RICH TREND LTD v. 張文房 AND OTHERS

HCA 906/2022

[2023] HKCFI 271

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 906 OF 2022

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DECISION

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APPLICATIONS

1.  This is the hearing of the Plaintiff’s Summons dated 19 September 2022 (“the Summons”) for default judgment against the 1^st and 2^nd Defendants pursuant to Order 19, rule 7 of the Rules of High Court on the basis that the 1^st and 2^nd Defendants failed to file any defence.

2.  On 25 October 2022, two days before the hearing of the Summons, the 1^st, 2^nd and 4^th Defendants took out a summons for leave to file and serve their Defence as annexed to the summons within 7 days after the date of the order to be made. The 1^st, 2^nd and 4^th Defendants also agreed that the costs of and occasioned by the Summons dated 19 September 2022 be paid by them to the Plaintiff to be taxed if not agreed.

3.  At the hearing on 27 October 2022, this Court gave leave to the 1^st and 2^nd Defendants who were represented by counsel, Ms Leung, to file and serve an affirmation in opposition to the Summons and in support of their time extension summons to file their Defence, in particular, to exhibit evidence in relation to the signed authorization given to the 2^nd Defendant and state the steps to be taken to store the company which granted the authorization within 14 days.

4.  The Plaintiff was also given leave to file an affirmation in reply within 14 days. Both Summonses were adjourned for paper disposal upon the filing of evidence by the parties.

5.  As it turns out, the 1^st, 2^nd and 4^th Defendant did not file their affirmation in time and the Plaintiff invites this Court to deal with both summonses by way of paper disposal.

6.  The 2^nd Defendant only file his affirmation on 25 November 2022. In the Second Affirmation of Poon Key Yuen, the 2^nd Defendant exhibited an authorization signed by Magic Bright Development Limited (“MBDL”) dated 30 March 2018 which authorized the 2^nd Defendant to act as its agent in relation to the management of the subject property in the present case. In paragraph 6 of the same affirmation, the 2^nd Defendant deposed that he was advised that the chance of restoration of MBDL, the legal and registered owner of the subject property, in the BVI is very high.

7.  The Plaintiff filed the 4^th Affirmation of Cheng Yin Fong on 28 December 2022 to challenge the authenticity of the authorization letter and the prospect of the restoration of MBDL.

ANALYSIS

8.  Having considered the matter carefully, I am of the view that the right course is to allow the time extension application for the 1^st, 2^nd and 4^th Defendants to file their Defence out of time.

9.  Ms Leung for the 1^st, 2^nd and 4^th Defendants submitted that the lateness in preparing the Defence was due to the 1^st and 2^nd Defendants’ late and mistaken instructions to Messrs. M.K. Lam & Co., and their failure to provide the Statement of Claim on 15 August 2022 to solicitors for preparing their Defence. However, any prejudice caused by such lateness can be compensated by costs.

10.  I agree with Mr Mak for the Plaintiff that the 1^st, 2^nd and 4^th Defendants have only themselves to be blamed if they delayed in providing instructions to their solicitors.

11.  However, there are two special features in this case. First, the Affirmation of Poon Key Yuen Jenson was filed on 2 September 2022 which basically sets out the matters as now pleaded in the Defence. Hence, in substance, if not in form, the Plaintiff knew or should have known the defence that it would have to meet, whether in trial or in an application for default judgment. It is regrettable that the 1^st, 2^nd and 4^th Defendants did not put their own house in order. Nonetheless, given the content of the Affirmation of Poon Key Yuen Jenson dated 2 September 2022, I do not consider that the Plaintiff would have suffered any real prejudice if the 1^st, 2^nd and 4^th Defendants were allowed to file and serve their Defence out of time.

12.  Secondly, in the absence of the filing of a defence, the Plaintiff would still have to prove its case. From the Affirmation of Poon Key Yuen Jenson, this Court considers that there are at least two issues which would require full investigation by the Court before a default judgment can be safely granted. First, the status of the Plaintiff in relation to the subject property as the Plaintiff is not the registered owner of the same. The issue of whether the Plaintiff has ever been entitled to exclusive possession of Lot No.769, 770 to 775, 778, 780 and 782 in D.D. 216 since around 1996 is a live one. The question is whether the Plaintiff does have a possessory title over the subject property as at the date of the application for default judgment.

13.  In Sum Chi Chung v Tsang Kwok Hung [2022] HKCFI 166, 5 January 2022, Deputy High Court Judge Winnie Tsui, albeit in an application for a declaration, at §47, said:

“In my view, the present case is a case when the Plaintiff seeks to assert his alleged beneficial interest over the Property. The title of the Property is at stake. The financial interest of the intended 2^nd Defendant will be affected. It would appear to me that the plaintiff should prove his case at trial so that his evidence can be tested at the trial and only then can the interest of all the parties, including the intended 2^nd defendant (in the form of the charging order) be properly adjudicated upon.”

14.  The Plaintiff’s status vis-à-vis the subject property is different from the plaintiff in Billion Star Development Ltd v Wong Tak Chuen [2012] 2 HKLRD 85. In that case, the plaintiff was the registered owner of the property in question. Hence, the Plaintiff has yet to prove its possessory title to the subject property.

15.  Further, as far as the 1^st, 2^nd and 4^th Defendants are concerned, the key issue is whether Magic Bright Development Limited, a BVI company and the registered owner of the subject property, had given authorization to the 1^st to the 8^th Defendants to carry out renovation and decoration works at the subject property.

16.  Additionally, the 1^st Defendant also gives an undertaking to the Court not to enter the subject property until further order of the Court.

17.  Finally, in relation to the disputed facts as set out in the last around of affirmation evidence as set out in paragraphs 6 and 7 above, I am of the view that the same cannot be resolved in a summary manner.

18.  In the circumstances, it is not appropriate to enter a default judgment for the Plaintiff.

DISPOSITION

19.  For all the reasons stated above, I make the following orders:

(1)  The Summons dated 19 September 2022 be dismissed;

(2)  Leave be granted to the 1^st, 2^nd and 4^th Defendants to file and serve their Defence within 7 days hereof.

20.  For costs, this Court agrees with the matters set out in paragraph 29(a) to (d) of the 4^th Affirmation of Cheng Yin Fong. The conduct of the 1^st and 2^nd Defendants in breaching various rules of the High Court is inexcusable. I agree that costs should be awarded on an indemnity basis.

21.  Accordingly, I make an order that costs of both Summonses be to the Plaintiff and I summarily assess it at HK$120,000.

22.  Finally, I thank Mr Mak and Mr Wang for the Plaintiff and Ms Leung for the 1^st and 2^nd Defendants for your helpful assistance.