Fortune Chart Financial Consultants Ltd v. New Technology Co Ltd
Read the full judgment text of DCCJ 664/2005 on BabelCite. This District Court judgment.
1. In this action the Plaintiff claims against the Defendant the sum of HK$61,000 together with interests.
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DCCJ 664/2005 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 664 OF 2005 ____________ BETWEEN
____________ Coram: Her Honour Judge H.C. Wong in Court Dates of Hearing: 24th to 25th January, 17th February & 15th March 2006 Date of Handing Down Judgment: 27th July 2006 ______________________ JUDGMENT ______________________
1.In this action the Plaintiff claims against the Defendant the sum of HK$61,000 together with interests. 2.The Plaintiff is a company engaged in the business of procuring banking facilities from banks and financial institution on behalf of its clients. The Defendant is a manufacturer of LCD displays with production facilities in mainland China. 3.By an engagement agreement in writing dated 14 June 2004 between the Defendant and the Plaintiff, the Defendant appointed the Plaintiff as its sole authorized agent to obtain from bank(s) or other financial institution(s) banking facilities (“the agreement”). 4.Under Clause 5 of the agreement, the Defendant agreed to pay to the Plaintiff upon signing of the agreement a non-refundable application fee of HK$20,000.00. The Defendant further agreed that upon approval of facilities to the Defendant by any bank or financial institution to the Defendant, the Defendant would pay to the Plaintiff a consultant fee at the rate of 1.8% on the facilities approved or granted and the application fee of $20,000.00 would be deducted from the consultant fee (see Clause 6 (a) the agreement). 5.It is not disputed that general banking facilities from Dah Sing Bank Limited was extended to the Defendant to the extent of HK$4.5 million in or about September 2004. 6.The Defendant claimed that under the agreement and the schedule attachment parts I and II, the Plaintiff agreed to obtain banking facilities and machinery loans for the Defendant to the extent of $6.5 million to $7 million. 7.It is further the Defendant's defence that due to the Plaintiff's failure to fulfil the conditions set out in the agreement and the attachment, the Defendant had to accept the offer from Pacific Finance Limited (“Pacific Finance”) on the machinery loans obtained without the Plaintiff's assistance, the Defendant claims therefore the Plaintiff was in breach of the agreement, and the Plaintiff revoked the offer from the Dah Sang Bank for general banking facilities of $4.5 million in October 2004. The Issues 8.The 1st issue is: under the construction of the agreement whether the Plaintiff is entitled to the consultant fee on the amount of facilities obtained on the Defendant's behalf or whether the Plaintiff was obliged to obtain both the general banking facilities and the machinery loans under parts I and II before the consultant fee of 1.8% on the amount became payable. 9.The 2nd issue is: did the Defendant inform the Plaintiff's Mr. Chai that the machinery leasing loans under part II of the agreement would no longer be required because the Defendant had already obtained such facilities from Pacific Finance? 10.The 3rd issue is: was there a variation of the terms of the agreement? The Engagement Agreement 11.Clause 1(a) the agreement of 14 June 2004 stated:-
12.Other relevant clauses of the agreement are Clauses 4, 5, 6, 7 and 9:-
13.The attachment schedule to the agreement stated:-
14.Miss Cheung, Counsel for the Defendant submitted that on the ordinary and natural meaning of the terms of the agreement there is no ambiguities over the scope and definition of the facilities. The Plaintiff was engaged to procure under Clause 1(a) of the agreement the facilities set out in the attachment. The attachment clearly specified and defined the facilities under parts I and II. She further argued that Clauses 6(a) and (d) are in effect the 'trigger' clauses which specified when the Plaintiff's entitlement to a fee arises. The triggering event is stated in Clause 6(a) to be 'upon the approval of the Facilities' and in 6(d) 'upon any bank or financial institution offering in writing to grant the Facilities to the Borrower' which must mean the parts I and II facilities. There was nothing in the agreement which specified that the performances can be effected partially or that parts I and II were divisible obligations or that the Plaintiff is entitled to charge on a quantum meruit basis. She referred to Clause 6(b) which specified how the consultant fee is to be calculated: 'the amount of Consultant Fee shall be calculated on the total aggregate amount of Facilities approved or to be granted to the Borrower by any bank or banks or financial institution(s)'. Therefore, the words 'the Facilities' must mean all the facilities set out in the schedule. 15.On the other hand, Mr. Yeung, legal representative for the Plaintiff, submitted that since there was no provision in the agreement that the Plaintiff would only be entitled to consultant fee upon the achievement of both parts I and II and as there was a provision in Clause 6(a) under the agreement that the Plaintiff would be entitled to a consultant fee at the rate of 1.8% on the facilities approved or to be granted and that Clause 6(b) provided for the calculation of the consultant fee to be based on the total aggregate amount of facilities approved; it is therefore clear on the construction of Clause 6 that the consultant fee is not a fixed sum. Furthermore, there was no guarantee under the agreement that the Defendant would necessarily be offered any loan facilities as reflected by the non-refundable but deductible nature of the application fee of $20,000.00. 16.Mr. Yeung further argued that Clause 6 together with the other clauses in the agreement consistently and expressly provided for the degree of flexibility of facilities to be achieved. He relied on Clause 1(a) and submitted that it provided the terms and conditions outlined in the schedule may be varied from time to time as the Borrower may direct or confirm. Therefore Clause 1(a) provided the flexibility on the amount of facilities obtained by the Plaintiff on the Defendant's behalf. He further argued that it would be nonsensical to construe the agreement in such a way that the Plaintiff must be able to achieve the $7 million facilities outlined in the schedule. He argued that there was no obligation on the Plaintiff to obtain facilities with terms exactly identical to both parts I and II of the schedule. Variations 17.Mr. Yeung argued that since the Plaintiff's case is that the agreement did not confine the Plaintiff to achieve both parts I and II of the schedule there is no need for the court to deal with the issue of variation of the agreement should the court accept the Plaintiff's construction of the agreement. 18.The Plaintiff's pleaded case, however, refers to a variation of the agreement in that Mr. Chai was informed by Mr. Wong that the Defendant had been offered a machinery leasing loan therefore there was no need for the Plaintiff to proceed to seek loan facilities under part II of the schedule. 19.Mr. Yeung argued that it was not a variation of the agreement as alleged by the Defendant, any variation of facilities to the contents of the schedule is 'variation within the agreement' or 'variation sanctioned by the agreement'. Therefore, the agreement had not been varied. Mr. Yeung submitted the Plaintiff did not commit a breach of Clause 4 of the agreement which provided that the Plaintiff “shall act bona fide for and on behalf of the Borrower in performing its services and will use its best endeavours to introduce interested bank, banks and financial institution(s) to make reasonable enquiries to liaise and negotiate with any interested bank, banks and financial institution(s), to arrange meeting(s) and conference(s) (if necessary) and to provide relevant and necessary information and to assist in the approval of the Facilities.” The Intention of the Parties 20.In order to construe whether parts I and II of the schedule to the agreement of 14 June 2004 were divisible, the intention of the parties have to be considered. The Evidence 21.Mr. Chai's evidence on the meeting with Mr. Steven Wong of the Defendant prior to the signing of the agreement was that he had mentioned to Mr. Steven Wong the charges of the Plaintiff would be 1.8% on the banking facilities to be granted and the non-refundable application fee of HK$20,000.00 would be deducted upon successful approval of facilities. At the end of the meeting they came to a conclusion that general banking facilities in the sum of around $4.5 million would be required. At the time, Mr. Chai said he had mentioned to Mr. Wong that should the bank only agree to grant banking facilities for less than the sum requested, the Defendant may reject the bank's offer and the Defendant would not have to pay the Plaintiff's consultant fee. He admitted that Mr. Steven Wong did inform him that the Defendant had already submitted an application to Pacific Finance Limited for machinery leasing facilities and he requested Mr. Chai to obtain for the Defendant machinery leasing facilities with better repayment terms. 22.The evidence of Mr. Steven Wong on the other hand was very different. He claimed that during the oral discussions and negotiations with Mr. Chai he had repeatedly emphasised to Mr. Chai that the Defendant was particularly interested in obtaining low interest rates for the machinery leasing facilities because the Defendant would be required to buy new machines from time to time for the purpose of its business development. Mr. Wong claimed that he had told Mr. Chai his company was not really interested in obtaining further general banking facilities through the Plaintiff because it already had such facilities secured on the company's office premises. He believed that an improvement of the general banking facilities could be obtained without any assistance from the Plaintiff. Nevertheless, the Defendant supplied the Plaintiff with all the necessary information on the Defendant such as the profit and loss accounts, audited reports and financial statements of the Defendant's business in Hong Kong and the factory in Zhongshan in the PRC as well as its major customers' list to facilitate the Defendant's application for the loans under the schedule of the agreement. 23.Mr. Wong claimed that it was at the meeting of 14 June 2004 that he saw for the first time the agreement document and he was asked to sign it immediately. Prior to that date, he was only given an oral quotation of the proposed services after delivery of the documents relating to the Defendant's company in late May 2004. On 14 June 2004, Mr. Chai had repeatedly urged him to sign the agreement immediately and he was not to take it with him for further consideration before signing. 24.Mr. Wong further claimed that when Mr. Chai visited his office the second time in or about early May 2004, the Japanese bonding machine quotation had just arrived in his office and he showed Mr. Chai the document and informed Mr. Chai that it was a very important machine to the Defendant's business. He had also told Mr. Chai the approximate shipping date would be in the second half of 2004, while the actual delivery date would depend on the date of opening of letters of credit by the bank. He told Mr. Chai he had already had a preliminary discussion with Pacific Finance over the machine leasing facilities. Mr. Chai informed him that Pacific Finance is a finance company and the interest rate charged would be higher than the banking institutions the Plaintiff would locate for the Defendant. Mr. Wong claimed that was the basis of his entering into the agreement with the Plaintiff. 25.It is not disputed that Mr. Wong accompanied Mr. Chai and the representative of the Dah Sing Bank Limited to visit the Defendant's factory in Zhongshan PRC on or about 3 August 2004 to enable the bank to make an assessment of the Defendant. 26.Mr. Wong claimed that it was a surprise to him when Mr. Chai informed him in or about August or September 2004 that part II of the attachment to the agreement might not be successful because there was insufficient time for the application to be processed and approved. Mr. Wong claimed that he received a letter offering general banking facilities in a total sum of $4.5 million under part I of the attachment to the agreement dated 15 September 2004 from Dah Sing Bank Limited. He was under the impression and believed that an offer in relation to part II would be sent to him soon after and that was why he signed the offer from the Dah Sing Bank Limited. He claimed he had repeatedly reminded Mr. Chai to follow up on the facilities under part II of the agreement but he received no reply from Mr. Chai. Instead, the Plaintiff had allowed various other banking institutions to keep calling him for further loan facilities and he felt aggrieved by the inconsistent conduct of the Plaintiff. 27.Because of the aforesaid, Mr. Wong decided to revoke the loan facilities offered by Dah Sing Bank Limited and refused to pay the consultant fee demanded by the Plaintiff. Upon his refusal to pay the consultant fee, Mr. Chai threatened him and his company claiming that the Defendant would be blacklisted by major banks and financial institutions in Hong Kong. 28.On the other hand, Mr. Chai claimed that sometime in July 2004, Mr. Wong had requested him not to proceed with the machinery leasing facilities application further because the Defendant was prepared to accept the offer of the machinery leasing facilities from Pacific Finance for the Defendant had to open letters of credit for the purchase of the 2 machines immediately. He claimed that was why in his letter dated 13 July 2004 enclosing the proposal for facilities on the Defendant's behalf to Dah Sing Bank Limited he had only asked for banking facilities of $4.5 million to be extended to the Defendant. 