POON TUNG HOI GORDON v. CHAN YING MING SIMON

DCCJ4706/2014

CIVIL ACTION NO 4706 OF 2014

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DECISION

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1.  This is the defendant’s appeal against the order of Master Daniel Tang dated 7 January 2016 refusing to set aside the default judgment entered against him on 27 January 2015 for the sum of HK$200,000 (pleaded by the plaintiff as an interest-free loan repayable on demand to the defendant on or about 4 July 2012) together with interest at 8% per annum from 5 December 2014 (date of the Writ of Summons) until the date of judgment and thereafter at judgment rate until payment and fixed costs of HK$7,130.

2.  The defendant contended that the default judgment was irregularly obtained in that the Writ of Summons was served on 8^th Floor, Silver Fair Mansion, 2F Shiu Fai Terrace, Hong Kong (“the Address”) by insertion through letter box on 9 December 2014 when he was no longer residing there, having moved out since his company Union Metro Holdings Limited had sold the property on 8 March 2013.  He claimed that he only knew about the Writ of Summons and the default judgment in August 2015 when the plaintiff’s solicitors approached his present solicitors (whom he had retained to act for him in DCCJ 1760/2014 also involving the plaintiff and the defendant) trying to arrange for personal service of the statutory demand based on the default judgment on him.

3.  The defendant further claimed that it was impossible for the plaintiff’s process server to have inserted the Writ of Summons and other enclosures into the letter box at the Address given its small size.

4.  Finally, the defendant contended that he has a meritorious defence to the claim, in that he had never borrowed the purported loan from the plaintiff and he did not need to do so given he had a credit balance of over three times the purported loan in his bank account as of 30 June 2012.

5.  When a defendant deposes that he has not received the Writ through the post (or, in the present case, by insertion through letter box), this does not mean that the court must accept his assertion no matter how improbable.  The defendant has to provide convincing evidence that he has indeed not received the Writ.  How much evidence is required depends on the circumstances of the particular case: Bank of China (Hong Kong) Ltd v Cheung King Fung [2007] 1 HKLRD 462 at paras 32 to 34 (Tang JA as he then was).  The relevant question is whether there is sufficient evidence to cast doubt on the defendant’s credibility such that the court should not accept the bare allegation that he has not received the Writ: Cheung Chi Lun v Ng Lai Ming Juliana, HCA 1611/2006 (unreported, 14 February 2007) at para 26 (Recorder Fok SC as he then was).

6.  Despite claiming that he ceased to reside at the Address after 8 March 2013, the defendant continued to state the Address as his address or residential address in the following documents:-

(1) his inter partes summons dated 30 September 2014 issued in DCCJ 1760/2014 for leave to set aside the default judgment entered on 25 June 2014 and to uplift the legal aid stay;

(2) his supporting affidavit for the summons under (1) above dated 30 September 2014;

(3) his letter dated 30 September 2014 to the plaintiff’s solicitors providing his address for the purpose of DCCJ 1760/2014 and DCCJ 622/2014;

(4) his inter partes summons dated 8 October 2014 issued in DCCJ 1760/2014 for stay of execution of the judgment and to uplift the legal aid stay;

(5) his supporting affidavit for the summons under (4) above dated 8 October 2014; and

(6) his affidavit dated 4 May 2015 made in DCCJ 1760/2014 to oppose the plaintiff’s summary judgment application.

7.  The defendant claimed that he did not disclose his purported true residential address in the above documents because two unknown males attempted to forcibly enter his residence at the Address in mid-May 2012 and injured his domestic helper in the process, and he had made a report to the Police.  No Police report or statement was produced by the defendant.  I also fail to see how the defendant’s claimed concern arising from the attempted break-in would have led him to withhold his purported true residential address from the plaintiff in documents available only to the plaintiff but not the public, when the defendant never sought to associate the incident to the plaintiff.

8.  That the property at the Address was sold on 8 March 2013 does not necessarily show that the defendant was no longer residing at the property.  The defendant did not produce the sale and purchase agreement or assignment of the transaction which may cast light on when his company had to deliver up vacant possession to the purchasers.

9.  I note that even by 8 October 2014, the bailiff in the course of executing a garnishee order against the defendant in DCCJ 1760/2014 was able to locate and seize two cars in the car park of the building at the Address recorded in the bailiff’s list of inventory as belonging to the defendant.  There is no evidence from the defendant that he owned or had rented these two car parking spaces despite having moved out from the property at the Address.  Mr Lawrence Cheung for the plaintiff submitted, and I accept, that this undermined the defendant’s bare assertion that he had ceased to reside at the Address from 8 March 2013.

