Kai Fung Engineering Co v. Plasteel Hong Kong Ltd

HCA004527/1982

Commercial Law - Civil Practice and Procedure - Consent order embodied in judgment of the court - whether fresh proceedings have to be commenced to sue on consent order - meaning of "as per sample"

A consent order embodied in a judgment of the court is enforced in the same way as any other judgment of the court, so that there is no need for fresh proceedings to be commenced in order to enforce such a consent order.

Where a consent order provided that the obligation on the plaintiff was to hand over to the defendant a quantity of steel rods, being peg-stays, "as per sample", this meant that the steel rods tendered by the plaintiff had to be like the sample in essential characteristics.  The court held that an essential characteristic of the sample was that it was in a polished condition, so that when the plaintiff tendered steel rods which were dirty as the result of being covered with grease and dust the court regarded the defendant as justified in rejecting them.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Rhind, J.

Date: 15 July 1983

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JUDGMENT

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1. By consent of the parties, the court made an order in the following terms on 25th February 1983:-

2. The sample steel rod or peg-stay referred to in paragraph 2 of that consent order was in a shiny, clean condition when kept by the plaintiff's solicitor Now that it has been handed over to the court as Exh. P1, it in still in that same condition. This sample peg-stay has two grooves which are designed to slot into a bracket, so that a window can be held open into different positions. A whole window easement left with the court (Exh. P2) demonstrates how the peg-stay is meant to operate.

3. As may be calculated from paragraph 3 of the consent order, the last day for the plaintiff to have the goods ready for return to the defendant was 10th March 1983. Five days before then, the plaintiff's solicitor wrote to the defendant's solicitor, announcing that the goods were awaiting collection by the defendant at the plaintiff's premises described in the consent order,

4. Representatives from the defendant, accompanied by surveyors, called at the plaintiff's premises on the afternoon of the 10th March 1983.

5. The defendant refused to accept delivery of the steel rods tendered by the plaintiff, contending that they did not conform with the sample in two respects, namely:

6. The defendant refused to pay over any money on 10th March 1983, or since. The plaintiff contends the defendant is in breach of the consent order embodied in the judgment of 25th February 1983, and seeks the leave of the court to enforce that judgment by levying execution against the defendant. The appropriate Rule of the Supreme Court for seeking such leave is O.46 r.2(1) (d).

7. According to the defendant, the leave sought by the plaintiff should be refused because it is the plaintiff itself which is in default under the order, as the result of failure to tender goods conforming with the sample.

8. A preliminary point taken by the defendant was that the present proceedings were misconceived as the plaintiff is required to commence a new action to sue upon the agreement reached between the parties. The defendant is clearly wrong on that. A judgment embodying a consent order is the same as any other judgment of the court, and is enforced in the same way as any other judgment of, the court. The position is explained by Slade J. in Green v. Rogen and others⁽¹⁾ at page 800G-H.

9. The plaintiff does not dispute what the defendant says about the steel rods it tendered not being polished,

10. After the defendant rejected the goods, the plaintiff employed its own surveyor who found that almost half the steel rods he examined were "covered with grease/oil and soiled''. It is clear from the plaintiff's surveyor's report that what the defendant's surveyor described as a "rough surface" was in effect the result of dust accumulating on the greasy surface of the rods.

11. I have no doubt that the rods can be restored to the bright condition of the sample by washing.

12. Was tendering of almost half of the rods in an admittedly dirty condition sufficient compliance by the plaintiff with the terms of paragraph 2 of the consent order? If the answer to that question is "No", the plaintiff will fail in its application for leave to enforce the judgment.

13. The court has to rule what function the parties objectively intended the sample to serve in the present instance.

14. Although the problem before me is not one falling under the rubric of sale. of goods, but, is, instead, a problem of construction of the term of a consent. order, some of the sale of goods cases which have had to deal with problems of sale "as per sample'' or sale by sample can, nonetheless, serve to shed some useful light, at least by analogy, on the problem presently confronting the court. Of course, the court has to bear in mind the whole time that the conditions and warranties implied in sales of goods by sample have no relevance to the problem arising in the present case.

15. A sample invariably serves to describe the goods to which it relates. See Chitty at paragraph 835. The difficult question is which features o?the goods the sample is meant to describe. "The extent to which a sample may be held to 'speak' must depend on the contract and what is contemplated by the parties in regard to it": Steels and Busks Ltd, v. Bleeker Bik & Co. Ltd.⁽²⁾

16. I think that "as per sample" here refers to the visual characteristics of the rod (Exh. P1), as seen with the naked eye. "As per" means nothing different from "like the", so that a more natural way to read the relevant part of paragraph 2 in my opinion is "...... comprising not less than 5,000 lengths of steel rods like the sample kept by the plaintiff's solicitors ........."

