LEUNG HO YIU t/a KENT LONG TRADING CO v. WINNER GODOWN LTD

1992, No. A662

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

_________________

_________________

Dates of hearing :   6th and 27th November 1992, 27th, 28th, 29th and 30th April, 3rd, 4th, 5th, 6th, 7th, 10th, 11th, 12th, 13th, 14th, 19th and 21st May 1993

_________________

JUDGMENT

_________________

1. The Issue between the plaintiff and the claimant is whether the goods being 742 bags of garments deposited in the defendant's godown ("the goods") are the property of the plaintiff or that of the claimant. By Master Bokhary's Order dated 14/4/92, in respect of the Issue, the plaintiff is treated as the plaintiff and the claimant the defendant. The defendant of the action is not concerned with the outcome of the Issue except to abide by the decision of the court.

2. The parties' cases clash very severely. Very briefly, the plaintiff’s case is a story of he being cheated out of the goods by the claimant without goods from the plaintiff for which she had fully paid in cash but the plaintiff tried to renege from the transaction as she did not agree to an increase in price unilaterally imposed by him after the delivery of the goods on 8/1 /92.

ISSUES

3. The plaintiff raised three main issues for my decision:

(1)   whether the price for the goods had been paid by the claimant;

(2)   what the intention of the parties was as to when property in the goods would pass; and

(3)   whether the claimant had made a misrepresentation to the plaintiff of her intention to pay for the goods, or in other words, whether the claimant obtained the goods by deception.

4. In order to resolve the Issue and these main issues, a number of other issues have to be considered, namely,

(a)   whether the claimant had represented herself to the plaintiff and his wife Madam Chiu Wai-ching (collectively called "the Leungs") that she was called "Miss Sen" or "Sen";

(b)   the time when the Leungs first got to know the claimant;

(c)   the time when the Leungs first carried out a business transaction with the claimant;

(d)   whether the Leungs knew the means to contact the claimant after the delivery of the goods;

(e)   the agreement between the parties as to when payment of the price for the goods had to be made, and by what means; and

(f)    whether the Leungs had unilaterally imposed on the claimant an increase of price for the goods after delivery.

5. The trial of the Issue took altogether eighteen days during which the parties called a number of witnesses. These witnesses were those who had already made affidavits or affirmations in this action and the contents of them were used partly as their evidence in chief. On behalf of the plaintiff, he himself, Madam Chiu Wai-ching ("Madam Chiu"), Mr Law Tak-wo, Mr Chu Kuo-chien gave oral testimony. The claimant herself, Mr Wong Kin-cheong, Mr Fazal Hussain, Mr Ng Tit-hon, Mr Alex Lee Soo-tien and his wife Madam Choy Kit-ying, and Mr Amarsee Ishvar Lal came before me to bear witness for the claimant.

6. The Leungs gave evidence on all the various issues. The Leungs alleged that they first met the claimant sometime in October 1991 and the contract for the sale of the goods was made with the claimant in that month. Mr Law Tak-wo gave evidence in respect of the first time he met the plaintiff and the claimant which was in about September and October 1991. Mr Chu Kuo-chien, the manager of the defendant godown, talked about the dealings that his company and himself had with the claimant as well as events concerning the goods.

7. The claimant gave evidence also on all the various issues. She alleged that the contract was in writing and there was also a receipt for the initial deposit she paid in cash under the contract. Both documents were burnt or destroyed during a fire that took place in January 1991 in Chung King Mansion in which her shop was situate. Mr Wong King-cheong from the Fire Services Department as well as Mr Ng Tit-hon, a contractor who repaired the claimant's shop, were called to tell me about the fire and the damage to the shop. Mr and Mrs Alex Lee were subpoenaed by the claimant to come to give evidence to discredit the Leungs' case that they first came to know the claimant in October 1991. Mr Fazal Hussain told me that he lent cash to the claimant and he witnessed payments made by the claimant to Madam Chiu on two occasions. Mr Amarsee Ishvar Lal was called to tell me the practices of traders to make payments in cash.

THE PARTIES' CASES

The plaintiff’s case

8. The plaintiff traded in the name of Kent Long Trading Company, a manufacturer of gamments. He and his wife Madam Chiu ran the business. The plaintiff did not know too much English which was the language used by the claimant. Although he was present on most if not all occasions when the parties dealt with each other, it was Madam Chiu who conversed with the claimant in English and his knowledge of what was being said was derived from what he was told by Madam Chiu. The plaintiff’s evidence is that he first got to know the claimant when he made delivery of some goods to Mr and Mrs Alex Lee ("the Lees") in October 1991 at Hanoi Road when he saw the claimant together with Madam Choy Kit-ching ("Mrs Lee"). With the help of Mr Law Tak-wo, he removed the goods to Gobo's premises on the 2nd floor of a building in that road. Madam Chiu's evidence is mainly contained in her affirmation of 27/1/92. She said that it was on 15/1 0/91 at the Malaysian Restaurant at Mody Road, Tsimshatsui, Kowloon that she agreed with the claimant who called herself Miss Sen regarding the sale of about 11,000 dozens of garments that could be produced by the end of November 1991 at a price of about $700,000. However, the claimant refused to pay a deposit for the goods and suggested cash on delivery that she would go to her bank to transfer the price to Madam Chiu's bank account upon or shortly after delivery. Madam Chiu reluctantly agreed to this arrangement, though she subsequently kept on pressing the claimant for a deposit.

9. The gamments were manufactured in the plaintiffs factory in China and were ready by the end of November 1991, but it was in the period between 17/12/91 and 8/1 /92 that the two ladies agreed that the goods were to be delivered on 7/1 /92. The claimant was still unwilling to pay any deposit but instead told Madam Chiu that she kept her money in Citibank and that Madam Chiu should open an account with Citibank for ease of transfer of the purchase money from the claimant's account to Madam Chiu's account. Madam Chiu did on or about 7/1/92 open a current account and a savings account with Citibank and apply for a Citicard.

10. At about noon time on 7/1/92, Madam Chiu met the claimant at the back of Hung Hom Railway Station for the purpose of delivery. As there was some delay at the border that day, they agreed that delivery should take place at the Hung Horn Public Cargo Area at noon time the following day, i.e., 8/1/92.

11. On 8/1/92, the plaintiff, his brother-in-law Wong Chu-hau and Madam Chiu met the claimant at the Hung Hom Public Cargo Area. The lorries hired by the claimant were waiting at an area near the International Mail Centre at Hung Hom and so all went there. The goods were then transferred from the trucks from China onto the lorries hired by the claimant. As no deposit nor any part of the purchase money had yet been paid, the plaintiff and Madam Chiu were careful to try to keep track of where the goods went. They took down the address shown on the door of the lorries hired by the claimant, and Wong Chu-hau was sent to hire a taxi to follow one of those lorries. Wong Chu-hau found out that the lorry delivered its load to the warehouse of the defendant Winner Godown Limited.

12. At about 3:30 p.m., the re-loading of the goods had not yet been completed, but Madam Chiu was anxious to obtain payment for them. She asked the claimant to go to the bank with her to transfer money into her account, but the claimant said that she had to remain there to supervise the re-loading of and count the goods and told Madam Chiu not to worry. At about 4:30 p.m., the reloading had completed and the Leungs, Wong Chu-hau and the claimant went to the coffee shop of the Holiday Inn Hotel in Nathan Road where the claimant alleged she was staying. The arrangement was to be that if Madam Chiu did not trust the claimant, she could stay the night in a hotel room there booked by the claimant and the purchase money could be transferred the following morning. However, about half an hour later, on the excuse or pretext of getting some money that she kept in the hotel's deposit box, the claimant disappeared. It was at about 7:30 p.m. that the Leungs realised that they were deceived by the claimant and the plaintiff went to report the matter to the Tsimshatsui Police Station, but the police there refused to deal with the case.

