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DCPI 2562/2011
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
PERSONAL INJURIES ACTION NO 2562 OF 2011
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| BETWEEN |
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ZARIR KHALID |
Plaintiff |
| and |
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GURUNG DURGA BAHADUR |
1st Defendant |
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TRENDY INVESTMENT LIMITED TRADING AS MES AMIS |
2nd Defendant |
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| Before: His Honour Judge Andrew Li in Chambers (Open to the public) |
| Date of Hearing: 1 June 2015 |
| Date of Decision: 21 July 2015 |
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DECISION
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1. This is an application made by the 2nd defendant to set aside:-
(1) the interlocutory judgment entered in default of notice of intention to defend against the 1st and 2nd defendants on 5 March 2013 (“the Interlocutory Judgment”); and
(2) the final judgment entered on 8 April 2014 against the 1st and 2nd defendant after an assessment of damages hearing before Master WY Ho (“the Final Judgment”) (collectively “the Judgments”).
BACKGROUND
2. These proceedings arose out of an assault incident happened at around 1:22 am on 17 September 2009 (“Assault Incident”) at a bar by the name of Mes Amis in Wanchai (“the Bar”). The plaintiff was a customer at the Bar and claims to have suffered personal injuries as a result of the Assault Incident.
3. The 1st defendant was an employee of Signal 8 Security Limited (“Signal 8”) which provided security service at the Bar. Signal 8 was allegedly hired by the 2nd defendant to maintain peace and order at the Bar.
4. The 2nd defendant was and is the owner of the Bar.
5. There is no dispute that the plaintiff had sustained injuries in the incident as he was treated at the Tang Shiu Kin Hospital at around 2:26 am the same evening.
6. There is also no dispute that the police had conducted investigation into the matter which resulted in the prosecution of both the plaintiff and the 1st defendant. They were both bound over to keep the peace for $3,000 and for 12 months by a magistrate.
7. The following procedural steps or history are also not disputed or indisputable.
8. On 23 December 2011, the plaintiff issued the writ of summons in the present proceedings. The writ was duly served on the 2nd defendant on 10 December 2012.
9. The notice of the check-list review returnable before Master SP Yip on 25 May 2012 as well as a copy of the remark made by the master on 6 December 2012 were served on the 2nd defendant on 10 December 2012.
10. On 5 March 2013, the Interlocutory Judgment was obtained against the 2nd defendant. The Interlocutory Judgment was served on the 1st and 2nd defendant on 6 March 2013.
11. Thereafter, between 27 March 2013 and 19 February 2014, no less than 14 court documents had been served on the 2nd defendant on 9 separate occasions. They included documents like list of documents, the plaintiff’s witness statement, mediation certificate, revised statement of damages, application to set down for assessment of damages and revised index to bundle for assessment of damages, etc.
12. On 4 April 2014, Final Judgment in the sum of HK$413,604 was obtained against the defendants after an assessment hearing before Master WY Ho when both defendants were absent.
13. On 23 September 2014, the plaintiff presented a petition in the High Court to wind up the 2nd defendant for the unpaid judgment debt.
14. On 21 November 2014, the 2nd defendant’s solicitors filed a notice to act on behalf of the 2nd defendant.
15. On 25 November 2014, which was the date before the hearing of the winding-up petition in the High Court, the 2nd defendant issued the present summons to set aside the Judgments.
16. On 27 November 2014, the 2nd defendant issued another summons to seek interim stay of execution of the default Judgments pending the resolution of the set aside judgment summons.
17. On 28 November 2014, Master WY Ho adjourned the summonses on condition that the 2nd defendant makes payment into court in the sum of HK$413,604.
18. On 11 December 2014, the 2nd defendant duly made the payment into court pursuant to Master WY Ho’s order.
19. On 17 December 2014, Master Au-Yeung of the High Court adjourned the hearing for the winding-up petition pending the outcome of the present proceedings.
