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 15 April 2015.
1. There are two summonses before me.
Cites 6 cases
|
DCCJ 2263/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 2263 OF 2013 --------------------
--------------------
-------------------- DECISION -------------------- Applications 1.There are two summonses before me. 2.On 13 August 2014, the plaintiff took out a summons (the “Striking-out Summons”) to strike out parts of the defendant’s defence and counterclaim dated 17 July 2014 (the “July Defence”) pursuant to Order 18 rule 19 of the Rules of the District Court, Cap 336H (“DCR”). 3.On 10 October 2014, the defendant took out a summons (the “Amendment Summons”) for an order to be made for:-
Events leading to this hearing 4.The two summonses were fixed before the learned Deputy Judge Winnie Tsui on 15 October 2014. Because of the draft of the proposed amended defence and counterclaim has not been properly marked-up in accordance with Practice Direction 19.1, the hearing was adjourned for the defendant to put in a properly marked-up draft of its proposed amended defence and counterclaim. 5.The hearing was then fixed before the learned District Judge Andrew Li on 1 December 2014. The learned judge adjourned the hearing to give the defendant another chance to put in a properly marked-up draft of its proposed amended defence and counterclaim. 6.On 8 December 2014, the defendant filed an amended defence and counterclaim into Court purportedly pursuant to the order made by the learned District Judge Andrew Li on 1 December 2014 (the “December Draft”). 7.The two summonses were then fixed before this court on 21 January 2015. Having realized that no leave had actually been granted for the defendant to amend its defence and counterclaim, the parties agreed that the December Draft should be removed from the court file. 8.The December Draft was indeed the third version of the defendant’s proposed amended defence and counterclaim submitted to the court for the purpose of the Amendment Summons. It was not prepared in accordance with the directions of the court and was not based on the July Defence. Coupled with the fact that this court and the plaintiff were provided with more than 500 pages of documents by the defendant at the beginning of the hearing, I adjourned the hearing to 17 March 2015 before me for substantive argument. I ordered the December Draft be removed from the court file. I also ordered that unless the defendant put in a properly marked-up draft of the proposed amended defence and counterclaim which must be based on the July Defence within 7 days, the defendant be debarred from producing any other versions of proposed amended defence and counterclaim other than the one annexed to the Amendment Summons for the purpose of its amendment application. I gave further directions for the preparation of the adjourned hearing. 9.On 28 January 2015, the defendant lodged into court a draft amended defence and counterclaim (the “Proposed Defence”). Same as the July Defence, the Proposed Defence was a “home-made” defence prepared by Mr Lau Chun Ming, the director of the defendant, in Chinese. It contains more than 100 paragraphs and sub-paragraphs. Background 10.For the purpose of these two applications, it is necessary to set out in brief the parties’ respective cases and the procedural history of the proceedings. 11.The present action was commenced for enforcement of a settlement agreement. The settlement agreement is related to a contract dispute between the parties which was determined in the District Court action DCCJ 1569/2008 (the “Contract Action”). 12.The Contract Action was related to a written contract (the “Sales Contract”) entered into between the parties in 2007 whereby the plaintiff agreed to sell to the defendant some lift parts. Dispute arose. On around 17 April 2008, the plaintiff commenced the Contract Action against the defendant for recovery of the balance of the sale price under the Sales Contract. The defendant counterclaimed for delivery of the unsupplied and supplied but damaged lift parts, damages for breach of the Sales Contract including the value of the unsupplied and/or the damaged lift parts, storage fees, interests and costs. 13.One of the disputes between the parties in the Contract Action was whether the plaintiff failed to supply the lift parts to the defendant pursuant to the terms of the Sale Contract. The quantity and quality of the lift parts supplied by the plaintiff to the defendant was in dispute. 14.Judgment of the Contract Action was handed down on 12 May 2010. The defendant was ordered to pay the plaintiff HK$169,040 plus interests and costs. The counterclaim was dismissed (the “Contract Judgment”). 15.The defendant was dissatisfied with the judgment, it applied for and was granted leave to appeal the Contract Judgment to the Court of Appeal, consequently, the commencement of action CACV 250/2010 (the “Appeal Action”). On the other hand, the plaintiff filed a winding-up petition to enforce the Contract Judgment against the defendant in action HCCW 251/2010 (the “Winding-up Action”). 16.During an adjournment of the appeal hearing in the Appeal Action on 8 November 2012, the parties entered into a settlement agreement (the “Settlement Agreement”) outside the courtroom. The relevant clauses for the present purpose are, in essence, as follows:-
