PRIMECREDIT LTD v. HON WAI KAN

DCCJ2167/2016
DCCJ 2251/2011
DCMP 2179/2015
(Heard Together)

[2018] HKDC 49

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2167 OF 2016

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2251 OF 2011

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2179 OF 2015

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DECISION ON COSTS

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1.  In DCCJ 2251/2011 (“First Action”), the plaintiff obtained judgment against the defendant and also a charging order against the property known as Flat 6, 24^th Floor, Hong Sang House (including the planter/planterbox appertaining thereto, if any) (Block 5), Kin Sang Estate, No 3 Leung Wan Street, Tuen Mun, New Territories (“Property”). The defendant was and is the registered owner of the Property and the intended intervener (“Hon’) is his sister.

2.  In 2015, the plaintiff took out an originating summons (“OS”) at the Court of First Instance for, inter alia, sale of the Property for enforcement of the charging order.  On 16 June 2015, Master R Lai transferred the matter to the District Court which became DCMP 2179/2015 (“Second Action”).  At the hearing before Master R Lai, Hon appeared in person and filed an affirmation claiming her alleged beneficial interest in the Property.

3.  The OS was first heard at the District Court on 22 September 2015 by Master D To.  Hon did not turn up and the OS was adjourned to 13 October 2015 for, inter alia, updated valuation report of the Property.  Hon did not appear on 13 October 2015 and an order for sale of the Property was made.  The writ of possession was issued on 1 February 2016.

4.  On 19 February 2016, Hon, in person, filed another affirmation claiming her alleged beneficial interest and took out a summons for her joinder in the Second Action and for stay of execution of the writ of possession.  The summons was dismissed by Master M Lam after hearing Hon in person on 25 February 2016.

5.  Hon then instructed solicitors and on 16 August 2016, a notice of appeal was filed by Messrs Leung Kin & Co. (“LK”) on her behalf in respect of the decision of Master M Lam dated 25 February 2016, as well as a summons for extension of time for the appeal.  On 30 September 2016, a further summons for adducing fresh evidence was taken out by LK on behalf of Hon.  The fresh evidence is the 2^nd Affirmation of Hon Yuen Wan dated 27 September 2016 and the Affirmation of Han Zhanming of the same date.

6.  Despite this pending appeal of the Master’s decision, another summons for joinder of Hon as a party to the First Action (“First Joinder Summons”) was filed by LK on 7 May 2016, which included a request for the discharge of the charging order obtained by the plaintiff in respect of the Property.  A similar summons for joinder of Hon was also filed by LK in respect of the Second Action on 7 May 2016 (“Second Joinder Summons”). 

7.  On the same day when the First Joinder Summons and the Second Joinder Summons were filed in court, Hon issued the Writ in another action commenced against the defendant, DCCJ 2167/2016 (“Third Action”).  After having obtained an order for substituted service, Hon applied by summons dated 6 September 2017 for default judgment in the Third Action (“Default Judgment Summons”). 

8.  The Default Judgment Summons was heard by District Judge W Tsui on 3 November 2017.  LK had been representing Hon in the Third Action until after the skeleton submissions and the hearing bundle had been filed with the court on 31 October 2017, when Hon filed a Notice to Act in Person.  At the hearing of the Default Judgment Summons, Hon did not inform the court of the First Action or the Second Action, nor the various applications for her to be joined as party in those actions.  Default judgment was entered against the defendant in the Third Action on 3 November 2017.

9.  Subsequently, upon coming to notice of the First Action and the Second Action and the role or intended role of Hon in them, the learned judge, by her Order dated 8 November 2017, set aside the Order she made on 3 November 2017 and adjourned the application for default judgment in the Third Action to be heard together with the above-mentioned applications in the First Action and the Second Action on 10 November 2017.

10.  The plaintiff had since learnt about the Default Judgment Summons.  On 10 November 2017, the plaintiff filed a summons seeking to be joined as a party to the Third Action (“Third Joinder Summons”).

