Case Detail

HCA 1284/2019

[2020] HKCFI 849

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1284 OF 2019

________________________

BETWEEN
	秦錦釗	Plaintiff
and
	香港海關關長	1^st Defendant
	香港特別行政區	2^nd Defendant

________________________

Before: Deputy High Court Judge MK Liu in Chambers

Dates of Plaintiff’s Submissions: 7 & 15 May 2020

Date of 1^st and 2^nd Defendants’ Submissions: 12 May 2020

Date of Decision: 20 May 2020

________________________

DECISION

________________________

1. By a summons taken out on 29 April 2020 (“the summons”), P applies for leave to appeal from my decision dated 17 April 2020 (“the April Decision”), in which I have dismissed P’s appeal against Master SP Yip’s decision made on 23 October 2019 and refused to give leave under Order 77 rule 9 to P to enter judgment against Ds in default of a defence to his claim. This decision should be read together with the April Decision. For ease of reference, the abbreviations used in the April Decision are adopted herein.

2. I have directed that the summons be determined on paper without an oral hearing[1]. The parties have provided me written submissions, and I have considered the same.

3. The principles concerning leave to appeal are trite. Leave can only be granted if the appeal has a reasonable prospect of success (which means that the prospect of success is reasonable and more than fanciful, without having to be probable), or there is some other reason in the interests of justice why the appeal should be heard[2]. In respect of an appeal from an exercise of a discretion by the court below, the appeal would not be entertained unless it can be shown that the discretion was exercised under an error of law, in disregard of a principle, under a misapprehension of facts or the conclusion reached is outside the generous ambit within which a reasonable disagreement is possible[3].

4. Mr Ambrose Ho SC (leading Ms Winnie Li) for P proposes the following grounds of appeal:

Ground 1

(1) The April Decision is plainly wrong. Even if I am right to have regard to the pending hearing of the Ds’ summons for a striking out order into account, my dismissal of P’s appeal (rather than adjourning the same until after the court’s ruling on the strike-out application) has the effect of barring P’s default-judgment application from ever being determined on its merits. As a result of the erroneous dismissal of the appeal, it will not be possible for P’s application for leave to enter a default judgment against Ds to be revived even if P succeeds in resisting the striking out application.

Ground 2

(2) Further or alternatively, I have erred in having taken irrelevant matters into account, namely, Ds’ striking out application which is pending.

(a) At all times, Ds were aware of P’s application to enter default judgment. At no time had Ds ever applied to have P’s appeal adjourned to be heard subsequent to or at the same time as their striking out application.
(b) I ought to have to determine whether P’s statement of claim would support a judgment to be entered. Instead, contrary to the principle set out in [19(1)] of the April Decision, I have adopted an inconsistent approach at [19(2)] and [19(3)] by having regard to the pending striking out application, when:
(i) the matter raised at [19(2)] could, and indeed should have been considered at the appeal in P’s favour when Ds have not advanced any contrary argument to P’s analysis of the causes of action pleaded in the statement of claim;
(ii) the matters raised at [19(3)] would inevitably require a consideration of the evidence, which according to the principle set out in [19(1)] of the April Decision is precisely not relevant for the purpose of determining P’s application to enter default judgment; and
(iii) the matter raised at [19(4)] of the April Decision is simply not relevant, and has been wrongly taken into account.

(3) Further or in the alternative, I have erred at [19(5)] in considering Ds’ failure to seek direction (for the striking out application to be heard at the same time as the appeal) as a relevant matter to be taken against P, when chronologically, Ds had only taken out the summons for striking out after the P’s notice of appeal was already issued and served. In the circumstances, any failure to seek direction (if relevant) should be held against Ds, not P.

Ground 3

(4) I have wrongly exercised the discretion to grant Ds extension of time to file and serve a defence at the appeal for the reasons set out in Ground 2 above.

(5) I also erred in upholding the Master’s decision to extend time to Ds to file and serve a defence. I ought to have held that Ds’ oral application at the hearing on 23 October 2019 for time extension should be dismissed:

(a) I have failed to take into account that, regardless of P’s intention to amend the statement of claim, Ds remained under an obligation to file and serve a defence, and that the failure of Ds to seek an extension of time until the hearing on 23 October 2019 was a deliberate flouting of the rules prescribing the time to do so. It was also a conscious non-compliance of the requirement for any such application (for time) to be made by summons, and be supported by a valid explanation (of which there was neither at the hearing before the Master).
(b) I also erred in holding at [21(4)] of the April Decision that Ds’ oral application for extension of time to file and serve a defence was triggered by P’s sudden change of stance, when an extension of time was necessary regardless of P’s stance.
(c) I have failed to take into account that an amended defence would not be necessary given the indicated amendment to the statement of claim was a mere numerical correction of the damages sought.
(d) I erred at [21(1)] of the April Decision in taking into account that Ds were justified in considering there might have been other amendments than that mentioned in the July Letter when there was no or no sufficient factual basis for such finding, especially when the July Letter had specifically identified the intended amendment and that there was no concern or speculation on other amendments raised in the August Reply.

