CHAN YEUK MUI v. NG SHU CHI

CACV 254/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 254 OF 1998

(On appeal from HCA No. 2763 of 1997)

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J U D G M E N T

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Rogers, J.A. :

Introduction

1. This is an appeal from a decision of Mr. Recorder Wong given on 8th September 1998.

2. The Plaintiff brought this action by writ issued on 17th March 1997, seeking declarations that the Defendant's title to Lot No. 1862 in Demarcation District No. 106 had been extinguished by operation of the Limitation Ordinance and further that the Plaintiff had acquired a good possessory title to that Lot.

3. The Plaintiff claims that she entered the land in September 1973, that she fenced the land with wire and that since then she has remained in exclusive physical possession of the land without either a tenancy agreement or any other acknowledgement of the Defendant or of any other person as having title to the land.

History of the ownership

4. The title to the Lot was conveyed to the Defendant in July 1952. The previous ownership of the land is not important for the purposes of this case save that whilst it was under the control of the Defendant's father, it was let to a Mr. Cheung Kuen Fat. During the 1930s, Mr. Cheung sub-let the Lot to a Mr. Yeung who apparently farmed the same.

5. In the 1950s, the Defendant moved to Hong Kong. Insofar as there was any management of the land on his behalf, it was undertaken on his behalf by his mother and brother. Mr. Cheung Kuen Fat died in about 1980 and his son Mr. Cheung Sing Kwong took over. Both the elder and younger Messrs. Cheung apparently paid rent in the form of rice. That rice seems to have been part of the rent which was paid by Mr. Yeung to the Cheungs. Quite how much rice was involved in either payment is not known but it seems to have been minimal. One point which makes that clear is brought out in Mr. Cheung's affirmation where he says that in 1987, after the Defendant's mother had died, he met the Defendant's brother and asked whether he would like to receive the rent directly. The brother was aware that the rent would be minimal and he asked the younger Mr. Cheung to keep the rent for the time being.

6. The Defendant himself seems to have no personal knowledge of what took place in respect of the land after it was conveyed to him. Apart from identifying the rent which his father paid to the Defendant's father as "some rice" and the rent paid up until 1987 as being minimal, Mr. Cheung is imprecise as to the amount of any rent. As regards occupation of the land, his affirmation is again vague. He says that he is unaware of when Mr. Yeung, the tenant, stopped occupying the land. Mr. Yeung apparently stopped paying Mr. Cheung rent "a couple of years" ago. That rent in itself was described as being minimal. Save for saying that he believed that the Plaintiff's occupation must have been permitted by Mr. Yeung and that he did not believe the Plaintiff could have been in occupation of the land as early as 1973, Mr. Cheung's affirmation gives no further relevant information.

Service of the writ

7. The Plaintiff made application shortly after the commencement of the proceedings for substituted service of the writ. There is no dispute that the Plaintiff established by her affidavit that it had been impossible to locate the Defendant whether at any of the addresses known for the Defendant or through inquiry of any local persons. In the circumstances, there is no dispute that the Plaintiff had established that it was impracticable to serve the writ personally on the Defendant.

8. Order 65 rule 4 of the Rules of the High Court permits the Court to make an order for substituted service where it appears that personal service is impracticable. Sub-rule 3 provides :-

"Substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as the Court may direct to bring the document to the notice of the person to be served."

9. The order made by the Registrar was that the service should be "effected by advertising a notice of these proceedings once in Sing Tao Daily, a Chinese newspaper published and widely circulating in Hong Kong" and that such service should be deemed to be good and sufficient service of the writ on the Defendant.

10. There is no dispute that the newspaper in question is a widely circulated newspaper in Hong Kong. It was also accepted that the Defendant was likely to be in Hong Kong. After the conclusion of the hearing in the Court below, the Recorder's attention was drawn to the decision of Deputy Judge Chung in Chan Kam Kee v. Chan Kam Man dated 15th July 1998. Since this occurred before any Judgment was given, the Recorder called for further argument.

11. In the Chan Kam Kee v. Chan Kam Man decision, the Deputy Judge referred to the decision of Carnwath J. in Abbey National plc v Frost (Solicitor's Indemnity Fund Ltd. intervening) [1998] 2 All ER. 321 which, in turn, had referred to a decision of a seven-man Court of Appeal (the eighth member having died 2 days before Judgment was delivered) in the case of Porter v Freudenberg [1915] 1 KB 857.

12. The Porter v Freudenberg decision involved 3 quite separate cases in which proceedings were brought against enemy aliens. The issues involved included whether enemy aliens could be parties to a suit in time of war and, if so, how process should be served upon them. Considerations there involved persons who not only were not in the country at the time but who would clearly be unlikely to read English newspapers. In the course of delivering the Judgment of the Court, the Chief Justice said at page 888 that for substituted service to be permitted, it must be clearly shown that :

"the writ is likely to reach the defendant or to come to his knowledge if the method of substituted service which is asked for by the plaintiff is adopted."

13. That is a passage which was cited by Carnwath J. However, the Judgment of the Court then went on to say :

"The Court may then make an order as may seem just: Order IX., r.2. (equivalent to Order 65 r.4). The terms of this rule are of very wide application, and give a very wide discretion which we are not inclined to limit."

14. I do not read this as going any further than the general rule that in considering the exercise of the discretion to permit substituted service, the Court must consider whether the form of service proposed would be effective. Sub-rule (3) seems, to my mind, to go no further than that.

15. The Abbey National case concerned the service of process in proceedings against a solicitor who was believed to have gone to Thailand by serving the documents on the Solicitors' indemnity fund from which it was hoped to make recovery in default of the solicitor honouring any judgment. Clearly, those were circumstances where it was hardly contemplated that the solicitor should receive or come to hear of the process. In the Chan Kam Kee case, the country of residence, not to say whereabouts of the party sought to be served, was unknown.

