YIU SAU LIN v. WONG TANG

HCA 397/2023

[2024] HKCFI 3519

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 397 OF 2023

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BETWEEN

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REASONS FOR DECISION

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1.  On 29 February 2024, this Court granted default judgment (“the Default Judgment”) to the Plaintiff (“Mother”) upon the default of the Defendant (“WT”), who is her youngest son, in filing his Acknowledgment of Service and Defence.

2.  My Reasons for granting the Default Judgment ([2024] HKCFI 656) was handed down on 6 March 2024 (“the Reasons”). I will continue to adopt the same abbreviations used in the Reasons.

3.  I have set out in the Reasons Mother’s pleaded case and averments, which I will not repeat here. In gist, her case is that on a number of occasions in November and December 2021 and by various fraudulent misrepresentations, WT had wrongfully obtained her authority and withdrawn from her accounts in 4 different banks the 4 sums in US dollars mentioned in the next paragraph. Mother was 90 years old at the time.

4.  By the Default Judgment, (a) it was declared that Mother has been the beneficial owner of 4 respective sums, namely, US$174,610, US$201,668.87, US$173,931.34 and US$149,121 (totalling US$699,331.21 (“Mother’s Savings”)) previously kept in her respective bank accounts with 4 different banks, and (b) WT was ordered to return or pay the said 4 sums to Mother with interest at prime plus 1% from their withdrawal dates to date of the judgment, and (c) costs of this action were awarded to Mother with Legal Aid taxation.

5.  I was given to understand by the parties that in executing the Default Judgment Mother obtained a Charging Order Nisi (“the Charging Order Nisi”) against WT. The Charging Order Nisi was served to WT in early May 2023 by posting it to his last known address, namely, Flat 2, 30^th Floor, Block B, Po Nga Court, No 2, Tai Wo Road, Tai Po, New Territories (“the Tai Po Property” or “the Tai Po Address”). The Tai Po Property was one of the 3 properties owned by WT charged by the Charging Order Nisi.

6.  By his summons filed on 13 June 2024, WT applies to set aside the Default Judgment on the basis that it was irregularly obtained in that there was no valid service of the Writ and the SOC, and that in any case, WT has a meritorious defence.

7.  This was the substantive hearing of D’s said summons and another summons issued recently by Mother for leave to adduce her 2^nd Affirmation and the 3^rd Affirmation of Ho Sze Wai Alan (“Ho”). Mother’s summons was disposed of at the hearing by giving leave in respect of Mother’s 2^nd Affirmation but not Ho’s, with costs be to WT to be summarily assessed together with the costs of D’s summons.

8.  At the conclusion of the hearing, I

(1) ordered that upon and conditional on WT paying into court the full sum claimed in the amount of US$699,331.21 on or before 4:00pm on 27 December 2024, the Default Judgment be set aside; failing which the Default Judgment shall stand and the following directions for speedy trial shall henceforth cease to have effect; and

(2) directed that there be a speedy trial of this action, with various directions given, beginning with WT filing his Acknowledgement of Service within 7 days, which directions I will not recount here in detail, preparing for and leading to a speedy trial with 4 days reserved on a date to be fixed not earlier than April 2025.

9.  As the hearing took place in the afternoon instead of starting at 10am as scheduled due to the postponement caused by typhoon signal No 8 and the hearing has already over-run to 5pm, I indicated I would give a costs order nisi on D’s summons in these Reasons.

10.  These are my reasons for so ordering and directing.

Was the Default Judgment regularly or irregularly entered?

11.  As said, WT contended that the service of the Writ and the SOC was invalid. According to the affirmation of service of Ho filed on 31 January 2024, the Writ and SOC have been served to WT by inserting the sealed envelop containing the same into the letter box for the Tai Po Address on 14 September 2023.

12.  WT said, as shown by the Statement of Travel Records issued by the Immigration Department dated 21 May 2024 (“the Travel Records”)[1], that from 9 to 30 September 2023, he was not in Hong Kong. Ms Yau, counsel for WT, contended that, therefore, WT was not “within the jurisdiction” as provided by O.10 r.1(2) when the Writ and the SOC were served and during the 7-day period at the expiry of which service was deemed to have been effected under O.10 r.1(3)(a).

