SCHINDLER LIFTS (HONG KONG) LTD. v. OCEAN JOY INVESTMENTS LTD.

HCCT000081B/2001

HCCT 81/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 81 OF 2001

____________

BETWEEN
	SCHINDLER LIFTS (HONG KONG) LIMITED	Plaintiff
	AND
	OCEAN JOY INVESTMENTS LIMITED	Defendant

____________

Coram: Hon Ma JA in Chambers

Date of Hearing: 11 February 2003

Date of Decision: 11 February 2003

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D E C I S I O N

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1. On 25 February 2002, the plaintiff applied for summary judgment against the defendant in the sum of $1,166,100.00. Affidavits with voluminous exhibits were filed in the following few months by both sides. On 2 September 2002, some three weeks before the hearing of the summary judgment application, the defendant substantially amended its Defence.

2. By a Judgment handed down on 10 January 2003, I granted the defendant unconditional leave to defend (which was the order sought by it: see the defendant's skeleton submissions for the hearing). I also made a costs order nisi that the costs of and occasioned by the summons were to be costs in the cause.

3. By a letter dated 24 January 2003, the defendant sought to vary the costs order nisi. It is said that counsel advised that the application could be made in this way. Be that as it may, this was inappropriate. The defendant ought to have taken out a summons within 14 days to make the application. Eventually, on 29 January 2003, the defendant took out the appropriate summons, seeking leave to do so as it was out of time.

4. I am not minded to vary the costs order nisi:-

(1) Where, as was the defendant's contention, an order for unconditional leave to defend is made, the usual order is that costs are to be costs in the cause: Hong Kong Civil Procedure 2002, Volume 1 at paragraph 14/7/3. I accept that this is a general rule subject to exceptions but I see none in the present application.

(2) First, the full extent of the defendant's position was not made apparent until the Defence was amended on 2 September 2002, as I have said, some three weeks before the hearing. The Amended Defence pleaded for the first time, the defendant's case on the true construction of the relevant agreement (the Letter as defined in my earlier Judgment), namely that upon the making of the sub-contract between the plaintiff and Free Form Construction Company Limited (the main contractor), any obligations on the defendant's part as contained in the Letter fell away. Facts in support of this contention are yet to be supplemented at the discovery stage. Furthermore, the Amended Defence also pleads for the first time an estoppel by convention, which was the other main plank of the defendant's defence. Mr Kwok, for the defendant, argues that on the basis of the original Defence alone, triable issues existed. I am not prepared to go into the exercise of separating the facts and matters pleaded in the original Defence from those pleaded in the Amended Defence. The fact remains that the defendant relied on the Amended Defence at the hearing of its application for summary judgment.

(3) Secondly, reliance had been placed by Mr Thomas Lee (who appeared for the defendant at the hearing of the summary judgment application), on the factual matrix existing at the time of the Letter. For example, reference was made to the common practice of employers engaging sub-contractors even before a main contract is entered into "especially when manufacturing or shipment lead times are involved". In my earlier Judgment, I referred to the possibility of the court looking at the factual matrix of the Letter at trial. I note that the defendant has not pleaded much, if anything, by way of relevant fact going towards this aspect.

(4) Thirdly, ultimately I am not of the view that it was somehow unreasonable for the plaintiff to take out a summons for summary judgment and to pursue this course. Indeed the defendant seems to have recognized this in that it sought an order there be unconditional leave to defend at the hearing and not the dismissal of the summons. Furthermore, whether or not the costs expended by either party are somehow disproportionate to the claim itself is a matter eventually for taxation. It does not feature significantly in the present decision as to the right order to make in relation to the incidence of costs at this stage.

5. For the above reasons, I dismiss the application to vary the costs order nisi.

	(Geoffrey Ma)
	Justice of Appeal (Sitting as an additional judge of the Court of First Instance)

Representation:

Mr G Shaw, of Messrs Deacons, for the Plaintiff

Mr Gilbert Kwok, of Messrs Simmons & Simmons, for the Defendant

HCCT000081A/2001

HCCT 81/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 81 OF 2001

______________

BETWEEN
	SCHINDLER LIFTS (HONG KONG) LIMTIED	Plaintiff
	AND
	OCEAN JOY INVESTMENTS LIMITED	Defendant

______________

Coram: Hon Ma J in Chambers

Date of Hearing: 24 September 2002

Date of Judgment: 10 January 2003

_______________

J U D G M E N T

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The plaintiff's claim

1. By a summons dated 25 February 2002, the plaintiff seeks summary judgment in the sum of $1,166,100.00 and interest, being the balance allegedly due to it from the defendant in relation to some lift installation work that had been carried out by the plaintiff at the commercial development situate at 7-11 Li Yuen Street East, Central, Hong Kong.

