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FCMC 1453 of 2002
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 1453 OF 2002
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BETWEEN
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KGL |
Petitioner |
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CKY |
1st Respondent |
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LSM |
2nd Respondent |
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Coram : Her Honour Judge Chu in Chambers
Date of Hearing : 11 April, 12 April, 9 May & 9 June 2005
Closing Submissions for the Petitioner : 3 July 2005
Closing Submissions for the 2nd Respondent : 13 July 2005
Date of Handing Down of Judgment : 5th August 2005
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J U D G M E N T
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1. There were initially two summonses before me issued on behalf of the 2nd Respondent :
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a summons issued on 5th November 2004, (“1st Summons”) for, inter alia, leave to appeal to the Court of Appeal, out of time, the following orders : |
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order of 5th November 2003, setting aside a disposition of HK$1.3 million by the 1st Respondent to the 2nd Respondent (“1st Disposition Order”) |
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order of 20th November 2003, a substituted service order in relation to the Petitioner’s notice for avoidance of disposition in relation to a sum of HK$245,000 from the 1st Respondent to the 2nd Respondent, an injunction order dated 5th November 2003 freezing a sum of no less than HK$245,000 in the 2nd Respondent’s HSBC account, and the Petitioner’s supporting affidavit thereof (described as the “3rd Service Order” later in this judgment) |
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order of 30th August 2004, anorder dispensing with service of the Petitioner’s 20th affidavit filed in support of her application for ancillary relief (described as the “4th Service Order” later in this judgment) |
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(d) |
that part of the order of 15th September 2004, which relates to 2nd Respondent, (“the 2nd Disposition Order”) for, inter alia, |
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setting
aside a disposition of HK$245,000 by the 1st Respondent to the 2nd Respondent |
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the
dispositions of HK$1.3 million and HK$245,000 having been set
aside, the 2nd Respondent being indebted to the 1st Respondent in a total sum of HK$1,545,000, the 1st Respondent is ordered to transfer and assign this debt of HK$1,545,000 to the Petitioner |
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a summons issued on 9th November 2004, (“the 2nd Summons”) for, inter alia, setting aside the following 4 orders relating to service : |
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order of 26th August 2002, forservice of the amended petition on the 2nd Respondent be deemed to have been effected (“the 1st Service Order”) |
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(b) |
order of 11th August 2003, dispensing with personal service on the 2nd Respondent of the order of 13th June 2003 requiring her to file her affidavit of means and that service of all other relevant documents on the 2nd Respondent be effected by delivery to 1st Respondent (“2nd Service Order”) |
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order of 20th November 2003, for service of a copy of the Notice of Application for Avoidance of Disposition Order dated 4th November 2003 (later referred to as “2nd s.17 Application” in this judgment), an injunction order dated 5th November 2003, and a copy of the Petitioner’s 15th Affidavit on the 2nd Respondent be substituted by advertising once in the Oriental Daily News (“3rd Service Order”) |
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(d) |
order of 30th August 2004, for service of the Petitioner’s 20th Affidavit on the 2nd Respondent be dispensed with (“4th Service Order”) |
2. On 18th April 2005 a further summons (“3rd Summons”) was issued on behalf of the 2nd Respondent to set aside the 1st and the 2nd Disposition Orders. On 9th May 2005, I granted leave to the 2nd Respondent to have the 1st Summons adjourned sine die with liberty to restore after the hearing of the 2nd Summons and the 3rd Summons. Thereafter the 2nd Respondent proceeded with only the 2nd Summons and the 3rd Summons.
BACKGROUND
3. W (“W”) and the 1st Respondent (“H”) were married in New York in February 1987 where they were then living.
4. After marriage, H and W continued to live in the United States, although work constraints kept them living apart for most of the time.
5. There are no children of the family.
6. In 1992, H returned to Hong Kong to work for his father’s stockbroking firm.
7. W said she met the 2nd Respondent (“L”) first, after H had returned to Hong Kong. W said after their meeting, she and L then became friends and it was only at about end of 1992, when L was returning to Hong Kong and voluntarily delivered W’s Christmas gift to H that L eventually met H in Hong Kong. However, L claims that she met H and W together socially in the United States in about July 1992. The details of the circumstances of how L met H are not relevant at this stage, save that L admitted first meeting H in 1992, and having kept in contact with him since and they later became good friends.
8. According to W, by 1994, H had formed an intimate relationship with L. This is, however, denied by L, who said that her intimate relationship with H only started on her birthday on 9th October 2002 and before then, they were only good friends. L said that during the period 1995 to 2000 she was living in the United States and she in fact married another man in the United States in July 1997.
9. Anyway, in 1994, W returned to Hong Kong and resided with H at his parents’ home. According to W, after her return, her marriage with H continued harmoniously, notwithstanding she was under the belief that H was then already having an intimate relationship with L.
10. After W’s return to Hong Kong, she did not take up any employment, and was financially dependent on H until he left Hong Kong and disappeared.
11. In the meantime, it appears that L had been coming to Hong Kong for holidays. L said her own marriage was not happy, and in 2000, as she was then 35, and as she was unlikely to conceive a child with her husband with her marriage having broken down, she was contemplating having a child from a sperm bank. She said she understood from H, with whom she had kept up contact since they first met, that his marriage had broken down sometime ago, and that he also wished to have a child. L said she then decided it was “more appropriate that her child should have a father whom the child would know and would provide for him and who would be to some extent involved in his life rather than just an anonymous donor”. Subsequently, a child was conceived by L out of artificial insemination on 28th January 2000, and she produced a letter from her doctor in Hong Kong in support of the fact that her child was born out of artificial insemination. What L says is that in 2000 H was only the provider of the sperms for her to conceive a child and that at that time her relationship with H was not yet an intimate one. L maintains that in 2000, there was no physical or intimate relationship between her and H. Her child (“C”) was born in the United States in October 2000.
