Shen Gan Finance Ltd. v. Yiu Tek and Another

HCMP004275/1998

HCMP4275/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.4275 OF 1998

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Coram: The Hon Mr Justice Stone in Chambers

Date of Hearing: 30 November 1998

Date of Delivery of Judgment: 30 November 1998

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J U D G M E N T

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1. I am seized this morning with a Notice of Appeal dated 19th August 1997. It is an appeal against the decision of Master Cannon given on 14th August 1997, whereby she dismissed the summonses of the 1st and 2nd Defendants respectively dated 5th June 1997 and 20th June 1997.

2. The background to this case is somewhat odd, and I am grateful to Mr Thomson, who appears for the Plaintiff/Respondent to this appeal, for the short skeleton argument he has presented to bring the Court up to date upon what does not appear to have been an entirely logical procedure.

3. The story begins with an Order 88 application by the Plaintiff against the Defendants. It was a mortgage action, and on 7th May 1997, Master Sweeney (as he then was) heard the Plaintiff's application for summary judgment. Master Sweeney did not give judgment, but he did grant conditional leave. The 1st and 2nd Defendants were granted leave to defend conditional upon their payment into Court of the sum of HK$11 million on or before 4th June 1997; paragraph 2 of the same Order permitted the Plaintiff, upon default, to enter judgment with costs.

4. It is important to note, and crucial to an understanding of the way matters have developed in this case, that there was no appeal by the Defendants against the grant of conditional leave ordered by Master Sweeney on 7th May.

5. By 4th June 1997, that is the date ordered by Master Sweeney for compliance with the Order for payment in, no payment into Court had been made. Perhaps this is unsurprising, at least as far as 4th June was concerned, because on that day the Court was closed as there was a red rainstorm warning. As I understand the situation, the provisions of the relevant Ordinance provide in such situations for an additional 24 hours of grace, so that 4th June 1997, within Master Sweeney's Order, necessarily became 5th June 1997.

6. On that day, I am told, the Defendants applied by issuance of a summons to extend time for payment in and for proceedings to be stayed. However, that summons of the Defendants was adjourned by Mr Registrar Betts (as he then was); in fact, it was first heard on 11th June and was formally adjourned to Master Cannon.

7. That was not all that happened on 5th June 1997. The evidence before this Court, as was the case before the learned Master below, is as contained in the Fourth Affirmation of one David Chan, and states that on 5th June 1997 at 4.20 pm, the Plaintiff's Solicitors had enquired with the Accounts Office of the Court as to whether indeed there had been a payment into Court in compliance with Master Sweeney's Order; they were told that no payment into Court had been made.

8. Accordingly, on Friday 6th June 1997, Mr David Chan delivered a draft judgment to the Registry. This was undated, and I am told that this was because the date is usually completed by the Court. Thereafter, on the same day, on 6th June 1997, the same Mr David Chan was informed that the sealed judgment was ready for collection. When collected, he failed to notice that it bore the date 5th June 1997. However, there also appeared thereon the handwritten legend, "Approved Sandie 6/6/97", the reference here no doubt being to the clerk in the Registry whose task it was to ensure that the formalities were in order, that there had been no payment in by the relevant date and so forth, and, crucially in my view, the Court seal on the face of the judgment is dated 7th June 1997 and the sealed copy was filed with the Court on 7th June 1997. Thereafter, a sealed copy of the judgment was served on the Defendants' Solicitors on 20th June 1997.

9. On that date, namely 20th June 1997, the Defendants issued a summons to set aside the judgment on the ground that it was irregular "as the Plaintiff's application for default judgment is premature". This was the Plaintiff's summons of 20th June, and was heard by the learned Master together with their original summons of 5th June 1997, which had asked for an extension of time to effect payment into Court to 30th September, and further that the proceedings be stayed until the conclusion of that application.

10. This, therefore, brings us back to 14th August 1997, when Master Cannon heard argument upon both these summonses. Mr Thomson tells me that he represented the Plaintiff below, as now, and that the Defendants were then represented by Miss Patricia Wong of Counsel. Indeed, I have had the advantage of seeing, within the Court file, skeleton arguments filed by both Counsel on that occasion. I understand also that Master Cannon reached her decision in the face of evidence in the case filed by both sides.

11. This, then, is the background to the present Notice of Appeal which is dated 19th August 1997. On its face, it asks that the Order of Master Cannon dismissing the summonses of 5th and 20th June 1997 be rescinded and that in its place there may be ordered that : (1) unconditional leave be given to the 1st and 2nd Defendants to defend, and (2) that the costs of this appeal and of the application before the Master be to the 1st and 2nd Defendants in any event.

12. I confess that I do not understand how the first prayer could be pursued, given that in the summonses before her, which of course she dismissed, the learned Master was only ever asked to set aside the judgment which had been entered - which I note was not a default judgment in the true sense, but was a judgment entered consequent upon non-compliance with a conditional leave condition - and to extend the time for compliance for three months or so, together with the stay of proceedings.

13. Be that as it may. The procedural curiosity in this case does not stop there, because the Notice of Appeal dated 19th August 1997 first came on before Deputy Judge Whaley (as he then was) on 25th September 1997. At that stage, the Plaintiff was once more represented by Mr Thomson, and the Defendants were represented by Mr Christopher Mumford, S.C. In the event, the appeal was not argued, I am told, and as appears from Deputy Judge Whaley's handwritten note, both parties addressed the Court and indicated, and I will say no more than this, that negotiations were then ongoing. The end result was that the learned Deputy Judge stood the appeal out of the lists, formally ordering that the appeal be adjourned sine die with liberty to either party to apply, and that the costs of that hearing be in the cause.

