Acelink Ltd v. Sanju.Com Ltd t/a Dannyboy International and Another

DCCJ 229/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 229 OF 2013

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JUDGMENT
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1.This is a case by the plaintiff against the 1^st defendant’s failure to repay a loan and against the 2^nd defendant as a guarantee to the repayment of the loan.

Trial in the absence of defendants

2.This trial was proceeded in the absence of both defendants for the following reasons.

3.On 12 January 2015, the learned master set this case down for trial at 9:30am on 8 July 2015 and fixed the PTR on 21 May 2015. At that time, both defendants were represented.

4.On 19 May 2015, both defendants filed a notice of intention to act in person.

5.The PTR was held by me on 21 May 2015 when the 2^nd defendant, appearing for the 1^st defendant and himself, was present. I ordered that the trial shall commence at 9:30am on 8 July 2015, as scheduled.

6.Both defendants were absent on 8 July 2015. At 9:42am, I informed Mr Daswani, director representing the plaintiff, that my clerk had tried to contact the defendants via a phone number left by them but found that the person who answered the phone was not anyone of the 1^st or the 2^nd defendant. As I had no idea why the defendants were absent, I suggested to wait until 10:30am. Mr Daswani had no objection.

7.At 10:30am, the defendants were still absent. I therefore decided to proceed. In Law Yin Pok Bosco, a minor v Dr Chan Yee Shing, HCMP 2256/2012 (unreported, 2 November 2012), it was held by Fok JA (as he then was) that :-

“9. In the ordinary course of events, milestone dates such as the dates fixed for the trial of an action must, on occasion, yield to the vicissitudes of life. The illness of a party or a necessary and important witness may, depending on the circumstances of the case, justify vacating and re-fixing the trial dates. This is simply a manifestation of the principle recognised in Dick v Piller [1943] 1 KB 497, the headnote of which reads:

“When a witness in, or a fortiori a party to, an action in a county court is alleged to be prevented by illness from attending the court for a hearing of the case and the judge is satisfied of the fact of his illness and of the materiality and importance of his evidence and that the granting of an adjournment will not cause an injustice to the other party which cannot be reduced by costs, it is the duty of the judge to grant an adjournment, it may be on terms, and failure on his part to do so constitutes a miscarriage of justice which necessarily involves an error of law on which an appeal may be founded.”

10. By way of example of the operation of the principle: see, as regards a material witness of fact, Fairwing Investment Limited v China and Canton (Properties) Company Limited & Anor, unrep., HCA 2137/2004, 16 June 2009; as regards an expert witness, Joyce & Anor v King, unrep., Times Law Reports, 13 July 1987; and, as regards a litigant, Teinaz v Wandsworth London Borough Council [2002] ICR 1471.

11. However, in order for an adjournment to be granted on this basis, the court is entitled to be satisfied that the inability of the litigant to be present is genuine and the onus is on the applicant for an adjournment to prove the need for such an adjournment: Teinaz v Wandsworth London Borough Council at §21.”

8.The defendants attended the PTR and must have known the scheduled trial date. I heard nothing from the defendants as to the reason of their absence. It was the defendants’ decision not to appear and any further delay would be unfair to the plaintiff. In the circumstance, I decided to proceed the trial in the absence of the defendants.

Plaintiff’s evidence

9.Mr Daswani was the only witness giving evidence in court. Basically, he confirmed the content of his witness statement. In a gist, he said that the plaintiff lent a sum of US$132,528 to the 1^st defendant. The 2^nd defendant had personally guaranteed the repayment of the said loan. In April 2012, the 1^st defendant agreed to set off the said loan by a sum of US$39,448.20 owed by the plaintiff to the 1^st defendant, leaving a balance of US$93,079.80 which is still outstanding.

The Issue

10.The issues in this case are :-

(1)Did the plaintiff lend the loan to the 1^st defendant?

(2)If the answer to (1) is yes, what is the outstanding amount?

(3)Did the 2^nd defendant personally guarantee the repayment of the said loan?

Did the plaintiff lend the loan to the 1^st defendant?

