ECOSUCCESS LTD v. WONG MAN KAM PATRICK AND ANOTHER

HCA 1491/2021

[2023] HKCFI 910

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1491 OF 2021

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BETWEEN

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DECISION

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1.  The plaintiff (“Ecosuccess”) claims for outstanding indebtedness owed by Bintan Mining Corporation (“Bintan Mining”), which the 1^st defendant (“Wong”) and the 2^nd defendant (“Leung”) guarantees, pursuant to a written facility agreement dated 17 November 2014 (“the Agreement”). Wong and Leung are collectively referred to below as the defendants unless otherwise specified.

2.  This is Ecosuccess’ application for summary determination of the issue of construction of the relevant terms of the Agreement, and summary judgment against the defendants. There is also the application by the defendants to strike out certain part of Ecosuccess’ affirmation evidence filed for the purpose of its application.

BACKGROUND

3.  The Agreement was between Pacific Bulk Enterprises Company Limited (“Pacific Bulk”) and Bintan Mining, of which the defendants were at the material times shareholders and directors in control. The recital of the Agreement provided for the following background:

“(1) Bintan Mining is developing a bauxite project on Rennell Island of the Soloman Islands… (the “Project”)

…

(3) Pacific Bulk is a marine transportation company that provides marine transportation services to its clients, including Bintan Mining.

(4) Bintan Mining urgently needs additional cash for their operations in relation to the Project.

(5) Upon Bintan Mining undertaking to use Pacific Bulk, subject to the Shipping Agreement under clause 6, as their exclusive transportation services provider for all Bauxite exported from Rennell Island, Pacific Bulk arranged at its own cost detailed seabed screening of various potential loading areas under Rennell Island as well as conducting various other investigations into navigation safety for marine vessels in the vicinity of Rennell Island.”

4.  It continued with the following substantive terms:

“1. THE SERVICES BY PACIFIC BULK AND THE FACILITY

(a) Subject to the Shipping agreement under clause 6, Pacific Bulk shall be the exclusive ocean carrier or transportation services provider for Bintan Mining in respect of the Bauxite exported from Rennell Island…

(b) Pacific Bulk further agrees to lend to Bintan Mining an amount of US$3,000,000 pursuant to the terms and conditions of this Agreement (the “Facility”). All amounts drawn under the Facility shall be applied by Bintan Mining towards its operational expenditures on the Project…

2. REPAYMENT

The Advance shall be repayable by Bintan Mining, together with any accrued interest and all other amounts accrued or outstanding under this Agreement, in full on the earliest of the following dates:

(a) at any time, immediately upon occurrence of an Event of Default (as defined below);

(b) from the date that falls 6 months after the date of this Agreement, within 10 banking days of demand by Pacific Bulk; and

(c) the date that falls 10 years from the date of this Agreement (the “Final Repayment Date”) or until the mine is fully excavated of its reserve of Bauxite, or of no more economic value to excavate, whichever earlier.

3. PAYMENTS TO PACIFIC BULK BASED ON BAUXITE EXPORTED

(a) In consideration of Pacific Bulk becoming Bintan Mining’s exclusive transportation services provider, its entering into this Agreement and its funding of a portion of the operational expenditures of the Project by way of the Facility, Bintan Mining shall pay to Pacific Bulk an amount equivalent to the total of US$1.00 per dry metric ton of bauxite exported from the Project and imported at any ports in the People’s Republic of China (the “Payments”)…

(b) The Payments shall be paid by Bintan Mining to Pacific Bulk until the Final Repayment Date. The total amount of the Payments payable to Bintan Mining during this period shall not exceed US$30,000,000 in aggregate.

(c) …

(d) The first sums of Payments up to US$500,000 shall not constitute repayment of principal of the Advance or payment of any interest accrued thereon in the event a repayment is triggered under clause 2(a) or 2(b) of this Agreement. Payments thereafter shall be applied towards as repayment of the principal of US$3,000,000.

(e) Payments after the full settlement of the principal shall be deemed the investment returns to Pacific Bulk for funding part of the operational expenditures of the Project by way of the Facility.

4. INTEREST UPON DEMAND OR DEFAULT

(a) In the event the Advance becomes repayable pursuant to clause 2(a) or 2(b) of this Agreement, interest shall be deemed to have accrued on the outstanding balance of the Advance at the rate of 12% per annum.

(b) Interest shall be deemed to have accrued daily and shall be payable together with repayment of the outstanding principal of the Advance on the date that such repayment becomes due pursuant to clause 2(a) or 2(b), as the case may be.”

5.  Clause 7 of the Agreement set out various representations and warranties given by Bintan Mining to Pacific Bulk, while clause 9 provided that essentially the defendants would jointly and severally guarantee Bintan Mining’s obligations under the Agreement.

6.  By 18 November 2014, Pacific Bulk had, in accordance with clause 1(b) of the Agreement, advanced a total sum of US$3,000,000 (the “Facility”) to Bintan Mining.

7.  By a nomination agreement dated 21 January 2015, Pacific Bulk nominated and transferred to Ecosuccess all of its rights, title, liabilities and obligations under the Agreement. The defendants signed and assented to the nomination agreement.

8.  On 9 September 2020, Ecosuccess served a statutory demand on each of the defendants. The debt as stated on each statutory demand was US$1,194,450.34 plus HK$5,757,913.14, being the outstanding sum under various invoices issued under the Agreement.

9.  On 28 September 2020, the defendants respectively applied to set aside the statutory demands, alleging, amongst other things, that the Agreement was tainted by misrepresentation and illegality, and was invalid or unenforceable (ie HCSD 50/2020 and 51/2020).

10.  By the judgment handed down on 16 June 2021, DHCJ MK Liu dismissed the defendants’ applications in HCSD 50/2020 and 51/2020 with costs to Ecosuccess: see [2021] HKCFI 1725.

11.  Meanwhile, Bintan Mining was put into liquidation. On 26 May 2021, its liquidators appointed in the British Virgin Islands applied ex parte to the Hong Kong court for a recognition order. There is, and can be, no dispute that that constituted an event of default under clause 8 of the Agreement.

12.  By then, after giving credit to the payments made by Bintan Mining pursuant to clause 3 of the Agreement, the outstanding principal of the Facility was around US$2,170,000.[1]

13.  During the period between June to July 2021, the defendants made payments to Ecosuccess as follows:

(1) HK$3,600,000 on or around 25 June 2021;

(2) US$1,194,450.34 plus HK$757,913.14 on or around 14 July 2021; and

(3) HK$1,400,000 on or around 29 July 2021.

14.  On 30 July 2021, Ecosuccess issued demand letters to Bintan Mining and the defendants, demanding the repayment of a total sum of US$1,940,150.40 comprising:

(1) US$242,537.64, being the outstanding principal of the Facility as at 30 July 2021, after giving credit to the payments mentioned in the preceding paragraph; and

(2) US$1,697,612.76, being contractual interest at 12% per annum on the sum of US$2,170,480.10 (i.e. the outstanding principal as at 26 May 2021) accrued from 18 November 2014 to 26 May 2021.

15.  In August 2021, the defendants made further payments to Ecosuccess as follows:

(1) HK$1,893,920.36 (or US$241,263.74) by cheque dated 24 August 2021;

(2) HK$194,829.62 (or US$24,819.06) by another cheque dated 24 August 2021;

(3) HK$100,356.21 (or US$12,784.23) by cheque dated 31 August 2021.

16.  According to Ecosuccess, in light of the above payments in August, a sum of US$1,661,283.37 (US$1,940,150.40 – US$278,867.03) remains outstanding.

17.  On 29 September 2021, Ecosuccess commenced the present action against the defendants to recover the sum of US$1,661,283.37 plus further interest until full payment.

