LI YOEK CHING t/a STAR RIVER v. SIT KIT SING t/a YUE TAT TRADING CO.

1992, No.A6204

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. In his Writ of Summons the Plaintiff claims for non-payment for goods sold and delivered to the defendant and accepted by the defendant's consignee and/or agent in Guangzhou upon the request of the defendant. The sum claimed is $169,935.70, together with interest and costs.

2. The defence filed on 12th October 1992 denies that the defendant purchased or agreed to purchase or requested from the plaintiff any goods. The defendant denies that the acts alleged in the Statement of Claim amounted in law to an acceptance of the goods, and puts the plaintiff to strict proof. Alternatively, it is pleaded that if there was a contract, the property in the goods never passed. It is further pleaded that there was no agreement as to the price to be paid.

It is further and alternatively pleaded that the goods were smuggled into China, and therefore unacceptable to the defendant, and the defendant is not liable for the price. This claim was not pursued at trial.

3. By a letter dated 15th October, 1992, the defendant's solicitors requested further and better particulars of the statement of claim. The particulars were supplied in a letter of 29th October 1992 as amended by a letter dated 12th November 1992. The particulars are incorporated into the plaintiffs Reply.

4. In its Reply, the plaintiff joins issue, stating that the goods sold and delivered as pleaded in the statement of claim consisted of a total of 2,145 dozens and 400 pairs of Taiwan-made hairpins of various styles and descriptions, as evidenced by the three invoices 031392, 031393 and 031394. The defendant commenced purchasing hairpins from the plaintiff in or about November 1991. At about that time, the defendant gave to the plaintiff details of Wong Yuk Chung, instructing the plaintiff to deliver the hairpins to Madam Wong at the address given. It is pleaded that in or about April or May 1992, Sit for the plaintiff visited the plaintiffs premises and placed an order for about 609 dozens of the goods (first order). In or about May 1992, Sit again visited the plaintiffs office and placed a further order for about 1,536 dozens and 400 pairs of goods(the second order) to be delivered together with the goods in the first order.

5. At or immediately before the first and second orders were placed with Li of the Plaintiff, Sit confirmed and agreed the price and orally and expressly instructed the plaintiff to deliver the goods to the address in Guangzhou. On or about 21st or 22nd May, the plaintiff instructed Kwok Pui Metal Accessories Trading Company to deliver the goods to Madam Wong at the address in Guangzhou.

6. The plaintiff denies the goods were smuggled into China. The plaintiff further pleads that the goods had been accepted by the defendant and/or agent Madam Wong and the goods had not at any material time been rejected or returned.

7. The plaintiff avers that it was at all material times and is entitled to claim for the price or value of the goods as or on the basis of quantum valebant.

One final matter on the pleadings is that the plaintiffs name was amended to LI Yoek Ching trading as Star River.

8. At the hearing Mr Li gave evidence for the plaintiff, as did Mr Ho, the transport driver who delivered the goods to Madam Wong in Guangzhou on 22nd May 1992. Mr Sit gave evidence for the defendant, and there were two statements, one from Madam Wong and one from Madam Sin, which were the subject of hearsay notices and counter-notices, and which were admitted into evidence.

9. At the hearing, it was not disputed that the goods were delivered to Madam Wong on 22nd May 1992, and that she had acknowledged receipt to the driver, Mr Ho.

10. The plaintiff did not rely on a written contract, but relied on two oral orders together with an express oral direction from the defendant that the goods were to be delivered to Madam Wong. The two orders were recorded in the three invoices at pages 9,11 and 13 of the plaintiffs bundle and 1, 2 and 3 of the defendant's bundle. Prior to these oral orders, there were 6 to 7 transactions of the same nature between the parties.

11. The defendant denies entering into the two orders with the plaintiff. It is his case that the plaintiff unilaterally decided to deliver the goods to him. The thrust of the cross examination is to show that the invoices were fabricated and that the document at page 17 had been doctored to support the plaintiffs scheme, and that the reason for this was that the plaintiff wanted to get rid of unmerchantable goods and he chose the defendant as the victim.

12. Defence counsel submits that the plaintiffs case varies in material ways which, taken together with Mr Li's oral evidence, throw doubt on the plaintiffs claim.

13. Defence counsel's written submissions were detailed and thorough, and highlighted the following issues:-

As to the date of the alleged order, the defence submits that the amendments to the further and better particulars of the statement of claim voluntarily supplied to the defence just five months after the events cannot be explained away by a lapse of memory.

14. As to the date of delivery, the defence notes the reference to delivery from 19th May to 21st May in the demand letter, when in fact there was only the one delivery on 22nd May.

15. It was pleaded that the orders were oral. In cross examination, the plaintiff disclosed the three slips of paper used for notation prior to the three invoices being written up.

16. As to the invoices, counsel notes that one invoice was dated 19th March, 1992 and not 19th May, 1992, and the date of 19th March 1992 was referred to in the letter of 13th August, 1992, between the solicitors, which was corrected only after the plaintiff had instructed his solicitors. Counsel submits that the amendments were incorporated to provide consistency to his case.

