TAN KAH ENG v. TAN ENG KHIAM

HCA9640/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9640 OF 1999

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BETWEEN

(By Order of Master J. Wong dated 21 July 2008)

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D E C I S I O N

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1.  This is the continuation of a saga that began in 1999 and resulted in a number of court hearings, including court hearings before me in respect of which I made rulings on 13 August 2010 and 9 September 2010. My earlier ruling arose from the defendant’s application to strike out the plaintiff’s claim and to dismiss his action on the ground that the proceedings commenced by the plaintiff were nullity for the reason that the plaintiff was an undischarged bankrupt in Singapore and had no capacity to bring these proceedings for repayment of loans he had allegedly advanced to the defendant.

2.  The plaintiff was adjudged bankrupt on 11 November 1994 in bankruptcy proceedings in Singapore.  As pleaded in the statement of claim, the plaintiff advanced six loans to the defendant, pursuant to agreements reached between the plaintiff and defendant in Hong Kong between 2 October 1997 and 21 February 1998, in the total sum of S$3,120,190 and HK$3,000,000.  The plaintiff brought these proceedings to recover these amounts by the issue of the writ and statement of claim on 11 June 1999.  The defendant’s address shown on the writ was a Singaporean address.  In accordance with the prevailing practice, the writ was issued out of the Registry and was stamped with words to the effect that it was not for service out of the jurisdiction.  On 27 October 1999, on the plaintiff’s ex-parte application supported by the affirmations of one, Mr Chong Moon Hing of 17 June 1999, 22 July 1999 and 25 October 1999, Master S. Kwan, as she then was, granted the plaintiff leave to issue a concurrent writ of summons against the defendant and to serve a copy of the said concurrent writ on the defendant at his usual and last known address in Singapore or elsewhere in Singapore.  Pursuant to the leave that was granted, a concurrent writ and statement of claim was issued with leave of court on 5 November 1999 for service outside the jurisdiction.  When the writ was served on the defendant, he did not file a defence but, instead, applied for a stay of the action on the ground of forum non conveniens on 25 January 2000.  This application was heard and dismissed by Master Barnes, as she then was, on 2 June 2000.  There was no appeal from the decision of Master Barnes.  In the interim, the plaintiff’s bankruptcy was annulled by a certificate of annulment dated 18 February 2000. 

3.  On 13 August 2010, I ruled that the effect of the certificate of annulment of 18 February 2000 was to confer capacity retrospectively to the plaintiff to commence these proceedings on 11 June 1999, and I decided that the proceedings were not nullity and could not be struck out.  Having so decided, I went on to consider the further matter raised by the defendant, namely, that there was material non-disclosure on the part of the plaintiff at the time when he applied for leave to serve the writ out of the jurisdiction, in that he had failed to disclose that he was an undischarged bankrupt in Singapore and had not obtained the prior sanction of the Official Assignee in Singapore to commence these proceedings.  I held that there was clear material non-disclosure in the present case.  At the time that he commenced proceedings, the plaintiff had no capacity to sue under Singapore law and the Hong Kong Court, informed of the plaintiff’s bankruptcy in Singapore, would have concluded, after giving effect to Singapore law, that these proceedings were a nullity and would have refused to grant leave to serve out of the jurisdiction.  Given this material non-disclosure, I concluded that I should discharge the leave that was granted by Master S. Kwan on 27 October 1999, at a time when the plaintiff remained an undischarged bankrupt in Singapore. 

4.  I then went on to consider the further application of the plaintiff that the court ought to re-grant leave on the ground that the bankruptcy had been annulled in February 2000, and the plaintiff restored retrospectively to full capacity to commence and maintain these proceedings. 

5.  I would have acceded to the application to re-grant the leave, for the reasons set out in §§29–33 of my decision on 13 August 20l0.  However, given the plaintiff’s failure to disclose the special resolution, based upon which the Official Assignee issued the certificate of annulment, and having regard to the possibility that the non-disclosure of the plaintiff’s overseas assets to his creditors in Singapore might result in the setting aside of the certificate of annulment, thereby rendering these proceedings a nullity once again, I concluded that I was unable to re-grant leave to serve out of the jurisdiction unless the plaintiff was prepared to make disclosure of the special resolution resulting in the issue of the certificate and satisfy me that the certificate of annulment could not or could no longer be set aside. I directed the parties to make further submissions to me including, in the event that I was prepared to re-grant leave to serve out of the jurisdiction, whether or not I should give a direction for re-service of the writ or to dispense with re-service. 

