Lau Muk Fat (Suing As the Manager of Lau Shau Wo Tso) v. Wong Kwok Wa and Others
Read the full judgment text of HCA 1006/2017 on BabelCite. This High Court CFI judgment was delivered on 5 November 2020.
1. This is the application by the plaintiff (“ P ”) by Summons of 12 March 2020 (the “ Summons ”) for default judgment against all the defendants (“ D1 ” to “ D12 ”, and collectively “ Ds ”).
Cited by 1 case · Cites 4 cases
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HCA 1006/2017 [2020] HKCFI 2789 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1006 OF 2017 ______________ BETWEEN
______________ Before: Hon K Yeung J in Chambers Date of Hearing: 21 October 2020 Date of Decision: 5 November 2020 ______________ DECISION ______________ 1.This is the application by the plaintiff (“P”) by Summons of 12 March 2020 (the “Summons”) for default judgment against all the defendants (“D1” to “D12”, and collectively “Ds”). 2.The issues are whether service of the Writ herein has been validly effected, and whether, given the history of the disputes between the parties and the nature of the relief sought (which include Declarations), this is in any event an appropriate case for default judgment to be granted. 3.Mr Kenneth C L Chan together with Mr Billy Ma appear for P. Mr Tony Chow appears for D1. Ms Evelyn Cheng appears for D2 to D12. The parties 4.P is the Manager of Lau Shau Wo Tso (the “Tso”), a tso within the meaning of s 15 of the New Territories Ordinance, Cap 97. It owns land in the New Territories. 5.D1 is a developer. 6.D2 to D12 are indigenous villagers, or dings. Background facts 7.The disputes concern the development of ding houses in the New Territories. 8.Back in 1994, P as manager on behalf of the Tso entered into a development agreement with D1 (the “Development Agreement”)[1]. Under the same, development and construction of small village houses were contemplated. The Tso would provide land, whilst D1 would be responsible for procuring dings (D2 to D12 being some of the dings subsequently procured), assigning the land to the dings, making the relevant applications to the government, and the building and construction of small houses. The completed houses would be split amongst the Tso and D1 in the ratio of 40:60, and would be selected by the Tso and D1 following an agreed selection mechanism (the “Selection Mechanism”). 9.Ultimately, 17 ting houses have been built. 6 were allocated to the Tso in 2011 (the “6 Houses”). The other 11 have been called the “11 Unallocated Houses” or the “Other 11 Unallocated Houses”, and the lots of land on which there were build the “Other Unallocated Building Lots”, which terms I adopt as appropriate. 10.On the bases of the agreed 40:60 split and Selection Mechanism, the Tso should arithmetically be allocated 6.8 houses. P says therefore that despite the allocation of the 6 Houses, the Tso still have some interest over the Other 11 Unallocated Houses. 11.Disputes eventually arose between the parties. They have resulted in no less than 3 sets of proceedings before the High Court. They are as follows. The Main Actions 12.In late 2011 and early 2012, P commenced HCA 1879/2011 (the “2011 Action”, and the Writ thereof the “2011 Writ”), HCA 896/2012 and HCA 897/2012 (collectively the “Main Actions”) against D1 and some dings (not any of D2 to D12 in the present case). His claims are for, and as summarized by Mr Chan[2], inter alia:
13.In each of those 3 Actions, a Defence and Counterclaim has been filed. Specifically in the 2011 Action, D1 seeks:
14.The Main Actions have been ordered to be heard together[4]. They have not yet been set down to be tried. Both sides are blaming the other side for that. The next Case Management Summons is scheduled to take place on 22 December 2020[5]. HCA 1006/2017 (“Present Action”) 15.Then, on 26 April 2017, P took out the Writ herein (the “2017 Writ”) and commenced the Present Action against D1 and 11 other dings (ie D2 to D12). Those 11 other dings were, until a sale in favor of D1’s wife by 9 of them in April 2017 in circumstances very much in dispute, the registered owners of the 11 Unallocated Houses. 16.The 2017 Writ is indorsed with a Statement of Claim bearing the same date (the “2017 SOC”):
