S.C.A. TECHNOPOL LTD v. TIANJI INTERNATIONAL CO., LTD AND ANOTHER

HCA 411/2025

[2025] HKCFI 5272

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 411 OF 2025

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J U D G M E N T

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I.  INTRODUCTION

1.  SCA and Tianji entered into a Sale and Purchase Contract (SPC)  dated 20 August 2023 for the sale by the former to the latter of 2 tonnes of copper powder. SCA delivered the copper powder on 2 November 2023.  But Tianji never paid for the goods.  As of today’s date, both parties accept that the SPC has been rescinded.  SCA says rescission was the result of SCA avoiding the SPC due to Tianji’s fraudulent, negligent or innocent misrepresentation. Tianji says termination was a result of the parties’ mutual agreement. 

2.  Tianji took some samples of the copper powder at the time of delivery for the purposes of testing.  Tianji eventually paid SCA for those samples. Tianji also took away two ampoules of copper powder (the two ampoules)  when SCA initially delivered the goods to Safety Logistics to hold as bailee on Tianji’s behalf. Tianji has not paid for the two ampoules. Save for the samples and the two ampoules, all the copper powder delivered to Safety Logistics has now been returned to SCA pursuant to my Order dated 16 June 2025.

3.  Safety Logistics applied by interpleader in April 2025 to hold the copper powder bailed to it, and to deliver the same, as ordered by the Court. My order of June 2025 directed Safety Logistics to release the goods held by it to SCA upon payment by SCA of HK$46,930.80 (the storage fees)  to cover Safety Logistics’ outstanding storage fees. That payment was made without prejudice to my subsequently determining which of SCA or Tianji should ultimately bear the storage fees.  Since applying by interpleader, Safety Logistics has not played any part in these proceedings.  

4.  Apart from costs and interest (if any)  payable by one party to another, the key issues that remain for me to decide are the following:

(1)  Whether the SPC was terminated by misrepresentation or mutual agreement?

(2)  Whether Tianji should compensate SCA for the two ampoules and (if so)  for what amount?

(3)  Whether Tianji is liable to pay SCA an “Irrevocable Late Payment Compensation” (ILPC)  agreed between SCA and Tianji pursuant to an Addendum to the SPC dated 28 September 2023?  Under the Addendum, Tianji was to pay SCA liquidated damages of US$1 million if Tianji failed (as it did)  to make a first payment for the copper powder by a long-stop date,

(4)  Who should bear the storage fees?

II.  DISCUSSION

A.  Issue 1: Whether the agreement was terminated by misrepresentation or mutual agreement?

5.  The is largely (but not completely)  a moot issue. It is moot to the extent that, although for different reasons, SCA and Tianji accept that the SPC has been terminated. Howsoever the SPC was terminated, the pertinent question would be how are the parties to be restored (“restituted”)  to their original positions? Here, the parties have largely been restored to their starting positions, but for the fact that Tianji has had the benefit of the two ampoules without having paid for the same.

6.  The issue is live, to the extent that it may have a bearing on costs.  Where a defendant is liable for fraudulent misrepresentation, the plaintiff may be entitled to costs on an indemnity basis.  Accordingly, I need to determine whether or not the SPC was terminated by reason of fraudulent misrepresentation. By the time of the Writ (28 February 2025)  at the latest, SCA was contending that the SPC had been rescinded for fraudulent misrepresentation. Tianji’s case is that the SPC was “validly rescinded” by agreement “by virtue of the release of the Goods to [SCA] by [Tianji] on 24 June 2025, which was agreed by [Tianji] prior to the date of the release”.

7.  Copper powder is an expensive commodity. The evidence is that copper powder of the purity in this case would cost about €1,500 per gramme. SCA’s case is essentially that Tianji fraudulently misrepresented that Tianji had the financial means and business connections to purchase the copper powder from SCA and on-sell the same.  In pre-contractual negotiations in July 2023 SCA (acting through its sole director and shareholder Mr. Charalampos Antoniou and through SCA’s agent (a company called Venoso acting through Mr Kostas Moschakis))  made it clear to representatives of Tianji that SCA was only prepared to enter into a sale contract with a buyer having the financial resources to purchase the significant quantity of copper powder involved in this case. Documents purporting to evidence Tianji’s creditworthiness and financial means were forwarded to Mr Antoniou by Tianji through Mr Moschakis.  But it was later found out that the documents were fraudulent in the sense that several appear to have been adopted from “standard” forms available on the internet and typically used for scams.

