LAM MABLE v. WORLD PLACE LTD AND OTHERS

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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D E C I S I O N

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1. An order for inspection has been made on the basis of the common views of the parties although not in the form of a consent order. The remaining argument is on costs of the application.

2. The defendants’ objection as can be understood from the correspondence exchanged in 2012 and the 3rd defendant’s affirmation in opposition is to the inspection itself rather than any entry by the plaintiff herself for the inspection.  The grounds stated are about the need to have such inspection, invasion of privacy and balance of convenience. 

3. If the defendants’ objection is indeed to the plaintiff’s entry personally, they could and would have made this plain. Judging from the previous correspondence, pleadings, affirmations and skeleton arguments emanating from the defendants, it is clear that the defendants have no difficulty in expressing their views and to do so with clarity. 

4. Furthermore, the plaintiff has already made plain by an affirmation of her solicitor filed and served on 2 November 2012 saying that the plaintiff herself is not seeking to enter the property.  If the plaintiff’s entry was the defendants’ worry, that affirmation would have removed the worry. 

5. If the defendants’ wanted the order to state clearly that the plaintiff was not going to enter the premises by herself, they could have said so then.  It is not right for them to keep quiet then and now say that the plaintiff should have amended the summons. 

6. If the defendants should have indicated earlier their agreement to an inspection by the plaintiff’s expert, but to the exclusion of the plaintiff, I am sure an order in those terms could have been made despite the terms of the summons.

7. I also take the view that a summons under Order 25 is appropriate for an application to inspect premises as inspection is also part of the management of a case and to make the case ready for trial. 

8. But for the imperfection of the summons in seeking an inspection by the plaintiff and/or her expert, I would have ordered costs against the defendants.  In the light of the imperfection, I order that costs of the summons be the plaintiff’s costs in the cause.

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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BETWEEN

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DECISIONON COSTS

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1.  Master Yu made a decision against the 1st, 2nd and 3rd defendants. The defendants launched an appeal against the decision. The appeal was scheduled to be heard on 20 March 2012.

2.  The 2nd defendant on 20 January 2012 applied to adjourn the hearing of the appeal on medical grounds.  After considering the submissions from both sides, I dismissed the 2nd defendant’s application on 31 January 2012 for want of sufficient reason for adjournment. 

3.  The 2nd defendant renewed his application for adjournment on 3 February 2012.  After considering further evidence and submissions, I dismissed the renewed application on 15 February 2012 on the ground that there had been no significant change in the 2nd defendant’s medical conditions since February 2011.  I also reserved the costs of the application and the renewed application to be dealt with at the end of the hearing of the appeal.

4.  The 2nd defendant applied again on 23 February 2012 for reconsideration of his application to adjourn.  I again dismissed it after considering various medical reports.

5.  The defendants later withdrew their appeal. The costs of the 2nd defendant’s applications for adjournment were therefore not dealt with.

6.  The plaintiff through counsel’s written submissions filed on 22 March 2012 sought costs of the applications for adjournment to be paid by the 2nd defendant.

7.  The 2nd defendant opposed the application.  He submitted that he was acting in person and sought the adjournment on the recommendation of his doctor that he was not fit to attend the appeal.  His application was purely based on medical reason and he did not intend it to become a major dispute involving the other party.

8.  He further submitted that the court should not punish him with costs for his legitimate and timely application which was based on health reasons.  He also referred to the plaintiff’s delay in prosecuting this action.

9.  I remind myself the usual rule that the loser of an application is liable for the opponent’s costs for opposing it.

10.  The fact that the applications by the 2nd defendant were based on medical ground and his health reasons is insufficient to displace this rule.  The plaintiff has also not done anything in the applications which could invoke the court’s discretion to deviate from this rule.

11.  I also take the view that the applications to adjourn, if successful, would have a profound effect on the progress of the action.  The adjournment, if granted, could have put the action on hold to the grave prejudice of the plaintiff.

12.  I therefore order the 2nd defendant to pay the plaintiff the costs of his applications to adjourn.

13.  I further direct the 2nd defendant to state his objections, if any, to the plaintiff’s bill of costs for summary assessment dated 22 March 2012 by a letter to reach the court by fax no later than 25 July 2012 for the court’s consideration in assessing the amount of costs payable by him.

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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DECISION ON COSTS

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1. The plaintiff applied to amend her statement of claim. The defendants opposed the application. I gave my reasons on 3 April 2012 in favour of the plaintiff. I made a costs order nisi as follows:

“47. I also make a costs order nisi that the costs of and occasioned by the plaintiff’s application to amend be to the defendants in any event save that the defendants do pay the plaintiff the costs of the opposition and the costs reserved in this application in any event.”

2. The solicitors for the plaintiff applied by letter for variation of the costs order nisi to the extent that the defendants do pay the plaintiff the costs of the opposition and the costs reserved forthwith to be taxed if not agreed.

3. The plaintiff’s grounds are that she has succeeded despite the repeated oppositions by the defendants and their attempts to adjourn the matter on the 2nd defendant’s medical ground.  The defendants have lost their opposition and they should not be encouraged to oppose interlocutory applications unnecessarily or inappropriately.

4. The defendants opposed the plaintiff’s application to vary the order nisi.  The grounds are that the opposition to the application to amend was not frivolous or without merits and that costs could be set-off at the end of the trial.  The defendants also pointed out that the plaintiff’s intention to engage counsel to oppose the defendants’ intended application for leave to appeal against the leave given for amendment shows that the defendants’ opposition was not lacking in merits.

5. I would not say that the defendants’ opposition was frivolous, but the grounds tendered for the opposition were indeed devoid of merits.

6. Since the CJR, unmeritorious interlocutory applications or unmeritorious oppositions to interlocutory applications usually attract costs orders that are implemented immediately if the amount of costs are immediately ascertainable.  This is to discourage unmeritorious interlocutory applications or oppositions.  There is no special reason in this case for deviation from this practice.

7. For these reasons, I vary the costs order nisi to the extent that the defendants do pay the plaintiff the costs occasioned by the defendants’ opposition to the plaintiff’s application to amend her statement of claim and the costs reserved in this application and that such costs are to be taxed, if not agreed, and paid forthwith. 

8. I further order that the plaintiff do file and serve a bill of costs within the next 7 days for summary assessment unless the amount of costs can be agreed within this period.  The defendants do file and serve their grounds of objections, if any, within 7 days thereafter.

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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______________

D E C I S I O N

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1.  This is the plaintiff’s application to amend her statement of claim.

The plaintiff’s claim

2.  The plaintiff claims to be the legal and beneficial owner of a property in Sai Kung.  She is seeking possession of the same from the defendants who are currently the occupiers. 

3.  She has pleaded in the original statement of claim that she is the legal and beneficial owner of the property.  She further pleaded that the 1st defendant had entered into an agreement dated 10 June 1994 to purchase the property from the then registered owner Ho Ngau (“Ho”) at HK$8,000,000.  The agreement was negotiated by one Cheung Shek Kong (“Cheung”) on behalf of Ho.  The 1st defendant pursuant to the agreement paid various sums totalling HK$1,600,000 for the purchase.  The construction of the property was completed on 14 March 1997.  It was delivered to the 1st defendant as licensee on 6 March 1998 in return for a part payment of HK$800,000 from the 1st defendant.  The 1st defendant in turn granted a permission/licence to the 2nd and 3rd defendants to have vacant possession of the property. 

