TANG PAT YU v. LAU YET WAH, AMY

DCCJ 346/2014

[2023] HKDC 1320

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 346 OF 2014

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BETWEEN

(By Original Action)

AND BETWEEN

(By Original Writ and Order to carry on dated 3 April 2023)

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DECISION

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A. INTRODUCTION

1.  By the summons dated 12 October 2022 (the “Summons”), the defendant applies for an order to set aside the judgment of Deputy District Judge Maurice Chan dated 27 May 2015 (the “Judgment”), which was granted after trial, and various subsequent orders including the Charging Order Absolute dated 4 October 2016 against Flat C4 on 12/F, Block C, Elizabeth House, 250-254 Gloucester Road, Hong Kong (the “Charged Property”).

2.  The margin note of the Summons cited Order 13 rule 9 of The Rules of the District Court, Cap 336H (“RDC”). The grounds in support of the application, as stated on the Summons, are that:-

(1) the writ of summons of the present action dated 27 January 2014 (the “Writ of Summons”) was not duly served upon the defendant; and

(2) the defendant has a meritorious defence.

B. THE BACKGROUND OF THE PLAINTIFF’S CLAIM

3.  The plaintiff commenced the present proceedings in 2014 against the defendant for a declaration that he had adversely possessed (a) a property situate at 134 Shui Tau, Yuen Long, New Territories, erected on all those pieces or parcels of ground registered in the Land Registry as Kam Tin Pak Pin, Lot No 80 in DD 109 (“Property”); and (b) an adjoining land situate at Yuen Long, New Territories, standing on all those pieces and parcels of ground registered as Lot No 1388 in DD 109 (“Land”), and for all consequential orders.

4.  On 18 September 2017, the plaintiff passed away. His wife Madam Ng Fung Fa (“Madam Ng”) has been the Executrix of his estate.

5.  I respectfully adopt the detailed summary of facts underlining the plaintiff’s claim as set out at paragraphs 2-10 of the reasons for the Judgment. For present purpose, I only find it necessary to highlight the following:-

(1) The plaintiff was the younger half-brother (borne by a different mother) of the defendant’s mother;

(2) In 1950, the plaintiff inherited the Property and Land by way of succession;

(3) In 1974, he assigned the Property and Land without consideration to his then girlfriend Tang Big-Duen (“Big-Duen”) with the intention of she holding them on trust for him;

(4) Unbeknownst to the plaintiff, Big-Duen sold the Property and Land to the defendant in 1978 at a consideration of HK$20,000;

(5) The plaintiff had not been aware of the sale until 1985, when he was informed by the defendant’s mother about it at Big-Duen’s funeral;

(6) Nevertheless, since the 1960s, the plaintiff had continued to use the Property and Land for ancestral worship and storage; and

(7) In 1997, the plaintiff moved into the Property and Land with Madam Ng and their three children, and they had been occupying them as their residence and matrimonial home since then. They would make repairs and renovations from time to time.

C. PROCEDURAL HISTORY

6.  The procedural history of the present proceedings up to the date of Judgment is material to the Summons:-

(1) On 27 January 2014, the plaintiff filed the Writ of Summons which stated the last known address of the defendant to be the Charged Property;

(2) On 15 April 2014, upon the defendant’s failure to take any steps in the present action, the plaintiff took out a summons under Order 19 rule 7 of RDC for a declaratory judgment to the effect that the plaintiff had adversely possessed the Property and the Land (the “Default Application”);

(3) The defendant did not attend the hearing of the Default Application held on 8 May 2014, whereby an order for a case management conference (the “1^st CMC”) was made (“1^st Order”);

(4) On 30 July 2014, the 1^st CMC was held with the defendant being absent, and directions were given for the filing of evidence, including witness statements (“2^nd Order”);

(5) On 5 November 2014, another case management conference took place, again with the defendant being absent, and it was ordered that the action be set down for trial (“3^rd Order”);

(6) On 27 November 2014, a Notice of Trial (“Trial Notice”) was issued by the Court to both parties by, inter alia, mailing the same to the Charged Property;

(7) On 10 February 2015, the plaintiff’s solicitors by way of ordinary post sent a letter to the Charged Property in order to remind the defendant of the time and date of the trial which was to take place on 13 February 2015;

(8) On 13 February 2015, the trial of the present action took place before Deputy District Judge Maurice Chan in Court (the transcript of which is before me), whereby the plaintiff gave live evidence and the defendant remained absent;

(9) On 26 May 2015, a Notice of Handing Down Judgment (“Judgment Notice”) was issued by the Court to both parties by, inter alia, mailing the same to the Charged Property; and

(10) On 27 May 2015, the Judgment was granted with reasons in favour of the plaintiff. The learned Judge granted a declaration that (a) the defendant’s title to the Property and Land was extinguished, (b) the plaintiff was the owner in possession; and (c) costs be to the plaintiff, including all reserved costs (if any), with the plaintiff’s own costs to be taxed in accordance with Legal Aid Regulations, Cap 91A.

7.  Subsequent to the Judgment, the following key events occurred and led to the present application:-

(1) An Allocatur dated 15 February 2016 was made, whereby the defendant was ordered to pay the plaintiff costs in the total sum of HK$298,616.30;

(2) On 29 July 2016, a Charging Order: Notice to Show Cause was granted in favour of the plaintiff over the Charged Property;

(3) On 4 October 2016, a Charging Order Absolute over the Charged Property was granted in favour of the plaintiff;

(4) On 2 June 2020, after the plaintiff’s death on 18 September 2017, Madam Ng as the executrix of the plaintiff’s estate commenced action DCMP 1638/2020 to seek an order for vacant possession and an order for sale of the Charged Property (the “Enforcement Action”); and

(5) On 12 October 2022, the defendant filed the present application.

D. EVIDENCE

8.  The way evidence was adduced in the present application is worthy of note.

9.  In the affirmations filed by the plaintiff, various earlier affirmations in the same action were exhibited, which caused unnecessary duplication of documents in the case file of the present action. On the other hand, most of the affirmations of service filed on behalf of the plaintiff, which are pertinent to one of the key issues in the present application, were not included in the hearing bundles. The organization of the hearing bundles were far from satisfactory.

10.  At the hearing, I required parties to agree and produce an extra hearing bundle which should consist of all affirmations of service filed on behalf of the plaintiff in the present action.

11.  Nevertheless, in the extra hearing bundle that was subsequently lodged, various affirmations filed in the Enforcement Action which were yet to be exhibited in any affirmations in the present action (“Unexhibited DCMP Affirmations”) were included. The correspondence between parties arguing whether the Unexhibited DCMP Affirmations should be included in the extra hearing bundle was also included. The solicitors for Madam Ng argued on the correspondence that they were entitled to include the Unexhibited DCMP Affirmations pursuant to my direction given at the hearing.

12.  The stance of the solicitors for Madam Ng was misconceived. The direction given at the hearing was only confined to affirmations of service of the present action, and no more. In the absence of any application for leave to include the Unexhibited DCMP Affirmations into the evidence, those affirmations are not considered in the present application.

E. APPLICABLE RULE(S)

13.  There is a dispute between the parties as to which rule under RDC is pertinent to the present application. Notwithstanding citing Order 13 rule 9 of RDC on the margin note of the Summons, the defendant submits that it should be Order 19 rule 9 instead. On the other hand, the plaintiff argues the applicable rule should be Order 35 rule 2.

14.  A default judgment entered irregularly (in the sense that it was obtained without good and effective service of the writ) is liable to be set aside as a matter of right, and the Court does not have to consider the merits of the proposed defence: Cheung Sai Lon v Cheung Sai Ha & Anor [2021] HKCFI 904 at §14.

15.  For a default judgment that was entered regularly:-

(1) The Court may set aside the judgment if a meritorious defence can be shown by the defendant. The defendant must show a real prospect of success, meaning a defence that could well be established at trial. Clear and objective evidence casting doubt on the claim is required;

(2) The power to set aside a regular default judgment is discretionary and unconditional. The Court should have regard not just to the merits of the defence case put forward, but to all relevant circumstances; and

(3) Typically, the circumstances taken into account in the discretionary exercise include: (i) why the default occurred; (ii) the defendant’s conduct after he had notice of the proceedings; (iii) the explanation for the time taken where there has been delay in making the application; and (iv) any prejudice that would be caused to the plaintiff or third parties if the default judgment were to be set aside.

