XCHRX DORERA LTD. v. LAM KAM MING AND ANOTHER

HCA 4099/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4099 OF 1999

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REASONS FOR DECISION

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1. This is the Plaintiff's ex parte application for leave to commit D1 for contempt of Court. At the end of the hearing on 4 July 2000, I adjourned the application to another date indicating that reasons for doing so would be given later. These are the reasons.

2. The history of the proceedings giving rise to this application is as follows. On 11 March 1999, the Plaintiff commenced this action against the 2 Defendants for wrongfully failing to return the Plaintiff's diamonds. In the prayer for relief of the Statement of Claim, the Plaintiff asked for:

(a) an order that the Defendants do forthwith return the said diamonds;

(b) damages for detinue,

together with interest and costs of the action.

3. On 27 May 1999, the Plaintiff applied under RHC O. 14/O. 27/O. 18 r. 19 for judgment against D1. D1 appeared in person at the hearing of the Plaintiff's said application. After hearing the parties, the Master made the following Order on 13 September 1999:

"1. Conditional leave to defend upon payment of the sum claimed i.e. US$843,616.13 into Court within 28 days from the date hereof.

2. Costs of today be costs in the cause ..."

There are obvious mistakes in the drawn-up Order of 13 September 1999 such as the reference to "UPON hearing the Solicitors for the Plaintiff" but the part of the Order dealing with costs stated that "Certificate to counsel" was allowed. However, the parts of this Order of more relevance to the present application are:

(a) it does not follow or adopt the usual form of order giving conditional leave to defend: see for example, Chitty & Jacob's Oueen's Bench Forms (1986) 21st Ed., pp. 125 to 126, Forms 130 to 132.

(b) it does not provide for the consequence(s) if D1 should fail to comply with the said condition.

4. D1 defaulted in complying with the condition imposed in the Order of 13 September 1999.

5. Judgment was subsequently entered against D1. This however was not dated and was purportedly entered pursuant to the Order of 13 September 1999. The wording of the Judgment is extremely confusing, for example:

(a) the 1st paragraph stated: "The 13th September 1999." without stating what is the relevance of this date;

(b) the 2nd paragraph stated "... and the court having under O. 14 r. 3 ordered that judgment be entered for the Plaintiff against the 1st Defendant unless the 1st Defendant paid into Court the sum of US$843,616.43 within 28 days from the 13 September 1999." This paragraph is clearly not supported by the drawn up Order of 13 September 1999 which did not order Judgment to be entered (whether on 13 September 1999 or anytime thereafter);

(c) the 4th paragraph stated: "It is this day adjudged that the 1st Defendant do deliver to the Plaintiff the diamonds ... set out in the 3rd scheduled of the Statement of Claim without the alternative of paying their assessed value ...". This is apparently made pursuant to O. 14 r. 9. However, it is to be noted that neither the Statement of Claim nor the Order of 13 September 1999 mentioned that this was the kind of relief sought by the Plaintiff.

6. On 23 November 1999, before the said judgment was served on D1, the Plaintiff took out an ex parte application for the said Judgment to be amended. The amendment was in effect that D1 should forthwith comply with the 4th paragraph of the Judgment. The wording of the summons was also confusing because it referred to the Judgment dated 13 September 1999 when in fact that Judgment must have been entered after that date. This ex parte application was approved by the Master on 26 November 1999.

7. According to an affirmation of Tang Kim Kwong dated 2 June 2000, the Amended Judgment was served on D1 personally on 24 May 2000.

8. As stated above, it appears that there is nothing in the Order of 13 September 1999 which could properly enable a Judgment to be entered against D1 as it now appears in the Judgment or the Amended Judgment. In order for the Plaintiff to be able to do so, it would appear that an application would need to be made to the Master to amend the Order first, whether pursuant to the "slip" rule (O. 20 r. 11) or the court's inherent jurisdiction. It would also appear that such an application would need to be made inter partes so as to afford D1 an opportunity to be heard.

9. The last remark is all in the more important in the context of this action because it appears from:

(1) the "home-made" defence of D1 filed on 8 April 1999;

(2) D1's affirmation dated 2 July 1999,

D1 claimed that, to the Plaintiff's knowledge, he received the Plaintiff's diamonds as D2's agent only and that the diamonds were in fact delivered by way of credit sale and not on consignment. D1 further claimed that D2 had in fact sold all the diamonds but could not pay the Plaintiff because D2 had not received payment from its own buyers. The Master must have found these not entirely unbelievable because she must have given leave to defend based on these claims of D1. If that is the case, D1 and D2 may not now be in possession of the diamonds. Furthermore, it would appear to be common ground that the Plaintiff's diamonds were stocks-in-trade. In these circumstance, I find it difficult to understand why Judgment should be entered for the delivery up of the diamond without giving D1 the alternative of paying for their assessed value.

10. After I have pointed out the above matters to Mr Chong who appears for the Plaintiff, he informed me that he was not aware of the manner in which the Judgment and the Amended Judgment were obtained against D1.

11. In view of the above, I considered that it is appropriate, taking into account the interests of both the Plaintiff and D1, for this application to be adjourned to an inter partes hearing. Mr Chong did not oppose such proposal. I therefore directed that this application is to be adjourned to a date to be fixed in consultation with counsel's diary and to be heard inter partes. All the relevant papers including this "Reasons for Decision" are to be served on D1.