Hui Tze Ha (許紫霞), The Sole Executrix of the Estate of Lam Yim (林炎), Deceased v. Ho Yuet Lin

HCA 1420/2016

[2021] HKCFI 3867

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1420 OF 2016

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Before:  Deputy High Court Judge MK Liu in Chambers

Date of Hearing: 30 December 2021

Date of Decision:  30 December 2021

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DECISION

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1.By a summons dated 1 November 2021 (“the summons”), D seeks leave to lodge an appeal against my judgment handed down on 30 June 2021 (“the Judgment”)[1] out of time. The facts and my findings have been set out in the Judgment and would not be repeated herein. For ease of reference, the abbreviations used in the Judgment are adopted in this decision.

The principles

2.The principles concerning leave to lodge an appeal out of time have been summarized by Lam VP (as he then was) in Progetto Jewellery Co Ltd v Lau Chiu Ying and Another[2], in which the learned judge said:

“6. The Court’s approach in considering an application to extend time to appeal is well settled. In Tang Chai On v Tang Sing Ki, [2016] 5 HKLRD 104, this Court held at [9] (citing Lee Chick Choi v Best Spirits Co Ltd, HCMP 371/2015, [2015] HKEC 899 (CA) at [19]):

‘The legal principles regarding an application to extend time for an appeal are well established.  In the exercise of its discretion, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party of the application is granted.  Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success on the merits, not merely a reasonable prospect of success.’”

Substantial and inexcusable delay

3.Below is a table prepared by Ms Ho for P, summarizing the relevant events leading up to the summons:

Date	Event
30.06.2021	Court handed down the Judgment
07.07.2021	According to D, she met with her legal representatives and decided to appeal against the Judgment
22.07.2021	D applied for legal aid, which triggered a 42-day automatic stay
28.07.2021	Original deadline for D to serve notice of appeal
01.08.2021 – 31.08.2021	Summer vacation, which overlaps with the legal aid stay
02.09.2021	End of legal aid stay
08.09.2021	Deadline for D to serve notice of appeal after the legal aid stay
21.09.2021	D’s solicitors sent a letter to the Legal Aid Department to check the progress of the D’s legal aid application
05.10.2021	The Legal Aid Department granted legal aid to D
07.10.2021	D received a letter dated 5 October 2021 from the Legal Aid Department granting her application for legal aid.
22.10.2021	D erroneously filed a summons for extension of time to serve the notice of appeal before the Court of Appeal
28.10.2021	The Registrar of the Civil Appeals wrote to D’s legal representatives directing that the application be made to the Court of First Instance
29.10.2021	D withdrew the application before the Court of Appeal
01.11.2021	D took out the summons

4.D has filed her 4^th affirmation dated 1 November 2021 (“D’s 4^th Affirmation”), in which she admitted that the deadline for serving a notice of appeal after the legal aid stay was 8 September 2021[3], and “there is a seven-week delay in bringing out the present application.”[4]

5.However, Mr Tam for D has tried to say that the legal aid stay would have been suspended during the summer vacation, and taking the summer vacation into account, the deadline for D to serve a notice of appeal in fact should be 8 October 2021.  With respect, I am unable to agree.  As submitted by Ms Ho, where the summer vacation overlaps with the legal aid stay, the reckoning of time would only be suspended once.

6.First, the plain meaning of the relevant statutes suggests that once the legal aid stay is triggered, it runs continuously for 42 days and is not affected by the intervening summer vacation.

(1)  Legal Aid Ordinance (“LAO”), section 15(4) provides that:

“Where any memorandum is so filed, then, unless otherwise ordered by the court in which the memorandum is filed, all proceedings in the action or in the appeal or in both the action and the appeal shall, by virtue of this section, be stayed for such period, being not less than 14 days, as may be prescribed, and during such period (unless otherwise ordered by any such court) time fixed by or under any law or otherwise for the doing of any act or the taking of any step in the proceedings shall not run.” (Emphasis added)

(2)  High Court Ordinance (“HCO”), section 31(1) provides that:

“Where by any law regulating civil procedure, or by any special order of the High Court, any period not exceeding one month is appointed or allowed for the doing of any act or the taking of any proceeding, no days included in the summer vacation shall be reckoned in the computation of such time, unless the Court otherwise directs.” (Emphasis added)

(3)  By D’s application for legal aid on 22 July 2021, the time for serving a notice of appeal under Order 58 rule 4 would stop to run for 42 days.  This is the combined effect of section 15(4) of the LAO and rule 7A of the Legal Aid Regulations.