11.Mr Daswani testified that the plaintiff had business dealings with the 1^st defendant for years. By an e-mail dated 25 August 2011, the 1^st defendant requested finance from the plaintiff for US$150,000. By another e-mail dated 29 August 2011, the 1^st defendant specified that the exact amount of finance requested for was US$132,528. That finance was required by the 1^st defendant relating to business dealings with a company called Best Colour International Limited (“Best Colour”). Basically, the plaintiff agreed to lend the said sum on condition that US$8,614.32, representing 6.5% of the loan, be charged as finance charge and US$39,489.56 been deducted for settlement of an invoice of the plaintiff. Further, the plaintiff through an e-mail dated 6 September 2011 demanded the 2^nd defendant to give a personal guarantee on this matter. The 2^nd defendant subsequently gave a personal guarantee on 7 September 2011.

12.In the circumstance, after taking into account of the said sum of US$8,614.32 and US$39,489.56, the plaintiff lent the remaining amount in the following manner:

(1)deposited US$74,424.12 into the 1^st defendant’s bank account on 8 September 2011; and

(2)deposited US$10,000 into the 1^st defendant’s bank account on 9 September 2011.

13.The original intention was that Best Colour would pay US$132,528 to the plaintiff. However, Best Colour did not pay anything at all.

14.The evidence of Mr Daswani was not subject to any challenge. I have read all the e-mails and find that his evidence sits well with all documentary evidence and contemporaneous records. The defendants were absent and therefore there is no evidence from the defence to contradict what Mr Daswani said. In fact, according to the defence, the 1^st defendant admits that sums totalling US$84,424.12 (US$ 74,424.12 + US$10,000) were deposited into its bank account. On balance, I accept the evidence of Mr Daswani and find that the plaintiff had made a loan to the 1^st defendant.

What is the outstanding amount?

15.Having accepted the evidence of Mr Daswani and gone through all the documentary records, I find that the plaintiff lent a total sum of US$132,528 to the 1^st defendant. Mr Daswani confirmed in court that the said loan is still outstanding. However, in November 2011, the plaintiff purchased some fabrics from the 1^st defendant for US$39,448.20. In April 2012, the 1^st defendant requested the plaintiff to set off the said US$39,448.20 from the loan of US$132,528. The plaintiff agreed.

16.According to the pleaded case of the defendants, the 1^st defendant counterclaimed the plaintiff for the said sum of US$39,448.20. However, as the defendants were absent and there is no evidence to rebut what Mr Daswani said, I accept that the said sum of US$39,448.20 had already been agreed to be set off against the loan of US$132,528.

17.Therefore, US$39,448.20 had to be deducted from the loan. In the circumstance, I find that the total outstanding loan is US$93,079.80.

Did the 2^nd defendant personally guarantee the repayment of the said loan?

18.The plaintiff’s case is that a letter dated 7 September 2011 was a personal guarantee signed by the 2^nd defendant in respect of the loan.

19.According to the pleaded case of the defendants, the said letter was a guarantee given by the 1^st defendant. The 2^nd defendant signed the said letter in the capacity of a director of the 1^st defendant.

20.Having read the letter and taking into account all the circumstance, I find that the said letter is a personal guarantee by the 2^nd defendant.

21.In Ricacorp Properties Ltd v Golden Cosmos Corporation Ltd, HCA 2339/2012, (unreported, 20 May 2015), Deputy High Court Judge Suffiad had clearly and succinctly summarized the applicable legal principle as follows:-

“299. The law is that where an agent signs a contract, and that signature is unqualified, the presumption is that the person signing would himself be personally liable. Where, however, the signature is sufficiently qualified usually by words such as “for and on behalf of…” to show that the person signing signs as agent for another, then the presumption is that the agent who signs the contract would not be personally liable.  In either case, the presumption may be rebutted.  It must therefore always be a question of construction of the document involved in order to determine whether the presumption is or is not rebutted.

