WONG HOI PANG v. SIU WAI CHING SHIRLEY

HCA 521/2018

[2020] HKCFI 2524

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO 521 OF 2018

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DECISION

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A.   PROCEDURAL HISTORY

1.  In this action, the plaintiff sues the defendant for the sum of HK$2,236,084.34 (“the Sum”) plus interest. 

2.  According to the Statement of Claim filed on behalf of the plaintiff, who is and was the Chief General Manager of an insurance company (“MassMutual”), he was the guarantor of a loan of HK$2,000,000 advanced by MassMutual to the defendant, who was an insurance agent of MassMutual.  Because the defendant failed to repay the loan or any part thereof, MassMutual deducted the Sum (which was inclusive of accrued interest on the loan) from the plaintiff’s commission account with it. The plaintiff therefore sues the defendant for the Sum plus interest, claiming that he is “entitled to seek indemnity from the Defendant”.

3.  Before me, Mr Damian Wong, counsel for the plaintiff, states that this is a claim in restitution, the plaintiff having paid the Sum under the deed of guarantee he signed with MassMutual.

4.  On 7 March 2018, solicitors then acting for the plaintiff sent a copy of the Writ of Summons by registered post to the defendant at an address at Henley Building, Central (“the Henley Building address”).  The defendant claims that the signature on the receipt adduced by the plaintiff was not hers.

5.  Be that as it may, obviously the Writ of Summons did come to the notice of the defendant, because, on 28 March 2018, she filed an acknowledgment of service and stated that she intended to contest the proceedings.  On that document, the defendant gave her address for service as one in Happy Valley (“the Happy Valley address”).  The defendant accepts that that document was signed and filed by her.

6.  By a notice dated 10 July 2018, the plaintiff gave notice of his intention to apply for judgment in default of defence under Order 19, rule 8A, of the Rules of the High Court[1] (“the Notice”), unless a Defence was filed and served within the time prescribed.  According to an Affirmation dated 11 June 2020 of Mr Lai Wing Chuen, a clerk employed by the plaintiff’s then solicitors, the Notice was sent on 10 July 2018 to the defendant by ordinary post in a sealed envelope to the Happy Valley address.[2]

7.  By the reference to Order 19, rule 8A, and the possibility of the filing of a Defence, the Notice proceeded on the correct basis that a notice of intention to defend had been filed. However, when the application was made ex parte to the Court for a judgment in default, the then solicitors for the plaintiff enclosed a draft judgment which referred (incorrectly) to the fact that no notice of intention to defend had been filed.  Because of this mistake, on 13 September 2018, the Registrar raised a requisition asking the plaintiff’s then solicitors to clarify whether the application for default judgment was made under Order 13 or Order 19, noting that an acknowledgement of service had been filed.

8.  By letter dated 15 November 2018, solicitors then acting for the plaintiff referred to the acknowledgement of service and the defendant’s indication of her intention to contest the proceedings, and confirmed that the application for default judgment was made under Order 19, rule 2.[3]

9.  Notwithstanding the earlier clarification, apparently the draft judgment was not corrected.  On 12 December 2018, the plaintiff obtained a default judgment for the Sum plus interest and costs (“the Judgment”). The Judgment, as approved by the Registrar, still stated, incorrectly, that the defendant had not filed any notice of intention to defend. 

10.  According to the Affirmation of 11 June 2020 from Mr Lai, on 12 December 2018, a copy of the Judgment was sent to the defendant by ordinary post in a sealed envelope.  According to the covering letter before me, the Judgment was sent to the Henley Building address.

11.  Bankruptcy proceedings[4] were instituted by the plaintiff against the defendant based on the Judgment which was not satisfied. A statutory demand, referring to the Judgment, was issued sometime in June 2019 to which the defendant responded by a letter dated 4 July 2019.  Thus, whether the defendant received a copy of the Judgment in December 2018 or not (she says she did not), she would have had notice thereof by 4 July 2019 the latest.

12.  In opposition to the bankruptcy proceedings, the defendant filed two affirmations, dated 19 September 2019 and 14 October 2019 respectively, neither of which contains the allegation that she did not receive the Notice or the Judgment.

