SUN HING HONG TRAVEL AGENCY CO LTD v. WESTMINSTER TRAVEL LTD

HCA 662/2010 & HCA 680/2010
(Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NOS. 662 & 680 OF 2010

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BETWEEN

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J U D G M E N T

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Introduction

1.  The Plaintiff (“SHH”) and the Defendant (“WTL”) are both in the travel industry. The former is a travel agency and the latter is a wholesale travel agency.  They had been doing business with each other since 1987 and their business relationship terminated in March 2010.  In this action, SHH claims against WTL in respect of certain outstanding refunds to which it claims to be entitled.  There is a counterclaim by WTL for outstanding payment of interest which arose out of certain credit facilities granted by it to SHH in the course of their business.

2.  The issues in this case are not extensive and the scope of factual disputes is confined.  Before I identify the issues I shall set out some of the background circumstances of the business dealings between SHH and WTL, much of which are uncontroversial. 

3.  In the course of SHH’s business, orders made by its customers for air-tickets and other travel related products would be purchased via WTL.  There was a credit period for the settlement of WTL’s accounts by SHH.  Initially, it was 14 days but that period gradually increased in time.  From time to time, there were flight cancellations in respect of which the customers would be entitled to a refund from the airlines.  These refunds were processed via WTL and once confirmed there would be a sum of money payable by WTL to SHH (and ultimately to its customers).  From 1987 to 1994, these refunds were initially paid to SHH by way of cheques.  At a later stage, they were dealt with by way of a set-off between the refunds and the trade debts which were owed by SHH to WTL as a result of their business transactions.  The last set-off exercise was carried out on 21st November 1994^[1].

4.  It is SHH’s case that at the beginning of 1994 an oral agreement was reached with WTL whereby the refunds would be accumulated and held by WTL as security for the increasing trade debts owed by SHH due to the increase in the volume of business between the two (“the Security Agreement”).  The existence of the Security Agreement is disputed by WTL.  It says that the refunds were normal trade debts and, in particular, the claim for which is subject to the normal six-year limitation period. 

5.  However, counsel for the parties have very helpfully reached an agreement as to the quantum of the refunds, namely HK$10,105,054.30, which were accumulated from April 1994 to February 2011.  It appears to me that SHH must have paid its customers the equivalent amount of money out of its own pocket to satisfy their claims. On the other hand, it is undisputed that there are outstanding trade debts owed by SHH to WTL in the total sum of HK$8,879,229 and that the refunds owed by WTL to SHH will have to be set-off against these trade debts.  WTL’s case is that the refunds which SHH is entitled to amount to only HK$5,686,399.40, the balance between that and HK$10,105,054.30, which was accrued prior to April 2001, is said to be time-barred. 

6.  It is not disputed that the volume of business between SHH and WTL had grown over the years such that the amount of trade debts owed by SHH had increased significantly.  The evidence is that in 1994 the trade debts were in the region of HK$8 to HK$10 million and the credit period had been extended to 60 days.  From 1994, SHH was required by WTL to put in place a number of securities to ensure that the trade debts would be duly honoured.  These securities took the forms of a bank guarantee, a mortgage over a landed property and a personal guarantee from two of SHH’s directors.  Some if not all of such securities were renewed over the years.

7.  On 1^st November 1999, the parties entered into a credit facility agreement embodied in a letter of WTL of that date (“1^st Credit Agreement”).  Pursuant to the 1^st Credit Agreement, SHH was allowed a credit limit of HK$7 million.  Further, clauses 3 and 4 of that agreement provided as follows:

“3. In case the granted credit limit is exceed (sic), an immediate settlement for the difference is requested (“Clause 3”).

4.[SHH] understands that [WTL] reserves the right to charge overdue interest at the rate of 1.5% per month from the due date (“Clause 4”).”

8.  On 14^th April 2000, the parties entered into another credit facility agreement, again in the form of a letter from WTL of that date (“2^nd Credit Agreement”).  The effect of the 2^nd Credit Agreement was to vary the 1^st Credit Agreement in that the credit limit was “revised from HK$7,000,000.00 to HK$4,600,000.00 based on 150 days post dated cheque with effect from 01 May 2000”.  It was also provided that “all other terms and conditions remain unchanged”.

