THE HONG KONG SETTLERS HOUSING CORPORATION LTD v. LEE WAI LAN

DCCJ 47/2024

[2025] HKDC 465

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 47 OF 2024

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BETWEEN

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REASONS FOR DECISION

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1.  This is one of the ten odd still on-going actions (“the Related Actions”) commenced by the Plaintiff The Hong Kong Settlers Housing Corporation Limited (“HKSHC”) to recover possession of various flats in the Tai Hang Sai Estate (“the Estate”) from the tenants upon the expiry of the respective tenancies to implement the Tai Hang Sai Estate Redevelopment project.

2.  The unique history of the Estate and the redevelopment project, which form the essential background to the public law challenges mounted by one of the tenants by way of judicial review and which challenges were adopted as one of the defences by a number of defendants in the Related Actions, have been briefly narrated by Registrar Soong in §§3-9 of her decision dated 22 August 2024 in the Related Actions ([2024] HKDC 1397), which will not be repeated here.

3.  The Defendant herein (“Madam Lee”) is the tenant of Flat No 334, 3^rd floor, Man On House, Tai Hang Sai Estate (“the Flat”). She is now 93 years old. Her late husband Mr翁戴 (“late Yung Senior”), who passed away in 2005, was originally the tenant of the Flat.

4.  By the Writ dated 4 January 2024 endorsed with the Statement of Claim, HKSHC claims possession of the Flat as the term under the tenancy agreement dated 29 December 2021 (“the Tenancy Agreement”) has expired on 30 June 2022 by the effluxion of time.

5.  In the affirmation of service of Hon Shu Min filed on 2 February 2024, it was said that a sealed copy of the Writ has been served to Madam Lee on 8 January 2024 by its insertion into the letter box of the Flat and posting the same “at a conspicuous place to the main entrance of [the Flat]”.

6.  On 23 February 2024, HKSHC obtained a default judgment for possession (“the Default Judgment”) upon Madam Lee’s default in filing her Acknowledgment of Service.

7.  On 2 July 2024, Madam’s Lee took out a summons to set aside the Default Judgment (“the Setting Aside Summons”) and Mr Yung Ka Po (“Yung”), the son of Madam Lee, took out a summons applying to be joined as the 2^nd Defendant herein (“the Joinder Summons”).

8.  Madam Lee and Yung all along have been acting in person.

9.  The originally scheduled hearing date of these 2 summonses of 1 August 2024, the adjourned hearing dates on 24 October 2024 and then 28 November 2024 were all vacated and adjourned as Yung successively applied for Legal Aid, despite being rejected thereby engaging automatically the respective statutory stays triggered by these Legal Aid applications.

10.  For substantive hearing on this occasion were the Setting Aside Summons, the Joinder Summons and HKSHC’s summons dated 7 March 2025 to file and serve the short 3^rd affirmation of侯劍強essentially to exhibit a true copy of an “Application for Change of Tenant/Family Member” dated 28 July 1999 by late Yung Senior and signed by him and Yung applying to delete Yung’s name from those listed in the “Family of Tenant”. (respectively “the New Evidence Summons” and “the 1999 Application”).

11.  At the conclusion of the hearing, I announced my decision (a) setting aside the Default Judgment, (b) giving leave to file and serve the 3^rd affirmation of侯劍強, and (c) dismissing the Joinder Summons.

12.  Having heard the parties on costs and on their summary assessment, I ordered (a) HKSHC to pay Madam Lee her costs of the Setting Aside Summons summarily assessed at HK$2,000 payable forthwith, (b) no order as to the costs of the New Evidence Summons save the costs of its hearing, which were not much, be paid by Yung, and (c) Yung to pay HKSHC its costs of the Joinder Summons, with certificate for counsel, summarily assessed (together with the hearing costs mentioned in (b) above) at HK$45,000 payable forthwith.

13.  I said written reasons would be provided, which I now do. Having discussed with Yung at the hearing, he agreed that these Reasons can be rendered in English.

