POON TING CHAU v. WONG KWOK CHI AND ANOTHER

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 65 OF 2007

(ON APPEAL FROM HCA 2903 OF 2004)

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J U D G M E N T

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Hon Cheung JA :

Background

1. This appeal arises from two orders for examination against the plaintiff both dated 16 February 2006 (‘Examination Orders’) and two orders for substituted service of the Examination Order both dated 5 June 2006 (‘Substituted Service Orders’).

2. The background is fully set out in the judgment of Chu J.  For present purpose the following are relevant matters for this appeal.

3. On 8 April 2004 in HCMP 5314 of 2002 Master Levy awarded costs to the 1^st defendant against the plaintiff.  The taxed costs was $43,620.99.

4. On 26 November 2004 Waung J ordered HCMP 5314 of 2002 to be continued as if it had begun by writ and gave directions for filing of pleadings.

5. Instead of serving a statement of claim under HCMP 5314 of 2002, the plaintiff issued a new action, namely, HCA 2903 of 2004.

6. On 18 January 2005, Burrell J ordered HCA 2903 of 2004 to be dismissed and the statement of claim that was filed in that action to stand as the statement of claim in HCMP 5314 of 2002.  The plaintiff was ordered to pay the costs of the application to the 1^st and 2^nd defendants.  The taxed costs were $14,788.

7. Based on these costs orders, the Examination Orders were granted to the 1^st defendant on 16 February 2006 on an ex parte basis.

8. In view of the difficulties in serving the Examination Orders, the Substituted Service Orders were obtained on 5 June 2006.

9. The plaintiff applied to set aside these two sets of orders.  He was unsuccessful before the Master.  His appeal to Chu J was likewise unsuccessful.  He now appeals to this Court.

The arguments below

10. Before Chu J, the plaintiff relied on the following nine arguments :

(1)    The 1^st defendant is in breach of the Registrar’s order of 7 July 2006 by not filing affidavit within 21 days after the plaintiff had filed his affirmation on 28 July 2006.

(2)    The plaintiff, being unrepresented, did not have a fair hearing before the Master, who was biased in favour of the 1^st defendant’s solicitors.  The Master’s decision was erroneous.

(3)    The Examination Orders and the Substituted Service Orders were obtained ex parte and by way of paper application.  There was no hearing in public and the orders were granted without hearing the other side.  The procedure is open to abuse and inconsistent with the Bills of Rights Ordinance and the Basic Law.

(4)    The 1^st defendant had failed to make full and frank disclosure when making the ex parte applications. 

(5)    Substituted service should only be ordered when: (a) it is impracticable to effect service, and (b) there are exceptional circumstances.  These conditions were not met.  The Substituted Service Orders were made upon false evidence.  

(6)    The Examination Orders and the Substituted Service Orders contained errors and omissions.  They were not clerical errors and could not be amended or corrected by invoking Order 20, rule 11 of RHC or the inherent jurisdiction of the court.

(7)    The Master erred in the interpretation of the rules with regard to Order 48 and Order 49B.  The effect and the category of debtor subject to the provisions are different.

(8)    The amended Examination Orders were not personally served on the plaintiff.  As such, the orders are nullities.

(9)    The hourly rates of $3,800 and $4,000 charged by the 1^st defendant’s solicitors were disproportionately high in view of their incompetence and mistakes.

The arguments in this Court

11. In this Court, the plaintiff relies on the following arguments which can be summarised as follows :

(1)    The two costs orders were below $50,000.  The Small Claims Tribunal and not the High Court has exclusive jurisdiction to deal with claims under $50,000.

(2)    Order 49B of the High Court Rules is unconstitutional under the Basic Law and the Hong Kong Bill of Rights.

(3)    Appeal from master to judge is by way of rehearing.  Chu J did not conduct a rehearing.  The plaintiff did not have a fair hearing.

(4)    The 1^st defendant’s application for examination was stated to be based on Order 48.  The Examination Order in HCMP 5314 of 2002 did not specify under which order the examination was to take place.  The Examination Order in HCA 2903 of 2004 stated that the examination was pursuant to Order 49B.  Before the plaintiff applied to strike out the Examination Orders and the Substituted Service Orders, the 1^st defendant obtained, ex parte, an order to amend the Examination Order in HCMP 5314 of 2002 by specifying that it was made pursuant to Order 49B.  The plaintiff contended there were difference between these two procedural remedies.

(5)    The Examination Orders cannot be amended ex parte.

(6)    The Examination Orders were invalid.

(7)    The 1^st defendant failed to effect personal service of the amended Examination Orders on the plaintiff.

(8)    The affirmation for substituted service was based on false information.

(9)    Chu J’s reasoning was wrong and she failed to apply rules of equity.

(10) Procedural irregularity : In HCMP 5314 of 2002, the 1^st defendant did not pay the filing fee of $1,045 when the ex parte applications were made.  The ex parte applications were approved by a listing officer and not a Master.

12. I will deal with the arguments in turn. 

Jurisdiction

(1)    The plaintiff had misconstrued the requirement of jurisdiction.  The 1^st defendant did not commence proceedings in the High Court for sums below $50,000, hence the question of jurisdiction does not arise.  What the 1^st defendant was seeking to do was to rely on the procedural remedy under the High Court Rules to examine the plaintiff for the purpose of deciding how to enforce the orders for costs.  Although these costs orders were below the sum of $50,000, the 1^st defendant was entitled to pursue examination in the High Court.  He was a defendant in proceedings brought by the plaintiff in the High Court and he was using the procedural remedies under the High Court proceedings.  The fact that the costs were about $50,000 does not mean that the 1^st defendant could not invoke the procedural remedy.