(4)  Section 31(1) of the HCO would only suspend the time for “the doing of an act or taking of any step in the proceedings”. In my view, that section would not have the effect of stopping the running of the time of the legal aid stay.

(5)  The suspensory effect of section 31(1) of HCO and section 15(4) of LAO would be concurrent during the summer vacation, with the legal aid stay ending after 42 days on 2 September 2021, and the time for serving a notice of appeal expiring on 8 September 2021.

7.Second, adopting a purposive approach, there is no reason why the legal aid stay should stop to run during the summer vacation.

(1)  The purpose of the legal aid stay is to “give time for the Director of Legal Aid to consider an application for legal aid”, while ensuring “that the appellant in the meantime would not be prejudiced by his lack of legal representation in his litigation”.[5]  Such purpose does not require the legal aid stay to stop running during summer vacation.

(2)  The Director of Legal Aid is already afforded time to consider the application for legal aid via the automatic stay. There is no reason why the Director of Legal Aid should be given further time to do the same task because of the summer vacation of the High Court.

8.Finally, following Mr Tam’s submission, that would give D a 73-day extension (legal aid stay of 42 days, plus summer vacation of 31 days) for filing her notice of appeal, which clearly contradicts the post-CJR principle of ensuring that a case should be dealt with as expeditiously as is reasonably practicable.

9.In my view, the time for D to serve her notice of appeal expired on 8 September 2021.  D only took out the summons on 1 November 2021.  In other words, D was close to 8 weeks late in taking out the summons.  The delay is substantial.

10.I am also of the view that the substantial delay is inexcusable.

(1)  In Brook v The Law Society of Hong Kong, Mortimer VP said:[6]

“…… Time limits are prima facie to be observed. Time limits are laid down for the orderly conduct of litigation. So that the parties know where they are. If a party has won in litigation, he is entitled to assume - if time expires and a notice of appeal has not been filed - that the matter is at rest. That he has won and that there is no appeal. That applies even if as in this case, he was notified that an application for legal aid was being made. The Law Society was informed on about 11 August that an application for legal aid would be made. That is a neutral matter. It would be quite different if during the period for appealing an application had been made either to the court or in correspondence for extension of time. That is sufficient to indicate to a winning litigant that an appeal is still alive.

…… The only explanation is that there was a legal aid application. That of itself is of course some explanation. It is not a good explanation without something further. There was no letter to the respondent asking for an extension of time on the basis that legal aid was still being considered. Nor there was an application to the court within time asking for an extension on that basis. If the applicant and his solicitors were mindful of trying to fulfil their duties within the time limits imposed by the rules, it is to be expected normally that they would take steps of that kind within the time for appealing. From mid-September to 26 September there is no indication what was happening save the awaiting of the issue of a legal aid certificate.” (Emphasis added)

(2) The fact that P received notice of D’s application for legal aid on 22 July 2021 is a neutral matter. That would not allow D to take her time as she pleased. The burden remains on D to serve a notice of appeal within time.

(3) Between 22 July 2021 and 8 September 2021, nothing was done by D. There was neither a letter to P asking for an extension of time nor an application to the court within time asking for an extension on the basis of a pending legal aid application. Further, there is also no evidence showing that D has made any enquiry during this period to find out the progress of her legal aid application.

(4) Between 9 September 2021 and 5 October 2021, D has also not taken any step to seek a time extension. Save and except sending a letter to the Legal Aid Department on 21 September 2021, no other enquiry as to be progress of her legal aid application has been made.

(5) D’s legal aid application was granted on 5 October 2021. There is no explanation why D did not seek a time extension from P or from the court shortly after 5 October 2021.

(6) D only made an application for an extension of time on 22 October 2021. However, the application was mistakenly made to the Court of Appeal. Undeniably, this is a mistake.[7] Between 22 October 2021 and 1 November 2021, further delay was caused by this mistake committed by D. In D’s 4^th Affirmation, D has offered no explanation as to why her solicitors would commit the mistake. In the absence of such explanation, the delay caused by the mistake is inexcusable.[8]

(7) In view of all these, D’s inaction and substantial delay from 8 September 2021 to 1 November 2021 (nearly 8 weeks) cannot be said as excusable.

