HONG KONG MAGNETRONIC CO. LTD. v. LAU WAH

IN THE SUPREME COURT OF HONG KONG

COURT OF APPEAL

CIVIL APPEAL NO. 53 OF 1986

(On Appeal from High Court Action No. 8322 of 1984)

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BETWEEN

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JUDGMENT

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Clough, J. : (delivering the judgment of the court)

1. This is an appeal by the Defendant from the order of Deputy Judge Scriven, made on 8th April 1986, dismissing the application of the Defendant (1) to enlarge the time under Order 3 rule 5 for the Defendant to apply for the setting aside of the Deputy Judge's order made on the 28th January 1986 giving judgment against the Defendant in the action for $240,000 with interest and costs under Order 35 rule 1 in default of the appearance of the Defendant at the hearing of the action, and also (2) to set aside that judgment under Order 35 rule 2.

2. The practice of the court is that, as a general rule, if by some oversight or mistake by a party, or as a result of his solicitor's error or negligence, the party does not appear at the hearing of an action and judgment is given against him, then if justice can be done by compensating the other party for any costs and trouble caused to him, the judgment should be set aside on terms as to the costs thereby thrown away.

3. The first question for inquiry, where an application is made, as in the present case, to enlarge the time under Order 3 rule 5 for applying and thereafter to apply under Order 35 rule 2 to set aside a judgment given to the Plaintiff in the absence of the Defendant who has failed to appear at the trial hearing, is what excuse, if any, is offered by the Defendant for his failure to appear at the trial?

4. The second question is, has there been undue delay in making the application, that is to say delay causing prejudice to the Plaintiff or delay which has enabled the rights of third parties to intervene? The third question is, would the ordering of a new trial be prejudicial to the Plaintiff, because circumstances may have arisen making a new trial unfair or inequitable to the Plaintiff, for example witnesses may have died and so on.

5. Finally, the question of merit sometimes arises, but the practice normally is for these matters not to be investigated, if the court decides that there is a reasonable excuse and that the Plaintiff will not be prejudiced if the judgment is set aside on appropriate terms.

6. In the present case, the judgment having been given on the 28th January 1986, the Defendant did not apply until the 13th March to set aside the order. As to his explanation for his failure to attend at the hearing, the Defendant made an affirmation on the 13th March, which is about 6 weeks after the date of the order, in which he said this:

"Because of my business connection, I have to travel frequently to China. It is now shown to me and produced marked "LW-1" the relevant pages of my China Entry Permit together with the English translation thereof which shows that since 27th January 1986 up to 10th March 1986 I was in Hong Kong only on two occasions, between 8th and 10th of February which was Chinese New Year and between 1st and 3rd March the first two days of which were a Saturday and Sunday."

He formally affirmed that the factual averments in his defence and counterclaim were true.

7. The judge dismissed the application on the 8th April, delivering an oral decision, which was later reproduced in writing. When giving his reasons for his decision he made observations about the circumstances under which, on the 28th January 1986, the Defendant's solicitors had come off the record. It may well be, and Mr. Chain for the Defendant relies heavily on this, that there was irregularity in the course of the application to come off the record. It appears that the necessary summons under Order 67 was not served on the Defendant and that one of the daughters of the Defendant appeared in court on the 28th January, when the application under Order 67 by the Defendant's solicitors to come off the record was granted.

8. The judge read the evidence of the Defendant's former solicitor Mrs. Dissanayake regarding the grounds for coming off the record. She had made reference to a letter dated the 14th January 1986, addressed to the Defendant, in which she warned him of the imminent trial date for the action, which was in the running list. At that stage, it was due to come into the warned list not earlier than the 27th January, which was a Monday. The letter urged the Defendant to make the witnesses available and to provide funds for the instruction of counsel to advise on evidence. It emphasised that, if the solicitors were not put in funds, they might not be able to continue to act for the Defendant.

9. The same affidavit referred to telephone conversations which Mrs. Dissanayake had had with one or other of the daughters of the Defendant, regarding the imminent hearing on the 28th January 1986. By the 27th January it was known by the solicitors that the trial would take place on the 28th.

10. The judge referred to some of these matters in his Reasons for Decision. In the grounds of appeal the course taken by him is impeached. It is alleged that the judge erred, when refusing counsel for the Defendant's application for an adjournment (made when the judge was delivering his reasons for his decision) by taking into consideration matters which transpired on the 28th January 1986 between the court, the Defendant's former solicitor and the Defendant's daughter, when there was no sufficient evidence that the Defendant knew or ought to have known what transpired on that occasion.

11. The grounds of appeal further allege that the judge erred in refusing to allow the Defendant an opportunity to explain these matters and to be heard. Mr. Chain has told the court that he actually applied to the judge for an adjournment when he heard the oral reasons, at the time the application to set aside was being refused, but that his application to be permitted to adduce further evidence was refused.

12. The third ground refers to the question of prejudice and irreparable damage, which it is alleged would not be incurred by the Plaintiff if the judgment were to be set aside.

13. So the substance of the grounds of appeal concerns the judge's references in his reasons to matters which were in effect adverse to the Defendant. It is contended that the Defendant was entitled to be permitted to adduce evidence in rebuttal of these matters. In our judgment, if there is some merit in these points, and it may well be that the circumstances under which the solicitors came off the record were irregular in some respects, they are nevertheless of insufficient weight to deflect attention from the essential lack of merit of this application.

14. In paragraph 2 of his affirmation (the terms of which I have read out) the Defendant is not saying that he was unaware that the action was due to be heard on the 28th January; nor that he went to China some time before he knew of the hearing date; nor does he allege any mistake or excuse; nor does he explain why he chose to leave on the 27th January, the day before the hearing date, nor why he took so long to apply, some six weeks later, to set aside the judgment when it had been given.

15. All the Defendant does is to assert that he was in Guangzhou, for most of the time during January, February and March, although he identified days when he was in Hong Kong. There is a complete absence, on any fair construction of this affirmation, of any reasonable excuse for his failure to appear for the hearing on January 28th or of his delay thereafter in his application to set aside the judge's order.

16. Mr. Chain has contended that it is implicit in the Defendant's evidence that he was saying that he had gone to China because he did not know about the hearing, and that, because the solicitors were on the record until the 28th January, it must be assumed in some way that the Defendant did not have the relevant information. Attempts have been made, on this appeal, to adduce further evidence by the Defendant's two daughters to the effect that the Defendant did not know about the pending hearing, or other matters in connection with it because they did not tell him, through omission or ignorance. That additional evidence has not been admitted by this court because there is no evidence whatsoever to indicate that it could not have been adduced in support of the application when that was first made.

17. The judge himself clearly stated in his written Reasons for Decision that he found that the Defendant had not given any good reason for not attending the original trial, which his solicitors had attended. He rightly pointed out that the evidence of the Defendant, to which I have referred above, simply indicated that the Defendant chose to leave Hong Kong on the day before the hearing and that his affirmation gave no cogent reason for his so doing. It merely stated as a fact that he had not been in Hong Kong for many days since the hearing.

18. Thus the Defendant has failed to give any reasonable excuse, or to furnish any explanation of his failure to attend. Nor did he take any action whatsoever, to set aside the order of the judge of 28th January, until 13th March 1986, which was two days after the Plaintiff had obtained a Charging Order Absolute on some shares in a Hong Kong registered company belonging to the Defendant to secure the payment of his judgment debt. We do not consider that the court can properly look further into questions of prejudice and merit, where there is no reasonable explanation for the defaults of the Defendant. For those reasons we dismiss this appeal.