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

DCCJ 2263/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2263 OF 2013

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RULING

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1. Today’s hearing involves 2 summonses.

2. The 1^st summons dated 13 August 2014 was taken out by the plaintiff to strike out certain paragraphs of the defendant’s defence and counterclaim dated 17 July 2014.

3. The 2^nd summons dated 10 October 2014 was taken out by the defendant to amend its defence and counterclaim. 

4. They were both adjourned from the hearing before Deputy Judge Winnie Tsui on 15 October 2014.

5. The checked history of this case has been very helpfully summarized in Deputy Judge A Yim’s decision dated 26 November 2013.  I do not wish to repeat them here.

6. The parties spent the entire morning to discuss what would be the best way in dealing with the 2 summonses before the court today.

7. The following is the ruling of the court regarding how to deal with these 2 summonses, having heard the submissions made by the solicitor representing the plaintiff and Mr Lau Chun Ming, the director of the defendant who is acting on its behalf.

8. Mr Shaw, solicitor for the plaintiff, submits that the defendant has failed to follow the order of Deputy Judge Winnie Tsui on 15 October 2014.  §1 of the order requested the defendant to submit to the court and serve on the plaintiff a marked-up version of the proposed amended defence and counterclaim which complies with Practice Direction 19.1, within 7 days from the date of the order.

9. On the same day, the plaintiff’s solicitors sent a letter to the defendant enclosing a copy of PD 19.1 so that the defendant can comply with the learned Deputy Judge’s order when preparing the marked-up version of the proposed amended defence and counterclaim.

10. On 22 October 2014, the defendant served on the plaintiff’ solicitors a purported marked-up amended defence and counterclaim (“the 22 October version”) which is different from the one attached to the defendant’s summons dated 10 October 2014.  The one attached to the summons only consisted of proposed amendments marked with 2 vertical black lines next to the margins of the relevant pages where the proposed amendments appeared.  However, the 22 October version[1] not only marked up the proposed amendments in red but also put in additional amendments which were marked in green.  Those additional amendments did not appear in the original draft attached to the summons.  Nonetheless, the defendant still calls it an “amended defence and counterclaim” and not a “re-amended defence and counterclaim”. 

11. The defendant claims that the plaintiff had been served with the marked-up copy in red on 15 October during the hearing before Deputy Judge Tsui.  As such, the plaintiff is fully aware of the defendant’s intention to amend the defence and counterclaim and the proposed amendments at the time even though it had not been filed yet.

12. The plaintiff’s solicitors in their letter dated 11 November 2014 stated that they do not take issue with the 22 October 2014 proposed amended version is different from the version attached to the summons dated 10 October 2014.  However, the plaintiff alleges that the defendant had failed to comply with Deputy Judge Tsui’s order for the following reasons:-

(1) The defendant had marked up amendments in both red and green in its 22 October version while the order only directed the defendant to amend the defence once, hence an amendment in red only rather than amendments in both red and green;

(2) the defendant had underlined the amendments in the 22 October version of the defence and counterclaim instead of typing it in red;

(3) the defendant had underlined words that were in the original defence.  An example of that is the first 2 lines of para 5(a) on p 8 of the 22 October version was underlined;

(4) the defendant had ignored deletions in the 22 October version; and

(5) the defendant had failed to mark up all amendments.

13. The plaintiff’s solicitors invited the defendant to file with the court and served on them a proper marked up proposed amended defence and counterclaim by 18 November 2014.

14. Instead of doing that, the defendant wrote to the plaintiff’s solicitors disputing the plaintiff’s version of events and claims that Deputy Judge Tsui gave the defendant a 7 day period from 15 October 2014 to consider whether it needed to further amend its defence and counterclaim.  Therefore the defendant was entitled to re-amend its defence and counterclaim as per the 22 October version.

15. In my view, the defendant has clearly failed to observe Deputy Judge Tsui’s order dated 15 October 2014 in regard to its proposed amendments in the following manner:-

(1) The 22 October amendments are clearly different from those in the proposed amendments attached to the summons dated 10 October 2014;

(2) the defendant in the 10 October 2014 summons only asked for amending the original defence and counterclaim for the first time only (therefore any amendments or deletions should appear in red).  Instead, the 22 October version contained further proposed amendments which are marked up in green;

(3) some words which had been deleted from the original defence did not appear in the 22 October version; and

(4) the order of Deputy Judge Tsui did not give the defendant permission to put in further amendments which differ from the draft attached to the summons.

16. It has been a well established rule that a party who proposes to amend his pleadings should specify the intended amendments in the summons or in a document with the proposed amendments properly marked and annexed to the summons: see para 20/8/4 of the Hong Kong Civil Procedure 2015 p 470.  A party is not at liberty to amend or add in words in whatever manner they like without giving proper notice to the other side and to the court.

17. As a result of the defendant’s failure to follow Deputy Judge Tsui’s order, the plaintiff intended to proceed with the striking out summons dated 13 August 2014 which is an application to strike out part of the original defence and counterclaim based on the original pleadings dated 17 July 2014.

18. Mr Shaw proposed that I should proceed with today’s 2 summonses in either one of the 2 following ways:-

(1) To dismiss the defendant’s summons dated 10 October 2014 for the non-compliance of Deputy Judge Tsui’s order but without prejudice to the right of the defendant in filing a new defence and counterclaim; or

(2) to adjourn the defendant’s application to a date to be fixed but to proceed with hearing the plaintiff’s striking out summons first.

19. The defendant on the other hand asked the court to proceed with “striking out” the plaintiff’s summons today (by which I understood it to mean he wants the court to dismiss the plaintiff’s application) and to give the defendant extension of time to file its amended defence and counterclaim.

20. In my judgment, the most economic and costs effective way of dealing with today’s 2 summonses, while at the same time would not affect the parties’ respective substantive rights to litigate, will not be by way of hearing the plaintiff’s striking out summons based on the defendant’s original defence and counterclaim today first and to adjourn to deal with the defendant proposed amendments application later. To do so will in my view be like putting the cart before the horse.  Instead, I consider that the best way to achieve justice in this case would be to allow the defendant the opportunity to properly put in whatever amendments it wishes to make, based on the original defence and counterclaim and then, if the plaintiff still considers that it may have a case to strike out some parts of the amended defence and counterclaim, then the plaintiff can restore or amend its summons to strike out the defendant’s amended defence and counterclaim.

21. While I understand that the defendant who is unrepresented may not understand all the details of the rules governing amendments, it is clear that the court had on 15 October 2014 tried to explain what the defendant needed to do in order to comply with the court’s order.  Further, the plaintiff’s solicitors had in their letters to the defendant dated 11 and 24 November 2014 tried to be helpful in pointing out the deficiencies of the defendant’s 22 October version of amendments and invited the defendant to file a proper marked-up copy in order to comply with the order.  Despite of that, the defendant insisted that its 22 October version complied with the order made by Deputy Judge Tsui. 

22. In my view, had the defendant complied with the requirements made by the court and the plaintiff’s solicitors suggestions in regard to the rules on amendments, the parties would not need to find themselves before me arguing how to deal with the summonses today.

23. In the circumstances, I would give the defendant a further opportunity to put in a proper marked-up version of the proposed amendments within 7 days.  Such marked-up version has to be based on the copy of the proposed amendments provided to the plaintiff on 22 October 2014.  However, the same must be based on the original version of the defence and counterclaim filed in court on 17 July 2014 and any proposed amendments must be marked in red only (and not in red and green at the same time).  Further, any words or phrases which appeared in the original defence and counterclaim that the defendant wishes to delete now must appear in the proposed amended version and those words or phrases be deleted by putting a line through the centre in red.

24. The hearing of the defendant’s summons dated 10 October 2014 will accordingly be adjourned to a date to be fixed before a Judge in chambers.

25. Regarding the plaintiff’s summons to apply to strike out part of the defendant’s original defence and counterclaim based on its original version filed in court, it is in my view pointless for the court to hear that summons today due to:-

(1) The plaintiff’s solicitors are fully aware that the defendant are going to make substantial amendments to the original pleadings since or about 10 October 2014;

(2) although the defendant has failed to file any proposed amendments to date, it cannot be said that the plaintiff did not have knowledge of the proposed amendments after the striking out summons was issued.  The plaintiff was served with a “marked-up” version on 15 October 2014 during the hearing before Deputy Judge Tsui by the defendant.  Thus, it cannot be said that the plaintiff did not know the defendant would be going to rely on a version resembles to that of the 22 October amendments even though technically it was not filed in court yet;

(3) to hear the striking out summons based on the original defence and counterclaim today would be superfluous and will be a waste of time and costs as the defendant is going to amend his pleadings in any event;

(4) the plaintiff’s right to strike out part or the whole of the defence and counterclaim would not be prejudiced after the defendant has the opportunity to put in its proposed amendments, subject of course to the issue of costs.  In fact, in my view, it would be fairer to both parties when the plaintiff will have the opportunity to look at the defendant’s final version of amended defence and counterclaim and having time to consider the same and then make the decision of whether to proceed with the striking out application or not.

26. In the circumstances, I will also order the plaintiff’s summons dated 13 August 2014 be adjourned to a date to be fixed to be heard together with the defendant’s summons dated 10 October 2014 before a Judge in chambers with 1 day reserved. The plaintiff is at liberty to amend or to withdraw its summons dated 13 August 2014 within 14 days after receiving the proper marked-up version of the defendant.

27. In respect of costs, I consider that the hearing today is caused by the non-compliance of Deputy Judge Tsui’s order on the part of the defendant.  Had the defendant followed the rules under the Practice Directions or the suggestions made by the plaintiff’s solicitors in their letter dated 11 November 2014, I am certain that today’s adjournment would not be necessary.  I therefore would propose to order that the costs wasted today as a result of the adjournment will be borne by the defendant, such costs to be taxed if not agreed. 

28. However, I would like to hear the party’s submissions on this before I make a final order on today’s costs.

29. [After hearing parties’ submission on costs, I make an order that all costs thrown away by reason of the defendant’s non-compliance of the order of Deputy Judge Tsui dated 15 October 2014, including of today’s adjournment, be to the plaintiff, such costs to be taxed if not agreed, on a party and party basis.]