NEW YORK LIFE INSURANCE WORLDWIDE LTD v. YAN SUI TONG

bjbj TONG ALBERT Defendant ------------------------ Coram: H H District Judge Marlene Ng in Chambers (open to the public) Date of Hearing: 2nd January 2008 Date of Handing Down Ruling: 7th January 2008 ------------------------ RULING ON COSTS ------------------------ I. Background The Plaintiff is an authorised insurer that carried on the business of providing and selling life insurance policies throughout Kong Kong. The Defendant was its agent for the purpose of marketing and selling the Plaintiff s life insurance policies and carrying services to the Plaintiff s policyholders. The Defendant s agency relationship with the Plaintiff ceased with effect from 3rd June 2002. The Defendant was registered as a life insurance agent with American International Assurance Co (Bermuda) Ltd on/about 21st June 2002 and joined American International Assurance Co Ltd as a Career Representative on 1st July 2002. On 18th October 2006 the Plaintiff commenced the present proceedings to claim against the Defendant for the outstanding balance of various allowances and advances granted to the Defendant during the currency of his agency relationship with the Plaintiff (ie Development Allowances and Career Advances) in the total sum of HK$54,504.58. The Defendant s former solicitors filed his Defence on 8th December 2006 denying the Plaintiff s claim and averring that the alleged advances were in fact and substance commission paid to the Defendant as agent. But no material facts or particulars were pleaded for such averment. On 11th April 2007, the Plaintiff issued an inter partes summons for summary judgment of its claim ( Summons ) and filed the affirmation of Chow Suk Ying, the Plaintiff s controller of credit management, in support ( Chow s Affirmation ). By a consent summons filed on 3rd May 2007 ( Consent Summons ), both parties solicitors jointly applied for an order inter alia that (a) the hearing of the Summons scheduled on 4th May 2007 be vacated, (b) the Defendant do have leave to file an affirmation in opposition within 28 days, and (c) the Plaintiff do have leave to file an affirmation in reply within 21 days thereafter. Master C P Pang granted an order in terms of the Consent Summons on the same day. The Defendant did not file any affirmation in opposition until 7 months later on 24th December 2007 (see below). On 25th July 2007, the Defendant filed a Notice to Act in Person stating his address for service was at Room 932, Block 11, Pak Tin Estate, Kowloon, Hong Kong ( Old Address ). Such Notice to Act in Person was re-filed on 4th August 2007. On 18th October 2007, the Plaintiff issued an inter partes summons for an order inter alia that unless the Defendant filed and served an affidavit in opposition to the Summons within 14 days the Defendant s defence be struck out and judgment be entered for the Plaintiff with costs. The Defendant was absent at the hearing of such summons on 26th October 2007. Master R Lai declined to make any order in respect of the summons. On 14th November 2007, the Plaintiff s solicitors wrote to the Defendant with copy to the Listing Office of the District Court (a) noting no affirmation in opposition had been filed to date, and (b) proposing to attend the Listing Office on 21st November 2007 to restore the hearing of the Summons. On 16th November 2007, the Defendant s present solicitors filed Notice to Act on behalf of the Defendant. On the same day, the Plaintiff s solicitors sought liberty to search the court file. The file search was done on 21st November 2007. On 21st November 2007, the Listing Office fixed the hearing before me on 2nd January 2008 in the presence of representatives of both parties solicitors. As explained above, the Defendant filed/served his affirmation in opposition ( Defendant s Affirmation ) on 24th December 2007, ie 3 working days before the hearing on 2nd January 2008. There was no dispute that a signed version of the Defendant s Affirmation was faxed to the Plaintiff s solicitors on 22nd December 2007 (ie a Saturday) at a time which the Plaintiff s solicitors claimed was outside their office hours. However, despite the long expiry of the time limit for filing affirmation in opposition in the Consent Summons, the Defendant failed to issue any summons for leave to file and serve such affirmation out of time. Indeed, Mr Ng, solicitor for the Defendant, only sought leave to file and serve the Defendant s Affirmation by way of oral application before me at the hearing on 2nd January 2008. On 24th December 2007, the Plaintiff s solicitors lodged with the court and served their skeleton submissions, list of authorities and chronology, which did not take into account the Defendant s Affirmation. However, upon review of the Defendant s Affirmation, the Plaintiff s solicitors took a pragmatic approach and decided not to pursue the Summons save for the purpose of determining the issue of costs. At the hearing, I made the following orders : the Defendant do have unconditional