POON TING CHAU v. WONG KWOK CHI AND ANOTHER

BETWEEN

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(Heard together)

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J U D G M E N T

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1.  In both actions, the plaintiff seeks to appeal against the Order of the Master made on 15 September 2006 dismissing the summonses issued on 29 June 2006 in both actions.  By the summonses, the plaintiff applied to set aside two ex parte orders granted by the Masters on 16 February and 5 June 2006 respectively.

The facts relevant to the appeals

2.  The salient facts that are relevant to the appeals are summarized below.

3.  The 2^nd defendant was the common law wife of the plaintiff.  The 1^st defendant is the brother-in-law of the 2^nd defendant.

4.  On 23 December 2002, the Originating Summons in HCMP5314/2002 was issued against the 1^st defendant.  The plaintiff and the 2^nd defendant were respectively named as the 1^st and 2^nd plaintiff in the Originating Summons. 

5.  On 27 September 2004, Waung J ordered that Madam Yam ceased to be the 2^nd plaintiff and be joined as the 2^nd defendant instead. 

6.  On 8 April 2004, in connection with the adjournment of the 1^st defendant’s summons issued on 18 November 2003, Master Levy made a costs order against the plaintiff in favour of the 1^st defendant. After a contested taxation hearing, the 1^st defendant’s costs were assessed at $43,620.99 and the Allocatur was sealed on 18 February 2005.  The Allocatur was served on the plaintiff with a covering letter dated 21 February 2005.

7.  The 1^st defendant’s said summons was eventually dismissed by Master Hui with costs to the plaintiff against the 1^st defendant in any event. 

8.  Then on 26 November 2004, Waung J gave direction for HCMP 5314/2002 to continue as if begun by Writ and gave directions for filing of pleadings. 

9.  On 21 December 2004, the plaintiff issued the writ in HCA2903/2004.  On 3 January 2005, the 2^nd defendant applied by summons to strike out the action for abuse of court process.  On 18 January 2005, Burrell J granted the application.  He ordered, inter alia, that: (a) HCA2903/2004 be dismissed, and (b) the Statement of Claim already filed in HCA2903/2004 be amended in respect of the description of the action number and the Statement of Claim as amended to stand as the Statement of Claim in HCMP5314/2002.  Burrell J further ordered that the plaintiff paid the costs of the 1^st and 2^nd defendants.

10.  The 1^st defendant proceeded to tax his legal costs.  On 10 October 2005, the Allocatur was sealed.  The taxed costs as certified by the Allocatur were $14,788.  The Allocatur was served on the plaintiff on 14 October 2005.

11.  In connection with the enforcement of the two costs order, the 1^st defendant applied on 14 February 2006 in both actions for an order for examination against the plaintiff.  The applications were made ex parte by way of an affirmation made by the 1^st defendant.  In the affirmation, it was stated that the examination was sought under Order 48, rule 1 of Rules of the High Court (“RHC”).

12.  On 16 February 2006, Master de Souza granted the ex parte applications and made an order for examination of the plaintiff in each of the action (“the Examination Order”).  The Examination Order in both actions stated that the plaintiff was to attend court to be “orally examined as to whether any and what debts are owing to him, and whether the plaintiff has any and what other property or means of satisfying the costs order[s]” (“the Examination Order”).  While the Examination Order in HCMP5314/2002 did not specify whether the examination was pursuant to Order 48 or Order 49B, the Examination Order in HCA2903/2004 specified that the examination was pursuant to Order 49B.  

13.  In both actions, the Examination Order was perfected and sealed on 21 February 2006 and filed on 22 February 2006.  

14.  On 4 April 2006, the 1^st defendant’s solicitors filed an affirmation in both actions to clarify that the reference to “Order 48 rule 1” in the 1^st defendant’s affirmation leading the ex parte application for the Examination Order was a clerical error and that the application was made under Order 49B, rule 1 of RHC.

15.  Then on 24 May 2006, the 1^st defendant applied ex parte by affirmation in both actions for an order dispensing with personal service of the Examination Order and for an order for substituted service. 

16.  On 5 June 2006, Master Kwan ordered in both actions (“the Substituted Service Order”) that: (a) personal service of the Examination Order be dispensed with, and (b) service of the Examination Order may be effected by substituted service by sending it by prepaid ordinary post to the plaintiff’s address at Flat 1022 Bell House Block A, 525-543 Nathan Road, Kowloon (“the Bell House address”).