18.  The defendants filed their defence on 12 November 2021. Among other things, it was pleaded that:

(1) On the true construction of clause 4 of the Agreement, contractual interest would only accrue from the date the Facility became repayable (i.e. 26 May 2021), not from the date the Facility was advanced (i.e. 18 November 2014);

(2) In any event, it was the common intention of Pacific Bulk, Bintan Mining and the defendants that interest would only accrue from the date the Facility became repayable; hence, if necessary, clause 4 of the Agreement should be rectified to give effect to such common intention.

19.  By pleading, the defendants also contended that clause 4 was unenforceable as a penalty clause and that Ecosuccess’ claim is time barred[2]. However, these arguments were abandoned for the purpose of the hearing.

20.  On 23 December 2021, Ecosuccess filed its summons seeking (i) determination of a question of construction of the Agreement pursuant to O14A of the Rules of the High Court, Cap 4A (“RHC”); and (ii) final judgment against the defendants pursuant to O14 of the RHC.

21.  The question of construction that Ecosuccess seeks summary determination of pursuant to O14A is:

“In the event that the Advance (as referred to in Clause 4 of the [Agreement]) becomes repayable pursuant to Clause 2(a) of the [Agreement], whether the interest on the outstanding balance of the Advance payable under Clause 4 shall be deemed to have accrued:-

(a) from the time when the Advance was made to and received by Bintan Mining Corporation, as pleaded in Paragraph 17 of the Amended Statement of Claim (i.e. as from 18 November 2014 up to 26 May 2021); or

(b) “from the date the Advance becomes repayable” as pleaded in Paragraph 10(e)(ii) of the Amended Defence[3] of the 1^st and 2^nd Defendants (i.e. from 26 May 2021)”

22.  Further, consequential upon the determination of the above question of construction, Ecosuccess would seek summary judgment against the defendants on the amounts claimed with further interest and costs of the action.

23.  After the close of affirmation evidence, the defendants took out their summons on 12 April 2022 for (i) striking out, expunging or debarring Ecosuccess from relying on §24 and Exhibit SM-2 of the 2^nd Affirmation of Sun Min (“Sun”) filed for Ecosuccess (“Sun 2^nd”); further or alternatively (ii) leave to file, serve and rely on the 1^st Affirmation of their solicitor, Chan Ting Kwong, (“Chan 1^st”) at the substantive hearing. Sun was at the material time and is a director of Pacific Bulk and the assistant to the sole director of Ecosuccess, Mr Lau Wing Yan (“Lau”).

THE DEFENDANTS’ SUMMONS

24.  I deal with the defendants’ summons first, as this would affect the evidence that may be taken into account when considering Ecosuccess’ summons.

25.  What the defendants object to is §24 of Sun 2^nd, which referred to the decision of DHCJ Le Pichon in a separate action between Pacific Bulk Supramax Co Ltd and Bintan Mining (HCMP 1190/2020). In that action, the learned Deputy Judge granted to Pacific Bulk a Mareva injunction against Bintan Mining in aid of 16 ongoing arbitrations between them. Ecosuccess seeks to rely on the various remarks and findings made by the learned Deputy Judge regarding the credibility and integrity of Bintan Mining and Wong. A copy of the learned Deputy Judge’s decision [2021] HKCFI 680 was exhibited as Exhibit SM-2. These are what the defendants seek to expunge.

26.  In my view, it is obvious that the remarks and findings of DHCJ Le Pichon in her decision were adduced for the mere purpose of credibility.

27.  First, there was no indication that HCMP 1190/2020 would be relevant to the O14A or O14 applications. Otherwise, the decision, which was handed down on 15 March 2021, would have already been referred to by way of affirmation in support filed on 23 December 2021 just as what Ecosuccess did with respect to the proceedings and outcomes in HCSD 50/2020 and 51/2020.

