3 Default Judgment, Judgment on Admission and Summary Judgment Civil Pro

Default Judgment

- P may be entitled to obtain default judgment IF either:

o In default of notice of intention of defend (O13) OR
o In default of defence (O19)

(A) Judgment in Default of Notice to

Defend O13

- O13 only applies to proceedings begun by Writ of summons

o Cf. Proceedings begun by originating summons - governed by O28

- *Pre-requisite to enter DJ under O13 Proof of service of writ O13 r7(1)

O13 r 7(1)
- Judgment shall NOT be entered against D under this Order UNLESS

(a)D has acknowledged service on him of the writ OR

(b)an affidavit is filed by or on behalf of P proving due service of the
writ on D OR
(c) P produces the writ indorsed by Ds solicitor with a statement that
he accepts service of the writ on Ds behalf

(1) Claim for liquidated demand O13 r1

O13 r1
- Where a writ is indorsed with a claim against D for a [1] liquidated demand
only, then if that [2] D fails to give notice of intention to defend P may
o [3] AFTER the prescribed time, enter final judgment against D
for:
a sum NOT exceeding that claimed by the writ in respect of
the demand +
costs
AND
o proceed with the action with other Ds, if any

N.B. default judgment is entered by P as of right Court has NO discretion (mere

administrative act)

[1] Liquidated demand vs. unliquidated damages

- Liquidated demand
the amount of debt must either be:
o already ascertained OR
o capable of being ascertained as a mere matter of arithmetic
E.g. Debt, total failure of consideration, guarantee

o The mere fact that interest is also claimed under S.48 HCO or S.49 DCO
does NOT prevent the claim from being a liquidated claim (O13 r1(2))

- Unliquidated damages:
o The ascertainment of the amount of claim requires investigation beyond
mere calculation (Knight v Abbott)
E.g. a claim in tort, a claim for breach of contract

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Josepy Yen & Co v Luen Cheung Hong (1952)

- D failed to take delivery of goods ordered from P
- P claimed for an exact sum of $54,503.77, being balance due under the contra
less the amount realised by P on resale
Held
- Focus on the nature of claim
- EVEN IF Ps claim was expressed as a specific figure
it was an unliquidated damages claim
o since it was founded on a breach of contract

[2] WHEN would D fail to give notice of intention to defend + [3] WHAT is the
prescribed time?
- Prescribed time in relation to a writ issued against a P means
(O 13 r6A)
o the time limited for D to acknowledge service of the writ OR
o If within tht time, the D has returned to the Registry an A/S containing a
statement to the effect tht he does NOT intend to contest the proceedings

1. NO Acknowledgment of Service filed at the registry

a. Prescribed time = AFTER expiry of 14-day period from + including date of
service of writ (O13 r6A and O12 r5)

2. D has filed an A/S stating an intention NOT to defend

a. Prescribed time = AFTER the date on which the A/S was received at the
Registry (O13 r6A)

Proceed with the action with other Ds

- In general, P may:
o obtain default judgment (DJ) against on D +
o proceed with the action against others

- BUT Note alternative co-Ds

o If Ps claim against D1 is alternative to the claim against D2 in the circs. that
the claims against co-Ds are based on mutually inconsistent assumptions
of fact
DJ against one may be treated as an irrevocable election
constitute a bar to the action against the other
(Morel Bros & Co Ltd v Earl of Westmoreland [1904]; Bonus Garment Co
v Karl Rieker [1997])
o Thus, it is important NOT to enter DJ against an alternative D precipitately

Costs
- Part II of Sch. 2, O62 a fixed costs scale for obtaining default judgment
- $10,000 (RHC) OR $6,500 (RDC), + court fees

WHEN should P enter DJ for a sum less than that claimed by the writ?
- (i) When D has already made part of the payment AFTER commencement of
action
o Reason: P should be limited to the amount actually due at the time of
judgment

- (ii) A judgment entered for too large a sum (i.e. an irregular judgment)
o Court has jurisdiction to amend the judgment by reducing its sum to the
correct amount instead of setting it aside
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(2) Claim for unliquidated damages O13 r2

O13 r2
- Where a writ is indorsed with a claim against D for unliquidated damages
only, then if that D fails to give notice of intention to defend P may
o AFTER the prescribed time, enter interlocutory judgment against
that D
for:
damages to be assessed +
costs
AND
o proceed with the action against other Ds, if any.

N.B. NOT final judgment only interlocutory judgment for damages to be

assessed
- Cf. claim for liquidated demand

Assessment of damages AFTER obtaining interlocutory judgment

- Damages assessed at a subsequent hearing before a Master (O37)
o Rules governing mutual discovery + exchange of witness statements also
apply automatically UNLESS the Master directs otherwise (O37 r1(1A))

o Where the DJ is obtained against some but NOT all Ds, the damages will be
assessed at the trial UNLESS the Court orders otherwise (O37 r3)
Rationale: to avoid
multiplicity of hearings on damages assessment +
inconsistencies in the assessment

- D must be given at least 7 days notice of the hearing (O37 r1)

(3) Claim for detention of goods O13 r3

- For a claim against a D relating to the detention of goods ONLY, when D fails to give
notice of intention to defend, AFTER the prescribed time
P has 3 options:
o Usual case - Enter interlocutory judgment against D for delivery of goods
+ an option to pay its value (to be assessed)

(i) delivery of the goods OR their value to be assessed + costs (O13

r3(1)(a)(i))
(ii) the value of the goods to be assessed + costs (O13 r3(1)(a)(ii))

o Special case NO option to pay

(iii) Apply for judgment against D for delivery of goods WITHOUT
giving D the alternative of paying their assessed value (O13 r3(1)(b))

