GAO XIN JIAN GROUP (HONG KONG) HOLDING COMPANY LTD v. KIN LEE PRECAST CONCRETE PRODUCTS COMPANY LTD

HCA 1453/2019

[2024] HKCFI 1058

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1453 OF 2019

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D E C I S I O N

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A.  INTRODUCTION

1.  There were before me three matters:

1.1  the Defendant’s appeal (by Notice of Appeal filed on 25^th September 2023)  against the Master’s decision of 11th September 2023 dismissing its application of 5^th September 2023 for an extension of time to file its Re-Amended Defence and Counterclaim (“the Time Extension Appeal”);

1.2  the Defendant’s appeal (by Notice of Appeal filed on 21^st December 2023)  against the Master’s decision of 20th November 2023 giving judgment to the Plaintiff in the sum of $2,941,520 with interest thereon, together with costs (“the O.14 Appeal”);

1.3  the Defendant’s application (by summons filed on 21^st December 2023)  for an extension of time to file its notice of appeal in the O.14 Appeal out of time.

2.  At the hearing, I granted the latter application for an extension of time, and ordered that the Plaintiff pay indemnity costs to the Defendant in respect of the same, the Plaintiff’s solicitors Messrs Lo & Fung (“LF”)  having deliberately withheld from the Defendant’s solicitors CLM Lawyers (“CLM”)  the fact that judgment had been entered against the Defendant until after time to appeal had expired.[1]

B.   BACKGROUND

3.  The following is undisputed.

4.  The Plaintiff is a manufacturer of precast concrete products. The Defendant supplies precast concrete products to contractors.

5.  In 2018, the parties entered into several contracts, whereby the Plaintiff agreed to supply, and the Defendant agreed to purchase, precast concrete slabs and bricks produced by the Plaintiff.

6.  On 12th August 2019, the Plaintiff commenced the present proceedings, claiming a total of $3,026,320 due under three agreements, made on 5^th October and 5^th November 2018.

7.  On 14^th October 2019, the Defendant filed a Defence and Counterclaim alleging, inter alia, non-delivery and delivery of defective goods, and counterclaiming for damages arising from the need to find an alternative supplier to manufacture goods to meet the Defendant’s obligations to its end buyer.

8.  On 17^th January 2020, the Plaintiff filed an Amended Statement of Claim (“the ASOC”).

9.  On 28^th February 2023, the Defendant applied for leave to amend its Defence and Counterclaim. Leave was granted on 7^th March 2023. The Amended Defence and Counterclaim (“ADCC”)  was filed on 8^th March 2023.

10.  On 8^th March 2023, the Defendant filed its witness statement.

11.  On 10^th March 2023, the Plaintiff filed its witness statement.

12.  On 22^nd March 2023, LF wrote to CLM asking for consent to the Plaintiff’s intended application for leave to re-amend its Statement of Claim.

13.  On 27^th March 2023, CLM responded that the Defendant was unable to agree to the Plaintiff’s amendments as the Plaintiff had completely changed its originally pleaded case after the Defendant’s amendment of its Defence and Counterclaim.

14.  On 3^rd April 2023, the Plaintiff applied for leave to re-amend its Statement of Claim. By consent, leave was given on 8^th June 2023 (“the 08.06.2023 Order”). Under paragraph 3 of the 08.06.2023 Order, leave was given to the Defendant to file a Re-Amended Defence and Counterclaim within 28 days thereafter.

15.  On 15^th June 2023, the Plaintiff filed its Re-Amended Statement of Claim (“the RASOC”). The Plaintiff substantially revised its pleading, claiming a sum of $2,941,520 said to be outstanding amounts for goods (“the Goods”)  delivered under the agreements made on the following dates (collectively, “the Agreements”):

15.1  5^th October 2018 (“the 1^st Agreement”);

15.2  5^th November 2018 (“the 2^nd Agreement”);

15.3  5^th October 2018 (“the 3^rd Agreement”);

15.4  5^th October 2018 (“the 4^th Agreement”);

15.5  7^th November 2018 (“the 5^th Agreement”);

15.6  4^th December 2018, varying the price per unit of part of the Goods contracted to be sold under the 2^nd Agreement and the 5^th Agreement (“the Memorandum”);

15.7  4^th December 2018, orally, retrospectively extending the Memorandum to cover the Goods to be delivered under the 4^th Agreement, such that the unit price for each item thereunder would be increased to $600 (instead of $480)  (“the Memorandum Extension”);

16.  On 10^th July 2023, the Plaintiff filed a Supplemental List of Documents.

17.  On 11th July 2023, CLM wrote to LF, asking for copies of the documents in the Plaintiff’s Supplemental List of Documents. There was no reply from LF.