10.  Whilst not making any concession, Mr Paul Kwong for the defendant fairly did not pursue the defendant’s contention that the letter box at the Address was too small for the Writ of Summons and other enclosures to be inserted, when on the measurements of the letter box put forward by the defendant (9.5 inches long, 1.5 inches wide and 5.0 inches deep) it does not appear impossible for the documents to be inserted, and there is no basis to dispute the affirmation of the plaintiff’s process server who deposed that he did insert the documents through the letter box.

11.  In the circumstances, I am not satisfied that the defendant has put forward any convincing evidence that he did not receive the Writ at the Address.  I find that the default judgment was a regular one.  The defendant thus has to show that he has a real prospect of success on the merits to persuade the court to exercise its discretion to set aside the judgment, and the court has to form a provisional view of the probable outcome of the action.  Where however the outcome of the action very much depends on whose evidence is likely to be accepted, the court has to ask whether the defendant’s version could well be believed at trial: El Vince Ltd v Wu Wen Sheng [2001] 3 HKLRD 445 at para 25 (Kwan J as she then was).

12.  Mr Cheung argued that the defendant had raised nothing of substance but a bare denial of the loan.  But if the defendant’s case is that he had never borrowed the purported loan from the plaintiff, one wonders what more could the defendant meaningfully say save to deny the loan on oath.  What is peculiar in the present case is that faced with the defendant’s denial of the loan, the plaintiff did not put forward any evidence of any details of the loan, including when the defendant made the request for the loan from the plaintiff, what was the reason for the loan proffered by the defendant (if any), and crucially when and how the loan was paid to the defendant.  If the plaintiff for whatever reason chose not to explain such key aspects of his claim which are entirely within his knowledge and information, it is commonsense that this will cast doubt on the plaintiff’s claim and in turn potentially bolster the credibility of the defence.  I add that the defendant’s evidence about his liquidity in his bank account is one further aspect tending to support his case.  I am therefore satisfied that the defence case is not one which I can dismiss at this stage as lacking any real prospects of success or conviction without evaluating the evidence at a trial. It follows that subject to the question of any conditions to be imposed, the default judgment entered against the defendant ought to be set aside.

13.  Mr Kwong accepted that the defendant should pay all of the plaintiff’s costs arising from the defendant’s application to set aside the default judgment as one of the conditions to be imposed.

14.  Mr Cheung urged me to further impose the condition that the defendant do pay the full sum claimed by the plaintiff into court. 

15.  In L & M Specialist Construction Ltd v Wo Hing Construction Co Ltd [2000] 3 HKLRD 262 at 269D-I, Ribeiro JA (as he then was) observed the paradox in the court deciding on the one hand that the defendant has a real prospect of success in defending the claim, and yet on the other hand ordering the defendant to pay the sum claimed into court as a condition of setting aside the judgment, and there must therefore be something specific in the defendant’s conduct or in the case which justifies imposing such a condition, for instance to encourage the proper future conduct of the litigation, or to provide a measure of security for the plaintiff.  In other words, there must be some material upon which the court can exercise its discretion in that manner.

16.  On the defendant’s own admission, he was prepared to put forward a false address (even on oath) to the plaintiff on multiple occasions (although I stress that this does not mean I find that the Address was indeed a false one).  Such conduct plainly shows that the defendant is prepared to mislead the plaintiff to suit his needs and has the propensity in evading service.  I am of the view that this is a proper case to order the defendant to pay the sum claimed by the plaintiff into court as a further condition of setting aside the default judgment to ensure proper future conduct of the litigation and to avoid the plaintiff being put on a wild goose chase in the future to enforce judgment against the defendant. 

17.  Mr Kwong confirmed that the defendant has the financial means to pay the full sum claimed by the plaintiff into court, which was what the defendant proposed in his Notice of Appeal in the event that the court is minded to set aside the default judgment on terms, and he asked that the defendant be allowed up to the end of this month to do so.

18.  I therefore order as follows:-

(1) The judgment entered against the defendant on 27 January 2015 be set aside upon the defendant’s full compliance with the following conditions on or before 29 February 2016, namely the defendant do pay:-

(a) the sum of HK$200,000 into court;

(b) the plaintiff’s costs of this appeal which I hereby summarily assess at HK$30,000 to the plaintiff; and

(c) the plaintiff’s agreed costs in the sum of HK$32,000 under the order of Master Daniel Tang dated 7 January 2016 to the plaintiff.

(2) In default of compliance with the conditions set out in paragraph 18(1)(a) to (c) above, the defendant’s appeal be dismissed with costs to the plaintiff as summarily assessed above without further order.

(3) Liberty to apply.

19.  I thank Mr Cheung and Mr Kwong for their assistance.