LAU CHING CHUEN v. CHOI YEE WAI

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J U D G M E N T

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Power, J.A.:

1. The plaintiff in this matter brought action against the defendant for a declaration that an agreement and/or a varied agreement for the sale of premises situated at Roof BD of Sing Teck Factory Building at No.44 Wong Chuk Hang Road, Hong Kong, had been discharged and the defendant had, having failed to pay monies owing thereunder, evinced an intention not to proceed and wrongfully repudiated that agreement. The plaintiff also sought a declaration that he was entitled to forfeiture of a $10,000 deposit, although no provision" for such forfeiture was made in the agreement, and for vacant possession and mesne profits.

2. The plaintiff sought summary judgment under 0.14. This application was refused by Registrar Perrior who granted conditional leave to defend which require the defendant to pay $100,000 into court within 21 days. Both parties appealed from this decision to Hopkinson, J. who dismissed the plaintiff's appeal but upheld the appeal of the defendant and, varying the order, held as follows:

"It seems to me that the Defendant has shown that he has an arguable defence and that he should have conditional leave to defend. So the plaintiff's appeal is dismissed.

    But it is clear that he has sat tight in the subject premises for nine months since last November without paying a cent.

    I appreciate that he has no money in two bank accounts, so that it may be impossible for him to pay $100,000 as a condition for leave to defend. (See 0.14 rr. 3 and 4). But he and his wife earn over $5,000 per month and it is quite wrong that they should think they can stay there indefinitely without paying anything.

    Accordingly I allow the appeal to the extent that the defendant should pay into court $30,000 within 21 days (plus a further $3,000 payment into Court on 1/9 and each further month until trial (if any)) failing which the plaintiff may sign judgment.

    Otherwise the defendant's appeal is dismissed and the Master's order is confirmed."

3. It is the argument of Mr. Murray, for the defendant, that once the judge found that the defendant had shown "an arguable defence" he should have given unconditional leave to defend. Mrs. Yew, who appears for the plaintiff, has not cross appealed against the judge's finding that the defendant had shown "an arguable defence". As the matter stands in this appeal the only issue is whether the conditional leave imposed by Hopkinson, J. should be replaced by an order giving unconditional leave. Mrs. Yew, in arguing that it should not, submits that a gloss must be put upon the words used by the judge suggseting that he must, given that he imposed conditions, have meant that the defendant had shown an "arguable but shadowy defence". The words used by the judge lend no support to such a suggestion. He found, without qualification that the defendant had "shown .... an arguable defence". It seems to us clear, from the ruling and as a whole, that the condition was imposed not because he found a shadowy defence but because he was concerned that if the plaintiff was eventually successful he might find difficulty recovering mesne profits. While this concern is understandable we are satisfied that the judge was wrong to attempt to meet it in the way he did. We can do no better than to echo the words of the appeal court in Finsbury Building Society v. Pears et se (1890) 89 L.T.J. 81 where, in circumstances which were not dissimilar, the appeal judges said:

"The terms imposed by Hawkins, J. might do substantial justice, but in no other sense was the order just or legal."

We are satisfied likewise in the present case that once the judge was satisfied that the defendant had shown an arguable defence he should have given unconditional leave to defend.

4. While we are in some doubt that we would have come to the same conclusion that there is an arguable case, given that there is no cross appeal and given our rejection of the gloss sought to be put upon the words "arguable case" we are satisfied that it would be wrong to disturb his finding in that regard.

5. The appeal must succeed. The order is quashed and the defendant is given unconditional leave to defend.