LIQUIDITY TECHNOLOGIES LTD AND ANOTHER v. MARK DAVID LAMB AND OTHERS

HCA 1646/2023

[2025] HKCFI 730

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

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DECISION

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1.  In this decision, I have to determine two applications of Ps by their two summonses respectively dated 2 October 2024 and 14 October 2024 (“the Summonses”) arising from my decision made in these proceedings dated 30 September 2024 (“the Decision”) by way of paper disposal.

2.  I shall refer to the Decision for the background facts and shall, unless otherwise stated, adopt the abbreviations and definitions therein.

3.  Briefly, the former summons is for Ps’ application for a variation of the costs orders nisi in the Decision (“Variation Summons”) and the latter summons is for Ps’ application for leave to appeal from the Decision to the Court of Appeal (“Leave Summons”).

4.  While Ps’ solicitors filed their written submissions on 31 October 2024 pursuant to my directions dated 16 October 2024, despite my direction that D1, D3 and D4 do file and serve their respective written submissions on or before 14 November 2024, nothing has been received from any of these Ds in respect of the Summonses thereafter. By their letter dated 28 November 2024, Ps’ solicitors informed the court that Ps would not file any reply submissions.

Leave Summons

5.  I shall first determine the Leave Summons.

6.  Mr Clark representing Ps correctly states the relevant principles regarding these leave to appeal applications in his written submissions. For leave to be granted, Ps have to meet the threshold that their appeal should have a reasonable prospect of success or there should be some other reason in the interests of justice why Ps’ appeal should be heard. The prospect of Ps’ appeal of succeeding must be reasonable and therefore must be more than fanciful without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at §17.

7.  There is a draft Notice of Appeal attached to the Leave Summons (“the draft NOA”). The draft NOA contains 6 broad grounds. I should examine each of those grounds in turn.

8.  The first two grounds relate to the admissibility of the 6^th Affirmation of D1, which is the supporting affirmation of D1 purportedly filed in support of the Jurisdiction Summons.

9.  Ps repeat their objections about this affirmation, which was not filed and served with the Jurisdiction Summons in contravention of O.12 r.8(4). By the order dated 15 March 2024, Registrar Kwang extended the time to file the same to 2 April 2024. A copy of the 6^th Affirmation of D1 which was not affirmed before a notary public was sent to the solicitors of Ps on or about 27 March 2024. A sworn copy of the 6^th Affirmation of D1 was eventually filed and served on 4 July 2024 without any further extension obtained beforehand. Ps did not ask for any extension of time to file their written submissions after receiving the sworn copy.

10.  Indeed, Mr Clark himself made his 3^rd Affirmation dated 22 April 2024 to deal with the allegations of D1 including the Statement of Travel Records issued by the Hong Kong Immigration Department purportedly supportive of his absence in Hong Kong after 13 October 2023. Mr Clark has never made any complaint that the sworn copy of the 6^th Affirmation of D1 is in any way different from its unsworn copy served more than three months ago.

11.  The claim of the alleged prejudice that Ps have suffered as a result of the late filing of the sworn copy is unconvincing.

12.  At §§33-34 of the Decision, I noted the problems with the 6^th Affirmation of D1 and at §§41-43, I explained why I exercised my discretion to allow the belated filing of the notarised 6^th Affirmation of D1 to be a correction of the irregularity under O.2 r.1(2). I have nothing to add to those reasons and I am not persuaded that I have wrongly exercised my discretion in the circumstances.

13.  Mr Clark submits, for the first time, that the court had debarred the parties from filing further affirmations and in the absence of any application to seek relief from sanctions to file and serve the 6^th Affirmation of D1, it was not permissible for me to invoke O.2 r.1(2).

14.  I believe that Mr Clark is referring to the order dated 5 July 2024 made by this court. By the said order, this court ordered that the parties be debarred from filing further affirmations and letters and that all the summonses would be determined on papers. It is not an unless order. In the preamble of the said order, the 6^th Affirmation of D1 was included as one of the many affidavits and affirmations which this court had read before making the said order. Thus, the sworn copy of the 6^th Affirmation of D1 should not be considered as a further affirmation filed in breach of the said order. In any event, I allow the sworn copy of the 6^th Affirmation of D1 to be admitted for the reasons given above.

