SKILLSOFT ASIA PACIFIC PTY LTD v. AMBOW EDUCATION HOLDING LTD

HCCL 19/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 19 OF 2013

(Transferred from HCA 597 of 2012)

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BETWEEN
	SKILLSOFT ASIA PACIFIC PTY LTD	Plaintiff
	and
	AMBOW EDUCATION HOLDING LTD	Defendant

____________

HCCL 20/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 20 OF 2013

____________

BETWEEN
	SKILLSOFT ASIA PACIFIC PTY LTD	Plaintiff
	and
	AMBOW EDUCATION HOLDING LTD	Defendant

____________

HCCL 31/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 31 OF 2013

____________

BETWEEN
	SKILLSOFT ASIA PACIFIC PTY LTD	Plaintiff
	and
	AMBOW EDUCATION HOLDING LTD	Defendant

[Consolidated by order of
the Honourable Mr Justice Anthony Chan dated 20 March 2015]

____________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 12 January 2016

Date of Decision: 12 January 2016

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D E C I S I O N

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1.  This is an application by the plaintiff (“Skillsoft”) for summary judgment in respect of part of its claim against the defendant (“Ambow”) in this consolidated action. By a summons dated 16 July 2015 (“Summons”), Skillsoft is seeking an order for specific performance against Ambow, pursuant to an agreement dated 30 April 2008 (“Agreement”), that the latter do :

(1) provide a Sales Report for each month in 2012 and 2013; and

(2) make available for inspection and audit all of Ambow’s accounting, sales and customer service books and records from 30 April 2008 to the date of the Summons.

2.  On 29 November 2013, this court dealt with, inter alia, a summary judgment or interim payment (in the alternative) application by Skillsoft against Ambow in HCCL 19/2013 – see judgment dated 12 December 2013 (“Judgment”).  The background to the dispute between these parties had been set out in paras 2 to 12 of the Judgment.  I do not propose to repeat them here.

3.  However, for the present purpose, it should be pointed out that under the Agreement there were a number of obligations on Ambow as the distributor of Skillsoft’s products :

(1) Ambow should provide Skillsoft with monthly Sales Report in the agreed format which set out, inter alia, the licence fees payable to the latter (see Sections 4.4, 7.4 and 7.8);

(2) Ambow should keep records relating to its distribution of Skillsoft’s products and allow Skillsoft to inspect and audit all its accounting, sales and customer service books and records to determine whether applicable fees have been paid in accordance with the Agreement, and also to ensure compliance with the terms of the Agreement (see Sections 7.7 and 9.3).

4.  Section 14.5 of the Agreement provided that : “Upon termination of this Agreement, all obligations of each party hereunder shall terminate.  …”

5.  However, Section 15.10 of the same document provided that : “The provisions of Sections 7.1, 7.6, 9, 11 and 13 shall survive the expiration or earlier termination of this Agreement.”.

6.  It can be seen from the pleadings that the most fundamental dispute between the parties in these proceedings will be when the term of the Agreement ended.  Skillsoft contends that the Agreement expired on 31 December 2013 at the end of its stated term of 5 years and 8 months. Whereas, Ambow says that the Agreement expired on 31 December 2011 in accordance with its termination letter dated 23 September 2011.

7.  The key to this fundamental dispute is whether Ambow was entitled to terminate the Agreement after having issued a notice to Skillsoft on 19 September 2011 (“Notice”) to exercise an option to become a non-exclusive distributor of Skillsoft’s products from January 2012, pursuant to Section 2.3 of the Agreement.  However, the Notice was not simply accepted by Skillsoft.  In its response on 22 September 2011, Skillsoft stated that Ambow’s obligations to make pre-payment of licence fees (“Prepayments”) under Section 7.2 would continue despite the change from an exclusive distributor to a non-exclusive one.  It appears that this was the reason why Ambow reacted on the next day by terminating the Agreement on 31 December 2011 (see paras 3 to 5 of Judgment). 

8.  It was held in the Judgment that the issue whether Skillsoft was entitled to Prepayments under the Agreement once Ambow became a non-exclusive distributor is arguable, and unconditional leave to defend was granted to Ambow in that regard (see paras 28 to 30 of Judgment). There was no appeal from the Judgment. 

