Cwt Beheermaatschappij Bv v. Lincoln Serejo Venancio
Read the full judgment text of HCA 4320/2000 on BabelCite. This High Court CFI judgment was delivered on 16 April 2003.
1. In this action for money due and owing the plaintiff claims US$300,000 as against the defendant pursuant to a guarantee in writing made by the defendant on 22 August 1996.
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HCA4320/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO.4320 OF 2000 ---------------------
---------------------- Coram: Deputy High Court Judge McMahon in Court Dates of Hearing: 10 - 13 March 2003 Date of Judgment: 16 April 2003 ------------------------ J U D G M E N T ------------------------ THE ACTION 1.In this action for money due and owing the plaintiff claims US$300,000 as against the defendant pursuant to a guarantee in writing made by the defendant on 22 August 1996. BACKGROUND 2.The guarantee the subject of the action arose out of a factual background which is in large part not in issue. 3.The defendant was at all material times a director of a limited company, Spectrum International Marketing Ltd ("Spectrum"), which was in the business of sports events' promotions and organisation in Hong Kong and elsewhere. He was an equal majority shareholder in Spectrum and its Group Managing Director and conducted its business from Hong Kong so far as the present matter is concerned. 4.Starting in 1993, Spectrum became involved in the annual arranging and promotion of a woman's volleyball competition which in 1996 was to be held in various Asian cities, including Hong Kong ("the event") as part of a Woman's Volley Ball Grand Prix ("WVGP") series held under the auspices of the Federation of International Volleyball Associations. 5.Spectrum's obligations in this regard included the arranging, through a travel agency Carlson Wagnolit Travel ("CWT"), of airline tickets required by the contesting terms travelling to the events venues from various countries. 6.Spectrum had previously, and in 1996, arranged for those tickets to be provided through CWT. It is accepted for the purposes of this action that the plaintiff stands wholly in the shoes of CWT. 7.During a series of communications between Spectrum and CWT in August 1996, the payment terms for the tickets to be issued by CWT were discussed against an approaching deadline for the practical worldwide distribution of the tickets to the participating teams so as to enable those teams to receive those tickets in time to attend the event. The event was due to commence at the beginning of September 1996. 8.Those negotiations concerned, in the main, what amount and manner of pre-payment for the tickets by Spectrum to CWT was to be made. 9.The defendant says that on or about 14 August after various negotiations, a contract was made for the provision of the tickets by CWT on terms agreed on that date. The plaintiff says that no such contract was agreed on that date and the parties were still negotiating. The plaintiff says that a contract for the provision of the tickets was not made between the parties until 20 August and that the terms agreed on that date included the provision of a guarantee by the defendant to the effect that he would personally guarantee up to a limit of US$300,000 any non-payment by Spectrum of the debt it owed CWT for the tickets provided by CWT. That guarantee was in fact reduced to writing and signed by the defendant on 22 August 1996 and is the subject of this action. 10.The tickets were in due course provided by CWT. Spectrum made only partial payment of the full amount of about US$500,000 of the price payable by it for the tickets to CWT leaving a balance of US$340,000 owing. 11.CWT proceeded initially against Spectrum for the debt representing the balance of the ticket price owed to it. It succeeded in obtaining judgment in this regard. But Spectrum, it is not disputed, was unable to satisfy any part of that judgment and the debt representing the balance payable by Spectrum for the tickets provided by CWT remains outstanding. 12.CWT now relies on the defendant's guarantee in respect of that debt. THE ISSUES ARISING 13.While the pleadings originally gave rise to a number of issues, it is now agreed between the parties to this case that there is one fundamental issue only to be resolved. 14.The defence case is now simply that the defendant provided the guarantee to CWT as the result of economic duress. 15.His case is that by 14 August a contract had been concluded, on specific terms as to payment for the airline tickets, between Spectrum and CWT. 16.He says, however, CWT following that then threatened to breach the agreement to provide the airline tickets unless the defendant provided the personal guarantee at issue and, though incidental to this action, Spectrum agreed to a series of additional terms as to payment. 