4.  The vendor’s solicitors gave notice in around September 2000 to the 1st defendant to complete the purchase on about 20 October 2000.  However, the 1st defendant’s solicitors by letter of 20 October 2000 notified Ho and/or Cheung that the 1st defendant was not going to complete the purchase. 

5.  The plaintiff then purchased the property from Ho on 30 November 2000 at HK$4,380,000 and the purchase was financed by a mortgage in favour of a Treasure Spot Finance Company Limited.  The plaintiff completed her purchase on 30 November 2000 and was entitled to possession of the property.

6.  The vendor also terminated the licence given to the 1st defendant and requested for vacant possession of the property from the defendants.

7.  Alternatively, the licences or permissions were deemed to have been revoked by the vendor upon disposal of the property to the plaintiff.

8.  However, despite repeated demands and requests, the defendants refused to return the property to the vendor.  The defendants also refused to return the property to the plaintiff despite demands.

The defence

9.  The defendants pleaded in their defence that Ho was illiterate and had been deceived or misled into executing the assignment in favour of the plaintiff.  Ho did not intend to do so.  Nobody including the solicitors explained to Ho the purpose of the assignment.  Nothing had been paid to Ho.  The assignment of the property by Ho to the plaintiff was a fraud on Ho, but Ho did not intend to take any action against the plaintiff.

10.  The defendants further pleaded that the 1st defendant entered into possession of the property through the 2nd and 3rd defendants and continued to do so after Ho’s apparent repudiation of his contractual obligation to complete the sale of the property to the 1st defendant.  The 1st defendant’s occupation of the property is pursuant to the 1st defendant’s lien which arose out of the part of the purchase price which is kept by Ho.

The plaintiff’s summons to amend

11.  By her summons to amend the statement of claim, the plaintiff wants to plead that Cheung was the beneficial owner whilst Ho was merely holding the property as a bare trustee for Cheung.

12.  She also wants to add that Ho and/or Cheung had by the letter dated 23 October 2000 not only accepted the repudiation of the agreement by the 1st defendant, but also terminated the licence to the 1st defendant and demanded vacant possession of the property from the defendants. 

13.  She also wants to delete a subordinate clause which says that her purchase was financed by a mortgage on the property in favour of Treasure Spot Finance Company Limited. 

The defendants’ opposition

14.  The proposed amendments appear to be simple and straightforward, but the 3rd defendant on behalf of the 1st defendant made a 20-page affirmation to oppose the application dated 15 December 2010.  Pursuant to my directions for skeleton submissions, all three defendants filed a one-page submissions on 16 March 2012.  After the plaintiff had filed their brief and general submissions on 22nd March, the defendants applied on 26th March for leave to file a further set of submissions as they only received the plaintiff’s submissions by post in that morning.  The defendants then filed a further set of lengthy submissions on 2nd April pursuant to leave granted.

The 3rd defendant’s affirmation to oppose

15.  The 3rd defendant said in her affirmation that the amendments were proposed by the plaintiff with devious intentions and are mala fide.  They are for a strategic manoeuvring to constitute a completely new case as the plaintiff realised that her case as pleaded would not do well.

16.  The 3rd defendant then elaborated her opposition. She said the plaintiff had by an affirmation used in an application for summary judgment verified the truthfulness of her original statement of claim.  The plaintiff had also exhibited in an affirmation the assignment by which Ho assigned the property to her and the assignment stated that she had paid Ho, the vendor the price of HK$4,380,000.  The original statement of claim did not say that Cheung had any interest in the property.  The plaintiff merely referred to Cheung as Ho’s attorney in her affirmation.

17.  The 3rd defendant then said that the plaintiff, by proposing to amend the statement of claim to plead that Ho was merely a bare trustee of the property whilst Cheung was the beneficial owner, was seeking to withdraw her admissions made in the original statement of claim and her affirmation.

18.  I do not think the proposed amendments saying that Ho was a bare trustee and Cheung was the beneficial owner of the property have the effect of withdrawing any admission.  The statement of claim has made no admission to anything said by the defendants. 

19.  The proposed amendments can no doubt change the nature of Ho’s previous interest in the property and make Cheung its previous beneficial owner.  That is the background of the plaintiff’s case leading to the plaintiff becoming the legal and beneficial owner.  These proposed amendments do not contradict the original statement of claim.  They are elaborations to the background with a significant change as who vested the beneficial interest of the property unto the plaintiff.  The plaintiff’s cause of action is based on her being the current legal and beneficial owner of the property.  There proposed amendments will not change this cause of action.  I hold that the defendants cannot oppose these amendments on the ground of withdrawal of admissions. 

20.  Regarding the proposed deletion of the clause saying that the plaintiff’s purchase was financed by a mortgage of the property in favour of Treasure Spot Finance Company Limited, the 3rd defendant said that this proposed deletion is to omit a material fact which will contradict the plaintiff’s case.  She pointed out that the mortgage is a registered document and has been verified by the plaintiff’s solicitors for public investigation (at the Land Registry).

21.  The plaintiff in her affirmation in reply explained that the proposed deletion is to remove an inaccurate detail.  The reason being that her purchase was financed not only by the mortgage in favour of Treasure Sport Finance Company Limited, but also by another mortgage in favour of Allied Capital Resources Limited and her own money.  In the light of this clarification, I see no reason why the deletion should not be allowed.

22.  The 3rd defendant then said that the plaintiff, having verified her original statement of claim, cannot make the amended statement of claim with an honest belief in its truthfulness.  I disagree with this for what I have already said above.

23.  The 3rd defendant further said that if the amended statement of claim is true and correct, then the action that has proceeded until now on a false basis and the plaintiff has lied on oath.  The action should therefore be struck out as an abuse of process.  I disagree with this for what I have said above.  Furthermore, if the amendment can indeed put right what is wrong, then it should be allowed.

24.  The 3rd defendant further said that the proposed amendments are matters that the plaintiff should have brought up before her application for summary judgment.  She further said that if Cheung should be the beneficial owner, then the material times of the case should be traced back to when Cheung had become the equitable owner and Ho the bare trustee.  The fact that Ho was the legal and beneficial owner before his assignment of the property to the plaintiff was supported by the New Grant to the land on which the property was built and by Ho’s agreement of sale and purchase with and assignment to the plaintiff.

25.  I however take the view that delay is no ground for disallowing the amendments as the case is still at the early stage.  Discovery and exchange of witness statements have yet to take place. 

26.  The defendants are also at liberty to contest the question of whether Ho or Cheung was the beneficial owner if they consider that such contest can assist their defence.  In any case, the defendants are not defending on the basis of a title paramount.  Furthermore, the defendants’ reliance on the 1st defendant’s lien on the purchase price as the ground to retain their occupation of the property is not affected by these amendments. The reason being that the plaintiff has treated the 1st defendant’s dealings with the vendor as dealings vis-à-vis either Ho or Cheung.