11.  I have therefore the following matters before me on 10 November 2017:-

(1) In respect of the First Action, the First Joinder Summons;

(2) In respect of the Second Action,

(a) Appeal against the decision of Master M Lam dated 25 Feb 2016 (“DCMP Appeal”);

(b) Application for extension of time to file the notice of appeal (“Time Summons”);

(c) Application for adducing fresh evidence (“Evidence Summons”); and

(d) the Second Joinder Summons;

(3) In respect of the Third Action, the Default Judgment Summons and the Third Joinder Summons.

12.  The Default Judgment Summons was the first to be dealt with at the hearing.  Hon, acting in person, and the plaintiff agreed to the adjournment of the Default Judgment Summons and the Third Joinder Summons pending determination of the various applications and appeal filed on her behalf in the First Action and the Second Action.  I therefore adjourned the Default Judgment Summons and the Third Joinder Summons sine die with liberty to restore and with costs reserved.

13.  In respect of the above applications in the First Action and the Second Action, after some arguments had been made by both sides, they came to agreement on how to proceed further and sought the following directions from court, which were granted:-

“Parties to jointly inform the court in writing on whether there would be consent to the joinder of Hon in the First Action and the Second Action as a result of a material change in circumstances within 14 days hereof;

If parties come to agreement on joinder of Hon in the First Action and the Second Action,

each party shall file written submissions on costs within 14 days thereafter;

Issue on costs to be dealt with by the court by way of paper disposal.”

14.  Parties filed written submissions on costs by 8 December 2017, before any joint notice to the court had been filed.  There has been some delay in the filing of the joint notice after Hon filed Notice to Act in person on 11 December 2017 for both the First Action and the Second Action.  The joint notice was eventually lodged on 4 January 2018, recording consent of the plaintiff and Hon to the joinder of Hon as a party in the First Action and the Second Action on ground that there has been a material change in circumstances.

15.  This is my decision on costs.

16.  On the legal principles applicable, I accept the position as set forth in the following passage in Famous Marvel Co Ltd v Conversant Group Ltd HCA 2153/2009, unreported, 29 October 2012, which was quoted in the written submissions of Mr To:-

“There is no dispute that even if a case is settled except as to costs, the Court sill has power to determine which party should be liable for costs. There is no tradition for there to be ‘no order as to costs’ in such a scenario. I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd HCCW 291/1994, 5 October 1995, Roger J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion.  In between, the position will, in differing degrees, be less clear.  How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.  Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii) The Court will first consider if it is in a position to say what the likely outcome after trial would have been.  If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1), at para 18, Longmore LJ, followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv) The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12.  However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v) A broad brush can be taken by referring to all matters already laid before the court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi) The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional costs: Brawley v Marcynski (No.1).”

17.  The main argument advanced by Mr To is that Hon is to be treated as having been successful.  Even if Hon is to be regarded as the winning party in the First Joinder Summons and the Second Joinder Summons, the overall position has to be considered, when the issues in question in respect of the appeal and the different applications as well as the legal principles applicable are not the same.

18.  Further, the agreement reached at the hearing on 10 November 2017 only came into being after a few hours of argument by counsel.  The Court had heard a large part of the submissions of the parties.  Unlike the case where an action is settled well before the trial, the court is well apprised of the background to the DCMP appeal, the Evidence Summons, the Time Summons and the First and Second Joinder Summons.  There is no need for me to especially look into the unresolved substantive issues in respect of them.  I am able to say what the likely outcome would be had the hearing come to its scheduled completion on 10 November 2017.

EVIDENCE SUMMONS

19.  The parties are not in dispute that for adducing further evidence, the following tests laid down in Ladd v Marshall [1954] 1 WLR 1489 apply:-

(a) It must be shown that the evidence could not have been obtained for use at the trial below with reasonable diligence;

(b)It must be shown that the evidence, if received, would probably have an important influence on the result of the case, though not necessarily decisive; and

(c) It must be shown that the evidence would probably be accepted as truthful.

20.  Mr To put it to me that had the plaintiff consented to the First Joinder Summons and the Second Joinder Summons earlier, time and costs for the Evidence Summons and the Time Summons, which were taken out more than 3 months afterwards, could have been saved.

