LUU HUNG VIET DERRICK also known as HUNG VIET DERRICK LUU v. CAR CITY MOTORS LTD

HCA2421/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2421 OF 2009

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BETWEEN

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J U D G M E N T

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1.  The plaintiff is suing the defendant for the return of the deposit of HK$1,000,000 he paid to them in respect of the intended purchase of a Pagani Zonda Cinque motor car.

2.  The defendant which is a dealer in motor cars defends the action on the basis that as there was a contract of sale and purchase of the car they are entitled to retain the deposit and they made a counterclaim against the plaintiff for their loss of profit consequent upon the plaintiff’s failure to fulfil his contractual obligations.

3.  This is an exotic motor car.  According to the evidence before me only five such cars were manufactured and these were only intended to be made available in Hong Kong.  They are also very expensive.  The purchase price was €1 million.

4.  The main issue in this case is whether in fact a contract was entered into between the plaintiff and the defendant.

5.  Only two witnesses gave evidence.  The plaintiff on his own behalf and Mr Mink Hwee (“Mr Hwee”) a sales representative for the defendant. 

6.  It was common ground that Mr Hwee was the only person from the defendant company having relevant dealings with the plaintiff.

7.  The plaintiff is an enthusiast of luxury motor cars. 

8.  Sometime around April 2008 he learnt that Pagani an Italian manufacturer intended to introduce a limited edition of a model to be sold as a Pagani Zonda Cinque in Hong Kong and that only five of these cars would be made available to the public.  He understood that a company called SPS would be the importer of the car and the defendant company would be the distributor.

9.  The defendant had a showroom in Chaiwan. 

10.  The plaintiff attended at the showroom and met Mr Hwee.  

11.  Mr Hwee showed him a Pagani Zonda car which he understood was not the same as the Cinque model he was interested in.

12.  On account of the very limited number of Cinque models which would be available he was of the opinion that contrary to the usual position of a car depreciating in value, it would increase significantly in value over time.

13.  Mr Hwee informed him that there was a quota for the cars.

14.  The plaintiff then informed Mr Hwee that he was interested in purchasing a Cinque.  At this time he was unaware of any requirement that a deposit of 50% of the purchase price needed to be paid.

15.  Sometime in June 2008, Mr Hwee contacted him and enquired whether he was still interested in buying the car.

16.  The plaintiff said he was and a meeting was arranged on 24 June at the Starbucks Café at the Airport Express Station in Central.  This was convenient for the plaintiff as he was embarking on a business trip that evening.

17.  The meeting took place.

18.  Mr Hwee informed him that at that time no delivery date was known nor were there detailed specifications for the car.

19.  However a deposit of a million dollars was required if a car was to be reserved for him.

20.  The plaintiff gave him a cheque for HK$500,000 and promised that he would give him a cheque for the balance of $500,000 in the near future.

21.  Mr Hwee told him that he would prepare a sales contract for his signature in due course.

22.  On 30 June the plaintiff received an Email from Mr Hwee which contained the following terms :

“We, Car City Motors Ltd. (‘the Seller’), confirm the sale to you of the following upon the conditions set out herein and overleaf (‘the Contract’) subject to contingencies beyond our control and shall be obliged if you will sign and return to us the duplicate in acknowledgement of your purchase hereinafter (‘the Goods’).

Model: Pagani Zonda Cinque Limited Edition

Colour: To be advised

Interior: Toora racing seats in carbon fibre with leather cover

Chassis No.: To be advised

Engine No.: To be advised

Options: All standard factory options and further options as selected by, and for account of the Buyer.

…

No guarantee of shipment dates can be given. Please note

Price: €1,000,000 Euro

Deposit: 1^st deposit €250,000 Euro with signed contract

2^nd deposit €250,000 Euro to be paid three months before confirmation of production month

Terms: The Seller will advise the Buyer after having received full information of all details pertaining to the Goods such as retail price, technical specification, options etc.

…

Notes:  This Contract is the sole basis and evidence of the transaction referred to herein. No verbal qualification of any kind will be recognized.  Customers are therefore requested, in their own interests, to satisfy themselves, before signature, that the terms of Contract and the conditions governing this sale, which are detailed on the back of this Contract, are in accordance with their wishes. Alteration cannot be made thereafter.”

23.  Although reference is made to conditions in the note at the end, he was not provided with a copy of the conditions nor had he up to the date of the present litigation ever seen such conditions.

24.  He was also concerned to observe that a deposit of €500,000 needed to be paid. 

25.  This was entirely contrary to his experience when purchasing luxury cars.  The usual practice was to require a deposit of 10%.

