CHAN KAM KEE v. CHAN KAM MAN

1995, M.P. No. 1042

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1042 OF 1995

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J U D G M E N T

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1. This is an action brought by the Plaintiff on behalf of the deceased's estate asking for a number of declaratory orders. In essence, these orders, if granted, would declare that the Defendant's title to the 3 pieces of land referred to in the title of this action ("the suit properties") has been extinguished by virtue of the provisions of the Limitation Ordinance, Cap. 347 and that the Plaintiff has acquired title thereto by virtue of his adverse possession of the suit properties.

2. According to the evidence filed by the Plaintiff, the deceased had been in continuous possession of the suit properties since about 1932. By the time when the deceased made his affirmation in support of this action (in April, 1995), he was in possession thereof for about 62 or 63 years. The deceased passed away on 13 April, 1996 and the present proceedings were then taken up by the present Plaintiff (the deceased's son) acting for the deceased's estate (see the 6th affirmation of Ko Kok Fai dated 16 September, 1996).

Service of the Court Documents on the Defendant

3. For reasons not made known to me, this action has taken quite a protracted course. The Originating Summons herein was issued on 21 April, 1995. The supporting affirmation was made earlier on 10 April, 1995.

4. However, the first attempt to personally serve the court documents on the Defendant was made by a firm of solicitors in the U.K. only in January, 1996. According to a letter dated 25 January, 1996 from the U.K. solicitors (exhibit "KKF-1" to the 3rd affirmation of Ko Kok Fai dated 5 March, 1996), when they tried to personally serve the Defendant at an address in the U.K., the door was unanswered on the first occasion. When they went there again, they were told by a lady that she never heard of the Defendant.

5. As a result, the Plaintiff applied for and obtained a number of orders permitting substituted service on the Defendant. On 3 April, 1996, the Plaintiff obtained an Order ex parte to effect substituted service of the Originating Summons on the Defendant by advertising in a newspaper published in the U.K. On 3 November, 1997, the Plaintiff obtained a similar Order to serve the Notice of Appointment to Hear the Originating Summons. Further, on 3 February, 1998, the Plaintiff also obtained another similar Order for serving the Notice of Appointment for the full hearing on the Defendant.

6. The first time when substituted service was effected in accordance with the Order was 16 April, 1997 when the first advertisement was placed in "The Times" (p. 42, Bundle of Court Documents). It is important to note that the said U.K. address visited by the U.K. solicitors came from the Memorial registered at the District Lands Office in June, 1978 in which the Defendant was described as the purchaser (pp. 76, 99 and 139, Exhibits Bundle). Some 18 years have therefore lapsed between the date of registration of the Memorial and the first Order permitting substituted service (in April, 1996) and nearly 19 years have lapsed between that date of registration and the first substituted service (in April, 1997). At no time has evidence been filed indicating whether the Defendant was still in the U.K. after 1978, let alone in April, 1996 or April, 1997. The information from the U.K. solicitors rather showed that the Defendant's whereabouts were simply unknown.

7. In these circumstances, I enquired with Ms. Lee Counsel for the Plaintiff if the ex parte Orders were properly obtained. The enquiry arose from the decision in Abbey National plc v. Frost (Solicitors' Indemnity Fund Ltd intervening) [1998] 2 All E.R. 321. Since this case has an important bearing on my decision, I propose to set out the facts and decision of that case in more detail below.

8. The plaintiff in that case was a building society. It brought an action against the defendant arising from a transaction in 1990. The defendant acted as the plaintiff's solicitors as well as the solicitors for the borrower. The plaintiff alleged that the defendant failed to report to the plaintiff that the borrower was acquiring the property by way of sub-sale and there was a substantial price differential. By the time when the writ was issued in 1997, the defendant was already struck off from the roll of solicitors and his whereabouts were unknown. The private investigators employed by the plaintiff had reason to believe that he was in Thailand. The plaintiff decided that it was impracticable to serve the writ personally on the defendant and decided to effect substituted service by serving the Solicitors' Indemnity Fund Ltd. ("the SIF"). The SIF sought leave to intervene and applied to set aside the substituted service order. The master affirmed the validity of the order. On the SIF's appeal to the Judge, the order was set aside by Mr. Justice Carnwath.

