Jim Shyu t/a United Trading Corporation v. Guan Guan Shipping (Pte) Ltd

Case No.HCA 1865/1975

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA001865/1975

IN THE HIGH COURT OF JUSTICE

HONG KONG

ACTION NO. 1865 OF 1975.

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BETWEEN	JIM SHYU trading as UNITED TRADING CORPORATION	Plaintiff
	and
	GUAN GUAN SHIPPING (PTE) LTD.	Defendant

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Coram: Mr. Justice Yang in Court.

Date of Judgment: 23rd June, 1976.

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JUDGMENT

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1. This is the plaintiff's claim for the return of a deposit of US$20,000 which he paid to the defendant Co. for the purchase of a ship.

2. The first issue in this case is whether the following document was the agreement between the parties or was subject to a formal contract of sale. The document is in these terms:

	SINGAPORE, 25th September, 1973.
Messrs. United Trading Corpn.,
Room 1081, Wu Sang House,
655, Nathan Road,
Kowloon,
Hongkong.	Attention: Mr. James Shyu.

Dear Sirs,

"Golden Hill" as Scrap Price.

We confirm that "Golden Hill" is sold to you at US$200,000/- nett as scrap price with the following terms:-

	1.	Vessel delivery Singapore AS IS, WHERE IS.
	2.	On signing of agreement the buyer will pay 10% deposit and the balance through Letter of Credit to American Express International Banking Corpn. Singapore, in favour of Guan Guan Shipping (Pte.) Ltd.
	3.	Delivery within Sixteen (16) days on signing of agreement, otherwise deposit will be forfeited and agreement treated as cancelled.
	4.	Your crew will be allowed on board only on completion of payment and signing of receipt of vessel.
	5.	Balance bunkers on board will be sold at Singapore list price.
	6.	The vessel will be re-registered and the name changed.

		Yours faithfully,
		GUAN GUAN SHIPPING (PTE.) LTD.
		(Sd.) .....................................................
We accept the above terms.		Manager.
(Sd.) .....................
President,
UNITED TRADING CORPORATION.

3. The plaintiff sought to introduce extrinsic evidence to show that the parties had, prior to the signing of the above document, agreed that a formal contract would be drawn up and that the word "agreement" in that document was intended to refer to a subsequent, formal contract. Mr. Chang for the plaintiff argues that extrinsic evidence in the present circumstances is permissible because the word "agreement" is ambiguous. It is not part of his case that extrinsic evidence is admissible to show a condition precedent. In my view ambiguity only arises if one has taken account of the extrinsic evidence sought to be adduced. On the face of the document itself, there is no ambiguity. The agreement referred to can only mean the document. There is nothing written there which shows that the word "agreement" might have referred to a subsequent, formal contract. In my judgment this document is a binding agreement.

4. It is not disputed that delivery of the ship was not taken within sixteen days from the signing of the agreement.

5. The next issue is whether the defendant Co. is entitled to forfeit the deposit. Mr. Chang submits that the forfeiture clause is in reality a penalty clause, and as such it would be inequitable for the defendant Co. to retain the deposit. With respect, I disagree. There is evidence, which I accept, that the differences between the market price and the contract price of the ship, at the time that delivery of the ship ought to have been taken, was US$20,000. In my view, the plaintiff fails in this second issue also.

6. Accordingly I dismiss the plaintiff's claim with costs.

	T.L. Yang
	Judge of the High Court
	23rd June, 1976.

Representation:

Mr. Dennis Chang (Shea & Co.) for Plaintiff.

Mr. Richard Mills-Owens (Johnson, Stokes & Master) for Defendant.