LEE WAI MAN v. TSO YAN

HCA011301A/1997

HCA 11301/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11301 OF 1997

 

BETWEEN
	LEE WAI MAN	Plaintiff
	AND
	TSO YAN	Defendants

 

Coram: Hon. Sakhrani J in Chambers

Date of Hearing: 25 September 2000

Date of Judgment: 25 September 2000

 

____________________

J U D G M E N T

____________________

 

1. This is an appeal by the Defendant from the order of Master Wilson made on 18 April 2000 whereby he ordered that the costs order made at the assessment on 12 November 1999 is to be on the High Court scale.

2. The matter arises in this way. Default judgment for damages to be assessed was entered by the Plaintiff against the Defendant in February 1998. The Plaintiff was the purchaser and the Defendant was the vendor of a flat at Sing Woo Road, Happy Valley, Hong Kong. The assessment of damages arose out of the Defendant's failure to complete the sale of the flat to the Plaintiff.

3. The assessment of damages came before Master Wilson. Master Wilson gave judgment on 12 November 1999 and assessed damages against the Defendant in the sum of $120,000. By the final judgment after assessment of damages, the Master also ordered that costs of the action be to the Plaintiff "to be taxed if not agreed, with certificate for counsel". This has been conveniently referred to in the appeal before me as "the first order" and I shall refer to it as such. The first order was sealed and perfected on 23 November 1999.

4. There is no dispute that on 12 November 1999 after the damages were assessed by Master Wilson, counsel for the Plaintiff did apply to the Master for the costs order to be awarded on the High Court scale. However, the Master suggested that the matter should be decided by the taxing master on a taxation of costs. It is also said that counsel then appearing for the Defendant also supported the Master's suggestion. Although at one stage in his submissions, Mr Lam, Counsel for the Plaintiff, said that the Defendant was thereby estopped from resiling on that suggestion, in the course of his arguments, however, he, very properly, abandoned any suggestion of there being an estoppel against the Defendant in the light of the evidence.

5. The question of costs proceeded to taxation and the matter came before Master Lok on 17 December 1999. He came to the view that he did not have the jurisdiction to make the order sought by the Plaintiff by its summons dated 16 December 1999. Master Lok, by his order of 17 December 1999, ordered, inter alia, that there be a rehearing of the taxation before another Master and that the taxation hearing be adjourned to a date to be fixed.

6. On an application by letter dated 14 March 2000 from the Plaintiff's solicitors to the Practice Master, the matter eventually came before Master Wilson on 18 April 2000 whereby he ordered that :

"Costs order made at assessment on the 12th day of November 1999 is to be on the High Court scale and no order as to costs of to-day".

The order of 18 April 2000 was conveniently referred to as "the second order" and I shall also refer to the same as such.

7. The first point that is made on behalf of the Defendant is that the first order having been perfected on 23 November 1999, Master Wilson did not have the jurisdiction to re-hear or to review or to vary the first order. It is said that the second order was, in effect, a further order as to the scale of costs which had been dealt with finally by the perfection of the first order.

8. It was submitted on behalf of the Plaintiff that on 12 November 1999, Master Wilson did not decide on the question of scale of costs and that there had been no determination on the merits of the application to have the costs taxed on the High Court scale. It was said that, because of this, it was permissible for Master Wilson to make the second order even though the first order had been perfected. The Plaintiff also submitted that Master Wilson was entitled to make the second order under the slip rule, namely, under O. 20; r. 11, Rules of the High Court.

9. It is important, in my judgment, to construe the costs' order that was made in the first order. By the first order, costs of the action were awarded to the Plaintiff "to be taxed if not agreed". The words are clear and simple. They clearly mean that the costs, if not agreed, are to be taxed upon the ordinary principles of taxation. In Lui Po Leung v Tam Kwok Hung [1985] 1 HKC 224 @225, Power J. (as he then was) decided that the words "plus costs to be taxed" mean what they say, namely, costs to be taxed upon the ordinary principles of taxation. I respectfully adopt the approach of Power J (as he then was). In my judgment, the construction of the first order is that the costs, if not agreed, are to be taxed upon the ordinary principles of taxation.

