AUSTRALIAN MEDIC-CARE CO LTD v. NETWORK ADVERTISING DEVELOPMENT LTD AND ANOTHER

DCCJ 4394/2019

[2022] HKDC 42

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4394 OF 2019

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BETWEEN

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JUDGMENT

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PROCEDURAL BACKGROUND

1.  In this action, the plaintiff sues the 1^st defendant for breach of contract and the 2^nd defendant for, among other things, wrongfully procuring the 1^st defendant’s breach of contract.

2.  While the defendants had filed a Defence on 6 November 2019 (when they were still represented by solicitors at the time), they had failed to comply with two unless orders dated 5 January 2021 and 13 April 2021 respectively, and as a result they had been debarred from filing or serving any list of documents or witness statements for the purpose of this action.

3.  Although the defendants had been duly informed about the date of the trial, they had not attended court on the scheduled date, and therefore the trial had been conducted in their absence.

THE PLANTIFF’S CASE

4.  The plaintiff’s pleaded case may be summarised as follows:-

(1) The plaintiff is and was a company carrying on distribution business of healthy and health care products;

(2) The 1^st defendant is and was a company in the business of providing advertising services, whereas the 2^nd defendant is and was its sole director and shareholder;

(3) In late 2018, the 2^nd defendant approached the plaintiff and represented that he could arrange a commercial advertisement of the plaintiff’s product through the 1^st defendant at a lightbox situated at 3/F, Departure Hall of Lo Wu Control Point (“the Departure Hall”);

(4) As a result, on 29 January 2019, the plaintiff’s director, Dr Keung Kin Wah, went together with the 2^nd defendant to inspect the physical location of the lightbox at the Departure Hall;

(5) On 30 January 2019, the plaintiff reached an agreement with the 2^nd defendant acting on behalf of the 1^st defendant partly orally and partly in writing (“the Advertisement Agreement”) under which the 1^st defendant would arrange to advertise for the benefit of the plaintiff a commercial advertisement at a designated lightbox at the Departure Hall (“the Lightbox”) for 3 consecutive months commencing from March 2019 to May 2019 at a total consideration of RMB79,500;

(6) In relation to the terms of the Advertisement Agreement which was agreed in writing, such agreement was contained in a contract in Chinese (Contract No. Inet20190228) issued by the 2^nd defendant acting on behalf of the 1^st defendant on 30 January 2019, which was duly accepted by the plaintiff on the same day;

(7) In relation to the terms of the Advertisement Agreement which were orally agreed, the plaintiff had made known to the defendants on 29 January 2019 that the advertising period shall be between 1 March 2019 and 31 May 2019 and that time shall be of the essence, to which the defendants agreed (“the Oral Terms”);

(8) In performance of the Advertisement Agreement, the plaintiff duly paid to the 1^st defendant a total consideration of RMB79,500 (equivalent to HKD91,300) on 30 January 2019 by cheque;

(9) Wrongfully and in breach of the Advertisement Agreement, the 1^st defendant failed to produce, install and advertise and/or failed to procure, arrange or cause the production, installation and advertising of a commercial advertisement for the benefit of the plaintiff on 1 March 2019 or at all;

(10) The said breach was caused, authorised, permitted, induced or otherwise procured by a conspiratorial agreement, scheme or combination between the 1^st and 2^nd defendants who combined and acted together with the intention of injuring the plaintiff and/or causing loss to the plaintiff by entering into the Advertisement Agreement with no intention to honour it and subsequently acting in breach of the same and refusing to return, refund or compensate the plaintiff in the sum of RMB79,500 (equivalent to HKD91,300);

(11) Further or alternatively, the 2^nd defendant had wrongfully procured the 1^st defendant to act in breach of the Advertisement Agreement, and therefore the 2^nd defendant shall be liable personally in tort;

(12) By reason of the 1^st defendant’s breach of the Advertisement Agreement, the conspiracy between the 1^st and 2^nd defendants to injure the plaintiff and/or the wrongful procurement by the 2^nd defendant of the 1^st defendant’s breach of the Advertisement Agreement, the plaintiff has suffered loss and damage in the sum of RMB79,500 (equivalent to HKD91,300);

(13) Further or alternatively, the plaintiff is entitled to recover the said sum of RMB79,500 (equivalent to HKD91,300) on the ground of total failure of consideration;

(14) The plaintiff is also entitled to claim against the 1^st defendant for liquidated damages in the sum of HKD182,600 (i.e. HKD91,300 x 2) pursuant to Clause 3 of the Advertisement Agreement;

(15) The plaintiff therefore claims against the 1^st defendant for the sum of RMB79,500 (equivalent to HKD91,300) and liquidated damages in the sum of HKD182,600; and claims against the 2^nd defendant for RMB79,500 (equivalent to HKD91,300).[1]

THE DEFENCE CASE

5.  While the defendants are absent, the plaintiff’s counsel accepted that the plaintiff still has to prove its case at the trial, having regard to the pleaded case of the defendants[2].

