Lau Ying Sau Sailing and Another v. Wan Kwan Cheung

DCCJ 1405/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1405 OF 2010

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BETWEEN

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Coram : Deputy District Judge Grace Chan in Chambers (Open to the Public)

Date of Hearing : 22 February 2012

Date of Handing Down Decision: 7 March 2012

DECISION

INTRODUCTION

1.This is a water leakage case. At all material times, the Plaintiffs are the registered owners of the Ground and 1^st Floors of a village house of Lot No. 1044 in Demarcation District No. 5, Tai Po (“Plaintiffs’ Premises”). The Defendant is the registered owner of the 2^nd Floor and Main Roof of the same village house (“Defendant’s Premises”).

2.The Plaintiffs allege that water has seeped from the Defendant’s Premises into the 1^st Floor of the Plaintiffs’ Premises since about 2005. A writ of summons and statement of claim was issued on 22 April 2010 (collectively the “Writ”) and allegedly served on the Defendant at the 2^nd Floor of Defendant’s Premises (“Service Address”).  No notice of intention to defend was filed by the Defendant. The District Court, upon the application by the Plaintiffs by way of inter-partes summons dated 15 June 2010 (“Plaintiffs’ Summons”), entered judgment in favour of the Plaintiffs on 14 July 2010 by granting an injunction that the Defendant be restrained from causing or allowing water to seep from the Defendant’s Premises into the 1^st Floor of the Plaintiffs’ Premises and by ordering that the Defendant do carry out remedial work forthwith with damages of the Plaintiffs to be assessed (“Default Judgment”).

3.The Defendant now applies before me to set aside the Default Judgment on the grounds that:

(1) Service of the Writ was irregular because they were not served on the Defendant’s usual or last known address;

(2) The Defendant has a meritorious defence.

BRIEF FACTS & CHRONOLOGY

4.At all material times, the Plaintiffs and the Defendant are the respective registered owner(s) of their premises.

5.The Plaintiffs have been living in the Plaintiffs’ Premises since about 1990. The Defendant and her family lived in the Defendant’s Premises until about 1995 when they moved out. Since then, the Defendant’s Premises were rented out.

6.On 24 April 2010, a clerk of the Plaintiffs’ solicitors [Tsai Hin Fan] (“Process Server”) inserted the Writ contained in a sealed envelope and addressed to the Defendant into the letter box of the Service Address (“1^st Service”).

7.On 22 June 2010, the same Process Server inserted the Plaintiffs’ Summons, also said to be contained in a sealed envelope and addressed to the Defendant, into the letter box of the Service Address (“2^nd Service”).

8.On 8 July 2010, the same Process Server inserted the affirmation of the 2nd named Plaintiff made in support of the Plaintiffs’ Summons, contained in a sealed envelope and addressed to the Defendant, into the letter box of  the Service Address (“3^rd Service”).

9.On 14 July 2010, the Default Judgment was entered.

10.At the time of the 1^st to the 3^rd Service, the Plaintiffs knew that the Defendant did not reside at the Service Address and that it was rented out to one Mr. Wong Wing Nin (“Tenant”) since about 2005 up to now.

11.The Plaintiffs are aware of the Defendant’s mobile number at all material times. In fact, on numerous occasions between 2005 and February 2010, the Plaintiffs contacted the Defendant by calling at the Defendant’s mobile number to complain about the water leakage problem. However, the Plaintiffs did not call the Defendant at her mobile to make inquiry into or enquire with the Tenant (who, according to the 2nd named Plaintiff, is in good relationship with the Plaintiffs) of the current address of the Defendant before the Process Server attempted the 1^st to 3^rd Service.

12.On the other hand, it is not disputed that subsequent to the complaints of water leakage made by the Plaintiffs through telephone calls to the Defendant in 2005 and 2007, the Defendant engaged building contractors to do remedial work to the Defendant’s Premises in or about 2005, April 2009 and April 2010 respectively.

13.After the Default Judgment was entered, the Plaintiffs were unable to effect personal service of the same on the Defendant for almost 10 months. It was only in or about February 2011 that the Plaintiffs obtained hints from the Tenant about a vehicle alleged owned by the Defendant. A vehicle particulars search was thus conducted by the Plaintiffs’ solicitors on 1 March 2011. The search result shows that the Defendant’s residential address is at House 223B, Ting Kok Village, Shan Liu Road, Tai Po (“Residential Address”).  

APPLICALE LEGAL PRINCIPLES

14.Order 10 rule 1(2) of the Rules of the District Court provides inter alia that the writ for service on a defendant within the jurisdiction may be served by sending a copy of the writ by (1) registered post to the defendant at his usual or last known address, or (2) if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant.

15.It is established law that “usual or last known address” in Order 10 rule 1(2) should be read disjunctively, which means that a defendant may be served at either his “usual” or his “last known” address. The word “address” does not confine to a person’s residence, but essentially means a location where a person may be reached or where contact or communication in written form, such as letter, could be established.  A defendant may have a number of last known addresses as well as a number of usual addresses, but there is no need for the plaintiff to effect service of the originating process on all of such addresses. Proper service of the originating process on any one of the defendant’s last known addresses or any one of his usual addresses will suffice: The Hong Kong Mortgage Corporation Limited v Ching Kit Yu & anor HCMP 2226/2002, per Deputy High Court Judge To (as he then was).

16.On the other hand, Counsel for both sides agree that the legal principles on service and setting aside a default judgment summarised succinctly by HH Judge Thomas Au (as he then was) at para 30 of Ng Kwok On & Lam Man Lin v Rich Legend Limited & Others, DCCJ 3474/2006 apply to this case. Essentially, the real test for service is whether a writ is brought to the notice of a defendant and not whether it has been delivered to his usual or last known address. If the service is irregular, a defendant is entitled to have default judgment set aside as of right without consideration of merits of his defence. If the judgment is a regular one, the court may set aside the judgment if a meritorious defence can be shown by the defendant.

WHETHER SERVICE WAS IRREGULAR

Submission from Both Parties

17.Ms Cheung, Counsel for the Defendant, submits to me that the Service Address is neither the usual nor last known address of the Defendant, for the reason that the Plaintiffs well knew that the Defendant did not live there since 1995 and that it was rented out to the Tenant at the material times. Yet, the Plaintiffs made no attempt to locate the Defendant’s current address by calling the Defendant (who was always reachable by phone so far) or by timely enquiry with the Tenant before the Writ was issued or served. Ms Cheung says that the Plaintiffs simply failed to prove that the Writ was brought to the notice of the Defendant. She refers me to: Philip Securities (HK) Ltd v Lam Chi Bin Stanley [2002] 1 HKC 432; Ng Kwok On & Lam Man Lin v Rich Legend Limited & Others (supra); Incorporated Owners of May Moon House v Lai Mun Han Rossetti, DCCJ 1269/2005.

18.She also points out to me that in the affirmation of the 2nd named Plaintiff dated 5 July 2010 and made in support of the Plaintiffs’ Summons (“Plaintiffs’ 1^st Affirmation”), the 2^nd named Plaintiff did not disclose to the court the aforesaid fact that the Defendant did not live at and had rented out the Service Address since 1995. The Plaintiffs’ 1^st Affirmation only deposed that the Defendant was the owner of the Defendant’s Premises. Even worse, in the affirmation of the Process Server dated 3 June 2011 (“Process Server’s 1^st Affirmation”), it was deposed that the Service Address was the “usual place of abode of the said Defendant in Hong Kong”. The overall picture painted by the Plaintiffs to the court, submitted by Ms Cheung, created a misleading impression that the Defendant lived at the Service Address and thus there was no discussion or query from the court on the service of the Writ at the time when Default Judgment was entered. Ms Cheung says that the Default Judgment was not obtained under the good faith of the Plaintiffs in the circumstances.

19.Mr Lam, Counsel for the Plaintiffs, concedes that the Defendant’s Premises was not the usual address of the Defendant, but it was the address last known to the Plaintiffs (See: Guangdong International Trust & Investment Corporation Hong Kong (Holdings) Ltd v Yuet Wah (Hong Kong) Wah Fat Ltd & Another [1997] HKLRD 489). He stresses that the Defendant did not inform the Plaintiffs of the Residential Address or other current address when the Defendant moved out of the Defendant’s Premises in 1995. It mattered not that with further inquiry, such as the inquiry made by the Plaintiffs to the Tenant in or about February 2011 and subsequently the Residential Address was located, a different address might have been discovered (See: Law Kwok Hung v Tse Ping Man & Anor [1994] 4 HKC 397). Mr Lam goes further to say that the Plaintiffs have no obligation to make any further investigation even if it would have been prudent and advisable to do so: Hong Kong Civil Procedure 2012, para 10/1/12.

