CHEUNG HING v. WONG CHOR CHEUNG AND ANOTHER

HCA 336/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 336 OF 2008

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D E C I S I O N

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Introduction

1.  This is a long running litigation between the plaintiff (“P”) and the 1^st defendant (“D1”) arising out of their joint investment in 1991 to purchase a property on the Peak (“Property”) through the corporate vehicle, 2^nd defendant (“D2”). 

2.  The present summons issued by P concerned the service of two orders made by this court.

Background

3.  The background in relating to the dispute has been set out in this court’s decision of 13 August 2015 (“13.08.15 Decision”) and also the Burrell Judgment referred therein, which will not be repeated here.

4.  In particular, on 6 January 2015, under paragraph 6 of this court’s order made on that day (“06.01.15 Order”), D1 was to file and serve on P within 60 days an account of D2, updated to the date of the order (namely 6 January 2015), to be audited and verified by a chartered public accountant, and such account to show all rental income, in and out of mortgage loan monies and expenses commencing from the purchase of the Property up to the date of the order, and that thereafter D1 to file such accounts on a quarterly basis until the date of completion of the sale of the Property (“Accounts Order”).

5.  Further, pursuant to paragraph 3 of this court’s order of 13 August 2015 (“13.08.15 Order”), D1 and D2 were to file and serve on P within 7 days of the order a list of information/documents in relation to the two mortgages, which I shall simply call Marcellotino Mortgage and the Good Brothers Mortgage (“Disclosure Order”).

6.  As D1 failed to comply with the Accounts Order and the Disclosure Order, on 22 December 2016, this court granted a further order that D1 was to comply with the Accounts Order, and D1 and D2 were to comply with the Disclosure Order, within 42 days of that order (“22.12.16 Order”).

7.  On 23 March 2017, P then issued the present summons for extension of time for D1 and/or D2 to comply with the Accounts Order and the Disclosure Order, and sought substituted service orders in relation to the two orders, and also that there be a penal notice be endorsed on the order to be made by this court. 

8.  The substituted service orders sought by P was as follows:

(i)  Personal service on D1 be substituted by leaving a copy of a sealed copy of the order at the usual best and last known address of D1 (“Lai Chi Kok Address”) and at the address of D1’s present solicitors;

(ii)  Personal service on D2 and its registered directors be substituted by leaving a copy of a sealed copy order of the registered address of D2 at the Lai Chi Kok Address, and also at the address of D2’s present solicitors.

9.  At the 1^st hearing of P’s summons, 6 April 2017 (“1^st Hearing”), Counsel Mr Thomas Wong, appeared for Ds.  With no opposition from Ds, this court ordered the extension of time for D1 and D2 to comply with the 22.12.16 Order, the order be endorsed with a penal notice, and that substituted service of D1 and D2 be effected at the Lai Chi Kok Address and at the address of their solicitors.

10.  The only disputed matter was whether personal service on the directors of D2 should also be substituted, as there was no sufficient evidence to support this application, this court then ordered this matter be adjourned to a further hearing on 5 May 2017 (“2^nd Hearing”) and gave leave for P to file a further affirmation, D1 and D2 to file an affirmation in opposition and P had leave to reply.

11.  P filed his supplemental affirmation on 11 April 2017.  D1 then filed his 7^th affirmation in opposition on 4 May 2017.  P complained at the 2^nd Hearing that D1’s affirmation was filed late and he did not have a chance to file a reply.  The matter was then adjourned again for P to file his reply affirmation, and the parties to file supplemental written submissions.  The parties agreed to this court dealing with the matter on paper, with no further oral hearing, unless otherwise directed.

The Law

12.  Order 65 rule 4 of the Rules of the High Court (“RHC”) provides, among other things, that in the case of any document which is required to be served personally, if it appears to the court that it is impracticable for any reason to serve that document in the manner prescribed on that person, the court may make an order for substituted service of that document.

13.  It is stated in paragraph 65/4/3 of the Hong Kong Civil Procedure 2017, Volume 1, the court will not make an order for substituted service on the mere statement that the defendant is evading service.  The grounds for the statement must be given in the affidavit in support, which must state the efforts which have been made to find the defendant, and the reason for believing that he is keeping out of the way to evade service.