6.  In a gist, it is the defendants’ pleaded case that:

(1) The parties did not agree that the advertising period shall be from 1 March 2019 to 31 May 2019;

(2) Upon the enquiry of the plaintiff, the 2^nd defendant did inform the plaintiff that the Lightbox would be available in mid-March 2019;

(3) No date or period of advertisement had been stipulated in the Advertisement Agreement (whether in writing or orally);

(4) The period of advertisement shall be commenced from the date when the Lightbox was available for 3 months;

(5) On 20 February 2019, the 2^nd defendant was informed by a company in control of the use of the Lightbox that the Lightbox shall only be available on 1 April 2019. The 2^nd defendant therefore informed the plaintiff accordingly.

THE ISSUES

7.  In his opening submissions, the plaintiff’s counsel stated that the issues which this court has to resolve are as follows:

(1) Did the Advertisement Agreement between the plaintiff and the 1^st defendant contain an oral term that the advertisement period shall commence from 1 March 2019 and that time shall be of the essence?

(2) Did the 1^st defendant act in breach of the Advertisement Agreement by failing to arrange the Lightbox on 1 March 2019, or alternatively in March 2019?

(3) Was the breach caused, authorized, permitted, induced or otherwise procured by a conspiratorial agreement between the 1^st defendant and the 2^nd defendant and, if so, was liability against the 2^nd defendant established?

(4) Did the plaintiff suffer from any recoverable loss by reason of the breach in Issue 1 above and, if so, what is the proper amount of such recoverable loss?

8.  In his closing submissions, the plaintiff’s counsel stated that the above issues could be “further boiled down into two major issues” as follows:

(1) Was it an oral term of the Advertisement Agreement that the advertisement period shall commence on 1 March 2019?

(2) Whether the 2^nd defendant had knowledge at the time when the Advertisement Agreement was entered into that the Lightbox was not going to be available on 1 March 2019?

9.  Having considered the pleadings, in my view, the above 6 issues should be combined into 4 issues, namely:

(1) Was it an oral term of the Advertisement Agreement that the advertisement period shall commence on 1 March 2019 for 3 months?

(2) Did the 1^st defendant act in breach of the Advertisement Agreement by failing to arrange the Lightbox for the plaintiff’s use on 1 March 2019, or alternatively in March 2019?

(3) Whether the 2^nd defendant had knowledge at the time when the Advertisement Agreement was entered into that the Lightbox was not going to be available on 1 March 2019, or alternatively in March 2019?

(4) Did the plaintiff suffer from any recoverable loss by reason of the breach in Issue 2 above (if any), and, if so, what is the proper amount of such recoverable loss?

DISCUSSION

Issue 1 – Oral agreement

10.  The first issue which this court will consider is whether there was any oral agreement between the plaintiff and the 1^st defendant that the advertising period shall commence on 1 March 2019.

11.  Dr Keung Kin Wah, a director and shareholder of the plaintiff, has given evidence in court (by adopting his witness statement and supplemental witness statement) in support of the plaintiff’s case that there was indeed such an agreement.

12.  In Dr Keung’s witness statement, he stated that:

“9. Accordingly, on 29 January 2019, I met with the 2^nd Defendant in Shenzhen, Mainland China and discussed the terms and arrangements for the intended advertisement of the Plaintiff’s product at the Lightbox. During the discussion, I specifically expressed and emphasized very clear that (i) the advertisement period must commence on 1 March 2019 and time shall be of essence (i.e. the Oral Terms), given that such period with cool weather was suitable for and favourable to the distribution and/or sale of the Plaintiff’s product (i.e. Fuyunhon Oatmeal Body Wash).