No real prospect of success

11.Since the delay on D’s part to serve the notice of appeal is substantial and inexcusable, unless D can show a real prospect of success in her appeal, no extension of time would be granted.  As said by Lam VP (as he then was) in Progetto[9]:

“15. Since the delay is both substantial and inexcusable, [the applicant] must demonstrate a real prospect of success before an extension of time could be granted, see Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125; Lee Carol v Tong Hung Wai Tommy [2020] HKCA 325.”

12.In my view, D has failed to demonstrate a real prospect of success in her appeal.

13.In her draft notice of appeal (“DNOA”)[10], D has put forward two grounds of appeal:

(1)  this court erred in law in holding that the SPA was terminated on 19 October 2016 by the acceptance of P’s repudiatory breach by D (“Ground 1”); and

(2)  this court erred in exercising the discretion in favour of P by allowing P to rely on her post-writ unjust enrichment claim (“Ground 2”).

14.Before hearing the summons, I have checked the transcript of the hearing on 24 June 2021.  In that hearing, the parties made their oral final submissions and there were some exchanges between the court and counsel.  In my view, in examining whether there is any merit in the proposed grounds of appeal, it would be necessary to bear those oral submissions and those exchanges in mind.  If D intends to take this matter to the Court of Appeal, it would be important for D to place the said transcript before the Court of Appeal.  I would release the transcript to either P or D, provided that there is an undertaking to pay the relevant transcript fee.

15.D has given the following three reasons in support of Ground 1:

(1)  There has been no finding on the repudiation of the SPA (“Reason 1”).

(2)  D has already accepted the repudiatory breach on around 27 August 1993 (“Reason 2”).

(3)  The service of D’s defence and counterclaim on P does not amount to acceptance of P’s repudiatory breach (“Reason 3”).

With respect, none of these reasons is valid.

16.Before going to discuss the merit of these reasons, I have to mention the parties’ respective positions in the hearing on 24 June 2021, ie the final submissions stage.

(1)  In the hearing on 24 June 2021, I posited four scenarios regarding the termination of the SPA for the parties to consider:

Scenario A

Both the Deceased and D were in breach of the SPA by not performing their respective obligations on the Scheduled Completion Date, and the contract was still on foot.  See the Court of Appeal’s decision in Camberra Investment Ltd v Chan Wai Tak[11], and the Privy Council’s decision in Chong Kai Tai Ringo v Lee Gee Kee[12].[13]  However, specific performance of the SPA became impossible as a result of the master’s decision dated 22/03/2019.

Scenario B

The Deceased was the one repudiated the SPA by failing to tender the balance of the purchase price on the Scheduled Completion Date, but there was no unequivocal acceptance of repudiation by D and the contract was still on foot.  However, specific performance of the SPA became impossible as a result of the master’s decision dated 22/03/2019.

Scenario C

The Deceased repudiated the SPA by failing to tender the balance of the purchase price on the Scheduled Completion Date. The repudiation was accepted by D by commencing the MP Proceedings.

Scenario D

The Deceased repudiated the SPA by failing to tender the balance of the purchase price on the Scheduled Completion Date, and D accepted the repudiation by serving her defence and counterclaim on P in this case.

(2)  I specifically asked Mr Tam whether one of the scenarios mentioned by me was the true scenario, or whether he would suggest a new scenario, which in his submissions, should be the true scenario.  Mr Tam then submitted that the true scenario should be a Scenario E.

(3)  Scenario E suggested by Mr Tam is as follows:

D was in breach of the SPA by failing to tender an assignment to the Deceased on the Scheduled Completion Date or within a reasonable time thereafter.  The cause of action of unjust enrichment arose in 1993, and P’s claim in this case has been time-barred before the commencement of these proceedings.

(4)  After hearing Scenario E, I immediately referred Mr Tam to [5] of D’s defence, in which D pleaded:

“…… [D] avers that the Deceased unilaterally and consciously caused the failure of the completion of [the SPA] by his inaction and failure to pay the remaining balance of the consideration at the sum of HK$200,000 before the completion date ……”

I told Mr Tam that Scenario E was contradicted by D’s own pleadings, and I asked Mr Tam how could D put forward Scenario E in this situation.  I did not hear any satisfactory reply from counsel.

