Read the full judgment text of HCA 000528/1968 on BabelCite. This High Court CFI judgment was delivered on 14 November 1968 before Mills-Owens J..
Commercial law – summary judgment under O.14 – cheques – parol evidence rule – conditional delivery of bill of exchange – section 21(2)(b) of the Bills of Exchange Ordinance (Cap. 19) – contracts – agency versus principal liability – waiver of contractual mode of payment – letter of credit – whether stipulation a condition precedent – appeal. Great Sincere Trading Co., Ltd. v. Swee Hong & Co. (a firm) – two consolidated applications for summary judgment under O.14 arising from a series of contracts for the supply of goods intended for the Indonesian firm N.V. Lampong, which the defendants agreed to enter into as principals because the plaintiff would not trust the credit of the foreign firm. In HCA 724/68 the plaintiff sued on a cheque drawn by the defendants; the defendants alleged an oral condition that the cheque would be honoured only if N.V. Lampong put them in funds before the due date. In HCA 528/68 the plaintiff sued on a contract providing for payment by irrevocable letter of credit, but the goods were shipped without any letter of credit or other payment having been arranged. Held, in HCA 724/68: the alleged oral arrangement was not a true escrow case within section 21(2)(b) of the Bills of Exchange Ordinance (Cap. 19), but an attempt by parol evidence to vary the unconditional tenor of the cheque and to introduce a contingency into the unqualified order for payment; following Ridout v. Bristow (1830) Cr. & J. 231 and New London Credit Syndicate Ltd. v. Neale (1898) 2 Q.B. 487, such evidence was inadmissible and the defendants had no arguable defence. Held, in HCA 528/68: the defendants had admitted they contracted as principals; the provision for payment by irrevocable letter of credit was a condition for the benefit of the plaintiff, which the plaintiff was entitled to waive, and could not be used to reduce the defendants' admitted primary liability to that of mere sureties for N.V. Lampong. Mills-Owens J. granted summary judgment for the plaintiff in both actions with costs, observing that the defendants' original agency defence had been abandoned once shown to be untenable, and that the alternative defence now advanced placed on the evidence a construction it could not bear.
Legal issues: Whether oral evidence of conditional delivery is admissible to defeat summary judgment on a cheque · Whether failure to open a letter of credit discharges principal-buyers' liability
Outcome: Summary judgment under O.14 entered for the plaintiff company in both actions (HCA 528/1968 and HCA 724/1968) in the amount claimed, with costs.