THE HONG KONG SETTLERS HOUSING CORPORATION LTD v. TAM WAI LAN

DCCJ 5582/2023

[2025] HKDC 97

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5582 OF 2023

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BETWEEN

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DECISION

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I. INTRODUCTION

1.  Before me is the defendant’s summons filed on 23 September 2024 (the “Setting Aside Summons”) to set aside the judgment entered on 31 May 2024 (the “Order 14 Judgment”) against her in the absence of her attendance to the hearing of the plaintiff’s Order 14 summons filed on 23 April 2024 (the “Order 14 Summons”).

II. BACKGROUND

2.  The background has been set out in §§2 – 6 of my decision ([2024] HKDC 2110) (the “CMC Decision”) delivered at the Case Management Conference (the “CMC”) on 16 December 2024, and I shall not repeat the same here.

3.  In respect of the procedural history specific to the present action:-

(1) On 13 December 2023, the plaintiff issued the writ of summons herein endorsed with a statement of claim. In essence, the plaintiff’s claim against the defendant is a landlord-and-tenancy matter concerning the premises known as Flat No 307, 3^rd Floor, Man Lok House, Tai Hang Sai Estate, Kowloon (the “Premises”). Specifically, the plaintiff claims that the subject tenancy agreement (the “Tenancy Agreement”) dated 26 May 2021 had expired on 30 April 2023 without renewal (or alternatively, a monthly tenancy at will thereafter) and the defendant should thus return vacant possession to the plaintiff;

(2) On 19 January 2024, the defendant returned the acknowledgment of service (the “Acknowledgment of Service”) with the address of the Premises filled in as the address for service;

(3) On 15 February 2024, the defendant, then acting in person, filed a defence (the “Defence”);

(4) On 23 April 2024, the plaintiff filed the Order 14 Summons and served it with the supporting affirmation (collectively, the “Order 14 Papers”) by ordinary post to the address of the Premises;

(5) On 31 May 2024, in the absence of the defendant’s attendance, Madam Registrar Soong entered the Order 14 Judgment;

(6) On 23 September 2024, the defendant filed the Setting Aside Summons returnable before Master on 30 September 2024;

(7) On 30 September 2024, for a better case management with all the related cases, the Setting Aside Summons was not substantively dealt with but was adjourned to the CMC on 16 December 2024 to be dealt with by me as well;

(8) The defendant acted in person all along until 7 October 2024, when Messrs Mohnani & Associates (“Mohnani”) filed a Notice to Act for the defendant;

(9) On 16 December 2024, I gave directions in relation to the conduct of the Setting Aside Summons; and

(10) The matter is now placed before me for my substantive disposal.

III. LEGAL BASIS FOR SETTING ASIDE

4.  As mentioned above, the Order 14 Judgment was entered in the absence of the defendant. To set aside such a judgment, the defendant would apply to set aside the same pursuant to Order 14 rule 11. The legal principles in relation to such an application to set aside are essentially the same as those governing an application to set aside a default judgment under Order 13 rule 9: see Hong Kong Civil Procedure 2025 Vol 1, §14/11/1.

5.  Thus, the first matter the Court would have to consider is whether the service of the Order 14 Papers was regular or irregular. If it was regular, then the Court would consider whether there are any real prospects of success in the intended resistance to the Order 14 Summons, and if it was irregular, normally, the judgment would be set aside without consideration of merits.

IV. SERVICE

6.  It must be noted that service of the Order 14 Summons, not an originating process, does not require personal service. By Order 65 rule 5(1)(c), service by ordinary post to the usual or last known address is good service.

7.  Since the defendant herself wrote the address of the Premises in the Acknowledgment of Service, this address clearly is the usual or last known address of the defendant.

8.  The plaintiff served the Order 14 Papers by post under Order 65 rule 5. By virtue of section 8 of the Interpretation and General Clauses Ordinance (Cap 1), for a service by post, there should be “properly addressing, pre-paying the postage thereon and dispatching it by post”. The commentary in Hong Kong Civil Procedure 2025 Vol 1 §65/5/4 states that “proof of prepayment as well as posting is necessary”. In the affirmation of service of Hon Shu Min, the only affirmation of service placed before Madam Registrar on 31 May 2024, Hon Shu Min only said that he served the Order 14 Papers by post to the address of the Premises, but there is not even a mere allegation of pre-paying the postage thereon (let alone documentary proof like an envelope with a stamp thereon one would usually see).

