Houston Machinery Co. Ltd. v. Bermian Ltd.

HCA020996/1998

HCA 20996/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 20996 OF 1998

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Coram: Hon Sakhrani J in Chambers

Dates of Hearing: 25 and 26 January 2000

Date of Judgment: 26 January 2000

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J U D G M E N T

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1. The facts in this action are closely related to the facts in action No. HCA 20995/1998. I have already given my judgment in the appeal in that action.

2. In this action, the Plaintiff claims against the Defendant for

(a)	the sum of $802,310 being the outstanding balance of the price of goods sold and delivered to the Defendant by the Plaintiff;
(b)	alternatively, the sum of $650,000 being the amount of 4 dishonoured cheques issued by the Defendant to the Plaintiff in purported payment of the said balance of $802,310 under (a) above; and
(c)	the sum of $250,000 being money lent by the Plaintiff to the Defendant on or about 9 February 1994.

The Plaintiff sought summary judgment and on 30 December 1999, Master B Kwan dismissed the Plaintiff's application. This is an appeal from that decision.

3. It is pleaded in the Amended Statement of Claim that the total price for the goods sold and delivered was $1,012,310 but that there has been part payment in the total sum of $210,000. It is also pleaded that in purported part payment, the Defendant drew a total of 4 cheques particularised in para.2 of the Amended Statement of Claim totalling $650,000. These were dishonoured on presentation for payment.

4. The defence raised is that there has been no delivery of goods by the Plaintiff to the Defendant as alleged and hence, no liability to pay for the price of goods sold and delivered under the contract sued on. Also the payments totalling $210,000 said by the Plaintiff to be in part payment for the price of goods sold and delivered, the Defendant says that the $210,000 was in part repayment of the loan of $250,000 as stated in the affirmations of the Defendant Luk Chung Shing and Li Fai Wan in HCA No. 20995/1998. I have already referred to these in my judgment in that action. There is some support for the fact that the $210,000 paid by the Defendant was not for partial payment of goods sold and delivered but was for payment towards repayment of the loan of $250,000, leaving a balance of $40,000 owing by the Defendant to the Plaintiff.

5. The defence is that the goods under the contract of sale in question have never been delivered to the Plaintiff. Although the matter has been put fairly and squarely in issue, the Plaintiff has not produced any delivery orders showing delivery of the goods to the Defendant. The terms of payment under the contract provided that the payment should be about 60 days after signing of the delivery order.

6. Mr Packwood, for the Plaintiff, relies on the documents produced by the Plaintiff, including the godown warrant and letter of credit issued in favour of the Defendant, to show that there has, in fact, been delivery of goods under the contract to the Defendant. The Plaintiff says that the Defendant was in financial difficulties and the Plaintiff agreed to assist. The Defendant's goods had been detained by a godown on the order of Wing Hang Bank Ltd. To assist the Defendant, the Plaintiff agreed to purchase the goods shown in the godown warrant for $995,000, and a letter of credit was issued by Dao Heng Bank Ltd for this purpose. The letter of credit produced was issued on 21 December 1994. However, as Ms Chan for the Defendant has pointed out, it is questionable whether this letter of credit related to the godown warrant produced which was dated 11 October 1994 as one of the special conditions under the letter of credit provided that "documents to be presented within 21 days after the date of the godown warrant". 21 days after the date of the godown warrant relied on by the Plaintiff would have been well before the date of the issuance of the letter of credit which was only done on 21 December 1994. This is not a matter that can be resolved at this stage.

7. The Plaintiff also says that the Defendant agreed to purchase the goods back from the Plaintiff at $1,012,310 as evidenced by the contract and that the goods have been delivered to the Defendant. This is disputed by the Defendant.

8. I accept Ms Chan's submission that the documents produced by the Plaintiff are not satisfactory evidence of delivery of the goods under the contract. There is, in my view, a triable issue raised.

9. Furthermore, as regards the 4 cheques totalling $650,000, the Defendant has affirmed that the cheques were part of various payments between the Plaintiff and the Defendant under their current accounts arrangement and were not related to the sale and purchase of goods as alleged by the Plaintiff. The payments of the cheques were subsequently rendered unnecessary as a result of settlement of other payments in the current accounts between the Plaintiff and the Defendant. This is also a question of fact which cannot be resolved at this stage.

10. I am satisfied that there are disputes of fact raised and that the Defendant is entitled to unconditional leave to defend on the claim in respect of the 4 cheques for $650,000.

11. On the claim for $250,000, on the Defendant's case, the sum of $210,000 has already been repaid towards the loan of $250,000, leaving a balance of $40,000. I have already mentioned that the evidence filed by the Defendant in the other action, HCA 20995/1998, tends to support this. Apart from the balance of $40,000, I am satisfied that a triable issue has been raised. Ms Chan has submitted that the Defendant cannot object to the Plaintiff obtaining judgment for the sum of $40,000 and to that limited extent, I allow the appeal giving judgment to the Plaintiff for $40,000.

Representation:

Mr Edwin Mark Ian Packwood, of Messrs Wong, Packwood & Co., for the Plaintiff

Ms Linda C F Chan, instructed by Messrs S K Lam, Alfred Chan & Co., for the Defendant