27.  The 3rd defendant further said that there are still other matters that should be pleaded in the amended statement of claim.  They are the details of the plaintiff’s payments for the consideration of her purchase, how and when did Cheung become the equitable owner, how was Cheung’s equitable interest transferred to the plaintiff and the plaintiff’s intimate relationship with Cheung.  It is also the plaintiff’s case that she had paid the consideration to Ho.  But Cheung has said on affirmation that the purchase money was received by him. 

28.  The 3rd defendant also asserted that the alleged payments were purportedly made by the plaintiff in a devious way as there was a sum of HK$1,500,000 borrowed by the plaintiff and Cheung together and secured by a mortgage on the property.  The 3rd defendant said that the transaction of sale to the plaintiff was a sham and the payments were also a sham.

29.  If the 3rd defendant should consider that there are further matters that should be included in the amended statement of claim, she and the other defendants are at liberty to seek further and better particulars of the amended statement of claim. 

30.  If the defendants should consider the sale of the property by Ho to the plaintiff a sham, then it is open to them to challenge the plaintiff’s capacity to sue on this basis.  In fact, they have already done so in their defence.  They are also at liberty to challenge the plaintiff’s purported payments to show that her purchase was a sham.  However, these are not grounds for refusing the proposed amendments.   

31.  The 3rd defendant also said if these proposed amendments should have been pleaded earlier, then they would have affected substantially how the defendants would have formulated their defence.  I do not think this is an argument for refusing the proposed amendments.  If I should grant the plaintiff leave to amend, the defendants will be given an opportunity to amend and reformulate their defence too.

32.  The 3rd defendant further argued that allowing the amendments will be to put the defendants on trial for a second time for a completely new case.  I think this assertion is an exaggeration.  The defendants have not been tried on this case and the plaintiff’s amendment does not alter her case that she is the legal and beneficial owner of the property. It is the defendants’ case is that the plaintiff has never been the legal and/or beneficial owner.  The proposed amendments will not prejudice or prevent them from continuing with this line of argument.

33.  The 3rd defendant’s next argument is that the plaintiff applied for summary judgment to force the defendants to disclose their evidence before exchange of witness statements and then tailor-made her amended statement of claim according to such evidence.  The 3rd defendant argued that if the amendments should be allowed, then the plaintiff can tailor-made her pleadings whenever there should be new evidence that may defeat her claim and the action will never come to an end.

34.  I however take the view that if there is evidence from the defendants which tarnishes the plaintiff’s case and obliges the plaintiff to clarify her case by amendment, then if there is no other reason not to allow the amendment, then I must allow the amendment so that the issues between the parties can clearly be identified.

35.  The 3rd defendant further argued that the proposed amendments are embarrassing to the defendants.  She supported this argument by repeating what she has said about the amended statement of claim being incomplete and should be struck out.  She repeated that Cheung’s equitable ownership, the trust between Cheung and Ho, the plaintiff’s legal rights, the plaintiff’s equitable interest and the chain of title should all be pleaded.

36.  If the 3rd defendant should consider that there are matters that should be pleaded, she and/or the other defendants can apply for further and better particulars of the same.  This objection cannot stop leave to be granted for the amendments.

37.  The 3rd defendant then repeated her argument that the plaintiff has delayed the making of the amendments.  She further said that some documents produced by the plaintiff are difficult for the court to make any sense out of them.  In the alternative, it was highly possible that the defendants might not be able to trace some of the key witnesses or the witnesses are no longer available after a long delay.  However, I do not think it too late to grant the amendments as the action has not even gone passed discovery and the exchange of witness statements.  The defendants’ application to strike out for delay has also been dismissed.

38.  Regarding the documents, even if they are difficult to understand, that is not a ground for refusing the amendments. 

39.  On the alternative ground about unavailability of witnesses, the 3rd defendant did not specify any witness or the matter that the witness may be able to testify on.  It is just a bare allegation.  I do not think such an allegation can stop the granting of leave for the amendments.  I also cannot see what prejudice will be caused by the amendments to the defendants that cannot be compensated by costs.

40.  The 3rd defendant then complained that the action has taken 9 years and has not concluded.  Granting the amendments will give the plaintiff one more opportunity to renew the fight on an entirely different claim and that is extremely unfair to the defendants.

41.  I understand that the defendants have tried to strike out the action on the ground of delay.  They failed.  They then appealed, but withdrew the same subsequently.  The action therefore has to proceed.  The purpose of allowing an amendment is to ensure the determination of the real question in controversy.  If the background leading to the plaintiff becoming the legal and beneficial owner of the property is relevant to the merits of her claim, then I should allow her to set forth the whole of her alleged background and for the defendant to challenge that.

The defendants’ skeleton submissions

42.  The one-page submissions of the defendants filed on 16 March repeated the 3rd defendant’s arguments of delay and the insufficiency of the proposed amendments.  It also says that the plaintiff’s pleading of the 1st defendant’s agreement to purchase of the property and subsequent repudiation as excessive and redundant.  I do not think so.  The matters pleaded can explain the plaintiff’s case on how the defendants have acquired possession of the property and their basis of keeping there.

43.  The defendants’ further submissions are lengthy, but they contain more or less the same arguments as in the 3rd defendant’s affirmation referred to above.  I do not see it necessary to repeat the same analyses again.

Order

44.  In the premises, I grant leave to the plaintiff to amend her statement of claim in terms of the draft amended statement of claim annexed to her summons filed on 9 November 2010.

45.  I also grant leave to the defendants to file and serve their amended defence to deal with the plaintiff’s amendments within 28 days from today.

46.  I further grant leave to the plaintiff to file and serve a reply to the amended defence within 28 days thereafter.

47.  I also make a costs order nisi that the costs of and occasioned by the plaintiff’s application to amend be to the defendants in any event save that the defendants do pay the plaintiff the costs of the opposition and the costs reserved in this application in any event.

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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BETWEEN

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J U D G M E N T

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1.  This is an action taken out by the Plaintiff against the Defendants for possession of a small village house (“丁屋”) built on Lot 1002 DD 220 (“the Land”), and for mense profits.  The Defendants have filed a defence denying that the Plaintiff is the owner of the Land or entitled to possession of the Land.

2.  After the Plaintiff has taken out an order 14 summons and after Master Ho determined that no judgment would be granted in favour of the Plaintiff in 2005, the Plaintiff has failed to take any further action in these proceedings until late 2010 when the Plaintiff filed a summons for leave to amend the Statement of Claim.  The Defendant issued a summons to strike out the Plaintiff’s Statement of Claim and to dismiss this action for want of prosecution.  To better understand the issue in dispute and to determine if the Defendant’s application should be allowed, I start with some background history, which are not really in dispute.

