XCHRX CHINAWAY TRADING LTD. v. SUN STAR FOCUS DEVELOPMENT LTD.

1995, No. A10891

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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Background

1. On 16 November 1995, I handed down a judgment in which I ordered, following an interlocutory application for specific performance, that the defendant should, under a contract, deliver to the plaintiff 630 dehumidifiers immediately, and that the remaining 712 dehumidifiers sold under the contract should be made as soon as a bank draft had been cleared and the defendant credited with the proceeds. I also made an order nisi that the costs should be in the cause.

This Matter

2. The plaintiff has now taken out an inter partes summons in which it asks that the costs order should be varied to include a certificate for two counsel,

for a final decree of specific performance, inquiry into damages sustained by the plaintiff, payment of the amount found to be due, and interest, within 14 days, and costs.

Certificate for Two Counsel

3. As to the application for a certificate for two counsel, Mr Leong says that the use of senior counsel in this matter cannot be justified. He now says that the matter was straightforward, without any difficult point of law or fact. As Mr Lim has pointed out, this is not quite the attitude he took at the hearing. Then he submitted that the order sought by the plaintiff was unusual and that the burden on the plaintiff was particularly onerous. I think he was right. In my view, the matter was not run-of-the- mill. The plaintiff was seeking an interlocutory mandatory injunction. This is a difficult order to obtain. There was not a great deal of money involved as far as the purchase price was concerned, but it was an important matter to the plaintiff, who had contracts to fulfil and was exposed to damages suits if he failed to perform. I believe that this was a matter suitable for the employment of senior counsel, and a grant a certificate for two counsel.

Final Judgment

4. In an affirmation filed and served on 9 January 1996, Mr Chow Chun Man, on behalf of the defendant, said that the defendant did not oppose an order for specific performance of the contract or for an inquiry into damages. In his skeleton submission dated 10 January 1996, Mr Leong repeated that this was the defendant's attitude. However, when the matter came before me, Mr Leong said that his instructions now were to argue that the defendant had an arguable defence regarding the claim for specific performance of the 712 dehumidifiers.

5. The defence argued is precisely the same as that advanced at the hearing of the interlocutory application, which I rejected for reasons stated in my judgment. It is true that I am now dealing with an application for final judgment, but I have not been given any reasons that would justify me taking a different view.

6. The only reason that induced me to order delivery of the 712 dehumidifiers only after the draft had been cleared was the fact that I was told by Mr Leong that, as at 13 November 1995, the draft had not been cleared. The defendant says in an affirmation filed for the purposes of this matter that it "was notified by its own banker that the draft had been cleared on or about 22 November 1995". The fact of the matter is that the draft was cleared on 8 November 1995. Mr Leong says that he told me that the draft had not been cleared on 13 November 1995 because this is what the defendant had said after inquiries had been made by it. I find it very difficult to believe that, if the defendant had made proper inquiries, he would not have been told what the plaintiff's solicitors were told after a simple inquiry; that the draft had been cleared on 8 November 1995.

7. The defendant does not have an arguable defence to the claim for specific performance relating to the 712 dehumidifiers for the reasons I gave in my judgment.

8. I conclude that the plaintiff is entitled to a final decree that the contract of 31 July 1995 be specifically performed, and to an order for an inquiry into damages suffered by the plaintiff as a result of the defendant's failure to perform it.

Payment of Any Damages

9. In this event, Mr Leong asks that any judgment for damages found after the inquiry should be stayed pending determination of a claim for damages by the defendant against the plaintiff as a result of an alleged breach of another contract entered into in September 1995, which I described in my judgment of 16 November 1995. In that judgment, I found that the plaintiff had not breached this contract. I also held that there was no well-founded basis for fearing that the defendant would not perform it. I think subsequent events have confirmed this.

10. The defendant issued a writ of summons in respect of a claim arising out of the breach of this contract on 21 December 1995. The summons also included another claim. I will deal with this later.

