XCHRX INTERMARE TRANSPORT GMBH v. LOFTY LTD.

1995, CL No. 193

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

___________

_______________

D E C I S I O N

_______________

1. This is an application for the continuation of a Mareva injunction and an application for discharge of the ex parte granted on the 11th October.

2. The point is a short point but not without its difficulty.

3. The claim arises in this way. There was a charter party made between the Plaintiff and a Liberian company. The freight is owing to the tune of US$627,00 or so. The Defendant is a Hong Kong company. It is sought to make the Defendant liable as guarantor and that is where the trouble begins. There is no document which constitutes the guarantee.

4. Briefly what happened is that Hong Kong shipping agents were in communication with the agents for the Plaintiff is Germany. At first the parties exchanged telexes on the basis that the Defendant would be the charterer. That changed to the Defendant or its nominee. Then by what I shall for convenience call the page 6 telex because it appears at page 6 of exhibit 2 to the Plaintiff's solicitor's affirmation, it is said that the charterer would be the Liberian company with performance to be guaranteed by the Defendant. To that telex the owners made a counter offer. Eventually an agreement was arrived at. The charterparty was between the Plaintiff and the Liberian company. It had a clause which read "Lofty (i.e. the defendant) to issue a Letter of performance guarantee of Solid Ventures Inc. (The charterer.)". The Defendant was not a party to the charterparty.

5. The Plaintiff puts its case in 3 ways. In the writ it says that the contract of guarantee was entered into between the Plaintiff and the Defendant on or about the 28th April. That must be a reference to what has been termed the "Recap" telex which is annexed to the charterparty. That "Recap" telex does not seem to me to take the matter any further as in the first place it was expressed to be subject to bunker/charterparty details and in the second place it has not been shown that the brokers who sent the telex were acting on behalf of the Defendant when they sent the telex. The clause in the telex which is relevant is in the same terms as the clause in the charterparty.

6. In the Plaintiff's solicitor's affidavit the contract of guarantee is said to be in line 12 of the charterparty. That I have referred to already. The Defendant was not a party to the charterparty and I cannot see how it can be bound by somebody else's contract.

7. Finally Mr. Kat in his able argument on behalf of the Plaintiff put the case on the basis of the page 6 telex. That on its face does not take the matter any further and is if anything treading on even more dangerous ground because as I have said there was a counter offer which thus caused any original offer to lapse.

8. In my view there has not here been shown to be a guarantee and I do not consider that the Plaintiff has reached the stage of showing a good arguable case. The existence of a written guarantee is ion my view fundamental to the Plaintiff's cause of action. I say so for 3 reasons. In the absence of showing that the Defendant committed itself to providing a guarantee and written document is necessary. In any event without the written document the terms, it seems to me in this case would be uncertain. Finally I consider that the absence of a document in writing might well cause unenforceability problems under terms of section 13 of LARCO.

9. I was addressed on other points as well, in particular the question of whether the Plaintiff had a shown a risk of dissipation of assets. I doubt that it has. I do not wish to go into the point to any great extent save to make one observation. One of the grounds put forward as to risk of dissipation of assets is that the Defendant is not a substantial company, indeed its paid up capital is only $10,000. But the Plaintiff chose to do business with it. Not only that but apparently chose to accept a guarantee that would be given by the Defendant company. I find it incongruous that the Plaintiff should then come to Court and seek a Mareva injunction party on the basis that the Defendant is a small entity.

10. I consider that Mr. Faulkener put forward strong grounds for saying that there was not sufficient evidence of risk of dissipation of assets.

11. In those circumstances I feel compelled to set aside the Order and grant no further relief.