18.  Pursuant to the terms of the 08.06.2023 Order, the last day for the Defendant to file its Re-Amended Defence and Counterclaim was to be 13th July 2023. The Defendant did not meet this deadline, which it says was due to the late provision of documents by the Plaintiff.

19.  On 18^th July 2023, CLM wrote to LF chasing for copies of the documents in the Plaintiff’s Supplemental List of Documents.

20.  On 19^th July 2023, LF provided six hundred and nineteen pages of documents to CLM.

21.  On 27^th July 2023, the Plaintiff filed its Amended Reply and Defence to Counterclaim.

22.  On 23^rd August 2023, the Plaintiff issued a summons against the Defendant seeking, inter alia, final judgment against the Defendant and a dismissal of the Defendant’s counterclaim (“the O.14 Summons”).

23.  On 24^th August 2023, CLM proposed directions for the conduct of the O.14 Summons and informed LF that the Defendant would file a Re-Amended Defence and Counterclaim.

24.  On 5^th September 2023, the Defendant issued a summons for leave to file its Re-Amended Defence and Counterclaim within seven days (“the Time Extension Summons”).

25.  On 11th September 2023, as mentioned above, the Master dismissed the Time Extension Summons.

26.  On 10^th October 2023, the Defendant filed the 1^st Affidavit of Tam Yuen Shan in support of the Time Extension Appeal. Amongst other things, the affidavit exhibited the Defendant’s draft Re-Amended Defence and Counterclaim (“the draft RADCC”).

27.  On 20th November 2023, there was a second call over hearing of the O.14 Summons. By an oversight, CLM failed to attend. Judgment against the Defendant was entered (“the O.14 Judgment”). Later that day, CLM wrote to LF, asking for the directions which the court had given. CLM received no response.

28.  On 22^nd November 2023, Mr Chung of CLM called Mr Ho of LF, asking about the directions given. Again, he was not told of what had happened. Mr Chung also called the Master’s clerk, and was asked to put his query in writing.

29.  On 27^th November 2023, the O.14 Judgment was sealed.

30.  On 7^th December 2023, LF wrote to the court, without sending a copy to CLM,[2] asking to vacate the hearing of the Time Extension Appeal fixed for 16^th January 2024, on the grounds that the O.14 Judgment had been obtained.

31.  In the evening of the same day, LF faxed the O.14 Judgment to CLM.  By this time, the time for appealing against the O.14 Judgment had expired.

C.  THE O.14 APPEAL

32.  The O.14 Appeal is a rehearing of the O.14 Summons

C1.  Relevance of draft RADCC

33.  Counsel for the Plaintiff, Mr Oscar Tam, submitted that in considering the O.14 Summons, I cannot take into account the draft RADCC, or indeed any other points which are not pleaded in the ADCC (such as the points taken in the Defendant’s affidavits).

34.  Mr Tam cited Hong Kong Topkey Limited v Wintac (Hong Kong)  Ltd [2023] HKCFI 1711 for this proposition. Hong Kong Topkey Limited referred in turn to Kaefer AG v Winfield Marine Services Co Ltd [2022] HKCA 807. As explained in CCMD Overseas Ltd v Sinom Investments Ltd [2023] HKCFI 2912 (Mr Recorder Eugene Fung SC)  at [39(2)], the Court of Appeal in Kaefer AG did not appear to lay down any general rule that in an O.14 application, a defendant cannot rely on a defence which has not been pleaded. After all, RHC O.14 r.4(1)  provides that a defendant may show cause against a summary judgment application by affidavit or otherwise to the satisfaction of the court. This includes showing cause by the exhibition of a draft defence to the defendant’s affidavit: Chinakong Manufactory Ltd v Uniden Hong Kong Ltd [1993] 1 HKLR 28 at 31 line 1.