14.  As further set out in paragraph 65/4/4 of Hong Kong Civil Court Practice 2016, in order to obtain an order for substituted service, it is necessary to demonstrate to the court that it is “impracticable for any reason” to effect service by the usual method, and that this is a threshold requirement which, when satisfied, gives the court a discretion whether to make the order: Chan Yuek Mui v Ng Shu Chi [1999] 2 HKC 702 (CA).

Whether impracticable

15.  The 5 registered directors of D2 were :

(i) D1’s wife Ms Wong Yuen Wai Rita Maria (“Ms Wong”);

(ii) Chan Siu Fung (“Chan”);

(iii) Chen Shulong (“Chen”), said to be a New Zealander holding a New Zealand passport with no HKIC details;

(iv) Success Consultants Limited (“Success”); and

(v) Hopewell Investments Inc (“Hopewell”).

16.  P had filed a total of 3 affirmations in support of his application. In his 1^st affirmation, he had said the directors and/or officers of D2 could not be located.

17.  In P’s 2^nd affirmation, he explained that D1 and his wife Ms Wong were the founding shareholders and directors of D2, and he had set out the historical changes in D2’s directors since 29 January 1991 and that since 31 December 1993 until 19 February 1997, P and D1 were the only 2 directors of D2. 

18.  Thereafter, according to P, without his knowledge, and without valid shareholders’/directors’ resolution, Ms Wong, Chan and Chen were appointed as directors on 8 August 1997, whereas Success and Hopewell were appointed on 9 March 2000.

19.  Further, according to P, D1 and Ms Wong resigned as directors on 9 March 2000, but Ms Wong was re-appointed again on 11 August 2000.

20.  Then on 27 December 2013, without his knowledge and consent, P was said to cease to be a director.

21.  Ms Wong then resigned as a director on 31 December 2013.

22.  P said he had been told by his solicitors in the statutory derivative action HCMP 2433/2012 issued in October 2012 (“Derivative Action”) that before commencement of the intended Derivative Action, he had to give notice on behalf of D2 to each of the registered directors, and his solicitors were instructed to send notices to each of them.  He was told by his solicitors that notices sent to Chan and Chen, both at their address given in the 2012 Annual Return of D2, to be at A-3, 24/F, Hong Keung Building, 32-34, Hong Keung Street, San Po Kong (“San Po Kong Address”) were returned through dead letter service with “no such person” marked thereon.  Further when his solicitor’s staff Kan Sin Ying (“Kan”) attended the premises for personal service of the notices, it was found that the San Po Kong Address was an apartment with 6 partitioned rooms and a man there told Kan that no one was living there by the names of Chan or Chen.

23.  As for notices given to Ms Wong, they were sent to the address she gave in various annual returns of D2, namely at the Hing Tai Building, No 139 Connaught Road West (“12A Hing Tai Building”), but later P’s solicitors received a letter dated 12 September 2012 from a KS Yu informing them that he was the owner of 12A Hing Tai Building which was purchased by him about 6-7 years ago, and no one by name of Ms Wong was at that address and he did not know any person by the name of Ms Wong and requested P’s solicitors not to send any further letters for Ms Wong to 12A Hing Tai Building.

24.  As for Success and Hopewell, Success is a BVI company and Hopewell is a Mauritius company.  P’s evidence was that the notices sent by his solicitors to the addresses of those companies respectively in BVI and in Mauritious were returned through the dead letter service.

25.  P had relied on an affirmation of service filed by Kan in the Derivative Action.  D had also produced a copy of last annual return D2 filed with the Companies Registry on 15 November 2013, which was made up to 19 February 2013 (“19.02.13 AR”) and the addresses of all the registered directors were given same as before.  There has been no Notice of Change of Director’s address filed since.

26.  Further, P pointed out that D1 and/or D2 did not object to the substituted service order previously sought by P against Ds and the 13.08.15 Order had already stated that personal service of the order on D2 and its registered directors be substituted by leaving a sealed copy of the order at the registered office of D2 and at the address of D2’s solicitors.

27.  P also said he did on 22 January 2017 personally attended the Lai Chi Kok Address to effect personal service on D1 and D2 individually of copies of the 06.01.15 Order, the 13.08.15 Order, and the 22.12.16 Order, but the door of the Lai Chi Kok Address was closed and locked and no one answered when he rang the doorbell.  He then served the 3 orders on Ds and the registered directors of D2 by leaving the same at the door of Ds’ address.  He also attended the office of Ds’ present solicitors to try and effect personal service of the 3 orders by leaving the same at the address of Ds’ solicitors.