10. The 2^nd Defendant responded that he understood my concern above and agreed orally that these terms were part of the Advertising Agreement. He asked me to pay the total amount of the advertising fee in the coming days as the commencement date of the intended advertisement was 1 March 2019. He also checked and confirmed the availability of the Lightbox from 1 March 2019 onwards. He also confirmed that he would mark the advertising period, i.e. from March 2019 to May 2019, on the contract to be issued to me for confirmation and payment settlement, which further confirm the commencement date to be 1 March 2019.

11. On 30 January 2019, I received from the 2^nd Defendant an email enclosed with a contract in Chinese (Contract No: Inet20190228) in the total sum of RMB79,500 (which I discovered belatedly to be wrongly dated with the date of 28 February 2019), together with another fee quote issued by a company named Recom Media Limited (with a higher quote) of RMB84,000) which was provided upon my request for my comparison of the advertising fee involved. The said contract was drafted by the 1^st and/or 2^nd Defendant(s) and it contained inter alia, the written express terms and conditions pleaded in the Plaintiff’s Statement of Claim. There are now produced and shown to me marked “KKW-3” a copy of the said contract, a copy of the said fee quote, and a copy of the email dated 30 January 2019, all from the 2^nd Defendant. To my understanding, the Advertising Agreement contains both the express terms and the Oral Terms.” (emphasis added)

13.  Mr Wan, counsel for the plaintiff, submitted that the court should accept Dr Keung’s evidence in this regard. He had provided 5 reasons in support. I would consider these reasons in turn below.

14.  Firstly, it was submitted that:

“[…] the fee quote attached in the email dated 30 January 2019 explicitly stated that the availability of the Lightbox shall be from March to May 2019 [B/162]. In WhatsApp [B/181], D2 alleged that D1 would not in breach of the Advertisement Agreement if the Commercial Advertisement could start in March 2019. These suggest that there was a time element in the Advertisement Agreement.” (Mr Wan’s emphasis)[3]

15.  It should be pointed out at the outset that the document on page 162 of the trial bundle is in fact a written contract instead of a fee quotation. This is what Dr Keung referred to as “the said contract” in paragraph 11 of his witness statement which was quoted above. This written contract was exhibited as part of “KKW-3” by Dr Keung in his witness statement.

16.  It is clear that the said written contract did not “explicitly state” that the Lightbox shall be available from March to May 2019 at all. Page 1 of the written contract reads:

Item	Description	Listing Position/Tier	Monthly Charge
	廣告位置: 羅湖離境3/F往香港 廣告形式: 室內燈箱 1.52m (w) x 2.05m (h) 合約有效期: 以廣告發布起計算 Special 3Months Package Offer (RMB$26,500/month) (Inclusive of Electrical Fee, Maintenance, 4 x Production & Installation) Extra Production & Installation: HK$2,000 / Insertion Availability : March 2019		RMB32,000
Total monthly fee			RMB32,000 RMB26,500
			3 mths (廣告上載日期起)
Total Service Charge			RMB79,500

17.  It can be seen that while the written contract did mention that the Lightbox would be available in March, it did not state that the available date was “1 March 2019”. It only referred to “March 2019”. The words “May 2019” did not appear at all. On the other hand, it was stated that the contractual period would be “以廣告發布起計算”. It was further provided that the contract would be valid for “3 months (廣告上載日期起)”.

18.  In reliance of the Whatsapp messages, Mr Wan submitted that there was a time element in the Advertisement Agreement. That I agree. That is in fact borne out by the above written contract as well. However, whether there was an agreed commencement date as such is another matter.

19.  Secondly, Mr Wan submitted that:

“[…] the WhatsApp messages [B/171] show that before D2 and Dr. Keung travelled to Shenzhen on 29^th January 2019, they had never mentioned the time of display of the Commercial Advertisement. Yet, the fee quote attached in the email sent by D2 to Dr. Keung a day later (i.e. on 30^th January 2019) stated the time of display explicitly (i.e. from March to May 2019). The only reason must be that the matter had been discussed and brought to D2’s attention during the visit. On balance, the Court is invited to find that Dr. Keung (on behalf of P) communicated to D2 (on behalf of D1) the Oral Terms during the visit.”[4]

20.  While I accept that Dr Keung and the 2^nd defendant must have discussed about the timing of the placing of the advertisement on 29 January 2019 when they did a site visit to the Departure Hall, I do not think that necessarily mean that they had agreed that the advertisement period must commence on 1 March 2019.

