DENKI TETSUSHIN INDUSTRIAL CO. LTD. v. UNIWEALTH INTERNATIONAL LTD.

HCA012572A/1997

1997, No. A12572

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12572 OF 1997

____________

BETWEEN
	DENKI TETSUSHIN INDUSTRIAL COMPANY LIMITED	Plaintiff
	AND
	UNIWEALTH INTERNATIONAL LIMITED	Defendant

____________

Coram: The Hon. Mr. Justice Sakhrani in Chambers

Date of Hearing: 13 January 1999

Date of Ruling: 13 January 1999

__________

R U L I N G

__________

1. I have been asked to rule as a preliminary matter whether the 2nd affirmation of To Chun Kong of the Defendant affirmed on 27th October 1998 can be adduced by the Defendant at the hearing of the appeal before me today.

2. The matter arises in this way. A default judgment was entered by the Plaintiff against the Defendant on its claim in respect of dishonoured cheques on 11th December 1997. On 28th May 1998 solicitors for the Defendant issued a summons to set aside that judgment for irregularity on the ground that the writ of summons was not served on the Defendant. There was an application for leave to amend that summons and by an order made on 4th June 1998, Master Cannon gave leave to the Defendant to amend that summons by adding an alternative ground that the judgment be set aside on the ground that the Defendant has a good defence to the action. She also gave directions as to filing of an affirmation or an affidavit in reply to the affirmation of To Chun Kong that had already been filed, namely the 1st affirmation of To Chun Kong. The direction was that the Plaintiff have leave to file and serve the affidavit or affirmation in reply within 28 days and thereafter the Defendant do have leave to file and serve an affirmation in reply thereto within 14 days thereafter, and the amended summons was adjourned to a date to be fixed.

3. There was some correspondence between the solicitors for the Plaintiff and the solicitors for the Defendant thereafter. However, on 20th July 1998 the solicitors for the Plaintiff wrote to the solicitors for the Defendant informing them that they did not consider that it was necessary to serve evidence in reply to the 1st affirmation of To Chun Kong. They wished to set the matter down as soon as possible to have the Defendant's application heard.

4. On 21st July 1998 the solicitors for the Defendant said, inter alia, that they would be taking their client's instructions to file evidence on the merits of the defence and by a letter of the same date, the solicitors for the Plaintiff replied stating that the Defendant was not entitled to file further evidence in the light of the directions that had already been given by Master Cannon on 4th June 1998.

5. The Defendant's solicitors disputed this by a letter of the same date, 21st July 1998, and by a letter dated 25th July 1998, the solicitors for the Plaintiff maintained their position that the Defendant was not entitled to file any further evidence in the light of the directions that they had obtained from Master Cannon.

6. That letter dated 25th July 1998 addressed to the solicitors for the Defendant also stated as follows:

"Since the hearing before Master Cannon was adjourned you have done nothing to refix the date of the hearing and we were entitled to arrange for a new date to be set. In any event, the hearing now set for 29th October 1998, the first available date suitable for your Counsel's diary, is over 3 months away. This gives your client ample time before the hearing to obtain directions for additional evidence, either by agreement or order. If you do obtain directions for filing supplementary evidence, we reserve our client's right to reply to it."

7. This put the solicitors for the Defendant on ample notice that the Plaintiff took the stand that no new evidence could be filed by the Defendant without further directions for the same being obtained, either by agreement or by an order and it is clear from that letter that the hearing date for the hearing of the Defendant's application had already been fixed for hearing on 29th October 1998. Unfortunately, the matter was allowed to lapse. Nothing was done until the letter dated 26th October 1998, 3 days before the hearing date of the Defendant's application, where the Defendant's solicitors said that they had just received their client's instructions to prepare an affirmation to include a bundle of documents which had been sent to the solicitors for the Plaintiff previously for the purpose of the forthcoming hearing. At that stage, the affirmation was not yet ready.

