Lin Shuang Lai v. Lee Ying Tung Michael

DCCJ2523/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2523 OF 2009

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BETWEEN

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Decision

1.This is the Defendant’s appeal against the Order made by Master Clement Lee made on 11 September 2009.  On that day there was a 3 minute call-over hearing of a summons taken out by the Defendant on 4 September 2005, for the purpose of setting aside the Plaintiff’s judgment.  Master Lee adjourned the hearing of the Defendant’s summons to 23 October, 2009 for a 2^nd call-over hearing, and ordered the Defendant to pay under Order 2 Rule 3 of the Rules of the District Court (“RDC”) a sum of $200,000 into Court as security on or before 16 October, 2009; in default the Defendant’s summons was to be dismissed with cost.

2.The Plaintiff’s claim is for RMB750,000.  The Writ was issued on 27 May 2009.    On 23 July 2009, the Defendant took out a summons for an extension of time to file and serve his Defence.  On 30 July 2009, Master Lo made an “unless order” for filing the defence within 14 days from the date of the Order.  The deadline for doing so was therefore 13 August 2009.  But the Defendant did not file his defence on or before that day.  The Defendant only filed his defence on 14 August 2009.  Judgment was entered against the Defendant in default of defence.

3.The Defence Counsel submits that where the parties have only reached the pleading stage, as in the instant case, the assessment of the merits should not be brought in at all except where the court is able to say that the Defendant has “no real prospect of succeeding” – such would be possible only where the pleadings themselves, even if the matters therein are all taken to be true, would disclose no defence.  This is not the case here.  He argues that,

“By merely looking at the Statement of Claim and the Defence, one is not really able to tell the likely chance of success of one party or another.  At the very least, no one could say that the Defence filed is in such a state that it is liable to be struck out.”

4.Referring to the case of Chow Kai Sang v. Toi Samuel & Ors. [1996] 4 HKC 330, he submits: -

“Keith J. further held that the test of showing a real prospect of success by credible evidence applicable in a default judgment case was not applicable to an application for setting aside a judgment based on an ‘unless order’.”

But the Court in that case made a distinction between defaults by the plaintiff and default made by the default.  This is demonstrated by what it said at p. 338:-

“…… the principle that a party in default has to demonstrate by credible evidence that he has a real prospect of success has only been applied in the past to judgments entered in default against defendants.  Again, it is not without significance that the principle is discussed in the Supreme Court Practice in the commentary on O. 13 r. 9, which gives the court power to set aside or vary any judgment entered as a result of the defendant’s failure to give notice of intention to defend the action.  I am not convinced that the rationale for the rule applies with equal force to defaults by plaintiffs.  After all, save in the case of a plaintiff who failed to serve a statement of claim, the nature of the plaintiff’s claim is known, whereas the defence of the defendant who has not given notice of an intention to defend is not.”

(Underlines provided)

The Court in that case was dealing with a situation under which the Plaintiff failed to abide by an “unless order”.  This is different from the situation where a defendant failed to file a defence.  In this case, the Plaintiff obtained judgment because the Defendant failed to file a defence.

5.The test of showing a real prospect of success by creditable evidence still applies to judgments entered in default against defendants.  In China Dragon International Limited v. Pang Hong (HCA 1864/2005) the Court stated, at p. 9, that:-

“26.            In the Golden Tech case, the defendant failed to file a defence as ordered by an unless order.  Deputy Judge Poon held that the judgment entered in default was regular and the defendant needs to demonstrate a defence with a real prospect of success.  In the China International Water case, the unless order related to the serving of adequate further and better particulars of the defence, and I saw fit to distinguish the Golden Tech case on the facts.  In Chow Kai Sang v. Toi Samuel, the unless order also related to further and better particulars of pleading.  However, in the present case, the unless order related to the filing of defence as in the Golden Tech case, and with respect, I consider the ruling of Deputy Judge Poon as apposite.  If the judgment were simply entered in default of defence without any unless order, the defendant would need to show merits.  I cannot see that he should be in a better position where he was actually in breach of an unless order.”

(Underlines provided)

6.The burden is on the Defendant to show that he has a real prospect of success by credible evidence.  Has he done that?  That answer is “No”.  He has not filed any affirmation / affidavit to show the facts of his case.

7.The Defendant’s solicitor stated, in his affirmation dated 4 September 2009, that “I verily believe that the Defence disclose a real defence to the Plaintiff’s claim.”  That is only his comment or opinion on the nature of the defence.  There has been no affirmation made by the Defendant himself on the facts of his case based on which this Court could decide whether he has a real prospect of success.  The order made by Master Lee is correct.  Hence I dismiss the Defendant’s application. 

Costs

8.I make an order nisi for costs, to be made absolute in 14 days’ time, that the Defendant do pay costs of this application to the Plaintiff, to be taxed, if not agreed.

The Plaintiff:  represented by Mr. C. Au Young of M/S. Yuen & Partners, Solicitors.

The Defendant:   represented by Mr. Anthony P.W. Cheung, instructed by M/S. T.K. Cheng & Co., Solicitors.