The Hong Kong Settlers Housing Corporation Ltd v. Fung Tak Lok
Read the full judgment text of DCCJ 39/2024 on BabelCite. This District Court judgment was delivered on 14 February 2025.
1. Upon hearing arguments on 14 February 2025:-
Cited by 17 cases · Cites 9 cases
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DCCJ 39/2024 [2025] HKDC 261 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 39 OF 2024 ________________
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___________________ REASONS FOR DECISION ___________________ I. INTRODUCTION 1.Upon hearing arguments on 14 February 2025:-
2.I also heard arguments on costs after my decisions, and I will make costs orders here. 3.I shall give the reasons for my decision to allow the Setting-aside Application first. II. BACKGROUND 4.The background has been set out in §§2 – 6 of my decision ([2024] HKDC 2110) (the “CMC Decision”) delivered at the Case Management Conference (the “CMC”) on 16 December 2024, and I shall not repeat the same here. 5.In respect of the procedural history specific to the present action:-
III. LEGAL PRINCIPLES IN RELATION TO SETTING ASIDE DEFAULT JUDGMENT 6.The legal principles in relation to setting aside default judgment are trite. Where the service of the writ is regular, then the Court would have to consider whether there is real prospect of success in the defence. If so, the Court would usually set aside the default judgment, although it still retains discretion not to do so considering all the relevant circumstances. If the service of the writ is irregular, then the Court would usually set aside the default judgment without consideration of merits, although again it still retains discretion not to do so considering all the relevant circumstances. IV. SERVICE 7.There is no dispute that the Address was the usual and last known address. The defendant also effectively deposed that he received the writ on 8 January 2024 (the date of the insertion of the writ into the letterbox). The service was regular. V. MERITS OF DEFENCE 8.One of the defences raised by the defendant is essentially the same as the grounds of judicial review in the Form 86 of the judicial review (HCAL 1600/2024) (the “Judicial Review”) mentioned in §1 of the CMC Decision and summarised in §18 of my decision of 16 January 2025 in DCCJ 5582/2023 ([2025] HKDC 97) (the “DCCJ 5582/2023 Decision”). 9.In the light of the DCCJ 5582/2023 Decision as well as my decision in DCCJ 5579/2023 ([2025] HKDC 142), Mr Michael Lok (leading Mr Paul Law), counsel for the plaintiff, fairly makes no submissions on the merits of the defence. I shall just briefly explain my reasoning here. 10.As I said in §24 of the DCCJ 5582/2023 Decision, grounds in public law may constitute a valid defence to a private claim: Wandsworth LBC v Winder [1985] 1 AC 461 at 506C-D, 509E-H; North British Housing Association v Matthews [2005] 1 WLR 3133 at §12; Kay v Lambeth LBC [2006] 2 AC 465 at §60. 11.Further, Coleman J’s grant of leave for the Judicial Review in [2024] HKCFI 2592, as explained in my decision in DCCJ 5579/2023 at §16, means that the grounds in the Judicial Review are reasonably arguable “having realistic prospect of success”. 12.This in my view means that there is a real prospect of success in the defence of the Judicial Review to the plaintiff’s claim. 13.Given my view on the defence of the Judicial Review, I do not need to scrutinise the merits of the defendant’s other defences, save and except that provisionally, I have quite some doubt over the merits of the other defences. I also make a note here that the plaintiff makes it clear that it refrains from making submissions on these other defences. VI. RESIDUAL DISCRETION 14.This usually is sufficient to set aside the judgment. However, in determining how to exercise my discretion, the Court has to consider all relevant circumstances depending on the individual facts of that case, for example, why the default occurred; the defendant’s conduct after he had notice of the proceedings; an explanation for the time taken for the delay; and any prejudice to the plaintiff and third parties. That said, “[t]he consideration of merits would usually transcend any reasons given by the defendant for the delay in making the application… This may be so even where the explanation given by him on oath is false…”: see Hong Kong Civil Procedure 2025 Vol 1 §13/9/13. 15.Further, “the right to apply to set aside on the ground of a meritorious defence is not lost even if the defendant, having had the judgment entered against him in default of acknowledgement of service, obtained from the plaintiff time in which to pay”: see Hong Kong Civil Procedure 2025 Vol 1 §13/9/15. 16.In summary, the defendant gave the following reasons for the default in filing acknowledgement of service:-
17.As regards (1), the Court of Appeal has time and again emphasised that litigants, whether legally represented or not, shall comply with the legal procedures and practice directions: see 朱賽金 對 高等法院司法常務官 [2020] HKCA 914 at §21. Further, the acknowledgment of service specifically stated in Chinese and English that the defendant had to return the acknowledgment of service to the Court. Thus, the mere fact that she was not legally represented is not a good reason. 18.As regards (2), the situation may be difficult for the defendant, but there was nothing to prevent the defendant from at least making a request to the plaintiff in writing for more time, rather than simply doing nothing. 19.As regards (3) and (4), her legal aid application was refused on 27 March 2024. So, even according to her own belief, she should be aware that the time started to run again after 27 March 2024. 20.Mr Lok, for the plaintiff, highlights the fact that the plaintiff had engaged solicitors even before the commencement of the present action, and the solicitors went off the record only when they were asked whether they had instructions to accept service. Mr Lok asks me to consider the evidence holistically and find that the defendant’s conduct was deliberately evasive. While the solicitors went off record when asked whether they had instructions to accept service, concern over costs rather than evasion of service might be the true reason. Having considered the evidence holistically, I do not think there is sufficient evidence before me to come to a rather serious finding that the defendant deliberately evaded service. 21.In the circumstances, the only delay for which I find good reason is the stay period upon her legal aid application from 17 January 2024 to 27 March 2024. 22.For the delay from 8 January 2024 to 17 January 2024 and 28 March 2024 to 25 April 2024 (totalling about one month), I find no good reason. Be that as it may, the delay is about one month only. 23.As regards prejudice, the plaintiff says that if I would set aside the Default Judgment, the plaintiff would have to incur extra costs which the plaintiff would find it difficult to recover from the defendant who has allegedly lack of financial resources. 24.In my view, the extra costs cannot be a prejudice. As the defendant has a defence of real prospects of success, it is too early to say that the plaintiff would be awarded costs order. In any event, difficulty in recovering costs is always inherent in any litigation. If the plaintiff’s point is valid, then every plaintiff would find a way to raise this as a ground to object to setting aside default judgment. This, in my view, is absurd. 25.The plaintiff also says that in refusing to set aside the Default Judgment, the defendant would suffer no prejudice because the defendant no longer lives in the Premises. 26.However, in my view, if the defendant has a valid defence, then it is her right that would be prejudiced if I am not to set aside the Default Judgment. Although she does not reside in the Premises anymore, whether she has a valid defence or not clearly would affect the parties’ positions in, for example, how the redevelopment could be carried out. 27.Lastly, Mr Lok, for the plaintiff, complains that the defendant only raises the defence of Judicial Review in her reply affirmation, but not in the draft defence and counterclaim. I accept that the defendant did not clearly raise the defence in the draft defence, and the defendant’s such conduct is not satisfactory, but given that the defendant has made it clear that she now relies on the defence of the Judicial Review as well, I have no doubt that her legal representative would amend the draft defence clearly to reflect this latest position. (The defendant would only have herself to blame if she does not make such amendment to the draft.) In this regard, I see no prejudice that would be suffered by the plaintiff, who, as I said, has fairly refrained from making submissions on the merits of this defence. It is not a situation where the plaintiff complains that because this defence was raised in the reply affirmation, the plaintiff had not been given sufficient opportunity to respond. 28.Having considered the above, namely the short delay and lack of any real prejudice, and especially the real prospect of success in the defence of the Judicial Review, I find it appropriate to exercise my discretion to set aside the Default Judgment. VII. CONCLUSION ON SETTING-ASIDE APPLICATION 29.In the circumstances, I allowed the Setting-aside Application. 30.As regards costs, there are two sets of costs, namely, costs of the Setting-aside Application itself and costs of the hearing for the application. Having heard counsel’s submissions, for the costs of the Setting-aside Application itself, despite the shortness of delay, I have still found that there is no good reason for the delay. 