Caffall Bros. Forest Products, Inc. v. Chie Ku Yin t/a Sin Lie International Enterpises

Case No.HCA 4562/1986

Court

High Court CFI

Date14 Oct 1986

Judge—

Case Document

100%Judiciary

HCA004562/1986

1986, No. A4562

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

CAFFALL BROS. FOREST PRODUCTS, INC.

Plaintiff

AND

CHIE KU YIN, t/a SIN LIE INTERNATIONAL ENTERPRISES

Defendant

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Coram: Hon. Liu, J. in Court

Date of hearing: 14 October 1986

Date of delivery of judgment: 14 October 1986

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JUDGMENT

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1. The plaintiff's claim against the defendant is for US$54,326.76 with interest thereon at the rate specified in the Statement of Claim and costs. The judgment as finally granted by the Master on an Order 14 application was for slightly less, having taken into account the US$197.07 extracted out of the defendant by way of execution in the United States of America of a judgment given in Oregon.

2. This action is founded on a foreign judgment obtained by the plaintiff against the defendant in Oregon in the sum of US$54,326.76. That the foreign judgment is final and conclusive is implicit in the allegation, though it is not specifically pleaded as such in the Statement of Claim.

3. The Oregon judgment ends with the following passage:

" There is no just reason to delay entry of a judgment on this claim and this final judgment is ordered pursuant to Rule 54(b), Federal Rules of Civil Procedure. "

4. The defendant's Grounds of Appeal can be broadly divided into two : First, it was contended that the plaintiff had failed to verify, in its Order 14 application, the Oregon judgment sued upon as being final and conclusive. Secondly, it was further argued on behalf of the defendant by Mr. Bell that the defendant was entitled to set off a sum of US$28,500.00 against the plaintiff's claim in this action on the Oregon foreign judgment.

5. I will deal with counsel's submissions in the same order as they were put. It was conceded by Miss Stewart on behalf of the plaintiff that like the Statement of Claim, nowhere in the verifying affidavit of Mr. Caffall was it stated that the Oregon foreign judgment was final and conclusive. Counsel sought to place some reliance on the wording of the Oregon foreign judgment which purports to have been entered as a final judgment. I have set out that particular passage. I am not very impressed by what seems to be the label that documents seeks to put on itself. However, Miss Stewart proceeded to draw my attention to paragraphs 2 and 13 of the affirmation of Mr. Chie Ku-yin. In his paragraph 2, Mr. Chie stated :

" The plaintiff obtained a final judgment against myself in the State of Oregon in the United States of America. "

In paragraph 13, Mr. Chie disclosed the American execution against him to the extent of US$197.07 and sought to take credit of that partial enforcement. The very fact that the plaintiff relied on the consequence of partial execution of this Oregon foreign judgment before the learned Master, his reference to it on affirmation as a final judgment and to its execution, and the lack of any material pointing to the contrary are together, in my view, sufficient verification of the implicit assertion of the plaintiff that the judgment sued upon in this action against the defendant is final and conclusive.

6. In my judgment, the defendant fails on this limb.

7. Next I turn to the other argument of the defendant on the alleged set-off. The defendant allegedly paid US$28,500 for berth fee. The plaintiff is said to have agreed to be responsible for the same sum. Mr. Bell submitted on behalf of the defendant that whether or not there was any enforceable agreement between the plaintiff and the defendant on this $28,500 berth fee, the very payment the defendant allegedly made on behalf of the plaintiff would found a good set-off against the plaintiff's claim in this action on the Oregon foreign judgment. Much was sought to be made by Miss Stewart of a passage in the defendant's telex to the plaintiff conveying the defendant's readiness to accept US$19,689.60. Quick always to his client's rescue, Mr. Bell explained that if indeed there had been no enforceable agreement between the plaintiff and the defendant as regards the berth fee, the reference to this sum of US$19,689.60 could not have been an unambiguous acceptance of the defendant of a lesser sum in satisfaction of the actual berth fee paid. In the circumstances, it was, so counsel contended, to be taken as no more than an amount offered in negotiation.

8. As to whether or not a set-off can now be raised against the plaintiff's claim on the Oregon foreign judgment, one has to bear in mind that the extent to which a foreign judgment is effective as res judicata has not been quite settled. See p.651 Cheshire & North "Private International Law", 10th ed. But what seems to have been established by the authorities is, in my view, sufficient to dispose of the arguments canvassed on behalf of the defendant. Page 652 of Cheshire & North contains the following paragraph :

In pursuance of this doctrine it was clearly established that a judgment debtor sued in England could not impeach a foreign decision, either on the ground that in the original proceedings he had been denied some defence available to him, or on the ground that the foreign court had mistaken its own law or had reached an erroneous conclusion as to the facts. Thus in Henderson v. Henderson : It was pleaded to an action on a Newfoundland judgment, (a) that the plaintiff had brought the original suit in right of her husband without proving any right to sue in a representative character, and (b) that the defendant had a right to set-off against the husband.

Both these pleas were held bad. "

9. On the face of it, the passage is against the defendant. Through the industry of Mr. Bell, I was well assisted on the ratio decidendi of Henderson v. Henderson, [1844] 6 Q.B.288. What transpired was: The widow plaintiff sued in a representative character in Newfoundland and a judgment was given in her favour against the defendant. It was held by Lord Denman C. J. in an English action in which the plaintiff sued in her own capacity against the defendant who sought to raise a defence of set-off on account of an alleged debt from the deceased husband, that the defendant could not succeed by reason that the plaintiff sued in England in her own right and by reason that :

"..... the set-off can only be maintained on the ground of an alleged defect in the plaintiff's title in the former suit in Newfoundland which ought to have been made the ground of defence there." See p.298 ibid.

10. I share the view of Miss Stewart that the decision of the Learned Lord Chief Justice was two-pronged, one on the different capacity in which the plaintiff sued and the other on the circumstances in which the defence of set-off could properly be raised.

11. Mr. Bell further contended that by raising the defence of set-off in these proceedings, the defendant could not be said to be seeking to impeach the Oregon foreign judgment but it was a rightful exercise of the defence of set-off in an action in Hong Kong in debt. I cannot draw such a subtle distinction. Impeachment it must be at whatever stage it is introduced. The authority of Henderson v. Henderson is clear; so is the passage in Cheshire & North. I am driven to the conclusion that it is much too late for the defendant to raise the defence of set-off and the defendant is not entitled to do so here by way of impeachment of the Oregon foreign judgment.

12. In conclusion, in his second limb of argument, counsel also fails. It remains for me to say that this appeal must be dismissed with costs and that the decision of the learned Master is to stand. I order :

1. Appeal dismissed with costs.

2. Master's decision affirmed.

(B. Liu)
Judge of the High Court

Representation:

Miss F. Stewart instructed by M/S Barker & McKenzie for the Plaintiff.

Mr. A. Bell instructed by M/S Tai, Ho & Chan for the Defendant.