Goh Soo Siah v. Au Yeung Tin Wah and Others

HCA 1100/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1100 OF 2014

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BETWEEN

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D E C I S I O N

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THE APPLICATIONS

1.There are three summonses before the Court:

(1)  The 1^st defendant’s and the 2^nd defendant’s (“the 1^st defendant and the 2^nd defendant are called the defendants”) summons dated 15 July 2015 (“Summons for Relief regarding Witness Statements”) seeking relief of an unless order dated 26 June 2015 made against the defendants for the exchange of witness statements (“June Unless Order”);

(2)  The plaintiff’s summons dated 2 September 2015 (“Striking out Summons”) to strike out the defendants’ defences and for judgments to be entered against them for having breached an unless order dated 22 July 2015 (“July Unless Order”) requiring them to provide specific discovery pursuant to the plaintiff’s application; and

(3)  The defendants’ summons dated 17 September 2015 (“Summons for Relief Regarding Specific Discovery”) seeking retrospective leave to be given to the defendants to file various affirmations, and lists of documents to serve copies of documents set out in their Supplemental List of Documents dated 11 August 2015 upon the plaintiff.

2.The above summonses are contested and the parties are legally represented.[1]

THE FACTUAL BACKGROUND

3.Briefly stated, the plaintiff was, at the material times, an investor. The plaintiff alleged that the 1^st and the 2^nd defendants had induced him to enter into a contract for the project to build a columbarium in Sai Kung.  The 3^rd and the 4^th defendants were the corporate vehicles of the project.  The plaintiff had made the total investment into the 1^st defendant’s account and he had acquired shares in the 3^rd defendant. In 2013, the columbarium project was rejected by the Town Planning Board and the plaintiff asked for the return of the total investment.  The plaintiff alleged that there was an agreement whereby the defendants agreed to repurchase his shareholding in the 3^rd defendant for the amount of the total investment.  Pursuant to this repurchase agreement, the 2^nd defendant had paid 2 million dollars into the plaintiff’s account by way of cheque.  The cheque was dishonoured.  Summary judgment had been obtained against the 2^nd defendant and the 2^nd defendant had made partial payment in satisfaction of the summary judgment.

4.The 1^st and the 2^nd defendants denied that there had been a repurchase agreement.[2]

5.The plaintiff therefore has made monetary claim for the sum of $20,768,240 and claimed for entitlement to landed properties against the defendants[3] and the 3^rd and 4^th defendants.

6.An Unless Order by consent was made by Master K. Lo on 26 June 2015, whereby it was ordered “Unless by 4 p.m. on the 14^th day from the date of the Order to be made herein, the parties do exchange signed witness statements as to fact in compliance with the order by Master Ho dated 16^th January 2015, the defaulting party shall be debarred from adducing evidence at trial”. The deadline for the exchange of the witness statements was therefore on 10 July 2015.[4]

7.The defendants failed to exchange signed witness statements with the plaintiff by 4 p.m. on 10 July 2015.[5]

8.On 13 July, the defendants changed their solicitors to the present firm of solicitors and Notice of change of solicitors was filed on 15 July 2015.  The defendants say that now they are ready to file the witness statements and relief should be granted to them to do so.[6]

9.In relation to the striking out summons regarding specific discovery, there was an order by consent made by this Court on 22 July 2015 at the Case Management Conference where both parties were legally represented.  The terms of the unless order read:

“Unless by 4:00 pm on 12 August 2015, the 1^st and the 2^nd Defendants do (i) make and serve affidavits stating whether they have or have not at any time in their possession, custody or power the documents specified in the Schedule hereto, and if not then in their possession, custody or power when they parted with it and what has become of it; and (ii) serve a copy of the documents which are in their possession, custody or power on the Plaintiff in compliance with the Order of Master K Lo dated 26 June 2015, the 1^st and 2^nd Defendants’ Defences be struck out and judgment be entered against the 1^st and 2^nd Defendants in favour of the Plaintiff as claimed with costs to the Plaintiff to be taxed if not agreed.”

