Treasure Land Property Consultants Ltd. v. Lee Po Ting and Another

DCCJ2102/1998

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2102 OF 1998

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J U D G M E N T

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1. This is an application by the Defendants to set aside the judgment against them dated 26 March 1998. The Defendants claim that the said judgment is an irregular judgment as the writ was not served on them.

2. The background of the present case is this. The Plaintiff at all material times carried on the business of an estate agent. By an agreement as contained in or evidenced by the appointment letter dated 29 September 1997, the 1st and the 2nd Defendants agreed to pay commission in the sum of $41,000 to the Plaintiff for its service in assisting the Defendants to purchase the property known as Flat D, 13th Floor, Celeste Court, No. 12 Fung Fai Terrace, Happy Valley, Hong Kong ("the Subject Premises"). The provisional sale and purchase agreement was subsequently signed on or about the same day and the sale was made subject to the then existing tenancy. As the Defendants had not paid the said agreed commission, the Plaintiff brought the present action against the Defendants.

3. The Plaintiff's previous solicitors served the writ on the Defendants at the address of the Subject Premises. The Plaintiff claims that the Defendants used the Subject Premises as their address in the assignment dated 15 December 1997, and so it was the Defendants' address last known to the Plaintiff.

4. On the other hand, Mr Mak for the Defendants argues that the writ should never have been served on the Defendants at the address of the Subject Premises. As the Plaintiff was fully aware that the sale of the Subject Premises was subject to the then existing tenancy, the Plaintiff should have had knowledge that the tenant, and not the Defendants, was occupying the Subject Premises at the relevant time. In such case, the Subject Premises should not be accepted as the last known address of the Defendants. The residential address of the Defendants had indeed been set out in the formal sale and purchase agreement dated 14 October 1997, and so the Plaintiff should at least have served the writ on the Defendants at that address. As an alternative ground, the Defendants argue that the Plaintiff did have knowledge that the Defendants were actually purchasing the Subject Premises as agents for one Miss Lee Po-chu, Fiona. The Plaintiff at all material times knew about the residential address of this Miss Lee, and so Miss Lee should be the proper defendant and the writ should have been served on her residential address.

5. In my judgment, the primary case of Mr Mak must be correct. The whole purpose of the exercise of serving the writ is to bring the proceedings to the attention of the defendant. In such case, the address of the defendant must be one through which the defendant is expected to receive the mail addressed to him. The address may be the residence or the workplace of the defendant.

6. However in the present case, the Plaintiff should have known that the Subject Premises was not the residence or the workplace of the Defendants. The Subject Premises was occupied by a tenant and there was no obligation for such tenant to pass the mail addressed to the Defendants to them. As the Defendants were not living or working there, there was no means for the Defendants to have access to the mail directed to that address, and so the Subject Premises cannot in any way be regarded as an address of the Defendants.

7. Indeed, the Defendants did not have knowledge of the present proceedings because they could not receive the writ under the circumstances mentioned above, and so they could not have defended the case at an earlier stage. In such case, I accept that the writ had not been properly served on the Defendants and the judgment is therefore an irregular one.

8. In England, there have been some authorities which seem to suggest that the court, in an application for setting aside a judgment, should also consider the merits of the defence even if the judgment is an irregular one (see the case of Faircharm Investments Limited v Citibank International plc. (1998) The Times, February 20 1998, and the Supreme Court Practice 1999, Volume 1, paragraph 13/9/8).

9. The Hong Kong Court of Appeal in the case of Chu Kam-lun v Yap Lisa Susanto [1999] 3 HKC 378 declined to rule whether this reflected the law in Hong Kong. However, the Court of Appeal acknowledged that there had been a long line of local authorities which held that irregular judgment should be set aside as a right without the need to consider the merits of the defence. Leung JA said the following in his judgment:

"The weight of the Hong Kong authorities is where judgment is irregular, it should be set aside without going into the merits of defence. This would have disposed of the appeal."

10. Nazareth JA also said the following in his judgment:

"For my part, I have to say that I am attracted by the dictum in Faircharm Investments Limited and Citibank International plc. Where a defence is clearly hopeless, it does indeed seem pointless to set aside the judgment even if irregular. On the other hand, it would be a major departure from the long established position that in such circumstances, it is unnecessary to be concerned with the merits of the defence which is not without practical advantage. As Leung JA has shown, it cannot be said that the defence here is hopeless, so that Faircharm does not assist and whether the dictum should be followed does not have to be decided."

11. As the Court of Appeal has refused to rule whether the Faircharm case represents the law in Hong Kong, I am bound by the long line of authorities as set out in the Susanto case, and as a result, the Defendants are entitled to have the irregular judgment set aside as a right. I make such order accordingly.

12. This is the reason I give in relation to this case.