China Express Card Ltd v. Poon Yiu Wah t/a Shun Hing and Another
Read the full judgment text of DCCJ 3892/2003 on BabelCite. This District Court judgment.
1. This is an application by the 2 nd defendant to set aside a default judgment, and also to set aside a charging order nisi obtained on the judgment, and to stay execution of the judgment.
Cites 2 cases
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DCCJ3892/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 3892 OF 2003 ______________________ BETWEEN
Coram : His Honour Judge Muttrie in Chambers Date of Hearing : 22nd November 2004 Date of Ruling : 1st December 2004 __________ Ruling __________
1.This is an application by the 2nd defendant to set aside a default judgment, and also to set aside a charging order nisi obtained on the judgment, and to stay execution of the judgment. 2.The plaintiff’s claim is for $149,498.18 being the price of goods, namely diesel fuel sold and delivered to the 1st defendant, Poon Yiu Wah trading as Shun Hing (China-HK) Transportation Company between January and May 2003. The 2nd defendant is sued as guarantor, under a sales agreement dated 1 November 2000, on which her name and signature appear. 3.The Writ was issued on 2 July 2003. It was served on the defendants by registered post. On 4 July 2003 the bailiff posted copies of the Writ to the both the 1st and the 2nd defendants at Flat 640, Oi Fai House, Yau Oi Estate, Tuen Mun. This was the residential address of the 1st defendant, given in his Business Registration Certificate dated 24 November 1998. No acknowledgment of service was filed and the plaintiff obtained default judgment against both defendants on 12 November 2003. The plaintiff later took out an application for a charging order against the 2nd defendant’s property at Flat 6, 23rd Floor, Tin Hor House (Block 3), Tin Ping Estate, 48 Tin Ping Road, New Territories and obtained the charging order nisi on 13 August 2004. 4.The 2nd defendant says that the address at which the Writ was served was not her address. She only knew of the Writ and the judgment when the charging order nisi was served on her. Further, she says, she did not sign the sales agreement as guarantor. 5.It is therefore argued on her behalf that the judgment is irregular, because it was not served at her “usual or last known address” as is required by Order 10 Rule 1(2) of the Rules of the District Court, and should be set aside; but that in any event she has a meritorious defence, so that if the judgment is found to be regular, it should be set aside in the discretion of the court. 6.The history of the dealings between the parties is as follows. There was formerly a company called Shun Hing (China-HK) Transportation Company Ltd., which had a registered office in Sheung Shui and a post office box at the San Tin post office. According to the plaintiff, the 1st defendant operated this company, though it appears that its directors were Wong San Wah and Poon Mi Luen, Loretta. On 10 March 1997 this company applied to the plaintiff for the supply of fuel. The 2nd defendant was named as the responsible person, and the registration number of a vehicle, FJ 1965 was shown as the vehicle to which the fuel was to be supplied. This vehicle is in fact registered in the name of the 2nd defendant and was first registered in 1992, as appears from a Transport Department certificate of particulars dated 1 November 2003. This certificate shows the 2nd defendant’s address as Room 6, 23rd Floor, Tin Ping House, Tin Ping Estate, Sheung Shui, which is of course the address of the property to which the charging order nisi relates. 7.The 1st defendant started trading as Shun Hing (China-HK) Transportation Company in November 1998. The Business Registration Certificate dated 24 November 1998 shows the place of business as an address in Lok Ma Chau and the 1st defendant’s residential address as Flat 640, Oi Fai House, Yau Oi Estate, Tuen Mun. The fuel with which this case is concerned was supplied under a sales agreement dated 1 November 2000. This shows the 1st defendant’s business address in Lok Ma Chau and the place where the vehicle is to be kept as his residential address at Tuen Mun. It names the 2nd defendant as guarantor, and shows her name in English and Chinese as well as her identity card number and a telephone number. It also bears her disputed signature and the date but it does not show any address for her. 8.The plaintiff’s witness, Mr So says that the two defendants carried on business in the name of Shun Hing (China-HK) Transportation Company Ltd. from 1997 to 2000. In that year the 1st defendant told the plaintiff that since the account had been dormant for a long time, this company would be replaced by his own unlimited company, i.e. Shun Hing (China-HK) Transportation Company and it was on this basis that the sales agreement was made. In accordance with the plaintiff’s business practice, a guarantor was needed and this was the 2nd defendant. After the 1st defendant defaulted on payment in about April 1993, various attempts were made to contact him. He was told that the plaintiff would sue him and the 2nd defendant; he was asked if his residential address at Flat 640, Oi Fai House, Yau Oi Estate, Tuen Mun was a valid correspondence address for both defendants; and he expressly indicated to Mr So that it was indeed a valid correspondence address for both of them. 9.The 2nd defendant filed two affirmations. In the first, she says that she was an employee of the 1st defendant and worked for him from about February or March 2001 and resigned before Christmas of the same year. In that time she was asked to sign some documents, but she was never asked to become, nor did she agree to become, his guarantor. She was not living at the residential address of the 1st defendant and according to her, the plaintiff knew that. 10.In the second affirmation the 2nd defendant says that she made a mistake as to the dates in her first affirmation. In fact, she worked for Shun Hing (China-HK) Transportation Company Ltd. until 31 December 1997, and she produces a letter purporting to be a letter of termination of her employment on that date. She further says that between June 1999 and march 2001 she was working for one Top Excellent Development Ltd., and produces a certificate bearing to come from that company, to confirm what she says. She knew nothing about the unlimited company which the 1st defendant later operated, and it would have been impossible for her to sign as guarantor for that company, which was not her employer. 11.The court’s power to set aside a judgment is set out in Order 13 Rule 9 of the Rules of the District Court which provides:
12.If a judgment is obtained regularly, the court’s power to set it aside is discretionary; but for the discretion to be exercised in its favour the defendant must show a real prospect of success; see Alpine Bulk Transport Co Inc. v. Saudi Eagle Shipping Co. Inc. [1986] 2 Lloyd’s Rep. 221, CA. This means, in the words of the authors of the Hong Kong Civil Procedure 2004 at paragraph 13/9/14 tha
13.If the judgment is obtained irregularly, the defendant does not need to show merits; but the court may consider all the other circumstances of the case in deciding whether to impose conditions in the exercise of its discretion. See Po Kwong Marble Factory Ltd. v Wah Yee Decoration Co. Ltd. [1996] 4 HKC 157, which was followed by the Court of Appeal in Chu Kam Lun v Yap Lisa Susanto [1999] 3 HKC 378 and by Yuen J. as she then wasin Law Kwok Hung v Tse Ping Man [1999] 4 HKC 397. 14.The first question therefore is whether the judgment was obtained regularly, i.e. on the basis of regular service at the 2nd defendant’s usual or last known address. In Law Kwok Hung Yuen J. considered the meaning of the words “last known address” and held that it was the address last known to the plaintiff. It was further held that a plaintiff was entitled to acquire knowledge of the defendant’s address by any reasonable means available to him. He had to state, in his affidavit of service, that the writ had been served at the address last known to the plaintiff and that in his opinion it would come to the defendant’s notice within seven days. His opinion must be reasonably held, and if the defendant impeached the good faith of that opinion, the court would determine whether or not the plaintiff had reasonable grounds to hold it. If there were no reasonable grounds for the opinion, the service would be irregular for non-compliance with the rules. 15.The question is really whether it was reasonable for the plaintiff to accept the representation made by the 1st defendant that his residential address was a valid correspondence address for both himself and the 2nd defendant. It is not clear why the plaintiff should have accepted that representation at face value. Mr So says that the defendants carried on business together, but it is not suggested that the 2nd defendant was held out as a spouse, girl friend or other relation of the 1st defendant, who could be expected to have the same residential address. 16.So far as I can see the only documents available at the time of the service of the writ were the 1997 document relating to the limited company and the sales agreement dated 1 November 2000. It is not clear whether the business registration certificate was then available but if it was it showed no more than did the sales agreement. The certificate of particulars, which did show the 2nd defendant’s address, could not have been available for it is dated 1 November 2003 though no doubt it could have been obtained before that. 17.The situation is quite unlike that in Law Kwok Hung where the court accepted the address given by the defendant to his professional body and hence to the public, although it was an out of date address, as the usual or last known address of the defendant. Here the 2nd defendant has never actually given the plaintiff or anyone else any address for herself. 