Ho Man Yuen v. The Incorporated Owners of Kiu Yu and Kiu Fat Mansions

DCCJ2116/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2116 OF 2015

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REASONS FOR DECISION AND DECISION ON COSTS

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1.Two applications came before me on 19^th August 2015. The first was an application by the Plaintiff to enter default judgment against the Defendant. The second was an application by the Defendant for leave to file a defence and counterclaim. At the end of the hearing, I dismissed the former application with reasons for decision reserved and granted leave to the Defendant to file a defence and counterclaim. The only issue that remained unresolved at the hearing was the question of costs of the Plaintiff’s application. I now provide my reasons for decision and decision on costs.

Background

2.By a writ issued on 14^th May 2015 which is indorsed with what is usually called a general indorsement, the Plaintiff commenced an action against the Defendant for adverse possession of a piece of land which is identified by reference to a plan annexed to the writ.  On 26^th June 2015, a statement of claim was filed.  On the same day, the writ and the statement of claim were sent by registered post to what the Plaintiff believed to be the Defendant’s registered office, namely G/F, 86-106J Lok Shan Road, Kowloon, Hong Kong (“the Ground Floor Address”).  There being no acknowledgement as to service, the Plaintiff took out a summons for default judgment against the Defendant.

3.On 14^th August 2015, the Defendant filed an acknowledgement of service and gave notice of notice of intention to defend.

4.The Defendant having filed an acknowledgement of service, the Plaintiff is not entitled to enter default judgment: O 12, r 6; Hong Kong Civil Procedure 2015, para 13/0/15.

5.Mr Ng, counsel for the Plaintiff, asks for the costs of the default judgment application.  He argues that it is due to the Defendant’s default that the Plaintiff has incurred unnecessary costs.  On the other hand, Mr Chan, counsel for the Defendant, argues that his client should be awarded costs of the application because there has been no proper service of the writ and statement of claim.

Service

6.One starts with O 10, r 1 of the Rules of the District Court, which provides so far as relevant that:-

“(1) A writ must be served personally on each defendant by the plaintiff or his agent.

(2) A writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served-

(a)  by sending a copy of the writ by registered post to the defendant at his usual or last known address…”

7.The Defendant, an owner’s incorporation, is a body corporate^[1]. Hence, one also refers to O 65, r 3, which provides:-

“(2) Where a writ is served on a body corporate in accordance with Order 10, rule 1(2), that rule shall have effect as if for the reference to the usual or last known address of the defendant there were substituted a reference to the registered or principal office of the body corporate and as if for the reference to the knowledge of the defendant there were substituted a reference to the knowledge of a person mentioned in paragraph (1).”

8.O 10, r 1(2) and O 65, r 3(2) working together allow a party to effect service of a writ on a company by sending the writ by registered post to the defendant at its registered office.  Leaving the writ at the company’s registered office is another mean of effecting service: s 827 of the Companies Ordinance, Cap 622.

9.In this case, it is common ground that the Defendant’s registered office is situated at 86-106J Lok Shan Road, Kowloon, Hong Kong (“the Registered Office”).  The issue is whether the Ground Floor Address, which differs from the Registered Office in that it contains a reference to the Ground Floor, can be considered the registered office of the Defendant for the purpose of service.

10.There are cases that involve service at addresses that are no more specific than a number of a street.  Mr Ng draws my attention to the recent decision of Deputy District Judge Amy Chan in Chan Wing Go v The Incorporated Owners of Wing Hong Factory Building DCCJ 1736/2014, unreported, date of decision: 27^th May 2015.  In Chan Wing Go, the writ together with the statement of claim were sent by registered post to the defendant at its office at Nos 777-783 Yu Chao West Street, Kowloon, Hong Kong.  The said address was the defendant’s registered office as shown on the Index of Owners’ Corporation kept by the Land Registry.  In refusing to set aside the default judgment, the learned Deputy District Judge held that there had been proper service of the writ.  Contrary to what Mr Ng submits, I do not think Chan Wing Go throws light on the issue.  It is not useful to me because the writ and statement of claim were indeed sent to the Defendant at its registered office.

