VARICRAFT MANUFACTORY LTD v. KIMBERLI LTD

CACV 166/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 166 OF 2009

(ON APPEAL FROM DCCJ NO. 5243 OF 2007)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Stone J (giving the reasons for judgment of the court) :

This appeal

1.  This is an appeal by the defendant herein, Kimberli Ltd, against the Order of HH Judge Yung made on 20 May 2009 whereby the learned judge refused the defendant leave to defend against the claim of the plaintiff, Varicraft Manufactory Ltd, and awarded summary judgment against the defendant in the sum of HK$122,880.09, together with interest and costs.

2.  Leave to appeal was granted by Judge Yung on 13 July 2009.

3.  At the conclusion of the hearing, this appeal was dismissed, with costs to the plaintiff, such costs to be taxed if not agreed.

4.  We now give our reasons for such dismissal.

The factual background

5.  This matter is in short compass, and the facts can be but briefly outlined.

6.  The claim of the plaintiff is as set out in its Statement of Claim dated 25 January 2008.

7.  It is for the price of goods sold and delivered to the defendant, in this case plastic parts for baby products, for which the invoice price was the unpaid sum of HK$122,880.09.

8.  In its Defence dated 25 February 2008 the defendant admits that these goods were sold and delivered during a period between 25 August 2005 to 20 April 2006, and there appears to be no dispute or issue that payment of the invoice value has not been made.

9.  The defence is a counterclaimed set-off against the debt arising from an entirely separate antecedent transaction which took place in or about August 2003, wherein the plaintiff had ordered plastic goods from the defendant; however on that occasion the plaintiff itself allegedly had refused to pay the purchase price thereof, with the result that the amount said by the defendant to remain outstanding and due and owing is quantified in the sum of HK$85,058.11.

10.  In reply, in its Amended Reply and Defence to Counterclaim dated 28 November 2008, the plaintiff condescends to some detail about this antecedent transaction, none of which is of particular relevance for present appellate purposes, but avers that the aforesaid outstanding sum of HK$85,058.11 specifically was compromised by the parties by means of a settlement with the defendant in or around March 2004 resulting in the plaintiff paying the defendant a cheque in May 2004 in the sum of HK$47,180.56, which sum, it is averred, “was accepted by the defendant in satisfaction and discharge” of the defendant’s claim for non-payment.

11.  Hence, according to the plaintiff, no sum remains outstanding as now is alleged by the defendant to be the subject of the counterclaim, and in the court below summary judgment was sought by the plaintiff for the full sum claimed to have arisen as a result of the later 2005-2006 transaction, namely HK$122,880.09, together with interest thereon and costs.

12.  Pursuant to the summons for summary judgment, dated 28 November 2008, affirmations duly were filed on either side, and the matter came on for hearing before HH Judge Yung on 20 May 2009.

13.  In an extemporary judgment, which if we may respectfully say so represents a less than prime example of ordered sequential thought, being replete with the sort of extraneous and irrelevant observation to which by their very nature extemporary judgments are susceptible, the learned judge took the view that there was no triable issue in relation to the plaintiff’s claim for the sale and purchase of the plastic goods, and further observed that “as a whole there is no reasonable prospect for the defendant to counter the defence to counterclaim by raising a valid settlement”, which in any event clearly constituted “quite a separate matter”.

14.  Hence by his Order dated 20 May 2009, Judge Yung entered summary judgment for the full sum claimed by the plaintiff, that is HK$122,880.09, together with interest and costs, against which award the defendant now appeals.

15.  Was the judge correct?

Argument

16.  For the defendant/appellant Mr H Y Wong urged that the learned judge clearly had been in error in so holding, and that in the particular circumstances of this case that his Order should be set aside, and that the defendant should be accorded unconditional leave to defend, arguing that, in accordance with established principle, tangled factual issues such as that resulting from that which clearly had been a ‘running account’ between these parties simply was not susceptible to summary disposition solely on affidavit.

