BATES HONG KONG LTD v. CASH ASSETS LTD AND ANOTHER

HCA1572/2003

IN THE HIGH COURT OF THE 

HONG KONG SPECIAL ADMINISTRATIVE REGION 

COURT OF FIRST INSTANCE

ACTION NO.1572 OF 2003

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J U D G M E N T

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1. This judgment deals with both HCA1572/2003 and HCA1675/2003 which have been ordered to be heard together.

2. The plaintiffs in both actions are different legal entities but belonging to the same group of companies, namely the Bates group.

3. There is a common 1^st defendant in both actions, being Cash Assets Ltd, however, the 2^nd defendant in both actions are different legal entities but belong to the same group of companies as the 1^st defendant, the CASH group.

4. The plaintiffs’ claims in both actions are for unpaid retainer fees owed by the respective defendants, alternatively for quantum meruit.  (Originally, the pleaded claim of the plaintiff in HCA1675/2005 also claimed for production costs amounting to over RMB70,000.  I was informed by the parties jointly at the start of the trial that the claim for production costs was no longer a live issue between them for reasons that need not be gone into.)  For the purposes of this judgment therefore, I need only concern myself with the claim for retainer fees in both action, alternatively quantum meruit for work done.

5. The defences raised in both actions are similar, namely, that there were no retainer agreements agreed between the respective parties, no services were provided by the plaintiffs for the period claimed by them, alternatively, in any event, the fees claimed are not reasonable.

Plaintiff’s claim in HCA1572/2003

6. The plaintiff is an advertising agent.

7. Both defendants are subsidiaries of Celestial Asia Securities Holding Ltd (“Celestial”) the holding company in the CASH group of companies.  There exist a Letter of Intent dated 24 June 2002 whereby Celestial appointed the plaintiff to be the advertising agent of the 2^nd defendant for a period of two years. 

8. Pursuant to such Letter of Intent, the plaintiff had prepared a formal Advertising Agency Service Agreement (“the unsigned Agency Agreement”) to be executed by the 1^st defendant for itself and on behalf of the 2^nd defendant, but that agreement had never been formally signed or executed by the defendants.

9. Despite the fact that the unsigned Agency Agreement had never been formally executed between the parties, the plaintiff nevertheless relies on terms contained in the unsigned Agency Agreement on the basis that the defendants had agreed to those terms (save for the bonus calculation) and that by its conduct, the defendants have actually accepted those terms by performance of them.  The terms relied on by the plaintiff in the unsigned Agency Agreement is to the effect that :

(a)	the period of the agency agreement is from 1 July 2002 to 30 June 2004;
(b)	for that period the 1st defendant appoints the plaintiff as advertising agent for the 2nd defendant in Hong Kong;
(c)	the monthly retainer fee for the first year is $320,000;
(d)	there will be charged interests at 1.5% per month for overdue payment (i.e. not paid within 30 days from receipt of invoice);
(e)	the plaintiff will not handle any account competitive to the 1st defendant or its affiliates;
(f)	termination of the agency agreement by either party is by three months prior notice.

10. The plaintiff started to provide advertising agency service to the defendants and had in fact been paid its retainer fee of $320,000 for the month of July 2002, being the first month of the term of the agency agreement by the defendants.

11. The plaintiff continued to provide service to the defendants.  However, the defendants failed to pay any retainer fee to the plaintiff up till December 2002 when by a letter dated 11 December 2002, the 2^nd defendant sought to terminate the plaintiff’s retainer under the agency agreement.

12. By reason of the three months termination clause in the unsigned Agency Agreement, the plaintiff continued to provide such services to the defendants up till 10 March 2003. 

13. The defendants have failed and refuses to pay the retainer fees from November 2002 until 10 March 2003 which the plaintiff claims for in the total amount of $1,383,226.00 and interests at 1.5% per month.  Alternatively the plaintiff’s claim is put on the footing of quantum meruit for services provided.

Plaintiff’s claim in HCA1675/2003

14. The plaintiff is an advertising agent dealing with the China market.

15. The defendants are again subsidiaries of Celestial.  The 2^nd defendant is a retailer of household utilities and furniture dealing in the China market.

16. By a Letter of Appointment dated 1 May 2002, the 2^nd defendant appointed the plaintiff to handle marketing and commerce for business in China for it with an agency appointment contract to be finalized between the parties.

17. The plaintiff prepared a formal Advertising Agency Service Agreement (“the unsigned Agency Agreement”) to be executed by the 1^st defendant for itself and on behalf of the 2^nd defendant.  Again the unsigned Agency Agreement was never formally signed or executed by the parties.

18. Nevertheless, the plaintiff relies on the terms contained in the unsigned Agency Agreement on the basis that those terms (save for the performance bonus contained in clause 8(e)) had been orally agreed to by the defendants and that by its conduct in accepting the services provided by the plaintiff between June and December 2002, the defendants have performed such agreement as per the terms contained in the unsigned Agency Agreement even though it had not been formally signed and executed.

19. The terms relied on by the plaintiff in the unsigned Agency Agreement are that :

(a)	the 1st defendant appoints the plaintiff as advertising agent from 1 June 2002 to advertise the 1st and 2nd defendants in China;
(b)	the monthly retainer fee from 1 June to 31 December 2002 is $150,500.00;
(c)	interests to be charged at 1.5% per month on overdue accounts.

20. The retainer fees for June to December 2002 remains unpaid by the defendants and the plaintiff’s claim $1,053,500.00 being such retainer fees from June to December 2002 together with interests at 1.5%.  Alternatively the plaintiff claims for quantum meruit.

The defence case

21. A common line of defence is taken by the defendants in both actions.

22. Firstly, that both the unsigned Agency Agreements (in both actions) or the terms thereof was never agreed and had never been accepted whether by conduct as alleged by the plaintiff or in any other way and those two unsigned Agency Agreements remained unsigned and unexecuted.

23. Secondly, no services were provided to the defendants after November 2002 in HCA1572/2003.  Fees for August to October 2002 had already been paid by the defendants and for which no claim was made.

24. No services were provided in HCA1675/2003 after the launch of the Guangzhou store in September 2002 and in any event, up to that time only limited services were provided.

25. In both matters, the amounts claimed by the plaintiff are not reasonable sums.

The plaintiff’s evidence in HCA1572/2003

26. The plaintiff called one witness, Hung Ka Yee Margaret, the deputy managing director of the plaintiff.

27. Her evidence was that in June 2002, Bates China Ltd, a related company of the plaintiff was engaged by the 1^st defendant to be the advertising agent and to carry out promotional work for Pricerite in China.

28. In mid-June one Felix Miao of Celestial appointed the plaintiff to be the advertising agent of the 2^nd defendant for a period of two years to carry out promotional work for the 2^nd defendant in Hong Kong.

29. On 18 June, the plaintiff gave a briefing at its office on the scope of work to be provided by the plaintiff for a two-year advertising programme.

30. At a follow up meeting on 20 June the plaintiff presented its remuneration proposal based on a two-year programme.  Felix Miao and Daryl Lai, both representing the 2^nd defendant seemed happy with the proposal presented by the plaintiff.

31. The Letter of Intent appointing the plaintiff to be the advertising agent of the 2^nd defendant for two years from 24 June 2002 was signed on that same day.  The plaintiff was also asked to prepare a formal contract.

32. By e-mail dated 2 July, Felix Miao advised her that the contract was to be signed by one Bernard Law of the 1^st defendant acting on behalf of the 1^st and 2^nd defendants.

33. On 3 July the plaintiff prepared the unsigned Agency Agreement for execution by the 1^st defendant on its behalf and on behalf of the 2^nd defendant.

34. Since that time, apart from Clause 5(e) of the unsigned Agency Agreement which needed further discussion on the mechanism of implementation of the bonus calculation, all the other terms were agreed upon between the parties.  The plaintiff had since July 2002 started to provide a team group and devised a work flow process to carry out the advertising agency services to the 2^nd defendant in accordance with the unsigned Agency Agreement.

35. On 12 September 2002 there were press releases announcing the appointment of the plaintiff and Bates China Ltd as the advertising agents to promote Pricerite in Hong Kong and China.