13.  By Summons dated 26 November 2019 (“the Setting Aside Summons”), the defendant applies to set aside the Judgment.  The Setting Aside Summons was dismissed with costs by the Master on 16 June 2020.  The Master summarily assessed the costs to be paid by the defendant at HK$130,000.

14.  In the meantime, the mistake in the Judgment was discovered, and a Summons (“the Amendment Summons”) was issued on behalf of the plaintiff on 12 June 2020 (four days before the date fixed for the hearing of the Setting Aside Summons) seeking to amend the Judgment by replacing the reference to “No notice of intention to defend having been given” with “No defence having been served”.  I am informed by Mr Wong at the hearing that those acting for the plaintiff wanted to fix the Amendment Summons to be heard on 16 June 2020 as well.  Those in charge of listing refused to so fix the hearing of the Amendment Summons.  However, at the hearing of the Setting Aside Summons on 16 June 2020, the Master became aware of the existence of the Amendment Summons and she directed that that Summons should be dealt with at the same time, and she granted leave to the plaintiff to amend the Judgment.

15.  This is the appeal from the order of the Master dismissing the Setting Aside Summons.

16.  Further, by a Summons dated 18 September 2020, the defendant also seeks to amend the Notice of Appeal so as to appeal, out of time, the decision of the Master granting leave to amend the Judgment, as well as the order summarily assessing the costs payable by the defendant (which Mr Bowers says the defendant wishes to pursue on its own, even if the other appeals are dismissed).  The reason for the delay in seeking to appeal the decision granting leave to amend the Judgment is stated to be that she had been acting in person until 1 September 2020, and did not know that she ought to have appealed that decision as well if she is appealing the decision refusing to set aside the Judgment.

B.   THE DEFENDANT’S CASE

17.  The Setting Aside Summons was supported by a short Affirmation of the defendant dated 26 November 2019, which states:

“I, Siu Wai Ching Shirley,, have never personally received the Notice of Intention to enter Judgement from Plaintiff dated July 10,2018 by which lead to the Final Judgement by the High Court dated December 20,2018. Since those two documents weren’t received and not served, I hereby did not have a fair equality chance to defend the above mentioned case.

I hereby demand to request for viewing all the records for the proof of the document delivered from the Plaintiff’s solicitor, Cham & Co Solicitors, and also from the High Court if all documents had served on me during the material times and period in 2018”.

18.  By another Affirmation dated 4 December 2019, the defendant further elaborates her case. 

19.  The defendant alleges that in about 2013 she, upon the invitation or “inducement” of the plaintiff, became a senior marketing manager in MassMutual under the plaintiff, who was the Chief General Manager thereof, as well as a senior vice president in a company called PAC Capital Limited (“PAC”), which the plaintiff operated and of which he was a shareholder. 

20.  The defendant does not deny that she received $2,000,000 from MassMutual.  She suggests that the plaintiff induced her to sign the agreements with MassMutual “to assist him to get funding from MassMutual”. However, she does not allege that the HK$2,000,000 was in fact given to the plaintiff.

21.  The defendant does admit that the plaintiff “personally guaranteed and undertook to repay MassMutual in case of default of payment on my part”.  However, she says:

(1)   “Apparently, there is no evidence to support his allegation that the sum of HK $2million was mutually agreed for such reimbursement to [the plaintiff], in this situation he prima facie acted as the guarantor. Meanwhile, there was no signed contract of reimbursement between [the plaintiff] and myself.  It is also submitted that [the plaintiff] failed to show he has reasonable grounds for the reimbursement of the said amount of HK $2million from myself.  In fact, [the plaintiff] signed as guarantor to benefit himself to get funding from MassMutual to induce me to work for his illegal private business, PAC”;

(2)   “… my advance payment of HK $2million cheque came from MassMutual only.  It was not from PAC Capital Ltd. not from [the plaintiff]. As my contractual relationship was only between MassMutual and myself therefore I did not owe any debt to [the plaintiff].  Again, I did not sign any contract of reimbursement between [the plaintiff] and myself”;

(3)   “[The plaintiff] acted as guarantor to benefit himself and as shareholder of PAC Capital Ltd. share secret profit with MassMutual high level staff seriously breach of fiduciary duty and breach of trust”.