26.  He expressed his concern to Mr Hwee and the fact that even at that time no delivery date had been fixed nor were detailed specifications available.

27.  This being the case he refused to sign the sales contract.

28.  At this time he was travelling a lot.  When he returned to Hong Kong in August he saw an Email from Mr Hwee requesting him to come and sign a sales contract as soon as possible as he had another potential customer who was prepared to pay an additional HK$1,000,000 for the car.

29.  As a result of this, he felt under some pressure.

30.  A meeting was arranged at his Lippo Building office on 13 August.

31.  At the meeting, he gave Mr Hwee a cheque for HK$500,000 being the balance of the deposit he had promised to pay Mr Hwee.

32.  As there was still no firm delivery date and no detailed specifications he was not prepared to pay the deposit being requested by Mr Hwee.

33.  However as he felt considerable pressure from him as he wanted the car, he was prepared to pay €250,000 on the signing of a sales contract and a further €250,000 three months prior to the manufacture of the car.

34.  This being the case he amended the draft sales contract by proposing that the provisions relating to the deposit should read 1^st deposit €100,000, 2^nd deposit €150,000 Oct 15/08 and 3^rd deposit €250,000 Dec 15.

35.  He was not prepared at that stage to pay a larger deposit than the HK$1,000,000 already paid and thus was not willing to sign the sales contract and did not do so.

36.  On 19 August, he received a fresh draft sales contract from Mr Hwee.  However as there was still no delivery date or detailed specification he was not prepared to sign it.

37.  Following this Mr Hwee sent a number of Emails to him requesting further payments of deposits.

38.  The plaintiff however held his ground that until his requirements were complied with he was not prepared to sign a sales contract or pay any further deposits.

39.  The final development prior to legal proceedings being commenced was when he received a letter from the defendant in these terms :

“ Car City Motors Limited

TO: Hung Viet Derrick Luu

HKID: R594413(8)

Phone No.: 6131 5436

09 March 2009

Dear Mr. Luu

We refer to your purchase of a new Pagani Zonda Cinque Limited Edition under the Sale Contract No.CC300608. As you are aware, your car will product (sic) in early June 2009. Actually, your Sales Executive, Mink Hwee, has been trying to coordinate with you for the deposit (2^nd & 3^rd), unfortunately, we still have not received your payments for the arrangement as of today.

In accordance with the terms and conditions of your Sale Contract, we must advise you that if we do not receive you instructions with the 2^nd & 3^rd deposit payment of €400,000 (please refer to the Sale Contract as attached) within 7 days from the date of this letter, we will have no alternative but to consider that you want to cancel your order and the deposit of HK$1,000,000. – you paid for this car will be forfeited. However, we still hope that you will respond to this letter without further delay.

Your sincerely,

(Signature)

Head Office – New Cars”

The plaintiff replied in this letters as follows :

“寄件人：Derrick Luu (luu.derrick@gmail.com)

收件人：mink_hwee@yahoo.com.hk;

日期：2009/3/16(一)3:36:11 PM

副本(CC)

主題： Re: Pagani Zonda R @ Car City Motors Ltd – Hong Kong

Dear Mr. Mink Hwee:

I have received your letter date on the 9th of March regarding to the order and I would like formally inform you that I want to buy the car as ordered but there are few items need clarification. I just received some information regarding to the interior of the car and the color is not yet pick, should I pick the color and I do not have any spec. on the car only few picture sent to me late last week. According to the letter date on the 9th you want me to forfeited my deposit I fine it is unfair please review the preliminary contract before you forfeited my deposit. Again I do appreciated the time and your information related to the vehicle that I interested and there are options to handle this matter as follow;

1. If you have some one want to buy the car then you could consider to cancelled my order and sell the car to other buyer and return my deposit.

2. I want to buy the car but the detail spec. should be included with the agreement and I would like to inform you my schedule, I will not be in Hong Kong on April, May and June of 2009. Please deliver the car on August 2009 and the second and third deposit will be handle at the end of April and May. You could rewrite the contract and I will sign it.

Thank you very much for your understanding.

Derrick Luu”

40.  The matter was then placed in the hands of the respective solicitors and the plaintiff commenced the present proceedings.