Ground 4

(6) In any event, having regard to all the circumstances, the Decision was plainly wrong and should be set aside by Court of Appeal.

5. Having considered these proposed grounds in detail, with respect, I am unable to agree that there is any reasonable prospect of success in any of these grounds.

6. As to Ground 1, knowing that the striking out application will be heard by the court on 2 July 2020, neither P nor Ds have sought a direction that the striking out application and this appeal be heard and determined at the same time, or that the appeal be determined after the outcome of the striking out application is known. On the contrary, P has been pressing for a determination of the appeal before the hearing of the striking out application. In adopting such a course, P would have pre-empted the striking-out application if he succeeds in the appeal. At the same time, P would not be able to pursue his application for leave to enter default judgment if he fails in the appeal. From P’s perspective, there are pros and cons in this approach. Having adopted this approach, P cannot complain while the outcome of the appeal is unfavourable to him.

7. As to Ground 2, I am of the view that there is no reasonable prospect of success in arguing that I have erred in taking the striking out application into account in the exercise of my discretion.

(1) Although the striking out application was taken out after P had lodged the appeal[4], as a matter of fact, both the striking out application and the appeal have been on foot after 20 November 2019. It is an undeniable fact that neither P nor Ds have sought a direction that the appeal and the striking out application be heard and determined in the same hearing at any time after 20 November 2019.
(2) I do not agree that P must be considered as having put forward a meritorious claim in the statement of claim while Ds have not advanced any contrary argument. The court has to examine the statement of claim and to see whether a reasonable cause of action has been pleaded therein. I have stated in the April Decision that given the matters before me, I am of the view that this exercise (ie examining the statement of claim to see whether a reasonable cause of action has been pleaded therein) should be done in the determination of Ds’ summons[5].
(3) The principle stated in [19(1)] of the April Decision is the principle concerning an application for a default judgment. However, the application made by P is not an application for a default judgment, but is an application for leave under Order 77 rule 9 to enter a default judgment against Ds. In considering in what way the court’s discretion under Order 77 rule 9 should be exercised, the matters set out in [19(3)] of the April Decision are relevant.
(4) I am also of the view that the matter set out in [19(4)] of the April Decision is relevant for the purpose of considering how the discretion under Order 77 rule 9 should be exercised. P’s failure in obtaining an order to dismiss Ds’ summons summarily means that the striking out application therein is arguable and Ds may succeed in that application.

8. As to Ground 3, I do not think that the reasoning given in [21] of the April Decision can be said as being plainly wrong. The only way to make sure that the amendment mentioned in the July Letter is the only amendment is to file and serve an amended statement of claim containing the said amendment only[6]. This has not been done by P. Had this been done, Ds would have been automatically entitled to have time to file and serve a defence in response to the amended statement of claim without the necessity of making an application for time extension[7]. Thus, it is correct to say that Ds’ oral application for an extension of time in the hearing on 23 October 2019 was triggered by P’s sudden change of stance, ie suddenly abandoning the attempt to amend the statement of claim in that hearing[8]. With respect, I am of the view that there is no legitimate complaint in this ground.

9. Ground 4 is a mere repetition of the previous grounds. For the reasons set out in the above, there is also no merit in this ground.

10. I am of the view that there is no reasonable prospect of success in the proposed grounds of appeal. I also do not see any reason why in the interests of justice the appeal should be heard. In the circumstances, P’s application for leave to appeal must be refused.

11. I dismiss the summons with costs to Ds forthwith. Those costs be summarily assessed. There be leave to Ds to provide a bill of costs for summary assessment within 7 days, and leave to P to provide a written reply to the said bill within 7 days thereafter.