P must apply by way of summons supported by affidavit (O13 r3(1)(b)

+ r3(2))
The summons + a copy of the affidavit must be served on D
(O13 r3(2))

- Rationale: Usually the Court would NOT force D to return goods

but will give D an option to compensate P for the value of the goods

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(4) Claim for possession of land O13 r4

O13 r4
- Where a writ is indorsed with a claim against D for possession of land only,
then if that D fails to give notice of intention to defend, P, AFTER the prescribed
time
o on producing:
a certificate by his solicitor OR
an affidavit (if he sues in person)
stating that he is NOT claiming any relief in the action of the
nature specified in O88 r1 [i.e. Mortgage actions]
o may:
enter judgment for possession of the land as against D + costs

AND
proceed with the action against the other Ds, if any.

(5) Mixed Claims O13 r5

O13 r5
- Where a writ issued against any D is indorsed with 2 or more of the claims
mentioned in the O13 r1 r4, and NO other claim

o Then if that D fails to give notice of intention to defend

P may, AFTER the prescribed time:
Enter against D such judgment in respect of any such claim as he
would be entitled to enter under those rules
if that were the ONLY claim indorsed on the writ and
AND
proceed with the action against the other Ds, if any

(6) Other Claims O13 r6

- For a writ indorsed with a claim NOT mentioned in O13 r1 to r4
e.g. declaration, specific performance, injunction etc.
o P must serve statement of claim + proceed as if D had given notice of
intention to defend
UNLESS P decides to abandon those other claims
i.e. P canNOT obtain the DJ

Rationale: Those claims involve discretionary remedies

P should NOT be entitled to judgment automatically upon default

- BUT if D satisfied the claim + compiled with the demands/ any other like reason that
it has become unnecessary for P to proceed with the action
P may enter judgment against D for costs

Writ returned AFTER judgment O13 r7(3) to (5)

- If AFTER obtaining DJ against a D purporting to have been served by post under
O10 r1(2)(a)
o the copy of the writ sent to D is returned to P through post undelivered
to the addressee
i.e. writ properly served BUT NOT received by D

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P shall either:
Make a request for judgment to be set aside OR
on the ground that the writ has NOT been duly served (O13 r7(3)
(a))
Apply to the Court for directions (O13 r7(3)(b))
Procedures
- For request under r7(3)(a) to set aside judgment in accordance with r7(4)
o Producing + filing to the Registry, an affidavit stating:
the relevant facts +
thereupon the judgment shall be set aside

o The entry of the judgment + of any proceedings for its enforcement made in
the book kept in the Registry for that purpose shall be marked accordingly

- For an application under r7(3)(b) to get directions from court in accordance

with r7(5)
o Ex parte application by affidavit stating:
the facts on which the application is founded +
any order or direction sought

o On the application the Court may:

(a) set aside the judgment OR
(b) direct that, notwithstanding the return of the copy of the writ, it shall be
treated as having been duly served OR
(c) make such other order + give such other direction as the circ. may
require

Fok Chun Hung v Lo Yuk Shi [1995]

- When a writ served by registered post was returned undelivered AFTER DJ has
been obtained
the DJ must be set aside unconditionally
o WITHOUT any regard to merits of the defence

- O13 r7(3) mandated P to apply for judgment to be set aside for further directions

Cases outside the scope of O13

- Proceedings commenced by originating summons
DJ can be obtained under O28

- O13 is inapplicable to special types of proceedings e.g.

o Admiralty actions in rem (O75 r21)
o Actions against a person under disability until guardian ad litem has been
appointed (O80 r6)
o Probate actions (O76 r6(1))
o 3rd party proceedings (O16 r5)

- Leave of court is required in other cases e.g.

o Actions against the Gov. (O77 r9(1))
o Mortgage actions (O88 r6(1))
o Actions by money lender (O83A r4)
o Actions arising out of hire-purchase or conditional sale agreement (O84A r3)
o Actions in tort between husband + wife (O89 r2)

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(B) Judgment in Default of

Defence O19

Pre-requisite: Notice of intention to enter judgment O19 r8A

O19 r8A
(1) NO party shall enter a judgment against D under O19 UNLESS:
(a) AFTER the A/S giving notice of intention to defend (or counterclaim) has
been filed + NOT less than 2 clear days BEFORE entering judgment
P has served notice in writing of his intention to do so on D/ his
solicitor; and
(b) Evidence of such service by way of affidavit has been filed in Court

N.B. P can serve notice BEFORE deadline for filing defence (Ho Yuen Tsan v Hop
Wing Transportation)

Situations where O19 r8A does NOT apply (i.e. a DJ canNOT be obtained under
O19)
(2) This rule shall NOT apply where:
(a) Court has made order prescribing/ extending the time for service of
defence or defence to counterclaim OR
(b) D does NOT have a solicitor of record in the proceedings + has failed to
state an address within the jurisdiction in the proceedings at which he can be
served

(1) Ordinary claims O19 r2-r6

O19 r2

(1) Where Ps claim against D is for a liquidated demand only, then if that D fails
to serve a defence on P
P may, AFTER the expiration of the period fixed by or under these rules for
service of the defence:
- enter final judgment against D for:
o a sum NOT exceeding that claimed by the writ in respect of the
demand +
o costs
AND
- proceed with the action against the other Ds, if any

(2) O13 r1(2) shall apply for the purpose of this rule as it applies for the purposes of
that rule
- N.B. O13 r1(2) the mere fact that interest is also claimed under S.48 HCO or
S.49 DCO does NOT prevent the claim from being a liquidated claim