(see Cheung Sai Lon (supra) at §15)

16.  Young Bing Ching (deceased) v Chow Yung Fong & Anor [2001] 2 HKLRD 394 is an example where the Court, under Order 13 rule 9 of The Rules of the High Court, Cap 4A, refused to accede to the application notwithstanding that the test in relation to merits had been satisfied, having considered, inter alia, the delay of nearly five years and the death of the plaintiff whose evidence would be crucial (at 404I-407B).

17.  Where an application is made to set aside a judgment after trial pursuant to Order 35 rule 2, the Court will consider the principles summarised by Cheung JA in Lau Kam Cheun v Lee Ching [2003] 2 HKLRD 1018 at §11:-

(1) Where a party with notice of proceedings has disregarded the opportunity of appearing at and participating in the trial, he will normally be bound by the decision;

(2) Where judgment has been given after a trial it is the explanation for the absence of the absent party that is most important: unless the absence was not deliberate but due to accident or mistake, the Court will be unlikely to allow a rehearing;

(3) Where the setting aside of judgment would entail a complete retrial on matters of fact which have already been investigated by the Court, the application will not be granted unless there are very strong reasons for doing so;

(4) The Court will not consider setting aside judgment regularly obtained unless the party applying enjoys real prospects of success;

(5) Delay in applying to set aside is relevant, particularly if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;

(6) In considering justice between parties, the conduct of the person applying to set aside the judgment has to be considered: where he has failed to comply with orders of the Court, the Court will be less ready to exercise its discretion in his favour;

(7) A material consideration is whether the successful party would be prejudiced by the judgment being set aside, especially if he cannot be protected against the financial consequences; and

(8) There is a public interest in there being an end to litigation and in not having the time of the Court occupied by two trials, particularly if neither is short.

18.  Under Order 35 rule 2, the most important consideration is the reason why the defendant failed to appear at the trial. The explanation must be something which justifies depriving a plaintiff of a regular judgment and putting a plaintiff to the trouble of proceeding to prove his case, which he thinks has been successfully concluded in his favour: Wong Wah On v Tsung Tsin Association & Ors [2019] HKCFI 3030 at §8, per Harris J.

19.  I see no reason why the present application is not to be subject to Order 35 rule 2. The trial before Deputy District Judge Maurice Chan was set down and subsequently took place in the normal course albeit without the defendant’s participation.

20.  Having said that, the difference between Order 19 rule 9 and Order 35 rule 2 in the present context is more a matter of emphasis than substance.

21.  If the Writ of Summons was not properly served, i.e. the defendant never had notice of the same when the Judgment was granted, the Judgment should be set aside under both rules subject to proper conditions to be imposed (if any).

22.  If the Writ of Summons was properly served, whether for Order 19 rule 9 or Order 35 rule 2, the Court is entitled and indeed required to consider not only the merits of the defence, but also the conduct of the defendant. The reason for the defendant’s default and the explanation for the delay (if any) in applying for the setting aside of the judgment is a significant consideration under both rules.

F. GROUND 1: ALLEGED IRREGULAR SERVICE

23.  The Court does not have to accept a defendant’s assertion that he has not received the writ, which the defendant must show by compelling evidence. The relevant time is the time at which the default judgment was entered; therefore, it is for the defendant to show that he did not have notice of the writ at that time: Cheung Sai Lon (supra) at §14.

24.  Order 10 rule 1 provides an alternate mode to personal service of a writ on a defendant by inserting the writ through the letterbox at the defendant’s usual or last known address. As Ms Wallis Chung, Counsel for the defendant, accepted in her submissions, the last known address is the address last known to the plaintiff, and it does not matter that the plaintiff could have found a different address for the defendant with further investigations (even if it would have been prudent to do so). Also, the real test as to whether there has been properly effected service is whether the writ has been brought to the attention of the defendant, not simply whether it has been delivered to his usual or last known address: Cheung Sai Lon (supra) at §§17-18.

