KWONG MUK HING, one of the executors named in the Will of LUK HEUNG deceased v. CHENG PUI NIN WILLIAM AND ANOTHER

HCMP 202/2018

[2020] HKCFI 3113

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 202 OF 2018

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D E C I S I O N

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Background

1.  This is an ex parte application by the Applicant taken out on 17 November 2020, made after final judgment was entered over a year ago, for extension of validity of the originating summons (“OS”).

2.  The OS was issued on 13 February 2018 by one of the executors (“Kwong”) named in the will of his mother, Madam Luk Heung (“Madam Luk”) 

3.  The 2 Respondents had sold the subject property under the Home Ownership Scheme to Madam Luk in 2008 pursuant to an assignment dated 28 July 2008 (“the 2008 Assignment”).

4.  Madam Luk died on 10 August 2014.

5.  In about March 2016, Kwong instructed solicitors to apply to the Housing Authority for a change in ownership of the Property to him and another as beneficiaries under the will.  The application was rejected because the 2008 Assignment deviated from the prescribed form without the prior approval of the Housing Authority.  As such the 2008 Assignment was considered void under the Housing Ordinance, Cap 283.

6.  The Applicant had to seek approval from the Housing Authority to execute a confirmatory assignment to rectify the 2008 Assignment.  By then, the Respondents were not traceable.  Hence the OS was issued.

7.  Master Kot gave an order on 1 February 2019 for substituted service of the OS on the Respondents by advertisement and ordinary post. That order was sealed only on 26 March 2019.  The late sealing of the order did not appear to be the Applicant’s fault.

8.  The substituted service order was effected on 12 April 2019, about 2 months after validity of the OS had expired. 

9.  The Applicant proceeded to apply for judgment on the OS without informing DHCJ Leung that the validity of the OS had expired. DHCJ Leung gave judgment on 3 July 2019 (“the Order”), amongst others, for the Respondents to execute a confirmatory assignment of the Property in favour of the executors of the estate of Madam Luk to rectify the deviations, subject to consent of the Housing Authority.  In the event the Respondents failed to comply or could not after reasonable inquiry be found, then the Registrar be directed and appointed to execute the confirmatory assignment on behalf of the Respondents.  The Order was sealed.

10.  Subsequently, Yip & Partners, solicitors for the Applicant, applied ex parte for leave to amend the Order.  Master Kot raised requisition on service of the OS beyond the 12-month validity period.  She stated that the Order obtained under such circumstances was null and void.

11.  On 9 January 2020, by the 3^rd affirmation of Yip Wai Chuen Paul, the Applicant’s solicitors applied ex parte to amend a clerical mistake in the Order, ie the memorial number of the 2008 Assignment.

12.  On 27 February 2020, this Court granted leave to amend the Order.

13.  When the Applicant requested the Registrar to execute documents pursuant to the Order, the Registrar queried (by letter dated 18 September 2020) whether Master Kot’s requisition has been answered.

14.  In their reply dated 30 September 2020, Yip & Partners stated affirmatively, amongst others, as follows:

“No, the requisitions raised by Master Kot on 16 October 2019 might not be necessary as those technical defects would not cause any prejudice to the parties, in particular, the interests of the Respondents. It is because we have re-submitted our application for the amendment of [DHCJ Leung’s] Order dated 3 July 2019 to Deputy High Court Judge, which has then been approved by the Honourable Madam Justice Au-Yeung without raising the same requisitions.”

15.  The Registrar was not satisfied as to Yip & Partners’ answer.  He replied stating, amongst others, as follows:

“Without answering and responding to the directions given by Master Kot on 16 October 2019, the Plaintiff’s solicitors had by-passed the same and lodged another ex-parte application before a Judge did not by itself resolve the problem. In fact, it may amount to an abuse of court process especially, when you chose not to disclose such directions given by Master Kot to the Judge in an ex-parte application. This may also [be] in breach of your duty to give full and frank disclosure in an ex-parte application.”