3.  There is one key character in this set of proceedings, one Mr. Ho Ngau (“Ho”) who is an indigenous villager.  He is entitled to have a piece of land from the government for the erection of a three storeys village house.  In 1992, he has entered an agreement with one Tak Lei Development Limited (“Tak Lei”) whereby Tak Lei agreed to let him have Lot no. 769 DD 220 to facilitate him to apply for a small village house.  Ho agreed that upon completion of the small village house to assign the same to Tak Lei.  While it is questionable if this agreement is against public policy or void, this is not an issue before me today.

4.  In 1993, Tak Lei transferred the benefit of the agreement to one Mr. Cheung Shek Kong (“Cheung”).  The assignment was with the consent of Ho.

5.  In 1994, Ho had another agreement with Cheung when Cheung agreed to provide Ho with Lot No. 1002 DD 220 for Ho to get the approval from government to build a small house.  Ho agreed to assign the small house to Cheung at the consideration of $350,000.

6.  On 10 June 1994, Cheung as the attorney of Ho entered into a provisional sale and purchase agreement with the 1^st Defendant for sale and purchase of the small village house to be erected on the Land at the consideration of $8,000,000.

7.  From documents now exhibited to the various affirmations in support of this application, Ho surrendered Lot 769 DD 220 to the government in or about 14 September 1995 in exchange for Lot 1002 DD 220 to erect a small village house.  Restrictions on alienation was imposed by the government in the related Grant, being New Grant no 8629.

8.  Pending removal of the restriction on alienation and completion of the sale and purchase between Ho (acting through Cheung) and the 1^st Defendant, the 1^st Defendant was allowed to enter into the possession of the Land after he had paid part consideration in the sum of $2,400,000.  The 2^nd and 3^rd Defendant were allowed to occupy the Land as sub-licensee of the 1^st Defendant.  And the Defendants had been staying in the property until now.

9.  Letter of comply was issued by the District Land Office on or about 22 May 2000, upon which the restriction against alienation has been removed.  And by letter dated 12 May 2000, the 1^st Defendant’s solicitor called upon Ho or Cheung for completion within one month.  No completion took place. The 1^st Defendant, through its solicitor claimed the failure amounted to a repudiation on the part of Ho and it accepted the repudiation on 5 October 2000.

10.  On about 19 October 2000, Ho through his solicitor called upon the 1^st Defendant for completion.  On 20 October 2000, the 1^st Defendant refused and claimed that the agreement has been repudiated by Ho which had been accepted by the 1^st Defendant.  Accordingly, the 1^st Defendant had no obligation to complete.  Upon the agreement having been repudiated, the 1^st Defendant also demanded refund of the deposit paid in the sum of $2,400,000.  Further, the 1^st Defendant refused to deliver vacant possession until the said deposit has been refunded.

11.  Ho considered that the 1^st Defendant was in breach of the sale and purchase agreement.  On 23 October 2000, the solicitors for Ho accepted the Defendants’ repudiation and gave notice to forfeit all deposit.  They also demand vacant possession of the Land.  On 24 November 2000, Ho issued an action in the High Court being HCA 10132 of 2000 against the 1^st Defendant for possession of the Land and for damages.

12.  The above history seems to be the dispute between Ho and/or Cheung with the 1^st Defendant and has nothing to do with the Plaintiff.  Indeed, the Plaintiff only came into picture on 30 November 2000.

13.  On 30 November 2000, the Plaintiff entered into a sale and purchase agreement of the Land with Ho whereby Ho agreed to sell the Land to the Plaintiff at the consideration of HK$4,380,000.  By an assignment of the same date, Ho assigned the Land to the Plaintiff.  It is the Plaintiff’s case that by this assignment, she has become the registered owner of the Land.  She also claims that Ho has terminated the licence to the 1^st Defendant, and hence the sub-licence of 2^nd and 3^rd Defendants has been terminated at the same time.  She also claims that in the alternative, the licence in favour of the 1^st Defendant would have been revoked when Ho assigned the Land to her. 

14.  The Plaintiff only issues this action on 31 October 2001.  And the writ together with the Statement of Claim has only been served on the Defendant in August 2002.  Acknowledgment of service has been filed by the Defendants on 29 August 2002.

15.  The Defendants have prepared a chronology of proceedings in this action.  Mr. Cheung, counsel for the Plaintiff also prepared a chronology which set out in greater details of the proceedings, which I find to be correct.  At this stage, I need to mention only two matters.  After the Defendants have filed an acknowledgment of service, they applied for extension of time to file the defence.  Before they obtained leave of this court, the Plaintiff has entered default judgment against the Defendants.  On the hearing before Master Brock, the default judgment has been set aside and retrospective leave was granted to the Defendants to file the defence and counterclaim (which has been filed in court on 19 October 2002 without leave).  The matter was taken on appeal on the issue of costs and was resolved by Deputy High Court Judge A. Cheung (as he then was) on 17 February 2003.

16.  After disposing of the issue on default judgment, the Plaintiff took out an order 14 summons on 30 June 2003.  Direction for exchange of evidence and setting down for argument was given by Master Lung (as he then was) on 14 July 2003.  There were further directions on filing of affirmation, and the last affirmation in issue, the 2^nd Affirmation of Ho was filed on 27 March 2004.  No further action was taken by the Plaintiff until 6 April 2005 when she filed a notice of intention to proceed.  The 3^rd Defendant applied for legal aid and there were other interlocutory application.  The order 14 summons was only heard by Master Ho on 28 September 2005.  No order was made on the summons and no direction on further conduct of this Action had been given by Master Ho as the parties would like to amend their respective pleadings.  The order/direction given expressly reserved to the Plaintiff the right to take out a fresh order 14 application.

17.  Since the order of Master Ho, the Plaintiff had taken no steps in these proceedings.  In fact, the Plaintiff only filed a Notice of Intention to Proceed on 20 December 2007.  No fresh proceeding has been taken out thereafter.  The Plaintiff filed yet another Notice of Intention to Proceed on 22 September 2009.  On 25 August 2010, Messrs. Choi & Liu the present solicitors for the Plaintiff filed a Notice of Change of solicitors.  And a summons to amend the Statement of Claim has been filed on 9 November 2010.  The Defendants objected to the application and the summons had been adjourned for argument.  And on 2 December 2010, the Defendants took out this summons to strike out the Plaintiff’s Statement of Claim and the Action for want of prosecution.  The Plaintiff’s summons for amendment has been adjourned for argument but to be heard after determination of the Defendants’ summons for striking out.

18.  The 3^rd Defendant has filed her 6^th and 8^th Affirmations in support of this summons.  The Plaintiff has filed her 4^th Affirmation.  It is only in July 2011 when the Plaintiff took out a summons to apply for leave to adduce further affirmation for today’s hearing.  The Defendants object to the application.  Having heard the submission by Mr. Cheung, I am not convinced there is any special reason for putting in the late application.  In fact, Mr. Cheung cannot explain why, since the 3^rd Defendant filed her 8^th Affirmation in January 2011, the Plaintiff has not applied to this Court earlier for leave to put in the proposed 7^th Affirmation of the Plaintiff.  Accordingly, I dismiss the application with costs to the Defendants.

