Century Talent Investment Ltd. v. Danzas Aei (HK) Ltd.

DCCJ3664/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3664 OF 2001

_________________

J U D G M E N T

_________________

1. The Plaintiff claims in this action against the Defendant for $324,414.35, being the charges for transportation services rendered to the Defendant, and the Defendant counterclaims against the Plaintiff for $448,502.85, that being the value of goods which were lost whilst in the care and custody of the Plaintiff.

2. There is no dispute on the liabilities of the claims and also the amount so claimed. The only issue here is whether the Defendant is entitled to a set-off of the claim.

3. The Plaintiff alleges that there was a binding agreement between them under which the Defendant agreed to allow the Plaintiff to pay off the sum of $448,502.85, the subject amount of the counterclaim, by way of 30 instalments but this is denied by the Defendant.

4. Here is the evidence of the Plaintiff's witness, Yuen Wing-shing (hereinafter called "Yuen"):-

Yuen is the manager of the Plaintiff which has a contract with the Defendant for the provision of transportation services since 1996. On 19 June 2000, certain goods belonging to the Defendant's customer, Phillips Electronic Hong Kong Limited (hereinafter called "Phillips") were stolen from the Plaintiff's goods vehicle. Compensation for the lost goods was under discussion between "Yuen" and Wallace Chan(?) (hereinafter called "Chan") of the Defendant. "Chan" indicated that Phillips demanded a full compensation for the actual value of the goods stolen and would claim against the Defendant for other losses. Therefore, "Chan" required the Defendant to compensate the actual value. "Yuen" refused it and told "Chan" that the Plaintiff only made a marginal profit and was unable to pay for the actual value. "Chan" said that if the Plaintiff failed to do so, the Defendant would instruct another transportation company for the services.

5. In about mid-July, having discussed the matter with other shareholders of the Plaintiff, "Yuen" suggested a proposal to "Chan" in that the Defendant agreed to pay the amount of $448,502.85 to the Defendant by way of 30 instalments to be deducted from the Plaintiff's account for service $15,000 each month until the sum was paid off.

6. At that time, "Chan" prepared a letter together with an agreement for compensation (see page 75 and 76) for "Yuen" to sign, but he refused to sign for he had to take them back to consult other shareholders for their approval. "Yuen" made it clear to "Chan" that the agreement for compensation was subject to conditions, namely a) the Defendant must continue to instruct the Plaintiff for the transportation services; b) the Defendant must supply proof that the Defendant and Phillips had reached an agreement on the amount of compensation before the Plaintiff would start to pay. "Chan" agreed to such conditions and told "Yuen" that they would negotiate with Phillips to reach a minimum compensation sum and would notify the Plaintiff.

7. Later, "Yuen" was asked to attend a meeting where the Defendant and the representatives of Phillips were also present. During the meeting, "Yuen" handed over a letter dated August 1, 2000 (see page 77) to "Chan" in which the Plaintiff agreed to compensate the Defendant the sum of $448,502.85 by way of 30 instalments. As the Defendant had not reached an agreement with Phillips, the exact time for commencing for the first instalment could not be ascertained and therefore "Yuen" did not put down the commencing date for the first instalment in the letter.

8. On 27 September 2000, another theft of Phillips' goods occurred and "Chan" told "Yuen" that they would not assign any more of Phillips' goods to them for transportation. Since November 2000, the Defendant stopped paying the Plaintiff for the services already provided and "Chan" said that he would deduct the agreed compensation in one go from the Plaintiff's account.

9. Yuen accused the Defendant of breaching their agreement of payment by instalments. In or about January 2001, the Plaintiff refused to accept any more orders from the Defendant.

10. Here is the evidence of the Defendant's witness, Wallace Chan:-

"Chan" is the General Manager of the Defendant. After the theft of Phillips' goods on 19 June 2000, he took up the matter with "Yuen" and had a meeting with him about compensation in early July. During the meeting, "Chan" told "Yuen" that Phillips had already lodged their claim with the Defendant for full compensation of the goods lost in the sum of $448,502.85 and expected the Plaintiff to compensate the Defendant the same amount. However, "Yuen" said that it would cause hardship to them and requested the Defendant to negotiate with Phillips for a smaller sum. "Yuen" also urged him to continue giving the Plaintiff business and more orders, so as to help the Plaintiff pay the compensation.

11. On or about 11 July, a meeting was held with Phillips and "Yuen" was also present. He knew full well that Phillips insisted a full compensation. "Yuen", after the meeting, had told "Chan" that he had to go back to discuss the matter with other shareholders and would come back to him with a definite answer. Later, "Yuen" telephoned "Chan" that the Defendant agreed to compensate the Defendant for the full value of the goods in the sum of $448,502.85, but indicated that the Plaintiff might not be able to do so in a lump sum.