25.  The gist of the defendant’s evidence in respect of her notice of the present action was that:-

(1) The Charged Property was never her residence, but merely her investment property (which remained so at all material times),^[1] to where she would go every two to three months to collect mails;

(2) However, she had not seen any Court documents purportedly served on her as deposed to in numerous affirmations of service filed on behalf of the plaintiff (which will be detailed below);

(3) She further produced a photograph showing the letterbox of the Charged Property and suggested that given it only had a thin opening, it would be impossible to insert a thick pile of documents into the letterbox;

(4) She also never saw any documents posted or left at the main door of the Charged Property as suggested in the affirmations of service filed for Madam Ng in the Enforcement Action (which were exhibited by the defendant in her affirmations); and

(5) She only came to know the Enforcement Action when Court documents were posted to the Charged Property by a sealed envelope from the Judiciary with the stamp chop dated 5 May 2022.

26.  The service of the plaintiff’s documents in the present action, as well as Madam Ng’s documents in the Enforcement Action was said to be effected by one Mr Lee Yiu Sun (“Mr Lee”), clerk to Messrs Kwok, Ng & Chan (the solicitors for the plaintiff), on the Charged Property at all material times.

27.  Mr Lee has made 16 affirmations of services in the present proceedings. 14 out of those 16 affirmations recorded that the following documents had been served by inserting the same into the letterbox of the Charged Property:-

(1) 29 “February” 2014:^[2] a sealed copy of the Writ of Summons, three copies of Acknowledgement of Service of Writ of Summons, copy of Admission (liquidated amount) Form 16, and copy of Notes for Guidance and Directions for Acknowledgement of Service;

(2) 15 April 2014: a copy of the Summons (傳票) and a copy of the plaintiff’s affirmation;

(3) 21 May 2014: a sealed copy of 1^st Order;

(4) 23 July 2014: a copy of the Plaintiff’s Listing Questionnaire, a copy of the Plaintiff’s List of Documents, a copy of the Plaintiff’s Notice of Desire to give in Evidence Hearsay Statement made in a Document, a copy of Expert Report of Tang Sze Kin Eric, and a copy of Report of Boundary Re-establishment of KTPPL 80 & Lot 1388 in DD 109;

(5) 5 August 2014: a copy of the plaintiff’s affirmation;

(6) 11 August 2014: a sealed copy of 2^nd Order;

(7) 29 August 2014: a copy of the Plaintiff’s Certificate of Time Estimates for Trial;

(8) 3 December 2014: a sealed copy of 3^rd Order;

(9) 30 January 2015: a copy of trial bundle, a copy of the Plaintiff’s Chronology and a copy of Dramatis Personas;

(10) 8 February 2015: a copy of Application to set a Bill Down for Taxation;

(11) 7 August 2015: a copy of Notice of Commencement of Taxation and the plaintiff’s Bill of Costs;

(12) 8 October 2015: a true copy of Application to Set a Bill Down for Taxation;

(13) 14 September 2016: a copy of Second Affirmation of Cheung Sze Ki Sherbe, and a sealed copy of the Charging Order: Notice to Show Cause; and

(14) 3 November 2016: a sealed copy of the Charging Order Absolute.

28.  Apart from service through inserting into the letterbox, Mr Lee recounted that the defendant was served and notified of the proceedings on two further occasions in the following manner:-

(1) 7 May 2014: a copy of the Plaintiff’s Skeleton Submission, a copy of the Plaintiff’s List of Authorities and a copy of Bundle of Pleadings and Affirmations were served by leaving the same at the Charged Property; and

(2) 10 February 2015: a letter to the defendant to inform her of the hearing of the trial to be held on 13 February 2015 was sent by ordinary post in a separate envelope duly prepaid and properly addressed to the Charged Property.

29.  Mr Lee’s affirmations of service are clearly not perfect. In his 17^th affirmation, he clarified that the date of the service of the Writ of Summons together with other documents on that occasion should be 29 January 2014 instead of 29 February 2014 as stated in his 1^st affirmation. As emphasized by the defendant, 29 February 2014 was non-existent. Whilst Mr Lee suggested that he had kept a record which showed the exact date of the service of the Writ of Summons was 29 January 2014 and “February” was a mere typo, no such record was exhibited in his 17^th affirmation. Also, on the face of it, it is impossible that the trial bundle could have been inserted into the letterbox of the Charged Property as he suggested in his 10^th affirmation.