12. I thank counsel for the assistance provided to the court.

( MK Liu )
Deputy High Court Judge

Mr Ambrose Ho SC and Ms Winnie Li, instructed by K H Mak & Co, for the plaintiff

Mr Louie Chan, Government Counsel of the Department of Justice, for the 1^st and 2^nd defendants

[1] Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 250, [24]

[2] HighCourt Ordinance, s.14AA; SMSEv KL [2009] 4 HKLRD 125, [17]; Hong Kong Civil Procedure 2020, Volume 1, §59/2A/4

[3] CheungKam Wahv CheungHon Wah & Others [2005] 1 HKC 136, [17]; CarlosManuel Kwongv LoKam Wing & Others (CACV 128/2005, 3 November 2005), [28]; HongKong Civil Procedure2020, Volume 1, §59/0/54

[4] April Decision, [10] and [11]

[5] April Decision, [19]

[6] Order 20 rule 3(1)

[7] Order 20 rule 3(2)(b)

[8] April Decision, [21(4)]

HCA 1284/2019

[2020] HKCFI 625

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1284 OF 2019

________________________

BETWEEN
	秦錦釗	Plaintiff
	and
	香港海關關長	1st Defendant
	香港特別行政區	2nd Defendant

________________________

Before: Deputy High Court Judge MK Liu in Chambers

Date of Plaintiff’s Submissions: 7 & 14 April 2020

Date of 1^st and 2^nd Defendants’ Submissions: 9 April 2020

Date of Decision: 17 April 2020

____________________

DECISION

____________________

1. This is an appeal brought by the plaintiff (“P”) against the decision made by Master SP Yip (“the Master”) on 23 October 2019. By that decision, the Master extended the time for the defendants (“Ds”) to file and serve a defence to 20 November 2019, and dismissed P’s summons dated 14 October 2019. In the said summons, P is seeking leave under Order 77 rule 9 to enter judgment against Ds in default of a defence to his claim.

2. P was acting in person in these proceedings until 2 April 2020. From that date onwards, P is legally represented in these proceedings. Ds have been represented by the Department of Justice (“DoJ”) at all times in these proceedings.

3. Due to the General Adjourned Period (“GAP”), this appeal could not be heard on 14 April 2020 as scheduled. The parties have agreed that the appeal be determined on paper without an oral hearing. Mr Amborse Ho SC and Ms Winnie Li for P, and Mr Louie Chan for Ds have provided me detailed written submissions, and I am grateful for that.

The facts

4. I would first set out the facts which are not in dispute or indisputable.

5. On 17 July 2019, P issued the writ of summons herein, which is indorsed with a statement of claim.

6. On 22 July 2019, P sent a one-page letter (“the July Letter”) to the DoJ, in which the plaintiff said there would be an amendment to the quantum of the damages claimed in paragraph 55(i) of the statement of claim. In the letter, P mentioned that the amended part of the statement of the statement of claim was enclosed in the said letter. The enclosed document is also a one-page document.

7. On 30 July 2019, each of Ds filed an acknowledgment of service of the writ, in which Ds indicated that they would contest the proceedings.

8. On 27 August 2019, DoJ wrote to P and replied to the July Letter (“the August Reply”). In the said reply, DoJ reminded P that he might amend the statement of claim without leave once before the close of pleadings. DoJ also said that P had only enclosed a one-page document in the July Letter and that document could not be a proper amended statement of claim. DoJ urged P to file and serve a proper amended statement of claim.

9. On 14 October 2019, P took out a summons under Order 77 rule 9 for leave to enter default judgment against Ds. On 23 October 2019, P’s application made by the summons was heard by the Master. In that hearing:

(1)  DoJ informed the Master of the July Letter and the August Reply. DoJ submitted that since they had not been served with the amended statement of claim, they would not be able to file and serve a defence.
(2)  P agreed that he had sent the July Letter to DoJ. P said that he only intended to amend the statement of claim after Ds had filed and served a defence. If Ds did not file and serve a defence, he would not amend the statement of claim.
(3)  The Master said that the sequence mentioned by P might not be a proper sequence. If P really intended to amend the statement of claim, P should do so before Ds filing any defence. That would avoid the necessity of filing a defence by Ds first and then filing an amended defence by Ds at a later time after seeing P’s amended statement of claim, and time and costs could be saved.
(4)  After hearing the Master’s comment, P told the court that he decided not to amend the statement of claim.
(5)  P then raised the issue that Ds had never applied for extending the time for Ds to file and serve a defence. DoJ repeated the submission that they had not filed and served a defence because they were waiting for the amended statement of claim. The Master then asked DoJ since P had decided not to amend the statement of claim, whether DoJ would apply for an extension of time to file and serve a defence. DoJ then sought a time extension of 18 days.
(6)  After hearing further submissions from the parties, the Master granted a 28-day time extension, ie until 20 November 2019, to DoJ. The Master however required Ds to bear the costs of the hearing.

