CHARTERED FINANCE (HK) LTD v. LEE SEONG AND ANOTHER

DCCJ010124/1974

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

ACTION NO. 8670 OF 1974

—————–

Between: Jebsen & Co., Limited Plaintiff
and
Suen Tin Shing (a male) Defendant

—————–

ACTION NO. 10124 OF 1974

—————–

Between: Chartered Finance (H.K.) Ltd. Plaintiff
and
Madam Lee Seong 1st Defendant
Yin Schu Sen 2nd Defendant

Coram: E.C. Barnes, D.J.

Date of Judgment: 29 August 1975.

—————–

RULING

—————–

1. Both these actions arise out of hire-purchase agreements. One is brought against the hirer of the motor vehicle to which the agreementrelates and the other against a guarantor as well as the hirer. In each the claim is for money but in each case it is a claim whichis neither a claim for unliquidated damages nor a claim limited to the amount of instalments due and unpaid. If the actions had beenbrought in the Supreme Court there would be no doubt that judgment in default could only be entered by leave of the Court under 0.84R.3 RSC. But the solicitor for both plaintiffs has argued that 0.84 R.3 does not apply in the District Court and that he is entitledby virtue of the provisions in Rule 22 of the District Court Civil Procedure (General) Rules to have judgment entered without applying for leave.

2. Rule 9 of the District Court Civil Procedure (General) Rules provides as follows:-

“9. (1) Subject to the provisions of the Ordinance and of these rules, the Rules of the Supreme Court as for the time being enactedand save as it therein may otherwise be provided shall apply to proceedings in the Court as they apply to proceedings in the SupremeCourt with such modifications as are necessary for that purpose.
(2) Those parts of the Rules of the Supreme Court which are listed in the Schedule shall not apply to the Court or to any proceedingsin the Court.”

3. There is no provision in rules of Supreme Court to the effect that 0.84 is not to apply in the District Court and 0.84 is not listedin the schedule referred to in Rule 9(2) District Court Civil Procedure Rules. But the argument is that since the R.S.C. apply subject to the District Court Ordinance and District Court Civil Procedure Rule and the overall aim of those provisions is to provide a simplified form of procedure modelledon that of the County Court in England the intent of the provisions is to eschew sophisticated procedures such as that set out in0.84 RSC.

4. My attention has been drawn to O. 10 R. 2 of the County Court Rules and to a comment by Judge Liu in his ruling in Wayfoong Finance Limited v. Tommy Ng Sung Hei (V.C.J.5774/74) that in “like cases in the English County Court the plaintiff may simply enter judgment in default of defence”. Thatprovision applies however only in respect of default actions and by O. 6 R. 2 it is provided that a default action is not availablewhere the debt or liquidated demand sought to be recovered is more than the amount of instalments due and unpaid under a hire-purchaseagreement. An action brought on such a claim in the County Court must be an ordinary action. In any event, Judge Liu makes it quiteclear that he considers that “O. 84 R. 3 RSC is made applicable to the District Court” and he points out how, even if a plaintiffcommenced a default action on such a claim, he would have to amend and continue as an ordinary action.

5. Consequently, to hold that O. 84 RSC applies to the District Court does not have the effect of introducing into the District Courta procedure more complex than that available in the County Court.

6. The overall intent of O. 84 RSC is to provide the Court with a means of supervising claims for the payment of debt or liquidateddemands arising out of hire-purchase agreements to ensure that judgment is not entered in respect of an unrecoverable sum of money.The aim is to put the Court on its guard and provide a means of preliminary investigation to ascertain whether or not the amountclaimed, or part of it, may be a penalty. If it is clear that no part of the claim is a penalty the Court will grant leave to enterjudgment. But if there are reasonable grounds, or there is a fair arguable case, for holding that the sum claimed may be a penaltyleave will be refused and the Court will try the action. (The Supreme Court Practice 1973, sixth cumulative supplement, para. 84/1-3/8).

7. If O. 84 applied only in the Supreme Court the old result would follow that supervision over such claims would be restricted simplyto those large enough to exercise the jurisdiction of the Supreme Court. Yet it is clearly the intent of O. 84 to ensure that judgmentis not entered in respect of an unenforceable claim. It is not the magnitude of the claim to which odium attaches but its penal nature.There is therefore sound reason for holding that there is just as much need for O. 84 in the District Court as in the Supreme Court.Consequently, it seems to me that there would need to be a clear-cut indication in the District Court Ordinance or District Court Civil Procedure Rule that O. 84 was not to apply before I would be prepared to rule that it did not. Since I canfind no such indication I rule that O. 84 does apply.

8. In each of these cases since the plaintiff has sued for a stipulated sum as a debt or liquidated demand and not for damages for breachof contract he cannot escape the operation of the Order. (The Annual Practice 1973, para. 84/1-3/4).

Sd. E.C. Barnes
District Judge
29.8.1975.

Certified true copy:-

(I. Tang)
S.A.T./K.D.C. 4.9.75.

Representation: