Far East Sourcing Ltd v. Man Bond International Ltd and Another
Read the full judgment text of HCA 1463/2012 on BabelCite. This High Court CFI judgment was delivered on 22 March 2016.
1. The plaintiff (“P”) is, and was at all material times, a company incorporated in Hong Kong carrying on the business of the import and export of goods.
Cited by 5 cases
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HCA 1463/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1463 OF 2012 ________________________
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____________________ J U D G M E N T Introduction 1.The plaintiff (“P”) is, and was at all material times, a company incorporated in Hong Kong carrying on the business of the import and export of goods. 2.Gobind Ramchand Changlani (“Gobind”) is, and was at all material times, a director of P. 3.Euro‑East Exports Limited (“EEE”) is, and was at all material times, a company incorporated in Hong Kong carrying on the business of the import and export of goods. 4.Madhur Naraindas Bhojwani (“Madhur”) is, and was at all material times, a director of EEE. 5.The 1st defendant (“D1”) is, and was at all material times, a company incorporated in Hong Kong carrying on the business of the import and export of goods. 6.Direktshop Inc (“Direktshop”) is, and was at all material times, a company incorporated in the United States of America (“USA”) carrying on the business of the import and sale of goods in the USA. Direktshop is, and was at all material times, based in California, USA. 7.The 2nd defendant (“D2”) is, and was at all material times, a director of D1. 8.D2 is, and was at all material times, also a director of Direktshop. 9.P’s claim in this action is for damages against D1 and D2 for breach of contract for the sale and purchase of goods known as Snuggle Pets or Pillow Pets (“the goods”) which P shipped and delivered to Direktshop in November 2010. P claims, in the alternative, against D2 on an oral personal guarantee for the indebtedness of D1 which was allegedly given by D2. 10.P also claims against D1 and D2 as the assignee of the debt allegedly owing to EEE by D1 and D2 under the assignment of debt made between EEE as the assignor and P as the assignee on 30 March 2012 (“the assignment”). 11.The total sum claimed by P against D1 and D2 is the sum of US$393,430.56 with interest and costs as set out and particularized at para 14 of the re‑amended statement of claim (“the RASC”). 12.The writ of summons together with the statement of claim was issued on 17 August 2012. The total sum claimed in the original statement of claim (“the SC”) was the sum of US$392,451.26 with interest and costs. 13.P entered default judgment against D1 on 9 October 2012 for the sum of US$392,451.26 with interest and costs. The default judgment against D1 remains unsatisfied. 14.D2 denies that he is personally liable to P or that he was ever personally liable to EEE. 15.D2’s case is that the contracts for the sale and purchase of the goods were contracts entered into between P and EEE respectively, as the sellers and Direktshop as the buyer. D2’s case is that he has never given any personal guarantee to P or to EEE and that he is not personally liable for payment of the sums claimed. 16.There is no dispute that the damages suffered by P are in the amounts claimed. The only question is whether P can establish that D2 is personally liable for the amounts claimed. Agreed issues 17.By an agreed list of issues dated 5 February 2016 which was supplied to the court, there were four agreed issues at the commencement of the trial. However, after the amendments that were made to the amended statement of claim (“the ASC”) on the first and second day of trial, the remaining agreed issues, as confirmed by counsel in closing submissions, are:
The Evidence and Findings 18.I heard evidence from Gobind, Madhur and D2. 19.The undisputed evidence is that by 2010, D2 had been doing business with Gobind and Madhur for many years. Gobind used to work for his uncle Madhur at EEE under its former name Euro‑East Electronics Limited from 1993 to 1999. In 1999, Gobind set up his own company being P. He has been a director of P ever since. 20.Madhur is the uncle of Gobind and an elderly gentleman. He is well respected by D2 who addresses him as Madhur “Bhai”. By addressing him as “Bhai” D2 has given him due respect as his senior. 21.Gobind, Madhur and D2 are all experienced businessmen who have been in the import and export trade for many years. 