9. The reasons for the learned Judge's decision were set out in the headnote and at pp. 323 to 324 and p. 331. In essence, the learned Judge set aside the order on 2 grounds. First, the order was made not in accordance with the normal requirement implicit in the wording of R.S.C. Ord. 65 r. 4(3). Secondly, it did not conform with the requirements established by authorities.

10. The learned Judge set out the relevant law on this issue as follows:-

"The fundamental issue raised by Mr. Jackson [counsel for the SIF] .... is whether there was any power to order substituted service in the circumstances of this case, where, contrary to the implied requirement in r. 4(3), there was no likelihood that service on the SIF would bring the proceedings to the attention of Mr. Frost himself.

This is a normal requirement for substituted service is not only implicit in the wording of the rule, but is also firmly established by the authorities. In Porter v. Freudenberg [1915] 1 KB 857, [1914-15] All. ER Rep 918 a seven-man Court of Appeal dealt with the problems of service on alien enemies in the First World War. In the judgment of the court the established principles for substituted service were summarised (see [1915] 1 KB 857 at 887ff, [1914-15] All ER Rep 918 at 933ff). Among other matters, the court said:

'In order that substituted service may be permitted, it must be clearly shown that the plaintiff is in fact unable to effect personal service and that the writ is likely to reach the defendant or to come to his knowledge if the method of substituted service which is asked for by the plaintiff is adopted.' (See [1915] 1 KB 857 at 888, [1914-15] All ER Rep 918 at 935.)

If the matter rested there, it would be clear that the order for substituted service on the SIF in the present case was misconceived, since on the evidence there was no reason to think that such service would bring the matter to the attention of the defendant."

The learned Judge then went on to deal with what he called a supposed exception to that principle in relation to insurance companies and the Motor Insurers' Bureau which has no application to the present case.

11. The wording of R.S.C. Ord. 65 r. 4(3) in the U.K. is identical to that of our R.H.C. Ord. 65 r. 4(3). Although the above observations of the learned Judge are not binding on me, I consider that it reflects the true state of the law in this area. It is one of the fundamental principles in our legal system that litigants have a right to be heard. Service of the process is a necessary corollary to that principle without which the right to be heard would be empty words. Further, if substituted service were automatically granted regardless of whether this will be likely to bring to the defendant's attention the existence of the proceedings (in the absence of some special feature, for example, he was evading the process), this will lead to an undesirable result. The courts would effectively have to "rubber-stamp" these proceedings because they are likely to be uncontested.

12. The evidence of this case is more sketchy than that in the Abbey National plc case. The whereabouts of the defendant in that case was unknown for about 3 years when the writ was issued in February, 1997, he having been struck off the roll in April, 1994 (see p. 323d to g). In the present case, by the time when substituted service was effected, some 19 years have lapsed. In that case, there was at least some evidence that the defendant was in Thailand. In the present case, there was no information as to his whereabouts at all.

13. For these reasons, I consider that this is not a case where the Courts ought in its discretion to grant the orders for substituted service. As these orders were apparently all made ex parte, I consider that I have power pursuant to R.H.C. Ord. 32 r. 6 and the inherent jurisdiction of the Court to set aside these orders: see the footnotes in The Supreme Court Practice 1997, para. 32/1-6/23 and the Judgments of Pang, J. and Master Jennings in Saatori v. Cheng Chun Mo, HCA No. A3908 of 1995. In exercise of my discretion, I would set aside all the orders for substituted service made herein earlier.

14. Since I have set aside the orders for substituted service, these proceedings have not been properly served. No order can therefore be made on the Originating Summons at present, save that there should be a costs order nisi that there be no order as to costs of these proceedings since 22 April, 1995 (the day following the issue of the Originating Summons) to today.