9.  Based on the 1^st and 2^nd Credit Agreements, WTL makes a counterclaim against SHH for overdue interest, which is disputed.  However, there is a deficiency in WTL’s evidence on quantum and pursuant to my ruling made on the first day of this trial (“the Ruling”), the assessment of the quantum of the overdue interest will be made by a Master.  Whether that exercise will be required depends on the finding of this court in respect of WTL’s entitlement to such overdue interest.   

The Issues

10.  There are two matters of dispute, namely, the refunds and the overdue interest.  In respect of the refunds, the issue is the existence of the Security Agreement. If I find against SHH on this matter, the consequence will be that a considerable portion of the accumulated refunds is time-barred.  In this regard, Mr Sham, who appears for SHH with Mr Lee, has very fairly accepted in his written opening that if this court finds against SHH on the Security Agreement the amount of refunds payable by WTL will be limited to what has been admitted by it as stated in paragraph 5 above (the claim for the balance being time-barred).  Hence, bearing in mind the agreed trade debts mentioned above, the finding here will determine who is the true creditor.

11.  As regards the overdue interest, I will have to decide on the effect of the 1^st and 2^nd Credit Agreements.  Further, it is SHH’s case that certain promise was made on behalf of WTL prior to the signing of the 1^st Credit Agreement and as a consequence WTL is precluded by law to insist on the payment of overdue interest, if any.  The alleged promise is disputed by WTL. 

The Evidence

12.  Three witnesses were called by the parties, one for SHH and two for WTL.  Mr Wong Po Kin (“Wong”), one of SHH’s directors, gave evidence on its behalf.  Where his evidence is disputed, I shall indicate so and set out my findings.  Otherwise, the evidence sets out below is undisputed and constitutes part of my findings in this case.

13.  In about the middle of 2007, Wong heard rumours of a takeover of WTL by a new investor.  He was concerned that the outstanding refunds should be settled prior to the takeover by the new management and for which purpose he contacted Mr Daniel So (“So”), WTL’s managing director at the time.  Despite a number of contacts between the two sides, at the time when the new management took over the company in the middle of October 2007, no agreement had been reached as to the amount of refunds.  However, the difference between the parties at the time was purely one of quantum.

14.  The discussions in respect of the refunds (amongst other matters) continued after the takeover and the new management was represented by Miss Kok Yiu Ngor (“Kok”) and Mr Lo Fai Wah (“Lo”).  However, despite various efforts no agreement could be reached on the matter.  Kok and Lo gave evidence for WTL.

15.  Wong’s evidence was tested in cross-examination by Miss Lam, who appears for WTL with Mr Chen.  Before I deal with the contested evidence, I should point out that there is a significant limitation in WTL’s factual case, eg, it has no evidence in respect of the Security Agreement.  It was an agreement reached between SHH and WTL back in 1994, something over which neither Kok nor Lo has any knowledge. Further, as I have pointed out to Miss Lam at the beginning of this trial, given the fact that the parties had been settling the refunds periodically up until 1994, the proposition that thereafter and for some unknown reason SHH had failed to pursue its claim in respect of the refunds until 2007 does not sit well with common sense. 

16.  Wong’s evidence on the Security Agreement is quite simple.  At about the beginning of 1994, WTL stopped making any refunds and when asked by him it was said that the refunds were kept by WTL as security for the ever increasing trade debts owed by SHH.  In addition, SHH was required to provide a mortgage as further security for the trade debts.  Reluctantly, the arrangement was accepted by Wong.  Wong gave no evidence as to who was representing WTL in reaching the Security Agreement.  The matter was not explored in evidence.  It appears from the evidence that Wong normally dealt with So and that is consistent with the fact that they were the decision makers in their companies.  If necessary, I would have inferred that WTL was represented by So at the material time.  However, I do not believe that anything turns on this particular point.