8.  Tianji was initially represented by solicitors.  But in the run up to the trial of these proceedings, it has not given instructions to its solicitors and the latter have applied to cease to represent Tianji.  The latest statement of Tianji’s case is its Defence and Counterclaim dated 14 July 2025. In its pleading, Tianji claims that it was all along acting as an agent of the “Haijian group” which is described as “a PRC state-owned enterprise”.  Tianji says that SCA all along knew that Tianji was merely acting as an agent. Tianji denies any knowledge of the misrepresentations alleged by SCA or having made the same. It counterclaims for the sample testing fees of US$519,350 which it paid to SCA.  Following the filing of its pleading, Tianji has not complied with the orders for specific disclosure made by this Court.  In consequence, I directed on 22 October 2025 that “the Court will draw adverse inferences from such failure in connection with these proceedings including but not limited to the trial of these proceedings”.  Nor has Tianji filed any witness statement for this trial.  Tianji did not in fact take part in the trial at all. 

9.  In my view, Tianji made the oral and written statements of creditworthiness and financial means about which SCA complains. The statements were made (among others)  to Mr Antoniou at a July 2023 video conference in which Mr Antoniou and Mr Wayne Bravo (acting on behalf of Tianji)  participated. Tianji was ordered to disclose audited statements and financial documents (among others)  by this Court.  But it failed to do so.  I infer from this that it has no documents to back up its representations as to its creditworthiness and access to significant financial resources.  This conclusion is bolstered by the evidence that “standard” forms were presumably downloaded from the internet and then, suitably edited, used to give a aura of authenticity to Tianji’s representations of financial substance.  All this suggests that Tianji’s statements were fraudulent, that is, deliberately or recklessly made, knowing the statements to be untrue or without any concern or consideration about their truth or falsity.  There can be no doubt that Mr Antoniou (who appeared to give evidence before me)  relied on Tianji’s representations as to its financial means.

10.  In those premises, I conclude that SCA has made out its case of fraudulent misrepresentation and, as at the date of the Writ, that SCA had rescinded  the SPC.  It follows that, by June 2025, the SPC had already been terminated.

B.   Issue 2: Whether Tianji should compensate SCA for the two ampoules and (if so)  for what amount?

11.  In my view, in order to restore SCA to the position that it would have been in if Tianji’s fraudulent misrepresentations had not been made, Tianji should compensate SCA for the value of the two ampoules.  The two ampoules had a total net weight of 1,728 grammes. The value of the two ampoules based on a price of €1,500 per gramme is thus €2,592,000. SCA suggests that a higher price per gramme should be used for the calculation, but there is no evidence before me justifying the use of a higher unit price.

C.   Issue 3: Whether Tianji is liable to pay SCA the ILPC of US$1 million?

12.  The SPC having been rescinded, it follows that the Addendum (which was supplemental to the SPC)  must likewise be treated as having been terminated for misrepresentation.

13.  Where there is rescission for misrepresentation, the measure of damages is the innocent party’s reliance loss.  The innocent party should be restored as much as possible to the position that it would have been in, if the misrepresentations had not been made.   If the misrepresentations had not been made, the SPC would not have been entered into, and the Addendum would not have been concluded. Consequently, given rescission, no ILPC is payable.  SPA relied on Article 1191[1] of the Civil Code of the Philippines to argue otherwise.  But that is not legal authority in Hong Kong.

D.   Issue 4: Who should bear the storage fees?

14.  The object being to restore SCA to the position that it would have been in if no misrepresentations had been made, insofar as SCA paid the storage fees, SCA should be reimbursed by Tianji for the payment. 

III.  CONCLUSION

15.  There will be orders that Tianji (1)  pay SCA €2,592,000 and (2) reimburse SCA for the storage fees of HK$46,930.80 insofar as paid by SCA.  Tianji’s counterclaim is dismissed as unsupported by evidence of the alleged agency with Haijian.

16.  I will now hear SCA on interest, costs and any other consequential orders.