21.  In respect of the Evidence Summons, despite the submission of Mr To that the tests in Ladd v Marshall are satisfied, there has actually been no real explanation as to why the new evidence sought to be admitted was not submitted before.  There is the mention of Hon acting in person and hence she did not have the benefit of legal advice on such matter.  I do not find such lame excuse to be acceptable. 

22.  In any event, the Ladd v Marshall principles apply whether or not the party seeking to adduce further evidence has legal representation.  I fully agree with the following observations of Kwan JA in A vAdministrative Appeals Board HCMP 985/2017, unreported, 21 July 2017 –

“…The rules for adducing evidence in the court below and further evidence on appeal apply to all litigants, whether they act in person or are legally represented…”

23.  The new evidence sought to be adduced includes purported records of the financial contributions alleged to be made by Hon towards the repayment of the mortgage loan of the Property, and the involvement of Han Zhanming, sister of Hon and the defendant, in the payment of a sum by their mother to the defendant back in 2009.  It is clear that such evidence should have been adduced when the matter first came before Master M Lam on 25 February 2016.

24.  As there would be no way for this application of Hon to get off the ground for failing to pass this very first test of Ladd v Marshall, it was the submission of the plaintiff that I did not even have to consider the other requirements of Ladd v Marshall.

25.  I agree with Mr Lung on this.  Hon had sorely failed to justify the late admission of new evidence.  There would have been no chance of Hon succeeding with the Evidence Summons.  I therefore order costs of the Evidence Summons to be paid by Hon to the plaintiff, to be taxed if not agreed.

DCMP APPEAL AND TIME SUMMONS

26.  The plaintiff relies on three grounds for seeking costs of the DCMP Appeal: (1) all costs of the appeal were caused solely by the decision of Hon not to raise the material change in circumstances argument until during the hearing on 10 November 2017, which would have been saved had it been raised earlier; (2) Hon would have to withdraw the DCMP Appeal if she had elected to rely on the material change in circumstances argument earlier and the general rule is for the withdrawing party to pay costs; and (3) the DCMP Appeal is unmeritorious and would have been dismissed.

Merits of the DCMP Appeal

27.  The provisions on joinder can be found in Order 15 rule 6(2) of the Rules of District Court.  They read–

“6. Misjoinder and nonjoinder of parties

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(2)   Subject to this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application—

(a) order any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;

(b) order any of the following persons to be added as a party, namely—

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon; or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

28.  The case put forward by Hon is a usual one in a family context.  She claims the defendant no longer has any beneficial interest in the Property, firstly because she had contributed to its purchase, and secondly because the defendant had been paid money by the family for his share in the Property.

29.  Although the evidence from Hon was thin, the direct debit form exhibited to her handwritten affirmation dated 19 February 2016 shows that money from her account had been used in repayment of the mortgage over the Property.  That in itself is unlikely sufficient to establish Hon’s case that the defendant has no beneficial interest at all in the Property, but that is sufficient to support a case that Hon is likely to be entitled to some interest in the Property. 

30.  Further, I do not share the concern of the learned Master about Hon not having sued the defendant to establish her entitlement to the beneficial interest of the Property.  As noted in the case of Wing Hang Bank Ltd v Tsang Sze Yin HCMP 1689/1998, unreported, 30 December 1999:-

“A line of authorities shows that in cases like the present, the proper approach is for the person claiming the right to remain in possession to apply to be joined as a defendant and to have his claim tried as between himself and the purchaser or mortgagee claiming possession…”

31.  It would appear that the intervener in the Wing Hang Bank case had not bothered to sue the defaulting mortgagor.  In the case of Yu Fung Company Limited v Olympic City Properties Limited HCMP 1084/2008, unreported, 9 March 2017, the court acknowledged that it would be open to the intervener to simply seek to be joined in the proceedings for possession.

32.  For the above reasons, I do not find the DCMP Appeal unmeritorious and Hon would not have to rely on the material change in circumstances argument.  Subject to Hon being granted an extension of time for filing the notice of appeal, the costs of the DCMP Appeal should be borne by the plaintiff, to be taxed if not agreed.

Delay in filing notice of appeal

33.  The time limit prescribed under Order 58 for an appeal against a decision of a master is 14 days.  It took Hon over 5.5 months to file a notice of appeal against the decision of Master M Lam dated 25 February 2016.  By any standards, that is a long and substantial delay.

