LI & FUNG (TRADING) LTD v. WING HING (TANGS) FABRICS MANUFACTURING CO LTD

IN THE COURT OF APPEAL

1987, No. 17
(Civil)

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JUDGMENT

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Cons, V.-P.:

1. This appeal derives from proceedings commenced by the Plaintiff with a writ issued on the 4th June 1984 claiming upon a dishonored cheque. The Defence alleged firstly that the cheque, which had been given in part reimbursement of a deposit paid by the Plaintiff, had been given on condition that the Plaintiff would fulfill the rest of the contract to which the deposit related; secondly that the Plaintiff had not fulfilled the rest of the contract and was therefore not entitled to recover on the cheque.

2. The Defendant further counterclaimed damages for loss of profit on that unfulfilled part of the contract. By the Reply the Plaintiff admitted the initial contract, denied that the cheque had been given subject to any condition, and alleged that the contract had been in fact fulfilled.

3. The proceedings first came on for hearing before His Honour Judge Downey, sitting as a Deputy Judge of the High Court, on the 21st May 1986. In a reserved judgment he rejected the suggestion that the cheque had been given subject to condition, indeed he accepted that it "had never even been a starter". He therefore found for the Plaintiff on the claim, but subject to the counterclaim. As to that he went into the documents in very great detail. He concluded that the Plaintiff had fulfilled the rest of the contract.

4. In the course of his reasoning he found that the evidence led him to believe that there had in fact been two contracts between the Plaintiff and the Defendant, and that some of the deliveries which had been put forward as being under the contract in question had in reality been under another contract. Nevertheless even so, and by giving the Plaintiff the benefit of the five per cent more or less margin which had been included in the contract, he was satisfied that the Plaintiff had accepted sufficient delivery to fulfill the contract. He therefore dismissed the counterclaim.

5. The Defendant, not being satisfied with the decision, brought the matter to this Court. On the 12th November last year the judgment on the counterclaim was set aside and a retrial ordered. At the same time the Plaintiff was given leave to amend its Reply by deleting those deliveries which the judge had found not subject to the contract in question and adding others which he had found were. To that extent the Plaintiff accepted the existence of two contracts, and we are told that it was expressly on the premise of two contracts and payment by two Letters of Credit that the retrial before Nazareth J. was conducted.

6. The determination of Nazareth J. was far less favourable to the Plaintiff who, in his opinion, had accepted delivery well below that of the contract figure. 'He gave judgment accordingly on the counterclaim in a sum of just over half a million dollars.

7. In this appeal the Plaintiff now wishes to re-amend the Reply by suggesting that there had been a variation of the original contract. This would effectively and necessarily reinstate the items deleted by the first amendment. Request is also made to allege other terms of the agreement, terms, which as far as I can see, have not so far been mentioned at any stage of this action.

8. In addition the Plaintiff wishes to introduce a bundle of documents which have been obtained since the trial. They come from the bankers of those in America who are associated with the Plaintiff and had made payments under the contract on its behalf. The object of the documents is to show that payments for the deleted items had been made under the same letter of credit as those which were accepted to be under the contract in question. It would follow, it is said, that the deliveries must have been then under the same contract. Furthermore the documents would show that one particular finding of Nazareth J., in relation to Invoice No. 1427, which he found not to be within the original contract, is inconsistent with their contents.

9. The documents are introduced by an affirmation of a Mr. William Fung Kwok Lun, who claims to be, and to have been at all material times, the Managing Director of the Plaintiff. It is to be noted however, that he gave evidence in neither court below.

10. The rules for admission of fresh evidence at this stage are well established and to be found in Ladd v. Marshall(1). Three hurdles must be overcome by he who wishes to bring it in. The first is that the evidence would not have been discoverable with the exercise of reasonable diligence by the time of the trial.

11. In my view the Plaintiff falls at that first hurdle. The issue before Nazareth J. was whether delivery had been taken. An obvious avenue for exploration was to see what had been paid for. Indeed I think that much is conceded by Mr. Sceats, who appears for the Plaintiff and who, if I may so say with respect, has been most industrious in the preparation of this appeal. The way he puts his case is that, by reason of the conduct of the Defendant throughout the whole course of the proceedings, the position in which the Plaintiff now finds himself, of seeking to put in the fresh evidence has been created by misleading or even deceptive conduct on the Defendant's part.

12. Counsel relies on three factors in support of his argument. The first is the failure of the Defendant to comply with a routine order for discovery; secondly, the Defendant produced irrelevant documents at the first trial upon which the judge, and later the Plaintiff, relied; thirdly, the Defendant pleaded, only to abandon at the trial, a claim for damages in respect of certain late payments. This indicated at least a knowledge of the documents which the Plaintiff now seeks to produce.

13. It must be observed that the Plaintiff has had two opportunities to enforce the failure to comply with the order for discovery, that is before Judge Downey and again before Nazareth J. It may be possible to suggest, by analogy to the facts in Skone v. Skone(2) that by the acceptance of an agreed bundle at the trial, the order for discovery was by agreement dispensed with. I do not wish necessarily to be thought to take that view. I can find no other assistance in that authority, which relied to a very large extent upon the fact that there the husband did not have the slightest idea that his wife was in possession of the documents which she subsequently disclosed. That was not the situation in the present instance.

14. But in any event and quite apart from that aspect, I must confess that for my part I fail to find any logical progression from the three factors which I have just enumerated to misleading or deception on the part of the Defendant. I can do no more than say that it seems to me that when the Plaintiff adopted the findings of Judge Downey and relied on them in the subsequent trial before Nazareth J., it acted on its own assessment of the situation. I am not persuaded that it was, in any way, misled or deceived into that course by the conduct of the Defendant.

15. Therefore for my part I would not admit the evidence that is now proferred, nor would I allow any amendment of the Reply. In those circumstances the appeal cannot possibly succeed and I would dismiss it.

Kempster, J.A :

16. I too would refuse the applications to amend and produce fresh evidence for the reasons given by my Lord and in consequence also would dismiss this appeal.

Clough, J.A.:

17. I agree with both the judgments that have been delivered and have nothing to add.