PRIMARY COMPANY LIMITED v. SEMBODJA HONG KONG LIMITED

1988 No. A3386

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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DECISION

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1. There are two short points to be determined on facts. The disputed facts are that by an alleged contract, the plaintiff agreed to sell and the defendant agreed to buy l,000 metric tons of acrylonitrile. It is the contention of the plaintiff that the defendant had agreed, by conduct, to buy. If I understand counsel correctly, it is alleged that the defendant's acceptance of the plaintiff's counter-offer was evidenced by conduct. Put another way, the defendant's acceptance is to he implied from conduct. I need not specify what alleged subsequent conduct is, but it is a complaint of the defendant that such alleged conduct evidencing its alleged acceptance has not been pleaded.

2. Counsel for the plaintiff argues that as pleaded paragraph 1 is, per se, sufficient to support the presently alleged concluded contract. Paragraph l, in my view, cannot be interpreted as meaning more than an alleged agreement to buy by the document therein set out and pleaded. The defendant is averred to have agreed by signing a document, not by conduct. In no way does it refer to any alleged conduct evidencing an alleged acceptance on the part of the defendant.

3. I do not propose to repeat myself. In more ways than one, the Statement of Claim is defective, and paragraph 1 and paragraph 2, left in their present state, could not have enabled the plaintiff to obtain interlocutory judgment successfully. In addition, paragraph 1 of the Statement of Claim lacks any reference to the alleged conduct on the part of defendant, which is essential to its alleged acceptance for a concluded contract. That is a further deficiency by which the plaintiff must necessarily fail before the learned Master on its application for summary judgment.

4. If, indeed, the Statement of Claim in its paragraph 1 and others can be taken as having effectually pleaded a concluded contract, Counsel for the defendant argues that the defendant denies any acceptance. Counsel for the defendant has prayed in aid that the alleged acceptance of the defendant has never been pleaded nor particularised. But even on the assumption that the Statement of Claim could stand in so far as it purports to set up the presently alleged concluded contract, Mr Sussex submits that a mere factual denial of the defendant's acceptance would warrant a trial and that interlocutory judgment should, therefore, not have been granted.

5. I believe there was advanced before the learned Master a submission that the telexes, CBL2 and CBL4, referred to in the affidavit of Mr Chan Bik-luen filed on the 19th May 1988 constituted acceptance. Counsel for the defendant submits that an acceptance must be a final and unqualified expression of consent to the terms of an offer and that the expression of such consent must he communicated to the other party concerned. Counsel argues that no statement made in the very same document in which a contract is repudiated could amount, in law to communication of a final and unqualified acceptance of the contract. That contention does not seem to have been vigorously contested by Counsel for the plaintiff. Mr Sussex also contends that the telexes themselves evinced no intention to accept. Mr Chan, for the plaintiff, suggested that the counter-offer had earlier been accented and that these telexes merely confirmed the prior acceptance. On the effect of the telexes alone, even on the assumption that Mr Chan is correct, we are still left with a factual denial of acceptance from the defendant. Counsel for the defendant quite rightly maintains that such factual denial must go to trial and interlocutory judgment should not have been given. Whether or not the counter-offer was previously accepted by conduct, the further obstacle is that it is not so pleaded. The existing averment of an acceptance communicated in the contractual documents is no longer supported.

6. No one before me has canvassed the possibility of conditional leave. We are concerned solely, on the arguments advanced by both Counsels, with an interlocutory judgment. Mr Sussex's submission cannot be faulted in my view. A factual denial advanced on behalf of the defendant warrants a trial and interlocutory judgment should not have been granted. For all these reasons, the appeal must succeed and I allow the appeal with costs against the plaintiff. The order of the learned Master and the judgment, if entered pursuant thereto, must therefore be set aside. Costs reserved this morning be also costs against the plaintiff.

1988 No. A3386

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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RULING

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                The plaintiff now applies for two amendments. First, he applies to add the words "and certain amendments thereto sent to the defendant on or about the 19th March 1988" after the date, the 8th March 1988, in paragraph 1 of the Statement of Claim. Further, Counsel for the plaintiff applies to amend the date in paragraph l(3) and paragraph 2 of the Statement of Claim , from the 10th April 1988 to the 7th April 1988.