16. The Court in granting an order for substituted service must then take into consideration the requirement of bringing the particular document to the notice of the person being served. It is, after all, not an order that service be dispensed with. The first consideration must be where the person is likely to be found. If the person to be served is likely to be found abroad, then obviously different considerations will apply and this is recognised in the notes in the White Book. Then, consideration must be given as to what practical steps can be taken to bring the documents to be served to the attention of the relevant party. Often, advertisements will be the only practical way.

17. Orders for substituted service are doubtless not uncommon. An order that substituted service should be effected by a single advertisement in a paper widely distributed within the jurisdiction is not unusual in the exercise of this jurisdiction. Our attention has been drawn to a standard form used, for example, in the District Court. In this case, there is no reason to doubt that the Registrar made an order which was in a standard form. Unarguably, there could be no certainty that a single advertisement in any newspaper would come to the attention of the party proposed to be served. Neither, however, could any number of advertisements guarantee such a result.

18. Whether the course adopted to order only one advertisement was a wise course or not, or whether the procedure is open to criticism or not, at any rate, it was within the Registrar's jurisdiction to so order. It may be that others would take a different view of the necessity for further advertisements.

19. As with any ex parte order, the Court would have power to review the order inter partes. If the application had been defective or had been made on the basis of evidence which was shown to be wrong, then no doubt it would be set aside.

20. In the absence of showing that the Registrar either did not take into consideration the question as to whether the Defendant's attention would be brought to the issue of the writ, or that he took into account irrelevant considerations, or that his decision was clearly wrong, the grant of the order in these circumstances should, in my view, not be disturbed.

21. Here, there is no basis for suggesting that the Registrar did not consider the requirements of Order 65 rule 4(3). It may well be that that different Tribunals would exercise their discretion in a different way but there were no grounds for alleging the Court had not considered the correct question and reached a rational decision. The order for substituted service, once made, took effect to provide that service in accordance with the order would constitute a valid service. Such an order should not be set aside lightly particularly as the order had been made following established practice.

22. In my view, therefore, the Recorder should not have set aside the order for service. On the other hand, the absence of the writ coming to the attention of the Defendant should be taken as a valid reason why the Defendant should be permitted to argue that he has a defence to the Plaintiff's claim which should be permitted to stand.

The substantive defence

23. There was some discussion as to what the Defendant was required to show in order to be able to set aside a judgment in default. In this case, there is no need to dwell on the niceties of language in this respect since the Defendant has failed to show any defence.

24. As Mr. Chiu pointed out, the effect of the tenancies of both Mr. Cheung Senior and Mr. Cheung Junior and of their sub-tenancies to Mr. Yeung must have been that both under the old law and the new that they were tenancies at will. They were all oral tenancies. Under Section 12 of the Law Amendment (Miscellaneous Provisions) (Amendment) Ordinance 1971, a tenancy made orally would only operate as a tenancy at will. The only exception would be for a tenancy created for a term of 3 years or less which was at the best rent obtainable without a fine (or premium). There is no evidence as to the length of the tenancy. Furthermore, it is highly dubious if the payment in rice could be regarded as a payment of rent in view of the fact that neither the Defendant nor Mr. Cheung refers to any fixed amount. But, in any event, the rent was clearly only minimal and could not have satisfied the requirement that it should be at the best rent which could reasonably have been obtained. This provision replaced in Hong Kong and was the equivalent of Sections 1 and 2 of the Statute of Frauds and was later consolidated as part of the Law Amendment and Reform (Consolidation) Ordinance.

25. Section 12(1) of the Limitation Ordinance provides that a tenancy at will shall be deemed to be determined at the expiration of one year from the commencement and that accordingly the right of action of the person entitled to the land subject to the tenancy shall be deemed to have accrued on the date of determination. The same provisions were applicable under the Limitation Ordinance which was in force in 1973, namely that enacted in 1965 which in turn replaced similar provisions contained in the Real Property Limitation Act 1833 which applied to Hong Kong.

26. It is clear therefore that the tenancies of both Mr. Yeung and both the elder and younger Messrs. Cheung would have determined each year and the Defendant's right to the property would have accrued. Hence, on the basis that the Plaintiff was a trespasser in 1973, at the very latest within a year of that date, any tenancy would have determined and the Defendant's right of action against the Plaintiff would have accrued.

27. In those circumstances, I am of the view that the defence must inevitably fail. The learned Recorder considered that the question of whether the rice tendered as rent was the best rent that could be reasonably obtained was an issue which had to be resolved at trial. In view of the Defendant's evidence that the rent was minimal, demonstrated by the practicality that it was not worth collecting, there can be no issue fit to go to trial.

28. In those circumstances, the Plaintiff's judgment should not have been set aside and she is entitled to the relief she had been granted. I would allow this appeal.

Godfrey, J.A. :

29. I agree that we should allow this appeal for the reasons given by Rogers, J.A.

Mortimer, V.-P.:

30. I have had the advantage of Rogers JA's judgment in draft. I agree both with the reasoning and the conclusions. Although we are differing from the learned Recorder, there is nothing that I can usefully add. I would allow the appeal.

31. The appeal is allowed with an order nisi that the defendant shall pay the costs of the appeal.

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[Since the hearing of this Appeal and after the judgments were prepared, this Court has become aware of the decision of the Court of Appeal in the case of Abbey National plc v Frost (Solicitors' Indemnity Fund Ltd. intervening) reported in the Times of the 5th February 1999 reversing the decision of Carnwath J. Neither the result of the decision nor the reasoning of the Court of Appeal has caused us to consider that any change is necessary to our decision.]