36. Upon the instructions of the 2^nd defendant and with its approval, the plaintiff had run various award winning advertising campaigns for the 2^nd defendant between July and October 2002 using up more than half the maximum annual budget provided for in Clause 5(a) of the unsigned Agency Agreement.

37. In accordance with Clause 5(a) of the unsigned Agency Agreement, the plaintiff had issued an invoice for the month of July 2002 for $320,000 to the 1^st defendant which was paid on 11 October 2002.

38. By a letter dated 11 December 2002 from the 2^nd defendant to the plaintiff, the 2^nd defendant sought to terminate the plaintiff’s retainer.

39. By its reply dated 16 December, the plaintiff referred the 2^nd defendant to the unsigned Agency Agreement and treated the termination letter from the 2^nd defendant as notice of termination under Clause 14 of the unsigned Agency Agreement.

40. Thereafter the plaintiff continued to provide advertising agency services to the 2^nd defendant for a further three months until 10 March 2003 during which time the 2^nd defendant continued to give instructions to and accepted the services provided by the plaintiff without objection.

41. By letter of 29 March 2003, the 1^st defendant admitted liability to pay the plaintiff for its services for the months of August to October 2002 and payment of same was made on or about 30 April 2003.

42. However, the defendants have failed to pay the plaintiff’s invoices for November 2002 until 10 March 2003 in the total amount of $1,383,226 despite repeated demands.

43. The services provided by the plaintiff for the period between November 2002 to 10^th March 2003 consisted of :

(a)	one big presentation by the plaintiff which took place on 6 November 2002 using the material contained in pages 151 to 248 of the trial bundle of agreed documents;
(b)	liaison work with the different media;
(c)	research analysis; and
(d)	some work on production, in particular cutting TV commercials.

Plaintiff’s evidence in HCA1675/2003

44. The plaintiff called one witness, Barry Leung Kwai Chuen, the Regional Director of the plaintiff.  His evidence can be summarised as follows. 

45. Since about March 2002, the defendants had approached the plaintiff to be their advertising agent in China and the plaintiff provided a pitched proposal to the defendants in respect of their advertising services in China.  Because of the background of the defendant, the plaintiff further agreed to provide free services for three months from March to May 2002 in order to promote the relationship between the parties.

46. The plaintiff had started rendering services to the 2^nd defendant since March 2002.

47. By a Letter of Appointment dated 1 May 2002, the 2^nd defendant appointed the plaintiff to handle all marketing communication activities for its business in China with details of such appointment to be discussed and finalised.  Thereafter, Felix Miao of Celestial, acting on behalf of the 1^st and 2^nd defendants, negotiated the details of the agency appointment with the plaintiff.

48. Meetings were held between the parties on 10, 22 and 24 of May 2002.  Felix Miao was present at these meetings and representing the 1^st and 2^nd defendants.  As a result of these discussions, the plaintiff was informed that the 1^st defendant would execute a formal agency contract with the plaintiff.

49. On or about 1 June 2002 the plaintiff prepared a formal contract, being the unsigned Agency Agreement, which contained all the terms and conditions agreed between the parties at the earlier discussions for execution by the 1^st defendant on its behalf and on behalf of the 2^nd defendant as per the instructions of Felix Miao.

50. At the request of the defendants, the plaintiff had pitched and briefed the Bates Remuneration Proposal to Pricerite China on 9 July 2002.

51. After further negotiations, all the terms and conditions contained in the unsigned Agency Agreement were agreed upon by both the plaintiff and the defendants.  Thereafter, the plaintiff rendered advertising agency services to the 2^nd defendant pursuant to the terms of the unsigned Agency Agreement.

52. Clause 8(a) of the unsigned Agency Agreement provides for the plaintiff to bill the 1^st defendant the monthly retainer fee equivalent to HK$150,500 from 1 June to the 31 December 2002.

53. The plaintiff did provide advertising agency services to the defendants and had issued various progress reports for the period from July 2002 to October 2002.  The defendants had accepted those progress reports and had never raised any objection.  The defendants had also accepted the services provided by the plaintiff up to the end of December 2002 without objection.

