Civil ProcedureLecture 1

Pre-Commencement Considerations

A Process Model of Legal Problem Solving: The model (or framework) presents a general, though simplified, theory of

competent legal practice. It offers a logical and systematic way to handle a range of legal problems. On the other hand, it allows for flexibility to accommodate the variety and

complexity of legal problems.The 5-stage Process Model of Legal Problem Solving (PG-FLAP):

Problem and Goal identification; Fact investigation; Legal issue identification and assessment; Advice and decision making; and Planning and implementation.(Need to note the linear and fluid nature of the various stages)

Jurisdiction of the CourtsSmall Claims Tribunal Enjoys exclusive jurisdiction over any monetary claim not exceeding $50,000

founded in contract, quasi-contract or tort But excludes e.g. defamation action, action by licensed moneylender and action in

respect of matrimonial maintenance agreement District Court Non-exclusive jurisdiction over any monetary claim above $50,000 but not exceeding

$1,000,000 founded in contract, quasi-contract or tort (s 32 DCO) Plaintiff may abandon part of its claim in excess of $1m so as to bring its claim

within the DC’s jurisdiction (s 34 DCO) Non-exclusive jurisdiction over action for recovery of land where annual rent, rateable

value or annual value (whichever is the least) does not exceed $240,000 (s 35 DCO) If the claim calls into question the title to an interest in land, DC only has jurisdiction

if the rateable value or the annual value (whichever is the less) does not exceed $240,000 (s 36 DCO)

Non-exclusive equity jurisdiction (e.g. administration of estate, mortgage action, specific performance or rescission of sale and purchase agreement) where the amount or value of the subject matter does not exceed $1m (for the part not relating to land) or $3m (for the part relating to land) (see s 37(2) DCO)

For the purposes of ss.32,33,36,37, if the claim amount exceeds $1m, any discretionary interest that may be or is ordered under s 49 is excluded (s 49(7) DCO)

PD27 para 1.2: all writs and originating summonses should contain a plea that the relief sought do fall within the jurisdiction of the District Court, specifying which section(s) of ss.32-39 DCO do apply to the case.

Court of First Instance of the High Court The CFI is a superior court of record and has unlimited civil jurisdiction

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Action falling within the exclusive jurisdiction of other tribunals cannot however be commenced in the CFI

Exclusive jurisdiction to hear judicial review and habeas corpus proceedings

Choice of Court If a particular court/tribunal has exclusive jurisdiction => no choice If more than one court have jurisdiction (e.g. both the DC and CFI) => in general

choose the lower court which is normally cheaper, unless there is good reason to choose higher court (e.g. importance or complexity of the issues involved).

Transfer of Proceedings between DC and CFI DC shall transfer the action to the CFI if the claim (not being a counterclaim) is

outside its jurisdiction. It may strike out the action on D’s application if P knew or ought to have known that the DC has no jurisdiction (s.41(1),(2) DCO)

Even if the claim is within the DC’s jurisdiction, DC may transfer proceedings to the CFI if there is good reason (e.g. importance or complexity) (s.42 DCO)

CFI is required to transfer any claim (other than a counterclaim) which appears likely to be within the DC’s jurisdiction unless it is of the opinion that, by reason of the importance or complexity of the issues involved or for other reason, the action ought to remain in the CFI (s.43 DCO)

If the parties consent, the CFI may transfer any action whose monetary limit exceeds the DC’s jurisdiction to the DC (s.44 DCO)

Legal Aid A positive professional duty to advise client to seek legal aid if he is eligible (see

Principles 4.01 and 5.21 of HK Solicitors’ Guide to Professional Conduct) Available to any natural person in Hong Kong, resident or non-resident. Cover most civil proceedings but exclude proceedings such as defamation

proceedings, relator actions, election petitions (unless human rights issue is involved), disputes between shareholders or business partners, claims for the recovery of a loan made in the ordinary course of the applicant’s business, and proceedings where the only question before the court is as to the time and mode of payment for debt and costs (see Schd 2, Legal Aid Ordinance).

Need to satisfy the Director of Legal Aid as to the justification for legal action (the merits test) and financial eligibility (the means test).

Merits test must show that one has “reasonable grounds for taking, defending, opposing or

continuing the proceedings or being a party thereto” (s.10(3) LAO) Means test total financial resources (i.e. disposable annual income plus disposable capital) not

exceeding $175,800 for the Ordinary Scheme and between $175,801 to $488,400 for the Supplementary Scheme.

Negative Equity Property: In Ng Ai Kheng Jasmine v. Master M. Yuen (CFI 2004), Chu J held that on a proper construction of the statute, the negative equity property could not be taken into account in reducing the total financial resources but would only be given a zero value.

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In Shem Yin Fun v Director of Legal Aid [2003] 1 HKC 568, Chu J also held that any outstanding debt owed by the applicant cannot be taken into account in reducing the disposable capital. Hence, if the applicant wants to have the debt taken into account, he has to first settle the outstanding debt before applying

Ordinary Scheme For the Ordinary Scheme, aided persons with financial resources of less than $20,000

are exempted from making a contribution. If the aided person is receiving Comprehensive Social Security Assistance (CSSA), he is generally presumed to have financial resources below $20,000 and so is not required to pay any contribution. Aided persons with financial resources ranging from $20,000 to $60,000 are required to make a nominal contribution of $1,000 to $2,000. Aided persons whose financial resources exceed $60,000 are required to contribute an amount equivalent to 5% to 25% of their financial resources according to a sliding scale set out in Schedule 3 of the Legal Aid (Assessment of Resources and Contributions) Regulations. The contribution is used to set off any unrecoverable legal costs incurred by the DLA

Supplementary Scheme The Supplementary Scheme is more limited in scope and covers only personal

injuries or death claims, or professional negligence claims with an amount exceeding (or likely to exceed) $60,000 (Schd 3, LAO)

Under Supplementary Scheme, all aided persons are required to pay an interim contribution equivalent to the maximum contribution payable under the Ordinary Scheme ($175,800 x 25% = $43,950) plus $1,000 application fee upon acceptance.

If the aided person loses the case, this interim payment is the maximum contribution that he has to pay for the legal costs incurred by LAD.

If he succeeds in the case, the aided person needs to pay for the legal costs incurred by LAD on his behalf but cannot be recovered from his opponent. In addition, if he recovers or preserves any money or property, he needs to contribute 10% (reduced to 6% if the case is settled before counsel is briefed for the trial) of the recovered or preserved value. This contribution and unrecoverable legal costs will be deducted (a) first from the interim contribution and application fee already paid and then (b) the money or property recovered or preserved.

If an aided plaintiff/applicant loses the case, any costs awarded to the unaided defendant/respondent will generally be borne by the LAD.

If an aided defendant/respondent loses the case, neither him nor the LAD will generally be liable for the costs of the unaided plaintiff/applicant (s.16C LAO and Common Luck Investment Ltd v Director of Legal Aid (2002, CFA)).

Hence, one main advantage of getting legal aid is that even if one loses in the proceedings, one is generally not personally liable for the other party’s costs.

Note however that if one obtains legal aid while the proceedings are ongoing, the aided person remains personally liable for the costs awarded to the opponent arising before the grant of legal aid (s.16C(2) LAO). Hence, if one is eligible, one should generally obtain legal aid before the commencement of the legal proceedings (unless, for example, there is an urgency to start legal action).

If an application for legal aid is refused on means, the applicant may re-apply for legal aid when as a result of changes to his financial circumstances or the financial eligibility limit, his financial resources are reduced to a level below that of the

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applicable financial eligibility limit. However, the Director may refuse legal aid if the applicant has disposed of any capital or income or fails to maximise his earning potential so as to expend or reduce his financial resources for the purpose of satisfying the financial eligibility limit (s.10(2) LAO)

R isk of expiration of limitation period General periods of limitation of action are laid down in Limitation Ordinance:-

(a) Contract under seal -- 12 years from date of breach (s.4(3))(b) Simple contract -- 6 years from date of breach (s.4(1))(c) tort (apart from personal injury and death) -- 6 years from date of damage being

sustained as a result of the tortious act) (s.4(1))(d) recovery of land -- 60 years for action by government and 12 years for action by

individual, calculated from the date of adverse possession (ss 7, 8 and 13)(e) negligence action involving latent damage (apart from personal injury and death)

-- the usual 6-year period can be extended to 3 years from the date on which the plaintiff first had actual or constructive knowledge required for bringing the action (s.31), subject to an overriding time limit of 15 years from the date of the alleged negligent act (s 32)

(f) personal injury cases -- 3 years from date of accrual of cause of action or from the date of the plaintiff’s actual or constructive knowledge (if later) of the injury being significant and attributable to D’s act/omission as well as D’s identity (s 27), subject to the court’s discretion under s.30 to override this time limit by balancing the respective prejudices

(g) death claims under the Fatal Accidents Ordinance -- 3 years from the date of death or the date of the requisite actual or constructive knowledge of the beneficiary of the claim, whichever is the later (s.28), subject also to the court’s discretion to extend the time limit under s.30

(h) Claim against trustee – 6 years from the date of breach of trust for an action by a beneficiary to recover trust property or in respect of any breach of trust. But there is no limitation period if it is a claim by the beneficiary in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use (s.20(1))

Provided that: -i) for infant or person of unsound mind, the period of limitation does not begin to run

until that person has ceased to be under the disability or died (s.22)ii) where any action is based upon the fraud of the defendant, or any fact relevant to P’s

right of action has been deliberately concealed from him by D or the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the P has discovered the fraud, concealment or mistake or could with reasonable diligence have discovered it (s.26)

iii) in actions to recover land or foreclosure of a mortgagee of personal property, and the person in possession of the land or personal property acknowledges the title of P or makes payment of the mortgage debt (principal or interest), the right of action shall be deemed to have accrued on the date of acknowledgment or payment (s 23). The acknowledgment must be in writing and signed by D and made to the P (s 24).

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The same applies in respect of acknowledgment or part payment of a debt (s 23(3)) There may be other shorter periods of limitation specified under the contract (in

which case one needs to look at the contract documents) or prescribed under international conventions (e.g. in respect of carriage by air).

Pre-action Notice A notice (letter) before action is not generally required as a pre-condition to the

accrual of the cause of action, though failure to do so in some circumstances could affect the issue of costs (see O 62 r 7).

Some causes of action require service of notice as a precondition, for example:-o Motor Vehicles Insurance (Third Party Risks) Ordinance allows a victim who has

obtained judgment against the insured driver or owner to enforce the judgment directly against the insurer (whether or not the insurer is entitled to repudiate liability for breach of any insurance provision by the insured) provided that certain conditions are fulfilled. The most important condition is that notice of the bringing of the proceedings be given to the insurer before or within 7 days after the commencement of the proceedings (s 10(2)(a))

o s.24 of Employees' Compensation Ordinance: an employee of a sub-contractor may choose to claim compensation under the Ordinance against the principal contractor. However there is a pre-condition that before making such claim the employee shall serve on the principal contractor a notice in writing stating certain particulars (e.g. his own name and address and those of his employer sub-contractor; the particulars of the accident and injury as well as the amount of compensation claimed) (s 24(6)). See also s25B of the Employees Compensation Assistance Ordinance and the need to serve notice on the Employees Compensation Assistance Fund Board.

o In a claim against the drawer on dishonoured cheque, s.48 of the Bills of Exchange Ordinance (Cap 19) provides that the drawer shall not be liable unless notice of dishonour is given to him within a reasonable time as prescribed in s.49(l) (which is prima facie within the day after the dishonour of the cheque). In practice most clients have failed to do this and by the time the matter comes to their lawyers the prescribed reasonable time has long lapsed. Fortunately, there are exceptions to the rule as prescribed in s 50(2) for the dispensation of the notice of dishonour. In most cases, the reason given by the agent bank for dishonouring the cheque will either be "Payment Countermanded" (in which case the dispensation under s 50(2)(c)(v) applies) or "Refer to Drawer" (which has been interpreted by the court to mean that there are insufficient funds in the drawer’s account so that the dispensation under s 50(2)(c)(iv) applies). It should, however, be noted that the Statement of Claim must either allege that due notice of dishonour has been given stating the necessary particulars or set out the facts relied on for dispensing with the notice of dishonour; otherwise there may be no cause of action against the drawer (see Thong Ko Sine v Wilkinson (1988, CA))

Civil Justice Reform Order 1A and Order 1B are introduced to the RHC and RDC, setting out the

Underlying Objectives and the Court’s Case Management5

Order 1A: Underlying Objectives Underlying objectives: (a) increasing cost-effectiveness, (b) expeditious dealing with

a case, (c) reasonable proportionality and economy, (d) fairness between parties, (e) facilitating settlement and (f) fair distribution of court’s resources: r 1

The court must always recognize that UO’s “primary aim is to secure the just resolution of disputes in accordance with the substantive rights of the parties”: r 2(2)

Significance of UO(1) court shall give effect to UO when exercising its powers or interpreting the rules: r 2(1);(2) the parties and lawyers shall assist the court to further the UO: r 3;(3) UO requires active case management by the court: r 4(1)

Active case management includes the court encouraging the parties to co-operate with each others, fixing the time-table, identifying, isolating or consolidating the issues, encouraging the parties to seek ADR, dealing with the case without requiring the parties to attend etc.: r 4(2)

Order 1B: Case Management PowersSet out some express powers of case management, including in particular: Power to control procedural timetables and time limits Power to decide the issues to be determined and how they are to be determined Power to impose conditions, including a condition to pay money into court, when

making an order; Power to make order on its own motion with or without first hearing the parties (in

the latter case the parties have a right to apply to set aside the order), and Power to give procedural directions on its own motion without first hearing the

parties by way of order nisi if the court thinks the parties will unlikely object to it

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4. Procedural Flow in a Contested Action Commenced by Writ4.1 Issue of Writ (O 6)4.2 Service of Writ (O 10, O 11 and s 365 Companies Ordinance)4.3 Acknowledgment of Service (O 12)4.4 [Dispute over jurisdiction (O 12 r 8)]4.5 Exchange of Pleadings (O 18)

o Statement of Claimo Defence [and Counterclaim]o [Reply] [and Defence to Counterclaim]o Close of pleadings or further pleadings with leave

4.6 Mutual Discovery and Inspection of Documents (O 24)4.7 Case Management Directions (O 25)

o For cases other than personal injury actions, parties have to file case management questionnaires and the Court will give case management directions for the further conduct of the case either by paper disposal or at the hearing of the case management summons;

o for personal injury actions, automatic directions under O 25 r 8 and detailed procedures set out in PD 18.1 will apply.

4.8 Exchange of Witness Statements (O 38 r 2A)[and Expert Reports (O 38 Part IV)]

4.9 [Other Interlocutory Applications]4.10Case Management Conference(s) 4.11Setting down the case for trial and fixing trial date (O 34)4.12Pre-trial Review

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4. Procedural Flow in a Contested Writ Action

FlowchartTimetabli

ng Question

naire

Pleadings

Consent summons

Case management summons (CMS)

Listing Question

naire

Directions with/without hearing CMS

PTRTrial

CMCCMC

Bundle

Mediation Certificate

Mutual

Discovery

Issue Writ and service

Interlocutory Applications

4.13Trial (O 35)4.14Judgment (O 42)4.15Enforcement (O 45-52)4.16Appeals (O 58-59 RHC and O 58 RDC)

6 Stages of Proceedings Stage 1: Pre-commencement Stage 2: Commencement of Proceedings Stage 3: Pre-trial Stage 4: Trial Stage 5: Enforcement Stage 6: Appeal

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Lecture 2Commencement of Proceedings, Service and Acknowledgement of Service

Commencement of ProceedingsChoice of the Originating Process (O 5)Writ of Summons: whenever there are substantial disputesOriginating Summons: principal issue is matter of law (O 5 r 4(2))o Determined on affidavit evidence, no pleadings, discovery, etc. (Procedure = O 28)

you don’t contemplate a trial with witnesses being called to testified and examined; instead a trial on affidavit, simply produce affidavit document and the court decides;

Formalities for Writ of Summons (O 6)Form 1 in Appendix A, sealed with the seal of the Court Registry and accompanied by the prescribed form of Acknowledgment of Service in Form 14O 6 r 2(1)(a): Writ can be specially indorsed or generally indorsedO 6 r 2(1)(b): if P sues for a debt or liquidated demand only, with a statement that proceedings will be stayed if the amount are paid within 14 days of serviceO 6 r 2(1)(c): if the only remedy is for money, with a statement on 13A admission

• HCA 3388/2011 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGIONCOURT OF FIRST INSTANCE

ACTION NO. 3388 OF 2011Between CHA COMPANY LIMITED Plaintiff

and CHAN KWOK YING Defendant

WRIT OF SUMMONSTo the Defendant [NAME]……........... of [ADDRESS]………………………………..THIS WRIT OF SUMMONS has been issued against you by the above-named Plaintiff in respect of the claim set out on the back.Within (14 days) after the service of this Writ on you, counting the day of service, you must either satisfy the claim or return to the Registry of the High Court the accompanying ACKNOWLEDGMENT OF SERVICE stating therein whether you intend to contest these proceedings or to make an admission.If you fail to satisfy the claim or to return the Acknowledgment within the time stated, or if you return the Acknowledgment without stating therein an intention to contest the proceedings or to make an admission, the Plaintiff may proceed with the action and judgment may be entered against you forthwith without further notice.* [If you intend to make an admission, you may complete an appropriate form enclosed in accordance with the accompanying Directions for Acknowledgment of Service.]Issued from the Registry of the High Court this       23      day of April 2011. Registrar Note: This Writ may not be served later than 12 calendar months beginning with that date unless renewed by order of the Court. IMPORTANT: Directions for Acknowledgment of Service are given with the accompanying form.

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*[Statement of Claim]The Plaintiff's claim is for ........................................................................................

A statement of claim must be verified by a statement of truth in accordance with Order 41A of the Rules of the High Court (Cap. 4 sub. leg. A).

(Where the Plaintiff's claim is for a debt or liquidated demand only ) If, within the time for returning the Acknowledgment of Service, the Defendant pays the amount claimed and $ ............. for costs, further proceedings will be stayed. The money must be paid to the Plaintiff or his Solicitor.

THIS WRIT was issued by (solicitor’s firm) ........... of (address)........................

Duration and Renewal of Writ (O 6 r 8)Validity period: 12 months, extended at most 12 months by court’s leave (O 6 r 8(2))A writ will not be extended unless good reason is first shown: unsuccessful attempts before the expiry of the original writ to serve the Defendant despite reasonable efforts having been made is clearly a good reason for leave to renew a writChow Ching Man v Sun Wah Ornament Manufactory Ltd [1996] 2 HKC 460 (CA)

19/10/94: obtained on an ex parte basis from the Master an extension of the validity of Writ for another year. A few days later, completed S/C and served Writ on Ds CA held: though well-intentioned, such a deliberate decision not to comply with a highly important and already generous time limit was NOT a good reason

Joinder of Parties (O 15 r 4)Permitted on a liberal basis to avoid multiplicity of actions; (O 15 r 4); abuse/injustice is controlled by court’s discretion to order separate trials (O 15 r 5(1))(rules are interpreted broadly, since parties can apply to separate the trials at any time)Leave required for Joinder of Ps or Ds, except: common question of law or fact, and rights to relief arise out of the same transaction or series of transactions (O 15 r 4(1))Lewis v Daily Telegraph Ltd (No 2)

Co-Ps must not have conflicting interests and must be jointly represented(there may be exception, but in general cases no since Ps are the drivers of the case)

Defendant: Where Ds are jointly (but not severally) liable under a contract, the court may stay the action upon application by D, until the other person by whom the joint liability is owed is also joined as a defendant (O 15 r 4(3))

Joinder of Causes of Action (O 15 r 1)Similar to above, subject to court’s discretion to order separate trials (O 15 r 5(1))Without leave: P sues and D being sued in same capacity (or executor/administrator acting for an estate and in personal capacity with reference to the same estate)

ServicePersonal service (O 10 r 1(1))

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O 65 r 2: Personal service of a document is effected by leaving a copy of the document with the person to be served.Registered post or letter box service (O 10 r 1(2))(2) A writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served-

(a) by sending a copy of the writ by registered post to the defendant at his usual or last known address, or(b) if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant.

(3) Where a writ is served in accordance with paragraph (2)-(a) the date of service shall, unless the contrary is shown, be deemed to be the seventh day (ignoring O 3 r 2(5)) after the date on which the copy was sent to, or as the case may be, inserted through the letter box for, the address in question;(b) any affidavit proving due service of the writ must contain a statement to the effect that

(i) in the opinion of the deponent (or, if the deponent is the plaintiff's solicitor or an employee of that solicitor, in the opinion of the plaintiff) the copy of the writ, if sent to, or as the case may be, inserted through the letter box for, the address in question, will have come to the knowledge of the defendant within 7 days thereafter; and(ii) in the case of service by post, the copy of the writ has not been returned to the plaintiff through the post undelivered to the addressee.

Barclays Bank of Swaziland Ltd v HahnHELD: the words “within the jurisdiction” apply to “the defendant”, but not to “the writ for service” Since the basic function of service is to bring to the attention to D the fact that he is sued, the time of service is the time when (1) the defendant has knowledge of the existence of the writ (2) while he is within the jurisdiction.

Forward v West Sussex County CouncilService is effected on actual notice to D and not on mere delivery to D’s addressAdopted in HK in Chu Kam Lun v Yap Lisa Susanto, see Cosec Nominees Ltd

Usual or last known addressJudge’s explanation in The Hong Kong Mortgage Corporation Ltd v Ching Kit YuOne may have more than one usual and/or last known addressLast known address simply means “last known” to P, whatever the source.Does P need to make any reasonable inquiry to confirm whether D is still living at the last known address? No. Nonetheless, there is no incentive for P to turn a blind eye, because without proper notice, service would not be meaningful.

Other modes of service (apply also to actions commenced other than by writ (O 10 r 5))Indorsement by D’s solicitors (O 10 r 1(4))

D’s solicitor indorses acceptance on writAcknowledgment by D (O 10 r 1(5))

subject to O 12 r 7, D acknowledges serviceO 12 r 7: acknowledgment of service does not amount to waiver of irregularity of service(if D acknowledges service, but apply within time to dispute jurisdiction, then the deeming provision will not apply; the correct thing to do if there is any irregularity

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found, is to amend it now) (Dispute as to jurisdiction (O 12 r 8))

Service of writ on Agent of Overseas Principal (O 10 r 2)P needs to make an ex parte application and satisfy the court that:(a) a contract has been entered into within the jurisdiction with or through an agent

residing or carrying on business in Hong Kong;(b) the principal was and is not residing or carrying on business in Hong Kong; and(c) at the time of the application either remains as the agent or he is still in business

relations with his principal the order must prescribe the time for A/S a copy must be sent by post to the defendant at his address out of the jurisdiction

Service of writ in pursuant of contract (O 10 r 3)(a) Where, CFI has jurisdiction to hear the action in respect of the contract (whether

or not by express contractual provision); and (b) the contract provides that proceedings may be served on D (or his agent) in such

specified manner or place; then writ will be deemed to have been duly served on D if it is served in accordance with the contract (N.B no such words as “unless the contrary is shown”) (conclusively deeming; e.g. the contract can even allow service of writ by email; you don’t need to prove notice, because this is contract, D has agreed to that particular form of service of writ, so no complaint can be heard from D)If the writ is served out of the jurisdiction, leave is still required under O 11

Service of writ in certain actions for possession of premises or land (O 10 r 4)If the claim is for the recovery, or delivery of possession, of premises or land May apply to court for service be effected by affixing a copy of the writ to some conspicuous part of the premises or land if certain conditions are satisfied In any event need to post the writ in a conspicuous place on or at the entrance to the premises or land in addition to the normal method of serviceRationale: there may be other persons residing in the flat who may have interest or know D

Mode of service outside the rulesKenneth Allison Ltd v AE Limehouse & Co, HL

Leading judgment by Lord Bridge of Harwich followed Montgomery, Jones & Co v Liebenthal & Co, held that ad hoc

agreement not embodied in a wider contract is nonetheless legally effective the introduction of O 10 r 1(1) does not prohibit such consensual servicesJudgment by Lord Goff of Chieveley O 10 is a complete code, it does not contemplate any alternative mode of service An agreement between the parties otherwise than permitted by the Rules cannot

constitute good and effective service Nonetheless, D will be estopped by convention to contend that there was not

good and effective service, because he has accepted that by agreement

Service on Limited Company (s 356, Companies Ordinance)12

s.356 CO: a document may be served on a company by leaving it at or sending it by post to the registered office of the companyTreasure Land Property Consultants (A firm) v United Smart Development Ltd

O 10 r 1 is not intended to apply to Co Ltd, but that s.356 should govern a serviceUnder CO, there is NO deemed 7th day notice(before this case, deemed 1 day after the service, now you need double registered mail to prove delivery; otherwise you don’t do it by post)Held: No judicial notice can be taken for the time for delivery in the ordinary course of post, must be proved by evidences.8 IGCO: “…unless the contrary is proved, such service or notice shall be deemed to have been effected at the time at which the document or notice would be delivered in the ordinary course of post.”

Possible conundrumsD may try to rely on Keith J in GITIC v Yuet Wah: “O 10 r 1 is applicable to service on a limited company, as a result of O 65 r 3(2)”EC: he is not correct; he overlooked O 65 r 3(1) saying that “in cases for which provision is not otherwise made by any written law”;

Can P still serve the writ on a company at its registered office if it is vacant?If service is valid, does it violate the general principle that service is only effected upon D being notified? Yes!Ho Kwok Wah, Lo Wing Kwong: no requirement that the writ had to be brought to D’s notice, service was valid despite the registered office was vacated

Service on Oversea Company carrying on business in HK (s 338, CO) (S2, p.11)

Service on Partnership ( O 81 ) (S2, p. 12) Actions by and against firms within jurisdiction (O 81 r 1)

Subject to the provisions of any written law, any 2 or more persons claiming to be entitled, or alleged to be liable, as partners in respect of a cause of action and carrying on business within the jurisdiction may sue, or be sued, in the name of the firm (if any) of which they were partners at the time when the cause of action accrued.

