Choo Kim San v. The Bank of Tokyo Ltd
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 2568 OF 1972 __________________
Coram: Hon. Blair-Kerr, S.P.J. in Chambers. Date of Judgment: 19.12.1972 ______________ J U D G M E N T ______________ 1. The writ in this action was issued on 10th October 1972. In the statement of claim endorsed thereon, the plaintiff (CHOO Kim-san) alleges that he is a director of San Timbers Limited, a company incorporated in Hong Kong and “carrying on business as a timber merchant at 59 Des Voeux Road, Central, Hong Kong;” that by a contract dated 5th October 1970 he agreed to sell to Sumitomo Shoji Kaisha Limited “120,000 cubic metres of Indonesian Mixed Meranti Logs of Kalimantan origin” and that payment therefor should be by irrevocable and without recourse letter of credit; that by a letter dated 9th April 1971, the defendants informed him that an irrevocable credit no. 161-61652 has been opened with them in his favour for US 1,500,000 available by drafts drawn by him and accompanied by the following documents:-“(i) signed commercial invoice in sextuplicate; (ii) log specification in triplicate; (iii) one copy of timesheet duly signed by Master; and (iv) full set of clean Onboard Ocean Bills of Lading issued to order of shipper, blank endorsed and marked ‘Freight Collect’;” that the defendants undertook that all drafts drawn on them would be honoured on presentation if drawn and negotiated on or before 30th April 1972; that on 14th February 1972 the plaintiff “presented through their Banque de l’Indochine, Hong Kong to the defendants for acceptance a Bill of Exchange for US$193,608……together with the documents……as required by the terms of the said credit;” that the Bill was due and payable at sight and that the defendants refused to accept it. The plaintiff’s claim is for HK$1,084,204.80 (being the Hong Kong equivalent of US$193,608 at the exchange rate of HK$5.69 to US$1.00) together with interest. 2. The defendants entered a conditional appearance on 17th October; and on 28th October they took out a summons giving notice of their intention to apply under 0.18 r.19 and the inherent jurisdiction of the court for the following relief:-
3. It is apparent from their summons that the defendants were not suggesting that the statement of claim disclosed no reasonable cause of action. [Paragraph (a) of 0.18 r.19(1)]. Their case was, and is:-
4. In support of their application the defendants filed an affirmation by Mr. Shinozaki, the pro-manager of the defendants' Hong Kong branch. No evidence was filed on behalf of the plaintiff. Having heard submissions from counsel on behalf of both parties, Mr. Registrar Jones refused the relief sought by the defendants. They now appeal to this court against the Registrar’s decision. The parties agree that the defendants’ conditional appearance should be treated as conditional until after the determination of the “appeal” which, of course, takes the form of a fresh application to this court. 5. From the affirmation of Mr. Shinozaki, it appears that the plaintiff is a Malaysian and that his home is in Malaysia; that in the Return of Directors filed in the Companies Registry against San Timbers Limited the plaintiff’s residential address is said to be 34 Prinsep Street, Singapore 7; that he is not a resident of Hong Kong and that he spends only such part of his time here as his business dictates. 6. Mr. Shinozaki has exhibited to his affirmation a number of documents, the first of which is a “Purchase Contract” dated 5th October 1970 evidencing the purchase 120,000 cubic metres of Indonesian Mixed Meranti Logs of Kalimantan origin by Sumitomo Shoji Kaisha Limited (a Japanese company) from the plaintiff. It states that the Japanese company “confirms having purchased from the seller” the logs; and the seller’s name and address is given as: “Mr. CHOO Kim-san, P.Y. San Timbers Limited. 87-B Djalan Pintu Besar Selatan, Djakarta.” The contract provides for shipments of the logs by instalments from an Indonesian port between November 1970 and October 1971; that payment therefore shall be by irrevocable and without recourse letter of credit; and that the contract shall be “governed by and constructed in accordance with the laws of Japan.” 7. On 9th April 1971, at the request of a company called Sumitomo Shoji American Incorporated, the defendants’ San Francisco branch opened a letter of credit for US$1.5 million in favour of “Mr. CHOO Kim-san of P.T. San Timbers Limited, Suite 10/D, 10th floor, Kam Wah Bldg., 516 Nathan Road, Kowloon.” The credit was subject to the Uniform Customs and Practice for Documentary Credits (1962 Revision), Article 30 of which reads:-
8. The letter of credit authorised the plaintiff “to draw on The Bank of Tokyo Limited San Francisco Agency for the account of Sumitomo Shoji American Incorporated, one California Street, San Francisco.” The credit was to be
9. The documents were to evidence the shipment of “Indonesian round logs fresh cut F.O.B. from Indonesia to Japan”. It was a term of the credit that drafts thereon should be negotiated on or before 30th April 1972. The document was endorsed as follows:-
10. Letter no.4294 is dated 13th April 1971 and was sent by the Hong Kong branch of The Bank of Tokyo Limited to Mr. CHOO Kim-san. It reads, in part:-
