XCHRX AULT & WIBORG INTERNATIONAL LIMITED v. SUNGRAFIC (B.W.) PRINTING EQUIPMENT COMPANY LIMITEDXCHRX AULT & WIBORG INTERNATIONAL LIMITED v. SUNGRAFIC (B.W.) PRINTING EQUIPMENT COMPANY LIMITED

1995, No. CL 197

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. The plaintiff claims the sum of ￡ 197,866, and interest, on the basis of the price of goods sold and delivered by the plaintiff to the defendant, or, alternatively, the defendant being the acceptor of certain bills of exchange drawn by the plaintiff on the defendant and payable to the plaintiff between 22 October 1994 and 17 March 1995. The plaintiff has issued a summons under Orders 14 and 29 asking for final judgment or an interim payment. There is no allegation in the statement of claim, or in the evidence adduced, that the bills were duly presented for payment.

2. The defendant says that some of the goods sold were defective, and the plaintiff has a claim for damages in the sum of some $500,000 in respect of this. Mr Lam concedes that this would not be a good defence to the claims on the bills of exchange.

3. The defendant says, however, that, in respect of certain heat-set ink products, the defendant has a defence in that these goods were rejected by the defendant and the plaintiff, in early May 1995, accepted this rejection. The plaintiff, the defendant says, agreed to take back these goods. The price of these goods was ￡ 37,240, and, to this extent, Mr Lam says there was a failure of consideration.

4. This allegation, if true (and there is no reason at this stage to think it is not), does provide a defence to the extent of ￡ 37,240. The consideration given for the bills was the delivery of the contract goods. If the goods were not delivered, there would be a failure of consideration. Equally, if the goods were delivered, but the plaintiff agreed to take them back, there would be a failure of consideration. The reason for the plaintiff's agreement that these goods should be re-delivered to it is, in this context, irrelevant. The plaintiff cannot recover under the bills when it has agreed to take back the goods.

5. Accordingly, in my view, the plaintiff is, at this stage entitled only to the difference between ￡ 197,866 and ￡ 37,240; that is, ￡ 160,626. Judgment is entered in favour of the plaintiff for this sum, with interest as claimed. It would seem that the plaintiff is entitled to its costs of this application. I make an order nisi accordingly.

6. The defendant asks for time to pay. It asks this because its equipment in the People's Republic of China has been "impounded in China, causing cashflow problems for the Defendant". I do not think this is a situation in which I should order that the plaintiff should not be at liberty to seek to recover money clearly owing to it. This may prejudice the plaintiff without good reason. It may be that this would allow other creditors to get the first bite. It may be that it would be wise for the plaintiff to give the defendant some lee-way, but that is a matter for it to decide. I do not feel that I should intervene here.