CRANE WORLD ASIA PTE LTD v. HONTRADE ENGINEERING LTD

HCA 256/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 256 OF 2014

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D E C I S I O N

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Application

1.  This court had on 18 June 2014 ordered, pursuant to the consent summons between the parties, that

(a) the plaintiff’s summons dated 4 March 2014, taken out pursuant to RHC Order 14, rule 1 (the “Order 14 Summons”) be withdrawn;

(b) the hearing of the Order 14 Summons fixed for 10.00 am on 19 June 2014 before Master K Lo be vacated;

(c) the costs of the Order 14 Summons and of the consent summons be reserved and be disposed by way of written submissions;

(d) the parties to exchange and lodge into court their respective written submissions on costs in paragraph (c) above within 21 days from the date of this order;

(e)       the parties to exchange and lodge their respective reply submissions on costs (if any) within 14 days thereafter; and

(f)        the defendant is to file and serve its defence within 28 days from the date of this order.

2.  I now deal with issue of costs pursuant to paragraph (c) above by way of paper disposal.

Background

3.  On 13 February 2014, plaintiff commenced the present proceedings seeking, inter alia,

(a) specific performance of clause 9 of the Rental Agreements in respect of Crane Nos 1-6 (namely the delivery up of Crane Nos 1-6 by the defendant to the plaintiff), or damages in lieu; and

(b) specific performance of the Agreement in respect of Crane Nos 7-10 and the Accessories (namely the delivery up of Crane Nos 7-10 and the Accessories by the defendant to the plaintiff), or damages in lieu.

4.  On 25 February 2014, defendant filed their acknowledgment of service contesting the proceedings.

5.  On 4 March 2014, plaintiff issued the Order 14 summons seeking final judgment against the defendant for only part of the relief claimed in the Statement of Claim, namely

(a) specific performance of clause 9 of the Rental Agreement in respect of clause 9 of the Rental Agreements in respect of Cranes Nos 1-6 as pleaded at paragraphs 12 and 13 of the Statement of Claim; and

(b) specific performance of the Agreement in respect of Crane Nos 7-10 and the Accessories as pleaded at paragraph 14 of the Statement of Claim.

and costs of and occasioned by the application.

Plaintiff’s case

6.  Plaintiff filed affirmation of Poon Wee San dated 3 March 2014 in support of the application.

7.  In paragraph 7 of the affirmation, Mr Poon made it clear that in the O14 application, they seeked the delivery up of the 10 cranes and accessories (detailed in paragraph 4 of the Statement of Claim) and an order that the defendant indemnify the plaintiff for any loss of or defects in the 10 cranes and accessories.

8.  In paragraph 9 of the said affirmation, Mr Poon said he was aware of legal proceedings against the defendant claiming possession of the defendant’s warehouse and the defendant’s office.

9.  In paragraph 10 of the affirmation, Mr Poon stated that as the defendant has yet refused to permit collection of the 10 cranes and accessories, currently stored at defendant’s warehouse, he feared that the defendant might be forced to remove the 10 cranes and accessories from the warehouse which might result in loss to the cranes and accessories.

10.  Mr Poon continued to say that although defendant’s solicitors did on 8 February 2014 requested the plaintiff to remove cranes from the warehouse and that the plaintiff’s solicitor had already enclosed a detailed checklist for the 10 cranes and accessories by 14 February 2014, defendant’s solicitors on the same day said only removal of 5 of the 10 cranes could be effected on 24 February 2014 and further they requested a much more detailed description list for these 5 cranes before collection could be made.

11.  As for the other 5 cranes, the defendant still refused collection by the plaintiff.

Defendant’s case

12.  Defendant filed the affirmation of Leung Ping Wah on 14 April 2014 contesting the Order 14 application.  Nevertheless, Mr Leung said in paragraph 10 of the affirmation that they had already informed the plaintiff before the application that the defendant does not object to plaintiff collecting the cranes.

13.  In the letter dated 14 February 2014 from defendant’s solicitors, the defendant said they agreed to the plaintiff to retrieve and remove the cranes.

14.  Nevertheless in their letter dated 25 February 2014, the defendant claimed “lien on the accessories being the replacement generic parts e.g. masts sent by your client which had arrived too late for them to be installed to our client’s customer’s construction sites.  Consequently our client had to utilize other mast sections from their own cranes in order for the erection of the crane.  Our client maintains such a lien pending the dismantling of those cranes”.

15.  Further in the same letter, the defendant’s solicitors stated that the plaintiff did not come to collect the cranes.  They insisted that identification of the relevant parts/accessories of cranes nos 1, 2, 3, 8, 9 and 10 be provided before removal.