20.The Defendant has filed an affirmation made by the Tenant deposing that no court documents, including the Writ and the Plaintiffs’ Summons had been served to the Service Address (“Tenant’s Affirmation”). But it is Mr Lam’s submission that I should pay no heed to the Tenant’s Affirmation because his credibility is in issue: he did not want the repair work to take place and to interrupt his daily life.

21.Above all, Mr Lam argues that the Writ must have come to the notice of the Defendant, as it is reasonable to believe that the Defendant (as landlord) and the Tenant would have communication from time to time or as whenever necessary. Further, if the Writ had not been brought to the Defendant’s attention, it would be too much of a co-incidence that the Defendant engaged a building contractor to repair the water pipe of the toilet inside the Defendant’s Premises in the same month when the Writ was issued and served, ie April 2010.

Discussion

22.I should begin by stating that Ms Cheung’s submission on the Process Server’s 1^st Affirmation does carry some substance. It is admitted by the Plaintiffs that they knew the Defendant had moved out from and rented out the Service Address since about 1995. It is thus clear to me that the Service Address (which the Defendant has moved out and rented out for more than 15 years) cannot be regarded in any respect as the “usual place of abode of the said Defendant in Hong Kong”. In this sense, what the Process Server had deposed in paragraph 1 of his 1^st Affirmation cannot be taken as correct.

23.Further, the plain fact that the Defendant had moved out from and rented out the Defendant’s Premises since about 1995 was never disclosed in the Process Server’s and the Plaintiffs’ 1^st Affirmation when the Default Judgment was applied for and granted.  It was neither explicitly disclosed to the court in the 2^nd affirmation of the 2^nd named Plaintiff (“Plaintiffs’ 2^nd Affirmation”) when the Plaintiffs filed another summons for enforcement of the Default Judgment on 2 September 2011 (almost 14 months after the Default Judgment). The Plaintiffs only disclosed this plain fact to the court for the first time in the 3^rd affirmation of the 2^nd named Plaintiff dated 16 December 2011 (“Plaintiffs’ 3^rd Affirmation”) after the Defendant filed this summons of setting aside the Default Judgment and her affirmation in support (deposing that she has not lived at the Service Address since 1995).

24.Essentially, what the Plaintiffs applied for in the Default Judgment was an injunction order against the Defendant. It is trite to say that due to the severity of the relief that was sought, the importance of material disclosure (or non-disclosure) cannot be under-stressed. The Plaintiffs have a duty to disclose, when they applied for the Default Judgment, the plain fact that the Defendant did not live at and had rented out the Service Address; yet they failed to discharge this duty at the material time.  The Process Server’s and the Plaintiffs’ 1^st Affirmation together did give a misleading impression that the Defendant lived at the Service Address at the time of the 1^st and 2^nd Service.

25.It is my view that on the basis of non-disclosure as well as the incorrect deposition of the Process Server’s 1^st Affirmation alone, the Default Judgment cannot be said as a regular one and should be set aside.

26.If I was wrong on the above analysis, then are the Plaintiffs correct in saying that the Service Address was the last known address of the Defendant for service purpose?

27.Mr Lam in his submission relies quite heavily on The Hong Kong Mortgage Corporation Limited(supra). In particular, he draws my attention to para 18 therein in which Deputy High Court Judge To (as he then was) said that even assuming the defendants in his case did not live at the property in question (at Sui Wo Court) and that the property was rented out, the tenant would bring the process served to the defendants’ notice. In my view, I do not think his lordship was propounding a general legal guideline in the said para 18. In any event, it was never the facts of The Hong Kong Mortgage Corporation Limited(supra) that the property in question at Sui Wo Court was rented out and thus his lordship was not possibly making a ruling on the same.

