Woc Finance Co Ltd v. Fullpate Enterprices Ltd and Another

HCA000584/1982

Order 14 application. No strict time limits. Timur Jaya Co. Ltd. v. United Asia Trading Co. (1980) H.K.L.R. 768 not followed.

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Coram: The Hon. Mr. Justice Hunter

Date: 22 July 1982

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ADDENDUM

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Since delivering this judgment I have consulted a 1960 White Book. This confirms my recollection as to the then terms of Order 14 rule 1. It is interesting also that the editors then gave wider significance to the decision in McLardy v. Slateum in their notes to Order 14 rule 1 than they now do in the note 14/1/3.

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Coram: The Hon. Mr. Justice Hunter

Date: 22 July 1982

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JUDGMENT

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1. This is an Appeal from a decision of Mr. Registrar Betts given on the 15th of July last, when he refused the plaintiff's application for summary judgment. It gives rise to two questions: one is a question of practice which is of general importance, and the other is a question which simply arises on the facts of this case as to whether or not an arguable defence is available to the defendants on the merits.

2. The practice question is whether or not applicants under Order 14 are under any and if so, what limitations as to time. It is upon this matter that the Registrar based his decision. He did not go into the merits at all. He based his decision upon a decision of Mr. Commissioner Hooper as he then was, in a matter called Timur Jaya Co. Ltd. v. United Asia Trading Co. ⁽¹⁾.  By this decision, the learned judge held two things. First of all that an applicant for summary judgment had to apply within a reasonable time after the defendant's appearance. Secondly, that the onus was on the plaintiff who has in any way delayed in making his application, to show that such delay was justifiable in the special circumstances of the case. That decision was solely and entirely based upon a decision of the Divisional Court in England, in a case called McLardy v. Slateum⁽²⁾ .

3. I am in the embarrassing position here of finding myself unable to agree with Mr. Justice Hooper, as he now is. It seems to me that his approach involves reading into Order 14 rule 2, two things which simply are not there. The first thing is some express limitation as the time. Order 14 rule 2 simply says that the application "must be made by summons supported by an affidavit". I can see no reason for reading into that rule, the phrase "must be made within a reasonable time of appearance or acknowledgement of service" or some such provision. Secondly I can see no reason for reading into that rule a requirement, that the affidavit in support of the summons, must deal not simply with the two things which the rule requires i.e. verification of the facts and a statement on belief that there is no defence, but further with an explanation of some delay if any delay has arguably occurred. It seems to me to be imposing time limits on this procedural application where none exist. The proper means for imposing such time limits, in my view, is in the rules themselves by the Rule Making Committee.

4. Unhappily I think that insufficient attention may have been directed in the course of the argument before Mr. Justice Hooper, to the differences which I believe existed between Order 14 at the time of the decision in McLardy v. Slateum and Order 14 as it now exists. I cannot specify precisely what those differences are, because the report in 24 Queen's Bench Division is not in fact before me; and nor have I been able to lay my hands, in the short time available, on a pre - 1962 White Book. Purely as a matter of recollection I believe that certainly prior to the 1962 amendment, the requirement of Order 14 rule 1 was, that it was only open to an applicant who had done one or other of two things, either served a specially endorsed writ, i.e. endorsed his Statement of Claim on the writ, or secondly served his Statement of Claim with the writ. Unless one or other of those two steps were taken it was not open to him to proceed under Order 14 at all.

5. The timings of applications under this rule could be said to be have been affected by such requirement. One finds for example in the notes to the White Book under Order 14, the note is 14/1/2A, a reference to the desirability of an application being made as soon as possible after Notice of Intention to defend, and the suggestion that the plaintiff who wishes to use this procedure should follow what was in substance the old practice. But it is very significant, in my judgment, that nowhere in the White Book is it suggested that the rule of practice or any rule of practice approaching the strictness of that suggested by Mr. Justice Hooper is in fact applicable. It is pointed out that there is in fact no time limit at all. That is the note 14/2/1. McLardy v. Slateum is referred to in 14/1 /3 simply as authority for the proposition that an application can perfectly be properly made after a defence has been filed, if the applicant can still swear that it is his belief that there is no defence to the action.