300. That principle of the law was clearly stated by by Bankes LJ in the case of Ariadne Steamship Co v James McKelvie & Co [1922] 1 KB 518 at page 525 where he said:

“My own view is that it is a sound rule of construction, applicable to cases like the present, that where the signature is unqualified the presumption is that the agent is personally liable, but that where sufficient words of qualification are annexed to the signature to indicate that the person signing signs as agent the presumption is the other way. No doubt the presumption in either case may be rebutted, and it must always be a question of construction merely whether, taking the document as a whole, the presumption is or is not rebutted.”

301. The same principle of law was stated by Melnick J in the Supreme Court of British Columbia in the case of Barnett v Rademaker et al [2004] BCSC 1060 at paragraph 38 of his judgment where he said:

“If the agent signs without any qualification at all, it is presumed that he or she made the contract in his or her own name and he or she will be personally liable (see Parker v Winlow (1857) 7 El & Bl 942). However, both the presumption that the agent is liable because he or she did not qualify his or her signature and the presumption that the agent is not liable because he or she did qualify his or her signature are rebuttable (see Ariadne Steamship Co v James McKelvie & Co [1922] 1 KB 518).”

302. In construing the identity and capacity of a signatory, one needs to:

(a) look at the contract as a whole;

(b) ascertain the intention of the parties; and

(c) look at the surrounding circumstances.

303. As was said by Giles J in the  case of Clark Equipment Credit of Australia Ltd v Kiyose [1989] 21 NSWLR 160 at page 174”:

“In the result I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract evidenced in the document, meaning thereby not a subjective intention but an intention to be found objectively, notwithstanding a qualification attached to the signature. That intention, or lack thereof, is to be found upon the construction of the document as a whole, including but not being limited to the qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible. The inquiry is not limited to consideration of the signature and its qualification in order to determine whether or not the signature indicates an assent to be personally bound.”

22.In this case, the plaintiff, by an e-mail dated 6 September 2011 addressed to the 2^nd defendant, requested that :-

“Pls assist me to send us a letter confirming this [Best Colour] is covered by your personal guarantee.”

23.Just 1 day afterwards, the 2^nd defendant signed the letter dated 7 September 2011, which stated that :-

“I the under personally guarantee the above bill payment”

24.The said letter bears the letter head of the 1^st defendant. The signature of the 2^nd defendant can be found at the left hand bottom. Immediately above the signature of the 2^nd defendant are the words “for [the 1^st defendant]”. Immediately beneath the signature of the 2^nd defendant are the full name of the 2^nd defendant and the word “director”. The company chop of the 1^st defendant can be seen at the right hand side of the signature of the 2^nd defendant. I accept, on the face of it, the presumption that the 2^nd defendant was signing the letter on behalf of the 1^st defendant arises.

25.However, the presumption is rebuttable. By reading the said letter as a whole, the words “I” and “personal guarantee” were used and necessarily gave an impression that it was the 2^nd defendant, instead of the 1^st defendant, who was personally guaranteeing the loan. Besides, the letter was obviously in reply to the e-mail dated 6 September 2011 in which the plaintiff was asking, or even demanding, a personal guarantee by the 2^nd defendant. In the circumstance, applying the above principle of law and taking into account of the context and timing of the letter, I accept that 2^nd defendant was personally guaranteeing the loan.  As the loan is still outstanding, I find that the 2^nd defendant should be liable for repayment of the loan.

Conclusion

26.Judgment should be entered for the plaintiff against both defendants.  I order that the 1^st and 2^nd defendants do, jointly and severally, pay a sum of US$93,079.80 (or its equivalent in Hong Kong dollars) to the plaintiff, together with interest at judgment rate from the date of writ until satisfaction.

27.The defendant’s counterclaim be dismissed.

Costs

28.Costs should follow events.  On a nisi basis, the 1^st and 2^nd defendants do pay costs of this action to the plaintiff, including any costs reserved, to be taxed if not agreed. This order nisi for costs becomes absolute 14 days after the date hereof unless any party applies to the court for varying the order.

The plaintiff appeared in person

The 1^st defendant was not represented and did not appear

The 2^nd defendant was not represented and did not appear