Kwok Lai Kwan Rosena v. Kwok Biu and Another

HCA 1797/2016

[2023] HKCFI 17

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1797 OF 2016

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Before:  Deputy High Court Judge Jason Pow SC in Chambers

Date of Hearing: 28 December 2022

Date of Decision:  10 January 2023

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DECISION

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1.On 11 August 2022, after hearing a trial in the absence of the defendants, I granted judgment in favour of the plaintiff upon duly proving her case. Apart from declaring that the Property (which are registered in the joint names of the 1^st and 2^nd defendants) has been held by the defendants on trust for the plaintiff, I also ordered that:-

“The 1^st Defendant (and the personal representative of his estate) and the 2^nd Defendant do take all necessary steps including but not limited to execute all necessary assignment, conveyance, instrument or document to transfer the title of the Property to the Plaintiff free from encumbrance, failing which the Registrar of the High Court be appointed under section 25A of the High Court Ordinance (Cap. 4) to execute the same in the Defendants’ stead. The costs and expenses incurred thereof to be borne by the 1^st and 2^nd Defendants, to be taxed if not agreed, on an indemnity basis;”

2.By a summons dated 6 December 2022 (“Plaintiff’s Summons”), the plaintiff applied for variation of the aforesaid Order seeking to substitute the reference to “the Registrar” by a reference to “a Partner of the Plaintiff’s solicitors”. This application is made pursuant to the direction of the Registrar stating that “it is not the current practice of the Registrar to execute conveyance of property for and on behalf of any person unless there are special or exceptional circumstances… ”. As advised by the Registrar, the current usual practice is for the Court to appoint a partner of the plaintiff’s solicitors to carry out the necessary execution of conveyance. The Registrar’s direction is supported by the decision of Madam Justice Au-Yeung J in HCA971/2021 [2021] HKCFI 1113.

3.The plaintiff originally asked for this application to be dealt with by way of paper disposal and I accordingly gave directions for filing of affirmations/submissions.  The 2^nd defendant did not file any affirmation to set out his opposition within the stipulated time. Since the 2^nd defendant appears today and indicated that he has no opposition to the variation[1], I will also deal with the Plaintiff’s Summons today. It is clear from my original Order that the manifested intention was to effect a valid conveyance of the Property in favour of the plaintiff. The appointment of the Registrar was merely a mechanism to deal with the contingency of the plaintiff not being able to obtain necessary cooperation from the defendants. Given the current practice of the Registrar (which is supported by authorities), I am prepared to exercise my discretion and inherent jurisdiction under the “slip rule” to amend my Order in the manner prayed for in the Plaintiff’s Summons.  I will in due course deal with question of costs of the Plaintiff’s Summons which is linked to the 2^nd defendant’s summons dated 14 Dec 2022 (“2^nd Defendant’s Summons”).

4.Today is in fact the hearing of the 2^nd Defendant’s Summons issued in person and in Chinese. He prayed for the following relief:-

“1. 推翻審訊律師費抗辯書(推翻2022年8月11日判決第2段要被告(二)支付訟費的判決.

2. 暫緩訟費評估的程序.

3. 就原告申請修改判決的申請不作訟費命令.”

5.The 2^nd defendant appeared today in person. In relation to the first prayer, he reiterated that he is only seeking to set aside the costs order that I made in my Judgment dated 11 August 2022. The 2^nd prayer stands or fall together with the 1^st prayer. The 3^rd prayer actually relates to the Plaintiff’s Summons.

6.Mr Cheung appeared for the plaintiff and had filed written submissions in opposition. However, with respect, Mr Cheung wrongly treated the 2^nd defendant’s application as an application for leave to appeal against my costs order. In fact, the 2^nd defendant’s application should be understood as an application to set aside my costs order pursuant to Order 35 rule 2 because the 2^nd defendant was absent at the trial.

7.An application to set aside under Order 35 rule 2 shall be made within 7 days of the Judgment. The 2^nd defendant’s application is clearly out of time and he now seeks also for an extension of time pursuant to Order 3 rule 5. Mr Cheung opposed the application for extension of time.

8.The applicable legal principle had been explained by the Court of Appeal in Nantong Angang Garments Co. Ltd. v Hellmann International Forwarders & Ors. [2005] 4 HKC 86. The correct principle to be adopted in the exercise of the court’s discretion under Order 3 rule 5 is not that before any discretion is exercised, there must first be an acceptable reason for the delay. Instead, all matters, including the adequacy of any reason for delay, must be considered, the one to be weighed against the other, in the exercise of the court’s discretion. Taking a rigid mechanistic approach is inappropriate.

9.In the present case, Mr. Cheung submitted that my discretion should not be exercised in favour of the 2^nd defendant because:-

(1)  the 2^nd defendant’s delay (for nearly 4 months before making the application) was inordinate and inexcusable; and

(2)  there is no reasonable prospect of success in the setting aside application.

10.I will first deal with the issue of “prospect of success”.  In the affirmation filed by the 2^nd defendant in support of the 2^nd Defendant’s Summons, he gave two grounds for the setting aside application:-

(i)   his impecuniosity; and

(ii)  that he had not taken part in the proceedings and he had given up the ownership of the Property.

11.First of all, I agree with Mr Cheung that impecuniosity is not a valid ground for disturbing the ordinary incidence of costs, i.e. the fact that the plaintiff is the successful party against the defendants in the action.