17.So far as the provision of the defendant's personal guarantee is concerned, the defendant says he had no real choice, given the time and other restraints he was subject to, and so provided the guarantee to CWT under duress. 18.A final issue before this court arises as to the terms of that guarantee. 19.The defendant says that even in the event that the guarantee is not voidable on the ground of economic duress, by its proper construction it operates to guarantee only the first US$300,000 of the debt owed to CWT by Spectrum and, as US$160,000 was in fact paid by or on behalf of Spectrum to CWT, the guarantee now operates only in respect of a balance of US$140,000. 20.Mr Wong for the defendant conceded properly that the defendant had the burden of proof in establishing the factual basis of his defence that CWT threatened to breach an existing contract for the provision of the airline tickets which had come into existence on or about 14 August 1996. 21.Mr Wong accepts that proof that the contract for the provision of the airline tickets came into existence before the threat to break it by CWT is crucial to his case. He did not seek to argue that any defence of economic duress could have any effect in the absence of a pre-existing contract. He asserts that the contract came into existence on or about 14 August as evidenced by internal communications within Spectrum and as stated by the defendant in his evidence. 22.Accordingly, the first and fundamental issue is whether any such contract was formed on or about 14 August so as to predate any communication from CWT to Spectrum requiring the defendant to enter into a personal guarantee for Spectrum's debt, or any part of it, to CWT in respect of the price of the airline tickets to be provided by CWT. THE EVIDENCE 23.The evidence adduced in the case comprises certain documents in the nature of communications between and within CWT and Spectrum and the statements of staff or officers of CWT and Spectrum as well as the statements and oral evidence of the defendant. The defendant was the only witness to give oral evidence. So in large part the exhibited documentation relating to communications between the staff of CWT and Spectrum involved individuals who gave evidence by statement only. 24.So far as that documentation expressly relates to the defendant's assertion that the contract for the supply of airline tickets for the event was formed on 14 August 1996 and CWT's assertion that no such contract existed on that day is concerned, there were two particular documents adduced in evidence, one of which, from Spectrum to CWT, purported to confirm that an agreement for the supply of the tickets had been reached on or by that date, and the other, from CWT in reply, which purported to deny such an agreement had been reached. 25.In summary, the evidence available therefore comprises the two documents of 14 August themselves, which expressly refer to or deny an agreement of that date, and other documentation leading up to and following these two documents which more generally relate to the question of when the contract was formed together with the statements of some of the individuals involved, directly or indirectly, in these negotiations and communications generally and the oral evidence of the defendant only. 26.A brief summary of the evidence is necessary. SUMMARY OF SOME RELEVANT PARTS OF THE DOCUMENTARY COMMUNICATIONS 27.So far as the documentation leading up to the alleged formation of a contract on 14 August 1996 is concerned, an appropriate starting point is a fax of 12 August from CWT in Switzerland, under the hand of its staff member Kate Wyss, to Spectrum in Hong Kong which states :
28.The following day, 13 August 1996, a further fax was sent from CWT under the hand of its Manager, Mr Dall'Aglio to Spectrum's General Manager, Mr Luévano as follows :
29.The same day a reply was sent by Mr Luévano of Spectrum to Mr Dall'Aglio. That reply said :
30.The following day, 14 August, Spectrum sent a further fax which is fundamental to the defendant's case in the present action. This fax was sent without there apparently being any response by fax from CWT to the above fax by Spectrum on 13 August. 31.The defendant's case is that this fax, which is set out below, in referring to "the payment agreement reached", must necessarily refer to the acceptance by CWT of the terms of the counterproposal sent to it by Spectrum the previous day. That is because of the commonality of reference in the two faxes to the amount of US$50,000 and to Eagle International (a company which owed money to Spectrum and which it had been agreed would make payment to CWT on Spectrum's behalf but which in the event subsequently asserted it owed only US$20,000 to Spectrum). 32.This fax sent by Mr Luévano of Spectrum on 14 August to Mr Dall'Aglio and Kate Wyss of CWT stated :
