NELSON TELECOMMUNICATION GROUP (ASIA) LTD v. UNITED LAND NETWORK TECHNOLOGIES LTD

DCCJ5962/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5962 OF 2005

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J U D G M E N T

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1.  This case has a long history.

Background of the case

2.  The Plaintiff commenced the present action against the Defendant on 29 November 2005.  As no notice of intention had been filed by the Defendant, the Plaintiff obtained default judgment against the Defendant on 30 December 2005.  Pursuant to such judgment, the Plaintiff obtained a charging order absolute against the Defendant on 8 February 2006.  Later on 14 March 2006, the Defendant took out an application to set aside the default judgment and the charging order, on the ground that the judgment was irregular as the writ of summons had not been properly served at the registered office of the Defendant.  Both parties then filed a number of affidavits pursuant to such application.  On 25 August 2006, the Plaintiff took out a second summons seeking to strike out a few affidavits filed on behalf of the Defendant on the ground that the deponents of these affidavits had not provided their places of residence or occupations as required by Order 41 rule 1(4) of the Rules of the District Court, Cap.336.  This is the resumed hearing of these 2 applications.

3.  I can perhaps try to summarise the facts of the present case as follows.  One Mr Thompson and one Mr Maxfield were former colleagues employed as engineers in the Chak Lap Kok Airport project.  Through the introduction of Mr Maxfield, Mr Thompson came to know one Madam Unsay.  In 2000, Mr Maxfield proposed to Mr Thompson to enter into a property investment venture.  Under such proposal, Madam Unsay and Mr Thompson would buy a flat in Pokfulam area through a limited company, and they would then partition the property into various cubicles for lease mainly to Filipinos.  An agreement was finally reached between the parties, and the Defendant, which was a limited company, was acquired to purchase the property known as Flat A, 5th floor and roof, Yue Tak House, 7-11 Pokfulam Road, Sai Ying Poon, Hong Kong (hereinafter referred to as “ the Property”).  The sale of the Property was completed on 31 October 2000. 

4.  After the purchase of the Property, Mr Thompson stayed mainly in the Philippines by reason of his work, and the daily operation relating to the leasing of the Property was handled by Madam Unsay. 

5.  The Plaintiff was a company mainly controlled by Mr Maxfield’s former wife, Madam Nelson.  According to the Plaintiff’s case, the Plaintiff had made an oral agreement with the Defendant in 2000 under which the Plaintiff agreed to: (a) provide some items for use in the Property; and (b) renovate and decorate the Property at a fee of HK$500 per day. In October 2002, the Plaintiff and the Defendant further made an agreement in writing whereby the Plaintiff agreed to provide repair and maintenance service in respect of the Property, and the Plaintiff would be paid $3,500 per month for the management of the Property and $500 per day for the actual time used by the Plaintiff for the repair and maintenance work of the Property.  The Plaintiff’s claim herein relates to the sums allegedly due under these 2 agreements.  Further, the Plaintiff claims that the Defendant is indebted to the Plaintiff a sum of $154,000 being money loaned by the Plaintiff to the Defendant in or about October 2000.

6.  There was another sidetrack to this litigation.  On 22 September 2006, the Plaintiff took out a summons to set aside the Notice to Act for the Defendant filed by the Defendant’s solicitors for want of authority (hereinafter referred to as “the Want of Authority Summons”).  This application was made on the basis that Mr Thompson alone had no authority to instruct solicitors to act for the Defendant. 

7.  On 1 December 2006, all 3 summonses came before Deputy Judge W C Lee.  On that day, the learned deputy judge queried whether he had jurisdiction to deal with the Want of Authority Summons.  He therefore made an order that the Plaintiff should proceed with the Want of Authority Summons in the Court of First Instance within 2 months, failing which the Defendant be at liberty to strike out the Want of Authority Summons for being an abuse of the process of the court.  On 7 February 2007, the learned judge dealt with the case again.  Upon the application of the Plaintiff, the learned deputy judge made an order transferring the Want of Authority Summons to the Court of First Instance.

8.  With respect, this order was not appropriate for 2 reasons.  Firstly, it is not desirable for 2 courts to exercise jurisdiction over one single case at the same time.  If a District Court judge finds that he does not have the jurisdiction to make an order pursuant to an interlocutory application, he should transfer the whole case to the Court of First Instance for disposal.  Secondly, the Want of Authority Summons apparently related to a deadlock situation in the Defendant company.  In such circumstances, appropriate miscellaneous proceedings had to be taken out in the Court of First Instance under the company jurisdiction to resolve the matter.  This was certainly not an ordinary civil action, and so it was not appropriate for the learned deputy judge to transfer the Want of Authority Summons to the ordinary civil jurisdiction of the Court of First Instance for disposal.  In my judgment, the learned deputy judge should have stayed the action pending  proper miscellaneous proceedings be taken out by the Plaintiff under the company jurisdiction of the Court of First Instance to resolve the want of authority issue. 

