廣東省廣業環保產業集團有限公司 (formally known as 廣東省廣業工業建設集團有限公司) v. PO ON CONSTRUCTION ENGINEERING LTD

HCA 362/2015

[2018] HKCFI 1380

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 362 OF 2015

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J U D G M E N T

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The parties

1.  The plaintiff is a company incorporated in Mainland China in 2000. Prior to 22 July 2008, it operated under the name of 廣東省廣業工業建設集團有限公司 and was in the business of manufacturing and exporting of, amongst other things, aluminum panels.

2.  The defendant was a sub-contractor engaged by the China Overseas Building Constructions Limited (the “Principal Contractor”) for construction of buildings at the Lohas Park (the “Lohas Park Project”).

The plaintiff’s claim

3.  On 25 October 2007, the plaintiff and the defendant entered into an agreement whereby the plaintiff agreed to manufacture and sell and the defendant agreed to buy a specified quantity of aluminum panels to be used in the construction of Towers 2 and 3 of Lohas Park.  The total contractual sum of HK$5,233,800 was to be settled by the defendant by instalments with reference to the progress of the manufacture and construction works.

4.  On 7 December 2007, the plaintiff and the defendant entered into another agreement whereby the plaintiff agreed to manufacture and sell and the defendant agreed to buy a further specified quantity of aluminum panels to be used in the construction of Towers 7 and 8 of Lohas Park.  Like the first agreement, the total contractual sum of HK$5,124,000 was also to be settled by the defendant by instalments with reference to the progress of the manufacture and construction works.

5.  By December 2008, the full sum of HK$10,357,800 under the two agreements had become payable.

6.  Between November 2007 and November 2012, the defendant had only made to the plaintiff part payment in the total sum of HK$5,035,780.  Despite repeated demands by the plaintiff, the defendant has failed to settle the balance of HK$5,322,020.

7.  On 17 February 2015, the present action was commenced.   The plaintiff claims from the defendant the outstanding sum of HK$5,322,020 together with interest and costs.

The defendant, and its Defence and Counterclaim

8.  On 2 May 2015, the defendant filed its Defence and Counterclaim.  The existence of the two agreements is admitted (paragraphs 4 and 6 of the Defence).  It is further admitted that between about January and November 2008, the plaintiff supplied and delivered to the defendant aluminum panels (paragraph 8(a) of the Defence).  The defence raised by the defendant is that the aluminum panels so supplied and delivered by the plaintiff were not of merchantable quality, and were not reasonably fit for the purpose of constructing formworks in the Lohas Park Project.  The defendant further avers that by virtue of such alleged breaches by the plaintiff, it has suffered loss and damage as follows:

(a)  the Principal Contractor’s non-payment of the balance of the contract price relating to the Lohas Park Project, in the sum of HK$4,091,469.40;

(b)  additional labour costs to be assessed; and

(c)  loss in the goodwill of the defendant in general, to be assessed.

9.  Despite its pleaded defence, the defendant has failed to take steps in any attempt to substantiate it.  On 25 July 2017, the defendant’s then legal representative ceased to act for it.  On 27 July 2017, Master K Lo granted an unless order that “unless the parties do exchange or serve signed statements of factual witness by 4 p.m. on 2^nd August 2017, the parties be debarred from adducing evidence of factual witnesses at the trial.”  Despite the Order, the defendant has failed to file any witness statement of facts.  It has now been debarred from doing so.  It did not attend the Case Management Conference that took place on 9 November 2017.  It failed to attend the Pre-trial Review before me on 28 February 2018.  On that day, I made an Order pursuant to Order 25, rule 1C of the Rules of the High Court that the defendant’s counterclaim be provisionally struck out.  The three-month period for the defendant to make application for restoration of the same will soon expire on 28 May 2018.  The Court has received no such application.

The trial

10.  The defendant fails to appear during the trial.  I am satisfied that the defendant has properly been informed of the hearing date and served with the trial bundles.  I proceed with the trial pursuant to Order 35, rule 1.

11.  The plaintiff calls 梁勁瑜 (“Mr Leung”).  At the time material to this action, he held the position of “採購貿易部副部長” of the plaintiff.  His witness statement is dated 3 July 2017.  Pursuant to the Order of Master Hui dated 8 May 2017, Mr Leung’s statement stands as his evidence in chief.  I see no reason to order otherwise.  Mr Leung confirms the truth and accuracy of the contents of his statement.  There is no cross-examination.  I accept his evidence that the aluminum panels which the defendant ordered pursuant to the two agreements have been manufactured and delivered to the defendant.  Mr Leung denies that they were unmerchantable or otherwise not fit for their specified purpose. He denies the defence.  I have considered the defendant’s pleaded defence.  There is no evidence in support thereof.  In fact, the defendant has previouslyin its letter of 4 August 2010 admitted its liability for the outstanding amountwithout any reservation.  I find that Mr Leung’s evidence, together with the documents referred to in his statement, supports and proves the plaintiff’s claim. 

12.  There is no evidence in support of the defendant’s counterclaim.  It has been provisionally struck out.  The three-month period for the defendant to make application for restoration of the same has not expired (which will soon do on 28 May 2018).  The trial has however taken place.  Rather than to wait for the expiry of the three-month period, I now formally dismiss the counterclaim.

Disposal

13.  In the circumstances, and having heard the evidence, I allow the plaintiff’s claim and dismiss the defendant’s counterclaim.  I give judgment to the plaintiff in the said sum of HK$5,322,020.  I further order that costs of both the claim and counterclaim be to the plaintiff, to be taxed if not agreed.

14.  As to interest, I note that there was a substantial time gap between the accrual of the cause of action and the commencement of the present action.  I do not deem it fair to order pre-judgment interest for the entire period.  I note that on 19 August 2013, the plaintiff through a firm of lawyers in the Mainland formally issued a letter of demand to the defendant for payment of the outstanding sums.  That date appears to me to be a fair starting point for pre-judgment interest to run.  Having heard Mr Chow, I award pre-judgment interest on that sum of HK$5,322,020 at the rate of prime plus 1% from 19 August 2013 to the date of this judgment, and thereafter until payment at the judgment rate.