DBS BANK (HONG KONG) LTD v. TANG HIN MING HENRY formerly trading as TANG & ASSOCIATES AND ANOTHER

HCA 664/2017

[2018] HKCFI 177

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 664 OF 2017

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D E C I S I O N

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INTRODUCTION

1.  This is the 2^nd defendant’s application to set aside the default judgment granted in favour of the plaintiff against the 1^st and 2^nd defendants on 5 May 2017 for the sum of HK$1,847,903.70 with interest thereon.  The grounds of the application are (1) that the default judgment is irregular due to defective service; and (2) that if the default judgment is regular, she has real prospects of success in her defence.

PLAINTIFF’S CLAIM

2.  The plaintiff is a bank.  As lender, it granted two facilities to the 1^st and 2^nd defendants as borrowers, both formerly trading as Tang & Associates, a law firm (the “Firm”).  The 1^st facility letter (the “1^st Facility Letter”) dated 14 January 2013 was signed by the 1^st and 2^nd defendants on behalf of the Firm and in their own capacities, and the 2^nd facility letter (the “2^nd Facility Letter”) was issued by the plaintiff to the Firm.  According to the Statement of Claim, the 1^st and 2^nd defendants drew loans and the overdue balance as of 15 February 2017 was HK$1,847,903.70.  The plaintiff also claimed interest thereon at various rates under the facilities.

PROCEDURE

3.  On 5 May 2017, the 1^st and 2^nd defendants having filed no notice of intention to defend, the default judgment was entered.  On 15 September 2017, the 2^nd defendant issued summons for the present application.

2^nd DEFENDANT’S DEFENCE AND EVIDENCE

4.  In her supporting affirmation, substantively, the 2^nd defendant deposed that she joined the Firm in early 2010. She was subsequently promoted as a non-equity partner of the Firm.  She deposed that as the major practice of the Firm was conveyancing work, it was necessary for the Firm to open bank accounts with different banks to facilitate mortgage loans of the property purchasers in the conveyancing transactions.  To facilitate that, the 2^nd defendant agreed with the 1^st defendant that she would sign the bank documents for that purpose.  To her recollection, she only signed documents for opening bank accounts with the Hong Kong Bank, the Bank of China and Citic Ka Wa Bank. 

5.  The 2^nd defendant deposed that during her stay with the Firm, she only used two specimen signatures.  She had a practice that she would use one for documents issued in the name and/or with the chop of the Firm, and the other (using her name “Elisa”) for documents issued in her own capacity.  She specifically refers to the 1^st Facility Letter, where there were two signatures purported to be hers, one for the Firm and one in her own capacity.  However, contrary to her practice, the two signatures were the same, and the 2^nd defendant expressly said that those signatures were not hers, and she expressly said that she did not remember signing the 1^st Facility Letter.  She also said that had she known that she was asked to sign any facility letter, she would have refused.  In essence, she is running a defence that the signatures on the 1^st Facility Letter were forged.

6.  Procedurally, the 2^nd defendant deposed that by a letter of 7 December 2016 signed by her (in her own capacity), before the present action was commenced, she had informed the plaintiff that her correspondence address would be Room 601, 6/F, Hewlett Center, 52-54 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong (the “Hewlett Address”).  In her supporting affirmation, she purported that this address was an address of her tax agent, although she did not identify and name it.  She further deposed that she did not receive the court documents.  The 2^nd defendant explained that she became aware of the present action only after she received a copy of the charging order served by the plaintiff’s solicitors on 23 July 2017 at No.29 Lychee Road West, Fairview Park, Yuen Long, New Territories, Hong Kong.  She then instructed her solicitors to request the relevant documents of this action.

REGULARITY OF DEFAULT JUDGMENT

7.  In respect of her ground that the default judgment is irregular, the plaintiff filed an affirmation of service that the server did insert the Writ of Summons into the letterbox for the Hewlett Address, with two photographs of the insertion exhibited.  There is no evidence suggesting that the affirmation of service is not accurate.  Nor is there any evidence suggesting that the letterbox was not effective.  The only evidence from the 2^nd defendant is a piece of hearsay evidence purportedly from her unidentified and unnamed tax agent that the tax agent did not receive the Writ.  There is not even a signed statement (let alone any affirmation) from this unidentified and unnamed tax agent in support.  While hearsay evidence is admissible on affirmation in an interlocutory application by virtue of Order 41 rule 5(2) of the Rules of High Court (Cap 4A), the source has to be stated such that if necessary, the opponent would have the opportunity to verify.  Thus, in my judgment, an unidentified source of hearsay evidence simply means that the source is not stated.  Therefore, this hearsay evidence of the 2^nd defendant is inadmissible.  In the circumstances, I do not see any reason why the Writ was not brought to the attention of the plaintiff by this insertion, and I conclude that it was.  For the sake of completeness, even if such hearsay evidence would be admissible, the weight would be too little to affect my such conclusion.  I find that the service was valid and the judgment is regular.

