HARVEST RISE LTD v. LAW KWOK YAN

HCA 771/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 771 OF 2004

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J U D G M E N T  

1. This is an appeal against the costs order made by Master Au- Yeung. 

2. On the defendant’s application to set aside judgment entered in default Master Au-Yeung decided that the judgment that was entered by the plaintiff was regularly entered.  However, she exercised her discretion to set aside the judgment on the ground that the defences raised showed a real prospect of success. 

3. There was an issue before her as to whether or not the judgment was a regular judgment.  That issue was decided in favour of the plaintiff and she held that the judgment was regularly entered.  There is no appeal from that decision of the Master.  The appeal is as to the costs order made.

4. By her order dated 12 January 2005, she ordered that the judgment in default be set aside and that the defendant do pay the costs of the application to the plaintiff.  She further ordered that the assessment of costs be adjourned to 21^st January 2005. 

5. On 21 January 2005 she ordered that the defendant do pay the costs which she assessed in the gross sum of HK$110,000.00 to the plaintiff.  She further ordered that the application of the defendant for stay of the costs order be refused and the costs of that application be assessed in the sum of HK$2,000.00 to be paid by the defendant to the plaintiff.

6. Mr. Chung, for the defendant, tried to argue that the judgment that was entered was an irregular judgment.  However, it is not open to the defendant to argue that the judgment was an irregular judgment.  That has already been found by the Master to be a regular judgment entered by the plaintiff.  There is no appeal from that decision and it is not open to the defendant to re-open that matter before me. 

7. As I have said, this is an appeal as to costs only.  An appeal from a Master to a Judge as to costs only should not be allowed unless it could be shown that the order made by the Master in the exercise of her discretion was unreasonable or erred in law namely, if she either failed to take into account proper matters or took into account matters that should not be taken into account (marginal note 58/1/6 Hong Kong Civil Procedure 2004 and Paul Y-ITC Construction Ltd. v. Kin Shing Co. Ltd. [1999] 1 HKC 511). 

8. Mr. Chung argued that the usual practice is for the plaintiff to be awarded its costs in any event where there is a regularly obtained judgment but it is inappropriate to do that when neither party had been at fault (marginal note 13/9/16 Hong Kong Civil Procedure 2004).

9. In this case the defendant applied to set aside the judgment on the ground that service of the writ was irregular and further, that the obtaining of the default judgment was by fraud.  The Master dealt with these matters in her Reasons for Decision dated 12 January 2005.  She was satisfied that the judgment was regularly obtained and she also frowned upon the allegations of fraud made without proper particulars being given. 

10. I am unable to accept that there has been no fault on the part of the defendant. 

11. The Master at para. 12 of her Reasons for Decision said this :

“Whilst I accept the defendant had tried to, but was prevented, from filing the acknowledgment of service because of the plaintiff’s failure to file and seal Master Kwan’s order, that barrier was removed from 13 August onwards.  Order12, rule 6(2) did not bar the defendant from filing an acknowledgment of service out of time, he could have done so without leave of the court.  Even if leave of the court was required, an application taken out shortly after 13 August would doubtless have received sympathetic treatment of the court coupled with a cost order against the plaintiff.  The defendant had not made use of the opportunity after 13 August to file an acknowledgment of service.”

12. And at para. 18, she said this :

“Taking all circumstances into account, I am of the firm view that the re-service was proper, was effective and that the judgment was regularly entered on 30 August.  The opportunity for the defendant to file the acknowledgement of service was not taken through no fault of the plaintiff from 13 August to 29 August.”

13. Order 12, rule 6 makes it plain, in my view, that a defendant is not precluded from acknowledging service in an action after the time limited for so doing.  It goes on to say that if the defendant acknowledges service after that time, he shall not, unless the Court otherwise orders, be entitled to serve the defence or do any act later than if he had acknowledged service within that time.  There was nothing to stop the defendant from acknowledging service of the writ after the barrier had been removed from 13 August onwards.  So for the period from 13 August to 29 August the defendant did not make use of the opportunity to file an acknowledgment of service.  I, therefore, cannot say that there was no fault on the part of the defendant. 

14. The defendant has failed to persuade me that the Master in the exercise of her discretion erred in law or that her order was unreasonable.  In the circumstances the appeal is dismissed.