9.  In my view, this is a rather unusual application in that Skillsoft is seeking summary judgment on part of its claim, and such part is concerned with the enforcement of its disputed rights under the Agreement[1]. It is therefore hardly surprising that Mr Alder, appearing for Ambow, is taking a preliminary point whether this application should be entertained by the court given that :

(1) This is not the usual case where a grant of final judgment will obviate the trial.  The application for judgment is partial only and a trial is to take place in any case;

(2) The “consequential question” of Ambow providing Sales Reports for 2012 and 2013 and other materials should be determined at trial because :

(a) Under O 1A, r 4(2)(i) of the RHC, the court is mandated to deal with as many aspects of the case as practicable on the same occasion;

(b) More importantly, if this court were to give final judgment now in terms of para 1 of the Summons (see para 1(1) above), there would be a risk of inconsistent judgments from this court and the trial judge in these proceedings;

(c) Ordinary discovery would provide an adequate access for Skillsoft to Ambow’s documentation and it has not be asserted or shown otherwise[2].

10.  I find considerable force in this preliminary objection by Ambow.  On any view, it must generally be undesirable for litigants to fragment their cases into parts and to advance them as they please.  This cannot be conducive to proper deployment of the scarce resources of the court.  Unnecessary deployment of the limited resources of the court means that less will be available for the other court users.  Hence, it is the duty of the court to jealously guard against misuse of its resources, especially after the CJR.

11.  A parallel may be drawn with the procedure for trial of preliminary issues.  It is trite that in considering such an application the court must take into account whether it may lead to delay and increase in costs compared to resolving all the issues in 1 trial.

12.  Skillsoft has no adequate answer to this preliminary objection.

13.  In an attempt to answer the argument on inconsistent findings, Mr Wong SC, appearing for Skillsoft, submitted that a final judgment in terms of §1 of the Summons would have necessarily determined the issue whether the Agreement was extant during 2012 and 2013.  With respect, this is an illegitimate expansion of the scope of the Summons. 

14.  I should say that, in any case, I am not satisfied that Skillsoft’s case on when the Agreement came to an end is unanswerable.  The previous holding of this court that there is a triable issue on the Prepayments may have an impact on the arguments on the termination of the Agreement.  If Skillsoft was not entitled to Prepayments after Ambow became a non-exclusive distributor, there is scope for argument that the latter was entitled to terminate the Agreement in light of the insistence of the former on payments to which it had no entitlement. 

15.  I agree with Mr Alder that it is undesirable for this court to make an incidental finding in this application which may constitute an issue estoppel.  This will no doubt lead to an expansion of the scope of dispute between the parties, which is already substantial. 

16.  Mr Wong seeks to argue that discovery by Ambow in this action is insufficient for purposes of ensuring that all the relevant evidence will be before the court at the trial, and thus a split trial may be necessary.  This application serves to avoid a split trial, said Mr Wong. 

17.  With respect, I am not convinced that there will be a split trial.  There is no such application, and the same will have to be justified.  Mr Wong’s argument is premised on his construction of the relevant contractual provisions such that the right to inspect and audit concerns not only Skillsoft’s licence fee entitlements but the policing of its intellectual property rights.  I need only say that the point, turning upon the proper construction of the contractual provisions, is highly arguable. 

18.  Further, insofar as the licence fees are concerned, I am unable to see why discovery in this action will not cover the relevant documents.  It is certainly not demonstrated so. 

19.  In the premises, I agree with Ambow that this application ought not be entertained. 

20.  For completeness, I should mention briefly that I also find force in Mr Alder’s submission that specific performance is a discretionary remedy and it would be inappropriate for this court to determine whether to grant the relief before having made its findings on the facts after trial, which is the usual course.

