FWD LIFE INSURANCE COMPANY (BERMUDA) LTD v. SO KWAN HUNG PETER ALSO KNOWN AS SO KWAN HUNG

HCA 918/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 918 OF 2011

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D E C I S I O N

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1. I have before me an appeal by the plaintiff against the decision of Master Lai given on 23 July 2014 dismissing the plaintiff’s ex parte application for extending the validity of the writ of summons herein under Order 2, rule 1 and Order 3, rule 5 of the Rules of the High Court, Cap 4A.

2. The plaintiff’s claim against the defendant, an ex-employee, is for repayment of certain sums of money allegedly due and payable to the plaintiff under the defendant’s contract of employment following the termination of his employment on 13 April 2011.

3. The writ, endorsed with a statement of claim, was issued on 2 June 2011, and was amended on 10 October 2011 without the leave of the court pursuant to Order 20, rule 1 of the Rules of the High Court.  It was re-amended on 14 December 2011 pursuant to the leave granted by Master Ng on 9 December 2011.

4. The writ has never been validly served on the defendant.  Its validity for the purpose of service expired on 2 June 2012.  The writ cannot now be renewed under Order 6, rule 8(2) of the Rules of the High Court in view the fact that it has expired for more than twelve months from the date of expiry of its validity.  It is presumably for this reason that the plaintiff seeks to invoke the powers of the court under Order 2, rule 1 and/or Order 3, rule 5 of the Rules of the High Court in support of its application to extend the validity of the writ.

5. The court has jurisdiction to entertain such application, notwithstanding the fact that the writ can no longer be renewed under Order 6, rule 8 of the Rules of the High Court (see Bank of China (Hong Kong) Ltd v Chen Jianren [2009] 3 HKLRD 163; Tan Kah Eng v Tan Eng Khiam [2012] 1 HKLRD 329).  However, the following statement of principle by Slade LJ in Leal v Dunlop Bio-Processes International Ltd [1984] 1 WLR 874 at 885C‑D should be borne in mind:

“Likewise, in my opinion, it would have been an improper exercise of the registrar’s discretion under Ord 2, r 1 to make good the irregular service of the writ retroactively in this case, where he could not properly have renewed the writ under Ord 6, r 8. When seeking the indulgence of the court under Ord 2, r 1, in circumstances such as the present, a plaintiff cannot, in my opinion, expect the court to exercise its discretion more favourably than it would be prepared to exercise it on an application under Ord 6, r 8. If he cannot properly enter through the front door of Ord 6, r 8, he should not be allowed to enter through the back door of Ord 2, r 1.”

6. The above statement of principle was referred to with approval by the Court of Appeal in Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd [2009] 3 HKLRD 203 at paragraph 38, per Yuen JA, with whom Hartmann JA agreed.  Although the present application is not an application to make good an irregular service of the writ retroactively, but one to extend the validity of the writ for the purpose of service, I consider that the same principle is applicable.

7. In Tan Kah Eng v Tan Eng Khiam, the Court of Appeal agreed with the view of Bharwaney J expressed at first instance that even in a case where the validity of the writ can no longer be extended under Order 6, rule 8, the plaintiff may nevertheless rely on Order 2, rule 1 and/or Order 3, rule 5 to seek an extension of the validity of the writ if there is a “good cause” or “good reason” to explain the failure to serve the writ during its original period of validity. It may be noted, however, that in that case, the concurrent writ was in fact served, with the court’s leave, out of the jurisdiction on the defendant within time, but the plaintiff’s difficulty there arose out of the fact that the leave granted for the issue and service of the concurrent writ out of the jurisdiction was set aside many years later by Bharwaney J on the ground of material non‑disclosure.  It is thus readily understandable why the learned judge considered that a “good cause” or “good reason” had been shown to explain the failure to serve the writ during its original period of validity.  In any event, whether there is such a “good cause” or “good reason” shown must be assessed having regard to the principle mentioned in paragraph 5 above.

8. Further, even where resort is being had to Order 2, rule 1 and/or Order 3, rule 5 to extend the validity of the writ, the strictures imposed on the court’s discretion to renew the writ under Order 6, rule 8 are still relevant.  It is well established that an application for renewal of the writ under Order 6, rule 8 involves a two‑stage inquiry.  At stage one, the court must be satisfied that there is a good reason to extend time, and also that the plaintiff has given a satisfactory explanation for his failure to apply before the expiry of the writ’s validity (where this is the case).  If the court is so satisfied, the court should proceed to stage two and decide whether or not to exercise its discretion in favour of renewal by considering all the circumstances of the case including the balance of prejudice or hardship.  Nevertheless, the two stages should not be treated as watertight compartments (see Hong Kong Civil Procedure 2014, paragraph 6/8/3).

