UNION FILM LABORATORY LTD. v. MODERN FILMS DISTRIBUTION CO. LTD.

HCA12951/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.12951 OF 1995

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J U D G M E N T

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1. This is the trial of an action brought by the plaintiff company against the defendant company in respect of amounts due pursuant to a contract entered into between the plaintiff company and the defendant company, by a contract in Chinese ("the contract") dated 3 November 1994, whereby the plaintiff agreed with the defendant to do the following :

(1) To lend or sell for the making of the film "殺夫" the appropriate film negative.

(2) To process, i.e. to develop, and print for the defendant the appropriate footages.

(3) To charge for the necessary work at the rate agreed in clause 5.

The contract also provides for the broad basis of the payment in that the defendant is given credit until the first copy is produced.

2. That is the general scheme. Of course, it makes sense in the context of Hong Kong because filming period tends to be short for the filming companies involved in the production and distribution of films, it makes commercial sense not have to pay as soon as work is done, especially when work is spread over a period of time.

3. Pursuant to the contract entered into between the plaintiff and the defendant, in the form of Mr Alan Wong Shu Hung signing and entering into the contract on behalf of the defendant and Lo Hon ("Mr Lo") entering and signing the contract on behalf of the plaintiff, the plaintiff supply the appropriate film negatives to the defendant, then develop and print, from time to time, the appropriate footages at the request of the defendant.

4. The documentation involves took the form of the plaintiff issuing the delivery orders, signed by the defendant as acknowledgement and with copies of these delivery orders the accounts department run by Ms Au Yeung Yuet Wah ("Ms Au Yeung") would then issue the appropriate invoices as stated thereon the relevant delivery orders. The invoices were sent to the defendant from November 1994 onwards until May 1995 when, I think, the film was completed. No payment, however, was made by the defendant and letters were written, eventually leading to the commencement of this action.

5. The pleadings revealed an alleged defence by the defendant of lack of authority by Mr Alan Wong to enter into this contract of 3 November 1994. That is the principal and substantial defence. However, at the trial (notice of which had been properly given to the defendant), the defendant was absent and no one came to defend or to give evidence on behalf of the defendant. So, this action therefore proceeded largely in the absence of any submissions or evidence from the defendant. But having heard Mr Lo and Ms Au Yeung, both of whom I consider to be reliable and good witnesses, I have no doubt that there is no substance to this defence of lack of authority. Mr Alan Wong was a director at the relevant time, he seemed to have also signed another very relevant contract on behalf of the company and I can see no reason why he was not properly authorised. The document has been repeatedly sent to the proper address of the defendant company and there has been no dispute whatsoever about the work having been done by the plaintiff for the defendant and, therefore, it seems to me that the plaintiff must succeed on its claim under the contract.

6. The question that took a little bit of time before me today is the proper quantum. Having regard to the amendment made today to the Statement of Claim, where the amount had been reduced so that it reflects properly the amount owing under the contract and not in accordance with the amount stated in the invoices, I am satisfied that the full amount now sought in the amended Statement of Claim under paragraph 7 in the amount of $515,099.68 should be fully allowed. The two pages in Appendix II show clearly how that total sum of $515,099.68 is arrived at. It shows, in relation to each invoice, whether a reduction has been made from the invoice to reflect the true contractual agreement or whether no reduction has been made because that is what is to be due.

7. I can summarise the way Appendix II appears and in fact the way all the invoices add up. There are really three categories. The first category is in relation to the supply of film. There is no specific unit price stated in the contract and therefore, the plaintiff charges according to the market price. As I said, I accept the evidence of Mr Lo and it would seem that the market price fluctuates a little bit, but generally speaking, is a little bit below $3. No discount is to be given for the supply of film.

8. The second category covers the development and the printing of the films. This, very much, is the subject of clause 5 in the contract where there is a price stated, both for development at $0.60 as well as for printing at $0.76 for B copy and $0.84 for A copy or trailer. Account had been taken in Appendix II of this specific contractual provision and appropriate reductions had been made in respect of these invoices to reflect the contractual prices.

9. The third category is really the three items under clause 5 where it says 20% discount per price list and again, I am satisfied that in relation to the balance of the invoices where these are applicable the contractual provision had been observed. I think there are a lot of minor details that had been canvassed. I am satisfied that the proper full sum has been claimed and that the defendant is not being asked to pay any excessive sum.

10. The plaintiff, therefore, is entitled to the judgment in the amount of $515,099.68. So far as interest is concerned, having regard to both the contractual provision in clause 2(A) as well as the evidence I have heard that the general credit period given to the defendant is up to the first copy, it seems to me that the court should exercise its discretion by ordering interest on the sum of $515,099.68 at 2% per month from 17 May 1995 until today, the date of judgment. The plaintiff is to have the costs of the action.