Onspan Ltd. v. Tanrich Investment Consultant Ltd.

IN THE COURT OF APPEAL

1994, No. 164
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

1. This is an appeal by the unsuccessful defendant from an order of Mr. Anthony To, sitting as a Deputy Judge of the District Court, who on 4 July 1994 gave judgment, in an action between Onspan Ltd ("Onspan") as plaintiff and Tanrich Investment Ltd ("Tanrich") as defendant, in favour of Onspan.

2. Onspan is a company of which the controlling shareholder is a Mr. Samucha. (The other shareholder is his wife.) Tanrich is a company which, it appears, deals in foreign exchange contracts.

3. The dispute between the parties has narrowed down before this court to the following issue. Is Tanrich liable, in connection with its dealings over certain such foreign exchange contracts, to Onspan, or to Samucha? The details of the relevant transactions are analysed carefully by the judge in his judgment and I need not rehearse them here. The judge, when turning to the point in issue, dealt with the matter in this way:

"The Parties and the Agreement:

Mr. Liu on behalf of the Defendant submitted that all along it was Samucha's intention that the account was to be opened in his name. He referred me to the following passage of Samucha's evidence at page 2 of the notes of proceedings:

"He (Lee) called me the following day and said the (Defendant) company accepted that an account would be opened without those terms and conditions. He said I could open the account in my name. By that time I intended to open the account in my name.'

On the basis of Samucha's evidence, all along the conversation between him and Lee were carried out in the first person. There was no mention at all during those conversation that the account was to be opened in the name of the Plaintiff company.

An incorporated company has nevertheless to conduct its business and daily affairs through natural persons. To determine whether the acts of a director were done in his personal capacity or as agent of the company, it is necessary to look at all the circumstances and determine what was the intention of the parties.

The 'cold call' was made to the office of the Plaintiff's Company. The visits were paid to the Plaintiff company. The conversations were between Lee and Samucha who is the majority shareholder and director of the Plaintiff company. The other shareholder is the wife of Samucha. Most significantly is that the deposit was paid by the Plaintiff's cheque. Having regard to these, I find that when Samucha was negotiating the contract, he was doing so as the mouthpiece of the Plaintiff company. When he said he intended to open an account in his name, he meant it was his intention that the account be opened in the name of the Plaintiff company.

On the other hand, it is Lee's evidence that opening an account for an incorporated company would require other documentation and no such documentation has been called for. That I have no doubt. However, having heard Lee's evidence, I find that he was indifferent as to who he was contracting with, whether it be the Plaintiff company or Samucha in his personal capacity. He was only interested in opening an account, and on his evidence, which I do not accept, he would even offer his name for that purpose.

Having regard to these primary facts, I apply the reasonable man's test. I find that a reasonable man, looking at all these circumstances, would conclude that the contract was negotiated between Samucha as an agent of the Plaintiff company on the one hand, and Lee as an agent of the Defendant company on the other."

4. Before us, Tanrich challenges the judge's finding of fact (for it is a finding a fact) that the contractual arrangements here were made between Tanrich and Onspan, and not between Tanrich and Samucha. Tanrich says that the evidence of Samucha, and all the documents, suggest that Samucha intended to open the relevant account with Tanrich for himself and not for Onspan. Tanrich says that Samucha himself said that he intended to open the account "in my name", as the judge observed. (One might add, as was pointed out from the bench in the course of argument, that Samucha never expressly said that he intended to open the account in the name of Onspan.) Tanrich says (as is the case) that it was Samucha himself who inserted his full name "Haim Samucha" on a deposit notice dated 5 December 1992 which he was asked to sign. Tanrich says that the buying and selling orders which came into existence here were sent by facsimile by Tanrich not to Onspan but merely "for the attention of Mr. Samucha". Tanrich says that when Samucha complained of various matters to Tanrich in a letter dated 8 December 1992, he signed his own name, without adding the words so 'For and on behalf of Onspan Ltd' and without affixing what is known in Hong Kong as 'the company chop' (it is, however, to be observed that this letter is written on Onspan's headed paper.) Tanrich says that its cheque dated 14 December 1992 for HK$39,286 in a settlement of obligations was drawn by Tanrich, not in favour of Onspan, but in favour of Samucha, and was received by Samucha who signed a receipt for it, also dated 14 December 1992, again, without doing so for on behalf of Onspan and without affixing the company's chop.

5. In these circumstances, Tanrich has marshalled a formidable case which could well have led the judge to the conclusion that the contractual arrangements here were made by Tanrich with Samucha rather than with Onspan. That however was not the judge's conclusion.

6. In the passage from the judgment which I have already cited, the judge said that he would "apply the reasonable man's test". It is said on behalf of Tanrich that that was the wrong thing to do. But I am not convinced that this is so. When questions like this arise, some exercise in objective reasoning may well become necessary. A distinguished Scottish jurist once pointed out:

"The judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude of the other."

See Gloag on Contract, 2nd edition, p.7, cited by in McCutheon v. David Macbrayne Ltd [1964] 1 WLR 125 per Lord Reid at p.128.

7. When the judge here, having regard, as he said, to the primary facts, applied "the reasonable man's test", I think he was doing no more and no less than to approach the matter in this way. The judge found, as I read his judgment, that a reasonable man, looking at all the circumstances which he had related, would conclude that the contract here was negotiated between Samucha (as the agent of Onspan) on the one hand and Tanrich on the other hand.

8. This court must be careful before it interferes with a finding of fact arrived at by the court below. That court has had all the advantages of seeing and hearing the witnesses and getting the "feel" of the case. Of course, if a judge fails to take proper advantage of the opportunity which seeing and hearing the witnesses has given him, or, in some other way, fails properly to appreciate the effect of the evidence which he has received, this court can and will interfere, but I am far from satisfied that the present is such a case. Although I accept that, on the evidence before the judge, he might well have come to a different conclusion on the point of fact which he had to consider, I am not prepared to hold that the judge here went wrong. He carefully reviewed the evidence. He took into account all the matters which he had to take into account. He did not take into account any matter which he should not take into account. He based his finding of fact largely, and in my view quite properly, on the significant feature that the deposit had been paid by a cheque issued by Onspan. (He might have added that much of the correspondence had been conducted on paper bearing Onspan's letter heading.) Paying what seems to me to be proper respect to the findings of fact of the judge, I would uphold his decision, and, for these reasons, I would dismiss this appeal.

Liu, J.A. :

9. I agree. The only comment I wish to make is that the evidence in this case before the trial judge was not all one way.

10. There was evidence for the trial judge to find the facts as he did. I agree with my Lord, Godfrey, J.A. that the appeal should be dismissed.

Rogers, J. :

11. I agree and there is nothing I can usefully add.