6.  After that, a number of developments occurred which I recorded in my decision of 9 September 2010.  The plaintiff had made an offer of composition of 20% to his creditors in 2000 that was accepted by his creditors.  In view of the non-disclosure of the plaintiff’s assets, the Official Assignee came to the conclusion that he would revoke the certificate of annulment on the ground of the plaintiff’s failure to inform the Official Assignee and the creditors of his assets.  This would require an application to the High Court of Singapore, the costs of which were to be borne by the plaintiff.  After the revocation, the plaintiff could pay off his debts in full by making payment of the remaining 80% due to his creditors.  He could then apply for an annulment once again.  Although the Official Assignee would not object to the plaintiff’s fresh application for annulment, he reserved his right to pursue prosecution action against the plaintiff. 

7.  There was disagreement between the plaintiff’s and the defendant’s Singaporean solicitors as to the right of the defendant to appear and to be heard on the plaintiff’s application for a fresh annulment. I concluded that, whether or not the defendant was entitled to appear and be heard by the Singapore court, it was clear that the final decision whether or not to grant an annulment must lie with the Singapore court, notwithstanding that the Official Assignee did not intend to object to the application.  In the light of this development, it became clear to me, when the parties returned to me on 3 September 2010, that the disclosure of the special resolution resulting in the issue of the certificate of annulment on 18 February 2000 was no longer an issue, and that the remaining issue on the plaintiff’s application to re-grant leave to serve out of the jurisdiction was no longer whether or not the original certificate of annulment was liable to be set aside (clearly, it was going to be set aside), but whether or not the plaintiff could obtain a fresh order of annulment from the Singaporean court and be restored, once again, to full capacity to maintain these proceedings.

8.  In the light of these developments and having heard submissions from the parties, I granted an adjournment to the plaintiff for the further steps to be taken in the Singapore court, and I directed on 3 September 2010 that, if the Singapore court granted a fresh order of annulment, the plaintiff could proceed with his application before me for re-grant of leave to serve out of the jurisdiction at which point in time the defendant could raise before me all the matters that had been raised in opposition to the plaintiff’s application for adjournment.  

9.  When the parties returned to me on 8 February 2011, the following had occurred :

(a)   The High Court of Singapore on 14 January 2011 made an order revoking the plaintiff’s annulment of Singaporean Bankruptcy No. 4312 of 1994;

(b)   Thereafter, all the plaintiff’s creditors were immediately paid in full;

(c)   On 24 January 2011, after all of his creditors had been paid in full, the plaintiff filed a fresh application in the High Court of Singapore for an order that his Singaporean Bankruptcy No. 4312 of 1994 be annulled;

(d)   That application was heard on 26 January 2011.  At the hearing, the Official Assignee did not oppose the plaintiff’s application for a fresh annulment.  After hearing the application, the High Court of Singapore ordered that the plaintiff’s bankruptcy be annulled. 

10.  Apparently, the defendant’s Singaporean lawyers had not been notified of the hearing on 26 January 2011.  There is a possibility that the defendant’s Singaporean lawyers might take steps in Singapore to try to set aside the new order of annulment and be heard on the matter.  However, Mr Remedios, who appeared for the defendant, submitted that I should proceed with the application for re-grant of leave to serve out of the jurisdiction on the basis that the new order for annulment had the same effect as the order made in February 2000 and he informed me that the defendant did not need to further adjourn the matter to await the outcome of any further developments in Singapore.  However, Mr Remedios made the point, which Mr Sherry, for the plaintiff, accepted, that I could not re-grant leave to serve out of the jurisdiction unless I also renewed the writ which had already expired. 

Whether court should reconsider and reverse earlier decision

11.  Sensing the difficulties posed by the expiry of the writ, Mr Sherry submitted that I should reconsider and reverse my decision to set aside the leave that was originally granted to serve the writ out of the jurisdiction.  He relied on Tsang Chung Wan v Li Ming and others, HCPI1063/1996, 23 March 1998, and Sun Jiangqiang v Trans-Island Limousine Services Limited, CACV20/2003, 17 November 2003, to submit that I had jurisdiction to do so as my order had not yet been entered or perfected, and that exceptional circumstances existed which would enable me to exercise this jurisdiction.  Mr Sherry submitted that the exceptional circumstances arose from the fact that a fresh annulment had been made confirming retroactively the plaintiff’s capacity to bring and maintain these proceedings and that, in the light of the fresh annulment, the plaintiff’s previous non-disclosure about his Singaporean bankruptcy should no longer be viewed as material.  However, the same submission could have and, indeed, had been made in respect of the original order of annulment at the hearing before me on 11 August 2010, and which I had recognized when I observed that the weight to be placed on the plaintiff’s continuing non-disclosure of the fact of his bankruptcy had to be measured in the light of the annulment of February 2000 and its effect.  The fresh annulment did not result in an exceptional change of circumstances.  It restored the plaintiff to full capacity to bring and maintain proceedings just as the original annulment of February 2000 had done.  However, neither the original annulment nor the fresh annulment could alter the fact that, at the time the plaintiff applied for leave to serve out of the jurisdiction in October 1999, he had no capacity to sue under Singapore law and the Hong Kong court, on being informed of the plaintiff’s bankruptcy in Singapore, would have concluded, after giving effect to Singapore law, that the proceedings were a nullity and would have refused to grant leave to serve out of the jurisdiction.  The non-disclosure was material and deliberate.  The fact that the plaintiff was an undischarged bankrupt in Singapore must have been known to him and ought to have been disclosed by him to his solicitors making the application for leave to serve out of the jurisdiction.  I cannot discern any material change of circumstances, not to say any exceptional circumstances, which cause me to reconsider my decision.  I do not accede to Mr Sherry’s application for me to do so. 

12.  On 13 August 2010, I concluded that I was unable to re-grant leave to serve out of the jurisdiction unless the plaintiff was prepared to satisfy me that the certificate of annulment he had obtained in February 2000 could not or could no longer be set aside.  He has done more than that, he has paid off his creditors in full and he has obtained a fresh annulment order which operated in the same way as the previous one in that it restored him to full capacity to bring and maintain these proceedings.  

13.  The only change of circumstance that had occurred since my decision of 13 August 2010 was the settlement of the claims of the creditors in full.  However, this is a circumstance that does not relate to the reason for my previous decision, namely, the deliberate material non-disclosure to the learned Master, at the time of the application for leave to serve out of the jurisdiction, of the then prevailing fact that the plaintiff was an undischarged bankrupt in Singapore. It must be remembered that his annulment was only obtained some months later in February 2000. 

Re-grant of leave to serve out of the jurisdiction

14.  I now turn to consider the present application to re-grant leave and conclude, for the reasons set out in §§ 29-30 and 32 and 33 of my decision on 13 August 2010, that I would be prepared to do so.  For ease of reference, I replicate those paragraphs herein :

“29. It would appear, on all the facts now known, that it is appropriate that the leave be re-granted for service outside the jurisdiction. As can be seen from the plaintiff's statement of affairs prepared by him on 17 March 1995 in the Singapore bankruptcy proceedings, his unsecured creditors were owned the sum of S$169,008.44. As against that, the plaintiff claims the equivalent of about HK$18 million in these proceedings. To deny him the right to maintain these claims must be considered to be excessive for the transgression of the requirement to make full disclosure of the Singapore bankruptcy proceedings resulting from his unpaid debts of less than the equivalent of HK$1 million.

30. I accept the submissions of Mr Remedios that the non-disclosure was deliberate.  The fact that the plaintiff was an undischarged bankrupt in Singapore must have been known to him and ought to have been disclosed by him to his solicitors making the application for leave to serve out of the jurisdiction.  As against that, however, the bankruptcy was annulled some 3 months later on 18 February 2000 with the effect that full capacity to sue was restored retrospectively to the plaintiff.  Mr Remedios has rightly submitted that the plaintiff has never made disclosure of the fact of his bankruptcy and it was only early this year that this fact became known to the defendant’s legal representatives.  However, the weight to be placed on the plaintiff’s continuing non-disclosure of the fact of his bankruptcy has to be measured in the light of the annulment and its effect. 

…

32. He also complained that the defendant suffers prejudice by reason of the fact that he suffered from a serious stroke in 2007 which has totally impaired his capacity to give evidence in defence of the plaintiff's claims. 

33. I do not see that the prejudice suffered by the defendant as a result of his stroke can be a relevant consideration in the exercise of discretion to re-grant leave for service outside the jurisdiction.  Even if it were a relevant consideration, I note that Deputy Judge To, as he then was, dismissed the defendant’s application to strike out for want of prosecution on 15 January 2009.  He was well aware of the fact that the defendant had suffered a stroke which had reduced him to a vegetative state.  Notwithstanding that, he was unable to find that the delay in prosecuting the proceedings gave rise to any substantial risk that it was not possible to have a fair trial of the issues in the action or that the delay was such as was likely to cause or to have caused serious prejudice to the defendant.  There has been no appeal from the judgment. No additional circumstances arising between 15 January 2009 and today have been identified to me as constituting additional prejudice and which I ought to have regard to before exercising my discretion to re-grant leave.” 

15.  In reaching this decision, I have also had regard to the fact that the setting aside of the original order of annulment on 14 January 2011 had the effect of incapacitating the plaintiff from maintaining these proceedings and that he was only restored to capacity to maintain these proceedings on 26 January 2011, when a fresh order of annulment was granted.  These 14 days of incapacity do not cause me to refuse the application to re-grant leave to serve out of the jurisdiction.  The important point to bear in mind is that the fresh annulment restored the plaintiff to full capacity once again and did so retrospectively. 

16.  I have also had regard to the submission made to me by Mr Remedios that it would be a wrongful exercise of discretion to re-grant leave to the plaintiff to serve out of the jurisdiction, given his fraudulent non-disclosure of his assets to the Official Assignee and the fact that he was subject to possible prosecution in Singapore for such conduct.  I have taken this consideration into account.  However, it does not cause me to refuse the application to re-grant leave.  In my judgment, the primary relevant consideration on the application to re-grant leave is whether or not the plaintiff has been restored to capacity to maintain these proceedings.  In my view, the plaintiff’s conduct in failing to make full disclosure of his assets to the Official Assignee is a matter for the Singaporean court to consider and deal with.  It has apparently done so and has made a fresh order of annulment.  If the Singaporean court is prepared to grant a fresh order of annulment, notwithstanding the plaintiff’s conduct, then I ought not to have regard to that same conduct and refuse the plaintiff’s application to re-grant leave to serve out of the jurisdiction.  I received an indication from Mr Remedios that his client might engage Singaporean lawyers to make application to Singaporean court to be heard as an interested party and to ask the Singaporean court to set aside the fresh order of annulment on the grounds of the plaintiff’s fraudulent non-disclosure of assets.  If they were able to do so, these proceedings would once again be rendered a nullity.  An application can then be made to stay these proceedings.  However, unless and until that occurs, I am not prepared to stop this case from going to trial by refusing the application to re-grant leave to serve out of the jurisdiction. 

17.  An additional factor, which lends weight to the plaintiff’s application for re-grant of leave to serve out of the jurisdiction, is the fact that the plaintiff has paid his Singaporean creditors in full, which was not the case at the time of my initial ruling on 13 August 2010.  However, just as the factor identified above is of marginal relevance to the present application, so too is this factor.  Just as the failure to make full disclosure of his assets to the Official Assignee is a matter for the Singaporean court to consider and deal with so must the fact that the plaintiff has paid his Singaporean creditors in full. 

Is Hong Kong the appropriate forum

18.  As the court is being asked to re-grant leave to serve out of the jurisdiction, it is right that the court should consider the question of forum afresh.  As jurisdiction was not founded in Hong Kong as of right, it is for the plaintiff to demonstrate that Hong Kong clearly was the appropriate forum.  The natural forum is that where the action has the most real and substantial connection, and the court must look at all relevant factors to determine where is the natural forum.  These factors include :

(a) convenience or expense;

(b) the law governing the contract;

(c) the place where the parties reside;

(d) the place where the parties carry on business;

(e) the place of performance of the contract;

(f) the location of the defendant’s witnesses; and

(g) the location of the documents.  

19.  It is also important to note that choice of law is not to be equated with choice of forum. 

20.  The ground relied on by Mr Chong Moon Hing, the plaintiff’s solicitor, in his 1^st affirmation of 16 July 1999 in support of the plaintiff’s application for leave to serve out of the jurisdiction was that it was brought to enforce contracts made within the jurisdiction, pursuant to O. 11, r. 1(1)(d)(i) of the Rules of the High Court (“RHC”).  In his 2^nd affirmation of 16 July 1999, Mr Chong said that the loan agreements sued upon were entered into between the plaintiff and the defendant in Hong Kong and that, therefore, the loan agreements were by implication governed by Hong Kong law.  The plaintiff advanced some of the loans to the defendant in Hong Kong and some in the People’s Republic of China.  In the plaintiff’s 1^st affirmation of 23 February 2000, the plaintiff confirmed that the six loans sued upon were advanced by him to the defendant pursuant to oral agreements reached between the defendant and himself in Hong Kong.  The oral agreements were evidenced in writing by six payment vouchers which had been exhibited to the 2^nd affirmation of Mr Chong.  The plaintiff also relied on a letter, signed by the defendant in Hong Kong at the Hong Kong Park Hotel, addressed to the plaintiff acknowledging that he had taken a great amount of money from the plaintiff in China and asking for time to settle the outstanding amount after the Asian financial crisis was over.  The letter contained the following statement :

“I would prefer to settle the amount in Hong Kong. Should there be any disagreement in the future, we would settle everything in Hong Kong.”

The letter was also signed by the defendant below the words “agreen (sic) and accepted by”.  The plaintiff explained in his 1^st affirmation of 23 February 2000 that the letter had been signed in early 1998 at the Hong Kong Park Hotel at a time when the defendant and him were both staying there.  

21.  Although, strictly speaking, not a formal agreement as to forum, the expression, in the letter, of the intent to settle disagreements in Hong Kong is a factor which weighs in favour of Hong Kong being the appropriate forum. 

22.  In addition, the parties have spent considerable time and expense in preparing the case for trial in Hong Kong.  Indeed, the application to strike out the proceedings was heard literally at the eve of trial.  The factor of convenience and expense points towards Hong Kong as being the appropriate forum having regard to the conduct and carriage of these proceedings in Hong Kong for many years.  The substantial expenses that have incurred would be wasted if leave to serve out of the jurisdiction were to be refused. 

23.  Hong Kong law applies by implication to the loan agreements and this also points to Hong Kong as the appropriate forum. 

