PEACE TOWN FINANCE LTD v. CHEUNG CHING YING MAGGIE

HCA 889/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 889 OF 2002

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J U D G M E N T

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1. In this action, the Plaintiff seeks payment of a sum of HK$799,411.75 from the Defendant pursuant to a Guarantee dated 15 December 2000 and by a Letter of Demand from the Plaintiff to the Defendant dated 7 December 2001. The Plaintiff also claims interest on the sum together with costs.

2. The sum sought is the balance of a judgment sum in HCA 2935 of 2001. By that judgment, Wide Concept International Ltd (Wide Concept), was ordered to pay to the Plaintiff HK$1,667,476.17, together with interest at a contractual rate of 2% per annum over the prime rate of interest imposed by the Hong Kong and Shanghai Banking Corporation from 28 June 2001 until 24 August 2001 and at judgment rate thereafter until payment in full.

3. The Plaintiff is and was a licensed money lender in terms of the Money Lenders Ordinance, Cap. 163. The Defendant, at all material times was a director and shareholder of Wide Concept, a company incorporated on 13 October 2000, with its registered office at Unit A, 8th Floor, Capital Building, 6-10 Sun Wui Road, Causeway Bay, Hong Kong. Supreme Advance International Ltd (Supreme Advance) was a corporate director and shareholder of Wide Concept. James Chou and Topbury Ltd are and were shareholders of Supreme Advance. Originally James Chou and Topbury Ltd were directors also - later James Chou's wife, Flavia Chou, replaced him as director.

4. By a continuing guarantee dated 15 December 2000 (the Guarantee), in consideration of the Plaintiff continuing to make available credit facilities, or other financial accommodation, or lending money to Wide Concept, the Defendant agreed to guarantee the punctual payment of monies due or owing to the Plaintiff by Wide Concept, to make immediate payment to the Plaintiff upon any default by Wide Concept and to pay interest on all monies guaranteed from the date of demand made by the Plaintiff.

5. Between 15 December 2000 and 9 May 2001 credit facilities were given to Wide Concept; a total of HK$1,705,000.00 at the contractual interest rate. Wide Concept failed to repay the amount claimed, except for a partial repayment of HK$920,835.00. A Letter of Demand was issued on 7 December 2001, pursuant to the Guarantee, demanding payment of the outstanding HK$799,411.75.

6. Three grounds of defence were advanced, that the Defendant had been misled by a misrepresentation by the Plaintiff about the guarantee; that the Plaintiff had not complied with section 20 of the Money Lenders Ordinance, Cap. 163; and that the action was premature because no demand had been made of the Defendant pursuant to clause 1.02 of the Guarantee.

Background

7. Prior to the incorporation of Wide Concept, the Defendant was operating a business which involved her purchasing luxury goods in Europe to sell to suppliers in other countries in Asia, particularly Japan. The business relied on merchandisers who made trips to Europe, sourced the goods, paid for them, brought them back to Hong Kong and were reimbursed by the Defendant after the customers had paid to her whatever was owed.

8. The business relied for finance chiefly on the merchandisers using their personal, multiple, credit cards to ensure that they had a very substantial credit base. Some of the purchasing clients were prepared to make an initial deposit of around 30% to facilitate the obtaining of the goods. In some cases, though more rarely, the purchaser was prepared to outlay the total cost of the goods, but whichever method was used, there was an inevitable delay between the time the goods were brought back to Hong Kong for checking and onward delivery and the time when the merchandisers were reimbursed for their purchases and travel expenses.

9. In about September 2000, the Defendant was introduced to Madam Flavia Chou with a view to their cooperating commercially in merchandising fashion and leather goods. James Chou, husband of Flavia Chou joined in the plan and it was agreed a new company, Wide Concept, would be incorporated. Half the shares were to be held by the Defendant and the other half held by the Chous through Supreme Advance. The profits would be split 60/40 in favour of the Defendant, because her existing client base and her detailed merchandising know-how, including important contacts with suppliers and clients, would be the most valuable asset of the company.

10. The registered office of Wide Concept was 2nd Floor, AON China Building, 29 Queen's Road Central, Hong Kong, but the actual office premises was at all times at 22nd Floor, Plaza 2000, 2-4 Russell Street, Causeway Bay, Hong Kong. The Plaintiff's registered office was also at 2nd Floor, AON China Building.