12. L claims that when her pregnancy was confirmed, she reached an oral agreement with H for him to support her and her child and that H would purchase an apartment to provide for her child (“Oral Agreement”). L says the Oral Agreement was further evidenced by a birthday card H sent her in October 2000.
13. L further says that after birth of C she did not see H for a period of over 1 year until the end of June 2001, when C was about eight and half months old and when H went to the United States. L says she was originally planning to return to Hong Kong after the birth of C, but her health and C’s health prevented them from doing so until August 2001. It transpires that C has not been a very healthy child and as early as May 2001, when L and C were still in the United States, C was diagnosed with mild psychomotor delay, but according to L, she kept this from H as she was concerned that if H knew, he might renege on the Oral Agreement to support C.
14. Subsequently, according to L, H honoured the Oral Agreement and paid a sum of HK$1.3 million to her and part of the sum was used to purchase a flat which is at Woodlands Terrace, Central (“Woodlands Terrace Property”). This property is registered in the sole name of L. The address of Woodlands Terrace Property was, however, not disclosed to W and W only found out this address much later, in July 2003 (The copy of the land search produced by W bore a search date of 3rd July 2003).
15. On 8th February 2002, W petitioned for divorce based on H’s unreasonable behaviour. L was only cited later on 2nd May 2002 as the 2nd Respondent when W amended her petition.
16. According to the affirmation of H of 30th April 2002, he moved out of his parents’ home to live with L and their son C on 19th April 2002 in a rented flat at Cordial Mansion, Caine Road (“Cordial Mansion”).
17. L now gives a slightly different version of events in her affirmations. According to L, H told her in April 2002 that W had issued divorce proceedings against him and he asked to move to share her accommodation, to which she agreed. However, she said she and C occupied one bedroom and H was occupying another bedroom. L was then residing at Cordial Mansion with C. The lease at Cordial Mansion was only a temporary lease for 3 months from 1st February 2002 to 30th April 2002. L produced a copy of this temporary lease in her 2nd affirmation. L said she resided there from 4th February 2002, upon her return from the United States, to 30th April 2002, when she left for the United States again. After the expiration of the temporary lease, according to L, H moved into Woodlands Terrace Property first, and when she returned from the United States on about 8th June 2002, she also moved into the Woodlands Terrace Property. Although they moved respectively into Woodlands Terrace Property, it is L’s case that they were still then merely good friends and were only sharing accommodation and there was no intimate relationship between them until October 2002. H and L continued to reside in the property until they left for the United States on about 14th July 2003.
18. During the period while L, H, and C were residing at Woodlands Terrace Property, according to L, H paid the mortgage repayments of Woodlands Terrace Property, and all of their living expenses as well as L’s and C’s trips to the United States. During this period, H supported L and C financially, as part of the Oral Agreement. L was unemployed.
19. In the meantime, with a view to the marriage terminating, and to provide a roof for W, H had also purchased a flat in the W’s name in Tseung Kwan O in November 2001. The date for completion and occupation was on about 11th June 2002. W and H entered into a consent order on 14th May 2002 in relation to interim financial relief for W as W was asked to leave H’s parents’ home, after he had moved out, and she had to move to a serviced apartment before the completion of purchase of the Tseung Kwan O flat.
20. In July 2002, W successfully applied for a variation upwards of the consent order of her maintenance pending suit. H appealed against the varied order but his appeal was later dismissed by the Court of Appeal on 25th March 2003.
21. On 16th August 2002, after learning of the payment of HK$1.3 million by H to L in H’s affirmation of 30th April 2002, W took out an application under s. 17 of Matrimonial Proceedings and Property Ordinance (“MPPO”) to set aside, inter alia, this disposition (“1st s. 17 Application”), and other dispositions H made in favour of his father, which does not concern L.
22. Thereafter, W’s solicitors made several attempts to serve the 1st s. 17 Application on L. The first call over hearing for the 1st s. 17 Application was on 13th June 2003 at which L was absent. On 13th June 2003, an order was made, inter alia, for L to file an affirmation of means upon personal service of the order on her. During the period between 16th August 2002, i.e. after the issue of the 1st s.17 Application, and middle of July 2003, W took quite a number of steps in the divorce proceedings, including applying for the Decree Nisi, taking out, as aforesaid, her application for variation of the consent order for maintenance pending suit which resulted in an appeal by H, issuing a Notice to proceed with her application for ancillary relief in respect of two properties in which it was alleged that H had interest. Eventually, H absconded in July 2003.
23. According to an immigration movement record obtained by W on 30th October 2003, H left Hong Kong on 15th July 2003 and has not re-entered the jurisdiction since, except perhaps for a short transit stopover. Since 15th July 2003, H basically has not taken part in the proceedings, and W has not been able to locate him. It is now confirmed that L and C left Hong Kong at about the same time with H.
24. After H absconded, W further discovered that a sum of about HK $245,000 was transferred by H to L, and on 4th November 2003, W took out a further s. 17 application to set aside this payment (“the 2nd s.17 Application”). Further, on 5th November 2003, W obtained an injunction order to freeze L’s HSBC account. (“Injunction Order”).
25. It now appears from L’s affirmations that during the period from January 2000 to October 2004, she had made 5 trips to the United States as follows : -
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She
returned to Hong Kong on 9th January 2000 from United States. She left Hong Kong on 19th April 2000 for United States and returned to Hong Kong on 23rd August 2001 (approximately 17 months in the United States). |
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She left
Hong Kong on 15th January 2002 for the United States and returned to Hong Kong on 4th February 2002 (approximately 3 weeks in the United States). |
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She left
Hong Kong on 30th April 2002 for United States and returned to Hong Kong on 8th June 2002 (approximately 5 weeks in the United States). |
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She left
Hong Kong on 4th September 2002 for United States and returned to Hong Kong on 4th October 2002 (approximately 4 weeks in the United States). |
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She left Hong
Kong on about 14th July 2003 for United States and returned to Hong Kong only on 26th October 2004 (approximately 16 months in the United States). |
26. L claims that she had to stay in the United States for a much longer period, i.e. 16 months, when she left Hong Kong in July 2003 as her greencard was rescinded upon her return and she was advised by her US lawyer to remain in the United States until November 2004 in order to secure her US citizenship but she decided to return earlier upon learning of these proceedings in October 2004.
