啓元幹細胞生化技術有限公司 v. 香港聯合船塢集團有限公司

DCCJ 137/2019

[2020] HKDC 1035

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 137 OF 2019

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

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

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

DECISION

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

INTRODUCTION

1.  This is an appeal against a Master’s Decision for a final judgment on a counterclaim brought by the defendant.

2.  At the hearing on 15 June 2020, Master B Mak after hearing an application brought by the defendant under Order 14, rule 1 and Order 27, rule 3 of the Rules of the District Court (“RDC”), entered final judgment against the plaintiff in the sum of HK$223,490 and interest thereon (“the Judgment Sum”).  He further ordered that the sum of HK$230,000 previously paid into court by the plaintiff pursuant to the Order of His Honour Judge Kent Yee dated 18 January 2019 be paid to the defendant in satisfaction of the final judgment.  He further ordered that the plaintiff to pay the defendant’s costs of the action, including the costs of the Order 14 application before him, with certificate for counsel, such costs to be summarily assessed by him on paper (“the Master’s Order”).

3.  A Notice of Appeal dated 29 June 2020 was filed by the plaintiff, who at all time was represented by one of its directors Madam Lam Ka Man (林家敏) (“Ms Lam”), seeking to set aside the Master’s Order.

BACKGROUND

4.  The plaintiff was and is the owner of a luxury 72 feet yacht by the name of “San Lorenzo 72” (“the Yacht”).

5.  The defendant was and is the owner/operator of some dockyards situated on Tsing Yi Island (“the Dockyards”). 

6.  One of the main areas of its business is to license the Dockyards to its clients and providing them with services of labour and equipment assistance.

7.  Far East Marine Electrics Limited was a company incorporated in Hong Kong which carried on the business of maintenance and repair of yachts under the name and style of ‘Staub Marine’ (“Staub Marine”).  On or about 9 February 2018, the then general manager of the engineering division of the defendant, one Mr Vincent Ko, on behalf of the defendant, entered into a service agreement with Staub Marine whereby Staub Marine licensed part of the land on the Dockyards for the period from 1 February 2018 to 31 January 2023 at the monthly fees of HK$168,750 plus service charges, if any.

8.  On 19 March 2018, the Yacht was brought to the Dockyards by the representatives of Staub Marine.  As a matter of routine procedures, the defendant, upon Staub Marine’s request and in accordance with their instructions, provided “seawall craning service” to deliver the Yacht from the water to the dry Dockyards.  In the process, the defendant incurred cost for the craning service for which they had made a counterclaim against the plaintiff.

9.  In around June 2018, the person in charge of Staub Marine had absconded.  As a result, Staub Marine abandoned the Dockyards.  By that time, Staub Marine had already defaulted in payment under the service agreement with the defendant.  When the staff of the defendant checked the Dockyards, they found that 3 yachts remained on the premises.  One of them was ‘San Lorenzo 72’, ie the Yacht which belonged to the plaintiff.  In early July 2018, the staff of the defendant examined the Yacht and recorded its existing condition as part of standard procedure of the defendant when the defendant resumed full control of the parts of the Dockyards from Staub Marine.  It was confirmed by the staff of the defendant that, apart from the cracks existed at the bottom of the Yacht, there were also some damage found on both sides of the vessel.

10.  There were subsequent negotiations between Ms Lam of the plaintiff and the staff of the defendant, including Mr Fung Siu Piu (“Mr Fung”), the production manager of the defendant; Mr Lee Siu Chung, the senior estimator of the defendant; and Mr Fung Hing Yip, the billwriter of the defendant.  At the meeting on 10 July 2018, Mr Fung of the defendant had clearly informed Ms Lam and her colleague, one Mr Thomas Chan, that the defendant intended to charge the plaintiff for all the outstanding service fees. As part of the defendant’s standard terms of service, it says that it is entitled to keep the custody of the Yacht on the Dockyards until all the outstanding fees have been settled by the plaintiff.

11.  On 26 July 2018, the defendant issued a lien notice to the plaintiff and asked for the outstanding fees of HK$16,690, being the seawall craning service fees provided in March 2018 for the delivery of the Yacht from the port to the Dockyards.  Further, on 1 August 2018, after a meeting between Ms Lam of the plaintiff, Mr David Murphy, the chief executive officer of the defendant and Mr Fung, the plaintiff indicated that it would not “at this stage” object to the retention of the Yacht by the defendant in view of the fact that they needed time to engage contractor to repair the cracks on the keel of the Yacht before it could leave the Dockyards.  On or about the same day, the defendant issued an invoice (No. S008/08-18) in the sum of HK$16,690 (“the August Invoice”), which was the same sum as stated under the lien notice.

12.  On or about 8 August 2018, the defendant further sent the plaintiff a tender (No. T.167/18) (“the August Tender”) covering the plaintiff’s service charge in respect of the Yacht, including daily storage charge; launching fees upon departure; and all the other miscellaneous expenses.

13.  On or about 3 September 2018, in anticipation of the upcoming the repair of the Yacht, Ms Lam of the plaintiff expressly accepted the terms of the August Invoice and the August Tender on behalf of the plaintiff by signing on them, with the plaintiff’s company chop affixed.

14.  During September 2018, on several separate occasions, Ms Lam of the plaintiff had arranged the plaintiff’s own contractor to carry out repair works to the Yacht in preparation of the departure.

15.  In breach of the agreement between the plaintiff and the defendant, the plaintiff had failed to pay such fees due to the defendant.  As a result, the defendant makes the present counterclaim against the plaintiff for the unpaid occupation fees and various service charges due.

16.  The plaintiff in this case was not represented.  Instead, it had filed a statement of claim and all substance documents in Chinese prepared by Ms Lam herself.

17.  In short, the plaintiff objected to the defendant’s application for final judgment under Order 14, rule 1 of the RDC for the following:-

(1)  an order that final judgment be entered against the plaintiff for the sum of HK$223,490 and interest thereon;

(2)  an order that the sum of HK$230,000 paid into court by the plaintiff pursuant to the Order of His Honour Judge Kent Yee dated 18 January 2019 be paid to the defendant in satisfaction of the final judgment as set out in paragraph (1) above; and

(3)  costs thereof.

18.  The plaintiff had filed a two-page affirmation by Ms Lam which essentially raised the following two lines of defence:-

(1)  Retention Defence: the defendant had retained the Yacht against the plaintiff’s will from 13 September 2018 onwards.  Therefore, it should not be liable for any occupation fees beyond that day (“the Retention Defence”); and

(2)  Deposit Defence: the plaintiff had paid a deposit in the sum of HK$50,000 to Staub Marine (an entity which is entirely unrelated to the defendant) (“the Deposit Defence”).

DISCUSSION

19.  In my judgment, neither of the plaintiff’s 2 defences mentioned above has any substance at all. 

20.  First, as stipulated in the agreement between the plaintiff and the defendant, the defendant is entitled to retain the Yacht unless and until the plaintiff has made full payment of the outstanding fees.  It is not disputed that the plaintiff had not made full payment of such fees.

21.  Second, I agree with the defendant’s counsel Mr Lai that what happened between the plaintiff and Staub Marine does not concern the defendant at all.  The fact that the plaintiff had previously paid Staub Marine a deposit in my view has nothing to do with the defendant’s counterclaim against the plaintiff.

22.  Further, in my judgment, the plaintiff’s attempt to resist the defendant’s application for the Order 14 summons before the Master below by making a counterclaim against the defendant had also been plainly misconceived due to the following reasons:-

(1)  The purported counterclaim made in the application had previously been made against the defendant by the plaintiff under the statement of claim.  However, all such claims had been struck out by reasons of the plaintiff’s failure in making the payment for security for costs pursuant to §1 of the Order of Master Jacqueline Lee dated 24 September 2019.  Plainly, the plaintiff simply cannot rely on the purported counterclaim as a ground for resisting the summary judgment brought by the defendant;

(2)  I further agree with Mr Lai for the defendant that the purported counterclaim must fail because the agreement between the plaintiff and the defendant expressly excludes contractual and/or tortious liability of the plaintiff against the defendant; and

(3)  I also agree with Mr Lai that the purported counterclaim is entirely unsupported by any particulars and/or evidence.  As such, the plaintiff has failed to demonstrate that it has a bona fide defence against the defendant’s counterclaim.

23.  Based on the above 3 points, in my judgment, it must be obvious that summary judgment should be given in favour of the defendant against the plaintiff in this case.

The plaintiff’s defence to counterclaim

24.  The principles on the burden that a defendant bears in resisting a summary judgment application are well-settled. In Pacific Harbour Advisors Pte Ltd and Another v Winson Federal Ltd and Others (HCA 1257/2013, 1 August 2014), Deputy High Court Judge Bebe Chu (as Chu J then was) summarized them at §§61-65 as follows:-

(1)  The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant clearly has no defence to the plaintiff’s claim, and that the procedure enables plaintiffs in cases where there is no defence to obtain expeditious summary judgment to avoid unnecessary delay;

(2)  It is for the plaintiff to establish a prima facie case.  Once this is done, he will become entitled to judgment and the burden shifts to the defendant to satisfy the court why judgment should not be given against him;

(3)  The defendant may show cause against the plaintiff’s application by:-

(a)  A preliminary or technical objection;

(b)  On the merits, eg that he has a good defence to the claim on the merits, or (subject to Order 14A) that a difficult point of law is involved, or a dispute as to the facts which ought to be tried, or a real dispute as to the amount due which requires the taking of an account to determine or any other circumstances showing reasonable grounds of a bona fide defence.