Service (O 81 r 3) (Similar to O 10 r 1(3))Partners may be sued as individuals => service on each of them under O 10If partners sued in the name of a firm, 3 methods of service under O 81 r 3(1) (a) on any one or more of the partners (b) at principal place of business in HK and on a person having (at the time of

service) the control or management of the partnership business (c) by registered post to the firm at the principal place of business in HK

Enforcing judgment or order against firm (O 81 r 5) (S2, p.13)r 5(1): execution to enforce judgment/order against propertyExecution against the firm’s property without leave (subject to rule 6: inside disputes) Rule 6 deals with actions between partners and the firm where leave is requiredr 5(2): execution to enforce judgment/order against personExecution against individual partners permitted without leave only in 4 situationsr 5(4): execution to enforce judgment/order against a member of the firm

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If P wants to execute judgment against an individual partner when none of the 4 in para (2) applies, needs to seek leave by issuing Summons served personally on him r 5(3): execution to enforce judgment/order against member out of jurisdictionIf a partner was outside HK when the writ was issued, execution only available in 3 situations, otherwise not affected at all by any judgment obtained against the firmQuery: in view of O 81 r 5(2),(3), what factors should one consider when deciding whether to serve a writ on the firm by methods permitted under O 81 r 3?

Substituted Service (O 65 r 4) (S2, p.14)Precondition: it is impracticable for any reason to serve in the prescribed manner Discretion: must consider the requirement of bringing the document to the notice of the person being served (i.e. whether the form of service proposed would be effective)Chan Yeuk Mui v Ng Shu Chi (1999, CA);Abbey National plc v Frost (Solicitors’ Indemnity Fund Ltd intervening) (1999, CA);(if any substituted service to be ordered by the court would be ineffective, can you still apply for substituted service? In this case the solicitor has absconded but the plaintiff may still obtain the Solicitors’ Indemnity Fund)“The first consideration must be where the person is likely to be found. If the person to be served is likely to be found abroad, then obviously different considerations will apply and this is recognized in the notes in the White Book. Then, consideration must be given as to what practical steps can be taken to bring the documents to be served to the attention of the relevant party. Often, advertisements will be the only practical way.”

Service outside jurisdiction (O 11)Leave required for issuing writ (under O 6) and for service (under O 11)Seaconsar Ltd v Bank Markazi

The present proceedings are concerned with a claim by Seaconsar against Bank Markazi for damages for breach of contract in respect of Bank Markazi’s failure to pay against both presentations

1. whether P has a good arguable case that his claims fall within one of the heads listed in O 11 r 1(1)(a) to (p) (the jurisdiction requirement)

2. whether P’s evidence (by an affidavit) discloses a serious issue to be tried, so as to satisfy the court under O 11 r 4(2) that the case is a proper one for service outside the jurisdiction (the merits requirement)N.B. the grounds upon which the application is made, required to be stated in the affidavit… embrace not merely the head of jurisdiction relied upon but also the cause of action invoked by the plaintiff as falling within that head of jurisdiction.

3. whether in the exercise of the court’s discretion (with particular reference to the issue of forum conveniens) leave should be granted (the discretion exercise)

Acknowledgment of Service ( O 12 ) Within 14 days after service of writ (including the date of service), the defendant

must file an Acknowledgment of Service in the prescribed form with the Court Registry (O 12 rr 1 – 5), otherwise default judgment may be obtained by the plaintiff

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In the A/S, D is required to state his address and check the box to indicate whether he intends to contest the proceedings

He who intends to challenge jurisdiction shall state intention to defend in A/S (O 12 r 8)

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Case Summary for Seminar TwoBarclays Bank of Swaziland v Hahn (time of service of writ)

D must be within the jurisdiction at the time when the writ is servedThe service of a writ is at the time when the defendant acquires knowledge of the writ

Kenneth Allison v AE Limehouse (re: other modes of service)In the note itself

Chan Yeuk Mui v Ng Shu Chi (re: substituted service)O 65 r 4(3): substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as the Court may direct to bring the document to the notice of the person to be servedThe Court in granting an order for substituted service must then take into consideration the requirement of bringing the particular document to the notice of the person being served. It is, after all, not an order that service be dispensed with. The first consideration must be where the person is likely to be found. If the person to be served is likely to be found abroad, then obviously different considerations will apply and this is recognized in the notes in the White Book. Then, consideration must be given as to what practical steps can be taken to bring the documents to be served to the attention of the relevant party. Often, advertisement will be the only practical wayIn this case, the order to post only one advertisement was not overturned

Seaconsar v Bank Markazi (re: service outside jurisdiction under O 11)It raises in particular the question of the extent to which the plaintiff has to establish, in relation to such an application, a sufficiently strong case on the merits of his claimO 11 r 1(1) provides that, subject to certain specified exceptions, “service of a writ out of the jurisdiction is permissible with the leave of the court if in the action begun by the writ,” and there follows a list of 20 specified circumstances, set out in paragraphs lettered (a) to (t) respectively, in which service out of the jurisdiction is permissible.The other rule in Order 11 which is relevant for present purposes is rule 4, of which we are only concerned with paragraphs 1 and 2.Background of O 11 r 4(2) => from this is follows that the grounds upon which the application is made, required to be stated in the affidavit, were understood to embrace not merely the head of jurisdiction relied upon but also the cause of action invoked by the plaintiff as falling within that head of jurisdictionFurther, the court had still to decide whether it should exercise its discretion to give leave; and for that purpose it had to consider whether the evidence showed that the cause of action relied upon by the plaintiff was sufficiently firmly establishedTest: where there is a substantial legal question arising on the facts disclosed by the affidavits which the plaintiff bona fide desires to try, I think that the court should, as a rule, allow the service of the writ. The words at the end of the Order do not, I think, mean more than that the court is to be satisfied that the case comes within the class of cases in which service abroad may be made under the first rule of the Order.If this approach is correct, the standard of proof in respect of the cause of action can broadly be stated to be whether, on the affidavit evidence before the court, there is a serious question to be tried.

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Civil ProcedureLecture 3

Default Judgment, Judgment on Admission and Summary Judgment

Default JudgmentJudgment in Default of Notice of Intention to Defend (O 13)1. Claim for liquidated demand (O 13 r 1)

for amount capable of being ascertained as a mere matter of arithmetic (e.g. debt, total failure of consideration, guarantee, etc.)Failure to give notice after the prescribed time, enter final judgmentO 13 r 6A: prescribed time = the time limited for A/S = (O 12 r 5) 14 days after service of the writ, including the day of service, or if A/S stated no intention to defend, after the date on while the A/S is filed)(Costs: O 62, Schd 2, Part II, $10,000 (RHC) or $6,500 (RDC) + court fees)In general P may obtain default judgment against one D and proceed with the action against the other(s). But if P’s claim against D1 is alternative to the claim against D2 in circumstances that the claims against them are based on mutually inconsistent assumptions of facts, default judgment against one might arguably be treated as an irrevocable election and constitute a bar to the action against the other (Morel Bros v Earl of Westmoreland; Bonus Garment v Karl Rieker) advice: important not to enter default judgment against an alternative D precipitately

2. Claim for unliquidated damages (O 13 r 2)Beyond mere calculation (Knight v Abott), usually tort or breach of contract/dutyEnter interlocutory judgment for damages to be assessed and costs (O 37) (p.3)

3. Claim for detention of goods (O 13 r 3)(1)(a): interlocutory judgment giving D option either for delivery or for value(1)(b): in special circumstances, apply by summons for judgment for delivery

4. Claim for possession of land (O 13 r 4)P must produce certificate/affidavit that he is not claiming under mortgage action in O 88 r 1; P may enter judgment for possession of the land and costs

5. Mixed claims (O 13 r 5)For mixed O 13 claims, P may enter judgment against D under those rules

6. Other claims (O 13 r 6)For writ mixed with non-O13 claims (e.g. specific performance), may proceed with the action as if that D had given notice of intention to defendIf for any reason it has become unnecessary for P to proceed with the action, P may after the prescribed time, enter judgment against D for costs

7. Proof of service of writ (O 13 r 7(1))Judgment shall not be entered unless (1)(a) D acknowledged service, (b) P proves due service by affidavit, or (c) P produces writ indorsed by D accepting service

8. Writ returned after Judgment (O 13 rr 7(3) – (5))If after judgment entered, writ is returned to plaintiff undelivered to D, P shall (a) request to set aside the judgment, or (b) apply to Court for directionsFok Chun-hung v Lo Yuk-shi: unconditionally set aside judgment and orders, costs in the cause

9. Cases outside the scope of O 13Actions commenced by originating summons are regulated under O 28

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P cannot obtain default judgment against a mentally incapacitated person, and would require leave in e.g. hire-purchase, admiral action, mortgage actions, etc.

Judgment in Default of Defence (O 19)1. O 19 rr 2 – 6 ==> O 13 rr 1 – 5

O 13 deals with filing A/S, while O 19 deals with the stage of filing defenceO 18 r 2: D must serve a defence “before the expiration of 28 days after the time limited for A/S or after S/C is served on him, whichever is the later

2. Other Claims (O 19 r 7)For non-O19 claims, P may apply to the Court for judgment, and the Court shall give such judgment as the plaintiff appears entitled to on his S/CSpecific performance or injunction may be given if this is the only fair remedy

Notice of Intention to Enter Judgment (O 19 r 8A)On a counterclaim, or against a person who gave notice of intention to defend,a 2-clear-day notice must be served in writing before entering judgment informing the opposite party of P’s intention to enter default judgment;This rule does not apply if (a) time for service of defence already extended or prescribed, or if (b) D has no solicitor and no stated address within the jurisdictionHo Yuen Tsan v Hop Wing Transportation Co Ltd

P can serve the requisite notice before deadline for filing defence

Setting Aside Judgment in DefaultPrinciples (O 13 r 9 and O 19 r 9)

“The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order.”Setting aside a regular default judgment

D must show a defence on merits: more than an arguable defence required for summary judgment, but must generally have a “real prospect of success”The court may need to form a provisional view of the probable outcome of the action by looking at the potentially credible affidavit evidence, while avoiding a mini-trial; otherwise, see “whether the defence could well be established at trial”D should also give an explanation for the default; the court may impose additional conditions if there is anything specific in D’s conduct that justifies the impositionO Mark Polyethylene Products Factory Ltd v Reap Star LtdL&M Specialist Construction Ltd v Wo Hing Construction Co Ltd

Setting aside an irregular default judgmentChu Kam Lun v Yap Lisa Susanto

CA is in favour of setting aside irregular judgments without going into the merits of the defence, and has residual discretion to impose conditionsIt is left open whether an irregular judgment may be aside where there is a “clearly hopeless” defence

Costs OrderA distinction is drawn between setting aside a regular and an irregular judgmentIrregular default judgment: costs be to D; regular judgment: costs be to PKo Sin Yun: who is at fault in necessitating the setting aside?

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But no absolute rule, wide discretion to order costs be in the cause, or makes no orderCosts of application vs costs of hearing: Court may make a split costs order If court considers P being unreasonable in resisting D’s application thereby

wasting the court’s time and the parties’ expenses in having a substantive hearing, may, in setting aside a regular default judgment, order that “the costs of the application be to P but costs of the hearing be to D”

If the court considers that P should have acceded to the application after D has filed the supporting affidavit, may order that costs of the application before D’s affidavit be to P but thereafter be to D

Admissions in Money Claims (O 13A)Deadline: within period fixed for service of defence, or before default judgment is obtained; for originating summons action, the deadline is the period for filing affidavitCounterclaim/TP claim: applicable with necessary modifications (O 13A r 14(1))Additional box in new A/S form to indicate whether D intends to admitResponse: P must respond by filing a reply and/or request for judgment within 14 days after admission is served on him, otherwise the claim will be stayedLiquidated Amount of Money Claim (request by Form 16)

D may admit the whole or part of the claim, and may make a request for deferred or instalment paymentsIf D admits whole of the claim : P files Form 16A and obtains judgmentIf D admits part of the claim : P files Form 16B and either obtains judgment or refuse to accept and continue with the action

Unliquidated Amount of Money Claim (request by Form 16C)D may admit liability, and optionally offer a sum in satisfaction of the claim; in both cases, D may make a request for deferred or instalment paymentsIf D replies without offering a sum : P files Form 16D for interlocutory judgmentIf D replies and offer a sum : P files Form 16E either to obtain judgment on the sum offered or obtain interlocutory judgment for Court to decide the amount

Proposal for Deferred Payments1. P accepts D’s proposal → execution of judgment is stayed pending payment

according to the proposal. If D defaults on any instalment payment, the stay of execution ceases immediately and P can enforce entire claim.

2. P refuses D’s proposal → P must state reasons for objection and may make counter-proposal → Judgment will be entered for amount admitted to be paid in accordance with terms determined by the court.

If D requests time for payment, he is required to make extensive disclosure of financial situation on oath.Court can make assessment with a hearing (parties given 7 days’ notice), or on papers (but must take into account information and reasons filed by D and P).If decision on papers, either party can apply for court’s decision to be re-determined (within 14 days of notice of determination)

Points of NoteIn cases where judgment is obtained on the basis of D’s admission to a liquidated sum or D’s offer in satisfaction for an unliquidated amount, judgment must include the amount of interest claimed to the date of judgment (O 13A r 12).

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The procedure applies to counterclaims and third party proceedings. (O13A r 14(1))

Problem AreasIf D intends to make an admission under O 13AIf advising D: should still state an intention to defendIf advising P: should not obtain a default judgment even if D does not state so

Summary Judgment (O 14)Man Earn Ltd v Wing Ting Fong: strong warning against abuse or unwitting usePlaintiff may apply for summary judgment on the ground that D has no defence to a claim, or a part of the claim, or if defence is only as to amount (O 14 r 1(1))Exception (O 14 r 1(2))The rule applies to actions begun by writ, but does not apply to actions

(a) For libel, slander, malicious prosecution, false imprisonment, or seduction(b) That include a claim by the plaintiff based on an allegation of fraud

Pacific Electric Wire & Cable Co Ltd v Harmutty Ltd & Ors (the PEWC case)‘Fraud’ covers only allegations of deceit or false representation, i.e. a narrow understanding of fraud, but not in the broad sense of e.g. fraud on the minoritySufficient if one or more claims in an action is fraud, even if not based on fraud

Comsec Travel Ltd v Fok Hing Tours Co LtdIn any event, the court should be slow to give summary judgment if there is allegation of matters such as serious misconduct or unfairness or foul playCourt would not conclude guilt of conspiracy except in the clearest possible case

Exceptions for SP and Mortgage actions (O 14 r 1(3))This order does not apply to action under O 86 (SP) and O 88 (Mortgage)

Time for making ApplicationThere is no deadline imposed by the rules: but delay may be penalized by costs in light of the CJR principles (e.g. Orders 1A, 1B)Morison v Yiu Wing: follow Timur, penalize party by costs

O 14 application and filing of defenceIf leave to defend is granted, then 28 days after granting of that orderOtherwise, time for filing defence will be postponed until resolution of O 14 appConclusion: P may suffer more delay by applying for summary judgment

Manner of making Application (O 14 r 2)(1) must be supported by affidavit stating deponent’s belief that there is no defence(2) may contain statements of information or belief with sources/grounds thereof(3) the summons, a copy of affidavit, and of any exhibit referred to therein must be

served on D not less than 10 clear days before the return dayHongkong Chinese Bank Ltd v Delon Photo & Hi-Fi Centre Ltd

Court may, if it considers just and appropriate, allow defects to be cured by a supplementary affidavit;

Mutual Luck Investment v Chiu Yim ManAffidavit that contains hearsay evidence may not be justified under O 41 r 5(2).It is advised that solicitors should not swear on behalf of their clients unless there is some very good reason (e.g. absence from Hong Kong)

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Judgment for plaintiff (O 14 r 3)Unless Court dismisses the application, or D satisfies the court that there is an issue to be tried or for some other reason there ought to be a trial, the Court may give judgment for P as may be just having regard to the nature of remedy/relief (O 14 r 3)

Leave to defend (O 14 r 4)D may show cause by affidavit; (O 14 r 4(1)) the court may order D to produce any document, or even to attend and be examined on oath (O 14 r4(4))The court may give leave to defend either unconditionally or on such term as to giving security or time or mode of trial or otherwise as it thinks fit (O 14 r4(3))Re Safe Rich Industries Ltd

Not to embark on a mini-trial, but simply whether D's assertions are believableTalent Wise v Cheung Shui Ching

Even though D cannot point to a specific issue which ought to be tried, but if he satisfies the court that there are circumstances that ought to be investigated, then justice would require close investigation of the case

Conditional LeaveMuhammad v Asmat Khan: if D can show impecuniosity which would render him unable to satisfy the condition, then it would be improper to impose that conditionUnic Company (a firm) v Centus Development Ltd

If no sign of bad faith, or anything to show that the defence raised is a sham, nor anything suspicious about D’s case, leave to defend should be unconditionalAlso improper to impose conditions that D cannot fulfil by virtue of impecuniosity

Billion Silver Development Ltd v All Wide Investment LtdIf both P and D’s claims are problematic, should give unconditional leave

Costs (O 14 r 7)1. Judgment for P (interlocutory or final; whole or part): Costs awarded to P2. Unconditional leave to defend: costs be in the cause3. Conditional leave to defend: costs be in the cause4. Dismiss P’s application: costs awarded to D forthwith

Where P knew D relied on a contention which would entitle him to unconditional leave to defend (O 14 r 7(1))

But Court will take into account conduct of parties and has wide discretion to make costs orders under case management powers.

The Defendant having a Cross-claimShenzhen Baoming Ceramics Co Ltd v Companion-China LtdAlco International Ltd v Akai Electronic Co Ltd

Parallel Application for Interim Payment (O 29 rr 9 – 12)After writ served and time limited for A/S expired, P may apply at any time requiring D to make interim payment (O 29 r 10(1)); this may be made by summons or included in a summons for an O 14 application (O 29 r 10(2))The application shall be supported by affidavit, which shall verify the amount of the damages, and exhibit any documentary evidence (O 29 r 10(3))

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Order for Interim PaymentIf on hearing an application under r 10 in an action for damages, Court is satisfied–(a) D has admitted liability for P's damages; or(b) P has obtained judgment against the respondent for damages to be assessed; or(c) that, if the action proceeded to trial, the plaintiff would obtain judgment for substantial damages against the respondent …the Court may, if it thinks fit and subject to paragraph (2), order the respondent to make an interim payment of such amount as it thinks just, not exceeding a reasonable proportion of the damages which in the opinion of the Court are likely to be recovered by the plaintiff after taking into account any relevant contributory negligence and any set-off, cross-claim or counterclaim on which the respondent may be entitled to rely.ApplicationWhere liability is not disputed, but only quantum is unclear

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Case Summary for Seminar ThreeO Mark Polyethylene v Reap Star (setting aside regular default judgment)

A defendant who seeks to set aside a regular judgment must at least show that his case has a real prospect of success. Unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he would succeed on fact, he cannot have shown that he has a real prospect of successHon Godfrey VP: The only way of the out minefield, as it seems to me, is to apply the same, comparatively straightforward, test in all these cases of applications to set aside a judgment, whether made under O 13 r 9 or O 14 r 11. The test ought simply to be whether or not the applicant has shown that he has a real prospect of success in the action. (But he left it open)

L&M Specialist v Wo Hing (setting aside regular default judgment)The principles upon which the court exercises its discretion are well known. The discretion is there “to avoid the injustice which may be caused if judgment follows automatically on default.” Where, as in the present case, the judgment was regularly entered, the court will consider the nature of and reasons for the default but it will focus on whether defence has sufficient merits.“The primary consideration in exercising the discretion is whether the defendant has merits to which the court should pay heed, not as a rule of law but as a matter of common sense… The defence must generally have a “real prospect of success” or to “carry some degree of conviction”, requiring the court to form some provisional view of the probable outcome of the action.In this case, the judge noted that the plaintiff obtained the default judgment as a tactical step since defendant has explained that defence was already prepared but merely needed checking: this was not a mere delaying tactic of the defendant“In the present case, that power was invoked on the very day that the plaintiff was supplied with the draft defence and asked to accept service out of time. In pursuing the default judgment the plaintiff was therefore obviously not using the procedure as a sanction against non-delivery of the defence.”Court: “For my part, I find it very hard to see why the plaintiff chose to enter judgment in the circumstances which I have described.”“In my view, it must be very rare that a payment into court is made a condition of setting aside a judgment.” It may in theory do so, but there is a certain logical tension between a court deciding that the defendant has real prospects of succeeding in his defence and the court considering at the same time that the defence is in shadowy realms. But where the defendant has a reasonably arguable defence which ought to be allowed to go to trial, there must be something specific in the defendant’s conduct or in the case which justifies the imposition of a condition

Chu Kam Lun v Yap Lisa Susanto (setting aside irregular default judgment)The weight of the Hong Kong authorities is where the judgment is irregular, it should be set aside without going into the merits of the defence. It is left open whether judgment should be set aside for a defendant bound to lose

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Man Earn v Wing Ting Fong (summary judgment)Unless it is obvious that the defence put forward by the defendant is “frivolous and practically moonshine, O 14 ought not to be applied”

Comsec Travel v Fok Hing (fraud allegation in summary judgment)The fraud exception under O 14 r 1(2)(b) is confined to actions based on fraud as strictly defined in Derry v Peek, namely a false representation made (i) knowingly, (ii) without belief in its truth or (iii) recklessly, careless whether it be true or false.“Notwithstanding the narrow definition of fraud, however, save in the clearest case, it is inappropriate for the court to decide in summary proceedings whether a defendant has been fraudulent or dishonest”

Pacific Electric Wire & Cable v Harmutty (fraud allegation in summary judgment)There is an adage that if the parties need to sit down in the course of an Order 14 application, the matter is not fit for summary judgmentActive non-verbal conduct can amount to deceit. In this case, the allegations of the concealment of facts from the plaintiff when there was a duty to disclose, and the connivance at the preparation of false financial statements and accounts would be clear allegations of fraud.Fraud on the minority, however, is not encompassed by the word “fraud” in O 14.

Morison, Son & Jones v Yiu Wing (time for application of summary judgment)WOC Finance: “there are simply no rigid time limits of any sort on applications under O 14, however they are put, either as express time limits or by reference to a reasonable time.”Timur: “if the delay was not too great, provided a defence filed did not disclose any arguable case, I would be inclined to grant an application for summary judgment notwithstanding the delay, and consider penalizing the delay by an appropriate order for costs.”

Re Safe Rich Industries (leave to defend at summary judgment)The test at the summary stage is: whether the defendant’s assertions are believable, but this question is to be answered not by taking those assertions in isolation but rather by taking them in the context of so much of the background as is either undisputed or beyond reasonable dispute

Talent Wise v Cheung Shui Ching (reason for granting leave to defend)Under rules 3 and 4 of the present Order 14, the defendant can obtain leave to defend if (and I read from rule 3(1)) the defendant satisfies the court ‘that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial.’ If the defendant cannot point to a specific issue which ought to be tried but nevertheless satisfies the court that there are circumstances that ought to be investigated, then I think that those concluding words are invoked.In this case, the reason is that of justice (the case required close investigation)

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Billion Silver v All Wide (unconditional leave when both pleadings problematic)D borrows from P, to be used lawfully and retuned after 6 months, not a loanThe court imposed a condition on D to pay into court US$2,439,763.88 as a condition to defend, as the judge considered the defence put forward was “shadowy”Basically the defence is that the arrangement was a sham, or at least does not accurately represent what was agreed between the partiesHowever, the Plaintiff’s case was also not satisfactory.“If he had suspicions concerning the Plaintiff’s case, this was a matter which he could not leave unresolved. The correct course for him to adopt was to give unconditional leave to defend so that all of these matters could be ventilated at the trial.”“No measuring, however approximate, of the respective degrees of possible bad faith should be made, nor should any opinion be expressed, however tentative, as to which case appeared to be stronger at that time.”Ribeiro J: the importance of there being doubts or suspicion as to the validity of the Plaintiff’s case is that such doubts detract from the Plaintiff’s right to summary judgment

Shenzhen Baoming Ceramics v Companion-China (cross claim of D)D or alternatively SGT made counterclaim/set off against PlaintiffThere is a triable issue whether D can counterclaim loss suffered by SGT (privity)(a) Where D can show an arguable set-off, whether equitable or otherwise, he is

entitled to defend to the extent of the set-off and the court has no discretion(b) Where D sets up a bona fide counterclaim arising out of the same subject matter

as the action and connected with the grounds of defence, the order should not be for judgment on the claim, subject to a stay pending trial of the counterclaim, but should be for unconditional leave to defend, even if D admits the whole or part of the claim

(c) Where there is no defence to the claim but a plausible counterclaim of not less than the claim is set up, judgment should be for the plaintiff on the claim with costs, stayed until trial of the counterclaim;

(d) Where the counterclaim arises out of a separate and distinct transaction or is wholly foreign to the claim, judgment should be for P with costs without a stay

Alco International v Akai Electronic (cross claim of defendant)Equitable set-off: the kind of close connection that is required is that which relates to the dealings, the rights, the obligations and/or the duties between the parties in those transactions being the subject matter of the plaintiff’s claim and those transactions being the subject matter of the defendant’s counterclaim which are relevant, such that it would be manifestly unjust to allow one to be enforced without regard to the other

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Civil ProcedureLecture 4

Pleadings and Third Party Proceedings

Time for Service of PleadingsStatement of Claim (O 18 r 1)

together with the writ or at any time, but before the expiration of 14 days after D gives notice of intention to defend (O 18 r 1)

Defence/Counterclaim (O 18 r 2)before expiration of 28 days after time limited for A/S or after S/C is served, whichever is the later (O 18 r 2, but subject to O 18 r 2(2) and O 18 r 2(3))O 18 r 2(2): after a summary judgment under O 14 r 1, or under O 86 r 1O 18 r 2(3): after an O 12 r 8(1) application by D to dispute jurisdiction

Reply (and/or Defence to Counterclaim) (O 18 r 3)before expiration of 28 days after service of the Defence (and Counterclaim) (O 18 r 3(4))

Close of pleadings (O 18 r 20)14 days after service of the Reply (and/or Defence to Counterclaim); or if no such pleading is served, 28 days after service of the Defence (O 18 r 20)Note: not to serve/amend pleadings in Summer Vacation in HC (O 18 r 5 RHC) (i.e. August)

PleadingsFormalities (O 18 r 6)(1) Every pleading must bear on its face: year, title, description, date of service(2) Every pleading must, if necessary, be divided in paragraphs(3) Dates, sums and other numbers must be expressed in figures not in words(4) Every pleading must be indorsed the name and address (in person or solicitor)Statement of truth (O 18 r 20A) all pleadings must be verified by a statement of truth in accordance with O 41A either signed by the party or his legal representative: O 41A r 3(1)(b). But the lawyer

should not sign it unless cannot conveniently be signed by the client

Rules for pleading (O 18 r 7) every pleading must contain, and contain only, a statement in a summary form of

the material facts on which the party pleading relies, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits (O 18 r 7(1))

See O 18 rr 7(2) and (3), 7A, 8, 9, 10, 11, 12, 13, 14 and 15 for additional rules Material facts

(1) Facts necessary to establish a cause of action(2) Relevant facts which the party is entitled to prove at trial (to prevent surprise)(3) Whether any fact is material depends on the circumstances of a particular case

Statement of Claims (O 18 r 15) It must state specifically the relief or remedy sought, but costs need not be

specifically claimed (O 18 r 15(1))

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A S/C must not contain any allegation or claim in respect of a cause of action that is not mentioned in the writ (O 18 r 15(2))

HCA 12345/2011IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGIONCOURT OF FIRST INSTANCEACTION NO. 12345 OF 2011

BETWEENDor Dor Trading (a firm) Plaintiff

andFoughty Telephones Limited Defendant

STATEMENT OF CLAIM1. The Plaintiff is …2. …THE PLAINTIFF THEREFORE CLAIMS:(1) Damages;(2) Interest pursuant to s 48 of the High Court Ordinance;(3) Costs.Dated this 24th day of January 2011

Messrs. Wan, Cheuk & SoSolicitors for the Plaintiff

The Plaintiff believes that the facts stated in this Statement of Claim are true[signed by a partner of Dor Dor Trading]

Defence (O 18 r 13) Subject to para (6), an allegation is deemed to be admitted unless it is traversed or

a joinder of issue operates as non-admission of it (O 18 r 13(1))It is unnecessary to plead every detailed allegation provided that the substance of the Defence is set out (O 18 r 13(6))

Subject to para (5), a traverse may be either a denial or a statement of non-admission, either expressly or by necessary implication (O 18 r 13(2))For a traverse by denial, the party shall state his reasons for doing so; and if he intends to put forward a different version, state his own version (O 18 r 13(5))

Every allegation must be specifically traversed; a general denial or a general statement of non-admission is not a sufficient traverse (O 18 r 13(3))

Set-off and CounterclaimDefence of set-off (O 18 r 17) Where a claim by D to a sum of money (ascertained or not) is relied on as a defence

to the whole/part of a claim made by P, it may be included in the defence and set-off against P's claim, whether or not it is also added as a counterclaim

It is a SHIELD to the plaintiff’s claim Alco International Ltd v Akai Electronic Co Ltd

Legal set-off: available if both P’s claim and D’s cross-claim are for liquidated sum

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Equitable set-off: where the cross-claim is (1) closely connected with the same transaction giving rise to P’s claim; and (2) it is manifestly unjust to allow one to be enforced without regard to the other

Counterclaim (O 15 r 2(1)) If D alleges that he has any claim or is entitled to any relief or remedy against P in

respect of any matter (whenever and however arising) may make a counterclaim instead of a separate action. He must add the counterclaim to his defence.