leave to defend this action; leave to the Defendant to file and serve the Amended Defence as per the draft being exhibit YST-4 of the Defendant s Affirmation within 7 days; leave to the Plaintiff to file and serve Reply within 21 days thereafter; costs of and occasioned by the Defendant s application to amend the Defence be paid by the Defendant to the Plaintiff in any event to be taxed if not agreed; there be mutual discovery of documents within 21 days of filing and service of the Reply; there be inspection of documents within 7 days thereafter. Ms Tse, solicitor for the Plaintiff, asked for leave to withdraw the Summons. Mr Ng asked for dismissal of the Summons or alternatively unconditional leave to defend. Neither party made submissions on the substantive Order 14 application. Both proceeded on the basis that (a) although the Plaintiff stood by its Summons issued in April 2007 it no longer wished to pursue the Summons, and (b) the Defendant should be allowed to defend the Plaintiff s claim on the basis of the draft Amended Defence. On such basis, I find that the most appropriate order to make is neither withdrawal nor dismissal of the Summons, but the Defendant should be given unconditional leave to defend. II. Defendant s delay The Defendant s explanation for the delay of more than 6 months in filing his affirmation in opposition could be found in paragraphs 29-32 of his affirmation. The Defendant admitted he received a copy of the Summons and Chow s Affirmation from his former solicitors. On 25th July 2007, the Defendant s former solicitors (of whom the handling solicitor was his personal friend) requested him to sign a Notice to Act in Person prepared by them, which gave the Old Address as his address for service. By a fax dated 6th August 2007, the Defendant wrote to the Plaintiff s solicitors advising them of his new correspondence address at 11/F, C5, Hankow Centre, Tsimshatsui, Kowloon ( New Address ). He claimed to be unaware of any obligation to file a Notice of Change of Address for Service. Although the Defendant claimed he moved from his Old Address and did not receive any mail from that address thereafter, he did not so inform the Plaintiff in his fax of 6th August 2007. All he said was that he could be contacted by mail at the New Address, which was a business address. In my view, such fax did not tell the Plaintiff that the Old Address, which was a residential address, would no longer be in use. Further, despite the Defendant s claim that he did not know he had to file Notice of Change of Address for Service, he actually re-filed his Notice to Act in Person on 4th August 2007 re-affirming the Old Address as his address for service. The Defendant did not give any explanation why he did so when he (a) had already filed it on 25th July 2007 and (b) well knew it referred to the Old Address where he could no longer receive any mail. The Defendant said he got married on 9th September 2007 and went overseas for his honeymoon from 26th October to 3rd November 2007. He claimed he was unaware of (a) the Consent Summons, (b) the deadline for filing his affirmation in opposition, (c) the Plaintiff s summons filed on 18th October 2007, or (d) the hearing before Master R Lai on 26th October 2007. I pause here to say that the Plaintiff could not be faulted for serving its summons of 18th October 2007 to the Old Address since no Notice of Change of Address for Service was filed. I disagree with the assertion in the fax of the Defendant s solicitors of 28th December 2007 that the Plaintiff ought to have sent correspondence to the New Address after 6th August 2007. The Defendant claimed he first became aware of the deadline for filing his affirmation in opposition about the time when his present solicitors became solicitors on the record (ie about 16th November 2007). He was also aware that on 21st November 2007 his solicitors and the Plaintiff s solicitors fixed the hearing before me on 2nd January 2008. The Defendant further claimed that since then he had been travelling in and out of PRC on business and had difficulty arranging meeting with his solicitors to prepare his affirmation in opposition, particularly since relevant events dated back over 6 years. In my view, although the Defendant s Affirmation provided an explanation for the substantial delay of over 6 months in filing his affirmation, such explanation (as Mr Ng fairly accepted) did not in any way excuse his dilatory behaviour. The importance of timely service of the affidavit in opposition with or without directions has been emphasised in Hong Kong Civil Procedure 2008 Vol.1 para.14/7/16 at pp.211-212. Whatever the position was between the Defendant and his former solicitors, the Plaintiff s conduct over the procedural progress of this case was above reproach and I would even say tolerant. Even assuming that the Defendant s former solicitors did not tell the Defendant of the deadline for filing affirmation in opposition, it was plainly incumbent on the Defendant, who knew about the Summons and Chow