XCHRX DENKI TETSUSHIN INDUSTRIAL CO. LTD. v. UNIWEALTH INTERNATIONAL LTD.

1997, No. A12572

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12572 OF 1997

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J U D G M E N T

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1. This is an appeal from the decision of Master Bennet given on 29th October 1998 refusing to order that the judgment entered in default of giving notice to defend on 11th day of December 1997 be set aside for irregularity on the grounds that the writ of summons herein was not served on the Defendant and alternatively, on the ground that the Defendant has a good defence to this action.

2. The first point I have to consider is whether the judgment was a regular judgment or an irregular judgment. Judgment was obtained in default by the Plaintiff against the Defendant on 11th December 1997. The writ was served by the Plaintiff's solicitors by leaving the writ of summons at the Defendant's registered office at Unit B, 14th Floor, Tung Chong Factory Building, 653-659 King's Road, Hong Kong in an envelope addressed to the Defendant. This was done on Friday 21st November 1997.

3. In the 1st affirmation of To Chun Kong, he says that the Defendant first realised that the Plaintiff had entered a judgment on failure to give notice of intention to defend against the Defendant on 11th day of December 1997 after it had received a letter dated 6th May 1998 from the Plaintiff's solicitors. He says that the Defendant moved to the new address on 24th February 1997 and a removal notice had been sent to all customers and the associates of the Defendant and its subsidiary, and that the removal notice had also been sent out to the Plaintiff.

4. The removal notice exhibited to his affirmation states that with effect from 24th February 1997, the recipient was asked to update their record for "our new address" as follows and it sets out the address at Unit 9-10, 12th Floor, Cornell Centre, 50 Wing Tai Road, Chai Wan, Hong Kong.

5. It transpires from his affirmation that Annual Returns of the company had not been filed for a number of years until 27th February 1998. According to the copy Register of Secretaries and Register of Address of the Defendant exhibited in evidence, the registered office was changed from King's Road to an address at Room 1807, Kodak House II, 39 Healthy Road, North Point, Hong Kong on 10th September 1995. The date this document was filed was 27th February 1998. No explanation has been given by the Defendant about this date 10th September 1995 at all. It is stated in the same document that on 10th January 1997, the registered office was further changed from the Healthy Road address to Unit 9-10, Cornell Centre, 50 Wing Tai Road, Chai Wan, Hong Kong. That is a different date than the one given in the removal notice that I have referred to above. So, according to the records of the Companies Registry, the registered office of the Defendant had remained at the same address where the writ was served until the change was filed on 27th February 1998 by the filing of the Annual Return. I note that there was no formal change of registered office filed the Companies Registry.

6. O.10, r.1(2) of the Rules of the High Court deals with service of originating process on the Defendant. O.10, r.1(7) provides as follows:

"This rule shall have effect subject to the provisions of any Ordinance and these rules and in particular to any enactment which provides for the manner in which documents may be served on bodies corporate."

7. Section 356 of the Companies Ordinance (Cap. 32) provides that a document may be served on a company by leaving it at or sending it by post to the registered office of the company. The registered office of the company, the Defendant, at the material time when the writ was served was at the address where the writ was served.

8. In the circumstances, I see nothing irregular about the service of the writ and I see nothing irregular about the judgment that was entered on 11th December 1997.

9. This being a regular judgment, the provisions of O.13, r.9 apply. The leading case of The Saudi Eagle [1986] 2 Lloyd's Rep. 221 sets out the relevant guidelines. The primary consideration is whether the Defendant has merits to which the court should pay heed. It was held that a Defendant who was asking the court to exercise its discretion in his favour should show that he has a defence which has a real prospect of success.

10. And in Premier Fashion Wears Ltd. and Another v. Li Hing Chung and Another [1994] 1 HKLR 377, The Saudi Eagle was followed. It was held by the Court of Appeal that the court has a wide discretion under O.13, r.9. In relation to a regular judgment, the authorities show that the first consideration is whether the Defendant can show a defence on the merits. It is generally not sufficient for a Defendant merely to show an arguable defence. He must show a real prospect of success. He must satisfy the court that his case carries some degree of conviction. This requires a potentially credible affidavit demonstrating a real likelihood that he will succeed on fact.

11. The only evidence as to merits is in the 1st affirmation of To Chun Kong, in particular para. 13. The Plaintiff's judgment was in respect of two dishonoured cheques. What Mr. To said in para. 13 is as follows:

"I have been advised by my solicitors and verily believe that the Defendant has a good defence herein provide that the Defendant could produce the documents relating to the Plaintiff's agreement to settle the two hishonoured cheques mentioned in the indorsement of claim herein. The Defendant is now considering a counterclaim against the Plaintiff in respect of the latter's obligations under an Agreement for Technological Transfer & Sale of Manufacturing Facility dated 30th June 1992 made between the Plaintiff, Mr. Tadatoshi Watabe and the Defendant."

12. That paragraph does not even begin to show that the Defendant has a defence which has a real prospect of success. I would go even further to say that the Defendant does not even begin to show a triable issue in para. 13 of the said affirmation.

13. In the circumstances, Master Bennet was, in my view, correct in dismissing the application and the appeal is dismissed with costs to the Plaintiff.