CHU CHEE HA t/a SHOWREEL FILM FACILITIES v. AUDIO CONSULTANTS CO LTD

DCCJ 4074/2003

N THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4074 OF 2003

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JUDGMENT

1. In 1997 the plaintiff, Mr Chu who trades as Showreel Film Facilities undertook to supply a public address system to the Chi Lin Nunnery at Diamond Hill in Kowloon and bought the audio and video equipment for the system from the defendant. It is not in dispute that the parties agreed on the purchase and sale of equipment at a total price of $1,329,725.00 and that the plaintiff paid the defendant a total of $800,000.00 towards that price.

2. In brief, the plaintiff’s pleaded case is that the parties agreed the sale and purchase on 13 October 1997 and that the equipment would be delivered on or before 10 January 1998, but the defendant only delivered part of it by 2 January 1998. There was a telephone conversation on 9 January when Mr Wong of the defendant told Mr Chu that the rest of the equipment would not be delivered on time; this amounted to repudiation and the plaintiff accepted it. Later the parties agreed that the total value of equipment delivered was $676,471.76. There was therefore a balance of $123,528.24 due to the plaintiff. On 6 August 1998 the plaintiff bought other unrelated equipment from the defendant at a price of $14,465.00 and it was agreed that this figure be set off, reducing the balance due by the defendant to $109,063.24 which is the plaintiff’s claim.

3. The defendant’s case is from 13 October 1997 it gave a series of quotations to the plaintiff as the specifications of equipment changed. The parties only entered into an agreement on 10 December 1997 when they signed a copy of a quotation for equipment valued at $1,426,191.00. This agreement was varied by two further quotations, and there was a final agreement dated 7 January 1998 for equipment valued at $1,329,725.00. The initial and final agreements contained the entire agreement between the parties and there was no agreement, express or implied for delivery of the goods by 10 January 1998. Delivery was to be made 6-12 weeks after receipt of a 30% deposit and subject to the final confirmation of the defendant’s suppliers. There was no repudiation of the agreements.

4. The defendant pleads that it delivered a quantity of equipment between 13 October 1997 and 2 January 1998 and on 23 January told the plaintiff that it was ready to deliver a further quantity of equipment but the plaintiff did not accept delivery. The defendant agrees that after the purchase on 6 August 1998 the plaintiff has surplus funds of $109.063.24 with the defendant but says that the cost of the undelivered items amounts to $121,930.00. The defendant offered to sell these undelivered items to the plaintiff at a reduced price of $60,966.50 but the plaintiff rejected this proposal. Some of the undelivered items were sold, but the remainder have no resale value on the open market and the defendant should be permitted set-off of the surplus funds against their value, which leaves a deficit of $12,870.00 owing to the defendant. The defendant further claims on 2 January 1998 it loaned equipment worth $33,000.00 which the plaintiff has not returned. Accordingly, the defendant counterclaims for damages for its loss resulting from the plaintiff’s refusal to take delivery of the undelivered items and for wrongful retention or conversion of the loaned equipment.

5. The plaintiff does not deny the loan of equipment but says that he was prepared to buy it at a reasonable price but the defendant refused to negotiate with him.

The Documents

6. The defendant sent the plaintiff a series of documents bearing to be quotations, as follows:

Q971511-1	13 October 1997	$1,329,725.00
Q971511-1A	21 October 1997	$2,539,926.00
Q971511-2	11 November 1997	$1,631,120.00
Q971511-3	14 November 1997	$1,473,729.00
Q971511-4	21 November 1997	$1,537,081.00
Q971511-5	10 December 1997	$1,426,191.00
Q971511-6	19 December 1997	$1,333,593.00
Q971511-7	6 January 1998	$1,329,725.00

7. Although in evidence the parties spoke of the 1^st to the 8^th quotations, I will refer to them by the suffixes to their serial numbers, as Q1 to Q7.

