MASTER NATION LTD v. 何美媛 AND ANOTHER

DCMP 2526/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 2526 OF 2014

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DECISION

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Introduction

1. Master Nation Limited, the plaintiff, acquired the captioned land in Yuen Long (“the Premises”) in March 2014.  By summary proceedings, the plaintiff obtained an order for possession against the unknown persons occupying the Premises collectively named as the defendant.  Writ of possession followed.  何美媛 (“Madam Ho”) then applied to join as a party to these proceedings and is now the 1^st defendant.  She applied to have the order for possession and writ of possession set aside.

Background

2. The Premises was originally owned by 李官洪 (“Mr Li”).  He rented the Premises to Madam Ho years ago. Then, Madam Ho and her family members resided at the Premises in the capacity of a tenant.  By an assignment dated 31 March 2014, the plaintiff became the registered owner.  Through Chun Fat Property Management Limited (“Chun Fat”), the plaintiff liaised with Madam Ho matters about the tenancy.  After several rounds of negotiation, the plaintiff and Madam Ho failed to arrive at any compromise on the terms of the continuation of the tenancy. Then, the plaintiff commenced these proceedings for recovery of the Premises. 

3. The plaintiff commenced the present proceedings by way of originating summons under O.113 of the Rules of District Court on 18 September 2014.  In default of appearance, the plaintiff obtained the order for possession on 27 October 2014 and the writ of possession on 24 December 2014 (collectively as “the Orders”).

4. By summons dated 20 January 2015, Madam Ho applied to join these proceedings and to set aside the Orders.  On 27 January 2015, Madam Ho was allowed to join as the 1^st defendant. Execution of the Orders has so far been stayed, pending the determination of Madam Ho’s application.

Legal Principle

5. The application to set aside was apparently pursuant to O.13 r.9 of the Rules of District Court. The legal principle is well settled that if the Orders were irregularly obtained, the court should set aside without going to consider if the defence has a real prospect of success (see Po Kwong Marble Factory Ltd. v Wah Yee Decoration Co Ltd. [1996] 4 HKC 157).  Obviously, the burden was on Madam Ho to prove that the judgment was irregular.

The issue

6. Ms Yue, counsel for Madam Ho, expressly and confidently confirmed that if I find the Orders were regularly obtained, she would not submit on the merits of the defence case. Accordingly, the only matter for my consideration is whether or not the Orders were regularly obtained.

Analysis

7. At the time when the originating summons was taken out, the defendant was named as “the occupier(s)”.  According to the affirmation of Go Yan Yan, director of the plaintiff, filed on 18 September 2014 (“the 1^st Affirmation of Go”) in support of the originating summons, the plaintiff’s allegation was:-

“4. The Plaintiff recently discovered that there is/are person(s), whose identity is/are not known, entered into and have been occupying the Land without its consent, whether express or implied”. (my emphasis)

8. According to an affirmation dated 17 October 2014 by Kong Kai Suen, clerk to Messrs Alan Ho & Co, solicitors firm representing the plaintiff at that time, the originating summons and the 1^st Affirmation of Go had been served through inserting into the mailbox and posting up at the main entrance of the Premises. According to the 2^nd affirmation of Kong Kai Suen dated 13 November 2014, the order for possession was served by leaving the same to the Premises. Also, notice of application was posted at the main entrance of the Premises.

9. At that time, Madam Ho was not named as the defendant. In effect, the overall picture presented was that the plaintiff had no knowledge of the identity of the occupier(s). 

10. In the circumstance, I find that the learned Master, in making the Orders, was undoubtedly under an impression that the plaintiff did not know the identity of the occupier(s).

11. Ms Yue submitted that the learned Master was misled.  She pointed out that the plaintiff should have known full well the identity of the occupier was Madam Ho. 