24.  Although the parties reside in Singapore, the plaintiff is willing to bear the costs and expenditure of coming to Hong Kong to prosecute these proceedings.  The defendant is seriously incapacitated after suffering a stroke and is unable to participate in the proceedings, whether carried on in Hong Kong or in Singapore. 

25.  As the defendant does not carry on any business, the place where the parties carry on business appears to be a neutral factor. 

26.  The place of performance of the contract points towards Hong Kong as being the appropriate forum, being the place where the oral agreements were made, being the place where some of the loans were advanced to the defendant, and being, arguably, the place where the defendant has to repay those loans. 

27.  The location of the defendant’s witnesses is not relevant, as the defendant has no witnesses to call and the defendant is unable to give evidence. 

28.  The trial bundles, containing the relevant documents, have been lodged in court, and the location of these documents can be said to be in Hong Kong.  

29.  I also recognise the plaintiff’s juridical disadvantage in pursuing his claims in Singapore, if I were to refuse to re-grant leave to serve out of the jurisdiction, in that any proceedings now commenced in Singapore are likely to be met with a limitations defence. 

30.  Taking all these factors into account, I conclude that Hong Kong clearly is the appropriate court to entertain these proceedings. 

Renewal of writ

31.  However, a fundamental objection has been raised by Mr Remedios, and accepted by Mr Sherry, that I cannot re-grant leave to serve out of the jurisdiction without, at the same time, renewing the writ which has since expired.  In this connection, Mr Remedios takes a preliminary point.  He asserts that leave to issue a writ for service out of the jurisdiction was never obtained in the present case and, given the judgment of the Court of Appeal in Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd [2009] 3HKLRD 203, this is a fundamental defect which cannot be cured. 

32.  In support of his preliminary point, Mr Remedios has referred me to O. 6, r. 7(1) of the RHC which provides :

“No writ which is to be served out of the jurisdiction shall be issued without the leave of the Court: Provided that if every claim made by a writ is one which by virtue of any written law the Court of First Instance has power to hear and determine notwithstanding that the person against whom the claim is made is not within the jurisdiction of the Court or that the wrongful act, neglect or default giving rise to the claim did not take place within its jurisdiction, the foregoing provision shall not apply to the writ.”

33.  Nothing turns on the proviso in the present case.  Mr Remedios submitted that the plaintiff had not obtained leave to issue the writ for service out of the jurisdiction, and that this was a fundamental defect, as recognized by the Court of Appeal in the Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd [2009] 3HKLRD 203. 

34.  In that case, the plaintiff issued writs in 2003 and 2004 against the defendant as guarantor of loans made to a Hong Kong registered company.  They were purportedly served on the defendant at the Hong Kong residential address given in the guarantees that she had signed. Unknown to the plaintiff, however, the defendant no longer lived in Hong Kong at the time of the issue and purported service of the writs.  In 2004, the plaintiff obtained default judgments against the defendant.  In 2008, the defendant applied to set aside the default judgments on the ground that they had been irregularly obtained.  The Master granted the application and made orders renewing the writs and dispensing with service of the writs.  On appeal from the Master’s orders, the judge held that the orders renewing the writs should be set aside. Since the writs were issued in 2003 and 2004 and had not been renewed in the interim, the Master had no power to renew the writs from the date of his order.  However, the judge affirmed the orders to dispense with service of the writs.  The Court of Appeal allowed the defendant’s appeal.  In the course of her judgment, Yuen JA said :

“33. The rules of court are clear that to make a person outside the jurisdiction amenable to the court of Hong Kong, leave to issue a writ for service out is required under O.6 r.7, and leave to serve that writ out is required under O.11 r.1. That had not been done, the Bank says simply because it did not know the appellant had emigrated. However the fact remains that the writ in each of the actions, quite apart from being lapsed for service, is not valid for service out and no application has been made for leave to serve out.”

35.  I do not agree with the submissions of Mr Remedios.  Unlike the situation that prevailed in Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, when the writ in this case was issued, on 11 June 1999, it was issued with a stamp affixed to it by the Registry bearing the words “not for service out of the jurisdiction.”  This was done because the address of the defendant set out in the writ was a Singaporean address.  On 27 October 1999, on the ex-parte application of the plaintiff by way of affidavit, Master S. Kwan, as she then was, ordered that the plaintiff do have leave to issue a concurrent writ of summons against the defendant and to serve a copy of the said concurrent writ on the defendant’s usual and last known address in Singapore or elsewhere in Singapore.  Pursuant to that leave, the concurrent writ was issued on 5 November 1999 and subsequently served on the defendant in Singapore.  In my judgment, the leave granted by Master S. Kwan to issue the concurrent writ and to serve the same out of the jurisdiction satisfied the requirements of O. 6, r. 7(1) and of O. 11, r. 1 of the RHC. 