8. Although Q1 and Q7 were for the same price there are fairly considerable differences between them. In particular, in the latter an “Individual Sound System” and a “PA System for Open Area” have been added. It is also noted that an item of 85 loudspeakers was changed from Altec model 409-8T and 409–4T to model 309-8T and 309–4T. Ultimately it seems that 46 model 8T and 45 model 4T loudspeakers were quoted for and supplied.

9. The plaintiff issued its own quotation to the Nunnery dated 16 October 1997 and invoiced the Nunnery on 25 August 1998 for the work done. There are again some differences. A video system in the quotation does not appear in the invoice, but a “PA System for Open Area” was added. The quotation includes 33 Altec 409-9T and 52 Altec 409-ST loudspeakers; the invoice charges for 46 model 309-8T and 45 model 309-4T loudspeakers.

10. The quotations were all in a standard form and at the end of each was set out the following:

TERMS AND CONDITIONS :
PRICE	:	TOTAL NETT CIF HONG KONG IN HK DOLLARS
PAYMENT	:	30 DAYS AGAINST INVOICE
DELIVERY	:	6-12 WEEKS AFTER RECEIPT OF ORDER CONFIRMATIONS & SUBJECT TO THE FINAL CONFIRMATIONS BY THE SUPPLIER.
VALIDITY	:	30 DAYS FROM DATE HEREOF.

11. The quotations also contained the following:

SCOPE OF WORK

Work included the supply and installation of all equipment specified, all necessary fitting, wiring installation is, testing and commissioning but does not include...(the matters not included are not relevant here).

12. The quotations were all chopped and signed on behalf of the defendant. Q5 and Q6 were chopped and signed on behalf of the plaintiff.

13. Goods were delivered, and delivery notes have been produced in respect of them, on the following dates, 13 December 1997, 17 December 1997, 29 December 1997, 31 December 1997 and 2 January 1997.

14. There is also a transmittal form in respect of loan equipment dated 2 January 1998. The equipment is an “Autopatch 4YDM 8 in 8 out A/V Switcher”. There is, as I have indicated no dispute that the defendant lent this equipment to the plaintiff. The plaintiff had ordered an “Autopatch 4YDM 8/20 Mono Audi Matrix Switcher” which appears on the defendant’s list of goods available for delivery on 23 January 2002. As will be seen the switcher was an essential part of the installation. For convenience, I will refer to the two items respectively as “Autopatch 8x8” and “Autopatch 8x20”.

15. The plaintiff paid the defendant $500,000.00 on 10 December 1997 and  $300,000.00 on 31 December 1997. Payments were by cheque and the relevant documents are produced.

16. The plaintiff received a cheque from the Chi Lin Nunnery dated 10 December 1997 for $1,000,000.00. The relevant invoice is dated 31 March 1998. On 25 August 1998 the plaintiff presented his final invoice to the Nunnery for a further $1,000,000.00, being a total itemised sum of $2,436,499.00 minus the payment already received, and then further discounted.

The Issues

17. The major issue in this case it is whether the parties made a contract, partly in writing and partly oral, based on Q1 but thereafter varied by the following quotations, and containing a term that delivery was to be completed by 10 January or some other date close to that date, or whether as the defendant says, the contract came into being when the parties signed Q5, and was thereafter varied by Q6 and Q7, and the written terms and conditions bind the parties.

18. The defendant argues that the contract is a written contract so that the parol evidence rule applies. The plaintiff is bound by the written delivery condition and extrinsic evidence to contradict it is inadmissible. The defendant's other contention is that even if the evidence is admissible, the plaintiff has not discharged his burden of demonstrating on the balance of probabilities that his delivery date replaced the written delivery condition.

19. Mr Baillie for the defendant cites a passage in Phipson on Evidence, 9^th Edition at page 599 that one of the grounds of exclusion commonly given is

“that when the parties have deliberately put their agreement into writing, it is conclusively presumed between themselves and their privies that they intend the writing to a form a full and final statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith or treacherous memory.”

20. The learned and author, however, goes on to say the following (in the 15th edition at page 1166):

"The rule applies when the document is accepted as a document operating in accordance with its terms. It does not exclude evidence which attacks it, e.g. as not being genuine or duly executed or not carrying out the intention of the parties or subject to a condition, etc."

