MUNEICHI NITTA v. WANG JUI CHIN, HUANG JUI CHEN and LIANG JIE MEI trading as SUNG CHUK CHAI CURIOS SHOP (a firm)

1992 No.A2645

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The issue to be decided in this case is one of fact as to whether a contract had been entered into between the parties on the 18th December 1991 for the sale and purchase of a bronze vessel in the shape of a mythological "Feng" bird for the sum of Y50,000,000. Accordingly the result will depend upon the credibility of the witnesses. The counterclaim of the defendant was withdrawn.

2. Mr Wong, counsel for the defendant, submitted that as an alternative there was no consensus between the parties so that the evidence of the witnesses was not capable of belief. He argued that as the defendant's counterclaim has been withdrawn, the plaintiff's case in these circumstances should be dismissed. I have no hesitation in rejecting this submission for there was no allegation of mistake and upon the evidence this contention was unrealistic.

3. The plaintiff Muneichi Nitta (Mr Nitta) is a Japanese aged 81 who was born in Taiwan but now lives in Tokyo. He has about 50 years experience in collecting various antiques but specialises in the collection of buddhist statues which he has collected for about 40 years. He is very highly regarded world wide. His collection is called the Nitta Group Collecton of Buddhist Art which he displays in a gallery in Tokyo and some of the items have been classified by the Japanese Government as national treasures. Mr Nitta exhibited some of his collection at the National Palace Museum of Taipei in 1987 for a period of one year. Three of Mr Nitta's sons work in the family business in Tokyo.

4. Mr Wang Jui Chin (Mr Wang), the first named defendant was also born in Taiwan and is the managing partner of Sung Chuk Chai Curios Shop which sells antiques and objects of fine art and carries on business at Lascar Row, Sheung Wan, Hong Kong. There are two other partners in the business, Huang Jui Chen, the second named defendant and Liang Jie Mei, the third named defendant who are respectively the brother-in-law and wife of the first named defendant. Prior to the present dispute, Mr Nitta had visited Hong Kong on three or four previous occasions where he met Mr Wang in his shop and purchased some items without any problem arising.

5. At the beginning of 1990 Mr Nitta stated that Mr Wang was aware that he was very interested in Buddhist Statues and had at that time represented that he had an extremely rare gilt bronze buddhist statue about 40 - 50 cm in height for sale. However Mr Wang informed him that the item was in Taiwan and was not available for inspection. Mr Nitta assumed that the particular statue referred to by Mr Wang was one of the rarest pieces that he had come across.

6. Mr Nitta came to Hong Kong on the 16th December 1991 and went to the defendant's shop on the following day when he said that Mr Wang represented to him that the buddhist statue which he had previously mentioned was not available for sale but that it was in Taiwan and he did not have any photographs. Mr Nitta said that he wished to inspect the statue or see some photographs before making a decision whether he was going to purchase this item. Mr Wang went on to say that a bronze vessel in the shape of a mythological "Feng" bird was available for sale but Mr Nitta said he was not particularly interested in this item but that his sons in Tokyo who were collectors of bronze antiques might be interested. Accordingly Mr Nitta contends that an oral agreement was reached on the 17th December 1991 with Mr Wang that he would arrange for the statue and "Feng" bird to be delivered to Tokyo for inspection before a decision was made to purchase these items. No price had been mentioned for either item but Mr Nitta said that Mr Wang's financial position was not particularly good so that he agreed as a mark of sincerity to pay by way of earnest money for the statue, the sum of ￥ 20,000,000, the sum to be returned if the purchase did not proceed. Mr Nitta testified that the ￥ 20,000,000 was neither a deposit nor part payment for the "Feng" bird. The ￥ 20,000,000 was transferred from Japan to Mr Wang through the Commercial Bank of Hong Kong Limited. No invoice or receipt was provided by Mr Wang for this payment.

7. Mr Wang subsequently arranged for his brother-in-law Mr Wei Wan Lung (Mr Wei) to act as his courier for the visit to Japan.