10.On 11 August 2015, the 2^nd defendant filed and served his 3^rd affirmation purporting to comply with the “unless order”.  The 1^st defendant had not served an affirmation.  However, the 2^nd defendant deposed that he served his 3^rd affirmation on behalf of the 1^st defendant as well, which was contested by the plaintiff.

11.The plaintiff alleges that the 1^st defendant was in breach of the “unless order” and the 2^nd defendant’s affirmation has not complied with the terms of the “unless order” as the contents of the affirmation do not give the particulars and information as required under the Schedule attached to the summons.  Therefore, he says that both 1^st and 2^nd defendants have been in breach of the “unless order”.  He applies for judgment against the defendants.[7]

12.The defendants seem to admit that they are in breach of the “unless order” as they have already filed a summons for relief under O.2, r.5 of RHC and their counsel’s written submissions do not dispute that they had not complied with the “unless order regarding specific discovery”.[8]

13.However, this morning, the defendants submit that they had attempted to comply with the “unless order” by supplemental affirmations with the 2^nd supplemental and 3^rd supplemental lists of documents.  They further submit that they are not arguing that they had not complied with the order in view of the objections raised by the plaintiff.  But they say that such supplemental lists of documents should be taken into consideration in support of their application for relief under O.2, r.5 RHC.  Although this Court should take that into consideration under the rule, it has been pointed out by the plaintiff that those supplemental lists of documents do not comply with the requirements under O.24, r.7 for specific discovery as they had not informed the court the whereabouts of the documents and what had become of them.  See paragraph 21 of Patriarch Partners Media Holdings LLC v Wong Siu Wah Sammy [2014] HKEC 2072. Therefore, it is beyond argument that the defendants are in breach of the “unless order” for specific discovery.

THE LEGAL PRINCIPLES AND THEIR APPLICATION

14.The defendants rely upon O.2, r.5 of the Rules of the High Court for the relief from the sanctions of the “unless orders”, a judicial discretion of the court, which must be exercised judiciously, taking into account all the circumstances, including those set out under O.2, r.5 RHC.  The consequences of the “unless order” are grave for the defendants.  This Court must be guided by the law and the relevant legal principles in its exercise of the discretion.  I shall therefore set out the relevant legal principles below:

a.  The peremptory order or “unless” order must be given due weight and authority it deserves in order to establish the court’s authority in case management. It will be apposite to bear in mind what Ma J. (as he then was) said in Ping Kai Engineering Co Ltd v Hong Kong Teakwood Works Ltd (unrep., HCCT 2/2001, 6 February 2002) at §20 where he adopted the applicable principles contained in the judgment of Sir Nicholas Browne-Wilkinson VC in Re Jokai Tea Holdings Limited (Note) [1992] 1 WLR 1196 at page 1203:

“In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an ‘unless’ order, the relevant question is whether such failure is intentional and contumelious. The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded. But if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which would otherwise have enjoyed.” (emphasis added)

It will be seen that the test of “intentional and contumelious” has been modified after the CJR as discussed below.

b.  Order 2, r.5 RHC provides the factors, which the court has to consider in exercising its judicial discretion as to whether relief should be granted to the applicant, who has been in breach of the court order:

(1) On an application for relief from any sanction imposed for a failure to comply with any rule or court order, the Court shall consider all the circumstances including-

(a)  the interests of the administration of justice;

(b)   whether the application for relief has been made promptly;

(c)   whether the failure to comply was intentional;

(d)   whether there is a good explanation for the failure to comply;

(e)   the extent to which the party in default has complied with other rules and court orders;

(f)   whether the failure to comply was caused by the party in default or his legal representative;

(g)   in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h)   whether the trial date or the likely trial date can still be met if relief is granted;

(i)   the effect which the failure to comply had on each party; and

(j) the effect which the granting of relief would have on each party.

