LING WAI LUN v. NORDIC WAY LTD

DCCJ 4490/2024

[2025] HKDC 1916

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4490 OF 2024

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REASONS FOR DECISION

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Introduction

1.  This is the hearing for the Defendant’s appeal against part of the Order of Master Bianca Yu made on 8 July 2025.  At the conclusion of the hearing, I dismissed the appeal and ordered the Defendant to pay the Plaintiff’s costs of and occasioned by the appeal.

2.  I now give my reasons for my decision.

Procedural Background

3.  In order to understand the scope of the Defendant’s appeal, it is necessary to set out some procedural background first.

4.  The Writ of Summons was issued on 7 August 2024.  The Writ was indorsed with a Statement of Claim, in which the Plaintiff prays for a judgment for the sum of HK$550,000, a declaration that the sum of HK$550,000 is an amount held by the Defendant on trust for the Plaintiff, damages, interest and costs.

5.  According to the Affirmation of Ho Ka Chi (“Ho”) filed on 30 September 2024, the Writ of Summons, the Statement of Claim together with the Acknowledgment of Service (in triplicate), and other related documents were served on the Defendant on 8 August 2024 by leaving at the Defendant’s registered office.

6.  The Defendant did not give notice of intention to defend the action.

7.  Upon the Plaintiff’s application and the abandonment of the claims for declaration and damages, a default judgment was entered on 8 October 2024 as follows:

“… IT IS THIS DAY ADJUDGED that the Defendant do pay the Plaintiff (i) the sum of HK$550,000.00 together with interest thereon at the rate of 8.875% per annum from 7^th August 2024 to the date hereof and thereafter at judgment rate until payment and HK$7,130 fixed costs.”

(“the Default Judgment”)

8.  Upon the Plaintiff’s application, a Garnishee Order to Show Cause was made on 12 December 2024, with a returnable date of 3 April 2025 (“the Garnishee Order Application”).

9.  On 31 March 2025, the Defendant applied by summons to set aside the Default Judgment (“the Setting-Aside Application”).

10.  On 3 April 2025, Master B Mak heard both the Garnishee Order Application and the Setting-Aside Application. The learned Master gave directions for the filing of affidavit evidence, and adjourned the hearing of both applications to 8 July 2025 for substantive arguments.

11.  On 11 June 2025, the Defendant applied by summons for leave to file and serve an affirmation (“the Leave Application”); such application was scheduled to be heard also on 8 July 2025.

12.  Without leave of the Court, the Defendant filed the 2^nd Affidavit of Paul Yau on 30 June 2025.

13.  On 8 July 2025, Master Bianca Yu heard the Garnishee Order Application, the Setting Aside Application, and the Leave Application.  The learned Master dismissed both the Setting Aside Application and the Leave Application.  As regards the Garnishee Order Application, the learned Master, inter alia, made the following orders on a nisi basis:

(1)  The Default Judgment be amended to state that:

“… IT IS THIS DAY ADJUDGED that the Defendant do pay the Plaintiff the sum of HK$563,467.77 together with interest at judgment rate from 8 October 2024 until payment”;

(2)  The Garnishee Order nisi be made absolute to the extent of HK$563,467.77 together with interest at judgment rate from 8 October 2024 until payment; and

(3)  Costs of the Garnishee Order Application be to the Plaintiff.

14.  The learned Master directed that in the absence of any application for variation by summons within 14 days, the above orders nisi shall become absolute.

15.  On 10 July 2025, the Plaintiff filed an Amended Final Judgment pursuant to the Order of Master Bianca Yu (“the Amended Default Judgment”).

16.  On 22 July 2025, the Defendant issued a Notice of Appeal against Master Bianca Yu’s Order dated 8 July 2025. However, significantly, the Defendant only complained about the dismissal of the Setting-Aside Application.  There was no appeal against Master Bianca Yu’s Order to dismiss the Leave Application.

17.  Also on 22 July 2025, the Defendant applied by summons to vary the orders as stated in paragraph 13 above, and prayed, inter alia, in gist, that the Default Judgment which entered for too much is liable to be set aside instead of being amended (“the Variation Application”).

18.  On 31 July 2025, Master Bianca Yu heard the Variation Application, and ordered, inter alia, that:

(1)  The Order nisi dated 8 July 2025 be varied and the Default Judgment be amended to state:

“… IT IS THIS DAY ADJUDGED that the Defendant do pay the Plaintiff the sum of HK$563,467.77 together with interest on the principal sum of HK$550,000.00 at judgment rate from 8 October 2024 until payment”;

(2)  the Garnishee Order nisi to be amended as stated aforesaid and made absolute; and

(3)  There be no order as to costs.

19.  On 7 August 2025, pursuant to Master Bianca Yu’s Order, the Plaintiff filed a Re-Amended Final Judgment (“the Re-Amended Default Judgment”).

20.  There is no appeal against Master Bianca Yu’s Order dated 31 July 2025.

The Scope of the Present Appeal

21.  In his skeleton submissions, Mr Joseph Wong, counsel for the Defendant, asked me also to set aside the Garnishee Order to Show Cause.  However, the Garnishee Order has already been made absolute and there is no appeal against such order.  I do not think it is open for the Defendant to ask me to set it aside without an appeal.

