XCHRX WANG ON SHOPPING CENTRE MANAGEMENT LTD. v. LAI KIN MAN AND ANOTHER

HCA18763/98

HEADNOTE

Practice and Procedure. Ex-parte order under O.44A, r.7 obtained. Plaintiff's claim for non-payment of licence fees and charges. Judge hearing ex-parte application not specifically informed that the Plaintiff held a deposit which was for more than the amount claimed. Although the deposit was mentioned in an exhibit to the affidavit in support of the ex-parte application, it is not good enough to simply rely on what is contained in an exhibit. It should have been specifically drawn to the judge's attention that the Plaintiff in fact held a deposit. Breach of duty to make full and frank disclosure of all material facts. Ex-parte order discharged.

HCA18763/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 18763 OF 1998

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J U D G M E N T

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1. This is the return date of an ex-parte order made by Sears J. on 19th November 1998. On that day Sears J. ordered that:

"1. Upon the usual undertaking as to damages there be an interim order than a warrant be issued in the form of the Draft submitted calling upon the 1st and 2nd Defendant by 27th November 1998 or further order to furnish security in the sum claimed or within that period to show cause why they should not, failing which the Bailiff will be commanded to attach all movable or immovable property of the 1st and 2nd Defendants within the Hong Kong Special Administrative Region until further order."

2. The claim by the Plaintiff against the Defendants is for non-payment of licence fees under an agreement in writing dated 16th October 1997. The amount said to be owing at the time of the issue of the writ is the total sum of $92,388.00 in respect of outstanding licence fees and other charges due and payable. The licence was in respect of a shop known as Shop 107, Ping Tin Shopping Centre, Ping Tin Estate, Lam Tin, Kowloon, Hong Kong. It is common ground that the Defendants operated a shop selling electrical appliances there.

3. Mr. Ng, for the Defendants, has made a number of submissions in opposition to the order sought by the Plaintiff. It has also been said that there has been material non-disclosure on the part of the Plaintiff in seeking the ex-parte order before Sears J.

4. The application was made under O. 44A, r.7 of the Rules of the High Court. This provides as follows:

"(1) If any action the defendant, with intent to obstruct or delay the execution of any judgment that may be given against him in the action, is about to dispose of his property or any part thereof, or to remove any such property from the jurisdiction of the Court, the plaintiff may, either at the institution of the action or at any time thereafter until final judgment, apply to the Court to call upon the defendant to furnish sufficient security to produce and place at the disposal of the Court, when required, his property, or the value of the same, or such portion thereof as may be sufficient to answer any judgment that may be given against him in the action, and, in the event of his failing to furnish such security, to direct that any property, movable or immovable, belonging to the Defendant shall be attached until the further order of the Court."

5. It is incumbent on the Plaintiff to provide sufficient evidence for the Court to draw the inference that the Defendant had the intent to obstruct or delay the execution of any judgment that may be given against him. That is the intent that must be shown and it is also incumbent to show that the Defendant is either about to dispose of his property or any part thereof, or to remove any such property from the jurisdiction of the Court. That is provided for in O. 44A, r.7(1).

6. The evidence of Mr. Lo Tat Suen who made an affidavit on 19th November 1998 was to the effect that on 4th November 1998 the 1st Defendant or his agents had commenced to remove their goods "including but not limited to a number of valuable electrical appliances from the premises."

7. Mr. Lai Kin Man has made an affirmation dated 25th November 1998. It is clear from his affirmation that the Defendant carries on business of selling electrical appliances. There is also an affirmation of Lai Sau Lan which has been put before me that was affirmed also on 25th November 1998. Mr. Ng, for the Defendants, relies on these affirmations and has submitted that this is not a proper case for the Court to grant an order under O. 44A, r.7 and he also complains about material non-disclosure at the ex-parte stage.

8. It is trite law that the Court must be fully informed by applicants for ex-parte applications of all the facts that are relevant to the weighing operation which the Court has to make in deciding whether or not to grant the ex-parte order.

