SECAN LTD. v. WONG PING WAI

HCA005227A/1996

1996, No. A5227

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BETWEEN
	SECAN LIMITED	Plaintiff
	AND
	THE PERSONAL REPRESENTATIVE OF WONG PING WAI FORMERLY TRADING AS ASSOCIATED CONSULTING ENGINEERS	Defendant

Coram: The Hon Mr Justice Findlay, in Chambers

Date of hearing: 3 December 1998

Date of handing down of judgment: 7 December 1998

________________

JUDGMENT

________________

1. On 30 October 1998, I handed down a judgment in relation to an application by the defendant to set aside a default judgment against it. In relation to costs, I said this -

"I have heard no argument on the question of costs, but it seems to me that the defendant should not get its costs because he was in default and he is seeking the court's indulgence. On the other hand, I am inclined to think that the plaintiff should not get its costs unless it wins the action. In this respect, I take into account that the plaintiff's solicitors knew that the defendant intended to file a defence, and took advantage of a lapse by the defendant's solicitors. I make an order nisi that the costs of this application be costs in the plaintiff's cause."

2. The defendant issued a summons on 5 November 1998 in which it sought a variation of this order nisi so that the order be that the costs be to the defendant in any event.

3. Before me, Mr Harris argued that the order should be that the costs be in the plaintiff's cause up to the end of January 1998, and, thereafter, the costs be to the defendant in any event. The basis for this argument is that, by 12 January 1998, the plaintiff had from the defendant a comprehensive defence and the evidence on which it based its case. The plaintiff should then have taken stock of the situation. If it had done so, it would have realised that it should concede the setting aside. Further opposition after this point, Mr Harris says, was unreasonable.

4. Mr Harris drew my attention to my judgment delivered in the case of Kailay Engineering Company (HK) Limited v Silver Faith Holdings Limited (1998, No. CON14) in which I said -

"The plaintiff should then have examined the case thoroughly to see if it was the kind of case that merited opposition. If it had done that, it would have realised that its own evidence did not support its case, and, indeed, established precisely the case pleaded by the first defendant. Having reached that stage, I believe the plaintiff should have consented to the judgment being set aside. I do not think I should give my blessing to further unjustified opposition by the plaintiff by allowing it to recover its costs of this."

5. As I said, that was a case in which the plaintiff's own evidence established the defendant's case. I do not think that the present case is like Kailey at all. Here, it is the defendant's evidence that raised a real prospect of success. But this is not the only difference. The defendant's evidence was not complete until 23 October 1998; the Friday before the application on the following Monday. In particular, the independent expert evidence filed by the defendant in the case before me was important, and this was not filed and served by the defendant until just before the hearing. In these circumstances, I do not think it can be said justifiably that the plaintiff's opposition to the setting aside was so unreasonable so that the order suggested by Mr Harris is the right one.

6. I am also of the view that the letter by the defendants solicitors of 14 October 1998 in which it was said that the defendant was willing to agree that the judgment be set aside on the basis that the costs be to the plaintiff alters the situation. This would only have been so if, at that time, the plaintiff had been fully appraised of the defendant's evidence.

7. It was my belief, when I made the order nisi, that this case fell somewhere between the usual case, where the defendant should be ordered to pay the costs in any event, and the Kailey type of case, where the opposition is totally unreasonable and the plaintiff is ordered to bear part of the costs. I am still, after argument, of this view. Accordingly, the order nisi is made absolute.

8. There remains the question of the costs of this application. There seems no obvious reason why costs should not follow the event, especially in the light of an offer by the plaintiff by letter of 18 November 1998 that the plaintiff was prepared to agree that the order nisi stand. Accordingly, I make an order nisi that the defendant pay the costs of this application in any event.

	JK FINDLAY
	Judge of the High Court Court of First Instance

Representation:

Mr Russell Bennett, of Messrs Masons, for the plaintiff.

Mr Jonathan Harris, instructed by Messrs Johnson Stokes and Master, for the defendant.

HCA005227/1996

1996, No. A5227

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

 

BETWEEN
	SECAN LIMITED	Plaintiff
	AND
	THE PERSONAL REPRESENTATIVE OF WONG PING WAI FORMERLY TRADING AS ASSOCIATED CONSULTING ENGINEERS	Defendant

Coram: The Hon Mr Justice Findlay, in Chambers

Date of hearing: 26 October 1998

Date of handing down of judgment: 30 October 1998

____________

JUDGMENT

____________

This Application

1. On 4 December 1997, the defendant suffered judgment to be entered against him in default of a defence having been served. This judgment was in the sum of $4,000,364.57, with interest and costs. The defendant now seeks to have this judgment set aside.

Defence on the Merits

2. The defendant contends that he has a defence to the plaintiff's claim that that has a real prospect of success.

3. Associated Consulting Engineers (ACE) was a consultant engineer on the plaintiff's large construction development, and its job, broadly, was to design a seawater supply and control system and a flushing water distribution system in a water chilling plant room. This installation operated the air-conditioning system for the commercial part of the development and the flushing water system for both the commercial and residential parts of the development.

