Bright Islands Corporation v. Joachim Chao
Read the full judgment text of CACV 682/2000 on BabelCite. This Court of Appeal judgment was delivered on 11 March 2002.
1. The petitioner is appealing from a decision of Le Pichon J (as she then was) who acceded to an application made by Chao Sze-bang (Chao) to strike out the Bankruptcy Petition which had been lodged by the petitioner.
Cited by 6 cases · Cites 1 case
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CACV000682/2000 CACV 682/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 682 OF 2000 (ON APPEAL FROM HCB 549 OF 2000) ______________
______________ Coram: Hon Mayo VP, Cheung JA and Chung J in Court Date of Hearing: 22 February 2002 Date of Judgment: 11 March 2002 _____________ J U D G M E N T _____________ Hon Mayo VP and Chung J: 1.The petitioner is appealing from a decision of Le Pichon J (as she then was) who acceded to an application made by Chao Sze-bang (Chao) to strike out the Bankruptcy Petition which had been lodged by the petitioner. 2.Chao died on 17 February 2001. His son Chao Joachim (the respondent) now represents his estate. 3.It appears to be common ground that as a consequence of the provisions contained in section 103 of the Bankruptcy Ordinance Cap. 6 the bankruptcy proceedings are still "alive" and that this appeal can properly be proceeded with. 4.The background facts have been most helpfully and succinctly summarized by Mr Scott SC who represents the petitioner. 5.The background to this dispute is two agreements and associated security documents for the construction, sale and purchase for a total consideration of about US$29.7 million of an oil-tanker designated Hull No. PC440-2 by a Chinese shipyard. 6.The petitioner as a financier entered into a ship building agreement with the yard and at the same time arranged in terms of a back to back agreement to sell the ship to Finex Shipping Limited (Finex), Chao's company. Chao guaranteed the obligations of Finex to the petitioner. 7.Finex only ever paid the first 10% deposit, but has defaulted on the payment of the 90% balance of about US$27 million, despite the completion of the vessel and its launch in March 1999. 8.Finex entered into discussions in September 1999 in an attempt to sell the vessel with the benefit of a charter but Finex never made any attempt to tender the outstanding purchase price to enable it to take delivery. In the end Chao acknowledged that he was unable to find a buyer for the vessel and Finex failed to pay the 90% balance remaining due. The charter with Oetker was cancelled and the vessel was sold in a falling market for what was claimed to be the best price that could be obtained; US$21.25 million including broker's commission. 9.There was therefore a shortfall of about US$7 million between the sale price obtained and the price which Finex (guaranteed by Chao) had originally agreed to pay. Nissho Iwai an associated company of the petitioner settled the shipyard's claim by payment of US$6 million. 10.The petitioner claims that Chao is liable as guarantor to make good the deficiency between the purchase price Finex agreed to pay for the vessel and the resale price of the vessel. 11.The statutory demand which was served on Chao was in the sum of US$6,305,772.88 which was made up of:
12.The petition was founded on this. 13.The issues which had to be determined by the Judge were whether the claim which was being made by the petitioner was a liquidated claim and whether there is a substantial dispute in the matter. 14.For the reasons she gave the Judge was satisfied that the claims which were being made by the petitioner were liquidated claims. 15.It was however her finding that there was a substantial dispute which led to her making the order to set aside the petition. 16.The Judge considered in some detail how the claim for the shortfall was made out by the petitioner. 17.The figure of approximately US$7 million referred to earlier in the judgment was calculated by subtracting the net proceeds of sale of the vessel of US$20,825,000.00 from the total claim made by the petitioner of US$27,790,710.00. 18.This was made up as follows:
19.The Judge was satisfied that there was a substantial dispute concerning the allegation which had been made that the vessel had been sold at an under-valuation. 20.The way this arose was that Chao made an allegation in his second affirmation that Nissho Iwai had interfered with Macpherson Marine Ltd who were endeavouring to market the vessel for sale and that as a result of this interested potential purchasers had not proceeded with negotiations to purchase it. 21.The source of information relied upon by Chao was a report made by Mr Greig Macpherson, the Managing Director of the Company. 22.Mr Macpherson described how Nissho Iwai's intervention had had a detrimental effect upon his marketing efforts. 23.Mr Scott submitted that the Judge had wholly misconceived the situation. She had proceeded upon the basis that Finex had had a right to "resell" the vessel. They had no such right. They had not complied with the terms of the ship sale agreement or paid for the vessel and accordingly could have had no title to sell it. 24.Over and above this all of the available evidence indicated that Chao's claim in relation to the alleged interference was spurious and without merit. 