6. It has been argued before me that this rule is similar to the procedure under Order 18, rule 19. Indeed it was suggested that if in fact this defence discloses no grounds of defence that would have been the proper application to have made. I cannot accept that, because an application to strike out the defence, could never have got past the non-admission of the Hire Purchase Agreement in that document. The only way which a plaintiff can et judgment in this sort of circumstance is by an application under Order 14, which would put in evidence before the court, the truth of the Hire purchase Agreement. But the reference to Order 18 rule 19 is in fact instructive. It is plain that an application under Order 18 rule 19 can be made at any time. It is equally plain that there is a close connection between the type of application before me and the type of application which can be made under Order 18 rule 19. It is equally the case that under both rules you will find in the notes suggestions that applications should be made at the earliest possible moment, without delay, and remarks like that. But in the same way that under Order 18 this is simply a general suggestion as to how the court should approach the matter; equally, I think, the same is true under Order 14. There are simply no rigid time limits of any sort on applications under Order 14, however they are put, either as express time limits or by reference to a reasonable time.

7. It follows regrettably that I cannot agree with the decision in Timur Jaya. I am as convinced as I could be, that that decision does not represent the current practice in the U.K., to which I think I am directed to turn whenever the practice here is silent. In this respect there is in our rules of the Supreme Court no express time limit, anymore than there is in the U.K. From my part I think it would be unfortunate if it were introduced. I think that the matter is much better left to general exhortations that these matters should not be unduly delayed rather than to rules. I think that delay is a factor which the court can take into account when looking at the substance and the merits of the application, in agreement with Fuad J. Kaufman v. Maker Industrial No. 2326 of 1981. Here, for example, I have been told, and it is in evidence, that the plaintiff deliberately did rot make this application until the defence was filed to enable them to see the nature of that defence. The plaintiffs here are relying upon the old maxim nemo dat. It is equally well known that there are certain exceptions to that maxim. One of these, for example, is a sale in market overt; others are sales by factors under the Factors Act or the Factors Ordinance in Hong Kong. What the plaintiff was really saying to me is this. They thought it made sense to see if the defendant could advance an arguable case of that sort. In my judgment, there is a great deal of common sense behind that. I think it is wrong to say that you must not exercise common sense in these sort of matters, or if you do so, that you are at risk of having your application dismissed in limine as coming too late, which is what happened here. I do not criticise Mr. Registrar Betts at all, because he had binding authority before him; and it is with considerable regret that I find myself unable to follow that authority.

8. I now turn to the merits of the application. What is put in evidence before me by the plaintiff in support of this application for summary judgment, is a pleading which simply said this: The car in question was hired by us to someone who has now been joined in the proceeding as the 1st third party under a Hire purchase Agreement. We were the owners of that vehicle. This hirer and no possible right to enter into the sale transaction which is described in evidence by the defendants. The plaintiffs say that there is no semblance of defence to this. This is simply the classic illustration: of the sort of situation where one of two innocent people must suffer from (I am much regret to say) the dishonesty of a third. I say dishonesty because although I have not heard whether Madam Wang has any sort of explanation for what she did, it is rather difficult to see what explanation there could be.

9. Now what is said by the defendant in answer to that claim is really two things. First of all, the defendant says he does not admit what he calls the authenticity of the Hire Purchase Agreement. Now authenticity in this context is a highly ambiguous word. What it came down to was that he wanted the opportunity of cross-examining the plaintiff and the 1st third party to see whether they in fact signed this Agreement. In my judgment that simply does not amount to a triable issue at all.

10. The second point relied upon here is a point of estoppel. It is really based upon Section 23 of the Sale of Goods Ordinance (Cap. 26) which is in identical terms to the U.K. Sale of Goods Act Section 21. Section 21 in effect goes like this: You do not receive a better title when your seller has unless the true owner is estopped for some reason. The particular point relied upon here is that under terms of this Hire Purchase Agreement, the hirer was required to register the vehicle in her own name. Having done so it necessarily followed that she' was either in possession of a registration book in respect of this vehicle or able to obtain a duplicate. It said that requiring her to take this step, requiring her to put herself in this position in relation to a registration book, means that she was being held out by the finance company to the world as being in a position to deal with this vehicle as owner.