2. The defendant was at all material times the employer under the said development. The plaintiff's claim is based on a letter of intent dated 8 June 1998 from LCT Associates Limited (the defendant's agent) to the plaintiff ("the Letter").

3. In the Letter, the plaintiff was informed that its tender for the lift installation nominated subcontract in relation to the said development had been accepted by the defendant (as the employer). The contract sum was stated to be $3,780,000.00.

4. The Letter went on to set out various terms of the plaintiff's engagement. The following terms should be noted:-

(1) By clause 9 thereof, it was expressly envisaged that the plaintiff would be a nominated subcontractor. It was to be nominated to the main contractor whose identity was to be later confirmed. That clause stated, "You [the plaintiff] shall be nominated to the Main Contractor, which is to be confirmed later, as a nominated subcontractor to carry out the work. You are required to enter into a sub-contract agreement with the Main Contractor".

(2) By clause 12 thereof, the plaintiff was required to provide to the defendant a performance bond in relation to its performance of the subcontract (which, as stated above, was to be made between the plaintiff and the main contractor).

(3) Clause 14 thereof, the clause on which the plaintiff's claim is crucially based, stated as follows:

"Until a formal agreement is prepared and executed between you and the Main Contractor, this Letter of Intent together with the correspondences listed in item 13 above shall constitute a binding Contract between you and the Employer."

5. At the time the Letter was issued and signed by both parties, the main contractor for the development had not as yet been appointed. Later in 1998 or early 1999, Free Form Construction Company Limited ("Free Form") was appointed the main contractor for the project. The written contract between the defendant and Free Form was dated 12 January 1999.

The issues in the present application for summary judgment

6. The plaintiff's case is simply put by Mr Geoffrey Shaw who appears on its behalf: the said balance of $1,166,100.00 is indisputably due under the agreement contained in the Letter.

7. The defendant raises a number of defences in its Amended Defence. Principally, its stance is that any agreement between the plaintiff and the defendant as contained in the Letter (which is denied), fell away once Free Form was appointed the main contractor and had entered into a contractual relationship with the plaintiff. Mr Thomas Lee, who appears for the defendant, submitted that this was so for the following reasons (and that there were therefore triable issues):-

(1) on a true construction of the terms of the Letter; alternatively

(2) by reason of the parties treating this as the position thus giving rise in law to an estoppel by convention.

8. The plaintiff joined issue with these submissions. Mr Shaw contended in the first place that there was no subcontract between the plaintiff and Free Form anyway. Even if there was, this did not mean that the agreement contained in the Letter became irrelevant because clause 14 was explicit in this respect: only if a formal agreement was executed between the plaintiff and Free Form would the agreement in the Letter fall away. Finally, it was argued that the facts in the present case did not bear out any estoppel by convention.

9. Three issues can therefore be identified for consideration in the present application for summary judgment:-

(1) Was there a subcontract between the plaintiff and Free Form?

(2) Even if there was, how does clause 14 of the Letter affect the position?

(3) Was there an estoppel by convention?

10. In deciding whether or not summary judgment should be given, I bear in mind the standard approach in such applications:-

(1) Factually, it has to be determined whether what the defendant says is believable, rather than whether its version of events is to be believed:- see Ng Shou Chun v Hung Chun San [1994] 1 HKC 155, at 158 per Godfrey JA; Re Safe Rich Industries Limited, unreported, 3 November 1994, CACV 81/1994.

(2) As a matter of law, even if what the defendant says is believable, does it amount to an arguable defence in law?

Was there a subcontract between the plaintiff and Free Form?

11. In my view, this is clearly a triable issue:-

(1) The Letter expressly envisages (indeed by clause 9 requires) that the plaintiff would enter into a subcontract with the main contractor. A number of obligations on the part of the plaintiff makes this assumption. Amongst them is the requirement that the plaintiff should provide a performance bond for the due performance of its obligations under such a subcontract.