9. On the evidence that has been filed, it is clear that a demand letter was sent by the Plaintiff to pay the licence fees by a certain date, namely, 4th November 1998. However, before the end of that day at about 11.00 p.m. the Plaintiff re-entered into possession of the premises, the subject matter of the licence. In Mr. Lo's affidavit placed before Sears J. at the ex-parte stage, this was described as a peaceful re-entering into possession of the premises. On the evidence that has been placed before me in the affirmation of Mr. Lai Kin Man and the affirmation of Lai Sau Lan, it is clear that on 4th November 1998 after the Defendant closed shop that evening, the locks of the shop were broken into by the Plaintiff. On 5th November, when the 1st Defendant and his sister, the other deponent Lai Sau Lan, returned to the shop to open up for business, he found that the lock and the metal chain lock of the shop had been broken. There were two new locks together with the metal chain installed at the door of the shop. This was reported immediately to the Plaintiff's representative, a Mr. Ho, and the 1st Defendant was informed that the locks had been broken into by the Plaintiff and they had taken possession of the shop. This led to an argument and a report by the 1st Defendant to the police. Unfortunately, Sears J. was never told about this at the ex-parte stage.

10. He was also not told about the very recent correspondence, namely the letter dated 17th November 1998 sent by the solicitors for the Defendants to the solicitors for the Plaintiff. This is an important letter in my view because of what it says:

"We refer to our letter dated 7th November 1998 to you.

We are further instructed by our clients that at or about 11.30 p.m. on Wednesday, 4th November 1998, your client in fact without our client's knowledge and consent forcibly entered into our client's shop No. 107 Ping Tin Shopping Centre, Ping Tin Estate, Lam Tin, ("the Premises") by damaging the lock for the entrance of the Premises and put a new lock instead to deprive our client's access back to the said Premises.

We are instructed to give your client a final notice that unless your client return all goods and belongings of our client inside the said Premises as per the list of Inventory enclosed therewith our said letter dated 7th November 1998 to you to our client within the next 7 days from the date thereof, we shall take appropriate action against your client without further notice.

We reserve all our client's rights."

The letter dated 7th November 1998 was, of course, exhibited to the affidavit of Mr. Lo filed in support of the ex-parte application but this letter dated 17th November 1998 was not disclosed to Sears J. In my view, he should have been told that the Defendant was taking the view that there was a forcible entry of his premises by the Plaintiff. He in fact reported the matter to the police. It is, in my view, a material fact that ought to have been disclosed.

11. Furthermore, it has been pointed out to me that under the licence agreement the Plaintiff already had a cash deposit. The deposit was in the sum of HK$107,958.00. This amount is more than the amount claimed, namely the sum of HK$92,388.00. Sears J., I have been told, was not specifically informed about the fact that the Plaintiff held a deposit. Of course, if there were any arrears of licence fees the Plaintiff could use the deposit to set off any amounts owing to it from the deposit it held. Mr. Finley said that the fact that there was a deposit is mentioned in the licence agreement and the licence agreement was exhibited to the affidavit of Mr. Lo. In my judgment, it is not good enough to simply rely on what is contained in an exhibit. It should have been drawn specifically, in my view, to the judge's attention at the ex-parte stage that the Plaintiff in fact held a deposit. It should have either been in the body of the affidavit or that fact should have been orally informed to the judge granting the ex-parte application. It was a very material fact, in my view, because after all, by O. 44A, r.7, the Plaintiff is seeking security for any judgment that it may obtain. Here you had a deposit which was held in the hands of the Plaintiff, a deposit which was more than the amount claimed.

12. In my view, there has been a breach of duty to make full and frank disclosure of all material facts and I would discharge the ex-parte order on that ground.

13. I would also go on to say that on the evidence of Mr. Lai Kin Man, it is clear that on the day in question, namely 4th November, he affirms that he was delivering goods to his customers but he was not disposing of them for the purpose of defeating any judgment that might be made against him. It is hardly surprising that Mr. Lai who was running an electrical appliances shop would be delivering goods to his customers. In the light of all the evidence, I do not think that the Plaintiff has made out its case to justify the grant of an order under O. 44A, r. 7 of the Rules of the High Court.

14. The application is dismissed and the ex-parte order is discharged.

15. [After hearing submissions]

16. Cost of the application to the Defendants on an indemnity basis.