東莞市東莞東祥裝飾有限公司 v. UNIVERSAL RIGHT LTD.

CACV 42/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 42 OF 1999

(ON APPEAL FROM HCA 5250/98)

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J U D G M E N T

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Rogers, J.A. :

Introduction

1. This is an appeal from a judgment of Barnett, J. given on the 8th January this year. The application before Barnett, J. itself was an appeal against the refusal of the Master to set aside a judgment entered in default.

2. Briefly, the history of this matter is that the writ in this Action was issued on 2nd April 1998. The Defendant filed an acknowledgement of service on the 16th April. On 29th of April, the Defendant issued a summons seeking an extension of 28 days to file its Defence but the Master granted an extension of 21 days. The Defendant then applied again for a further extension of 14 days and the Master, on that occasion, extended the time for filing the Defence until 4 p.m. on 4th June 1998, but made the following order :-

"that unless the Defendant do file and serve its Defence pursuant to the Order herein dated 30th April 1998 by 4:00 p.m. on Thursday, 4th June 1998, judgment be entered in favour of the Plaintiff against the Defendant for the sum of RMB1,330,376.73 or its Hong Kong dollar equivalent at the time of payment together with interest thereon at the rate of 12.9% per annum from 2nd April 1998 to the date of judgment and thereafter at judgment rate until payment together with costs of this action to be taxed, including the costs of this application."

3. The Defendant, however, did not file its Defence by the time stipulated. Half an hour before the time expired, it filed a summons under Order 12 rule 8. That summons sought a declaration that the Court had no jurisdiction on the ground of forum non conveniens. The summons was fixed to be heard on the 30th June. Again, shortly before that occurred on the 29th June, the Plaintiff's solicitors entered judgment against the Defendant.

4. We were told today that the date of the judgment was left blank and it was filled in as the 21st May, being the date of the Master's Unless Order. On the appeal in front of Barnett, J., the Judge took that date to be the wrong date which indeed it was. He set that judgment aside and gave leave to the Plaintiff to enter judgment again. He said that it should be dated as the date on which judgment was actually entered.

5. My view of the Order of 21st May is that judgment was automatic as of one second past 4 p.m. on the 4th June. The order says that judgment be entered in default of the filing of the Defence. Hence, if the Defence was not filed, the judgment was automatic. There was no need for anybody to do anything further in the matter. I would also say that it appears from the application itself under Order 12 rule 8 and, indeed, from the affidavit filed on behalf of the Defendant, that it appears for some reason that the Defendant, or its advisers, may have thought that an application for trial in another jurisdiction on the basis of forum non conveniens was a Defence which was maintainable in the Action. Hence, the application was that the Court has no jurisdiction. That, of course, only has to be considered to be realised to be erroneous. An application for a stay of proceedings on the ground of forum non conveniens is simply a request to the Court to stay the proceedings so that the matter can be litigated in a forum which is more convenient, it is not a denial of jurisdiction by the Court itself.

6. The reason which had been given by the Defendant for not filing the Defence was that advice had been given by Counsel to the solicitors that the point about forum non conveniens should be taken and that an application to the Court should be made and in the meantime, no Defence should be filed. Counsel based himself upon the Notes in the White Book under Order 12 rule 8. Those Notes are of course applicable in normal circumstances where time limits have not expired but they are not applicable, as is now conceded in this Court by Mr. Mok on behalf of the Defendant, in a case where the Court has made an Unless Order that a Defence should be filed. Indeed, no indication had been given to the Master on the two occasions on which extensions of time had been sought, that any application under Order 12 rule 8 would be made for stay of proceedings on the ground of forum non conveniens.

7. The Judge below considered, however, that the judgment which had been entered should not be set aside on the basis that the Plaintiff would be prejudiced. There were two grounds upon which he relied. The first was, he said :

"There is the possibility that the Plaintiff will be deprived of not only its judgment but also its continued right of access to the courts in Hong Kong. The Plaintiff may have to start all over again in the courts on the Mainland. It seems to me difficult to say that the Plaintiff can be compensated in costs for such an eventuality."

8. The other ground upon which the Judge below relied was that he felt that the Plaintiff had in some way been ambushed by reason of the fact that the Defendant had not disclosed the intention to or the possibility of it making an application for a stay of the proceedings on the ground of forum non conveniens.

9. The first point has now been taken care of by one of the undertakings which Mr. Mok has offered today, namely that the Defendant, if it was successful in this Court, would undertake to abandon any application for a stay of the proceedings.

10. The second point raised by the Judge seems to me to be somewhat tenuous. I, for my part, cannot see how the Plaintiff has, in any way, been said to have been "ambushed". Simply the Defendant did not make its position clear but I do not see how the Plaintiff has walked into any trap, as it were, by reason of that.

11. In normal circumstances, that would leave this Court to exercise its own discretion in the matter. But as the matter has developed, it has emerged that really these proceedings have got off on the wrong foot. The real complaint that the Defendant has, is in respect of the Order of the 21st May. As I have indicated, that provided that judgment would be automatic on non-compliance. It seems to me that the Order of the 21st May may not be said to be wrong as such but it was certainly a harsh order to make. This was only the second application by the Defendant for an extension of time. Although it was not supported by any evidence or affidavit, it does seem to me that in normal circumstances, the Defendant might have expected at least one more chance before an Unless Order were made with the serious consequences that it would have. In my view, time under that order should have been extended.

12. If this had been a matter of whether the judgment itself should be set aside, I would have exercised my discretion in favour of setting it aside. As I have referred to, Mr. Mok today has offered a number of undertakings : First of all, that the Defendant would pay all the costs of these proceedings from 29th June 1998 to date including, in particular, the costs in this Court and in the Courts below. Secondly, the Defendant has offered to pay into Court an amount equivalent to the interest on the amount claimed which would have resulted from the period of 29th June 1998 to date, when calculated at the judgment rate.

13. Then, the undertaking to which I have referred to that the Defendant would abandon any application for stay on the basis of forum non conveniens. The Defendant has also indicated that it would be prepared to file its Defence within 14 days but that is a matter which, in my view, is slightly too long and I consider that having taken into consideration the time which has passed, 7 days should be sufficient.

14. Finally, the Defendant has added a further undertaking not to apply for security of costs.

15. On the Plaintiff's part, the Defendant should be required to pay into Court a sum equivalent to the amount claimed. In this respect, I would say that if this was simply a matter of setting aside a judgment in default, the evidence of the Defence as to the merits of its claims seems to me to be sketchy. There is possibly just enough there. But apart from providing the Plaintiff with some form of comfort, it would deprive the Defendant of the capital sum which would not be available to the Plaintiff until the end of the proceedings if at all. In my view, requiring the Defendant to pay the amount into Court would not be necessary at this stage.

16. I consider that the order that this Court should make is an order that the time for filing the Defence should be extended until 4:00 p.m., 29th April, which is 7 days from today and the order of the 21st May should be varied accordingly.

17. In those circumstances, that would take care of the whole matter and of course the Defendant's undertakings should be accepted.

Godfrey, J.A. :

18. I agree.

19. On the footing that the defendant by its counsel gives the undertakings to which Rogers, J.A. has referred in his judgment, the judgment in default here, and the orders of Master Jones and Barnett, J. refusing to set it aside, will themselves be set aside and in place thereof we will simply order that time for service of the defendant's defence be extended to 4 p.m. on Thursday, 29 April 1999.

20. The appeal is allowed to that extent.