Shinsei Manufacturing Ltd v. Lion Rock Ltd
|
CACV000151/1982
BETWEEN
______________________ CorAm: Hon. Leonard, V-P., Cons & Fuad, JJ.A. Date: 21 January 1983 ___________ JUDGMENT ___________ Leonard, V-P. : 1. This is an appeal from the refusal, on the 16th November 1982, of the appellant's application for payment out of the sum of $450,000 paid into Court pursuant to an order of the same judge made on the 26th May 1982. Such are the difficulties arising from the earlier order that it is necessary to examine in some detail the application which led to its being made and its precise terms. 2. The summons leading to it is dated 21st May 1982 and is headed -
It applies for an order that the applicant (the present appellant) "be at liberty to commence proceedings for detinue - against the above-named Company as per writ of summons marked "A" attached notwithstanding the appointment of the Official Receiver as Provisional Liquidator" and then (very oddly) continues "and that the service of the Summons marked "B" attached herein (sic) and the affidavit marked "C" attached herein (sic) on the above-named Company and the official Receiver ... be dispensed with." 3. The writ is endorsed with a claim for return of moulds therein particularised. The "Summons marked B" is no more than an undated draft application "for an Order that the defendant do forthwith deliver all the moulds referred to in the Writ of Summons to the plaintiff". No summons following this draft appears ever to have been taken out or filed. Two affidavits were filed. In the first of these a Mr. Tam, director of the appellant, refers to two contracts entered into between the appellant and the respondent for the production by the respondent of toys for the appellant in pursuance of which the appellant claimed to have delivered the moulds in question to the respondent. Mr. Tam goes on to allege breaches of the two contracts by the respondent, wrongful detention of the moulds and an urgent requirement for their return and refers to legal advice to the effect that "at most the said Company can claim a lien over the said moulds" and that "unless the applicant be allowed to institute proceedings against the said Company for the return of the aforesaid moulds irreparable damages (sic) will be caused to the applicant". In the second affidavit Mr. Tam refers to and. exhibits the first affidavit and the exhibits referred to in it (a practice which is all too common, quite unnecessary - see 0.41 r.10 - and extremely irritating) and says:
We are unable to understand the reference to the 'plaintiff's undertaking as to damages'. We can only surmise that Mr. Tam or his legal advisers thought that an application for an interlocutory injunction had been made; none had, for what was sought was liberty to commence proceedings for detinue and to dispense with service of a (draft) summons and the second affidavit. 4. We can only stigmatise the course followed by the appellant's solicitors when making the application of the 21st May 1982 as sloppy in the extreme. What they should have done was firstly sought leave to commence the proceedings. Having obtained leave they should then have applied, in the proceedings so constituted, for interlocutory relief. Little or no time would have been lost had they done this and confusion would have been averted. The shortcut attempted has, as usual, been self-defeating. 5. The operative parts of order made on the 26th May 1982 are in the following terms:- "IT IS ORDERED, neither the Applicant nor the Provisional Liquidator opposing, that
It is to be noted that it does not appear that the appellant's solicitors gave nor did the judge extract from them any undertaking that a summons for interlocutory relief would be filed either in the terms of the so-called "summons marked B" or in terms more fitting to a litigant seeking a mandatory interlocutory injunction. Again the order is not a consent order in the strict sense. From the words "neither the Applicant nor the Provisional Liquidator opposing" one would gather that the judge was seeking to assist the parties but it is noteworthy that the order does not grant the relief sought. Instead it gives leave to commence an action in respect of the two contracts in writing. It does grant relief of the kind contemplated by the so-called "summons marked 'B"' but not on an undertaking as to damages fortified by a payment in as one might expect in view of Mr. Tam's second affidavit. We need not comment on the apparent conflict between paragraphs 6 and 8 of this order. We would place emphasis rather on the facts that the payment in is to be made "into Court under the proposed action" as a condition for the delivery up of the moulds, and not as a condition of the granting of leave, and that the payment in is "to abide the result of the determination on the validity of the Company's claim of lien". We must confess that the intended effect of the paragraph "and the nature and purpose of such payment in shall not be in any way be (sic) affected by the preceding Order" escapes us entirely. Reading the order in its entirety we are driven to the conclusion that the sum of $450,000 paid into Court was to