21. Here, the plaintiff's case is that the written terms do not carry out the intention of the parties, and that it was specifically agreed to between himself and Mr Wong that the written delivery term would not apply. It seems to me that in the circumstances of this case, a particularly where the plaintiff was leaving matters of paperwork to his secretary, Ms Leung and Mr Wong was a sales manager, employed by the defendant's parent company against a background of financial control exercised by others such as Mr Lau and leaving at least some of the direct communication to another, namely Ms Joanne Lee, extrinsic evidence must be heard. It is all very well for a party to say that it has a written document signed by representatives of both sides, and that document must therefore be binding but that is not necessarily so. If something else was really agreed between the parties, then to exclude evidence would lead to injustice.

Evidence

22. The plaintiff adopted a written statement as evidence, but then his counsel proceeded to examine him at length, as if there were no statement. In brief, his evidence is that he had previous dealings with the defendant which were always on the basis of cash on delivery. He started dealing with Mr Wong of the defendant about this project in October 1997. The latter provided the various quotations and drawings. He asked for a rough quotation to show his client, and received Q1. He told Mr Wong that the project must be finished by the beginning of January. Mr Wong told him that the defendant should be able to supply all the equipment by then. He mentioned the delivery term in the quotation and Mr Wong said that that was only the usual practice of the defendant. Mr Wong knew all along that the plaintiff had to finish the project by early January, in time for the opening of the Nunnery.

23. The plaintiff was not clear in his evidence as to when that opening was. I myself asked him, and he said that it was in early January but he could not remember the date. I also asked him how long it would have taken him to install all the equipment if it had been delivered on 2 January 1998; he said that, in effect, he was unable to say, because it depended on the number of men he could put on; he had 100 or 200 men working 24 hours a day. He was still quite unclear about when his deadline was, with reference to 2 January.

24. The plaintiff said that in fact he asked for delivery in early December because it would take him three weeks to install the equipment. Delivery was not made by then, but he accepted it when made because he still had time for installation. The later quotations came about because Mr Wong told him that some of the equipment was not available. Therefore, they had to amend the model numbers. Some of the equipment would not be available before the opening of the Nunnery.

25. With regard to the terms of the quotations, the plaintiff said that although the "scope of work" provision in the quotations called for the defendant to carry out installation and testing, this was not required and not done. All the defendant had to do was deliver the equipment to the site. Although the quotations required a 30% deposit, this was never discussed. In the dealings between the parties, payment was always made by cash on delivery. 

26. With regard to the Autopatch 8 x 20, the plaintiff said that this would not be available in time for the opening. He made a lot of noise, and Mr Wong proposed to lend him at the inferior model, the Autopatch 8 x 8. He had to make a lot of changes in the wiring because of this. However, once this had been done he would be unable to put in the 8 x 20 model. This was because it was a wooden building; it would not be possible for him to do any more things in it. Mr Wong knew this from his own experience. The plaintiff agreed that he had received the Autopatch 8 x 8 on loan but had not returned it.

27. From the written statement, it appeared that the plaintiff himself had signed Q5 and Q6 but in oral evidence he said that Ms Leung had signed them, and she confirmed this. In fact, he did all the technical work and he left all the paperwork to her.

28. Also, from the written statement it appeared that there was a conversation on 9 January 1998 when Mr Wong told him that some of the goods would not be available and he said that he would not accept them. In oral evidence, he said that he told Mr Wong that after the opening it would not be possible for him to do anything, and therefore he would not be able to accept any equipment. Mr Wong said that he understood that. It was a rule of practice in that the parties' field that even if one had ordered something, before it was paid for it could be returned or changed, because everything was done on the basis of cash on delivery.

29. According to the plaintiff, the payments which he made were not by way of deposit but by way of payment for equipment which was ready for delivery.

30. Under cross-examination, the plaintiff said that he had not told Mr Wong at the outset that his deadline, which was the Nunnery opening, was to be 10 January 1998. He told Mr Wong this later; but he could not remember when he told him. He was asked if the Nunnery had imposed a deadline, for there was none in his quotation to it. He said that it had, and the deadline was indeed the ceremony, which was on 10 January. In fact the date of 10 January seemed to become more certain as the cross-examination progressed.

31. As to the Autopatch 8 x 8, the plaintiff agreed that this was on loan and that he had never returned it. He had charged the Nunnery for an Autopatch, or his secretary Ms Leung had, for $92,396.00; but this, he said, was not the Autopatch 8 x 20 the defendant had quoted for, and not the Autopatch 8 x 8 that he had installed. Then he said that it was indeed the Autopatch 8 x 8 and he did not know how the invoice had come about.

32. The plaintiff’s secretary, Ms Leung likewise adopted a written statement, but then went on to give extensive evidence which was not covered by it. In the statement she said that all the negotiations were done by the plaintiff himself but in oral evidence she said that she was involved in them. She had direct contact with Mr Wong or his secretary Ms Joanne Lee because she had to follow up on the documentation. At the end of November 1997 Mr Wong said that some of the equipment was not available.

33. Ms Leung said that she signed Q5 because Joanne told her that the defendant had a batch of goods worth $500,000 ready to deliver. She was told to prepare a cheque for that figure which had to be sent to the defendant before delivery could be made. She did so, because the parties had always dealt by cash on delivery. She signed the quotation because Joanne Lee of the defendant asked her to sign it as a confirmation for the defendant's record purposes. She knew that the quotation was in the standard form, that the defendant could not change it and that if she did not sign, the defendant will not deliver. Nevertheless, she asked Joanne about Mr Wong's promise about the time of delivery and Joanne told her that if Mr Wong had promised delivery they should be no problem. She knew about this promise because she had been present when the plaintiff was talking on the telephone about it to Mr Wong. Actually, she proposed to Joanne that at the delivery term and the scope of work terms should be crossed out that Joanne said that it could not be done.

34. With regard to the second payment, Ms Leung said that this also was made by way of payment for goods which were ready for delivery.

35. In her written statement, Ms Leung said that on the night of 9 January 1998 Mr Wong telephoned her to say that the remaining goods listed in the quotation had been shipped but there was no definite arrival date, so it was not possible to make delivery by 10 January. She stated to him that the plaintiff would not take the remaining goods under such circumstances. She maintained this in oral evidence although, as I have noted, but the plaintiff himself said that it was he who had this conversation with Mr Wong.

36. Ms Leung was also cross-examined at length. She could not explain why she had invoiced the Nunnery for a different Autopatch device than the 8 x 8 or the 8 x 20; she could not remember if she had mixed things up, or mistyped the entry. But she said that in any event, what was installed was the 8 x 8 model.

37. She had, apparently, prepared the plaintiff’s invoice to the Nunnery by simply copying Q1 and applying a mark-up.

38. She was further asked why, although the defendant had quoted for an “individual sound system” this was not included in the invoice from the plaintiff to the Nunnery. She said that she did not have to put exactly the same in the invoice as appeared in the quotation. To be fair it appears that the components of the individual sound system were included in the delivery notes, and were charged for by the defendant in the invoice. But this kind of thing is indicative of a rather confused approach to the paperwork. I will return to this point later.

39. I have not sought to rehearse all the evidence of the plaintiff and his witness, particularly that given in cross-examination. I will refer to it further as necessary in evaluation.

40. In brief, the evidence of Mr Wong, the defendant’s Sales Manager (Fixed Installation) as it appears from his written statement was that the parties had had dealings for some years before this matter arose. They always dealt on the basis of the terms set out in the defendant’s quotations, at any rate when equipment had to be ordered from third parties, though the equipment could be sold by cash on delivery if it was made by the defendant or its parent company. In this case the plaintiff asked for a quotation in October 1997 and Mr Wong provided it, along with design drawings. No order was placed at that stage. Thereafter the series of other quotations was produced at the plaintiff's instance. The order was placed when the plaintiff signed and returned Q5 and gave the defendant a cheque for $500,000 as a 30% deposit. Thereafter deliveries began. As was normal, the equipment was delivered gradually and systematically to the site. Changes were thereafter made at the request of the plaintiff. On 31 December 1997 the plaintiff gave the defendant another cheque for $300,000, being part payment of the contract price, as fixed by the initial agreement at that stage.