35.  I therefore do not agree with Mr Tam that since the ADCC has not pleaded to certain parts of the (subsequently filed)  RASOC, the Defendant does not have, and is not entitled to adduce, evidence in opposition to the Plaintiff’s claim, and that the Plaintiff is therefore entitled to judgment without more.[3]

36.  I would further note that the Defendant’s defences that the Goods were defective or not delivered was set out in its Defence from the start, albeit that it is true that not all of the points now relied on by the Defendant in its defence were pleaded. In any event, however, the points now relied on by the Defendant were set out in the 2^nd Affidavit of Tam Yuen Shan (“Tam 2^nd”)  which was filed in opposition to the O.14 Summons. Many of the points were also set out in the Defendant’s witness statement.

37.  The Defendant’s case is that there are clearly triable issues in the present case, which makes it one unsuitable for summary judgment.

C2.  Whether counterclaim for defective Goods; defence of set-off

38.  The Defendant says that there were defects in the concrete bricks supplied under the 2^nd, 4^th and 5^th Agreements.  It complains that the defective Goods were of poor quality and failed to comply with the agreed requirements and industry standards. For example, the surface colour of the bricks was inconsistent; the patching materials used were of inconsistent colours; the repair works done were rough; there were damaged bricks; there were bricks with unsmooth surfaces, excessive air bubbles and concrete voids; concrete aggregates were exposed without protective layers; there were broken hook positions; the hook positions were shoddy and poorly constructed; and the product heights were inconsistent.

39.  There were in fact contemporaneous complaints about these defects, in the form of emails, letters and photographs. The following were cited in the skeleton argument of Miss Athena Wong, counsel for the Defendant. Apart from the first one, they were all referred to in the Defendant’s witness statement which predated the O.14 Summons.

39.1  An email from China State Construction to the Plaintiff dated 16^th November 2018:

“We received the precast concrete blocks on Wednesday, 14/11, which did not meet our requirements. The construction site cannot accept the delivery. Please make immediate improvements and respond with the improved quality and remedial measures by the morning of 26/11 (Monday).”

39.2  An email from the Defendant to the Plaintiff dated 16^th November 2018:

“Project: Ma On Shan and Hong Kong Airport North

We have received complaints from the China State Construction about the quality of the one-meter large bricks produced by your company, which have serious quality problems as shown in the attached photos. ….

1. The surfaces of the bricks have a large number of cavitation (water vapour bubbles), rough and uneven surfaces, and honeycombs (hollow spaces and cavities)

2. The quality of the concrete blocks is poor

3. The repair works are rough

The delivered batch of one-meter bricks (65 pieces)  has been rejected by the construction sites. The clients have made it clear that improvements must be made before the next delivery arrives at the sites, and if there are the same problems, the goods will definitely be returned!”

39.3  An email from the Defendant to the Plaintiff dated 16^th November 2018:

“Attached are the photos recently taken at the two delivery sites of China State Construction for your record. Please follow up…!”

39.4  Another email from the Defendant to the Plaintiff of the same date and in the same terms but with a further set of photographs.

39.5  A letter from the Defendant to the Plaintiff dated 21^st November 2018:

“Subject: Contract GXJ_HM 002 Problems in Delivery Progress

In accordance with the contracts signed by both parties at the beginning of November, it was clearly stated that the client places great importance on the delivery time. At that time, we also provided a supply schedule, which stated that by today, 21/11/2018, there should be a production quantity of 290 units of Type B and 110 units of Type A. However, despite repeated reminders from our side, your company has failed to meet the standards.

Your company has only produced 6 units of Type A and 32 units of Type B and, further, all those units are defective. The production has been significantly behind schedule and unable to meet progress requirements.”

39.6  A letter from the Defendant to the Plaintiff dated 21^st November 2018:

“Subject: Contract GXJ_FW 003 Quality Problem of Concrete Bricks”

….

Upon our inspection and testing of the products that have arrived in Hong Kong, it is evident that the quality is very poor. We have already discussed these problems with you via WeChat. …. [We] request [you] to find ways to improve the production quality to meet the delivery standards.”

39.7  A letter from the Defendant to the Plaintiff dated 28^th November 2018:

“Contract GXJ_FW 004 (Fuyong)

Contract GXJ_HM 002 (Hongmei)

Subject: Quality Problems of Concrete Bricks for China State

Construction – Airport (Type B)  1000 x 1000 x 1000mm

We hereby notify your company that the products which arrived at Hong Kong on 26/11 and 27/11 have been found to be of substandard quality, not meeting the specifications, with a large number of cavitation (water vapour bubbles)  and many areas requiring repairs. In addition, there have been significant delays in your production schedules. These reasons have led the client(s)  to send stern warning letter(s)….