12. "Chan" said that it was important that the Defendant agreed in principle to pay the full amount, but regarding the manner of payment it might be flexible. However, Chan also made it clear to "Yuen" that if there be no agreement on the manner of payment, the Plaintiff would ask the Defendant to pay in a lump sum, to which "Yuen" agreed. "Chan" was given instruction that the Defendant would accept payment from the Plaintiff by two to three instalments, but in any event, should be paid within a period of six months. Then Chan prepared a letter together with the agreement leaving the instalment part blank.

13. On 26 July, "Chan" handed over the two documents to "Yuen" and discussed with him about the manner of payment. "Chan" informed "Yuen" the position of the Defendant regarding payment by instalment, but "Yuen" refused to sign on the document saying that he needed to obtain approval from other shareholders in relation to the matter of instalment.

14. On or about 1 August, "Chan" received a letter from "Yuen" to the effect that the Plaintiff accepted and agreed to pay the said sum by 30 instalments. "Chan" at once called up "Yuen" telling him that his proposal was unacceptable. Since then, "Chan" repeatedly chased "Yuen" for the payment of the said sum, but in vain. As a result, the Defendant had no alternative but to withhold delivery service payments to the Plaintiff as a set-off.

15. In or about January 2001, the Plaintiff refused to take up any further orders from the Defendant.

16. On 30 November 2001, the Defendant paid a sum of $448,502.85 to Phillips in settling their claims against the Defendant in respect of the stolen goods in June 2000.

17. Here is the assessment of evidence:-

It is clear from the evidence that there was at least an agreement reached between the parties that the Plaintiff had accepted responsibility for the loss of the goods in its custody and agreed to pay the Defendant the value of the goods, i.e. $448,502.85, but whether there was a consensus on manner of payment, the court has to look at, in particular, what the parties had said and done over this matter to find out if they had a meeting of minds.

18. The Plaintiff's own witness, "Yuen", does not impress me as a frank witness. He was evasive, especially when asked by the defence counsel as to when the Plaintiff would start paying the first instalment. He had given a number of different answers but in the end he seemed to say that the Defendant had to have proof of actual payment made to Phillips by the Defendant.

19. In the Plaintiff's reply and defence to counterclaim, paragraph 9, it states that the Plaintiff and the Defendant had also agreed that only when the owner of the said goods lodged his claims so that the exact amount of the claim was ascertained, the Plaintiff then start to pay the monthly instalment. Nowhere in the Plaintiff's pleading does it say that it was dependant upon evidence of actual payment and in Yuen's witness statement, paragraph 10, he says the Defendant must provide the relevant document proving an agreement of compensation for stolen goods has been reached between the Defendant and Phillips Electronic Hong Kong Limited and thereafter the Plaintiff would start to pay the instalments.

20. This is clearly different from what he said in the witness-box. In Yuen's statement, paragraph 13, he said that after he hand over the letter of August 1st to "Chan", he explained why there was no due date for the first instalment. It was because the Defendant did not reach an agreement with Phillips. It is not clear what he meant by "not having reached an agreement", but judging from the paragraphs that follow, it seems that the Defendant had yet agreed to pay Phillips the actual value of $448,502.85 as demanded by Phillips. If there was not any concrete agreement between the Defendant and Phillips about the amount of compensation at the conclusion of the meeting where the letter of August 1st was handed to "Chan", as seems to be the case, how could the Defendant have agreed to accept the terms of the Plaintiff in paying the said sum by 30 instalments? It just does not make sense.

21. Moreover, I find it hard to believe that the Defendant would agree to payment by 30 monthly instalments when it would have to pay Phillips the same amount in one go. Bearing in mind what the Plaintiff had said that they would start to pay only after the Defendant had paid Phillips, the length of time is just too long that it is unreasonable to expect that Defendant would be willing to bear all the costs for the theft which occurred through no fault of its own.

22. In my judgment, it is more likely to be the situation that the Defendant gave some allowance to the Plaintiff to make payment by instalments, but no more than six months.

23. If there was an agreement for payment by 30 instalments, as alleged by the Plaintiff however, the letter dated August 1st did not accord with the existence of such an agreement. Words like "it is agreed" or "pursuant to our verbal agreement" etc., are lacking in the body of the letter and no requirement of countersigning to confirm the contents. In my judgment, this letter is no more than an offer or a proposal to the other side to accept payment by 30 instalments.

Conclusion:

24. Having considered all the evidence on a civil standard and based on the reasons I set out above, I believe that the Defendant's version of events is more likely to be the truth that there was not any agreement between the parties concerned as to the payment of the said sum by 30 instalments.

25. As there is no dispute on the liabilities of claims and the quantum, my judgment is as follows:-

- Judgment for the Plaintiff for $324,414.35.

- Judgment for Defendant's counterclaim for $448,502.85.

- Defendant is entitled to a set-off and judgment for Defendant for the balance of $124,088.50.

- Interest on the sum of $124,088.50 from the date of writ at 12.5 per cent per annum to the date of judgment and thereafter at judgment rate until payment.

(Costs submission)

26. Costs to the Defendant with certificate for counsel to be taxed if not agreed.