HONG YINGFEI v. SUEN SIN PO

DCCJ 3570/2022

[2023] HKDC 945

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3570 OF 2022

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DECISION

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A.  INTRODUCTION

1.  This is the Plaintiff’s application by summons dated 25 April 2023 (“the Plaintiff’s Summons”) for default judgment against the Defendant in default of filing a defence pursuant to Order 19 rule 7 of Rules of District Court (“RDC”), seeking, among others, declaratory relief. The Plaintiff’s claim was commenced on 14 September 2022 and the Defendant has not up to the date hereof responded to these proceedings.

2.  The Plaintiff is a student currently residing in the United States of America and a holder of a Bank of America, NA bank account (“the Plaintiff’s Account”). The Defendant is the owner of a Hang Seng Bank account (account number 777-506684-888) (“the Defendant’s Account”). The Plaintiff has no business, monetary, or other commercial relationship with the Defendant.

3.  As pleaded in the Statement of Claim, the Plaintiff was a victim of a fraud and was fraudulently misled into making a transfer of US$300,000 (“the Defrauded Sum”) from the Plaintiff’s Account to the Defendant’s Account. The Plaintiff pleaded the circumstances of the fraud as follows: -

(1)  On 31 July 2022, the Plaintiff received a call from a fraudster impersonating an officer of a telecommunication company informing her that her personal information was used to register a mobile phone number at the airport of Haikou County, Hainan, China, which was later being used in a fraud case;

(2)  The call was then transferred to another person claiming to be an inspector of the Public Security Bureau of Haikou County in Hainan, China. The fraudster told the Plaintiff that she was suspected to have engaged in an international fraud, and that she may be arrested and repatriated back to China;

(3)  Thereafter, the fraudsters continued to communicate with the Plaintiff, informing her that she will be charged and extradited back to China. The Plaintiff was asked to pay a sum of RMB 2,590,000 as bail money and directed the Plaintiff to deposit the sum to the Defendant’s Account;

(4)  On account of the Plaintiff’s difficulties in raising the whole sum of RMB 2,590,000 and knowing that the Plaintiff has the Defrauded Sum available to her, the fraudsters instructed the Plaintiff to transfer the Defrauded Sum to the Defendant’s Account.

(5)  On 10 August 2022, the Plaintiff transferred the Defrauded Sum from the Plaintiff’s Account to the Defendant’s Account;

(6)  After discussing the matter with her friends, and making enquiries and reports to the Hong Kong police and in the United States, the Plaintiff realized that she has fallen victim to a fraud.

4.  The Plaintiff further pleaded that: -

(1)  The Defendant “(1) participated in or perpetrated the aforesaid fraudulent scheme against the Plaintiff; or (2) was used as a vehicle or intermediary for the Defrauded Sum on behalf of the fraudsters”; and

(2)  The Defendant “knew or ought to have known at all material times that the Defrauded Sum wholly or partly consisted of proceeds of fraud, deceit and/or were made in breach of trust.”

5.  Accordingly, the Plaintiff made a proprietary claim as well as a claim in unjust enrichment in the Statement of Claim.

B.  SERVICE OF PROCEEDINGS ON THE DEFENDANT

6.  After the Plaintiff commenced the present action, on 15 September 2022, the Plaintiff attempted to serve the Writ on the Defendant by (1) sending the same to an address in Shau Kei Wan Road, Hong Kong (“D’s Address”), and (2) inserting the Writ through the letterbox of D’s Address. D’s Address was provided by the fraudsters in the course of providing the transfer instructions to the Plaintiff.

7.  However, both copies of the Writ were returned by the post office to the Plaintiff’s solicitors on 23 and 28 September 2022 respectively and marked “Refused” and “No Such Person”.

8.  The Plaintiff had on 3 November 2022 made an application for substituted service of the Writ on the Defendant. On 1 March 2023, Master Maurice Lam granted the application and ordered service of the Writ by advertising Notices of these proceedings in one Chinese and one English newspaper. The service shall be deemed to have been effected on the date of the publication of the advertisements. The court also ordered that service of all correspondence, court documents and orders in this action shall be good and sufficient service by ordinary post to D’s Address.

9.  On 31 March 2023, the Plaintiff caused advertisements of the English and Chinese notices of these proceedings to be advertised in “China Daily News” and “Hong Kong Commercial Daily” in accordance with the Order dated 1 March 2023. Accordingly, I am satisfied that good and sufficient service of the Writ on the Defendant had been effected on 31 March 2023.

10.  The Plaintiff’s Summons was taken out on 25 April 2023, being only 25 days after effective service of the Writ. Under Order 12 rule 5 RDC, the Defendant has 14 days after service of the Writ (including the day of service) to file an acknowledgment of service. This period expired on 13 April 2023.

11.  The time limit for service of a defence is provided in Order 18 rule 2 RDC. The defence shall be filed before the expiration of 28 days after the time limited for acknowledging service. This period will only expire on 11 May 2023 (ie 28 days from 13 April 2023).

12.  Pursuant to Order 19 rule 7(1) RDC, the Plaintiff is only entitled to apply to the court for judgment in default “after the expiration of the period fixed by or under these Rules for service of the defence.” As such, any application for default judgment under Order 19 rule 7 RDC should not have been made before 12 May 2023. The Plaintiff’s Summons taken out on 25 April 2023 (17 days prior to 12 May 2023) is clearly premature.

C.  EFFECT OF PREMATURE APPLICATION FOR DEFAULT JUDGMENT

13.  The effect of a premature application for default judgment under Order 19 rule 7 RDC (as distinct from applications under Order 19 rules 1 to 5 RDC) is that the court does not have jurisdiction to grant default judgment.