[We] request that [you] find a way to improve production quality to meet the delivery standards. Should the same problems persist, we do not exclude the possibility of placing orders for the remaining products with other suppliers, and any additional costs incurred will be borne by your company.”

40.  These complaints were not denied by the Plaintiff at the time.

41.  It is the Defendant’s case that it has suffered loss, including but not limited to the $144,000 incurred in disposing of the defective items of Goods.

42.  Mr Tam submitted that nobody in court could tell whether the Goods complained of were defective or not based on an examination of the photographs. What would be required would be expert evidence, but the Defendant had already disposed of the defective items so it would not be possible to tell whether there were defects or not, and in any event, the Defendant is barred from adducing expert evidence at trial pursuant to the terms of an “unless” order of 18^th October 2022. Furthermore, it was a term of the 2^nd to 5^th Agreements that the Defendant was to arrange for inspectors to inspect the items before they left the factory and the Plaintiff would not bear any responsibility afterwards.

43.  As to the first point, I am obviously not in a position, on an application for summary judgment, to determine definitively against the Defendant that there were no defects in the Goods. There must be a triable issue in this regard. Nor can it be said that the Defendant would definitely fail at trial for lack of expert evidence. The Defendant is not limited to relying on expert evidence in order to prove its case as regards the alleged defects in the Goods. It could call witnesses who dealt with the Goods at the relevant time. As Miss Wong pointed out, there are also photographs. Matters such as cracks can be seen without the assistance of an expert, and it is not inconceivable that evidence could be called to establish that they constitute defects.

44.  As to the second point, the Defendant’s evidence in Tam 2^nd was that in or around mid-October 2018, the Plaintiff was experiencing difficulties with storage and asked the Defendant to pick up the concrete bricks manufactured under the various Agreements ahead of the delivery schedule of November 2018, as the Plaintiff would not have sufficient space for further production otherwise. It is said that Mr Kam of the Plaintiff and Ms Tam of the Defendant entered into an oral agreement that the previously agreed arrangements in relation to delivery, inspection and therefore acceptance or rejection of the concrete bricks would be varied, such that there would not be any onsite inspection, acceptance or rejection by the Defendant, and that the concrete bricks would first be picked up by the Defendant and placed temporarily at a site in Hong Kong, for inspection by the Defendant and acceptance or rejection then (“the Oral Variation Agreement”). It was pursuant to such inspection that the Defendant discovered the defects referred to above.

45.  This is an application for summary judgment. I cannot determine the veracity of the Oral Variation Agreement at this stage; nor can I make definitive findings as to whether or not part of the Goods were defective when the Defendant came to inspect them pursuant to the alleged Oral Variation Agreement.

46.  The Defendant counterclaims for the loss suffered arising from the defective Goods and seeks to set off the sums counterclaimed against the Plaintiff’s claim. It is not suggested by the Plaintiff that the claim and counterclaim are not closely connected.

C3.  Whether counterclaim for late delivery or non-delivery; defence of set-off

47.  As can be seen from the above, some of the letters complaining about defective Goods also complained about late delivery, and these were not refuted at the time.

48.  As with the complaint of the defective Goods, this defence was raised in the Defendant’s witness statement which predated the O.14 Summons. Apart from the letters above, the witness statement referred to a number of further letters, as set out in Miss Wong’s skeleton.

48.1  An email from the Defendant to the Plaintiff dated 21^st November 2018:

“The delivery rate of concrete block not even reached 20% in which we need to complete the erection of concrete block within the coming two weeks! … even based on your estimation, 200 nos. per day still not enough for us to install the concrete block.”

48.2  An email from China State Construction to the Plaintiff dated 5^th December 2018:

“I write regarding to the delivery of your concrete test cubes to our

construction site. The last two batches of your concrete test cubes were lately delivered to our site without any suitable reason. A summary regarding the late delivery of your concrete test cubes were attached.”

48.3  An email from China State Construction to the Plaintiff dated 11th December 2018:

“We received your delivery records as at 10/12 yesterday and it is behind our schedule. As our last meeting mentioned that your should complete to deliver all concrete blocks by 13 Dec 2018 this week. Now there are total 1,513 nos of concrete block pending to deliver ….”

48.4  A letter from the Defendant to the Plaintiff dated 18^th December 2018:

“Contract GXJ_FW 004 (Fuyong)

Contract GXJ_HM 002 (Hongmei)

Subject: Delivery Quantity Problems of Concrete Bricks …

Total Contract Quantity: 253 units Type A + 2442 units Type B 19

Below is the delivery status of the above contract undertaken by your company (the seller), please be informed: ….

This means your company still owes a balance of 159 units for Type A and 841 units for Type B.

…based on the above figures, the client (China Construction)  has informed us that the final delivery date for the goods is this Thursday (20 December). There will be no extensions after this date.

[We] request that your company seriously addresses the outstanding balance of the delivery. If your company is unable to complete the order within the deadline, our company will source the remaining goods from a third party, and any costs difference and administrative fees will be fully borne by your company.”

49.  The Plaintiff’s pleadings did not, on their face, disclose how many of the Goods had actually been delivered. Miss Wong analysed the pleadings and produced a table showing that the total quantity of Goods said to have been sold under the Agreements was 11,108. She then analysed the invoices which the Plaintiff had issued to the Defendant and exhibited to its evidence. These showed that the Plaintiff had only invoiced for 4,320 items (for a total amount of $3,026,320, which is the sum claimed in the RASOC). In other words, even on the Plaintiff’s own case, there was a substantial shortfall in delivery of some 6,788 items.

50.  The Defendant’s evidence is that to mitigate the loss caused by this shortfall, it had to purchase goods from alternative suppliers in order to fulfil its contractual obligations to its own clients, at a cost of some $5,750,000. This was done pursuant to two contracts, one in February 2019 and one in May 2019 (“the Replacement Contracts”). It counterclaims for the loss and damage suffered as a result of the Plaintiff’s late delivery and non-delivery, and seeks to set this off against the Plaintiff’s claim.

51.  The Plaintiff pleaded, in its Amended Reply and Defence to Counterclaim, a right to exercise an unpaid seller’s lien given the Defendant’s breach of the Agreements. However, on the Plaintiff’s pleaded case, no payment was due at the time of the late delivery or non-delivery, since payment was only due 60 days after collection of goods. It must be at least arguable that reliance on the unpaid seller’s lien provides no defence to the complaint of late delivery or non-delivery: see s.43(1)(b)  of the Sale of Goods Ordinance, Cap.26.

52.  The Plaintiff also claimed that the Replacement Contracts specified goods of a different standard to those under the Agreements. The Replacement Contracts referred to National Standard Y16, whereas the Agreements referred to British Standard 500B or National Standard 400. Furthermore, the Replacement Contracts were entered into only after the Defendant was already in breach of the Agreements by non-payment.

53.  However , as Miss Wong pointed out, even if the Replacement Contracts were not for products identical to those under the Agreements, this did not mean that they did not represent the Defendant’s best efforts to mitigate the loss caused by the Plaintiff’s late delivery or non-delivery. I agree that this must be a triable issue, and that the counterclaim is closely related to the Plaintiff’s claim.

54.  There is a further triable issue arising in relation to the complaint of non-delivery. The Defendant says that the parties entered into a further agreement after the 5^th Agreement, as evidenced by a written purchase order numbered GXJ_HM 003 and dated 27^th December 2018, for the Plaintiff to supply 640 concrete bricks at the price of $600 per piece (“the 6^th Agreement”). The Defendant says that the Plaintiff failed to deliver any of the 640 bricks under this agreement, and its counterclaim for the loss arising as a result of this forms part of its counterclaim for 6,780 items of Goods which it says was not delivered (a figure close, but not identical, to the Plaintiff’s figure above). The Plaintiff disputes that such an agreement was made at all.

C4.  Whether conditions for payment fulfilled

55.  The payment terms in the Agreements provided for payment to be made within 60 days from receipt of the “signed and stamped” delivery notes and “original” invoices from the seller. Miss Wong submitted that as the Plaintiff failed to provide the Defendant with signed and stamped delivery notes and original invoices, payment was not yet due, even in respect of those Goods which had been delivered. The Defendant also discovered that there were errors in the invoices, and had asked the Plaintiff to correct them, but the Plaintiff failed to do so.

56.  Mr Tam submitted that this was not a credible defence, as it had not been raised in earlier pleadings. He also submitted that since the Defendant had paid some of the invoices, this must have meant that the invoices were originals; otherwise, why would the Defendant have paid?