13.  Ms Yau emphasized that WT has “emigrated” to Singapore in 1990s. However, it is WT’s own evidence[2] that he ran certain businesses in Hong Kong such that he was travelling between and staying in Hong Kong and Singapore, though principally staying in Singapore. Apparently, WT has dual citizenship of Hong Kong and Singapore. According to Mr Au, counsel for Mother, not disputed by Ms Yau, that the Travel Records show that in the year 2023, WT was in Hong Kong for more than 150 days. Moreover, WT gave the Tai Po Address as his residential address in his 1^st Affirmation (“WT 1^st”) and 3^rd Affirmation (“WT 3^rd”) filed herein respectively on 13 June 2024 and 18 October 2024.

14.  Mr Au on behalf of Mother cited and relied on the principle and approach summarized by Linda Chan J in Goldteam Group Ltd v Qin Hui [2021] 5 HKC 708.

15.  Goldteam was concerned also with whether a default judgment should be set aside. The center of contention was whether the service of the writ by registered post at the time when the defendant was not in the jurisdiction was nevertheless a valid service. Madam Justice Linda Chan there considered O.10 r.1 and examined the authorities, among them the House of Lord case of Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506, the local Court of Appeal’s judgment in Deng Minghui v Chau Shuk Ling [2007] 1 HKLRD 905 and local CFI decision of Emperor Prestige Credit Limited v King Pak Fu [2021] HKC 41. Her Ladyship then accepted the submission made by the plaintiff there that where a defendant was outside the jurisdiction at the time or on the seventh day after the writ was served in accordance with O.10 r.1(2), the plaintiff could not rely on the deemed date of service stipulated in O.10 r.1(3)(a), but service was effected at the moment when the defendant’s presence within the jurisdiction and his knowledge of the writ coincided.

16.  Her Ladyship then held and summarized at §37:

“37. As I see it, there are 4 possible scenarios which fall for consideration, depending on whether the defendant came within the jurisdiction after the writ was served up to the end of the relevant period (“Relevant Period”)[6] and whether the defendant acquired knowledge of the writ during that period:

(1) The defendant was outside the jurisdiction at the time the writ was served by Postal Mode or Insertion Mode and never came within the jurisdiction during the Relevant Period and had no knowledge of the writ (Scenario 1).

(2) The defendant was outside the jurisdiction at the time the writ was served by Postal Mode or Insertion Mode and never came within the jurisdiction during the Relevant Period, but had knowledge of the writ whilst outside the jurisdiction (Scenario 2)

(3) The defendant was outside the jurisdiction at the time the writ was served by Postal Mode or Insertion Mode but came within the jurisdiction during the Relevant Period, and had no knowledge of the writ during the Relevant Period (Scenario 3).

(4) The defendant was outside the jurisdiction at the time the writ was served by Postal Mode or Insertion Mode but came within the jurisdiction during the Relevant Period, and had knowledge of the writ during the Relevant Period (Scenario 4).”

17.  The “end of the relevant period” as referred to by her Ladyship in §37 of the judgment was stated under footnote 6 there to be “Which, in the case of an application to set aside a default judgment, would be the date the default judgment was entered against the defendant. There may be other relevant dates for other purposes. For example, in an application to discharge an injunction on the ground that the writ (and the order) had not been served on the defendant, it would be the date when the writ expired or the date when the application was made (as appropriate)”.

18.  The relevant period in the present case therefore was the period between the Writ and the SOC was served on 14 September 2023 and the date the Default Judgment was entered on 29 February 2024 (“the Relevant Period”).

19.  Ms Yau did not dispute the above principle and approach.

20.  Mr Au and Ms Yau agreed that therefore in issue presently was whether the service of the Writ and SOC to WT fell within Scenario 3 or Scenario 4. If within the former, the service was invalid; if within the latter, the service was valid.

21.  It was also not disputed that Mother bore the burden to prove, on balance of probabilities, that WT was within the jurisdiction and had knowledge of the Writ and SOC during the Relevant Period.

22.  The following matters are undisputed or indisputable or I find established:

(a) The Travel Records show that WT travelled back to and stayed in Hong between 7-17, 24-26 October 2023, 15-21 November 2023, 29 November – 2 December 2023, 10-14, 24-27 December 2023, 8-10 January 2024, 25 January -5 February 2024, and 26-28 February 2024.

(b) As said, in WT 1^st and WT 3^rd, WT stated the Tai Po Address as his “place of residence” (as required by O.41 r.1(4)). Moreover, in both said affirmations, WT did not say anything at all about where he was staying during the time he was in Hong Kong, and particularly during the time he was in Hong Kong during the Relevant Period. The only reasonable inference I draw therefrom is that WT stayed in the Tai Po Property during all the occasions he came to and stayed in Hong Kong as listed in sub-paragraph (a) above.