25.Even on Chao's own evidence the value of the vessel had been greatly diminished as a result of the Oetker charter party not being proceeded with. The reason for this was that it was a 5-year charter party the terms of which had been negotiated in a much more favourable market. 26.Chao had not attempted to lay any of the blame for the charter party being cancelled on Nissho Iwai. However as a result of the cancellation the value of the vessel had immediately fallen significantly. Chao himself accepted that following the cancellation of the charter party the value of the vessel was not more than US$23 million. 27.Prior to the shipyard exercising its power of sale under the agreement between itself and the petitioner it had written to Finex and Chao in these terms:
28.This letter had never been replied to. Nor had Finex or Chao ever put forward any other potential purchasers who might be able to match the purchase price referred to. 29.The complaint made by Chao had only surfaced many months later. 30.It was also significant to note that the allegations made in Macpherson's report were based upon hearsay and would not be admissible as evidence in any court. 31.Over and above this even if the evidence had been admissible it is by no means clear that even if the allegations proved to be well founded that this would have made any difference. 32.As stated earlier Finex had no title to the vessel. They could only have resold the vessel if the sale could have been concluded in time for the purchase price of the vessel to have been available to enable Finex to meet its contractual obligations to the petitioner. 33.In the circumstances it would have been perfectly understandable that Nissho Iwai themselves may have sounded out the market for the sale of the vessel thus indicating that the sale of the vessel was a "distress" sale. 34.It was not contended by counsel for the respondent at the appeal hearing (nor can it properly be contended) that Nissho Iwai was under a duty not to sound out the market for the sale of the vessel or not to disclose the intended sale was in the nature of a "distress" sale. 35.Further, insofar as Chao alleges that Nissho Iwai's "interference" with Chao's intended sale is relevant to the petitioner's alleged duty to mitigate, (as will be set out below) the Judge has correctly found that the petitioner's claims were liquidated claims. The alleged duty to mitigate therefore did not arise. Further, in the circumstances of this case, it was reasonable for Nissho Iwai to have sounded out the market and, in the absence of evidence suggesting mala fide on Nissho Iwai's part, no valid complaint has been established by Chao regarding such conduct. 36.For all of these reasons it cannot be said that there was any substantial dispute between the parties on this issue. 37.It is now necessary to consider the more difficult questions as to whether the claim being made by the petitioner is a liquidated claim of such a nature that this bankruptcy petition can proceed. 38.Mr Scott referred us to a passage at p. 96 in Fletcher - The Law of Insolvency 1990 which is of some assistance. Here the author of the work states:
39.Mr Scott submitted that this was an accurate statement of the law. The essential requirement was whether it was possible to arithmetically calculate the amount due and owing. Le Pichon J had held this to be the case in Re Kwok Chok-yee (unreported) being HCB 670/1999. 40.Mr Scott argued that what was necessary was to have regard to the overall situation and in particular business efficacy. In this connection he called in aid the observations made by Roskill LJ at p. 506 of Hyundai v Pournaras (1978) 2 Lloyd's Law Reports 502:
41.The terms of the performance guarantee which had been executed by Chao were clear and unambiguous. They were in these terms:
42.It was of course Mr Scott's case that the claim which was being made by the petitioner was in relation to the payment obligations rather than those relating to the indemnity. 43.It was common ground that Finex had been in breach of the terms of the ship sale agreement and that relevant notices had been served upon them in relation to the default. Finex breached the ship sale agreement by failing to pay the instalment payments as and when they became due and payable. Mr Ambrose Ho SC for the respondent argued that in relation to the 4th (and final) instalment, the payment obligation was concurrent with the petitioner's obligation to deliver the vessel. Since the vessel was in fact not delivered to Chao, his payment obligation has not arisen yet. With respect, Mr Ho's argument ignores two things:
44.As indicated earlier in this judgment the shipyard had sold the vessel and Nissho Iwai had settled the claim on its guarantee with the shipyard for US$6 million. 45.Mr Scott pointed out that his clients owed no fiduciary obligations to Finex or Chao and that all that was necessary for the petitioner was to take reasonable action to mitigate the loss they had suffered. The vessel had been sold timeously by the shipyard and there was no substantial dispute concerning the sale. In these circumstances the claim could be arithmetically calculated in such a manner that the claim which was being made could be properly characterised as a liquidated claim. 46.Mr Ho did not accept that the claim was a liquidated claim. 47.In this connection he placed particular reliance upon a passage from the judgment of Maule J at p. 25 of Ex parte Broadhurst (1852) 32 LJ Ch (NS) 21 which he claimed adopted the reasoning in the judgment Ex parte Charles (1811) 14 East 197:
48.Mr Ho also called in aid the passage at 27-008 of the 28th Edition of Chitty on Contracts (Volume 1) where there is a discussion on the distinction between claims for payment of an agreed sum and claims for damages and the differentiation between liquidated and unliquidated damages codimented upon in 27-009. 49.Adopting this analysis of the law Mr Ho submitted that in essence the claim which was being made by the petitioner was a common law claim for damages rather than a claim for a specific sum under the ship sale agreement. 50.Mr Ho took us through the relevant articles in this agreement. 51.The main point made by him was that as the agreement was drafted the 4th instalment only became payable when the vessel was delivered to Finex. As the vessel had never been delivered to Finex the 4th instalment had not become payable. 52.In the normal course of events it is necessary for goods to be delivered to a purchaser before the price of the goods becomes payable under the agreement. All of this was indicative of the fact that any claim which the petitioner may have would be a claim for damages in common law. 53.The agreement spelt out the rights available to the parties. The right of sale of the vessel in the event of default was exercisable by the petitioner. 54.This right had not been exercised. What had happened was that the shipyard had exercised its right of sale under its agreement with the petitioner. 55.So far as the performance guarantee was concerned it was apparent from the terms of the document that what was contemplated was a breach of the contractual terms of the ship sale agreement rather than any general common law claim. 56.Mr Ho submitted that the observations made by Roskill LJ in Hyundai had no application to the present case as in that case the claim had been made in respect of outstanding instalments and there had been no question of delivery of the vessels having been effected. 57.Although the 4th instalment became payable on the delivery of the vessel to Finex it is common ground that the vessel was ready for delivery at the relevant time. It is also apposite to note the observations made by Roskill LJ in his judgment immediately following the passage already cited:
58.What is apparent from this passage is that an obligation to pay instalments which have already accrued is not extinguished when a agreement comes to an end. Rather than supporting the arguments being advanced by Mr Ho this passage would tend to support the submissions being made by Mr Scott. 59.At this point it is necessary to consider the main issue which arises on this appeal namely whether the claim being made by the petitioner is a liquidated claim. 60.The definition in Fletcher earlier cited in this judgment is in our view an accurate statement of the law. The two 19th Century cases relied upon by Mr Ho are of very limited assistance. Circumstances prevailing at the time when the judgments were delivered were very different. 61.Considerable assistance is derived from the observations made by Roskill LJ in Hyundai that what is required is a pragmatic approach to the problem. Here it is possible to arithmetically calculate the amount which is payable to the petitioner and there is no substantial dispute in relation to this. 62.The submissions made by Mr Ho to the effect that simply because the claim which is being made by the petitioner is not being made entirely pursuant to the terms of the agreement is not decisive of the issue. The fact that the vessel was sold by the shipyard does not make the claim an unliquidated one. What is necessary is to consider whether the claim can be arithmetically calculated. 63.Also if the performance guarantee is read carefully it is clear that the rights of the petitioner are not circumscribed in the manner contended for by Mr Ho. 64.Mr Ho accepted that if the main submissions he was advancing were not accepted the claim for the loss of commission would logically follow the same principles as those obtaining for the non-payment of the instalments. 