QUENTIN KEITH HILLS v. MARLENE RITA WITTMAN

HCA2149/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2149 OF 2006

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D e c i s i o n

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1. This is an application by summons dated 11 January 2008 taken out by the defendant seeking to set aside the judgment entered herein on 23 November 2007 and for an extension of seven days for the defendant to comply with the order of the court dated 23 October 2007 to pay into court the amount of US$135,000, being the condition imposed for granting leave to defend.  

Background

2. The plaintiff and the defendant were, prior to their breakup some time in February 2006, engaged to be married. 

3. It is the plaintiff’s case that before their breakup, the plaintiff had made a loan of US$150,000 to the defendant in November 2001. 

4. A further or additional loan of US$10,000 was made by the plaintiff to the defendant in March 2005. 

5. In November 2005, the defendant had made a part repayment to the plaintiff of US$10,000 and a 2^nd part repayment was made by the defendant of US$15,000 in December 2005. 

6. The plaintiff’s claim herein is for US$135,000 being the balance outstanding of the loans made by him to the defendant. 

7. The defendant disputes that the original amount of US$150,000 by the plaintiff to her in November 2001 was a loan.  It is the defendant’s case that this sum was paid to her by way of gift by the plaintiff. 

8. The writ herein was issued on 28 September 2006. 

9. On 18 December 2006, the plaintiff took out a summons for summary judgment.  That summons was heard by a master and on 26 April 2007 summary judgment was granted to the plaintiff by the master. 

10. As a result of summary judgment being granted to the plaintiff, the plaintiff entered judgment and issued garnishee proceedings upon HSBC where the defendant held bank accounts.  A Garnishee Order nisi was made by the Registrar on 26 June 2007. 

11. On 3 August 2007, Master de Souza discharged the Garnishee Order nisi upon the invitation of the plaintiff when HSBC confirmed by affidavit that there was a net debit balance in the defendant’s bank accounts maintained with it. 

12. Master de Souza’s sealed order discharging the Garnishee Order nisi was served on HSBC on 17 August 2007. 

13. In the meantime, on 9 May 2007 the defendant had issued a Notice of Appeal, appealing the decision of the master granting summary judgment to the plaintiff.  That appeal was heard by me on 4 September 2007 and in a written judgment given on 23 October, I set aside the order for summary judgment and gave the defendant conditional leave to defend.  The condition imposed was for the claimed amount of US$135,000 to be paid into court by the defendant within 21 days from 23 October 2007 failing which the plaintiff be at liberty to enter judgment against the defendant. 

14. The 21 days within which the defendant was to make payment into court upon the condition imposed was to expire on 13 November 2007. 

15. On 12 November, one day before the expiry of the time for the defendant to meet the condition imposed, the defendant applied by Summons for an extension of time to make payment into court as ordered and further asked for the Garnishee Order Absolute to be set aside.  That Summons came before me on 16 November when the defendant was represented by her solicitor, Mr Erving.  At the start of the hearing, Mr Erving informed the court that the application for extension of time by the defendant was on the basis that the plaintiff had obtained a Garnishee Order Absolute against the defendant in respect of the defendant’s bank accounts held with HSBC.  This drew from the plaintiff the response that the Garnishee Order had been discharged in August and the order for discharge had been duly served on HSBC.  As a result, Mr Erving accepted that there was no good basis for that application by the defendant for extension of time and invited me in the circumstances to dismiss the defendant’s application.  Accordingly, the defendant’s summons was duly dismissed. 

16. On 23 November 2007, judgment against the defendant was sealed and perfected since the defendant had failed to comply with the condition of making payment into court. 

17. The present summons was taken out by the defendant on 11 January 2008 seeking to set aside the sealed judgment and to extend time by a further seven days for the defendant to make payment into court being the condition imposed for granting leave to defend as contained in my order of 23 October 2007.  

The application

18. The present application by the defendant is said to be made pursuant to Order 13, rule 9 of the RHC, alternatively the inherent jurisdiction of the court. 

19. The basis for this application is that the defendant was misled by the conduct of the plaintiff or his legal advisers in not pursuing the application for extension of time at the hearing on 16 November 2007 in that the plaintiff or his legal advisers chose not to inform the defendant or her solicitors of the discharge of the Garnishee Order. 

20. It was also submitted that had this information been supplied to the defendant, she would have been able to comply with the condition imposed by the court on 23 October 2007. 