(2)   An application for relief must be supported by evidence.

c.  Order 1A, r.2 of RHC provides that the Court shall seek to give effect to the underlying objectives of the rules when it exercises any of its powers (whether under its inherent jurisdiction or given to it by these rules or otherwise); or interprets any of these rules or a practice direction.  In giving effect to the underlying objectives of the rules, the Court shall always recognize that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties. (O.1A, r.2(2))

d.  Lord Scott of Foscote NPJ in Wing Fai Construction Company Limited (in Compulsory Liquidation) v Yip Kwong Robert & Others (2011) 14 HKCFAR935 has set out the important guide of exercising the judicial discretion, which other members agreed.  At paragraph 88 of the judgment, he said:

“…The statutory rules applicable to the exercise of the discretion are to be found in the Rules of Court set out in the White Book. Judicial decisions explaining the Rules … and the manner in which those Rules should be given effect should not be treated as a statute replacing the Rules themselves but rather as a very important guide to the exercise of the discretion. The power to strike out remains a discretionary one.”

e.  The court should adopt the approach as set out in Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 where, at p.1677, Auld LJ said:

“In my judgment, there is no need to confine the test to that of an intentional disregard of a court’s peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise. Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction. But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.”

See §§35-41 of Top One International (China) Property Group Company Limited & The Bank of New York Mellon v Top One Property Group Limited & Others [2011] 1 HKLRD 606 by Fok J. (as he then was) delivered on 9 December 2010.

f.  The court has to consider all the factors, including those set out under O.2, r.5 RHC and find the degree of the fault as committed by the defendants in order to determine whether relief should be granted, placing considerable significance on the duty of the parties to assist the court in furthering the objectives of the CJR as at §41 of Top One International (China) Property Group Company Limited, the learned judge said:

“As directed by RHC O.2 r.5, the court should consider all the individual circumstances including those listed in r.5(1) at sub-paragraphs (a) to (j). Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted. Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (RHC O.1A r.3) and on the court to do so by actively managing cases (RHC O.1A r.4(1)).”

g.  The Court of Final Appeal in Wing Fai Construction Company Limited (in Compulsory Liquidation) at §34 held: ‘Rules do not exist for the sake of compliance with them as an end in itself; they exist for the purpose of ensuring that disputes before the courts are justly resolved.  It does not, however, provide any excuse for parties or their legal representatives not to comply with the Rules or orders made by the court, nor does it relieve them of this duty under O.1A r.3.  The emphasis must be placed on the word “just”.’ (emphasis added) Here, it must be emphasized although the solicitor’s fault does not provide an excuse for non-compliance of the rules, it is, nevertheless, a factor that has to be taken into consideration as provided under O.2, r.5(1)(f) as can be seen from the decision of Sakhrani, J. in the case below.

h.  The meaning of “just” can be seen from Far East Sourcing Ltd v Man Bong International Ltd & Another (unrep., HCA 1463/2012, DHCJ Sakhrani, 29 April 2015) where the court set aside the default judgment because non-compliance of the “unless” order for not supplying the documents was due to the negligence of the solicitor, to whom the 2^nd defendant had given all the documents. [56-60]

i.  On the other hand, in the case of Jose Miranda Da Costa Junior & Another v Lorenzo Yih, also known as Yu Chuan [2014] HKCU 414 where the plaintiff by Counterclaim (the applicant) had failed to make payment of security into court, as a result of which the Defence and Counterclaim were struck out and the applicant applied for relief under O.2, rr.4 & 5 two days after the 14-day limitation period.  The court had examined the procedural history of the matter and further the conduct of the parties and found that the applicant had been delaying the proceedings by dragging its feet. In this case, although the solicitor had admitted his negligence, the court refused to grant the relief, taking other factors into consideration.

j.  Order 2, rule 5(2) provides that the application for relief must be supported by evidence. The burden must be on the party who has not complied with the “unless order” to give explanations on affidavit for such default.  See § 22 of Ping Kai Engineering Co Ltd v Hong Kong Teakwood Works Ltd:

“It will not do so where the party in default (and it is important to stress that the burden is on him) to demonstrate with cogent and compelling evidence that the failure was not intentional or contumelious and was caused by circumstances beyond his control. Invariably, I would have thought that an affidavit would be essential if any explanation is sought to be given for, as is obvious, a court would attach more weight to sworn evidence than evidence either unsworn or simply given from counsel’s table.” (emphasis added)

k.  In the application of the above legal principles and those provisions under O.2, r.5, RHC, the court will apply the proportionality test.  At §513 of the Final Report, it stated:

“As indicated in the Interim Report, the sanction prescribed in a self-executing order should be proportionate to the non-compliance in question. Where the non-compliance is such as to make a fair trial impossible, the claim or defence may be struck out. However, that should be a last resort. As Lord Woolf MR pointed out in Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926, other sanctions often enable a case to be dealt with justly without the draconian step of striking the case out.”

l.  This is exemplified by the Court of Appeal in Daimler AG v Leiduck [2012] 3 HKLRD 119 where after it had decided that a fresh exercise of discretion for the relief under the unless order was necessary and it said at §57: “In our view, a weighty factor in the weighing exercise to be undertaken by the court on a fresh exercise of the discretion is the question of proportionality of the sanction in the circumstances of this case.”  Having considered the circumstances of the case, the Court of Appeal found that “the delay can be compensated in costs and the insufficiency of the four answers in question can be addressed by this court requiring the plaintiff to provide further answers to those interrogatories without the invocation of LPP.” (legal professional privilege).  It had exercised its discretion afresh and made the “unless” order with different terms.  See §68.  Here, it should be noted that the defaulting party had relied upon legal professional privilege to refuse to give the answers, which the Court of Appeal had considered and made the “unless order” in different terms.

m.  On the other hand, in Top One International (China) Property Group Co Ltd., the court, having considered the circumstances of the case had come to find at §54 that “it is tolerably clear from the procedural history of these proceedings since at least February 2010 that the 3^rd defendant has played a systematic game of “hide and seek” in order to evade service of documents on him and compliance with orders, including the Unless Order.”  Taking into account of the fact that the case had not been set down for trial, the court did not accept that that factor alone would exempt the defendants from the draconian effects of the “unless order”.  See paragraph 60 of the judgment.  The court went further to consider the factors under O.2,r.5 and finally found at paragraph 62:

“Taking all the matters I have referred to into account, I have ultimately come to the conclusion that I should not grant relief from the sanction imposed by the Unless Order in the present case. I recognise that the striking out of the Amended Defence deprives the 1^st and 3^rd defendants of the opportunity of having their day in court and it is therefore a draconian sanction. But in the light of my findings, it would be right to say that the 1^st and 3^rd defendants have brought this on their own heads.”

n.  In An Zhou & Others v Zhou Zheng Kuan & Others (unrep., CACV193/2012, 19 July 2013), a defamation case where the plaintiff claimed against the defendants for libel, the 1^st defendant had pleaded justification.  The plaintiff applied to court for further and better particulars of D1’s defence. D1 had on a number of occasions agreed to provide the particulars, but had failed to provide satisfactory answers to the plaintiff.  Eventually, the matter was before the Judge, who had made unless order by consent of the parties for D1 to give the particulars. D1 had failed to do so and it applied to court for extension of time under Order 2 rule 5.  But the application was out of time, viz. beyond 14 days after default.  The Judge found that D1’s conducts in the proceedings were intentional and contumeliousand he dismissed D1’s defence and entered judgment against it. On appeal, the Court of Appeal adopted the approach that striking out is the last resort and other remedies have to be considered before the last resort, [51] but nevertheless held that there was a history of non-compliance with the unless orders by D1; its default was intentional and contumelious [48]; the particulars were one of the central issue to the disputes [58]; D1’s application for extension of time was out of time [63] and it dismissed D1’s appeal.