33.But on the very same day, 14 August, a response to the above fax was sent by Kate Wyss on behalf of CWT to Mr Luévano of Spectrum. It stated :
34.The next day, 15 August, Spectrum's Mr Luévano sent a fax to Mr Varesano, the Finance Director of CWT. That fax stated :
35.In the top right hand corner of that fax are written words which seem to be as follows :
36.On 16 August 1996, a fax was sent by Mr Varesano to Mr Luévano which stated as follows :
37.There were apparently further negotiations between Spectrum and CWT as the next fax in the documents is dated 19 August and is again from Mr Varesano of CWT to, on this occasion, the defendant. It states inter alia :
The next day, 20 August, Spectrum replied to that fax in the following terms under the hand of Mr Luévano :
38.The above documentary evidence must be taken together with the evidence of the witnesses. CWT'S WITNESSES 39.All CWT's witnesses gave evidence by way of statement only. Those witnesses were Mr Marco Dall'Aglio who, at the relevant time, was the Manager of CWT's business centre in Lausanne, Switzerland and Mr Francis Varesano who, at the relevant time, was the chief Financial Officer of CWT. 40.According to both their witness statements, the previous course of dealings between CWT and Spectrum in respect of the WVGP events required substantial pre-payment by Spectrum for tickets issued by CWT. 41.Neither Mr Dall'Aglio in his original statement nor Mr Varesano in his statement refer specifically to the faxes of 14 August, being Spectrum's purporting to confirm an agreement had been reached and that of Kate Wyss on behalf of CWT stating, with reference to that Spectrum fax, that no agreement had been reached. 42.That is not surprising. Both those faxes of 14 August were discovered and included in the bundle of exhibits at or shortly after the commencement of this trial. Accordingly, neither document was available, apparently, to either, or at least the other, party prior to the commencement of the hearing. That meant that no witness in the course of his original witness statement addressed them. Mr Dall'Aglio provided a supplemental witness statement during the course of the hearing which did refer to both the 14 August faxes. 43.Both Mr Dall'Aglio and Mr Varesano by their statements gave evidence that there had been a series of communications by fax which continued to 15 August, on which date Spectrum (by the fax of that date under the hand of Mr Luévano) informed CWT that it was having financial difficulties due to the withdrawal of the a large sponsor. 44.According to Mr Varesano, CWT tried to be of assistance to Spectrum by way of requiring only a 50% pre-payment and the provision of a bank guarantee for the balance, and that following further negotiations the terms set out in the CWT fax to Spectrum and addressed personally to the defendant and dated 19 August were accepted by Spectrum. Those terms required the provision by the defendant of a personal guarantee described as being a "letters of personal guaranty from you committing yourself to CWF for the payment of Spectrum debt in case of default of payment for a maximum amount of US$300,000". 45.In other words, the thrust of Mr Varesano's statement evidence was that there was an on-going series of negotiations which, eventually culminated in CWT providing the most favourable offer it could to Spectrum, given its financial difficulties, as set out in the fax of 19 August sent by him to the defendant personally. That offer was accepted and then in accordance with the terms of the agreement and following upon that correspondence, the defendant on 22 August provided his personal guarantee. According to Mr Dall'Aglio's supplemental statement, he had arrived at no agreement on 14 August with Spectrum and believed that an agreement was reached after that date when the terms of the 19 August fax sent by Mr Varesano for CWT to Spectrum were accepted. He referred to the fax of Miss Wyss dated 14 August, stating no agreement had been reached on that date as supporting his belief in this regard. THE DEFENDANT'S EVIDENCE 46.The defendant gave evidence by way of adopting the contents of his statement and supplemental statement and by way of his oral evidence. 