WONG TAK SHING AND ANOTHER v. AMRTEX INTERNATIONAL LTD

IN THE COURT OF APPEAL

No. 110 of 1987
(Civil)

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JUDGMENT

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Kempster, J.A.:

1. Between August and November 1984 certain transactions involving the sale and purchase of textiles took place which, alas, led to litigation between the parties thereto. On 28th January 1985 a writ was issued whereby the plaintiffs claimed from the defendant company $342,533 as the balance of the price of goods sold and delivered.

2. On 18th February of that year the defendants paid $137,635 into court and, by their Defence filed during the following December, admitted liability to the plaintiffs in that sum subject to their Counterclaim.

3. The next matter of immediate concern is that on 18th November 1985 Master Betts gave the defendants unconditional leave to defend. This, I assume, was on the footing that the monies counterclaimed might exceed the sum admittedly owing to the plaintiffs.

4. On 14th May 1986, the sum of $137,635 remaining in court, solicitors for the plaintiffs wrote to those acting for the defendants offering to compromise both claim and counterclaim on the payment by the defendants to the plaintiffs of $25,000 in full and final settlement. That offer, made without prejudice, was accepted without reservation in a matter of hours; so swiftly indeed that the acceptance overtook a further letter from the plaintiffs' solicitors, also dated 14th May, seeking to substitute for $25,000 the figure of $250,000.

5. The proceedings continued in a somewhat desultory manner until, on 20th May of this year, the defendants issued a summons for a stay save for leave to take out of court the money they had paid in on 18th February 1985. This was perfectly legitimate procedurally because when an action is thought to have been compromised and the compromise is not implemented by one party or the other the party aggrieved may either rely on the agreement by way of amendment to his pleading in the instant action or apply to the court to stay the proceedings by reason of such compromise.

6. When the matter came before Master Jones he, as the terms of his order demonstrate, found that the proceedings had effectively been compromised:

“It is ordered that all further proceedings be stayed on the ground that the terms of settlement have been arrived at by the parties save for the purpose of leave to the defendant to withdraw the payment-in.”

Against that order the plaintiffs appealed. Penlington J. allowed the appeal and set the master's order aside. Accordingly, as the matter stands, there is no stay on the action commenced in January 1985. The defendants now invite this court to find that the judge erred in the exercise of his discretion and to restore the stay imposed by the master.

7. Penlington J. having reviewed both the history of the litigation and a number authorities also canvassed before us found himself unable to make any finding as to whether or not the obvious mistake of the plaintiffs in inserting the figure of $25,000 in their first letter of 14th May 1986 was known to the defendants because he had heard none of the relevant deponents cross-examined on his or her affidavit and because he was satisfied that, in any event, it would be an inappropriate exercise of his discretion to uphold the stay. In my view the question posed for our determination is whether or not he erred in refusing a stay expressly because he was satisfied that the plaintiffs' solicitors had written a letter by reason of a mistake which would render it unconscionable for the court to lend its assistance to a party seeking to take advantage of it and implicitly because it would also be inappropriate so to do in circumstances where the prima facie agreement between the parties might successfully be impugned in the same or related proceedings in due course. If that was not implicit in his judgment I, for my part, would find that no judge faced with the evidence which was before him and is before us could properly come to any other conclusion. Further, I am quite satisfied that the judge made no finding and certainly I would make no finding as to whether or not the parties to this litigation are bound by the exchange of letters on 14th May 1986.

8. In a situation where I would certainly have made the same order had I been faced with the same evidence I would without hesitation dismiss the appeal.

Barker, J.A.:

9. I agree and there is nothing I would wish to add.

Hunter, J.A.:

10. I agree. The issue was whether the letters passing between the solicitors on 14th May constituted a binding and enforceable agreement between the parties. In the circumstances which my Lord has outlined, in my judgment at least, that issue can only determined at the trial of this action or of some preliminary issue established for the purpose and after hearing the oral evidence and cross-examination of all parties concerned. It necessary follows to my mind that the judge was perfectly right in declining to decide that issue on affidavit evidence alone. It equally follows, in agreement with my Lord, that there was really no basis on which he could exercise his discretion in favour of the appellants because any grant of a stay of the proceeding would, in effect, summarily determine this question in their favour. I also agree that this appeal should be dismissed.