P.K. CHRISTIANTA (HONG KONG) LTD. v. FRANKWELL TRADING CO LTD

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JUDGMENT

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Preliminary

1. The claim is based on a contract, evidenced in writing, entered into on the 8th December 1982 whereby the, defendant sold to the plaintiff US $100,000.00 and in exchange e for HK$ 642,000.00. It was an option contract, the expiry date being the 30th April 1983. It was renewed some 5 times but eventually the plaintiff squared the position on the 8th April 1984 when the exchange rate was HK $7. 8 to US$ 1 and the defendant showed a loss which was debited on its account. This it has refused to pay.

2. The defendant has pleaded that there was a mistake on the part of the plaintiff and that in fact he position was the reverse and it was to buy the U.S. dollars from the plaintiff at that rate.

The evidence

3. Evidence was given for the plaintiff by Mr. Victor Chan, Miss Rosaline Mak, the chief dealer in December 1982 and Mr. Jody Lee, a trainee dealer at the time. They produced a mass of documents relating to the contract when it was made and when it was later extended, ultimately to April 1984. I accepted all these as witnesses of truth. While none of them could specifically remember the circumstances relating to how the original contract was concluded Mr. Chan and Mr. Lee could remember clearly various conversations with Mr. Chilly Cheng regarding its extension. They were adamant that Mr. Cheng asked for the extensions and at no time did he suggest that any mistake had been made by the plaintiff bank. They had received no written complaint at all until after the position was closed in April 1984 and the loss of $133,000.00 claimed from the defendant. Mr. Chilly Cheng, an executive director of the defendant gave evidence when. the contract note came to his attention he was busy. He did not notice that the mistake had been made and he signed on behalf of the defendant and sent it back. It was only when the contract expired in April and Mr. Jody Lee of plaintiff rang him to find out what intended to do about it that he realised the mistake had been made., It was his evidence that he asked for rectification and spoke to a friend who was employed by the plaintiff. Mr. Chan confirmed that an error had been made and he would take steps to rectify it. However nothing was done and renewal notices were sent out. Mr. Cheng phoned Mr. Chan to try to get the matter put right but the telephone was hung up on these occasions and he got no satisfaction at all. However the only action he took was that he did not sign the various reminders that were sent and the contract notes which were sent when the option was renewed, as it was on some five different occasions. There was nothing whatever in writing from him or the defendant company at any stage indicating they did not accept that in fact they had bought U.S. dollars from the plaintiff not the other way round.

Decision

4. The plaintiff has produced abundant documentary evidence relating to the time of the entering into the contract. There is also substantial evidence in the form of internal memos which I accept as being authentic and genuine between Mr. Jody Lee and Mr. Victor Chan which in my view totally support the plaintiff's case that while the defendant may well, in retrospect, thought it had made a mistake at the time the contract was entered into, they knew exactly what they were doing. I don't think the mistake was any more than if a person buys shares in the Hong Kong Bank to-day and in a week's time the shares have gone down; they may well say, "Well, I made a mistake there.". I have no doubt whatever that this was a contract entered into by both parties who knew precisely what they were doing. I did not accept the evidence given by Mr. Chilly Cheng. I did not regard him as being an incompetent business man and I think that if he had behaved in the way that he did it would have been quite incredibly incompetent. I do not accept his evidence as to his conversations with Mr. Victor Chan or Mr. Jody Lee. I am satisfied that on the various occasions they had these conversations, he asked for the extensions to this contract which were granted. It is true that this is perhaps surprising that they were granted in view of the fact that the defendant had not returned as confirmed the previous extensions. There was undoubtedly a friendly relationship between Mr. Victor Chan and Mr. Chilly Cheng and that may well be part of the explanation, but I am satisfied that the failure to return those renewal notes does not bar the plaintiff from succeeding in this action. Some evidence was called from Mr: Johnny Lai, the accountant of the defendant company relating to the last extension and in my view the internal memo again supported the plaintiff that in the absence of the directors the contract was extended for a final three months. Mr. Wong for the defendant argued that this was a very generous extension, but at this stage the Hong Kong dollar was pegged to U.S. dollar, and no doubt an extension of that nature was no great risk. And it was on the basis that if the directors, in particular Mr. Chilly Cheng, did not want to extend to that length of time, they would contact the plaintiff again.

5. There will, therefore, be Judgment for the plaintiff for the sum of $133,707.82 plus interest at 12% p.a. from the 5th April 1984. The plaintiff is to have its costs to be taxed if not agreed.