Ng Wai Chiu v. Skin Club (Shock Treatment) Ltd and Another
Read the full judgment text of DCCJ 18/2007 on BabelCite. This District Court judgment.
1. The Plaintiff claimed that the 1 st and 2 nd Defendants and other associate companies were engaged in the business of promoting and selling cosmetic and health products (“ Products ”) through the recruitment of members with different incentive plans at various levels. Interested parties had to first join as members of a club known as “Skin Club” (“ Club ”).
Cited by 1 case · Cites 5 cases
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DCCJ18/2007 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 18 OF 2007 ------------------------ BETWEEN
------------------------ Coram : H H District Judge Marlene Ng in Chambers (open to the public) Date of Hearing : 10th September 2007 Date of Handing Down Decision : 12th September 2007 ------------------------ DECISION ------------------------ I. Introduction (a) Plaintiff’s claim 1.The Plaintiff claimed that the 1st and 2nd Defendants and other associate companies were engaged in the business of promoting and selling cosmetic and health products (“Products”) through the recruitment of members with different incentive plans at various levels. Interested parties had to first join as members of a club known as “Skin Club” (“Club”). 2.Relying on representations by Madam Lee How Kom (“Madam Lee”) who was at the material time a director and majority shareholder or otherwise in control of the 1st and 2nd Defendants, and supplemented and/or supported by information contained in various pamphlets and plans, the Plaintiff entered into an agreement to become a member of the Club (“Agreement”). 3.Pursuant to the Agreement, in purported payment for the purchase of various Products and at the directions of Madam Lee who acted for and on behalf of the 2nd Defendant, the Plaintiff paid a total sum of HK$425,250.00 (“Sum”) to the 1st Defendant on divers dates between 22nd and 27th March 2001. 4.No Products were delivered and before any transaction was effected, the 1st and 2nd Defendants ceased business in/about April 2001 due to police intervention. In the circumstances, the Agreement was frustrated and the Plaintiff claimed for refund of the Sum. (b) Legal proceedings 5.The Plaintiff issued the Writ of Summons on 3rd January 2007. The 1st and 2nd Defendants did not file any notice of intention to defend. Default judgment was entered against them on 7th February 2007 for the Sum with interest and fixed costs (“Judgment”). 6.On 21st February 2007, Master C P Pang granted a Charging Order : Notice to Show Cause returnable before him on 23rd March 2007 (“Charging Order Nisi”). In the meantime, the 1st Defendant’s beneficial interest in Office Nos. 9 and 10 on the 6th Floor, Boss Commercial Centre, No.28 Ferry Street, Kowloon (“Offices 609 and 610”) was to stand charged with payment of the Sum with interest and fixed costs together with the costs of the application. 7.On 22nd March 2007, the 1st Defendant by its solicitors issued a summons seeking inter alia to (a) set aside the Judgment against the 1st Defendant for irregularity on the ground that the Writ of Summons “was not duly and effectively served on the 1st Defendant”, (b) alternatively, if the Judgment were a regular judgment, set aside the Judgment against the 1st Defendant on the ground that the 1st Defendant had a good defence to the Plaintiff’s claim, (c) discharge and vacate the Charging Order Nisi, and (d) grant liberty to the 1st Defendant to give notice of intention to defend and/or file/serve its Defence (“Summons”). 8.On 23rd March 2007, Master C P Pang ordered inter alia there be a stay of execution of the Judgment pending disposal of the Summons and adjourned the Plaintiff’s application to make the Charging Order Nisi absolute sine die with liberty to restore. 9.The 1st Defendant filed 2 affirmations of Madam Lee dated 21st March and 30th April 2007 in support of the Summons. The Plaintiff filed his affirmation and the affirmation of Mr Ma Kwan Lam (a legal executive of the Plaintiff’s solicitors) both dated 13th April 2007 in opposition thereto. 10.With no objection from Mr Chan, leading counsel for the 1st Defendant, I granted leave to the Plaintiff to file/serve and to rely on the affirmation of Wong King Fai dated 4th September 2007 for the purpose of the Summons. (c) Law 11.At the hearing before me, Mr Chan conceded the Writ of Summons had been duly served on the 1st Defendant and the Judgment was a regular judgment. 12.Since the Judgment is a regular judgment, the 1st Defendant carried the burden of showing a meritorious defence with a real prospect of success or which carried some degree of conviction (Premier Fashion Wears Ltd v Lee Hing Chung [1994] 1 HKC 213, 219). Godfrey JA said at pp.219-220 that “[it] seems to me that unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on fact, he cannot have shown that he has a real prospect of success.” (see also Tong Yi Sang & anor v Fung Law & Ng & ors [1993] 2 HKC 665, 671-672). Kaplan J in Tong Yi Sang (supra) went on to say as follows :
13.This required the court to form some provisional view of the probable outcome of the action. Where the outcome depended on whose evidence was likely to be accepted, the appropriate test for determining whether the defendant had a real prospect of success was to ask whether the defence “could well be established” at trial or whether the defence witnesses could well be believed at trial (Guangdong International Trust and Investment Corp Hong Kong (Holdings) Ltd v Yuet Wah (Hong Kong) Wah Fat Ltd & anor [1997] 2 HKC 696, Morigood Development Ltd (supra) and L & M Specialist Construction Ltd v Wo Hing Construction Co Ltd [2000] 3 HKLRD 262). 14.There are other considerations which a court must consider in deciding whether or not to set aside a default judgment, such as the reason why default judgment was allowed to occur in the first place, any delay in setting aside and any consequent prejudice caused to the plaintiff. The court’s approach was to conduct a balancing exercise of all relevant factors (see Morigood Development Ltd (supra), Young Bing Ching (deceased) v Chow Yung Fong & another [2001] 2 HKLRD 394, and Chekiang First Bank Limited v Ng Chun Hing Benjamin HCA3473/2000, Ma J (as he then was) (unreported, 12th December 2001) at para.13). 15.But as Ma J (as he then was) pointed out in para.14 of the judgment in Chekiang First Bank Limited (supra), the critical factor and starting point are the merits of the defence. If the defence has no real prospects of success, there is no point in setting aside the same (see also Premier Fashion Wares Ltd (supra)). II. Undisputed facts 16.For the purpose of the Summons, the following assertions in the affidavit evidence are undisputed :
III. 1st Defendant’s case 17.The 1st Defendant’s defence is that (a) the 1st and 2nd Defendants were separate legal entities and not associate companies, and (b) the 2nd and not the 1st Defendant was the contracting party with the Plaintiff in respect of the transaction for which the Plaintiff paid the Sum to the 1st Defendant. 18.In respect of (a), Madam Lee claimed the 1st and 2nd Defendants and TRDL were separate legal entities. At the material time the 1st Defendant was in the business of supplying, distributing, wholesaling and retailing the Products whilst the 2nd Defendant and TRDL were engaged in separate business. Further, the daily operation, administration and management of the 1st Defendant was/is the responsibility of Madam Chiu and some senior staff of the 1st Defendant whilst Madam Lee focused on the business of the 2nd Defendant “and participated in the business affairs of the 1st Defendant”. 19.In respect of (b), the Plaintiff, a customer of the 1st Defendant, became acquainted with Madam Lee as he used to attend the 1st Defendant’s shop for purchasing the Products. Since TRDL and/or the 2nd Defendant did not have credit card payment service (“Service”), they would normally borrow and use the 1st Defendant’s Service maintained with Citibank when participants or distributors wanted to pay for “their plans” by credit card. Thereafter the 1st Defendant would transfer the payments received back to TRDL and/or the 2nd Defendant “according to the product pick up forms submitted by the participants or distributors”. But the 1st Defendant did not have any business relationship with TRDL and/or the 2nd Defendant other than the Service. 20.Madam Lee claimed the Plaintiff’s Letter and Pick Up Forms showed that in March/April 2001 the Plaintiff used the Service to effect payment of the sums of HK$70,000.00, HK$60,750.00 and HK$364,500.00. The latter 2 sums of HK$60,750.00 and HK$364,500.00 comprised the Sum. Madam Lee claimed the 2nd Defendant requested the Plaintiff to pay (and he paid) such sums through the 1st Defendant’s Service, so the Plaintiff well knew the payments for the Products was made to the 2nd Defendant. Madam Lee verily believed that the 2nd Defendant’s staff would have informed the Plaintiff that the 1st Defendant only acted as agent for the 2nd Defendant if he wished to make payments by credit card. 21.Madam Lee claimed that “[as] regards the Plaintiff’s aforesaid credit card payments, the 1st Defendant had already transferred back the same to the 2nd Defendant”. After such payments, the Plaintiff got the Products from the 2nd Defendant which were stored at the 2nd Defendant’s warehouse upon the Plaintiff’s request. As far as Madam Lee knew, it was the Plaintiff who refused to take delivery of the Products from the 2nd Defendant, but the Products were still at the warehouse for his collection. 22.Madam Lee said she did not (a) ask the Plaintiff to effect payment directly to the 1st Defendant, (b) tell the Plaintiff it was not necessary for him to take away the merchandise, or (c) personally inform the Plaintiff the 2nd Defendant did not have the Service. She said the 1st Defendant had over 20,000 members, so she was not required to and it was impossible for her to have direct contact with or be involved in the sale of the 1st Defendant’s Products to customers. She claimed the allegation that she kept the Plaintiff informed from time to time was nonsense. 23.Madam Lee also denied she gave the Plaintiff any promise that his investment money would be refunded since such decision rested with the board of directors of the 2nd Defendant. 24.Madam Lee admitted that in early May 2001 she and others were arrested by the police, but she was unconditionally released in/about June 2001. In/about July 2006 she was re-arrested and prosecuted for an offence of conspiracy to defraud (“Criminal Case”) in relation to the 2nd and not the 1st Defendant. Mr Yip Tsang Ming Alex (“Mr Yip”), the Plaintiff’s brother-in-law, was one of the defendants in the Criminal Case. The trial was scheduled to take place in the Court of First Instance in mid-November 2007. IV.Plaintiff’s case 25.According to paragraphs 26(f) and (h) of the written submissions of Ms Yiu, counsel for the Plaintiff, the Plaintiff’s case was that the underlying contract for which he paid the Sum to the 1st Defendant was made between the Plaintiff and the 1st Defendant. On Madam Lee’s representation that the 1st Defendant might “(as a member of D1)” participate in an investment plan administered by the 2nd Defendant, “it has been agreed by the parties that when P becomes a member of D1, he is entitled to participate in various investment plans; the subsequent participation of investment plans are circumstantial evidence which supports the existence of this contract”. 26.Since 1989 the Plaintiff worked in the banking industry as account manager of Dao Heng Bank Limited (now known as DBS Bank Limited) and branch manager of International Bank of Asia Limited (now known as Fubon Bank). In October 2001 he ceased working in the banking sector and started his own business as a financial consultant. 27.When the Plaintiff worked as an account or branch manager, he had to solicit business and expand his customer base for selling various banking products (including credit card products). In/about April 1999, the Plaintiff came to know Madam Lee through Mr Yip who was then working as a lecturer on sales techniques and skills for Madam Lee. The Plaintiff became aware that the core business of the 1st Defendant was the sale of the Products directly to members under various plans administered by the 1st Defendant as per various pamphlets which introduced such plans. 28.Soon afterwards Madam Lee invited the Plaintiff to join an investment plan for the purchase of certain Products which guaranteed total return of HK$21,390.00 on an investment of HK$3,450.00. Attracted by the high yield, the Plaintiff joined the 1st Defendant as a member, participated in such plan, placed orders for the Products and paid his share for participation in such plan. But before he joined such plan, he asked Madam Lee whether such plan was lawful. Madam Lee assured him there was no problem because they had sought professional advice from chartered accountant, actuary and leading counsel. 29.In/about March 2001, Madam Lee told the Plaintiff she would set up the 2nd Defendant and introduce another investment plan for purchasing the Products which guaranteed total return of HK$21,390.00 at different stages with other bonus points on an initial investment element of HK$4,300.00 (or HK$4,050.00 after discount). 30.The Plaintiff claimed “[he] was not aware that the 2nd Defendant did not have credit card payment service”. When Madam Lee introduced him to the investment plan administered by the 2nd Defendant, she requested him to effect payment directly to the 1st Defendant, but did not inform him the 1st Defendant only acted as agent to provide the Service for the 2nd Defendant. Madam Lee also told him the reason for setting up different companies was for administrative and calculation convenience in administering different investment plans with different incentives and bonus points. She also told the Plaintiff it was not necessary for him to take away the merchandise in order to participate in the investment plans. 31.The Plaintiff did not know the relationship amongst Madam Lee, Madam Chiu, Mr Fong and Mr Tsui except that (to the best of her knowledge) Madam Chiu and Mr Lee are respectively the daughter and younger brother of Madam Lee. Given Madam Lee’s representations to the Plaintiff and the corporate particulars in the company search records of the Plaintiff and the 1st Defendant, the Plaintiff disagreed that (a) Madam Lee was not in control of the 1st Defendant or (b) the 1st and 2nd Defendants were not associate companies. 32.To the best of the Plaintiff’s knowledge, the business of the 1st and 2nd Defendants including their associate companies were suspended in/about May 2001 when the police intervened and searched the office premises of both defendants. The Plaintiff was shocked by the police intervention because Madam Lee had assured him the investment plans administered by the 1st and 2nd Defendants were legal. He telephoned Madam Lee from time to time to make enquiries of the situation. Each time Madam Lee assured him she had already instructed leading counsel to represent her and her companies, and once the injunction freezing company assets were discharged she would refund to him the investment sum which he had paid so far. 33.In December 2006, the Plaintiff discovered from the News Report that Madam Lee, Madam Chiu, Mr Lee and Mr Yip were charged with conspiracy to defraud. According to the News Report, committal proceedings for transfer of the Criminal Case to the Court of First Instance would have been held on 25th August 2006, but the Plaintiff had no idea as to its current status. 34.The Plaintiff then sought legal advice. Upon advice that his claim against the 1st and 2nd Defendants would become statute-barred after 6 years, he instructed his solicitors to issue demand letters to the 1st and 2nd Defendants on 14th December 2006 and to commence the present proceedings. V. Discussion 35.It is important to bear in mind that the Plaintiff’s pleaded case is one based on contract, namely, (a) pursuant to the Agreement and Madam Lee’s representations, he purchased various Products for which he paid the Sum, (b) no Products were delivered, and (c) the Agreement was frustrated and the Sum should be refunded. Such pleaded cause of action does not involve any allegation of fraudulent pyramid-selling schemes (see paragraph 53(a) below). Indeed, the Plaintiff did not plead any particulars of Madam Lee’s representations let alone assert fraud (which must be specifically pleaded) in the Statement of Claim. 36.Ms Yiu argued that the relevant contract was the Agreement between the Plaintiff and the 1st Defendant whereby the Plaintiff agreed to become a member of the Club. She submitted that on the affidavit evidence only the 1st Defendant had a system of membership. 37.The crux of the contention between the parties is the next limb of Ms Yiu’s submission, namely, the Agreement was the umbrella contract under which the Plaintiff became entitled to participate in various investment plans, so that his subsequent participation in such plans were merely “circumstantial evidence which supports the existence of the contract”. In short, the suggestion was that the true contract was the Agreement between the Plaintiff and the 1st Defendant, and the subsequent purchases of Products by the Plaintiff under the investment plans were only evidence of the umbrella Agreement and not separate contracts between the Plaintiff and the 1st/2nd Defendants. 38.In such circumstances, one is left to wonder the basis of the Plaintiff’s contractual cause of action against the 2nd Defendant when, according to the Plaintiff, it is claimed that the umbrella Agreement was made with the 1st and not the 2nd Defendant, the payment of the Sum was made to the 1st Defendant, and the investment plan administered by the 2nd Defendant was not a separate contract but merely “circumstantial evidence which supports the existence of [the Agreement with the 1st Defendant]”. Yet Judgment for the Sum was entered against the 2nd Defendant on the pleaded contractual cause of action presumably on a joint and several basis with the 1st Defendant. No satisfactory explanation has been put forward. 39.Although Madam Lee’s affirmations did not deny the Plaintiff’s allegation that he became a member of the Club and indeed she admitted he used to attend the 1st Defendant’s shop for purchasing the Products, it is the 1st Defendant’s contention that in respect of the subject transaction for which the Plaintiff paid the Sum the true contract was between the Plaintiff and the 2nd Defendant with the 1st Defendant merely providing (to the knowledge of the Plaintiff) the Service. 40.Having carefully considered the affidavit evidence set out in Parts II to IV above, I find it is not possible to form any provisional view as to the outcome as it depends largely on whether the Plaintiff’s or Madam Lee’s evidence is likely to be accepted. On the analysis below, I find the defence raised by the 1st Defendant could well be established at trial. 41.Both Mr Chan and Ms Yiu urged me to consider the contemporaneous documents, ie Pick Up Forms and the Plaintiff’s Letter. The Plaintiff did not challenge the authenticity of such documents. Indeed, he did not offer any explanation or clarification in respect of these documents although they were exhibited to Madam Lee’s 1st affirmation. 42.Ms Yiu pointed out that the Plaintiff’s membership number was quoted on the Pick Up Forms. “If D1 is no longer a “contracting party” for the various “investment plans”, there is no need to quote the membership number”. 43.On the other hand, Mr Chan strongly emphasised that the Pick Up Forms were all issued in the name of the 2nd Defendant with no reference to the 1st Defendant at all. According to the Plaintiff, he knew that the 2nd Defendant was setting up another investment plan (probably Plan C as noted at the bottom of the Pick Up Forms in contra-distinction to Plans A and B referred in the pamphlets disclosed by the Plaintiff) for purchasing the Products with guaranteed return at different stages and bonus points. 44.In my view, the presence of the membership number on the Pick Up Forms is insufficient to exclude the real possibility that irrespective of the umbrella Agreement there might have been separate contracts for the sale and purchase of the Products between the Plaintiff and the 1st Defendant or between the Plaintiff and the 2nd Defendant depending on which company was the administrator of the relevant investment plan. 45.Ms Yiu argued the fact that the Pick Up Forms were issued by the 2nd Defendant did not mean the 1st Defendant was not a party to the contract. She premised her submission on the ground that the subject transaction was not a simple case of sale and purchase of the Products and that the operations of the 1st and 2nd Defendants were shams and facades to cover up what were usually described as pyramid selling schemes (see paragraph 53(a) below). However, as Ms Yiu accepted, these matters were not part of the Plaintiff’s pleaded case of a contractual cause of action. 46.I note 3 further matters. First, the Plaintiff by paragraph 5 of the Statement of Claim drew a distinction between the 1st and 2nd Defendants, ie payment of the Sum “to the 1st Defendant” and directions given by Madam Lee “acting for and on behalf of the 2nd Defendant”. There was no suggestion in the pleadings that the 1st Defendant was the alter ego of the 2nd Defendant (see paragraph 53(a) below). Instead, the Plaintiff regarded the 1st and 2nd Defendants as associate companies engaged in the business of promoting and selling the Products. 47.Secondly, the Plaintiff in the Statement of Claim claimed that in persuading him to enter into the subject transaction for which he paid the Sum to the 1st Defendant, Madam Lee gave directions not on behalf of the 1st Defendant but on behalf of the 2nd Defendant. 48.Thirdly, the Plaintiff described the 1st Defendant in the Plaintiff’s Letter as the “merchant” vis-à-vis Orix Asia Limited that provided the Service. He went on to say that he paid a deposit “for the purchase of goods provided by …… [the 2nd Defendant]” and “[since the 2nd Defendant]” did not have the Service “they” (meaning the 2nd Defendant) requested the Plaintiff to use the Service of the 1st Defendant. It is clearly arguable that the Plaintiff’s Letter on its face drew a distinction between the purchase of goods from the 2nd Defendant and the Service provided by the 1st Defendant at the request of the 2nd Defendant. 49.As regards the 1st Defendant’s allegation that its role was merely to provide the Service, the Plaintiff stated in his affirmation that he was not aware that the 2nd Defendant did not have the Service. I accept that this is contradicted by his statements in the Plaintiff’s Letter and he did not condescend to offer any explanation. Mr Chan suggested there could be no stronger evidence of the unreliability of the Plaintiff’s assertions bearing in mind that he had been in the banking and financial field since 1989 and was not an unsophisticated layman. In light of the contents of the Plaintiff’s Letter, I disagree with Ms Yiu’s submission that the 1st Defendant only made a bald assertion that it merely collected monies as agent for the 2nd Defendant. 50.In relation to the purchased Products, the Statement of Claim averred “[there] was no delivery of any of the products”. This does not sit well with the Pick Up Forms which required the Plaintiff to pick up the Products (“提貨”) from the 2nd Defendant instead of requiring the 1st and/or 2nd Defendants to deliver the Products to the Plaintiff. Interestingly, the Plaintiff in his affirmation said Madam Lee told him it was not necessary for him to take away the merchandise in order to participate in the investment plan. In the circumstances, even on the Plaintiff’s case, one is uncertain whether (a) the 1st and/or 2nd Defendants failed to deliver the Products or (b) whether the Products were actually available with the 2nd Defendant but the Plaintiff did not take delivery of the same in light of Madam Lee’s representation. I cannot say at this stage that the 1st Defendant’s case that it was the Plaintiff who failed to take delivery of the Products is without merit. 51.It is, however, true that the 1st Defendant did not provide any documentary evidence to support Madam Lee’s claim that it had paid the Sum back to the 2nd Defendant. But in light of the aforesaid analysis and bearing in mind that the Plaintiff’s pleaded cause of action is not based on money had and received (see paragraph 53(b) below), I do not consider this sufficiently shows there is no meritorious defence. 52.I have considered the whole circumstances relevant to the application and find that the 1st Defendant has established a meritorious defence that has a real prospect of success. V. Plaintiff’s other arguments 53.Ms Yiu raised 2 further arguments :
54.Ms Yiu conceded that the above 2 arguments were alternatives to the Plaintiff’s pleaded cause of action and not pleaded in the Statement of Claim. She submitted that since a default judgment was not a judgment on the merits of the Plaintiff’s pleaded claim, it was open to the Plaintiff to raise further or alternative causes of action to oppose the Summons and the 1st Defendant was required to establish there were no meritorious defence against those further or alternative causes of action as well. 55.Ms Yiu did not cite any authority in support of the above proposition. I cannot accept such argument. In my view, when the Plaintiff obtained the Judgment, his cause of action as pleaded in the Statement of Claim against the 1st and 2nd Defendants merged in the Judgment. If he wished to rely on further or alternative causes of action, he would need to seek leave to amend the pleadings which might entail setting aside the Judgment. 56.In Lam Chi Fat v Liberty International Insurance [2002] 3 HKLRD 480, 488-489, Ma J (as he then was) said as follows in relation to the effect of a default judgment :
57. The aforesaid principles in Lam Chi Tat was approved on appeal ([2003] 2 HKLRD 119). Cheung JA confirmed at p.174 that “[by] making default in giving notice of intention to defend the defendant admits all the allegations in the statement of claim indorsed on the writ (Cribb v Freyberger [1919] WN 22) : see Hong Kong Civil Procedure 2002, Vol.1, p.125 para.13/0/10.” 58.I have referred both counsel to the judgment of Chung J in China Construction Realty Limited v Sino Business Services Proprietary Limited & others HCA1294/2005 (unreported, 2nd February 2007). In that case the learned judge referred to the Plaintiff’s pleaded case and concluded that the 5th defendant had established a meritorious defence for the purpose of the application for setting aside the default judgment. However, the plaintiff also put forward other matters not specifically raised either in its affidavit evidence or skeleton submissions. The learned judge disagreed with such arguments and said at para.49 as follows :