s Affirmation and who decided to conduct his defence on his own, to follow up with his former solicitors, the Plaintiff s solicitors or the court on what needed to be done on his part in relation to the Summons. There was ample basis for the Defendant to commence gathering of information to defend the Plaintiff s claim instead of waiting indefinitely to be told what he should do. Of even greater concern is the fact that even on the Defendant s own case, he already knew by 21st November 2007 that (a) he was substantially out of time in filing his affirmation in opposition and (b) the Summons had been restored to be heard before me on 2nd January 2008. But instead of dealing with the matter with alacrity bearing in mind the Plaintiff s right to file affirmation in reply within 21 days after service of his affirmation in opposition, he prioritised his work over his opposition to the Summons, and did not finalise his affirmation until a few working days before the hearing on 2nd January 2008. I find such explanation unsatisfactory. I also do not accept the fact that the relevant events dated back 6 years would be of any significance. By the Statement of Claim in October 2006 and latest by Chow s Affirmation in April 2007, the Defendant already knew the Plaintiff s case and had access to copies of the various agreements relied on by the Plaintiff. In my view, he has had ample time to prepare his affirmation in opposition. At the hearing, Mr Ng suggested that it took the Defendant a long time to reconcile the alleged outstanding Development Allowances and Career Advances with the Statements issued to him by the Defendant for the production months of November 2000 to April 2002 ( Statements ). I do not see why (a) the Defendant s preparation of a summary table based on information extracted from the available Statements and (b) his drawing of the conclusion therefrom that the quantum of the Plaintiff s claim did not sit well with the contents of the summary table would require any length of time. If he experienced difficulty in reconciling the Plaintiff s pleaded claim with the primary documentary information in his possession, there would have been even greater urgency for him to give early intimation of such contentions to support his defence. III. Costs of the Summons With the above background in mind, I turn to the parties arguments on costs of the Summons. I note at the outset that on such costs issue Mr Ng did not solely rely on the pleaded Defence, but sought leave to rely on the Defendant s Affirmation as well. Indeed, pursuant to his oral application for leave to file and serve the Defendant s Affirmation out of time, which was not opposed in light of the Plaintiff s pragmatic stance in relation to the Summons referred to above, I granted leave to the Defendant to file and serve the Defendant s Affirmation out of time. Each of the Plaintiff and the Defendant claimed for costs of and occasioned by the Summons to be taxed if not agreed with the Defendant putting forward an alternative claim for costs of the Summons to be in the cause. Both Ms Tse and Mr Ng agreed that the costs of the hearing on 2nd January 2008 be costs in the cause, and I so order. That leaves the costs of and occasioned by the Summons (other than the costs of the hearing on 2nd January 2008) to be considered. The Plaintiff claimed that the signed version of the Defendant s Affirmation was faxed to them on 22nd December 2007 outside the office hours of its solicitors and it was formally served on 24th December 2007 after they have lodged their skeleton submissions and list of authorities with the court. Hence, the skeleton submissions of the Plaintiff s solicitors could not have taken into account the arguments raised in the Defendant s Affirmation. But on 27th December 2007, having reviewed the Defendant s Affirmation but without commenting on the merits of the defence raised, the Plaintiff offered to withdraw the Summons on condition that the Defendant pay the costs of and occasioned by the Summons forthwith. The Plaintiff s position was starkly simple : had the Defendant properly pleaded his defence at the outset, the Plaintiff would not have proceeded with the summary judgment application. The Defendant s Defence as filed was a bare denial or non-admission defence that was thin on particulars, and according to Ms Tse, raised no triable issue. In the circumstances, the Plaintiff s claim was at that stage plainly amenable to a summary judgment application. There was more than ample time for the Defendant to prepare his Defence and affirmation in opposition. Yet it was only at the eleventh hour, ie after the Plaintiff had proceeded with the Summons and served their skeleton submissions, that the Defendant filed affirmation in opposition raising new arguments against the Plaintiff s claim. There was no explanation why all of the arguments raised in the Defendant s Affirmation and the skeleton submissions of the Defendant s solicitors were not pleaded in the first place. Mr Ng raised a number of