36.  The point taken by Mr Remedios had also been taken by the 1^st defendant in Hui Suet Ying, the proposed personal representative of Hui Chung, deceased and Anor v Sharp Corporation and Anor, HCPI 1269 of 1997, 15 February 2000.  In that case, the plaintiffs obtained leave to issue a concurrent writ for service on the 1^st defendant corporation in Japan and effected service through the Minister of Foreign Affairs in Japan.  The 1^st defendant acknowledged service and applied to court to set aside the original writ on the ground that no leave was given to the plaintiffs under O. 6, r. 7(1) of the Rules of the High Court before the original writ was issued.  The 1^st defendant submitted that since the original writ (as opposed to the concurrent writ) was issued without the leave of the court, it was never validly issued.  Suffiad J rejected that submission for these reasons :

“10. The plaintiffs on the other hand submit that Order 6, rule 7(1) refers not to the original writ but to the concurrent writs for those are the documents which are to be served out of jurisdiction. In support of that submission, Mr Harris, who appears for the plaintiffs, referred me to the 1999 edition of The Supreme Court Practice in England and Wales in which Order 6, rule 7(1) contains the additional words ‘for such service’ after the word ‘issued’. He submits that the three additional words in the English rules, which do not appear in the Hong Kong rules, is not because Hong Kong law is different from that in England but because the Hong Kong rules follow the wording of an older version of the English Rules of Supreme Court. In this respect, he has referred me to an extract from the English Annual Practice for 1962, Order 2, rule 4, the predecessor of the present Rules of High Court in Hong Kong which reads :

‘No writ of summons for service out of the jurisdiction, or of which notice is to be given out of the jurisdiction, shall be issued without the leave of the Court or a Judge.’

The footnote to that rule states ‘Usually this leave is given by the Master if and when leave is given for service out of the jurisdiction’.

11. I accept the submission of the plaintiffs as indeed I know of no practice in Hong Kong where the original writ, as opposed to a concurrent writ, has to be issued with leave of the court where it is intended to be served out of the jurisdiction.  The practice in Hong Kong has always been that leave is required only for the issue of a concurrent writ which is to be served out of jurisdiction.” 

37.  I agree with the judgment of Suffiad J.  The practice in Hong Kong is almost invariably to issue a writ on a foreign defendant, without leave of court, which is stamped with the words “not for service out of the jurisdiction”.  Although, as Mr Sherry pointed out, such a writ is not good for service out of the jurisdiction, if the overseas defendant happened to be in Hong Kong, he might well be served with this writ in Hong Kong.  More often than not, however, an application is made for leave to issue a concurrent writ for service out of the jurisdiction and for leave to serve that concurrent writ out of the jurisdiction.  The grant of leave to issue a concurrent writ for service out of the jurisdiction has the effect of satisfying the requirement of O. 6, r. 7(1).  In Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd, no application had been made to issue a concurrent writ for service out of the jurisdiction.  The plaintiff did not do so because it did not appreciate that the defendant had moved overseas. The judgment of the Court of Appeal in that case does not affect the correctness of Suffiad J’s decision in Hui Yuet Ying v Sharp Corporation. 

38.  It was common ground between the parties that I could not re-grant leave to serve the writ out of the jurisdiction unless I also make an order under O. 2, r. 1 and under O. 3, r. 5 to extend the validity of the writ.  It was also common ground that the writ in the present case, which expired many years ago, is not amenable to extension under the provisions of O. 6, r. 8.  A writ is valid in the first instance for 12 months beginning with its date of its issue.  Where a writ has not been served on a defendant within 12 months, the court may extend the validity of the writ, but such extension can only be for a period not exceeding 12 months at any one time. The extension granted must begin with the date immediately following that on which the writ would have expired and the extension must be specified in the order granting the extension.  In Bank of China (Hong Kong) Ltd v Chen Jianren [2009] 3 HKLRD 163, Deputy Judge Carlson accepted that the writ before him was not amenable to an extension under O. 6, r. 8 because it had expired some 5 years before the Master’s order, which was the subject of the appeal before him.  In the present case, the writ was issued in 1999 and no one has suggested that I ought to resort to the provisions of O. 6, r. 8 to renew the writ. 

39.  However, just because resort is being had to O. 2, r. 1 and O. 3, r. 5 to renew the writ does not mean that the strictures imposed on the court’s discretion to renew the writ under O. 6, r. 8 are to be ignored.  As Slade LJ said in Leal v Dunlop Bio-Processes [1984] 1 WLR 874 at 885C-D :

“Likewise, in my opinion, it would have been an improper exercise of the registrar’s discretion under Ord 2, r 1 to make good the irregular service of the writ retroactively in this case, where he could not properly have renewed the writ under Ord 6, r 8. When seeking the indulgence of the court under Ord 2, r 1 [and, I would add, under Ord 3, r 5], in circumstances such as the present, a plaintiff cannot, in my opinion, expect the court to exercise its discretion more favourably than it would be prepared to exercise it on an application under Ord 6, r 8. If he cannot properly enter through the front door of Ord 6, r 8, he should not be allowed to enter through the back door of Ord 2, r 1.”