13. The Leungs went to Minden Row, according to the address shown on the lorry door, to locate the lorries hired by the claimant and on the next day, i.e. 9/1/92, they were able to find that all the goods were stored in the defendant's warehouse. They then made a report to the Tsuen Wan Police Station in order to protect the goods and locate the plaintiff. Shortly thereafter, an injunction was obtained to restrain the defendant from releasing the goods.

14. By an inter partes swnmons dated 13/3/92 served on both the plaintiff and the claimant, the defendant interpleaded and as a result the Order of Master Bokhary was made on 14/4/92.

15. Madam Chiu's oral evidence verified the facts I set out above. She stressed that the transaction in issue involved the largest amount of business that she and the plaintiff had done so far for the past 10 years and that it was the first ever transaction she had with the claimant. She described how many times she pressed the claimant for the payment of a deposit which was usually 30% of the price and how the claimant refused to pay every time. She said the claimant represented to her that she stayed alternately between Hong Kong and the United Kingdom every two weeks and that the claimant or her husband had a shop in England the name of which she did not remember.

The claimant's case

16. The claimant's evidence is to the effect that she agreed with Madam Chiu to purchase 800 bags of gamments for about $350,000 in January 1991. She had a shop in Chung King Mansion for a number of years. The transaction in issue was not the first one done with Madam Chiu. They had had business dealings since the beginning of 1990 and Madam Chiu had come to her shop many times. The transaction in issue was initiated at the beginning of 1991. There was a contract in writing and she paid the first sum ofUS$15,000 in cash, for which Madam Chiu gave her a receipt. However, both the contract and the receipt were lost during a fire in January 1991 at Chung King Mansion. She paid 3 other sums in cash to Madam Chiu: $60,000 in March 1991, $80,000 in September 1991 and $85,000 in October 1991. The 4 sums totaled about $342,000. For all the 3 later payments there was no receipt. She trusted Madam Chiu and people doing business in Chung King Mansion always used cash without a scrap of paper as evidence. The 2nd and 4th payments were witnessed by a friend of hers, Fazal Hussain, who also ran a business in Chung King Mansion. On those 2 occasions, Fazal Hussain lent respectively $20,000 and $25,000 cash to the claimant in her shop where he saw Madam Chiu and heard the claimant mention the sums in cash paid by her to Madam Chiu. Fazal Hussain gave evidence in support and said that there was no receipt for his 2 loans to the claimant either.

17. Pausing here for a moment, there was a diary for the year 1991 (Exhibit P8) produced by the claimant at the request of Mr Jat for the plaintiff during her cross-examination. In this diary, there were 3 significant entries: the entries showing the payments with months, the total of the payments being $342,000 and the telephone and pager numbers of the plaintiff.

18. Thereafter the claimant chased Madam Chiu for delivery of the goods and eventually Madam Chiu told her that the goods would be delivered on 7/1/92. However, there was some trouble with the trucks at the border on 7/1/92 and it was on 8/1/92 that the goods were delivered. The claimant’s story is that she did not have to pay any more because not all the goods ordered by her had been delivered. She said that she had been known as Sushima and not Sen as the Leungs would now call her, and they knew her shop in Chung King Mansion and Madam Chiu visited her shop a number of times before the contract and thereafter.

ASSESSMENT OF WITNESSES

19. Counsel for both parties asked me not to accept the evidence given on behalf of their respective opponent, because there were a number of discrepancies in it and it was unsatisfactory and unreliable. In deference to the arguments of counsel and the amount of hard work they must have put into their submissions, I would first deal with my impression, assessment and conclusion on each of the witnesses who testified before me.

20. PW1 Madam Chiu Wai-ching, wife of the plaintiff. I consider her to be a careful business woman who has helped her husband who used to be a garment factory worker to establish a business in the manufacturing and selling of garments. However, the Leungs were not sophisticated business people, nor did they run their business in the manner as any proper business concern. The plaintiff used to be a worker in a garment factory dealing with tailoring of garments, rising to the rank of a factory floor foreman. He started his own business of selling garments in the street or to retailers about ten years ago. Madam Chiu’s assistance to the business, on the evidence, lay mainly on the sales side. Her understanding of some English helped, and she was therefore responsible solely for dealing with the claimant who was English speaking vis-a vis the Leungs. I consider her to be basically an honest witness although there are some discrepancies in her evidence. What is important is her behaviour and that of the plaintiff in the span of less than twenty-four hours since the completion of the unloading of the goods in the afternoon of 8/1/92. Had the Leungs been fully paid for the goods delivered and merely wished to increase the price for the goods already delivered, I would have thought that they would not go to the extent of making a false report to police that evening and going to Minden Row to find the drivers of the lorries hired by the claimant that night and early next morning, and further going to Winner Godown to look for the goods and making another false report to the Tsuen Wan Police Station so soon after the delivery. Would this hurly-burly have been caused by the fact that they were pressurising the claimant to pay an increased price? I have no doubt that cannot be the case. If they be friends with police officers and triad members as alleged by the claimant, the Police would hardly have arranged for Madam Chiu to be identified by the claimant and Fazal Hussain. Nor is there any evidence from the claimant that she was in anyway approached by any thugs after 8/1 /92. Had the Leungs truly wanted to impose unilaterally an increase of price, they would have done it before delivery, when their bargaining position would have been much stronger. If they were as crooked and wicked as the claimant suggested, there was no reason why they should so easily have let the goods leave their possession. If they did not deliver the goods upon the claimant not agreeing to pay an increased price, what they would face would only be a law-suit for non-delivery. Their delivering the goods first and demanding an increased price afterwards uttered with threats, to my mind, borders on absurdity.

21. Madam Chiu's carelessness in not obtaining payment of the price was caused by the desire to carry out this transaction, which was the largest amount of business that she and her husband had ever done and the hope that more business involving sizable amounts would be forthcoming from the claimant. It would be a break-through for her and her husband. Despite her agreement to COD terms with the claimant when the oral agreement was concluded on or about 15/1 0/91, she kept on pestering the claimant for payment of a deposit. The claimant's story is the same that Madam Chiu kept seeking payments from her, although of course, she said that she succumbed to such pressure and paid. Whilst I do not believe Mr Alex Lee's evidence generally, his story concerning Madam Chiu's pestering for payment was consistent with Madam Chiu's behaviour.