17. Can a polished appearance for the sample rod fairly be said by a detached observer to be one of its essential characteristics for the purposes of the present consent order?

18. This is a question which, I must confess, has occasioned me great difficulty, and it is only after considerable hesitation that I have concluded that a polished appearance is, indeed, such an essential characteristic,

19. This was a border-line case in my view, and I am on balance just peruaded that the rods must be clean to conform with paragraph 2.

20. Assuming that the number of items looked at by the plaintiff's surveyor was representative, the defendant would have finished up with about 2,000 of the 5,100 rods requiring cleaning.  I do not think the plaintiff is entitled to say that he has handed over rods like the sample when the defendant is left with a fairly sizeable cleaning operation to perform. My reason for hesitating before reaching this conclusion was that I at first inclined to the view that a complaint about the dirtiness of the rods might attract the operation of the de minimis principle.  In the end, I decided that such a complaint was not so trivial it should be ignored.

21. It is all very well for the plaintiff to say that it would have been a simple matter for the defendant to clean up the peg-stays. If it was such a simple matter, then the plaintiff could itself have attended to such cleaning as soon as the defendant made its complaint, thus depriving the defendant of any prospect of avoiding the Terms of Settlement on this ground.

22. I felt that my role was limited to construing the consent order in the light of the pleadings which revealed that the peg-stays in issue had been manufactured by the plaintiff for the defendant.  I took the view that someone paying $40,000 for the items included in the settlement on the basis that part of the goods were like a sample was entitled to expect those goods to be clean if the sample was clean.

23. I was not prepared to pay any heed to the material in the affidavits, purporting to show the course of negotiation between the parties leading up to the settlement.

24. Comfort was sought by the plaintiff from the House of Lords' decision in Reardon Smith Line Ltd. v. Hansen Tangen.⁽³⁾ The plaintiff argument went along the lines that the sample rod was included for purposes of identification rather than for purposes of description.  I do not think that argument is valid.  A sample is inevitably a form of description.  No description can be better.  It is better even the picture, which is sometimes said to be worth more than a thousand words.

25. The Reardon Smith Line case is important because it shows the courts are nowadays out of sympathy with earlier cases like Re Moore l & Co. v. Landauer & Co.⁽⁴⁾ and Behn v. Burness⁽⁵⁾ where too technical an approach was taken in deciding whether a particular item in a description was a substantial ingredient of the identity of something sold.

26. In the case before me, I take the view that, as a matter of fact and degree, the tendering of dirty goods when the sample goods were clean does amount to a departure from a characteristic of the sample of sufficient importance to justify the defendant in rejecting the goods.

27. For the plaintiff it was argued that the all-important words in paragraph 2 of the consent order are "now in the plaintiff's possession". According to the plaintiff, the defendant was agreeing to accept whatever peg-stays the plaintiff had in its possession, and the purpose of paragraph 2 was to identify where these goods were to be located.

28. True, the peg-stays the subject matter of the consent order were those located on the plaintiff's premises, but in my opinion, besides being located on the plaintiff's premises, they must also be like the sample. I do not see how the words "as per sample" can simply be treated as if they do not exist.

29. That the rods tendered by the plaintiff were not like the sample with respect to the characteristic of having a polished  grearamce is sufficient ground for the present application to be is disposed of in the defendants' favour,

30. As the defendants' have won on that ground, there is now no need to go on to rule on their other ground of complaint, namely, that the width between the grooves on the steel rods tendered was different from that on the sample,

31. To have resolved that second ground of complaint would have required the taking of further evidence by the court.  So long as the width between the grooves of the rods tendered by the plaintiff, and the width between the grooves on the sample (Exh. Pl) more or less packed the same, to the naked eye, and so long as the rods operated of ficiently as peg-stays, I would have treated the goods tendered by the plaintiff as conforming adequately with the sample. A peg-stay is not a piece of equipment demanding all that high a degree of precise. As long as it fits securely, and holds the window open all right, that is good enough.  I would certainly have been unsympathic to arguments but the odd fraction of a millimetre of difference in dimensions sulting from microscopic or other high precision methods of examinati less the difference in measurements affected the performance of the peg-stay as a peg-stay.

32. My conclusion in view of the above is that the leave sought by the plaintiff must be refused, and there must be judgment for the defendant who does not, however, seek any damages,

(1)    (1955) 2 All E.R. 797

(2)    (1956) 1 Ll.R. 228, 239

(3)    (1976) 3 All E.R. 570

(4)    (1921) 2 K.B. 519

(5)    (1863) 3 B & S 751

Representation:

Mr. Lau(Ng & Yung) for plaintiff

K.K. Ho (Deacons) for defendant