21.  Mr Wan referred to a “fee quote” in his argument. He did not clarify whether he was referring to page 162 of the trial bundle again (which, as I said, is a contract rather than a quotation). If it was indeed his intention, then what I mentioned above while I was dealing with his first agreement would be applicable equally here.

22.  However, the confusion is that there was in fact another document attached to the 2^nd defendant’s email sent on 30 January 2019 and that other document was indeed a quotation.[5] To play safe, I should consider this quotation as well here.

23.  As a matter of background, I should mention that this quotation was not issued by the 1^st defendant but another company. For the sake of convenience, I quote again what Dr Keung stated in paragraph 11 of his witness statement which explained why this quotation was obtained:

“On 30 January 2019, I received from the 2^nd Defendant an email enclosed with a contract in Chinese (Contract No: Inet20190228) in the total sum of RMB79,500 (which I discovered belatedly to be wrongly dated with the date of 28 February 2019), together with another fee quote issued by a company named Recom Media Limited (with a higher quote) of RMB84,000) which was provided upon my request for my comparison of the advertising fee involved.”

24.  I do not agree with Mr Wan that “the fee quote attached in the email sent by D2 to Dr. Keung a day later (i.e. on 30^th January 2019) stated the time of display explicitly (i.e. from March to May 2019)” (see his argument quoted in paragraph 19 above), as it is provided therein that:

ITEM	DESCRIPTION	MONTHLY	PERIOD/QTY	AMOUNT
1	羅湖口岸 Size: 1.52m(W)x2.05m(H) Ad Position: b3 start day :March	RMB28,000	3	RMB84,000

25.  It can be seen that the quotation did not state that the time of display of the advertisement would be “from March to May 2019”. It only stated “start day :March”. If anything, this quotation tends to support the defendants’ case more.

26.  Thirdly, Mr Wan argued that:

“[…] on 20^th February 2021, D2 took the initiative informing P that the Lightbox would only be available starting from 1^st April 2021 and apologized to Dr. Keung [B/177]. If there was no specified time of commencement as pleaded by Ds, it is superfluous for D2 to apologize.”[6]

27.  As reflected by the written contract, the 2^nd defendant must have indicated to Dr Keung that the Lightbox would be available in March 2019. In fact, although it was provided in the written contract that the Lightbox would be available in March 2019, it had been pleaded by the defendants in paragraph 12 of their Defence that:

“[…] It is averred that it was the Plaintiff to enquire the date of availability for the Light Box and the 2^nd Defendant acting on behalf of the 1^st Defendant replied to the Plaintiff that the available period would be starting in mid-March 2019 […]”

28.  It is therefore not surprising that the 2^nd defendant apologised to Dr Keung when it transpired that the Lightbox would not be available until April 2019. However, this does not mean that the parties had reached an agreement that the Lightbox would be available on 1 March 2019.

29.  Fourthly, Mr Wan contended that:

“[…] after D2 informed P that the Lightbox was not available in March 2019, Dr. Keung immediately requested for refund and repeatedly made reference to the date of 1^st March 2021 [B/178 –181]. P’s case therefore is internally consistent at all stages. On the contrary, D2 did not instantly denied that there was no specified commencement date of the Advertisement Agreement until he was informed that Dr. Keung had reported the matter to the police on 28^th February 2019 [B/181]. D2’s assertion at such a late stage strongly suggest that it was an afterthought.”[7]

30.  I agree that Dr Keung had been consistent in his WhatsApp messages in insisting (after he had been told by the 2^nd defendant that the Lightbox would only be available in April 2019) that the advertisement period must start on 1 March 2019. Be that as it may, this is just one of the matters which the court should take into account when considering whether there was any oral agreement as alleged.

31.  Mr Wan drew this court’s attention to the evidence that the 2^nd defendant only defended himself by virtue of his WhatsApp messages by saying that there was no specified commencement date of the Advertisement Agreement when Dr Keung told him that the plaintiff had reported the matter to the Police on 28 February 2019. He stated that this shows that this was an afterthought on the part of the 2^nd defendant.

32.  I do not think this argument would assist the plaintiff. What the 2^nd defendant said in his WhatsApp message was that “合約同發票都沒有指明日子”. I have quoted the written contract above, and it could be seen that there was indeed no specified commencement date thereon. It is therefore not an “afterthought” as such.

