HUI CHI MING (PREVIOUSLY KNOWN AS X) v. KOON WING YEE AND OTHERS

HCA 1479/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1479 OF 2009

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D E C I S I O N

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1.  This is an application by the Plaintiff to set aside the interlocutory judgment on the 3^rd Defendant’s counterclaim.

Background

2.  The plaintiff commenced action in 2009 claiming for damages as a result of being procured to transfer certain company shares by “duress, illegitimate coercion and unlawful intimidation” by the 1^st to 4^th defendants.

3.  An injunction was granted to restrain, inter alia, the 3^rd defendant from dealing with his respective assets until trial or further court order.

4.  The action was stayed pending criminal proceedings in which the 3^rd defendant was charged and prosecuted for conspiracy with others to blackmail the plaintiff for the shares and conspiracy with others to steal the shares.

5.  The 3^rd defendant was subsequently acquitted and he later served and filed his Defence and Counterclaim on 11 February 2015.

6.  The counterclaim was based upon the allegation that “the plaintiff had wrongfully and maliciously procured the prosecution against the 3^rd defendant”.

7.  On 17 March 2015, the plaintiff obtained leave to file and serve a Reply and Defence to Counterclaim within 21 days but failed to do so.

8.  The 3^rd defendant entered judgment for his counterclaim on 4 May 2015. There is no dispute that the judgment was regular.

9.  The plaintiff took out the current application on 5 June 2015.

The issues in dispute

10.  “The power of to set aside a default judgment which has been entered regularly is discretionary and such power is unconditional. The court should not lay down rigid rules...The purpose...is to avoid the injustice...if judgment follows automatically on default.” (White Book 2016 13/9/12)

11.  Thus the court should look all circumstances of the case to determine whether there would be injustice “if judgment follows automatically on default”.

12.  Mr. Adrian Bell S.C., acting for the 3^rd defendant, is relying on the “not guilty” verdict in the criminal case as evidence for this “malicious prosecution” counterclaim.

13.  He submitted that “P is not open to suggest that D3 failed to prove “malicious prosecution” upon the evidence so far adduced. Indeed, D3 is not obliged to do so, because D3 already obtained the Judgment regarding the Counterclaim, which is binding upon P. It seems very absurd and wrong to say that D3, having obtained the Judgment, is nevertheless required to prove each and every elements of his case again....”

14.  I am not persuaded by this line of argument.

15.  The Court’s discretion to set aside a default judgment does not require the claimant to “prove each and every element of his case again”, but neither is the Court prevented from looking at the merit of the claim (counterclaim in this case) as well as the merit of the defence, both of which must be part of “the relevant circumstances of the case” to “avoid injustice”.

16.  To suggest that a default judgment is somehow “binding” so the Court cannot assess the merit of the claim (the counterclaim in this case) itself is not only illogical but is imposing a “rigid rule which deprives the Court of the jurisdiction” to decide what is “just” under the circumstances.

17.  Mr. Bell criticised that the affidavits of the plaintiff in support of the application were made not by the plaintiff personally but by his solicitor.

18.  Whilst this may goes to the question of credibility with regard to factual disputes in the main claim, the merits of counterclaim and its defence are not significantly affected: much of the circumstances of the criminal proceedings relevant to the allegation of “malicious prosecution” (e.g. the various investigations conducted by the police, the decision of the police and the Department of Justice to prosecute, the charges, the documentary evidence produced by the prosecution at trial and the verdict etc.) are not disputed.

19.  The law on malicious prosecution is trite (Martin v Watson [1996] 1AC 74, Jae Hoon Oh v Richdale [2005] 2 HKLRD 285 etc.) and I need not repeat them here. The court’s role here is not to conduct a “mini-trial” but I am satisfied that, on the basis of the undisputed evidence alone (as stated in paragraph 17 above), the plaintiff has a real prospect of a successful defence against the counterclaim.

20.  Mr. Bell also criticised the plaintiff’s solicitors’ explanation of how the default came about.

21.  Whilst Mr. Bell might think that “an oversight by a staff” was an unsatisfactory explanation, I am of the view that further details like the identity of the “staff” or details on how the error came about may not help the court further. It is clear that the plaintiff has all along intended to defend the counterclaim and there was no evidence to show that he has tried to delay, stall or otherwise neglected the proceedings, and thus the default could only be an innocent slip :-

a. there were substantial factual disputes of the circumstances of the main claim;

b. it was the plaintiff who took out the application for time to file and serve the defence to the counterclaim; and

c. the plaintiff did not delay in taking out the current application to set aside the default judgment.

22.  I see no prejudice to the 3^rd defendant’s position and any delay caused by this slip should be adequately compensated by costs.

23.  Given the circumstances, I am of the view that it would be unjust to deny the plaintiff a defence for the 3^rd defendant’s counterclaim. I also consider it inappropriate for the court to impose any conditions for setting aside the default judgment.

Order

24.  I will therefore make the order that:

(i) The interlocutory judgment on the 3^rd defendant’s counterclaim dated 4 May 2015 that had been entered against the plaintiff be set aside.

(ii) The plaintiff do have unconditional leave to file and serve his Reply and Defence to Counterclaim of the 3^rd defendant within 14 days from the date of the order to be made herein.

(iii) The costs of this application be to the 3^rd defendant to be taxed if not agreed, with certificate granted to one Counsel.