YIU FUNG TRANSPORTATION CO v. EI A SHIPPING LTD

DCCJ1506/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1506 OF 2004

J U D G M E N T

1.  The plaintiff, Yiu Fung Transportation Company, claims against the defendant, Ei A Shipping Limited, the sum of $101,875 which is equivalent to RMB105,950, representing charges for freight services outstanding for work done in July, August and September 2001.  The defendant denies it had ever contracted with the plaintiff.  This is the gist of the defendant’s defence.

The Plaintiff’s Case

2.  The plaintiff’s evidence came from Miss Hsu Tsui-fong, the manager of the plaintiff.  According to the business registration record, the partners of the plaintiff included one Mr Hsu Jung Chiao, Miss Hsu Tsui-fong and Mr Hsu Chi-jian. 

3.  The plaintiff is a registered business in Hong Kong providing freight services since 1991.  According to Miss Hsu, the plaintiff established a company called Yiu Fung Ton Transportation (Shenzhen) Company Limited (hereinafter “Yiu Fung Ton”) in March 2000 to supply freight services within mainland China in pursuance to orders placed by the plaintiff’s customers in Hong Kong, mainland China and Taiwan.

4.  Miss Hsu became also the manager of Yiu Fung Ton after its incorporation in March 2000.  According to Miss Hsu, after the customers contacted her for quotations of prices and other details and upon acceptance of the terms by the customer, she would request the customers to contact Yiu Fung Ton in Shenzhen for services to be rendered in mainland China in respect of the follow-up details on delivery, including such details as port, time of loading, the booking number of the shipment, the vessel number, location of the consignment and specification of the containers, etc., etc.

5.  After completion of each delivery, the plaintiff would send consignment and monthly account records to its customers on a monthly basis.  The payments would therefore be made to the plaintiff but not to the Yiu Fung Ton in Shenzhen.  In short, according to Miss Hsu, Yiu Fung Ton would be wholly financed by the plaintiff to serve the plaintiff’s customers.

6.  According to Miss Hsu’s evidence, for the transaction between the plaintiff and the defendant, the defendant had requested settlement of payments in renminbi.  The plaintiff then asked the defendant to make payments to another of the plaintiff’s company in China.  This is a company incorporated in 1994 called the “廣東南豐運輸有限公司” “Guangdong Nan Fung Transportation Company Limited, (hereinafter called “Nan Fung”). 

7.  According to the registration record exhibited on page 389A of the bundle, Nan Fung is registered in Guangdong province as a Taiwanese-funded company with a capital of RMB7.5 million while at page 389, the registration record indicated that Yiu Fung Ton Transportation (Shenzhen) Company Limited has a capital of RMB15 million.  Page 389 I to H showed the business registration records of the plaintiff.  The record showed that Mr Hsu Jung Chiao (father of Miss Hsu) to be the founder owner and partner of the plaintiff.  Mr Hsu is also named as the legal representative of both Yiu Fung Ton (Shenzhen) Transportation Company Limited and Guangdong Nan Fung Transportation Company Limited.  Miss Hsu became a partner of the plaintiff on 10 October 1995. 

8.  The record also showed that Mr Hsu Jung Chiao had for a period of 19 months ceased to be a partner of the plaintiff, but he  resumed the partnership in September 2002.

9.  It is, however, Miss Hsu’s evidence that all three entities are owned by her family, headed by her father, Mr Hsu Jung Chiao.  They are Taiwanese and had invested in China through Nan Fung as a joint venture with a mainland company in the early 1990s.  Subsequently, Nan Fung became wholly-owned by Mr Hsu and his family members, including his wife, Mrs Hsu, and his daughter, Miss Hsu, etc.

10.  According to Miss Hsu, after the incorporation of Nan Fung, she and her father obtained seven years’ residency status in Hong Kong and were therefore able to incorporate the Shenzhen company, Yiu Fung Ton Transportation (Shenzhen) Company Limited, in the year 2000.  It was registered as a company with investment capital from Hong Kong.

11.  According to Miss Hsu, all three businesses were engaged in the same type of freight transportation services and Yiu Fung Ton was incorporated to handle the mainland freight transport services.  In Miss Hsu’s words, she and her family would deploy whichever of the three businesses as they pleased.  However, it is also her evidence that the practice was for the plaintiff to negotiate prices and other details with clients, and after a preliminary contract had been agreed to, the work would be delegated to Yiu Fung Ton in Shenzhen if the services involved would take place in mainland China.  Yiu Fung Ton in Shenzhen also shared the same office and staff with Nan Fung.