(5)  Ms Ho submitted that the true scenario should be either Scenario C or Scenario D.  Ms Ho said that Scenarios A and B were not covered by the pleadings.  She submitted that both Scenarios C and D had been touched upon in the pleadings. However, Ms Ho admitted that Scenario C had not been very clearly mentioned in the pleadings.  The scenario which had been clearly covered by the pleadings should be Scenario D.

17.As to Reason 1, I do not agree that there is no finding concerning when the SPA was repudiated in the Judgment.  Having heard all the submissions, I find that Scenario D is the true scenario in the Judgment.  See [28(1)] and [29] of the Judgment.  My finding is based upon the matters pleaded by D in [19] of her counterclaim dated 17/10/2016, in which she pleaded that by reason of the failure of the Deceased and/or P to complete the purchase of the Property on or before the Scheduled Completion Date, D is entitled to forfeit the deposit of HK$1m.  Clearly, D is saying that the Deceased has committed a repudiatory breach of the SPA by failing to tender the balance of the purchase price on the Scheduled Completion Date.  By making the finding in [29] of the Judgment on the basis of [19] of D’s counterclaim, clearly I have made a finding that the SPA was repudiated by the Deceased on the Scheduled Completion Date, as pleaded by D in [19] of her counterclaim.

18.In [5] of the DNOA, Mr Tam contends that “[o]n a true construction of the SPA, the Judge ought to have found that there has been no repudiation of the contract by either the Deceased or [D]”.  With respect, this is Scenario A suggested by me to Mr Tam in the hearing on 24 June 2021.  In that hearing, Mr Tam refused to accept Scenario A, and suggested that Scenario E should be the correct scenario.  In view of the position taken by Mr Tam in his final submissions, I am of the view that the point in [5] of the DNOA may not be open to D in the appeal.  In any event, that point has not been canvassed by the parties in their respective pleadings.  As a result, there cannot be any finding based upon that point in any way.

19.As to Reason 2, Mr Tam’s arguments are as follows:

(1)   The SPA was repudiated by the Deceased’s failure to make payment to D on the Scheduled Completion Date, and D had accepted the repudiation on or around that date, ie 27 August 1993. 

(2)  D’s acceptance of repudiation was constituted by (a) her failure to redeem the mortgage as a condition precedent of completion and (b) her continued residence at the Property with no intention to vacate it, which were unequivocal overt acts inconsistent with the subsistence of the SPA.  

20.With respect, these arguments are problematic.

(1)  The points in these arguments have not been pleaded and have not been canvassed at the trial at all.  Further, D’s position under Reason 2 now is different from and contradicts Scenario E submitted by Mr Tam in the final submissions stage.  In the circumstances, it is unlikely that D would be allowed to rely upon these new points in the appeal.

(2)  Further, the conduct relied on as constituting acceptance of repudiation must not merely unequivocally convey to the repudiating party that the aggrieved party is treating the contract as at an end, but must also unequivocally convey to the repudiating party that the aggrieved party is treating the contract as at an end because of the repudiating party’s repudiatory breach of the contract.[14] D’s argument is that that she accepted the repudiation on or around 27 August 1993, ie the Scheduled Completion Date.  It cannot be said that the actions mentioned in [19(2)] above were done in response to the Deceased’s repudiatory breach at all.  In fact, in [6] of her defence, [D] pleaded that she had never had any intention to transfer the Property to the Deceased.  As such, those act could not have been done in response to the Deceased’s repudiatory breach. 

21.There is no merit in Reason 2.

22.Under Reason 3, Mr Tam has put forward 3 points:

(1)  There has not been any repudiation by the Deceased.

(2)  D’s defence and counterclaim is equivocal and cannot constitute an acceptance of repudiation.

(3)  My finding in [29] of the Judgment is based upon a case not pleaded by either party, and I have wrongly applied the Poon Hau Kei case.

23.With respect, I am not persuaded by these submissions.

(1)  As to the first point, that has been dealt with in [16] – [18] above.

(2)  As to the second point, the primary case as pleaded by D in her pleadings is non est factum, and the alternative case is to terminate the SPA by reason of the Deceased’s repudiatory breach.  Having abandoned the non est factum case, it is clear that D is claiming that she is entitled to forfeit the deposit of HK$1m paid by the Deceased, by reason of the Deceased’s failure to complete on the Scheduled Completion Date.  In my judgment, this forfeiture claim is clear and unequivocal, and this is a clear acceptance of the Deceased’s repudiation.

