Jointing Construction Ltd v. Highfield Sea Land Development Ltd and Others

Case No.HCA 1129/1977

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA001129/1977

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO.1129 OF 1977

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BETWEEN
	Jointing Construction Limited	Plaintiff
	and
	Highfield Sea Land Development Ltd.	1st Defendant
	China Pacific Shipyard Limited	2nd Defendant
	Richard Hwang	3rd Defendant

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Coram: Zimmern J. in Court.

Date of Judgment: 31st May 1977

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JUDGMENT

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1. Nissan Construction (H.K.) Ltd. to which I shall refer to as Nissan, are the Government Contractors for certain works at Shatin in the New Territories. Nissan sub-contracted the performance of the entire works to the plaintiff company which in turn sub-contracted part of the said works to a firm Tang Engineering Company which I shall call Tang.

2. To perform their part of the works Tang required inter alia the services of a tug, a dredger and 2 hopper barges. These they hired from the 1st and 2nd defendants' evidence by 4 Bareboat Charter Parties all dated 25/11/76 and executed by Tang and the respective owners of the vessels. For the purpose of this finding it does not matter which defendant owned which vessel. Mutatis mutandis all the charter parties contained identical terms.

3. The period of hire was expressely stipulated to be for a period of 5 months from the time of delivery. It is common ground that all 4 vessels were delivered on the 7th December 1976 and that under the charter parties the term expired on the 7th May 1977. The charges for the hire were to be paid twice monthly and failing punctual and regular payments each owner reserved the right to withdraw their vessels.

4. Tang through a chapter of misfortunes had serious cashflow problems and fell into arrears with the hire charges. The owners as were within their rights threatened to withdraw the vessels. A meeting was held on 25/2/77 at which representatives of the plaintiff company, Tang and the 3rd defendant Richard Hwang no doubt representing the owners were present. In passing I might mention that Hwang was only joined as a defendant because of an allegation of trepass against him. What was said to have been agreed at the meeting is incorporated in a letter dated 28/2/77 from Tang to the plaintiff and is signed by both of them. The letter is document 45 in Ex.A the agreed bundle. In effect as far as it concerns this case Tang agreed to hand back their works and the site to the Plaintiff company which agreed to pay in full the arrears to the owners and to punctually pay the hiring charges thereafter. It is the plaintiff company's case that there was a formal handing over of the site by Tang to them on 1/3/77 at which the 3rd Defendant was present.

5. By a letter dated 17/3/77 the 3rd defendant as Director of the 1st defendant and also on behalf of the 2nd defendant wrote to the plaintiff in these terms:

	"We and on behalf of Messrs. China Pacific Shipyard Ltd., enclosing herewith Four (4) copies of our Bareboat Charter Party for your kind attention.
	Please duly sign the spaces provided and return the duplicates to us for record."

6. It is common ground that the charter parties were in identical terms to those executed by Tang save the name of Tang had been substituted by the name of the plaintiff and that the owners had signed them. The plaintiff company say they signed the charter parties upon receipt but never returned them to the owners, though a covering letter had been typed and signed to return them. Instead the plaintiff by a letter dated 7/4/77 wrote to the 2nd defendant no doubt intended for all the owners and I quote the first two paragraphs:

	"For your kind information, Tang Engineering Co. had hand-over the captioned project to us in February 25 1977.
	Here we thank you for the preparation of the transfer agreement of the bareboat charter party to our company. We have not returned the mentioned agreement because after our careful study of the present situation we find we have to request your company for an extension of two months as effective from the following day of agreement date. As the rental for the bareboat charter party we also expect to maintain the same charge as before. Under our observation of the River wall dredging we are sure the operation will be working to the end of July 1977. Since we are applying for the extension, therefore we hope to have the transferance and extension agreement to be signed at the same time after your kind approval."

7. By a letter dated 12/4/77 the 1st defendant replied in terms advising that the matter was under consideration and would revert.

8. On 6/5/77 both the 1st and 2nd defendants wrote to the plaintiff advising that they would not give an extension of 2 months and requested for re-delivery of the vessels not later than 8/5/77. The plaintiff company answered through their solicitors on the 7/5/77 and I set out these 2 letters in full.