47.His original witness statement made no particular reference to any agreement being arrived at between Spectrum and CWT on 14 August in terms of the fax of that date from Spectrum to Mr Dall'Aglio of CWT. 48.The thrust of the contents of his original witness statement was simply to the effect that he was under pressure to agree to provide such a guarantee because of the limited time frame and because of additional pressure being placed upon him by the President of the International Volleyball Federation ("FIVB") , a Mr Acosta, who was pressing him "to do whatever had to be done" to ensure the provision of the flight tickets. In his statement the defendant alleged that the involvement of Mr Acosta had come about as the result of CWT contacting Mr Acosta. 49.It was only in his supplemental witness statement filed at the commencement of the hearing that he referred to being provided with a copy of the 14 August fax from Spectrum to CWT and thereby believing an agreement had been reached. 50.The defendant's oral evidence was to the effect that in addition to the contents of his witness statements he had been informed on 14 August by Mr Luévano that an agreement had been reached between Spectrum and CWT for the provision of the flight tickets as stated in the fax from Mr Luévano of Spectrum to Mr Dall'Aglio and Kate Wyss of CWT dated 14 August. 51.He said following his being made aware of the contents of the 14 August fax, he spoke to Mr Varesano on a number of occasions in terms from which he understood Mr Varesano had acknowledged the agreement referred to in the 14 August fax. 52.He said that he first found out that the 14 August agreement was not going to be honoured by CWT when Mr Luévano spoke to him and said Mr Varesano had interfered and added additional conditions to the original agreement. 53.One of those additional conditions was the requirement that he provide a personal guarantee. He said that because of the pressure placed upon him as a result of the now impossible time constraints and by Mr Acosta, as a result of CWT contacting Mr Acosta, he had no practical choice but to comply with the altered and additional conditions insisted upon by CWT, including his provision of a personal guarantee. It was too late to go to any other travel agency. He eventually said his understanding of the terms of that guarantee was that he understood it to mean that he was to guarantee only that Spectrum would pay at least a sum of US$300,000 and that he was guaranteeing only the difference between any amount Spectrum paid and that sum of US$300,000. 54.None of Messrs Andy Jay, who on the defendant's case was the officer of Spectrum who had purportedly on Spectrum's behalf entered into the 14 August agreement with CWT, or Mr Luévano of Spectrum who was the General Manager dealing with the WVGP aspect of its business and who had been personally involved in much of the fax correspondence between Spectrum and CWT, or Kate Wyss a staff member of CWT who, from the CWT reply to the Spectrum fax of 14 August, may have spoken to Mr Jay on 14 August during a conversation which prompted the Spectrum fax of that date, gave evidence either by way of statement or orally. CONCLUSIONS The alleged agreement of 14 August 1996 55.It is common ground the defendant, as Mr Wong properly conceded, must establish that the contract between CWT and Spectrum for the supply of the tickets was made on or about 14 August 1996. The defendant asserts this so as to establish his defence of economic duress to the effect that that CWT threatened to and indeed did breach a contract made on that day so as to leave him no practical choice but to sign the personal guarantee demanded of him. 56.Mr Wong, in my view, is right to so concede. The evidence that Spectrum was rapidly running out of time to reach any agreement with CWT for the provision of flight tickets to participants in the event no doubt did put considerable and increasing pressure upon Spectrum from about the middle of August onwards to reach some agreement with CWT in this regard. But, without more, and particularly without any allegation of a threat to breach an agreement as alleged, this was plainly no more than the pressures often associated with the realities of commercial life. There is no suggestion in the evidence that the relationship between CWT and Spectrum in any way placed any pre-existing obligation upon CWT to provide fight tickets to Spectrum for the 1996 event in the absence of any specific agreement, or that there was any form of continuing agreement between the parties to that effect. 57.In those circumstances in my judgment Mr Wong accepts rightly, that any defence of economic duress, so far as the defendant's provision of the guarantee is concerned, can only succeed on the basis of CWT's threat of breach or actual breach of an existing contract, i.e. the contract the defendant asserts and relies upon as coming into being between CWT and Spectrum concerning payment terms for the flight tickets as evidenced by the fax from Spectrum to CWT on 14 August. 