17.  Substituted service of the two Examination Orders in accordance with the Substituted Service Order was effected on 8 June 2006.       

18.  At the inter partes hearing pursuant to the Examination Orders on 12 June 2006, the plaintiff was present.  It appears from the notes of Master J Wong who presided over the hearing that the plaintiff had raised objections to the examination and pointed out there were three errors in the Examination Orders.  Firstly, the Examination Order in HCA2903/2004 was mistakenly stated to be made by Master de Souza in court when it should have been made in chambers.  Secondly, both Examination Orders wrongly stated that the application for examination was made by the plaintiff when it was made by the 1^st defendant.  Thirdly, it was not clear whether the examination was to be under Order 48 or Order 49B.  Mr Chan who appeared for the 1^st defendant acknowledged that the first two were clerical mistakes and clarified that the examination in both actions was under Order 49B. In the end, Master J Wong ordered that the examination to take place on a date to be fixed and gave directions for disclosure of documents by the plaintiff.  Subsequently the examinations were fixed for 15 September 2006 before Master Lung. 

19.  Meanwhile on 14 June 2006, the 1^st defendant’s solicitors made an ex parte application by summons in both actions to amend the Examination Order.  The applications were stated to be made under Order 20, rule 11 of RHC.  They were to deal with the mistakes mentioned in the preceding paragraph and to add in the Examination Order in HCMP5314/2002 the words “pursuant to Order 49B of the Rules of the High Court”. 

20.  On 16 June 2006, Master de Souza granted the applications to amend.  The Amended Orders were filed on 19 June 2006.

21.  On 29 June 2006, the plaintiff applied in both actions by summons to strike out: (a) the Examination Order, and (b) the Substituted Service Order.  The summonses were returnable before the Registrar on 7 July 2006.  The Registrar adjourned the summonses for argument before Master Lung on 15 September 2006 and gave directions for the plaintiff to file supporting affidavit within 21 days and for the 1^st defendant to file affidavit within 21 days thereafter.  The plaintiff filed an affirmation in HCMP5314/2002 on 28 July 2006.  The 1^st defendant did not file any evidence. 

22.  On 15 September 2006, Master Lung dismissed the plaintiff’s summonses in both actions with costs to the 1^st defendant in the gross sum of $2,500.

23.  On 29 September 2006, the plaintiff filed the Notice of Appeal in both actions to appeal against Master Lung’s Order.

The plaintiff’s arguments

24.  In summary, the plaintiff raised the following arguments:

(1)	The 1st defendant is in breach of the Registrar’s Order of 7 July 2006 by not filing affidavit within 21 days after the plaintiff had filed his affirmation on 28 July 2006.
(2)	The plaintiff, being unrepresented, did not have a fair hearing before Master Lung, who was biased in favour of the 1st defendant’s solicitors.  The Master’s decision was erroneous.
(3)	The Examination Order and the Substituted Service Order were obtained ex parte and by way of paper application.  There was no hearing in public and the orders were granted without hearing the other side.  The procedure is open to abuse and inconsistent with the Bills of Rights Ordinance and the Basic Law.
(4)	The 1st defendant had failed to make full and frank disclosure when making the ex parte applications. The 1st defendant did not in his application mention the costs order of Master Hui of 9 July 2004, which was in favour of the plaintiff, and also that the plaintiff’s claim against the 1st defendant in fraud is in excess of $5 million.
(5)	Substituted service should only be ordered when: (a) it is impracticable to effect service, and (b) there are exceptional circumstances.  These conditions were not met.  The Substituted Service Order was made upon false evidence. The plaintiff could be found at the Bell House address and whenever he went out, he would put a plastic board on the door indicating the time of his return. It was not impracticable to effect service and there was no exceptional circumstance justifying an order for substituted service.
(6)	The Examination Order and the Substituted Service Order contained errors and omissions. They were not clerical errors and could not be amended or corrected by invoking Order 20, rule 11 of RHC or the inherent jurisdiction of the court.
(7)	The Masters erred in the interpretation of the Rules with regard to Order 48 and Order 49B.  The effect and the category of debtor subject to the provisions are different.
(8)	The amended orders for examination were not personally served on the plaintiff.  As such, the orders are nullities.
(9)	The hourly rates of $3,800 and $4,000 charged by the 1st defendant’s solicitors were disproportionately high in view of their incompetence and mistakes.

