International Projects Corporation Ltd v. Cheung Ping Yuen Albert and Another

HCA001859/1974

IN THE HIGH COURT OF JUSTICE

ORIGINAL JURISDICTION

ACTION NO. 1859 OF 1974

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Coram: Li, J.

Date of Judgment: 17th November, 1976 at 2.35 p.m.

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JUDGMENT

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1. This is an action by the plaintiff company, International Projects Corporation Ltd. against the defendants in their capacity as guarantors to certain short term loan agreements. The plaintiff's case is that the two defendants were the sole directors of one Fortex Industries Ltd. a company which had been financed by the plaintiff company. Over the months of November 1973 down to May 1974 the defendants in their capacity as directors signed and executed a series of four short term loan agreements for advance of money by the plaintiff company; they further signed in their personal capacity as guarantors that such loans be repaid. The several agreements alleged were one dated the 13th November, 1973, for $30,000, another one dated the 16th November, 1973, for $20,000, the third one dated the 7th January, 1974, for $40,000, the fourth one dated the 19th February, 1974, for $32,000 and finally another one dated the 1st May, 1974, for $205,000. The Fortex Industries Ltd. failed to pay the plaintiff and the defendants as guarantors have also failed to pay the plaintiff these loans. Hence this action.

2. The defence is that on or about the 10th June, 1974, the two defendants signed a series of short term loan agreements without any specification as to date of these loans, especially the loan dated the 1st of May. It is alleged that the agreement was left in blank without specifying any sum of money. At the time when the defendants signed them an officer of the plaintiff company, one Mr. Francis Cheung, represented to them that the amount put down in the agreement would be $20,000 and no more. Subsequently it was put down as $225,000. It is further alleged that when this agreement was signed the plaintiff company had entered into an agreement with a series of other companies plus the Fortex Industries Ltd. that whatever debt that the Fortex Industries Ltd. owed the plaintiff such debt would not be enforced until December, 1974. However, in breach of this agreement the plaintiff issued a writ on the 9th August, 1974, and it is therefore alleged that the Fortex Industries Ltd. owed the plaintiff nothing.

3. The issue therefore is whether the plaintiff indeed advanced the money to Fortex Industries Ltd. as alleged and whether the defendants signed on the short term loan agreements as guarantors. It is common ground between the parties that the two defendants were at the material time the only two directors of Fortex Industries Ltd. The defendants' company was financed by the plaintiff company. There is no dispute in the evidence that the documents dated the 13th November, 1973, the 7th January, 1974 and the 19th February, 1974, were signed and the money named in such documents were advanced to the Fortex Industries Ltd. There is also evidence as far as these three agreements are concerned the defendants signed as guarantors. No evidence has been adduced as to the agreement between the plaintiff company and the various companies and, in any event, that point appeared to have been abandoned. What the defence has persisted is that in so far as the last and the fifth agreement dated the 1st May 1974, Exhibit 7, is concerned, the total amount was left blank. The evidence before me is that the system is for the plaintiff to advance money to purchase raw materials for the Fortex Industries Ltd. so as to enable the latter company to fulfil the orders placed by various customers. Although the total amount was left in blank at the time of execution of the agreement yet it was signed by the two defendants in their capacity as directors with their eyes wide open. There was a schedule of the projects typed at the back of that agreement to the effect that the agreement was to finance these various projects so that there was some form of limit and qualification as far as the total amount was concerned. Furthermore, cheques had been issued to the Fortex Industries Ltd. as from the 24th April in compliance with this agreement which was reduced into writing and signed by the defendants on the 1st of May, various sums were advanced by cheques up to the 2nd January, 1975 and receipts were given from time to time - see Exhibits 8 and 9.

4. It is admitted that the defendants signed the guarantee much later than the agreement for the loan. There, again, in plain language the defendants signed as guarantors in consideration of the plaintiff granting the loan to the Fortex Industries Ltd. so that even at the time of signing this guarantee in June, 1974, there had been some past payment or past loan which can be enforced forthwith for repayment and after June the loan continued to be advanced to Fortex Industries Ltd. so that I cannot say that these were past considerations.

5. Having regard to the evidence as a whole and having heard the plaintiff's evidence as well as the 2nd defendant's evidence, I have come to the conclusion and am satisfied on the balance of probability that the loan of, first of all, $30,000 advanced under the agreement dated the 13th November, 1973, the loan of $40,000 under the agreement of the 7th January, 1974 and the $32,000 on the 19th February, 1974, had been made. These make a total of $102,000. There is no evidence that the agreement dated the 13th November, 1973, had been signed, and, indeed, no document substantiating this agreement has been produced. Learned counsel for the plaintiff informs me that he is not proceeding with the claim in this agreement. As to the agreement dated the 1st May, 1974, counsel for the plaintiff informs me that a total of $205,000 is being claimed out of which a substantial portion had been repaid leaving a balance of $74,947.66 so that he is proceeding only on this agreement for $74,947.66. As far as interest on this $74,947.66 is concerned, he would not claim interest as from the 1st of May to the 31st of July because a lot of these loans were advanced some time in July, August, September of 1974. The interest for the first three sums of $30,000, 40,000 and $32,000 come to a total of $10,474.90. In the circumstances I give judgment to the plaintiff for the three sums of $30,000, $40,000 and $32,000, plus interest, and the $74,947.66 on principal alone making a grand total of $187,422.56.

6. I give judgment against both defendants in their capacity as guarantors who failed to repay the loan when the principal debtor has also failed to repay the loan to the plaintiff company. The 2nd defendant appears in person. The 1st defendant is absent after attempt had been made to serve upon him the notice of hearing when the case was set down for hearing yesterday at his addressed for service without success. For these reasons I give Judgment also against the 1st and 2nd defendants jointly and severally in the sum of $187,422.06 with interest at the rate of 18 per cent as from the 1st August, 1974, down to the date of judgment.

7. Costs will go to the plaintiff as well.

Representation:

R. Tang (H.M. So & Co.) for Plaintiff

Ho Ka-kui, 2nd Defendant in Person