- NB: NO diff. between O19 r2 + O13 r1 (i.e. claim for liquidated demand for judgment
in default of notice to defend) above, and O19 r3-6 are ~ to O13 r2-5

Expiration of period fixed

- Time for P to enter DJ under O19 r2 = when D fails to serve his defence within the
prescribed period
o Prescribed period in O18 r2(1)
D must serve a defence BEFORE the expiration of 28 days AFTER:
the time limited for acknowledging service of the writ OR
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the statement of claim is served on him

o whichever is the latter

(2) Other claims O19 r7(1)

O19 r7(1)
- Where P makes against D a claim NOT mentioned in O19 r2-r6 AND D fails
to serve defence on P
P may, AFTER the expiration of time period:
o Apply to Court for judgment
On hearing of the application, the Court shall give such
judgment as P appears entitled to on his S/C

- N.B. O19 r7 is diff. from O13 r6 [i.e. Other claims under the judgment in default
of notice to defend]
o If D fails to file any defence to Ps claim for SP/ injunction
P can still obtain a DJ
(Andrew Ronald Taylor v Christopher William Jorgenson)
Also extends to declarations, but NOT easily granted

(C) Setting aside a Judgment in

Default

O13 r9 / O19 r9: The Court may, on such terms as it thinks just, set aside or vary
any judgment entered in pursuance of this order
- Application to set aside a DJ is made by summons supported by an affidavit
- Distinction drawn between regular + irregular DJ

(1) Setting aside a regular DJ

- A regular judgment is one that has compiled with ALL the procedural
requirements laid down in the rules

- Courts power is entirely discretionary

factors will depend on the individual case could include:
o (i) D must show merits of the defence
o (ii) Ds explanation as to WHY allowed DJ to occur
o (iii) Conduct AFTER he was aware of the proceedings
Any delay in applying to set aside
o (iv) Any prejudice to P or any 3rd party IF set aside

(i) D must show a defence on merits

- D must generally have a real prospect of success in his defence
(O Mark v Reap Star)
o > a mere arguable defence that would justify leave to defence on a
summary judgment application
BUT < 50/50 chance of success
o Requires potentially credible evidence which can demonstrate a real
likelihood that D would succeed on fact

- Court may need to form a provisional view of the probable outcome of the
action (may NOT be required in all circs. O Mark v Reap Star)
o Yet, the Court should NOT conduct a mini-trial on affidavit evidence

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o If there is conflicting oral evidence + a provisional view canNOT

sensibly be formed
Court should ask whether the defence could well be established at trial
(O Mark Polyethylene v Reap Star)
i.e. so long as the Ds defence is capable of being believed

- N.B. Court may impose any reasonable terms in setting aside a regular DJ
e.g. payment into Court by D (although there is a meritorious defence)
o NOT to punish D BUT to:
encourage the proper future conduct of litigation +
provide a measure of security for P

o BUT there must be sth specific in Ds conduct in the case

to justify the imposition of the terms
(L&M Specialist Construction Ltd v Wo Hing Construction Co Ltd )

O Mark Polyethylene Products Factory Ltd v Reap Star Ltd [2003]

- The principles which guide the Court on an application to set aside a DJ under O13
r9 are NOT entirely clear
o The judge expressed NO conclusion as to whether there ought to be the
requirement to form a provisional view of the probably outcome in all
circs.
the test ought simply to be whether the application has shown that he has
a real prospect of success in the action

L&M Specialist Construction Ltd v Wo Hing Construction Co Ltd [2000]

- The principles governing setting aside a regular DJ are summarized:
o The defence must generally:
have a reasonable prospect of success OR
to carry some degree of conviction

o So that in general the Court must form some provisional view of the
probable outcome of the action
UNLESS a provisional view canNOT be formed WITHOUT a trial of the
facts

(2) Setting aside an irregular DJ

- An irregular judgment generally refers to a judgment entered WITHOUT complying
fully with the rules or the law
o The irregularity complained of should be described in the summons + the
affidavit
(O2 r2(2) RHC, RDC)

- Time for application (O2 r2)

o An application to set aside for irregularity any proceedings shall NOT be
allowed UNLESS it is made:
within a reasonable time +
BEFORE the party applying has taken any fresh step AFTER
becoming aware of the irregularity

Q: whether D could set aside an irregular judgment

- ex debito justitiae i.e. as of right VS had to show a meritorious defence

- Current position:

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o The more recent CA decisions are in favour of setting aside irregular

judgments WITHOUT going into the merits of the defence
BUT the Court has residual discretion to look into other matters in
deciding whether to impose terms on setting aside the judgment
(Po Kwong Marble Factory Ltd)

Po Kwong Marble Factory Ltd [1997]

- NOT absolute right just a **limited right to set aside the irregular DJ
o As court still has a residual discretion to consider:
the conduct of the parties +
other surrounding circs.
decide whether to set aside the judgment/ to impose terms under
O13 r9

- Here, D co. had virtually disguised its registered office

o P proved service left writ there
o Held: Irregular judgment set aside on the condition that D paid the amount toe
the court

Liu Chong Hing Bank Ltd v Union World (HK) Ltd & Ors [2005]
- Endorsed Po Kwong
- The Court would NOT require D to show that he has a defence on the merits
o i.e. In this sense as of right
o However, in the exercise of its discretion, the Court would consider other
relevant matters
including conduct of D AFTER he learns of the proceedings