34.  The main reason proffered by Hon is that she did not understand that her application for joinder and stay of the writ of possession was dismissed by the master.  Mr To drew my attention to the transcript of the hearing on 25 February 2016 where Hon indicated that she did not understand what the court was saying to her.  That was when the learned master was telling Hon that if she wanted to do something about it, she should seek legal advice on how to proceed further.  That of course is something not necessarily familiar to a lay person and I accept that Hon could truly be unable to fully appreciate what was said to her. 

35.  However, as to the outcome of her application, the master had subsequently said, in no unclear terms and for no less than three times, that her application was dismissed by the court.  There was no indication otherwise by Hon that she failed to understand those very clear statements of the court.  I do not find her explanation convincing at all.

36.  Hon also complained about the delay in the perfection of the order made on 25 February 2016.  The plaintiff’s lawyers sent in the draft on 2 March 2016 but it was only eventually approved in August 2016.  Having concluded that Hon knew her application was dismissed on 25 February 2016, there is no basis to blame the delay on the plaintiff.  Even if the story of Hon that she thought she was only asked to provide further documents was to be believed, there would still be an order made recording the directions given.  There is no justification to put the blame on the plaintiff for the tardiness in having the order sealed, when Hon had the means to find out the terms of the order by raising enquiry with the court or with the plaintiff.

37.  I note that this was not the first time Hon had just sat back and waited to be informed.  On the occasion of the hearing before Master R Lai on 16 June 2015, she knew about the transfer of the proceedings to District Court and she received notice of the hearing on 19 September 2015.  She failed to attend the hearing on 19 September 2015 but did not venture to find out what the outcome was.  Her expectation that she would be notified of the adjourned hearing on 13 October 2015 does not relieve her of the duty to find out for herself what had happened on 19 September 2015.  Her inaction on such occasions speaks against her assertion that she had acted expeditiously.

38.  Notwithstanding the above, I have to balance the above matters against the other factors, including the likelihood of success of the DCMP Appeal.  There is also the delay on the part of the plaintiff in taking enforcement action against the defendant, as well as the value of the Property when compared with the amount owed by the defendant to the plaintiff and the costs that may be further incurred by the plaintiff should the joinder be allowed. 

39.  Having taken into account of all relevant considerations, I would have granted the application under the Time Summons.  Nevertheless, since indulgence would have been granted to Hon, she would have to bear the costs of the Time Summons.  I so order and the costs are to be taxed if not agreed.

FIRST JOINDER SUMMONS AND SECOND JOINDER SUMMONS

40.  In the written submissions of the plaintiff, it is said that there is no dispute that costs of these two summonses and the affirmation in support should be in the cause, but the plaintiff seeks other costs associated with the two summonses.  The plaintiff so claims on ground that such costs would have been saved had Hon indicated in her affirmations in support that she was relying on the material change in circumstances argument, but she had failed to do so.

41.  That is however not the position of Hon in the written submissions filed.  Rather, Hon is asking for costs of the two summonses on ground that (1) Hon has now achieved the substantive relief she asked for; and (2) the plaintiff has completely reversed its position on the material change in circumstances argument and in doing so, costs and time of the Court were wasted.

42.  It is apparent from the discussions above that I would have found there to be duplicity of proceedings in seeking an appeal from the decision of the Master on the one hand and in filing the First and Second Joinder Summonses on the other.  Hon may have been successful in her application to be joined, that does not mean that she is entitled to two sets of costs for achieving the same thing.  Extra costs have been incurred by the plaintiff in dealing with the two unnecessary summonses, when the DCMP Appeal and Time Summons should have been sufficient to dispose of the matter.  I therefore award costs in respect of the First Joinder Summons and the Second Joinder Summons to the plaintiff, to be taxed if not agreed.

Counsel’s certificate

43.  I grant certificate for counsel for all the costs order made in paragraphs 25, 32, 39 and 42 above.

DCMP 2179/2015
DCCJ 2251/2011
(Heard together)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2179 OF 2015

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2251 OF 2011

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DECISION

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1.  The issues before me are the costs of the application made in the plaintiff’s solicitors’ letter dated 22 May 2017 (“the plaintiff’s application”) and the costs of the joint application as set out in the intended intervener’s solicitors’ letter dated 17 July 2017 (“the joint application”).