12. Ms Lau, counsel for the plaintiff, submitted that the Orders were regularly obtained.  She pointed out that despite Madam Ho was not named as the defendant at the outset, Madam Ho should have known the present proceedings because the originating summons, the supporting affirmation, the order for possession and the notice had been properly served and/or posted. Madam Ho was selective in receiving documents and is now making a bare allegation that she was not aware of the proceedings at that time.

13. Having read all the evidence, I find a number of correspondences to support Madam Ho’s contention that the plaintiff knew her identity prior to the issue of the originating summons.

14. By a letter dated 2 May 2014 sent to Madam Ho by Chun Fat, Chun Fat stated that Madam Ho’s tenancy had expired in November 2013.  In that letter, Chun Fat sought to negotiate with Madam Ho matter concerning the continuation of the tenancy.

15. Madam Ho and her son Mr Wong, through a letter dated 6 May 2014 addressed to Chan Fat, queried the identity of Chun Fat.

16. Chun Fat sent 2 letters respectively dated 9 May 2014 and 9 June 2014 to Madam Ho and Mr Wong, to follow up the matters.

17. There was also a document bearing the title “Final Notice” dated 14 July 2014, issued by Chun Fat to Madam Ho, demanding Madam Ho to reply if she would continue the tenancy.

18. These documentary evidence sit well with the contention that Chun Fat knew Madam Ho was the occupier prior to the issue of the originating summons.  Pursuant to an authorization letter dated 20 April 2014, it is indisputable that Chun Fat was the agent for the plaintiff to handle matters relating to the Premises.

19. Furthermore, according to the affirmation of Madam Ho, her house (or building) erected on the Premises was demolished by some males on 14 August 2014.  Police was called and 2 males were subsequently arrested.  One of the arrested male admitted that he was sent by Chun Fat.  I pause here to state clearly that in deciding the present application by Madam Ho, I would not consider if anyone from the plaintiff or Chun Fat should be held liable for that incident.  I would only take into account that because of that incident, Madam Ho and her family members would probably be more alert than before to any strangers approaching the Premises and any notice posted up at the main entrance.

20. Subsequent to that incident, a letter by Messrs Alan Ho & Co was posted up at the entrance of Madam Ho’s house.  Messrs Stephen Lo & PY Tse, solicitors firm acting for Madam Ho, then wrote a letter in reply.  Although the date as appeared in the said letter was “2^nd September 2013”, it referred to the incident on 14 August 2014 and a letter in August 2014.  In view of the context of the letter by Messrs Stephen Lo & PY Tse, the year as stated therein must be wrong. It should be “2014” instead of “2013”. In this letter, Madam Ho claimed that she resided at the Premises pursuant to a life tenancy agreement. There is no evidence before me that Messrs Alan Ho & Co did not receive this letter.

21. However, in the 1^st affirmation of Go, she did not mention that Madam Ho, through Messrs Stephen Lo & PY Tse, had replied to Messrs Alan Ho & Co.

22. In opposing Madam Ho’s application, Go Yan Yan filed a 2^nd affirmation dated 20 March 2015.  By then, she acknowledged that she knew Madam Ho had an on-going discussion over the tenancy matter with Chun Fat.  Although she affirmed that to her knowledge Madam Ho was not actually residing at the Premises, she did not state the source of her belief.

23. Chun Fat, agent for the plaintiff, had exchanged a number of correspondences with Madam Ho from May to July 2014.  Messrs Alan Ho & Co, solicitors for the plaintiff, should have realized that Madam Ho had claimed herself occupying the Premises as a tenant. Taking all the evidence into account, I find that the Chun Fat, Messrs Alan Ho & Co and the plaintiff should have known full well that Madam Ho was residing at and occupying the Premises prior to the issue of the originating summons.

24. The procedure for service of the originating summons would be different between a case involving a named defendant and a case with unknown defendant (see Hong Kong Civil Procedure 2015 Vol.1, para.113/4).  Given the background of this case and the incident on 14 August 2014, I think Madam Ho and her family members would undoubtedly alert to any notice posted at the Premises.  I fail to find any reason for Madam Ho to keep silent if she knew that the plaintiff was taking steps to repossess the Premises.

