TUNG KWOK KUEN t/a CHE LUEN ELECTRICAL ENGINEERING v. MAK ON t/a WRENKY CONSTRUCTION CO.

HCA8736/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.8736 OF 1997

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J U D G M E N T

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1. This is an appeal against an Order 14 judgment of Master Kwan of 15th April 1998 whereby the learned Master ordered that summary judgment be entered in favour of the Plaintiff in the sum of HK$208,758.43, together with interest thereon from 21st August 1997 to the date of payment, and that the costs of the action be to the Plaintiff, to be taxed if not agreed.

2. It is against that judgment that the Defendant appeals today before this Court.

3. The background, in broad terms at least, is relatively simple. I am told by Miss To, who appears on behalf of the Defendant/Appellant, that her client is a Main Contractor who was employed to do certain electrical installation works on Lantau, works which, I understand, were part of the Chek Lap Kok Airport project. Perhaps the particular details are neither here nor there for present purposes.

4. The Plaintiff is the Defendant's subcontractor. I understand that a certain amount of money has already been paid to the Plaintiff by the Defendant, and the argument before me today revolves around the figure of HK$208,758.43. I am further told by Miss To, helpfully, that this figure itself is divided into two elements : first, the sum of HK$160,638.43, which sum is admitted to be due and owing to the Plaintiff sub-contractor; and second, the sum of HK$48,120.00, about which there is a dispute. This latter sum appears to involve an argument about certain specific lighting goods which Miss To says that the Plaintiff must return to the Defendant before the Defendant is reimbursed therefor.

5. Mr Wong, who appears for the Plaintiff, maintains that, upon analysis of the evidence, in fact there is no real dispute regarding this figure of HK$48,120.00, but that nevertheless, for present purposes and in order to simplify matters, he is content not to press the point and to proceed on the basis of such a dispute if indeed he is able to obtain immediate payment of HK$160,638.43, namely the sum admitted to be due. In addition, Mr Wong tells me, and of course I accept, that at the hearing before Master Kwan, and for Order 14 purposes only, he waived certain other sums which the Plaintiff claims to be due, but that, if this matter is indeed to go to trial, he wishes to resile from that position and to maintain a claim against the Defendant for the further sum of HK$218,826.00, which sum, I apprehend, also includes the presently disputed sum of HK$48,120.00.

6. There is clearly going to be a trial in this case because, notwithstanding the admission by Miss To on behalf of her clients that the sum of HK$160,638.43 is undoubtedly due and owing, she wants a stay of execution of the judgment on that sum pending trial of her counterclaim. Now her counterclaim is in or around the sum of HK$208,740.00 and relates, she tells me, to the costs incurred by her client, the Main Contractor, for drilling and grouting certain parts of the tendered works which should have been, but were not in fact, done by the Plaintiff subcontractor. So a trial there must be on this counterclaim, and I have to consider, for present purposes, whether there should be a stay of execution of the sum admittedly due pending trial of such counterclaim. I am not minded so to order. In the ordinary course of events, and as a rule of thumb, unless there are very particular circumstances militating against it, contractors should pay subcontractors. There is no suggestion before me that the Plaintiff subcontractor is anything other than reputable, and I can see no reason why the subcontractor should not have immediate judgment for the sum admittedly due. Accordingly, the shape of the trial will, I apprehend, be that the Plaintiff will maintain its claim to the balance referred to me by Mr Wong, namely HK$218,826.00 (which sum includes the disputed figure of HK$48,120.00) and the Defendant will defend and counterclaim for the costs of the drilling and grouting in the sum of HK$208,740.00.

7. The result of this appeal, therefore, is that the judgment of the learned Master is set aside, albeit not varied by a great deal. Instead of the cumulative figure of HK$208,758.43, the Plaintiff shall have judgment in the lesser, admitted sum of HK$160,638.43, and the Defendant shall have leave to defend to the cumulative balance of the Plaintiff's claim, to the details of which I have already referred.

8. I will now hear both Counsel on the issue of interest and costs.

[Submissions from Counsel]

9. I have now had the opportunity to hear the spirited debate between Counsel upon the twin issues of interest and costs. My decision thereon is encompassed in the following order. My Order on this appeal is as follows :

1. The judgment of Master Kwan dated 15th April 1998 is set aside;

2. The Plaintiff is to have judgment against the Defendant in the sum of HK$160,638.43, with interest thereon at the rate of 8% from 21st August 1997 to the judgment date, and thereafter at judgment rate from time to time prevailing until payment;

3. The Defendant is to have unconditional leave to defend to the balance of the Plaintiff's claim, amounting to HK$218,826.00;

4. The Defendant is to have leave to counterclaim in the sum of HK$208,740.00;

5. (i) The Plaintiff is to have the costs of and occasioned by the Order 14 application before the Master in any event, such costs to be taxed if not agreed;

(ii) The Defendant is to have the costs of and occasioned by the appeal herein in any event, such costs to be taxed if not agreed, with the matter certified as fit for Counsel.

10. I pause to add here, it only out of deference to Mr Wong's forceful arguments on the point, that it seems to me that on rigorous analysis that Miss To ultimately is right when she says that her appeal has had its effect, and that costs should follow the event.

11. I will not today make further directions. The able representatives of both parties before me have indicated that further directions as to pleadings, discovery and so forth can be agreed between themselves, and naturally I welcome that spirit of co-operation.

12. There is one further issue that arises as a result of my setting aside of Master Kwan's judgment, and substituting my own judgment therefor. It is this. Mr Wong helpfully draws to my attention the fact that pursuant to the judgment of Master Kwan, he obtained a Charging Order nisi over the property of the Defendant on 2nd June 1998, which Order nisi was made absolute on 10th July 1998. Mr Wong suggests, I think probably correctly although I have not researched the point, that the appropriate course now is for this Charging Order absolute to be discharged on his application, and for him thereafter to seek to execute the judgment he now has, whether by way of charging order or by writ of fieri facias or other means. I confess that I was tempted simply to amend the existing Charging Order which is in place, but I think, on reflection, there may be jurisdictional issues arising and that Mr Wong is right to apply to formalize the matter. Accordingly, upon the Plaintiff's application, I discharge the Charging Order absolute of 10th July 1998, and such order for discharge will constitute paragraph 6 of my Order consequent upon this appeal. As to the costs of such application to discharge, to prevent yet another spirited debate on costs, I am going to make no order as to costs on this ancillary application.

13. That, I think, concludes matters for today. I have been much assisted in this matter by Mr Wong for the Plaintiff and by Miss To for the Defendant, and I am grateful to them both.