17.The appeal was then adjourned sine die with liberty to restore by the court’s own motion within 10 weeks to allow the parties to work out the details. 18.After the payment of the Settlement Sum by the defendant, dispute arose as to the interpretation of the terms of the Settlement Agreement. The parties could not reach an agreement on the manner of disposing the Winding-up Action and the Appeal Action. There was a series of exchange of correspondences between the parties as well as court hearings from 22 November 2012 to 10 June 2013. 19.Up until now, the two actions have neither been dismissed nor withdrawn. 20.On 21 June 2013, the plaintiff commenced the present action to enforce the Settlement Agreement. On 21 November 2013, the Appeal Action was stayed pending the final determination of the present action. 21.For the present action, the plaintiff filed the statement of claim on 28 June 2013. The defendant then filed its defence on 1 August 2013 and supplementary defence and counterclaim on 2 August 2013. The plaintiff filed its defence to counterclaim on 18 August 2013. 22.Thereafter, the parties made various applications against each other. Those applications were hotly contested which ended up with a number of applications for leave to appeal, appeals and winding up action. As a result, the statement of claim filed on 28 June 2013 was struck out. Months later, leave was granted to the plaintiff to file a fresh statement of claim. Striking Out Application 23.On 20 June 2014, the plaintiff filed a fresh statement of claim (the “New Statement of Claim”). On 17 July 2014, the defendant filed the July Defence. On 12 August 2014, the plaintiff filed its Defence to Counterclaim. Thereafter, the defendant produced various versions of amended defence and counterclaim to the court. No leave has been granted for the defendant to file and serve them. 24.In the New Statement of Claim, the plaintiff alleges that by a proper interpretation of the terms of the Settlement Agreement, it is sufficient performance of the said agreement for the Winding-up Action be dismissed and the Appeal Action be withdrawn at the same time or by a Court during the same hearing. The prior dismissal of the Winding-up Action was not a pre-condition to the withdrawal of the Appeal Action. In view of the events happened between the parties from 22 November 2012 to 10 June 2013, it complains that the defendant has been in breach of the Settlement Agreement due to the defendant’s refusal to agree to the withdrawal of the Appeal Action. It therefore prays for damages for breach of the Settlement Agreement, declaration and mandatory injunction requiring the defendant to consent to the withdrawal of the Appeal Action. 25.In the July Defence, the defendant disputes the interpretation of the Settlement Agreement. It pleads that the dismissal of the Winding-up Action is a pre-condition of the withdrawal of the Appeal Action. The plaintiff has been in breach of the Settlement Agreement because of its failure to cause the dismissal of the Winding-up Action within the 6 months time limit. The defendant’s obligation to withdraw the Appeal Action has therefore been discharged. It further counterclaims for the return of the Settlement Sum, interest and costs. In the Striking-out Summons, the plaintiff does not seek to strike out this part of the July Defence. 26.The parts of the July Defence the plaintiff seeks to strike out are identified in the schedule to the Striking-out Summons (the “Schedule”). The plaintiff makes three complaints about them. The plaintiff’s skeleton argument is economical. It relies on all the grounds for striking out under O 18, r 19(1) DCR but gives only one short phrase to justify each of the three complaints. On the other hand, the defendant’s skeleton arguments involve matters not only relating to the present applications but the many disputes between the parties in seven legal actions. I have considered all the arguments and documents put forward by the parties. I will turn to deal with the three complaints raised by the plaintiff. 