SIN HUA BANK LTD. v. SUNG FOO KEE, LTD.

IN THE COURT OF APPEAL

1992, No. 175
(Civil)

Headnote

Appeal against Judge's grant of unconditional leave to defend under Order 14 r.4(3) R.S.C. - Pure question of fact - observation in Lloyds Bank v. Ellis-Fewster [1983]1 WLR 559 at 562 followed.

Costs of bundle prepared for appeal - Solicitors' personal liability under Order 62 r.8 where costs have been incurred improperly or without reasonable cause.

IN THE COURT OF APPEAL

1992, No. 175
(Civil)

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J U D G M E N T

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Litton, J.A.:

1. This is an interlocutory appeal from the judgment of Woo J. given on 21 October 1992 whereby, on the plaintiff's application for summary judgment under Order 14 of the Rules of Supreme Court, he gave unconditional leave to the defendant to defend.

2. The plaintiff is a bank. The defendant is a contractor. Prior to May 1989 the defendant had subcontracted certain works to a subcontractor called Tim's Construction Co. and in consequence was liable to pay various sums of money to Tim's arising from three contracts. By an assignment dated 10 May 1989, Tim's assigned to the plaintiff bank the right to receive sums payable by the defendant to them arising from those contracts. It is the plaintiff's pleaded case that by a Notice of Assignment dated 15 May 1989 signed by Tim's and delivered to the defendant by registered post, the plaintiff gave notice to the defendant of the assignment. There is only one issue between the parties. If the evidence before Woo J. was sufficient to show that the defendant had received notice of the assignment in May 1989 the defendant is entitled to summary judgment for the sum of $2,153,794.10.

3. The plaintiff's case is that the notice was sent by registered post by their solicitors Messrs. Kao, Lee & Yip under cover of a letter dated 16 May 1989 but posted on 17 May: in fact posted twice on that day, once by registered post to the defendant's office at 2906 Great Eagle Centre Wan Chai, and once by double registered post to the defendant's registered office at the 20/F Alliance Building, Connaught Road, Central. In addition a copy of the same notice was, on the plaintiff's case, hand delivered to the defendant's office at 2906 Great Eagle Centre, Wan Chai. The notice asked the defendant to acknowledge receipt by signing and returning an enclosed duplicate to the bank at No. 2-8 Wellington Street Central for the attention of one Mr. Maurice Lee. The plaintiff has produced no evidence before the judge that such an acknowledgment was ever made or any duplicate returned. No affidavit has come from Mr. Maurice Lee.

4. The defendant's case is quite simply that such notice was never received; the first time they had notice of such assignment was by letter dated 9 January 1992 from Messrs. Kao, Lee & Yip, hand delivered, the receipt of which the defendant acknowledged. The copy exhibited to the affidavit bears the "received" chop of the defendant and the date "10 January 1992". That according, to the defendant, was the only notice of assignment they ever received and when they did they acted on it.

5. On the material before the judge the inherent probabilities seem to weigh both ways. The plaintiff says this: the mailing book kept by the solicitors suggest that on 17 May 1989 two registered letters bearing the same file reference as that appearing in the Notice of Assignment was sent to the defendant; further, a double registered letter bearing the same file reference was also sent. In addition the articled clerk who had assisted in preparing the notice of assignment gave instructions to his secretary to have a messenger hand-deliver the copy of the notice to the Great Eagle Centre address.

6. The plaintiff relies upon a presumption of regularity. In the absence of evidence that the organs of administration in the solicitors' office were not working properly, the inference is that the notices were sent. If sent, they must have been received. For the defendant, they make the simple point that if the notice had been received they would unquestionably have acted upon it. There was no reason for them not to. They point to the fact that when their wholly-owned subsidiary Viben Services Limited received a similar notice, all the sums payable to Tim's were then paid over to the plaintiff bank in accordance with the notice.