40.  In two subsequent decisions of the English Court of Appeal, in Golden Ocean Assurance Ltd v Martin, the Golden Mariner [1990] 2 Lloyd’s Rep 215 at pp. 225-226, per Sir John Megaw and in Kuwait Oil Tanker Co SAK v Al Bader [1997] 1 WLR 1410 at pp. 1418-1419, per Staughton LJ, the view was expressed that the criterion of “exceptional case” to cure an irregularity, where service out of jurisdiction under O. 11, r. 1 was concerned, was too stringent and that the test of “good cause” or “good reason” would be the appropriate criterion to justify a retroactive validation.  Having regard to the reasons given by the House of Lords for their decision in Kleinwort Benson Ltd v Barbrak Ltd, The Myrto (No. 3) [1987] AC 597, I incline to the view that a good reason or a good cause is required to explain the failure to obtain leave to serve out of the jurisdiction or the failure to serve the writ during its original period of validity and that it is not necessary to show an exceptional case or the presence of exceptional circumstances. 

41.  In this case, the plaintiff seeks the renewal of the writ in order that the court may re-grant leave to issue a concurrent writ for service out of the jurisdiction and to serve it properly on the defendant in Singapore within the period of its validity.  The plaintiff is required to show good cause or that good reasons are present which support the application for the renewal of the writ in the circumstances of the present case.  The application is prompted by the plaintiff’s difficulty which stems, not from the failure to seek leave to serve out of the jurisdiction, which was done, or the failure to serve the writ within time, which was also done, but from my order discharging the leave that was granted. 

42.  In considering this application, one must not lose sight of the critical fact that the object of service of process upon a party is to bring the proceedings to the notice of the party to be served. This has occurred and it has not been suggested that the service that was effected on the defendant, within the original validity of the concurrent writ, was in any way defective or caused prejudice to the defendant.  However, the order setting aside the original leave to serve out of the jurisdiction has created a limitations defence in favour of the defendant.  The prejudice complained of is that the renewal of the writ for the purpose of re-granting leave to serve out of the jurisdiction would deprive the defendant of his limitation defence and thereby cause prejudice to the defendant.  That is a fact that that must be recognized and weighed in the balance. 

43.  No doubt, the delay in discovering that the plaintiff was an undischarged bankrupt at the time of commencement of these proceedings enures to the benefit of the defendant.  If that fact had been discovered sooner, and before the expiry of the limitation period, the defendant would not have enjoyed a limitation defence upon the discharge of the original leave to serve out of the jurisdiction, if the writ could have been renewed for the purpose of re-granting leave to serve out of the jurisdiction prior to the expiry of the limitation period.  The defendant now enjoys a limitations defence, but that is not an absolute bar to the exercise of the court’s discretion to renew the writ, as the following cases demonstrate. 

44.  In Jones v Jones [1972] QB 576 at pp. 586-587, Sachs LJ said :

“Where it is desired to deprive a defendant of his ability to plead the statute to limitation, naturally the good cause to be put forward must be strong. It is quite impossible to define the circumstances which can constitute ‘good cause’. It is sufficient in the present case to say that here we find the most unusual set of circumstances. Probably, they are and will remain unique … In this class of case, where the effects of statute of limitation have to be taken into account, it may very well be that the climate of opinion, both in the legislature and in the courts is … moving more towards an ascertainment of how lies the balance of justice between the parties.”

As recognised in the decision of the House of Lords in Kleinwort Benson Ltd v Barbrak Ltd, The Myrto (No. 3) [1987] AC 597, it is possible to renew a writ so as to deprive the defendant of the accrued benefit of a limitation period provided, however, that good cause or a good reason is established.  Indeed, where application for renewal is made after the writ has expired and after the expiry of a relevant period of limitation, the applicant must not only show good reason for the renewal, but must give a satisfactory explanation for his failure to apply for renewal before the validity of the writ expired.  Once the court is satisfied that a good reason or a good cause has been shown, it moves on to the next stage of the process, namely, to consider all the circumstances of the case, including the balance of prejudice or hardship, and, in this connection, it must weigh the balance of hardship to the plaintiff if the extension is refused and the hardship to the defendant if it is allowed. 

45.  I do not agree with Mr Sherry’s submissions that the payment of the creditors in full or that the recent fresh order of annulment made by the Singaporean court constitutes good cause or good reason such as would enable the court to exercise its discretion in this matter to renew the writ but I conclude that the court’s desire to exercise its jurisdiction to re-grant leave to serve out of the jurisdiction, for the reasons set out in §§ 14 to 17 above, is itself a good cause and a good reason to renew the writ. 

