SITEC ELECTRONICS LTD AND OTHERS v. CHAN KWOK KEUNG t/a CHAP YAU (KEUNG KEE) CHINA HK TRANSPORT CO

DCCJ1456/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1456 OF 2004

R U L I N G

1. There are two applications before me.  One is the application by the three Plaintiffs (the Plaintiffs) appealing against the order of Master Poon, who had refused the Plaintiff’s application for striking out of paragraph 18 and paragraph 24 of the amended defence.

2. The second application is made by the Defendant to re-amend the amended defence by deleting the reference to “the expressed term” in paragraph 18 of the amended defence.  The effect of the amendment is that the Defendant would no longer rely on an expressed term for the defence of limitation of liability.

3. The appeal is heard by way of a re-hearing.  I will first deal with the appeal.

4. The writ of summons of this action was issued on 17 March 2004.  The amended defence which is now being complained of was served on the Plaintiff on 30 May 2005. 

5. The case has been subjected to a number of interlocutory applications and appeals. 

6. On 1 September 2006 the Plaintiffs took out a summons to strike out paragraph 18 and 24 of the amended defence on all the grounds under Order 18 rule 19(1) generally.  Master Poon dismissed the application and ordered the Plaintiffs to pay costs of $550 to the Defendant.  This is the order which the Plaintiffs now appeal.

The Plaintiffs’ Case

7. The Plaintiffs were the owners of 27 cartons of electronic products (the cargo).  They allege that the Defendant, being the carrier of the cargo, was in breach of contract and/or negligent in failing to deliver 7 cartons of the cargo, which is worth a total of US$23,796.26.  The Defendant had signed a transportation contract which provides all the obligations and liabilities of the parties.  The 7 cartons were left unattended in the unlocked truck of the Defendant and subsequently lost because of the negligence of the Defendant.

The Defendant’s Case

8. From the pleadings, the Defendant admits that it received an order to carry 38 cartons to the 1st Plaintiff’s office for a reward of $900 on the verbal instructions of one Mr Lee of the 1st Plaintiff to deliver the goods to the car park of the 1st Plaintiff’s office situated at Sha Tin Galleria.

9. The Defendant did deliver the 38 cartons of goods to the said car park.  Upon request from Mr Lee, the Defendant was required to unload 31 cartons and deliver the same to the 1st Plaintiff’s office and leave 7 cartons in the truck which was parked in the said car park.  Later the 7 cartons were found missing.

10. The Defendant denies it was liable for the loss of the 7 cartons.  Further, if it is liable, its liability is limited to the costs of the freight, which was an implied term of the agreement.  (See the third answer by the Defendant to the Plaintiffs’ request for further and better particulars.)

11. The effect of the answer is that the term is implied from:

(a)     the true construction of the agreement;

(b)    the nature of the agreement;

(c)    business efficacy;

(d)    as a matter of law; and

(e)     the circumstances of the case.

12. The main argument of the Defendant is that the Defendant had not been notified of the value of the goods and had no right of inspection and examination of the contents, state, condition and quality of the goods sealed in the cartons.  It would not be fair, just and equitable that the defendant should be liable for the price of the goods the Plaintiffs now claim.

The Issue

13. The Defendant has applied to delete “the express term” and therefore the issue is whether the implied term in paragraph 18 and thus 24 of the amended defence should be struck out.

14. The Defendant objects to the Plaintiffs’ reliance on the 5th affirmation of Mr Man Wai-kuen, which exhibits a transportation contract signed by the Defendant, in support of some other previous applications.  I gave leave to the Plaintiffs, as the basis of the argument in this affirmation has been made known to the Defendant for a long time.  The reliance by the Plaintiffs on the said affirmation today would not  cause prejudice to the Defendant.

15. The main complaints of Mr Kerry, representing the Plaintiffs, is that there was a written agreement which set out all the liabilities and obligations of both parties.  The implied term as suggested by the Defendant cannot be implied, either as a matter of statutory or common law.  Such term would be inconsistent with the intention of the parties, as shown in the written contract.

The Law

16. I have been referred to some general principles in respect of an implied term of a contract and Order 18 rule 19, which I do not think need to be repeated here.

17. It is trite law that striking out will only be ordered in plain and obvious cases (see paragraph 18/19/4 of the Hong Kong Civil Procedures 2006).  The mere fact that the case is weak and unlikely to succeed is no ground for striking out.

18. I agree with Mr Wong, counsel for the Defendant, that the Plaintiffs have not made the application promptly since the amended defence was served on 30 May 2005.  Three answers had already been given by the Defendant to the Plaintiffs with respect to the request for further and better particulars.  The case was subject to a number of interlocutory applications and appeals.  However, I think the modern approach in this respect is that the court will not feel precluded from exercising its power in a proper case simply because the application is not made promptly.

Not a Plain and Obvious Case

19. However, looking at the pleadings as a whole, in particular the third answer of the Defendant, I cannot say that it is a plain and obvious case that the defence of limitation of liability by an implied term is unsustainable.  I think there is an issue on law and facts to be decided by court at  trial.  While the Plaintiffs may be right to say that the defence is weak, it is not sufficient for me to exercise a summary jurisdiction to strike out the defence.

20. For the reasons I have stated, I think Master Poon has reached a correct decision and I therefore dismiss the Plaintiffs’ appeal.

21. In relation to the summons seeking to amend the re-amended defence, Mr Kerry has indicated that he has no objection to the application.  I will order in terms of the summons.

22. Finally, I note that the parties have spent considerable resources in pursuing interlocutory applications.  In my view, they should have applied their resources to more useful purposes, namely, to expedite the proceedings and to bring the matter to trial as soon as possible.

23. I will hear the parties on the question of costs.

(Submissions on costs)

Costs Order

24. I think costs should follow the event.  The main argument in this application is on the striking out of the implied term on the limitation of liability.  The Defendant has succeeded in this appeal so I would order the Plaintiffs to pay costs of this appeal to the Defendant.  By consent, costs of the Defendant’s summons for re-amendment be to the Plaintiffs.

(Submission on certificate for counsel)

25. I order that the costs order I have made are to be paid in any event, to be taxed if not agreed. 

26. So far as the application for certificate for counsel is concerned, I cannot say that Mr Wong is not of assistance to the court.  Indeed I am grateful to him for his assistance.  However this is just a simple case that any competent solicitor should be able to handle.  I am afraid that this is not an appropriate case for a certificate for counsel and I have to refuse the application for certificate.

(Discussion re further conduct of case)

Directions

27. I make order in terms.  So can you draft the terms you have just proposed for record purpose.

28. Witness statement to be exchanged within 28 days and such witness statement do stand as evidence-in-chief at trial unless otherwise ordered. 

29. Leave to the parties to apply for PTR  at the District Court within 90 days.

30. Order in terms and costs be in the cause in respect of the directions part.