ASIA TELEVISION LTD v. MAK CHI KIN t/a WILSON & TOP MARKETING PROMOTION CO AND ANOTHER

DCCJ5940/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5940 OF 2004

D E C I S I O N

1.  This is the hearing of the plaintiff’s application for summary judgment or judgment on admission against the 1st defendant by the plaintiff’s summons dated 19 October 2005.  In this application, the plaintiff asks for an order for final judgment to be entered against the 1st defendant for the sum of HK$889,854 together with interests and costs of this action, including the costs of this application.

2.  The statement of claim states that by an appointment letter dated 19 September 2003, the 2nd defendant was appointed by the 1st defendant as the agent to act on the 1st defendant’s behalf in all matters relating to the airtime advertising of “ice-cream product line” on the plaintiff.  The advertisements of ice-cream product line were broadcast by the plaintiff at the request of the defendants, and as at date of the writ, the outstanding balance due and owing by the 1st defendant to the plaintiff was that pleaded in the sum claimed.

3.  There is no dispute and the 1st defendant has admitted in its defence that the 1st defendant duly appointed the 2nd defendant as its advertising agent by an appointment letter pleaded in the statement of claim.  This is found at page 1 of bundle B of the bundle of documents.

4.  The terms of the appointment letter state that the 1st defendant confirmed that effective from October 2003, the 2nd defendant was appointed by the 1st defendant to act as agent of the 1st defendant on its behalf in all matters relating to the advertising of the 1st defendant’s product, ice-cream, on the plaintiff, Asia Television Limited, including, without limitation, booking of commercial airtime, scheduling of advertising spots and payment for advertising spots in accordance with the prevailing rate card.

5.  The 1st defendant also confirmed that the 2nd defendant was duly and fully authorised by the 1st defendant to bind the 1st defendant in all matters concerning the said business and the 1st defendant thereby ratified what the 2nd defendant had done or undertaken or would do or undertake in relation to thereto; and that such authorisation would remain effective until the plaintiff actually received and acknowledged the 1st defendant’s written notice of cessation of such agency and the 1st defendant undertook to indemnify the plaintiff and keep the plaintiff fully indemnified against all losses and damage of the plaintiff arising out of any default of the 2nd defendant and/or relating to the said advertising.

6.  The defence of the defendant is now limited to one matter, and that is the issue as regards whether the 1st and 2nd defendants were jointly as well as severally liable to the plaintiff.  It is clear that the plaintiff’s claim also relies on the advance commitment discount scheme 2003 at page 2 of the bundle B of the bundle of documents.  The defendants’ counsel submits that the 1st defendant did not sign this advance commitment discount scheme agreement and this agreement states in paragraph 3 thereof a term with express words for joint liability for the parties signing therein. 

7.  The 1st defendant’s counsel submits that as the 1st defendant did not sign on this agreement, that the terms thereof do not bind the 1st defendant, including the term for joint and several liability of the parties.  He states that as default judgment had been entered against the 2nd defendant, the plaintiff is barred to proceed against the 1st defendant.  He relies on the judgment in Moore v Flanagan [1920] 1 KB 919 and the judgment of Banks LJ at page 923 which states:

“If a person has a claim against two persons, one of whom is in fact an agent for the other and judgment is signed against the one who turns out to be the agent, that is a conclusive bar to an action against the principal.”

8.  The point as regards whether the advance commitment discount scheme binds the 1st defendant when it did not sign or execute it is therefore of vital importance because of the provision for joint and several liability in clause 3 thereof.  I therefore have to consider the construction of this agreement as well as consider the effect of the appointment of advertising agency in the context of this agreement.

9.  This advance commitment discount scheme states that there are three parties, first being Asia Television Limited, second being the 1st defendant, third being the 2nd defendant, and it is envisaged that this agreement is a three-party agreement. 

10.  As far as the signatories of this agreement is concerned, there is provision for three signatories, one for and on behalf of the participating advertiser which is stated to be the 1st defendant; second for and on behalf of the participating advertising agent, being the 2nd defendant; and third being for and on behalf of the plaintiff.

11.  The paragraph 3, clause 3 states in these terms:

“The participating advertiser (being the 1st defendant), and the participating advertising agent (being the 2nd defendant), shall jointly and severally be liable to all obligations and liabilities hereunder, and the participating advertiser and the participating agent warrant and confirm to ATV that the participating advertising agent has full authority to do all such act of and relating to the commitment agreement.”

12.  Clause 5 states:

“This commitment agreement has to be signed by ATV, the participating advertiser and the participating advertising agent to be binding and enforceable against the parties hereto.”

13.  The plaintiff’s counsel submits that by the appointment of advertising agency, the 1st defendant has appointed the 2nd defendant to act on its behalf in all matters and they confirm that the agent is duly and fully authorised by them to bind them in all matters concerning the business and they hereby rectify what the agent has done or undertaken or will do or undertake in relation to thereto, and that such authorisation shall remain valid and effective until ATV actually receives and acknowledges their written notice of cessation of the agency here mentioned.

14.  The appointment of advertising agency authorises the 2nd defendant to act on its behalf, but the 2nd defendant has to act on its behalf.  It seems to me, on reading the advance commitment discount scheme, this clear provision for each of the there parties to execute it and each party has to execute, whether by itself or through its agent, and as the 1st defendant is a firm, it could either sign on its own behalf or through its agent.

15.  In this agreement, the place for execution by the participating advertiser being clearly stated to be a party is left blank.  The 2nd defendant executed for and on behalf of participating advertising agent, that is on its behalf as agent, because clause 5 clearly states that the agreement has to be signed by three parties for it to bind the parties thereto and the 1st defendant did not execute it. 

16.  In my view, there is no participation in this agreement by the 1st defendant.  The 2nd defendant merely executed on its own behalf.  As the appointed agent, it would have been fully entitled and authorised to execute on behalf of the 1st defendant, the participating advertiser, but it did not do so.  In my view, the intent of this agreement is clear, that it is a three-party agreement.  Each party has to execute and there has been no execution of this agreement by the 1st defendant either on its own behalf or by its agent, the 2nd defendant.

17.  Therefore, in my view, the defence raised by the 1st defendant is a valid defence and this application, in my view, cannot succeed.

18.  I therefore grant unconditional leave to the 1st defendant to defend with costs in the cause.