Six years after the re-unification of Hong Kong with China, substantive Hong Kong law, particularly commercial law, remains for nearly all purposes the same as English law. However, the procedures in Hong Kong’s courts remain identical to those in place in England and Wales before the adoption of the Civil Procedure Rules (“CPR”) in 1998 (based on the 1997 recommendations of Lord Woolf).
In February 2000 a Working Party was appointed by the Chief Justice to review the civil rules and procedures of the High Court in Hong Kong and to recommend changes with a view to ensuring and improving access to justice at reasonable cost and speed.
On 21 November 2001, the Working Party published an Interim Report and Consultative Paper containing 80 proposals for consultation. There was a seven month consultation period during which various public seminars and briefings were held and almost 100 written submissions were submitted by the legal profession, industry bodies and the public.
Edward Alder, a partner in our Hong Kong office was a member of a Working Party of the Law Society of Hong Kong which prepared a major report of its own and filed it in the Judiciary’s consultation. After much deliberation, the Judiciary’s Working Party identified the key areas where reform was considered necessary or desirable and made recommendations to the Chief Justice. A total of 150 recommendations are listed in the Final Report.
The Interim Report posed the key question of whether the proposed reforms should be implemented through the adoption of an entirely new code of civil procedure along the lines of the CPR or whether the existing High Court Rules should be maintained with only selective amendments grafted on to them.
The essential question was whether Hong Kong should adopt the ‘root and branch’ approach to reform favoured by Lord Woolf, or whether, with the benefits of the English experiment available, the best parts of the English reforms should be ‘cherry picked’.
The conclusion reached was that in the light of assessments which have been made of the impact of the CPR during the first 4 years of their operation, it would be best to adopt a series of reforms by amendment to the existing rules rather than adopting an entirely new code. In practice, it is envisaged that this will enable the more beneficial elements of the CPR to be implemented.
The underlying objectives
Instead of adopting certain fundamental principles which define the “overriding objective” of the civil justice system, as introduced in England and Wales by the CPR, the Working Party recommended that a rule be introduced acknowledging the benefits of good management.
These aims are to be referred to as the “underlying objectives” of the civil justice system. Therefore, the concept of “proportionality” will form part of the underlying objectives of reform, but without the specificity attempted in the CPR.
The Working Party has recommended that:
(a) timetables be determined by the court which should only be changed in exceptional circumstances;
(b) allocation questionnaires be filed to help the court to fix appropriate timetables; and
(c) specific provisions be made for dormant cases.
The Working Party rejected a more far reaching proposal that a US style “docket system” be introduced under which a case is assigned to a particular judge at the outset and remains with that judge throughout its life.
These are codes of conduct which parties in dispute must follow before commencing proceedings. They do not have the force of law, but if a party fails to adhere to a relevant protocol then the court can deprive it of part of its costs under the usual “loser pays” rule.
The Working Party concluded that the introduction of pre-action protocols across the board would lead to the front-end loading of costs making litigation more expensive. Therefore, pre-action protocols will be introduced in the specialist lists only, for example, in construction and administrative law cases.
The Working Party recommended that the modes of commencing proceedings be reduced from four to two as the current rules are unnecessarily complicated. The modes of commencing proceedings will now be confined to Writs and Originating Summonses, the former to be used where substantial disputes are likely to arise and the latter, where dispute concerns questions of law involving little or no factual investigation.
Default Judgment enables a party to obtain judgment without appearing before a Judge and accordingly saves time and costs. This proposal is aimed at encouraging parties to dispose of simple debt claims where there is no defence to either part of a claim or the entire claim by using a process which requires no appearance before a judge and accordingly will save time and costs. It is envisaged that this process may be expanded in the future to apply to a range of cases.
Statement of Truth
The Working Party recommended that pleadings be verified by a Statement of Truth which is a declaration of belief that the facts stated in the pleadings are true and signed by the party on whose behalf the pleading is filed or the party’s legal representative. A party who makes a statement of truth without an honest belief in the truth of the facts pleaded faces possible proceedings for contempt of court.
The aim of this proposal is to discourage parties filing exaggerated or overly ambitious pleadings which do not accurately reflect the true facts.
Introduction of English ‘Part 36’ type offers and payments
In Hong Kong, as in England, there is a “loser pays” costs rule in litigation. At present, if a defendant concedes it is liable in part then it may pay what it considers due ‘into court’.
If the claimant accepts the sum, the defendant must pay the claimant’s costs up to the date of acceptance. If the plaintiff declines the sum and continues litigating in the hope of securing a judgment for a higher sum but fails to achieve a higher sum at trial, the claimant must pay the costs from the time of the payment in, even if it technically “wins” the case.
This new proposal modernises and widens this sort of procedure. It introduces a procedure for any party (claimant or defendant) to make any kind of offer (cash or otherwise) to settle a dispute. The offer or payment will have costs consequences for the recipient if it fails to accept it and then fails to beat it at trial.
The Chief Justice has accepted the Working Party’s proposals in full. However, it is likely to be up to two years before the proposals reach the rule book because the new rules need to be drafted and enacted into law.
It is hoped that this new set of procedures will ensure that the Hong Kong courts remain a modern, commercially attractive and reliable place to resolve disputes into the next decade.