	"Your letter dated 6th May 1977 written to our clients Messrs. Jointing Construction Ltd. has been handed to us with instructions to reply there to .
	We are instructed under the terms of the Bareboat Charter Parties and entered into between our clients and our goodselves, the period of five months mentioned therein shall commence from the hour and day of delivery of the plants or vessels, and the delivery of the plants or vessels took place on the 1st March 1977 at 16:30 hours. The expiry date the Bareboat Charter Parties will therefore be on the 31st day of July 1977 and not the 7th day of May 1977 as suggested. In the circumstances, your request to return the plants or vessels on the 8th May 1977 cannot be complied with by our clients."
	"Further to our letter to you of the 6th May 1977 we have since taken instruction from our clients on your letter of the 6th May 1977.
	We are instructed that with your letter dated 17th March 1977 you forwarded to our clients Messrs. Jointing Construction Ltd. four originals of Bareboat Charter party for our clients' signatures. Our clients duly signed the same and by a letter dated 7th April 1977 our clients asked for an extension of two months from the expiry date of the four Agreements. Under the terms of the Bareboat Charter Party the period of five months shall commence. from the hour and day of delivery of the plants or vessels and the delivery of the plants or vessels took place on the 1st March 1977 at 16:30 hours. The bareboat Charter Party therefore will not expire until the 31st day of July 1977, and not on the 7th May 1977 as suggested in your said letter. Our clients have noted from your letter under reply that you do not agree to any extension. Delivery of the plants or vessels will there fore be given to you by our clients on or before the 31st July 1977."

9. On the 10/5/77 the plaintiff issued the writ herein. The owners were re-possessing the vessels and the plaintiff company obtained 2 ex parte injunctions to restrain them from so doing. I do not have to go into the details of these. On the return date of the inter partes summons the parties agreed to any early trial of the issues without pleadings. I heard the case on 30/5/77 and the first issue before me settled by the parties was:

"Whether the defendants were, in law, entitled to repossess the four vessels (particulars of which are set out in the writ of summons) on 8/5/77."

10. Mr. Litton opening for the plaintiff was in difficulties from the word go. For the plaintiff company to succeed on the issue they would have to prove a contract of hiring with the owners over and above the charter parties entered into between the owners and Tang which terminated on 7/5/77. He set about it this way. The 4 charter parties signed by the owners and sent to the plaintiff under cover of the owner's letter of 17/3/77:

"We and on behalf of Messrs. China Pacific Shipyard Ltd., enclosing herewith four (4) copies of our Bareboat Charter Party for your kind attention. Please duly sign the spaces provided and return the duplicates to us for record."

constituted an offer capable of acceptance. The offers had not been revoked when they were accepted by Messrs. T.S. Tong & Co.'s 2 letters of 7/5/77 communicated to the owners, whereby 4 contracts came into existence on 7/5/77 between the plaintiff and the owners evidenced by the charter parties and the 2 letters which I have set out above. Mr. Litton then says on a liberal interpretation of the contract documents and the extrinsic evidence before the Court I should come to the conclusion each contract was a contract of hire for a period of 5 months commencing 1/3/77 i.e. the date the plaintiff repossessed the site from Tang.

11. I reject the plaintiff company's contention for the following reasons:-

(1)

Neither one of Messrs. T.S. Tong & Co.'s letter of 7/5/77 is capable of being construed as a communication of an acceptance of an offer made to the plaintiff. The one to the 1st defendant company in part reads "We are instructed under the terms of the Bareboat Charter Parties and entered into between our clients and our goodselves." Let me substitute the word "your" for the penultimate word "our" Messrs. T.S. Tong & Co. were clearly referring to a contract already entered into. This can clearly be discerned from the letter of the same date to the 2nd defendant company. It reads in part "We are instructed that with your letter dated 17th March 1977 you forwarded to our clients Messrs. Jointing Construction Ltd. four originals of Bareboat Charter Party for our clients' signatures. Our clients duly signed them."

12. The solicitors obviously thought the fact their clients had signed the 4 charter parties was sufficient to form the contracts.

13. Mr. Litton has of course conceded that before a contract can be formed acceptance has to be communicated to the offeror. There was no such communication in this case.

(2) Even if the plaintiff company had returned the 4 charter parties duly signed to the owners I would have had no hesitation in holding that the contracts entered into between the owners and the plaintiff company were mere novations of the contracts between Tang and the owners whereby Tang were discharged and the plaintiff company stood in their place under the new contracts on identical terms and conditions such novations of course would have required the consent of Tang. It was common ground that on the 1/3/77 Tang was in possession of the vessels under their contracts with the owners. The terms of the contracts did not disallow Tang from passing the physical possession of the vessels to the plaintiff company. That company's promise to pay the hiring charges was not an obligation which could be assigned under the Tang contracts. If the plaintiff company did not pay, the owners could repossess but they could not sue the plaintiff company in damages under the Tang contracts. It follows that the owners were not concerned with the events of the 1/3/77 even though the 3rd defendant had attended at Shatin on that day.

14. The Tang contracts were determined on 7/5/77 and there were no other contracts subsisting, I therefor answered the question in the issue in the affirmative and give the reasons for my answer now.

	(A. Zimmern)
	Judge of the High Court

Representation:

Litton, QC & Winston Poon (T.S. Tong & Co.) for plaintiff.

Denis Chang (Yung, Yu, Yuen & Co.) for defendants.