4. On 8 May 1993, the water tank in the water chilling plant room overflowed causing damage. The plaintiff says that ACE is responsible for this damage both in tort and by reason of the breach of its contractual obligations.

5. As one might expect, ACE admits its obligations to carry out its undertaking with reasonable care and skill, that there was the flood and that this caused damage. ACE says, however, that it did not breach its obligation, and that the reasons for the flood were -

a) the ball float valve intended to shut off the water inflow remained partly open;

b) an ultrasonic sensor intended to shut off another valve did not work;

c) the water from the tank discharged directly onto the floor of the room; and

d) the drainage system of the room was not capable of draining the water at the same rate as it was discharged from the water tank.

ACE further says that -

a) a central control system controlling the seawater pumps was not operational so the pumps or the valves should have been, and were up to 8 May 1993, switched off manually by others who were responsible for this; and

b) ACE's design provided for attendance in the room, and, if this attendance had been provided, the overflow would have been detected immediately.

6. These allegations by ACE are supported by evidence, including expert evidence. The evidence is that, if these facts are established, it was not the design of ACE, or its supervision or co-ordination, that was at fault or caused the damage, but other factors. If this evidence is accepted, the likelihood is that the defendant will succeed in his defence. There is no evidence to the contrary from the plaintiff so there is no reason at this stage why I should hold that the evidence is not likely to be accepted. It is not inherently improbable or inconsistent with any other evidence.

7. I say that the plaintiff has not adduced any evidence to the contrary, although it has filed an affidavit by its solicitor, Mr Russell Bennett. Mr Bennett, while no doubt an expert solicitor, is not an expert in the field concerned. What he says are, unashamedly, arguments. I should, however, deal to some extent with the most important of them.

8. Regarding the allegation that the room was unattended, Mr Bennett says that ACE's design contemplated that the room would be unattended for up to 6 hours per day so it was supposed to be safe when unattended. That is not my reading of the evidence. What was contemplated by ACE's design and the subsequent requests to the architect was that the room would be attended while the plant was operating.

9. Mr Bennett says that ACE should not have substituted the sensor for other types of switches. That is a matter of expert evidence. That evidence, at this stage, is that this was acceptable. According to the expert evidence, "the existing safety regime built into the design . . . is safe enough.".

10. Regarding the drainage arrangements in the room to cope with any overflow, Mr Bennett's view appears to be that ACE should have ensured that the architect, whose responsibility it was and who was, as is usual, the lead consultant, designed the drainage to cope with the overflow. I do not accept this. The architect knew the details of the design by ACE. The architect must have seen what overflow would come from the tank. It was the architect's responsibility, if anyone's, to design the drainage to cope with this. Not only do I not accept this, but the only expert evidence before me at this stage supports the defendant.

11. Mr Bennett says that ACE should have designed the overflow so that it discharged directly into a drain. The expert evidence is that discharge from an overflow should be conspicuous, and that discharge into a drain would not be so.

12. Miss Rattigan's submissions follow much the same lines as the arguments advanced by Mr Bennett. I reject them for the same reasons.

13. In summary, the plaintiff's case at this stage is, broadly, that ACE was responsible for the design as described, the system failed, there was a flood, so ACE is responsible. This might be enough to raise a prima facie against ACE in the absence of evidence, but there is evidence. This evidence, if established - and there is no reason now to think it will not be established - shows that there is a real prospect of ACE showing that it is not responsible. On that basis, I believe that I should exercise my discretion to set aside the judgment, and give leave to the defendant to file and serve a defence within 7 days. I so order.

Irregular Judgment

14. As an alternative, Mr Harris argues that the judgment is irregular, and, if this is so, the burden that the defendant has to overcome to have this judgment set aside is a much lighter one.

15. The argument here is that the judgment was entered for a specific sum of money, but the plaintiff's claim was for damages and not "a liquidated demand only". The judgment, therefore, should have been for damages to be assessed.

16. In view of my earlier findings, it is not necessary to decide this aspect of the matter. I will say that I am inclined to think that the plaintiff's claim is for damages, and the judgment should not have been entered for a specific sum. But, if the defendant's case had been on this basis alone, I would have set aside the judgment and entered one for damages to be assessed. This, I imagine, would not have suited the defendant.

The Costs

17. I have heard no argument on the question of costs, but it seems to me that the defendant should not get its costs because he was in default and he is seeking the court's indulgence. On the other hand, I am inclined to think that the plaintiff should not get its costs unless it wins the action. In this respect, I take into account that the plaintiff's solicitors knew that the defendant intended to file a defence, and took advantage of a lapse by the defendant's solicitors. I make an order nisi that the costs of this application be costs in the plaintiff's cause.

JK FINDLAY

Judge of the High Court
Court of First Instance

Representation:

Ms Mairead Rattigan, instructed by Messrs Masons, for the plaintiff.

Mr Jonathan Harris, instructed by Messrs Johnson Stokes & Master, for the defendant.