41. According to Mr Wong, the parties were bound by the delivery terms written on the quotations. Neither party intended, nor did he promise to the plaintiff that in the equipment would be delivered on or before 10 January 1998.

42. After the deliveries had been made up to 6 January 1998, the plaintiff was left with a credit balance of $123,528.24. On 23 January 1998, the defendant sent a fax to the plaintiff listing the remaining goods which were to be delivered but the plaintiff never accepted them.

43. In August 1998, there was a further delivery of goods unconnected with the nunnery project. This was agreed because the plaintiff still had a deposit balance with the defendant. It was approved by the financial controller.

44. In late 2002, there were some negotiations between Mr Wong and Ms Leung who proposed reimbursement of the deposit balance or alternatively credit to be given against future sales. Mr Wong after consultation with his financial controller, Mr Lau, did not accept this. Later in the defendant proposed that the plaintiff take delivery of the undelivered goods for $60,966.50 but the plaintiff refused to accept it. The defendant was able to sell some of the undelivered goods but the value of those remaining is $121,932.

45. With regard to the Autopatch 8 x 8, Mr Wong said that this was lent on 2 January 1998 to assist the plaintiff at his request in an emergency situation. It had never been returned. According to Mr Wong's statement its cost price was US$4,200.00 and its market value and selling price was US$6,000.00. This means that the defendant suffered a loss at cost value of $32,760.00 or at market value of $46,800.00, in respect of this piece of equipment. The defendant's loss on the undelivered equipment, by calculating its value against the deposit balance, is $12,868 76.

46. In oral evidence Mr Wong said that he was never told by the plaintiff that the equipment was particularly needed for the opening ceremony at the Nunnery on 10 January 1998. He produced a chart, exhibit D1, which shows differences between Q1, Q5 and Q7.

47. Under cross-examination, Mr Wong admitted that he was told that there would be an opening ceremony for the Nunnery in early 1998. He modified that, to say that he knew that the plaintiff would have to complete his contract in early 1998, but he did not know that there would be an opening ceremony. He only knew about this from solicitors’ correspondence.

48. Mr Wong said, with regard to the items in the quotations for installation, commissioning and testing, that the defendant had provided such a service. Then he said that the plaintiff requested testing and commissioning, but not installation. However, he admitted that neither he nor his colleagues had gone to the Nunnery to carry out testing and commissioning.

49. Mr Wong insisted that the payment of $500,000 represented a 30% deposit, although it was not in fact 30% of the contract figure. Any further payment of $300,000 did not represent a deposit. This payment was made because the plaintiff was already over the defendant's account limit.

50. With regard to the Autopatch 8 x 8 switcher, Mr Wong said that the plaintiff had asked him to find one for him. Mr Wong knew that it was needed for the Nunnery project and that there was an emergency but he did not know the extent of the emergency. He did not propose that the loan of the Autopatch himself. He denied that he had lent it because he knew that the defendant was in breach of an agreement to deliver the goods by 10th January. He insisted that there had never been any such agreement.

51. In re-examination, Mr Wong said that the Autopatch 8 x 20 could have been exchanged for the Autopatch 8 x 8. The numbers signify input and out put connections. If the wiring was set up for 8 output connections, 8 of the 20 could be used.

52. Evidence was also heard from the financial controller Mr Lau, who spoke to the defendant's policy on ordering. He said that after receipt of the signed quotation by the customer and receipt of deposit, if a deposit was required, the defendant would start placing the order form of the third party products. It would not act on an order unless the order was confirmed and a deposit receipt received if the receipt was required. For the defendant's own products, it did not need a deposit but the defendant would not risk ordering third party products before it got a deposit.