- Here, D delayed substantially BEFORE applying to Court to set aside the

judgment
the Court was clearly justified in setting aside the judgment on imposing terms

o The ONLY apparent discretion which the court might exercise to refuse to
set aside an irregular judgment:
Unreasonable delay on the part of D in making the application to set
aside
(O2 r2(1) RHC, RDC)

Even though the court may NOT go so far to refuse the application
it may still take into a/c the delay + set aside the DJ on terms that
D makes a payment into court
E.g. Wong Pak [1982]
o Reason: excessive delay would result in irreparable
mischief to P in view of adverse effect on the memories
of the witnesses

- In extreme cases where it is apparent that there is NO meritorious defence

the legal position is NOT settled
(Chu Kam Lun)

Chu Kam Lun v Yap Lisa Susanto [1999]

- The weight of the HK authorities is where the judgment is irregular
it should be set aside WITHOUT going into the merits of the denfence

- This case leaves the position open

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o Obiter per Nazareth VP: Where a defence is clearly hopeless, it does

seem pointless to set aside the judgment even if irregular

o i.e. Even tho there may be some procedural errors on the Ps DJ

application, if D still has NO gd defence
the court will NOT set aside the DJ
Becuz the P will then embark on summary judgment IF his ori. DJ
has been set aside ( D has NO good defence)

(3) Cost Order

- A distinction should generally be drawn between:

Setting aside a regular judgment VS an irregular judgment

(Ko Sin Yun v Chan Chuen and another)
- Regular judgment:
o D was at fault + was asking the Court for an indulgence
Cost be to P

- Irregular judgment:
o P should NOT have entered it in the first place
Costs be to D

The costs of the application VS the costs of the contested hearing

- Contested hearing:
o P wants to contest about Ds application to set aside the DJ

- The Court may make a split costs order relating to the contested hearing
depending of its assessment as to
o Whether + WHEN P should have conceded the application

o If the court considers that P should have agreed to Ds application to set

aside the judgment
instead of unreasonably resisting Ds application at a contested
hearing

Court may order:

costs of the application to P BUT
costs of the hearing to D
(Cosec Nominee Ltd v Lan Hong Ming Alan [2001])

Rationale: the courts time + parties expenses hv been wasted in hving

a substantive hearing

- There are NO absolute rules Court has a very wide discretion to do justice
o If the Court thinks that NO party is at fault (or both are at fault)
may order that:
costs be in the cause (i.e. whoever wins at the end will get this set of
costs) OR
sometimes make NO order on costs
Admission in Money Claims

- Purpose: to encourage speedy resolution of money claims admitted by D

- P may file a request for judgment where:

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o P is ONLY seeking a money claim +

o D admits the claim under the procedural in O13A

o Liquidated amount of money claim

D may admit the whole/ part of the claim + may make a request for
deferred/ installment payments

o Unliquidated amount of money claim

D may admit:
Liability (in which case damages will be assessed by the court)
OR
Liability + offer a sum in satisfaction of the claim
In either instance, D may request for deferred/ installment payments

- N.B. IF P claims both liquidated + unliquidated amounts of money (O13A r1(2))

the amount of the claim is treated as unliquidated

Procedure for making an admission under O13A

- Admission must be made in prescribed form, filed + served within the period
fixed for the service of defence
o i.e. 28 days AFTER service of S/C OR time limited for A/C, which ever is latter
(O13 r3(1)(a))
D may still serve an admission AFTER this period if P has NOT
obtained a DJ
(O13A r3(1)(a))

o prescribed form
Liquidated amount form 16
Unliquidated amount form 16C

N.B. New Form 15 for A/S additional box for D to indicate whether he
intends to admit

- P must respond to Ds admission by filing a reply and/or request for judgment in

the prescribed form
o If P fails to do so within 14 days AFTER copy of admission is served on him
the claim is stayed until he files the request (O13A r4(4))

- Once D has made an admission under O13A, it can be withdrawn

o IF the Court considers it just to do so, having regard to all the circs. of the
case
(O13A r2(3))

- The procedure applies to counterclaims + 3rd party proceedings with an necessary

modifications (O13A r15)

Ps Request for Judgment

4 possible situations:

1. D admits whole of liquidated amount

o P files Form 16A + obtains judgment with fixed costs and interest

2. D admits part of liquidated amount

o P files Form 16B + either:
obtains judgment on admitted sum with fixed costs and interest OR

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NOT accept + continue with action

3. D admits liability for the unliquidated amount WITHOUT offering any sum
o P files From 16D + obtains interlocutory judgment for an amount to be
decided by the Court and costs

4. D admits liability for the unliquidated amount + offers a sum

o P files Form 16E, either:
obtains judgment on sum offered with fixed costs + interest OR
obtains interlocutory judgment for an amount to be decided by the
Court and costs

- In cases where judgment is obtained on the basis of Ds admission to a liquidated

sum/ Ds offer in satisfaction for an unliquidated amount
o Judgment must include the amount of interest claimed to the date of
judgment (O 13A r 12)

Proposal for Deferred Payments

- (i) If P accepts Ds proposal
o Execution of judgment is stayed pending payment according to the
proposal

o If D defaults on any installment payment

the stay of execution ceases immediately + P can enforce the whole
claim against D
(O 13A r 9(8))

- (ii) If P rejects Ds proposal

o P must state reasons for objection + may make counter-proposal by
filing a notice in the Registry (O 13A r 10(2))

o Judgment will be entered for the amount admitted to be paid in accordance

with terms determined by the Court
The Court can (but NOT must) make assessment with a hearing, with at
least 7 days notice given to each party (O 13A r 10(5))

