XCHRX GREAT SUCCESS DEVELOPMENT (HONG KONG) LTD. v. TOWA CONCRETE LTD.

DCCJ 9015/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 9015 OF 2001

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JUDGMENT

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1. This is an application for summary judgment. By a written contract signed by the Plaintiff and the Defendant dated 1 April 2000 ("the Contract"), the Plaintiff agreed to supply bulk cement to the Defendant at certain agreed prices. During the period from 1 May 2000 to 13 June 2000, the Plaintiff supplied 62 trucks of bulk cement at a total value of $936,542.72, including the cancellation fee of $5,600, to the Defendant pursuant to the Contract. Subsequent to the said deliveries, the Defendant only made a part payment of $590,000.00 for the supply of the cement and refused to pay the balance in the sum of $346,542.72, and so the Plaintiff brought the present action against the Defendant to claim for the latter sum of money.

2. It is not in issue that the Defendant signed the Contract. As I understand it, the Defendant's defence is twofold. Firstly, the Defendant alleges that some lots of cement were never delivered to the Defendant's joint-venture project. In support of such allegation, the Defendant only managed to produce some photostat copies of the delivery dockets for the lots of cement allegedly not been delivered. However from the dates on such documents, one can see that the said delivery dockets actually relate to deliveries made prior to the making of the Contract, and so there is no connection between the alleged non-deliveries and the Contract which is the subject matter of the claim. Unfortunately, no particulars has been supplied by the Defendant as to: (i) the details of the contracts which are the subject matters of the Defendant's complaint; and (ii) the exact quantity and value of the alleged non-deliveries. Indeed, such allegation has not been pleaded in the Defence previously filed by the Defendant, and no attempt for counterclaim has ever been made. In such circumstances, the Defendant's first defence is only a bare allegation without any supporting particulars, and hence in my judgment, the Defendant has failed to discharge its burden to establish an arguable defence, either on liability or quantum, in this regard.

3. The second defence raises a more interesting point of law. According to the Defendant, its representative signed the Contract only as an agent of a joint-venture partnership, of which the Defendant and another company known as Yik Fung Concrete Products Manufactory Limited ("Yik Fung") were partners. This fact was made known to the Plaintiff prior to the signing of the Contract. As the Defendant is liable jointly and not severally with Yik Fung under the Contract, the Defendant has a right to ask this court to stay the proceedings pending the joinder of Yik Fung as an additional defendant.

4. In support of such defence, Mr. Wong for the Defendant relies heavily on a number of ancient cases such as Cabell v. Vaughan (1669) 1 Wms. Saund 291 and Byers v. Dobey (1789) 1 H. Blacks 236. In those days, if a defendant was jointly liable to a claim with another person, that defendant could rely on a plea of abatement and insisted that the other person be joined as a party to the proceeding. However after the enactment of the Judicature Acts in England in the 19th century, this was no longer the law. A provision in the Judicature Acts, then O. 16, r. 1 and which was identical to the existing O. 15, r. 6 of the Rules of the District Court, provided that no cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party. The effect of this provision has been commented upon by the learned authors in The Supreme Court Practice 1999, volume 1, paragraph 15/6/2, which reads as follows:

"It (O. 15 r. 6) does away with the plea in abatement, by which an objection to the nonjoinder of parties was raised before the Judicature Acts, and with demurrers for want of parties."

5. Mr. Wong also relies on Robinson v. Geisel [1894] 2 QB 685, which was a case decided after the enactment of the Judicature Acts in England. In relation to the legal position after the enactment of the new laws, Lord Esher M.R. said the following in page 687:

"The sate of the law seems to me to be this: if co-contractors are within the jurisdiction and can be found, they ought to be joined, not because it is obligatory on the plaintiff to join them, but because, if there is no reason to the contrary, all the co-contractors ought to be joined as defendants. If it were shewn in this case that all might have been joined, it would be right to compel the plaintiff to take that course."

Kay L. J. also said the following in pages 688 to 689:

"In my opinion it would be unjust, under the circumstances of this case, to stay the plaintiff's action against the defendants whom he is able to find, unless there is some rigid rule of law that obliges him to have all the defendants before the Court before he can proceed against any of them. The rules seem to me to be directed to this - that when pleas of abatement were abolished there should be a large discretion in the Court to permit an action to go on, so that the rights of the parties before the Court may be determined even though all parties to the action are not before it."

6. Based on the aforesaid authorities, the law can be summarised as follows. If two or more partners are jointly liable to a third party for breach of contract, all the partners ought normally to be sued jointly. However, it is not mandatory and the court does have a wide discretion to allow the action to be proceeded against some and not all the partners of the firm. Some of such instances can be listed as follows:

(a) some of the partners are not within jurisdiction or cannot be located with reasonable effort (see: Robinson v. Geisel [1894] 2 QB 685);

(b) the plaintiff was not aware of those partners at the time when the contract giving rise to the joint liability was entered into (see: Mullet v. Hook (1827) Mood & M 88, De Mautort v. Saunders (1830) 1 B & Ad 398, Bonfield v. Smith (1844) 12 M & W 405); and

(c) the defendant did not take objection to the non-joinder of other partners or did not raise such objection in due time (see: Kendall v. Hamilton (1879) 4 App Cas 504, Cabell v. Vaughan, ibid.).

However, this list is not exhaustive. Provided that there is good reason, the court should not blindly insist that the plaintiff should sue all the partners of a firm.

7. In my judgment, such good reason exists in the present case. So far as the Plaintiff's case is concerned, the Defendant signed the Contract and so it is the only party liable. The Plaintiff has no intention or reason to sue Yick Fung. However if the Plaintiff is compelled to take that course, there is certainly costs implication if Yick Fung is ultimately held not to be a contracting party. On the other hand, the Defendant admits that it was a party to the Contract. Whether its representative was signing as principal or agent on behalf of the partnership business, the Defendant would still be liable for the Plaintiff's claim. The only outstanding issue, which does not concern the Plaintiff, is whether the Defendant is entitled to contribution from Yik Fung. In such case, why does the law require the Plaintiff to join Yik Fung as a party? In my judgment, the outstanding issue can easily be resolved in a separate proceeding between the Defendant and Yik Fung, and there is no justification to complicate the matter by insisting the Plaintiff to join Yik Fung as an additional defendant. I therefore do not accept that the court should stay the proceedings pending the joinder of party.

8. Based on the aforesaid analysis, I do not find that there is any triable issues in the present case. I therefore allow the Plaintiff's application and grant judgment in favour of the Plaintiff in the sum of $346,542.72. I also make an order nisi that the Plaintiff is entitled to: (i) interest on the said sum at the rate of 9.82% per annum (the existing judgment rate) from 29 May 2001 (the date of the issuance of the Writ) to the date hereof and thereafter at judgment rate; and (ii) the costs of the action, including the costs of this application, to be taxed if not agreed. The order nisi is to be made absolute after the expiration of 14 days from the date of the handing down of this judgment.