(4)  The defendant has to meet two limbs:-

(a)  whether the defendant’s assertions are believable.  Furthermore, the defendant’s assertions should be tested against contemporaneous documents and other pertinent circumstances;

(b)  if the answer to the above limb is in the affirmative, the second to be considered is whether there is/are “a fair probability or reasonable grounds that a bona fide defence exists”.

(5)  If the above burden is not met by the defendant, judgment should be entered in favour of the plaintiff without more.  If the burden is met, the defendant should be granted unconditional leave to defend.  It is possible, if the defence set up is “shadowy” or if the case is almost one in which summary judgment should be ordered, to grant leave conditional upon the full amount in dispute being paid into court.

Whether the plaintiff has met the threshold in this case

25.  In my judgment, the plaintiff has clearly failed to provide any bona fide defence to the counterclaim under the two matters raised by it in its purported defence under Ms Lam’s affirmation.

26.  First, there is nothing in the Retention Defence raised by the plaintiff in its affirmations.  As a matter of law, as clearly provided by the August Tender, all sums invoiced by the defendant should be settled by the plaintiff before the departure of the Yacht from the Dockyards.  Full payment has to be made prior to the launching of the Yacht under the defendant’s terms of business.  The plaintiff does not dispute the fact that it had not paid the due sum as invoiced by the defendant up to the date hereof at all.  On that, it seems to me the plaintiff has no defence to the counterclaim at all.

27.  As a matter of fact, the contemporaneous documents demonstrate that the defendant has always been willing and ready to return the Yacht to the plaintiff provided that they are being fully paid for all the outstanding charges stated in the invoice.  This can be seen in the various emails exchanges between the parties found in the hearing bundles.  They included emails from the defendant to the plaintiff dated 4 October 2018; 19 October 2018; 23 October 2018; 1 November 2018 and 8 November 2018.

28.  What is much more significant in the context of this case is the fact that the plaintiff had never protested about the defendant alleged “unlawful” retention of the Yacht and/or the damage caused by the defendant to the Yacht until 6 December 2018 when, for the first time, the plaintiff’s started to accuse the defendant of having caused such alleged damage and demanded the release of the Yacht “free of charge”: see email from the plaintiff to the defendant dated 6 November 2018.  I find such belated and unsustained allegations totally unfounded and not believable.  I have no hesitation in rejecting all of them.

29.  Equally, I find the Deposit Defence contains no merits at all.  As pleaded by the defendant, it’s claim against the plaintiff is based on the Release Agreement between the plaintiff and the defendant.  In my view, what was agreed between the plaintiff and Staub Marine had nothing to do with the contractual relationship between the plaintiff and the defendant.  Thus, whether the defendant had previously paid Staub Marine a sum of HK$50,000 or not had, in my judgment, no relevance to the liability of the plaintiff under the Release Agreement.  Therefore, I find that the plaintiff cannot rely on the payment of deposit to Staub Marine as ground for resisting summary judgment in this case.

Lack of merits in the purported counterclaim

30.  I also agree with the counsel of the defendant Mr Lai that the plaintiff’s purported counterclaim bound to fail for the reasons stated below.

31.  First, as the plaintiff’s purported counterclaim to resist the summary judgment has already been struck out by reasons of §1 of the Order of Master Jacqueline Lee dated 24 September 2019, the plaintiff simply cannot rely on the same to resist the summary judgment.

32.  Second, as set out by Mr Lai in his submission, Clause 17(a) of the Standard Conditions for Shiprepair (which was incorporated into the Release Agreement) has expressly provided that the defendant shall not be reliable to the plaintiff in any way whatsoever for any loss, whether in contract or tort.  I agree with Mr Lai that, given the plaintiff’s claim against the defendant was one founded on top of the alleged damage to the Yacht, it falls within the ambit of the exclusion clause in the agreement.  As such, I find that Mr Lai that the purported counterclaim simply cannot “get off the ground”.  

33.  Last but not the least, the fact that the plaintiff had failed to particularise and show that it has suffered any loss by way of incurring money as costs for the repair and/or loss of rental show that the allegations are noting but bare and without substance.  I so find that it is the case.

CONCLUSION

34.  In the aforesaid premises, I have no hesitation to dismiss the appeal of the plaintiff and make an order in term of §§1 and 2 of the Summons dated 15 January 2020 with costs against the plaintiff, with certificate for counsel.

35.  I also would order the costs of the appeal to be summarily assessed by me.  For this purpose, the defendant is directed to lodge with the clerk of this court a statement of costs within 7 days after the handing down of this decision with copy to the plaintiff.  And the plaintiff to lodge a list of objection, if any, within 7 days thereafter with copy to the defendant. I shall make a summary assessment on costs on paper.