CHUNG FAI ENGINEERING CO. (A FIRM) v. MAXWELL ENGINEERING CO. LTD.

HCMP004473A/2000

HCMP 4473/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 4473 OF 2000

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HCA 10504/96

BETWEEN
CHUNG FAI ENGINEERING COMPANY (a firm) Plaintiff
AND
MAXWELL ENGINEERING COMPANY LIMITED Defendant

HCA 10631/96

AND BETWEEN
MAXWELL ENGINEERING COMPANY LIMITED Plaintiff
AND
CHUNG FAI ENGINEERING COMPANY (a firm) Defendant

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Coram: Keith JA in Chambers

Date of Hearing: 29 November 2000

Date of Judgment: 29 November 2000

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J U D G M E N T

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Introduction

1. On 27 June, Burrell J gave judgment in the Court of First Instance in two actions which had been consolidated. The order giving effectto that judgment was sealed on 5 July, though I had originally been given the date 7 July. One of the parties, Chung Fai EngineeringCo. (“Chung Fai”), wishes to appeal. The 28-day time limit for appealing, plus the intervention of the summer vacation, meant thatChung Fai had until 2 September to serve its notice of appeal. It did not do so, and on 26 September its solicitors issued a summonsunder Ord. 3 r. 5 for an extension of time to do so.

The reason for the non-compliance with the time limit

2. Chung Fai has always wanted to appeal against Burrell J’s judgment if such an appeal has merit. It was originally advised, eitherby its previous solicitors or by counsel who had represented it at the trial, that its time for appealing would expire on or about17 August. That advice was wrong. Chung Fai’s advisers had been unaware of the recent reduction of the time limit from six weeksto 28 days from the perfection of the judgment. The incorrectness of that advice was brought to Chung Fai’s attention by its newsolicitors on 15 August. Their advice was that Chung Fai’s time for serving its notice of appeal had expired by then, and accordinglyon 26 August they filed a summons under Ord. 59 r. 4 and Ord. 59 r. 15 seeking “leave to appeal” against Burrell J’s judgment “notwithstandingthat [the] time limit for appealing has expired”.

3. The new solicitors’ advice was also wrong. They had failed to take into account that the reduction of the time limit to 28 days,i.e. to a period not exceeding one month, had triggered the application of section 31(1) of the High Court Ordinance (Cap. 4) which, when coupled with Ord. 64 r. 1(1), meant that the time for serving the notice of appeal did not run during the monthof August.

4. The summons of 26 August was placed before me. For the reasons set out in the judgment handed down by me on 21 September, I heldthat there should be a hearing of the summons, and that the hearing should be inter partes. A new summons was issued on 26 September, and that is the summons before me today.

5. It is not suggested that Chung Fai’s original advisers had made any inquiries or conducted any research into what the time limitthen was. Despite suggestions to the contrary by the Managing Director of Maxwell Engineering Co. Ltd. (“Maxwell”), the other partyto the litigation, I proceed on the basis that Chung Fai’s original advisers simply assumed that the time limit was as it had beenfor many years. It has not been suggested that the reduction of the time limit was given particular publicity,and if a time limithas been in place for many years I do not suppose that it would occur to many lawyers to take the precaution of checking that thetime limit had not recently been reduced.

6. Nor has it been suggested that Chung Fai’s new advisers had made any inquiries or conducted any research into whether Chung Fai’stime for serving the notice of appeal ran during the month of August. They simply assumed that it did. That was, I suppose, not anunreasonable assumption because the impact of section 31(1) of the High Court Ordinance on the reduced time limit may not have occurred even to experienced and knowledgeable litigators.

The extension of time

7. I regard four factors as important as to whether Chung Fai’s time for serving the notice of appeal should be extended. First, the mistakes made by Chung Fai’s advisers,though not capable of being condoned, were nevertheless understandable. Secondly, despite suggestions to the contrary by Maxwell’s Managing Director, I have not discerned any fault on the part of Chung Fai itself.Thirdly, the delay has been relatively short. Indeed, the original summons was issued before the time for serving the notice of appeal hadexpired, and the only reason why two months have elapsed since the issue of the new summons on 26 September was because Maxwell’ssolicitors estimated that the hearing of the application would last two hours. Fourthly, Maxwell does not suggest that it has suffered any significant relevant prejudice. By that, I mean prejudice caused by the fact thatthe notice of appeal is now to be served a few months later than it should have been. There is no reason why Maxwell should not takesteps to enforce its judgment. If a stay of execution of Burrell J’s judgment is applied for and obtained, Maxwell will have to waitlonger for its money, but that would be as a result of the stay of execution rather than because of the delay in serving the noticeof appeal.

8. In all the circumstances of the case, I have concluded that the overall interests of justice require the grant of the extension oftime which Chung Fai seeks unless its appeal has no real prospect of success. The only finding made by Burrell J to which Chung Fai’sproposed notice of appeal relates was his finding that Maxwell had not been in breach of contract in failing to meet the target datefor the fire services inspection. Having read that part of Burrell J’s judgment carefully and the criticisms of it in the proposednotice of appeal, it may be that Chung Fai may have some difficulty in succeeding in its appeal. However, I have not been persuadedthat the proposed appeal has so little merit that Chung Fai’s time for serving its notice of appeal should not be extended.

9. I have noted that one of Maxwell’s claims related to a cheque drawn by Chung Fai which had been dishonoured on presentation, andwhich Burrell J found had not been given conditionally. However, Burrell J added that it was “nonetheless necessary to examine thecircumstances of the alleged delay because it would still be possible to find Maxwell in default as alleged and therefore liablewholly or in part on Chung Fai’s claim” (emphasis supplied).

10. Mr Boey Chung for Maxwell has suggested that if Chung Fai’s time for serving its notice of appeal is extended, that should be conditionalon Chung Fai paying the judgment debt into court. In that way the debt would be secured. I might have been attracted by that suggestionif Maxwell had filed some evidence (in sufficient time for Chung Fai to have replied to it) showing that Chung Fai would be ableto raise that amount, and that the imposition of such a condition would not therefore have the effect of stifling Chung Fai’s appeal.However, the point was taken so late in the day that I do not think that it would be right to impose such a condition.

Conclusion

11. For these reasons, I grant an extension of Chung Fai’s time for serving the notice of appeal to 1 December.

(Brian Keith)
Justice of Appeal

Representation:

Mr Wong Kwong On, of Messrs M. F. Ko & Co., for Chung Fai Engineering Co.

Mr Boey Chung, instructed by Messrs Jesse H. Y. Kwok & Co., for Maxwell Engineering Co. Ltd.