8. Mr Wei travelled from Taiwan to Japan on the 26th December 1991 and came to Mr Nitta's gallery on the following day with the "Feng" bird but did not bring with him the buddhist statue or any photograph of it. Mr Nitta was very disappointed that the statue had not been brought whilst his sons after carrying out an inspection of the "Feng" bird and comparing it with other bronze items said that they did not wish to purchase it and informed Mr Wei to this effect. Mr Wei returned to Hong Kong on the following day taking with him the "Feng" bird.

9. Subsequently Mr Nitta telephoned Mr Wei in Hong Kong enquiring about the statue but was unable to obtain a definite answer from him as to when the statue would be available for inspection.

10. Following the rejection of the "Feng" bird and the failure to produce the buddhist statue or photographs, there was correspondence between the parties in which Mr Nitta set out his position in letters that he wrote to Mr Wang.

11. Mr Shinichi Nitta, the eldest son of Mr Nitta confirmed that an inspection was made of the "Feng" bird in Tokyo and comparisons were made with other bronze objects but that it was rejected. He also referred to certain photographs that were taken of the "Feng" bird as a record of this item but that at the request of Mr Wei, the negative was returned to him. Although Mr Wei had suggested leaving the "Feng" bird at the gallery, this offer was declined. At no time did Mr Wei suggest that the "Feng" bird had been purchased.

12. Mr Wang testified that when Mr Nitta came to his shop on the 18th December 1991 he was asked if any new addition of prized gold leaf or gilt statue had come into his possession and he replied that he had some in Taiwan but that he had a very valuable bronze vessel of around the late "Western Zhou" period in the shape of a bird, the mythological "Feng" or phoenix. He claims that Mr Nitta showed interest in this item and that he was very interested in making a purchase. Mr Wang said that the purchase price was HK$3,000,000. He went on to say that there were subsequent discussions with regard to the price of this object, but that eventually it was agreed to sell the "Feng" bird for ￥ 50,000,000. Mr Nitta enquired whether the bronze item could be taken to Japan and said he would pay upon receipt of the goods. How ever Mr Wang replied that he had to pay at that time and then collect the goods. He also said that if there was to be a special delivery to Japan, a deposit was required and that if there was no deposit, there would be no deal and that he did not mind if this was to be the case. However, in view of the value of the bronze item, he said that his brother-in-law Mr Wei could act as special courier to take the "Feng" bird to Japan. Mr Wang claimed that a deposit of ￥ 20,000,000 which is equivalent to about HK$1,208,000 was then paid as a deposit for the "Feng" bird. Mr Wang agreed that he did mention to Mr Nitta that he had gilt buddha statues in Taiwan but that this was a separate matter and no suggestion was made that there was to be a package deal. After his return to Japan, Mr Nitta made telephone calls to Mr Wang enquiring when delivery of the goods would be made and also enquired about gold and gilt buddhist statues. Mr Wang mentioned that Mr Wei would be bringing the "Feng" bird to Japan after he had obtained an entry visa from the Japanese Consulate in Taiwan as he could not obtain one in Hong Kong. During these telephone calls, he said that in order to do business, he went along with Mr Nitta with regard to the gold and gilt buddhist statues saying that he did have such statues in Taiwan. Mr Wang was informed by Mr Wei on about the 27th December 1991 that Mr Nitta had decided not to proceed with the purchase of the "Feng" bird. Reference was also made to the photographs taken of the bronze and that Mr Wang had asked Mr Wei to have the photographs returned. Although Mr Wang said that he was very upset by the rejection of the "Feng" bird and refused to discuss the matter with Mr Nitta, he nevertheless sent an unnumbered invoice to him with his letter of the 6th January 1992 which documents read as follows:

"Dear Mr Nitta,

Thank you for purchasing the bronze vessel in the shape of a mythological "Feng' bird and for your deposit of Japanese Yen 20,000,000.- I am enclosing an invoice and should be grateful if you would kindly arrange to pay the balance, i.e. 30 million Japanese Yen at your earliest convenience. Also, please instruct us as to how you would like the piece shipped to you in Japan once we have received the balance.

