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DCCJ 2678 of 2005
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 2678 OF 2005
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BETWEEN
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VICTOR WONG |
Plaintiff |
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and |
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VINCE PINTO |
1st Defendant |
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SELPRO LIMITED |
2nd Defendant |
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Coram: Deputy District Judge Abu B. bin Wahab
Date of Hearing: 2 May 2007
Date of Handing Down Judgment: 8 June 2007
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JUDGMENT
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1. The Plaintiff claims against the 2 Defendants for repayment of a loan and payment of a share of profits. It is not in dispute that the Plaintiff made the loan in Australian currency by way of bank transfer. Hence, the claim seeks repayment or payment in terms of Australian currency or its equivalent in Hong Kong currency. I will simply say that the amount of loan is HK$530,000 and the amount of share of profits is HK$200,000.
2. No notice of intention to defend having been given by the 2nd Defendant, judgment was entered against it on 8 March 2006 (Trial Bundle page 11).
3. Although the claim is against “the 1st Defendant and/or the 2nd Defendant” (see Amended Statement of Claim in Trial Bundle pages 5 and 6), it is clear that the Plaintiff is more concerned with attaching liability on the 1st Defendant. The 1st Defendant, shareholder and managing director of the 2nd Defendant, said in evidence that the 2nd Defendant is in liquidation.
4. I dismiss the claim against the 1st Defendant. I make an order nisi that the 1st Defendant’s costs in this case be borne by the Plaintiff, to be taxed if not agreed. I will now explain my decision.
5. The material facts in this case are not in dispute. The dispute really boils down to this: the Plaintiff says that the loan was a personal loan to the 1st Defendant who promised to repay it together with a share of profits. The 1st Defendant, however, says that he was acting on behalf of the 2nd Defendant all along. Liability for the loan and the share of profits rest with the 2nd Defendant.
6. Material facts
The Plaintiff resides in Papua New Guinea or Sydney, Australia (see Trial Bundle page 13 and, for example, page 21). He explained that he is engaged in consultancy business. It is consultancy business of a special kind. He represents (or acts as a middleman for) an Israeli company in what I think is generally described as “arms dealing”. He has been in such business for 20 to 30 years. I think it acceptable to say that the Defendants are also in this line of business.
7. The Plaintiff came to know the 1st Defendant through the introduction of a friend in about the year 2000 or 2001. Since that time, the Plaintiff has had business contacts with the 1st Defendant/ 2nd Defendant. Through such contacts, the Plaintiff had arranged for representatives of the Israeli government to come to Hong Kong to make presentations on a “Super Jail”. The Plaintiff had also brought out Israeli military personnel to address the Hong Kong police on body-armour. The Plaintiff had tendered ammunition to the Hong Kong Police through the 2nd Defendant. During this period, the Plaintiff would meet the 1st Defendant every 4 to 6 weeks. They would dine together.
8. The Plaintiff and the 1st Defendant got on very well and a cordial relationship developed.
9. Sometime in August 2002 and over dinner, the 1st Defendant mentioned to the Plaintiff that he was dealing with an Austrian company that supplied pontoons. The 1st Defendant said that his company, the 2nd Defendant, had an order from the Hong Kong Marine Police for the pontoons (“Pontoon Project”) but that funds were needed to bring into effect the order. The 1st Defendant said that if the Plaintiff would advance money, then he would gladly share the profit with the Plaintiff as well as repay the advance/loan in 2 months’ time.
10. Without any further details being provided, the Plaintiff agreed to make the loan.
11. Some details of the loan (and, indeed, of the Pontoon Project) were only provided to the Plaintiff later over the telephone and by e-mail (see, for example, Trial Bundle page 19.The evidence does not indicate what was said over the telephone). The loan was for HK$530,000 and the share of profits was in the sum of HK$200,000.
12. A few days after this particular dinner and on instructions of the 1st Defendant, the Plaintiff transferred funds for the loan into the bank account of the 2nd Defendant (see Trial Bundle page 20 to 23).
13. The Plaintiff was not paid or repaid in full as promised. Money received by the 2nd Defendant from the Pontoon Project was used by the 1st Defendant to pay off an “old debt” of the 1st Defendant’s former freight forwarding company of which the 1st Defendant was guarantor as well as to fund a post-dated cheque the 1st Defendant made out some time ago which the 1st Defendant had forgotten about (Trial Bundle page 24 and 25).
