SINCLAIR K.W. CHOY t/a SINCLAIR & COMPANY v. CHUNG HING TRAWLING LIMITED

Contract - sale of ice making machine for installation on fishing vessel - whether parties agreed to sale of 1 ton or 2 ton machine - 1 ton machine supplied - dispute between the parties resolved wholly on the facts - Held: 1. Contract was for the sale of the 1 ton machine supplied; 2. Judgment for plaintiff for $66,020 plus interest and costs.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

H.C. Action No. 2165 of 1986

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JUDGMENT

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1. At the conclusion of the hearing on 8th October 1986, I orally delivered judgment in favour of the plaintiff, for the sum of $66,020 plus interest and costs. I then indicated that I would subsequently hand down written reasons for judgment. I now do so.

2. The plaintiff claimed the sum of $66,020 for goods sold and delivered and services rendered to the defendant at the defendant's request made up as follows:

During the hearing the defendant admitted liability for the radar repairs costing $5,020. The remaining matter in disputes therefore relates to the Model SK-10 1 ton ice making machine for which the. plaintiff claimed $61,000. The dispute between the parties on this issue was whether the plaintiff agreed to supply Model SK-10 with a 1 ton ice making capacity or whether he agreed to supply Model SK-20 which had a larger 2 ton ice making capacity. This narrow issue can fortunately simply be disposed of on the facts.

3. The plaintiff, Mr.S. K.W. Choy, gave evidence. In the course of his business he supplies ice making machines for installation on fishing vessels. During 1985 such machines were in short supply. There are apparently a number of different brands and Mr. Choy stated that the Fuji Model SK-10, which he supplied, was the most suitable model and brand on sale for local fishing vessels. The machine could be driven by a 7.5 KW condensing unit and had the capacity to produce 1 ton of ice during a period of 24 hours. There is also a larger Fuji Model SK-20 which required an 11 KW condensing unit and could produce 2 tons of ice during a period of 24 hours. Mr. Choy stated that he had never sold a Model SK-20 for installation on a fishing vessel where the demand was for the smaller Model SK-10.

4. During August 1985 Mr. Choy stated he was approached by Mr. S.C. Yeung then an Executive Director of the defendant, who enquired about ice making machines suitable for installation on fishing vessels. At that stage the parties only discussed the supply of a new machine. Mr. Yeung accompanied Mr. Yeung to two fishing vessels at Cheung Sha Wan which were equipped with Model SK-10 machines but as their owners were not on board they went on to Shaukiwan where they boarded a fishing vessel owned by Mr. Ng Lou-yau which was equipped with a Model SK-10 machine supplied by Mr. Choy. Mr. Choy stated that during their August meeting and inspection he told Mr. Yeung that Model SK-10 produced 1 ton of ice per day and that Mr. Yeung asked questions of Mr. Ng about the ice making performance of the machine on that vessel.

5. Mr. Ng gave evidence for the plaintiff. He recollected the visit by Mr. Choy, Mr. Yeung and a third person who accompanied Mr. Yeung. Mr. Ng went on to say that Mr. Yeung enquired of him about the machines performance and he replied that it produced 1 ton of ice per day, its performance had been satisfactory and that it had never broken down since installation. Mr. Ng also stated that other brands of ice making machines were not as good as the Fuji Model SK-10 and that in the Hong Kong fishing trade, Model SK-10 was considered the best machine available.

6. After these initial enquiries Mr. Choy. stated that Mr. Yeung contacted him, again in October 1985 and sought to purchase two new ice making machines. According to Mr. Choy, he was told by Mr. Yeung that the machines were wanted urgently and if new machines were not available he was prepared to buy used machines. Mr. Choy located 1 used Model SK-10 machine and offered to sell it to the defendant for $60,000 plus transportation-and painting charges. Mr. Choy stated that Mr. Yeung agreed to purchase on those terms and the machine was installed by the plaintiff on the defendant's fishing vessel then moored at Shaukiwan.

7. Mr. Choy was emphatic that throughout he had clearly told Mr. Teung that the machine was Model SK-10 with a 1 ton ice making capacity. On a number of occasions Mr. Wong stated he gave Mr. Yeung or his staff copies of the Fuji Catalogue which had details of the various models including their capacity and the specifications of condensing units and other ancillary equipment. Copies of these catalogues were produced. Mr. Choy further stated that he had personally coloured red, with a marking pen, the references to the Model SK-10 machine in the catalogue he gave Mr. Yeung. After the machine was installed Mr. Choy stated he left the machine turned on in order that its ice making capacity could be tested. When he returned the following day the machine had been turned off and there had been electrical problems with the generator but these had been remedied. On enquiring about the machine's performance, Mr. Choy stated he was told by employees of the defendant, that the test was satisfactory as in 10 hours the machine had produced more than one half of a ton of ice. Mr. Choy stated that as the test run was satisfactory and he had received no complaints, he sent to the defendant on or shortly after 23rd October 1985 his invoice for $61,000 made up of $60,000 for the machine and $1000 for transportation and repainting. The 'invoice was produced and in these terms expressly refers to the capacity of the machine and that it was a used machine:

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ONE(1) TON FLAKER ICE SEA WATER ICE MACHINE COMPLETED SET MODEL SK-10 (USE ONE) "

8. The invoice was unpaid. The plaintiff thereafter sent a series of monthly statements which were also unpaid. Mr. Choy stated that Mr. Yeung on 23rd December 1985 promised to make payment but when it was not forthcoming he wrote to the defendant on 8th January 1986 again requesting payment. The defendant replied by letter on 9th January 1986 signed by Mr. Yeung. The letter stated that the defendant had:

"

... the intention to settle this payment soon provided that we obtain prior approval from PRC. The problem is essentially the daily production between 1 ton and 2 tons. As I indicated to you that Mr. K. S. Cheng and yourself had mentioned the daily production of the ice making machine of 2 tons during the wireless conversation in our transportation vessel in October. "

9. The reference to "PRC" was clarified during the hearing when the defence evidence was that the defendant had been involved in a joint venture with Chinese authorities at Hainan Island and the fishing vessels were to operate between Hainan Island and Hong Kong. Mr. Yeung, who was the sole defendant witness, agreed in cross-examination that the joint venture was not a party to the contract with the plaintiff but that it was entered into by the defendant alone. The inference most favourable to the defendant from that letter. and the defendant's oral evidence was that it sought to purchase a 2 ton machine but would waive its contractual rights and would be willing to accept a 1 ton machine if its partner in the joint venture at Hainan Island agreed. The references to Hainan Island are at most of background relevance. It is necessary to return to the crucial issue of whether the plaintiff and the defendant agreed to the sale and purchase of a 1 ton or a 2 ton machine.

10. Mr. S.C. Yeung gave evidence for the defendant. He alleged that the defendant throughout had requested to purchase a 2 ton machine. He denied that Mr. Choy ever told him that the one ton Model SK-10 was the most suitable. He said that Mr. Choy had expressly offered only a used 2 ton machine. He agreed that he visited Mr. Ng's vessel but stated that as he was an accountant he did not have any knowledge of ice making machines and left all technical matters to his assistant who accompanied him. He denied that he asked Mr. Ng about the machine's capacity. He denied that Mr. Ng told him that it produced 1 ton of ice in 24 hours and had performed satisfactorily. Later he agreed he had asked questions but stated that these were about how the machine worked and which buttons to push and not about its capacity. He agreed that he had been handed a catalogue by Mr. Choy and produced the copy given to him. He agreed that the references to the Model SK-10 had been marked in red.

11. Mr. Yeung stated that on noting that the 1 ton machine had been marked in red, he told Mr. Choy that the defendant wanted a 2 ton machine. Mr. Yeung stated that on his own desk he had a blue marking pen. He stated that he picked it up, put a blue cross over the marking of the 1 ton machine and then marked the two ton Model SK-20 particulars in blue. Both these two coloured markings were on the catalogue Mr. Yeung produced - Exhibit D1. When the allegations that the additional blue markings were made by Mr. Yeung in Mr. Choy's presence, were put to Mr. Choy, the latter emphatically denied Mr. Yeung's statement and said that the first time he ever saw the blue markings was when the catalogue was shown to him in Court.

12. Mr. Choy denied that there was any discussion in a vessel of the defendant on 23rd October 1985 over the appropriate capacity of the machine. He denied he ever offered to sell a 2 ton machine or represented that the machine had a 2 ton capacity. Mr. Yeung alleged that the discussion on the vessel took place several days after he altered the catalogue with the blue marker pen. Mr. Yeung stated that as he had no technical knowledge of ice making machines so he had arranged on the vessel on 23rd October 1985 for Mr. Choy to speak to the defendant's trawling manager in Hainan, Mr. K.S. Cheng, who had expert knowledge on these matters. Mr. K.S. Cheng is no longer employed by the defendant but was called by the plaintiff as a witness. He stated that throughout the negotiations he was in Hainan and had no personal knowledge of what occurred. However, he stated that he was not aware of any objection by the defendant to the 1 ton capacity of the machine and that the defendant after installation used the machine. I record that the machine remains in the defendant's possession and is apparently on a vessel which sails between Hainan Island and Hong Kong. Mr. Yeung stated that the defendant was prepared to pay $25,000 for the machine but that offer was rejected. Mr. Yeung resigned as a director of the defendant in August 1986.

13. There is a direct conflict between Mr. Choy and Mr. Yeung's evidence. Mr. Choy impressed me with his clear and consistent evidence and no material part was varied or altered during a long cross-examination. Mr. Yeung, although possessing professional accountancy, cost accountancy and secretarial qualifications, was an unimpressive witness. Apart from the conflicts between his evidence and Mr. Choy's, his evidence was also not consistent with Mr. Cheng's evidence. It was directly in conflict with Mr. Ng's. There were a number of other aspects of his evidence which were unsatisfactory. If the capacity of the machine was determined when the catalogue was allegedly altered it seems unnecessary days later to have radioed Hainan to discuss whether a 1 ton or 2 ton machine was necessary. Mr. Choy denies he spoke and stated the machine had a 2 ton capacity. Mr. Cheng knew of no complaint over the 1 ton machine while he was employed by the defendant. The itemised 1 ton machine invoice was issued in October 1985 but the first query over capacity was made in December 1985 after the defendant had been pressed for payment.

14. I find that Mr. Yeung was not a credible witness. Where his evidence conflicts with Mr. Choy's I prefer and accept the evidence of Mr. Choy. I reject Mr. Yeung's allegation that he changed the catalogue in blue in Mr. Choy's presence. I find that throughout Mr. Choy offered and Mr.. Yeung on behalf of the defendant accepted, the sale and purchase of a used 1 ton Model SK-10 ice making machine. I further find that such a machine was supplied and installed. The machine was tested, found to be in good working order and remains in the possession of the defendant.

15. From these findings of fact it follows as a matter of law that the plaintiff has established its claim for $61,000. I confirm that the defendant has already admitted liability for the balance of $5,020. On those findings and that admission I confirm I have made the following orders: