LAL IMP. EXP. S.A. v. UTANIKO (HONG KONG) LTD

DCCJ1907/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1907 OF 2010

________________________

________________________

D E C I S I O N

________________________

1.  The plaintiff asks for summary judgment under Order 14 against the defendant for this sale of goods dispute.

2.  It is not disputed that the plaintiff placed an order for mobile phones to be delivered to Paraguay in South America which the plaintiff had fully paid for after the defendant issued a commercial invoice addressed to the plaintiff. The plaintiff’s customers did not receive the goods ordered.  In fact, they were never delivered by the defendant.

3.  The defence raised was that the order placed had been revised.  Furthermore, the payment made by the plaintiff was applied and used against payment for another order for goods that the plaintiff’s agent Shadi Farhat had ordered and did not pay for.  It was on Shadi Farhat’s instructions that the money the plaintiff paid to the defendant was diverted and transferred to settle a different order of goods. 

4.  The defendant claimed that this was known to the plaintiff and the plaintiff did not disagree with this diversion of fund.  In short, the defendant’s defence is that the plaintiff had an agent who gave a different set of instructions for the payment the plaintiff sent to the defendant.  As the plaintiff was silent on those new instructions, the defendant went ahead and applied the plaintiff’s payment to settle Shadi Farhat’s goods. 

5.  The sale contract between the plaintiff and the defendant was originally a sales order belonging to Shadi Farhat which was transferred to the plaintiff.  The defendant therefore claimed that he had reasons to believe that Shadi Farhat was either the agent for the plaintiff or the plaintiff was the paying agent for Shadi Farhat.  That was the reason the defendant gave for taking instructions from Shadi Farhat and applying the money the plaintiff sent for goods ordered by the plaintiff to pay for the goods Shadi Farhat had ordered earlier.

6.  I find the defendant’s defence shadowy because there were direct communications between the plaintiff and the defendant’s staff, yet many of the emails exchanged between Shadi Farhat, Kaswani and the defendant’s staff were not copied to the plaintiff, from what has been disclosed in the exhibits in the defendant’s affidavit.  On the other hand, there are other areas of facts which the plaintiff failed to explain that led to the full payment for goods which were different from the original order. 

7.  For this reason, I find there are triable issues raised.  As I am not trying the case on affidavit at a Order 14 proceedings, I will order the defendant be given conditional leave to defend on condition the defendant pays the sum claimed by the plaintiff into court within 14 days, failing which the plaintiff will be at liberty to enter judgment against the defendant.

(Discussion re summons on security for costs)

8.  At this stage, I am not prepared to order security for costs.   If the payment in full is paid into court, there will be a trial.  If the defendant failed to pay up the judgment sum into court, there will not be a trial.   The summons for security for costs against the plaintiff is adjourned sine die, with liberty to restore, after full payment has been made.  I do not see any reason why we should decide security for costs before the judgment sum is paid into court. Plaintiff’s costs be in the cause with certificate for Counsel.