Supreme Court New South Wales Medium Neutral Citation: Tongfang Global Limited v Seiki Australia Pty Limited [2015] NSWSC 228 Hearing dates: 11 February 2015 Date of orders: 11 February 2015 Decision date: 11 February 2015 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Defendant to pay $246,770 to the plaintiff Catchwords: [PROCEDURE] – whether funds paid into Court by the defendant following summary judgment should be released to the plaintiff after delay in making part of the payment – whether earlier orders requiring payment into court should be varied – whether order for summary judgment should be stayed Category: Procedural and other rulings Parties: Tongfang Global Limited (Plaintiff) Seiki Australia Pty Limited (Defendant) Representation: Counsel: AM Stewart SC/K Tang (Plaintiff) C Alexander (Defendant) Solicitors: J.S. Mueller & Co (Plaintiff) Carroll & Associates (Defendant) File Number(s): 2014/282011 Publication restriction: Nil EX TEMPORE Judgment 1. These are competing Notices of Motion that have been referred to the Duty List by the Registrar in Equity this morning. The plaintiff, Tongfang Global Limited, seeks an order that the amount of $446,770 together with any interest earned thereon that has been paid into Court by the defendant, be released to the plaintiff forthwith. That Notice of Motion was filed in Court today. 2. The defendant/cross-claimant, Seiki Australia Pty Ltd, pursuant to a Motion filed on 2 February 2015, seeks an order that the orders made on 17 December 2014 be varied so that the defendant/cross-claimant pay the balance of the second payment of $346,770 due by 31 January 2015, now in the sum of 246,770, into Court by 27 February 2015, and that Orders 1 and 2 made by Robb J on 28 November 2014 be extended pending further order. 3. The parties were in a commercial relationship pursuant to which the plaintiff supplied television sets to the defendant. Some of the television sets are alleged to have been not fit for the purpose by reason of the absence of a particular cable. Others are alleged to have been defective in various ways with the television sets being returned to the retailer and the retailer seeking from the defendant/cross-claimant reimbursement in respect of those returned television sets. 4. The plaintiff filed a Statement of Claim on 25 September 2014. On 6 November 2014, the defendant paid into Court the sum of $200,000. It appears that this may have been by way of security. On 21 November 2014, a Defence was filed. On 28 November 2014, Robb J ordered summary judgment for the plaintiff in the amount of US $770,000 together with costs. His Honour stayed those orders until 5pm on 15 December 2014 and directed the cross-claimant to file any Notice of Motion seeking a further stay by 12 December 2014. 5. The defendant filed that Notice of Motion for a further stay on 12 December 2014 and also filed and served its Cross-Claim. On 17 December 2014, Rein J ordered that the US $200,000 previously paid into Court be paid out to the plaintiff, and the two tranches of AUD $346,770 be paid into Court by 16 January 2015 and 31 January 2015 respectively. His Honour stayed the judgment and orders pending further order and dependent upon the two payments being made. 6. On 16 January 2015, the defendant paid the first tranche of AUD $346,770 into Court. On 19 January 2015, the plaintiff served an unverified defence to the cross-claim which was verified and filed on 28 January 2015. 7. The defendant did not comply with the order to pay the second tranche on 31 January 2015. However, it notified the plaintiff on 2 February 2015 that it had paid into Court AUD $100,000. On 2 February 2015, the defendant filed and served the Notice of Motion to which I have referred. 8. The defendant's Notice of Motion for the variation of the orders is supported by the evidence of Quang Ho Ngo. Mr Quang Ho Ngo is a director of the defendant. His evidence is that unfortunately the TV units supplied by the plaintiff that the company held in stock came without U-Vision cables "which made the sale of the TV units difficult at a retail level" (see paragraph 5). 9. On 19 December 2014, the defendant received notification from Dick Smith Electronics that it required promotional and marketing funds of US $193,000 to actively promote the sale of the TV units. The director's evidence was that this amount was "unexpected". He claimed that there were 440 TV units that the defendant held in stock to be sold to Dick Smith Electronics with an approximate value of $358,550, and that they have now been sold by Dick Smith Electronics and the funds received. He also claimed that because the defendant has had to pay the marketing funds to Dick Smith it has been "left with significant shortfall of funds to meet the second payment" that the Court ordered in December 2014. 10. A further explanation was put forward as to why the defendant had the difficulty in meeting the second payment. It is that it had to pay an amount in excess of $50,000 excluding GST to customers who had purchased the TV units and had claimed that they were defective, and that it had to pay an ongoing "after sales support" due to the faulty goods in excess of an amount of $100,000. So far it would appear that the amount of the damage suffered on the Cross-Claim is $100,000, and perhaps the extra $50,000, although that is not as clear as the claim for $100,000. 11. There is also evidence that the defendant has made arrangements for the sale of "alternative products" through Dick Smith Electronics, and that the company is confident that the balance of the moneys ordered to be paid into Court can be paid by Friday 27 February 2015. 12. The plaintiff's position is that it does not oppose the extension of time within which to pay the balance of the moneys into Court. However it is submitted that this Motion is misconceived because the stay was dissolved automatically by the default in payment and what is really being sought is a fresh stay on the evidence that is now before the Court. It is submitted that the just and equitable outcome of any grant of a stay at this juncture is that the moneys paid into Court should be paid out to the plaintiff and that the defendant pay the balance outstanding into Court by 27 February 2015. 