GLOBAL MEDICAL SOLUTIONS HONG KONG LTD v. MA MAN LUNG

HCA 1560/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1560 OF 2011

-----------------------------------

-----------------------------------

__________________________________

REASONS FOR DECISION

__________________________________

Introduction

1. This is the defendant’s application for leave to appeal against my order made on 19 January 2012 entering judgment against him.

2. The background leading to the application is as follows.  The defendant was a former employee of the plaintiff, having been employed for four months from 1 November 2010 until 11 March 2011 when he was dismissed.  The plaintiff’s case is that thereafter, the defendant launched a massive scheme to assault, intimidate and harass the plaintiff as well as its employees, customers and supplies.  The harassment mainly consisted of making silent telephone calls to the plaintiff and its staff, placing unauthorised orders on behalf of the plaintiff with its suppliers, placing bogus orders with the plaintiff allegedly on behalf of the plaintiff’s clients and making unjustified complaints to the regulatory authorities against the plaintiff.  Between 18:40 hours and 23:59 hours on 19 July 2011, the silent telephone calls amounted to 144 calls to the plaintiff’s general manager Mr Kwong.

3. On 12 September 2011, the plaintiff issued a writ with a general indorsement of claim against the defendant.  At an ex parte hearing on 16 September 2011, Yam J granted an interlocutory injunction restraining the defendant from committing further offending acts.  On 21 September 2011, the defendant filed an acknowledgement of service contesting the plaintiff’s claim.  On 18 October 2011, he filed what he called a “Letter of Defence” denying the offending acts complained of.  Then, on 18 November 2011, the plaintiff filed a statement of claim which was served on the defendant.  However, the defendant did not file any defence.  On 9 January 2012, the plaintiff issued a summons pursuant to Order 19, rule 7 of the Rules of the High Court for leave to enter judgment against the defendant in default of service of a defence.

4. The plaintiff’s application was heard before me on 19 January 2012.  No affirmation had been filed by the defendant in opposition.  At the hearing, he denied the offending acts complained of.  I rejected his argument and entered judgment against him.  On 5 July 2012, six months later, he applied for leave to appeal my order.

The applicable legal principles

5. Order 19, rule 7 of the RHC provides as follows:

“(1) Where the plaintiff makes against a defendant or defendants a claim of a description not mentioned in rule 2 to 5, then, if the defendant or all the defendants (where there is more than one) fails or fail to serve a defence on the plaintiff, the plaintiff may, after the expiration of the period fixed by or under these rules for service of the defence, apply to the Court for judgment, and on the hearing of the application the Court shall give such judgment as the plaintiff appears entitled to on his statement of claim.”

6. Thus, if no defence has been filed and the court is satisfied that the matters pleaded in the statement of claim support the claim sought by the plaintiff, the court shall give such judgment as the plaintiff is entitled to according to his statement of claim.  It is not strictly necessary for the court to consider the substantive merits of the plaintiff’s action and the evidence: see Hong Kong Civil Procedure 2012, paragraph 19/7/11. Though phrased in mandatory terms, the rule is not mandatory but discretionary, and the court has discretion not to give judgment or to extend the defendant’s time to file a defence if it is just to do so: see Hong Kong Civil Procedure 2012, paragraph 19/7/13.

7. Order 19, rule 9 gives the court power to set aside or vary any judgment entered in pursuance of this order.  This is a very wide discretion.  As with any discretionary powers, it must be exercised in accordance with legal principles.  In my view, if a judgment is regularly obtained pursuant to Order 19, rule 7, it may only be set aside as if it were a summary judgment entered pursuant to Order 14.  The legal principles applicable to applying for leave to defend under Order 14, rule 4 apply.  In brief, the defendant has to show he has a real or bona fide defence.  There are many authorities as to the test of real or bona fide defence.  They are all similar.  I just need to quote the oft-quoted dicta of Bokhary JA, as he then was, in Re Safe Rich Industries Ltd [1994] HKLY 183:

“The test at the summary stage is indeed as simple as whether the defendant’s assertions are believable. But it must be recognized – because failure to recognize it would create a debt-dodger’s charter – that whether the defendant’s assertions are believable is a question to be answered not by taking those assertions in isolation but rather by taking them in the context of so much of the background as [is] either undisputed or beyond reasonable dispute.”

