KWAN TAT CHUNG v. HO CHEUK KUWN t/a FAT FAI ENGINEERING CO. AND OTHERS

HCPI 381/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO.381 OF 2002

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R U L I N G

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1. This is an appeal by the 2nd and 3rd defendants from the Order of Master Kwan dismissing the summons taken out by the 2nd and 3rd defendants dated 11 July 2002, asking for, inter alia, that interlocutory judgment entered on 1 June 2002 in default of Notice of Intention to Defend be set aside. In this matter, the plaintiff claims against three defendants for damages for personal injuries sustained by the plaintiff on 11 May 1999 at a construction site when he fell from a ladder some 3.6 metres high. The 1st defendant is sued as the employer, the 2nd defendant as the sub-contractor and the 3rd defendant as the main contractor. Default judgment was entered against the 2nd and 3rd defendants on 1 June 2002. No default judgment has been entered against the 1st defendant.

2. The chronology of events leading up to the entry of the default judgment is as follows. The Writ with Statement of Claim attached was issued in the High Court on 8 May 2002. The Statement of Claim was amended on 10 May 2002, and on that same day, the Writ and the Amended Statement of Claim were posted by mail to the 2nd and 3rd defendants. On 11 May 2002, the Writ and the Amended Statement of Claim was delivered to the 2nd and 3rd defendants' address by the post office. On 27 May 2002, the plaintiff's solicitors filed an application to court for default judgment against the 2nd and 3rd defendants. On 29 May 2002, an Acknowledgement of Service containing a Notice of Intention to Defend was filed on behalf of all the defendants by the same solicitors acting for them. On 31 May 2002, the draft default judgment was approved by court and on 1 June 2002, the default judgment was entered and sealed against the 2nd and 3rd defendants.

3. In this appeal, the 2nd and 3rd defendants submit that the judgment was an irregular judgment and/or that they each have a meritorious defence to the plaintiff's claim.

4. Dealing first with the irregular judgment point, it is accepted that the 14 days time limit prescribed by the rules for filing an Acknowledgement of Service expired in this case on 25 May 2002. The plaintiff was therefore within his rights to apply for judgment in default on 27 May 2002. However, it is submitted by the 2nd and 3rd defendants that albeit late, since an Acknowledgement of Service was filed on behalf of the 2nd and 3rd defendants by their solicitors on 29 May 2002 before any interlocutory judgment had been entered or obtained against them, such Acknowledgement of Service was valid and proper although out of time. In so saying, they rely on Order 12, rule 6 which provides as follows :

"(1) Except with the leave of the Court, a defendant may not give notice of intention to defend in an action after judgment has been obtained therein.

(2) Except as provided by paragraph (1) nothing in these rules or any writ or order thereunder shall be construed as precluding a defendant from acknowledging service in an action after the time limited for so doing, but if a defendant acknowledges service after that time, he shall not, unless the Court otherwise orders, be entitled to serve a defence or to do any other act later than if he had acknowledged service within that time."

5. It is further submitted by the 2nd and 3rd defendants that an essential precondition for entry of default judgment is the failure on the part of a defendant to give Notice of Intention to Defend. For that purpose, the only relevant date is the date of entry of judgment. The date on which an application is made for default judgment has no relevance in this context when the rules are looked at. Since therefor when default judgment was entered against the 2nd and 3rd defendants on 1 June 2002, by that date the 2nd and 3rd defendants had already given valid Notice of Intention to Defend, it follows that the interlocutory judgment entered was entered irregularly. As such, the 2nd and 3rd defendants submit that they are entitled to have the irregular judgment set aside as of right and the court has no discretion to refuse its setting aside.

6. The plaintiff, on the other hand, opposes this appeal. Counsel for the plaintiff takes the short point that once the 2nd and 3rd defendants fail to file their Acknowledgement of Service within the 14-day limit prescribed by the rules and which expired on 25 May 2002, the plaintiff was entitled to apply for judgment in default on 27 May 2002 which he did. In so submitting, the plaintiff seeks to rely on those words in Order 13, rule 2, which says :

".... then, if that defendant fails to give notice of intention to defend, the plaintiff may, after the prescribed time, enter interlocutory judgment against that defendant ...."