13. Mr C Alexander, of counsel, who appears for the defendant, has taken the Court to the pleadings, in particular to the Cross-Claim and the Defence filed in response to the Cross-Claim. It is submitted that the prospects of success of the Cross-Claim are not great having regard to exhibit 2, the Repayment Agreement. It is not an issue that after the plaintiff had supplied the television sets, the defendant did not pay the plaintiff pursuant to the arrangements that were in place. Subsequently the parties entered into the Repayment Agreement. That Repayment Agreement recited that the payments by the defendant were overdue, and that the parties desired to resolve and settle in full, all disputes between them without further litigation and without any party admitting fault or liability. 14. The Defence to the Cross-Claim filed by the plaintiff as cross-defendant, contends that the Repayment Agreement constitutes a full accord and satisfaction of all claims including in relation to the original underlying transactional contract pursuant to which the television sets were supplied. 15. That of course is a matter for the trial judge. However Mr Alexander points to it to submit that this is not a straightforward case and submits that it is a factor to be taken into account in exercising any discretion to grant a stay at this stage. 16. He also submits that the plaintiff has delivered the goods, the goods have been sold, the moneys have been paid for the goods that have been sold, and his client is entitled to the payment for those goods. He submits that the indulgence was granted to the defendant last year, and the defendant has not taken advantage of that indulgence and failed to pay the amounts that were ordered to be paid by Robb J and Rein J. 17. Mr AM Stewart SC leading Mr K Tang, of counsel for the plaintiff, submit that it would be inappropriate to make an order for payment out of the moneys in Court. The defendant is a company registered overseas (in Hong Kong) but there is no evidence to suggest that any judgment on the Cross-Claim would be not paid by reason of an inability of the plaintiff to pay. Rather, the point is made that difficulties may be encountered in enforcing the judgment by reason of the defendant being registered overseas. 18. Mr Alexander does not quibble with the fact that his client is a company registered overseas. He submitted that the Court can infer that there may be difficulties in enforcement but there is no evidence to suggest that his client is not a substantial client and capable of paying and meeting a judgment debt. 19. It must be remembered that this payment into Court should not be seen as security for costs or security for a judgment. It occurred in circumstances set out in Robb J's judgment at a time when the Cross-Claim had not been filed and soon after the proceedings had commenced. It occurred in circumstances where it was appropriate to enter summary judgment on the main claim and to place the moneys into Court staying the judgment in the circumstances. 20. The defendant's evidence explaining the delay in the payment is that the essential commercial aspects of the arrangement with Dick Smith had to be met, and accordingly, the Court's order was simply not complied with. The plaintiff was entitled to have those orders met in circumstances where it was not able to have the moneys paid to it on its judgment. 21. The fact that commercial expediency was met by dealing with promotional expenses and the like, is a matter in the ordinary course of business between the defendant/cross-claimant and its contractors. As the extension of time for payment into Court is not opposed, it is necessary to assess what is a just outcome between the parties by reason of these new circumstances. 22. What has happened is that the defendant has had the benefit of the moneys for an extra month. It has had the benefit of being able to use that money to meet its commercial arrangements with Dick Smith and to obtain the benefit of any payments from Dick Smith for those commercial arrangements in respect of other products that have nothing to do with these television sets. I am satisfied that I should impose the stay but I am also satisfied that it is just that some payment be made to the plaintiff. 23. It seems to me appropriate in the circumstances that the balance of the amount outstanding be paid to the plaintiff, and that the moneys paid into Court can for the time being remain in Court. Accordingly, I intend to dismiss the defendant/cross-claimant's application. 24. I also intend to dismiss the plaintiff's application and to make the following orders: 1. The defendant/cross-claimant is to pay to the plaintiff the sum of $246,770 on or before 27 February 2015. 2. I order that the cross-claimant is to serve its affidavit evidence by no later than 19 February 2015. 3. I stay orders 1 and 2 made by Robb J on 28 November 2014 pending further order. In the event that the payment of $246,770 is not paid to the plaintiff by 27 February 2015, such stay is dissolved forthwith. 4. I order that the cross-claimant file and serve any Reply to the Defence to the Cross-Claim by 19 February 2015. 5. I order that the plaintiff/cross-defendant serve its evidence by 20 March 2015. 6. I list the matter for directions before the Registrar in Equity on 26 March 2015. 7. In respect of the Motion brought by the defendant/cross-claimant pursuant to which the stay was granted, the defendant/cross-claimant is to pay the plaintiff/cross-defendant's costs of that motion. 8. In respect of the Motion brought by the plaintiff/cross-defendant, I make no order as to costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 March 2015