WOOCHANG CHARTERING & AGENCY CO. LTD. v. CENTURY FORTUNE NAVIGATION LTD. AND ANOTHER

HCCL54/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.54 OF 1998

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J U D G M E N T

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1. This is the Plaintiff's application for summary judgment against both Defendants pursuant to the provisions of Order 14, rule 1, the application itself being contained in the Plaintiff's Summons dated 21st April 1998.

2. In short, the Plaintiff claims the principal amount of US$40,277.24 being the sum due to the Plaintiff by the Defendants pursuant to a charterparty recorded in a fixture note dated 11th December 1997, and to a guarantee dated 22nd January 1998. By the voyage charterparty recorded in that fixture note, the Plaintiff as disponent owners agreed to charter the vessel M.V. "Navira Express", or other substitute tonnage, to the 1st Defendant as charterers to carry cement from Longkou, P.R.C. to Yangon, Myanmar; in the event, the M.V. "Aria" was substituted for the "Navira Express".

3. The voyage charterparty expressly provided that, in effect, 100% freight be paid to Owners within five banking days after completion of loading. The vessel completed the voyage from Longkou to Yangon and the freight due for payment under the fixture note at the rate agreed came to US$235,527.24. Of this total sum, the Defendant paid US$185,250.00 on or about 5th January 1998 and US$10,000.00 on or about 22nd January 1998, leaving the balance outstanding of US$40,277.24, that is, the sum claimed in this application.

4. The Defendants' original position was that they had not paid the outstanding balance of freight and did not dispute that it was due, but asserted a set-off. The set-off claimed amounted to rather less than the sum of US$40,277.24, and I do not think, for present purposes, I need itemize the component parts of this claim. Be that as it may. Advice was obviously sought, and Mr Reyes of Counsel appears before me today. He says, correctly, that there is a rule which the Defendants now accept that there is no right of set-off against the freight due under the voyage charterparty. Thus he accepts, and I am grateful to him for his usual realism, that whatever its merits the Defendants' counterclaim cannot be set off against the Plaintiff's claim for freight. However, and this is the nub of the present application this afternoon, his clients, the Defendants herein, seek a stay of execution under Order 14, rule 3(2), RSC of any judgment against them up to the amount of US$19,366.66 pending the outcome of the counterclaim. This latter sum is the amount of the Defendants' liquidated claims. Mr Reyes says, helpfully, that the Defendants are prepared to pay this sum into Court, and the balance of US$20,910.58 to the Plaintiff directly. He also indicated at the outset of the hearing that his only ground for applying for a stay of execution is that the Plaintiff is a South Korean Company, and that if the Defendants are successful in their counterclaim, it would be unfair for the Defendants to have to take proceedings in South Korea for enforcement, especially as the claim of the Plaintiff and the counterclaim of the Defendants have arisen out of the same matter.

5. Mr Murphy, on the stay of execution point alone, this being the only point which has occupied argument this afternoon, has helpfully drawn my attention to the decision of Godfrey J. (as he then was) in Emery Air Freight Corp v. Equus Tricots Ltd. [1989] 1 HKC 541, wherein the learned judge was there seized with an appeal against the decision of a master who had granted a summary judgment on the Plaintiff's claim for freight, but had given a stay of execution pending trial of the Defendant's counterclaim on the ground that goods in question had been lost or damaged in transit. Godfrey J. held in that case that the Defendant's right to deduct the amount of any claim for loss or damage to the goods from the transportation charges was excluded by contract in that case, but he also went on to hold - and this is the rule that Mr Reyes has recognised - that in an action for freight (whether over land, sea or air) the Defendant would not be allowed to set up a defence or counterclaim in respect of cargo, and that the Plaintiff, if he could satisfy the requirements of Order 14, would be entitled to summary judgment and the Defendant would not be entitled to a stay of execution.

6. As to this latter point, the learned judge deals with this specifically in this case, op.cit. at pages 542-543, wherein he analyses the rule, and concludes, at p.543F as follows :

"...I hold that in an action for freight (whether over land, sea or air) the rule is that the defendant will not be allowed to set up a defence or counterclaim that the plaintiff (if he can satisfy the requirement of O 14) will be entitled to summary judgment; and that the defendant will not be entitled to a stay of execution (which would negate the effect of the rule)." (emphasis added)

7. Mr Reyes suggests, I put it no higher than that, that the matter is perhaps not as clear cut as was perceived by the learned judge in Emery Air Corp.; he submits that a stay of execution is essentially an administrative matter within the Court's discretion, and that I should consider such a stay of execution in this case because of the physical situation of the Plaintiff in South Korea.

8. I disagree (I think that Mr Reyes did not press the point particularly hard) and, with respect, I accept the analysis of Godfrey J. (as he then was); indeed if a Defendant was entitled to a stay of execution it seems to me that, in an action for freight, it would effectively be obtaining by the backdoor what could not be achieved by the front. And if I be wrong in following the decision of Godfrey J., I add that in any event, in the exercise of my discretion in this particular case, I would have refused a stay of execution on the evidence before me. I do not think that it is sufficient simply to mount an application for such a stay solely on the ground of the Plaintiff being physically abroad, and that the Court is entitled, if the matter is to be seriously put forward, to more evidence on this particular issue.

9. At the end of the day, therefore, the Plaintiff herein is to have summary judgment against the Defendants in the sum claimed, namely US$40,277.24.

10. As to interest, I will hear Counsel as to the particular rate, and for the relevant period, and if necessary I will also hear argument on the question of costs.

[Submissions from Counsel]

11. I have now had the opportunity of hearing Counsel on the twin issues of interest and costs.

12. As to interest, I award interest on the judgment sum of US$40,277.24 at the rate of 8% from the date of demand for payment, namely 9th February 1998, to the date of judgment, namely today's date, and thereafter at the judgment rate from time to time prevailing until payment.

13. As to costs, in my judgment it is right that the Plaintiff should have the costs of the claim herein to be paid by the Defendants, to be taxed if not agreed. I have put it in that way because, as Mr Reyes has pointed out, there is extant a counterclaim in the action which presumably will go forward in the fullness of time.

14. It remains only to thank Counsel for both parties for isolating the only point at issue, and for their assistance in its disposition.