THE INCORPORATED OWNERS OF KAN OKE v. LEE YIU KEI AND ANOTHER

HCMP 33/2014

[2020] HKCFI 75

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 33 OF 2014

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D E C I S I O N

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1.  This is an appeal brought by the Defendants against the order of Master A Ho dated 28 September 2018 (“the Order”).

2.  This case arises out of a simple claim for unpaid contribution for renovation fund.  The Plaintiff is the incorporated owners of a building, and the Defendants are the owners of one of the units of such building (“the Property”).  The Defendants had not paid the outstanding contribution for the renovation fund in respect of the Property and so the Plaintiff registered a Memorandum of Charge against the Property (“the Memorandum”).  In these proceedings, the Plaintiff claims for the outstanding sum due under the Memorandum.

3.  The proceedings had been commenced in 2014.  Unfortunately, the Defendants had issued a number of unnecessary summonses and brought a number of unsuccessful appeals against the orders of various Masters, and as a result the proceedings had been delayed considerably.

4.  On 5 April 2016, Master Hui finally gave an order authorising the sale of the Property if the Defendants still refused to pay for the outstanding contribution.

5.  On 22 July 2016, DHCJ Saunders made an order to stay the execution of the order for sale of the Property to give time to the Plaintiff to bank-in 56 cheques issued by the Defendants.

6.  After that, there was dispute between the parties as to the payment of the remaining interest and legal costs incurred by the Plaintiff.

7.  On 7 July 2017, Master J Wong made an order that, unless the Defendants do pay the sum of $49,572.09 being remaining outstanding interest on or before 7 August 2017, the stay of execution ordered by DHCJ Saunders be lifted.

8.  On 17 July 2018, the Defendants took out a summons to stay the execution of the order of Master Hui dated 5 April 2016 as amended on 16 January 2017 “until all omitted page numbers in the 2 said orders of 5 April 2016 and 16 January 2017 are added.”

9.  On 28 September 2018, Master Ho dismissed the said summons and ordered the Defendants to pay costs of the Plaintiff summarily assessed in the sum of $650.

10.  The Defendants now seek to appeal against the Order of Master Ho which, in my judgment, is totally groundless.

11.  From the outset, I must say that the Defendants have all along conducted the case in a vexatious manner.  Throughout the proceedings, they have issued repetitive groundless applications with a view to strike out the Originating Summons or to stay the execution of the order for sale which are totally without substance.  It is easy for the court to lose track of all the applications taken out by the Defendants, and navigation through the court file to find out what really happened is a painful exercise.

12.  The same applies to the Plaintiff’s summons dated 17 July 2018.  The only complaint is that there are no page numbers in the relevant orders.  So far as I am aware, there is no specific requirement both in the Rules of the High Court (Cap 4A) or in the Practice Directions for page numbers to be inserted in the bottom of each page of a court order, though I agree that it is a good practice to do so.  In any event, such minor technicality should not affect the validity of the orders made on 5 April 2016 and 16 January 2017.  The orders sealed by the court truly reflect the orders made by Master Hui on 5 April 2016 and 16 January 2017 and so the appeal is a hopeless one.  Neither can the Defendants complain that the costs order made by Master Ho is an unreasonable one.

13.  For the above reasons, I dismiss the appeal.  I have listened to the parties’ submissions on costs.  As costs should follow the events, I order that the Defendants do pay to the Plaintiff the costs of this appeal.

Mr J Wong, of S K Lam, Alfred Chan & Co, for the Plaintiff

The Defendants, in person, present

HCMP 33/2014

[2019] HKCFI 2872

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 33 OF 2014

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REASONS FOR DECISION

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1.  At the end of the hearing on 27 November 2019, I gave leave to the defendants (“Ds”) to withdraw a notice of appeal filed by Ds on 26 April 2019 (“the appeal”).  At the same time, I ordered that costs of the appeal be paid by Ds to the plaintiff (“P”) on the District Court’s scale forthwith and be summarily assessed.  These are my reasons.

2.  By a summons dated 4 April 2019, Ds sought an order to stay the execution of the order obtained by P on 5 April 2016 and subsequently amended on 13 January 2017. On 26 April 2019, the said summons was heard by Master Lui.  The master dismissed the summons and ordered Ds to pay costs to P.  On the same date, Ds lodged the appeal against Master Lui’s decision.  Ds stated in the notice of appeal that the estimated length of the appeal hearing would be 20 minutes.

3.  Originally, the appeal was scheduled to be heard on 30 October 2019 at 2:30 pm, with 20 minutes reserved.  Having briefly read the papers, I was of the view that the appeal could not be disposed of within 20 minutes. On 3 October 2019, I issued directions to the parties, in which I told the parties that the appeal hearing would be moved to 24 October 2019 at 10 am, with 3 hours reserved.  I also gave directions concerning the preparation of hearing bundles and written submissions.

4.  On or about 10 October 2019, Ds wrote to the court and said that they cancelled and withdrew their notice of appeal, and they requested the court to vacate the hearing concerning the appeal.  They also said that they would not be free on 24 October 2019.

5.  On 11 October 2019, I directed P to provide a written reply to Ds’ letter.  By their letter dated 14 October 2019, P’s solicitors replied and said, inter alia, that P would agree to the proposed withdrawal of the appeal, provided that Ds would pay costs of the appeal to P.

