BRIGHT SUCCESS PROPERTIES LTD v. DIAS, SANDRA MARY ELIZABETH

DCCJ4464/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4464 OF 2013

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DECISION

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1.  This is an appeal against master’s decision by the defendant.

2.  On 20 May 2014, Master D Ho dismissed the defendant’s application to set aside the default judgment dated 3 January 2014 and the Writ of Possession and Fieri Facias Combined dated 14 February 2014.  The learned master ordered the defendant to pay the plaintiff costs of the application forthwith summarily assessed at HK$20,000 and the sum of HK$60,000 paid into court by the defendant on 31 March 2014 be paid out forthwith to the plaintiff as partial satisfaction of the default judgment.  It is against this order that the defendant now appeals to me.

Background

3.  The Writ of Summons was issued on 19 November 2013.  The plaintiff’s claim against the defendant is based on a tenancy agreement dated 23 November 2012 (“the Tenancy Agreement”).  Pursuant to the Tenancy Agreement, the plaintiff let the premises known as Rear Portion of 3/F, No 8A Mosque Street, Hong Kong (“the Premises”) from 9 November 2012 to 8 November 2013 at a monthly rental of HK$10,000 to the defendant.  The plaintiff’s case is that the Tenancy Agreement expired on 8 November 2013 but the defendant refused to quit the Premises and deliver vacant possession.  The defendant has also failed to pay rent for the period from 1 October 2013 to 8 November 2013.  The plaintiff is claiming against the defendant for:-

(a) Order for possession of the Premises;

(b) The sum of HK$12,666.66 being rent for the period from 1 October 2013 to 8 November 2013;

(c) Mesne profits at the rate of HK$10,000 per month from 9 November 2013 to the date of delivery up of vacant possession of the Premises;

(d) Interest; and

(e) Costs. 

4.  The defendant failed to give notice of intention to defend and judgment was entered against her on 3 January 2014 in the following terms (“the Default Judgment”):-

(a) The defendant do give the plaintiff possession of the premises described in the Statement of Claim endorsed on the Writ of Summons as Rear Portion of 3^rd Floor, No 8A Mosque Street, Hong Kong; and

(b) The defendant do pay the plaintiff: -

(i) The sum of HK$12,666.66 together with interest thereon at the rate of 8% per annum from 19 November 2013 to the date hereof and thereafter at judgment rate until payment;

(ii) Mesne profits at the rate of HK$10,000 per month from 9 November 2013 to the date when vacant possession is delivered up to the plaintiff by the defendant; and

(c) Costs.

5.  On 16 January 2014, the plaintiff applied for leave to issue a Writ of Possession and the same was granted by Master M Lam on 17 January 2014.  A Writ of Possession and Fieri Facias Combined was issued on 14 February 2014 (“the Writ of Possession”).

6.  On 5 March 2014, the defendant took out a summons to apply to set aside the Default Judgment and the Writ of Possession (“the Setting Aside Application”).  Also on 5 March 2014, the defendant took out another summons to apply for stay of execution (“the Stay of Execution Application”). 

7.  In respect of the Setting Aside Application, on 14 March 2014 Master Lam ordered that:-

(a) The defendant’s summons for setting aside judgment dated 3 January 2014 and Writ of Possession and Fieri Facias Combined issued on 14 February 2014 be adjourned to 20 May 2014 at 9:30 am at Court No 47 before a master (with 3 hours reserved);

(b) The defendant do have leave to file and serve an affirmation in support on or before 21 March 2014;

(c) The plaintiff do have leave to file and serve an affirmation in opposition on or before 4 April 2014;

(d) The defendant do have leave to file and serve an affirmation in reply (if any) on or before 18 April 2014;

(e) No further affirmation shall be filed by any party without leave of the court; and

(f) Costs reserved.

8.  In respect of the Stay of Execution Application, on 14 March 2014 Master Lam ordered that:-

(a) The execution on the judgment dated 3 January 2014 be stayed until 20 May 2014 on condition that the defendant shall pay into court a sum of HK$80,000 as security on or before 21 March 2014;

(b) If the defendant fails to pay the said sum in full on the due date, the aforesaid stay of execution shall be uplifted forthwith automatically and the plaintiff shall be at liberty to levy execution in respect of the judgment;

(c) There be an interim stay of execution until 21 March 2014; and

(d) Costs of the application, summarily assessed at HK$600, be paid by the defendant to the plaintiff forthwith.

