ILINK.NET LTD. v. CYBERTECHNIC (HONG KONG) LTD.

DCCJ 1248/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1248 OF 2002

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JUDGMENT

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Introduction

1. In this action, the plaintiff claims against the defendant the sum of $143,000.00 in respect of the outstanding charges for internet access services and other monitoring services provided by the plaintiff to the defendant under a written agreement made between the parties on 29 September, 2000 ("the Contract").

2. The Contract was for a term of 2 years commencing, I suppose, from the date of the Contract. It is the plaintiff's case that the defendant has failed to settle the services charges under the Contract at the rate of $13,000.00 per month for the period between 1 March, 2001 and 31 January, 2002, totalling $143,000.00. The demands for the services charges are evidenced by various invoices issued by the plaintiff to the defendant.

Order 14

3. The machinery of O.14 works on the basis that if the plaintiff's application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary. The burden is on the Defendant to show an bona fide and arguable defence.

4. In Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155, Godfrey JA (as he then was) said:

"In the local case of Murjani BK & Ors v Bank of India [1990] 1 HKLR 586, the Court of Appeal, after going into all the evidence, came to the conclusion that the case of the defendant was plainly advanced dishonestly and was therefore incredible. But Murjani was decided before National Westminster Bank v Daniel and I would sound a note of caution about Murjani, which has come to be cited in almost every case under O 14 or O 86 to justify the plaintiff in asking the court to embark on a mini trial of the action on affidavit evidence. That is not a proper course for the court to take. It will in future be sufficient for the court to ask itself the simple question: 'Is what the defendant says credible?' If so, he must have leave to defend. If not, the plaintiff is entitled to summary judgment. The issue is not whether the defendant's assertions are to be believed; it is whether those assertions are believable."

5. The approach in Ng Shou Chun shall be the one I adopt here. I also remind myself of what Bokhary JA (as he then was) said in Re Safe Rich Industries Ltd (CA 81/94, unreported):

"The test at the summary stage is indeed as simple as whether the defendant's assertions are believable. But it must be recognized -- because failure to recognize it would create a debt-dodgers' charter -- that whether the defendant's assertions are believable is a question to be answered not by taking those assertions in isolation but rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute."

The Defence

6. The defendant's case is this. The defendant says that, in October 2001, the defendant reached an agreement with the plaintiff whereby the parties agreed to terminate the Contract with effect from 30 September, 2001 and the defendant agreed to settle the outstanding charges accrued up to 30 September, 2001 in the total sum of $91,000.00 by 5 monthly instalments to be paid after the execution of an agreement embodying the settlement agreement. The settlement agreement was reached, says the defendant, orally between one Mr. Robert Lo of the plaintiff and one Miss Wendy Lam of the defendant a few days after 9 October, 2001. The existence of the settlement agreement is denied by the plaintiff. The defendant has so far failed to pay the sum of $91,000.00. At the hearing before me, Miss Wong, solicitor for the defendant, concedes that the defendant has no defence to the plaintiff's claim for $91,000.00. However, the defendant, submits Miss Wong, has an arguable defence to the claim for the balance sum of $52,000.00 on the basis of the settlement agreement.

7. The position on a discharge of a contract by agreement is well summarised in Chitty on Contract (1999) 28th ed. para.23-05, as follows:

"Where a contract is executory on both sides, that is to say, where neither party has performed the whole of his obligations under it, it may be rescinded by mutual agreement, express or implied. A partially executed contract can be rescinded by agreement provided that there are obligations on both sides which remain unperformed. Similarly, a contract which has been fully performed by one party can be rescinded provided that the other party returns the performance which he has received and in turn is released from his own obligation to perform under the contract. The consideration for the discharge in each case is found in the abandonment by each party of his right to performance or his right to damages, as the case may be. A rescission of this nature must be distinguished from a repudiation by one party, which the other party may elect to treat as discharge of the obligation , and from the right to rescind which is given to one party in cases of fraud, misrepresentation, duress and undue influence, and in certain cases of mistake. It depends upon the consent of both parties, to be gathered from their words or conduct and not upon the intimation by one of them that he does not intend to be bound by the agreement.

8. In the present case, the burden rests on the defendant to raise a triable issue that the plaintiff did consent to the early termination of the Contract with effect from 30 September, 2001. Of course, it is not the function of this court at the Order 14 stage to resolve factual dispute on affidavits. On the other hand, it is trite law that the mere assertion in an affidavit of a given situation does not, ipso facto, provide leave to defend, since the defendant must satisfy the court that he has a fair or reasonable probability of showing a real or bona fide defence, i.e. that his evidence is reasonably capable of belief. If the evidence of the defendant is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence and judgment will be given to the plaintiff.

9. Whether the plaintiff did give such a consent has to be considered against the circumstances of the case including all the contemporaneous documents. While the defendant asserts that the plaintiff had agreed to an early termination of the Contract in mid-October, 2001 (i.e. a few days after 9 October, 2001), the plaintiff continued to issue invoices to the defendant demanding payments for the months of October, 2001 up to January, 2002. The 4 invoices for the said 4 months' payments were sent on 19 September, 2001, 19 October, 2001, 19 November, 2001 and 18 December, 2001 respectively. The dates of the delivery of the invoices are evidenced by the date chops appearing on the 4 invoices. There is no dispute in the affirmations filed on behalf of the defendant here that the invoices had not been received by it or that they were not sent on those dates. However, there is no evidence of any protest by the defendant about the issue of the invoices. It was not until 22 December, 2001 when the defendant raised for the very first time that there was a settlement agreement.

10. The plaintiff's consent is crucial to the defendant's case that there was an agreement for the early termination of the Contract. However, the fact that the plaintiff continued to issue issues demanding payments after the alleged settlement agreement militates against the defendant's case that the plaintiff consented to the early termination of the Contract. In Hayton International Ltd v. Massoni Treasures (Mandarin) Ltd Civil Appeal No.125 of 1990 (unrep. 23 Oct, 1990), Sir Derek Cons VP (as he then was) said

"[The Judge] concluded, as I have just quoted, that there was no contradictory evidence to that of Mr. Chan and Mr. Yong. In so doing he must have overlooked the invoice. Contemporary documents from their very nature inevitably have great evidential value. They are drawn at a time when there is no dispute in existence." (emphasis added)

11. Here I find that the defendant's case that there was a settlement agreement was wholly inconsistent with the contemporary documents, namely, the invoices. It also appears from the defendant's letter dated 4 February, 2002 that the defendant only demanded for the removal of the equipment from the plaintiff's premises in late January, 2002. This also lends support to the plaintiff's contention that there was no concluded agreement for the early termination of the Contract in October 2002.

12. Having carefully considered the defendant's case, I am not satisfied that the defendant's contentions are credible or believable at all. No triable issue is raised on this defence.

Conclusion

13. Accordingly, I give judgment for the plaintiff against the defendant for the sum of $143,000.00. I shall hear the parties on the questions of interest and costs.