LITE-ON INFORMATION TECHNOLOGY CORPORATION v. AMERICAN CANYON LTD

HCA 2335/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2335 OF 2008

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D E C I S I O N

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1. The Plaintiff makes an application for further and better particulars of the Defence and Counterclaim.  The parties have jointly requested that the application be dealt with on paper pursuant to Order 32 rule 11A and Part D of the Practice Direction 5.4.  They have punctually observed the time requirement for lodging their submissions, statements of costs and authorities except that the Plaintiff has indicated to my clerk that it does not intend to make any submission in reply on 24 April 2009.

2. In this case the Plaintiff claims against the Defendant for the price of goods sold and delivered and also for loss suffered arising from cancellation of the remaining purchase orders in the sums of US$111,622.70 and US$255,060.0652 respectively.

3. The Defendant’s defence is simple: the goods supplied are defective, not of merchantable quality and not fit for which purpose they are sold.  The Defendant counterclaims: the price of Dead Stock HK$2,078,924, Repair Charges of $2,896,250 and Damages of HK$191,526 being the loss suffered due to the Plaintiff’s failure or refusal to repair the defective goods.  The Defendant also counterclaims for loss of goodwill and damage to reputation.

4. The Plaintiff requests for particulars in respect of some paragraphs of the Defence and Counterclaim filed, and the Defendant refused to provide; hence, this application.

REASONS FOR DECISION

Request 1: under paragraph 11

5. The Plaintiff asks the Defendant to give full particulars as to how the DVD recorders supplied were defective and/or not reasonably fit for their purpose and/or not of merchantable quality.

6. The Defendant does not deny that they have an obligation to supply the particulars but say that the Plaintiff is well aware of them by referring to various documents which have been sent to the Plaintiff i.e. complaints from a customer, 11 records of complaints from the Consumer Council and a Statement of Claim by a certain Mr. Chow against the Defendant.  I have read them all and find:

(a)  In these 13 cases of complaints some have not clearly identified what the defects are;

(b)  We do not know these defects are attributable to which lots of goods sold and supplied by the Plaintiff;

(c)  They form only part of the goods that are alleged of having defects.

7. I allow Request 1.

Request 2A: under paragraph 11(i)

8. In that request, the Plaintiff asks: “(a) What has the Defendant done with the Dead Stock?”  The Defendant’s submission is: “The Plaintiff is not entitled to particulars sought under Request 2(a) as it does not arise from any allegations raised in the Defence and Counterclaim.”  It is difficult to understand the true meaning of the submission.

9. I guess its meaning is that as the goods are defective and they are not saleable, what the Defendant has done with the Dead Stock is irrelevant.  If that is what the submission means, I consider that the Defendant has to answer this Request 2A(a): he has, at least, to let us know whether it has informed the Plaintiff of the defects and also of its intention to treat them as Dead Stocks etc.

10. The Plaintiff has also asked in Request 2A(b): “Provide details of the dates of supply to the Defendant of each of the alleged items comprising the Dead Stock and details as to when and how each of the said 699 items of the Dead Stock were discovered to be defective and what the defects were in the case of each of the said 699 items of Dead Stock.”

11. The Defendant’s argument is: “The issue is whether the Dead Stock is defective.  Details requested by the Plaintiff in request 2(b) and (c) in regard to each of 699 unit of Dead Stock, is unnecessary for disposing fairly of any matter, cost wasting, and is a matter of evidence.”

12. I find that this Request 2A(b) is a continuation of Request 2A(a).  The Plaintiff has to know the particulars requested for before it can properly prepare its case to meet the Defendant's defence and counterclaim on the ground of defective goods.

13. I allow this Request 2A(b).

Request 2B: Under paragraph 12(a)

14. Under paragraph 12(a) of the Defence, the Defendant alleges that there was an agreement for return of defective goods to the Plaintiff for repair.  The Plaintiff makes the usual enquiry of whether the agreement is oral or written etc as contained in (a), (b) and (c).

