UNI-PACIFIC PROPERTY CONSULTANTS LTD. v. SOUTHERN THEME LTD.

HCA8104/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.8104 OF 1998

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J U D G M E N T

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1. I have before me a Notice of Appeal dated 9th October 1998. It is an appeal by the Plaintiff herein against the judgment of Master Bennett in Chambers dated 5th October 1998 whereby upon the Defendant's application by summons dated 21st August 1998, the learned Master set aside judgment in default of defence entered in favour of the Plaintiff on 26th June 1998. He further set aside charging orders nisi and absolute, which had been respectively entered on 2nd July 1998 and 12th August 1998, and ordered that within 14 days the Defendant do file its Defence and that within 14 days the Plaintiff to file its Reply. As to costs, the learned Master ordered that they be to the Plaintiff in any event.

2. Mr Chu, appears on behalf of the Appellant/Plaintiff this morning. By his Notice of Appeal, he asks that the Order of Master Bennett be set aside, and he asks that the default judgment which was set aside be reinstated, together with the charging orders pursuant thereto.

3. The Defendant, Southern Theme Limited, does not appear before me today, whether by solicitors or by a director in person. Accordingly, I have not had the advantage of hearing argument from both sides.

4. The claim itself is not an unusual one in Hong Kong. It is a claim by the Plaintiff property consultants for commission due to them, in the sum of $338,000, allegedly as the result of their services to the Defendant in terms of the sale and purchase of a commercial property situate at 141-143 Wan Chai Road. What actually happened was that the Defendant herein purchased the shares of the vendor holding company and did not purchase the property as such; doubtless there were commercial advantages to this course of action, and the evidence before the Court is replete with references to the most advantageous mode of completing the relevant purchase.

5. Be that as it may. On the face of the evidence before the Court, I apprehend that the Defendant's Defence would be one of true set-off, resulting from the misrepresentation by representatives of the Plaintiff as to the area of the property, (namely 1,500 square feet), so that the Plaintiff, consequent upon such misrepresentation, would be responsible to the Defendant for the difference between the value of the property as represented by the Plaintiff and as purchased by the Defendant. I gather that in real terms this difference is approximately 300 square feet, although no attempt whatever has been made on the face of the evidence filed on behalf of the Defendant to quantify the damage that is claimed to have been suffered. For present purposes, however, I am assuming that it will be equal to or greater than the Plaintiff's claim for its commission.

6. I turn now to the convoluted procedural history of this case. The sale and purchase agreement entered into by the Defendant with the holding company vendor of the shares was dated 22nd July 1997. A Jones Lang Wootton survey report of 16th September 1997 (which has been exhibited in evidence) indicates that the precise area of the property is 1,229 square feet. Completion was due to be on 22nd September 1997 and in fact took place in terms, so that the Defendant purchaser in fact paid a total consideration of some $15 million for the shares, and as a result the property in question. However, as I have noted, the Defendant has been unwilling, and markedly unwilling, to pay the Plaintiff's commission in what is the relatively small sum of $338,000.

7. The Defendant was originally represented, albeit I am told not formally on the record, by Messrs K.C. Yung & Co. There is a letter in the evidence before the Court dated 3rd June 1998 written by these solicitors referring to a chance of settlement between the Plaintiff and its clients of the Plaintiff's claim, which was lodged pursuant to the writ of summons herein dated 4th June 1998. In the event, judgment in default of defence was entered by the Plaintiff against the Defendant on 26th June 1998 after notice had been given by the Plaintiff's solicitors, Messrs Peter K.S. Chan & Co., by its letter dated 8th June 1998, to the Defendant company, whose address for service at 21st Floors, Gitic Centre, is also the address of its then solicitors, Messrs Robertson Double & Lee; that notice of intention to enter judgment in the event of failure to file a Defence was given pursuant to the provisions of Order 19, rule 8(a) of the Rules of the High Court.

8. Consequent upon the judgment, a charging order nisi was entered on 2nd July 1998 which itself was made absolute on 9th September 1998. On 21st August 1998 the Defendant instructed it solicitors Messrs Robertson Double & Lee to issue a summons to set aside the default judgment which had been entered on 26th June 1998, and it was that application which was heard by Master Bennett on 5th October 1998.

9. Thereafter by a Notice of Appeal dated 9th October 1998, the Plaintiff appealed against Master Bennett's decision, and the date appointed for this morning's hearing was fixed on that same day. One further matter is worthy of note : that is that on 4th December Messrs Robertson Double & Lee applied ex-parte to come off the record, as solicitors for the Defendant, and were permitted to do so by Order dated 18th December 1998.