In determining the time + rates of payment

the Court must take into a/c:
o the info. set out in Ds admission filed in the Registry +
o the reasons WHY P does NOT accept Ds proposal for
payment +
o all other relevant matters

If decision on papers, either party can apply for the Courts decision to
be re-determined within 14 days of notice of determination (O 13A r
11(1))

o HOW the courts discretion is exercised concerning whether instalment of

payment is allowed

Chandrabhan Jethanard Panjabi v Saifuddin Tyeb Abdul Cader [2011]

Fact:
- Ds financial situation
o Some figures look doubtful e.g. it is unusual for him:
to support a large number of dependants with his fixed salary

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to allow earning to have fallen into arrears for 4 months WITHO

taking steps to pursue these outstanding wages
o Proposed to pay by way of instalments of $40000 per month
will take > 7 years to satisfy just the principal sum
Held:
- Referred to Gulf International Bank [2010] (UK authority)
o Court has absolute discretion having regard to the interest of the
relevant parties

o Interest of P (creditor)
The court will consider that P will be kept out of his money for the
period of the extension
The court will only approve of the proposal in exceptional circ. w
D is clearly solvent +
he only needs perhaps a short period of time to restructu
his financial situations so that the entire judgment sum can b
paid

o Interest of D
Inability to pay will usually NOT justify a proposed extension of t
Becuz an insolvent debtor will hv to take the usual
consequences of his insolvency
o where the parties are business entities

- Here: Ds application to defer payment was refused

o D being insolvent
o It is also difficult to say that Ds case falls into an exceptional circ. whe
discretion should be granted

o D has already put the ppty on the mkt

There is NO reason WHY P should be prejudiced by being preven
from executing the judgment
so that P can be put in a more secured position by way of
immediate execution of judgment against D
o BEFORE he can actually dispose of his ppty

Problem Areas
- If D intends to make an admission under O 13A, in the A/S whether he should
check Yes or No to the box whether D intends to contest the proceedings
o Note: If NO intention to defend
P may obtain DJ under O 13

o Practical advice
If acting for D should still state an intention to defend in A/S
If acting for P + D does NOT state an intention to defend
NOT advisable to obtain DJ
becuz the Court may set it aside so as NOT to allow P to get
around O 13A

- Unclear whether liquidated/unliquidated amount of money under O 13A =

liquidated demand/unliquidated damages under O 13/O 19
o C.f. UK CPR: specified/unspecified amount of money for both Part 12 DJ +
Part 14 Admissions

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Pros and Cons of O13A

Advantages
Speedy and relatively inexpensive
disposal of money claims
Disadvantages
If D does NOT ask for time to pay,
seems little advantage in using O
13A
o C.f. allowing DJ under O 13 OR
making a sanctioned payment if D
wishes to pay less
If D requires time for payment, he is
required to make exclusive
disclosure of financial situation
on oath
may deter many Ds

The rules are silent on principles to

be adopted by the Court
for resolving disputes b/w parties
who do NOT agree on proposal for
payment

- Hence, O13A is in fact rather unattractive to many Ds

Summary Judgment (O14)

Use and Abuse of the Procedure

- Summary procedure is a very useful procedure whereby P can obtain judgment
WITHOUT trial on the ground that D has NO defence to the claim
o It enables P to obtain judgment quickly
avoiding all interlocutory procedures (e.g. discovery) + the expenses +
delay in having a full trial where D has clearly NO defence

- Unfortunately, it is applied for too readily in HK WITHOUT due consideration as to

whether D has or is likely to have an arguable defence
o On occasions, it is misused by P for tactical reasons e.g.
An attempt to secure more info. about Ds possible defence on
oath
Putting D into unnecessary expenses in defending the summary
judgment application exerting undue pressure to force a compromise

Man Earn Ltd v Wing Ting Fong [1996] CA

- Summary of the intended application of SJ procedure:
o The SJ procedure is to prevent sham defences from:
Defeating the rights of parties by delay +
causing great loss to Ps who are endeavoring to enforce their rights

o UNLESS it is obvious that the defence put forward by D is frivolous +

practically moonshine
O 14 ought NOT to be applied

o Where there are substantial issues of genuine complexity

The parties should prepare for trial rather than dissipate their energy +

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resources on deceptively attractive short-cuts

- A strong warning to practitioners for abuse or unwitting use of the procedure:

o Too many practitioners appear to be prepared to advise every client with what
seems to be a good case to invoke the SJ procedure
o Warning:
If the attempt fails
P will be kept out of judgment for far longer than would have
been the case
if they had concentrated, instead, on bringing the matter to trial
So practitioners should think twice BEFORE giving such advice in the
future

Order 14 Procedure

Scope of O14
- SJ application may cover the whole/ a particular part of Ps claim/ on liability
only (O14 r1(1))
o If P accepts that D ONLY has an arguable defence to part of his claim
he may seek SJ on the other parts

o O14 covers also equitable relief e.g. injunction/ declaration

Injunction:
The summons must be issued directly before a judge in
chambers
o As the master has NO power to grant an injunction in the
absence of the parties agreement on the terms of the
injunction (O 32 r 11(1)(d))
Declaration
e.g. a declaration as to whether a binding contract was concluded
between the parties
There has to be a clear case

- If NO defence on liability BUT a triable issue on quantum of damages

Application should be for interlocutory judgment on liability with damages
to be assessed
o May be coupled with an application for interim payment under O29 r10 of a
reasonable proportion of the damages which P is likely to recover

- O14 generally applies to every action begun by writ (O 14 r 1(2))