19.  I shall now come to this substantive application by the Defendants.  The Defendants seek to strike out the action on three alternative grounds. Firstly, the Defendant complained that the Plaintiff has been guilty of inordinate and inexcusable delay, which delay has caused and is likely to cause substantial prejudice to the Defendant and/or there is a real risk that a fair trial is impossible.  They further added that conduct of the Plaintiff is contrary to the underlining objectives of the new rules under the Civil Justice Reform.  I shall first deal with this ground of application. 

20.  It cannot be disputed, and in fact it is admitted by the Plaintiff that there is a period of inactivity from 28 September 2005, i.e. the order of Master Ho, until 9 November 2010 when the Plaintiff took out a summons to amend the Statement of Claim.  Mr. Cheung does not dispute the fact that the filing of notice of intention to proceed is not an action in the proceedings.  The new Rules of High Court under the Civil Justice Reform come into effect on 2 April 2009.  For the last 19 months of the period of the inactivity, the new Rules applied.

21.  The Defendants also complain that there is inactivity for the period from November 2003 to March 2005.  And if I adopt the chronology prepared by Mr. Cheung, after filing of the 2^nd Affirmation of Ho on 27 March 2004, there is no activity until June 2005 when the Defendant requested for further and better particulars of the affirmation of the 3^rd Defendant.  Taking into account the application by the 3^rd Defendant for legal aid in early May 2005, there is a period of inactivity for about 14 months.

22.  The Defendant also complained that there is another period of inactivity between December 2002, when the Plaintiff should have taken out summons for direction under the old Rules of High Court to June 2003 when the Order 14 summons was taken.  I give the benefit to the Plaintiff that during this period, there is appeal against the order of Master Brock and I do not take into account this period of inactivity.

23.  The Defendants also complain that the Plaintiff has failed to serve the Writ after it has been issued.  The Writ which was issued in October 2001 has only been served on the Defendants in August 2002.  Again, I am not prepared to take this period into consideration.  Technically, the Defendants are not parties to this proceeding until they have been served with the Writ.  The Plaintiff is of course entitled to decide whether they want to proceed with the proceedings by serving the writ on the Defendant.  If the Defendants feel aggrieved, the proper recourse is to make application to this court for direction that the Writ be served upon them and failing which the Action be struck out.  I do not take such a period of inactivity into account for any application for striking out on the ground of want of prosecution.

24.  The Defendants also complain that the Plaintiff has failed to issue the Writ after they became the owner of the Land.  I accept the submission of Mr. Cheung that the pre-action delay should not be taken into account.

25.  Summing up the above chronology, there have been periods of delay summing up to about 74 months, of which 19 months is pro-CJR.  As I mentioned in court, a delay of over 5 years is a substantial delay.  Prima facie, it is an inordinate delay and short of explanation, it is inexcusable.

26.  It is explained by the Plaintiff that she has not proceed with the case because of two reasons.  Firstly, she claimed that she had financial difficulties during these 5 years.  Secondly, it was attributable to the expenses she has to pay in order to support her son who is born with learning difficulties.  She provides this court with some evidence on the school fees that she has to pay for her son studying in the USA, and the costs of maintaining a maid to take care of him in the USA.  But the Plaintiff has not disclosed to this court her monthly earning.

27.  The Plaintiff also claims that she had health problem.  She has been diagnosed to suffer from heart disease and has spent around HK$100,000 for medical expenses.  There is no detail of her medical condition and there is no suggestion that because of her health, she cannot proceed with the proceedings.  This is not an excuse for not proceeding with the case.

28.  On the income of the Plaintiff, the Defendants has adduced evidence to suggest that at the material time, the Plaintiff has properties and she has sold some of them.  I do not need to go as far as to infer that the Plaintiff would have sufficient funding.  But by merely showing the Court her expenses without giving this Court information of her assets and income, the Plaintiff does not begin to prove that she has financial difficulties.

29.  The last reason offered by the Plaintiff is that, her previous lawyers are not getting things done fast enough.  This is not an excuse and the Defendants should not suffer if her lawyers do not proceed with the case properly.

30.  In fact, Mr. Cheung has not offered much explanation for the delay.  I appreciate his difficulty.  But with the above evidence, I conclude that the periods of delay are inordinate and inexcusable.

31.  On application to strike out the want of prosecution, I believe the leading case is Birkett v. James [1978] AC 297 it is said by Lord Diplock in the judgment that: -

“The power should exercise only where the court is satisfied either (1) that the default has been intentional or contumelious, to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2)(a) that has been an inordinate and inexcusable delay on the part of the Plaintiff or his lawyers; and (b) that such delay will give rise to substantial risk that it is not possible to have a fair trial of the issue in the action or such is likely to cause or to have caused serious prejudice the Defendants either between themselves and the Plaintiff or between each other or a third party.”

32.  I understand that the Defendants indeed rely on both limbs as set out in the judgment of Lord Diplock.  I shall come to the abuse point later in this judgment.  For this part of the application, I found that the Defendants have established that there is an inordinate and inexcusable delay.  But the Defendant has to satisfy the court that there is serious prejudice to the Defendants.

33.  I refer to the Defence filed in this action.  The Defendants claimed that Ho is still the registered owner of the Land.  They claimed that Cheung and the Plaintiff, through one Mr. William Chu, on about November 2000 misled and/or deceived Ho to execute the assignment of the Land to the Plaintiff. Further no consideration has been paid by the Plaintiff to Ho as claimed or at all.

34.  I was referred to an Affirmation of Ho dated 4 November 2003 filed by the Defendants in opposition in the order 14 application taken out by the Plaintiff.  Ho stated in paragraph 2 of his Affirmation that: -

“ (1) 本人從來沒有把南山村163號之業權售賣給原告人。對於原告人所說本人於2000年11月30日簽署的買賣合約及同日簽署的契據亦不知情。如本人確有在該等文件上簽名，乃因為受誤導的情況下才會簽署，該等文件在法律上無效。

(2) 本人絕對沒有收受原告人所指的438萬作為賣樓的金額。本人從來不認識原告人，也沒有接受過原告人任何金錢利益。原告人須拿出真確的證據，不可隨便捏造事實。

(3) 由於本人並沒有售樓予原告人，所以本人在法律上並沒有任何責任要把南山村163號交吉予原告人。

(4) 本人亦沒有如原告人申索陳述書之第5段所說於2000年12月23日或其他任何時間終止第一被告人世和有限公司對於南山村163號的特許與及其管有權。本人對於被告人繼續居住或使用該樓宇並無反對。”

35.  The Defendants claimed that the evidence of Ho is material to their defence.  If they could establish that Ho has been misled to execute the assignment, the Plaintiff is not the rightful owner of the Land and accordingly, the Plaintiff’s case must fail.  As the incident took place more than 10 years ago, the Plaintiff invited me to draw the inference that the memories of the relevant witnesses must inevitably fade.