16.  On 17 November 2020, the Applicant took out the present ex parte application for an order to extend the validity of the OS for 3 months from 13 February 2019, pursuant to Order 6, rule 8, Order 2, rule 1 and Order 3, rule 5 of the Rules of the High Court (“RHC”). 

17.  By a letter dated 20 November 2020, this Court queried whether or not it was functus and whether the application should be refused because Yip & Partners twice breached their duty of full and frank disclosure.

18.  In response, Yip & Partners apologized for their misconception as to the extent of their duty of full and frank disclosure in their ex parte application for amendment.  They said that they had mistakenly believed that in the absence of any summons from the Respondents challenging service of the OS, the case could be proceeded with and that the Order was in order.  Yip & Partners admitted that they had inappropriately believed and described the irregularity of service as “technical defects”.  So they took out the present ex parte application.

19.  Yip & Partners submitted that this case did not involve any issue of limitation period.  The Applicant had encountered much difficulty and expended much time and efforts in making extensive enquiries to locate the Respondents. The Respondents have not suffered any prejudice as a result of the irregularity in procedure, for they no longer have any interest in the Property.

20.  If the Judgment were to be ruled null and void, the Applicant would have wasted all costs and had to issue another OS, only to repeat the steps taken before getting a substituted service order and then getting final judgment.  Yip & Partners submitted that it did not serve the underlying objectives of proper case management under Order 1A, rule 1 of the RHC.

Legal principles

21.  Under Order 6, rule 8 of RHC, an OS is valid in the first instance for 12 months but the Court has power to extend its validity for up to 12 months.  Such time will be strictly construed; even one day’s delay will result in a plaintiff not being able to proceed with the action.  Hong Kong Civil Procedure 2020, Vol 1, §6/8/1.

22.  Order 6, rule 8 provides a comprehensive code for the renewal of a writ, and therefore an irregularity in procedure caused by failure to renew a writ under this rule is such fundamental defect in the proceedings that the wide powers of the court under Order 2, rules 1 and 2 to cure non-compliance with the rules ought not to be exercised by treating an OS which has become invalid for service as though it had been renewed and was therefore valid for service. Hong Kong Civil Procedure 2020, Vol 1, §6/8/1.

23.  In exceptional circumstances and where the interests of justice so require the court will entertain an application to extend the validity of the OS even after service or after expiry of the 12-month period under Order 2, rule 1, or Order 3, rule 5.  Hong Kong Civil Procedure 2020, Vol 1, §6/8/8.

24.  The power of extension is discretionary and should only be exercised for good reason.  Whether there was good reason depended on all the circumstances of the particular case. The judge is entitled to have regard to the balance of hardship between the parties and the possible prejudice to the defendant if an extension were allowed: Kleinwort Benson Ltd v Barbrak Ltd [1987] 2 WLR 1053.  Extension would be refused where it would deny the defendant of a defence in limitation: Leal v Dunlop Bio-Processes International Ltd [1984] 1 WLR 874.

25.  It would be an improper exercise of discretion under Order 2, rule 1 to make good the irregular service retroactively where the OS could not properly have been renewed under Order 6, rule 8; if the plaintiff cannot properly enter through the front door of Order 6, rule 8, he should not be allowed to enter through the back door of Order 2, rule 1.  See Hong Kong Civil Procedure 2020, Vol 1, §6/8/1.

Analyses

26.  In my view, the Court is functus as final judgment has been granted.  The Court should not give retrospective effect to an interlocutory matter as fundamental as validity of the OS for service.  This application is unlike one that sought to, eg cure a defect under the slip rule.

27.  Yip & Partners relied on Order 2, rule 1 RHC to invite the Court to exercise its discretion to cure the irregularity.  However, none of the authorities cited by them concerned extension of validity of a writ after final judgment was entered.

28.  In any case, I do not think Order 2, rule 1 assists the Applicant.  That rule provides as follows:

“(1) Where, in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of any thing done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.

(2) Subject to paragraph (3) [which is not applicable], the Court may, on the ground that there has been such failure as is mentioned in paragraph (1), and on such terms as to costs or otherwise as it thinks just, set aside either wholly or in part the proceedings in which the failure occurred, any step taken in those proceedings or any document, judgment or order therein [limb 1] or exercise its powers under these rules to allow such amendments (if any) to be made [limb 2] and to make such order (if any) dealing with the proceedings generally as it thinks fit.”

(underline added)

29.  Whilst procedural irregularity would not nullify a judgment by virtue of Order 2, rule 1(1), the Court’s powers under Order 2, rule 1(2) are to set aside the judgment (limb 1) or to allow amendments (limb 2).  The words “and to make such order (if any) dealing with the proceedings generally as it thinks fit” are consequential orders to limbs 1 or 2.  The Applicant is not invoking either of the 2 limbs.

30.  Even if the Court still has power under Order 2, rule 1, I decline to exercise the discretion to make the order sought for these reasons:

(1)     Yip & Partners apparently lacked good faith.  They took it upon themselves to decide that there were only “technical defects”, thereby ignoring Master Kot’s requisition.

(2)     There was material non-disclosure before DHCJ Leung when the Order was sought.  It was deliberate as the expiry of the validity of the OS was brought to Yip & Partners’ attention by Master Kot before the Applicant went before DHCJ Leung.

(3)     That leave was granted to amend the Order did not advance the Applicant’s position because the amendment merely related to a clerical error and the Court was not told of the expiry of the OS.   There was thus material non-disclosure for the second time.

(4)     A solicitor’s breach of his duty of full and frank disclosure to the court in an ex parte application would not constitute exceptional circumstances to justify renewal of the OS. There would not be “proper” case management if the Court were to turn a blind eye to such breach.

(5)     That the Respondents have not been prejudiced would not undermine the Court’s power to regulate its own process. 

31.  In summary, I agree with Registrar Kwang that Yip & Partners have abused the process of the court.  I dismiss the ex parte summons.

Costs

32.  It appears that it was the fault of Yip & Partners which led to the making of the Order and the subsequent requisitions of Registrar Kwang.  The Applicant’s solicitors shall show cause by 31 December 2020 as to why they should not personally bear all costs wasted by the Applicant (and reimburse him if such costs have been paid) from and including 12 April 2019 (when the substituted service was effected).

HCMP 202/2018

[2019] HKCFI 1726

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 202 OF 2018

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DECISION

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1.  This is an application for an order of the court that the respondents do execute a confirmatory assignment of the subject property in favour of the applicant for the purpose of rectifying errors in the assignment executed by the parties to the assignment back in 2008. The reason is that errors exist in the 2008 assignment and rectification is necessary in accordance with the terms prescribed by the Housing Authority for a valid assignment.

Background

2.  As a matter of background, briefly, the sale and purchase of the subject property (“the Property”) was completed by way of an assignment dated 28 July 2008 (“the 2008 assignment”) between the vendor, the respondents, and the purchaser, Madam Luk Heung (“Madam Luk”). Madam Luk passed away in August 2014.  The party applying today is one of the executors of the will of Madam Luk.  The applicant, together with his wife, were the two executors named in the will of Madam Luk as well as the beneficiaries under the will.  The asset specifically bequeathed to them under the will is the Property.

3.  As a result, the applicant has sought to have the Housing Authority consent to the transfer of the Property from Madam Luk’s name to them but unsuccessfully. The basis for the refusal of the Housing Authority is that the 2008 assignment of the Property to Madam Luk actually deviated from the prescribed form without the prior approval of the Authority.  As such, the 2008 assignment was considered to be non-compliant with the authorised terms, and was strictly speaking void under the Housing Ordinance, Cap 283.

4.  Correspondence between the applicant, through solicitors, and the Housing Authority ensued, yet the matter was not resolved. The applicant, through solicitors, also tried to contact the solicitors acting for the vendors, the respondents, in the conveyance in 2008, but the attempts by both the then solicitors for the respondents as well as the applicant’s solicitors to locate and to obtain a reply from the respondents have been unsuccessful.