54. The plaintiff's invoices for retainer fees from June to December 2002 in the total amount of HK$1,053,500 remain unpaid by the defendants.

Defendants’ evidence in HCA1572/2003

55. The defendants called two witnesses, Felix Miao, the head of the Group Public Affairs (“GPA”) of the CASH group of companies and  Ben Cheng,  the Group Financial Controller of the CASH group of companies.

56. Felix Miao’s evidence can be summarised as follows.

57. He was the head of GPA, and was charged with advising on the promotional activities of the CASH group, including those of the 2^nd defendant.  Before joining the CASH group, he had worked in the field of advertising and public relations, for over 10 years.  GPA’s role was mainly advisory, advising the CASH group on matters relating to public relations and advertising campaigns, but was not responsible for budget approval or execution approval for any marketing campaigns.

58. In early 2002, a decision was made at senior management level of the 2^nd defendant that a professional advertising firm be engaged to improve the quality of advertisements and promotion campaigns.

59. When Felix Miao took up the post as head of GPA in June 2002, he understood that the 2^nd defendant was about to engage the plaintiff to carry out advertising campaigns for it.  The decision to engage the plaintiff was made shortly before his appointment as head of GPA.  However, at that stage, no decision was made as to the terms of the engagement of the plaintiff.  The plaintiff, however, was pressing for terms, including a retainer and performance bonus in the form described in the Letter of Intent dated 24 June 2002 from the plaintiff.  To his understanding neither the 2^nd defendant, nor any director from Celestial had at any time agreed on the actual terms of the engagement.

60. On 24 June 2002, the 2^nd defendant was keen to roll out a major promotion campaign.  Although the plaintiff had been selected to undertake advertising and promotional work for the 2^nd defendant, however, formalities had not been finalised and no formal agreement had been entered into.  As the 2^nd defendant was anxious to enlist the plaintiff to assist in this promotion campaign, the plaintiff took the position that the CASH group must at least show some intention of entering into a formal agreement before it would undertake work for the 2^nd defendant.

61. Not wanting to delay their promotion campaign, which was a matter of great urgency, he then discussed with Ms Chris Leong of the plaintiff whether the plaintiff could render some services to the 2^nd defendant, while the senior management of the CASH group considered the terms of any agreement.  As a result of that discussion, Chris Leong asked whether he would be willing to sign a letter of intent before the plaintiff would start work on the 2^nd defendant’s behalf.  He then told Chris Leong to send him a draft for his consideration.

62. When the draft was received by him from the plaintiff, Felix Miao caused to be added to the upper right-hand corner of the first page the words “Subject to Contract”.  He also caused to be added a further paragraph beneath where the signatures would be affixed with the following words :

“ note: this letter is intended solely as a basis for further discussion.  Nothing herein contained shall constitute a legally binding agreement between your company or any company within the Pricerite Group and us unless and until a formal legal contract is duly signed.”

63. At that time, he was neither a director of Celestial, nor of the 2^nd defendant and had no authority to bind either of them on any contract.  Moreover, since the senior management had not decided on the terms of engagement of the plaintiff, he could not sign the Letter of Intent in its original form.

64. He did sign the Letter of Intent, but only after those amendments which he had caused to be added in were incorporated.

65. Thereafter, he had supplied the name of Mr Bernard Law, being the Chief Financial Officer of the CASH group, to Margaret Hung of the plaintiff, as being the person to sign and execute the unsigned Agency Agreement.

66. His understanding was that, although there were ongoing discussions with the plaintiff on the terms of the engagement, but as there has been no agreement as yet, when the plaintiff started to work on the promotion campaigns for the 2^nd defendant, such work was undertaken by the plaintiff on a job by job basis.  He believed that if a formal agreement was reached later between the parties, it would then be determined how the plaintiff would be remunerated for the work rendered before the date of such agreement.  But in the event that no formal agreement was to be reached, the 2^nd defendant would pay the plaintiff a fair and reasonable amount determined on the basis of the work rendered by them. 

