MARKLAND GLOBAL INVESTMENT LTD v. TSUI HOI SAN AND ANOTHER

DCMP 1329/2019

[2022] HKDC 538

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 1329 OF 2019

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DECISION

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1.  By a summons dated 22 February 2022 (“P’s Summons”), the plaintiff (“P”) seeks an order to set aside the default judgment entered against P on the 1^st defendant (“D1”)’s Counterclaim on 9 September 2021 (“the Default Judgment”).  P’s Summons is supported by an affirmation filed by P on 22 February 2022 (“the Supporting Affirmation”).  No affirmation in opposition is filed by D1.

2.  The procedural and factual background is as follows:-

(1)  On 18 April 2019, P commenced these proceedings by an Originating Summons, seeking an order to recover possession of a portion of the Remaining Portion of Lot No. 792 in Demarcation District No. 453, Tsuen Wan, New Territories, Hong Kong (“the Lot”), pursuant to Order 113 of the Rules of the District Court.  At that time, the only defendant was all occupier(s) of the subject area mentioned in the Originating Summons.

(2)  By an order dated 25 July 2019, Tsui Hoi San has been added as the 1^st defendant, and the original defendant has been renamed as the 2^nd defendant.  Further, these proceedings have been converted to writ proceedings.

(3)  On 14 August 2019, P filed its Statement of Claim (“the S/C”).  In the S/C, P has made it clear that this case concerns part of the Lot only, which is shown on the plan annexed to the S/C and coloured green (“the Green Area”).  The subject area is called “佔用區” in the S/C.

(4)  On 11 November 2019, D1 filed his Defence and Counterclaim (“D&C”).

(a)  In [2] of the Defence, it is pleaded:-

“…… [D1] avers that [P]’s title, if any, to the Occupied Area (「佔用區」as defined at paragraph 2 of the Statement of Claim) or parts of the Occupied Area, subject to the surveying evidence on its exact boundary, had extinguished[1] by reason of the matters pleaded hereinbelow.”

(b)  In the D&C, D1 pleaded that P had been dispossessed of the Occupied Area or parts of the Occupied Area by D1, and D1 had acquired a possessory title to the Occupied Area or parts of the Occupied Area.

(c)  On 26 November 2019, P filed a Reply and Defence to Counterclaim (“RDC”).

(d)  Subsequently, P decided not to continue the claim against the defendants and not to defend D1’s Counterclaim. On P’s application, the court granted an order dated 19 March 2021 to the effect that P’s claim be discontinued and the RDC be withdrawn and expunged.  The court also ordered that costs and occasioned by the claim and the counterclaim in this action up to the date of the order be paid by P to D1, to be taxed if not agreed.

(e)  By a summons dated 5 July 2021 (“D1’s Summons”), D1 applied to enter default judgment against P on D1’s Counterclaim, with costs of the action including the default judgment application be to D1. D1 relied on an expert report dated 11 June 2021 (“the Expert Report”) and his own affirmation in support of the application.

(f)  As per D1’s Summons, D1 is seeking a judgment concerning the area coloured pink (“the Pink Area”) as shown on the plan annexed to D1’s Summons.

(g)  On 9 September 2021, the court acceded to D1’s application and granted the default judgment sought by D1.  The land covered by the Default Judgment is the Pink Area.

3.  Having considered the parties’ respective submissions, I am of the view that P is correct on its primary contention, i.e., the relief granted in the Default Judgment is not within the case as pleaded by D1 in the D&C.  Accordingly, the Default Judgment is irregular and must be set aside.

4.  Mr Vincent Chiu, counsel for P, submits inter alia that:-

(1)  In the S/C, P pleaded that it was the owner of the Occupied Area, i.e. the Green Area.

(2)  In the D&C, D1 pleaded that P’s title to “the Occupied Area or parts of the Occupied Area” was extinguished and D1 sought declaratory reliefs to that effect.

(3)  However, the area targeted by D1’s Summons is the Pink Area, which is a different area.  The Pink Area is not the “Occupied Area” as defined in the S/C and in the D&C.

(4)  The Pink Area has not been pleaded in the D&C.

