NAZLA AND NORA ENTERPRISES (GAMBIA) LTD v. NG CHI YU AND OTHERS

CACV 321/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.321 OF 2007

(On Appeal from HCA 3747 of 2003)

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JUDGMENT

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Hon. Yeung JA:

1.  I agree with the judgment of Yuen JA and would make an order in terms of para. 29 hereof.

Hon. Yuen JA:

2.  This is the 1^st and 2^nd Defendants’ appeal from an assessment of damages undertaken by Master Roy Yu after the Plaintiff had obtained default judgment against them.  These Defendants had earlier applied to set aside the default judgment but that application was dismissed by Deputy Judge Louis K Y Chan on 14 March 2005.

3.  The 1^st and 2^nd Defendants were respectively the store manager and accountant of the Plaintiff, a company which carried on business selling shoes in Banjul, the capital of The Gambia.  The shoes were sold from a shop and there was also a store for stock.  The 1^st Defendant was the manager of the store.  The Plaintiff claimed that the 1^st and 2^nd Defendants had misappropriated its property and that they had also taken money which a Mr Jallow had given the Plaintiff for transfer to an associate company of the Plaintiff in Hong Kong. 

4.  The 1^st and 2^nd Defendants disputed the loss of property claimed by the Plaintiff.  This loss was proved by the Plaintiff in the following way. 

(A)	The Plaintiff quantified the value of the actual stock on the day the 1st and 2nd Defendants left the Plaintiff’s employment on 14/4/2003 – by reference to a stock take carried out on 19/4/2003 and working back from that to 14/4/2003 – (“Sum A”) .
(B)	The Plaintiff quantified the value of notional stock (by which I mean the stock that  should have been there) – by reference to a stock take which had taken place earlier in December 2002 and working forwards from that to 14/4/2003 – (“Sum B”).

According to the Plaintiff, the discrepancy between the larger Sum B and the smaller Sum A represented the property taken by the 1^st and 2^nd Defendants. 

5.  Master Yu accepted that approach and assessed the loss of property together with the loss of Mr Jallow’s money at US$142,880.03 which he ordered the 1^st and 2^nd Defendants to pay the Plaintiff together with interest at judgment rate from 9 October 2003 until payment.

6.  On appeal the 1^st and 2^nd Defendants advanced 9 points in their Amended Notice of Appeal.  I will deal with them in order.  (All page references are to the Appeal Bundle).

Point 1

7.  The master found the value of stock at 31/12/2002 was US$272,708.80 (para. 55(a) Judgment).  This was the US dollar equivalent of the closing stock value of 7,635,846.39 Dalasis (the Gambian currency) which he had taken from exhibit “JY-5" (p.184). 

8.  In fact the correct closing stock value was 7,629,926.39 Dalasis, as shown in exhibit “JY-28" (p.875).  The US dollar equivalent of this figure is US$272,497.37. 

9.  The difference is US$211.43.  Counsel for the Plaintiff concedes that the sum ordered to be repaid by the master should be reduced by this sum of US$211.43.

Point 2

10.  In calculating Sum B using the approach I have described in para. 4 above, the master had to deduct the Plaintiff’s expenditure from 1/1/2003 to 10/4/2003.

11.  The master found that the Plaintiff’s expenditure for that period was US$41,685.81 (para. 55(c) Judgment).  However the master failed to include the sum of US$900 being the salaries of the 1^st and 2^nd Defendants for that period. 

12.  Again Counsel for the Plaintiff has conceded that the sum ordered to be repaid by the master should be reduced by this sum of US$900.