65.For the reasons which have been given we are of the view that the claims now being advanced in the statutory demand are liquidated claims. This being the case we consider that this appeal is allowed and the Judge's order should be set aside and an order nisi should be made that the petitioner should have the costs both before us and in the court below. This appeal is only concerned with whether there should be an order striking out the petition, it is not entirely appropriate for this court to decide whether a bankruptcy order should be made. However, to avoid any doubt and in view of the above matters, the petitioner should be at liberty to restore the petition for hearing in the bankruptcy court. Hon Cheung JA: 66.I agree with the decision and reasons of Mayo VP and Chung J. I would like to add the following observation. Nature of the application 67.This is an appeal by the Petitioner ("Bright Islands") against the striking out of its petition by the debtor ("Mr Chao") on the ground that the peitition was an abuse of the process of the court. Although it was a striking out application pursuant to Order 18 Rule 19 of the Rules of the High Court (applicable to bankruptcy proceedings by reason of section 99(1) of the Bankruptcy Ordinance ("the Ordinance")), both parties had in effect treated the application as a determination on whether there was a bona fide dispute on the existence of a debt. This is apparent from the approach taken by the parties in this appeal. They argued the matter as if it was an appeal from a dismissal of the petition. At the end of the submissions, Mr. Scott S.C., counsel for Bright Islands even invited this court to pronounce a verdict on the petition and declare Mr. Chao bankrupt. 68.This approach is also consistent with what Rogers J. (as he then was) said in Re ICS Computer Distribution Ltd., (formerly known as Cheflink Ltd.) [1996] 1 HKLR 181 :
69.Although this was said in the context of a striking out application of a company's winding up petition, this approach is applicable to a bankruptcy petition as well as shown in cases such as Leung Hoi [2000] 1 HKC 276. Further, although in this case the striking out application was dealt with separately from the petition itself, this does not distract the real nature of the application. Facts 70.It is not necessary to go into the details of the facts in this case. It is sufficient to note that Bright Islands had entered into a contract ("the Ship Building Contract") with a shipyard ("the shipyard") in the Mainland, China to buy a vessel. Nissho Iwai Corporation ("Nissho Iwai"), the parent company of Bright Islands, guaranteed the shipyard the payment and performance by Bright Islands of this contract. 71.Bright Islands entered into a contract ("the Ship Sales Contract") with Finex Shipping Limited ("Finex") to sell the vessel to Finex. Mr. Chao, the beneficial owner of Finex, guaranteed the payment and performance by Finex. 72.Finex was to pay the contract sum of US$29,704,000.00 by four instalments. It managed only to pay one instalment and failed to pay the other three instalments or take delivery of the vessel. 73.Bright Islands by a notice dated 18 October 1999 informed Finex and Mr. Chao that, pursuant to Clause 4 of Article XI of the Ship Sales Contract, it had cancelled that contract. It also intended to sell the vessel pursuant to Clause 5 of Article XI. 74.Bright Islands was unable to fulfill its own obligations to the shipyard. The vessel was eventually sold, not by Bright Islands, but by the shipyard on 19 November 1999 for a net sum of US$20,825,000.00. The shipyard then claimed against Bright Islands and Nissho Iwai for the deficiency between the contract price together with costs and interest under the Ship Building Contract and the resale price of the vessel amounting to US$7,065,710.86 on 28 December 1999. Nissho Iwai settled the claim for US$6 million. 75.Bright Islands then claimed against Finex and Mr. Chao. The terms of the Ship Building Contract and Ship Sales Contract are identical. What Bright Islands stood to gain from this back to back arrangement is a commission of US$300,000.00 payable by the shipyard under a separate commission agreement. The statutory demand 76.Under the statutory demand issued to Mr. Chao, the debt is US$6,305,772.88, made up as follows :
The shortfall 77.The shortfall of US$7,065,710.86 was particularised in a letter dated 7 January 2000 from Bright Islands to Mr. Chao. Without going into details, it is made up as follows :
78.The ultimate shortfall is confined to US$6,000,000.00 because Nissho Iwai's settlement with the shipyard was for that sum. Debt of a liquidated sum 79.Mr. Ho S.C., counsel for Mr. Chao, now based his case on striking out almost exclusively on this ground : the bankruptcy court has no jurisdiction to deal with the matter because the petition is based not on a debt in that the claim is not a liquidated sum. Despite his extremely persuasive arguments, I am not satisfied that there is a substantial dispute on this point which requires the petition to be struck out. 80.The requirement that a bankruptcy petition can only be based on a debt in the form of a liquidated sum is clearly provided by s. 6(1) and s. 6(2)(b) of the Ordinance. 81.The distinction of a liquidated sum and damages is likewise well established :
See Chitty on Contracts 28 Ed. Vol. 1 Paras. 27-008 and 27-009. Para. 6/2/4 of the Hong Kong Civil Procedure further states that :
