Case Detail

HCA 771/2004

in the high court of the

hong kong special administrative region

COURT OF FIRST INSTANCE

Action no. 771 of 2004

BETWEEN

	HARVEST RISE LIMITED	1st Plaintiff
	LEUNG CHI MING	2nd Plaintiff
	CHENG WING LAM	3rd Plaintiff
	CHENG SHUI YU	4th Plaintiff
	and
	LAW KWOK YAN	Defendant

Before: Hon Rogers VP (sitting as an additional Judge of the Court of First Instance) in Chambers

Date of Hearing: 11 August 2005

Date of Judgment: 11 August 2005

________________________
J U D G M E N T
________________________

1. I have two applications in front of me today. One is for a stay of these proceedings under the inherent jurisdiction on the basis that a settlement agreement has been reached between the parties.

2. The more this case went on, the more I felt that it would be a very sensible thing if these parties did reach an agreement and settle their differences because, the more this case goes on, it seems to me that the more costs will be run up. However, looking at the documents which I have been shown, all I can say is it looks as though the parties are getting close to a settlement, but I do not think, at the moment, that they have reached one because there seem to be differences between the various documents that have been put forward and I think that this has to be sorted out. I therefore would urge the parties to use their best endeavours to try and settle this before the whole litigation gets totally out of hand.

3. In those circumstances, I cannot accede to this summons today and I will adjourn that so that if the plaintiffs really wish to pursue that summons, he can do so, but at the moment I cannot see that, today, I can adjourn these proceedings.

4. The other matter is an appeal from the master. What had happened was, in January of this year, there had been a hearing before another master on the defendant’s application to set aside judgment in default. The master granted that application but ordered the defendant to pay a total of $112,000, $110,000 being the gross sum assessment and the extra $2,000 was the costs of that day.

5. On that application, I note, that the defendant had applied for a stay of the costs order but that was refused. That costs order has not been satisfied and I am told - and there seems to be adequate reason to believe that - that a great deal of money has been spent on litigation, in fact, in other courts and in other cases between the parties, much of it by the defendant making various claims in the District Court and so forth which possibly could have been made in a counterclaim in these proceedings and, therefore, one queries whether that was an appropriate step.

6. Nevertheless, what the plaintiffs then did was to seek an order from the master that there be an Unless Order that the money be paid and, if it does not get paid, there be judgment in default. The master refused that order, exercising his discretion. He explained why; because he did not consider that the defendant had been contumacious, and he did not consider that the failure to pay the amount of costs ordered delayed the proceedings in any way or hampered the proper conduct of the proceedings.

7. In both respects, he seems to be right. In respect of contumaciousness, there seems to be a great deal of dispute between the parties as to who owes who what, and it does seem that the defendant has quite heavy financial claims, whether they are justified or not, against the 1^st plaintiff. As regards delaying the proceedings or hampering the proceedings, I agree with the master that simply a failure to pay the costs is not to be equated with something like failing to provide discovery, which of course hampers the proper administration of justice because the full facts are not before the court; nor is it like failing to provide further and better particulars, which of course are there to clarify what each party’s case is about.

8. Whilst I do not consider that it would be impossible for a court to make such an order as is requested, in the circumstances of this case and taking into consideration the other litigation which is going on and the other claims which are extant, I do not consider it right, on today’s application, to make such an order. But because the defendant has not paid a sum which has been ordered to be paid, I do not think that the 1^st plaintiff should have to bear the costs of these proceedings.

9. In the circumstances, I propose to dismiss the application with no order as to costs.

(Anthony Rogers)
Vice-President

Mr Victor Chan, of Messrs Tang, Wong & Cheung, for the Plaintiffs/Appellants

Mr Raymond Chung, of Messrs Chung, Fong & Co., for the Defendant/Respondent

HCA 771/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 771 OF 2004

BETWEEN

	HARVEST RISE LIMITED	Plaintiff
	and
	LAW KWOK YAN （羅國恩）	Defendant

______________________

Before : Hon Sakhrani J in Chambers

Date of Hearing : 7 April 2005

Date of Judgment : 7 April 2005

J U D G M E N T

1. This is an appeal against the costs order made by Master Au- Yeung.

2. On the defendant’s application to set aside judgment entered in default Master Au-Yeung decided that the judgment that was entered by the plaintiff was regularly entered. However, she exercised her discretion to set aside the judgment on the ground that the defences raised showed a real prospect of success.

