ABLE CONTRACTORS LTD v. WUI LOONG SCAFFOLDING WORKS CO LTD

HCA 2587/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2587 OF 2008

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DECISION

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1.  By Judgment handed down on 13 June 2012, I entered judgment for the plaintiff on the claim in the sum of $1,835,826.20 together with interest and also entered judgment for the defendant on the counterclaim in the sum of $784,959.32 together with interest. The defendant appeals against the part of the Judgment allowing the plaintiff’s claim.

2.  By summons filed on 6 September 2012, the defendant applies for a stay of execution of the Judgment pending its appeal.

3.  The applicable legal principles governing the grant of a stay of execution are trite and are not in dispute: see Star Play Development Limited v. Bess Fashion Management Company Limited, unreported, HCA No. 4726 of 2001, 7 June 2002, at paras. 6-10.

4.  The defendant’s application is based on the sole ground that it has a strong appeal or that there is a strong likelihood that its appeal would succeed.

5.  In this regard, as held by Ma J (as he then was) in Wenden Engineering Services Co Ltd v. Lee Shing Yue Construction Co Ltd, unreported HCCT No. 90 of 1999, 17 July 2002, para. 6, the requisite strength of the appeal must be such that the court takes the view that "something has grievously gone wrong with the process of law in the court below". A mere arguable appeal will not suffice.

6.  The principal point in the defendant’s appeal is the finding that when the defendant issued the letter of termination dated 23 April 2008, it was not entitled to treat the Subcontract as having been repudiated by the plaintiff.

7.  Mr Cheng who appears for the defendant argues that the strength of the appeal lies in an error of law or an error in the application of the law. The point of law identified in the Notice of Appeal and the Supplementary Notice of Appeal is the application of the following passage in the judgment of the Court of Appeal in Creatiles Building Materials Co Ltd v. To’s Universe Construction Ltd [2003] 2 HKLRD 309 at para.23:

“Ultimately one has to examine the facts of the case to see whether the non-payment amounted to a repudiation. The principle is to consider whether the circumstances of the non-payment show an intention not to be bound.”

8.  The defendant complains there was a failure to adhere to the above principle in that there was a failure to have regard to the plaintiff’s late payments and under payments for the work of T1 to T6 and the denial of the 1% rebate on the discount in deciding whether the plaintiff had evinced an intention not to be bound by the Subcontract.

9.  The hearing of a stay of execution application is not an occasion to embark upon a detailed examination of the merits of the appeal.  For the purpose of disposing of the present application, it will be sufficient to make the following observations.

10.  Firstly, in coming to the finding complained of, the court had taken into consideration a number of matters, including the late payments and under payments and the conduct of the parties after the completion of the work on T1 to T6: see paragraph 61 of the Judgment.

11.  Secondly, the relevant conduct of the parties in the period after the Chinese New Year in 2008 until the defendant’s letter of termination include: (i) engaging in discussions with a view to settling the accounts; (ii) reaching consensus on a number of the disputes; (iii) the making of further payments based upon the consensus reached; (iv) agreeing that the defendant would proceed with the work of the remaining six towers pending further discussions on the outstanding differences on the accounts for T1 to T6; and (v) simultaneously engaging in discussions on and making preparations for the work for the remaining six towers: see paragraphs 32, 34 and 35 of the Judgment.              

12.  Thirdly, it is the defendant’s case and also the evidence of its witnesses that what triggered the letter of termination was the fact that the 9^th payment had not included the 1% discount rebate: see paragraph 33 of the Judgment.

13.  Fourthly, the crux of the issue is therefore whether against the above relevant factual matrix, it is open to the defendant to say that the cumulative effect of the breaches (i.e. the previous late payments and under payments as well as the exclusion of the 1% discount rebate from the 9^th payment) is such as to amount to a repudiation and justifies the termination of the Subcontract.

14.  Fifthly, in this connection, Mr Wong who appears for the plaintiff points out that the Subcontract is a re-measurement contract such that there are bound to be differences between the amount of payment applied for and the amount of the payments made.  Mr Wong further makes the point that the defendant’s witnesses also accept that both the IPAs and the plaintiff’s assessments contain errors.

15.  Having regard to all these matters, I am not persuaded that the defendant has demonstrated that the strength of its appeal is such as to support a stay of execution.

16.  Accordingly, I dismiss the summons. Applying the usual rule of costs follow event, the defendant is ordered to pay the plaintiff the costs of the application which is summarily assessed at $30,000.