IBM CHINA/HONG KONG LTD v. SILVER TECH ELECTRONICS LTD

DCCJ3054/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3054 OF 2011

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D E C I S I O N

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1.  The defendant applies to set aside the judgment entered by the plaintiff in default of defence on 4 October 2011.

2.  The writ was issued on 10 August 2011.  Service was effected and the defendant acknowledged service of writ expressing an intention to defence the action.  However, the defendant failed to file a defence on time. 

3.  On 20 September 2011, the plaintiff filed a notice of intention to enter judgment. On 22 September 2011, the defendant wrote to the plaintiff asking for extension of time to file the defence.  On 28 September 2011, the defendant took out a time summons to be heard on 10 October 2011.  On 4 October 2011, the plaintiff obtained default judgment against defendant.  On the same day, the defendant’s solicitor filed a notice to act on behalf of the defendant into court.

4.  It is not disputed that the judgment entered was regular.  Consequently, the defendant has to show it has real prospect of success for the judgment to be set aside.  The court has the discretion to impose terms even if merits are shown by the defendant in such a case.

5.  The plaintiff is a company selling computer hardware, software and related goods and related licenses.  It entered into an agreement with the defendant in July 2007 called the ‘Value Plan Lease agreement’, where the plaintiff agreed to lend $714,501.80 to defendant for the purchase of computer equipments from JOS (Jardine One Solution). 

6.  The loan was to be repaid by 48 instalments of $17,577.00 from 1 July 2007.  The defendant defaulted payment from January 2011 onwards.  The sum of $87,885.00 is outstanding at the time of the writ.

7.  Under the lease agreement, the plaintiff is entitled to levy a late payment charge when there was default in payment.  The plaintiff claimed the late payment charge amounted to $13,170.29.  The plaintiff is therefore claiming a total of $101,055.29 against the defendant in this action.

8.  The defendant denied it is liable for the total sum of $101,055.29.  It claimed it had paid a total sum of $170,274.72 for goods that the JOS supplier ‘Employee Connect’ had failed to deliver in June 2006.  Therefore, it claimed it is entitled to set off this sum against the outstanding instalment payment of $87,885.00.  It further claimed the plaintiff had wrongly released the payment to the supplier in 2006.

9.  The plaintiff denied there was any wrongful payment claiming it relied on the defendant’s signature on the delivery note dated 30 June 2006 and the acceptance confirmation signed by the defendant.  The defendant claimed it had signed the delivery note in blank at the time it signed the lease agreement because the plaintiff had promised to confirm the delivery of goods with the defendant before releasing payment.  This was denied by the plaintiff referring to the delivery note with the serial number endorsed on the document at page 167 of the bundle.

10.  The defendant relied on the page 92 document which is a delivery note without the endorsement of the reference number on the top right hand corner of the document, claiming the p 167 document endorsement was written by someone subsequent to the date, presumably the supplier in order to collect payment even though the goods were never delivered.  The defendant categorically denied ever receiving the goods in 2006 claiming the plaintiff had orally agreed to set off the payment for those goods.  This was denied by the plaintiff.

11.  The plaintiff referred to clause 1 of the lease agreement, which stipulated that no deduction or set off of any kind will be allowed under the agreement.  The defendant referred to the email exchanged between the plaintiff’s staff on 11 May 2011 following the query raised by the defendant on the non-delivery of goods in June 2006.  These emails raised the query on the date of delivery of the goods in question to be made.     

12.  This was 5 years after those goods should have been delivered and money had been released to the supplier.  Why was the staff of the plaintiff referring to delivery on a future date in their emails?

13.  The evidence adduced on affidavit indicated there may have been a misunderstanding or miscommunication on the delivery of the goods on 30 June 2006.  This was the question raised by the defendant.  I find the defendant’s case somewhat questionable because the non delivery claim was raised on email in March 2011 for goods which was supposed to be delivered on 30 June 2006.  The query was 5 years late.  Nevertheless, based on the email exchanged on 11 May 2011 by the plaintiff’s staff, it seems the defendant has raised questions which should be answered.

14.  I find the defendant’s defence shadowy and I am not totally convinced it is fully meritorious, but due to the unexplained email exchanges of the plaintiff’s staff, I am prepared to grant conditional leave to defence to the defendant. The condition imposed is the full payment of the claimed sum of $101,055.29 into court within 21 days.

15.  I allow the costs of the application and today to the plaintiff to be taxed if not agreed.  The order includes costs reserved on the last occasion before the master.