22. PW2 Leung Ho-yiu, the plaintiff. There are a number of discrepancies in the plaintiff’s evidence. Mainly, the discrepancies exist in the evidence of the plaintiff himself. He is a man who has a smattering of the English language like "yes", "no", "telephone me" etc. mentioned in his evidence in English. As a result, it was Madam Chiu who dealt and conversed with the claimant throughout the negotiations and all dealings between the parties, which is common ground. The plaintiff often said in evidence what he was told by Madam Chiu as to what had happened, without objection from Miss Chow on the ground of hearsay. Having observed the plaintiff in the witness box for two days, and bearing in mind the way he answered questions, I am of the view that his memory is weak. He is verbose but inarticulate, because he could not explain a simple matter in a simple way. Not that he can comprehend complex matters, but he complicates matters for himself. His style of answering questions is to give a rambling of various events or conversations but not addressing the point. He was sometimes insistent but incoherent, constantly missing the point, inconsistent but nonetheless frank. For instance, when he was cross-examined by Miss Chow, he said in one breath that Madam Chiu alone returned to the coffee shop of the Holiday Inn, but in the next breath he said she did not return and it was rather that he went to fin her; he talked three times about his statement to the police dated 9/1/92 as what he had written, but in fact, he did not write the statement himself which was taken by a police officer from what he said. The court interpreter experienced great difficulty in translating his evidence because he talked in a rambling way and inconsistently in answering questions and the sense of what he said was difficult to grasp. In the circumstances, and in view of that common ground that all the dealings between the parties were carried out between the claimant and Madam Chiu, I do not attach much weight to the plaintiffs evidence, save for bits and pieces about what he actually did, like his scolding of his wife (Madam Chiu) upon learning from her that the claimant had disappeared despite his impressing upon her not to lose sight of the claimant at the Holiday Inn, and his scolding of Madam Chiu when he learned that Madam Chiu had given invoices for the goods to the claimant because he only issued invoices to customers when he had been paid the purchase money. I do not take the discrepancies in his evidence against him to indicate untruthfulness because despite all his failings in giving evidence to the extent of being annoying, I do not find him basically dishonest. If I may be forgiven to say so, he is simply too stupid to lie and it would be extremely unlikely that this man was one who cheated the claimant and made a false report to the police as soon as the claimant disappeared from the Holiday Inn in the evening of 8/1/92. Anyhow, all the discrepancies in his evidence are on peripheral matters and do not touch upon the particulars of the matters agreed between the parties and whether any payment of the price for the goods was received by him or his wife.

23. PW3 Law Tak-wo gave evidence that he accommodated Mrs Lee in about September or October 1991 to allow goods to be stored at the premises of his elder brother's business called Gobo situate on the 2nd floor of a building in Hanoi Road. That was the first time he met the plaintiff and the claimant together with Mrs Lee. He helped the plaintiff remove goods from Hanoi Road to Gobo's premises. I find him to be an honest man, who came to give evidence for the plaintiff instead of siding with the Lees who were his friends and former neighbours in business. I just cannot figure out any motive from which he would lie. He simply told me what happened in September or October 1991 when Mrs Lee borrowed his brother's business premises to store some goods, and that Mrs Lee told him that the Indian woman with her was her friend in the presence of the plaintiff. What is impressive in his evidence and carries the tone of truth is that he was able to say that the Indian woman was staying inside Gobo's premises, sitting there and smoking.

24. PW4 CHU Kuo-chien, the manager of the defendant godown, is an old gentleman who was in charge of the running of the godown. There again is no conceivable motive why this man talked ill of his client, the claimant. He just told me the facts he knew. I have no doubt that he is an honest witness. I believe his evidence.

25. DW1 the claimant. She admitted to be a free-lance interpreter employed for about 30 days in court every year by the Chief Interpreter. However, she gave her evidence in English which was sometimes broken and always ungrarmmatical. On many occasions, she said she did not understand the question, and even when it was repeated, she did not answer. I think she was just buying time to think and to concoct.

26. The way that the claimant made up her accounts for preparation of her tax return was shocking. She said she did not keep any records, but she had a rough idea of all the transactions for the year when she took a piece of paper and wrote down the accounts at the end of the year for her accountant to prepare the tax return for her.

27. There are at least 5 sheets (i.e., 10 pages) tom away from the 1991 diary she produced during cross-examination (Exhibit P8); one of the sheets contained the dates between 19/9/91 and 25/9/91, three sheets contained the dates between 17/10/91 and 6/11/91, and one sheet covered the dates between 14/11/91 and 20/11/91. The claimant told me that she tore off pages of her diaries if anything incorrect like a telephone number of a person was written on them. Mr Jat suggested that these 5 sheets were torn away because they might include information in relation to the claimant's transaction with Mrs Lee (regarding the October 1991 delivery made by the plaintiff to Mrs Lee in Hanoi Road) and to the transaction in issue. I do not think I should enter into the realm of speculation, but I just do not accept the reason given by the claimant for these sheets in the diary to have been destroyed.

28. There are, however, entries in this diary relevant or relating to the issues in this case. The telephone and pager numbers of the Leungs in Madam Chiu's handwriting appear on the 2 pages spanning the dates of 7/10/91 to 12/10/91. On one of these 2 pages, there is a notation "342000 HK$ paid in 4 instl." Also on the 2 pages covering the dates from 28/1 /91 to 3/2/91, entries were made showing the following:

Jan 1991 US 15000 -- 78000+39000
March 1991 60000 HK
Sept. 1991 80000 HK$
Get. 1991 85000 HK$
78000
39000
60000
80000
85000
342000

29. The claimant's evidence is that she wrote these figures showing the payments she had made to the plaintiff in respect of the transaction in issue. The diary was not listed on discovery and was only produced in court after one day of cross-examination of the claimant. I do not believe her evidence that these entries of payments were written respectively in March or April 1991 showing her alleged January and March 1991 payments, in September 1991 regarding her August or September 1991 payment, and upon her payment of the last instalment in respect of her alleged October 1991 payment, or else her solicitors would have included this diary in discovery of documents in these proceedings. Nor do I accept her explanations as to why this diary was not included in her discovery. Albeit the relevant entries in the diary being self-serving, they must be relevant to the key issue to be decided, which is whether she paid $342,000 to the plaintiff. I do not accept her allegation that her solicitors had simply brushed aside the diary as not helpful, for in the absence of any documentary evidence of her alleged payments, this diary must be treated as her own record in support of at least her alleged times of the payments.

30. In the course of her cross-examination about whether she was present when the plaintiff removed goods to Gobo's premises in October 1991, she denied that her handbag knocked down a piece of jade rabbit and the shopkeeper there demanded compensation from her. When a copy cheque dated 8/10/91 drawn on Citibank for $120 was produced (Exhibit P7), whilst she admitted that it was drawn by her, she denied that she issued the cheque to any shopkeeper. She also said that she did not know whether the cheque was dishonoured. She went on to say: "I do not remember to whom I have given this cheque, but if it has bounced, he can always come to my shop, and in the past many of my cheques bounced." She then said that for large amow1ts like US$15,000 and $85,000, she received and paid in cash. She issued cheques for amounts only ranging from $60 to a maximum of $4,000 to $5,000 because sometimes it was not possible for her to pay in cash. When put that her account with Citibank did not have $120 in October 1991, she said: "I did not know how much was there and when the account was closed." She claimed that she issued the cheque because she wanted to finish the amount if there was any amount, or otherwise the bank would charge her handling charges every month. However, she agreed that with or without any money in her account, she would be charged handling charges until she formally closed her account.

31. I do not view this evidence concerning the cheque as being any proof that the claimant was at Gobo's premises in October 1991. What is important is that the claimant had made a shocking admission of how recklessly or even dishonestly she behaved in her monetary affairs. She just issued a cheque not knowing whether the account upon which it was drawn was closed and not knowing whether there was sufficient money in the account to cover it. What she wanted to do by issuing the cheque was to finish the amount if there was any amount in the account, in order to avoid the bank charging her handling charges. She also admitted that in the past many of her cheques had been dishonoured. This fairly indicates the low standard of commercial morality and the high degree of recklessness or even dishonesty practised by the claimant. Her evidence relating to her dealings with the Leungs should be viewed in that light.

