P & L CONCEPTS LTD. v. PLANNERS & DESIGNERS AND ASSOCIATES LTD.

DCCJ 2310/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2310 OF 2002

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JUDGMENT

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NATURE OF APPLICATIONS BEFORE COURT

1. There are before me 2 Summonses issued by the Defendant on respectively 27th June 2002 and 22nd August 2002. By the first Summons, the Defendant seeks to set aside the Judgment entered in these proceedings on 23rd May 2002 in default of filing a notice of intention to defend, and the Garnishee Order to Show Cause made by Master C. K. Chan on 12th June 2002. By the second Summons, the Defendant seeks to have the Statement of Claim struck out and the action dismissed on the ground that it is scandalous, frivolous or vexatious or it is otherwise an abuse of the process of the Court.

BACKGROUND

2. The Plaintiff's claim against the Defendant is for the sum of HK$65,100, allegedly being the balance of the price of 5 plasma monitors sold and delivered by the Plaintiff to the Defendant. Three of the monitors were delivered on 24th September 2001, the remaining two on 10th October 2001. The total price for the goods was HK$210,000. The Plaintiff was paid a deposit in the sum of HK$63,000 on 1st August 2001. Further part payment in the sum of HK$81,900 was made to the Plaintiff on or about 20th October 2001.

3. The common theme underlying the Defendant's applications is that the Plaintiff has sued the wrong party. According to the Defendant, the buyer of the 5 plasma monitors from the Plaintiff was in fact one Planners Designers & Associates (Far East) Limited ("PDA Far East"), which at all material times shared a registered office with the Defendant. The Defendant further alleges that the Writ of Summons had not been received by the Defendant.

4. At this juncture, it should be pointed out that at the time when the Writ of Summons was issued on 16th April 2002, the defendant in the action was named by the Plaintiff as "PLANNERS˙DESIGNERS AND ASSOCIATES LIMITED" ("P.DA"). Likewise, both the Default Judgment and the Garnishee Order were obtained against P.DA.

5. At paragraph 3 of the 2nd Affirmation of Dickie Ng Wing Chiu filed on behalf of the Defendant on 5th July 2002, Mr. Ng exhibited as "DN-9" a copy of the Certificate of Incorporation of the Defendant and deposed to the fact that P.DA was merely the style name used by the Defendant. In other words, there never was a company incorporated in Hong Kong under the Companies Ordinance known as P.DA.

6. This created real difficulties for the Plaintiff, as the Plaintiff appeared to have commenced proceedings, and obtained default judgment, against a non-existent entity. Order 81, rule 9 of the Rules of the District Court could not assist the Plaintiff. The word "individual" in that rule does not include a body corporate (see: Survival Technology v. Loh & Co. [1986] HKC 64, at 66F-67I).

7. All these difficulties could easily have been avoided if the Plaintiff's legal advisors had bothered to take the simple and obvious step of conducting a company search in the Companies Registry before issuing proceedings. Be that as it may, during the course of the hearing before me, Ms. Sun acting for the Plaintiff applied for leave to amend the Writ, the Default Judgment and the Garnishee Order by changing the name of the defendant from P.DA to "PLANNERS & DESIGNERS AND ASSOCIATES LIMITED". Ms. Sun submitted from the bar table that this was a case where a defendant had been misnamed or misdescribed, rather than a case where proceedings had been issued against an entity who could properly be described as non-existent. Mr. Chan acting for the Defendant very fairly conceded that this was a 'misnomer' case.

8. In these circumstances, on 5th September 2002 I allowed the amendments sought by the Plaintiff. I was of the view that the Court had jurisdiction to do so, see: Singh v. Atombrook Ltd. [1989] 1 W.L.R. 810 and Colman Airflow Co. Ltd. v. Collections Construction Ltd., HCA 13456/1999 (Judgment of Chung J. dated 27.01.2000). I also made an order dealing with the costs which the Plaintiff must pay in any event in respect of its application for the amendments.