29.It is not disputed that Mr. Steven Wong and his parents attended the office of Dah Sing Bank Limited to sign the acceptance document in relation to the banking facilities extended on 28 September 2004. The Plaintiff then issued an invoice for a total sum of $61,340.00 consultant fee on 4 October 2004 to the Defendant. The Plaintiff claimed that it was only in November 2004 that Mr. Wong informed Mr. Chai the Defendant's existing banker DBS Bank was willing to offer the Defendant general banking facilities similar to the Dah Sing Bank offer. Mr. Wong told him the Defendant preferred to accept the banking facilities offered by DBS Bank. 30.Mr. Yeung submitted that the Plaintiff had successfully obtained from Dah Sing Bank loan facilities to the Defendant in the sum of $4.5 million, even if the Plaintiff had failed to achieve part II of the attachment of the agreement, the Plaintiff is still entitled to be paid the consultant fee in respect of what the Plaintiff had managed to achieve for the Defendant under Clause 6 of the agreement. The Plaintiff denied that it had in anyway breached Clause 4 of the agreement. Mr. Yeung relied in particular on the fact that Mr. Steven Wong and his parents had attended the Dah Sing Bank at the end of September 2004 and signed the acceptance of the offer from Dah Sing Bank. Even though the Defendant subsequently revoked the acceptance, the Plaintiff had performed what it agreed to do under the agreement. 31.Mr. Yeung argued that the Plaintiff's consultant fee was a performance base remuneration, and the charge was 1.8% on the facilities obtained. The amount of facilities the bank would offer to the Defendant depended on the credit-worthiness of the Defendant and that was the basis of the performance-based formula under the agreement. 32.So far as the evidence of Mr. Steven Wong is concerned, he admitted that he had informed Mr. Chai at the two meetings in April and May 2004 the importance of the machinery leasing loans to the Defendant. As the Japanese manufacturer of the bonding machine required 3 to 4 months to set up the machine, in order that the machine should be delivered on time, the Defendant would be required to issue a purchase order 3 to 4 months prior to the delivery of the machine. He had also informed Mr. Chai that he expected the Taiwanese machine to be delivered in July 2004 because the Defendant required the use of the Taiwanese machine urgently. 33.He claimed that upon receiving the Pacific Finance offer of 25 June 2004, because Pacific Finance interest rate was on the high side, he asked the Plaintiff to find a finance company which could offer better interest terms. Mr. Chai said he would find a banker to finance the Defendant, in particular for the purchase of the Japanese machine. He further maintained that the consultant fee would not come from the Defendant's own pocket because of the savings in interests charged by the finance company he was going to obtain for the Defendant. He went to the extent of promising Mr. Wong that he would be able to find financing at a lower interest rate than the offer from Pacific Finance for the machinery leasing loan because he would be getting a better finance package for both the general banking facilities and the machinery leasing loans. 34.Mr. Wong claimed that after he received the offers from Pacific Finance in late June 2004 for the two machines, Mr. Chai asked him to fax over the said offers to him so that he could negotiate with other banks and the documents would put him in a better position to talk with these banks. After the Pacific Finance's offer letters were faxed to the Plaintiff on 28 June 2004, he had a meeting with Mr. Chai and Mr. Chai told him that so far as the Taiwanese machine was concerned he would not be able to obtain financing before July 2004, but since the price of the Taiwanese machine was not high and the interests saved would not be much, he suggested Mr. Wong to accept the Pacific Finance offer on the Taiwanese cutting machine. As to the Japanese machine, the value was very much higher and Mr. Chai said he would be able to deal with the financing of this machine and obtain better terms and the Defendant would save money due to the lower interest rate charged. As it was then close to July Mr. Wong felt he could not ask the manufacturers to wait much longer for the letters of credit to be opened and for production to begin. He had nevertheless urged Mr. Chai to find a banker soon. 35.Mr. Wong claimed that sometime in July 2004, he was informed by Mr. Chai that he could not get the machinery leasing loan for the Taiwanese cutting machine in time but he would find financing for the Japanese bonding machine. Mr. Chai later told Mr. Wong that he would obtain machinery leasing loan for the bonding machine from Dah Sing Bank because Dah Sing Bank had already visited his factory in early August. 36.It was Mr. Wong's evidence that the reason why he had signed and accepted the offer from Dah Sing Bank for the $4.5 million general banking facilities was because Mr. Chai told him the Defendant needed to establish an initial banking relationship with the bank before obtaining the machinery loan. Mr. Wong claimed that with the Defendant's 2 office units and a cash deposit of $500,000 as security the Defendant could obtain better terms from Shanghai Commercial Bank for the facilities mentioned under part I of the agreement. The reason why the Defendant had not negotiated the facilities under part I with Shanghai Commercial Bank was because the Defendant's objective was to obtain the machinery loans for the 2 machines. 37.Upon signing the acceptance of the Dah Sing Bank offer in late September 2004, Mr. Wong claimed he did not see any progress or sign for the approval of the machinery leasing and the manufacturer was putting a great deal of pressure on the Defendant to take delivery of the Japanese bonding machine or it would be sold to another customer. Should the Defendant fail to take delivery of this machine in October 2004, the Defendant would have to wait another three to four months to obtain a new machine from Japan. For that reason, he eventually decided to take up Pacific Finance's offer. 38.Mr. Wong emphasized that Mr. Chai had said to him when Mr. Chai brought the agreement for him to sign that the Plaintiff would not charge any commission if he could not obtain loans for parts I and II of the agreement. Mr. Wong had also told Mr. Chai that it was not short term financing he was looking for but machinery leasing facilities which would be a loan for repayment over a period of 2 to 3 years. 39.Because the Plaintiff was not able to arrange the machinery financing, Mr. Wong terminated the agreement with the Plaintiff and in November 2004 he began negotiating with DBS. He was able eventually to obtain a banking loan from DBS of HK$3 to 4 million. Mr. Wong admitted that although he had signed the purchase order for the bonding machine in or around April 2004, it was only on 4 October 2004 that he signed an interim agreement for the purchase of the Japanese bonding machine. It was executed after Mr. Chai had confirmed to Mr. Wong that he could not arrange financing for the Japanese bonding machine for the Defendant, Mr. Wong had to accept the Pacific Finance offer. The date of signing of the lease agreement with Pacific Finance on the Japanese bonding machine was 9 November 2004. Findings 40.From the documents produced by the Plaintiff, in particular, the letter to Dah Sing Bank Commercial Banking Division dated 13 July 2004 (page 46 to 51) consisting of a covering letter and a report on the Defendant's background in detail, it is apparent that the Plaintiff had only asked for general banking facilities of HK$4.5 million against the security of a fixed deposit and the Defendant's two commercial properties. Nothing about the machinery loans under part II of the agreement was ever mentioned either in the letter or the report enclosed. The financial highlights of the Defendant's PRC factory was set out in full (page 49) in the report prepared by the Plaintiff, it stated :
At page 4 of the report (page 50 of the bundle), it set out the existing facilities enjoyed by the Defendant at the time:
The report then requested facilities for:
on the security of a charge over a fixed deposit of HK$0.5 million and a mortgage from DBS bank of the Defendant's property at Rooms 2006 & 2207, New Treasure Centre, 10 Ng Fong Street, San Po Kong, Kowloon (valuation at HK$2.5 million) plus a personal guarantee by Mr. Wong Ka Wah, Madam Cheung Ming Wai and Mr. Wong Hing Tak. 41.It is apparent from the aforesaid report that the Defendant's existing banking facilities from DBS Bank and Shanghai Commercial Bank secured on its office at New Treasure Centre, the Defendant had already obtained banking facilities of HKD1.01 million from DBS Bank and from Shanghai Commercial Bank, a credit facility of $6.5 million secured on its fixed deposit of $2 million. Therefore, when the Plaintiff obtained for the Defendant general banking facilities of $4.5 million from the Dah Sing Bank secured on the Defendant's office valued at $2.5 million plus $0.5 million fixed deposit, the Defendant did not make much of a gain. The difference was a change in the terms of security on the loan, i.e. a reduction to $0.5 million of the fixed deposit and an updated valuation of the two office units of the Defendant at $2.5 million for a reduction in the facilities from $7.5 million to $4.5 million. 42.Against this background, at the time when the parties entered into the agreement, one can see the motive and intention behind the Defendant's engagement of the Plaintiff to obtain banking facilities on its behalf. If the Defendant's intention was only to obtain general banking facilities of $4.5 million, he would be getting much less than what he had before from the two banks that he had been dealing with. 43.The Defendant's factory at PRC had in 2003 a paid up capital of RMB13.03 million and a current turnover of RMB58.50 million with current profits of RMB16.70 million and the total net worth valued at RMB32.3 million. It was not surprising for the Defendant to consider that it should not have much problem in obtaining banking facilities for its factory in PRC and the business in Hong Kong. 44.I accept Mr. Wong's evidence that what he was looking for was better repayment terms and interest rates for the Defendant's machinery leasing loans. The most pressing matter for the Defendant at the time was the 2 new machines it was going to buy. The Taiwanese machine was inexpensive by comparison to the Japanese machine, and the Defendant had an urgent need for it in July 2004. The Japanese bonding machine on the other hand was much more expensive with a value of over HK$2 million. It is understandable that the Defendant would like to have a machine leasing loan from a bank at a low rate of interest and that the machines could be repaid over a period of 36 months. It was clear to both parties when they signed the agreement on 14 June 2004 that the Defendant had already applied to Pacific Finance for machinery leasing facilities. Therefore, it is not a matter of whether the Defendant was able to obtain general banking facilities and machine loan facilities, but a matter of better repayment and interest terms from the bank offering the part I and II facilities. I accept the evidence of Mr. Wong whom I find to be an honest businessman and a reliable witness. I am satisfied he was informed by Mr. Chai and believed that the general banking facilities and the machinery loans should come as a package from the same lending bank in order to get better lending rates. I also accept that he took the advice of Mr. Chai that the Defendant should establish a banking relationship by opening an account at the Dah Sing Bank first and accept the general banking facilities offered pending the approval of the machinery leasing loan. 45.I am not convinced on a balance of probabilities that Mr. Wong had informed Mr. Chai in July 2004 he was going to accept the 2 Pacific Finance offers on the machinery leasing loans and instructed Mr. Chai to concentrate only on the general banking facilities application. Could it be Mr. Chai was simply forgetful or did he misunderstood what Mr. Wong meant when Mr. Wong faxed over to him on 28 June 2004 the offer from Pacific Finance? According to Mr. Wong's evidence there could not be any misunderstanding because Mr. Wong had in no uncertain terms informed Mr. Chai he wanted better terms on the machinery financing than the Pacific Finance offers. 46.Based on the background of the facts disclosed in this case, I find on a balance of probabilities that it was unlikely for Mr. Wong of the Defendant to have requested Mr. Chai to drop part II of the attachment of the agreement and concentrate only on the part I general banking facilities. Based on the securities offered by the Defendant together with the background of the Defendant's PRC factory with a net worth of RMB32.3 million and a satisfactory profit of $16.7 million in the year ending 31 December 2003 and the fact that the Defendant had already been using 2 bankers with existing banking facilities, it should not be difficult for the Defendant to negotiate more favourable terms for the general banking facilities of $4.5 million from his existing bankers. 