(2) A performance bond dated 24 August 1998 was in fact provided by the plaintiff and ABN-AMRO Bank NV making express reference to the due performance of the plaintiff's obligations under the subcontract with the main contractor. This performance bond probably pre-dated the appointment of Free Form as the main contractor but there has been no suggestion that somehow this performance bond did not remain valid and effective once Free Form was appointed the main contractor. This would therefore suggest that a subcontract did exist.

(3) By a Warranty dated 5 August 1998, the plaintiff warranted in consideration of its appointment as a nominated subcontractor that it would carry out the subcontract works in accordance with the subcontract to be made with the main contractor. Again, there is no suggestion that this warranty remained anything other than valid and effective.

(4) I have been referred to numerous excerpts of correspondence between Free Form and the plaintiff over the course of the construction of the development. This correspondence seems to assume the existence of a contractual relationship between the plaintiff and Free Form.

(5) Payment for work done was apparently claimed by the plaintiff from Free Form during the course of the project, whether through payment certificates or otherwise. I refer in particular to a letter dated 31 January 2000 from the plaintiff to Free Form, in which reference is expressly made to "our Sub-Contract". It is also alleged in the Amended Defence and the defendant's affirmation evidence that payments were made by Free Form to the plaintiff at various stages of the works upon presentation of payment or valuation certificates.

(6) By a letter dated 28 September 2001, the plaintiff gave notice to Free Form that if the sum of $1,163,100.00 was not paid within seven days, legal action would be taken against Free Form. There is reference again in that letter to a "contract" in relation to the lift installation work carried out by the plaintiff.

12. There may be some dispute as to the exact terms of the subcontract between the plaintiff and Free Form, but the existence of a subcontract is a matter that ought to be tried.

The impact of clause 14 of the Letter

13. Mr Shaw argues with some conviction that even if there was a subcontract between the plaintiff and Free Form (which the plaintiff denies), the terms of clause 14 are clear. Unless there is in existence a formal contract that has been executed by the plaintiff and Free Form, the defendant remains liable to the plaintiff under the agreement contained in the Letter.

14. Mr Lee submitted that on a true construction of the Letter, the defendant's liability thereunder (if this existed in the first place) fell away once a subcontract was made between the plaintiff and Free Form.

15. I am of the view that the defendant's position here is likewise a matter that should go to trial for the following reasons:-

(1) The common intent of the Letter was arguably to commit the plaintiff as a subcontractor for the lift installation works even before the appointment of a main contractor. However, it seems always to have been envisaged that the plaintiff would be a subcontractor and that is the way it is described throughout the Letter. Further, as I have already remarked, there were obligations on the part of the plaintiff that assumed the existence of a subcontract with the Main Contractor.

(2) The Letter therefore arguably envisaged a situation in which, as with most building projects, there is a contractual relationship between the employer and the main contractor on the one part and between the main contractor and the subcontractor on the other. Clause 9 of the Letter required the plaintiff to enter into a subcontract with the main contractor.

(3) Commercially, one sees the desirability of separate contractual relationships between employer and main contractor, and between main contractor and subcontractor. In an often complex venture such as a building contract, the existence of different contractual regimes governing the terms of a subcontractor's engagement is more likely to give rise to difficulties in the practical implementation of that subcontractor's work than if his obligations were governed under only one such regime.

(4) The project in the present case and therefore the Letter are arguably to be seen in this light.

(5) In this way, even though the words of clause 14, if taken in isolation, may lead to the construction that Mr Shaw places on it, when taken in the context of the other provisions contained in the Letter (particularly clauses 9 and 12) and the general commercial considerations I have just referred to, the true construction of that clause may have to be seen in a different light. Mr Lee referred to the case of Stent Foundations Limited v Carillion Construction (Contracts) Limited (1999-2000) 78 Con L R 188 for the proposition that the absence of a formal executed subcontract is not decisive. The clause in the Stent case is of course of a different character to clause 14 in the present, but what that case does demonstrate at least is that it is important when construing contracts to look at the whole of the terms and at what is commonly referred to as the factual matrix.

(6) It is therefore arguable that clause 14 merely requires the existence of a binding subcontract between the plaintiff and the main contractor before the defendant's liability falls away. At trial, the Court will have to examine those considerations I have briefly alluded to above. The factual matrix may well have to be looked at.

Estoppel by convention

16. Even if Mr Shaw's construction of clause 14 is correct, the defendant's case on estoppel by convention should also go to trial. As pleaded, the estoppel relied on is the common assumption on the part of the plaintiff and the defendant that "they did not have or after the end of 1998 no longer had, a binding agreement with each other and that the plaintiff entered into the Sub-Contract with Free Form Construction Co. Ltd.".

