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Cheng, Henry v Imperial Sierra Group Holdings Ltd And Another

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date29 July 2020
Neutral Citation[2020] HKDC 605
Judgement NumberDCCJ5318/2019
Subject MatterCivil Action
CourtDistrict Court (Hong Kong)
DCCJ5318/2019 CHENG, HENRY v. IMPERIAL SIERRA GROUP HOLDINGS LTD AND ANOTHER

DCCJ 5318/2019

[2020] HKDC 605

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5318 OF 2019

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BETWEEN
CHENG, HENRY (鄭永堅) Plaintiff

and
Imperial Sierra Group Holdings Limited 1st Defendant
(御峰集團控股有限公司)
YIP WIK ARIC (葉域) 2nd Defendant

---------------------------

Coram: His Honour Judge Andrew Li in Chambers (By paper disposal)
Date of written submissions: 16, 17 & 22 July 2020
Date of Decision: 29 July 2020

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DECISION

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INTRODUCTION

1. This is an appeal brought by the 1st defendant (“D1”) against a master’s decision.

2. The appeal was originally fixed for hearing before me on 21 July 2020. However, due to the General Adjournment Period announced on 19 July 2020, the case was adjourned.

3. By an application made on 22 July 2020, the parties invited the court to deal with the appeal by way of paper disposal. The court considers that this is an appropriate case to do so and hence has acceded to the request.

BACKGROUND

4. This is a case where the plaintiff (“P”) and D1 have locked into a bitter dispute. In short, the latest episode is that P had taken out a statutory demand against D1 on rather flimsy grounds in July 2019. D1 applied to set aside the statutory demand in the High Court under HCSD 37/2019 in August 2019 (“the HCSD Action”). P then wrote to the court to apply to withdraw the statutory demand and asked for the hearing to be vacated. D1 proposed that the statutory demand be set aside with costs to be assessed on paper. P did not reply to the proposal which led to a hearing before Deputy High Court Judge Leung (“DHCJ Leung”) on 23 October 2019. Unsurprisingly, DHCJ Leung while allowing P to withdraw the statutory demand at the hearing, ordered P to pay D1’s costs which was summarily assessed at HK$45,000. P was ordered to pay it within 14 days (“DHCJ Leung’s Order”).

5. In the meantime, P has issued the writ of summons in the present proceedings in the District Court on 27 September 2019 but did not file the statement of claim until D1 issued a summons to dismiss the claim. The statement of claim was only filed on 15 November 2019 after further extension of time was granted by the court.

6. On 19 May 2020, D1, together with the 2nd defendant (“D2” and collectively as “Ds”), issued 2 separate summonses to apply to strike out P’s action and seeking security for costs from P (“P’s Striking Out and Security for Costs Summonses”).

7. On 25 May 2020, Registrar Lui adjourned the hearing of those 2 summonses to 3 August 2020 before Master B Mak for full argument with 3 hours reserved.

8. P did not pay the assessed costs within 14 days as ordered by DHCJ Leung. Despite repeated demands from D1’s solicitors, P has failed to pay the costs for a period of over 7 months.

9. However, in the meantime, D1 applied under the HCSD Action for a charging order against a property situated in a luxurious development owned by P in Hong Kong. A charging order nisi was granted by Master J Wong in the High Court on 11 March 2020. P was ordered to show cause as to why the charging order should not be made absolute before Master Kot in the High Court on 15 June 2020. The charging order was made absolute before Master Kot on that occasion with fixed costs of $9,100 awarded against P. P did not appear at the hearing in person or by legal representative.

10. Despite having secured the charging order nisi against P in March 2020 and having fixed a hearing before Master Kok to make the order nisi to become absolute on 15 June 2020, on 9 June 2020, Ds took out a 3-minute summons for a Hadkinson Order to be imposed on P, ie unless P pays the costs and interest of the HK$45,000 ordered by DHCJ Leung, P be barred from being heard at the hearing on 3 August 2020 (“the Hadkinson Summons”).

11. On 23 June 2020, Master B Mak dismissed the Hadkinson Summons. In his oral reasons for the ruling, the learned Master held that Ds having made an application to impose a charge on P’s property forcing P to satisfy the costs order of DHCJ Leung, there was no compliance issue as far as payment of the High Court proceedings is concerned. Further, as P by this action is making a claim against Ds, P should be entitled to have his day in court. For those reasons, the master considered that P should not be barred from proceeding his claim in this court.

12. D1 now appeals against Master B Mak’s decision.

DISCUSSION

(i) What is a Hadkinson Order?

13. This is a draconian measure seldom used in modern day litigation. It originated from a 1952 matrimonial case in Hadkinson v Hadkinson [1952] 2 ALL ER 567 where the English Court of Appeal laid down the rule that a person who has committed a contempt should not be heard or entertained by the court until he had purged his contempt. Lord Denning, who was one of the justices of appeal in that case, specifically stated that the court would only refuse to hear a party to a cause when the contempt impeded the course of justice by making it more difficult for the court to ascertain the truth or to enforce its order and there was no other effective means of securing his compliance. The court might then in its discretion refuse to hear him until the impediment was removed or good reason was shown why it should not be removed: per Denning LJ (as he then was) at 575B.

14. There is no major dispute as to the legal principles involved in a Hadkinson Order in this case. However, I wish to note here that in almost all the cases cited by the parties involving a Hadkinson Order, they are in the context of matrimonial proceedings. They are seldom found or used in general civil litigation. At least I have not come across any. However, that of course does not mean they cannot be used in such cases.

15. Perhaps it is important to bear in mind that in the very case which laid down the rule, the court stated that “it is a strong thing for a court to refuse to hear a party to a cause” and a Hadkinson sanction is “only to be justified by grave considerations of public policy”: Hadkinson v Hadkinson, supra at 574H, per Lord Denning.

16. Further, it has been stated by our own Court of Appeal that “the Hadkinson sanction should be a last resort and the exercise of the power is to be guided by asking whether in the circumstances, the interest of justice is best served by hearing or refusing to hear a party in contempt, bearing in mind that the paramount importance of orders of the court being observed”: THY v CHFR, unreported, HCMP 1755/2015 (23 September 2015; Lam VP and Barma JA), at §6, per Lam VP.

17. In M v M (Maintenance Pending Suit: Enforcement on Dismissal of Suit) [2009] 1 FLR 790, Bodey J observed, at §52:-

“Any Hadkinson application needs to be approached with circumspection since, whilst the concept may, of course, be justified to meet the needs of a particular case, there is always the risk that it will not succeed and will be a mere distraction. Such an order is a remedy of last resort, for use where the circumstances are such that adequate justice cannot be done to the aggrieved party whilst the defaulter remains in breach.” [Emphasis added]

18. Given the above, in my judgment, one must treat the Hadkinson sanction as the last resort and must not lose sight of whether the interest of justice will be best served by barring a party in contempt his right to be heard.

(ii) Criteria to be met in a Hadkinson Order

19. As said, the parties have no substantial dispute over the criteria required.

20. In an application for a Hadkinson Order, the court would consider the following questions:-

(a) Is...

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