Setting aside the Default Judgment

14.  I will first consider whether the Default Judgment was regularly or irregularly entered. In this regard, in her short 1^st affirmation, Madam Lee said that she no longer lived in the Flat but has been living with her daughter (without specifying since when) as her health had so deteriorated that she had to use wheelchair. She said she had not received the Writ.

15.  Under O 10 r 1 of the Rules of the District Court, a Writ must be served personally on the defendant. O 10 r 2 allows the Writ to be served by alternative modes by insertion into letter box or by post whereby the date of service is deemed to be 7 days then after. It is only a presumption, and a rebuttable one, that these alternative modes of service will bring the proceedings to the notice of the defendant (Hong Kong Civil Procedure 2025 §10/1/11). Where a defendant was not living at the address and the Writ was inserted into the letter box at that address, it was not brought to the defendant’s notice and the service was irregular (Sinokawa Investment (Holdings) Ltd v Li Chun [2006] 3 HKLRD 441; Hong Kong Civil Procedure 2025 §10/1/13).

16.  Moreover, when the Writ is served by either of these alternative modes, under O 10 r 1(3)(b)(i), the affidavit proving due service must contain a statement to the effect that in the opinion of the deponent, the copy of Writ so served will have come to the knowledge of the defendant 7 days thereafter.

17.  In Law Kwok Hung v Tse Ping Man [1999] 4 HKC 397, Yuen J (as the learned JA then was) observed (at 404D-E) that:-

(a) Order 10, rule 1(3)(b)(i) of the Rules of the High Court requires that the affidavit of service of a writ by post or by insertion through letter box must state, inter alia, that the writ in the plaintiff’s opinion would come to the defendant’s knowledge within 7 days.

(b) To prevent any abuse, that opinion held by the plaintiff must be a reasonably held one.

(c) The Court can determine whether the plaintiff did or did not have any reasonable grounds to hold the opinion asserted in the affidavit of service. If there were no reasonable grounds, then the service would have been irregular for non-compliance with the rules.

These observations in Law Kwok Hung was subsequently applied, for instance, by DHCJ Lam (as the learned PJ then was) in Phillip Securities (HK) Ltd v Lam Chi Bin Stanley [2002] 1 HKC 432 (at §9) and by DHCJ Kent Yee in Cheng Yip Chi v Kan Ming Construction Investments Ltd & Anor (HCA 3291/2000, unrep, 3 January 2017, at §§30-31).

18.  Here, HKSHC by its solicitors’ letter dated 12 September 2023[1] complained that Madam Lee has apparently breached Clause II (21) in that (a) the employees of HKSHC had visited the Flat on 2 consecutive days to effect repairs, namely 4 and 5 September 2023, and discovered that the Flat was occupied by a Mrs Yung, a 5 year old boy and a maid, who were not the family members registered with HKSHC under Clause II (21), (b) Madam Lee on 6 September 2023 admitted at the office of HKSHC that the Flat was then occupied by that lady, and (c) the employee visited the Flat again on 7 September 2023 and was greeted by the same lady who refused to talk.

19.  Therefore, according to HKSHC’s own investigations and complaints, Madam Lee was not living in the Flat in early to mid-September 2023.

20.  Ms Chan, counsel for HKSHC, drew attention to the fact that there were 2 letters from Madam Lee both dated 19 September 2023[2] responding to the said solicitors’ letter, one to the solicitors of HKSHC (“the 1^st Letter”) and the other to the unauthorized occupant (one Haung Jing) (“the 2^nd Letter”) and the 2^nd Letter was copied to HKSHC and its solicitors. In the 1^st Letter, Madam Lee mentioned, among others, that she had sought help from HKSHC to assist her in handling the unauthorized occupation of the Flat. In the 2^nd Letter, she complained that the occupation of the Flat by Haung Jing was unauthorized and demanded Haung Jing to vacate the Flat before 12 October 2023. Ms Chan contended that by these 2 letters it is shown that on that occasion, the solicitors’ letter was brought to the attention of Madam Lee. That may be so, but that does not detract from or negate the fact that Madam Lee was not living in the Flat at the time.

21.  I therefore find credible Madam Lee’s claim that she has not been living in the Flat, that she has not been residing there at least since September 2023, and that HKSHC knew the same.