67. He further believed that the HK$320,000 paid to the plaintiff to settle the July invoice from the plaintiff was not paid according to clause 5(a) of the unsigned Agency Agreement, but rather was an amount determined by senior staff of the Group Finance Department to have been a reasonable amount for the services rendered by the plaintiff for the month of July 2002.

68. In November 2002, the senior management of the 2^nd defendant reviewed the way marketing campaigns were carried out and decided that the 2^nd defendant should take up the job of producing advertisements and handling its own promotion campaigns itself.  Because of this change of policy, the 2^nd defendant stopped asking the plaintiff to undertake any further work on its behalf.

69. Since no work had been further undertaken by the plaintiff from November 2002, the plaintiff is not entitled any further remuneration.  The plaintiff was paid HK$320,000 each month from August to October 2002 which he understood to have been reasonable sums assessed by Majone Cheng and Ben Cheng in respect of the amount and quality of work carried out by the plaintiff during those months, and not pursuant to any retainer clauses in any agreement.

70. The plaintiff is not entitled to claim for fees for the months during which they did not render any services to the 2^nd defendant.

71. The second witness called by the defendant was Ben Cheng Man Pan, the Group Financial Controller of the CASH group at the material time.  He was not involved in the negotiation with the plaintiff on any of the terms relating to the engagement of the plaintiff.  His evidence is concerned only with the invoices received from the plaintiff.

72. When the July invoice was received from the plaintiff, he was asked to deal with it sometime in September or October 2002.  Daryl Lai and Felix Miao both confirmed to him that no formal agreement had been entered into with the plaintiff.  He was aware of the existence of a Letter of Intent dated 24 June 2002, signed by Ms Chris Leong of the plaintiff and countersigned by Felix Miao but which was marked “Subject to Contract” and with the proviso at the end of it to the effect that the letter was not legally binding between the plaintiff and Celestial.

73. He also understood from Daryl Lai and Felix Miao that some work had been done and services provided by the plaintiff to the 2^nd defendant.  Based on the information provided to him he came to the conclusion that HK$320,000 would have been about a reasonable amount to pay the plaintiff for the work they had done in July 2002.  That decision was based on his review of the work done by the plaintiff.

74. He would have preferred the plaintiff to have issued an itemised invoice, which the July invoice was not.  However, he did not raise any objection, because he was under the impression there was ongoing negotiations for a formal contract of engagement.  If an agreement were to be reached along the lines of the Letter of Intent, he would then expect the plaintiff to bill the 2^nd defendant on a retainer basis.

75. He was aware that in November 2002 Daryl Lai left the 2^nd defendant and was replaced by Majone Cheng.  He also understood that about the same time, the 2^nd defendant decided to stop engaging the plaintiff in carrying out further work for it.  That was communicated to the plaintiff by a letter dated 11 December 2002 from Majone Cheng.  He was also informed that although the letter was dated the 11 December 2002, the 2^nd defendant had in fact stopped requesting the plaintiff to carry out work for it for some time before that letter.

76. In January or February 2003 he was contacted by Mandy Chin of the plaintiff to discuss the invoices sent by the plaintiff for the period between August 2002 and January 2003.  Later, Mandy Chin, visited him at his office, and he told her that he had to liaise with the marketing staff to check what services had actually been rendered by the plaintiff before he could approve any payment to the plaintiff.

77. He was informed by Majone Cheng, that the plaintiff did carry out work relating to the promotional campaigns of the 2^nd defendant between August and October 2002, which was three full months of work involved.  He then needed time to assess how much would be a reasonable amount to remunerate the plaintiff for those work.  On the other hand, he could not find that any work had been undertaken by the plaintiff at the request of the 2^nd defendant or the 1^st defendant from November 2002 onwards.  It appeared to him that the plaintiff was relying on the “termination clause” in the unsigned Agency Agreement to justify their invoices for the months after October 2002. 

78. There was a subsequent visit from Mandy Chin to him again pressing for settlement of the invoices.  However, he told her that CASH group would only pay the plaintiff for services actually rendered by them to the 2^nd defendant.  Mandy Chin threatened legal action relying on the clauses in the Letter of Intent, but he refused to back down.  He also told her that he would assess how much should be paid to the plaintiff for the services rendered between August and October 2002.