It operates only as a SWORD unless it is pleaded as a set-off It may be made against P and any other person, if it is alleged that such other

person is also liable to him along with P in respect of the subject-matter of the counterclaim or claims against such other person any relief relating to or connected with the original subject matter of the action (O 15 r 3)

The court may by order, and subject to such conditions, if any, as may be just, stay execution of summary judgment until after the trial of any counterclaim… (O 14 r 3(2))

If a counterclaim also amounts to a set-off, it should be pleaded as both

Reply and Defence to Counterclaim Implied joinder of issue if no reply to a defence (O 18 r 14(1)) A joinder of issue operates as a non-admission of every material allegation of fact

made in the pleading (O 18 r 14(4)) There can be NO joinder of issue implied or expressed, on S/C or Counterclaim P must serve a Defence to Counterclaim if he intends to defend (O 18 r 3(2)) It must be served within 28 days after the service on him of the Counterclaim to

which it relates (O 18 r 3(4)). In default D is entitled to proceed to enter judgment as if the Counterclaim were a S/C (O 19 r 8)

Particulars of PleadingsFurther and Better Particulars (F&BP) the Court may order a party to serve on any other party particulars of any claim,

defence or other matter stated in his pleading, or in any affidavit of his ordered to stand as a pleading, or a statement of the nature of the case on which he relies, and the order may be made on such terms as the Court thinks just (O 18 r 12(3))

may be ordered upon parties’ application or on court’s own motion (O 18 r 12(3A)) No order shall be made unless the Court is of the opinion that the order is necessary

either for disposing fairly of the cause or matter or for saving costs (O 18 r 12(3B)) It is now arguable that F&BP can be sought if D pleads bare denial (O 18 r 13(5)) ‘Fishing’ applications for evidence are disallowed (i.e. vexatious/oppressive)

(Wootton v Sievier: Material facts vs evidence to prove those facts) The purposes of particulars (same as pleadings) are to inform the other side of the

nature of the case they have to meet, to prevent the other side from being taken by surprise, and to enable the other side to know what evidence they ought to be prepared with and the prepare for trial

Applications for Particulars may be made at any stage, but the court shall not made an order before a Defence is served, unless the court thinks it is necessary and desirable to enable D to plead or for some other special reason (O 18 r 12(5))

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(e.g. an ambiguous S/C and where D may be prejudiced or embarrassed in his pleading, P may be ordered to give particulars before Defence)

A party shall first apply for F&BP by letter, otherwise may not get order (O 18 r 12(6))If the other party ignores the letter or fails to provide the particulars as requested, the requesting party may then take out a summons seeking court order

Amendment (O 20)Tsoi Yiu Chung v ING Life Insurance HCA 2447/2007

After CJR, with the introduction of milestone days, the court may now be reluctant to allow late amendments (change of lawyers, etc. is not a good reason)

Amendments without Leave Amendment of writ without leave

o Writ may be amended in any way without leave before it is served (O 20 r 1(3)(c))o After service, the writ may without leave be amended once before the close of

pleadings (r1(1)) provided that there is no change in the parties or the causes of action. (r 1(3)(a),(b)). P must serve the amended writ on the opposite party.

Amendment of pleadings without leave o Any pleading may without leave be amended once in any way before close of

pleadings (O 20 r 1). The party who does so must serve the amended pleading on the opposite party. The opposite party may then amend his pleading, and the period for service be extended to 14 days if the original period is shorter (O 20 r 3)

o Deemed close of pleadings is in O 18 r 20: 14 days after service of reply or defence to counterclaim; if no, 28 days after service of defence

Objection to the Amendments made without leaveo Opposite party may, within 14 days after service, apply to a master by summons

for an order striking out the amendment (O 20 r 4)o Test: whether the amendment will be disallowed if an application for leave to

amend would have been refusedAmendment with Leave Subject to O 15 rr 6,7,8, the court may at any stage of the proceedings allow the

plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just (O 20 r 5(1))

The relaxed approach in Kwan Shiu Cheong Charles is now replaced by the modern approach such as Chan Wing Cheung Allan and Tang Shun Hay.

Reason for refusal (1) O 20 r 8(1A): tcourt shall not order a pleading to be amended unless it is

necessary either for disposing fairly of the cause or matter or for saving costs;(2) O 25 r 1B(3): court shall not vary a milestone date unless there are exceptional

circumstances justifying the variation(3) C&A Consultants v Hong Kong Airlines: leave to amend pleadings which would

necessitate the vacation of the trial dates was refused for, inter alia, lateness(4) Wong Sai Pong v Wong Kim Por: exceptional circumstances exist to justify leave

to amend pleadings and the consequential vacation of the trial dates already fixedAmendment of Pleadings by Consent

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Any pleading may be amended at any stage of the proceedings by written agreement between the parties (unless it consists of change of party) (O 20 r 12)

Amendment after the Limitation PeriodOverriding provision: a court must not allow a new claim, other than an original set-off or counterclaim, after the expiry of the time limit: s.35(3) LOTwo exceptions1. Statutory discretion to override time limits for personal injuries/death (s.30 LO)2. Where the Rules of Court so permit

(a) Correcting the name of a party (O 20 rr 5(2),(3))Provided the mistake was genuine, not misleading or causing reasonable doubt

(b) Altering the capacity in which a party sues/correcting a genuine mistake or alteration of capacity (O 20 rr 5(2),(4))Provided that the new capacity was already there or has since acquired

(c) Adding or substituting a new cause of action (O 20 rr 5(2),(5))Where it arises out of the same, or substantially the same facts

(d) Adding or substituting a new party (not for genuine mistake) (O 15 r 6(5))(i) Only if the relevant period of limitation was current at the date when the

proceedings were commenced and it is necessary for the determination of the action that the new party should be added/substituted, or

(ii) The Court disapplies the limitation period under ss 27 or 28 of LOO 15 r 6(6): exhaustive list of 5 circumstances to be treated as necessary for (i)

Third Party Proceedings (O 16) For a D who has filed A/S and given notice of intention to defend, D may

(a) Claim against TP for contribution or indemnity (O 16 r 1(a))(b) Claim against TP for relief/remedy related to the original matter and substantially

the same as that claimed by P (O 16 r 1(b))(c) Requires determination (between any of P/D/TP) of questions/issues related to

the original subject matter (O 16 r 1(c)) D may invoke the procedure under O 16 r 1 and issue a Third Party Notice If the TP is already an existing co-D, D may issue a Contribution Notice (O 16 r 8)

(e.g. D1 may seek an indemnity from his agent, D2 by service a CN) The rule allows a fourth party to be served notice, and so on (O 16 r 9) Procedurally, TPP is treated as independent, but there may be situations where the

TPP is no longer viable if P’s claim fails (e.g. where TPP is for indemnity) Although P is not a party to the TPP, the court has power to order discovery,

interrogatories, etc. as between P and TP: Eden v Weardale Usually, costs follow the event (O 62 r 3(3)), but if D’s claim against TP is seen as

misguided, or not arguable, D may have to pay TP’s costs: Thomas v Times Court may grant leave to D to issue execution against TP before he has satisfied P’s

judgment (O 16 r 7(2)) P may add TP as D (O 15 r 6(2)), otherwise P cannot directly claim against TP

Procedure: TPN against a new party1. D issue a TPN containing (O 16 r 1(1))

(a) A summary of P’s claim against D30

(b) The nature and grounds of D’s claim against TP (see Form 20/21)2. Leave is not required only if the action was begun by writ and D issues the TPN

before serving his Defence on P (O 16 r 1(2))3. Application for leave to issue TPN is ex parte by summons + affidavit (O 16 r 2)4. TP has to file A/S served with the TPN; if he does not give notice of intention to

defend, he shall be deemed to admit any claim stated in TPN (O 16 rr 3, 5)5. If TP gives notice of intention to defend, D must seek court directions (O 16 r 4)6. RHC regulating procedures between P and D apply to TPP to the extent provided for

in O 16 r 3(4) as D = P’ and TP = D’

Procedure: CN against an existing party1. It is basically the same as TPN except the heading is the same as the earlier pleadings. It shall

contain the nature and grounds or claim or question required to be determined (O 16 r 8)2. No leave is required (O 16 r 8(1))3. No acknowledgment of service is necessary. “The same procedure shall be adopted”

e.g. O 16 r 4 concerning TP directions (O 16 r 8(3))

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Civil ProcedureLecture 5

Discoveries and Interrogatories

DiscoveryDiscovery is a two-stage process: Disclosure: disclosing documents in a List of Documents and serving that list Production: allowing the other side to inspect and take copy of the documentsDiscovery is a continuing obligation

Automatic Discovery (O 24) After the close of pleadings, there shall be discovery by the parties to the action of

the documents which are or have been in their possession, custody or power relating to matters in question in the action (O 24 r 1)

The time limit is 14 days after pleadings are deemed to be closed (O 24 r 2(2))(close of pleadings: O 18 r 20)

This rule applies to all action begun by writ, except:(1) Third Party Proceedings (O 24 r 2(1))(2) “Running down” actions (O 24 r 2, PD 18.1)(3) Personal injuries actions (O 25 r 8, PD 18.1)(4) Action for recovery of penalty (O 24 r 2(3))(5) Civil proceedings to which Government is a party (O 77 r 12)

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Pre-action Discovery

Against person likely to be a party to a subsequent proceedingsS.41(1) HCOS.47B(1) DCOO24 r7A(1)

Against non-partyNorwich PharmacalDiscovery

C. Main Types of Discovery For Actions Begun by Writ

Post Action Discovery

Against non-partiesS.42(1) HCOS.47B(2) DCOO24 r7A(2)

Against parties

General or Automatic DiscoveryO24 r1

Discovery by Order of Court

Documents Referred to in Pleadings Affirmation etcO24 r10 RHC, RDC

Others, e.g.Running down actionPersonal injuries actionThird party proceedings

Order for General Discovery O24 r3(1)RHC and RDC

Order for Specific Discovery O24 r7(1) & (3)RHC and RDC

Order for Further & Better List of Documents

First stage: DisclosureThe parties make and serve a List of Documents which are or have been in their possession, custody or power relating to matters in question in the action (O 24 r 2)The list must be in the prescribed form (O 24 r 5(1))Schedule 1 Part 1: documents in possession, custody or power to be disclosedSchedule 1 Part 2: documents in possession, custody or power NOT to be disclosedSchedule 2: documents have been but no longer in possession, custody or power

Second stage: ProductionA party who served a list must allow other parties to inspect the documents referred to in Schd 1 Part 1 and to take copies, so he must serve on him a notice to inspect at a time within 7 days and at a specified place after the service of the notice (O 24 r 9)A party may require physical inspection (O 24 r 11A(1)) or simply request copiesA party can require the other parties to verify the list (O 24 r 2(7))

Limit Scope of DiscoveryThe parties may agree to limit or dispense with discovery (O 24 r 1(2)), or a party may apply to the Court to limit discovery (O 24 r 2).(this is the case where there are potentially many documents and full discovery is not necessary for fair disposal of matters and for saving costs)The Court may make orders to limit the scope or direct the manner of disclosure, and the time for inspection of documents for the purposes of case management and furthering the objectives specified in Order 1A (O 24 r 15A)

The parties shall conduct discovery without waiting for Court order, and are encouraged to try to agree directions to discharge their discovery obligations, for “achieving economies in respect of discovery” (PD5.2, para 5)

Documentss.3, IGCO: documents “means any publication and any matter written, expressed or described upon any substance by means of letters, characters, figures or marks, or by more than one of these means” (thus includes CD, tapes, computer data, films, etc.)Disclosable documents(a) Documents which relate to a matter in question (i.e. relevant documents)

Peruvian Guano rule Whether the document is related to the pleaded claim/defence in a broad sense Chan Hung v Yung Kwong Chung: relevance must not be a mere off-chance, but

a real probability of relevance has to be shown by the applicant(b) Documents which are in the possession, custody and power of that party

Disjunctive requirementsPossession – denotes physical holding + a right of possessionCustody – denotes physical holding onlyPower – denotes a right to inspect or to obtain possession or control

(c) Documents which are not exempted from discoveryExempted documents Legal professional privilege (Legal Advice privilege + Litigation privilege)

Absolute, but can be overridden by statute or court order, or waived by a party intentionally/unintentionally/impliedly

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Fraud exception (R v Derby Magistrates’ Court ex parte B)Legal Advice Privilegeo Definition of “confidential information”, “legal advice”, “client”, etc.o Legal advice: including presentational onesLitigation Privilegeo Dominant purpose: actual/contemplated litigation (Waugh v BRB)o Documents already in existence (e.g. medial records) are not privileged

Without prejudice communicationsCommunications between parties for the purpose of and in the course of negotiation to settle (e.g. during ADR process), inadmissible as evidence“without prejudice, save as to costs”: Calderbank offer

Privilege against self-incrimination (right against self-incrimination: s.65(1) EO) Public interest Immunity

Government may refuse to produce documents the production of which would injure the public interest (O 24 r 15), e.g. internal police documentA balancing exercise of the public interest in concealment and the public interest that administration of justice should not be frustrated

Statutory Secrecye.g. Adoption Ordinance (Cap 290) and Official Secrets Ordinance (Cap 521)

Disallowing discoveryFishing and Oppressive Discovery Court will not allow discovery to enable a party to “fish” for witnesses or for grounds

upon which to hang his case (Re State of Norway’s Applications) Where there are numerous documents only of slight relevance, it would be oppressive

to produce them all. In such case, the Court may disallow discovery or to limit the scope of discovery: O 24 r 15A

Hong Kong: Lee Nui Foon v Ocean Park Corp (No. 1)Discovery not necessary for disposing fairly of the case or for saving costs ( O 24 r 8 ) Court may either disallow the application, or to adjourn the application

Discoveries against non-party to the action1. “mere witness” rule

Court cannot order discovery against persons not parties to the action (Norwich Pharmacal)2. Exception to the General Rule

(a) Pre-writ discovery against person likely to be a partys.41(1) HCO: if a likely P has a likely claim against a likely D who likely has or has had in his possession, custody or power any documents which are directly relevant to an issue, discovery order may be given (s.47B(1) DCO)Requirements:(1) Likely claim: “reasonable prospect of a claim to be made” (Dunning)

As opposed to irresponsible, speculative or allegations based merely on hope(2) person likely to have or have had those documents in possession, custody or power(3) Document is directly relevant: i.e. (a) it would likely be relied on the

evidence by any party; (b) it supports/adversely affects any party’s case

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(4) Discovery necessary for disposing fairly of the case, or for saving costs (O 24 r 8)O 24 r 7A(1): apply by way of originating summons and supporting affidavit

(b) Pre-writ discovery against non-party: Norwich Pharmacal discoveryPurpose: discovering the identity of the wrongdoers (e.g. requiring an ISP to disclose information and identity of an internet account subscriber)General principle: “if through no fault of his own a person gets mixed up in the tortuous acts of others so as to facilitate their wrongdoing… he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoersMixed up: “in between the guilty co-conspirator and the mere bystander” (Danone)Requirements (Lonrho per Millett J, accepted by HC in Danone v SB Chow) The order has to be necessary to enable other wrongdoers to be identified(1) Information sought would not otherwise become available(2) To withhold relief would amount to a denial of JusticeExtension(1) Discovery of a bank’s books and documents to investigate the passage of

monies in aid of a tracing claim (A v B cited in State Bank of India v Fleet)(2) Information that D has committed the wrong (cited in Kensington v ICS)

(c) Post-writ discovery against non-partys.42(1) HCO: if a non-party like to have or have had in his possession, custody or power any documents relevant to an issue, discovery order may be givenRequirement(1) Since the test is relevance, Peruvian Guano rule applies, subject to O 24 r 8(2)(2) Documents likely is/was in possession, custody or power of the person(3) Order necessary for disposing fairly of the case or saving costs (O 24 r 8(2))(4) Personal Data (Privacy) Ordinance: exempted under s.58(2) and Sch 1 principle 3

Tse Lai Yin Lily v Incorporated Owners of Albert HousePlaintiff in a PI claim sought discovery of witness statement from Police. Police refused, alleging that would contravene PDPO.Suffiad J held that the bringing of a civil claim for damages in tort amounts to the remedying of unlawful or seriously improper conduct under s.58(1)(d) and so exempted from Schd 1 principle 3 under section 58(2). Alternatively, bringing civil action for damages was a purpose directly related to the purpose for which the witness statements were taken, thus it constitutes an exemption under principle 3

Apply by summons under O 24 r 7A(3)(b),(4): supported by affidavit

Discovery by Order of the Court1. General Discovery (O 24 r 3)

Where a party fails to (a) make automatic discovery, (b) comply with order for limited discovery, or (c) comply with a notice requiring him to verify the listMay be refused under O 24 r 8 if not for disposing fairly the case or saving costs

2. Specific DiscoveryRequirements (Lee Nui Foon v Ocean Park Corp (No. 1))(1) A prima facie case that some specific documents do exist, relevant but not included in

list;35

(the prima facie case may be based on the probability arising from the surrounding circumstances or in part on specific facts deposed to; not a priori reasoning?)

(2) The documents are in the possession, custody or power of the party;(3) The documents or class of documents relates to a matter in question in the action; and

the relevancy has to depend upon the particular contents, then there must be a prima facie case for particular contents made, before, discovery can be granted

(4) discovery is necessary to dispose fairly of the case or for saving costs (O 24 r 8)Paul's Model Art GMBH & Co KG v U.T. Limited & Ors

the order must identify with precision the document or documents or categories of document which are required to be disclosed

Application Procedures(1) Can apply even if documents available elsewhere: Tsoi Chan Kwai Kui(2) Can apply even the Court has ordered the party to serve a List or a F&BL or a

verifying affidavit (O 24 r 7(2))(3) By way of summons with affidavit in support (O 24 r 7(3))

3. Further and Better List (O 24 r 3)Court would order an F&BL if some documents have been omitted from the listRequirement(1) Reasonable ground that the party has or has had other documents relating to

matter in issue;(2) Documents in his possession, custody or power; or(3) Party has misconceived principle upon which discovery should be made

Other Forms of Discovery1. Documents referred to in pleadings, affidavit, etc. (O 24 r 10)

(a) May serve a notice to require production if documents referred to in a party’s pleadings, affidavit, witness statements or expert’s reports (O 24 r 10(1))

(b) The party must serve a notice in reply within 4 days (O 24 r 10(2))(c) If a party objects to production, it should in its own notice identify the documents

concerned and the grounds of objection, e.g. LPP(d) Failure to comply, objection to production, or offer a reasonable time or place for

inspection: other party may apply for an order for production (O 24 r 11(1))(e) The court will not order the production unless it is “necessary for disclosing fairly

of the case or matter or for saving costs” (O 24 r 13(1)). For objection, court may inspect the document to assess validity of the objection (O 24 r 13(2))

2. Ancillary Discovery Orders made in other Interlocutory OrdersMareva injunctions and Anton Piller orders also contain disclosure orders

Use of Materials obtained in Discovery1. Implied Undertaking

There is an implied undertaking to the court that a party will not use the document obtained by discovery for a collateral or ulterior purpose without the leave of the court or consent of the party providing such discovery (Derek v Nicholas)Collateral or ulterior purposeTest: the use is “not reasonably necessary for the proper conduct of the action” (Derek)Examples: using it for business activities, other litigations, in a counterclaim, etc.

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Exception(a) Documents produced under O 24 r 10: a party voluntarily chooses to refer to a

document in his pleading/affidavit… destroy the privacy of the document(Shun Kai Finance Co Ltd v Japan Leasing (Hong Kong) Ltd (No 2))

(b) After a document has been read to or by the Court, or referred to, in open Court, unless the Court orders otherwise (O 24 r 14A)

(c) May be relaxed by the Court in appropriate circumstances where the release or modification of the undertaking does not “occasion injustice to the person giving discovery” (Re NDT (BVI) Trading Ltd)

2. Restrictions imposed by Court OrderFor example, where the documents contain trade or technical secret, the Court may order a “controlled inspection”, e.g. only a small number of specified persons are allowed to see the documents (See, e.g. PCCW-HKT v New World)

Solicitors’ Duties1. A duty to his client, as well as to the Court as an officer of the Court2. explain the duty and nature of discovery and the implied undertaking to client3. advise his client not to destroy or withhold disclosable documents4. ensure that full and proper disclosure of all relevant document is made5. has a continuing duty on discovery

Non-compliance of Discovery Obligation1. For a deficient list: apply for F&BL under O 24 rr 3(1),(2), 5(3)2. Some documents are missing: apply for specific discovery under O 24 rr 7(1),(3)3. If no list has been served: apply for general discovery under O 24 r 3(1)4. If a party generally failed to comply with an order for discovery

(a) Apply for an “unless order”(b) Apply to dismiss action or strike out defence (O 24 r 16(1))

rarely exercised, unless real risk to fair trial; usually court will debar the party from producing documents as evidence at trial (Yeung Shu Lam Wilson)A party is liable to committal for failure to comply with discovery order (O 24 r 16(2))If a solicitor fails without reasonable excuse to give notice of this order (for listing or production, he is also liable to committal (O 24 r 16(4))

Interrogatories (O 26)Written questions served on the other party, regarding facts which are within the other party’s knowledge and which are relevant to the dispute. Answering party is required to give answers on oathA party may serve interrogatories relating to any matter in question which are necessary either for disposing fairly of the case or for saving costs (O 26 r 1(1))It must NOT(a) be fishing, oppressive, prolix, impressive;(b) be questions going to the evidence the opposing party intend to adduce(c) be questions which is a matter of opinion or require answer from an expert(d) be questions which went to the facts which would assist in establishing the opposing

party as opposed to the case of the party seeking the interrogatories37

(e) be effectively asking for documents of discovery(Lee Nui Foon v Ocean Park Corp (No. 2))

How to Apply?High Court(a) Interrogatories may be served on a party twice, without court order (O 26 r 3(1))(b) Leave is required after the first two services (O 26 r 1(2))(c) Leave is required for service on Government (O 26 r 3(3))(d) Application for leave is by summons, attaching the interrogatories (O 26 r 4(1))

Alternatively it can be made by way of notice for CMS purpose (O 25 r 7)(e) The Court must consider the intended recipient’s offer to give particulars, make

admissions, or produce documents, and whether interrogatories without order have already been served (O 26 r 4(2))

District Court(a) All interrogatories require Court’s leave (O 26 r 1)(b) Similar to HC, by summons (O 26 r 1(2)) or by notice under CMS (O 25 r 10)(c) Similar to HC, the Court must consider the recipient’s offer (O 26 r 1(2A))

Condition to Apply Must be essential for the preparation for the trial and cannot be expected from

requests for F&BP, discovery or witness statements Normally premature to apply before exchange of witness statements

(premature to be regarded necessary for disposing fairly or for saving costs) Ultimately a matter of judicial discretion, no hard and fast rule

Zhu Kuan v Brickell (interrogatories ordered shortly after service of Defence)Failure to Answer Interrogatories(1) If the interrogatories were ordered by the Court but the receiving party failed to

comply, the Court may make an appropriate order, e.g. for the party to provide a further answer or to be orally examined by the Court (O26 r5(2))

(2) If the interrogatories were served (in the CFI) without Court order but the answer is not satisfactory, the interrogating party may request further and better particulars of the answer (O 26 r5(3) RHC);

(3) If a party fails to answer interrogatories (whether ordered by the Court or not) properly, the Court has the power to dismiss the action or strike out the Defence(O 26 r6(1)), although this power will not be lightly exercised by the Court;

(4) If a party fails to answer Court ordered interrogatories or to comply with a Court order made under O26 r5(2), the party is liable to committal (O26 r6(2));

(5) If a solicitor fails without reasonable excuse to give notice of a Court order for interrogatory to his/her client, the solicitor is also liable to committal (O26 r6(4)).

