Man Earn Ltd. v. Wing Ting Fong

IN THE COURT OF APPEAL

1995, No. 94
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an interlocutory appeal, from an order of Jerome Chan J, dated 17 March 1995, made on an application by the plaintiff for summary judgment against the defendant in an action for specific performance of a contract for the sale of land. The master had acceded to the plaintiff's application for summary judgment and had made an order for specific performance of the contract against the defendant. The defendant successfully appealed to the judge, whose view it was that the plaintiff's application ought to be dismissed; accordingly he allowed the appeal and dismissed the plaintiff's application, with costs. The plaintiff now appeals to this court. The plaintiff says the case is one in which it has properly invoked the provisions of the Rules of the Supreme Court which enable a plaintiff, in an appropriate case, to apply for summary judgment against the defendant, and that accordingly this court ought to make an order for specific performance against the defendant.

Summary judgment

2. This appeal has demonstrated once again that, although the Rules of the Supreme Court have provided for many years a procedure whereby a plaintiff can in an appropriate case apply for summary judgment against the defendant, the purpose of this procedure, and the sort of case for which it is suitable, is not always properly appreciated.

3. The Rules of the Supreme Court, so far as ordinary civil proceedings are concerned, are designed for the resolution of genuine disputes. They enable the issues to be defined; the parties to prepare for trial; and the trial to take place in an orderly and effective manner. But all this is inappropriate where there is no genuine dispute and the defendant, although he has no real defence, finds it advantageous to keep the plaintiff out of the latter's entitlement as long as possible, e.g. because it will help the defendant's cash-flow if he keeps the plaintiff waiting for his money, rather than borrowing what he needs from a commercial institution in order to pay the plaintiff. The typical case is that of a defendant who takes delivery of goods and then, on some spurious pretext, dishonours the cheque which he has issued in payment for the goods. Although (in general) he will have no defence to the plaintiff's action on the dishonoured cheque, he will be able, if the plaintiff is required to proceed to trial in the ordinary way, to keep the plaintiff out of his money for months and possibly longer. Until 1855, a plaintiff could do nothing about this. But the abuse of the court's procedure by defendants seeking to obtain free or cheap credit at the expense of plaintiffs led in that year to the passing of the Act known as "Keating's Act" under which the defendant was allowed to defend the plaintiff's action on a bill of exchange drawn by the defendant only if he paid the money alleged to be due into court, or alternatively, was able on affidavit to demonstrate a genuine defence to the action. This "summary procedure" worked well, and its scope has been progressively extended to almost all actions, including (under O.86 of the Rules of the Supreme Court) actions for specific performance of contracts for the sale of land. But those familiar with the history of the "summary procedure" do not forget its extraordinary nature :

"It is a procedure in which, instead of trial first and then judgment, there is judgment at once and never any trial" :

see Symon & Co. v. Palmer's Stores (1903) Ltd [1912] 1 KB 259 per Buckley L.J. at p.266.

4. Since the policy which underlies the summary procedure is to prevent the defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant has clearly no defence to the plaintiff's claim, the procedure should be invoked only where this condition is satisfied. Practitioners, and sometimes judges, are in danger of losing sight of this :

"People do not seem to understand that the effect of Ord. 14 is that, upon the allegation of the one side or the other, a man is not permitted to defend himself in court; that his rights are not to be litigated at all. There are some things too plain for argument; and where there were pleas put in simply for the purpose of delay, which only added to the expense, and where it was not in aid of justice that such things should continue, Ord. 14 was intended to put an end to that state of things, and to prevent sham defences from defeating the rights of parties by delay and at the same time causing great loss to the plaintiffs who are endeavouring to enforce their rights. But when in such a case as this, Ord. 14 is applied, there are a great many things to be said. I do not propose to enter into the merits of the case or the comprehension of it, which is necessary to some extent in order to deal with the merits. That question would have to be dealt with when the case is tried. But I am bound to say that it startles me to think that in a case of this sort an order should be made, the effect of which is that the defendant is not to be heard to make his defence." :

see Jacobs v. Booth's Distillery Co. (1901) 85 L.T 262, per Lord Halsbury LC.

Unless it is obvious that the defence put forward by the defendant is "frivolous and practically moonshine, Ord. 14 ought not to be applied" : see Codd v. Delap (1905) 92 LT 510, per Lord Lindley, at p.511.