22.There is no dispute that both Gobind and Madhur have dealt with D2 for many years prior to 2010 when D2 was representing D1. Gobind first dealt with D2 in 1997 and Madhur first dealt with D2 in 1995. 23.In all the transactions prior to the contracts entered into in 2010, P and EEE had been purchasing goods that were supplied by D1. D1 was the supplier of goods which P and EEE had purchased from D1 in the past. 24.There is also no dispute that in 2009, D2 had gone to live in the USA to set up Direktshop. This was known to Gobind as the evidence shows. By an email sent “From Direktshop Inc” by D2 from his Direktshop email address on 7 May 2009 (Bundle B1, p 1) to Gobind, D2 introduced Direktshop to Gobind by sending him photos of Direktshop’s operations in California, USA which were attached to the email. 25.Later on in the same year 2009, in early October D2 called up Gobind and also Madhur separately to offer a proposal to P and EEE. This was followed up by emails to P and EEE. Pursuant thereto, P and EEE respectively entered into contracts for the sale by them of the goods to be shipped to Direktshop. 26.The above facts are undisputed and I find them proved. 27.What is in dispute between the parties is: who were the contracting parties to the contracts? 28.Mr Babani, for P, opened P’s case on the basis that P’s primary case (“the primary case”) is that D2 was the contracting party who entered into a contract with P and another contract with EEE for P and EEE respectively, to supply the goods to Direktshop. He submitted that the primary case was that the two agreements were concluded between the P and EEE respectively, on the one part and with D2 on the other part. 29.The alternative case (“the alternative case”) was that the two agreements were concluded between P and EEE respectively, on the one part and with D1 on the other part. On the alternative case, the contracting parties were P and EEE respectively, on the one part and D1 on the other part. In respect of the alternative case, the claim against D2 is on a personal guarantee allegedly given by D2 for the indebtedness of D1. This is pleaded and particularized at para 16 of the RASC. 30.I would observe that, in the SC at para 3, it was pleaded that on or around 8 October 2010 the First Agreement was an agreement whereby P agreed to sell and D1 agreed to purchase the goods. And at para 5 of the SC, it was pleaded that on or around 8 October 2010, the Second Agreement was an agreement whereby EEE agreed to sell and D1 agreed to purchase the goods. Gobind verified the facts pleaded in the SC as being true by his statement of truth dated 17 August 2012. 31.I would also observe that it was on the cause of action as pleaded in the SC that the default judgment against D1 was entered on 9 October 2012. 32.However, by the ASC filed on 6 June 2014, paras 3 and 5 of the SC were amended by adding “and/or [D2]” so that it was alleged by the said amendments in the ASC that D2 was also the party that had agreed to purchase the goods in addition to or instead of D1. Gobind also verified the facts pleaded in the ASC as being true by his statement of truth dated 6 June 2014. 33.Mr Babani made it plain in his opening submissions that P was abandoning and was no longer pursuing the further alternative case pleaded and particularized at para 17 of the ASC and which was repeated at para 17 of the RASC. The plea made there is that, in the alternative, P claims against D2 personally as the agent of Direktshop pursuant to the agreements made between P and EEE respectively, and Direktshop as the contracting parties as particularized therein. 34.I would also observe that by deleting the words “and/or Direktshop” at para 16 of the RASC, P was also abandoning the earlier allegation pleaded at para 16 of the ASC that D2 personally guaranteed the indebtedness of Direktshop in addition to or instead of the indebtedness of D1. Gobind also verified the facts pleaded in the RASC as being true by his statement of truth dated 18 February 2016. 35.The undisputed evidence from Gobind, Madhur and D2 is that on 8 October 2010, when D2 was in the USA, he telephoned Gobind and also Madhur separately in Hong Kong to tell them about a proposal for P and EEE respectively, to ship goods to Direktshop in th e USA. 36.Both Gobind and Madhur said that D2 had telephoned them on 8 October 2010 informing them that he was looking for them to ship goods on payment terms of Documents against Payment (“D/P”). 37.Gobind said that on the same day 8 October 2010, he also received a telephone call from Madhur who told him that he had received a similar telephone call from D2. 38.I would observe that in his witness statement, which was confirmed by him as being true when giving evidence, Gobind said at para 5 that D2 informed him that there was a high demand for the goods, that D1 was unable to secure the necessary banking facilities and that he needed other companies to take up part of the orders. Gobind said at para 5:
39.It is clear that Gobind was saying that D2 was acting in a representative capacity for D1 and/or Direktshop. 40.I would also observe that at para 6 of his witness statement Gobind said that Madhur informed him that “a similar call had been made to him whereby [D2] , on behalf of [D1] had made the same proposal to EEE”. 41.I would also observe that in respect of the telephone conversation that Madhur had with D2 on 8 October 2010, Madhur, at para 5 of his witness statement, said the same thing as what Gobind had said in his witness statement, namely:
42.It is clear that Madhur was also saying that D2 was acting in a representative capacity for D1 and/or Direktshop. 43.Both Gobind and Madhur said that as they wanted more detailed information they asked D2 to send them further details by email. 44.Gobind also said in evidence that in his first telephone call on 8 October 2010, D2 gave him a personal guarantee. He said that as he had concerns D2 told him that he personally guaranteed everything and that nothing would go wrong in the transaction. 45.Madhur also gave evidence that that on 8 October 2010 after he received the call from D2, he telephoned Gobind as he knew that Gobind had been dealing with D1 and D2 regularly. He was told by Gobind that he had also been contacted by D2 with the same information given to the both of them. Both Gobind and Madhur said that they discussed the potential risk of the proposal involving the payment term of D/P. 46.Madhur also said that on 8 October he relayed his concerns to D2 about the proposal. Madhur said that in response D2 assured him that nothing would go wrong. He also said that D2 promised him that he would personally pay EEE should anything go wrong. 47.Both Gobind and Madhur said that it was because of the personal guarantees given by D2 that they decided to go ahead with the proposal, although Madhur said that he decided to ship a quantity smaller than what P would ship. 48.Madhur said that his business was with D2 and he had no idea who Direktshop was. Madhur said that in the telephone call on 8 October 2010 when D2 called him with the proposal, he said that he told D2 that he was concerned and that he would only enter into the transaction if D2 personally confirmed that he would have no issues at all. He was concerned about payment and also infringement issues. Madhur gave evidence that during the telephone call D2 told him that he would have no issue regarding payment and no issue regarding infringement of the products. 49.I would observe that, at para 10 of his witness statement, Madhur said that after the said conversation that he had with D2, Gobind informed him that a similar conversation on the same date had taken place between D2 and Gobind:
50.It is clear that at trial it was no part of P’s alternative case against D2 that D2 ever gave a personal guarantee for the indebtedness of Direktshop. 51.D2 gave evidence that in the telephone calls that he had made to Gobind and Madhur, he offered a proposal as an officer of Direktshop for P and EEE to supply the goods to Direktshop, which were to be sold by Direktshop to the end buyer “As Seen on TV”. D2 explained in evidence that shortly before 8 October 2010, he had managed to secure large orders for the sale of the goods in the USA. He said that D1 was unable to supply all the goods as the large orders exceeded the facilities that D1’s bankers had granted to them. He, therefore, telephoned Gobind and Madhur to see if they were interested in supplying the goods to Direktshop. 52.D2 emphasised in evidence that the orders that he had secured were orders that Direktshop had got in the USA and that it was not D1 that had got the orders. He also said that his first preference was to have the orders fulfilled by D1 as D1 was a sister concern of Direktshop. 53.D2 said in evidence that when he approached Gobind and Madhur on 8 October 2010 he was making a business proposal on behalf of Direcktshop. He gave both Gobind and Madhur details of the proposal and this was followed up by emails. He emphatically denied that he ever gave any personal guarantee to either Gobind or Madhur on 8 October 2010 as they both alleged. He also denied that he ever acted in his personal capacity in respect of the transactions with P and EEE. 54.On the evidence, there is no dispute that D2 was a major shareholder of D1. D1 was also a major shareholder of Direcktshop. Although D2 tried to minimize his role in Direktshop and in D1 in his witness statement, it is clear on the evidence that D2 was in effective control of D1 and Direktshop. D2 accepted that he was indirectly in effective control of both companies by virtue of his majority shareholding in D1. 55.Be that as it may, there is no doubt that D1 and Direktshop are and were separate and distinct legal entities. The same applies to P and EEE which are and were also separate legal entities. Corporations can only act through individuals and in respect of the transactions entered into Gobind acted on behalf of P and Madhur acted on behalf of EEE. It has never been suggested by either Gobind and Madhur that they have acted in their personal capacities in these transactions even though they were the ones who spoke and communicated with D2. 56.The primary case that D2 was a contracting party is without merit, in my view. I prefer the evidence of D2, which I accept, to the evidence of Gobind and Madhur, which I reject. 57.D2’s evidence is supported by the contemporaneous documentary evidence whereas Gobind’s and Madhur’s evidence is contradicted by the contemporaneous documentary evidence. 58.The first email from D2 to Madhur (Bundle B1, pp 16 and 17) is said to be from “Direktshop Inc. CA‑USA” with the email address “[email protected]”. This was D2’s Direktshop email address. D2 sent this email at 11:15:24 am on 9 October 2010. D2 was introducing Direktshop to Madhur in the second paragraph. It is clear from this email that D2 was giving Madhur some information about Direktshop in the USA which was set up “as an extension of [D1]”. He also briefly mentioned the projects in hand. At the end of the email, the name of Direktshop is given clearly with the address and contact information. D2 asked Madhur to await the next email for details. 59.The next email sent by D2 to Madhur (Bundle B1, pp 18 and 19) was also sent on 9 October 2010 but at 12:07:29 pm. This email is also said to be from Direktshop Inc CA‑USA. D2 gave a description of the goods. He mentioned that:
60.As D2 explained, he was informing Madhur that the total capacity of the orders that they had was beyond “MB” capacity , referring to Man Bond, namely, D1. As D2 said in evidence, the orders that Direktshop had procured was beyond the facilities that D1’s bankers had granted to D1 so D2 was looking to see if Madhur and Gobind would like to supply some of the goods to Direktshop. 61.The second email sent on 9 October 2010 clearly mentions that:
62.It seems to me that D2 was clearly informing Madhur that the goods had to be sold and shipped to Direktshop and that the other notify party to be mentioned in the shipping documents was the end buyer in the USA namely, “As Seen on TV Stores”, the end buyer being the client of Direktshop. 63.D2 in the same email also mentioned the price at which pre‑approved quality of the goods could be obtained from China. He also mentioned that the goods had to be sent on D/P terms to the USA. He mentioned also that the shipment was to be done by “UPS (Sea Shipments division)” as the client had obtained its own special rates. D2 also asked Madhur to “Pls check and inform, so that we may plan” and said that he was awaiting his reply. 64.Madhur replied to the emails also on 9 October 2010 at 12:56:44 pm (Bundle B2, p 206). The email is addressed “To Direktshop Inc. …”. In the email, Madhur thanked D2 for the details provided to him. Madhur also asked whether he had to find his own supplier or whether D2 already had one. Madhur also expressed his interest in the transaction and said:
Madhur also asked D2 whether:
Madhur also asked whether he can sell the same product to any part of the world. 65.Contrary to his oral evidence, by this email from Madhur, it is clear that Madhur knew that the buyer was Direktshop. He was asking whether he can obtain export credit insurance on Direktshop. 66.D2’s reply email to Madhur was on the same day, 9 October 2010, at 2:10:35 pm (Bundle B2, pp 205 and 206). D2 informed Madhur that “we” have a group of factories who have the capacity to fulfil the orders and that they are already making the goods. He emphasized that there was no time to look for other factories and to do re-sampling again. He made the point that it was a passing fad item and that time was short as the last shipment from China should leave by 30 November. At the paragraph numbered 6 in this email, D2 very clearly informed Madhur that:
67.Madhur was clearly told that the buyer was Direktshop. D2 also addressed Madhur’s query about whether export credit insurance could be obtained on Direktshop by saying that he was not too sure in view of the short history of Direktshop and further, that the insurance cover would also expensive. He offered to get “DB” details of the end buyer to ease Madhur and for him to judge things. In evidence, D2 said that he offered to get a Dun and Bradstreet credit report for Madhur. In my view, on the evidence, the “DB” details mentioned in this email refers to the Dun and Bradstreet credit report that D2 spoke about in evidence. 68.D2 also dealt with Madhur’s query about whether Madhur could sell the same product in other parts of the world. D2 told him to be careful with other markets as this was a Christmas item, a one‑time fad item. 69.It seems to me to be clear from D2’s reply to Madhur that he has answered Madhur’s queries. It is plain that Madhur knew that the buyer was going to be Direktshop and no one else. I so find. 70.I would also observe in the email dated 8 October 2010 sent at 21:12:36 hrs “From: Direktshop Inc. CA‑USA” to Gobind (Bundle B1, p 10) by D2 from his email address at Direktshop that D2 gave similar information to Gobind as he gave to Madhur in the emails that he sent to Madhur on 9 October 2010. D2 also clearly told Gobind that:
71.It seems to me that it is also plain that Gobind knew that the buyer was going to be Direktshop and not anyone else. I so find. 72.P has produced in evidence a bundle of P’s sales confirmations (“the sales confirmations”) all dated 13 October 2010 (Bundle B1, pp 21 – 60) which Gobind said were sales confirmations issued and sent to D2. There is a dispute of fact as to whether these sales confirmations were ever sent out by P. 73.What is clear, however, is that Gobind himself did regard the buyer as being Direktshop and not anyone else, contrary to the primary case that D2 was the contracting party with P. The sales confirmations are all addressed to Direktshop with its address in the USA. The contact person is said to be D2. This makes it clear that Gobind regarded D2 as the contact person in Direktshop and not as a contracting party. Just above the description of goods are the words:
74.Also at the bottom of the sales confirmations is a space on the left for the signature and chop of Direktshop and on the right a space for the signature of a person signing for and on behalf of P. There is also a note at the bottom:
75.Gobind gave evidence that he did not require the sales confirmations to be stamped or signed or returned. He also said that the sales confirmations were not signed by either party. 76.There is also a note (“the note”) just under the box setting out the particulars of the goods which states:
and also giving D2’s Hong Kong Identity Card number. The note was inserted by Gobind. It is a self serving statement. 77.Gobind said at para 11 of his witness statement, amended by him at trial, that due to the increased risk in the payment terms being D/P and out of an abundance of caution, the note in the sales confirmations clearly and specifically mentions the fact of the personal guarantee given by D1 and D2 to P. I do not believe Gobind. 78.It seems to me that by inserting the note in the sales confirmation Gobind was treating Direktshop as the principal debtor who was the purchaser of the goods and responsible to pay for the same. He was treating D1 as the guarantor of the principal debt with a personal guarantee also from D2. 79.Gobind said in evidence that the sales confirmations were all sent out by email to D2, but he was unable to produce the email by which the sales confirmations were sent out. He also accepted in evidence that the email by which the sales confirmations were sent out were not disclosed in P’s List of Documents. 80.On the evidence of D2, which I accept, I find that the sales confirmations were never sent out to D2 or to Direktshop. I do not believe Gobind. As D2 mentioned in evidence, the sales confirmations were not part of the documents presented by P for payment of the goods. I would also observe that in the emails in evidence and even after P was repeatedly chasing up for payment, there was no mention by Gobind in any communication with D2 that there were in existence the sales confirmations which contained the note. 81.I bear in mind that in his witness statement D2 gave the impression at para 11 that there were in existence some different sales confirmations without the note which were “faxed to or returned after signing by Direktshop”. I also bear in mind that at para 5 he said that the contract entered into between Direktshop and P was evidenced by the sales confirmations issued by P. D2 was evasive when cross‑examined on these matters. It seems to me that he was careless in making those statements in his witness statement. It seems to me that he had not properly checked the documents that were received before making those statements in his witness statement. 