21.  For these reasons, the Summons is dismissed. 

[Submissions on costsof the application]

22.  I make an order that the costs of and occasioned by the Summons be to Ambow, to be taxed if not agreed. 

	(Anthony Chan)
	Judge of the Court of First Instance
	High Court

Mr Anson Wong SC, instructed by Timothy Loh Solicitors, for the plaintiff

Mr Edward Alder, instructed by Tanner De Witt, for the defendant

HCCL 19/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 19 OF 2013

(Transferred from HCA 597 of 2012)

____________

BETWEEN
	SKILLSOFT ASIA PACIFIC PTY LTD	Plaintiff
and
	AMBOW EDUCATION HOLDING LTD	Defendant
____________

Before: Hon Anthony Chan J in Chambers

Date of Written Submissions: 16 December 2013

Date of Decision on costs: 6 January 2014

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D E C I S I O N   O N   C O S T S

____________________________

1. Pursuant to para 35 of the judgment dated 12 December 2013 (“Judgment”), the parties have filed written submissions on the issue of costs. This is the decision on that issue.

2. However, 3 points should be dealt with first. Firstly, the defendant’s submissions were not filed on time. It appears that its legal advisors have failed to familiarise themselves with the rules on how clear days are to be calculated (see O 3, r 2 and Hong Kong Civil Procedure 2014, vol 1, 3/2/8 and 3/2/9).  This is unsatisfactory.  In the future, similar failure may result in an issue being decided without the submissions of the defaulting party when there is no application, which has to be properly supported with an explanation for the default, for an extension of time.

3. Secondly, a summary judgment on the 1^st Payment has been granted with a stay of execution pursuant to para 33 of the Judgment. There is an omission to deal with interest entitlement.  I award interest on the 1^st Payment at prime rate plus 1% from 2 October 2012 until 12 December 2013 and thereafter at judgment rate(s) until payment. 

4. Thirdly, the plaintiff has raised a concern in respect of the concession referred to in para 25 of the Judgment that it may in the future be said to be a binding admission on its part that the Agreement was terminated upon the appointment of the JPLs.  Quite fairly, the defendant did not comment on such concern.  I do not believe that the concession in question can be construed to be a binding admission.  It was made for the purpose of the arguments ventilated before the court on 29 November 2013 (“Hearing”).  In particular, at the time Senior Counsel for the plaintiff was responding to an authority which was produced to the court without advance notice to him.

Costs

5. I have been referred by the defendant to some correspondence exchanged between the parties.  I do not believe that the defendant has made any sanctioned offer to settle the plaintiff’s claim or part thereof (see O 22, r 3 and r 5).  Indeed, it is not suggested that the defendant has made such an offer.  However, the defendant seeks to rely upon O 62, r 5(d) and ask to have its costs on indemnity basis from 24 October 2013 onwards.

6. I do not believe that the defendant can rely upon O 62, r 5(d) because I am not convinced that it could not have protected its position as to costs by means of a sanctioned offer.  Indeed, no proper reason has been advanced by the defendant as to why it could not have relied upon the provisions of O 22. 

7. I intend to adopt a broad brush approach on costs as suggested by the defendant.

8. There were 3 issues before the court at the Hearing – stay of proceedings and summary judgment on the 1^st and 2^nd Payments.  The plaintiff was successful in respect of the first two issues.

9. Further, I take into account two particular matters, namely (a) at the hearing on 3 October 2013, the plaintiff had already made clear its position that notwithstanding the insolvency of the defendant it was entitled to a summary judgment on any indisputable debt (relying upon Hong Kong Institute of Education v Aoki Corp (No 2) [2004] 2 HKC 397) and (b) in a letter issued well before these proceedings were instituted and dated 23 September 2011, the defendant had made clear its contention that there is “no support in the Agreement that the License Fees applies to non-exclusivity” [bundle 1, tab 29].

10. Taking a broad brush approach, I am inclined to apportion the costs to the effect of 2/3 and 1/3 in favour of the plaintiff and defendant respectively.

11. However, there are merits in the defendant’s criticisms of the plaintiff’s evidence in terms of both prolixity and admissibility (see paras 31 and 32 of the Judgment and paras 5 and 8 of the defendant’s submissions filed on 17 December 2013).  I shall therefore make a downward adjustment of the plaintiff’s costs entitlement.  I order that: (i) the plaintiff is to have its costs of the Summons dated 7 June 2013, including 55% of the costs of the Hearing and (ii) the defendant is to have its costs of the Summons dated 3 October 2013, including 35% of the costs of the Hearing.

12. The plaintiff succeeded in bringing forward the hearing of its Summons dated 7 June 2013 and should have its costs of and occasioned by the Summons dated 17 September 2013.