10. S. 43(2) of the District Court Ordinance provides as follows :

"Where any proceedings in which the Court has jurisdiction are brought in the Court of First Instance costs shall be recoverable on such scale and in such amount as would have been recoverable if the proceedings had been brought in the Court, unless the proceedings were so brought by leave of the Court of First Instance or unless the Court of First Instance otherwise orders."

11. The assessment of damages was in the sum of $120,000, this being the upper limit of the jurisdiction of the District Court. So, under S. 43(2) of the District Court Ordinance, unless the proceedings were brought by leave of the Court of First Instance or unless the Court of First Instance otherwise orders, the costs shall be recoverable on the District Court scale as if the proceedings had been brought in the District Court. As the proceedings had not been brought by leave of the Court of First Instance and there had been no order otherwise, it is not surprising that Master Lok felt that he did not have the jurisdiction to tax the bill of costs on the High Court scale.

12. I refer also to what Power J. (as he then was) said in Lui Po Keung v Tam Kwok Hung [1985] 1 HKC 224@226 :

"I must be bound by the words to which the parties agreed and which were that there be judgment for 'the sum of $50,000 plus costs to be taxed if not agreed'. I cannot look beyond this formula of words which, as I have already indicated, means cost to be taxed upon the ordinary principles of taxation which, in the circumstances, means taxation upon the District Court scale."

13. In this case, the words in the first order are clear and the ordinary principles of taxation apply. By virtue of S. 43(2) of the District Court Ordinance, this means taxation on the District Court scale. It is clear to me that Master Wilson made no order on the Plaintiff's application on 12 November 1999 to have the costs awarded on the High Court scale, he preferring to leave it to the taxing master. The effect of the first order is that the ordinary principles of taxation should apply and, as I have said, in the circumstances that means taxation upon the District Court scale. The first order having been perfected on the 23 November 1999, I am satisfied that Master Wilson had no jurisdiction to vary that order by the making of the second order. Although Master Wilson took the view that he was not conducting a review but simply clarifying the first order, I am satisfied that the second order was not a mere clarification of the first order but was, in effect, a variation of the first order. (See also Reigate Corporation v Wilkinson [1920] W.N. 150)

14. I also do not think that the slip rule provides any assistance to the Plaintiff. O. 20; r. 11, Rules of the High Court provides as follows :

"Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal."

In my judgment, there was no clerical mistake in the first order. There was also no error arising from any accidental slip or omission.

15. Although the Plaintiff relied on Doswell v Norton (1902) 18 T.L.R. 228 mentioned in marginal note 20/11/2 in the White Book, it is clear from the later authorities of Bentley v O'Sullivan [1925] W.N. 95 and Sutherland v Hanevig [1921] 1 K.B. 336 that the decision of Doswell v Norton was strongly criticised by the Court of Appeal in those two later cases. Counsel for the Defendant also relied on R. v. Cripps, Ex p. Muldoon and others [1983] 3 W.L.R. 465.

16. I am satisfied that the slip rule is not applicable in the circumstance of this case and the Plaintiff cannot rely on the slip rule for the making of the second order in this case. I am satisfied that the second order was one made without jurisdiction and ought to be set aside.

17. I should also mention that although the Plaintiff initially took the point as to whether I had jurisdiction to hear this appeal because of O. 58; r. 2(b), Rules of the High Court, this point was abandoned by counsel for the Plaintiff.

18. In the circumstances, the appeal is allowed. The order of Master Wilson made on 18 April 2000 is set aside.

 

 

 

Representation:

Mr Simon H.W. Lam inst'd by M/s Yip & Partners for Plaintiff

Ms Winnie Ho Suk Yu inst'd by M/s Chan & Kong for Defendant

 

Appeal by the Defendant to Court of Appeal. Appeal dismissed. Please refer to the appeal judgment of CACV366/1999 (4 April 2006).