7. The judge, having reviewed all the evidence carefully, concluded that there was a "fair and reasonable possibility of the defendant having a real defence". In other words that the notice arguably was never sent. The judge did not consider it appropriate to comment too heavily on all the evidence at the stage of the proceedings before him, for fear of prejudicing the trial. I would therefore only mention some of the salient points. (1) There was no evidence from the solicitors themselves as to who had made the mailing record and whether as a matter of course it would have been made before or after a mailing. (2) The articled clerk could only depose to the fact that he gave instructions to his secretary. The court is then left to assume that the secretary in turn gave the appropriate instructions. On this point this perhaps can be said, that those instructions must have been carried out to the extent of some one actually making entries in the mailing book. (3) The solicitors cannot produce certificates of posting from the post office given to the sender as a matter of course when registered and double registered letters are posted. (4) As to the compliments slip which the plaintiff says acknowledged the receipt of the hand delivered notice, the possibility that this related to the notice given to Viben, the defendant's subsidiary which shared an office with the defendant, cannot be wholly eliminated. It may not have referred to a notice addressed to the defendant at all.

8. Much is left to speculation. As to the point concerning the practice of posting registered letters, at this stage, it seems to me that it supports the defendant's case. The plaintiff relies on an evidential presumption that instructions to post would have been duly carried out by the staff of the solicitors' office. But such presumption of regularity works both ways. The whole point of having letters sent by registered mail is to have evidence of posting. Normally the certificate would be put in the solicitor's file as evidence of such posting: this is apart from the receipt in the hands of the post office, normally kept by the post office for not more than one year. The absence of such certificate would tend to show that no such posting had taken place, if the system of keeping records was properly maintained.

9. The matter is even stronger as regards the double registered letter. One would have expected the advice of delivery to have been kept in the solicitors' file, if such posting had taken place.

10. Where there are real disputes of fact, or where the factual matrix is unclear, it would be a strong remedy for a court to give summary judgment to the plaintiff. By giving unconditional leave to defend the court is, in effect, postponing judgment for the plaintiff if the plaintiff turns out eventually to be right. Any delay can be compensated for in interest.

11. I would add this, that Mr. Lau's affidavit in support of the plaintiff's case contains in many instances bare assertions of his own belief. For example, paragraph 9 of his affirmation where he said "I verily believe that Miss Lam [the secretary] gave instructions to KLY's mailing section". In para 13: "I verily believe that a messenger of KLY did deliver a copy of the Notice". This is evidence of belief and advances the plaintiff's case no further. There was signal absence of any evidence of system from Messrs. Kao, Lee & Yip, from which a confident inference of regularity of conduct could have been drawn.

12. At the end of the day the matter before the judge was a simple question of fact. No question of law arose. As to this I have derived considerable assistance from the dictum of Sir John Donaldson MR in the case of Lloyds Bank v. Ellis-Fewster (1983)1 WLR 559 at 562B cited with approval by this court in Tandy Rank Video CA 5/91 15 March 1991 (unreported) where he said:

"In a case where the triability of the issue depends upon evidence as opposed to law, I would think it a very surprising situation if the Court of Appeal was prepared to disturb the judge's view. If one judge thinks there is a triable issue, it would be surprising if two or three judges think there is not."

13. In my judgment, the judge did not err in concluding that there is a triable issue in this case. I would accordingly dismiss the appeal.

14. I would like to add this. As to the costs incurred in preparing the bundle, pages 81-358, 366-455, and 466-512 of the appeal bundle are copies of documents which on no conceivable view of the appeal could have constituted relevant material to be put before us. It appears to me that no legal professional judgment of any kind has been exercised as to the inclusion of this material. Under Order 62 r8 of the Rules of the Supreme Court we have power, where costs are incurred improperly or without reasonable cause, to make an order disallowing the costs as between the solicitors and their own clients. I suggest that this is a proper case where the solicitors for the plaintiff should be afforded an opportunity to show cause under Order 62 r8(2) why such order should not be made against them. For this purpose I suggest that this court should recontravene one day next week at 9.30 a.m. to hear them on the matter.

Penlington, J.A.:

15. I agree with the judgment of Litton, J.A. and would also dismiss this appeal. I also agree with the order he proposes regarding the costs of preparation of the appeal bundle.

Jones, J.:

16. I also agree and have nothing to add.