5.  Hence the present proceedings.

6.  The proceedings were first served on the respondents by insertion of the court documents into the letterbox of the last known address of the respondents in February 2018.  Leave was further obtained from the Master of the High Court for service to be effected by prepaid ordinary post as well as advertisement in a local Chinese newspaper, which were deemed to be good service on the respondents.  The necessary search into the Registrar of Births and Deaths early last year revealed no record concerning either of the two respondents.  As confirmed by the affirmation of service in May 2019, all the documents have been served in accordance with the leave of the Court just mentioned and the respondents are absent today. 

7.  Considering all the circumstances, I see no reason why the applicant should not be allowed to proceed, though in the absence of the respondents.

Discussion

8.  The applicant accepts that the 2008 assignment indeed deviated from the prescribed form under the Housing Ordinance of a valid assignment.  Such deviation includes deviation from paragraphs 3 and 7 of the prescribed form. The actual provisions in the 2008 assignment, in particular paragraphs 4, 5 and 9 of that, are also not part of the prescribed form.  Therefore, a case is made out suggesting actual non-compliance with the prescribed form as well as the Ordinance.   Prima facie, the 2008 assignment is a void one.

9.  Considering the sale and purchase agreement leading to the 2008 assignment, there should be no doubt that the parties to the conveyance at that time contemplated that the completion of the conveyance would have to accord to the terms as prescribed by the Housing Ordinance.

10.  It is expressly provided (section 35(1)) in the Conveyancing and Property Ordinance, Cap 219 and specifically implied to an assignment a covenant, as set out in paragraph 5 of part II of the First Schedule to the Ordinance, that the vendor of the conveyance should do, execute, or do all such lawful acts, assurance and things as the purchaser may reasonably require for further or more perfectly assuring the property to the vendor.

11.  Section 25A of the High Court Ordinance provides that:

“Where the Court of First Instance has given or made a judgment or order directing a person to execute any conveyance, contract or other document, or to endorse any negotiable instrument, then if that person neglects or refuses to comply with the judgment or order or cannot, after reasonable inquiry, be found, the Court of First Instance may on such terms and conditions, if any, as may be just, order that the conveyance, contract or other document shall be executed, or that the negotiable instrument shall be endorsed, by such person as the Court may nominate for that purpose.”

12.  Counsel for the Applicant cited to me cases, including Lau Yun Lin v Registrar of Companies, HCMP 1111/2017 (15 May 2018), Lam Kiu Shing v Yau Fuk [2016] 3 HKLRD 242 as well as Li Kwan Chuen v Vector Development Limited [2009] 3 HKLRD 511 as instances of application of the provisions.

13.  All matters considered, I see that this is an appropriate case where the Court should accede to the application.  The reservation, as I expressed during exchange with counsel, is that for a confirmatory assignment to be executed in the event that the respondents fail to do so, it would be inappropriate for the Court to appoint the applicant’s solicitors to execute instead.  I would however accept the request by counsel that it may be appropriate to appoint the Registrar of the High Court to execute the confirmatory assignment in the event that the respondents fail to do so.

Order

14.  The order I give is:

(1)   There is a declaration that there are substantial discrepancies between the Assignment (Memorial No. 08082501700091) in relation to the Property and the authorised terms of assignment under the Home Ownership Scheme Secondary Market Scheme as required under paragraph 4(c) of the Schedule to the Housing Ordinance, Cap 283.

(2)   Subject to consent to the rectification by the Housing Authority, the respondents do execute a confirmatory assignment of the Property in favour of the executors of the estate of Madam Luk to rectify the aforesaid discrepancies.

(3)   In the event the respondents fail to execute the said confirmatory assignment and/or cannot after reasonable inquiry be found, an order pursuant to section 25A of the High Court Ordinance directing and appointing the Registrar of the High Court to execute the said confirmatory assignment for and on behalf of the respondents, and for such purpose the draft confirmatory assignment must be lodged for the Registrar’s approval.

(4)   The costs of and for execution of the confirmatory assignment shall be borne by the applicant.

(5)   There is no order as to costs of the originating summons.