IP MAN KEI v. LIU WAI HONG AND ANOTHER

HCPI 901/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 901 OF 2006

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J U D G M E N T

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1.  On 21 February last the Registrar set aside an interlocutory judgment entered against the 1^st defendant, with consequential directions concerning his defence.  He ordered costs in the cause.

2.  This is an appeal by rehearing by the plaintiff and a cross appeal by the 1^st defendant against the costs order.

3.  The action is a claim for damages for personal injury.  One early morning of July 2005 the plaintiff was the front seat passenger of a car being driven by the 1^st defendant when he lost control of it and crashed.  Prior to the accident both had been drinking in the same bar; not necessarily together. 

4.  The 1^st defendant tested positive for excessive levels of alcohol in his blood and was convicted of driving in that condition.

5.  What happened next and when is as per the following timetable:

20 October 2006	The plaintiff’s solicitors Leland Chu & Co. (LCC) filed his writ and served it on both defendants (The 2nd defendant is the owner of the car).
9 November	The Court received the 1st defendant’s acknowledgment of service in prescribed form sent in by him in which he ticked the box that indicated he would not be defending the action.  He did not send a copy or otherwise inform LCC.
	Johnson Stokes & Master (JSM) having been appointed by the 2nd defendant’s insurers to defend the action representing both defendants telephoned LCC.  They were informed that no acknowledgments of service had been received, and the deadline was the following day.
10 November	JSM attempted to file acknowledgements of service for both defendants, incorporating a notice of intention to defend in each case.  The Registry declined to accept that of the 1st defendant because of the original already on file with notice that he would not be contesting the action.  The Registry did accept the acknowledgement of service of the 2nd defendant.
	JSM filed and served a notice to act for the 1st defendant on the same day.
	(Note: What they did not do then or thereafter before judgment was file an amended acknowledgement for the 1st defendant to the effect that he intended to contest the action.  This can be done without leave as long as it is filed before entry of judgment (see O.20 r.2 RHC).
13 November	LCC submitted to the Court for approval a draft interlocutory judgment against the 1st defendant.
14 November	LCC received from the Court copies of the defendants’ acknowledgements of service.
	JSM wrote to LCC requesting an extension of time to file the defence (with no indication as to whose defence).
15 November	LCC wrote refusing the request.
16 November	JSM filed an application for an extension of time to file the defences of both defendants.
	That afternoon a clerk in the Registry approved LCC’s form of draft interlocutory judgment.
17 November	(Morning) At a hearing before the Registrar the defendants were given a 14-day extension to file the defences.
	(Afternoon) interlocutory judgment was entered against the 1st defendant.  This was served on JSM.
21 November	JSM applied to set aside the judgment, for leave to amend the 1st defendant’s acknowledgement of service and for further time to file his defence.
21 February 2007	Following a contested hearing the Registrar set aside the judgment, finding it to have been irregular.  He ordered costs in the cause.

The Issues

6.  The Court’s power to set aside a judgment entered because of a failure by the defendant to give notice of an intention to defend is a discretionary one under O.13 r.9 RHC.

7.  For rather obvious reasons it will almost invariably be exercised where the judgment is found to have been entered irregularly, with an order for costs against the plaintiff for having allowed the irregularity.

8.  But if the judgment is a regular one, factors surrounding the case must be considered, the overriding one being that the defendant has to show there is a real prospect of success.

9.  So, was the judgment entered against the 1^st defendant irregular?  If not, in the circumstances of the case, should it be set aside in any event?

Was the Judgment Irregular?

10.  Miss Lee of JSM submitted that it was.  She accepted that the 1^st defendant had filed an acknowledgment of service with notice of his intention not to defend.  She further acknowledged that by the time judgment was entered there had been no compliance with O.20 r.2 RHC; namely, the 1^st defendant having given notice of his intention not to defend did not file a statement to the opposite effect in time.

11.  Her argument was that once her principals JSM had conduct of the case LCC were given notice of their intention to defend on behalf of both defendants; if not before, at least by the time they had filed an application to extend the filing of the defences of both defendants.

12.  Further, that LCC having by the hearing of that application (17 November) set in train the entry of judgment, did not alert the Registrar, whereupon judgment was entered notwithstanding the granting by the Registrar, prior to that event, of further time to both defendants to file their defences.

