The Hongkong & Shanghai Banking Corporation Ltd and Another v. Sky Plastic Co Ltd
Read the full judgment text of HCA 467/1968 on BabelCite. This High Court CFI judgment was delivered on 11 June 1968.
1. This is an application made by the plaintiffs under O. 14 r. l. for leave to sign final judgment against the defendant company. The facts may be briefly stated.
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HCA000467/1968 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 467 OF 1968 -----------------
----------------- Coram: Rigby, S.P.J. and in Chambers. Date of Judgment: 11 June 1968 ----------------- JUDGMENT ----------------- 1. This is an application made by the plaintiffs under O. 14 r. l. for leave to sign final judgment against the defendant company. The facts may be briefly stated. 2. The first plaintiff is The Hongkong and Shanghai Banking Corporation, hereinafter referred to as "The Bank". The second plaintiff is a limited liability company. In 1965 the second plaintiff issued two floating charges covering "all their undertaking, property and assets whatsoever and wheresoever both present and future", dated respectively the 8th March and the 9th December, and one specific charge dated the 4th November, to the Bank as security for very substantial sums of money advanced to them. All those charges were duly and properly registered. 3. By paragraph 4 of their Statement of Claim the plaintiffs claim that the specific charge of the 4th November included the following property :-
4. In or about the month of August 1967 the second plaintiff went into voluntary liquidation and on the 12th August a compulsory Winding Up Order was made, at the suit of the second plaintiff, by order of the court. 5. On the 14th August, in exercise of the powers accorded to them under all three charges, The Bank appointed receivers with power to get in and collect the second plaintiff's property including, inter alia, the machines already specified and which, it is said, still remained specifically charged to The Bank. 6. By paragraph 7 of the Statement of Claim the plaintiffs claim that in or about the month of June 1967, whilst the said machines remained specifically charged to The Bank, and without the consent of The Bank, the defendant company wrongfully took possession of the said machines, having allegedly purchased them from the second plaintiff. 7. By paragraph 8 of the Statement of Claim both plaintiffs aver that "Despite repeated demands made both orally and in writing the defendant company has refused and continues to refuse to deliver up the said machines to the plaintiffs, or either of them, and wrongfully remains in possession of the said machines and has converted the same for its own use or benefit." 8. The plaintiffs now claim :-
9. The application for summary judgment is supported by affidavit. 10. A Statement of Defence was filed on the 22nd April, the same day as the summons for leave to sign final judgment was filed. 11. As I understand the defence put forward it is this: The defendant company admits possession of the machines referred to in the Statement of Claim. They maintain, however, that these machines were sold and delivered to them by the second plaintiff in June 1967. They concede that all the second plaintiff's property, including these machines, were covered by the floating charges made by the second plaintiff in favour of The Bank in March and December 1967. But they maintain as a matter of law that such property remained unencumbered by these floating charges until an event happened on which the floating charge, according to its terms, crystallized and became a fixed charge. Until that event happened - and in this case it happened only upon the appointment of the receivers on the 14th August 1967 - the second plaintiff was at liberty to dispose of all or any of the property covered by the floating charges. The sale to the defendant company of these machines being in June 1967 - and, therefore, before the appointment of the receivers in August 1967 - it was a good and valid sale. Mr. Mills-Owens, for the plaintiffs, concedes that for the purposes of this case that is a good and valid argument in law in so far as the floating charges are concerned. 12. It remains, then, to consider the position in so far as the property claimed is allegedly covered by the specific charge. As to that, Mr. Litton, counsel for the defence, puts forward two arguments. First, he says it is necessary to consider the precise terms of the Deed of Charge itself for the purpose of ascertaining what restrictions are imposed upon the property which is the subject matter of the charge. He draws attention to, and relies upon, the wording of the charge, which is in the following terms:-
13. Mr. Litton maintains that those words are only an injunction upon the second plaintiff from removing any part of the property charged to some other place, the property continuing to remain in the possession of the second plaintiff. He contends that those words do not, and cannot, amount to a prohibition upon the company from selling any part of that property to a third party. With respect, that argument seems to me thoroughly unsound. Whilst it is true that the words used might have been more carefully chosen so as to impose an express prohibition of sale of any part of the property subject to the charge, I am clearly of the opinion that the words "will not remove" are sufficiently wide to cover any act of removal, whether for the purpose of removing from one place to another to suit the convenience of the second plaintiff, the property still remaining in their possession, or to remove, or cause or allow or permit to be removed, for the purpose of sale to a third party. That argument accordingly fails. 14. Mr. Litton then submitted that one must look very carefully at the Schedule to the Deed of Charge to see precisely what property and what machinery was covered by the Charge. As I understood Mr. Litton, he conceded that the last two items were specifically covered by the Deed of Charge. He denied, however, that the first three items were so covered. He referred to the particulars in respect of these three items appearing in paragraph 4 of the Statement of Claim and, by reference to the Schedule contained in the Deed of Specific Charge he pointed out that there were no machines so described as Model YD-50, Model Y2D-50 and Model TPA-50 appearing in the schedule. 