11. On or about 14th February 1972 the plaintiff’s agents in Hong Kong (the Banque de l’Indochine) received certain documents. One of them was a sight Bill of Exchange dated 14th February drawn under the letter of credit no.161-61652 for US$193,608 and the addressed to “The Bank of Tokyo Limited, San Francisco Agency, a/c Sumitomo Shoji American Inc., San Francisco.” The document bore the chop of San Timbers Limited and it was signed by two individuals, one of whom, presumably, is the plaintiff. The chop on the copy before this court is not sufficiently clear to say in which capacity the two individuals signed; but I do not think that there can be any doubt but they were signing in a representative capacity. In other words, the Bill was not drawn by the plaintiff. It was drawn by San Timbers Limited. 12. The invoice in respect of the shipment in question is dated 14th February 1972. But it was not issued by the plaintiff. It is printed form for use by the company, San Timbers Limited. It bears the San Timbers Limited chop and it is signed by someone (presumably the plaintiff) in a representative capacity. It states that the logs were shipped by San Timbers Limited; and the invoice is addressed not to Sumitomo Shoji America Inc. (the applicant for the credit) but to Sumitomo Shoji Kaisha Ltd., Tokyo, who, according to the letter of credit, was the party to be notified. 13. The letter of credit required the bills of lading to be
But the bill of lading relative to the shipment in question states that the shipper is:
14. But, as I have said, on the invoice the name of the shipper is given as San Timbers Limited of Hong Kong. Furthermore, on the bill of lading the consignee is said to be “order of Bank Dagang Negara Samarinda.” Therefore the bill of lading cannot be said to be “issued to order of shipper blank endorsed.” 15. On 22nd February 1972 the defendants’ San Francisco branch received a cable from the plaintiff’s agents (Banque de l’Indochine, Hong Kong) in which the agents pointed out certain defects in the documents which they had received including the fact that the bill lading was “consigned to order of Bank Gagang Negara Samarinda endorsed in your favour” and also the fact that there was an apparent discrepancy of 20% on the log specification. Banque de l’Indochine asked the defendants’ San Francisco branch: “May we negotiate. The defendants’ San Francisco branch sent a cabled reply to the Bnaque de l’Indochine on 23rd February. It read:-
16. On 17th March 1972 the defendants’ San Francisco branch received from the Banque de l’Indochine copies of the draft (that is to say the bill of exchange for US$193,608) together with the commercial invoice and the bill of lading. The draft was not accompanied by the log specification or the time sheet, as required by the letter of credit. On 20th March 1972, the San Francisco branch presented the bill of exchange, invoice and bill of lading to Sumitomo Shoji America, Inc. This company refused to accept the bill; and as the San Francisco branch were usable to extract any further information from the Banque de l’Indochine or the plaintiff, the document were returned to the Banque de l’Indochine on 22nd June 1972. 17. On 8th August 1972 the bill of exchange, without any supporting documents of any sort, was presented to the defendants’ San Francisco branch by the Bank of California, San Francisco; but it was returned for the reason that the terms of the letter of credit has not been complied with. 18. As I have said, the bill of exchange was a sight bill; and it is not exactly clear what is meant by the allegation in the statement of claim that on 14th February 1972 the bill was “presented for acceptance.” But whatever is meant, counsel for the defendants takes the point that there was no presentment within the time limit prescribed by the credit viz. 50th April 1972. It is common ground that the cable was not a presentment. All the Banque de l’Indochine did on 22nd February was to inquire from the defendants’ San Francisco branch whether, in view of certain discrepancies in the documents, the defendants would negotiate – merely a request for information; and, as counsel for the defendants said, the fact that the San Francisco branch replied “no” did not excuse the plaintiff as regards the necessity for presentment – if presentment was, in the circumstances necessary. In this connection counsel referred to ss.39 and 41 of the Bills of Exchange Ordinance Cap.19. 19. Counsel’s next point is this. He says: Even assuming that there was presentment, the documents were not in order. Firstly, the draft (bill of exchange) was drawn by a person who is not the beneficiary under the letter of credit, and, in the circumstances of this case, only the beneficiary was entitled so to draw. (article 3 of the Uniform Customs). Secondly, as regards the commercial invoice, the plaintiff’s name does not appear on this document as shipper and the document is addressed to the buyer in Tokyo – not to the applicant for the letter of credit. Amounts under the credit were to be for the account of Sumitomo Shoji America Inc. Therefore, says counsel for the defendants, this invoice was issued by a person who was not the seller and it was addressed to a person who was not the applicant for the credit – that is to say there was an infringement of Article 30 of the Uniform Customs. Thirdly, counsel referred to the discrepancies in the bill of lading and the log specification; and he says: Even if there was presentment (which the defendants deny) the draft was not accompanied by all the documents specified in the letter of credit; and even as regards such documents as did accompany the bill of exchange on 17th March 1972 there was non-compliance with the letter of credit. 