SIU KEE (HONG KONG) TANNERY LTD v. DREYER & CO LTD

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J U D G M E N T

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1. The Plaintiff ("Siu Kee")in this action claims the sum of $172,046.70 being the balance outstanding in respect of goods sold by Siu Kee to the Defendant ("Dreyer") and delivered at the request of Dreyer to Liu's Shoes Manufacturing Co. Ltd. ("Liu's") of which full particulars had already been supplied to Dreyer. Despite demands to pay the said sum this has not been done and they ask for judgment for that amount. Dreyer in its equally brief statement of defence simply says that it never at any time purchased any goods from Siu Kee nor did it request Siu Kee to deliver any goods to Liu's

The evidence for the Plaintiff

2. There was only one witness called for Siu Kee, Mr. Wong Yui-chuen, a director. His evidence was that over a period of some years leather had been ordered by a Mr. Liu Ming-sun who he understood to be an employee or representative of Dreyer. He said that Liu Ming-sun would telephone and place orders for leather and would then check to see if he had it in stock. If he did not have that leather on hand he would have to have it specially prepared. In any case he would telephone back to Liu Ming-sun at Dreyer and if the goods were to be delivered he would ask for delivery instructions. A firm called Hon Kee would deliver the goods and return a delivery note to Siu Kee chopped by Liu's. Normally an invoice was then prepared and sent, not however to Liu's, but to Dreyer. Occasionally the invoice was sent direct to Liu's and the goods would be paid for by means of a post dated cheque drawn by Liu's. However in most cases this was not the way payment was made and the invoices sent to Dreyer would be eventually settled by them by means of a letter of credit. He said that deliveries in respect of the goods subject to the claim were made in this manner. Each of the invoices was sent to Dreyer although the leather was sent to Liu's and the delivery notes were chopped by Liu's. These delivery notes have been produced they are so chopped and there is no dispute that delivery of the goods was made to Liu's.  Copies of the invoices addressed to Dreyer have also been produced. If orders were placed by Liu's direct it was done by a Mr. Liu Kei-cheung, the uncle of Liu Ming-sun and the owner of Liu's.  Liu Kei-cheung is also the uncle of Liu Ming-sun.

3. Mr. Wong said that he had never asked Liu Ming-sun for a business card and had never seen one. He said however that Liu Ming-sun had told him he was a representative of Dreyer. He said he had sometimes telephoned Drever, asked to speak to Liu Ming-sun and did so. He therefore knew he worked there. He said that the letter of credit would be prepared by Dreyer and sent to Siu Kee at the end of each month. They would in fact receive payment about three months after delivery of any particular batch of leather. If the leather had been ordered direct by Liu Kei-cheung he would send an invoice to Liu's. If ordered by Liu Ming-sun then he would send the invoice to Dreyer. The great bulk of the invoices were in fact sent to Dreyer and are contained in Bundle C of the agreed documents. Mr. Wong agreed that he had no written or oral contract with Dreyer and had never spoken to any of its senior staff about buying leather from Liu's.

The evidence for Dreyer

4. Evidence was given by Dreyer's office manager, Mr. Cassiane Azedo, who said that he had been with them for some 30 years. He said that Dreyer had never ordered leather from Siu Kee or requested delivery of leather to Liu's.

5. He said he did know a Mr. Liu Ming-sun, but that he had never been employed by Dreyer and had never been authorised as a representative of Dreyer or to transact any business whatever on their behalf. He said that apart from one or two isolated occasions when he had come to their office, Liu Ming-sun had never been in their premises. He had met him on social occasions.

6. He said that the arrangement so far as Dreyer was concerned was that Liu's would order leather direct from Siu Kee and the goods would be invoiced to Dreyer who would then in turn invoice Liu's with the amount plus a commission of 15%. Liu's would chop the invoice which Dreyer took to be an acknowledgment that the goods had been received in good order and condition. Affter 60 days Drever would open a letter of credit in favour of Siu Kee. After 90 days they would be paid by Liu's in the form of a post-dated cheque. There was, however, no obligation on Dreyer's part to pay for any particular lot of leather and they always had regard to Liu's position before doing so.

7. He said that his company had never received the 7 invoices relating to this particular leather and this was despite his having searched thoroughly in his office. They have not in turn invoiced Liu's. He also said that at a creditors' meeting following Liu's going into liquidation thare was no record in Liu's account of invoices sent by Dreyer reflecting the 7 invoices which Siu Kee said were sent to them. He said that the first time he learned of these 7 invoices when his company received a letter from Siu Kee's solicitors.

8. When cross-examined Mr. Azedo said that normally delivery note was sent to Liu's together with Siu Kee's invoice. On re-examination however he was somewhat vague on this and said he really did not know if a delivery note was sent or not.

