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Chan Lap Shun v Cheng Shing And Another

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date15 November 2011
Subject MatterCivil Action
Judgement NumberDCCJ4449/2009
CourtDistrict Court (Hong Kong)
DCCJ4449/2009 CHAN LAP SHUN v. CHENG SHING AND ANOTHER

DCCJ 4449 / 2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4449 OF 2009

____________

BETWEEN
CHAN LAP SHUN formerly trading as
LAP SHUN PAO HONG		 Plaintiff

and
CHENG SHING and CHAN LAP WAH
both formerly trading as YIU WING TRADING CO.		 Defendants
____________

Coram: Deputy District Judge Rebecca Lee in Chambers

Date of Hearing: 19 October 2011

Date of Decision: 15 November 2011

____________

DECISION

____________

Background

1. By way of Writ of Summons issued on 13 October 2009 (“the WS”), the Plaintiff claims against the 1st named Defendant Cheng Shing (“D1”) and the 2nd named Defendant Chan Lap Wah (“D2”) both formerly trading as Yiu Wing Trading Co. (“the Firm”) for, inter alia, the sum of HK$850,000.00, being the amount of a cheque No.178703 drawn by the Defendants on the Hongkong and Shanghai Banking Corporation Limited dated 27 December 2003 and payable to the Plaintiff (“the Cheque”).

2. The Cheque was presented for payment on 29 April 2004 but was returned dishonoured for reason of “refer to drawer”. Notice of dishonour was given to the Defendants by the Plaintiff on 10 May 2004.

3. The Copies of the WS was said to have been served on both D1 and the D2 by way of inserting the same through the letterboxes of their respective usual and last known addresses in Hong Kong on 15 October 2009.

4. The usual and last known address of the D1 was said to be Flat C, 11th Floor, Kam Wah Building, 226 Cheung Sha Wan Road, Kowloon (“the Cheung Sha Wan Flat”).

5. The Copies of the WS were sealed with seal of the District Court of HKSAR and were accompanied by a prescribed form of Acknowledgement of Service and Form 16.

6. No Acknowledgement of Service was filed by neither D1 nor D2 within the prescribed time. The Plaintiff therefore proceeded to obtain judgment in default on 2 December 2009 (“the Judgment”).

7. Apparently unable to execute the Judgment in Hong Kong, the Plaintiff attempted to execute the Judgment in the PRC, where he believed both D1 and D2 were keeping their assets.

8. On 16 August 2011, Messrs. Winnie Leung & Co. filed Notice to Act for D1 in these proceedings.

9. On 19 August 2011, D1 issued an inter partes summons to set aside the Judgment against D1 (“the Setting Aside Summons”) together with D1’s affirmation in support of the Setting Aside Summons on the same day (“D1’s Affirmation).

10. D1’s case is that the Judgment was an irregular judgment. He also argued that he has a meritorious defence towards the Plaintiff’s claim.

11. The Plaintiff filed an affirmation dated 22 September 2011 to resist the Setting Aside Summons (“P’s Affirmation”). The Setting Aside Summons was scheduled to be heard on 19 October 2011.

12. At the eleventh hour, the Plaintiff agreed to have the Judgment set aside with costs to D1. At the same time, the Plaintiff also invited D1 to agree to an order to the effect that:

(a) the validity of the WS be extended to 26 October 2011 (the WS being expired on 13 October 2010); and

(b) service of the renewed WS on D1 be dispensed with.

13. Not surprisingly, D1 refused to consent to such proposal and the Plaintiff took out an inter partes summons pursuant to O.6, r.8 Rules of the District Court for the above relief (“the Present Summons”).

14. Mr. Cheung for D1 has, at the outset, made clear to me that he has no objection to deal with the Present Summons so long as this Court is prepared to hear the same.

15. An application to extend validity of a writ should be made ex parte: 6/8/8, Hong Kong Civil Procedure 2012 Vol.1 (“the White Book”). The procedure is that if the plaintiff got a favourable order after the ex parte hearing, he can then serve the writ within the extended period. The defendant may acknowledge service of the writ, give notice of his intention to defend, or apply to the court for the discharge of the order extending the validity of the writ. The issue whether an extension of the validity of the writ was justified or not will then be considered at an inter partes hearing.

16. Although it is most unusual for a summons to extend validity of a writ to be made on an inter partes basis, it is a mere procedural irregularity which could be cured by O.2, r.1(1): per Godfrey JA, Lee Fai t/a Fai Kee Timber v. Chan Kui [1997] HKLRD 1154, CACV 84/1997.