(I digress to say something about the 1st Defendant’s relationship with the 2nd Defendant and the aforesaid “former freight forwarding company”. The 1st Defendant’s explanation, which I accept, was this: shares of the 2nd Defendant are owned by the 1st Defendant and a Palomino Investment Limited (“Palomino”) with the 1st Defendant being the minority share-holder. The 1st Defendant, however, holds 51% of the shares of Palomino and his wife the balance. Palomino owned the “former freight forwarding company”.)
14. Some effort was made to pay the Plaintiff.
15. The 1st Defendant sold off “his” Australian art collection and arranged for the purchaser to pay the Plaintiff direct. This art collection was actually owned by Palomino. All in all, the Plaintiff did receive some money in Australian currency: $40,000 on 24 April 23 and $10,000 on 28 June 2003 (see Amended Statement of Claim paragraph 4 at Trial Bundle page 5. Adopting the exchange rate of Australian $1 to HK$4.24, Australian $50,000 translates into HK$212,000).
16. At the request of the Plaintiff, 3 “Letters of Comfort” (“Letters”) dated 21 April, 11 June and 2 July 2003 were sent by the 1st Defendant to the Plaintiff. By such Letters, the 1st Defendant pledged his apartment situated in New South Wales, Australia, as security for the Plaintiff’s “investment” (Trial Bundle page 26 to 28).
17. Matters considered
The Plaintiff said that the agreement of loan and share of profits made over dinner was personal to the 1st Defendant. The Plaintiff maintained, inter alia, that:
a) the Plaintiff himself is Chinese and thus will only recognise/ accept the person, i.e. the 1st Defendant, in the agreement and not the corporate body i.e. the 2nd Defendant. It was not business concerned with Israeli interests where the corporate body of the 2nd Defendant would then be involved and
b) the agreement was personal and between friends, otherwise the Plaintiff would have asked for formalities to be complied with e.g. a written agreement and company receipt.
18. Regarding paragraph 17 a), I fail to see justification for the professed nexus between being Chinese and recognition only of the person of the 1st Defendant as the contracting party. In fact, such assertion came across as nothing but affectation. It is true that the agreement of loan and sharing of profits had nothing to do with any Israeli interest. The Plaintiff’s own evidence, however, was that the 1st Defendant had made it clear the order for pontoons involved the 2nd Defendant (contracting with the Hong Kong Marine Police).
19. Regarding paragraph 17 b), it is true that the Plaintiff is not a dilettante or neophyte in the business world. He did agree to fund the Pontoon Project on the slightest of information and without formality. I think, however, that on this occasion the Plaintiff saw an opportunity for a quick profit on what he believed to be a no-risk basis. He felt that it merely involved a brief financial bridging exercise. He trusted the 1st Defendant and the 2nd Defendant. Neither had presented problems in the past. I consider the truth is that on this occasion the Plaintiff did not give any thought to or just did not care whether he was advancing money to the 1st Defendant or the 2nd Defendant. Alas, even seasoned fighters may unwittingly let their guard down.
20. As far as the 1st Defendant is concerned, I think it more probable than not that he negotiated the loan on behalf of the 2nd Defendant and considered it the responsibility of the 2nd Defendant to repay the loan and pay a share of profits to the Plaintiff. The 2nd Defendant was, after all, the party contracting with the Police. The 2nd Defendant was the 1st Defendant’s instrument for doing business. More importantly, the 2nd Defendant was the 1st Defendant’s shield against personal liability. I do not think the 1st Defendant will discard this shield so easily.
21. I regard the issuing of the Letters and payment to the Plaintiff out of proceeds of sale of the art collection (see paragraphs 15 and 16 above) as merely acts of good faith on the part of the 1st Defendant. They do not indicate the 1st Defendant had at any time assumed personal liability. The various e-mail messages exchanged between the parties and payment of the loan into the bank account of the 2nd Defendant by the Plaintiff on instructions of the 1st Defendant do not assist either the case of the Plaintiff or the 1st Defendant.
22. I consider that a reasonable bystander seised of the facts of this case (in particular my findings in paragraph 18 to 21 above) will conclude that the Plaintiff made the agreement of loan and share of profits with the 2nd Defendant and that no personal liability was ever assumed or borne by the 1st Defendant.
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Abu B. bin Wahab
Deputy District Court Judge |
Representation:
Mr. Lawrence W.C. Lau instructed by Messrs. Stevenson, Wong & Co.
1st Defendant, Mr. Vince Pinto, in person
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