27. When L decided to leave for United States in July 2003, she says she asked her younger sister LMS to look after the Woodlands Terrace Property and had given LMS a power of attorney at L’s Wing Lung Bank to pay for the mortgage instalments and outgoings of the Woodlands Terrace Property. The Wing Lung Bank account was apparently opened by L with a sum of HK$200,000 from H on 25th June 2003 and an autopay arrangement was set up to pay the monthly mortgage instalments of the Woodlands Terrace Property. L claimed that in August 2003, when she realised that she could not return soon to Hong Kong, she asked LMS to move into the Woodlands Terrace Property. According to L, LMS has been residing in the property since.
28. L says she was required to go back to the United States in July 2003 and she also had to return to the United States because C, having bon in the US has no residence rights in Hong Kong. L says that when she told H that she and C had to go to the United States in July 2003, H insisted that he would come with them, telling her that his divorce proceedings were over and that all he was waiting was a final decision of the Court. However, it later turned out they had to remain in the United States longer than they had expected. He told her that he could not withdraw money from his Hong Kong bank accounts to support L and C, and asked L to pay money for their living expenses while they were in the United States and said that he would repay her when they returned to Hong Kong.
29. According to L, she therefore paid all the living expenses for herself, and also for H and C from her savings while they were living together in the United States. L has produced a notebook which she says contained a record of the money that H asked her to lend him and the total sum amounted to about HK$480,000.
30. In November 2003, LMS received a letter dated 6th November 2003 from HSBC addressed to L and sent to Woodlands Terrace Property referring to an order from the W’s solicitors. This was in fact the Injunction Order obtained by W freezing L’s HSBC account but L claimed she had no knowledge of her HSBC account being frozen, as no order was actually enclosed in HSBC’s letter, and there was further no mention in HSBC’s letter that this was an injunction order freezing the account. L said she did not know what was happening, and asked LMS to check the balance in her HSBC account. Upon finding that the balance in her HSBC account remained intact, she did not take any further steps. However, she said LMS then took own initiative to withdraw all sums of money from L’s Wing Lung Bank account, so as to make sure that she had funds to pay for the mortgage and the outgoings of the Woodlands Terrace Property. L said that LMS did not consult with L prior to the withdrawal, and that LMS only told L afterwards.
31. In August 2004, according to L, H discovered the documents with regard to C’s psychomotor delay, and H became very upset. He then left her and C, claiming that he had been deceived. Although since then H returned home from time to time to pack his possessions and to see C, L says that the intimate relationship between her and H has been over since August 2004.
32. L claimed that notice of these proceedings only came to her knowledge for the first time when LMS received a letter addressed to her from W’s solicitors in October 2004 at Woodlands Terrace Property enclosing a sealed copy of the 2nd Disposition Order. In October 2004, on one occasion, when H returned home to see C, W confronted him and asked him about the order. According to L, H refused to answer her and completely ignored her.
33. L then decided to return to Hong Kong on 26th October 2004. After her return, she instructed solicitors and the 1st Summons was issued on 5th November 2004. The 2nd Summons was issued 5 days later, on 9th November 2004.
APPLICATION TO SET ASIDE THE 4 SERVICE ORDERS (2ND SUMMONS)
34. So far as jurisdiction on setting aside of ex-parte orders is concerned, Counsel for L, Mr. Pilbrow SC, relies on O. 32 r. 6 of the Rules of the High Court (“RHC”) which states that the Court may set aside an order made ex parte, and Mr. Pilbrow also relies on the inherent jurisdiction of the court. Mr Pilbrow submits that the wording of O. 32 r. 6 imposes no restrictions on the discretion of the Court. Counsel for W, Mr Clough has submitted that “the approach is not to look with hindsight and see what else might have been done to effect service or for other orders that might have been more effective ….. but to look at the Orders as they were made at the time on the information available”. I agree with Mr Pilbrow that this approach is not consistent with the cases referred to me by him.
35. “Rule 6 embodies the fundamental rule of practice that a party affected by an ex parte order may apply to the Court to discharge it, inasmuch as he has not had an opportunity of being heard (H.M.S. Archer 1919 P. 1 at 4)” (see also O.32/6/16 of the Hong Kong Civil Procedure 2004). Mr Pilbrow has also drawn this Court’s attention to what Lord Denning has said in Becker v. Noel v. Another [1971] 2 AER 1248, namely “I am quite clear that not only may the Court set aside an order made ex-parte, but where leave is given ex-parte, it is always within the inherent jurisdiction of the Court to revoke that leave if it feels it gave its original leave under a misapprehension on new matters being drawn to its attention”.
36. Mr Pilbrow has further referred this Court to two cases Clifford v. Clifford (1985 FLR 732) and Purse v. Purse [1981] 2 AER 465. In Clifford, the Court of Appeal in England felt that it would have assisted the Registrar to know that the husband had formerly appointed solicitors. In Purse, the Court critized the efforts made to discover the whereabouts of the wife since the husband had failed to make enquiries through the daughter of the marriage and her husband. In both cases, the Court of Appeal reflected, with the benefit of hindsight, on the duty of party seeking an order to effect service by substitution or to dispense with service to make every enquiry, which might lead to service, before applying for such order from the Court, and that, if he did not, he had not sufficiently demonstrated that service was impracticable. In the circumstances, in both cases, the Court of Appeal in England set aside the ex parte orders as to service and also the resultant decrees nisi.