28.  Second, nothing in the affirmation in opposition filed by the defendants gave rise to any factual issue calling for reply by reference to that decision in HCMP 1190/2020. The only possible bearing of the decision was the adverse remarks and findings, which Ecosuccess seeks to rely on for casting doubt on the general credibility of Bintan Mining and the defendants, and thus their assertions. The submission on behalf of Ecosuccess made that clear. That however does not found the relevance of such evidence, and thus its introduction by way of reply or at all.

29.  In the circumstances, I would allow §1 of the defendants’ summons. §2 of the summons is consequential, an effectively “tit for tat” response of the defendants. This is not justified nor necessary, in view of the ruling in terms of §1 of their summons.

ECOSUCCESS’ SUMMONS

The O14A application

30.  It is trite that the approach of the court in an O14A application is to ask: (i) whether the relevant question is one of law or of the construction of a document; (ii) if the answer is yes, whether that question is one that should be determined under the Order 14A procedure; and (iii) if yes, what the determination of that question is and what orders the court should make consequential upon such determination: See Rockwin Enterprises Ltd v Shui Yee Ltd [2003] 3 HKC 174. In the present case, only questions (ii) and (iii) are disputed.

Contractual interpretation

31.  The issue raised in the present application is one of construction of the contractual term regarding liability to pay interest and accrual of such interest.

32.  The principles governing contractual interpretation are also trite.

33.  To ascertain the intention of the parties, the court reads the terms of the contract as a whole, giving the words used by the parties their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions, the court does not inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified: see Marble Holdings v. Yatin Development Ltd (2008) 11 HKCFAR 222 at §19.

34.  Where the parties have used unambiguous language, the court must apply it: see AFH Hong Kong Stores, Ltd v. Fulton Corporation Ltd [2021] HKCFI 873 at §32(d).

35.  Commercial common sense is an important factor in interpreting a contract. However, the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. A court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. It is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. When interpreting a contract, the court should avoid rewriting it in an attempt to assist an unwise party or to penalise an astute party: see Arnold v. Britton [2015] AC 1619 at §§19-20; Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632 at §§77 to 79.

36.  The above principles were recently reiterated in Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) 23 HKCFAR 487 at §§43-45.

Whether the O14A jurisdiction should be invoked for determining the construction issue

37.  Essentially, the defendants argue that the Agreement has to be construed in context. This is indisputable as a matter of principle. In case of a contract which is marked by informality, brevity or the absence of skilled professional assistance, correct construction may be achieved by a greater emphasis on its factual matrix: see Eminent Investments (Asia Pacific) Ltd (above) at §§43-45. This, the defendants argue, is such a case but the necessary factual matrix is lacking or incomplete without trial. Therefore, the questions for construction are not suitable for O14A determination.

38.  Insofar as the alleged lack of or incomplete factual matrix is concerned, the defendants argue that the Agreement was poorly drafted without the intervention of legal professional. They refer to instances such as the lack of consistency in the use of the terms “facility” and “advance” in the Agreement. However, these, in my judgment, fall far short of the circumstances material enough to render the relevant terms of the Agreement ambiguous.

39.  In my judgment, the defendants fail to identify the precise relevant elements that are missing from, or uncertain in, the factual matrix which would really compromise the context in which the relevant part of the Agreement has to be construed. As mentioned, the relevant part of the Agreement is the term in respect of the obligation to pay interest and the accrual of such interest in the event of default.

40.  To the extent that the defendants seek to rely on the factual dispute they raise by reference to the alleged pre-contractual oral representation or promise made by Sun in respect of the accrual of interest, the discussion further below refers. Suffice to say for the present purpose that such attempt is rejected both in principle and in substance.

41.  In my judgment, I see nothing material standing in the way of the exercise of the O14A jurisdiction of this court in respect of the construction issue.

Which side the construction issue should be determined in favour of

42.  The claim is based on the obligation of the defendants pursuant to clauses 2(a) and 4(b) of the Agreement. Their wordings, in my view, are clear.