17. Estoppel by convention arises when parties have acted on an agreed assumption as to a state of facts or of law (which includes the construction of a document):- see Chitty on Contracts (28th Edition) Volume 1 at paragraphs 3-100 to 3-103; Amalgamated Investment & Property Company Limited v Texas Commerce International Bank Limited [1982] QB 84, at 120H-122D, 126A-B, 130G-131A; The Vistafjord [1988] 2 Lloyds Rep 343, at 349(2)-353(1); Hiscox v Outhwaite [1992] 1 AC 562, at 574H-575H; Yuen Ching Yuen v Union Insurance Society of Hong Kong Limited [1998] 2 HKC 294, at 304-5.

18. I should perhaps highlight two aspects of estoppel by convention:-

(1) The requirement that the mistaken assumption be a common one means that the assumption must have been communicated between the relevant parties. In other words, both parties must share the mistaken assumption and conduct themselves on this basis. It will not be sufficient for each party to have acted independently of each other, albeit on the basis of the same assumption. However, as Chitty points out at paragraph 3-102 referring to The Vistafjord at 351(1), such communications may be effective by the conduct of one party being made known to the other.

(2) As to the proposition that estoppel by convention may not apply to future dealings, it is important to note that this is tied up with questions of unconscionability, justice and equity. These concepts are relevant to determine the extent to which a party will be bound by an estoppel by convention: see The Vistafjord at 351(2)-352(2).

19. The following facts and matters in the present case are relevant and should go to trial:-

(1) I have earlier in relation to the issue of the existence of a subcontract between the plaintiff and Free Form referred to a number of factual instances in support of the defendant's case. The same facts are relevant to the estoppel by a convention defence.

(2) The facts seem to show an acceptance by the plaintiff that it was with Free Form (and they alone) with whom the plaintiff should communicate in terms of ongoing matters in relation to the project as well as payment. Indeed, it would appear that throughout the project, the plaintiff looked to Free Form for payment and indeed got payment from them.

(3) The communications between the plaintiff and Free Form were copied to the defendant so it is clear that the defendant was fully aware of what was happening as far as the plaintiff and Free Form were concerned. This deals with Mr Shaw's submission that there were no communications of the mistaken assumption between the plaintiff and the defendant.

(4) On the defendant's part, it has dealt with Free Form on the basis that the plaintiff's costs were included in Free Form's claim for payment against the defendant. Mr Liang Zhi Cheng, a director of the defendant, deposes to the fact that the sums claimed by the plaintiff were included in the statement of final account under the main contract between the defendant and Free Form.

(5) As far as considerations of unconscionability, justice and equity are concerned, this can only be determined at trial. Only then will the court be in any position, after hearing the witnesses and studying the full extent of the documentary evidence, to determine the precise nature of the relationship between the plaintiff, the defendant and Free Form.

Conclusion

20. For the above reasons, I order that the defendant should be given unconditional leave to defend the present action.

21. Although Mr Shaw appeared to accept that costs should follow the event, in view of the order sought by the defendant being unconditional leave to defend, I shall make an order nisi that the costs of and occasioned by the plaintiff's application be costs in the cause.

	(Geoffrey Ma)
	Justice of Appeal

Representation:

Mr Geoffrey Shaw, of Messrs Deacons, for the Plaintiff.

Mr Thomas Lee, instructed by Messrs Simmons & Simmons, for the Defendant.

HCCT000081/2001

HCCT81/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO.81 OF 2001

------------------------

BETWEEN
	SCHINDLER LIFTS (HONG KONG) LIMITED	Plaintiff
	AND
	OCEAN JOY INVESTMENTS LIMITED	Defendant

------------------------

Coram : Hon Ma J in Chambers

Date of Hearing : 2 January 2002

Date of Decision : 2 January 2002

Date of Reasons for Decision : 11 January 2002

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REASONS  FOR  DECISION

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The issue

1. The issue before the court is not an uncommon one : where a party is in default in serving his pleading, what is the proper approach when the court is faced with both an application for default judgment and an application from the defaulting party for an extension of time.

2. At the hearing on 2 January 2002, I made an order giving leave to the defendant to file and serve its Defence and Counterclaim (if any) within 14 days. I now set out my reasons.