9.  When I noticed this, on Monday (13 January 2025), I directed the plaintiff to point to the Court any evidence of prepayment of the postage. The next day, that is, 14 January 2025, the plaintiff issued a summons for leave to file a supplemental affirmation of service, where a solicitor of the plaintiff’s solicitors instead of Hon Shu Min explained that the envelope containing the Order 14 Papers was stamped with the firm’s Private Franking Machine (for which stamping the firm would then pay the Hong Kong General Post Office) and exhibited a record showing that on 23 April 2023 (the date of the posting according to the affirmation of Hon Shu Min), the Private Franking Machine was used. The way the evidence is now presented before me actually requires me to draw an inference from the record that the usage of the Machine on 23 April 2024 was indeed for the Order 14 Papers. On balance, I make such inference. I do not see any prejudice the defendant would suffer given that the defendant has never relied on this prepayment of postage point which, as I mentioned, was raised by me. In any event, Ms Lydia Leung (leading Mr Christopher KH To), fairly does not oppose this supplemental affirmation Therefore, I allow the late application with costs to the defendant. I also have no reason to doubt the accuracy and truthfulness of this supplemental affirmation. Therefore, I accept that with the supplemental affirmation, there is evidence of prepayment of postage. So, the service of the Order 14 Papers by post complies with Order 65 rule 5.

10.  Before I proceed further to consider the matter, as a general advice for those firms which use Private Franking Machine, I should say that the most direct evidence of posting and pre-payment of postage is a photograph of the envelope stamped by the Machine. The solicitors may be the one to blame if the Court does not agree to make the inference as I did above.

11.  Where a defendant deposes that she does not have knowledge of the proceedings, the defendant is required to provide convincing evidence, and the court should consider the evidence with regard to probability: see Bank of China (Hong Kong) Ltd v Cheung King Fung [2007] 1 HKLRD 462 at §§32-34 per Tang JA and Carlye Chu J (as they then were).

12.  In the present case, the defendant alleges that she did not receive the Order 14 Papers and did not have notice of the hearing of 31 May 2024. The defendant’s attempted explanation for her purported non-receipt of the Order 14 Papers is set out in §14 of her affirmation:-

“I am also advised and verily believe that due to the large volume of the documents of summary judgment application by the Plaintiff together with Hau’s affirmation and exhibits… (a total of nearly 50 pages), the papers could not be inserted into the small size letter box for my flat on the ground floor of Man Lok House. It could have been easily discarded by someone if the paper bag containing the court papers was left unattended on the top of the letter box case as shown in the photographs… especially many occupants of the building were moving out with loads of unattended letters, envelops, documents left in the letter boxes area in May 2024”.

13.  The defendant’s son echoed in §13 of his affirmation:-

“Taking into account the thick volume of the papers for the summary judgment call-over hearing, they could not be inserted into the small size letter box of our Flat. If it was sent by ordinary mail, the paper bag containing the papers would most likely be left unattended on the top of the letter boxes or in that area. As many of the occupants were moving out during that period, it could easily had been discarded by the cleaning workers. If the papers had been delivered at the door of our Flat, I should have received them when I visited the Defendant for taking care of her”.

