Myriad Electronics Ltd v Enity Technology Ltd

Court:High Court (Hong Kong)
Judgement Number:HCA822/2004
Judgment Date:22 Mar 2005
HCA000822/2004 MYRIAD ELECTRONICS LTD v. ENITY TECHNOLOGY LTD

HCA822/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.822 OF 2004

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BETWEEN

MYRIAD ELECTRONICS LIMITED Plaintiff
and
ENITY TECHNOLOGY LIMITED Defendant

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Before : Deputy High Court Judge Muttrie in Chambers

Date of Hearing : 11 March 2005

Date of Judgment : 22 March 2005

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J U D G M E N T

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1. The plaintiff’s claim is for the price of goods sold and delivered to the defendant under an invoice dated 10 October 2003. The price of the goods was US$452,192.89 but credit was given for three debit notes and the final figure is US$440,862.00. The plaintiff applied for summary judgment, but on 28 October 2004 Master Lung, having heard the summons, gave the defendant unconditional leave to defend. The plaintiff now appeals against that order.

2. There is no dispute that the plaintiff sold the goods to the defendant who did not pay for them. The defendant bought the goods for sale on to an electronics chain store in the USA called Circuit City Stores, Inc. The plaintiff in fact delivered the goods direct to Circuit City. The plaintiff’s invoice allowed for 75 days’ credit and should have been paid in December 2003. In fact on 25 March 2004, the defendant issued to the plaintiff a document in the following terms :

“GUARANTEE

In consideration of the attached invoice numbered MY030908 for an amount owing to Myriad Electronics Limited by Enity Technology Limited (‘Enity’) in the amount of US$440,682.00 representing the balance of the original amount due of US$4562,192.89, the directors of Enity (‘Guarantors’) unconditionally guarantee the payment in full of this balance amount by close of business on April 2 2004.

For and on behalf of Enity Technology Ltd.

(sgd)

Steven Todd Krause, Director

Dated this 24th day of March 2004.”

3. The defendant however claims set-off and counterclaims against the plaintiff which will extinguish the value of the claim. These are :

(i) right of set-off for faulty goods that would more than extinguish the plaintiff’s claim and a counterclaim for damages incurred as a result of the faulty goods;
(ii) a right of set-off for poaching the defendant’s client, Circuit City and a counterclaim for poaching Circuit City in breach of a contract; and
(iii) counterclaim for breach by the plaintiff of a separate contract for the supply of goods.

4. It is not necessary to set out the principles to be followed in Order 14 cases. There is no doubt that the defendant bought the goods and did not pay for them. Suffice it to say that if the defendant can set up a bona fide set-off arising out of the same subject-matter of the action which will extinguish the claim, as argued here, it will be entitled to unconditional leave to defend.

Faulty goods

5. On 6 April 2004, a Californian law firm, Klamath, wrote a letter behalf of the Mateel Environmental Justice Foundation (“Mateel”) to the president of Circuit City giving notice that the latter was in violation of the California Health & Safety Code §25249.6 (known as “Proposition 65”) because it was marketing electrical cables or “cords” which contained toxic chemicals, in particular lead. It was said that violations had occurred every day since at least 6 April 2000 and would continue every day until reasonable warnings were given to those people exposed.

6. On 13 May, Circuit City wrote to the defendant with a copy of Klamath’s letter, requesting that the defendant, to the extent that any products supplied by it, indemnify Circuit City for any liability incurred in connection with Circuit City’s sale of such products in California, and that the defendant immediately take steps to ensure that any products supplied containing cords comply with Proposition 65, or be...

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