HCA 802/2019 (“The 2019 Action”) 17.By letter of 12 February 2018 (the “12/2/2018 Letter”) from Messrs Cheung, Chan & Chung (“CCC”, solicitors for D1) to Messrs Hong Lee & Co (“HL&Co”, solicitors for P), D1:
18.According to the land search records, D2 and D5 to D12 each entered into a sale and purchase agreement dated 21 April 2017 selling the 9 Selected Houses to D1’s wife (the “Sales of the 9 Houses”) (and that was the sales I have mentioned in §15 above). The related assignments were effected on 6 July 2017. 19.On 7 May 2019, P commenced HCA 802/2019 (ie the 2019 Action). As can be gleaned from the Statement of Claim indorsed on the Writ:
Whether service of the 2017 Writ on D1 valid 20.I consider now whether the service of the 2017 Writ on D1 is a valid one. I will consider the validity of the service upon D2 to D12 separately. 21.The relevant affirmation of service is that of Mr Lee Siu Hong (“Mr Lee”) filed on 20 January 2020 (“Lee/Aff#1”). Mr Lee is the sole proprietor of HL&Co. 22.According to Mr Lee:
23.Mr Lee has not clarified what he meant by saying in §4 of Lee/Aff#1 that D1 Address was D1’s last known address “used in” the 2011 Action. 24.At §15(2) of his written submissions, Mr Chan, with reference to §4 of Lee/Aff#1, submits that:
25.Mr Chan has not clarified in his written submissions as to what he meant by the words “used by him”. 26.In the course of the hearing, I sought clarifications from Mr Chan on the above. Having taken further instructions, Mr Chan confirmed that by saying at §4 of Lee/Aff#1 that D1 Address was “the last known address of [D1] used in” the 2011 Action, Mr Lee meant merely that D1 Address was the address which P (or his solicitors) put down in the 2011 Writ as D1’s address. 27.The fact that D1 Address was put down by P (or his solicitors) on the 2011 Writ as being D1’s address constitutes little proof that D1 Address was in fact D1’s usual or last known address for the purpose of effecting service of the 2017 Writ. There is no evidence before me that P (or his solicitors) was, back in 2011, correct in adopting D1 Address as D1’s address on the 2011 Writ. The basis of P’s case in this regard is circular. 28.The above should also be read and understood in the context of D1’s unopposed evidence that service of the 2011 Writ was not effected upon him at D1 Address, but was accepted by his solicitors on his behalf. At §28[9] of affirmation in opposition (“D1/Aff”), reciting §§8-10 of his earlier affirmation filed in HCMP 944/2018, D1 says that:
29.There is further evidence that the Covering Letter (together with the enclosures) sent to D1 Address had in fact not been claimed by the addressee, but was sent to the Dead Letter Office and subsequently destroyed[10]:
30.I note further these matters. At the time when the Present Action was commenced, P and D1 were and had been litigating over the Main Actions in relation to the same subject matter. D1 was represented. P himself pleads in the 2017 Writ that it would apply to set down the 2011 Action for trial. The Main Actions and the Present Action arose from largely common facts. There is no evidence before me as to what D1 would have to gain by ignoring service of the 2017 Writ. I note further that P had made no attempt to approach CCC to ascertain whether they were prepared to accept service of the 2017 Writ on behalf of D1. 31.In conclusion, there is no evidence before me that D1 Address was D1’s usual and last known address for effecting service of the 2017 Writ. I have no reason not to accept D1’s evidence that at the material time, he was no longer living there, and that he did not receive the 2017 Writ. 32.Mr Chan submits that D1 must have had knowledge of the Present Action. But given the bad mode of service, any knowledge which D1 might subsequently have on the Present Action would not in my view render the service good and effective. Mr Chan has not produced any authority in support of that possibility. 33.For the reasons set out above, I rule that the attempted service of the 2017 Writ on D1 was bad. Whether service of the 2017 Writ on D2 to D12 valid 34.I next consider whether the service of the 2017 Writ on D2 to D12 was valid. 35.As I have summarized above, D2 to D12 were, until the Sales of the 9 Houses by 9 of them in April 2017, the registered owners of the 11 Unallocated Houses. 36.According to Mr Lee[11], the 2017 Writ was served on each of D2 to D12 at the relevant lots which they held. 37.I have considered the scheme under the Development Agreement. Each of D2 to D12 was only the ding procured by D1 for the purpose of development. Whilst they had been assigned the relevant lots, that was again done for the purpose of the Development Agreement. There is otherwise no evidence that they lived in or occupy the lots. The likelihood is that they did not. 38.I however accept Mr Chan’s legal submissions[12] on the meaning of “address”, citing Hong Kong Civil Procedure 2021, Vol 1 at §10/1/12, that:
39.I note also that in respect of D2 and D5 to D12, in the Stamping Request forms dated 11 May 2017[13] submitted to the IRD, the addresses at which the 2017 Writ was served upon them were described as their postal addresses. 40.I regard also as important that none of D2 to D12 has filed any evidence disputing the validity of the service. 41.On balance, I accept that the service of the 2017 Writ on D2 to D12 was valid. Exercise of discretion 42.As the 2017 Writ contains claims not mentioned in Order 13, rules 1 to 4 and Order 19, rules 2 to 5, the present application is governed by Order 19, rule 7(1). Under that rule:
43.The parties accept, and it is clearly correct in my view, that whilst Order 19 rule 7(1) uses the words “the Court shall”, “the rule is not mandatory but discretionary, and the court retains its discretionary power whether to give judgment …” — see Hong Kong Civil Procedure 2021, Vol 1, paragraph 19/7/13. It is further stated at paragraph 15/16/2 that:
Similarly, it is stated at paragraph 19/7/20 that:
44.On the other hand, as has been explained at paragraph 15/16/2 of Hong Kong Civil Procedure 2021, Vol 1:
45.Mr Chan further accepts, and in my view also correct, that whilst the consideration of the Court is confined to what a plaintiff appears entitled to “on his statement of claim” so that the Court cannot receive any evidence on merits, the Court may receive evidence on otherwise how the court should exercise its discretion, and this is particularly so when declaratory relief is involved — and see Fung Shek Wa v Chang Lai Yue, unrep, HCA 2258/2013 (18 September 2014). 46.I point out first of all the obvious, that P is seeking, amongst other forms of relief, binding declarations on legal rights and titles over land. I have set out above the prayer pleaded in the 2017 SOC. 47.The discretion of this Court engaged. 48.Mr Chan highlights at §32 of his written submissions that the practice of the court not granting declaratory relief on default may be departed from in order to do fullest justice to P. He then submits at §33 that:
49.In my view, whilst those reasons may explain why P is seeking declaratory relief, they do not even start to justify why any such relief should be granted at this stage in default. 50.On the other hand, there are in my view overwhelming reasons why the default judgment sought should not in the exercise of this Court’s discretion be granted. 51.The Main Actions are still on foot. The Main Actions and the Present Action arose out of primarily the same set of facts. 52.Some forms of the relief sought in the Main Actions and the Present Action overlap — see eg §6 of the prayer in the 2011 Writ and §(a.) of the prayer in the 2017 SOC. 53.In the Main Actions, the legality and hence enforceability of the Development Agreement is challenged. It is D1’s case that it is unenforceable and void. It is a fundamental challenge. In addition, various estoppels against P have also been raised. 54.P is seeking in the Present Action declaratory relief in default on a set of facts which is subject to fundamental challenges in the Main Actions to be tried. 55.The grave concern is that, if this Court were to grant any judgment and any binding declaration of rights in default at this stage, the basis upon which this Court does so might ultimately be found to be inconsistent with the conclusions which another Court reaches after trial of the Main Actions. 56.In particular, there is a risk that the Development Agreement (which would necessarily form the basis of any judgment which this Court might grant at this stage in default) could be found after trial of the Main Actions to be an illegal one. 57.The risk is a real one, and is one impossible to gauge because this Court, when considering the Summons, is required by law to consider on merits only what P appears entitled to “on his statement of claim”. 58.As P has himself said at §24 of his affirmation filed in support of the Summons (and repeated at §63 as he thinks it is important):
