QUANTEL LTD v. KAM KUI INTERNATIONAL (HOLDINGS) LTD

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JUDGMENT

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1. This is an appeal by the defendant against a decision of Master Barnett given on the 19th October 1984 when he ordered that judgment under Order 14 be entered in favour of the plaintiff for the sum of £72,467.53 interest and costs in respect of three bills of exchange drawn by the plaintiff on the defendant which were accepted by the defendant, but were dishonoured by non-payment.

2. The proceedings arise as a result of a contract made between the parties on the 28th May 1982 whereby the plaintiff agreed to sell to the defendant certain television equipment. Details of the equipment are set out in Appendix A of the contract. The defendant alleges that they were induced to enter into the contract by a series of oral misrepresentations made by the plaintiff. As a result of these misrepresentations the defendant contends that the contract was rescinded because the plaintiff failed to supply a vital part of the equipment that would produce what is called the Autoflex function. Autoflex is used in making television commercials to electronically reproduce the same images, but distorts them according to pre-set patterns and enables them to merge into different shapes automatically. The defendant therefore maintains that there has been a total failure of consideration with the result that unconditional leave to defend should be granted.

3. It is clear that the written contract does not include equipment for Autoflex. Mr. Mitchell who appeared for the plaintiff submitted that the defendant has in fact received what they are entitled to under the contract and that with regard to Autoflex there was a misunderstanding between the parties. On the other hand Mr. Leung the defendant's managing director states that when the Autoflex equipment was not delivered the plaintiff at first promised to make delivery, but later retracted by saying that it would only be made upon payment of the price.

4. The law with regard to a bill of exchange in Order 14 applications is clear for the bill is to be treated as cash. However, when there is an arguable case based on a total failure of consideration unconditional leave will be given. Extrinsic evidence is admissible to defeat a written contract where there has been a misrepresentation or a mistake.

5. In this case the defendant has put forward an arguable case based on a total failure of consideration. Accordingly the appeal is allowed and the judgment is set aside. The defendant is granted unconditional leave to defend.