9.  The defendant appealed to Deputy District Judge A Chow against Master Lam’s orders dated 14 March 2014 in relation to the Setting Aside Application and the Stay of Execution Application.  On 28 March 2014, the learned deputy judge varied Master Lam’s orders as follows:-

(a) The execution of the judgment be stayed until 20 May 2014 on condition that the defendant shall pay into the court a sum of HK$60,000 as security on or before 31 March 2014;

(b) There be an interim stay of execution until 31 March 2014; and

(c) Costs of the appeal be in the cause of the defendant’s application to set aside the judgment and the Writ of Possession.

10.  On 31 March 2014, the defendant paid into court a sum of HK$60,000 as security pursuant to the order of Deputy District Judge A Chow on 28 March 2014.

11.  On 20 May 2014, the Setting Aside Application took place before Master D Ho.  The learned master made the order against which the defendant now appeals to me.

Hearing on 27 May 2014 morning

12.  The hearing before me was scheduled on 27 May 2014 at 9:30 am.  The defendant failed to show up.  The court waited until 9:50 a.m.  On the application of Ms Mak, solicitor for the plaintiff, I dismissed the defendant’s appeal against Master D Ho’s order on 20 May 2014 and ordered the defendant to pay the costs of and occasioned by the defendant’s Notice of Appeal filed on 23 May 2014 to the plaintiff summarily assessed at HK$1,200.

Hearing on 27 May 2014 afternoon

13.  After my order on 27 May 2014 morning, the defendant took out a summons on the same day applying to set aside the order I made.  The hearing of the summons now takes place before me in the afternoon of 27 May 2014 at 2:30 p.m.

14.  Before me, the defendant explains her absence in the morning by saying that she had difficulty in catching a taxi and she went to the wrong court room ie Court No 3 instead of Court No 33.

15.  With respect, the reasons put forward by the defendant are not good reasons.  The Notice of Appeal filed by her on 23 May 2014 clearly states that the hearing would take place on 27 May 2014, 9:30 am at Court No 33.

16.  Despite the defendant’s failure to put forward any sufficient reasons to explain her absence, I believe the order made in the morning of 27 May 2014 should be set aside because the appeal was merely dismissed due to the defendant’s absence and the court had not heard the substantive arguments on the merits.  I, therefore, order that:-

(a) Time for service of the defendant’s summons filed on 27 May 2014 be abridged.

(b) The order made in the morning of 27 May 2014 be set aside.

(c) The defendant do pay the plaintiff the costs of and occasioned by the defendant’s summons filed on 27 May 2014 forthwith, summarily assessed at HK$1,200.

Preliminary issue

17.  Before I go into the merits of the defendant’s appeal, I need to decide a preliminary issue as to whether the court should allow the defendant to rely on an affirmation filed by her today ie 27 May 2014.  This affirmation was filed without leave of the court.  Ms Mak, on behalf of the plaintiff, opposes the admission of this affirmation.

18.  When the defendant took out her Setting Aside Application on 5 March 2014, she already filed a short affirmation in support.  On 14 March 2014, Master Lam gave the defendant another chance to file an affirmation in support on or before 21 March 2014 and an affirmation in reply (if any) on 18 April 2014.  The defendant did not file any affirmation pursuant to Master Lam’s order.  In her Notice of Appeal dated 21 March 2014, she requested for another 3 weeks for filing of affirmation but this was not entertained by Deputy District Judge A Chow on 28 March 2014.

19.  Master Lam on 21 March 2014 already gave opportunities to the defendant for filing further affirmations but the defendant did not follow the timetable laid down by the learned master.  Master Lam on the same day ordered that no further affirmation shall be filed by any party without leave of the court.

20.  I have come to the view that the defendant should not be allowed to rely on the affirmation filed by her today ie 27 May 2014 at this hearing.  My reasons are as follows:-

(a) The defendant failed to follow the timetable for filing of affirmations laid down by Master Lam on 14 March 2014.

(b) Master Lam on 14 March 2014 ordered that no further affirmation shall be filed by any party without leave of the court.

(c) The affirmation filed by the defendant today ie 27 May 2014 is without leave of the court and there is no proper application for leave before the court.