9. Two main points are relied upon by the plaintiff in support of the present application, namely, (1) the defendant has been evading service or his address for service is unknown to the plaintiff, and (2) the limitation period in respect of the plaintiff’s cause of action against the defendant has not yet expired.

10. As for (1):

(1) The evidence before me shows that the plaintiff previously attempted to serve the writ on the defendant at two different addresses in Hong Kong in 2011 and 2012, including service by post and by inserting through the letter box.  However, the evidence also discloses that the plaintiff knew, even prior to the termination of the defendant’s employment, that the defendant had moved out of Hong Kong to live in the Mainland China.  It is thus not surprising that the said attempts to serve the defendant in Hong Kong failed.  I take this opportunity to remind practitioners that service by post or by inserting through the letter box is not permissible where the defendant is out of the jurisdiction, and also where the plaintiff knows or believes that the address in question is no longer the usual or last known address of the defendant.

(2) The 1^st Affidavit of Lee Wai Sang shows that the plaintiff previously attempted to serve, or considered serving, the defendant at various other addresses in Hong Kong, but it is accepted that those other addresses were either irrelevant or were no longer proper addresses at which the defendant could be served.

(3) The plaintiff refers to the information appearing in a “facebook” web page of the defendant which suggests that the defendant is a “partner” of a Hong Kong company called APSS International Advisory Co Limited (“APSS”).  The annual return of APSS dated 26 October 2011 indicates that the defendant is neither a director nor a shareholder of APSS, but a person bearing the same name as the defendant’s son appears to be a director and shareholder of APSS.  When the process server attended upon the registered office of APSS as stated on the said annual return in December 2011, he found that it was occupied by a company called “Sun Hing Group Co”, and he was told by a receptionist there that she had never heard of APSS.  On another occasion in April 2014 when the process server attended the same premises again, he was told that APSS was a company formerly occupying those premises but had moved out many years ago.

(4) The plaintiff also refers to the fact that attempts by its solicitors to contact the defendant by telephone in 2014 have been unsuccessful (two of the telephone numbers were apparently no longer in use, while the third telephone number appeared to be current but no one answered the phone), and both the defendant and his wife have, apparently, changed their first names.

(5) None of the above, it seems to me, is sufficient to show that the defendant has been evading service.

(6) On the other hand, I accept that the plaintiff did not know the proper address of the defendant for the purpose of service.

11. As for (2), while the fact that the relevant limitation period has already expired is a factor against the exercise of the court’s discretion to extend the validity of the writ, albeit not an absolute bar to the exercise of discretion (see Battersby v Anglo-American Oil Company Ltd [1945] KB 23; Tan Kah Eng v Tan Eng Khiam [2012] 1 HKLRD 329 at paragraph 41), I do not consider the mere fact that the relevant limitation period has not expired is a sufficient reason to justify the court exercising its discretion to extend the validity of the writ.

12. The plaintiff has not given any satisfactory explanation for failing to apply for renewal of the writ within the period of its validity or the further period of twelve months from the date of expiry of its validity, or for an order for substituted service of the writ on the defendant earlier.  When I raised this point with Mr Lee, the answer given was that the plaintiff failed to act expeditiously.  I should make it clear that nothing herein is intended to affect any application which may be made by the plaintiff for an order for substituted service of the writ on the defendant (whether in the current proceedings or some other proceedings), which will have to be determined on its own merits.

13. I bear in mind the practical consequences of refusing to extend the validity of the writ for service, namely, that it would be open to the plaintiff to commence a new action against the defendant, in which event the plaintiff will be incurring more time and costs in pursuing its claim against the defendant.  However, the time that has elapsed since the commencement of the proceedings has been lost in any event. The additional time required to commence a new action is not, in my view, significant in the overall context.  In relation to the costs which have been incurred by the Plaintiff, even if I were minded to extend the validity of the writ, I would order that the costs of and occasioned by the ex parte application to the master and the present appeal be borne by the plaintiff because they are the result of the plaintiff’s own failure to seek an order for substituted service of the writ earlier, or to apply for an extension of the validity of the writ within the time frame allowed by Order 6, rule 8(2). Hence, the additional costs which could be saved by the plaintiff from an order extending the validity of the writ would be less than they may appear at first sight.

14. Taking into account all the circumstances of the present case, I am not persuaded that I should exercise my discretion to extend the validity of the writ under Order 2, rule 1 and/or Order 3, rule 5.  To do so would effectively be to permit the plaintiff to enter through the back door of Order 2, rule 1 and/or Order 3, rule 5 when it cannot properly enter through the front door of Order 6, rule 8.  I therefore dismiss the plaintiff’s appeal under its Notice of Ex-parte Appeal to Judge in Chambers dated 6 August 2014.