Wishing Star Ltd v. Etrema Co Ltd and Another

HCA 656/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 656 OF 2010

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J U D G M E N T

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Introduction

1.This is an application by the plaintiff (“P”) to restore its claim in this action after it was provisionally struck out under Order 25 rule 1C of the RHC by reason of the plaintiff’s failure to appear at the adjourned Case Management Conference (“CMC”) on 13 June 2013.

2.P’s claim against the 3^rd defendant was settled following mediation and discontinued on 25 September 2012.

3.The 1^st defendant (“D1”) and the 2^nd defendant (“D2”) both opposed this application.

4.At the hearing before this court, Mr Clayton SC appeared for P, Mr Pennicott appeared for D1, and Mr YL Cheung appeared for D2.

5.The parties’ dispute arose out of a project in relation to the construction of a private residential development on Barker Road (“Project”).  

Brief Background

6.P was the owner/employer in the Project.  D2 was the main contractor engaged by D1 to carry out and complete the Project. The architect appointed for the Project was D3.  P was a sub-contractor.

7.By a Letter of Award dated 17 June 2004 and signed by P on 26 June 2004 (“Letter of Award”)[1], P was nominated the sub-contractor to carry out curtain wall and external architectural features works in relation to the Project (“Sub-Contract Works”).  It was pleaded by P that the Letter of Award was issued by D2, as agent of D1[2]. This was denied by D1 and its case was the Letter of Award was issued by D3 to P, copied to D1[3]. D2’s case was that the Letter of Award was issued to P by D3 (not by D2) as the agent of D1[4].  The contract sum was HK$6,743,898 (“Sub-Contract Sum”) including the provisional sum of HK$780.000.

8.The main contract between D1 and D2 seemed to be executed only 7 February 2005 (“Main Contract”)[5] under which D2 agreed to carry out and complete the works for the Project, although according to the Letter of Award, the Main Contract commencement date was 1 April 2004, and the completion date was 26 March 2005[6].

9.Then there were to be two documents signed by P, both dated 4 April 2005, namely (i) a sub-contract to carry out the Sub Contract Works (“Sub-Contract”)[7], and (ii) a “Form of Agreement between Employer and Nominated Sub-Contractor” (“Form of Agreement”), a copy of which was attached to the Sub-Contract as Appendix A[8].  It was P’s case that both the Sub-Contract and the Form of Agreement were entered into between P and D1[9].  D1 denied he entered into the Sub-Contract with P, but admitted that he signed the Form of Agreement.  D2 said it was D2 which had entered into the Sub Contract with P[10].

10.It was D1’s case that according to clause 8 of the Letter of Award, upon signing the Sub-Contract by P with D2, D1 was released and discharged in respect of any claims in the Sub-Contract[11].

11.When the Project was near practical completion, according to D1, D3 had issued a letter to D2 on 25 January 2006, copied to D1 and P, setting out the outstanding defects which required rectification (“Defects Rectification Works”)[12].  Further, according to D1, on the same day, there was also a letter issued by D2 to D3 attaching a document titled “Defect List for Curtain Wall & Architectural Features Installation” (“Defect List”)[13] which had set out the Defective Rectification Works, and which D2 said it undertook the responsibility of making good on P’s behalf provided if P were unable to rectify such works by the agreed target dates[14].  A Certificate of Practical Completion was then issued by D3 on 26 January 2006[15]. 

12.By a letter or 17 March 2006, D3 requested D2 to take over the Defects Rectification Works from P, and P said at the request of D2 and/or D3, P ceased to carry out the Defects Rectification Works on about 30 March 2006, and that at the time the Defects Rectification Works had been mostly completed[16].

13.It was, however, the case of D1 and D2 that, despite repeated requests, P had not completed all the Defects Rectification Works by the target dates set out in the Defect List[17].  As a result, D2 engaged other contractors to carry out the Defects Rectification Works[18].

14.P pleaded in his statement of claim that on 26 July 2007, the payment certified by D3 in respect of the Sub-Contract Works completed by P amounted to HK$8,397,054.62, and P had only received certified payment in the sum of HK$4,853,846 from D1[19]. D2 had claimed contra charges, which included loss and damage incurred as a result of P’s breaches of the Sub-Contract and other deductions under clause 13 of the Sub-Contract from the certified sums, of which P only admitted HK$340,000.  As a result, it was P’s case that D2 owed P outstanding certified payment in the sum of HK$3,203,208.70.

15.P also claimed against D2 other variation and additional works carried out at the request of D2 and/or D3[20] (“Variation and Additional Works”).