9. Evidence was then given by Liu Kie-cheung, manager and proprietor of Liu's. He said that he had had many dealings with Siu Kee and on some occasions when he ordered goods they would be invoiced direct to him and Liu's would pay by post-dated cheque. In most eases, however, he paid through Dreyer. He said he usually placed the orders himself although sometimes it was done by his son, Liu Jin-bong or by an accounting clerk, Chan Yuk-chi. He, however, always made the decision to order leather even if the actual order was placed by his son or the clerk. He said nobody else had authority to place orders on behalf of Liu's. The person he spoke to at Siu Kee's office when he ordered leather was Mr. Wong who was an old friend. On receipt of leather from Siu Kee his staff would chop the delivery note indicating that the goods had been received in proper order and condition. A few days later he would receive an invoice from Dreyer. It would he for the amount owing to Siu Kee plus 15% commission. He said he was not sure if he would also get a delivery note from Dreyer. He would then pay them by means of a post-dated cheque the date of which would vary depending on the state of business.

10. He said he knew Liu Ming-sun, who was his nephew. He was a share broker but is now suffering from a mental disease and does not work. He has spent quite a bit of time in Kowloon Hospital. He said he was not in the leather business and has never worked for Liu's or for Dreyer. As far as he was concerned Liu Ming-sun could never have placed orders on behalf of Liu's. He said that the object of doing business through Dreyer was that he then had a longer time in which to affect payment. Liu's was in financial difficulty and he said that leather was only ordered when corresponding orders for shoes were on hand.

11. A clerk of Dreyer, Liu Wai-sun, a nephew of Liu Kei-cheung, said that he worked in the import department of Dreyer. He confirmed that the procedure by which invoices were sent to them by Siu Kee and that they in turn would invoice Liu's for the amount owing, plus a commission of 15%. He described that as a "buying commission". He said that they had 60 days in which to make payment and that they gave Liu's 90 days which gave Liu's an extra 30 days. He said he had never himself placed any order for leather with Siu Kee. He said that Liu Ming-sun, who was, he understood, now in hospital with a mental illness, did not work for Dreyer. He said that when an invoice was sent from Dreyer to Liu's there was also a delivery note as well. This seems somewhat strange and I do not see what the purpose of such a delivery note would be as Siu Kee's delivery note had already been chopped by Liu's, however that was his evidence.

12. Another member of the Liu family, Liu Kei-hong gave evidence and said that he was a leather broker. He said that he had never placed orders for leather on behalf of Liu's with Siu Kee. He had no authority to place such orders. He said that Liu Ming-sun who was a share broker occasionally helped him with his business but not in placing orders. He also said that Liu Ming-sun had been suffering from mental illness for about a year. If Liu's was ordering leather from Dreyer it would be done through him so he would get some commission. He had been employed by Dreyer for many years and received a salary plus commission.

Finding of facts

13. I am satisfied from the evidence as to the following facts.

14. I am therefore satisfied that the goods were not ordered or delivered at the request of Dreyer as claimed by Siu Kee. It is, however, argued that that is not an end to the matter. They say that notwithstanding such a. finding, by a course of conduct Dreyer has held itself out to Siu Kee as being the buyer of the goods and this can be evidenced from the following facts.

15. This is an attractive argument and there is some support for it in the evidence. I am, however, satisfied that it is not correct and there was no contract between Siu Kee and Dreyer in respect of this leather. I am satisfied that although Mr. Liu Wai-sun referred to Dreyer's "buying commission" they were not in fact ever in a position of buying the leather. They have certainly not made an offer to Siu Kee to buy leather and I am satisfied that at no time were they the owners of the leather. I do not consider that by accepting Siu Kee's invoices and by sending out their own invoices and delivery notes in respect of the leather this created a buyer/seller relationship between Dreyer and Siu Kee. There is no evidence that they invoiced Liu's in respect of the leather which is the subject of the claim. It may be that Dreyer was acting as a guarantor of Liu's in respect of its dealings with Siu Kee. I do not, however, consider that Dreyer can recover in this action in respect of any such guarantee, firstly because that has not been pleaded and secondly I do not think that Mr. Wong's evidence supports such an interpretation. Siu Kee's case has been pleaded and Mr. Wong's evidence is that the orders for the leather were placed by Dreyer and they were the buyers. I am satisfied that that was not so. It has been argued that the pleadings are wide enough to allow Siu Kee to succeed even if I was to find that Dreyer did not place the orders. That was on the basis that by sending an invoice to Dreyer, Siu Kee were in effect saying we havesent this leather to Liu's.   Do you now want to step in and become the purchaser and thus earn commission.". By not returning the invoice within a reasonable time Dreyer, in view of the course of conduct over the previous years, must be deemed to have accepted the offer. That however was not the case put forward by Sir Kee and that was not the case that Dreyer was called upon to meet and I do not consider that failure to decline payment for these seven invoices made Dreyer liable for them.

16. I am therefore satisfied that the leather was not ordered by Dreyer from Siu Kee and that Dreyer is not liable to pay for it and the claim must therefore fail.

17. Dreyer is entitled to its costs.