(d) The affirmation filed by the defendant today ie 27 May 2014 is late and the plaintiff will have no opportunity to take instructions on the same.

(e) The admission of new evidence in a hearing of appeal against master’s decision is, save for exceptional circumstances, not allowed under O 58, r 1(5) of the Rules of the District Court and is contrary to the spirit of the Civil Justice Reform.

21.  In relation to point (e) above, I have considered paragraph 58/1/3 of Hong Kong Civil Procedure 2014 which is about the corresponding rule under O 58, r 1(5) of the Rules of the High Court:-

“Admission of new evidence – Since the introduction of the Civil Justice Reform, the rules now provide that no further evidence, other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made, may be received on the hearing of an appeal under RHC O 58, except on special grounds: See RHC O 58, r 1 (5).

Order 58, r 1(5) was introduced to curb the undesirable practice before the Civil Justice Reform when parties sought to adduce a further round(s) of evidence on appeal after an unfavourable decision from a Master.  Rule 1(5) aims at effecting a change of culture so that parties should prepare their application properly prior to the hearing before a Master.  The spirit of this rule will be defeated if a party is allowed to revert to the pre-CJR practice:  Bank of China (Hong Kong) Limited v Certain Aim Ltd (unrep, HCMP 1272/2007 (October 4, 2010)) per Deputy High Court Judge Au-Yeung (at para 17).”

22.  The affirmation filed by the defendant without leave of the court is not about matters which have occurred after the decision of Master D Ho on 20 May 2014 and should not be allowed under O 58, r 1(5) of the Rules of the District Court.  At this appeal hearing, I will only consider the evidence which was available before Master Ho on 20 May 2014.

Regular or irregular judgment

23.  In an application to set aside a default judgment, the common question to be asked is whether the default judgment is a regular judgment or an irregular judgment.

24.  In the affirmation filed on 5 March 2014 in support of her Setting Aside Application, the defendant says that she was unaware of the concept of default judgment.  She was waiting for a court date and then left Hong Kong for holiday.  There is no mention by the defendant as to whether she received a copy of the Writ of Summons issued on 19 November 2013.  On the plaintiff’s part, there is an affirmation of Lau Ho Lam filed on 12 December 2013 deposing that a copy of the Writ of Summons was posted up at the main entrance of the Premises on 20 November 2013 and another copy was enclosed in a sealed envelope addressed to the defendant and the same was inserted into the letter box of the Premises.

25.  After obtaining the default judgment on 3 January 2014, the plaintiff’s solicitors served a sealed copy of the same by sending to the defendant by ordinary post to the Premises on 6 January 2014.

26.  A notice to vacate the Premises dated 6 January 2014 was sent by the plaintiff’s solicitors to the defendant by ordinary post to the Premises on 6 January 2014.  Copies of the notice to vacate the Premises were posted up at the main entrance of the Premises on 6, 7 and 8 January 2014.

27.  In the absence of any complaint by the defendant that she did not receive a copy of the Writ of Summons issued on 19 November 2013 and in the absence of any explanation as to when the defendant became aware of the Default Judgment against her, the court has to treat the Default Judgment entered against the defendant on 3 January 2014 as a regular judgment.

Legal principles for setting aside regular judgment

28.  To set aside a regular default judgment, the defendant has to show a defence on merits.

29.  Paragraph 13/9/13 of Hong Kong Civil Procedure 2014 states as follows:-

“(2) Relevant consideration – On an application to set aside a regular default judgment, the major consideration is whether the defendant has shown a defence on the merits to which the court should pay heed, not as a rule of law, but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence, and because, if the defendant can show merits, the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication (per Lord Wright in Evans v. Bartlam [1937] AC 473, HL at 489).