7. 'The prescribed time' is defined in Order 13, rule 6A as being "the time limited for the defendant to acknowledge service of the writ", the rest part of that definition is not relevant to this matter. Thus the plaintiff submits that once a defendant fails to give Notice of Intention to Defend within 14 days after service of a writ on him, a plaintiff is entitled to enter judgment. Any judgment obtained as a result thereof must be a regular judgment since the plaintiff has complied with everything in the rules, and more important, the court has approved and granted them judgment in default.

8. Counsel for the plaintiff further submits that Order 12, rule 6 is merely explanatory of the fact that if an Acknowledgement of Service is filed late, that does not extend time for the defendant to file and serve his defence. And that Order 12, rule 6 does not prohibit the plaintiff from signing judgment in default once no Acknowledgement of Service has been filed within the prescribed time.

9. It seems to me that the crux of the dispute between the parties is whether the Acknowledgement of Service filed after the expiry of the 14 days limited for acknowledging service of the writ and after an application has been made by the plaintiff for default judgment but before the judgment is actually entered in favour of the plaintiff is a valid acknowledgement and therefore a valid Notice of Intention to Defend. If it is, it follows that the judgment entered must be irregular. In this respect, I accept the contention put forward by counsel for the 2nd and 3rd defendants and the reasons upon which that submission is based.

10. Moreover, the contention put forward by the 2nd and 3rd defendants can be further supported by the following two matters : firstly, in the Hong Kong Civil Procedure, Marginal Note 13/0/15, the following statement, which in my view, is definitive of the issue in the present case reads :

" Judgment in default may be signed at any time after the prescribed time has expired, provided the defendant has not in the meantime given notice of intention to defend ...."

The words "in the meantime" can only mean between the expiry of the prescribed time and the signing of the judgment. Therefore, if between those times the defendant has given Notice of Intention to Defend, judgment in default cannot be entered.

11. It is also interested to note that these words found in Marginal Note 13/0/15 of the Hong Kong Civil Procedure was copied from its English equivalent under the same marginal note. However, in the 1999 English White Book, one further sentence precedes the sentence cited above. That sentence reads :

" In the Central Office, and in the District Registry, the practice is that a judgment form will not be sealed with 'No Notice of Intention to Defend Given' nor judgment be allowed to be signed in default until the morning post of the fifteen day after service of the writ has been opened."

That suggests that the words "No Notice of Intention to Defend given" are not merely taken to be a formality. It also suggests that care is taken to ensure that the gap in the meantime between application and signing of judgment is to be looked at to ensure that no Notice of Intention to Defend has been given.

12. In the context of the above, the second point that appeals to me is that when one looks at the wording of the Interlocutory Judgment entered in this case on 1 June 2002, that judgment reads as follows :

"	INTERLOCUTORY JUDGMENT
	Dated this 1st day of June 2002

No notice of intention to defend having been given by the abovenamed 2nd and 3rd Defendants herein, IT IS THIS DAY ADJUDGED that the 2nd and 3rd Defendants do pay the Plaintiff's damages to be assessed and costs to be taxed if not agreed"

13. Factually, that must be an incorrect statement since Notice of Intention to Defend contained in the Acknowledgement of Service was filed on 29 May 2002. I therefore take the view that default judgment could not properly have been entered against the 2nd and 3rd defendants on 1 June 2002, nor even could the draft judgment have been approved by the court on 31 May 2002.

14. For these reasons, I hold that the interlocutory judgment entered in this case was irregular. In the light of such findings, there is no need for me to go into the arguments as to the merits of the defence since it is accepted by the plaintiff that if the judgment is irregular, the normal practice is for the court to set it aside without going into the merits of the defence.

15. This appeal is allowed and the Order of Master Kwan dismissing the summons of the 2nd and 3rd defendants dated 11 July 2002 be set aside.

16. I should at once add that when this matter was argued before Master Kwan, the solicitors appearing for the defendants not only did not take the point argued before me today, but in fact withdrew from arguing the point of irregularity of the judgment. Therefore, the Master did not have the benefit of the arguments put before me by counsel and upon which this appeal was decided.

17. I shall make the following orders :

(1) The interlocutory judgment entered herein on 1 June 2002 be set aside.

(2) The 2nd and 3rd defendants do have leave to amend their defence as per the draft annexed to the said summons dated 11 July 2002 and service of same that dispensed with. The costs of and occasioned by such amendments be to the plaintiff in any event.

[Submission on costs]