o.  The central question is thus whether the court finds that the applicant’s default was intentional and contumelious, or in a lesser degree as held by the court in Top One International (China) Property Group Co Ltd. In Tang Kim Kwan Patrick, also known as Patrick Tang v Lee Chi Ting Karen also known as Karen Lee (unreported, HCA920/2009, DHCJ Au-Yeung, 6 January 2012), DHCJ Au-Yeung (as she then was) adopted the same approach and finally came to a conclusion at §30 that “To preclude the defendant from relying on her witness statement will effectively deprive her of a proper defence as the plaintiff is relying on the presumption of resulting trust.  The primary aim of the Court in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties and not technical failure.  It will not be conducive to the administration of justice to bar the defendant entirely from adducing witness statements.”  At §32, she held: “Having considered all the factors, I am not satisfied that there had been deliberate flouting of the unless order.  I therefore exercise my discretion to grant the relief against sanction in the interests of justice.” 

p.  In Lai Sai Sang v UBS AG (unrep., HCA97/2010, DHCJ Burrell,3 April 2012), the plaintiff had been in breach of an “unless order” for specific discovery of documents.  The Master dismissed the plaintiff’s action and granted judgment for the defendant for the counterclaim. The plaintiff appealed.  The Judge, applying the principles of Top One International (China) Property Group Co Ltd, dismissed his appeal and held that the plaintiff had delayed for 8 months during which he had committed many failures to comply with the court order and there were no extraneous circumstances.  The court also held that it was not required to pinpoint the precise failure to be intentional or contumelious and the court could take a broad view of the circumstances of delay.  See §§17&18:

“17. In conclusion, firstly, I find that the plaintiff has failed to establish any ‘extraneous circumstances’ which caused or contributed to the non-compliance. In particular, I reject his belated attempt to blame his former solicitors and I find no substance in the complaint that the financial institutions were too slow in their responses.

18.  Secondly, the court is not required to pin point the precise nature of the failure; for example by finding that it was specifically intentional or specifically contumelious.  The plaintiff’s conduct over a 8-month period must be considered.  Over that time there were many failures which were not remedied within time.  Sufficient of those failures were, taking a broad view, at worst intentional or contumelious and at least the result of sheer indolence or a deliberate turning of a blind eye to one’s obligations.”

DISCUSSION

Common issues for both summons for relief under O.2, r.5

15.I shall now apply the above legal principles to the applications.

16.I shall first deal with the plaintiff’s summons for striking out of the defendants’ defences for breach of the “unless order” for specific discovery and the defendants’ application for relief thereof before I deal with the “unless order regarding witness statements” because of their different sanctions under the “unless orders”. The striking out sanction will result in entering judgment against the defendants whereas the sanction relating to witness statements will only debar the defendants from adducing the evidence at trial, which will still proceed. The legal principles above are applicable to the defendants’ summonses for reliefs against the sanctions for breach of the specific discovery order and the witness statements order.  However, I shall deal with the summonses below.

17.It is obvious that the burden is on the defendants to explain, by way of affidavit evidence, the reasons for non-compliance of the “unless orders” in question.  Ping Kai Engineering Co Ltd.

18.The defendants agree to the chronology of events submitted by their solicitor filed on 15 December 2015 for this hearing:

a.  An unless order dated 2 September 2014 by Master K Lo for the defendants to file and serve their defences;

b.  An unless order dated 10 December 2014 by Master Hui for the defendants to file and serve their lists of documents;

c.  The 2^nd defendant failed to make payment under the consent order dated 13 January 2015;

d.  An order by Master Ho dated 16 January 2015 that if mediation fails the parties should exchange the witness statements;

e.  The defendants failed to attempt mediation despite numerous approaches from the plaintiff and the mediator;

f.  An unless order by consent dated 26 June 2015 (the present order in question) by Master K. Lo; and finally;

g.  An unless order by consent dated 22 July 2015 by this Court for specific discovery.