14.  I am not be convinced by this explanation:-

(1) By 19 January 2024 (the date of the return of the Acknowledgment of Service), the defendant and the defendant’s son must have already known the existence of the action already. They should thus be more alert to checking whether any further legal documents would be sent to their letterbox. This is in fact what the defendant’s son said in §7 of his affirmation that he paid “special attention to any correspondence sent to us”;

(2) In fact, according to the defendant’s son, on 11 June 2024, when he was going to visit the defendant in the Premises, he found that a copy of the Order 14 Judgment with the plaintiff’s solicitors’ letter had been inserted into the letterbox for the Premises;

(3) There is no evidence from the defendant that when the defendant or the defendant’s son received the Order 14 Judgment, any of their reaction was something like how the plaintiff would be able to obtain the judgment without them explaining to the court. Instead, on 2 September 2024, they even went to the plaintiff’s solicitors’ office preparing to sign a settlement agreement they had since 6 June 2024 been negotiating on (though they did not sign it eventually). I would think that if the defendant did not have any knowledge of the Order 14 proceedings, they would have immediately asked the plaintiff’s solicitors especially when they had been in contact with the plaintiff’s solicitors already by 11 June 2024;

(4) Further, I have doubt whether the postman would not be able to fold documents of less-than-50 pages and insert them into the letterbox, as surmised by the defendant and the defendant’s son;

(5) In any event, leaving on top of letterboxes bulky mail is common practice. Even assuming that the postman did not insert the Order 14 Papers into the letterbox and really put it on top of the letterboxes like in the photographs exhibited to the defendant’s affirmation, as the defendant and the defendant’s son had been put on alert of the existence of the present action, they would have checked any mail put on the top as well;

(6) Even without such alert by the litigation, they would still do so because as the defendant and the defendant’s son themselves said, quite a number of residents had moved out already and thus there would only be fewer mail and it would be more conspicuous to anyone when there was mail on the top. Even without the litigation, the defendant and the defendant’s son would be concerned if the plaintiff would have any new offer for them to move out or any legal proceedings against them. They would probably check not only the letterbox but also the top of the letterboxes;

(7) I do not accept the defendant and the defendant’s son’s surmise that the cleaning workers may have discarded the mail. First, it is not the defendant’s surmise and evidence that the postman left the mail on the ground. I do not understand why cleaning workers would take the trouble to discard mail put on the top of the letterboxes. Second, the mail contained the Order 14 Papers of just less than 50 pages. Though not bulky in my view, the mail must have looked substantial. It is highly improbable the cleaning workers would discard such substantial mail in any event, a fortiori put on the top of the letterboxes; and

(8) Lastly, insofar as the defendant attempts to differentiate herself from the defendant’s son in terms of knowledge of the existence of the Order 14 Papers (for example, I see from §12 of the defendant’s son affirmation that he signed the consent for delivering the keys to the plaintiff without the defendant’s knowledge), I dismiss such attempts as highly improbable. As the defendant’s son himself deposes, he took care of the defendant and he assisted the defendant in filing out the Acknowledgement of Service and paid special attention to correspondence sent to “us”. It would be highly improbable that the defendant’s son would withhold informing the defendant of any matter in relation to the present litigation.

15.  The burden lies upon the defendant to convince me that she did not have the knowledge. On the analysis above, I find her evidence (more accurately, surmise only) not convincing. This is sufficient for the present purpose. I do not need to go into the plaintiff’s evidence alleging that the defendant was evasive in accepting legal documents and/or taking calls from the plaintiff’s solicitors.

16.  Therefore, I find that the service of the Order 14 Papers regular. I now have to consider the merits of the defendant’s defence.

V. MERITS OF DEFENCE

A. Defence prepared by defendant acting in person

17.  The Defence was prepared by the defendant acting in person. In summary:-

(1) The defendant did not renew the tenancy because of the redevelopment of Tai Hang Sai Estate (“THSE”), in which the Premises is located;

(2) During the 560^th Town Planning Board meeting in 2016, the Secretary for Transport and Housing commented that if the plaintiff failed to reach an agreement with existing tenants on rehousing / decanting arrangements, the development should not proceed;

(3) In the Chief Executive’s 2021 Policy Address, the Chief Executive stated that “the Executive Council has recently given approval for [the plaintiff] and the [Urban Renewal Authority] to jointly implement the project, on condition that [the plaintiff] will provide proper rehousing arrangements for existing tenants”;

(4) The plaintiff openly promised to assist those tenants who choose rehousing / decanting arrangement to look for transition housing; and

(5) The defendant chose rehousing / decanting, but she does not agree to the arrangement proposed by the plaintiff, which she thinks is not suitable to her.