30.  Nevertheless, the conclusion to be drawn from the totality of the evidence is overwhelmingly clear, namely the defendant did have notice of the present proceedings before trial:-

(1) As a clerk to a law firm which was assigned to the plaintiff by legal aid, there is no reason to suggest that Mr Lee was being dishonest in all 16 affirmations of service. Nor has Counsel for the defendant gone so far to suggest so. Instead, the defendant simply chose to ignore most of the affirmations of service;

(2) It is far from sufficient to argue that the Writ of Summons and other documents to be served together on the same occasion was impossible to fit into the letterbox by just providing the measurements of the letterbox. No further substantive evidence demonstrating the purported impossibility, e.g. photos or videos, were produced. The measurements per se were hardly conclusive;

(3) Many documents, such as the 1^st to 3^rd Orders, were slim in size. Mr Lee’s evidence that he has served them by inserting the same into the letterbox of the Charged Property could not be faulted;

(4) The Trial Notice and the Judgment Notice, which are both one-page documents, were both sent by the Judiciary, not Mr Lee. Whilst Madam Ng has specifically referred to both documents in her affirmation in opposition, the defendant has completely failed to address them in her affidavit in reply; and

(5) Whilst the defendant exhibited some affirmations of service filed by Mr Lee in the Enforcement Action which contained photos of Court documents being posted on the door of the Charged Property, the defendant posted another photo which purportedly showed a clean door of the Charged Property and asserted that she was not aware of any documents being posted on the said door at all. The effect of such assertion is that Mr Lee must have taken the relevant documents off the surface of the door after taking the relevant photos, if not those photos being complete fabrications. One way or the other, such assertion is completely unbelievable.

31.  On the basis above, I find the defendant’s assertion that she had had no notice of the present action as well as the Enforcement Action until she received the documents posted to the Charged Property by the Judiciary on 5 May 2022 to be plainly incredible.

32.  Since the defendant simply claimed to be ignorant of the present proceedings, she has not put forward any other explanations as to her failure to take any steps in the present action until taking out the Summons. The effect of rejecting her evidence on the alleged lack of notice must be that her inaction in the present proceedings until the Summons is completely inexcusable.

33.  I shall address the consequence of basing the present application substantially on an untrue factual assertion towards the end of this decision.

G. GROUND 2: MERITORIOUS DEFENCE

34.  I find that the Summons ought to be dismissed simply on the basis that the defendant had notice of the proceedings before trial but inexcusably failed to take any steps until the Summons, which was more than 8 years after the commencement of the proceedings, 7 years after the grant of the Judgment, and 5 years after the plaintiff had passed away.

35.  Merely for completeness, I shall address the purported defences which are obviously unmeritorious.

36.  The starting point of my assessment of the purported defences is that the plaintiff’s claim was examined by the learned Judge at the trial. The learned Judge also produced a written Judgment. Contrary to the defendant’s argument that the plaintiff’s claim ought to be “examined with skepticism”, I see no reason to go through the same exercise as the learned Judge did at the trial, particularly when he had the benefit of receiving the live evidence of the plaintiff. The learned Judge made it clear at paragraph 18 of the Judgment that “after scrutinizing all evidence, and considering all circumstances, I am satisfied nonetheless that the self-serving statements of the plaintiff do not give rise to any cause for the court’s skepticism.” The defendant chose not to participate in the trial, and so there is no reason to allow her to test the case of the plaintiff generally, particularly when the plaintiff has passed away since the trial.

37.  Therefore, I reject those of the defendant’s arguments which are merely general criticisms of the plaintiff’s case. In any event, I do not find any of those arguments to be of substance. I shall now address the three more specific purported defences raised by the defendant.

38.  First, the defendant argued that if the plaintiff’s case were to be accepted, particularly about Big-Duen selling the Property and the Land to the defendant in breach of trust, it would be contrary to his claim of adverse possession. This argument is simply misconceived. The plaintiff did not claim against the defendant as a beneficiary of a constructive trust. He did not assert that the defendant had notice of the trust between himself and Big-Duen. On the contrary, he made it clear that he had no idea about the circumstances leading to the sale of the Property and the Land by Big-Duen to the defendant. Nor is the defendant asserting that she was a mere constructive trustee of the Property and the Land for the plaintiff (which would not assist the defendant in asserting a right to the Property and the Land which is superior to that of the plaintiff in any event). Therefore, it is inconceivable that the defendant could avail herself of a defence along this line of argument.

