Lee Hung Yam v. Lee Sou Fai

HCA004390/1983

Headnote

Unless order made by consent - whether time may be extended. Dictum of Lord Denning M.R. in Siebe Gorman v. Pneupac Ltd. [1982] 1 WLR 186 followed i.e. that "by consent" is ambiguous and could evidence either "real contract" or merely the parties "not objecting; and that where there is no real contract, a consent order may be varied by the court in the same circumstances as any other order made by the court without consent.

Dictum of Eveleigh L.J. noted i.e. that if the power of the court to extend time under Ord. 3 r. 5 is to be excluded by agreement, that must be made abundantly clear; it must be shown not only that there was agreement to give discovery within the stated time, but also agreement that in default the claim should be struck out inspite of the court's power to extend time under Ord. 3 r. 5.

Appeal allowed. Time provided by consent order extended.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

Coram: Deputy Judge Nazareth, Q.C. in Chambers.

Date of Hearing: 15th -16th May 1985.

Date of Delivery of Judgment: 23rd May 1985.

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JUDGMENT

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1. On the 11th March 1985 Master Hansen by consent made an unless order requiring the defendant to make disclosure within seven days. The defendant having failed to do so, judgment was entered against him on the 26th March 1985. On the 12th April Master O'Donnell refused an application made to him by the defendant to order that the judgment be set aside and that the time for compliance with Master Hansen's order be extended. The defendant now appeals against Master O'Donnell's refusal and asks that -

2. The first point that falls to be considered in this appeal is whether Master Hansen's order of the 11th March is bad because it did not comply with Order 42 rule 2(1) of the Rules of the Supreme Court. Mr. Woo for the defendant relies upon the English Court of Appeal decision in Van Houten v. Foodsafe Limited and Anor. (1980) 126 S.J. 277. In that case the Master ordered that "unless the defendants within 10 days comply with the order of 27th February 1979 as to discovery ..... the defence be struck out and the plaintiff have leave to sign full judgment".

3. Order 42 r. 2(1), both in England and in Hong Kong, provides that "subject to paragraph (2)", which is not material in the present context, ''a judgment or order which requires a person to do an act must specify the time after service of the judgment or order, or some other time with which the act is to be done".

4. The judgments of Lord Denning M.R. and Shaw L.J., are reported with admirable brevity, even if suggestive of some ellipsis. No other report of the decision appears to be available. The judgments are reported in the following terms : -

5. The material part of the Master's order in the present appeal is in the following terms

"..... by consent IT IS ORDERED that :-

Mr. Woo for the defendant contends that the order did not specify the "time after service". That is obvious. He also says that the order did not specify "some other time. I do not agree. I should say first of all that it matters not that paragraph (3) of the order does not itself specify a time, since it clearly relates back to that specified in paragraph (1). Reverting to Van Houten, I think what Lord Denning was saying was that the order in that case did not specify a time within which the act had to be done. It merely said "within 10 days'' without saying from when, e.g. the day of making the order, the date it was entered, the date of service or whatever. The purpose of Ord. 42, r. 2(1) seems to be to enable the time within which the act has to be done, to be determined from the order itself, without reference to other documents or to the law. I can see no objection to "some other time" within which the act is to be done being specified as a period identified by the date of the order, as was expressly done in the Master's order in this case. Indeed such a way of specifying the time within which the act is to be done was clearly within Lord Denning's contemplation. What I think he found fault with in the Van Houten case, as I have said, was that it did not say when the 10-day period was to commence or end. Likewise Shaw L.J. clearly thought a 10-day period specified by reference to the date the order was made would be unobjectionable. Clearly therefore the Master's order cannot be said to be bad on the basis of Van Houten.

6. The next matter that has to be considered is whether the court has power to extend the time provided in a consent order. From the following passage in Lord Denning M.R.'s judgment in Siebe Gorman v. Pneupac Ltd. [1982] 1 WLR 186 at p. 189, it is apparent that what has first to be determined is whether the consent order evidences a "real contract " :

"   We have had a discussion about "consent orders." It should be clearly understood by the profession that, when an order is expressed to be made "by consent," it is ambiguous. There are two meanings to the words "by consent." That was observed by Lord Greene M.R. in Chandless-Chandless v. Nicholson [1942] 2 K.B. 321, 324. One meaning is this the words "by consent" may evidence a real contract between the parties. In such a case the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this : the words "by consent" may mean "the parties hereto not objecting." In such a case there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without the consent of the parties. In every case it is necessary to discover which meaning is used. Does the order evidence a real contract between the parties? Or does it only evidence an order made without objection?".

7. Proceeding to the exchange between the parties that led to the consent order made by Master Hansen on the 11th March 1985, according to Mr. Mark, one of the plaintiff's solicitors' clerks, Mr. Lo the defendant's solicitor telephoned him to say that he had no objection to supplying the documents for inspection and asked if attendance at the hearing could be dispensed with by means of a consent order. His response was that might be possible if the terms of the order were agreed. Mr. Lo said that the form of the order as couched in the summons could be agreed, but asked if that part which provided for the plaintiff's costs in any event could be changed to costs in the cause. After taking instructions, the plaintiff's solicitors prepared a consent summons which was sent to the defendant's solicitors and signed by them.

