BEL INTERNATIONAL LOGISTICS LTD v. CTS INTERNATIONAL LOGISTICS CORPORATION (HK) LTD

HCA 1619/2019

[2023] HKCFI 3000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1619 OF 2019

____________

____________

______________

J U D G M E N T

______________

A. INTRODUCTION

1.  This is the trial of a dispute between two freight-forwarding companies.  The plaintiff (“Bel”) says that there was an oral agreement (“the Oral Agreement”) between Bel and the defendant (“CTSHK”), by which CTSHK had agreed to bear the fees for the services provided by Bel to Sino Top Logistics Ltd (“Sino Top”).  Based upon the Oral Agreement, CTSHK ought to but has failed to pay about HK$3.3 million to Bel.  Bel is now claiming for these outstanding fees.  CTSHK denies the existence of the Oral Agreement and the liability to pay Bel.  CTSHK counterclaims against Bel for about HK$1.2 million, which (according to CTSHK) are the fees overpaid to Bel.

2.  In this trial, Bel is represented by Mr Justin Lam, and CTSHK is represented by Mr Isaac Chan (together with Mr Adrian TY Wong).  Sino Top is not a party in these proceedings, and no one from Sino Top has given evidence in this trial.

B.  THE AGREED FACTS

3.  I would first set out the agreed facts.

4.  Bel is a Hong Kong-incorporated company established in 1978 carrying on business of providing logistic and air transportation services.  It is and was at all material times a Regulated Agent (“RA”) registered with the Civil Aviation Department (“CAD”).

5.  CTSHK is a Hong Kong-incorporated company established in 2010 carrying on business of providing air freight forwarding services.  It is and was at all material times a RA registered with the CAD.

6.  As RAs, Bel and CTSHK are required to follow the Handling Procedures for Regulated Agent Regime published by the CAD (“the Handling Procedures”) from time to time and to meet certain documentation requirements set out in the same for tendering consignments to a Cargo Terminal Operator for processing.

7.  Since 2015, Bel and CTSHK have been offering and acquiring services of (a) consolidating shipment or sharing of freight transportation, and (b) lending/borrowing master air waybills (“MAWBs”), to and from each other from time to time.

8.  Sino Top was at all material times a company engaged in the business of trading and forwarding services.

9.  On or about 24 April 2017, Mr Wong Kim Hei Alien of Bel (“Alien”, Bel’s Air Transport Manager at the material times) and Mr Wong Chun Yip Wilson (“Wilson”, then of a company called Win Cargo International Logistics Limited (“Win Cargo”)) commenced a Skype chat conversation between themselves (“Alien/Wilson Group”), which lasted until around September 2019.

10.  On or about 7 September 2017, a chat group was set up among (a) Alien, (b) Mr Or Chuen Po (“Po”, Bel’s Assistant Operations Manager at the material times), and (c) Wilson (“Alien/Wilson/Po Group).  Messages were exchanged in this chat group until December 2018.

11.  On or about 20 December 2018, a Skype group chat was set up between (a) Alien and Po of Bel with (b) Wilson of Sino Top (“Bel/ST Group”).  Messages were exchanged within the Bel/ST Group until July 2019.

12.  On or about 8 January 2019, a Skype group chat was set up among (a) Po of Bel; (b) Mr Ying Chin Keung Horton (also known as “Engine”, CTSHK’s Operations Manager at the material times) of CTSHK; and (c) Wilson of Sino Top (“Tripartite Group”).  Alien of Bel and Ah Fai (“Fai”, Engine’s assistant at the material times) of CTSHK were added into the Tripartite Skype Group subsequently in January 2019.  Messages were exchanged within the Tripartite Group until 28 May 2019, save for the period between 11 April and 6 May 2019.

13.  The subject matters in these proceedings are some invoices issued by Bel to CTSHK during the period from December 2018 to May 2019.  These invoices are for the freight-forwarding services provided by Bel to Sino Top.

(1)  Regarding some invoices issued by Bel to CTSHK from December 2018 to March 2019 which have already been settled by CTSHK (“the Disputed Invoices in the Counterclaim”)[1], CTSHK claims that the freight-forwarding services covered by these issues were provided by Bel to Sino Top without CTSHK’s consent, and CTSHK should not be liable to the fees under these invoices.  The said invoices were settled by CTSHK under a mistake of fact that CTSHK had requested or ordered the services mentioned in the invoices from Bel.  CTSHK claims that Bel is unjustly enriched by these payments made under the said mistake, and is liable to repay the same to CTSHK.

(2)  Regarding some invoices issued by Bel to CTSHK in April and May 2019 which have not been settled by CTSHK (“the Disputed Invoices in the Original Claim”), Bel says that CTSHK is liable to the fees as set out in those invoices by reason of the Oral Agreement, alternatively by reason of the implied agreement (“the Implied Agreement”) or the estoppel (“the Estoppel”) as pleaded in Bel’s case.  CTSHK denies that they are liable to settle those invoices.

14.  The parties have agreed that:

(1)  If Bel succeeds on their claim, CTSHK would be liable to pay HK$3,385,545.54 (being the total of the sums in the Disputed Invoices in the Original Claim) plus interest to Bel;

(2)  If CTSHK succeeds on their counterclaim, Bel would be liable to return HK$1,235,479.26 (being the total of the sums in the Disputed Invoices in the Counterclaim already paid by CTSHK to Bel) plus interest to CTSHK.

C.  THE PARTIES’ RESPECTIVE CASES

15.  I would first set out the parties’ respective cases.

C1. Bel’s claim

16.  Bel’s claim as pleaded in the Re-Amended Statement of Claim is as follows:

“4. In or about December 2018, [Sino Top], which carries on business of trading and forwarding services, engaged [CTSHK] as a forwarder agent to arrange numerous shipments for its products and provide shipping instructions to [Bel] for transportation. Sino Top had originally attempted to engage [Bel] directly. However, this was refused by [Bel] as Sino Top was not registered as a [RA] with [CAD].

4A. On or about 10 December 2018, [PO] of [Bel] received a phone cal1 from [Wilson] of Sino Top. In the said phone call, Wilson informed [Po] that Wilson and [Engine] of [CTSHK] had agreed to adopt the following operation arrangement:

(a) Sino Top can directly obtain quotations from and place orders with Bel;

(b) [Bel] will directly provide quotations to Sino Top;

(c) If Sino Top agrees with the quotation, [Bel] will make arrangements for bill(s) of lading and consignment services;

(d) After [Bel] completes the consignment services and issues the invoice(s) to [CTSHK], [CTSHK] will settle the invoice(s).

(hereinafter called the “Operation Arrangement”)

4B. On the same day, very soon after the said phone call, [Po] called Engine to confirm whether [CTSHK] and Sino Top had agreed to adopt the Operation Arrangement. Engine on behalf of [CTSHK] confirmed this to be the case.

4C. By reason of the matters pleaded in paragraphs 4A and 4B above, [Bel] and [CTSHK] entered into [the Oral Agreement] on inter alia the following terms … on or about 10 December 2018:

(a) Pursuant to the Operation Arrangement, [Bel] will accept orders directly from Sino Top, in consideration of [CTSHK]’s obligation to settle invoices issued by [Bel] to [CTSHK] in respect of such orders;

(b) [Bel] or [CTSHK] may terminate the Operation Arrangement by giving reasonable notice to the other party.

5. Since December 2018, pursuant to the Oral Agreement, Sino Top being the vendor would provide shipment instructions to [Bel]. Upon receiving the shipment instructions, [Bel] repeatedly agreed to collect and ship various products of Sino Top to the designated location worldwide (the “Contract”). After completion of each shipment, [Bel] would issue the invoice showing the particulars thereof to [CTSHK] for settlement (the “Invoice”).

5A. Pursuant to the Oral Agreement, from January to April 2019, [Bel] issued [the Disputed Invoices in the Counterclaim] to [CTSHK] for consignment services provided to Sino Top, which were settled by [CTSHK] without any objection ……

5B. Further or alternatively, an agreement between [Bel] and [CTSHK] is to be implied from their conduct as pleaded in paragraphs 5 and 5A above on the same terms as the Oral Agreement (the “Implied Agreement”) on 26 February 2019[2].

5C. Further or alternatively, [CTSHK] is estopped from denying the existence of the Implied Agreement:

(a) By reason of [CTSHK]’s conduct as pleaded in paragraph 5A above, [CTSHK] represented to [Bel] that [CTSHK] would settle invoices issued by [Bel] to [CTSHK] in respect of orders placed by Sino Top with [Bel] directly (the “Representation”) on 26 February 2019.

(b) Further or alternatively, by reason of the conduct of [Bel] and [CTSHK] as pleaded in-paragraphs 5 and 5A above. it was the shared assumption of both [Bel] and [CTSHK] that [CTSHK] would settle invoices issued by [Bel] to [CTSHK] in respect of orders placed by Sino Top with [Bel] directly (the “Assumption”) from 26 February 2019 onwards.

(c) In reliance on the Representation and/or Assumption, [Bel] (i) accepted orders placed by Sino Top referable to the Invoices pleaded in paragraphs 5A above and 9[3] below and (ii) provided consignment services to Sino Top in respect of such orders insofar as the orders post-dated the Representation and/or Assumption.

(d) [Bel] suffered detriment by having provided substantial consignment services to Sino Top at its own expense without receiving any payment in respect of the Invoices pleaded in paragraph 9 below even up to now, insofar as the orders post-dated the Representation and/or Assumption.

…………

8. From the period between April 2019 and July 2019, pursuant to the Oral Agreement and/or the Implied Agreement, [Bel] provided numerous air freight shipments to Sino Top worldwide. During the said period, [Bel] issued numerous Invoices and/or Statement of Account to [CTSHK] for the total amount of HK$3,385,545.54 and [CTSHK] failed to settle the said sum within the deadline.

9. As at 30^th August 2019, [CTSHK] was indebted to [Bel] in the total sum of HK$3,385,545.54.  [Details of the outstanding payments are then set out.]”

17.  As per Bel’s pleaded case, Bel’s claim is based upon the Oral Agreement, alternatively the Implied Agreement and/or the estoppel pleaded in the Re-Amended Statement of Claim.

C2. CTSHK’s case

18.  CTSHK denies the existence of the Oral Agreement.  In their Re-Amended Defence and Counterclaim, it is pleaded:

“4A. [CTSHK] avers that:-

(a) In or about November 2018, [Wilson] of Sino Top approached Engine of [CTSHK] by phone and discussed with [Engine] the possibility of procuring the Co-loading Services and MAWB Assignment Services[4] of [Bel] through [CTSHK] in view of the [CTSHK]’s very good and long standing business relationship with [Bel]. [Wilson] also divulged to Engine that [Bel] did not agree to deal with Sino Top directly because Sino Top was a newly established company and had not obtained the license as a RA.

(b) As it is not uncommon in freight forwarding industry for multiple forwarding agents being involved in handling one and the same air cargo consignment in exportation, Engine of [CTSHK] verbally agreed with Wilson of Sino Top to procure the Co-loading Services and MAWB Assignment Services of [Bel] for Sino Top on the following terms:-

(i) All of Sino Top’s orders for Co-loading Services and/or MAWB Assignment Services placed with [CTSHK] would subject to (i) the availability of such Co-Loading Services and/or MAWB Assignment Services of [Bel] and (ii) the acceptance of [CTSHK], be fed by corresponding orders from [CTSHK] to [Bel];

(ii) [CTSHK] shall be entitled to charge for Sino Top’s orders so placed with and accepted by it at the rate equivalent to HK$0.5 per kilogram, which was reviewable by [CTSHK] from time to time, plus the agreed fee or rate charged by [Bel] upon the corresponding orders placed by [CTSHK] with [Bel] in each case (hereinafter referred to as the “Agreed Top-up Rate”).

