VASKY ENGINEERING LTD v. J M L ENGINEERED FACADES PTY LTD

HCA 1423/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1423 OF 2001

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J U D G M E N T

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1. This is a pre-trial review in respect of a trial that is due to commence on 25 November this year with 5 days reserved.

2. At the hearing, Mr Lee, who appears for the Plaintiff, indicated that his client desired to make an application for security for costs against the Defendant in respect of the Defendant's counterclaim to these proceedings.

3. That application is not technically before me at the moment, as I have been provided with a copy of a summons which has been prepared but not yet issued seeking such an order.

4. Having heard the parties, I have decided that it would be appropriate from me to deal with this matter today, on the undertaking of the Plaintiff, which has been given through Mr Lee, to immediately issue that summons.

5. It seems to me that the application that is made by the Plaintiff is faced with considerable difficulties. The first is that it seems to me quite clear on the basis of the pleadings that the matters that are raised in the counterclaim arise out of, in broad terms, the same matters on which the claim is based. The claim is based upon an alleged contract between the Plaintiff and the Defendant for the carrying out certain building works at the Dragonair Building at Chek Lap Kok Airport.

6. The counterclaim is put forward on the pleadings by way of defence to those proceedings and alleges various breaches of that contract on the part of the Plaintiff. These are said to relate to delay, which has resulted in damage being suffered by the Defendant in the form of a reduced payment from its head contractor at the end of the day; to defective work in relation to the work done by the Plaintiff, for which a claim to damages is made by the Plaintiff; and in respect of certain contra charges which were imposed, which are also said to arise as a result of a failure of the Plaintiff to do certain thing that it should have done, for which the Plaintiff seeks reimbursement.

7. It seems to me that, certainly in a broad sense, all the matters arise out of the same matter - the performance by the Plaintiff of the contract on which the claim is based. That being the case, I am satisfied that there is, in principle, no real prospect of a successful application for security given that the matters raised by the Defendant are put forward firstly by way of defence, and secondly by way of counterclaim to the extent that the amounts claimed exceed the amount of the claim put forward by the Plaintiff.

8. It also seems to me that the Plaintiff would have been in difficulties in relation to the court's exercise of its discretion having regard to very late stage at which this application is made. These proceedings have now been on foot for over two years. The counterclaim was first made in a slightly smaller amount, although still one which exceeded the amount of claim, in the middle of 2001. It was amended following the service of witness statements and supplemental statements in October 2002, just over a year ago. At no time has there been any application or suggestion that security for costs should be given. I have had no very good explanation of the reason for the delay, and in the circumstances, it seems to me that this, too, would be a factor which would have weighed heavily with me, had I gone on to consider whether or not an order for security should be made in the exercise of my discretion.

9. In those circumstances, I direct that the summons be issued forthwith but I shall go on to dismiss the summons.