Cheung Chi Ying and Another v. Kwok Wang Tang and Another

DCCJ1583/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1583 OF 2013

--------------------

--------------------

--------------------

DECISION

--------------------

Background

1.By an order made by Master D Ho on 23 August 2013, it was ordered, by consent, that “Unless by 4:00 pm on Wednesday, 4 September 2013 the 1^st and 2^nd defendants do file and serve their Defence, the 1^st and 2^nd plaintiffs be at liberty to enter judgment against the 1^st and the 2^nd defendants for the relief claimed with costs” (“the Unless Order”).

2.The defendants failed to file and serve their Defence within the time as prescribed by the Unless Order. 

3.By the plaintiff’s Summons dated 6 September 2013, the plaintiffs seek Judgment against the defendants as prayed for in the summons, presumably under Order 19, rule 7 of the Rules of the District Court (“the Default Judgment Summons”).

4.By the defendant’s Summons also dated 6 September 2013, the defendants seek relief from the sanction imposed by the Unless Order, and further for time to file and serve their Defence under Order 2, rule 4 and Order 3, rule 5 of the Rules of the District Court (“the Relief Summons”). 

5.By the order of Master B Mak dated 9 September 2013, the Relief Summons was adjourned to be heard with the Default Judgment Summons.

6.The parties agreed that the court should hear the Relief Summons first.  Should relief from sanction be granted to the defendants, it will, of course, no longer be necessary to deal with the Default Judgment Summons except for the question of costs.

The applicable legal principles regarding applications for relief from sanction

7.In case of an unless order:-

(1) the sanction imposed takes effect immediately upon the default by the party against whom the order is made;

(2) the burden falls on the party in default to apply for relief from the sanction;

(3) upon an application for relief, the court is required to consider whether or not it is just to grant relief

[see: Daimler AG v Leiduck [2012] 3 HKLRD 119, per Fok JA at paragraphs 47 and 48].

8.Order 2, rule 5 provides a non-exhaustive list of factors that the court may consider in such an application.  Such factors include:-

(a) The interests of the administration of justice;

(b) Whether the application for relief has been made promptly;

(c) Whether the failure to comply was intentional;

(d) Whether there is good explanation for the failure to comply;

(e) The extent to which the party in default has complied with other rules and court orders;

(f) Whether the failure to comply was caused by the party in default or his legal representative;

(g) In a case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware or it, whether he was able to comply with it without legal assistance;

(h) Whether the trial date or the likely trial date can still be met if relief is granted;

(i) The effect which the failure to comply had on each party; and

(j) The effect which the granting of relief would have on each party.

9.Order 2, rule 5(f) thus expressly distinguishes between a non-compliance by the party himself and that by his legal representative.

10.In deciding whether or not to grant relief, ultimately the court will need to consider:-

(1) Whether or not the default is “intentional and contumelious”; and

(2) Whether or not the party seeking relief is able to adduce evidence to demonstrate that discretion should be exercised in its favour.

11.Non-compliance in cases where “his solicitor has negligently or otherwise missed the deadline through no fault of the litigant” would be regarded as non-contumelious [see: Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606, per Fok J, as he then was, at paragraph 34(c)].

12.The court is inclined to grant relief to a litigant if he has no deliberate feet dragging and the default was caused by his legal representative [see: An Zhou & others v Zhou Zheng Kuan & others, HCA 241/2010, Judgment of To J dated 30/08/2012, at paragraph 27].

Reasons for non-compliance and subsequent steps taken

13.As explained by the Affirmation of Cheung Chi Wah affirmed on 5 September 2013, the defendants’ solicitors were under the wrong impression that the deadline to file the Defence had been extended to 12 September 2013 by the Unless Order.  The mistaken deadline was therefore so marked on the cover of the office file (see: Exhibit CCW-1 thereto).

14.The defendants’ solicitors realised such a mistake on 5 September 2013.  By then, the time for serving the Defence had already expired.

15.In the morning of 6 September 2013, the defendants’ solicitors first attempted to seek a short extension from the plaintiffs’ solicitors over the telephone.  They were, however, told that the solicitor in charge had been in court and no extension was therefore granted.

16.The defendants’ solicitors then wrote to the plaintiffs’ solicitors (by fax at around 12:54 pm) seeking an extension of 2 days (from 6 September 2013) or alternatively, their confirmation not to apply for judgment pending an application for relief.

17.The defendants’ solicitors received no reply from the plaintiffs’ solicitors to their request.  They were then served with a copy of the Default Judgment Summons at around 2:05 pm on 6 September 2013.

18.The Relief Summons was then taken out.

Matters favouring the grant of relief

19.The defendants invite the court to take into account the following matters and grant relief from sanction in the circumstances:-

(1) The period of delay is relatively short;

(2) There has been credible explanation offered by the defendants’ solicitors with evidence in support;

(3) The non-compliance was caused by the carelessness on the part of the defendants’ solicitors and should not be regarded as “intentional or contumelious”; and

(4) Remedial steps, including the Relief Summons, were taken promptly as soon as the defendants’ solicitors had realised their own mistake.

20.Balancing all the relevant factors, I am of the view that relief from sanction should be granted.  I note in particular that the default in complying with the Unless Order was caused by the mistake on the part of the defendants’ solicitors.  Contrary to the submissions of Ms Queenie Ng, counsel for the plaintiff, I do not feel able to reject the explanation given under oath by Mr Cheung Chi Wah, an officer of the court, particularly where the same is supported by the mistaken deadline marked on the cover of the office file. 

21.I shall now hear the parties on the proper form of the order to be made and the question of costs.

(Discussion re form of the order)

22.First of all, I make an order in terms of paragraph 1 of the defendants’ summons.

23.Further, unless by 4:30 pm on Friday, 27 September 2013 the 1^st and 2^nd defendants do file and serve their Defence, the 1^st and 2^nd plaintiffs be at liberty to enter judgment against the 1^st and 2^nd defendants for the relief claimed with costs.

(Discussion re costs)

24.The plaintiffs ask for costs of both summonses, to be summarily assessed with certificate for counsel.

(Discussion)

25.A breach of an unless order is a serious matter, and in this case was caused by the inadvertence of the defendants’ solicitors.  In my view, the defendants should pay for the costs of both summonses which shall now be summarily assessed and paid forthwith (with certificate for counsel).

26.The defendants are to pay to the plaintiffs the costs of the 2 summonses, summarily assessed at $39,000.  Such costs to be paid forthwith.  Save as aforesaid, no order is made on the plaintiffs’ summons.

(Discussion re Order 62, rule 8(2))

27.Pursuant to Order 62, rule 8(2)(a) and (b), and upon the defendants’ solicitors having no objection thereto, I further direct as follows:-

(1) The costs as between the defendants’ solicitors and their clients in respect of the 2 summonses be disallowed; and

(2) The defendants’ solicitors are directed to repay to their clients costs which the clients have been ordered to pay to the plaintiffs.

Ms Queenie WS Ng, instructed by Chan, Lau & Wai, for the 1^st and 2^nd plaintiffs

Mr Lee Shu Wun, instructed by Tony Kan & Co, for the 1^st and 2^nd defendants