12.  According to Miss Hsu, the plaintiff would prepare the accounts and send monthly account records to clients, and in the present case, the accounts were prepared by the plaintiff but forwarded to Nan Fung and subsequently sent by Nan Fung to the defendant.  Because the defendant chose to pay in renminbi, therefore the plaintiff had appointed Nan Fung to be the collecting and receiving agent for the plaintiff.

13.  Consequently, after the plaintiff prepared monthly accounts for July to September 2001, these were sent to Nan Fung for Nan Fung to issue invoices and monthly statements together with the supporting shipping documents and receipts to the customer i.e. the defendant in the present case.  The defendant failed to settle accounts for July to September 2001 although in the previous three months the defendant had settled outstanding amounts for those three months from March to June 2001.

The Defendant’s Case

14.  Mr Chau is a director and majority shareholder of the defendant company.  The defendant company is incorporated in Hong Kong.  Mr Chau denied he had ever been in contact with Miss Hsu.  He admitted only to have spoken to Mrs Hsu and a Miss Yeung of the Shenzhen office.  Mr Chau also claimed that he had always been dealing with Nan Fung and not with the plaintiff.  Therefore, the defendant had no contract or no contractual relationship with the plaintiff; therefore, no such liability involved.

15.  Throughout the hearing, the defendant made no denial that the transaction and services had been rendered.  The only defence therefore is that the party to the contract was Nan Fung, not the plaintiff.  Mr Chau pointed out that the statement of demand and the monthly accounts were sent by Nan Fung to the defendant and there was a deposit slip for payment by the defendant to Nan Fung’s bank account in China, and these the defence claimed to be the evidence that the contract was not between the plaintiff and the defendant but between Nan Fung and the defendant.

16.  The defendant had put the plaintiff to strict proof of its claim against the defendant.

Findings

17.  The plaintiff produced full sets of consignment records of the completion of freight delivery services rendered by the plaintiff and these were not disputed by the defendant, the only dispute being whether the defendant had contracted with the plaintiff or with Nan Fung.

18.  Miss Hsu’s evidence was it was her that Mr Chau had talked to on the phone.  She claimed that she received his call for the first time on the first contact between the plaintiff and the defendant on her mobile phone while she was in China at a client’s premises.  She also claimed that she gave him the quotations for the plaintiff’s services and eventually they had agreed on the prices for the delivery of the consignment, and thereafter, she informed Mr Chau that the actual delivery details should be sent to the office in Shenzhen because the services would be rendered in mainland China and the services would not involve any work to be done outside China. 

19.  The persons that Mr Chau then contacted were Mrs Hsu (Miss Hsu’s mother) and a Miss Yeung, a local staff of Yiu Fung Ton and Nan Fung.  Both of them in fact work for Yiu Fung Ton Transportation (Shenzhen) Company and Guangdong Nan Fung Transportation Company Limited.  From then on, all the details were handled by Yiu Fung Ton in Shenzhen.

20.  The plaintiff claimed that in effect the plaintiff had delegated work to Yiu Fung Ton in Shenzhen as its handling agent.  All documents sent or faxed to the plaintiff were sent to Shenzhen but addressed simply to Yiu Fung.  The plaintiff claimed that that means the plaintiff, because the Shenzhen-registered company is called Yiu Fung Ton Transportation (Shenzhen) Company Limited and not Yiu Fung.  The defendant, on the other hand, denied that was the correct name used.

21.  Referring to Miss Hsu’s witness statement, Mr Wong, counsel for the defendant, submitted that Miss Hsu had used the name Yiu Fung Shenzhen throughout in her witness statement referring to Yiu Fung Ton Transportation (Shenzhen) Company Limited. 

22.  Miss Leung, counsel for the plaintiff, on the other hand submitted that it was the solicitors’ fault when the witness statement was drafted.  It was a careless mistake, according to Miss Leung.  However, this was not put by the defendant to Miss Hsu in cross-examination though it was clear in the cross-examination what the defendant’s defence was.  Miss Hsu, however, did correct Mr Wong in cross-examination that the name of this Shenzhen company should be Yiu Fung Ton.

23.  Mr Wong also pointed out that Miss Hsu had never referred to the role played by Nan Fung in her witness statement.  She had only referred to the role played by Nan Fung in her evidence in court.  Miss Hsu insisted then that Nan Fung was the collecting agent for the plaintiff because the defendant had requested payment in renminbi and that she had explained fully to Mr Chau the role played by Yiu Fung Ton in Shenzhen and the role played by Nan Fung.