17.  Wong’s evidence on the Security Agreement was challenged on a number of grounds. Firstly, there is no written record of the Security Agreement.  Indeed, admittedly the first time that the Security Agreement was recorded in writing was a letter from SHH’s solicitors dated 3^rd May 2010[2].  I fully accept that it would have been desirable for the Security Agreement to be recorded in a written form to avoid any arguments.  However, the reality is that businessmen do not always maintain a perfect or proper record.  In this case, I do not see a compelling reason for the Security Agreement to be recorded in writing.  From the point of view of WTL, it was holding onto SHH’s money.  On the other hand, the trade debts owed by SHH to WTL exceeded the refunds at any given time (this is undisputed).  In these circumstances, I can see that the parties were quite content with an arrangement which had been agreed orally. 

18.  Secondly, Wong was taxed in cross-examination in respect of an Audit Confirmation dated 12^th July 2007^[3] whereby a sum in excess of HK$26 million was acknowledged to be due from SHH to WTL and nothing was recorded as due the other way round.  Wong’s evidence is that he queried So on the HK$26 million given that there were outstanding refunds in excess of HK$7.6 million at the time.  However, he was told that the refunds constituted a security and irrelevant for WTL’s audit purpose.   Whilst I accept that Wong’s answer may be regarded as unsatisfactory, even on WTL’s case there was an outstanding refund at the time of the Audit Confirmation and such refund was ignored for the purpose.  I therefore see no reason to doubt Wong’s credibility. 

19.  Thirdly, there was a meeting between the parties which took place on 14^th November 2007 (“the Meeting”).  Wong and one of his colleagues represented SHH and WTL was represented by Kok and one of her colleagues.  Amongst the issues discussed at the Meeting was the outstanding refunds.  Subsequent to the meeting, on 12^th December 2007 an email entitled “Notes on our meeting dated 14 Nov 2007” (“the Notes”) was sent by Kok to, inter alia, Wong^[4].  It was put to Wong that the email made no reference to any security arrangement and that he had failed to reply to the email pointing out the existence of the same.  I am unable to see the force of this criticism.  The undisputed fact is that since the middle of 2007 Wong had been trying to reach an agreement with WTL on the amount of the refunds.  Further, it is evident from the email that the discussion at the Meeting was that the refunds would be set-off against the trade debts of SHH.  In a way, the security arrangement was to be consummated.  In these circumstances, I find the criticism unfounded.

20.  For these reasons, I see no reason to doubt Wong’s evidence on the Security Agreement and I find in favour of SHH on the existence of the same.  Miss Lam accepted that the consequence of such a finding is that the entire outstanding refunds of HK$10,105,054.30 would have to be repaid to SHH by WTL (subject of course to the set-off against the admitted trade debts).

21.  As regards the overdue interest, Wong’s evidence is that after he had received the letter containing the 1^st Credit Agreement^[5] he contacted So and told him that it would be unreasonable for WTL to charge SHH for any overdue interest.  The reason being that SHH had not asked WTL to pay any incentive rebate to which it was entitled (such rebate would have been calculated on the basis of 1% to 2% of the monthly business generated by SHH).  So responded by saying that WTL was only reserving its right to charge overdue interest but he promised that such right would not be exercised against SHH, and he asked Wong to sign the 1^st Credit Agreement letter (This promise was referred to in the Amended Reply and Defence to Counterclaim as the “1^st Undertaking” and I shall adopt this terminology.).  Accordingly, the 1^st Credit Agreement was signed and SHH did not ask for any incentive rebate from WTL. Over the years, there was never any demand for payment of overdue interest by WTL despite the fact that the credit limit of HK$7 million (and later HK$4.6 million) was constantly exceeded. 

22.  At the Meeting, the issue of overdue interest was raised by Kok.  In response, Wong explained to her what So had promised him and that it was impossible for SHH to do business with WTL if such interest had to be charged.  He said that Kok nodded and uttered “mm…mm…” in response to his explanation and after he finished Kok did not request any payment of interest and the discussion then moved on to other topics.   

