Dbs Bank (Hong Kong) Ltd v. Keenpack Industrial Ltd and Others

HCMP 759/2020

[2021] HKCFI 2368

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 759 OF 2020

_______________________

_______________________

_______________________

__________________________________

REASONS FOR DECISION

__________________________________

Introduction

1.Before the Court was an appeal by the 2^nd defendant(“D2”) against an order of Master Lai of 31 May 2021.

2.In the present proceedings, the 3^rd defendant (“D3”) has been granted leave to represent his companies the 1^st defendant (“D1”) and D2.

3.On 19 March 2021 D2 issued a summons in which D2 disputes the jurisdiction of the Court of First Instance claiming that the present mortgagee action against D2 is within the jurisdiction of the District Court and that (i) all proceedings in this action should be stayed under Order 12 rule 8(2) (b); (ii) pursuant to Order 12 rule 8(1)(e), protection of the property of D2 seized or threatened with seizure in these proceedings; (iii) pursuant to section 44(1) of the District Court Ordinance, the action be transferred down; and (iv) and all claims against D1, D2, and D3 by P should be discharged; and (v) costs (“Summons”).

4.On 31 May 2021, Master Lai made no order in relation to the Summons and made no order as to costs (“31.05.21 Order”).

5.On 25 June 2021, D2 filed a Notice of Appeal against the 31.05.21 Order. 

6.At the hearing, this Court dismissed D2’s appeal and made no order as to costs.  The reasons are now set out hereinafter.

Out of Time

7.Under Order 58 rule 1 (3) of RHC, the Notice of Appeal must be issued within 14 days after the judgment.

8.No reasons for delay had been given by D2, as to why the Notice of Appeal was filed out of time.

9.At the hearing, D3 on behalf of D2 explained that he was acting in person and needed time to read the law and the Practice Directions, and further he had a conflict with the landlord and could not access D2’s papers.

10.D3 has been acting in person since the commencement of these proceedings some two years ago.  He has had more than sufficient time to read up the relevant law, rules and the practice directions.  Further, no particulars were given as to why he was not able to access D2’s papers.  In any event, these reasons were not valid.  Having said this, as the delay was not substantial, I would proceed to consider the merits of the present appeal.

The Appeal

11.An appeal from the master to the judge in chambers is by way of an actual rehearing of the application.

12.In these proceedings, the originating summons against the defendants was issued by the plaintiff (“P”) on 2 June 2020. Briefly, P provided banking facilities to D1, secured by a commercial property registered in D2’s name and mortgaged to P, and D3 is the guarantor and thereafter, there was default, and Ds have failed to settle the amount due to P.  P now seeks payment of all sums due by D1 against D1 and further against D3 as guarantor, and in default of payment, delivery by D2 to P vacant possession of the mortgaged property.

13.On 29 January 2021, D1 filed an acknowledgment of service of the originating summons.  D3 was subsequently granted leave to represent D1 on 19 February 2021.

14.On 12 March 2021, D3 obtained leave to represent D2 and on 16 March 2021, D2 filed an acknowledgment of service. 

15.It was only on 19 March 2021 that D2 issued the Summons challenging the jurisdiction and seeking a transfer down.

16.After the 31.05.21 Order, D1 and D3 took out a summons on 29 June 2021 to strike out the present action.  The striking out summons and P’s summons for default judgment against all Ds have now been fixed for a substantive hearing on 27 August 2021.

17.During the hearing, D3 (on behalf of D2) informed the Court that his reasons for seeking a transfer down were:

(i)     leave for him to represent D1 and D2 in these proceedings could be withdrawn at any time by the Court, whereas in the District Court, no such leave would be required;

(ii)     even though both the Court of First Instance of the High Court and the District Court have jurisdiction in the present matter, both sides should be afforded equal opportunities to justice, and the choice by P to file the originating summons in the High Court was only good to P and not good to the defendants (“Ds”), as the District Court would be more flexible in the processing of the case;

(iii)     there are practice directions which say in case both the Courts have jurisdiction, the matter should be in the District Court, and that the Court can transfer down of its own accord.

18.As for (i) above, so far, leave granted to him to represent D1 and D2 has not been withdrawn, and there are no indications or evidence that such leave is likely to be withdrawn.  D3 pointed out that he had to make applications to represent both D1 and D2, which he would not have to do if the proceedings were issued in the District Court.  However, if necessary, he can raise this issue when costs of this action are being considered.  As Master Lai has indicated at the hearing on 31 May 2021, the Court of First Instance can order costs on District Court Scale if the matter falls within the jurisdiction of the District Court.    

19.As for (ii), even though the originating summons appears to be within the jurisdiction of the District Court, the provisions of mortgagee actions under Order 88 of RHC are in effect the same as those under Order 88 of the RDC and D2 will not suffer any prejudice procedurally.   

20.As for (iii), whether to transfer down at this stage of the proceedings is a matter of discretion of the Court.

21.In the present case, after the issue of the originating summons some 14 months ago, there have been numerous steps taken by D3 on behalf Ds including an application for legal aid.  There have been various orders made including an “unless order” against Ds.  Mr Lee who appeared on behalf of P had pointed out to this Court that there had been repeated non-compliance by Ds of “unless orders” and/or extended orders.

22.Mr Lee had further pointed out that at the time of the hearing before Master Lai on 31 May 2021, there was an imminent direction hearing fixed on 30 June 2021.  Mr Lee informed this Court that one of the reasons which led to Master Lai to exercise his discretion in making no order on the Summons was that any transfer down would result in further delay in the matter and that this was a case management decision. 

23.In fact, after the order made by Master Lai, Ds took out 3 summonses on 25 June 2021 including the present Notice of Appeal and two stay applications, one for stay pending appeal and one for stay pending outcome of his legal aid application.  Further on 29 June 2021, Ds issued a summons to strike out P’s originating summons in these proceedings.

24.In any event, at present, a 2 hour substantive hearing has been fixed on 27 August 2021 for P’s application for default judgment and for Ds’ striking out application. 

Conclusion

25.Having considered all the circumstances of this case, and also the evidence so far, I see no merits in the appeal. Essentially, Master Lai’s decision is a case management decision.  In light of the imminent substantive hearing, by seeking a transfer down at this stage can only cause further disruption and delay in these proceedings and would increase costs unnecessarily.  As said, it is open to the Court, if necessary, to order costs on District Court scale if the originating summons should have been issued in the District Court in the first place.

26.For the above reasons, I therefore agreed with the 31.05.21 Order and the appeal was dismisse   d.

27.In the Notice of Appeal, D2 has sought other directions including serving a defence by D2 and a reply by P.  These were not orders sought in the Summons which was issued on behalf of D2, nor insofar as this Court can see, part of the 31.05.21 Order.  I have declined to make such other directions as sought by D2.

28.As in the 31.05.21 Order, I have made no order as to costs of this appeal.

Mr Raymond Lee of Michael Cheuk, Wong & Kee, for the Plaintiff

The 2^nd Defendant, acting in person, represented by the 3^rd Defendant, acting in person