XCHRX ARTS INTERNATIONAL PRINTING LTD. v. ALLALIN TRADING CO. LTD.

HCA 18281/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 18281 OF 1998

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J U D G M E N T

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Godfrey, J.A. :

1. This is a defendant's appeal, against an order made by the master for summary judgment on a claim made by the plaintiff against the defendant for the price of printed material produced by the plaintiff for the defendant from films supplied by the defendant to the plaintiff for that purpose.

2. In answer to the claim, the defendant says that, in 20 out of 25 instances, the plaintiff failed to deliver this printed material to the defendant within the time limited by the contract for the work in each case, and that time was of the essence of each such contract. The defendant has not paid for any of the deliveries, not even for the 5 which were on time. It does not appear that notification of rejection was given by the defendant to the plaintiff, but the defendant says that that is immaterial, because the provision in each of the contracts for deliveries to be made on time was couched in terms which absolved the defendant from having to make any payment in respect of any delivery which was late. (I should perhaps add that, in some cases, the original date of delivery was amended by subsequent agreement between the parties.)

3. The defendant also has a counter-claim for the return of films which it says the defendant has retained and which should have been returned to the defendant. This counter-claim is for the cost of reproducing the films, and is estimated at HK$168,000 approximately. The claim made by the plaintiff against the defendant is for less than that, that is to say, HK$143,000, so that the amount of the counterclaim, if set off against the amount of the claim, would extinguish the claim altogether.

4. In my judgment, this is not a plain and obvious case suitable for judgment under Order 14. There is a genuine dispute here which ought to be tried.

5. The plaintiff, however, while accepting that there are triable issues, has advanced an argument that the defence of the defendant which I have attempted to outline has not been advanced bona fide. Before dealing with this argument, I should say, first of all, that the plaintiff says the deliveries which were late were late because the films to be supplied by the defendant to the plaintiff for purpose of producing the printed material were not supplied in due time by the defendant to the plaintiff. There is, however, no contractual provision as to the time for delivery of the films by the defendant to the plaintiff and it is perhaps surprising that the plaintiff should be prepared to contract in terms which made time of the essence if it did not already have the films it needed for the purposes of complying with its own obligations. The plaintiff further says that the late deliveries were accepted without complaint. The defendant answers that, even if that were so, it would not afford the plaintiff any excuse for the late deliveries and it points to other complaints which were made, in relation to other, earlier, contracts, of late deliveries made by the plaintiff.

6. I return to the question of the bona fides of the defence. The plaintiff points to the following matters. First, it says, there are no written complaints from the defendant before the court which relate to the transactions now in dispute. Secondly, although the defendant makes an allegation of loss because of the failure of the plaintiff to deliver the material on time, it makes no claim against the plaintiff in respect of that loss. Thirdly, the plaintiff challenges the bona fides of the counter-claim, on the ground that although the amount of the counterclaim should be easily ascertainable, relating, as it does, to the cost of reproducing the films which are said not to have been returned to the defendant, the claim is, in fact, only an estimated claim. Lastly, the plaintiff points to a lack of any sufficient documentation to support the alleged defence and counter-claim. In these circumstances, the plaintiff says that either the defence is not a bona fide defence or, even if it is sufficiently bona fide to warrant leave to defend being given, it is so shadowy that such leave should be given only on terms.

7. After considering the whole matter, I am satisfied that, as I have already said there is a genuine dispute here between the plaintiff and the defendant which ought to be tried. That being so, the defendant ought to have unconditional leave to defend the action. I shall accordingly allow this appeal. The costs of this appeal, and of the hearing below of the plaintiff's application for summary judgment, will be costs in the cause.