22.  In this Affirmation the defendant repeats her case (twice, as Mr Bowers reminds me) that she did not receive the Notice or the Judgment.

23.  Although not clearly expressed, it would appear that the case of the defendant is that the plaintiff arranged for MassMutual to lend the sum of HK$2,000,000 to her so as to induce her to work for him at PAC.

24.  The fact that the plaintiff, for whatever reason or motive, did agree to repay the loan made by MassMutual to the defendant if the latter defaulted was accepted by the defendant and was known to her when she applied for the loan. By another Affirmation dated 23 January 2020, the defendant alleges that when she applied for the loan on 18 March 2013:

“The Plaintiff agreed he would be responsible for the whole loan amount plus interest, should I default”.

25.  The defendant goes on to allege that there was nothing in her agency agreement with, or loan application to, MassMutual that the loan to her was conditional on the signing of any guarantee, and she was not a party or even been informed that there would be a separate deed of guarantee to be entered into between MassMutual and the plaintiff.  Thus, the plaintiff signed the guarantee gratuitously and voluntarily without her knowledge or signature or agreement.

C.   DISCUSSION

26.  In the appeal against the order of the Master dismissing the Setting Aside Summons, Mr Bowers (who did not appear before the Master) relied on four grounds in support of the defendant’s application to set aside the Judgment:

(1)  The Statement of Claim is defective in that it fails to plead a cause of action against the defendant and the calculation of the Sum claimed is wrong;

(2)  The Judgment was incorrect as it refers to the fact that no notice of defend was filed, when such notice had been filed. The true position was that no defence had been filed.  The Judgment was therefore irregular and should have been set aside;

(3)  Even if the Judgment is regular it still ought to be set aside because, by reference to a draft Defence (an amended version of which is handed up during the hearing), the defendant does gave a good arguable defence;

(4)  There was irregular service of the Writ of Summons and the Notice.

27.  I shall consider each ground in turn.

C1.    The Statement of Claim

28.  Under this ground, the defendant argues that the Statement of Claim fails to plead a good cause of action against her.  She also claims that the calculation of the amount of the Sum, contained in Schedule 1 to the Statement of Claim (which I annex hereto), is incorrect, and there is also an inconsistency in the Statement of Claim when, after stating that the defendant has failed to repay “any part” of the loan after it became due and payable, it goes on to say that she did made partial repayment of HK$80,152.56 which was debited from her commission.

29.  I shall deal with the figures first.

30.  Schedule 1 shows that the sums of HK$69,670.19 and HK$10,482.37 (adding up to HK$80,152.56) had been deducted in May and June 2014 from the commission account of the defendant.  So the calculation which results in the Sum had already taken the HK$80,152.56 into account and there is no mistake in that regard.  There may be a prima facie inconsistency between the plea of no repayment of any part of the loan after it became due and payable and that there was a partial repayment.  However, when one reads those pleas with Schedule 1 I do not think that any person will be confused or misled, or question the correctness of the Sum, on this ground.  Indeed, it is the defendant’s own case in the draft Defence that she did fail to repay part of the loan, but did repay HK$80,152.56, meaning that she only repaid the latter sum.  I do not see how she was being, as she claims, to be embarrassed by the “inconsistency”, or that the same is a reason to support her application to set aside.

31.  The defendant then claims that the calculation of the Sum of HK$2,236,084.34 is also incorrect. This is how Mr Bowers put it in his skeleton:

“26. In addition to the lack of a pleaded cause of action, Schedule 1 to the SOC [A/1/7] records incorrect figures in the calculation of the liquidated sum claimed by P. Pursuant to the Loan Agreement entered into between [MassMutual] and D on 10 April 2013 [B/9/145], the loan was to be repaid in two repayments: HK$1,000,000 after 12 months of service of the Agent, and HK$1,000,000 after 24 months of service of the loan agreement. P has attempted to explain his interest calculations in his reply letter to the Registrar dated 15 November 2018 [B/15/177]. Even after reading the explanation, this calculation simp,y makes no sense and cannot be relied upon.