14. There is nothing particularly surprising about this. If the parties wanted to negotiate, and if there was a chance of monies being paid from Defendants to Plaintiff, so be it. The Courts do not stand in the way of negotiated settlements, whether done in the face of a judgment or not.

15. Nothing, however, further came of the matter, and in August 1998 - that is almost a complete year after it had been brought before Deputy Judge Whaley - it was the Plaintiff who sought to restore this appeal. It was restored for today's date, namely 30th November 1998. And I am told that the appointment to fix dates was attended by representatives of both sides. In any event, for the avoidance of doubt, those instructing Mr Thomson wrote to those instructing Miss Lau on 20th August 1998 with notification of the scheduled date, namely today, for the restored hearing of the appeal against the Order of Master Cannon dated 14th August 1997.

16. Mr Thomson tells me that during the week preceding today's hearing, those instructing him had been inquiring of those instructing Miss Lau as to the whereabouts of bundles and/or skeleton arguments. Nothing happened in that regard, and the parties, represented by their respective Counsel, are before me this morning.

17. Miss Lorinda Lau for the Defendants finds herself in difficulty this morning. She tells me, and of course if she says so I am happy to accept it from her, that she was first instructed, at least in terms of being formally retained, in the afternoon of Thursday 26th November, although all that she received at that stage was a formal back sheet, but no documents. Entirely sensibly, she held a conference on Saturday morning in order to find out precisely what this case was about. She now, I think, knows what the case is about, but nevertheless asked for an adjournment of this adjourned appeal so that she could consider, she says, putting in further evidence.

18. Whilst of course I sympathise with the difficulties of this nature that junior Counsel find themselves in, far too frequently if I may say so, the fact remains that there was no material before me in the form of affidavit evidence or otherwise upon which, against the factual background of this case, I could legitimately consider exercising my discretion.

19. Justice is a two-way street; applications cannot be considered in isolation, and fairness towards both sides in any application or dispute is the benchmark. Against the factual background of this case, a further undocumented adjournment application at this stage was, I am afraid, with respect to Miss Lau, simply a no-hoper. So the adjournment application was refused.

20. Miss Lau was then invited to proceed with the appeal. All the evidence that was before the learned Master was before this Court, albeit not in formal bundle form. Again, I think Miss Lau found herself in difficulties.

21. To be fair to her, against this background, and given this Notice of Appeal and the absence of any appeal against the original Order of Master Sweeney, I think it is fair to say that any Counsel would have been in difficulty. Be that as it may. She did press on me, with as much conviction as she was able to muster, that the judgment that had been formally entered as long ago as 7th June 1997 was irregular because it bore thereon the date of 5th June (which, as a matter of form, was obviously incorrect), and also because, she asserted, the Plaintiff's Solicitors had submitted their documents to the Registry prematurely.

22. I hope I have not done her a disservice. That seemed to be the nub of her points, and she recognised, I am sure, that without attacking the judgment, she had no room for manoeuvre, the reason being that the Plaintiff's cause of action had, as a matter of law, merged with the judgment.

23. Mr Thomson for the Plaintiff, whilst recognising that Miss Lau faced problems, being new to the case, said that in any event Miss Lau's submission was wrong on two counts. It was wrong as a matter of fact, and it was wrong as a matter of law. As a matter of fact, it was wrong because the evidence in Mr Chan's Fourth Affidavit made it perfectly clear that no papers for the entry of judgment in default of compliance with Master Sweeney's condition in the Order granting conditional leave had been lodged with the Registry until Mr Chan had ascertained that the Plaintiff in fact had not paid any monies into Court by the appointed date, and then it was not until the following day, namely 6th June, that the papers were lodged, which were duly returned sealed on 7th June. And as a matter of law, said Mr Thomson, Miss Lau was in error as to the date upon which the judgment takes effect, asserting, and I accept his contention in this regard, that this judgment took effect from the date it is sealed; in this connection he drew my attention to the provisions of Order 42 rule 5. So that if this be right, and I have held that it is, this gave Miss Lau nowhere to go.

24. It follows that Miss Lau is faced with a regular judgment. It is not a default judgment of the type that the Court grapples with when entered in default of acknowledgement of service or in default of defence. It is simply a judgment entered in default of compliance as to a condition which requires to be fulfilled before leave to defend becomes operative. So that in terms of the appeal with which I am seized, namely that against the decision of Master Cannon, this appeal must be dismissed. In my judgment the learned Master was correct, on the evidence before her, in dismissing the application to set aside the judgment which had been entered, and it must also follow that there could have been no question as to an extension of time for payment into Court, a regular judgment having already been entered.

25. What remains unsolved, and certainly this is not Miss Lau's doing because she has come into the case very late, is how it could have been thought that it was within the jurisdiction of this Court, against the procedural and factual background outlined herein, to grant unconditional leave to defend, there having been no appeal, as I have earlier observed, against the decision of Master Sweeney.

26. So there we have it. A rather unfortunate muddle, and it is time that this matter is finally brought to an end so far as the Court is concerned. The appeal is dismissed with costs to be taxed if not agreed, such costs to include the costs incurred before Deputy Judge Whaley.

Representation:

Mr James Thomson, inst'd by M/s Livasiri & Co., for the Plaintiff

Miss Lorinda Lau, inst'd by M/s Oliver C.M. Chan & Co., for the Defendants