JOIN-BUILD ENTERPRISES LIMITED v. AU KIANG INTERNATIONAL COMPANY

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J U D G M E N T

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Fuad, V.-P. (giving the judgment of the Court):

1. On 7th January 1992 we dismissed this appeal by the unsuccessful plaintiff in this action heard by Deputy Judge Jerome Chan in the High Court. His reserved judgment was delivered on 7th June 1991. We now give the reasons for our decision.

2. Notice of appeal was filed and served on 24th July 1991. The hearing date (7th January 1992) for the appeal was fixed on 5th August 1991. The solicitors acting for the plaintiff company had difficulty in obtaining instructions as to whether or not the plaintiff wished to discontinue the appeal, and they were not placed in funds. They made an application under RSC O.67, r.6(1) for an order declaring that they had ceased to act for the plaintiff. This was granted by Nazareth, J.A. on 3rd December.

3. On 2nd January 1992 a master gave leave to the plaintiff company for it to be represented by its director Madam Chan Fu Lin. She duly appeared before us for her company.

4. The Notice of Appeal was drafted by counsel who had represented the plaintiff before the judge. We would mention here that we regard the Notice (its terms will later be set out) as inadequate for the purposes it was intended to serve. We would have had stern comments to make about them had counsel been before us. Since the plaintiff company did not have the assistance of counsel, we read through the whole record of proceedings, as well as perusing the pleadings and documents which were before the lower court.

5. The main part of the plaintiff's case is pleaded in this way. On 31st July 1987 the defendant, who knew that the plaintiff wanted to buy 5,000 cubic metres of plywood of DBB-CC grade, each grade of 50%, in compliance with the Japanese Inspection Standard ("JPIC") 1968 to sell it on to a Chinese buyer, offered to sell plywood matching that description on terms and conditions to be agreed and to be set out in a written contract. In December 1987 in order to induce the plaintiff to enter into the contract, the defendant orally represented (in a telephone conversation with the plaintiff's Madam Chan) that the defendant would supply plywood of DBB-CC grade, each grade of 50%, in compliance with JPIC 1968, although the plywood would be described as "overlay grade" in documentation in order to avoid certain Indonesian quota problems.

6. It is then pleaded that relying on this representation the plaintiff entered into a Sale and Purchase Agreement dated 23rd December 1987 with a named Chinese buyer to supply 5,000 cubic metres of Indonesian plywood of DBB-CC grade, each grade of 50%, in compliance with the JPIC 1968.

7. The Statement of Claim goes on to plead that on 5th January 1988 in further reliance upon the defendant's representation, the plaintiff entered into a contract with the defendant agreeing to buy (for US$1,960,000.00) 5,000 cubic metres of Indonesian plywood "overlay grade" JPIC1968, Type II. Paragraph 6 of the Statement of Claim states:

"6. In fact, the plywood supplied by the Defendant pursuant to the said contract No. JP-HK1-03 was not all of grade DBB-CC, each grade of 50%, in compliance with the JPIC 1968 or alternatively 'overlay grade' is not the same as grade DBB-CC."

8. Particulars of the loss suffered are then given. There is also a claim for damages for late shipment. The defendant's case was that negotiations between the parties in December 1987 concerned the purchase of 5,000 cubic metres of Type II Indonesian made plywood of overlay grade by the plaintiff from the defendant. These negotiations resulted in a written agreement entered into between the parties on 5th January 1988. According to the contract, which was produced in court, the "description of goods" was as follows:

"Indonesian plywood, 3MM x 4' x 8'

'Overlay Grade' JPIC 1968, TYPE II 

Glued

Origin : Indonesian

Quantity : 5000 CBM

Unit Price : .........." (Emphasis supplieded]

The term we have emphasised was later amended by mutual consent to read "DBB-CC/Overlay or better (mix) JPIC 1968."

9. The defendant denied making any representations of the kind averred by the plaintiff.

10. It was common ground that 5,001,024 cubic metres of plywood were supplied by the defendant and duly shipped to the ultimate buyer, and that 18% of the wood was of the "D/BB" grade, 18% was of the "D/CC" grade and the remaining 64% was of the "overlay" grade. However, since the Chinese customers had stipulated that the plywood should be "DBB/CC grade 50%, in compliance with JPIC" they complained about the shipment, and the plaintiff had to reduce the sale price by US$47,071. This was the principal sum claimed as damages in the plaintiff.'s action.

11. After reviewing the evidence given by the witnesses before him, the judge said this:

" I find both witnesses [Mr. Wong and his wife, otherwise known as Madam Chan Fu Lin] called on behalf of ,the plaintiffs to be untruthful witnesses. Both were evasive, and their evidence inherently inconsistent as well as inconsistent with. the documentary evidence. Their story is incredible. They would have me believe that P.W.1 [Mr. Wong], an experienced engineer in the construction material business, was totally ignorant of 'overlay' grade plywood but nevertheless entered into contracts worth almost US$2 millions on the strength of a vague oral assurance as to quality from a person who apparently was as ignorant as he was about 'overlay'. I am satisfied that both P.W.1 and P.W.2 [Madam Chan] were never misled by the defendants as they alleged. P.W.1 may not have understood the precise classifications of the grading system under J.P.I.C. as he evidence demonstrated, but I have no doubt at all that he fully appreciated that there is a distinction between "DBB/CC" and "overlay" grades. All the documents made reference to "overlay or better mix". The SGS report verified that 64% was of "overlay" grade.

    I have no hesitation at all in rejecting the oral allegations of the plaintiffs' witnesses and the existence of the alleged misrepresentations, even without the assistance of the testimony of the defendants" witnesses. However, I do find D.W.1 [Ms. Hui Lai Ping, the defendant's shipping clerk at the relevant time] to be an honest and truthful witness and I have no hesitation.in preferring her evidence to that of P.W.2. Though, I have some reservation as to whether D.W.2 [Mr. Hung Wing Ming, the defendant's General Manager at the time the events relied upon took place] did tell me the whole truth, I prefer his evidence to that of the plaintiffs' witnesses in so far as the alleged misrepresentations are concerned. It is not necessary for me to make any finding of facts further than what I have done already, but I do believe that I am only looking at the tip of the iceberg in so far as true facts surrounding the dealings are concerned."

12. Later the judge said specifically that he rejected the plaintiff's allegations of misrepresentations on the evidence before him.

13. The first ground of appeal is in these terms:

"The learned Judge erred in law in ruling that it was not necessary to decide as a matter of fact what was the true agreement between the Appellant and the Respondent."

14. The judge had referred to the "misrepresentation" pleaded and commented that the emphasis had shifted at the trial to a slightly different one. He then observed:

"The plaintiffs' case proceeds on a claim for damages for misrepresentation, and not for breach of the contract as rectified by the court. Thus, it is not necessary for me to find what in fact was the true agreement between the said parties."

15. With very great respect to the judge, we do not know what he meant by the remark criticised in ground 1 of the Notice, for in rejecting the evidence led for the plaintiff, he did in the event decide what the material terms of the agreement sued upon had been.

16. The second ground of appeal is as follows:

"2. The learned Judge erred in fact in finding that it was the Appellant's case that Mr. Wong Chun Tak had vast experience in the field of.construction materials including plywood."

Mr. Wong is the Chairman and Managing Director of the plaintiff company. In evidence-in-chief he is recorded to have said, inter alia:

"I got real experience in all type of building material control, materials and all types of control and experience in building construction material." [sic].

He then said:

"[While working for a named construction company] I had been in charge of over 10 large building projects. There would have been projects where plenty of plywood was used, a large amount ... I have substantial knowledge of plywood ... Since 1988 to now [April 1991] my company had ordered plywood for own use ... My company had been dealing in Chinese trade including plywood since 1986. Plywood is one of the things we dealt with ... Our company had supplied plywood to Chinese buyers before ... we had successful transactions for 10 occasions."

17. It seems to us that the judge's comment was justified on the evidence and, in any case, It has not been suggested to us why, if the judge can be said to have overstated Mr. wong's experience of plywood, this affected the validity of his conclusions.

18. The final ground of appeal was drafted in this way:

"3: The learned Judge's assessment of the veracity and reliability of the Appellant's witnesses was wrong in fact, and inconsistent."

19. We decided to consider this unparticularised and unhelpful ground of appeal only because the plaintiff company was not represented by counsel before us. We listened to Madam Chan carefully and she did her best, but she was unable to persuade us this was a case in which we could properly interfere with the findings of fact made by the judge after seeing and hearing the witnesses over a three-day trial. Once Madam Chan and her husband were disbelieved, (they were the only witnesses for their company) their case was doomed to fail.

20. After hearing argument, and despite a spirited plea by Madam Chan, we concluded that the appeal should never have been instituted and therefore ordered that the costs of the appeal to be paid by the plaintiff company should be taxed on a common fund basis.

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