Wong King Fun v. Keywah International Ltd

CACV 7/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 7 OF 2009

(ON APPEAL FROM HCA NO. 2823 OF 2006)

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Before: Hon Rogers VP and Le Pichon JA in Court

Date of Hearing: 27 August 2009

Date of Judgment: 27 August 2009

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J U D G M E N T

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Hon Rogers VP:

1.This is an appeal from a judgment of Fung J given on 23 December last year, and that in turn was an appeal from a decision of Master Kwang given on 13 August of 2008.

2.By the Master’s decision, the Master had refused to set aside a judgment in default which had been obtained in respect of the Plaintiff’s claim in this case.  The judge dismissed the appeal.

3.Very briefly, the Plaintiff claims that loans were made to the Defendant company, of which her husband was a director and she was formerly the secretary of the company.  The loans were set out in paragraph 5 of the statement of claim and it was said that they were remittances on behalf of the company, so that the company’s obligation under a joint venture agreement in Harbin could be complied with.

4.The total claim is based upon the money advanced, namely RMB7,550,000 less a deduction of RMB100,000, for reasons which it is unnecessary to go into, plus the interest on that amount and it came to RMB8,555,188.14.

5.The writ in this case was issued on 21 December 2006.  It was served that day on the company’s registered office.  That registered office was not one which was used for conducting business by the Defendant because the Defendant was simply an investment company with comparatively few directors and shareholders, all save one other who lived in the Philippines.

6.When the service company that operated the registered office of the Defendant sent the writ to the Plaintiff’s husband, who was the director at the time responsible for the financial matters, he then sent copies of that by registered letter to the other directors.  Only one of those letters was returned, that was from Mr Hui, who has given evidence.  There is a question as to why it was returned.  One thing is clear: that Mr Hui says that he changed addresses, but his address in the company’s registry was not changed.

7.It was on the basis of that, that judgment was entered against the Defendant on 12 January 2007.

8.The first point that has been taken in this case on behalf of the Defendant is that that service should not be regarded as good service, and, as in the court below, Mr Tsui, who appeared on behalf of the Defendant, relies upon the case of Li Ngan Kwan v Gao Li Hui [2007] 4 HKLRD 592.  But the facts of that case were very different.  In that case, it had been arranged that any document that was served on the company would be sent straight back to the Plaintiff and so, not surprisingly, A Cheung J, when he gave judgment, said that that service should not be regarded as good.  One can understand that, because although the documents were sent to the company, if the only person who would receive them would be the Plaintiff because of an arrangement whereby he would get the documents back, that would not be really any intention for the company at its registered office to keep those documents.

9.Contrast that with this case, where the only place where proper service on the company could be effected would be the registered office.  Admittedly, most of the directors and shareholders were in the Philippines, but the affairs of the company had been arranged that that would be the registered office; there was no trick involved, because copies of the writ, after it had been properly served and Mr Choi, who was the company director who was in charge of it, had received it from the service company, were sent round to all the other directors.

10.So in those circumstances, I consider that there is no question but that there has been proper service and it cannot be said that there has been any unfairness or any trick in the matter, because steps were taken to bring this to the attention of all the other directors and shareholders.

11.Now, that having been done, it was not until some six months later on 18 July that the summons to set aside the judgment was taken out.

12.Having come to the conclusion that the service was good, the court is then faced with the question as to whether that judgment should be set aside.  The law is quite clear on that.  Since the service was good, the Defendant who wishes to set aside the judgment has to do better than showing that there is merely an arguable defence, but must show that there is a real prospect of success.

13.The Master considered the evidence which had been filed, the judge also did, and, in my view, the judge came to the right conclusion for the right reasons.  Although there are a number of issues which have been raised, the crucial question in this case is whether the Plaintiff had advanced the moneys herself and, to that extent, whether the directors themselves had provided the funds by which the Plaintiff had advanced the money; in this case, it seems to me that there is no question but that the money came from the Plaintiff, or at any rate, there is no substantial issue which has been raised upon which one can say that there is any real prospect of success in showing that the Plaintiff did not advance that money.

14.The only matter which has been raised is whether the other directors have also provided the money.  Mr Hui says that he did remit US$100,000 to the Plaintiff or her husband, but in respect of that, two matters arise.  First of all, it is disputed that any such payment was made in respect of this transaction.  The Plaintiffs say that that was a payment in respect of other dealings which Mr Hui had with Mr Choi.

15.Secondly, the matter came before the Master, the Master specifically asked the Defendant as to whether the Defendant wished to consider seeking an adjournment to adduce further evidence as to whether the other directors and shareholders had contributed to the money.  That invitation was refused.  So the Master drew the inference which, in my view, the Master was perfectly entitled to do, that they could provide no evidence that they had contributed to the funds which the Defendant company required in order to meet its obligations under the joint venture.

16.Then the matter goes before the judge and no attempt is made to file any such evidence.  It hardly needs to be said that the same thing happens in this court.

17.Given the length of time which has now expired since the writ was served and judgment was entered, it is simply the only inference which this court can draw that the other shareholders and directors did not provide any money to meet the Defendant’s obligations.  In those circumstances, it is not even speculation, in my view, that they did so; it is simply a matter which cannot be put forward at this stage.

18.In my view, there is really no defence which has been raised which could come anywhere close to being categorised as having any prospect of success.  In those circumstances, this appeal must be dismissed.

Hon Le Pichon JA:

19.I agree.

Mr Victor Dawes, instructed by Messrs Liu, Chan & Lam, for the Plaintiff/Respondent

Mr Raymond W N Tsui, instructed by Messrs Darin Leung & Partners, for the Defendant/Appellant