NGAI SIN FAT v. KEUNG FUK YAU AND ANOTHER

DCCJ 228/2018

[2019] HKDC 711

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 228 OF 2018

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DECISION

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1.  By summons taken out on 24 Sept 2018 (the Summons), the 1^st and 2^nd Defendants (D1, D2 and collectively Ds) apply[1] to set aside a judgment against them in plaintiff (P)’s favour made by order of Deputy District Judge Kate Li at a hearing on 6 Apr 2018 (the Judgment), at which hearing Ds were both absent.

2.  The Judgment was entered in default of notice of intention to defend and in default of defence.

3.  P is owner of a flat (P’s Flat) one floor immediately below that owned by Ds (Ds’ Flat) in a building in Shamshuipo (the Building). P sued Ds in negligence, nuisance, breach of deed of mutual covenant and non-natural user of land for water seepage to P’s Flat since Mar 2016 (the Seepage) from Ds’ Flat.

4.  The Judgment provides for prohibitory injunction to restrain Ds from allowing or causing the Seepage, mandatory injunction that they do forthwith carry out all necessary works to stop the Seepage, and also for damages to be assessed.

5.  Ds applied on 2 main grounds. First, they said they have no notice of the writ and P’s summons for default judgment (the Subject Summons) before the Judgment was entered. Secondly, they have a meritorious defence to P’s claim. On either ground, the Judgment ought, they say, to be set aside.

6.  P disputed both grounds. First, he argued that Ds failed to provide convincing evidence of their having no notice of the writ and the Subject Summons. Secondly, they also failed to discharge their burden to show a meritorious defence with a real prospect of success. Hence, the Summons should, he says, be dismissed.

Applicable principles

7.  The applicable legal principles are trite and not much disputed by counsels appearing before me (it is their application to the evidence before me that is hotly disputed by them) and they are, I hold, as follows.

Test for service

8.  The real test for service is whether a writ is brought to the notice of a defendant and not whether it has been delivered to his usual or last known address: Lau Ying Sau Sailing & another v Wan Kwan Cheung, unreported, DCCJ 1405/2010, 7 Mar 2012, para 16.

9.  However, the court does not have to accept a defendant’s assertion, no matter how improbable, that he had not received the writ. A defendant is required to provide convincing evidence. How much evidence is required must depend on the circumstances of the particular case: Bank of China (HK) Ltd v Cheung King Fung [2007] 1 HKLRD 462, 469E-470A.

Irregular judgment

10.  If the service is irregular, a defendant is entitled to have default judgment set aside as of right without consideration of merits of his defence: Lau Ying Sau Sailing, supra, para 16.

Regular judgment

11.  If the judgment is regular, the court may set it aside if a meritorious defence can be shown by the defendant: Lau Ying Sau Sailing, supra, para 16.

12.  The power to set aside a regular judgment is discretionary and its purpose is to avoid injustice: HKCP 2019, Vol.1, para 13/9/12.

13.  The major consideration is whether the defendant has shown a defence on the merits. In exercising its discretion, the court has regard to all relevant circumstances. The usual factors are: why the default occurred; the defendant’s conduct after he had notice of the proceedings; an explanation for the time taken where there has been delay in making the application; and any prejudice that would be caused to the plaintiff if the judgment were to be set aside. They will then have to be weighed against the dominant factor of merits to see where justice lies: HKCP 2019, Vol.1, para 13/9/13.

14.  On the strength of the defence, it is not sufficient for a defendant merely to show an arguable defence. A defendant must show that his case has a real prospect of success. To do so, he must satisfy the court that his case, and the evidence that he has adduced in support of it, carries some degree of conviction. Unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on facts, he cannot have shown that he has a real prospect of success. Thus, the court has to form a provisional view of the probable outcome of the action: El Vince Ltd v Wu Wen Sheng [2001] 3 HKLRD 445, 455H-456C.

15.  Where the ultimate outcome very much depends on whose evidence is likely to be accepted and a provisional view of the probable outcome of the action cannot sensibly be formed without conducting a trial, the appropriate test is to ask whether the defence “could well be established” at trial and if the defendant’s version could well be believed at trial, it follows that the defence has a real prospect of success: El Vince Ltd, supra, 456D-G.

Leakage claim

16.  There is no presumption in law that water found at the ceiling of the lower floor flat must originate from the upper floor flat: Lau Ying Sau Sailing, supra, para 42.

17.  In a water leakage claim, the burden is on the plaintiff to prove the source of the water leakage.  It is not for a defendant to find out or identify the correct source of water leakage or to prove that its origin did not come from his property: Hung Luen Kwan v Shiu Lin Fong & another, unreported, DCCJ 676/2018, 19 July 2018, para 12.

