HAIFA INTERNATIONAL FINANCE CO LTD v. CONCORD STRATEGIC INVESTMENTS LTD AND OTHERS

HCA 2308/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2308 OF 2006

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R U L I N G

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Introduction

1.  This is an application by Mr Keung Chak, the 2^nd Defendant, to have set aside, as irregularly obtained, a judgment in default of appearance entered against on 8 November 2007.

2.  Mr Lau, who appears for him, submits that the application is one that can be disposed of very shortly.The generally endorsed writ was issued on 16 October 2006.On 15 September 2007 the Plaintiff’s solicitors attempted to serve the writ by registered post on the 2^nd Defendant at what has been described as his usual and last known address which is Flat B, 603, Hong Way Gardens, 8, New Market Street (“the address”).That address was obtained from the records kept at the Companies Registry of the 1^st Defendant filed on 20 January 2003.

3.  Two attempts were made to serve the 2^nd Defendant at the address.Firstly, by registered post on 15 September 2007 which was returned on 12 October 2007 marked “unclaimed and returned to sender”.This attempt is not relied on.The one relied on is of 8 October 2007 when the writ was inserted into the letter-box of the address.

4.  The point that arises is a short one.It is a proven fact from Immigration Department records that the 2^nd Defendant was not in Hong Kong on 8 October.He had left on 2 October and returned to Hong Kong on 10 October.

The law on service

5.  The general provisions on service are contained in Order 10 r1.The rule is that a writ must be served personally on the Defendant by the Plaintiff or his agent [Order 10 r1(1)].An alternative is provided by [Order 10 r1(2)(b)] which allows service by insertion into a letter-box at the Defendant’s usual or last known address.In such circumstances the date of service shall, unless the contrary is shown, be deemed to be the seventh day after the date on which the copy was inserted through the letter-box [see Order 10 r3(a)].

6.  In Deng Ming Hui v Chau Shuk Ling [2007] 1 HKLRD 905 the Court of Appeal held that in order to invoke Order 10 r1(2) a defendant must be in the jurisdiction at the time that he was served.In doing so it applied what had been decided by the House of Lords in Barclays Bank of Swaziland v Hahn [1989] 1 WLR 506.

7.  Mr Lau, for the 2^nd Defendant, submits therefore that this is conclusive and there can be no answer to his summons.

8.  Mr Kwok, in resisting the application, has addressed a contrary argument to the effect that once it is shown that the Defendant has returned to Hong Kong, in this case on 10 October, three days after the actual insertion of the writ at the address, then the deeming provision [7 days after the date of insertion] will be activated from 10 October and valid service will have been effected on 18 October.

9.  Very frankly Mr Kwok recognises that if I were to follow that submission I would be making new law.For my part I would have thought that this would not only be new law but also bad law.The position is very well settled and once it can be shown, as it has in this case, that a defendant is not in Hong Kong on the date when the writ was inserted into the letter-box of his address, service in this way will be held to have been invalid.There is simply no warrant to construe this provision in any other way.The fact is that personal service is the primary recognised means of service but a concessionary alternative means is provided by Order 10 r2 (a) by registered post and (b) by insertion through the letter-box of the defendant’s usual or last known address, after which good service is deemed after the expiry of 7 days.This deemed good service can be displaced whenever a defendant shows that he was not in Hong Kong on the date of insertion of the writ into the letter-box.Once this is demonstrated that is the end of the matter.Mr Kwok wishes me to suspend the running of the 7-day deeming period to, as it were, await the return of the Defendant to Hong Kong when the clock will then start to run to its 7-day deemed conclusion.I do not consider that such an interpretation is open to me.

10.  I hold therefore that there has not been valid service and that the judgment obtained was an irregular one.In such circumstances it ought to be set aside as of right.

Conditions on setting aside

11.  There has been argument as to whether I should impose conditions on the 2^nd Defendant.It seems to me that the law in Hong Kong is now clear where a judgment has been set aside ex debito justitae.In the case of Po Kwong Marble Factory Ltd v Wah Yee Decoration Co Ltd [1996] 4 HKC 157, the Court of Appeal has held that a court retains a residual discretion to impose terms on a defendant even in a case of an irregularly obtained judgment.In this case there is no ground for the imposition of terms.There has been no culpable delay on the part of the Defendant in making his application and even more importantly, the fact is that the case against the other Defendants has been struck out as disclosing no reasonable cause of action.A fortiori this is the position that would also obtain in this Defendant’s case.I think one must therefore go back to the beginning.The judgment will go unconditionally and the parties must take their own course as to how the action can be prosecuted (in the Plaintiff’s case) and resisted (in the 2^nd Defendant’s case).

12.  I anticipate that the Defendant will apply to have it struck out and I am told that the Plaintiff intends to amend its case against the 2^nd Defendant to plead an action in contract against him alone thereby putting the matter on a separate footing against the 2^nd Defendant from that advanced against the other two defendants.Those events, must therefore be awaited.The costs of this application must be to the 2^nd Defendant to be taxed on a party and party basis and the Plaintiff will in addition bear its own costs in obtaining this irregular judgment.These orders for costs will be orders nisi in the usual way.