Ip Cheng Tong v. Liu Yiu

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 45 OF 1971

(On appeal from O.J. Action No. 1010 of 1971)

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JUDGMENT

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Huggins, J.:

1. I agree, but as we are differing from the learned judge I will give my reasons shortly. He appears to have thought that there was something unconscionable in the Plaintiff’s opposing the application for an extension of time, for he said:

“... it would, on the face of it, be unjust that the defendant should be deprived of having his case decided by this court on the merits by reason only of his being two days late in payment into court of rent for mesne profits payable in advance”

and again

“it would in my opinion be monstrous to decide that the parties when consenting to this order were agreeing that a delay of two days or even of four days in making an advance payment would debar the defendant from further defending the action”.

With all respect to him I do not share this view.  The consent order is evidence of the parties’ having contracted on the terms there indicated as having been expressly agreed between them: see the note in 1970 Supreme Court Practice Vol.2 559 (2011).  Where parties have contracted at arms’ length the court will not intervene except upon certain limited equitable grounds.  My Lord has cited several cases where the possibility of a distinction between final consent orders and interlocutory consent orders in this respect has been considered.  With Buckley L.J., in Purcell v. F.C. Trigell Ltd.^([1]), I can see no valid distinction in principle between them.  I accept that a consent order may be set aside on any ground which would justify a refusal to enforce, or the rescission of, the contract of which it is evidence and it may well be that where the order is an interlocutory order it can be set aside by motion in the same action whereas a final order can be set aside only in a fresh action except in the cases expressly provided by the rules: Ainsworth v. Wilding^([2]).  Beyond that I am not at present prepared to go.  The rather sweeping statement of Lord Denning M.R. that “the Court has always a control over interlocutory orders: it may, in its discretion, vary or alter them even though made originally by consent” does not appear to be supported by other authority.

2. Although some of what I said in F. Hoffmann-La Roche & Co. v. T.W. Wu & Co. (H.K.) Ltd.^([3]) may hereafter need to be subjected to critical examination, I adhere to what I said in the passage which my Lord has cited.  I see no reason to think that the parties in the present case “left it to the court to fix [the time limit for payment of mesne profits and rent] having regard to O.3 r.5”.  I prefer not to guess at the reason why the parties omitted from the terms agreed any reference to the result of a default: I certainly see no reason to infer that it was because when they said they agreed to payments on specified dates they foresaw the possibility of extensions of time beyond those dates.  The fact that they agreed to conditional leave rather than to unconditional leave with an order for payment suggests the contrary.  The omission undoubtedly had the effect that judgment could not be entered without further application to the court, but I think that is as far as it goes.  Upon the application for leave to enter final judgment it was open to the Defendant to adduce evidence that he had fulfilled the conditions, an opportunity not afforded where the order gives leave to enter judgment without a further application.  Instead he has clearly admitted a breach of the conditions.  Whether or not it was impracticable for him to pay within the time limited by the order (taking into account the mandatory extension resulting from the provisions of O.3 r.4) I do not know, although for my part I would not easily be persuaded that it was: hardship is not a consideration which the courts may normally take into account when asked to enforce contractual obligations.  The fact that O.3 r.4 applies to consent orders and judgments as to all other orders and judgments does not, as it seems to me, compel us to hold that O.3 r.5 also applies to consent orders and judgments. 

3. What, then, was the position when the Defendant broke the conditions of the order?  The Plaintiff could not proceed upon the original summons under O.14 because that had been disposed of.  A defence had been filed and so long as that remained upon the record he could not apply for judgment in default of defence.  The proper course was to apply to strike out the Defence and then to apply for judgment in default of defence.  That is what the Plaintiff has done in his summons although the ground stated in para. (2) of the summons was not in precisely those terms. Nevertheless I would not allow any technicality of this kind to interfere with our doing what clearly ought to be done and I would allow the appeal and order that the Defendant’s application for an extension of time to pay the money which was due on 1st August, 1971 do stand dismissed.  I would further give leave to the Plaintiff to enter final judgment for possession and for mesne profits as claimed in the Statement of Claim, although credit must, of course, be given for the moneys which have been paid pursuant to the consent order.

([1]) 1970 3 W.L.R. 884, 890.

([2]) 1896 1 Ch. 673.

([3]) 1966 H.K.L.R. 306.