16.P’s claim against D1 was for damages for D1’s alleged breach of clause 2 of the Form of Agreement, and also paragraph 5 of the Letter of Award in refusing to pay the Sub-Contract Sum to P and further or in the alternative, damages for the negligence, tortious and/or wrongful interference of the Sub-Contract and/or Form of Agreement[21].   Mr Pennicott had submitted on behalf of D1 was thus at best, P’s claim against D1 was only a contingency claim, in that if P’s claims against D2 were to succeed, no further sums would be payable by D1, save as alleged damages.

17.To summarise, P’s claims in its statement of claim essentially relate to two matters, namely (i) sums certified by D3 which had not been paid to P[22]; and (ii) payment for the Variation and Additional Works[23]. Although Mr Clayton has put forward a total figure of P’s claims of about HK$9m, including the amount for Variation and Additional Works of about HK$5.9m, according to Mr Pennicott, the Variation and Additional Works would come down to only about HK$2.4m, and according to Mr Cheung, the total figure would only be about HK$3.5m, and not HK$9m.  This is clearly a disputed issue.

18.P issued the writ on 29 June 2011, and was all along legally represented by solicitors.  On 11 December 2012, in the absence of P, P’s then solicitors were granted an order by Master de Souza to cease to act for P[24].

19.The CMC was initially fixed on 11 April 2013 (“1^st CMC”).  P was represented by a Madam Wen (“Wen”) at the 1^st CMC.  The matter was then adjourned to 13 June 2013 for a further CMC (“2^nd CMC”) as none of the parties had complied with an order for directions given by Mr Registrar Lung on 9 October 2012 (“Directions Order”).  Thereafter P was absent at the 2^nd CMC, and its claim was provisionally struck out pursuant to Order 25 rule 1C (1) of the RHC by Master Hui (“Striking Out Order”)[25].

20.P issued his present summons on 13 August 2013 to apply to restore his claim (“P’s Summons”)[26], supported by an affirmation of Wen.  D1’s director, Ms Ma (“Ma”), and D2’s director Mr Yeung both filed affirmations in opposition (“Yeung”), to which Wen had filed an affirmation in reply.

Legal Principles

21.Order 25 rule 1C of RHC states as follows:

“(1) Where the plaintiff does not appear at the case management conference or pre-trial review, the Court shall provisionally strike out the plaintiff's claim.

(2) …

(3) Where the Court has provisionally struck out a claim or counterclaim under paragraph (1) or (2), the plaintiff or the defendant may, before the expiry of 3 months from the date of the case management conference or pre-trial review, as the case may be, apply to the Court for restoration of the claim or counterclaim.

(4) The Court may restore the claim or counterclaim subject to such conditions as it thinks fit or refuse to restore it.

(5) The Court shall not restore the claim or counterclaim unless good reasons have been shown to the satisfaction of the Court.

(6) If the plaintiff or the defendant does not apply under paragraph (3) or his application under that paragraph is refused, then-

(a) the plaintiff's claim or the defendant’s counterclaim stands dismissed upon the expiry of 3 months from the date of the case management conference or pre-trial review, as the case may be; and

(b) (i) in the case of the plaintiff’s claim, the defendant

is entitled to his costs of the claim; and

(ii)    in the case of the defendant’s counterclaim, the plaintiff is entitled to his costs of the counterclaim.”  

22.Order 25 rule 1C is a relatively new rule introduced by the Civil Justice Reform and as submitted by Mr Pennicott, should be read in conjunction with the underlying objectives of the CJR.

23.Mr Clayton had referred this court to the decision of Registrar Au-Yeung (as she then was) in World Chinese Business Investment Foundation & Ors v Shine Rainbow Marketing Ltd & Ors [2010] 2 HKC 294.  In this case, the plaintiffs’solicitors failed to turn up at a CMC and the plaintiffs’ claim was provisionally struck out under Order 25 rule 1C (1) of RHC.  The plaintiffs sought restoration of  the claim,  As this was the first application of its kind since Order 25 rule 1C came into force, the then Registrar took the opportunity to consider and to set out the principles which should apply.