6.  On 15 October 2019, I issued directions and required Ds to clarify in writing whether they intended to withdraw the appeal, or they were merely requesting to move the substantive hearing of the appeal to another date.  On or about 16 October 2019, Ds wrote to the court and asked to have the substantive hearing of the appeal on 30 April 2020 or in the last week of April 2020.  Ds also insisted that the substantive hearing must be held in the afternoon at 2:30, the length of the substantive hearing must be 20 minutes, and there should be no hearing bundle and no written submission.

7.  Having read Ds’ letter dated 16 October 2019, I took the view that it would be necessary to have a direction hearing to understand the reasons of the proposal made by Ds in the said letter.  The direction hearing should be held as soon as practicable so that there would not be any substantial delay in disposing the appeal lodged by Ds.  On 16 October 2019, I issued the following directions to the parties:

“1. The hearing on 24 October 2019 be vacated.

2. There be a direction hearing for the appeal lodged by [Ds] on 26 April 2019 on a date to be fixed before DHCJ MK Liu in Chambers (open to public) with 30 minutes reserved.

3. The parties shall approach the listing office to fix the date of the said direction hearing on or before 22 October 2019, failing which a date will be fixed by the Court without consulting the parties.

4.  The direction hearing shall take place on or before 20 December 2019.”

8.  On or about 17 October 2019, P’s solicitors wrote to Ds to inform them that P’s solicitors would attend the registry of the court to fix a hearing date in accordance with my directions on 22 October 2019 at 11 am. P’s solicitors asked Ds to give a reply concerning the proposed time for fixing a hearing date by 21 October 2019, or P’s solicitors would fix a hearing date in Ds’ absence.

9.  On or about 17 October 2019, Ds wrote 2 letters to P’s solicitors.

(1)     In the first letter, Ds gave a reply to P’s solicitors’ letter dated 14 October 2019. Ds objected to P’s claim for costs of the appeal. Ds said that they had withdrawn the appeal and P’s solicitors and counsel would have no need to do any work.

(2)     In the second letter, Ds said that they would not be free on 22 October 2019 and they objected that they had only been provided with short notice of the fixing-date appointment.

10.  On 21 October 2019, Ds wrote to the court and said they requested to vacate all appeal hearings, and there would be no need to have any direction hearing and any fixing-date appointment. Ds also expressed their dissatisfaction of the directions given by the court on 16 October 2019.

11.  On 22 October 2019, P’s solicitors attended the registry of the court and fixed the direction hearing on 27 November 2019. Ds were absent when the date of the direction hearing was fixed.

12.  On 30 October 2019, I gave the following directions to the parties:

“1. The parties shall attend the hearing on 27 November 2019.

2.     The court may make any order in the hearing as the court deems fit, including an order finally disposing of the appeal.”

13.  On or about 9 November 2019, Ds wrote to the court and said that they had withdrawn the appeal and there would be no need to have any hearing. They also complained that the direction hearing on 27 November 2019 was fixed unfairly in their absence, for they were not free and unable to attend the fixing-date appointment on 22 October 2019.

14.  I do not accept that the direction hearing on 27 November 2019 was unfairly fixed in Ds’ absence. In their second letter to P’s solicitors dated 17 October 2019, Ds only said that they were not free on 22 October 2019.  No reason was given as to why they were not free on that day.  Further, there was no counter-proposed date and time for going to the registry of the court to fix a hearing date. In these circumstances, P’s solicitors cannot be criticized for attending the registry of the court on 22 October 2019 to fix the hearing date of the direction hearing. In any event, both Ds were able to attend the direction hearing on 27 November 2019, and the 2^nd defendant (“D2”) on behalf of Ds has made lengthy oral submissions in the direction hearing. 

15.  Initially, Ds did not make themselves clear as to whether they intended to withdraw the appeal or to have the substantive hearing of the appeal at a later time.  Subsequently, in their first letter dated 17 October 2019, Ds stated that they opposed to P’s claim for costs for they had withdrawn their appeal.

16.  In the hearing on 27 November 2019, Mr Chan for P submitted that P had no objection to Ds’ application for leave to withdraw the appeal, but costs of the appeal should be awarded to P.  Mr Chan submitted that since his firm had agreed to charge P on the District Court’s scale, P was only claiming costs of the appeal against Ds on the District Court’s scale.  D2 on behalf of Ds submitted that they had withdrawn their appeal and P should have incurred no costs as a result of the appeal.  If there has been any cost incurred by P in relation to the appeal, such costs were occasioned by the unreasonable and unnecessary works done by P’s solicitors and the improper directions given by the court. 

17.  After hearing submissions from the parties, at the end of the hearing, I made the order set out in paragraph 1 above.  In my view, there is no merit in D2’s submissions.  Ds have lodged the notice of appeal on 26 April 2019, and Ds did not make themselves clear whether they intended to withdraw the appeal at any time before 17 October 2019.  There was nothing wrong for P’s solicitors to do preparatory work in relation to the appeal before 17 October 2019, including the preparation of the hearing bundles.  Further, on and after 17 October 2019, Ds insisted that they should not bear costs of the appeal, and therefore it could not be said that everything in relation to the appeal had been settled.  There was nothing wrong for P’s solicitors to continue to do work relating to the appeal.  Turning to the directions given by the court, I do not accept that there is any impropriety in the directions given by the court.  As to the estimated length of the appeal hearing and the necessity of having hearing bundles and written submissions for the disposal of the appeal, this court is entitled to take a view different from Ds’ own view.  Ultimately, case management matters are determined by the court and not dictated by Ds.  P has incurred costs as a result of that notice of appeal.  As a result of the Ds’ abandonment of the appeal, costs should follow the event.  There is no reason why Ds should not bear costs of the appeal.

18.  Mr Chan has provided a bill of costs for summary assessment to the court and to Ds in the hearing on 27 November 2019.  D2 complained that the bill of costs was only provided to Ds during the hearing and Ds had no sufficient time to study the bill.  However, D2 had made lengthy oral submissions on P’s bill of costs in the hearing.  I also gave leave to Ds to put in a written reply to the said bill on or before 2 December 2019.  However, Ds have not put in any written reply pursuant to my leave. Having considered the submissions made by the parties in the hearing, I summarily assess the costs to be paid by Ds to P at HK$25,000.

19.  After the hearing on 27 November 2019, Ds wrote several letters to this court on the same date.  In one of those letters, Ds said that they did not withdraw the appeal, and they repeated the request made by them in their letter dated 16 October 2019, ie postponing the substantive hearing of the appeal to late April 2020, with 20 minutes reserved, with no hearing bundle and no written submission.  I must say that the request made by Ds is an extremely unreasonable request.  Ds have clearly and unequivocally confirmed in the hearing on 27 November 2019 that they withdrew the appeal, and I have made the order as stated in paragraph 1 above in the hearing.  Ds are not allowed to change their stance from time to time.  Ds’ request as stated in the said letter must be refused.

HCMP 33/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 33 OF 2014

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D E C I S I O N

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1.  This is the defendants’ application for an injunction and RAO and RPO.

2.  The background is this.  By an order dated 5 April 2016, Master Hui required the defendants to pay outstanding charges and interest on a memorandum of charge.  If they failed to pay, then the plaintiff was at liberty to sell the defendants’ properties at a reserve price of $15.5 million.  Master Hui also dismissed six summonses taken out by the defendants.  Subsequently, Master Hui’s order was amended, on 13 January 2017, to specify the interest that the defendants had to pay on the principal sum.  I shall collectively refer to the original order and the amended order as “the orders”.

3.  By the present summons, the defendants seek an order against the plaintiff, the plaintiff’s solicitors and all related parties and all other parties requiring them to stop or be prohibited from enforcing the orders.  The solicitors and so-called related and all other parties are not joined to this summons so I do not have to consider making any order against these persons. In addition, the defendants seek an RAO and RPO against the plaintiff.  The defendants claim that there is urgency in the present application to prevent the plaintiff from recovering possession and selling the properties belonging to the defendants.

4.  A preliminary point has been taken that the affirmation of Li Man-kit filed on behalf of the plaintiff should not be admissible as he is not a party to the present proceedings.  I do not accept this argument.  Mr Li is a witness for the plaintiff and a witness can provide evidence in an interlocutory application by way of affirmation on behalf of the plaintiff. But even if I were to disregard Mr Li’s affirmation altogether, it can be seen that the evidence of the defendants is not sufficient to support any of their applications.

Injunction Application

5.  I have read the supporting affirmations of the defendants and their written submission and every summons and supporting affidavit for those summonses referred to in Master Hui’s orders.  It is quite clear that the defendants feel aggrieved by the orders made against them, ranging from procedural error to merits or lack of merits.  For example, they claim that there was no basis for Master Hui to grant interest and they complain about the procedure before Master Hui in that they were not given the opportunity to respond.  The complaint concerns the rate of interest and period covered.  They assert that the amendments were obtained by fraud or misconduct on the part of the plaintiff.  

6.  All of these complaints go to the merits of the orders.  The proper application should have been an appeal against the orders or a stay of execution on appeal instead of an injunction.

7.  I have nevertheless considered the appropriateness of an injunction.  The orders are valid until set aside on appeal and ought to be complied with within the time specified in the order.  If no time is specified, the time for compliance is usually forthwith.  The defendants appear to be asking for an interim injunction which they say is urgent.  It is noteworthy that they are seeking not to preserve the plaintiff’s assets but their own assets.  Assuming this injunction is of the type that falls within the American Cyanamid situation, being an interim injunction, I have considered the test set out in American Cyanamid. 

8.  In my view, there is no serious issue to be tried on the claim since the substantive issue under the originating summons has been resolved by the orders.  The counterclaim is yet to be tried.  They do not affect the validity of the orders.  There is not shown to be any risk of dissipation of assets on the part of the plaintiff.  The balance of convenience lies in not denying the plaintiff of the fruit of their judgment and in not granting an injunction. The application for an injunction is therefore dismissed.

9.  Separately, I have considered the alternative of a stay of execution of the orders as invited by Madam Leung.  However, there is no appeal against the orders and therefore the court should not consider a stay of execution pending appeal.

10.  Furthermore, if the defendants are relying on Order 45 or 47 of the Rules of the High Court in seeking a stay, they have not set out the evidence in support.  Once again, I do not see why the plaintiff should be denied the fruit of their judgment.  A stay is refused.