11. The business continued as Wide Concept, using the same form of financing, until about late November or early December 2000, when James Chou suggested it would be more efficient to have loan and credit facilities, rather than relying on the credit cards of the individual merchandisers. The parties recognised it would be difficult, if not impossible, for Wide Concept, as a newly incorporated company, to obtain loan or credit facilities through a bank, without its providing substantial security.

12. James Chou offered to obtain such facilities from the Plaintiff, Peace Town Finance Limited, a company in which he was and is both director and shareholder. It was agreed that the profit sharing for Wide Concept would be altered to 50% for the Defendant and 50% for James and Flavia Chou, to acknowledge James Chou's assistance.

13. On 15 December 2000, a general loan agreement from the Plaintiff, in favour of Wide Concept, was signed by the Defendant, as was a Guarantee. There is a dispute as to how, why and under what circumstances the signing came about. The Plaintiff's case is that the documents were signed at the registered office of the Plaintiff under the supervision of Dalis Tsui (PW3), who was James Chou's secretary. According to the Defendant, they were signed at her office at Plaza 2000. The documents were brought by a tea lady, Madam Ling, who was employed by and acting as a messenger for, the Plaintiff and were signed after discussion with Flavia Chou, who was present at Wide Concept's office and a telephone conversation with James Chou.

14. There is also serious dispute whether, thereafter, copies of the documents signed were given to the Defendant. The Plaintiff maintained they were, the Defendant said they were not. Differences arose between the parties from that time onwards. The Defendant alleged she was unjustifiably excluded from the management and operation of Wide Concept and from about the middle of May 2001 was denied access to Wide Concept's office premises. Various sums of money were drawn down under the loan agreement at intervals from December 2000 to May 2001.

The evidence of Chou Si Kit James

15. James Chou (PW1) confirmed he was a shareholder and director of the Plaintiff which had been operating a licensed money lending business since 1992. His evidence was that the Plaintiff's standing practice required shareholders of a corporate borrower to provide a personal guarantee in favour of the Plaintiff as lender, to guarantee punctual payments by the corporate borrower for the money due.

16. Supreme Advance, a company operated by him and his wife, was the other shareholder of Wide Concept. He confirmed that the Defendant and the authorized representatives of Supreme Advance had each signed the standard form of guarantee. He denied he ever told the Defendant that he would sign a personal guarantee, in addition to the guarantee given by Supreme Advance.

17. The arrangement was that Wide Concept would obtain loans from the Plaintiff whenever necessary and payments would be applied according to general practice to payments for earlier loans. He was not responsible personally for approving Wide Concept's applications for finance, because he and his wife were involved in the business. Loans had to be discussed with Mr Chan, a director, and Mr Yiu, the Financial Controller of the Plaintiff and put to the finance committee.

18. It was suggested to Mr Chou that a guarantee by a shelf company like Supreme Advance was meaningless and that as the only other shareholder of Supreme Advance was a shelf company too, the Plaintiff would not seek, or rely on, such a guarantee. He agreed that was so, but because Supreme Advance was controlled by him and his wife considered there was no need for the Plaintiff to check the creditworthiness of the business. He agreed that he and his wife could have been asked for personal guarantees, but thought it unnecessary, because if the money was not received by Peace Town, ultimately he, as a shareholder, had to stand any loss.

19. He confirmed that loan documents were prepared by the Plaintiff's staff including Dalis Tsui and, normally, were sent by post to clients. There were exceptions to this practice; when clients asked to collect documents in person; when the borrower was a staff member, or when borrowers came from neighbouring companies, documents would be handed to them. This particular case he considered exceptional, because Wide Concept shared its registered office with the Plaintiff. Dalis Tsui would give documents and cheques to the Defendant by hand, or, if she was in the Causeway Bay office, deliver documents to her there.

The evidence of Yiu Hi-cheong

20. Mr Yiu (PW2), the Financial Controller of the Plaintiff, explained the practice followed for applicant borrowers. A committee of two directors and himself would consider the size of the loan in relation to the background of the applicant and whether it was in profit and then, if approved, ask for the documents to be signed. They had to decide also whether one or more directors of any corporate borrower should sign a Guarantee in favour of the Plaintiff. It was the practice that all documents had to be signed at the Plaintiff's office and a specific document had to be signed for every drawdown. Once the Memorandum of Agreement and any guarantee were signed, photocopies would be made for the borrower and the guarantor.

21. Monthly and daily statements and other documents were usually sent by post, unless staff were going to the place at which the borrowers were. He believed Dalis Tsui took the documents with her when she visited the Causeway Bay office, but could not confirm that. He could confirm that the Letter of Demand was sent to the Defendant's home address, which had been obtained from company documents. It was sent to the residential address because the Defendant was likely to receive it there; she was no longer working at Wide Concept on 7 December 2001.

22. He recollected the Defendant coming to the office to sign the documents, but was not present when they were signed, nor was any written record kept of Defendant's attending their office. At the relevant time, between December 2000 and May 2001, the Plaintiff did not require clients who collected documents at the company to sign receipts. However, since the end of 2002, all documents so collected required receipts which, the witness agreed, was the more prudent course.

The evidence of Dalis Tsui

23. Dalis Tsui (PW3) was employed as an executive secretary by Mr Chou and worked at Peace Town; she assisted with Wide Concept's activities after its incorporation. She would go two or three times a week to Wide Concept with documents for Wide Concept and the Defendant.

24. On 15 December 2000, the Defendant came to the Plaintiff's offices, where she signed the documents to open the loan account and the continuing Guarantee. She checked that the Defendant understood the contents of those documents before signing and signed as witness immediately afterwards. She made photocopies of the Notification Letter about the loan and the Memorandum and handed them to the Defendant immediately. Thereafter the Memorandum and Notification of Loan letters were delivered to Defendant when she made her twice or thrice weekly visits to Wide Concept's offices.

25. Dalis Tsui said this practice was exceptional, as ordinarily such documents were served by post and only rarely delivered by hand. Because other documents were brought to the Defendant, it was decided she would deliver the loan documents in this manner.

26. She confirmed that the procedure was for the general commercial agreement to be signed; it then had to be approved. After that, based on the general commercial agreement she prepared the Memorandum of Agreement and Guarantee and gave them to the Defendant for signing. The documents were taken to the Accounts Department for approval. Once approval was granted, Mr Chou signed the withdrawal slip and a cheque would be paid out. The cheque was deposited by Dalis Tsui in Wide Concept's bank account, as all its banking activities were dealt with through the Plaintiff's office.

The evidence of the Defendant

27. Maggie Cheung's evidence was that although she signed the documents on 15 December 2000, it was at Wide Concept's not the Plaintiff's offices. The documents were brought to her by a tea lady, Madam Ling, employed by the Plaintff. Some particulars had been filled in beforehand and her name was on the guarantee, but not the name of James Chou. This was the first time she realised she was expected to sign a guarantee; no mention of a guarantee had been made at any earlier stage, either by James or by Flavia Chou. She telephoned James Chou who told her that as each of them had a half share in Wide Concept, both were required to guarantee Wide Concept's liability. James Chou told her he would sign a personal guarantee in due course. He asked her to sign the guarantee first and hand it to Madam Ling. He reassured her that he would not trick her on this matter. She asked for a set of copies of the loan documents, to which he agreed.

28. Flavia Chou came into the room and urged her to sign the Loan Agreement and Guarantee and, relying on the assurance of James Chou that he would sign his personal Guarantee as well, she signed the documents. Madam Ling took the documents back to the Plaintiff's office. No one signed as witness at that time; she did not know when the witness signed. James Chou did not sign a personal guarantee - the next day Supreme Advance executed a guarantee.

29. After that, despite her repeated requests, Flavia Chou, James Chou and Dalis Tsui kept referring her from one to another of them without actually giving her copies of the loan documents. She agreed that Dalis Tsui did come two or three times a week to bring documents to Wide Concept's office, but the loan documents were not amongst them. Financial matters including drawdowns and loan repayments were handled thereafter by James Chou with Dalis Tsui's assistance. Although Defendant was required to sign cheques and documents, copies were not given to her. Eventually the relationship between her and the Chous soured; in her view it was because she kept asking for documents which were not provided. She was excluded gradually and unjustifiably from the management and operation of Wide Concept and from about the middle of May 2001, was denied access to the office premises.

30. According to her, the Plaintiff addressed the Notification Letters and Memoranda of Agreement to the registered office of Wide Concept, which was also the Plaintiff's own office premises, knowing she did not work at that address at all and that she would not have received the Notification letters and the Memoranda of Agreement whether delivered or posted there. Of those 20 Memoranda and 20 letters, all but the last 4 sets, which were addressed to Wide Concept's office address at Plaza 2000, were addressed to the company's registered offices at the AON China Building.

