CMIC FINANCE LTD v. KE JUN XIANG

HCA 1711/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1711 OF 2004

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J U D G M E N T

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1.  The Plaintiff, (CMIC), claims the balance of moneys lent as a licensed moneylender to the Defendant, (Mr Ke), pursuant to a contract signed, between CMIC and Mr Ke, in Hong Kong on 26 June 2003.  The amount outstanding is $1,986,657.53.  Mr Ke is a citizen of the People's Republic of China, and has a residence in Guangzhou.  At the same time he is the Chairman of directors of a company listed on the Hong Kong Stock Exchange, and spends a good deal of his time in Hong Kong.  When he entered into the contract with CMIC, he gave them two addresses; Rooms 1804-5, Hutchinson House, 10 Harcourt Road, Hong Kong, and Room 910, Premier Centre, 20 Cheung Shum St, Lai Chi Kok, Kowloon, Hong Kong.

2.  CMIC’s solicitors issued the writ on 23 July 2004, and in an effort to effect service by the method provided for in O. 10 r. 2, alternative to personal service, on 23 July 2004, sent a copy of the writ by registered post to both of the addresses in Hong Kong that had been given to CMIC by Mr Ke.

3.  It is not disputed that on 5 May 2004, Mr Ke had left Hong Kong, and that he next returned to Hong Kong on 17 August 2004, departing again the next day 18 August 2004.  It is therefore clear that on 23 July 2004 and on the subsequent seven days thereafter Mr Ke was not in Hong Kong.  Mr Ke returned to Hong Kong on 11 October 2004 and departed again on 13 October 2004.  He returned on 15 October 2004, leaving approximately 6 hours later on the same day.  He again returned to Hong Kong on 29 October 2004, again leaving on the same day, approximately 7 hours later.

4.  On 14 September 2004, CMIC issued a summons under O. 83A r. 4 for default judgment.  That summons was set down to be heard on 1 November 2004.  On 27 October 2004, a copy of that summons was sent to Mr Ke, by fax, by CMIC, to his address in Guangzhou.  On the next day, 28 October 2004, the solicitors for Mr Ke wrote to the solicitors for CMIC, pointing out that their client was out of the jurisdiction, and sought a copy of the writ, and any documents that would have been required to obtain the requisite order giving leave to serve the writ of the jurisdiction.  The next day, 29 October 2004, CMIC’s solicitors sent to Mr Ke’s solicitors the writ and statement of claim, together with the O. 83A summons and the affidavit in support.  Also supplied were an affidavit of service of the writ, made on 14 September 2004, by a solicitor's clerk, which asserted that the Writ of Summons that had been sent by registered post to the two addresses given by Mr Ke had not been returned through the post.  A subsequent affidavit made the next day, 15 September 2004, recorded that the writ had in fact been returned through the post.  That too was supplied to Mr Ke’s solicitors.

5.  It is clear from the Immigration movement record that Mr Ke was in Hong Kong on 29 October 2004.  He undoubtedly gave his solicitors instructions on the matter on that day.  On the same day he met with the managing director of CMIC and attempted to negotiate a resolution of the matter, including the imposition of a condition that in any resolution, the writ must be discontinued or further action withheld.

6.  On 1 November 2004 the solicitors for both parties appeared before the Master on the first calling of the O. 83A summons.  By consent, it was ordered that the summons be adjourned to 15 October 2004.  On 15 October 2004 again both solicitors appeared before the Master, and again, by consent, the summons was further adjourned.

7.  On 30 November 2004 Mr Ke’s solicitors filed an Acknowledgement of Service pursuant to O. 12.  At the same time a summons, pursuant to O.12 r 8(a), was filed, in which Mr Ke sought that the writ and the service of the writ be set aside, and the action be dismissed.  It was clear from that summons that Mr Ke intended to dispute the jurisdiction of the court by reasons of an irregularity.  On the facts it is clear that the appropriate order that should have been sought was an order under O. 12 r 8(b)  declaring that the writ had not been duly served on him, but, sensibly, no point is made of this. It is appropriate to record here the specific terms of O. 12 r 7:

“The acknowledgement by a defendant of service of a writ shall not be treated as a waiver by him of any irregularity in the writ or service thereon or in any order giving leave to serve the writ or extending the validity of the writ for the purpose of service.”

8.  When the summons under O. 12 came before the Master he dismissed it, holding that there was good service.  From that decision this appeal follows.

9.  It is now argued for Mr Ke that as he was out of the jurisdiction at the time the writ was served by post, that is on 23 July 2004, and for the subsequent 7 days, and that it had been returned to CMIC’s solicitors, there has been no service of the writ and consequently no further steps can be taken by CMIC in the proceedings until appropriate service is effected.

