XCHRX Electronic Spider Technology Ltd. and Another v. Au Cheong Tat and Others

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 17323 OF 2000

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J U D G M E N T

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1. This is an application by the 3rd defendant to set aside a default judgment entered against her on 8 March 2001, following her failure to file an acknowledgement of service indicating an intention to defend the present action against her.

2. The writ in the present case was issued on 14 December 2000. It was served, or purported to be served, by the plaintiffs' solicitors on the 3rd defendant by post, i.e. ordinary post, on 15 December 2000 at the last known address of the 3rd defendant.

3. Subsequently, the writ of summons was amended on 7 February 2001 and on the following day the amended writ of summons was likewise served, or purportedly served, by the plaintiffs' solicitors on the 3rd defendant by post, i.e. ordinary post, at her last known address. Having received no acknowledgement of service to either the writ or the amended writ, the plaintiffs applied for and successfully obtained a default judgment against the 3rd defendant.

4. By summons dated 27 April 2001, the 3rd defendant applied to set aside the default judgment on two grounds, namely, that the writ had not been properly or duly served on her and that she had a good defence to the action in any event.

5. According to the evidence filed by the 3rd defendant in support of her present application and, in particular, a statement of travel records issued by the Immigration Department, the 3rd defendant had emigrated to Canada during the material time. To be more precise, she left Hong Kong on 25 October last year for Canada and, as I understand it, has not returned to Hong Kong until after learning of the entry of default judgment against her this year. So at all material times, i.e. from the time when the writ was first issued up to the time when the default judgment was entered against her, she was out of the jurisdiction.

6. The plaintiffs' service of the writ on the 3rd defendant was apparently based on Order 10, Rule 1(2)(a) of the Rules of the District Court. Rule 1(2)(a) says a writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served by sending a copy of the writ by registered post to the defendant at his usual or last known address. There is no dispute that the address used was the last known address in Hong Kong of the 3rd defendant.

7. Mr Jim, for the 3rd defendant, submitted that Rule 1(2)(a) had no application in the present case because at the time of service, and in fact up to the time when default judgment was entered, the defendant was without the jurisdiction. The evidence, as I said, unequivocally supported such a contention. In my judgment, this submission is correct. Rule 1(2)(a) only applied if at the time service was effected the defendant was within the jurisdiction. If the defendant was without the jurisdiction, then leave to serve the writ out of the jurisdiction would have to be applied for pursuant to the provisions in Order 11 of the Rules of the District Court.

8. The authorities also support this reading of Rule 1(2)(a). See Desirable International Fashions Limited (in liquidation) v Chiang Shi-chau [1997] 3 HKC 170, applying the English case Barclays Bank of Swaziland Limited v Hahn [1989] 1 WLR 506.

9. As I have emphasised more than once, in the present case the defendant was out of the jurisdiction throughout the entire material period, i.e. from the time service was purportedly done by post to the time when default judgment was entered against her. There is thus in the present case no question of the defendant having returned to the jurisdiction after the writ was purportedly served on her by post, and having had the opportunity of learning of the existence of the writ before the default judgment was entered against her. Had that been the case, it might have given rise to some other consideration.

10. It is also pertinent to point out that in any event the service in the present case was defective, even assuming that Rule 1(2)(a) were applicable to the 3rd defendant, for the simple reason that Rule 1(2)(a) requires the writ to be sent by registered post, not ordinary post, which (i.e. service by ordinary post) was the case in the present case.

11. For all the above reasons, I have come to the conclusion that service in the present case was irregular and it follows that the judgment so obtained was an irregular one.

12. The consequence of an irregular judgment due to defective service has recently been examined by Deputy High Court Judge Poon in Cosec Nominees Limited v Lau Hon-ming, Alan HCA 9775/2000, 31 May 2001 unreported. To cut a long story short, in my judgment in such a case the defendant is entitled to have the default judgment irregularly obtained by reason of defective service set aside as of right. As explained in the Court of Appeal decision in Po Kwong Marble Factory Limited v Wah Yee Decoration Company Limited [1996] 4 HKC 157, which, as explained in Deputy High Court Judge Poon's judgment, is still widely considered as the binding decision of the Court of Appeal on this subject, such a judgment should be set aside as of right. In other words, the merits of the particular defence to the claim need not be entered into by the court. Nevertheless, there is always a residual discretion in the court to have regard to the conduct of the parties. The court has a discretion, having regard to what the defendant himself has done, to deprive him if necessary of that judgment (i.e. a judgment setting aside the default judgment) or, alternatively, to impose terms upon the setting aside of the judgment which accords with justice, having regard to the facts of the particular case.

13. Turning to the circumstances of the present case and, in particular, the conduct of the 3rd defendant, I can find nothing which would justify or warrant the court in imposing any condition to the setting aside of the irregular judgment. She explained in her evidence filed in support of her application, which is not challenged, that she had emigrated to Canada last year. There was, on the evidence, nothing sinister about her move, nor were there any suspicious circumstances.

14. In those circumstances, I can see no reason for imposing any term for setting aside the irregularly obtained default judgment. And also for the above reasons I did not find it necessary to go into the merits of the intended defence of the 3rd defendant and I did not hear the parties' submissions in relation to the merits of the defence. I say nothing about it.

15. So in conclusion, I order that the judgment by default dated 8 March 2001 be set aside unconditionally. I shall now hear the parties as to costs.

(Submission re costs)

16. I have heard the parties' submissions as to costs. I bear in mind the following matters. First, it is normal for solicitors to effect service by post. In the present case the plaintiffs and their solicitors, on the materials before me, had no reason to suspect that the 3rd defendant was out of the jurisdiction at the time when they tried to serve the writ on her by post. It was unfortunate that it so happened that she had by then emigrated to Canada. But Mr Jim reminded me that the service in the present case was, in any event, defective because it was only done by ordinary post, not registered post. And had it been done by registered post, the fact that the 3rd defendant was no longer residing at her last known address would have been brought to the attention of the plaintiffs and their solicitors. And that could lead to the making of further enquiry by them which could lead to the discovery of the fact that the 3rd defendant had already emigrated to Canada.

17. Another matter I take into account is that when the 3rd defendant applied to set aside the default judgment by summons supported by affirmations and evidence from the Immigration Department, the fact that she had emigrated to Canada was made very plain in those supporting affirmations and documents. By then the plaintiffs ought to have realised that their case did not fall within Order 10, Rule 1(2)(a). And had they then conceded this present application, today's hearing would not have been necessary.

18. So for all these reasons I order that the costs of and occasioned by this application, as well as the costs thrown away, be paid by the plaintiffs to the 3rd defendant in any event.

19. Mr Jim asked for a certificate for counsel, which was opposed. Mr Lau (for the plaintiffs) said that the matter was not complicated and it could have been competently done by a solicitor. That would really backfire because if the matter was not complicated and was in fact simple, it ought not to have been fought at all. In my view, moreover, I do not think that the true test is whether a solicitor could competently have done the job. There must be areas of overlapping and I suspect the areas of overlapping are quite substantial where both counsel and solicitors are competent to do the same job. I do not think that should be the test. Rather, I think that a certificate for counsel should be granted unless it was totally unnecessary or unreasonable to instruct counsel to appear at the hearing in this court. This was not such a case. For that reason I also grant a certificate for counsel.

20. Since the service was held by me to be defective, so there is no point in my giving further direction for the conduct of this case because, according to my holding, the writ has not even properly been served yet. And I do not know whether the 3rd defendant is now in Hong Kong or not, although in my judgment I assumed that she had since returned to Hong Kong; but that assumption, I suspect, might not be correct. If she is out of the jurisdiction, then of course the writ can only be served on her after obtaining leave to serve it out of the jurisdiction. So for all these reasons I do not think I should or need give any further direction for the conduct of these proceedings between the plaintiffs and the 3rd defendant.

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