Application for judgment

8. At the hearing on 19 January 2012, Mr Lazim, solicitor acting for the plaintiff, demonstrated that the matters pleaded in the statement of claim support the claim sought by the plaintiff.  He submitted that the court shall give such judgment as the plaintiff is entitled.  I did not take that submission too seriously as I had discretion not to enter judgment and to give such direction for filing of defence and the further conduct of the case.  This was particularly so as the defendant was not legally represented and had denied the offending acts complained of in his Letter of Defence.  I proceeded to examine if the defendant has a bona fide defence.  I treated the defendant’s submission on the facts as if they were contained in his affirmation.

9. As regards the silent telephone calls, they were made from either of the telephone number 64298425 or 62973795.  Police inquiries confirmed that as the calls were made from phone cards, the identity of the caller could not be identified. Therefore, the defendant argued that there was no evidence that he was the owner of the phone cards or that the calls were made by him.  However, Mr Lazim referred me to two e-mails which, he submitted, if read together amounted to an admission by the defendant that he was the caller.

10. On 10 July 2011, the plaintiff’s chief executive officer, Jay Simon wrote to the defendant via e-mail as follows:

“Dear Henry,

I am asking you as a gentleman and as a person of honor to stop calling and telephone harassing Kenneth, suppliers and others associated with [the plaintiff]. I realize things did not work out for you while at GMS and I have offered to be a reference for you should you need one. However if this harassment continues, we will be forced to take legal action, up to and including filing a police complaint. We do have evidence you are making the calls.

Henry, I am appealing you to find peace and to move on.  I am hoping that we can put this behind us, and still find a mutual collaboration.  Thank You, Jay”

Thus, Jay Simon specifically referred to the harassing telephone calls, ie the silent telephone calls to the plaintiff’s staff, suppliers and others, and pleaded the defendant to stop. 

11. According to Mr Lazim, to that e-mail, the defendant responded on 16 July 2011.  Not known to me at the time, but as revealed by the defendant’s affirmation in the present application, there was one intervening e-mail issued by the defendant on 10 July 2011.  But in the end, as I shall explain, it made no difference. The defendant wrote on 16 July 2012:

“My bottom line is: fire or get rid of Patrick in [the plaintiff].

Then, we are happy to settle mutual collaboration in foreseeable future.  I have plenty of solicitors to file a series of complain / investigation / findings.”

12. Patrick was the defendant’s former supervising officer against whom the defendant had a grudge.  In the face of the allegation by Jay Simon that the defendant made the silent telephone calls, one would expect the defendant to protest if he was not the caller.  But, instead, he demanded Patrick’s dismissal as a settlement.  Mr Lazim submitted that the defendant’s e-mail is an implied admission that he was the maker of the silent telephone calls and he demanded Patrick’s dismissal as a condition for his stopping the nuisance.  In the light of the circumstances, I agree that this is evidence on which the above inference could be drawn.

13. As regards the unauthorized orders placed by the defendant on behalf of the plaintiff, the plaintiff’s case according to Kwong’s affirmation is as follows.  The defendant had obtained the password from the plaintiff’s supplier RadQual LLC (“RadQual”) to enter RadQual’s order system.  After his dismissal, RadQual received three orders dated 13, 16 and 17 March 2011 from the plaintiff for goods worth US$3,330, US$6,306 and US$10,898.  The orders were out of line with the usual orders of about US$3,000.  Hence, RadQual made inquiries with the plaintiff and the plaintiff discovered that the orders were placed via the defendant’s e-mail account with the plaintiff after his dismissal and were unauthorized.  Kwong’s affirmation was supported by exhibits from RadQual. Apart from making a bare denial in his Letter of Defence, the defendant did not respond to Kwong’s affirmation.  I understand it is difficult to prove the negative.  But the evidence against him is overwhelming, cogent and supported by documentary exhibits and is incontrovertible.