53. Mr Lau said that the Autopatch 8 x 20 was ordered on 16 December 1997. It landed in Hong Kong on 1 January 1998. Customs clearance would take three to four days. The defendant was still holding the Autopatch 8 x 20.

54. In cross-examination, Mr Lau said that he had authorised the August sale because he thought that it was to do with the Nunnery. He produced a printout of a list of payments and receipts for the transactions with the plaintiff which he said came from his computer.

55. Ms Leung was recalled on this point. She said that she had prepared the list and given a copy of it to Joanne on a floppy disk. There was some confusion as to whether an entry "V.O." against the August transaction signified "variation order" or "verbal order" but this was not particularly significant.

56. I have not dealt with evidence of the August sale, or why it was made, because I do not think it particularly important. There is no dispute that the sale was made and the cost set off against the money in hand which the defendant was holding. Whether this was authorised by Mr Lau because he thought it was part of the Nunnery project, or put up by him by Mr Wong without insistence that the plaintiff paid for the goods also held really takes the case nowhere.

Evaluation

57. All the witnesses were unsatisfactory to some degree. The obvious and glaring problem with the evidence of the plaintiff himself is that although he was seeking to rely on an agreed specific delivery date, namely 10 January, he could not really remember either the date which was actually agreed or the date of the opening ceremony. His idea that it was on 10 January seemed to crystallise by repetition in the course of his evidence. Ultimately, however, we do not really know whether it was 10 January or some other date close to that; the only really definite evidence is that it was some date in early January. Obviously, if a date had been agreed, it would have to be sufficiently in advance of the opening ceremony date for the plaintiff to complete such work as was necessary for the ceremony; according to him, the whole of the project.

58. It was suggested to the plaintiff, and he did not agree with this, that he did not need to finish all his work by the date of the ceremony, and that the project continued after January 1998. His final invoice was not submitted to the Nunnery until August 1998. Generally it appears that what was supplied by the defendant was charged for in the plaintiff’s final invoice. It appears that some of the items which appear in it were not supplied by the defendant; the plaintiff said that they were bought “on the street”. Of course, this does not mean that they must have been supplied after January. However, this does rather call into question the plaintiff’s assertion that he wanted the defendant to be the sole supplier of equipment for this job, and to have it all supplied by an agreed date.

59. In the invoice, the plaintiff has charged the Nunnery for a series of Altec model 409 loudspeakers. What were delivered were model 309 loudspeakers. According to the comments on Exhibit D1, which Mr Wong adopted, there is a price difference between the two models. I do not think this is particularly significant; Ms Leung, it appears, drafted the original quotation from Q1, with the plaintiff’s mark-up included and the loudspeakers in Q1 were model 409. However, it does tend to show a rather confused approach to the paperwork.

60. It appears from the invoice to the Nunnery that the plaintiff has charged it for an Autopatch 1-YDM control system rather than for an Autopatch 4-YDM 8 x 8 or 8 x 20. It seems most likely that on this point the plaintiff or Ms Leung or both of them have simply become confused. Only one Autopatch was fitted; the plaintiff said that he changed the wiring to accommodate the 8 x 8 model instead of the 8 x 20, and ultimately the former was fitted. There does not seem to have been any reason to install a totally different device.

61. A problem which arises between the evidence of the plaintiff and Ms Leung relates to the telephone call by which, it is said, the plaintiff told the defendant that it would take no further equipment because the defendant had not delivered on time, and thereby accepted the defendant's repudiation. Each of the witnesses claims to have had this conversation with Mr Wong. They cannot both have done so. Mr Wong for his part said that he never had such a conversation with anybody.

62. Turning to the evidence of Mr Wong, however, although he said that he never knew of the date of the opening ceremony of the Nunnery, his evidence on this point was self-contradictory. At first, he said that he knew that there was to be a ceremony, but he did not know when. Later it he said that he only heard of it from solicitors' correspondence. It seems most unlikely that if the plaintiff was working to the deadline of a ceremony he would not have told Mr Wong the date of it, even if Mr Wong was not himself aware of this “landmark” religious ceremony.

