Venetian Coati Ltd v. Bright & Bright Ltd

HCA 1034/2020

[2021] HKCFI 390

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1034 OF 2020

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Before: Hon Au-Yeung J in Chambers

Date of Hearing: 17 February 2021

Date of Decision: 17 February 2021

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D E C I S I O N

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A. INTRODUCTION

1.A Master gave summary judgment in favour of the Plaintiff for refund of the sum ofHK$10,725,000.  That amount was an advance deposit paid by the Plaintiff to the Defendant under an agreement for the procurement ofmasks which were not delivered.

2.There are before me 2 summonses filed by theDefendant:

(a)  For leave to appeal out of time; and

(b)  For leave to adduce the affirmation of Chan Hung LuHenry (“Chan’s affirmation”) on appeal.

B.  PROCEDURAL HISTORY

3.The Plaintiff commenced this action by writ on 23June 2020 and filed its amended statement of claim on 23 July 2020.  The Defendant did not file any defence.

4.The Plaintiff issued the summons and affirmation for summary judgment on 3 August 2020.  The Defendant did not file any affirmation inopposition.

5.Summary judgment was granted to the Plaintiff at the call-over hearing on 12 October 2020.

6.The Defendant filed the notice of appeal on 30 December 2020.  On the same day, the Defendant filed an affirmation in support of its application for leave to appeal out of time.  It was only on 9 February 2021 that the Defendant filed a summons for leave to adduce Chan’s affirmation for the purpose of the appeal.

C.  FACTS

7.The facts are not in dispute and are taken from the helpful summary of Mr Leo Yu, counsel for the Defendant.

8.The Plaintiff and the Defendant entered into an Agreement by which the Plaintiff agreed to purchase and the Defendant agreed to sell 500,000 NOISH approved N95 masks (“the masks”) for a total price ofHK$10,725,000.

9.The Agreement was evidenced in writing bythe Defendant’s proforma invoice dated 9 April 2020 (“the Invoice”) which stipulated, amongst others,

(a)  The detailed description and standard of themasks;

(b)  The lead timefor delivery to be 30 days upon receipt of the deposit from the buyer; and

(c)  100% payment in advance.

10.The Plaintiff alleged that the Agreement was also evidenced by:

(a)  The Plaintiff’s Purchase Order dated 14 April 2020 (“thePO”); and

(b)  The Plaintiff’s Global Enterprise Purchase Order – General Termsand Conditions incorporated in the Agreement by reference in the PO (“GT&C”) which stipulated that (i) the Plaintiff may terminate the Agreement upon the Defendant’s event of default; and (ii) time was of the essence.

11.The Plaintiff paid HK$10,725,000 on 15 April 2020 and it was received by the Defendant on the 17^th. The due date for delivery was 16 May 2020, taking into account the lead time.

12.The lead time was later extended to 19 May 2020 but the Defendant had only delivered 3,000 pieces on 29 April. Those 3,000 pieces were rejected by the Plaintiff for not meeting the quality requirement.  The rest of the masks were never delivered.

D.  LEGALPRINCIPLES

D1.  Extension of time for appeal against a Master’s decision

13.In considering whether to extend time to appeal, the Court has to consider all relevant factors, namely, the length of thedelay, the explanations for thedelay, merits of the appeal and prejudice to the other party if leave isgranted.

D2.  Appeal against a Master’s decision

14.Appeal against a Master’s decisionis by way of rehearing.  The judge considers the case afresh.

15.Under O.58 r.1(5) of RHC, further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on appeal on special grounds if the conditions laid down in Ladd v. Marshall [1945] 1 WLR 1489 aresatisfied:

(a)  The evidence could not have been obtained with reasonable diligence for use at the hearingbelow;

(b)  The evidence is such that, if given, would probably have an important influence on the result of the case though it need not bedecisive; and

(c)  The evidence is such as is presumably to be believed. It need not be incontrovertible. It is sufficient that it is apparentlycredible.

D3.  Principles for the grant of summary judgment under Order 14

16.The principles governing summary judgment application aretrite:

(a)  The burden is on the defendant to show a bona fide defence or some other reason for a trial.  This is normally done by affidavit and it is incumbent upon the defendant to “condescend upon particulars” in suchaffidavit;

(b)  The mere assertion in an affidavit of a given situation by the defendant does not, ipso facto, ground leave todefend;

(c)  Order 14 is only for clear cases, and ought not to be applied in cases where there are serious material factual disputes, or a difficult point of law not fit for summary determination, unless it is obvious that the defence put forward is “frivolous and practically moonshine”;and

(d)  The Court should not embark on a mini trial on affidavits. Where there are factual disputes, the issue is not whether the defendant’s assertions are to be believed; it is whether those assertions arebelievable.

See On Loong Investment Company Ltd v IO of Wah Luen Industrial Centre, HCA 341/2014, unrep, 8 January 2016, at §20, per Au-Yeung J.

17.The proper approach to the relevant test of whether the defendant has raised credible triable issues isalsowell-settled. Any alleged defence will not betaken at face value but, rather, have its inherent probability considered and tested against the evidence, including contemporaneous documents, and whether there has been inconsistency in defence, or whether the defence is raised only recently despite earlier opportunity to do so: Time Rich 08 Limited v DBE (HK) Limited & ors[2018] HKCA 404, at §5.2, per Cheung JA.