20. On 31 December 2014, the plaintiff filed and served the statement of claim pursuant to an order made by Master WY Ho on 28 November 2014.
21. On 12 February 2015, the hearing for the 2nd defendant’s summonses was adjourned to 1 June 2015 before me.
DISCUSSION
22. The starting point for discussion in this case is that there is no dispute the Judgments had been entered regularly.
23. In the present application, the 2nd defendant’s focus has been very much centred on the merits of the defence rather than the reasons for the default. It is understandably so when one looks at the reasons – or rather the lack of them – for the default for both the Interlocutory and Final Judgments.
24. The 2nd defendant’s only explanation for the default is that it had passed the writ to Signal 8 and it took the view that Signal 8 ought to deal with the plaintiff’s claim because it was the 1st defendant’s employer. The managing director of the 2nd defendant claims that, ever since he passed the writ to Signal 8, he had been laboring under the misapprehension that Signal 8 was dealing with the plaintiff’s claim: see para 8 of affidavit of Matthew Philip Bonner filed on 25 November 2014. The 2nd defendant further claims that it would have attended the hearing and resisted the application had it not been for its mistaken assumption that Signal 8 would take steps to properly deal with the action: see para 8 of 2nd affidavit of Cho Hung Fat, the general manager of the 2nd defendant, filed on 3 February 2015. It now, through its counsel, seeks the “forgiveness” of the Court for its failure to appreciate the importance of the legal documents.
Relevant legal principles
25. Under Order 13, rule 9 of the Rules of the District Court (“the RDC”), the Court may on such terms as it thinks just, set aside or vary any judgment entered.
26. The power to set aside a default judgment which has been entered regularly is discretionary and such power is unconditional. The purpose of the discretionary power is to avoid the injustice which may be caused if judgment follows automatically on default: see para 13/9/12 of the Hong Kong Civil Procedure 2015.
27. Hence, in order to succeed, the 2nd defendant will have to cross 2 hurdles in this case. First, it must demonstrate that its defence has a real prospect of success. Second, it must convince the Court that after considering all the relevant circumstances, including the reasons for the default, it is just to exercise the discretion to set aside the regular judgment: see para 13/9/13 of the Hong Kong Civil Procedure 2015.
28. It is trite that the determining factor in an application to set aside default judgment is the merits of the defence. The test is whether the defendant has shown a defence which has a real prospect of success. Keith J in Korea Sonbak shipping Co v Charter Harvest Shipping Ltd [1994] 1 HKC 494, at 497F made the following observations in this regard:-
“…the primary consideration is whether the defendant has a defence which is not merely arguable but has a real prospect of success though not necessary a better than 50/50 chance of success: Evans v Bartlam, as explained in The Saudi Eagle; Alpine Bulk Transport Co v Saudi Eagle Shipping Co [1986] 2 Lloyd’s Rep 221, 223 and The Ruben Martinez Villena [1987] 2 Lloyd’s Rep 621, 624.”
29. Hence, I propose to deal with the 2nd defendant’s application under the following headings:-
(I) merits of the defence; and
(II) other relevant circumstances including reasons for the default.
(I) Merits of the defence
30. The 2nd defendant claims that it has a strong defence against the claim of the plaintiff and therefore it would be in the interests of justice to allow it to set aside the Judgments and to allow the 2nd defendant to have the opportunity to defend the action. In this regard, the 2nd defendant has heavily relied on a closed-circuit television (“CCTV”) recording footage which was taken on the night of the Assault Incident.
31. Ms Athena Wong, counsel for the 2nd defendant, has repeatedly called the CCTV recording a “smoking gun” in her submission, ie a piece of incontrovertible incriminating evidence. The 2nd defendant submits that the CCTV recording indicates that :-
(1) The assault was started or incited by the plaintiff himself;
(2) The 1st defendant was acting in defence (of a female staff of the 2nd defendant or himself) against the plaintiff’s attack or threat to attack; and
(3) The 2nd defendant had taken steps to stop the fight once it came to its attention.