37. L’s grounds for her 2nd Summons, namely to set aside the 4 service orders were that the 4 service orders were not effective. She did not receive any of the documents and was not aware of the proceedings and did not attend any hearings. Mr Pilbrow submits that on the information now available, the 4 service orders should not have been made. L attended the hearing to be cross-examined.
38. Although L did not produce any immigration records, Mr Clough has not challenged the dates which L said she was not in Hong Kong.
39. I will now consider the circumstances leading to the making of each of the 4 service orders.
1st Service Order
40. The 1st Service Order relates to the service on L of the Amended Petition, in which L was cited as the 2nd Respondent. It was an order that service of the Amended Petition be deemed to have been effected on her.
41. According to the 1st affirmation filed on 21st August 2002 by Mr Ng, the service clerk of W’s solicitors (“Mr Ng”), he attended Cordial Mansion on 26th July 2002 to attempt personal service of the Amended Petition and accompanying documents on L. He knocked on the door but no one answered his call. He waited outside the premises for a further 10 minutes but as no one returned to the premises or opened the door, he then left.
42. On 27th July 2002, W’s solicitors wrote to H’s then solicitors Wong Hui & Co asking them whether they had instructions to accept service of the Amended Petition on behalf of L to which Wong Hui & Co replied on 30th July 2002 that they had no instructions to do so.
43. As set out in the 1st affirmation of service of Mr. Ng, on about 27th July 2002, he then posted a copy of the Amended Petition to L at Cordial Mansion by “double registered post”. On 9th August 2002, he again sent a copy of the Amended Petition by “ordinary post” to L at Cordial mansion. On 14th August 2002, Mr. Ng sent the Amended Petition to L by “ordinary post” care of H’s office address. In his 1st affirmation, Mr. Ng claimed that all the letters had not returned through dead letter service. This turns out to be not quite correct. There was a certificate of posting chopped 29th July 2002 addressed to L at Cordial Mansion and a letter returned with an envelope chopped “Unclaimed Return to Sender” dated 31st July 2002 by the General Post Office to W’s solicitors, which were subsequently produced later in Mr. Ng’s 10th affirmation dated 26th January 2005. It would appear from the schedule setting out the various attempts at service on L exhibited in Mr. Ng’s 10th affirmation that the returned letter was the service letter with the Amended Petition sent by “double registered post” (“Returned Letter”).
44. It is not clear as to when W’s solicitors received the Returned Letter from the General Post Office, but it must have shortly after 31st July 2002. The date of the receipt of the Returned Letter was, however, not disclosed in Mr. Ng’s 1st affirmation of 21st August 2002, nor in W’s 9th affidavit of 20th August 2002, both filed in support of the application which led to the 1st Service Order.
45. In the meantime, on 16th August 2002, W’s solicitors wrote again to Messrs Wong Hui & Co to ask H to disclose L’s address for service, threatening to instruct private investigator to locate L. By this stage, H had admitted in his own affirmation of 30th April 2002 that he was living with L, and H had also disclosed that he and L would be moving to a new flat but the address of the new flat was not disclosed to W. On 20th August 2002, Wong Hui & Co replied to say that H had already passed the Amended Petition to L and it would be up to L to acknowledge service or not.
46. L now says she never received the Amended Petition from H, and that the first time she saw a copy of the Amended Petition was in November 2004 after she had instructed her present solicitors to obtain copies of all the documents filed from the Court.
47. During the hearings before me, it was disclosed by L that she had attended the offices of Wong Hui & Co and had a brief meeting with H’s then solicitor, Ms Ann Hui, on 17th August 2002.
48. Ms Ann Hui of Wong Hui & Co has filed an affirmation on 17th May 2005 in relation to her meeting with L on 17th August 2002 exhibiting a copy of her attendance note (“Attendance Note”). Ms Hui also attended Court to give evidence in answer to a subpoena served on her by W’s solicitors.
49. L said on the day of the meeting, she was sitting in the reception area of Wong Hui & Co. L said she was waiting for H who was in a meeting with his solicitor as they had to go and collect a toy car for C from H’s brother’s home afterwards. Then H emerged from the meeting and asked her something about C and then invited her to enter the room. After she was introduced to Ms Hui, L said she just sat there and was in the room for only about 5 minutes. L said her mind was then on something else which H had said about C and she therefore was not paying attention to what Ms Hui was saying. She said she did not even know whether Ms Hui was talking to her and thought she was talking to H. L said she had not received or seen the Amended Petition at that time and had no idea what Ms Hui was referring to when the latter mentioned about “Form 4”. She said no documents were shown to her.
50. The main contents of the Attendance Note, which Ms Hui said she caused to be typed out in accordance with her own handwritten note, state that :
“Explain to Suzanne much costs can be saved if she
signs Form 4 (rather than let O/P apply for deemed service or
substituted service order)
Uncontested divorce : therefore, unless she files
Answer, she needs not testify.
Except avoidance of disposition application : she
may be a witness to client if she doesn’t Want to intervene as a
separate party.
Will not ask her to file an Affirmation of Means”.