13. By reason of the complexity of the costs order as a whole, I decline the defendant’s invitation to assess its costs summarily.

	(Anthony Chan)
	Judge of the Court of First Instance
	High Court

Mr Clifford Smith SC, instructed by Timothy Loh Solicitors, for the plaintiff

Mr Edward Alder, instructed by Tanner De Witt, for the defendant

HCCL 19/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 19 OF 2013

(Transferred from HCA 597 of 2012)

____________

BETWEEN
	SKILLSOFT ASIA PACIFIC PYT LTD	Plaintiff
and
	AMBOW EDUCATION HOLDING LTD	Defendant

____________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 29 November 2013

Date of Judgment: 12 December 2013

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J U D G M E N T

________________

 

1. There are 2 applications before the court, namely (1) an application for summary judgment or interim payment (in the alternative) by the plaintiff (“Summons”) and (2) an application by the defendant to stay these proceedings by invoking the inherent jurisdiction of the court on the ground that there is on foot insolvency proceedings against the defendant in the Cayman Islands (the defendant is a Cayman company).

Background

2. The material facts are not controversial and can be briefly stated as follows.  The plaintiff’s claims herein arise under a Reseller Course and Distribution Localization Agreement (“Agreement”).  The Agreement was originally entered into on 29 April 2008 between other related parties but subsequently novated so as to take effect between the plaintiff and the defendant as if each had always been a party to it. The various amendments and novations are not in dispute.  The key features of the Agreement are that:

(1)   under clause 14, the term of the Agreement is 5 years and 8 months which runs from an Initial Term from 20 April 2008 to 31 December 2009 together with “any Renewal Term(s)”;

(2)   the defendant was to act as distributor of the plaintiff’s products in the Mainland on an exclusive basis for the Initial Term, but thereafter on either exclusive or non-exclusive terms at the defendant’s option;

(3)   clause 7.1 requires the defendant to pay a licence fee to the plaintiff for each of plaintiff’s product sold;

(4)   clause 7.2 further requires the defendant to pay certain prepaid licence fees (“Prepayment”).

3. On 19 September 2011, the defendant gave a notice to the plaintiff that it intended to the sell the latter’s products on a non-exclusive basis commencing January 2012 (“Notice”).

4. On 22 September 2011, the plaintiff acknowledged receipt of the Notice and indicated its view that the defendant’s obligation to pay Prepayment remained in force.

5. On the next day, the defendant responded by (a) denying the correctness of the plaintiff’s contention regarding the Prepayment and (b) giving notice that it did not intend to renew the Agreement for 2012.

6. The defendant has failed to pay the Prepayment for the 4^th quarter of 2011 in the amount of US$625,000 (“1^st Payment”) which was due on 1 October 2012.  On 1 January 2012, the plaintiff issued an invoice for the Prepayment for Q1 2012 in the amount of US$825,000 (“2^nd Payment”) which was stated to be due for payment on 31 January 2012.

7. On 13 April 2012, P issued these proceedings.  The Defence was filed on 6 August 2012.  Apart from seeking particulars of the Defence and serving a Notice to Admit on the defendant, the plaintiff did nothing further to advance this action until issuing the Summons on 7 June 2013.  I have been told by Mr Smith SC, who appeared for the plaintiff, that the lack of action was attributable to the fact that the plaintiff was waiting for more Prepayments to fall due with the intention of dealing with them together.

8. Meanwhile, on 23 April 2013 a shareholder made an application in the Cayman Islands to wind up the defendant on the just and equitable ground and sought the appointment of provisional liquidators.  There is no suggestion that the plaintiff knew about this application.

9. On 7 June 2013 (the day when the Summons was issued), the Grand Court of the Cayman Islands made the following order:

(1)   Mr Edward Middleton (KPMG Hong Kong), Ms Tiffany Wong (KPMG Hong Kong) and Mr Kris Beighton (KPMG Cayman) be appointed Joint Provisional Liquidators (“JPLs”) of the defendant (§1); and

(2)   Pursuant to s 97 of the Companies Law (2012 Revision) (as amended) all proceedings against the defendant – save one shareholder action against the defendant in California – be stayed (§6).