82.As I have said, I do not believe Gobind when he said that the sales confirmations were sent out by email. I find that Gobind never sent out the sales confirmations and that neither Direktshop nor D2 ever received the sales confirmations. It is common ground that the sales confirmations were never signed by either party and were not returned to P. 83.All the other documents, including sales invoices issued by P, the packing lists, the shipping documents, and the banking documents, show that the purchaser of the goods was Direktshop. I so find. 84.In the transactions involving EEE, there were no sales confirmations issued. This is common ground. The contemporaneous documentary evidence shows that EEE also knew and treated Direktshop as the purchaser of the goods sold by EEE. The contemporaneous documents include the commercial invoices dated 2 November 2010 issued by EEE to Direktshop with the payment terms “D/P AT SIGHT” stated therein for payment of the invoices. The commercial invoices were addressed to Direktshop as the purchaser of the goods who was responsible for payment. The packing lists, the shipping and banking documents also show Direktshop as the purchaser of the goods. This was clearly known to Madhur. I so find. 85.I would observe that in the assignment made on 30 July 2012 (Bundle B1, pp 182-185) signed by Madhur on behalf of EEE as the assignee and by Gobind on behalf of P as the assignor, EEE assigned to P the debt set out in the schedule to the assignment. It is clear that in the schedule, the debtors are stated to be D1 and D2. Under the particulars of debt, it is stated that the debt owing to EEE in the sum of US$136,788.63 was in respect of goods “sold to [D1] and delivered to [Direktshop]”. It is further stated that in respect of D2 the particulars given are that D2 “as a director of [D1] has guaranteed all the debts payable by [D1] to EEE in relation to the sale” of the goods. Thus, it is clear that on 30 July 2012, both Gobind and Madhur did not regard D2 as a contracting party. Both Gobind and Madhur regarded D1 as the contracting party who had purchased the goods from EEE. They regarded D2 as a director of D1 who had guaranteed “all the debts payable by [D1] to [EEE]” in relation to the sale of the goods. 86.As I have said, I prefer the evidence of D2 to the evidence of Gobind and Madhur. 87.In my judgment, there is no merit in the primary case that D2 was the contracting party with P and EEE respectively. I find that D2 is not personally liable for the sums claimed as a contracting party. 88.I am satisfied and find, on the evidence of D2, which I accept, and the contemporaneous documentary evidence, that the contracting party was Direktshop as the purchaser of the goods from P and EEE respectively. I am also satisfied and find that D2 was acting on behalf of Direktshop in making the proposals to and entering into the contracts with Gobind and Madhur, who were also acting on behalf of their companies, P and EEE respectively. In my judgment, the purchaser of the goods under the contracts with P and EEE respectively, was neither D1 nor D2 but it was Diresktshop and no one else. 89.As to issue 1, I find that D2 was not a party to the contract for the sale of P’s goods. As to the issue 2, I also find that D2 was not a party to the contract for the sale of EEE’s goods. 90.I am also satisfied and find that D2 did not give a personal guarantee to P and to EEE respectively, to be responsible for the indebtedness of D1 as claimed. As I have found, the contracting party who purchased the goods from P and EEE respectively, was Direktshop and not D1. In my judgment there was no debt owing by D1 to either P or to EEE. 91.I believe D2 when he said that he never gave a personal guarantee to either Gobind or Madhur when speaking to them on 8 October 2010. It is clear from his evidence, which I accept, that he never gave them a personal guarantee to be responsible personally for payment at any time. 92.I would observe that the fact of an oral personal guarantee having been given by D2 in the telephone