3. There was an issue before her as to whether or not the judgment was a regular judgment. That issue was decided in favour of the plaintiff and she held that the judgment was regularly entered. There is no appeal from that decision of the Master. The appeal is as to the costs order made.

4. By her order dated 12 January 2005, she ordered that the judgment in default be set aside and that the defendant do pay the costs of the application to the plaintiff. She further ordered that the assessment of costs be adjourned to 21^st January 2005.

5. On 21 January 2005 she ordered that the defendant do pay the costs which she assessed in the gross sum of HK$110,000.00 to the plaintiff. She further ordered that the application of the defendant for stay of the costs order be refused and the costs of that application be assessed in the sum of HK$2,000.00 to be paid by the defendant to the plaintiff.

6. Mr. Chung, for the defendant, tried to argue that the judgment that was entered was an irregular judgment. However, it is not open to the defendant to argue that the judgment was an irregular judgment. That has already been found by the Master to be a regular judgment entered by the plaintiff. There is no appeal from that decision and it is not open to the defendant to re-open that matter before me.

7. As I have said, this is an appeal as to costs only. An appeal from a Master to a Judge as to costs only should not be allowed unless it could be shown that the order made by the Master in the exercise of her discretion was unreasonable or erred in law namely, if she either failed to take into account proper matters or took into account matters that should not be taken into account (marginal note 58/1/6 Hong Kong Civil Procedure 2004 and Paul Y-ITC Construction Ltd. v. Kin Shing Co. Ltd. [1999] 1 HKC 511).

8. Mr. Chung argued that the usual practice is for the plaintiff to be awarded its costs in any event where there is a regularly obtained judgment but it is inappropriate to do that when neither party had been at fault (marginal note 13/9/16 Hong Kong Civil Procedure 2004).

9. In this case the defendant applied to set aside the judgment on the ground that service of the writ was irregular and further, that the obtaining of the default judgment was by fraud. The Master dealt with these matters in her Reasons for Decision dated 12 January 2005. She was satisfied that the judgment was regularly obtained and she also frowned upon the allegations of fraud made without proper particulars being given.

10. I am unable to accept that there has been no fault on the part of the defendant.

11. The Master at para. 12 of her Reasons for Decision said this :

“Whilst I accept the defendant had tried to, but was prevented, from filing the acknowledgment of service because of the plaintiff’s failure to file and seal Master Kwan’s order, that barrier was removed from 13 August onwards. Order12, rule 6(2) did not bar the defendant from filing an acknowledgment of service out of time, he could have done so without leave of the court. Even if leave of the court was required, an application taken out shortly after 13 August would doubtless have received sympathetic treatment of the court coupled with a cost order against the plaintiff. The defendant had not made use of the opportunity after 13 August to file an acknowledgment of service.”

12. And at para. 18, she said this :

“Taking all circumstances into account, I am of the firm view that the re-service was proper, was effective and that the judgment was regularly entered on 30 August. The opportunity for the defendant to file the acknowledgement of service was not taken through no fault of the plaintiff from 13 August to 29 August.”

13. Order 12, rule 6 makes it plain, in my view, that a defendant is not precluded from acknowledging service in an action after the time limited for so doing. It goes on to say that if the defendant acknowledges service after that time, he shall not, unless the Court otherwise orders, be entitled to serve the defence or do any act later than if he had acknowledged service within that time. There was nothing to stop the defendant from acknowledging service of the writ after the barrier had been removed from 13 August onwards. So for the period from 13 August to 29 August the defendant did not make use of the opportunity to file an acknowledgment of service. I, therefore, cannot say that there was no fault on the part of the defendant.

14. The defendant has failed to persuade me that the Master in the exercise of her discretion erred in law or that her order was unreasonable. In the circumstances the appeal is dismissed.

	(Arjan H. Sakhrani)
	Judge of the Court of First Instance,
	High Court

Mr. Victor Chan of Messrs Tang, Wong & Cheung, for the plaintiff

Mr. Raymond Chung of Messrs Chung, Fong & Co., for thedefendant

HARVEST RISE LTD AND OTHERS v. LAW KWOK YAN

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