AXA CHINA REGION INSURANCE CO LTD v. LEONG FONG CHENG

CACV 113/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 113 OF 2016

(ON APPEAL FROM HCA NO 1516 of 2013)

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REASONS FOR JUDGMENT

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Hon Lam VP (giving the Reasons for Judgment of the Court):

1.  Though the Defendant is unrepresented and the application was made by a summons in Chinese, we decide to give judgment in English in view of its general interest to the legal profession and general public on the practice to be adopted when a litigant resides abroad acts in person without giving any local address for service. The Defendant appears to have some knowledge in English though she claims she did not understand it fully. If she needs interpretation service, she can contact the clerk of Lam VP to arrange for oral interpretation of this judgment by a court interpreter in the High Court building.

2.  There are three main subject matters we need to deal with in this judgment:

(a) The non-compliance by the Defendant with Order 6 Rule 5 (1)(b) (read together with Order 59 Rule 3(1) providing that a notice of appeal is a notice of motion and Order 8 Rule 3(3) providing that Order 6 Rule 5 shall apply with modifications to notice of originating motion) in that whilst acting in person in the appeal and her place of residence is not in Hong Kong, she failed to give an address within the jurisdiction at or to which documents for her may be delivered or sent;

(b) The defects in the notice of appeal; 

(c) The application by the Plaintiff for security for costs by a summons of 18 July 2016.    

3.  The first subject matter also has some relevance to the third one because the summons of 18 July 2016 was purportedly served on the Defendant by post sent to the address in Thailand given by her in the Notice of Appeal of 12 May 2016. That address is apparently not a residential address.  Instead it appears to be an address of a business called Yamato Protec Asia [“the Yamato Protec address”]. This court invited submissions on whether the service by post at such address is valid under the law of Thailand and the law of Hong Kong.

4.  A brief history of the action and the appeal is as follow.  The Plaintiff commenced the action in 2013 to sue the Defendant for recovery of certain sums advanced to her during her appointment as agency manager of the Plaintiff.  The action was tried before Chow J [“the Judge”] in April 2016 and the Defendant acted in person at the trial.  By a judgment of 4 May 2016, the Judge found the Defendant liable and gave judgment in favour of the Plaintiff in the sums of $997,500 and $208,366.64 with interests and costs.  He also dismissed the counterclaim by the Defendant.

5.  Before the trial, the Defendant had relocated to Thailand together with her husband who took up employment there.  By a fax of 7 February 2016, she informed solicitors for the Plaintiff her contact address in Thailand [“the old Thai address”].  It is not clear whether that was a residential address.

6.  At the trial, upon enquiry by the Judge, the Defendant informed the court (and the Plaintiff) that she had a new address in Thailand, which is the Yamato Protec address.

7.  It should also be noted that she did not say she worked there.  She gave that address as the address of a person called Takahashi Yoshiharu who apparently had an office there.  In her affirmation of 11 October 2016, she described the way in which documents sent to this address could come to her attention as being brought to her by a friend of her husband.  Presumably, Takahashi Yoshiharu is that friend.

8.  The Defendant served a Notice of Appeal on 12 May 2016, which was only 8 days after the handing down of the judgment below. As mentioned, in the Notice of Appeal, she used the Yamato Protec address as her address.  Again she stated explicitly that it was not her own address but documents sent there were to be addressed in this manner:

“ Ms Leong Fong Cheng c/o Takahashi Yoshiharu”.

9.  In addition, she gave a Hong Kong fax number in her Notice of Appeal.  However, fax number is not an address and the provision of such a number cannot be compliance with the requirements in the rules set out above.  Further, service cannot be effected by fax (under Order 10 and Order 65 of the Rules of High Court) in the absence of any specific order for substituted service to such effect.

10.  The Notice of Appeal of the Defendant, written in Chinese, did not set out any substantive grounds of appeal.  The only ground of appeal put forward is that there were many mistakes in the judgment (“判詞上有很多不對(錯誤不正確)的地方”). Such a notice of appeal does not comply with Order 59 Rule 3(2) and is liable to be struck out.

11.  Despite comments from the Registrar of Civil Appeals in a letter of 21 July 2016 as to the need for clear and specific grounds of appeal and the court’s directions on 11 August 2016 that she should file an amended notice of appeal which set out her grounds of appeal clearly and the relief she sought with a warning that the appeal might be struck out on her failure to do so, up to now the Defendant has not amended her Notice of Appeal.  Her response to the directions of 11 August 2016 only related to her address and she made a request for deferring provision of grounds of appeal pending her legal aid appeal. Further, despite the very substantial affirmation filed by her on 11 October 2016 (the body of the affirmation itself is 218 pages plus a 16 page list of documents and the documents themselves), she still did not put forward any substantive ground of appeal in accordance with Order 59 Rule 3(2).

12.  The court repeatedly requested the Defendant to provide an address in Hong Kong for service in letters of 17 May 2016, 26 May 2016, 18 July 2016, 21 July 2016 and 1 August 2016.  Despite that, the Defendant did not comply with that requirement. 

13.  On 11 August 2016, Lam V-P made an order directing the Defendant to comply with the rules in terms of address for service and proper notice of appeal within 14 days, failing which the court shall consider striking out the appeal.  The order also directed the Defendant to lodge written submissions if she did not comply with these requirements.

14.  On 11 August 2016, the Defendant sent to the court her submissions on her lack of Hong Kong address.  She queried the basis for requiring Hong Kong address.  She said she had moved to Thailand with her husband and she no longer had any Hong Kong address.  She referred to the use of her Thailand address for contact in the history of these proceedings and she averred that the clerk of court had approved of her use of that address by sending documents to the same.  She also made other submissions which are not relevant for this purpose.

15.  The Plaintiff did not lodge any submissions on the question of non-compliance with the rules for providing Hong Kong address for service.

16.  We have already set out at the beginning of this judgment the relevant rules requiring the provision of Hong Kong address for service.  The primary rule is Order 6 Rule 5(1)(b) which is applicable by reason of Order 59 Rule 3(1) and Order 8 Rule 3(3), see Wong Yu Cho Rolly v Ling Dai Hong CACV 59 of 2013, 5 May 2015 at [7].

17.  The rationale for having such a requirement is to ensure that the court can effectively and efficiently exercise its jurisdiction over a party invoking a process of the courts in Hong Kong.  By invoking the process (as the Defendant did in the present appeal by serving and filing the notice of appeal) she must be taken as having submitted to the jurisdiction of the court here.

18.  There are situations where a respondent to an appeal may wish to take out applications against the appellant, like the present application for security for costs.  The respondent would have to serve the summons according to the rules.  The absence of an address for service within the jurisdiction increases the costs and time involved in effecting service.  This is particularly so when the law of the place at which service is effected has some stringent or peculiar requirements on mode of service and the country concerned is not a party to the Hague Convention on Service Abroad 1965 or a party to a bilateral agreement or arrangement with Hong Kong on service.  One must then consider the extent to which such difficulties can be ameliorated by a mode of service (like postal service or other mode ordered by way of substituted service pursuant to Order 65 Rule 4) which, though recognised in terms of Hong Kong law, is not recognised by the law at the place of service.  If these solutions are not viable, it would be proportionate to require a person invoking our jurisdiction to provide a local address for service.

19.  Under common law, the concept underpinning the requirement of service has evolved.  According to the traditional view, service was regarded as an exercise of sovereign power over the defendant.  As such, when exercised in respect of a foreign defendant who was outside jurisdiction, it was regarded as an interference with the sovereignty of the state in which the process was served.  There are countries or places where the law still holds such a view. 

20.  On the other hand, in Abela v Baadarani [2013] 1 WLR 2043, the Supreme Court of the United Kingdom categorically adopted a modern pragmatic approach summed up by Lord Sumption JSC at [53], where His Lordship abandoned the traditional view as being no longer realistic, and said as follows:

“ The adoption in English law of the doctrine of forum non conveniens and the accession by the United Kingdom to a number of conventions regulating the international jurisdiction of national courts, means that in the overwhelming majority of cases where service out is authorised there will have been either a contractual submission to the jurisdiction of the English court or else a substantial connection between the dispute and this country. Moreover, there is now a far greater measure of practical reciprocity than there once was. Litigation between residents of different states is a routine incident of modern commercial life. A jurisdiction similar to that exercised by the English court is now exercised by the courts of many other countries. The basic principles on which the jurisdiction is exercisable by the English courts are similar to those underlying a number of international jurisdictional conventions ...The characterisation of the service of process abroad as an assertion of sovereignty may have been superficially plausible under the old form of writ ... But it is, and probably always was, in reality no more than notice of the commencement of proceedings which was necessary to enable the defendant to decide whether and if so how to respond in his own interest. It should no longer be necessary to resort to the kind of muscular presumptions against service out which are implicit in adjectives like ‘exorbitant’. The decision is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.”

21.  In the same vein, Lord Clarke of Stone-cum-Ebony JSC reiterated that the most important purpose of service is to ensure that the contents of the document are communicated to the party to be served, see [37].

22.  At the same time, the legitimate sensibilities of the other states in which the service shall take effect are still recognised, see [45].  Thus, the English CPR r6.40 provides that the court cannot authorise or require any person to do anything which is contrary to the law of the country of service.

23.  However, the mere fact that the mode of service ordered in England by way of substituted service is not a valid mode of service in the country does not infringe this prohibition.  On the facts of Abela v Baadarani, supra, the mode of service was not valid under Lebanese law (where service took place).  Despite that, the Supreme Court accepted it as valid service under English law.  Lord Clarke explained at [24],

“ ... Although it was held that delivery of the claim form was not permitted service under Lebanese law, it was not suggested or held that delivery of the documents was contrary to Lebanese law or that an order of an English court that such delivery was good service under English law was itself contrary to Lebanese law.”

24.  This modern approach was discussed and adopted in Hong Kong in Deutsche Bank AG v Zhang Hong Li [2016] 3 HKLRD 303 at [74] to [76].

25.  With the modern approach in mind, in the absence of any applicable international convention or bilateral agreement governing the situation, the validity of the service of a summons by post under Hong Kong law should primarily be determined by reference to Hong Kong law irrespective of the law of the place of service.  However, the law of the place of service can be relevant because as a matter of Hong Kong law if the serving of documents by post is illegal per se at the place of service, such mode of service would not be valid. 

26.  For service to be effected at places where there is a relevant bilateral agreement or international convention governing service, Hong Kong courts must have regard to the provisions in the relevant instrument, see Abela v Baadarani, supra, [34].  Thus, for countries that subscribed to the Hague Convention on Service Abroad 1965, we must have regard to the terms of the Convention in deciding whether a particular mode of service abroad is valid.  As between Hong Kong and the Mainland, we must have regard to the Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong Courts 1999.  Further, in the Mainland, by reason of art 277 of the Civil Procedure Law (民事訴訟法), it is actually illegal for foreign authority or individual to serve process without permission from the competent authorities in the Mainland, see footnote 13 of Deutsche Bank AG v Zhang Hong Li, supra.  

27.  Thailand is not a country subscribing to the Hague Convention.  We are not aware of any bilateral arrangement or agreement between Hong Kong and Thailand for service of judicial documents.  Thus, we are dealing with a situation similar to the one before the Supreme Court in Abela v Baadarani, supra.

28.  Though we have no evidence to suggest that the mere service of Hong Kong court documents by post to an address in Thailand would be regarded as illegal under Thai law, we are aware that Thailand has a system where service of judicial process has to be undertaken by the courts. 