8. On 26th October, the solicitors for the Plaintiff wrote to the solicitors for the Defendant referring to the earlier correspondence and reminding them that there were no directions that allowed the Defendant to file further evidence, and pointing out that they had had ample opportunity to obtain directions and to prepare evidence but had failed to do so. And at that late stage, they were not prepared to consent to the service of any further evidence in the light of the forthcoming hearing. That prompted the Defendant to issue the summons dated 27th October 1998 which was returnable before Master Bennet on the same day as the hearing of the Defendant's application to set aside, namely 29th October 1998.

9. The 2nd affirmation of To Chun Kong was affirmed on 27th October 1998, the same day as when the summons was issued and by that summons the Defendant wished to file and serve the 2nd affirmation of To Chun Kong in support of the application to set aside the default judgment. Master Bennet dismissed the summons to put in the further evidence. On 29th October 1998 he also dismissed the Defendant's amended summons to set aside judgment.

10. By the Notice of Appeal filed on 4th November 1998, the Defendant gave notice that it intended to appeal against the decision of Master Bennet given on 29th October 1998 refusing to order that the judgment entered in default of giving notice to defend on 11th December 1997 be set aside for irregularity on the grounds that the writ of summons herein was not served on the Defendant and alternatively, on the ground that the Defendant has a good defence to this action. That is the extent of the Notice of Appeal. There is no Notice of Appeal in respect of the decision of Master Bennet dismissing the summons dated 27th October 1998 whereby he refused the Defendant leave to file and serve the 2nd affirmation of To Chun Kong.

11. I have considered the submissions made on behalf of the Defendant. I accept that the hearing before me is a re-hearing. I accept also that as an appeal by way of re-hearing, a court commonly allows, subject to the question of costs, an appellant put in additional evidence at the hearing of the appeal. But that depends on the circumstances. The Defendant tried to use the 2nd affirmation of To Chun Kong before Master Bennet and indeed took out a specific summons to enable that to be used. It failed on that application as Master Bennet dismissed that summons. There is no appeal from that decision. If the Defendant wished to use the 2nd affirmation of To Chun Kong at the hearing of the appeal today, it should have appealed that part of Master Bennet's order as well. But the Defendant has not done so.

12. In the circumstances and in the exercise of my discretion, I do not think that the Defendant should be allowed to adduce the 2nd affirmation of To Chun Kong at the hearing of the appeal before me today. I refuse leave to the Defendant for it to adduce that 2nd affirmation.

	(Arjan H. Sakhrani)
	Judge of the Court of First Instance

Representation:

Mr. Michael Liu instructed by Messrs. Tang Wong & Cheung for Plaintiff.

Ms. Doris To instructed by Messrs. K. K. Lau & Co. for Defendant.

HCA012572/1997

1997, No. A12572

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12572 OF 1997

____________

BETWEEN
	DENKI TETSUSHIN INDUSTRIAL COMPANY LIMITED	Plaintiff
	AND
	UNIWEALTH INTERNATIONAL LIMITED	Defendant

____________

Coram: The Hon. Mr. Justice Sakhrani in Chambers

Date of Hearing: 13 January 1999

Date of Judgment: 13 January 1999

______________

J U D G M E N T

______________

1. This is an appeal from the decision of Master Bennet given on 29th October 1998 refusing to order that the judgment entered in default of giving notice to defend on 11th day of December 1997 be set aside for irregularity on the grounds that the writ of summons herein was not served on the Defendant and alternatively, on the ground that the Defendant has a good defence to this action.

2. The first point I have to consider is whether the judgment was a regular judgment or an irregular judgment. Judgment was obtained in default by the Plaintiff against the Defendant on 11th December 1997. The writ was served by the Plaintiff's solicitors by leaving the writ of summons at the Defendant's registered office at Unit B, 14th Floor, Tung Chong Factory Building, 653-659 King's Road, Hong Kong in an envelope addressed to the Defendant. This was done on Friday 21st November 1997.

3. In the 1st affirmation of To Chun Kong, he says that the Defendant first realised that the Plaintiff had entered a judgment on failure to give notice of intention to defend against the Defendant on 11th day of December 1997 after it had received a letter dated 6th May 1998 from the Plaintiff's solicitors. He says that the Defendant moved to the new address on 24th February 1997 and a removal notice had been sent to all customers and the associates of the Defendant and its subsidiary, and that the removal notice had also been sent out to the Plaintiff.

4. The removal notice exhibited to his affirmation states that with effect from 24th February 1997, the recipient was asked to update their record for "our new address" as follows and it sets out the address at Unit 9-10, 12th Floor, Cornell Centre, 50 Wing Tai Road, Chai Wan, Hong Kong.

5. It transpires from his affirmation that Annual Returns of the company had not been filed for a number of years until 27th February 1998. According to the copy Register of Secretaries and Register of Address of the Defendant exhibited in evidence, the registered office was changed from King's Road to an address at Room 1807, Kodak House II, 39 Healthy Road, North Point, Hong Kong on 10th September 1995. The date this document was filed was 27th February 1998. No explanation has been given by the Defendant about this date 10th September 1995 at all. It is stated in the same document that on 10th January 1997, the registered office was further changed from the Healthy Road address to Unit 9-10, Cornell Centre, 50 Wing Tai Road, Chai Wan, Hong Kong. That is a different date than the one given in the removal notice that I have referred to above. So, according to the records of the Companies Registry, the registered office of the Defendant had remained at the same address where the writ was served until the change was filed on 27th February 1998 by the filing of the Annual Return. I note that there was no formal change of registered office filed the Companies Registry.

6. O.10, r.1(2) of the Rules of the High Court deals with service of originating process on the Defendant. O.10, r.1(7) provides as follows:

"This rule shall have effect subject to the provisions of any Ordinance and these rules and in particular to any enactment which provides for the manner in which documents may be served on bodies corporate."

7. Section 356 of the Companies Ordinance (Cap. 32) provides that a document may be served on a company by leaving it at or sending it by post to the registered office of the company. The registered office of the company, the Defendant, at the material time when the writ was served was at the address where the writ was served.

8. In the circumstances, I see nothing irregular about the service of the writ and I see nothing irregular about the judgment that was entered on 11th December 1997.

9. This being a regular judgment, the provisions of O.13, r.9 apply. The leading case of The Saudi Eagle [1986] 2 Lloyd's Rep. 221 sets out the relevant guidelines. The primary consideration is whether the Defendant has merits to which the court should pay heed. It was held that a Defendant who was asking the court to exercise its discretion in his favour should show that he has a defence which has a real prospect of success.

10. And in Premier Fashion Wears Ltd. and Another v. Li Hing Chung and Another [1994] 1 HKLR 377, The Saudi Eagle was followed. It was held by the Court of Appeal that the court has a wide discretion under O.13, r.9. In relation to a regular judgment, the authorities show that the first consideration is whether the Defendant can show a defence on the merits. It is generally not sufficient for a Defendant merely to show an arguable defence. He must show a real prospect of success. He must satisfy the court that his case carries some degree of conviction. This requires a potentially credible affidavit demonstrating a real likelihood that he will succeed on fact.

11. The only evidence as to merits is in the 1st affirmation of To Chun Kong, in particular para. 13. The Plaintiff's judgment was in respect of two dishonoured cheques. What Mr. To said in para. 13 is as follows:

"I have been advised by my solicitors and verily believe that the Defendant has a good defence herein provide that the Defendant could produce the documents relating to the Plaintiff's agreement to settle the two hishonoured cheques mentioned in the indorsement of claim herein. The Defendant is now considering a counterclaim against the Plaintiff in respect of the latter's obligations under an Agreement for Technological Transfer & Sale of Manufacturing Facility dated 30th June 1992 made between the Plaintiff, Mr. Tadatoshi Watabe and the Defendant."

12. That paragraph does not even begin to show that the Defendant has a defence which has a real prospect of success. I would go even further to say that the Defendant does not even begin to show a triable issue in para. 13 of the said affirmation.

13. In the circumstances, Master Bennet was, in my view, correct in dismissing the application and the appeal is dismissed with costs to the Plaintiff.

	(Arjan H. Sakhrani)
	Judge of the Court of First Instance

Representation:

Mr. Michael Liu instructed by Messrs. Tang Wong & Cheung for Plaintiff.

Ms. Doris To instructed by Messrs. K. K. Lau & Co. for Defendant.