22.  Moreover and importantly:

(a) In the 1^st Letter, Madam Lee also said, and emphasized by underline, that the letter box of the Flat was also being taken over (佔用) by the unauthorized occupant and she asked the solicitors of HKSHC to mail their response to the office of HKSHC situated in the Estate and inform his grandson Yung Ka Shing by phone to collect, thus:

“由於該單位的信箱也被非許可人士佔用，請把回覆寄至貴客戶辦事處（大坑西街7號），並通知翁嘉成先生領取（電話63733XXX[3]）” (original emphasis).

(b) This same message was reiterated and emphasized by underline again in another letter of Madam Lee to HKSHC dated 16 January 2024 (“the 3^rd Letter”)[4], but according to the receipt chop affixed thereon, received by HKSHC on 16 February 2024.

23.  Thus, HKSHC has been expressly informed once on 19 September 2023 that Madam Lee no longer had the use of the letter box and so informed a second time on 16 February 2024 (assuming that the 3^rd Letter was actually received that day), which were respectively 5 months and a week before the Default Judgment was entered.

24.  In the circumstances, prior to the service of the Writ HKSHC had already had strong suspicion, if not actual knowledge, that Madam Lee did not live in the Flat, and it had also been so expressly informed twice. Thus, HKSHC had to know that there would be a high likelihood, to say the least, that serving the Writ by insertion into the letter box would not have brought notice to Madam Lee of this action within 7 days thereafter. I therefore find that the opinion stated in the said affirmation of service of Hon Shu Min that the Writ would have come to the notice of Madam Lee by so inserting into the letter box was one that the deponent had no reasonable ground to hold.

25.  At the hearing, this Court also enquired with Ms Chan that since HKSHC received the 3^rd Letter after it has lodged an application for the Default Judgment (apparently on 2 February 2024) but before the same was entered on 23 February 2024, whether HKSHC was under a duty to inform the Court that there was no longer reasonable ground to hold the said opinion, and therefore the application for Default Judgment should no longer be processed. Ms Chan made no submissions thereon. In view of the fact that what I concluded in the preceding paragraph would be dispositive and I did not have the benefit of legal argument from Madam Lee, I am not prepared to rule on that matter.

26.  Accordingly, I hold that the service of the Writ was irregular for having been obtained with non-compliance with the rules. The Default Judgment was therefore irregularly entered.

27.  Moreover, even if the Default Judgment was a regular one (though I held it to be otherwise), I would also have held that Madam Lee has a defence of merits with a real prospect of success and set the Default Judgment aside, for the reasons expressed below.

28.  Madam Lee is now relying on the public law challenges as one of her defences. Ms Chan complained that such was not entirely clear from reading her 2^nd affirmation, in that Madam Lee has not spelt out the case number of the High Court Judicial Review case (HKAL 1600/2024) and has not formulated the grounds for judicial review as they have been in HKAL 1600/2024. In my view, these complaints did not help HKSHC, as it is abundantly clear from a fair reading of her 2^nd affirmation that in substance Madam Lee was seeking to rely on the public law challenges as one of her defences.

29.  HKAL 1600/2024 was commenced by Madam Leung Ah Duen, the defendant in DCCJ 5511/2023, one of the Related Actions, to challenge the decisions of HKSHC. Her main grounds for judicial review as set out in the Form 86 were :

“Ground 1: The Decisions [即該決定] had the cumulative effect of terminating the Applicant’s tenancy before commensurate alternative housing is provided to the Applicant during the redevelopment period, in breach of the applicable policy/Government directives (both as directed by the Government and which HKSHC had represented to the Legislative Council) which stipulated that satisfactory rehousing and relocation of affected residents is a precondition to redevelopment, and are thus unlawful;

Ground 2: The Rehousing Arrangement Decision [即該決定 (1)] where a One-Off Rental Subsidy is given to the Applicant to find alternative accommodation on her own with no guarantee that she will be able to secure comparable alternative housing for the entire redevelopment period, as well as the Eviction Decision [即該決定 (2)] which evicted the Applicant and her family from the Flat before a proper and lawful rehousing arrangement is devised, are irrational, perverse and Wednesbury unreasonable; and

Ground 3: The HKSHC is also in breach of the Applicant’s substantive legitimate expectation when it reneged on: (a) the Government-mandated directives; and (b) its prior representations to the general public via its statement to the Legislative Council, in failing to devise a proper and lawful rehousing arrangement for affected residents and proceedings to evict those residents before such an arrangement is properly put in place.”

30.  By the Notification of the Judge’s Decision dated 20 September 2024 [2024] HKCFI 2592, Coleman J granted leave to apply for judicial review thereon, and the substantive hearing will be held on 25 April 2025.

31.  In 3 recent decisions of HHJ Gary CC Lam in 3 of the Related Actions, namely (a) in DCCJ 5582/2023 dated 16 January 2025 ([2025] HKDC 97) setting aside the summary judgment obtained at hearing when the defendant did not appear, at §§18-27 (b) in DCCJ 5579/2023 dated 23 January 2025 ([2025] HKDC 142) setting aside the default judgment, at §§15-18 and (c) in DCCJ 39/2024 dated 19 February 2025 ([2025] HKDC 261) setting aside the default judgment, at §§8-13, the learned District Judge held:

(a) Grounds in public law may constitute a valid defence to a private claim.

(b) The grounds relied on by Madam Leung in HCAL 1600/2024 are generally applicable to HKSHC’s decision to terminate and/or evict the tenants in the Estate and are not specific to Madam Leung.

(c) The granting of leave by Coleman J means that the grounds in HCAL 1600/2024 are reasonably arguable “having realistic prospect of success”, and such means, among another, that there is a real prospect of success for the purpose of showing merits to set aside a default judgment.

32.  I respectfully agree with the said holdings of HHJ Gary CC Lam and the reasons expressed by him. I therefore would also have held that Madam Lee has a defence with a real prospect of success based on the same public law challenges.

33.  HKSHC also urged here, as it did in DCCJ 5579/2023 and DCCJ 39/2024 opposing the setting aside of the default judgments there, that the Court should exercise its discretion to refuse to set aside the default judgments. Essentially, the arguments advanced there, and rehashed here, are primarily that HKSHC would suffer prejudice in that the redevelopment project would be delayed with attendant increase in costs. As reasoned by HHJ Gary CC Lam in those 2 decisions rejecting these contentions and exercising the discretion in the respective defendants’ favour, the fact that the tenants have shown a defence with real prospect of success transcends these complaints of some delay and the expenditure of extra time or expenses on the part of HKSHC. I respectfully and entirely am of the same view and would have held that the discretion should be exercised in favour of setting aside the Default Judgment.

Allowing the New Evidence Summons

34.  I accept the submissions of HKSHC, which is not disputed by Yung that:

(a) The short 3^rd affirmation of侯劍強was sought to be adduced in response to this allegation contained in the 2^nd affirmation of Madam Lee[5] apparently made by her in support of the Joinder Summons :

“31. 我的兒子本來就是這單位的合法居住者但不知何年何月何日在租約上失去佢個名字原告人的寫字樓經理講話係我個仔自願簽名退出租約但係當我哋問佢攞返佢嘅簽名嚟睇佢竟然話我哋係冇權睇當然我哋知道呢個係違反私隱條例因為我哋係有權睇返佢嘅簽名嘅我本人從來冇簽名將我個仔嘅名剔除於租約之外所以我個仔係應該加入作為抗辯人等佢可以經過向法庭申請強迫原告人將某些文件公開”

(b) The 2^nd affirmation of Madam Lee was filed very recently on 27 February 2025, on which HKSHC had no opportunity to respond.

(c) The allegation was a serious one in that it alleged that HKSHC was hiding documents and it hinted that HKSHC had acted improperly in somehow removing Yung from the list of family members without the consent or knowledge of the tenant. The adverse ramifications to HKSHC of this serious allegation, if left unanswered, would go beyond the immediate consequences in this action.

