IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 919 OF 2010
FINE MASTER LIMITEDPlaintiff
NIPPON CIRCUITS LIMITEDDefendant
Before : Deputy High Court Judge Woo in Court
Dates of Hearing : 5, 6 and 7 March 2013
Date of Handing Down of Judgment: 12 March 2013
J U D G M E N T
The plaintiff’s claim is for unpaid proceeds of goods sold and services provided in the amount of $1,760,085.41. Such goods and services were provided to Nippon (Boluo) Electronics Co Ltd (“Nippon Boluo”). By a “confirmation letter” dated 9 March 2009 (“the confirmation letter”) signed and issued by the defendant, the defendant confirmed to the plaintiff that it would be responsible for the settlement of all the purchase orders placed by Nippon Boluo with the plaintiff.
At all material times, Nippon Boluo was wholly owned by Nippon Products Ltd (“Nippon Products”). Both Nippon Products and the defendant were wholly owned subsidiaries of NCP Holdings.
The plaintiff’s claim against the defendant is based on the confirmation letter. Owing to the importance of this letter, it is set out below for close examination:
“To:Fine Master Ltd. (ie the plaintiff)
From:Nippon Circuits Ltd. (ie the defendant)
Date:9 March 2009
Re:Invoice settlement arrangement
We, Nippon Circuits Ltd., hereby writing to confirm that we are responsible for the settlement of all the purchase orders placed by Nippon (Boluo) Electronics Co., Ltd. Please direct all the invoice to our office, address: Room 803-4, 8/F., Wah Wai Centre, 38-40 Au Pui Wan Street, Fotan, Shatin, N.T. for our handling.
For and on behalf of
Nippon Circuits Ltd.
[Stamp and signed]”
The plaintiff’s case is that this is a guarantee issued by the defendant to pay for all the past and future unpaid proceeds of goods sold and services supplied by the plaintiff to Nippon Boluo (“the said proceeds”).
On six occasions between 4 June and 31 December 2009, the defendant made payments by way of bank transfers to the plaintiff as part payments of the said proceeds.
By a document entitled “admission upon accounts being checked” dated 14 January 2010 (which is a statement of account) signed by the plaintiff and Nippon Boluo, Nippon Boluo admitted that the outstanding debts owed by it to the plaintiff totalled $2,313,262.99.
On 7 April 2010, the defendant made payment by way of a cheque for $553,177.58, reducing the outstanding amount to $1,760,085.41, the amount claimed in this action.
The defendant raises three defences, namely,
(1)The guarantee in the confirmation letter is not binding on the dependant as it lacks consideration;
(2)Alternatively, even if consideration had been provided, the guarantee was superseded by the “admission upon accounts being checked” dated 14 January 2010; and
(3)In the further alternative, the defendant only acted as an agent of Nippon Boluo to sign the guarantee, to make the part payments to the plaintiff, and to handle the outstanding debts owed by the Nippon Boluo to the plaintiff.
A question also arises on the proper interpretation of the confirmation letter, whether it is to guarantee the payment of proceeds of goods sold and services supplied up to the date of the confirmation letter or only for those supplied after the execution of the confirmation letter, or whether for both past and future proceeds.
The plaintiff called two witnesses, being its director Mr Ng Man Cheung and a former finance manager of the defendant, Mr Chau Kuen Eddie.
The defendant, on the other hand,...