79. After further communication with Majone Cheng, he understood the plaintiff had rendered sufficient services to the 2^nd defendant to justify the total payment of HK$960,000 for the months between August and October 2002.  This payment was therefore made on or about 30 April 2003 to the plaintiff.

80. Since there was no agreement to pay the plaintiff any retainer fees when they ceased providing any services to the 2^nd defendant, the defendants could not be held liable for the invoice amounts after October 2002.

Defendants’ evidence in HCA1675/2003

81. The defendants called three witnesses.  Apart from Felix Miao and Ben Cheng who gave evidence in the other action, there was a further witness by the name of Rosa Li.

82. The evidence of Felix Miao was a long very similar lines to the evidence given by him in the other action.

83. It is not necessary for me to repeat the background evidence relating to his being head of Group Public Affairs Department of the CASH group.

84. In 2001 and 2002 the Cash group planned to expand its operations into China and recognised the need to enlist the assistance of professional firms with a presence in China for advertisement and promotion.  By mid-2002 the Cash group had decided to set up one store in Guangzhou as a first step.

85. When he became the head of GPA in June 2002, the 2^nd defendant was just about to engage the plaintiff to carry out promotional and advertising work for it in China.  That decision to engaged plaintiff was made prior to his appointment as head of GPA.  Such decision was conveyed to the plaintiff by a letter dated 1 May 2002, signed by Thomas Li.  It was also clear from that letter that the terms of the agency appointment had yet to be discussed and finalised.

86. Pursuant to that letter of appointment, the plaintiff prepared the unsigned Agency Agreement for discussion purposes, but that unsigned Agency Agreement had never been signed or executed by the defendants or by Celestial.  He did not have authority to negotiate or approve such a contract.  Although there were ongoing discussion at that time with the plaintiff on the terms of their engagement, nothing had been agreed between the parties.

87. In the meantime, the plaintiff had started to work with the 2^nd defendant on the launching of the Guangzhou store.

88. His understanding was that since there was no agreement reached between the parties, the work undertaken by the plaintiff would be on a job by job basis and the plaintiff would be remunerated based on the work rendered by them.

89. He was not directly involved in the launching of the Guangzhou store.  That was taken care of by Miss Rosa Li.

90. He was informed by Rosa Li and Raymond Yuen, that the actual involvement of the plaintiff was limited.  The plaintiff had designed an advertisement to cover the shelter of a bus stop, designed and produced some of the standing signs inside the shop and produced  some information leaflets.  The Guangzhou store was launched in September 2002.  Thereafter, the plaintiff did not render any further services to the 2^nd defendant.

91. He went on to elaborate on what he meant to say, in an e-mail dated 18 September 2002 sent by him to the plaintiff.

92. He accepted that the plaintiff had rendered some services relating to promotion in respect of the Guangzhou store and agree the plaintiff was entitled to charge for that work.  However, he was not the person to assess whether the amount billed by the plaintiff in their invoices were reasonable for the work done.  That assessment would have to be made by Ben Cheng, the Group Financial Controller, after liaising with Raymond Yuen and Rosa Li.

93. As for the e-mail dated 11 December 2002 sent by him to Barry Leung of the plaintiff, he explains that by saying that he had verified the invoices of the plaintiff, that does not mean that he had agreed to pay the plaintiff the specific sums invoiced.  Rather, it meant that as head of GPA, he recognised that the plaintiff did render services to the 2^nd defendant in China.

94. As no further work had been undertaken by the plaintiff after the launch of the Guangzhou store, the plaintiff cannot claim remuneration, other than for the work done by the plaintiff directly relating to the launch of the Guangzhou store.

95. The evidence of Ben Cheng was along very similar lines to the evidence given by him relating to the other action.

96. He was not involved with the engagement of the plaintiff all the work performed by the plaintiff relating to the 2^nd defendant in China.

97. He was first brought into this matter, when the accounting staff at Pricerite had difficulty dealing with the invoices from the plaintiff  because the plaintiff was invoicing on monthly retainer basis when there was no retainer agreement between the parties.  Having looked into the matter, he was surprised to find that the invoices did not itemize the particular services rendered by the plaintiff.

