Introduction
Background
Judgment
Comment
While appeals of non-final orders granting extensions of time to serve pleadings are uncommon in the first-instance courts, attempts to appeal such orders to the Court of Appeal are rare. This does not appear to have dissuaded the plaintiffs in Yinggao Resources Ltd & Ors v HSBC Ltd.(1) Having failed to persuade a judge to overturn on appeal a judicial officer's order granting the defendant bank a first non-final extension of time to serve their defence, the plaintiff sought permission to appeal from the Court of Appeal. In its judgment, following written legal submissions (without a hearing), the Court of Appeal dismissed the intended appeal as having no prospect of success and being "wholly unmeritorious".(2) As an illustration of what the Court of Appeal thought of the intended appeal, it also awarded costs in favour of the defendant on an indemnity (higher) basis and ordered that there be no reconsideration of the Court's determination at an oral hearing. Appeals in such circumstances are rarely, if ever, worth it.
The first and second plaintiffs commenced two actions against the defendant bank (the defendant) – one in 2015 and the other in 2022. The facts pleaded in both actions were substantially the same. In the 2015 action a judicial officer granted the plaintiff permission to amend some of their statement of claim in 2022 – that decision was appealed by the defendant and the court's judgment is pending. In the meantime, the parties agreed to extend time for service of the defendant's defence pending determination of the defendant's appeal.
In the 2022 action the defence was due to be served on or about 7 April 2022. However, during the fifth wave of the covid-19 pandemic in Hong Kong, the court registry was closed between 7 March 2022 and 11 April 2022 (save for urgent or essential business) – known as the "second general adjourned period". On 12 April 2022 (the first day of the reopening of the court registry) the defendant applied for an extension of time to file and serve their defence to 28 days after the determination of the appeal in the 2015 action. A judicial officer granted that application on 4 May 2022, as a first court-ordered extension of time (the extension of time).
The plaintiffs appealed the judicial officer's decision to a judge. In short, the judge dismissed the appeal as having no merit.(3) In particular, the judge rejected the plaintiffs' argument that the reference note in paragraph 2 of the directions in the acknowledgment of service form – which referred to service of a defence within 28 days after the time for acknowledging service of the writ – took effect as a peremptory "unless order". For further details, please see "Courts explain peremptory orders (and some prepositions)". The judge also declined to grant the plaintiff permission to appeal.(4)
Apparently undaunted, the plaintiff applied to the Court of Appeal for permission to appeal the decision of the judge. The principal issue before the Court of Appeal was whether the intended appeal had a reasonable prospect of success.
The Court of Appeal summarised the plaintiffs' argument as to whether the judicial officer had a discretion to grant the extension of time as follows:
[T]he crux of the plaintiffs' arguments is that the failure to file and serve a defence within 28 days after the expiry of the 14-day time limit for giving notice of intention to defend, has the effect of an "unless" order such that the defendant must apply for relief from sanction under Order 2 rule 4 of the RHC, and the Master therefore erred in simply extending the time for the defendant to file and serve its defence and the Judge also erred in upholding his decision.(5)
The Court of Appeal described such arguments as "legally untenable" for the following reasons:
- The reference note in the directions in the acknowledgment of service form was neither a court order nor a court rule – therefore, it did not have the status of an "unless order".
- The relevant court rule was Order 18, rule 2 ("Service of defence"), which provided that a defendant had 28 days after the time limited for acknowledging service of the writ to serve their defence. However, that rule (of itself) did not stipulate a sanction and the consequence of failing to serve a defence in time was that a plaintiff could enter judgment in default.
- There were two types of peremptory orders – those with an inbuilt self-executing sanction (known as an "unless order") and those without an inbuilt sanction, which were preliminary to an "unless order".(6)
- Order 2, rule 4 ("Sanctions have effect unless defaulting party obtains relief") was not relevant because Order 18, rule 2 did not impose a sanction for failing to serve a defence within the specified time.
- The case could not be distinguished from other recent cases which had held that the reference note in the directions in the acknowledgement of service form did not create an "unless order" and that Order 2, rule 4 had no application.(7)
There being no other reason in the interests of justice to hear the intended appeal, the Court of Appeal refused to grant permission to appeal. For good measure, given that the Court of Appeal considered the application to be "totally unarguable" and "wholly unmeritorious", it awarded costs to the defendant on a higher (indemnity) basis and ordered that there be no reconsideration of the Court's determination at an oral hearing.(8)
From a defendant's perspective, a case like this could be mistaken for being a gift that keeps on giving. The plaintiffs' arguments before the judicial officer, the judge and the Court of Appeal had no merit and the Court of Appeal stated as much several times. The argument that the first extension of time, granted by the judicial officer, was anything other than (for example) an ordinary non-final order was fundamentally mistaken.
Applications for extensions of time with respect to non-milestone dates are common and often proceed by consent. Appeals to a judge with respect to orders for first extensions of time are rare and, it would appear, almost unheard of before the Court of Appeal.
For further information on this topic, please contact Jacky Darsono or Jennifer Leung at RPC by telephone (+852 2216 7000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.
Endnotes
(1) [2022] HKCA 1477, 30 September 2022.
(3) [2022] HKCFI 1704, 6 June 2022.
(4) [2022] HKCFI 2355, 28 July 2022.
(6) Practice Direction 16.5 (Peremptory Orders).
(7) Re Guangdong Yinggao Shipping Ltd [2022] HKCFI 305 and Young Crystal Ltd & Ors v Hang Seng Bank Ltd [2022] HKCFI 1589.