33.  On the other hand, while it appears that the 1^st defendant did issue an invoice to the plaintiff (Dr Keung also referred to such an invoice in his WhatsApp messages sent to the 2^nd defendant), no invoice had ever been placed before the court by the plaintiff. I have not lost sight of the fact that Dr Keung did allege twice in his WhatsApp messages sent to the 2^nd defendant that the words “March to May” did appear in the invoice. However, I am not prepared to find that the invoice indeed bore those words on the sole basis of Dr Keung’s said messages without reading the invoice myself. I find it most surprising that the plaintiff had failed to disclose such an invoice in the present action, particularly when Dr Keung seemed to be suggesting that such an invoice could advance the plaintiff’s case.

34.  The fifth point made by Mr Wan was that:

“[…] as shown from the WhatsApp messages on 28^th February 2019 [B/182] D2 was aware of the reason of P entering into the Advertisement Agreement was because of the desirable location of the Lightbox which could boost the sale of beauty products. This reference suggested that D2 was conscious of P’s purpose of renting the Lightbox, that is to promote its beauty and health care products, which P submits that time is of the essence.”[8]

35.  I do not think this argument can assist the plaintiff in advancing its case that the advertisement period must start from 1 March 2019. Even if the 2^nd defendant knew that the plaintiff’s use of the Lightbox was to promote its beauty and health care products, that does not mean “time is of the essence”.

36.  I do not accept Dr Keung’s evidence that the 2^nd defendant had agreed on behalf of the 1^st defendant on 29 January 2019 that the advertisement period must commence on 1 March 2019 because:

(1) If it was so important that the advertisement must start to be displayed on 1 March 2019, Dr Keung would have confirmed the availability of the Lightbox (or any other light boxes at the Departure Hall) with the 2^nd defendant before he agreed to do a site visit. However, it is evident from the WhatsApp communication between Dr Keung and the 2^nd defendant that Dr Keung did not make any enquiry on timing at all. Neither did Dr Keung say in his witness statement or supplemental witness statement that he had made such enquiry;

(2) If Dr Keung was telling the truth in that the commencement date was so important that he had emphasized the same when he discussed the terms of the agreement with the 2^nd defendant on 29 January 2019, it would be very strange if he did not insist that the date of “1 March 2019” (or the period “March to May 2019”) be inserted specifically in the written contract, particularly when he alleged that the 2^nd defendant had expressly “confirmed that he would mark the advertising period, i.e. from March 2019 to May 2019, on the contract to be issued to [him] for confirmation” (see paragraph 10 of his witness statement quoted above);

(3) On the other hand, the written contract was vague on the commencement date of the advertisement period. It only stated that such a period would start in March 2019. The words “以廣告發布起計算” and “3 months (廣告上載日期起)” show that it is more likely than not that the parties did not agree on a definite commencement date of advertisement.

37.  It is therefore my ruling that the alleged “oral term” did not exist at all.

Issue 2 – Any breach of the Advertisement Agreement

38.  Despite my finding above, it is clear from the written contract that it had been agreed that the advertising period shall start within the month of March 2019. However, it is evident that, at the end of the day, the 2^nd defendant told Dr Keung that the Lightbox would only be available on 1 April 2019. As a result, there was a repudiation of the Advertisement Agreement on the part of the 1^st defendant, which the plaintiff had apparently accepted by requesting for a refund of the whole amount of advertising fee paid.

Issue 3 – 2^nd defendant’s prior knowledge of (un)availability of the Lightbox

39.  The plaintiff’s cause of action against the 2^nd defendant is the tort of conspiracy. It was alleged that although the 2^nd defendant was not a party to the Advertisement Agreement, he had procured the breach of the same and/or combined, with a common design, together with the 1^st defendant committing the breach.

40.  Mr Wan had drawn this court’s attention to the case of Pido v Compass Technology Co Ltd [2010] 2 HKLRD 537 in which Ma CJHC (as his Lordship then was) explained the tort of conspiracy to injure as follows:

“13. The law need only be briefly dealt with. As stated above, the tort of conspiracy to injure is an economic tort. Essentially, the tort consists of a conspiracy to injure the Plaintiffs resulting in (usually, if not invariably) pecuniary damage.

14. There are two types of conspiracy to injure : -

(1) First, there is the conspiracy to injure the Plaintiff using lawful means. Here, a requisite element of the tort is the predominant motive to injure : see Lonrho Plc v Fayed and Others [1992] 1 AC 448, at 464B-C, 465C, 465H-466A.

(2) The second type of conspiracy is the conspiracy to injure by the use of unlawful means. Here, the mental element is not the predominant motive to injure the Plaintiff, merely an intention to do so : see Lonrho Plc v Fayed and Others at 465C, 465H-466A. This is a lower requirement of intention, but it is still “needed” to found the cause of action : see Revenue and Customs Commissioners v Total Network SL [2008] AC 1174, at 1249A-C (paragraph 82).”

41.  In Apple Inc & Another v Proview International Holdings Limited & Others (HCA 739/2010, unreported, 14 July 2011), Poon J (as Poon CJHC then was) also explained that:

“30. In a claim of conspiracy, the plaintiff must prove the following elements :

(1) a combination or agreement between two or more individuals;

(2) an intent to injure;

(3) pursuant to which combination or agreement and with that intention certain acts were carried out;

(4) resulting in loss and damage to the plaintiff.

See Bullen & Leake & Jacob’s Precedents of Pleadings 15^th Edn, Vol. 2, at paragraph 50–01.1.

31. A combination to effect a breach of contract is an actionable conspiracy. A party to the conspiracy can liable even if he is not a party to the contract and even where it was not possible to establish that he had procured any breach of it, but where he had merely combined, with a common design, together with the parties committing the breach. See Clerk & Lindsell on Torts 20^th Edn, at paragraph 24–103.

32. A company, being a separate legal person, can conspire with its directors; and the knowledge of the company may be found in a director who has management or control for the transaction or act in question. See Clerk & Lindsell on Torts 20^th Edn, at paragraph 24–93; Belmont Finance Corporation v Williams Furniture Ltd and others (No. 2) [1980] 1 All ER 393.”

42.  Relying on the case of De Krassel v Chu Vincent [2010] 2 HKLRD 937 at §§51-58 (per Sakhrani J) and Top Point Ltd v K & L Gates (A Firm) [2020] 1 HKLRD 814 at §43 (per Lok J), Mr Wan further submitted that if a party deliberately decides not to inquire into matters which are obvious and specific, it is approximated to “blind-eye knowledge” that could form part of a conspirator’s state of mind in a claim of conspiracy.

43.  The defendants admitted in their Defence filed on 6 November 2019 that the 2^nd defendant was the sole director, shareholder and responsible person as well as the sales director of the 1^st defendant, having sole management and control over the 1^st defendant’s affairs, transaction and day-to-day matters. The plaintiff and the 1^st defendant had entered into the Advertisement Agreement, and it is clear that, despite what had been provided in the written contract and the defendants’ admission in the Defence that the 2^nd defendant did represent to the plaintiff that the Lightbox would be available for use from mid-March 2019 onwards, the 1^st defendant in the end could not provide the Lightbox for the use of the plaintiff within the month of March 2019.

44.  By reasons of the above, out of the 4 elements referred to by Poon J in Apple Inc, the only remaining question is on the element of “intention to injure”. Hence, the question is: Did the 2^nd defendant have knowledge at the time when the Advertisement Agreement was entered into (on around 30 January 2019) that the Lightbox was not going to be available in March 2019? Alternatively, were there obvious and specific matters (which matters might affect the availability of the Lightbox in March 2019) which the 2^nd Defendant deliberately decided not to inquire into at the time when the Advertisment Agreement was entered into?

45.  In this regard, Mr Wan argued in his written closing submissions that:

“54. According to the WhatsApp messages, at the time when D2 informed Dr. Keung of the availability of the Lightbox, he told Dr. Keung that the Lightbox had just been released to the market and urged P to “grab the chance” (“快搶”).

55. Then in the meeting on 29 January 2019 between Dr. Keung and D2 in Shenzhen, D2 was already aware that the Lightbox was occupied by China Mobile given the display of their advertisement at the Lightbox [A/100/§26v].

56. Later on 20 February 2019, D2 confessed in WhatsApp that he was told at the first place that the Lightbox would have been available starting from early-March 2019 (without pinpointing the exact date) [B/177].

57. It can be readily inferred that prior to the Advertisement Agreement been entered into, (i) the Lightbox had been used by China Mobile from January to end of March 2019 and (ii) D2 being provider of advertisement service of inter alia the Lightbox knew or ought to have known that the Oral Terms would not necessarily be fulfilled. Yet, D2 deliberately concealed the matter, until such risk has been realized.