32. In my view, if the CCTV recording is the “smoking gun”, then half of the barrel must be missing as it does not tell the whole story of what happened that evening. The plaintiff in his statement of claim as well as witness statement has all along claimed that there were in fact 2 separate assaults inflicted on him that evening. They included the initial one which was captured by the CCTV recording. But there was another alleged assault after the plaintiff had emerged from the bathroom after cleaning himself of the blood on his face/body. He claims that after he came out of the bathroom, he told the security guard that he would require medical attention. While he was waiting for the ambulance, allegedly a group of 6 staff of the 2nd defendant suddenly came over to him and started hitting him. It was alleged by the plaintiff that he was hit, kicked on his face and stepped on his back by this group of men for about 30 minutes and was subsequently thrown out of the Bar (“the 2nd Assault”).
33. The plaintiff solicitors’ subsequent request to obtain the relevant CCTV recording for the 2nd Assault was met with an answer that they had not been retained.
34. I do not find the 2nd defendant’s explanation on the missing part of this crucial CCTV recording either credible or probable. If they have managed to locate the recording for the first part of the Assault Incident, I find it difficult to believe that they would fail to retain the recording for the 2nd Assault, which is something that has been maintained by the plaintiff in the pleadings and his witness statement all along.
35. The plaintiff’s injuries were set out in the plaintiff’s witness statement as well as in the Final Judgment of Master WY Ho. The plaintiff’s injuries included a laceration on his left forehead, dislocated left shoulder, left suprapinatus tear, tenderness over his back muscles, multiple wounds and brusies over his body, haematoma on his upper arms which were likely to be the result of finger tips poking into the skin while the arms were being dragged by force or when someone is being pinned down by excessive force and haematoma on his right flank which seemed to be formed by a heavy kick. The above injuries are supported by medical evidence. Further, those injuries could not, in my view, have been sustained during the initial incident captured by the CCTV recording alone as it had lasted for no more than 1 minute.
36. In its draft defence, the 2nd defendant claims that it has at least 6 defence available to it to the plaintiff’s claim. I shall briefly discuss them hereinbelow.
(1) Wrongdoing by the plaintiff (ex turpi causa)
37. The 2nd defendant alleges that the plaintiff’s claim arose out of the reprehensible conducts on the part of the plaintiff in that the fight was incited by the plaintiff himself and he has participated in the fight voluntarily.
38. The rule of ex turpi causa says that the court will not assist a plaintiff who was in the wrong himself. The court could not permit him to recover without appearing to condone the conduct: see Clerk & Lindsell on Torts 21st ed, p 203 at para 3-25.
39. Beldam LJ in Cross v Kirkby, The Times, April 5, 2000 CA, stated that ex turpi causa applies when the claim was “so closely connected or inextricably bound up with his own criminal or illegal conduct that the court could not permit him to recover without appearing to condone that conduct.”
40. I agree with Mr William Kwan, solicitor for the plaintiff, that the application of ex turpi causa is not as simple as that submitted by the 2nd defendant. This issue has been considered in detail by the Court of Appeal in Chung Man Yau & Another v Sihon Co Ltd [1997] HKLRD 1221 where Mortimer V-P stated the following at p 1227:-
“The court must examine all the circumstances – the nature of illegality complained of, the moral and criminal culpability and the plaintiff’s conduct. Also any relevant legislation must be considered. Having done that the court must decide whether in all those circumstances it would affront the public conscience or offend the ordinary right-thinking citizen if compensation for the loss concerned is awarded.”
41. V. Bokhary J. at p 1229 in the same case has succinctly put the question as follows:-
“The broad question seems to be: would it be more offensive to the notions of justice held by right-thinking people generally to allow a plaintiff to recover in light of the actual illegality involved or would it be more offensive to such notions to refuse him a remedy?”