(c) I accept the evidence given in various affirmations of service filed by the Mother that apart from the service of the Writ and the SOC on 14 September 2023, in the Relevant Period, (i) Mother’s summons applying for the Default Judgment was served by posting the same to the Tai Po Address on 1 February 2024, and (ii) the hearing bundle, Mother’s written submissions, chronology and list of authorities for the hearing on 29 February 2024 were served by leaving the same at the Tai Po Address on 23 February 2024. Yet, in WT 1^st and WT 3^rd, WT was completely and conspicuously silent as to whether he received these documents or not.

(d) WT’s only evidence on whether and how and when he checked and collected letters from the letter box of Tai Po Address generally and during the Relevant Period was most vague, he seemed to be only saying that he would usually not open letters sent to him:

“18. 由於大埔居所收取例如水、電、煤、差餉及地租等需要繳費的信件本人已安排好自動轉賬，本人一般只會一次過收起信件而不會細看或拆閱，萬一發生事情才會翻閱舊信。” (my emphasis, WT 1^st §18)

(e) However, in next paragraph in the same affirmation (§19), WT said that on or around 11 May 2024 he received in the letter box and realized he was served the Charging Order Nisi (according to the Travel Records, he arrived Hong Kong and passed through immigration check point at 7:41pm on 11 May 2024, a Saturday). And on 14 May 2024 (a Tuesday), he met with his present solicitors regarding the Charging Order Nisi. Now, WT’s version is that all along until he received the Charging Order Nisi, he was unaware of this action. Yet, it was not explained by him why on about 11 May 2024, he acted inconsistent with what he deposed in §18 and checked the letter box of the Tai Po Property shortly after his arrival in Hong Kong, opened and read the letter and discovered that it was the Charging Order Nisi. In my view, it shows that what he deposed in §18 is untrue.

(f) Considering the above, I find on balance of probabilities that WT did regularly check the letter box when he came to Hong Kong and returned to stay in the Tai Po Property. He thus would have received the Writ and the SOC and Mother’s summons applying for the Default Judgment in the Relevant Period.

23.  I thus find that Mother has proven, on balance of probabilities, that WT was within the jurisdiction in the Relevant Period and WT in the Relevant Period had acquired knowledge of the Writ and the SOC. It follows that I hold that WT had been validly served with the Writ and the SOC and that the Default Judgment was a regular judgment.

Setting aside the Default Judgment on condition of payment in

24.  Ms Yau on behalf of WT contended that WT has a defence with strong merits. Mr Au on behalf of Mother disputed that strenuously.

25.  The parties have filed affirmations on merits that are rather detailed. Mother has filed her own affirmation, the affirmation of 王志堅, her eldest son (“the Eldest Son”), the affirmation of 王淑吟and the affirmation of 王淑惠, all dated 27 August 2024. As mentioned, WT has filed WT 1^st and WT 3^rd.

26.  At the hearing, having considered broadly the merits of the parties’ respective case and the circumstances, I took the view that I should exercise my discretion to set aside the Default Judgment conditional upon WT paying the full sum claimed into court. As there would likely be a trial of the parties’ disputes, I would only give my broad assessment of merits sufficient to explain my reasons for ordering that the Default Judgment be set aside only upon such condition.

27.  The basic background is that Mother was born in 1931, is completely uneducated, is illiterate, does not speak Punti fluently, if at all, and only speaks Chaozhou dialect (潮州話). She has 4 children, namely and in order of seniority, 淑惠, the Eldest Son, 淑吟 and WT. Their father died in 1999. It seems to be common ground that by 2019, Mother owned a flat in Kornhill Garden (“the Kornhill Flat”) which is her residence and savings of about HK$5 million.

28.  It is common ground that the relationship between the Eldest Son and WT has been far from good.

29.  According to the Eldest Son :

(a) From November 2018 to February 2019 on a number of occasions, Mother had given to the Eldest Son and WT the total sum of HK$1,870,270.50 each. After having given them such sums, Mother retained savings of about HK$5 million.

(b) In 2019, Mother had revoked authorization for either him or WT to operate Mother’s bank accounts, so that she would be the person in direct control of her bank accounts. After such revocations, the arrangement was that either him or WT would accompany Mother to the bank to assist her.

(c) Since March 2020 and during the Covid epidemic, he was not in Hong Kong and WT became the only person accompanying Mother to the bank to assist her.

