Leader Screws Manufacturing Co Ltd v Huang Shunkui [2025] 2 HKLRD 485, [2025] HKCA 276 (Jason Wong, Esmond Wong)

Jason Wong and Esmond Wong represented the defendant in Leader Screws Manufacturing Co Ltd v Huang Shunkui [2025] 2 HKLRD 485, [2025] HKCA 276.

P was a Hong Kong company and D was P’s accounting clerk. P alleged that D had practised supplier fraud from 2018 to 2019. When confronted, D resigned. After D’s resignation, P allegedly discovered a further customer fraud by D. P then issued a writ and obtained an ex parte Mareva injunction against D. Acting in person, D filed an acknowledgement of service indicating no intention to defend and had not filed a defence by the relevant time limit. P then took out a Default Judgment Summons. Five months out of time, D took out a summons seeking leave to file a defence out of time (the Leave Summons) with a home-made draft defence attached. The Default Judgment Summons and Leave Summons were heard together. The Judge granted default judgment to P while dismissing the Leave Summons, finding that the delay was inexcusable and D’s defences were unarguable. D, by then legally represented, appealed, relying on a revised draft defence in support.

Held, allowing the appeal and granting leave to D to file and serve the defence out of time on conditions, that:

(1) When considering an application to file a defence out of time, the court, in exercising its discretion in deciding whether to extend time should consider the extent and reasons for the *486 delay and whether the defendant had shown that the proposed defence was arguable after taking into account the draft defence and any affirmations filed in support (Lee Leung Nang v Karen Lee [2007] 3 HKLRD 615, Koo Ming Kown v Baptist Convention of Hong Kong (HCA 731/2017, [2017] HKEC 2332), Built Procurement Pty Ltd v Sheng Ji Trade Ltd [2020] HKCFI 582 applied). (See paras.25-27.)

(2) In an appeal against a first instance judge’s exercise of discretion, the Court of Appeal would only intervene if the judge had erred in law, failed to take into account relevant matters or had taken into account irrelevant matters or was plainly wrong (Po Kwong Marble Factory Ltd v Wah Yee Decoration Co Ltd [1997] HKLRD 1341, Re Simpson QC [2021] 1 HKLRD 715 applied). (See para.28.)

(3) Here, the defences were not incredible as contended by P as all of the essential elements of the defences advanced in the revised draft defence, including those based on P’s usual practices for payments and D’s close relationship with P’s directors, were already set out in D’s home-made draft defence albeit in a disorganised manner. While the defences were shadowy, the Judge had failed to have regard to the relevant evidence and matters which lent some support to them and erred in concluding that they were unarguable and also that the delay was inexcusable. (See paras.34-58.)

(4) Since the Judge had erred in failing to take into account certain relevant evidence and factors, it was open to the Court of Appeal to interfere with the Judge’s discretion on appeal and to re-exercise the discretion to grant D leave to file a defence out of time after assessing the evidence afresh. (See para.29.)

[The above is excerpted from the headnote to the report in HKLRD.]