TRILEASE INTERNATIONAL LTD. v. KINSLEY LTD. AND OTHERS

TRILEASE INTERNATIONAL LTD. v. KINSLEY LTD. AND OTHERS

The continuing guarantee's express terms allowed Trilease to pursue guarantors without first repossessing or realizing the leased machinery; the machinery was not a creditor-held security in the redeemable sense because title remained with Trilease as lessor, so there was no contractual or equitable duty to preserve or assign the machinery to the guarantor before calling the guarantee; accordingly Mr Lai was liable under the guarantee and his claim to recover the tendered cheque failed because the cheque was a gesture of goodwill and Trilease was entitled to apply it as part payment.

Citation
TRILEASE INTERNATIONAL LTD. v. KINSLEY LTD. AND OTHERS
Parties
Plaintiff (hca 9069/1999); 2nd Defendant (hca 9126/1999): LAI SIN TONG, THOMAS; Plaintiff (hca 9126/1999); 1st Defendant (hca 9069/1999): TRILEASE INTERNATIONAL LIMITED; 1st Defendant (hca 9126/1999); 2nd Defendant (hca 9069/1999): KINSLEY LIMITED; 2nd/3rd Defendant (both Actions): CHAN CHEUNG LIT
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 November 2000
Case Number
HCA9126/1999
Procedural Posture
Consolidated Civil Actions: Enforcement of Continuing Guarantee and Counterclaim for Recovery of Conditional Payment / Judgment (court of First Instance; Consolidated Trial)
Outcome
Judgment for Trilease; guarantor (Mr Lai) held liable under the continuing guarantee; Mr Lai's claim to recover the cheque dismissed; Trilease entitled to apply cheque as part payment; costs nisi.
Legal Topics
Continuing Guarantee, Surety's Duties and Protections, Repossession of Leased Goods, Implied Terms in Guarantee, Conditional Payment and Offer, Interpretation of Contractual Guarantees
Source Language
EN
Contract Guarantee/suretyship Equity Property (personal Property/lease) Civil Procedure Remedies Continuing Guarantee Surety's Duties and Protections +4 more

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Parties

LAI SIN TONG, THOMAS

Plaintiff (hca 9069/1999); 2nd Defendant (hca 9126/1999)

TRILEASE INTERNATIONAL LIMITED

Plaintiff (hca 9126/1999); 1st Defendant (hca 9069/1999)

KINSLEY LIMITED

1st Defendant (hca 9126/1999); 2nd Defendant (hca 9069/1999)

CHAN CHEUNG LIT

2nd/3rd Defendant (both Actions)

Procedural Posture

Consolidated Civil Actions: Enforcement of Continuing Guarantee and Counterclaim for Recovery of Conditional Payment / Judgment (court of First Instance; Consolidated Trial)

Legal Issues

  1. 1 Whether an implied term existed in the continuing guarantee requiring the creditor to exhaust remedies against the lessee and preserve or realize the leased machinery before calling on guarantors
  2. 2 Whether Trilease owed an equitable duty to the guarantor to protect and preserve the machinery as security for the debt
  3. 3 Whether the cheque for HK$248,394.72 was a conditional part of Mr Lai's settlement offer and wrongfully retained by Trilease

Ratio Decidendi

The continuing guarantee's express terms allowed Trilease to pursue guarantors without first repossessing or realizing the leased machinery; the machinery was not a creditor-held security in the redeemable sense because title remained with Trilease as lessor, so there was no contractual or equitable duty to preserve or assign the machinery to the guarantor before calling the guarantee; accordingly Mr Lai was liable under the guarantee and his claim to recover the tendered cheque failed because the cheque was a gesture of goodwill and Trilease was entitled to apply it as part payment.

Court Disposition

Judgment for Trilease; guarantor (Mr Lai) held liable under the continuing guarantee; Mr Lai's claim to recover the cheque dismissed; Trilease entitled to apply cheque as part payment; costs nisi.

Orders

  • HCA 9126/1999: Judgment for the plaintiff against the 2nd defendant in the sum of HK$918,113.54 together with interest from today until payment at the judgment rate. Costs, nisi at first instance, to the plaintiff, taxed if not agreed.
  • HCA 9069/1999: Claim against the 1st defendant dismissed. The damages in the judgment of 27 June 2000 are assessed at the total of HK$918,113.54, HK$284,394.72, interest on the said sum of HK$284,394.72 at 12% from 18 May 1999 to today (561 days) HK$52,453.29 and costs payable, amounting to HK$1,254,961.55 plus...