13.  A preliminary point was made by Mr Hadden-Cave representing the plaintiff, and I shall deal with that first.  He submitted that notwithstanding the events and order of the morning of 17 November, and the signing of the interlocutory judgment that afternoon, in reality judgment had been entered the afternoon before; that is when the draft submitted by LCC was approved.  He cited in support of that proposition a judgment of the Court of Appeal in Chow Po Bar & Anor v Timothy Lee & Anr [1993] 1 HKC 271, in which the Court had to consider when a judgment comes into effect; is it at the moment of pronouncement or, following its having been drawn up and perfected, when it is sealed?  Godfrey J (as he then was) who wrote the lead judgment, stated that it is given and made, and thus comes into effect, when pronounced.  So that is the law.

14.  But that decision does not assist Mr Hadden-Cave.  A judgment entered in default as in this case is not by pronouncement but by way of entry under the RHC.  That does not happen until it is signed by or on behalf of the Registrar, and takes effect at the moment of signing and not before.  The fact that the draft as submitted by LCC was approved the day before by an authorized clerk is immaterial.

15.  Was that entry irregular? 

16.  The 1^st defendant filed the acknowledgment of service incorporating an intention not to defend in time and on the prescribed form.  JSM was taken by surprise when it attempted to do likewise, the day before expiry of time, but with an intention to defend.  The proper course then, with time on their side, would have been to reverse the statement that the 1^st defendant would defend by filing a fresh notice under O.20 r.2 RHC. 

17.  That of course did not happen, so that when the time came for the entry of judgment, being the afternoon of 17 November, there was nothing to prevent that entry.  It was not irregular; indeed there would have been an irregularity not to enter judgment.

18.  The fact that prior to that event, on the same day, the Registrar had given leave extending time to file the defences does not alter things.  That order would have prevented the plaintiff from holding the defendants in default of filing their defences by due date after service, but did not act as a bar to the entry of judgment arising out of the 1^st defendant’s notice of intention not to defend.

The Judgment is Regular.  Should it be Set Aside, in Any Event?

19.  I revert to the White Book and its commentaries from 13/9/12.

20.  The discretion for a court to set aside a judgment held to be regular is unconditional.  The purpose of it is to give the Court power to avoid an injustice caused by a judgment that has been entered without the issues having been tried.

21.  Of paramount consideration is as to whether the defendant has shown that he has a real prospect of running a successful defence.  This is a higher burden than showing that he has an arguable defence.  He must satisfy the Court that his case and the evidence he will put forward is potentially credible and carries a depth of conviction.

22.  In this case the 1^st defendant has filed a defence, and there has been some evidence of how he will run it if permitted.  He denies that he was negligent as to cause the crash and the injuries the plaintiff complains of.  He pleads that he was driving with care when a dog suddenly appeared from nowhere and caused him to lose control as he swerved to avoid it.  He admits the drunk whilst driving conviction, but pleads that his condition did not cause the crash.  In any event, the plaintiff was well aware that he had been drinking and yet chose to ride with him without regard for the risk.  Further, he (the plaintiff) failed to fasten his seat belt.

23.  Mr Hadden-Cave submitted these were all unmeritorious allegations.  The drunk driving conviction was enough to establish the 1^st defendant’s negligence and was “more than anything else the likely cause of the accident”.  The plaintiff made no reference to any dog; he says the 1^st defendant was driving too fast.  He did not know that the 1^st defendant had been drinking or that he was incapable of driving safely.  His pleaded case is that he was at all times wearing a safety belt.

24.  In considering the merits of the case I am obliged to form a provisional view.  My preliminary view is that the plaintiff has a strong case, but not one that is so strong as to deny the 1^st defendant the opportunity to defend.

25.  A driver involved in an accident whilst driving with excessive alcohol in his blood will not necessarily be found liable in negligence.  And there are the issues of fact such as the dog and seat belt to be disposed of.

26.  In the circumstances and to avoid risking injustice I propose to set aside the judgment.

Costs

27.  These are nisi.

28.  The 1^st defendant has his setting aside.  But in failing to comply with the rules of procedure he allowed a judgment to be entered that was regular.  As I find, he should be required to meet the plaintiff’s costs here and below in any event. 

The Result

29.  The appeal is dismissed save as to costs which are to the plaintiff in any event.  The plaintiff’s own costs are to be taxed under Legal Aid Regulations.