Procedural history

18.  Before I apply the above principles to the evidence before me, a brief overview of the procedural history is, I think, indispensable to discussion below.

19.  At all material times, Ds’ Flat had been subdivided into 3 rooms and rented out to tenants by Ds.

20.  On 27 Dec 2017, P’s solicitors delivered by hand/by leaving their letter before action to Ds at Ds’ Flat.

21.  On 17 Jan 2018, P’s solicitorsissued these proceedings by specially indorsed writ against Ds with their address of service at Ds’ Flat.

22.  According to affirmation of service filed by clerk of P’s solicitors, sealed copy writ of these proceedings enclosed in a sealed envelope and accompanied by prescribed form of acknowledgment of service in triplicate was served on Ds on the same day at about 3pm by being inserted in the letterbox of Ds’ Flat as Ds’ last known address. In P’s opinion, the said writ will have come to Ds’ knowledge within 7 days after the said date of inserting.

23.  On 12 Feb, P’s solicitors took out their first summons for default judgment against Ds returnable on 21 Feb (the First Summons) with Ds’ address of service at Ds’ Flat.

24.  According to affirmation of service filed by clerk of P’s solicitors, the First Summons enclosed in a sealed envelope was served on Ds on the same day at about 3:15 pm by being inserted in the letterbox of Ds’ Flat as their last known address.

25.  At the hearing of the First Summons on 21 Feb when Ds were both absent, P’s solicitors withdrew the application as time has not expired for service of Defence.

26.  On 8 Mar, P’s solicitors took out the Subject Summons returnable on 6 Apr with Ds’ address of service at Ds’ Flat.

27.  According to affirmation of service filed by clerk of P’s solicitors, the Subject Summons enclosed in a sealed envelope was served on Ds on the same day at about 11:20 am by being inserted in the letterbox of Ds’ Flat as their last known address.

28.  On 6 Apr when the Subject Summons was heard, Ds were both absent and the Judgment was entered by court order.

29.  On 14 Jun, sealed order dated 6 Apr 2018 was served on D1 at his work address in Apleichau.

30.  On 11 Sept, Ds’ solicitors filed notice to act on behalf of Ds.

31.  On 24 Sept, Ds’ solicitors took out the Summons.

Discussion

Regular or irregular service?

32.  Mr Dixon Tse appearing for Ds (Mr Tse) agreed before me that Ds’ Flat was Ds’ “last known address” under O.10 r.1, RDC.

33.  The reasons are apparent:

(1)    D1 had been able to produce in his affirmation in support of the Summons 3 letters dated July to Aug 2018 issued by the Joint Office (the 3 Joint Office 2018 Letters) of the Buildings Department and the Food & Environmental Hygiene Department (the Joint Office) addressed to owner/occupier of Ds’ Flat despite that Ds’ Flat was at material times rented out; and

(2)    Ds themselves gave Ds’ Flat as their address in their 4 affirmations filed for the Summons.

34.  But Mr Tse pointed to, and relied on, affidavit evidence of D1[2], who deposed that he “first became aware of the present proceedings and the Judgment on 14 Jun 2018 when the sealed Order dated 6 Apr 2018 was served on” him at his work address in Apleichau.

35.  D1 further deposed that the Building “is an old building with letter boxes behind the gate on the ground floor. Those letter boxes are very small”. He was advised, and he verily believed, that “the writ of summons was printed on a rather think pile of A4 size papers, and could not possibly fit into these letter boxes. It must have been inserted in a way hanging at the insertion hole at the gate facing the outside of (italics supplied)” the Building.

36.  While he does “not have first-hand knowledge why” he has “not been able to receive the writ” as he “never saw it”, his “best guess”, deposed D1, “is that it might have dropped on the floor when residents of the building opened and closed the gate while accessing the entrance. It might also have been taken away by unknown persons without (italics supplied)” his knowledge.

37.  On the above evidence, Mr Tse submitted that as Ds had deposed that they had no notice of the writ inserted into letterbox of Ds’ Flat, this court should believe them. He submitted that there is no or insufficient materials before this court to cast doubt on their credibility to enable the court to disbelieve them. He cited HKCP 2019, Vol.1, para 13/9/5[3], in support.

38.  Hence, the service of the writ, he submitted, was bad and irregular. And the Judgment ought to be set aside as of right without consideration of merits of the defence raised by Ds.

39.  I cannot agree.

40.  I agree with Mr Peter Chung appearing for P (Mr Chung) that Ds’ evidence in this respect are unconvincing and, indeed, improbable.