57.  It seems to me that this is not an issue of credibility, but rather, one of whether, on the proper construction of the Agreements, the requirement of a signed and stamped delivery note and delivery of an original invoice were preconditions to payment becoming due. The fact that the Defendant has paid some of the invoices may indicate that there were no such preconditions, or that the parties had subsequently agreed to dispense with such preconditions. Whether or not there were any such preconditions, and whether or not the parties subsequently dispensed with them, must be triable issues. It is also possible, as Mr Tam submitted, that the invoices were in fact originals, although there is no direct evidence in this regard from the Plaintiff; this point only adds to the list of triable issues.

58.  Mr Tam further submitted that each of the unsigned delivery notes were in fact accompanied by a stock sheet which was completed in manuscript and signed by a company related to the Plaintiff. However, there was in fact no evidence filed by the Plaintiff that the stock sheets accompanied the delivery notes (they were identified in the bundles as discrete documents), that the signatory was a company related to the Plaintiff or signed on behalf of the Plaintiff, or that the documents taken together were somehow agreed by the parties to fulfil the requirements of providing signed and stamped delivery notes.

59.  In contrast, the Defendant put forward uncontradicted evidence that no original invoices were sent to them. Again, this is not an issue that can be definitely resolved against the Defendant at this stage.

C5.   Costs of rebar

60.  The 2^nd Agreement provided that the Defendant was to provide the rebar for this agreement and that the Plaintiff would deduct the purchase cost from the contract price. Miss Wong submitted that whilst the Defendant purchased and supplied the rebar at a cost of $180,000, the Plaintiff failed to make the agreed deduction.

61.  This point affects the amount claimed by the Plaintiff.

C6.  Whether Memorandum Extension

62.  The Plaintiff pleaded that there was an orally agreed Memorandum Extension, pursuant to which the parties agreed that the unit price of Goods under the 4^th Agreement would be increased to $600 (from $480), representing a substantial total increase of $720,000 in price. The Defendant disputes that there was such an agreement.

63.  This point affects the amount claimed by the Plaintiff.

C7.  Plaintiff’s alternative case

64.  Mr Tam submitted that in the alternative, judgment should be entered for the Plaintiff for a lesser sum of $1,008,690, based on the fact that the Defendant admitted in the ADCC that it did receive 4,329 items of Goods. Mr Tam submitted that the lesser sum of $1,008,690 already gave credit for the Defendant’s complaints of loss and damage arising from the alleged defective Goods, late delivery, non-delivery, need to purchase replacement goods under the Replacement Contracts, and failure to make a deduction for the rebar costs under the 2^nd Agreement.

65.  However, Miss Wong pointed out that the calculations were based on the Defendant’s case as pleaded in the ADCC, rather than the draft RADCC. The ADCC had not completely identified all the non-delivered items, whereas the draft RADCC had identified 6,780 non-delivered items.

66.  Mr Tam did not provide any revised calculations to suggest that on the basis of the draft RADCC, judgment should nevertheless be entered for the Plaintiff for a particular sum.

67.  In any event, Mr Tam’s calculations cannot deal with the triable issue arising out of whether there are preconditions for payment under the Agreements that have not been met.

C8.  Conclusion regarding the O.14 Summons

68.  In my view, the O.14 Summons ought to be dismissed. Even in the original Defence of October 2019, the Defendant had put forward its complaints about the defective Goods and the late delivery or non-delivery of some of the Goods. Furthermore, the Defendant filed its witness statement on 8^th March 2023, in which it condescended to particulars of its defence, by, inter alia, identifying the contemporaneous complaints regarding the defective Goods and the late delivery or non-delivery of some of the Goods, exhibiting the Replacement Contracts, and explaining the circumstances in which some of the Goods were collected without inspection.

69.  It was only subsequently, on 23^rd August 2023, that the Plaintiff issued the O.14 Summons.

70.  Even then, when Tam 2^nd was filed on 9^th October 2023, setting out in detail once again the Defendant’s defences to the Plaintiff’s claim, the Plaintiff persisted with its application for summary judgment.

D.  THE TIME EXTENSION APPEAL

71.  The Time Extension Appeal is a rehearing of the Time Extension Summons.

72.  There is no dispute that the relevant considerations are as follows.

72.1  What was the original time allowed and when did it expire? The longer the original period allowed, the more difficult it is to justify an extension.

