XCHRX SCHENKER (H.K.) LTD. v. TENERET LTD. and Another

1995 No. A7768

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. On 28th November 1997, Master Cannon entered summary judgment under Ord. 14 in favour of the Plaintiff. Judgment was given against the Defendants in the sums of $89,085.10 and $42,238.93. The 2nd Defendant now appeals against that judgment. No appeal has been filed by the 1st Defendant.

2. The Notice of Appeal was filed on 5th December. That was one day late. In addition, it was not served on the Plaintiff's solicitors until 23rd December. That was 12 days late. The reason for the delay in filing the Notice of Appeal was because the 2nd Defendant's director who was handling the case wrongly assumed that Saturday was not a working day. The reason for the delay in serving the Notice of Appeal was because he was out of Hong Kong for part of the relevant period. However, no prejudice has been caused to the Plaintiff by the failure to file and serve the Notice of Appeal within the time limits laid down by Ord. 58 r. 1, and I propose to extend the 2nd Defendant's time for filing and serving it.

3. Save for one issue, the facts are not in dispute. The Plaintiff is an international freight forwarder. In April 1995, it agreed to arrange the carriage by air from Hong Kong to Rome of a consignment of men's shirts. The shirts were duly sent to Rome, but no-one took delivery of them. The sums which the Plaintiff was given judgment for represented (a) the Plaintiff's freight charges, and (b) the handling and storage charges which the Plaintiff had to pay.

4. The one outstanding issue relates to whether the Plaintiff contracted with the 2nd Defendant as well as the 1st Defendant. The Plaintiff relies on the fact that, although the shipping instructions and the airway bill were both issued by the 1st Defendant, they both named the 2nd Defendant as the shipper. That is not in dispute. What the 2nd Defendant claims is that the 1st Defendant was in fact the shipper: the 2nd Defendant simply allowed the 1st Defendant to export the consignment in the name of the 2nd Defendant, since the 2nd Defendant was the quota holder, and the licence for the export of the consignment therefore had to be in its name. On the 2nd Defendant's case, therefore, the consignment was exported in the 2nd Defendant's name (even though the 1st Defendant was the actual shipper) in order to conceal the fact that the consignment was being exported by an exporter who was not entitled to export it. These facts are asserted in the 2nd Defendant's Defence. They have not been verified on affidavit or affirmation. Indeed, no evidence has been filed by the 2nd Defendant at all.

5. In my view, the 2nd Defendant has no defence to the Plaintiff's claim. I say that for two reasons. The first is procedural. Ord. 14 r. 3(1) puts the burden of satisfying the court that there is an issue to be tried on the defendant. This is not one of those rare cases (referred to by Kaplan, J. in Chinakong Manufactory Ltd. v. Uniden Hong Kong Ltd. [1993] 1 HKLR 28 at p.32) in which a verifying affidavit or affirmation is not required. There being no evidence to support the 2nd Defendant's contention, the 2nd Defendant has not satisfied me that there is an issue to be tried.

6. However, I would be unhappy about dismissing an appeal on the grounds of procedural default when an appellant is not legally represented. I have therefore considered whether, if there had been an affidavit verifying the facts pleaded in the 2nd Defendant's defence, those facts would have amounted to a defence in law. I do not think that they would have amounted to a defence in law, and that is the principal reason why I dismiss this appeal. Once the 2nd Defendant allowed the 1st Defendant to export the consignment in the name of the 2nd Defendant, the 2nd Defendant must be treated as having authorised the 1st Defendant to ship the consignment in the name of the 2nd Defendant. And once the 2nd Defendant is treated as having authorised the 1st Defendant to ship the consignment in the name of the 2nd Defendant, the 2nd Defendant must be treated as having been a party to the contract on the footing that the 1st Defendant entered into the contract on behalf of the 2nd Defendant in order to effect the shipment for the consignment in the 2nd Defendant's name.

7. The fact that the Plaintiff had obtained judgment against the 1st Defendant is not inconsistent with its case that the 1st Defendant acted as agent for the 2nd Defendant. That is because the 1st Defendant was, in addition, a principal in its own right - either because it was the shipper itself (albeit jointly with the 2nd Defendant) or because it was acting for another principal, Derby S.R.L., and that agency was undisclosed.

8. Finally, in the course of the hearing I was shown a letter from the 1st Defendant to the 2nd Defendant written in July 1995. It read:

"We refer to the meeting with you, we hereby issue your company a letter to prove that you will be no obligation connect with this matter."

That letter cannot afford the 2nd Defendant a defence to the Plaintiff's claim. What it might do, depending on the circumstances in which the letter was written, is to amount to a contractual promise by the 1st Defendant to indemnify the 2nd Defendant in the event of the Plaintiff enforcing any judgment it obtained against the 2nd Defendant.

9. For these reasons, I think that Master Cannon was entirely right to enter summary judgment against the 2nd Defendant, and this appeal must be dismissed.

(Brian Keith)

Judge of the Court of First Instance