Siu Kai Ming v. Dowd-brett Maureen P

DCCJ 383/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 383 OF 2006

------------------------

BETWEEN

------------------------

Coram:  Deputy District Judge Anthony Chow in Chambers (open to public)

Date of Hearing:    24^th November 2006

Date of Handing down Decision:  29^th November 2006

------------------------

DECISION

------------------------

1.This is a Summons, pursuant to O.13 r.9, O.19 r.9 and O.3 r.5 of the Rules of District Court, to set aside a default judgment.

Background:

2.On or about 24/11/2005, the Plaintiff purchased and became the registered owner of All That one equal undivided 3rd part or share of and in All That Lot No.341 in Demarcation District No.252 and of and in the messuages erections and building thereon now known as 54 Tso Wo Hang, Sai Kung, New Territories, Hong Kong Together with the sole and exclusive right and privilege to hold use occupy and enjoy All That Second Floor including the Balcony appurtenant thereto and the Roof thereof, No.54 Tso Wo Hang, Sai Kung, New Territories, Hong Kong (the “Property").

3.The defendant occupied the Property as her resident.

4.The plaintiff commenced this action in the District Court to recover possession of the Property, mesne profits, costs and interest against the defendant.

5.The writ was served to the defendant on 23/1/2006, no notice of intention to defend was filed and the plaintiff obtained default judgment on 30/3/2006.

6.On 6/4/2006 Notice of Judgment was served to the defendant, and on 6/4/2006, 7/4/2006 and 8/4/2006, the same was posted on the entrance door of the Property.

7.On or about 15/5/2006, the plaintiff obtained leave to issue Writ of Possession.

8.On 15/6/2006 and 28/6/2006, the Bailiff posted Notice to Recover Possession on the door of the Property.

9.Plaintiff recovered possession of the Property with the assistance of the Bailiff.

10.The defendant now applies to set aside the default judgment.

The Plaintiff’s case:

11.By an written memorandum of sale and purchase dated 4/4/1991 ("the Memorandum") made between Landyear Development Limited ("Landyear") as vendor and the Defendant as purchaser, the Defendant agreed to purchase the Property at the price of HK$1,250,000.00.

12.The Memorandum contains, inter alia, the following:

(a) The premium of the whole building payable to the Government of HKSAR shall be paid by Landyear;

(b) The Defendant will pay 1/3 share of the premium payable to the Government of HKSAR in the event that the premium exceeds $1,300,000.00.

13.Upon signing the Memorandum, Landyear orally agreed to give the Defendant a licen ce to occupy the Property (the “Licence").

14.Premium of the whole building was assessed at $3,962,400.00 . Demand note was issued by the Government of HKSAR on 26/9/2005.

15.By letters dated 10/10/2005 and 15/10/2005, Messrs. Chan & Associates, solicitors for Landyear demanded payment of $1,320,800.00, being 1/3 share of premium, from the defendant. The Defendant refused to pay and in breach of clause 9 of the Memorandum failed to complete the sale and purchase of the Property.

16.The Licence was revoked on 21/10/2005 upon the defendant’s failure to comply with the terms of the Memorandum. The Defendant refused to vacate the Property.  

17.The plaintiff has paid Landyear valuable consideration, including the requisite consideration for the Property and as the registered owner of the Property, is entitled to vacant possession of the same.

The Defendant’s Case:

18.The defendant alleged she had never receive d the Writ, the Notice of Judgment and Notice to recover Possession. On 5/7/2006, she was suddenly locked out and barred from re-entering the Property when she returned home after having dinner.

19.The defendant also alleged that at the time of signing the Memorandum, the excessive premium that she had to pay was in the range of HK$40,000.00 and she was astonished when told the premium was well in excess of HK$1  million.

20.In or about June 1995, Landyear caused the owner to issue a High Court Action under HCA 6168/1995, claiming the defendant has wrongfully entered into possession of the Property.

21.Up to 17/10/2001, Landyear was still asking for payment of the premium and HCA 6168/1995 is an on going litigation.

22.A few months after the defendant moved into the Property in April 1991, the plaintiff moved into the ground floor flat in the same building. Later in or about 2004, the plaintiff occupied the first floor flat of the building as well.

23.In the draft Statement of Defence and Counterclaim, the defendant alleged that so long as her interest in the Property is still pending for decision in HCA 6168 of 1995, she is entitled to occupy the Property as a licensee pursuant to and upon the terms of the agreement of purchase and sale with is partly evidenced in the Memorandum.