Background

2.  The aforesaid 2 applications stem from the decision made by DDJ S H Lee in the hearing on 6 January 2017.  Reasons for the decision have been handed down by the deputy judge on 11 January 2017 (“the Reasons”).  The decision made by the deputy judge, as well as the background and the reasons for the decision, have been clearly set out in the Reasons and I shall not repeat the same herein.  For ease of reference, unless otherwise specified, the abbreviations used in the Reasons are adopted in this decision.

3.  After the hearing before the deputy judge, the intended intervener made the following attempts to try to find out the whereabouts of the defendant:-

(a)  In January 2017, the intended intervener checked with her sister living in Hong Kong to see whether she had the means of contacting the defendant.  Her sister had no idea as to where the defendant currently lived, and could only give the intended intervener an address which was the defendant’s last known address.

(b)  In February, the intended intervener went to that address twice but could not find the defendant.

(c)  In February, the intended intervener went to the Mainland to visit her mother to try to find out the means to contact the defendant.  However, the mother told the intended intervener that she had no contact with the defendant for a long time and could not help the intended intervener.

(d)  Also in February, the intended intervener visited her another sister who was living in the Mainland.  That sister also did not know the whereabouts of the defendant.

(e)  In March, the intended intervener tried to contact the defendant’s wife by dialing her mobile number.  The intended intervener managed to reach the defendant’s wife but was told that the defendant had already separated with the wife, and the defendant’s business was none of the wife’s business.

(f)  From 20 March onwards, the intended intervener tried to contact the defendant by calling his mobile number but at no avail until 28 March 2017.  On 28 March 2017, the intended intervener managed to reach the defendant over the phone but the defendant refused to reveal his current address.

(g)  On 31 March, the intended intervener in her solicitors’ office gave a call to the defendant.  The defendant did not pick up the call from the intended intervener’s mobile phone.  When the intended intervener used another phone to call the defendant, the defendant picked up the call.  The intended intervener told the defendant that some documents had to be served on him and asked him to attend the intended intervener’s solicitors’ office to pick up the documents.  The defendant refused and asked the intended intervener not to call him again.

(h)  The intended intervener called the defendant’s wife again, but was again informed that the wife did not know the whereabouts of the defendant.

4.  On 5 April 2017, the intended intervener took out ex parte applications for substituted service in DCCJ 2251/2011 and DCMP 2179/2015.

5.  From 13 March 2017 onwards, there was correspondence passing between the plaintiff’s solicitors and the intended intervener’s solicitors concerning the service of the necessary documents (“the documents”) identified in the Reasons. 

6.  On 22 May 2017, the plaintiff’s solicitors wrote to the court and said:-

“We note that more than 4 months have passed but the Intended Intervener still has not been able to serve the said documents on the Defendant. Notwithstanding that the intended intervener claims that she is now applying for substituted service, we consider that such long delay has been greatly prejudicial to our client’s rights and interests in the Property and thus further procrastination is unacceptable.

With a view to prevent further delay and having regard to the underlying objectives of the CJR, we humbly ask for the said hearing be restored in order to seek the Court’s directions on how the case should proceed.” (underline in original)

7.  On 23 May 2017, the intended intervener wrote to the court and told the court what the intended intervene had done in order to effect service of the documents on the defendant.

8.  On 29 May 2017, DDJ S H Lee ordered that the hearing be restored before a judge for directions.  The restored hearing was fixed to take place on 3 August 2017 before me.

9.  On 28 June 2017, master M Lam granted the intended intervener’s application for substituted service in DCCJ 2251/2011.

10.  On 6 July 2017, I gave the order for substituted service sought by the intended intervener in DCMP 2179/2015.

11.  On 17 July 2017, the plaintiff and the intended intervener jointly applied to the court for vacating the hearing on 3 August 2017, and costs of the plaintiff’s application and the costs of the joint application be dealt with by written submissions.

12.  On 18 July 2017, I directed that the hearing on 3 August 2017 should stand.  As the defendant is a party in these proceedings and would be served with the notice of the hearing by substituted service, it would not be appropriate for me to vacate the hearing on 3 August 2017 without the defendant’s consent or submissions.

13.  On 21 July 2017, service of the notice of this hearing and the documents on the defendant was done by the intended intervener pursuant to the aforesaid orders for substituted service by putting up a notice on newspapers.

The plaintiff’s submissions

14.  Mr Chan, solicitor for the plaintiff, seeks indemnity costs against the intended intervener in respect of the costs of the plaintiff’s application and the costs of the joint application.  Mr Chan submits:-

(a)  There is a substantial delay by the intended intervener in making the applications for substituted service.  The delay is unreasonable and inexcusable.

(b)  From March to May 2017, the plaintiff had requested the intended intervener to update the progress of service on a monthly basis.  However, the intended intervener only gave brief and general reply every time.

(c)  After more than 4 months, the intended intervener was still unable to give a definite answer as to the time when the service could be completed. Accordingly, it would be necessary for the plaintiff to make the application on 22 May 2017 to restore the hearing for directions.

(d)  &The substantial delay has greatly prejudiced the plaintiff’s interest.

The intended intervener’s submissions

15.  Mr Ken To, counsel for the intended intervener, suggests that costs of the plaintiff’s application and costs of the joint application should be ordered against the plaintiff.  Mr To submits:-

(a)  The intended intervener has all along kept the plaintiff updated as to the effort made by her in finding out the whereabouts of the defendant.

(b)  By the time the plaintiff took out the plaintiff’s application, the plaintiff knew full well that the applications for substituted service had been taken out and the intended intervener had prepared answers to the requisitions raised by the court.

(c)  The intended intervener had to wait for the outcome of the applications for substituted service.

(d)  The intended intervener has not done or failed to do anything causing delay of the service of the documents on the defendant.  It is unreasonable and unnecessary for the plaintiff to apply for restoring the hearing.

My view

16.  With respect to Mr Chan and Mr To, I am of the view that neither of them is entirely correct.

17.  I do not accept Mr Chan’s submissions that the intended intervener has substantial delay in serving the documents on the defendant.  Having read the correspondence passing between the plaintiff’s solicitors and the intended intervener’s solicitors and the affidavit evidence filed by the intended intervener in the applications for substituted service, the facts mentioned in Mr To’s submissions are supported by evidence.  In the light of those facts, in my judgment, it cannot be said that the intended intervener has done or failed to do anything causing delay of the service of the documents on the defendant.

18.  At the same time, I do not accept Mr To’s submissions that the plaintiff’s application is unreasonable and unnecessary.  The plaintiff’s application is to restore the hearing for directions.  The plaintiff has already obtained a final judgment against the defendant in DCCJ 2251/2011.  If the appeal, the time summons and the evidence summons are determined in the plaintiff’s favour, the challenge raised by the intended intervener would have come to an end.  Obviously, the plaintiff intends to see finality in these matters, and the plaintiff is indeed entitled to have finality as soon as practicable.  These matters could not be determined in the hearing on 11 January 2017 solely because the intended intervener had overlooked to effect proper service of the documents on the defendant.  After waiting for more than 4 months, when the intended intervener could not advise when the service of the documents could be properly done, the plaintiff made an application to restore the hearing for directions.  In my judgment, in these circumstances, the plaintiff cannot be criticized in making the plaintiff’s application.  The plaintiff merely wants to seek directions from the court so that everyone would know what should be done by whom before when for the purpose of bringing forward the proceedings.

19.  In my view, both the plaintiff’s application and the joint application are for the purpose of bringing forward the proceedings relating to the appeal.  The costs of these 2 applications (including the costs of this hearing) should be in the cause of the appeal.

Disposition

20.  For the reasons above, I order that the costs of the plaintiff’s application and the costs of the joint application (including the costs of this hearing) be in the cause of the appeal.   I further direct that the substantive hearing of the appeal, the time summons and the evidence summons be fixed before a judge in chambers with 1 day reserved, in consultation with counsel’s diaries.