(d) The short 3^rd affirmation of侯劍強essentially only exhibited the 1999 Application, which is a documentary evidence and let the document speak for itself without introducing controversial factual allegations.

35.  Yung initially challenged the authenticity of the 1999 Application. He disputed that his signature thereon was not signed by him, and that he did not recognize the purported signature of late Yung Senior was that of his. Upon enquiry by this Court at the hearing, Madam Lee positively identified the purported signature of late Yung Senior as indeed his. She further confirmed that at the time late Yung Senior was the only tenant and thus the only person having the status to sign documents regarding the Flat. She effectively disowned the above-mentioned allegation in her 2^nd affirmation and mentioned that there were certain arguments between her and Yung.

36.  Yung then did not persist in his challenge on authenticity but maintained that the purported signature thereon was not his and, as a matter of his opinion, that the purported signature of late Yung Senior was not his. When asked by this Court, he confirmed that he would not be seeking to file any affirmation in reply to the short 3^rd affirmation of侯劍強. He also had no further submissions to make.

37.  In the circumstances, I thought it appropriate to give leave and allowed the New Evidence Summons.

Dismissing the Joinder Summons

38.  The applicable principles in relation to a joinder application in the context of the Related Actions has been summarized by HHJ Gary CC Lam in dealing with a similar joinder application in DCCJ 39/2024 [2025] HKDC 261 at §§37-39 :

“37. The general legal principles in relation to a joinder application are set out in Elysium Ltd v Sum Ka Kuen Dominic [2023] 5 HKC 508 at §§20-24. In particular:-

(1) The jurisdiction is discretionary;

(2) “The rule requires some interest by the would-be intervener which is directly related to the subject matter of the action. A mere commercial interest in the outcome of the action divorced from its subject matter is not sufficient. The interest of the intervener must raise an existing pleaded issue not merely a contingent one…” (§22);

(3) “The mere fact that relief may affect someone who is not a party in respect of his rights or obligations is not enough to give rise to jurisdiction under Order 15 rule 6(2)(b)…” (§23); and

(4) “Whilst the Court will not at the joinder stage engage itself in a scrutiny of merits or an adjudication of facts, it does not mean that the Court would take an intervener’s assertion of sufficiency of interest at face value and ignore any obvious legal impediments to its claim. The Court will not exercise its discretion in favour of joinder if it is plain and obvious that the joinder of the proposed intervener would be pointless and futile…” (emphases added) (§24).

38. With respect to Order 15 rule 6 of the Rules of District Court, a liberal application should be adopted to ensure that “all matters in dispute between the parties are completely and finally determined, and all multiplicity of legal proceedings with respect to any of those matters is avoided”: see Hong Kong Civil Procedure 2025 Vol 1 at §15/6/1.

39. With respect to the Court’s power to join a person under Order 15 rule 10 of the Rules of District Court:-

“any person in actual possession of land who is not made a party to an action for possession of that land by a plaintiff against a defendant is entitled to be added under O. 15 r. 10 as a defendant before or after judgment, provided he has a bona fide independent claim to be in possession. However…, if the applicant has no independent claim because his rights are wholly dependent upon those of the defendant in the action, out he must go”: (emphasis added) see Yu Wing Kan v Lau Shuk Lan [1990] 2 HKLR 583 at 590.””

39.  The following are undisputed or established:

(a) HKSHC’s pleaded claim is a landlord and tenant matters; and despite Yung’s repeated claim that “he has a name in the tenancy”, he is not the tenant named in the Tenancy Agreement or a party thereto.

(b) Ms Chan, fairly accepted on behalf of HKSHC, that Yung at some point in time had been named as one of the family members pursuant to Clause II (21) of the Tenancy Agreement :

“II. The Tenant …. Agrees

(21) Not to assign or sublet or part with the possession of the said flat … and not to use the said flat except as private residence for the Tenant himself and members of the Tenant’s family set out in the Schedule hereto”

(c) According to Yung’s own admission, he did not live in the Flat from 1999 to 2012.

(d) In the Tenancy Agreement, only Madam Lee, Madam Lee’s daughter-in-law and Madam Lee’s 2 grandsons were named as “Family of Tenant” in the Schedule thereto. Yung was not so named therein.

