XCHRX ANDREW PETER WINDEBANK AND ANOTHER v. PRIME CONSULTANTS LTD. t/a WINFIELD MOTORS CO.

HCA6338/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6338 OF 1998

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D E C I S I O N

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The background

1. On 15th May 1998, the Plaintiffs applied, pursuant to Order 29 Rules 1 and 2 of the Rules of the High Court, for an order requiring the Defendant to deliver up to the Plaintiffs a Caterham motor car ("the car"). Alternatively, they asked for an order that the car was to be sold by the Plaintiffs and the proceeds of sale to be paid into the Court or a stakeholder's account.

2. The Plaintiffs claimed that the car was delivered to the Defendant pursuant to an agreement ("the agreement") in which the car would be sold by the Defendant on a sale or return basis. The Defendant did not sell the car and despite request of the Plaintiffs to return the car, it refused to do so. The defence taken by the Defendant was that the agreement between the parties had not been terminated and the Plaintiffs were not entitled to take back the car. Barnett J. ordered that the car be sold and the proceeds of sale be paid into Court until further order.

Application for payment out

3. The Plaintiffs now apply to vary the order and have the money paid out to them. The Plaintiffs did not provide any evidence in support of the present application. The point taken by the Plaintiffs is that although the Defendant at the previous hearing denied the agreement had been terminated, it now agrees in its Defence that the agreement had been terminated. As a result, there is no claim to the money in Court which represents the value of the car and the money should be released to the Plaintiffs. It is argued that the money should not remain as security for the Defendant's counterclaims.

Rights not determined

4. The learned Judge did not give reasons for his decision. In my view, he made the order as a practical solution to the impasse of the parties. It was not based on a determination of the respective rights of the parties. The matter can be tested in this way. The Defendant, at that stage, disputed that the agreement had been terminated. Notwithstanding this, the learned Judge did not refuse the Plaintiffs' application and instead, he ordered the car to be sold. On the other hand, he allowed the Plaintiffs to amend their Statement of Claim by pleading termination of the agreement. However, if the agreement was terminated then the Plaintiffs should have the car returned to them. This, the learned Judge did not order. Hence the order made by the learned Judge was not based on a determination of the rights of the parties.

5. This being the case, whether the Defendant now accepts the agreement had been terminated or not cannot be the basis for varying the order. As a matter of fact, what the Defendant actually pleaded is that by the service of its Defence it accepted the repudiation by the Plaintiffs of the agreement and the agreement was terminated.

Plaintiffs seeking judgment

6. In the Amended Statement of Claim, the only substantial relief claimed by the Plaintiffs is for the release of HK$220,000 being the proceeds of sale of the car. The original relief was for the return of the car or its value and damages or the return of the car and damages. Although this is disputed by the Plaintiffs, they are in effect seeking to obtain judgment of the sum now in Court. Mr Collins said that the only relief that the Plaintiffs need to pursue is for damages because there is no claim to the money now in Court. That may be their intention but I do not think that this is how civil litigation operates. Until such time as the pleadings are amended, one has to proceed on the basis of the reliefs set out in the claim.

7. The Defendant counterclaims $64,500 for the promotion of the car. The Defendant also claims that it was appointed as the sole agent of the Plaintiffs to deal with Caterham cars and it claimed damages in the sum of $810,000 representing the anticipated profits that the Defendant could make as the distributor of the cars. These two claims are not pleaded as set off to the Plaintiffs' claim but merely raise as counterclaims.

8. Without finally deciding on the matter, it seems that the promotional expenses arise out of the agreement relating to the car itself. This being the case, if the Plaintiffs had applied for summary judgment against the Defendant, the sum of $64,500 could be used to set off part of the Plaintiffs' claim. In any event, even if there is no defence to the Plaintiffs' claim, the Court has the power to stay the judgment pending the determination of the counterclaims.

9. The Plaintiffs have, of course, not proceeded by way of summary judgment against the Defendant. The point is simply that had they done so, there remains the real question of whether they could obtain the money immediately by having them paid out of Court.

10. This is not a case where the Defendant had applied for security on the counterclaims. The situation arises by reason of the order which was not appealed against by either of the parties.

Conclusion

11. In the circumstances, I must refuse the application with costs nisi to the Defendant.