27. Schedule 1 to the SOC records that the first repayment of HK$1,000,000 was payable as of May 2014, which was about 12 months after the date of the Loan Agreement. However, Schedule 1 to the SOC also records a charge of HK$1,000,000 being payable as of December 2014 with interest being calculated accordingly, being the instalment of the loan repayment. This is five months earlier than the actual date on which the second repayment should have become payable (May 2015). The Schedule to the SOC also does not include any calculations for 2015. In other words, the repayment schedule should have been calculated over a period of 24 months, which is a combination of the time for repayment for both the first and second repayment terms. Here, there has been a simple calculation made over a period of 8 months. Schedule 1 to the SOC cannot be relied on as a verified source of loan repayment calculations, as is incorrect”.

32.  In my judgment, this argument must be rejected.

33.  Schedule 1 is not intended to show the state of indebtedness of the defendant as at December 2014.  It is to show the calculation resulting in the Sum of HK$2,236,084.34, which MassMutual claimed the defendant was owing to it as at 16 June 2016, when it deducted that Sum from the plaintiff’s commission account with it.  Thus, the question is not whether this was the correct figure as at December 2014, but whether this was the correct figure as at 16 June 2016.

34.  Such a figure, as at 16 June 2016, would be the total of the principal of HK$2,000,000 (as both instalments of HK$1,000,000 each were overdue by then), plus accrued interest on the principal, less any partial repayments so far.  This is what Schedule 1 does.

35.  On that basis, the criticism that Schedule 1 apparently records the second instalment of HK$1,000,000 as payable as of December 2014 (as the second HK$1,000,000 was put in the row with December 2014) is beside the point.  While it was not payable as at December 2014, it was as at 16 June 2016.

36.  As for the interest calculations, Schedule 1 calculates the interest on the first HK$1,000,000 up to November 2014, and on the second HK$1,000,000 up to 19 December 2014.  This may be incorrect in the sense that interest on both halves ought to be calculated up to 16 June 2016.  For whatever reasons apparently MassMutual did not so calculate and thus did not claim interest after December 2014.  This is purely to the defendant’s advantage.  As Mr Wong for the plaintiff submits, this is the amount MassMutual deducted from his commission account (which may arguably be less than what it could have claimed from him) and is what he now seeks from the defendant.  I do not see how this alleged mistake assists the defendant in any way.

37.  As for the pleading of a cause of action in the Statement of Claim by the plaintiff against the defendant, since the plaintiff is seeking the payment of the Sum from the defendant under a restitution claim, because he had paid MassMutual the Sum which was owed by the defendant, whether the plaintiff can so claim depends on whether such payment by him legally discharged the debt owed by the defendant to MassMutual, because if not, then the defendant would not have been enriched. 

38.  Mr Wong submits that the pleading is sufficient, as it is pleaded that there was a loan which was guaranteed by the plaintiff, who in fact paid off the debt owed by the defendant to MassMutual under the guarantee. He submits that that is sufficient for the plaintiff’s claim in restitution, and it is not necessary for the plaintiff to plead (which he has not) that the defendant knew of the plaintiff’s promise to be responsible for repaying the loan if the defendant defaults.

39.  I agree with Mr Wong. Although knowledge and consent by a debtor that a third party is to pay off his debt can give rise to a restitution claim by the third party against the debtor[5], this is not the only occasion for such a claim to be allowed.  Legal compulsion on the third party to pay also gives rise to such a claim[6]. Thus, in Goff and Jones, it is stated[7]:

“The claimant must prove that he paid the third party pursuant to an existing legal liability. He does not have to show that his liability arose under English law: it is enough that he was liable under foreign law. Nor does he have to show that he paid under pressure of legal process: it is enough that at the time of the payment he was legally compellable to pay. Nor is it automatically fatal that his liability to the third party was voluntarily assumed without any prior request from the defendant: this is merely one factor which may bear on the court’s decision whether to allow a claim”.

40.  Thus, while prior request or knowledge from the debtor would certainly assist the third party, it is not necessary in the sense that without pleading the same the plaintiff thereby does not have a good cause of action.  Nor is the fact that the legal liability to pay by the third party was assumed voluntarily originally.

