XCHRX WENDEN ENGINEERING SERVICES CO. LTD. v. LEE SHING YUE CONSTRUCTION CO. LTD.

HCCT 90/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO.90 OF 1999

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ADDENDUM TO DECISION

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1. On 20 November 2000, the court handed down a decision in relation to the plaintiff's application to enforce the terms of a Tomlin order. In that application, the plaintiff had claimed approximately $5.2 million under a settlement in which part of the litigation between the parties had been settled. By the court's decision, the plaintiff was awarded approximately $4.4 million.

2. The issue now before the court concerns the plaintiff's entitlement to interest on the sum awarded. The application for enforcement of the Tomlin order was brought by way of an amended motion. That amended motion made no reference to the question of interest. When the parties appeared in court, the question of interest was not canvassed. When the decision was handed down, interest was not dealt with and finally, when the order was drawn up and approved, there was no reference to interest. The order has not yet been sealed. On the same day that the draft order was submitted to the court, the plaintiff's solicitors wrote to the defendant's solicitors stating its entitlement to interest. Further exchanges of correspondence were unable to resolve the matter and so the plaintiff has taken out this summons which seeks an order that the sums ordered to be paid in the 20 November decision shall carry interest.

3. The cumulative effect of the following factors have persuaded me that I should grant the application sought by the plaintiff.

1. The court does have discretionary power under section 48 of the High Court Ordinance, Cap.4 to grant the order sought.

2. The fact that a claim for interest was not pleaded in the amended motion is not fatal to the plaintiff's application. A failure to plead a claim for interest in a statement of claim is fatal. However, there is no requirement to ask for interest in a generally endorsed writ. A generally endorsed writ merely initiates the proceedings, there are no specific requirements to itemize the heads of claim. A motion, or amended motion is, in the same way, an initiating process. Accordingly, failure to spell out the parties' claimed entitlement to interest does not preclude them from asking for it now. We should not lose sight of the fact that the court was ordering the defendant to pay money due under a consent order dated 18 November 1999 under which no payments had been made.

3. Mr Anthony Chan, for the plaintiff, reminded the court today, of the timing of the hearing on 15 November 2000. The court sat on past one o'clock, until about 1:20 pm in order to finish the hearing. The court's decision was reserved and handed down five days later. Mr Chan has informed the court today, and I naturally accept what he says, that the claim for interest was always intended to be asked for but because the court was sitting late, it was inadvertently omitted. I am confident that had the court given an ex tempore decision, the issue of interest would have been raised and dealt with on the date of the hearing. It was not an issue which only occurred to the plaintiff at a later date. It is true, as Mr Au for the defendant points out, that interest was not mentioned in either the motion or at the hearing or in the order. I have decided, however, that those omissions do not disentitle the plaintiff from claiming it. It would have been entitled to ask at the hearing. It can still do so now.

4. Interest was claimed in the original statement of claim from which the Tomlin order derives. From the outset of the claim, the defendant has been aware that the plaintiff claims to be entitled to interest on any sums which are ultimately paid, whether by consent or court order, to the plaintiff. Had the sums agreed in the Tomlin order been paid timeously, the question of interest would not have arisen. The interest being sought is that which has arisen from the defendant's failure to pay those sums which they had consented to pay.

5. The merits of the application are in the plaintiff's favour. The defendant has had, for many months, money which was rightfully the plaintiff's. The amount of interest is not insignificant, amounting to approximately $200,000. The money has been in the defendant's hands and they have profited from that situation. If they are able to keep it, it would be a windfall. I find no merit in the submission that they are entitled to such a windfall by virtue of the fact that a specific claim for interest was not included in the amended motion.

6. The plaintiff does not rely on the "slip rule" (Order 20, rule 11). It is arguable that it could, on the basis that their failure to raise the matter on 15 November caused an error arising from an accidental omission. However, the question of whether the slip rule applies need not arise because the court has an inherent power to vary its own orders so as to carry out its own meaning and to make its meaning plain. I am satisfied that adding an order for interest is a variation. Moreover, such a variation does reflect the court's intentions. Put simply, had the matter been raised at the right time, the court would have made the order sought.

7. Even if all the above is wrong, it would be open to the plaintiff to apply for an amendment to the amended motion by adding a paragraph 2c which would simply comprise the one word "interest". Such an application to amend would have been granted.

8. I reject the submission that the court, having approved the draft order, is functus officio. For this proposition, Mr Au relies on the case of Chiron Corporation v. Organon Tekmkes Ltd [1994] FSR 253. Whilst I accept there are similarities between this case and the one before the court, as to the timing and sequence of events, the case is otherwise distinguishable on its facts. In the Chiron case, an amendment to the cause of action was being sought. This is not such a case. An amendment of such a fundamental nature is not being sought here.

The appropriate rate

4. Mr Au submits that as the defendant's actual benefit by way of interest was only, in fact, about 6%, the usual rate of prime plus 1% should not be awarded. I do not agree. What the defendant did with the money is not a relevant consideration. The fact is that the plaintiff was deprived of its use. Prime plus 1% is the appropriate rate.

5. The dates from which interest shall run are those which appear in the draft order submitted to the court.

Costs

6. The summons before the court today seeks an order in relation to the costs reserved order made on a previous occasion. Happily the parties have agreed that matter and it is also agreed that I need not deal with it in this decision, as a result of the agreement.

7. As to the costs of today, I make a final order that they be to the plaintiff.

Order

8. There will be an order in the terms of the plaintiff's draft order as submitted, dated 11 December 2000. In paragraph 1, the appropriate dates are 5 April 2000 to 24 October 2000. In paragraph 4, the rate will be prime plus 1% per annum.