28.On the other hand, I draw Mr Lam’s attention to the often quoted paras 10 to 13 of The Hong Kong Mortgage Corporation Limited(supra), in particular para 12 where his lordship had this to say:

“….Hence, I hold the words ‘last known address’ mean the address last known to the plaintiff from whatever source and a defendant may have a number of addresses last known to the plaintiff, depending on the circumstances and the diligence of the plaintiff’s inquiries.” (emphasis added)

29.I invited Mr Lam to make submission on whether a plaintiff has the duty to make diligent inquiry into a defendant’s last known address; and if so, whether the Plaintiffs of our case had fulfilled such duty. In response, Mr Lam submits that the Plaintiffs already knew the Defendant’s last known address from a source, ie a land search into the Service Address; there was thus no need for the Plaintiffs to carry out other diligent inquiry into any further last known address(es) of the Defendant.

30.If I understand Mr Lam correctly, he is not disputing that a plaintiff has a duty to conduct diligent inquiry into a defendant’s last known address. That is also my reading of para 12 of his lordship’s judgment in The Hong Kong Mortgage Corporation Limited(supra). However, I do not see that the Plaintiffs had fulfilled such duty of diligent inquiry. To conduct a land search into an address, which is already known to the Plaintiffs as an address owned but rented out by the Defendant for more than 15 years, cannot possibly be said as fulfilling the duty of diligent inquiry. At the very least, before the Writ and/or the Plaintiff’s Summons were issued, the Plaintiffs should have enquired with the Tenant, if not the Defendant herself, for the Defendant’s address or for any clue or hint thereon.  

31.It is not my view that the Plaintiffs should be required to carry out perfect inquiry into the Defendant’s address. However, without any diligent inquiry into the Defendant’s address on the part of the Plaintiffs, the Service Address cannot be taken in any respect as the address of the Defendant last known to the Plaintiffs.

32.On the other hand, even if it was assumed (just assuming) that the Service Address was the last known address of the Defendant, it is agreed by both Counsel that the real test of service is whether the Writ was brought to the attention of the Defendant. I find that it was not on the following grounds.

33.First, in Hong Kong Civil Procedure 2012, para 10/1/13, it is stated clearly that:

“Again, the writ must be brought to the attention of the defendant. Thus where a defendant was not living at the address where it was inserted into the letter box at that address, it was not brought to the defendant’s notice and the service was irregular (Sinokawa Investment (Holdings) Ltd v Li Chun [2006] H.K.L.D.R. 441, CFI)” (emphasis added)

34.Secondly, the Tenant’s Affirmation deposed that it never occurred to him that the Writ and the Plaintiffs’ Summons were among the mails collected from the letter box of the Service Address. I have no reasonable ground to doubt this piece of affidavit evidence of the Tenant. Mr Lam’s submission that the Tenant had his own hidden agenda to conceal the truth is nothing more than wild guess of the Plaintiffs. It also does not sit well with the fact that it was the Tenant who gave hint to the Plaintiffs of the Residential Address of the Defendant. Since the Tenant did not find the Writ and the Plaintiffs’ Summons from the mails collected from the letter box of the Service Address, it follows logically that the Tenant had nothing to bring to the attention of the Defendant. It further follows that the Writ and the Plaintiffs’ Summons would not have been brought to the attention of the Defendant.

35.On the other hand, I find it rather strange that given the good relationship between the Plaintiffs and the Tenant, the Plaintiffs did not (1) alert the Tenant before the 1^st and 2^nd Service that the Writ and the Plaintiffs’ Summons would be inserted into the letter box and request/ remind the Tenant to pass the same to the Defendant; and/or (2) make any enquiry with the Tenant after the 1^st and 2^nd Service if he had received the Writ and/or the Plaintiffs’ Summons and had passed the same to the Defendant. It is pertinent to point out that no information or evidence on these points is eminent in various affirmations filed by the Plaintiffs so far.

36.Due to the matters aforesaid, I find that the service of the Writ and/or the Plaintiffs’ Summons is irregular and the Default Judgment should be set aside.

WHETHER DEFENCE HAS MERITS

37.If I was wrong on the above finding, I would proceed to consider whether the Defendant has shown a meritorious defence. But I shall be very brief here.

38.The main defence raised by the Defendant in her 2 affirmations is two-folds. First, the Plaintiffs have not submitted any expert evidence on the source of water leakage and the Defendant puts the Plaintiffs to strict proof that the source actually originated from the Defendant’s Premises. Secondly, the origin of the water leakage may be the common parts such as the external wall.