41.  My reasons are as follows.

(1)   In the ordinary course of events, correspondences addressed to Ds inserted into letterbox of Ds’ Flat should, one thinks, be forwarded by Ds’ tenants to them. Ds never deposed to the contrary.

(2)   The 3 Joint Office 2018 Letters are, one thinks, ample proof of such forwarding in (1) above.

(3)   But no affirmation is, I note, forthcoming from tenants of Ds’ Flat to depose that they never noticed, or never forwarded to Ds, the writ (or any court documents of these proceedings) inserted into letterbox of Ds’ Flat.

(4)   D1 provided, I note, neither particulars nor documentary evidence (e.g. photo) how allegedly small the letterbox of Ds’ Flat was at the material times.

(5)   Any allegation of the writ dropping onto the floor when residents of the Building opened and closed its gate while accessing its entrance, and of the writ having been taken away by unknown person without Ds’ knowledge, is, I think, no more than D1’s speculation. He himself used the words his “best guess” and also the word “might” twice. He said he does not have “first-hand knowledge”.

(6)   Were the writ so thick and unable to be fit into letterbox of Ds’ Flat such that it must have been inserted in a “hanging” way as claimed by D1, the said alleged size problem was not complained of by D1, and cannot be said, of the First Summons and the Subject Summons also inserted into the letterbox of Ds’ Flat.

(7)   Notwithstanding that P had specifically pointed out in para 19 of his affirmation in opposition that Ds had failed to respond as to whether they or any of them have or have not received the First Summons, Ds had not seen fit to deny notice of the First Summons on oath in their reply affirmations.

(8)   And, notwithstanding that P had specifically referred to letter before action issued by his solicitors to Ds in para 18 of his affirmation in opposition, Ds had also not seen fit to deny notice of such letter on oath in their reply affirmations.

(9)   Had Ds really had no notice of these proceedings through insertion of the writ into letterbox of Ds’ Flat in Jan 2018 as alleged by D1, there was, I think, no reason why they did not have notice of these proceedings through the letter before action dated Dec 2017, the First Summons dated Feb 2018 and the Subject Summons dated Mar 2018. It is, I think, improbable to the extreme that such multiple services during a lengthy period of 4 months all failed to bring notice of these proceedings to Ds as alleged.

(10)   All in all, D1’s assertion that he had no notice of the writ, and no notice of these proceedings, until Jun 2018 is, I think, improbable and incredible.

42.  Hence, Ds have failed to discharge their burden as submitted by Mr Chung.

43.  The Judgement is, I am satisfied, a regular judgment.

Meritorious defence or not?

44.  I move to consider defence raised by Ds to P’s claim in their affidavits. As it was developed by Mr Tse in his submissions, the focus is on the source of the Seepage.

45.  D1 deposed that he was advised by his legal advisors and verily believed there is factual issue as to whether the Seepage originated from Ds’ Flat. He was advised and verily believe that he has a meritorious defence because the 3 Joint Office 2018 Letters confirmed that there is no evidence that the source of the Seepage was Ds’ Flat.

46.  The determination of this factual issue, deposed D1 in his affirmation in support dated Sept 2018, is “subject to filing of expert evidence from both parties”. He “has not been able to seek expert evidence” but he “will do so as soon as possible”.

47.  In opposition to the Summons, P in his affirmation dated Nov 2018 rely on, among others, the followings: -

(1)   a nuisance notice issued on 24 Nov 2016 by the Director of Food and Environmental Hygiene under s.127(1) of Public Health & Municipal Services Ordinance[4], requiring Ds to abate water seepage through floor slab of bathroom at sub-divided room A of Ds’ Flat to ceiling of P’s Flat below (the 2016 Nuisance Notice);

(2)   an investigation report of Silver Consultants Engineering Ltd instructed by P and signed by Mr Leung Yu Cheung on 17 Aug 2017 as P’s expert (P’s 2017 Expert Report), which report concluded that there was water seepage from toilet of one subdivided room of Ds’ Flat to ceiling and floor of the living room of P’s Flat; and

(3)   two prosecution summonses Nos. KCS 18012/2017 & KCS 18103/2017 against Ds for water seepage (the two 2017 Summonses) with same hearing date of 11 July 2017.

48.  Both (1) and (2) above are also pleaded in the Statement of Claim specially indorsed on P’s writ.

49.  In reply affirmation dated Feb 2019, D1 exhibited no expert report. He agreed, however, that the two 2017 Summonses were issued to him in relation to water seepage. He said he pleaded guilty to them “for convenience and to save time”. And he has “already lost the documents relating to” them.