24.It was held, allowing the application to restore the action, without condition, that:

“(1) There was force in the submission that the principles for applying for relief against sanctions (O 2 rule 5) and setting aside a default judgment (O 13 rule 9; O 19 rule 9) were applicable. Similarly, reference could be made to the courts’ power under O 35 rule 2 to set aside a judgment obtained in the absence of a party;

(2) The court would not lightly accede to the request of a defaulting party to restore an action without sufficient explanation and consideration of the merits. This was to maintain the integrity of the timetable laid down by the court, or the rules, and to ensure that a matter without merits should not continue;

(3)   The application should be dealt with in three stages (i) first, there was the threshold of showing ‘good reasons’; (ii) then the court would consider whether, as a matter of discretion, it should grant the restoration; and (iii) if it decided to restore the claim, the court may consider conditions to be imposed; …”

25.The Registrar then went on to consider the three stages in that particular case.

26.In the context of an application for further time to comply with an unless order, as referred to by Mr Clayton, the Court of Appeal in PT Bank Pembangunan Indonesia (Persero) v Tan Eddy Tansil & others [1997] HKLRD 457, said the relevant question to ask was whether or not the failure to comply was intentional and contumelious[27].  I note that this Court of Appeal decision was prior to the coming into effect of the CJR.

27.Mr Clayton then referred to the following passage of Fok J, as he then was in the case of Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606-

“In my view, the passage quoted above from Hytec is entirely consistent with the more pro-active case-management approach encouraged by the CJR and, in my view, the CJR has had the effect that the Hytec approach now reflects the approach that should be applied in this jurisdiction. That is to say, although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of an extension of time to comply with a peremptory order, the exercise of the discretion to refuse an extension or to relieve a party from sanctions is not limited to cases of intentional and contumelious default. As directed by RHC O.2 r.5, the court should consider all the individual circumstances including those listed in r.5(1) at sub-paragraphs (a) to (j). Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted. Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (RHC O.1A r.3) and on the court to do so by actively managing cases (RHC O.1A r.4(1))”[28]

28.Mr Clayton also referred to an unreported decision in An Zhou & others v Zhou Zheng Kuan & others, HCA 241/2010, 30 August 2012  where To J had said:

“… Basically, the court considers the reasons for the default, explanation for the delay in applying for relief, whether there was a history of default, whether the sanction is out of line with the consequence of the breach and whether the breach was intentional and contumelious: see Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606 at 616…”[29]

29.Then M Chan J in Juicy Couture, Inc v Bella International Ltd & others, HCA 1764/2008, 11 October 2012, stated as follows:

“Of course, orders of the court are made and meant to be complied with. However, as the Chief Justice emphasised in Wing Fai Construction Co Ltd (in liq) v Yip Kwong Robert [2012] 1 HKLRD 589, the primary aim in the exercise of the court’s powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties. Having balanced the prejudice that would be caused to the defendants if relief against the sanction of the unless order is not granted against any prejudice that may be, or has been, caused to the plaintiff by the defendants’ failure to exchange their statements at the same time as the plaintiff served theirs, I consider that the plaintiff’s prejudice can be compensated in costs, and that the administration of justice requires that relief be granted to the defendants.”[30]

30.Mr Pennicott had also submitted that since there is limited case law guidance on the meaning of “good reasons” in the context of Order 25 rule 1C (5), it would be helpful to look elsewhere for guidance, such as Order 6 rule 8.

31.Order 6 rule 8 deals with extending the validity of a writ, where the courts have consistently held that there must always be a “good reason” for the grant of an extension.  As stated in paragraph 6/8/3 of the Hong Kong Civil Procedure 2014, it is not possible to define or circumscribe what is a good reason.  Whether a reason is good or bad depends on the circumstances of the case.  Normally the showing of good reason for failure to serve the writ during its original period of validity will be a necessary step to establishing good reason for the grant of an extension.

32.Examples of reasons which have been held to be good and bad are set out in the above paragraph and those held to be bad include carelessness, oversight and incompetence of plaintiff’s legal representatives, but Mr Pennicott accepted that those reasons as “bad” suggest some inconsistency with the decision in World Chinese Business[31].

33.As Mr Clayton had pointed out, the words “good reasons” do not in fact appear in Order 6 rule 8, and that it was only through case law which decided that “good reasons” had to be shown before one could get an extension under Order 6 rule 8 (2).  Further, under Order 6 rule 8, even if no extension is granted, the plaintiff can issue another writ.

34.Mr Cheung had referred to what was pointed out by Ma CJ in Wing Fai Construction Co Ltd (in liq) v Yip Kwong Robert [2012] 1 HKLRD 589 (CFA), that the court in the exercise of case management power would strike out a claim for failure to comply with peremptory orders.  As pointed out by Mr Clayton, which I agree, in the present case there was no peremptory order.

35.In the Wing Fai case, Ma CJ, has further re-iterated that it is important to recognize, as stated in Order 1A rule 2 (2) that the primary aim of exercising its powers is for the court to “secure the just resolution of disputes in accordance with the substantive rights of the parties”[32]. 

36.With the above principles in mind, I now turn to the facts of the present case.

Discussion

37.The main reason given by Wen for P’s non- attendance at the 2^nd CMC hearing was through her inadvertence.

38.As P is a limited company, it should be represented by a solicitor, and Wen was reminded of this by Master Hui at the 1^st CMC hearing in April 2013 and that either P should instruct solicitors or seek leave to be represented by its director.  Yet P had failed to take either step by June 2013.  Thus, as submitted by Mr Pennicott, P’s difficulty was brought upon itself, and that P had not been full and frank as to the reasons why P parted company with its former solicitors.

39.Mr Pennicott further complained that Wen’s evidence was vague, as there were no sufficient details including no information of the whereabouts of Wen in June 2013, and no information as to when the trip to Shanghai arranged, when she left and when she returned.  There were also no reasons given as to why new solicitors were not appointed soon after the 1^st CMC hearing, and no information as to whether the hearing of the 2^nd CMC hearing was put in the diary or not. 

40.Mr Cheung also pointed out that there was no reason why P could not delegate the duty to some other people in the company to handle this court case, such as another director like Carrie.  Wen had been busy travelling extensively in Mainland China, and that it sounded absurd that P had to seek information from D2 concerning the 2^nd CMC date.

41.According to Wen, from about June 2012 when Master de Souza ordered a stay for mediation, until about November 2012, there were mediation attempts between the various parties, which resulted in at least a settlement being reached between P and D3.  Then, at around this time, according to Wen, the matter was further complicated due to its difference with its former solicitors, which were due to, among other things, the fact that P belatedly realized that the former solicitors did not have experience in a construction case such as the present, and P was frustrated with the quality of the representation[33].

42.After P’s former solicitors ceased to act, Wen said the responsibility of running the case fell upon her as a lay person, and at the time, as the parties were still trying to mediate, she had thought she would be able to handle the discussions among the parties and hopefully an amicable settlement could be reached.  However, Wen said the legal proceedings had turned out to be something far more than she could properly or fully understood, let alone competently or properly handle on her own[34].

43.Both D1 and D2 denied that P had taken any steps to resolve the disputes between the three of them in early 2013, but Wen seemed to have told Master Hui at the 1^st CMC hearing that she was waiting for D3 to deal with certain matters out of the settlement terms between P and D3. She had also produced in her affirmation copies of P’s letters to D3 in January 2013[35] and February 2013[36] to demonstrate P was chasing D3 to handle the matters stated therein.

44.Anyway, Wen said in her affirmation that she vaguely recalled that she attended court in about April 2013, and that due to her advanced age, being 63 years old, and her over-stretched business commitments as she had to travel extensively to attend to her business in Shanghai and Hubei, and also due to her lack of legal knowledge as a lay person, her recollection of the event was very sketchy.  She said all she could remember was that since mediation had failed, the judge said the case would have to continue and the judge adjourned the case to a later date, and she recalled that she told her assistant, Carrie, about the latest progress and asked her to take note of the date for the further hearing[37].

45.Wen said that as things transpired, the adjourned hearing slipped both her and Carrie’s mind.  According to Wen, in June 2013,  she was in Shanghai and Carrie was also very busy, and it was only in about late June 2013 that Carrie telephoned Wen to tell her that she recalled that there should be or should have been a court hearing coming up in June 2013.  Wen said she was confused, and thought the hearing was only in July 2013.  Wen then told Carrie to call D2’s solicitors, which Carrie did, but was informed by D2’s solicitors that the hearing was already over and that P’s claim was struck out[38].

46.Wen said as a lay person, she did not appreciate the legal effect of a ‘provisional striking-out’ and she immediately went around to look for new solicitors to advise P, and eventually contacted her present solicitors in around mid July 2013.

47.D2’s director Yeung disagreed with Wen’s claim of lack of legal knowledge, as P had also been involved in other litigations and that her brother is a very senior solicitor.  Yeung also said that P could have access to legal advice a long time ago, if she so wished.

48.D1’s director, Ma, in her affirmation, had pointed out that after P’s former solicitors ceased to act, no further steps had been taken by P in pursuing the present action, and that P did not approach D1 for any further mediation, or for further conduct of the case.  Ma also pointed out that P and/or Wen had been involved in other litigations prior to the present action.