(iii) The Agreed Top-up Rate charged by [CTSHK] upon Sino Top’s orders shall be settled on monthly basis at the end of each calendar month.

(hereinafter referred to as the “Sino Top Agreement'”).

(c) Engine of [CTSHK] further requested, and Wilson of Sino Top agreed, that each step of the intended transaction(s) should be properly documented according to general market practice.

(d) Engine further suggested, and Wilson agreed, that a ‘test-run’ should be conducted first.

4B. Shortly after the conversation between Engine and Wilson, [Po] of [Bel] contacted Engine by phone to confirm whether Wilson had previously contacted him to discuss the possible arrangement of Sino Top procuring [Bel]’s MAWB Assignment Services and/or Co-loading Services through [CTSHK]. Engine confirmed to [Po] that this was the case.

4C. A transaction under the anticipated tripartite arrangement involving (i) Sino Top and [CTSHK] (governed by the Sino Top Agreement), and (ii) [Bel] and [CTSHK] (governed by the individual agreements for each corresponding order placed by [CTSHK] with [Bel] on account of Sino Top) (“P/D/Sino Top Arrangement”), would encompass the following steps (“P/D/Sino Top Transaction Flow”):-

(a) Sino Top first places art order with [CTSHK] for [Bel]’s MAWB Assignment Services and/or Co-loading Services by providing it with shipping instructions regarding the quantity and destination of goods to be shipped.

(b) [CTSHK] would seek from [Bel] a quotation for the fee/rate to be charged.

(c) Upon Sino Top’s acceptance of [Bel]’s quotation, [CTSHK] would provide to [Bel] (i) a written confirmation by text messages, either through [the Tripartite Skype Group] or by email, for MAWB Assignment Services; or (ii) [CTSHK]’s Co-load Form (containing shipping instructions) for Co-loading Services.

(d) [Bel] would then either (i) release the MAWB Number(s) to [CTSHK], which would in turn release the same to Sino Top (for MA WB Assignment Services); or (ii) receive the consignment from Sino Top together with the relevant transport documents and execute the MAWB to be tendered to the cargo terminal operator of the airline carrier (for Co-loading Services).

(e) With respect to the MAWB Assignment Services, Sino Top would return to [CTSHK] one of the copies of the used MAWB, and [CTSHK] would in turn send the corresponding MAWB Assignee’s Undertaking to [Bel].

4D. Throughout November and December 2018, [Bel], [CTSHK] and Sino Top carried out a number of ad hoc transaction to ‘test run’ the P/D/Sino Top Arrangement in respect of which the P/D/Sino Top Transaction Flow was satisfactorily documented.

4E. Sometime in December 2018, further to the satisfactory ‘test run’ of the P/D/Sino Top Arrangement, Engine met with Wilson and [Po] for a dinner gathering (“December 2018 Dinner Gathering”), wherein:

(a) Wilson informed Engine and [Po] of Sino Top’s intention to procure [Bel]’s MAWB Assignment Services and/or Co-loading Services more regularly in respect of shipments to the United States through [CTSHK].

(b) Engine indicated that [CTSHK] would be amenable to such an arrangement. Engine briefly reminded Wilson and [Po] to properly document the P/D/Sino Top Transaction Flow.

4F. After the December 2018 Dinner Gathering, in around late December 2018, Engine reported the details of the P/D/Sino Arrangement as pleaded above to his superior Mr Huang Ruoshan (“Huang”), who approved of the same.

4G. In the-premises, with respect to paragraph 4A of the Re-Amended Statement of Claim:-

(a) Insofar as it is suggested that Wilson of Sino Top and Engine of [CTSHK] had entered into the purported Operation Arrangement at all, such suggestion is denied. ……

(b) Further, Engine did not at all material times have any authority (whether express, implied, ostensible or otherwise) to agree to the purported Operation Arrangement on behalf of [CTSHK].

(c) Save as aforesaid, paragraph 4A of the Re-Amended Statement of Claim is not admitted. [CTSHK] is not privy to the circumstances and contents of the alleged phone call between [Po] and Wilson.

4H. Paragraph 4B of the Re-Amended Statement of Claim is denied. It is specifically denied that Engine had confirmed (on behalf of [CTSHK]) to [Po] that [CTSHK] and Sino Top had agreed to adopt the alleged Operation Arrangement. ……

4I. Accordingly, paragraph 4C of the Re-Amended Statement of Claim is denied.  It is specifically denied that [Bel] and [CTSHK] entered into the purported Oral Agreement.”

19.  CTSHK also denies the Implied Agreement and the estoppel as pleaded by Bel.

20.  CTSHK counterclaims for the sums paid to Bel under the Disputed Invoices in the Counterclaim.  CTSHK’s case is that “[CTSHK] was misled by the presentation of [the Disputed Invoices in the Counterclaim] and under mistake of fact that they did request or order from [Bel] the Co-loading Services and/or MAWB Assignment Services as particularized in [the Disputed Invoices in the Counterclaim] and mistakenly caused to pay the same to [Bel] … and [Bel] had received the same.”[5] CTSHK claims that Bel has been unjustly enriched at the expense of CTSHK.

C3.  Bel’s defence to CTSHK’s counterclaim

21.  Apart from the Oral Agreement, Bel is also relying upon the following as defences to CTSHK’s counterclaim:

(1)  Bel has changed their position in good faith, believing that [CTSHK] would settle invoices issued by Bel to CTSHK in respect of orders placed by Sino Top with Bel directly, by procuring consignment services for such orders and incurring substantial costs in doing so.[6]

(2)  The estoppel as pleaded in the Re-Amended Statement of Claim.[7]

D.      THE AGREED ISSUES

22.  The parties have agreed that the issues to be resolved in this trial are as follows[8]:

(1)  What were the terms of agreement as agreed between Po of Bel and Engine of CTSHK in respect of the orders for Bel’s co-loading and/or MAWB assignment services in relation to Sino Top?  In particular, whether such terms were in accordance with:

(a)  the Operation Agreement and the Oral Agreement as pleaded in the Re-Amended Statement of Claim; or

(b)  the P/D/Sino Top Arrangement as pleaded in the
Re-Amended Defence and Counterclaim.

(2)  If the terms of the agreement as agreed between Po of Bel and Engine of CTSHK were in accordance with the Operation Agreement and the Oral Agreement, whether Engine had authority (whether express, implied, ostensible or otherwise) to agree to the said agreements;

(3)  Whether there was any Implied Agreement between Bel and CTSHK as pleaded in the Re-Amended Statement of Claim;

(4)  Whether CTSHK was estopped from denying the existence of the Implied Agreement[9];

(5)  Whether CTSHK has a claim in unjust enrichment for mistaken payment against Bel in respect of the Disputed Invoices in the Counterclaim;

(6)  If so, whether Bel can rely on the defences of (a) change of position and/or (b) estoppel as pleaded in the Amended Reply and Defence to Counterclaim.

E.  THE EVIDENCE

23.  Bel’s pleadings are verified by statements of truth signed by Mr Lau Chi Kwong (“Lau”, Bel’s Director).  CTSHK’s pleadings are verified by a statement of truth signed by Huang, CTSHK’s Managing Director.

24.  In this trial, Bel has called Alien, Mr Li Wai Ho (“Li”, Bel’s General Manager at the material times) and Po to give evidence.  Bel has not called Lau to give evidence.  CTSHK’s witnesses are Huang and Engine.

E1.  The principles

25.  In assessing the evidence given by the witnesses, I bear in mind the guidance given by DHCJ Eugene Fung SC in Hui Cheung Fai and another v Daiwa Development Limited^[10].  In that case, the learned judge said:

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) ……

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

26.  I also bear in mind the well-established summarized by DHCJ Thomas Au (as hen then was) in Lee Fu Wing v Yan Paul Po Ting[11] as to assessment of witnesses’ evidence:

(1)  whether the party’s case is inherently plausible or implausible;

(2)  whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3)  where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests.  This is relevant to the assessment of his overall credibility; and

(4)  the demeanour of the witnesses.

27.  Both Mr Lam and Mr Chan have made submissions that adverse inference should be drawn against the other side for the absence of a particular witness from that party.  On the question of drawing adverse inferences by reason of the absence of a witness, the Court of Appeal has given guidance in Li Sau Keung v Maxcredit Engineering Ltd[12], which has been applied by DHCJ Lisa Wong (as she then was) in South China Securities Ltd v Lam Kwen Yuen[13]. In that case, the learned judge said:

“7. …… I take note, of the principle that where a person without explanation fails to call as a witness a person who he might reasonably be expected to call, it is open to the Court to infer that that person’s evidence would not have helped that party’s case. See, eg Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434, 443E–444C, per Le Pichon JA citing O'Donnell v Reichard [1975] VR 916, 929, per Newton and Norris JJ. The same principle would apply to a failure without proper explanation to produce a document or other real evidence that a party might reasonably be expected to disclose.” (Emphasis added)

28.  I now turn to discuss the evidence given by the witnesses.  The gist of the evidence given by each witness is summarized in the below.

E2. Bel’s witnesses

E2.1 Po

29.  According to Bel’s pleaded case, the Oral Agreement is an oral agreement reached between Po and Engine in a telephone conversation on or about 10 December 2018.  The veracity of the Oral Agreement therefore hinges on the credibility and the reliability of Po’s evidence.

30.  Being joining Bel, Po worked at Sun Cargo International Ltd (“Sun Cargo”) and then WTC Logistics Ltd (“WTC”).  These companies are also freight forwarders and RAs.  Po started to work in Bel in the second half of 2018.  His rank in Bel was Assistant Operations Manager.  He was the subordinate of Alien.

31.  Before the occurrence of the events leading to the dispute in this case in late 2018, Po had known Engine and Wilson for 7 and 8 years.  Po regarded Wilson and Engine as his friends.  The three of them would meet each other regularly for social purposes, and the frequency of meetings was about twice a week.

32.  By November 2018, Po knew that Wilson had established a new company to carry out his freight forwarding business.  Po did not know the name of Wilson’s company at that time.  However, Po knew that Wilson had been placing orders with Bel via WTC since October 2018, since he was in the Alien/Wilson/Po Group.

33.  At a time in late November 2018, Po received a phone call from Wilson. Wilson told him that Sino Top had large quantities of cargo which were to be shipped to the US, and wished to use air cargo space provided by Cathay Pacific (“CX”).  Wilson asked Po whether Bel, which had access to CX air cargo space, could provide services to Sino Top.  Wilson also said that he preferred to have a quotation covering the services in one season from Bel if possible.  If that could not be given, Bel could provide an ad hoc quotation for each order.  Po told Wilson that he would need to seek instructions from his superior.  Po then orally reported the matter to Alien.

34.  Subsequently, Alien told Po that the management had made the following decision:

(1)  Bel could not cooperate with a freight forwarder which was not a RA.  Bel had to fulfill more requirements if Bel directly worked with a non-RA.  However, Bel would welcome Sino Top’s orders if the business was done through a RA which had business dealings with Bel.

(2)  If Sino Top was to work with Bel through a RA, Bel could provide (a) a seasonal quotation for CX air cargo spaces for 2019, and (b) ad hoc quotations for orders placed from
mid-late December 2018.

35.  Po then called Wilson and informed him the management’s decision. Wilson told Po that perhaps Sino Top would place the orders through CTSHK.  Po told Wilson that he could directly talked to CTSHK.  No matter who was the middle agent, the prices given by Bel would be the same.

36.  In early December 2018, Po received a phone call from Wilson.  Wilson told him that Sino Top had already discussed with CTSHK, and Sino Top would obtain Bel’s services through CTSHK.

37.  Immediately after that telephone conversation, Po called Engine to seek confirmation from Engine.  Po sought confirmation with Engine over the phone, to which Engine replied “係啊，Sino Top果單嘢照去啦，無問題”.   Po said that in fact he could not remember the exact words said by Engine.  However, his memory is that Engine was referring to the agreement among Bel, CTSHK and Sino Top when he said “果單嘢”.

38.  Although Bel, CTSHK and Sino Top had agreed to work together, the mode of cooperation had not been discussed.  Po said that a mode of cooperation was adopted impliedly.  That mode of cooperation (“Initial Mode of Cooperation”) was as follows:

(1)  Sino Top would first ask Bel for a quotation for the booking;

(2)  Bel would then provide the quotation to CTSHK and Bel by phone, by email, by Skype, or by other means;

(3)  Sino Top would inform Bel and CTSHK of its agreement to the quotation, and then Bel would provide the corresponding services to Sino Top.

39.  However, the Initial Mode of Cooperation was unsatisfactory, for CTSHK often delayed in giving replies and in following up the relevant documentation.

40.  On or around 10 December 2018:

(1)  Po received a telephone call from Wilson, in which Wilson told him that he and Engine had agreed to adopt a new mode of cooperation (“Second Mode of Cooperation”):

(a)  Sino Top would obtain a quotation from Bel, and Bel would provide the quotation to Sino Top.

(b)  If Sino Top agreed to the quotation, Bel could provide the services to Sino Top.

(c)  CTSHK would settle the invoice(s) issued by Bel afterwards. 

(2)  On the same day, Po reported the matter to Alien.  Alien instructed Po to call Engine to ascertain whether what Wilson suggested was indeed the case.

(3)  Po then called Engine.  In that telephone conversation, Po asked Engine “係咪Wilson 啲貨可以經你俾我地”.  This was the entirety of what he said to Engine in that telephone conversation.  As to this, Engine replied “知道啊, 照住做就得”.  Po said that this was the gist of the exchange between himself and Engine in that telephone conversation.

41.  Since then, Bel adopted the Second Mode of Cooperation.  After testing this new mode of cooperation for a few days, upon Wilson’s suggestion, Po (with Alien’s agreement) established the Bel/ST Group on 20 December 2018 to facilitate communication and exchange of documents.

42.  After Bel obtained from CX the cargo freight rates for 2019 in mid-December 2018, Po sent a WhatsApp message to Wilson on 28 December 2018 containing CX’s rates for specified ports in North/Central America (“CX 2019 Annual Quotation”).  Po did not send the same to Engine until 25 January 2019.

43.  Despite the adoption of the Second Mode of Cooperation, Po accepted in cross-examination that he saw the need to let Engine know the details of Sino Top’s orders before shipments.  The documentary evidence on this point is as follows:

(1)  the email sent by Po to Engine (copying Wilson and Bel) on 20 December 2018, providing particulars for MAWB nos. 160-77676454 and 160-77676465 in relation to flight CX2082 on 21 December 2018 (“the 20.12.2018 Email”);

(2)  Alien’s message to Wilson in the Bel/ST Group on 31 December 2018, asking “肥[14]，問多次，d CX email 除咗你同鬼[15]，仲有冇要CC邊個方便你哋做野” (“Message A”);  and

(3)  Alien’s subsequent message in the Bel/ST Group on 31 December 2018, telling Wilson “頭先阿鬼 call我，話收到email唔知咩事，話可以就你同佢講聲先喎” (“Message B”).

44.  As from 1 January 2019, Bel charged CTSHK pursuant to the Second Mode of Cooperation, based upon the CX 2019 Annual Quotation.

45.  On 8 January 2019, following Alien’s instruction, Po created the Tripartite Group to keep all parties in the loop.

46.  Under cross-examination, Po was asked why he requested Wilson to stop forwarding matters in the Tripartite Group on 10 April 2019, and why there was no activity in that group between 11 April 2019 and 6 May 2019.  As to these questions, Po was unable to provide any answer.

47.  In mid-2019, when the dispute between Bel and CTSHK had surfaced and before commencement of these proceedings, Bel’s management had enquired with Po regarding the details of the matters leading to the dispute, and Po had given a full account to the management.

E2.2 Alien

48.  Alien mentioned the following matters in his evidence.

49.  He joined Bel as an Air Cargo Manager in 2017, and he was in that post at all material times.  Po was his subordinate in Bel at all material times. Since 2018, he and Po dealt with CTSHK’s orders for US and European shipments. Bel was specialized in doing such shipments.  Alien and Po would communicate with CTSHK’s staff by email and phone, and through Skype.  CTSHK’s business focused on Mainland and

50.  Alien had known Wilson since at least April 2017.  At that time, Wilson was working in Win Cargo.  Alien seldom contacted Wilson for social purposes. Alien only met Wilson once at a meeting with people in the industry in September 2017.  Alien, together with Po, also met Wilson once in early 2020.

51.  Wilson left Win Cargo in about early August 2018.  In late October 2018, Wilson approached Alien to seek quotations for Bel’s services via WTC.  As a result, several deals were done up to early November 2018.  In those deals, Alien treated WTC as Bel’s counterparty.

52.  Alien knew that Wilson had established a new company to carry out his freight forwarding business, but did not know the company’s name or whether he was acting as its representative.   On 1 November 2018, Alien knew that Wilson’ new company was trying to obtain the RA status when Alien and Wilson discussed whether a particular shipment could be done directly between Wilson’s company with Bel or whether the shipment should be done through WTC.  However, Alien was not aware that Wilson was acting as his company’s representative until 5 November 2018.

53.  In late November 2018, Alien was informed by Po that he received a call from Wilson as representative of Sino Top, indicating that Sino Top intended to do business with Bel directly.  Alien instructed Po to inquire with Wilson whether Sino Top was a RA, and Po later reported to Alien that Sino Top was not yet a RA.

54.  Alien reported the matter to Bel’s management, which decided that Sino Top would need to do business with Bel through a RA.  After knowing the management’s decision, Alien asked Po to relay the message to Wilson.  Alien believed that Po did pass the message to Wilson.

55.  In early December 2018, Po informed Alien that he had received a call from Wilson.  Wilson told Po that Sino Top would do business with Bel through CTSHK. Thereafter, Alien and Po confirmed the same by phone with Engine.  Alien said that it was necessary to have such confirmation from Engine, for the volume of consignments and communications to be handled was expected to be large.

56.  At that time, the mode of cooperation adopted by Bel, CTSHK and Sino Top was the Initial Mode of Cooperation.  Alien agreed that in the Initial Mode of Cooperation, CTSHK was kept in the loop.  However, CTSHK frequently delayed in giving replies.

57.  As to the agreement to the Second Mode of Cooperation, Alien essentially repeated Po’s version of the events that took place on or about 10 December 2018.  Alien said that unlike the time when Bel and CTSHK started the Initial Mode of Cooperation, he himself did not call Engine to double-confirm whether Engine had agreed to the Second Mode of Cooperation, because he regarded the changes were only some operational matters, which were not significant.  The new mode of cooperation was prompted by the need for speed in transport.

58.  As to the correspondences in mid to late December 2018:

(1)  Alien denied that the 20.12.2018 Email was inconsistent with the alleged Oral Agreement.  The reason given by Alien in support of his answer was Bel did not give up its right to request for documents from CTSHK.

(2)  As to Message A and Message B in the Bel/ST Group on 31 December 2018, Alien said that he hoped that CTSHK would participate in the process, and it was for CTSHK and Sino Top to work out a complete set of documentation and to provide the same to Bel. Alien denied that CTSHK was entitled to be notified of the details of a transaction before the transaction taking place.

59.  In Alien’s witness statement, Alien mentioned that the provision of the provision of MAWB Assignee’s Undertaking (“the Undertaking”)[16] by CTSHK to Bel for MAWB Assignment Services is merely a safety requirement imposed by the CAD.  However, under cross-examination, Alien confirmed that the Undertaking is viewed by Bel internally as an important document for the completion of a job.  Without receiving the relevant Undertaking, Bel would not be able to issue an invoice to CTSHK.  Alien also agreed that the Undertaking is the only document in which CTSHK could show its agreement to accepting liability for a particular transaction vis-à-vis the lending RA.

60.  By March 2019, Alien was repeatedly asking Wilson for helping him to meet his tonnage targets, for Wilson would always be able to provide large volume of cargo.

61.  Alien did not dispute that between December 2018 and March 2019, there were over 110 transactions between Bel and CTSHK on Sino Top account, involving around HK$6.1 million.

62.  Between April and May 2019, while there was no activity in the Tripartite Group, Bel would occasionally send out emails on Sino Top’s orders and issue invoices, copying to, inter alia, CTSHK (“the April/May Emails”). Alien disagreed that a reasonable person receiving such emails would not think that they had anything to do with CTSHK.

63.  Between 17 May 2019 and 21 May 2019, Sino Top further placed 12 orders with Bel pursuant to the Oral Agreement.

64.  On 21 May 2019, Engine sent out a message in the Tripartite Group, asking for holding all the bookings relating to Sino Top.

65.  After 21 May 2018, although Bel had ceased to take new orders from Sino Top within the tripartite cooperation context, it did not cease to work with Sino Top.  Alien had discussed with Wilson over the phone as to how to deal with the remaining cargo committed by Sino Top.  Thereafter, Sino Top placed 55 direct orders with Bel in the next 2 months.  Alien said that Bel’s policy of not having any direct deal with a non-RA was not an inflexible policy, and the key was whether the non-RA was creditworthy.

66.  In late June 2018, Alien came to know that Wilson was in financial trouble and owed CTSHK HK$12m.  By that time, Bel was primarily concerned with recovering what Sino Top owed to Bel.

67.  Alien also said that Bel’s management and Bel’s lawyers had made enquiries with him, and he had told them all he knew in relation to the dispute herein.

E2.3 Li

68.  Li joined Bel as an Air Cargo Manager in 2016, and was promoted to General Manager in the same year.  At all material times, he was Alien’s supervisor.  Save and except the following matters, Li did not personally participate in any matter relating to the dispute in these proceedings.

69.  On 14 June 2019, Li met Huang in a restaurant in Kwun Tong (“the 14.06.2019 Meeting”).  In that meeting, Huang told him that CTSHK had stopped cooperation with Sino Top on 1 April 2019.  Li said that if that was the case, CTSHK should have immediately notified Bel, so that Bel could promptly cease to accept Sino Top’s orders.  Huang said that his colleagues did not do well in the matter.