82.The difficulty in this case is applying these well known principles to the claim under the statutory demand. Bright Islands' case 83.Mr. Scott submitted that the sums claimed are liquidated sums. After Bright Islands cancelled the Ship Sales Contract, it became entitled to exercise its remedies under common law and under that contract specifically against Finex, including an express right to sell the vessel without being answerable for any loss and damage and set off the proceeds against the sums definite payable by Finex. Finex remained liable for any deficiency between the amounts payable by it and the sale of the vessel. Not having paid the deficiency, Finex failed to discharge a contract liability and remains in breach. Accordingly, Bright Islands is entitled to demand payment of the deficiency from Mr. Chao under the guarantee. Article XI 84.Under Clause 5(a) of Article XI of the Ship Sales Contract, Bright Islands may, after cancelling or rescinding the contract, sell the vessel "without being answerable for any loss of damage occasioned to [Finex]." In the case of a sale of completed vessel, the proceeds of sale received by Bright Islands will apply first to payment of the expenses of the sale and second to payment of all unpaid instalments and interest : Clause 5(b). There is another provision for applying the proceeds of sale of a vessel in its incomplete state. Clause 5(d) further provides that the excess of the proceeds of sale after it had been applied in accordance with the earlier provisions is to be returned to Finex. In case of deficiency, Finex "shall promptly pay the deficiency to [Bright Islands] upon request" : Clause 5(e). 85.It is clear that in order to rely on Clause 5, Bright Islands must be the one who had sold the vessel and received the proceeds of sale. This is what the clause provides. If this happens, the claim for deficiency by Bright Islands may well be in the nature of a liquidated claim because it is payable under the contract. The amount is capable of being ascertained as a mere matter of arithmetic. However, in this case Bright Islands did not sell the vessel and did not receive the proceeds of sale. It therefore cannot rely on Clause 5 to claim the deficiency from Finex. This is not a technical point. Common Law 86.If Bright Islands cannot rely on Clause 5 in order to constitute the claim as a liquidated claim, then whether its common law remedy will constitute the claim in the form of a liquidated claim will depend on whether it is based on the price or damages for non-acceptance by Finex. It is fair to say that the present claim does give the impression that it is one based on damages. It is confusing to refer to a claim on deficiency under the common law claim. It is helpful to remind oneself of the principles set out in Benjamin's Sale of Goods 5th Ed. Para. 16-054 ：
Claim for unpaid instalments 87.However, in this case, Bright Islands is clearly entitled to the 2nd, 3rd and 4th instalments of the price of the vessel. The terms of payment were provided for in Clause 3 of Article II. Specifically, the 4th instalment was to pay upon delivery of the vessel. Bright Islands had, by a notice dated 30 September 1999, informed Finex that it had received notice from the shipyard to pay the unpaid balance of the contract price and take delivery of the vessel immediately. It then made a similar request to Finex. The failure by Finex to comply with the request constituted default under Clause 1 (a), (b) and (c) of Article XI. The default enabled Bright Islands to rescind the contract under Clause 4(b)(i) of Article XI. 88.Under Clause 4(b)(iii) the default to pay the 2nd and 3rd instalments also enabled it to "demand, recover and exercise" its rights under the guarantee signed by Mr. Chao. This is "without prejudice to its right to recover from [Finex] all instalments due and payable before/on delivery of the VESSEL together with all interests, costs and/or expenses by applying the proceeds to be obtained from sale of the VESSEL pursuant to the provisions set out below and in accordance with the provisions set out in this Contract." 89.While Bright Islands cannot rely on the provisions relating to the sale of the vessel or the proceeds of sale referred to in Clause 5, clearly by virtue of the above clause it is entitled to recover the unpaid instalments. 90.In Hyundai Heavy Industries Co. Ltd v. Papadopoulos and Others [1980] 1 WLR 1129, the House of Lords held that save in the case of sales of land and goods and where there has been a total failure of consideration, it was the law prior to the decision in Lep Air Services Ltd. v. Rolloswin Investments Ltd. [1973] A.C. 331 that cancellation or rescission of a contract in consequence of repudiation did not affect accrued rights to the payment of instalments of the contract price unless the contract provided that it was to do so : per Viscount Dilhorne at page 1136. He further held that Lep Air Services had not affected the law because the observation in that case about instalments not becoming payable after the contract was brought to an end by acceptance of repudiation, was in respect of future instalments and not instalments where right to payment had already accrued. (See also the observation of Roskill L.J. on the same point in another case concerning the same parties in [1978] 2 Lloyd's L.R. 503) Substance of the claim 91.If the nature of the claim is in substance the unpaid instalments of US$26,733,600.00 with a credit being given to the proceeds of sale of US$20,825,000 leaving a balance of US$5,908,600.00, would this turn the claim into an unliquidated debt? 92.The first point to note is that this is not the claim contained in the statutory demand. It included other claims. But as pointed out in In re A Debtor (No. 1 of 1987) [1989] 1 WLR 271 (a case referred to In re A Debtor (No. 64 of 1992) [1994] 1 WLR 264) :