59.Yet, whilst the Main Actions are still on foot, and when there has not yet been any judicial determination of the Development Agreement, P is seeking default judgment under the Present Action. 60.In the above regard, Mr Chan submits that by making the selection pursuant to the 12/2/2018 Letter, D1 has been barred from running the illegality defence. 61.I do not accept that submissions. In the 12/2/2018 Letter, it was specifically said that nothing therein “shall prejudice [D1’s] Amended Defence Counterclaim filed herein”. 62.The bottom line is this. Mr Chan’s contention that D1 has been barred from running the illegality defence could be found upon trial of the Main Actions to be correct. That however is only something which the trial judge after trial can decide. It is impossible for this Court in the course of an application for default judgment to so conclude. 63.I note further that as part of the relief sought in the Present Action, P is seeking an account. Ds would be obliged to undertake the exercise, and effect the profits found due immediately if this Court were to grant any default judgement. That would in my view be clearly undesirable when the Main Actions have not been tried. 64.There is further no urgency in P getting any judgment. Service of the 2017 Writ was effected (or attempted to be effected) in April or early May 2017. The present Summons was only taken out almost 3 years later in March this year. 65.For the reasons set out above:
Disposition 66.For the reasons set out above, I dismiss the Summons. HCMP 944/2018 67.I record that Mr Chow has made reference to the Decision Madam Recorder Linda Chan (as Her Ladyship then was) handed down on 28 June 2019 in HCMP 944/2018. Mr Chow submits that as a result of certain findings made therein by the learned Recorder, P is precluded by the doctrine of issue estoppel to argue some of the points which Mr Chan has taken in the present application on P’s behalf. 68.Mr Chow has confirmed that it is not his position that the doctrine of issue estoppel would prelude this Court from considering the question of service afresh. In the end, I have reached my decisions above independent of the learned Recorder’s Decision. The question of issue estoppel does not arise. Costs 69.I make a costs order nisi that P should bear the costs of the Summons, to be assessed summarily. Ds are to lodge their statements of costs within 7 days of the date hereof, and P to lodge his objections within 7 days of receipt. Any party who seeks any variation of the costs order nisi may also lodge submissions within 7 days from the date hereof, submissions in response within 7 days of receipt, and reply within 7 further days. Both the summary assessment and any application for variation will be disposed of on the papers.
Mr Kenneth C L Chan and Mr Billy N P Ma, instructed by Hong Lee & Co, for the Plaintiff Mr Tony H H Chow, instructed by Cheung, Chan & Chung, for the 1st Defendant Ms Evelyn L C Cheng, instructed by S H Chou & Co, for the 2nd to 12th Defendants [1] Which has been varied, but this Court is not concerned with such details. [2] At §28(4) of his written submissions. [3] Which reads “Specific performance of the Development Agreement by [D1] to select 9 houses on 9 Building Lots out of the Other 11 Unallocated Houses on the Other 11 Unallocated Building Lots and to assign and transfer and/or to procure the assignment and transfer of 40% interest and benefit of and in the 2 Remaining Houses on the 2 Remaining Building Lots to [P] free from encumbrances, and damages in addition to or in lieu of specific performance …”. [4] Order of Master M Wong dated 13 September 2013 [C/565-569] [5] [A/87-89]. [6] §71(d) at [C/617]. [7] §71(i) at [C/619-620]. [8] The full address has been specified, but not reproduced here. [9] [A/123]. [10] And see §11 of Lee/Aff#1. [11] §3 of Lee/Aff#1. [12] At §18. [13] Which related to the Sales of the 9 Houses [B/317-329]. | ||||||||||||||||||||||||||||||||||||||||||||||||
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