98. He contacted Thomas Li who confirmed that the plaintiff had rendered some services to the 2^nd defendant in relation to the launching of the Guangzhou store but that there was no agreement between them as to the terms of engagement of the plaintiff.  He also contacted Felix Miao who also confirmed that no agreement had as yet been reached with the plaintiff as to the terms of their engagement.

99. He met with one Eva Chan of the plaintiff in January or February of 2003 who was pressing for the unpaid invoices to be paid on the basis of the unsigned Agency Agreement.

100. In an e-mail from Eva Chan of the plaintiff to Raymond Yuen, the plaintiff sought to justify their entitlement to a retainer on the basis that the terms of the unsigned Agency Agreement had been agreed to by Bankee Kwan.  This is different to the information that he had been given to him by Thomas Li and Felix Miao.

101. He informed Eva Chan that he could not release payment on the strength of the unsigned Agency Agreement but would only pay for services actually rendered.

102. However, before they could assess the reasonable cost of the services actually rendered by the plaintiff, the plaintiff had initiated these proceedings against the defendants.

103. The third witness, Rosa Li was the manager of the Group Public Affairs department of the CASH group in 2002.

104. Her evidence was the in July 2002, Felix Miao assigned her to look after the publicity matters relating to the launching of the Guangzhou store of the 2^nd defendant.  As a result, she was seconded to the 2^nd defendant for the period to oversee the marketing and promotion operations of the Guangzhou store launch, which took place on 21 September 2002.  It was in that capacity that she became involved with the plaintiff, who had been selected to carry out promotion work for the 2^nd defendant in China.

105. Between July and 21 September 2002, she had attended several conferences with people from the plaintiff where it was discussed what should be done in terms of promotion during the launch of the Guangzhou store.  The plaintiff produced design templates for advertisement purposes during those meetings.

106. Within the scope of her responsibility, she was aware that the only work rendered by the plaintiff to the 2^nd defendant in China, consisted of the plaintiff producing outdoor advertisement covering bus shelter light boxes, near the Guangzhou store; they also designed and produced some indoor signage, leaflet and banners.  Other than that, no other proposals had been requested by the 2^nd defendant for this store launch event.

107. As for the e-mail dated 12 December 2002 sent by her to Grace Wong of the plaintiff, she explained that at that time Grace Wong had called her by phone several times asking about the unpaid invoices.  She told Grace Wong, that she was not involved in the payment process.  But that they could send the invoices to her and she would direct the invoices to the relevant parties.  In that e-mail, she was simply informing Grace Wong, that she had asked the invoices to their accounting department for processing.  She denies that she was making any representation that she accepted that any of the company in the CASH group was liable to the plaintiff for those invoices.  She had no authority to confirm liability on behalf of any of the company in the CASH group.

Finding of facts and decision in HCA1572/2003

108. Although it is common ground that the unsigned Agency Agreement has not been executed by the parties, I accept the plaintiff’s evidence that there was an oral agreement between the parties as to the appointment of the plaintiff to be the advertising and promotional agent for the defendants and that the monthly retainer fee of HK$320,000 was also agreed between them.

109. That there was such an agreement is adequately shown by the fact that HK$320,000 had been paid by the defendants to the plaintiff for the month of July to October 2002.

110. In this respect, I do not accept the evidence of the defendants that HK$320,000 was paid to the plaintiff for each month from July to October 2002 because it was assessed by the defendants to have been reasonable amounts for the services performed by the plaintiff for each of those months.  That would be far too much of a coincidence that the amount assessed for all the four consecutive months just happened to be the amount stated in the unsigned Agency Agreement as being the monthly retainer fee.

111. Having rejected the defendants’ evidence on this point, and having accepted the plaintiff’s evidence, I have little doubt in concluding that the plaintiff’s evidence that the rest of the terms of the unsigned Agency Agreement (save for the bonus performance) had also been agreed between the parties is to be preferred on balance over the defendants’ evidence that none of the terms had been agreed.