10. On 30 October 2019, P lodged this appeal.

11. On 20 November 2019, Ds took out a summons (“Ds’ summons”) for, interalia, the following:

(1) an order to strike out the statement of claim on the ground that (a)it discloses no reasonable cause of action or defence, as the case may be, (b)it is scandalous, frivolous or vexatious; and/or (c) it is otherwise an abuse of the process of the court; and
(2) the time for Ds to file and serve a defence be extended to 42 days after the determination of the summons (if applicable).

12. On 26 November 2019, P took out a summons for an order dismissing Ds’ summons dated 20 November 2019.

13. The summonses mentioned in [11] and [12] above were heard by Master A Ho on 29 November 2019. At the end of that hearing, Master Ho ordered, interalia, that:

(1)  P’s summons dated 26 November 2019 be dismissed with costs;
(2)  D’s summons be adjourned for substantive arguments before a judge with 3 hours reserved; and
(3)  The time for Ds to file and serve a defence be extended to until the determination of Ds’ summons.

14. The substantive hearing of Ds’ summons will take place before G Lam J on 2 July 2020.

The parties’ respective arguments

15. Mr Ho SC for P submits that:

(1)  Before the hearing on 23 October 2019, Ds had not only failed to properly produce a defence (not even a draft defence), but they had also failed to make any application for time extension by way of a summons.
(2)  The hearing on 23 October 2019 was fixed solely for the purpose of considering whether leave should be granted for entering default judgment. The hearing was not scheduled to deal with any extension of time for filing the defence – no such application having been made prior to the hearing.
(3)  The contention put forward by DoJ in the hearing (viz that time should run only after the filing and service of the intended amended statement of claim) is untenable.
(a)  As shown in the July Letter, the only intended amendment was a mere numerical correction of the damages sought. Such intended amendment does not, and cannot, in any way prevent or affect the preparation of a defence.
(b)  After receipt of the July Letter, Ds filed acknowledgements of service to contest the proceedings on 30 July 2019. They were fully aware that no amended statement of claim was filed and served at that stage.
(c)  There is no provision in the Rules of the High Court that the time prescribed for the filing and service of the defence would be suspended or extended in these circumstances. There is no basis for Ds unilaterally to disregard the relevant provisions of the rules.
(d)  In any event, if there is any amendment of the statement of claim after filing of the defence, Ds can always file an amended defence, if necessary, without leave before close of pleadings. Waiting for the intended amended statement of claim is no justification for the deliberate non-compliance with the rules.
(4)  After the CJR, Ds are expected to comply strictly with the timetable laid down by the rules, so that the disputes between the parties could be dealt with efficiently, expeditiously and justly.
(5)  The Master should not have entertained Ds’ oral application made on the spot and without reasons. It is particularly unfair to the unrepresented P to have to address such application without warning, and without the knowledge or benefit of any advice that he had the right to insist on proper explanation and supporting evidence if any application for time-extension were to be entertained.
(6)  Time extension for filing and serving the defence should never have been granted to Ds in the first place.
(7)  The statement of claim is not deficient. Based upon the matters pleaded therein, P is entitled to have judgment against Ds.
(8)  As to Ds’ summons, Ds have never sought to have the substantive hearing of that summons and the hearing of this appeal at the same time. Ds have also not sought to seek to adjourn the hearing of this appeal before the determination of Ds’ summons. In the circumstances, it is only fair that this court should hear and determine the present appeal as it stands without being unduly distracted by Ds’ summons.

16. Mr Chan for Ds submits that:

(1) The time extension order made by the Master in the course of the hearing on 23 October 2019 is an order within the Master’s power. In the light of that order, Ds have not been default in filing and serving the defence.
(2) Further, P’s application for leave to enter default judgment has been overtaken by events. By the order made by Master A Ho on 29 November 2019, the time for Ds to file and serve a defence has been extended until the determination of Ds’ summons. The substantive hearing of Ds’ summons has been fixed to take place before G Lam J on 2 July 2020.

17. Mr Ho SC submits the following in reply:

(1) There is no dispute that the Master has the power to grant an extension of time to Ds. However, the Master has erred in exercising his discretion in favour of Ds in granting the time extension.
(2) The 2^nd time extension granted by Master A Ho is based upon the 1^st time extension granted by the Master, which is the subject matter of this appeal. In other words, the basis of the 2^nd time extension is under challenge in this appeal.

My view

18. It is trite that an appeal hearing under Order 58 is a denovo hearing. The hearing before me is an actual rehearing as if the application came before me for the first time[1]. See Hong Kong Civil Procedure2020, Volume 1, §58/1/2. In considering the application made by P in his summons dated 14 October 2019, I have to take all the relevant matters into account, including the matters which have occurred after the hearing before the Master on 23 October 2019.

