SPC CREDIT LTD. v. WONG KAM BIU

CACV 158/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 158 OF 1999

(ON APPEAL FROM DCCJ 11644 OF 1989)

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J U D G M E N T

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Mayo, J.A.:

1. This appeal by the Defendant relates to an order made by H.H. Judge C.B. Chan.

2. The issue between the parties was whether the Defendant had been a party to a hire purchase agreement with the Plaintiffs. The Plaintiffs obtained a default judgment on 8th December 1989. They tried without success to enforce the judgment. Steps taken by the Plaintiffs included an attempt to examine the Defendant and obtaining a warrant for his arrest. This warrant was served on the Director of Immigration.

3. The Judge was satisfied on the application made by the Defendant to set aside the judgment on 13th November 1998 that the Defendant would at the latest have become aware of the proceedings when he passed through the Immigration channel on the 2nd May 1995.

4. The Plaintiffs did not oppose the application to set aside the judgment. However as they contended that the judgment which had been entered was a regular judgment they submitted that they were entitled to their costs.

5. In the event the Judge made the following order:

"1. the judgment entered herein in default of defence on the 8th December 1989 and all subsequent executions of the said judgment and the Order for Examination dated 23rd April 1990 be set aside except that the issue as regards whether the judgment was regular is an issue which will be decided along with the factual issue at the trial as regards which the Defendant's address stated in the Hire Purchase Agreement was provided by the Defendant;

2. the Defendant has leave to defend this action by serving his Defence within 14 days;

3. costs of the proceedings up to and including 2nd May 1995 be costs in the cause;

4. costs of the execution proceedings after 2nd May 1995 until today be to the Plaintiff in any event; and

5. costs of this application be costs in the cause."

6. Part of the rationale of this order was that the Judge was not satisfied on the material which was before her that the service of the writ had been regular. This depended upon how and what information they had received concerning the address for service on the Defendant contained in the hire purchase agreement. Understandably the Judge ordered that this was an issue which should be determined at the trial of the action.

7. Although the order was finalised the Plaintiffs' solicitor contended that the order did not reflect what the Judge had decided at the hearing. There was a further hearing on 2nd February 1999. After hearing the parties the Judge made an order amending the previous order, this order read:

"... It is ordered that the sealed order herein dated 13th November 1998 be amended by deleting 'execution' in paragraph 4 thereof and by deleting the paragraph 5 thereof."

8. It appears from reading the transcript of 2nd February 1999 hearing that the reason why the Judge made the order she did is that there was no reference in her notes of 13th November 1998 hearing to costs of the application being costs in the cause.

9. On 14th November 1998 the Plaintiffs filed a Notice of Discontinuance. It would appear that they did this without obtaining leave from the court.

10. As a consequence of the notice there has been and will be no determination of the issue as to whether service of the writ was regular.

11. In the Amended Notice of Appeal that the Defendant appeals against the Judge's decision to amend the 13th November 1998 order, particularly having regard to paragraph 5 of the order which provided that costs of 13th November 1998 hearing be costs in the cause.

12. In my view the Defendant has a legitimate grievance.

13. There has been no adjudication upon whether the service of proceedings on him was regular and indeed he will have no opportunity now of establishing this.

14. The original reasons given by the Judge for leaving the issue open were valid and understandable. The mere fact that the Judge made no note of costs of the 13th November 1998 application being costs in the cause was not a good reason to amend the original order.

15. The question also arises as to the propriety of the Judge making costs orders outside the four corners of the application which lay before her.

16. In this connection the observation made at p.623 of the report of Scherer v. Counting Instruments Ltd. (C.A.) WLR 615 is our assistance, which reads:

"The third ground, which relates to the abandoned claims, is clearly connected with the plaintiffs' conduct of the action. It would be a relevant matter in considering what order for costs should be made at the trial. It might have had some bearing upon the gravity of the plaintiffs' delay in the first action, but, since that delay was held not to be either inordinate or inexcusable, we cannot see how these claims can be suggested to have justified the defendants, knowing that the claims were not to be pursued, in moving for the dismissal of the first action. Moreover the defendants have got their costs of these claims. We can find in these circumstances no ground on which the judge could properly order the plaintiffs to pay the defendants' costs of the motion to dismiss the first action.