WAS THE DEFAULT JUDGMENT A REGULAR OR IRREGULAR JUDGMENT

9. The first issue I have to decide is whether the Default Judgment entered in this action is regular or irregular. Miss Cheung Lai Fun Connie, a clerk under the employ of the Plaintiff's solicitors, has in her 2nd Affirmation filed herein on 28th August 2002 explained in detail the manner in which the Writ was purportedly served. Miss Connie Cheung deposed to the following in paragraph 1 of her affirmation:

"As instructed by my principal, I did serve the Defendant with a sealed copy of the Writ of Summons ("the Writ") in this action on the Defendant at about 11:00am on Wednesday, 17th April 2002 at its registered office at Room 901, Eton Tower, No. 8 Hysan Avenue, Causeway Bay, Hong Kong ("the premises"). I still recalled that when I entered the premises, nobody was at the Reception Desk. I then asked at the reception area that if there was any body at the office. A man from inside of the office came to the reception area. That man is about 30 to 40 years old. He asked me what the matter was. I said to him I delivered document. I then showed him the envelope, enclosing the Writ, duly and properly addressed to the Defendant at Room 901, Eton Tower, No. 8 Hysan Avenue, Causeway Bay, Hong Kong and I asked him whether it was their company. The man said to me that it was their company. I then gave him the envelope enclosing the Writ and left their office." (Emphasis supplied)

10. The Defendant denies that the Writ has been received by any of its staff, see: paragraph 12 of the Affirmation of Dickie Ng Wing Chiu filed on behalf of the Defendant on 27th June 2002.

11. No application has been made to the Court by either party to cross-examine the deponents of the respective affirmations.

12. In my judgment, even taking the Plaintiff's case at its highest and accepting the evidence of Miss Connie Cheung at its face value, the Writ has not been effectively served on the Defendant. It is clear that the Plaintiff has purported to serve the Writ pursuant to Section 356 of the Companies Ordinance, rather than Order 10, rule 1(2) as amended by Order 65, rule 3(2) of the Rules of the District Court. The Writ was not purported to have been served by registered post or by inserting through the letter box.

13. Section 356 of the Companies Ordinance provides that: "A document may be served on a company by leaving it at or sending it by post to the registered office of the company". In my view, the meaning of the underlined words is plain. The document required to be served must be left by the process server physically at the registered office. "A company after all, apart from its servants, agents and its directors, has no other animate entity but at least it has a registered office which may be determined by a simple company search in the Companies Registry and it is to that which, inevitably, people should look, in my view, when serving documents.": per Rogers JA (as he then was) in Ho Kwok Wah v. Group Jewellery Arts Ltd. [2000] 3 HKC 595, at 598I-599A.

14. In other words, under Section 356 of the Companies Ordinance, it is neither necessary nor sufficient to give the document to someone at the registered office (cf., for example, the wording of Order 81, rule 3(1)(b) of the Rules of the District Court dealing with the service of a writ on a firm). The document should simply be left physically at the registered office.

15. This is particularly so in the present case as the Plaintiff appears to be unable to provide the name of "the man" to whom the envelope containing the Writ was given, nor the position he occupied in the Defendant company. In my view, giving the envelope to "the man" in the circumstances described by Miss Connie Cheung cannot be equated with the leaving of the same at the registered office of the Defendant.

16. Accordingly, in my judgment, there has not been a proper service of the Writ in accordance with Section 356 of the Companies Ordinance. It follows therefore that the Default Judgment which was obtained was an irregular judgment and ought to be set aside.

MERITS OF THE DEFENCE

17. The Plaintiff's case is that the agreement for the sale and purchase of the plasma monitors was made between the Plaintiff and the Defendant, and the agreement was contained in the Plaintiff's quotations dated respectively 7th June 2001 and 21st June 2001 which were accepted by the Defendant, see: paragraphs 5 and 22 of the Affirmation of Ng Chi Man filed on 4th July 2002. The quotations have been exhibited as "NCM-2" to that affirmation.

18. Both quotations were addressed to "PDA" for the attention of Mr. Dicky Ng. I take that to be a reference to Mr. Dickie Ng Wing Chiu of the Defendant. It is implicit from the Plaintiff's case that the expression "PDA" in the quotations was meant to be a reference to P.DA. In paragraph 4 of his affirmation, Mr. Ng Chi Man stated that Mr. Dickie Ng represented P.DA "to make the deal with our company". Mr. Dickie Ng's name card (Exhibit "NCM-1") showed that he was a director of P.DA.

19. The Defendant, on the other hand, contends that the agreement was in fact made between the Plaintiff and PDA Far East. According to the Defendant, the agreement was not contained in the quotations, but was contained in a Purchase Order dated 21st June 2001, exhibited as "DN-2" to the Affirmation of Mr. Dickie Ng filed on 27th June 2002.

