Schindler Lifts(Hong Kong) Ltd v. Nikko Services Ltd
Read the full judgment text of DCCJ 2263/2013 on BabelCite. This District Court judgment was delivered on 20 January 2014.
1. This is the Plaintiff’s application for leave to appeal against my Decision on 26 November 2013 (my Decision), ordering it to take out summons for the amendment of his Statement of Claim with copy of the draft Amended Statement of Claim on or before 24 December 2013. The Plaintiff also took out a summons for the variation of the Cost Order Nisi I made in relation to the Defendant’s two summonses. Thereafter the Defendant took out a summons pursuant to Order 2 of the Rule of District Court r
Cites 2 cases
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DCCJ2263/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2263 OF 2013 --------------------
--------------------- D E C I S I O N (Leave to Appeal) (Variation of Costs Nisi) (Order 2 of RDC) --------------------- Introduction 1.This is the Plaintiff’s application for leave to appeal against my Decision on 26 November 2013 (my Decision), ordering it to take out summons for the amendment of his Statement of Claim with copy of the draft Amended Statement of Claim on or before 24 December 2013. The Plaintiff also took out a summons for the variation of the Cost Order Nisi I made in relation to the Defendant’s two summonses. Thereafter the Defendant took out a summons pursuant to Order 2 of the Rule of District Court related to the Plaintiff’s non-compliance. 2.This is a case related to a contract dispute (“the second hand parts agreement) which has been determined in DCCJ1569/2008; being dissatisfied with the judgment, the Defendant applied and obtained leave to appeal. During an adjournment of the appeal (CACV 250/2010), the parties entered into a written agreement settling the appeal (“the settlement agreement”). The Plaintiff instituted the present proceedings to enforce the settlement agreement, the Defendant attempted to counterclaim alleged damages related to the second hand parts agreement which had been determined in DCCJ1569/2008. 3.After the exchange of pleadings, the parties took out three summonses in total, and they were referred as the First summons (taken out by the Plaintiff), Second summons and the Third summons (both taken out by the Defendant) in my Decision dated 26th November 2013. Out of the three summonses, the two substantive applications being the Plaintiff’s application for security for costs against the counterclaim and the Defendant’s application for striking out the claim. All the summonses were heard on 22nd November 2013. 4.During the course of discussion, the Defendant applied to withdraw his counterclaim, the Plaintiff has no objection but requested to have the counterclaim dismissed; the Defendant has no objection to this cause. That being the case, the Amended Counterclaim was dismissed and no order was made for the Plaintiff’s application for security of costs. The parties had no objection that the costs should follow the event and requested the costs be assessed summarily. 5.As to the Defendant’s application for striking out, I considered it to be defective and ordered the Plaintiff to apply for amendment with draft Amended Statement of Claim within 28 days, this is the decision that the Plaintiff sought to have leave to appeal. In the same order, various costs orders nisi were made related to other incidental applications, the Plaintiff applied to have those related to the Defendant’s summons be varied. The Defendant objected the Plaintiff’s applications. 6.The Defendant took out a summons pursuant to Order 2 of the Rules of District Court for striking out and/or security of costs on the ground of non-compliance of my order mentioned above and failed to apply extension of time within 14 days upon expiry. The Plaintiff objected to the Defendant’s application. 7.Both parties have submitted their respective skeleton submission before the hearing and further elaborated by oral submission. I shall deal with the Plaintiff’s application for leave to appeal first, then the Plaintiff’s application for variation of the Costs Orders Nisi and finally the Defendant’s application. Discussion Leave to Appeal The test for leave to appeal 8.It is clear that leave should be granted only if the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. The relevant provision is Section 63A (2) of the District Court Ordinance, which stated that:
9.In HCMP 1009 of 2009, the plaintiffs applied for leave to appeal from an order whereby they were ordered to give specific discovery, Hon Le Pichon JA in considering the provision of section 14AA(4) of the High Court Ordinance, which is of similar wording of section 63A(2), stated that:
Grounds of appeal 10.The grounds put forward by the Plaintiff being:
11.Order 18 rule 19 of the Rules of District Court provides that:
12.The Defendant applied to strike out the Endorsement of Claim, the content of which is as follow:
13.The Endorsement of Claim is repeated in the prayer of the Statement of Claim. The Defendant also applied to strike out paragraph 11 and 12 and the prayer of the Statement of Claim. The relevant paragraphs of the Statement of Claim being:
