Strong Base Services Ltd v. Geroma Electronic Ltd and Another

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Coram: Hon. Litton, V.R. , Godfrey & Liu, JJ.A.

Date of hearing: 6 March 1996

Date of judgment: 6 March 1996

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JUDGMENT

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Godfrey, J.A. :

Introduction

1. This is an appeal by the 1st defendant from an order of Yam, J. made on 30 October 1995. The judge made his order on appeal from the Registrar, who, on 31 October 1995, on a summons under 0.14 for summary judgment taken out by the plaintiff on 1 May 1995, had given judgment for the plaintiff against the 1st defendant for $1,158,608 together with interest and costs. The judge, taking the view that the 1st defendant had demonstrated the existence of a genuine dispute on issues of fact which, if decided at the trial in the 1st defendant's favour, would entitle the 1st defendant to succeed, reversed the Registrar and gave the 1st defendant unconditional leave to defend. The plaintiff appeals to this court.

The function of the Court of Appeal

2. I propose first to consider the function of the Court of Appeal on an appeal from an order of a judge giving a defendant unconditional leave to defend on a plaintiff's application under Order 14. In Lloyds Bank Ltd. v. Ellis-Fewster and another, [1983] 1 WLR 559, Sir John Donaldson M.R. , in relation to such a decision by a judge, said this (at p.562) :

"He thought there was a triable issue. In a case where the friability of the issue depends upon evidence as opposed to law, I would think it a very surprising situation if the Court of Appeal was prepared to disturb the judge's view. If one judge thinks there is a triable issue, it would be surprising if two or three judges think there is not."

3. In European Asian Bank A.G. v. Punjab & Sind Bank (No.2) [1983] 1 WLR 642, Goff L.J. , on an identical point, said this (at p.654):

"If the judge has already decided, on the evidence, that there is a triable issue on a question of fact, it must in the very nature of things be unlikely that this court will interfere with his decision and decide that no trial should take place; because, where such a conclusion has already been reached by a judge, this court will be very reluctant to hold that there is no issue or question which ought to be tried."

4. In R. G. Carter Ltd. v. Clarke [1990] l WLR 578, Lord Donaldson of Lymington M. R. , returning to the question, said this (at p. 583):

He continued:

"By contrast, the dismissal of an application for summary judgment or, which is the same thing, the making of an order giving unconditional leave to defend leaves the rights of both parties wholly intact and the parties with everything to play for. All that has happened is that the court has declined to take a short cut."

5. As he went on to point out (at p.584), against this background it was not surprising that until relatively recently there was no right of appeal against the grant of unconditional leave to defend.

The present case

6. In the present case, Mr. Jat Sew Tong, for the plaintiff, in an attractive argument, recognised the difficulties faced by a plaintiff who seeks to appeal to this court against the grant of unconditional leave to defend to the defendant. He bravely asserted that he was able to surmount them: but in the end I have, for my part, come to the conclusion that the burden was too heavy for even so able an advocate as Mr. Jat Sew Tong to succeed in discharging it.

The facts

7. I turn then to the facts, pausing only to remark that, as it would be inappropriate to deal with the facts at any length when they will have to be properly investigated by the judge at the trial of the action, it will be sufficient if they are summarised as follows.

8. The plaintiff is a manufacturer of electrical goods, including in particular television, telephone and speaker wall sockets. It has a close commercial relationship with the 1st defendant in particular in that it shares, or shared, a common director in the person of the 2nd defendant. Between 1993 and 1995, the plaintiff supplied the 1st defendant with goods for resale (as the 1st defendant knew) to a buyer in Germany. It is a startling feature of the case that for a very considerable time the 1st defendant left the plaintiff unpaid for goods delivered by the plaintiff to the 1st defendant. It is an equally startling feature of the case that although it appears that complaints were made by the German buyer to the 1st defendant as to defects in the goods, and as to a failure to fulfil altogether certain orders for those goods, no protest of any sort appears to have been made by the 1st defendant to the plaintiff until the very end of the saga, when proceedings were instituted.

9. Those proceedings included the plaintiff's action in which this present application for summary judgment was made. The writ was issued on 11 April 1995, claiming payment of $1,158,608 for goods sold and delivered. They included also the action instituted by the 1st defendant against the plaintiff two days later, on 13 April 1995, in which the 1st defendant claimed damages for the failure on the part of the plaintiff to deliver goods, causing a loss of profits for which it claimed $612,500, and a liability to compensate the German buyers in the sum of $725,800.

10. For myself, I have no doubt that this is a genuine commercial dispute. Although there are a number of odd and, indeed, suspicious features, about the 1st defendant's case, the allegation made by the plaintiff that it is obviously a cock and bull story, and practically moonshine (an allegation which the plaintiff has to make in order to succeed in this appeal) seems to me to be an allegation which is simply not made out on the material before us. There is material which justifies some suspicion as to the 1st defendant's case, but nowhere near sufficient for us to hold that the 1st defendant is to be sent away from the seat of judgment without being given the opportunity to defend itself at a trial.

Conclusion

11. The conclusion to which I have come is that the 1st defendant must be given unconditional leave to defend. Although it might have been open to the judge to have granted conditional leave to defend (the "fall back" position that the plaintiff urged us to take here) it is not in my view open to us to substitute for his judgment giving unconditional leave to defend an order that conditional leave to defend ought to be granted instead. As Mr. Kenneth Chan for the 1st defendant pointed out, the judge, having decided that unconditional leave to defend ought be granted, had got past the point of considering whether conditional leave to defend might be granted as an alternative. In my view, we ought not to disturb the decision of the judge who, having evaluated the material before him, came to the conclusion that the 1st defendant had demonstrated triable issues which could not be decided on affidavit evidence. That is sufficient to dispose of the appeal, but I should mention one other feature of the case, a minor claim made by the plaintiff against the 1st defendant in relation to what has been called in this court the "shortfall" agreement, under which, in exchange for exclusivity of supply, the 1st defendant was to pay $1 for each unit under 350,000 units per year purchased from the plaintiff by the 1st defendant. This, although a small sum, is equally a matter of dispute. It is unnecessary and would be undesirable for me to say anything more about it. I am for my part satisfied that the dispute is genuine. I do not accept Mr. Jat's submission that the judge wrongly allowed his view about this minor dispute to affect his judgment as to the more important matters in dispute. The only other point made by the plaintiff to which I ought to refer is that no credence whatever should be attached to a letter dated 28 February 1995 in which the German buyers appear to have accepted a payment of $725,800 in settlement of their claim for compensation. This letter had been preceded by correspondence on the subject between the German buyers and the 1st defendant, and I am not for my part prepared to treat the letter as obviously a fabrication.

12. For all these reasons, and with a renewed expression of gratitude to Mr. Jat for his skilful conduct of the plaintiff's case upon this appeal, I am of the opinion that we must dismiss it.

Liu, J. A. :

13. On more aspects than one, both the plaintiff and the 1st defendant had been less than active, but the allegations made on the averments would seem to merit further and full investigation. I agree, for the reasons given by my Lord, Godfrey, J.A. that there is nothing to encourage or allow us to interfere with the order made under 0.14 by Yam, J. and that the appeal should be dismissed.

Litton, V. P. :

14. I also agree that this appeal must be dismissed.

Representation:

Mr. Jat Sew Tong (M/s. Wong, Hui & Co.) for Appellant/Plaintiff

Mr. Kenneth C.L. Chan (M/s. T.C. Lau & Co.) for Respondent/1st Defendant