JHJ INTERNATIONAL TRANSPORTATION CO LTD v. ORIENTAL UNION AIRCARGO LTD

HCA 2849/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2849 OF 2001

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REASONS FOR JUDGMENT

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1. On 4 April 2003 Master M. Rogers gave judgment to the plaintiff on its application for summary judgment in the sum of US$88,092.63 with interest thereon from 10 February 1999 to the date of judgment at a commercial rate of HIBOR plus 2% and from the date thereof to payment at the prevailing judgment rate from time to time. He also made an order nisi that the defendant pay to the plaintiff the costs of the action to be taxed if not agreed, save insofar as costs orders, if any had been made already in favour of the defendant.

2. The defendant appealed against the said decision of the Master by its notice of appeal dated 9 April 2003 and the matter came before me on 20 May 2003. After hearing submissions I dismissed the appeal with costs to the plaintiff. I indicated at the time that I would give reasons in writing later. This I now do.

3. The plaintiff's claim is a simple and straightforward claim. The plaintiff is a PRC company and claims the sum of US$88,092.63 with interest as the balance of fees for freight forwarding services rendered to the defendant for the period from 2 December 1998 to 10 February 1999. The plaintiff was formerly known as Shanghai Jin Hai-Jet Air International Forwarding Co. Ltd. The defendant, which is a company incorporated in Hong Kong, was formerly known as Ideal Aircargo Limited.

4. As the evidence filed on behalf of the plaintiff shows, there was a history of business dealings between the plaintiff and the defendant. The evidence shows clearly that there was a business relationship between the plaintiff and the defendant. Mr. Ruan Jin Ming, of the plaintiff, in his affirmation in support of the application said that the plaintiff contacted the defendant at its Shanghai office and a business relationship between the parties commenced in 1994 whereby the defendant engaged the freight forwarding services of the plaintiff.

5. The documentary evidence supports the plaintiff's case and shows that in the past dealings the defendant would complete a form described as 'Shipper's instructions to arrange for shipment of goods' ("shipper's instructions") to confirm its instructions to the plaintiff for forwarding the goods to the destination as instructed by the defendant. Mr. Wong, counsel for the plaintiff, referred me to the documents in evidence which are examples of the past dealings between the parties. The shipper's instructions would be completed by the defendant and on this document the shipper was described as "Ideal Aircargo Ltd., Shanghai Office". There was also the chop with the former name of the defendant, Ideal Aircargo Ltd., both in English and in Chinese placed on the said document. This form was provided by the defendant to the plaintiff to arrange for the freight forwarding services which the plaintiff did provide. An airway bill would be issued by the air carrier for the consignment of goods as set out in the shipper's instructions and the shipper on the airway bill was described as "Shanghai Jin Hai Air International Forwarding Co. Ltd. C/O Ideal Aircargo Ltd. (Shanghai Office)". After the freight forwarding services were rendered by the plaintiff to the defendant the plaintiff would issue an invoice to the defendant and the defendant would make payment to the plaintiff.

6. The fact that in the past the defendant has made payment to the plaintiff cannot be seriously challenged. The plaintiff has produced payment orders which show clearly that the remitter was the defendant who remitted the payments through its bank in Hong Kong to the plaintiff's bank in Shanghai.

7. The plaintiff has also produced a 'customer's receipt' issued by the defendant's bank, Bank of China, Hong Kong Branch at page 136 of the bundle (with its certified translation at page 616 of the bundle) which shows clearly that the defendant had given instructions to its bank to remit the sum of US$19,222.09 to the plaintiff through its bank. This resulted in the issuance of the corresponding payment order dated 25 November 1996 (at page 137 of the bundle) for the payment of the said sum of US$19,222.09 to the plaintiff. Mr. Ruan explained that 'customer's receipts' are internal documents of the defendant and the plaintiff does not have other 'customer's receipts' apart from the one produced.

8. The documents produced provide compelling evidence that the plaintiff did render services to the defendant in the examples of the transactions showing the past dealings between the parties and in respect of which the defendant has made payments to the plaintiff.

9. In respect of the amount claimed, these are in relation to 23 transactions between 2 December 1998 and 10 February 1999 as pleaded in the statement of claim and evidenced by the shipper's instructions, airway bills and invoices issued to the defendant. But no payment has been received from the defendant for the said 23 transactions.

10. It is plain that in O.14 proceedings the defendant has a threshold onus to satisfy the court that it has a triable issue. The defendant's affidavit must also condescend upon particulars. A mere general denial and bare assertions will not be sufficient.

11. The defendant relies on its defence dated 3 August 2001 that was filed and served. It also relies on the two affirmations of Mr. Lam Cho Cheung ("Mr. Lam") filed in opposition to the O.14 application.

12. The defence that was filed pleads in para. 2 that the defendant never engaged the services of the plaintiff. It also averred that the defendant did not have any business registration and/or office and did not operate any business in Shanghai.

13. These assertions are, in my view, unsustainable. The evidence shows clearly that the defendant and the plaintiff had a business relationship for a number of years before the 23 transactions the subject matter of the claim. The evidence of representatives of the defendant which was filed in other High Court proceedings, namely Action No. 3137 of 1999 ("Action No. 3137") brought by another freight forwarder, Star Trans International Limited, as plaintiff against the same defendant (in its former name) as in this action show clearly that the defendant did have an office and did operate in Shanghai. I would refer in particular, by way of example, to para. 3 of the 2nd affirmation of Mr. Kenneth Cheung Ching Fung ("Mr. Kenneth Cheung"), then a director of the defendant, where he said that he had obtained relevant information from the "China Branch of the Defendant in Shanghai China". There is also the affirmation of Mr. Du Jin Liang of No. 628, Zhang Yang Road, Pu Pong, Shanghai who described himself as the "Liaison Officer of the China Office" of the defendant. He also mentioned that the records of the defendant were kept in Shanghai.

14. The defence advanced in Action No. 3137 was that the defendant merely acted as a payment agent and should not incur personal liability. The defence filed in Action No. 3137 pleaded specifically that the plaintiff there "provided services for one Ideal Aircargo Limited (Shanghai) ("IALS"), of which the defendant was the payment agent, as the plaintiff at all material times well knew". The point made by Mr. Du Jin Liang in his said affirmation in Action No. 3137 was that the defendant already had business transactions with one company established in Shanghai by the name of "Ideal Aircargo Limited Shanghai" which he said was a separate entity from the defendant. He asserted that the defendant merely acted as payment and receipt agent for IALS in Hong Kong and overseas. However, I would observe that the defence advanced in Action No. 3137 did not survive an O.14 application and summary judgment was ordered. There was an appeal lodged but eventually the matter was settled and there was a Tomlin order made by consent that the defendant should pay a sum close to the claimed amount by instalments.

15. The defendant is unable to refute the compelling evidence that the plaintiff and the defendant did have a business relationship and that the defendant did have a representative office in Shanghai at the material time. It is not sufficient to make a bare denial and put the plaintiff to proof as to this. No triable issue is shown as to this.

16. The next matter relied on by Mr. Kwong, counsel for the defendant, was the co-operation agreement, the translation of which is at page 639 of the bundle, and which was produced in the evidence filed in Action No. 3137. This shows that there was a co-operation agreement between Party A, which was Ideal Aircargo Limited, and Party B, which was Ideal Aircargo Shanghai Company. Mr. Kwong submitted that the past dealings and the payments made by the defendant to the plaintiff in this action could be explicable as payments made by the defendant as payment agent under this agreement as by para. 1 it is stated that Party A should be Party B's agent and would make payments as instructed by Party B. He submitted, therefore, that there was a triable issue as to whether in respect of the past dealings the payments that were made by the defendant were made as payment agent for Party B.

17. I am unable to accept Mr. Kwong's submissions. I would observe that at least in the other proceedings the defence that the defendant was a payment agent was pleaded in the defence. There is no plea in the defence in this action that the defendant acted as agent for another entity and that it should therefore not incur personal liability for the services rendered. There is also no assertion made in the two affirmations of Mr. Lam opposing the O.14 application that it ever acted as a payment agent. Mr. Lam in para. 4 of his 2nd affirmation said that he could not even find any record for the company called "Ideal Aircargo Limited (Shanghai)" or that the defendant ever acted as "payment agent" of this company.

18. As Mr. Wong correctly submitted, even if it were asserted in the defence and the affirmations in opposition that the defendant acted as agent that would not raise a triable issue. The shipper's instructions presented to the plaintiff by the defendant did not describe the defendant's role as that of agent. There is no evidence at all to suggest that the plaintiff ever knew of the said co-operation agreement or that the plaintiff ever knew that it was contracting with the defendant as agent for someone else.

19. It is trite law that where a person makes a contract in his own name without disclosing either the name or the existence of a principal, he is personally liable on the contract to the other contracting party (para. 168 Vol. 1(2) Halsbury's Laws of England 4th Edn. Reissue). Nowhere is it asserted by the defendant in these proceedings either in the defence or in the affirmations of Mr. Lam in opposition that the defendant was acting as an agent of someone else to the knowledge of the plaintiff.

