Swiss Singapore Overseas Enterprises Pte Ltd v. China Citic Bank Corporation Ltd, Xiamen Branch

CACV 197/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2013

(ON APPEAL FROM HCCL NO. 11 OF 2009)

________________________

BETWEEN

________________________

Before: Hon Lam VP, Kwan and Barma JJA

Dates of Written Submissions: 11 and 23 July and 8 August 2014

Date of Judgment: 29 August 2014

________________________

J U D G M E N T

________________________

Hon Kwan JA (giving the judgment of the Court):

1.This is the plaintiff’s application for discretionary leave to appeal to the Court of Final Appeal against a judgment we handed down on 15 May 2014 (“the Judgment”). In the Judgment, we allowed the Bank’s appeal, set aside the judgment below of Bharwaney J and dismissed the plaintiff’s claim against the Bank for the difference between the amount originally payable under a letter of credit and the payment subsequently made by the Bank, alternatively for damages to be assessed.

2.Questions numbered 1 to 6 were framed in the notice of motion as questions of law of great general and public importance.  The plaintiff also relies on the “or otherwise” ground contending that there has been a “serious miscarriage of justice”.

Questions 1 and 2

3.These questions may be considered together.

4.Question 1 is as follows:

“Whether, having issued a documentary credit incorporating the terms of ICC Uniform Customs and Practice for Documentary Credits 600 (“UCP 600”), an issuing bank which has sent a message containing a representation that it has determined that a documentary presentation is complying, that issuing bank is bound to honour pursuant to Article 15(a) of UCP 600?”

5.Question 2 is in these terms:

“Whether an issuing bank, which has sent a message containing a representation that it has determined that a documentary presentation is complying, is not bound to honour pursuant to Article 15(a) of UCP 600, if it has not in fact made such a determination?”

6.These questions would appear to us to be academic, as although we ruled against the plaintiff on its contention that the effect of the 1^st Message was that the Bank was bound to honour the credit and could not withdraw its representation in the 1^st Message that the presentation was complying by giving a notice of refusal within time[1], we have held in the plaintiff’s favour that the notices of refusal served by the Bank in the 2^nd and 3^rd Messages were defective[2].  The result of this holding is that the Bank was liable to the plaintiff for the difference between the full amount under the letter of credit and the reduced sum it paid to the plaintiff, unless the Bank could successfully establish one of the defences raised.

7.In the circumstances, we do not think it appropriate to exercise our discretion to grant leave for these questions.

Question 3

8.This question reads as follows:

“In circumstances where there is a claim for payment due on a contract, can a defendant succeed on appeal on a defence of accord and satisfaction, if that defence has not been pleaded or run as a substantive defence to the plaintiff’s claim in the court below?”

9.This is fact sensitive and not a question of great general or public importance.  We dealt with the objection about the failure to plead the defence of accord and satisfaction and came to the view that in the particular circumstances of this case, the Bank should be allowed to rely on this as a defence[3].

10.We refuse to give leave for this question.

Question 4

11.Question 4 is in these terms:

“In circumstances where there is a claim for payment due on a contract, and in the absence of an express representation that no further sum is due, can mere silence or a message relayed to a third party (which only indicates that the defendant should pay part of the sum due) amount to a representation to the defendant that there has been acceptance of a lesser sum sufficient for accord and satisfaction?”

12.This court affirmed the finding of Bharwaney J that the representation made on the plaintiff’s behalf in the September Message was a clear and unequivocal representation by the plaintiff that it would not be claiming from the Bank any shortfall between the original amount of the letter of credit and the reduced amount to be paid[4].  This question would appear to posit facts contrary to the concurrent findings of this court and the court below.  We do not think it appropriate to grant leave in respect of it.  Besides, it is fact specific and does not constitute a question of great general or public importance.

Questions 5(a) and (b)

13.Question 5 is in two parts and reads as follows:

“In claims for payment of a sum due under a contract, in considering the defence of accord and satisfaction where there is part payment of the sum claimed:

(a) Does the authority of Foakes v Beer (1884) 9 App Cas 605 apply, such that part payment cannot constitute good consideration? Or does the principle in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1997] 1 QB 1 apply, such that payment of the lesser sum will amount to some “practical benefit” sufficient to constitute good consideration?

(b) Can the defence of accord and satisfaction apply when the defences of variation of the existing contract (for which consideration is required) and/or promissory estoppel, as propounded by the English Court of Appeal in Collier v P & M J Wright (Holdings) Ltd [2008] 1 WLR 643 have been held to be not established (and such finding not disturbed by the appellate court)?”

14.These questions, which are based on the plaintiff’s contention that the defence of accord and satisfaction may not be deployed to bypass the rules on consideration and the requirement for change of position or detriment in promissory estoppel, do not arise from our judgment.  They were not argued before us.  As Mr Kat has pointed out, the Court of Final Appeal will not generally entertain an appeal on a point not raised in the Court of Appeal, even if the state of the evidence is such as to overcome the bar in The Tasmania (1890) LR 15 App Cas 223 at 225, and will only do so in “very exceptional” circumstances, particularly so when a new point would constitute a major development of the law (Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §§39 and 46).  In any event, whether a party should be allowed to take the new point in such cases is generally a matter for the Appeal Committee (Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd & Anr, CACV 227/2005, 26 June 2007, §4).

15.On the matter of additional benefit to a creditor to found satisfaction where a lesser sum was paid, we have applied well established principles to the facts of this case[5].

16.We would decline to grant leave for Questions 5(a) and (b).

Question 6

17.Question 6 is as follows:

“Whether an issuing bank which, upon instructions from its customer (the applicant for the documentary credit), transmits the sum agreed between that customer (applicant/buyer) and the seller (beneficiary) as giving rise to an accord and satisfaction of sums due under the sales contract, can itself rely upon the sum so paid as satisfaction of an accord relating to its separate payment obligation to the beneficiary under the documentary credit?

18.Concurrent findings were made by this court[6] and the court below[7] of the agreement between the Bank and the plaintiff, in contra-distinction to the agreement to compromise between the plaintiff and the purchaser.  This question would appear to be based on a factual premise contrary to the concurrent findings.  Besides, it was not argued before us.

19.It would not be appropriate to give leave for this question.

The “or otherwise” ground

20.In the notice of motion, this ground was invoked on the basis there has been a miscarriage of justice in that this court found in favour of the Bank on a case which has not been pleaded.

21.We do not think it reasonably arguable that there has been a miscarriage of justice as alleged.  We have allowed the defence of accord and satisfaction to be relied on despite the absence of pleading due to the special circumstances of this case[8].

22.For all the above reasons, we refuse leave to appeal to the Court of Final Appeal.  We make an order nisi that the plaintiff is to pay the Bank its costs of this application.  We decline to make a gross sum assessment and direct taxation of costs be carried out in the usual way.

Written submissions by Mr Charles Sussex SC and Ms Rachel Lam, instructed by Smyth & Co, for the Plaintiff (Respondent)

Written submissions by Mr Nigel Kat, instructed by Eversheds, for the Defendant (Appellant)