51. Ms Hui confirmed that her meeting with L on 17th August 2002 was the first and only time that she had met L. The entire meeting was about 20 minutes, but most part of the meeting time was spent on confirming the contents of an affirmation with H, and L was not present at that juncture. Ms Hui said she was asked by H to explain to L that L could help save his costs if she were to file a Form 4, and then H went out and returned with L to her room. Ms Hui said, as directed by H, she explained to L that L could help save H’s costs if she were to file a Form 4 as the additional costs of a deemed or substituted service application could be avoided. Ms Hui said during the meeting with L, L appeared to her to be rather aloof and that L ignored her, not asking Ms Hui any questions or making any response to what she was saying. Ms Hui confirmed that no documents were shown to L during their meeting and that she probably could have just said “Form 4” without explaining to L that Form 4 was an acknowledgment of service. Ms Hui said that she recalled that while she was talking, L then suddenly said something to the effect that C was not the natural son of H, and as H then looked uneasy, Ms Hui then called off the meeting with L. Although Ms Hui did not record the meeting time with L, she recalled it was a very short one of about 5 minutes. Ms Hui said she did not explain to L about the Amended Petition, and only emphasized on the cost implication, and as L made no response, not even any facial expression, Ms Hui said she could not tell the extent of L’s knowledge of the divorce proceedings. According to a letter dated 16th August 2002 from W’s solicitors, copies of the letter and its enclosures which included a copy of W’s 1st s. 17 Application, and W’s supporting affidavit were faxed over to Ms Hui on 16th August 2002, the day before the meeting. Ms Hui recalls that she had a telephone call with H in the evening of 16th August 2002, and the 1st s.17 Application. When Ms Hui was asked to explain the bottom 6 lines of the Attendance Note which referred to L not being required to testify in an uncontested divorce, and the avoidance of disposition application, Ms Hui said that during the meeting, she could have mentioned whether L needed to testify, and the avoidance of disposition in one of her answers to H’s questions, but Ms Hui says that cannot now recall if L was still present in the room at that time.
52. It is clear from Ms Hui’s evidence that her meeting with L was indeed a very short one and that Ms Hui believed that L had already received a copy of the Amended Petition from H when she was explaining the signing of the Form 4. Ms Hui was certain that L was present in the room during the meeting when the upper part of the “Attendance Note”, namely the upper 4 lines was said by Ms Hui but was not certain as to whether L was still in her room during the meeting when the bottom 6 lines were said.
53. Although L maintained that her intimate physical relationship with H only commenced on her birthday on 9th October 2002, she had allowed H to share accommodation with her since sometime in mid April 2002. She says that at that time H slept in her room whilst she slept with C in another room. L has admitted meeting H in 1992, and further that H had invested in her elder’s ice-cream parlour in the United States. In fact, L’s elder sister had filed an affirmation to say that H had invested US$20,000 in November 1996, US$2,500 in June 1997 and US$3,000 in February 1998 in her ice cream parlour, and that all such sums were returned to H in April 1998. In her affirmation, L’s elder sister said that L had acted as the manager of her ice cream store and as such, L had handled the transfers of these sums and other funds. L has further admitted having assisted H in preparing the expenses of her and C as contained in H’s affirmation of 30th April 2002. Further, in H’s said affirmation, he referred to legitimising C by the marriage between him and L and further referred to their expenses “as a household” when he set out the monthly expenses of himself and L and C. Whether L and H actually had any intimate physical relationship or not prior to October 2002, no one would know apart from H and L but the fact that they started to reside under the same roof in April 2002, and H was the provider of the sperms which led to C being born, I find H and L must have been very close, by the time when H’s sperms were provided, otherwise L would not have asked or agreed to H donating his sperms and further allowed him to share her accommodation. According to Ms Hui, H had instructed her that he had handed a copy of the Amended Petition to L. There was no reason as to why H should lie to his own solicitor. The order of 2nd May 2002 for L to be made a 2nd Respondent was made with the consent of H. L had tried to make it sound as if she was casually invited into the room to meet with Ms Hui. I cannot believe this. I accept what Ms Hui has said, namely that H had specifically asked her to explain the filing of the Form 4 to L, and he then went out and returned with L. L was obviously invited by H to enter the room for this purpose.
54. During her oral evidence, L struck me as being an intelligent woman, and she was calm when giving her evidence, listening carefully to the questions before answering them. During the short meeting with L, Ms Hui was obviously explaining about the filing of the Form 4, and if L did not understand, she could have asked Ms Hui to explain. I do not accept L’s explanation that she was not paying attention and did not know what Ms Hui was saying or that she thought Ms Hui was talking to H. L agreed it was a small room. L said she was invited into the room as H wanted to ask her something about C. I cannot understand her evidence, since H could have asked her this in the reception area and if she entered the room to expect something to be asked of her about C and if Ms Hui talked about something else, L should have clarified with Ms Hui or H as to what Ms Hui was talking about.
55. In the circumstances, I find it more probable than not that L had already earlier been given a copy of the Amended Petition by H and during her meeting with Ms Hui, she had been explained if she were to file a Form 4, much costs would be saved. In any event, I find that L must have knowledge about H’s divorce proceedings and that she has been made a party thereto. If L chose to ignore what Ms Hui was saying, she has only herself to blame. I therefore see no reason to set aside the 1st Service Order.
2nd Service Order
56. The 2nd Service Order was made on 11th August 2003, dispensing with personal service on L of the order requiring her to file an affirmation of means and that service of all documents on L to be by way of delivery to H.
57. As mentioned above, W took out the 1st s. 17 Application on 16th August 2002. A copy of the 1st s. 17 Application was sent to L by ordinary post at Cordial Mansion on 16th August 2002, according to the 2nd affirmation of Mr. Ng filed on 10th April 2003. The notice for the call over hearing for this application was sent by Mr. Ng to L on 22nd May 2003 at Cordial Mansion by way of ordinary post. By mid August 2002, W’s solicitors should have received the Returned Letter from the General Post Office, and yet Mr. Ng continued to send documents to L at Cordial Mansion. Mr. Ng tried to explain his actions in paragraph 4 of his 10th affirmation. What he said was that if a double registered post was returned unclaimed through the Post Office, it did not mean that L was not residing at the relevant address, as there could be many reasons for L not acknowledging receipt of the double registered post, and a usual reason would be that L intended to evade service. This is true but H had already said in his affirmation of 30th April 2002 that he and L were going to move to new premises. There was no reason to believe H would mislead W at that time since the litigation had not yet turned aggressive, H having bought a flat for W and there was a consent order on 14th May 2002 to provide for W’s interim maintenance. In fact H had also voluntarily disclosed to W in his affirmation about the payment of $1.3 million to L for the purchase of a flat for L. On hindsight, W should be alerted that H and L had moved from Cordial Mansion and she should perhaps make greater efforts to find out about the new address, which of course she subsequently did in July 2003. Anyway, L did not appear at the call over hearing of the 1st s. 17 Application on 13th June 2003.