10. Notwithstanding that it would now be open to Mr Chu, as he recognizes, to enter default judgment once again, because of course the Defendant has not filed any Defence pursuant to the Order of Master Bennett within the time allotted or at all, he nevertheless wishes to press ahead with this appeal. He says that he is concerned about the chronology of events and the necessity to maintain in place the earlier existing judgment and also the relevant charging orders. Accordingly, I have heard his submissions on the appeal as it stands, albeit in the rather unreal situation of there being no opposition today. In this connection, I am driven to draw the clear inference from the history of this matter that the Defendant is no longer interested in this case.

11. I have had the advantage of Mr Chu's skeleton argument and I have also had the opportunity to read the totality of the evidence that has been filed by both parties. I remind myself specifically of the burden which falls upon any litigant who seeks to set aside a default judgment. The leading case in this jurisdiction remains that of Premier Fashion Wears Ltd. and Broadway Sport Wear Limited v. Chow Chuk Man and Li Hing Chung [1994] 1 HKLR 377. In particular, in Premier Fashion at page 383, Godfrey J.A. noted as follows :-

"...A defendant who seeks to set aside a regular judgment must at least show that his case has a real prospect of success. To do so he must satisfy the court that his case, and the evidence he has adduced in support of it, carries some degree of conviction. It seems to me that unless a potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on fact, he cannot have shown that he has a real prospect of success."

Equally, Bokhary J.A. in the same case, op. cit., at page 380, observed as follows :-

"...No defence is any good if it will not work in law even if based on the fact. Likewise, no defence whatever its effect in law if believed, is any good if it does not enjoy any real prospect of being believed."

12. Having reviewed the available evidence in its entirety, I do not consider that the Defendant has attained this benchmark, and it follows therefore, with respect, that I do not think that Master Bennett was correct in reaching the conclusion that he did. I recognize, however, that I have not of course had the benefit of argument on both sides, and that there is a sense of unreality about this case given the Defendant's absence. Indeed, it is probably fair to say that the Court's perception of the weight and credibility of the assertions in the various affidavits made on behalf of the Defendant must be at least coloured by the fact that the Defendant apparently is no longer interested in retaining its solicitors, because they have now received permission to come off the record, or indeed in coming to this Court to prosecute its own cause. Moreover the Defendant also appears to be in breach of Master Bennett's Order that it should file its Defence within 14 days of the date thereof, although Mr Chu with great fairness tells me that pursuant to a verbal agreement between those instructing him and the Defendant's then solicitors, it was decided by both sides to do nothing further pending this appeal. Quite why such an agreement should have been made in the circumstances I cannot begin to understand, but there it is. All I will say is that had a Defence in fact been filed, rather than the rather general affidavit evidence presently available, the Court would have had the benefit of a clearer and more specific plea of how the representation is put for which the Plaintiff's employees are said to have been responsible, which representation allegedly caused the Defendant to enter into the relevant sale and purchase contract.

13. Nevertheless, looking at the matter in the round, I have, as I have said, reached the conclusion that the Defendant does not get home, and has not complied with the requirements necessary to convince the Court that it should set aside the judgment and proceed to hear the matter on its merits. I am particularly impressed by the fact, which remains undisputed, that the director of the Defendant who appears to have been most greatly concerned with this transaction, namely a Madam Noel So, not only visited the building containing the suit property and thereby obtained a reasonable idea of the layout and the approximate area thereof, but that she also had, on the Plaintiff's case, a pre-existing commercial relationship with the Sales Manager in the employ of the Plaintiff, Mr William Ng Po Hang, whose evidence is that he had dealt with this lady before, albeit when working for a different employer, and that Miss So was regularly engaged in buying and selling of premises for speculative purposes. I am also impressed by the fact that upon receipt of the Jones Lang Wootton survey report, which put the question of the precise area of the relevant property beyond question, the evidence, which again is not disputed, is that Miss So actually utilized that report in the course of instructing the Plaintiff to find a purchaser and to resell the property on behalf of the Defendant.

14. Looked at overall therefore, I have no great difficulty in allowing this appeal, which I now do. I suspect I may well have allowed it even with the advantage of argument on the other side. However, at the end of the day, I confess that I find it difficult to seriously strive to discern a case for a Defendant who apparently does not bother to attend Court to resist an appeal against the decision below made in its favour, and in a case in which it no longer maintains solicitors of record, for whatever reason.

15. Accordingly, my Order today is as follows :-

1. the Order of Master Bennett dated 5th October 1998 be set aside; and

2. that the Defendant do pay the Plaintiff the costs of and occasioned by this appeal and by the Defendant's summons to set aside dated 21st August 1998, such costs to be taxed if not agreed.

It follows from the foregoing that the judgment which was entered on 26th June 1998 remains in place, as do the charging orders obtained subsequent thereto.

16. I thank Counsel for his assistance.