Read the full judgment text of HCCT000085/2000 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 23 March 2001 before Hon Burrell J in Chambers.
Construction Law — Subcontractor payments — Payment arrangement disputes — Interpretation of special and varied agreements — Interim payment applications under Order 29 — Leave to defend under Order 14 — Security for costs applications — Oral versus written collateral agreements. The plaintiff sub-contractor Leung Shing On Construction Co Ltd entered a contract with Wing Hong Construction Ltd, later modified by agreements with Hung Kei Mechanical Engineering Co to share net income and payment arrangements. Wing Hong paid directly to Hung Kei post-May 2000, breaching the special payment setup and leading to supplier nonpayment with LSO liable to suppliers. The court examined whether interim payments should be made despite defendants’ leave to defend granted under Order 14. Citing authorities, the court held that with unconditional leave to defend, interim payments generally cannot be granted unless leave is conditional and the payment is sensible and desirable given the plaintiff’s precarious position. The court found triable issues as to contract terms and oral collateral agreements, making summary judgment inappropriate and granting conditional leave to defend contingent on interim payment. The 1st defendant's application for security for costs was refused balancing LSO's impecuniosity and claim merits, particularly as interim payment was ordered. The 2nd defendant's summonses for accounts and small final payments were dismissed to be resolved at trial. The court ordered an interim payment of HK$1.2 million to cover supplier claims, to be held by plaintiff's solicitors for that purpose, balancing multiple counterclaims and evidentiary issues. Costs were reserved accordingly.
Legal issues: Interim payment under Order 29 · Suitability of Order 14 applications for summary judgment · Security for costs under section 357 Companies Ordinance and Order 23 · Order 27 claim for $100,000 by 2nd defendant
Outcome: The court ordered an interim payment of HK$1.2 million to the plaintiff; dismissed the 1st defendant's application for security for costs; dismissed the 2nd defendant's summonses under Order 14 and Order 27; leave to defend granted to the 1st defendant conditional on payment of interim payment.