B. Judicial Review

18.  This Defence in my view is essentially the same as the grounds of judicial review in the Form 86 of the judicial review (HCAL 1600/2024) (the “Judicial Review”) mentioned in §1 of the CMC Decision. The Judicial Review was lodged by the defendant, Madam Leung, in DCCJ 5511/2023. Although the decision being the subject decision under the Judicial Review is the plaintiff’s decision specifically against Madam Leung, namely, (a) the decision to limit any rehousing and relocation arrangement and assistance to a one-off rental subsidy (the “Rehousing Arrangement Decision”) to Madam Leung and the decision to terminate (the “Eviction Decision”) Madam Leung’s tenancy and evict her, the grounds there are in my view generally applicable to the plaintiff’s decision to terminate and/or evict the tenants in THSE. In essence, the grounds set out in the Form 86 of the Judicial Review are:-

(1) “Since 2016, the Government and the Town Planning Board have echoed the residents’ concerns for rehousing and directed that [the plaintiff] is to provide proper rehousing arrangement to affected residents of THSE during the redevelopment period. [The plaintiff] itself has promised to give priority to address the needs of affected residents for rehousing and relocation, including in a statement to the Legislative Council in March 2019”: see §6 of Form 86;

(2) “In a sharp volte-face in June 2023, [the plaintiff] announced a rehousing and relocation plan (i.e. the Rehousing Arrangement Decision) which: [a] only provided for relocation if a tenant met income/asset requirements; [b] only provided limited assistance in the form of a one-off lump sum payment (“One-Off Rental Subsidy”), with no guarantee that such sum would be sufficient to enable the affected residents to find suitable alternative housing for the entirety of the redevelopment period…” see §7 of Form 86;

(3) “This would mean that [Madam Leung], an 85-year-old lady, would be left to her own devices to find accommodation during the redevelopment period… in stark contrast to relocation arrangements which are standard and commonplace in other public housing redevelopment cases, where the Government would take appropriate steps to guarantee that affected tenants will not be left without a roof over their heads”: see §8 of Form 86;

(4) “… Instead of striving to meet the reasonable requests of affected residents… [the plaintiff] took the strong-handed option of commencing legal proceedings in the District Court claiming for a repossession of the residents’ flats”: see §9 of Form 86;

(5) “Ground 1: The Decisions had the cumulative effect of terminating [Madam Leung’s] tenancy before commensurate alternative housing is provided to [Madam Leung] during the redevelopment period, in breach of the applicable policy/Government directives (both as directed by the Government and which HKSHC had represented to the Legislative Council) which stipulated that satisfactory rehousing and relocation of affected residents is a precondition to redevelopment, and are thus unlawful”: see §15(1) of Form 86;

(6) “Ground 2: The Rehousing Arrangement Decision where a One-Off Rental Subsidy is given to [Madam Leung] to find alternative accommodation on her own with no guarantee that she will be able to secure comparable alternative housing for the entire redevelopment period, as well as the Eviction Decision which evicted [Madam Leung] and her family from the Flat before a proper and lawful rehousing arrangement is devised, are irrational, perverse and Wednesbury unreasonable”: see §15(2) of Form 86; and

(7) “Ground 3: [The plaintiff] is also in breach of [Madam Leung’s] substantive legitimate expectation when it reneged on: (a) the Government-mandated directives; and (b) its prior representations to the general public via its statement to the Legislative Council, in failing to devise a proper and lawful rehousing arrangement for affected residents and proceeding to evict those residents before such an arrangement is properly put in place”: see §15(3) of Form 86.

C. Judicial Review generally applicable and same as Defence

19.  The Judicial Review is not specific to Madam Leung in DCCJ 5511/2023 only. The grounds set out there are generally applicable to the plaintiff’s decision to terminate and/or evict any tenant in THSE based on the Rehousing Arrangement Decision for the purpose of the redevelopment.

20.  Both the Defence and the Form 86 refer to the Government’s representation and the plaintiff’s own promise that the plaintiff should provide proper rehousing arrangement to affected residents of THSE during the redevelopment period. Both complain that the plaintiff has not properly exercised its power to make the decisions. Both essentially say that the decisions are therefore invalid.