31.Ms Leung (for the defendant) submits that the costs after the CMC of 16 December 2024 or after my DCCJ 5582/2023 Decision on 16 January 2025 should be to the defendant because by then the plaintiff should have known that its opposition to setting aside would be unmeritorious. I do not agree that by the CMC of 16 December 2024, the plaintiff would have such knowledge. As regards 16 January 2025, Ms Leung’s argument bites the defendant as well – the plaintiff did not prepare any further papers in opposition to the setting aside application after 16 January 2025, but on the contrary, it was the defendant who still kept preparing affirmation in support and in reply. If by 16 January 2025, according to Ms Leung, the plaintiff should have known its opposition to be unmeritorious, the flipped side is that the defendant should also have known that there was no need to file any further evidence, and it would be the defendant’s own fault in incurring costs for such further evidence. 32.Overall, I still think that the defendant should pay the plaintiff the costs of the application itself. The costs is summarily assessed at HK$75,000. 33.As regards the costs of the hearing itself, as I have allowed the Defendant’s Summons, the costs of the hearing should follow the event. Unfortunately, in breach of PD14.3, the defendant did not file and serve the statement of costs together with her skeleton submissions. Based on Au-Yeung J’s warning in §44 of Huang Chang Fa v Tong Yuk Ping [2023] HKCFI 1894, I gave a stern warning in §26 of my decision in DCCJ 5579/2023 ([2025] HKDC 142) that if the plaintiff’s solicitors would fail again to comply with PD 14.3 the plaintiff’s solicitors may be met with personal costs order. Ms Leung (for the defendant) did refer to this decision in her written submissions for other matters. Thus, the defendant’s solicitors, assumed to have read their own counsel’s submissions in discharge of their duties as solicitors, should have had knowledge of my stern warning. Despite such knowledge, they still failed to comply with PD14.3. Ms Leung accepted that there was no good reason for the non-compliance, and although the warning there was made to the plaintiff’s solicitors, I do not think that any reasonable legal practitioners would therefore think that they could still continue to disregard PD14.3 in the circumstances. To save her solicitors, Ms Leung submits that a statement of costs would have to be filed and served together with the skeleton submissions only if they would seek summary assessment but she would like to seek taxation instead. I do not accept such submission because the default rule for costs of interlocutory applications has been summary assessment since CJR was launched more than 15 years ago. 34.I assess the costs to be HK$17,580, and I give a 20% discount representing HK$3,516 deduction. But for this relatively minor sum, I would have directed proceedings for personal costs against the defendant’s solicitors under Order 60 rule 8 of the Rules of District Court. However, I direct the defendant’s solicitors to explain specifically to the defendant that the deduction of HK$3,516 was a consequence of the failure to comply with PD14.3. 35.After setting off of the two sets of costs (HK$75,000 – HK$14,064), the defendant shall pay the plaintiff costs of HK$60,936. VIII. JOINDER APPLICATION 36.By the Joinder Application, the defendant seeks an order to join her brother Fung Dickson as the 2nd defendant. 37.The general legal principles in relation to a joinder application are set out in Elysium Ltd v Sum Ka Kuen Dominic [2023] 5 HKC 508 at §§20-24. In particular:-
38.With respect to Order 15 rule 6 of the Rules of District Court, a liberal application should be adopted to ensure that “all matters in dispute between the parties are completely and finally determined, and all multiplicity of legal proceedings with respect to any of those matters is avoided”: see Hong Kong Civil Procedure 2025 Vol 1 at §15/6/1. 39.With respect to the Court’s power to join a person under Order 15 rule 10 of the Rules of District Court:-
40.Ms Lydia Leung (leading Mr Christopher KH To), counsel for the defendant, time and again emphasises that for determining a joinder application, the Court should refrain from examining the merits of the claim or defence of the intended party. However, this is not what the legal principles are. As mentioned §37(4) above, “if it is plain and obvious that the joinder of the proposed intervener would be pointless and futile”, or as mentioned in §39 above, if the claim is not “bona fide”, that is, a claim that has not even a prima facie case and thus would deliberately or not just obscure any real issues, the joinder application should not be allowed. In my view, this means that the Court should still examine the merits to ensure that the claim or defence is not plainly and obviously pointless, futile, or