72.2  Why was the original time not adhered to?

72.3  When was the application for an extension of time taken out? The greater the delay, the more difficult it is to justify an extension.

72.4  What realistically is the further time needed to complete and file the document in question?

72.5  Will the extension of time sought have any impact on any hearing date or milestone date?

See Built Procurement Pty Limited v Sheng Ji Trade Limited [2020] HKCFI 582 at [29] (Anthony Chan J).

73.  I would first of all note that the only real impact of the outcome of this appeal is in relation to costs. As Mr Tam acknowledged,[4] even if the time under paragraph 3 of the 08.06.2023 Order is not extended, it always remains open to the Defendant to apply for leave to amend its ADCC. The only question is whether the Defendant can take advantage of the leave originally granted under the 08.06.2023 Order, so that its RADCC stands as a consequential amendment and the Defendant can thereby obtain the costs of making the amendments, pursuant to paragraphs 6 and 7 of the 08.06.2023 Order.

74.  Miss Wong submitted that the Defendant’s failure to file a Re-Amended Defence and Counterclaim by the deadline of 13th July 2023, and to only issue the Time Extension Summons some eight or nine weeks later on 5^th September 2023, was due to LF’s tactics in withholding the provision of documents in the Plaintiff’s Supplemental List of Documents despite the Defendant’s repeated requests for the documents – over six hundred pages of documents were provided only on 19^th July 2023. She further submitted that the delay was to be viewed against the context of the Plaintiff having entirely overhauled its pleadings in its RASOC some three and a half years after the commencement of proceedings, and the fact that this was the first application for an extension of time being sought.

75.  Whilst it is the case that the Plaintiff delayed providing documents which had been requested by the Defendant, this does not explain why the Defendant did not apply for an extension of time prior to the expiry of the 13th July 2023 deadline. It would have been readily apparent to the Defendant and its legal team that they would not obtain the documents in time to file an amended pleading prior to the expiry of the deadline, and that substantial time would be needed to review the documents as and when they were received. No good explanation has been put forward to explain the delay. It was only on 24^th August 2023 that CLM intimated to LF that the Defendant would seek to file a Re-Amended Defence and Counterclaim, and only on 5^th September 2023 that the Time Extension Summons was taken out.

76.  In the circumstances, it seems to me that no good reason has been established by the Defendant to justify the extension of time being sought.

77.  Given the agreed position at the hearing that it remained open to the Defendant to make a fresh application for leave to re-amend its ADCC, and given Miss Wong’s confirmation that on such an application, the Defendant would simply seek leave to make the re-amendments in the form of the draft RADCC, the possibility of granting leave to the Defendant, on terms as to costs, was raised.

78.  Initially, Mr Tam indicated that he had no objection to such a course. Subsequently, he submitted that the Plaintiff would be prejudiced by the amendments because the draft RADCC sought to delete some admissions which had previously been made in the ADCC.

79.  However, the RASOC replaced the entire substance of the ASOC. In its draft RADCC, the Defendant was not so much withdrawing an admission as making amendments consequential upon the wholesale replacement of the ASOC.

80.  In the circumstances, the Defendant ought to be given leave to make the re-amendments.

E.  DISPOSITION

81.  I allow the O.14 Appeal and dismiss the O.14 Summons. As to costs, the parties have already made submissions in this regard at the hearing. I order that the Plaintiff pays the costs of the O.14 Appeal to the Defendant. I do not disturb the costs order below, the Defendant having failed to attend the hearing before the Master.

82.  I dismiss the Time Extension Appeal and dismiss the Time Extension Summons. As to costs, I order that the Defendant pays the costs of the Time Extension Appeal to the Plaintiff.

83.  I give leave to the Defendant to file its Re-Amended Defence and Counterclaim in the form of the draft RADCC within 7 days, and leave to the Plaintiff to file consequential amendments to its Amended Reply and Defence to Counterclaim within 14 days thereafter, with the costs of and occasioned by the Defendant’s re-amendments to be borne by the Defendant.

84.  All costs are to be assessed summarily on the papers. The Plaintiff has already lodged its statements of costs. The Defendant should lodge any statements of costs within 5 days. In respect of all three matters (as identified at paragraph 1 above), the paying parties are to lodge and serve their list of objections, limited to 2 pages in bullet point form, within 5 days thereafter; the receiving parties have leave to lodge and serve their replies, if any, limited to 2 pages in bullet point form, within 3 days thereafter.