25. Taking all the circumstance into account, I seriously doubt if the originating summons and the relevant documents had been served or posted up in the way as stated in Kong Kai Suen’s affirmations.  Coupled with the way how the plaintiff and Messrs Alan Ho & Co presented this case, in particular the failure to name Madam Ho as a defendant at the outset, I do not accept the originating summons and the relevant documents had been served or posted in the way as alleged by Kong Kai Suen.

26. The originating summons and the 1^st affirmation of Go were filed on 18 September 2014. Taking into account that both parties had negotiated since May 2014 and the proximity of time between the letter by Messrs Stephen Lo & PY Tse and the issue of the originating summons, I find that the plaintiff was intentional in not disclosing the name of Madam Ho.  The motive for the plaintiff in doing so, I find, was not to alert Madam Ho the commencement of these proceedings and attempted to, and in fact did, obtain a speedy “default judgment”.

Conclusion

27. I therefore find that the Orders were irregularly obtained and should be set aside accordingly.  I do not think that Madam Ho was evading service and find no reason for me to impose any condition against her to set aside the Orders.

Defence

28. In view of my decision, it is undesirable that I should express any opinion on the merits of this case as that could prejudice any future determination of this matter. Suffice for me to say is that according to the affirmation of Madam Ho, she alleged that she had offered to pay rents until the end of 2015 by a cheque. If the landlord, be it Mr Li or the plaintiff, refused to continue the tenancy, the natural response would probably be a return of the cheque.  However, Go Yan Yan admitted that she is still in custody of the cheque, passed to her by Mr Li. I therefore find that there are substance in the defence case and can forecast that there will be factual dispute in these proceedings.

Costs

29. Both parties agreed that if I set aside the Orders, I should give direction of the future conduct of these proceedings.  Before that, however, I have to consider the appropriate order for costs. I find no reason to depart from the cardinal principle that costs should follow event.  On top of that, Ms Yue submitted that I should award costs on full indemnity basis. In Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327, Stock J (as he then was) said, at 1338F:-

“Then it is said that somehow the judge ought not to have taken into account events prior to the institution of the proceedings.  I do not agree.  In determining whether the conduct of proceedings or the motive behind that conduct is or is not of a particular colour, the court cannot put on blinkers and shut out earlier behaviour by a litigant which might well explain conduct within the litigation itself.  In any event, in the course of normal litigation, whilst “the grounds upon which costs are awarded must be connected with the case, this may extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further.”

30. In consideration of costs, I take into account the plaintiff’s conduct in these proceedings. I find that the plaintiff had intentionally not to disclose the identity of Madam Ho at the outset and therefore misled the learned Master. Had the plaintiff named Madam Ho as the defendant, the whole procedure would be different.  The application to set aside the Orders could be avoided. I therefore consider it appropriate to exercise my discretion to impose costs on full indemnity basis. The costs incurred by the plaintiff for obtaining the Orders should not be borne by Madam Ho in any event.

Order

31. I therefore make the following orders :

(1)The order for possession dated 27 October 2014 and the writ of possession dated 24 December 2014 are set aside;

(2)These proceedings shall continue as if begun by writ;

(3)The plaintiff do file and serve statement of claim within 21 days from today;

(4)Madam Ho do file and serve defence (and counterclaim, if any) within 21 days thereafter;

(5)The plaintiff do file and serve reply (and defence to counterclaim), if any, within 21 days thereafter;

(6)There be a nisi order that the costs of and occasioned by Madam Ho’s summons dated 20January 2015 including this hearing and the cost reserved (if any) be to Madam Ho, to be taxed if not agreed on full indemnity basis with certificate for counsel.  The plaintiff’s costs of and occasioned by obtaining the order for possession and the writ of possession are wasted in any event.

(7) The cost order nisi will become absolute after 14 days in the absence of any application to vary the same.