NORTH SEA A/C & ELECT ENG CO. v. COLLECTIONS INTERIOR LTD.

IN THE COURT OF APPEAL

1994, No. 195
(Civil)

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J U D G M E N T

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Litton, J.A. (giving the judgment of the court):

1. This is an appeal against a summary judgment given by Yam J. in chambers on 7 October 1994 whereby he awarded to the plaintiff the sum of $422,940, being the balance of a lump sum claimed under an air-conditioning sub-contract. The sum of $422,940 was arrived at by the judge by giving unconditional leave to the defendant to defend in relation to two sums, but not allowing by way of equitable set-off the sum of $486,710 claimed by the defendant in its counterclaim. This appeal therefore revolves around the defendant's claim in the sum of $486,710.

2. This is particularised in para 2 of the counterclaim as follows:

"2. The Defendant is entitled to recover from the Plaintiff a sum of HK$486,710.00 representing the sum outstanding for work of dismantling high ceiling and 3 openings for access to Return Air Ducts carried out at the site of works at the request of the Plaintiff particulars of which are known to and previously not contested by the Plaintiff.

Particulars

3. The question before the judge, quite simply, was whether upon the material before him there was arguably a counterclaim in that amount which could operate as an equitable set-off, and hence a defence to the plaintiff's claim.

4. The set-off is, in essence, particularized in the invoice pleaded in para 2. When one looks at the invoice more closely, one sees that there is a total of 11 items which constitute the sum of $486,710. This is said to relate to work done to the high ceiling of the Ballroom at the Sheraton Hotel. The material before the court indicates that the plaintiff made requests to the defendant to have the high ceiling demolished, to enable access to the ceiling void to be given to the plaintiff for the purpose of the air-conditioning work. If nothing else were said about the matter then, arguably, this gives rise to an obligation falling upon the plaintiff to pay for the work done by the defendant at the plaintiff's request.

5. The question before Yam J. was whether there was enough evidence adduced to enable the defendant to set up an equitable defence, and this must focus upon the items in the invoice.

6. Mr Cheung, counsel for the defendant, frankly tells us that in relation to items No. 3 to 6 amounting to a total of $168,360 he is unable to say what precisely those mean; there is nothing in the evidence before us to help in that regard; apparently it has something to do with the moulding of the corners of the Ballroom ceiling. But why the work, whatever that might have been, should have amounted to such a large sum as $168,360 remains a mystery at present. Nor are the other items in the invoice necessarily self-explanatory. The affidavit evidence does not help to illustrate many of those items. Yet these matters are peculiarly within the knowledge of the defendant. The outcome of this appeal therefore must be this. Arguably, the defendant might at trial be able to establish some claim against the plaintiff for work done at the plaintiff's request. The amount which is put forward as the quantum of that claim has not by any means been verified upon the material before the court. The burden plainly is on the defendant to establish by evidence an arguable defence; this means one which condescends to some particulars. In our judgment, the defendant fails in this regard. This does not mean of course that the defendant will not be able to establish a counterclaim against the plaintiff at trial. Nor does it necessarily mean that the invoice is not genuine. What it means is that at the Order 14 stage the defendant has not put sufficient material before the court to set up a viable defence to the balance of the claim. In these circumstances it seems to us that the conclusion reached by the judge in the court below is right and the defendant's appeal must be dismissed.