Thank you once again and congratulations on having purchased such a rare bronze. For your reference, I am enclosing an article from 'Orientations' magazine which discusses such birds and their function as a symbol of imperial power and spiritual access in Zhou art.

Yours sincerely,
Wang Jui Chin"

"	INVOICE
An Extremely Rare Bronze Vessel in the Shape of a Reclining Mythological 'Feng' Bird with a Smaller Bird on its Back - Late Western Zhou (9th - 8th Century B.C.) -		Total: Deposit: Balance Due:	Yen 50,000,000.- ---------------- Yen 50,000,000.- Yen 20.000.000.- Yen 30,000,000.- ----------------

We certify the above item is a genuine antique and was made over 100 years ago.

	SUNG CHUK CHAI CURIOS SHOP
	Manager

In fact on the previous day, the 5th January 1992, Mr Wei had written to the plaintiff in the following terms:

“	RE: Bronze Bird

Further to our previous fax, Mr Wang said that if it's convenient, he invited you to come to Hong Kong to settle this matter with him and his two partners. Right now his two partners are very angry about this matter. Mr Wang also said that your JP ￥ 20,000,000.- already taken and shared by his partners and they will not return it to you. May be you don't know that it's a regulation in Hong Kong that if you cancel the order that you paid downpayment already, then your downpayment will be confiscated (sic) automatically because you do not fullfill the sales contract. As his partners will not return the money so Mr Wang said that it's not fair for you to put the loss on him only. He said, maybe it's a small amount for you, but to him, it's a large amount.

He said he's bothered and confused by this matter and doesn't know how to settle it. Before this matter is settled, he is not in a mood to do any further business.

If you prepare to come to Hong Kong, please advise the date, so that he can arrange time.

Thank you in advance.

Best rgds/Wei Wan Lung

Sung Chuk Chai Curios Shop"

13. Mr Wei confirmed that he went to Tokyo with the bronze bird for the purpose of inspection and collection of the balance of the purchase price but the object was rejected. Although Mr Wei gave evidence that he had heard the details of the transaction between Mr Nitta and Mr Wang, in cross-examination he admitted that he was not in the room at the time when the discussion took place and therefore did not hear what was said. He also agreed during cross- examination that when he was in his hotel he was awaiting Mr Nitta and his sons' decision as to whether they had decided to purchase the "Feng" bird. Clearly upon his evidence no agreement had been concluded.

14. I have had no difficulty in deciding that Mr Nitta and his son were witnesses of truth. The only evidence that can be described as doubtful is that indicating Mr Nitta's sons might purchase the "Feng' bird for Mr Nitta's birthday. This had been adverted to by Mr Wang, Mr Wei and Mr Nitta in their evidence. However, Mr Nitta's son categorically denied that this had ever been mentioned. In any event it was not a significant matter for it does not support the defendant's case that there was a contract for the sale of the "Feng" bird. In view of Mr Nitta's dislike of the "Feng" bird I do not accept that it would have been given as a birthday present.

15. Mr Wang, on the other hand, was a most unimpressive and evasive witness upon whom no reliance can be placed. The evidence reveals that when Mr Nitta came to Mr Wang's shop on the 17th December 1991, his first enquiry was about a buddhist statue which Mr Wang said was in Taiwan. There was undoubtedly a discussion between Mr Nitta and Mr Wang when it was finally agreed that Mr Wang would arrange for Mr Wei to bring the buddha and "Feng" bird to Tokyo for inspection. No price however had been agreed for either the buddha or the "Feng" bird.

