Hong Kong – A cautionary tale of two summary judgment applications
Details
Summary judgment is a very effective tool for a plaintiff to obtain a final judgment for the whole claim at an early stage of the proceedings and avoid enduring the delay, expense and risk of proceeding to a full trial.
Recently, in Skillsoft Asia Pacific Pty Ltd -v- Ambow Education Holding Ltd (No 2) [2016] 1 HKLRD 1052 (Skillsoft 2), the High Court of Hong Kong rejected the plaintiff’s application for summary judgment for a part of its claim, rationalising that it is generally undesirable for litigants to fragment their cases and litigate in parts as they please by filing for summary judgment for only certain parts of a claim. The Court further commented that this may also be an improper deployment of the Court’s scarce resources.
Background
The plaintiff, Skillsoft, had filed three separate cases against Ambow Education (HCCL 19/2013, HCCL 20/2013 and HCCL 31/2013). The plaintiff made an earlier application for summary judgment for a part of its claim in one of the actions (HCCL 19/2013) and was partially successful. The three cases were subsequently consolidated into one proceeding under Skillsoft 2 and the plaintiff later made a separate summary judgment application for part of its claim in the consolidated proceedings. This was an unusual case for summary judgment.
Both summary judgment applications in HCCL 19/2013 and Skillsoft 2 concerned the enforcement of certain rights of the plaintiff under a distribution agreement for the plaintiff’s products (the agreement). However, the application in Skillsoft 2 concerned a set of rights which were different from the rights that were the subject of the earlier partial summary judgment application in HCCL 19/2013 (i.e. the earlier application in HCCL 19/2013 concerned the plaintiff’s right under the agreement to receive certain payments from the defendant, whereas the Skillsoft 2 application concerned the plaintiff’s right under the agreement to require the defendant to provide certain sales reports and to inspect and audit certain of the defendant’s internal records).
Importantly, although the two summary judgment applications dealt with the enforcement of different sets of rights under the agreement, in order to grant the summary judgment application the judge in Skillsoft 2 would be required to make factual findings on when the agreement was terminated, which is an issue the Court had already ruled in the earlier summary judgment application should be left for argument at trial.
The judge in Skillsoft 2 was thus concerned that any finding on fact which he would be required to make in granting the partial summary judgment might be inconsistent with the trial judge’s eventual finding on the same issue.
Decision
The Court in Skillsoft 2 refused the plaintiff’s summary judgment application. In summary, the judge gave the following reasons for its decision:
- Risk of inconsistent judgments – the judge in Skillsoft 2 would need to make a finding on the issue of when the agreement was terminated in order to grant the partial summary judgment application. The judge was concerned that the eventual trial judge for the remainder of the claim would also need to make a finding on this issue which may result in inconsistent findings. In particular, this may constitute issue estoppel, which prohibits an issue previously decided by the Court from being argued again.
- Procedural economy – the judge also considered that it is generally undesirable for litigants to fragment their cases into parts for summary judgment and other parts for determination at trial. He stated that this is not conducive to the proper use of the Court’s scarce resources and he made these observations:
- This was an unusual application for summary judgment for only part of a claim and a trial would still need to take place; and
- Following the Civil Justice Reform, the Court is mandated to deal with as many aspects of the case as practicable on the same occasion (Order 1A, r4(2)(i) of the RHC).
Comment
An application for summary judgment for part of a claim is fairly unusual compared to the typical scenario where a plaintiff applies for final judgment for the whole claim which then obviates the need for a trial.
Following Skillsoft 2, clients may be advised to adopt a more cautious approach when considering whether to apply for summary judgment for part of a claim where there will still need to be a trial to determine the remainder of the claim. An applicant would have to be confident that an application for summary judgment for part of a claim is indefensible, there are no triable issues and there is no risk of inconsistent findings. Otherwise, the court will, quite properly, dismiss the application and send the case to trial and the application for summary judgment will have resulted in wasted costs and delays.
Clients need to be warned that an adverse costs order may be made against them if the court considers the summary judgment application was misconceived and has caused delays and increased costs compared to proceeding straight to trial so that all of the issues can be heard together at the same time.
Having said that, Skillsoft 2 will be less relevant to clear-cut cases where there is no good reason why the plaintiff should be prevented from obtaining a ‘quick’ judgment for part of his or her claim. This would include cases where the defendant disputes only part of a money claim and the balance is undisputed, and where there is no risk of inconsistent findings.
We would expect that the Hong Kong courts will consider each case on its own facts and circumstances as these types of cases tend to be very ‘fact-sensitive’ and there is usually plenty of ‘wriggle room’ for the court to exercise its discretion.