12.Secondly, it is wrong for the 2^nd defendant to say that he had not taken part in the proceedings for the following reasons:-

(1)  he gave notice of intention to defend the action on 3 Jan 2017 through his then solicitors;

(2)  he and the 1^st defendant jointly filed a Defence on 3 Mar 2017 denying the plaintiff’s beneficial ownership of the Property and asserting that the 1^st defendant is the sole beneficial owner of the Property;

(3)  although he did not take any active step in the proceedings after his then solicitors ceased to act for him in September 2017^[2], he never indicated to the plaintiff that he would give up ownership of the Property to the plaintiff or that he would choose not to continue defending the proceedings. He never withdrew his Defence and he never expressed that he would abide by whatever orders or judgments made by the Court;

(4)  In fact, he provided a Declaration dated 23 April 2022 to his sister Kwok Lai Ling to support her application to represent the 1^st defendant’s estate in these proceedings. In this Declaration, the 2^nd defendant maintained the stance that the Property was solely and beneficially owned by the 1^st defendant. He stated that he was willing to convey all interest in the Property to the legal representative of the 1^st defendant.  In other words, he maintained his denial of the plaintiff’s beneficial ownership of the Property; and

(5)  even though the 2^nd defendant chose not to attend the trial, the steps that he had taken in these proceedings constituted continuous denial of the plaintiff’s rightful claim and entitlement. It became necessary for plaintiff to strictly prove her case and in so doing incurred legal costs.

13.Mr Cheung referred me Erwiana Sulistyaningsih v. Tsui Yun Bun Barry & ano. HCA 2256/2015 [2018] HKCFI 463 in which the learned Recorder said at §§15-16:-

“15. I do not think that if a defendant does not expressly admit liability, that is necessarily inconsistent with him not defending the action. He is simply leaving it to the plaintiff to do what would have to be done to obtain judgment. He is neither admitting nor denying liability.

16. Having said that, by leaving it to the plaintiff to do whatever is needed to obtain judgment, rather than submitting to judgment, if the plaintiff does succeed in doing so, then the ordinary rule is that the defendant will have to pay the plaintiff’s costs.”

14.The present case is a fortiori of the situation in Erwiana’s case. In Erwianna’s case, the 1^st defendant actually stated in his witness statement that he did not intend to take any further action to defend the claim and confirmed his intention and agreement to withdraw the Defence in so far as it related to him. He said he would take a neutral stance. In the present case, the 2^nd defendant did not even indicate in any pleadings, witness statement, or correspondence that he would take a neutral stance. The 2^nd defendant simply did not respond at all and chose to be absent at the trial. On the contrary, just 4 months prior to the trial, he provided Kwok Lai Ling with his Declaration for use in the proceedings. It is clear from the contents of his Declaration that he was maintaining his denial of the plaintiff’s ownership of the Property.  In fact, both in his oral and written submissions provided to this Court, the 2^nd defendant reiterated that the Property does not belong to the plaintiff, albeit at the same time stating that he is not seeking to overturn any other parts of my Judgment and Order.  With respect to the 2^nd defendant, if it were his case that the Property truly belongs to the 1^st defendant and not to the plaintiff, he should have appeared at the trial to put forward his case. This Court had made findings of fact and applied the law accordingly on the strength of the evidence presented at the trial. The 2^nd defendant is not seeking to overturn these findings of fact and application of law. It is thus impermissible for the 2^nd defendant to invite this Court to deal with the incidence of costs on a different factual and legal basis.

15.In the circumstances, I agree with Mr Cheung that there are no valid reasons for departing from the general rule that the 1^st defendant’s estate and the 2^nd defendant shall be jointly and severally liable for the plaintiff’s costs in the action, to be taxed if not agreed. In other words, there is no reasonable prospect of success in the 2^nd defendant’s setting aside application. On this reason alone, I will not exercise my discretion to extend time under Order 3 rule 5. Accordingly, it is unnecessary for me to delve into the issue of delay. Suffice for me to say that I am not at all impressed by the 2^nd defendant’s purported explanation given in his affirmation. Clearly, he had consciously chosen to ignore letters from the plaintiff’s solicitors and spend his energy or attention on other matters until sometime around 6 December 2022.

16.I now come to the Plaintiff’s Summons. It must be remembered that before I granted the Order on 11 August 2022, counsel for the plaintiff put forward a draft order in such terms for my consideration. Counsel never drew my attention to the “current practice” that was enunciated in the Judgment of Madam Justice Au-Yeung. The said Judgment was already pronounced in April 2022 whilst the trial in these proceedings took place in August 2022.  Mr Cheung fairly admitted that he and his counsel were not aware of the said Judgment when the draft order was presented.  I must emphasize that this Court does rely on the industry of counsel and solicitors in conducting necessary research before putting forward a draft order for the Court’s approval. This is particularly important when the opponent is either absent or is acting in person such that keen adversarial submissions would be lacking. In my view, the plaintiff is solely responsible for the need of variation of my Order.  I agree with the 2^nd defendant that no order of costs shall be made in relation to the Plaintiff’s Summons.  I accordingly dismiss prayers 1 and 2 of the 2^nd Defendant’s Summons but allow prayer 3.  If the 2^nd defendant considers the bill of costs proposed by the plaintiff excessive, he should ask for the bill to be taxed and put forward his objections accordingly.

17.In the end, the 2^nd defendant is partly successful in the 2^nd Defendant’s Summons.  The 2^nd defendant could have put forward his successful argument in opposition to the Plaintiff’s Summons. However, the 2^nd defendant is a layman acting in person. Taking a broad brush approach and seeing that today’s hearing also effectively dispose of the Plaintiff’s Summons, I will make no order as to costs under the 2^nd Defendant’s Summons.  In relation to the Plaintiff’s Summons, I shall amend paragraph 2  of my Order of 11 August 2022 by substituting the words “the Registrar of the High Court” by these words: “a partner of the Plaintiff’s solicitors”. I will also make no order as to costs under the Plaintiff’s Summons.

Mr C L Cheung of Raymond Siu & Lawyers, for the plaintiff

2^nd Defendant, acting in person