XCHRX STRATEGIC FINANCE RELATIONS LTD. v. CHUN TAI HOLDINGS LTD.

HCA7940/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.7940 OF 2000

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D E C I S I O N

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1. On 13 November 2000, the parties appeared before a master on the plaintiff's application for Order 14 summary judgment. That summons had been taken out on 27 October 2000. Prior to that date, however, the defendant had, on 22 September 2000, applied for all proceedings in the writ action to be stayed in favour of arbitration.

2. Before the learned master, the defendant submitted, as its primary contention, that the Order 14 summons should be dismissed because the stay application had been issued. The plaintiff's primary contention was that in certain circumstances the court could hear an Order 14 application ahead of a stay application. The learned master referred the matter to this court for determination. The question is framed as follows :

"Whether it is still open to a plaintiff to bring Order 14 proceedings against a defendant when the defendant has applied for a stay of proceedings in favour of arbitration under the Arbitration Ordinance, Cap.341?"

3. The court has had the advantage of hearing Mr Russell Coleman for the plaintiff and Mr Bernard Mak for the defendant on this issue.

4. The narrow purpose of the ruling which follows is to deal with one particular situation. The situation is where the court determines, on the stay application, that the stay should be refused because the court has been persuaded that there is no dispute referable to arbitration because of an unequivocal admission on liability and quantum by the defendant. In those circumstances, a stay would be refused and the defendant would have no answer to the claim. It is sensible, therefore, for the Order 14 proceedings to be before the court on the same occasion to be dealt with as a formality following the court's determination on the stay application.

5. Thus, it is open to the plaintiff to commence Order 14 proceedings after a stay application has been issued. However, the stay application should always be heard first. It is open to the plaintiff to take the usual preparatory steps in the Order 14 proceedings but the earliest hearing date will be the same date as the stay application, only to be heard after the court's determination on the stay.

6. Of course, if the stay is granted, the Order 14 will fall away and the plaintiff will be faced with the costs thus far incurred in those proceedings.

7. If the stay is refused on the basis that there is no dispute between the parties because an unequivocal admission has been made, the court will almost inevitably deal with the Order 14 there and then.

8. If the stay is refused for some other reason, the court may still go on to deal with the Order 14 issues on the same day. However, such a course is not "almost inevitable". It is equally possible that a better course may be to relist the Order 14 to a later date. That decision will be for the court, depending on the issues in the Order 14 and the submissions of the parties.

9. Thus :

1. It is open to a party to commence Order 14 proceedings after the other party has applied for a stay in favour of arbitration under the Arbitration Ordinance, Cap.341.

2. The Order 14 proceedings may take their normal course but not be heard before or at the same time as the stay application.

3. The Order 14 may be listed on the same day as the stay application but only to be dealt with if the stay application is refused.

4. If the stay application is refused on the basis that the court determines there is no dispute referable to arbitration, then the Order 14 application should be ready to be dealt with as a formality on the same day.

5. If the stay application is refused for some other reason, the future conduct of the Order 14 summons is a matter for the court.

6. If the stay application is granted, the Order 14 summons will be dismissed. In the normal circumstances, costs would follow the event.

10. Costs of this application will be in the cause.