WORLD CHINESE BUSINESS INVESTMENT FOUNDATION LTD AND OTHERS v. SHINE RAINBOW MARKETING LTD AND OTHERS

HCA 2547/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2547 OF 2007

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BETWEEN

WORLD CHINESE BUSINESS INVESTMENT
FOUNDATION LIMITED
世界華商投資基金會有限公司
1st Plaintiff
HANDKEY CONSULTANT &
DEVELOPMENT LIMITED
基業顧問有限公司
trading as THE HONOR DOCTORATE OF WORLD
OUTSTANDING CHINESE
世界傑出華人博士學會
2nd Plaintiff
MA HING LEE HENRY馬興利 3rd Plaintiff
And
SHINE RAINBOW MARKETING LIMITED
沐陽推廣有限公司
1st Defendant
WONG SIU CHEUNG 黃少璋 2nd Defendant
CHAN CHI KWAN 陳紫君 3rd Defendant

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Coram : Before Madam Registrar Au-Yeung in Chambers

Date of Hearing : 10th February 2010

Date of Judgment : 12th February 2010

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J U D G M E N T

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1. The Plaintiffs’ solicitors failed to turn up at the case management conference (“CMC”) and the action was provisionally struckout by a Master The Plaintiffs now seek restoration of the claim pursuant to Order 25, rule 1C(3).

Order 25, Rule 1C

2. Rule 1C provides as follows:

“(1) Where the plaintiff does not appear at the case management conference …, the Court shall provisionally strike out the plaintiff’sclaim.

(3) Where the Court has provisionally struck out a claim … under paragraph (1) …, the plaintiff or the defendant may, beforethe expiry of 3 months from the date of the case management conference …, apply to the Court for restoration of the claim …

(4) The Court may restore the claim … subject to such conditions as it thinks fit or refuse to restore it.

(5) The Court shall not restore the claim … unless good reasons have been shown to the satisfaction of the Court.

(6) If the plaintiff … does not apply under paragraph (3) or his application under that paragraph is refused, then-

(a) the plaintiff’s claim … stands dismissed upon the expiry of 3 months from the date of the case management conference …;and

(b) (i) in the case of the plaintiff’s claim, the defendant is entitled to his costs of the claim; …”

3. Mr. Lam submits that rule 1C(1) is akin to:

(i) a regular default judgment to be set aside by a defendant; and

(ii) a standing unless order so that “unless the plaintiff attends the CMC, his claim will be struck out and will not be restoredwithout leave of the Court”.

Therefore the principles for applying for relief against sanctions and setting aside a default judgment are equally applicable.

4. I find force in Mr. Lam’s submission by comparing the wording and considering the legislative scheme under various rules. Order25, rule 1C(4) is drafted in very similar terms to Order 13, rule 9 (and Order 19, rule 9). The latter provides that “… theCourt may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order.” A defendant hasto apply promptly to set aside a default judgment and explain any delay; he has to explain why he let judgment go by default andthat he has reasonable prospect of success.

5. Likewise, under Order 2, rule 5 where a party has failed to comply with an unless order, on any application for relief from anysanction, the Court shall consider all the circumstances including 10 factors. An application for relief must be supported by evidence.

6. Similarly, any judgment obtained where one party does not appear at a trial may be set aside by the Court, on the application ofthat party, on such terms as it thinks just. Again, the applicant has to,amongst others, explain his absence and show reasonableprospects of success. Unless the absence was not deliberate but was due to accident or mistake, the Court will be unlikely to allowa rehearing: paragraph 35/2/1 of the Hong Kong Civil Procedure 2010.

7. The general theme derived from these rules is that the Court will not lightly accede to the request of a defaulting party to restorean action without sufficient explanation and consideration of the merits. This is to maintain the integrity of the timetable laiddown by the Court or the rules and to ensure that a matter without merits should not continue to haunt an innocent party.

8. It is thus clear that under rule 1C(4) and (5), a plaintiff should first meet the threshold of showing “good reasons” in stage1 and then the Court will consider whether, as a matter of discretion, it should grant the restoration in stage 2. If it decidesto restore the Claim, the Court may consider conditions to be imposed in Stage 3.

Stage 1 – Good Reasons

9. The Plaintiffs’ solicitors gave 3 reasons to explain their absence:

(i) Parties were negotiating for mediation.

(ii) Complications in the sense that there were 3 other actions involving the same parties.

(iii) Mistake/oversight of a Plaintiff’s solicitor.

10. With regard to reason (i), mediation is done beyond the precincts of the court, and cannot override the milestone date fixed by theCourt. In this case a Master has granted stay of proceedings for the purpose of mediation. That stay has long lapsed and the court’stimetable started to run again without a mediator even agreed upon. Thus reason (i) is not a good one.

11. With regard to reason (ii), many cases are complicated and have related actions, but that is not a good reason for not appearingon a milestone date. Thus reason (ii) is not a good one.

12. With regard to reason (iii), solicitor’s fault may constitute a good reason. In PT Bank Pembangunan Indonesia (Persero) v. Tan Eddy Tansil [1997] HKLRD 57, in deciding whether to grant an extension of time for compliance with an unless order, the Court of Appeal held that where non-compliancewas due to the default of the solicitor rather than the litigant himself such default should be regarded as an extraneous caus­eof non-compliance so far as the litigant is concerned, inclining the court towards granting him an extension of time.

13. However, the solicitor has to explain how the fault came about. In Secretary for Justice v. Hong Kong & Yaumati Ferry Co. Ltd. & anor [2001] 1 HKC 125, the solicitor wrongly calculated the time for filing a notice of appeal. Le Pichon JA held that the absence of any explanationof how the error arose made the solicitor’s conduct “inexcusable”.

