KEE SHING INDUSTRIAL PRODUCTS LTD v. WAH LAI METAL ARTIFICIAL JEWELLERY FACTORY (a firm)

CACV 224/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 224 OF 2004

(ON APPEAL FROM DCCJ 2115 OF 2003)

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J U D G M E N T

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Hon Tang JA (giving the judgment of the Court):

1.  This dispute arose out of the sale of 3 metric tons of Nickel Square (“the goods”) in October 2002.  The appellant was the seller and the respondent was the purchaser.  This was not the first time that the respondent purchased the goods from the appellant.  There were earlier purchases, in particular, one in September 2001 of 3 metric tons.

2.  There was no written contract. 

3.  The goods were delivered by the appellant to a carrier for carriage to the Mainland.  In relation to the 3 metric tons which were purchased in October 2002 only one ton was actually received by the respondent. 

4.  The appellant sued the respondent for the price of the other 2 tons.  The respondent’s case is that there was an oral term of the contract, (“oral term”) that the respondent was not obliged to pay unless and until actual receipt of the goods in the Mainland has taken place.

5.  At the trial, the appellant was represented by a solicitor, and the respondent was unrepresented.  However, he admitted that had professional help in the preparation of his case.

6.  The statement of claim was simply drafted and essentially claimed the sum of $120,000.00 for goods sold and delivered.  In the defence, the defendant denied receipt either by himself or any agent for him.

7.  Witness statements were filed by the parties.  In the witness statement, it was said on behalf of the plaintiff by Mr Yip Tsz Fai that the defendant had agreed to use a transportation company called “聯榮貿易公司” (“Luen Wing”).  Also that he had faxed an instruction letter to Mr Mak Kwok On, the sole proprietor of the defendant, to sign and confirm the defendant’s instruction on the delivery arrangement.  That instruction letter was produced as Exhibit P1.

8.  In the witness statement filed on behalf of the respondent made by Mr Mak Kwok On, he denied that Luen Wing was his agent.  He also said that although he signed a authorization letter entrusting Luen Wing to transport 3,000 kilogrammes of Nickel Square to the Mainland, he forgot when he signed the letter as there were so many transactions between the plaintiff and the defendant.  Then he went on to say:

“

10.

The said letter was a trap.  It is not regarded as a receipt.  The said letter does not state when and how the goods were delivered.  Neither had the Defendant nor the Company filled out the date of the said letter.  The Company only put a chop on the said letter without signing the same.  Further, the delivery note number and the invoice number were not filled out when I signed the said letter.  Obviously, the delivery note number and the invoice number referred to in the said letter were in someone else’s handwriting.”

9.  Her Honour, District Judge H C Wong in an extempore judgment dismissed the plaintiff’s claim.  It seems on the basis that she was not satisfied with Exhibit P1. 

10.  However, the learned Judge made no finding on the oral term. 

11.  Section 34(1) and (2) of the Sale of Good Ordinance provide:

“34. Delivery to carrier

(1)  Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer.

(2)  Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case.  If the seller omits to do so, and the goods are lost or damaged in course of the transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages.”

So it was essential to the defence to establish the oral term. 

12.  Mr Suen who appeared for the respondent accepted that absent the oral term section 34 would apply unless he could reply on section 34(2).  As for section 34(2) no reliance was placed on it at the trial.  Nor is there sufficient evidence for us to make any finding in that regard. 

13.  As we have said the appellant also relied on Exhibit P1.  This is what the judge said in paragraphs 16 and 17 of her judgment:

“16.  這份文件最大的疑點是託運公司和付運公司在第一、第二項所寫與簽署的委託公司、付運公司是互相調亂了，究竟根據這份文件的證據，誰屬於委託公司，而誰屬於付運公司呢？並不能知曉。就這樣的文件證據，既然原告依賴這一份原告第1項證物，而這項證物內容是不清不楚，法庭又怎可能根據這份證物去裁定誰需要負責呢？原告的丘律師請求法庭因這份文件的證據根據文件備註一欄的責任，判決被告人應當向被告人負責那兩噸貨物的貨款。

17.  在法律上，法庭不可能強逼任何一方去履行一份文件上所列出的責任，若此份文件所登錄的是不清不楚的，尤其是這份文件並非一份合約。如果這份文件屬於一份契約，是以契約形式去訂立，而這份文件亦在落漆封上文件正本，經雙方簽署而生效，一份契約不論有沒有訂立一項代價由其中一方付出，此份文件也可在法律上生效。但觀乎原告證物１並非以契約形式而訂立，而這份文件亦非一份合約，因為文件上沒有指出所應付的代價。正如丘律師所講，這只是送貨安排的文件。既然是送貨安排的文件，又怎可能要求另一方完全負責在貨物未交到手仍須付款呢？”

14.  But even if the judge was right in refusing to rely on Exhibit P1, it does not follow that judgment should have been entered against the appellant.

15.  We accept that Exhibit P1 is a badly drafted document.  It is also not clear from the evidence when or in connection with which transaction it was signed.  The appellant’s case was that it was signed in relation to its particular consignment.  The defendant’s evidence was equivocal.  But this document is likely to have an important bearing on whether or not there was the oral term. 

16.  Mr Suen invited us to find the oral term.  He referred us to the evidence.  But they are not sufficiently unequivocal for us to make such a finding.  As we have said the judge made no finding.  Moreover, we believe any court resolving this issue has to have regard the Exhibit P1 which, despite its unsatisfactory wording, purported to exonerate the appellant from liability for non-delivery by the carrier.  If the oral agreement was subject to the oral term as alleged by the respondent, why did the respondent sign Exhibit P1?  This is an issue which should be determined at the trial.  Nor would the effect of Exhibit P1 depend solely on whether it was signed for this consignment.  The respondent admitted to signing at least one such document.  It would still have bearing on his credibility to consider why he should have signed the Exhibit P1 at all.  This can only be resolved at trial by the judge who hears the evidence. 

17.  Mr Suen also referred us to the invoice dated 18 October 2002, where the payment term was “COD”.  He argued that if delivery to the carrier was deemed to be delivery to the respondent why was not payment expected or required upon delivery to the carrier.  However the delivery address given on the invoice was the Hong Kong address of the respondent, although, the contact telephone number given was a telephone number in the Mainland.  Mr Suen argued that this document is consistent with or supported the oral term.  We would not comment since it is our view that there has to be a new trial.  We do not believe that this document is strong enough to enable us to find that there was indeed the oral term.

18.  We were also referred to an unreported decision of Deputy High Court Judge Lam (as he then was) in Great Bright Limited v Triangle Motors Limited, HCA 7781/1999 (given on 4 February 2002).  But the point in that case was whether certain confirmations absolved the defendant from the performance of his contractual obligations.  It was held that unless the confirmations could be taken as a waiver or variations of the contract, the defendant was obliged to perform its original contractual duties towards the plaintiff, namely to deliver the vehicles to Shenzhen. 

19.  Here, the oral term which required delivery of the goods to the Mainland as a pre-condition to payment of the contract price has not been established.  Unless that was established, it was unnecessary for the appellant to rely on Exhibit P1 as a waiver or variation.

20.  For the above reasons, we allowed the appeal and ordered a retrial.  We also made an order that the costs of the trial below should be in the cause of the new trial.  As for the costs of the appeal, the appellant having been partially successful, we believe that in all the circumstances the fairest order is that the plaintiff’s costs of the appeal should be the plaintiff’s costs in the cause of the new trial.