iPRO FINANCIAL PRESS LTD v. E-STATION GREEN TECHNOLOGY GROUP CO., LTD (formerly known as K GROUP HOLDINGS LTD)

DCCJ 4658/2022

[2026] HKDC 1502

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4658 OF 2022

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JUDGMENT

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Introduction

1.  This is the trial of an action which involves a total of 92 unpaid invoices for financial printing services rendered by the Plaintiff to the Defendant, a listed company in Hong Kong (Stock Code: 8475). The Plaintiff commenced this action by a writ dated 21 November 2022 and the total outstanding invoiced amount claimed was HK$873,748.50. The Plaintiff also claims for interest at a rate of 2.5% per month for all overdue amounts.

2.  Previously, the Defendant was legally represented and has filed an Amended Defence and witness statements. At trial, the Defendant appeared in person and was represented by its executor director Mr Liang Qianyuan.

3.  On 8 March 2024, the Defendant changed its name from K Group Holdings Limited to E-Station Green Technology Group Co Limited. Pursuant to my direction, the Plaintiff filed a Notice informing the Registrar of the Defendant’s change of name on 5 March 2026.

4.  The facts of the case are largely undisputed.

Undisputed Facts

5.  At all material times, the Plaintiff carried on the business of providing financial printing services including the creation, translation and submission of documents to the platforms of the Stock Exchange of Hong Kong (“HKEX”) for and on behalf of listed companies. Pursuant to a quotation dated 6 August 2018 signed by the Plaintiff and the Defendant, the Plaintiff began to provide services to the Defendant.

6.  In each subsequent year, a new quotation setting out the respective charges of services to be rendered would be signed by the Plaintiff and the Defendant. The subsequent quotations dated 9 July 2019, 9 June 2020 and 25 October 2021 were all signed by Mr Melvyn Yeap who was the Defendant’s then executor director and chief financial officer (“Yeap”).

7.  In all of the 4 quotations, there was a clause 9 which provides:

“9. All payments should be paid within 30 days after our invoice is issued. Interest at a rate of 2.5% per month will be charged on any overdue amounts.”

8.  Pursuant to the quotations, the Plaintiff provided services to the Defendant since August 2018 to September 2022 and invoices would be issued upon completion of each job. For example, the Plaintiff would issue invoices for production fee for preparation of documents e-submitted to the HKEX website for the Defendant’s change of address of registered office and for printing fees for the Defendant’s quarterly report.

9.  Despite repeated requests and demands, the Defendant failed and/or refused to settle invoices issued from 17 December 2020 to 29 September 2022.

The Defendant’s Case

10.  For the unpaid invoices, it is not disputed by the Defendant that services have been rendered by the Plaintiff and it has received the said invoices. The Defendant’s case as pleaded can be summarized as follows:

(1)  Before engaging the Plaintiff for its service in 2018, the Defendant had expressed that it was unrealistic for a listed company to settle every invoice within 30 days due to complicated procedures involved and the Plaintiff assured the Defendant that it fully understood that invoices might not be settled on time; before the first quotation was signed in 2018, there was a mutual agreement between the Plaintiff and the Defendant that Clause 9 was only a pro-forma clause which would not come into effect;

(2)  Further or alternatively, the monthly interest rate of 2.5% was excessive and unreasonably high; and

(3)  On or about 8 May 2023, the Plaintiff and the Defendant agreed that the invoices issued after 1 January 2022 would be settled by the Defendant and all invoices issued before that would be settled by Yeap personally who agreed to this as he was not authorized by the Defendant to sign the quotations to engage the Plaintiff on or before 31 December 2021.

11.  At trial, Mr Liang confirmed that the Defendant was only willing to settle the invoices issued between 4 January 2022 to 29 September 2022 for the total sum of HK$423,342.10. As to the overdue interests and the outstanding invoices issued before 31 December 2021, Mr Liang asked the Court to rule based on documents before the Court.

Assessment of Witnesses

Madam Poon for the Plaintiff

12.  The Plaintiff called one witness, Madam Poon Kai On Erica (“Poon”), the sales manager who joined the Plaintiff in 2017.

13.  Poon was aware that Yeap was the authorized representative of the Defendant since August 2018 who signed the quotations as the authorized signatory and the CFO[1] of the Defendant. In her witness statement, she explained the services rendered by the Plaintiff including the procedure of getting approval of announcements and financial reports and then uploading the same to the HKEX website. She also referred the Court to the announcements prepared by the Plaintiff for the Defendant and records showing the Plaintiff’s submission of documents for the Defendant with HKEX.

14.  Monthly statements and numerous reminders were sent to the Defendant for payments but to no avail. On 13 July 2022, the Plaintiff sent a final reminder to the Defendant demanding for settlement of the total amount due and overdue interest at the rate of 2.5% per month. A letter of demand was sent to the Defendant on 3 November 2022 by the Plaintiff’s solicitors for immediate settlement of the outstanding fees and interests.

15.  At the request of the Plaintiff, a meeting was held on 8 May 2023 which was attended by Poon and Mr Henry Hui (“Hui”) of the Plaintiff, and Madam Chan Kwan, the Defendant’s witness, and another Madam Chan of the Defendant. In Poon’s witness statement, it was stated that one of the Madam Chans said that there have been changes in the Defendant’s management and/or structure and proposed that the new management would settle invoices issued after 1 January 2022; as to those issued before that, they should be settled by Yeap being the former management of the Defendant. Poon said they rejected the proposal right away. The discussion at the meeting was evidenced by a written minutes prepared by the Plaintiff. Poon further explained in Court that the Plaintiff would not ask or contact Yeap to settle the sums due personally as the services were provided to the Defendant.

16.  As to the interest charged by the Plaintiff, Poon denied in her witness statement that Clause 9 was a pro-forma clause and that the overdue interest would be waived by the Plaintiff. Poon also stressed that the Defendant has never complained about the monthly interest rate of 2.5% to be excessive and/or unreasonable.

17.  In cross-examination, Mr Liang only asked Poon about her role in the Plaintiff to which she said she was responsible for following up the accounts of the listed companies including the Defendant’s.

18.  I accept Poon as a credible and reliable witness. None of her evidence was challenged by the Defendant at trial and I accept her evidence in total.

Madam Chan of the Defendant

19.  The Defendant called one witness, Madam Chan Kwan (“Chan”) who joined the Defendant in July 2022 as an administrative manager and became its general manager since end of 2023.

20.  Although it was alleged in her witness statement that Yeap, being the then chief financial officer, had engaged the Plaintiff’s services by signing 3 quotations without the Defendant’s authority, she did not state her basis for such assertion. In fact, Chan admitted in Court that she had no personal knowledge in the dealings between the Plaintiff and Yeap and/or the Defendant prior to July 2022.

21.  More importantly, the Defendant had already admitted its liability to settle the invoices issued after 1 January 2022. In other words, the Defendant did not challenge Yeap’s authority in signing the quotation dated 25 October 2021 pursuant to which all the post-January 2022 invoices were issued.

22.  As to the invoices issued before January 2022, Chan maintained that since the Plaintiff’s services were engaged by the previous management before “they”[2] took over the Defendant, Yeap should be responsible for paying the same.

23.  As to the meeting on 8 May 2023, despite her assertion in her witness statement that the Plaintiff had agreed that invoices before January 2022 would be settled by Yeap, Chan admitted in her oral evidence that it was only a proposal made by their side that they would settle half of the outstanding invoiced amounts, which was around four hundred thousand odd dollars, but was refused by the Plaintiff at the meeting.

24.  As to the interest for the overdue payments, Chan claimed in her witness statement that Hui agreed to waive all at the meeting. When it was put to her in cross examination that Hui did not say the Plaintiff would waive interest, she responded by saying that Hui did not say the Plaintiff would charge interest either.

25.  Given that Chan had no knowledge of the parties’ dealings before July 2022, I find that she was only capable of giving evidence on what happened at the meeting on 8 May 2023. Chan impressed me to be very insistent that the new management should not be liable to settle expenses incurred by the Defendant before the takeover although she was quite unable to explain why the Defendant company did not need to pay for services rendered by the Plaintiff. Clearly, it was an internal matter between the new and the old management or Yeap which had nothing to do with the Plaintiff’s entitlement to be paid.

26.  All in all, I do not accept Chan’s evidence to the extent that it is inconsistent with the evidence of Poon and the written minutes which is a contemporaneous record of what was being discussed at the meeting.

27.  I shall now deal with the issues raised by the Defendant.

(1)  Yeap’s authority

28.  In Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No 2)[3], the Court of Final Appeal cited what Newnes JA said in Auxil Pty Ltd and Anor v Terranova & Ors[4], about representation capable of creating an apparent authority at §45:

“A representation creating an apparent authority of an agent may be made in a number of ways but the most common form of representation by a principal is by conduct, that is, by permitting the agent to act in the management or conduct of the principal’s business. By permitting the agent to act in the management or conduct of the business, the principal thereby represents to anyone dealing with the agent that he or she has authority to do those acts on behalf of the company which an agent authorised to do acts of the kind which he or she is in fact permitted to do normally does in the ordinary course of such business.”

29.  Yeap was the executor director and chief financial officer of the Defendant at the time when he signed the quotations in 2019, 2020 and 2021. In fact, he remained to be the executive director of the Defendant until he resigned in 2025.

30.  Invoices issued before 17 December 2020 pursuant to the 2019 quotation signed by Yeap were all settled by the Defendant. As for invoices issued after 1 January 2022 pursuant to the 2021 quotation signed by Yeap were not disputed. I find that there are simply no grounds for the Defendant to challenge Yeap’s actual implied and/or apparent authority to sign the 2020 quotation while accepting him having authority to sign the other two. In any event, the Defendant has also failed to adduce any evidence in support of Yeap’s alleged lack of authority.

31.  In my judgment, the Defendant was bound by the quotations signed by Yeap who clearly had the authority to do so on behalf of the Defendant and is therefore liable to settle the outstanding fees for services rendered by the Plaintiff.

(2)  Monthly Interest of 2.5%

32.  The Defendant’s pleaded case that there was a mutual agreement between the parties in 2018 that Clause 9 was of no effect is totally unarguable.

33.  The Plaintiff and Defendant, being a listed company, were reaching an express agreement of a commercial character and they must be presumed to intend it to have legal effect unless the contrary is shown. The alleged mutual agreement pleaded by the Defendant was unsupported by any evidence. The Defendant has decided not to call Yeap as its witness. I find that it is not even necessary for me to draw any adverse inference on this as submitted by Ms Chor, counsel for the Plaintiff, as the Defendant’s bare assertion fails to establish even a prima facie case.

34.  The Defendant pleaded that the overdue interest rate of 2.5% per month is excessive and unreasonably high but it did not contend that Clause 9 is unenforceable as a penalty clause. At trial, Mr Liang had not advanced any argument on the point. Insofar as is necessary, I find that Clause 9 is not a penalty clause.

35.  In Law Ting Pong Secondary School v Chen Wai Wah[5], Chu JA considered the approach in determining if a clause is a penalty and said at §§69 - 71:

“69. The law in relation to penalties was reviewed by the UK Supreme Court in the conjoined appeal of Cavendish Square Holdings v Makdessi and ParkingEye Ltd v Beavis[6], supra, in which it undertook a comprehensive review of the authorities on liquidated damages and penalties. It considered that while the traditional test (see §66 above) was a useful tool in a simple case, it was not easily applied to more complex cases (at §22). The true test was held to be whether the clause is out of all proportion to the innocent party’s legitimate interest in enforcing the contract. It further recognized that an innocent party could have a legitimate interest in the performance of the contract or some appropriate alternative to performance that goes beyond compensation. It was said by Lord Neuberger and Lord Sumption (with whom Lord Carnwath and Lord Clarke agreed) that (at §32)[7] :

“The true test is whether the impugned provision is a secondary obligation that imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance. In the case of a straightforward damages clause, that interest will rarely extend beyond compensation for the breach, and we therefore expect Lord Dunedin’s four tests would usually be perfectly adequate to determine its validity. But compensation is not necessarily the only legitimate interest that the innocent party may have in the performance of the defaulter’s primary obligations.” 

70. In applying the test, the court should first identify the legitimate interest of the innocent party that is being protected by the clause, and then assess whether the clause is out of all proportion to the legitimate interest by considering the circumstances in which the contract was made. Notions of whether the clause has a deterrent purpose or whether it is a genuine pre-estimate of loss would be subsumed by the broader enquiry into the legitimacy of the interest that supports the provision.

71. Another aspect of the decision in Cavendish Square Holdings v Makdessi which is relevant to the present context is its discussion on the threshold requirement of a breach of contract. It held that the doctrine of penalty is only engaged when there had been a breach of contract. It is not applicable to contractual provision which stipulates an obligation to pay certain amount of money by way of a primary obligation. This means a clause can only be a penalty if, as a matter of substance, it operates upon a breach of contract. In other words, it is a secondary obligation triggered by a breach of a primary obligation. Lord Neuberger and Lord Sumption (with whom Lord Carnwath agreed) explained that there is a “fundamental difference between a jurisdiction to review the fairness of a contractual obligation and a jurisdiction to regulate the remedy for its breach”, pointing out that the penalties doctrine is a rule for controlling remedies for breach of contract that should not be transformed into a jurisdiction to review the content of the substantive obligations which the parties have agreed (at §§12-13).” (emphasis added)

36.  Applying the above principles, I find that the doctrine of penalty is not engaged as Clause 9 is a contractual provision which stipulates an obligation to pay certain amount of money by way of primary obligation which did not operate upon a breach of contract.

37.  The quotations were entered into at arm’s length between two commercial entities engaged in a routine trade arrangement for financial printing services. A service provider like the Plaintiff has a legitimate commercial interest in protecting its cashflow. An overdue interest chargeable in the event of late payments by customers is a term agreed and accepted by both parties.

38.  I also reject Chan’s evidence that the Plaintiff had agreed to waive the overdue interest at the meeting on 8 May 2023. At that time, the Plaintiff has already commenced the present proceedings. It defies common and commercial sense that the Plaintiff would agree to waive the overdue interests in such circumstances. It was also contradictory to the contemporaneous record as mentioned above.    

39.  In the circumstances, I find that the Plaintiff is entitled to charge interest for outstanding fees overdue for 30 days at the rate of 2.5% per month pursuant to Clause 9 of the quotations.

Conclusion

40.  For all of the reasons above, I allow the Plaintiff’s claim and ordered that judgment be entered for the Plaintiff in the sum of HK$873,748.50, together with interest at a rate of 2.5% per month on any overdue payment until the date of this judgment and at judgment rate thereafter until full payment.

41.  I make a costs order nisi that the Defendant shall bear the Plaintiff’s costs (including all costs reserved) with certificate for counsel to be taxed if not agreed.

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