46.  The plaintiff has also provided a good reason to explain his failure to apply for a renewal of the writ before the validity of the writ expired.  Rightly or wrongly, the plaintiff believed that the writ had been properly served within the period of its validity, pursuant to the leave granted by the court.  It is only when the court set aside that leave to serve out of the jurisdiction that the need arose to apply to renew the writ. Before that leave was set aside, the plaintiff had no reason to apply to renew the writ. 

47.  The fact that a good cause or good reason has been shown is not the end of the matter.  The court has got to go on to consider all the circumstances of the case and to assess the balance of hardship.  The circumstances of the case to be considered include the deliberate non-disclosure by the plaintiff to the Master that he was an undischarged bankrupt in Singapore when he first sought leave to serve the writ out of the jurisdiction.  Indeed, all the matters relevant to the exercise of my discretion to re-grant leave, as set out in §§ 14-17 above, were raised for my consideration in the exercise of my discretion whether or not to renew the writ. 

48.  It is true that the plaintiff is the author of his own misfortune.  He could have discontinued and re-commenced these proceedings in February 2000 after his annulment had been granted.  He did not do so and this is a factor that weighs against the renewal of the writ.  If the deliberate non-disclosure by the plaintiff to the Master, that he was an undischarged bankrupt in Singapore when he first sought leave to serve the writ out of the jurisdiction, does not prevent me from re-granting leave to serve out of the jurisdiction, should it prevent me from renewing the writ?  Again, whilst it is a factor that weighs against the renewal of the writ, it is not conclusive and must be weighed in the balance, together with all other relevant factors.  

49.  Is the defendant’s current medical condition a relevant factor?  I refer to §33 of my Ruling of 13 August 2010.  Just as I decided that the prejudice suffered by the defendant as a result of his stoke could not be a relevant consideration in the exercise of discretion to re-grant leave for service out of the jurisdiction, so too I conclude that it is not a relevant consideration for the exercise of the discretion whether or not to renew the writ.  However, even if it were relevant and even if some weight had to be placed on this factor for the present exercise, if the occurrence of the stoke did not lead Deputy Judge To to conclude that the defendant suffered prejudice, such as would result in the dismissal of the proceedings for want of prosecution, the weight to be placed on this factor must be minimal.  It must also be noted that no additional circumstances arising after the decision of Deputy Judge To on 15 January 2009 have been identified to me as constituting additional prejudice. 

50.  In considering all the circumstances of the case, I take note of the fact that this is a case where proper service was effected on the defendant, pursuant to the leave granted by the court, and that such service was effected within the period of validity of the concurrent writ and at the time when the limitation period had not expired.  Upon being served, the defendant had full opportunity to prepare and marshal his defence to the plaintiff’s claims.  Considering these circumstances, and balancing the hardship to the plaintiff on being deprived of his claim for repayment of alleged loans to the tune of HK$18m against the hardship to the defendant for the loss of his limitations defence, which accrued in the very unusual circumstances of this case, I come firmly in favour of the exercise of my discretion to renew the writ, which I do, in order that I may exercise my discretion to re-grant leave to issue a concurrent writ and to serve the same out of the jurisdiction on the defendant in Singapore.  

51.  This is not a case where the plaintiff failed to apply for leave to issue and serve the concurrent writ out of the jurisdiction such that the court has to retroactively grant leave and validate, after the event, the purported service in a foreign country without leave of process issued by the Hong Kong court.  In this case, the service of process in a foreign country was carried out pursuant to a court order which was valid and remained valid until it was recently set aside. 

52.  For this reason and for the reasons set out above, I am prepared to and hereby extend the validity of the writ under O. 2, r. 1 and O. 3, r. 5 of the RHC from the date of its expiry up to the present and for a further period of 3 months from the date of this order and I hereby re-grant leave to issue a concurrent writ having the same period of validity and re-grant leave to serve that concurrent writ out of the jurisdiction on the defendant in Singapore.  If it is necessary to amend the plaintiff’s summons to enable me to make these orders then I grant leave for those necessary amendments to be effected, with costs to the defendant, and I dispense with re-service of the amended summons. 

53.  Upon enquiry as to whether re-service of the new concurrent writ should be dispensed with, in the event the Court accepted the plaintiff’s submissions and granted the reliefs claimed, Mr Remedios informed me that he had no instructions to agree to service being dispensed with.  Absent agreement and as proper service of process is a fundamental step in the proceedings, I do not dispense with service of the concurrent writ. 

Further directions

54.  I also grant liberty to apply for further directions, including, if necessary, a direction that the current pleadings, lists of documents and witness statements stand as the pleadings, lists of documents and witness statements of the case. 

Costs

55.  I make a cost order nisi that the plaintiff pays the costs of the defendant’s application to strike out the action, and of the hearings on 11 August 2010, 16 August 2010, 23 August 2010, 3 September 2010, 8 February 2011 and 10 February 2011 to the defendant in any event.