11.In UDL Construction Ltd v Apple Daily Printing Ltd [2008] 2 HKC 534, the 1^st defendant’s registered office was at No 8 Chun Ying Street, Tseung Kwan O Industrial Estate West, Tseung Kwan O, New Territories, Hong Kong.  The process server effected service by throwing a pile of papers, which contained the writ and an acknowledgement of service, over the security barrier.  The pile of papers was picked up by a security guard who, after flipping through the papers causally, threw them into a waste paper bin.  Recorder B Yu S C held that there had been proper service:-

“10.  The 1st defendant made a number of submissions as to why it says Lo failed to leave the writ at the registered office in a proper way.  Mr Shieh submitted that in a case such as the present where the registered office is a large area within which there is a building, it would not be reasonable for the process server merely to leave the writ at the entrance of the compound or anywhere in the perimeter of the area.  He argued that common sense suggests that the office must be located within the building.  He said that follows from the use of the word “office”.  I do not accept this submission.  It is entirely up to the company what address it gives as its registered office. Section 92(1) of the Companies Ordinance provides:-

“A company shall, as from the day on which it begins to carry on business or as from the 14^th day after the date of its incorporation, whichever is the earlier, have a registered office in Hong Kong to which all communications and notices may be addressed.”

 11. Section 356 has already been alluded to.  This provides:-

“A document may be served on a company by leaving it at or sending it by post to the registered office of the company.”

 12. Whatever address a company chooses to name as its registered office, the effect of sections 92 and 356 is to make the place named as the place where documents can be served on the company by leaving the document at that location.  A company which chooses to give a number on a street instead of say, a specific room in a building, cannot be heard to complain if the document is left at the entrance to the place designated by the given address.  Mr Shieh’s argument, if accepted, would have the effect of requiring a process server to look for a location within the place given as being a place where the functions of an office are carried out.  That cannot be right.

12.Thus, if a company chooses to name a building as its registered office, the process server is entitled to effect service by leaving the documents anywhere in the building.

13.However, it should be noted that UDL Construction Ltd is a “leaving” case.  There is nothing in it that allows service of a writ by sending it to an address of the defendant that is not the same as the defendant’s registered office address.

14.There is, as far as I am aware, no direct authority on the issue but some insight can be had from the case of 深圳巿均翔房地產經紀有限公司 v Hong Kong Zhongxing Group Co Ltd HCCW 256/2011, unreported, 8^th March 2012. In that case, the defendant applied to strike out the petition on the ground that the company had not been properly served with either the statutory demand referred to in the petition, or with the petition itself.  The company’s registered office was situated at Unit 102, 1^st Floor, Hong Kong Trade Centre, 161-167 Des Voeux Road Central, Hong Kong.  On both occasions when the petitioner’s attended the company’s registered office at Unit 102, the door was closed and no one from Unit 102 answered the bell.  The process server left the statutory demand and petition at Unit 101, which happened to be the office of the company’s solicitors.  On the issue of service, Barma J (as he then was) held that there had been no proper service of the statutory demand and the petition.  His Lordship said:-

“13. I am unable to accept this submission.  It seems to me that the position is quite straightforward.  In order to be able to rely on the deemed inability to pay debts provided for by section 178(1)(a) of the Companies Ordinance, it is necessary for the creditor to serve his statutory demand on the company by “leaving it at the registered office of the company”.  All that is required is for the statutory demand to be left at the registered office.  This could easily have been done in the present case by either inserting the statutory demand under the door at the entrance to Unit 102, or by leaving it outside, at the foot of the door.  However, this was not done.

14. Neither the UDL Constructing Ltd case, nor Mearing v Qureshi is authority for any proposition to the effect that service at the registered office of a company may be effected by service of the document in question at some other address.  In the UDL Constructing Ltd case, what the court was concerned with was how service should be effected at the proper (i.e. registered) address.  In Mearing v Qureshi, the court was concerned with whether or not what had been done, at the registered address, was reasonably to be regarded as being likely to bring the document to the attention of the addressee.  In neither case was there an attempt to serve at somewhere other than the registered address.

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16. Thus, I do not accept that service of the statutory demand at Unit 101 can be regarded as amounting to service of it at Unit 102, and thus at the registered office of the Company.

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18. It is well established that in order to take advantage of the deeming provision under section 178(1)(a), the provisions as to service must be strictly complied with (see, eg Re Tung Fung Hong Forwarding Agents Ltd [1984] HKC 406, per Jones J at page 408C).  In the present case, the Petitioner has not strictly complied with the requirements of section 178(1)(a), as it did not leave the statutory demand at Unit 102, which was the registered address of the Company.  Instead, it left the statutory demand at Unit 101, which was not. Notwithstanding that the demand appears to have come to the attention of the Company soon afterwards, what was done was not in accordance with the statutory requirements, and the Petitioner is accordingly unable to rely on any deemed insolvency of the Company pursuant to section 178(1)(a).”

15.Although深圳巿均翔房地產經紀有限公司 is a case on the service of a statutory demand and petition, I see no good reason why the strict compliance requirement should not be applied in respect of the service of a writ.  If a party wants to save the trouble of attending the registered office of a company and leaving a copy of the writ there, he must have it sent to the Defendant at the address shown in public records as its registered office.