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Civil ProcedureLecture 6

Other Interlocutory Applications

Proper use vs AbuseO 1A – Underlying ObjectivesO 1B – Court’s express powers of case managementO 2 r 4 – Self-executing sanctions upon failure to comply with court directionsO 25 r 7 – Duty to make all interlocutory applications at case management summonsO 32 r 11 – Power of Master to dispose of interlocutory applications on papers (PD 5.4)O 32 r 11B – Power to specify consequences of failure to comply with court order

ProcedureMasters may deal with interlocutory applications on paper (O 32 r 11A(1)(a))Certain applications listed out in PD 5.4, but this power is not frequently invokedInterlocutory applications are generally made inter partes (normally with affidavit)Exceptionally, ex parte applications can be justified by extreme urgency/secrecy

Duty of Full and Frank Disclosure on ex parte ApplicationEx parte order can be set aside for insufficient disclosure: New Asia EnergyStandard Chartered v Arthur Lai(1) Materiality: whether the court should have these matters in the weighing scales(2) Materiality to be decided by the court, not by applicants or his legal advisers(3) Positive duty on applicant to point out points to their disadvantage(4) Applicant must make proper inquiries before making the application

(Duty of disclosure extends to fact he would have known with reasonable inquiries)(5) Ex parte order obtained would in general be discharged(6) The court has a discretion to continue the order, or to make new order on terms,

depending on where the justice of the case lies

Order for an Extension of TimeThe court may, on just terms, alter the time period, even after its expiration (O 3 r 5)After CJR and introduction of milestone dates, less relaxed, more “unless orders”, and more self-executing sanctions for failure to comply with court directionsBalance need to observe court rules and merits of the case (Bingham MR in Costello)The court must consider all circumstances to do overall justice (Fortune Asset)Court has a variety of sanctions for failure to comply (Ip Sau Lin v HA)

short-scheduled self-executing orders with sanctions, payment into court, etc.

Interlocutory Injunctions Temporary measures pending permanent injunction or to avoid final judgment being

ineffective. It can be mandatory or prohibitory It is usually ancillary to a main proceedings, but the CFI can grant free-standing order

for proceedings outside Hong Kong (s.21 HCO, O 29 r 8 RHC) It is an equitable and discretionary relief: usual factors in equity apply

(e.g. damages would suffice, trivial, unacceptable behavior, acquiescence, laches)39

General PrinciplesAmerican Cyanimid v Ethicon1. A serious issue to be tried (not frivolous claim, no need to conduct mini-trial)2. The balance of convenience lies in favour of the applicant

(1) Whether irreparable damage to P if interlocutory injunction refusedNo: no interlocutory injunction granted

(2) Whether D would be adequately compensated under P’s undertakingYes: interlocutory injunction will be granted

(3) If doubt, the court may take into account the merits of the caseFast-link Express Ltd v Falcon Express Ltd

If the grant/refusal of II would put an end to the matter, the court should approach the case on a broader approach: best endeavour to avoid injusticeP would need to show that it is at least very likely to succeed at trial

Music Advanced v IO of Argyle CentreThe court needs to avoid injustice, and since mandatory injunction would generally carry a higher risk of injustice, the court would have to feel a high degree of assurance, and look at the practical realities of the situation

Wah Nam Holdings v Excel Noble (Cross-undertaking, apply only to ex p application?)If there is no reference to financial position in the ex parte application, an adequate financial substance will be assumedIf an applicant’s financial position would fairly raise doubts as to his ability to honour the cross-undertaking, he has a duty to make full and frank disclosureThe probability to meet potential liability and a favourable outcome for the applicant would not justify the non-disclosure (end does not justify means!)

Procedure and Summons Day Apply before a judge (not master!) in chambers, unless by consent (O 32 r 11(1)(d),(2)) For ex parte application based solely on urgency, may be “ex parte on notice” PD5.3: each Friday is a summons day; all paper must be filed by 10:00 a.m. Tuesday

Mareva Injunction (freezing order, can be post-judgment)An order of the court prohibiting D from disposing of or otherwise dealing with assets up to an amount stated pending action or trial, contempt of court if disobeyedIt is binding also on all third parties served with the order: it should be served immediately on D and other holders of an asset of D, e.g. banksGeneral PrincipleP needs to establish by affidavit(1) “Good arguable case” or a “strong prima facie case”(2) Assets within jurisdiction (or outside if in a worldwide Mareva injunction)(3) Real risk of dissipation or removal of assets (mere suspicion/fear insufficient)

(a) D’s past conduct; (b) nature of the assets; (c) standing & respectability of DCAC Brake: a good arguable case of fraud alone would conclude a real riskHonsaico Trading: an unacceptably low standard of commercial morality suffices

(4) Balance of convenience in favour of P(5) full and frank disclosure (because by its nature it is an ex parte application)(6) Cross-undertaking (e.g. bank guarantee, payment into court)(7) Subject to considerations of equity factors (delay, non-disclosure, small sum, etc.)

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AssetsNormally only freeze up to prima facie justifiable amount: Z Ltd v A-Z and AA-LLMareva injunction covers assets which are in truth D’s assets: S.C.S. Finance v Masri(in deciding whether to accept the assertion of D or TP, the court will look to what is just and convenient between P, D and TP, and to make further inquiry)Ancillary OrdersCourt may make ancillary orders (e.g. discovery, disclosure/protection of assets, tracing)Norwich Pharmacal + gagging order may be ordered to make it effective (A Co v B Co)ServiceP must give TPs notice of the Mareva injunction, notify them of their right to vary the order and details of the order with as much certainty as possible (Guinness Peat Aviation)

Anton Piller orderAn order of the court requiring D to permit P to enter his premises and to search and seize offending or sought itemsO 29 r 2 is an order for detention, custody or preservation of any relevant property; it has similar effect as Anton Piller but has to be made inter partes, by summons or by notice, which carries the risk of D destroying the infringing material upon noticeGeneral Principle (per Ormrod LJ in Anton Piller)P needs to establish by affidavit(1) Extreme/very strong prima facie case of serious potential/actual damage to P(2) Possession of incriminating evidence and real possibility of Destruction(3) Balance of Convenience in favour of grant(4) Full and frank disclosure and Cross-undertaking

Both Mareva injunction and Anton Piller order are draconian measures not to be abused: see PD 11.1 and Ng Chun Fai Stephen v Tamco

Applicants for an order of such severity were under a strict duty to make to the court a full and frank disclosure of all matters that could be relevant and, having obtained the order, neither to act oppressively nor abuse their power in executing the order.

Security for Costs (O 23 r 1, s.357 CO)An order that P (or D in a counterclaim) to give security for D’s costs of the actionRequirement(1) Whether ground exists:

Ground on O 23 r 1 (O 23 = Security for Costs)(a) P ordinarily resident out of jurisdiction (O 23 r 1(a))

A balance between permanent and temporary residence, a matter of fact and degreeReason: unjust if P is more or less immune against costs if unsuccessfulFor limited companies, use central management and control test to decide where the ordinary residence is under O 23 r 1(a) (Charter View v Corona)In Akai Holdings v E&Y, CFA is of the opinion that the immunity given to companies incorporated overseas with central management and control in Hong Kong is a lacuna which should be filled by the legislatureA non-resident P may resist order by showing fixed assets in HK (Tsang Yee Lui)

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(b) Nominal plaintiff (O 23 r 1(b))e.g. a P who has assigned the benefit of the action (Semler v Murphy)

(c) address not stated or stated incorrect (O 23 r 1(c)), orthis does not apply if P was innocent and without intention to deceive (O 23 r 2)

(d) change of address by P with a view to evade consequences (O 23 r 1(d))Ground on s.357 CO• Where the company is P, any judge may, if it appears by credible testimony that

there is reason to believe that the company will be unable to pay the costs to a successful D, require sufficient security to be given, and stay proceedings til then

• “will” as opposed to “may”, and with credible evidence (Success Wise v Dynamic)

Other grounds?• The statutory provisions are exhaustive and the court has no inherent jurisdiction

to order security for costs (Condliffe v Hislop); but now it has power under O 2 r 3 to order a party to pay a sum of money into court as security

(2) Exercise of discretion (whether security should be ordered and if so, the amount)The court has a discretion under both s.357 CO and O 23 r 1 whether to order securityGiuseppina Tagliani v Lee Wai Yin, Elvis

Balancing exercise of (a) P to pursue a proper claim and (b) D to recover costs from P in due course; a weighing exercise of injusticeThe court may have regard to P’s prospect of success, but should not go into merits unless there is a high probability of success or failureCourt will consider whether P can raise the amount needed from its directors, shareholders, or other backers or interested parties; it is for P to satisfy the court that it would be prevented from continuing the litigationIn the immediate case, a part security was ordered (0.3/2m)

If the plaintiff is impecunious and the order for security for costs would unfairly stifle a genuine claim, this would be a very strong factor against making the order.

Amount of the security for costs discretion of the Court, having regard to all circumstances of the case usually extend to costs already incurred and future costs: Henrik Andersen Costs usually assessed on party and party basis, not indemnity basis: Cal-Trade v MindoWhen should an application for security for costs be made? An order for security may be made at any stage of the proceedings. However, delay in making the application may be relevant to the exercise of the

Court’s discretion to refuse security: Henrik Andersen v Huang Kuang YuanManner of giving security in such manner, at such time, and on such terms (if any) as the Court may direct (O 23 r 2)

e.g.: security by payment into Court, solicitor’s undertaking, bank guarantee, etc.Application for security for costs by summons supported by affidavit. usually a demand by letter beforehand should inform court of estimated costs already incurred and estimated future costs

a skeleton bill of costs would be exhibited to the affidavit in support of application If application successful, the master will usually fix the amount and give directions

on the mode and time where the security is to be given. Usually it will provide that a specific sum by a certain date be paid into Court to satisfy the security, and stay

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proceedings until security is given: Lam Fei Hong v. Wong Kam FongDefault in giving security If P defaults in giving security, an unless order may be granted to require him to give

security before a specified time, and in default the action will be dismissed. the power to dismiss an action for default derives from the inherent jurisdiction of the

Court and applies to orders made under s.357 and O 23 r 1, if satisfied that:(a) the action is not being pursued with diligence;(b) there is no reasonable prospect that the security will be paid; or(c) the time limit prescribed by the Court for giving the security has been

disregarded.

Prohibition order (O 44A r 2)A plaintiff or judgment creditor may apply ex parte to the Court for an order prohibiting a debtor from leaving Hong KongApplication can be made pre-action, pre-judgment or post-judgment

Pre-action and Pre-judgment applicationProhibition order can be made for civil claim

(i) for payment of money or damages; or(ii) for the delivery of any property or the performance of any other act (s.21B(1)

(c))A wide meaning of “civil claim”: Bunker Holdings v Asia Pacific Seafood

Conditions (s.21B(3) HCO)Probable cause for believing that:(a) There is good cause of action; (b) D incurred liability in HK, carries on business in HK or is ordinarily resident in HK;

Incur liability in HK = crystallization of liability in HK (Bank of India v Murjani) (c) D is about to leave HK; and(d) because of (c), judgment likely be obstructed or delayed

How to Applyby ex parte application by affidavit under O 44 r 2, with full and frank disclosure(this duty is continuous and applies to information acquired after the order is granted but before service; applicant should seek a further appointment before the judge and inform him of the fresh information: Auto Treasure v Pyramid International)

Service and Durationorder must be served on Director of Immigration, Commissioner of Police and D (if can be found); valid for one month (renewable up to three months: s.21B(5) HCO, s.52B(5) DCO; thereafter may grant fresh order: HKICB v Wong Siu Leung Tammy)

EffectArrest if D attempts to leave Hong Kong: s.21B(7) HCO; s.52E(7) DCOA breach of prohibition order = contempt of court: Sino Wood v Wong Kam Yin

DischargeOnce the judgment debtor has made payment, the usual practice is for the prohibition order to be discharged. An application to discharge is also provided under O 44A r 4

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Case Summary for Seminar SixStandard Chartered v Lai Arthur & ors (re: full and frank disclosure)

In considering whether there has been relevant non-disclosure and what consequences the court should attach to any failure to comply with duty to make full and frank disclosure, the principles relevant to the issues in these appeals appear to me to include the following.(1) The duty of the applicant is to make a ‘full and fair disclosure of all the

material facts’(2) The material facts are those which it is material for the judge to know in dealing

with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers

(3) The applicant must make proper inquiries before making the application. The duty of disclosure therefore applies not only to material facts known to the applicant but also to any additional facts which he would have, known if he had made such inquiries

(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant; and (c) the degree of legitimate urgency and the time available for the making of the inquiries

(5) In material non-disclosure is established the court will be ‘astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure is deprived of any advantage he may have derived by that breach of duty

(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depend on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case he presented

(7) Finally, it is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms

Fortune Asset v De Monsa (re: extention of time after CJR)Under CJR, court should further underlying objectives by active case management: fixing timetables or otherwise control progress of case: O 1A r 4(2)(g)The court may extend time even after expiry of time for compliance, factors:1) What was the original time allowed and when has it expired? The more the

original time allowed, the more difficult it is to justify an extension2) Was the original time laid down by consent or at the suggestion of the applicant?

Under CJR a party is held more to his own bargain44

3) Why was the original time not adhered to?4) When was the application for extension taken out? The greater the delay, the more

difficult it is to obtain an extension5) Has the applicant used his best endeavours to secure the attendance of a witness to

take instructions and impress upon that witness the importance of attending on a certain date to affirm?

6) Is a witness’s availability within the control of the applicant?7) That a client or witness has to travel frequently out of the jurisdiction is not a

good reason in itself given the advanced means of communication8) If the witness is an expert, has the expert been informed of the time laid down by

legislation, PD or the court, and committed himself to provide report on time?9) What realistically is the further time needed to complete?10) Was there any de facto extension of time already enjoyed by way of consent, or

in waiting for his time summons to be heard?11) Will the extension of time sought have impact on any hearing fate or milestone

date?Last minute change in legal team in itself can hardly be a good reason for extension

Ip Sau Lin v Hospital Authority (re: self-executing order)Parties should note that under CJR, failure to comply with court-imposed timetable is tantamount to sabotaging the court’s case management function. Practitioners are expected to proactively inform the court of any anticipated non-compliance prior to the court-imposed deadline or of any actual non-compliance immediately upon expiry of such deadline, and where appropriate to seek remedial directions. The other parties are likewise required to assist the court in discharging its active case management function by bringing to the court’s notice of any anticipated or actual non-compliance of court-ordered case management directions or timetableParties who fail to comply with case management directions or timetable and let time go by without taking reasonable steps to deal with any non-compliance may be visited with short-scheduled self-executing orders with sanctions that automatically take effect unless the defaulting party applies to the court for relief (O 2 rr 4,5 RDC)PD 18.2 discourages non-compliance of court-imposed timetable for steps to be taken and/or breach of court case management directions. The court does not smile kindly on party-driven litigation that (a) keeps the court in the dark of any delay due to anticipated or actual non-compliance and/or (b) fail to seek remedial directions on good and sufficient grounds in a timely mannerApart from short-scheduled self-executing orders and inter partes costs sanctions, the court may utilize its further case management powers under O 1B r 1(3),(4) and O 2 r 3 RDC ordering the defaulting party to pay a sum into courtIf legal representatives caused wasted costs to be incurred, the court may make a wasted costs order under O 62 r 8 RDC

American Cyanimid v Ethicon (re: grant of interlocutory injunction)(1) The court should first determine whether there is a serious matter to be tried.

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(2) Unless the material fails to disclose that P has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief(a) The court should first consider whether if the plaintiff were to succeed at the trial

in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of D’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial

(b) It no, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff’s undertaking as to daages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of trial

(c) If the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the affidavit evidence adduced on the hearing of the application

(d) There may be any other special factors to be taken into consideration in the particular circumstances of individual cases

Fast-link Express v Falcon (re: grant of interlocutory injunction)Where the grant or refusal of an interlocutory injunction will have the practical effect of putting an end to the action, the court should approach the case on the broad principle of what it can do in its best endeavour to avoid injustice and to balance the risk of doing an injustice to either party. Accordingly, the established guidelines requiring the court to look at the balance of convenience when deciding whether to grant or refuse an interlocutory injunction do not applyIt seems to me that where the consequences of the injunction would be as far reaching as I predict, the Plaintiff would need to show that it is at least very likely to succeed at trial before it can trigger the exercise of this jurisdiciton

Music Advanced v IO of Argyle Centre (re: grant of interlocutory injunction)The basic approach to interlocutory injunctions, whether mandatory or prohibitory, is the same: s.21L HCO. However in the case of interlocutory mandatory injunction, the risk of injustice can be quite acute: it usually causes more waste of time and money, and are often difficult to formulate with sufficient precision to be enforceableCourt will have to feel a high degree of assurance that the injunction was rightly granted before it will be given; but subject ultimately to risk of injustice

Wah Nam v Excel Noble (re: cross-undertaking)The requirement that P must provide a cross-undertaking in damages is therefore a necessary part of the mechanism, unless very rare exceptional circumstancesThe assumption is that the applicant has adequate financial substance for the cross-undertaking, it is incumbent upon P to make full and frank disclosure of his

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financial position if viewed fairly his financial position raises realistic doubts. He cannot argue inadvertence or proviso

A Co v B Co (re: Norwich Pharmacal order)Where innocent parties are caught up o have become involved in the tortuous or wrongful activities of others and thus facilitating the perpetration (or continuation) of such activities, justice may require (and therefore the court may order) that such innocent persons come under a duty to assist the victim of the tort or wrongful activities, by the provision of full information even though such innocent persons cannot be shown to incur any personal liability at that stage: equitable jurisdictionThe court in applications for Norwich Pharmacal relief must, in its discretion, balance the competing in interests of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing. The order is not lightly made:(1) There must be cogent and compelling evidence to demonstrate that serious

tortuous or wrongful activities have taken place(2) It must be clearly demonstrated that the order will or will very likely reap

substantial and worthwhile benefits for the plaintiff(3) The discovery sought must not be unduly wide: discovery order must be

specific, must also be restricted to those or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets; what is important is that the discovery, whether wide or narrow, is necessary

Ng Chun Fai Stephen v Tamco (Anton Piller applications)An Anton Piller order has to be made ex parte, not (or not only) because of urgency, but because of the necessity to do what had hitherto been thought to be the unthinkable, that is to say, to take the respondent by surpriseExceptional order devised for use in rare and extreme cases: plainly no such order should ever be made unless necessary in the interests of justice; not in terms wider than necessary to achieve the legitimate object of the order; nor unless there is real reason to believe that without such an order the respondent would disobey an injunction for the preservation of the evidence the destruction of which would defeat the ends of justiceColumbia Picture v Robinson: purpose = to preserve evidenceTate Access v Boswell: only to be made when there was a strong prima facie case of dishonest conduct by the defendants which indicated that they would be likely to destroy the evidence of their fraud

Charter View v Corona (ordinary resident out of the jurisdiction)For O 23 r 1(1)(a) the ordinary residence of a limited company is to be decided by reference to where its central management and control isRe Little Olympian(i) The mere assertion of where the company’s central management and control is is

unsatisfactory. What is needed are the primary facts on which the assertion is based(ii) All the circumstances in which the company carries on its business should be

taken into account, though the weight to be applied to each factor will obviously differ from case to case. Those factors include the provisions of the company’s

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objects clause, the place of incorporation, the place where the company’s real trade and business is carried on, the place where the company’s books are kept, the place where the company’s administration is carried out, the place where the directors with power to disapprove of local steps or to require different ones to be taken themselves meet or are resident, the place where its chief office is or where the company secretary is to be found, and the place where its most significant assets are

(iii) In applying the test to a non-trading company, it may be more important than would otherwise be the case to have regard to the nature of the company’s corporate activities

Giuseppina Tagliani v Lee Wai Yin, Elvis (discretion re: security for costs)Principles summarized in Keary Developments v Tarmac(1) The court has a complete discretion to order security, and accordingly it will act

in the light of all the relevant circumstances(2) The possibility or probability that the plaintiff company will be deterred from

pursuing its claim by an order for security is not without more a sufficient reason for not ordering security

(3) The court must carry out a balancing exercise. On the one hand it must weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order for security. Against that, it must be weigh the injustice to the defendant if no security is ordered and the defendant finds himself unable to recover costs from the plaintiff in due course

(4) In considering all the circumstances, the court will have regard to the plaintiff company’s prospects of success. But it should not go into the merits in detail unless it can clearly be demonstrated that there is a high degree of probability of success or failure

(5) The court may order any amount up to the full amount claimed by way of security, provided that it is more than a simply nominal sum; it is not bound to order a substantial amount.

(6) Before refusing to order security on the ground that it would unfairly stifle a valid claim, the court must be satisfied that, in all the circumstances, it is probable that the claim would be stifled. There may be cases where this can properly be inferred without direct evidence. The court should consider not only whether the plaintiff company can provide security out of its own resources to continue the litigation, but also whether it can raise the amount needed from its directors, shareholders, or other backers or interested parties. It is for the plaintiff to satisfy the court that it would be prevented by an order for security from continuing the litigation

Perfect Best v Yip, Tse & Tang (discretion re: security for costs)Bank of India v Murjani Industries (HK) Ltd (prohibition order: incurring liability in HK)

(1) On a claim under a guarantee of a Hong Kong Bank account where liability accrues on demand, the guarantor incurs “the alleged liability which is the subject matter of the claim to Hong Kong while he (is) present in Hong Kong” within s.21B(3)(b) of Cap 4 if he is present in Hong Kong when demand is made

(2) On the truth construction s.21B(3)(d) obstruction or delay in both the obtaining and in the enforcement of any judgment is relevant

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Civil ProcedureSeminar 7

Case Management Powers

Objectives (O 1A)Underlying objectives (O 1A r 1)The underlying objectives of these rules are-

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;(c) to promote a sense of reasonable proportion and procedural economy in the

conduct of proceedings;(d) to ensure fairness between the parties;(e) to facilitate the settlement of disputes; and(f) to ensure that the resources of the Court are distributed fairly.

Application by the Court of underlying objectives (O 1A r 2) The Court shall give effect to the underlying objectives when it exercises any of its

powers or interprets any of these rules or a practice direction (O 1A r 2(1)) the primary aim in exercising the powers of the Court is to secure the just resolution

of disputes in accordance with the substantive rights of the parties (O 1A r 2(2))Duty of the parties and their legal representatives (O 1A r 3) The parties to any proceedings and their legal representatives shall assist the Court

to further the underlying objectives of these rules.Court's duty of active case management (O 1A r 4)Active case management includes-1. encouraging the parties to co-operate with each other in the conduct of the proceedings;2. identifying the issues at an early stage;3. deciding promptly which issues need full investigation and trial and accordingly

disposing summarily of the others;4. deciding the order in which the issues are to be resolved;5. encouraging the parties to use an alternative dispute resolution procedure if the Court

considers that appropriate, and facilitating the use of such a procedure;6. helping the parties to settle the whole or part of the case;7. fixing timetables or otherwise controlling the progress of the case;8. considering whether likely benefits of taking a particular step justify the cost of taking it;9. dealing with as many aspects of the case as practicable on the same occasion;10. dealing with the case without the parties needing to attend at court;11. making use of technology; and12. giving directions to ensure that the trial of a case proceeds quickly and efficiently.

Case Management Powers (O 1B)In addition to and not in substitution for any powers given to the Court: the court may take steps or make orders for the purpose of managing the case and

furthering the underlying objectives set out in Order 1A (O 1B r 1(2)) when making order, the court may attach conditions (including a condition to pay a

sum of money into court), and specify consequences (O1B r 1(3))49

The court has power to make order of its own motion (O 1B r 2) The court has power to give procedural directions by way of order nisi (O 1B r 3)

Steps after Close of Pleadings Order 25: apply to all actions by writ but with exceptions (e.g. PI) Practice Directions 5.2 For cases longer than 15 days, Practice Directions 5.7 on Long CasesDirections for preparation after close of pleadings (PD 5.2) This PD applies to all civil actions in the CFI and DC (para 1), aiming to facilitate the

more efficient, expeditious and fair disposal of cases (para 2) Discovery: parties should proceed with discovery without the need to wait for an

order of the court and to try to agree on the directions for modifying discovery obligations or on the manner of their implementation with a view to achieving economies (para 5)

Interlocutory applications: parties should seek to reach agreement on directions (para 6(1)), focusing on relevant issues (para 6(2)). Where agreement cannot be reached, an application should be made to the court (para 6(3)), but ‘unnecessary and disproportionate’ applications or ‘unnecessary and unreasonable’ oppositions should not be made and may be met with adverse costs orders (para 6(4))

Checklist for preparation of CMS by solicitors:Faith Bright Development Ltd. v Ng Kwok Kuen & Ors(1) Mediation Certificate(2) Discussion with other party’s solicitor the best course to resolve the clients’ disputes;(3) Timetable for parties to make arrangement for mediation;(4) Should there be a short stay of the proceedings, if so, for how long? If not, why?(5) The further conduct of the proceedings and the best course to take in order to save

time and costs if mediation fails(6) Fill in the Timetabling Questionnaire with caution;(7) If need leave to adduce expert evidence at the trial, a number of factors to considerRegistrar K.W. Lung (See Lecture Note p.6 – 7)

C ase Management Summons and Conferences (O 25)Timetabling Questionnaire (apply to all cases commenced by writ) each party shall, within 28 days after the pleadings is closed or deemed to be closed,

(a) complete a questionnaire prescribed in a practice direction, and (b) serve it on all other parties and file it with the Court (O 25 r 1(1))

where the parties are able to reach an agreement on directions relating to case management, or a timetable to make such directions, they shall procure an order to that effect by way of a consent summons (O 25 r 1(1A), PD 5.2 para 13)

where the parties are unable to reach such an agreement, (a) each party shall in the questionnaire make a proposal on the matter; and (b) plaintiff shall take out a summons (in these rules referred to as a case management summons (CMS)) returnable in not less than 14 days for directions (O 25 r 1(1B), PD 5.2 para 16)

The CMS shall set out (i) all directions and timetable that can be agreed; and (ii) each party’s proposal in respect of the directions and the timetable that cannot be agreed (PD 5.2, para 18)

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certain cases in which this rule does not apply (O 25 r 1(2))Notably, personal injuries cases are governed by PD 18.1 instead

Faith Bright Development Ltd. v Ng Kwok Kuen & OrsThe court will heavily rely upon the TQ filed by the parties in order to chart the proper course for future conduct of the proceedings

Yip Kee Wai v So Kim Wah HCA 1504/2009, Registrar K.W. LungThe Court requires substantive compliance by the parties with the spirit of the CJR, and not only in form, i.e. the Court requires the parties to consider the case properly, and to provide useful and correct information in the TQ

Questions contained in the TQA. Alternative Dispute Resolution (“ADR”)B. PartiesC. PleadingsD. EvidenceE. Expert Evidence (special concern: need proper directions, see below)

(1) Identify the expert; (name, field, title, etc.)(2) Identify the related issues, cannot be too broad (show relevance?);(3) Consider the appropriateness of appointing a single joint expert

F. Interlocutory ApplicationsG. Case Management Conference/ Pre-trial ReviewH. TrialI. Proposed Directions

Sample CMS (PD5.2 App B)1. Parties to exchange all statements of factual witnesses within 28 days. [Agreed]3. Parties to seek counsel’s opinion within 28 days thereafter. [Agreed]4. Parties to take out all interlocutory applications within 14 days thereafter. [Plaintiff]

Parties to take out all interlocutory applications within 28 days thereafter. [Defendant] 5. A Case Management Conference be held on a day to be fixed by the Court not before

_____. [Plaintiff]No Case Management Conference be fixed for the time being. [Defendant]

6. Costs of this case management summons be in the cause. [Agreed]

Case management timetable Unless the court decides to give directions without hearings (below i.e. r 1A(4)), as

soon as practicable after completed TQ has been filed with the Court, the Court shall, having regard to the questionnaire and the needs of the case:(1) give case management directions and fix the timetable for the steps to be taken

between the date of the giving of those directions and the date of trial;(if no CMC is ordered, this must include either the date for a PTR or the trial)

(2) fix a CMC if the Court is of the opinion that it is desirable to do so, and fix the timetable for the steps to be taken between the that date and the date of CMC; or

(3) direct P to take out a CMS if he has not already done so under O 25 r 1(1B)(b).(RHC O 25 r 1A(1); RDC O 25 r 2(1))

If CMS is unnecessary, the court will make orders nisi giving case management directions and fix a timetable for the proceedings without a hearing (O 25 r 1A(4),

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PD 5.2 para 21) The order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order. (O 25 r 1A(5))On such application for variation, the court will hear the CMS. (O 25 r 1A(6))

Duty to consider all matters at CMS (O 25 r 2)When the CMS is first determined, the Court should consider: whether it is possible to deal with all matters required by O 25 to be dealt with at the

CMS, and at what stage to deal with such matters (O 25 r 2(1))(a) Any party who has been addressed in the CMS must so far as practicable, list the

directions/orders which he requires in order to take the action to trial and any other interlocutory application(s) which he intends to make. He should give notice of the same at least 7 days before the time fixed for determination of the CMS. (O 25 r 7).

