TEXWOOD LTD. v. NICE GREAT LTD. AND ANOTHER

CACV 388/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 388 OF 2000

(ON APPEAL FROM HCA NO. 13993 OF 1999)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from a judgment of Mr Justice Waung given on 2 August 2000. The application before Mr Justice Waung was an appeal by the 2nd defendant from an order of the master whereby the master had refused to set aside a default judgment which had been entered by the plaintiff against the 2nd defendant, the 2nd defendant having failed to enter the appropriate acknowledgement of service. The action against the 2nd defendant is based on a guarantee which the plaintiff says the 2nd defendant executed. Indeed, the 2nd defendant admits that a formal guarantee was signed.

2. However, there were a number of defences which were raised. Some related to whether the guarantee was enforceable, which were dealt with by the judge.

3. There is in particular one defence which was raised and that was that the 2nd defendant says that the guarantee that had been signed had been signed by a Mr Hara. Mr Hara happened to be a leading light in another restaurant company, Nice Great Limited. He was running a restaurant through that company. The primary debt arose as a result of a dispute between Mr Hara running that restaurant under the name Nice Great Limited, which is the 1st defendant, and the plaintiff.

4. Apart from anything else, Mr Hara has severe kidney disease which entails that he has to undergo kidney dialysis. It appears that on many occasions he has not been in the office for periods of days at a time. It is for that reason that it is said that judgment was not only allowed to go in default, but no steps were taken when the judgment was served upon the 2nd defendant until the bailiffs appeared some three months later.

5. The defence which the 2nd defendant has raised, and which the judge said constituted a good arguable defence, was that when the guarantee which Mr Hara had signed in the 2nd defendant's name was presented to the plaintiff, the plaintiff demanded a personal guarantee from Mr Hara. The 2nd defendant says that that personal guarantee from Mr Hara, which was provided, was to replace the 2nd defendant's guarantee and, therefore, the 2nd defendant is not liable thereunder.

6. In support of that proposition, the 2nd defendant points out that two actions were brought by the plaintiff against the 1st defendant in respect of unpaid rent and in both of those actions the 2nd defendant was not named as a party. The 2nd defendant has only been named as a party in this action.

7. I entirely agree with the judge below. This matter should go to trial. It seems to me that the 2nd defendant has a good arguable defence. I would only say this, that to bring this appeal to this court is merely an extension of satellite litigation. It achieves nothing. In this case, the parties would have been far better off proceeding to trial and having the matter decided properly rather than scratch around on affidavit evidence with arguments based, in part, on the significance of fax headers and what could be derived from the fact that a copy of the guarantee had been faxed to one party or another on a particular day.

8. In my view this appeal should never have been brought.

Hon Le Pichon JA :

9. I agree with the judgment of the Vice-President and have nothing to add.