This is not to say that a defendant who is able to demonstrate a defence which has a real prospect of success has an automatic entitlement to have the default judgment set aside. In exercising the discretion under this rule, the court has regard to all relevant circumstances. What will be relevant as a factor in any particular case will depend on the individual facts of that case. The usual factors are: why the default occurred; the defendant’s conduct after he had notice of the proceedings; an explanation for the time taken where there has been delay in making the application; and any prejudice that would be caused to the plaintiff or to third parties if the default judgment were to be set aside. These other relevant factors will then have to be weighed against the dominant factor of the merits in order to see where the justice of the case lies (Vann v. Awford (1986) 83 L S Gaz 1725; The Times, April 23, 1986, CA; Shocked v. Goldschmidt [1998] 1 All ER 372 at 379f; Premier Fashion Wears Ltd & Another v. Chow Cheuk Man & Another [1994] 1 HKLR 377 at 380 (6)-(12); (35)-(42); 382 (26)-(32); Young Bing Ching (dec’d) v. Chow Yung Fong & Another [2001] 2 HKLRD 394, CA) …

(3) Meritorious defence – It is not sufficient to show a merely “arguable” defence that would justify leave to defend under O 14. The defendant must show that he has “a real prospect of success”. To do so, he must satisfy the court that his case and the evidence that he adduces in support of it is potentially credible and carries some degree of conviction. Thus, the court must form a provisional view of the probable outcome of the action (Evans v. Bartlam [1937] AC 473, HL as explained in Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Inc., The Saudi Eagle [1986] 2 Lloyd’s Rep 221, CA applied in Yeu Shing Construction Co. Ltd v. Pioneer Concrete (H.K.) Ltd [1987] 2 HKC 187, CA; Premier Fashion Wears Ltd & Another v. Chow Cheuk Man & Another [1994] 1 HKLR 377 at 383; Law Kwok Hung v. Tse Ping Man & Another [1999] 4 HKC 397; L & M Specialist Construction Ltd v. Wo Hing Construction Co. Ltd [2000] 3 HKLRD 262; Gimex Development Ltd v. Fung Meng Sung, unreported, HCA No 2436 of 2001, November 29, 2001, [2001] HKEC 1514) …”

The purported defence raised by the defendant

30.  The defendant raises the point that before entering the Tenancy Agreement dated 23 November 2012, a representative of the plaintiff called Wilson promised her that the Tenancy Agreement would be renewed until the Premises were redeveloped (“the Alleged Oral Promise”).

31.  The plaintiff denies that there was such a promise made to the defendant.

Discussions

32.  With respect, the defendant’s Alleged Oral Promise argument cannot be a defence on the merits because it violates the Parol Evidence Rule.  The Tenancy Agreement clearly states that that tenancy is for the period from 9 November 2012 to 8 November 2013 and the defendant shall deliver up vacant possession of the Premises upon the expiration of the Tenancy Agreement.  But the defendant is now purporting to show that the Tenancy Agreement would be renewed for an indefinite period of time.  The defendant is trying to introduce evidence to contradict the written terms of the Tenancy Agreement and this is not allowed.

33.  Paragraph 12-096 of Chitty On Contracts (31^st Edition), Volume I, states as follows:-

“Whether document conclusive. It is often said to be a rule of law that:-

“If there be a contract which has been reduced to writing, verbal evidence is not allowed to be given … so as to add to or subtract from, or in any manner to vary or qualify the written contract.”

Indeed, in 1897, Lord Morris accepted that:-

“ … parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract.””

34.  Apart from the Parol Evidence Rule, the law requires that a Tenancy Agreement must be certain in terms of duration (See: Lace v Chantler [1944] KB 368，Prudential Assurance Co Ltd v London Residuary Body & Others [1992] 2 AC 386).  The defendant’s allegation that the Tenancy Agreement would be renewed for an indefinite period of time cannot amount to a valid tenancy agreement at law.

35.  In any event, the defendant’s Alleged Oral Promise is not credible as a matter of common sense and logic.

36.  It is unimaginable that a landlord would be willing to bind itself for an indefinite period of time as described in the Alleged Oral Promise.  This is contrary to business sense.

37.  The Alleged Oral Promise is lacking in particulars.  One does not know when and where it was made and who was present.  The words actually spoken by the parties, if any, are unclear.

38.  Ms Mak, for the plaintiff, informs me that at the hearing before Master Ho on 20 May 2014, the learned master allowed the defendant to rely on 6 pages of mobile phone text messages exchanged with Wilson which the defendant said would support her case.  I have gone through the same but they do not support the existence of the Alleged Oral Promise.  The parts emphasized by the defendant are these:-

6 September 2013, 14:38

“if you think many noise here, did you consider will move out here? Your tenancy agreement will be expired on Nov”

11 September 2013, 17:52

“I have discuss your case with my company already. We think your relationship not well with your neoghbour and many argument, to avoid the situation get worse, we would not renew the tenancy agreement with you after expire day (o0 Nov). You should find a new apartment at that moment. We will refund deposit to you on 09 Nov when you handover the key.”

12 September 2013, 12:29

“… But this is my company decision, I cannot control it …”

12 September 2013, 17:17

“I have remember that I told you we will consider renew tenancy agreement with you with market value when everything is normal. Redevelop is the main risk.”

6 November 2013, 10:25

“Kindly reminded that tenancy agreement of 3/F 8A Mosque Street will be expired on 08 Nov 2013. Please contact me and confirm when will you handover the key to landlord.”

39.  There is nothing in the text messages suggesting that Wilson agreed there was an oral promise to renew the Tenancy Agreement before the plaintiff and the defendant entered the Tenancy Agreement dated 23 November 2012.  On the contrary, Wilson expressly stated that the plaintiff would not renew the Tenancy Agreement.

40.  While the defendant sent a text message to Wilson on 4 December 2013 at 16:55 alleging that he had given a personal assurance that the Tenancy Agreement would be renewed unless the building was to be redeveloped, there was no reply from Wilson indicating he accepted the defendant’s suggestion.

41.  The plaintiff sent 2 notices of termination to the defendant on 12 September 2013 and 8 November 2013 respectively.  The defendant does not deny receiving the same.  If the Alleged Oral Promise were true, one would expect her to write back to the plaintiff saying that the plaintiff had no right to terminate due to an oral promise to renew made by Wilson before the parties entered the Tenancy Agreement dated 23 November 2012.  However, there is no such correspondence.

42.  The defendant also raises the issue that the plaintiff had subjected her to continuous harassment by giving the keys of the empty flat above the Premises to somebody.  She was kept up all night because of the loud banging as a result of which she lost her employment and income.  The defendant has not put in concrete evidence to establish this allegation.  Even this allegation is true, it does not amount to a defence to the plaintiff’s claim.  Taking the allegation to its highest, it might only be an independent claim by the defendant against the plaintiff.

43.  The defendant also mentions the Contra Proferentum Rule which she says is helpful to her case.  She is misconceived.

44.  Paragraph 12-083 of Chitty On Contracts (31^st Edition), Volume I, states as follows:-

“Construction against grantor. Another principle of construction is that a deed or other instrument shall be construed more strongly against the grantor or maker thereof …”

45.  The Contra Proferentum Rule only has application when there is a deed or instrument which requires construction or interpretation.  The defendant says she is relying on the Alleged Oral Promise.  The rule has no application in her case.

46.  The defendant requested Master Ho to adjourn the hearing of the Setting Aside Application on 20 May 2014 but the learned master refused.  The defendant now asks me to adjourn the hearing of the appeal so that she can seek legal advice and properly reply to the plaintiff’s arguments.  I am refusing her request.  The Setting Aside Application was taken out by her on 5 March 2014.  More than 2 months have passed.  If she would like to seek legal advice, there has been sufficient time given to her.  I need to be fair to the plaintiff as well.  The Default Judgment was given on 3 January 2014.  Any adjournment would cause further prejudice to the plaintiff. 

Conclusion

47.  The defendant has failed to show a defence on merits.  Master Ho was right in dismissing her Setting Aside Application.  I order that the defendant’s appeal against Master D Ho’s decision given on 20 May 2014 be dismissed.

48.  Costs should follow the event.  I grant a costs order nisi to be made absolute within 14 days that the defendant do pay the plaintiff the costs of and occasioned by the Notice of Appeal filed on 23 May 2014, to be taxed if not agreed.

Latest development

49.  Before this court hands down decision, the defendant made an ex parte application to Master W Y Ho on 28 May 2014 for an interim stay of execution of the Default Judgment.  The learned master granted an interim stay until the return day on 10 June 2014.

50.  Towards the end of the hearing on 27 May 2014, the defendant also requested me to give a few weeks’ time for her to move out if the court dismissed her appeal.

51.  The Default Judgment was entered on 3 January 2014 and the plaintiff should not be prejudiced by further waiting.  As indulgence to defendant, I order that there be an interim stay of execution of the Default Judgment until 16 June 2014.  This should give about 1 week to the defendant to move out of the Premises, which I think is reasonable in the circumstances.