19.The defendants submit the explanations as set out in their counsel’s written submissions at paragraphs 28 & 29:

“28. Ds have filed the 2^nd Aff. of D2 and the 4^th Aff. of D2, in support of this application. It could be seen from the evidence filed by Ds that the way that Ds’ former legal representatives, Messrs. L&L, were conducting the case is a major reason leading to Ds failures to complied with other court directions / orders and the said Unless Order:-

a. Ds do [are] not aware of P’s time summons taken out on 15 June 2015 seeking an ‘Unless Order’ (para. 8 of the 2^nd Aff. of D2);

b. Ds were surprised by the fact that Messrs. L&L had agreed to the Unless Order (para. 9 of the 2^nd Aff. of D2);

c. Messrs. L&L had not explained to Ds s as to the legal effect of the Unless Order (also, at para. 9 of the 2^nd Aff. of D2);

d. It seems that Messrs. L&L had a habit of consenting to an Unless Order even if there has been no previous breach by Ds of any order or direction (see: para. 28 and 29 of the 4^th Aff. of D2, regarding the filing of Defence);

e. Regarding the filing of List of Documents, Messrs. L&L once again demonstrated their habit of consenting to an Unless Order even if there has been no previous breach by Ds of any court order or direction (para. 33 and 34 of the 4^th Aff. of D2);

f. Messrs. L&L had not advised Ds as to the Order for Directions, which was dated 16 June 2015 (para. 37 of the 4^th Aff. of D2);

g. Apart from the strange habit of consenting to Unless Order on first occasion, Messrs. L&L had also demonstrated other unreasonable manner in the conduct of Ds’ case (see: para. 40 of the 4^th Aff. of D2).

29.  The Ds have not deliberately chosen to disregard the Court’s directions / orders (see: para. 38 of the 4^th Aff. of D2). In this regard, Ds also refer to Order 2 Rule 5(c). It is submitted that the failure to comply with the Unless Order was not intentional. ”

20.This case bears much similarity to Lai Sai Sang.

21.The fact that the defendants were not aware of the “unless orders” is not believable.  The reasons behind their solicitor agreeing to the making of the “unless orders” are beyond our discussion today.  They may involve professional privilege.  There is no evidence from the handling solicitor explaining the situations.  This Court will assume that the defendants’ solicitor had informed the defendants of the “unless orders” and had also explained the consequences for breach of them.

22.The wordings of the “unless orders” are plain, so are the consequences. It simply defies common sense that the defendants will have difficulty in understanding the plain language of the “unless orders”.  I have no difficulty in rejecting such reasons.

23.The issue raised by the plaintiff relating to the contractual nature of the consent orders, referring to 42/5A/4 of the White Book 2016 is, in my view, irrelevant for our present discussion.  The defendants are not asking this Court to set aside the consent orders.  The nature of the consent orders is that the parties had no objections to the terms of the orders, which have “the same force and effect as a consent order made by a judge or master”.  It is therefore obvious that the court retains the jurisdiction to deal with such consent orders. See 42/5A/3 of the White Book 2016.  The defendants are now applying for reliefs under O.2 RHC.

24.Since this Court does not accept the defendants’ explanations, it is obvious that the defendants have no reasons not to comply with the terms of the “unless orders”.  Such conduct will amount to contumelious breach of the “unless orders”.

25.I have taken on board the defendants’ submissions:

a.  There has not been a trial date fixed for this matter; and

b.  The delay caused by the defendants’ breach of the “unless orders” can be compensated by costs;

c.  The case of Tang Kim Kwan Patrick v Lee Chi Ting Karen;

d.  The UK practice in Levy v Ellis-Carr & Others [2011] EWHC 3674 (Ch) at §9 and Chartwell Estate Agents Limited v Fergies Properties SA Hyam Lehrer [2014] EWCA Civ 506.

The Striking Out Summons and the Relief Summons

26.For the reasons above, I consider that since sufficient opportunities had been given to the defendants to make discovery, yet they had failed to do so without good reasons.  The sanction for breach of the order for discovery is clearly provided under O.24, r.16:

(1)  If any party who is required by any of the foregoing rules, or by any order made thereunder, to make discovery of documents or to produce any documents for the purpose of inspection or any other purpose or to supply copies thereof fails to comply with any provision of that rule or with that order, as the case may be, then, without prejudice, in the case of a failure to comply with any such provision, to rules 3(2) and 11(1), the Court may make such order as it thinks just including, in particular, an order that the action be dismissed or, as the case may be, an order that the defence be struck out and judgment be entered accordingly.