70.  On 18 June 2019, Li met Huang and Mr Samson Chai of CTSHK, and Wilson of Sino Top, at a coffeehouse in Kwun Tong (“the 18.06.2019 Meeting”).  In that meeting, Wilson admitted that the Disputed Invoices in the Original Claim were all related to orders directly placed by Sino Top with Bel.  Huang then demanded to change the addressees of the invoices to Bel.  Li objected.  Li was of the view that the suggested amendment was contrary to the initial mode of cooperation accepted by Bel.  This was because Bel would only accept to work with a familiar counterparty, and would avoid to have any direct dealing with a newly established company, so that risk could be avoided.  At the end of that meeting, Wilson promised to repay all debts owed to Bel through CTSHK.  Li did not object to this, but Li did not promise if Sino Top did not pay CTSHK, CTSHK would have no need to pay Bel.

71.  On 22 July 2019, upon knowing that Wilson had signed a personal guarantee dated 3 June 2019 (“the Guarantee”) in favour of CTSHK for HK$12m (“the Guaranteed Amount”), Li (in Wilson’s presence) recorded a phone call (“22.07.2019 Call”) between Wilson and Ms Brenda Wong (“Brenda”, CTSHK’s Finance Manager), without Brenda’s consent.  In the 22.07.2019 Call, Brenda suggested that the Guaranteed Amount covered the amounts in the Disputed Invoices in the Original Claim.  Li then called Huang to inform Huang that Brenda had confirmed that the Guaranteed Amount covered the sums in the Disputed Invoices in the Original Claim.  Huang replied that he was unclear about the contents of the 22.07.2019 Call, and he needed some time to understand the situation.  Subsequently, Li followed-up the matter by WeChat messages, but did not have a substantive reply from Huang.

72.  In Huang’s supplemental witness statement, Huang said (a) the copy of the Guarantee disclosed as item 15 of Bel’s Supplemental List of Documents was incomplete; (b) the full version of the Guarantee should be the one produced by Huang and marked as exhibit “RH-3” in his supplemental witness statement; and (c) the Guaranteed Amount did not cover any sums under the Disputed Invoices in the Original Claim.  In Li’s supplemental witness statement filed in response to Huang’s supplemental witness statement, the aforesaid matters mentioned by Huang was not touched upon.

E3.  CTSHK’s witnesses

E3.1  Engine

73.  According to Bel’s pleaded case, the Oral Agreement was reached between Po and Engine in a telephone conversation between them on or about 10 December 2018.  Naturally, the witness from CTSHK who could give direct evidence on the Oral Agreement is Engine.

74.  At all material times, Engine was CTSHK’s Operations Manager, and his supervisor was Huang.  By late 2018, he had known Po for more than 8 years through the introduction of his relatives, and had known Wilson for more than 5 years through Po’s introduction.  Until May or June 2019, Engine and Po would have meal gatherings around 2-3 times a month.

75.  In or about November 2018, Wilson contacted Engine by phone.  Wilson asked Engine in respect of a possible arrangement involving Sino Top procuring Bel’s services though CTSHK.  Wilson said that since Sino Top was a new company without a RA license, Bel refused to deal with Sino Top directly.  Engine told Wilson that CTSHK would be agreeable to such a tripartite arrangement on the conditions that (a) Sino Top’s orders would be subject to CTSHK’s acceptance; (b) CTSHK would be entitled to charge a top-up rate of HK$0.5/kg to be paid by Sino Top; (c) the fees charged by Bel plus the top-up rate would be settled by Sino Top on a monthly basis at the end of each calendar month; (d) the steps involved should be documented according to the Handling Procedures issued by the CAD. There should be a test-run to see whether the tripartite arrangement could operate smoothly.  If the volume of shipments was large, further approval from CTSHK would be required.  Wilson agreed to Engine’s proposed terms (“the Sino Top Agreement”).

76.  Shortly thereafter, Engine received a phone call from Po.  Po asked Engine whether Wilson had contacted him to discuss the possibility of Sino Top procuring Bel’s services through CTSHK.  Engine told Po the previous conversation between him and Wilson.

77.  Over the next few weeks, there were about two to four transactions pursuant to the Sino Top Agreement, which were done as a test run.

78.  In December 2018, Engine had a dinner with Wilson and Po at a restaurant in Kowloon Bay, in which Wilson said that Sino Top intended to more regularly procure Bel’s services for shipments to the US via CX flights through CTSHK. Wilson’s suggestion might have an impact on how CTSHK dealt with similar requests from its other customers, since Sino Top might compete with them for finite cargo spaces.  Engine thus asked Wilson if he was serious about his suggestion.  Wilson replied positively.  Engine reminded Wilson and Po that the steps in the transactions pursuant to the Sino Top Agreement had to be properly documented.  In that dinner, Po did not say that Bel would charge for its services based on the CX 2019 Annual Quotation.

79.  After the dinner, Engine reported to Huang that he had sourced a new substantial customer (ie Sino Top), and the details of the Sino Top Agreement. Huang approved the Sino Top Agreement.

80.  Engine denied that he had discussed with Wilson or Po about the Second Mode of Cooperation, whether on 10 December 2018 or otherwise.  Also, Engine did not have any authority to agree to such an arrangement on behalf of CTSHK.

81.  The Tripartite Group was set up by Po on 8 January 2019 to facilitate communications among Bel, CTSHK and Sino Top concerning the transactions pursuant to the Sino Top Agreement.  Some of the steps involved in the transaction flow are not apparent from the exchanges in the Tripartite Group, for Engine would also communicate with Wilson and Po through other means, for example, Whatsapp and phone.

82.  In carrying out the Sino Top Agreement from 1 January 2019, Bel did not consistently charge CTSHK for its services according to the CX 2019 Annual Quotation.  However, Engine maintained HK$0.5/kg as the additional charge payable by Sino Top in most of the transactions.

83.  In late March 2019, since Sino Top had fallen seriously behind on the due settlement of its accounts with CTSHK, on Huang’s instructions, Engine orally notified Wilson over the phone that CTSHK would temporarily suspend and decline all Sino Top’s further orders pursuant to the Sino Top Agreement until further notice.

84.  As to the Disputed Invoices in the Counterclaim settled by CTSHK:

(1)  As a general practice in CTSHK at the material times, when the accounts department received a monthly statement issued by Bel, the accounts department would request the operations department (of which Engine was a member) to provide the supporting documents.

(2)  When the Engine and his assistant Ah Fai could not locate the documents, they would simply ask the counterparties (ie Alien and Po of P and Wilson of Sino Top) to provide the same.  They would not carry out any investigation as to why they could not locate those missing documents.

(3)  For those transactions that took place before Engine notified Wilson of CTSHK’s decision to suspend further cooperation with Sino Top in late March 2019, Engine and Ah Fai adopted the above practice by trusting that Bel and Sino Top would abide by the Sino Top Agreement.

85.  After suspending further cooperation with Sino Top in late March 2019:

(1)  Regarding the MAWBs circulated in the Tripartite Group in early April 2019 for transactions that had already been shipped, Engine made clear that he was still entitled to reject the same as the transactions had not previously been accepted.

(2)  Upon receiving an email dated 1 April 2019 from Alien concerning Sino Top, Engine inquired with Wilson by phone as to why the email was sent to Engine.  Wilson explained to Engine that the email concerned direct dealings between Sino Top and Bel, and was inadvertently sent to Engine because Bel had forgotten to remove CTSHK from the email loop used for the Sino Top Agreement.  Engine then reported the matter to Huang, who instructed Engine to ignore the email.  Engine also requested Wilson not to send such similar emails again.

(3)  The email dated 10 April 2019 from Alien to Wilson and CTSHK’s Operations Department (copying Engine and Ah Fai) was treated similarly.

(4)  For the rest of the April/May Emails, Engine made similar inquiries with Wilson, but did not report the same to Huang again, since Huang had already instructed Engine to ignore such emails.

86.  Engine said that he did not contact Bel in respect of his receipt of the April/May Emails despite having suspended cooperation with Sino Top, because he did not want to be seen as ‘bad-mouthing’ Sino Top before Bel so as to jeopardise Sino Top’s business.  As long as CTSHK did not accept Sino Top’s orders, there would be no deal between Bel and CTSHK under the Sino Top Agreement.

87.  Engine was confused by the Disputed Invoices in the Original Claim, which were sent out by Bel in the Tripartite Group on 8 May 2019.  At that time, Engine focused on finding out what had happened, and asked Bel to provide the corresponding MAWBs, which were essential for him to ascertain what those invoices were about.

E3.2  Huang

88.  At all material times, Huang was CTSHK’s Managing Director, and he was Engine’s supervisor.  Huang had not personally participated in the discussion or communication with Wilson, Alien or Po leading to the dispute in these proceedings.

89.  Huang has mentioned some background information in his evidence:

(1)  From 2015 to 2018, Bel and CTSHK had been providing each other MAWB Assignments and Co-loading Services on ad hoc rates, which were to be quoted and agreed on a case-by-case basis.  The transaction value of such dealings was not large, averaging HK$200,000 to HK$300,000 per month.

(2)  Bel and CTSHK had been adopting a consistent course of dealing whereby a statement of account would be tendered by each of them at the end of every month, with a credit period of 30 days.

(3)  The procedures involved in MAWB Assignments and
Co-loading Services applicable to RAs are set out in the Handling Procedures, which are also the practice in the market.  In those procedures, the Undertaking is an important document, which must be provided by the borrowing RA.  The Undertaking would show (a) that the underlying transaction has been completed, and (b) which RA had used the MAWB.  Failure of the borrowing RA to provide the Undertaking may have regulatory consequences.

(4)  CTSHK began to have business dealings with Sino Top since mid-2018.

90.  Huang said that in December 2018, Engine reported to him that Wilson and Po had approached him separately by phone to discuss the question of Sino Top through CTSHK procuring Bel’s services through CTSHK.  Engine told Huang that according to Wilson, Bel did not agree to deal with Sino Top directly, because Sino Top was a new company without a RA licence.  Since (a) the tripartite arrangement would involve Engine assisting Sino Top to procure the air cargo spaces of a third-party RA, which would be regarded as a sensitive matter in the industry, and (b) a foreseeable large volume of cargos from Sino Top, Engine sought Huang’s approval on this arrangement, ie the Sino Top Agreement.  When Huang giving the approval, Huang had a clear understanding that under the Sino Top Agreement, CTSHK would retain control over whether it would accept orders from Sino Top.  He had never authorised Engine to enter into the Second Mode of Cooperation with any customers, in which CTSHK would have no control as to whether any order from Sino Top should be accepted.

91.  From late December 2018 to March 2019, Sino Top regularly placed orders with CTSHK requesting for Bel’s services under the Sino Top Agreement, and CTSHK placed corresponding orders with Bel requesting for such services. During this period, there were over 110 transactions in relation to Sino Top, with a total transaction value of some HK$6.1m.  At the same time, Bel and CTSHK continued to have business not relating to Sino Top by providing, requesting and receiving MAWB Assignments and Co-loading Services from each other, and there were 47 orders in this regard, with a total transaction value of HK$1.3m.

92.  In effecting the Sino Top Agreement, while more and more transactions were involved, it became difficult for each and every step in every transaction to be properly documented.

93.  Between February and May 2019, CTSHK settled the Disputed Invoices in the Counterclaim for the following reasons:

(1)  In view of the significant number and value of transactions handled by CTSHK between December 2018 and 2019, “it is only natural that the staff of [CTSHK] may not be able to check every item stipulated in [Bel]’s monthly statement of accounts against the corresponding invoice and underlying documents in order to verify whether the item is correct before the settling the relevant statement of account in one go”.[17]

(2)  The common practice in the industry is for freight forwarding agent to settle monthly statements issued to it by another forwarding agent first.  If any discrepancy is found at a later time after reviewing the underlying records, adjustments could be made with that forwarding agent.

(3)  CTSHK’s Finance Manager, Brenda, took promptness in settling bills as an important matter, due to her background in the aviation accounting industry.

94.  By late March 2019, Sino Top had fallen seriously behind on the settlement of its accounts with CTSHK.  Therefore, Huang instructed Engine to notify Sino Top that CTSHK would suspend all of Sino Top’s orders placed under the Sino Top Agreement until further notice.  At that time, the amount owed by Sino Top to CTSHK reached the credit limit of HK$10 million.  Therefore, Sino Top’s trading account with Sino Top was locked.

95.  To assist Sino Top to unlock the account, CTSHK agreed to allow Sino Top to place with CTSHK a limited amount of new orders for African shipments on a “cash on delivery” basis.  However, as a condition for CTSHK to accept those new orders, Sino Top had to pay CTSHK in cash three times the amount of the fees for the relevant orders.  The excess would be used to settle the oldest outstanding debts in Sino Top’s account with CTSHK.

96.  In respect of the April/May Emails, in April 2019, Engine reported to Huang that Alien had inadvertently copied to CTSHK some emails concerning direct dealings between Bel and Sino Top.  Huang did not think that CTSHK should interfere in the dealings between Bel and Sino Top, hence Huang instructed Engine to ignore those emails.

97.  Engine reported to Huang the receipt of 41 of the April/May Invoices on 8 May 2019.  Huang instructed Engine to demand Bel and Sino Top to provide the relevant underlying documentation first.  Huang came to know that such invoices were all related to Sino Top by 21 May 2019.

98.  On 3 June 2019, upon CTSHK’s request, Wilson signed the Guarantee for the debts owed by Sino Top to CTSHK at that time.  The Guarantee was updated on 24 June 2019.  The Guaranteed Amount did not include any sum in the April/May Invoices.

99.  In the 18.06.2019 Meeting, Li said that it would be difficult for Bel to adjust the April/May Invoices by changing the addressee to Sino Top, for this might trigger an enquiry from Bel’s head office in Japan.

100.  In the telephone conversation between Li and Huang on 22 July 2019, Huang rejected Li’s suggestion that Brenda had confirmed in the 22.07.2019 Call that the Guaranteed Amount covered the April/May Invoices.  Huang also made it clear that CTSHK had not issued corresponding invoices to Sino Top.

F.  ANALYSIS

101.  Both Mr Lam and Mr Chan (together with Mr Wong) have put forward detailed submissions in support of their respective cases.  With no disrespect to counsel, I am not prepared to discuss each and every point put forward by counsel in this judgment.  In my view, the analysis set out below would be sufficient for disposing the issues in this case.  For avoidance of doubt, all the submissions made by counsel have in fact been considered, and the points made by counsel which have not been discussed in this judgment should not be regarded as having been overlooked by this court.

F1. Overview on the witnesses’ evidence

102.  I do not regard Po and Alien as reliable witnesses.  Their evidence in relation to the Oral Agreement is inherently improbable and is not supported by the contemporaneous documents.  In my judgment, the Oral Agreement is not true.  Po and Alien have given untruthful and unreliable evidence on the Oral Agreement, which is an important issue in this case.  By reason of this, the reliability of their evidence as a whole is in doubt.

103.  Mr Chan has chosen not to cross-examine Li.  Accordingly, the matters deposed in Li’s witness statement and supplemental witness statement should be regarded as undisputed facts.

104.  I accept that Engine’s evidence is true and reliable.  His evidence is inherently probable and consistent with the contemporaneous documents.  I attach full weight to his evidence.

105.  I also accept Huang’s evidence.  In my view, although Li’s evidence should be regarded as undisputed facts, that would not affect the truthfulness and the reliability of Huang’s evidence in relation to the 18.06.2019 Meeting and the telephone conversation between Li and Huang on 22 July 2019.

F2.  Oral Agreement

106.  In assessing the Oral Agreement put forward by Bel, the following principles have to be borne in mind:

(1)  While it is argued that the parties have reached a binding oral agreement in a causal meeting, the court has to assess the matter objectively, and has to carefully scrutinize the surrounding circumstances.  In Kwan Siu Man v Yaacov Ozer[18], Litton PJ said:

“Where parties have reached a binding agreement then, statutory restrictions and matters such as illegality apart, it is of course the function of the court to give effect to it. And, in ascertaining the intentions of the parties the court must, it goes without saying, look at the matter objectively.

In a case such as this, it would be highly unusual for the parties to have intended, on the basis of a casual meeting alone, to enter into a binding contract for the sale of the property. It is therefore important for the court to scrutinize the surrounding circumstances carefully, and not be too impressed by the parties' own protestations as regards their intent. ……” (Emphasis added)

(2) In considering whether the parties have reached a binding oral agreement, one has to be careful to avoid falling into the trap of circularity. In World Food Fair Ltd v Hong Kong Island Development Ltd[19], Ribeiro PJ said:

“27. In my view, there is a circularity inherent in the Court of Appeal’s approach. In regarding payment of the deposit and the giving of possession for fitting out works as “performance” which decisively proved the existence of a concluded contract, the Court of Appeal implicitly assumes that there existed a concluded contract of which such acts constituted “performance”, which “performance” is then relied on to prove the existence of that very contract.

28. Such acts are no doubt consistent with the existence of a concluded contract but they do not prove its existence. They are no less consistent with being acts done in anticipation of a legally binding agreement which the parties confidently expected to enter into but which never materialised – which is what the Judge found was the position in the present case.

29. It is not uncommon for parties in the course of negotiations which are still incomplete or subject to contract to pay deposits or to allow builders access to the premises. Such acts are no doubt done with a view to commercial advantage but they involve the risk that the other party may decide to withdraw from the deal without any contract coming into being. Many examples of such conduct can be found, for instance, in textbooks on the law of restitution regarding claims for recovery of expenses incurred or in respect of benefits conferred where anticipated contracts do not materialize.” (Emphasis in original)

(3) Recently, DHCJ Jin Pao SC have summarized the principles relevant to the determination of dispute on the existence of a binding oral agreement in Leung Chin Sing Rabo & Anr v Ko Chun Hay Kelvin:[20]

“41. Since this case concerns the existence of an alleged oral agreement, and turns on my assessment of the credibility of witnesses, the legal principles on evaluating the truthfulness of an account given by a witness are relevant. …

(1) contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) in deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) regard should be had to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence;

(4) care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character;

(5) witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

42. It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint … Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded …

43. In Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [16-20], Leggatt J (as he then was) set out a detailed analysis on the unreliability of human memory and the impact on the civil litigation process on recalling past events. In view of these considerations, at [22], it was held that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. …

44. I also bear in mind that the burden of proof rests on the Plaintiffs to prove and establish the oral agreement, including the manner in which it was concluded and on the terms as pleaded, on a balance of probabilities. There is no burden on the Defendant to persuade the Court that his alternative version of events should be accepted … ” (Emphasis added)

107.  Mr Lam submits that in assessing whether the parties have made a binding oral agreement, the subjective intentions of the parties at the material time would also be relevant.  He refers me to the following cases:

(1)  In Carmichael v National Power Plc[21], Lord Hoffmann said:

“The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course, the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done. But when both parties are agreed about what they understood their mutual obligations (or lack of them) to be, it is a strong thing to exclude their evidence from consideration. ……” (Emphasis added)

(2)  In Yu Man Fung Alice v Chiau Sing Chi Stephen[22], Coleman J said:

“34. That is an objective test, making it unnecessary to prove any positive subjective intention to contract – so that the objective test may be satisfied even though neither party had any actual subjective intention that there be a contract, in the sense that neither party gave any thought to the matter: see, for example, Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 330.

35. For the purpose of determining the parties’ intention at the material time, evidence of their subsequent conduct is admissible: see Blue v Ashley [2017] EWHC 1928 (Comm) at §64. As it was put in Jones at 336H, the subsequent history may give the “best guide” to the parties’ intention at the material time. Sometimes, the fact that the transaction was performed on both sides may point to an intention to enter into legal relations, and the same might apply to partly executed transactions: see Euro Search (Hong Kong) Ltd v Snow Lake Capital (HK) Ltd [2018] HKCFI 402 at §§33-36.

36. However, that is but one factor in the consideration of the question, the answer to which will, of course, very much depend on all the other circumstances (including, for example, whether there was a commercial context). Each case depends upon its own facts. It does not follow from the fact that some performance occurred that the parties must have entered into a contract. On the other hand, it is plainly a very relevant factor pointing in that direction. It must be emphasised that whether the court will hold that a binding contract was made depends on upon all the circumstances of the case: see RTS Ltd v Molkerei Alois Muller GmbH & Co KG [2010] 1 WLR 753 at §54 (considering G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25 and British Steel Corpn v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504, both of which were factually very different from the current case).

37. Evidence of the subjective understanding of the parties is also admissible, in so far as it tends to show whether, objectively, the agreement was intended to be legally binding. In the case of an oral agreement, where no recording was made, the court cannot know the exact words spoken nor the tone in which they were spoken, nor the facial expressions and body language of those involved. In those circumstances, the parties’ subjective understanding may be a good guide as to how, in their context, the words used would reasonably have been understood: see Blue v Ashley at §64; also Carmichael v National Power plc [1999] 1 WLR 2042 at 2050H-2051B.

38. The court will also bear in mind, in an appropriate case, that the absence of express terms may be the result of reaching an oral agreement between non-legally trained people, perhaps over a telephone conversation: see Ho Lai King at §63.  The closeness of a personal relationship between those said to have made the agreement also needs to be considered carefully and not be overplayed.”

108.  Mr Lam accepts that there is no evidence showing (a) the subjective intention of Po at the time of the formation of the alleged Oral Agreement, and (b) the common subjective intention of Po and Engine at that time.  However, Mr Lam submits that there is evidence from Engine showing that he had a subjective intention at the material time, which was consistent with the existence of the Oral Agreement.  For the reasons set out in [131] to [134] below, I am unable to accept this submission.

F2.1 Unexplained radical change in Bel’s pleaded case

109.  As rightly pointed out by Mr Chan, before the filing of the respective witness statements of Po and Alien on 27 January 2021, Bel has never mentioned the existence of the Oral Agreement in their pleadings.  By that time, Bel had already filed (a) the Statement of Claim dated 30 August 2019, (b) the Reply and Defence to Counterclaim dated 16 January 2020, (c) Further and Better Particulars of the Statement of Claim (filed on 6 May 2020), and (d) Further and Better Particulars of the Reply and Defence to Counterclaim (filed on 2 June 2020).  It had never been raised in these pleadings (all verified by statements of truth signed by Lau) that a binding agreement, ie the Oral Agreement, was reached between Po on behalf Bel and Engine on behalf of CTSHK on or about 10 December 2018.

110.  In particular, in [5] of the Statement of Claim, it is pleaded:

“Since December 2018, at the instructions of [CTSHK], Sino Top being the vendor would, via [CTSHK], provide shipment instructions to [Bel]. Upon receiving the shipment instructions from [CTSHK], [Bel] repeatedly agreed to collect and ship various products of Sino Top to the designated location worldwide (the “Contract”)” (Emphasis added)

111.  As submitted by Mr Chan, it is plain and obvious that in the case initially put forward by Bel, the only binding agreement between Bel and CTSHK is the one as pleaded in [5] of the Statement of Claim.  Under that agreement, Bel must accept shipment instructions from CTSHK.  In other words, Sino Top could not bypass CTSHK and place orders directly with Bel.  That agreement is different from the Oral Agreement now alleged by Bel, and in fact contradicts the Oral Agreement now being argued by Bel.