93.I do not think that the failure to state the exact claim will automatically entitle Mr. Chao to strike out the petition because there remains to be a substantial indebtedness by Mr. Chao based on the above claim. After all, the claim for the unpaid instalments is at the core of Bright Islands' claim. This is shown in the particulars of the claim on the shortfall. 94.If in substance the debt is based on the unpaid instalments, then it cannot be said there is a bona fide dispute on substantial grounds on the validity of the debt. The unpaid instalment are clearly liquidated sums provided by the contract. 95.In re A debtor (No. 64 of 1992), a debtor was liable to the creditor under a mortgage. The creditor issued a statutory demand claiming a sum based on the debt under the mortgage less the estimated value of a security held by the creditor. It was held by Colin Rimer Q.C., sitting as a Deputy High Court Judge in England, that the claim remained to be a liquidated sum. This approach was followed in Hong Kong in Re Kwok Chok Yee (HCB No. 670 of 1999). 96.The English case was, of course, concerned with Rule 6.1(5) of the Insolvency Rules (a similar provision is in s. 6B of the Ordinance) which recognized that it is competent for a secured creditor to place a value on its security and to serve a statutory demand of the total debt less such value. But in my view this issue will not necessarily restrict the application of that case in respect of credit being given to a debt which is obviously in the form of a liquidated claim. As Colin Rimer Q.C. observed the statutory demand may be set aside if there is credible evidence that the credited amount is grossly undervalued, but this is not because the debt claimed is not a liquidated claim but rather, given the true value of the credit, the debtor is not truly indebted at all. Undervalue and sabotage 97.As to the contentions by Mr. Chao that the sale was at a gross undervalue and Nissho Iwai had sabotaged his attempt to find a purchaser for the vessel, these had not been raised by him at all at the time he was notified by Bright Islands in November 1999 of the intended sale of the vessel at US$21 million or after he received the demand for payment in January 2000. These allegation only surfaced in his second affidavit of 7 June 2000. The allegation of sabotage was couched in vague terms. It was obviously in the interest of Nissho Iwai to obtain a high price in the sale so as to minimize its loss. 98.It is important to bear in mind that the actual sale of the vessel was without the benefit of the charterparty. This reduced the value of the vessel. It was due to Finex's failure to pay for the instalments and take delivery of the vessel that rendered it unable to fulfill the contract with the charterer. Further, even based on Mr. Chao's own estimate of the value of the vessel at the time of sale at the maximum of US$23.5 million, there is still a substantial indebtedness of US$3,233,600.00 after deducting the estimated value from the unpaid instalments of US$26,733,600.00. A bankruptcy order can still be made on this basis, as Peter Gibson L.J. observed in TSB Bank plc v. Platts [1998] 2 BCLC 1 :
99.I do not regard these allegations to be so substantial as to merit the striking out of the petition. The burden was on Mr. Chao and he had failed to discharge the burden. Nature of Mr. Chao's liability 100.Under the Guarantee, Mr. Chao "absolutely, unconditionally and irrevocably guarantee :
101.It is clear from its terms that there is a distinction between Mr. Chao's payment obligation which is described as the "contract liability" and performance obligation which is described as the "contract obligation". In the first of the Hyundai cases, Roskill L.J. in the Court of Appeal held that the guarantee should be construed as a whole and not break into different limbs; the commercial purpose of the document was to ensure payment by the guarantor if the buyer did not pay the instalments on their due dates. 102.Accepting this to be the proper approach, the issue in this appeal remains to be whether the debts are liquidated sums or not. If they are not, the conclusive evidence clause in the guarantee will not turn them into liquidated claims. This, however, is not a matter that needs to be dwelled upon in view of my decision. Conclusion 103.I will also allow the appeal. Hon Mayo VP: 104.The appeal is allowed and the costs order proposed above is made.
Representation: Mr. John Scott SC, instructed by Messrs Deacons, for the Petitioner. Mr Ambrose Ho SC and Mr Michael Yin, instructed by Messrs Hobson & Ma, for the Respondent. |
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