TIMES PRINTING MACHINERY LTD. v. WONG CHI PING t/a SANG YAU LUEN PRINTING CO.

HCA14364/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.14364 OF 1998

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J U D G M E N T

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1. This is an action for damages for breach of contract. The contract in question was for the sale of goods, and the goods in question were a printing machine, a sophisticated piece of printing machinery, the contract price of which was some $2.32 million. The nature of the claim is a wrongful refusal by the buyer to accept delivery.

2. Let me commence by setting out the history. It starts back in August 1997. The plaintiff's company was in the business of supplying machinery of the kind in question, and at that time, supplied the defendant with a printing press. It was evidenced by a contract which bears the label T-065. That sale went through on the plaintiff's standard terms in the sum of $1.46 million. Both parties agreed that this transaction was unexceptionable and occurred in the manner I just described. The time then moved on to November 1997. The parties got together again and signed a contract bearing the label T-076 dated 25 November of that year for the sale of a further machine for the sum of $2.4 million. The contract is set out in the bundle at page B3. Printing presses of this type, made by a manufacturer called Roland, have a model number which varies as the machines develops over the years. This was going to be a contract for the sale of a model 643. The year of manufacture was 1989. It is common ground between the parties that it was a term of this contract that the defendant have the opportunity to examine the goods and if they were not what he wanted, then the contract could be cancelled. That is just what happened. The significance of this is that the defendant went to look at that machine and inspected it in November 1997.

3. The case for the plaintiff was that at this time four photographs were delivered to the defendant showing that machine. These four photographs are 3R in size and are exhibit 1 in the case. The defendant's case is that those photographs were not given to him at this time in November 1997, and no photographs were then given to him at all.

4. We then move on to February 1998. The parties entered into a written contract bearing the label T-088 for the sale of a printing press in the sum of $2.32 million. The model number was 638 and the year of manufacture was 1987. The written contract is set out at page B6. On the back of it there were standard terms and conditions as seen at page B7. The written contract sets out the number and the date I have just given. The case for the plaintiff was that on this occasion, further photographs were given showing this 638 machine. He says that they were given by two means. Firstly by the provision of three photographs which are exhibit 2 in the case, the larger photographs, I think they are 5R in size. And also by the provision of one sheet of A3 paper which had a colour photocopy of those three photographs upon it, and he said both of those were given to the defendant on 27 February in a café or restaurant in Kwun Tong where they were negotiating this deal before they went to the office and actually executed the written contract. The case for the defendant is that on this occasion, he was given exhibit 1, the four small 3R photographs, which it is common ground do not depict a 638 machine but depict a 643 machine.

5. In March, the plaintiff company entered an agreement to purchase the 638 machine, a specific one, that was working and in use in Sweden. Time went by and the next significant event that occurred was a fax dated 5 June from the defendant to the plaintiff. I should add here that the delivery date on the written contract on page B6 of the bundle, put shipment or delivery at around July 1998. At the time that this contract was executed no shipping date was available therefore it was no more specific than that. Turning to that fax of 5 June, at page B10 of the bundle, it said this :

"Your Company had verbally promised the Printing Press under the above contract [referring to T-088 at the top] will arrive in Hong Kong before 20th June. However, since the signing of the contract, we heard nothing from you. We hereby notify your Company if the above Printing Press cannot arrive before 15th July 1998, the above contract will be cancelled and please return the deposit. Hope your Company will abide by the promise."

6. What the plaintiff said happened after that is there was negotiation between them. The plaintiff company was now aware of the shipping details and the date of arrival, and that accordingly on 18 June the parties entered a supplemental contract, and this is set out at page B12 of the bundle. And what this said was that :

"In respect of Contract T-088 for the purchases of Roland Four Colour Printing Press :

Estimate that the Printing Press will arrive in Hong Kong on or before 25th day of July, and will arrange for inspection of machine immediately.

If after checking the machine number and machine accessories with the contents of the contract which confirms everything is correct. Buyer shall pay all balance according to contract within 7 days and take delivery, otherwise the deposit will not be refunded.

If the Printing Press shall arrive in Hong Kong after 25th day of July, Seller shall compensate the deposit paid under the contract."

7. That was typed. Then at the meeting between the plaintiff's representative, Mr Lam and Mr Wong, the defendant, in the presence of Mr Wong's secretary, the secretary added these words with everyone's consent : "Seller's machine shall be shipped from Sweden to Hong Kong. If it is discovered that the machine is not shipped from Sweden to Hong Kong, Seller must compensate Buyer for the deposit paid under the contract."