112.  No evidence has ever been put forward by Bel to explain this radical change from the initial case pleaded in the Statement of Claim to the case pleaded in the Amended Statement of Claim[23]. Naturally, if the Oral Agreement is true, Bel would put forward the same in its Statement of Claim in the very beginning of this case.  In my judgment, the fact that Bel did not do so but put forward an entirely different agreement in the Statement of Claim (which has been confirmed in the Further and Better Particulars of the Statement of Claim as the only contract between Bel and CTSHK), and the unexplained radical change in Bel’s pleaded case in the Amended Statement of Claim, significantly undermines the truthfulness of the Oral Agreement alleged in Alien’s evidence and in Po’s evidence.

113.  Mr Chan has invited me to draw an adverse inference against Bel’s case, by reason of the absence of Lau (who signed all the statements of truth verifying all the pleadings filed by Bel) as a witness in this trial.  Having considered all the evidence given in the trial, Mr Chan did not ask Bel’s witnesses in the cross-examination as to why Lau did not attend the trial to give evidence for Bel.  Since no opportunity has been offered to Bel to explain Lau’s absence in this trial, I decline to draw the adverse inference mentioned by Mr Chan in his submissions.  For avoidance of doubt, the conclusion set out in the paragraph above is not the result of drawing any adverse inference against Bel, but is based upon the unexplained radical change of Bel’s case in their pleadings over time.

F2.2  Li’s evidence not in support of the Oral Agreement

114.  I have considered the matters in the 14.06.2019 Meeting, which are not in dispute.  In that meeting, Huang told Li that CTSHK had stopped cooperation with Sino Top on 1 April 2019.  Li said that if that was the case, CTSHK should have immediately notified Bel, so that Bel could promptly cease to accept Sino Top’s orders.  Huang said that his colleagues did not do well in the matter.  I agree with Mr Chan that these matters do not lend support to the existence of the Oral Agreement:

(1)  Under the Oral Agreement, CTSHK would be liable to Bel in respect of all the orders directly placed by Sino Top.  Had the Oral Agreement been in place since about 10 December 2018, there would have been no need for Li to complain for no notice from CTSHK on the cessation of cooperation between CTSHK and Sino Top, for CTSHK would be liable to all the orders placed by Sino Top anyway.

(2)  Huang said that his colleagues did not do well in the matter.  It is unclear what Huang was referring to when he said this.  The issue has not been explored in the cross-examination of Huang.

115.  In Li’s evidence, Li did not mention the Oral Agreement in all the conversations with Huang, ie in the 14.06.2019 Meeting, in the 18.06.2019 Meeting, and in the telephone conversation with Huang on 22 July 2019.  Had the Oral Agreement been true, there is no reason why Li did not mention it at all in all these exchanges, for the Oral Agreement would have provided a solid basis in support of Bel’s claim against CTSHK for all those unpaid invoices.

F2.3  Oral Agreement not proved by the evidence adduced by Bel

116.  In my view, it is important to bear in mind that the Oral Agreement as pleaded by Bel in the Re-Amended Statement of Claim is an express agreement, with the express terms as pleaded in [4C] of the

Re-Amendment Statement of Claim.  As pointed out by Mr Chan, by inserting the phrase “inter alia” into [4C], Bel’s averment is that the Oral Agreement does not only contain the terms as set out in subparagraph (a) and subparagraph (b) of [4C], but also contains some other terms.  However, as to what are the other others, Bel has never spelt these out in their pleadings, nor there is any evidence showing the other terms of the Oral Agreement.

117.  Further, in [4C(b)], it is pleaded that “[Bel] or [CTSHK] may terminate the Operation Arrangement by giving reasonable notice to the other party”.  There is no evidence showing that Po and Engine had mentioned this in the telephone conversation between them on or about 10 December 2018. Even assuming that all the evidence adduced by Bel as true and reliable, there is no evidence showing that the Oral Agreement would contain such the term as pleaded in [4C(b)] of the Re-Amended Statement of Claim.

118.  Mr Lam submits that [4C(b)] is not an express term of the Oral Agreement, but is a term implied into the agreement by the operation of the law.  With respect, I am unable to accept this submission.  Undeniably, the term pleaded in [4C(a)] must be an express term of the Oral Agreement.  The term in [4C(a)] and the term in [4C(b)] are in the same category.  While [4C(a)] is an express term, there is no basis to say that [4C(b)] is an implied term.

119.  While there is no evidence proving an express term of the Oral Agreement pleaded in the Re-Amended Statement of Claim, whether Po and Engine have indeed reached an agreement over a telephone conversation on or about 10 December 2018 is in serious doubt.

F2.4 Oral Agreement inherently improbable

120.  I agree with Mr Chan that the Oral Agreement alleged by Bel is a “blank cheque” given to Bel by CTSHK, by which CTSHK have unconditionally and unreservedly underwritten all liabilities incurred by the services provided by Bel to Sino Top since on or about 10 December 2018.  The alleged arrangement is against common and commercial sense and is inherently improbable.

121.  In the P/D/Sino Top Arrangement, Sino Top would place an order with CTSHK.  If the order is accepted by CTSHK, CTSHK would place a corresponding order with Bel.  In the said arrangement, CTSHK would retain a control as to whether a particular order from Sino Top should be accepted.  If CTSHK has any reservation (for example, the financial ability of Sino Top at a particular time appears to be not good), CTSHK would have an opportunity to protect their own interest by refusing to accept an order from Sino Top.

122.  However, under the Oral Agreement, CTSHK would not have the aforesaid control.  Sino Top may place as many orders as they wish with Bel, and CTSHK would have to pay Bel all the corresponding fees charged by Bel unconditionally and unreservedly.  It is inherently improbable that CTSHK would enter into an agreement of this kind.

123.  While it is true that CTSHK would earn a profit from Sino Top at the rate of HK$0.5/kg for the orders placed by Sino Top, CTSHK may earn the profits by following the P/D/Sino Top Arrangement.  It is unreasonable to suggest that by reason of this profit, CTSHK would enter into the Oral Agreement and expose themselves to unlimited liability.  One must bear in mind that in 2018, Sino Top was a new company in the industry.  Any reasonable businessman having dealings with Sino Top would take precautions to guard against the risk of Sino Top suddenly having some financial difficulties.

124.  Further, in January and February 2019, there were occasions in the Tripartite Group in which Po was chasing Engine and Ah Fai for the Undertakings relating to some transactions.[24] In the Tripartite Group, Po said that some officers in Bel regarded the Undertakings as a

125.  Given the importance of the Undertaking, it is inherently improbable that Bel and CTSHK would enter into the Oral Agreement.  Both Bel and CTSHK knew that each and every transaction had to be supported by an Undertaking given by CTSHK.  Bel’s internal practice was that in the absence of a relevant Undertaking, no invoice would be issued to CTSHK.  The Oral Agreement, if true, would mean that (a) CTSHK would be liable to a transaction proposed by Sino Top and accepted by Bel, without CTSHK stating their consent in any written document; and (b) Bel would be able to issue an invoice to CTSHK for that transaction, even in the absence of any written document showing CTSHK’s consent to the said transaction.  These are fundamental changes to the long established practice of both Bel and CTSHK.  Applying common and commercial sense, it is inherently improbable that Bel and CTSHK would intend to have such fundamental changes by a causal telephone conversation between two middle-level staff members of their respective companies.  

126.  In my judgment, the existence of the Oral Agreement is inherently improbable.  This has an adverse impact on the reliability of Alien’s evidence and Po’s evidence.

F2.5  Oral Agreement not supported by any contemporaneous documents

127.  The Oral Agreement as alleged by Bel is also not supported by the contemporaneous documents.

128.  There is no written record in support of the existence of the Oral Agreement.

(1)  At the material times, Po was the Assistant Operations Manager, and Alien was the Air Cargo Manager in Bel.  They were at the level of middle management.  Both of them appreciated the importance of CTSHK’s consent to the Oral Agreement.  That is why Alien instructed Po to seek a confirmation from Engine, and that is why Po did do so immediately after receiving Alien’s instruction.  Allegedly, Po received the requisite confirmation from Engine.  However, Po did not make any written record of the confirmation given by Engine, for example, sending an email to Engine recording down the confirmation from Engine.  Alien also did not do so.  In my judgment, had there been such a confirmation given by Engine in a telephone conversation on or about 10 December 2018, there would have had been some written record made by Alien and/or Po.  The lack of such written record shows that the truth is not the one alleged by Alien and Po.

(2)  As said in the above, even in the Statement of Claim and in the Further and Better Particulars of the Statement of Claim, the Oral Agreement is not mentioned.  Even after the commencement of these proceedings and up to the time of these pleadings, the Oral Agreement has still not appeared in any document.

F2.6  Oral Agreement not consistent with undisputed or indisputable facts

129.  I am also in agreement with Mr Chan that the alleged Oral Agreement is not consistent with the undisputed or indisputable facts.

(1)  On 5 December 2018 (ie before the alleged formation of the Oral Agreement on or about 10 December 2018), Bel and Sino Top already bypassed CTSHK in agreeing 2 shipments through Polar Airline.[25] Those 2 shipments were the very first transactions that Bel requested CTSHK to pay for Sino Top.[26]  The next shipment that Bel and Sino Top had bypassed CTSHK took place on 26 January 2019, which was preceded by 38 transactions which were properly approved by CTSHK.  All these contradict Bel’s allegation that the Oral Agreement was formed on or about 10 December 2018, and all the transactions concerning Sino Top were done pursuant to the Oral Agreement after reaching that agreement.

(2)  The Bel/ST Group was established by Po on Alien’s instructions on 20 December 2018.  According to Alien, the reason for establishing the Bel/ST Group was to facilitate communications and exchange of documents between Bel and Sino Top, and not to keep CTSHK in the dark.

(3)  The documentary evidence showing that in fact after 10 December 2018, the three parties were doing business on the basis of having CTSHK’s full participation in the process.

(a)  On 20 December 2018, Alien released 2 MAWB numbers to Wilson that he intended to book in the Tripartite Group.

(b)  Later on the same day, by the 20.12.2018 Email, Po sent the particulars of Sino Top’s orders, the links to the 2 MAWB nos., and Bel’s quotation for the same to Engine, copying Wilson and Bel.

(c)  On 21 December 2018, Wilson emailed Po and Engine, attaching the relevant Reception Checklist and used MAWBs.

(d)  On 22 December 2018, Alien sent an email to CTSHK (copying Bel, Engine, Po and Wilson) requesting for the provision of Undertakings.  Subsequently, the Undertakings were provided by CTSHK.

(e)  Bel then issued invoices to CTSHK for the transactions on 21 December 2018 and 28 December 2018 respectively.

(4)  The exchanges in the Bel/ST Group show that (a) Alien was of the view that it was necessary to inform Engine of the details of Sino Top’s orders prior to shipment, and (b) Engine expected to be so informed.

(a)  In response to Wilson’s request on 31 December 2018 for the electronic links for 5 MAWB numbers, Alien said to Wilson: “肥[27]，問多次，d CX email 除咗你同鬼[28]，仲有冇要CC邊個方便你哋做野”.

(b)  Later on the same day, Alien told Wilson that “頭先阿鬼call我，話收到email唔知咩事，話可以就你同佢講聲先喎”.  Wilson replied and said “打咗俾佢了”.

(5)  According to Alien, the Tripartite Group was established to ensure a larger degree of participation by CTSHK, so that CTSHK would have a better understanding of the details of the orders placed by Sino Top.

(6)  Between January and February 2019, there were numerous instances of Bel chasing CTSHK for Undertakings in the Tripartite Group.

(7)  From March 2019 onwards, Alien and Po stopped chasing for Undertakings from CTSHK.

(8)  On 10 April 2019, Engine rejected certain quotations provided by Po for fees to be charged by Bel to CTSHK for a completed transaction in which Bel had provided service to Sino Top.  Engine’s evidence is that he was entitled to reject the same as the transaction had not been previously accepted by CTSHK.

(9)  There was a complete silence in the Tripartite Group from 11 April to 6 May 2019. During this period, Bel continuously received orders from Sino Top in the Bel/ST Group.  Po could not offer any explanation as to this under cross-examination. I agree with Mr Chan that the reasonable inference is that by about 11 April 2019, Bel had known that CTSHK had stopped cooperation with Sino Top.

130.  In view of the contemporaneous documents as set out in the above, in my view, the Oral Agreement pleaded by Bel and alleged by Alien and Po in their evidence is not true.

F2.7 Oral Agreement not supported by Engine’s evidence

131.  Mr Lam submits that Engine has given evidence in support of the Oral Agreement.  Mr Lam is relying upon an answer given by Engine nearly at the end of the cross-examination.  Engine said that at one time, he told Po “你搞掂先喇，搞掂然後通知我喇”.

132.  In order to clearly and fairly understand Engine’s evidence, I set out the relevant part of the transcript below:

“問：但係我而家指出個案情。

答：唔。

問：喺嗰個對話--12月10號，係呀，12月10號左右嘅。

答：喺香港，學你話齋。

問：嗰個對話，你同Wilson嘅對話之後，阿����係打過畀你嘅，而阿����係問你「Wilson啲貨又經你喇」咁樣嘅，同唔同意？

答： Wilson啲貨係經我吖，okay呀。

問：咁之後你就話「知道呀，照做就得喇。」？

答：我又唔同意喎呢個，照做--嗱，好老實，大家做咗咁多年喇，行家，有時真係忙呢，都話「喂，你搞掂先喇，搞掂然後通知我喇。」因為我哋每一樣嘢係講「搞掂」，係可能你畀--要畀啲冧把我呀，要畀好多樣嘢我，唔係我哋可能單單--每一單去傾㗎嘛，唔係你每一次你話呢一樣嘢就想話畀我聽永--你永遠都係咁做，唔會㗎嘛。

問：唔係，我想理解你頭先話「搞掂先就通知我」係你同阿����講過，定係你同邊個講呀？

答：阿����囉，係。

問：係咩嘢時候講㗎？係你個電話度講，係咪呀？

答：我唔記得，應該係電話度講。

問：都係12月頭？

答： 12月頭--我又覺得未必係喎，係講緊可能再前啲喎，因為係嗰陣時試做形式，有時我忙或者係乜嘢，其實都叫佢哋搵阿Fai都得㗎。

問：我就繼續向你指出喇，你話你有匯報畀黃生聽關於呢啲安排嘅，實際嘅安排我哋梗係有爭議喇，但係我而家向你指出你其實匯報畀黃生聽嗰個安排就係你頭先咁講，原告同埋Sino Top搞掂咗先喇，之後再通知你，呢個安排你同唔同意？

答： 唔同意。

問：去到3月底喇，一路係指出嘅案情嘅。

答： Okay。

問：所以你同意就同意，唔同意就唔同意喇。

答：唔。

問： 3月尾，2019年3月尾，我就向你指出，黃生係冇指使你叫Wilson去停咗Wilson嗰啲單嘅？

答：黃生有指使我。

問：而你實質上係冇同Wilson講話停咗佢啲單嘅？

答：有。” (Underline added)

133.  As shown in the transcript, Engine in fact has expressly denied the Oral Agreement put forward by Bel.  The true meaning of the sentence “你搞掂先喇，搞掂然後通知我喇”, as explained by him in his evidence, is that Po should give him the documents in one go, not to pass the documents to him in bits and pieces at different times.

134.  I do not agree that Engine has agreed to, or has accepted, the Oral Agreement alleged by Bel.

F2.8 Other matters

135.  As to whether the Oral Agreement pleaded by Bel is true, I have also taken the following matters into account.

136.  First, as shown in the documents, after 21 May 2019, Sino Top in fact placed 55 direct orders with Bel.  At that time, Sino Top remained as a company without a RA licence.  This fact is inconsistent with Alien’s evidence and Po’s evidence that the reason for Sino Top having to procure Bel’s services through CTSHK in the first place was Bel’s decision that it could not directly deal with a non-RA.

137.  Second, Alien and Po signed their respective witness statements on 12 January 2021, in which they mentioned the alleged Oral Agreement formed on or about 10 December 2018.  In the absence of any written record or anything in aid of their memories, it is inherently improbable that they could clearly and accurately remember any discussion concerning the Oral Agreement conducted on or about 10 December 2018.

138.  Third, when Po was asked what he told Engine in the telephone conversation on or about 10 December 2018, Po said that all he told Engine was “係咪Wilson 啲貨可以經你俾我地”.  And the reply given by Engine was “知道啊, 照住做就得”. Clearly, the question asked by Po is not a question seeking Engine’s confirmation of his agreement to the Oral Agreement pleaded by Bel in the Re-Amended Statement of Claim.  For the sake of discussion, assuming that this telephone conversation has taken place, I am of the view that the matter discussed in the telephone conversation is the continuation of the Initial Mode of Cooperation. The subject matter in the telephone conversation is certainly not the Oral Agreement in Bel’s pleaded case.

139.  Fourth, Mr Lam has made the following points in his submissions.  With respect, I am unable to accept these points.

(1)  Mr Lam submits that an adverse inference should be drawn against CTSHK’s case, by reason of the absence of Ah Fai as a witness in this trial.  I decline to draw this inference, for the following reasons:

(a)  As to why CTSHK did not arrange Ah Fai to give evidence in this trial, this topic has not been explored in the cross-examination of CTSHK’s witnesses.  Without giving an opportunity to CTSHK to explain why Ah Fai is not a witness in this trial, it would not be appropriate and fair to draw an adverse inference against CTSHK by reason of the absence of Ah Fai in the trial.

(b)  Further or alternatively, there is no or no sufficient reason to say that Ah Fai is a witness whom might reasonably be expected to be called by CTSHK.  In my view, it cannot be reasonably said that Ah Fai might give evidence, which might be material to the issues in dispute in these proceedings.

(2)  Mr Lam also submits that an adverse inference should be drawn against CTSHK, by reason of the absence of any staff member from CTSHK’s accounting department (including Brenda) as a witness in this trial.  I accept that evidence from Brenda or someone else from CTSHK’s accounting department may be relevant to why CTSHK would settle the Disputed Invoices in the Counterclaim.  However, in my view, the real reason leading to the settlement of those invoices, based upon the parties’ respective pleadings, can only be the Oral Agreement suggested by Bel, or the mistake claimed by CTSHK in their counterclaim.  On the totality of the evidence before the court, I conclude that the Oral Agreement is inherently improbable and is untrue.  Further, Po and Huang have given direct evidence in support of the mistake claimed by CTSHK.  I have found that their evidence is true and reliable.  In the circumstances, based upon the evidence accepted by this court, I am of the view that the adverse inference suggested by Mr Lam is unwarranted.

(3)  Mr Lam has argued that in the Tripartite Group, after Alien sent out 41 invoices (which include the Disputed Invoices in the Original Claim) in that group on 8 May 2019, there was no immediate objection from CTSHK.  On the contrary, Ah Fai in that group asked for MAWBs relating to those invoices.  This fact indeed supports the existence of the Oral Agreement.  With respect, I am unable to agree.  As submitted by Mr Chan, given Alien’s sudden circulation of a large number of invoices in the Tripartite Group, naturally Engine would need some time to look into the matter.  Ah Fai was Engine’s assistant.  That fact that Ah Fai requested Bel to provide more documents relating to the 41 invoices could not be understood as acceptance or admission of the existence of the Oral Agreement now alleged by Bel.

(4)  One of the submissions made by Mr Lam is that the allegation that Huang had instructed Engine, and Engine had followed the instruction and stopped to accept all further orders placed by Sino Top is untrue.  The basis of this submission is the dates of some statements of account produced by CTSHK are the dates after March 2019.  In respect of this point, I am of the view that:

(a)  As submitted by Mr Chan, there has never been any pleading or any forewarning by Bel that Bel is going to run a positive case in the trial that there were business dealings between CTSHK and Bel after March 2019.  In the absence of any forewarning, it would not be fair for Bel to take that point at the trial, for CTSHK has not been given an opportunity to conduct investigation and to adduce evidence to meet that case.

(b)  Without prejudice to the above, as to this point, Huang has given an explanation in his evidence.  Huang said that the dates on the statements of account were the dates of the relevant invoices, not the dates of the transactions.  Save and except a few transactions, all the transactions with Sino Top were pre-April 2019 transactions.  The few exceptions relate to a small amount of new orders for African shipments.  In respect of these orders, Sino Top had to place the orders with CTSHK on a “cash on delivery” basis.  I accept Huang’s evidence.

(c)  In my view, what Engine and Huang have said in their evidence is that after March 2019, CTSHK did not have any business dealing with Sino Top in which CTSHK had given Bel a credit period.  Huang’s explanation given under cross-examination as summarized in the above is not inconsistent with what he had previously said in his evidence.

(5)  In [7(1)] of Huang’s supplemental witness statement, Huang corrected what he said in [16(1)] of his witness statement.  Huang said that [16(1)] of his witness statement was inaccurate due to miscommunication during the preparation for the present proceedings.  Mr Lam submits that Huang is not a credible or reliable witness, for Huang is unable to give detailed explanation as to what miscommunication leading to the mistake made by him in [16(1)] of his witness statement.  Mr Lam also criticizes Engine’s credibility and/or reliability, for when Engine was referred to [16(1)] of Huang’s witness statement, Engine confirmed that [16(1)] was correct.  In my view, all these are some very minor points.  It is not unusual that a witness may have made some mistakes in his or her witness statement.  After all, Huang has made the necessary correction in his supplemental witness statement.  When Engine was referred to [16(1)] of Huang’s witness statement, Engine was not told that that paragraph had been corrected by Huang in [7(1)] of his supplemental witness statement.  With respect, the question put to Engine may not be fair or appropriate.  I would not attach much weight to Engine’s answer to that question.

140.  Finally, the settlement of the Disputed Invoices in the Counterclaim is consistent with the existence of the Oral Agreement.  However, it is also consistent with the mistake suggested by CTSHK in their case.  Having considered all the evidence before me, I accept CTSHK’s case and find that the settlement of the Disputed Invoices in the Counterclaim is indeed caused by the mistake said by CTSHK.  The settlement of these invoices cannot prove the existence of the Oral Agreement. 

F2.9 Oral Agreement not proved

141.  For the reasons set out in the above, in my judgment, the Oral Agreement pleaded by Bel is contradicted by the Statement of Claim and the Further and Better Particulars of the Statement of Claim, inherently improbable, not supported by contemporaneous documents and contradicted by undisputed or indisputable facts.  The alleged Oral Agreement cannot be true.