42. The “criminal, illegal, reprehensible” conduct of the plaintiff alleged by the 2nd defendant included:-
(1) started or incited a fight by attacking and/or threatening to attack the 1st defendant and/or the 2nd defendant’s staff;
(2) grabbed the right arm of a female staff of the 2nd defendant who appears to be a waitress; and
(3) touched the face of the waitress inappropriately.
43. From the CCTV recording, it is apparent that the plaintiff, most likely under the influence of alcohol, was the person who had started or incited the fight. He did so by first inappropriately touching the arm and the face of the waitress briefly and then, when being challenged, he became aggressive and charged at the person who appeared to the 1st defendant in this case. Without going as far as making a finding of fact (which I do not have to in such an application), it at least appears to me that the plaintiff was the aggressor rather than the victim of the assault – at least at the initial stage of the Assault Incident in any event. It is also apparent that the plaintiff, eventhough appears much bigger in size and stature, came out of the fight much worse than the 1st defendant. He fell down on the ground while trying to punch the 1st defendant. He was kicked forcefully by the 1st defendant while on the ground before they were separated by others. After he got up on his feet, he was assaulted again by a group of men who appeared to be staff of the 2nd defendant. There were then separated.
44. While the plaintiff might be the person who had started or initiated the fight, in my view, it does not justify the degree of force or violence which was being inflicted on the plaintiff subsequently, whether after the plaintiff got up on his feet after the initial assault or during the 2nd Assault of which the 2nd defendant has failed to put up a positive defence. Thus, I agree with the submission of the plaintiff’s solicitor that the circumstances of the injury will not affront the public conscience or offend the ordinary right-thinking citizen if compensation for the damages suffered by the plaintiff is awarded when the initial assault and the 2nd Assault were looked at together.
45. I therefore consider that the 2nd defendant only has a weak defence which does not have a real prospect of success based on this plea.
(2) Consent and assumption of risk by the plaintiff
46. With respect, I do not consider that the defence of volenti non fit injuria will have any application in this case. In my judgment, it cannot be said that the plaintiff, by inciting or voluntarily participating in the fight, has consented to, willingly undertook or assumed the risk of injuries as submitted by the 2nd defendant.
47. For the defence to apply, the following criteria must be met: (a) agreement by the plaintiff to absolve the defendant from legal responsibility for his conduct; (b) this agreement must be voluntary, not due to compulsion by the defendant or external circumstances; and (c) the claimant should have full knowledge of the nature and extent of the risk it is alleged that he has assumed: see Clerk & Lindell on Torts, 21st ed, para 3-95.
48. In my view, while the plaintiff might have started or incited the fight himself, it is clear that he had not voluntarily agreed to take on the risk of being injured, or agreeing to absolve the 2nd defendant from the legal consequences of an unreasonable risk of harm created by the 2nd defendant, particularly during the 2nd Assault.
49. Thus, I do not consider that there is any real prospect of success based on this defence also.
(3) Self-defence
50. Self-defence is a form of justifiable action in the interest of the defendant, which implies some kind of attack on him, usually by the claimant who is in the wrong himself. While a person is entitled to act reasonably in defence of himself, his property or third parties, this defence is not available to the perpetrator or aggressor of a fight: Clerk & Lindsell on Torts, 21st ed, para 3-143.
51. The 2nd defendant claims that the 1st defendant’s conduct was justifiable. It is said that he had acted reasonably in defence of the female staff of the 2nd defendant or himself against the plaintiff’s attack and/or threat to attack as captured in the CCTV recording.
52. It is important to bear in mind that in a self-defence situation the force used must not be greater than was needed to repel the attack or what the situation required: Cook v Beal (1697) 1 Ld Raym 176; Cockcroft v Smith (1705) 11 Mod 43.
53. In this case, eventhough the plaintiff might have incited or even started the fight himself, it is clear that the force used on him could not have been justified and had far exceeded what was required to repel the attack.
