BUCKTON SCOTT LTD v. WAINE TRADING CO

IN THE COURT OF APPEAL

No. 122 of 1987
(Civil)

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JUDGMENT

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Kempster, J.A.:

1. This is an appeal from an order of Rhind J. made on 18th August of this year giving Waine Trading Co., a Hong Kong firm, unconditional leave to defend an action brought against them by Buckton Scott Ltd., an English Co, on 28th April 1987. The parties accepted that the law of Hong Kong applies.

2. It is admitted on the pleadings that by an agreement in writing dated 24th March 1986 the defendants agreed to sell to the plaintiffs and the plaintiffs agreed to buy from the defendants 10,000 kilos of Vitamin C at a price of US$85,000 less 3% commission CIF European Main Port. It is not admitted that by a document of even date the defendants and the plaintiffs concluded a similar agreement in relation to 2,000 kilos of Vitamin B at a price of US$50,000 though the defendants do admit that they offered these goods to the plaintiffs. However, the terms of telexes which the defendants sent to the plaintiffs on 11th and 17th July following demonstrate that they regarded themselves bound as well in relation to the Vitamin B transaction as to that relating to Vitamin C. The plaintiffs acted accordingly. Rhind J. found the defendants bound by both agreements and there is no appeal against that finding. Both Sales Contracts purport to be signed on behalf of each of the parties and despite the assertion to the contrary made by Mr. Chan Chuen Wai, a partner in the defendants' firm, in his affirmation made on 9th July 1987 it is an inescapable inference from the defendants’ conduct during July 1986 that the plaintiffs had communicated the fact of their signature to the defendants. Robophone Facilities Ltd v Blank(1). Rhind J. went on to point out that the documents were posted in Hong Kong on 24th March and can hardly have been signed before the 29th. Communication of that fact to the defendants could not have occurred at any earlier date.

3. Each agreement required the plaintiffs to establish a letter of credit in the defendants' favour assuring them of payment of the price on presentation of a signed draft together with the prescribed shipping documents. As regards the Vitamin B transaction such credit had to be established before 20th April 1986. This was done. The Bank of China in London issued the Letter and the Bank of Credit & Commerce Hong Kong Ltd, Wanchai, acted as advising bankers. As regard the Vitamin C transaction a letter covering the price of 5,000 kilos fell to be established before 10th April 1986 and one for the balance of 5,000 kilos before 10th May following. The plaintiffs failed to establish the first letter required, using the same banks, until about 14th April and at no time established the second. However, the defendants waived these breaches up to and by their telex of July 17th whereby they asked the plaintiffs to extend the life of the existing Letters of Credit. This the plaintiffs had in fact already done and, indeed, had so informed the defendants by telex dated 11th July. In the latter telex they told the defendants that they would further extend the Letter of Credit covering the first 5,000 kilos of Vitamin C to add sufficient funds to cover the price of the second shipment upon receipt of your advice.

4. The defendants made no delivery under either agreement despite the establishment and extension of the Letters of Credit for the whole of the price of the Vitamin B and for half of the price of the Vitamin C agreed to be bought. The plaintiffs contend that the defendants thereby repudiated the agreements and that they accepted such repudiation by issue of writ if not by the terms of their solicitor's letter dated 22nd December 1986. They claim damages and declarations.

5. Since the defendants were not required to give any "advice" the establishment by the plaintiffs of a Letter of Credit for the second 5,000 kilos of Vitamin C remained a condition precedent to the sellers' duty to deliver. Soproma Sp A v Marine & Animal By-Products Corpn(2). The defendants have, therefore, a good arguable defence and perhaps a counterclaim to the plaintiffs' claim for relief for non-delivery of the second 5,000 kilos of vitamin C. Since questions as to the severability of the Vitamin C agreement, waiver, and of the effect of the defendants’ failure to rescind by reason of the plaintiffs' default inevitably arise I would give the defendants unconditional leave to defend as to the whole of the claim based on this agreement.

6. As regards the Vitamin B transaction Mr. Chan deposes to the truth of an allegation in the Defence that it was the intention of the representatives of the parties who had met in Peking before the documents dated 24th March 1986 were prepared that the goods should be bought by the defendants from China National Chemical Import/Export Corporation in the first place and then resold to the plaintiffs and, in consequence, that any agreement concluded between the plaintiffs and the defendants in relation to Vitamin B was subject to the implied term that delivery would only be made by the defendants if the goods had been made available to them by the Chinese Corporation.

7. In the absence of a claim for rectification evidence either of intention or of negotiations is inadmissible as an aid to the construction of an unambiguous written document, Prenn v Simmonds(3), and it cannot seriously be contended that such a term is required to give the agreement business efficacy. Further, nothing in Mr. Chan's affirmation suggests that an additional or collateral agreement came into being at any material time nor have the defendants so pleaded in their Defence and Counterclaim. The genesis and aim of any transaction relating to Vitamin B was the import and export of goods for the mutual profit of the parties.

8. In the circumstances I cannot agree with the conclusion of Rhind J., as a matter of law rather than as a matter of evidence, that the defendants have an arguable defence as regards the Vitamin B transaction. The circumstances in no way call for close investigation. Accordingly I would allow the appeal to the extent that judgment should be entered in the plaintiffs' favour for damages for breach of the Vitamin B transaction to be assessed; prima facie pursuant to section 53 of the Sale of Goods Ordinance, with liberty to apply to a Judge of the High Court for directions in respect of monies lawfully paid to or claimed by sub-purchasers by reason of the defendants' default. Trans Trust S.P.R.L. v Danubian Trading Co.(4); Wong Ho Wai Ying v Yeung Shui Cheung(5).

Cons, V.-P.;

9. I agree with what my Lord has said and with the order he proposes.

Clough, J.A.:

10. I also agree and have nothing to add.