29.  In the present circumstances, given that the Defendant has a local fax number (which she herself used to send documents to court), we think instead of directing service to the Yamato Protec address as service on her, a better course is to make an general order for substituted service on the Defendant in this appeal by sending the documents to the local fax number of the Defendant and deeming the same as good service on the Defendant. This is particularly so when this course of service was expressly endorsed by the Defendant and as submitted by Mr Chan, the court can properly give effect to a mode of service agreed upon by a party, see Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105 at p.116H-117A.  Such service is effected in Hong Kong as in Deutsche Bank AG v Zhang Hong Li, supra. and there will not be any question of contravention of Thai law. 

30.  In such circumstances, the problems on service generated by the non-compliance by the Defendant with the requirement in providing a Hong Kong address for service could be ameliorated by the general order for substituted service. With this in mind, we are prepared in this instance to waive the non-compliance with Order 6 Rule 5.

31.  Turning to the second matter, we cannot see any reason why the Defendant should be allowed to pursue an appeal when she cannot even set out her grounds of appeal in accordance with Order 59 Rule 3 in her notice of appeal. Her pending application for legal aid cannot be an excuse because she would have to have some idea on the merits of her intended appeal before she decided to lodge an appeal. The absence of a proper notice of appeal hampers severely the proper processing of an appeal. We therefore ordered her to file and serve an amended notice of appeal setting out her precise grounds of appeal and the order she asks this court to make in the appeal within 2 months, failing which the appeal will be struck out without further order and in that event the Defendant shall pay the Plaintiff the costs of this appeal, such costs are to be taxed if not agreed. For the avoidance of doubt, as we have made clear at the hearing, time shall run in this respect notwithstanding the stay we ordered in the context of the order for security for costs.

32.  We turn to the summons for security for costs. With respect, we do not agree with Mr Chan that the summons of 18 July 2016 did not need to be served by reason of Order 65 Rule 9.  Though the Defendant did not give a Hong Kong address in the Notice of Appeal in accordance with the rules, she did give an address.  We do not regard the present case as a case where no address for service has been provided.  However, since the summons of 18 July 2016 was faxed to the local fax number provided by the Defendant, and the Defendant repeatedly intimated that she had knowledge of the summons and the supporting affirmation and she actually appeared and made submissions on the summons at the hearing of 21 October, we see no reason why we should not deem that service of the summons had been duly effected.

33.  Coming to the merits of the application for security for costs.  The Plaintiff applied for security for costs on the following grounds:

(a) The Defendant is impecunious;

(b) The Defendant usually resides out of the jurisdiction and the Plaintiff would encounter undue delay or bear extra expenses in enforcing order for costs against her. 

34.  This court has the power to order security under Order 59 Rule 10(5) in special circumstances.  Impecuniosity of an appellant and potential difficulty in enforcing a costs order can give rise to such special circumstances.  The relevant principles governing the consideration of an application for security for costs in an appeal are well established and discussed in Chung Kau v Hong Kong Housing Authority [2004] 2 HKLRD 650, as recently applied by Chu JA in 梁偉珍 v鄭子駒律師行 [2014] 1 HKLRD 1021.

35.  It is beyond dispute that the Defendant is residing outside jurisdiction and there would be undue delay and extra expense if the Plaintiff needs to enforce an order for costs against her.  Further, on the Defendant’s own admissions in her affirmation of 11 October 2016, she had no means on her own to pay the costs of the Plaintiff. 

36.  The court should also examine whether there is any counterveiling matter which militates against the making of an order for security for costs.  In this respect, the merit of the appeal (to be assessed preliminarily on the basis of the materials before us at this stage) is relevant. 

37.  As we said, the notice of appeal does not disclose any specific grounds of appeal.  Having read the judgment of Chow J, we do not see any ground for suggesting that the merit of the appeal is so strong that no security should be ordered in the present circumstances.