54. It is apparent that the extensive injuries sustained by the plaintiff could not have been caused during the initial assault as captured by the CCTV recording only. Instead, they are consistent with the plaintiff’s claim that he was assaulted extensively and for a long period of time by a group of men after he came out of the bathroom. It is also apparent that even if the plaintiff might have started the fight, he did not inflict any injury on the 1st defendant or the waitress. In my judgment, the force used by the 2nd defendant’s staff was clearly outside the acceptable boundary of self-defence.
55. Hence, I do not consider that the 2nd defendant will have any real prospect of success based on this defence either.
(4) Independent contractor vs employee defence
56. The 2nd defendant claims that the 1st defendant was not an employee of the 2nd defendant. He was an employee of Signal 8, which was an independent contractor of the 2nd defendant responsible for the security at the Bar. It has also been alleged that the 2nd defendant had also taken steps to stop the fight once it came to its attention.
57. I agree with Mr Kwan that the evidence put before the court regarding the employment status of the 1st defendant and the relationship between Signal 8, the 1st defendant and the 2nd defendant is flimsy at best. Apart from the bare assertions of Mr Cho and Mr Bonner, the only documentary evidence produced to support such claim is an invoice allegedly issued by Signal 8 to the 2nd defendant. However, there is no description on this document of what sort of service was provided by Signal 8 to the 2nd defendant. In fact, the name of the 1st defendant does not even appear on the invoice. Further, there is no documentary evidence produced to show the relationship between Signal 8 and the 2nd defendant.
58. I further agree with Mr Kwan that even if it is made out that the 1st defendant was an employee of Signal 8 but not the 2nd defendant and that Signal 8 was an independent contractor of the 2nd defendant, in law the 2nd defendant can still be liable to the plaintiff for his injuries as the 1st defendant was the 2nd defendant’s agent: see Wong Wai Hing & Another v Hui Wei Lee [2001] 1 HKLRD 736.
59. Therefore, I do not consider the 2nd defendant has made out a defence with real prospect of success under this head.
(5) conduct outside the employment
60. The 2nd defendant claims that even if the acts of the 1st defendant were found to be wrongful, the 2nd defendant is not vicariously liable in view of the fact that:-
(1) the 1st defendant was acting out of his own initiative and the 2nd defendant had neither authorized nor subsequently ratified any wrongful acts of the 1st defendant;
(2) the 1st defendant’s acts were performed outside the course of his duty to maintain peace and order at the Bar or not so closely connected to such duty.
61. Thus, the 2nd defendant says that those wrongful acts took the 1st defendant beyond the performance of his duties.
62. The law on vicarious liability has been authoritatively decided by the Court of Final Appeal in the case of Ming An Insurance Co (HK) Ltd v Ritz-Carlton Ltd [2002] 3 HKLRD 844. Vicarious liability is no longer determined solely on whether the tortious conduct of an employee was inside or outside the course of the employment. The modern test is the “close connection” test, ie “whether there is a connection between the employee’s unauthorized tortious act and his employment which is so close as to make it fair and just to hold his employer vicariously liable.”: See Ming An Insurance Co (HK) Ltd, supra at p 852E.
63. I agree with Mr Kwan that when applying the close connection test to this case, the actions of the 1st defendant and the group of 6 staff in handling the intoxicated customers like the plaintiff in the 2nd Assault were part and parcel of their jobs and were clearly done in the interests of the 2nd defendant. It can be said that their actions were so closely connected with their employment that it is only just and fair to hold the 2nd defendant liable for their actions.
64. I therefore am of the view that the defence that the 1st defendant’s conduct was outside the course of his employment has no real prospect of success.
(6) Contributory negligence
65. Lastly, the 2nd defendant argues that the plaintiff had contributed to (i) the occurrence inflicting his alleged loss and damage; and (ii) the extent and nature of his ensuring injuries by (a) his wrongful doing and negligence; and/or (b) his drunkenness and failure to use reasonable care for his safety.
66. I agree with the plaintiff that the extensive injuries suffered by the plaintiff, particularly those from the 2nd Assault, were not caused by his own action. I further agree that even if the fight was initiated by him, with the manpower of the 2nd defendant at the Bar, they could have easily coerced the plaintiff to leave or ejected him from the premises without inflicting such serious injuries on him.