32. I shall further comment on various aspects of the claimant's evidence later on. My impression of her as a witness is that she was vague, evasive, pretending not to be able to understand questions when cornered in order to gain time to think and to concoct, pushing blame to others when trying to extricate from an inconsistency, and her evidence is most untrustworthy and most unreliable. My conclusion is that she is extremely dishonest and I simply do not believe her.

33. Not all the witnesses testifying for the claimant are dishonest and unreliable. For instance, I find that DW2 Mr Wong Kin-cheong, DW4 Mr Ng Tit-hon and DW6 Mr Armasee are honest people.

34. DW2 Mr Wong Kin-cheong from the Fire Services Department told me the fire in Chung King Mansion started in the night of 16/1/91 and how badly the premises were burnt. He said that the claimant's shop at 95A on 1/F was seriously damaged. Although he did not remember exactly the extent of damage to various areas on the 1/F affected by the fire, I think he is an honest witness and therefore I accept that the claimant's shop was severely damaged by fire that took place on 16/1/91 and 17/1/91 and nothing kept in the shop could have been saved, let alone documents. However, this does not mean that there were the contract and receipt for US$15,000 both signed by Madam Chiu as alleged by the claimant.

35. DW4 Mr Ng Tit-hon is another honest witness, but his evidence only established that the claimant's shop in Chung King Mansion was severely damaged by fire.

36. DW6 Mr Amarsee Ishvar Lal, a good friend of the claimant, said that there were borrowing and lending transactions between the claimant and him. He lent her a sum of money in the last six months, between $20,000 and $35,000, but strangely enough, he did not remember the exact amount. Apart from this, there is nothing to discredit his evidence. He just stated what normal businessmen would usually do regarding payments and documentary receipts. If there was no trust amongst them, then they would demand cash even before delivery of goods; and if they paid cash, they would usually get a receipt; and if he delivered goods to people on consignment whom he doubted, he asked for a receipt for the goods. Making loans to friends was a different matter to him: if you don't trust the borrower, you don't lend; and you only lend to good friends; if the good friend repays, well and good, but if the good friend does not repay, then it follows the spirit of the Indian saying "When you lend money to your friend, don't expect to get it back."

37. His evidence, as well as that of Mr Wong Kin-cheong and Mr Ng Tit-hon, however, do not help the claimant as it does not touch upon the main issues of this case.

38. DW3 Mr Fazal Hussain told me that he lent two sums of money to the claimant, $20,000 in March 1991 and $25,000 in October 1991, and not only that, there was no receipt or any written document from the claimant to evidence the loans. Moreover, when he lent the money, on each of the occasions, he went to the claimant's shop and saw the claimant hand a sum of money to Madam Chiu, claiming that it was $60,000 in March and $85,000 in October. He only started to run his own business 3 years ago, and the business was a small one involving an annual turnover of about $200,000, bringing him $7,000 or $8,000 a month. Before that, he was working as a security guard in the Hang Seng Bank and later worked as an office assistant. I have grave doubts how such a person could have parted with large sums of money so easily and without obtaining proof. What is strange in his evidence is that he said that neither Madam Chiu issue a receipt for the sums she received from the claimant, nor did the claimant ask for one. This contradicts the claimant's evidence that she kept on asking Madam Chiu for a receipt. This witness, Hussain, was evasive and kept on changing his answers. I find him not truthful or reliable.

39. DW5 Mr Alex Lee Soo-tien is a garrulous man, and in fact, his lengthy and expressive language betrayed the untruthfulness and unreliability of his evidence. He often gave a long speech which did not answer the question, and he kept on changing his evidence. He said at first that he did not know the Indian lady who the Leungs claimed to have deceived them, but he agreed that the Leungs told him that Ah Sen had deceived them. Later on, he even told me the name of the claimant being "Susima". He said he first knew the Leungs before the fire in Chung King Mansion in January 1991, but he later told me that it could be in April or May 1991. He further said that had he not known the Leungs earlier than the fire, the goods delivered by the Leungs would have been burnt by the fire and he would be a pauper, and that the goods were delivered long before the fire. What is most revealing is his reference to poaching of the claimant by the Leungs, which he likened to his girl-friend being poached. This he uttered in the late afternoon of the hearing on 12th May 1993. But on the next morning, he volunteered to tell me that he had not heard the word "claimant" and only heard "poach", and then went on telling me his suspicion that the Leungs had successfully poached his suppliers or customers at the packers' in Texaco Road, Tsuen Wan. Yet his suspicion was based simply on the fact that the Leungs had not for 10 months contacted him or shown him samples, and he did not bother to check if his suspicion was justified. That is most inconsistent with his reason why he ceased dealing with the Leungs after they delivered to him the goods ordered by him, as stated in his affirmation, that he was dissatisfied with their late deliveries. He could not give any satisfactory explanation as to why he made 2 affirmations at the request of the claimant or her legal representatives while he was adamant that he refused her as well as the Leungs in the same unceremonious way to help them with evidence. 1 do not believe his evidence, not only on the basis of the stark inconsistencies in it and the nebulous way he answered questions, but also on the ground of his admitted bias against the Leungs, although more than once, he said he came to give evidence in the name of justice.

40. DW7 Madam Choy Kit-ying, the wife of Mr Alex Lee, who in her affirmation stated that she saw the claimant on the occasion when the last batch of goods she had ordered from the plaintiff was delivered by him to Gobo's premises. She told me that she did not know why the claimant was there. She said: "l met her by chance, not only once but on many occasions. On many occasions, people doing the same trade, especially living in the neighbourhood, bump into each other from time to time. "

41. When asked if she said in her affirmation "I do not know why she followed to Gobo's premises as she had nothing to do with the arrangement of the goods", Mrs Lee said: "Well, my understanding of the English language is quite limited. I don't known what's put here in the affirmation by the solicitors for the other party. I was asked questions and I answered. I said something to the effect that I bumped into the Indian woman in the street. I said to myself 'Touch wood. I am going to receive goods. How come I bump into a person dealing in the same trade.' I said I only said hello to her and we waved at each other."

42. She then volunteered: "I wish to add something. Well, basically when dealing in business, we tried as much as we can to protect ourselves. We don't want to disclose our buyers to our manufacturers and likewise we don't want to disclose our manufacturers to our buyers. ..."

43. The underlining above emphasising the parts of this lady's answers is mine. In the rest of Mrs Lee's evidence, she was insistent that the claimant had never bought goods from her and that the claimant did not go to Gobo's premises on that occasion. If it was but a chance meeting, why should she have given such answers and volunteered this long information? If the claimant was but a neighbour to whom she only said hello and waved her hand, why should she have remembered even seeing her on that occasion? Right at the beginning of her evidence, she denied knowing what business the claimant was doing and at almost the end of her evidence in chief, she again said she did not know the nature of the claimant's business, but here, she impliedly admitted that the claimant was her customer, because the plaintiff was her manufacturer and she said she feared to let her manufacturers know her customers and vice versa. But she was adamant in denying that the claimant was the buyer of this last batch of goods delivered by the plaintiff and that she had any dealings with her. Even her short expression "touch wood" betrayed her denial. That expression in the sense used by her was similar to "Oh God!". Her evidence as quoted gives rise to a very grave doubt as to whether she was telling me the whole truth, although if I may say so, she was a cleverer witness than her husband who claimed that she was illiterate not only in English but even to the extent of writing cheques in Chinese wrongly. The explanation at the end of her evidence in-chief that "people in the same trade meant people dealing in business upstairs and. downstairs" in Chung King Mansion cannot erase the effect of or explain the expression "touch wood".