50.  Mr Tse submitted that, absent particulars of the two 2017 Summonses or documents such as brief facts prepared by prosecution thereof, the two 2017 Summonses themselves are of no evidential value to this court.

51.  Regarding P’s 2017 Expert Report, Mr Tse submitted by reference to its contents that that its conclusion was based on speculation and it does not advance P’s claim either.

52.  Despite Ds bear their burden in their application to show a defence with a real prospect of success, as this court has to form a provisional view of the probable outcome “of the action”, Mr Tse submitted, this court must take into account that there is, at law, no burden on Ds at trial regarding the source of the Seepage. The burden at trial remains, he stressed, on P to prove that the Seepage originated from Ds’ Flat.

53.  Though there is no expert report for the time being from Ds, given the updated opinion in the 3 Joint Office 2018 Letters, Ds do, he submitted, have a meritorious defence. This is a case which, he submitted, should be left for determination at trial when the court will have the benefit of expert opinions from both sides.

54.  And Mr Tse relied on Lau Ying Sau Sailing, supra, and Hung Luen Kwan, supra, to support his submissions.

55.  It is therefore submitted by him that, even if the Judgment is regular, it should be set aside by reason of Ds having a meritorious defence. He also addressed this court on other considerations having a bearing on my discretion setting aside a regular judgment, which will be discussed further below.

56.  Again, I cannot agree with Mr Tse’s submissions on merits of Ds’ defence.

57.  First, Ds have, I think, early notice of P’s complaint of the Seepage, full opportunity and plenty of time to seek expert evidence of their own to rebut P’s claim and/or to dispute P’s expert evidence but have, I think, elected not to do so.

58.  I therefore do not see any real likelihood of Ds obtaining by trial any expert evidence of their own (not to mention it is unknown if the same is favourable to Ds or not).

59.  My reasons are as follows.

(1)   D1 admitted in his affirmation that, as early as from about Nov 2016, he had already received complaint from P that the Seepage was suspected to have originated from Ds’ Flat.

(2)    Notwithstanding the issue of the 2016 Nuisance Notice, Ds have not sought expert evidence regarding the Seepage.

(3)   And notwithstanding P’s reliance in the specially indorsed writ of the 2016 Nuisance Notice and P’s 2017 Expert Report, both of them having been exhibited in P’s affirmation dated Nov 2018, Ds have not sought expert evidence regarding the Seepage either.

(4)   That was the case despite D1 has himself claimed in his affirmation dated Sept 2018 that he would seek expert evidence “as soon as possible” and added that the factual issue of the source of the Seepage is “subject to filing of expert from both parties”.

(5)   D1 never, one notes, explained in his affirmation dated Sept 2018 why he has “not been able to seek expert evidence” in the past and, in his reply affirmation dated Feb 2019, he no longer adverted to this issue of expert evidence.

(6)   By way of illustration of Ds’ attitude in dealing with water seepage, D1, I note, elected to pleaded guilty to the two 2017 Summonses in relation to water seepage “for convenience and to save time”, and not elected to oppose the same by seeking expert evidence. Though he said he lost documents relating to the two 2017 Summonses, D1, I note, never saw fit to depose in his reply affirmation that they had, from his memory, nothing to do with the Seepage.

60.  Unlike the case with the defendant in Lau Ying Sau Sailing, supra[5], and that of the defendant in Hung Luen Kwan, supra[6], Ds had nowhere in their affidavits, one notices, adverted to any circumstances contradicting P’s claim (or P’s expert evidence) of the source of the Seepage being Ds’ Flat and/or suggesting alternative source of the Seepage other than Ds’ Flat.

61.  The so-called updated “opinion” in the 3 Joint Office 2018 Letters relied upon by D1 in his affirmation, I agree with Mr Chung, is neutral. They point to nothing and they do not assist Ds on P’s claim (or dispute P’s expert evidence).

(1)   The letter dated 19 July 2018 merely indicated that the Joint Office could not identify the source of seepage to ceiling of bathroom of P’s Flat.

(2)   The letter dated 14 Aug 2018 again indicated that the Joint Office could not identify the source of seepage.

(3)   The letter dated 29 Aug 2018 merely said that the Joint Office would appoint a consultancy company to make more detailed investigation of the seepage and required Ds’ cooperation to allow access to Ds’ Flat for inspection and test. Contrary to D1’s assertion in his affirmation dated Sept 2018 that he had “not been asked to provide any assistance to such investigation”, the Joint Office replied P in its letter dated 19 Nov 2018 that the said consultancy company had “repeatedly tried to contact the owner concerned” in order to gain access to arrange inspection and testing but it was unsuccessful.