67. The 2nd defendant further submitted that the plaintiff was at least equal to blame for the Assault Incident because both the 1st defendant and the plaintiff were bound over to keep the peace after the police investigation.
68. While that may be true from a criminal law point of view, namely that both the plaintiff and the 1st defendant were equally at fault because they both had disturbed the peace by participating in a fight, it does not mean that the plaintiff was necessary to blame in contributory negligence in a civil case. This depends on the evidence produced by the 2nd defendant at trial. While I can see an argument that the plaintiff may be partly to blame for the initial incident, I note that the 2nd defendant has failed to put up any positive case for the 2nd Assault, in particular how the plaintiff may be liable in contributory negligence when he was allegedly assaulted by a group of men in the later incident.
69. Thus, I do not think the 2nd defendant will have any real prospect of success under this defence.
70. In the aforesaid circumstances, I do not consider that the 2nd defendant has any real prospect of success under the 6 different possible defence raised by its counsel.
(II) Other relevant circumstances including reasons for default
71. Even if the 2nd defendant may have some real prospect of success under one or more of the above defence (which I found it has none), I am of the view that this is one of those cases where due to the delay and conduct of the 2nd defendant and as a matter of public policy, the Court should not allow the 2nd defendant to set aside the Judgments.
(a) Lack of reasonable explanation for the default
72. Both the managing director Mr Bonner of the 2nd defendant and the general manager Mr Cho of the Bar explained under oath that the Judgments were allowed to be entered by default because the 2nd defendant had passed all the court documents and correspondence from the plaintiff’s solicitors to Signal 8 for their handling. They claimed that the 2nd defendant was under the misapprehension that all along Signal 8 had been dealing with the plaintiff’s claim.
73. I find the above claim totally unbelievable and devoid of any merits for the following reasons:-
(1) The 2nd defendant is a well established company with a paid up capital of HK$2.6 million;
(2) It has been operating the Bar for over 14 years and employed no less than 12 employees;
(3) There was not one but two Judgments which had been entered against the 2nd defendant in default. They would have alerted the 2nd defendant that things were not going well;
(4) It is against common sense that they would allow Signal 8 to handle the case on its behalf when it was the 2nd defendant who was named as one of the defendants and not Signal 8;
(5) Shortly after the Interlocutory Judgment was served on the 2nd defendant, on 11 March 2013, a Mr Chan from the 2nd defendant called the office of the plaintiff’s solicitors and confirmed that the 2nd defendant had insurance coverage but could no longer contact the 1st defendant. Mr Chan then enquired from the staff of the plaintiff’s solicitors what they should do with that court document. He was advised to contact the 2nd defendant’s insurer;
(6) The court document Mr Chan was referring to in the telephone conversation was the Interlocutory Judgment. Thus there is no question of the 2nd defendant not knowing the effect and the consequence of ignoring the document;
(7) For a period which lasted almost 2 years, the plaintiff’s solicitors claim that they had served 20 documents on the 2nd defendant on 13 separate occasions. This is not disputed by the 2nd defendant. Thus, there is no question of the 2nd defendant not knowing the progress of the case and what they would be facing if they chose to ignore those documents;
(8) The 2nd defendant has failed to produce any correspondence to show that in fact it had passed any documents to Signal 8;
(9) There is also no evidence to show that Signal 8 has agreed to handle the case on behalf of the 2nd defendant;
(10) There is no evidence to show that the 2nd defendant had taken any legal advice at all prior to issue the present application to set aside the Judgments; and
(11) There is also no credible explanation why the 2nd defendant has simply allowed Judgments to be entered against it by default.
