SCHINDLER LIFTS (HONG KONG) LTD. v. OCEAN JOY INVESTMENTS LTD.

HCCT 81/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 81 OF 2001

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D E C I S I O N

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1. On 25 February 2002, the plaintiff applied for summary judgment against the defendant in the sum of $1,166,100.00. Affidavits with voluminous exhibits were filed in the following few months by both sides. On 2 September 2002, some three weeks before the hearing of the summary judgment application, the defendant substantially amended its Defence.

2. By a Judgment handed down on 10 January 2003, I granted the defendant unconditional leave to defend (which was the order sought by it: see the defendant's skeleton submissions for the hearing). I also made a costs order nisi that the costs of and occasioned by the summons were to be costs in the cause.

3. By a letter dated 24 January 2003, the defendant sought to vary the costs order nisi. It is said that counsel advised that the application could be made in this way. Be that as it may, this was inappropriate. The defendant ought to have taken out a summons within 14 days to make the application. Eventually, on 29 January 2003, the defendant took out the appropriate summons, seeking leave to do so as it was out of time.

4. I am not minded to vary the costs order nisi:-

(1) Where, as was the defendant's contention, an order for unconditional leave to defend is made, the usual order is that costs are to be costs in the cause: Hong Kong Civil Procedure 2002, Volume 1 at paragraph 14/7/3. I accept that this is a general rule subject to exceptions but I see none in the present application.

(2) First, the full extent of the defendant's position was not made apparent until the Defence was amended on 2 September 2002, as I have said, some three weeks before the hearing. The Amended Defence pleaded for the first time, the defendant's case on the true construction of the relevant agreement (the Letter as defined in my earlier Judgment), namely that upon the making of the sub-contract between the plaintiff and Free Form Construction Company Limited (the main contractor), any obligations on the defendant's part as contained in the Letter fell away. Facts in support of this contention are yet to be supplemented at the discovery stage. Furthermore, the Amended Defence also pleads for the first time an estoppel by convention, which was the other main plank of the defendant's defence. Mr Kwok, for the defendant, argues that on the basis of the original Defence alone, triable issues existed. I am not prepared to go into the exercise of separating the facts and matters pleaded in the original Defence from those pleaded in the Amended Defence. The fact remains that the defendant relied on the Amended Defence at the hearing of its application for summary judgment.

(3) Secondly, reliance had been placed by Mr Thomas Lee (who appeared for the defendant at the hearing of the summary judgment application), on the factual matrix existing at the time of the Letter. For example, reference was made to the common practice of employers engaging sub-contractors even before a main contract is entered into "especially when manufacturing or shipment lead times are involved". In my earlier Judgment, I referred to the possibility of the court looking at the factual matrix of the Letter at trial. I note that the defendant has not pleaded much, if anything, by way of relevant fact going towards this aspect.

(4) Thirdly, ultimately I am not of the view that it was somehow unreasonable for the plaintiff to take out a summons for summary judgment and to pursue this course. Indeed the defendant seems to have recognized this in that it sought an order there be unconditional leave to defend at the hearing and not the dismissal of the summons. Furthermore, whether or not the costs expended by either party are somehow disproportionate to the claim itself is a matter eventually for taxation. It does not feature significantly in the present decision as to the right order to make in relation to the incidence of costs at this stage.

5. For the above reasons, I dismiss the application to vary the costs order nisi.