SNE ENGINEERING CO LTD v. CHIM KEE MACHINERY CO LTD

HCMP 2863/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2863 OF 2012

(ON AN INTENDED APPEAL FROM HCA NO 1313 OF 2012)

______________________

______________________

___________________________

JUDGMENT

___________________________

Hon Yuen and Barma JJA:

1. This is the plaintiff’s application for leave to appeal against a decision on costs made by Chung J on 23 August 2012. Leave to appeal was refused by the judge on 6 December 2012. Full written reasons were given on both occasions.

2. The costs in question related to:

(1)  the plaintiff’s application before Saunders Dep J for an ex parte injunction on 24 July 2012, and

(2)  the plaintiff’s application before Lok Dep J for an inter partes order on 30 July 2012. 

Background

3. Briefly Hsin Chong (“HC”) was the main contractor on an MTR site.  The plaintiff was HC’s sub-contractor.  The plaintiff hired heavy machinery from the defendant for use on the site. 

4. Disputes broke out between HC and the plaintiff of the one part, and also between the plaintiff and the defendant of the other part.  On 3 July 2012, (a) the defendant terminated the hiring agreement with the plaintiff and (b) HC stated that it would take over the plaintiff’s sub-contract works.  The plaintiff was aware that HC might well deal directly with the defendant as a result, because of delays to construction that would be caused by withdrawal of the defendant’s machines.  This was apparent from the plaintiff’s letter dated 19 July to HC, asking if it had allowed the defendant to leave its machines on site. 

5. On 24 July, the plaintiff applied for an ex parte mandatory injunction against the defendant requiring it to remove all its machines from the site.  From the transcript of the proceedings which took only 8 minutes, it would appear that the judge thought it was a simple case where the defendant was trespassing on a site after the termination of a hiring agreement.  It was not explicitly drawn to the judge’s attention that the defendant may well have the defence that HC had proposed to take over the plaintiff’s sub-contract works and thus deal directly with the defendant, and that any removal of heavy machinery from the site required prior permission of the site manager, so that the machines could not in any event be “immediately removed” as stated in the order.

6. In fact on 27 July, HC did hire the machines directly from the defendant. 

7. On 30 July, the defendant applied to discharge the ex parte injunction.  Deputy Judge Lok confined the order to any machines on the plaintiff’s part of the site only.  A few days later the injunction order was discharged by consent of the parties. 

Chung J’s decision on costs

8. It was in light of the above that Chung J held that (a) there had been material non-disclosure by the plaintiff of the defendant’s possible defence of direct dealing with HC, and (b) in any event there would have been no urgency had the plaintiff not delayed in making the application.  Further, solicitors for the defendant had previously informed the plaintiff that they would vigorously defend any application for an injunction, and yet no notice was given to them of the ex parte application.

9. Accordingly Chung J ordered that the plaintiff pay the costs of the applications to the defendant.

Application for leave to appeal

10. The plaintiff has provided grounds of appeal in its draft Notice of Appeal.  We have also read its written submission as well as those in opposition from the defendant.

Discussion

11. We are not persuaded that there is any reasonable prospect of the plaintiff succeeding in the proposed appeal.  It is well established that an appellate court would not lightly interfere with a judge’s exercise of discretion, and all the more so when the judge’s decision deals only with costs.  The plaintiff has failed to show that the judge has exercised his discretion on wrong principles or that the exercise was demonstrably flawed.  The judge was entitled to give weight to the point that the plaintiff had failed to put to the ex parte judge that HC would not have wished the defendant to take its machines off site, as

-  HC had sided with the defendant against the plaintiff as the plaintiff had failed to pay the defendant,

-  HC had cautioned the plaintiff against seeking an injunction against the defendant and

-  HC had informed the plaintiff more than once that it (HC) would not arrange for the defendant’s demobilization. 

These were clearly matters that the ex parte judge should have been alerted to, to be disabused of the perception that it was a simple case of the defendant trespassing on the site after termination of its hiring agreement with the plaintiff.

Order

12. We would refuse leave to appeal with an order nisi that the plaintiff should pay the costs of the application to the defendant.