CHAN SAU WAI MAY v. WOO YIU CHUNG BARRY

DCCJ2834/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2834 OF 2013

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DECISION

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1.  This is an application made by the plaintiff against the defendant for default judgment upon the defendant’s failure in filing a defence.

2.  The plaintiff is seeking an order that she will be at liberty to enter judgment against the defendant upon his default in serving a defence for the relief stated in the plaintiff’s statement of claim filed on 2 August 2013, namely:-

(i)   A declaration that the property known as Flat 1 on the 16^th Floor of Block A, Tung Tao Court, No 33, Oi Shun Road, Hong Kong (“the Property”) as referred to in the statement of claim under the name of the defendant is held by the defendant upon trust for the plaintiff absolutely and that the plaintiff is the sole beneficial owner of the Property;

(ii)   An order compelling the defendant to deliver and/or transfer the Property to the plaintiff as the Court may direct, subject to the consent of the Hong Kong Housing Authority; and

(iii)   Costs of the action and this application be to the plaintiff.

The plaintiff’s case

3.  The details of the plaintiff’s case can be found in the statement of claim.  In summary, the defendant is the lawful son of the plaintiff from her first marriage.  In December 2008, the defendant and the plaintiff purchased the Property under the Home Ownership Scheme for HK$2,061,000.00.

4.  Although the Property was and is held on the sole name of the defendant, it has been claimed that it was purchased for use as residence of the plaintiff and her children from her second marriage.

5.  The plaintiff claims that the down payment, mortgage instalments and all incidental expenses relating to the purchase of the Property were paid by the plaintiff solely.  It is the common intention and understanding that the Property was held by the defendant on trust for the plaintiff.

6.  In about March 2013, the defendant and the plaintiff had a dispute, the defendant threatened to evict the plaintiff and her children from the Property.  In about July 2013, the defendant deliberately withdrew from the Bank of East Asia all the money deposited by the plaintiff which was intended to be applied towards the monthly mortgage repayment.  The purpose of the defendant in doing so was to cause default in the monthly mortgage re-payment and to cause repossession of the Property by the bank.

7.  To protect her interest in the Property, the plaintiff instituted the present proceedings against the defendant.

The Procedural History

8.  The writ together with the statement of claim indorsed thereon in this case was issued on 2 August 2013 and served on the defendant by sending the same by registered post to the last known address of the defendant on 2 August 2013 and by inserting the same into the letter box at the same usual and last known address of the defendant on 3 August 2013.

9.  The defendant should have filed an acknowledgment of service on or before 23 August 2013 and his defence on 20 September 2013.

10.  On 15 August 2013, ie 8 days before the date on which the defendant was required to file his acknowledgment of service, the defendant applied for legal aid.  On 12 September 2013, the defendant was refused legal aid.  The proceedings were supposed to be stayed for 42 days until 26 September 2013.

11.  Prior to the expiry of the first statutory stay and on 19 September 2013, the defendant applied for legal aid for the second time.  On 14 November 2013 , the defendant was again refused legal aid.  The proceedings were stayed for another 42 days until 3 October 2013.

12.  Upon the expiry of the second statutory stay, the defendant should have filed an acknowledgment of service on or before 8 November 2013 and his defence on or before 6 December 2013.  This however was not done.

13.  On 11 December 2013, the defendant filed an acknowledgment of service indicating his intention to defend.

14.  On 12 December 2013, the defendant applied for legal aid for the third time.

15.  This court lifted the statutory stay due to the 3^rd legal aid application on 20 December 2013, pursuant to section 15(7) of the Legal Aid Ordinance, Cap 91.

16.  On 20 December 2013, the defendant and the plaintiff entered into a Chinese settlement agreement whereby the defendant, inter alia, agreed to judgment being entered against him and the specified declaration (i) referred to hereinabove being made by the court in favour of the plaintiff: see Chinese Agreement dated 20 December 2013 attached to plaintiff’s skeleton arguments lodged with court on 27 December 2013 (“the Chinese Agreement”).