23.  In respect of the 1^st Undertaking, again WTL has no direct evidence to contradict that of Wong’s.  However, Wong accepted in cross-examination that there was no written record of the 1^st Undertaking until the letter of SHH’s solicitors date 3^rd May 2010.  Further, he was taxed in respect of the Notes.  Paragraph 5 of that document referred to overdue interest in excess of HK$30 million and that “WTL reserves its right to charge SHH interest as per Appendix 2”.  However, he failed to reply to the email or express his disagreement to the liability to pay overdue interest.  In response, Wong said that in his mind the email was a record of meeting, SHH’s position had been made clear at the meeting and that he did not think it necessary to have the position repeated or to argue over the same.  When pressed further, Wong agreed that the record was inaccurate and that it was important.  However, his understanding was that Kok agreed with SHH’s position which had been explained very clearly. 

24.  I must say that I am not impressed by Wong’s explanations for the lack of response over the Notes.  On the other hand, the Notes were sent almost one month after the Meeting.  Further, the evidence shows clearly that at the material time Wong was trying his best to resolve the disagreement with WTL over the refunds and I have to bear in mind also the fact that the parties were continuing to do business and that there were significant trade debts owed by SHH to WTL.  Furthermore, the Notes did not make any demand for payment of overdue interest.  In such circumstances, I can understand Wong’s reluctance to come to any confrontation with WTL and his failure to respond to the Notes.

25.  There are two further points.  There is no disagreement that the rate of interest under the Credit Agreements amounted to 18% per annum.  On any view, this was a high rate of interest and there is nothing in the evidence to suggest that SHH would have agreed to bear such a rate of interest at the material time. Moreover, even on WTL’s case there was no demand for payment of overdue interest prior to the Notes (WTL contends that the Notes constituted a demand for overdue interest) despite the terms of the Credit Agreements.  In these circumstances, and despite Miss Lam’s valiant attempt to discredit SHH’s case, I have no reason to doubt Wong’s evidence of the 1^st Undertaking. 

26.  In addition to the 1^st Undertaking, it is SHH’s case that there is a second undertaking which had arisen as a result of the discussions during the Meeting in respect of the overdue interest.  Pursuant to paragraph 8(1)(h) of the Amended Reply and Defence to Counterclaim, it is pleaded that “By reason of the matter aforesaid, the Defendant had accepted the Plaintiff’s request that the Defendant should continue its undertaking not to charge the Plaintiff overdue interest.  In consideration thereof, the Plaintiff continued to place orders with the Defendant for air-tickets and other travel related products (the “2^nd Undertaking”)”. 

27.  With respect, I reject this part of SHH’s case.  I do not accept the evidence that Kok expressed an agreement to what Wong said about So’s promise.  At the highest, she might have given the impression that she understood what Wong was saying.  That does not support the allegation set forth in the said paragraph 8(1)(h). 

28.  I can deal with the evidence adduced by WTL quickly.  With respect, the evidence of Kok and Lo has little bearing on the issues which I have to decide.  They know nothing about the Security Agreement or the 1^st Undertaking.  In respect of the Meeting, I have rejected SHH’s case on the 2^nd Undertaking by reason of the quality of its own evidence.  In truth, I do not see much relevance in what transpired during that meeting.  Miss Lam has made the best use of that evidence to try to discredit Wong and I have dealt with those matters above.  However, there is one particular point in respect of Kok’s evidence which I should mention, namely, when she was asked in cross-examination about Wong’s reaction when the issue of overdue interest was raised at the Meeting she said that she could not remember how Wong reacted.  I find this answer unconvincing given the importance of the matter and I am inclined to agree with Mr Sham’s suggestion that Kok was trying to avoid the question.

Clauses 3 and 4

29.  Before I address the legal effect of the 1^st Undertaking, I should deal with the proper construction of Clauses 3 and 4.  In respect of Clause 3, the difference between the parties is whether SHH was required to make immediate payment to WTL in the event that the credit limit was exceeded so that the trade debts would be kept within the credit limit.  It appears to me that the terms of Clause 3 are reasonably clear in that immediate payment should be made once the credit limit was exceeded.  Clause 3 is important in that it impacts upon the entitlement to charge interest as provided under Clause 4.

