Susan Chan Sak Bun v. Eoghan Murray Mcmillan and Another

HCMP001376/1984

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BETWEEN:-

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Coram: The Honourable Mr. Justice Jones in Chambers.

Date of hearing: 12 June 1984

Date of delivery of judgment: 10 July 1984

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JUDGMENT

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INTRODUCTION

1. On the 4th March 1983 Axona International Credit and Commerce Limited (Axona) a deposit taking company incorporated in Hong Kong was ordered to be wound up on the grounds of insolvency. Mr. E. M. McMillan and Mr. M. J. Johnson were appointed to be joint liquidators. Axona was formerly known as Bancom International Limited (B. I. L.), but changed its name to Axona in July 1982.

2. B. I. L. (Vila) Pank Ltd. (hereafter referred to as Vila) a deposit taking company in Vanuatu is also in liquidation. This company was formerly called Bancom International (New Hebrides) Limited.

3. On the 13th May 1983 a proof of debt for the sum of US$236,325.44 in respect of three deposits was lodged with the liquidators of Axona on behalf of the applicant. The proof was rejected on the 24th April 1984 on the grounds that the claim should be made against Vila.

4. By the present summons the applicant seeks an order to reverse the liquidators decision under Rule 95 of the Companies (Winding-up) Rules.

FACTS

5. A joint account was opened by the applicant and her sister Julia Orr Chan Sak Bik with B.T.L. in September 1979. A sum of US$100,000 was placed on deposit for 91 days. According to the applicant her husband Nelson P.K. Chan always dealt with the investment and gave instructions to B.T.L. or Axona for the renewal of the deposit with interest accrued upon maturity from time to time. No affidavit has however been filed by Mr. Chan.

6. The original investment with accrued interest has throughout been kept on deposit for short periods ranging from a minimum of 1 day to a maximum of 91 days with either B. I .L. or Vila until the 26th October 1982 when it was renewed with Vila for 31 days. Upon maturity on the 26th November 1982 the deposit with interest amounted to US$159,861.11.

7. Two other sums for US$31,579.80 and US$44,223.62 were also placed on deposit on the 26th October 1982 for the same period. With interest these deposits on maturity amounted to US$31,855.14 and US$44,609.19. Records in respect of these two deposits are incomplete, but it appears that the deposit for US$44,223.62 was previously invested with B.I.L. from the 28th December 1981 until the 23rd June 1982 when it was transferred to Vila. It is the total of the three deposits with interest on the 26th November 1982 that is claimed by the applicant.

8. The original deposit was made with R.I.L. on the 10th September 1979 for 91 days. Upon maturity the deposit and interest were rolled over on four separate occasions until the 11th April 1980.

9. On the 11th April 1980 B.I.L. wrote a letter to the applicant which reads:-

"APR. 11, 1980

Dear Sir,

RE: PRO FORMA INVESTMENT CONFIRMATION

We have been requested by Bancom. International (New Hebrides) Limited, to advise your investment with the Company as follows:-

	PRINCIPAL	:	US$108,588.72
	VALUE DATE	:	APR. 11, 1980
	MATURITY DATE	:	JUN. 11, 1980
	INTEREST PERIOD	:	61 days straight
	INTEREST RATE	:	*18% p.a.*
	INTEREST	:	US$3,311.96
	MATURITY VALUE	:	US$111,900.68
	REMARKS	:	Being transferred from Bancom Int'1 Ltd's account. Principal plus interest roll over. This cancels IF NO.14223.

This pro forma acknowledgment is subject to formal confirmation notice by Bancom International (NH) Limited which will be forwarded to you shortly.

Kindly acknowledge the attached copy and return to us at your earliest convenience.

Very truly yours, BANCOM INTERNATIONAL LIMITED

Acknowledged by:

AUTHORIZED SIGNATURE(S)"

From the 11th April 1980 to the lst April 1982 the deposit continued to be invested in Vila when it was transferred to B.I.L. for the period from the 1st April 1982 until the 23rd June 1982. On that date the deposit returned to Vila where it has since remained.

10. The applicant contends that the deposits were always placed with Axona under its former name, and with no other bank. In fact the applicant says she would not have invested in a bank abroad. However, she agrees that she signed the investment confirmation slips that were addressed to her by B.I.L. upon maturity of the deposit from time to time.

LIABILITY AS PRINCIPAL

11. Mr. Merry who appeared for the applicant submitted that Axona is liable either as the principal debtor or as the agent of Vila. With regard to the contention that Axona is the principal debtor it is alleged that the funds were only placed in Vila as a result of an internal arrangement between the two companies. However, the uncontradicted letter of the 11th April 1980 is cogent evidence that refutes this allegation. Apart from the similarity in the names of the companies before the change to Axona there was no evidence to show the exact relationship or association between them. Each company must necessarily be treated as a separate legal entity.

12. The course of dealing between the parties reveals that the monies were transferred to Vila on the instructions of the applicant's husband and the applicant concedes that she signed confirmation slips to this effect. I  am unable  to accent that  such transfers were made as a result of an internal arrangement, so that I reject the argument that Axona was the principal debtor.

LIABILITY AS AGENT

13. I now come to the question whether Axona acted as agent for Vila. The law was expressed in a case cited by Mr. Merry The Swan (1968) 1 Lloyd's Rep 5 where Brandon, J. at page 12 had this to say:-

"Where A contracts with B on behalf of a disclosed principal C, the question whether, both A and C are liable on the contract or only C depends on the intention of the parties. That intention is to be gathered from (1) the nature of the contract, (2) its terms and (3) the surrounding circumstances: see Bowstead on Agency, (12th ed.)(1959), at pp. 257 and 258, par. 113, and the authorities there cited. The intention for which the Court looks is not the subjective intention of A and B. Their subjective intentions may differ. The intention for which the Court looks is an objective intention of both parties, based on what two reasonable businessmen making a contract of that nature, in those terms and in those surrounding circumstances, must be taken to have intended.

Where a contract is wholly in writing, the intention depends on the true construction, having regard to the nature of the contract and the surrounding circumstances, of the document or documents in which the contract is contained. Where, as in the present case, the contract is partly, oral and partly in writing, the intention depends on the true effect, having regard again to the nature of the contract and the surrounding circumstances, of the oral and written terms taken together.

Many of the decided cases on questions of this kind relate to contracts wholly in writing. But it seems to me that, in principle, there can be no difference in the approach to the problem, whether the contract concerned is wholly in writing 'or partly in writing and partly oral. In either case the terms of the contract must be looked at and their true effect ascertained."

14. Mr. Merry also referred to Stanley Yeung Kai Yung and another v. Hong Kong and Shanghai Banking Corporation (1981) A. C. 787 where Lord Scarman at page 795 said:-

"......It is not the law that, if a principal is liable, his agent cannot be. The true principle of the law is that a person is liable for his engagements (as for his torts) even though he is acting for another. unless he can show that by the law of agency he is to be held to have expressly or impliedly negatived his personal liability."

Having regard to this passage Mr. Merry contends that there is a presumption that an agent is liable for the acts of his principal unless he can disprove the presumption by showing a contrary intention.  Mr. Poon counsel for the liquidators agrees that an agent may be held liable in addition to the principal, but that the words of Lord Scarman on this point were obiter. In that case letters had been written by brokers to the bank on behalf of Mr. Wong to register  share transfer deeds upon which the plaintiff's signature as transferor had been forged.. On this matter Lord Scarman had said earlier on page 795:-

"........... The letters were the letters of the brokers notwithstanding the fact that they were written on behalf of Mr. Wong. The brokers (as they have admitted in their pleading) made the request to the bank; and they requested the bank not only to effect the transfer but to send the new certificates, when prepared, to them. The fact that the request, by the law of agency, was also Mr. Wong's request in the sense that it was made with his authority does not necessarily prevent it from being a request made by the brokers. There is nothing in the letters or in the signature, which in each case was. unquailified, to suggest that the request being made was exclusively Mr. Wong's and not theirs. On the contrary, the terms of the letters convey irresistibly the message that Stanley Yeung & Co., stockbrokers and members of the Far East Exchange, were making the request."

15. In order to determine the liability of Axona it is necessary to look objectively at the surrounding circumstances to ascertain the intention of the parties from the point of view of the reasonable businessman or as expressed by Mr. Merry the reasonable depositor.

16. When deciding whether an agent can be held liable one factor to be taken into consideration is the fact that the principal is a foreigner see Teheran-Europe Co. Ltd. v. S.T. Belton (Tractors) Ltd. (1968) 2 Q.B. 545. The foreigner in that case was an undisclosed principal whereas the identity of the principal in the instant case is known. However, in my opinion this matter carries no weight here for it is a common practice especially in Hong Kong for investors to place their funds off shore in foreign currencies.

17. Although there was no evidence of the terms of the agreement between the applicant and B.I.L. Mr. Merry suggested that when the account was opened in 1979 the effect was to bring into existence a master controlling agreement whereby the applicant entrusted her funds for deposit in Hong Kong or to Vila as a disclosed principal. I do not accept this submission. When the applicant and her sister opened the account they contracted to lend to B.I.L. US$100,000 for 91 days to be repaid on the expiry of that period with interest at the stipulated rate. There was no obligation to renew the deposit upon maturity. The applicant could have withdrawn the funds and placed them elsewhere as she wished. If she wanted to renew the deposit a fresh instruction. had to be given for the period required. Accordingly in my judgment each deposit upon renewal formed a separate contract.

18. It was submitted on behalf of the applicant that the course of dealing was not consistent, but this is not borne out by the evidence which clearly shows that the deposits were either placed with B.I.L in Hong Kong or with the bank in Vila. No reasonable person after reading the letter of the 11th April 1980 could be in any doubt that the investment had been transferred to Vila. If the applicant had given no instruction for the transfer, and objected to this course, it is pertinent to enquire why no action was taken.

19. Thereafter the funds remained in Vila for two years on short term deposits until they were placed on deposit in Hong Kong with B.I.L. for almost three months before their final transfer back to Vila. When the investment returned to Vila the applicant received notifications from B.I.L. as she had on previous occasions by way of pro Forma Investment Confirmations that they had been requested by Vila to advise the applicant of the details of the investment. There were four separate deposits in Vila which were rolled over before the final deposit on the 26th October 1982. Upon confirmation of each deposit the applicant was requested to sign a copy of the confirmation slip which she agrees she signed.

20. It is apparent from these documents that the investments were placed in Vila after the 23rd June 1982. The applicant had conducted her business with or through B.I.L. for three years. She elected through her husband to invest either with B.I.L. in Hong Kong or with Vila depending no doubt on the  most favourable rates of interest offered by the respective companies.

21. By transferring the funds to Vila and dealing with the applicant's instructions to renew the deposits did Axona also hold themselves out to be personally liable. Instructions are placed every day through banks to invest monies in other parts of the world without the transferor bank becoming liable as agent. The plain documentary evidence indicates that the  intention of the parties was to  treat Axona as an agent without incurring any personal liability.

22. Accordingly I am of  the opinion that the decision of the liquidators that Vila is solely responsible to repay the deposits was correct.

23. The summons is therefore dismissed.

Representation:

Mr. M. Merry (Philip K. H. Wong & Co.) for Applicant.

Mr. W. Poon (Wilkinson & Grist) for Respondents.