(b) Delay in taking action after Final Judgment was entered
74. On 22 May 2014, the plaintiff’s solicitors served the Final Judgment on the 2nd defendant by ordinary post. The 2nd defendant was deemed to have received the service by 29 May 2014. Upon receipt of the Final Judgment, there could no longer be any doubt that the 2nd defendant had been adjudicated to pay damages and costs to the plaintiff in this case.
75. However, the 2nd defendant chose to ignore the Final Judgment again.
76. The plaintiff had no choice but to commence enforcement action. On 23 September 2014, the plaintiff filed a petition in the High Court to wind up the 2nd defendant. The hearing of the petition was scheduled on 26 November 2014.
77. Yet the 2nd defendant waited until 25 November 2014, ie the date before the winding up petition hearing, to make the present application.
78. The above conduct of the 2nd defendant, including the lack of any satisfactory explanation for allowing the Judgments to be entered against it by default and the timing of making the present set aside application, leads the Court to come to the inevitable conclusion that the 2nd defendant had deliberately chose to ignore the proceedings brought by the plaintiff. Further, the present application was only made at the very last possible minute when the 2nd defendant realized that it could no longer resist the enforcement action taken by the plaintiff. All the above strongly suggests to me that the 2nd defendant chose to ignore the proceedings with its eyes wide open and only tried to set aside the Judgments when it run out of all other options.
(c) Prejudice to the plaintiff
79. The plaintiff, eventhough might have started or incited the initial fight, has suffered extensive injuries in the Assault Incident. It was within his rights to institute the present proceedings. The 2nd defendant could have defended the matter if it thought that it had valid grounds to do so. Yet the 2nd defendant chose to ignore the proceedings until enforcement proceedings were brought against it.
80. In this case, the plaintiff’s solicitors have taken the appropriate steps of informing the 2nd defendant of the progress of the case by serving all the relevant court documents and hearing notices on the 2nd defendant. Further, the plaintiff has filed and disclosed his witness statement to the 2nd defendant. He has also given evidence at the assessment hearing. Thus his entire case was laid bare before the Court and the defendants. If the Judgments were allowed to be set aside now, that would mean that the 2nd defendant will be able to tailor make its case with full knowledge of the evidence produced by the plaintiff at the assessment hearing. Further, by reading the reasons given by Master WY Ho for the Final Judgment, it will give the 2nd defendant a distinct advantage of taking procedural steps to get rid of the action, eg by making appropriate sanctioned payment, which it would not otherwise have enjoyed had it played the game according to the rules. In my judgment, the above are prejudice that could not be compensated by costs.
81. In my view, one further prejudice which would cause to the plaintiff that cannot be compensated by costs is the extra stresses and delay that would inevitably result if the Judgments were to be set aside now. The plaintiff resides in the United Kingdom. He already had come to Hong Kong once to give evidence at the assessment hearing in March 2014. If the Judgment were to be set aside, it would mean that he has to come to Hong Kong at his own expenses to attend the trial and handle the proceedings again. It would also mean that the time and efforts he spent in the last 2 years to obtain the Judgments had been completely wasted. More importantly, both he and his family will have to endure the uncertainties and extra stresses of not knowing when he will be able to obtain the compensation out of the Assault Incident again.
82. All the above reasons have led me to the conclusion that the Judgments should not be set aside.
(d) Finality of litigation
83. One further but very important reason why I consider the Judgments should not be set aside in this case is based on the public policy of finality of litigation.