16.In my view, there has been no proper service of the writ and the statement of claim.

Other Reasons For Not Giving Default Judgment

17.Even if the writ and statement of claim had been properly served, I would not have entered default judgment against the Defendant.

18.First, the writ is indorsed with a concise statement which reads as follows:-

“The Plaintiff’s claim against the Defendant are:-

(1) A Declaration that:-

(i) Prior to commencement of this action, the Defendant has lost its right to bring any action to recover the land shaded red on the Plan annexed, or any part thereof by virtue of section 7(2) of the Limitation Ordinance; and

(ii)  by virtue of section 17 of the Ordinance, the title of the Defendant has been extinguished in favour of the Plaintiff and the Plaintiff has acquired all the rights, title and interest including the ownership and right to exclusive possession and occupation of and in the land shaded red on the Plan annexed.”

19.Two additional claims are pleaded in the statement of claim, namely (1) a claim for an easement (a right of way over the Defendant’s land); (2) trespass to the Plaintiff’s land.

20.O 18, r 15 prohibits the making of any allegation or claim in respect of a cause of action that is not mentioned in the writ or does not arise from facts which are the same as the facts giving rise to the cause of action already mentioned in the writ.  Thus, the Plaintiff will have to amend the writ to claim easement and damages and other reliefs for trespass.

21.Technicality aside, the various claims have their own problems. I accept that the matters pleaded in the statement of claim should be taken as proved.  However, I am of the view that the various claims are not pleaded with a sufficient degree of caution and precision.

22.In respect of the claim for adverse possession, the disputed area is identified by nothing but a colored marking on the floor plan annexed to the writ.  The plan is blurred with markings thereon that are totally illegible.  In fact, it is impossible to tell whether the colored area is part of Kiu Yu Mansion or Kiu Fat Mansion (the Defendant is the Incorporated Owners of both).  The lower part of the plan is magnified and produced as an annex to the statement of claim.  The colored area looks different on the two plans.  In the plan annexed to the writ, it appears that the colored area is distinctively bigger than the adjacent common area (which is not colored in the plan annexed to the writ but shaded green in the magnified plan annexed to the statement of claim), whereas the magnified plan tends to show that the disputed colored area and the adjacent common area are roughly of the same size.  Although there is no formal requirement that the disputed area should be identified by a survey plan, it is important that the disputed area is identified with sufficient precision.  On this problem alone, even if the Defendant had not filed an acknowledgement of service, I would not have given judgment for adverse possession.

23.Insofar as the easement claim is concerned, the Plaintiff is seeking pedestrian access over the Defendant’s land.  Inevitably, such claim will involve assessment of the Plaintiff’s actual need and the burden on the Defendant’s land.  I do not think this is an appropriate case for a default judgment.  In any event, as the easement claim is premised and conditional upon the Plaintiff succeeding on the adverse possession claim, the easement claim should follow the adverse possession claim and proceed to trial.

24.As for the trespass claim, although it is open to the Plaintiff to argue that the claim is independent of the adverse possession claim because trespass to land is simply an unjustifiable intrusion by one person upon land in the possession of another: Clerk & Lindsell on Torts (20^th ed) para 19-01, given that the adverse possession and easement claims will proceed to trial, justice and convenience demands that the trespass claim should be tried together with the other two claims in one go.

Costs

25.Upon dismissal of the default judgment summons, the Defendant is entitled to the costs of and occasioned by the Plaintiff’s summons.  However, I am not going to give certificate for counsel.  Mr Chan, counsel for the Defendant, has produced a 2-page skeleton submission.  The discrepancy in the Defendant’s address is raised in the skeleton submission but the significance of which is not discussed.  There is also no mention of the matters discussed in the preceding paragraphs under the heading Other Reasons For Not Giving Default Judgment.  With respect to Mr Chan and his instructing solicitor, I do not consider it necessary for those instructing Mr Chan to instruct him to tell me that the address is different.

26.The Defendant has put in a bill of costs.  Taking a broad-brush approach as the Hon Chu JA did in Tsao Chi Ching v Tsao Lung May CACV132/2013, unreported, date of decision: 26^th June 2015, I summarily assess the costs of the default judgment application to be paid by the Plaintiff at HK$10,000.

27.The above costs order nisi shall become absolute in 14 days in the absence of an application for variation.

28.I thank both Mr Ng and Mr Chan for their assistance.

Mr Ernest CY Ng, instructed by Wong & Co, for the plaintiff.

Mr Joe Chan, instructed by Mike So, Joseph Lau & Co, for the defendant.