58. At the hearing on 13th June 2003, Deputy Judge Woodcock ordered, inter alia, L to file an affirmation of means within 21 days of personal service of the order of the 13th June 2003 on her. Sometime in early July 2003, W’s solicitors did find out about the address of Woodlands Terrace Property, and on 21st July 2003, Mr. Ng attended this address attempting to serve the 1st s. 17 Application, the Order of 13th June 2003 and other documents personally on L. When he arrived at Woodlands Terrace Property, a woman answered. Mr. Ng asked for L and said there were legal documents to be served on L. The woman replied that there was no person with the name of L. Mr. Ng then went and made enquiry with the watchman of the building who said that the occupant of Woodlands Terrace Property had only just moved in on 21st July 2003. L now says that this woman is in fact her younger sister LMS. LMS has also filed an affirmation and said although she moved into Woodlands Terrace Property only in August 2003, before she moved in, she had often attended the Woodlands Terrace Property looking after the property whilst L was away in the United States. LMS said she recalled a stranger coming to look for L, and believing that he was a door to door salesman, LMS responded that L was not there. According to LMS, the man did not identify himself or the purpose of his visit. LMS was not called to give evidence or cross examined, and neither was Mr. Ng called or cross examined.
59. Subsequently, W’s solicitor, Miss Chih, on behalf of W, filed an affirmation on 7th August 2003 to apply for personal service of the order of 13th June 2003 to be dispensed with and for service of all other relevant documents of these proceedings be effected by delivering the same to H. In Ms Chih’s affirmation of 7th August 2003, she said that she had sent a copy of the 1st s.17 Application and a letter informing L of the hearing of 13th June 2003 to Cordial Mansion and none of the documents were returned by the Post Office through the Dead Letter service. This is not correct. By then, the Returned Letter should have been received by W’s solicitors. In early July 2003, W found out about the address of the Woodlands Terrace Property but no letters were sent to L at Woodlands Terrace Property apart from one visit by Mr. Ng. L was in Hong Kong in June 2003 but both she and H left Hong Kong together on about 14th or 15th July 2003. When Mr. Ng went to Woodlands Terrace Property, H and L had already left Hong Kong. The 2nd Service Order was only obtained on 11th August 2003, and it was to dispense with personal service of the order of 13th June 2003 on L and that for all relevant documents to be served on L by delivery of the same to H.
60. L said she never received a copy of the 1st s. 17 Application or W’s supporting affirmation or any other documents through H or through any other means. Unlike the Amended Petition, there was no evidence to show that H had indeed passed these documents to L. Although I find that L must have knowledge of H’s divorce proceedings, and that she should have been aware that she had been made a party in the divorce proceedings, there is no evidence that L was aware that the 1st s. 17 Application had been take out against her or she had been made a party to the 1st s. 17 Application. Ms Hui cannot be certain whether L was present when Ms Hui mentioned the avoidance of disposition application in the Attendance Note. I cannot speculate as to whether L could have found out from H, or whether H could have told her no matter how close their relationship was, even though L admitted that she and H talked to each other often. Mr Pilbrow put forward the question as to why, if L had been aware of the 1st s. 17 Application and that she was a party thereto, did she wait until now to take action since there was a possibility that she would lose her property. W says L has an economic degree and other accounting certificates. Certainly, as stated earlier in this judgment, I find L an intelligent woman. I believe she would have reacted earlier had she known about the application. Having considered all the circumstances, I will give L the benefit of the doubt and accept that she did not receive a copy of the 1st s. 17 Application or a copy of the Order of 13th June 2003, nor did she have knowledge of the same. I therefore set aside the 2nd Service Order. Having set aside the 2nd Service Order, that leaves the order made by Deputy Judge Woodcock on 13th June 2003 which required personal service on L, which service had not been carried out at the hearing of the 1st s. 17 Application.
3rd Service Order
61. As stated above, on 4th November 2003, W issued the 2nd s. 17 Application. The Injunction Order was granted on 5th November 2003. W applied for an order that service of the 2nd s. 17 Application and the Injunction Order, be by way of substituted service by advertising once in the Oriental Daily News in Hong Kong.
62. By now, W has obtained the movement records of H from the Immigration Department, and it is clear that he left jurisdiction on 15th July and has not returned since. In early July 2003, W had also found out the address of Woodlands Terrace Property. Although at that time, W did not have any concrete evidence that L had left together with H it was W’s belief then that they had left the jurisdiction together. W’s solicitor, Miss Chih said that she had attempted effecting service by post on L by sending the documents to H’s parent’s address and the address of H’s last employer, which is a stockbroking company of which his father has interest, and these letters had been returned by the post office through dead letter post. According to Miss Chih, L had two last known addresses, namely Cordial Mansion and Woodlands Terrace Property. She had sent Mr. Ng to the two addresses. Mr. Ng attended Cordial Mansion on 14th November 2003 and found that there was a foreigner living there since about a year ago. In relation to Woodlands Terrace Property, the attempt at service has been described above.
63. I agree with Mr Pilbrow, with the benefit of hindsight, W should have at this stage made greater efforts in locating L, for example, by attempting to contact her elder sister in the United States with whom H had an ice cream parlour business, by writing to the mortgagee bank of Woodlands Terrace Property and further, perhaps W should have at least applied for service to be effected at the Woodlands Terrace Property, as it is a property registered in the sole name of L. Even if, as W had suspected, L had left the jurisdiction, and there had been a tenant / licensee living there, such person should certainly know how to contact L, L being the registered owner and landlady / licensor.
64. The 3rd Service Order, namely a substituted service order made by me providing for service by advertising once in the Oriental Daily News in Hong Kong, on hindsight, could not have been effective, as there was no information that such advertisement would have been brought to the attention of L who was then not in Hong Kong and further there was no information that L was even in the habit of reading such newspapers, whether she was in Hong Kong or not. L said she never received the 2nd s. 17 Application and had no knowledge of the application and the Injunction Order until she instructed her present solicitor in October 2004.