21.  I thank Mr Chan and Mr To for the helpful assistance provided to the court.

DCMP2179/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGSNO.2179 OF 2015

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REASONS FOR DECISION

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1.  Originally, I have to hear a notice of appeal dated 16 Aug 2016 (“theappeal”), one summons for time extension for the appeal dated 16 Aug 2016 (“the time summons”), and another summons for adducing fresh evidence on the appeal dated 30 Sept 2016 (“the evidence summons”) all taken out by the intended intervener (“the intervener”).

2.  In the middle of submissions of Mr Ken To (“Mr To”) appearing for the intervener, and after hearing Mr Jose d’ Almada Remedios (“Mr Remedios”) for the plaintiff, I ordered that the appeal, the time summons and the evidence summons be all adjourned sine die with liberty to restore for fresh hearing for all 3 of them.

3.  I further ordered that all outstanding summonses filed in the captioned proceedings and in DCCJ No.2251 of 2011 (“the 2011 DC action”) are to be fixed to be dealt with at the same time together with the appeal, the time summons and the evidence summons by the same judge.

4.  And I ordered the intervener to pay forthwith plaintiff’s costs of the hearing before me in respect of the appeal, the time summons and the evidence summons on a common fund basis (with certificate for counsel), to be taxed if not agreed.

5.  I now give my reasons.

Background

6.  The appeal was directed against order of Master M. Lam given on 25 Feb 2016 whereby she refused to allow the joinder of the intervener to the captioned proceedings and refused stay of execution of writ of possession issued against the property.

7.  The intervener is sister of the defendant, who was and is the registered owner of the property. The intervener, however, claimed to have beneficial interest in the property and also claimed to reside at the property.

8.  In the 2011 DC action, the plaintiff obtained judgment against the defendant. The charging order was also obtained against the property in 2011.

9.  In 2015, plaintiff took out originating summons (“the OS”) at the Court of First Instance for, inter alia, sale of the property to enforce the charging order and it was, on 16 Jun 2015, transferred by Master R. Lai to District Court to become the captioned proceedings. At the hearing before Master R. Lai, the intervener appeared in person and filed an affirmation claiming her alleged beneficial interest.

10.  The OS was first heard at District Court on 22 Sep 2015 by Master D. To. The intervener did not turn up and the OS was adjourned to 13 Oct 2015 for, inter alia, updated valuation report of the property.

11.  On 13 Oct 2015, absent again intervener’s attendance, Master D. To made an order for sale of the property.

12.  On 1 Feb 2016, the writ of possession was issued.

13.  On 19 Feb 2016, the intervener in person filed another affirmation claiming her alleged beneficial interest and took out a summons for her joinder and stay of execution of the writ of possession, which summons was dismissed by Master M. Lam after hearing the intervener in person on 25 Feb 2016. That becomes the subject matter of the appeal.

14.  The notice of the appeal, the time summons and the evidence summons were all filed on intervener’s behalf by her solicitors (“intervener’s solicitors”) and, on all 3 documents, the defendant was a party to be served at an address other than the property in Tuen Mun (“the other TM address”).

15.  At today’s hearing, defendant did not turn up by 0950 hours. I enquired Mr To if defendant had been served with the papers and was told that he had been served and was offered undertaking to file necessary affidavit of service within 14 days.

16.  On the basis that defendant had been served, Mr Remedios made no objection for the hearing to proceed in defendant’s absence as Mr To suggested. And I decided accordingly but required intervener’s solicitors to double-check to get the details of service by close of 1300 hours.

17.  In the middle of Mr To’s oral submissions, his instructing solicitors returned with the information that service of the notice of the appeal, the time summons, the evidence summons and affirmations concerned on defendant at the other TM address had all been returned through the post.

Submissions

18.  In view of such failure of service on defendant, Mr To submitted that the hearing today can be adjourned pending service on the defendant.

19.  In the alternative, Mr To suggested an “unconventional” approach of continuing the hearing in defendant’s absence with certain undertakings to be given by intervener to avoid possible prejudice to defendant (as defendant never bothered to appear in the 2011 DC action and the captioned proceedings so far).