The fourth ground, which relates to the nature of the actions, is of course intimately connected with the litigation and may be relevant to the gravity of delay by either party. It may very well be something which the judge could properly take into account in considering his order for costs at the trial. If the character of the action could be related to the consequences of delay on the part of the plaintiffs in some way which would make the delay prejudicial to the prospect of the defendants being able to defend the action as satisfactorily as they would be able to do without such delay, the character of the action might be regarded as relevant to the question whether the defendants could justify moving to dismiss the action for want of prosecution; but no such relation has been suggested, and Mr. Jacob has, as we have said, conceded that commercial embarrassment would not constitute relevant prejudice for this purpose. So commercial considerations can have no bearing on whether the defendants were justified in launching their motions to dismiss for want of prosecution."

17. In my view the Judge should so far as costs were concerned have confined herself to the application which lay before her.

18. The result of this is that the orders of 13th November 1998 and 3rd February 1999 should be amended to delete all reference to costs save that the costs of the two applications should be costs in the cause.

19. Having regard to the fact that the action has been discontinued this will in all probability mean that the Defendant will get all his costs.

Rogers, J.A.:

20. I agree.

21. I only wish to add a few words in relation to the order which was made below. The order in particular relates to the costs of the execution proceedings after 2nd May 1995 until 13th November 1998 to be the Plaintiff in any event.

22. One of the difficulties with the wording of that order is that there seems to be some confusion as to whether those costs included the 13th November 1998 or not. I feel I need say no more about that in view of the course which this Court is taking in the matter.

23. The question arose as to why the Defendant should be paying the costs after 2nd May 1995 and why that order should be made in proceedings to set aside the default judgment. The basis upon which it was sought to justify such an order was that it was said that the Defendant had acted unreasonably. It was said that the originating process was served on the Defendant's mother at the mother's place of abode which was thought to be the Defendant's address. But the Defendant gave evidence that by the time of the service, he was no longer living at his mother's home. There is no relevant dispute as to that.

24. In my view, in any event, this is not a point which could be taken into account on an application to set aside a judgment. No good service has been shown. The indication rather is that the mother would not have understood what had happened.

25. That service, in any event, took place in May 1990 and it can hardly be a justification for ordering costs from a date 5 years later.

26. Then, the other point that was taken was that on 2nd May 1995, apparently the Defendant came across the border. What happened on that occasion is difficult to fathom. The Judge records that he was notified of these proceedings by the Immigration Department on 2nd May 1995:-

"The Defendant admitted he was notified but thought it related to fixed penalties. He failed to make inquiries from the Court as to the reason for the warrant of arrest. He should have done so."

But precisely what took place at the border, what the Defendant was told or understood, how the Defendant came to be free if it was known that there was a warrant for his arrest has not been explained.

27. To my mind, that matter is wholly unsatisfactory; but even if the Defendant had been notified that the proceedings in someway or another, presumably by word of mouth by an Immigration Officer, I fail to see how it can put a burden upon him to make inquiries of the Court as to the conduct of proceedings of which he otherwise apparently was ignorant.

28. The important point in relation to this is also, as has been pointed out by Mayo, J.A., that there are not relevant matters to take into consideration when ordering costs in relation to the application to set aside the default judgment. They may, as was indicated by Lord Justice Buckley in the Scherer v. Counting Instruments case, be relevant matters to take into account when the final order is made at the trial. They are irrelevant on the interlocutory decision which relates to setting aside the default judgment.

29. In my view, this Court has no alternative but to set aside the order and make the order proposed by Mayo, J.A., and I concur therein.