LEE WAI t/a HING KEE DECORATION v. RIMA ENTERPRISES LTD

IN THE COURT OF APPEAL

1987, No. 28
(Civil)

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J U D G M E N T

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Cons, V.-P.:

1. This is an appeal from the decision of His Honour Judge Caird who gave judgment in favour of the Plaintiff in the sum of $45,205.65 and interest against Rima Enterprises Limited (“Rima”), representing the balance of moneys due for work done and materials supplied.

2. It is not disputed that the work, which was carried out in July last year, related to the re-decoration of an office in Century Centre, Hung To Road. That office was to be used for a joint venture in the garment trade. Parties to the venture were a Mr. C.C. Lam, Mr. Kevin Lam, his brother, Mr. C.R. Yien and Mr. Arthur Cheung. Arthur Cheung was the person who actually commissioned the work from the Plaintiff, the person who gave him instructions as to what was to be done and who accepted the quotation which the Plaintiff gave.

3. Mr. C.C. Lam is the majority shareholder in Rima, while Mr. Yien controls another garment company, the Sun See Garment Factory, which has its offices in virtually the same premises. In view of those controlling interests it is not surprising that they and others involved with the joint venture did not at all times meticulously distinguish between the interests of the individuals in the joint venture and their interests in the companies.

4. The joint venture was to operate through Likent Limited (“Likent”), a shelf company acquired for the purpose. Indeed the first payment to the Plaintiff for $1,500, which was made in August against a total bill of some $80,000, was by a cheque drawn by Arthur Cheung on Likent.

5. Unfortunately, at least as far as the Plaintiff is concerned, as I feel had it been otherwise he would probably have had no difficulty in recovering the whole of his money, the joint venture did not survive for long. The principal parties, i.e. Mr. Lam and Mr. Yien, could not agree together. The Plaintiff did recover in fact some more of his money. In September he received a further $12,564, again on a cheque drawn by: Arthur Cheung, but this time against the account of Rima. Both cheques were paid to him at the premises of Rima, which is at Star House.

6. The first, and I think the only, meeting of Likent Limited was on the 5th July. The judge accepted the evidence of Arthur Cheung that at that meeting it was agreed that the decoration work should be done by the Plaintiff. In point of fact, according to the evidence of the Plaintiff, which the judge accepted, the work had by then already started, Arthur Cheung having accepted the plaintiff's quotation 2 days earlier.

7. It may be noted that in that quotation, and in a second quotation dated 9th July, and indeed in the final bill rendered on the 31st July, there is no mention of the name of the party with whom the Plaintiff was then contracting or offering to contract, although in the address section of the quotation we do find mention of the Sun See Garment Factory. That was possibly because it was the Sun See Garment Factory, and in particular Mr. Frankie Cheung Who is the Managing Director of that company, which introduced the Plaintiff to Arthur Cheung.

8. During the initial negotiations between the Plaintiff and Arthur Cheung, the Plaintiff asked Arthur Cheung for his name card. Arthur Cheung replied that he did not have his own, but gave instead the name card of a man whom he said was his boss. The card was in fact one of Rima's, and indicated on its face that Mr. C.C. Lam was Managing Director. It gave also the address at Star House and a telephone number. Arthur Cheung explained to the judge below that the card was only given as a contact address, should the Plaintiff wish to get in touch with him. As far as that went, the judge did not believe him.

9. At the conclusion of the evidence the judge reserved his decision and then ultimately concluded that the other party to the Plaintiff's contract was Rima. He relied on several factors in support. Firstly, the name card of the company had been produced; secondly, the two cheques had been handed over at Star House, Rima's place of business; thirdly, the second payment had been made by means of a cheque drawn on Rima’s account; fourthly, staff from Rima were employed at the premises in question. (With all respect to the judge below, it seems to me that in this particular respect he misunderstood the evidence which shows that the staff were employed by either Arthur Cheung or by Likent.); and fifthly, a memorandum drawn up in September by Arthur Cheung, and addressed to Frankie Cheung of the Sun See Garment Fact6ry, mentions that the two companies were to be equally liable for the costs which had been incurred in respect of the then aborted joint venture.

10. The judge further concluded that Rima made the contract as agent for Likent, Likent being at the time a principal not disclosed to the Plaintiff, but subsequently made apparent; in the circumstances both Rima and Likent were responsible for the bill. (Likent has not been sued.)

11. With every respect to the judge below in my view the five factors that he mentions do not, either individually or cumulatively, go any way at all to establish Rima as a party to the contract or to show Arthur Cheung had ever intended it to be.

12. Mr. Wong who appears for the Plaintiff today, although he did not do so in the court below, has urged us to look at the evidence as a whole. He suggests that in doing so we shall find at least sufficient primary facts from which the judge could have drawn appropriate inferences. With respect, I find I am irresistibly led to opposing inferences. Clearly Rima was not a party to the contract. And it may be pertinent to note, as my Lord Fuad J.A. observed during the course of the argument, that at no stage did the Plaintiff himself even suggest that it was.

13. That conclusion alone would be sufficient to dispose of this appeal, but even assuming for the moment that the judge's conclusions were justified by the evidence, it would still have been necessary, in order to impose liability upon Rima, to establish either that Arthur Cheung was clothed at the time with authority from Rima, or that Rima subsequently ratified the action taken on its behalf. These were questions .to which the judge did not address his mind. Had he done so he would have realised that there was no evidence of express authority, that there was nothing in the evidence to support a suggestion that Rima held him out as having authority, nor to show that his unauthorized conduct was subsequently ratified. With every respect to those who were responsible for advising the Plaintiff, the action against Rima was misconceived. I would allow the appeal and set aside the judgment below.

Fuad, J.A.:

14. I agree for the reasons given by my Lord the Vice-President that the appeal should be allowed and I also agree with the order that he proposes.

Hooper,.J.:

15. I also agree.