Yifung Developments Ltd v. Liu Chi Keung Ricky and Others

HCA 1341/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1341 OF 2014

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D E C I S I O N

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Introduction

1.YDL first issued a summons (“the 1^st Summons”) to vary costs order nisi, 6 weeks out of time.  It then issued another summons (“the 2^nd Summons”) to vary the 1^st Summons, asking for costs on indemnity basis.  This court dismissed both summonses by a decision dated 24 November 2016 (“the Decision”).  YDL seeks leave to appeal against the Decision.

Legal principles

2.Leave to appeal may be granted if the court is satisfied that a question of law is involved in the proposed appeal; and the proposed appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the proposed appeal should be heard: section 14AA of the High Court Ordinance, Cap 4.

3.Reasonable prospect of success means that the appeal has merits and ought to be heard and the prospects of success are more than fanciful but without having to be probable: Wynn Resorts (Macau) S.A. v Mong Henry [2009] 5 HKC 515 at 519H; and SMSE v KL [2009] 4 HKLRD 125 at §17.

4.Case management decisions are only subject to appeal in rare circumstances.  An applicant faces a very high hurdle and must show that the court has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task, or if the judge erred in principle or the order was irrational having regard to the issues that had to be resolved: Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887, at §31, Kwan JA.

5.The appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible: Wong Kar Gee Mimi, at §31; Hong Kong Civil Procedure 2017, Vol 1, §59/0/54.

Intended grounds for appeal

6.Leave is sought under both limbs of section 14AA of the High Court Ordinance.  The grounds can be summarized as follows:

(i)     That this court adopted a rigid and mechanistic approach focused on the delay but failed to have regard to the primary object of exercising fairness and avoidance of injustice to the parties, and failed to take into account the merits of YDL’s application to vary.

(ii)    That this court erred in treating the situation as a pure failure to apply within time when there was timely application, albeit informal, by letter setting out the full reasons; and this court failed to appreciate that, at most, this was simply an irregularity capable of cure: Ling Yuk Sing v Secretary for Civil Service [2010] 3 HKLRD 722.

(iii)   That this court took into account an irrelevant matter or was plainly wrong in finding a deliberate decision by YDL’s solicitors to flout the Rules of the High Court by not taking out a summons to vary in the light of various pieces of evidence.

(iv)   That this court erred in finding prejudice to the defendants by reason of YDL’s method of applying or delay in issuing a summons. 

(v)    That this court took into account an irrelevant matter, namely that the dismissal of the summons would not prejudice YDL in that it might choose to explore recourse against its own solicitors for related losses.

(vi)   That there was no ground identified when the 2^nd Summons was dismissed for abuse of process. The court incorrectly stated that there had been failure by YDL to seek costs on an indemnity basis when there had been an oral application in the strike out application but the costs were reserved.  The indemnity costs issue was not mentioned in the Decision when the court made a costs order nisi.  The only reason such an order had not been made earlier was the significant delay and distraction introduced by D1’s ultimately unsuccessful authority summons. That same feature occasioned the firm’s inadvertence on this issue.

(vii)  There were merits in YDL’s underlying application for variation of costs order.

7.There is no attack on the legal principles that this court took into account in the Decision. 

8.For present purposes, I disregard Order 32, rule 1 and Hong Kong Civil Procedure 2017, Vol 1, §32/6/9A which neither party relied on at the hearing on 24 November 2016.  Even so, as can be seen in the case of Ling Yuk Sing now cited by Mr Barlett SC, the Court of Appeal had decided that an application to vary a costs order nisi has to be made by summons and not informally by letter, based on to a PCCW case back in 2003.  The passage in Hong Kong Civil Procedure 2017, Vol 1, §42/5B/1 relied on by the applicant to show that an application to vary can be made without a summons is not supported by authority.  That commentary refers, at best, to a practice, which cannot override established case law.

9.Further, Ling Yuk Sing is distinguishable in that the applicant had not shown prejudice by the informal mode of application for variation of a costs order and had chosen not to avail himself of the opportunity to raise objections to it (§6).  This was in stark contrast to Ricky Liu who had, right from the start, pointed out the irregularity in procedure to YDL.

10.The Decision refusing to extend time is a case management decision. Apart from saying that the Decision has the effect of barring an underlying substantive application from being made, Mr Bartlett has not shown how the intended appeal could meet the test in Wong Kar Gee Mimi set out in paragraph 4 above.

11.Grounds (i) to (iii) are attacks on the way this court exercised the discretion in refusing to give time extension and are not appealable: Wong Kar Gee Mimi set out in paragraph 5 above.

12.Ground (iv) is a view on the facts held by this court and has not been shown to be perverse, irrational or unsupported by evidence: Wong Kar Gee Mimi set out in paragraph 5 above.

13.Ground (v) has no merits.  Lack of prejudice to the other party is not in itself a ground for granting extension of time which is otherwise unjustified: Pine Enterprises Ltd v Cyber Strategy Ltd, CACV 116/2008, 12 December 2008, at §18, per Yuen JA.

14.Ground (vi) has no merits.  If the 1^st summons was already issued way out of time, an application to amend it to add a further item of relief could not be anything other than an abuse.  The fact that an oral application for costs have been made was irrelevant.  The procedure for variation is to precisely deal with any matters overlooked by counsel or the court when making the costs order nisi.  Moreover, lawyers are used to dealing with multi-issues and there is no room for them to say that they have been distracted by the opponent’s unwarranted interlocutory applications and failed to make a proper application.

15.Ground (vii) has no merits.  It was another exercise of discretion based on the lengthy delay.

16.None of the intended grounds for appeal have reasonable prospect of success.  I dismiss the application for leave to appeal with costs, nisi, to the 1^st defendant.  Such costs are summarily assessed and allowed at $45,000.

Mr Jeremy Bartlett SC, instructed by Linklaters, for the plaintiff

Mr David Chen, instructed by Li, Wong, Lam & W I Cheung, for the 1^st defendant