65. So far as the Injunction Order is concerned, L admitted that as set out earlier in this judgment, that she knew about the letter dated 6th November 2003 from HSBC referring to an order. L claimed that LMS had gone to HSBC to update the balance in her HSBC account and as the balance remained the same, L then thought nothing had happened to the account, and she took no further steps. The Injunction Order was not enclosed in the letter from HSBC and L said she did not know the order was an order freezing her account. L said she had asked H about the letter from HSBC and H explained that as he had written cheques to L, it was the normal procedure for the bank to notify her about the divorce proceedings. L said as her money was still there, she believed what H had said and that she had nothing to worry about. She said LMS then took own initiative and went to withdraw all sums totalling about HK$150,000 from L’s Wing Lung Bank account to which LMS was given a power of attorney. L said LMS did this on her own, without prior consultation with her, to make sure there would be sufficient money to pay the monthly mortgage payments and outgoings of Woodlands Terrace Property.
66. There was no evidence that L did receive a copy of the Injunction Order which was made when she and H were already outside jurisdiction or that she had knowledge of the Injunction Order. There was, also, no evidence that L ever received the 2nd s. 17 Application, or had knowledge of the same. In the circumstances, I will give L the benefit of the doubt and set aside the 3rd Service Order. The result of this would be that there had been no effective service of the 2nd s. 17 Application, the Injunction Order and a copy of W’s 15th affidavit.
4th Service Order
67. 30th August 2004 was the first hearing date set down for W’s various applications including W’s application for ancillary relief against H and the 2nd s. 17 Application against H and L and others. W filed her 20th affidavit just before the hearing, and there were no attempts at service of such affidavit. At the hearing, Mr Clough applied for service of W’s 20th affidavit to be dispensed with under r. 111 of the Matrimonial Causes Rules (“MCR”). This rule states that “in a case to which sub-paragraph (b) (ii) applies, if it appears to the Court that it is impracticable to deliver the document to the person to be served and that, if the document were left at, or sent by post to, the address specified in that sub-paragraph, it would be unlikely to reach him, the court may dispense with service of the document”. Sub-paragraph (b) (ii) refers to service on a person acting in person, by delivering the document to him or by leaving it at, or sending it by post to his last known address. I granted Mr Clough’s application, and made the 4th Service Order, dispensing with service W’s 20th affidavit. There was no attempt to send W’s 20th affidavit to the Woodlands Terrace Property. As L was not in Hong Kong, there was no evidence that she had any notice or knowledge of W’s 20th affidavit, or of the hearing date. In the circumstances, I will set aside the 4th Service Order.
APPLICATION TO SET ASIDE THE 1ST AND 2ND DISPOSITION ORDERS (3RD SUMMONS)
68. I have set aside 3 of the 4 Service Orders, and found that there was no evidence that L knew about the 1st s. 17 Application and the 2nd s.17 Application. As a result, I am of the view that the 1st Disposition Order and the 2nd Disposition Order had been obtained due to irregularity. I believe that I have jurisdiction to set aside the two Disposition Orders due to irregularity under O.2 (2) of RHC, as L issued the 2nd Summons and 3rd Summons within a reasonable time after she said she found out about the two Disposition Orders, and there is no evidence that she has taken any “fresh step” which constituted a waiver.
69. Mr Pilbrow has, further, submitted that there is jurisdiction for this court to set aside a judgment obtained when a party fails to appear under O. 35 r 2 of RHC. Although Mr. Pilbrow has initially also relied on O.28 r.4 of RHC, in his Closing Submissions, he submitted that the more appropriate rule is O. 35 r. 2 of RHC.
70. O. 35 r 2 gives this Court power to set aside any judgment or order obtained where one party does not appear at the trial, but an application under this rule must be made within 7 days after the trial. The Court does have a discretion under O 3 r 5 to extend the period of 7 days. As submitted by Mr Pilbrow, the question is that whether a hearing of any application under s. 17 of MPPO is “a trial”. There is no definition of “trial” either in the RHC or in the Interpretation and General Clauses Ordinance. O. 32 of RHC deals with proceeding in chambers. O. 33 r 2 of RHC deals with “Place and Mode of Trial” which says that a cause or matter, or any question or issue arising therein, may be tried before : (a) a judge alone : (b) a judge with a jury, or (c) a judge with the assistance of assessors, or (d) a master. Mr Pilbrow submits that a s. 17 Application under MPPO is an issue arising within a cause or matter. He further submits that the 1st Disposition Order and the 2nd Disposition Order were orders obtained at a trial, and as such may be set aside under O. 35 r 2. Mr Clough has not challenged this submission, namely the orders were orders obtained at a trial. I therefore accept Mr Pilbrow’s submissions that I have jurisdiction to set aside the two Disposition Orders under O. 35 r 2 of RHC.
71. Mr. Clough submits that even if this court were to set aside the service orders, this court should look at the merits in that L could not have succeeded in opposing the two s. 17 Applications and therefore the two Disposition Orders should not be set aside. He submits L will not be able to establish that the dispositions were made for good consideration, to fall within the “exception” of s. 17 (2) of MPPO. To fall within this “exception”, Mr. Clough submits that L would have to establish that she would have been able to commence proceedings against H for enforcement of contract and a promise to support a child is not capable of being good consideration and that any rights would have to be limited to an application for maintenance under the Guardianship of Minors Ordinance or otherwise.
