VINCENT OFFICE SUPPLIES CO LTD v. ASIA-STEEL.COM LTD

HCA 644/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 644 OF 2002

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J U D G M E N T

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1. The plaintiff was placed in creditors' voluntary liquidation by a resolution of a meeting of creditors on 31 October 2001. Messrs. Tai Hay Yuen and Robert Kong Tak Wing of Tai, Kong & Co. were appointed liquidators of the plaintiff.

2. The plaintiff's claim against the defendant is for the sum of HK$4,065,316.00 for the price of goods sold and delivered to the defendant over a period of time from March 2000 to August 2001. At all material times the plaintiff sold computer equipment to the defendant.

3. The total amount claimed is in respect of three invoices for goods sold and delivered to the defendant as follows :

（1） Invoice No. F-000107 issued on 16 March 2000 for the sum of HK$99,313.00;

（2） Invoice No. F-000192 issued on 16 August 2000 for the sum of HK$34,803.00; and

（3） Invoice No. F-000003 issued on 13 September 2001 for the sum of HK$3,931,200.00.

4. The defendant in its defence denies that it is liable to the plaintiff. It is alleged that one Korea Data Systems (USA) Inc. ("KDS"), a supplier of personal computer monitors and accessories, supplied goods to the plaintiff on an open account basis. It is alleged that pursuant to a verbal agreement between the plaintiff, the defendant and KDS in or about August 2000, KDS instructed the plaintiff to deliver certain goods to the defendant which it did. Under the verbal agreement the defendant was not required to pay for the goods delivered but that the plaintiff would adjust its accounts with KDS thereby reducing the amount the plaintiff owed to KDS by the price of the goods delivered to the defendant. It is admitted that the goods under invoice no. F-000192 were delivered and received by the defendant under the verbal agreement. It is, however, denied that any of the goods under invoice nos. F-000107 and F-000003 were ever delivered to the defendant or that the said invoices were issued to the defendant.

5. The issues raised on the pleadings are therefore :

（1） Whether there was the alleged verbal agreement between KDS, the plaintiff and the defendant made in or about August 2000, so that the defendant was not liable to pay the plaintiff the amount under invoice no. F-000192; and

（2） Whether the goods set out in invoice nos. F-000107 and F-000003 were delivered to the defendant.

6. Although a defence has been filed by the defendant disputing liability, the defendant has not appeared at the trial and no evidence has been adduced on behalf of the defendant.

7. In support of the plaintiff's claim, I heard evidence from Ms. Choi Siu Han ("Ms. Choi") of Messrs. Tai, Kong & Co. who is a chartered accountant employed by that firm. I also heard evidence from Mr. Albert Wong, a director of the plaintiff company at all material times. I have no hesitation in accepting both of them as witnesses of truth who gave their evidence honestly. I find that they are credible and reliable witnesses. I accept their evidence.

8. Mr. Albert Wong's family established the plaintiff and he was a director and a Marketing Executive at all material times. He gave evidence, which I accept, that his uncle, Mr. Jacky Wong, who was then the Chief Executive Officer of the plaintiff, began ordering computer monitors, accessories and computer systems from KDS. The Chief Executive Officer of KDS's branch office in the USA was a close personal friend of Mr. Jacky Wong. Goods purchased from KDS by the plaintiff were shipped to the plaintiff in Hong Kong. The plaintiff resold some of goods to its Hong Kong appointed agents. As instructed by Mr. Jacky Wong, the plaintiff also resold a portion of the goods to the defendant. The Managing Director of the defendant, Mr. Andrew Li, was also a close personal friend of Mr. Jacky Wong. After the defendant had confirmed with the plaintiff the quantity of goods to be delivered to them, Mr. Jacky Wong would instruct Mr. Albert Wong to request the clerk to prepare the delivery notes for the required quantity of goods and to arrange delivery of the same to the defendant.

9. In respect of the goods covered by the three invoices in issue, Mr. Albert Wong gave evidence about these which I accept. For invoice no. F-000107 dated 16 March 2000, it was prepared at the request of Mr. Jacky Wong who instructed him what goods were to be delivered. This invoice for HK$99,313.00 was signed by Mr. Albert Wong. This was replaced by another invoice dated 20 March 2000 at the request of the defendant. The defendant placed its company chop on the invoice with the same number F-000107 dated 20 March 2000, thereby acknowledging receipt of the goods. I am satisfied that the goods under invoice no. F-000107 in the sum of HK$99,313.00 were sold and delivered to the defendant.

10. I reject the pleaded defence that there was a verbal agreement that the defendant was not required to pay for goods delivered and that the plaintiff would adjust its accounts with KDS to reduce the amount that the plaintiff owed to KDS. The burden is on the defendant to establish this alleged verbal agreement. The defendant has not appeared at the trial and has called no evidence in support of its allegations. Ms. Choi, who was involved in the liquidation of the plaintiff and whose evidence I accept, said that she examined the books of the plaintiff. It is abundantly clear that the three invoices in dispute were recorded in the ledgers of the plaintiff as accounts receivable from the defendant. It is, in my view, highly unlikely that the invoices would be recorded in the ledgers as accounts receivable from the defendant if indeed there was in existence the alleged verbal agreement. The defendant has failed to establish the pleaded defence and I reject the same.

11. As regards invoice no. F-000192, Mr. Albert Wong said that this was prepared at the request of Mr. Jacky Wong. This invoice dated 16 August 2000, which was also signed by Mr. Albert Wong, was in respect of goods delivered to the defendant on 17 August 2000 which date appears on the invoice. The defendant also placed its company chop on the invoice to acknowledge receipt of the goods. I am satisfied that the goods under invoice no. F-000192 in the sum of HK$34,803.00 were sold and delivered to the defendant. I reject the pleaded defence that the goods under this invoice were not sold and delivered to the defendant.

12. As regards invoice no. F-000003 dated 13 September 2001, this was dated and issued much later than the actual delivery of the goods under this invoice. This was also signed by Mr. Albert Wong. On the evidence of Mr. Albert Wong, which I accept, goods were delivered to the defendant under a number of delivery notes dated 17 April 2000 to 11 August 2000. These have been produced in evidence. Some of these contain the defendant's company chop while others have been signed by representatives or agents of the defendant, thereby acknowledging receipt of the goods. Mr. Albert Wong said that no invoice was issued at the time of delivery as the defendant did not know the final quantity of goods that they would require. Instead, delivery notes were issued for the various lots for record purposes. The invoice no. F-000003 for the sum of HK$3,931,200.00 was issued on 13 September 2001 on the advice of the plaintiff's provisional liquidator at that time. I am satisfied that all the goods under this invoice were sold and delivered to the defendant under the various delivery notes dated 17 April 2000 to 11 August 2000. I reject the pleaded defence that the goods under this invoice were not sold and delivered to the defendant.

13. Ms. Choi has examined the books of the plaintiff including the cash accounts and bank accounts of the plaintiff. She has been unable to find any evidence of payment by the defendant in respect of any of the three invoices in issue. I accept her evidence. I am satisfied that despite demand, the defendant has failed to pay the plaintiff any of the sums under the three invoices. I give judgment to the plaintiff against the defendant in the sum of HK$4,065,316.00.

14. By letter dated 25 November 2001 to the defendant, the joint liquidators demanded payment of the said sum. I also award interest on the said sum at 1% above prime rate from 25 November 2001 until judgment and thereafter at judgment rate until payment.