Wfm Motors Pty Ltd v Malcolm Maydwell

Judgment Date07 December 1995
CourtCourt of Appeal (Hong Kong)
Judgement NumberCACV187/1995
Subject MatterCivil Appeal



Civil Appeal Nos. 148 & 187 of 1995

Miscellaneous Proceedings No. 1778 of 1995






Coram: Hon. Nazareth, V.P., Bokhary & Ching, JJ.A.

Dates of hearing: 13, 14, 18 & 19 September, 1995

Date of handing down judgment: 7 December 1995




Ching, J.A. :

1. Skink, Ltd., is a Hong Kong company in which the Defendant and his wife are the only shareholders. It dealt in the sale of cordless telephones. It had done business with a company owned or controlled by the Plaintiff called Zap, subsequently renamed Australian Telephone Distributors Pty., Ltd., ("ATD") with which it had entered into a distributorship agreement dated 5th December, 1991. The agreement obliged ATD to order a minimum number of telephones every year. For reasons into which it is not necessary to go, it is accepted by the Defendant that Skink became indebted to ATD. There then came into being a guarantee by deed dated 20th July, 1992, executed by the Defendant in favour of the Plaintiff.

2. The guarantee provided that in consideration of the Plaintiff

"..... granting and continuing to grant credit or other financial accommodation ....."

to Skink, the Defendant promised to pay to the Plaintiff the "Guaranteed Moneys" on demand. The "Guaranteed Moneys" were defined as being

"..... all moneys ..... owing by (Skink) to (the Plaintiff) ....."

The maximum liability of the Defendant was to be $3,500,000 with interest and other expenses. By clause 2.04 it was provided that

"A certificate of balance signed by any director of (the Plaintiff) shall be conclusive evidence against the (Defendant) of the amount of the Guaranteed Moneys."

One of the events upon which the Plaintiff could demand payment was the making of an order for the winding-up of Skink. Such an order was made and the Plaintiff, through its solicitors, made a demand. The Defendant did not pay and the Plaintiff issued proceedings in Australia.

3. The Amended Statement of Claim was in a simple form. It alleged the guarantee, the indebtedness of Skink to it, the winding-up order, the demand and the non-payment. Paragraph 8 pleaded that

"By letter dated 18 December 1992 the Defendant acknowledged the indebtedness of Skink to the Plaintiff in the sum of Five Million and Fifty Four Thousand Six Hundred and Seventeen Dollars and Eighty Cents Hong Kong ($5,054,617.80 HK)."

The claim was limited to the amount set out in the guarantee.

4. A Defence was filed. It admitted the guarantee but made no admission as to the demand. It set out details of dealings which took place from 21st July, 1992. In essence those dealings were with ATD who had opened various letters of credit. Only one letter of credit had been opened by the Plaintiff the full amount of which had indeed been drawn down and against which the full amount of goods had been sent. In other words, there was no debt owing by Skink to the Plaintiff. In accordance with this, paragraph 4 admitted the letter of acknowledgement but asserted, as was plainly true, that it was addressed to ATD. Paragraph 5 concluded the pleading in this way,

"(o) Further or alternatively, the Plaintiff represented to the Defendant that it would procure ATD to perform its obligations under the Agreement referred to in paragraph 5(d) above by causing ATD to purchase 61,000 cordless telephones from Skink during 1992 and to cause Letters of Credit to be issued to enable ATD to pay for goods ordered from Skink.

(p) Acting on the faith of the above representation and induced thereby, the Defendant entered into the said Guarantee.

(q) The representations were false, made negligently or alternatively innocently.

(r) In the premises the Guarantee is void."

The agreement referred to in (o) was the distributorship agreement.

5. The Plaintiff made an application for summary judgment and, in the alternative, for the Defence to be struck out. On 22nd October, 1993, the Plaintiff was given summary judgment by Master McLaughlin. The Defendant allowed the time for appeal to pass and then applied for an extension. That application was dismissed by Windeyer, J., on 16th August, 1994. On 26th September an appeal against that dismissal was refused. There have been other proceedings in Australia and the Plaintiff has recovered a part of the judgment debt.

6. On 8th June, 1994, the Plaintiff had registered the judgment in Hong Kong under the provisions of section 4 of the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap.319, liberty being given to the Defendant to apply to set it aside. Under section 6(2) of the Ordinance the registration may be set aside on the grounds that there is an appeal pending in the foreign court against the judgment or on the grounds that the judgment debtor is entitled to and intends to appeal. Accordingly on 4th July, 1994, the Defendant issued his first summons to set aside the registration on the grounds that an appeal was pending. After he had unsuccessfully exhausted his appeals in Australia, Master Britton dismissed his first summons on 17th October, 1994. On 23rd December, 1994, the Defendant sought leave to appeal against that dismissal out of time.

7. Meanwhile, on 12th December, 1994, the Plaintiff had served a bankruptcy notice upon the Defendant. On 21st December, 1994, he applied to set it aside. On 23rd December, 1994, the same day upon which he sought leave to appeal the Britton order out of time, he issued a second summons seeking an extension of time within which to make another application to set aside the registration of the judgment on five new grounds.

8. At that time the Defendant thus had three outstanding applications. The first was his application for leave to appeal against the Britton order out of time. The second was his application to set aside the bankruptcy notice. The third was his application for leave to issue his second summons to set aside the registration of the judgment. These three applications came before Yam, J., on 10th January, 1995. He refused leave to appeal against the Britton order out of time and he adjourned the other two to be heard together by a Master. They came before Master Betts on 12th April, 1995. He set aside the bankruptcy notice but refused leave to issue the second summons. Both sides appealed to the Judge in chambers. The Defendant maintained that having regard to section 97(2) of the Bankruptcy Ordinance, Cap.6, the Plaintiff's appeal lay only to the Court of Appeal. In any event the two matters then came before Findlay, J.

9. Before Findlay, J., the Defendant's appeal against the refusal of leave to issue the second summons to set aside the registration of the judgment was heard first. It appears to have been treated as a substantive application to set aside. On 31st May, 1995, Findlay, J., set aside the registration of the judgment. Time constraints did not allow the Plaintiff's appeal to be argued. Rightly or wrongly, however, the Plaintiff took the view that the bankruptcy notice was based solely upon the registration of the judgment and, with that registration having been set aside, the bankruptcy notice also had to go. The Plaintiff's appeal was therefore dismissed on 6th September, 1995.

10. On 26th June, 1995, the Plaintiff filed a Notice of Appeal against the setting aside of the registration of the judgment. Without prejudice to its contention that it was entitled to appeal to a Judge to apply for an extension of time to appeal to the Court of Appeal against that part of the Betts order setting aside the...

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