15. Again the submission given by the Defendant is not easy to understand and I quote it below:

“If the agreement was made orally, the oral particulars that should be pleaded are the date, between whom it was made and the relevant terms relied on by the Defendant (paragraph 18/12/3 of Hong Kong Civil Procedure).  Particulars as to where, in whose presence the agreement was made, the exact wording used or the gist of the wording so used are all matters of evidence.”

16. The Defendant has not indicated whether the agreement was oral or written.  By its submission it seems to me that the agreement was oral and the Defendant agrees to supply the date, the names of the persons involved and the relevant terms only but no more.

17. I find the requests 2B(a), (b) and (c) are reasonable requests and should be allowed.

Request 3: under paragraph 13(i)

18. In that paragraph, the Defendant states that it has received 42 defective units and has to refund to customers a total sum of HK$146,696.

19. I agree with the Defendant that it has clearly stated the retail price and the model number of each unit in the table contained in paragraph 13(i).  I do not allow request 3(a) and (b).

20. I agree with the Defendant that it is not right to ask for the identities of the customers as it is not relevant to the issue.  Request 3(c) is refused.

21. For the reasons I have given in respect of Request 1, I rule that the Defendant has to supply the particulars requested for under Request 3(d).

22. I find that the time when the Defendant received each of the 42 units is necessary to enable the Plaintiff to ascertain when the cause of action arose.  I allow Request 3(e).

Request 4: under Paragraph 13(ii)

23. In that paragraph the Defendant says: “Because it will not be able to give the warranty that it is obliged to give, it could not sell the remaining 14 units of DVD recorders which causes a loss of HK$44,832.”

24. I do not know what the warranty is and why the Defendant thinks that it is obliged to give such warranty.  I think the Plaintiff is entitled to know whether the warranty is a one reasonable and whether it should be given according to the usual trade practice and custom.  Requests 4(a) and (b) are allowed.

25. In its submission, the Defendant has equated its loss with the retail price of the goods.  I find that it has answered Request 4(c).

Request 5: under Paragraph 17

26. The Plaintiff asks how the sum of $10,000 per month for the rental and management fee is calculated.  I do not agree with the Defendant in saying that the request “is a matter of evidence and is not necessary for disposing fairly of the cause or matter or for saving costs.”

27. If the Plaintiff knows the basis of the claim under this issue, it may agree to it or if it does not agree, he has to know how to prepare the case to answer this point.

28. I allow Request 5.

Summary

29. For the purpose of quick reference I set out the results of my ruling in the following table:

Request	Paragraph of the Defence	Decision
1	11	Allow
2A(a)	11(i)	Allow
2A(b)	11(i)	Allow
2B(a)	12(a)	Allow
2B(b)	12(a)	Allow
2B(c)	12(a)	Allow
3(a)	13(i)	Not Allow
3(b)	13(i)	Not Allow
3(c)	13(i)	Not Allow
3(d)	13(i)	Allow
3(e)	13(i)	Allow
4(a)	13(ii)	Allow
4(b)	13(ii)	Allow
4(c)	13(ii)	Allow but already answered
5	17	Allow

Order

30. I order that the Defendant shall within 21 days from the date of this decision provide written replies to the Plaintiff’s Request for Further and Better Particulars of the Defence and Counterclaim filed on 11 March 2009 to the extent that I have allowed as indicated above.

Costs

31. I also make an order nisi as to costs that the Defendant shall pay the Plaintiff’s costs (including disbursements) assessed by me on party and party basis in the sum of $25,000.00.  This order will become absolute unless within 14 days from the date of this decision written application is made to vary it.

32. My comments on the Plaintiff’s statement of costs are as follows:

(a)  The costs should be restricted to this application.

(b)  The fees of two solicitors to do the same piece of work in an assessment on party and party basis are usually not allowed.

(c)  I do not see the necessity of using 4 hours in communication with client for an application of this nature.

(d)  I do not find that there are many correspondences with the other side in respect of the application.

(e)  Neither do I find much communication with the court.

(f)   The time for preparing the Request and Summons is grossly excessive.

(g)  There are practically no other documents for perusal apart from the defence and counterclaim.

(h)  The time for preparation for hearing is excessive.