Decision

21. This application is wholly misconceived in so far as it purports to be made pursuant to Order 13, rule 9 of the RHC. 

22. Order 13 of the RHC relates to “Failure to Give Notice of Intention to Defend” being the heading of that order.  Rule 9 of that order therefore can only have application where judgment has been entered upon a failure to give notice of intention to defend.  That is not the case here and Order 13, rule 9 can have no application. 

23. In the present case, not only was judgment entered against the defendant upon the defendant’s failure to comply with the condition imposed by the order of 23 October 2007, that judgment was sealed and perfected on 23 November 2007. 

24. Upon the judgment being sealed and perfected on 23 November 2007, the court is functus officio and has no further jurisdiction to set aside that judgment as sought by the defendant by its summons dated 11 January 2008. 

25. For these reasons above, the application must be dismissed. 

26. Even if I am wrong in dismissing this application on the above two procedural grounds and for the reasons given, I find that there is no substantive merits in the application for the following reasons. 

27. The entire basis upon which this application is made is that the plaintiff or his legal advisers had misled the defendant by failing to inform the defendant or her legal advisers that the Garnishee Order had been discharged, and letting the defendant to believe that the Garnishee Order had been made absolute on 3 August 2007. 

28. The garnishee application by the plaintiff was a part of these proceedings with the same action number as herein. 

29. The defendant had all along in this matter been represented by Messrs Erving Brettell, solicitors. 

30. The garnishee application was served on Messrs Erving Brettell being the solicitors on record for the defendant herein. 

31. The defendant’s solicitors having been served could have attended the hearing on 3 August 2007 when the Garnishee Order was discharged but chose not to be present. 

32. The Order of Master de Souza discharging the Garnishee Order nisi was duly served on HSBC by the plaintiff. 

33. It is conceded by the defendant in her affidavit in support of this application that upon checking with HSBC, her bankers, it was discovered and accepted that HSBC had failed to inform the defendant of the discharge of the Garnishee Order despite HSBC having been served with the order discharging same. 

34. At the hearing on 16 November 2007, Mr Erving was informed by the plaintiff that the Garnishee Order had been discharged and it was upon being so told that Mr Erving invited the court to dismiss the defendant’s application which was made by summons dated 12 November 2007. 

35. Therefore it would follow that when Mr Erving invited the court to dismiss the defendant’s summons dated 12 November 2007, he or the defendant could not have been under any further misconception about the Garnishee Order having been made absolute. 

36. Moreover, when told of the discharge of the Garnishee Order on 16 November 2007, Mr Erving did not ask for an adjournment of that application or for time to consider the defendant’s position. 

37. As for the submission that had the defendant been informed of the discharge of the Garnishee Order, she would have been able to comply with the condition imposed by the order of 23 October 2007, I am unable to accept that submission for these reasons. 

38. Firstly, the Garnishee Order nisi was made by Registrar Chan on 26 June 2007.  That order nisi was served on HSBC on 4 July 2007, being the Garnishee, to show cause why that order should not be made absolute. 

39. By an affirmation of Choi Gin, made on behalf of HSBC, it was deposed that at the date of service of the Garnishee Order nisi on HSBC, namely 4 July 2007, the accounts of the defendant with HSBC “was in debit after set off the debit balances against the credit balances” amongst the accounts of the defendant. In short there was no debt due or accruing due to the defendant from HSBC. 

40. Bearing in mind that the effect of a Garnishee Order was for a judgment creditor to attach any debt due or accruing due from the garnishee to the judgment debtor, and unlike a Mareva injunction, it does not freeze the judgment debtor’s accounts with the bank (being the garnishee), I frankly cannot understand how the defendant in this case was prevented from complying with the condition imposed even if she was under the mistaken belief that the Garnishee Order nisi had been made absolute. 

41. In any event, since the totality of the defendant’s accounts with HSBC showed a total debit balance, whatever funds she may have to comply with the condition imposed would have to come from elsewhere other than those accounts with the HSBC. 

42. For these reasons, I do not consider that there is or can be any substantive merits in this application by the defendant. 

43. Accordingly for the reasons given, this application must be dismissed. 

Cost

44. This application was wholly devoid of merit, both procedurally as well as substantive merits and should not have been taken out at all. 

45. There will be a costs order nisi that the defendant pays the plaintiff’s costs of this application on an indemnity basis.