CHAN YEUK PING v. WANG WEI MING

HCMP 1744/2016

[2019] HKCFI 1634

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1744 OF 2016

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J U D G M E N T

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Introduction

1.  This is the hearing of the defendant’s application by summons dated 6 August 2018 (the “Summons”) that an order in terms of the originating summons dated 11 July 2016 (the “OS”)granted by this court on 18 October 2016 (the “Order”) be set side, by reason of irregular service of the process.

Background Facts

2.  By a Trust Deed dated 27 May 2004 executed by the defendant, the defendant held 100,000 shares (the “Shares”) in one Kensen Technologies Limited (“Kensen”) on trust for the plaintiff.  A blank Instrument of Transfer was also executed by the defendant but was misplaced (presumably lost) by the plaintiff.

3.  In early 2016, the plaintiff says that she decided to reclaim the Shares.  The plaintiff alleges that therefore from May to June 2016 via email she had been requesting the defendant to effect the transfer of the Shares, but the defendant had refused by giving various excuses.

4.  The plaintiff further alleges that on 14 June 2016 and via her solicitors’ letter, the defendant was requested again to sign on a new Instrument of Transfer in both English and Chinese, and the plaintiff alleges that she never received any reply.

5.  Therefore, on 11 July 2016 the plaintiff commenced the present proceedings against the defendant by the OS. 

6.  On 18 August 2016, the plaintiff purported to effect service of the OS on the defendant by inserting the same through the letter box for the 2 usual and last known addresses of the defendant, respectively at “Unit B10 7^th Floor Sui Ying Industrial Building, No. 41 Lok Shan Road, To Kwa Wan, Kowloon” (the “TKW Address”) and “Flat F 15^th Floor, Fung Cheung Building, No. 15 Wan Fung Street, Fung Wing Sun Tsuen, Wong Tai Sin, Kowloon, Hong Kong” (the “WTS Address”).

7.  No acknowledgement of service was filed by the defendant.

8.  The plaintiff accepts that the purported service of the OS on the WTS Address was unsuccessful.

9.  Hence, the issue here is whether the purported service of the OS on the TKW Address was effective or not.

10.  On 18 October 2016, being the date appointed for the hearing of the OS, and the defendant being absent, this court granted the Order.

Relevant Legal Principles

11.  Where a defendant alleges that he was unaware of the proceedings begun by originating summons, the principles regarding the setting aside of a default judgment entered under Order 28, rule 4 of the Rules of the High Court were the same as if the proceedings had been begun by writ and judgment had been entered under Order 13.  See: Hong Kong Civil Procedure 2019 Practice Note 28/4/3; Liu Chong Hing Bank Ltd v Union World (HK) Ltd, CACV 285/2003 (unreported, 25 October 2004, §10, per Rogers VP).

12.  A defendant is entitled to set aside an irregularly obtained default judgment “as of right”.  See: Liu Chong Hing Bank Ltd v Union World (HK) Ltd, ibid, §14, per Yuen JA.

13.  In this case, the plaintiff purported to effect service by insertion through the letter box of the TKW address under Order 10, rule 1(2)(b) of the Rules of the High Court.

14.  It is not in dispute that the defendant was not within jurisdiction at the time when the OS was inserted through the letter box of the TKW Address.  But that is not to the point.  The real issue is whether on a balance of probabilities, the defendant had acquired knowledge of the existence of the OS when he was within the jurisdiction before the plaintiff obtained the Order on 18 October 2016: Christow Corp Trust v Asiacom International Holdings Ltd [2015] 2 HKLRD 1134 (at §§21 and 26).

15.  Where a defendant deposes that he has not received the process through the post or inserted through the letter box, the court has little option but to believe this save where there is sufficient material to cast doubt upon the defendant’s credibility to enable the court to disbelieve him (which is a matter of evidence dependent on the circumstances of the case).  This does not mean the court must accept a defendant’s assertion no matter how improbable.  A defendant must therefore provide convincing evidence.  How much evidence is required must depend on the circumstances of the particular case.  See:Bank of China (Hong Kong) Ltd v Cheung Keung Fung [2007] 1 HKLRD 462 at §§32-34 and Hong Kong Civil Procedure 2019, Practice Note 10/1/13.

The Defendant’s Case

16.  The defendant deposed that the TKW Address was Kensen’s address after 26 February 2016.  Subsequently, Kensen moved out and ceased to use the TKW Address from about July 2016.

17.  The defendant further deposed that since around April 2016, he perceived that Kensen had ceased trading and treated Kensen as pending deregistration or winding up.  

18.  The defendant’s travel records issued by the Immigration Department show that from 18 August 2016 to the date of the Order on 18 October 2016, the defendant was present in Hong Kong at the following times: –

(1)  23 August 2016: entered Hong Kong at 10:48 and departed at 20:39;

(2)  21 September 2016: entered Hong Kong at 10:06 and departed at 18:51; and

(3)  15 October 2016: entered Hong Kong at 08:41 and departed at 23:08.

19.  The defendant deposed that he did not visit the TKW Address on 23 August 2016 and described his activities in Hong Kong that day.  

20.  Counsel for the defendant submitted that while the defendant did not give an account of his activities in Hong Kong on 21 September 2016 and 15 October 2016, given that on the defendant’s case Kensen had moved out of the TKW Address in July 2016, the defendant would not and in fact did not visit the TKW Address.

21.  As to Kensen’s Annual Return made up to 5 September 2016, it was not signed until 2 December 2016.  The defendant further deposed that since he was removed as a director on that same day, the defendant did not prepare or authorize that Annual Return.  

22.  The defendant deposed that he was unaware of these proceedings until June 2018 when his solicitors received copy of an Instrument of Transfer made pursuant to the Order, during the process of discovery in HCA 3322/2016.  

Discussion

23.  As confirmed by the defendant’s counsel during the hearing, the defendant does not seek to set aside paragraph 1 of the Order.  The only question for this court is whether paragraphs 2 to 4 of the Order should be set aside.

24.  I agree with the defendant’s submission that the materials relied on by the plaintiff does not cast serious doubt on the defendant’s evidence that the defendant had not acquired knowledge of the existence of the OS before the plaintiff obtained the Order.

25.  In this regard, the plaintiff relies heavily on the fact that the documents inserted through the letter box of the TKW Address were not returned to the plaintiff undelivered.  But as pointed out by Master Herold Leong in Christow Corp Trust v Asiacom International Holdings Ltd, supra, at §19, the plaintiff may have a more difficult task to show the knowledge of the defendant, if the plaintiff chooses to insert the documents into the post box, as opposed to the documents being sent by registered post.

26.  In short, I find that there is insufficient material in this case to cast doubt upon the defendant’s credibility to enable this court to disbelieve him.

27.  Accordingly, I hold that the purported service of the OS on the defendant was ineffective, and the Order was irregularly obtained.

28.  Further, I do not accept the plaintiff’s submission that paragraphs 2 and 3 of the Order are necessarily consequential upon paragraph 1 of the Order.  An order for account should not be made unless the plaintiff establishes that the defendant had refused to give the same. Likewise, the plaintiff would not be entitled to damages unless the plaintiff establishes breach of trust on the part of the defendant.

Disposition

29.  For all the reasons set out above and as sought by the defendant, I order that paragraphs 2 to 4 of the Order be set aside.

30.  The costs of the application be paid by the plaintiff to the defendant, such costs are to be taxed if not agreed.

31.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

32.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.