41.  The plaintiff was subjected to a lengthy cross-examination by Ms Elizabeth Cheung.

42.  In this he maintained his ground and was not seriously challenged.

43.  Ms Cheung was critical of the way in which the plaintiff had dealt with the numerous Emails which Mr Hwee had sent to him after the 13 August meeting.  She suggested to him that if indeed the only reason for him not making the payments requested was the absence of the detailed specifications or a definite delivery date, one would expect him to state this in a reply in the Emails rather than just prevaricating and just putting Mr Hwee off.

44.  With respect to Ms Cheung there would seem to be a flaw in this line of reasoning.  It is predicated on the premise that a contract had been entered into and that the plaintiff had some obligation to proceed with the matter.

45.  On my reading of the Emails all that Mr Hwee was doing initially was requesting further payments.  If the plaintiff did not consider himself to be bound by any contract, it is entirely understandable that he would not consider it to be necessary to provide any explanation for his delay in complying with Mr Hwee’s requests.

46.  On the whole, I found the plaintiff to be an honest witness and on virtually all of the issues upon which there are disputes, I much prefer his evidence to Mr Hwee’s.

47.  Mr Hwee gave evidence that he had been employed by the defendant since 2003 and was experienced in the sale of luxury motor cars.

48.  He agreed that he had had a preliminary meeting with the plaintiff sometime prior to June 2008.  He had given the plaintiff his business card.

49.  Subsequent to this, he had several telephone conversations with the plaintiff when he expressed an interest in acquiring a Pagani Zonda Cinque.

50.  He informed him that the purchase price was €1,000,000 and that a deposit of 50% of the purchase had to be paid in advance.  He told him that delivery would take place sometime in 2009.  No exact date could be given as the production and manufacture of the five cars had not been completed.

51.  The plaintiff had agreed to these terms and he attended the meeting at the Airport Express on 24 June.

52.  At the meeting he received a cheque for HK$500,000.

53.  He subsequently obtained the plaintiff’s personal particulars thus enabling him to prepare the first version of the sales contract.

54.  This was Emailed to the plaintiff on 30 June.

55.  Mr Hwee said that he sent a number of Emails to the plaintiff requesting him to sign the sales contract.

56.  Eventually a meeting was set up at the plaintiff’s office at Lippo Centre on 13 August.

57.  At the meeting there were discussions concerning the time for the payment of the deposit.  The plaintiff proposed the amendments which were referred to in his evidence and he had made a notation on his copy of the sales contract concerning the amounts payable on the different dates proposed. 

58.  He informed the plaintiff that he would need to get the defendant’s agreement to the proposed variations and that if and when this was obtained the matter could then be proceeded with.

59.  The plaintiff gave him the document and asked him to prepare a sales contract.  He said that he would sign the revised sale contract.

60.  He prepared the revised version and after affixing the chop of the defendant sent it to the plaintiff for his signature.

61.  Acting on the plaintiff’s promise to sign the document, the defendant placed an order with SPS to purchase a car for €900,000. It also paid a deposit of €50,000 with the order.

62.  It was Mr Hwee’s evidence all along that the plaintiff was fully aware of the requirement that a 50% deposit was required and that he had not complained about the absence of a delivery date or the non production of detailed specifications when replying to the Emails which he had received asking him to sign the sales contract.

63.  Mr Hwee claimed that it was clearly the case that the plaintiff was using these matters as a pretext to gain extra time from the defendant.

64.  This could be seen from the excuse he finally gave for delay that he was awaiting the transfer of funds.

65.  After receiving the plaintiff’s Email of 16 March 2009, a final attempt was made to resolve the matter.

“寄件人：Mink Hwee (mink_hwee@yahoo.com.hk)

收件人：luu.derrick@gmail.com;

日期： 2009/3/18 (三) 1:02:08 PM

副本(CC)

主題 ：Re: Pagani Zonda R @ Car City Motors Ltd – Hong Kong

Hi Derrick,

Well noted with thanks.

After discuss with my company, As you request to deliver the car on August 2009.

Please kindly find the revised contract details as below:

2^nd deposit 150,000 euro should be made 20 March 2009

3^rd deposit 250,000 euro should be made 30 April 2009

Final selection of exterior and interior color have to confirm by end of May 2009

Production : June 2009

Deliver : August 2009

We will revise the Sale Contract as above once you agreed.

Await for your soonest reply,

Pagani Zonda Cinque : Official Details

Zonda Cinque Press Release

A project born to satisfy the request of the Pagani dealer for Hong Kong ‘SPS’, an incredible car which will be produced only in 5 (five) limited pieces, already all sold and will be street legal. It will be the first Pagani car to be equipped with sequential gearbox manageable both with paddles behind the steering and with the traditional gear stick on central tunnel. Besides, it will be the first Zonda to use the new Pagani invention, the carbon-titanium, a special fiber purposely created for the Zonda Cinque, which will be eventually used on the new generation models. This monster has 678 hp, 780 Nm torque, forged monolock titanium wheels, bolts and nuts will fully be done in titanium and boast the Pagani logo.