63. I found Mr Wong that rather evasive on the question of the "scope of work". The defendant quoted for doing installation, testing and commissioning work. But such work was never done. He insisted that the plaintiff wanted a quotation for this, or at any rate for the testing and commissioning, if not the installation. But there was no reason for the plaintiff to want this.

64. Overall I have the impression that none of the witnesses, except perhaps Mr Lau who was directly involved is entirely truthful or entirely accurate. I have to decide which parts of their evidence I can accept by reference to the documents and the inherent probabilities and improbabilities of the situation.

Findings

65. The plaintiff's pleaded case is that the contract between the parties came into being with Q1 and was partly written and partly oral. It is, however, a fact that although there was a series of quotations, no money was paid until 10 December 1997 and no equipment was delivered until 13 December 1997. Further, there were substantial differences between the equipment quoted for in Q1 and Q5. I am not satisfied that the contract came into being with Q1. It is more probable than not that it came into being when the plaintiff paid the money on 10 December 1997 so that deliveries could begin.

66. The next question is whether Q5, as amended ultimately by Q7 represents the agreement between the parties so that they are bound by its terms.

67. The defendant included installation, testing and commissioning work in its quotations, but such work was never done. Maybe it was there so that Ms Leung could include it in her quotation to the Nunnery, which it appears she made by reproducing the defendant’s quotation with the prices marked up; but I do not believe Mr Wong that the plaintiff ever asked for testing and commissioning.

68. Further, although according to the defendant it invariably insisted on a 30% deposit, neither of the payments represented 30% of the price quoted. The second payment, indeed, was not intended, on the evidence of both Mr Wong and Mr Lau, to represent a percentage of anything. It had rather to do with the plaintiff having exceeded an account limit. So clearly, the evidence given for the defendant on this point cannot be accepted. At the same time, the first payment did not represent the actual price of goods which were about to be delivered. Leaving aside any argument about who was the author of the chart, Exhibit D2, there is no dispute that the values of the goods delivered as shown therein are correct. The value of the goods delivered on 13 December was $90,98.80. Therefore, the evidence given for the plaintiff on this point cannot be accepted either, although it is true that goods delivered on 29 December were valued at about $300,000.

69. I accept that it is inherently improbable that the defendant would have agreed to a definite delivery date for equipment which had to be ordered from third parties, and was not within its own control. At the same time, there is nothing to indicate that the plaintiff did not have to finish his project by the time of the opening ceremony, and I accept his evidence that he did. It is inherently improbable that the plaintiff would have accepted a six to twelve week delivery schedule subject to the control of the third party supplier when he had to finish the job in less than six weeks.

70. In the light of the above facts, I do not see how it can be said that the parties intended to be bound by the terms and conditions written on the quotations. The evidence for the plaintiff it is that it did not intend to be so bound. Ms Leung says, and it was she who signed those quotations which were signed, that Joanne Lee told her that if she did not sign, the defendant would not deliver. At the same time, Joanne told her that if Mr Wong had promised delivery to a deadline they should be no problem. The defendant was quoting for work that it never did, and accepting payments which did not represent the percentage which it claimed had to be paid. Even on the defendant's own evidence, it was prepared to depart from its standard terms and conditions where the equipment to be supplied came from itself or its parent company. Indeed the impression gained from the evidence is that both sides were more concerned with practical matters in the first instance and left the paperwork to catch up later.

71. It seems to me more probable than not that the defendant or its employees treated the quotations and the terms and conditions written on them as a formality which did not necessarily represent what was really agreed. In the circumstances I do not see how they can now say that Q5 as amended by Q7represents the agreement between the parties.