25.  I will deal with the arguments in turn.

Arguments (1) and (2): Hearing before Master Lung

26.  In respect of arguments (1) and (2), the order of the Registrar only gave permission to the parties to file evidence in relation to the summonses.  Although the plaintiff had filed an affirmation subsequently, that did not oblige the 1^st defendant to file evidence in opposition if he does not consider it necessary to do so. It only means the 1^st defendant would not be able to rely on evidence or facts that are not already before the court. 

27.  Further, as appeals from Masters operate by way of rehearing, the complaints levelled by the plaintiff against Master Lung, even if substantiated, are not determinative of the outcome of his appeals.  It is for this reason that I did not accede to the plaintiff’s request to adjourn the appeals to await the transcripts of the hearing before Master Lung and for him to file an affirmation deposing to what transpired at the hearing.  What is important for the determination of the appeals is whether there are merits in the plaintiff’s summonses for setting aside the Examination Order and the Substituted Service Order. It is to this question that I now turn.           

Argument (3): Bill of Rights Ordinance and Basic Law

28.  It is not in dispute that the Examination Order and the Substituted Service Order were granted upon ex parte application and without a hearing.  For the Examination Order, both Order 48, rule 1(1) and Order 49B, rule 1(1) of RHC expressly provide that the Court may grant the order for examination “on an application made ex parte”.  The general practice has always been for such applications to be dealt with without a hearing: Hong Kong Civil Procedure 2006 vol.1 paras.48/3/1 and 49B/1/1.

29.  In the case of the Substituted Service Order, Order 65, rule 4(2) of RHC provides: “An application for an order for substituted service may be made by an affidavit stating the facts on which the application is found.”  The practice is for the application to be made ex parte, as contemplated by the Rule: Hong Kong Civil Procedure 2006 vol.1 para.65/4/4. 

30.  It is therefore permissible as a matter of law for the application for the Examination Order and the Substituted Service Order to proceed ex parte and without a hearing.  In fact, ex parte applications for examination of debtor and for substituted service are regarded as the most ordinary applications made in chambers without a summons, hence without a hearing: Hong Kong Civil Procedure 2006 vol.1 para.32/6/5.  Where the Master desires further submissions or clarifications from the applying party, he has a discretion to hold an ex parte hearing.  This, however, rarely happens.

31.  By its nature, an order made upon an ex parte application is based upon the evidence and submissions emanating from one side only.  Accordingly, it is open to the court to review it either upon application by either of the parties or on its own motion.  It is expressly provided under Order 32, rule 6 of RHC that an order made ex parte may be set aside.  Accordingly, where the party affected by an ex parte order wishes to make representations or objections to it, he can apply to the Court for an inter partes hearing to be held.  Thus viewed, it cannot be said that because the Examination Order and the Substituted Service Order were made ex parte without a hearing and based solely upon the evidence adduced by the 1^st defendant, the Orders amount to infringement of the Bill of Rights Ordinance or the Basic Law or the plaintiff’s human rights.

Argument (4): Duty to make full and frank disclosure

32.  It is trite law that a party applying for an ex parte order is under a duty to make full and frank disclosure and that an ex parte order is liable to be set aside or discharged if it is established that there was material non-disclosure by the applying party when making the application.  It is also clear law that the duty to make full and frank disclosure relates only to material facts, which are facts relevant to the weighing operations which the court has to make in deciding whether or not to grant the order application: Secretary for Justice v. Choy Bing Wing (unreported) CACV 11/2004, 3 December 2004.

33.  In the present case, as far as the ex parte orders are concerned, the fact that there was also the 9 July 2004 costs order in favour of the plaintiff against the 1^st defendant is not a material fact.  Neither is it a material fact that the plaintiff’s pending claim relates to a property that has a value much higher than the taxed costs as certified by the two Allocaturs. 

34.  Irrespective of whether the examination is under Order 48 or Order 49B, the critical consideration is whether the applying party has obtained an order or judgment for the payment of money, which has to be a specified sum in the case of Order 49B, and that the order or judgment has not been wholly satisfied.  Examination of debtor is a recognized step that a party who has obtained an order or judgment for payment of a sum of money may take for the purpose of enforcing the order or judgment.  The fact that the litigation between the applying party and the debtor is ongoing or that there is other pending litigation between them does not by itself operate as a bar to the making of an order for examination. 