Exceptions:
o Action which includes a claim by P:
for libel, slander, malicious prosecution, false imprisonment or
seduction
(O14 r1(2)(a))

based on an allegation of fraud (O14 r1(2)(b))

N.B. The fraud exception has been abolished in England, BUT
remains in HK
It has NOT yet been fully settled as to its exact scope (see
below)

o Admiralty action in rem (O14 r1(2)(c))

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o Claims against the Gov. (O 77 r 7)

o Action to which O86 or O88 applies (O14 r1(3))

O86: Actions for SP (or rescission) or forfeiture (or return) of deposit
under agreements relating to ppty
O88: Mortgage actions (usually by originating summons)

Exception under O86/ O88

- O86 provides for a separate but ~ SJ procedure
o Main diff. between O14 VS O86:
Under O86 procedure
Application can be made even before D has acknowledged
service of the writ +
Ps summons must set out or have attached thereto minutes of
the judgment sought

o Reasons for allowing SJ application BEFORE A/S:

Given the discretionary relief sought, even if D does NOT
acknowledge service
DJ canNOT be automatically obtained
it would be a waste of time to require P to wait and see

Given the volatility of the mkt conditions

More flexibility should be given to a deserving P
to avoid unnecessary delay in obtaining SJ

Construction of the Fraud Exception (O14 r1(2)(b))

- Issue:
o Whether the fraud exception is narrowly construed to cover ONLY fraud as
strictly defined in Derry v Peek
i.e. the making of a false representation knowingly, or without belief
in its truth, or recklessly, careless whether it be true or false
OR
o Whether it may extend to embrace cases where other forms of dishonesty
was alleged

Pacific Electric Wire & Cable Co Ltd v Harmutty Ltd and Others [2009]
- O14 r1(2)(b) expressly excludes the SJ procedure from an action which
includes a claim by the P based on an allegation of fraud

2 implications from O14 r1(2)(b)

- (i) There may be one or more claims in the action
o O14 applies to exclude SJ proceedings where ONLY 1 claim was based
on an allegation of fraud even though there might be another claim
which was NOT

- (ii) The rule is NOT confined to excluding actions in which one of the claims is
a claim for damages for fraud
o WHAT is excluded is any action where there is a claim in respect of
which the underlying allegations on which the claim is based
constitute an allegation of fraud
Claim for fraud VS claim based on an allegation of fraud

i.e. claim claim of fraud (Derry v Peek type)

as long as its substantive meaning is an allegation of fraud
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still will be excluded under this head

o Here, although the claims made were framed in respect of constructive

trust, resulting trust
the claims were based on allegations of fraud which included:
Deliberate dishonesty
Allegations of the concealment of facts from the P when there
was a duty to disclose
Connivance at the preparation of false financial statements + A/C
o SO SJ proceedings shd be excluded

Borri SpA v Tralco Technology Ltd and Others (2010)

Roger VP sought to explain his decision in PEWC v Harmutty:
- Those provisions of O14 precludes both:
o actions for fraud in the Derry v Peek sense +
o claims which are based upon allegation of fraud in the Derry v
Peek sense

Menford Electric Art & Computer Design Co Ltd v Wong Wang Tat Victor (2013)
- A wider defn. of fraud was adopted to cover other forms of dishonesty

- Deputy High Court Judge Lisa Wong SC was unable to reconcile PEWC v
Harmutty + Borri SpA, BUT proceeded on the bases that:
o In Borri SpA, CA did NOT propose to lay down any new principles
but only to explain that earlier decision
o PEWC v Harmutty remains the definitive authority on WHAT constitutes
an allegation of fraud, i.e. deliberate dishonesty other than of the
Derry v Peek type
is also encompassed

- A good summary on the principles in relation to the fraud exception under O 14:
o An allegation of deliberate dishonesty, NOT of the Derry v Peek type,
also constitutes an allegation of fraud under O 14 r 1(2)(b)
(PEWC v Harmutty)
o The fraud alleged must be fraud against P (Borri SpA)

o In considering whether an action includes a claim in respect of which an

underlying allegation constitutes an allegation of fraud
the Court should have regard NOT only to the Statement of claim
BUT also the pleadings as a whole (A-1 Business Ltd)

- But she also cautioned against inferring the making of an allegation of

deliberate dishonesty too liberally
o Any form of deliberate dishonesty is a serious charge
o A breach of obligation can equally be the result of a dispute as to the
rights and liabilities arising from the relationship between the
parties
WITHOUT any element of dishonesty

Comsec Travel Ltd v Fok Hing Tours Co Ltd [2002]

- Even if the fraud exception as narrowly defined does NOT apply, the Court may
still be reluctant to grant SJ
o IF it involves a serious allegation of misconduct or foul play against
D

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o It could NOT be right for a Court to conclude that D was guilty of

conspiracy to defraud P in SJ
save in the clearest possible case +
where the evidence is overwhelming

Time of Application
- A SJ application under O 14 can only be made AFTER (O 14 r1(1))
o (i) D has given notice of intention to defend +
BUT the application can be made by P either BEFORE or AFTER D has
filed defence
If BEFORE D is no longer required to serve his defence
o until 28 days (or such other period ordered by the Court)
AFTER he has obtained leave to defend upon resolution
of the SJ application
(O18 r2(2))

o i.e. P may suffer more delay by applying for SJ IF:

a D will unlikely file a defence OR
the application is unlikely to be successful

Only the start line BUT NO deadline fixed to file SJ application

Morison, Son & Jones (Hong Kong) Ltd v Yiu Wing Construction Co Ltd
[1989]
- Situation where P applied for SJ AFTER D filed defence alrdy