without bona fide, and such approach makes eminent sense. If it were otherwise, this would mean the Court would have to let any plainly and obviously pointless, futile, less-than-a-prima-facie case proceed with the other parties, and this would waste the parties’ time and costs and the judicial resources. One may argue that any party after the joinder could apply to strike out if the case is plainly and obviously pointless, futile, less-than-a-prima-facie case. Such an approach would again unnecessarily waste the parties’ time and costs and judicial resources. The right course to take at the joinder application is that the Court should ensure that the intended party’s claim or defence should have a serious issue to be tried, and the burden to prove that of course lies upon the applicant for the joinder. 41.Ms Leung summarised the grounds in support of the Joinder Application in §43 of her skeleton submissions as follows:-
42.I have no doubt that Fung Dickson, as an occupant of the Premises, would be affected by the present proceedings and the plaintiff’s decisions on rehousing and evicting the occupants of the Premises. However, the mere fact that he would be so affected does not mean that there are any issues between the plaintiff and Fung Dickson that would require the resolution by the Court. The fundamental question is on what basis Fung Dickson has occupied the Premises. 43.First, in my view, it is plain and obvious that there is no basis for saying that “Fung Dickson’s right of residence does not solely derive from the [Tenancy Agreement], but instead has been established since he was born”:-
44.Second, Madam Leung who commenced the Judicial Review was the tenant herself, and thus the issues in the Judicial Review are issues between the plaintiff and its tenants but not others. The “Eviction Decision” being the subject decision in the Judicial Review (see §18 of the DCCJ 5582/2023 Decision) is the plaintiff’s decision to terminate the tenancy and evict her. Here, as between the plaintiff and Fung Dickson, there has never been any tenancy. In this regard, I note that there has been no judicial review commenced by a non-tenant at all. Insofar as a non-tenant would rely on the tenant’s right to stay, I would understand why the non-tenant has not commenced any judicial review. However, insofar as a non-tenant would rely on the Judicial Review to say that he himself has a right to stay independent of the tenant, it is plain and obvious to me that a non-tenant such as Fung Dickson could not avail himself of the Judicial Review (concerning tenants only) to confer upon him some interest in the cause or matter to be joined to the plaintiff’s claim. 45.I would like to stress that I am not being technical here to differentiate between tenants and non-tenants. Legally, it is only the tenant who would have the obligations (and as quid pro quo, rights), for example, the obligation to pay rents, the obligation to ensure the proper use of the Premises, and so on. If there is any breach of the tenancy agreement, it is the tenant who would have to take up the liability, but not the members listed in the Schedule. 46.Ms Leung (for the defendant) contends that the Rehousing Arrangement Decision, being the other decision in the Judicial Review (see §18 of the DCCJ 5582/2023 Decision), may benefit Fung Dickson but not the defendant. Her contention is that there may be a scenario where the Eviction Decision is lawful so that the plaintiff could terminate the tenancy and evict the defendant, but as against Fung Dickson, the Rehousing Arrangement Decision is unlawful so that the plaintiff would still not be able to exercise its power to obtain possession of the Premises. Therefore, Ms Leung contends, Fung Dickson should be joined to ensure that the plaintiff’s entitlement to the relief of possession of the Premises could be properly determined. 47.I disagree that this could constitute a valid reason for joinder, for the following reasons:-
48.In the circumstances, I find it plainly and obviously that Fung Dickson has no bona fide independent claim in the present matter. I also find that joining him to the present proceedings is plainly and obviously pointless and futile, and is not conducive to a complete and final determination of all the issues. Joining him would only unnecessarily waste the parties’ time and costs and the judicial resources. 49.Therefore, I refused the Joinder Application. 50.Costs should follow the event. I order that the defendant do pay the plaintiff costs of the Joinder Application, summarily assessed at HK$90,000.
Mr Michael Lok and Mr Paul Law, instructed by Messrs P C Woo & Co, for the plaintiff Ms Lydia Leung and Mr Christopher KH To, instructed by Messrs Mohnani & Associates, for the defendant | |||||||||||||||||||||||||
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