14. In the present case, four weeks had elapsed after Master Ho informed the Plaintiff that the action was provisionally struck out beforethe Plaintiff wrote to him stating that “the parties were absent for the Case Management Conference by mistake.” The affirmation in support of this application stated that the failureto attend was due to oversight. Whose mistake? Whose oversight? It was only at the hearing that Ms. Kan for the Plaintiff affirmativelystated that it was the oversight of the solicitor as he had failed to mark his diary. She explained that it took them 4 weeks towrite to Master Ho because they needed to study rule 1C.

15. To present evidence in this manner is clearly unsatisfactory. What is more troubling is that reasons (i) and (ii) would have ledto a deliberate decision not to attend the CMC, whereas reason (iii) would have arisen out of inadvertence. These reasons were inconsistentamongst themselves.

16. I am however mindful of the fact that all along the Plaintiffs’ solicitor has assumed the responsibility for the non-attendanceand went on affirmation. It appears that the fault was not with the Plaintiffs themselves. Given this is the 1st application of its kind before me and practitioners may not be familiar with rule 1C, I give the benefit of the doubt to the Plaintiffs’solicitor. The Court would not want to dismiss a good cause for pure technical breach or inadvertence. I find that reason (iii)is a good reason in the circumstances of this case.

Stage 2 – Exercise of Discretion

17. The Defendant has filed an affirmation to state that the Plaintiff’s claim has no merits. As rightly pointed out by the Plaintiff,the contents of this affirmation had been used when the Defendant applied previously to serve voluntary particulars but the applicationwas dismissed by Master Levy. It is not permissible for the Defendant to introduce such positive facts again, especially since thedefence is just a bare denial.

18. The Plaintiffs, on the other hand, has not filed evidence to show merits of their claim although the amended statement of claim haspleaded a proper cause of action. Since rule 1C does not require on its face reasonable prospect of success to be shown, the Plaintiffs’failure to show merits is understandable.

19. Mr. Lam submits that the Plaintiff has had a history of failure to comply with court orders, e.g. in failing to attend a mediationbriefing before Master Lung. I note, however, that despite the Plaintiff’s personal absence the Court proceeded to manage thecase and no time was wasted.

20. I also note that, like the Plaintiffs, the Defendants failed to attend the same CMC and they have not shown any prejudice if theaction were restored.

21. This is the 1st application of its kind when practitioners may not be familiar with how rule 1C operates. I err on the side of caution and restorethe action. This must not be taken to mean that I am satisfied with the way the case is presented on either side.

Stage 3 – Conditions for Restoration

22. Mr. Lam has invited me to impose 2 conditions:

(i) That the amended statement of claim be re-amended so that English translation of the Chinese words can be provided.

(ii) That the Plaintiff be required to provide security for the Defendants’ costs.

23. As a matter of law, a set of pleading should be only in one of the official languages: Chan Kong v. Chan Li Chai Medical Factory (Hong Kong) Ltd [2009] 2 HKLRD 455; and the English translation of the allegedly defamatory words in Chinese should be pleaded: Cheung Kong (Holdings) Ltd v. Chan Wai Yip Albert [2000] 4 HKC 591. The English translation can be provided either by re-amendment or certified translation of the article in question. I do not seethe need to make it a condition for restoration of the action.

24. In principle, condition (ii) can be imposed. Unfortunately, the affirmation of the Defendants did not propose the amount of securityrequired and what stages of the proceedings it should cover. It is not appropriate for the Court to guess the amount.

Conclusion

25. Under Order 25, rule 1C, a plaintiff who seeks restoration of an action should give good reasons as to why he did not attend themilestone event. Absence due to the fault of the solicitor instead of the party may be a good reason but the solicitor should explainfully how the fault came about. The plaintiff should also show that he has reasonable prospects of success. A defendant who wishesthe Court to impose conditions for the restoration should propose the conditions. Where payment of security or other conditionsare required, details should be given to enable the Court to come to a fair decision.

26. In the present case, I permit the Plaintiff to restore the action. No condition will be imposed.

27. Since it involved an indulgence granted by the Court, I make an order nisi that the Plaintiffs should bear the costs of and incidental to the present application. However, for the reason given in paragraph17 above, I disallow the costs of and incidental to the preparation and use of the second affirmation of Wong Siu Cheung. I findMr. Lam’s submission to be very helpful. I also make an order nisi that there should be certificate for counsel.

28. The matter is adjourned to 5th March 2010 for summary assessment of costs on paper. The defendants shall file and serve a costs statements by 24th February 2010. The plaintiffs shall file and serve the grounds in opposition by 3rd March 2010.

29. Some practitioners still do not comply with paragraph 8 of PD 14.3 to lodge their costs statements together with their skeleton submissions. I can understand this if a hearing involves cross-summonses and complicated issues when parties may wish to consider the rulingbefore presenting a costs statement for summary assessment or apportionment of costs. The present case does not belong to this category. It will defeat the exercise of summary assessment if a hearing has to be adjourned for several weeks for parties to lodge costsstatement, grounds in objection and the Court has to refresh his memory of the case.

30 Practitioners are thus reminded to comply with paragraph 8 of PD 14.3, especially for hearings before Masters. Failure to comply,thereby necessitating a separate hearing for summary assessment, may cause the receiving party to be penalized in costs.

(Queeny Au-Yeung)
Registrar, High Court

Ms. M. Kan of Messrs. S.H. Chou & Co. for the Plaintiffs.

Mr. Gary C. C. Lam instructed by Tse & Associates for the Defendants.