XCHRX O MARK POLYETHYLENE PRODUCTS FTY LTD. v. REAP STAR LTD.

HCA6978/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6978 OF 1999

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J U D G M E N T

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The appeal

1. On 19th July 1999, the Plaintiff obtained summary judgment against the Defendant with damages to be assessed. The Defendant was absent at the hearing. The Defendant applied to set aside the judgment and the Master ordered that the judgment be set aside conditional upon the Defendant paying into Court $45,000. The Defendant now appeals against the Order requiring him to pay $45,000 as the condition. The Plaintiff cross-appeals and argues that the judgment should not be set aside in the first place.

The merits

2. By ordering the setting aside of the judgment, the Master obviously had considered the merits of the defence. The Plaintiff's case is based on a breach of a contract ("the Contract") dated 14th April 1999 by the Defendant to deliver goods. Under the Contract, the goods would arrive in Hong Kong on 24th April 1999. Payment was by way of Letter of Credit. Although no time was specified for the opening of the Letter of Credit, one would expect it to be available to the Defendant when the goods arrived on 24th April. The Plaintiff said that on 22nd April, it had opened the Letter of Credit but the Defendant said that it was only available for collection from the bank on 26th April. There being a dispute on whether the Plaintiff itself was in breach in providing the Letter of Credit to the Defendant within time, the Defendant obviously should be given leave to defend.

Condition for setting aside the judgment

3. Under Order 14, rule 11, a judgment given against a party who does not appear at the Order 14 hearing may be set aside or varied by the Court on such terms as it thinks just. The Order 14 judgment was given on 19th July 1999 but the application to set aside the judgment was only filed on 30th August 1999. The Defendant was fully aware of the hearing on 19th July 1999 but chose not to attend because of some business commitment overseas by Mr Lui, who was authorised by the Court to represent the Defendant. Even though Mr Lui had asked for an adjournment in his opposing affirmation, the fact was that no one on behalf of the Defendant attended Court on the hearing date. In my view, what was said to be the personal reasons of Mr Lui not appearing in Court on that day is not a good reason for ignoring the Order 14 hearing.

4. The condition of $45,000 was imposed by the Master by reference to the wasted costs in this action. In my view, she is clearly entitled to impose such a condition. If the Defendant said because of financial incapacity, it is unable to meet the condition, then details of its assets and liabilities must be disclosed. None was disclosed before the Master hearing the setting aside application or before me. Mr Lui stated that he had previously submitted financial statements of the Defendant to the Master who granted him leave to represent the company. However, Mr Lui himself admitted that those documents had been returned to him after the Master had made the order. In the circumstances, the appeal must be dismissed.

The Counterclaim

5. In the summons issued by the Defendant, it had also asked for judgment on the Counterclaim. Although the sealed Order of the Master did not expressly deal with this aspect, by granting leave to the Plaintiff to file a Reply and Defence to the Counterclaim, the Master obviously had refused the Defendant's application on the Counterclaim. I do not need to go further on this aspect of the case.

Order

6. The appeal is dismissed save that $45,000 is to be paid by the Defendant into Court on or before 12:00 noon on 4th December 1999. Costs of the appeal be to the Plaintiff in any event.