31. The Defendant was referred to all the Memoranda and Notification Letters addressed to Wide Concept and confirmed she had never received or seen them. The first time she saw them was in her lawyer's office when this case was being prepared.

32. She had never seen, or received, the demand letter of 7 December 2001, addressed to her at Flat B, 30th Floor, Block 32, South Horizons, Ap Lei Chou, Hong Kong. She resided in those premises as a tenant from August 2000 until about September 2001 when she moved into another premises, also at South Horizons. After September 2001, she lived in Tower 22, and her previous address was rented by her colleague, Alan Lam. When asked to explain why her address for service had been given in the Acknowledgment of Service as Block 32, she said she thought it followed the address on the court documents. She denied the suggestion that she never moved out of Block 32.

33. Although the Defendant agreed she was keen to join forces with the Chous, she appeared reluctant to admit that the major reason for her doing so was because she wanted capital for the business. According to her, she wanted simply to maintain the supply of goods and believed that the Chous had their own way to find suppliers. However, it must have been obvious to her that the Chous had no experience in that type of merchandising and it was her experience which was important to them. She could expand the operation significantly if she had access to capital to make larger purchases from suppliers in Europe and she could also keep her merchandisers happy and loyal, by repaying them in a shorter time than the six day period over which she had been operating. Prior to Wide Concept starting operation, the capacity of her business had been restricted by the credit limits of her merchandisers, although by using multiple credit cards, purchases of HK$300,000 - 500,000 by one merchandiser were possible. She agreed that access to credit facilities would enhance the business and because of that, she was willing to cut her profit ratio from 60% to 50%.

34. It was put to her that the loan terms were very favourable with interest of prime rate plus 2%. She said that at the time she did not pay much attention to that aspect, but with hindsight realised it. That answer was rather unconvincing, because clearly the Defendant was an extremely knowledgeable operator, who had been running a complicated business with haphazard funding for some time prior to Wide Concept's being established.

Defences

35. The Defendant relied on several defences the first being the Plaintiff's non-compliance with section 20 of the Money Lenders Ordinance, Cap. 163 (the Ordinance).

36. Section 20 of the Ordinance, provides:

"20. Duty of money lender to give information to surety

(1) A money lender who makes any agreement for the loan of money in relation to which security is provided shall within 7 days after the making of the agreement give to the surety (if a different person from the borrower)

(a) a copy of the note or memorandum in writing made under section 18(1);

(b) a copy of the security instrument, if any; and

(c) a statement in writing signed by or on behalf of the money lender showing

(i) the total sum payable under the agreement by the borrower;

(ii) the various amounts comprised in that total sum with the date, or the mode of determining the date, when each becomes due.

(2) Without prejudice to subsection (1), a surety may at any time during the continuance of an agreement (whether made before or after the commencement of this Ordinance) in relation to which the security is provided require the money lender by notice in writing to furnish him with a statement in writing signed by or on behalf of the money lender showing

(a) the total sum paid under the agreement by the borrower;

(b) the total sum which has become payable under the agreement by the borrower but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due; and

(c) the total sum which is to become payable under the agreement by the borrower, and the various amounts comprised in that total sum, with the date, or the mode of determining the date, when each becomes due.

(3) Subsection (2) does not apply to a request made by a surety less than 1 month after a previous request under that subsection relating to the same agreement was complied with.

(4) If a money lender fails to comply with subsection (1) or a request to which subsection (2) applies he shall not be entitled, while the default continues, to enforce the security so far as provided in relation to the agreement."

37. The Defendant submitted that section 20(4) was absolute in its terms, so the court had no discretion to enforce the security if the provisions set out therein were contravened. A failure to provide documents listed in section 20(1)(a), (b) and (c) of the Ordinance within 7 days, is a breach which occurs at the conclusion of the seventh day and cannot be remedied thereafter (Emperor Futures Ltd v. La Belle Fashions Ltd (unrep.), CACV 1476 of 2001) per Rogers V.P.

38. The Defendant denied ever seeing any of the Memoranda of Agreement or Notification Letters until April 2002 when her solicitors showed them to her. Only then, on her solicitor's request, was she able to obtain a copy of the Guarantee she had signed.