27.The case of Tang Kim Kwan Patrick does not assist the defendants as the court found at paragraph 32: “Having considered all the factors, I am not satisfied that there had been deliberate flouting of the unless order.  I therefore exercise my discretion to grant the relief against sanction in the interests of justice.” This is not the case here.

28.The UK practice is not binding upon this Court.  In fact, the law of UK is somewhat different from ours here. In the UK, the adjudication on the merit of the case is the overriding objective for case management whereas this is the underlying objective for our case management, in effect, raising the prominence of procedural fairness for case management for civil litigation in Hong Kong.  The decisions of the UK seem to be not consistent with the decisions of the higher courts in Hong Kong as shown above, which are binding on this Court. I decline to follow the UK practice.

29.I can see no reason to extend further time to the defendants for discovery.  As the Court of Final Appeal said in Wing Fai Construction Company Limited (in Compulsory Liquidation) at §33 of its judgment: “enough is enough”. The 1^st and the 2^nd defendants’ defences should be struck out and judgment be entered against them.

30.Accordingly, the defendants’ summons for relief is dismissed.

Summons for Relief regarding Witness Statements

31.Bearing in mind the factors above and following the line of authorities, especially the Top One, I decline to grant the relief sought by the defendants.  Their summons is also dismissed accordingly.

COSTS AND ORDER

32.As to the costs of the applications today, there is no dispute that the costs should follow the event and the plaintiff should be entitled to the costs of all three summonses. The plaintiff has prepared three separate schedules of costs for assessment under O.62, r. 9A, apportioning the time and costs to each of the summonses. The total amount comes up to over $600,000.  The defendants oppose and submit that the costs are excessive.  At the first blush of the costs for the applications today, they are excessive.  This Court has to, therefore, go to the items of the schedules for assessment, though on a broad brush basis.  As can be seen from the structure of this Decision, it is obvious that the preparation for the striking-out application and the application for relief from the sanction under O.2, r.5 should be done together.  Again, the preparation for the defendants’ summons for relief relating to the witness statements, should be the same as the same legal principles are applicable for both summonses for reliefs.  On this basis, the three schedules of costs should be considered together.  The plaintiff agrees that the hourly rates for the solicitors are on the high side and should be reduced in accordance with the current practice of the court.  Taking a broad brush approach, the appropriate costs for all three applications, including the costs reserved and the costs for hearing today be assessed at $180,000, to be paid by the defendants to the plaintiff within 14 days from the date hereof.

33.I shall now make an order in terms as follows:

a.  An order in terms of the plaintiff’s summons for striking out;

b.  Defendants’ summons for relief from striking out be dismissed;

c.  Defendants’ summons for relief from sanction relating to debarring them from adducing evidence at trial be dismissed;

d.  Costs of the applications, including all costs reserved and for today’s hearing be as per paragraph 32 above.

34.As to the Case Management Conference for this matter, since the 1^st and the 2^nd defendants’ defences have been struck out, it is not necessary to make directions for them. It remains for this Court to consider directions for the 3^rd and the 4^th defendants. The outstanding reliefs against the 3^rd and the 4^th defendants are the prayers A and E as set out in the Amended Statement of Claim. The 3^rd and 4^th defendants have not exchanged their witness statements with the plaintiff and obtained Counsel's advice. I therefore accede to their request to adjourn the Case Management Conference to 11:30 am on 25 February 2016 for the 3^rd Case Management Conference, with the following directions:

a.  The 3^rd and 4^th defendants shall within 21 days from the date hereof exchange witness statements with the plaintiff;

b.  The parties shall obtain Counsel's advice within 28 days thereafter;

c.  All interlocutory applications as may be advised shall be taken out within 14 days thereafter; such applications, if contested, shall be fixed before the Registrar for argument;

d.  Costs of this Case Management Conference be in the cause (time taken: 30 minutes).

Mr Alfred Wu, of Norton Rose Fulbright Hong Kong, for the plaintiff

Mr Arthur Yip, instructed by Hoosenally & Neo, for the 1^st and 2^nd defendants in the Summonses and the 1^st to the 4^th defendants in the Cases Management Conference