27.The legal principles governing striking out applications are well-established. This court should only strike out a claim in a plain and obvious case. The claim to be struck out must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed. It is for the applicant to demonstrate that the case is plain and obvious one in which the other party’s claim is bound to fail. There should be no trial upon affidavit. Disputed facts should be taken in favour of the party whose pleading is under attack. Hong Kong Civil Procedure 2015, §18/19/4. Re-litigation 28.The plaintiff's first complaint is that the paragraphs identified in the Schedule other than paragraphs 15 and 21 seek to re-litigate the same matters and issues already dealt with in the Contract Action and are therefore liable to be struck out. 29.The doctrine of res judicata is well-established. The essence of the doctrine is that a party ought generally not be permitted to raise in subsequent proceedings matters which the court was actually asked to decide in earlier proceedings; it also covers issues or facts which are so clearly part of the subject-matter of the earlier litigation and so clearly could and should have been raised then that it would be an abuse of process to allow new proceedings to be started in respect of them. I seek support from paragraph 83 of the decision of the Court of Final Appeal in Ko Hon Yue v Chiu Pik Yuk, the wife and intended administratrix of Liu Ching Leung, deceased and Others (2012) 15 HKCFAR 72. 30.With these principles in mind, I proceed to analyze the first complaint of the plaintiff. In summary:-
31.It is obvious that by pleading the paragraphs abovementioned, the defendant seeks to litigate the matters which have or should have already been decided in the Contract Action, namely, the breach of the Sales Contract as well as the relief and damages flowing from the breach. Those were the matters the defendant has raised or should have raised in its defence in the Contract Action and upon which the trial judge was actually required to form an opinion and subsequently pronounced the Contract Judgment. The counterclaims in the present action are substantially the same reliefs sought in the Contract Action. 32.As to the matters relating to the alleged unfair trial of the Contract Action, this is the subject matter of the Appeal Action which falls to be decided by the Court of Appeal. 33.Further, the matters pleaded in Paragraph 15(iv) are against the plaintiff’s solicitor who is not a party to the present action and the legal costs of other actions are not relevant to the present action. 34.In the premises, I find the paragraphs above mentioned shall be struck out on the grounds of abuse of process, frivolous and vexatious as the defendant is not entitled to seek to litigate matters which have, or could have been decided in the Contract Action as well as matters that fall to be decided in the Appeal Action. Multiplicity of proceedings in relation to the same or similar issues should be prevented. 35.In light of the fact that paragraph 5 (save the first two sentences) is struck out, the last two sentences of paragraph 8 (starting from “用作引証......”) shall be struck out as it relates to the same matter. Order 22 rule 25(1) 36.I also accept the plaintiff’s second complaint that paragraph 21 of the July Defence shall be struck out as it offends against Order 22 Rule 25(1) DCR. Order 22 rule 25(1), in providing that a sanctioned offer is treated as “without prejudice save as to costs”, provides for the confidentiality of sanctioned offer. It prohibits disclosure to the court of the offer before the substantive issues have been decided, save with the consent of the parties and in exceptional circumstances. 37.By the operation of Order 22 rule 25(1), the defendant is not allowed to mention about any sanctioned offer relating to the present action in paragraph 21 of the July Defence. Further, the proposals he has made for the purpose of settling the many disputes between the parties are not valid defence but tend to cause prejudice and embarrassment to the plaintiff and a fair trial of the present action. Paragraph 21 shall be struck out. Unsuccessful Objections 38.Other than the paragraphs above mentioned, I do not take the view that the other paragraphs under attack should be struck out as suggested by the plaintiff. Paragraph 7 simply serves to give an account of the defendant's application for leave to appeal against the Contract Judgment and the commencement of the Appeal Action. There is no valid ground to strike it out. 39.Paragraph 15 (except paragraph 15(iii) (iv)) pleads that the misconduct of the plaintiff’s solicitor has contributed to the plaintiff’s breach of the Settlement Agreement and the commencement of the present action. Paragraph 15 should be read together with paragraph 14 (z) (dd). The combined effect of these two paragraphs tends to suggest that it was the plaintiff but who was in breach of the Settlement Agreement. It explains that the alleged misconduct of the plaintiff’s solicitor has contributed to the plaintiff’s breach of the Settlement Agreement and the defendant had a right not to endorse the consent summons put forward by the plaintiff for the purpose of withdrawing the Appeal Action and dismissing the Winding-up Action. This paragraph is relevant to the issues in dispute in the present action and is material with reference to the relief prayed in the counterclaim including the return of the Settlement Sum and costs, it should not be struck out merely because allegation of misconduct is raised. I do not find the plaintiff’s third complaint carries any merit. Amendment Application 40.I will now turn to determine the Amendment Summons. 41.The Proposed Defence contains two parts. Part 1 is a newly added document entitled “Amended Defence of Set-off”with a letter of the Official Receiver attached thereto. Part 2 basically adopts the July Defence with a few new paragraphs added to it. There is no proposed amendment on the relief sought in the counterclaim. The plaintiff says that it generally does not oppose the proposed amendments with a few exceptions which are identified in its skeleton argument dated 3 March 2015. 42.The Proposed Defence is obviously not going to cure the defects of the July Defence. For avoidance of doubt, the parts of the July Defence that are liable to be struck out pursuant to my ruling above shall be deleted from the Proposed Defence. 43.Taking into account of my ruling on the Striking-out Summons, the relief sought in the counterclaim of the Proposed Defence is limited to an order for the return of the Settlement Sum, interest, costs and any other relief the court considers appropriate. The real disputes between the parties are therefore confined to, in essence, the interpretation of the Settlement Agreement, whether the dismissal of the Winding-up Action is a pre-condition to the withdrawal of the Appeal Action, who was in breach of the Settlement Agreement for failing to take necessary steps to cause the dismissal of the Winding-up Action and/or the withdrawal of the Appeal Action. 44.The principles for amendments are well-established. I do not intend to set them out here and it suffices for me to state that the purpose of the pleadings is to determine the real question in controversy between the parties. No amendment should be allowed unless it is necessary either for disposing fairly of the cause or matter or for saving costs. I should not allow immaterial and useless amendments and that pleadings should contain only a statement of the material facts but not evidence. Order 20 rule 8 DCR. See paragraph 20/8/24 and 18/7/5 Hong Kong Civil Procedure 2015. 45.For clarity purpose, I will first deal with the proposed amendments that are not allowed. 46.The structure of the Proposed Defence is confusing and difficult to follow. It contains more than one hundred paragraphs and sub-paragraphs. I will identify the particular paragraph of the Proposed Defence by referring to the exact paragraph number the defendant uses as well as specifying the page number on which it is pleaded. 47.I will now deal with the proposed amendments in Part 1 of the Proposed Defence. Paragraphs 1) to 5) of Part 1 (on page 1 and page 2 of the Proposed Defence) provides the history of the procedural steps the parties have taken for filing and striking-out of the pleadings in the present action, the related appeals and winding up actions from July 2013 to 22 October 2014. I will not allow such immaterial and useless amendments which are not relevant to the issues in dispute, ie the breach of the Settlement Agreement. 48.Paragraph (2) of the Particulars of Part 1 (on page 3 of the Proposed Defence) in effect relies on a letter of the Official Receiver to show that the time for the plaintiff to perform its obligations under the Settlement Agreement has expired. I find no valid objection to this paragraph save that the actual letter attached to the Proposed Defence (page 7 and 8 of the Proposed Defence) is disallowed as pleadings should only contain statements of material facts but not evidence. 49.Consequentially, the proposed addition of the phrase of “the enclosed copy of”in paragraph (2) of the Particulars and the sentence following paragraph (16), “Encl Letter of ……(DW/G)”(on page 6 of the Proposed Defence) are not allowed. 50.Paragraphs (6), (11) to (16) of the Particulars of Part 1 (on page 4 to 6 of the Proposed Defence) are confusing and could not be understood. Not only that the defendant mentions various types of relief without providing the cause of action or factual basis each of such reliefs is related, such reliefs are not prayed for in the counterclaim. Further, the defendant appears to seek to set-off the costs already incurred or to be incurred in the seven legal actions between the parties against each other as well as against the damages flowing from the breach of the Sales Contract. 51.However, the factual basis for the claim for such set-off is not sufficiently pleaded. Most of the liability and quantum of the costs of such actions have yet been determined which should be dealt with in their respective original legal actions and/ or taxation proceedings. Further, the Contract Judgment is under appeal in the Appeal Action. The defendant is not entitled to try those matters in more than one action. This is a clear case of abuse of process. In the absence of factual and legal basis of such claim for set-off, such paragraphs are unarguablybadand are impossible,notjustimprobable,fortheclaimtosucceed. I do not allow such amendments. 52.I will now deal with the proposed amendments in Part 2 of the Proposed Defence. The proposed amendments in paragraphs 5 (a) and (b); “其中在……被告進行上訴”, of paragraphs 6 and paragraphs 6(c), (f) and (g) of Part 2 (on page 10 and 11 of the Proposed Defence) are not allowed for the reasons I have given when striking out paragraph 5 of the July Defence as aforesaid. 