CITLTN TRADTNG CO LTD v. WINSTON MAGNETIC LTD

ACTION NO. 4022/1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an appeal against the decision of the Master, who, on 15th of March this year gave judgment to the plaintiff under Order 14 in the sum of $248,090.27 being in terms of part of the plaintiff's claim in the action. He preserved the Defendant's right to defend a claim for interest. Now the defendant appeals against that decision and the facts are not without interest in the light of authority. I will not attempt to review them comprehensively. Suffice it to say that it is admitted for all practical purposes that the principal sum is owed, but the defendant claims that subsequent to the debt being incurred an agreement was reached between the plaintiff and the defendant whereby the defendant agreed to pay off the whole of the principal sum by way of monthly instalments of $5,000 and, further to that, gave to the plaintiff thirty cheques to cover the first thirty such payments or the repayment of HK$150,000.

2. The plaintiff did not present the cheques for payment as they fell due but waited until some eight months had elapsed when eight cheques were presented for payment and six were not. The first two in point of date were not honoured but only by reason, so it is said and not really contested, of a six-month period having elapsed.

3. Now the defendant through Mr. Woo argues that here was a compromise agreement and although no benefit was conferred upon the plaintiff as to amount or time for payment, nevertheless the plaintiff did receive additional security in the form of the cheques themselves and further the defendant argues through Counsel that assuming the facts as recited by me to be correct it would be inequitable for the plaintiff to be allowed to go behind that agreement. Mr. Woo relies on a passage in the judgment to the Master of the Rolls in D & C Builders Ltd. v. Rees ⁽¹⁾.

4. Now the facts, as I recounted them are not admitted facts. There is a hotly contested issue as to what was agreed but I have to look at the matter as if those facts might be proved at the trial and to consider what the consequence in law would be. I think in the light of D & C Builders Ltd. v. Rees, it is unarguable, at least before me, that the giving of postdated cheques as opposed to a mere promise to pay by instalments provides any consideration for the agreement, but it does seem to me that on the passage to which I was referred in the judgment of the Master of the Rolls, which appears in the report of the case in the Law Report at page 625 paragraph B, it may be open to the defendant to argue that it would be inequitable in this instance to allow the plaintiff to go behind the bargain which is alleged to have been struck. It does appear that the Master of the Rolls would have been prepared to decide the case in favour of the defendant had it been equitable so to do but held on the facts there obtaining of some question of the agreement being achieved through intimidation that it would not be equitable to allow that defence to succeed. Therefore it may be said that that passage is obiter only and it is difficult to find any support for the proposition put forward by the Master of the Rolls in other authority cited to me today. Nevertheless, I do not think I can say that the matter is unarguable or not reasonably arguable in point of law, though I do say that were the matter to be argued as it has been today, it is, I think, unlikely that the defendant's case would succeed. However, I reserve my position in case it does come before me and the argument is developed in a way differently to that in which it has been developed on this occasion. So I am, I think, with some hesitation prepared to allow this appeal and to give leave to defend but I think in the circumstances the leave ought to be conditional at least to this extent. Leave to defend will be conditional upon all those cheques currently in the hands of the plaintiff drawn by the defendant being honoured upon presentation on due date and further upon the defendant continuing to pay instalments at the rate of $5,000 a month thereafter until such time as the whole of the principal debt has been discharged. I think also in the circumstances it would be right in justice to the plaintiff to make an Order for speedy trial which I do.

5. So far as costs are concerned, Mr. Woo concedes that at best he ought to have defendant's costs in the cause and Mr. Chu makes an application for plaintiff's costs I do not think I can give the plaintiff costs of today, the appeal having suecooded at any rate to the extent which I have indicated. I think the appropriate Order is the one suggested by Mr. Woo of defendant's costs in the cause.

6. Costs of today and below be defendant's costs in the cause.

7. I ought to have said incidentally that I make it a further condition of leave to defend being given that the defence be amended within seven days to raise in terms the defence of equitable or promissory estoppel.

8. I give the usual directions for trial. Action to be set down for trial within 42 days.

9. Estimated length of hearing - 2 days.

(1) [1966] 2 Q.B. 617