CHING HING WEAVING DYEING & PRINTING FACTORY LTD v. REALTY TEXTILES CO LTD

HCA 1880/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1880 OF 2005

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HCA 1884/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1884 OF 2005

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BETWEEN

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RULING ON COSTS

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1.  The only matter outstanding is that of costs on Realty’s summons dated 4 July 2006.  I have considered the submissions made by the parties on the question of costs, and have reviewed the correspondence that has been put before me.

2.  This is my ruling on the issue of costs.

3.  The substantive matter from which the requirement for a costs order arises was an interlocutory application in relation to the return of certain cloth, from the Mainland, to Hong Kong.  Realty had earlier, by a consent order, been required to provide a bank guarantee, following which Ching Hing were to make applications to PRC Customs for approval to return certain cloth from the mainland to Hong Kong, to Realty.  The essential point of the order was that cloth, previously delivered by Realty to Ching Hing in the Mainland for dyeing, but not dyed, would be returned to Realty.  Upon its return the bank guarantee would be released.

4.  It took what can only be described as an inordinately long time to obtain the Customs approval.  The position initially adopted by Ching Hing was that applications for the Customs approval had been made, and that nothing could be done to speed up the matter.  Notwithstanding the obvious fact that each day hundreds of thousands of tonnes of goods pass quickly through the border between the Mainland and Hong Kong it seemed that this particular Customs approval was destined for a long delay.  The explanations for the delay offered by Ching Hing did not satisfactorily elucidate the matter.

5.  On 4 July 2006, Realty issued a summons for certain directions, designed to bring the matter to a conclusion.  On the eve of the hearing of the summons, Ching Hing offered to bypass the order designed to return the original cloth, by offering to deliver cloth of an equivalent quality to Realty.  Sensibly, Realty agreed to this proposal, in principle.

6.  However difficulties arose as to the meaning of “equivalent quality”, and how Realty could be ensured that the condition was fulfilled.  I was, and made it quite clear through the numerous hearings, entirely sympathetic to Realty’s solicitors concern in this respect, having regard to the whole way in which Ching Hing had been conducting themselves up until this time.  The failure by Ching Hing to return the cloth, and its inadequate explanations for the delay, had done nothing at all to encourage any belief in either the court or Realty, that Ching Hing were genuine in their resolve to return the cloth.  Inevitably, that background would not encourage an immediate belief that any substitute cloth would truly be of equivalent quality.

7.  At no stage did Ching Hing offer a satisfactory explanation to the court for the very long delay in processing the export licence.  Assertions were made that there was a liaison person in the Mainland who was dealing with the matter.  It would have been a straightforward matter to get an affidavit from that person explaining the matter, but that was not done.

8.  There was a great deal of confusion as to who should be making the application for the export licence, Ching Hing, or its associates in China who held the cloth.  The plain onus lay on Ching Hing to resolve that confusion and have the proper party make the application.  It is no answer for Ching Hing to say that it was not until the time of the filing of the third affidavit of Wong Wai Man that both parties did not really know exactly how to go about the application.  The obligation was on Ching Hing to deliver the cloth.  The duty was on them to promptly resolve the matter as to how that was to be done.  They had, after all, agreed to resolve the matter on the basis that they would return the cloth to Hong Kong, upon the provision of the bank guarantee.  Realty had every reason to become suspicious.

9.  On numerous occasions I expressed concern about the issue, and was never given a clear explanation.  The inference arose, having regard to the unexplained delay that was taking place, that the cloth no longer existed.  The offer of substitute cloth served only to strengthen that inference.

10.  In all the circumstances I am satisfied that Realty were acting properly in pressing the matter the way they did, and cannot be said to have been either unreasonable or oppressive.

11.  For those reasons I am satisfied that Ching Hing must pay Realty’s costs on the summons dated 4 July 2006, those costs to be taxed on the party and party basis and to be paid forthwith.