19. I am of the view that P’s application ought to be refused. In my judgment, it would not be proper and appropriate to enter default judgment against Ds before the determination of Ds’ summons for an order to strike out the statement of claim.

(1)  In considering an application for a default judgment, the fact that the defendant has failed to file and serve a defence within the prescribed time would not ipsofacto mean that the plaintiff is entitled to have a default judgment. The court would need to examine the statement of claim to see whether a valid claim against the defendant has been pleaded therein.   The court would only consider the matters pleaded in the statement of claim and would not consider any evidence on merits[2].
(2)  In Ds’ summons, Ds contend that the statement of claim ought to be struck out for it discloses no reasonable cause of action against Ds. If Ds are correct on this point, no default judgment should be given to P.
(3)  Further, whether the court should grant leave to P under Order 77 rule 9 is a discretionary decision to be made by the court. In Ds’ summons, Ds also contend that the statement of claim ought to be struck out for (a)it is scandalous, frivolous or vexatious; and/or (b)it is otherwise an abuse of the process of the court. If these contentions are upheld, there would be no reason for the court to exercise its discretion under Order 77 rule 9 in favour of P.
(4)  P has made an application for an order summarily dismissing Ds’ summons by taking out a summons on 26 November 2019. P’s summons dated 26 November 2019 was dismissed by Master A Ho on 29 November 2019. There is no appeal from that decision.
(5)  Neither P nor Ds have sought a direction that Ds’ summons and this appeal be heard and determined at the same time. As the matters now stand, Ds’ summons will be heard by another judge on 2 July 2020.
(6)  In view of all the above, it would not be proper and appropriate to enter default judgment against Ds before the determination of Ds’ summons.
(7)  Given the matters now stand, I am of the view that Ds should have time to file and serve a defence until the determination of Ds’ summons.

20. For the reason above, in my view, P’s application for leave under Order 77 rule 9 must be refused.

21. For the sake of completeness, I would briefly comment on the Master’s decision to grant an extension of time to Ds in the hearing on 23 October 2019. In my view, the Master’s decision cannot be faulted.

(1)  By the July Letter, P had certainly given an impression to Ds that P was going to amend his statement of claim. Without seeing the complete amended statement of claim, Ds would not be able to know whether the amendment would only be the one mentioned in the July Letter or there would be some other amendments. It would certainly save much time and costs for Ds to put in a defence in response to the amended statement of claim, and not to put in a defence in response to the statement of claim first and shortly thereafter put in an amended defence in response to the amended statement of claim.
(2)  By the August Reply, DoJ has urged P to provide a copy of the complete amended statement of claim to them. The request has been ignored by P.
(3)  P only changed his stance in the hearing on 23 October 2019 by saying that he was not going to amend the statement of claim. Had he insisted on amending the statement of claim, it would not be possible for him to obtain a default judgment against Ds. P would not be able to obtain a default judgment based upon a pleading (ie the amended statement of claim) which has not yet been produced by him.
(4)  Ds’ oral application for an extension of time in the hearing on 23 October 2019 was triggered by P’s sudden change of stance in the hearing.
(5)  Viewing the matters in context, I am of the view that Ds cannot be criticized for not making an application for an extension of time at an earlier time. Further, I am also of the view that there is nothing wrong for the Master to grant the time extension to Ds in the circumstances.

Disposition

22. I dismiss the appeal.

23. Costs should follow the event. I order that costs of the appeal be paid by P to Ds forthwith and be summarily assessed. There be leave to Ds to provide a bill of costs for summary assessment to the court and serve the same on P on or before 24 April 2020, and leave to P to provide a written reply to the said bill to the court and serve the same on Ds on or before 5 May 2020. Letters and documents provided to the court during GAP shall be sent to the designated no-reply email address.

24. Lastly, it remains for me to thank counsel for the helpful assistance rendered to the court.

	( MK Liu )
	Deputy High Court Judge

Mr Ambrose Ho, SC and Ms Winnie Li, instructed by K H Mak & Co, for the plaintiff

Mr Louie Chan, Government Counsel of the Department of Justice, for the 1^st and 2^nd defendants

[1] HongKong Civil Procedure2020, Volume 1, §58/1/2

[2] LamChi Fatv LibertyInternational Insurance Ltd [2002] 3 HKLRD 480, [27]; LeungPak Kiv TheEstate of Pang Kau (彭九), deceased & Anor (HCA 624/2009, 1 March 2016), [5]

秦錦釗 v. 香港海關關長 AND ANOTHER

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