E.  LEAVE TO APPEAL OUT OF TIME

18.According to §5 of Chan’s affirmation, the Defendant was aware of there being an application for summary judgment and it had been giving instructions to its solicitors.  The Defendant was represented by solicitors at the hearing before the Master.  The time for appeal would have been within the knowledge of the Defendant’s solicitors.  And yet the Defendant only filed the summons for leave to appeal out of time on the day the Master made a garnishee order absolute against it in respect of the judgment debt.

19.Mr Yu admitted, correctly in my view, there was no explanation as to why the Defendant was out of time for 2½ months in seeking to appeal.  For this ground alone, leave to appeal out of time should be refused.

20.If I am wrong, I will consider the merits of the appeal under section G below.

F,  LEAVE TO ADDUCE CHAN’S AFFIRMATION

21.The Defendant plainly could not meet the first limb of Ladd v Marshall.  The contents of Chan’s affirmation were all available before the hearing of the O14 summons.  The Defendant did not put in an affirmation before the Master.  They should not be allowed to put in one on appeal.

22.Chan explained that while he gave instructions to his legal representatives to resist the summary judgment application, he had not had the opportunity to have his affirmation notarized due to his travels to different countries during 16September 2020 to 22December 2020.  Only after he had returned to the United Kingdom on 15 September could he find a notary.  Chan’s affirmation was only notarized on 23 December 2020 in London.

23.I am unable to accept such explanations:

(1)  As stated above, Chan was aware of the O14 summons and had given instructions to the solicitors to defend.  There was 1½ months from the date of issue of the O14 summons to 15 September and another month from 15 September to the date of hearing of the O14 summons.  There had been ample time for the Defendant to find a notary had he wanted to.

(2)  Chan’s affirmation was not complicated.  The only non-documented piece of evidence was the alleged oral agreement that the lead time need not be strictly adhered to (“the Oral Agreement”).  It was not difficult for the solicitors to prepare a draft for Chan.  And yet Chan had not even attempted to serve an unsworn affirmation signed by him with an undertaking of his solicitors to file the affirmation when it was sworn.

G.  MERITS OF THE INTENDED APPEAL

24.Chan’s affirmation alleged that the Oral Agreement arose due to a 2/3 increase of quantity of the masks from 300,000 to 500,000.  Further, the Plaintiff unilaterally issued the PO and GT&C 5 days after the Defendant’s issuance of the Invoice.  The Plaintiff claimed that it had the sole discretion to terminate the Agreement and alleged that time was of the essence by virtue of the terms stipulated in the GT&C. However, the Invoice had already included all the essential terms for the Agreement and there was no evidence showing that the PO and GT&C were agreed by theDefendant.

25.Even assuming that the Oral Agreement existed, these issues raised by the Defendant are not triable for the following reasons:

(1)  The Invoice was issued by the Defendant itself, stating the quantity to be 500,000 pieces with a lead time of 30 days.  This term was not altered in the PO.

(2)  About 2 weeks after the Plaintiff issued the PO, Chan in his e-mail dated 29 April 2020 asked if the Plaintiff would order an additional 500,000 pieces to make a total order of 1 million pieces for delivery by 18-20 May 2020.  Once again, the delivery time was suggested by the Defendant based on the lead time.

(3)  Even if the 30 days’ lead time was applicable to only 300,000 masks, the Defendant’s purported delivery of 3,000 was woefully deficient.

(4)  Even if the 30 days’ lead time need not be strictly followed, the Plaintiff had specified a date for delivery (19 May), a date mentioned in the Defendant’s own email dated 1 May 2020.

(5)  The Defendant had accepted the terms of the PO and GT&C by accepting payment without objection to the terms and purporting to make partial delivery of the masks.  In fact, the Defendant had paid the deposit to its own supplier and a referral fee to a sales person.  Those were used as reasons to reject the Plaintiff’s request for refund.

(6)  The Defendant had offered to pay back $7 million to the Plaintiff by 28 June 2020, without asserting the Oral Agreement.

(7)  The 3,000 pieces fell below standard.  There was no further delivery.  There was simply total failure of consideration.

26.There are no merits in the intended appeal.

H.  PREJUDICE TO THE PLAINTIFF

27.Mr Yu submits that there was no conceivable prejudice to the Plaintiff if leave is granted to appeal out of time.  I am unable to agree.  Ample opportunity had been given by the Plaintiff to the Defendant to deliver the masks before action, to refund the money before action, and to defend the O14 summons.  The Plaintiff had been deprived of its money from 20 May 2020.  The Plaintiff should not be deprived of the fruits of its judgment without any triable issue raised by the Defendant.

I.  CONCLUSION

28.There being no valid explanation for the delay in lodging the appeal and no triable issues shown, I decline to grant extension of time for appeal.  As the first limb of Ladd v Marshall was not met, I also decline to give leave to adduce Chan’s affirmation on appeal.  Both summonses are thus dismissed.

29.This application completely lacks merits.  I make an order nisi that the Defendant should bear costs of the Plaintiff on indemnity basis.  The Plaintiff had not produced a costs statement with its skeleton submission until asked by the Court.  This failure to comply with the practice direction justifies reduction in solicitors’ fees.  I summarily assess costs at $90,000.

30.I thank Mr Vincent Law and Mr Leo Yu for their assistance.

Mr Vincent Law, Solicitor Advocate, of Mayer Brown, for the Plaintiff

Mr Leo Yu, instructed by Lim & Lok, for the Defendant