58.I am perfectly satisfied that no such contract did come into being as asserted by the defendant. 59.Firstly, it is quite plain from the documentary evidence that on the same day as the fax purporting to evidence that contract was dated and sent to CWT, i.e. 14 August 1996 CWT, through its staff member Kate Wyss, immediately responded that no agreement as to payment terms had been made. It appears from the terms of that communication that any agreement Mr Jay of Spectrum may have thought had come into existence was through his conversation with Miss Wyss. 60.From the nexus in time of those two communications, it seems to me, without more, highly probable that even if Mr Luévano for Spectrum who sent the fax purporting to evidence any such agreement did in fact believe there to be such an agreement that he was either misinformed or mistaken. 61.It is apparent that Mr Luévano's information as stated in his fax of 14 August was based on what he was told by Mr Jay. That is a somewhat remote basis, without more, upon which to prove the making of an agreement. 62.The response of 14 August by Miss Wyss to Mr Luévano's fax whilst itself still hearsay is at least apparently based on her own knowledge of a conversation between her and Mr Jay. 63.But in addition to that documentary evidence, the defendant in his evidence suggested that he had on occasion spoken to Mr Varesano, CWT's Financial Director, on or shortly after 14 August and Mr Varesano in those conversations had acknowledged the making of the agreement evidenced by the 14 August fax. 64.I place no weight on the defendant's evidence in this regard at all. I appreciate that the defendant did give oral evidence and so was, unlike the plaintiff's witnesses, tested in cross-examination in this regard. But generally, the defendant was a witness who inspired caution as to his credibility. He was evasive in his answers, he habitually avoided simple and pointed questions by going off on a tangent. He was, and had to be, reminded repeatedly to answer the question asked of him. More importantly, he for the very first time in his evidence, whether in his statement or oral evidence, mentioned those conversations he says he had with Mr Varesano only in the very last stage of his cross-examination. No where in the documentation produced in evidence is there any reference direct or indirect to any such conversation. Additionally, if he were to have had any such conversation or conversations with Mr Varesano of this sort, they would have had to be held within the narrow time period between the sending of Mr Luévano's fax of 14 August to Mr Dall'Aglio and Miss Wyss confirming the agreement that he had just been informed of by Mr Jay, sent at 7:54 p.m. on that day, and Miss Wyss's reply some hours later. I place no weight on the defendant's evidence in this particular regard. 65.That leaves, in support of the defence assertion that a contract was arrived at on 14 August, the documentary evidence I have referred to and particularly the two faxes of 14 August under the hands of Mr Luévano and Miss Wyss respectively. 66.As I say even from the terms and nature of those two faxes, I am satisfied that no agreement was reached on 14 August between CWT and Spectrum as to the payment terms for the event participants' flight tickets. 67.In this regard it seems to me that the effectively immediate response of Miss Wyss recorded in her 14 August fax reply that she had not reached agreement with Mr Jay and had merely told him that Mr Varesano of CWT would call Mr Luévano of Spectrum the next day is perfectly borne out by subsequent events. Mr Varesano did contact Mr Luévano by phone the next day, as evidenced by Mr Luévano's own fax of 15 August to him confirming precisely this. 68.And that same fax of Mr Luévano's of 15 August, copied to the defendant, in no way suggests any pre-existing agreement had in fact been made and then broken. The terms of that communication are redolent of on-going negotiations and of Spectrum in particular seeking special consideration because of its cash flow difficulties. 69.In that fax, Mr Luévano on behalf of Spectrum specifically states that "we are not trying to make any non-payment, just reasonable responsible and realistic terms". 70.In my judgment, taking the contents of that fax as a whole, it is inconsistent with any agreement, in reality, having been arrived at between Spectrum and CWT the previous day. It is particularly inconsistent with Spectrum having managed to obtain pre-payment terms, which by comparison with previous years were remarkably favourable, only to have that agreement broken and CWT attempt to replace it with much more onerous terms of payment. 