conversation with Gobind and also in the telephone conversation with Madhur on 8 October 2010 was never mentioned by either Gobind or Madhur in the emails that they sent to D2 when they were pressing for payment. On the evidence, D2 was not responding to the emails pressing for payment in a timely fashion. It seems to me that if D2 had really given P and EEE respectively, through their representatives Gobind and Madhur, an oral personal guarantee on 8 October 2010 as claimed, it is highly likely, in my view, that they would have reminded him of the same in their email communications when they were chasing for payment. But the oral personal guarantee allegedly given by D2 was never mentioned in any of the emails from Gobind or Madhur. 93.Gobind’s evidence that having made the note in the sales confirmations he did not feel the need to say that again in an email was evasive and unconvincing. I do not believe him. 94.Madhur’s evidence that he did not mention the guarantee in an email or in writing was that he trusted the word of D2 and did not feel the need to put it in writing was also evasive and unconvincing. I do not believe him. 95.P also relied on an email “From: Direktshop …” sent by D2 on 11 February 2011 to Gobind and copied to Madhur (Bundle B1, p 123). This email was written by D2 after he had received a number of emails chasing for payment. The email stated:
96.P relied on the words in the email where D2 said “I have the major liability” as an admission by D2 that he was personally responsible for payment. I reject the submission that by this email D2 has made an admission that he was personally responsible for payment of the goods shipped. 97.D2’s evidence, which I accept, was that when he said that he had the “major liability” in the said email, he was not talking about financial liability. He said that he was referring to the legal problems that Direktshop was facing at that time. By that time, as D2 said, and I accept, Direktshop had already received a cease and desist letter from the attorneys acting for their end buyer. The letter from the attorneys The Scheier Law firm dated 14 January 2011 addressed to D2 at Direktshop (Bundle B1, p 148) demanded that Direktshop stop selling the goods without the consent of their client who owned the copyright. D2 said that he was talking about the copyright issue that had occurred by the time of the email sent on 11 February 2011 and the liability that he was addressing was the liability in relation to the copyright issue. I believe him and accept his evidence. 98.As D2 explained in evidence, he referred to 15 containers in the said email. There were a total of 15 containers shipped. He put in brackets “6 ManBond + 6FE + 3EE” and said that this referred to 6 containers shipped by D1, 6 containers shipped by P and 3 containers shipped by EEE making a total of 15 containers shipped to Direktshop. The 6 containers shipped by D1 were separate from the shipments made under the contracts with P and EEE. 99.It seems to me that it is highly unlikely that D2 was referring to a personal financial obligation on his part to pay for the 15 containers mentioned in the sentence relied on in the said email. The 15 containers mentioned there included the 6 containers which were shipped by D1 and which had nothing to do with the shipments made by P and EEE. There was no reason why D2 would have a personal financial obligation to pay for the 6 containers shipped by D1. It seems to me that D2 was not talking about his personal financial liabilities in the sentence relied on in the said email. 100.I believe D2’s evidence and find that P’s reliance on the said email as an admission by D2 that he was personally liable to pay P and EEE respectively, is misplaced. 101.On the dispute of fact as to whether D2 gave a personal guarantee to Gobind and Madhur in the telephone conversations on 8 October 2010, I prefer the evidence of D2 to the evidence of Gobind and Madhur. I believe D2 and disbelieve Gobind and Madhur. 102.As to issue 3, I am satisfied and find that D2 had not given a valid and legally enforceable personal guarantee for the indebtedness of D1. Conclusion 103.P has failed to establish the primary case or the alternative case. 104.I dismiss P’s claim against D2. 105.I also make an order nisi that P do pay D2 his costs of the action, such costs to be taxed if not agreed.
Mr Navin Babani, instructed by Gary Lau & Partners, for the plaintiff Mr Kenneth Lam and Mr Jeffrey Sze, instructed by Eric Yu & Co, for the 2nd defendant |
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