30.  Mother’s evidence given in her affirmation was that on the occasions in question, she was intending to renew the time deposits. There in the banks, she signed documents WT told her to sign and WT never mentioned to her about making any gift of Mother’s Savings to him. She only discovered that WT took all her money when the Eldest Son asked her in August 2022 as to why Mother was not receiving any bank statements. She was only left with a small sum, only several tens of thousands, to live by. She decided to make her Will dated 12 June 2023 to exclude WT from the inheritance. She also did not know that WT were recording her in those videos and she was led along to chat by WT.

31.  According to WT:

(a) Since 2021 Mother repeatedly told him that she intended, by way of testamentary gift, to leave the Kornhill Flat to the Eldest Son and the HK$5 million savings to him.

(b) Upon the repeated requests by Mother, and in November and December 2021, Mother caused the 4 withdrawals to be made and money in the total sum of US$699,331.21 was paid to him by way of gift.

(c) This action was commenced upon instigation by the Eldest Son, who swayed Mother to do so, to ventilate the Eldest Son’s animosity towards him.

32.  WT also proffered a number of video recordings, including those made (a) on 14 April 2022 in which he and Mother were present, (b) on 14 August 2022 in which again only him and Mother were present, (c) on 12 May 2024 in which again only him and Mother were present, and (d) on 29 May 2024 in which him, Mother, the Eldest Son and淑吟 were present. WT contended that in these recordings Mother indicated that she agreed that she has gifted WT Mother’s Savings in November and December 2021. Without delving into analyses or going into details concerning these recordings (which presumably would be hotly contested at trial), it seems to me that what were asked of Mother and what she said in purported response were not as clear as would exonerate WT as Ms Yau contended. The circumstances surrounding each recording, their context and what Mother understood to have been asked of her and the precise meaning of her answers, in my view, cannot be decided without hearing oral evidence.

33.  I would only add that at this stage, and if WT’s version were true that Mother intended to make a testamentary gift to WT and was eager to make, and on her own initiative did make, a gift of Mother’s Savings to WT in late 2021, it seems to me puzzling that (a) Mother would in her lifetime of such an advanced age of 90 years old, but still in relatively good health, completely divest herself of her entire savings, leaving herself little to live by and thus vulnerable financially, (b) the 4 respective sums were withdrawn and ultimately paid to WT in rather indirect manners as I have set out in §§9 to 12 of the Reasons, and (c) Mother would make her Will dated 12 June 2023 to make a point that she was excluding WT as one of the beneficiaries.

34.  In all and so broadly assessed, I am not persuaded that WT has a particularly strong or meritorious defence, as Ms Yau contended; or conversely, I am also not ready to conclude, as Mr Au contended, that WT’s defence is of no merits. On the other hand, Mother’s present allegations against WT consist of serious allegations of fraud, and therefore it seems to me undesirable to completely deprive WT of an opportunity to defend. The parties’ disputes should and would be properly resolved by a trial. In the circumstances of the present case and in my view, to ironclad the Default Judgment simply upon WT’s default, thereby denying him a chance to defend, may occasion injustice.

35.  I thus came to a view that the appropriate exercise of my discretion to attain justice between the parties was to set aside the Default Judgment, but only upon WT paying the whole claim into court.

Directions for speedy trial and mediation

36.  Mother sought directions for a speedy trial in view of the fact that Mother is now 93 years old and her ability to give oral evidence would very likely be declining with the passage of time and the just resolution of the parties’ dispute depends very much on her evidence. I accept that this would be so and a speedy trial is appropriate to be ordered. WT also did not dispute that. Thus, I so ordered with detailed directions given.

37.  In the circumstances, at the hearing I also directed parties to attempt mediation within the next 5 weeks, hopefully to resolve this dispute amicably without a trial.

Costs

38.  As this is an application by WT to set aside a regular default judgment, it is an application by him for the court’s indulgence. Though successful in getting it set aside conditionally, the usual costs order is that WT should pay Mother’s costs of this application. Moreover, there is yet nothing to indicate that Mother’s opposition was in any extent unreasonable. I thus would so order on nisi basis to become absolute within 14 days in the absence of any application to vary by summons.

39.  If WT makes the payment in within time, such costs is to be summarily assessed on paper, with Mother lodging and serving her Statement of Costs 7 days after payment in, WT lodging and serving his Lists of Objections within the next 7 days, and Mother her reply within next 5 days. If WT fails to pay the money into court in time, this set of costs shall be taxed as part of Mother’s costs of this action.

40.  Lastly, I thank Mr Au and Ms Yau for their assistance.