17. Reference is made to the confusion as to when the invoices were prepared and confirmed. Counsel quoted from cross examination where the plaintiff said in evidence that the first confirmation took place towards the end of April when the defendant placed the order for 609 dozen and the second confirmation took place at the beginning of May. The plaintiff goes on to say that the defendant placed the order for the goods listed in the three invoices at one go, but he confirmed the correctness of the information in the invoices on two separate occasions, The plaintiff says there were four meetings between the parties - the first at the end of April, the second at the beginning of May, the third in the middle of May when the goods were inspected, and the fourth when he came a day later to check that the goods had been sent. It was on the second occasion (the beginning of May) when the contents of the three invoices were confirmed. The defendant also placed orders for 1,536 dozens on the second occasion.

18. Counsel submits that there are discrepancies as to whether there were two oral orders or one entire order. Counsel submits that these discrepancies raise doubts as to whether any orders were placed and if so, when, and notes that the confirmation of the orders did not emerge until the plaintiff gave evidence.

19. Attention is drawn to the numbers on the invoices, which are not in sequence, since the order for the 609 dozens was made before the other orders, and yet its invoice number is 031394, later in sequence than invoices numbered 031392 and 031393 which are for the later or second order. As well as this discrepancy, counsel refers to invoice number 031576, dated 5th May 1992. The order under this invoice was placed before the other three, yet its serial number runs some 180 units ahead of the three invoices dated 19th May, 1992.

20. Counsel refers to the existence of the defendant's name on invoice 031576, but its absence on the three invoices dated 19th May 1992. She points to the different locations of the so-called trademark (WONG).

21. Counsel refers to the admission by the plaintiff that he inserted the fax and telephone numbers and the dates after the defendant had confirmed the order. She refers to the fact that the character WONG is equivocal, and that the character for WONG on the invoices is different from the character used for Wong in Chinese, and she refers to the character used on the receipt at page 17.

22. All these points, it is submitted, tend to suggest that the defendant had not placed an order and had not consented to the preparation of the three invoices. Counsel submits that it was not until Madam Wong's receipt was received that the plaintiff then filled in the missing details in the invoices to supplement his concocted story.

23. As to the samples produced in court, Counsel submits that it is unlikely that the defendant supplied the samples to the plaintiff because the plaintiff had samples in his shop; the defendant would not bring samples with him since they represented items that were of some value and saleable; there were only 26 samples while the three invoices include 47 listed items incorporating 34 styles; there was no duplication of styles distinguished only by different colours among the samples, so that they would not assist in ordering the same style in different colours as was suggested by the plaintiff; there are several instances in the invoices where the style numbers are repeated but there is no indication of colour preference, although the plaintiff says the repetition indicates colour choices.

24. Counsel also suggests that it is odd that the defendant included a slip of paper with the style reference and price with the sample, without also noting the quantity or colour he wanted.

25. Counsel submits that it would be odd for samples of out of style goods to be used by the defendant to buy more of such unstylish goods.

26. Counsel submits that the plaintiff collected the samples from his shop for the purposes of the trial.

27. Counsel refers to the memorandum signed by Mr Ho, and to the evidence of both the plaintiff and Mr Ho. There is a conflict in the evidence as to which part of the document was written first. The evidence of both the plaintiff and Mr Ho on the contents of this document and how they were entered on the document emerged in a confused manner. It is the defence case that this document was needed by the plaintiff before he could complete the invoices which he concocted to support his case against the defendant, and the cross-examination was aimed at this issue. This evidence goes to the existence of the oral agreement and not to the delivery itself, which is admitted.

28. On the assumption that the court finds that the defendant did not order the goods, counsel submits that there was no acceptance by the defendant. The fact of delivery per se is not sufficient to constitute acceptance. Reference was made to the provisions of sections 36,37 and 38 of the Sale of Goods Ordinance, Cap. 26. The sending of the goods to Guangzhou could be treated as an offer or invitation to treat, which would require acceptance by conduct or agreement, but the facts do not meet the prerequisites of acceptance. In the circumstances of this case, the receipt by Madam Wong could amount at the very most to a tentative acceptance under protest. As soon as the defendant discovered the goods had not been ordered by him, he told the plaintiff. On his return to Hong Kong, he again protested to the defendant. The defendant refused to arrange to transport the goods back to Hong Kong, but counsel submits he was not bound to do so under section 38. Neither the defendant or his agent had acted in a manner inconsistent with the plaintiff's ownership by selling or destroying the goods, and therefore the defendant was not deemed to have accepted the goods. The facts do not constitute acceptance in law.

29. Defence counsel submits that the defendant's version of events is more consistent with the documentary evidence than that of the plaintiff. She refers to how the defendant came to know of the delivery of the goods; that the reaction of Madam Sin and her comment as to the quality of the goods is explicable by the arrangements between Madam Sin and the defendant as to the purchase and delivery of goods; that the suggestion that the plaintiff gave the defendant copies of the three invoices after the goods were delivered for checking against the goods seems odd.

