Great Sincere Trading Co Ltd v. Swee Hong & Co (A Firm)
Read the full judgment text of CACV 33/1968 on BabelCite. This Court of Appeal judgment was delivered on 1 May 1969.
1. These are two appeals, taken together, from the decisions of Mills-Owens, J. giving leave to the respondents (the plaintiffs in both actions) to enter final judgment against the appellants in respect of both actions. As a matter of convenience, I propose hereafter to re...(illegible) to the respondents as the "plaintiffs" and the appellants as the "defendants".
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CACV000033/1968 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 33 OF 1968 (On Appeal from O.J. Action No. 528 of 1968) -----------------
IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 34 OF 1968 (On Appeal from O.J. Action No. 724 of 1968) -----------------
Coram: Rigby, Acting C.J. and Huggins, J. Date of Judgment: 1 May 1969 ----------------- JUDGMENT ----------------- Rigby, C.J.: 1. These are two appeals, taken together, from the decisions of Mills-Owens, J. giving leave to the respondents (the plaintiffs in both actions) to enter final judgment against the appellants in respect of both actions. As a matter of convenience, I propose hereafter to re...(illegible) to the respondents as the "plaintiffs" and the appellants as the "defendants". 2. The facts in both cases are simple and straightforward. The plaintiffs are a merchant firm carrying on business in Hong Kong. The defendants are an import and export firm, but the two partners of the firm are both normally resident in Singapore. In the past, the defendant firm has acted as purchasing agents for an Indonesian firm to whom I will refer as Messrs. N.V. Lampong. In fact, it would appear that a Mr. Kho Siu Bin, the managing partner of Messrs. N.V. Lampong, is the son of one of the two directors of the defendant firm. In July 1966, Mr. Kho Siu Bin came to Hong Kong from Indonesia and, together with other representatives of the defendant firm, called on the plaintiff firm with the object of doing business with that firm in the way of purchasing textiles for export and delivery to Indonesia. Apparently, there were various commercial difficulties in the way of trading with Indonesia and by reason of these difficulties and, still more so, because the plaintiff company was, not unnaturally, reluctant to trust to the credit of a foreign company, it was arranged that the defendants should enter into the contracts with the plaintiffs as principals in each contract. 3. The particular contract sued upon in this case was for the sale of goods (textiles) at the price of $276,000 for delivery to Djakarta "Around Feb. 1967 from Japan". Payment was expressed to be "By Irrevocable 4c". It is not disputed that the goods were duly delivered in Indonesia. As principal signatories to the contract the plaintiffs looked to the defendants for payment. 4. The argument put forward by the defendants was that they took no part in the negotiations of the terms of sale and purchase of the goods; that none of the arrangements for shipment were made by them and that none of the shipping documents passed through their hands. They contended that when the plaintiff company authorized shipment from Japan without a letter of credit having been opened as provided for by the contract, the plaintiff company did so on its own responsibility and cannot now look to the defendants for payment. Their argument, in effect, was that they had simply lent their name to the contract which was, in truth, one between the plaintiffs and Messrs. N.V. Lampong, and that it was generally understood between all parties that Messrs. N.V. Lampong would provide the irrevocable letter of credit. There were also produced in evidence seven other contracts entered into between the parties for the supply of goods to Messrs. N.V. Lampong dated between July and December 1966. They showed a variety of methods of payment. In order of date, they provide for payment (1) by full prepayment to the plaintiff; (2) by letter of credit in favour of the plaintiff, or in favour of the defendants and to be transferred by them to the plaintiff; (3) by letter of credit in favour of the plaintiff; (4) by cash; (5) by cash; (6) by letter of credit; (7) by letter of credit or cash cheque. Also put in evidence were various letters and cables sent by the plaintiff company to Messrs. N.V. Lampong pressing for a letter of credit to be opened in respect of the contract now sued upon. On the one hand, the defendants contended that these letters and cables clearly enforced their contention that the true nature of the contract was one between the plaintiffs and Messrs. N.V. Lampong and that the plaintiffs looked to Messrs. N.V. Lampong for payment; on the other hand, the plaintiffs said that those letters were sent at the defendant's request, and they point out that it is evident that those letters were sent contemporaneously to the defendants. 5. Upon first consideration, it seemed to me that there might be some substance in the defendants' argument and that leave should have been given, whether conditional or unconditional, to the defendants to defend the action so that they might be given an opportunity to explain the true nature of the agreement between the parties. If, indeed, the contention upon which the defendants relied was the true agreement between the parties, namely that the goods should not be shipped until Messrs. N.V. Lampong had produced an irrevocable letter of credit, then it might have been open to an unscrupulous plaintiff, with goods warehoused in Japan which he expected to depreciate in value, to ignore the true nature of the contract and, anxious to dispose of those goods in the face of a falling market to deliver the goods to Messrs. N.V. Lampong and to demand payment of the purchase price from the defendants as principal parties expressed on the face of the contract, in breach of the true position between the parties. 