Hung Shing Electronics Industrial Co Ltd v. Colin Chan Alias Chan Kwan Shui t/a Colin Chan Electronic Co

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWNLOON

CIVIL JURISIDICTION

ACTION NO. 8451 OF 1971

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Coram: Judge Davies in Court

RULING

1.  Although O.14 is not specifically excluded from application in the District Court by the Schedule to the District Court Civil Procedure (General) Rules, nevertheless Rule 9(1) of those Rules provides for the application of Rules of Supreme Court, only subject to the provisions of the District Court Civil Procedure (General) Rules.

2.  Rule 27 of those Rules makes due provision for summary judgment and that Rule accordingly prevails over any provision of Rules of Supreme Court.

1.  For this reason, it appears to me that Mr. LEE’s submission must be considered as an application under R.27(1)(b) of the District Court Civil Procedure (General) Rules, and it is under this head that I now consider it upon the merits.

4.  Mr. LEE submits that upon an application for summary judgment under O.14 of Rules of Supreme Court, a defendant will in normal circumstances not be allowed to set up a set-off or counterclaim for damages in an action based upon a dishonoured cheque, and that this obtains whether or not the counterclaim is connected with the contract in respect of which the cheque was given.

5.  Mr. LEE refers me to the Annual Practice (Supreme Court) 1970 at page 132 and the cases therein quoted.

6.  I would agree that the quoted passage appears to support Mr. LEE’s argument.

7.  It appears, however, that that passage is somewhat incomplete, and I refer to the local case of Celestial Traders v. Oriental Bead Arts Co. 1965 D.C.L.R. 181.

8.  In that case, Williams D.J. held that where a defendant alleges partial failure of consideration, and the amount of the failed consideration is liquidated, there is a valid defence to the action in respect of that ascertained specific sum.

9.  I respectfully agree that this is a correct statement of the law.

10.  It follows therefore that the question arises in the present case whether the defendant’s set-off is in fact a liquidated sum.  If it is, then the principle followed in Celestial Traders will apply, and he is entitled to leave to defend.

11.  It however, this set-off, although expressed in a certain figure, is truly a sum which can only be ascertained or assessed by the Court, it is unliquidated, and falls within the purview of Mr. LEE’s submission.

12.  The sum which the defendant seeks to set-off is expressed in the Statement of Defence as being “about $600.00” and arises from alleged loss of production due to defects in the goods sold and delivered by the plaintiff and in respect of which the cheque was given as part-payment.

13.  I would unhesitatingly rule that this set-off by the defendant is in law a claim in respect of an unliquidated sum.

14.  In consequence, I am satisfied that it cannot be validly set-up in this action upon a dishonoured cheque, and the defendant if he wishes to pursue it must do so by means of a separate action for damages (unliquidated).

15.  Accordingly Mr. LEE’s submission is upheld.  Under R.27(1)(b) I give it as my opinion that there is no valid defence disclosed to the plaintiff’s claim, and I dismiss the Defence as filed and enter judgment for the plaintiff in the full amount of claim and costs, to be taxed on Scale II unless earlier agreed.