16.  In a subsequent letter dated 27 February 2014, the defendant’s solicitors wrote to plaintiff’s solicitors that plaintiff shall arrange collection of the cranes only after completion of the rental agreements.

17.  Later on 7 March 2014 defendant said they were agreeable that plaintiff come and collect all 10 cranes referred to in the Statement of Claim.

18.  On 27 March 2014, defendant again wrote and stated they had no intention for the cranes to remain at their storage yards and that they should be collected.  Again, the defendant stated that they required plaintiff to produce formal identification of these cranes by their original/factory serial numbers.  Defendant said plaintiff refused to do so but only relied on Bill of Loading and Packing List which does not set out the original/factory serial number but only the general description of the crane top component.

19.  Mr Leung further said in paragraph 56 of the affirmation that

“Each crane has about 30 major parts to it, depending on the model and therefore it is plain and necessary that the parties would have to first verify the crane parts before the plaintiff’s haulage vehicles attend the storage yards to collect them. Each component of the crane top has specific identification numbers which the plaintiff can easily provide.”

Plaintiff’s case in reply

20.  In reply, solicitors for the plaintiff filed an affidavit dated 12 May 2014 exhibiting thereto the affirmation of Poon Kok Meng of the same day in reply to the affirmation of Mr Leung for the defendant.

21.  Paragraph 5 to 8 of this affirmation encapsulated their position: -

“ 5. The Plaintiff is perplexed by the Defendant’s position in respect of the delivery up of the 10 cranes, as the Defendant is on one hand objecting to the application, i.e. refusing to acknowledge the responsibility to deliver up the cranes, but on the other hand claims to be acting reasonably by having stated in correspondence it allows the cranes to be collected.

6. In any event, the position of this matter has moved on since 29^th April 2014, because the Defendant has finally allowed the Plaintiff to collect the cranes and the process is currently underway. As of the date hereof (12^th May), the collection process is still taking place. It was initially envisaged that the collection operation would take five working days to complete, however, the recent inclement weather has meant that the work has taken longer than first anticipated.

7. In light of the present position, if the 10 cranes are satisfactorily delivered up, it is possible that the Plaintiff will not need to proceed with the hearing for the summary judgment application, which is currently set down for 19 June 2014, subject to only the issue of costs to be dealt with (in a way to be further decided in case no agreement can be reached between the parties). For avoidance of doubt, should the need arise, the Plaintiff will demonstrate to the Court (for the purpose of costs determination) that the delivery up process which is now underway, and the matter in which it is taking place, should entitle it to a favourable costs order.

8. Despite the development of the matter and the fact that collection is currently underway, I have been advised and verily believe that it is still necessary to prepare this Affirmation, as the matter remains contentious until the collection is completed. As of this moment there is no assurance that the collection will complete in time. The deadline for filing this Affirmation is 12^th May 2014 pursuant to the “unless order” made by Master K. Lo dated 25^th April 2014.”

22.  Mr Poon said despite all the efforts made by the defendant contesting the application, the same seeking collection of the 10 cranes, the defendant had finally allowed the plaintiff to collect all 10 cranes, not insisting on further identification evidence from the plaintiff, after the issue of the Order 14 summons.

23.  Plaintiff said at all times they had provided sufficient details for the defendant to identify the 10 cranes and that one could not accept how the defendant could say they, as bailee of the cranes, had no details of the cranes in their possession.  Plaintiff says defendant was actually obstructing the plaintiff in collecting the cranes.

24.  Mr Poon says it was because of the difficulty faced by the plaintiff as a result of the delay tactics by the defendant in returning the cranes that the O14 application was taken out.

25.  In paragraph 16 of this affirmation in reply, Mr Poon said it is possible that the Order 14 summons need not be proceeded with if all the cranes were fully returned to the plaintiff, the operation of which was still underway at the time of affirmation.

Discussion

26.  This court had perused and considered correspondence between the parties, it is clear that prior to the issue of the present proceedings and up to around 29 April 2014, the defendant despite saying they had no objection to plaintiff collecting the cranes, had actually been insisting that the plaintiff do further produce identification documents and/or maintaining lien on certain parts and accessories of the subject 10 cranes.

27.  As referred to in the affirmation in reply by Mr Poon, it was only until around 29 April 2014, that the defendant allowed collection of these 10 cranes without the plaintiff meeting their earlier repeated demands for identification codes.