HCA011301/1997

1997 No. A11301

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

______________

BETWEEN
	LEE WAI MAN	Plaintiff
	AND
	TSO YAN	Defendant

______________

Coram: The Hon. Mr. Justice Keith in Chambers

Date of Hearing: 8 December 1998

Date of Delivery of Judgment: 8 December 1998

_______________

J U D G M E N T

_______________

 

Introduction

1. This is an appeal from the refusal of Master Jones to set aside interlocutory judgment entered in default of defence. The Defendant asserts that the judgment was irregular, and that he has a complete defence to the action.

Was the judgment irregular?

2. The Defendant claims that the judgment was irregular because he was not served with the writ. A clerk employed by the Plaintiff's solicitors has affirmed that he personally served the writ on the Defendant at the Defendant's flat on Hong Kong Island on 27th October 1997. The Defendant has affirmed that, to the best of his recollection, he was at his home in Tai O at the time.

3. I think that the Defendant's denial that he had been served with the writ is very unlikely to be correct. I say that primarily for three reasons:

(i) At the time when he is alleged to have been served with the writ, he is alleged to have been served, amongst other documents, with an inter partes summons for a hearing at the High Court on 31st October. The Defendant attended the High Court on 31st October. It may be that he was told to attend court on that date by the solicitors who were then acting for him, and his presence at court is therefore not necessarily attributable to the fact that he was served with the inter partes summons. However, the fact that he attended court on 31st October is an indication that he might have been served with the inter partes summons, in which case it is very likely that he was served with the writ as well.

(ii) If the Defendant is telling the truth, the Plaintiff's solicitors' clerk is either lying or mistaken. There is no obvious reason why he should lie, and the only other alternative is that he served the writ on a person at the flat who he mistakenly thought was the Defendant. However, the Defendant has not alleged that there was anyone in the flat who the Plaintiff's solicitors' clerk might have mistaken the Defendant for.

(iii) The Defendant unfortunately suffers from schizophrenia, and has a history of mental illness. Although he is said to have been in remission in October 1997, it may be that his memory is not as good as it might be.

4. I find that the Defendant was served with the writ on 27th October. But even if he was not, it does not automatically follow that the judgment must be set aside: see Honour Finance Co. Ltd. v. Chui Mei Mei [1989] 2 HKLR 146 and Faircharm Investments Ltd. v. Citibank International PLC (1998) "The Times", February 20th. As it is, the Defendant would have known about the writ and the nature of the claim being made against him as a result of his attendance at the High Court on 31st October. Moreover, the judgment in default was not entered until 23rd February 1998. Accordingly, the Defendant would have had plenty of time to decide what his response to the writ was to be. If I had found that the Defendant had not been personally served with the writ on 27th October, I would have decided that this was one of those exceptional cases in which the mere irregularity of the judgment would not have warranted setting it aside.

The merits of the defence

5. I turn to the merits of the defence, bearing in mind that it is not sufficient for the Defendant to show an arguable case which would justify leave to defend under Ord.14. The defence must have a real prospect of success and must carry some degree of conviction. The Plaintiff is suing on a provisional agreement for the sale by the Defendant of his flat to the Plaintiff. The Plaintiff's case is that she and her husband were shown the flat by an estate agent. The Defendant was present. They made an offer for the flat but the offer was not accepted. The estate agent subsequently told the Plaintiff's husband that the offer was acceptable, and the Plaintiff and her husband went to the estate agent's offices to finalize the transaction. They did not meet the Defendant there, but they were told that he was in another room. They signed the provisional agreement and paid the initial deposit, and a week or so later they paid the balance of the deposit. Eventually, the Defendant decided not to go through with the agreement, and he returned the cheques which had not even been banked.