24.The defendant also stated that since the plaintiff purchased the Property with full notice of the defendant’s interest, the purchase of the Property should be set aside pending final decision in HCA 6168 of 1995.

25.The defendant counterclaimed against the plaintiff for possession of the Property and damages for being deprived of occupation of the Property, loss of goods and to restore and reinstate the roof-top to the condition before plaintiff took possession of the same.

The Law

26.In exercising the court’s power to set aside default judgment, it is necessary to distinguish between a judgment that was obtained irregularly and one that was not so obtained. [Hong Kong Civil Procedure 2006, Para. 13/9/2] 

27.It would appear that Po Kwong Marble Factory is the definitive authority in Hong Kong so that an irregular judgment would be set aside ex debito justitiate, i.e. without regard to the merits of the proposed defence. [Hong Kong Civil Procedure 2006, Para. 13/9/4]

28.On an application to set aside a regular default judgment, the major consideration is whether the defendant has shown a defence on the merits to which the court should pay heed, not as a rule of law, but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence, and because, if the defendant can show merits, the court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. [Hong Kong Civil Procedure 2006, Para. 13/9/13]

The Issues:

29.There are two issues in this matter:

(1)   Was the judgment a regular judgment?

(2)   Has the defendant shown a meritorious defence?

Was the judgment a regular judgment?

30.Although the defendant alleged she never received the Writ, the Notice of Judgment and Notice to Recover Possession and 5/7/2006 was the first time she was aware of the plaintiff’s claim against her. Mr. Kwok, counsel for the defendant, seemed to have accepted these court documents were served to the defendant. Whilst accepting that there was ample and proper affidavit of service of the court documents, Mr. Kwok nevertheless described the fact that the plaintiff’s affidavit in support of this application included photographs of the posted up Notice of Judgment and Possession Order as being strange.

31.In view of Mr. Kwok’s inability to decide whether he should or should not argue that the court documents were not received by the defendant, I will deal with this issue.

32.In the Affirmation of Service dated 6/3/2006, See Ho Yin, affirmed that:

(1)   On 25/1/2006 she posted a copy of the Writ of Summons to the defendant, by registered post to the Property;

(2)   On 17/2/2006, she served a copy of the Writ of Summons to the defendant, by posting up a copy in a conspicuous place at the entrance to the Property.

33.In the Affirmation of Service dated 11/5/2006, See Ho Yin affirmed that:

(1)     On 6/4/2006, she served a copy of the Notice of Judgment and Possession Order to the defendant.

(2)     On each of 6/4/2006. 7/4/2006 and 8/4/2006, she also posted up a copy of the Notice of Judgment and Possession Order at a conspicuous position on the main entrance of the Property.

(3)     On each of 7/4/2006 and 8/4/2006, it was noticed that the notice posted on the previous day was taken away.

34.Exhibit 7 of the plaintiff’s affirmation dated 31/8/2006, are three photograph of the Notice of Judgment and Possession Orders posted up on the entrance to the Property on 6/4/2006, 7/4/2006 and 8/4/2006.

35.In view of the overwhelming evidence that multiple notices have been serviced on the defendant I find the defendant had received service of the Writ of Summons and the Notice of Judgment and Possession Order.

36.In addition to the service issue, Mr. Kwok also argued that the default judgment was irregular because the Statement of Claim was defective since it failed to disclose a cause of action.

37.Mr. Kwok reasoned that the plaintiff failed to disclose all of the facts involved in this matter. In the Statement of Claim, the sole cause of action was the revocation of the Licence, it failed to mention the existing High Court Action between the plaintiff’s predecessor of title, the defendant and Landyear, where the defendant’s right to occupy the Property has yet to be decided.

38.With all due respect to Mr. Kwok, I fail to see how the defendant’s right to occupy the Property vis-à-vis the plaintiff’s predecessor of title and her claim against Landyear could have any impact on the plaintiff’s cause of action against the defendant. Each of these is independent cause of action and may be decided independent of each other.

39.I find the default judgment regular and to have it set aside, the defendant must shown a meritorious defence.

Has the defendant shown a meritorious defence?