10. In view of the defendant’s cashflow insolvency, on 22 August 2013 the Grand Court issued a Revised Order varying the JPLs’ powers and amending §6 of Order dated 7 June 2013 to remove the Californian action as an exception to the stay.  Mr Alder, who appeared for the defendant, submitted that the effect of §6 is a worldwide stay of proceedings against the defendant.

11. Two additional writs have been issued by the plaintiff against the defendant on respectively 6 June and 21 October 2013 – HCCL 20/2013 and HCCL 31/2013.  I am given to understand that those actions cover Prepayments which have fallen due after the issuance of the present action, and that there is a procedural dispute over the service (on the JPLs) of at least one of those actions.

12. The defendant’s stay application was taken out on 3 October 2013.  The current state of affairs in respect of the defendant is that the JPLs are working hard to secure fresh fundings and to restructure its debts.

Stay of proceedings

13. The dispute here is quite narrow. There is no issue that this court should generally do what it can to give effect or assistance to foreign insolvency proceedings.  However, this court is not bound by such proceedings.  In other words, the stay of proceedings ordered by the Grand Court is not binding on this court.  It remains a matter of discretion of this court as to how best to recognise and give effect to the foreign proceedings.

14. In In re HIH Casualty and General Insurance Ltd [2008] 1 WLR 852, para 30, Lord Hoffmann said:

“… The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the 18th century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co-operate with the courts in the country of the principal liquidation to ensure that all the company’s assets are distributed to its creditors under a single system of distribution. That is the purpose of the power to direct remittal.”

15. The argument here is whether this court should apply atwo-stage approach.  I have been referred to a useful summary of the relevant principles in TheConflict of Laws in Hong Kong by Graeme Johnston, 2^nd edn, at pp 533 to 539 where the following summary appears on p 536 at para 8.073 (3)(b):

“(a) The precise nature of the foreign insolvency proceedings … is not a critical factor;

(b) The proper approach when the court is faced with a summary judgment application or similar is in two stages:

(i) If the plaintiff is entitled to summary judgment on ordinary principles (ignoring, for this purpose, the foreign process), judgment should be entered;

(ii)   However, the court retains a discretion to have regard to the foreign process and order in deciding whether to allow judgment to be executed …”

16. On p 539 of the abovementioned textbook, it is said that where the plaintiff is not seeking summary judgment, but is instead seeking to proceed to trial, the court may impose a stay if it concludes that it would be a woeful misallocation of resources to allow the action to proceed to trial.

17. The application of the above principles, involving the two-stage process, can be seen in two Hong Kong cases.  Firstly, Modern Terminals v States Steamship Company [1979] HKLR 512 where Trainor J permitted summary judgment to be entered under Order 14 when Chapter XI proceedings were pending in the USA, but ordered a stay of execution of the judgment so that the plaintiff would not gain an advantage over other creditors.

18. Secondly, Hong Kong Institute of Education v Aoki Corp (No 2) [2004] 2 HKC 397, in which the two-stage approach was endorsed and adopted by Reyes J.  A debt restructuring scheme was before the Japanese court; the Hong Kong court nevertheless permitted judgment to be entered but did not permit enforcement of the same. One of the factors the learned judge took into account was that the judgment would allow the judgment creditor to enforce its rights under the debt restructuring scheme in Japan.

19. I believe that there are good reasons for adopting the two-stage approach in this case.  Firstly, the Agreement is governed by Hong Kong law and the parties have submitted, according to its terms (clause 15.2), to the non-exclusive jurisdiction of the Hong Kong court.  There are disputes in respect of both the 1^st and 2^nd Payments.  If the disputes can be resolved speedily, and by definition a summary judgment application should be so resolved, it ought to be in the interest of the parties to have them resolved by this court now.  Otherwise, there is the risk that they will have to come back to this court for determination at a later stage or that evidence of Hong Kong law will have to be adduced before the Cayman court to enable it to resolve the disputes.

20. Secondly, I accept that the plaintiff has a legitimate interest in obtaining a judgment from this court so that it may then advance its claim in the insolvency proceedings in the Cayman.  Presently, it is not recognised by the JPLs as a creditor of the defendant.

21. Thirdly, I am unable to see any disruption to the Cayman insolvency proceedings or unfairness to other creditors of the defendant by determining the Summons.  On the contrary, I can see some advantage in having the disputes over the Payments decided.