28.  I agree the plaintiff that it is bizzare for the defendant to say that they, as bailee of these cranes did not have their own system of keeping records of the cranes with identification particulars but that they actually need these further identification codes from the plaintiff.  The same was later proved to be unnecessary as a matter of fact.

29.  It is alleged by the defendant that they had raised triable issues in their affirmation in opposition to the O14 application.

30.  The same is nevertheless disputed by plaintiff as “moonshine” and “without merits”.

31.  Defendant says ultimately plaintiff withdrew the Order 14 summons and allowed defendant unconditional leave to defend.

32.  It is submitted by Mr A Leung, counsel for the defendant that

“… delivery up of the tower cranes should not have a bearing on the question of costs because:

(a) Final judgment has not been obtained by the Plaintiff.

(b) The Order 14 Summons was dropped.

(c) Unconditional leave to defend was granted to the Defendant to file its Defence within 28 days from date of the Order of Master K. Lo dated 18 June 2014.”

33.  He further stressed that the return of the 10 cranes to the plaintiff was made on a “without admission of liability basis”.

34.  He referred this court to the cases of: -

(a) Alviero Martini S P A v Bubble Retail Management Limited, HCA 1937/2008 (unrep, 2 October 2009), Deputy High Court Judge Louis Chan (as he then was) and

(b) Bold Shine Investment Limited v Zheng Deli, HCA 1676/2011 (unrep, 17 October 2013), Deputy High Court Judge Marlene Ng.

35.  In the Alviero Martini S P A case, plaintiff was ordered to pay costs for the Order 14 summary judgment application since the deadline for the plaintiff to file his affirmation in reply (which he has failed).  It was said that as the plaintiff failed to inform the defendant the plaintiff’s decision not to pursue the summary judgment application when the time for the plaintiff to fairly and properly advise the defendant of its change of position.  It was said that if the plaintiff was still considering what to do, it should at least have informed the defendant on a without prejudice save as to costs basis about its intention and asked the defendant not to incur further costs.

36.  In the Bold Shine Investment Limited case, it was said by the court that as soon as credible defence is shown, plaintiff in an order 14 application should be advised to arrest the summary judgment application, failure to do so must be a relevant consideration in the overall exercise of the court’s discretion on costs.

37.  In both of these cases, as pointed out Mr J Wong, counsel for the plaintiff, the plaintiff did not obtain what he seeked for in the Order 14 application whereas in the present case, the plaintiff had achieved what he claimed in the application.

38.  In my view, the facts of the present case is clearly distinguishable from the 2 cases cited.

39.  It was submitted by Mr Leung that if defendant’s case is really “moonshine” or “frivolous”, the plaintiff should still have proceeded with Order 14 summons.  This, I cannot agree.  It would be a waste of costs and court’s resources and indeed against the spirit of Civil Justice Reform should the plaintiff still insist to proceed with the Order 14 application after they practically achieved the relief sought in the O14 application.

40.  Plaintiff had in their reply affirmation rightly stated that they might not need to proceed with the application after the return of all of the 10 cranes.

41.  It is said by the defendant that the plaintiff should latest by 14 April 2014 ie time for filing of the defendant’s affirmation in opposition withdraw the Order 14 summons, as the plaintiff will be well aware that the defendant is willing to allow plaintiff retrieving the 10 cranes.  I do not agree.

42.  On reading the correspondence between the parties on the collection/retrieval of the 10 cranes in question, the plaintiff’s solicitors were perplexed at the preconditions imposed by the defendant and much time and efforts were unnecessarily spent on the subject, leading ultimately to the issue of the present action and the O14 application.

43.  On evidence, the return process should have been completed around mid May 2014 and allowing sufficient time for the plaintiff to fairly and properly consider their position, in my view, the plaintiff should inform the defendant that they need not proceed with the application by the end of May 2014 which they failed, not until 3 working days before the substantive hearing and without good reasons.

44.  I see no reason why the plaintiff should not be entitled to costs of the application up to end of May 2014 but for the fact that the plaintiff had allowed defendant unconditional leave to defend on the subject matter of the application as the defendant does not need leave of the court to defend the other claims of the plaintiff.  The court will adjudicate on these issues, it would be embarrassing if the costs order I now make is inconsistent with the findings of the court after trial.

45.  Further, presently, both parties are only seeking costs of the application, the issue of costs of the parties in prosecuting/defending the subject matter of the O14 application has not been dealt with, the same would be argued and dealt with when judgment is available.

Conclusion

46.  For the reasons above, and despite observations by the court as aforesaid, this court considers it only appropriate to reserve the issue of costs of the present application.