6. On further consideration, I think this would be a wrong view to take. It must be manifest that if in fact an irrevocable letter of credit had been produced by Messrs. N.V. Lampong before delivering the goods, that would have been the end of the matter and these proceedings would never have been brought. It is beyond dispute that on the face of the contract itself the defendants were principal parties to it. The reason for that was, quite clearly that the plaintiffs were not prepared to extend credit to a foreign firm and looked to the defendants for payment. It was a contract of sale and purchase as between the plaintiffs and the defendants as the sole parties to the contract. In the absence of any expressed stipulation as to who was to provide the letter of credit, it was clearly for the defendants to do so. Mills-Owens, J. took the view, and I think rightly, that the method of payment by way of irrevocable letter of credit was a provision inserted solely for the benefit of the plaintiffs as vendors; a condition which they were entitled unilaterally to waive. Whatever may have been the arrangements as to payment between the defendants and Messrs. N.V. Lampong, it was not a matter which concerned the plaintiffs. The contract was one for the sale and purchase of goods; the goods having been delivered in accordance with the contract, the plaintiffs were entitled to look to the defendants, as purchasers, for payment. 7. I would accordingly dismiss this appeal. 8. The facts and, indeed, the conclusions concerning Appeal No. 34 of 1968, in my view, present no difficulty. 9. The plaintiffs sued upon a cheque for $370,643.49 drawn by the defendants in favour of the plaintiffs. The cheque was originally dated the 7th May, 1967, but was altered, at the request of the defendants, to the 10th October, 1967. It was not, in fact, presented for payment until May 1968 when it was dishonoured. Here, again, a similar defence was sought to be put forward, namely, that the cheque was not to be presented for payment until Messrs. N.V. Lampong had put the defendant firm in funds to meet it. 10. By the very nature of the definition of a "cheque" as an unconditional order in writing drawn on a banker, signed by the drawer, requiring the person to whom it is addressed to pay on demand a sum certain to the order of a specified person, or to bearer, this seems to me to be a hopeless defence. 11. It may be that in certain circumstances a cheque drawn by A in favour of B for a sum certain may be handed to a third party, C, not to be presented for payment until some condition precedent has been complied with by B, but I know of no authority, nor has one been cited to us, which decides that a cheque drawn by A in favour of B, and handed by A to B, may not be negotiated by B until some condition has been complied with by a third party. Such a condition would seem to defeat the whole nature and purpose of such an instrument. 12. I would accordingly dismiss both appeals, with costs. Representation: Martin Lee (Lo & Lo) for appellants/defendants Litton (D'Almada Remedios & Co.) for respondents/plaintiffs. Separate judgments read. APPELLATE JURISDCITION CIVIL APPEAL NOS. 33 & 34 OF 1968 (On Appeal from O.J. Action Nos.528 and 724 of 1968) -----------------
Coram: Rigby, Acting C.J. & Huggins, J. Date of Judgment: 1 May 1969 ----------------- JUDGMENT ----------------- Huggins, J: 13. These are appeals against orders of Mr. Justice Mills-Owens in chambers giving leave to the respondents to enter final judgment in two actions. The facts are simple. The respondents had goods for sale. A firm in Indonesia named N.V. Lampong desired to purchase the goods but the respondents were not disposed to contract with them direct. The appellant, a Hong Kong firm known to the respondents and related to Lampong, agreed to contract with the respondents in order to assist Lampong. It is now common ground that the appellants contracted with the respondents as principals, although at one stage they maintained that they contracted merely as agents for Lampong. 14. The contract in the first action was for the sale of goods at a price of $276,000 for delivery "around February 1967 from Japan" and payment was to be "by irrevocable L/C". There had been previous contracts of a similar nature but with different terms as to payment: in some instances shipment was to be effected "against buyers' full payment" and in some payment was to be "by irrevocable L/C to be open (sic) by Messrs. Lampong N.V.". The goods under the contract in question were delivered by the respondents to Lampong but no letter of credit was arranged by Lampong or by anyone else. The appellants concede that it was the intention of the parties that delivery should be made direct to Lampong in certain circumstances, namely that the respondents should have been given the benefit of an irrevocable letter of credit prior to the date of delivery and that such letter of credit should have been arranged by Lampong, but contend that in any other circumstances delivery was not to be made to Lampong. 15. The respondents sued the appellants for the price of the goods delivered. The material paragraph of the affidavit filed on behalf of the appellants reads as follows:
From this it can be seen that the appellants admitted a contract and, although no doubt the practical result was expected to be something in the nature of a guarantee, that the appellants further admitted the contract was in reality a contract for the sale of goods. The learned judge assumed, without deciding, that the contract did contemplate the opening of a letter of credit by Lampong. Although it is clear, as the learned judge said, that the appellants' defence was that delivery was made to Lampong without a letter of credit's having been opened I have not been able to understand precisely what are the full terms of the contract they contend for. If they had alleged that there was a contract to consign the goods to Djakarta and there to deliver them (a) if Lampong had arranged the required letter of credit, to Lampong, otherwise (b) to the appellants themselves or to their further order, there would be no difficulty for the condition would clearly be for the benefit of the appellants, but it has been agreed on all sides that nothing of the sort has been alleged. Under the contract delivery was to be made "C. & F. Djakarta" and the whole case was argued on the assumption that there was no contemplation of physical delivery to anyone but Lampong. The argument of counsel for the appellants appears to me to be inconsistent with the affidavit, for it is really based not upon a contract of sale but upon some kind of conditional agreement which would become a binding contract of sale only if the letter of credit were supplied by Lampong - the purchasers were under no obligation to take the goods unless a third party arranged to pay for them. No defeasance clause is alleged: on the one hand it is conceded by counsel for the appellants that in the event of Lampong's failure to arrange a letter of credit the respondents could not tender delivery at all, but on the other hand he says the respondents would be left with some remedy, namely a right to sue for damages. He did not indicate the nature of such claim for damages. It could hardly be based upon a rejection of the goods because ex hypothesi the appellants were under no obligation to take the goods. Indeed, on the argument as put before us the failure to deliver would be due not to any default by the appellants but rather to the default by the respondents in not securing the letter of credit which was the condition precedent to delivery. The learned judge understood the appellants to be contending for an implied term that the respondents would secure a letter of credit originated by Lampong and that in default the appellants would not be liable. As I see it any such implied term would be inconsistent with the existence of a contract of sale, although such a contract has been admitted by the appellants. I therefore conclude that the plaintiffs were always at liberty to make delivery to Lampong and that if there was any implied term that the respondents should not be bound to make delivery unless and until Lampong had arranged a letter of credit it was a term solely for the benefit of the respondents, a benefit which the respondents were at liberty to waive. In these circumstances I am satisfied that there was no arguable defence and that the learned judge was right in entering final judgment for the plaintiffs. 16. In the second action the respondents sued upon a cheque drawn by the appellants in favour of the respondents. The cheque was originally dated 7th May 1967 but the date was subsequently changed to 10th October 1967. It is common ground that the cheque was given in payment of the purchase price of goods bought by the appellants from the respondents and delivered by the respondents to Lampong in circumstances similar to those in the first action. The appellants alleged that delivery of the document, which they admitted had the appearance of a cheque, was subject to an oral condition that it should not be presented for payment unless Lampong had put the appellants in funds to meet it before the due date, and the real issue is whether it was open to the appellants to adduce evidence of such an oral condition by way of defence. Counsel for the appellants has conceded that s.21(2)(b) of the Bills of Exchange Ordinance was not intended to alter the general law of evidence which renders parol evidence inadmissible for the purpose contradicting the terms of a written document. He submits that the cheque was delivered as a mere escrow and that there was no intention that the respondents should have any interest in the cheque unless and until the condition was fulfilled. In support of this contention he cited Bell v. Lord. Ingestre (1), where the endorser of a bill delivered it to the endorsee for the express purpose of retiring other bills and on the express condition that they should be retired forthwith. It was held that under a p...(illegible) traversing the endorsement parol evidence of the condition was admissible. I think this is a very different case. In my view the judge in chambers correctly stated the position when he said:
In other words this was no escrow but an unconditional order to pay upon which the appellants are trying to engraft a condition. That they may not do. 17. I would dismiss this appeal also. 1st May, 1969. Representation: (1) (1848) 12 A. & E. 317. |