KINGSWAY CARS SERVICE LTD. AND ANOTHER v. KWAN KWAI WUN TONY

HCA 21542/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 21542 OF 1998

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J U D G M E N T

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1. The 1st Plaintiff is a motor vehicle service provider and also provides service and maintenance for vehicles sold by the 2nd Plaintiff. The 1st and 2nd Plaintiff are related companies.

2. At the outset, I was informed by Mr Chow, Counsel for the Plaintiffs, that the 2nd Plaintiff was in fact not claiming anything against the Defendant. The claims against the Defendant in this action are claims only by the 1st Plaintiff. Accordingly, Counsel applied for and I granted leave to the 2nd Plaintiff to withdraw its claims against the Defendant. The 1st Plaintiff remained as the only plaintiff in respect of the claims against the Defendant.

3. The Defendant was not represented at the trial and did not appear. No evidence was called on behalf of the Defendant.

4. The 1st Plaintiff called four witnesses namely, Leung Shun King ("Leung") who is a technical consultant of the 1st and 2nd Plaintiffs, Cho Kwan Lok, Mak Yat Cheung ("Mak"), the general service manager of the 1st and 2nd Plaintiffs, and Choi Kim Chi, a service consultant of the 1st and 2nd Plaintiffs. I have no hesitation in accepting the evidence of those witnesses. I am satisfied that they are witnesses of truth.

5. The Defendant is a racing enthusiast. It is not in dispute that the Defendant wished to have his car, a Porsche registration mark GU 4483 ("the Porsche") modified so that he could drive it in a race in Zhuhai in the Mainland in April 1997.

6. On the evidence of Leung, which I accept, the Defendant met Leung in February 1997 and informed him that he wanted the Porsche to be modified for a car race in Zhuhai in April 1997. He asked for assistance in this regard and agreed to authorize the Plaintiffs to place orders for component parts from manufacturers. He also provided his credit card number so that purchases of component parts could be debited to his credit card account direct. I accept and find that it was agreed between Leung, on behalf of the 1st Plaintiff, and the Defendant that the 1st Plaintiff would carry out the modification works on the Porsche for the race in Zhuhai. I also find that the Porsche was taken to the workshop of the 1st Plaintiff on 20 February 1997. Leung checked the Porsche to see what work was required and he then issued to the Defendant the memorandum, Exh. P1, detailing the work to be done.

7. The 1st Plaintiff thereafter carried out the modification work for the race in Zhuhai ("the 1st modification") and Leung asked the Defendant to collect the Porsche in or about early April 1997 after the 1st modification was completed. The Defendant asked Leung to deliver the Porsche to Zhuhai which Leung did on or about 15 April 1997.

8. I also find that the Defendant drove the Porsche without any problem during the practice sessions from 16 to 18 April 1997. The Defendant also drove it for two car races in Zhuhai from 19 to 20 April 1997 but the Porsche sustained damage after the Defendant was involved in an accident.

9. After the Zhuhai race, the Defendant instructed Leung to tow the Porsche back to Hong Kong for repair. Leung arranged for agents to tow it to the Zhuhai pier at the cost of 500 RMB which was paid by the 1st Plaintiff on the Defendant behalf.

10. Thereafter, the Porsche was returned to the 1st Plaintiff workshop in Hong Kong. Under the agreement made in February 1997, the 1st Plaintiff was to reinstate the Porsche after the Zhuhai race so that it would be fit for driving on the roads in Hong Kong. However, on Leung's evidence, which I accept, I find that after the Porsche was brought back to the workshop after the Zhuhai race, the Defendant informed Leung that he wished to race the Porsche in another race in Kuala Lumpur in Malaysia and requested Leung to repair the Porsche so that it would be fit for racing generally in Malaysia. The 1st Plaintiff agreed to this and I accept that this amounted to a variation of the original agreement. I also find that Leung issued to the Defendant a quotation for the repair and modification of the Porsche for racing in Malaysia ("the 2nd modification"). The quotation is Exh. P3 dated 11 June 1997.

11. On the evidence, I also find that in respect of the 1st modification, the invoice dated 10 June 1997, Exh. P4, was issued by the 1st Plaintiff and sent to the Defendant. This was for the sum of $125,774. This invoice was eventually settled by the Defendant by payment of $110,000 to the 1st Plaintiff which was accepted. There is no claim by the 1st Plaintiff for any outstanding amount in respect of the 1st modification.

12. On Leung's evidence, I also find that to enable the 1st Plaintiff to carry out the 2nd modification, the 1st Plaintiff placed an order for component parts from a German manufacturer, RUF Automobile Gmbh ("RUF"). It is clear on the evidence, which I accept, that although the Defendant provided the 1st Plaintiff with the number for his Visa card, RUF was unable to obtain payment using the Defendant's Visa card. The Defendant then provided his Diners Club credit card number but again RUF was unable to obtain payment for the component parts from Diners Club. On the evidence, which I accept, the 1st Plaintiff paid RUF the sum of DM10,161.22, which is equivalent to HK$45,725.49, on the Defendant's behalf and obtained the component parts from RUF.

13. I also find that the 2nd modification was carried out by the 1st Plaintiff and on the Defendant's instructions, the Porsche was delivered to a Mr Wong Kong Fa of Continental Motors Co. on 15 July 1997. I also find that the invoice dated 15 August 1997, Exh P7, for work done in respect of the 2nd modification, but not including the cost of component parts paid to RUF, was issued to the Defendant. The invoice was for the total sum of $99,986.70.