(b) Therefore, when the CMS is determined, the parties should consider and apply for such directions/orders as could be reasonably contemplated at the time, by reference to the parties’ pleaded case or otherwise.If further directions/orders become necessary after the CMS, parties are obliged to take immediate steps to take out a summons to seek such directions/orders. Such application should be by summons and with 2 days’ notice. (O 25 r 7(3))

At the determination of CMS (O 25 r 4)(a) Court shall endeavour to secure that the parties make all admissions and all agreements

as to the conduct of the proceedings which ought reasonably to be made (O 25 r 4)The parties should not unreasonably withhold their consent or agreement to any direction or order granted by Court. Otherwise, they may be penalised as to costs.

(b) In order to assist the Court to consider and deal with all interlocutory matters when determining the CMS, it is the duty of all parties to give information and produce documents that are reasonably required. (O 25 r 6)

(c) Pursuant to O 33 r 4, “in any action begun by writ, the Court shall by order determine the place and mode of trial.”

(d) However, unless the parties agree otherwise, the Court shall not make an order as to the place and mode of trial until all the matters that are required to be dealt with at the determination of the CMS have been dealt with (see O 25 r 2(4)).This does not apply if the action is ordered to be transferred to the District Court or some other court (O 25 r 2(5)).

Failure to file TQ or take out a CMS If P fails to file TQ or take out a CMS, D may apply to (a) take out a CMS, or (b)

apply for an order to dismiss the action. Upon the latter application, the court may either dismiss the action on such terms as may be just, or deal with the application as if it were itself a CMS (O 25 r 1(4),(5))

If D does not file a TQ, or case involves litigant in person, P shall take out CMS (PD 5.2 para 17)

Parties failing to file TQ shall expect to face adverse costs order. In Sherryknoll Enterprises Ltd and Ors v Grand Power Ltd, where both parties failed to file TQ and Mediation Certificate before taking out a CMS, Court ordered that

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costs between solicitors and clients for both parties be disallowed.

Case Management Conference Where the Court has fixed a CMC,

(a) Each party must file a Listing Questionnaire (LQ) at least 7 days before the date fixed for CMC to assist the Master to give directions (PD 5.2, para 24)

(b) P shall prepare and lodge with Court not less than 3 clear days before CMC a CMC bundle containing pleadings, witness statements, expert reports and draft index of document bundle (PD 5.2, para 26)

Unless in exceptional circumstances, CMC is for reviewing due compliance with directions already given, NOT for seeking directions (PD 5.2, para 28,32)

At CMC, parties are expect to have complied with the timetable, no further extension will usually be granted; even if sufficient grounds are given to support an extension, it will likely be granted with an unless order (PD 5.2, para 29)

CMC is a milestone date, a critical stage of proceedings; If further interlocutory applications are made, the parties are expected to indicate accurately and fully the extent of the application (PD 5.2, para 30). However, the later and closer to trial an application is made, the less likely the Court will entertain it (PD 5.2, para 31) see Chok Yick Interior Design and Engineering Co. Ltd

At CMC, the Court will:(a) review steps parties have taken, in particular, compliance of previous orders(b) fix timetable for steps to be taken between CMC and date of trial (which must

include a PTR date or trial date/period)(c) record all admissions or agreements by the parties(d) ascertain parties’ attempt or intention to undergo ADR(e) adjourn the CMC to another date, fix a PTR or fix a trial date/period

Pre-trial Reviews (PTR) Normally be held 8 to 10 weeks before trial or beginning of trial period.

It is generally heard before a Judge (PD 5.2, para 33) Not less than 3 clear days before the PTR, Plaintiff to lodge with Court an updated

bundle (PD 5.2, para 35). The bundle, where possible, should be a CMC bundle updated and reused (PD 5.2, para 26)

At PTR, Court will (PD 5.2, para 36)(a) fix the starting date of trial if a trial period has been fixed(b) confirm or vary estimated length of trial(c) give further directions needed provided that these will not affect the trial date(d) give directions relating to trial under O 35 r 3A – e.g. limit time to be taken to

examine witnesses, number of witnesses to be called, making submission, etc

Variation of Case Management Timetable(1) The Court may of its own motion or upon application give further case management

directions or vary any timetable fixed: O 25 r 1B(1).(2) The applicable procedure depends on whether the date to be varied is a milestone date

or a non-milestone date. A milestone date is a date which the Court has fixed for a

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CMC, PTR, the trial or the period fixed for the trial. A non-milestone date is a date or period fixed by the Court which is not a milestone date: O 25 r 1B(8).

Non-milestone date(3) A non-milestone date may be varied by way of consent summons: O 25 r 1B(4)(4) If there is no consent, the requesting party may apply for variation, but the court shall

not vary any non-milestone dates “unless sufficient grounds have been shown” by the applicant: O 25 r 1B (5),(6).

(5) If a variation will necessitate a change to the trial date/period, court shall not vary the non-milestone date even sufficient grounds have been shown: O 25 r 1B(7)

Milestone date(6) The Court shall not vary a milestone date unless there are exceptional circumstances

justifying the variation: O 25 r 1B (3).(7) “late instructions from client, change in the team of lawyers, the absence of prejudice

to the other party which cannot be compensated for by costs will NOT be treated as exceptional circumstances.”: PD 5.2 para 42

Failure to attend a CMC/PTR(1) If a claimant (including counterclaim) does not appear on a CMC or a PTR, his

claim/counterclaim shall provisionally be struck out: O 25 r 1C(2) A party may apply within 3 months to the court for reinstatement (O 25 r 1C(3)), and

must be able to satisfy the court that there are good reasons for restoration of the claim or counterclaim (O 25 r 1C(5)). The Court may allow restoration with or without conditions or may disallow restoration (O 24 r 1C(4)). If the Court refuses to restore the claim, the claim or counterclaim will stand dismissed upon expiry of 3 months from date of CMC/PTR with a costs order against the party whose claim has been dismissed. (O 25 r 1C(6)).

World Chinese Business v Shine Rainbow, per Registrar Au-Yeung,“The Court will not lightly accede to the request of a defaulting party to restore an action without sufficient explanation and consideration of the merits. This was to maintain the integrity of the timetable laid down by the Court or the rules and to ensure that a matter without merits should not continue”.

(3) The application should be dealt with in three stages:-(a) first, there was the threshold of showing ‘good reasons’;(b) then consider whether, as a matter of discretion, it should grant the restoration;(c) if restore the claim, the Court may consider conditions to be imposed.

World Chinese Business Investment, Registrar Au-Yeung (as she then was).

Failure to comply with case management directionsIp Sau Lin v. Hospital Authority, per District Judge Marlene Ng(1) “… disobeying court imposed case management directions and timetable without good

reason is not only breach of court order, which of itself is no light matter, but is also a serious subversion of the entire case management system envisaged by the CJR.”

(2) Parties/practitioners are expected to be proactive and inform the court if there is any anticipated non-compliance of court-ordered case management directions or timetable before the court deadline, or alternatively to inform the court promptly of

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any actual non-compliance immediately upon the expiry of the deadline, and, where appropriate, seek remedial directions (such as extensions of time).Inter-partes court directions (such as the filing/exchange of witness statements, for restoring the case for directions hearing, or for making joint written application on or before a specified deadline) bind both parties, and consequently this burden rests not only on the defaulting party but also the other party(ies) involved.

(3) “… the court does not smile kindly on party-driven litigation that (a) keeps the court in the dark of any delay due to anticipated or actual non-compliance and/or (b) fails to seek remedial directions on good and sufficient grounds in a timely manner.”

Sanctions for Non-Compliance with CMDparty who fails to comply with case management directions will expect sanctions:

Costs sanctions: Supply Chain & Logistics Technology Limited v NEC The payment by a defaulting party of a sum of money into court as security for

the other party’s claim or its costs (see O 1B r 1(3),(4) and O 2 r 3)BUT, Lee Wai Ming v Chan Che Ming(a) it would only be in an exceptional case (if ever) that a court would order

security for costs if the order would stifle a claim or an appeal;(b) in any event,

(i) an order should not ordinarily be made unless the party concerned can be shown to be regularly flouting proper court procedures or otherwise to be demonstrating a want of good faith -- good faith being understood to consist…of a will to litigate a genuine claim or defence (or appeal) as economically and expeditiously as reasonably possible in accordance with the overriding objective; and

(ii) an order will not be appropriate in every case where a party has a weak case. The weakness of a party’s case will ordinarily be relevant only where he has no real prospect of succeeding.”

Self-executing “unless orders” (effected automatically upon non-compliance) without the need for a further application, unless the defaulting party applies to court for relief within 14 days (O 2 rr 4,5)

Wasted costs orders being made against legal representatives (O 62 r 8)Application for relief(1) application for relief must be supported by evidence, and in deciding whether to grant

relief, Court shall consider all the circumstances including (O 2 r 5(1))(a) the interests of the administration of justice;(b) whether the application for relief has been made promptly;(c) whether the failure to comply was intentional; (d) whether there is a good explanation for the failure to comply; (e) the extent to which the party in default has complied with other rules or court orders;(f) whether failure to comply caused by the party in default or legal representative;(g) in the case where the party in default is not legally represented, whether he was

unaware of the rule or court order, of if he was aware of it, whether he was able to comply with it without legal assistance;

(h) whether the trial date or the likely trial date can still be met if relief is granted;(i) the effect which the failure to comply had on each party;

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(j) the effect which the granting of relief would have on each party.(2) Relief is unlikely to be granted lightly and any party who fails to comply with the

‘unless order’ runs a significant risk that he will be refused relief. It is vitally important to the administration of justice that the rules of procedure are observed.

(3) But Court must bear in mind that, where the effect of the sanction is to preclude a trial on the merits, the effect is to deprive the applicant of access to the Court.

(4) When the court makes an order on an interlocutory application before a CMS or before it has given case management directions, it may specify the consequences of failure to comply. Where an order is made after a CMS or directions, the court is required to specify the consequences of failure to comply with the order unless there exist ‘special circumstances which render it inexpedient to do so’.Any such consequence must be guided by what is ‘appropriate and proportionate’ in relation to the non-compliance: O 32 r 11B

Preparation for TrialO 25 r 3: court shall look at certain matters of evidence at the determination of CMS – including O 38 rr 2-7 and O 38 Part III,IV. The usual directions which the Court would make in routine actions concerning evidence, where appropriate, would include directions for the filing and service of List of Documents, directions concerning the exchange of witness statements and directions and orders in relation to expert evidence.

Exchange of Witness StatementsThe principle of orality and witness statement(a) principle of orality: in an action begun by writ, any fact to be proved at trial by the

evidence of witnesses shall be proved by the examination of the witnesses orally and in open court (O 38 r 1 RHC)

(b) “At the determination of a CMS, the Court shall direct every party to serve on the other parties, within such a period as the Court may specify, written statements of the oral evidence which the party intends to adduce on any issues of fact to be decided at the trial.” (O 38 r 2A(2) RHC)

Purpose and functions of a witness statement(a) Purpose of a witness statement: it records the oral evidence which a party intends to

adduce on any issues of fact to be decided at the trial.(b) Functions of a witness statement:

i) provide parties with the relevant factual evidence before trial so as to assist them in appraising the strength and weaknesses of their respective cases;

ii) encourage settlement;iii) eliminate surprises;iv) prepare for trial: to identify the real issues/eliminate unnecessary issues and to

focus the parties on the real matters in controversy between the parties;v) encourage parties to make admission of facts;vi) reduction in the number of interlocutory applications;vii) provide framework for giving evidence-in-chief, assist in cross-examination;viii) save costs

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Order for exchange of witness statement (O 38 r 2A(1))(a) The powers of the Court to order parties to exchange witness statements must be

exercised “for the purpose of disposing fairly and expeditiously of the cause or matter before it, and saving costs.” (O 38 r 2A(1) RHC).

(b) When making an order for the exchange of witness statements, the Court should also have regard to all the circumstances of the case, including but not limited to:(i) the extent to which the facts are in dispute or have been admitted;(ii) the extent to which the issues of fact are defined by the pleadings; and(iii) the extent to which information has been or is likely to be provided by

further and better particulars, answers to interrogatories or otherwise.”

Contents of a witness statement:(a) include the material facts and evidence in support of a party’s case which the

witness is able to prove of his own knowledge.(b) It must be full and complete.(c) It must be “the truth, the whole truth and nothing but the truth”.(d) It must not contain any evidence which is not admissible at trial.(e) It must be confined to matters of fact and must not contain any expressions of opinion.(f) It should contain all the evidence which the witness is expected to give, were he to be

examined orally at trial.(g) It must follow the formalities in O 38 r 2A(4) RHC(h) It must be verified by a statement of truth: O 41A.

Use of witness statements(a) Subject to O 38 r 2A(9) (use of depositions as evidence), if a party serving statements

under this rule does not call the witness to whose evidence it relates, no other party may put the statement in evidence at the trial. (O 38 r 2A(6) RHC)Deposition: examination of a person on oath before a Judge, an officer of the Court or any other person at any place other than at trialprinciple of orality: a witness statement itself does not form the evidence of a case. Therefore, witness statements which have been exchanged are not put in evidence by the fact of the exchange. The information in a witness statement remains confidential until the witness makes the statement in public by verifying it on oath

(b) If a witness is called to give evidence at the trial: (O 38 r 2A(7) RHC)i) except where the trial is with a jury, the Court may, on such terms as it thinks fit,

direct that the statement served, or part of it, shall stand as the evidence in chief of the witness or part of such evidence;

ii) the witness may with the leave of the Court –o amplify his witness statement; ando give evidence in relation to new matters which have arisen since the witness

statement was served on the other party;“Court may grant leave only if it considers that there is good reason not to confine the evidence of the witness to the contents of his witness statement.”: O 38 r 2A(7A)

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iii) whether or not the statement or any part of it is referred to during the evidence in chief of the witness, any party may put the statement or any part of it in cross-examination of that witness.” (O 38 r 2A(7) RHC)

(c) To summarize, if a witness is called to give evidence, a Court may order a witness statement to stand as evidence in chief (which is usually the case), in absence of such direction, the party calling the witness must elicit his evidence by oral examination in chief in the usual way as provided in O 38 r 1 RHC.The oral evidence given by a witness at trial should not cover those matters which are not already included in his witness statement, unless so allowed by the Court. Therefore, when preparing a witness statement, it is important to include all the factual matters which the witness would be attesting to at the trial of the matter.

Failure to comply with orders re witness statementsCourt has power to dismiss the action or strike out a Defence and Counterclaim if parties are in default in relation to an order for exchange of witness statementsChow Kwok Fai v Waysuntone Communication Ltd

Court has jurisdiction to make an “unless order” that unless the Defendant served its witness statements within 14 days, its defence and counterclaim be struck out.

(Also see Kai Yip Air-Condition Engineering Co. v Ma Hei Sun)

Expert evidence (O 38 r 4 RHC and O 38 Part IV RHC)Function of an expert(a) assist the Court on relevant issue which he possesses specialist knowledge(b) The expert should be independent of the parties and the expert’s duty is to assist the

Court and his duty to the Court overrides any obligations to the person from whom he has received instructions or by whom he is paid (O 38 r 35A)

(c) His evidence is admissible under s.58(1) EOWhen can parties adduce expert evidence?(a) O 38 r 37: where a party makes an application to Court for leave to adduce oral

expert evidence, unless the Court considers there are special reasons, it should direct that the substance of the expert evidence be disclosed in the form of an expert report to the other parties within a given time period. Therefore, at an application for leave to adduce expert evidence, the party adducing the expert evidence would normally also seek for a direction that an expert report from the expert in question be filed and served within a time set by the Court.

(b) O 38 r 41: applies to expert evidence contained in a statement which a party may wish to use because the maker of the statement is not able to or does not wish to give oral evidence at trial. In that case the party must apply under r 41 and procedures at Part III of Order 38 relating to hearing evidence be followed.

(c) Except with leave or where all parties agree, no expert evidence may be adduced unless a party seeking to adduce expert evidence has made an application under O 38 r 37/41 for directions, and complied with the directions given: O 38 r 36.

(d) The general test is: necessity, relevance and probative value: see Chan Kwok Ming v Hitachi Electric Service Co. Ltd. (HCPI 322/2002, Suffiad J)

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Appointment of experts(a) The Court can order the parties to appoint a single joint expert upon application by

at least one of the parties. Other parties have an opportunity to be heard and to show cause why the order should not be made, and if it is satisfied that it is in the interests of justice to do so after taking into account all the circumstances of the case including the matters specified in r 4A(5), the refusal to agree to a single joint expert may be found unreasonable in the circumstances: O 38 r 4AIf parties cannot agree on who should be appointed as the joint expert, the court may select an expert from a list identified by the parties.

(b) Where the parties appoint their own experts, the Court can order the experts appointed by each of the parties to meet on a “without prejudice” basis before or after disclosure of their reports in order to identify the parts of their evidence which are in issue; when such meeting takes place, the experts may prepare joint statements indicating their agreements and disagreements.

(c) The parties may apply for the appointment of a Court expert instead of separate experts for each party: O 40 RHC

Code of Conduct of Experts(a) O 38 Part IV emphasises the independent role of an expert in court proceedings with

the introduction of a Code of Conduct for Experts and experts have to be bound by such code: O 38 r 35A, 37A, 37B, 37C RHC and Appendix D to RHC.

(b) O 38 r 37C provides that an expert’s evidence will not be admissible unless it contains a declaration that he has read an approved code of conduct and agrees to be bound by it; that he understands his duty to the court and that he has and will continue to comply with that duty.O 38 r 37A provides that an expert report must be verified by a Statement of Truth in accordance with Order 41A.

Trial Procedures(1) Order of Speeches

(a) Plaintiff begins by opening his case, then calls his witness(es) who are in turn examined, cross-examined by the defendant and re-examined by the plaintiff.

(b) If the defendant elects to adduce evidence (which is often the case), then the defendant may open his case. He then calls his witnesses who are in turn examined, cross-examined by the plaintiff and re-examined by the defendant.

(c) Defendant then closes his case and plaintiff may then make a speech in reply.(d) If the defendant does not elect to adduce evidence, then after all the plaintiff’s

witnesses have given evidence, the plaintiff closes his case and the defendant shall then state his case (O 35 r 7(1)–(4) RHC)

(e) O 35 r 7(5): the order of speeches where there is more than one defendant(f) Where the burden of proof of all the issues lies on the defendant, the order of

speeches as set out herein would be reversed (O 35 r 6 RHC)(g) After all parties have closed their cases, the trial judge can give judgment straight

away although it is quite often for trial judges to reserve judgment. When his judgment is ready, the trial judge would call upon the parties to attend Court so

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that judgment could be read out or the Court may simply hand down the written judgment to parties. The trial judge must give reasons for his decision (O 42 r 5B)

(2) O 35 r 3A: Court has power to limit (i) the time to be taken in the examination, cross examination and re-examination of a witness, (ii) the number of witnesses, (iii) the time taken to make oral submissions, (iv) the time taken by a party to present his case, and (v) the time taken by the trial.Such directions may be made at any time before or during trial. However, such directions must not detract from the principles that each party is entitled to a fair trial and that each party must be given a reasonable opportunity to lead evidence and cross-examine witnesses.

(3) O 35 r 3A(2): matters that Court shall have regard to when making such directions

Judgment and Orders (O 42 RHC)(1) Pursuant to O 35 r 10 RHC, at the conclusion of the trial of the action, the judicial

clerk or other officer in attendance at the trial should make a certificate to certify every finding made by a jury (if the trial was by jury), the judgment given by a judge and the order made by the judge as to costs.

(2) Notwithstanding the certificate made by the judicial clerk, the party seeking to have judgment entered must draw up the judgment and present it to the Registry for entry (O 42 r 5(2) RHC).

(3) Judgment takes effect from the day of its date and it shall be dated as of the day it is pronounced, given or made, unless the Court otherwise directs (O 42 r 3 RHC).

(4) Therefore, a judgment takes effect on the date it is pronounced, even if it be entered on a later date or even if the reasons may not be given until a later date.

Costs (Parts I, II, O 62 RHC and O 62 r 1–11A)A. General points

(1) Costs include fees, charges, disbursements, expenses and remuneration: O 62 r 1(1)(2) party is not entitled to recover his costs of any proceedings from another party

unless there is a court rule or an order to that effect (O 62 r 3(1) RHC).(3) Costs may be dealt with by the Court at any stage. Usually, at the conclusion of

the trial and often, during the interlocutory stages of proceedings when interlocutory applications are being made, the Court will make orders as to the costs of the action or the costs of the particular interlocutory application.

(4) s.52A(1) HCO: “subject to the provisions of rules of court, the costs of and incidental to all proceedings in CA in its civil jurisdiction and in CFI, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid.”Court has absolute discretion when making costs orders in respect of an action

(5) The conventional rule adopted by the Court is that costs should normally follow the event (O 62 r 3(2) RHC), i.e. successful party should be awarded his costs of the proceedings. However, under the CJR, O 62 r 3(2A) is added to give Court power to order “costs to follow the event or make such other order as it sees fit” when dealing with interlocutory proceedings.

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B. Meaning of some common orders for costs:(1) Costs be in the cause – a costs order made at interlocutory proceedings which

means that the costs of those proceedings are to be awarded according to the final award of costs in the action.

(2) P/D’s costs forthwith – P/D is to have costs of the interlocutory proceedings without waiting for the final decision in the action and payment of the costs could be enforced immediately: Big Boss Investment Limited

(3) P/D’s costs in any event – P/D is to have costs of the interlocutory proceedings irrespective of who wins or loses when the case is finally decided or settled. He is not entitled to receive or tax those costs until after the case is decided.

(4) P/D’s costs in the cause – P/D is to have costs of the interlocutory proceedings if judgment is given in his favour but he shall not be liable to pay the costs of the other party in respect of the interlocutory proceedings if judgment is given in favour of the other party.

(5) Costs reserved – costs of the interlocutory proceedings will be lost if the Court does not specifically make an order dealing with such costs in the end

(6) No order as to costs – means that each party will bear his own costs.(7) Taxed costs – means costs taxed in accordance with the taxation provisions

provided for in the relevant rules of the Court.(8) Fixed costs – means costs determined in relation to particular proceedings in

accordance with prescribed scales. e.g. P is only entitled to fixed costs of $10,000 (if legally represented) upon entering default Judgment against D for failing to file a Notice of Intention to defend: O 62 Second Schedule, Part 1.

(9) Certificate for counsel – by O 62, Part II of Schd 1 para 2(3)If one counsel is instructed to appear before a master in chambers or if more than one counsel were instructed to appear before a master in open court or a judge or the Court of Appeal, the fees of counsel(s) would not be allowed unless counsel requests for and a “certificate for counsel” is granted.

C. Different Basis of costs/taxation(1) Apart from determining the liability of the costs (i.e. who is to pay the costs of the

action or the interlocutory proceedings), the Court also has an absolute discretion as to the basis upon which costs are taxed

(2) Where costs are ordered to be paid to a party, that party is entitled to have his taxed costs (O 62 r 9(1) RHC) by applying for taxation after proceedings.

(3) Even if a party is successful in the action and is awarded costs in his favour, he will not recover 100% of the costs expended. The amount of costs he would be able to recover would depend on the basis on which the costs are to be taxed. Any costs which are not recoverable would be borne out of the party’s own pocket. The usual basis upon which costs are ordered are:(a) Party and party basis – the usual basis, unless the order specifies the costs to

be paid on another basis. On this basis, the costs that are allowed to be taxed are all that are necessary or proper to enable the adverse party to conduct the litigation and no more.

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(b) Common fund basis – more generous, and includes a reasonable allowance in respect of all costs reasonably incurred. In order to justify an order for costs on the common fund basis, the case has to have some special or unusual feature. Where case are settled or compromised in favour of an infant or patient plaintiff, it is the general practice of the Court to award costs on a common fund basis so that the Court can be reasonably sure of the adequacy of the settlement to the infant. Where the case involves an infant or patient Plaintiff proceeds with trial, the Court would consider if the case possesses special or unusual feature before this is awarded.

(c) Indemnity basis – all costs are to be allowed except those unreasonably incurred or of an unreasonable amount. Any doubts as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party: Choy Yee Chun v Bond Star (CA) and TPB v. Society For The Protection Of The Harbour Ltd (CFA)

(d) It should also be noted that where there has been a contractual right to indemnity costs (i.e. where the parties have agreed, for example, under a mortgage deed, that any legal costs expended by the mortgagee bank to recover outstanding amounts due under the mortgage to be payable by the mortgagor to the mortgagee bank on an indemnity basis), the Court’s discretion as to costs should ordinarily be exercised so as to reflect that contractual right: Chekiang First Bank v Fong Siu Kin & Another (CA)

(e) Court may order indemnity costs under O 22 (sanctioned offer and payment)(f) Solicitor and own client basis – this basis is generally adopted on the taxation

of a solicitor’s bill to his own client. All costs are allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.