36.  In reply, Mr. Cheung submitted that the evidence of Ho is well documented.  In particular, Mr. Cheung referred me to paragraph 3 of the said Affirmation of Ho: -

“另外，本人曾於1995年簽訂一份授權書，授權張錫剛先生處理有關售賣本人經權與協助發展商在西貢220約1002地段的物業發展事宜。於1995年至2000年間，張錫剛曾透過一位朱家樂先生，多次著本人簽署多份英文文件。所有文件的簽署都是由朱家樂安排，本人沒有與張錫剛先生見過面。”

37.  Mr. Cheung submits that Ho has admitted giving a power of attorney to Cheung in relation to the sale of the small house to be built on the Land in his Affirmation.  And he has admitted signing certain English document.  The affirmation is in such details that could assist Ho to refresh his memory.

38.  The Defendants referred me to a comment by Mr. Justice Au in a case Cheung Sai Kit v Wong Chiu Kit HCA 1611/2005, when his Lordship commented that although the defendant could have the benefit of the affirmation filed in the order 14, it does not mean that the Defendant would not suffer the risk of an unfair trial by reason of the inordinate delay, in particular in cases where the affirmation were filed for interlocutory purpose which may not have suffered many of the details of the event to be recorded.  But each case must turn on its own fact.

39.  For today’s application, Ho has not filed any affirmation to suggest that he has difficulties in recalling the relevant transactions.  I have to say that, having read through the Chinese Affirmation of Ho filed for the order 14 summons, he has set out most of the details.  I agree with Mr. Cheung that the evidence is well documented.  I am not convinced that Ho would suffer from fading memory to such extent that no fair trial is possible.

40.  The Defendants further submitted that prejudice could take different form.  They claim that the health condition of both the 2^nd and 3^rd Defendant were negatively affected with the litigation hang over the heads for over 10 years.  The 3^rd Defendant had been diagnosed with cancer in January 2010.

41.  While accepting this is a form of prejudice, I do not conclude this is serious prejudice to the extent that this court should dismiss the Plaintiff action.

42.  The Defendants also complained that this action deprive the 1^st Defendant the opportunity to settle the dispute with Ho in HCA 10132/2000.  Pausing here, HCA 10132/2000 was instituted by Ho to claim termination of the sale and purchase argument with the Defendants and for possession.  It is apparent from the evidence before me that the action is commenced by Cheung as attorney for Ho.  Subsequently, Ho revokes the power of attorney and the action is in abeyance.

43.  However, there is no detail of what had been offered by Ho or the Defendants to Ho to settle the matter.  I am not in a position to assess if any opportunity for settlement has been affected by this action. 

44.  In conclusion, the Defendants fail to establish prejudice.

45.  Further, even if the Defendants could establish serious prejudice, the Court has to decide whether it is an appropriate case to exercise the discretion to strike out the Action.  Mr. Cheung submitted that the Plaintiff’s main claim is for possession of the Land.  The limitation period is 12 years from the time the cause of action first arises.  The Plaintiff’s right to bring the action accrue in November 2000.  Accordingly, if I strike out the Action today, the Plaintiff is entitled to bring a fresh action tomorrow.

46.  Mr. Cheung has referred me to a number of cases in Hong Kong and the United Kingdom when it is commented that the Court is slow to exercise the discretion when the limitation period has not expired.  I agree.

47.  The Defendant submitted that the limitation period for the claim for mesne profit is 6 years.  Accordingly, at least part of the mesne profit claim by the Plaintiff is time-barred.  They further submitted that I have to consider the application in the spirit of the Civil Justice Reform.  Since the introduction of the new Rules of High Court under the Civil Justice Reform, it is imperative for the Court to have regard to the underlying objectives which are set out in the order 1A rule 1 of the Rules of High Court.  It serves as a caveat to litigants and the legal advisers that the parties’ conduct of the proceedings has to be viewed in accordance with the new Rules and with regard to the underlying objectives as set out in Order 1A.

48.  In fact, I have no disagreement with this submission.  The question before me is whether in light of the Civil Justice Reform, the dismissal of the Plaintiff claim in the circumstances of this case can properly achieve the objectives of the Rules of High Court.  And the fact that the main claim of the Plaintiff for possession is not time-barred must be a significant factor for me to take into account to decide whether I should exercise my discretion to strike out the Plaintiff’s action.  The action would be started again and that would not be a waste of time and costs for me to strike out the action.  I do not consider this is an appropriate case to exercise my discretion, even if I am satisfied that there is prejudice to the Defendants.

49.  On the exercise of my discretion, Mr. Cheung also referred me to the judgment of Deputy High Court Judge Seagroatt in HCA 66/2000.  This is a dispute over tenancy matter.  The defendant in that case applied to strike out the case of want of prosecution.  The application was dismissed by Master Levy and the matter went on appeal to the Honourable Deputy Judge.  The Honourable Deputy Judge referred to the judgment of Neuberger J (as he then was) in Annodeus Entertainment Limited and another v Gibson and another, Chancery Division, 2 February 2000.  Neuberger J set out nine factors that a court should take into account when considering a dismissal for want of prosecution.  Three of the factors are considered by Deputy Judge Seagroatt: -

“Seventhly, the CPR enable the court to adopt a more flexible approach. The previous “all or nothing” extremes of either dismissing the claim for delay or permitting it to continue are now merely the two ends of a spectrum. The court has other sanctions at its disposal which it can and, in appropriate cases, should impose, rather than adopting one of the two extreme positions. Those weapons, those sanctions, are discussed in the judgment of Lord Woolf in Biguzzi at pages 1933D to 1934C of the [1999] 1 WLR 1926 report, and I do not propose to set them out here save to mention that they include payments into court, providing for no interest in favour of the claimant or for high rates of interest in favour of the defendant and for appropriate directions and supervision for the future conduct of the trial. As the decision of the Court of Appeal in AXA Insurance Co Ltd v Swire Fraser (Unreported) 9 December 1999, shows, it is also possible for the court to exercise its jurisdiction to strike out parts of the claim (see per Tuckey LJ at para 25).

Eighthly, in light of general principle and the overriding objection (see CPR, r 1.1(2)) the sanction, if any, to be invoked by the court to deal with a particular case of delay should be proportionate. To dismiss a claim where the claimant appears to stand a reasonable chance of success and of recovering substantial damages is a strong thing to do. [my emphasis] Particularly so bearing in mind art 6(1) of the European Convention on Human Rights, a point touched on, in somewhat different circumstances, by Laddie LJ in Re Swaptronics Limited (unreported, 24 July 1998) and Evans-Lombe in Arrow Nominees Inc and another v Blackledge and others, The Times 8 December 1999. In those cases the question was whether to strike out a claim in circumstances where the claimant had been in contempt of court, in the latter case the contempt being directly related to documents concerned with the action.

Ninthly, it appears to me that it is normally relevant to consider the following factors. First, the length of the delay; secondly, any excuses put forward for the delay; thirdly, the degree to which the claimant has failed to observe the rules of court or any court order; fourthly, the prejudice caused to the defendant by the delay; fifthly, the effect of the delay on trial; sixthly, the effect of the delay on other litigants and other proceedings; seventhly, the extent, if any, to which the defendant can be said to have contributed to the delay; eighthly, the conduct of the claimant and the defendant in relation to the action; ninthly, other special factors of relevance in the particular case.