40.  Yung does not claim any interest in land concerning the Flat or make any independent claim entitling him to the alleged possession of the Flat. His claim is that he has been named as one of the “Family of the Tenant” who may use the Flat as private residence, that he had lived in the Flat for some time and that he has lived in the Flat for the last 12 years.

41.  Yung’s contentions made at the hearing that he is entitled to and should be joined as the 2^nd Defendant boil down to:

(a) The members listed in the “Family of Tenant” have a substantial interest in that they are allowed to live in the corresponding unit in the Estate.

(b) His joinder as a co-defendant would enable him to clarify and challenge matters relating to HKSHC’s eviction of the tenants and the compensation and re-housing arrangements made by HKSHC, to investigate whether HKSHC, a non-profit organization, is making a huge profit by the redevelopment project; such that even the Financial Secretary should be invited to join in this Action.

(c) His joinder as a co-defendant would enable him to pursue and protect his own interest by pursuing the matter relating to the propriety or validity of the deletion of his name from the “Family of Tenant”.

(d) His joinder would enable him to help Madam Lee in the conduct of this action, like in matters of discovery and cross-examination of witnesses.

42.  In my view, on proper interpretation of Clause II (21), Madam Lee was contractually required to list members of “Family of Tenant” in the Schedule to the Tenancy Agreement such that the use as private residence by the listed members would not constitute a breach of Clause II (21); while such use by any person not so listed would amount to a breach of Clause II (21). Therefore, under the terms of the Tenancy Agreement, the family members so listed are still licensees of Madam Lee, albeit specifically named as required by the Tenancy Agreement and Clause II (21) clearly does not create any interest in land in favour of the listed members. Thus, Yung at best was or is a licensee of Madam Lee. I say at best as Madam Lee seems to be saying that there have been “unauthorized persons” occupying the Flat.

43.  As at best a licensee of Madam Lee, Yung has not acquired any interest in the Flat and has no claim to be in possession of the Flat independent, and not subsidiary to that, of Madam Lee.

44.  Next, the propriety or otherwise of HKSHC’s actions or decisions in the manner now accused of by Yung are matters within the realm of public law. It clearly is not a subject matter of this action; and I would add that it cannot be, as the jurisdiction of public law matters is exclusively within the Court of First Instance.

45.  Next and evidently, it is not permissible, not to say appropriate, to allow the joinder of Yung as a co-defendant merely to enable him to act essentially as the legal representative of Madam Lee to conduct the case on her behalf, as Yung is now contending.

46.  As the hearing continued, it was more and more apparent to this Court that the main purpose of Yung seeking to be joined was, as he said, to “protect and pursuing” his interest in the matter relating to the deletion of his name as one of the “Family of Tenant” of the Flat so as to facilitate his intended claim for the compensation under the redevelopment project that has been offered by HKSHC to the persons residing in the flats in the Estate who are listed in the corresponding “Family of Tenant”. This action does not deal at all with any entitlement or claim or any other matters relating to the compensation under the redevelopment project, which is not at all a subject matter of this action. As said, this action is a straightforward claim by a landlord to repossess land rented out the term of the tenancy of which has already expired.

47.  As set out above, one of the clear principles for joinder is that some interest of the would-be intervener which is directly related to the subject matter of the action is required and a mere commercial interest in the outcome of the action divorced from its subject matter is not sufficient. Yung’s desire to claim such compensation, in my judgment, clearly falls within “a mere commercial interest in the outcome of the action divorced from its subject matter” and is not sufficient to ground the joinder sought.

48.  There is thus no good basis or reason to join Yung as the 2^nd Defendant. I therefore dismissed the Joinder Summons with costs.

49.  I thank Ms Chan for her assistance.

50.  Before I leave these reasons, I would record that at the end of the hearing HKSHC indicated that it would seek to amend the Statement of Claim and I therefore made no directions for further conduct which of course by default would be regulated by the Rules of District Court. For the avoidance of doubt, I also made clear that this action would not be included in the coming CMC hearing of the Related Actions scheduled on 9 May 2025.