35.  The two costs orders against the plaintiff are orders for immediate payment.  The 1^st defendant is therefore entitled to apply to examine the plaintiff without having to await the outcome of the claim in HCMP5314/2002.  The fact that HCMP5314/2002 is pending and that it relates to a property values much more than the costs due from the plaintiff to the 1^st defendant will not disentitle the 1^st defendant to an examination order.  Accordingly, they are not facts relevant to the weighing exercise of the Master when deciding whether to grant the ex parte application. 

36.  As for the costs order of 9 July 2004, apart from the fact that the costs have not been taxed, it is not an order for immediate payment, being an order “in any event”: Hong Kong Civil Procedure 2006 vol.1 para.62/3/6 at p.927. 

37.  Accordingly, the fact that the 1^st defendant did not mention these facts in his affirmation leading the application for the Examination Order does not amount to a sufficient ground for setting aside the Examination Order.

Arguments (5) and (6): Basis for the Substituted Service Order

38.  As at starting point, an order for examination, whether issued under Order 48 or Order 49B, is required by the Rules to be personally served on the examinee. 

39.  An order for examination is also an order falling within the meaning of Order 45, rule 5 of RHC that relates to enforcement of judgment or order requiring a person to do an act within a time specified in the judgment or order.  Order 45, rule 7 deals with service of judgment or order prerequisite to enforcement under Order 45 rule 5.  Under Rule 7(2), personal service of a copy of the judgment or order is required before the judgment or order can be enforced under Order 45, rule 5.  Rule 7(7) however provides that the Court may dispense with personal service of a copy of the judgment or order “if it thinks it just to do so”.  Plainly under Order 45, rule 7(7), there is a wide discretion to dispense with personal service of an order for examination. 

40.  Further under Order 65, rule 4 of RHC, where it appears to the court that it is impracticable for any reason to effect service personally or in the manner prescribed by Order 10, rule 1, the court may make an order for substituted service by taking such steps as the court may direct to bring the document to the notice of the person to be served.  Where the court is satisfied that the person to be served is deliberately keeping out of the way to evade service, an order for substituted service can be made.

41.  In the present case, it is true that the plaintiff has given the Bell House address as his address for service.  It also appears that he resides at the Bell House address.  However, according to the 3^rd affirmation of To Pui Sang, the process server, leading to the application for substituted service, no less than six visits had been made to the Bell House address on different dates and at different time, but there was no one answering the door.  Mr To further related the unsuccessful attempt made in the afternoon of 30 March 2006 and the telephone conversation between the plaintiff and Mr To’s senior, during which the plaintiff made it clear that he would not accept personal service of the Examination Orders.  Mr To’s 3^rd affirmation also pointed out that an appointment letter was also sent to the plaintiff on 3 May 2006, which had not been returned by the post office, but there was no one to answer the door at the Bell House address at the appointed time.

42.  On such evidence, it must be open to Master Kwan to conclude that it would be impracticable to effect personal service on the plaintiff and/or that the plaintiff was avoiding or evading personal service. Although the plaintiff claimed that the Substituted Service Order was made on false evidence, he had not spelt out what the falsity was.  It is also worth noting that the plaintiff also said in his affirmation filed on 28 July 2006 that there was an occasion when Mr To telephoned him to arrange personal service, without specifying the document to be served.  The plaintiff went on to state that he refused Mr To’s request to attend the solicitors’ office because that was not his address for service, and he told Mr To to leave the documents at the entrance of the Bell House address.

43.  In the light of all these, the plaintiff’s argument that there is no proper basis for the Substituted Service Order is untenable.  It is also irrelevant that he had indicated the time of his return on a plastic board hanging at the entrance of the Bell House address.  The point is not whether he has an address for service.  The fact that he might be contacted at the Bell House address does not automatically mean that it was practicable to effect personal service on him at the address.  In view of what he expressly told Mr To’s senior and what he admittedly told Mr To, it is obvious that he was resisting personal service.       

Argument (6): Errors in the Examination Orders

44.  The plaintiff repeatedly claimed that the Examination Orders contain no less than six errors and the Substituted Service Orders also contained an error, but he did not specify what they were, apart from the three he related to Master J Wong on 12 June 2006 and which had since been rectified by the amendments to the Examination Orders.

45.  On the errors in the Examination Orders identified by the plaintiff, I accept that they should not have occurred and could have been avoided if greater care was applied in the drawing up of them.  That said, however, it must be plain that they are clerical mistakes or accidental slips or omissions capable of being rectified by amendment under Order 20, rule 11 of RHC or under the court’s inherent jurisdiction.

46.  Further, given that they are ex parte orders, there was no need to give notice to the plaintiff.  The 1^st defendant was correct to apply for amendment by way of an ex parte summons.  As to the plaintiff’s complaint that he had not seen Master de Souza’s order granting the amendment, the order for amendment had been endorsed at the top right hand corner of the Amended Examination Orders. The practice is for the Court Registry to check the endorsement against the records in the case file before allowing an amended order to be sealed and issued out of the court.

Argument (7): Order 48 vs. Order 49B, RHC

47.  I accept that Order 48 and Order 49B are not identical provisions.  However, they are not completely different provisions. The power of the court following examination as provided under Order 49B, rule 1B applies also to an examination under Order 48.  It will also appear from Order 49B, rule 1B, that the common purpose between the two Orders is to find out whether the debtor has any means of satisfying the liability under the judgment or order for payment, whether wholly or partially.  I also accept that the mistaken reference in the 1^st defendant’s affirmation leading the application for an order of examination could and should have been avoided.  However, I am unable to understand the plaintiff’s complaint that the Masters or the High Court Registry had misinterpreted the two Orders and had failed to appreciate that the two Orders were different.

48.  Although the 1^st defendant’s affirmation referred to Order 48, rule 1, it is within a Master’s discretion whether to make an order for examination and, if so, under which provision of the RHC.  Further, it is not objectionable for the words “be orally examined as to whether any and what debts are owing to him, and whether the plaintiff has any and what property or means of satisfying the costs order” to appear in the Examination Orders, even though these are words which appear in Order 48, rule 1, but not in Order 49B.

Argument (8): Service of the amended orders

49.  It is important to note at the outset that the plaintiff’s summonses of 29 June 2006 do not relate to the amended orders for examination.  It is not open to the plaintiff to challenge the propriety of the amended orders for examination.

50.  In addition, when granting the applications for amendment, Master had only directed that the amended order be served on the plaintiff.  He had not ordered personal service.  As previously noted, the court has power to dispense with personal service under Order 45, rule 7(7) of RHC.

51.  Even if indeed that the 1^st defendant was at fault in failing to personally served the amended orders on the plaintiff, it will not, as the plaintiff submitted, render the amended orders a nullity.  The validity of the amended orders is not conditional upon personal service of them.  Personal service is only relevant when it comes to enforcement under Order 45 of RHC.

Argument 9: Hourly rates of the solicitors

52.  The question of the hourly rate charged by the 1^st defendant’s solicitors is only relevant to the amount of costs to be recovered from the plaintiff.  The time for examining the amount of costs covered by the two costs order in question had long lapsed.  The quantum of the 1^st defendant’s costs is also not a relevant ground for challenging the Examination Orders and/or the Substituted Service Orders.

Conclusion

53.  For the above reasons and analyses, the plaintiff’s applications to set aside the Examination Orders and the Substituted Service Orders have no merits.  The appeals are dismissed.

54.  I consider that the normal rule of costs follow event should be applied.  I also consider that given these are short appeals involving not too voluminous papers, it is appropriate to award a gross sum costs in lieu of taxed costs under Order 62, rule 9(4)(b) of RHC.  Taking into account that the appeal hearing lasted for 1 hour and 15 minutes, I am of the view that a gross sum based on 1 hour 45 minutes of Mr Chan’s time is appropriate and reasonable.  Mr Chan was admitted in 2004, so that the hourly rate he would usually be allowed on taxation is $2,500.  A gross sum of $4,375 ($2,500 x 1.75 hours) is therefore appropriate.

55.  Accordingly, the orders that I make are:

(1)	The appeals are dismissed.
(2)	There is an order nisi that the plaintiff pays the 1st defendant the costs of the appeals, assessed at $4,375 pursuant to Order 62, rule 9(4)(b) of RHC.