14.  In Yau Kar Kwai v Shan Jigesh Rajnibhai (unrep, DCCJ 4752/2017, 22 December 2017), in dismissing an application for default judgment under Order 19 rule 7 RDC taken out prematurely, Acting Chief District Judge Ko (as he then was) said: -

“6. The plaintiff took out the present summons on 13 December for default judgment when the defendants had not yet defaulted in serving a defence. The application was therefore premature…

7. Mr Lam (for the plaintiff) argues that I should overlook the prematurity.

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10. Notwithstanding the valiant attempt of Mr Lam, I am not persuaded by his argument.

11. There is a fine distinction between the procedure under rules 2-5 of Order 19 on the one hand and the procedure under rule 7 on the other hand.

12. For the former, the plaintiff may (in terms of the rules) enter judgment after the expiration of the period fixed for service of the defence. According to paragraph 19/2/4 of the Whitebook, the practice is for the plaintiff to tender a copy of the judgment for entry against the defendant. No formal application is required and judgment is entered upon the plaintiff’s certification that the time for service of the defence has expired and that the defendant is in default. This is an administrative process.

13. However, if a plaintiff makes a claim beyond the scope of rules 2-5, he is not entitled to enter judgment administratively. He may only apply for judgment in terms of rule 7, and he may only do so after the expiration of the period fixed for service of the defence. In other words, he is not entitled to apply for judgment before the time for service of the defence has expired.

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16. … Here, as I have observed above, Order 19, rule 7 specifically provides that the plaintiff may only take out an application for default judgment after the expiration of the period for service of the defence and that is a clear injunction against taking out an application prematurely.

17. In Ho Yuen Tsan, the Judge approached the issue as a matter of statutory construction. He reiterated the observation of Steyn J in Libanbois v Fama Shipping Limited [1992] 1 Lloyd’s Rep 197 at 199 that the rules must be construed in a purposive manner and that the court must reject an interpretation which results in wasteful procedures unless the language of the rules compels such an undesirable result with precision and clarity. In that case, however, the Judge felt unable to strain the clear meaning of the plain words of the rule to resolve any deficiency in the rule by judicial legislation.”

15.  The learned Judge was clearly aware of the time and costs which might be wasted to require a further application from the plaintiff, but nevertheless upheld the clear and plain wordings of Order 19 rule 7 RDC: -

“18. The defendants in this case have so far been unresponsive. If I rule against the plaintiff now, there is nothing to stop the plaintiff from taking out the same application tomorrow and costs and valuable time will be wasted. Be that as it may, what Mr Lam has suggested me to do is exactly what the Judge in Ho Yuen Tsan felt unable to do, ie to ignore the clear meaning of the plain words of Order 19, rule 7.”

16.  There being no other jurisdictional basis other than Order 19 rule 7 RDC, the learned Judge dismissed the summons for default judgment.

17.  I agree with and will adopt the reasoning of the learned Judge in Yau Kar Kwai (supra) (see also: Hong Kong Civil Procedure 2023, commentary 19/7/3). On my part, I would also add that, in the absence of a defendant opposing the application, it is even more important that a plaintiff do strictly follow the procedures prescribed under our procedural rules.

18.  At §15 of the written submissions filed by the Plaintiff, the following was stated in justifying the taking out of the Plaintiff’s Summons on 25 April 2023: -

“15. As D failed to give notice of intention to defend within the prescribed time (14 days), nor file a defence within the prescribed time (28 days), P proceeded with the action as if D had given notice of intention to defend, pursuant to O.13, r.6(1) of RDC and took out [the Plaintiff’s Summons] on 25 April 2023…”

19.  This, however, does not explain why, having proceeded on the basis that the Defendant had given notice of intention to defend, the Plaintiff’s solicitors nevertheless felt able to take out P’s Summons before the expiry of the time prescribed for filing of a defence.

20.  Amongst the relief sought by the Plaintiff are declaratory relief such that judgment cannot be entered for default of acknowledgment of service pursuant to Order 13, rule 6 RDC. It is only upon default of defence that judgment may be entered under Order 19 rule 7 for a claim falling within Order 13 rule 6 RDC. The reliance of Order 13 rule 6 in justifying the taking out of the Plaintiff’s Summons on 25 April 2023 is clearly misplaced.

21.  At the hearing, Miss Law for the Plaintiff accepted that P’s Summons was taken out prematurely, but submitted that: -

(1)  Since there was no reply from the Defendant up to the date of this hearing, it is unlikely to change the outcome of the case, even if a fresh summons is taken out; and

(2)  The Plaintiff might lose out to other creditors of the Defendant in the meantime if an order is not granted at the hearing. However, the Plaintiff has no knowledge of any existing creditors of the Defendant at all.

22.  In my view, these are not sufficient reasons to overlook the prematurity in the present case.

D.  DISPOSITION

23.  In my view, the Plaintiff’s Summons was taken out prematurely. As a result, the Court has no jurisdiction to grant default judgment under Order 19 rule 7 RDC. As the Plaintiff has no other jurisdictional basis to apply for default judgment other than under Order 19 rule 7 RDC, I dismiss P’s Summons with no order as to costs. The dismissal is without prejudice to the bringing of a subsequent “Order 19, rule 7-compliant” application.

24.  I hope this present case and the case of Yau Kar Kwai (supra) will serve as a reminder to practitioners that, despite the absence of opposition from a defendant, a plaintiff should ensure that any application for default judgment under Order 19 rule 7 complies strictly with the requirements thereunder, including importantly to ensure that an application is not made prematurely.