47.I am satisfied the Defendant had asked for a financial package consisting of both parts I and II of the agreement and that the Defendant was led to believe at the time that the machinery leasing facilities should be offered by the same bank as the general banking facilities to attract a favourable rate of interest. That was why Mr. Wong upon receipt of Pacific Finance's offers of 25 June 2004, faxed the two offer documents on the 2 machines to Mr. Chai on 28 June 2004 for his reference. If Mr. Wong had decided to accept Pacific Finance's offers at the end of June 2004, there was no need for the 2 offers from Pacific Finance disclosing full details to be faxed to Mr. Chai. 48.I am not convinced that Mr. Chai was completely truthful about being informed by Mr. Wong in early July that there was no need for the Plaintiff to look for machinery leasing facilities from another bank because the Defendant had decided to accept the 2 Pacific Finance offers. If that was the case, there was really no need for the Dah Sing Bank officer to visit the Defendant's PRC factory in early August. This visit perhaps had re-enforced the Defendant's belief that the machinery loan for the Japanese machine would be extended by Dah Sing Bank. I am also satisfied that the Defendant had patiently waited for the Plaintiff to come up with an offer of better terms for the machinery leasing loan on the Japanese machine until early October when the Defendant received the Plaintiff's invoice that indicated the Plaintiff would no longer be working on the machinery financing for the Defendant. It was only then that the Defendant realized the Plaintiff would not be arranging the machinery loan and it had to accept the Pacific Finance offer. 49.I am satisfied there was no variation of the agreement whatsoever. It was clear and obvious to the Plaintiff right from the beginning of the negotiations before the Defendant signed the agreement of 14 June 2004 that the Defendant was looking for general banking and machinery leasing facilities as a package. What prompted the engagement by the Defendant of the Plaintiff was the forthcoming purchase of the 2 machines from Taiwan and Japan. I am satisfied that this had been emphasised by Mr. Wong at the meetings between him and Mr. Chai in April and May 2004. The only variation that took place was in July due to the Defendant's pressing need for the Taiwanese cutting machine and Mr. Chai informed Mr. Wong that he would not be able to obtain financing for the Taiwanese machine before July 2004. Mr. Wong took Mr. Chai's advice and accepted Pacific Finance's offer on this machine. Consequently, the only variation was to remove the Taiwanese machine from part II of the attachment to the agreement. The documents in this case and Mr. Wong's evidence all pointed to the fact that the Defendant had been waiting for Mr. Chai to obtain financing for the Japanese machine. 50.I am satisfied further that Mr. Wong was telling the truth about the April and May negotiations between himself and Mr. Chai, that he had informed Mr. Chai he had already been approached by Pacific Finance and was told it would be charging prime plus 1.25% p.a. interest rate for the machinery leasing loans and that Mr. Chai had promised he would get a better financial package for the Defendant on both the general banking facilities and machinery loans. It was because of this representation made by Mr. Chai to Mr. Wong that Mr. Wong signed the agreement on 14 June 2004. 51.On this basis, the representation made by Mr. Chai to Mr. Wong before the agreement was signed formed part of the agreement and it had induced Mr. Wong to enter into the agreement. For the same reason, part I and part II of the agreement were not severable. The parties had agreed in July 2004 that the financing of the Taiwanese cutting machine would not be required. That was the only variation agreed to by the parties. Further, I find the Plaintiff was in breach of Clause 4 of the agreement when it failed to carry out part II of the schedule to obtain the machinery loans as evidenced by its report to Dah Sing Bank on 13 July 2004. 52.For the aforesaid reasons, I dismiss the Plaintiff's claim. Cost nisi: cost to the Defendant to be taxed if not agreed with certificate for counsel to the Defendant.
Parties: Mr. Yeung Lung Sang of Messrs Ho, Lo & Yeung for the Plaintiff. Miss Janine Cheung instructed by Messrs Huen & Partners for the Defendant. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||