59.In the circumstances, I consider it unnecessary to consider the 2 further unpleaded arguments raised by Ms Yiu. VII. Discretion 60.The Plaintiff claimed that he would suffer substantial prejudice (ie a risk that the fruits of the Judgment against the 1st Defendant might be lost) if the Judgment against the 1st Defendant was set aside (“First Concern”). Ms Yiu further submitted that it was likely that the Plaintiff would not recover any compensation from the 2nd Defendant, Madam Lee and other parties (“Second Concern”). 61.But having come to the view that the 1st Defendant has established a meritorious defence with a real prospect of success, I do not consider the First Concern justifies not setting aside the Judgment against the 1st Defendant. I cannot see how the Second Concern is pertinent given that the Judgment against the 2nd Defendant has not been set aside and the Plaintiff had not alluded to any legal proceedings by him against Madam Lee and/or other parties. 62.For the avoidance of doubt, I have also considered all the circumstances including those referred to in paragraph 14 above, and do not find any matter that encouraged an exercise of discretion not to set aside the Judgment against the 1st Defendant. VIII. Term for setting Judgment aside 63.Ms Yiu submitted that even if I were minded to set aside the Judgment against the 1st Defendant, I should impose a condition requiring the 1st Defendant to pay the Sum into court. 64.The relevant principles can be found in the judgment of Ribeiro JA (as he then was) in L & M Specialist Construction Limited at pp.268-269. Whilst he agreed that Order 13 rule 9 of the Rules of the District Court made clear that the court had jurisdiction to impose appropriate terms for setting aside default judgment, “[most] of these [examples] involve terms requiring payment of the other party’s costs”. The learned judge referred to examples of conditions requiring money be brought into court in Richardson v Howlett (1892) 8 TLR 445 where the defendants appeared to play for time and the defence was shadowy (although in modern times a shadowy defence might not be sufficient for setting aside a default judgment) and City Construction Contracts (London) Ltd v Adan (unreported) The Times January 4, 1988 where it was said the imposition of such condition was “not to punish the defendant but to encourage the proper conduct of the litigation and to provide a measure of security for the plaintiff”. 65.The learned judge went on to say as follows :
66.The above principles were endorsed by Ma J (as he then was) in Dah Chong Hong (Engineering) Limited v Boldwin Construction Company Limited HCA1291/2002 (unreported, 11th October 2002) at paras.29-31. He went even further as follows : “I would venture to add that in most cases, a suitable order for costs will often be the only appropriate term to impose on a defendant.” 67.I respectfully agree with all of the above observations. Here, the “procedural infarction” was not substantial. A failure to promptly notify the Companies Registry of change of address of registered office is not such as to attract the stringent condition suggested. Further, notwithstanding Ms Yiu’s criticisms of the 1st Defendant’s case which I have carefully considered, I am not prepared to order that the 1st Defendant should be asked to pay money into court as a condition of setting aside the Judgment against the 1st Defendant. IX. Conclusion 68.In the circumstances, the Judgment insofar as it relates to the 1st Defendant is set aside unconditionally and the Charging Order Nisi is discharged. I also grant leave to the 1st Defendant to file Acknowledgment of Service within 7 days from the date hereof and to file and serve its Defence within 14 days thereafter. 69.After a half-hearted attempt to suggest otherwise, Mr Chan conceded that the 1st Defendant should bear the costs of the Summons. I therefore order that the 1st Defendant do pay the Plaintiff in any event costs of the Summons (including all costs reserved, if any) to be taxed if not agreed with certificate for counsel. In light of Mr Chan’s concession, such costs order is a final order.
Representation: Ms Elsie Yiu instructed by Messrs Tang Wong & Cheung for the Plaintiff. Mr Kenneth Chan leading Mr Victor Cheung instructed by Messrs Simon Y C Yung & Co for the 1st Defendant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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