SCHINDLER LIFTS (HONG KONG) LTD v. NIKKO SERVICES LTD

DCCJ2263/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2263 OF 2013

--------------------

--------------------

--------------------

DECISION

--------------------

Application

1. By summons dated 29 April 2015 (“Summons”), the defendant applied to vary the costs order nisi (“Order Nisi”) and to stay the execution of the order (“April Order”), made by this court in the decision (“April Decision”) handed down on 15 April 2015.

2. In this decision, I shall not repeat the factual background of this action, which is covered in the April Decision.  I will adopt the same abbreviations used therein.  In a nutshell, the present action was commenced for enforcement of the Settlement Agreement reached between the parties during a hearing in the Appeal Action.  In the Appeal Action, the defendant appealed to the Court of Appeal against a judgment in which it was ordered to pay the plaintiff damages, interests and costs relating to a contract dispute between the parties. 

3. At the early stage of the present action, the statement of claim was struck out.  Subsequently, the plaintiff obtained leave to file a fresh statement of claim and a fresh statement of claim was then filed accordingly.  The defendant filed the July Defence in response to it.  In reply, the plaintiff filed a reply and defence to counterclaim.  The pleadings were followed by two summonses: the Striking-out Summons taken out by the plaintiff to strike out part of the July Defence and the Amendment Summons taken out by the defendant to amend its defence (collectively as “Two Summonses”).

4. The Two Summonses were determined in the April Decision.  In the April Order, this court ordered that: -

(a)     for the Striking-out Summons:-

         part of the July Defence be struck out.

(b)    for the Amendment Summons:-

(1)    leave be granted to the defendant to file and serve an amended defence and counterclaim save that a number of proposed amendments were not allowed;

(2)    consequential direction for the plaintiff to file and serve an amended reply and defence to counterclaim, if necessary;

(3)    the defendant's application for security for proceedings and for rescission, rectification or restitution of the Settlement Agreement be refused.

5. By the Order Nisi, the defendant was ordered to pay the plaintiff costs of and occasioned by the Two Summonses in any event, to be taxed if not agreed.

6. On 29 April 2015, the defendant filed an Amended Defence pursuant to the April Order.

7. On the same day, the Summons was taken out which was supported by an affidavit of Mr Lau Chun Ming, the director of the defendant (“Affidavit”). He sent a letter to this court on 27 May 2015 (“Letter”). Mr Lau appears for the defendant at this hearing.

Stay of execution

8. In the Summons and the Affidavit, the defendant applied to stay the execution of the April Order until the result of the “review application”. 

9. In the Letter, Mr Lau referred this court to his request made to “a judge” for “review and relief”（“覆核及濟助”）on 16 April 2015 and on that basis, made a request for a stay of execution of the April Order.

10. However, there is indeed no review application afoot at present.  Not only that there has been no formal application made, the defendant’s request for “judicial procedural review and relief”（“申請司法程序覆核及濟助”）by a letter to the court on 16 April 2015 (“Review Request”) was dealt with and disposed of by a written reply on 24 April 2015.

11. Further, the defendant’s letter to this court on 25 April 2015 (wrongly dated 25 December 2014) asking for a stay of execution of the April Order pending the outcome of the Review Request was replied in writing by this court on 28 April 2015.  The defendant was specifically notified that this court could not deal with any application that was not made in accordance with the relevant legal procedures.

12. At this hearing and in the Letter, the defendant kept silent on the fact that the Review Request had been dealt with and disposed of as early as on 24 April 2015.

13. In light of the fact that there is no review application afoot, there is no basis on which the April Order can be stayed.  The application for stay of execution is bound to fail.

14. Further, the fact that the defendant has already filed and served an Amended Defence pursuant to the April Order, has rendered the present application nugatory.  This court will be slow to make an order that serves no practical purpose.

15. Mr Lau alleges that the “settlement agreement” exhibited to the affidavit of Mr Geoffrey James Shaw, the solicitor of the plaintiff, affirmed on 3 July 2013 was not the Settlement Agreement as alleged by Mr Shaw in the said affidavit.  He therefore argues that Mr Shaw’s false representation and the false exhibit is sufficient ground to dispose of the whole action and consequently overrule the April Decision.  The said affidavit was indeed produced in the Appeal Action for the purpose of seeking an order to stay the Appeal Action. 