D. Summary assessment of costs(1) O 62 r 9A: the Court can make a summary assessment of costs by ordering a

party to pay a sum of money to another part in lieu of taxation after it has determined an interlocutory application at any stage of the proceedings.

(2) Court may also make provisional summary assessment of costs by ordering a sum to be paid but subject to either party’s right to have the costs taxed pursuant to r 9A(2),(3), but the party who insists on such taxation would be at risk as to a special order for costs of the taxation and other possible sanctions in the event that the taxation does not result in a proportionate benefit to him (see r 9A(4),(5)).

(3) PD 14.3 on Costs makes it clear that the court will give preference to summary assessment or provisional summary assessment of the costs of interlocutory applications unless there is good reason not to do so.

(4) If the Court makes an order under r 9A for the payment of a sum of money in lieu of taxed costs, payment would have to be made within 14 days or within the period specified by the Court when making the order (r 9B).Summary assessment is not allowed in all cases and the r 9C sets out the cases where summary assessment of costs would not be allowed.

(5) O 62 r 9D(2): Court may make an order for taxation of costs at an earlier stage so that taxation need not necessarily be at the conclusion of the action.

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E. Costs arising from misconduct or neglect and wasted costs orders(1) Costs arising from misconduct or neglect (O 62 r 7)

(a) if something is done or an omission is made improperly or unnecessarily by or on behalf of a party and in such cases, Court can penalise that party by bearing the costs of the improper or unnecessary act, i.e. that party would have to bear his own costs and pay the other party his costs in relation to the improper or unnecessary act. O 62 r 7(2) sets out the factors which the Court would have to regard, notably, including the underlying objectives set out in O1A, when considering an order under r 7(1)

(2) Wasted Costs Order (O 62 r 8) and PD 14.5(a) Court may make a wasted costs order against legal representative only if

(i) the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs; and

(ii) it is just in all circumstances to order the legal representative to pay such costs. (O 62 r 8)

(b) “Legal representative” means Solicitor or Counsel conducting litigation on behalf of a party. (s.52A(7) HCO, s.53(6) DCO)

(c) “Wasted costs” is defined under s.52A(6) HCO to mean any costs incurred by a party as a result of:(i) an improper or unreasonable act or omission; or(ii) any undue delay or other misconduct or default on the part of the legal

representative. This needs not involve criminal activity or dishonesty.However, a mere mistake/error of Judgment is generally insufficient.It should involve a failure of solicitor to fulfil his duty to Court and to realize his duty to aid in promoting his own sphere the cause of justice: KB Chau & Co

(d) rr 8,8A,8B,8C,8D provide guidance for the exercise of Court’s discretion and discourage disproportionate satellite litigation. The rules provide that applications for wasted costs orders should generally not be made or entertained until the conclusion of the proceedings (O 62 r 8A(4)).It is improper to threaten wasted costs proceedings so as to intimidate the other party, and the party who wishes to put the other side’s lawyer on notice of a potential claim for wasted costs against them should not do so unless he is able to particularise the misconduct which is alleged to have caused him to incur wasted costs (O 62 r 8C)

(e) Solicitor/counsel should not assist in commencing an action which he knows to be false and has no chance of success: Ma So So v Chin Yuk LunThe CFA in that case, has explained the jurisdiction of the Court to make wasted costs order as follows:-(i) Court’s jurisdiction is compensatory. However, jurisdiction becomes

punitive if obligation to pay costs is shifted upon the solicitor.(ii) Court should only exercise power if improper conduct or misconduct is

found in proceedings, as distinguished from non-contentious matters.(iii)It should be confined to questions apt for summary determination only.

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(iv)1. When client applies for wasted costs order against his own solicitor, there is an implied waiver of LPP.2. When a party claims costs against the other party’s solicitor, no waiver will be implied and in such circumstances, the Court must make full allowance for a solicitor’s inability to tell the Court the whole story.

(v) The jurisdiction ought only be exercised if it can be established that there has been a dereliction of duty as solicitor.

(vi)The applicant must establish a casual relationship between the acts of the solicitor and the wasted costs incurred.PD 14.5, para 3: general principles of Ma So So likely to be relevant where wasted costs orders are sought.

(f) A wasted costs order may(i) disallow costs between the legal representative and his client; and(ii) direct the legal representative to

repay to his client costs which his client is ordered to pay to the other parties Indemnify other parties against costs incurred by them

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Civil ProcedureSeminar 8

Settlement, ADR, Sanctioned Offer and Sanctioned Payment

Parties settle their disputes. Most civil claims are settled before trial Settlement(a) By negotiation

Flexible, depending on parties’ agreement Can be conducted:

o In writing, by telephone, or face-to-face meeting o b/w parties themselves, with no legal repo with all parties AND legal rep, ORo by only legal reps

(b) By ADR Mediation Early neutral evaluation Expert determination

Procedural safeguards for settlement – negotiations (a) Conducted through lawyers

Lawyers have ostensible authority to settle the case on their client’s behalf One party need NOT ask if the other party’s lawyer has actual authority to make

the settlement: Waugh v HB Clifford & Son Ltd, UNLESS if the settlement introduces extraneous subject-matter, then the other party’s solicitor should be put to proof of his authority (e.g. breach of contract vs sale of D’s flat)

Waugh v HB Clifford & Son Ltd – held whilst there was no actual authority from client to lawyers, there was ostensible authority on the part of the D’s solicitors to reach the agreement (which was not agreed and instructed by client)

To avoid professional negligence, should clarify with client (usually in writing) the precise extent of your authority to conclude a settlement on their behalf

(b) Conducted by lay clients Parties can settle on their own without knowledge/intervention of his solicitor on

record: The Hope, but this is not encouraged Kwan Siu Man Joshua v Yaacov Ozer – agreement made b/w parties at a 10 mins

chance meeting outside lift lobby was overturned by CFA. Lui Che Woo v Wong Si Ling – D alleged on 1st day of a 5-day trial, settlement

has been reached in the absence of their lawyers. P denied. D successfully vacated trial date to get key witness to testify on the alleged settlement

Advice: client should be made fully aware of the risks of any direct discussions with other parties, and importance of informing you of the same

(c) ‘Without prejudice’ and ‘subject to contract’ negotiations Purpose: prevents any party from unilaterally referring to these ‘w/o prejudice’

communications in evidence at trial, or from using them to establish an admission: Unilever plc v The Proctor & Gamble Company

Even if we lost the case, we should be awarded costs because P should have

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accepted our proposal. Time and cost would not have been lost. Costs is always discretionary. When the court considers costs, take into a/c many factors including ‘letter without prejudice”.

Exceptions: evidence of WP communications may be admissible, in deciding: o Whether a settlement has been reached at all o Whether a concluded settlement should be set aside on grounds of fraud/misrep o Where WP correspondence is being used as a ‘cloak’ for perjury or blackmail o Whether any delay on the part of a P in prosecuting an action was due to

ongoing settlement negotiations Unilever v Proctor & Gamble Company When an offer marked WP is accepted by the opposite party, acceptance should

be made by an open letter. Once accepted, settlement is concluded and the whole chain of WP correspondence will no longer be privileged, and can be referred to at any subsequent court hearings as evidence of a settlement Ref. to “D’s email to client”: be careful before accepting the other side’s offer Better protect yourself. If your client denies acceptance later on, you’re stuck.

‘Subject to contract’ avoids a binding settlement being concluded before all details are sorted out. No settlement will be concluded UNTIL it has been reduced into writing and signed by all the parties: Darton Ltd v HK Island Development

Alternative Dispute Resolution (ADR) Types of ADR: mediation, conciliation, adjudication, arbitration, early neutral

evaluation, mini-trial, expert determination, mediation-arbitration, negotiation Judiciary focuses mediation as ADR, according to Practice Direction 31 Advantages: control, flexibility, broader interest and creativity, privacy, speed, cost,

attitude, expertise, relationships, risk, focus, the 3rd party Disadvantages: precedent, coercive power, equality, reputation, forum, attitude,

disclosure

Mediation(a) Order 1A

O 1A: courts should facilitate settlement of disputes (understood to include mediation) O 1A r 4(2)(e): active case management includes encouraging the parties to use

an ADR procedure if the Court considers that appropriate… O 1A r4(2)(f): helping parties to settle the whole or part of the case PD 5.2: court will ‘encourage parties to compromise their disputes’ O 62 r5(1)(aa): court, when exercising its discretion as to costs, shall take into

account the underlying objectives of O 1A r 1; court has power to impose cost sanctions if a party refuses to attempt mediation

iRiver Hong Kong v Thakral(b) PD 31 on mediation Mediation defined as – a process whereby the parties agree to appoint a 3rd party to

assist them to settle or resolve their dispute (settlement negotiation does not count) Para 4: In exercising its discretion on costs, court takes into a/c all relevant

circumstances, include any unreasonable failure of a party to engage in mediation where this can be established by admissible materials

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Para 5: court will not make an adverse costs order for unreasonable failure of a party to engage in mediation if the miscreant party has previously engaged in mediation to ‘the minimum level of participation agreed by parties or directed by the court’ or if it has a ‘reasonable explanation for not engaging in mediation’

Part II of PD (all parties are legally represented): o Parties (or solicitors) must file Mediation Certificate (Appendix B) at the same

time as the TQ (as referred to O 25 r 1), to be signed by the solicitors and the parties, and expressly provides, (1)The solicitors have explained mediation to the party (2)The client understands what has been explained to it (3)Whether the party intends to attempt mediation or, if not, why not

o Para 10: If a party wishes to attempt mediation, should serve a mediation notice (Appendix C) on the other parties, stating(1)Rules under which the mediation will take place (2)The mediator to be appointed(3)The venue and costs of the mediation (with proposal for their payment) (4)When mediation should take place(5)The ‘minimum level of participation’ expected

o Para 11: the other party is to respond to mediation notice by way of a mediation response (Appendix D) within 14 days of receiving the former, and should state, (1)Whether the respondent agrees to mediation or, if not, why not(2)Whether the rules are agreed(3)Whether the mediator and venue are agreed (4)The ‘minimum level of participation’ (5)Whether the payment proposals are agreed

o Para 12: any issues which are not agreed are to be discussed and agreement on the same should be recorded in a mediation minute signed by parties

o Para 13: parties may ask the court to assist them in this process On the choice of mediator: Upplan Co Ltd v Li Ho Ming & Another In deciding ‘minimum level of participation: Hak Tung Alfred Tang v Bloomberg

o Para 15: mediation notice and response are to be filed at the same time as being served on the other party or parties, and any mediation minute should also be filed within 3 days of it being signed by all concerned

o Para 16-17: parties may apply for a stay of the proceedings for purpose of the mediation as one will not be granted automatically

(c) What is mediation? The mediator is completely impartial with no power over the parties. He is only the facilitator and it is the parties to express their opinions and goals

(d) Stages of a mediation Stage 1 – Selecting the mediator o Choice of mediator: consider (1) the independence of the mediator (2) no. of

mediators AND (3) background and knowledge of the mediator o Decide the time & venue of the mediation and any procedure to be adopted Stage 2 – Pre-mediation o A meeting b/w the mediator and the parties in a joint session OR the mediator

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may meet the parties individually OR there might be no meeting with telephone conversations instead

Stage 3 – Actual mediation (Phase 1) Joint session/plenary (Phase 2) Separate sessions/shuttle diplomacy (Phase 3) Joint session

(e) The lawyer’s role in mediation As a negotiator Take a pro-active approach to persuade client to take a co-operative approach (if

necessary) Ensure terms of settlement into a formal and binding contract or Court Order

(f) Costs sanction for refusal to mediate English lines authorities suggested courts have imposed cost sanctions upon

parties who have been unwilling to entertain possibility of ADRDyson v Leeds City Council: if necessary, the court will order indemnity costs or higher interest rate for parties who refused to conduct ADR. But attitude of plaintiff may justify refusal (Hurst v Leeming)Halsey v Milton Keynes: it is for the unsuccessful party to show why the successful party should be deprived of its costs for refusing to agree to ADR. In deciding whether refusal is unreasonable, the court will consider (1) the nature of the dispute; (2) the merits of the case; (3) the extent to which other methods had been attempted; (4) whether the costs of ADR would be disproportionately high; (5) whether delay would have been prejudicial; and (6) whether the ADR had a reasonable prospect of success

Hong Kong: the principles and approach is yet to be fully arguedGolden Eagle v GR Investment – did not follow Halsey, willing party does not carry any burden to show that mediation has a reasonable prospect of success o Also consider whether a successful party had refused to agree to ADR despite

court’s encouragement: Supply Chain & Logistics Technology Ltd v NEC

Procedural devices to pressurize opposing party to bring about settlement (under CJR) Pre-CJR: payment into court and Calderbank offer, adverse cost consequence for PPayment into court: an offer from D to settle P’s claim at the amount paid into courtCalderbank offer: written offer, usually marked as ‘without prejudice save as to costs’(after CJR, may still be useful before commencement of proceeding or pending appeal)These may only be invoked by D.(a) Order 22 under CJR

(1) P may make a sanctioned offer of settlement, putting D who rejects that offer at risk of paying part or all of the judgment award at an enhanced interest rate of up to 10% above judgment rate, and legal costs on indemnity basis plus enhanced interest thereon

(2) D may make a sanctioned payment or a sanctioned offer Similar to payment into court and Calderbank offer, but more severe

consequences if P cannot obtain a judgment more favourable than the sanctioned payment or offer: instead of paying the D’s costs on a party-and-party basis, now the P is at risk of paying the D’s costs on an indemnity basis plus enhanced interest, and of being disallowed part or all of the discretionary

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interest which would otherwise be awarded on the judgment award If an offer made by a D involves payment of money to the P, the offer must be

made by way of a sanctioned payment, NOT sanctioned offer (b) When and how to make sanctioned offers and payments?

A sanctioned offer/payment may be made at any time after the commencement of the proceedings but may not be made before action (O 22 rr 3(3), 5(6))

In general, should be not less than 28 days before trial, otherwise may not carry the stipulated sanctions of indemnity costs and enhanced interest

Procedures in O 22 must be followed, otherwise may not attract those consequences(1) Sanctioned Payments

May be used only by Ds, when offering a monetary settlement O 22 r 8(2): After making the payment into court, D will need to file with the

Court a Notice of Payment in the prescribed form O 22 r 9: D must serve the Notice on the P, AND the Director of Legal Aid in

legally-aided cases O 22 r 12(2): sanctioned payment regarded being made when Notice is served

(2) Sanctioned Offers Made be made either by a P (any type of claim) and a D (for offers NOT

involving payment of money) (O 22 rr 3,4) O 22 r 5: made in writing, detailed requirements set out in O 22 r 5 to be followed O 22 r 12(1): regarded as made on the date on which it is served

(c) Seek clarification of a sanctioned offer/payment O 22 r 14(1): If the terms of sanctioned offer or Notice of Payment are unclear,

receiving party have 7 days within which to seek clarification O 22 r 14(2): if the party does not provide the clarification as requested within

further 7 days, the requesting party will have a right to apply to the Court for an order requiring him to do so

(d) Procedures for accepting a sanctioned offer/payment by serving a written notice of acceptance: O 22 r 15(1) and 16(1) Leave may required depending on when it was made (1) If sanctioned offer/payment made 28 days or more before trial,

o It remain open for 28 days, capable of acceptance at any time within that period without leave: O 22 r 15(1) (accepting D’s offer), r 16(1) (P’s offer)

o Even if 28 days period for acceptance is expired, it can still be accepted without leave if parties agree on liability for costs: O 22 r 15(2)(b), r 16(2)(b)

(2) If sanctioned offer or payment is made less than 28 days before trial, o without leave, if parties agree on liability for costs: O 22 r 15(2)(a), r 16(2)(a)

(3) Where proceedings involve a claim by or on behalf of a person under disability, sanctioned offer/payment may be accepted only with leave of court: O 22 r 19

(e) Consequence of acceptance P accepting D’s sanctioned offer/payment: P entitled to his costs of proceedings

up to the date of serving notice of acceptance, unless the Court otherwise orders: O 22 r 20(1). If P has other claims which is not abandoned, liability for costs shall be decided by court unless otherwise agreed: O 22 r 22(3)(c)

D accepting P’s sanctioned offer: P entitled to his costs up to the date upon which D serves notice of acceptance, unless the Court otherwise orders O 22 r 21.

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P’s costs usually deemed to include any costs attributable to D’s counterclaim or set-off if the sanctioned offer/payment states that it takes these into a/c.

O 22 r 22(1): claim is stayed when a sanctioned offer or payment is accepted. The stay is upon the terms of the offer and either party may apply to enforce terms without the need to commence new proceedings

(f) Consequences of Non-acceptanceIf a sanctioned offer/payment is rejected, claim will proceed in the normal way to trial OR until it is eventually settledP’s non-acceptance of D’s sanctioned offer or payment : O 22 r 23 (where P fails to do better than sanctioned offer/payment)

(1) P may not be awarded all his interest on the damages (r 23(2))(2) He may have to pay all D’s costs incurred after latest day of acceptance

without leave (i.e. 28 days after offer/payment is served) (r 23(3))(3) D’s costs under (2) may be taxed on indemnity basis (r 23(4)(a)) and may carry

enhanced interest rate (not exceeding 10% above judgment rate) (r 23(2)(b))(4) These orders shall be made unless it is unjust to do so (r 23(5))

D’s non-acceptance of P’s sanctioned offer O 22 r 24 (where P does better than his sanctioned offer, or D is liable for more)

(1) P may receive enhanced interest on the whole or part of the sum for some or all period after the latest day of acceptance without leave (r 24(2))

(2) P may receive all his costs from the latest day of acceptance both on the indemnity basis (r 24(3)(a)) and with enhanced interest (r 24(3)(b))

(3) These order shall be made unless it is unjust to do so (r 24(4)) Amoi Electronics v Kin Cheung – P successfully obtained summary judgment

(for a sum above the sanctioned offer) against D, who rejected an earlier sanctioned offer. Court held D has to bear consequences of having been beaten by a sanctioned offer which it had declined to accept. Without the sanctioned offer Court would order discretionary interest at USD prime rate plus 1%. With sanctioned offer, Court awarded P interest on the sum awarded at USD prime rate plus 1% up to 28 days after the sanctioned offer was made and thereafter at 2% over judgment rate, PLUS indemnity costs (2% over judgment rate on such costs)

O 22 r 26 – any such sanctioned offer or payment is to be treated as inclusive of all interest until the last date on which it could be accepted, unless the contrary is stated: court need to take interest into a/c when deciding whether a sanctioned offer/payment has been beaten

Calculating whether a sanctioned offer/payment is beaten:Adding amount awarded at trial with amount of interest which the Court would have ordered as at the last date of acceptance, then compare it with the offer

(g) Circumstances in which it may be ‘unjust’ to apply the usual sanctions When considering so, court take into a/c all the circumstances, including

(a) Terms of sanctioned offer(b) The stage in proceedings when any sanctioned offer was made(c) The info available to the parties at the time the offer was made, and (d) The conduct of the parties with regard to giving or refusing to give info to

enable the offer to be made or evaluated O 22 r23(6), O 22 r24(5) 70

Key test is not whether unreasonable to decline offer/payment, but whether it is unjust to order the specified consequences: Matthews v Metal Improvements

Order may be declined if one party withheld information: Ford v GKR Cost sanctions only run from the date of the amendment of pleading, if the true

nature of one party’s claim only becomes apparent after that amendment (h) Costs consequence where formal requirements of new O 22 are not followed

Sanctioned offers/payments will need to comply with formal requirementsHowever, court may overlook purely technical errors, and has residual power to take non-complying offers into account when exercising its general discretion on costs

(i) Withdrawing/reducing a sanctioned offer/payment remain open for 28 days from the date it is made, unless Court gives leave to

withdraw it earlier O 22 r 7 (sanctioned offer) and O 22 r 10 (sanctioned payment)

After the 28 day period, offeror will be able to withdraw or reduce the offer or payment at any time without leave If withdrawn, it will not have the consequences (i.e. indemnity costs and

enhanced interests) set out in that Order O 22 r 7(5) (sanctioned offer) and O 22 r 10(4) (sanctioned payment) Note: even if it’s withdrawn, it is arguable that court may still take it into a/c when exercising its general discretion on costs: Trustees of Stokes Pension Fund

Recall: if it is not withdrawn, it can still be accepted providing The parties can agree on liability for costs OR Court gives leave to accept

(j) Illustration through a case study (S8, p.29)Acceptance of offer/payment => action stayed (O 22 r 22(1)), D pays P’s costs on a party to party basis up to when notice of acceptance was served (O 22 r 20(1))

Settlements by infants and mental patients Where money claimed on behalf of an infant/mental patient, court must approve any

settlement, compromise, payment or acceptance of money paid into court: O 80 r 10 If settlement reached before proceedings issued, may seek court’s approval; the

proper procedure is for P to issue an originating summons seeking court’s directions and approval of settlement (O 80 r 11)

Approval procedure: PD 18.1 Part XUsually on a common fund basis (PD 18.1 para 189)The process to be followed in seeking approval: So Long Him v Ho Kai Lun

Duty of solicitor/counsel independent of the next of friendRe YCK (mother as next friend of YCK wrongfully paid monies to “consultancy firm”)

Solicitor and counsel acting for person under disability has a duty to consider whether reasonable measures are in place to safeguard against the misuse of monies received for the benefit of that person. Instructions from the next friend cannot override the lawyers’ personal duty owed to the client, viz. the person under disability. Solicitors acting for persons under disability should realize that given the incapacity of their clients, they have to be more vigilant in ensuring that the interests of such clients are properly protected.

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In cases involving mentally incapacitated persons, should consider applying under Part II of the Mental Health Ordinance for appointment of a committee to oversee investment and disposal of the settlement sums

Agreeing settlement terms (a) Can client carry out its obligations under the settlement agreement?

Vital to ensure client can carry out its obligations Kai Fung Engineering Co – P failed to comply with its undertaking in the

settlement agreement to deliver-up goods , thus unable to enforce judgment on D Ng Yiu Ming v Leung Yee: P denied enforcement

(b) Additional claims b/w parties Johnson v Gore Wood & Co

If a claim was not raised in the settled proceedings, but could and should have been so raised, any fresh action should be struck out as an abuse of processAdvice: make sure clients exhausted all possible claims he intends to bring

(c) Effect of settlement on claims against non-parties A claims and settles with B, can A claims against C in respect of the same loss?

Depends on whether the settlement sum received by A is intended to be in full satisfaction of the claim/represent the full measure of A’s lossIf it is so intended, A cannot claim against C in respect of the same damage, because it has not suffered any loss

A question of fact of a given case, and terms of settlement agreement If A’s settlement with B is not in full satisfaction of A’s claim, and A then has a

continuing claim against C, C can still claim a contribution against B For B to protect itself against this type of 3rd party claim re the same cause of

action, B should: Ensure settlement agreement specifies that the settlement sum is in full

satisfaction of A’s claim (but this by itself may not be sufficient) Obtain an undertaking from A not to pursue any claim against C re the same

subject matter OR Obtain an indemnity from A against any liability attaching to B following any

claim for contribution (d) Other terms

Consider with client: Whether to include confidentiality clause Who should bear the costs of the proceedings to date, incl how previous costs

orders on interlocutory applications should be dealt with When and how any payment out of court should be made

Documenting settlements Read Green v Rozen (five methods of disposing of an action when settlement arrived at)(a) Settlement agreement (without court order, should avoid doing so?)

Used when the case is settled without formal proceedings commenced If the compromise is given in return for a promise by the other party to fulfill its

obligations under the settlement agreement, the original cause of action will be 72

discharged [G v R]. The settlement enforced by an action for breach of the Settlement Agreement (a promise to perform some acts)

If the compromise is given in return for actual performance of acts under the settlement agreement, original cause of action will not be discharged until those acts are performed (innocent party can either sue on the settlement agreement or continue with the original cause of action): Lam Fung Ying v Ho Tung Singo Whether a settlement has effectively and finally disposed of the original cause

of action depends on the intent and effect of the settlemento If the settlement is reached in return for a promise to pay or to do an act,

there is an accord and satisfaction. On the other hand, if the settlement is reached in return for the performance of an act or conditional or dependent upon the doing of an act, then there is merely an accord executory;(i.e. when is settlement reached? upon promise or upon actual performance?)

It may be difficult to enforce the settlement agreement where there are disputes as to the existence/validity of that agreement: Lam Fung Yingo “If one party disputes that a binding agreement has been made to compromise

or settle the pending proceedings, or denies the making of such an agreement, or repudiates the agreement, the other party is entitled to apply to the Court to stay all further proceedings and to enforce the agreed terms. The ground of the application is the making of the compromise or settlement agreements and the court may entertain the application in the pending proceedings themselves; or on the application of a party, the court may direct an issue to be tried as to whether a binding agreement or settlement has been concluded between the parties, and, if satisfied that it has, the court may stay all further proceedings and enforce the agreed terms.”

o Where a party litigant is faced with making a choice between two different courses of action, and by words or conduct represents to the other party his election in favour of one course, with the result that the other party conducts himself in reliance on that representation, the first party is estopped from resorting afterwards to the other course.

