SHUN CHEONG ELECTRICAL ENGINEERING CO., LTD v. LI PING KUEN AND OTHERS t/a U SING ENGINEERING CO (a firm)

HCA 1297/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1297 OF 2006

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D E C I S I O N

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1.  Though the summons states the only ground for the application to set aside being the irregularity of the default judgment, the parties have indeed gone into the merits of the action. 

2.  The subcontract was prepared and witnessed by a firm of solicitors.  There is no apparent reason why the limited company should have executed the subcontract as agent of the partnership (the defendant).  If the partnership was the intended principal, the agreement should have said so or the partnership should have been named as a party instead of the limited company. 

3.  Furthermore, the subcontract refers to the main contract as having been made between the limited company and the Housing Authority.  There is therefore less reason for the partnership (the defendant) and not the limited company to subcontract the works to the plaintiff.

4.  However, the mere reference to the subcontract is not enough to show a real prospect of success by the 1st and 2nd named defendants as undisclosed principals are not uncommon in the building industry.  They should have provided more particulars like who was making payment, who was doing the work, who attended the site meetings.  They should also have produced the correspondence in relation to the performance of the subcontract.  Nothing has been done by these two defendants.

5.  It is unusual to give the defendants an opportunity to make good their case at this late stage of appeal with the charging order absolute already made.  However, despite the challenge made by the 1st named defendant on affirmation that the contract was only between the plaintiff and the limited company and had nothing to do with the partnership, there was no response whatsoever from the plaintiff.  Furthermore, the main contract was between the limited company and the Housing Authority and the subcontract was prepared and witnessed by solicitors.  The plaintiff so far has not been explained why things had to be arranged in such manner.

6.  In these circumstances, I take the exceptional step of allowing the 1st and 2nd named defendants to file an affirmation or affirmations to condescend on the particulars of the merits of the action. 

7.  I now deal with the logistics and the costs of today.

(Discussion re costs)

8.  I think the 1st and 2nd named defendants should pay the costs of today in any event and I so order.  On the logistics, the 1st and 2nd named defendants will file and serve an affirmation or affirmations on the merits and also to deal with the fifth affirmation of Chan Chung-fai within 21 days from today.  The plaintiff will file and serve its affirmation/affirmations in opposition within 14 days thereafter.  The 1st and 2nd named defendants will file and serve their affirmation or affirmations in reply within 14 days thereafter.  The appeal is adjourned part-heard to a date to be fixed with one day reserved, but the new hearing date shall not be within the next 55 days.  The new date to be fixed in consultation with counsel’s diaries.  New hearing bundles shall be filed no later than two days before the hearing.