14. The total amount claimed in this action is $149,590.09. This comprises of four sums which Counsel for the 1st Plaintiff conveniently referred to as the 1st to 4th sums inclusive. The 1st sum is the amount of the invoice, Exh. P7, namely $99,986.70 ("the 1st sum") which was for work done by the 1st Plaintiff in respect of the 2nd modification. The 2nd sum is the sum of $45,775.49 ("the 2nd sum"), which is the equivalent of DM10,161.22 paid to RUF on the Defendant's behalf. The 3rd sum is the sum of $467.30 ("the 3rd sum") which is the equivalent of the 500 RMB being the towing charges paid on the Defendant's behalf after the race in Zhuhai. The 4th sum is the sum of $3,410.60 ("the 4th sum") which relates to something entirely different. It is for the materials and parts supplied by the 1st Plaintiff to the Defendant in respect of his Lamborghini which he had purchased from the 2nd Plaintiff.

15. The defences raised by the Defendant in his amended Defence and Counterclaim are as follows :

1. that it was an express term of the agreement in respect of the 1st modification that the component parts which had been removed would be reinstated after the Zhuhai race, so that the Porsche could be used on the roads in Hong Kong. It is alleged that there was a breach of this express term as the 1st Plaintiff wrongly failed to reinstate the component parts which had been removed despite repeated requests and demands.

2. that the 1st Plaintiff had installed equipment in the Porsche for a fee of $21,000 which had been paid by the Defendant but the said equipment was defective.

3. that the 3rd sum, being the towing charge paid by the 1st Plaintiff after the Zhuhai race, had already been paid by the Defendant.

4. that in respect of the 2nd modification, there was an express term of the agreement that the Porsche would be modified to the extent that the maximum speed would be raised from 405 h.p. to 480 h.p. It is alleged that there was a breach of this express term in that the 1st Plaintiff failed to increase the maximum speed of the Porsche to 480 h.p.

5. that in respect to the 4th sum, in respect of the Lamborghini, the amounts charged were covered by a warranty so that the Plaintiff should not be liable to pay the sum of $3,410.60 claimed.

16. There is also a counterclaim for the return of the component parts which the Defendant alleges has not been returned to him or for the value thereof at $206,591 and for damages for failing to reinstate the component parts to the Porsche. The Defendant also counterclaims for the return of the sum of $21,000 being the amount he paid for what he alleges was defective equipment installed by the 1st Plaintiff in the Porsche.

17. On the evidence, I am satisfied that the Defendant did not ask Leung, or anyone from the 1st Plaintiff, to reinstate the Porsche after the race in Kuala Lumpur in Malaysia. I accept Leung's evidence that after the Malaysia race, the Defendant did not request the Plaintiff to reinstate the Porsche back to make it fit for driving on the roads in Hong Kong. In my judgment, the defence raised fails.

18. On the evidence of Leung, I find that the 1st Plaintiff had already returned some of the component parts, which had been removed from the Porsche for the Zhuhai race, when it delivered the Porsche together with some component parts to the Defendant's agent Mr Wong Kong Fa on 15 July 1997. The evidence shows that the 1st Plaintiff still retains some component parts but these are not as alleged by the Defendant. On the evidence, I find that the parts still retained by the 1st Plaintiff are as set out in para. 6 of the Reply and Defence to Counterclaim, namely, three turbo chargers, one heat protection plate, two rear mufflers, one blower, two muffler brackets and two muffler straps. These items are subject to a lien. The 1st Plaintiff is prepared to return the same to the Defendant upon payment of the sums claimed.

19. There is no evidence at all that any of the equipment installed in the Porsche for which the Defendant paid $21,000 was defective. There is no merit in this defence and it also fails.

20. I am also satisfied on the evidence that the Defendant has not paid the 3rd sum, which is the towing charges after the Zhuhai race. This defence raised also fails.

21. I also find on the evidence that there was never any express agreement in respect of the 2nd modification to modify the Porsche so that the maximum speed would be raised from 405 h.p. to 480 h.p. This defence also fails.

22. In respect of the 4th sum, the defence raised is that the amount claimed by the 1st Plaintiff was covered by the warranty given to him when he purchased the Lamborghini from the 2nd Plaintiff in December 1997 and that the Defendant should not be liable to pay the 1st Plaintiff for the charges under its invoice.

23. On the evidence of Mak, which I accept, the manufacturer's warranty for the Lamborghini did not cover the items charged which make up the 4th sum. Under the terms of the warranty card, Exh. P8, by cl. 2.2, it is clear that the warranty did not include materials or parts provided such as lubricants, filters, brake pads and oil and other parts set out therein. On the evidence, the 1st Plaintiff has not charged the Defendant for the service to his Lamborghini which was provided free of charge. He has only been charged for the materials or parts as shown in the invoice, Exh. P11, which was sent to him. I am satisfied that the provision of those parts or materials was not covered by the warranty and the Defendant is liable to pay the 4th sum. The defence raised in respect of the 4th sum also fails.

24. The 1st Plaintiff has proved its case and is entitled to judgment as claimed. The 1st Plaintiff is entitled to judgment as claimed in the total sum of $149,590.09, being the total of the 1st to the 4th sum inclusive. I give judgment to the 1st Plaintiff for the sum of $149,590.09.

25. The counterclaim of the Defendant is dismissed.

26. There will be interest on the 1st , 2nd and 3rd sums at 1% above prime rate from 22 July 1997 until judgment and thereafter at judgment rate until payment. The date 22 July 1997 is 7 days after the Porsche was delivered to the Defendant's agent. The 1st, 2nd and 3rd sums should have been paid by then.

27. There will be also interest on the 4th sum at 1% above prime rate from 4 September 1998 until judgment and thereafter at judgment rate until payment. The invoice for the 4th sum was dated 28 August 1998 and payment should have been made within 7 days thereafter. The 1st Plaintiff is also entitled to its costs of the action and of the counterclaim, including the costs reserved on 17 October 2000 and I so order.