84. In Wan How Wan v Wan Hoi Wei, Personal Representative of Wan Tak Yee, Deceased, unreported, HCA 578/2006 (Andrew Cheung J (as he then was); 18 February 2011), the Court dismissed the application for setting aside a default judgment notwithstanding that the Court considered that the applicant had shown a defence which had a real prospect of success. The Court reiterated the principles involved in setting aside default judgment and stated the following:-
“9. The court’s jurisdiction under O 13, r 9 to set aside a default judgment is unfettered. It is a statutory discretion, the exercise of which has been the subject of a substantial body of case law, which has laid down guidelines for the exercise of the discretion. See, for instance, Evans v Bartlam [1937] AC 473; Alpine Bulk Transport Co Inc v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd’s Rep 221; Premier Fashion Wears Ltd v Chow Cheuk Man [1994] 1 HKLR 377. However, guidelines are what they are, that is, guidelines. To borrow from language used in another branch of the law, guidelines constitute “guidance and not tramlines” (R v Wakefield Metropolitan District Council, ex p Peal Assurance Plc [1997] EWHC (Admin) 228, para 9, per Jowitt J). The court’s discretion cannot be fettered by guidelines; rather, the court is duty bound to take into account all relevant considerations in exercising its statutory discretion. Young Bing Ching (deceased) v Chow Yung Fong [2001] 2 HKLRD 394, 402-404, a decision of Mr Recorder Ma SC (as the Chief Justice then was).
10. Nonetheless, there can be no denial that where, as in the present case, a regular default judgment has been obtained, the merits of the proposed defence is a primary consideration for the court, in the sense that unless the defendant can demonstrate that he has a defence on the merits which has a real prospect of success or carries with it some degree of conviction, the court would almost invariably exercise its discretion against setting aside the default judgment. For in such a case, there is simply no point to re-open the matter as this would only meaninglessly postpone the inevitable. However, it does not follow that where such a defence can be demonstrated, the court must necessarily set aside the default judgment. As mentioned, all other relevant considerations need be borne in mind. In Young Bing Ching (supra), the Court took into account, apart from the strength of the proposed defence, that there had been a very substantial delay in making the application to set aside, the unsatisfactory explanation given for allowing the judgment or the delay, the possibility of third party interests being prejudiced if the judgment was to be set aside, and the prejudice to the plaintiff if the judgment was to be set aside in terms of evidence (the plaintiff having passed away since the obtaining of the default judgment). At the end of the day, the Court refused to set aside the default judgment.
11. Needless to say, each case turns on its own facts.”
85. Besides the delay and lack of satisfactory explanation, the Court considered the public policy of finality of litigation and stated the following:-
“23. In my view, the public policy of finality in litigation was engaged. See HKSAR v Hung Chan Wa (2006) 9 HKCFAR 614; Chan Chi Wai v Commissioner of Police CACV 129/2010 (16 December 2010). Finality in litigation, as a legal policy, is a relevant consideration to take into account, even in the case of a default judgment. This is particularly so where the default judgment, which was entered with the prior knowledge of the person now seeking to set it aside, has been allowed to stand after its entry for a substantial period of time as a result of an informed and deliberate decision of that person.
32. There is, in my view, a world of difference between a party who has simply been dilatory in applying to set aside a default judgment and someone who has decided with his eyes wide open not to apply to set aside the default judgment but to let it stand.”
86. I agree that in this case, as a matter of public policy, there must be a finality of the litigation. The 2nd defendant had had more than ample of opportunities to set aside the Judgments when the various court documents and notices were served on it. Yet it consciously decided not to apply to set aside the Judgments. It only changed its mind when the company was going to be wound up by the plaintiff. I echo what the learned judge said in Wan How Wan above and hold that the 2nd defendant has not only been dilatory in applying to set aside the Judgments, particularly after the Interlocutory Judgment had been entered against it, it decided with its eyes wide open not to set aside the default judgments until the very last moment when all options had been run out. In those circumstances, I do not consider justice will be served by allowing it to set aside the Judgments now.
87. In my judgment, for the reasons above, the Court should exercise its discretion against setting aside the default judgments in this case.
CONCLUSION
88. In conclusion, for the reasons stated above, the 2nd defendant’s summons to set aside the Judgments is hereby dismissed with costs. The 2nd defendant’s summons for stay of execution will be dismissed with costs also. The above costs to be taxed if not agreed.
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( Andrew SY Li ) |
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District Judge |
Mr William Kwan of Or & Lau, for the plaintiff.
The 1st defendant not represented, being absent.
Ms Athena Wong, instructed by Payne Clermont, for the 2nd defendant.
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