The Commissioner of Inland Revenue Hong Kong v. Thomas Tsang and Another

HCA000272/1974

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 272 OF 1974

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Coram: Li, J.

Date of Judgment : 3rd October 1974

Present: Mr. M. Jackson-Lipkin (J.S. & M.) for plaintiff

Mr. R. Mills-Owens (W. & G.) for defendant

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RULING

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1. This is an application under Order 24 Rule 17 "that the Order of Mr. Registrar Doyle dated the 24th September, 1974, be revoked alternatively that the said Order be varied by substituting the period of seven days or such other period as this Honourable Court shall think fit for the period of three days provided in the said Order". The full text of the Order may be read as follows:

"By consent it is ordered that the Defence and Counterclaim in the 1st and 2nd of the Consolidated Actions be struck out and judgment entered for Thomas Tsang unless within three days the said Shulman Air Freight International (H.K.) Limited do file an Affidavit in accordance with paragraph 1 of the Order of Mr. Registrar Jones made on the 25th of March, 1974, and do supply photocopies of the yearly statements of accounts as referred to in Part B of paragraph 1 of the schedule to the Affidavit of Mr. Ip in support of the summons; it is further ordered that the said Thomas Tsang do have the costs of this summons in any event"

2. Pursuant to this Order an Affidavit had been filed in part compliance of the said Order on the 27th of September, 1974, well within the three day limit. However, the signed balance sheet was not tendered to the plaintiff or filed until the morning of the 30th of September. When I say "filed" it has not been filed; it has only been tendered to the plaintiff. The plaintiff's contention is that it is already out of time. The reason for this application is twofold: firstly, that the consent to the Order was made under a mistake as there was some misunderstanding between the solicitor for the plaintiff, Mr. Ip, and the solicitor for the defendant, Mr. Brown: Mr. Brown's version is that he was under the impression that the plaintiff was quite prepared to have the summons struck out or withdrawn upon Mr. Brown's undertaking that the signed balance sheet would be delivered as soon as the Directors of the defendant company arrived in Hong Kong. Further, the defendant was not represented before Mr. Registrar Doyle by Mr. Brown, the solicitor having the conduct of the defence proceedings, but by an articled clerk of Wilkinson & Grist, the defence solicitor. As such, the articled clerk had no authority to consent to such an Order.

3. The background of this case was that on the 25th March, 1974, Mr. Registrar Jones made an Order to the effect that the defendant should file an Afficait in support and give certain particulars referring to certain documents as to their existence or non-existence. Six months elapsed and nothing was done. As from early September, 1974, correspondence took place between Mr. Ip and Mr. Brown regarding the compliance with the said Order. Again, there were telephone conversations and in the course of such conversations Mr. Brown's version is that he understood Mr. Ip was agreeable that the summons be struck out or withdrawn on Mr. Brown's undertaking that such documents would be provided on the arrival of the defence company Directors. Thus on the 24th September instead of Mr. Brown going before the Registrar himself he sent Mr. Souza, an articled clerk of his firm. It was before Mr. Registrar Doyle that the Order was made by consent. As it turned out, one of the Directors of the defence company arrived on the 25th September, that was Mr. Shulman; the other Director, Mr. Burstein, did not arrive until 10 p.m. on the 27th September. Under the circumstances there was no way that Mr. Brown could have complied with the Order by producing or filing a balance sheet signed by two Directors of that company. There was no judgment entered so far despite the non-compliance. Learned counsel for the plaintiff suggested that as from Friday midnight there should have been judgment entered or a judgment may well be entered at any time. The time in complying with the Order has passed. No extension of time should be granted and that the plaintiff should be allowed to enter judgment in respect of the first two actions in these proceedings of the four consolidated actions.

4. Evidence has been adduced regarding the subject matter in this summons. Normally it could have been dealt with by Affidavit. I could have disposed of this matter summarily. What I am about to say, I hope, will not be too harsh on the parties concerned. What is disclosed in evidence, what authorities have been cited before me have been duly considered by me. The evidence as such disclosed that there was certainly no mistake on the part of Mr. Brown in giving consent to the Order dated the 24th September. If there was any mistake at all, it might well be a misunderstanding on his own part due to pressure of work. I can dispose of the proposition that the articled clerk has no authority quite simply that the question of authority may well be a matter between the firm and the articled clerk himself. When it comes to a third party in proceedings before the Registrar, defence solicitor is not allowed to say an articled clerk has no authority to represent the firm or to represent the lay client. If that is the case, the normal business of the court would be seriously hampered. No principal can be allowed to say to a third party, even in ordinary law of agency, that his agent has no authority. However, in all fairness on the evidence before me, I find that Mr. Souza has not been negligent. He has not been given clear and proper instructions and clear and proper supervision in this matter. He was obviously going into the Registrar's chambers quite clearly in his own mind that he had authority to give consent to the Order dated the 24th and he went back to report to Mr. Brown and he was not even given a chance to give a full report of what transpired before the Registrar. Hence this mistake.

5. The text of Rule 17 Order 24 reads:

"Any order made under this Order (including an order made on appeal) may, on sufficient cause being shown, be revoked or varied by a subsequent order or direction of the Court made or given at or before the trial of the cause or matter in connection with which the original order was made."

This order quite clearly gives the Court certain wide discretion. Mr. Jackson-Lipkin, learned counsel for the plaintiff, contends with eloquence that it is not that the Court will not revoke or vary an Order or give an extension of time. But the Court will not do so as a matter of course, unless there must be shown to the Court a sufficient cause and the burden is on the applicant, the defendant in this case. However, there is no definition that I can find as to what constitutes sufficient cause. The fact that judgment is being entered without trial or merits is not relevant in consideration of the power to be exercised by the Court. But he very fairly concedes the point that documents being served at a late stage without prejudice or substantial prejudice to the plaintiff is a matter to be weighed in my consideration. He has also pointed out that this is not the first time the defendant had been guilty of such neglect. This is, in fact, at least the second time. However, I also recall that, as it is given in evidence, at some time the plaintiff was under the same predicament and as a result time was extended to the plaintiff. As I said, I would have disposed of this case quite quickly and simply, even on the assumption that Mr. Brown had committed a misjudgment or slip in this matter. However, I allowed evidence to be adduced because the evidence would have a great deal to do with costs in this application. Sufficient it is to say, without repeating the evidence and going through the authorities in detail, that in all fairness extension should be granted in this matter. That the late delivery or filing of the documents concerned has not substantially prejudiced the plaintiff at the trial is sufficient cause to me. If learned counsel for the plaintiff feels that there is any prejudice to his client's interests by such late delivery he can always apply for an adjournment and that would be reflected in costs in the plaintiff's favour. Perhaps I should add that I have to take the easy way out. Obviously it may be easy for me to say that there should be leave to enter judgment because of this slip. It would save not only counsel and parties a great deal of time, perhaps not the money. It would also save me a lot of time. In the circumstances I would extend the time for filing and supplying the signed balance sheet to comply with the Order - to make it a blanket Order - to comply with the Order dated the 24th September until 12 o'clock tomorrow, that is the 24th of October.

(Court and counsel discuss costs)

6. For reasons given, the Order dated the 24th September, 1974, be varied to the extent that the time for filing and supplying of documents, the subject matters of the said Order, to be extended to 12 noon, the 4th October, 1974, costs on common fund basis to the plaintiff in any event to be paid by the defence solicitors.

Representation:

Mr. M. Jackson-Lipkin (J.S. & M.) for plaintiff

Mr. R. Mills-Owens (W. & G.) for defendant