be paid out when an issue to be raised by the respondent i.e. the claim that the respondent was entitled to a lien over the moulds, was determined. If the respondent claimed such a lien in the action and that claim was upheld the $450,000 should be available to secure payment of the amount in respect of which the lien might have been exercised. If no claim of lien was made or if a claim was made and was unsuccessful the sum should be paid out to the appellant. To our minds the proper Court to decide if and when payment out should be made was the Court on which lay the duty to decide the issue if and when raised. We can see nothing in the order to warrant a reference back to the judge in charge of the winding up. 6. On the 16th November 1982 when the appellant's summons for payment out was dismissed the pleadings in the action were closed. The Company had raised no issue in the defence as to whether it was or had been entitled to a lien over the moulds and had not counterclaimed. The appellant had therefore taken out the summons which is headed with the title of the action which it had been permitted to bring and not with the title of the proceedings in which permission was granted. Although the same judge was involved throughout the heading used on this summons apparently troubled him for he said:
7. With respect we consider that there were a number of misconceptions in this passage. Firstly the judge seems to regard the "companies Court" as a separate and special entity distinct from the High Court. There is no statutory ground for such a distinction. The original order of 26th May 1982 was made by the trial judge in a company matter but it was made by him as a judge of the High Court. Again there was no question of a variation being sought to the order of the 26th May 1982. What was being sought was payment out of the sum paid in under that order, no claim of lien having been raised. 8. Furthermore as is apparent from our comments on the order ofthe 26th May 1982 there is nothing in that order to require the appellant to go to the judge in charge of the winding up when seeking any payment out to which he might become entitled. 9. The judge observes "It is doubtful if the creditors of the defendant in liquidation are fully represented. The said $450,000 was. ordered to be paid into Court under this action by the companies Court for the benefit of the creditors whose interest ought not to be overlooked." With respect the order of the 26th may 1982 does not say or in any way suggest that the sum was ordered to be paid into court for the benefit of the creditors. The payment in could confer a benefit on the creditors in the event of the company successfully claiming a lien but only in such event. The trial judge concludes:
We think the approach outlined in this last sentence is correct. 10. The defendant has now put his house in order, for an amended defence has been filed in which a lien is set up. Admittedly in the court below the solicitor for the defendant' is quoted as saying "There can be no question of Defendant claiming any lien "now" but we think he must have meant "There can be no question of the Defendant enforcing any lien now." Since a lien has now been claimed the money in Court can only be paid out on the resolution of that claim. In exercise of powers given by 0.59 r 10(4) we would order that the refusal to make the order for payment out must stand. It was contended before us by Counsel for the respondent that the judge was entitled to refuse the order at the time he did; we think that he was not and this must be reflected in our order as to costs. 11. Counsel for the appellant does not now dispute that what he now asks for is in effect that the amount of the payment in ought to be drastically reduced in view of the way in which the Counterclaim is drafted. He is bound, he says, to come to this Court to obtain an order of that kind because the judge below wrongfully refused to entertain an application for it. With respect no order of that kind was requested from the judge. Then it was all or nothing. 12. We sympathize with the position in which the appellant finds himself, but there is nothing which this Court can do to assist him. We have no basis on which we could make any such order. The Counterclaim is, inter alia, for unliquidated damages and contains no particulars in that respect. Counsel for the respondent, at our suggestion, tried to obtain particulars, in the hope that a sensible settlement of the matter might be reached and further hearings avoided. Unfortunately it could not be obtained there and then. We have then, as we indicated during argument, no alternative except to dismiss the appeal, and the appellant, if he thinks fit, may restore the application in the Court below. 13. In view of the very unusual circumstances, and subject to any argument Counsel may wish to bring before us, we think the proper order as to costs of the appeal should be that each side bear its own. We also think that the appellant should have the costs below.
Representation: Mr. A R. Suffiad (H.M. So & Co.) for Appellant/Plaintiff. Mr. Roderick Murray (Johnson, Stokes & Master) for Respondent/Defendant. |