Civil Procedure UpdatesEric TM Cheung

Assistant Professor, Faculty of Law, HKU

Consultant, ONC Lawyers

26 November 2007

Service: D acquiring knowledge of Writ while overseas

� Penrose Industries Limited v. Tam Yan Lung unreported, HCA 5738/2000, 10 May 2001 (N.B. ONC acted for P)

� D: former director of P working until December 1999; sued for breach of director’s duties

� D left HK for US and was in US at time of service (by insertion into his letter box at his usual and last known address in Shatin)

� D contacted P’s lawyers in June 2000 soon after issue of Writ

� Interlocutory default judgment obtained on 6 July 2000 on liability with damages to be assessed

� Yeung J: Valid service and regular judgment, but set aside as there were substantial disputes as to facts and P’s claim not yet properly formulated

� “In my view, irrespective where the Defendant was at the time of the service, if he had actually acquired knowledge of the proceedings he should not be allowed to complain about the service not being regular and effective. In this respect, the judgment in the case of Chu Han Lunand Yap Lisa Susanto [1999] 3 HKC 378 is relevant.”

Is Yeung J correct?

� Is Chu Kam Lun case (mis-spelt as “Chu Han

Lun” supportive of Yeung J’s decision?

� Leong JA at p 2: “The authorities are clear that

for service under this rule (i.e. O 10 r 1(2)(b)) to

be effective, the defendant has to be physically

within the jurisdiction at the time of service”

(then citing the Hahn case in support)

DENG MINGHUI v CHAU SHUK LING [2007] 1 HKLRD 905,

[2007] 2 HKC 414, 13/2/07 CA

� 28/4/2005: Writ inserted into letterbox of D at her HK property

� The Property was a vacant residential flat which was used by D before she left for the US on 28/9/04

� May 05: Son of D visited the flat and picked up the mail and forwarded the writ to D in the US

� 23/5/05: D’s lawyers wrote to P’s lawyers advising that D was in the US and asserting invalid service

� 14/6/05: default judgment entered.

� D’s application to set aside the default judgment was dismissed by the Master, whose decision was upheld on appeal by Deputy Judge Saunders

� Deputy Judge Saunders: “[D’s counsel] accepted that the service was good service. I am satisfied that that was a proper concession. Whatever the precise intricacies of the whereabouts of Ms Chau at the relevant time… it is quite plain that the proceedings were properly drawn to her attention, the Writ having been served at an address that is properly described as the last known address of Ms Chau in Hong Kong… It is simply not open to her to take no steps and then say that the service was bad, because at the time it was effected in accordance with the Rules she happened to be out of the jurisdiction. In this respect I agree fully with the judgment of Yeung J., (as he then was), in Penrose Industries Limited v Tam Yan Lung, unreported, HCA 5738/2000.”

CA’s Decision

� Cheung JA: “14. I have no doubt whatsoever that the concession was wrongly made. Counsel obviously missed the important decision of Lord Brightman in Hahn. What probably had caused the concession to be made was the case of Penrose Industries Limited v. Tam Yan Lung (HCA 5738/2000) …

� 15. This Court (Nazareth VP and Leong JA (as he then was)) in Chu [Kam] Lun actually held that the defendant must be within the jurisdiction for an Order 10, rule (1)(2)(b) service to be effective. The case of Hahn was cited. While the Court also dealt with the effect of notice by the defendant of the proceedings, this does not detract from the basic ruling on jurisdiction. In my view, and I say this most respectfully, under the existing state of authorities, Penrose was incorrect.”

� After writing the letter of 23/5/05, what could D’s lawyers have done to prevent default judgment being entered in the first place?

� See O 12 r 8

Any Privilege created from unprivileged docs

� LMH v KLH [2007] 1 HKC 320, CA

� Relevant non-privileged documents belonging to H in

possession of third party in Singapore

� Third party offered to return the docs to H for a fee

� H’s solicitor inspecting documents on behalf of client

and drawing up a schedule as aide-memoire

� Whether the schedule protected by legal professional

privilege?

CFI Decision

� “11. On the evidence therefore the schedule was prepared by the solicitor for the purposes of fulfilling his professional mandate in order to better advise his client. Accordingly the schedule must be taken to be more than a simple long-hand copy of the documents studied by the solicitor. While it may contain details of those documents, in light of the mandate being fulfilled by the solicitor, the schedule must, to some material degree, consist of the solicitor’s impression of those documents. That impression in turn will have been coloured by the solicitor’s view of the value of the documents to his client.

