Litigation often concerns hostile adversaries. But this is not always the case. After an initial flurry of steps, one or more of the parties may lose interest in the suit. In Asiam Holdings Ltd v. Shin Kai Lok & Anor [2024] 3 HKC 140; [2024] HKCFI 375, the Court had an opportunity to deal with a case where the Defendants have “gone into sleep”. The Court considered that it would be appropriate to make an “unless order” requiring the Defendants to confirm whether or not they shall attend trial, failing which judgment will be entered against them without the need of a full-blown trial.
The Case Facts
This is a case involving a contractual claim between the Plaintiff and the Defendants. The Plaintiff sues for a liquidated sum arising from a Deed of Settlement.
The Defendants initially filed a Defence and Counterclaim. However, some time after the pleadings stage, the Defendants have failed to appear. The question that arises is whether, in these circumstances, the Plaintiff still has to appear at trial simply for the purposes of proving its case.
The Possible Legal Vacuum
Because the Defendants were not in default of acknowledgment of service, the provisions of O. 13 of the Rules of the High Court (Cap. 4A) are not applicable. Because the Defendants were also not in default of pleadings, the provisions of O. 19 of the Rules of the High Court also cannot be applied.
Under O. 25 of the Rules of the High Court, where a plaintiff (or a counterclaiming defendant) does not appear at a case management conference or pre-trial review, the Court may provisionally strike out the claim (or counterclaim). To an extent, this provides recourse to the situation where a plaintiff (or a counterclaiming defendant) lost interest in pursuing a claim. However, these provisions do not apply to a case where it is the “receiving end” of the claim who refuses to participate further in the matter.
The Ruling
In Asiam, Deputy High Court Judge H. Au-Yeung (as he then was) held that, notwithstanding the above, the Court enjoys general case management powers to require the Defendants to confirm whether they intend to attend the trial and contest the Plaintiff’s claim. Moreover, in the event of default, the Court can strike out their Defence.
His Lordship held that when exercising this power, the Court should take the following considerations into account:-
- It is a draconian measure to take away a defendant’s right to defend the plaintiff’s claim at the trial. Therefore, the discretion should be exercised carefully;
- There should be at least prima facie evidence in support of the assertion that the defendant is no longer interested in contesting the claim;
- The Court should take into account the nature of the plaintiff’s claim;
- The Court should consider the pleaded case and the evidence adduced by the plaintiff, so as to decide whether it is likely that the plaintiff will be able to prove his case successfully at the trial in the absence of the defendant thereat;
- The Court should also consider all the circumstances before coming to the conclusion as to what should the appropriate period be for the defendant to indicate whether the defendant is still minded to contest the plaintiff’s claim.
In the present case, the Defendants have failed to serve any witness statement and to attend a number of case management hearings. In the event the defendants are not going to attend the trial, it is highly likely that the Court will accept the plaintiff’s claim. Accordingly, his Lordship held that it will be a waste of cost and time for the Court to insist that the Plaintiff should prove its case regardless of the Defendants’ appearance.
In the event, his Lordship decided to give “one last chance” to the Defendants, and ordered that unless they confirm whether they would attend the trial, their Defence would be struck out. Thereafter, the Plaintiff may enter judgment against them without the need of a full-blown trial.
Implications
This is the first reported case at the High Court level where the Court made such orders. Previously, such orders have only been applied for, and made at, the District Court level (see Kristen Lee v. Santa Fe Transport International Ltd [2020] HKDC 79). Whilst the High Court has on a previous occasion dealt with a similar application, the application was unsuccessful on the facts (see Air Charter Service (HK) Ltd v 美拓国际物流(上海)有限公司 [2020] HKCFI 2863).
The Asiam decision serves as a timely reminder as to how the Court may actively manage cases to give effect to the underlying objectives under O. 1A of the Rules of the High Court. It can be readily seen that the Court would not allow parties to play technical games, especially when this may jeopardise the efficient use of judicial resources.
Where a defendant has manifested no intention to defend the case, the Court will make appropriate orders to regulate his conduct. If the defendant continues to be in default, his defence may be struck out with the consequence that the plaintiff may directly obtain judgment against him without the need of going through the trouble and expenses of a full-blown trial.
The full judgment of the Court of First Instance is available at: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=157848&currpage=T
Martin Lau acted for the Plaintiff.