43.  Pursuant to clause 2(a), the advance shall be repayable together with any “accrued” interest on the date immediately upon the occurrence of an event of default”. Clause 4 provides that where the advance becomes repayable pursuant to clause 2, interest shall be deemed to “have accrued” on the outstanding balance of the advance. Clause 4(b) provides that interest shall be deemed to “have accrued” daily and shall be payable together with repayment of the outstanding principal of the advance “on the date that such repayment becomes due”.

44.  If the construction contended by the defendants were correct, one would have expected that interest “shall accrue” on the date when the outstanding principal becomes repayable. There would have been no need for the deeming of a state of affairs regarding interest, and second, and more importantly, there should be no accrued interest repayable on that date together with the outstanding principal as, according to the defendants, interest should merely start to accrue. The defendants’ contended construction flouts the actual wordings of the relevant clauses.

45.  In their arguments, the defendants also made the following points:

(1) the Facility was not advanced with a view of giving profit/security in the form of interest to Ecosuccess;

(2) Ecosuccess had already received substantial payments totalling some US$83.8 million under the Agreement;

(3) the circumstances surrounding how the Agreement came to be finalised support their understanding of the relevant terms;

(4) their construction is in line with business common sense; and

(5) the contra proferentum rule operates against Ecosuccess as the drafter of Agreement.

46.  First, it is factually incorrect to categorise the term regarding payment of interest or the calculation of such interest from the date of the advance as security or profit for Pacific Bulk/Ecosuccess.

47.  That Pacific Bulk would obtain contractual return for the transportation services as the exclusive provider as well as contractual entitlement to interest on the Facility as the lender under the Agreement were not mutually exclusive. The former was the return for services whereas the latter was the compensation for the loss of use of money over time. As regards its entitlement to such compensation for the loss of use of money over time, whether or not Pacific Bulk was in the business of money lender (which the defendants also refer to) is irrelevant.

48.  Importantly, interest becomes payable only if the Facility becomes repayable under clause 2. It is due to the outstanding amount of the Facility becoming repayable pursuant to clause 2(a) that interest is deemed to have accrued and becomes payable at the same time. That cannot be categorised as profit or security. Nor is there absurdity as the defendants suggest for mere argument’s sake.

49.  Second, whether or not Ecosuccess has already received substantial payments from the defendants is not relevant.

50.  Clause 3(a) makes clear that these payments were made in consideration of not only the advance but also the provision of transportation service by Pacific Bulk. The reasonableness or adequacy of the reciprocal consideration from Pacific Bulk/Ecosuccess, and thus whether or not it was a bad deal for the defendants, is not relevant to the construction of the relevant terms.

51.  Third, the attempt by the defendants to rely on pre-contractual negotiation and drafts agreements exchanged between the parties could not aid the construction of the Agreement.

52.  The law is trite that evidence of such matters is inadmissible in aid of construction of the parties’ agreement: see Marble Holdings (above) at §21; AFH Hong Kong Stores Ltd (above) at §§37-38. The defendants refer to Channel Green Ltd v Huge Grand Ltd [2015] 1 HKLRD 655 (at §§35-37). If anything, what the appellate court said in Channel Green Ltd in fact reiterate the same principle while the other purpose for which pre-contractual negotiations may be admissible as evidence, as the court there explained, is not the relevant purpose in the present application.

53.  Even if admissible, the evidence of the pre-contractual negotiation between the parties in the present case does not support the defendants. After receiving the defendants’ draft of the Agreement on 30 October 2014, Pacific Bulk returned a revised draft to the defendants by email on 5 November 2014. It was remarked that the revised draft generally reflected what was discussed between the parties. On the same day, Leung replied to Pacific Bulk by email (with copy to Wong), referring to the further discussion with Lau and leading to their further revised draft of the Agreement. Amongst others, the proposed amendments in the latest draft concerned clauses 2, 3 and 4 relating to the repayment of the advance and payment of interest upon default. This was followed by further revised drafts of the Agreement on 11 and 17 November 2014. The Agreement in its present terms was eventually executed by the parties. In other words, both parties contributed to the final version of the terms of the Agreement signed by them.