14.Mr Shaw submitted that the basis of my Decision is not clear. In particular, although the court outlined the 4 possible bases of striking out/amendment, it did not indicate which basis it applied. Further Order 18 rule 19(2) provides that no evidence shall be admissible on an application to strike out/amend on the “discloses no reasonable cause of action” ground. However, the court referred extensively to the evidence. Further the Plaintiff’s position is that the disposal of HCCW 251/10 is not a pre-condition. It therefore did not plead the matter, just as it did not plead any number of other things were not a pre-condition. It is for the Defendant to plead the disposal of HCCW 251/10 is a pre-condition, and if the Defendant did plead such a precondition, the Plaintiff may have produced a Reply, answering the point. 15.Mr Shaw submitted that (in paragraphs 32, 35 and 44 of my Decision) the court directed the Plaintiff to amend its Statement of Claim to plead:
However, the court failed to consider the consequence of her order in relation to amendment of the Statement. No doubt, the defendant immediately would make an application to strike out the claim, this time on the basis that the claim discloses no cause of action. 16.Mr Lau represented the Defendant submitted that the arguments submitted by Mr Shaw are irrelevant; they cannot afford a basis for exempting the Plaintiff from the consequences of its own failing. The term as pleaded by the Plaintiff stated the dismissal of HCCW 251/10 is a pre-condition, this was also the view of Hon Chu JA when the judge invited the parties’ to consider the disposal arrangement by the letter dated 28 March 2013 (the content of the letter was quoted in paragraph 12 of my Decision). The Statement of Claim is defective as it disclosed no cause of action, however the court after considering the evidence agreed with Mr Shaw’s submission and allowed the Plaintiff an opportunity to amend its defective pleading yet it has given up the opportunity. The Plaintiff’s application for leave to appeal is vexatious and the attempt to re-argue the Decision and Orders is an abuse of the process. Ground 1 17.I have stated in paragraph 32 of my Decision that “it is clear from the part of the term pleaded that the dismissal of HCCW 251/10 is a pre-condition of the withdrawal of CACV 250/10. And it is also clear from the Statement of Claim that whether the pre-condition has been fulfilled is not pleaded, on the face of it the cause of action has not accrued yet. When I made my statement I did not refer to any evidence but only on the construction of the term pleaded by the Plaintiff. 18.In the same paragraph and the subsequent paragraphs, I referred to Mr Shaw’s submission on the issues and the evidence, it is clear that I did not refer to the evidence to consider whether the Statement of Claim should be struck out but whether I should exercise my discretion to allow the Plaintiff an opportunity to plead the cause of action properly. In my view the course of action that the Defendant was in breach of the settlement agreement is not properly pleaded. 19.In paragraph 42, again, when I made my statement “(on) further consideration of the pleading, I must say that it is defective”, I only considered the pleading, no evidence was referred. In paragraph 13 of his skeleton submission, Mr Shaw presumed that the court found the Plaintiff’s Statement of Claim “is scandalous, frivolous or vexatious”, this was not the case, should that be the case, I would not have exercised my discretion to allow amendment. 20.One of the grounds for striking out that the Defendant relied on was “on ground that it discloses no reasonable cause of claim.” As mentioned above, I could have struck out the Statement of Claim on this ground but after considering the merit of the case, where I stated and referred to the evidence and concluded in paragraph 43 of my Decision that I agreed with Mr Shaw that there is a reasonable cause of action and triable issues of mixed law and fact involved, thus I allowed the Plaintiff an opportunity to amend the defects and ordered the Plaintiff to amend the Statement of Claim within a reasonable time, namely, 28 days. Ground 2 21.Mr Shaw submitted that the Plaintiff’s position is that the disposal of HCCW 251/10 is not a pre-condition. It therefore did not plead the matter, just as it did not plead any number of other things were not a pre-condition. Who pleads the “subject to” provision at the beginning of clause 2 has important procedural effects. The onus of proof as to any term is on the party that pleaded that term. It is therefore procedurally unfair to require the Plaintiff to plead what it regards as an irrelevant term. 22.As mentioned above the Plaintiff did plead in paragraph 10 of its Statement of Claim that:
The natural and ordinary meaning of “subject to” being used in this context is conditionally upon. I have stated my construction of the term as pleaded by the Plaintiff in paragraph 32 and 42 of my Decision, the meaning of the express term as pleaded in paragraph 10 of the Statement is clear and plain, “subject to the dismissal of HCCW 251/10” means the dismissal of the HCCW 251/10 is a pre-condition of the withdrawal of the CACV 251/10 mentioned in sub-paragraph (a). It is not opened for another construction. Further, the cause of action should be pleaded in the Statement of Claim, the purpose of Reply is not to rectify defective Statement of Claim. Ground 3 23.As mentioned above I only stated the defect of the pleading in paragraph 32, whereas paragraph 35 is a discussion on Clause 2 of the settlement agreement raised by Mr Shaw. In my Decision, I did not direct the Plaintiff to amend the Statement of Claim in any particular manner; I only stated the defects of the pleading, the summary of which is in paragraph 42 of my Decision without referring to any of the evidence of the case. It is for the Plaintiff to rectify the defects within reasonable time. 24.For the reasons mentioned above I do not consider the Plaintiff has demonstrated the intended appeal has reasonable prospects of success. I further considered that there is no other reason in the interests of justice why the appeal should be heard. In the circumstances, I dismiss the Plaintiffs application for leave to appeal with costs to the Defendant (I shall refer to this again later). Variation of Costs Order nisi 25.The Plaintiff applied to vary my costs order nisi that there be no order as to costs to various application of the Defendant’s summonses. Mr Shaw submitted that my Decision suggested the reason for the costs order nisi was “minimal time was spent”. Obviously, costs were incurred. These include receipt of the summons, advising the Plaintiff, determining whether a skeleton argument was needed, discussing the matter in court (albeit briefly), reading the Decision and advising the Plaintiff. Further for the Defendant’s application of the summons dated 22 October 2013, it was hopeless and confused. All of the applications were dismissed. If the Plaintiff had made this application, there can be little doubt it would have been dismissed, with costs. No different principle is to be applied because the Defendant acts for itself. 26.Mr Lau submitted that costs are in the discretion of the court. They should follow the event, expect where it appears to the court that in the circumstance of the case some other should be made. The general rule does not cease apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of the costs. Where the successful party raises issues and makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful part’s costs. 27.Mr Lau submitted that the reasons for taking out the summons dated 22 October 2013 was because the Plaintiff did not file affidavit in accordance to the court order, as the Defendant wanted to have the matter proceeded as soon as possible, therefore it took out the summons to cover all the outstanding matters. Because the Plaintiff’s pleading was defective, the Defendant asked for trial without pleading, for the other applications all were pursuant to a certain Order of the Rules of District Court, and since the Defendant all along wanted to have a settlement, it therefore made an application for direction related to sanctioned offer. The Defendant did try its best to do the legal research and have a legal basis for each of its applications. 28.Further Mr Lau submitted that because of the Plaintiff‘s non-compliance, it is not entitled to any relief, its application to vary the costs order nisi should therefore be dismissed. Mr Shaw submitted that these are two separate matters. Further the Plaintiff did not take out a summons for the amendment because the Plaintiff applied for leave to appeal with the time given. 29.In my Decision, for all the other incidental applications in the Plaintiff and the Defendant’s summonses, in view of the minimal time spent, I made a costs order nisi that it be no order as to costs. The Plaintiff only applied to vary those related to the Defendant’s summons. 30.Mr Shaw being the handling solicitor of the appeal case and the present case has full knowledge of the background of the matters. The Plaintiff being a party to the settlement agreement should have full knowledge of all the clauses of the settlement agreement. Summons dated 4 October 2013 31.The application as per paragraphs 3 and 4 of the Defendant’s summons dated 4 October 2013 are as follow:
32.At that time the Plaintiff has already taken out a summons for the Defendant to provide security for costs of its Counter-claim, the Plaintiff must had been advised on the Defendant’s Counter-claim and thereafter instructed to take out the application. This part of the costs has been considered and taken into account when assessed the costs related to the dismissal of the Counter-claim and application for security for costs. 33.The HK$50,000 referred in paragraph 3 of the summons mentioned above is related to Clause 4 of the settlement agreement (the content of which can be found in paragraph 33 of my Decision), the Plaintiff must have knowledge of such. The recovery of the settlement sum simply cannot be made by way of interlocutory summons, and whether to set down a matter/case should be considered by the Master and in any event the Defendant has applied to withdraw his counterclaim and the counterclaim was dismissed. Similar applications for case management direction were included in the Plaintiff’s summons of which I also made a cost order nisi that there be no order as to costs. I consider it is just and appropriate that there be no order as to costs for paragraphs 3 and 4 of the Defendant’s summons dated 4 October 2013. Summons dated 22 October 2013 34.As stated in my Decision, 3 applications out of the 7 applications in the Defendant’s summons dated 22 October 2013 are applications for case management direction; 2 paragraphs about application to adduce evidence related to the second hand parts agreement made in 2007 which is simply irrelevant; 1 paragraph about consolidation with the appeal case; and 1 paragraph about direction for sanction offer. 