41.  Mr Bowers argues that not only must the defendant know of the plaintiff’s intention or promise to be responsible for the loan if she defaults, but she must also know of the fact that a deed of guarantee would be executed by the plaintiff and of the terms of that guarantee. However, no authority is cited for this proposition and I do not see any reason in principle why this is necessary.

42.  In my judgment, a good cause of action has been pleaded in the Statement of Claim.

C2.    The Judgment

43.  As for the fact that the Judgment, before it was amended on 20 June 2020, referred erroneously to the fact that no notice of intention to defend had been given, rather than the correct fact that no Defence had been filed, in all the circumstances as I relay above, in particular the terms of the Notice, the requisition raised by the Registrar and the reply thereto, it is patently clear that that was an error which could be, ought to be, and was, corrected under the slip rule under Order 20, rule 11.  Both the then solicitors for the plaintiff and the Registrar were proceeding on the correct basis that it was a case of application for default judgment for want of Defence rather than want of notice of intention to defend. The error is only in the drafting and approval of the Judgment, which failed to record the true intention and basis of the grant thereof.  I cannot imagine a clearer case for the application of the slip rule. No prejudice is suffered by the defendant (or any third parties) because of the mistake as there is no evidence that the defendant had acted differently because of the mistake to her detriment.

44.  Mr Bowers emphasises the fact that the application to amend the Judgment was not made until a year and a half later, and a mistaken Judgment existed throughout that period. However, in the absence of prejudice, this is not a reason not to grant the amendment.  As stated in Hong Kong Civil Procedure 2020:

“Undue delay is not itself a ground for refusing to correct a judgment under the ‘slip rule’, at any rate where the delay has not caused the opposite party to omit to take or to take any step which he otherwise would have taken or refrained from taking …[8]

…

‘Lapse of time has nothing to do with the matter’ (per Lord Macnaghten in Hatton v Harris [1892] A.C. 564; error 39 years old amended; Shipwright v Clements 38 W.R. 746, 29 years elapsed; and see Barker v Purvis (1886) 56 L.T. 131). But where rights of third parties have intervened, the order will not be made …”[9]

45.  Mr Bowers also argues that the slip rule does not apply where the mistake goes to the reasons for the making of the order.  By that I understand him to mean that if the Court uses a wrong basis or reason to make the order in issue that cannot be corrected by the slip rule.  I agree but this is not such a case.  If the true correct basis for an order is A and not B, and if the Court does proceed on the basis of B, then the mistake cannot be corrected under the slip rule.  But if the Court is proceeding on the basis of A, but mistakenly stating the basis to be B in the order, then the mistake can be so corrected.  In this case it is clear that both the plaintiff’s then solicitors and the Registrar proceeded on the right basis, that this is an Order 19 case and not an Order 13 case.  The mistake is in expressing that basis in the Judgment and this is exactly what the slip rule is for, i.e. to correct this “accidental slip”[10].

46.  I do not see any basis to suggest that the Judgment ought not be corrected under the slip rule.  Further, it is proper case management for the Master to deal with both the Setting Aside Summons and the Amendment Summons at the same hearing and I do not see any prejudice suffered by the defendant in so proceeding.

47.  The proposed appeal from the order of the Master granting leave out of time is devoid of merit and I decline to grant an extension of time for the defendant to appeal on this ground.

48.  The Judgment having been amended, retrospectively as from 12 December 2018, any argument based on the original mistake to set aside the Judgment cannot be sustained.

C3.    Service

49.  I shall deal with the arguments on service of the Writ, the Notice and the Judgment before I deal with whether the defendant has a good arguable defence, because the consideration is different depending on the regularity or otherwise of the Judgment.

50.  First, I do not see how the proper service or otherwise of the Judgment on the defendant is relevant to the regularity thereof.

51.  As for the service of the Writ, the position is as follows:

(1)  It was sent by registered post to the Henley Building address.  Mr Wong says in his skeleton submissions that it was the defendant’s address last known to the plaintiff but he accepts fairly that there is no evidence on why that is so.  I am prepared to proceed on the basis that it was not the “usual or last known address” of the defendant for the purposes of Order 10, rule 1(2)(a).

(2)  However, it is clear that the defendant did receive the Writ as it is not in dispute that it was the defendant who filed the acknowledgment of service herself on 28 March 2018.

