EGO FINANCE LTD v. JU LUI AND OTHERS

DCMP 1714/2020

[2021] HKDC 651

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1714 OF 2020

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DECISION

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1.  At the hearing on 9 October 2020, this court summarily determined these originating proceedings as well as entered judgment and granted the order against the defendants in their absence. Reasons for decision were handed down on 15 October 2020 (“the Reasons”). The 1^st defendant now applies to set aside the judgment and order.

Background

2.  This is a money lender’s action.  The plaintiff claims against the 1^st defendant for outstanding loan, which was secured by a legal charge of his interest in the property in question.  He is one of the three joint tenants of the property.  The other two joint tenants are his parents.  To enforce the security, the parents were joined as the 2^nd and the 3^rd defendants.

3.  Aware that the 1^st defendant had been adjudged bankrupt, the plaintiff took the course of applying for leave from the bankruptcy court to commence these proceedings against him.  Such leave was granted afterwards.

4.  The plaintiff’s claim was for the outstanding loan and contractual interest against the 1^st defendant pursuant to the loan agreement.  In enforcement of the legal charge, the plaintiff applied for an order against all the defendants for the sale of the property in question subject to the legal charge pursuant to the Partition Ordinance, Cap 352 (“PO”).

5.  Appointment was made for the hearing of this matter on 9 October 2020.  Hence the hearing on that day before this court.  As mentioned, none of the defendants appeared.

6.  Upon satisfaction with the evidence of service of these proceedings and notice of hearing, this court permitted the plaintiff to proceed in the defendants’ absence.

7.  For reasons explained in the Reasons, this court summarily determined the claim, and gave monetary judgment against the 1^st defendant and the order for sale against all the defendants.  The plaintiff was awarded costs, summarily assessed, against the 1^st defendant but not the other two defendants.

8.  Apparently the 1^st defendant failed to satisfy the monetary judgment.  Hence the plaintiff’s execution of the Order.  Writ of possession was issued in March 2021.

9.  The record shows that between dates of the order and the writ of possession, the 1^st defendant has applied for but been refused legal aid twice.

10.  On 18 March 2021, the 1^st defendant, in person, took out the present summons to set aside the judgment and the order. At the same time, he took out a summons for stay of execution of the judgment and order pending the determination of his summons to set aside.

11.  On 22 March 2021, the master granted the stay until the present hearing.  This court extended the stay until handing down of this decision.

The 1^st defendant’s application

12.  The action was commenced under O83A and O88 of the Rules of the District Court, Cap 336H together with an application under the PO.  In this action commenced by way of originating summons, the court had the power under O28, r4(1) to make summary determination of the claim, if this was appropriate: see Hong Kong Civil Procedure 2021 (Vol 1) at §88/0/2. This court did that.

13.  O28, r4(1) provides the jurisdiction of the court to vary or revoke the order made upon such summary determination against the defendant who did not appear at the hearing:-

“The Court by whom an originating summons is heard may, if the liability of the defendant to the plaintiff in respect of any claim made by the plaintiff is established, make such order in favour of the plaintiff as the nature of the case may require, but where the Court makes an order under this paragraph against a defendant who does not appear at the hearing, the order may be varied or revoked by a subsequent order of the Court on such terms as it thinks just.”

14.  Whilst summary determination pursuant to O28, r4(1) is not the same as entering judgment in default of appearance of the defendant, the defendant who subsequently applies for variation or revocation of the order has the burden to show that his contention has a real prospect of success.  Where he alleges that he was unaware of the hearing, the principles regarding setting aside default judgment may be borrowed.  See Hong Kong Civil Procedure 2021 (Vol 1) at §28/4/3.

15.  Indeed, in his summons, the 1^st defendant stated that he has not received notice of the hearing fixed on 9 October 2020.  There was however no elaboration of that by way of affirmation.

16.  In his first affirmation in support, the 1^st defendant stated his assertions in defence of the claim.

17.  In his second affirmation in support, the 1^st defendant made his demand for the plaintiff to disclose and to adduce evidence in respect of his signing of the loan documents in question.

Notice of hearing

18.  As mentioned, this court permitted the plaintiff to proceed at the hearing on 9 October 2020 upon satisfaction of the evidence of service of proceedings and notice of hearing.  The following facts should be noted.

19.  The originating summons were addressed to the defendants all of the same address, namely that of the property in question. This was also the address provided by the 1^st defendant in his own petition for bankruptcy in 2016 as well as in the summons now before this court.

20.  On 23 July 2020, the amended originating summons and affirmation in support were served by post to the 2^nd and the 3^rd defendants at the address of the property.  The mails were not returned.  The same set of documents were served by hand to the trustee in bankruptcy of the 1^st defendant, who acknowledged receipt thereof.

21.  On 26 August 2020, the plaintiff served the notice of hearing appointment by post to the 2^nd and the 3^rd defendants at the address of the property.  The mails were not returned.  The same was served on the trustee in bankruptcy of the 1^st defendant, who again acknowledged receipt thereof.