38.  We shall therefore grant an order for security for costs of the Plaintiff. 

39.  As regards quantum, having considered the skeleton bill and the submissions of the parties, we find the sum proposed by the solicitors for the Plaintiff in the summons to be a reasonable one. Though there can be rooms for reduction in terms of the skeleton bill attached to the letter of 18 May 2016 from the Plaintiff’s solicitors, such reductions are definitely absorbed by the costs of the application for security for costs set out in another skeleton bill (in the sum of $55,450) placed before us. The figures suggested by the Defendant at the hearing are, in our view, wholly unrealistic. We made an order in terms of paragraphs 1 to 3 the summons of 18 July 2016 except that we would give the Defendant 2 months to pay and the interim stay pending payment of security would not affect the obligation to file and serve an amended notice of appeal as ordered above. We also ordered the Defendant to pay the costs of the Plaintiff in the summons and such costs shall be taxed and payable upon the determination of the appeal.     

40.  Before we end this judgment, we must highlight what we had said at [9] above regarding communication by fax in the context of litigation.  As we said, the rules do not authorise service of court documents by fax unless a specific order to such effect is made by way of substituted service.  In the special circumstances of the present case, for the reasons set out above, we decide it is appropriate to make such an order in respect of service on the Defendant. But it does not mean it would be appropriate to do so in other cases.  Much depends on the facts of each case. 

41.  In the absence of such specific order, sending documents by fax to the other side is not good service.  In this appeal, the court has not made any order for substituted service by fax in respect of the Plaintiff as the primary modes of service within the jurisdiction provided under the rules (whether by post or service by leaving the documents at the office address of the solicitors for the Plaintiff) are viable.  It is for this reason the court reminded the Defendant that her faxing of a few pages of her affirmation to the solicitors for the Plaintiff is not good service. 

42.  In addition, she had apparently only faxed the pages where she signed instead of the full copy of her affirmation of 11 October and its exhibits.  Even though she did not have the benefit of legal advice, we cannot accept her assertion that she believed that the sending of those pages alone could amount to service of the affirmation.  She has been involved in this piece of litigation for several years and she has been served with affirmations from the other side.  With such experience, it is simply incredible that she could harbour such nonsensical belief.

43.  There is a tendency for litigants who acted in person to conduct communication with the court by fax or letter as it does not cost much (except it could actually be costly if one takes account, and one should, of the time costs of solicitors acting for the opposite party on account of reading the same and explaining its implications to their clients).  Whilst it may be convenient to do so, and the court does sometimes notify litigants and solicitors of matters relating to the hearing and directions given by judges through fax, it always does so openly (save in the context of an ex parte application) with such notifications given to all the parties in the proceedings.  However, there are instances where a litigant-in-person sends documents by fax to the court unilaterally.  Such unilateral communication is inappropriate and the court will always inform the other parties of such communication.

44.  The Defendant had been careful in that all her faxes to the court were copied to the solicitors for the Plaintiff by fax.  But there are other good reasons why the court should not encourage communications by fax (or by letters) with litigants.  As laid down in the rules (Order 59 Rule 14(1) of the Rules of the High Court[1]), the proper procedure for making applications in an appeal is by way of summons which should set out the relief sought.  In most cases, an application should be supported by affidavit or affirmation.  The summons and the affidavit or affirmation must be served on the other parties to the appeal.   Though the court may now process an interlocutory application on paper, it usually gives directions for the orderly filing of evidence and submissions upon a proper application by summons having been filed.  It is only in very exceptional circumstances that the court will entertain an application by letter.

45.  Unfortunately, the indulgence of the court in entertaining informal requests or applications by correspondence has too often been exploited and abused by some litigants acting in person (and occasionally by solicitors) who developed a habit of writing to court without regard to the proper procedure that should be followed.  This is not acceptable because judicial time is limited and the court has to distribute such limited resource on a fair and orderly basis. 

46.  Correspondence from litigants acting in person are often unfocused and, sometimes, quite lengthy.  The contents of such correspondence should generally be set out in an affirmation (insofar as they are evidence relevant to a pending application, assuming a proper summons has been issued) or submissions to be lodged pursuant to directions of the court.  It is not right to mix up everything in a letter or fax sent to the court.    