71.In this same vein, when an agreement was finally arrived at on 20 August on the basis of the conditions set out in CWT's fax to the defendant of the previous day and which included the requirement that the defendant enter into a personal guarantee for part of Spectrum's debt, Spectrum's fax in recording its acceptance of those conditions, under the hand of Mr Luévano, thanked CWT and particularly Mr Varesano for his "flexibility". 72.This fax, like all others under the hand of Mr Luévano, was also copied to the defendant. Again, it seems to be a fax consistent with a final agreement being reached after on-going negotiations in which Spectrum was seeking some special consideration in its terms of for payment for the event's flight tickets, rather than with the final succumbing of either Spectrum or its group Managing Director, the defendant, to the imposition of unconscionable conditions under duress, following the plaintiff's blatant breach of an earlier contract which, if it existed, was on very much more favourable terms. Rather than thanking CWT or Mr Varesano for their "flexibility", if the defendant's assertions are correct one might have expected some form of protest at the imposition of changed and additional terms to the agreement already arrived at to be expressed therein. 73.In short, the documentary evidence taken as a whole so far as the payment negotiations between Spectrum and the plaintiff were concerned is very much more consistent with and supportive of the evidence of Mr Dall'Aglio and Mr Varesano of CWT in suggesting a continuity of negotiations leading up to an agreement for the terms of payment for the event's flight tickets being made on 20 August in the terms of the acceptance fax of that date sent to Mr Varesano by Spectrum and signed by Mr Luévano. 74.In this regard, I take into account also that the previous history of CWT and Spectrum, so far as payments by Spectrum to CWT for the provision of the previous WVGP events airline tickets is concerned, was that Spectrum would make a significant pre-payment of about 80% of the estimated total amount before the commencement of the event. This was not really challenged by the defendant and is apparent from the documents for the 1995 event. 75.For CWT to have suddenly agreed to the proposal contained in the Spectrum fax of 13 August that Spectrum pre-pay only US$110,000, i.e. about 20% of the estimated total amount, is without any reasonable basis. It simply flies in the face of the immediately preceding CWT faxes of 12 and 13 August to Spectrum requesting, as in previous years, substantial prepayment of the whole of the estimated cost of the tickets. 76.For all these reasons I am satisfied that there was no agreement arrived at on 14 August as asserted by the defendant and that, accordingly, CWT in no way could have either threatened or acted in breach of any such agreement. 77.Accordingly there could have been no economic duress of the sort alleged directed at the defendant by CWT. 78.I should briefly mention also in this context the defendant's suggestion that the plaintiff applied pressure upon him, albeit indirectly, by calling in aid Mr Acosta of FIVB. It seems to me quite apparent from the terms of the CWT fax to Spectrum of 16 August under the hand of Mr Varesano to the effect that Mr Dall'Aglio would contact the FIVB President (i.e. Mr Acosta) on that day, that CWT was doing this to alert Mr Acosta to a problem which could cause his association considerable difficulties rather than for the purpose of placing any undue pressure on the defendant or indeed Spectrum. 79.I am satisfied the only reason the defendant entered into the guarantee evidenced by the fax signed by him on 22 August was because of a considered commercial decision made by him at that time. It may well be that factors of time and the financial difficulties his company Spectrum were in weighed somewhat heavily upon his shoulders. But they were matters of the sort that are part and parcel of the push and shove of normal commercial relations and in no way amounted to the imposition of any form of duress by CWT. In terms of the judgment in Occidental Worldwide Investment Corporation v. Skibs A/S Avanti [1976] 1 Lloyds Rep.293, 336 that pressure of time was no more than "normal commercial pressure". The terms of the guarantee 80.I turn now to consider the terms of the guarantee provided by the defendant. CWT's case is that the guarantee goes to all of Spectrum's debt to CWT arising out of its obligation to pay for the tickets provided by CWT. The defendant's case is that the guarantee's terms restrict it so as to guarantee only that Spectrum will pay at least US$300,000 of the due debt. 81.As it is common ground that Spectrum did make a partial payment to CWT for the amount due in payment for the tickets of US$160,000, Mr Wong asserts that only US$140,000 falls to be recovered under the guarantee. 82.The terms of the guarantee as contained in the fax of the defendant to Mr Varesano of CWT on 22 September are worth repeating. It states :