(5)  The Green Area and the Pink Area are two different areas entirely separated from each other.  The evidence in support of this is in [17] and [18] of the Supporting Affirmation.  There is no evidence from D1 disputing this.  Further, in the Expert Report adduced by D1, there is no reference to the Green Area, and the expert has not said that the Pink Area is part of the Green Area.

(6)  Based upon the D&C, there can simply be no basis to grant any default judgment concerning the Pink Area.  The Default Judgment is an irregular judgment and should be set aside.

5.  Mr Ng Man Kin, solicitor for D1, submits inter alia that:

(1)  As pleaded in [2] of the D&C, the exact location of the land adversely possessed by D1 is “subject to the surveying evidence on its exact boundary”.   The plan annexed to D1’s Summons, including the Pink Area thereon, is prepared by the surveying expert. Accordingly, the Default Judgment is based upon the matters pleaded in the D&C.

(2)  D1’s pleaded case and the expert evidence adduced by D1 have been considered by the court before the court granting the Default Judgment to D1.  Having considered all these, the court decided to exercise the discretion in favour of D1 and granted the Default Judgment.

(3)  In Re Mai Xi Hong (HCB 550/ 1996, 17 December 2004), Barma J (as he then was), having gone through a line of authorities on declaratory judgments entering for too much, held that where a defendant simply contends that the amount claimed is more than the amount due, that would seem to be a matter of defence in relation to which it will be necessary for that defendant to demonstrate some merits and to persuade the court to exercise its discretion to set aside the declaratory judgment against him.  The same principle should apply here.  In this case, P has not adduced any evidence to show a meritorious defence to D1’s counterclaim.  That being the case, there would be no reason for the court to exercise the discretion in favour of P to set aside the Default Judgment.

(4)  Although the Green Area and the Pink Area are two different areas, a majority part of the Pink Area is within the Green Area.  Mr Ng accepts that D1 has not filed any evidence in support of this proposition, and the expert has not mentioned the Green Area at all in the Expert Report.   However, by just comparing the plan annexed to the S/C and the plan annexed to D1’s Summons, it can be seen that part of the Pink Area is within the Green Area.

(5)  There has been undue delay on P’s part in taking out the application for an order to set aside the Default Judgment.  D1’s Summons, the supporting evidence, and the written submissions in support of the application were served on D1 prior to the hearing on 9 September 2021.  The Default Judgment was served on D1 on 30 September 2021. However, P did not take any action until 12 January 2022.  On that date, P began to challenge the Default Judgment for the first time by correspondence. P only took out P’s Summons on 22 February 2022.  No discretion should be exercised in P’s favour because of the undue delay.

6.  With respect, I am in agreement with Mr Chiu, and I am unable to agree with Mr Ng.

7.  The principles concerning default judgments are trite.

(1)  In an application for a default judgment, the court would only consider the matters pleaded in the statement of claim and would not consider any evidence in support of the merits of the case.

(2)  See Lam Chi Fat v Liberty International Insurance[2], in which Ma J (as he then was) said:-

“26. …… As I have noted above, the interlocutory judgment entered on 28 January 1995 pursuant to Order 13, rule 2 was made in default of Acknowledgement of Service. No reasons for the judgment were given in these circumstances. This judgment was therefore entered on the basis that the facts as contained in the Writ of Summons, were true and admitted by the defendants: see Hong Kong Civil Procedure 2002 Vol 1 at paragraph 13/0/10 referring to Cribb v Freyberger [1919] WN 22 (English Court of Appeal). This, I should add, is also the position where judgment is entered in default of pleadings (in this situation the facts are those as contained in the relevant pleading) : see Young v Thomas [1892] 2 Ch. 132, at 137 (English Court of Appeal).

27. The basis for default judgments I have just referred to, give rise to the obvious consequence that as the facts on which the plaintiff's claim is based are deemed to be admitted, judgment will only be given on the plaintiff's claim provided the pleaded facts give rise to the relief sought. Where, however, the facts do not give rise to the relief sought, then unless the Writ or Statement of Claim is amended, no judgment will be given. In default judgment situations, the court looks to the pleaded facts alone and no other evidence will be permitted. As I have said, if the plaintiff wishes to rely on other facts, leave to amend will be required together with all that this entails (such as re-service, etc). See here : Smith v Buchan [1888] 58 LT 710 (English High Court); Young at 136; Hong Kong Civil Procedure 2002 Vol1 at 19/7/11.” (Emphasis added)