arguments, some of which I can deal with quickly. First, Mr Ng submitted that the events being the subject matter of the present proceedings dated back to 2000-2002 and there was no explanation forthcoming from the Plaintiff on the substantial delay before it commenced the present proceedings in 2006 and issued the Summons in 2007. I do not consider this pertinent to the issue of costs. There is no dispute that the Plaintiff s claim was well within the limitation period. Indeed, as Mr Ng accepted, there was no limitation defence raised in the draft Amended Defence. There is no express provision in the rules as to the time when a summary judgment application must be made, and failure to give reason for delay would not necessarily prevent Order 14 judgment (see Hong Kong Civil Procedure 2008 Vol.1 para.14/2/2 at p.185). Secondly, Mr Ng asked the court to bear in mind the matter of proportionality in the sense that the Plaintiff s claim was just over the exclusive jurisdiction of the Small Claims Tribunal. Given the small amount of the claim, he questioned whether it was appropriate for the Plaintiff to incur the costs of a summary judgment application. I do not accept such argument. Since the Plaintiff s claim exceeded HK$50,000.00, it could not have proceeded with in the Small Claims Tribunal. There was no suggestion that the Plaintiff should waive the excess and bring its claim within the jurisdiction of the Small Claims Tribunal. That being the case, the Plaintiff had to commence its action in the District Court. Mr Ng then asked me to consider (without prejudice to the other defence arguments) that the Defendant s challenge to the quantum of the Plaintiff s claim in the Defendant s Affirmation (ie claiming that the Statements showed there was no sum due to the Plaintiff at all and there should be set-off for unpaid remuneration for May and June 2002) indicated a real possibility that the amount of the Plaintiff s claim was smaller than the pleaded sum. I am not prepared to countenance such argument. The lateness of the Defendant s Affirmation meant the Plaintiff was deprived of an opportunity to file and serve affirmation in reply in relation to these new matters raised in the Defendant s Affirmation. Previously, the pleaded challenge to the quantum to the Plaintiff s claim was nothing more than a bare denial in the Defence as filed. I find it unfair and indeed impossible at this interlocutory stage to draw any definitive conclusion to suggest that the Plaintiff acted unreasonably in commencing the present proceedings in the District Court. Thus, whether the Plaintiff should proceed with a summary judgment application turned on the appropriateness of the procedure in all the circumstances and not on the quantum of the claim. I see no reason why a claimant with a claim just over HK$50,000.00 should necessarily forgo summary judgment application and proceed to trial. In an appropriate case, a summary judgment application may well save costs. Thirdly, despite the lateness of the Defendant s Affirmation, the Defendant s solicitors in their faxes of 28th December 2007 complained that the Plaintiff s solicitors failed to take into account the Defendant s Affirmation in their skeleton submissions. It was further pointed out that the faxed and served versions of the Defendant s Affirmation were identical. The Defendant s solicitors boldly asserted that if the Plaintiff were unable to deal with the same by the hearing on 2nd January 2008, you could apply for an adjournment and the most you could obtain may be costs of such adjournment . In my view, it is not incumbent on the Plaintiff, being the wronged party served with a last-minute affirmation in opposition, to rush to court with an application for adjournment. The boot was on the other foot. It was for the Defendant who was inexcusably late to seek leave of the court to file and serve the Defendant s Affirmation out of time, and until such leave was granted there would no question of any adjournment of the hearing of 2nd January 2008 which would proceed on the basis of there being no affirmation evidence from the Defendant. Fourthly, Mr Ng complained that the Plaintiff failed to (a) provide adequate particulars of the amounts allegedly due to the Plaintiff or (b) mention any particulars of the remuneration due to but not paid to the Defendant between 1st May and 3rd June 2002. However, the Defendant s pleaded defence in this respect was nothing more than a bare denial. The above complaint was only fleshed out in the Defendant s Affirmation by exhibiting the Statements and summary table (see paragraphs 29 and 36 above) and suggesting allegedly irreconcilable differences between his stance of there being no money due to the Plaintiff and the Plaintiff s pleaded claim. The Defendant s affirmation in opposition must condescend upon particulars , and as far as possible deal with the Plaintiff s claim and Chow s Affirmation, and state clearly and concisely what the defence was, and what facts were relied on to support it. A