30.  As regards Clause 4, the parties are in agreement that it gave rise to a right to charge overdue interest on the part of WTL. The difference concerns how the right could be exercised.  Miss Lam’s primary case is that interest was accrued as soon as the credit limit was exceeded.  However, WTL had the right whether or not to demand the payment of such interest and that once demanded the entirety of the interest would become payable.  In this submission, Miss Lam relied heavily upon the concluding words “from the due date”. 

31.  I can see some force in Miss Lam’s submission but I found it very difficult to agree to it.  On any view, Clause 4 provided for an option on the part of WTL whether to charge overdue interest.  On a proper construction of the clause, the court must consider the matter from the point of view of both sides to the bargain. If Miss Lam’s primary case is correct, SHH would have to put aside some funds or somehow provide for the payment of overdue interest from day 1 because as and when WTL made a demand for interest the entirety of the accrued interest would become payable.  I find it unlikely that reasonable businessmen would have conducted their affairs in such a manner.  Equally, I would be very surprised if that was the consensus reached between the parties.  Accordingly, I reject WTL’s primary case.  

32.  Before I deal with Miss Lam’s alternative case, I should mention two points.  Firstly, no doubt after a considerable amount of research, Miss Lam has cited to me two authorities concerning interest provisions which are not dissimilar to Clause 4.   However, she very fairly accepted that such authorities are rarely of great assistance by reason of the different factual matrix.  Further, she has also confirmed that it was not argued in those cases whether the exercise of the right to charge interest would require giving a notice to the paying party. For those reasons and with respect, I am unable to attach much weight to these authorities.

33.  Secondly, even on its primary case WTL’s claim is confined to overdue interest which had accrued within 6 years of its claim. 

34.  WTL’s alternative case is that overdue interest accrued when the right to charge the same was exercised and it was exercised at the Meeting when WTL gave notice to SHH that overdue interest was payable on the trade debts.  As an alternative, the right to charge interest was exercised by virtue of a letter from WTL’s solicitors dated 17^th October 2008^[6]. The difference between the parties here is whether WTL had indeed exercised its right to charge interest under Clause 4, which is a factual point. 

35.  I am also unable to agree with this part of WTL’s case.  The relevant part of the Notes on which Miss Lam heavily relied stated that “WTL reserves its rights to charge SHH interest as per Appendix 2”.  I am unable to see how that can constitute an exercise of the right to charge interest notwithstanding the attachment of an Appendix setting out the details of the interest charges.  I bear in mind in particular that Kok had agreed in cross-examination that at the material time there was never any demand for overdue interest in accordance with the provisions of Clause 4. 

36.  In relation to the letter dated 17^th October 2008, as pointed out by Mr Sham to Kok in cross-examination, the demand which was made was for “interest [on the trade debts] at HSBC’s Best Lending Rate per annum …”.  I am unable to see how that could constitute a notice to SHH for the exercise of right under Clause 4. 

37.  My conclusions in respect of WTL’s case on Clause 4 are sufficient to dispose of its claim on overdue interest (the burden of proof is on WTL).  However, for completeness, I shall next deal with the legal arguments arising from the 1^st Undertaking. 

The Legal Arguments

38.  SHH argues that, based on the 1^st Undertaking, it is entitled to invoke the principles of promissory estoppel, estoppel by convention, waiver and collateral warranty to defeat WTL’s counterclaim. 

39.  The reliance on collateral warranty is an afterthought in that it was not pleaded by SHH and did not feature in its written opening.  According to the research by both Mr Sham and Miss Lam, there is no clear authority on whether a collateral warranty is required to be specifically pleaded.  I accept Mr Sham’s submission that the material facts underpinning the asserted collateral warranty had been pleaded.  Further, I believe that the proper approach is to endeavour to adjudicate the dispute on its merits.  The court should not be shackled by matters of procedure in the performance of its duties if there is no unfairness.  I do not believe that there is such unfairness and therefore, despite my misgivings, I shall deal with the arguments on collateral warranty.

Promissory Estoppel

40.  SHH contends that a promissory estoppel had arisen by reason of the 1^st Undertaking which precluded WTL from exercising the right to charge overdue interest under Clause 4. 

