3LLB 2015-2016

CIVIL PROCEDURE (CODE 3097)

Seminar One: Overview and Pre-Commencement
Considerations
Date:
20 January 2016
Lecturer: Eric TM Cheung
OBJECTIVES
To provide students with an overview of civil procedure and civil
litigation practice, and of the matters to be considered before litigation
is commenced.
To help students acquire an overall picture of the civil litigation process
PREPARATION BEFORE CLASS
Read the Course Outlines and this Seminar Outline.
Consider the Exercises in this Seminar Outline and attempt to answer
the questions raised.
OUTLINE
A. Course Overview and Expectation
See the Course Outlines
B. Problem Solving Approach
1. Why is the skill to solve problem relevant and important?

Problem solving is at the centre of what lawyers do.

Competence for lawyers is the ability to solve legal problems
satisfactorily for clients in a lawful and ethical way.

2. What do you need?

In order to solve a variety of problems, need to acquire and develop:

Knowledge (legal and non-legal; substantive, transactional and

procedural)
Skills (core and specialised); and
Attitudes (professionalism, dedication, self-motivation).

3. Two basic types of legal problem solving:

(1) Playing out conflict and (2) blocking conflict
4. Playing Out Conflict:

Conflict already existed

Contentious
litigation anticipated
Resolve conflict by playing out or winning

5. Blocking Conflict:

Ability to foresee potential conflict

Non-contentious
Aim to avoid litigation by blocking conflict /minimizing risks

6. A Process Model of Legal Problem Solving:

The model (or framework) presents a general, though simplified,

theory of competent legal practice.
It offers a logical and systematic way to handle a range of legal
problems.
On the other hand, it should allow for flexibility to accommodate
the variety and complexity of legal problems.

7. The 5-stage Process Model of Legal Problem Solving (PGFLAP):

(1)
(2)
(3)
(4)
(5)

Problem and goal identification;

Fact investigation;
Legal issue identification and assessment;
Advice and decision making; and
Planning and implementation.
Need to note the fluid nature of the various stages and must not
treat it as a strictly linear process or apply it mechanically without
flexibility.

8. Stage 1: Problem and goal definition

What are the clients goals / objectives / problems?

What does the client want / need?
What are the obstacles/ conflict / problems
NOTE: clients goals / objectives / problems may change over
time.

9. Stage 2: Fact investigation

10.

11.

12.

Have to get some facts first to facilitate identification of legal

issues.
Method: Through interviews, correspondence, document
analysis, searches, investigative work etc
Once legal issues are preliminarily identified from facts gathered,
it may necessitate further fact investigation.
Stage 3: Identification of legal issue and assessment
Identify legal issues raised by the facts and make an assessment
as to the legal merits of parties.
Often need to do legal research before making the assessment
Stage 4: Advice and decision-making
Developing options: e.g. to sue, settle, mediate, negotiate, admit
fault, withdraw, abort transaction, continue transaction, renegotiate
Evaluating options: quantify outcomes, evaluate clients risk
profile
Other (non-law) factors should not be overlooked: including
peace of mind, cost in time and money needed
Choosing the best option: (1) client-centred: explain risks and
benefits of various options and let the client decide; (2) lawyercentred: recommend an option for client to adopt
Stage 5: Planning and implementation
Some planning normally done at Stage 4 to facilitate decisionmaking
More concrete and comprehensive action plans devised after the
client has chosen the option
Specify who does what, and when, and how.
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13. Consider before class how you may apply this process
model of legal problem solving to handle the following
instructions:
Exercise 1
You receive instructions by fax from Joe Chan, the managing director of
King Kong Toys Manufacturing Ltd requesting you to take legal
proceedings against Talk Sui Lung Ltd for the recovery of HK$80,000
for unpaid purchase price of goods sold and delivered to the latter.
What should you do?
Exercise 2
You receive another instruction from Joe Chan on behalf of King Kong
Toys Manufacturing Ltd. He says Mo Leung Sum, the general manager,
has just resigned from the company. He understands from a reliable
source that Mo is being headhunted for a job as a manager of their
main competitor, The Shark Toys Manufacturing Ltd (Shark Toys), and
it seems likely that he will get the job. Chan provides you with a copy
of the employment contract with Mo, which contains a clause
prohibiting Mo from being employed by or engaged in any competing
business including in particular Shark Toys within 1 year of his leaving
the company. Yesterday, Chan telephoned Mo and asked him not to join
Shark Toys in breach of the contract, but Mo said he was determined to
join Shark Toys. Mo further said he was not afraid of legal action as his
lawyer friend had advised him that the contractual prohibition had no
legal effect and his lawyer friend was willing to help him for free.
Chan wants you to take legal action to prevent Mo from joining Shark
Toys. What should you do?
C. Overview of the Conduct of Civil Litigation in the District
Court and the High Court
1. Civil Procedural Law
1.1 Importance of Civil Procedural law
The law of civil procedure regulates the enforcement and defence of
civil claims. Unless procedural law operates fairly and effectively,
substantive legal rights may be rendered meaningless, defeated by
excessive expense, delay and client frustration. For the system to
work, lawyers (and before them, law students) must acquire a
sufficient understanding and mastery of the rules to be able to
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advance a claim or defence in a cost-effective manner, appropriate to

the needs of their clients and the case at hand.
- per the Honourable Mr Justice Ribeiro, Permanent Judge of the Court
of Final Appeal in his Foreword to the first edition of A Guide to Civil
Procedure in Hong Kong

Substantive law creates rights and obligations

Procedural law governs how those rights and obligations can be
established and enforced

1.2 Main Sources

Statutes e.g. High Court Ordinance, District Court Ordinance,

Crown Proceedings Ordinance, Hong Kong Court of Final Appeal
Ordinance etc
Subsidiary legislations e.g. Rules of the High Court, Rules of the
District Court, Hong Kong Court of Final Appeal Rules etc
Case law
Practice Directions1

Inherent jurisdiction of the court

1.3 Civil Justice Reform

In recent years, disquiet has again been expressed in Hong Kong

and many other common law jurisdictions regarding the adequacy
of the existing civil justice system. As succinctly explained by Lord
Woolf in his Final Report on Access to Justice in England and Wales
published in 1996:The defects I identified in our present system were that it is too
expensive in that the costs often exceed the value of the claim; too
slow in bringing cases to a conclusion and too unequal: there is a
lack of equality between the powerful, wealthy litigant and the

1 Practice Directions are issued under the inherent power of the court to regulate its
own process and not under the Rules of the High Court or other statutory power. They
are designed, in consultation with the profession, to ensure the efficient, expeditious
and economical dispatch of the court's business: See e.g. Kaplan J in Tong Yi Sang &
Anor v Fung Law & Ng & Ors [1993] 2 HKC 665 at 669E and Re Boon Voon King & Ors
[1998] 3 HKC 537. Practice Directions are accessible from the judiciary website at
http://www.judiciary.gov.hk/en/legal_ref/prac_directn.htm

under-resourced litigant. It is too uncertain: the difficulty of

forecasting what litigation will cost and how long it will last induces
the fear of the unknown; and it is incomprehensible to many
litigants. Above all it is too fragmented in the way it is organised
since there is no-one with clear overall responsibility for the
administration of civil justice; and too adversarial as cases are run
by the parties, not by the courts and the rules of court, all too
often, are ignored by the parties and not enforced by the court.

In February 2000, the Chief Justice set up a Working Party on Civil

Justice Reform to review the civil rules and procedures and to
recommend changes with a view to ensuring and improving access
to justice at reasonable costs and speed. The Working Party
published its Interim Report and Consultative Paper in November
2001 and its Final Report subsequently in March 2004. Immediately
thereafter a Steering Committee on Civil Justice Reform chaired by
the Chief Judge was established to oversee the implementation of
the recommendations of the Final Report by introducing
amendments to the legislation, promulgating new Practice Directions
and providing necessary training etc.
Amendments to primary legislation were passed on 5 February
2008 under the Civil Justice (Miscellaneous Amendments)
Ordinance 2008 and six Ordinances were amended: High Court
Ordinance; District Court Ordinance; Small Claims Tribunal
Ordinance; Lands Tribunal Ordinance; Arbitration Ordinance and
the Law Amendment and Reform (Consolidation) Ordinance
(LARCO).
Amendments to three subsidiary legislations were gazetted on 6
June 2008: the Rules of the High Court, the Rules of the District
Court and the Lands Tribunal Rules.
New or revised Practice Directions on CJR were subsequently
issued in February 2009.
All the amended legislation and Practice Directions2 became
operative on 2 April 2009, which apply basically to both existing
and new actions (with transitional arrangements in some aspects).
This course is based on the new CJR rules. Students must therefore be careful when
consulting textbooks or materials published before 2009, which may be based on the
old rules.

ExceptPD31ondMia,whbmerv1Jnuy20.

 Students can access the new CJR legislation and rules from the Governments
Bilingual Laws Information System (http://www.legislation.gov.hk/eng/home.htm)
or from HKLII (http://www.hklii.org.hk/) or the Civil Justice Reform website
(http://www.civiljustice.gov.hk/; click Gazetted Primary Legislation and Gazetted
Subsidiary Legislation icons respectively).
Apart from the specific changes made to various procedural rules
(to be discussed in future seminars), Order 1A and Order 1B are
introduced to the RHC and RDC, setting out the Underlying
Objectives and the Courts Case Management Power. Students
should read Order 1A and Order 1B before attending this
seminar.
Useful papers and reports can be obtained from the CJR web
(http://www.civiljustice.gov.hk/) and the LegCo Bills Committee web
(http://www.legco.gov.hk/english/index.htm)
2. Jurisdiction of the Courts
2.1

Small Claims Tribunal

Enjoys exclusive jurisdiction over any monetary claim

exceeding $50,000 founded in contract, quasi-contract or tort

But excludes e.g. defamation action, action by licensed

moneylender for the recovery of money lent, action falling within
the jurisdiction of the labour Tribunal, and action in respect of
matrimonial maintenance agreement

2.2

not

District Court

Non-exclusive jurisdiction over any monetary claim above $50,000

but not exceeding $1,000,0003 founded in contract, quasi-contract
or tort (s 32 DCO)

Plaintiff may abandon part of its claim in excess of $1m so as to

bring its claim within the DCs jurisdiction (s 34 DCO)

Non-exclusive jurisdiction over any action for the recovery of land

where the annual rent, rateable value or annual value (whichever
is the least) does not exceed $240,000 (s 35 DCO)

dUtoseb0$6,f1r2/3n.Whvetisyacdolnfbtexkrpas 0$6o,hDitcCursdjn lowbeat$1m.

If the claim calls into question the title to an interest in land, DC

only has jurisdiction if the rateable value or the annual value
(whichever is the less) does not exceed $240,000 (s 36 DCO)

Non-exclusive equity jurisdiction4 where the amount or value of the

subject matter does not exceed $1m (for the part not relating to
land) or $3m (for the part relating to land) (see s 37(2) DCO)

In determining, for the purposes of ss 32, 33, 36 and 37, whether

the claim amount exceeds $1m, any discretionary interest that
may be or is ordered under s 49 is excluded (s 49(7) DCO)

Paragraph 4 of Practice Direction 27 requires that: All writs and

originating summonses should contain a plea that the relief sought
do fall within the jurisdiction of the District Court, specifying which
section(s) of sections 32 to 39 of the District Court Ordinance do
apply to the case.

Matrimonial proceedings for divorce, maintenance, child custody

etc must be commenced in the DC acting in its capacity as the
Family Court5.

2.3

Court of First Instance of the High Court

The CFI is a superior court of record and has unlimited civil

jurisdiction

Action falling within the exclusive jurisdiction of other tribunals

cannot however be commenced in the CFI

Exclusive jurisdiction to hear judicial review and habeas corpus

proceedings

2.4

Other Tribunals

e.g. Labour Tribunal, Minor Employment Claims Adjudication Board

and Lands Tribunal

Students will NOT be examined on the jurisdictions of these

tribunals. But in your future practice whenever you come across
employment or land related disputes, you should check their
jurisdictions and decide whether the proceedings should be
commenced in these special tribunals.

4
5

asnidtfe37(1)DCO.gmraofest,cinprmaoes flndhpucgrmt
uSdentswilNOTbmxaordpngces

2.5

Choice of Court

If a particular court/tribunal has exclusive jurisdiction => no choice

If more than one court have jurisdiction (e.g. both the DC and CFI)
=> in general choose the lower court, which is normally cheaper,
unless there is a good reason to choose the higher court (e.g. by
reason of the importance or complexity of the issues involved).

2.6

Transfer of Proceedings between DC and CFI

The DC shall transfer the action to the CFI if the claim (not being a
counterclaim) is outside its jurisdiction. It may however strike out
such action on the defendants application if it appears that the
plaintiff knew or ought to have known that the DC has no
jurisdiction (s 41(1) and (2) DCO)

Even if the claim is within the DCs jurisdiction, the DC may

transfer proceedings to the CFI if there is good reason (eg by
reason of the importance or complexity of the issues involved) (s
42 DCO)

The CFI is required to transfer any claim (other than a

counterclaim) which appears likely to be within the DCs
jurisdiction unless it is of the opinion that, by reason of the
importance or complexity of the issues involved or for other
reason, the action ought to remain in the CFI (s 43 DCO)

If the parties consent, the CFI may transfer to the DC any action
whose monetary limit exceeds the DCs jurisdiction (s 44 DCO)

3.Pre-commencement Considerations
3.1

Whether you should act for client in the matter?

Any conflict of interest?

Should do a conflict search to see whether your firm has acted for any
related parties with opposing interests.

Do you have the ability and/or time to handle the matter?

A solicitor must not act or continue to act in circumstances where he

9

has insufficient time to devote to the matter, or insufficient experience

or skill to deal with the instructions. This however will not prevent a
solicitor from acting if he is able to do so competently by instructing
suitable counsel, but he must still be able to exercise sufficient care
and control in the matter (see Principle 5.03 Commentaries 2 and 3 of
the Hong Kong Solicitors Guide to Professional Conduct)

Does the person giving instructions to you have the

authority to represent the actual client?

Need to distinguish the client in the legal sense and the client in
business sense (or the person who gives you instructions).

In particular, if the client is a corporation, the legal authority to

institute legal proceedings normally rests on the board of directors
(sometimes not even the majority shareholders) so that one should
obtain a written directors' resolution before commencing any
litigation. Any proceedings instituted without proper authorisation
or subsequent ratification may be stayed by the court with costs of
both parties to be borne personally by the plaintiffs solicitors (eg
Yonge v Toynbee [1910] 1 KB 215 (CA) and Danish Mercantile
Co Ltd and Others v Beaumont and Another [1951] 1 All ER
925 (CA)). In the case of Mercury (London) Ltd and Mercury
International (Hong Kong) Ltd v Mercury Shipping and
Trading Ltd, HCCL 75 of 1990, 12 April 1991, the solicitors
commenced legal action for the plaintiff corporations on the
authorisation of the majority shareholder without proper board
resolution, Godfrey J granted a stay of the proceedings upon the
application of the defendant with costs to be borne by the solicitors
on an indemnity basis).

Whilst a partner has an implied authority in law to commence

proceedings for the partnership firm (e.g. Court v Berlin [1897] 2
QB 396), in case the matter involves partnership disputes or that
you have reason to suspect that the other partner(s) may not
approve the litigation, it is advisable to obtain proper written
authorisation from the partners before commencing litigation.

Is client entitled to legal aid?

You have a positive professional duty to advise client to seek legal

aid if he is eligible (see Principles 4.01 and 5.21 of the Hong Kong
Solicitors Guide to Professional Conduct)

Availability and Scope

10

Available to any natural person in Hong Kong, resident or nonresident.

The Ordinary Scheme covers most civil proceedings but exclude

proceedings such as defamation proceedings, relator actions,
election petitions (unless human rights issue is involved), disputes
between shareholders or business partners, claims for the recovery
of a loan made in the ordinary course of the applicants business,
and proceedings where the only question before the court is as to
the time and mode of payment for debt and costs (see Schedule 2
of the Legal Aid Ordinance (Cap 91)).

The Supplementary Scheme is more limited in scope and used to

cover only (1) employees compensation claims; (2) personal
injuries or death claims, and (3) medical, dental or legal
professional negligence claims, with an amount exceeding (or likely
to exceed) $60,000.

With effect from 30 November 2012, the Supplementary Legal Aid

Scheme has been expanded to cover the following new types of
cases where the claim is likely to exceed $60,000 (see amended
Schedule 3 of the LAO):

professional negligence claims against certified public

accountants (practising), registered architects, registered
professional engineers, registered professional surveyors,
registered professional planners, authorized land surveyors,
registered landscape architects and estate agents;

negligence claims against insurers or their intermediaries in

respect of the taking out of the personal insurance products; and

monetary claims against vendors in the sale of completed or

uncompleted first-hand residential properties.
It also covers representation for employees in appeals against
awards made by the Labour Tribunal irrespective of the amount in
dispute.

Need to satisfy the Director of Legal Aid as to the justification for

legal action (the merits test) and financial eligibility (the means
test).

Merits test

11

Must show that one has reasonable grounds for taking,

defending, opposing or continuing the proceedings or
being a party thereto (s 10(3) of the LAO).

What needs to be satisfied is not that the issue of fact will be decided in the
applicants favour, but that there is a reasonable, as opposed to a fanciful, chance
of the court at trial deciding that issue of fact in his favour (Ngugen Trong Son v
Director of Legal Aid, LAA No. 20/1999, 15 December 2000 per Keith JA in
chambers). This approach was adopted by Chu J in Ng Ai Kheng
Jasmine v Master M Yuen and Legal Aid Department (unrep., HCAL
46/2003, 8 March 2004) (at para 48) as the proper approach
towards assessing the merits of an applicants claim for legal aid
whether the issue be one of fact or law (see also F and Others v
The Registrar of the High Court [2012] 2 HKLRD 73, Macrae J)

It seems regrettable that notwithstanding the above-mentioned earlier authorities, in

a recent case Chung Yuk Ying v Registrar of the High Court [2013] 5 HKLRD 78
(Queenie Au-Yeung J), it transpires that the Legal Aid Department still instructed its
counsel to give advice on whether the merits test was satisfied based on a test of
more than even chance of success, a threshold higher than reasonable, as
opposed a fanciful, chance; and its counsel failed to spot the wrong test and gave
her advice accordingly. See another more recent case Wong Chun Tak v
Registrar of the High Court [2015] 3 HKLRD 449 (Queenie Au-Yeung J, 5 June
2015) where the same mistake on merits threshold was made by the Legal Aid
Department and rectified by the court via judicial review.

Means test

Total financial resources (i.e. disposable annual income plus

disposable capital) must not exceed $290,380 for the Ordinary
Scheme and from above $290,380 to $1,451,900 for the
Supplementary Scheme6.

6 The financial eligibility limits used to be $175,800 for the Ordinary Scheme and
between $175,801 to $488,400 for the Supplementary Scheme before 18 May 2011.
However, the Chief Executive announced in his Policy Address in October 2010 of the
Governments plan to increase substantially the limits to $260,000 for the Ordinary
Scheme and $1,300,000 for the Supplementary Scheme. With the approval of the
Legislative Council on 30 March 2011, the new financial limits became effective on 18
May 2011. The Administrations present policy is also to review the financial limits
annually to take account of movements in the Consumer Price Index and to conduct
biennial reviews to take account of changes in litigation costs. One may check the
updated figures from sections 5 and 5A of the Legal Aid Ordinance cap 91 and
Schedule 3 of the Legal Aid (Assessment of Resources and Contributions) Regulations
cap 91B (go to http://www.legislation.gov.hk/eng/home.htm). Alternatively, one may
find the updated figures from the Legal Aid Departments website at
http://www.lad.gov.hk/pdf/FinInfoSheet_e.pdf. For the purpose of examination,
students will be given the updated figures in the examination paper if there have
been any further changes before the examination.

12

The financial resources of an applicants spouse (unless they are

separated or have opposing interests in the proceedings) will be
treated as the applicants financial resources.

Following the recent review and in recognition of the fact that

elderly applicants generally lacks earning power and are more
reluctant to deploy their capital for litigation, a new rule was added
on 30 March 2011 (and effective on 18 May 2011) so that an
amount equivalent to the financial eligibility limit of the Ordinary
Scheme (currently at $290,380) is disregarded in calculating the
disposable capital of any applicant who is not less than 60 years
old.

Negative Equity Property: In Ng Ai Kheng Jasmine v. Master M.

Yuen (HCAL46/2003, 8 March 2004), Chu J held that on a proper
construction of the statute, the negative equity property ((i.e.
outstanding mortgage debt exceeding the current market value of
the flat) could not be taken into account in reducing the total
financial resources but would only be given a zero value.

In Shem Yin Fun v Director of Legal Aid [2003] 1 HKC 568, Chu
J also held that any outstanding debt owed by the applicant cannot
be taken into account in reducing the disposable capital. Hence, if
the applicant wants to have the debt taken into account, he has to
first settle the outstanding debt from his capital before applying for
legal aid.

If an application for legal aid is refused on means, the applicant

may re-apply for legal aid when as a result of changes to his
financial circumstances or the financial eligibility limit, his financial
resources are reduced to a level below that of the applicable
financial eligibility limit. However, the Director may refuse legal aid
if the applicant has disposed of any capital or income or fails to
maximise his earning potential so as to expend or reduce his
financial resources for the purpose of satisfying the financial
eligibility limit (s 10(2))

Contribution

By the Legal Aid (Assessment of Resources and Contributions)

(Amendment) Regulation 2015 (effective from 17 June 2015), a
revised set of bandwidths of assessed financial resources was introduced to
determine the contribution payable by the aided person under the Ordinary Scheme 7.

nHhcetdailosbfur p3.5AdGetoiCvlPcurnHgKaspde.

13

Aided persons with financial resources not exceeding 12.5% of the

financial eligibility limit are exempted from making a contribution.
If the aided person is receiving Comprehensive Social Security
Assistance (CSSA), he is generally presumed to have financial
resources not exceeding the said 12.5% and so is not required to
pay any contribution. Aided persons whose financial resources
exceed 12.5% of the financial eligibility limit are required to
contribute an amount equivalent to 2% to 25% of their financial
resources according to the financial resources bandwidth table in
Schedule 3 of the Legal Aid (Assessment of Resources and
Contributions) Regulations. Hence, the maximum contribution
under the Ordinary Scheme is 25% of $290,380 i.e. $72,595. The
contribution will be used to set off any unrecoverable legal costs
incurred by the DLA.

Under the Supplementary Scheme, the contribution required

depends on the type of proceedings. Type 1 proceedings cover the
employees compensation claims and death and personal injuries
claims (those set out in paragraphs 1-3 and 8 of Part 1 of Schedule
3 to the Legal Aid Ordinance), and Type 2 proceedings cover the
various professional negligence claims and claims against vendors
in first-hand sale properties (those set out in paragraphs 4-7 of Part
1 of Schedule 3). For Type 1 proceedings, all aided persons are
required to pay an interim contribution equivalent to the maximum
contribution payable under the Ordinary Scheme8 (plus an
application fee of $1,000) upon acceptance of legal aid. For Type 2
proceedings, the interim contribution is either 10% of the assessed
financial resources of the aided person or the maximum
contribution payable under the Ordinary Scheme, whichever is
higher. If the aided person loses the case, this interim payment is
the maximum contribution that he has to pay for the legal costs
incurred by the Director of Legal Aid. If he succeeds in the case,
the aided person needs to pay for the legal costs incurred by the
Director of Legal Aid on his behalf but which cannot be recovered
from his opponent. In addition, if he recovers or preserves any
money or property, he needs to contribute 10% (reduced to 6% if
the case is settled before counsel is briefed for the trial) of the
recovered/preserved value for Type 1 proceedings and 20%
(reduced to 15% if the case is settled before counsel is briefed for
the trial) for Type 2. The 10%/20% (or 6%/15%, as the case may
be) contribution and unrecoverable legal costs will be deducted
(a) first from the interim contribution and application fee already
paid and then (b) the money or property recovered or preserved.9

8
9

Thepresentfigureis$72,595(25%of$290,380).
SeeLAO,ss18and32.

14

See the Financial Information Sheet accessible at the Legal Aid

Departments website for an updated and convenient summary of
the
contribution
figures
(http://www.lad.gov.hk/eng/documents/wnew/FinInfoSheet_e.pdf)

Costs Liability

If an aided plaintiff/applicant loses the case, any costs awarded to

the unaided defendant/respondent will generally be borne by the
DLA.

If an aided defendant/respondent loses the case, neither him nor

the DLA will generally be liable for the costs of the unaided
plaintiff/applicant (see s 16C of LAO and Common Luck
Investment Ltd v Director of Legal Aid [2002] 3 HKLRD 81
(CFA)).

Hence, one main advantage of getting legal aid is that even if one
loses in the proceedings, one would not generally be personally
liable for the other partys costs.

Note however that if one obtains legal aid while the proceedings
are ongoing, the aided person remains personally liable for the
costs awarded to the opponent arising before the grant of legal aid
(s 16C(2)). Hence, if one is eligible, one should generally obtain
legal aid before the commencement of the legal proceedings
(unless, for example, there is an urgency to start legal action).

3.2Should the matter be resolved through litigation?

Is the dispute/problem a legal one which can be resolved in court?

Is the other party worth suing? Principle 4.01 Commentary 5 of the

Hong Kong Solicitors Guide to Professional Conduct Volume 1
provides that In all matters a solicitor must consider with
his client whether the likely outcome will justify the
expense or risk involved.

Can your client afford the trouble and expense of litigation?

Prospect of settlement or resolution without intervention of lawyers

or court proceedings

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3.3

Should the matter be resolved through arbitration or mediation?

Under the Civil Justice Reform, greater use of ADR (primarily
mediation) is anticipated and unreasonable refusal by a party to
attempt settlement through ADR may result in costs penalty.
Any risk of soon expiration of the limitation period?
The general periods of limitation of action are laid down in the
Limitation Ordinance (Cap 347):(a)

Contract under seal -- 12 years from date of accrual of

cause of action. (i.e. upon breach) (s 4(3))

(b)

Simple contract -- 6 years from date of accrual of cause of

action (i.e. upon breach) (s 4(1))
(c) tort (apart from personal injury and death) -- 6 years
from date of accrual of cause of action (i.e. upon
damage being sustained as a result of the tortious act)
(s 4(1))
(d) recovery of land -- 60 years for action by government
and 12 years (N.B. previously 20 years) for action by
individual, calculated from the date of adverse
possession10 (ss 7, 8 and 13)

(e)

negligence action involving latent damage (apart from

personal injury and death) -- the usual 6-year period can be
extended to 3 years from the date on which the plaintiff
first had actual or constructive knowledge required for

10 N.B. Whether the adverse possession provision under the Limitation Ordinance is
consistent with the Basic Law is not yet authoritatively settled: see the obiter dicta in
Hong Kong Buddhist Association v Occupiers & Another (HCMP 4108/2003, 8
September 2006, Deputy Judge Saunders) applying J. A. Pye v The United Kingdom (E
Ct HR App. No. 44302/02, 15 Nov 2005) that the adverse possession provision
violated that the Basic Law. Deputy Judge Saunders decision was upheld on appeal
on the facts (CACV 358/2006, 15 May 2007), but the Court of Appeal considered it
unnecessary to consider whether sections 7 and 17 of the Limitation Ordinance are
invalid in the light of Articles 6 and 105 of the Basic Law. However, in a subsequent
decision in Harvest Good Development Limited v Secretary for Justice & Ors HCAL 32/2006,
16 July 2007, Hartmann J decided not to follow the dicta in the Hong Kong Buddhist
Association case and ruled that Art 105 of the Basic Law only applies when the Government
seeks to expropriate land but not when it introduces legislation of a general regulatory nature
to govern the land ownership rights between citizens, and in any event the adverse possession
provision under the Limitation Ordinance is not in breach of the Basic Law. Students should

however watch out for any latest development in this area of law, particularly
whether there is any further decision by the Court of Appeal/Court of Final Appeal
dealing with Hartmann Js decision in the Harvest Good Development Limited.

16

bringing the action (s 31), subject to an overriding time

limit of 15 years from the date of the alleged negligent act
(s 32)

(f)

personal injury cases -- 3 years from date of accrual of

cause of action or from the date of the plaintiffs actual or
constructive knowledge (if later) of the injury being
significant and attributable to the defendants act/omission
as well as the identity of the defendant (s 27), subject to
the courts discretion under s 30 to override this time limit
by balancing the respective prejudices to the plaintiff and
to the defendant having regard to all the circumstances of
the case and in particular to those factors set out in s 30(3)
(e.g. reasons for the delay and conducts of the parties).
The practice of the courts has been regularly to exercise
the discretion in favour of the plaintiff in cases in which the
defendant cannot show that he has been prejudiced by the
delay (see Horton v Sadler [2006] UKHL 27 per Lord
Hoffman at 44; for an illustration as to how the court
analysed the factors in exercising its discretion, see the
judgment of Deputy High Court Judge Saunders in Chau
Chui Ping Winky v Cathay Pacific Airways Ltd, unreported,
HCPI 261/2003, 17 July 2006 and the judgment of Master M Ng in
Cheung Yin Heung v Hang Lung Real Estate Agency Ltd And Another
[2010] 3 HKLRD 67.)

(g)

death claims under the Fatal Accidents Ordinance (Cap 22)

-- 3 years from the date of death or the date of the
requisite actual or constructive knowledge of the
beneficiary of the claim, whichever is the later (s 28),
subject also to the courts discretion to extend the time
limit under s 30

(h)

Claim against trustee 6 years from the date of breach of

trust for an action by a beneficiary to recover trust
property or in respect of any breach of trust. But there is
no limitation period if it is a claim by the beneficiary in
respect of any fraud or fraudulent breach of trust to which
the trustee was a party or privy; or to recover from the
trustee trust property or the proceeds thereof in the
possession of the trustee, or previously received by the
trustee and converted to his use (s 20(1))11

SefomrxpalctyJusivHnKWg[203]1LRD54.Notehwvrancibyfoetusprmhidaynectofbrushiandtlbjecousa6ymrinpd:e20).(

17

Provided that: (i) In case of an infant or person of unsound mind, the period of
limitation does not begin to run until that person has ceased to be
under the disability or died (s 22).
(ii)Where any action is based upon the fraud of the defendant, or
any fact relevant to the plaintiffs right of action has been
deliberately concealed from him by the defendant or the action is
for relief from the consequences of a mistake, the period of
limitation shall not begin to run until the plaintiff has discovered
the fraud, concealment or mistake or could with reasonable
diligence have discovered it (s 26).
(iii)In actions where there has accrued a right of action to recover
land or any right of a mortgagee of personal property to bring a
foreclosure action and the person in possession of the land or
personal property acknowledges the title of the plaintiff or makes
payment of the mortgage debt (principal or interest), the right of
action shall be deemed to have accrued on the date of
acknowledgment or payment (s 23). The acknowledgment must
be in writing and signed by the defendant or his agent and made
to the plaintiff or his agent (s 24). The same principle applies in
respect of acknowledgment or part payment of a debt (s 23(3))

3.4

There may be other shorter periods of limitation specified under

the contract (in which case one needs to look at the contract
documents) or prescribed under international conventions (e.g. in
respect of carriage by air).
Any need to take urgent protective measures?

Any real risk that the other party may take steps to make himself
judgment proof? If so, Mareva Injunction relief (an ex parte order
restraining the other party from disposing of his assets) should be
considered.
Any real risk that the other party may destroy crucial evidence? If
so, Anton Piller relief (an ex parte order requiring the other party to
permit access to his premises to search for and preserve materials
and documents) or an order under O 29 r 2 for the detention or
preservation of the evidence should be considered
Any real risk that the other party may cause further irreparable
damage to client pending the litigation? If so, interim or
18

interlocutory injunction application should be considered.

3.5

Any need to serve pre-action notice?

A notice (letter) before action is not generally required as a precondition to the accrual of the cause of action, though failure to do
so in some circumstances could affect the issue of costs (see O 62
r 7 RSC).

Some causes of action require service of notice as a precondition

to the accrual of liability, for example:

Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap

272) allows a victim who has obtained judgment against the
insured driver or owner to enforce the judgment directly
against the insurer (whether or not the insurer is entitled to
repudiate liability for breach of any insurance provision by the
insured) provided that certain conditions are fulfilled. The
most important condition is that notice of the bringing of the
proceedings be given to the insurer before or within 7 days
after the commencement of the proceedings (s 10(2)(a))

Under s 24 of the Employees' Compensation Ordinance, an

employee of a sub-contractor may choose to claim
compensation under the Ordinance against the principal
contractor. However there is a pre-condition that before
making such claim the employee shall serve on the principal
contractor a notice in writing stating certain particulars (e.g.
his own name and address and those of his employer subcontractor; the particulars of the accident and injury as well as
the amount of compensation claimed) (s 24(6)). See also s25B
of the Employees Compensation Assistance Ordinance and the
need to serve notice on the Employees Compensation
Assistance Fund Board.

In a claim against the drawer on dishonoured cheque, s 48 of

the Bills of Exchange Ordinance (Cap 19) provides that the
drawer shall not be liable unless notice of dishonour is given
to him within a reasonable time as prescribed in s 49(l) (which
is prima facie within the day after the dishonour of the
cheque). In practice most clients have failed to do this and by
the time the matter comes to their lawyers the prescribed
reasonable time has long lapsed. Fortunately, there are
exceptions to the rule as prescribed in s 50(2) for the
dispensation of the notice of dishonour. In most cases, the
19

reason given by the agent bank for dishonouring the cheque

will either be "Payment Countermanded" (in which case the
dispensation under s 50(2)(c)(v) applies) or "Refer to
Drawer" (which has been interpreted by the court to mean
that there are insufficient funds in the drawers account so
that the dispensation under s 50(2)(c)(iv) applies). It should,
however, be noted that the Statement of Claim must either
allege that due notice of dishonour has been given stating the
necessary particulars or set out the facts relied on for
dispensing with the notice of dishonour; otherwise there may
be no cause of action against the drawer (see Thong Ko Sine
v Wilkinson [1988] HKC 56 CA).
3.6
Do you need to obtain further facts, evidence or
documents?
3.7
Do you need to engage experts or counsel and if so at
what stage?
3.8
If proceedings are to be commenced, which court has
jurisdiction over the matter? (see discussions at section 2
above).
4.

Procedural Flow in a Contested Action Commenced by Writ

4.1

Issue of Writ (O 6)

4.2 Service of Writ (O 10, O 11 and s 365 Companies

Ordinance)
4.3

Acknowledgment of Service (O 12)

4.4

[Dispute over jurisdiction (O 12 r 8)]

4.5

Exchange of Pleadings (O 18)

Statement of Claim
Defence [and Counterclaim]
[Reply] [and Defence to Counterclaim]
Close of pleadings or further pleadings with leave

4.6

Mutual Discovery and Inspection of Documents (O 24)

4.7

Case Management Directions (O 2512)

12

UhndertwCivlJuscmRfo,O25btanydehwiourcfCasgMnmteSdorcpushlaetSmnfoDirdpucs.

20

For cases other than personal injury actions, parties have to file
case management questionnaires and the Court will give case
management directions for the further conduct of the case either
by paper disposal or at the hearing of the case management
summons;
for personal injury actions, automatic directions under O 25 r 8 and
detailed procedures set out in PD 18.1 will apply.

4.8
Exchange of Witness Statements (O 38 r 2A) [and Expert
Reports (O 38 Part IV)]
4.9

[Other Interlocutory Applications]

4.10 Case Management Conference(s)

4.11 Setting down the case for trial and fixing trial date (O 34)
4.12 Pre-trial Review
4.13 Trial (O 35)
4.14 Judgment (O 42)
4.15 Enforcement (O 45-52)
4.16 Appeals (O 58-59 RHC and O 58 RDC)
5. Overview of Pre-Trial Procedures
5.1 Three Main Functions

For disposing of action without trial

For protecting or preserving a partys rights and interest in the
interim
For preparation for trial
N.B. The functions may overlap and a pre-trial procedure may be
used for more than one objective

5.2 Disposing of action without trial

Default judgment
Summary Judgment
Discontinuance of action and withdrawal of claim or defence
21

Sanctioned Offer and Sanctioned Payment into court

Without prejudice settlement negotiation
Striking out claim or defence
Dismissal for want of prosecution

5.3 Protecting or preserving a partys rights and interest in the

interim

Interlocutory injunction (pending claim for final injunction)

Mareva injunction (to prevent dissipation of assets)
Anton Piller order (to prevent destruction of documents and
evidence)
Prohibition order (to prevent the defendant from leaving Hong
Kong)
Interim payment (to alleviate hardship or prejudice to the plaintiff)
5.4 Preparing for trial

Discovery of documents
Interrogatories (for discovery of facts)
Amendment of pleadings
Request for further and better particulars of pleadings
Notice to admit facts
Exchange of witness statements and expert reports
Case Management Conference(s) and Pre-trial Review

22

Appendix
Relevant Provisions of the District Court Ordinance on Civil
Jurisdiction
Jurisdiction-General
S 32 (1) The Court has jurisdiction to hear and determine any action
founded on contract, quasi-contract or tort where the amount of the
plaintiff's claim does not exceed $1,000,000.
(2) In this section and in section 34, the amount of the plaintiff's claim
means the amount the plaintiff claims after taking into account(a) any set-off or any debt or demand the defendant claims or may
recover from the plaintiff;
(b) any compensation, as defined in section 3 of the Employees'
Compensation Ordinance (Cap 282), paid to the plaintiff under that
Ordinance; and
(c) any contributory negligence,
that the plaintiff admits in his statement of claim.
(3) The Court has jurisdiction to hear and determine any proceedings
by way of interpleader in which the amount or value of the matter in
dispute does not exceed $1,000,000.
Money recoverable by enactment
S33 (1) The Court has jurisdiction to hear and determine any action for
the recovery of any penalty, expenses, contribution or other like
demand which is recoverable by virtue of any enactment for the time
being in force and for the recovery of any sum which is declared by any
enactment to be recoverable as a civil debt if(a) it is not expressly provided by that or any other enactment that the
demand shall be recoverable only in some other court; and
(b) the amount claimed in the action does not exceed $1,000,000.
(2) For the purposes of this section, "penalty" () does not include a
fine to which any person is liable on conviction on indictment or on
summary conviction.
Abandonment of part of claim to give Court jurisdiction
S 34 (1) The Court has jurisdiction to hear and determine an action
that is in excess of the Court's monetary jurisdiction limit on the
plaintiff abandoning the amount of the plaintiff's claim in excess and
the action is one in which the Court otherwise has jurisdiction.
(2) The Court cannot award to the plaintiff in an action under this
section an amount exceeding the Court's monetary jurisdiction limit for
the action.
23

(3) The judgment of the Court in an action limited under this section is
in full discharge of all demands in the cause of action.
Jurisdiction for recovery of land
S 35 The Court has jurisdiction to hear and determine any action for
the recovery of land, where the annual rent or the rateable value of the
land, determined in accordance with the Rating Ordinance (Cap 116),
or the annual value of the land, whichever is the least, does not exceed
$240,000.
Jurisdiction where title in question
S 36 The Court has jurisdiction to hear and determine any action which
would otherwise be within the jurisdiction of the Court and in which the
title to an interest in land comes into question if(a) for an easement or licence, the rateable value, determined in
accordance with the Rating Ordinance (Cap 116) or the annual value,
whichever is the less, of the land, over which the easement or licence
is claimed, does not exceed $240,000; or
(b) for any other case, the rateable value, determined in accordance
with the Rating Ordinance (Cap 116) or the annual value, whichever is
the less, of the land, does not exceed $240,000.
Equity jurisdiction
S 37 (1) Subject to the maximum limits in amount or value set out in
subsection (2), the Court has the jurisdiction of the Court of First
Instance to hear and determine the following proceedings(a) proceedings relating to or for the administration of the estate of a
deceased person;
(b) proceedings for the execution of a trust or for the declaration that a
trust subsists or proceedings under section 3 of the Variation of Trusts
Ordinance (Cap 253);
(c) proceedings for the foreclosure or redemption of a mortgage or for
enforcing a charge or lien;
(d) proceedings for the specific performance, or for the rectification,
rescission or delivery up or cancellation of an agreement for the sale,
purchase or lease of property;
(e) proceedings for the maintenance or advancement of an infant;
(f) proceedings for the dissolution or winding up of a partnership,
whether or not the existence of the partnership is in dispute;
(g) proceedings for relief against fraud or mistake.
(2) The maximum limits in amount or value referred to in subsection
(1) for24

(a) in the case of subsection (1)(a), an estate of a deceased person;

(b) in the case of subsection (1)(b), an estate or fund subject or alleged
to be subject to the trust;
(c) in the case of subsection (1)(c), the amount owing under the
mortgage, charge or lien;
(d) in the case of subsection (1)(d), for an agreement for sale or
purchase, the purchase money or, for an agreement for lease, the
value of the property;
(e) in the case of subsection (1)(e), the property of the infant;
(f) in the case of subsection (1)(f), the assets of the partnership;
(g) in the case of subsection (1)(g), the damage sustained or the estate
or fund for which relief is sought,
are(i) $1,000,000, where the proceedings do not involve or relate to land;
(ii) $1,000,000, where the proceedings partly involve or partly relate to
land and the part that does not so involve or does not so relate
exceeds $1,000,000 in amount or value;
(iii) $3,000,000, where the proceedings wholly involve or wholly relate
to land;
(iv) $3,000,000, where the proceedings partly involve or partly relate
to land and the part that does not so involve or does not so relate does
not exceed $1,000,000 in amount or value.
(3) A judge has in proceedings authorized by this section in addition to
his other powers and authority the powers and authorities of a judge of
the Court of First Instance acting in the exercise of the equitable
jurisdiction of the Court of First Instance.
(4) Nothing in this section gives jurisdiction to the Court in proceedings
for the recovery of land or relating to the title to land, where the
annual rent or the rateable value of the land, determined in
accordance with the Rating Ordinance (Cap 116), or the annual value
of the land, whichever is the least, exceeds $240,000.
Jurisdiction under the Married Persons Status Ordinance
S 38 The Court has the jurisdiction and powers of the Court of First
Instance conferred by section 6 of the Married Persons Status
Ordinance (Cap 182).
Counterclaims
S 39 In sections 32 to 37, references to an action or proceeding are to
be construed as including references to a counterclaim.
Procedure where proceedings beyond the jurisdiction of the
Court are
commenced in the Court
25

S 41 (1) The Court shall, either of its own motion or on the application
of any party, order that an action or proceeding be transferred to the
Court of First Instance where an action or proceeding commenced in
the Court, not being a counterclaim, is outside the jurisdiction of the
Court but is within the jurisdiction of the Court of First Instance.
(2) The Court may, if it thinks fit, instead of ordering that the action or
proceeding be transferred, order that it be struck out where, on the
application of a defendant, it appears to the Court that the plaintiff or,
if more than one, one of the plaintiffs knew or ought to have known
that the Court had no jurisdiction.
(3) If a defendant in an action or proceeding within the jurisdiction of
the Court makes a counterclaim which is not within the jurisdiction of
the Court but within the jurisdiction of the Court of First Instance, the
Court may, either of its own motion or on the application of any party,
order(a) that the whole proceedings be transferred to the Court of First
Instance; or
(b) that the proceedings on the counterclaim be transferred to the
Court of First Instance; and the proceedings on the plaintiff's claim,
except for a defence of set-off as to the whole or a part of the subject
matter of the counterclaim, be heard and determined by the Court; or
(c) where the Court considers the whole proceedings should be heard
and determined in the Court, that the matter be reported to the Court
of First Instance or a judge thereof.
(4) On the receipt of a report mentioned in subsection (3)(c), the Court
of First Instance or a judge thereof may, as it or he thinks fit, order
either(a) that the whole proceedings be transferred to the Court of First
Instance; or
(b) that the whole proceedings be heard and determined in the Court;
or
(c) that the proceedings on the counterclaim be transferred to the
Court of First Instance; and the proceedings on the plaintiff's claim,
except for a defence of set-off as to the whole or a part of the subject
matter of the counterclaim, be heard and determined by the Court.
(5) Where an order is made under subsection (3)(b) or subsection (4)
(c) and judgment on the claim is given for the plaintiff, execution
thereon shall, unless the Court of First Instance or a judge thereof at
any time otherwise orders, be stayed until the proceedings transferred
to the Court of First Instance have been concluded.
(6) If no report is made under subsection (3)(c), or if on any such report
it is ordered that the whole proceedings be heard and determined in
the Court, the Court shall have jurisdiction to hear and determine the
whole proceedings notwithstanding any enactment to the contrary.
26

Transfer of proceedings to the Court of First Instance or the

Lands Tribunal
S 42 The Court may, either of its own motion or on the application of
any party, order at any stage the transfer to the Court of First Instance
or the Lands Tribunal of all or part of any action or proceedings before
it which are within the jurisdiction of the Court of First Instance or the
Lands Tribunal, as the case may be.
Transfer to the Court from the Court of First Instance of
proceedings within the jurisdiction of the Court
S 43 (1) The Court of First Instance may, either of its own motion or on
the application of any party, order the transfer to the Court of all or
part of an action or proceeding, other than a counterclaim, which
appears to the Court of First Instance likely to be within the jurisdiction
of the Court.
(2) An order may be made under this section at any stage of the
proceedings of the motion of the Court of First Instance itself or on the
application of any party.
(3) The Court of First Instance is required to make an order under this
section unless it is of the opinion that, by reason of the importance or
complexity of any issue arising in the action or proceeding, or for any
other reason, the action or proceeding ought to remain in the Court of
First Instance.
Transfer to the Court from the Court of First Instance where
the parties consent
S 44 (1) The Court of First Instance may, if the parties consent, order
the transfer to the Court of all or part of an action or proceeding,
including a counterclaim, which is outside the jurisdiction of the Court,
but would have been within its jurisdiction except for the monetary
limits specified in section 32, 33, 35, 36 or 37.
(2) An order may be made under this section at any stage of the
proceedings.
(3) Upon a transfer under subsection (1), the Court shall have
jurisdiction to hear and determine all or part of an action or
proceeding, including a counterclaim, so transferred notwithstanding
any enactment to the contrary.
Costs in transferred cases, etc.
S 44A (1) This section applies to an action or proceeding transferred-

27

(a) from the Court of First Instance to the Court;

(b) from the Court to the Court of First Instance; or
(c) from a tribunal to the Court.
(2) The court or tribunal that orders the transfer may make an order for
costs prior to the transfer and of the transfer of proceedings.
(3) The costs of the whole proceedings both before and after the
transfer are in the discretion of the court to which the proceedings are
transferred subject to any order made by the court or tribunal which
ordered the transfer.
(4) The court to which the proceedings are transferred has power to
order costs and order the scales on which the costs of the several parts
of the proceedings are to be taxed. The costs of the whole proceedings
are to be taxed in the court to which the proceedings are transferred.
(5) In an action founded on contract, quasi-contract or tort, for the
proceedings in the Court of First Instance before the transfer, the Court
may, if satisfied that there was sufficient reason for bringing the action
in the Court of First Instance and subject to any order of the Court of
First Instance, allow costs on the Court of First Instance scale.
Division of causes of action
S 45 No cause of action shall be split or divided so as to be made the
ground of 2 or more different actions for the purpose of bringing 2 or
more actions in the Court.
Interest on claims for debt and damages
S 49 (1) The Court may include simple interest, at the rate the Court
thinks fit in a judgment for a debt or damages, on the debt or damages
or on a payment made before judgment, for the period between the
date when the cause of action arose and(a) for a sum paid before judgment, the date of the payment; and
(b) for the sum for which judgment is given, the date of the judgment.
(2) Rules of court may provide for the rate of interest and the method
of calculation.
(3) In a judgment given for damages for personal injuries or arising out
of the death of a person which exceed $30000, the Court has, unless
the Court is satisfied that there are special reasons to the contrary, to
include simple interest at the rate the Court thinks fit on(a) payment made before judgment, for the period between the date
when the cause of action arose and the date of the payment; and
(b) any other sum for which judgment is given, for the period between
the date when the cause of action arose and the date of the judgment.
(4) The defendant in proceedings for the recovery of a debt who pays
the whole debt to the plaintiff (otherwise than in pursuance of a
judgment in the proceedings) is liable to pay the plaintiff interest at the
28

rate the Court thinks fit or rules of court provide on the debt for the
period between the date when the cause of action arose and the date
of the payment.
(5) Interest in respect of a debt shall not be awarded under this section
for a period during which, for whatever reason, interest on the debt
already runs.
(6) Interest under this section may be calculated at different rates for
different periods.
(7) In determining, for the purposes of section 32, 33, 36 or 37,
whether an amount exceeds or is less than the amount specified in
those sections, the Court shall not take account of any interest that
may be ordered under this section or of any order for interest made
under this section.
(8) This section does not affect the damages recoverable for the
dishonour of a bill of exchange.
(9) In this section"defendant" () means the person from whom the plaintiff seeks
the debt or damages;
"plaintiff" () means the person seeking the debt or damages.
Interest on judgments
S 50 (1) Judgment debts are to carry simple interest(a) at the rate the Court orders; or
(b) in the absence of an order, at the rate the Chief Justice determines
by order,
on the total amount of the judgment debt, or on the part that for the
time being remains unpaid, from the date of the judgment until
payment.
(2) Interest under this section may be calculated at different rates for
different periods.

END

29