mere general denial that the Defendant was indebted would not suffice (see Hong Kong Civil Procedure 2008 Vol.1 para.14/4/4 at p.188). In any event, the burden was necessarily on the Defendant to raise any defence of set-off which he failed to do in his Defence as filed. Fifthly, Mr Ng dealt with the Plaintiff s complaint that notwithstanding the Defendant had ample time to plead his Defence, there was no plea of restrictive covenant in the Defence filed in December 2006 and no application to amend to add such plea for more than a year. In respect of the Plaintiff s claim for repayment of the outstanding balance of the Development Allowances, the Plaintiff relied on the terms of an Appointment Letter dated 23rd November 2000( Appointment Letter ), an Agent s Agreement signed by the Defendant on 24th August 2000 (but there was dispute whether the Plaintiff signed the same on 24th August 2000 or 23rd November 2000) ( Agent s Agreement ), and an Application for Finance signed by the Defendant (but the Plaintiff claimed he only printed and did not sign his name) on 21st August 2000 ( Application for Finance ). Clauses 2 and 10 of the Appointment Letter provided inter alia as follows : 2. Finance During the first 12 months, a monthly Development Allowance (DA-UGDS2K) [ UDGS Development Allowance ] of maximum amount HK$10,000 will be paid to you subject to your fulfilment of the validation requirements including personal production stated in clause 2.2 below. This monthly Development Allowance is not guaranteed and you must meet the validation requirements and is paid subject to Clause 10 below. In addition to the DA-UGDS2K validated, only 25% of the normal remuneration as stated in the Agent s Agreement will be paid to you. 10. If you, within twelve (12) months from the date of termination of the Agent s Agreement between you and the Company, engaged as a director, principal, partner, consultant or agent, or accept employment in any capacity or otherwise be concerned or interested in any insurance business in Hong Kong, you are required to pay back in a lump sum immediately to the Company any collection related costs and a) all (100%) the above mentioned allowances received if you are leaves the Company in two years or less after the cessation of receiving the allowances Clauses 1 to 3 of the Application for Finance provided inter alia as follows : I (hereinafter called the Agent ) am applying for a finance from [the Defendant] (hereinafter called the Company ). Type & amount of FINANCE applying : Development Allowance-BDE2K* only. Development Aloowance-BDE2K* & a fixed amount of Career Advance HK$______ per month Career Advance only: HK$______ per month. [As per Agent s Advance Agreement] Others (Please specify) UGDS [As per described in the Appointment Letter] *The Development Allowance under FINANCING SCHEME FOR BDE Payments receivable by the newly contracted agent (hereinafter called the Agent ) during the financing period The starting month of the finance period is the first month that the finance for that month has been considered. This month will be regarded as the first servicing month for the calculation of finance, bonuses, awards, contests and etc. During the financing period (not exceeding 12 months) and still under this financing scheme, the Agent, if also applying for Career Advance, will receive the DA-BDE2K & the Career Advance (even zero) validated, and 25% of regular remuneration as stated in the Agent s Agreement The total amount of DA-BDE2K and Career Advance are both subject to monthly validation in accordance with the validation requirements below. Repayment If the Agent s Agreement is terminated, upon leaving the Company, the terminated agent should repay the total outstanding indebtedness immediately by a single payment if the Agent, within twelve (12) months from the date of termination of the Agent s Agreement between the Agent and the Company, engaged as a director, principal, partner, consultant or agent, or accept employment in any capacity or otherwise be concerned or interested in any life insurance business in Hong Kong which is a direct competition with the Company, the Agent is required to pay back in a lump sum immediately to the Company any collection related costs and all (100%) the DA-BDE2K received if the Agent has been contracted with the Company for three years or less 3. All outstanding indebtedness will be considered to be a legal debt from the Agent to the Company. The Defendant claimed that under the Appointment Letter, even if he could meet the validation requirements for a particular month (and he claimed he exceeded the validation requirements for November and December 2000), he could only get UDGS Development Allowance of HK$10,000.00 plus 25% of the commission to which he was entitled (pursuant to the Agent s Agreement) whilst the Plaintiff would retain the remaining 75% of his commission (on top of its own commission). The Defendant claimed that on/about 18th December 2000, Mr Tang of the Plaintiff told him his payment