Should the Declaratory Orders Sought be Granted?

15. Since I already decided that these proceedings have not been properly served on the Defendant, there is no need for me to deal with this action further. However, if I have to decide on the declaratory relief asked for by the Plaintiff, I would have refused to grant the relief sought.

16. I have come cross quite a number of cases where the defendants' names (and sometimes addresses) only appeared on documents registered in the District Land Offices (or, less frequently, the Lands Registry). Almost invariably, quite a number of years have lapsed between registration of the documents and commencement of proceedings. The defendants could not be found and the plaintiffs would then apply to Court for an order for substituted service. On the basis that the proceedings have been duly served by way of substituted service, the plaintiffs would then ask from the Court similar declaratory orders. These are basically uncontested applications where the Courts were effectively asked to "rubber stamp" these cases when in reality no dispute (let alone bona fide dispute) was involved.

17. If declaratory orders like these could be granted by the Courts, in an extreme case, a plaintiff could come to court and ask for a declaration order that he be permitted to go home everyday, in the absence of any genuine challenge to his right to do so (see similar comments in Re Clay [1919] 1Ch. 66, at pp. 78-9). I enquired with Ms. Lee what was the practical need for the relief asked for herein. Ms. Lee replied that at the moment there was no need for the relief but they may become necessary at some later stage when, for example, Government resumes the suit properties and has to decide who is entitled to compensation.

18. Ms. Lee accepts that the Courts have a discretion whether to grant a declaratory order of a nature similar to the one sought in the present case. Yet, when asked, Ms. Lee could not say when relief can be properly refused except perhaps when the Court documents have not been properly served. Cases of lack of proper service pertain to procedural defect and do not, however, involve the exercise of discretion. So if relief were granted to the Plaintiff in this case, this could lead to a floodgate of similar applications and in the end, the Courts will effectively have to "rubber stamp" all such applications.

19. The Plaintiff could try to argue that such application could save time and costs. On the other hand, if this application were entertained only after a real opponent is in existence, for example, Government intending to resume the suit properties and pay compensation therefor, or an intended purchaser of the suit properties who raised requisitions on the Plaintiff's title, the litigation may be more time-consuming and costly.

20. In the face of these conflicting considerations, the manner in which the Court's discretion should be exercised will have to be examined in the light of established principles. One factor recognised by the Courts as militating against the grant of a declaration is that the order sought is academic or involves hypothetical question: 37 Halsbury's Laws of England (1982) 4th ed., 253, text to n. 9. Further, it was said "A declaration will not be made against a person who has asserted no right against the plaintiff nor formulated any specific claim, nor where there is no breach and no threat or intention to commit a breach of agreement": 37 Halsbury 253, especially text to nn. 1 and 2. Similar remarks were also made in The Supreme Court Practice 1997, para. 15/16/2 where it was said:-

"The Court will not generally decide academical or hypothetical questions (Tindall v. Wright [1922] W.N. 124; Re Barnato [1949] Ch. 258, C.A.) Nor can a person against whom no claim has been made obtain a declaration that no such claim exists (Re Clay [1919] 1 Ch. 66, C.A.)";

"A declaration will not be granted where there is no breach and no threat or intention to commit a breach of agreement (Mellstrom v. Garner [1970] 1 W.L.R. 603; [1970] 2 All E.R. 9, C.A.). Where the defendant has never threatened to take proceedings against the plaintiff in the English Courts, there is no jurisdiction to make a declaration that the plaintiff is under no liability under English law (Midland Bank plc v. Laker Airways Ltd [1986] Q.B. 689; [1986] 1 All E.R. 126, C.A.)".

21. What is asked for here is ultimately for the grant of an academic declaration without any real opponent. The evidence does not show anyone, let alone the Defendant, asserting any right, or raising any other claims, against the Plaintiff. It rather points to the other direction. For these reasons, if there was a need to deal with the Plaintiff's claim herein, I would have refused to grant the relief asked for.

(Andrew Chung)

Deputy Judge of the Court of First Instance