83.Mr Wong argues, as I understand him, that the reference to "such sum" is a reference to the amount of US$300,000 and, accordingly, upon its proper construction the guarantee is a guarantee that that amount will be paid, and goes no further. He says in this regard that the terms of the guarantee must be construed strictly in favour of the surety and that no liability is to be imposed which is not clearly stated by those terms. 84.So far as Mr Wong's assertion that the terms of the guarantee should be construed strictly in favour of the defendant is concerned, with that I agree. But I do take into account, in the circumstances of this case, that the terms of the guarantee were contained in a fax message drafted or at least under the hand of the defendant himself which was sent to Mr Varesano at CWT. 85.The defendant's fax, containing the guarantee, firstly commences with an acknowledgement of his receipt of the CWT fax, under the hand of Mr Varesano, dated 19 August which included the condition of the defendant providing his personal guarantee. The defendant's fax then goes on to "confirm" the defendant's personal guarantee. 86.It seems to me that the reference to "such sum" contained in the terms of the written guarantee can only properly be given meaning in the context of the earlier fax of 19 August sent by Mr Varesano to the defendant which itself refers to the nature of the US$300,000 sum. In my view, it is entirely proper for the construction of the present guarantee to go to the surrounding circumstances, in this case the fax of 19 August under the hand of Mr Varesano, in order to determine the scope and object of the defendant's guarantee. 87.This is a course adopted in Bank of Scotland v. Wright (1990) BCC 663, at 669 which adopted the opinion of the board in Coghlan v. SH Lock (Australia) Ltd (1987) 3 BCC 183 where Lord Oliver said after stating the convential principles of construction of a contract of guarantee :
88.The question which in my view fairly arises on the face of the terms of the faxed guarantee of 22 August is whether reference to "such sum" is an intended reference to Spectrum's default of payment generally or to Spectrum's default of payment of a partial sum of US$300,000. 89.In my judgment, because of the reference in the defendant's fax guarantee to his "confirmation" of his personal guarantee, and to that same fax "acknowledging receipt" of the payment terms, the plain meaning of the document of 22 August containing that guarantee and of the terms of the guarantee itself is that the defendant intended to, and did, provide a guarantee of the whole of the debt owed by Spectrum to CWT. 90.It is plain that the sum of US$300,000 referred to in the defendant's fax of 22 August is the same sum of US$300,000 referred to in paragraph 3 of Mr Varesano's fax of 19 August directed to the defendant. In that paragraph Mr Varesano requires :
91.I bear in mind also in this regard that it was only after some hesitation in his oral evidence that the defendant was eventually able to assert that he believed he was guaranteeing only the balance between any amount actually paid by Spectrum to CWT and the amount of US$300,000. I reject his evidence in that regard as being of any weight. 92.In my judgment, it is quite plain that the guarantee provided by the defendant was intended between the parties to go to the whole of the Spectrum debt to CWT although limited to US$300,000 and not just part of it. That whole debt had been effectively ascertained at the time of the giving of the guarantee. 93.Accordingly, judgment to the plaintiff in the sum of US$300,000. 94.I order nisi that interest run at 1% above prime from the date of the demand pursuant to section 6A(1)(a) of the Bankruptcy Ordinance being served upon the defendant on 4 November 1998. The demand clearly identified the debt. Costs nisi to the plaintiff.
Representation: Mr Paul Carolan, instructed by Messrs Tanner De Witt, for the Plaintiff Mr Jonathan Wong, instructed by Messrs Barlow Lyde & Gilbert, for the Defendant Appeal by the Defendant to Court of Appeal. Appeal dismissed. Please refer to the appeal judgment of CACV111/2003. |