The interiors are refined and at the same time reveal the sporting attitude of this car. Racing leather seats developed by Toora, 4-points seatbelts and molibden steel roll-bars with carbon fiber coating. The Zonda Cinque total weight will be 20 Kg lighter then the F model, will have new Pirelli tyres, with special compounds for the car.

Suspensions and springs will be in ergal (sic) and titanium developed with the latest technology from Ohlins, in accordance with the Pagani specifications. Four different settings, 10 adjustments each, to separate high and low frequencies, both in compression and extention.

The body is equipped with a longer front spoiler, new designed rear wing, central air intake on monocock, extra air intakes for rear brakes. Flat bottom and new rear air extractors will improve the downforce up to 750 Kg at 300km.

Technical Specifications”

  Mercedes Benz AMG engine, 678 hp,

  ECU, Traction control, ABS by Bosch

  Inconel/titanium exhaust system coated with ceramic

  Suspensions in magnesium and titanium

  Cima sequential gearbox (6 speed), robotized by Automac engineering

  APP monolithic wheels forged in aluminium and magnesium.

  wheel size : front 9x19 – rear 12,5x20

  Pirelli PZero tyres, Size: front 255/35/19 – rear 335/30/20

  Toora Racing Seats in carbon fiber, with leather cover

  Carbon Fiber steering wheel

  Brembo brakes in carbo-ceramic self ventilated with hydraulic servo brake,

  Size: front 380x34 mm, monolithic 6 piston caliper; rear 380x34 mm, monolithic 4 piston caliper.

  Dry weight 1210 Kg

  Weight distribution in driving condition: 47% front, 53% rear

  Acceleration: 0-100 Km in 3.4 sec., 0-200 in 9.6 sec.

  Braking: 100-0 km in 2.1 sec., 200-0 km 4.3 sec.

  Maximum side acceleration: 1,45 G (with road tyres, NO CUP)

The Zonda Cinque will be a piece of art able to speed over 350 Km/h.  A special colour livery will distinguish this unique, exclusive, 1ML Euro + tax model.  Only five pieces for five wealthy Pagani lovers.

Thanks & Best Regards

Mink Hwee

852-65555110

www.carcity.com.hk”

66.  The plaintiff did not avail himself of this opportunity.

67.  Mr Hwee was cross-examined at some length by Mr Paul Leung for the plaintiff.  

68.  So far as the critical meeting on 13 August 2008 was concerned, Mr Hwee accepted that it was the policy of the defendant company to require that a prospective purchaser must sign a sales contract and the defendant must receive the requisite deposit at the time when a contract was concluded for the sale of a car.

69.  Mr Hwee did not provide any satisfactory explanation for the departure in this case from the defendant’s company policy. 

70.  He also accepted that he had not at any time provided the plaintiff with a copy of the conditions on the back of the sales contract and in particular the provision that in the event of the purchaser defaulting any deposit paid would be forfeited.

71.  He did, however, maintain that he had always used the word “deposit” and that the plaintiff had not used words to the effect that the payments he was making were just an earnest of good faith.

72.  Mr Hwee was not a satisfactory witness whose testimony can be relied upon.

73.  There were serious inconsistencies in his evidence. Perhaps the most glaring of these is the evidence he gave in relation to placing the order with SPS after he claimed that the plaintiff entered into a contract for the purchase of the car.

74.  The document which evidences the SPS purchase is dated 28 June 2008.

75.  The case being relied upon by the defendant and Mr Hwee’s evidence is that the plaintiff’s counter offer was made at 13 August meeting and was accepted shortly after this.  This was approximately six weeks after the order was placed with SPS.

76.  There were also inconsistencies concerning the extent to which a purchaser could exercise a choice over the external and internal colours which were available.

77.  There was also conflicting evidence as to whether a Pagani F. Zonda Cinque was the same car as a Pagani Zonda Cinque.

78.  In addition to the unsatisfactory aspects of Mr Hwee’s evidence, it was definitely my impression that he was a thoroughly evasive witness.

79.  In the final analysis what I have to determine is whether what transpired at the 13 August meeting and the events immediately following it can establish that a contractual relationship was established between the parties.