44. What impresses me further as the indicia of untruthfulness and unreliability is that both Mr and Mrs Lee openly claimed that they came to court to tell the truth and not for any party, and they came to court for justice. Mrs Lee even asked me a number of questions to show that she was friends with both parties and, I have no doubt, in an attempt to induce me to confirm that she was giving evidence purely in the name of justice, and not for any party. I feel I just cannot rely on their evidence insofar as it is inconsistent with that of the Leungs and Mr Law Tak-wo.

45. It also appears to me that the Lees refused to bear witness for the Leungs for the following reasons: Mrs Lee did not actually introduce the claimant to the plaintiff. They thought the Leungs' story was unbelievable, inconceivable and impossible. They thought that they were not involved at all and whatever they had done, they did not cause the misery that the Leungs claimed to be suffering. They wanted to wash their hands off the whole thing as not being caused by them. They were furious that the Leungs had poached the claimant who used to be their customer. They were also irritated or jealous that the Leungs gave the claimant such a good deal as not even receiving a deposit of 30% or indeed a cent from her for such a large transaction whereas the Leungs used to require them to pay the deposit and various payments to help out. Looking at the behaviour of Mr Lee in answering questions, I am firmly of the view that it was more because of the fury and annoyance with the Leungs that the Lees decided to help the claimant. With that fury, disbelief, exculpatory sense, and wish for vengeance, they mesmerised themselves to believe that whatever the Leungs were suffering was not caused by them and therefore they denied any knowledge of the plaintiffs meeting with the claimant during the delivery in Hanoi Road. In this connection, Mr Lee's not infrequent use of the word "subconsciously" fares as an illumination.

46. It is based on all these matters that I find the Lees' evidence unreliable and untruthful. The unreliability and untruthfulness of their evidence was betrayed by the instances I have demonstrated above. Insofar as their evidence is inconsistent with that of the Leungs, I reject it.

EVALUATION OF THE EVIDENCE

The plaintiffs story

I have observed Madam Chiu when she gave her oral testimony. She appeared to me to be quite careful in her dealing with the claimant. She had never said that she trusted the claimant. At the meeting on 15/1 0/91 in the Malaysian Restaurant, the claimant impressed upon Madam Chiu as to her wealth. At a subsequent meeting in December 1991 in the same restaurant, the claimant brought along Hussain. Hussain impressed upon Madam Chiu as to the trustworthiness of the claimant. On the other hand, the Leungs were desirous of doing this transaction with the claimant which was the largest that they had ever done. Despite this, the Leungs were always dissatisfied with the situation that no deposit had been paid by the claimant. They were careful as they had not been paid. That was the reason why Wong Chu-hau was sent to follow one of the lorries to see where the goods were delivered and they tried to keep a close eye on the claimant in the Holiday Inn after the delivery.

47. Arguments unfavourable to the plaintiffs case can be suggested. There was absolutely no reason why Madam Chiu or the plaintiff did not get even a cheque from the claimant even if it was true that time was getting too late for them to go to a bank for the transfer of money in the afternoon of 8/1/92 when the re-loading of the goods was completed. Nor was there anything signed by the claimant even for acknowledging the receipt of the goods. If the claimant intended to deceive the plaintiff of the goods, would she permit the plaintiff to find out where the goods were stored? Would she have used a godown that she had patronized before and which knew her name and phone numbers to store the stolen goods so as to facilitate herself being located? Would she not have sold on the stolen goods so that she could pocket the ill-gotten gains first and let the plaintiff fight the matter out with whoever bought the goods from her? If the plaintiff’s story is true, why did he and Madam Chiu not go to the godown the night of 8/1/92 when the police refused to accept their case? The brother-in-law knew about the godown. Why did the plaintiff and Madam Chiu waste time and energy on Minden Row instead of going to the godown straightaway shortly after 7:30 p.m. Without a cheque from the claimant, and when the transfer of funds as allegedly promised did not materialise, would Madam Chiu truly intend to stay with the claimant through the evening and night of 8/1/92 had the claimant not disappeared? But Madam Chiu was worried only about the claimant obtaining money from the safe-deposit box with the hotel to buy them dinner.

48. Against these criticisms the evidence must be examined. It is the claimant's own evidence that she never gave a cheque for any amount over $4,000 to $5,000, and Madam Chiu was not asked in cross-examination why she did not ask the claimant for a cheque. The argument that Madam Chiu did not even seek to get a cheque from the claimant in the late afternoon of 8/1/92 after the goods had been delivered can therefore not be justified. There was also no reason why Madam Chiu should have asked for a cheque in view of her expectation that the transfer of money through bank accounts was imminent. Madam Chiu and the plaintiff were simply not careful enough to ask the claimant to acknowledge receipt of the goods, as they were careless enough to let the claimant disappear from the Holiday Inn.

49. It was because they had not been paid for the goods that the plaintiff and Madam Chiu took the precaution of writing down the address on the door of the lorries hired by the claimant and of sending the brother-in-law to follow one of the lorries to see the destination of that load of goods. The claimant said that Wong Chu-hau did not leave the scene of re-loading. Perhaps she failed to notice his departure, or she did not know where he was going, or she did not care about" it at all. I would accept that if the claimant intended to deceive the plaintiff of the goods, she would not have permitted the plaintiff to find out where the goods were stored. But if the location of the goods by the plaintiff could not be avoided, she could still play for time and hopefully could get the goods disposed of before the plaintiff could lay a hand on them.

50. Moreover, if the plaintiff did not use the Winner Godown to store the goods before she could finally dispose of them, where else could she have kept the goods? There were 742 bags of goods occupying 3 10-tonne trucks from China or 7 loads of the lorries hired by the claimant. She could not well have put the goods in her own shop having an area of about 60 to 70 sq.ft. or in her residence which, considering the price she paid for it, would not be of any large area. If she was located by reason of the telephone numbers or her address kept in the records of Winner Godown, she could deny having failed to pay the price or she could even disappear. In fact there is some evidence that even the police failed to locate her for quite some time after 9/1/92. She would have sold on the goods so that the plaintiff would be left to fight the matter out with whoever bought the goods from her, had she had the opportunity which was denied her by the vigilance of the plaintiff in getting an injunction.

51. The Leungs had acted with vigilance, albeit not totally satisfactorily. In the afternoon of 8/1/92, when the unloading of the goods was finished, there was insufficient time for the promised transfer of money to take place. They stuck to the claimant and went with her to the Holiday Inn. They were prepared to spend the night with the claimant. Madam Chiu was careless in losing sight of the claimant on the excuse of her (the claimant) going to get some cash from the safe-deposit box with the hotel manager to buy dinner. Even if they had intended to have Madam Chiu stay with the claimant through the evening and night of 8/1/92, that chance of not losing sight of the claimant had gone. After the claimant had disappeared, the plaintiff scolded Madam Chiu who was rendered into tears. They were anxious and at their wits' end. Upon being reasonably sure that the claimant had fled, the plaintiff went to make a report to the Tsimshatsui Police Station in Austin Road, but he was unable to persuade the police there to start helping him or making investigation. They did not go to the godown that evening because of what Wong Chu-hau told them that the godown was closed for the night.