- Ordinarily, an application for SJ will be made promptly BEFORE a

defence has been filed
o BUT no time limit imposed
there is no ROL that it must be made within a
reasonable time

o If the P has satisfied the court tht notwithstanding the

delay
There is NO defence to his claim
he is entitled to SJ, BUT subject to Q of costs on
a/c of delay
UNLESS there are special circ. which makes SJ
unjustifiable

- Any delay is simply a matter to be taken into a/c by the Court

when looking at:
o the substance +
o the merits of the app. +
o when deciding costs

- N.B. BUT under active case management in CJR, any undue delay
would likely attract severe criticisms + sanctions from the
Court
o Esp. IF the application would necessitate a change in a
milestone date

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o (ii) D has been served with the S/C

Ps application for SJ
- SJ application is made by summons supported by affidavit (O14 r2(1))
o The summons + affidavit must be served on D NOT < 10 days BEFORE the
return date
(i.e. the hearing date) (O14 r2(3))

o The affidavit must:

(i) verify the facts upon which the claim is made +
(ii) state that in the deponents belief there is NO defence to the
claim
(O14 r2(1))

Where a defence has been served, Ps affidavit should:

address the allegations made in the defence +
show WHY he still believes that there is NO defence to the claim

- If the affidavit filed does NOT comply with the rule

o The summons may be dismissed with costs (Lagos v Grunwaldt) OR
o The Court may ex. its discretion in appropriate cases
to allow any defects/ omissions in the original affidavit to be cured by
an affidavit made subsequently (Hongkong Chinese Bank Ltd)

Hongkong Chinese Bank Ltd v Delon Photo & Hi-Fi Centre Ltd [2000]
- Where Ps affidavit in support omitted to state the deponents belief that (there
was NO defence to P claim)
o The judge in chambers when hearing Ps appeal against the masters
decision
decided to proceed to hear the appeal
upon the undertaking by counsel to place a supplementary
affidavit from P to cure the omission BEFORE the conclusion of the
hearing of the appeal

- The affidavit can contain hearsay

o But where hearsay or opinion is included
the deponent must identify:
the source of the info. +
the grounds for his belief (O14 r2(2))

Practical concern: Should the supported affidavit be sworn by Ps solicitor

- NO legal prohibition tht Ps solicitor canNOT do so, BUT:

o Solicitor may NOT know the relevant facts
o P may lie to his solicitor

Mutual Luck Investment Ltd v Chiu Yim Man [1999]

Keith J reminded solicitors of some pertinent remarks by Mr. Julian Betts in 1987:
- The parties themselves should swear/ affirm to matters of fact
o UNLESS there is some very good reason
e.g. absence from HK
o Rationale: when P + D swear or affirm to those stories
they can + will be prosecuted for perjury

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- Where such stories are put forward through a solicitor/clerk who swears the he is
informed or verily believes
the client escapes the criminal sanction

The Decision: principles governing the determination of the SJ app.

- Court should give SJ to P UNLESS (O14 r3(1)):
o Court dismisses the application OR
o D satisfies the Court that:
(i) there is a triable issue OR
(ii) there ought for some other reason to be a trial e.g. justice

- Leave to defend (O14 r4)

o The Court may give D leave to defend the action with respect to the claim/
part of a claim, either unconditionally OR on such terms
to giving security/ time/ mode of trial or otherwise as it thinks fit (O14 r4(3)

(i) Triable issue

- D may show cause against a SJ application by affidavit evidence (O 14 r 4(1))
o The mere assertion in an affidavit does NOT by itself provide leave to defend
(Murjani v Bank of India)

- On the hearing of such application, the Court may order a D showing cause
o to produce any document (O 14 r4(4)(a))
o IF it appears to the Court that there are special circs. which make it
desirable that he should do so
to attend + be examined on oath (O 14 r 4(4)(b))

Re Safe Rich Industries Ltd (unrep. 2004)

- In dealing with factual disputes on a SJ application, the issue is simply:
o whether Ds assertions are capable of belief

- The Court must refrain from trying credibility on conflicting affidavit evidence
o BUT there may be cases where Ds assertions are so incredible or
contradicted by contemporaneous documents or circs. that
it becomes clear that his defence is a sham

- Another Q that the Court needs to consider:

o As a matter of law, EVEN IF what D says is believable
whether it amount to an arguable defence in law
(Schindler Lifts (Hong Kong) Ltd v Ocean Joy Investments Ltd)

(ii) There ought for some other reason to be a trial

Talent Wise Limited v Cheung Shui Ching [1998] (CFI)

- Explained the there ought for some other reason to be a trial limb Very wide
o The limb has special significance where:
most/ all of the relevant facts are under the control of P +
D would have to seek to elicit by discovery, interrogatories and those
which will aid her
If D canNOT point to a specific issue which ought to be tried
o BUT nevertheless satisfies the Court that there are circs.
that ought to be investigated
the limb will be invoked + D could still obtain leave to
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defend

o So some other reason: reason is that of justice

- Here, it would unjust if P were able to enforce the rights which he claims WITHOUT
being put to strict proof that they do enable him to evict D

Orders of the Court

- Possible orders that may be made by the Court in determining an O14 application:
o O14 r3: dismiss application OR grant judgment

o O14 r4(3): give leave to defend the action

either unconditionally/ on such terms as to giving security or time or
mode of trial or otherwise as it thinks fit
i.e. 2 types of leave:
o Conditional (see below)
o Unconditional

o O14 r7: dismiss the application with costs

Usual costs order (O14 r7)