arrangement would be replaced by a new one whereby if he met the validation requirements he would be entitled to a monthly development allowance of HK$5,000.00 plus 25% of his commission (with the Plaintiff retaining the remaining 75%) and a further monthly Career Advance of HK$15,000.00, which was in the form of a loan to him but he did not have to repay the same because his commission as retained by the Plaintiff would be used to set off the Career Advances. The Defendant questioned whether the Development Allowance was granted under the University Grants Development Scheme (ie the UGDS Development Allowance) or under the Financing Scheme for Business Development Executives (ie the DA-BDE2K Development Allowance). If it were the former, the Defendant doubted whether Clause 2.2.2 of the Application for Finance was applicable. If it were the latter, question was raised whether Clause 10 of the Appointment Letter was applicable. By the Defendant s Affirmation and the skeleton submissions of the Defendant s solicitors, it was argued that Clause 10 of the Appointment Letter and Clause 2.2.2 of the Application for Finance were unreasonable restraint of trade which were unenforceable and/or against public policy, and they were in any event inconsistent with each other. Mr Ng also referred to the decision of H H Judge Muttrie in New York Life Insurance Worldwide Ltd v Fong Hok Yin also known as Fong Hok Yin, Matthew DCCJ4042/2002 (unreported, 24th January 2003). In that case, the plaintiff claimed for repayment of various allowances paid to the defendant based on similar schemes and provisions as set out above. The learned judge granted leave to set aside the default judgment on the ground that the defendant had shown a real prospect of success in his defence contentions. In respect of provisions similar to Clause 10 of the Appointment Letter and Clause 2.2.2 of the Application for Finance herein, H H Judge Muttrie said as follows : 13. It seems to me that this provision cannot be said merely to be an agreement to repay financial support. The plaintiff could have made the allowances repayable or partly repayable on the defendant's leaving it within a given time frame (which appears to be the position with the "Career Advance" but not the Development Allowance) but it did not. The provision only comes into play if, within 12 months of leaving, the defendant goes to work for a competitor. It is a financial disincentive to him to do so. It must therefore be regarded as being in restraint of trade. 14. To justify such restraint the defendant (sic) must show that it is reasonably required for the protection of some legitimate interest. In that case, the learned judge held there were arguable defences with real prospect of success in that (a) there might not be legitimate interest which the plaintiff could protect by restraining the defendant from working for a competitor, (b) there was uncertainty or unnecessary width in restraining the defendant from being engaged in any life insurance business in Hong Kong which is a direct competition to the company , and (c) the relevant provision might be severable. Mr Ng pointed out that the solicitors for the Plaintiff herein (formerly known as Messrs Skrine Thomas Sharrock) also represented the plaintiff in Fong Hok Yin, so the Plaintiff herein must be taken to have been aware of such decision and its consequences on the present proceedings when issuing the Summons. It was suggested that the Plaintiff ought not have issued the Summons in the first place. However, irrespective of Fong Hok Yin and as Mr Ng conceded, the plea of unreasonable restraint of trade was a positive defence argument that ought to be pleaded, but was nowhere to be found in the Defence as filed. It only surfaced in the Defendant s Affirmation served shortly before the hearing on 2nd January 2008. I agree with the Plaintiff s solicitors that the Plaintiff was not obliged to conduct a roving expedition to deal with potential defences that might or might not be raised or relied on by the Defendant, who did not see fit to either amend his Defence or file his affirmation in opposition in good time. Mr Ng argued that once the Plaintiff pleaded the Appointment Letter and Clause 2.2.2 of the Application for Finance, the court would be seized of the issue of whether they were restraint of trade provisions that offended public policy. In my view, as a general rule the court will not entertain such question unless it is specifically pleaded and the court is satisfied that it has before it all the necessary facts concerning the contract and its setting. I need go no further than to refer to the Lord Moulton s judgment in North Western Salt Company, Limited v Electrolytic Alkali Company, Limited [1914] AC 461, 475-476. I am not with Mr Ng that the Plaintiff ought not to have issued the Summons because of this ground. Sixthly, Mr Ng argued that Fong Hok Yin showed there was an arguable case that the Development Allowances should be treated as remuneration and this defence was