28.  D1 had filed his 7^th affirmation to confirm Ms Wong is his wife, and that he said he “verily believed” that in or about 2013 when the 2013 AR was filed, his wife was residing at 12A Hing Tai Building, and that he had personally visited his wife at that address, and thus the address was genuine.  Ms Wong’s address changed from the San Po Kong Address in the 19.02.00 AR to 12A Hing Tai Building in the 19.02.01 AR and since then until, according to D1, 2013.  Yet, D1’s evidence was contrary to Kan’s evidence that the owner of that address claimed he had no knowledge of Ms Wong.  There was no explanation offered by D1 in relation to Kan’s evidence. 

29.  D1 claimed that P had developed a personal and working relationship with Ms Wong and believed that P has her contact information, and that Ms Wong personally knows and has the contact information of Chan and Chen, and that P could have called up Ms Wong to arrange for personal service on her, Chan and Chen. As for service on Success and Hopewell the service indicated in Kan Sin Ying’s affirmation was in fact successful.

30.  P denied what was alleged by D1, and said he had not developed a personal or working relationship with Ms Wong and there had been no communication between Ms Wong and P at all, and she had not provided any other contact details to him.

31.  The San Po Kong Address was in fact also the address of D1 in the 1992 Return of Allotment of D2, and also the registered address of D2, and in fact also the address of Ms Wong up until the 19.02.00 AR, as above mentioned.  Thus, D1, Ms Wong, Chan, and Chen had all used the San Po Kong address for various periods of time.

32.  I find what D1 said in his 7^th affirmation was evasive, in that he has confirmed that Ms Wong is still his wife, and yet he offered no explanation why the owner of 12A Hing Tai Building would say he did not know any person by name of Ms Wong, notwithstanding the owner bought that property 6 or 7 years prior to 2012, and that there was no person by name of Ms Wong living at that address.  If D1 verily believes that P has his wife’s contact information, then all D1 needs to do is to simply confirm or state the contact details of Ms Wong in his affirmation.

33.  Attempts at service at the 12A Hing Tai Building and at the San Po Kong Address have failed so far.  There have been no offers or no proposals by D1’s or D2’s solicitors to arrange for personal service on Ms Wong, Chan and/or Chen.

34.  So far as the service on the two corporate directors were concerned, it appeared from Kan’s affirmation that the notices sent to Success and Hopewell were not returned through dead letter service, as alleged by P.  Mr Wong thus submitted that P was lying and that his evidence should be rejected.

35.  P then explained he was told by his solicitors that the notices were returned, and in any event, he had said personal service on unknown principal, unknown directors or officers of overseas companies is impracticable, unduly difficult and expensive.

36.  P’s evidence on past service on the 5 directors was based on Kan’s affirmation filed in the Derivative Action.  There was no reason to doubt Kan’s evidence.

Conclusion

37.  Having considered the evidence, and the history of this matter, and further there was no objection by Ds’ then Counsel to the substituted service of the 13.08.15 Order on the 5 directors, I have come to the view that P has satisfied this court that it is impracticable, or unduly difficult or expensive, to effect personal service of the order made by this court on 6 April 2017 on the 5 directors.

38.  The mode of substituted service proposed by P was at the registered office of D2, and at D2’s solicitors.  This was the same mode previously ordered of the service of the 13.08.15 Order.  I am satisfied that the mode of substituted service proposed is most suitable and will have the high probability to bring the order to the notice of the 5 directors of D2.

39.  I therefore grant the orders sought by P in paragraph 5 (which should in fact read paragraph 4) of P’s summons issued on 23 March 2017, regarding substituted service on the 5 directors of D2.

40.  As for costs, I accept that the adjournment of 1^st Hearing was occasioned by P seeking leave to file a further supplemental affirmation.  I therefore order P to pay the costs of that adjournment.  Save for those costs, as P is the successful party and has obtained all the orders sought, I order Ds to jointly and severally pay P the costs of the summons issued on 23 March 2017, to be taxed if not agreed.  This is an order nisi, which will be made final after 14 days.