8. The defendant's version of the exchange emerges less directly in the way of a letter from the former solicitors of the defendant which is appended to an affidavit provided by his current solicitors. In the letter the former solicitors say they told the plaintiff's solicitor's clerk that they had no objection to supplying the particulars and vacating the trial date. They told him that by doing so both sides could dispense with attendance and save clients' costs. They say they did not discuss the matter of costs.

9. It is common ground that the summons sought an order for costs in any event, whereas the consent order provided for costs in the cause. The defendant's former solicitors are not able to explain how this came about and suggest that it might have been a favour.

10. I am asked on the basis of the foregoing to find that there was an offer and acceptance, and consideration in the promises of each party and the detriment occasioned to the plaintiff in foregoing costs in any event. I do not see the matter that way. To me it seems much more like the "no objection" situation described by Lord Denning.

11. Upon even the plaintiff's version, Mr. Lo is said merely to have asked that costs be in the cause, apparently as a bare suggestion or perhaps even a favour as suggested by his firm, for there is no suggestion whatever that it was proposed as a condition. Adopting the approach of Templeman L.J. at page 192 of Siebe Gorman, it appears to me that the service of the summons was neither an offer nor intended to create a contractual relationship; that on the contrary it constituted a threat or demand, and that the defendant could subsequently, if he as chose, have changed his mind and withdrawn his consent prior to the hearing of the summons. Equally, in my view, Mr. Lo did not make a counter offer. Furthermore, while Eveleigh L.J. in his concurring judgment in Siebe Gorman had doubts abort the existence of a contract in that case, he chose to rely upon the ground that "there was no specific agreement that the court would never be asked to exercise its discretion under R.S.C. Ord. 3 r. 5, to grant an extension of time".

12. Continuing, at p. 191 he said :

13. I find, therefore, that there was no real contract between the parties. Furthermore, as I read Eveleigh L.J.'s judgment, the power of the court to extend time would not be ousted by a real contract unless the intention of the parties to exclude such power was made abundantly clear. In the present case no such intention is evident.

14. But even in the context of a bare consent order where there is no real contract, there are decisions that suggest that time cannot be extended. Some of these were considered by the court in Siebe Gorman. Others have been cited to me by Counsel. All are prior to Siebe Gorman. I see no point in reviewing those decisions since in my view I am bound by Siebe Gorman, that being a decision of the English Court of Appeal upon indistinguishable provisions : de Lasala, 1980 A.C. 547. Mr. Mumford while recognising that asks that his submission that the decision in Siebe Gorman was bad in law be recorded.

15. I proceed then to consider whether this is a proper case in which discretion to extend time should be exercised. On the face of it a less deserving case is difficult to imagine. From the very outset there have been constant delays on the defendant's part necessitating a succession of applications by him for extension of time and for setting aside no less than two default judgments, and one charging order. His lists of documents have clearly been deficient. An early affirmation suggested that reasonably full accounts were available and that all documents had been disclosed. Subsequently it became clear that many accounting documents were missing and further documents were disclosed. His former solicitor accepted much of the blame. Now we have yet further applications in this appeal. And in the course of the hearing of this appeal, yet a further list of documents has been tendered. Mr. Mumford strongly opposes any further extension of time submitting that defendant has been contumacious that the blame cannot simply be shrugged off onto the shoulders of the defendant's solicitors that any extension of time will simply result in a repetition of earlier delays and evasion of discovery, that the Rules of the Supreme Court are meant to be complied with and not disregarded, and that on the authorities the power to extend time should be exercised with caution.

16. But on consideration there are countervailing factors. I think some of the delay in disclosing accounting documents, which lies at the heart of the matter, was caused by a lack of appreciation of their relevance particularly in the earlier stages. Although that is not strictly an excuse, I note that the defendant h clearly not been well served by his former solicitor. I am not persuaded that the plaintiff will be prejudiced in presenting his claim if the appeal is allowed. It would seem, although I would not wish to be taken as deciding the point, that the latest list of documents does at last make full disclosure. And not least, in response to the plaintiff's substantive claim for $640,585.80, alleged to be the difference in value between the partnership assets divided up between the two parties, the defendant pleads a specific agreement written out by their accountant and signed by both parties. On the face of it he would seem to have a defence that ought to be tried on the merits. On balance therefore I think I should exercise my discretion in favour of the defendant. Albeit with reluctance, I would therefore extend the time for appeal, allow the appeal, set aside the judgment entered on 26th March and extend the time for complying with Master Hansen's order dated 11th March, but on terms that clearly must be suitably stringent. As to those and costs I will now hear Counsel.

Representation:

Mr. E. C. Mumford instructed by M/S. John Ku & Tam for Plaintiff.

Mr. K. H. Woo instructed by M/S. Kwan & Kwan for Defendant.