14. The plaintiff’s case of the defendant placing bogus order with the plaintiff is as follows.  It is the plaintiff’s practice to issue template purchase order form for its usual customers.  At 2:17 p.m. on 4 April 2011, the plaintiff received by fax one such order purporting to be issued by its customer Irad Kowloon (“Irad”).  The order form did not bear the chop of Irad and did not show the identity of the incoming fax.  The plaintiff made the delivery but was advised by Irad that no such order had been placed.

15. Next, Kwong referred to the unscheduled inspection of the plaintiff’s premises by the Pharmacy and Poisons Board in May 2011 and by the Radiation Board on 5 and 13 May 2011.  Kwong said in his affirmation that the investigating officers informed him that they had received complaints from a former employee of the plaintiff.  The plaintiff also received inquiries from the Oriental Press Group Ltd about the sale of drugs which had not yet been registered with the Department of Health.  The plaintiff suspected these inspections and inquiries were caused by the defendant. 

16. Mr Lazim referred to two e-mails to support the plaintiff’s case.  On 16 July 2011, the defendant wrote to Jay Simon:

“We knew the bad history of Syncor for corruption in Taiwan and heavy penalty charged by USA government.

My bottom line is : fire or get rid of Patrick in [the plaintiff].

Then, we are happy to settle mutual collaboration in foreseeable future.  I have plenty of solicitors to file a series of complain / investigation / findings.”

On 19 August 2011, the defendant wrote to Jay Simon again, saying:

“How’s your founding on Patrick? You can’t act like an ostrich and always ask me for peace. If no official apology and possible solution, I am sorry to tell you we have a series of legal action on this.

You don’t need to pretend my question before.  Why sync or heavily fined by Federal Government and there should be something behind.”

17. Syncor was the predecessor of the plaintiff.  In Jay Simon’s reply, he said that the charge against Syncor were dropped.  This was besides the point.  Mr Lazim submitted that these e-mails carried an implied threat that the defendant had evidence of corruption or other irregularities of the plaintiff and was in a position to bring about complaints and investigations resulting in heavy penalty to the plaintiff.  Mr Lazim submitted that this threat supported the plaintiff’s belief that the unscheduled inspection by the authorities was instigated by the defendant.  I, nevertheless, consider this a surmise.

18. But on the totality of the evidence, the plaintiff presented a strong case of the defendant making the silent telephone calls and placing unauthorized orders. The case was unanswered except for a bare denial.  I considered the bare denial not credible and unsupported by evidence.  The defendant was simply unable to pass the test in Re Safe Rich Industries Ltd.  Therefore, the discretion not to enter judgment should not be exercised.  It would serve no purpose to allow time for the defendant to file a defence which would only delay the inevitable.  This case should be brought to an end as soon as possible.  The plaintiff should not be forced to incur further costs to allow the litigation to run its full unwarranted course.  Accordingly, I refused to exercise the discretion not to enter judgment and so entered judgment against the defendant with costs.

Application for leave to appeal

19. On 5 July 2012, the defendant issued a summons seeking leave to appeal my order made on 19 January 2012 entering judgment against him.  His application was supported by his affirmation filed on 9 August 2012.  He sought direction for the plaintiff to file affirmation in opposition, for him to file affirmation in reply and to have his application adjourned for argument.

20. As I have already indicated, the proper course would have been for the defendant to apply to have the judgment set aside pursuant to Order 19, rule 9 and not to appeal against the judgment.  In any event, the application was made out of time.  As the defendant was not legally represented, I took the extra caution of investigating if there was any reason for setting aside my order made on 19 January 2012.