(b) Consent judgment in favor of P Used either in place of, or in addition to, a settlement agreement Consent judgment will be entered for P, either

for the settlement amount, OR for the full amount of P’s claim (plus costs) with a stay of proceedings for so

long as D complies with the terms of the settlement (e.g. by timely repayments) Advantage: if D defaults, P can execute and enforce the judgment award without

bringing separate proceedings (c) Consent order for dismissal/discontinuance/stay of original action

Dismissal: P cannot pursue same cause of action in fresh proceedings, even if D defaults on the settlement terms. P can only sue for breach of settlement agreement

Discontinuance/withdrawal: the original action ends. BUT, a fresh action may be brought on the same cause of action, provided the settlement agreement itself does not have the effect of discharging the cause of action

Stay: original action is still alive, and stay may be lifted by the court in

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exceptional circumstances (d) Tomlin Order

A form of consent order: O 42 r 5A(2)(b)(iii)“It is ordered that all further proceedings in this action be stayed upon the terms of the settlement agreed between the parties set out in the schedule hereto [or a letter dated xxxx] except for the purpose of carrying this Order and the said terms into effect for which purpose the said parties are to be at liberty to apply”

On default, innocent party need not bring a new action, BUT must apply to court in the original action to enforce the agreed terms

It is useful where the agreed terms are more complex than just payment of money, those terms go beyond ambit of original dispute (Phillips(EF) v Clarkes)

Agreed terms, but not all settlement terms (Horizon Technologies v Lucky), are set out in the schedule to Tomlin Order (e.g. in another letter if for confidentiality)

Court may refuse to enforce terms in exceptional circumstances(e.g. if unconscionable: Green v Rozen; Tsang Iu Hung)

(e) Is leave of Court required to obtain a consent judgment/order i.e. (b) and (c)? NO leave required if terms of settlement fall within O 42 r 5A BUT, if terms of settlement falls outside O 42 r 5A, parties must apply by consent

summons for court’s approval O 42 r 5A(2) This rule applies to any judgment or order which consists of one or more of the following-(a) any judgment or order for –

(i) the payment of a liquidated sum, or damages to be assessed, or the value of goods to be assessed;

(ii) the delivery up of goods, with or without the option of paying the value of the goods to be assessed, or the agreed value;

(iii) the possession of land where the claim does not relate to a dwelling-house;(b) any order for-

(i) the dismissal, discontinuance or withdrawal of any proceedings, wholly or in part;(ii) the stay of proceedings, either unconditionally or upon conditions as to the

payment of money;(iii) the stay of proceedings upon terms which are scheduled to the order but

which are not otherwise part of it (a "Tomlin order");(iv) the stay of enforcement of a judgment, either unconditionally or upon condition

that the money due under judgment is paid by instalments specified in the order;(v) the setting aside of a judgment in default;(vi) the transfer of any proceedings to the District Court or the Lands Tribunal;(vii) the payment out of money in court;(viii) the discharge from liability of any party;(ix) the payment, taxation or waiver of costs, or such other provision for costs as

may be agreed;(c) any order, to be included in a judgment or order to which the preceding sub-

paragraphs apply, for–(i) the extension of the period required for the service or filing of any pleading or

other document;(ii) the withdrawal of the record;

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(iii) liberty to apply, or to restore.

Notifying court of settlementIf case has been set down for trial, inform Court Registry or Judges’ clerk of settlement or likely settlement: O 34 r8(2) and O 34 r8(3)

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Civil ProcedureSeminar 9

Enforcement of Judgments

Introduction Date from which judgment takes effect When it is pronounced: O 42 r 3(3) Judgment generally not enforced until formally drawn up and entered (O 46 r 6(4)(a)(i))

Court has power to order immediate execution at the time of giving judgment (O 45 r 14)

Service of the judgment Generally not a pre-req to enforcement, EXCEPT for mandatory orders O 45 r 7: order be personally served on the judgment debtor where enforcement is

sought by writ of sequestration or order of committal

Limitation period S.4(4) LO – the 12-year limitation period only applies to an action on the judgment,

NOT an application to enforce a judgment by execution: National Westminster BankHowever, it further provides that no arrears of interest is recovered after 6 years due

BUT if 6 or more years have elapsed since the date of the judgment, leave of court is required to issue a writ of execution: O 46 r 2(1)(a)

Practical advice: try to enforce the judgment a.s.a.p. and in any event within 6 years

Determining the available method of Enforcement O 45(a) Judgment or order for the payment of money (except for payment into court)(b) Judgment or order for the payment of money into court(c) Judgment for the possession of land(d) Judgment for delivery of goods(e) Judgment to do any act within a specified time or abstain from doing any act

Judgment or order for the payment of money (except for payment into court) Governed by O 45 r 1(1) It may be enforced by:

a) A writ of fiery faciasb) Garnishee proceedingsc) A charging orderd) the appointment of a receivere) in the case of judgment to do any act within a specified time or abstain from doing

any act, by an order for committal and writ of sequestration (b) Judgment or order for the payment of money into court Governed by O 45 r 1(2) It may be enforced by:

a) The appointment of a receiverb) In the case of a Judgment to do any act within a specified time or abstain from

doing any act, by an order for committal and a writ of sequestration 76

Judgment for possession of land Governed by O 45 r 3 It may be enforced by:

a) A writ of possessionb) In the case of a Judgment to do any act within a specified time or abstain from

doing any act, by an order for committal and a writ of sequestration Judgment for the delivery of goods O 45 r 4(1) – a judgment that does not give the D the option of paying the assessed

value of the goods may be enforced by: a) A writ of specific delivery to recover the goodsb) In the case of 2(e) above, by an order for committal or writ of sequestration

O 45 r 4(2) - a judgment that gives the D the option of paying the assessed value of the goods may be enforced by: a) A writ of delivery to recover the goods or their assessed value b) If the court orders upon application by summons, by writ of specific delivery c) In the case of 2(e) above, by writ of sequestration

Judgment to do or abstain from doing act O 45 r 5 – may be enforced by an order for committal or by writ of sequestration, but

only with the leave of the court **Note also O 81 for enforcement of a judgment obtained against a partnership firm vis-à-vis individual partners or their assets (covered in earlier Seminar on service)

Provisional Remedies Post-judgment Mareva Injunction CFI has the power to grant an injunction in all cases where it appears to the court just

and convenient to do so: s.21L(1) HCO But such power is more limited in the DC: s 52(1) DCO MI may be granted to a judgment creditor after he has obtained a judgment, provided

there is real risk that the judgment debtor may dispose of his assets to avoid execution e.g. Stewart Chartering Ltd v C & O Managements SA

Prohibition Order under O 44A(a) Principles

An order to prohibit debtor from leaving HK: (s.21B(1) HCO, s.52E(1) DCO) o Court has jurisdiction to make an order prohibiting a person from leaving Hong

Kong (a prohibition order) to facilitate the enforcement, securing or pursuance of- (a) a judgment against that person for the payment of a specified sum of money; (b) a judgment or order against that person-

(i) for the payment of an amount to be assessed; or(ii) requiring him to deliver any property or perform any other act…

o s 21B(2): the Court shall not make an order under subsection (1)(b) unless it is satisfied that there is probable cause for believing that–(a) the person against whom the order is sought is about to leave Hong Kong; and(b) by reason of paragraph (a), satisfaction of the judgment or order is likely to be obstructed or delayed.HBZ Finance v Glory Products: the leave needs not be permanent

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o a prohibition order will only be granted where there is some evidence that enforcement of the judgment will be impeded in some significant way if no prohibition order were made: AVCO v Topma Electronics

(b) ProcedureApplications made ex parte by affidavit (continuing duty of f&f disclosure: Auto Treasure)The order must be in the prescribed form in App A, Form 106Granted by a Master with or without conditions: O 32 r 11(1)(b)It may be a condition that the order shall have no effect if the judgment debtor satisfies the judgment or provides such security as the court orders (s.21B(4)(b) HCO)

(c) Service and duration of PO s.21B(6): a sealed copy of the order must be served on the Director of Immigration (to place D on “stop list”), the Commissioner of Police and the Judgment debtor)Practical arrangement: Law Society Circular 98-185(PA) and 00-241(PA)Duration: generally one month, renewable up to 3 months s.21B(5) HCO, s.52B(5) DCO May obtain fresh PO after 3 months: HKICB v Wong Siu Leung Tammy

(d) Contravention by leaving HK constitutes a contempt: s.21B(7) HCO, s.52E(7) DCO Sino Wood Investment Ltd v Wong Kam Yin: leaving HK is a continuum

(e) Discharge of orderdischarged by consent upon satisfaction of judgment debt dueO 44A r 4 – application for the discharge of the order

Oral examination of the judgment debtor (O 48, O 49B)(a) Introduction

Where debtor is a body corporate, application must be made under O 48 Purpose of such orders: to enable the judgment creditor to come to an informed decision as to how best to enforce the judgment which he has obtained

(b) Difference b/w O 48 and O 49 (See S8, p.6 – 7)(c) Procedure

o an order for oral exam is made ex parte by affidavito A sealed copy of order, indorsed with the appropriate penal notice and

appointment time is served on the JD (see form of penal notice in O 45 r 7(4))o If he fails to attend the exam, this is contempt, punishable by order of committal o Before oral exam, court will usually hold an initial hearing (call-over) where it

will give standard directions and fix a date for examinationo It may take a couple of weeks before a call-over hearing and another couple of

months before a substantive exam hearing. It is also a very costly exercise(d) Nature and scope of exam

Order 48 O 48 r 1(1) provides that debtor may be examined on: i) whether any, and if so, what debts are owing to the debtor, and ii) whether the debtor has any, and if so, what other property or means to satisfy

the judgment “means” denotes not only existing property/assets, but also resources or sources whereby assets/property may become available for satisfaction of the judgment debt.

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It connotes NOT other possible methods by which the JD may obtain satisfaction of the JD, but the means of the debtor which are the subject of exam (McCormack)O 48 is a cross-examination and that of the severest kind: Republic Costa Rica v Stromsberg The court may order production of books/documents in the possession of the debtor relevant to the 2 specific matters detailed above, but not books that belong to other legal entities: Chung Fai Engineering v Maxwell EngineeringOrder 49BO 49B r 1A(2): a specific obligation on the debtor to “make a full disclosure of all his assets, liabilities, income & expenditure and of the disposal of any assets or income and shall, subject to the directions of the Court, answer all questions put to him”**In practice, an oral exam of a JD (other than of an officer of a corporate debtor, which can only be made under O 48) will be sought under BOTH O 48 and O 49B so there’s no need to make any distinction b/w the two Orders.Pursuant to O 49B(1) the debtor may be arrested to secure his attendance at the examination: r 1(1)(b);(2) prior to the examination, the court may make a prohibition order, prohibiting the

debtor from leaving Hong Kong: r 1(2);(3) the debtor may be arrested if he fails to attend the examination: r 1(3);(4) if the hearing is adjourned, the court has the power to order the imprisonment of

the debtor until the resumed hearing: r 1A(3)(b); and(5) if the hearing is adjourned, the court may make a prohibition order: r 1A(3)(a).

(e) Court’s powers following an examination (under either O 48 or 49B) ImprisonmentO 49B r1B(1): court may order the imprisonment of the debtor for up to 3 months if satisfied that the judgment creditor has established that the debtor:i) is able to satisfy the judgment in whole or in part ii) has disposed of assets with a view to avoiding satisfaction of the judgment debt oriii) has willfully failed to make a full disclosure of assets or to answer any questions

put during the examination. Court must be satisfied beyond reasonable doubt that one of the grounds

specified above has been established Bank of India v Murjani Court’s power given by this rule DOES NOT apply to a director or other officer

of the JD, where JD is a company: Hua Chiao v Alpha PlusPayment by instalments O 49B r 1B(2): if after completion of exam, court is satisfied that debtor is able or will be able to satisfy the judgment debt in whole/in part by instalments, it may order the JD to be paid by instalments, or in such manner as court thinks fit. If debtor defaults in payment, the judgment creditor may apply, on 2 clear days

notice, for an order for the imprisonment of the debtor: O 49B r1B(3)(a)

Writs of Execution 1. writ of fieri facias O 472. writ of possession (for land) O 45 r 33. writ of delivery (of goods) O 45 r 44. writ of sequestration and committal proceedings O 45 r 5, O 46 r 5 and O 52writs in aid of execution

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1. writ of assistance2. writ of restitution Writ of Fieri Facias (O 47)(a) Introduction

Common means of enforcing an order for the payment of moneyIt requires the bailiff to seize such of the goods, chattels and other property of the debtor as are reasonably sufficient to satisfy the judgment debt together with interest and the costs of the executionIf debtors fail to pay, goods will be sold, and proceeds will go to the judgment creditor after deducting the expenses of the execution (surplus returned to debtor)

(b) Proceduremust be in one of the forms prescribed by the Rules (App A Forms 53-54, 56-57 and 63) The writ is issued on being sealed by the Registrar (see O 46 r 6(1)).Upon issue, the creditor will collect the writ and deliver the same to the Chief Bailiff.

(c) What property is liable to be attached and sold? (see O 47 r 7)s.21D(1) HCO: “land, goods, money, bank notes, checks, bills of exchange, promissory notes, Government stocks, bonds or other securities for money, debts, shares in the capital or joint stock of any co or corporation, and all other property whatsoever, whether movable or immovable, belonging to the JD and whether the same is held in his own name or by another person in trust for him or his own behalf.” Exempted items s.21D(1) HCO (s.68B DCO): “the tools (if any) of any trade of the JD and the necessary wearing apparel and bedding of him and his family dependent on and residing with him, to a value, inclusive of tools and apparel and beeding, not exceeding $10,000 in the whole”

(d) Third party interests and relief by way of interpleader under O 17Where a 3rd party owner makes a claim to the goods or the proceeds of sale, bailiff may apply under O 17 r 1 to the court for relief by interpleader; court will determine who has title to the property, or who is entitled to the proceeds of sale

(e) Stay of execution by writ of fiery facias under O 47 r 1(1)Where a judgment/order is given/made for payment by anyone of money, and the court is satisfied, on an application at the time of the judgment/order, or any time thereafter, by the JD or other party liable to execution that the applicant is unable from any cause to pay the money, then court may order stay of execution of the judgment or order by writ of fiery facias either absolutely or for such period and subject to such conditions as the court thinks fit. Such order may be varied/revoked by a sequent order

Writ of possession (O 45 r 3)(a) Procedure

Leave of court required except: (i) Where the judgment or order is mortgagee action to which O 88 applies, and (ii) Where the order for possession is obtained against trespassers under O 113 Application for leave to be made ex parte by affidavit (O 47 r3(3), PD16.4)Affidavit must show:

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(i) Notice of the proceedings in both Chinese and English addressed to all persons in actual occupation of the land of the land has been posted for 3 successive days upon the main door of the premises, and

(ii) A minimum of 4 clear days has elapsed from the 3rd day the notice was postedIt may be combined with writ of fi-fa if the judgment also involves the payment of money and valuable properties belonging to JD may be found inside the premises

(b) Delivery of possession Carried out by the bailiff who is under a duty to deliver complete and vacant possession of the premises to the judgment creditor

Writ of delivery of goods (O 45 r 4)Two types of judgment for the delivery of goods:(a) Judgment for the delivery of goods which gives the debtor the option of paying the

assessed value of the goods; or(b) Judgment for the delivery of goods which does not give the debtor the option of

paying the assessed value of the goods The type of remedy will depend on the form in which judgment is made.For (a), (i) a writ of delivery to recover the goods or their assessed value; or(ii) by a writ of specific delivery, if the court so orders For (b), Judgment may only be enforced by a writ of specific delivery(If given the option, may need to first assess the value under O 37)

Writ of sequestration and Committal Proceedings (O 45 r 5, O 46 r 5, O 52)(a) Nature and Scope

Sequestration is directed at the contemnor’s assetsCommittal directed at the contemnor’s person (by way of committal proceedings)O 45 r 5(1), 2 categories of judgment writ of sequestration and/or committal proceedings: (a) Those that direct JD to do an act within a specified time, whether expressly specified

by the original judgment, or by a subsequent order (‘a mandatory order’), and(b) Those that command JD to abstain from doing an act (a ‘prohibitory order’) Mens rea not required for civil contempt, but must prove: a) the alleged contemnor knew the facts which give rise to the contempt and b) the disobedience is ‘more than casual or accidental and unintentional’c) No need to prove a deliberate intent to breach the order or that the contemnor

appreciated that his conduct would constitute a breach (b) Contemnor being a corporation

both body corporate and its officer may be held to be in contempt. A director of a company can be liable for contempt committed by company in 2 ways, (1) under O 45 r 5(1) - no need for any moral blame (2) a person aiding and abetting the contempt – personal misconduct must be proved

Fonfair v UDL: director duty not absolute, but he has “to find out exactly what have to be done by the company to comply with the order; (b) to see that such things are done properly and in accordance with the time set out in the order, whether by delegating the task to other employees of the company or by themselves personally; and (c) in the case of delegation, to ensure that the

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employees understand the requirements of the order and do the things properly within the time set out in the order; and to supervise the staff to ensure that they did carry out their instructions properly and timely.” per Deputy Judge Poon

Hence, if the contemnor is a body corporate, the contempt may be punished by:(1) sequestration against the property of the company;(2) sequestration against the property of a director or other officer of the company;(3) committal against the company (but no imprisonment can be imposed);(4) committal against a director or other officer of the company.

(c) FormalitiesProcedural requirements laid down in O 45 r 7 must first be complied with,(1) the original judgment or order must have been endorsed with a penal notice,

setting out the consequences of a failure to obey the order. For the form of penal notice, see Order 45 rule 7(4)

(2) the order must have been served personally on the judgment debtor. Note that in the case of prohibitory orders only, the requirement for personal service is slightly relaxed as O 45 r 7(6) provides that such orders may still be enforced in the absence of personal service if the court is satisfied that, pending such service, the debtor had notice of the order either:a) by being present when the order was made; orb) by being notified of the terms of the order on telephone, telegram or otherwiseCitybase Property Management Ltd v Kam Kyun Tak

In order for the court to exercise its discretion under O 45 r 7(6), not only was it essential for the contemnor to have been notified of the terms of the order but also of the consequences of his failure to comply with the order

O 45 r 7(7): the court has express power to dispense with personal service if it thinks it just to do so. The power is exercisable to both mandatory and prohibitory orders, see Excel Noble Development Ltd v Wah Nam Group Ltd

(d) Procedure In the case of a writ of sequestration i) One must apply to a judge by motion for leave: O 45 r 5(1)(b) and O 46 r 5(1)ii) The notice of motion must state the grounds of application and be accompanied

by a copy of the supporting affidavit: O 46 r 5(2)iii) The notice of motion and affidavit in support must be served personally on the

debtor, but the court may dispense with such a service: O 46 r 5(2),(3)iv) The application is normally heard in open court: O 46 r 5(4)

In the case of an order for committal i) Application for leave must be made ex parte to a judge, and must be supported

by a statement setting out the contemnor’s particulars and the grounds, with facts verified by an affidavit: O 52 r 2(2)

ii) Application for leave usually determined on papers without hearing: O 52 r 2(4)iii) After leave is granted, the application for an order of committal shall be made by

motion to a judge. The notice of motion, accompanied by the earlier statement and affidavit in support for the leave application, must be served personally on the debtor, but the court may dispense with such a service: O 52 r 3

iv) The application is normally heard in open court: O 52 r 6(e) Form and effect of the writ of sequestration

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The writ is in the form of App A, Form 67Different from other writs of execution, it is not addressed to the bailiff but, instead, to at

least four commissioners (called sequestrators) who are nominated by the judgment creditor. On receipt of the writ, the sequestrators’ duty is to enter upon the contemnor’s property and to take possession of all his real and personal property and to detain the same until the contemnor has purged his contempt.

Property sequestered cannot be sold without leave of the court.

G arnishee Proceedings (s.21 HCO, O 49) Introduction

Equitable remedy: a process by which a judgment for the payment of money (other than a judgment for the payment of money into court) may be enforced by the attachment of debts due or accruing due to the judgment debtor

The court may order a 3rd person (the ‘garnishee’) to pay directly to the judgment creditor (the ‘garnishor’) the debt that the garnishee owes to the judgment debtor.

Conditions for Instituting Garnishee Proceedings O 49 r 1, garnishee proceedings are available if:

a) The garnishor has obtained a judgment for the payment of money amounting to at least $1,000 against the judgment debtor;

b) there is a debt due or accruing due from the garnishee to the judgment debtor, andc) the garnishee is within the jurisdiction

Source of funds (a) Bank accounts

JD ’s account with a bank = most common target for garnishee proceedingsBUT, garnishee order is subject to the bank’s right of set off against any liability owed

by judgment debtor to the bankGarnishee order will only attach the credit balance in the debtor’s account at the time

of service of the order nisi, so if monies are paid in after this date, a further order is required to attach such monies: Heppenstall v Jackson

s21(1) HCO: a judgment creditor may attach funds in deposit accounts by way of garnishee proceedings (Panyu Chemicals v Sun Wai Man)

Account held jointly by JD with another person cannot be attached: Hirschorn v Evans (b) Foreign Debts

Court should not generally make a garnishee order in relation to a foreign debtSociete Eram: possible in theory but cannot imagine how it can be shown in practice(c) Debts expressly exempted from attachment

Unable to take garnishee proceedings if the debt is one that is expressly exempted from attachment by virtue of specific legislative provisions to that effect.

s.66 Employment Ordinance - prohibits attachment of wages due to employees.s.12 Pensions Ordinance - a pension, gratuity or other allowance is not liable to

attachment unless the debt is one that is owed to the Government Procedure

Two stages: (1) application for an order nisi or interim order; (2) an inter-partes hearing where the court determines whether or not to make the order absolute(1) Application for order nisi O 49 r 2: application for a garnishee order nisi is made ex parte by affidavit:

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a) state the name and last known address of the judgment debtor;b) identify the judgment to be enforced and the amount unpaid at the time of the

application;c) state that to the best of the deponent’s information and belief, the garnishee is

within the jurisdiction and is indebted to the judgment debtor, giving the sources of information and belief; and

d) (where the garnishee is a bank having more than one place of business) state the name and address of the branch at which the debtor’s account is believed to be held, or that this information is unknown.

The affidavit + draft order are filed in the Registry and placed before a MasterIf the Master is satisfied, he will grant a garnishee order nisi, specifying a time and

place for further consideration of the matter and, in the meantime, attaching the debt specified in the order.

(2) Service of order nisiO 49 r 3(1): unless the court otherwise directs, the order nisi must be served on the

garnishee personally at least 15 days before the date appointed for further consideration of the matter, and on the debtor at least 7 days after order has been served on the garnishee and at least 7 days before inter-partes hearing.

After order nisi is served, the order charges or freezes the debt, preventing the garnishee from making payment of the debt to JD or to any other person

(3) Order absolute After further consideration, if the garnishee disputes liability , the court may summarily

determine whether the order should be made absolute, or, in the case of a substantial dispute, the court may give directions that the matter at issue between the parties be tried, see O 49 r 5.

Discretionary power to make order absoluteequitable remedy: the court may decline to make the order absolute where it would result

in injustice or prejudice to some person other than the judgment debtorRooke v HV Construction Services Ltd

issue: whether any reasonable ground why it should not be made absoluteBurden is on JD to show why the orders nisi should not be made absolute

Court will decline to make the order absolute where JD is insolvent or likely to become insolvent: Chellic Indstries v Datacom Wire and Cable Co Ltd (HK)

Effect of the garnishee orderGarnishee order = proprietary remedy which operates by way of attachment against the

property of the judgment debtor. It gives rise to an equitable charge over the third party debt in favor of the judgment creditor: Karaha Bodas v Pertamina (No 4)

Once order is absolute, the garnishee becomes liable to pay to the judgment creditor the amount due from him to the judgment debtor, or as much as may be sufficient to pay the judgment debt and the costs of the garnishee proceedings: O 49 r 1(1).

If the garnishee fails to comply with the order, payment may be enforced in the same manner as any other order for the payment of money O 49 r 4(2).

Charging Orders (s.20(1) HCO, O 50 RHC) Introduction

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s.20(1) HCO: court has the power to impose, for the purpose of enforcing a judgment for a sum of money, a charge upon certain specified property of the judgment debtor for securing the payment of any money due under such judgment .

(s.52A DCO for District Court) What may be charged

Property which may be charged is specified in s.20A(2)(a)-(c) HCO and includes:(a) land; (b) securities; (c) funds in courtA charge may be imposed on any interest in the property, even if the debtor holds the

property jointly with another. A charge may only be imposed, however, where the property to be charged is beneficially owned by the judgment debtor.

Ho King Yim v Lan King Mo: the Vendor’s interest after the signing of the sale and purchase agreement but before assignment (still retain beneficial interest).

Ko Sha Lam v Kei FongProblematic: case of matrimonial home registered in the joint names of the debtor and

his/her spouse. Court may need to deduce the couples’ intention from the available evidence before the court

Bank of China (Hong Kong) Ltd v Kanishi (Far East) LtdWhere the property in question is already subject to a prior equitable charge so that the

judgment debtor only holds the equity of redemption, this is still an interest capable of being charged

Procedure2-stage process

(a) Application for order nisi (O 50 r 1(3)(a)-(d))(1) Apply for a charging order nisi ex parte by affidavit: O 50 r 1(3)(a)-(d):

(i) identify the judgment or order sought to be enforced(ii) state the name of the judgment debtor and of any other creditor of his

whom the applicant can identify(iii) give full particulars of the interest on which it is sought to impose

a charge; and(iv)verify that such interest is owned beneficially by the debtor

(2) If the Master is satisfied that a sufficient cause for the order is made on the affidavit, he will grant a charging order nisi , specifying a time and date for the inter partes hearing and, imposing a charge on the property specified in the order until that date. See App A, Form 75.

(b) Service of order nisi (O 50 r 2)Copies of the order and the affidavit in support must be served on JD at least 7 days

before the date of the inter partes hearing : O 50 r 2(1)(a),(3)For requirements as to service where the order relates to securities (other than

securities in court) and to funds in court, see O 50 r 2(1)(b) and (c): if a charging order nisi is obtained over JD’s shareholding in a limited company incorporated in Hong Kong, the order nisi shall also be served on that limited company, in which case until such order is discharged or made absolute, the company shall not permit any transfer of those shares specified in the order or pay any dividend except with the authority of the court (see O 50 r 5(2))

Discretionary power to make order absolutes.20(3) HCO: court should consider all the circumstances of the case, in particular:

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a) the personal circumstances of the debtor, andb) whether any other creditor of the debtor would be likely to be unduly prejudiced

by the making of the order Burden is on JD to show why the order nisi should not be made absolute.

Court will decline to make the order absolute where the debtor is or is likely to become insolvent and the order absolute would have the effect of giving the judgment creditor priority over the debtor’s other unsecured creditors (Wardley v Aik San)

Court may refuse to make the order absolute if there is over-security => debtor to prove with sufficient evidence: Chan Miu Cheung v Prague Enterprises Ltd

The fact that the judgment debtor only holds a negative equity in the asset to be charged is not a factor to be taken into consideration: Ip Hon Nam v Chan Moon Kau

The charging order absoluteOnce made absolute, the charging order must be in the prescribed form: App A, Form 76The charging order absolute will secure not only the judgment debt but also interest

payable on the judgment debt: Ezekiel v Orakps.20B(3) HCO: a charge imposed by a charging order shall have the like effect and shall be

enforceable in the same manner as an equitable charge created by the debtor by writing under his hand => creditor may enforce the order by applying to the court for an order for the sale of the charged property or by appointing a receiver(a) Effect of charging order on land

s.20B(2) HCO: LRO applies in relation to charging orders as it applies in relation to other orders or writs issued or made for the purpose of enforcing judgments.

If the charging order relates to land, it should be registered at the Lands Registry.A charging order takes effect, for the purposes of priority, from the day after the date

of its registration.e.g. where A obtains a charging order on 5 May but registers it on 3 June and B obtains

a charging order on 19 May but registers it on 26 May, B’s charging order will take priority over A’s charging order since it was registered first.

(b) Effect of charging order in relation to securities out of courtIf court makes the charging order absolute, a copy of the order including a stop notice (see

below) must be served on the person or body specified in O 50 r 2(1)(b) as may be appropriate, see O 50 r 5(3 ) , i.e. company, Registrar or Unit Trust Registrar.

Timmar Co Ltd v Erwin Hardy Corpn Ltdthe court has the power to make an order for the sale of shares in a private limited

company although they do not appear in the list of items liable to attachment and sale set out in s 21D(1) HCO

Enforcement by SaleIn order to obtain an order for the sale of the charged property, the judgment creditor must

commence separate proceedings. These proceedings are commenced by originating summons, supported by an affidavit. O 88 governs the proceedings.

Appoint of Receiver by way of Equitable Execution (s.21L(1) HCO, O 51)It was used to assist a judgment creditor in enforcing a money judgment where the debtor

had interests in property that could not be reached by the common law writs of execution.

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s 21L(1) HCO: a receiver may be appointed in any case where it appears just or convenient to do so. (s.52B(5) DCO for District Court)

The jurisdiction to appoint a receiver is flexible and developing as it shares the same source with Mareva injunctions: Soinco SACI v Novokuznetsk

Thus, a receiver may be appointed in respect of a debt which will become due to the judgment debtor in future: Soinco and Pertamina (No. 3)

Procedure The procedure for the appointment of a receiver is governed by O30. The application is

made, without leave, by summons to a Master or, upon motion: O 30 r 1(1) Role of Receiver

Main role: to apply the income or monies received in or towards satisfaction of the judgment debt.

A receiver will be entitled to such proper remuneration as may be authorised by the court, which may be fixed by reference to a scale fee or appropriate rate of professional charges, see O 30 r 3.

A receiver must submit accounts to such parties at such intervals as the court may direct: see O 30 r 5(1).

Note: this procedure is a very costly exercise and so should not be taken lightly.

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Case Summary for Seminar NineBloomsbury International v Nouvelle (nature and scope of oral examination)

The purpose is “to enable a judgment creditor to come to an informed decision as to how best to enforce the judgment which he has obtained”Rule 1(1)(a) allows a debtor to be examined on “what debts are owing”. That plainly means claim for liquidated sums which are presently due and owing from others.Rule 1(1)(b), on the other hand, refers to “any and, if so, what other property or means of satisfying the judgment or order”. The second limb is broadly worded. I do not see why the expression “property” should be read narrowly as excluding claims for unliquidated damages or for restitution of property of whatever nature. Such claims would be choses in action and, although intangible, would still constitute “property” in law.The word “means” must refer to something more than just property rights. Creditor must be entitled to examine whether a debtor has “any means” to satisfy the judgment debt.McCormick: the term “means” of its very nature denotes not only existing property or assets but also resources or sources whereby assets or property may become available for satisfaction of the judgment debt. It however does not denote other possible methods by which the judgment creditor may obtain satisfaction of the debt. It is the means of the debtor which are the subject of the examination.Conclusion Nouvelle’s existing contractual rights against third parties constitute property (in

legal terms) or assets (in economic terms) belonging to Nouvelle. Those rights are within the ambit of “property” or “means” in Order 48

Order 48 concerns discovery by a debtor of his means and property. Order 48 does not authorize pre-trial discovery to enable a creditor to assess the prospects of personal actions brought by him against others

Order 48 examinations should not be confined to what directors learned or know in their capacity as officers of one company as opposed to another in a group

Chung Fai v Maxwell (2001, Sakhrani J)JD is a named “Chung Fai Engineering Company”. The Master ordered the directors to supply accounts of “Chung Fai Engineering Co. Ltd.”, which is not a party to the proceedings. CA held that parties cannot be ordered to supply or produce documents which belong not to them or to the judgment debtor but to another separate legal entity.

Chung Fai v Maxwell (2003, Burrell J)The court found no “debt” due from the garnishee (Chung Fai Engineering Co Ltd) to the judgment debtor (Chung Fai Engineering Company)If it is not a debt it will not do. It must be something which the law recognizes as a debtMaxwell’s own case does not demonstrate that any debt, within the meaning of Order 49 rule 1, is due to the judgment debtor

Kao, Lee & Yip v Donald Koo (requirement of civil contempt)(1) There is a distinction to be drawn between civil contempt and criminal contempt

in relation to the mental element that is required; and(2) That in civil contempt, liability is strict in the sense that an intention to interfere

with or impede the administration of justice is not required

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Citybase: proof of an intention to disobey the order is not required. All that has to be shown is that the alleged contemnor knew the facts which gave rise to the contempt and that the conduct was not accidentalSpectravest v Apernit: it is not necessary to prove that the alleged contemnor appreciated that his conduct would constitute a breach of the order. Moreover, it is also well settled that the fact that the act or omission is bona fide and based on legal advice is not a defenceRejected D’s argument that a deliberate intention to breach the order must be shownIn this case, the fact that some files are missing, prima facie, must be evidence of non-compliance. Although it is for P to prove its case beyond reasonable doubt, once it has shown that there had been a breach of the order, it falls to D to explain why that is not so by showing that their loss was “casual or accidental and unintentional”

Excel Noble v Wah Nam (power to dispense with personal service/penal notice)The case of P is that the contemnor is liable under O 45 r 5 as a director, but not on the ground that he aided and abetted the company in breaching the injunction.The penal notice was served on the contemnor in an in appropriate form, but the court below dispensed with service under O 45 r 7(7). This appeal concerns majorly with whether an order should have been made to dispense with service.CA’s reasoningIn relation to mandatory injunctions,(1) The officer must be fully aware of the terms of the order with which the company

must comply;(2) The officer must have that knowledge at a time when he can use his position as an

officer to secure compliance; and(3) The officer should be aware that, if he does not so use his position, steps may be

taken against him personally to enforce complianceIn relation to prohibitory injunctions,(1) Court has power to enforce an injunction notwithstanding absence of service of a

copy of the order provided the person served has notice of that order, either because he was present when the order was made or because he was otherwise notified of the terms of the order

Critical in this case is that a copy of the order, with a form of penal notice, was put through the letterbox of the contemnor’s residence. It would be sufficient to constitute service in respect of a writ, and sufficient in the circumstances of this case to permit the court to exercise its discretion to make an order dispensing with service.

Citybase v Kam Kyun TakWhether D knowingly breached the order, and whether D is in contempt of courtBefore considering whether there is a contempt, the court must be satisfied that:(1) The relevant order, together with an appropriate penal notice, must generally

have been personally served on the alleged contemnor: O 45 r 7(2)(a),(4)Relaxed for prohibitory order: O 45 r 7(6), but the court retains discretion

(2) The relevant order must also contain, as I have said, a penal notice. Where there has been a failure in this regard, the court nevertheless has the power to enforce the order subject of course to the exercise of its discretion: O 45 r 7(6). However, it is in my view essential that the alleged contemnor shall have been told, whether

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by being present in court or by being notified by telephone, telegram or otherwise, that the consequences of breaching any order made is to be held in contempt of court and liable to a process of execution. It would be an extremely rare exercise of discretion under O 45 r 7(6) for the court to dispense with this requirement and in principle, I cannot conceive of any circumstances in which it would be right to dispense with such a requirement

(3) Next, the applicant must obtain leave from the court to make an application for committal: O 52 r 2(1). The application for leave is made ex parte and must be accompanied by an affidavit and a Statement providing details of the alleged contemnor and the facts of the contempt alleged: O 52 r 2(2)

(4) Where leave is granted, the applicant must apply by motion to a judge and serve the motion together with the affidavit evidence and Statement used for the ex parte application for leave, on the alleged contemnor at least eight clear days before the hearing: O 52 r 3. Service should be personal (O 52 r 3(3)) but the court has the discretion to dispense with that if it is just to do so: O 52 r 3(4)

Determine whether a contempt has occurredThe court must be satisfied beyond reasonable doubt before a finding of contempt can be made even in cases of civil contempt, but different from criminal proceedings,Affidavit evidence is invariably used: O 38 r 2(3); hearsay evidence is permissible; although the court has a discretion to disregard such evidence;There is no requirement in civil contempt proceedings to show that the alleged contemnor intended to disobey the order. It is sufficient to proof (a) that he knew the facts which are said to make his act or omission a contempt and (b) that such act or omission was not accidental. But of course, the alleged contemnor should be aware of the order and the consequences of breaching it (as said above)

Bank of China (HK) Ltd v Kanishi (Far East) (charging order absolute)Can a charging order absolute be granted in respect of property which is subject to a prior interest?On 2 April 2001, a charging order nisi was granted in respect of 25 shares in a private company. It is then claimed that a TP had a prior equitable charge or mortgage on those shares (as from 1 September 2000) and they had, on 10 April 2001, been converted in a legal charge when TP became the registered legal owner of the same.Consideration(a) The Court has a discretion whether to make a charging order (nisi or absolute) and

it is required to take into account “all the circumstances of the case”: s.20(3) HCO(b) The Court is required to consider the personal circumstances of the debtor and

whether any other creditor of the debtor would be likely to be “unduly” prejudiced by the making of the order: s.20(3)(a) and (b)

(c) Charging orders can only be made in relation to interests held beneficially by the debtor in certain specified types of property, land, securities and funds in court: s. 20A(2)

(d) Once a charging order is made, a statutory fiction is created whereby it “shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand”: s.20B(3)

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(e) The term charging order “absolute” is a light misnomer in that the Court may at any time on the application of the debtor or anyone interested in the property, make an order discharging or varying the order: s.20B(4), O 50 r 7 RHC

In this case, the Court found that it has jurisdiction to make a charging order absolute even where there exist prior interests in the relevant property.The Claimant is both the legal and equitable owner of the shares, while JD has only an equity of redemption, and Claimant contends that this equity of redemption was not a beneficial interest such as could be made the subject matter of a charging order.Court held that where the interest of a judgment debtor is in the equity of redemption, this is sufficient to enable a charging order to be made on the relevant property.

Chan Miu Cheung v Prague Enterprises (D to show cause re: charging order)Over-securityThe order is that D’s properties stand charged with payment of $1.4m odd, but D argues that the total value of the properties may be more than $5m.D sworn affidavit (because valuation reports not specifically obtained) that the open market value of the properties, on the basis that they were available for sale in the market with the benefit of physical vacant possession and the title being free of any material encumbrance or defect, were over $5m.However, D gave no information as to state of occupancy of the property charged.Duty is on D to show cause why the charging order nisi should not be made absolute.

Karaha Bodas v Pertamina (No 3) (appointment of receivers)KBC (JC) applies for the appointment of receivers by way of equitable execution over the shares of Pertamina (JD) in 3 companies (Petral, Tugu, KIPCO).Money was transferred from KIPCO to Pertamina notwithstanding service of the Garnishee Order Nisi on KIPCO(1) A receiver may be appointed when recovery of the judgment debt by normal

means of legal execution is “not practicable”. An applicant must normally show that the circumstances are such as to render it practically difficult, if not impossible, to obtain the fruits of his judgment

(2) It is not necessary that a judgment debtor have a legal interest in the asset over which a reciver is sought to be appointed. It is thus possible to appoint a reciver to recover future debts

(3) Nonetheless, there must be some difficulty, arising from the nature of the property, which precludes execution at law but which can be overcome by the appointment of a receiver.

The court is aware the possible conflict of interests of a receiver if he would in effective be in the management of the garnishee (e.g. when paying dividend)The court rejected JC’s argument in relation to Objective A, i.e. to obtain further financial information about the garnishee (private companies), which is too wide.However, the court accepted JC’s argument in relation to Objective B, i.e. to obtain information on and receive payment of dividends.

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Although no future debts, the KIPCO incident displays risk that monies may be paid to JD if JC is not informed of the same. Therefore receivers should be appointed with power to ascertain what monies is due/payable to KBC and to receive such sum

Ho King Yim v Lau King Mo (charging order registered after S/P but before assignment) After signing the S/P agreement, JD did retain a limited beneficial interest, and her rights therefore could be the subject matter of a charging order.Upon receipt of actual notice of the charge the purchaser became liable to account to JC for the purchase money – but to the extent of the charge.

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Civil ProcedureSeminar 10

Appeals

Introduction Right to appeal created by statutes, no common law right or inherent jurisdiction Objectives:

(1) correcting wrong decisions and(2) setting precedents and clarifying/developing the law

Bear in mind opposing public interests: certainty and finality; preventing costs/delay Usual limitations

(1) prescribing a short time period for instituting an appeal; and(2) requiring that in some types of appeal, leave from the court must first be obtained

so as to enable the court to sift out unmeritorious appeals at an early stage.

Appeals from Master (to Judge in chambers) Usually on interlocutory matters, goes to the same court (CFI/DC), as of right Appeal period: 14 days from the decision (O 58 r 1) Hearing de novo – Judge not bound by Master’s exercise of discretion

(Lord Atkin, Evans v Bartlam: as though the matter came before him for the first time)

Appeals to the Court of Appeal Normally from the decision of a judge

(N.B. also from certain final decisions made by a Master: O 58 r 2)Right to Appeal Before CJR, subject to certain exceptions, an appeal lied as of right to CA from every

judgment/order of CFI in any civil cause/matter (final or interlocutory): s 14(1) HCO Under CJR, for decisions made after 2/4/2009, leave is required for appeal against

CFI’s decisions on interlocutory matters. o Exemption: where the interlocutory decision is decisive of party’s substantive

rights (e.g. summary judgment, order striking out an action, an order refusing to set aside a default judgment) and also specifically exempted cases (e.g. orders for imprisonment or contempt, refusals of habeas corpus): O 59 r 21

Leave is generally required for an appeal to CA from a judgment or order made in DC (whether final or interlocutory): s.63 DCO; exceptions under s.63(3)

Applications for Leave to Appeal If leave required, on deciding whether to grant leave, court will consider (s14AA HCO)

(a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why it should be heard.“reasonable prospect of success”: something more than a prospect of success which is “not fanciful”, but without having to be “probable”(per Le Pichon JA, SMSE v KL)“merely showing the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient”, “‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”

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(per Le Pichon JA, Ho Yuen Ki Winnie v. Ho Hung Sun Stanley & Another) Leave should as far as practicable first be sought from the Judge whose decision is

being appealed. Time period for seeking leave is: (a) 14 days for decisions on interlocutory matters (not involving substantive rights), and (b) 28 days for final decisions or interlocutory decisions determining a party's

substantive rights.If refused, the party may further seek leave from CA within 14 days of the refusal(O 59 r 2A–C,4,21 RHC, O 58 rr 2,4 RDC)

Nature of the Appeal Hearing of an appeal to CA is “by way of rehearing”

Powell v Streatham: CA only reads the evidence and rehears the counsel CA re-determines the issues raised as at the date of the rehearing: it has power to

consider facts and changes in law occurred since the decision of the court below. If appropriate, the Court of Appeal may grant leave to admit fresh evidence not put

before the court below or allow new points to be taken on appeal.Approaches of the Court of Appeal

(a) Appeal against the exercise of a discretiono In many circumstances, a judge has a discretion as to whether, and in what

manner, to exercise his powers. CA must not interfere with a lower court’s discretion merely because it might have taken a different view

o It will interfere only if the exercise of discretion is based on a misunderstanding of the law or of the evidence before the court or if the judge’s decision is plainly wrong: Hadmor Productions Ltd v Hamilton, applied in PCCW-HKT International Ltd v New World Telephone Ltd

(b) Appeal against a finding of primary factso CA may reconsider the facts and to come to an opposite conclusion from that

arrived at in the court below. It does not mean CA will re-try the case o CA rehears on paper and does not rehear witnesses. If the decision depends

upon a conflict of oral evidence and the evaluation of the evidence and demeanour of witnesses, CA should defer to the opinion of the trial judge Ting Kwok Keung v Tam Dick Yuen:

Whether item (3) of the evidence happened is a finding of primary facts (c.f. in other cases, the court may need to decide whether one is an employee by applying the legal indicia to the primary facts)CFA held that the judge did not overlook or misapprehend the effect of any of the 3 items of evidence when determining this primary factThe question for CA is whether, even though without the advantages enjoyed by the trial judge who received the evidence at first-hand, it is nevertheless satisfied that his conclusion on the facts is plainly wrong.

(c) Appeal on a point of lawMost successful appeals are on this ground

(d) Taking fresh points on appealGenerally, a party cannot take fresh points on appeal, unless CA is satisfied that:(The Tasmania followed by CFA in BEA v Tsien Wui Marble Factory Ltd)(1) it has all the facts bearing upon the new contention and

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(2) that no satisfactory explanation could have been afforded by the relevant witness/party in response had the new point been raised at trial

Appeals to the CFA No appeal will be admitted unless leave has been granted either by CA or CFA

(s.23(1) HKCFAO) The time period for application for leave is 28 days from the judgment below (s.24).

Appeal as of right Leave will be granted as of right from final judgment of CA if: (s.22(1)(a)

HKCFAO) (1) where the matter in dispute on the appeal amounts to or is of the value of

$1,000,000 or more, OR(2) where the appeal involves, directly or indirectly, some claim or question to or

respecting property or some civil right amounting to or of the value of $1,000,000 or more

The first limb has been strictly construed to exclude a claim or an award of unliquidated damages. Even if it has already been assessed to have exceeded $1m, that requirement is still not satisfied: Shum Kam Fai v Lam Chi Wai

As for the second limb, see two recent cases:China Field v BAT

For the second limb, it is only proper to ascribe a value which qualifies for leave as of right to the candidate claim or question if(i) on the evidence, it is clearly quantifiable as a value of $1 million or more; and(ii) the court is satisfied that the Court’s order made upon disposing of the proposed

appeal would take effect by immediately conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.

It is not enough that one is able plausibly to say that such a financial impact is a likely eventual result of the appeal

WLK v TMC for a claim to fall in the second limb, it must not be a money claim (whether liquidated or unliquidated), but must be a claim to some particular property or to a proprietary right of the requisite value.It is insufficient if the claim is of some other kind, say one for unliquidated damages, even if it is incidental to the enjoyment of property rights which are not themselves the subject-matter of the claim

Appeal by discretion Leave granted by discretion if the appeal is one which (1) “a point of great general or

public importance”; or (2) “otherwise” ought to be submitted to CFA for decision The second ground is rarely invoked for granting leave, EXCEPT in the situation of

an unliquidated claim where it is a matter of utmost probability or even of virtual certainty that the damages ultimately awarded will be in excess of $1m.Bill Chao Keh Lung v Don Xia

The unliquidated damages were already assessed as being US$500,000 and so well exceeded the $1m thresholdRefused leave: emphasised the exceptional nature of the “or otherwise” limb and so required a higher merits threshold.

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Nature of hearing and approaches in determining appeals by way of a rehearing on the papers, approaches similar to that adopted by CA CFA will decline to review the evidence for a third time in the absence of special

circumstances and will not disturb such findings merely on the ground that the courts below did not accord appropriate weight to the evidence: Sky Heart v Lee Hysan

Extension of Time for Appeal Court has a discretionary power to extend time to suit the overall justice of an

individual case (see O 3 r 5 and s.24(5) HKCFAO) In exercising discretion, the Court should considers all relevant circumstances of an

individual case. The normal factors to be considered are: (a) the length of the delay(b) the reasons for the delay(c) the chances of the appeal succeeding if an extension is granted(d) the degree of prejudice to the would-be respondent if extension is granted. (Birkenhead Properties v Leung Yiu)

Time not extended only on the ground that an authoritative judgment subsequent to the decision in question has held the previous understanding of the law to be incorrect.

There could be exceptional circumstances which would justify an extension of time and a departure from the principle of finality, but it must be so exceptional it should be very rare (e.g. HKSAR v Hung Chan Wa; Lau Luen Hung Thomas v IDT)

Stay of Execution Pending Appeal General Principles

An appeal is not to operate as a stay of execution of the judgment of the court below, unless the court exercises a discretion to order a stay(RHC O 58 r 1(4), O 59 r 13; RDC O 58 r 3)Court considers all relevant circumstances of an individual case, with the guiding principle that unless a stay can be justified by good reasons, one will not be orderedGenerally needs to satisfy the court (Wendon Engineering v Lee Shing Yue)(1) there is a reasonable prospect of success in the appeal; and(2) failure to grant the stay would result in the appeal, if successful, being nugatory

ConditionsWhen making an order to stay proceedings pending appeal, the court may put the appellant on terms (e.g. payment of a certain sum into court as security)e.g. Jebson & Co Ltd v Watfiled Technology Ltd – Stay of execution ordered on condition that the appellant shall pay into court within 7 days the judgment sum of around $2m and interests. It also directed that the parties attend court within 7 days to fix the date for the appeal.

Liability of the appellant if appeal unsuccessfulo the appellant face the risk of of having to pay interest at the judgment rate in the

case of a monetary judgment: O 59 r 13(2) RHC, or in other cases, he may have to compensate the respondent for the loss suffered as a result of the stay in case the appeal is unsuccessful: Chen v Lord Energy Ltd

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o On the other hand, if there is no stay of execution of a monetary judgment and the judgment award has been paid by the appellant, upon the reversal of the judgment in a successful appeal, in order to do complete justice between the parties, the appellate court should normally upon request of the appellant order the respondent to repay the judgment sum received with interest thereon as from the date of payment: Man Ping Nam v Man Fong Hang

o CFA further held that the applicable interest rate should be the normal discretionary pre-judgment rate (normally at 1% above the HSBC best lending rate) before the appeal is allowed and thereafter at the judgment rate

o Therefore when acting for the appellant, one should not take it for granted that obtaining a stay of execution pending appeal is always good for the appellant.

Security for Costs of an Appeal Court has no inherent jurisdiction to order security for costs of an appeal The Court also has no jurisdiction to order security for costs of an appeal from a

Master’s decision to a Judge in chambers: Perennial Cable v Popbridge For appeals to CA, O 59 r 10(5): “CA may, in special circumstances, order that such

security shall be given for the costs of an appeal as may be just.”Most commonly, this is the case where an appellant is impecunious or where he is resident out of the jurisdiction, since a respondent would have difficulty enforcing an order for costs of the appeal in either situation.

Admission of Fresh Evidence on Appeal The ‘special grounds’ requirement Appellate court has a discretionary power to receive further evidence. As to appeal to CA from a judgment after trial or hearing of any cause or matter on

merits, further evidence may be admitted only on special grounds (O 59 r 10(2))“special grounds” defined in Ladd v Marshall:(1) it must be shown that the evidence could not have been obtained with reasonable

diligence for use at the trial;(2) the evidence must be such that, if given, it would probably have an important

influence on the result of the case, though it need not be decisive; and(3) the evidence must be such which is presumably to be believed, or in other words

it must be apparently credible, though it need not be incontrovertible.But note Sir John Donaldson MR in R v Home Secretary, ex p. Momin Ali

the Ladd v Marshall principles is subject always to the discretion of the court to depart from them if the wider interests of justice so require.

Applicability to appeals from Master’s decisions and interlocutory decisions of Judges “special grounds” requirement will apply to all appeals, BUT it is not fully settled

whether the Ladd v Marshall conditions will be applied with the full rigour in appeals against interlocutory ordersLangdale v Danly, adopted in HK in Chan Yau v Chan Calvin

It may well be that the standard of diligence required of a defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, will not be so high as that required in preparing for trial.

Bank of China (Hong Kong) Ltd v. Certain Aim Limited97

Deputy Judge Au-Yeung favoured the approach of applying the Ladd v Marshall conditions in the ordinary way even in an appeal from a master’s decision refusing to set aside a default judgment, though she seemed to have left the question open as to whether lesser standard of diligence is acceptable.

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Case Summary for Seminar TenTing Kwok Keung v Tam Dick Yuen (appeal against finding of fact)

It is contended whether Mr. Ting was an employee or an independent contractorThe trial judge accepted the account given by Mr. Ting, but CA challenged his finding in relation to the amount of weight he attached to Mr. Ting’s evidence.Lord Reid in Benmax: it is only in rare cases that an appeal court could be satisfied that the trial judge has reached a wrong decision about the credibility of a witnessUnless good reason to think otherwise appears, trial judges should be taken to have considered demeanour with caution, doing so only in the context of such inherent probabilities as may exist and the whole of the evidence.The question for CA is whether, even though it does not enjoy the advantages enjoyed by the trial judge who received the evidence at first-hand, it is nevertheless satisfied that his conclusion on the facts is plainly wrong.

China Field v BAT (appeal to CFA as of right)The applicant brought judicial review against the Buildings Appeal Tribunal which refused their approval plans to put up certain residential buildings.The applicant argues since the application indirectly involves property which was worth more than $1m and therefore they may appeal as of right under s.22(1)(a).The court upheld a narrow construction of the first “as of right” limb so that it refers only to liquidated claims.In relation to the first limb of s.22(1)(a), it is only proper to ascribe a value which qualifies for leave as of right to the candidate claim or question if (i) on the evidence, such value is clearly quantifiable as a value of $1m or more; and (ii) the court is satisfied that the Court’s order made upon disposing of the proposed appeal would take effect by immediately conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.The word “directly or indirectly” relates to the nature of the claim, but does not affect the requirement for immediacy of the consequences of the Court’s order

Birkenhead Properties v Leung Yiu (extension of time for appeal)Factors to be considered re: extention of time (adopting Norwich v Steed)(a) Length of delay(b) Reasons for delay(c) Chances of succeeding if the application is granted(d) The degree of prejudice to the Respondent if the application is granted

Wendon Engineering Services v Lee Shing Yue (stay of execution pending appeal)(1) The existence of an arguable appeal (i.e. reasonable prospects of success) is the

minimum requirement before a court would even consider granting a stay(2) The existence of a strong appeal or a strong likelihood that the appeal would

succeed, will usually by itself enable a stay to be granted because this would constitute a good reason for a stay

(3) In most cases, the court will not be dealing with such extreme situations. It is usually necessary for the appellant to provide additional reasons as to why a stay is justified. The demonstration of an appeal being rendered nugatory is one

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example, albeit a common one.(4) Regards must of course be had to the nature of the order in determining whether

an appeal would be rendered nugatory. If it is an injunction, it may well be that, without a stay, an appeal would be rendered nugatory; the situation is similar where the order is for the possession of premises

(5) If the argument is that of financial ruin or serious financial consequences, the court will require good evidence to support this contention, such as the production of accounts or other documents to justify the assertion.

(6) Ultimately, the court embarks on a balancing exercise and uses its common sense

Jebson v Watfiled Technology (conditions to be attached to stay of execution)Since P is able to demonstrate an obvious risk that D may not be able to make the repayment, a stay of execution was attached with a condition that P should pay the judgment sum plus interest up to judgment date in the respective sums into court within 7 days of the order.

Chen v Lord Energy (liability of unsuccessful appellant)The principles to be applied for assessing damages

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