39. The Plaintiff's evidence was that all these documents were delivered by hand to Wide Concept's offices. However the original stance of the Plaintiff was that all these items had been sent by ordinary mail. In a supplemental affirmation dated 28 April 2003, Dalis Tsui explained that this amendment was the result of her unwitting oversight which she did not discover until close to the time of trial. She agreed and it was confirmed by Mr Yiu, that it was exceptional for Memoranda and Notification Letters to be delivered by hand.

40. It is very surprising that Dalis Tsui forgot this exceptional practice when she made her 1st witness statement in December 2002. Moreover, this was not a wholly exceptional case, because on her own evidence the initial Memorandum of Agreement and the Guarantee, were signed at the Plaintiff's offices on 15 December 2000 and copies were given directly to the Defendant. Her explanation for her oversight was pressure of work.

41. Having considered the circumstances I find it is more likely than not, that the Defendant's account of her failure to receive the documents of 15 December 2000 and how those documents came to be signed was correct. Whilst it is likely that subsequent documents were prepared for each drawdown I am not satisfied they were delivered in the manner claimed by the Plaintiff, particularly as they were addressed to the registered office. It appears much more likely that the Plaintiff relied on the convenience of the shared premises for the registered offices and the close association of Mr Chou with Wide Concept, retaining the documents without passing them on to the Defendant. This would coincide with the banking activities of Wide Concept and the drawdowns being handled at the Plaintiff's office.

Defective Memoranda of Agreement

42. The defence argued that even if delivered correctly the Memoranda were defective in substance as they did not contain all the particulars required by section 18(2) of the Ordinance. The items missing from all the Memoranda, as can be seen from the original documents, were Item C, the address of the surety; Item H, the form of security for the loan and Item J, a declaration as to the place of negotiation and completion of the agreement for the loan.

43. Such omissions meant the "note or memorandum in writing" did not contain all the terms of the agreement in accordance with section 18(2), which meant the Plaintiff failed to give "a note or memorandum" as required by section 18(1)(a) and thus breached section 20(1)(a) of the Ordinance.

44. As the purpose of the Ordinance is to regulate the activity of money lenders it was held in Sun Lai La v. Sim Han International Ltd (unrep.) HCA 4537/1994, per Recorder Kotewall SC:

"that the court should be slow to relieve money lenders who fail to comply with the Ordinance since any other approach would be to frustrate rather than promote the objects of the Ordinance."

The Defendant contended the Guarantee was not enforceable against her as the wording of the sections was mandatory.

45. Having considered the evidence and counsels' submissions, I am satisfied that the form of the Guarantee was such that the Plaintiff was in breach of s. 20(1)(a) as the requirements of s. 18(1) were not carried out. In consequence I have considered my discretionary power under s. 18(3) as to whether, despite the Plaintiff's omissions, I should declare the Guarantee or any part of it enforceable. Those cases which consider the circumstances in which that discretion might be exercised, tend to a very sparing use of it, to avoid thwarting what the legislature clearly intended should be the usual consequences for breaches of s. 18(1).

46. Here the Plaintiff operated in very close, probably too close, proximity with Wide Concept and used Supreme Advance to give a guarantee which in reality appears to have left Defendant as the sole guarantor. Further, the Plaintiff adopted a casual approach to the formalities governing these advances, probably because of the close connections between Wide Concept and the Plaintiff in personnel and daily operating activities. In such circumstances I do not consider this an appropriate case in which to exercise the discretion under s. 18(3) in the Plaintiff's favour.

Premature action

47. A further ground of defence was that as no proper demand was ever made pursuant to the Guarantee the action was premature.

48. Clause 1.02 of the Guarantee provides:

"1.02 The Guarantor hereby undertakes that, upon default by the Customer in the payment when due of any payment guaranteed hereunder, the Guarantor will make immediate payment thereof, on demand, at the place, in the funds, in the currency and in the manner required of the Customer and without any withholding or deduction whatsoever. The Guarantor agrees that no time for limitation of liability in respect of this Guarantee shall begin to run in favour of the Guarantor unless and until you shall have made demand on the Guarantor and if more than one demand is made then only the date and to the extent of each demand respectively."

It was submitted on behalf of the Defendant that in cases of collateral promise or collateral debt as, for example, the Guarantee in this case, it was a question of construction of the Guarantee as to whether a real demand was necessary, so that no cause of action arose until after the demand.

