G.P. Vickers and Co Ltd v. Humanbo Enterprises Ltd

HCA012076/1983

BETWEEN

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Coram: Hon. Power, J.

Dates of Hearing: 16 January 1984

Date of Delivery of Judgment: 16 January 1984

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JUDGMENT

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1. In this matter the Plaintiff, G.P.Vickers & Company Limited, a United Kingdom importer of textiles is suing the Defendant, Humanbo Enterprises Limited, a Hong Kong manufacturer of textiles for the sum of $439,178.50 and for damages. It is alleged that the amount being sued for represents an over-payment which was made by the Plaintiff to the Defendant and which occurred because of an alleged short delivery of textiles to the Plaintiff. The writ in this matter was issued on the 29th September 1973. The acknowledgment of service of the Defendant was given on the 15th October and the last day for the filing of a defence was the 29th October. A defence was not filed by that date and on the 3rd November, the Plaintiff's solictors wrote a letter to the Defendant's solicitors stating that they would enter judgment within 48 hours. This letter was written in accordance with the practice that is adopted by solicitors in Hong Kong that they give such notice to each other before proceeding to enter judgment.

2. On the 9th November the Defendant's solicitors made a telephone request to the Plaintiff's solicitors asking to be allowed to file the defence out of time. They did not receive any satisfactory answer to this request and in consequence a summons for leave to file out of time was taken out on the 11th November which was returnable on the 26th November. This summons was served on the Plaintiff's solicitors on the 14th November. The Plaintiff's solicitors, however, did not let the time up to the 26th November elapse without further action. They, on the 25th November, entered judgment. It may well be suggested that the Plaintiff's solicitors could have been more courteous towards the Defendant's solicitors by indicating to them that they intended to proceed to judgment. They were, however, not bound to do so but were entitled, under the rules, to make their application as they did.

3. It is nonetheless argued by Mr. Mayne, who appears for the Defendant, that the judgment is an irregular one and that he is entitled to have it set aside ex debito justitiae. He refers to O.19 r.2 (2) which states that where the plaintiff's claim against a defendant is for a liquidated demand only, then, if that defendant fails to serve a defence on the plaintiff, the plaintiff may, after the expiration of the period fixed by or under these rules for service of the defence, enter final judgment against that defendant for a sum not exceeding that claimed by the writ in respect of the demand and for costs and proceed with the action against the other defendants, if any. This rule, of course, is a rule which gives the plaintiff the right to enter final judgment. However, Mr. Mayne refers to the note which appears at 19/2/2 which says that where the writ is endorsed with a statement of claim, and the defendant has given notice to defend, he must serve his defence within 14 days from the time limited for giving notice of intention to defend, unless the plaintiff has applied for an extension of time under O.3 r.5. O.3 r.5,of course, allows such an application to be made even after the time has elapsed. One of the most important points in this application, certainly the most important point in the resolution as to whether or not a judgment was irregularly entered, rests upon the correctness of the note where it states that a defendant must serve his defence within 14 days unless the defendant has applied for an extension of time under O.5 r.3.

4. Mr. Mayne submits that those words must be taken to mean exactly what they say. He contends that, once a plaintiff has made an application for extension of time, there is an automatic stay and that the entry of any judgment, given the existence of such a stay, must be regarded as being irregular.

5. Mr. Ma on the other hand submits that there is no question of an automatic stay in such circumstances; that, if there is to be a stay, an application must be made in that regard and that a stay would only come into being after it has been granted by a Master. In this respect he refers to the note to O.3 which appears under 3/5/4 where it states:-

"It should of course also be emphasised that mere issue or service of such a summons does not by itself operate to extend any relevant period of time or to stay proceedings."

6. It seems to me that Mr. Ma is quite correct in this submission that there can be no question that there is any automatic stay. It rests upon a person who is applying for an extension of time to safe-guard himself by making an application for a stay and asking that it be heard forthwith if he is already out of time. If this is not done, there is no stay in existence and any judgment that is entered before the hearing of the summons asking to extend the time is a regular judgment.

7. Mr. Mayne then turns to argue that even if it is a regular judgment, the circumstances are such that the Court should, being satisfied as to the merits of the Defendant's claim, set aside the judgment and allow the Defendant in to defend. He submits that he has only to establish that he has an arguable defence. This is so, however, the provision under which he makes his application is O.13 r.9 which gives the Court power to set aside or vary any judgment entered in pursuance to 0.13. In the statement at 13/9/4 the learned author commenting on the rules says, and I quote:-

"If the judgment is regular, then it is an almost inflexible rule that there must be an affidavit on the merits, i.e. an affidavit stating facts showing a defence on the merits".

8. In the present case, Mr. Mayne was driven to rely upon an affidavit by a clerk in his solicitors firm, a Mr. Mark, and to submit that this was a sufficient affidavit on the merits. It is true that attached to that affidavit there was a defence and counterclaim; however, all the affidavit said in this regard was, and I quote, "The facts affirmed to herein are within my knowledge".

9. Mr. Mayne did not really seek to suggest that the deponent was affirming the correctness of the facts set out in the defence. He, quite correctly it seemed to me, had to concede that all the deponent was doing was affirming that this was the defence that would be entered by the defendant's if they were allowed in to defend.

10. I am quite satisfied that this is not an affidavit of merits and that nowhere in the material before me is there anything showing that there is a defence on the merits. Mr. Mayne then fell back upon the alternative which is suggested in the note at 13/9/4 which is that an application can also be granted for some very sufficient reason. He submitted that there was a very sufficient reason shown in the facts themselves. I am unable to agree that this is so. The facts may well explain why the incident occurred but they do not, I am satisfied, establish a very sufficient reason. I consider that nothing has, so far, been shown in the present case that would warrant my setting aside the judgment

11. Finally Mr. Mayne asked that the matter be adjourned and that he be given leave to file an affidavit as to the merits. He submitted that the reason it had not been done was because his solicitors had believed that the affidavit by Mr. Mark was a sufficient affidavit of merits. This application was, of course, opposed by Mr. Ma. He submitted that firstly, the summons itself only sought to raise the issue that the judgment was irregular and that, even if the summons had been wide enough to allow for the argument that the judgment should be set aside even if regular, then it was much too late for the Defendant to suggest that they should be allowed to file further affidavits in the matter. Mr. Ma pointed to the fact that this had already been before a Registrar and that this very matter, as to the sufficiency of the affidavit, had been raised before the Registrar. He submitted, in my view quite correctly, that the Court could not, at this stage, give indulgence to the extent being sought by the Defendant. The Defendant had had ample time to file a further affidavit and had ample warning of the need for one. I am satisfied that the application to adjourn to allow further affidavit to be filed must be refused. I am satisfied also for the reasons already outlined that the application to set aside the judgment must also be refused. I order the Defendant to pay the Plaintiff's costs to be taxed.

Representation:

Mr. G. Ma instructed by Fairbairn & Kwok for Plaintiff/Respondent.

Mr. R. Mayne instructed by John Ku & Co. for Defendant/Appellant.