16. I see no force in this argument. Not only that the April Decision has not been appealed to and set aside by the Court of Appeal, Mr Lau’s allegation is indeed a substantive issue to be determined at trial but not a matter to be resolved in interlocutory proceedings for “tidying up” the pleadings or for security of proceedings.  The issues of what actually the Settlement Agreement was and the credibility of a witness are matters to be dealt with at trial when the court has a chance to consider all the documentary evidence and the witnesses are given opportunities to give evidence and be cross-examined.  Further, on the assumption that Mr Lau’s allegation is true, it does not automatically dispose of the whole action in light of the many disputes between the parties in this case.

17. By reason of matters set out above, the application for stay of execution should not be allowed.

Variation of Order Nisi

18. I will now deal with the application for variation of the Order Nisi.  As to the Striking-out Summons, the plaintiff succeeded in striking out almost all of the paragraphs of the July Defence it sought to strike out.  The plaintiff was the successful party and should have its costs of the application.

19. As to the Amendment Summons, it is the usual costs order for giving leave to amend pleadings that the party seeking amendment should pay in any event all the costs of and occasioned by the amendment.  See  explanatory note  20/8/51 Hong Kong Civil Procedure 2015 vol 1. 

20. Further, in response to the Amendment Summons, the plaintiff agreed with the defendant’s amendment application save that it sought to disallow a number of paragraphs.  In the end, most of its challenges succeeded.  It should be awarded the costs of the Amendment Summons.

21. Furthermore, the defendant’s application for security for proceedings and for rescission, rectification or restitution of the Settlement Agreement was refused.  The defendant should accordingly bear the costs of the plaintiff.

22. The defendant seeks to argue that as the matters in dispute in the present action are substantially the same as those in an action it commenced in the Small Claims Tribunal (which was transferred to the District Court recently, the costs of the Two Summonses should be taxed in accordance with the “Small Claims Tribunal scale”.

23. The defendant's argument ignores the fact that the plaintiff prays for damages for breach of the Settlement Agreement, declaration and mandatory injunction in the statement of claim.  The reliefs sought are not within the jurisdiction of the Small Claims Tribunal.  There is no basis to justify an order to have the costs taxed on the “Small Claims Tribunal scale.”

24. The defendant also says that under the Civil Justice Reform, the court should consider the reasonableness of the parties’ arguments as well as the time spent on those arguments when awarding costs.  Such argument does not advance the defendant’s case any further.  When awarding the Order Nisi, this court has borne in mind Order 62 rule 3 (2A) Rules of the District Court and considered all the relevant circumstances including the factors now raised by the defendant.  In the April Decision, this Court accepted almost all of the arguments of the plaintiff whereas the majority of the defendant’s arguments were rejected.  There is no reason for not awarding costs to the plaintiff.

25. The defendant also complains that basing on the plaintiff’s statement in its questionnaire in 2013 that no amendment of pleadings was needed, the plaintiff was not entitled to retreat from its position and to file and serve a fresh statement of claim in 2014.  Such argument is hopeless. Suffice it to say that leave had been granted to the plaintiff to file a fresh statement of claim in 2014.  The defendant failed to challenge such order.  It is debarred from re-opening the issue in the present application. 

26. I do not lose sight of the fact that the defendant has filed the July Defence in response to the fresh statement of claim.  The plaintiff has also filed a Reply in reply to the July Defence.  The defendant then took out the Amendment Summons to amend the July Defence. In the circumstances, I do not find any room for an argument on irregularity in this respect.

Conclusion

27. Having considered all the documents and arguments put forward by both parties, I do not find any of the defendant’s arguments carry merits.  I order that the Summons be dismissed.  The Order Nisi be made absolute.

28. I make a cost order nisi that the defendant do pay the plaintiff costs of the Summons including this hearing, in any event, to be taxed if not agreed.  In the absence of any application by summons to vary the costs order nisi, it will become absolute after 14 days.