16. Although it was the custom of Mr Wang to provide a receipt for a deposit, no receipt was given for the ￥ 20,000,000 paid by Mr Nitta. No invoice was given until Mr Wang sent one backdated to the 18th December 1991 with his letter of the 6th January 1992. Although Mr Wang said that it was the practice of his shop for an invoice to be issued when a purchase had been completed, if the payment was received promptly or if the customer had requested an invoice, none of these matters apply to Mr Nitta. I accept that the invoice which Mr Wang, by his own admission, backdated to the 18th December 1991 was sent with the letter of the 6th January 1992 in order to bolster up his case that there was an agreement for the sale and purchase of the "Feng" bird. It is also significant that Mr Wang did not inform his solicitors that he had backdated this document. Quite clearly, if this had been a genuine invoice, it could have been given to Mr Nitta at the time of the alleged sale or faxed to him in Tokyo or brought by Mr Wei when he went to Tokyo on the 26th December 1991. The letter of the 6th January 1992, with its expression of amity, totally conflicts with the plaintiff's evidence and that of Mr Wei that a dispute had arisen between the parties. At this time Mr Wang said that he was too busy to discuss the matter with Mr Nitta who was anxious to speak to him. Mr Wang further admitted that he had not been telling the truth with regard to two paragraphs in his letter of the 1st February 1992 which he had included in an attempt to put pressure on Mr Nitta. In this letter he said that the "Feng" bird was the property of a third party who had asked him to sell it whereas in answer to an interrogatory Mr Wang said that he had purchased the "Feng" bird from a person known as "Ah Kwok" for HK$2.45 million. Later he was unable to say to whom the "Feng" bird had been resold by his company in Taiwan but that it was sold to an unidentified person for a profit of HK$570,000.

17. Mr Wang did not deny that he did not wish to tank to Mr Nitta and that he failed to reply to Mr Nitta's letters of the 18th February 1992 and the 11th March 1992 explaining that the matter was frivolous and that a profit of $570,000 was not a large profit despite the figures that he gave for his annual net profit of just over HK$975,000 in 1991 and HK$868,000 in 1993. His evidence on these matters was both ludicrous and unbelievable.

18. Mr Wei was also an unsatisfactory witness upon whom little reliance can be placed. Mr Nitta and his sons saw Mr Wei in Tokyo for the purpose of inspecting the Buddhist statue and the "Feng" bird. Mr Wei, according to his evidence, went to Tokyo to deliver the "Feng" bird and to collect the balance of the purchase price. Yet it is abundantly clear that no agreement had been made to purchase this item but that a decision would be made during his visit. If there had in fact been an agreement to purchase the "Feng" bird in Hong Kong, Mr Nitta could have paid for it at the time and taken it back to Japan. The sum of ￥ 20,000,000 amounts to 40% of the purchase price of ￥ 50,000,000 demanded by the defendant which is in any event a most unlikely figure to be paid as a deposit. There is no doubt in my judgment that Mr Nitta and his sons expected Mr Wei to come not only with the "Feng" bird but with the buddha for inspection or, in the alternative, photographs of the statue. There could be no conceivable reason for an inspection of the items or a comparison with other bronze items that resulted in Mr Wei having to wait at his hotel for a decision. Mr Wei in cross-examination admitted that he went back to his hotel to await Mr Nitta's decision as to whether it was decided to purchase the "Feng" bird. Indeed at no time during his visit did Mr Wei make any request for payment of any balance which he contended was outstanding in respect of the purchase price. Mr Wei's evidence that he believed that the plaintiff on his own initiative would give the balance of the money proved to be a most unconvincing answer. Mr Wei's evidence as I have already said showed quite clearly that he was awaiting the plaintiff's decision as to whether the plaintiff wished to buy the "Feng" bird.

19. Accordingly when the plaintiff decided not to purchase, he was entitled to the return of the monies that he had paid.

20. As a result, I am quite satisfied that there was no agreement between the parties for the sale of the "Feng" bird on the 18th December 1991. There will therefore be judgment for the plaintiff.

21. The plaintiff seeks judgment to be made in Japanese yen as the payment was made in that currency. There is no doubt that a court has a general discretion to give judgment in a foreign currency and although the application was resisted by the defendant, the counterclaim, although it was abandoned, was also for a declaration that the deposit of ￥ 20,000,000 had been forfeited. It was quite clear that any transaction entered into would be in Japanese yen. The plaintiff is therefore entitled to judgment in the sum of ￥ 20,000,000 as claimed. Interest of 6.5% will be awarded on this sum from the date of rejection which was the 27th December 1991. Costs including the counterclaim will be to the plaintiff.