Situation Usual cost order

Judgment for P (interlocutory or
final; whole or part of the claim
Unconditional leave to defend
Conditional leave to defend
Dismiss Ps application
Costs awarded to P
Costs be in the cause
Costs be in the cause
Costs awarded to D
forthwith

- N.B. The successful partys cause will be subject to summary assessment by the
Court or taxation
o The Court will take into a/c of the conduct of the parties
has wide discretion to make costs orders with its case management
powers

Conditional leave to defend

- Usual condition to be imposed if the defence is shadowy/ far-fetched/ is
suspected to be a sham:
o D to provide security or make a payment into Court for the full amount or
reasonable proportion of Ps claim

- It would be improper for the Court to impose a condition that

o By virtue of his impecuniosity (having little money)
D could not fulfill

o If such a condition is imposed

onus is on D to establish that impecuniosity by adducing evidence of:
(M V Yorke Motors (a firm) v Edwards [1982]; Muhammad Ibrahim v Asmat
Khan)
his means OR
his ability to borrow from others to comply with the proposed
condition

Unic Company (a firm) v Centus Development Ltd [1988]

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- Leave to defend should be unconditional IF

o NO sign of:
bad faith OR
anything to show that the defence raised is a sham
anything suspicious about Ds case

o IF it is plain/ even probable that to give D leave to defend ONLY upon

condition that he pays the whole sum into Court
would tantamount to refusing him leave to defend at all
(due to Ds financial circs.)

Billion Silver Development Ltd v All Wide Investment Ltd [2000] (CA)
- If the defence is shadowy in certain respects
o BUT at the same time there are doubts/ suspicion as to validity of Ps case
The correct approach:
to give unconditional leave to defend

D having a cross-claim

Shenzhen Baoming Ceramics Co Ltd v All Wide Investment Ltd [2000] (CA)
4 diff. classes or orders when D raises a set-off or counterclaim:

1. Where D can show an arguable set-off (whether equitable or otherwise)

o D is entitled to defend to the extent of the set-off +
o the Court has NO discretion

2. Where D sets up a bona fide counterclaim arising out of the same subject
matter as the action + connected with the grounds of defence
o The order should be for unconditional leave to defend
Even if D admits whole/ part of the claim

3. Where there is NO defence to the claim BUT a plausible counterclaim of NOT <
the claim is set up
o Judgment for P on the claim with costs
stayed until trial of the counterclaim

4. Where the counterclaim arises out of a separate and distinct transaction/ is

wholly foreign to the claim
o Judgment should be for P with costs WITHOUT a stay

Alco International Ltd v Akai Electronic Co Ltd [2000] (CFI)

- Legal set-off is ava. ONLY if both claims are for liquidated sums
o Claim for unliquidated damages Doctrine of equitable set-off

- For equitable set-off to apply, it must therefore be established:

o The counterclaim is at least closely connected with the same
transaction as that giving rise to the claim +
o The relationship between the respective claims is such that it would be
manifestly unjust to allow one to be enforced WITHOUT regard to the other

Parallel app. for interim payment (O 29 rr 9-12)

- **2 situations under which P may consider making an parallel interim payment app.:

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o If P seeks under O14 for judgment on liability with damages to be

assessed OR
o If it appears that D may set up a shadowy, though arguable, defence

o N.B. In PI cases
NO interim payment UNLESS D is insured or has means to pay

- BUT impossible to make an order for interim payment, if it is pursued on the basis
of O29 r11(1)(c) (below) where unconditional leave had been given
(British and Commonwealth Holdings plc v Quadrex Holdings Inc)

- An application shall be made by summons BUT may be included in a summons

for SJ under O14 or O86 (O29 r10(2))
o An application shall be supported by an affidavit which shall (O29 r10(3)):
(a) Verify:
a. the amount of damages, debt or other sum to which the application
relates +
b. the grounds of that application AND
(b) Exhibit any documentary evidence relied on by P in support of the
application +
(c) if Ps claim is made under Fatal Accidents Ordinance (Cap 22)
a. contain the particulars mentioned in s.5(4) of that Ord.
i.e. particulars of the dependents

O29 r11(1) - Order for interim payment in respect of damages

- When the Court is satisfied that:

(a) D has admitted liability for Ps damages OR
(b) P has obtained judgment against D for damages to be
assessed OR
(c) If action proceeded to trial
P would obtain judgment for substantial damages against D

o The Court can order D to make an interim payment of such

amount as it thinks just
NOT exceeding a reasonable proportion of the
damages which in the opinion of the Court are likely to be
recovered by P
AFTER taking into a/c:
any relevant contributory negligence +
any set-off, cross-claim or counterclaim on which
D may be entitled to rely

O29 r12(1) - Order for interim payment in respect of sum other than
damages

- When the Court is satisfied that:

(a) P has obtained an order for an a/c to be taken as between
himself + the D OR
(b) Ps action includes a claim for possession of land OR
IF the action proceeded to trial D would be held liable to pay
for his use and occupation of the land even if P failed in
obtaining possession
(c) If action proceeded to trial
P would obtain judgment for substantial sum of money
apart from damages against D
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Summary - Ascending levels of merits of defence

Situation Option
NO defence / bound-to-fail defence SJ
Moonshine / far-fetched / shadowy Conditional leave to defend under O
defence 14
Arguable defence / triable issue Unconditional leave to defend under
O 14
Real prospect of success / carry Set aside regular DJ
some degree of conviction
50% chance of success (or more) in Succeed at trial
defending Ps claim
(i.e. >/= BoP)
NO reasonable cause of action by P Strike out Ps claim

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