CHING SHU-CHOI t/a HUA FU FASHION CO v. ABDUL HAFIZ RASSOUL t/a IMAN TRADING CO

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 15123 OF 2000

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JUDGMENT

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1. This is an application for summary judgment.

2. The Plaintiff's claim is one for the price of goods sold and delivered. According to the evidence filed by the Defendant, the goods were actually ordered directly by one Mr Mahyoub who was the proprietor of a trading firm in Saudi Arabia, and Mr Mahyoub also made an affirmation admitting this. The Defendant therefore says that he was only acting as an agent in the transaction.

3. The issue as to whether the Defendant was acting as an agent in the relevant transaction is one of fact.

4. In an Order 14 application, the burden is on the Defendant to establish that he has an arguable defence. However, if the Defendant's allegation or defence is one capable of being believed, then the court must grant the Defendant leave to defend. The court should not be asked to conduct a mini trial at this stage, hence even if the Defendant's defence may not appear to be a strong one, the court should not deprive the Defendant of a trial if his allegation is one capable of being believed.

5. Undoubtedly, the court has to look at all the circumstances of the case, including all contemporaneous documents, to test the credibility of the Defendant's allegation. Unfortunately, there was no contemporaneous document or signed written contract made when the goods were actually ordered. Even according to the Plaintiff's case, the order was placed by the Defendant orally and hence, it is not possible to test the Defendant's allegation by reference to any contemporaneous document made when the goods were actually ordered.

6. The Plaintiff sought to produce some contracts in the latest affirmation. However, these documents were not signed by the Defendant and the same were apparently sent to the Defendant after the goods were actually ordered. Hence, it does not alter the fact that there was no contemporaneous document made when the goods were ordered.

7. According to the defence case, Mr Mahyoub was not familiar with the export and the custom procedure of exporting garment products from Hong Kong, and so he engaged the Defendant to act as an agent to handle such matter.

8. Miss Cheung for the Plaintiff, in her very able and detailed submission, draws the attention of the court to the invoices and the shipping documents after the placement of the order. While I agree that these documents tend to suggest that the Defendant was acting as a principal and not as an agent in the relevant transaction, I am of the view that these documents do not directly contradict the defence case. As an agent to help Mr Mahyoub to export the goods to Saudi Arabia, it was possible for the Defendant to describe himself as a buyer and Mr Mahyoub as a sub-buyer, as it might give more flexibility to the Defendant in making the shipping arrangement. Hence, in my judgment, these documents do not destroy the credibility of the defence case.

9. Miss Cheung has also referred me to the discounts in price purportedly given by the Defendant to Mr Mahyoub in one of the invoices prepared by the Defendant (page 65 of the Bundle of Affirmations). According to Miss Cheung, if the Defendant was acting as a mere agent, it would not have made sense for him to give Mr Mahyoub discounts in price of the goods. However, as demonstrated by Mr Wong for the Defendant, the discounts included in the invoices correspond with the discounts given by the Plaintiff in his own invoices, and so these were not discounts given unilaterally by the Defendant, and such was not inconsistent with the fact that the Defendant was only acting as an agent at the relevant time.

10. Lastly, the Defendant seemed to refer Mr Mahyoub as "his buyer" in the letter in reply to the demand letter issued by the Plaintiff's solicitors. However, as Mr Mahyoub was his buyer for the purpose of the shipping arrangement, it would not be so unreasonable for the Defendant to refer Mr Mahyoub as his buyer in the correspondence. Hence, I agree with Mr Wong that the court should not read too much to the use of such words in the Defendant's reply letter.

11. In short, I am satisfied that there are triable issues of fact as to: (i) whether the goods were ordered directly by Mr Mahyoub; and (ii) whether the Defendant was only acting as an agent in the payment for the price of the goods and in arranging for the export of the goods. I am also not satisfied that the defence is a "shadowy" one and I therefore grant the Defendant unconditional leave to defend.