22.  The 2^nd Affidavit of Paul Yau is included in the hearing bundle, and Mr Wong also made references to it in his skeleton submissions.  However, there is no appeal against the Leave Application.

23.  As I indicated to Mr Wong during the hearing, in light of the aforesaid procedural background, it is clear to me that:

(1)  The only appeal which I should hear is the dismissal of the Setting-Aside Application; and

(2)  I should not consider the 2^nd Affidavit of Paul Yau for the purpose of this appeal.

Applicable Legal Principles

24.  An appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time: see Hong Kong Civil Procedure 2025 Vol 1 at 58/1/2.

Grounds of setting aside

25.  Mr Wong advances the following three grounds to submit that the Default Judgment should be set aside:

(1)  The Writ which was served on the Defendant was not accompanied by a form of acknowledgement of service (“the AOS Form”) in breach of Order 10 rule 1(6) of the Rules of District Court;

(2)  The Default Judgement was entered for too much and is liable to be set aside as of right, as the Plaintiff had applied for judgment rate to run even for the pre-judgment period from the date of the Writ; and

(3)  The Defendant has demonstrated at least a reasonable prospect of success of the defence.

The First Ground

26.  For the first ground, Mr Wong submitted that the Default Judgment was irregular as the AOS Form which ought to be included in the Writ was not served on the Defendant.

27.  However, there is no evidence before me that the AOS Form was not served on the Defendant.  In the Affirmation of Zhu Jianghao (“Zhu”), the director and shareholder of the Defendant, dated 31 March 2025, nothing was said about the alleged “missing” AOS Form.

28.  On the contrary, the Affirmation of Ho filed on 30 September 2024 clearly states that the AOS Form was served with the Writ.  According to this affirmation, Ho is a clerk to the Plaintiff’s solicitors.  This Court has not been informed of any motive on his part to lie on oath.

29.  I reject the first ground.

The Second Ground

30.  Regarding the second ground, Mr Wong submitted that the Plaintiff should not have been awarded interest at judgment rate even prior to the judgment.  He submitted that the Default Judgment which was entered for too much is liable to be set aside as of right unless there is an application for leave to amend it to reduce it to the proper amount.

31.  It is a common ground that the Plaintiff was not entitled to interest at judgment rate prior to judgment.  That should be the reason why, on 8 July 2025, Master Bianca Yu made an order nisi, inter alia, to amend the Default Judgment.

32.  On 31 July 2025, upon the Defendant’s application to vary the order nisi, and after hearing full arguments, Master Bianca Yu disagreed with the Defendant’s submissions that the Default Judgment should be set aside instead of being amended.  Master Bianca Yu, rightly in my view, directed the Default Judgment be further amended based on wordings which counsel for both parties agreed during the hearing.

33.  There is no appeal against the Order dated 31 July 2025.  The Re-Amended Judgment was filed on 7 August 2025. During the hearing of this appeal, Mr Wong also accepted that the Re-Amended Default Judgment contains the correct figures and interest.  I see no reason to set it aside.

34.  I reject the second ground.

The Third Ground

35.  Based on the above findings, the default judgment is a regular judgment.

36.  The relevant legal principles for applications to set aside regular default judgments are trite and are set out by Mr Recorder Ma SC (as he then was) in Young Bing Ching (deceased) v Chow Yung Fong & Another [2001] 2 HKLRD 394.  The learned Recorder at §§12, 24-26 said:

“12.  Where, as in the present case, a regular default judgment has been obtained, the burden on a defendant is to demonstrate that he has a defence on the merits which has a real prospect of success or carries with it some degree of conviction. This is the effect of The Saudi Eagle [1986] 2 Lloyds Rep.221 at 223. This approach has been followed in Hong Kong.  If a defendant is unable to discharge the burden, there is simply no point in the action continuing and the court will not, therefore, in the exercise of its discretion under Order 13, rule 9, set aside the judgment.  As was said by Bokhary JA in Premier Fashion Wears Ltd v Li Hong Chung [1994] 1 HKC 213 at 216, “no court would wish to reopen a matter without merit since that would only pointlessly postpone the inevitable”.  In The Saudi Eagle, Sir Roger Ormrod had this to say as a general principle, “the primary consideration is whether the defendant ‘has merits to which the Court should pay heed’ ..., not as a rule of law but as a matter of common sense since there is no point setting aside a judgment if the defendant has no defence ...”

…

24.  The starting point in this discussion is that where there has been a regular default judgment, the primary consideration for the court will be the merits of the defendant's case.  In most cases, the determination of this aspect will be determinative of the application to set aside.  If the defendant fails to satisfy the requisite test, there would be no point in setting aside the default judgment: see above. On the other hand, if the defendant satisfies the test, “... the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. ...” (per Lord Wright in Evans v Bartlam [1937] AC 473 at 489).  To quote again from the judgment of Bokhary JA in Premier Fashion Wears Ltd at p 216, “... no court likes to decide any matter other than in accordance with the merits, if any are in real prospect, because the court’s objective is justice”.  In the same case at p 219, Litton JA said: “Obviously, if upon the material before the court, the third party appears to have a strong defence to the claim that would be a powerful reason for setting aside the default judgment on the basis that in all the circumstances of the case it is just to do so”.  Thus, where a defendant is able to show that he has merits in his defence, justice will often demand that the default judgment be set aside and he be permitted to go to trial.

25.  Exceptionally, however, despite being able to demonstrate sufficient merits in his defence, a defendant might not be permitted to have the default judgment set aside.  In my judgment, the fact that a defendant is able to demonstrate a defence of sufficient merit does not mean he has an automatic entitlement to have the default judgment set aside.  The consideration of the merits of the defence, albeit the “primary” (see Evans at p 489 and The Saudi Eagle at p 223(i)) or the “dominant” (see Shocked and another v Goldschmidt and others [1998] 1 All ER 372 at 379) consideration, is not stated to be the only one.  Indeed, as Godfrey JA pointed out in Premier Fashion Wears Ltd at p 219, the requirement of a defence with a real prospect of success is “at least” what a defendant must show.  This presupposes the existence of other factors to which the court should have regard.

26.  The court is in my view entitled, indeed obliged, to exercise its discretion under Order 13, rule 9 with regard to all the relevant circumstances: see Premier Fashion Wears Ltd at p 219, per Litton JA.  What will be relevant as a factor in any particular case will of course depend on the individual facts of that case, and these other relevant factors will then have to be weighed against the dominant factor of the merits in order to see where the justice of the case lies: see Shocked at p 379.  It is, of course, no longer the law (if it ever was anyway) that before a judgment can be set aside, a defendant must provide a satisfactory explanation for his default; there is simply no such condition precedent and no cause for the court to lay down such rigid rules: see Evans v Bartlam at p 480 (per Lord Atkin).  Relevant factors to be weighed against the merits factor include the defendant’s explanation of why he allowed default judgment to occur, his conduct after proceedings were served on him, any delay on his part to apply to set aside and any prejudice that would be caused to the plaintiff or to third parties if the default judgment were to be set aside.  All this is clear from the authorities but I need only refer to a few.”

37.  In gist, I have to examine whether the Defendant has a defence on the merits which has a real prospect of success or carries with it some degree of conviction.

38.  The Plaintiff’s case is simple and straightforward.  He claims that he is a victim of an investment scam.  On 28 July 2023, he was deceived into causing the transfer of HK$550,000 to a bank account held by one YDE Trade Co Limited (“YDE”).  Subsequent to the said transfer and on the same day, a sum of HK$670,185 was transferred from YDE’s bank account to the Defendant’s bank account.  The Plaintiff therefore claims that the Defendant was unjustly enriched at the expense of the Plaintiff, and it is unconscionable for the Defendant to retain the sum of HK$550,000.

39.  The Plaintiff’s factual case is sufficiently supported by documentary evidence.  On the face of the evidence presented, the Plaintiff has established that the Defendant has been enriched at the expense of the Plaintiff.  The enrichments were also without reason and thus unjust.

40.  During the hearing, Mr Wong fairly did not make submissions to the contrary.  The defence, as Mr Wong sought to present, is that the Defendant is a bona fide purchaser for value without notice and had changed its position in good faith.

41.  The Defendant relied on the Affirmation of Zhu that exhibited a draft Defence to it.  The defence is very simple.  The Defendant claims that it is a company engaged in the trading of USDT, a cryptocurrency that is pegged to the US dollar.  On 28 July 2023, YDE had paid the Defendant the sums of HK$375,585 and HK$294,600 in consideration for the purchase of 47,845 USDT and 37,529 USDT respectively.

42.  I am not satisfied that the Defendant has adduced sufficient evidence to demonstrate that the defence has any real prospect of success or carries with it some degree of conviction.

43.  The documentary evidence adduced by the Defendant mainly shows the undisputed fact that the sums of HK$375,585 and HK$294,600 were transferred from YDE’s bank account to the Defendant’s bank account.

44.  There are no documents evidencing the alleged agreement between YDE and the Defendant or the alleged purchase. The only potentially helpful documentary evidence is the two photographs showing the screen of a mobile phone (hearing bundle pages 241 and 243).  They seem to show that on 28 July 2023, 47,845 USDT and 37,529 USDT were sent to a particular e-address.

45.  However, the evidence is far from sufficient for the Defendant to demonstrate the defence has a real prospect of success or carries with it some degree of conviction:

(1)  There is no evidence that the 47,845 USDT and 37,529 USDT were owned by the Defendant.

(2)  There is no evidence that the 47,845 USDT and 37,529 USDT were transferred to YDE; or that the e-address as seen from the two photographs belongs to YDE.

46.  What I have in front of me is merely some vague evidence showing that a certain amount of USDT was transferred by a person to another person.  While the burden is on the Defendant to demonstrate the defence has a real prospect of success or carries with it some degree of conviction, I find that the Defendant has not discharged that burden.

Disposition

47.  For all the reasons stated above, the Defendant’s appeal was dismissed with costs, summarily assessed at HK$42,080, to be payable forthwith.