35.I did not dismiss all the applications of this summons. The Defendant took out the summons with the intention to have the matter be set down for trial as soon as possible. As stated above 3 out of 7 applications are for case management direction and 1 for direction of sanction offer; case management direction should be considered by the Master in the case management conference, and parties are free to make their sanctioned offer without leave. For these applications, I made no order. 36.Further, the argument hearing on 22 November 2013 was originally scheduled for the other two summons mentioned above; and this summons was thus made returnable on the same date. The Plaintiff did not file any affirmation or submission for this summons. This summons was disposed of on its first hearing without hearing any submission; I consider it is just and appropriate that there be no order as to costs for the Defendant’s summons dated 22 October 2013. Accordingly I dismiss the Plaintiff’s application for variation of the costs order nisi. The Defendant’s summons Plaintiff’s non-compliance of paragraph 4 of my Decision 37.Order 2 rule 1 the Rules of District Court deals with Non-compliance with Rules, whereas rule 2 deals with irregularity, these two rules are not applicable in the present situation. For the non-compliance of court orders, the relevant rule is rule 3, which provides that:
38.By paragraph 4 of my Decision, the Plaintiff is ordered to take out summons for the amendment of his Statement of Claim with copy of the draft Amended Statement of Claim on or before 24 December 2013. The costs related and incidental to the amendment be to the Defendant in any event. Mr Shaw submitted that the time given was sufficient to the Plaintiff, the Plaintiff did not take out the summons was only because the Plaintiff has applied for leave to appeal the Decision within the time limit. 39.The Defendant referred to the Decision Hon Chu JA dated 3 August 2012, in which the Judge was required to deal with a breach by the Defendant of an earlier Court Order dated 22 March 2012 that the Defendant shall on or before 21 May 2012 provide security for costs in the amount of HK$50,000, failing which the appeal shall without further order stand dismissed with costs to the Plaintiff. In that Decision, the Judge referred to Order 2 rule 4 of the Rules of the High Court, which provides:
40.Mr Lau submitted that the Plaintiff failed to apply relief within 14 day upon expiry of the time limit given; the Statement of Claim should be struck out. It should be noted that the order I made, unlike the one made against the Defendant on 22 March 2012, is not an unless order. The Plaintiff might want to wait for the result for its application for leave to appeal before it files the summons for amendment, yet no application from the Plaintiff for stay of execution pending the result of its application, the Plaintiff could have taken out the stay application at the same time it applied for leave to appeal. 41.As I stated in paragraph 43 of my Decision, too much time has been spent by the parties on matters related to the second hand parts agreement made in 2007. Mr Shaw submitted that 28 days is sufficient for the amendment. In the circumstance, I will grant leave to the Plaintiff for time extension but make an unless order that in default, the Statement of Claim be struck out with costs to the Defendant to be taxed if not agreed. Where the plaintiff consider to apply leave to appeal from the Court of Appeal, it should also consider to apply to the Court of Appeal for stay of execution of my unless order. Security for costs 42.The Defendant applied for security for costs pursuant to Order 2 rule 3, in case the Plaintiff obtained leave to appeal and or the Plaintiff’s claim continued. The leave to appeal is refused with costs to the Defendant, and I have made an unless order related to the amendment of the Statement of Claim. I have made an order on 26 November 2013 that the costs related to the application for striking out be to the Defendant in the cause, and the costs related and incidental to the amendment of Statement of Claim be to the Defendant in any event. The costs incurred or may incur by the Defendant are thus protected to certain extent by various costs orders. I do not consider this is an appropriate case to impose security for costs. Costs 43.For the Plaintiff’s two summonses, I consider the general principle that the costs follow the event should apply. Accordingly I make a costs order nisi that the Plaintiff is to pay the costs of these two summonses to the Defendant to be taxed if not agreed, to be made absolute within 14 days. 44.In my view the issue of the Defendant’s summons is not necessary, in any event I would have made necessary consequential order. However the parties’ submissions related to the Plaintiff’s non-compliance could not be avoided, and I have made an unless order related to the amendment of Statement of Claim. I consider it is appropriate to make a costs order nisi that for the Defendant’s summons there be no order as to costs, to be made absolute within 14 days. Order
Mr Shaw of Haley & Co for the Plaintiffs The Defendant represented by director, Mr Lau Chun Ming | ||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCCJ 2263/2013