11. In my judgment that is simply no defence in law. The door to that line of argument has I think been firmly closed by a whole series of decisions in the United Kingdom. I do not see any difference between the position under this Hire Purchase Agreement and the position under another common form of Eire Purchase Agreement, which says that the hirer shall comply with all legal requirements in relation to the vehicle including making sure that it is licensed or words to that effect. One or other of those two provisions almost necessarily has to be in any Hire Purchase Agreement whether written in Hong Kong or written in the U.K. This has been the practice in both countries for as long as Hire Purchase Agreement of motor vehicles have been popular.

12. The first problem about this is that a registration book is not a document of title. That was decided as long ago as Joblin v. Watkins and Roseveare (Motors) Ltd. ⁽³⁾.   Secondly, the Court of Appeal in two decisions, Central Newbury Car Auctions Ltd. v. Unity Finance Ltd. and Another ⁽⁴⁾ and J. Sargent (Garages) Ltd. v. Motor Auctions (West Bromwich) Ltd. & Anohter ⁽⁵⁾ have held that simply passing to someone a vehicle plus a registration book does not put that person in a position to give a good title to that vehicle to a third party. Those two events do not found an estoppel under Section 21 of the Sale of Goods Act; nor do they found any claim or defence in estoppel by negligence or negligence simpliciter because as Lord Justice Stephenson points out in Sargent's case at page 133: "Secondly the decision in that case, (that is the New bury Car case) established that by your carelessness in being so trusting as to part with a car and a log book to a stranger, you did not so estop or preclude yourself (and these are important words) because you owe no duty to the public in general including any innocent purchaser". What Mr. Chan with engaging courage was seeking to argue before me, prefaced by the words that there is not yet an authority in his favour but this might be the first, was that a duty of care could be relied upon by his client to establish a defence. But as I see it, this was precisely the duty of care which Lord Justice Stephenson was there rejecting.

13. The same thing in my judgment appears quite clearly from the decision of the House of Lords in Moorgate Mercantile Co. Ltd. v. Twitchings ⁽⁶⁾, particularly in the opening paragraph of the speech of Lord Wilberforce and the concluding paragraphs in the speech of Lord Edmund Davies. If it were otherwise hire purchase companies would never have been able to recover cars sold by their hirers from anybody, because the hirers would inevitably find themselves in possession of the vehicle and frequently find themselves in the possession of log books showing them as the registered holders of the vehicle. One of the problems on the face of this argument which is as true in Hong Kong as in United Kingdom, is that the registration book expressly includes a warning that the holder of the registration book may not be the owner of the vehicle.

14. I think this is a typical example of a dishonest hirer who has repudiated the Hire Purchase Agreement by purporting to sell the vehicle being unable to pass any title of that vehicle at all. Therefore in my judgment no arguable defence is in fact shown to this claim. The Registrar erred in not considering the merits and not reaching that conclusion, but he erred in very understandable circumstances. I think that this plaintiff has made out a case for summary judgment. Sensibly the parties have recognised that the vehicle should stay with one of them. It is recognised that that person is the defendant, and if there is any liability here it should be financial, and not include any order for the delivery up of the car. So I think the proper order is that there should be judgment for the plaintiffs for damages to be assessed. Perhaps I should go on to say this. I also think that that should carry costs here and below, because I think that the material originally put before the court was sufficient to establish the plaintiffs title to this vehicle without the further and better affidavit that was put in in reply.

(1)    (1980) H.K.L.R. 768.

(2)    24 Q.B.D. 504.

(3)    (1948) 64 T.L.R. 464.

(4)    (1957) 1 Q.B.371.

(5)    (1977) R.T.R.121.

(6)    A.C. 890.

Representation:

Mr. Benjamin Chain (David Y.Y. Fung & Co.) for Plaintiff.

Mr. Edward Chan (D.W. Ling & Co.) for Defendant.