39.The 2^nd named Plaintiff has indentified in the Plaintiffs’ 3^rd Affirmation different areas allegedly affected by the water leakage problem. For her complaint made in 2005, no specific area within the Plaintiffs’ Premises was identified to be affected by water leakage problem. For her complaint made in 2007, she said the following areas were affected:

(1) Water dripping from the canopy at the roof of the Defendant’s Premises onto the ground floor of the Plaintiffs’ Premises;

(2) Water running down to the common staircase;

(3) Water was found at the ceiling of the entrance and the living room to the 1^st Floor of the Plaintiffs’ Premises;

(4) Water was found running at the wall corner of her son’s bedroom when it rained.

40.Mr Lam points out that upon receiving the complaints of water leakage from the Plaintiffs, the Defendant carried out repair work to the Defendant’s Premises on 3 separate occasions in 2005, 2009 and 2010 respectively. This is clear evidence of an admission of liability on her part.

41.Ms Cheung does not agree. She refers me to the fact that after the Defendant had repaired the floor slab of the roof in 2005, water was still found running at the corner of the wall inside the bedroom of the Plaintiffs’ son whenever it rained. This shows that the source of leakage may be the cracks of the external wall. She also points out that the repair work done by the Defendant in 2009 to the canopy gutter system was to address to the water-dripping problem outside the Ground Floor of the Plaintiffs’ Premises, which does not fall within the definition of affected area of the Plaintiffs’ Premises in the Writ.

42.I do not think one would seriously dispute that water leakage is a complicated problem and it is not always easy to identify the source. Yet, there is no presumption in law that water found at the ceiling of the lower floor must originate from the upper floor (See: 張秀玲及吳炳漢對鄭禮莊 CACV268/98). Therefore, water, if any, found at the ceiling of the 1^st Floor of the Plaintiffs’ Premises cannot by itself be taken as a conclusive proof that water must have originated from the Defendant’s Premises.

43.The fact that water was found running at the wall corner of the Plaintiffs’ son’s bedroom only when it rained is, to some extent, incompatible to the fact that the Defendant’s Premises (and thus the water system therein) has been in occupation and use all the time by the Tenant since 2005.

44.It is true that the Defendant said that the 3 repair works were done in response to the Plaintiffs’ complaint of water leakage problem. But the repair works done in 2005, 2009 and 2010 by themselves are not conclusive evidence that water must have originated from the Defendant’s Premises at the time when the Writ was issued. The Defendant’s Premises may be the source of leakage or it may not. It would be too much of a broad brush approach to conclude that water must have seeped from the Defendant’s Premises and an injunction order be granted by simply relying on the facts that some repair works were done by the Defendant at some stages.

45.In light of the above, I cannot say at this stage that there is no reasonable prospect that the intended defence of the Defendant would succeed and be accepted at trial. Therefore, even if (just assuming) the Default Judgment was a regular one, I would still have set it aside.

CONCLUSION

46.I therefore order that the Default Judgment be set aside and give unconditional leave to the Defendant to defend this action.

47.Further, I grant the following directions:

(1) the Defendant do file her Acknowledgment of Service within 7 days of the date hereof;

(2) the Defendant do file and serve her Defence within 21 days from the date hereof;

(3) the parties should comply with Order 25 rule 1 within 28 days from the date hereof to seek further directions for the management of the case.

48.I would also make a costs order nisi that the Plaintiffs are to (1) bear their own costs of signing the irregular Default Judgment, and (2) to pay the Defendant’s costs of this application, with certificate for Counsel, to be taxed if not agreed. If no application is made to vary the costs order nisi within 14 days from today, the said costs order nisi will be made absolute.

49.Both parties have requested for summary assessment of costs before me. The Defendant has in fact lodged and served her statement of costs before this hearing. I thus make the following additional directions in respect of the costs of this hearing:

(1) The Plaintiff do within 14 days from the date hereof lodge and serve a summary of objections;

(2) In lieu of agreement on the amount of costs between parties, the Defendant do within 28 days from the date of the costs order absolute fix a date with the Listing Clerk for summary assessment of costs to be heard before me in chambers (open to the public) with 30 minutes reserved.

50.The hearing bundle is to return to the Defendant for re-use after conclusion of the hearing on summary assessment of costs, if any. Only the content pages should be kept in the Court file for records purposes.

Mr Joseph S W Lam instructed by Messrs Rene Hout & Co for the Plaintiffs

Ms Karen W N Cheung instructed by Messrs Oliver C M Chan & Co for the Defendant