Jaguar Shipping Corporation Ltd v. Far East Filter Co Ltd

HCA000452/1969

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 452 OF 1969

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Coram: Blair-Kerr, J. and in Chambers

Date of Judgment: 25 June 1969

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JUDGMENT

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1. In an affidavit dated 25th April 1969 (paragraph 5) the managing director of the defendant company (Mr. Norman) states that there was :

"........... a conference held on 29th May 1968 in the Chartered Bank Building attended by myself, Mr. J.F. Payne, the defendant's solicitor, Mr. Peter Wong, the managing director of the plaintiff and representatives and advisers of the owners of the s.s. 'Euripides' and the Liu Chong Hing Bank Limited, the first mortgagees of the vessel, at which was discussed, inter alia, the vessel's future operation and management and at which it was agreed, in principle, that the plaintiff should become the manager of the vessel."

Mr. Norman states that following upon that conference he wrote two letters to the plaintiff company. It is common ground that the first letter was received by the plaintiff company. It reads as follows:

2. The second letter which Mr. Norman alleges he wrote to the plaintiff company reads as follows:

3. Paragraph 5 of Mr. Norman's affidavit continues thus:

"As is apparent from the terms of the said letters, it was intended that a management agreement relating to the management and operation of the s.s. 'Euripides' would be entered into between the vessel's owners, the plaintiff and the defendant under which the defendant would indemnify the plaintiff in respect of its fees and expenses incurred in or about the management and operation of the vessel. The defendant's solicitors prepared several drafts of such an agreement but the defendant never signed the agreement and moreover, apart from the two letters quoted above, never entered into any agreement to indemnify the plaintiff."

4. It is true that the defendant company did not sign the management agreement which they had agreed to sign. Brutton & Co., solicitors, were acting for both parties as regards the preparation of the management agreement. The owners of the vessel executed it. Brutton & Co. then forwarded it to the plaintiff company on 31st July 1968. It was executed immediately by the plaintiff company's managing director; and it was returned to Brutton & Co. on 1st August 1968 for execution by the defendant company. The defendant company has given no explanation for their failure to execute this agreement.

5. According to an affidavit of the plaintiff company's managing director (Mr. Wong) his company did not receive the letter alleged by Mr. Norman to have been signed by him on 30th May 1968. Mr. Wong states:-

"Prior to 29th May 1968 ... Mr. Norman ... requested the plaintiff company to take over the management of the ..... vessel ............. I informed him that the plaintiff company would be prepared to act as such manager upon his company's guarantee ............. I told him the plaintiff would not consider accepting the appointment without a written letter of indemnity."

He acknowledges that the plaintiff company received Mr. Norman's letter of 29th May 1968; and his affidavit continues thus:-

"On or about the ....... 30th May 1968 Messrs. Brutton & Co. sent me a draft of a proposed letter of indemnity and/or guarantee ......... I immediately rang Mr. Payne of Messrs. Brutton & Co. informing him that his proposed draft was no longer necessary as the defendant company had, a day before, given a letter of indemnity to the plaintiff company. ............."

Mr. Payne did send a draft letter of indemnity to both the plaintiff and defendant companies on 30th May. This draft was in exactly the same terms as the letter which Mr. Norman alleges he sent to the plaintiff company on 30th May.

6. In this action the plaintiff company's claim is for $25,722.44 said to be due to them in respect of work done, materials supplied and expenses incurred as manager of the vessel "Euripides"; and the plaintiff company now applies for final judgment under o.14.

7. In regard to the letter of 29th May 1968, Mr. Norman, in his affidavit, says:-

"This letter was intended only to cover the acceptance and loading of cargo in Hongkong for the vessel's proposed initial voyage in June 1968 under the management of the plaintiff, and this was well understood by Mr. Peter Wong the plaintiff's managing director. It was most certainly not intended to provide the plaintiff with an indemnity throughout the duration of the plaintiff's management of the vessel and this was made clear to Mr. Peter Wong."

8. Mr. Payne, who appeared on behalf of the defendant company, submits that the phraseology of the letter of 29th May supports this view, and that the words "in this regard" in para. 2 should be construed as referring only to the loading of cargo for the initial voyage as mentioned in para.1 of the letter. However, he agreed that this view could not be reconciled with para.3 of the letter which states categorically that the indemnity was intended to serve as an interim agreement pending completion of the formal contract. Furthermore, as Mr. Zimmern (counsel for the plaintiff) pointed out, the defendant company's view is at variance with Mr. Norman's admission in para.5 of his affidavit, namely, that the contract of indemnity of 29th May was reached after the conference at which was discussed "the vessel's future operation and management and at which it was agreed in principle that the plaintiff should become the managen of the vessel."

9. Mr. Payne says there are two triable issues, the first being as to whether the indemnity was in respect of the whole period of the management or in respect of some shorter period; and the second question being in regard to the amount claimed by the plaintiff company. He says that although the defendant company has received an account from the plaintiff company and that the defendant company is willing to pay anything which is legally due by them, the account received by them was not supported by vouchers and that it is impossible to say whether all the items fall within the scope of the indemnity, even if it were held to be as wide as the plaintiff company contends.

10. In his affidavit Mr. Wong says that the plaintiff company have, at the owner's request, submitted a full statement of their management of the vessel with supporting vouchers to Messrs. Lowe, Bingham & Matthews; and that this firm of accountants have not disallowed any of the items contained in the accounts.

11. It seems obvious that what happened was this: Brutton & Co. had been instructed to prepare a letter of indemnity. However, the parties themselves were negotiating independently; and on 29th May they agreed on the form of indemnity which was embodied in the letter of that date. Mr. Payne's draft reached both parties on the 30th May; and Mr. Wong's immediate reaction was to ring up Mr. Payne and tell him that his draft was unnecessary as Mr. Norman had already given the defendant an indemnity.

12. It seems strange that on 30th May Mr. Norman should have engrossed, signed, and despatched a letter in exactly the same terms as the draft from the solicitors, without making some reference to his letter of the previous day. Even if he did not wish to alter the letter drafted by his professional advisers so as to indicate that the letter of the 30th cancelled the letter of 29th, one would have expected him to have rung up Mr. Wong and said: "Since yesterday I have received the lawyer's draft; please treat yesterday's letter as cancelled."

13. However, it is not for me, upon an order 14 summons, to resolve the issue as to whether Mr. Norman did write to the plaintiff company in the terms of Brutton's draft or, if such a letter was despatched, whether the plaintiff company ever received it. But, as Mr. Zimmern said, even if such a letter had been received by the plaintiff company, it was not open to Mr. Norman, unilaterally, to vary the contract of indemnity of 29th May 1968.

14. On the material before me now, I feel almost disposed to give judgment to the plaintiff company on the issue of liability, and to refer the accounts to the Registrar. However, courts hesitate to act on an order 14 summons if there is the slightest chance that a defence might succeed. Conditional leave to defend would appear to be appropriate in this case.

15. The defendant company will therefore have leave to defend provided they pay into court $20,000 before 4.00 p.m. on Monday 14th July 1969.

Representation:

A. Zimmern (F. Zimmern & Co.) for Plaintiff

J. F. of Brutton & Stewant for Defendant

Written Judgment handed.