40.Mr. Kwok’s argument was in essence, the defendant has an interest in the Property that has not yet been adjudicated in HCA 6168/1995; the plaintiff took title to the Property with notice of the defendant’s interest and was subject to the defendant’s interest. Therefore, unless and until the defendant’s interest in the Property is finally decided by the High Court, the defendant should have possession of the Property.

41.Whilst this argument is attractive, one must first look into the nature of the defendant’s alleged interest in the Property and most importantly, whether this interest included a right of possession.

42.Mr. Kwok first argued that the defendant’s interest in the Property arise from the Memorandum; however it is trite law that a purchaser is not entitled to possession until the purchase price is paid. As the defendant has not yet paid the full purchase price of the Property, she has no right of possession of the Property arising from the Memorandum.

43.The defendant’s only right of possession must be from the Licence. There are however, several problems with the Licence granted by Landyear. First, Landyear was not a registered owner of the Property, as such it is questionable if Landyear had any right to grant a licence to the defendant.

44.Mr. Kwok argued that since Landyear executed the Assignment dated 24/11/2005 assigning the Property to the plaintiff, it must be acting as agent for the predecessor of title. There is of course no evidence that at the time the Licence was granted to the defendant, Landyear was acting as agent for the predecessor of title. Even if it was, in the Amended Statement of Claim in HCA 6168/1995, the predecessor of title stated:

“Sometime in or about 4^th April 1991, the Defendant wrongfully entered and took possession of the second floor and the roof thereabove of the house erected on the said Lot (‘the said premises”) and has thereafter wrongfully remained in possession thereof.”

45.By commencing HCA 6168/1995 against the defendant for possession of the Property and by what was pleaded in the Amended Statement of Claim (in HCA 6168/1995), the predecessor of title has clearly demonstrated that the Licence has been terminated.

46.Even if the termination was in breach of the licence agreement, the most the defendant could obtain against the predecessor of title and Landyear is a claim for damages.  The defendant has no legally enforceable right of possession to the Property.

47.If Mr. Kwok was right, that for unknown reason, upon execution of the Memorandum, the defendant obtained a right to possess the Property, another problem the defendant face is that the Assignment to the plaintiff was registered on title to the Property and under the Land Registration Ordinance Cap. 128, enjoys priority over the unregistered Memorandum.

48.Section 3 and 4 of the Land Registration Ordinance states as follows:

“3. Priority of registered instruments: effect of non-registration

(1) Subject to this Ordinance, all such deeds, conveyances, and other instruments in writing, and judgments, made, executed, or obtained, and registered in pursuance hereof, shall have priority one over the other according to the priority of their respective dates of registration, which dates shall be determined in accordance with regulations made under this Ordinance. (Amended 50 of 1911 Schedule; 34 of 1978 s. 2; 56 of 1980 s. 4)
(2) All such deeds, conveyances, and other instruments in writing, and judgments, as last aforesaid, which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same parcels of ground, tenements, or premises, be absolutely null and void to all intents and purposes:
Provided that nothing herein contained shall extend to bona fide leases at rack rent for any term not exceeding 3 years.

4. Notice of unregistered instrument not to affect registered instrument

No notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance, or other instrument in writing, or judgment, shall affect the priority of any such instrument as aforesaid as is duly registered.”

49.The Memorandum was clearly a “prior unregistered deed, conveyance, or other instrument in writing, or judgment” and as such, even when the plaintiff had notice of it, the plaintiff’s right of possession, which arise as owner from the registered assignment, enjoys priority over the defendant’s right of possession (if any), when that right of possession came from an unregistered memorandum of purchase and sale.

50.Mr. Kwok argued that although the Memorandum was a registrable instrument, the interest it created was not registrable. I am however unable to follow Mr. Kwok’s logic. I have already stated in law a purchaser of land does not have right of possession until all of the purchase price has been paid. Since the purchase price has not been paid, the defendant’s only other possible right of possession was a licence which was a personal right, the breach of which entitled the defendant to a claim for damages only. 

51.The defendant does not have any enforceable right of possession on the Property, there is no defence on the merits and this application must be dismissed.

Costs:

52.Mrs. Chan applied for indemnity costs against the defendant, I see no merits in this application.

Order:

Representation:

Mrs. Dora Chan, instructed by Messrs. Patrick K.H. Lam & Co., for the Plaintiff

Mr. K.K. Kwok, instructed by Messrs. Wong Poon Chan Law & Co., for the Defendant