(3) See also Leung Pak Ki v The Estate of Pang Kau (彭九), deceased & Anor[3], per DHCJ Paul Lam SC:-

“5.  …… It is trite that in an application made under Order 19 rule 7, the court cannot receive any evidence but must give judgment according to the pleadings alone (Hong Kong Civil Procedure 2016, vol 1 §19/7/11 at p 472).  I have repeated this fundamental procedural point in my judgment in Biostime International Investment Ltd v Finance Heson Paper (HK) Co Ltd [2015] 2 HKLRD 658 at 661, §§7–8.  I also note that this procedural point was repeated in recent cases including Li Sau Sing v CTMA Holdings Ltd and others, DCCJ 4825/2014 (5 October 2015, unreported), §§6–7, pp 3–4; Tsui Ming Sin v Tsui Chi Ping and another, HCA 2550/2014 (2 February 2016, unreported), §§10–11, pp 3–4; Li Sau Sing v CTMA Holdings Ltd and others, DCCJ 4825/2014 (3 February 2016, unreported), §9, pp 5–6). It is disappointing that legal practitioners still need to be reminded of such a fundamental procedural rule.”

(4) If there is any evidence showing that the plaintiff may not be entitled to have judgment, the court may take the said evidence into account. See Hong Kong Civil Procedure 2022, Volume 1, §19/7/11:

“The court has, in the context of a claim for declaratory relief regarding possessory title to land in reliance on s.17 of the Limitation Ordinance (Cap 347), taken into account evidence filed by the plaintiff which cast doubts on whether the defendant is abandoning her entitlement to the land. Default judgment was refused (Fung Shek Wa v. Chang Lai Yue (HCA 2258/2013, [2014] HKEC 716 [14] (Registrar Lung)); affirmed by (HCA 2258/2013, [2014] HKEC 1558), [40]-[42] (Deputy Judge B. Chu)).”

8.  In my judgment, based upon the evidence before me, the Green Area and the Pink Area are two different areas without any overlapping.  The point is supported by [17] and [18] of the Supporting Affirmation.  There is no evidence from D1 challenging this.  Also, there is nothing in the Expert Report touching upon the Green Area at all.  In these circumstances, the totality of the evidence shows that the Green Area and the Pink Area are two different areas entirely separated from each other.  With respect to Mr Ng, I am of the view that it is not apparent to the eyes that there is any overlapping between the two areas by just comparing the plan annexed to the S/C and the plan annexed to D1’s Summons.

9.  While the Pink Area is not the Green Area and is not even part of the Green Area, D1 can derive no assistance from [2] of the D&C.  The subject matter in [2] of the D&C is the Green Area or parts of the Green Area.  That paragraph certainly cannot be construed as referring to an area (i.e. the Pink Area) which is entirely separated from the Green Area.

10.  While the Pink Area is not within the case pleaded by D1 in the D&C, I do not see any ground upon which the Default Judgment can be upheld.  As a matter of law, the court cannot grant a default judgment to D1 based upon an unpleaded case.  There is simply no basis upon which the court may grant the default judgment sought by D1 in D1’s Summons.  This remains as an insurmountable hurdle notwithstanding all the points made by Mr Ng in his submissions.

11.  I agree with Mr Chiu that based upon the case pleaded by D1 in the D&C, D1 is not entitled to have the Default Judgment.

12.  Since I have ruled in favour of P on its primary contention, that would be sufficient for the purpose of disposing P’s Summons.  There would be no need to go into the other matters raised by the parties.

13.  I order that the Default Judgment be set aside.

14.  Costs should follow the event.   I order that costs of P’s Summons be paid by D1 to P forthwith, with a certificate for counsel.  Since D1 is on legal aid, I would order taxation instead of summary assessment.  D1’s own costs be taxed in accordance with the Legal Aid Regulations.

15.  P has prepared a bill of costs for summary assessment.   In that bill, P has included some costs incurred by P in the taxation pursuant to the Default Judgment (“the taxation costs”).  P is trying to recover those costs in this application.  I observe, and Mr Chiu has fairly accepted, that the taxation costs should not be part of the costs of P’s Summons.

16.  I thank Mr Chiu and Mr Ng for the assistance provided to the court.