50.  This principle is adopted by the Honourable Deputy Judge in the case.  The defendant as tenant has the uninterrupted use of the land in issue.  The structure on the land may be illegal but it is not to be determined by the Hon. Deputy Judge at this stage.  His Lordship commented that: -

“To put an end to these proceedings would be to occasion enormous prejudice to the plaintiffs and potentially give the defendants an undeserved benefit of significant proportions, and as a consequence prevent the examination of alleged fraudulent activity. It will leave an unhealthy vacuum.”

51.  It is not dispute that HCA 10132/2000 is still ongoing.  As submitted by Mr. Cheung, this Court should take the proportionality into consideration to decide whether we should exercise the discretion in favour of the Defendants.  

52.  And according to the evidence before me, the Defendants have repudiated the sale and purchase of the Land with Ho (or Cheung).  They may be entitled to a purchaser lien, but not for possession pending repayment.  The Defendants are only relying on a licence given to them by Ho.  It is highly questionable if they could maintain the licence as it is their own case that they have repudiated their agreement with Ho, which must be part and parcel of the sale and purchase agreement.  

53.  If I struck off this case, the Defendants would in effect be entitled to possession of the Land without paying the full consideration they have committed to pay in their contract with Ho.  On the basis that if Ho could not set aside the assignment in favour of the Plaintiff and I am not aware of any application made by Ho  herein or in any action, and if I strike out the Action, no one will be entitled to recover the Land from the Defendants.  They will have a windfall that they are not entitled to. 

54.  I am not at this stage making any ruling.  But looking at the issue that in dispute, I have to say that the loss to the Plaintiff if I strike out the case is not proportionate to the prejudice to the Defendant.  This is yet another factor I should take into account.  With the fact that limitation period for possession has not expired, this is not a just case to exercise my discretion even if there is prejudice to the Defendants.

55.  I shall now move on to the second limb of the Defendants’ argument, that the action should be struck out on abuse.

56.  It is recognized that there is a separate and long established power that the court may dismiss an action for abuse of process by virtual of its inherent jurisdiction.  It is an abuse if the Plaintiff brought an action with no intention to bring the case to trial.  This I believe is also the first limb in the Birkett’s case and has been confirmed by Lord Whoolf in Grovit v Doctor [1997] 1 WLR 640.  Borrowing the words of Lord Whoolf, “the court exists to enable parties to have their disputes resolved.  To commence and to continue litigation you have no intention to bring to conclusion can amount to an abuse of process.”

57.  The Defendants also referred me to the judgment of Mr. Justice Au in Cheung Sai Kit v Wong Chiu Kit HCA 1611/2005.  His Lordship commented that: -

“The inactivity of Mr. Cheung in taking any steps in the action for 22 months (which is a long period) bounds to prima facie evidence of his lack of intention to continue the action to a conclusion.”

58.  It is the complaint of the Defendants that, by the inactivity of the Plaintiff for a period of over 5 years, that amount to prima facie evidence of his lack of intention to continue.  The burden rests on the Plaintiff to satisfy this court that there is not the position.

59.  Mr. Cheung refers me to the judgment of Mr. Justice Woo given in New China Hong Kong Group Limited v AIG Asian Infrastructure Fund LP [2005] 1 HKLRD 383.  His Lordship found that if a litigant brings an action without intention to bring it to trial but simply use the action to put pressure and anxiety on the other parties, it is an abuse.  However, “short of this kind of conduct, an inordinate and inexcusable delay on a part of the plaintiff, without proof of intention to abuse the court process, cannot be a ground to strike out or otherwise the right to make claim within the limitation period, as accorded by statute would be removed.”

60.  Mr. Cheung submitted that the matter complain of against the Plaintiff is nothing more than delay.  It is not sufficient to establish that the Plaintiff has no intention to continue with the action and to bring it to a trial.

61.  The Defendants argue that the excuse given by the Plaintiff for inactivity, including lack of finance or change of solicitors are not acceptable excuse for an undue delay and it cannot rebut the prima facie evidence that the Plaintiff has no intention to advance this action to trial. They submitted that after the unsuccessful order 14 application, the Plaintiff realizes that she had a weak case.  They submit that she consciously chooses to warehouse her case as long as possible until the memory of witnesses and bank records all faded into obscurity.

62.  I am not convinced that there is evidence to suggest the Plaintiff deliberately warehouse the case until a convenient time.

63.  There are matters which have not been properly answered.  To begin with, the order 14 application come to an end when the usual direction should be given by the hearing master.  In this particular case, Master Ho did not give necessary direction for future conduct of the case on the basis that the parties expressed to him that they have to amend their respective pleadings. The Plaintiff must be under a duty to proceed with the amendment as soon as possible.

64.  Secondly, if no amendment has been taken out, the pleading would have been closed after the time filing a reply.  Strictly speaking, Plaintiff would be duty bound to take out the direction summons, or under the Civil Justice Reform to issue a case management summons.  None of this has been done.

65.  In light of the above, the Defendants submit that the conduct of the Plaintiff can amount to an abuse.  But I have to bear in mind that these are not unless orders.  Although it is prudent for the Plaintiff to have taken out the necessary application on time, having taken all the complaints into consideration, I do not agree that the Plaintiff’s conduct amount to an abuse of Court proceedings. 

66.  Further, if there is abuse, the court still have to consider whether it is fair to exercise the discretion to strike out the action, and particular in light of the Civil Justice Reform, whether the dismissal of the Plaintiff’s claim in the circumstances can properly achieve the objective of the Rules of the Court.

67.  In the consideration of exercising of my discretion, I come to the same argument as analyzed above.  Given the fact that the action is not time-barred, and on the added consideration of proportionality, I repeat my finding above mentioned that this is not an appropriate case that I should exercise my discretion.

68.  I now turn to the other complaints of the Defendants.  They complain that the Defendants has abused the Court proceedings.  They referred to the argument before Master Brock when the default judgment has been set aside.

69.  Further, they complain that when the Plaintiff took out an order 14 application, she stated in the supporting affirmation that she believes the Defendants has no defence to this action, and she cannot make such an averment honestly.

70.  The last complaint that the Defendant is the Plaintiff now seeking to amend the Statement of Claim.  By the amendment, it only shows that the Plaintiff now agreed that she was pleaded in the original Statement of Claim is false.

71.  On the summons for amendment, it is sufficient for me to say that, looking at the amendment, the Plaintiff is still rely on the assignment as the basis of the claim of possession.  It is quite clear that she has added some details which are missing in the original Statement of Claim.  Such might be commented but I am not convinced its amounts to abuse or deliberate covering up or lying to this Court.  Having considered all the matters and all the argument, I am not convinced there is other ground to support the Defendant’s application to strike out on the ground of abuse.

72.  I consider the written submission and I heard the oral argument. However I am not convinced this amount to abuse.

73.  In conclusion, I refuse the application of Defendants.  Nevertheless, given the history of this case, I believe it is one of those cases which this court cannot leave the case without giving a stringent timetable for the Plaintiff to comply with various directions.  To begin with, the Plaintiff is obliged to restore the summons for amendment within the next 14 days to a master on the usual 3-minutes call-over list.  If the Plaintiff fails to restore the summons for amendment within 14 days, the claim should be dismissed.