(3)  In the premises, under Order 10, rule 1(5), the Writ is deemed to have been duly served on the defendant “unless the contrary is shown”.  Thus, the burden is on the defendant to show the contrary, that is, lack of proper service.

(4)  Order 12, rule 7, to which Order 10, rule 1(5), is subject, states:

“The acknowledgment by a defendant of service of a writ shall not be treated as a waiver by him of any irregularity in the writ or service thereof or in any order giving leave to serve the writ or extending the validity of the writ for the purpose of service”.

(5)  Order 12, rule 8, then prescribes what a defendant should do if he or she wants to challenge, inter alia, the regularity of the service of the Writ:

“(1) A defendant who wishes to dispute the jurisdiction of the court in the proceedings by reason of any such irregularity as is mentioned in rule 7 or on any other ground shall give notice of intention to defend the proceedings and shall, within the time limited for service of a defence, apply to the Court for –

(b) an order declaring that the writ has not been duly served on him, or …

(3) An application under paragraph (1) or (2) must be made by summons and the summons must state the grounds of the application.

(4) An application under paragraph (1) or (2) must be supported by an affidavit verifying the facts on which the application is based and a copy of the affidavit must be served with the summons by which the application is made.

(7) Except where the defendant makes an application in accordance with paragraph (1) or (2), the acknowledgment by a defendant of service of a writ shall, unless the acknowledgment is withdrawn by leave of the Court under Order 21, rule 1, be treated as a submission by the defendant to the jurisdiction of the Court in the proceedings”.

(6) Thus, having filed the acknowledgment of service, the defendant, if she wishes to assert that there was no proper service of the Writ on her, ought to make an application under Order 12, rule 8(1)(b), within the time specified. No such application having been made, she is treated as having submitted to the jurisdiction of this Court by reason of the acknowledgment of service. In the premises, the entry of the Judgment thereafter is not irregular on this ground.

52.  As for the service of the Notice, it was sent by post to the Happy Valley address, which was the address stated on the acknowledgment of service to be her address for service. This was the authorised mode of service of the Notice under section 8 of the Interpretation and General Clauses Ordinance[11] and Order 65, rule 5.  Service of the document is deemed have effected at the time at which the Notice would be delivered in the ordinary course of post, unless the contrary is proved.  Thus, the burden is again on the defendant to prove that she did not receive the Notice.

53.  As stated in Hong Kong Civil Procedure 2020:

“When a defendant deposes that he has not received the writ through the post, the court has little option but to believe this save when there is sufficient material to cast doubt upon the defendant’s credibility to enable the court to disbelieve him (which is a matter of evidence dependent upon the circumstances of the case: see Wei Bingqing v Xie Diangrong, unreported, HCA No. 2654 of 2003, [2006] H.K.E.C. 634)”.[12]

54.  In my judgment, there is sufficient material in this case to cast doubt on the defendant’s evidence that she did not receive the Notice:

(1)  She did not raise this issue in her letter to the plaintiff solicitors when served with the statutory demand, or in the two Affirmations filed in the bankruptcy proceedings, which were instituted based on the Judgment, at all, when one would expect her to do so.

(2)  Mr Wong points to the various acts of the defendant regarding service or attempted service of documents on her by the solicitors of the plaintiff:

(a) She used only a post office box address on her Affirmations in the bankruptcy proceedings instead of her residential address;

(b)  Even though the solicitors for the plaintiff served a document on the defendant by inserting it underneath the door of her residence on 10 December 2019, she still denied that she received the document, and she even directed the manager of her building not to allow service of documents at her residence subsequently.  This is supported by an Affirmation of Mr Pang Ryan Yue Hin with photographs in support, and not traversed by the defendant.

(3)  In the premises, it seems to me that the defendant had been seeking to evade, or at least impede, service of various documents by the plaintiff on her and in my judgment that casts a genuine doubt on the credibility of her evidence regarding the receipt or otherwise of the Notice.  I find that she has failed to discharge the burden of proving that she did not receive the Notice.