20. The closest Mr. Lam comes to a suggestion of an agency situation is in para. 4 of his 1st affirmation where he said :

“ The [defendant] was a subsidiary of the Oriental Union Holdings Limited (OU Holdings) before October 2000. Many of the subsidiaries of the OU Holdings had business transactions with the Plaintiff and it would be general group accounting procedure for the OU Holdings to use the bank account of [the defendant] to remit or receive money from the Plaintiff."

21. The above allegation is wholly unparticularised. The subsidiaries which allegedly had business transactions with the plaintiff are not identified and no particulars are given of the transactions. Not a single document is produced by Mr. Lam. It is not even suggested that the plaintiff ever knew that it received the money which was remitted by the defendant as agent for such subsidiaries. There is just a bare assertion of a group accounting procedure which is wholly unparticularised. The documentary evidence of the past dealings produced by the plaintiff is compelling. There is no suggestion in any of the shipper's instructions and the payment orders of the remittances made by the defendant, through its bank, to the plaintiff, through its bank, that the defendant was acting as an agent for anyone. The above assertion of Mr. Lam is, in my view, insufficient to raise a triable issue.

22. The Master at para. 36 of his judgment correctly analysed the evidence of Mr. Lam and its very limited scope. He said this :

“ Mr. Lam's evidence on behalf of [the defendant] is, as I have observed earlier, relatively insubstantial and, when read carefully, is of very limited scope. His status within the management of [the defendant] is not clear but he appears to be only a relatively low level accounting employee. One critical aspect of his evidence is directly contradicted by evidence filed by [the defendant] in [Action No. 3137]. In particular, whilst Mr. Lam says that [the defendant] never had any office in Shanghai, that is directly contradicted by the evidence in the earlier action. Once that evidence is discounted, what is left? Mr. Lam says that the chop used on the documents relied on by [the plaintiff], bearing the name "Ideal Aircargo Limited", did not resemble any chop of [the defendant] in its offices. Mr. Lam must be talking about the chops used by [the defendant] at the time he made his affirmation, whereas the chop or chops used on the documents were used quite some time earlier. It does not seem to me that Mr. Lam's evidence takes the matter forward on [the defendant]'s behalf."

I agree entirely with the views of the Master.

23. Although it was not strictly necessary for the plaintiff to do so, it relied also on an oral admission made by Mr. Kenneth Cheung when he was a director of the defendant that the defendant was indebted to the plaintiff in the amount claimed. Mr. Kenneth Cheung was a director of the defendant from 30 January 1999 until 22 October 1999. The evidence shows that by a letter dated 21 January 2000 the Shanghai lawyers of the plaintiff wrote to the defendant demanding payment of the sum claimed which was outstanding and pointing out that Mr. Kenneth Cheung had orally acknowledged that the debt was payable. Mr. Kwong submitted that there was a triable issue as to whether Mr. Kenneth Cheung was still a director of the defendant at the time the oral admission was made. It seems to me, however, that the letter dated 27 January 2000 from Messrs. Dominic Y.K. Lau & Co. written on behalf of Mr. Kenneth Cheung to the plaintiff's Shanghai lawyers made it plain that when Mr. Kenneth Cheung made the oral admission that the defendant was indebted to the plaintiff for the amount claimed it was made at a time when he was still a director and had access to the accounting records of the defendant. It was stated in the said letter that :

“ Mr. Kenneth Cheung had ceased to be a director of Ideal Aircargo Limited since November last year. Our client only relied on the accounting records of the company at the time when he orally said that the said company defaulted in the payment of US$88,092.63 being the transportation fees. Our client was not aware of other matters."

24. By a letter also dated 27 January 2000 from the said solicitors of Mr. Kenneth Cheung to the defendant it was stated :

“ We are instructed to put on record that our client only informed [the plaintiff] the amount owed by you to them based on the records of the company which was within his power being a director thereof at the material time. We are instructed that our client does not wish to be involved in any dispute of your company with others."

There was no contemporaneous denial by the defendant of the debt to the plaintiff. It was only in the defence dated 3 August 2001 that the defendant first denied the debt. As I have said, it was not necessary for the plaintiff to rely on the oral admission of Mr. Kenneth Cheung. It, however, does provide additional support that there is no triable issue.

25. There being no triable issue raised, the Master, in my view, correctly gave summary judgment to the plaintiff. The Master helpfully gave detailed reasons in his judgment. It seems to me that great weight ought to be given to his reasons. In my view his decision and the reasons given cannot be faulted.

26. In the circumstances I dismissed the defendant's appeal with costs on 20 May 2003.