53.Paragraph 13 (iii) (a) to (g) of Part 2 (on page 14 and 15 of the Proposed Defence) pleads that the misconducts of the plaintiff have led to a series of unfair judgments and orders in various legal actions between the parties. Not only that the cause of action and factual basis of such claims have yet been adequately pleaded, the matters pleaded are not relevant to the issues in dispute. A challenge to the validity of an order or judgment (including the Contract Action, Appeal Action and the Winding-up Action) should be raised in the original legal action or appeal. It is not open to the dissatisfied party to challenge the validity of an order or judgment in other litigations. It is plain and obvious that this part of defence amounts to an abuse of process and cause embarrassment to the plaintiff. Such proposed amendments are not allowed. 54.The proposed amendments in paragraphs 14(tt) (a) to (h) and 26 of Part 2 (on page 29, 30 and 32 of the Proposed Defence) raise a number of legal terms without pleading any facts, sufficiently clear facts or cause of action in support. Absent the relevancy in the present action, it is plain and obvious that theses proposed amendments are unarguably bad that indeed serve no purpose in this case but cause embarrassment to the plaintiff to reply to such unclear and confusing allegations. Such amendments are accordingly not allowed. 55.The proposed amendments in paragraphs 16 to 21 are not allowed (on page 30 and 31 of the Proposed Defence) due to the reasons of striking out paragraphs 16 to 21 of the July Defence as elaborated above. 56.On the other hand, despite the objections of the plaintiff, I allow the following proposed amendments:-
57.In conclusion, the Proposed Defence is allowed except the proposed amendments that are disallowed as set out above. The other applications of the defendant 58.By the Amendment Summons, the defendant also applies for security for proceedings under Order 2 rule 3 DCR. The rule empowers the court to order a party to pay a sum of money into court if that party has, without good reasons, failed to comply with a rule or court order. Such power should, however, only be exercised if there has been a demonstration for want of good faith by the defaulting party. Schenker International (HK) Ltd v Natural Dairy (NZ) Holdings Ltd [2013] HKCU 2695 unreported HCA 1755/2011 22 November 2013. 59.In this matter, I am not impressed by any argument of the defendant. The defendant’s criticism on the plaintiff’s conduct in the filing of statement of claim has already been dealt with by a number ofinterlocutory application decisions and the Court of Appeal decisions. Appropriate costs orders have been made to compensate the innocent party for the costs incurred. Further, the defendant’s complaints on the plaintiff’s conducts in other legal actions are not relevant to the present proceedings which should be dealt with in their respective legal actions. The payment of the costs orders of the other legal actions could be achieved by way of enforcement proceedings and indeed is not relevant to the present proceedings. 60.In the absence of solid evidence to prove that the plaintiff has failed to comply with court orders in the present action and was acted without good faith, the application is refused. 61.The defendant’s application for rescission, rectification or restitution of the Settlement Agreement could not be dealt with in interlocutory application. In any event, the defendant has not counterclaimed for such relief. Accordingly, such application is refused. Costs 62.As to costs, there are no special circumstances that depart the present applications from the general rule that costs should follow the event. The plaintiff succeeds in its application for striking out certain parts of the July Defence. It should have the costs of the Striking-out Summons. 63.As to the Amendment Summons, the general rule is that the applicant should pay costs of and occasioned by the amendment to the other party. The defendant seeks an order for the costs of the amendments and costs of the application in its favour. It tries to argue that the amendment was occasioned by the plaintiff’s New Statement of Claim and accordingly should be provided for by the plaintiff. The defendant appears to have lost sight of the fact that it has already filed and served the July Defence in reply to the fresh statement of claim of the plaintiff in July 2014. The defendant could not claim costs for subsequent amendments against the plaintiff. Further, the plaintiff succeeds in opposing some of the proposed amendments. The general rule applies. Order 64.Having considered all the arguments and documents before me, I order that:-
65.I further make a cost order nisi that the defendant do pay the plaintiff:-
66.In the absence of any application by summons to vary the costs order nisi, it will become absolute after 14 days.
Mr Geoffrey Shaw, of Haley & Co, for the plaintiff The defendant represented by director, Mr Lau Chun Ming | |||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCCJ 2263/2013