(1)  Did the plaintiff indicate that if the notations he made on the sales agreement were accepted by the defendant, he would sign a sales contract?  For reasons apparent in this judgment, I do not accept that he did.

(2)  Did the defendant make a counter offer to the plaintiff which his alleged promise to sign a sales contract amount to a contract when the document was returned to him?  Again for the reasons given in this judgment, the answer clearly must be no.

80.  In general terms, I found the evidence of the plaintiff much more convincing than that of Mr Hwee.

81.  Certainly so far as the 13 August meeting is concerned, I find his evidence to be the more credible.

82.  Throughout his evidence, the plaintiff expressed his reluctance to pay €500,000 before having a firm delivery date or being able to make choices concerning the specifications of the very expensive car he hoped to acquire.

83.  On the subject of finance, there is a degree of uncertainty concerning the plaintiff’s financial position.

84.  At the commencement of his cross-examination, he was asked what was his occupation.  His reply was “investment”.

85.  This might embrace a multitude of activities.

86.  However, this might be considered against a background that it is common knowledge that during the latter part of 2008 and into 2009, world financial markets were extremely volatile and many investments declined considerably in value.

87.  This conjecture was not entirely fanciful as there was reference in the plaintiff’s Emails to his having to await the transfer of funds.

88.  The fact that the plaintiff may have been experiencing some financial difficulties in no way detracts from the case he is advancing and indeed may provide an explanation why he was reluctant to sign the sales contract and commit himself to the purchase.

89.  A further point which needs to be made concerns the notice which appears at the end of the page where the parties are supposed to sign the contract.

90.  The notice provides :

“…

Notes: This Contract is the sole basis and evidence of the transaction referred to herein.  No verbal qualification of any kind will be recognized.  Customers are therefore requested, in their own interests, to satisfy themselves, before signature, that the terms of Contract and the conditions governing this sale. which are detailed on the back of this contract, are in accordance with their wishes.  Alteration cannot be made thereafter.” 

91.  The plaintiff would have been aware of this, as this note was on the original sales contract which was supplied to him in June 2008 and upon which he made the notations at the 13 August meeting.

92.  Accordingly, it would not have been unreasonable for the plaintiff to assume that signing the document was an important matter and that a signed contract would supersede any verbal representations or discussions.

93.  This being the case, it was hardly surprising the plaintiff was reluctant to comply with Mr Hwee’s request that he should sign the sales contract.

94.  There are also matters relating to the forfeiture of the deposit.

95.  Mr Hwee admitted in cross-examination that he had never broached this topic with the plaintiff.

96.  If the defendant’s terms were complied with the deposit would have amounted to €500,000.  This is an exorbitant sum in the context of purchasing a car and the absence of either any verbal warning or providing the plaintiff with a copy of the conditions in this connection would lead me to a conclusion that there was no agreement that in the event of the plaintiff not completing the contract, the defendant was entitled to forfeit any deposit which had been paid.

97.  Having regard to all of these matters, I am satisfied on the balance of probabilities that the plaintiff did not verbally advise Mr Hwee that he would definitely proceed with the purchase or that if a fair copy of the sales contract was sent to him that he would sign it and return it.

98.  This being the case, I do not find that there was a sufficient consensus to establish either that the plaintiff made an amended offer to Mr Hwee or that he promised to accept any counter offer made by the defendant.

99.  For the reasons I have given, I find as a fact that no contract was ever entered into by these parties.

100.  I also find as a fact that no agreement was entered into, under which it was agreed that in the event of the plaintiff not purchasing the car, the defendant was entitled to forfeit the HK$1,000,000 deposit received from the plaintiff.

101.  On the authority of World Food Fair Ltd v H.K. Island Development Ltd [2006] 9 HKCFAR 735, the defendant must return the deposit to the plaintiff.

102.  So far as the defendant’s counterclaim is concerned, this must be dismissed, as I have found that there was no contract between the parties.  Over and above this, the only evidence in support of the counterclaim was Mr Hwee’s evidence.  He admitted in evidence that he was unfamiliar with what had transpired between the defendant and SPS or how any loss which was being claimed could be proved.

103.  Judgment is entered in the sum of HK$1,000,000 in favour of the plaintiff.

104.  The defendant’s counterclaim is dismissed.

105.  The plaintiff is entitled to interest at the rate of 6% from the date of the issue of the writ to the date of judgment and thereafter at the rate of interest payable on judgments.

106.  I make an order nisi that the plaintiff is to have his costs on his claim and on the counterclaim which if not agreed will be taxed.