ORECOM SOLUTIONS LTD v. CARD PRO HONG KONG LTD

DCCJ 571/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 571 OF 2010

__________________________

__________________________

__________________

DECISION

__________________

BACKGROUND

1.  On 27 April 2007, the plaintiff and the defendant entered into a Partnership Agreement (“the Partnership Agreement”) pursuant to which the plaintiff was engaged by the defendant as the latter’s partner for the sale of the defendant’s products globally.

2.  Pursuant to the Partnership Agreement, the defendant was obliged to pay the plaintiff commission and transfer certain shares in the defendant to the plaintiff.

3.  It is the plaintiff’s case that the defendant failed in its obligations to pay the said commission and to transfer the shares.  As a result, the plaintiff commenced the present proceedings against the defendant on 17 February 2010. In a gist, the plaintiff claimed that the defendant should pay commission in the sum of US$34,451.67 together with interest and that the defendant should allot paid-up shares to the plaintiff according to the Partnership Agreement.

4.  The Statement of Claim was subsequently amended on 26 March 2010.

5.  On 8 April 2010, the then unrepresented defendant filed its “without prejudice” Defence.  Without assistance of legal advisors, such a Defence was not drafted in a proper format.  Be that as it may, it had set out quite clearly the defendant’s stance in the present case:

(a) The Singaporean Court instead of the Hong Kong Court should have jurisdiction over the dispute arising from the Partnership Agreement;

(b) Out of the total amount of commission claimed, the defendant only admitted the sum of US$9,041.65 as being outstanding because pursuant to various agreements between the plaintiff and the defendant, the balance of the commission should be set off against the price of unpaid goods purchased by a client of the defendant in Nigeria;

(c) The defendant was not obliged to transfer further shares to the plaintiff because of the latter’s breach of the Partnership Agreement.

6.  On 7 May 2010, the plaintiff took out a summons and applied to have the defendant’s Defence set aside on the ground that it had failed to comply with Order 18 rule 6 of the Rules of the District Court.  Alternatively, the plaintiff asked for an order that the defendant do pay a sum of US$9,041.65 as interim payment on the ground that it had been admitted to be due.

7.  On 31 May 2010, the defendant, which was then represented by solicitors, filed a summons and asked for a declaration that the Hong Kong Court had no jurisdiction over the defendant in the present action and that the present action be stayed.  In the event that this Court refuses to stay these proceedings, the defendant sought security for costs against the plaintiff in the sum of HK$638,700.

8.  Further, by summons filed on 13 September 2010, the defendant sought to amend its Defence which was drafted by its solicitors.

THE CURRENT STANCE OF THE PARTIES

9.  I was informed by Mr. Wong, the defendant’s counsel, that the defendant would not:

(a) pursue its stay application; nor

(b) dispute its liability to pay the plaintiff the sum of US$9,041.65.

10.  Mr. Ng, counsel for the plaintiff, also confirmed at the hearing that the plaintiff would not object to:

(a) the defendant’s amendment of its Defence; nor

(b) the defendant’s application for security for costs. However, it was submitted that the amount of security asked for was excessive.

11.  As a result, the only outstanding matter which requires adjudication is the amount of security which the plaintiff should provide.

AMOUNT OF SECURITY FOR COSTS

12.  In the defendant’s summons, the defendant only asked for security for costs up to the stage of exchange of witness statements.  I shall consider the defendant’s application on that basis.

13. In support of the defendant’s application, its solicitors had prepared a draft skeleton bill, pursuant to which the estimated costs of the defendant up to the conclusion of the trial was stated to be over HK$600,000.

14.  At the hearing, Mr. Wong for the defendant fairly conceded that in relation to some of the items in the skeleton bill, costs of only one fee earner should have been included.  He also agreed that the hourly rates of the fee earners put down in the bill were excessive and they should be adjusted downwards according to the District Court scales.

15.  On the other hand, Mr. Ng pointed out, among other things, that the costs of the trial (including the attendance of solicitors and counsel at the trial) should be ignored for the purpose of this hearing because the Court should only order security up to the stage of exchange of witness statements as prayed for under the defendant’s summons.

16.  The points above are all valid and I shall take them into account when I decide on the amount of security.  Given Mr. Wong’s concession that the plaintiff should be entitled to the costs of the summons filed on 7 May 2010, I will also ignore the items in the defendant’s skeleton bill which relate to the said summons.

17.  I do not intend to analyse the defendant’s skeleton bill item by item.  I would adopt a broad brush approach in fixing the amount of security.  Doing the best I can, I order that the plaintiff should provide security in the amount of HK$65,000 by way of payment into Court.

ORDERS

18.  By reasons of the aforesaid, I will make the following orders:

(1) Paragraphs 1 to 3 of the defendant’s summons filed on 31 May 2010 be dismissed;

(2) The defendant do pay the plaintiff interim payment in the sum of US$9,041.65;

(3) Leave be granted to the defendant to file its Amended Defence in the form of the draft Amended Defence annexed to the summons filed on 13 September 2010 within 3 days;

(4) Service of the Amended Defence be dispensed with;

(5) The defendant’s counterclaim as set out in paragraph 7 of the Defence filed on 8 April 2010 be dismissed;

(6) All proceedings be stayed pending the plaintiff’s payment into court within 21 days a sum of HK$65,000 as security for the defendant’s costs up to the stage of exchange of witness statements, failing which the plaintiff’s claims against the defendant do stand to be dismissed without further order, with costs of the action to be paid by the plaintiff to the defendant, to be taxed if not agreed;

(7) The plaintiff be at liberty to file and serve its Reply, if so advised, within 28 days after the plaintiff had made payment into court in the sum of HK$65,000;

(8) There be liberty to apply for further security.

COSTS

Summons filed on 7 May 2010

19.  It was conceded by counsel for the defendant that the plaintiff should be entitled to the costs of the plaintiff’s summons filed on 7 May 2010.  I will therefore order that the costs of this summons be to the plaintiff in any event.

Summons filed on 31 May 2010 and costs of the hearing today

20.  To recap, there were two applications made pursuant to this summons, namely, application for stay on the ground of forum non conveniens and security for costs.

21.  The defendant indicated its intention to abandon the application for stay by way of its counsel’s skeleton argument which was lodged on 14 September 2010.

22.   As aforesaid, by reason of the latest development of the case, the only matter which this Court has to deal with is the quantum of the security for costs.

23.  Mr. Wong told me that in the light of my decision on the amount of security payable by the plaintiff, he was prepared to concede that the plaintiff should be entitled to the costs of the summons filed on 31 May 2010 together with the costs of the hearing today.  I will therefore order that the plaintiff should be entitled to the said costs in any event with certificate for counsel.

Summons filed on 13 September 2010

24.  By this summons, the defendant sought to amend its Defence.  Such amendment was required to be made because of the defendant’s failure to comply with the Rules of District Court when its “home-made” Defence was prepared.

25.  On 6 September 2010, the defendant’s solicitors wrote to the plaintiff’s solicitors and suggested that the defendant do have leave to file an Amended Defence.  It was made clear by the defendant’s solicitors that “the purpose of the pleadings is to ensure the issues in dispute be put before the Court before trial”.

26.  It had not been made clear by the defendant’s solicitors in their letter but it seemed that the defendant was prepared to submit to the jurisdiction of the Hong Kong Court because there is nothing in the said letter or in the draft Amended Defence (which was attached therewith) which mentioned that such Amended Defence was to be filed without prejudice to the defendant’s right to challenge the jurisdiction of the Hong Kong Court.

27.  According to Mr. Ng, the plaintiff was hesitated in accepting the defendant’s proposal and that was why the plaintiff did not agree to that there and then.  Instead, the plaintiff asked the defendant to prepare a draft consent summons for the plaintiff’s approval so that the plaintiff could be sure that the defendant was not still maintaining that the case should be heard in Singapore.

28.  The defendant sent a consent summons for the plaintiff’s approval accordingly on 10 September 2010.  It can be seen that the defendant did not state therein that the amendment was made without prejudice to its right to argue on forum non conveniens.

29.  Be that as it may, the plaintiff did not give its consent to the defendant’s proposed amendment.  Instead, the plaintiff proposed that the defendant should agree to the further filing of affirmation in relation to the defendant’s application for stay “in exchange for the filing of an Amended Defence”.

30.  With respect, I consider that it is unreasonable for the plaintiff to make such a suggestion.

31.  While the “home-made” Defence was irregular under the Rules of the District Court, given the fact that the matters pleaded were clear, I do not think this Court would have refused to waive such irregularity. 

32.  It is fair on the part of Mr. Ng to agree to the defendant’s proposed amendment today, but I am of the view that such consent could and should have been given before the defendant took out the summons.

33.  Taking everything into account, I would make no order as to the costs of the defendant’s summons filed on 13 September 2010.

Summary assessment of costs

34.  Having considered the plaintiff’s statement of costs and submissions from counsel, the costs of the hearing today and the summonses filed on 7 May 2010 and 31 May 2010 are assessed at HK$70,000.