15. Mr. Litton agreed with the comment I then made that in view of the apparent discrepancy between the machinery as described in the Statement of Claim and as described in the Schedule it might have been desirable, or even essential, for the summons for judgment to have been supported by an affidavit to the effect that the machinery referred to in the Statement of Claim was in fact identical with the machinery referred to in the Schedule. Mr. Mills-Owens, at a later stage in the hearing before me, asked leave to file an affidavit to that effect. That application was opposed by Mr. Litton. Mr. Mills-Owens pointed out, however - and I agree - that the Statement of Defence does not condescend to any particulars; that there is nothing in it from which it could reasonably be inferred or anticipated that the defence now put forward would be raised; nor had any such evidence been envisaged by any affidavit filed in answer to the summons for judgment. In the circumstances I thought it proper to grant an adjournment to enable the plaintiffs to have the opportunity to file an affidavit, if they could, to meet the apparent discrepancy between the machines as described in the particulars of the Statement of Claim and as described in the Schedule to the Deed of Fixed Charge. That is the position in which the matter now comes before me at this resumed hearing. 16. Mr. Litton did, however, raise a query as to the relief which the plaintiffs, and each of them, now claim by their Statement of Claim. There is, in my view, considerable substance in that query in so far as the second plaintiff is concerned. Upon the pleadings before me it is certainly open to argument that the second plaintiff did in fact enter into a contract of sale of these machines to the defendant company in June 1967, and in pursuance of that contract the machines were sold and delivered to the defendant company for $181,717.20. If that is in fact the true position, whatever may be the rights of The Bank as against the defendant company, it is difficult to see what possible rights the second plaintiff can have as against the defendant company and what relief he is entitled to claim. 17. The two further affidavits, together with the documentary exhibits attached to them, now satisfy me that the machines described in the Schedule to the Fixed Charge are in fact identical with the machines described in the particulars in paragraph 4 of the Statement of Claim, and are the machines allegedly sold by the second plaintiff to the defendant company in or about the month of June 1967, which still remain in their possession and are the subject matter of this Statement of Claim. Mr. Litton contends that those affidavits still do not meet the point of his argument; the question being whether an ordinary member of the public dealing with the second plaintiff and looking at the Schedule to the Fixed Charge, would consider the description given in that Schedule of the machinery sufficient to deter him from purchasing other machinery of the company which, although identical in regard to the description of the machinery had the numerals attached YD-50, Y2D-50, TPA-50, which numerals were not similarly attached to the machinery as described in the Schedule itself. In my view, the short answer to that question is that any member of the public buying machinery of this nature and presumably having knowledge and experience of such machinery, would certainly be put on enquiry, having regard to the machinery as described in the Schedule to the Fixed Charge, as to whether the machinery offered to him for sale was not in fact the same machinery as described in the Schedule to the Fixed Charge. There is really no doubt in my mind that the defence sought to be raised by the suggestion that the machinery purchased by the defendant company from the second plaintiff was not, to the knowledge of the defendant company at all material times, the same machinery as that described in the Schedule to the Fixed Charge, is really an entirely specious defence. 18. The procedure provided by O. 14 r. 1. for enabling a plaintiff to apply for leave to sign final judgment is no doubt in the appropriate case an eminently desirable and satisfactory way of obtaining judgment expeditiously. In many other cases it is, however, a risk which a plaintiff runs and which, if followed, may often result in the plaintiff's claim taking a great deal longer to be satisfied than if he had proceeded in the ordinary way by way of writ of summons and with a trial in the normal manner. Recent decisions of the Full Court bear eloquent testimony to this fact and to the risks which plaintiffs run by resorting to these applications for summary judgment. But having, in the course of these proceedings, made observations of this nature to the plaintiffs' counsel, I can do no more than proceed upon the application as it now appears to me. 19. On the facts before me and on such law as appears to me to be applicable, I am satisfied that there is really no substance, whether in law or upon the facts, in the defence which the defendant company seeks to raise. There must accordingly be leave for the first plaintiff to sign final judgment against the defendant company for :-
20. The defendant company must pay the costs of this application. 21. As regards the second plaintiff, bearing in mind that it is at least open to strong argument that there was a sale of these machines by the second plaintiff to the defendant company in or about the month of June 1967 for the sum of $181,717.20, and that in pursuance of that sale the machines were delivered to the defendant company, it must surely be open to argument as to whether the second plaintiff, in those circumstances, is entitled to any relief whatsoever as against the defendant company. However, it is unnecessary for me to go so far as that; it is sufficient for me only to say that at this stage I am in no way satisfied that the second plaintiff is entitled to leave to enter final judgment against the defendant company for any part of the relief which he now claims. 22. The application of the second plaintiff is therefore dismissed with costs.
11th June, 1968. Representation: Mills-Owens (Johnson, Stokes & Master) for Plaintiffs. Litton (Tso & Co,) for Defendant. |