58. Furthermore, since D2 admitted he was informed that the Lightbox would be available in March (without an exact date), he had knowledge that P intended to display the Commercial Advertisement starting from 1^st March 2019 sharp. In the circumstances, he turned a blind-eye to ascertain the same before entering to the Advertisement Agreement with P. Instead, on 29^th January 2019, he reaffirmed the availability of the Lightbox from 1^st March 2019 onwards [A/97/§10].

59. Given Ds had knowledge of the possible delay in display but their continuation to procure P to enter into the Advertisement Agreement, the only irresistible inference that could be drawn is that Ds intended to injure P. There is a conspiracy which consisted of an agreement between Ds to injure P by inducing P to enter into the Advertisement Agreement and to pay the full consideration and the unlawful means to be employed consisted of D2 falsely and/or misleadingly representing to P that the Lightbox would be available by 1^st March 2019, when in reality, the Lightbox was never available from January to end of March 2019 as it was occupied by China Mobile.”

46.  With greatest respect to Mr Wan, there is simply not enough material for the court to infer that, when the Advertisement Agreement was entered into by the parties in late January 2019, the 2^nd defendant knew or ought to have known that the Lightbox was not going to be available in early March 2019[9] or even within the month of March 2019. It is just pure speculation on the part of the plaintiff. Even though China Mobile was using the Lightbox on 29 January 2019, that does not necessarily mean that it would be using the Lightbox until the end of March 2019.

47.  In Dr Keung’s supplemental witness statement, he emphasized that, when the 2^nd defendant initially tried to attract the plaintiff in renting the use of the Lightbox, the 2^nd defendant stated in his WhatsApp message that there was a lightbox “剛放出來，快搶”. Dr Keung alleged in his statement that:

“42. […] Thus, the 2^nd Defendant did not tell the truth and had cheated me by saying in his WhatsApp messages to me on 20 January 2019 that the advertisement place of the Lightbox was just released (剛放出來), as it was still occupied by the advertisement of China Mobile at that time.”

48.  With respect, Dr Keung had no ground in making such an allegation against the 2^nd defendant. First of all, even if the Lightbox was “just released”, it did not necessarily mean that it was immediately available. Most important of all, it is his own evidence that the 2^nd defendant had invited him to go to Shenzhen to, among other things, take a look at and inspect the Lightbox, and as a result, he had met the 2^nd defendant in Shenzhen on 29 January 2019[10]. Dr Keung must therefore appreciate that China Mobile was using the Lightbox during the said inspection. That was 9 days after the 2^nd defendant stated “剛放出來”. Yet, Dr Keung did not say in his evidence that he had confronted the 2^nd defendant about this. In my view, this is because he knew clearly that “剛放出來” did not mean that Lightbox was available for a new user immediately.

49.  I also reject the plaintiff’s argument that the 2^nd defendant had turned a blind eye to the possibility that the Lightbox would not be available in early March 2019 or even within the month of March 2019. There is no evidence on the basis of which this court could infer that the 2^nd defendant knew or would at least reasonably suspect when the Advertisement Agreement was entered into in late January 2019 that the Lightbox would be used by China Mobile all the way until the end of March 2019. It cannot be said that the 2^nd defendant should have known back in January 2019 about the extension of use of the Lightbox on the part of China Mobile.

50.  I therefore find that the plaintiff has failed to prove its claim against the 2^nd defendant personally.

Issue 4 – the plaintiff’s recoverable loss

51.  The plaintiff has pleaded two items of loss against the 1^st defendant:

(1) Firstly, it claims for the sum of RMB79,500 (equivalent to HKD91,300) as its loss arising out of the breach of the Advertisement Agreement on the part of the 1^st defendant. Alternatively, it was stated that this sum would be recoverable on the ground of total failure of consideration.

(2) Secondly, it is alleged that the plaintiff is entitled to claim against the 1^st defendant for liquidated damages in the sum of HKD182,600 (i.e. HKD91,300 x 2) pursuant to the Advertisement Agreement.

The advertising fee paid

52.  As far as the advertising fee is concerned, I do not think there can be any serious argument that the 1^st defendant is not obliged to return the same to the plaintiff, since there was indeed a breach of the Advertisement Agreement on the part of the 1^st defendant in procuring the Lightbox available for the use by the plaintiff within the month of March 2019.