18.It is true that the 2nd defendant was held out as the responsible person of the limited company in the 1997 document, but the address given in that document was only a post office box number for the company. It is also true that the 2nd defendant apparently signed the sales agreement as guarantor for the 1st defendant but no address was shown for her. Both the residential and business addresses of the 1st defendant were given and one would have thought that, if one of these addresses were to be taken as that of the 2nd defendant, then unless she was known to be the spouse, girl friend or other relation of the 1st defendant the more likely address of those two would be the business rather than the residential address. 19.I take the view that it was not reasonable for the plaintiff to accept the 1st defendant’s representation, in the absence of anything to support it. It would have been easy enough for the plaintiff to check the position, as indeed it did later in November 2003, when it conducted a search of the office file, noted that the 2nd defendant had registered the vehicle no. FJ 1965 during the time when the plaintiff was trading with Shun Hing (China-HK) Transportation Company Ltd., and went on to obtain the certificate of particulars from the Transport Department. I therefore hold that the judgment was obtained irregularly. It must therefore be set aside. However the question then arises as to whether it can be set aside on terms, in particular of payment into court. 20.It must be said that the defendant’s case is not a strong one. It is very easy for anyone to deny a signature, but realistically, if the 2nd defendant was the registered owner of the vehicle for which the fuel was to be obtained from the plaintiff, there was good reason for her to guarantee payment of the fuel bills. Further her evidence as to when she ceased to work for the limited company or the 1st defendant is contradictory. 21.Following the cases cited above, however, the judgment must be set aside without considering the merits of the defence. In Chu Kam Lun the Court of Appeal was referred to the English decision of Faircharm Investments Ltd. v Citibank International plc (The Times, 20 February 1998) unreported), which espoused the view that the defendant’s merits or lack of them should be considered, because if the defence is hopeless it would be pointless to set aside the judgment even if it is irregular. The Court found the dictum attractive but held that Faircharm was not binding, and in any event it could not be said that the defendant was bound to lose if given the opportunity defend, so the issue as to whether to adopt Faircharm did not arise. The Court went on to affirm the law as decided in Po Kwong Marble Factory Ltd and held that an irregular judgment should be set aside without going into the merits of the defence. 22.The decision in Po Kwong Marble Factory Ltd did, however, allow for consideration of the other circumstances of the case in deciding whether to impose conditions in the exercise of the court’s discretion. The court took into account the circumstances surrounding the question of service, because the defendant had disguised the registered office of his company, and the risk that any judgment which the plaintiff might ultimately obtain may be an empty one if the court did not guard against it. 23.I do not see that there are any such circumstances here. There is nothing to suggest any attempt by the 2nd defendant to evade service. I do not see that I could impose conditions without going into the merits of the defence, and this, on the authorities, I cannot do. 24.There will accordingly be an order in terms of the 2nd defendant’s summons dated 7 September 2004. This means that the judgment is set aside and the charging order nisi vacated. The 2nd defendant will be at liberty to defend the action by acknowledging service within 14 days of the order to be made herein, and the costs of the summons including the costs reserved by the Master on 27 September 2004 will be to the 2nd defendant in any event with certificate for counsel. Because this ruling is to be handed down the costs order I make is nisi.
Representation : Ms. N.Y. Chan of Messrs. K.Y. Lo & Co. for the Plaintiff. 1st Defendant, in person, absent. Ms. Michelle Chui instructed by Messrs. Joseph Leung & Associates for the 2nd Defendant. |