RAO or RPO

11.  There are no bases for issue of RAO or RPO either.  The defendants have not provided any facts in support of these applications.  There is no evidence of the plaintiff abusing the process either by persistently making unwarranted applications to the court in the present case (see Hong Kong Civil Procedure 2017, Vol 1, PD11.3, §5) or by seeking persistently to re-litigate in fresh proceedings without viable legal grounds matters which have already been determined by the court (Hong Kong Civil Procedure 2017, Vol 1, PD11.3, §8).  There is simply no evidence that the plaintiff has been making applications to the court that were unwarranted or were persistent.  So far, the applications made were for costs and have been adjudicated upon by the court.  The evidence provided by the defendants in their supporting affirmations simply failed to demonstrate how all the elements constituting abuse have been met.  An RAO is therefore not justified.

12.  In respect of RPO, Madam Leung refers to two previous claims at the Small Claims Tribunal wherein, she asserts, that the plaintiff’s claims were dismissed.  However, the substance of those claims or orders of the Tribunal have not been placed before this court.  There is simply no way in which the court can assess if the plaintiff has re-litigated matters that have been adjudicated upon.  An RPO is not justified.

13.  None of the applications set out in the summons dated 13 January 2017 have been established or are justified.  I therefore dismiss the summons.

(Submissions on costs)

14.  I summarily assess and allow the costs at $10,000, to be paid by the defendants to the plaintiff within 14 days.

HCMP 33/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 33 OF 2014

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J U D G M E N T

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Introduction

1.  The originating summons was issued by The Incorporated Owners of Kan Oke (“P”) for the determination of payment of all monies due to P under a  memorandum of charge registered in the Land Registry and for sale of the defendants’ property, in order to discharge all the sums owed.

2.  There were two named defendants, Lee Yiu Kei (“D1”) and Leung Kwai Ling Loretta (“D2”) and both acted and appeared in person before this court.

3.  Before this court were D2’s notice of appeal filed on 21 August 2014 (“1^st Notice”), supplemental notice of appeal filed on 24 November 2014 (“2^nd Notice”), and an amended notice of appeal filed on 24 November 2014 to amend the 1^st Notice (“3^rd Notice”), all against an order of Master Hui made on 19 August 2014 which, among other things, dismissed D2’s applications for orders including summary judgment and / or default judgment on her purported amended counterclaim (“Amended Counterclaim”).

Background

4.  P is the registered incorporated owners of the building known as Kan Oke at 28A Tai Hang Road Hong Kong (“Building”) under the Building Management Ordinance, Cap 344.

5.  D1 and D2 (collectively “Ds”) are and were at all material times the registered owners of a property on the 1^st floor of  Kan Oke (“Property”) having acquired ownership on 25 July 2000, subject to and with the benefit of   the deed of mutual covenant of the Building dated 15 November 1967 (“DMC”).

6.  P had registered a memorandum of charge (“Memorandum ofCharge”) dated 15 December 2012 for a sum of HK$211,132, being the outstanding amount in respect of the Property  due and payable by Ds  to P under the provisions of the DMC for contribution for the Building’s renovation fund (“BR Fund”), and also legal costs and disbursements of HK$2,500.

7.  It was P’s case that in breach of the DMC and despite repeated requests, Ds had failed to pay the outstanding amount.

8.  P eventually issued the originating summons herein on 7 January 2014.

9.  After P issued the originating summons, D2 filed a “Statement of Counterclaim” on 14 February 2014 (“Counterclaim”).  In the Counterclaim, D2 alleged that P was liable for negligence in hiring the contractor (“Contractor”) for the Building’s renovation works (“BR Works”) and alleged various negligent acts to the Property as a result of the BR Works by the Contractor and she claimed various losses, harm, compensation and costs from P.

10.  Subsequent thereto, D2 issued a summons on 1 April 2014 (“01.04.14 Summons”) for, among other things, default judgment be entered against P and / or for summary judgment, for failing to file a defence to the Counterclaim.  This summons was supported by D2’s affidavit filed on 3 April 2014.

11.  Upon being served with D2’s 01.04.14 Summons, Mr Cheung Wing Kan, the Chief Property Manager of the management company (“Cheung”) filed an affirmation on behalf of P, opposing D2’s 1^st Summons.  D2 then filed a reply affidavit on 10 April 2014.

12.  As D2 had not complied with O 28 r 7(2) of the Rules of the High Court (“RHC”), at the hearing of D2’s 01.04.14 Summons on 11 April 2014,  the summons was ordered by Master J Wong to be treated as if it was a notice under O 28 r 7(2) of RHC by D2 to inform the court the nature of the Counterclaim, and Master Wong further ordered that D2’s summons was to be dealt with at the 1^st hearing of the originating summons (“11.04.14 Order”).

13.  Thereafter, on 23 May 2014, D2 filed an amended Counterclaim (“Amended Counterclaim”). In the Amended Counterclaim, D2 amended the quantum of her claims and claimed a total sum of HK$14,220,500 from P.

14.  This was followed by D2 issuing another summons on 9 June 2014 purported to be under O 19 r 2, r 8, and / or Order 13 r 1, for various orders including default judgment and summary judgment be entered against P (“09.06.14 Summons”).  On 23 June 2014, D2’s 09.06.14 Summons was dismissed by Master H Au-Yeung.  On 23 June 2014, D2 filed a notice to appeal against Master H Au-Yeung’s order, which was later heard before To J on 21 August 2014 and D2’s said appeal was dismissed by To J on the same day.