Constitutionality

(2)    The plaintiff has not explained properly why Order 49B is unconstitutional.  The order is to assist a party who has obtained judgment to find out the financial conditions of another party so as to enable him to assess what steps he should take to enforce the judgment.  The fact that Order 49B includes sanctions like imprisonment does not by itself make the provision disproportionate for its purpose.  I do not see any breach of the Basic Law or Bill of Rights. 

Rehearing and fair hearing

(3)    The fact that Chu J did not allow the plaintiff to adjourn the appeal before her in order to obtain the transcript of the proceedings before the Master does not mean that Chu J had not conducted a rehearing of the matter.  The rehearing is by way of the documents before her and also by way of the submissions of the parties.  The delay in processing the request for transcript of the hearing before the Master does not affect the validity of the hearing.  In my view, a proper rehearing had been conducted.  The plaintiff received a fair hearing.

Nature of the Order 48 and Order 49A

(4)    Chu J had considered the difference between Order 48 and Order 49B.  This is what she said :

‘ 47.   I accept that Order 48 and Order 49B are not identical provisions.  However, they are not completely different provisions.  The power of the court following examination as provided under Order 49B, rule lB applies also to an examination under Order 48.  It will also appear from Order 49B, rule lB, that the common purpose between the two Orders is to find out whether the debtor has any means of satisfying the liability under the judgment or order for payment, whether wholly or partially.  I also accept that the mistaken reference in the 1^st defendant’s affirmation leading the application for an order of examination could and should have been avoided.  However, I am unable to understand the plaintiff’s complaint that the Masters or the High Court Registry had misinterpreted the two Orders and had failed to appreciate that the two Orders were different.

48.   Although the 1^st defendant’s affirmation referred to Order 48, rule 1, it is within a Master’s discretion whether to make an order for examination and, if so, under which provision of the RHC.  Further, it is not objectionable for the words “be orally examined as to whether any and what debts are owing to him, and whether the plaintiff has any and what property or means of satisfying the costs order” to appear in the Examination Orders, even though these are words which appear in Order 48, rule 1, but not in Order 49B.’

I agree with her view. 

Amendment of Examination Orders

(5)    The plaintiff did not lodge an appeal against the amendment of the Examination Orders or apply to set them aside.  In any event, Chu J had considered this issue at paragraphs 45 and 46 of her judgment :

‘ 45.   On the errors in the Examination Orders identified by the plaintiff, I accept that they should not have occurred and could have been avoided if greater care was applied in the drawing up of them.  That said, however, it must be plain that they are clerical mistakes or accidental slips or omissions capable of being rectified by amendment under Order 20, rule 11 RHC or under the court’s inherent jurisdiction.

  46. Further, given that they are ex parte orders, there was no need to give notice to the plaintiff. The 1^st defendant was correct to apply for amendment by way of an ex parte summons.  As to the plaintiff’s complaint that he had not seen Master de Souza’s order granting the amendment, the order for amendment had been endorsed at the top right hand corner of the Amended Examination Orders.  The practice is for the Court Registry to check the endorsement against the records in the case file before allowing an amended order to be sealed and issued out of the court.’

Validity of the Examination Orders 

(6)    I have already dealt with arguments relating to the substance of the Examination Orders.  In terms of procedural requirements, Chu J had clearly identified the relevant procedures for ex parte application to be made for the Examination Orders.  She also fully addressed the issue of full and frank disclosure.  I cannot see any fault with the Examination Orders.

Service of the amended Examination Orders

(7)    Again, Chu J had dealt with the service of the amended Examination Orders at the following paragraphs of her judgment :

‘ 49.  It is important to note at the outset that the plaintiff’s summonses of 29 June 2006 do not relate to the amended orders for examination.  It is not open to the plaintiff to challenge the propriety of the amended orders for examination.

50.   In addition, when granting the applications for amendment, Master had only directed that the amended order be served on the plaintiff.  He had not ordered personal service.  As previously noted, the court has power to dispense with personal service under Order 45, rule 7(7) of RHC.

51.   Even if indeed that the 1^st defendant was at fault in failing to personally served the amended orders on the plaintiff, it will not, as the plaintiff submitted, render the amended orders a nullity.  The validity of the amended orders is not conditional upon personal service of them.  Personal service is only relevant when it comes to enforcement under Order 45 of RHC.’

Evidence based on false information

(8)    Chu J had considered the evidence that was before her.   The plaintiff had not applied for cross-examination of the maker of the affirmation for substituted service. 

Chu J’s reasoning and rules of equity

(9)    Chu J had carefully considered and rejected the plaintiff’s arguments.  She was correct in her decision.  The personal circumstances of the plaintiff were not relevant materials for her consideration.

Procedural irregularity

(10)  The plaintiff complained that in respect of HCMP 5314 of 2002, the affirmation in support of the application for examination and the ex parte application for amendment did not contain a chop showing that an order had been made on these applications.  This is incorrect because the original copies of these documents in the court file contained such a chop.  In any event sealed copies of the orders were made.  The plaintiff also complained that apparently no filing fee was paid for the application for amendment.  I fail to see the relevance of this complaint.  An order had been made on the application and if filing fees have not been paid then it is an issue between the Judiciary and the 1^st defendant and it does not affect the validity of the order.

Conclusion

13. In my view, the plaintiff failed to show any substance in his appeal.  Accordingly, his appeal is dismissed with costs to the 1^st defendant.

Hon Yuen JA :

14. I agree.