49.I note that there were 3 actions which P and/or Wen were involved in, namely HCA 9563/1996, HCMP 1156/2000, and DCCJ 206/2004, but I note that these actions were all prior to the CJR or Order 25 rule 1C coming into effect, and further P was legally represented in all three actions, although in two of them P seemed to be legally represented by its present solicitor, who was at that time with Wen’s brother’s solicitors’ firm.

50.Wen had said that like many other construction companies, P was not immune to litigation.  Having considered her evidence, I accept Wen’s explanation in her reply affirmation that being involved in previous litigations some years ago did not imbue her with legal knowledge that a lawyer would possess, especially as regards court rules and procedures, and she only contacted her present solicitor for assistance in July 2013.  I note her present solicitors filed a Notice to Act on 25 July 2013, In any event, there was no suggestion that P and/or Wen should have known the consequence of P’s absence at the 2^nd CMC, or that P and/or Wen was aware of the rules.

51.From the notes of Master Hui, it appears that the only explanation or warning given to Wen during the 1^st CMC was that she should seek leave to represent P without solicitors, P being a limited company.  D1 was in fact itself absent at this hearing.  There was no evidence from D2 that Wen had been reminded of the effect of Order 25 rule 1C (1) at the 1^st CMC hearing, namely the consequence that if P failed to attend the 2^nd CMC, P’s claims would be provisionally struck out.

52.In the World Chinese Business case, it was the plaintiffs’ solicitors who failed to turn up at the CMC hearing.  They gave three reasons to explain their absence (i) the parties were negotiating for mediation; (ii) complications in that there were three other actions involving the same parties; and (iii) mistake/oversight of a solicitor.  It was held by the then Registrar that (i) and (ii) were not good reasons, but (iii), namely a solicitor’s fault might constitute a good reason. It was then held that as the solicitor had all along assumed responsibility for non-attendance, and it appeared that the fault was not with the plaintiffs themselves, the court would not want to dismiss a good cause of action for pure technical breach or inadvertence[39].

53.In the present case, P’s absence was due to inadvertence and oversight on the part of Wen.  Wen had explained that she was busy with extensive travelling and she had forgotten about the date of the 2^nd CMC.  There was no evidence that P’s absence was intentional or contumelious. 

54.There was also no evidence to show that P had disregarded or failed to comply with any previous orders.  As for the Directions Order, none of the parties had complied with the directions therein.  P’s summons to restore was issued two months after the Striking Out Order, which was within the requisite 3 month period in Order 25 rule 1C (3) of the RHC.

55.So far as merits are concerned, it was Mr Pennicott’s submission that this should not be a relevant consideration in the context of Order 25 rule 1C, but if this court should regard this relevant, Mr Pennicott submitted that there was no merit in P’s case against D1, since the real dispute (if any) was between P and D2. 

56.As mentioned earlier, P’s claims against D1 were based mainly on D1’s alleged breach of clause 5 of the Letter of Award and clause 2 of the Form of Agreement.   Although as stated under clause 8 of the Letter of Award, D1 appears to have been released and discharged in respect of any claims in the Sub-Contract, the Form of Agreement seems to be a separate agreement signed between P and D1.  Under clause 2 of the Form of Agreement, D1 undertook to P that –

(a)     D3 was to require D2 to furnish reasonable proof that any amount stated as due in D3’s Certificate issued under the Main Contract in respect of the total value of work, material or goods executed or supplied by P had been duly discharged, but so where there was a dispute between D2 and P, D3 could treat the reasonable proof of payment by D2 to a stakeholder pending determination of the dispute as reasonable proof of discharge to the extent of such payment to the stakeholder;

(b)    If D2 failed to furnish such proof of discharge, D3 would issue a Certificate to that effect and thereupon D1 would deduct the amount so certified and unpaid from any sum due or to become due to D2, subject to the proviso stated therein.

57.It was P’s case that neither of the above had happened, and D1 was in breach of its undertakings.  Mr Clayton had submitted that there would be damages to P caused by D1’s breach, due to D2’s counterclaim.  Although P’s claims against D1 are contingent claims, I see no reason as to why this matter should not go to trial.