21. In his affirmation, the defendant produced 24 exhibits.  All except exhibit MML-15 was relevant.  In that exhibit, he exhibited one intervening e-mail dated 10 July 2011 at 10:33 am from him to Jay Simon shortly after his receipt of Jay Simon’s e-mail at 3:32 a.m.  That e-mail should be taken as his immediate response to Jay Simon’s e-mail requesting him to stop the harassing telephone calls.  In that e-mail, he complained about receiving continuous calls with blocked number and that Patrick sent him many harassing e-mails from ip addresses which allegedly were from Patrick’s desktop and cell phone.  In Exhibit MML-12, he exhibited an e-mail dated 14 April 2011 issued from one such ip address purportedly from his own father to him saying in rude language that he was stupid.  He said that was a harassing e-mail from Patrick.  He mentioned other things in his e-mail to Jay Simon which were not relevant.  It is important to note that in that e-mail he did not deny that the hundreds of silent telephone calls were made by him.  The thrust of his e-mail dated 10 July 2011 seemed to be that he was justifying what he did because Patrick had been harassing him with e-mails.  In another e-mail dated 22 July 2011 to Jay Simon, the defendant made an unspecific complaint about the plaintiff’s staff insulting his family.  One unlawful act cannot justify another unlawful act in retaliation.  Even if what the defendant said was true, I do not think these e-mails contained in MML-15 advanced his case any further.

22. The defendant argued by referring to his Exhibit MML-19 that the privacy policy of the Radiation Board was that they would not disclose the identity of the complainant and hence it was unlikely that the board would have informed the plaintiff that it received complaints from its former employee.  I do not consider this argument advanced the defendant’s case further as I gave no weight to the plaintiff’s complaint against the defendant in this regard.

23. Thus, the position remained as it was on 19 January 2012.  The defendant was unable to show a credible or bona fide defence as to justify the court to exercise the discretion not to enter judgment or to have the judgment entered set aside.  Accordingly, it would serve no useful purpose to assist the defendant to put him back in the proper course.  He would fail just the same.

24. I now turn to the grounds of appeal relied on by the defendant.  First, he referred to his Exhibit MML-23 which contained three pages from the plaintiff’s bundle used at the hearing on 19 January 2012.  His complaint was that these documents were in Chinese and had not been translated into English.  He complained that this was unfair. These documents related to change of directors of a company in the People’s Republic of China which have no bearing on the issue I had to decide in this case.  In any event, the matter was heard before me, being a bilingual judge. There is no substance in this ground of appeal.

25. Second, the defendant argued that as he had filed the Letter of Defence, the court is wrong to enter judgment in default of defence.  As I have indicated, the Letter of Defence was filed before the statement of claim was filed and served and could not have been a defence to the statement of claim.  It was not supported by a statement of truth.  I have, in any event, duly considered the defence stated therein but of the view that the defence being a bare denial was not credible and did not pass the test in Re Safe Rich Industries Ltd. There is no substance in this ground of appeal.

26. Third, the defendant said he is a layman and not familiar with the judicial process. This cannot be a ground of appeal.  Indeed, I have given him all the assistance he could expect from the bench and I have considered all possible issues in his favour.  But that still could not avail him.

27. As for the delay in lodging this appeal, the defendant argued that he had not been told about the time within which the appeal had to be lodged.  Even giving him the benefit of that argument, the application for leave was badly out of time. He advanced no credible explanation for the delay.

Conclusion

28. There is no substance in his grounds of appeal.  The appeal was lodged out of time. No credible explanation was advanced for the delay.  For reasons as explained in paragraph 18 above, the discretion not to enter judgment should not be exercised in the defendant’s favour.  He was unable to show a credible or bona fide defence as to justify setting aside the order.  In the circumstances, the only appropriate course is to refuse his application for leave to appeal.  Accordingly, his application for leave to appeal is refused with costs to the plaintiff to be assessed by way of gross sum assessment.