(3)  As to the third point, I repeated what I have said in [29(5)] of the Judgment.  In fact, Scenario D has been raised by Ms Ho in her written opening, and has been dealt with by Mr Tam in his written opening.  At the final submissions stage, Mr Tam has also been offered an opportunity to deal with the point.  Mr Tam’s answers on this point, as submitted in his oral final submissions, are (a) in Scenario D, there has not been any clear and unequivocal acceptance of repudiation; and (b) in Scenario D, the cause of action relied upon by P would be a post-writ cause of action.  At the trial, Mr Tam has not argued that there would be unfairness to D if a judgment based upon Scenario D is made.

24.There is no substance in Reason 3.

25.For the reasons above, I conclude that there is no merit in Ground 1.

26.I am also of the view that there is no merit in Ground 2.

(1)  I have explained in [45] of the Judgment as to why I exercised my discretion in favour of P by allowing P to rely upon a post-writ cause of action. The challenge against that discretion would not be entertained by the Court of Appeal unless it can be shown that the discretion was exercised under an error of law, in disregard of a principle, under a misapprehension of facts or the conclusion reached was “outside the generous ambit within which a reasonable disagreement is possible”[15].

(2)  Mr Tam submits that by exercising the discretion in favour of P, D has been deprived of a limitation defence, and D has also been deprived of the opportunity of advancing a defence in response to Scenario D by a pleading.

(3)  With respect, there is no merit in these submissions.

(a)  I have accepted Scenario D as the true position.  In this scenario, D in fact does not have a limitation defence, as explained in [45(3)] of the Judgment.

(b)  D has been given many opportunities to deal with Scenario D in the trial.  See [23(3)] above.  At the trial, it has never been submitted on D’s behalf that D has suffered any prejudice because a valid defence in response to Scenario D has not been pleaded.

27.For the reasons above, I conclude that D has failed to show a real prospect of success in her appeal.  Accordingly, D’s application for leave to lodge an appeal out of time must be refused.

Prejudice to P

28.For the sake of completeness, I would also discuss the prejudice to P if D’s application for an extension of time is allowed.  In my view, if the application is allowed, there would be prejudice to P, and the prejudice cannot be countervailed by the undertaking offered by D (“the Undertaking”).

29.As discussed in the above, that P received notice of D’s legal aid application on 22 July 2021 is a neutral matter.  On 22 October 2021, when the papers in D’s application to the Court of Appeal for an extension of time were served on P, the time for lodging an appeal has long elapsed by that time. P should be entitled to assume that the matter was at rest.

30.Allowing D to reopen the matter by lodging an appeal out of time would mean that P would need to wait for a long time before the final outcome is known. The Property is D’s only valuable asset known to P. The Undertaking offered by D is that she would not sell the Property pending the outcome of her appeal.  However, there is a reservation in the Undertaking, ie D may mortgage the Property at any time.  With the reservation in place, the Undertaking cannot give P any comfort.  There would be a real risk that the net value of the Property would be below HK$1m (ie the market value of the Property less the amount of the loan secured by the mortgage) when the final outcome is known, and P may not get back the entire HK$1m plus interest even if P is the ultimate successful party.

31.Insofar as may be necessary, the prejudice to P would be a further reason in support of exercising the discretion against D and disallowing D’s application as per the summons.

Disposition

32.I dismiss the summons.

33.I have heard submissions on costs.   Ms Ho does not seek a certificate for 2 counsel, but seeks indemnity costs.  Ms Ho submits that while there has been inordinate and inexcusable delay and the application is entirely without merits, the court may order indemnity costs against the applicant.[16] In view of the discussions set out in the above, I agree that indemnity costs should be ordered against D.  In my view, the application as per the summons is devoid of any merit and should not be made at all.

34.I order that costs of the summons be paid by D to P forthwith, to be taxed in accordance with the High Court Scale and on indemnity basis.  D’s own costs be taxed in accordance with the Legal Aid Regulations.

35.Lastly, it remains for me to thank counsel for the assistance rendered to the court.

Ms Sabrina Ho and Ms Tinny Chan, instructed by Wellington Legal, for the plaintiff

Mr Jeffrey Tam, instructed by Christine M Koo & Ip, Solicitors & Notaries LLP, assigned by Director of Legal Aid, for the defendant