54.  Fourth, business or common sense does not serve to displace the terms of the parties’ bargain if they are clear.

55.  As mentioned, what the court does is to construe the terms of the agreement to find out what the parties agreed, not what they in the court’ view should have agreed in line with business or common sense. If anything, Ecosuccess does have its argument from its perspective of the business sense in the provision for interest payable but only in the event of default and, in such event, counting interest from the date of the advance. It is difficult to see how the common or business sense argued by the defendants should and would prevail over that argued by Ecosuccess. In other words, even assuming that business or common sense is relevant, this is a neutral consideration in the bilateral deal in the circumstances of the present case.

56.  Last, the contra proferentum rule does not assist the defendants.

57.  That the terms of an agreement are construed against the party responsible for its drafting does not operate as a necessary starting point in construction of the agreement. It is invoked only if there exists doubt or ambiguity in the terms of the agreement which could not be resolved by the ordinary principles of construction. Doubt and ambiguity in that case will be construed against the party putting forward and drafting the terms. It has been said that this is a rule of the last resort: see Chitty on Contracts (34^th ed) at §15-111.

58.  As discussed, there is no ambiguity or potential absurdity in the relevant terms in respect of the obligation to pay interest and its accrual under the Agreement. Further, as mentioned, the relevant terms were the result of bilateral negotiation and revisions contributed to by both parties. The premise for invoking the rule against Ecosuccess, as if it were the party solely responsible for putting forward and drafting the relevant terms, does not exist: see Transocean Drilling UK Ltd v Providence Resources Plc [2016] 1 CLC 585 at §20.

59.  As to the other instances which the defendants put forward in support of the alleged ambiguity in the terms, they do not advance their case any far either. For instance, issue is taken as to the title of clause 4 “interest upon demand or default”. However, it indicates that the defendants only need to pay interest in the event that the Facility becomes repayable under clause 2. It does not indicate when such interest should start to accrue as the defendants contend.

60.  The defendants also refer to the qualification of “outstanding” to the balance of the advance in clause 4(a). That serves to qualify the interest accruing only on the amount of outstanding principal as at the due date (in this case US$2,170,000) as opposed the entire principal (US$3,000,000). It does not indicate what the defendants contend.

61.  All matters considered, I come to the view that the issue of construction should be resolved in favour of Ecosuccess.

The O14 application

62.  Consequential upon the O14A determination of the issue of construction of the terms of the Agreement, there remains the question of whether Ecosuccess should be entitled to summary judgment on its claim against the defendants. If yes, counsel for the defendants confirmed during the hearing that quantum would not be disputed. However, the defendants contend that they should be entitled to leave to defend.

63.  The principles are trite. While it is the burden of the plaintiff to prove its claim, the defendant has the burden of condescending upon particulars and raising issues of a credible defence that should go to trial or alternatively any other reason that the case ought to go to trial: see O14, rr3-4, RHC; Hong Kong Civil Procedure 2023 (Vol 1) at §14/4/8-14/8/12. The defendants referred in their affirmations at one point to inability to recall every single detail of the negotiation up to the conclusion of the Agreement. True or not, that will not help their discharge of their burden in raising credible triable issues.

The defence

64.  Not unrelated to their allegations in respect of the pre-contractual negotiation, the defence essentially boils down to the factual assertion that there was an oral representation or promise by Sun of Ecosuccess and a continuing common intention of the parties that interest would only accrue from the date the Facility becomes repayable.

65.  In my judgment, the defence must fail.

66.  As a preliminary observation, the defendants’ case on the alleged oral representation on behalf of Ecosuccess on 17 November 2014 has undergone evolution as their case went along. According to the pleading, the contention is that Sun orally represented and promised that interest would only accrue on the advance upon an event of default, such as if Bintan Mining was liquidated or Bintan Mining and/or the defendants failed to repay the advance. That would not have sufficed to displace the basis of the claim because Ecosuccess also suggests that the question of accrual and payment of interest arises only upon an event of default.