49. On the authority of Bradford Old Bank Ltd v. Sutcliffe [1918] 2 KB 833, counsel submitted that on a proper construction of the guarantee a real demand was necessary before any cause of action could arise. As the Defendant had not received the Letter of Demand dated 7 December 2001, no demand had been validly served on her before the action commenced. The action was thus premature.

50. The letter of demand was addressed to the Defendant at Flat B, 30th Floor, Block 32, South Horizons, Ap Lei Chau, Hong Kong. Her evidence was that she never received the demand letter, as she left that address in September 2001 to live at Tower 22. Her colleague, Alan Lam, lived at Block 32 from September 2001.

51. I note that the Writ, served on 6 March 2002, was addressed to Block 32 and the Defendant, when completing the Acknowledgment of Service, gave her address as Block 32.

52. Her unconvincing explanation for using for purposes of service an address at which she claimed she no longer lived, and from which she had been absent from 2-3 months, was that she thought she must have followed the address on the court documents. However if Defendant had left Block 32 in September 2001, it is very unlikely she would continue to use that address nearly 3 months later.

53. A letter of 8 March 2002 from the Plaintiff's solicitors addressed to the Defendant at Flat A, 36th Floor, Tower 22, enclosing the Writ, refers to a copy being sent to "your other address" a reference to Block 32, where according to her Alan Lam was living. I am satisfied that the Letter of Demand was sent correctly to what was, apparently, Defendant's last known address and that it would have come to her attention, even if she was not living at Block 32 at the time.

54. From the evidence I am satisfied that whatever documents were not received by the Defendant, that she would have received at one or other address, the Letter of Demand dated 7 December 2001. I find that the action was not premature and this ground of defence fails.

Misrepresentation

55. The last ground of defence related to an alleged misrepresentation by James Chou. A surety is entitled to resist a claim on a contract of suretyship if induced to enter into it by misrepresentation. The Defendant complained that on 15 December 2000, James Chou had told her that as each of them had a half share in Wide Concept, both of them should guarantee Wide Concept's liabilities and that he would sign another guarantee in due course. He asked her to sign the Guarantee first, reassuring her he would not trick her. On the assurance of James Chou that he would give his personal guarantee, in addition to a guarantee by Supreme Advance, the Defendant signed the documents, including the Guarantee.

56. Supreme Advance, a shareholder and director of Wide Concept, gave a guarantee executed on 16 December 2000. Supreme Advance was the corporate vehicle by which the Chous operated Wide Concept; that was known to the Defendant. Ordinarily, a lender such as the Plaintiff would be unlikely to seek a guarantee from an incorporated body, but would prefer a personal guarantee from the individuals behind the company.

57. As James Chou was himself a director and shareholder of the Plaintiff, the Plaintiff would be aware Supreme Advance was synonymous with James Chou and would be unlikely to require his personal guarantee for advances to Wide Concept. Furthermore, in the event of any default the Plaintiff would be unlikely to pursue Supreme Advance under its Guarantee, even assuming its assets, (according to James Chou's evidence a Mercedes Benz and a number plate obtained by bidding), made pursuit worthwhile.

58. No independent advice was given to, or sought by, the Defendant about the Guarantee. James Chou's evidence was that either on or immediately before, 15 December 2000 he, in his capacity as one of the directors of the Plaintiff, discussed the Guarantee with the Defendant. According to the Defendant's evidence, which I accept, he reassured her that he would not "trick" her on this matter. While there is no suggestion that James Chou deliberately deceived the Defendant, it appears that Wide Concept's arrangement with the Plaintiff was one with which James Chou, inevitably, was too closely involved.

59. Even if Supreme Advance's representatives gave a continuing guarantee, in reality the only effective guarantee would be given by the Defendant, so it is easy to understand her concern that it was not she alone who was to shoulder responsibility. I am satisfied that James Chou misrepresented to the Defendant that he would give a personal guarantee, as she had been encouraged to do, in addition to the guarantee given by Supreme Advance. Clearly it was never his intention to do so. I find that the Defendant would not have given her personal guarantee without receiving reassurance from James Chou that he would do the same.

Ruling

60. For the reasons given I dismiss the Plaintiff's claim against the Defendant in this action.

(1) The Defendant is discharged from all liability under the Guarantee.

(2) The Guarantee is set aside.

(3) There will be an order nisi for costs in favour of the Defendant, to be taxed if not agreed.

(4) Liberty to apply.