THE INCORPORATED OWNERS OF NOS 6, 6A, 6B, 8, 10, 12, 14 & 16 WING KWONG STREET（IN COMPULSORY LIQUIDATION) v. WONG KANG MING

[English Translation – 英譯本]

DCCJ 4022/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Civil Action No 4022 of 2012

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Reasons for Decision

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Introduction

1.  By summons dated 7 May 2014, the defendant applied to amend his Defence and Counterclaim.

2.  At the pre-trial review on 8 May 2014, I gave leave to the defendant to delete paragraphs 12, 13, 16 and 17 of his Defence but disallowed all the other amendments.  I now set out my reasons for the above decision.

Background

3.  A winding-up order against the plaintiff was made in the High Court on 13 January 2010.

4.  On 16 November 2012, the plaintiff commenced the present proceedings against the defendant, claiming $42,005 and $15,000 being two sums of contingency fund.

5.  The defendant filed his Defence and Counterclaim on 8 January 2013.

6.  The defendant’s counterclaim was struck out by Judge Ko on 9 January 2014.

7.  On 10 February 2014, Master Lam set down the present case for trial.  The trial will take place before this court on 24 to 27 June 2014.

The defendant’s proposed amendments

8.  The defendant proposed to delete paragraphs 12, 13, 16 and 17 of his Defence.

9.  The defendant proposed to add paragraphs 16, 17 and 18 to his Defence, which sought to plead that due to mismanagement of the management committee of the incorporated owners, water leaked from the rooftop, thereby causing loss and damage to him.  He considered that the incorporated owners’ claim against him should be bundled with and set off by the amount the incorporated owners owed to him.

10.  The Counterclaim which the defendant proposed to amend merely set out the amount of loss and damage he suffered as a result of water leakage in his flat.

Plaintiff’s position

11.  The plaintiff did not oppose the deletion of paragraphs 12, 13, 16 and 17 of the Defence, but opposed all the other amendments.

Legal principles

12.  If an application to amend the pleadings is made at a late stage of the proceedings, the applicant must ensure that adequate particulars of the proposed amendments are provided: see Hong Kong Civil Procedure 2014, Volume 1, paragraph 20/8/10[1] and Tang Poon Lap v Tang Kam Kai & others [2004] 1 HKLRD, at paragraph 7[2].

13.  If the defendant’s proposed counterclaim is not connected to the claim and lacking in particulars, and the defendant fails to explain why it was not brought up earlier, the court will not allow the application: see Hua Ning Industries Ltd v Best Leader Engineering Ltd, HCA 1801/2008, 24 March 2011, at paragraph 18[3].

14.  To establish a claim for equitable set-off, the defendant has to prove: (1) the defendant’s counterclaim and the plaintiff’s claim are closely connected; and (2) by reason of their close connection, it would be manifestly unjust to allow only one of them to be enforced: see Pollard Construction Co Ltd v Yung Yat Fan (t/a Golden Year & Co)  [1999] 3 HKC 109[4].

Discussion

15.  The proposed amended Defence did not clearly set out the particulars of the rooftop water leakage for which the plaintiff should allegedly be liable to pay compensation.  According to a document entitled “Details of the rooftop water leakage” submitted by the defendant at the hearing, what he referred to was the water leakage which occurred on 14 February 2008 and caused by a contractor called Chi Fu Construction and Engineering Company (transliteration) (hereinafter called “Chi Fu”) which had drilled too many screw holes on the rooftop.  Subsequently, Chi Fu applied waterproofing gel on the rooftop in an attempt to resolve the problem, but water leakage recurred two years later.

16.  It can be seen from paragraph 17 of the proposed amended Defence that the defendant had neither specified the date and the particulars of the alleged negligence on the part of the plaintiff nor stated the amount proposed to be set off.

17.  It can be seen from paragraph 18 of the proposed amended Defence that the defendant applied for the amendments because he took the view that since the plaintiff had bundled two sums in the claim against him, he might as well bundle the amount he believed to be owed to him by the incorporated owners with the plaintiff’s claim so that they could be set off with each other.

18.  It is beyond doubt that there is no connection whatsoever between the plaintiff’s claim for the two sums of contingency fund and the basis of the defendant’s proposed counterclaim.  The putting forward of such defence at this stage is, as paragraph 18 of his proposed amended Defence shows, no more than an act of retaliation.

19.  The defendant’s proposed defence of set-off is not permissible at law.

20.  The counterclaim proposed by the defendant is also lacking in particulars of the allegations against the plaintiff.

21.  The defendant stated at the hearing that he had, on the same ground, commenced proceedings in the Small Claims Tribunal against Chi Fu in September 2013.  Subsequently, following the advice of a loss adjuster who opined that it would be difficult to prove his case, the defendant discontinued the claim.

22.  The defendant now pursues his claim against the plaintiff instead, although I cannot be sure whether there are sufficient grounds in support of such a claim.

23.  The proceedings herein are approaching the trial stage, with trial to take place in less than 2 months.  To allow the defendant to make a counterclaim at this stage which was lacking in particulars and completely unconnected to the claim would not only be unfair to the plaintiff and go completely against legal principles, but would, more importantly, also render it impossible for the trial to take place as scheduled.

24.  Mr Sit for the plaintiff indicated at the hearing that, after the defendant’s summons was received, the liquidator sent a proof of debt to the defendant on 14 April 2014 and invited him to prove his debt, but to date he has not returned the proof of debt.

25.  Mr Sit indicated that if the defendant returned the proof of debt, the liquidator would be under a duty to process it promptly as the trial would soon commence.

26.  The defendant indicated at the hearing that he did not return the proof of debt for fear that it would affect the trial of the case.  He also considered that the liquidator lacked sincerity as he was invited to fill in a proof of debt only in 2014 but not in 2011.

27.  Rule 79 of the Companies (Winding-up) Rules provides that:-

“In a winding up by the court every creditor shall prove his debt, unless a judge in any particular winding up shall give directions that any creditors or class of creditors shall be admitted without proof.”

28.  The defendant must therefore submit a proof of debt to the liquidator to prove his debt.  The defendant cannot refuse to comply with the legal requirements simply because he subjectively feels that the liquidator lacks sincerity.

29.  Section 186 of the Companies Ordinance provides as follows:

“When a winding-up order has been made, or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court…”

30.  If the defendant is determined to proceed with an action against the plaintiff, he has to obtain leave from the High Court.  He apparently has still not obtained the requisite leave.

31.  For the above reasons, the defendant’s application for amendment of his Counterclaim has been dismissed.

Conclusion and order

32.  I have only allowed the deletion of paragraphs 12, 13, 16 and 17 of the Defence and have disallowed all other amendments.

Costs

33.  I order the defendant to pay to the plaintiff the costs of this application.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.