15.  Prior to the hearing on 21 August 2014 before To J, D2 had further issued a total of 4 summonses as follows:

(a)  Summons on 5 August 2014 (“1^st Summons”) seeking orders including the following:

(i) To restore her previous summons for summary judgment and final judgment ;

(ii) To decide/have trial on preliminary issue under O 33 r7 and r 3 that P was required to prove its claim of HK$200,000 and that as P’s claim was not a judgment debt, P could not apply for order for sale of the Property, and could not register the Memorandum of Charge on the Property;

(iii) P’s application for an order for sale of the Property be postponed indefinitely until after trial on preliminary issue of proof of P’s claim;

(iv) Leave be given for D2 to file 2^nd affidavit to oppose P’s 2^nd affirmation;

(v) Summary judgment and final judgment be entered against P for all amounts in her Amended Counterclaim as no defence served by P to the Amended Counterclaim under O 28 r 10(1) /O 28 r 7/O 14A (later amended to O14 r 5 );

(b)  Summons on 6 August 2014 (“2^nd Summons”) seeking orders including the following:

(i) Within 7 days,  P to file and serve accounts on the BR Fund  under O 43 of RHC , showing payments from each and all owners of the Building and showing balance on 1 February 2014, and showing each payment to the Contractor and the consulting company to the renovation work (“Consulting Company”) and payment dates etc;

(ii) To decide/have trial  on preliminary issue under O 33 r 7 and r 3 that the number of shares for the BR Fund was wrong and false, and that the number of shares should be 26 shares instead of 23 shares;

(iii) Attached to the 2^nd Summons was a “Notice of Request” under O 24 r 11(A) of RHC (“Notice ofRequest”) for certified true copies of the following documents to be provided by P within 7 days:

(1) BR Fund accounts ;

(2) Insurance payment receipt for around HK$800,000 for the BR Works;

(3) All receipts for all payments to the Contractor;

(4) All receipts for all payments to the Consulting Company in relation to the BR Works;

(vi) All receipts for payments of Building renovation fees (“BR Fees”) from each owner of the Building.

(c) Summons on 8 August 2014 (“3^rd Summons”) seeking orders including the following:

(i) P’s undated summons  filed on 2 July 2014 for sale of the Property and for judgment on P’s claim for HK$200,000 etc be struck out under O 18 r 19(1) b, c, d;

(ii) P’s undated summons filed on 2 July 2014 and all applications of P  be dismissed under O 18 r 19(1) b, c or d;

(iii) To amend the RHC number of  the 1^st Summons for summary judgment under O 14 r 5 , and not O 14A, and under O 28 r 7.

(d) Summons on 12 August 2014 (“4^th Summons”) seeking  orders including the following:

(i) Final judgment on all the amounts claimed by D2 in the Amended Counterclaim on the ground that P had failed to provide certified true copies of documents to D2 under O24 r 16(1) of RHC pursuant to her Notice of Request;

(ii) P to pay her all amounts in the Amended Counterclaim immediately;

(iii) P’s action, originating summons, and P’s summons filed on 2 July 2014 be dismissed under O 24 r 16(1) on grounds that P had failed to provide certified true copies of documents before deadline of 7 days, as requested in her Notice of Request;

(iv) Under O 18 r 19(1) b, c, and/or d, P’s exhibits of CWK 3-7, 9-10, and 12 in Leung’s 1^st affirmation, and P’s exhibits of CWK1, 3 and the DMC in CWK-5 in Leung’s 2^nd affirmation be struck out.

16.  The above 4 summonses were supported by various affidavits filed by D2.  Although the above 4 summonses, the Counterclaim / Amended Counterclaim were stated to be issued by D2, D1 had filed an affidavit on 8 August 2014 to support D2’s summonses, stating that with effect from 14 February 2014, he had transferred and passed to D2 all his rights to make counterclaim[1]. D1 filed another affidavit on the same day appointing D2 to act for him and sign all documents for him and to attend all hearings for him in this action.  Anyway, the hearing of D2’s 4 summonses took place before Master Hui on 15 and 19 August 2014 (“Hearing”).  Master Hui made the following orders on 19 August 2014 (“19.08.14 Order”):

(i) D2’s application relating to summary judgment and default judgment be dismissed;

(ii) D2’s application relating to restore the summons for summary judgment and amending the summons relating to summary judgment be dismissed;

(iii) D2’s application for striking out P’s original summons be dismissed;

(iv) D2’s application for leave to file counterclaim be dismissed;

(v) D2’s application for audited accounts for item (1) be dismissed;

(vi) Hearing of the originating summons be adjourned to a date to be fixed for further hearing with 2 hours reserved.

17.  Thereafter, D2 issued the 1^st Notice, the 2^nd Notice and the 3^rd Notice to appeal against the above order.

D2’s Grounds of Appeal

18.  D2 attached “grounds of appeal” to the 2^nd Notice.  She set out a total of 5 grounds and suffice to say, she complained that the Master had made errors on points of law and facts.  In her 3^rd Notice, she set out the 5 orders she sought from this court:

(i) Summary judgment and / or final judgment on items 1, 12, 13 and 15 and all items of the Amended Counterclaim totalling HK$14,220,500;

(ii) Final judgment be entered for all amounts in the Amended Counterclaim totalling HK$14,220,500;

(iii) P to pay amounts in the Amended Counterclaim totalling HK$14,220,500 to her immediately;

(iv) P to pay interest;

(v) P to provide audited accounts on the BR Fund.