72. The next question is, what if anything was agreed with regard to delivery?

73. I accept the plaintiff’s evidence that he had to have his system up and running in time for the opening ceremony of the Nunnery, whenever that was, and could not change it thereafter. There is nothing which supports the suggestion that the job went on after January 1998. However, I am not in a position to find that the opening ceremony - or the start of it, if it ran on for two weeks as the plaintiff says - was on 10 January 1998; the plaintiff’s evidence on that is far too uncertain. I do not believe Mr Wong when he says that all he knew was that the plaintiff had to complete his contract with the Nunnery some time in early 1998. The opening ceremony of the Nunnery is, the plaintiff says, a religious landmark, and I can accept that; it was a big job; as I have said, it is most unlikely that he would not have told Mr Wong the date of the opening ceremony even if Mr Wong did not know that for himself. But that does not help me; it still does not indicate a definite date. It is obviously very difficult to accept evidence that the parties agreed on a definite delivery date, if the party contending for it cannot specifically identify that date.

74. I accept, for Mr Lau says so and there is nothing to contradict him, that the Autopatch 8 x 20, which the plaintiff regarded as the most important part of the equipment he needed for the opening was ordered on 16 December 1997. As I have indicated, it is improbable that the defendant would have agreed to a definite date for delivery of third party equipment when there was only something like 24 days remaining before the opening, if indeed that was to happen on 10 January, or less if it was earlier.

75. It may of course well be, as Mr Wong says that he told the plaintiff that the defendant should be able to deliver everything in time, at some point in the negotiations between them. That is not the same as agreeing a definite deadline when the actual order was placed i.e. on 10 December. I am not satisfied to the requisite degree an agreement for a specific deadline was made.

76. If no agreement for time of delivery was made the provisions of section 31(3) of the Sale of Goods Ordinance come into play and the delivery must be within a reasonable time. Given that the equipment was coming from third parties, in particular in the U.S.A., it is difficult to say that a reasonable time would be as little as 24 days or less. It might have been; perhaps the equipment could have been sent by courier or air freight but there is no evidence about this. There is however evidence from Mr Lau, again uncontradicted, that the Autopatch 8 x 20 arrived in Hong Kong on 1 January and would have taken 3 to 4 days for Customs clearance. If this is right it is difficult to see why there was any need for the loan of the Autopatch 8 x 8 on 2 January, and it is also difficult to see that the defendant was not in a position to deliver within a reasonable time.

77. It is in any event difficult to see why, if the Autopatch 8 x 20 was available in early January, or even after 23 January, the plaintiff could not have accepted it and simply substituted it for the 8 x 8. Mr Wong said that that could be done; as I understand him, if the wiring is set up for 8 x 8 one can still use 8 of the 20 output connectors. That makes sense, so long as the unit is small enough and the plaintiff would not have needed to break walls or something of that sort to carry out the substitution. But there is no conclusive evidence on that point.

78. As to the plaintiff’s purported acceptance of the defendant’s repudiation in the telephone conversation on 9 January, I cannot find that that conversation took place. As I have indicated, the plaintiff and Ms Leung both say that they had this conversation. They cannot both have done so. I can believe neither of them on this point. The net result is that I do not find that the defendant was in breach of the contract, or that the plaintiff accepted its repudiatory breach.

79. So far as the defendant’s losses are concerned, Mr Wong says that the loss on the undelivered equipment is $12,870.00. This is uncontradicted. So far as the Autopatch 8 x 8 is concerned, there is again contradiction of the defendant’s evidence of the cost price and market value of this item. The plaintiff has in fact charged the Nunnery $92,396.00 which appears to be a mark-up of 5% of the quoted price of $87,997.00 for the 8 x 20 model. Mr Lau says, and again this is uncontradicted that the 8 x 20 model has not been sold. I take it that it is one of those items which the defendant could not sell. So the defendant’s loss is the market price.

Result

80. In the result, the plaintiff’s claim for $109,063.24 fails. The defendant succeeds on its counterclaim. Its loss on the undelivered equipment after taking into account the sum of $109,063.24 is $12,870.00. The defendant obviously cannot have delivery of the Autopatch 8 x 8 but it can have its alternative claim of damages and its loss is $46,800.00.

81. The plaintiff’s claim is dismissed with costs to the defendant to be taxed if not agreed. The defendant will have judgment on its counterclaim for $59,670 with interest thereon at the judgment rate from the date of filing of the counterclaim until payment, and costs to be taxed if not agreed. Since the judgment is to be handed down the costs orders are nisi.