5. For those who may believe that these sentiments are outdated, a salutary reminder is provided in Crown House Engineering v. Amec Projects Ltd (1990) 6 Const. Law Journal 141, where (at p.154), Bingham LJ says this :

"..... Ord. 14 is for clear cases; that is, cases in which there is no serious material factual dispute and, if a legal issue, then no more than a crisp legal question as well decided summarily as otherwise ..... The procedure is entirely inappropriate where the plaintiff's entitlement to recover any sum is the subject of any serious dispute, whether of law or fact. This is not to say ..... that a defendant with no or no more than a partial defence can cheat a plaintiff of his just deserts by producing hefty affidavits and voluminous exhibits to create an illusion of complexity where none exists. Where the point at issue is at heart a short one the court will recognise the fact and act accordingly no matter how bulky its outer garments. But it does mean that where there are substantial issues of genuine complexity the parties should prepare for trial ..... rather than dissipate their energy and resources on deceptively attractive short-cuts."

6. I would express the hope that those practitioners, of whom there are too many, who appear to be prepared to advise every client with what seems to be a good case to invoke this extraordinary procedure, without reflecting on the fact that, if the attempt fails, the result will be to keep the plaintiff out of the judgment to which he may well be entitled for far longer than would have been the case if they had concentrated, instead, on bringing the matter to trial, will in future think twice before giving such advice.

The present case

7. I regret to have to say that the present case is one to which the summary procedure which the plaintiff has sought to invoke is manifestly inappropriate. The plaintiff's case depends on a contract of an unusual nature, made as long ago as 1987; it is one of a number of such contracts made with villagers in the New Territories in order to acquire their land for development purposes, and, arguably, mutually dependent on each other. The writ was issued on 29 September 1992 and the defendant put in a defence as long ago as 12 January 1993; the present application for summary judgment was launched only following an amendment to the statement of claim made on 12 July 1994. There are issues between the parties as to want of fairness in the contract and as to the certainty of the contract; both as to the time of completion, and the subject matter of the sale. There are issues of misrepresentation, and as to whether, by his conduct, the defendant has waived his right to rely on any such misrepresentation. Although the plaintiff protests otherwise, what the court has really been asked to do is to try these issues on affidavit evidence (no less than 8 affidavits have been filed on the application), with the assistance of a number of authorities as to the law (no less than 9 are listed, including 2 from the High Court of Australia). Since the case will have to go to a proper trial, it is neither necessary nor desirable that we in this court should review the detailed facts which give rise to the dispute between the parties. The judge need not have done so either; but he did do so, and having done so, he came to the clear conclusion that the plaintiff's attempt to invoke the summary procedure here, and thus to shut out the defendant from having his case heard at all, was unjustified.

Conclusion

8. I agree with the judge. I would dismiss this appeal, with costs.

Ching, J.A. :

9. I agree.

Litton, V.-P. :

10. I agree that this appeal should be dismissed, for the reasons given by Godfrey JA. I am, like him, concerned with the manner in which the procedure under Order 86 rule 1 was used in the court below.

11. The judge, in his endeavour to deal with every point of defence raised and to give full reasons for his decision, had, in my view, strayed beyond the scope of Ord 86 r1.

12. The reason for dismissing the plaintiff's application for summary judgment was simply because the case did not come within Order 86 r1. In other words, the plaintiff had failed to satisfy the court that the defendant had no defence to the action. This meant, of course, that the matter must proceed to trial.

13. The defendant is, in these circumstances, entitled to set up all the defences available to him legitimately to resist the plaintiff's claim: untrammelled by the judge's preliminary observations on the strength or weakness of his case.

14. In the court below, what the judge did, in effect, was to have conducted a "mini-trial" on affidavit evidence and, on the basis of such evidence, he made certain "findings". Such "findings", by their very nature, have no standing. It would be unfortunate if, as a result of those "findings", the plaintiff should be encouraged to embark upon more interlocutory skirmishes, seeking to strike out some of the paragraphs in the Defence under Order 18 r19(1) of the Rules of the Supreme Court, relying upon the observations of the judge. Such a proceeding would, in my view, be unwarranted.

15. In my judgment, all that the judge was called upon to do - and all that he should have done - was to have stated in a few words why he concluded that the plaintiff had failed to satisfy him that the defendant had no defence. Any observations beyond that were unnecessary and otiose.

16. I would dismiss the appeal and make an order nisi that the plaintiff pays the costs of the appeal.