9.  The transfer order did create some embarrassment for the masters in the Court of First Instance.  The Want of Authority Summons was given a separate High Court action number in the Court of First Instance.   In that transferred action, Master Ho made an unless order on 12 September 2008, requiring the Plaintiff to take steps to proceed with the Want of Authority Summons within 7 days of the service of the order failing which the summons be dismissed.  No step had been taken by the Plaintiff pursuant to the unless order.  The Defendant then applied to restore the other 2 summonses in the Court of First Instance.  On 30 October 2008, Master Yu confirmed that the Want of Authority Summons had already been dismissed.  However, as only the Want of Authority Summons had been transferred to the Court of First Instance, the present action including the application to set aside the default judgment should be heard and dealt with in the District Court.  That is the reason why the 2 summonses were restored before myself for determination this morning.

10.  No one appears for the Plaintiff in this hearing.  According to the latest company search record, all the directors of the Plaintiff have resigned and the Plaintiff is now a dormant company.  Mr Maxfield, on the other hand, is now an absconded bankrupt. 

Irregular judgment

11.  The primary contention of the Defendant is that the default judgment should be set aside because it was irregular.  The Plaintiff has filed one single affirmation with service by a legal executive of the Plaintiff’s former solicitors, Mr Tsang Chi-ming, who confirmed that he had, on 30 November 2005, served the writ of summons on the Defendant by leaving a sealed copy of the writ at the Defendant’s registered address which was in fact the Property.

12.  The Defendant disputes such service.  According to the Defendant, Mr Thompson actually took back the management of the Property in 2004, and he had asked 2 of the long-term occupants of the Property, Madam Vergara and Madam Gomez, to pass to him any incoming mail addressed to the Defendant.  However, both Madam Vergara and Madam Gomez confirmed that they had never received any writ of summons from the Plaintiff.  Madam  Vergara found that there were some documents outside the Property on 8 March 2006.  She contacted Mr Thompson and it was only by then Mr Thompson found out from the documents that there was in fact a charging order against the Defendant, and it was the first time that the Defendant knew about the present proceedings.

13.  In fact, there was an iron gate at the main entrance of the building in which the Property was situated.  The letterboxes were installed in the private area on the ground floor of the building, and the postmen were given the key to the main gate of the building.  In such circumstances, it seemed quite impossible for Mr Tsang to have gained access to the building or the mailbox. Further, as shown by the photographs produced by the Defendant, the size of the letterbox of the Property was not big enough to enable a copy of the writ of summons to be inserted therein.  Further, there was no slit or aperture to the entrance door of the Property through which the writ of summons could have been inserted.  Based on such evidence, the Plaintiff’s process server could not have served the writ of summons as alleged.  As there is no evidence from Mr Tsang as to where and how he left the writ of summons at the Property, there is nothing to rebut the Defendant’s evidence about the lack of service.  Hence, the judgment should be set aside on the ground of irregularity.

Merits of the defence

14.  This would have been sufficient to dispose of the Defendant’s summons.  However, for the sake of completeness, I would deal with the issue as to whether the Defendant has a meritorious defence in the present case. 

15.  In this regard, I agree with the Defendant that the court should strike out the affidavits by Madam Unsay and Mr Maxfield on the ground that they had not provided their places of residence or occupations pursuant to Order 41 rule 1(4) of the RDC.  According to the affidavit evidence filed by the Defendant contained in the 3rd Affirmation of Mr William Thompson, paragraphs 5 to 6 of the 2nd Affidavit of Mr Stephen Crampton and the 2nd Affidavit of Mr Joseph Mullen, Madam Unsay and Mr Maxfield were not actually residing or occupying the addresses stated in their purported affidavits, and so the affidavit evidence produced by these 2 deponents should not be accepted by the court.  As there is nothing produced by the Plaintiff to rebut the Defendant’s allegation in this regard, I agree with the Defendant  to strike out the affidavits of Madam Unsay and  Mr Maxfield.

16.  Further, even accepting the contents of these affidavits, I find that the Defendant has managed to establish a meritorious defence in the present case.  In respect of the loan allegedly advanced by the Plaintiff to the Defendant in October 2000, Mr Thompson had shown by way of affidavit evidence that he had made considerable contribution for the purchase of the Property by that time.  In such case, there was no need for the Defendant to obtain further loan from the Plaintiff.  Further, no documentary evidence has been produced to substantiate the making of the loan, and there was nothing in the audited financial account of the Defendant to show that such a loan indeed existed.  Hence, the existence of the loan is very much a triable issue.

17.  Regarding the sums allegedly due under the agreements made in 2000 and 2002, the Defendant disputes that such agreements did exist.  As there is a lack of documentary evidence in this regard, I also find that the Defendant has a meritorious defence about the existence of these agreements.  Even if there were such agreements, no particulars had been provided to show that the Plaintiff had ever provided any items for use at the Property.  Neither did the Plaintiff provide any details about the renovation, decoration, repair or maintenance services provided to the Property.  In fact, the occupants of the Property dispute that the Plaintiff had ever provided such services to the Property.  In such circumstances, the Defendant has also managed to establish a meritorious defence to the Plaintiff’s claims.

18.  Based on the aforesaid, I grant the relief sought by the Plaintiff in the 2 summonses.