XCHRX THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD. v. LEUNG CHI KIT t/a LEUNG PUI FORM MOULD WORKS

HCA 5363/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5363 OF 1999

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J U D G M E N T

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Godfrey, J.A. :

1. This is a claim for summary judgment, for debts said to be due to the plaintiff pursuant to a factoring agreement with one of its customers ("the assignor"). The defendant debtor claims to be entitled to set off against the plaintiff's claim a claim for damages arising out of the same transactions as gave rise to the debts. The plaintiff's claim is for HK$5,470,490.63. The defendant has quantified its claim in the sum of HK$4,512,027.00, and asks for leave to file further evidence in substantiation of this claim. I will give leave as asked.

2. The defendant takes an objection to the plaintiff's proceedings, to which the assignor is not a party, either as plaintiff or defendant. It says that the assignment to the plaintiff was made before the debts assigned came into existence, and that therefore the assignment operated only as an equitable assignment, being an assignment of future choses in action. The debtor suggests also that there was no consideration for the assignment. But there plainly was consideration, in that the plaintiff set up the factoring service for the assignor. The assignment was, in my judgment, converted into a legal assignment so soon as the debt arose; but even if I am wrong about that, I am satisfied that there is no rule of law compelling the joinder of the assignor in the proceedings and that it would be appropriate to dispense with such joinder in this particular case, where the assignor is in liquidation and the defendant has anyway already settled (however inadvisedly) with the assignor.

3. The defendant asks for unconditional leave to defend as to the amount of its claim of set-off.

4. I am satisfied that there is a genuine dispute here as to the quality of the goods supplied by the assignor which ought to be tried. I am not able, at this stage, accurately to evaluate the quantum of the defendant's claim. I propose in these circumstances to give judgment for the plaintiff for part of its claim, namely, $1.5m, and to give the defendant unconditional leave to defend as to the balance of the plaintiff's claim, with interest from 1.4.98 until 19.8.1999 on $1.5m at the rate of 10% per annum and thereafter at the judgment rate until payment. Costs will be costs in the cause.