6. The Defendant's case is as follows. A few weeks before the date which appears on the provisional agreement, he had agreed to sell the flat to another buyer. However, he was persuaded by the estate agents who apparently introduced the flat to the Plaintiff to engage them to put the flat on the market. Despite that, he denies that the Plaintiff and her husband even inspected the flat. He agrees that he went to the estate agents' office on the day in question, and that he was persuaded to sign the provisional agreement. He does not identify the circumstances in which the lady he was dealing with got him to do that, but he noted that the agreement did not bear the name of the purchaser when he signed it. In anticipation of receiving a cheque for the initial deposit, he also signed that part of the agreement in which he acknowledged having received the initial deposit. However, he saw the estate agent writing out the cheque herself, and he saw that the payee was a firm whose name he did not recognise. He therefore told the estate agent to cancel the agreement. He denies that he left with the cheque or that he ever received a cheque for the balance of the deposit.

7. The cheque which the Plaintiff contends was the cheque tendered to the Defendant and accepted by him has been exhibited. It was drawn on the Plaintiff's husband's account, not that of the estate agents, and was payable to John Lau & Co., a firm of solicitors. The Plaintiff's case is that it had been discovered that the Defendant had been ordered in matrimonial proceedings to pay half of the proceeds of the sale of the flat to his wife. For that reason, the cheque was made payable to a firm of solicitors. As for why John Lau & Co. were the solicitors to whom the cheque was in fact made payable, the Plaintiff's case is that the Defendant told the estate agent that he did not have any solicitors, and the estate agent suggested to him that John Lau & Co. should act on his behalf. It is true that there is no direct evidence that the Defendant agreed to the cheque being drawn in favour of John Lau & Co., but it is said that he must have agreed to that because, on the Plaintiff's case, he took the cheque away with him.

8. On these facts, what is primarily said on the Defendant's behalf is that the provisional agreement was subject to a condition precedent, namely that a cheque for the initial deposit had to be accepted by the Defendant. Since the Defendant decided not to accept the cheque, a concluded agreement never came into effect. I confess that I have not discerned any basis on which it could be said that it had been agreed that the agreement was subject to such a condition precedent, and I rule that this defence has no real prospect of success.

9. The success of the other two defences on which the Defendant relies, however, depend on whose evidence the court will accept at trial. First, it is said that no concluded agreement was reached because the Defendant sought to pull out of the agreement before it had been signed by the purchaser. In other words, by signing the agreement, the Defendant had made an offer to sell the flat to whoever was subsequently identified in the agreement as the purchaser, but that offer had been withdrawn before it had been accepted by the Plaintiff by signing the agreement. Secondly, it is said that, even if an enforceable agreement had been concluded, the Plaintiff was in repudiatory breach of the agreement, and that the Defendant accepted the repudiatory breach as bringing the parties' obligations under the agreement to an end. The breach was the failure on the part of the Plaintiff to provide the Defendant with a cheque for the initial deposit payable to him.

10. There are so many implausible features in the Defendant's version of events that on the two factual issues which the two defences raise - namely, whether the Defendant had purported to cancel the agreement before it had been signed by the Plaintiff, and whether he had agreed to the cheque for the initial deposit being drawn in favour of John Lau & Co. - I think it much more likely that the Plaintiff will be believed on those issues. I therefore conclude that these defences do not have a real prospect of success. This was not a case in which it can be said that the Defendant's illness deprived him of the capacity to make an enforceable contractual commitment. There is no evidence that his illness was such as to deprive him of the capacity to understand what he was doing, or that the Plaintiff was aware of any incapacity on the Defendant's part.

11. Mr. Chan Chi Hung for the Defendant, in his excellent address and skeleton argument, pointed to a number of features which showed that the Plaintiff could have suffered no loss as a result of the Defendant's alleged breach of contract. That may or may not be so, but those points are to be made on the assessment for damages, the interlocutory judgment having been for damages to be assessed.

Conclusion

12. For all these reasons, and with considerable sympathy for the Defendant in the position in which he finds himself, this appeal must be dismissed.

	(Brian Keith)
	Judge of the Court of First Instance

Representation:

Mr. Simon Lam, instructed by Messrs. Yip & Partners, for the Plaintiff

Mr. Chan Chi Hung, instructed by Messrs. Chan & Kong, for the Defendant