15.  I see no merit in these two grounds.

16.  The 3^rd ground is that I failed to consider if making no order on application for declaration that D1 had not been properly served pursuant to O.12 r.8(6) was an appropriate order.

17.  I cannot understand this ground. I acceded to the application of D1 and accepted as a fact that D1 had not been duly served the Writ. Hence, I was minded to grant him such a declaration: §63 of the Decision. There is no reason why, despite my conclusion that D1 is entitled to the declaration, I should have made no order on D1’s application so that D1 should have been treated as having submitted to the jurisdiction by reason of his having given notice of intention to defend the action.

18.  This ground is rejected accordingly.

19.  In the 4^th ground, it is stated that I erred in failing to consider or apply 東莞市東莞東祥裝飾有限公司 v Universal Right Ltd (unreported, CACV 42/1999, 22.4.1999) or Lau Ping v Lim Gary Radford [2021] HKCFI 1137. It is further stated that in the circumstances where a defendant is subject to an unless order, the defendant is required to obtain relief from sanctions, even if he makes an application under O.12 r.8.

20.  Mr Clark in his written submissions does not expressly refer to the two authorities at all. They are not included in his list of authorities. He submits that I failed to consider or apply authorities on Ps’ default judgment application and D1’s relief from sanction application in the circumstances where D1 was subject to an unless order. He goes on to say that these authorities hold that the defence must be filed if the party has consented to an unless order.

21.  I can only assume that Mr Clark actually refers to the two authorities. I have perused them and I am not convinced that the Court of Appeal in 東莞市東莞東祥裝飾有限公司 and Mr Recorder Stewart Wong SC in Lau Ping made such a holding or said anything in support of Mr Clark’s proposition at all.

22.  I find no merit in the 4^th ground.

23.  The 5^th ground concerns my refusal to enter judgment against D3 and D4. They were in default of defence without any application pursuant to O.12 r.8.

24.  I am of course aware of the default of D3 and D4. I have given my reasons for my refusal to enter judgment against them at §§90 to 96 of the Decision. I do not think I should and can add anything to those reasons. Mr Clark does not point out any problems in such reasons. In the premises, I find the 5^th ground to be bereft of substance.

25.  The last ground is that I erred in finding that D1 had not been served at an agreed address for service by providing the address at which he was served in Hong Kong as his address to both Ps.

26.  It is further stated that the Caine Road Address (referred to as the Central Address in the Decision) is D1’s usual place of residence as provided as the director’s address under section 150(1A)(a)(ii) of the SIBC.

27.  In his written submissions, Mr Clark merely says that this court erred in finding that D1 had not been served at an agreed address for service.

28.  Again, I have given my reasons in the Decision at §§57 to 63 for my rejection of Ps’ allegation that there was an agreement between D1 and Ps that the Writ could be served simply by insertion the same into the letter box at the Caine Road Address.

29.  Mr Clark does not identify any errors in those reasons. Sheer rehashing his previous arguments cannot advance Ps’ case any further. I have no hesitation in dismissing the 6^th ground as well.

Variation Summons

30.  In the Decision, I made an order that Ps do pay D1 costs of and occasioned by the Jurisdiction Summons with the exclusion of some costs forthwith, to be taxed if not agreed. I also ordered that there be no order as to costs in respect of the Relief Summons and that Ps should pay D1 his costs of and occasioned by the Default Judgment Summons forthwith, to be taxed if not agreed. These orders were made on a nisi basis.

31.  By the Variation Summons, Ps seek to vary the costs orders nisi to the effect that costs of and occasioned by the Jurisdiction Summons, Relief Summons and Default Judgment Summons be paid by D1 to Ps forthwith, to be taxed of not agreed.

32.  First, Ps rely on an open offer in their solicitors’ letter dated 14 March 2024 (“the Open Offer”). The Open Offer contained the following terms:

(1)  D1 to withdraw his application that he has not been duly served the Writ;

(2)  Ps to withdraw the Default Judgment Summons; and

(3)  D1’s forum non conveniens application be listed to be heard together with any similar applications to be made by D3 and D4.

33.  Mr Clark now draws to my attention the fact that Ps have successfully obtained an order for substituted service on 21 October 2024, about three weeks after the Decision was made and D1’s forum non conveniens challenge was rejected by this court.