112. Whilst I accept that the name of Bernard Law was supplied to the plaintiff as being the person authorized to sign and execute the unsigned Agency Agreement, that does not mean that Felix Miao, who was present at all the meetings with the plaintiff and took part in the discussions as to the terms of the agency appointment on behalf of the defendants could not bind the defendants in so far as dealing with the plaintiff was concerned.  If in fact Felix Miao did not have the authority to bind the defendants when representing them in meetings and discussions with the plaintiff, there is no evidence that had ever been made known to the plaintiff.

113. Accordingly, I find that there was agreement between the parties and that the terms of the unsigned Agency Agreement (with the exception of the clause relating to bonus calculation) had been agreed between the parties.  That finding would necessarily include the three months termination notice as well as the interests charged for overdue payment.

114. In that respect, I also accept the evidence from the plaintiff that the three months termination notice was inbuilt into the unsigned Agency Agreement because the defendants had stipulated the condition that the plaintiff will not handle any accounts competitive to the 1^st defendant or its affiliates.

115. I further find that the notice of termination dated 11 December 2002 was a notice of termination given in accordance to the terms as agreed by the parties and contained in Clause 14 of the unsigned Agency Agreement.

116. I accept the evidence given by the plaintiff that work was done by the plaintiff after October 2002 and also for the three months after such notice of termination dated 11 December 2002.  That such work was done by the plaintiff is clearly shown in the presentation by the plaintiff on 6 November 2002 supported by the documents and material used in that presentation contained in pages 151 to 248 of the trial bundle of documents.  Furthermore the e-mail correspondence between the parties produced in evidence also show that the plaintiff carried out work for the defendants right up to almost the end of February 2003.

117. On the basis of the above findings, I hold that the defendants liable to pay the plaintiff the agreed monthly retainer fee of HK$320,000 for the period from November 2002 to 10 March 2003, as claimed by the plaintiff.

118. Accordingly, there will be judgment for the plaintiff against the defendants in the sum of HK$1,383,226 with interests at 1.5% per month from the date of Writ until judgment and thereafter at judgment rate.

Findings and decision in HCA1675/2003

119. There is uncontroverted evidence before me that the Bates group was appointed to deal with advertising and promotional work for Pricerite in China even before it was appointed to handle advertising and promotional work for Pricerite in Hong Kong.

120. On that basis it must follow that the appointment of the Bates group to deal with the China market and in Hong Kong for Pricerite went hand in hand.

121. In those circumstances, on my findings in HCA1572/2003, that there was an oral agreement between the parties as to the terms of such engagement, it would indeed be most surprising if there was no similar agreement reached between the parties as to the terms of engagement of the plaintiff in this action.

122. For that reason, I am disposed to accepting the evidence of the plaintiff that there was an agreement, albeit oral, and despite the unsigned Agency Agreement not having been signed, between the parties as to the terms of remuneration on retainer basis as well as the period of the engagement being from June to December 2002.

123. Indeed I accept the evidence of the plaintiff that with the exception of the performance bonus clause being Clause 8(e) of the unsigned Agency Agreement, which required further discussion and finalization, all the other terms contained in the unsigned Agency Agreement had been agreed between the parties.

124. I also find that work had been performed by the plaintiff for the 2^nd defendant pursuant to such agreed terms of engagement.  That is not disputed by the defendant.

125. There was no termination notice given in this case, unlike HCA1572/2003, and as such I am satisfied that the period of engagement continued up to December 2002 as provided for in the unsigned Agency Agreement.

126. In those circumstances, even if the work performed by the plaintiff was only up to the launching of the Guangzhou store on 21 September 2002, under the terms of the unsigned Agency Agreement the defendants would still be liable to pay the plaintiff its monthly fee up to the expiry of the period of engagement.

127. Accordingly, there will be judgment for the plaintiff for the amount claimed with interests at 1.5 % per month from the date of Writ until judgment in this matter and thereafter at judgment rate.

Costs

128. There will be costs order nisi that the respective defendants in both actions pay the respective plaintiffs in both actions the costs of each of the actions respectively to be taxed if not agreed.