8. Now the defendant's case is that the second set of photographs, exhibit 2, showing the machine model 638 was provided to him or, to be specific, to his secretary by Mr Lam, of the plaintiff, in April 1998. He says that when he saw that photograph, he realised the machine was different from the photographs that were already in his possession. He says that he therefore raised this with Mr Lam and Mr Lam agreed that was the case, and that they therefore came to an agreement that if the machine arrived from Sweden was as in the larger photograph, exhibit 2, the contract would be cancelled and the defendant would not have to pay for the goods. That is what the defendant contends for and he says that agreement was specifically made with Mr Lam before the supplemental contract of 18 June was executed. Subsequently, the machine did arrive in Hong Kong. It was inspected on 6 August, all parties being present, the defendant having an expert and not surprisingly, because it was a 638 machine that was being shipped, it looked like the machine shown in photograph exhibit 2, the larger photographs, it did not look like the machine in the smaller photograph exhibit 1, accordingly the defendant says that he was entitled not to accept it and he did not accept it. The plaintiff company accepted that repudiation and lines were then drawn up for this dispute. That is the history.

9. The issue therefore that determines this case is what photographs were shown by the plaintiff's representative Mr Lam to the defendant Mr Wong on 27 February 1998 in Kwun Tong. That is the issue.

10. The resolution for that issue turns upon credibility. The plaintiff's representative Mr Lam was the only witness for the plaintiff. I found him to be a good and credible witness. He struck me as a man who was doing his level best to remember back to events in 1997 and 1998. He impressed me very strongly as someone not arguing a cause but someone who strove to answer the questions honestly and accurately. He did not always find it easy - no one would in the circumstances. What he displayed in his evidence was a willingness to make concessions which were properly to be made. He exhibited a direct recall and a relationship to the events which had a quality of not being filtered by anything. In other words what I am saying is he impressed me as a witness of truth.

11. There was one good point made against him because his evidence in the trial differed in one material respect from what he said in his witness statement, which was adopted as part of his evidence-in-chief and that was to do with this : that in the witness statement and when he started to give his evidence, what he was saying was that the photographs showing the 638 machine were given on the photocopy A3 sheet in the restaurant. When he was cross-examined and the three photographs in separate form on ordinary photographic paper exhibit 2 were shown to him he said those were given at the same time as well. He provided the pictures in those two ways, whereas in the witness statement he said it was only done in one way. He explained that by saying he knew it was the provision of photographs, one and the same thing on one occasion. He put that mistake down to the passage of time and the fact that the difference was not particularly significant to him. I accepted the explanation that he advanced. I do not think that contradiction displayed any dishonesty on his part and it was not such a contradiction that made me doubt the weight to be given to his evidence.

12. I regret to say that the opposite struck me about the evidence of the defendant. I found him to be an evasive and a thoroughly bad witness. I do not say that just in relation to his demeanour. Demeanour is not always a particularly good guide but his demeanour was poor. The fact was that he consistently throughout his evidence, it seemed to me, was putting it all through a filter. Every answer that he was giving he was modifying in a way that demonstrated to me that it was not just recalling the events that had happened. He was recalling them and seeing which way he should answer because which way he answered could affect how his case went. I will give some examples of that as it is not easy to describe as a state of affairs. It is much easier to illustrate it by my looking at my note.

13. Let me start (I am not going to give all the examples) he was asked this - about the inspection in November 1997 when he looked at the 643 machine, he was asked "you knew you were going to look at a 643 machine". His first answer did not begin to grapple with the question, and in a way that became habitual in his evidence, it had to be repeated. He denied that. He said he did not know that he was going to look at a 643. Frankly I find that answer very difficult to believe. He was a man with 20 years experience in this trade. He consistently used the products of Man Roland, the manufacturer of the machine in question, in his factory in China in his printing business. He is experienced and he knew that the machines changed over the years, their logos changed and that the models would look different, especially by their logo, with the passage of time. So the 1987 machine would have a different logo which looked different from the 1989 machine. So the fact that he said he was going off to spend as much as of $2.32 million of his money to buy a machine without knowing what model it was, I thought, diminished his credibility. Not surprisingly, counsel for the plaintiff, following that up, said : "when you went on this inspection visit, it must have been right that you would make sure that the model you were looking at was the model in the contract?" In other words, the 643. He denied that. He said that was not the case. He then realised, in my judgment, that that answer was not a credible one, and he therefore said : Ah, I would have done that before I actually paid up. And then it was pointed out to him : how would you check that against the machine if you were not there to inspect, at which stage he said he always went back for a further inspection. "I go back two or three times", he said. Frankly, I judge that he was making that up as he went along. There was just no good reason why he would not, on his first visit to look at the machine, make sure it was the sort of machine he was contracting about and wanted to buy.

14. He was asked about the logo on the machine. And, I am afraid in the usual way, when asked about what he knew of the logo, he started to answer in terms about an engineer. The question was put again saying, "what did you actually look at, did you look the logo?" The answer was : yes, I would surely look at the logo. Counsel asked him : why was that important to you? His answer was : to see if it was a second generation machine and computer controlled. Then counsel said : how would you tell that from the logo? He could not answer that question. He went round in circles for a while until we came to the situation when he said he did not know. I regret to say he was not a witness who inspired any trust.

15. He said, and it was his analogy, that buying this machine was like buying a used car. It was with that in mind therefore that I asked if in that case, just like buying a car, two of the important things he would want to know is : what model is it? what year is it? One would have thought it would be easy to extract from the witness a clear answer therefore, that at the time of inspection, he knew the year and model of the machine. Frankly, it was not. Counsel took over. In the end he got an answer that suggested yes, that it was the case he did know the make and year of the machine inspected.

16. If the defendant is right in his contentions what happened was this : that he inspected in November 1997 a 643 machine and then only some few months later, at the end of February, he was shown photographs of that identical 643 machine. The defendant was at pains throughout his evidence to stress how important photographs were and what reliance he placed upon them. It was not the case of the photographs receiving any causal glance or examination. It seems to me that the reality of the situation would be this, that when he received the 643 photographs, if he is right, in February, he would say this was the machine I have just inspected, isn't it. The 643. Of course, he says he never realised that it was the same machine. Again, I am afraid I find that hard to believe. If he did acknowledge that it was the same machine, then he would immediately be on notice and he could not run the case the way he is running it now. If he did realise that the photographs given to him in February was a 643, he must have said : Well, hang on, I have just signed a contract for a 638, this cannot be right, what is going on? That is why in my judgment the defendant would not acknowledge, what I infer to be the case, that he must have realised that the photographs, those four small photographs, were a 643 and not, and never could be, a 638 machine.

17. It was established by counsel in cross-examination that the defendant Mr Wong did appreciate that what he looked at in November 1997 was a 643, a 1989 model. He conceded that he knew in February that he was buying a 638 and he knew that 638 was a 1987 model because that was written in the contract and he could read the numbers about it. He was then asked "you knew therefore that you were buying something different in February from what you inspected in November". He first answer was difficult to follow. He then avoided an answer and at the third time of asking, when put again, gave the answer, which I think surprised everyone in court, "I surely did not know". He must have known. That answer just cannot be right. I am afraid this was a witness whom I was not prepared to trust.

18. Let me come to what is probably one of the most powerful points to be made against him. It is this : that the plaintiff says in June, following that fax of 5 June, the issue was about the time of delivery with a subsidiary issue of was it was coming from Sweden That is the plaintiff's case, and he could look to the supplementary contract and say that is what is recorded there in writing. The contemporary document therefore supports the plaintiff in his version of events. The defendant's case is that : we had an agreement that if what arrived was like the photographs in exhibit 2, which shows the 638, if that was the case, I got my deposit back and I did not have to pay for the goods. That does not appear at all in the contemporary documentation. It is not in the supplementary contract. There is no good reason why not, especially when the defendant went to the length in putting in that it had got to come from Sweden. The importance of his requirement that it should actually come from Sweden was never adequately explained. It did not particularly matter because, on any view, it was a peripheral matter nowhere near as important as the fact that he be able to reject the goods if they looked like the second set of photographs he said he received in April. Whether right or wrong in my assessment of the defendant as witness, that point about the contemporary documentation can stand alone and is very powerful support for the plaintiff and it does great damage to the defendant.

19. So, given my view of Mr Lam and my view of Mr Wong, one can see which way the finding is likely to go. However, before making it I have to deal with the evidence of two witnesses that Mr Wong called. He called a friend who had been present in the restaurant in Kwun Tong in February 1998 and he called his secretary, a lady called Idy Yick. I regret to have to say it about Mr Wong, but such was his performance in the manner I have described, I assess him as someone who would not scruple to ask a friend or a secretary to help him if he thought it suited him. I judge him to be a man who would call upon the loyalties that such friendship and such relationship with a secretary would give him.