Point 3

13.  I have earlier said that one of the Plaintiff’s claims was for money which Mr Jallow had given the Plaintiff to transfer to Hong Kong.  It is not disputed that Mr Jallow had given, and the 2^nd Defendant had acknowledged receipt on behalf of the Plaintiff of, 4 sums making up a total sum of US$70,700 as follows:

10/2/2003     US$25,000   (p.226)

11/2/2003     US$  7,000  (p.227)

26/2/2003     US$  4,800  (p.228)

  1/4/2003    US$33,900   (p.229)

14.  The 1^st and 2^nd Defendants however say that these sums had in fact been remitted to Hong Kong.  The receipts of these sums in The Gambia were recorded in the “Record for Money Kept on Home Safety Box” (p.377 and p.391) although instead of the name of “Algassimiou Jallo”, the name recorded was “Agasime Diallo”.  And the same document shows that these sums had in fact been remitted by the Plaintiff to Hong Kong as follows:

as part of a remittance of US$50,850 on 11/2/2003 (p.377);

as part of a remittance of US$41,150 on 11/3/2003 (p.387);

and    as part of a remittance of US$41,900 on   2/4/2003 (p.391).

Hence the 1^st and 2^nd Defendants say the Plaintiff has no claim against them for the sum of US$70,700 as they had already remitted it to Hong Kong.

15.  The answer given by the Plaintiff is that it has given credit to the 1^st and 2^nd Defendants for those 3 remitted sums (i.e. US$50,850, US$41,150 and US$41,900) in its claim (p.185/876).  Therefore, even if Mr Jallow were the same as Mr Diallo, there has been no over-claim against the 1^st and 2^nd Defendants and so they are not entitled to any further reduction from the claim. 

16.  I think this was what the master meant in the last sentence in para. 53 of his judgment i.e. that if those were the sums remitted, then they were also the sums credited to the 1^st and 2^nd Defendants (p.186/876).  As the figures cancelled each other out, the bottom line of the claim against the 1^st and 2^nd Defendants remains the same.  That must be right and in fact neither the 1^st nor 2^nd Defendant advanced any further argument before us to the contrary.  Accordingly there is no merit in this point.

Point 4

17.  As I have said, the Plaintiff calculated Sum B by starting with a stock take in December 2002 and working forwards to 14/4/2003.  The value of the stock at the December 2002 stock take was set out in the Plaintiff’s document called “Monthly Stock Checking Report For Dec. 2002" exhibited as “JY-15" (pp.265-269).  In this document there was listed for each item of goods:

(the “quantity in the store” + the “quantity in the shop”) x the wholesale price for that item of goods  = the stock value for that item of goods.

18.  The 1^st and 2^nd Defendants queried this document at the hearing before the master.  They referred to another document “JY-14" (pp.260-264) which bore the same description as “JY-15" but which had no breakdown for each item of goods in the “quantity in the shop” (although it did contain a breakdown for each item in the “quantity in the store”).  Although a sub-total “quantity in the shop” was provided for batches of items, the items in the batches were sometimes differently priced, so the stock value could not be calculated on a flat rate (in fact “JY-14" did not set out the stock value for any goods).  The 1^st and 2^nd Defendants’ case, based on the difference between “JY-14" and “JY-15" was that the Plaintiff had “made up” the figures in “JY-15" (para.40 Judgment).   

19.  When they cross-examined Mr Yeung (PW1) the director and one of the shareholders of the Plaintiff on this point at the hearing before the master, Mr Yeung explained that “JY-14" had been sent by the 1^st and 2^nd Defendants by e-mail to his office in Hong Kong.  He himself had gone to The Gambia for the December 2002 stock take and he had the breakdown which was missing from “JY-14".  The breakdown was then incorporated with “JY-14" to become “JY-15".  Although the material containing the breakdown was not produced and the master did not make a finding as to whether it still existed, the 1^st and 2^nd Defendants did not seek specific discovery of this material during the hearing.

20.  The master accepted Mr Yeung’s evidence and rejected the 1^st and 2^nd Defendants’ contention that the Plaintiff had fabricated those figures in “JY-15" which were not in “JY-14".  The master had seen and heard Mr Yeung testify and he accepted that he had the breakdown (para. 41 Judgment).  Of course it would have been desirable for the breakdown material to have been produced if it still existed but that omission was not fatal to the Plaintiff’s case.  The 1^st and 2^nd Defendants’ contention that the Plaintiff had simply fabricated the figures in “JY-15" is not founded on any evidence.  The 1^st and 2^nd Defendants did not have any evidence showing a different breakdown.  And it is inherently improbable that there was never any breakdown.  After all, the whole purpose of a stock take is to ascertain the value of one’s stock.  If materials were not available to calculate the value of the stock, that would defeat the whole purpose of the stock take.  In the present case, if the breakdown had not existed, that would have rendered the December 2002 fruitless and one would have expected the Plaintiff to perform another stock take in the period between December 2002 and April 2003 in order to achieve the purpose of the December 2002 stock take.