19.  She also set out that the above orders were applied under O 14 r 5, O 24 r 16(1), O 43, O 28 r 7 and r 10(1) of RHC and / or under the court’s inherent jurisdiction.

20.  The day before the hearing of the appeal before this court, D2 filed skeleton submissions (“D2’s Skeleton Submissions”), and also another affidavit on that day.

21.  In paragraph 1 of D2’s Skeleton Submissions, she sought leave to file her affidavit of 26 November 2014, and 6 affidavits filed between 8 – 18 August 2014, and also her 2^nd Notice and the 3^rd Notice, if leave was required.  So far as the 6 affidavits and exhibits were concerned, these were filed prior to the 19.08.14 Order and there had been no objection from P to the filing of the same, and indeed these affidavits had been set out in the recital of the 19.08.14 Order and had been placed before Master Hui.  As for D2’s affidavit of 26 November 2014 and her 2^nd Notice and 3^rd Notice, again there being no objection from P, leave was duly granted by this court.

22.  As set out in paragraph 58/1/2 of the Hong Kong Civil Procedure 2015 Vol 1 (“HKCP”), an appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time.

1^st Summons

23.  In the 1^st Summons, D2 had applied to “restore” her previous summons for summary judgment and final judgment.

24.  As set out earlier, prior to the 1^st Summons, there were two summonses, namely the 01.04.14 Summons and the 10.06.14 Summons. As the 10.06.14 Summons had been dismissed by Master H Au-Yeung, and D2’s appeal dismissed by To J, presumably D2 was applying to restore her 01.04.14 Summons.

25.  In the 01.04.14 Summons, D2 sought default judgment and summary judgment of her Counterclaim based on P’s alleged failure to file a defence to the Counterclaim.  The 01.04.14 Summons had been ordered to be treated as if it was a notice under O 28 r 7 of RHC and was to be dealt with at the 1^st hearing of the originating summons namely the Hearing.

26.  O 28 r 7 of RHC provides that:

“(1) A defendant to an action begun by originating summons who has acknowledged service of the summons and who alleges that he has any claim or is entitled to any relief or remedy against the plaintiff in respect of any matter (whenever and however arising) may make a counterclaim in the action in respect of that matter instead of bringing a separate action.

(2) A defendant who wishes to make a counterclaim under this rule must at the first or any resumed hearing of the originating summons by the Court but, in any case, at as early a stage in the proceedings as is practicable, inform the Court of the nature of his claim and, without prejudice to the powers of the Court under paragraph (3), the claim shall be made in such manner as the Court may direct under rule 4 or rule 8.

(3) If it appears on the application of a plaintiff against whom a counterclaim is made under this rule that the subject-matter of the counterclaim ought for any reason to be disposed of by a separate action, the Court may order the counterclaim to be struck out or may order it to be tried separately or make such other order as may be expedient.”

27.  O 28 r 7(2) thus consists of  two stages:

(i) Firstly, the defendant must inform the court of  the nature of his counterclaim, and

(ii) Secondly, subject to the court’s power to strike it out under O 28 r 7(3), the counterclaim shall be made in such manner as the court may direct under O 28 rule 4 or 8.

28.  The effect of  O 28 r 7  has been explained in paragraph 28/7/1 of HKCP and although no procedure is laid down in the rule, the procedure suggested by the learned authors is as follows :

(i) the defendant should serve on the plaintiff (and file in court) proposed points of counterclaim before the hearing of his application;

(ii) the plaintiff should then raise any objection to there being a counterclaim before or at the hearing, probably by way of affidavit;

(iii) the court can then give such directions as may be appropriate.

29.  Paragraph 28/7/2 of HKCP further sets out  as follows:

“Presumably as the counterclaim will not have been formally made without leave, this means that the court may refuse leaveto bring the claim. A defendant proposing to counterclaim has a duty to put before the court all matters necessary to enable the court to adjudicate on the preliminary question of the competency or bona fides of his counterclaim. If it is a sustainable claim, the court would be obliged to let it proceed, and to give directions as to how it should proceed. In other words, it would only be open to the court to refuse directions and to frustrate the counterclaim if it is disposed to strike it out for reasons under O 28 r 7(3) or O 18 r 19…”[2]

(emphasis added)

30.  In Cheung’s 1^st and 2^nd affirmations, he had stated that the payment of the outstanding contribution for the BR Fund of the Property and Ds’ claim against the Contractor and P were two individual and separate matters, and that the Counterclaim / Amended Counterclaim was unfounded and groundless, and that Ds were not entitled to any set off [3].  P had clearly raised objection to the Counterclaim / Amended Counterclaim.

31.  Under the 11.04.14 Order, D2 was only treated / deemed to have informed the court of the Counterclaim under the 1^st stage of O 28 r 7, no directions had ever been given by the court under O 28 r 4 or r 8 allowing the Counterclaim / Amended Counterclaim to be formally filed or to proceed.

32.  As submitted by P’s Counsel Ms Sin, P was not required to file any defence to the Counterclaim / Amended Counterclaim until and unless the court had directed / ordered otherwise.  I accept Ms Sin’s submissions, and in the circumstances, D2’s application for default judgment must fail.