22. I am unable to see any distinction between this case and Modern Terminals.  If there is no triable issue in respect of the Payments, judgment should be entered with a stay of execution (which is not resisted by Mr Smith).

Summary judgment

23. I should clarify that a summary judgment is sought in respect of the 1^st Payment.  As regards the 2^nd Payment, a summary judgment or alternatively interim payment is being sought.  However, Mr Smith accepted that there is no practical difference in respect of the test which he has to meet to make good his application under either limbs.

24. With respect, I am unable to see any triable issue over the 1^st Payment.  The only argument advanced by Mr Alder is one based upon the termination clause 14.5 of the Agreement, which provides that “Upon termination of this Agreement, all obligations of each party hereunder shall terminate. …”.

25. It is accepted by Mr Smith that the appointment of the JPLs constituted an event which led to the immediate termination of the Agreement pursuant to clause 14.4.

26. However, I agree with Mr Smith that the argument is completely contrary to the established principle of law that the termination of an agreement would not affect any right or liability which has been crystallised prior to termination.  In the absence of clear wording, I do not begin to see how the court can construe the Agreement as one which undermines such established principle.

27. Further, I agree with Mr Smith that if the argument were to prevail it would produce a bizarre effect in that the defendant would be able to erase its own debts by the simple expedient of filing for bankruptcy (which is another termination event under clause 14.4).

28. Turning to the 2^nd Payment, I believe that the issue is equally straightforward.  Putting aside the argument whether the defendant was entitled to terminate the Agreement prior to the expiration of the 5 years and 8 months period, ie, taking the plaintiff’s case at the highest, I am unable to see any contractual provision which entitles the plaintiff to any Prepayment after the defendant has elected to operate on a non-exclusive basis.

29. Insofar as the express provisions are concerns, clause 7.2 and Exhibit A of the Agreement provide for Prepayments over the Initial Term.  It is not clearly stated whether any Prepayment is to be paid over the Renewal Term(s) if the option (to deal on non-exclusive basis) under clause 2.3 is exercised.  It is certainly arguable that no Prepayment is to be made when the Agreement becomes a non-exclusive one, ie, the plaintiff’s entitlement will be confined to the licence fee payable under clause 7.1.  Such a construction is consistent with commercial sense – the non-exclusive agent will have to pay for what it managed to sell but not a guaranteed minimum payment (which is the nature of the Prepayment).

30. In the premises, I have no hesitation in coming to the view that unconditional leave to defend should, if necessary, be granted in respect of the 2^nd Payment.  By the same token, no interim payment order should be made.

Procedural irregularity

31. I must point out that the evidence filed by the plaintiff contains a good deal of inadmissible material in the nature of submissions.  It is trite that submissions have no place in affidavits.  Regrettably, such infringement is widespread.  Equally regrettable, where one party has advanced submissions in his affidavit, it would be rare for his opponent to be able to resist doing likewise.  The result is that the court will be presented with a series of affidavits containing much inadmissible material.  Such infringement increases the costs of litigation and adds to the burden of the court.

32. It is the duty of the court to uphold the proper practice.  A party who fails to observe the same is at risk of an adverse costs order.

Conclusions

33. I give judgment in favour of the plaintiff in respect of the 1^st Payment with a stay of execution.

34. In light of the plaintiff’s concession over the stay of execution, it must follow that I should order a stay of proceedings in this action until further order, and I so order.  I also grant liberty to apply.  It may not be necessary to formally grant an unconditional leave to defend in respect of the 2^nd Payment in light of the stay.  On the other hand, it is probably desirable to have such an order so that the Summons is properly dealt with.  I make the order accordingly.

35. In respect of costs, the parties are to file and serve a written submission on the appropriate costs order to be made, which is limited to 2 pages, within 3 working days from the date of this judgment (unless agreement has been reached between them on the same).  The court will then decide the matter on papers.

36. Last but not least, I am grateful to both counsel for their assistance.

	(Anthony Chan)
	Judge of the Court of First Instance
	High Court

Mr Clifford Smith SC, instructed by Timothy Loh Solicitors, for the plaintiff

Mr Edward Alder, instructed by Tanner De Witt, for the defendant