SCHINDLER LIFTS (HONG KONG) LTD v. NIKKO SERVICES LTD

HCMP 270/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 270 OF 2014

(ON AN INTENDED APPEAL FROM DCCJ NO. 2263 OF 2013)

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BETWEEN

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Hon Kwan JA (giving the decision of the Court):

1.  This is an application for leave to appeal that should never have been brought. We will give our reasons succinctly why this is so.

2.  On 26 November 2013, Deputy District Judge Ada Yim handed down decision in the defendant’s application to strike out the endorsement of claim and paragraphs 11 and 12 of the statement of claim.  The judge was not satisfied that the plaintiff’s claim is unarguably bad or bound to fail but was of the view that the plaintiff’s pleading is defective.  She exercised her power under Order 18 rule 19(1) of the Rules of the District Court and directed the plaintiff to issue a summons on or before 24 December 2013 for amendment of the statement of claim and ordered that the costs related and incidental to the amendment application be to the defendant in any event.

3.  It is this decision that the plaintiff sought leave to appeal to the Court of Appeal.

4.  A number of arguments are advanced in the draft Notice of Appeal and the Skeleton Argument served by the plaintiff’s solicitors.  It is not necessary to go into most of them.  Still less is it necessary to mention any of the arguments advanced by the defendant, acting by its director Lau Chun Ming, in two skeleton submissions and three affidavits served in these proceedings.  Only one thing is of consequence to the present application: is the plaintiff’s pleading defective?

5.  We have not the slightest doubt it is.

6.  The material parts of the statement of claim consist of just three paragraphs, two of which the defendant seeks to strike out, and they read as follows:

“10. There was an express terms [sic] of the settlement agreement that

‘After the settlement sum is paid, subject to the dismissal of HCCW 251/10:-

(a) case CACV 250/10 shall be withdrawn with no order as to costs’.

11. There were implied terms of the settlement agreement that:-

(a) the defendant would do all things necessary to achieve the withdrawal of the appeal;

(b) the defendant would co-operate with the plaintiff to achieve the withdrawal of the appeal; and

(c) the defendant would take any and all reasonable steps required to achieve the withdrawal of the appeal.

12. In breach of the settlement agreement the defendant failed and/or refused to achieve the withdrawal of the appeal and/or co-operate with the plaintiff to achieve the withdrawal of the appeal.”

7.  The judge took the view that the express term (a) pleaded in paragraph 10 of the statement of claim is plainly a pre-condition, the effect of which is that the dismissal of HCCW 251/10 must first be brought about before the appeal in CACV 250/10 was to be withdrawn.  The plaintiff has not pleaded whether the pre-condition has been fulfilled, or whether the pre-condition is not applicable, or whether express term (a) as a whole is ambiguous, as contended by the plaintiff’s solicitor Mr Shaw at the hearing (see paragraphs 42 and 35 of the decision).  She concluded that the pleading is defective for the above reasons and it failed to show there is a breach of the implied term and the defects should be cured by amendment.

8.  For present purpose, it is unnecessary to decide if express term (a) is a pre-condition, although on the face of the wording it would appear to suggest that this condition, namely, dismissal of the winding-up petition, should be fulfilled before the appeal in CACV 250/10 was to be withdrawn.  That was also pleaded in one of the three ‘versions’ of defence filed by Mr Lau for the defendant[1].  Mr Shaw contended that a possible interpretation is that the dismissal of the winding-up petition and the withdrawal of the appeal could be done together.  He also argued that express term (a) is just “one of the background facts” and is “an irrelevant term”.

9.  We reject the above contentions without hesitation.

10.  If express term (a) is indeed of no relevance to the plaintiff’s claim, it should not have been pleaded.  But we do not think it is right to suggest that this term is mere background or is irrelevant, bearing in mind that the whole objective of the settlement agreement was to bring about the dismissal of the winding-up petition and the withdrawal of the appeal.

11.  Express term (a) is clearly a material provision to the plaintiff’s claim to enforce its rights under the settlement agreement.  If the plaintiff should contend that this term should not be construed as a pre-condition, contrary to what might have been suggested on the face of the wording, this should be pleaded in the statement of claim, as the meaning and effect of this term is different from the apparent meaning.  And if this term had not been fulfilled, or was not fulfilled within time, what is the basis of the plaintiff’s case for asserting that the defendant was in breach of the implied terms as alleged in paragraphs 11 and 12 of the statement of claim?  This is not apparent from the statement of claim, nor is it apparent in what way it is alleged that the defendant failed and/or refused to achieve the withdrawal of the appeal or to co-operate with the plaintiff to achieve the withdrawal of the appeal.

12.  These are crucial matters that should be pleaded in the statement of claim, not in the reply, because they formed the basis of the plaintiff’s assertion that it is entitled to enforce its rights to claim damages under the settlement agreement.  The three material paragraphs in the statement of claim quoted above are inadequate.  Pleadings are not a game of words.  They serve the important function of informing the other party and the court the factual and legal issues in dispute, so that proper preparation for trial may be made and the trial may be conducted in a manner in compliance with the underlying objectives of the rules of court.

13.  There is no merit in the proposed appeal.  We dismiss the application for leave to appeal.  As we have refused leave to appeal, the plaintiff’s application for stay of the judge’s order of 20 January 2014 (giving time to the plaintiff to amend the statement of claim) does not arise.  We make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing as the leave application is entirely without merit.

14.  We make an order nisi that the plaintiff should pay the defendant’s costs of this application.

15.  We make a provisional assessment for a gross sum order that the defendant’s costs be assessed at $2,000, bearing in mind that the defendant acts by its director and that costs to a litigant in person are not normally allowed at more than $200 an hour in respect of time reasonably spent on the work done.  We are mindful that Mr Lau might have spent more than ten hours but we are not inclined to award costs for work done of more than ten hours.  The two skeleton submissions served by Mr Lau, totalling 27 pages, are excessive.  They do not comply with Practice Direction 4.1 paragraph 15, which provides that skeleton arguments in an application for leave to appeal should not normally exceed five pages.  They would have been returned to the defendant unread with a request that a compliant skeleton submission be lodged in court.

16.  Any party seeking to vary the above order nisi shall lodge a written submission within seven days hereof, with leave to the other party to reply in writing seven days thereafter.