XCHRX SECAN LTD. v. WONG PING WAI t/a ASSOCIATED CONSULTING ENGINEERS

1996, No. A5227

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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This Application

1. On 4 December 1997, the defendant suffered judgment to be entered against him in default of a defence having been served. This judgment was in the sum of $4,000,364.57, with interest and costs. The defendant now seeks to have this judgment set aside.

Defence on the Merits

2. The defendant contends that he has a defence to the plaintiff's claim that that has a real prospect of success.

3. Associated Consulting Engineers (ACE) was a consultant engineer on the plaintiff's large construction development, and its job, broadly, was to design a seawater supply and control system and a flushing water distribution system in a water chilling plant room. This installation operated the air-conditioning system for the commercial part of the development and the flushing water system for both the commercial and residential parts of the development.

4. On 8 May 1993, the water tank in the water chilling plant room overflowed causing damage. The plaintiff says that ACE is responsible for this damage both in tort and by reason of the breach of its contractual obligations.

5. As one might expect, ACE admits its obligations to carry out its undertaking with reasonable care and skill, that there was the flood and that this caused damage. ACE says, however, that it did not breach its obligation, and that the reasons for the flood were -

a) the ball float valve intended to shut off the water inflow remained partly open;

b) an ultrasonic sensor intended to shut off another valve did not work;

c) the water from the tank discharged directly onto the floor of the room; and

d) the drainage system of the room was not capable of draining the water at the same rate as it was discharged from the water tank.

ACE further says that -

a) a central control system controlling the seawater pumps was not operational so the pumps or the valves should have been, and were up to 8 May 1993, switched off manually by others who were responsible for this; and

b) ACE's design provided for attendance in the room, and, if this attendance had been provided, the overflow would have been detected immediately.

6. These allegations by ACE are supported by evidence, including expert evidence. The evidence is that, if these facts are established, it was not the design of ACE, or its supervision or co-ordination, that was at fault or caused the damage, but other factors. If this evidence is accepted, the likelihood is that the defendant will succeed in his defence. There is no evidence to the contrary from the plaintiff so there is no reason at this stage why I should hold that the evidence is not likely to be accepted. It is not inherently improbable or inconsistent with any other evidence.

7. I say that the plaintiff has not adduced any evidence to the contrary, although it has filed an affidavit by its solicitor, Mr Russell Bennett. Mr Bennett, while no doubt an expert solicitor, is not an expert in the field concerned. What he says are, unashamedly, arguments. I should, however, deal to some extent with the most important of them.

8. Regarding the allegation that the room was unattended, Mr Bennett says that ACE's design contemplated that the room would be unattended for up to 6 hours per day so it was supposed to be safe when unattended. That is not my reading of the evidence. What was contemplated by ACE's design and the subsequent requests to the architect was that the room would be attended while the plant was operating.

9. Mr Bennett says that ACE should not have substituted the sensor for other types of switches. That is a matter of expert evidence. That evidence, at this stage, is that this was acceptable. According to the expert evidence, "the existing safety regime built into the design . . . is safe enough.".

10. Regarding the drainage arrangements in the room to cope with any overflow, Mr Bennett's view appears to be that ACE should have ensured that the architect, whose responsibility it was and who was, as is usual, the lead consultant, designed the drainage to cope with the overflow. I do not accept this. The architect knew the details of the design by ACE. The architect must have seen what overflow would come from the tank. It was the architect's responsibility, if anyone's, to design the drainage to cope with this. Not only do I not accept this, but the only expert evidence before me at this stage supports the defendant.

11. Mr Bennett says that ACE should have designed the overflow so that it discharged directly into a drain. The expert evidence is that discharge from an overflow should be conspicuous, and that discharge into a drain would not be so.

12. Miss Rattigan's submissions follow much the same lines as the arguments advanced by Mr Bennett. I reject them for the same reasons.

13. In summary, the plaintiff's case at this stage is, broadly, that ACE was responsible for the design as described, the system failed, there was a flood, so ACE is responsible. This might be enough to raise a prima facie against ACE in the absence of evidence, but there is evidence. This evidence, if established - and there is no reason now to think it will not be established - shows that there is a real prospect of ACE showing that it is not responsible. On that basis, I believe that I should exercise my discretion to set aside the judgment, and give leave to the defendant to file and serve a defence within 7 days. I so order.

Irregular Judgment

14. As an alternative, Mr Harris argues that the judgment is irregular, and, if this is so, the burden that the defendant has to overcome to have this judgment set aside is a much lighter one.

15. The argument here is that the judgment was entered for a specific sum of money, but the plaintiff's claim was for damages and not "a liquidated demand only". The judgment, therefore, should have been for damages to be assessed.

16. In view of my earlier findings, it is not necessary to decide this aspect of the matter. I will say that I am inclined to think that the plaintiff's claim is for damages, and the judgment should not have been entered for a specific sum. But, if the defendant's case had been on this basis alone, I would have set aside the judgment and entered one for damages to be assessed. This, I imagine, would not have suited the defendant.

The Costs

17. I have heard no argument on the question of costs, but it seems to me that the defendant should not get its costs because he was in default and he is seeking the court's indulgence. On the other hand, I am inclined to think that the plaintiff should not get its costs unless it wins the action. In this respect, I take into account that the plaintiff's solicitors knew that the defendant intended to file a defence, and took advantage of a lapse by the defendant's solicitors. I make an order nisi that the costs of this application be costs in the plaintiff's cause.

JK FINDLAY

Judge of the High Court
Court of First Instance