72. Mr Pilbrow submits that the two Disposition Orders were not made by H with the intention of defeating W’s claims for financial provision, and further they were dispositions made for valuable consideration and L acted in good faith and without notice of any such intention on part of H. There was also an allegation by L that she had paid a total sum of about $480,000 for the expenses of herself, H and C while they were living together in the United States and that H had promised to pay her back. This was challenged by W since H managed to withdraw amounts and shares from his Hang Seng Bank account after he left Hong Kong. However, if what L alleges is true, then there would be sums owing to her from H, which may reduce her indebtedness to H as set out in the 2nd Disposition Order, even if W were to succeed with her two s. 17 Applications eventually.
73. L was ordered on 13th June 2003 to file an affirmation as to her means. As I found that there was no evidence that L knew about this order, L has not yet filed her affirmation of means, and the details of her financial situation are not known. Part of the $1.3 million from H was alleged to be for the maintenance expenses of L and C and L’s financial situation would be relevant.
74. At the hearing on 5th November 2003, which led to the 1st Disposition Order being made, W only gave evidence to confirm the contents of her supporting affidavits. Although at the trial of ancillary relief, which led to, inter alia, the 2nd Disposition order, W gave more detailed evidence, L’s allegations or her means were not investigated or considered and the two Dispositions were based on the presumption in s. 17 (3) in MPPO and H’s affirmations.
75. In the circumstances, I cannot say that there are no merits in L’s case or that L has no “real prospects of success” if there is to be a re-hearing.
76. If O. 35 r. 2 is to apply, as submitted by Mr Clough as set out in the case of Shocked & Another v. Goldshmidt & Another [1994] The Times November 4 CA; there are “general indications” which should be taken into account when the court is asked to set aside a judgment obtained when a party failed to appear, as follows : -
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(1) |
Where a
party with notice of proceedings has disregarded the opportunity
of appearing at and participating in the trial, he will normally
be bound by the decision. |
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(2) |
Where
judgment has been given after a trial it is the explanation for
the absence of the absent party that is most important; unless
the absence was not deliberate but was due to accident or
mistake, the court will be unlikely to allow a re-hearing. |
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(3) |
Where
the setting aside of judgment would entail a complete re-trial
on matters of fact which have already been investigated by the
court the application will not be granted unless there are very
strong reasons for doing so. |
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(4) |
The
court will not consider setting aside judgment regularly
obtained unless the party applying enjoys real prospects of
success. |
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(5) |
Delay in
applying to set aside is relevant, particularly if during the
period of delay the successful party has acted on the judgment,
or third parties have acquired rights by reference to it. |
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(6) |
In
considering justice between parties, the conduct of the person
applying to set aside the judgment has to be considered; where
he has failed to comply with orders of the court, the court will
be less ready to exercise its discretion in his favour. |
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(7) |
A material
consideration is whether the successful party would be prejudiced by
the judgment being set aside, especially if he cannot be protected
against the financial consequences. |
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(8) |
There is a
public interest in there being an end to litigation and in not
having the time of the court occupied by two trials, particularly if
neither is short”. |
77. I set out my comments of the above “general indications” in the present case:-
| (1) |
As set out
earlier in the judgment, I have found that there is no evidence
that L had received or had knowledge of the documents referred
to in the 2nd, 3rd and 4th Service Orders, which led to the 1st Disposition and 2nd Disposition Orders. |
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| (2) |
L’s
explanation for her absence at the hearings was that she did not
know about the two s. 17 Applications, nor was there any
evidence that she knew about the hearing dates. |
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| (3) |
The setting
aside of judgment would not entail a complete re-trial on any
matters of fact, since this court basically relied on the
presumption in s. 17 (3) of MPPO, and relied on W’s unopposed evidence and on H’s affirmations, in making the two Disposition Orders. |
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| (4) |
I have said
above that I cannot say that L has no “real prospects of
success” in opposing the two s. 17 Applications. |
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| (5) |
I cannot
say that there was any delay on the part of L in applying to set
aside, as she applied as soon as practicable after she learnt of
the 2nd Disposition Order. There is no evidence, that W or any third party has acted or acquired any rights by reference to the two Disposition Orders. |
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| (6) |
In
considering justice between parties, I have in mind Mr. Pilbrow’s submission that the two Disposition Orders clearly affect L and her child and L has not been heard and that this appears to go against fundamental principles of the administration of justice. |
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| (7) |
Although there
will be longer delay suffered by W, and further costs to W and / or
to the Director of Legal Aid, there are other orders made on 15th September 2004 in W’s favour against H, which have not been subject of any setting aside applications. |
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| (8) |
There should
always be an end to litigation, but so far as the two s. 17
Applications are concerned, the time wasted of those parts of the
two hearings which affected L and led to the two Disposition Orders
against L, was not substantial. |
78. In the above circumstances, I will exercise my discretion to allow time to be extended under S. 35 r 2 of RHC and set aside those parts of two Disposition Orders which concern L.
79. The effect of my Orders are as follows : -
| (1) |
In
relation to the Petitioner’s Summons issued on 9th November 2004, |
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(i) |
the Order of 11th August 2003 be set aside. |
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(ii) |
the Order of 20th November 2003 be set aside. |
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(iii) |
paragraph 1 of the
Order of 30th August 2004, relating to service on 2nd Respondent, be set aside. |
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| (2) |
In
relation to the Petitioner’s Summons issued on 18th April 2005, |
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(a) |
the Order of 5th November 2003 be set aside. |
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(b) |
paragraphs 18, 19, 20
and 21 of the Order made on 15th September 2004 be set aside. |
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| (3) |
There
shall be a re-hearing of the Petitioner’s applications to set
aside the dispositions of HK$1.3 million and HK$245,000 by the 1st Respondent to the 2nd Respondent. |
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| (4) |
Parties to fix a half hour hearing for directions for the re-hearing. |
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| (5) |
Costs
reserved and to be dealt with after the re-hearing. |
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( Bebe P Y Chu
)
District Judge |
Mr Clough instructed by m / s Chaine Chow & Barbara Hung for Petitioner
Mr Pilbrow SC instructed by m / s Boase Cohen & Collins for 2nd Respondent
1st Respondent absent
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