62.  Accordingly, I agree with Mr Chung’s submissions that there is simply no issue of whose evidence or whose version of facts is to be accepted.

63.  It is purely a question of Ds putting P to strict proof on this issue of source of the Seepage.

64.  In my views, in terms of evidence, P is in much stronger position than that of the plaintiffs in Lau Ying Sau Sailing, supra, and that of the plaintiff in Hung Luen Kwan, supra. The former plaintiffs have not submitted any expert evidence on the source of leakage[7]. The latter plaintiff relies merely a finding made by the Joint Office on the source of leakage in his statement of claim[8].

65.  In contrast, putting aside the two 2017 Summonses, a letter dated 28 Apr 2016 from the Joint Office to P and an inspection report dated 2016 by consultant instructed by the Joint Office, the latter two both being neutral in that they were unable to identify source of the Seepage after test(s), Ps do have (1) the 2016 Nuisance Notice; and (2) P’s 2017 Expert Report as weighty evidence proving that the source of the Seepage was Ds’ Flat.

66.  Ds and Mr Tse gave no answer or submission at all to the 2016 Nuisance Notice.

67.  With respect to Mr Tse, the conclusion in P’s 2017 Expert Report was, I think, properly arrived at by P’s expert through logical inference after having inspected, inter alia, one subdivided room of Ds’ Flat and having considered the results of a series of scientific tests carried out at, inter alia, toilet of that subdivided room.

68.  Absent contrary evidence, including expert evidence, from Ds, P stands, I think, to have reasonable prospect of proving his case at trial that the source of the Seepage was Ds’ Flat.

69.  Put another way, my provisional view of the probable outcome of these proceedings is that Ds’ case of putting P to strict proof on the source of the Seepage carries no conviction and does not enjoy any real prospect of success.

70.  I therefore agree with Mr Chung that Ds have failed on the evidence before me to establish a meritorious defence with the required strength at law to set aside a regular judgment.

Other considerations

71.  Mr Chung is also right that, even on Ds’ case, it took them about 3.5 months to take out the Summons after the Judgment was served on D1 at Apleichau work address in Jun 2018.

72.  This, I agree, is no short delay.

73.  D1 had purported to explain in his affirmation dated Sept 2018 that, after he was served with the Judgment, he “immediately contacted P to clarify what had happened” and “did not consult any lawyers because” he “wanted to handle the matter through discussion and negotiation with P, so as to avoid unnecessary legal costs”. “However, up until Aug 2018”, said D1, he “had not been able to reach any agreement with P on how to settle the dispute”. He then sought legal advice from Ds’ solicitors and, on their advice, instructed them to take out the Summons and prepare the necessary papers.

74.  Putting aside whether D1 lied on above or not, D1 gave, I think, at least a misleading impression of Ds having settlement discussion or negotiation with P until Aug 2018.

75.  Upon confronted with P’s words in affirmation dated Nov 2018 that he “had never been contacted by Ds, face to face, or by telephone call, directly or indirectly, for… discussion”, D1 conceded to say in affirmation dated Feb 2019 that, “once he had notice of the current proceedings”, he “went back to the Building and find P in P’s Flat to talk to him face to face”. When he arrived, he “saw P near stairs”. He “immediately approached him and wished to talk to him about the matter”. However, P “ignored” him. “Since then”, he has “not attempted to approach P again (italics supplied)”.

76.  D1 in effect conceded of having made no discussion or negotiation with P from June to Aug 2018 at all. This is no clarification as Mr Tse sought to explain.

77.  I do not find the above explanation of D1 satisfactory at all. And Ds’ approach to solicitors for advice in Aug 2018 cannot be said to be prompt either.

78.  In the meantime, P stands, one thinks, to continue to suffer from the Seepage which dated back to Mar 2016 on P’s case (and which was complained to D1 since Nov 2016 according to D1). If the Judgment is to set aside, one thinks it takes no short time before this action comes on trial for resolution one way or another.

Conclusion

79.  All relevant circumstances considered, including the major factor of merits, I decline to exercise my discretion to set aside the Judgment.

Disposition

80.  I dismiss the Summons.

Costs

81.  Counsels agreed that costs should follow the event in the event the Summons is dismissed. I therefore order that the costs of and incidental to the Summons, including all reserved costs and the costs of this hearing with certificate for counsel, be paid by the 1^st and 2^nd Defendants to the Plaintiff, to be taxed if not agreed.

82.  Finally, I thank Mr Chung and Mr Tsefor their assistance.