74.  Further, within 14 days, the Plaintiff should take out a case management summons returnable at the same time as the summons for amendment.  Direction for further conduct of the case could be given.  And this Court may impose sanction against, in particular the Plaintiff, for failure to comply with any time set. With further directions on case management, I am sure the case could be brought to trial within a reasonably short period of time.

75.  On question of costs, although the Defendant failed in the case, this is one of those cases which I see no reason why the Plaintiff should not bear the costs of the Defendants.  It is mainly on the consideration whether I should exercise my discretion when I refuse to strike out the Plaintiff’s claim.  In such a situation, I grant order nisi that the Plaintiff should pay the costs of the Defendants forthwith to be taxed if not agreed.

Mr. Adonis KW Cheung, instructed by Messrs. Choi & Liu, for the Plaintiff

Defendants appearing in person

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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J U D G M E N T

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1. This is an appeal against a costs order made by Master D Brock on 25 November 2002. I need not recite the material events here; they have been set out succinctly in an amended chronology of events prepared by Mr Wong appearing for the Plaintiff in this appeal.

2. The principles governing a judge in chambers hearing an appeal from a master's costs order are well-known. Unless the order is unreasonable, unless the master erred in law or unless he failed to take into account proper matters or took into account matters that should not have been taken into account, the judge should not disturb the master's exercise of discretion on the question of costs. See for example, The Bank of East Asia Limited v. Yeung Lam Wilson, HCMP 4077 of 1998, Chung J, 27 October 1999.

3. In the present case, I am not persuaded by Mr Wong that the case falls within any one of those exceptions. I see no reason to disturb the Master's exercise of discretion. If I had been hearing the question of costs at first instance, I would most probably have made the same order myself.

4. I agree that so far as the costs of taking out the two time summonses by the 1st and 2nd Defendants are concerned, they should be paid, as a matter of general principle, by the two Defendants to the Plaintiff. After all, the Defendants were asking for an indulgence from the Court.

5. After the taking out of those two summonses, a defence was purportedly filed by all three defendants, one of whom i.e. the 3rd Defendant had already got leave from Master Levy to file the defence out of time. Mr Wong accepts that the defence disclosed a substantive and bona fide defence. In those circumstances, there was really no justification to oppose any further the two time summonses of the remaining two Defendants, i.e. the 1st and 2nd Defendants.

6. I would also agree that, as a matter of principle, the Plaintiff should be given the costs of the 3-minute hearing before Master Erik Shum on 25 October 2002, the return date of the two summonses in question. But in my judgment, the matter ought to have stopped there and then; in other words, the two Defendants should have been given leave to file the defence which was ready for filing out of time, whereas the Plaintiff should have been given the costs of the two time summonses (up to and including that hearing). In particular, in relation to the 2nd Defendant, although he did not turn up at that hearing, there was no reason why he should not have been given leave to file the defence out of time. There was absolutely no need, in relation to him, to have a further hearing to determine anything.

7. In relation to the 1st Defendant, there was some misunderstanding at the hearing before Master Erik Shum regarding whether leave had been given by the Court to the 1st Defendant to act in person and be represented by a director. In fact, leave had been given on 16 October 2002 when the 1st Defendant took out the time summons. As it happened, the 25 October hearing before Master Erik Shum achieved nothing － the matter was adjourned for argument with estimated time of 30 minutes, the Plaintiff having failed to indicate to the Master whether she would oppose or not contest the two applications; costs were reserved.

8. As I said, in relation to the 2nd Defendant's summons, I really fail to see what was required to be further argued that would require the consumption of anything near 30 minutes of the Court's time. Therefore in relation to the costs of the 30-minute hearing which eventually took place before Master D Brock whose order made at that hearing is the subject matter of the present appeal, in my judgment, the 2nd Defendant should not be held responsible for the costs. Rather, in my judgment, as a matter of principle, the 2nd Defendant should have been given the costs of that subsequent hearing.

9. In relation to the 1st Defendant, I can understand that because of the misunderstanding regarding whether the 1st Defendant had been given leave to act in person, the Plaintiff thought that there was some justification to have a 30-minute hearing to sort things out. However, the Plaintiff was made aware of the true position at the beginning of the hearing before Master Brock, yet the Plaintiff did not there and then stopped opposing the 1st Defendant's time summons. The hearing carried on for some time before the Master eventually made his order that each party should bear its own costs, after making an order in terms of the time summonses.

10. For my part, as a matter of principle, I am of the view that the 1st Defendant should not really be held responsible for the misunderstanding that the Plaintiff had had, prior to the hearing on 25 November 2002. Put another way, at best the Plaintiff's position on costs vis-à-vis the 1st Defendant should have been that each party should bear its own costs.

11. I have set out above my views on the respective positions of the parties in relation to the taking out of the two time summonses and the two hearings before the two learned Masters.

12. In my judgment, there was nothing to stop Master Brock from taking a global view of the matter based on the above views on the individual positions of the parties regarding the three sets of costs in question, and eventually coming up with a global order that each party should bear its own costs. Put another way, the order made by the Master eventually may be justified by taking the above approach. In particular, I should emphasize that it is quite apparent that the costs involved in the second hearing before Master Brock was in respect of a longer hearing time and probably involved a longer preparation time than the 3-minute hearing before Master Erik Shum. There is much to be said for the view that in fact by taking such a global view of the parties' respective responsibilities as to costs, the Master was indeed being lenient to the Plaintiff.

13. I should add that although there were two time summonses taken out respectively by the 1st and 2nd Defendants, the two summonses were heard together by the two learned Masters at the two hearings in question. So in my judgment, Master Brock was quite entitled to take a global view of the costs position regarding the two summonses together.

14. So for all those reasons, as I said, I am not convinced that this is a case in which I, sitting as a judge in chambers hearing an appeal from the Master's order on costs, should disturb the Master's order. Alternatively, if I had to exercise the discretion afresh, I would have made the same costs order myself, having heard arguments from Mr Wong. So in other words, I dismiss the present appeal.

[Submission on costs]

15. As regards the costs of this appeal, having heard Mr Wong further, I am not persuaded that the misunderstanding relating to whether the 1st Defendant had got leave to act in person can justify or excuse the lodging of this unsuccessful appeal. As I said above, the true position was made known to the Plaintiff at the beginning of the hearing before Master Brock. Looking at all the circumstances of this case, I can see no reason why the normal rule that costs should follow the event should not apply in the present appeal. So I further order that the costs of this appeal be paid by the Plaintiff to the 1st and 2nd Defendants, such costs to be taxed if not agreed.

Representation:

Mr S Wong of Messrs Lam, Lee & Lai, for the Plaintiff

World Peace Limited, the 1st Defendant, represented by Ms Kwok Tsui King Christine, appearing in person

Mr Frei Alfred, the 2nd Defendant, appearing in person