CHEUNG HING v. WAH FUNG FOREST RESOURCES LTD

HCMP 3/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3 OF 2016

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D E C I S I O N

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1.  There are before me three summonses this morning in these proceedings which were commenced by originating summons on 4 January 2016. In these proceedings, the plaintiff seeks relief for the rectification of the defendant company’s register of directors and for various declarations that various notification of changes of secretary and directors filed with the Companies Registry are null and void, and an injunction to restrain the defendant from appointing any directors or secretary without the written consent of the plaintiff.

2.  By the order of Ng J dated 15 April 2016, it was directed that the proceedings herein continue as if they had been begun by writ of summons.  The plaintiff was given leave to file a statement of claim and the defendant was given leave to file a defence within 35 days thereafter.  The statement of claim was filed by the plaintiff on 25 April 2016.  On a summons taken out by the defendant, Master Chow on 15 June 2016 extended the time for the filing and service of the defence to 21 days from the date of that order. The defence was therefore due on 6 July 2016. 

3.  No defence having been filed by the defendant, on 19 July 2016, the plaintiff took out a summons for judgment against the defendant.  Unfortunately, the summons was misstated as one for summary judgment instead of default judgment.

4.  More recently, on 10 September 2016, the defendant filed an affirmation made by one Mr Pan Man Yiu, said to be a manager of the defendant, in opposition to the plaintiff’s application for judgment. On the same date, the defendant prepared a summons which was filed on 12 September 2016, seeking an extension of time of 21 days, from the date of the order to be made, for the filing and service of its defence.

5.  Finally, on 13 September 2016, the plaintiff filed a summons for leave to amend his summons for judgment, clarifying that he is seeking default judgment instead of summary judgment.

6.  There was no strong opposition from Ms Law, who appeared for the defendant, to that last summons and as I thought it would focus the debate on the real issue, I gave leave this morning to the plaintiff to make the amendment. 

7.  On the plaintiff’s application for default judgment and the defendant’s application for extension of time to file its defence, the proper approach, as Ms Law has submitted, is to look at all relevant matters and circumstances and consider the overall justice of the case, eschewing any rigid, mechanistic approach: see The Decurion [2012] 1 HKLRD 1063, at paragraph 11(1). 

8.  It is important, in my view, to have regard to the fact that what the plaintiff seeks by these proceedings is not a simple monetary judgment against the defendant, but various declaratory and injunctive relief concerning the constitution of the defendant’s board of directors and the appointment of its secretary. 

9.  It is, in general, not the practice of the court to grant declaratory relief by default: see Wallersteiner v Moir [1974] 1 WLR 991.  It seems to me that the relief claimed by the plaintiff in these proceedings will have a fundamental effect on the defendant’s company, and in particular on who can control and represent the defendant company.  Such an order may have effect on the relationship of the company with third parties and it would, in my view, in general, not be desirable to make that kind of order on assumed facts which may or may not turn out on investigation to be true.  A substantive hearing of the matter would therefore be necessary in any event where the merits of the case and the veracity and accuracy of the factual allegations made by the plaintiff will have to be investigated.

10.  On the other hand, the proposed defence raises various factual matters which the court cannot, on the basis of the materials available on this application, simply dismiss out of hand.  I should mention in this connection that the defendant has, by counsel, undertaken to file and serve, within 21 days, a supplemental affidavit or affirmation of a director of the company and of Mr Wong Chor Cheung to verify the truth of the factual matters stated in the draft defence.

11.  I further take into account the fact that the action raises complaints on the part of the plaintiff about matters which happened quite a number of years ago.  I do not think that extending time for filing the defence would occasion any prejudice to the plaintiff that could not be compensated for by costs.

12.  For these reasons, I would make an order in terms of paragraph 1 of the defendant’s summons filed on 12 September 2016, from which it follows that the amended summons of the plaintiff for default judgment is to be dismissed.

(Submissions on costs)

13.  On the plaintiff’s summons to amend dated 13 September 2016, there will be no order as to costs. 

14.  As to the defendant’s application for extension of time to file a defence and the plaintiff’s summons for judgment, I think that costs should be dealt with together.  I consider that the matter has been in large part caused by the delay by the defendant in filing and serving its defence.  The defendant has been in default; it had to come to court to seek an indulgence.  It did not file a summons for extension of time on or before the original extended deadline in early July but only did so two days ago.  I recognise, however, that there are also certain problems with the plaintiff’s application.  The appropriate order seems to me to be that the defendant should be ordered to pay two-thirds of the plaintiff’s costs, on a party and party basis, of and relating to the two applications.

15.  The order will not be sealed until the supplemental affirmations have been filed.