                The latter proposed amendment is necessitated by the stipulated L/C payment date which is now acknowledged by the plaintiff to be on or before the 7th April. Time for payment in the Defendant's copy is said to have been accurately dated, but the payment date on the plaintiff's copy is said to have been wrongly entered as the 10th April "due to a clerical error on the part of the plaintiff's staff". The former proposed amendment is, so the plaintiff claims, desirable because the alleged concluded contract was not dated the 8th March 1988. It is common ground now that the document bearing the date of 8th March was thereafter returned to the defendant with amendments as a counter-offer. None of these was ventilated before the learned Master.

                Counsel for the defendant resists the application. Counsel relies on the reference in the 1988 Vol. I White Book p. 135 14/l - 14/4, which suggests that the Statement of Claim should be complete and good on its own and that if the defect is a substantial one, then a summary judgment application will be dismissed.

                On the Statement of Claim as it now stands, leave to sign interlocutory judgment has been obtained. Counsel for the plaintiff maintains that the interlocutory judgment should not be disturbed but preserved and that he should be granted leave to amend.

                From whatever angle the matter is being tested, I am left in little doubt that the amendment sought in terms of the proposed insertion after the date "8th March 1988" in paragraph 1 of the Statement of Claim is a matter of substance.

                Counsel for the defendant justisfiably made great play of the fact that the contract between the plaintiff and the defendant was neither dated the 8th March 1988 nor could it have been evidenced by the defendant's Purchase Contract as pleaded. I cannot find any flaw with that submission of counsel. The proposed insertion would only have the limited effect of diminishing the grossly, inadequately pleaded paragraph 1 of the Statement of Claim.

                The defect as criticized by Mr. Sussex, Counsel for the defendant, is indeed one of substance. That would have led to a dismissal of the plaintiff's application for summary judgment before the learned Plaster and the interlocutory judgment could not have been obtained. Hence, the plaintiff could not have been successful in that application. If the plaintiff declines, as its now does, to have the interlocutory judgment set aside, the instant application to amend would be an invitation to validate retrospectively its 0. 14 summons founded on the very same substantial pleading defect now sought to be remedied, which should have brought about its dismissal. I cannot allow that to occur, and the application to have paragarph 1 of the Statement of Claim so amended by the proposed insertion cannot be acceded to.

                As for the proposed amendment of the date from the 10th to the 7th April 1988, it is now maintained that in the copy of the plaintiff's own contractual document, an wrong date was put in by mistake. Evidently, the position must have been that at the time when these proceeding were instituted with the Statement of Claim in its present form, the plaintiff and its legal advisers were both labouring under no misapprehension, that they relied on a breach on the 10th April, and they so pleaded it. It was not an error of intention nor an error in pleading. They truly sought to rely on a 10th of April breach and raised it on the pleading. It is an error committed much earlier than the institution of this action and the drafting of the Statment of Claim as it now stands by the pleader - committed sometime earlier when the date was put on the contractual document by the Plaintiff's staff. The error is only discovered recently. The cause of action raised in the present paragraph 2 allegedly arose on the 10th April; it did not arise on the 7th. A breach on the 10th, as alleged, is infinitely different from any breach that fell on the 7th.

                Despite total lack of enthusiastic support by Counsel for the defendant, I find myself being unable to be deflected from the conclusion that in the present Statement of Claim, a different cause of action has been pleaded, different from the one now sought to be introduced by the proposed amendement to the 7th April 1988.

                An application of this nature would not usually draw much criticism or be met with staunch opposition subject to the question of costs. But again, the plaintiff, through his counsel, maintains that the interlocutory judgment should not be set aside.

                On my analysis and the conclusion that I have reached, the interlocutory judgment was granted on a cause of action that arose on the 10th April. If that were to be maintained by the plaintiff, there would be no room for the plaintiff to seek by amendment an introduction of a different cause of action accrued on the 7th.

                In addition, without amendment to paragraph 1 by the proposed insertion after the date of the 8th March 1988, Mr Sussex is quite right that the whole exercise would be futile. Also on that ground, I would not allow the application of the plaintiff for the date of the 10th April 1988 to be amended to the 7th April 1988.

                I can anticipate almost insurmountable difficulty in the pending appeal but we have to cross a bridge at a time.

                It is my decision that the application of the plaintiff to amend should be wholly dismissed and I refuse to allow the application made on its behalf by Mr. Chan. Costs is by agreement to be reserved.