CHING SHU CHOI t/a HUA FU FASHION CO. v. ABDUL HAFIZ RA SSOUL t/a IMAN TRADING CO.

CACV 1062/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1062 OF 2001

(ON APPEAL FROM DCCJ 15123/2000)

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J U D G M E N T

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Hon Yeung J: (Giving the judgment of the court)

1. On 20 March 2001, HH Judge Lok refused the plaintiff's application for summary judgment against the defendant and granted unconditional leave to defend.

2. The plaintiff now appeals against such decision with leave from the trial judge given on 25 May 2001.

3. It is the plaintiff's case that in May 2000, the defendant purchased clothes from him at the price of $431,539.18. The defendant only issued two cheques each for $75,000 as part payment and refused to settle the balance. The two cheques were also dishonoured upon presentation for payment.

4. The plaintiff therefore claimed against the defendant for the total sum of $431,435.18 with interest and costs.

5. The defendant denied that he had purchased the clothes from the plaintiff. The suggestion was that Saud Trading Est. of Saudi Arabia (Saud) ordered the goods and he was merely acting as a commission agent. The defendant suggested that his duties are limited to four matters, namely:-

(i) to prepare all necessary Customs documentations,

(ii) to liaise with the plaintiff in connection with shipment of the goods,

(iii) to liaise with Saud for the payment of the purchase price to the plaintiff and the handling commission to him; and

(iv) to exchange money remitted by Saud from US currency into Hong Kong currency and to release the purchase price to the plaintiff upon instruction from Saud to do so.

6. The defendant agreed that the two cheques for $150,000 were issued as payment for the goods under the 1st and 2nd invoices, but as Saud had not remitted fund to cover the two cheques on their respective due dates, he had requested the plaintiff not to present them for payment.

7. The defendant said he only received fund from Saud to cover the two cheques in December 2000. He therefore issued a new cheque for $150,000 and asked the plaintiff to exchange it for the two dishonoured ones. The plaintiff rejected the offer.

8. Mr Mahyoub of Saud supported the defendant contention. He confirmed that the defendant had not been put in fund to cover the 3rd, 4th and 5th invoices.

9. The suggestion that the two cheques could only be presented for payment if Saud put the defendant in fund is bad in law as it is an attempt to introduce extrinsic oral evidence to contradict the express term of the cheques. (Great Sincere Trading Co v. Swee Hong & Co [1968] HKLR 660)

10. In any event, the defendant had admitted that Saud had paid him the sum of $150,000 to settle the 1st and 2nd invoices. There was therefore no excuse not to pay the plaintiff the said sum of $150,000.

11. As for the balance of $281,435.18, it falls upon this court to decide if the evidence demonstrates a fair and reasonable probability of the defendant having a real and bona fide defence.

12. In the contract and the production orders as well as the invoices issued by the plaintiff, the names of both the defendant and Saud appeared. The plaintiff also issued the packing lists to the defendant with Saud's name appearing under customer's code.

13. The defendant himself would issue commercial invoices and packing lists to Saud. In the invoices, the price of the goods was inflated as compared with the price quoted by the plaintiff.

14. There is no suggestion that the plaintiff had issued any other document to Saud nor had any contact with it.

15. Saud is a foreign company and it was unlikely that the plaintiff would trade with it unless payment for the goods could be assured. It was also unlikely that the plaintiff would sell to Saud on credit if the defendant were only acting as an agent.

16. When the plaintiff demanded payments, the defendant did not deny liability. He asked to settle the $150,000 by installments and agreed to settle the balance later. Such attitude is totally inconsistent with the contention of the defendant that he was merely acting as an agent.

17. As an excuse not to settle the balance of $281,339.31, the defendant alleged that his buyer had found many defective goods from the plaintiff's shipment. However the goods were never returned.

18. In our view, the defence of the defendant is not only shadowy but also not capable of being believed. We are persuaded that the order granting unconditional leave to defend is not a correct decision and should be set aside. We are persuaded that the plaintiff should be granted judgment on the entirety of the claim in accordance with the decisions in B.K Murjani v Bank of India [1990] 1HKLR 586 and Tandy/Rank Video v Yee Hing Cassette Factory Ltd [1991] HKC 136.

19. The appeal is allowed. There will be judgment for the plaintiff against the defendant in the sum of $431,539.18 and interest thereon at the rate of 8% p.a. from the date of the writ and costs of the action to be taxed if not agreed.