The claimant's story

52. I come to examine the claimant's story. I have already set out her case above.

53. The defect in the claimant's story is that the full amount of the purchase money for the goods had been paid in cash by four instalments and there was not a single piece of paper evidencing the payments, save for the entries in her diary which I referred to before. Even accepting that sometimes people in Chung King Mansion and even elsewhere in Hong Kong would do business in cash without any scrap of documentary evidence, it is hard to believe that the trust reposed in each other by the people involved would enhance their memory. How on earth would a trader be able to remember all these sums of cash passing hands horn so many different customers, suppliers, lenders and borrowers, and in this case, also money allegedly received horn relatives and friends? Without a scrap of paper written or signed by the person who is obliged to pay or who has received payment, how would the involved parties resolve their disputes should such disputes, albeit innocently, arise as a result of fading of memory? It is not a single loan which has been repaid before another loan horn the same person is made. In this connection, Hussain's alleged loans to the claimant are examples. If the claimant's story is true, and if Hussain's story is true, how would they be able to remember the exact amount of each transaction, loan or other monetary obligation? As far as Hussain's alleged loans to the claimant are concerned, he said he expected the plaintiff to repay his March 1991 loan of $20,000 within a matter of days, but the plaintiff did not repay him. He went on making another loan of $25,000 to the claimant in about October 1991, with her promise that the goods for which she needed the money would arrive shortly. In fact, the only nearest thing for him to get a repayment of $45,000 was on 7/1/92 when the claimant brought him along to await the arrival of the goods. Was Hussain going to charge any interest on the sums? He cannot remember the exact date when the moneys were lent, and therefore there could not be a precise date for him to commence charging interest, even if he wanted. He was doing business in a small way, with a turnover of around $200,000 a year, and an alleged profit of $7,000 to $8,000 a month. He had been running his own business only since September 1990 and before that he worked as a security guard with the Hang Seng Bank and an office assistant with an Indian trading firm running errands like delivering samples, etc. How was he able to cope with lending so much money to the claimant? He also said that there were many mutual loan transactions between him and the claimant. Throughout their evidence, there were many things they said they did not remember. Without any record amongst both of them, I am firmly of the view that it would be impossible for them to remember. I believe that both the claimant and Hussain did not keep good records for preparing their tax returns, but that tells against their honesty and credit because this haphazard way of their keeping records or keeping no records would result in concealing or destroying evidence that is against their interest. I do not believe them that they had no records of the alleged cash transactions between them if they in fact took place, for such records would be a very useful means to protect their interest which they would certainly have employed when parting with such an important thing as money.

54. The claimant's position is still worse, because if Madam Chiu or the plaintiff were to deny receipt of the purchase money or a part thereof, how is she going to prove it? If a receipt was issued in respect of the US$15,000, why not the 3 later payments? The claimant would have me believe that it was the practice of Madam Chiu in the 3 alleged prior transactions and the present transaction in issue that only a receipt would be issued in respect of the initial deposit of 30% of the contract price, but no receipt would be issued for any later payments. I just do not believe that there was such a practice, and with the persistent character of the claimant which I gathered from her demeanour when giving evidence, I do not believe that she was so easy-going as to enable Madam Chiu to get away with not issuing any receipt to her upon her constant demands.

55. Even if it is true that the contract and the receipt for US$15,000 had been destroyed by fire, why did the claimant not ask Madam Chiu to issue another receipt in replacement? The claimant told me that she did request or demand a formal receipt from Madam Chiu so very often. If Madam Chiu should refuse (for whatever reason, justifiably or otherwise), why did the claimant not ask her for a receipt for the 3 payments in cash made subsequent to the fire? When the contract and receipt for US$15,000 had been destroyed by the fire, there should be more reason for the claimant to request documentary receipt for the 3 subsequent payments. Indeed, the claimant's own evidence supports this reasoning. She said that she made further payments in September and October 1991 because if she did not do so, she feared that she might lose the money previously paid to Madam Chiu, because she had no receipt for the $60,000 paid in March 1991 and she had her proof by way of the contract and the receipt for the US$15,000 burnt in the fire. She well appreciated the risk and she realised her predicament. Yet she kept on allowing Madam Chiu to get away with not issuing any receipt and worse still, she kept on paying. She said she was mum about the documents having been destroyed in the fire, for fear that Madam Chiu would not deliver the goods to her. There was simply no reason for her to fail to get a receipt from Madam Chiu for all the monies that she said she had paid, if in fact they had been paid.

56. When cornered with this reasoning, the claimant created a contradiction in her evidence by saying that she trusted Madam Chiu and that it was merely a matter of time that the goods would be delivered. If it was truly a matter of trust, then why in the first place was the contract or at least the receipt for US$15,000 required? Why should the claimant have allegedly gone to the extent of writing out all the particulars of the goods and time of delivery, price and time of payment for Madam Chiu to have them typed as a contract and having two copies signed by the parties? While Madam Chiu was willing to do the errand of having a type-written contract prepared for getting the business from the claimant, there can be no logical reason why she was not willing to issue a receipt with the allurement of getting paid, on at least the 3 alleged occasions in March, September and October 1991. The claimant could not hide behind the excuse that it was Madam Chiu's practice to issue a receipt for the initial deposit but not for any subsequent payments. If she felt uneasy about it, as she admittedly did, she could simply demand a receipt or else she would refuse to make further payment in cash.

57. I do not believe that the transactions in Chung King Mansion were carried out in cash and without a scrap of documentary evidence as described by the claimant and Hussain. It would be more understandable if the sale of goods transactions were done on the basis of cash on delivery where goods passed hands at the same time as cash, just like any retail sale; then no receipt would be needed and hardly any risk would be involved. If these transactions as alleged happened at all, let the traders in that building be warned that their stories will not find favour with the courts. Not that the courts have any bias against them, but that the courts would not believe that being traders and businessmen, they would be so careless about money, or would behave in ways not only different from those of ordinary people, but unreasonably foolish.

58. The unsatisfactory nature of the claimant's evidence goes further. In her statement to the Police dated 27/1/92, she said that "no receipts or documents were being signed." She tried to push all the blame for the discrepancy thus created between this record and her oral testimony to her former lawyers, her present solicitors and her inability to understand legal language. If the truth is that a contract in duplicate was typed and signed by Madam Chiu and a receipt was issued and signed by Madam Chiu for the US$15,000 cash, there can be no excuse for the claimant to have told the police that "no receipts or documents were being signed" although the lawyers had advised her not to tell anything to the police in detail and the police had told her to be brief.

59. Not only that the claimant's story of her having fully paid the price for the goods is unbelievable, there is also one very important piece of evidence against her. "CWC-3" consists of documents written by the claimant (i.e., Exhibit P3, with a copy at pp. 8 to 10 of Bundle B). From B9, it can be seen that the claimant wrote out a number of figures. My reading of them show in the light of other facts in this case the following: the quantity of garments was 11,000 dozens; 9,000 dozens @ HK$55 amounting to HK$495,000 and 2,000 dozens @ HK$90 amounting to HK$180,000; the total amount was about US$100,000 based on the wrong addition of the two figures HK$495,000 and HK$180,000 arriving at a wrong figure of HK$775,000 (the correct sum total should be HK$675,000). This document clearly shows that when the parties discussed about the quantity of the goods and prices, the quantity agreed was 11,000 dozens and the price would be in the region of $675,000, much closer to the plaintiffs alleged price of $700,000 than the price of $350,000 as alleged by the claimant as having been almost fully paid. These figures therefore support Madam Chiu's evidence and contradict the claimant's.