The facts

3. The Writ was served on 19 November 2001, Acknowledgement of Service was entered on 3 December 2001 and the Statement of Claim was served on 12 December 2001. The Defence was therefore due to be served on 27 December 2001.

4. On 24 December 2001, the plaintiff's solicitors sent a letter to the defendant's solicitors giving notice under RHC Order 19, rule 8A of its intention to enter default judgment in the event the Defence was not served on time. This letter was not received until the afternoon of that day (on the Christmas Eve). Later that day, the defendant's solicitors wrote to the plaintiff's solicitors stating that more time was needed due to the holiday season and a request was accordingly made for an extension of time of 14 days from 27 December 2001.

5. On 27 December 2001, the defendant issued a time Summons seeking an extension of time of 14 days within which to file its Defence and Counterclaim. The return date stated on the Summons was the next day, but, as no judge was available for the hearing, the date fixed for the hearing of the Summons was 2 January 2002. On the same day, the defendant's solicitors sent a letter to the plaintiff's solicitors requesting that, as the Summons could not be heard until 2 January 2002, the plaintiff should not enter default judgment in the meantime. On the next day, the defendant sent another letter in which the defendant repeated its request to the plaintiff not to enter default judgment, but that if judgment was to be sought, then the defendant would want to be heard at the hearing of the application for default judgment.

6. On 29 December 2001, both parties were present at the hearing of the plaintiff's application for default judgment before Master Cannon. She adjourned the application to 2 January 2002, to be heard at the same time as the plaintiff's Summons for an extension of time to file the Defence.

7. I have dealt with the facts in some detail not because they are in any way extraordinary but they illustrate, on the contrary, a very common situation that practitioners encounter. It is in this context that I deal with the applicable law.

The law and the court's approach

8. Once a party is in default of serving his Defence (or Defence to Counterclaim as the case may be), unlike in the case of a default in giving Notice of Intention to defend, the other party cannot apply for default judgment until he has served a notice giving two clear days' notice of its intention to enter judgment in default : see RHC Order 19, rule 8A. For convenience, I will hereafter refer to the defaulting party as the defendant and the non-defaulting party as the plaintiff.

9. The Notice may be served at any time, whether or not the defendant is already in default : see Ho Yuen Tsan v. Hop Wing Transportation Co. Ltd [1997] 1 HKLRD 46. In other words, the Notice may be served before the default occurs. The purpose of such a Notice is simply to give warning to the other party that no indulgence will be given once default occurs. In practical terms, when such a Notice is served after the default has occurred, this has the effect of extending the time within which the requisite pleading has to be served by two days. Technically, however, it should be stressed that it is not an extension of time as such : only that the plaintiff cannot apply for default judgment until the expiry of two clear days. Where such a Notice is served before the default has occurred, then judgment in default can be entered as soon as the default occurs providing that two clear days have elapsed.

10. An application for extension of time will not stop time running and will not prevent the plaintiff from entering default judgment : see G.P. Vickers & Company Limited v. Humanbo Enterprises Limited, unreported, 16 January 1984, Power J. It has been over the years and continues to be a popular misconception among many practitioners that an application for extension of time will prevent time from running or it would somehow render a default judgment obtained before the application for extension is heard, liable to be set aside. I take the opportunity to reiterate the correct position : an application for extension has neither of these consequences.

11. What then is a defendant to do in a situation when he is or may be in default and the plaintiff has given a Notice under Order 19, rule 8A? Of course, an application for extension of time has to be made but it is often not possible for the hearing of the application for extension to be heard before the plaintiff becomes entitled to enter default judgment.

12. One view is that it is up to the defendant to apply timeously for an extension of time and if he does not, then he must bear the consequences. Accordingly, so the argument runs, where the defendant is in default of serving his Defence, he exposes himself to the appreciable (if not inevitable) risk of default judgment being entered against him under the provisions of RHC Order 19.

13. An application for extension of time will not, as I have said, stop time running nor will it prevent the plaintiff from entering or applying for default judgment under Order 19, rules 1 - 8. I recognize, of course, that under Order 3, rule 5(2), an application for extension may be made notwithstanding that the relevant period has expired but in my view, this does not in any way affect the right of a plaintiff to enter or apply for default judgment under Order 19.

14. In my judgment, a defendant does indeed run a serious risk of default judgment being entered against him if he is in default of serving a Defence. An application for extension of time may not and often will not be heard before the time when the plaintiff becomes entitled to enter or apply for default judgment. Any attempt by the defendant to apply ex parte to a master or judge for an interim extension of time until the hearing of the application for an extension, will probably fail : see the observations of Jerome Chan J in Ho Yuen Tsan at page 50F - H.

15. It may be argued there is some unfairness to the defendant in his being unable to obtain a hearing date before the plaintiff is in a position to enter or apply for default judgment. However, this is not the correct way of viewing the matter. In my judgment, I believe it important to emphasize that it is incumbent on defendants to observe the time limits laid down by the Rules. If a defendant or his legal advisers are of the view that an extension may be required, this should be applied for at the earliest opportunity. If necessary, a summons for extension should be issued applying for an abridgement of time.

16. I recognize that it may very often be the case that a plaintiff will try to seek to enter default judgment while knowing that an application for an extension of time has been taken out by the defendant. However, given the time limits imposed by the Rules and the terms of Order 19 which give a plaintiff the right either to enter or apply for judgment default, this is an inevitable consequence. Litigation, it must be acknowledged, is often a hostile affair and no quarter should be expected to be given too often. It is not the court's role to insist on what it regards as gentlemanly behaviour when this is not required by the Rules. On the contrary, a plaintiff can insist on the defendant having to comply strictly with the timetable laid down by the Rules.

17. I would only add this caveat. The object of the Rules, it has often been said, is to enable the true controversy between the parties to be adjudicated upon efficiently, expeditiously and justly. Litigation and that the tactics associated with it are sometimes treated by parties as a game or a series of strategic manoevures. As far as the court is concerned, however, this is not the function of the Rules. Where a plaintiff enforces his strict legal rights, such as in the present case, by insisting that the defendant complies with the timetable laid down for the serving of the Defence, tactics aside (and I stress I make no criticism of the plaintiff in the present case), as far as the court is concerned, this is indicative that the plaintiff intends itself to prosecute the action efficiently and expeditiously and this will be borne in mind when the court oversees the future progress of the action.

18. In the present case, Master Cannon adjourned the plaintiff's application for default judgment to be heard at the same time as the defendant's application for an extension of time to serve its Defence. Where there is an actual hearing of an application for default judgment, it is perfectly legitimate for the court to adjourn the matter to be heard at the same time as an application for extension of time. This is a matter of discretion and whether the court will do so will of course depend on the prevailing circumstances. A defendant must not assume this will always be the case.

19. Thus, it is logical to consider first the application for extension of time, because if an extension is given, the application for default judgment falls away. On the other hand, if the application for default judgment were first to be dealt with and then granted, the defendant would have to set aside this judgment in accordance with the usual principles before an extension of time could be considered. This would be potentially time consuming and inefficient.

20. On an application for extension of time, the applicable principles are those stated in paragraph 3/5/2 of Hong Kong Civil Procedure 2002. I refer in particular to the decision of Hartmann J in Mobil Petroleum Co. Inc. v. Registrar of Trade Marks [2001] 1 HKLRD 225 for a recent statement of the law in this respect.

Application of law to present case

21. As I have already observed, the Defence should have been filed and served on 27 December 2001.

22. Although there was no affidavit explaining the reasons for the failure to serve the Defence in time, Mr Y.C. Lee for the defendant informed me of the following reasons :

(1) There were voluminous documents in the action that would have to be gone through in order to finalize the Defence.

(2) There has been a recent change in the handling solicitor and it was important for the new handler carefully to go through the facts and documents to acquaint himself with the issues. I was told that the facts were complicated.

(3) The fact it was also the Christmas season made it more difficult than usual to comply with the stipulated time limits.

23. I take into account those reasons as well as the following matters :

(1) This is the first application for an extension by the defendant.

(2) Upon receipt of the notice under Order 19, rule 8A, the defendant acted expeditiously, taking out a time Summons at the earliest date possible and seeking to have a hearing as quickly as possible.

(3) No prejudice is caused to the plaintiff if time were to be extended.

24. Looking at the matter as a whole, I am of the view that time should be extended for the filing and serving of the Defence and Counterclaim (if any).

25. As for costs, the usual order should follow. Accordingly, I therefore ordered that the costs of both summonses be to the plaintiff in any event.

	(Geoffrey Ma)
	Judge of the Court of First Instance,
	High Court

Representation:

Mr Joseph Chung of Messrs Deacons, for the Plaintiff

Mr Y.C. Lee of Messrs Simmons & Simmons, for the Defendant