11. On 23 November 1995, the defendant's solicitors wrote to the plaintiff's solicitors and said that "the first lot of goods shall arrive at Hong Kong on 24th November 1995" and asked for payment before 5 pm on that date. Having regard to the fact that the defendant insisted that the plaintiff pay by letter of credit, this request was unreasonable. On 24 November 1995, the defendant's solicitors extended the deadline for payment to 12 noon on 25 November 1995; a Saturday. On 25 November 1995, the defendant's solicitors extended the time again to 10 am on 27 November 1995; the following Monday. On 27 November 1995, the defendant's solicitors said that the defendant accepted the plaintiff's repudiation of the contract. In spite of this purported repudiation, the defendant, on 30 November 1995, presented the plaintiff's post-dated cheque for the amount of the price of the goods to the bank for payment. Up to the stage of the purported repudiation, no documents had been supplied to the plaintiff to show that the goods had arrived. On 29 November 1995, the plaintiff's solicitors told the defendant's solicitors that the plaintiff had obtained the letter of credit. On 14 December 1995, the defendant's solicitors told the plaintiff's solicitors that the defendant had sold the goods for something like 22% of the price that the plaintiff was willing to pay under the letter of credit, and claimed the difference by way of damages.

12. In my view, these circumstances make it very difficult to take the defendant's claim with any degree of seriousness. My feeling, from all the circumstances of this case, is that the defendant is not to be trusted. The defendant's attitude towards the proceedings before me is illustrated by the fact that it has treated my order for delivery in a very cavalier fashion.

13. I ordered, on 16 November 1995, that the 630 dehumidifiers should be delivered immediately. It was not until 20 November 1995 that the defendant gave to the plaintiff a cargo receipt for 629 dehumidifiers, and, in order to obtain delivery, the plaintiff was obliged to pay $7,100 storage charges and $1,300 as a vanning charge. This was not proper compliance with my order.

14. Regarding the remaining 712 dehumidifiers, as I have said, the draft was cleared on 8 November 1995, and the defendant could easily have ascertained this. Nevertheless, it gave a delivery order in respect of the 712 dehumidifiers to the plaintiff only on 25 November 1995, a Saturday, so that the plaintiff could obtain delivery only on 28 November 1995. And then the plaintiff had to pay $14,915.36 by way of charges before it could obtain the dehumidifiers. Again, the defendant treated my order with contempt.

15. The defendant's solicitors made some suggestion that there was nothing wrong with the plaintiff having to pay charges to obtain the delivery that I ordered. That, in the light of the facts found in my judgment, was palpable nonsense, and also verging on being contemptuous.

16. The other claim in the defendant's writ of summons is for US$206,576 for "liquidated damages suffered . . . as consequence of the . . . breach an agreement or a series of agreements . . . made partly orally, partly in writing and partly by conduct and/or as a result of a course of dealing . . .". I have the defendant's evidence regarding this claim. It is, in my view, not at all impressive. It is not a plausible claim.

17. I do not think that the defendant has any plausible claim that would justify any stay following the inquiry into damages, and I decline to order one.

Costs of Hearing on 1 November 1995

18. There is another aspect of the costs raised by the defendant. The plaintiff took out the inter parties summons claiming the interlocutory relief on 27 October 1995, returnable on 1 November 1995. It was served on the defendant on 30 October 1995. The next day, substantial evidence was served on the defendant. The defendant's solicitors asked for more time, giving an undertaking not to dispose of the goods. The plaintiff's solicitors refused this. At the hearing, the judge, not surprisingly, granted an adjournment at the request of the defendant, against an undertaking not to dispose of the goods. The defendant says that the costs of that hearing should be to the defendant in any event, taxed on a refresher basis. I agree. I can understand that the plaintiff was anxious to press for delivery as early as possible, and, in the result, it has succeeded in its claim, but I believe it was unreasonable to expect the court or the defendant to deal with the matter on such short notice. Accordingly, I order that the costs of the hearing on 1 November 1995 be to the defendant, taxed on a refresher basis.

The Result

19. In the result, I order that my order for costs in my judgment of 16 November 1995 include a certificate for two counsel, and that there be an order in terms of the draft minutes of order annexed to the plaintiff's summons, varied to the extent that I have indicated in the preceding paragraph.