HANG LUNG BANK LTD v. ASIA LANDS AND PROPERTIES LTD

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JUDGMENT

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1. This is an appeal against a decision of Master Hansen when he gave judgment for the plaintiff on the 4th July 1984 on a summons under Order 14 for the sum of $427,191.78 being interest accrued from the 31st August 1983 to the 24th September 1983.

2. By an agreement dated the 31st August 1983 the plaintiff advanced to the defendant a loan of $45000.00 which the defendant agreed to repay in 12 months with interest at prime rate plus 2% or such other rate to be charged by the plaintiff from time to time. On the 24th September 1983 the defendant repaid the loan at the request of the plaintiff but failed to pay the interest accrued up to that date.

3. Mr. Ko Win Wah, one of the directors of the defendant company, claims that there was an agreement by the defendant with the plaintiff whereby in consideration of the loan being repaid earlier the plaintiff would waive all interest and charges in respect of the loan. Mr. Ko says this agreement was reached with Mr. Chang Fng Kwan of the plaintiff.

4. The plaintiff alleges that there was a binding agreement for the defendant to pay interest by virtue of an exchange of letters between the plaintiff and the defendant's solicitors, which correspondence was headed without prejudice. The defendant contends that the correspondence should not have been placed before the Master but in the alternative submits that there was no final agreement concluded between the parties. Tomlin v. Standard Telephones And Cables Ltd. (1969) 1 W.L.R. 1878 was referred to by both Mr. Fung who appeared for the defendant and by Mr. Peard for the plaintiff. This decision held:-

"that without prejudice in a letter meant without prejudice to the position of the writer of it if the terms which he proposed therein were not accepted; that if the terms which he proposed were accepted, an enforceable contract would be established that, accordingly the correspondence could and must be looked at to ascertain whether an agreement intended to be binding had been reached between the parties.".

Exhibited to an affidavit of Mr. Murtagh, the plaintiff's solicitor, is a debit note dated the 31st October 1983 which was sent by the plaintiff to the defendant. The first two amounts set out in that debit note amount to the sum which is claimed by the plaintiff. There is also a sum of $1,257,534.25 included in the debit note which is referred to as a surcharge on prepayment. On the 4th November 1983 the plaintiff wrote to the defendant claiming an outstanding balance of $1,666,776.53 as at the 3rd November 1983 with a request for settlement within 7 days. Subsequently, a letter was written by the defendant's solicitors without prejudice dated the 19th December 1983, in which the defendant agreed to pay interest on the loan in the sum of $427,191.78. With regard to payment the defendant suggested that the sum be secured by a second mortgage. By their letter of the 5th January 1984 the plaintiff agreed to waive the surcharge on prepayment, but stipulated that interest on the loan totalling $427,191.78 together with interest on this sum should be paid to the plaintiff in settlement of the claim. Mr. Fung says that there was no binding agreement in view of the fact that the plaintiff by that letter was claiming interest on interest and no agreement had been reached with regard to the method of payment. Subsequently, the plaintiff quite properly abandoned the claim for interest upon interest.

5. In my judgment a final agreement had been concluded between the parties in the correspondence. In fact, the defendant has at no time denied that interest was payable to the plaintiff, and by their letter of the 19th December 1983 agreed to pay the sum claimed. The mode of payment suggested by the defendant is not relevant to the issue of liability.

6. I am therefore of the opinion that the without prejudice correspondence was properly placed before the court. The appeal must be dismissed with costs.