34.  Mr Clark contends that D1 has achieved no better result than the Open Offer. Thus, Ps should have the costs of the application.

35.  I am unable to understand how the order I made on the Jurisdiction Summons could be said to be equal to or even less than the Open Offer. Clearly, D1 has every right to prove that the purported service of the Writ on him was ineffective. He should then be entitled to the declaration under O.12 r.8(1)(b).

36.  The reason why Ps wanted D1 to withdraw his application that he had not been duly served the Writ is very obvious. All the efforts and costs in effecting service on D1 properly by their second attempt could be spared.

37.  Now that I have accepted that the Writ was not duly served on D1 and the Default Judgment Summons must be dismissed as a result, the Open Offer clearly could not be more advantageous.

38.  This ground is thoroughly untenable.

39.  Second, Ps rely on the fact that D1 had unreasonably refused to provide an address for service. Mr Clark highlights my observation in the Decision that Ps should have applied for service out of jurisdiction on D1 upon receipt of D1’s Statement of Travel Records on 6 March 2024.

40.  D1’s refusal to provide an address for service could provide a solid ground for Ps’ application for substituted service. Ps did succeed in obtaining an order for substituted service on such evidence too. But this can never justify purported service of the Writ on D1 when D1 was clearly out of jurisdiction at the material time.

41.  Mr Clark points out that Ps did seek an order for substituted service in their ex parte application for interlocutory injunctions before DHCJ Phoebe Man on 11 October 2024 but were rejected. They did alert the deputy judge to the fact that D1 was physically out of jurisdiction.

42.  The dismissal of their application, however, could not alter the prerequisite of service pursuant to O.10 r.1(2) and justify the purported service in my view.

43.  Third, Mr Clark complains about the late filing of the 6^th Affirmation of D1. I see no substance in this complaint and my foregoing analysis is applicable.

44.  As soon as the indisputable documentary evidence in the form of the Statement of Travel Records came into the possession of Ps, they should have accepted that the purported service could not be defended when they could adduce no contrary evidence. Indeed, they relied on this to make their application for substituted service. Their opposition to the Jurisdiction Summons is unreasonable.

45.  Fourth, Ps contend that D1 consented to the making of the unless order but he did not comply with it.

46.  I do not see any reason why D1 could be debarred from challenging jurisdiction after giving his consent to the making of the unless order. If D1 had failed to prove that the purported service of the Writ was ineffective and hence his challenge to jurisdiction had been dismissed, he would have been bound by the unless order.

47.  Lastly, Ps advance an alternative ground. They contend that D1 has failed in their forum non conveniens ground. They say that Ps should not be ordered to pay this part of the Jurisdiction Summons.

48.  In his written submissions, Mr Clark points out that each party won on one of the two main grounds of the Jurisdiction Summons. He submits that this court should adopt an issue-based approach in my determination of the question of costs. He suggests that there should be no order as to costs.

49.  D1 is able to make out the improper service ground and this alone is determinative of the Jurisdiction Summons, further leading to the dismissal of the Default Judgment Summons. Had Ps accepted the absence of D1 in the jurisdiction at the material time, which they had actually admitted at the ex parte hearing, the Jurisdiction Summons could have been avoided. Their change of position is unreasonable.

50.  D1 is successful in his fundamental challenge to the validity of the service of the Writ and must be the overall winner. This cannot be altered by his failure in his alternative ground of forum non conveniens. I do not accept that Ps’ success in the alternative ground can justify any reduction of D1’s costs of the Jurisdiction Summons recoverable from them. Having the overall justice in mind, I do not think that an issue-based approach is appropriate in the present case.

51.  Therefore, I conclude that this ground is not arguable and should be rejected.

Conclusion and order

52.  For the reasons given, I conclude that Ps cannot show valid grounds to vary the cost order nisi and meet the threshold to prove that their intended appeal has a reasonable prospect of success. Both the Variation Summons and the Leave Summons fall to be dismissed.

53.  Costs should follow the event. I make an order nisi that costs of the Variation Summons and the Leave Summons be to D1, D3 and D4, to be taxed if not agreed.

54.  Lastly, I thank Mr Clark for his assistance in this matter.