22.  On 2 September 2020, as required under O88, the amended originating summons, notice of hearing appointment and notice to occupants were posted up in a conspicuous place at the main entrance of the property.

23.  On 3 September 2020, the plaintiff again served the notice to occupants at the address by post.

24.  In the submission on its behalf, the plaintiff explains the propriety of service on the trustee in bankruptcy of the 1^st defendant.  Reference is made to the situation where the property of the 1^st defendant remained vested in the trustee, and the function of the trustee has not ceased, upon the discharge of the bankruptcy order.

25.  Putting aside whether or not service on the trustee must amount to good service on the 1^st defendant, one should not lose sight of the following reality.

26.  None of the defendants, including the 1^st defendant, asserts that they have received no document in these proceedings at all that were served as mentioned above.  The 1^st defendant, and only he, asserts that he has received no notice of hearing.

27.  The documents were served by post to the 2^nd and the 3^rd defendants at their address, which was the same address of the 1^st defendant.  Besides, the notice of appointment and notice to occupants have been posted up at the conspicuous space at the entrance of the property.

28.  Except for the one-liner assertion in his summons, the 1^st defendant has provided no factual basis for the court to question the steps taken by the plaintiff mentioned above or their effectiveness in bringing the documents to the attention of the defendants at the address of the property.

29.  It is inconceivable that the 1^st defendant at the same address would have failed to take notice of these documents including the notice of appointment and the notice to occupants.  Both notices, in which the appointment for the last hearing was stated, served the purpose of notice of hearing.

30.  The 1^st defendant therefore fails to discharge his burden of satisfying this court that he was disabled from attending the hearing on 9 October 2020 because of the failure of the plaintiff to serve him notice of hearing.

Merits of the 1^st defendant’s contention

31.  The 1^st defendant’s case apparently goes beyond mere dispute of liability.  In his first affirmation in support, the 1^st defendant asserted that the plaintiff misled him into signing the loan documents, conspired with another finance company to defraud him and failed to honour certain oral promise to him.  He attributed his bankruptcy to these wrongdoings of the plaintiff.  He also referred to his accident at work, and asserted reasons to believe that there was certain conspiracy to utilize these proceedings to force him to inflate his compensation claim.  He also indicated that he would claim for the loss of him and his family over the past 6 years.

32.  Not all of the above assertions of the 1^st defendant are readily comprehensible.  More importantly, they were neither particularised nor supported by any other form of evidence.  This is the least expected when the allegation is nothing short of conspiracy and fraud.  Had that been his stance, the 1^st defendant would have had to explain his nevertheless performance of the loan agreement by repayments, albeit irregular and partial, during the period between July 2015 and early 2016 before he defaulted altogether (as deposed to by the plaintiff).

33.  The 1^st defendant petitioned for his own bankruptcy right after his default.

34.  As to the evidence, the 1^st defendant by his second affirmation demanded the plaintiff to disclose and adduce oral evidence (by calling all the plaintiff’s staff members concerned) and documentary evidence (CCTV recording) in respect of his signing of the loan documents.

35.  The 1^st defendant’s demand is not justified, as it is his burden to substantiate his present application.

36.  As to whether it will be unjust to make an order for sale under the PO in the circumstances of this case, the Decision refers. The 1^st defendant made no mention of this in his affirmation.  The 2^nd and the 3^rd defendants also did not come forward to join hands with him in challenging this court’s decision in respect of this part of the plaintiff’s claim.

The plaintiff’s understanding

37.  The solicitors for the plaintiff views the present application as one for leave to appeal against the Order out of time pursuant to section 63A of the District Court Ordinance, Cap 336.  However, he was not quite able to explain to this court why this should be so whereas the above understanding of this court is wrong.

38.  Even assuming that this is considered as an application for leave to appeal (and putting aside the issue of application out of time), it would still be the 1^st defendant’s burden to show that his intended appeal has a reasonable prospect of success or that there is question that should be considered by the appellate court in the interest of justice.  For the above reasons, the 1^st defendant would be unable to discharge such burden as well.

Conclusion and order

39.  The 1^st defendant fails to satisfy this court that the judgment and order were irregular or that he has any real prospect of success in his defence.  The application is therefore dismissed.

40.  Following this event, the 1^st defendant should pay the plaintiff’s costs.  During the present hearing, the content of the plaintiff’s statement of costs was explained to the 1^st defendant.  I now make a nisi order that the 1^st defendant shall pay the plaintiff’s costs, summarily assessed at HK$11,000.  In the absence of application in 14 days to vary, the nisi costs order shall become absolute without further order, and upon that the 1^st defendant shall pay such assessed costs to the plaintiff within 14 days.

[The present hearing was conducted in punti for the benefit of the 1^st defendant. Interpreter was there to assist him if necessary. If requested, interpreter will be arranged to assist him when this decision is handed down.]