Citibank N.A. v. Days Properties Ltd
Read the full judgment text of HCMP 2447/2013 on BabelCite. This High Court CFI judgment was delivered on 11 December 2013.
1. The defendant commenced these proceedings by way of originating summons filed on 23 September 2013 to seek leave to file and serve a notice of appeal out of time. On the same day, the defendant’s solicitors requested by letter for an early hearing of the application within the next two days.
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HCMP 2447/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO. 2447 OF 2013 (ON AN INTENDED APPEAL FROM HCMP NO. 477 OF 2012) _____________
_________________ DECISION _________________ Introduction 1.The defendant commenced these proceedings by way of originating summons filed on 23 September 2013 to seek leave to file and serve a notice of appeal out of time. On the same day, the defendant’s solicitors requested by letter for an early hearing of the application within the next two days. 2.The filing of the originating summons is procedurally incorrect: see Order 59 rule 14(1) of The Rules of the High Court, Cap. 4A and Hong Kong Civil Procedure 2013 Vol.1 paras.59/4/9 and 59/14/1. Accordingly, on 24 September 2013, I gave leave to the defendant to substitute the originating summons by an inter-partes summons which was later filed on 25 September 2013. I refused the application to expedite the hearing as I was not satisfied there were good grounds for it. 3.Pursuant to my directions, the parties’ solicitors indicated by letter their agreement to the application being disposed of on paper and had filed evidence and lodged written submissions on the application. HCMP 477/2012 4.Briefly stated, the events leading to the present application are as follows. 5.On 15 March 2012, the plaintiff commenced HCMP477/2012 against the defendant under Order 88 RHC (“O.88 application”) for money judgment and possession of three properties pursuant to a banking facility dated 23 June 2011 and two legal charges dated 30 June 2006 and 19 March 2011 respectively. On 3 December 2012, the substantive hearing of the originating summons was fixed for hearing on 18 June 2013. 6.On 10 May 2013, the defendant issued a summons seeking specific discovery and production of documents (“specific discovery application”). The summons was made returnable on 4 June 2013. As there was insufficient time to deal with the application, it was adjourned for argument to be heard on 18 June 2013, immediately before the substantive hearing of the O.88 application. 7.At the hearing on 18 June 2013, Deputy High Court Judge Lok (“the Judge”) dismissed the specific discovery application (“Discovery order”) and reserved judgment on the O.88 application. On 26 August 2013, the Judge handed down his reasons for the Discovery order and also the judgment granting the O.88 application (“O.88 judgment”). 8.The defendant applied for leave to appeal against the Discovery order. On 10 September 2013, the Judge granted leave to appeal on condition that the defendant pursues the appeal against the O.88 judgment to the final hearing. The Judge gave leave notwithstanding his view that the intended appeal had no reasonable prospect of success, for he did not wish to fetter the power of the Court of Appeal in the defendant’s intended appeal against the O. 88 judgment. The order granting leave to appeal was perfected and filed on 17 September 2013. The sealed order contained no provision extending the time for serving the notice of appeal. 9.Order 59 rule 4(1)(a) RHC provides that a notice of appeal must be served within seven days after the date on which leave to appeal is granted. Order 59 rule 5(1) RHC further provides that within seven days after the service of the notice of appeal, the appellant must lodge with the Registrar copies of the notice of appeal together with copies of the sealed order or judgment and the reasoned judgment. Under Order 59 rule 5(2), when this has been done, the Registrar will then file one copy of the notice of appeal and cause the appeal to be set down. 10.According to the affidavits filed on behalf of the defendant, on 19 September 2013, the defendant’s solicitors attempted to lodge/ file with the Appeals Registry a consolidated notice of appeal that dealt with both the Discovery order and the O.88 judgment. The Appeals Registry refused to accept the notice of appeal as the time for appealing against the Discovery order had expired. 11.On the same day, the defendant sought an urgent hearing before the Judge for the purpose of rectifying the order granting leave to appeal. This is because the defendant’s legal representatives took the view that at the hearing on 10 September 2013 dealing with the application for leave to appeal, the Judge had granted the defendant a 14-day extension of the appeal period. The Judge’s clerk replied by letter on the same day, citing the Judge’s comment that he could not “recall giving the defendant 14 days to file the notice of appeal” and that “[n]o extension of time has been expressly asked for by the defendant’s counsel in the hearing.” 12.Subsequently on 23 September 2013, the defendant served the notice of appeal in respect of the O.88 judgment. The defendant’s application for stay of execution was refused by the Judge on 22 October 2013 and by the Court of Appeal on 20 November 2013. Applicable legal principles 13.The principles governing application for extension of time to appeal are well settled. In deciding on how to exercise its discretion, the court will normally have regard to: (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the intended appeal succeeding; and (4) the prejudice to the respondent if extension was granted: Hong Kong Civil Procedure 2013 Vol.1 para.59/4/9. Delay 14.Under Order 59 rule 4(1) RHC, the time for appeal is reckoned by reference to the service of the notice of appeal on the respondent and not by reference to the filing of the notice of appeal: see Law Bing Kee v. Person(s) in occupation of RP & Anor, unreported, HCMP 672/2013, 9 May 2013, at paras.10 to 13; and Hong Kong Civil Procedure 2013, Vol. 1, para.59/3/4. The evidence filed on behalf of the defendant only mentioned the attempt to lodge/ file the notice of appeal at the court registry in the morning of 19 September 2013, but said nothing about whether and, if so, when the notice of appeal was served on the plaintiff. The defendant’s suggestion that the delay is only for half a day is therefore not made out on the evidence before me. Instead, the period of delay would run up to the time the present application for extension of time was first taken out (i.e. 23 September 2013). But as both sides seem to take the stance that it is an insubstantial delay, I shall proceed on this basis. Reasons for the delay 15.The defendant’s explanations for the delay are that there was an agreement with the plaintiff and the Judge that the defendant would have 14 days to file and serve the notice of appeal. It is said that the extension was expressly asked for at the hearing on 10 September 2013 and the Judge had approved the extension. It is also said that the defendant and its lawyers honestly believed that a 14-day extension had been given by the Judge at the hearing. The plaintiff disputes these suggestions. 16.The transcript of the 10 September 2013 hearing has been obtained. The part that is directly relevant reads as follows (Transcript pp.6S to 8B):
17.It is abundantly clear from the transcript that the subject matter of the exchange between the Judge and counsel was the condition for granting leave to appeal. It was also made clear in this part and the earlier part of the transcript that the condition was the pursuit of the appeal against the O.88 judgment. Accordingly, when Mr Dawes who appeared for the plaintiff said “on the condition that they take out a notice of appeal within so many days”, he must be referring to the notice of appeal in respect of the O.88 judgment because it was in the context of discussing the term of the condition for granting leave to appeal. In the same vein, when Mr Sheppard who appeared for the defendant suggested to “do it within 14 days”, he could not be understood to be referring to anything else other than the notice of appeal for the O.88 judgment because when he interjected, the Judge and Mr Dawes were discussing how to make the leave of appeal conditional upon the pursuit of the appeal against the O.88 judgment. 18.It should be noted that at no stage did Mr Sheppard mention a consolidated notice of appeal or make any request for extending the time for serving the notice of appeal for the Discovery order. It is extraordinary to say that the Judge had agreed in principle to a 14-day extension for the appeal against the Discovery order simply because he said “M’m” after Mr Sheppard suggested “we do it within 14 days”. What is more, Mr Sheppard’s suggestion was immediately disputed by Mr Dawes and the Judge also corrected Mr Sheppard by stating that the condition was not limited to the issuing of notice of appeal but extended to the pursuing of the appeal against the O.88 judgment. The fact that there was never any agreement between the parties or approval by the Judge to an extension of time for appealing against the Discovery order is further borne out by the fact that until the end of the hearing, the Judge said nothing about granting the defendant an extension of time or 14 days to serve the notice of appeal. As noted above, the order perfected by the defendant made no mention of a 14-day period for serving the notice of appeal. 19.Mr Sheppard had in his submission sought to justify the delay by arguing that the 14-day extension was necessary to give proper workable effect to the condition imposed by the Judge for the leave to appeal. Although the statutory period for appealing the O.88 judgment was longer than that for the Discovery order, it does not follow that without an extension of time, the order of the Judge granting leave to appeal would be unworkable. In order to comply with the condition, the defendant would have to commence the appeal against the O.88 judgment on an earlier date. And if the defendant had difficulties with this or desired more time, it could apply for an extension of time for serving the notice of appeal for the Discovery order, but it should do so in clear unambiguous terms. The defendant cannot assume that the condition imposed by the Judge had the effect of enlarging the time for appealing the Discovery order when it had failed to apply for an extension. 20.Both Mr West and Mr Sheppard had in their affidavit and written submissions placed considerable reliance on what they perceived to be the importance and benefits of a consolidated notice of appeal in the light of the underlying objectives in Order 1A rule 1 RHC. Two points need to be made in this regard. First, as noted above, at the hearing before the Judge on 10 September 2013, the subject of a consolidated notice of appeal was never brought up. There is thus no basis for the submission that the purpose of a consolidated notice of appeal had been agreed and would have been obvious to all. Second and more fundamentally, in the present case, a consolidated notice of appeal is not vital to the fulfilment of the underlying objectives in Order 1A rule 1. The saving of costs and time is really to be achieved by having the appeal against the Discovery order and the appeal against the O.88 judgment being dealt with together so that there would be one hearing involving one set of appeal bundles, submissions and authorities. A consolidated notice of appeal or, if there were two sets of appeal proceedings, consolidation of the appeal proceedings is not a prerequisite to the two appeals being dealt with together. It follows that the submission that the defendant has been disadvantaged by endeavouring to adhere to and paying due regard to the underlying objectives in Order 1A rule 1 is misplaced. 21.In the circumstances, even accepting that the defendant and its legal representative somehow believed they had 14 days within which to serve the notice of appeal for the Discovery order, there was no justifiable or acceptable explanation for the delay. Merits of the appeal 22.I turn next to the chances of success of the intended appeal. Mr Sheppard in his written submissions referred to Wynn Resorts (Macau) S.A. v. Mong Henry [2009] 5 HKC 515, Re Wing Fai Construction Co Ltd, unreported, HCCW 735/2002, 8 December 2009 and Leung Kwok Hung v. The President of the Legislative Council, unreported, HCMP 1227/2007, 10 August 2007 and suggested that what the defendant has to show are reasonable prospects of success in the intended appeal. These cases were all applications for leave to appeal, the threshold test for which is reasonable prospects of success. In an application for extension of time to appeal, the applicant has to establish that his intended appeal has real prospects of success, which is a higher threshold: see Secretary for Justice v. Hong Kong & Yaumatei Ferry Co Ltd & Anor [2001] 1 HKC 125 at 129I; Law Bing Kee v. Person(s) in occupation of RP & Anor (supra) at para.18. Indeed, Mr Sheppard in his reply submission accepted that the burden is on the defendant to establish that the appeal has a real prospect of success (para.22). 23.The defendant defended the claim on the basis that the parties had intended the facility to be a long-term mortgage facility such that the plaintiff was not entitled to demand for repayment of the loan unless there was good reason to do so and that the plaintiff made the demand for repayment in bad faith. The defendant said that the discovery sought would support its contentions. 24.In brief, the discovery relates to: (1) all the telephone logs between the plaintiff’s and the defendant’s representatives from January 2001 relating to the credit facilities granted by the plaintiff to the defendant and the complete transcripts of all the relevant telephone recordings and the telephone notes relating to these telephone conversations; (2) notes of two meetings between the parties’ representatives on 19 September and 14 October 2011; (3) all relevant documents, including transcripts of telephone conversations, relating to the demand for the repayment under the credit facilities; and (4) all internal emails and documents of the plaintiff relating to the credit facilities. 25.The Judge dismissed the specific discovery application for three reasons, namely, (1) there was delay in making the application; (2) the application and the discovery sought is oppressive and out of proportion; and (3) the discovery sought is not necessary for the fair disposal of the case (see paras.22 to 35 of the Judgment). 26.The intended notice of appeal contained five grounds. In essence, the defendant complained that the Judge erred in the exercise of his discretion and case management powers in: (1) considering that the defendant was responsible for the delay in making the specific discovery application; and (2) placing excessive reliance on the plaintiff’s allegations of potential or actual prejudice in the event specific discovery was ordered. 27.For the purpose of the present application, I need only come to a preliminary view on the merits of the appeal having regard to the papers and the arguments advanced by both sides. 28.On the question of delay in taking out the specific discovery application, the defendant’s argument is that it was waiting for the plaintiff’s affirmation in reply, which was only filed on 30 January 2013, that the hearing date of 18 June 2013 was fixed “prematurely” when the defendant had already indicated it would require four months from the affirmation in reply and the defendant had since November 2012 been put the plaintiff on notice of its intention to apply for specific discovery unless the plaintiff complied with its request for discovery. 29.I find it hard to accept the argument that the plaintiff fixed the hearing of the O.88 application prematurely. I note, too, that the hearing date was fixed in the presence of the defendant’s representative. In any case, by December 2012, the defendant was aware that the O.88 application would be heard on 18 June 2013. By 7 March 2013, when the plaintiff’s solicitors wrote to refuse the defendant’s request for discovery by letter dated 28 February 2013, it was plain to the defendant that the plaintiff would not be making the discovery sought. Notwithstanding that, the defendant waited for another two months before issuing the summons for specific discovery, for which there was no good explanation. Clearly, there had been inordinate and inexcusable delay. The fact that the defendant had put the plaintiff on notice of its intention to seek discovery does not exonerate the delay. Given that 10 May 2013 was only five weeks away from the hearing of the O.88 application and since the discovery sought, to put it mildly, was extensive such that if the application was granted, the hearing would most probably have to be adjourned, the Judge cannot be said to have erred in the exercise of his discretion and case management powers to refuse the application. 30.As to the prejudice to the plaintiff if discovery was ordered, Mr Sheppard submitted there was no or insufficient evidence to support the Judge’s conclusion that the request was oppressive and disproportionate. The discovery sought by the defendant related to 27 categories of documents, which were wide ranging and spanning over 11 years. Even in the absence of direct evidence from the plaintiff, it is not difficult to imagine that it is an onerous and time consuming task. Mr Sheppard also submitted that the Third Affirmation of Keoy Soo Khim filed in opposition to the specific discovery application had contravened Order 41 rule 5 RHC in that paragraphs 36 to 41 contained matters that were outside the personal knowledge of Mr Keoy without identifying the source of the information. It is said that the Judge should have attached no weight to the affirmation. However, paragraph 36 of the affirmation merely quoted from the affidavit of the plaintiff’s staff, and paragraphs 38 to 41 were comments on the specific discovery application. In paragraph 37, Mr Keoy said he was informed by the plaintiff’s representative that the plaintiff’s staff would have to listen to all the telephone conversations to identify those requested by the defendant and that such review had to be carried out by someone who could recognise the voice of the defendant’s representatives. Mr Keoy said this would be an immensely time consuming process. In my view, this is all common sense. The suggestion that the Judge erred in admitting into evidence and relying on this part of Mr Keoy’s affirmation has no merit. The Judge cannot be faulted in concluding that the discovery sought was oppressive and disproportionate. 31.The Judge also dismissed the application on the basis that the discovery sought was not necessary for the fair disposal of the case. The Judge had concluded that even putting the defendant’s factual allegations to the highest, they provide no defence to the plaintiff’s claim, thus the discovery sought would make no difference to the outcome of the O.88 application. I agree with the Judge having regard to the analysis in paragraphs 45 to 68 of the Judgment. 32.I do not consider the intended appeal has any prospects of success, let alone real prospects of success. Prejudice to the plaintiff 33.I do not think it is necessary to dwell into the issue of prejudice to the plaintiff if the extension is granted. Even if the plaintiff will suffer no prejudice, it is per se not a ground for extending time: Secretary for Justice v. Hong Kong & Yaumatei Ferry Co Ltd & Anor (supra) at 133E-F. Orders 34.For the reasons set out above, I dismiss the defendant’s summons. 35.Mr Dawes in his submission asks for costs of the application and to be taxed on an indemnity basis. Mr Sheppard has made no contrary submission in his reply submission. I therefore make an order that the defendant pays the plaintiff the costs of the application, to be taxed on indemnity basis if not agreed.
Mr Victor Dawes, instructed by Baker & McKenzie, for the plaintiff. Mr Andrew Sheppard, instructed by Kennedys, for the defendant. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment