Portric Co Ltd v. Golden Dragon Engineering Co Ltd

HCA006969/1982

No. 6969 of 1982

IN THE HIGH COURT OF HONG KONG

Between

Coram: Hon. Penlington, J.

Date: 30th May, 1983

__________

JUDGMENT

__________

1. This is a claim based on two cheques each for $373,283.75 which the defendant gave to the plaintiff in February 1982. At the time the cheques were undated.

2. The background to the giving of these cheques is that through the introduction of the plaintiff the defendant secured a contract for the supply of aluminium doors and window frames to the China National Aero-Technology Import and Export Corporation ("the buyer") who was building houses in Jordan. The buyer required that the contract be guaranteed by a third party and when the defendant was unable to secure such a third party guarantee, the plaintiff agreed that it would guarantee the contract. However it required that the defendant supply three cheques totalling $1,092,465.50. The two cheques which are the subject of this claim were to be held as security for the performance by the defendant of its contract and the balance was payable direct to the plaintiff as its commission.

3. It was also agreed that funds which were paid by the buyer as a pre-payment would be paid into a joint account in the name of the defendant but on which both the defendant and the plaintiff were to be joint signatories. There were however differences of opinion between the defendant and the plaintiff and in April of 1982 the finance company with which the account was then held, FISA, was told that a resolution had been passed by the board of the defendant's company whereby the plaintiff was no longer to be a signatory of the account. The plaintiff's company was not happy about this and eventually in August of 1982 they dated the two cheques which they held as security and presented them for payment. The defendant's company anticipated this move and stopped payment on the cheques.

4. The plaintiff does not dispute that it is not entitled to the money represented by the two cheques. It agrees that these cheques would be given as security for the performance of the contract between the buyer and the defendant company. There is no evidence that there has been any failure in the performance of that contract. There is some evidence that then have been queries by the buyer but I did not regard these queries as anything which could enable the plaintiff to exercise its powers under the guarantee. The guarantee, which is at Item 6 of the agreed bundle of documents, refers only to the performance of the contract with the buyer. There is no mention whatever of any other rights given to the plaintiff to present the cheques for any other cause. The plaintiff relies on an alleged telephone conversation with a Mr. Kwong, the Managing Director of the defendant company at time the negotiations were going on, whereby he said that if they did take the action which eventually occurred, that is to delete the plaintiff as a signatory of the joint account, then the plaintiff would have the right to cash the cheques. I am satisfied no such conversation took place and even if it did it would have the effect of adding to and varying the written agreement between the parties which I am satisfied is contained in the letter of guarantee given by the defendant to the plaintiff.

5. Section 21(2) of the Rills of Exchanged Act provides that delivery of a bill may be shown to have been conditional or for a special purpose only and not for the purpose of transferring the property in the bill. I am satisfied that such is the case here. I am therefore satisfied that the plaintiff was not entitled to date and present the cheques for payment in the manner in which it did. There must therefore be judgment for the defendant, who is entitled to its costs.

Representation:

Daniel Fung (Woo, Kwan, Lee & Lo) for the plaintiff.

Leo Remedios (Hastings & Co.) for the defendant.