XCHRX TRADIGRAIN S.A. v. FONG PIK LAN (a female)

HCA 3956/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3956 OF 1998

____________

_______________

J U D G M E N T

_______________

1. This is the Defendant's appeal against the order of the Master dated 7 October 1999 when summary judgment in the sums of US$1.175 million and US$650,000 was entered against the Defendant together with interest and costs.

2. The Plaintiff's claim is based on an allege breach of 2 "Wash-Out" agreements. According to the Statement of Claim, the Plaintiff was the seller of soyabeans and the Defendant was the buyer of those products. There was also a broker called Tropical Oil Products Brokeage Pte. Ltd ("TOPB"). The Plaintiff alleges that 2 agreements for the sale and purchase of soyabeans were entered into by it and the Defendant: one on about 19 September 1996 and the other on about 14 October 1996. The Defendant was said to have breached both agreements by failing to procure the opening of Letters of Credit for the payment of the goods in question. The Plaintiff further alleges that 2 "Wash-Out" agreements were entered into by it and the Defendant: one on about 16 November 1996 and the other on about 4 December 1996. By these 2 "Wash-Out" agreements, the parties agreed that the 2 sale agreements were to be terminated and the Defendant would pay the Plaintiff the respectively sums of US$1.175 million and US$650,000 in return.

3. In a Defence dated 2 May 1998, the Defendant put forward the following defence:-

(a) the Defendant is and was a director and shareholder of a Fong Ching Co. Ltd ("the said Company"). The registered office of the said Company is the same as the address of the Defendant;

(b) the said Company has been engaged in the export and import of inter alia soyabeans;

(c) the said Company has been trading in the name of "Fong Ching Co.", the same trading name as that of the Defendant's;

(d) at all times, the Plaintiff was dealing with the said Company, and not with the Defendant in her personal capacity;

(e) whenever the Defendant dealt with the Plaintiff, she did so in her capacity as the Managing Director of the said Company.

4. In support of the aforesaid line of defence, paras. 7 and 8 of the Defence further refer to a number of the correspondence between the Plaintiff and the buyer. Para. 9 thereof avers that in the document evidencing in effect the 1st "Wash-Out" agreement, the Defendant appended her signature underneath the space for the said Company.

5. The issue raised in this action is therefore to a large extent a factual one. The principle relating to how the issue of credibility is to be decided in an O.14 application is well settled. The question which the court should ask is not whether the Defendant's assertions are to be believed but whether they are believable: see, for example, Ng Shou Chun v. Hung Chun San; BCC v. Overseas Trading & Co.

6. Having heard the parties and perused the documents before me, I find that:-

(a) If one ignores the contemporaneous documents, (and for the purpose of this appeal) there is nothing inherently impossible about the Defendant's assertions that it was the "Fong Ching Co." operated by the said Company (instead of the "Fong Ching Co." operated by her) which had been dealing with the Plaintiff;

(b) The contemporaneous documents show that:-

(1) in relation to the other transactions involving the Plaintiff and the "Fong Ching" side during the period from about September 1995 to about February 1997 (para. 5 of the 3rd affirmation of the Defendant), they were expressly made with the said Company;

(2) in relation to the 2 transactions (that is the sale transactions and the "Wash-Out" transactions). They were made with a "Fong Ching Co." without expressly specifying which "Fong Ching Co.";

(c) in view of (b) above, I cannot say that the Defendant's assertions are unbelievable over the point of whether the "Fong Ching Co." referred to in (b)(2) above was the one operated by the said Company as opposed to the one operated by her.

7. In coming to the conclusion at (c) above, I note that the issue raised in this appeal by the Defendant is not simply whether the 2 transactions were, as opposed to the other transactions set out in (b)(1) above, made with the said Company rather than the firm. The issue is, as stated above, whether even when the documents referred to the firm, they were referring to the one operated by the said Company (and not the one operated by the Defendant). In this connection, I find that the Defendant's case in this appeal is assisted by:-

(1) there was no apparent reason as to why, while the other transactions were all made with the said Company, the Defendant would particularly choose to make the 2 transactions in question in her personal capacity;

(2) parts of para. 4 of Mr Wells' 2nd affidavit had been shown by the contemporaneous documents to be inaccurate. These parts of his 2nd affidavit stated in essence that Mr Wells was not previously aware of the existence of the said Company and only knew of it through the Defendant's name card which is given to him in November 1996. Mr Wells said that that was the reason why he inserted the name of the said Company into the 1st "Wash-Out" agreement by mistake.

8. For the above reasons, I consider that the Defendant should be given unconditional leave to defend. I find that para. 4 of the Defendant's skeleton argument raises the issue of whether this application falls within O.14 r.7. Since the parties did not have the opportunity to address me on that point, I shall hear them before deciding on it.