The Applicable Law

17.  The applicable legal principles have been helpfully summarized by Ms Mak, the solicitor representing the plaintiff in this case, as follows:-

(1)   In general, a declaration would not be granted when giving judgment without trial (eg default judgment).  However, this was only a rule of practice and not of law and would give way to the paramount duty of the court to do the fullest justice to the plaintiff which he was entitled… A declaration can also be granted without trial, by way of a default judgment under O 19 r 7, if the plaintiff has a genuine need for such relief and the court could properly grant it based on the merits of the case.  It is only a rule of practice but not a rule of law not to make a declaration when giving judgment in default without a trial: HKCP2014 §15/16/2; Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 (applied in Liu Chi Keung v Law Sim Yuk [2006] 4 HKLRD 385);

(2)   The statement of claim must show a case for the order the applicant seeks to obtain.  The court’s task (in exercising its discretion) is to see whether the plaintiff appears to be entitled to judgment on his statement of claim.  The court does not need to be satisfied by evidence adduced by the plaintiff to prove his case: HKCP2014 §19/7/14; and

(3)   Even the declaration sought is a declaration of legal right, the force of objection (if any) to the making of such declaration would be much weakened if it does not affect the right of anyone other than the defendant or persons claiming through them: Patten v Burke Publishing Co Ltd [1991] 1 WLR 541 at 544G; HKCP2014 §19/7/14.

Declaratory relief in this case

18.  It has been submitted on behalf of the plaintiff that the plaintiffs’ case is not a case that could be settled simply by granting the Order (ii) referred to hereinabove because the Property is a Home Ownership Scheme Property and the transfer of the same is subject to the consent of the Housing Authority.  Further, the Property is encumbered by a mortgage with the Bank of East Asia.  The transfer of the Property by the defendant to the plaintiff would require the plaintiff to obtain a loan to pay off the existing mortgage with the Bank of East Asia.  Given that the plaintiff is a housewife, it will be difficult for her to obtain a loan from any financial institution to pay off the existing mortgage.

19.  It has further been submitted that, without the specified declaratory relief (i) referred to in paragraph 2 above, the plaintiff could not reasonably and peacefully enjoy the Property to the exclusion of the defendant and the plaintiff will possibly be subject to further threat of the defendant to evict the plaintiff and her children out of the Property if dispute between the defendant and the plaintiff shall arise again in the future.  Further, pursuant to the Chinese Agreement made between the plaintiff and the defendant, the defendant clearly indicates that he has no objection to the specified declaratory relief (i) being made by the court in favour of the plaintiff.

20.  Further, it has been submitted that, after entering judgment it will not longer be open to the defendant to argue that he has beneficial interest in the Property and therefore is entitled to evict the plaintiff and her children out of the Property without having the judgment set aside, but in the meantime the omission of any declaration to that effect from the judgment could seriously inhibit the plaintiff (and also her children from her second marriage) from her reasonable and peaceful enjoyment of the Property.

21.  I agree with the plaintiff’s submissions above and am of the view that a declaratory relief is necessary in this case in order to do justice to the plaintiff.

Conclusion

22.  I am satisfied that at all times the defendant has been served with all the relevant court documents, including the writ of summons with the statement of claim indorsed thereon and the summons applying for default judgment.  He has been fully aware of the proceedings (as shown by the filing of the acknowledgment of service and entering into the Chinese Agreement with the plaintiff).  However, he has chosen not to take any action.  Further, his 3 separate attempts to apply for legal aid were clearly made with a view to delay the proceedings.  The most revealing thing is that, on 20 December 2013, the same day on which the court lifted the statutory stay of proceedings for his third legal aid application, he had signed the Chinese Agreement with the plaintiff to settle the matter, including acknowledging all the material matters pleaded in the statement of claim.

23.  I agree with the Ms Mak’s submissions that this is a case of such a character that the normal practice should give way to the paramount duty of the court to do the fullest justice to the plaintiff to which she is entitled.  In my judgment, the declaration relief sought by the plaintiff would not affect any third party but the relief is necessary to ensure the plaintiff’s peaceful and reasonable enjoyment of the Property. 

24.  I further agree with the plaintiff’s submission that in order to do justice in this case, a declaration order would in my judgment be appropriate.  While the court recognizes the normal rule in such cases, I take the view that the plaintiff’s entitlement to the declaratory relief sought in this action should not be deprived and I am of the view that judgment should be entered against the defendant and the declaration shall be granted by the court in favour of the plaintiff. 

25.  I therefore would make an order in terms of paragraphs 1 and 2 of the plaintiff’s summons dated 9 November 2013.  There will be no order as to costs to the action, including the costs of the summons herein, as agreed by the parties under the Chinese Agreement.