17. I therefore proceeded to hear the Present Summons on an inter partes basis.

The Plaintiff's Stance

18. Mr. Lee for the Plaintiff submits that the WS has never been renewed and he now asks the Court to extend the duration of the WS under O.2, r.1 and O.3, r.5 although the Present Summons was said to have been taken out pursuant to O.6, r.8 to renew the WS.

19. Mr. Lee invites the Court to exercise its discretion under O.2, r.1 rather than under O.6, r.8.

20. Mr. Lee relies heavily on the case of Bank of China (Hong Kong) Ltd. v. Chen Jianren [2009] 3 HKLRD 163, HCA 2844/2001.

21. Mr. Lee's argument is this: the Plaintiff had good reason to believe that D1 was properly served the WS on his usual and last known address in Hong Kong (i.e. the Cheung Sha Wan Flat). The Plaintiff only learnt on 19 August 2011 when D1 filed his affirmation in support of the Setting Aside Summons (exhibiting his Immigration Record) that D1 was in fact out of the jurisdiction at the time of service.

22. It is said that the WS was properly served, as it was unbeknown to the Plaintiff that D1 was in the PRC.

23. Mr. Lee submits that the facts of the present case are strikingly similar to that of Chen Jianren, that there are "exceptional circumstances" which warrant the exercise of discretion of the Court to extend / renew the WS.

24. It would be helpful to recite the facts of Chen Jianren.

25. The plaintiff claimed against the defendant for payments under two deeds of guarantee. The writ was issued and served on the defendant in June 2001. Unknown to the plaintiff, the defendant was not in Hong Kong at the time of service. The defendant did not enter appearance to the writ and default judgment was entered in August 2001. In April 2006, the plaintiff issued a statutory demand against the defendant and in August 2006 presented a bankruptcy petition against him. In November 2006, the defendant instructed solicitors to act for him in the action. On 14 February 2007, the default judgment was set aside by consent. Thereafter the defendant’s solicitors informed the plaintiff’s solicitors that they had no instructions to accept service of the writ. The plaintiff then applied for the extension of the validity of the writ and a dispensation from serving the writ because the writ already came into possession of the defendant’s solicitors. The Master granted leave to extend the validity of the writ and further deemed service to have been effected by reason of it being sent to the defendant’s solicitors in November 2006.

26. The defendant’s appeal against the Master’s Order was dismissed by Deputy Judge Carlson. In so doing, the Judge accepted that the writ was not amenable to an extension under O. 6, r. 8 because it had expired some five years before the Master’s Order. However, he considered that the court had wide discretion under O. 2, r. 1 to cure the irregularity and there was further power under O. 3, r. 5 to extend time.

27. In Chen Jianren the plaintiff had assumed that it had effected good service at four addresses, two of which were the defendant’s business addresses and one of which was the address that he had provided when he signed the guarantees. The necessity for having to make his application for renewal has been caused by the proven fact from immigration records that the defendant was not in Hong Kong on the date of service. Until that had been demonstrated, the learned Judge held that the plaintiff was entitled to the view that it had validly served the defendant and that it had a good default judgment against him.

28. The learned Judge went on to say that:

“I am entirely satisfied that the Plaintiff had made perfectly good and reasonable efforts to serve the Defendant in 2001. That service was only invalid because, unknown to the Plaintiff, the Defendant happened to be outside Hong Kong on the day of service. It is plain from O.2 r.1 that the court enjoys a wide discretion to cure irregularities of this sort. The court also has express power to extend time under O.3 r.5 which is now the only route available to the Plaintiff for the reasons that I have previously discussed.”

“Mr. Chow has referred to the impact of a renewal on the limitation period. It seems to me that on a proper appreciation of the chronology in this matter (this being a Deed of Guarantee) that Mr. Pow is quite right in submitting that the limitation period will not expire until 2012. There is no limitation defence available to the Defendant of which he might he deprived by a renewal of the writ. His defence is the fundamental one that he did not sign the Deeds in question.”

(emphasis added)

29. On those exceptional facts, the learned Judge finds it entirely proper that the plaintiff should have its writ renewed, as there is no reason why a perfectly good order should be discharged thereby requiring the plaintiff to issue a new writ which it would be able to do, with some five years of the limitation period still to run.

30. It was held that in the absence of any prejudice, in circumstances that the writ had been brought to the defendant’s attention in November 2006 (when it was sent to his solicitors), the Master was perfectly right to have deemed service to have taken place in the way that he did in his Order. The Order was perfectly sensible and practical and therefore upheld it.

31. Mr. Lee admits that there is one matter which distinguishes the present case from Chen Jianren...

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