20.  Mr Remedios objected to continuation in defendant’s absence and submitted that the 2 summonses and the appeal should all be dismissed as plaintiff’s realization of its fruit of judgment against defendant had been delayed due to intervener’s opposition for a long period of time and plaintiff would be further prejudiced if the matter was adjourned.

21.  Mr To objected to dismissal and explained that the matter arose from oversight on the part of his instructing solicitors. He emphasized that the judgment debt was 114K odd by way of principal. Even with interest accruing daily at prevailing judgment rate, the total amount due to plaintiff could not, he submitted, be more than 300K now, which is relatively small compared to 1.6M valuation of the property, whose mortgage had entirely been paid off.

22.  Both counsels in their submission also referred me to the history of the captioned proceedings some of which I have highlighted in background section above. Let me say I took full account of all such matters I am directed to but, as they are to be considered again in future when the appeal, the time summons and the evidence summons are to be heard afresh, I say no more of them here.

Discussion

23.  All things considered and balanced, I do not find it appropriate to proceed further in defendant’s absence. As a matter of natural justice, he is entitled to notice of today’s hearing and to be heard as he sees fit. The fact that he might likely elect not to is, I think, neither here nor there. I reject Mr To’s unconventional approach. Indeed, no authority was cited by him for such approach.

24.  As for dismissal of the 2 summonses and the appeal before me, I agreed with Mr To that the plaintiff is sufficiently protected against downturn, if any, of the property market by the unencumbered equity of the property and by continuing interest accruing at favorable judgment rate of 8% p.a. against any further delay in sale. In this respect, the plaintiff saw fit to take no action for 4 years to enforce its judgment in the 2011 DC action until 2015.

25.  For such costs incurred by plaintiff for today’s hearing, that can, of course, be compensated by appropriate costs order in plaintiff’s favor.

26.  Even if I were to dismiss the 2 summonses and the appeal, the dispute between the intervener and the plaintiff over the property would not, I think, end completely today. As I have ascertained and confirmed with counsels before me, there are outstanding summonses filed by the interveners in the 2011 DC actions for joinder and discharge of the charging order, which had not been fixed to be heard before me at the same time. In the meantime, there was also an interim stay of execution of the writ of possession until further order granted by Master D. Ho on 13 May 2016.

27.  Lastly, I accept from Mr To that the matter arose from oversight of his instructing solicitors and, as such, the blame should not be put on the intervener.

28.  I do bear in mind the underlying objectives in O.1A r.1 of Rules of District Court, Cap.336H (“RDC”) but, at the same time, in giving effect to them, our primary aim remains to secure just resolution of parties’ dispute in accordance with their substantive rights: see O.1A r.2(2) of RDC. Dismissal of the 2 summonses and the appeal without going into their merits fails, I think, this very aim.

29.  Accordingly, I made the adjournment and case management orders as I did in para 2 & 3 above.

Submissions on costs

30.  Mr Remedios applied for costs of today’s hearing be paid by intervener on an indemnity basis. Mr To agreed to pay such costs but disputed the standard sought.

31.  Mr Remedios referred me to para 62/App/12 at p.1251 of Vol.1 of Hong Kong Civil Procedure, 2017 Edition that the court’s discretion to order indemnity costs is not fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.

32.  He submitted that what the intervener’s solicitors had done was an “affront to the court” as they failed to disclose the non-service until it was “caught out” by this court. That was sufficiently culpable to attract the punishment of indemnity costs. If not, costs should at least be awarded on a common fund basis.

33.  Mr To replied that the failure of those instructing him had not gone that far to become an affront to the court as suggested. It was at worst a very careless mistake of not following the rules properly.

Discussion

34.  I agree with Mr To that the matter did not amount to an affront of court as suggested by plaintiff. There was no suggestion that plaintiff had deliberately flouted any order made by the court. All her solicitors did was overlooking the non-service and proceeding ahead nonetheless not following proper procedures.

35.  It was nevertheless, I think, a serious oversight with grave consequence for all concerned. Efforts of all for today’s hearing had been wasted and the matter would be further delayed. While indemnity costs is not appropriate in all the circumstances, a taxation on common fund basis is, I think, warranted.

36.  Accordingly, I made the costs order as I did in para 4 above.