30. It is the plaintiff's case that there was an oral agreement and the goods were delivered pursuant to that agreement. It is common ground that there were 6 or 7 prior dealings based on oral agreements with no formal purchase orders and no confirmations in writing.

31. Counsel for the plaintiff produced careful and thorough submissions, and in particular referred to the following:-

The document at page 17 was the subject of extensive cross-examination, and counsel concedes that the evidence of both the plaintiff and Mr Ho emerged in a confused manner with inconsistencies between the evidence of the two witnesses. Counsel for the plaintiff submits that the document is only related to the issue of the delivery, which is not disputed.

32. As to the preparation of the three invoices, it is submitted that the fabrication of these would not help the defendant prove the oral order. Counsel submits that it would be odd if, not having ordered the goods, the defendant accepted the three invoices from the plaintiff without demur. Counsel refers to the notations on the defendant's copies of the invoices of a shortfall in contents, submitting that these are very odd in view of the defendant's case that the goods were never counted and were never ordered. He refers to the evidence in cross examination where the defendant at first said that he did not part with the invoices after he received them, but when cross examined on the notations he later varied this evidence and said that he had given them to Madam Sin.

33. Counsel for the plaintiff refers to the contradictions between the evidence of the defendant in court and in his witness statement, and notes discrepancies between the defendant's evidence and that of Madam Wong, as well as discrepancies between the statements of Madam Wong and Madam Sit.

34. Having considered the submissions of both counsel, I am satisfied that the three invoices were prepared as the plaintiff explained in evidence. It appears reasonable that, when the defendant placed his order, a rough note or draft was made, and that later the invoices were prepared from the draft, and I accept that that is what happened. As to the repetition of the style numbers on the invoices, I accept that this was brought about because of the colour choices made by the defendant, and I accept the plaintiff's oral evidence that he based the order to his Taiwan supplier on those style numbers. There was no documentary evidence before the court as to the placing of the order with the Taiwan supplier. The plaintiff applied to produce documentary evidence during the hearing, but I refused the late application. I am satisfied that, had the plaintiff been inventing a oral order and fabricating false invoices, he could have prepared documents with no repetitions to explain away and with no additions of fax and telephone number and date to explain away.

35. I found Mr HO to be a witness of truth, who at times gave confusing evidence, but no more. I do not accept that he was part of a scheme or that he was being manipulated by Mr Li. I accept Mr Li also as a witness of truth. Where there is confusion or inconsistency in his evidence, I am satisfied that it is because of inexperience in explaining his rather unsophisticated system of taking orders and lapses of memory. This case involves an order for hair clips, clearly the parties are engaged in business in a relatively small way, and I accept that they had done business before by way of similar oral agreements. If Mr Li had been doing what is alleged by the defence, it would be expected that his story would have a precision and consistency which did not emerge. in this case. As to the document at page 17, the evidence of the plaintiff and Mr Ho was confusing and at times inconsistent. I am satisfied that both witnesses, and particularly Mr Ho, were not in the least sophisticated in completing and handling simple documents. I do not accept that Mr Li used or manipulated Mr Ho in order to provide a document which he could use to support the three invoices in the way suggested by defence counsel.

36. As to the evidence of the defendant, I did not find him to be a credible witness. I accept that he too may have some lapses of memory and that he too may not be used to explaining events of some time ago with clarity and precision. However, even taking those considerations into account, I am satisfied that he was tailoring his oral evidence to suit his case. The evidence of events within their own knowledge contained in the statements of Madam Wong and Madam Sin when compared contain some inconsistencies, while the defendant's evidence when compared to those statements also contains some inconsistencies. I am satisfied that Mr Sit ordered the goods and for some reason changed his mind and attempted to evade payment for the goods by conjuring up the proposition that the plaintiff had unilaterally delivered the goods to Madam Wong without the benefit of an oral agreement. I do not accept the defendant's version of events in this case As to the issue of acceptance, and the provisions of the Sale of Goods Ordinance to which the court was referred, I am satisfied that the facts in this case are sufficient to amount to an acceptance in law, and I am also satisfied that property in the goods passed. In submissions, counsel for the plaintiff referred to the notations on the invoices as to a shortfall in the goods. There was no evidence on this point. The plaintiff claims for the price or value of the goods as or on the basis of quantum valebant. In the event, I find myself satisfied that the claim is based on the total amount of the three invoices and that there was an agreement between the parties that this was the price to be paid by the defendant to the plaintiff.

37. Consequently, on the basis of the findings which I have made, I give judgment for the plaintiff in accordance with the prayer in the statement of claim, in the sum of $169,935.70 together with interest at the rate of 9.5% from the 19th May 1992 to the date of Writ, and at judgment rate from the date of judgment until payment. I make an order nisi for costs to the plaintiff, to be taxed if not agreed.

38. This judgment is handed down under the provisions of O45, r.5B.