D. Current proposed defence

21.  In the defendant’s affirmation of the Setting Aside Summons prepared by Mohnani, a draft defence is attached to the affirmation. The draft defence deletes the Defence prepared by the defendant acting in person, and proposes defence essentially along the line of the defences which were filed for the defendants in DCCJ 5546/2023, DCCJ 5614/2023, DCCJ 5509/2023 also represented by Mohnani. I summarised the defence in §11 of the CMC Decision. In Ms Leung’s submissions for the defendant, she does not refer to the causes of action proprietary estoppel or promissory estoppel as in §11(7) of the CMC Decision but instead refers to implied term, non-derogation from grant and unequal bargaining power.

22.  Although the deletion of the original Defence is proposed, Ms Leung’s submissions still refers to the Judicial Review (as she did at the CMC as a ground for stay of proceedings), and during the hearing, she confirmed to me that the defendant would still rely on the Judicial Review as another defence.

23.  In these circumstances, I see no prejudice caused to the plaintiff if I allow the defendant still to rely upon the Judicial Review as a defence, despite the proposed deletion of the original Defence.

D. Real prospect of success of Defence?

24.  A defence in public law may constitute a valid defence to a private claim: Wandsworth LBC v Winder [1985] 1 AC 461 at 506C-D, 509E-H; North British Housing Association v Matthews [2005] 1 WLR 3133 at §12; Kay v Lambeth LBC [2006] 2 AC 465 at §60. Here, the Defence goes to the power of the plaintiff, specifically, the Defence (as well as the Judicial Review) is saying that the plaintiff did not have, or could not properly exercise, the power to make the Rehousing Arrangement Decision and the Eviction Decision against the defendant. If the Defence is established, this would mean that the plaintiff simply did not have any power to commence the present action in the first place.

25.  In an Order 14 application, where a defence is reasonably arguable, unconditional leave should normally be granted to defend. Coleman J granted leave for the Judicial Review in [2024] HKCFI 2592, and the substantive hearing will take place on 25 April 2025. His Lordship’s grant of leave to apply for judicial review means that the grounds in the Judicial Review are reasonably arguable. In other words, the Defence is reasonably arguable.

26.  This means that there is a real prospect of success of the defendant in resisting the Order 14 Summons.

27.  It remains for me to say that although at this interlocutory stage, I have quite some doubt over the validity of the other defences raised in the draft defence, given my opinion above, I should refrain from expressing any further view.

E. Residual discretion

28.  This usually is sufficient to set aside the judgment. However, Ms Margaret Chan, counsel for the plaintiff, urges me not to exercise my discretion to set aside the Order 14 Judgment. In determining how to exercise my discretion, the Court has to consider all relevant circumstances depending on the individual facts of that case, for example, why the default occurred; the defendant’s conduct after he had notice of the proceedings; an explanation for the time taken for the delay; and any prejudice to the plaintiff and third parties. That said, “[t]he consideration of merits would usually transcend any reasons given by the defendant for the delay in making the application… This may be so even where the explanation given by him on oath is false…”: see Hong Kong Civil Procedure 2025 Vol 1 §13/9/13.

29.  Here, the defendant’s explanation for the delay is that in June 2024, the parties negotiated for a settlement and only on 2 September 2024, when the plaintiff (accompanied by her sons) saw the terms of the draft settlement did she refuse to accept the settlement. Then, on 19 September 2024, the Premises was locked up by the plaintiff. The happening of such events was put on affirmations filed by the defendant on around 21 October 2024, and in the reply affirmation (that is, the 3^rd Affirmation of Hau Kim Keung), the plaintiff did not traverse such events. The delay is less than 4 months, and essentially, the reason for the delay is that there was some negotiation between the parties to the point that there was a draft settlement agreement ready for the parties to sign. I accept that this is a good reason for the delay.