41.  I believe that the law in this regard has been correctly set out in Chitty on Contracts, 30^th edn., §3-086 as follows:

“For the equitable doctrine to operate there must be a legal relationship giving rise to rights and duties between the parties; a promise or a representation by one party that he will not enforce against the other his strict legal rights arising out of that relationship; an intention on the part of the former party that the latter will rely on the representation; and such reliance by the latter party.”

42.  I believe that the only real dispute here concerns whether the requisite legal relationship existed at the material time between WTL and SHH.  On behalf of WTL, it is argued that the requisite legal relationship must be one whereby WTL had a right to charge overdue interest.  Given that the 1^st Undertaking was made prior to the 1^st Credit Agreement and at that time there was no such right, no promissory estoppel could arise.  On his part, Mr Sham submitted that the requirement was met by reason of the pre-contractual negotiations between WTL and SHH which would give rise to rights and duties once they entered into a contract. 

43.  I believe Miss Lam is correct.  In order to ground the promissory estoppel, there must be a pre-existing legal relationship whereby WTL was entitled to charge SHH for overdue interest.  I am alive to the fact that the parties most probably had a contractual relationship at the material time, if only by conduct.  On the other hand, I cannot see how WTL had an entitlement to charge overdue interest arising out of that relationship.  It is fundamental that a promissory estoppel cannot give rise to any new rights where none existed before.  It serves to prevent the enforcement of existing rights where the requirements are met (See also Chitty on Contracts, 30^th edn., §3-088 & 3-098 and The Law Relating to Estoppel by Representation, 4^th edn., §XIV.2.23-XIV.2.25). 

44.  In the premises, I reject SHH’s case on promissory estoppel.

Waiver

45.  Mr Sham also relies upon the operation of waiver said to be rising out of the 1^st Undertaking, citing for support Brikom Investments Ltd v Carr [1979] 1 QB 467.  I agree with Miss Lam that the waiver in question is analogous to or even identical with a promissory estoppel (Chitty on Contracts, 30^th edn., §3-104 & 22-044). 

46.  I believe that the reason for rejecting the contention of promissory estoppel should apply equally here.  It must be logical that there has to be an existing legal right before that right can be waived.  Accordingly, I also reject this part of SHH’s case.

Collateral Warranty

47.  SHH is on much stronger ground here.  Under the 1^st Undertaking, WTL had promised not to exercise the right to charge overdue interest under the 1^st Credit Agreement.  Acting in reliance upon the 1^st Undertaking, SHH entered into the 1^st Credit Agreement.  The entering into that agreement provided consideration for WTL’s promise.  I am of the view that the case for a collateral warranty has been made out and Brikom Investment Ltd, supra, is the authority for it.  WTL is not entitled to go back on its promise.

Estoppel by Convention

48.  The law in this area was comprehensively reviewed in Unruh v Seeberger (2007) 10 HKCFAR 31.  With gratitude, I adopt the summary of the requirements under this specie of estoppel set out in the headnotes of that report:

“The elements of an estoppel by convention were, first, the parties entering into some “transaction” or legal relationship on the basis of an assumption that was shared by or common to them both. Second, an attempt by one party to depart from the common assumption which departure would be unjust because of the part taken by him in occasioning its adoption by the other party.  Third, that the other party would suffer detriment arising out of his having entered into the relevant transaction on the basis of the common assumption if the opposite party were afterwards allowed to set up rights inconsistent with the assumption.”

49.  Miss Lam’s disagreement to the application of this principle to the 1^st Undertaking is two-fold.  Firstly, it was said that the subsequent signing of the letter containing the 1^st Credit Agreement which set out WTL’s reservation of right to charge overdue interest would defeat any common assumption that no such interest would be charged by WTL against SHH.  I do not believe that is the proper understanding of the evidence.  The promise in question was made by WTL after the said letter was sent to SHH.  Plainly, the common assumption was that notwithstanding the terms of the said letter no overdue interest would be charged. 