� 13. In the present case, put bluntly, the husband was being offered documents for sale, documents which, it was said, would be of assistance to him in his litigation. The husband sought advice from his solicitor as to what should prudently and sensibly be done in the circumstances: would the documents be of value or would they not? The schedule was the result of the solicitor’s research and skill; it was a document made for the purposes of legal advice and as such must be accorded legal professional privilege.”

CA’s Decision

� “16. It is well-established that no privilege attaches to a photocopy of unprivileged documents, even if the photocopy were made by solicitors who did so for the purpose of giving legal advice. There are a number of cases to this effect and it is not disputed by counsel for the Husband.

� 17. Since no privilege attaches to a solicitor’s photo-copy of unprivileged documents, it follows that no privilege attaches to a handwritten copy he makes of them even though it was created entirely by the solicitor ‘as an aide-memoire to facilitate him in advising the petitioner’.

� 18. From that I think it must follow that no privilege attaches if a solicitor makes a list of unprivileged documents — which is no more than a summary way of copying the documents — if it did not involve in an abstracting process the betrayal of the trend of any legal advice he is giving the client (Ventouris v Mountain [1991] 3 All ER 472, 479f-g).

� 19. ..A party who claims legal professional privilege has the burden of establishing it. But there is no evidence from [H’s solicitor] that any legal research or skill was involved in making the list, or that he added to it any legal advice or communications to his client…. If he had done anything beyond making a clerical list, he need only have gone on affirmation to say so..”

� Held: no evidence to support the judge’s conclusion, and appeal allowed.

How to list privileged docs

� Re Kong Wah Holdings Ltd HCCA 49 and 50/2000,

Kwan J, 13 Sept 2007

� Order against HSBC for production of documents and

oral examination under section 221 of CO

� Some docs withheld on ground of privilege

� Liquidators seek a list “detailing the date of the

particular document, the author, the addressee, a brief

description of its nature (without disclosing its contents)

and the ground of privilege relied upon”.

� HK White Book 2007 24/5/7:

� But there is a certain difference between documents for which privilege from production is claimed and other documents. .., the description is not for the purpose of enabling the other party to learn the contents of the document or to test the truth of the plea of privilege. .. It is not required that the dates of the documents should be specified nor the names of the makers. “Correspondence between the (defendant) and his solicitors for the purpose of obtaining legal advice" is sufficient.”

� Where privilege is claimed for professional communications of a confidential character obtained for the purpose of getting legal advice, the claim for privilege is to be treated as itself a sufficient description of the communications, irrespective of the scale of discovery or the complexity of the issues involved, and consequently the party seeking disclosure is not entitled to satisfy himself by means of fuller description of the communications for which privilege is claimed that it is not claimed for documents outside its proper scope. .. since to order such disclosure would be contrary to the public policy on which legal professional privilege is founded (Derby & Co. Ltd v. Weldon (No. 7) [1990] 1 W.L.R. 1156; [1990] 3 All E.R. 161).

Kwan J’s Decision

� Allowed the liquidators’ application by following the Australian approach (emerging from the case Kadlunga Proprietors v. Electricity Trust of South Australia(1985) 39 SASR 410, Full Court of the Supreme Court of South Australia.):

� It is both necessary and desirable that the description of a particular document for which privilege is claimed should be sufficient to disclose quite readily (without disclosing contents) whether or not it is in fact a document to which the head of privilege relied on can extend. It is impossible to discern whether the limits of privilege have been observed without some useful description of the nature of the document.

� What underlies the reasoning in Kadlunga is the fact that errors can be made, either through negligence or inadvertence, and the need to describe each document reduces the incidence of error. Furthermore, the requirement to examine each document for the purpose of description will focus the solicitor’s mind closely upon the issue and will assist in determining whether in fact the claim for privilege should be made or maintained.

� “Rolled up” claims of privilege are confusing and inappropriate. Where more than one ground of privilege is relied upon, the specific ground or grounds relied upon for each document must be related to that document, and it is not sufficient to state a number of grounds without specifying which of them relate to which document

Admission by Debtor and the Without Prejudice Rule

� Admission made by customer to bank officer over the phone sayingthat he could not afford to pay monthly installment at a particular sum and asked the bank to consider reducing the sum.

� Can the bank adduce evidence to prove such an admission when applying for summary judgment?

� STANDARD CHATERED BANK (HONG KONG) LTD v MA LIT KIN CARY HCA 62/2006, Reyes J, 22 Jan 2007

� The communication need not be expressed to be “without prejudice,” if it is clear from the surrounding circumstances that the parties were genuinely seeking to compromise their dispute.

� The mere fact that a communication concerns a dispute between the parties is not sufficient to confer privilege.

� Thus, it cannot be said that the telephone conversation was within the policy of the “without prejudice” rule. The conversation was a frank admission of liability coupled with a confession of an inability to pay up immediately.

� See also Bradford & Bingley plc v. Rashid [2006] 1 WLR 2066 HL

� Mortgagor in default with the last payment made on 3 January 1991.

� In October 1991, following a possession order, the property was sold for a sum that left a shortfall owing to the claimants of £15,583.

� On 26 September 2001 an advice centre wrote on mortgagor’s behalf to P‘s solicitors saying that “at present he is not in a position to repay the outstanding balance, owed to you” “but that once his financial situation was stable he would start to repay it.” On 4 October it wrote saying that the mortgagor was “willing to pay approximately £500 towards the outstanding amount as a final settlement”. None of the correspondence was marked “without prejudice”.

� Nothing was paid. On 17 June 2003 the claimants issued proceedings claiming £15,583 with statutory interest.

� Sole defence: expiry of limitation period by Jan 2003

� P’s reply: the two letters amounted to written acknowledgment under s 29(5) of the Limitation Act 1980 (similar to s 23 of Limitation Ordinance)

� P’s claim dismissed by first instance court and CA

HL’s decision

� Allowed P’s appeal

� (1) that acknowledgments for the purposes of the 1980 Act were not confined to admissions of debts that were indisputable as to quantum as well as liability; and that the defendant's agents' letters of 26 September and 4 October 2001 had constituted clear acknowledgments of the claimants' claim (an acknowledgment need not identify the amount of the debt and may acknowledge a general indebtedness, provided that the amount of debt can be ascertained by extraneous evidence.)

� (2) the without prejudice privilege did not apply to apparently open communications designed only to discuss how an admitted liability was to be paid rather than to negotiate to resolve a dispute over the existence or extent of a liability (e.g. privilege might well exist if D had been seeking to question the sufficiency of the sum obtained on mortgagee sale and had the correspondence been devoted to resolving that issue);

� (per Lord Hoffmann, not accepted by the majority) in so far as the without prejudice rule was based on general public policy, it did not apply to the use of a statement as an acknowledgment for the purposes of the 1980 Act.

Costs Against Funder

� S 52A(2) HCO: “… nothing in subsection (1) (i.e. the general power to award costs) shall authorize an award of costs against a person who is not a party to the relevant proceedings.”

� N.B. No similar provision in the section 51 of the English Supreme Court Act 1981 and , the House of Lords in Aiden Shipping Co. Ltd v Interbulk Ltd [1986] 1 AC 965, overruling previous decisions to the contrary, held that the English courts have the jurisdiction to order costs against any non-party.

� Hence the court does not have any general power to award costs against a non-party under section 52A HCO.

� THE MV LIBERTY CONTAINER (NO 2) [2007] 3 HKC 332 (16 MAY 2007 , CFA)

� P: successful in an admiralty action in rem against D, a company in liquidation.

� D’s litigation funded by an unsecured creditor (C) of the defendant company in liquidation. C at one stage obtained leave to join as an Intervener, but it did not formally appear in the various interlocutory proceedings and the subsequent trial between P and D.

� Issues: (1) whether court has jurisdiction to order costs against a person who, though not a party to the application giving rise to the costs, was a party on record in the action;

� (2) whether it was necessary to show that the funder funded the litigant with a view to becoming the sole or substantial beneficiary of the litigation

� (3) whether ordering costs against the funding creditor who funded the litigation in the hope of recovering assets for the benefit of all unsecured creditors proving in the liquidation was inhibited by the legal policy underlying s 265B of the Companies Ordinance.

� (4) Having ordered costs against D, was the court functus officio in respect of costs against the funding party.

CFA’s Decision

� (1) Section 2 of HCO plainly provided that ‘party’ included ‘… every person served with a notice of any proceeding, although not named on the record’. There was no reason to limit the meaning of the word ‘party’ in s 52A to mean only a party to the application in which the costs were incurred.

� (2) No need for the funder to have sole or substantial benefit. Distinction is between (a) a pure funder who funded the litigation to facilitate access to justice and (b) a self-interested funder who funded the litigation for his own purposes. A pure funderwas one who had no personal interest in the litigation, did not seek to benefit from it, and was not funding it as a matter of business and did not in any way seek to control its course. Costs should not normally be ordered against a pure funder, but should normally be made against a self-interested funder.

� (3) The underlying policy of s 265B CO is to allow funding creditors an advantageous distribution of recovered assets or expenses in order to reflect ‘the risk run by them’ in financing the litigation, which plainly included the risk of adverse costs orders.

� (4) The order for costs made against the funding creditor was in the nature of a supplemental order

� Held: costs against funding creditor C upheld.

� But can the court join a non-party funder as a party in order to exercise its power on costs against it?

� No binding decision in HK so far

� The Hong Kong Housing Authority v. Hsin Yieh Architects & Associates Limited & Others [2006] 1 HKC 116 (Tang JA and Sakhrani J, 5 Oct 2005)

� HKHA obtained judgment for HK$553m against B+B (a company in liquidation). B+B’s insurer, AXA, had denied liability to B+B under the insurance policy. But B+B had mounted a strenuous defence to HKHA's claim under the direction of and with funding from AXA. HKHA wasconcerned that (i) B+B's defence had caused it to incur significant legal costs, and (ii) HKHA would be unable to recover these costs from B+B if AXA successfully disclaimed liability under the insurance policy.

� HKHA applied to join AXA as a party and obtained leave for service outside the jurisdiction of the amended Writ and a Summons for costs against AXA.

� No cause of action against AXA, but sought leave under O 11 r 1(1)(c) on the ground that AXA was a necessary or proper party to the proceedings against B+B.

CA’s decision

� RHC O 11 r 4(1)(b) required P’s affidavit to state that in P’s belief P “has a good arguable cause of action”. Vis-à-vis r 1(1) (c), P only needs to show a good cause of action against an existing defendant who was amenable to the court’s jurisdiction, but no need to show a good cause of action against the foreign party against whom joinder was sought.

� Para 33: “under s 52A no such order could be made except against a party to the proceedings. The issue therefore is whether it is permissible for a person to be joined as a party so that he might be made liable for the costs of proceedings. This is not an easy question. However, all we need to decide is whether there is a serious question to be tried. We believe there is.”

Contingency Fee

� BANK OF CHINA (HONG KONG) LTD v WELL LOK PRINTING LTD & OTHERS (HCMP 3925/2002, Master J Wong, 7 Nov 2007)

� Bank’s action against wife as mortgagor. Defence of undue influence. Wife represented by solicitors (Chan & Associates) until shortly before trial. Wife won at trial in person and was awarded costs.

� Fee arrangement summarised by Master Wong: C&A would charge the Wife on time basis, subject to discretionary discount. Due to the financial position of the Wife, C&A agreed that she did not have to pay the interim bill right away. Further, it was to be reviewed later. No further bill was issued. The question would be further discussed after settlement or determination of the Wife's case at trial. (“if the trial result would be unfavorable ……We would consider remission of our fee if required.”)

� Bank took a preliminary issue that the arrangement was (1) against the rule of maintenance and champerty, (2) a contingency fee agreement, (3) and/or in breach of the indemnity principle.

Master’s Decision

� (1) Not champerty: C&A was not funding the Wife's litigation. Mr. Sun was not trying to share in the spoils of litigation to the exploitation of the vulnerable Wife. Indeed, he did all he possibly could in the circumstances for the Wife. Only when he could not take up the personal risk of liability to pay counsel fees, he then quitted. There is no risk to the integrity of the court's process. Quite to the contrary, Mr. Sun tried to help the Wife to obtain justice. (citing CFA’s decision in Siegfried AdalbertUnruh v Hasn-Joerg Seeberger [2007] 2 HKLRD 414)

� (2) But contingency fee arrangement: C&A said: “if the trial result would be unfavorable …… We would consider remission of our fee if required.” The liability of the interim bill is therefore not finalized, but to be determined and dependent on the trial result. Similar arrangement was made for work done not yet billed. While agreeing that C&A has not yet issued the final bill nor agreed to waive any of the fee, I can be certain, on balance, that the remuneration of C&A depends on the trial result. Indeed, Mr. Sun confirmed with me at the hearing that, by “再與你商量如何處理”, he meant a reduction or waiver of the fee in the event that the Wife lost her case at trial.

� Contingency fee agreement is not allowed under our system as being against public policy, citing Wallersteiner v Moir (No. 2) [1975] QB 372, 402

� (3) No need to decide on indemnity principle.

� But observed that:

� “Indemnity principle in the context of taxation requires that thereceiving party cannot recover a sum in excess of his liability to his own solicitors. Then, what exactly is the liability of the Wife towards C&A? A definite answer is unavailable because it is “variable” depending on the trial result. Will the answer of “the amount of costs I recover from the other side will be the costs charged by me” help Mr. Sun? I do not think so because such arrangement has been held by Mr. Registrar Chan under Holiday Resorts (Management) Co. Ltd v Chan Yuk Yan & another, judgment dated 2 May 2001, as “so vague and uncertain” that the liability of the client towards his client was not known. I agree with such observation.”

Scale of Automatic Costs Upon Acceptance of

PIC under O 62 r 10(2)

� Should the automatic costs be taxed in the District Court scale or Small Claims Tribunal scale if a payment into court of less than $50,000 is accepted by the plaintiff in a District Court claim?

� See Cho Ho Kuen v. Yu Kowk Wah & ors [2001] 3 HKC 566 (CA): District Court scale irrespective of amount and court has no discretion.

� How about in CFI action? Should the automatic costs be taxed in the District Court scale or High Court scale if a payment into court of less than $1,000,000 is accepted?

� Position unsettled. See conflicting CFI decisions in Wellegant Development Ltd v Fine Telecom Ltd & others [2007] 2 HKC 427 (Deputy Judge L Chan) and Wong Lan v Hong Chang Construction Transportation Engineering Company Ltd [2007] 3 HKC 499 (B Fung J)

� Latest position: court may decide whether DC or CFI scale applies in case the settlement sum is below $1m: see B Fung J’s decision in Wong Lan case.

Witness Expenses on Taxation

� You act for P, who lost at trial as the judge preferred the

evidence of D’s key factual witness (who is a former

employee of D).

� On taxation, D claimed inter alia for $10,000 for

expenses previously paid to that key witness as

reimbursement for his loss of income for attendance in

court.

� How should you respond?

� KWAN YIM KWAN PEGGY v NAMKUNG PROMOTIONS (WORLDWIDE) LTD [2007] 3 HKC 314, CA, 25 APRIL 2007

� Held, unanimously, allowing the appeal and ordering a retrial:(1) Payment of a not insubstantial sum of money to the witness was a matter of which the trial judge should have been aware before he made findings on the credibility of the witness. It might or might not have affected those findings but it was a relevant factor for consideration by him. Without going into the merits, the appeal must be allowed on this ground alone (paras 10-11).

Per curiam(2) Solicitors who are requested by non-expert witnesses for reimbursement for the loss of income for attendance in court must inform the witnesses that the reimbursement is subject to the approval of the court and the lawyers must disclose this fact to the court before the witnesses give evidence (para 12).

Company went into liquidation after

derivative action

� Ever Joint (Holdings) Ltd. v Nice Theme Ltd. [2007] 2 HKC 101, Deputy Judge Gill

� Held, staying the action:� (1) A derivative claim may not be brought where a company is in

liquidation. This is because the company is no longer in the control of the alleged wrongdoers, in which event the reason for any exception to the rule in Foss v Harbottle disappears.

� (2) Where a company is in liquidation, it is the liquidator, if necessary with the sanction of the liquidation committee or the court, who has the power to initiate proceedings on behalf of the company.

� =>The action should be stayed pending any further order of the court and any decision of the liquidator as to whether the action should continue and in what form and how it should be funded.

Leave to Appeal to CA

� If a single judge of the CA refuses leave, can one renew the application before a two-member CA?

� Appeal Committee of the Court of Final Appeal in HLF v MTC & LHN (Intervener) (2004) 7 HKCFAR 167:

� renewed applications are only provided for by O 59 r 14(2A) where the initial refusal was otherwise than after a hearing in open court

� =>if the open court hearing was before a single judge, no right to appeal the single judge's refusal of leave to the full Court of Appeal.

� Subject to a constitutional challenge, no appeal lies to the Court of Final Appeal from a refusal by the Court of Appeal to grant leave to appeal to that intermediate tribunal.

When should an appeal from

a Master’s decision lie to the CA?

� O. 58, r. 2:An appeal shall lie to the Court of Appeal from any judgment, order or decision (other than an interlocutory judgment, order or decision) of a master, given or made-

� (a) on the hearing or determination of any cause, matter, question or issue tried before him under Order 14, rule 6(2) and Order 36, rule 1;

� (b) on an assessment of damages under Order 37 or otherwise; or

� (c) on the hearing or determination of an application under Order 84A, rule 3; or (L.N. 127 of 1995)(d) on the hearing or determination of an application under Order 49B; or(e) on the hearing of a petition for winding-up or bankruptcy.

� What happens if the master’s order is Not interlocutory but not under (a) to (e)? For example, a disqualification order against a director under s 168H of CO.

� Official Receiver v Leung Hoi & Anor (Re Forever Wise Investment Ltd) [2006] 3 HKLRD 884(7 June 2006, CACV 43/2006):

� Appeal lies to the CA only under O 58 r 2(a) to (e) situations

� => an appeal against the Master’s disqualification order should be heard before the CFI judge in chambers

� THE OFFICIAL RECEIVER v. CHAN HING TO [2007] 1 HKLRD 381; [2007] 2 HKC 43 (Yuen JA, 19 JANUARY 2007):

� Yuen JA followed the above case and struck out the appeal against the Master’s disqualification order. Yuen JA further explained two differences:

� (1) an appeal from a master to a judge is by way of re-hearing, so it is to an unsuccessful litigant’s advantage that he has another chance when he appeals to a judge in chambers

� (2) security for the costs of an appeal cannot be ordered on an appeal from a master to a judge in chambers but may be ordered on an appeal from a judge to the Court of Appeal.

Can a single judge of CA strikes out an appeal

� Chan Kin Shing Sonny v. Insider Dealing Tribunal and Financial Secretary(CACV 358 and 360 of 2005, 7 December 2006, Ma CJHC, Tang VP andStock JA):

� S 35(1) HCO: “Subject to subsection (3), in pursuance of the civil jurisdiction of the Court of Appeal, any order or direction not involving the determination of the appeal may be made or given by a single judge sitting in court or in chambers, and a single judge may likewise make any interim order which he may think fit to prevent prejudice to the claims of any party pending an appeal.”

� Held: the words ‘not involving the determination of the appeal’ mean ‘not having the effect of deciding the appeal’

� => a single judge of the Court of Appeal does not have jurisdiction to strike out a notice of appeal as this involves a determination of the appeal’

� Upon further appeal/application to a two-member CA in Chan Hing To case (Tang VP and Cheung JA, 25 April 2007):

� Held: Yuen JA as a single judge had no jurisdiction to strike out the appeal

Amendment of Writ after Limitation Period

� s 35(3) of the Limitation Ordinance (Cap 347): “Except as provided by s 30 or by rules of court, the court shall not allow a new claim within sub-s (1)(b), other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Ordinance which would affect a new action to enforce that claim.”

� Can the court allow the amendment if the application to amend isfiled before expiry of the limitation period, but the hearing takes place afterwards?

� Earlier CA decision in Lim Ban Thoon v Chintung Securities Ltd [1991] 2 HKC 204: the appropriate time to consider the limitation was when the application to amend was lodged

� Subsequent English CA decision inWelsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409: held that the relevant time to consider whether the limitation had expired was at the time when the amendment was actually made.

BOWARDLEY ENTERPRISES LTD & ANOR v

MILLENNIUM GROUP LTD [2006] 4 HKC 329, CA

� Stare decisis: Lim Ban Thoon was binding on the Court of Appeal unless it came within the recognized exceptions: (a) where the court was entitled and bound to decide which of two conflicting decisions of its own it would follow; (b) where the decision (although not expressly overruled) could not stand with a decision of the Court of Final Appeal or the Privy Council, and (c) where the decision was given per incuriam.

� Held: None of the exceptions applied, and so CA bound by Lim BanThoon decision.

� Cheung JA: Personally preferred the English CA approach

� Yuen JA: Personally preferred Lim Ban Thoon decision

� Chu J: No comment on this issue

� Leave to appeal to CFA granted on 21 Nov 2006

� => watch out for CFA decision

� In the meantime, what should you do if the application to amend to add new cause of action is to be filed close to time limitation?

Submission to Court’s Jurisdiction

� MIRUVOR LTD v. PANAMA-GLOBE STEAMER LINES S.A. AND OTHERS CACV226/2006 (Rogers VP and Le Pichon JA; 9/2/207 and 21/3/2007):

� Writ issued against D3 (overseas D) in 1997; renewed a number of times.

� July 2004, leave to serve a concurrent writ against D3 obtained, withservice effected on 29 October 2004.

� 29 August 2005, an order was made to allow filing the Points of Claim out of time, and the Points of Claim were filed on the following day.

� 26 September 2005 D3 filed Defence, stating in para 1: “For the avoidance of doubt, this Defence is made strictly without prejudice to be Third Defendant’s applications (i) to have the writ served against it set aside and/or (ii) to have the Plaintiff’s claim dismissed for want of prosecution.”

� 28 September 2005, summonses were issued to discharge the orders extending the validity of the writs under the rubric Order 12 rule 8.

� Any waiver?

CFI Decision (Stone J)

� There was insufficient reason to have granted the orders for extension of the Writ and so the court should not have exercised its discretion to grant the extensions.

� However, D3 had failed to follow the procedure prescribed in Order 12, rule 8 for the purpose of taking objection to the jurisdiction:

� “43. The rules thus contemplate that any application to challenge jurisdiction should precede the substantive defence. As the editors of Hong Kong Civil Procedure 2006 explain, at MN 12/8/2 :

� … 3. If a defendant chooses to make an application under r.8(1), he should not meanwhile serve a defence, or take any step to defend the case on the merits, or apply for other primary relief; this may be construed as a submission to the jurisdiction or a waiver of irregularity (see Guangdong liFruit Wholesale Market Co. Ltd v. Yip Lai Fong [2003] 1370 HKCU 1) …”

� “58. …the introductory paragraph purporting to reserve the right to take issue with jurisdiction does not circumvent the difficulty, as Ms Lo has argued. The 3rd defendant cannot have it both ways. It seems to me that by filing its Defence in the manner in which it has the 3rd defendant must be taken to have submitted to the jurisdiction.”

CA’s Decision

� Citing Patten J’s decision in SMAY Investments Ltd v Sachdev [2003] 1 WLR 1973 with approval

� ‘A useful test was whether a disinterested bystander with knowledge of the case would have regarded the acts of the Defendant, or his solicitors, as inconsistent with the making and maintaining of his challenge.’

� “In arriving at the view to be imputed to the disinterested bystander, it seems to me that one has to bear in mind that there will be an effective waiver, or a submission to the jurisdiction, only where the step relied upon as a waiver, or a submission to the jurisdiction, cannot be explained, except on the assumption that the party in question accepts that the court should be given the acceptance of jurisdiction. If a step which can be explained also because it was necessary or useful for some purpose other than acceptance of the jurisdiction, there will, on the authorities, be no submission.. . ….If the well-informed bystander had been left in doubt because what the defendants had done was equivocal, in the sense that it was explicable on other grounds in addition to agreement to accept the jurisdiction of the court, then the conclusion must be, on the authorities, that there would have been no submission to the jurisdiction. The representation derived from the conduct of the party said to have submitted must be capable of only one meaning.”

� Rogers VP: “8. Order 12 does not provide that the making of an application to set aside the service of a writ absolves a defendant from serving a defence. In contrast, Rule 11(9) of the CPR provides that where a defendant makes an application under the rule he need not file a defence before the hearing of the application. It is true that the notes to the Hong Kong Civil Procedure state that a defendant who makes an application should not serve a defence and that the plaintiff should not seek to enter judgment in default of defence whilst the application is pending and continues “although there is no express extension of the time for defence, it would be quite inconsistent with the rules to do so and any such judgment would be set aside”. The fact that the matter has to be dealt with in notes to the Rules emphasises the point that the Rules by themselves are incomplete.

� “9….In my view, when the defences are considered it is abundantly clear from the first paragraph that the 3rd defendant intended to challenge jurisdiction and was to make an application to that effect. When the absence of a rule suspending time for service of a defence, such as is contained in the CPR, is borne in mind, it is not wholly incomprehensible that a cautious legal adviser might consider it appropriate to have a defence ready on file whilst at the same time making it clear that jurisdiction was being challenged.”

� But is it true that there is no express provision to absolve D from serving a defencepending application under O 12 r 8?

� Service of defence (O. 18, r. 2)(1) Subject to paragraphs (2) and (3), a defendant who gives notice of intention to defend an action must, unless the Court gives leave to the contrary, serve a defenceon every other party to the action who may be affected thereby before the expiration of 14 days after the time limited for acknowledging service of the writ or after the statement of claim is served on him, whichever is the later.

� …(3) Where an application is made by a defendant under Order 12, rule 8(1), paragraph (1) shall not have effect in relation to him unless the application is dismissed or no order is made on the application and, in that case, shall have effect as if it required him to serve his defence within 14 days after the final determination of the application or within such other period as may be specified by the Court.

� Further application to CA by P: Mistake didn’t affect the decision

� Rogers VP (21 March 2007): “6. It should not be held that the party did not intend to challenge jurisdiction simply because out of an abundance of caution a document had been filed, which starts by referring to an application to set aside the writ in phraseology that would be appropriate if that application had already been made, in circumstances where the Hong Kong Civil Procedure is misleading; it would be insincere of this court to hold that the party should have had in mind a provision of the Rules which this court and those appearing before it overlooked.”

Limitation Period for Adverse Possession

� S 7(2) of Limitation Ordinance: No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him …

� Article 105 of Basic Law:‘The Hong Kong Special Administrative Region shall, in accordance

with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property…’

� Hong Kong Buddhist Association v Occupiers & Another, HCMP 4108/2003, 8 September 2006, CFI (Deputy Judge Saunders)

� applied the European Court's judgment in J. A. Pye v The United Kingdom (E Ct HR Aplic. No. 44302/02, 15 Nov 2005) and took the view that: “In the absence of any compensatory provision to ameliorate the rights that the Basic Law requires the Hong Kong Special AdministrativeRegion to protect, I am driven to the conclusion that s 7 of theLimitation Ordinance (i.e. the adverse possession provision), as it presently stands is inconsistent with the Basic Law.”

� Saunder J’s dicta not followed in Harvest Good Development Ltd v SJ and others [2007] 4 HKC 1 (HCAL 32/2006, 16 July 2007, Hartmann J)

� (1) BL 105 concerning rights of private property does not operate retrospectively.

� (2) BL was not engaged. On a true construction, Art 105 of the Basic Law, even as buttressed by art 6, seeks only to guarantee the right to compensation for lawful deprivation of property when that deprivation constitutes expropriation of property by the state or a state agency. A loss of possessory title pursuant to the operation of ss 7(2) and 17 of the Limitation Ordinance does not constitute an expropriation, de facto or otherwise. If the legislation was of a general regulatory nature, i.e. authorising deprivation in the public interest so as to regulate the rights and duties of society, then a deprivation of property under that legislation might not constitute a ‘deprivation’.

� (3) Even if BL were engaged, there was no violation. Although the mechanism of adverse possession can bear harshly, it is founded on economic and social imperatives and consistent with the protections contained in arts 6 and 105 of the Basic Law. Pye could be distinguished as it was concerned with registered land in UK. Hong Kong land is unregistered land, proof of title depending ultimately upon possession.

� Watch out for any appeal decisions

Actions Involving Mentally Incapacitated Person

� Last year I referred to various decisions of Lam J (e.g. Re YCK, HCMP 2878/2004, 9 Feb 2006, Re CK, HCMP 1150/2006, 4 Aug 2006, Re YLC, HCMP 1190/2005, 25 Jan 2006; note also Suffiad J ruled in Sin Kam Hei v Transward Ltd HCPI 293 of 2004, 14 July 2006 that if Part II application is appropriate, the defendant in the PI action should bear the costs of the Part II application and the setting up of a committee.)

� Recent Law Society Circular 07-710 (PA) updated on 26 Nov 2007:

� New Court Prefix of HCMH to be used as from 2 Jan 2008

� PD 30.1 governing applications under Part II of the Mental Health Ordinance (Cap. 136)

� Solicitors’ duties to MIP (not only to next friend/guardian)

� Committee’s fiduciary duties to the MIP: court’s sanction should be sought if the Committee is considering entering into a transaction with one of its members.

� Court’s wider jurisdiction under Part II of MHO as compared to O 80 r 12(3) RHC (can provide for MIP’s family members’ need under Part II)

IMPORTANT

The law and procedure on this subject are very

specialized and complicated. This article is just

a very general outline for reference and cannot

be relied upon as legal advice in any individual

case. If any advice or assistance is needed,

please contact our solicitors.

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