20. But the counsel goes further. He says: when the draft was eventually presented on 8th August 1972, it was not accompanied by any documents whatsoever and furthermore such presentment was out of time by over 3 months. 21. Counsel for the defendants cited Raynor & Co. v. Hambro’s Bank Ltd[1]. In that case, MacKinnon L.J. cited with approval a passage from the judgment of Bailache J. in English, Scottish and Australian Bank Ltd. v. Bank of South Africa[2] and a passage from the judgment of Lord Sumner in the Equitable Trust Co. of New York v. Dawson Partners Ltd.[3]. In the former case, Bailache J. said:-
In the letter case, Lord Sumner said:-
And in the Hambro’s Bank case, Goddard L.J. said:-
22. Counsel for the plaintiff relied upon the decision of the Court of Appeal in Wenlock v. Moloney[4]; and emphasized the dangers of a judge purporting to resolve “issues” in chambers on affidavit evidence. But I do not find Wenlock v. Moloney4 of any assistance to me in this case. In Wenlock3, there were 10 affidavits filed – five by the defendants in support of their application to strike out and five by the plaintiff in opposition thereto. Issues were raised as a result of the plaintiff’s affidavits; and what happened before Master Jacob was this: The affidavits were read; there was no cross-examination thereon; and no oral evidence was given; the master was, according to the statement of facts at p.1241, “persuaded to hear and try the action on affidavits……In his judgment……the master…… came to the conclusion after an investigation of the issues that the plaintiff’s case was most unlikely to succeed.” 23. It is hardly surprising that, on appeal, Sellers L.J. said (p.1242):-
24. In this case no issues have been raised. The plaintiff has elected to file no evidence whatsoever. He says, through his counsel: “Never mind, I may have something to say if and when the matter comes on for trial.” 25. That, in my view, with great respect, is simply not good enough. Take an extreme example. Supposing A, for the purpose of harassing and vexing B, sues B for $50,000 for the price of goods sold and delivered. Supposing B files an affidavit saying:” I do not owe A anything. I do not know him. I have never in my life done any business with this man.” Supposing, upon B’s application to strike out the statement of claim, A sits back, files no evidence, but says to the judge:”Well, you know, there is no obligation on me to ‘prove’ anything at this stage. It is dangerous to try issues of fact in chambers.” What is the judge to do? His duty is clear. He says:”The plaintiff has not chosen to put anything in issue before me upon this application; there is no question of my being asked to try issues on affidavit; but, for the purpose of this application, the evidence is all one way; why should the defendants have to be vexed and harassed by having to incur the expense of a trial; why should the time of the court be wasted? I shall strike out the statement of claim and stay the action.” 26. I entirely agree that no judge should “try” issues of fact in chambers on affidavit. But the plaintiff has not chosen to put in issue any of the facts alleged by the defendants, most of which, anyway, are perfectly obvious from the documents themselves. There is no question of my trying or investigating “issues” in this proceeding. 27. On the evidence before me, I am impelled to the conclusion that, although the statement of claim purports to disclose a cause of action, the plaintiff has in fact no cause of action and that the action must necessarily fail. I do not see how it can possibly succeed. If the defendants were forced to defend the action, they would be vexed and harassed to no purpose and the time of the court would, in my view, be wasted. 28. For the above reasons, I order that the statement of claim be struck out and the action stayed. 29. In case this matter goes further I ought to say a word or two about the defendants’ second point, that is to say that even if the plaintiff did have a cause of action, Hong Kong is not the proper jurisdiction in which it should be tried. 30. It is common ground that this is not a case of “forum-shopping”; that the defendants were properly served having, as a company incorporated outside the Colony but having established a place of business in Hong Kong, complied with s.333 of the Companies Ordinance Cap.32, that is to say they have failed, inter alia, the names and addresses of persons resident in Hong Kong who are authorised to accept service of process on their behalf. There is no doubt but that The Bank of Tokyo Ltd. is resident in Hong Kong; and it is not suggested that, if the plaintiff does have a cause of action, this court has no jurisdiction to try it. 31. On the other hand, it is not in the interests of the Hong Kong taxpayer that our lists should get cluttered up with actions which have no connection whatsoever with Hong Kong; and, unless the law permits this, I think that is the duty of this court to prevent such a state of affairs arising. 