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The recent judgment in the case of Hua She Asset Management (Shanghai) Co Ltd v Hung & Anor [2023] EWHC 2445 (Comm) underscores the importance of adhering to the Civil Procedural Rule. It highlights the duty of all parties involved to promptly inform the court of any emerging complexities and to reassess previously agreed time estimates for substantive submissions. Failing to do so may result in costly adjournments during substantive hearings.

 

Our firm had the honour of representing the second and third respondents in this case, with Mr. Roger Masefield KC as the leading counsel and Mr. Nicholas Yell serving as the senior counsel for our clients. I had the privilege of serving as the leading solicitor on this case, working alongside my colleague, Paul Cheuk, whose valuable assistance greatly contributed to our efforts.

 

Key Issues

 

Judge Mark Pelling KC, who presided over this case, was unimpressed with various aspects, including the claimant’s late service of a notice under CPR 32.19, challenging document authenticity nearly two weeks before the hearing, the fourth defendant’s non-compliant witness statement filed nearly two weeks before the hearing, and the collective failure of the claimant and second, third, and fourth respondents to recognise the inadequacy of the time estimate.

 

“12. The need for an adjournment in large part arises from a failure on the part of the claimant (i) to issue the relevant notices challenging authenticity in time, (ii) to issue an application for relief from sanctions until two weeks before this hearing was due to commence, and (iii) the claimant requiring the application to be listed at the start of the trial.

 

 13. By the same token, some responsibility must rest on the shoulders of each of the second, third and fourth respondents for their failure to engage directly with the court and/or with the claimant in relation to the time estimate once it became apparent that the time estimate was plainly inadequate. Had that been addressed, then an application for directions could have been made at short notice and the wasting of at least some of the court time could have been avoided.”

 

The judgment thoroughly examined the intricacies of the adjournment and assigns responsibility to each party for the resulting costs.

 

Background

 

The case involved an application to make a charging order absolute, which was originally scheduled for a three-day hearing with half a day’s judicial reading time. However, it became apparent that the hearing would require a longer duration, and all parties agreed on a period of five days with one and a half days’ judicial reading time. The primary issue revolved around determining the ultimate beneficial owners of the property subject to charging orders, specifically focusing on the second, third, and fourth respondents.

 

Complications and Relief from Sanctions

 

The issue arose when two applications for relief from sanctions were made by the fourth respondent and the claimant which added complexity to the proceedings. The fourth respondent sought relief due to the Mandarin-speaking nature of their witnesses, whose statements were initially presented in English without proper translation from Mandarin. The Claimant also filed an application for relief due to the late service of notice to challenge the authenticity of the underlying agreements relied upon by the second, third and fourth respondents were non-authentic and sham.

 

Insufficient Time Estimate

 

The time estimate of three days was considered inadequate and later adjusted to five days. The hearing became increasingly problematic with the addition of the seventh respondent, Mandarin-speaking witnesses, and the time-consuming relief from sanctions applications. Recognising the impracticality of the original time estimate, all parties agreed to an adjournment.

 

Judge’s Critique

 

Judge Pelling expressed strong disapproval of the last-minute adjournment, emphasising the unacceptability of cramming a vast amount of submission in a short time. Such a practise could potentially lead to unfairness. Furthermore, such inadequacy in time estimate wasted three full days of the Commercial Court time. The Judge highlighted the responsibility of all parties, except the fifth, sixth, and seventh respondents, for failing to address the inadequacy of the time limit.

 

Costs Allocation

 

The central question addressed in the judgment was the allocation of costs resulting from the adjournment. The claimant argued for cost reservation pending the determination of the substantive issues. However, the judge rejected this, asserting that the adjournment costs are distinct from the substantive outcome.

 

Responsibility Attribution

 

Judge Pelling determined that the claimant bore primary responsibility for the adjournment due to late issuance of notices challenging authenticity and the delayed application for relief from sanctions. Nonetheless, he acknowledged the shared responsibility of the second, third and fourth respondents for not addressing the time estimate issue promptly.

 

Costs Award

 

The judge ruled that the second and third respondents were entitled to recover 75% of their adjournment costs from the claimant, reflecting their share of responsibility. The fourth respondent, facing additional issues related to the relief from sanctions application, was awarded 50% of her adjournment costs. The fifth, sixth, and seventh respondents, with a limited role and no direct responsibility for the time estimate, were entitled to recover their adjournment costs in full.

 

Conclusion

 

I am glad that our clients were happy with the outcome above but it is imperative to bear in mind the critical importance of complying with the Civil Procedural Rule and timely procedural adherence in legal proceedings. The last-minute adjournment, though regrettable, necessitated a fair allocation of costs. The court acknowledges the primary responsibility of the claimant for procedural lapses leading to the adjournment. However, shared responsibility is recognised concerning the inadequacy of the time estimate.

 

In determining costs, a balanced approach was adopted. The second and third respondents are awarded 75% of their adjournment costs, reflecting their proportional responsibility. The fourth respondent, facing additional complexities, is awarded 50% of her costs. The fifth, sixth, and seventh respondents, with a limited role and no direct impact on the adjournment, are entitled to recover their costs in full.

 

The judgment above serves as a reminder to all practitioners of the judiciary’s commitment to procedural fairness and the need for parties to engage proactively in addressing time estimates and compliance issues. It serves as a great reminder that all parties share the responsibility for efficient case management, failing which it will reflect dearly when it comes to allocation of costs.

 

It is evident that the case was successful being led under the guidance of Mr Roger Masefield KC https://www.brickcourt.co.uk/our-people/profile/roger-masefield-kc and Mr Nicholas Yell https://www.barstandardsboard.org.uk/barristers-register/912631B093D13865AE6EA50D81F049B6.html. We would highly recommend their expertise in both civil and commercial disputes.

 

Please feel free to contact myself, Evveline Ziwei Loh at e.loh@lisaslaw.co.uk or Paul Wai Ho Cheuk at p.cheuk@lisaslaw.co.uk.

 

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