39.  Secondly, the defendant argued that the evidence only showed that the plaintiff was in possession of about 52.5% of the Land:

(1) As shown in the photos and plans produced by the defendant’s surveying expert, the central portion of the Land was fenced, whilst the area outside the fence (“Unfenced Area”), together with the adjacent plots of government land, were apparently used as passageways for the neighbourhood;

(2) The expert report adduced by the plaintiff for the purpose of the trial further showed that part of the Unfenced Area of the Land was occupied by a temporary structure as of June 2014;

(3) The defendant referred to the judgment of Gotland Enterprises Limited v Kwok Chi Yau & Ors, CACV 260/2014, unreported, 19 January 2016, and emphasized on the need of fencing off the relevant land for the purpose of claiming adverse possession. I do not take the defendant’s argument to mean that unless an area is completely fenced off, the trespasser could never claim adverse possession. On the other hand, the fence may become a distinction between the fenced area and the unfenced area insofar as factual possession is concerned;

(4) It is ultimately a matter of fact and degree as to when one is justified in holding that acts of possession on part of an area of land can be treated as acts of possession in relation to the whole of that land: Barton v Church Commissioners [2008] EWHC 3091 (Ch), at §145;

(5) I am cognizant of the evidence referred to at paragraph 9 of the Judgment that the plaintiff had been paying the rates and government rent, as well as the learned Judge’s inquiry at the trial as to the usage of the unfenced area as a passage. Also, the Unfenced Area as shown on the photos in the expert reports was partly paved with cement, which is a sign of maintenance;

(6) As opposed to the fishponds in Gotland, the Land in the present action is situated in a dense residential area. It is unsurprising that residents nearby might have already acquired a right of way over the Unfenced Area through the doctrine of prescription. It is not sufficient for the defendant to merely point out that certain portion of the Land was unfenced. The defendant, for the purpose of the present application, needs to demonstrate some prospect of success in eventually ruling out the possibility that the plaintiff was occupying the Unfenced Area to the maximum extent possible subject to the right of way in favour of his neighbours. Instead, the defendant claims ignorance to the circumstances in relation to the Land and only adduces one expert report which sets out the Unfenced Area. There was no investigation as to the possible right of way; and

(7) In the circumstances, the defendant has not demonstrated a meritorious defence in relation to the Unfenced Area.

40.  Finally, the defendant asserted that the plaintiff occupied the Property and the Land as her licensee:

(1) She alleged in her affidavits that when she acquired the Property and the Land from Big-Duen, her mother specifically requested her not to take possession of the Property and the Land out of her mother’s desire to take care of her half-brother, i.e. the plaintiff, who was living there together with his family. The defendant alleged that she “believed that [her] mother must have communicated to the [plaintiff] that he would be in charge of all outgoings and maintenance of the Property and the Land in lieu of rents.”;

(2) On the other hand, the plaintiff’s evidence adduced for the trial did not show any hints of such communication between himself and the defendant’s mother. On the contrary, the plaintiff’s evidence at the trial was that he was not aware of the sale of the Property and the Land until the funeral of Big-Duen, and even then he was not clear about the situation and the detail of the sale;

(3) The most unfortunate fact is that both the plaintiff and the defendant’s mother have passed away, which means that the defendant cannot adduce any proof that the plaintiff was ever informed of her grant of a licence for the plaintiff to continue the occupation of the Property and the Land after the sale of the legal title by Big-Duen to the defendant; and

(4) Therefore, the defendant has not demonstrated any merits in respect of the purported defence of a licence granted in favour of the plaintiff.

H. DISPOSITION

41.  For the reasons set out above, I dismiss the Summons.

42.  Insofar as costs are concerned, given the Summons is substantially based on a plainly incredible assertion as I have held at paragraph 30 above, it is a clear case of an abuse of the Court’s process. I therefore make an order nisi that:

(1) Costs of and occasioned to the Summons be to Madam Ng and be assessed on an indemnity basis; and

(2) Madam Ng’s own costs be taxed in accordance with Legal Aid Regulations.