The High Court granted Kay-el (Hong Kong) Limited judgment on its summary claims against Musgrave Limited over dishonoured bills of exchange, while directing that Musgrave’s separate claim proceed to a plenary hearing.
In a judgment delivered on 2 December 2005, Mr Justice Kelly said Musgrave did not deny receiving the goods covered by the bills or liability on them. It argued that it had a right to set off sums it claimed were due under related agreements.
The judge said the governing law generally prevents an unliquidated claim for damages from being used to defeat a claim on a bill of exchange or to obtain a stay of execution. A relevant exception could arise where a total or partial failure of consideration produced a liquidated claim, or where fraud was involved. The judgment records no suggestion of fraud in this case.
The dispute involved a November 2003 exclusive supply agreement under which Kay-el was appointed sole supplier of products for consumer promotions through Musgrave’s SuperValu and Centra franchisees. The court noted that individual sales contracts were also entered into. It said the exclusive agreement’s terms appeared inconsistent with the set-off Musgrave relied on.
Musgrave’s summary summons sought €4,213,571.70 in connection with agreements for drinks cabinets, rocking chairs, chests of drawers and luggage sets. The amount included sums it said it could set off for other items. Kay-el disputed that the claim was a liquidated debt, arguing that alleged breaches of the exclusive supply agreement affected any obligation to accept returns and that the issues required an assessment of damages. It also said most of the goods remained with Musgrave and that, apart from one group of goods, invoices had not been received before proceedings began.
Justice Kelly concluded that Musgrave had not shown that its claim met the requirements to resist judgment on the bills. He said the disputed matters in Musgrave’s own proceedings required a plenary hearing, where the facts could be examined more fully. No cross-examination had taken place on the affidavits, and the judge said he could not make final or binding determinations on disputed facts at this stage.
The court therefore entered judgment for Kay-el on both summary summonses for the full amounts sought. It adjourned Musgrave’s action for plenary hearing and said it would give directions for exchanging pleadings. The judgment does not state the amounts awarded to Kay-el.