J.H. Trachsler (HK) Ltd. v. Liu Yan Rocky and Another

HCA004998/1997

HCA 4998/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4998 OF 1997

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Coram: The Hon. Mr. Justice Sakhrani in Chambers

Date of Hearing: 19 August 1998

Date of Judgment: 19 August 1998

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J U D G M E N T

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1. This is an appeal by the 1st and 2nd Defendants from the order of Master Jones made on 29th May 1998 whereby he ordered that judgment be given to the Plaintiff against the 1st and 2nd Defendants on its application for summary judgment under Order 14, Rules of the High Court.

2. The Plaintiff's claim in this action against the 1st and 2nd Defendants is for the sum of $755,487.24 being the principal sums outstanding under eight invoices pleaded in the Statement of Claim and accrued interest in the sum of $406,169.58 as at 12th May 1997.

3. The Plaintiff carries on business as sellers in Hong Kong and in China of photographic equipment manufactured in Switzerland and other parts of Europe. The eight invoices have been produced in evidence and they were all issued to the 2nd Defendant. These invoices were issued from December 1994 to November 1995.

4. It is the Plaintiff's case that the 1st and/or the 2nd Defendant is liable as the contracting party who purchased the goods which were destined for a corporation in Beijing, namely Rocky Electronic Photo Products (B.J.) Co. ("Rocky Co."). The Plaintiff's case is that the contracting party in respect of the goods delivered under the eight invoices in question was the 1st and/or 2nd Defendant.

5. The Defendants' case is quite simply that it was not the 1st or 2nd Defendant who was the buyer but that it was Rocky Co. The Plaintiff was the seller of the goods. It was Rocky Co. who was contractually liable to the Plaintiff, not the 1st or 2nd Defendant.

6. The Plaintiff's case is based on an oral agreement as pleaded in the Statement of Claim. The claim for interest is also based on an oral agreement that after a 60 days period of credit, interest at 2.5% per month or 30% per annum would be payable on any outstanding balance after the 60 days credit period.

7. The principles applicable to Order 14 applications for summary judgment are well-known and clear. It is useful to bear in mind what Godfrey J. (as he then was) said in Unic Co. v. Centus Development Ltd. [1988] HKC 643 at 647:

"The power to give summary judgment under Order 14 is intended to apply only to cases where there is no reasonable doubt that the Plaintiff is entitled to judgment and where therefore it is inexpedient to allow the Defendant to defend for mere purposes of delay: see Jones v. Stone [1894] AC 122.

As a general principle, where a Defendant shows that he has a fair case for defence or reasonable grounds for setting up a defence, or even a fair probability that he has a bona fide defence, he ought to have unconditional leave to defend. Leave to defend must be given unless it is clear that there is no real substantial question to be tried, or that there is no dispute as to the facts or law which raises a reasonable doubt that the Plaintiff is entitled to judgment. Order 14 is not intended to shut out a Defendant who can show that there is a triable issue applicable to the claim as a whole from laying his defence before the court, nor to make him liable in such a case to be put on terms of paying into court as a condition of leave to defend."

8. Also, it has been said that it is not a proper course for the court to embark on a mini-trial of the action on affidavit evidence: see Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155.

9. And Godfrey J.A., in the Court of Appeal in the case of Man Earn Ltd. v. Wing Ting Fong [1996] 1 HKC 225 said at 228:

"Unless it is obvious that the defence put forward by the Defendant is 'frivolous and practically moonshine, O 14 ought not to be applied': see Codd v Delap [1905] 92 LT 510, per Lord Lindley at 511."

10. There has been a great deal of affidavit evidence put in on behalf of the Plaintiff and the Defendants on the application for summary judgment. Of course, I should not embark on a mini-trial of the action on affidavit evidence.

11. Counsel for the Defendants has drawn my attention to the correspondence exhibited as "LY-1" to the affirmation of the 1st Defendant affirmed on 16th July 1997. The two letters from the Plaintiff to Rocky Co. dated 25th April 1997 and 30th April 1997 provide some support to the Defendants' case that the Plaintiff itself regarded Rocky Co. as the purchaser of the goods in question under the eight invoices as the Plaintiff was requesting Rocky Co. to pay up the amounts owing as the principal sums under the eight invoices. This lends some support to the fact that the Plaintiff regarded Rocky Co. as the debtor. Of course, these letters do not conclusively prove this. They are sufficient, in my judgment, to show that there is a triable issue as to who the contracting party was.

12. It is also pertinent to observe that it was only after this correspondence which did not result in payment to the Plaintiff that the Plaintiff instituted these proceedings on 12th May 1997 against the 1st Defendant initially, with the 2nd Defendant being added as a Defendant by application made in June 1997, in respect of the eight invoices which were dated from December 1994 to November 1995.

13. Furthermore, the claim for interest is a contractual claim. It forms a substantial part of the Plaintiff's claim. According to the Plaintiff's solicitor's letter to the Defendants' solicitors dated 4th June 1998, the judgment sum including interest up to the date of judgment totalled $1,402,156.38. Thus, it can be seen that the claim for interest represented about 50% of the total claim.

14. The oral agreement pleaded in respect of interest is not supported by the statement of account which has been produced in evidence. The statement of account is addressed to the 2nd Defendant and is dated 31st March 1997. That document, on its face, shows that the due dates of the amounts on the invoices was the same day as the date of the invoices with no regard for the 60 days credit as pleaded. Also, under the remarks on the statement of account, it is stated: "interest of 2.5% per month will be charged for delay payment". This suggests that if there is delay in payment of that statement of account dated 31st March 1997, then interest will become payable at that rate. As I have said, this document does not support the pleaded case on interest. I am satisfied that there is a triable issue on the claim of interest as well.

15. As I have decided that there are triable issues which ought to be resolved at trial, I do not think that I should express a view in respect of all the other evidence and submissions made to me. The matter will have to be resolved at trial. The Defendant is, in my judgment, entitled to unconditional leave to defend. The appeal is allowed. The order of Master Jones made on 29th May 1998 is to be set aside. The Defendants are to be given unconditional leave to defend.

[After hearing submissions]

16. As I have given the Defendants unconditional leave to defend, I think the proper order for the costs below is that costs should be in the cause. As for the appeal, costs should follow the event. Costs of the appeal to the Defendants in any event.

(Arjan H. Sakhrani)
Judge of the Court of First Instance

Representation:

Mr. W.S. Clarke of Messrs. Clarke & Liu for Plaintiff.

Mr. Wilson Chan, instructed by Messrs. Fairbairn Catley Low & Kong for 1st and 2nd Defendants.