53.  It is also undisputable that, at the end of the day, the plaintiff did not use the Lightbox pursuant to the Advertisement Agreement.

54.  Indeed, the 2^nd Defendant had also agreed on 18 March 2019, by virtue of his WhatsApp message to Dr Keung, that the plaintiff would be refunded if the plaintiff really did not make use of the Lightbox in the following 3 months.

55.  For the above reasons, it is my view that the 1^st defendant should be ordered to make a full refund to the plaintiff.

56.  While the plaintiff has asked for the relief of “RMB79,500 (equivalent to HKD91,300)” in its Amended Statement of Claim, I think judgment should not be entered in RMB even though it was the contractual amount stated in the written contract, because it is evident that the plaintiff had paid the 1^st defendant in Hong Kong Dollars. The 1^st defendant should therefore be ordered to pay the sum of HKD91,300 to the plaintiff.

Liquidated damages

57.  It is stipulated in the Advertisement Agreement that:

“合同簽訂後任何一方不得毀約。如有違約，須按合同中違約方按預付定金的雙倍向對方支付違約金; 以及違約方向對方支付按合同總價5%的罰金 (除政府政策外)。” (emphasis added)

58.  Relying on the above clause, the plaintiff alleged that the 1^st defendant is liable for the sum of HKD182,600 (being double of the advertising fee paid) as liquidated damages.[11]

59.  In paragraph 10 of Dr Keung’s witness statement, he explained the circumstances under which the plaintiff was requested to pay the advertising fee to the 1^st defendant. I have quoted that part of his evidence in paragraph 12 above and I do not propose to set it out again here. Dr Keung then continued in his witness statement:

“12. On the next day, i.e., on 31 January 2019, I immediately gave the 2^nd Defendant a Plaintiff’s cheque dated 31 January 2019 drawn in favour of the 1^st Defendant in the sum of HK$91,300 (equivalent to RMB79,500) in accordance with and in performance of the Advertising Agreement […]”

60.  In my view, and according to my interpretation of the clause in the Advertisement Agreement quoted above, it is clear that:

(1) The intention and agreement of the parties was that only the double amount of the deposit paid pursuant to the agreement (“按合同中違約方按預付定金的雙倍”) would be treated as “違約金”;

(2) “定金” and “合同總價” are apparently two different concepts, and they have also been so distinguished in the clause quoted above;

(3) the payment of HKD91,300 was not intended to be treated as “deposit” as such, but the full performance of the Advertisement Agreement on the part of the plaintiff.

61.  If the Advertisement Agreement did specify the amount of deposit payable by the plaintiff, then even if the plaintiff had paid the full amount of the advertising fee, it would still be arguable that the plaintiff might recover from the 1^st defendant the double amount of the stipulated amount of deposit. However, since no amount of deposit was so stipulated, one cannot even begin to calculate what the “double amount” should be.

62.  The plaintiff’s claim for liquidated damages must therefore be rejected.

ORDER

63.  By reasons of the aforesaid, I hereby enter judgment in favour of the plaintiff against the 1^st defendant for the sum of HKD91,300 together with interest on such sum at 1% over the prime rate of HSBC from the date of the writ to the date hereof, and thereafter at judgment rate until full payment.

64.  The plaintiff’s claim against the 2^nd defendant is dismissed.

COSTS

65.  I make a costs order nisi that:

(1) the plaintiff do bear the 2^nd defendant’s costs of the action, to be taxed if not agreed;

(2) the 1^st defendant do bear 30% of the plaintiff’s costs of the action, to be taxed if not agreed.

66.  The above order nisi was arrived at upon my consideration of the following matters on a preliminary basis:

(1) The plaintiff’s claim against the 2^nd defendant was dismissed;

(2) The plaintiff’s successful claim against the 1^st defendant in the sum of HKD91,300 was straight-forward;

(3) The whole case has been rendered more complicated by reasons of the issues arising from the plaintiff’s claim against the 2^nd defendant and the plaintiff’s case that the advertisement period was agreed to start on 1 March 2019. The plaintiff has failed on both issues. This should be reflected in the costs order to be made between the plaintiff and the 1^st defendant;

(4) But for the aforesaid 2 issues, counsel’s attendance at the trial would not be certified as proper. There is therefore no reason why the 1^st defendant should be responsible for the plaintiff’s counsel fees incurred for the trial.

67.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.