XCHRX LEADER CIVIL ENGINEERING CORPORATION LTD. v. WELL-PRO ENGINEERING LTD.

1997 , No. Con 42

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. The plaintiff (Leader) obtained default judgment against the defendant (Well-Pro) on 15 July 1997. This was a regular judgment. The judgment was for -

1. The sum of $9,059,883.12in respect of loans, "advance payments", with interest agreed at prime rate plus 3%, and certain payments by Leader to suppliers and contractors which Well-Pro, it is said, is obliged to reimburse.

2. The sum of $5,534,899.88 being loss and damage suffered by Leader because Well-Pro failed to carry out part of the contract and Leader did so.

3. Also unquantified loss and damage on the basis that Well-Pro failed to carry out maintenance work during the maintenance period.

2. Well-Pro applied to set aside this judgment. I found that Well-Pro had a real prospect of success on the first item above, but not the other items. I set aside the judgment in respect of the sum of $9,059,883.12 .

3. Regarding costs, I said this -

"The matter of costs has not been argued, but my preliminary view is that the honours were equally divided in the contest. Accordingly, I make an order nisi that the parties pay their own costs of the application."

4. Leader now applies to vary this order. Mr Aglionby points to the fact that the defendant was at fault - in the sense that it did not comply with the Rules - and, in this situation, the usual order is that the defendant bear the costs of the application. This is true, but it is also so that, when the plaintiff obtained judgment, it well knew that the defendant wished to defend the action. Given this, the plaintiff should have assumed that, if it proceeded with the application for default judgment, it would be faced with an application to have it set aside. The plaintiff must be taken to have known that it was at risk in such an application, but elected to proceed with the application for the default judgment. In this situation, it seems to me, I should look at the merits, and decide the question of costs on the basis of the degree of success of the parties. On that basis, I remain of the view that the fight resulted in a draw. Accordingly, my order is made absolute.

5. On this application, the plaintiff has been unsuccessful. There seems no obvious reason why costs should not follow the event. I make an order nisi that the plaintiff pay the costs of this application in any event.

6. The defendant applies for a stay of execution pending an appeal against my decision. The notice of appeal has been lodged and a hearing allocated on 5 March 1998 - some 6 weeks away. Unfortunately, the defendant's evidence in support of this application is not helpful. In such an application as this, the court wants to know why a defendant should not pay the judgment debt now and recover it from a plaintiff if it is successful in an appeal. The defendant says nothing about this. Miss Cheng says that her instructions are that the defendant is a small contractor, and having to pay now would cause hardship. This should have been in evidence. Nevertheless, I think I can infer from what the evidence I have read in these proceedings that the defendant is not a major contractor, and that for any smallish business to find over $5 million would be disruptive. The probabilities are that the defendant is entitled to be paid over $5 million by the employer, and this money will be channelled through the plaintiff. This being the case, and taking into account the fact that the appeal hearing will take place shortly, I do not think that the plaintiff will suffer any prejudice by a stay. In these circumstances, I exercise my discretion to grant a stay until judgment on the appeal or further order.

7. The costs of this application should, it seems to me, go to the plaintiff. The defendant was seeking an indulgence, and the plaintiff was entitled to oppose. I make an order nisi that the costs of this application be to the plaintiff in any event.