Profit Step Development Ltd and Another v. Sun Rising Development (Agriculture) Ltd and Another

CACV 279/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 279 OF 2010

(ON APPEAL FROM HCA NO. 1649 OF 2008)

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BETWEEN

Before: Hon Tang VP and Chu JA in Court

Date of Hearing: 13 January 2012

Date of Judgment: 20 January 2012

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JUDGMENT

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Hon Tang VP:

1.By summons filed on 14 March 2011, the 1^st and 2^nd Defendants applied for the discharge of the orders of Le Pichon JA dated 24^th February 2011 and 7^th March 2011, granting security to the Plaintiffs and refusing stay of execution as well as stay of execution of the judgment of Fok J (as he then was) dated 30^th November 2010.

2.The application was heard by us on 22 July 2011 and dismissed by our judgment dated 2 August 2011 with costs to be taxed if not agreed.  Our order of 2 August 2011 reads:

"And upon Hearing Senior Counsel for the 1^st Defendant and 2^nd Defendant and Leading Counsel for the 1^st Plaintiff and the 2^nd Plaintiff.

It is ordered that:-

1 the summons be dismissed; and

2 there be an Order nisi that the 1^st Defendant and the 2^nd Defendant do pay the 1^st Plaintiff and the 2^nd Plaintiff's costs of the application, to be taxed if not agreed." ("the Order")

3.Messrs Johnnie Yam, Jacky Lee & Co ("JYJL") were the solicitors on record as acting for the 1^st and 2^nd Defendants in the application.  At the hearing before us on 22 July 2011, Mr Edward Chan, SC, Mr KK Kwok & Mr Dan Chung appeared before us on the instructions of JYJL.

4.JYJL wrote a letter dated 15 August 2011 from JYJL to our clerks, saying:

"We were the solicitors acting for the defendants in the interlocutory appeal until the 2^nd Defendant became bankrupt, upon which we effectively only acted for the 1^st Defendant in the appeal hearing on 22^nd July 2011.

We write to rectify the record that at the hearing on 22^nd July 2011, we only acted for the 1^st Defendant, not for 'the defendants'.  There were typographical errors in the latest affirmation filed for the 1^st Defendant as well as in our skeleton argument that counsel acted for 'the defendants' instead of the 1^st Defendant.  We confirm that senior counsel and his juniors were instructed to appear for the 1^st Defendant only at the hearing.  In fairness to the 2^nd Defendant, he was not represented at the hearing.  We understand that such errors have caused great confusion, inconvenience and embarrassment to the Court.  We take responsibility for such errors and apologize for the confusion thus aroused.  To clarify the matter, we have also written to the Official Receiver as per copy of our letter enclosed herewith, which was in reply to their earlier letter dated 9^th August 2011 (also enclosed herewith).

Once again, we deeply apologize to the Court and take responsibility for the consequence of such errors."

5.There was also a letter of the same date written by Mr KK Kwok to our clerks tendering his personal apologies for the mistake. This is what he said:

"I write to offer my deepest apology to the Court of Appeal that there were errors in the skeleton argument to the effect that I and Mr. Dan Chung were counsel for 'the defendants'.  That was not correct.  We were both instructed alongside senior counsel to represent only the 1^st defendant at the hearing. There was also the same error towards the end of the latest affirmation filed for the appeal (the 2^nd affirmation of Chan Ho Tak Daniel which was filed around the same time as the skeleton argument) to the effect that the affirmation was filed for 'the defendants'.  In fact, Chan Ho Tak Daniel was only authorized (in the first paragraph thereof) by the 1^st defendant to file that affirmation.  I understand that the errors have caused much confusion to the Court, unfairness to the 2^nd defendant and inconvenience to the Plaintiffs and those representing them.  I stand to take responsibility for such errors on my part."

6.Messrs Fred Kan & Co, who was solicitors for the Plaintiffs, wrote to my clerk by letter dated 16 August 2011, drawing our attention to a letter which they had written to the Official Receiver's office dated 16 August 2011, complaining that notwithstanding that a bankruptcy order had been made against the 2^nd Defendant on 1 June 2011, JYJL purported to represent the 2^nd Defendant at the hearing of 22 July 2011.

7.I understood the letter of 15 August from JYJL to request the court to correct the Order.  On 18 August 2011, I directed a hearing to be held to deal with the matter.  The hearing took place on 13 January 2012.

8.At the hearing on 13 January 2012, Mr Edward Chan and Mr KK Kwok, appeared on the instructions of JYJL on behalf of JYJL. Mr William Chan and Ms Sylvia Lee, appeared on behalf of the 1^st and 2^nd Plaintiffs.

9.Mr Edward Chan accepted that although a bankruptcy order had been made against the 2^nd Defendant on 1 June 2011, the hearing on 22 July proceeded in ignorance of that fact.  He accepted that although when the summons was taken out as well as when the application was set down for hearing, JYJL were properly acting for the 2^nd Defendant, by the date of the hearing on 22 July 2011, JYJL had ceased to have instructions to appear for the 2^nd Defendant.  So he asked that the Order be corrected to reflect that fact.

10.The position of the Official Receiver's office can be seen from a letter dated 9 January 2012 addressed to my clerk:

"I wish to inform the Court that a bankruptcy order was made against the Bankrupt (as 2^nd Defendant in HCA No. 1649 of 2008) on 1 June 2011 under HCB No.2035 of 2011.  Pursuant to Section 58(1) of the Bankruptcy Ordinance, Cap.6, immediately upon the making of the bankruptcy order all the property of the Bankrupt (including the right of actions in legal proceedings) will become vested in the Official Receiver.

I noted that there was a Summons taken out by the 1^st and 2^nd Defendants on 14 March 2011 for the discharge of the Orders made by Le Pichon JA dated 24 February 2011 and 7 March 2011 respectively, the hearing of which took place on 22 July 2011.  As the bankruptcy order was already made on 1 June 2011, The Bankrupt's right to appeal against the said Orders has therefore become vested in the Official Receiver since then.  The Bankrupt thus has no locus to take any steps in respect of the said Orders, as consent from the Official Receiver is necessary before the Bankrupt can continue with the present proceedings.  The Official Receiver has never given consent to the Bankrupt to proceed with the Summons with or without legal representation.  Neither had the Official Receiver instructed anyone to represent the Bankrupt/2^nd Defendant at the hearing on 22 July 2011.

In fact, the Official Receiver was only first aware of such proceedings when she was served with a copy of the Judgment in relation to the Summons by Messrs. Fred Kan & Co., Solicitors for the Plaintiffs/Respondents, on 5 August 2011.  For the court's information, the Official Receiver has been unable to locate the Bankrupt since the making of the bankruptcy order and therefore no information can be obtained from the Bankrupt in relation to the Summons and hearing on 22 July 2011.

Having said the above, in order to save costs, it is not the intention of the Official Receiver to appear at the hearing on Friday 13 January 2012 unless otherwise directed by the Court."

11.Mr Edward Chan submitted that the fact that they had inadvertently given the appearance that they were also acting for the 2^nd Defendant would have made no difference to the costs of the 22 July 2011 hearing, a point not disputed by Mr William Chan.

12.Mr William Chan, who appeared on behalf of the Plaintiffs on 13 January 2012, has taken a neutral stance on whether the Order should be corrected.  However, he asked that the cost of 13 January 2012 hearing be borne by JYJL.  So far as such costs are concerned, it is right that JYJL should bear such costs since this application arose out of their mistake albeit an inadvertent one. 

13.On the question of amending the Order, it seems to me clear that by 22 July 2011, as a result of the Bankruptcy Order, JYJL had no authority to act for the 2^nd Defendant.  Mr Edward Chan has drawn our attention to O 67 r 1 which provides that a solicitor who is on record as acting for a party, shall be considered as so acting unless he has formally ceased to act.  Even so, O 67 r 1 does not provide a solicitor with authority to act if the solicitor does not have actual authority to do so.

14.On the basis that the 2^nd Defendant was not represented by JYJL, I believe the Order should be corrected to reflect that fact.

15.I turn to consider the mechanics of the correction.  The 2^nd Defendant was not present at the hearing of 22 July 2011.  Furthermore, the right to proceed with the application had vested on the Official Receiver who had no knowledge or notice of the application.  Had we known of the Bankruptcy Order I believe we would not have made any order in relation to the 2^nd Defendant without notice to the Official Receiver.  However, it seems quite clear from the subsequent correspondence, especially the letter of 9 January 2012, that the Official Receiver would not wish to proceed with the application.  That being the case, I believe it is right to formally dispose of that application by dismissing it.  So far as that is concerned, I do not proposed to make any order for costs because as Mr Edward Chan has made clear and it is not disputed, no additional costs was incurred as a result of the 2^nd Defendant having been made a party to the application in the first place.

16.This is the order I will make:

"Upon the direction given by the Court by letter dated 18 August 2011 that a hearing be held to decide whether the order of this Court made on 2 August 2011 ("the Order") should be amended

AND Upon hearing leading counsel for Messrs Johnnie Yam, Jacky Lee & Co and counsel for the 1^st and 2^nd Plaintiff, and the Official Receiver not attending

It is ordered that:

(1) the Order be amended so that it shall read:

'And upon Hearing Senior Counsel for the 1^st Defendant and Leading Counsel for the 1^st Plaintiff and the 2^nd Plaintiff and the 2^nd Defendant being absent.

It is Ordered that:-

1 the summons be dismissed; and

2 there be an Order nisi that the 1^st Defendant to pay the 1^st and 2^nd Plaintiff's costs of the application, to be taxed if not agreed.'

(2) Upon being informed that a bankruptcy order has been made against the 2^nd Defendant on 1 June 2011 and being satisfied that the Official Receiver does not wish to proceed with the 2^nd Defendant's application of 14 March 2011, the 2^nd Defendant's application is also dismissed with no order as to costs.

(3) Messrs Johnnie Yam, Jacky Lee & Co shall cause a copy of this order to be served on the Official Receiver."

Hon Chu JA:

17.I agree with the judgment and order of the Vice President.

Mr William Chan & Ms Sylvia Lee, instructed by Messrs Fred Kan & Co, for the 1^st and 2^nd Plaintiffs

The 1^st Defendant, in person, absent.

Mr Edward Chan, SC & Mr KK Kwok, instructed by Messrs Johnnie Yam, Jacky Lee & Co for Messrs Johnnie Yam, Jacky Lee & Co