Court distinguishes between fault of litigants and of legal representatives in considering whether to grant relief from sanction

Civil Procedure

In Chan Chung Sing v Chan Andy Yuan & Anor [2024] HKCFI 536, the Court, inter alia, granted the Plaintiff relief from sanction under an unless order on the basis that the failure to comply could be attributed to the fault or negligence of the Plaintiff’s former solicitors, not least because Order 2, rule 5(1)(f) of the Rules of the High Court (Cap.4A) provided for a distinction between the fault of litigants and of legal representatives, of which there is no parallel in England’s Civil Procedure Rules. Secondly, the Court also found the sanction of dismissing the Plaintiff’s whole claim to be disproportionate where a more proportionate and effective sanction should have been barring the Plaintiff from taking out these interlocutory applications and imposing a date for setting down for trial without further ado.

Frederick Fong, instructed by Messrs. Wan Yeung Hau & Co., appeared for the Plaintiff who was granted relief from sanction albeit with conditions. Valerie Tang provides her analysis of the decision below.

Facts

On 11 December 2020, an unless order (the “Unless Order”) was made against the Plaintiff, that unless he took out applications for amendment, joinder of parties and discovery on or before 4:30 pm on 8 January 2021, his action against the Defendants would be dismissed without further order. The Unless Order was not complied with. Subsequently, the Plaintiff, while acting in person, issued a Notice of Appeal (which was not pursued), followed by a summons seeking relief from sanction (the “Relief Summons”).

The basis of the Relief Summons was two-fold, being: (1) that the breach of the Unless Order, inter alia, was due to the fault or negligence on the part of the Plaintiff’s former solicitors (“Ground 1”); and (2) that the Plaintiff himself was not aware of the need to seek relief from sanction until another separate hearing (“Ground 2”). The Relief Summons was opposed by the Defendants.

Relevant Law

In the Decision, the Court examined the existing law on relief from sanction. The burden is on the defaulting party to demonstrate “with cogent and compelling evidence” that the failure to comply was not intentional or contumelious and was caused by circumstances beyond his control. The question of proportionality of the sanction in the circumstances of the case is a weighty factor: the purpose of an unless order is not to punish misconduct but to secure a fair trial in accordance with the due process of law; striking out a claim entirely is therefore a remedy of last resort. The Court also has to consider all relevant factors, which included the length of delay, the reasons of delay, the merits of the proposed application for relief from sanction and the degree of prejudice to the other party.

Decision

Ground 1: Fault of Former Solicitors

In the present case, the Plaintiff’s former solicitors were found by the Law Society to have failed to keep the Plaintiff properly informed of the status of the proceedings. It was therefore probable that the Plaintiff was not aware of the Unless Order.

Notwithstanding that the Defendants relied on various English cases which stood for the general principle that solicitors’ negligence is no good reason for granting relief from sanction, the Court rejected the application of English authorities directly in this context. Specifically, Order 2, rule 5(1)(f) of the RHC expressly provides that the Court shall consider whether the failure to comply was caused by the party in default or his legal representative, and such provision no longer exists in its English counterpart.

Ground 2: Awareness of Need to Apply for Relief for Sanction

The Court however did not find Ground 2 to be sustainable: at the very latest, there was a 6-month delay after the Plaintiff ought to have discovered the need to apply for relief from sanction. Having acted in person thereafter, the Plaintiff was also expected to familiarise himself with the relevant rules and procedures so that ignorance of the law was no excuse for not taking out the application for relief from sanction.

Proportionality of Sanction

The Court further went on to consider the Plaintiff’s entire history of defaults, and found that the Plaintiff’s conduct was not so poor as to warrant dismissal of his entire action with costs. Ultimately, the Court granted relief to the Plaintiff on the condition that the Plaintiff has to satisfy certain costs orders against him. The Plaintiff is also debarred from seeking discovery on the existing state of pleadings.

Conclusion

In light of the disproportionate nature of the sanction, fault of the Plaintiff’s former solicitors, lack of intentional and contumelious disregard of court orders, and balancing the prejudice to both parties, the Court ultimately exercised its discretion to grant relief from sanction in the Unless Order albeit with conditions.

 

Frederick Fong

Frederick has a general civil and criminal practice. His civil practice is broad with particular emphasis on personal injuries, intellectual property, and matrimonial law. He also represents clients in a wide range of criminal and regulatory matters, in particular, commercial crimes and Securities and Futures Commission investigations.

Recently, Frederick co-authored the article “Champerty, Maintenance and Litigation Funding in Hong Kong”, which analyses the legal position of champerty and maintenance following the enactment of the Arbitration and Legal Practitioners Legislation (Outcome Related Fee Structures for Arbitration) (Amendment) Ordinance 2022. The new law lifts the hurdles of criminal liability for litigation funding agreements in arbitration and related court proceedings.

Visit Frederick’s profile for more details.

 

Valerie Tang

Valerie was called to the Bar in 2019. Since joining Chambers, Valerie has established a broad civil practice with an emphasis on commercial and matrimonial matters. She has also been a Member of the Chartered Institute of Arbitrators since 2020.

In Atkins China Limited v China State Construction Engineering (Hong Kong) Limited [2020] HKCFI 2092, Valerie successfully resisted an application for an interim injunction to stay arbitration proceedings, which concerned a dispute over the design of certain sections of the Hong Kong-Zhuhai-Macau Bridge.

More recently, Valerie obtained a return and non-removal order for children abducted from Hong Kong to a non-Hague Convention contracting state in MF v LJL (FCMC 655/2023).

Valerie also regularly acts as sole advocate in land, trust and probate matters. She also has experience in matters relating to mentally incapacitated persons, including Part II inquiries and other contentious applications.

Valerie obtained her law degree from the Chinese University of Hong Kong and read International Relations at the London School of Economics and Political Science prior to her legal studies. She also served as a Legislative Council assistant for the Legal Sector Constituency office from 2015 to 2018.

More details can be found in Valerie’s profile.

 

This article was first published on 21 June 2024.

Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.