17.  In his helpful skeleton argument Mr Tony Ng for the plaintiff/respondent (whom in the event was not called upon to address the court) had submitted, correctly, that the central issue in this case was whether the defendant could show an arguable set-off and counterclaim, that on the plaintiff’s case demonstrably it could be shown that indeed there had been a valid and binding settlement of the earlier transaction which now formed the basis of an alleged (and apparently factually resurrected) counterclaim, and that the versions of events as now put forward by the defendant in this regard were “ambiguous, inconsistent and inherently implausible”. In his written submission Mr Ng condescended to some detail, all of which served to show, he said, that the defendant’s allegations as presently made were confusing and also contradicted contemporaneous documents; he suggested that there was no arguable set‑off and/or bona fide counterclaim, and that the learned judge had been correct to hold as he had.

18.  In the course of his argument Mr Wong – whom, we are minded to observe, did his best with a difficult brief – accepted that the central issue was the veracity of this alleged ‘settlement’ in the sum of HK$47,180.56 – but nevertheless stoutly maintained that there was sufficient on the face of the papers to merit the matter being permitted to proceed to trial, or, at the very least, to justify the award of conditional leave to defend.

Decision

19.  As an initial observation it seems to us, with respect, that on either side of this litigation fence these are small claims indeed, and that the amounts the subject of this dispute hardly merit the litigious treatment being accorded to them, with the consequent costs’ outlay being expended thereon.

20.  Be that as it may. An appeal has been mounted to this court requiring decision and, as indicated at the outset, ultimately the defendant/appellant proved unsuccessful in getting home and in persuading this court to interfere with the Order of the learned judge below.

21.  Having reflected on the entirety of the evidence, and upon the arguments ably advanced by Mr Wong, we were unable to be convinced that there was enough placed before the court to justify setting aside the currently extant Order for summary judgment in favour of the plaintiff.

22.  As Mr Wong fairly accepted, the key to the resolution of this appeal was the view that properly was to be taken as to the veracity of the earlier ‘settlement agreement’, wherein the plaintiff’s then debt to the defendant was compromised by the plaintiff’s payment of the sum of HK$47,180.56, together with the return by the defendant of the particular moulds which had been used to make the plastic goods then in question.

23.  Whilst we appreciate that it was the defendant’s accusation on affidavit that this so-called ‘settlement’ was prompted by “coercion”, there is little if anything volunteered to underpin this bare assertion.

24.  It is common ground that between these parties there was in operation what is commonly referred to as a ‘running account’, yet that which in our view is telling is that Mr Wong wholly was unable to identify any stage subsequent to this settlement wherein the sum of HK$85,058.11, now the subject of the desired set-off, specifically was referred to in any account or invoice from defendant to plaintiff. In fact, subsequent to this ‘settlement’ the record indicates that defendant had paid something in the order of 120 of the plaintiff’s invoices absent reference to any outstanding indebtedness for such sum, and yet all that Mr Wong was in a position to do was unsuccessfully to attempt, from the Bar table, to draw inferences in his client’s favour from various items of correspondence, which endeavour in our view clearly proved insufficient for his purpose.

25.  We further attribute not inconsiderable weight to the undisputed fact that at the time of the ‘settlement’ resulting in the cheque payment by the plaintiff of the sum of HK$47,180.56 – in itself a precise and far from random figure – the defendant also had handed the relevant moulds back to the plaintiff, when, it seems to us, the obvious course to have adopted in lieu of payment of the full sum claimed to have been outstanding would have been retention of the moulds qua defendant’s lien.

26.  At the end of the day, therefore, although initially tempting to opt for the alternative course of leave to defend on the basis of summary judgment in the sum of HK$37,821.99, with leave to defend on the balance of HK$85,058.11 conditional on payment into court of such sum, the hard analytical conclusion to which we have been driven, after having taken all the circumstances into account, was that the judge below was justified in ordering summary judgment in the full amount of the plaintiff’s claim – hence this court’s dismissal of this appeal, with costs to follow the event, at the culmination of this hearing.