24.  After considering the evidence of Miss Hsu giving evidence on behalf of the plaintiff and Mr Chau giving evidence on behalf of the defendant, I find Miss Hsu to be an honest witness.  Her manner was direct and straightforward.  She was vigorously cross-examined but remained unshaken.  I find her evidence reliable. 

25.  Mr Chau, on the other hand, I find to be evasive and his evidence unreliable.  At first, he claimed that the defendant’s Shenzhen office to be the home of office staff, Miss Lau, and he claimed he had never visited the defendant’s Shenzhen office because the staff Miss Lau was a woman who worked alone at her home.  Under further questioning, it was revealed by Mr Chau that he had paid the rental of the defendant’s Shenzhen office where all shipping and delivery documents were kept and delivered to.  He also admitted that he had installed all office equipments, including a computer, fax machine, a printer and telephones, etc.  He claimed he would go back to his Shenzhen home to work rather than visit the defendant’s Shenzhen office.  And later on in his evidence, he said Miss Lau had absconded with all the defendant’s office equipments and all of the defendant’s documents and therefore he was not able to produce any of the defendant’s documents.

26.  I find Mr Chau’s evidence incredible and not capable of belief whatsoever.  I accept Miss Leung’s submission that the failure of Mr Chau to produce any documents kept by the defendant to be inexcusable and the quotation from the case of Tullett & Tokyo International Securities Limited v APC Securities Company Limited [2001] 2 HKLRD 356 at page 365 where she referred to the judgment of Fuad JA in the case of Hongkong and Shanghai Banking Corporation v Chan Yiu Wah & Anor [1988] 1 HKLR 457 at page 467C to H that:

“The non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavourable to the parties’ cause.  Ever since the case of the Chimney Sweeper’s Jewel [Armory v Delamirie], this has been a recognised principle.”

And paragraph 291 of the same quotation:

“3.	Documents or chattels destroyed or not produced
	The applicability of the general principle to an opponent’s non-production or suppression of documents or chattels has always been assumed in England from the beginning of the recognition of the principle.  Some sort of inference has been acknowledged to be legitimate in this country.  Similarly, the tradition has been continued and steadily enforced in numerous instances where the opponent has destroyed, suppressed or refused or failed to produce a document or chattel whose contents or quantity came into issue or became relevant under the issues.”

27.  Of course, this is with reference to the failure of the defendant to produce any of the shipping documents and the delivery documents received by the defendant’s office which Mr Chau claimed to have been lost or taken away by Miss Lau, the staff at his office.

28.  I find that the reason why Mr Chau should claim he had never visited the defendant’s Shenzhen office although it was an official office of the defendant with rental paid by Mr Chau was because he wished to deny he had seen any of the original documents delivered by hand by the plaintiff’s handling agent in Shenzhen to the defendant’s Shenzhen office.  He claimed in court that he had only seen documents faxed to him by Miss Lau from the defendant’s office, the only staff employed by the defendant.  He had failed to explain why he would prefer to see copies if there were originals kept by the defendant’s office in the Shenzhen office. 

29.  Of the documents sent to the defendant’s office by the plaintiff, they invariably included the consignment orders of all consignments.  On this particular consignment form that appeared on each and every consignment, it contained first hand information filled in by the plaintiff and by the driver who delivered the cargo from the factory to the port or container terminal with detailed information on the time of loading, time of clearing customs at the Customs office, time of delivery of the container and the signature of the driver as well as details of the vessel, the container number, the number of the tractor, the shipping order number and the P.O. number (“PO” I take it to mean the purchase order number) and the seal number.  Even the number of the customs officer, who examined the cargo, had been recorded on this form and this is a form issued by the plaintiff with the plaintiff’s letterhead, name and address of the plaintiff and phone number in detail recording also the plaintiff’s order number from the defendant.  This document would have been delivered together with the shipping order faxed to Yiu Fung Ton in Shenzhen by the defendant’s Shenzhen office, forwarded to the defendant by the shipping agent of the defendant that had booked a space on the designated vessel named on the shipping order.

30.  Furthermore, the dock receipt would be issued upon delivery to the container terminal and this would be sent together with the other documents to the defendant by the plaintiff with the monthly statements. 

31.  I am satisfied on a balance of probability based on the evidence produced by the plaintiff that the plaintiff has proved its case against the defendant that the defendant had contracted with the plaintiff for the freight services and the defendant had failed to pay the plaintiff the charges from July to September 2001.  I therefore give judgment to the plaintiff for the sum claimed with interest from the  date of issue of the writ to the date of judgment at half judgment rate and thereafter at full judgment rate until full payment, and costs to the plaintiff, to be taxed if not agreed with certificate for counsel.