SPEED SOURCING LTD AND OTHERS v. RAINBOW STATE INVESTMENTS LTD AND OTHERS

HCMP 1839/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1839 OF 2015

(ON AN INTENDED APPEAL FROM HCA NO 2298 OF 2013)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  At the hearing of 15 September 2015, in light of what was intimated by counsel to court, we thought there is a practical solution to the matter. To facilitate that, we directed the Plaintiffs to serve and lodge with the court the proposed undertakings to be given by the Plaintiffs for our consideration.

2.  On 16 September 2015, solicitors for Plaintiffs produced an undertaking in written form offered by the Plaintiffs.  There was correspondence after that, with solicitors pointing some areas which required revisions.

3.  The latest version of the undertaking offered by the Plaintiffs is the one attached to the letter from solicitors for the Plaintiffs to the court dated 5 October 2015.

4.  Unfortunately, matter took an unhelpful turn in mid October with solicitors advancing allegations against each other in respect of the adjournment of the injunction hearing by B Chu J on 19 October 2015. That led to request for obtaining the transcript for the hearing of 15 September 2015, and that request was granted on 6 November 2015.  The transcript was made available to the parties on 24 November 2015.  Since then, solicitors for the parties did not write to the court further until a letter of 29 March 2016 asking the court to give our determination on the leave application.

5.  With respect, we are of the view that the arguments in correspondence after 19 October 2015 were not of assistance to the resolution of the matter before us.  Unfortunately, it had caused delay in the process.

6.  Having considered the arguments on the undertaking, we are of the view that the latest version of the undertaking (viz in the form attached to the letter of 5 October) should be sufficient in addressing the practical concerns of the 1^st Defendant.  We accept the undertaking.  In respect of the arguments raised on behalf of the 1^st Defendant, we only need say this:

(a)  Though this court cannot require the 1^st Defendant to give any undertaking in terms of the production of bank statements or satisfactory evidence on payment of management fees, government rent and rates, it is reasonable that the Plaintiffs should have such evidence in the time frame provided in the undertaking.  The net effect is that if the 1^st Defendant does not produce such documentary evidence, the Plaintiffs could be excused from further performance of the undertaking.  Thus, we do not believe it is in the interest of the 1^st Defendant to refuse to provide such evidence accordingly.

(b)  We do not think it is necessary to state expressly that the acceptance of the payments under the undertaking is without prejudice to the parties’ respective position over the beneficial ownership of the property.  The undertaking is accepted by this court in the context of the present application and it cannot be seriously suggested that in so doing this court has made a final determination on the question of beneficial ownership.  Likewise, the acceptance of payments made pursuant to the undertaking by the 1^st Defendant could not have such effect.

7.  Further, we also agree with Mr Bartlett SC that the case for interim payment had to be based on what was pleaded in the Defence and Counterclaim and as it stands the claim is based on rent or mesne profits as opposed to indemnity for all mortgage payments and outgoings in relation to the property.  The mere reference to these payments in evidence is not enough.  Up to now there has not been any application for amendment of the Defence and Counterclaim.  On the claim for rent or mense profit, we do not think the judge’s conclusion can be faulted. 

8.  Having said that, we wish to achieve a practical solution to this part of the dispute and with that in mind, we accept the undertaking from the Plaintiffs.

9.  The application for leave to appeal is dismissed.  We shall also order that the costs of the Plaintiffs in this application be costs in the cause of HCA 2298 of 2013.  We are not minded to make a similar order in respect of the 1^st Defendant’s costs in light of what we said on the mismatch between the pleadings and the basis on which the application for interim payment may be justified.