50.  Secondly, it was argued that the 1^st Undertaking is insufficiently clear and unequivocal to form the basis of an estoppel by convention.  With respect, I believe that my view on the evidence is adequately clear and I hope I can be forgiven for simply saying that I disagree with the submission. 

51.  I believe that SHH has made out its case under this head.  SHH would suffer detriment if WTL goes back on its promise.  The detriment is the foregoing of its incentive rebate claims.  Here, I should mention that there is a dispute as to whether SHH was entitled to any incentive rebate at the material times. However, WTL’s evidence in this regard (coming from Kok^[7]) is unconvincing, especially when she was not involved with WTL’s business back in 1999 (she joined WTL in 2007).  Wong’s evidence in this regard was not cross-examined.  In any case, I believe that the requirement is met if SHH had given up a “claim”.  A fanciful claim would not be relevant.  However, SHH needs not demonstrate that the claim was bound to succeed. 

Clause 8

52.  Clause 8 of the 1^st Credit Agreement (“Clause 8”) provided that: “No oral modifications or agreements regarding the credit application will be effective.”

53.  WTL’s contention, if any, based on Clause 8 is not altogether clear.  There may be a half-hearted argument that it precludes the 1^st Undertaking and the legal principles relied upon by SHH from taking effect. 

54.  As to the proper construction of Clause 8, I agree with Mr Sham that its terms do not apply to pre-contractual assurance.  Instead, it covers oral modification or agreements made after the 1^st Credit Agreement had come into existence, ie, to exclude oral variations of the agreement.  In the premises, Clause 8 is of no assistance to WTL’s case. 

Estoppel against SHH

55.  It is argued by WTL that SHH is contractually estopped from denying WTL’s right to charge overdue interest by entering into the 1^st Credit Agreement, relying upon Peekay Intermark v ANZ Banking Group [2006] 1 CLC 582 at 602,§56.

56.  With respect, it is self-evident that even if such an estoppel may apply it cannot materially improve WTL’s case.  It adds nothing to WTL’s case on the proper construction of Clauses 3 and 4.  The only purpose it serves is to add to the complication in resolving this dispute and to introduce an unnecessary distraction.  It must be remembered that the law and its application have to be helpful to the people affected by it.  Over analysis rarely serves any useful purpose.  I reject this part of WTL’s case as irrelevant and without merits.

The Ruling

57.  In the course of his closing submission, Mr Sham asked me to revisit the Ruling. Ironically, in Miss Lam’s written final submissions she also sought to re-argue the matter by suggesting that WTL has sufficient evidence on the quantum of overdue interest.  However, quite rightly, she did not press the point. 

58.  In respect of my jurisdiction to revisit the Ruling, I have been referred to the authority of In re Harrison’s Share under a Settlement [1955] 1 Ch 260. It was a case where certain orders were made.  Before the orders were entered, the House of Lords gave a decision to the effect that the judge had no jurisdiction to make the orders.  The judge called for further argument and subsequently varied the orders originally made.  The present situation is quite different.  I have made a ruling on a procedural matter having heard arguments from both sides.  I am not presently convinced that there is no jurisdictional hurdle for me to revisit the Ruling.

59.  Aside from jurisdiction, I am not persuaded that I should not have exercised my discretion the way I did.  The authority of Born Chief Co. v George Tsai & Anr [1996] 2 HKLR 188 cited to me concerned a fairly unique set of facts and is readily distinguishable. 

60.  I have given reasons for the Ruling and I am not inclined to revisit the same.

Conclusion

61.  I give judgment in favour of SHH against WTL in the sum of HK$1,225,825.30 with interest at judgment rate from the date of the writ until payment.  In addition, the parties have agreed two consequential reliefs in connection with unexpired securities.  I grant the orders set out in paragraph 1.2(c) of SHH’s closing submissions.  The counterclaim is dismissed.  I give liberty to apply.

62.  The costs of this action, including the costs of the counterclaim, be to SHH.  Mr Sham has asked for a certificate for two counsel on the ground of complexity of the quantum assessment.  Miss Lam has very fairly left the matter in the hands of this court.  I accede to the request and grant the certificate.