MERITS OF DEFENCE

8.  Thus, I should consider the merits of the defence.  The burden lies on the 2^nd defendant to show a real prospect of her success of her defence.  If the court cannot form any provisional view of the probable outcome of the action without a trial, then the court should also set aside the regular default judgment.

9.  In the present case, the only defence raised by the 2^nd defendant is that she did not sign the 1^st Facility Letter, and the signatures purported to be hers were forged.  I observe that first, while the 2^nd defendant alleges that for those documents issued in her own capacity, she would sign “Elisa”, this is not the case in relation to the letter of 7 December 2016 issued to the bank in her own capacity, and not the case for her affirmations.  In fact, the 2^nd defendant has not shown a document bearing such a signature.

10.  Second, although the allegation of forgery is a serious one, and thus cogent evidence is required, the 2^nd defendant’s only evidence in support of such a serious allegation is that the signature on a bill issued by her on behalf of the Firm is obviously different from those on the 1^st Facility Letter.  However, I cannot see any obvious difference.  Further, I have also compared her signature on her affirmations with those on the 1^st Facility Letter, and cannot see any obvious difference either.  Similarly in relation to the signatures on her letter of 7 December 2016 issued to the plaintiff, and the various documents signed by her to the plaintiff, namely, the account opening form of the Firm dated 29 January 2013, the Mandate for Partnership dated 29 January 2013, the Remote Channel Authority and Indemnity dated 29 January 2013, and the guarantees and indemnities dated 21 January 2013 as well as the Confirmation and Acknowledgment dated 21 January 2013.  Of course, I am not saying that I have the expertise in giving any opinion on the authenticity of the signature.  However, the burden is not on me and the plaintiff.  Absent any obvious difference, and absent any expert evidence, I am not satisfied that the 2^nd defendant has discharged her burden of showing a real prospect of success of her defence.

11.  In reaching this conclusion, I have not overlooked the background deposed to by the 2^nd defendant that she was asked to sign bank documents from time to time and everyone in the Firm including herself was subject to the 1^st defendant’s supervision. However, I cannot see how this background would advance the 2^nd defendant’s defence that the signatures on the 1^st Facility Letter were not hers since she was not running a defence that she did not understand the documents. 

12.  I have also not overlooked the circumstance stressed by the 2^nd defendant to me that she never signed any document witnessed by the Mr Kwok as stated in the 1^st Facility Letter, and that despite the affirmation of Mr Kwok deposing to his witnessing the 2^nd defendant’s signing, he has not provided any information as to the time and the location of the witnessing.  However, first, the important thing is the 2^nd defendant signed the 1^st Facility Letter, and the validity would not be affected by the witnessing.  Second, insofar as this is a circumstance suggesting suspicious feature in the case, it is still a mere allegation of the 2^nd defendant, against Mr Kwok’s affirmation deposing to the witnessing, absent any obvious difference between the signatures in question and absence any expert evidence on the signatures.

13.  Finally, I have also not overlooked the 2^nd defendant’s allegation that she has difficulty in obtaining an expert opinion given that upon her report, the police is still investigating the matter.  However, I do not see why the police investigation has caused any difficulty.  On the contrary, an expert opinion may even assist the police investigation.

14.  It remains for me to say that I also agree with the plaintiff’s submissions that even if the 2^nd defendant did not sign the 1^st Facility Letter, she was still bound as a partner of the Firm or as someone held out as such: see sections 7 and 16 of the Partnership Ordinance (Cap 38).  The 2^nd defendant complained that this is not the plaintiff’s pleaded case.  In my judgment, this is not pleaded because this partnership point is raised only in relation to the defence raised by the 2^nd defendant.  It is raised to say that even on the 2^nd defendant’s own evidence, she could not succeed.

CONCLUSION

15.  In the circumstances, I shall dismiss the 2^nd defendant’s application with costs to the plaintiff with certificate for counsel, to be summarily assessed.