21.  Accordingly the master was entitled to accept “JY-15" and there is also no merit in this point.

Point 5

22.  The 1^st and 2^nd Defendants argued that if the master had been satisfied with the accuracy of the April 2003 stock take, then he would not have allowed a 5% discount of the stock take value.  The 1^st and 2^nd Defendants pointed to 2 discrepancies in the quantities of goods between the stock take record of 19/4/2003 (p.220) and the sales records of 22/4/2003 (p.902) and 24/4/2003 (p.904).  The 1^st and 2^nd Defendants argued that since the master accepted that there were discrepancies, he should have rejected the entire stock take record.

23.  The master was satisfied that the stock take in April 2003 was undertaken by an independent body and that the discrepancies were only minor.  They amounted to only 277 pairs out of a total of 6,497 pairs of shoes in the same category (“new men’s shoes”).  This works out at about 4% which is de minimis.  In an assessment of damages there may well be some minimal discrepancies in the materials with which the court has to work.  I take the view that the master was entitled to deal with it by allowing a 5% discount in the 1^st and 2^nd Defendants’ favour.  There is no merit in point 5 either.  

Points 6 and 8

24.  The 1^st and 2^nd Defendants pointed out that a sum of US$8,200 and a sum of US$4,068 had not been credited to them in “JY-5" or “JY-28".  These are respectively the sums which Mrs Yeung had taken from The Gambia to Hong Kong and the sales from 15/4/2003 to 19/4/2003.

25.  Whilst it is correct that these sums had not appeared in “JY-5"and “JY-28", in fact the master did credit the 1^st and 2^nd Defendants with these sums (para. 7 Judgment).  So again there is no merit in these points.

Point 7

26.  The 1^st and 2^nd Defendants had remitted a total of US$103,000 to the bank account of the 3^rd Defendant, the 2^nd Defendant’s mother.  The Plaintiff claimed that this was money misappropriated from it.  The 1^st and 2^nd Defendants alleged that this was money which they had made from a business of their own in The Gambia.  They also relied on the fact that the police had not laid charges against them after investigations. 

27.  Neither Deputy Judge Chan nor the master accepted the 1^st and 2^nd Defendants’ explanation for the remittances.  It is significant that the 1^st and 2^nd Defendants had not been able to produce any records of their business other than a business registration form.   The master has made findings of fact which it was open to him to make on the evidence and with which this court will not interfere.  The burden of proof in a civil case is different from that in a criminal case and in any event the police may have many reasons for not laying charges.  So there is no merit in that point either.

Point 9

28.  Finally the 1^st and 2^nd Defendants queried the accuracy of the packing lists e.g. the wholesale price stated is higher than the retail price for some items.  Although the 2^nd Defendant said she mentioned this at the end of her evidence, the 1^st and 2^nd Defendants accept that they had not cross-examined the Plaintiff on the point when he gave evidence before them.  As such, the evidence on the point is incomplete and it cannot be taken on appeal. 

Order

29.  For the reasons I have set out above, I would dismiss this appeal but pursuant to Points 1 and 2, I would order that the sum set out in the master’s order be amended to US$141,768.60.  As for costs, I have no doubt that if the only matters raised on appeal by the 1^st and 2^nd Defendants were Points 1 and 2, the Respondent would have consented to an order containing the amended figure and the costs of this appeal would not have been incurred.  Accordingly I would give an order nisi that the costs of the appeal be borne by the 1^st and 2^nd Defendants.

Hon. Poon J:

30.  I agree.