19 July, 2016
The Hong Kong office of international law firm Hill Dickinson has acted for a Hong Kong based media consultancy company in proceedings against a Finland based radio-frequency operator (connected with the PRC Government) to recover unpaid consultancy fees and damages for breach of a consultancy agreement relating to the sourcing and operation of a radio station in Rome. There are also related proceedings underway in Italy.
Our client commenced the action in the High Court of Hong Kong on 29 June 2015. The Defendant subsequently filed a Defence pleading a raft of defences to the claim such as sham agreement, misrepresentation, uncertainty of contract, total failure of consideration and defective quality of services. The Defendant also filed a counterclaim seeking over Euros 1 million in damages against our client.
On 31 May 2015, we applied for summary judgment and dismissal of the Defendant’s counterclaim. The Defendant opposed the application.
There is always a significant risk for a client applying for summary judgment as, if the application is unsuccessful, the client will face a substantial costs order, which will usually be payable immediately, and the client will also have lost valuable time (usually 6 to 9 months) preparing for the summary judgment hearing which could otherwise have been used preparing the case for trial and obtaining the earliest possible trial date. It is therefore a bold (and risky) move for a client to apply for summary judgment except in the clearest possible cases such as a claim on a dishonoured cheque. This was not such a case. This case involved multiple jurisdictions with corporate entities based in the BVI, Rome, Milan, Finland, Hong Kong and the PRC and a detailed analysis of factual and legal issues relating to radio frequency broadcast services, forum non conveniens, exclusive jurisdiction and governing law clauses, expert evidence of foreign law and corporate transaction structuring alleged to be a dishonest tax avoidance scheme.
On 8 July 2016, there was a substantive hearing before Master S Kwang. In a nutshell, we argued that there was no merit in the ‘sham agreement’ defence (an alleged transfer-pricing scheme to avoid paying tax in Italy) relying in particular on Lord Diplock’s classic definition of a “sham” in Snook v London West Riding Investments Ltd [1967]2 QB 786. We submitted that all of the defences raised by the Defendant were themselves a sham and a smokescreen to muddy the waters in what was really a straightforward debt claim for unpaid invoices. After hearing lengthy submissions and considering the various affidavits filed by the parties, Master S Kwang concluded that he was satisfied that none of the defences were believable (particularly tested against the contemporaneous evidence) and he granted our client final judgment and interlocutory judgment with damages to be assessed together with the costs of the action. He also dismissed the Defendant’s counterclaim.
We obtained judgment approximately 12 months after the writ was issued.
The decision is a welcome reminder from the Hong Kong Court that the scope of the Order 14 ‘summary judgment’ procedure goes well beyond the more conventional but limited ‘dishonoured cheque’ type cases. The Order 14 procedure can be a very successful litigation strategy where a litigant is able to persuade the Court that even where, as in this case, a Defendant raises a raft of complicated ‘purported’ defences to a claim and a significant counterclaim supported by lengthy affidavit evidence, there is in fact no substance to the defences. In such cases, it is possible to significantly accelerate the period for a client to obtain a final judgment and significantly reduce overall costs by avoiding the substantial costs of preparing for and attending a trial.
Bryan O’Hare (Partner) led the Hong Kong team with assistance from Victoria Chang (Associate) and Jong Wong (Trainee).”