60. In her affirmation affirmed on 23/5/92 in these proceedings, the claimant said: "In respect of exhibit 'CWC- 3', I was anxious as the goods had not been delivered despite the agreement having been made so long ago. I was persistently asking Madam Leung for delivery of the goods over a period of months. The exhibit shows suggested dates of delivery of goods I made to Madam Leung." There was simply no explanation as to the figures in Exhibit P3. I raised concern about this document and as a result, Mr Jat asked the claimant to explain. Her evidence is to the effect that she created this document for the purpose of urging Madam Chiu to deliver the goods. She said that Madam Chiu had delayed the delivery of the goods for a long time, and that was why it was after she made the final payment of $85,000 in October 1991 that she tried to use  the figures written by her in this document to tempt Madam Chiu to make delivery. The claimant told Madam Chiu that the goods would be sold through customers in India, Pakistan and Nepal at a good price, but the price would be in rupees. The claimant used a calculator to convert the rupee price and converted it into Hong Kong currency by way of an illegal exchange rate and reached the unit prices of $55 and $90 respectively. Then she worked out the proceeds that could be obtained, coming to about US$100,000. The temptation to Madam Chiu, according to the claimant, was that the claimant would do further business with the plaintiff by using the large amount of the proceeds.

61. This story is hard to believe. If the claimant was not able to get a receipt for the monies allegedly paid by her to Madam Chiu, I do not expect the claimant would be so foolish as to think that she was able to allure Madam Chiu to deliver the goods by this method. Anyhow, this method of creating false figures of expectant sale could simply be accomplished by uttering a few words like "I have sold the good for US$100,000 which would be used to place another order with you", instead of going through the phony exercise.

62. Even on the evidence, this story is defective. The claimant mentioned 800 bags of goods to the Police, and before her attention was drawn to this exhibit, she had all along told the court that although she did not remember the exact quantity of the goods she ordered from the plaintiff, she could say that the quantity of tl1e goods that she was buying from the plaintiff was 10,000 to 11,000 dozens, and on one occasion she said 9,000 to 11,000 dozens. She also said that the goods were priced mainly between $25 and $35 each dozen, and that there was an expensive item costing her $110 per dozen. When asked why she did not include in her calculations in Exhibit P3 the proceeds of this expensive item, she said that Madam Chiu knew this item could not be sold in those foreign countries. But when questioned about the quantities she used to create the false figures, namely 9,000 dozens @ $55 and 2,000 dozens @ $90, she started to say that she ordered only 500 dozens of the expensive item and the total quantity of the goods that she ordered was more than 11,000 dozens. However, she did not give any satisfactory explanation why she had all along said that the quantity of the ordered goods was 10,000 to 11,000 dozens. If her story were worthy of any credence, then she should have only used 10,500 dozens at the maximum in her calculations. She admitted that these figures written by her on the exhibit were lies which she hoped to tempt Madam Chiu to make delivery. It would be most unlikely that she did not support the fabrication for convincing Madam Chiu with the correct basic figure like quantity.

63. The argument that can be proffered on behalf of the claimant is that had she intended to deceive the plaintiff to part with the goods without making any payment, she would not have written the figures on Exhibit P3, and even if she had written such figures, she would not have left the document with Madam Chiu. During the negotiations, be the claimant's participation bona fide or otherwise, the pieces of paper including Exhibit P3 would, in my view, have come into existence quite naturally. They were for her making calculations as to the total amount that she would have to pay for the goods she ordered. If she never intended to pay the price, the writing of these figures with calculations would have given an air of sincerity and truthfulness to the Leungs. The claimant might have been careless to leave these pieces of paper with Madam Chiu, or she might have forgotten their existence when she came up later with the story that the price was $350,000. She told the story of the price agreed at $350,000 to the police in her statement of 27/1/92 when she did not have Exhibit P3 before her. She must have realised when the dispute arose that she would be questioned as to the source of the funds with which she allegedly paid the price fully. The higher the price which she claimed to have fully paid, the more difficult it would be for her to satisfy the police and later the court as to the source of her funds. It could be more acceptable to the listener if she had paid $350,000 rather than $700,000 in cash, and if she had funds of $350,000 rather than $700,000, both of which are entirely unsupported by documents.

64. In my view, having observed her demeanour in the box, she simply lied as she went along and she was lying all the way, when she asked her former solicitors to write to the police, when she gave her statement to the police on 27/1/92, when she made her affirmations and when she gave evidence before me.

65. I have no doubt that Madam Chiu's evidence is true that Exhibit P3 was amongst the papers written by the claimant at the time when they struck the deal on or about 15/10/92 and I find it a fact that it contained the particulars of the oral agreement regarding the quantities and prices of the garments more particularly shown in Exhibit P1.

FINDINGS OF FACT

66. I find the following facts:

(a)   There was an oral agreement made on or about 15/1 0/91 between Madam Chiu on behalf of Kent Long Trading Company and the claimant for the sale and purchase of about 11,000 dozens of gamments at a price of about HK$700,000 and not HK$350,000 as alleged by the claimant. This was the first and only transaction done by the parties.

(b)   The parties agreed that the price was to be paid upon delivery of the goods, and later the parties agreed that the claimant would transfer the price into Madam Chiu's bank account upon delivery.

(c)   The claimant had not paid the price or any part thereof. She failed to do so after taking delivery of the goods from the plaintiff on 8/1/92.

(d)   The claimant told the plaintiff and Madam Chiu at the meeting on or about 15/10/91 that she was called "Sen" and not her usual name Sushima by which she was known by traders in Chung King Mansion at which her shop was situate. She did not tell the plaintiff and Madam Chiu that she had a shop in Chung King Mansion or her address or telephone number. She told them that she was travelling between Hong Kong and the United Kingdom when in fact on her own admission she had never been in the United Kingdom. She also told Madam Chiu that her husband had a shop in England and that she was rich.

(e)   She brought along Fazal Hussain to a meeting with Madam Chiu in December 1991 to impress upon Madam Chiu that she was a trustworthy person.

(f)    She telephoned Madam Chiu to say that she was calling from England when in fact she was not.

(g)   She told Madam Chiu that she' had an account with Citibank and told her to open an account with that bank so that the purchase money could be transferred more conveniently to Madam Chiu through the same bank, but in fact she did not even know whether her account with Citibank was closed or not, and she knew that she had little or no money in it.

(h)   She disappeared from the Holiday Inn although she had promised Madam Chiu that she would stay the night there with her and transfer the purchase money the following morning.

(i)    She said in her statement dated 27/1/92 to the police, deposed in her affirmation on 23/5/92 and confirmed in the witness box that the purchase price was agreed at $350,000 and that she had paid sums in cash totalling $342,000 when in fact the price was around $700,000 and she in fact had not paid a cent.

(j)    The written contract as well as the receipt for US$15,000 did not in fact exist.

(k)   The Leungs did not attempt to increase the price for the goods at the Holiday Inn or at all.

(l)    Last, but most important of all, the contents of the claimant's writing on Exhibit P3, which show quite conclusively what had been agreed regarding the quantity of the goods and the price, contradicting her affirmation evidence and oral testimony of 800 bags and $350,000, are true.

DECEIT & RESCISSION

67. When making the aforesaid findings, I have borne in mind the onerous standard of proof that has to be discharged for fraud as stated in Lord Denning's judgment in Bater v. Bater [1951] P.35, 37:

"The degree depends upon the subject-matter. A civil court when considering a charge of fraud will naturally require for itself a higher degree of probability than that which it would require when asking if negligence is established. It does not adopt so high a degree as a criminal court even when considering a charge of a criminal nature; but still it does require a degree of probability which is commensurate with the occasion."

68. As far as deceit is concerned, what is important to prove is that the claimant induced the plaintiff to part with the goods without any intention of paying the agreed price or any part thereof, or with reckless disregard whether she was going to pay. Chitty on Contracts, 26th Ed., General Principles, para. 431 has this to say:

"The common law relating to fraud was established by the House of Lords in Derry v. Peek (1889) 14 App. Cas. 337. It was there decided that in order for fraud to be established, it is necessary to prove the absence of an honest belief in the truth of that which has been stated; in the words of Lord Herschell at p. 374, "fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false." (The citation as well as the page references are added by me).

69. In Reese River Silver Mining Co. Ltd. v. Smith (1869) L.R. 4 H.L. 64, 79-80, Lord Cairns said:

"If persons take upon themselves to make assertions as to which they are ignorant whether they are true or untrue, they must, in a civil point of view, be held as responsible as if they had asserted that which they know to be untrue."

70. A buyer's title to the goods may be voidable at the option of the true owner, for example, on the ground of fraud at common law or in equity, misrepresentation, non-disclosure, equitable mistake, duress or undue influence. In these instances, the true owner is normally entitled to rescind the contract, but the contract is not void ab initio (see Chitty on Contracts, ibid., paras. 430 & 458, and Benjamin's Sale of Goods, 4th Ed., paras. 7-025 to 7-026).

71. The law on avoidance of a contract of sale is succinctly set out in Benjamin, para. 7-026:

"A voidable title 'is a good title until a person entitled to avoid elects to avoid it, and does avoid it, in which case that which was a title, though a voidable title, becomes an avoided title.’ … As a general rule, he must communicate it to the person his intention to rescind, and that person's title will not be avoided until this has been done. An uncommunicated intention, for example, by speaking to a third party of making a private note, will be ineffective. This rule, however, is not an absolute one. It would seem that the true owner may rescind the contract merely by retaking possession of the goods; and a further exception or qualification was recognised by the Court of Appeal in Car and Universal Finance Co. Ltd. v. Caldwell."

72. The effect of Car and Universal Finance Co. Ltd. v. Caldwell [1965] 1 QB 525 appears to have been curtailed by the subsequent decision of the Court of Appeal in Newtons of Wembley Ltd. v. Williams [1965] 1 QB 560. Without pausing to examine the exact effect of these two cases, I am content for the purpose of this judgment to accept as the law that for rescission to be effective, notification of the avoidance of the contract must be communicated to the other party. These two cases related to a dispute between the true owner and the subsequent innocent purchaser for value without notice. In the present case, no third party other than the seller and purchaser is involved. The notification of the avoidance of the sale must have been communicated by the plaintiff to the claimant at the latest on 14/4/92 when the plaintiff through his legal representative and the claimant personally appeared before Master Bokhary to assert their respective claims to the goods. I am therefore of the opinion that the necessary communication for rescission to take effect had been made.

73. At para. 7-028, Benjamin further states:

"In any event, in order to avoid the voidable title, the true owner must be in a position to rescind the contract made between himself and that person, that is to say, the remedy of rescission must not for any reason have become barred. In particular, the true owner must not have elected to affirm the contract and so lost his right to rescind."

74. Although the plaintiff in evidence told me that he wished to get the price of the goods from the claimant regardless of the outcome of my determination of the Issue, no adverse effect on the avoidance of the contract by the plaintiff has been caused. As I find before, the rescission took place latest by 14/4/92. Once that position was elected by the plaintiff, and insofar as he carried further on with pursuing his claim to the property in the goods, his avowed intention does not matter. Moreover, he expressed his wish to sell the goods to the claimant at the same price for the reasons that even if he recovered the goods he did not know how to deal with the warehouse charges and that he owed various people debts. That cannot be an unequivocal withdrawal of his former election to avoid the contract.

75. My finding is that the claimant had not paid a cent up till the last moment before she disappeared on 8/1/92. When disputing the ownership of the goods, she put on affidavit and gave in evidence various untrue explanations, which I reject. Despite the heavy burden on proof of fraud that the plaintiff has to discharge, I am of the view that there is sufficient proof that the claimant intended to and did deceive the plaintiff and his wife, causing them to part with their goods without any intent to pay anything, let alone the agreed price. On the facts, when agreeing with Madam Chiu that the price for the goods was to be paid upon delivery or transferred into Madam Chiu's account, the claimant misrepresented to the Leungs that she had an intention to pay, which was false. In the circumstances, the agreement for sale and purchase of the goods was voidable for fraud and was effectively avoided.

INTENTION TO PASS PROPERTY

76. Although I have decided on the question of deceit, there is another reason why the property in the goods has remained with the plaintiff. The Sales of Goods Ordinance, Cap. 26 makes provisions as to when property in goods passes. Section 19 provides as follows:

"(1) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case."

Section 20 also provides:

"Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer –

…

Rule 5. (1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description, and in a deliverable state, are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract."

77. From the evidence, it is clear that when the parties made the agreement for the sale and purchase of the garments, the garments were to be manufactured by the plaintiff. The goods were therefore unascertained and future goods. It is also in evidence that the garments eventually delivered were similar but not identical in style and in quantity to those originally agreed. On the evidence, therefore, the goods were only ascertained and put in a deliverable state when they were put into the lorries travelling from China to Hong Kong on 7/1/92.

78. The parties agreed that payment of the price was to be cash on delivery, COD, and it was also agreed that the purchase money was to be transferred from the claimant's bank account into a bank account of the Leungs. Madam Chiu, at the instigation of the claimant, opened an account with Citibank on or about 7/1/92 for the purpose of receiving the transfer of the purchase money from the claimant's account in that bank. No deposit or any part of the price for the goods had ever been paid, and this despite the various efforts of Madam Chiu urging the claimant to make some payments. It is therefore clear that no money from the claimant was used to purchase any material for the production of the goods. It was in the mind of the Leungs that inasmuch as the claimant went back on the deal, they could always sell the goods to others. The goods were not simply to be delivered to the claimant on 8/1/92, but a place was named for the delivery to take place and the Leungs and Wong Chu-hau, the plaintiffs brother-in-law, were there to make the delivery. During the unloading of the goods from the lorries from China onto the lorries hired by the claimant, Madam Chiu asked, though in vain, the claimant for transfer of the purchase money. Wong Chu-hau was sent to hire a taxi to follow one of the claimant's lorries in order to find out where the lorry took its load to. After the completion of the unloading, the Leungs and Wong went to the Holiday Inn Hotel purely for keeping an eye on the claimant so as to ensure that she would transfer the purchase money as promised the following morning. Madam Chiu even planned to stay the night with the claimant for that purpose. When the claimant disappeared, the plaintiff reported the matter to the police. He and Madam Chiu and Wong went to Minden Road to locate the drivers of the lorries hired by the claimant. They went again the next morning. They went to locate the goods and found them in Winner Godown, and they made a report to the police again. In view of all these facts which I accept, the much more probable inference is that the intention of the Leungs was not to pass the property in the goods to the claimant and that they reserved the right of disposal of the goods unless and until they received the full purchase price. The intention of the claimant cannot, by reason of my finding of deceit, be taken into account. On this ground also, I find for the plaintiff.

CONCLUSION

79. As I have come to the conclusion in favour of the plaintiff on both grounds of deceit and the property in the goods having remained with him, the Issue is decided in his favour. I make an order nisi that the plaintiff do have costs of the Issue and of this action against the claimant, and that the plaintiffs own costs be taxed under the Legal Aid Regulations.

80. There are two further matters I would like to mention.

81. First, I thank counsel for their assistance in the course of this trial. They discharged their tasks with diligence, careful preparation and courtesy.

Secondly, in view of the preponderance of evidence of fraud, I think it incumbent upon me to send the papers to the Director of Public Publications for him to review the materials and decide whether any criminal charges should be laid.