20. The Purchase Order was written on the letter-head of PDA Far East. In the body of the Purchase Order, reference was only made to PDA Far East but not P.DA.

21. I am of the view that the defence put forward by the Defendant has a real prospect of success. I am satisfied that the Defendant's case and the evidence adduced by the Defendant in support of it is potentially credible and carries some degree of conviction. In coming to this conclusion, I have taken into account, in particular, the following features of this case: -

(a) There is convincing evidence that the Purchase Order was faxed to the Plaintiff twice on respectively 21st June 2001 and 23rd June 2001 (see: paragraph 6 of the 2nd Affirmation of Mr. Dickie Ng filed on 5th July 2002);

(b) The timing of the demand for and the payment of the 30% deposit (respectively, 23rd July 2001 and 1st August 2001) was more consistent with the parties having acted pursuant to the Purchase Order;

(c) The timing of the delivery of the plasma monitors (3 units on 24th September 2001 and 2 units on 10th October 2001) was again more consistent with the parties having acted pursuant to the Purchase Order; and

(d) Except the first reply letter dated 22nd November 2001 (which in fact also contained a reference to the Purchase Order), all the pre-action correspondence were written by PDA Far East to the Plaintiff's solicitors.

SHOULD THE STATEMENT OF CLAIM BE STRUCK OUT

22. The Defendant, of course, is faced with a much higher hurdle in the striking-out application. It is only in plain and obvious cases that the court should exercise its summary powers to strike out a Statement of Claim. The Defendant would only succeed if the Plaintiff's claim is obviously frivolous or vexatious, or obviously unsustainable.

23. A main plank of Mr. Chan's argument is that even if the quotations constituted the contract between the parties, the purchaser therein was merely named as "PDA". The quotations plainly do not support the Plaintiff's contention that Planners˙Designers and Associates Limited was the party to the contract. "PDA", so says Mr. Chan, is a meaningless term. As it is the Plaintiff's case that the agreement was wholly contained in the quotations (and not merely evidenced by them), the Plaintiff's claim is bound to fail, it is based on documents which are meaningless.

24. I do not agree with Mr. Chan's argument. Even if an agreement has been embodied in a written document, the identity of the parties may be established by extrinsic evidence where it is not clear from the written instrument to whom it refers. So, where a landlord handed to his tenant a letter addressed "Dear Sir" in which he promised to renew a lease, extrinsic evidence was admitted to identify the proposed lessee, even though no mention of his name appeared in the agreement, see: Chitty on Contracts, 28th ed., Vol. 1, para. 12-120.

25. Further, there is undisputed evidence that the deposit was paid and the part payment was made by the Defendant under the style name of P.DA. The question of why such payments were made by the Defendant and not by PDA Far East is something which can only be explored at trial, after proper discovery has been made.

26. All in all, I am not satisfied that the Court should exercise its summary powers to strike out the Plaintiff's claim in this action.

CONCLUSION

27. Accordingly, the orders I make are as follow: -

(i) The Default Judgment entered herein on 23rd May 2002 as amended pursuant to my order of 5th September 2002 be set aside unconditionally;

(ii) The Garnishee Order to Show Cause made on 12th June 2002 as amended pursuant to my order of 5th September 2002 be set aside;

(iii) The Defendant be at liberty to defend this action by acknowledging service of the Amended Writ of Summons within 14 days from the date of this order and to file its Defence within 14 days thereafter; and

(iv) The Defendant's application by the Summons dated 22nd August 2002 be dismissed.

28. I make the following order nisi as to costs: -

(i) The Plaintiff is to bear its own costs of signing the said Default Judgment and obtaining the said Garnishee Order to Show Cause;

(ii) The costs of and occasioned by the Defendant's Summons dated 27th June 2002 including the costs of the hearing before Acting Registrar Chow on 5th July 2002 be paid by the Plaintiff to the Defendant in any event, to be taxed if not agreed;

(iii) The costs of and occasioned by the Defendant's Summons dated 22nd August 2002 be paid by the Defendant to the Plaintiff in any event, to be taxed if not agreed;

(iv) The costs of the hearing before me on 2nd September 2002 and 5th September 2002 are to be apportioned equally between the Plaintiff's Summons to amend dated 2nd September 2002, the Defendant's Summons dated 27th June 2002 and the Defendant's Summons dated 22nd August 2002; and

(v) There be a certificate for counsel for the hearing before me on 30th August 2002, 2nd September 2002 and 5th September 2002.