58.So far as P’s case against D2, Mr Cheung complained that Wen had been selective and partial in her affirmation and had refused to be frank about the merits of its claims.  Yeung’s affirmation did not really deal with the merits of P’s claims, as Yeung said he had been advised that this was unnecessary.  However, what Yeung did say was that P’s works were defective and D2 incurred substantial amount in the Defects Rectification Works, and there were substantial delays on P’s part.  Yeung further stated that “The facts and the law of this case in this action which are in serious dispute between the parties will have to be resolved by this Honourable Court, if the plaintiff’s claim in this action is restored”[40].  Thus, it seems clear that there are significant disputes/issues between P and D2 and I am again of the view that P should be entitled to go to trial on its claims against D2. 

59.Mr Cheung also complained that P issued the writ on 7 May 2010, some one and half years after the dispute arose, and that P only filed its statement of claim on 29 June 2011, over one year later, and by now it is about 8 years since the practical completion of the Project.  It was not clear why P took such a long time to file its statement of claim, but once filed, there was no sufficient evidence that there was any particular delay on the part of P.

60.According to D2, its quantity surveyor had left D2 some time ago, and the architect in charge of the Project had left the employ of D3, and D2 did not know his whereabouts.  Mr Cheung was submitting that there would be prejudice to D2 if P’s application were to be allowed.

61.According to Yeung’s affirmation, both these persons seemed to have left their employment some time ago.  The parties were supposed to exchange witness statements under the Directions Order, by end of December 2012, and there was no evidence from D2 at that time that it had any difficulties in exchanging witness statements. 

62.There was no evidence from D1 as to whether it would be prejudiced.  It was Mr Pennicott’s submission that there is no requirement under Order 25 rule 1C to show prejudice.

63.The Directions Order given in October 2012 included that witness statements had to be exchanged within 42 days after 16 November 2012, if mediation were to fail; counsel advice, if any, was to be obtained 30 days after exchange of witness statement; all interlocutory proceedings if advised to be taken out within 14 days thereafter, and any application for extension of time for compliance should be made not more than 7 days after the due date for compliance. 

64.As pointed out by Master Hui at the 1^st CMC hearing that all the parties had a duty to proceed with the matter.  Although P did not seem to have done anything pursuant to the Directions Order after the failure of mediation, neither seemed D1 or D2.  In fact, as mentioned earlier, D1 even failed to attend the 1^st CMC hearing before Master Hui.  It seems that D1 also failed to attend any mediation.

65.Mr Clayton had asked this court to consider the consequence to P if its claim were not restored, which would result in P losing its entire claim against D1 and D2, which according to P would be in the region of HK$9m.  Although this amount may not be accurate, I accept that if P’s claim is not restored, P would lose its claim of an amount of at least HK$3.5m, which in my view not an insubstantial sum.

66.Having considered all the circumstances of this case including those matters under Order 2 rule 5, I am satisfied that P has shown good reasons under Order 25 rule 1C (5) for the restoration of its claim, but this shall be subject to conditions.

Conditions

67.Mr Pennicott submitted that there should be security for D1’s costs.  Mr Clayton submitted that this would be penalizing P.  There seemed to be no sufficient evidence from Ma’s affirmation on matters under Order 23 rule 1 of RHC.  Although the then Registrar in the World Chinese Business case had held that in principle a security for costs condition could be imposed, I see no sufficient reasons to impose this as a condition in the present case.

68.The 1^st CMC was in April last year, and I am conscious that due to the Striking Out Order and P’s Summons, further time has been lost, and I am of the view that this matter should now proceed expeditiously.  The conditions I shall impose are as follows:

(i)   P to provide an undertaking to proceed expeditiously with its claim against D1 and D2;

(ii)   P to file and serve its Listing Questionnaire within 21 days hereof;

(iii)   P to take steps within 21 days hereof, either to issue an application to transfer the matter to the Construction and Arbitration List, if so advised as indicated by Mr Clayton, or to refix a CMC in the ordinary list before a Master on the earliest possible date.

Order

69.I grant an order in terms of paragraph 1 of P’s Summons, subject to the above conditions.

70.Since this application by P involves an indulgence granted by the court, I will make an order nisi that P should bear D1’s and D2’s costs of and incidental to the present application, such costs to be summarily assessed, and P shall pay such summarily assessed costs within 14 days after assessment.  This order nisi shall be final after 21 days.

71.D1 and D2 shall submit their statement of costs within 21 days.  Any objections thereto shall be lodged by P within 14 days thereafter.

72.Lastly, I thank all Counsel for their submissions and assistance to the court.

Mr Peter Clayton SC, instructed by Leung & Associates, for the plaintiff

Mr Ian Pennicott, instructed by Woo Kwan Lee & Lo, for the 1^st defendant

Mr Y L Cheung, instructed by Deacons, for the 2^nd defendant