This is a case on Summary Judgment.
Facts of the Case
The appellant, National Company for Foreign Trade is a state trading entity of Aden, Yemen. The respondent is a private limited company in Malaysia. The Appellant made an agreement with to buy timber and the respondent agreed to sell timber to be shipped from various port in Malaysia to Aden. The respondent had shipped timber on board a vessel named “Senang Island” from Kuantan and the appellant made payment under the agreement.
On the way to Aden, the vessel was arrested in Singapore and the timber was unloaded in Singapore. Appellant had made arrangements to ship the timber by another vessel named “Kota Abadi” to Aden and respondent had agreed to bear the cost of reshipment ($60,405). Respondent had requested the appellant to advance the freight cost of $907,350 with the express undertaking that the respondent will return the reshipment cost ($60,405) later.
Despite numerous demands, the respondent failed to pay the balance sum to the appellant. Thus, the appellant brought an action against the respondent. The Assistant Registrar allowed the summary judgment to be entered in favour of the appellant in the sum of $846,930. On appeal to the High Court, the court reversed the order on the grounds that the appellant did not plead the element of consideration in the statement of claim. Thus, the appellant appealed to the Federal Court.
Issue of the Case
Whether the respondent has satisfied the Court by raising a bona fide arguable defence which ought to be tried?
Judgment of the Court
The learned High Court had erred in deciding that consideration needs to be specifically pleaded in the statement of claim. The court is in the opinion that ‘consideration’, ‘agreement’ or ‘contract’ have been statutory defined in the Contracts Act 1950, they cannot regarded as material facts and therefore need not be specifically pleaded in the statement of claim under Order 18 Rules 7(1) Rules of the High Court 1980.
Under Order 14, considerations for summary judgment are whether the case comes within the Order and whether the plaintiff satisfied the preliminary requirements for the proceeding which are:
Defendant must have entered an appearance
The statement of claim must have been served to the defendant
The affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14
The court also states that a case is not within Order 14
where no statement of claim has been served on the defendant;
where the indorsement on the writ includes a claim or claims outside the scope of Order 14 as coming within Rule 1(2);
where the affidavit in support of the application is defective, e.g. in omitting to state the deponent's belief that there is no defence to the claim or part to which the application relates;
where the application is made in an action against the Government [Order 73 Rule 5(1)].
If the plaintiff satisfied these considerations, he would have established a prima facie case and becomes entitled to a summary judgment. The burden of proof will shift to the defendant to explain why judgment should not be given against him.
The respondent argued that under the contract, the legal responsibility of the
respondent/seller ceased when the sawn timber were loaded on board the vessel "Senang Island" at Kuantan and when the vessel "Senang Island" was arrested in Singapore the appellant applied to the Singapore High Court to off-load the sawn timber so that they could be reshipped to Aden by another vessel. By so doing the appellant exercised right of ownership over the saw ntimber in as much as the property of the sawn timber had passed or was deemed to have passed to the appellant at the place of shipment in Kuantan.
In the statement of claim it is alleged that following the undertaking by the respondent to reship the sawn timber and to be responsible for the cost of freight charges from Singapore to Aden the parties had agreed on new dates regarding the shipment of the balance of the sawn timber under the said contract. The appellant further submitted that on October 16, 1979 the appellant and the respondent signed another fresh sale and purchase agreement vide KR/NCFT/44/79 in respect of 11,600 tons of "Keruing sawn timber (Redwood). However, this was not pleaded in their Statement of Claim.
The court referred to the case of Gold Ores Reduction Co v Pain [1892] 2 QB 14 where it was held that for the purpose of Order 14 application the statement of claim must be complete and good in itself; any defect or omission cannot be corrected or supplemented by the plaintiff's affidavit. Furthermore, if the defect is one of substance, the application for summary judgment will be dismissed.
Applying the principle to the current case, the court held that the Appellant’s statement of claim is defective as he failed to include material facts. Thus, the respondent has satisfied the Court on affidavit evidence that there is an issue which ought to be tried. In such instance, the summary judgment was dismissed.
Principles of the Case
Under Order 14, considerations for summary judgment are whether the case comes within the Order and whether the plaintiff satisfied the preliminary requirements for the proceeding which are:
Defendant must have entered an appearance
The statement of claim must have been served to the defendant
The affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14
The court also states that a case is not within Order 14
where no statement of claim has been served on the defendant;
where the indorsement on the writ includes a claim or claims outside the scope of Order 14 as coming within Rule 1(2);
where the affidavit in support of the application is defective, e.g. in omitting to state the deponent's belief that there is no defence to the claim or part to which the application relates;
where the application is made in an action against the Government [Order 73 Rule 5(1)].
If the plaintiff satisfied these considerations, he would have established a prima facie case and becomes entitled to a summary judgment. The burden of proof will shift to the defendant to explain why judgment should not be given against him.