10.  Great care must be taken by a defendant who wishes to challenge the jurisdiction of the court.  The position is set out in the judgment of Godfrey JA in Lee Fai (t/a as Fai Kee Timber v Chan Kui [1997] 3 HKC 228 at 233:

“A defendant who invokes or utilises the jurisdiction of the court with a view to his own advantage waives by doing so his right to object to any earlier procedural irregularity (unless fundamental).  A defendant who wishes to dispute the jurisdiction of the court over him must be careful not to take any step in the action which may be regarded as a submission to the jurisdiction of the court.”

The learned judge goes on to deal with the particular steps taken by a defendant in that case, holding that the defendant had waived his right to object to the order.  The learned judge cited Cooze v Neumegen (1842) 9 M & W 200, where Alderson B said:

“If a defendant wishes to take advantage of an irregularity in the proceedings, he should not appear at court trial, but should allow the plaintiff to go on at his peril.”

It is plainly to avoid the difficulties that such situation would create that O. 12 r. 7 permits a defendant who wishes to dispute the jurisdiction of the court to file an acknowledgement of service, and to make application under O. 12 r. 8, without those steps being deemed to be a submission to the jurisdiction.  But plainly, any other step taken by a defendant in the proceedings may amount to a submission to the jurisdiction of the court by which the defendant will be taken to have waived the procedural irregularity.  It is in the taking of any step other than those permitted by O. 12 rr 7 & 8, that a defendant must take great care.

11.  Here, prior to the filing of the Acknowledgement of Service, and the summons under O. 12 r. 8, the solicitors for Mr Ke, plainly acting on his instructions, obtained on two occasions, an adjournment of the O. 83A summons.  I am satisfied that both of those steps were acts by Mr Ke which invoked the jurisdiction of the court with a view to his own advantage.  The jurisdiction invoked was the power of the court to adjourn a summons.  The jurisdiction was invoked to Mr Ke’s advantage because, had it not been invoked, there was a risk that judgment would be entered against Mr Ke by default.

12.  Mr Wong has argued that the two adjournments did not constitute relevant steps in the proceedings.  He says first that both adjournments were by consent.  I am satisfied that it does not matter whether the adjournment was by consent or was argued.  Mr Wong was obliged to acknowledge that he sought an adjournment.  As it happened it appears that the plaintiff too sought an adjournment, and as a result of prior discussions between solicitors it was agreed that the matter would be adjourned.  That was the basis upon which the matter was put to the Master.  But even where both parties consent to an adjournment the court still has power to refuse the adjournment.  Plainly whoever sought the adjournment, it was to Mr Ke’s advantage, and it was therefore a necessary step in the proceedings.

13.  Next Mr Wong contends that there was no adjudication on the substance of the matter.  Again, it is irrelevant whether there is an adjudication on the substance of the matter, for there was an adjudication on the joint application parties for an adjournment.  It is, in my view, beyond argument that an adjournment of a summons is a step in the proceedings.

14.  The proper course to have been taken would have been for the Acknowledgement of Service and the O 12. r.8 summons to have been filed immediately prior to the first hearing of the O. 83A summons.  The Master would then have been obliged to have dealt with that summons before dealing with the O. 83A summons.  In those circumstances the protection available to a defendant by way of O. 12 rr 7& 8, to enable him to raise the jurisdictional issue, without taking a step in the action which may be regarded as a submission to the jurisdiction of the court, would have protected Mr Ke from any argument that he had waived the irregularity.

15.  I accordingly hold that Mr Ke has waived the procedural irregularity in service and has submitted to the jurisdiction of the court.  It follows that the appeal  must fail.

16.  Mr Lin, for CMIC, made a subsidiary argument that the effect of the writ being drawn to Mr Ke’s attention on or about 27 or 29 October 2004, was that that knowledge made good the postal service attempted under O. 10 r. 2. That submission relied upon the decision of the House of Lords in Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506.  I am satisfied however that as, by that time, 29 October 2004, the copy of the writ had been returned to CMIC’s solicitors undelivered, CMIC is unable to comply with the mandatory requirement in O 10 r 2(3)(b)(ii), and, while clearly on that day Mr Ke became aware of the proceedings, that knowledge could not perfect service by post in circumstances where the writ had been returned through the postal service.

17.  The appeal is dismissed.  There will be an order nisi, absolute in 14 days, that Mr Ke must pay CMIC’s costs on the appeal of a party and party basis.