30.  Ms Chan, for the plaintiff, contends that there would be prejudice if the Order 14 Judgment is set aside, because setting aside would mean that the plaintiff cannot retain the possession of the Premises and according to §18(e) of the 3^rd Affirmation of Hau Kim Keung dated 7 November 2024:-

“The Plaintiff had commenced the advance works for demolition of Man Lok House [where the subject premises is situated] since September 2024. Man Lok House is therefore blockaded with restricted access for safety concerns. The Defendant was duly informed that the Plaintiff had moved all the left behinds to a vacant commercial unit in Man Hing House temporarily and discretionally allow the Defendant and/or her representative to collect the left behinds within 30 days from 17 October 2024. However, the Defendant did not make any appointment…”

31.  For the following reasons, I do not accept that there is any real prejudice that the plaintiff would suffer that would prevent me from exercising the discretion to set aside the Order 14 Judgment:-

(1) Ms Leung (for the defendant) said that the defendant well knows that it is practically impossible for her to move back into the Premises for residence purpose. All she would like, as she has affirmed in the affirmation, is to go back to get back her left behinds. On this, I note that there is dispute over whether the defendant actually wanted to get back her left behinds or not, given that according to the plaintiff, the defendant did not respond to the plaintiff’s permission (as recounted in §18(e) of the 3^rd Affirmation of Hau Kim Keung quoted above) for the defendant to get back the left behinds already moved to some other place. That said, I think the point here is clear – the defendant does not intend to get back the possession of the Premises. This is consistent with the defendant’s intended counterclaim for declaratory and monetary relief only, but not any order for possession of the Premises;

(2) There is no evidence placed before me as to how the redevelopment as a whole would be affected if the Order 14 Judgment is set aside. But by the CMC directions I gave at the CMC hearing on 16 December 2024, the most advanced the parties in the related case has proceeded to is evidence stage only, and the second CMC will take place on 9 May 2025. In the circumstances, I do not see how setting aside the Order 14 Judgment here will have any significant impact on the redevelopment as a whole;

(3) The demolition of Man Lok Building was said to have commenced in September 2024. But the un-traversed evidence is that the plaintiff locked up the Premises only on 19 September 2024. The defendant issued the Setting Aside Summons 4 days later on 23 September 2024. Added to all these is Coleman J’s grant of leave in the Judicial Review on 16 September 2024. Ms Chan also fairly confirms to me during the hearing that by the time of the 3^rd Affirmation of Hau Kim Keung dated 7 November 2024 (where the deponent said that the demolition had commenced “since September 2024”, short of mentioning the progress or completion of the demolition), the demolition has not finished. Having considered all these, it is, in my view, that though entitled to given that there is no order to stay the execution of the Order 14 Judgment, the plaintiff has proceeded with the demolition with its eyes wide opened to the risk that the Order 14 Judgment would be set aside; and

(4) In any event, as mentioned above, the defendant is not asking to move back into the Premises for residence purpose. The defendant is of course also not asking for restoration of the demolished parts of Man Lok Building.

32.  Having considered the above, especially the real prospect of success in resisting the plaintiff’s Order 14 Summons and the absence of any real prejudice against setting aside, I find it appropriate to exercise my discretion to set aside the Order 14 Judgment.

VI. CONCLUSION

33.  In the circumstances, I allow the Setting Aside Summons.

34.  As regards costs, despite my finding above that the service of the Order 14 Papers was regular, the affirmation of service of Hon Shu Min placed before Madam Registrar did not, by reason stated in §9 above, prove proper service. At the hearing before Madam Registrar on 31 May 2024, in the absence of the defendant, the plaintiff had duty to draw the Court’s attention to that, instead of making submissions that the service was proper. Had this been done, Madam Registrar would not have entered the Order 14 Judgment, and there would not have been this application before me. That said, as I have found above, with the supplemental affirmation of service, the service was regular, and thus the defendant is also to be blamed. In the circumstances, I make no order as to costs of the Setting Aside Summons. As regards the costs order made by Madam Registrar for entering the Order 14 Judgment, since this is not an appeal, I do not have any jurisdiction to vary the costs order.

35.  I shall now hear submissions on CMC directions bearing in mind that the Case Management Conference of the present case should take place together with the other related cases on 9 May 2025.