142.  Alien’s evidence and Po’s evidence in support of the existence of the Oral Agreement are untrue and unreliable.  The Oral Agreement is an important issue in this case.  Since Alien’s evidence and Po’s evidence on this material issue are untrue and unreliable, save and except the matters accepted by CTSHK or evidenced by documents, I refuse to accept their evidence.

143.  At the same time, both Engine and Huang denied the existence of the Oral Agreement in their evidence.  For the reasons set out in the above, I find that Engine’s evidence and Huang’s evidence are true and reliable.

144.  Since I have ruled against Bel on the Oral Agreement, Bel’s claim based upon the Oral Agreement must fail.

F2.10 Engine’s authority

145.  For the sake of completeness and without prejudice to the above, assuming that Engine did express his consent to the Oral Agreement in a telephone conversation with Po on or about 10 December 2018, I am of the view that Engine did not have the authority to enter into the Oral Agreement on behalf of CTSHK.

146.  According to Bel’s pleaded case, Bel is saying that Engine did have the authority to represent CTSHK to enter into the Oral Agreement.  Bel is relying upon actual express authority, actual implied authority, and ostensible or apparent authority.[29]

147.  Both Engine and Huang have said in their evidence that Engine did not have the authority to enter into the Oral Agreement on behalf of CTSHK.  This part of their evidence is not challenged under cross-examination.  Accordingly, it is not in dispute that Engine did not have the express actual authority to enter into the Oral Agreement on behalf of CTSHK.

148.  I have found that the Oral Agreement is equivalent to a “blank cheque” given to Bel by CTSHK, by which CTSHK have unconditionally and unreservedly underwritten all liabilities incurred by the services provided by Bel to Sino Top since about 10 December 2018.  Engine was an Operations Manager in CTSHK at the material times.  Being a staff member at the operational grade, in my view, it cannot be said that the authority of issuing a blank cheque on behalf of CTSHK would be within his ordinary scope of duties, or necessary for or incidental to the execution of his duties.  In my judgment, it cannot be said that Engine had the express implied authority to enter into the Oral Agreement on behalf of CTSHK.[30]

149.  As to ostensible or apparent authority:

(1)  In Hopkins v TL Dallas Group[31], Lightman J said:

“94.  Where an agent is acting within the usual authority of a person in his position, the third party will normally not be expected to inquire as to the details of his authority unless the transaction is abnormal or there are other circumstances giving rise to suspicion.  If there are suspicious circumstances or abnormalities, then the third party should “make such inquiries as ought reasonably to be made” to ensure that the authority is sufficient to bind the principal.” (Emphasis added)

(2)  In Criterion Properties v Stratford UK Properties LLC[32], Lord Scott said:

“31. …… If a person dealing with an agent knows that the agent does not have actual authority to conclude the contract or transaction in question, the person cannot rely on apparent authority. Apparent authority can only be relied on by someone who does not know that the agent has no actual authority. And if a person dealing with an agent knows or has reason to believe that the contract or transaction is contrary to the commercial interests of the agent’s principal, it is likely to be very difficult for the person to assert with any credibility that he believed the agent did have actual authority. Lack of such a belief would be fatal to a claim that the agent had apparent authority.” (Emphasis added)

(3)  As said in the above, the Oral Agreement is a blank cheque given by CTSHK to Bel.  The arrangement is an unusual arrangement in which CTSHK would need to bear unlimited liability.  Given all these, Bel may only say that Engine had the ostensible or apparent authority to represent CTSHK to enter into this agreement, if Alien or Po had made inquiries, which led to a reasonable belief that Engine did have the necessary authority at the material time.  However, there is no evidence showing that Alien or Po had made any inquiries of this kind at any time.

(4)  For these reasons, Bel cannot make out a case on ostensible or apparent authority.

150.  In my judgment, all the Bel’s arguments on the authority issue fail. Bel has not pleaded that CTSHK has at any time ratified the Oral Agreement or any transaction pursuant to the Oral Agreement.  In the circumstances, even if Engine has expressed an agreement to the Oral Agreement in a telephone conversation with Po on or about 10 December 2018, Bel cannot pursuant to the Oral Agreement to make any claim against CTSHK.

F3. Implied Agreement/Estoppel

151.  The Implied Agreement and the estoppel pleaded by Bel in their Re-Amended Statement of Claim are pleaded in the Re-Amended Statement of Claim, [5B] and [5C].

152.  In my judgment, the Implied Agreement as pleaded in the

153.  As to the estoppel pleaded by Bel, based upon the evidence accepted by this court, the reliance pleaded in the [5C(c)] of the Re-Amended Statement of Claim is not proved.  Accordingly, the alleged estoppel is not established.

F4. Mistake

154.  As to the mistake pleaded by CTSHK, I accept Engine’s evidence as set out in [84] above, and Huang’s evidence as set out in [93] above.  I am satisfied that when CTSHK made payments for the Disputed Invoices in the Counterclaim, CTSHK was under the mistakenly belief that they did request Bel to provide the services in those invoices to Sino Top.

155.  CTSHK is relying upon unjust enrichment as the cause of action in support of their counterclaim.  The elements of unjust enrichment are as follows[33]:

(1)  was the defendant enriched;

(2)  was the enrichment at the plaintiff’s expense;

(3)  was the enrichment unjust; and

(4)  are any of the defences applicable.

156.  CTSHK did make payments to Bel under the Disputed Invoices in the Counterclaim.  Elements (1) and (2) are there.  In my judgment, the payments were made under the mistake as pleaded in CTSHK’s case.  In the circumstances, it would be unjust for Bel to keep the money paid by Bel.  Element (3) is also present.

157.  Bel has put forward change of position and estoppel as defences.  In my view, since there is no evidence in support of the reliance pleaded by Bel (see [153] above), these defences to the counterclaim cannot succeed.

158.  In my judgment, CTSHK succeeds in establishing the counterclaim.  Bel ought to return the payments received under the Disputed Invoices in the Counterclaim to CTSHK.

F5. Answers to the Agreed Issues

159.  By reason of the aforesaid, the answered to the agreed issues are as follows:

(1)  The true agreement between Po of Bel and Engine of CTSHK in respect of the orders for Bel’s co-loading and/or MAWB assignment services in relation to Sino Top is the P/D/Sino Top Arrangement as pleaded in the Re-Amended Defence and Counterclaim.  The Oral Agreement as pleaded in Bel’s case is untrue.

(2)  Without prejudice to the above, if Engine and Po have reached the Oral Agreement, Engine did not have the authority to represent CTSHK to enter into the Oral Agreement.

(3)  The Implied Agreement pleaded in Bel’s case did not exist.

(4)  CTSHK was not estopped from denying the existence of the Implied Agreement.

(5)  CTSHK has a claim in unjust enrichment for mistaken payments against Bel in respect of the Disputed Invoices in the Counterclaim.

(6)  Bel cannot rely upon (a) change of position and/or (b) estoppel as pleaded in their case as defences to CTSHK’s counterclaim. 

F6. Conclusion

160.  Based upon the analysis as set out in the above, Bel’s claim should be dismissed, and CTSHK’s counterclaim ought to be allowed.

G.  DISPOSITION

161.  I dismiss Bel’s claim and allow CTSHK’s counterclaim.

162.  There be an order that Bel do return the sums paid by CTSHK to Bel under the Disputed Invoices in the Counterclaim forthwith, the total of which has been agreed at HK$1,235,479.26.  The parties have also agreed that in the event that the counterclaim be allowed, there be

163.  Mr Lam and Mr Chan have agreed that costs should follow the event. Since CTSHK succeeds in defending Bel’s claim and making out the counterclaim, costs of these proceedings should be to CTSHK.  Mr Chan does not seek a certificate for two counsel.  Accordingly, subject to the matter mentioned below, I order that costs of these proceedings (including all costs reserved) be paid by Bel to CTSHK, to be taxed if not agreed.

164.  Before leaving this judgment, I have to mention one matter.  After finishing hearing the evidence on 15 September 2023, I directed that the parties should prepare written final submissions, and I also directed that oral final submissions would be heard on 8 November 2023 at 10 am.  On 8 November 2023 at 10 am, all counsel and CTSHK’s solicitors were present in the court, but no one from the law firm representing Bel in this case was present in the hearing.  Mr Lam told me that he had tried to contact the handling solicitor, Mr Kam Fai (“Mr Kam”), but was unable to get in touch with him.  I therefore adjourned the hearing and gave some time to Mr Lam to try to contact Mr Kam again. Eventually, the law firm representing Bel managed to send a solicitor (not Mr Kam) to the court at around 11 am.  Because of all these, an hour was wasted and the hearing on 8 November 2023 actually started at around 11 am.

165.  At the end of the hearing on 8 November 2023, I directed that Mr Kam shall file and serve an affirmation personally made by him within 14 days to explain his absence in the hearing on 8 November 2023.  I also said that I might consider whether it would be necessary to make a wasted costs order against the solicitor.

166.  On 10 November 2023, Mr Kam filed an affirmation made by him (“the Affirmation”) pursuant to my direction.  In the Affirmation, Mr Kam said that he started to feel unwell in the late evening of 7 November 2023.  He suffered from a headache and running nose.  He took some medicine before going to bed at around 11 pm.  Before going to bed, he set an alarm to make sure that he would get up in time in the morning on 8 November 2023.  However, due to some unknown reason, the alarm did not function the next morning.  Mr Kam woke up at around 10:15 am.  He immediately called his firm to make some arrangements.  Eventually, he arrived at the court at around 11:50 am.  He has been practicing as a solicitor for 13 years.  Before this incident, he has never missed a hearing, and he has never been late in attending a hearing. This event is an isolated event.  He undertakes that he would never make any similar mistake again in the future.

167.  Having considered the Affirmation, I accept that Mr Kam’s failure to attend the hearing on 8 November 2023 on time is not his intentional act.  However, I regret to say that Mr Kam has not managed the situation satisfactorily.  On 7 November 2023, when Mr Kam started to feel unwell, he should let his colleagues know as soon as possible, so that the law firm could make necessary arrangements before the hearing on 8 November 2023 to send another solicitor to attend the hearing.   Having considered the matter in the round, save and except the following, I am not prepared to take any further action against Mr Kam.

168.  It is an undeniable fact that one hour (which is not insignificant) was wasted in the morning on 8 November 2023 due to the mistake made by Mr Kam.  At the moment, I am of the view that the costs wasted by the one-hour adjournment (ie from 10 am to 11 am) on 8 November 2023 should be personally borne by Mr Kam on an indemnity basis.  I direct that Mr Kam do file and serve an affirmation within 7 days, in which he shall state:

(1)  whether he is willing to offer an undertaking to the court that:

(a)  he would personally bear the extra costs incurred by CTSHK by reason of the one-hour adjournment on 8 November 2023 on an indemnity basis, to be taxed if not agreed; and

(b)  he would not charge Bel any extra costs incurred by reason of the one-hour adjournment.

(2)  if Mr Kam is unwilling to offer the said undertaking, why a wasted order compelling him to do the aforesaid should not be made.

169.  For avoidance of doubt, the fact that Mr Kam did not attend the hearing on 8 November 2023 on time has no impact on my assessment of the merits of the parties’ respective cases, and has not affected the outcome of this case in any way.

170.  Lastly, it remains for me to thank all counsel for the assistance rendered to the court.