Robert Steer Huthart v. Far East Service Co Ltd
Read the full judgment text of HCA 24/1975 on BabelCite. This High Court CFI judgment.
1. This is one of those unfortunate cases in which one of two innocent parties must suffer. The background of the case is as follows:
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HCA000024/1975 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 24 OF 1975 -----------------
----------------- CORAM: Trainor, J. Date of Judgment: 7th January 1976 ----------------- JUDGMENT ----------------- 1. This is one of those unfortunate cases in which one of two innocent parties must suffer. The background of the case is as follows: 2. The defendant company carries on business in Hong Kong dealing in sundry commodities. It has a showroom and a small store. 3. In November 1973 a Mr. Gilhooley was the manager of the showroom. He was a close personal friend of a Mr. Benn who was the Managing Director at the time of Alvin Schoncite & Associates Limited who were importers of, among other things, sundry plastic goods. The name of the Company was later changed to A.S.A. Electronic Ltd. and I shall hereafter refer to the Company as A.S.A. In August of 1973, Mr. Gilhooley had obtained from A.S.A. some samples of the plastic goods which that company imported. 4. About November 1973, a Mr. Alvin Schoncite who was the governing director of A.S.A. was told by the Hong Kong Government that his residence permit would not be renewed and that he must leave. He appealed against this ruling but the appeal was rejected. It would appear that in the end his departure from Hong Kong was indeed very hurried. In anticipation of his departure Mr. Schoncite instructed Mr. Benn to sell as much goods as he possibly could, and Mr. Benn approached Mr. Gilhooley as a result of which Mr. Gilhooley undertook to take a substantial amount of goods from the company. It was Mr. Gilhooley's evidence that the goods were to be on a sale or return basis, and Mr. Benn in his evidence confirmed this saying that the goods were sent on a consignment basis. 5. According to Mr. Gilhooley, an invoice, No.AS288, and dated the 29th November, 1973 was sent to him for the goods but as it might appear from the invoice that the transaction was an out and out sale he refused to sign an acknowledgment and contacted Hr. Benn. According to Mr. Benn he wrote to Mr. Gilhooley confirming what had been originally arranged between them. The letter which bears the same date as the invoice, the 29th November reads:
6. Mr. Benn said that the invoice was re-presented to Mr. Gilhooley together with that letter who then raised the question of the insurance of the goods. As a result of this, Mr. Benn wrote into the letter:
and initialed it "J.B." 7. Mr. Alvin Schoncite to whom I have earlier referred was I was told, very considerably in debt to a number of people in Hong Kong, among whom was the plaintiff in these proceedings. To the plaintiff Mr. Schoncite owed over a million dollars. 8. Some time prior to November 1973, I do not know when, Mr. Schoncite had acquired a Rolls Royce motor-car. This had been acquired on hire purchase terms and he had fallen into arrears with the instalments. The plaintiff came to his rescue, paid up all that was owing and the motor-car was transferred into his name. Despite this, the plaintiff permitted Mr. Schoncite to use the car. Mr. Schoncite I was told was very anxious to bring the Rolls Royce back to the United States with him and he approached the plaintiff. It was agreed that the plaintiff would sell the car to a company called Glenalco Company Limited, of which Mr. Schoncite and his wife were the principal shareholders on certain conditions which were incorporated in a letter from the plaintiff to A.S.A.:
9. The dispute in the case centred around the document called the invoice referred to in that letter of the 30th November, 1973; what did it mean and when was it countersigned by the defendant. 10. The document in question is headed Alvin Schoncite & Associates Limited and then sets out its address and telephone number, It is addressed to the defendants, and in large print across the top is the word "INVOICE". The date is given as the 29th November, 1973 and the invoice number is AS 288. Across the top of the invoice there is an item "Terms : 120 days billing; weekly payments to be made as goods sold." Thereafter it sets out a quantity of articles, their description, the unit price and the total value of the goods : $52,347.25. The invoice was endorsed "This invoice has been assigned to Mr. R.S. Huthart *Please make all payment direct to Mr. R.S. Huthart Lane Crawford House, 2/F., Hongkong.
11. At the bottom righthand corner is to be found "Alvin Schoncite & Associates Ltd.", and above the words "Managing Director" is Mr. Benn's signature. On the other side is "Acknowledgment : D.J. Gilhooley" over the words "Far East Service Co. Ltd." After that appeared the words: "Sign and return duplicate as confirmation E. & O.E." 12. On the 7th of December, 1973, Mr. Huthart wrote to the defendant. The letter is headed : "Attention Mr. D.J. Gilhooley" and is as follows:
13. He received no reply to that, and nothing more was done until the 7th June, 1974 when solicitors acting for Mr. Huthart wrote to the defendants saying :
14. To this the defendant replied on the 8th of June 1974 saying:
15. On the12th of June 1974, the plaintiff's solicitor replied saying:
16. No reply was received to that letter and on the 6th of November the solicitors for the plaintiff wrote to the defendants reminding him of it and requesting a cheque or "other reasonable proposals for settlement" within 7 days or they would advise their client to institure proceedings. 17. On the 16th of November, 1974 the defendants replied by registered letter saying:
18. On the 3rd January, 1975, the plaintiff issued a writ in which it was alleged that the defendant had purchased the goods the subject of the invoice to which I have referred for the sum of $52,347.25, payment for which was on the basis of 120 days, but interim payments were to be made weekly as goods were sold by the defendant. He pleaded the assignment to him and notice thereof to and acknowledgment by the defendant; he pleaded the receipt of a payment of $424.70 from the defendant; and claimed the balance $51,922.55 from the defendant. 19. The defence of the defendant was to the effect that it acquired the goods from A.S.A. on the express condition that the goods stated in the invoice would be delivered in such quantities as were be ordered from time to time, to be paid for, if any were sold, by weekly payments, and at the expiration of 90 days any goods remaining in the defendant's possession to be returned to A.S.A. without any further obligation on the part of the defendant. 20. Having heard the evidence of Mr. Gilhooley and Mr. Benn I had no hesitation in believing that the position was as stated by them so far as the arrangements between them were concerned. I was satisfied from the evidence of Mr. Benn that he made great efforts to get rid of the goods mentioned in the invoice, (goods in the marketability of which Mr. Benn had little confidence) on the insistent pressure of Mr. Schoncite. I am satisfied that he availed of an offer by Mr. Gilhooley to have them displayed in the defendant's showroom and sold there, or sold to other shops in Hong Kong through the defendant's salesmen. I am satisfied that Mr. Benn was prepared to grant his friend, Mr. Gilhooley, any terms to encourage him to take the goods and sell them if that were possible. Not having much confidence in the goods he was prepared, to by way of further encouragement, take them back if they were unsold. It was on those terms that Mr. Benn delivered a first and indeed only consignment of six cases of the goods listed in the invoice though the balance was at the defendant's disposition. 21. It was the plaintiff's case, and stated by him in his Reply that he was unaware of the arrangements made between Mr. Gilhooley and Mr. Benn; that there was an acknowledgement of the assignment to him of a debt of the defendant to A.S.A.; that on the strength of that acknowledgment he had acted to his detriment; and, consequently, the defendant was estopped from denying its liability to pay him the amount due on the invoice. 22. In his evidence the plaintiff was very positive that it was a condition precedent to him signing the letter of the 30th November and tranferring the motor-car that the assignment of the invoice be acknowledged by the defendant. In cross-examination he told Miss Cheung that Mr. Schoncite came to his office on the 30th November and had with him a copy of the invoice with the endorsement of notice of assignment on it but not acknowledged by the defendant. He said he insisted that Mr. Schoncite have it acknowledged by Mr. Gilhooley before signing the letter, and to this end Mr. Schoncite left the office and later returned with the endorsement acknowledged On further cross-examination he said he was certain that he signed the letter on the 30th November. It was put to him that the endorsement was not acknowledged by Mr. Gilhooley on behalf of the defendant until after that date and the defendant replied that he would strongly contest the suggestion. 23. Mr. Benn was called as a witness by the defendant. He said that when Mr. Gilhooley agreed to take the goods he sent him an invoice for them on the 29th November but the endorsement was not on it. He said the invoice was delivered with the letter of the 29th November which I have earlier quoted. Mr. Benn said that on the 30th November he was brought by Mr. Schoncite to meet the plaintiff. He said he heard them talk about the Rolls Royce which, he said, the plaintiff "was talked into" signing over to Mr. Schoncite. He said he also remembered talk of two cheques, the invoice and a note payable in the future. He was shown the letter of the 30th November in which were the conditions pursuant to which the Rolls Royce was sold to Glenalco Ltd. This letter has endorsed on it:
24. For A.S.A. Electronics Ltd." He said he signed that endorsement on behalf of the Company as managing director. 25. Mr. Benn said he was of the belief that the letter was typed in the plaintiffs office. As to the invoice he said that so far as he could recollect if had not the endorsement on it adding "It was after the agreement which was incorporated in the letter that the endorsement was added". He went on to say that it was on the 30th or after that the endorsement, which he also assumed was typed in the plaintiff's office was added. 26. Mr. Benn was told in cross-examination that the plaintiff had told the Court that the endorsement on the invoice had been completed before he, Mr. Benn, had signed the letter of the 30th November. In reply to this he said that he could neither confirm not deny that but that he did not think so. Later in an answer to Mr. Murphy he said" ..... but I am wondering if the invoice was signed that day". He was then asked "You may be cannot remember?" to which he replied "Yes. I was sitting there while they were doing their business." In further cross-examination he said he was sure that an invoice was present when the letter was singed, and he was equally sure that his letter to Mr. Gilhooley of the 29th November was not. Indeed, he said, he was surprised at the non-production of that letter as Mr. Schoncite was aware of it. 27. Mr. Gilhooley gave evidence but it was far from reliable. I do not for a moment think he was telling lies, On the contrary, he was patently honest but his recollection of details of the transaction was most unreliable. He said that Mr. Benn brought an invoice with the first consignment of goods - if his memory served him right - but he would not sign for the goods unless he had a letter undertaking to take back the goods if they were not sold. He got the letter, but he did not say when, and he signed the invoice which then had the endorsement on it "a few days later" than the 29th November. He was shown a copy of the letter dated the 7th December, 1973 which I have already quoted but, he said, he did not remember seeing it. 28. In cross-examination the witness was shown a document produced by the defence, and agreed it was a carbon copy of the invoice exhibited except that the endorsement - the notice of assignment - was not signed by him. On being pressed about these two documents he said there was a third invoice without any endorsement. He said he thought Mr. Benn produced it when he brought the goods and he the witness would not sign it until he got the letter. 29. I am satisfied that the position is as stated by the plaintiff; I think that the evidence of Mr. Benn substantially corroborates this. Indeed, I think the whole circumstances of the case corroborate the plaintiff. 30. The position as I see it is as follows: 31. Mr. Schoncite was indebted to the plaintiff who held a Rolls Royce that once belonged to Mr. Schoncite. The car, which was obviously far from new, was sold by the plaintiff to Glenalco Ltd., a company of which Mr. Schoncite and his wife were, in fact, the owners. 32. Mr. Schoncite was anxious to bring this status symbol back to America and he offered certain consideration through A.S.A. to the plaintiff in order to get possession of the car through his other Company. To the plaintiff the consideration offered was of a more realistic nature than the motor-car. I am satisfied that the plaintiff having once been badly bitten by Mr. Schoncite would fight very shy of being bitten again and to that end would make sure that the risk of such a repetition would be reduced to a minimum. I am satisfied, indeed I have no doubt, that when Schoncite offered to have assigned the debt alleged to be due by the defendant to A.S.A. the Plaintiff took every precaution to ensure that the existence of the debt was confirmed by the debtor and notice of the assignment was acknowledged by it. I am satisfied that the meeting in which Mr. Benn took part was held on the 30th November. I believe that to that meeting Schoncite brought the invoice which had been shown to Mr. Gilhooley the previous day but this time there was the notice of assignment endorsed thereon signed by Schoncite on behalf of A.S.A. but not yet by Mr. Gilhooley. This was done by Schoncite to induce the plaintiff to accept it as part of the consideration. When such a document was put to the plaintiff in cross-examination he said he had been shown such a document in his office by Schoncite who left and later returned with the document exhibited in Court as Exhibit PI and signed by Mr. Gilhooley. I am satisfied that it was after receiving that document that the plaintiff transferred the Rolls Royce to Glenalco Ltd. and the letter of the 30th November was endorsed by Mr. Benn. 33. In a nutshell I am satisfied that the plaintiff acted as he did by reason of the acknowledged of the endorsement the invoice by Mr. Gilhooley on behalf of the defendant. 34. What was the nature of the document Mr. Gilhooley endorsed? It is headed "Invoice". Jowitt's Dictionary of English Law defines an invoice as "a written account of the particulars of goods sent or shipped to a purchaser, factor etc., with the value, or prices, or charges annexed" and the Concise Oxford Dictionary gives a very similar meaning to the word. In other words it is a document that indicates the particulars of goods sold and the amount due for them. Subject to anything that might be inserted, a person who sees an invoice may conclude that the amount shown as the value of the goods is then due by the person receiving them. In the present case the effect of the "Terms" inserted in the Invoice merely indicate that the payment is not due until after the expiration of 120 days. So on the face of it a person seeing that document would conclude that the defendant had become the owner of the goods set out, to the value stated, payment for which had been postponed for 120 days. Indeed that would appear to be the interpretation Mr. Gilhooley put on the document hence his demand for a letter from Mr. Benn setting out the arrangement between them. There was, I am satisfied, an agreement between A.S.A. and the defendant that the goods were delivered, or to be delivered, on a sale or return basis but that is something which emerged in evidence and is certainly not discernible on the face of the document. Indeed, Mr. Benn agreed that any person seeing the invoice would conclude that the sum of money indicated in it would be due by the addressee after 120 days. 35. What then is the effect of the notice of assignment endorsed on the invoice and acknowledged by the defendant? The plaintiff would say that the invoice indicated that there was a debt due by the defendant and that the notice of the assignment acknowledged by the defendant made the debt payable to him; and, moreover, as he had acted to his detriment as a result of the acknowledgment the defendant is estopped from denying that the money is due to him. 36. Mr. Murphy for the plaintiff referred to the 2nd edition of Spencer Bower and Turner on Estoppel by Representation pp.4-7 in particular p.4 where the learned authors write: "Lord Birkenhead succinctly stated the essentials of the doctrine in Maclaine v. Gatty, (1921) 1 A.C. 376 at 386)
37. Reference is made in Spencer Bower to the case of Greenwood v. Martins Bank Ltd. (1933) A,C.51. In that case Lord Tomlin said (57)
38. Miss Cheung who appeared for the defendant contended that the invoice was merely evidence of an agreement between A.S.A. and the defendant and that it was obvious from the document itself that there were terms of the agreement missing, e.g. terms of delivery. She said that the evidence of Mr. Gilhooley and Mr. Benn established the missing terms all of which had been agreed on or before the 29th November. She contended that on the principle of caveat emptor the assignment to the plaintiff was subject to those terms. 39. She further contended that the evidence established that the signature of Mr. Gilhooley was appended to the invoice after A.S.A. had assigned its rights on foot of the invoice, and, therefore, the plaintiff was not influenced by it when he sold the Rolls Royce to Glenalco Ltd. 40. I am satisfied and find as a fact that on the 30th November, 1973 an agreement was entered into between the plaintiff and A.S.A., as represented by Mr. Schoncite the governing director and Mr. Benn the managing director, whereby, for the consideration set out in the letter of that date from the plaintiff to A.S.A., the plaintiff sold the Rolls Royce in question. I find as a fact that prior to the completion of the agreement and the signing of the letter the plaintiff insisted that Mr. Schoncite have the endorsement on the invoice, which was already signed on behalf of A.S.A. by Mr. Benn, signed by Mr. Gilhooley on behalf of the defendant. I find as a fact that it was only on seeing the signature of Mr. Gilhooley that the plaintiff transferred the Rolls Royce to Glenalco Ltd. 41. Part of the consideration for the transfer of the Rolls Royce to Glenalco was the transfer of what was called in the letter "the debt" due by the defendant to A.S.A. There is no doubt that taking that letter at its face value, and on the evidence before me there was an absolute assignment of a legal chose in action within the meaning of s.9 of the Law Amendment and Reform (Consolidation) Ordinance (Cap.23). 42. The next question to be decided was the plaintiff justified in concluding from the invoice that there was in fact a debt due by the defendant to A.S.A. I am satisfied that he was. The invoice on its face clearly suggests to anyone who reads it that there is a sum of money due by the defendant to A.S.A. which is payable within 120 days from its date. Indeed if it were otherwise the letter that Mr. Gilhooley insisted on having from A.S.A. would have been unnecessary. I can find no support for the contention of Miss Cheung that it was obvious from the omission from the invoice of any reference to delivery dates or such things that a person reading the document must conclude that there were undisclosed conditions. On the contrary, in my opinion the absence of any reference to such things must lead a reader to the conclusion that no such terms existed. 43. Having come to the conclusion I have mentioned I am satisfied that the plaintiff acted as he did, and to his detriment by reason of being led by the defendant to believe "that a certain state of facts existed" and that the defendant is now estopped from denying that such state of facts did exist and accordingly I find for the plaintiff with costs. 44. A final matter remains however. 45. I was told by Mr. Benn that of the goods mentioned in the invoice only six cases were in fact delivered. He told me that after the agreement between A.S.A. and the plaintiff of the 30th November the plaintiff took the balance into his custody at the request of Mr. Schoncite because A.S.A. had not adequate storage space. The plaintiff I understand still has these goods. They of course must be handed over to the defendant whose property they are.
Representation: Mr. D. Murphy (Lennox Bywater & Co.) for Plaintiff. Miss I. Cheung (LAU, Wong & Chan) for Defendant. |