20. Mr Chan Yiu Ming was the friend. The burden of his evidence was that there were, as he said in his witness statement, a "few" photographs handed over. They were 3Rs. When asked what he meant by a few, he said around four. When cross-examined about that, it became really definitely four, and it could not be - it was impossible - it could not have been three and he would not have that it could be five. About the actual size being 3R and not 4R or anything else, he was adamant. The fact is he was not asked about this until three years after the event. I cannot see that detail such as he now purports to recall in court could have been objects worthy of such attention at the time that he would now retain any accurate impression of either the number or the size. In fact, that answer "it is impossible, it could not be three" demonstrated to me that he was someone not sitting there, like the plaintiff was, doing his best actually to recall what happened a difficult task given the time. He was an advocate for a cause and that was why he jumped to make the assertion that it could not have been three.

21. Accordingly, I was not prepared to act on the evidence Mr Chan Yu Ming. The same applied to the evidence of the secretary Idy Yick. Her witness statement only dealt with her addition of the condition to the supplemental contract concerning the provenance of the machine being Sweden. It did not deal with what is the core of the case to which she now speaks, namely the date when the larger photographs, exhibit 2, came into the possession of the defendant as she now says. It was a crucial assertion in the case that they were given to her in April 1998.

22. She was asked about the handwriting on the back of exhibit 1 where there was a date of 27 February. She did not get off to a good start for the defendant, because the defendant had said that this was the secretary's writing, whereas she said no that was my boss' writing, Mr Wong's. I am afraid that this did not inspire any confidence, but the important or most important matter concerns the date on the larger photographs and when she received them. She said that it was a practice that she had to date documents that were given to her. Therefore on this, following her usual practice, she put the date. What is actually written there, isn't it, a full date, 20 April or anything like that, it just says "April 1998". Many offices have systems, using a receipt chop, for dating the receipt of items. If this was her usual practice, then it is surprising that she did not have a chop. But what is more surprising, is that she did not actually write the full date. An office system that dates documents received merely by designating a month and nothing more is frankly one I have difficulty remembering ever coming across in other circumstances, and frankly it is an unusual one. If you are going to date something, one expects the full date and it is an indication that makes me raise an eyebrow. Not only that, this witness was asked about the quotation document B5. It is common ground that this quotation had been given to the defendant and had been produced for the purposes of these proceedings from the defendant's custody, and the defendant admitted receiving it. It was the case that this witness said that she did all the filing of this kind in 1998. When asked if she noted on this the date it was handed to her, she had a good explanation, she said no she did not do it for documents that had the date on them. But that was not her first answer. I thought her first answer much more revealing: "this document did not go through me". A moment's thought about that reveals that she could not possibly begin to remember an unexceptional written quotation that would have come to her five years ago in the course of her work. The truthful answer would have been that she had no recollection of it and everyone would have thought that an honest and realistic answer. Her assertion then, and this is where she moved first when touched about it, was to say that document did not go through me. That is not something that she could say with any certainty at all. Again it is only a small thing but it is small indications like this that turn on credibility that seem to me to matter, and that reveal, I have to say, that she takes a position much like Mr Chan Yu Ming of being someone who was thinking about the effect of their evidence and wanting to achieve a result rather than honestly recalling facts in the way that the plaintiff did. Accordingly I was not prepared to place any reliance on her evidence, or act upon it, as to the date being April when those photographs exhibit 2 were first received.

23. Having made those findings about the witnesses and their credibility, I come to the crucial finding in the case which is this : that the photographs, exhibit 2, showing the 368 machine were the photographs that were shown in the restaurant in Kwun Tong in February 1998. They are the photographs which identified the machine which was the subject matter of the contract in question. It is common ground between the parties that if I make that finding of fact then the plaintiff proves its case, because the damages, which are pleaded at page A36 of the first bundle where the Amended Statement of Claim is set out, was spoken to by Mr Lam. He went through all those items and demonstrated how those amounts arose and Mr Cheng did not challenge at all and very helpfully and fairly tells me that he has no challenge to those matters.

24. Accordingly, I have no doubt that those matters did result directly and naturally in the ordinary course of events from the buyer's breach of contract and I shall award the sum of $664,918.92 to the plaintiff and I shall dismiss the defendant's counterclaim. I will hear counsel about the application for interest and costs.

[Discussions on costs]

25. Having heard counsel on costs and interests there will be judgment for the plaintiff in the sum of $664,918.92; and interest on $400,000 of that at the rate of 11% and on the balance there will be interest at the judgment rate from the date of issue of the writ to the date of payment, and the plaintiff's costs to be paid by the defendant on both the claim and the counterclaim.