67.  In his affirmation, what Leung deposed to in this respect became that Sun verbally assured the defendants that clause 4 had been inserted into the Agreement such that if the business of Bintan Mining collapsed or was wound up or otherwise liquidated, or if Bintan Mining failed to pay the outstanding advance on demand, interest would accrue on the outstanding advance and Pacific Bulk’s interest would be protected.

68.  On a crucial factual contention in defence, variation of the asserted content constituting the alleged oral representation, assurance or promise by pleading and the affirmation evidence is the least expected. That does not lend credibility to the defendants’ case so as to give rise to triable issues.

69.  More importantly, the substance of the assertions is problematic.

70.  First, the allegation that the defendants somehow considered it to be necessary to inquire, and Sun considered it necessary to respond by representation or even promise, in respect of a material term on the liability to pay interest after the same had just been addressed by way of their mutual correspondence and revisions of the draft agreement per se invites scepticism.

71.  Second, any enquiry and response, if considered material, would have been expected to transpire from the correspondence between the parties prior to the meeting on 17 November 2014 mentioned above. There is however no documentary record of the existence of such oral representation or, even more importantly, the alleged oral consensus reached between the parties alongside the Agreement which they proceeded to sign.

72.  Third, the Agreement itself contains provision in respect of warranties and representations. Had material representation been made and consensus been reached concerning the contractual effect of certain agreed obligation, nothing would have prevented the parties from actually incorporating that under clause 7 together with other warranties and representations. The defendants should know, as clause 7 contains very much their warranties and representations.

73.  Fourth, and following from the above, the contention of the defendants is effectively that the parties somehow specifically discussed and reached consensus on some terms or contractual effect of the agreed terms but consciously left them out of mention in the Agreement and yet proceeded on such consensus in apparent contradiction against what the written terms literally meant.

74.  Contrary to what the defendants contend, the Agreement cannot be categorised as unsophisticated and coarsely drafted, whether or not lawyers were involved in the preparation of the Agreement. What happened according to the defendants were hardly expected from business people dealing with business that involved substantial sums of money like that in the present case.

75.  The defendants seek rectification on the ground of (common) mistake in that the term in respect of accrual of interest under the Agreement allegedly do not accurately reflect the common understanding and intention of the parties. Whilst the defence (at §10(c)) hints that, there is no real counterclaim for such rectification. In view of the above discussion, the defendants have failed to make out a bona fide and credible case for rectification in any event.

76.  At one point, the alleged oral representation, assurance or promise by Sun was also said to give rise to estoppel binding Ecosuccess against the enforcement of the interest provision. However, counsel for the defendants also dropped that for the purpose of the hearing.

77.  All things considered, including those discussed above, I am not satisfied that a bona fide and credible defence is present. I therefore see no reason why judgment should not be entered against the defendants summarily.

Conclusion

78.  As mentioned, counsel for the defendants confirmed during the hearing that quantum is not disputed subject to liability. They do fail on liability, and judgment is therefore entered against them in terms of §2(1) and (2) of Ecosuccess’ summons.

ORDER

79.  Order is made in terms as set out in §§29 and 78 above.

80.  Following the event, I make a nisi order that the defendants shall pay the plaintiff’s costs of the action, including its present summons (with certificate for counsel) and any costs reserved, to be taxed if not agreed.

81.  Following the event of the defendants’ summons, they shall have on a nisi basis their costs of that, also to be taxed, if not agreed (with certificate for counsel). No time was really spent on arguing this summons at the hearing, and therefore I refrain from apportioning the costs of the hearing between the two sides’ summonses. Ecosuccess is entitled to its costs of the hearing.

82.  The nisi costs orders in respect of the two summonses respectively shall become absolute without further order, in the absence of application to vary within 14 days.

83.  The plaintiff shall draw up order for approval within 7 days.