specifically pleaded. This is not correct. I have carefully read the Defence as filed. The only express plea on this subject was that the Development Allowances were commission . There was no plea that the Development Allowances were remuneration as such. Indeed, the draft Amended Defence exhibited to the Defendant s Affirmation proposed amendments to expressly plead remuneration and/or commission in paragraph 5 thereof. I have also carefully read Fong Hok Yin in which the defence argument was that the provisions similar to Clause 10 of the Appointment Letter and Clause 2.2.2 of the Application for Finance were provisions in restraint of trade in contra-distinction to the plaintiff s contention that they were agreements to repay financial support granted on conditions in the event that the defendant joined a competitor (see also paragraph 52 above). The learned judge described the Development Allowances as incentive for the defendant to learn the business of insurance agent, and get up to speed in it as soon as possible. There was also no explicit discussion of the Development Allowances as the defendant remuneration in Fong Hok Yin but presumably if the relevant restraint of trade provisions were struck down or severed, the Development Allowances would not have to be repaid and would become the defendant s remuneration. Even so, there is no suggestion in Fong Hok Yin that the Development Allowances were in substance commission payable to the defendant. Further, the Defendant did not in his Defence as filed condescend upon the particulars of such defence by setting out the material facts and particulars in support of the averment that the Development Allowances were in substance commission . The Defendant s Affirmation did not go much further than to say generally that his remuneration paid by the Plaintiff was low and the substance of his remuneration package was in effect monthly remuneration calculated in a very complicated manner. Even on the Defendant s Affirmation, I still have difficulty in appreciating why the Development Allowances were regarded as commission when 75% of the commission he earned during a production month would be retained by the Plaintiff for set off against the Career Advances but not Development Allowances. In my view, the Defendant only raised arguable issues by the Defendant s Affirmation and it could not be said that the Plaintiff acted unreasonably in issuing and proceeding with the Summons after sight of the Defence as filed and without any affirmation in opposition until a few working days before the hearing on 2nd January 2008. The Defence as filed plainly invited a summary judgment application. Mr Ng fairly conceded that he could not offer any explanation why the full extent of the Defendant s defence was not pleaded in the first place. I find that the Plaintiff acted with due cost-saving speed upon sight of the Defendant s Affirmation. Despite the intervening public holidays, the Plaintiff s solicitors informed the Defendant s solicitors at first opportunity on 27th December 2007 that the Plaintiff would not continue with the Summons. In my view, the Plaintiff s approach could not be faulted and the Defendant must bear the price of failing to disclose the full extent of his defence until the hearing for argument was upon him. In any event, the cost of preparation of the Plaintiff s skeleton submissions was largely wasted due to the late service of the Defendant s Affirmation. In light of the above, there is no need for me to consider Mr Ng s reference to the commentary in Hong Kong Civil Procedure 2008 Vol.1 in relation to Order 14 rule 7. This is not a case where the Plaintiff was aware of an arguable defence prior to the issue of the Summons. Even though the usual order for costs of an Order 14 application where a defendant is given unconditional leave to defend is for costs to be in the cause, taking into account all of the above circumstances, I find that the appropriate order for costs is for the Defendant to pay the Plaintiff costs of the Summons (including all costs reserved, if any, but excluding the costs of the hearing before me on 2nd January 2008) to be taxed if not agreed. The Plaintiff asked for costs to be paid forthwith. I do not consider this is an appropriate case for forthwith payment. The above award of costs is to be paid in any event. (Marlene Ng) Representation : District Court Judge Ms Joey Tse of Messrs Kennedys for the Plaintiff. Mr Andrew Ng of Messrs Andrew Y W Ng & Co for the Defendant. PAGE - PAGE DCCJ5197/2006/Ruling on Costs DCCJ5197/2006/Ruling on Costs A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V &`#$ @\\Hc-oa-ws-656\HP LaserJet 1200 Series PCL 6 Ne00: winspool HP LaserJet 1200 Series PCL 6 \\Hc-oa-ws-656\HP LaserJet 1200 Letter HP LaserJet 1200 Series PCL 6 Hjc)b 97wfj B]gT )Yn@{i9Z -9]pVvr) \\Hc-oa-ws-656\HP LaserJet 1200 Letter HP LaserJet 1200 Series PCL 6 Hjc)b 97wfj B]gT )Yn@{i9Z -9]pVvr) Normal.dot setup Microsoft Word 9.0 Title Microsoft Word Document MSWordDoc Word.Document.8