32. The plaintiff is a director of San Timbers Ltd. which is a company incorporated in Hong Kong. He also appears to be a director, or to be otherwise associated with, two other companies namely P.T. San Timbers Ltd. which appears to be registered in Djakarta, Indonesia and P.T. San Timbers Ltd. which, according to the evidence, is not a company incorporated in Hong Kong but which has a Hong Kong address and which may, or may not, be carrying on business in Hong Kong. There appears to be no doubt at all that the plaintiff is not a Hong Kong resident; and there is no evidence that he was in Hong Kong when the alleged cause of action arose or when the writ was issued. The contract was signed in Indonesia and the parties to it were the plaintiff as seller (whose address is given as being that of the Indonesian P.T. San Timbers Ltd.) and a Japanese company as purchaser of the logs. The letter of credit was applied for by a Californian company (although, from its name, it appears to be associated in some way with the Japanese purchasers) and the letter of credit was opened by the San Francisco branch of the defendant bank, which has its head office in Tokyo. The credit provided for payment of drafts thereon in San Francisco and nowhere else; and, as regards that aspect, the law of California would apply. The alleged cause of action (the existence of which is, of course, denied by the bank) took place in San Francisco. The position therefore is: The contract of sale has absolutely nothing to do with Hong Kong either as regards the parties to it or the goods sold, or as to the mode of payment for those goods. The Hong Kong branch of the defendant bank acted purely in an advisory capacity. 33. If the case was tried in Hong Kong, presumably the plaintiff would give evidence. The documents would be produced; and someone from the defendants’ San Francisco branch would have to come to Hong Kong to testify as to how the credit came to be opened, as to their communication with the plaintiff’s agent (the Banque de l’Indochine) and as to what documents they in fact received on 17th March and 8th August 1972; and so on. 34. If the question were to be determined on the basis of a mere matter of convenience, there is no doubt at all that this action should have been instituted in San Francisco; and it would appear that that is how a question of this sort would be determined in Scotland. In Ewing v. Ott Ewing[5] Lord Selborne said:-
35. However, this is not an accurate statement of the law of England or Hong Kong. The principle applicable was stored by Scott, L.J. in St. Pierre v. South American Stores (Gath & Chaves) Ltd.[6] in these words:-
36. In In re Norton’s Settelement[7], Vaughan Williams L.J. put the matter thus:-
37. On the facts and considerations I have considered so far, I doubt whether it would be proper for me on this limb of the defendants’ submission, to grant a stay. But one further submission by counsel for the defendants does trip the balance in an otherwise border-line case (so far as this limb of the argument is concerned.) The position is this: The Californian company which applied to the defendants’ San Francisco branch for the credit to be opened in favour of the plaintiff has refused to pay the US$193,608. So far as I am aware, in this action, the defendants could not institute third party proceedings against the Californian company in order to claim an indemnity in the event of judgment being given against them; even if they could, how is such a judgment to be executed? 38. The plaintiff’s answer to that is: This court should presume that the defendants’ San Francisco branch insisted on some form of security from the California company before opening a credit for US$1.5 million. They may well be so, although there is no evidence on the point. But be ...(illegible) as it may, if the San Francisco bank were to sell such security as they may have, and if they were then sued by the Californian company for, say, breach of the terms on which the security was given, the bank would then have to defend themselves in this second action in San Francisco. As counsel for the defendants said, it is in the interests of justice that the rights of all parties concerned should be finally determined in one proceeding. Clearly, the defendants might not be able to obtain full justice in Hong Kong; and, on the evidence, the plaintiff would not suffer any injustice by instituting such proceedings as he may be advised in San Francisco where Californian law (whatever it may be) will apply. 39. As I have said, on this limb of counsel’s argument, it is a border-line case; but even if counsel for the defendants had not taken the point specifically that the plaintiff had no cause of action, I would have stayed the action anyway. 40. The appeal is therefore allowed with costs here and before the Registrar.
Jackson-Lipkin (Gunston & Chow) for plaintiff Charles Ching (D.W. Ling & Co.) for defendant [1] [1943] K.B. p.37 [2] [1992] 13 Lloyds Reports 21, 24 [3] [1927] 27 Lloyds Reports 49, 52 [4] [1965] 1 W.L.R. 1238 [5] [1885] 10 App. Cas. 453 at p.506 [6] [1936] 1 K.B. 382, 398 [7] [1908] 1 Ch. 471, 479-480 | |||||||||||||||||