IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 959 OF 2014
||LEUNG KIN KEUNG
||HANG SENG BANK LIMITED
|Before: Deputy High Court Judge Le Pichon in Chambers
|Date of Hearing: 2 May 2017
|Date of Judgment: 16 June 2017
1. This was an appeal pursuant to Order 58, rule 1 of the Rules of the High Court (“RHC”) from the decision of Master Kwang dated 27 January 2017 setting aside the order dated 24 September 2015 of Master M Wong extending the validity of the plaintiff’s writ issued on 30 May 2014.
2. The plaintiff has been one of the defendant’s private banking customers for decades. The defendant has provided banking services and financial advice to the plaintiff in relation to the management of his funds. It was also the banker for the plaintiff’s various businesses.
3. In October and November 2007, relying on the representations of the defendant’s employee, the plaintiff entered into two equity-linked investment transactions (“the ELN investments”). It is alleged that the employee negligently failed to inform the plaintiff of the true extent of his risks involved, that the employee ought to have known that it would only be after 2.5 years that the plaintiff would be given the shares at the “strike price” if at that time the market values of the ELNs were below the “airbag price”. Those were said to be facts material to the plaintiff’s investment decision to the knowledge of the bank’s employee. In the event, the plaintiff sustained losses on 19 and 20 May 2010 in excess of HK$34 million.
4. The chronology of events from the issuance of the writ concern is as follows:
(a) A generally endorsed writ was issued by Messrs CW Chan & Co (“CWC”) (the plaintiff’s former solicitors) on 30 May 2014 but not served.
(b) On 5 June 2014, the defendant informed the plaintiff that his credit card account would be terminated in accordance with the terms of the credit card agreement because certain basic criteria based upon which the credit facilities were granted had changed.
(c) On 6 June 2014 Octopus advised the defendant that the automatic add value service had been cancelled.
(d) Almost a year later, on 18 May 2015, Messrs How & Co (“HC”), the plaintiff’s current solicitors, filed a Notice of Change of Solicitors.
(e) Three days later, on 21 May 2015, the plaintiff filed an ex parte application for extending the validity of the writ supported by his affirmation dated 19 May 2015 (“P’s 1st affirmation”).
(f) The validity of the writ expired on 29 May 2015.
(g) There is a note of the court dated 1 June 2015 to the effect that good reason has to be shown even when the application is made before the time for service has expired.
(h) It appears to have resulted in the plaintiff filing his 2nd affirmation 3.5 months later on 15 September 2015 in further support of his application (“P’s 2nd affirmation”).
(i) On 24 September 2015, Master M Wong extended the validity of the writ for one year, to 29 May 2016.
(j) On 2 December 2015, the defendant informed the plaintiff that the 14 banking accounts the plaintiff and his companies maintained with the bank would be closed within 14 days from the date of the letter.
(k) On 4 December 2015, the plaintiff asked for the reason for closing his accounts and caused his solicitors to issue a pre-action letter on 31 December 2015.
(l) The defendant’s solicitors sent a detailed reply on 12 February 2016 stating the bank’s reasons.
(m) On 25 April 2016 HC enquired of the defendant’s solicitors whether the latter had instructions to accept service.
(n) On 5 May 2016, HC served the writ on the defendant.
(o) On the defendant’s application to set aside service and the order granting an extension of validity of the writ, on 27 January 2017, Master Kwang set aside the order of Master M Wong.
The applicable principles
5. Applications for extending the validity of a writ involve a 2-stage process. First, it needs to be shown that ‘good reason’ exists for the extension sought. Second, once the threshold test is satisfied, the court’s discretion becomes engaged and at that stage the court weighs all relevant factors: see Pacific Electric Wire & Cable Co Ltd v Hu Hung Chiu  1 HKLRD 1000 at §17; RHC Order 6, rule 8 at 6/8/3, §11.
Whether good reason shown for the extension sought
6. P’s 1st affirmation is brief and runs to only two pages. It was to the effect that after issuing the writ on 30 May 2014, the plaintiff’s intention was to negotiate and the writ would only be served failing settlement. However, several days after the writ was issued, the plaintiff allegedly received letters from the defendant asking him to close his bank accounts and credit card accounts.
7. It was then said that the termination of his accounts had cost him much time and trouble especially as the defendant was the only bank that has arrangements with the Hong Kong Jockey Club for the settlement of accounts. Eventually, in the few months prior to making P’s 1st affirmation (presumably in early 2015) the plaintiff was allowed to keep that account. The plaintiff reaffirmed his intention to settle the action and that was the reason he did not want to serve the writ at that time.
8. There was but a single exhibit to P’s 1st affirmation consisting of a letter from the defendant dated 5 June 2014 and an undated computer generated letter from Octopus: see §4(b) and (c) above. It will be seen that the exhibit did not provide any evidence of any threatened closure of the banking accounts he and his companies maintained with the defendant.
9. By the time of P’s 2nd affirmation, the validity of the writ had expired. That affirmation focused, almost entirely, on the plaintiff’s “reason for having negotiation” before serving the writ. He recounted the difficulties he had encountered in...