33.  In fact, D2 had in her 09.06.14 Summons again applied for final judgment under Order 13 r 1 and default judgment under O 19 r 8.  Her applications for default judgment had already been dismissed by Master H Au-Yeung and her appeal dismissed.  There was no further appeal by D2, and this should have been the end of the matter, in so far as D2’s application for default judgment was concerned.

34.  D2 had indicated in her 1^st Summons that her application for summary judgment and final judgment was made under O 28 r 10(1), and / or O 28 r 7, and / or O 14 r 5. I have already set out O 28 r 7 earlier.

35.  O 28 r 10(1) states that:

“(1) If the plaintiff in a cause or matter begun by originating summons makes default in complying with any order or direction of the Court as to the conduct of the proceedings, or if the Court is satisfied that the plaintiff in a cause or matter so begun is not prosecuting the proceedings with due despatch, the Court may order the cause or matter to be dismissed or may make such other order as may be just.”

36.  There was no evidence that P had made default in complying with any order or direction of the court as to the conduct of the present proceedings, or that the plaintiff was not prosecuting the proceedings with due dispatch.  I am unable to see why D2 should be entitled to judgment under O 28 r 10(1). 

37.  As for O 14 r 5, this only applies to a counterclaim filed by a defendant to an action begun by writ.  There was no direction or order for the present proceedings to continue as if begun by writ.  In any event, the court had not even given directions / leave for the Counterclaim / Amended Counterclaim to be formally filed or to proceed.  This rule is not applicable.

38.  At the Hearing, Master Hui had stated that from D2’s submissions and relevant documents produced by her, D2’s claims for alleged negligent acts in the Counterclaim / Amended Counterclaim were of the Contractor’s, and although D2 claimed that P should be responsible for her losses as P had hired the Contractor, Master Hui said he was not able to see from the documents produced by D2 as to why P should be responsible as alleged[4].  Master Hui came to the view that D2’s Counterclaim / Amended Counterclaim should be by way of a separate action and this was the reason why he did not grant any order / leave for Ds to formally file the Counterclaim / Amended Counterclaim or for the same to proceed.  I agree with Master Hui’s views.

39.  In the above circumstances, D2’s application for summary judgment must fail.

40.  In D2’s 1^st Summons, she had also applied for a trial on preliminary issue, namely that P should be required to prove its claim of HK$200,000 and that P’s claim was not a judgment debt, and therefore, P was not entitled to register the Memorandum of Charge.

41.  It would appear from the transcript of the Hearing that this part of the 1^st Summons, namely paragraphs 2 and 3 thereof, had been adjourned to be dealt with together with the originating summons[5], although this was not explicitly set out in the 19.08.14 Order.

42.  In view of the above, I will dismiss paragraphs 1a and 1b of the 1^st Summons.

The 2^nd Summons

43.  In this summons, D2 sought accounts of the BR Fund and various documents under O 43 of RHC.  O 43 r 1(1A) only applies to a defendant to an action begun by writ who has served a counterclaim which includes a claim for an account or a claim which necessarily involves taking an account.  Even if D2 had obtained an order or leave to formally file the Counterclaim / Amended Counterclaim, there was no claim in the Counterclaim / Amended Counterclaim for any account or any claim which necessarily involved taking an account.  I do not see how or why O 43 is applicable.

44.  In D2’s Notice of Request attached to the 2^nd Summons, she requested for certified true copies of various documents under O 24 r 11 (A) . 

45.  Notwithstanding P’s stance that such documents were not relevant nor necessary to dispose of the present action, as seen from the transcript of the Hearing, P’s solicitor Mr Wong who appeared on behalf of P at the Hearing had indicated to Master Hui that P had no objection to provide to D2 on a voluntary basis certified true copies of the accounts of the BR Fund and various receipts sought by P in items (1) – (4) of the Notice of Request and only objected to the provision of item (5).  At the Hearing, D2 had sought to amend item (1) to seek audited accounts of the BR Fund, as opposed to certified true copies.  In paragraph 5 of the 19.08.14 Order, Master Hui had dismissed her request for audited accounts for item (1).

46.  The court has the power to make an order for discovery if it is satisfied that the discovery is relevant and necessary.

47.  Under s 27(1) of the Building Management Ordinance, Cap 344, a management committee has the duty to maintain proper books or records of account and other financial records and shall prepare financial statements as provided for under that section.  S 27(1A) provides that such financial statements shall only be audited in the case of a corporation incorporated in respect of a building which contains more than 50 flats.  Applications in relation to s 27 would fall within Schedule 10 of the Building Management Ordinance and the jurisdiction of the Lands Tribunal and it would be open for D2 to make an application in the Lands Tribunal to seek documents under s 27, if she should deem it necessary to do so.

48.  There was in fact no evidence as to whether there had been any audited accounts of the BR Fund, or audited financial statements prepared by P.  Ms Sin submitted that such were irrelevant to P’s claim, as they would not negate Ds’ responsibility and liability under the DMC. 

49.  I accept Ms Sin’s submissions and therefore dismiss D2’s application for audited accounts of the BR Fund.  No order had been made by Master Hui in relation to documents requested by D2 in the Notice of Request.  Anyway, in the present appeal, D2 only sought the audited accounts of the BR Fund and had not sought any order for other items in the Notice of Request.   

50.  In the 2^nd Summons, D2 had again sought a trial on the preliminary issue on the calculation of the number of shares for the BR Fund, which she said should be 26 instead of 23.  There was no order made by Master Hui on this application, which would appear to have been adjourned, as with the trial of the other preliminary issue sought in the 1^st Summons.

51.  In light of what I have said above, I will only dismiss paragraph 1 of the 2^nd Summons.

3^rd Summons

52.  D2 in the 3^rd Summons was seeking an order to strike out P’s summons issued on 2 July 2014 and that all P’s applications should be struck out or dismissed under O 18 r 19(1) b, c or d, namely, it was scandalous, frivolous or vexatious; or it might prejudice, embarrass or delay the fair trial of the action; or it was otherwise an abuse of the process of the court.  There was no summons issued by P on 2 July 2014.  P only filed a notice of appointment to hear the originating summons on that day.

53.  In any event, I am unable to see in D2’s affidavits any sufficient evidence or sufficient grounds put forward by her to support her above application. I therefore dismiss the 3^rd Summons.

4^th Summons

54.  In this summons, D2 sought final judgment on the ground that P had failed to provide certified true copies of documents pursuant to her Notice of Request.

55.  As mentioned earlier, P had voluntarily agreed to provide certified true copies of items (1) to (4) of the documents in the Notice of Request.  This was notwithstanding P’s stance that such documents were not relevant nor necessary for the disposing fairly of the cause or matter for saving costs.  D2’s Notice of Request was served under O 24 r 11A(1). Under O 24 r 11A(3), where a party fails to supply the requested documents, the court, may, on application, make such order as to the supply of that document as it thinks fit.  

56.  There was no such order made by Master Hui under O 24 r 11A(3) in relation to the provision of the documents in the Notice of Request.  I am of the view that D2’s application for final judgment in the 4^th Summons was under O 24 r 16(1) of RHC must again fail. 

57.  D2 had also sought an order to strike out exhibits CWK 1, 3 in Cheung’s 1^st affirmation and CWK- 5 in Cheung’s 2^nd affirmation.  I am unable to see any sufficient grounds for D2 to seek such an order.  Her application in this regard must therefore equally fail.

Paragraph 4 of the 19.08.14 Order

58.  In paragraph 4 of the 19.08.14 Order, Master Hui ordered that D2’s application for leave to file the Counterclaim be dismissed.  D2 submitted that she never made such an application and that leave was not required, or alternatively under the 11.04.14 Order, leave had been given by Master J Wong.

59.  I repeat what was said earlier, Master J Wong only treated D2’s 01.04.14 Summons as notice under the 1^st stage of O 28 r 7(2), no leave was ever given.  As stated in paragraph 28/7/2 of HKCP, the effect of O 28 r 7 (2) is that a counterclaim will not have been formally made without leave, and that the court may refuse leave to bring any counterclaim.  D2 / Ds, by filing the Counterclaim / Amended Counterclaim had clearly intended to file the same, even though no proper application for direction / leave had been made by D2, she was deemed to have made such an application.  In any event, whether she had made such an application or not, having considered the subject matter of the Counterclaim / Amended Counterclaim, I have said I agree with Master Hui that the Counterclaim / Amended Counterclaim should be by way of a separate action.  I therefore refuse to grant leave to Ds to formally file the Counterclaim / Amended Counterclaim or to proceed with the same. 

Conclusion

60.  In light of the above, I dismiss the 2^nd named defendant’s appeal against Master Hui’s 19.08.14 Order.  For avoidance of doubt,

(i) The summons issued on 1 April 2014  by the 2^nd named defendant is dismissed;

(ii) Paragraphs 1a and 1b of the summons issued on 5 August 2014 by the 2^nd named defendant for summary judgment and final judgment are  dismissed;

(iii) Paragraph 1 of the summons issued by the 2^nd named defendant for accounts under O 43 of the Rules of the High Court on 6 August 2014 is dismissed;

(iv) The application of the 2^nd named defendant for audited  accounts of item (1) of her Notice of Request issued on 6 August 2014 under O 24 r 1A of the Rules of the High Court is dismissed;

(v) The summons issued on 8 August 2014  by the 2^nd named defendant to strike out or dismiss the plaintiff’s originating summons is dismissed;

(vi) The summons issued on 12 August 2014 by the 2^nd named defendant for final judgment under O 24 r 16(1) of the Rules of the High Court  is dismissed;

(vii) Leave for the defendants to formally file and serve or to proceed with the Counterclaim / Amended Counterclaim is refused.

(viii) Paragraphs 2 and 3 of the summons issued on 5 August 2014 and paragraph 2 of the summons issued on 6 August 2014 in relation to the applications of the 2^nd named defendant for trial on preliminary issues and the hearing of the originating summons be adjourned to a date to be fixed for further hearing before the Master with 2 hours reserved.

61.  As D2 has failed in her appeal, she is to pay P’s costs of the appeal with certificate for counsel, to be taxed if not agreed.

[1] B:87

[2] At page 647

[3] Para 9, B: 67-68, and also para 5, B:82

[4] Lines Q-V, pg 17, and Lines A-B, pg 18, Transcript of 19.08.14

[5] Lines C-E, pg 38 of the transcript of  19 August 2014