XCHRX FEOSO OIL LTD. v. MOON KEUNG SHIPPING & TRANSPORTATION CO. LTD.

1994, No.CL225

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

__________

___________________

J U D G M E N T

___________________

1. This is an application for final judgment under O.14 of the Rules of the Supreme Court.

2. On the 23 September 1994, Feoso Oil Limited, the Plaintiff, issued a writ against Moon Keung Shipping & Transportation Company Limited, the Defendant, claiming a sum of HK$837,445.96, being the balance of invoices issued to the Defendant in respect of motor lubricating oil and bunker fuel delivered by the Plaintiff to the Defendant for its use at the motor vessel "Queen of Jin Jiang".

3. That the oil was delivered to the ship is not in dispute. The Defendant says that it acted as agent for and on behalf of its principal Treasure Route Shipping Ltd ("Treasure Route") the demise charterers of the motor vessel Jin Jiang to whom the oil was supplied and whose responsibility for payment it is. It also alleged that the Plaintiff knew that the Defendant was acting as Treasure Route's agent in that an employee of the Plaintiff, Mr Chan Shun Kay ("Mr Chan") and a director of the Plaintiff, Mr H.T. Liu ("Mr Liu") arranged or negotiated wholly or in part the demise charter and therefore knew that the orders were placed by the Defendant as agent for Treasure Route; that agents of the vessel that trades out of Hong Kong and is based in Hong Kong act as agents and not as principal when ordering necessaries on behalf of the owners and/or demise charterers of a vessel.

4. The Plaintiff denies that the Defendant acted as agent. It says that the evidence does not support this and the demise charter has been raised as a smoke screen.

5. Mr Mak, counsel for the Plaintiff, referred me to three categories of documents which he submits showed conclusively that the Defendant acted as principal.

(1) Delivery receipts.

These fall into two types: lub oil delivery receipts and bunker delivery receipts. There are eight lub oil receipts for the period from 9 January to 15 April 1993. Each states that the oil was delivered to the ship "Queen of Jin Jiang". Although the Defendant is named as the "owner/operator", it did not sign any of the receipts and there is no evidence that the Defendant received these receipts. The receipts were in fact signed by the Chief Engineer. As regards, the two bunker oil receipts in evidence, the Defendant's name is not even shown on either of them. One is signed by the Second Engineer and the other by the Chief Engineer who noted on the receipt that as the actual amount received was less than that shown in the receipt, the receipt was expressed to be subject to "owners/charterers'"approval.

(2) Invoices.

Invoices in respect of the deliveries of lub and bunker oil were addressed to the Defendant.

(3) Payments made by the Defendant.

Four payments were made to the Plaintiff between 16 December 1992 and 5 February 1993 in part payment of the amounts invoiced. The Plaintiff submitted that the cheques sent in payment evidenced the holding out or acceptance by the Defendant as principal by settling payments direct without any qualification that it was acting as agent.

6. The Plaintiff contends that one cannot expect shipping agents not to be responsible for orders placed for a ship's necessaries and in any event, none of the contemporaneous documents stated that the Defendant was acting as agent only.

7. Mr Kerr, appearing for the Defendant, submitted that the three categories of documents relied on by the Plaintiff do not have the effect contended for. First, the delivery receipts were not signed by the Defendant and signature by the ship's crew does not bind the Defendant. Second, if a person acts as agent, it is not out of the ordinary for invoices to be sent to him. Third, the cheques used to effect part payment were in fact banker's drafts where the Defendant is named as the remitter of the funds. It is not conclusive one way or the other of its being a principal. If the Defendant were to succeed in establishing that it acted as the ship's agents and that the Plaintiff knew or was aware that it so acted, it would have a valid defence.

8. In proceedings for summary judgment, the proper test is that adumbrated by the Court of Appeal in Ng Sau Chun v. Hung Chan San, CA No.182 of 1993: "Is what the Defendant says credible, if so, he must have leave to defend. If not, the Plaintiff is entitled to summary judgment. The issue is not whether the Defendant's assertion has been believed, it is whether those assertions are believable."

9. In my view, the documents relied on by the Plaintiff do not show conclusively that the Defendant acted as principal. There is also in evidence (1) a proposal made on 5 August 1992 from Mr Chan of Jin Jiang Travel (HK) Ltd to Mr Liu relating to a proposed bare boat charter or charter by demise of the ship; (2) a bare boat charter dated 18 November 1992 between Golden Chance Ltd, the owner of the ship and Treasure Route, the charterer; and (3) a Certificate of Entry for the ship in which Ego Gain (Maritime) Ltd is named as agents for the bare boat charterers and the Defendant is named as agents.

10. The Plaintiff has not denied that Mr Chan and Mr Liu are respectively an employee and director of the Plaintiff. Mr Liu was, until 1 March 1991, also a director of Jin Jiang Travel (HK) Ltd and Mr Chan was a director of Ego Gain. In these circumstances, the Defendant says that the Plaintiff, through Mr Chan and Mr Liu, knew of the bare boat charter and of the capacity in which the Defendant acted.

11. Applying the test in Ng Sau Chun v. Hung Chan San to these facts, I reach the conclusion that what the Defendant says is credible and so it must have leave to defend. Accordingly, the Plaintiff's application is dismissed with costs.

[Submissions as to costs]

12. Application for costs on an indemnity basis refused.