Read the full judgment text of HCA 007069/1995 on BabelCite. This High Court CFI judgment was delivered on 18 June 1997 before Waung J.
Civil procedure – setting aside default judgment – irregular judgment – service of writ by registered post – Order 10 rule 1(2)(a) Rules of the Supreme Court – Order 13 rule 9 – Limited Right Principle – Absolute Right Principle – No Right Principle – Po Kwong Marble Factory – discretion to impose terms – delay in application to set aside – risk of empty judgment – foreign defendant – Mareva Injunction – Garnishee proceedings – The plaintiff, a company in liquidation, obtained default judgment against the defendant, a Chinese resident employed by a Mainland Chinese company (TDC) who made only short trips to Hong Kong to assist with business dealings between TDC and the plaintiff – The plaintiff's solicitors purported to serve the writ on 18 July 1995 by registered post to the plaintiff's former Kwai Chung Office, an address the plaintiff knew the defendant had stopped using in 1993 – Default judgment for $12,748,354.95 was entered on 14 August 1995, followed by a Garnishee Order Nisi on 11 October 1995, Garnishee Order Absolute on 28 November 1995, and payment out of HK$318,658.97 and US$14,057.15 to the plaintiff on 20 December 1995 – The defendant, who did not learn of the proceedings until late December 1995 or January 1996, applied to set aside the default judgment on 21 May 1996 – Held, the service was not good as the defendant was not within the jurisdiction at the time of service (Barclays Bank v Hahn [1989] 1 WLR 506), the address was not the last known address, and the service was not effective to bring the proceedings to the defendant's knowledge (Forward v West Sussex County Council [1995] 1 W.L.R. 1469) – The default judgment was also irregular because it was entered for too much; the plaintiff conceded it should have been $3.5 million or $7.9 million, with 5 items that should not have been claimed – The Court of Appeal in Po Kwong Marble Factory Ltd. v Wah Yee Decoration Co. Ltd. (unreported, CA153/96, 20 November 1996) established that the Limited Right Principle applies to setting aside of irregular judgments, giving the court residual discretion under O.13 r.9 to impose terms without going into the merits of the defence – A similar view was expressed by Keith J. in Guangdong International Trust and Investment Corporation Hong Kong (Holding) Ltd. v Yuet Wah (Hong Kong) Wah Fat Ltd. [1997] 1 HKLR 489 – The defendant had valid explanations for the 4-month delay in applying to set aside (borrowing money for legal costs, retrieving documents, being a foreign resident unfamiliar with the Hong Kong legal system) – The risk that the plaintiff would be left with an empty judgment was not a valid reason to impose terms; a Mareva Injunction should have been sought if the plaintiff wished to prevent removal of assets from Hong Kong – The plaintiff's conduct in effecting service at a known-bad address, filing an affirmation of service that must have been known to be untrue, and entering judgment for too much warranted unconditional setting aside – Orders: Default judgment set aside unconditionally; money paid out under Garnishee Order Absolute (HK$318,658.97 and US$14,057.15) together with interest at 1% above prime to be repaid by plaintiff to defendant; Order Nisi that the defendant is to have the costs of the summons to set aside
Legal issues: Whether service of the writ by registered post was good under O.10 r.1(2)(a) of the Rules of the Supreme Court · Whether the default judgment was entered for too much · Which principle (Absolute Right, Limited Right, or No Right) governs the setting aside of an irregular judgment · Whether terms should be imposed on the setting aside of the default judgment
Outcome: Default judgment and subsequent execution set aside unconditionally; execution money to be repaid to the defendant with interest; defendant to have costs of the summons to set aside
Cited by 2 cases