47.  Sometimes litigants acting in person treated the court as their legal advisors and shifted the responsibility for the preparation of their case to the court.  We must state categorically that a litigant acting in person should bear responsibility for the proper preparation of his or her own case in accordance with the rules and procedures of the court.  The court’s function is to adjudicate or rule on a matter, not to give advice.  

48.  Take an example in the present appeal.  After it had been brought to this court’s attention that the Defendant did not serve her affirmation of 11 October on the solicitors for the Plaintiff, the court made an order on 14 October barring her from using the same unless she served the same by noon on 17 October.  On 15 October, a Saturday, she faxed a letter to the court at 18:25 purportedly stating she had served her affirmation by faxing her signature pages (instead of the whole affirmation) to the solicitors for the Plaintiff.  That fax only came to the court’s attention on 17 October and the court pointed out her mistakes in that regard. She then faxed a letter to the court alleging that the court did not give clear directions on what constitutes a copy of her affirmation and requested for specific number of pages involved before she could serve the affirmation.

49.  Even without any specific direction from the court, service of an affirmation filed in court on other parties is the responsibility of the party intending to use the affirmation.  Order 59 Rule 14(1) provides that affirmation should be served on the other parties.  As said above, we cannot believe the Defendant did not understand what should be served should be the full copy of her affirmation and its exhibits.  Her attempt to put the blame on the court or court staff is disingenuous. Her non-compliance with her obligation under the rules is vexatious and it shows she has a tendency to abuse the court process.         

50.  Judges cannot be expected to read correspondence from a litigant as soon as they were sent or faxed to the court.  But some litigants apparently have such expectations.  Judicial clerks are often harassed by telephone calls from such litigants. 

51.  The reality is that judges have to deal with many cases simultaneously and there is no reason why those making requests or applications by correspondence should be allowed to jump the queue when others who follow the proper procedures (by filing a summons and affirmations and submissions according to the directions from the court) have to be deferred. Overlooking such irregularities is not in line with Order 1A Rule 1(f) and Rule 2(1) which require the court to ensure that the resources of the court are distributed fairly.

52.  Moreover, in many instances, it is not appropriate for the court to act on assertions or statements set out in letters or faxes (which are not on oath), particularly when the other side has yet to respond. 

53.  Time has come for the court to reinstate firmly the proper procedural discipline even in cases involving litigants acting in person.  Henceforth, whilst the court may consider notifying parties of dates of hearing and directions given by judges by letters or faxes, apart from queries regarding purely administrative or clerical matters which need not involve the exercise of any judicial power, the court generally will not take heed of applications, requests or assertions advanced by litigants (and solicitors) in correspondence.  If a party wishes to make an application, he or she (or the solicitor concerned) should apply by summons, supported by affidavits or affirmations.  Thus, a party cannot expect the judge to read (or reply to) his or her letter unless it is a letter written pursuant to direction or leave granted by the judge.       

54.  Parties or solicitors can and should liaise with each other by correspondence. However, such correspondence should not be copied to the court.  If such correspondence is relevant to a particular application, it should be produced in the proper way, viz by way of exhibit to an affidavit or affirmation filed in the context of that application.

55.  Efficient and effective case management can only be achieved if all stakeholders adhere to the rules and procedures that are in place (and they are in place for good reasons).  Such stakeholders include litigants acting in person.  In addition to legal aid, there is ample assistance out there to help and guide them to comply with such rules and procedures.  Within this court building, there is a Resource Centre for Litigants acting in person manned by the staff of the Judiciary and an office of the Legal Advice Scheme for Unrepresented Litigants on Civil Procedures (Procedural Advice Scheme) manned by staff from the Home Affairs Bureau.  There are also pamphlets and other materials published by the Judiciary assisting litigants acting in person in respect of court procedures.  Litigants should use these facilities instead of writing to judges or telephoning judicial clerks for guidance.