55.  Mr Bowers emphasises to me that the defendant has affirmed three times that she did not receive the Notice.  However, the credibility of the evidence is to be assessed in the light of all the evidence, and not by the number of times that it has been repeated.  He further points to various unsatisfactory aspects of the conduct and evidence from the then solicitors for the plaintiff regarding service of various documents (for example, sending the Writ and the Judgment to the Henley Building address, and discrepancies on dates on the documents and sending and where the Judgment was sent).   However, what is crucial is the service of the Notice, on which the evidence from Mr Lau is clear and inherently credible, stated to have been sent by ordinary post to the very address which the defendant had given as the address for service, as evidenced by the covering letter produced before me, and which I accept on a balance of probabilities.

56.  The Judgment is regular.

C4.    Whether the Judgment should be set aside

57.  The Judgment being a regular one, the question is whether it should nevertheless be set aside.  As stated in Hong Kong Civil Procedure 2020:

“On an application to set aside a regular default judgment, the major consideration is whether the defendant has shown a defence on the merits to which the court should pay heed, not as a rule of law, but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence, and because, if the defendant can show merits, the court will not prima facie desire to let a judgment pass on which there has no proper adjudication (per Lord Wright in Evans v Bartlam [1937] A.C. 473, HL at 489)”.[13]

58.  In my judgment, the defendant does not have such a defence.

59.  I repeat what I said at Section C1 above.

60.  Further, the defendant has admitted in her evidence that when she applied for the loan, the plaintiff agreed to be responsible for repayment if she defaults.  Thus, the assumption of legal liability by the plaintiff for the debt, pursuant to which he eventually paid, was with the knowledge and (at least implied) consent of the defendant, and on this basis it is difficult to see how the defendant can resist a restitution claim by the plaintiff, who had discharged the debt for her.  Even though this is not yet pleaded in the Statement of Claim, if this matter proceeds to trial, it is difficult to see how realistically this point is not raised, by amendment to the Statement of Claim if necessary.

D.  DISPOSITION

61.  For reasons above, I dismiss the appeal by the defendant from the decision of the Master dismissing the Setting Aside Summons.  I also decline to allow the defendant to appeal from the decision of the Master allowing the Amendment Summons out of time.

62.  As for the proposed appeal on costs out of time, I fail to see how that can possibly succeed.  Mr Bowers’ argument is that up to the time the Judgment was amended on 16 June 2020, there existed only an incorrect Judgment.  However, the costs were awarded by the Master against her because she had unsuccessfully sought to have the Judgment set aside on various grounds, for example, the non-receipt of the Notice and the claim that she has a meritorious defence.  It is not the case that the application to set aside the Judgment was made only on the ground that there was a mistake in the Judgment (which if it were the case then the question of costs might have been differently decided).  It is hard to see, given the contents of her Affirmations in support of the Setting Aside Summons, that she would not have applied to set aside the Judgment without the mistake. I decline to allow the defendant to appeal the costs order out of time.

63.  I therefore order:

(1)  The appeal by the defendant by way of her Notice of Appeal dated 29 June 2020 be dismissed;

(2)  The Summons dated 18 September 2020 seeking leave to amend the Notice of Appeal be dismissed (save that I grant abridgement of time for service);

(3)  There be a costs order nisi that the costs of the appeal and of the Summons dated 18 September 2020 be paid by the defendant to the plaintiff with a certificate for counsel;

(4)  If the defendant wishes to apply to vary the costs order nisi, she is to do so within 14 days from the date of this Decision by way of Summons together with a skeleton (not more than 10 pages) in support.  The plaintiff is to respond within 7 days thereafter with a skeleton (not more than 10 pages).  The defendant is at liberty to reply if she so wishes within 7 days thereafter with a skeleton (not more than 5 pages). I shall then deal with the application on paper.

(5)  If the does not seek to vary the costs order nisi, then since both Mr Bowers and Mr Wong agree that there should be summary assessment by me, I direct that the plaintiff is to file and serve his bill of costs within 21 days from the date of this Decision, the defendant is to state her objections to any of the items with reasons within 7 days thereafter, and the plaintiff is to reply if he so wishes within 7 days thereafter.  I shall then make the assessment on paper.

64.  I thank Mr Wong and Mr Bowers for their assistance.