HO KWOK WAI AND ANOTHER v. 陳雲

DCCJ 955/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 955 OF 2013

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DECISION

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The application

1.  This is the defendant’s application to transfer this action to the Court of First Instance pursuant to sections 41 and 42 of the District Court Ordinance, Cap 336 on the grounds that:-

(1) the relief sought in the counterclaim exceeds the jurisdiction of the District Court; and

(2) there are common questions of law or fact arise in this action and a High Court action HCA 1824/2013 (“the High Court Action’) and the two actions should be consolidated to save time and costs.

2.  The plaintiff opposes the application on the grounds that the counterclaim of this action does not exceed the jurisdiction of the District Court and the application is made too late.

Factual background

3.  For the purpose of disposing this application, the factual background of the two actions can be briefly stated. Both actions concern a factory premises known as Factory Flat F on 8^th Floor Including Roof F and Car Park Space No C13 on 1^st Floor of On Ho Industrial Building, Nos 17-19 Shing Wan Road, Tai Wai Shatin, New Territories (“the property”).  In or about 1999, the defendant and his father Mr Chan Kai Wing who were the then registered owners of the property, sold the property to Chun Wai Metal Limited, a limited company owned and controlled by the plaintiffs, at the price of HK$1,250,000.

4.  It is the plaintiffs’ case that after purchasing the property, Chun Wai subsequently leased the property back to the defendant in or about 2000.  In 27 May 2013, the plaintiff commenced this action at the District Court to claim the arrears of rent and to recover vacant possession of the property. 

5.  On the other hand, it is the defendant’s case that though the transaction to sell the property was completed in 1999, the defendant and his father never received the purchase price from Chun Wai.  As Chun Wai failed to pay the purchase price of the property, in or about 2000, the parties agreed that the property was leased back to the defendant for use and the defendant did not have to pay any rent until Chun Wai settled the purchase price of the property.

6.  In or about 2007, the 1^st plaintiff told the defendant that Chun Wai was not able to settle the purchase price of the property.  After negotiation, it was orally agreed that Chun Wai would sell the property back to the defendant and his father at the price of HK$650,000.  Pursuant to the said oral agreement, the defendant and his father paid to the plaintiffs a deposit of HK$300,000 (“the deposit”).  However, after receiving the deposit, the plaintiffs failed to complete the transaction by assigning the ownership of the property to the defendant and his father.  Therefore, in this action, the defendant counterclaims half of the deposit i.e. HK$150,000 as his damages.  Alternatively, the defendant seeks the relief that the ownership of the property be transferred to him.

7.  On 26 September 2013, the defendant and his father (as 1^st and 2^nd plaintiffs respectively) commenced the High Court Action in which they sue Chun Wai and the 1^st plaintiff (as 1^st and 2^nd defendants respectively) for:-

(1) electroplating service fees of HK$889,214.02 owed by Chun Wai to the defendant and his father;

(2) a sum of HK$645,000 being the outstanding purchase price of the property when Chun Wai purchased the property from the defendant and his father in 1999;

(3) refund of the deposit of the sale and purchase of the property pursuant to the oral agreement in 2007; and

(4) transfer of all legal and beneficial ownership of the property to the defendant and his father.

The law

8.  Section 41(3) of the District Court Ordinance, Cap 336, provides:-

“If a defendant in an action or proceeding within the jurisdiction of the Court makes a counterclaim which is not within the jurisdiction of the Court but within the jurisdiction of the Court of First Instance, the Court may, either of its own motion or on the application of any party, order-

(a) that the whole proceedings be transferred to the Court of First Instance;

(b) ……; and

(c) ……”

9.  Further, Order 4 rule 9 of the Rules of the District Court provides:-

(1)Where two or more causes or matters are pending, then, if it appears to the court –

(a) that some common question of law or fact arises in both or all of them, or

(b) that the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions, or

(c) that for some other reason it is desirable to make an order under this rule

the court may order those causes or matters to be consolidated on such terms as it thinks just or may order them to be tried at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any other of them.

Discussion

10.  The first ground relied on by the defendant is that the counterclaim exceeds the jurisdiction of the District Court.  On the face of the pleading it is not the case.  However, Counsel for the defendant, Ms Gwilt submitted that, in addition to what have been pleaded in the Counterclaim, the defendant is also counterclaiming damages against the plaintiffs for failing to transfer the ownership of the property pursuant to the oral agreement made between the parties in 2007.  It is submitted that although the defendant is only entitled to half of the ownership of the property, as the value of the property is about HK$4,800,000, the value of half of the ownership of the property will be already well over the jurisdiction of the District Court.

11.  Though it is not clearly pleaded in the Counterclaim, however, if properly amended, I agree that the amount of damages claimed in the Counterclaim will be over HK$1,000,000.  On this ground alone, this action should be transferred to the Court of First Instance.

12.  Further, it is also the observation of the court that in order to save costs and time, the two actions should be heard together, if not consolidated.  Simply by reading the facts of the two actions one can readily see that both actions arise out of the same factual background and series of transactions.  The counterclaim of this action is basically part of the claim of the High Court Action.  The parties of the two actions, though not exactly the same, are closely related.  The witnesses of the two actions will be the same group of people.  They will be giving evidence and be cross-examined about the same factual backgrounds that led to the series of transactions concerning the property.   

13.  As there is a substantial overlapping of factual disputes and legal issues in the two actions, it is obviously desirable to resolve the disputes of the two actions on one occasion before the same judge.  It will definitely save costs and time as witnesses do not have to attend two trials and give evidence on two different occasions about the same factual issues. 

14.  Whether the two actions should be consolidated or heard together is a question for the parties to consider. There are obviously some procedural matters to be resolved such as the parties of the two actions are not exactly the same.  Be that as it may, I believe it is in the interest of all parties involved to have the two actions to be dealt with on one occasion by the same judge.

15.  In conclusion, I am of the view that this action should be transferred to the Court of First Instance and I so order.

Costs

16.  This is one of those rare cases that costs should not follow the event.  Though the defendant is successful in this application, the application is made very late, and the plaintiffs cannot be said to be unreasonable to try to oppose such a late application.  In the circumstances, I will make a costs order that costs of this application be in the cause, to be taxed if not agreed, with certificate for counsel.  This is a costs order nisi and it shall become absolute in the absence of any application to vary within 14 days of the date of this decision.