BDP ASIA PACIFIC LTD v. LONGTEX APPAREL GROUP (HK) CO LTD

HCA 888/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 888 OF 2011

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BETWEEN

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REASONS FOR DECISION

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Application

1.  This is an application for summary judgment.

Background

2.  On 26 May 2011, the Plaintiff commenced the present proceedings. It sued the Defendant for balance of outstanding freight and shipment charges in the sum of $1,757,821.94. It was cumulated for a period of time from October 2010 to January 2011. 

3.  The Defendant contested the proceedings. By its Defence filed on 28 June 2011, the Defendant said that it was only an agent and not the contracting party. The Plaintiff acknowledged of the same. The principles were Xinggo Zhixing Company Limited in PRC (“Xinggo Zhixing”) and Sky Sense Holdings Limited (“Sky Sense”) in Hong Kong (collectively called “the Principles”). The Principles gave instructions to the Plaintiff directly for the shipment and paid through the Defendant due to foreign currency control. Upon the Principles’ transfer of money to the account of the Defendant, it paid to the Plaintiff by cheques. In fact, the Plaintiff would go to an address in San Po Kong to collect the cheques.

4.  The Plaintiff then issued the present order 14 application. Parties filed and served the usual affidavit evidence, the supporting affirmation, the affirmation in opposition and the one in reply.

Judgment for the Plaintiff

5.  They appeared before on 18 November 2011 on 18 November 2011 for the substantive argument of the application. Mr. Patrick Siu of Counsel acted for the Plaintiff and the Defendant was represented by Mr. Kevin Ho of Counsel. Upon consideration of all the evidence authorities and submissions from the parties, I ruled in favour of the Plaintiff with costs summarily assessed at $53,557. I also agreed to hand down the reasons at a later date. Here are them. 

Reasons

6.  The principles relating to summary judgment are clear. In short, the underlying policy of it aims at preventing the defendant from delaying the plaintiff to obtain judgment in case where the latter clearly has no defence.  Facing such application, the Court asks 2 questions:-

(a)  Factually, is what the defendant says believable in light of the undisputed or indisputable circumstances?  In so doing the court is entitled to take into account the commercial reality as well as contemporaneous documents.  However, mini-trial on affidavit evidence shall not be embarked.  Bare assertion is insufficient and the defendant must condescend upon particulars.

(b)  Legally, if what the defendant says is believable, does it amount to an arguable defence in law?

7.  By applying the facts before me to the two questions, I took the view that both of the answers were negative. 

8.  The Defendant said that it was not the contracting party. It was merely an agent and the Plaintiff knew it. However, such proposition is unbelievable.

(a)  There was clear admission of liability on the part of the Defendant. 

On January 2011, the plaintiff wrote to demand for the payment.

“我司總經理今朝開會後決定希望貴司能分兩期償還180萬元的欠款。第一期90萬元於2月11日前償還, 第二期90萬於2月28日前償還, 如貴司不能在指定日期內還款, 我司將訴諸法律行動。介時可能會將所有有關文件(包括提單, packing list & invoice) 與相關party, 即雙方海關及客戶作證據, 請知悉。謝謝。”

The Defendant then replied on the same date.

“由於去年青島廠裝船問題柜號 #CLLU9911226被利豐洋行拖欠貨款, 引致現金週轉不靈, 因此遲遲未能支付貴司欠款, 特此致歉。現本司安排28/1/2011先付100,000.00 另3月1號再支付100,000.00 (2月份除外, 因未有貨落)以後每月1號支付 HK$ 200,000.00希望你司能接受, 此外本司現開始收到美國客人2011年新訂單, 希望來年再能合作及支持本司, 謝謝!”

On 2 February 2011, the Defendant paid the 1^st instalment of $100,000 as it had counter-offered.

(b)  There is also un-contradicted evidence filed by the Plaintiff with regard to another admission of liability.

Paragraph 27 of the supporting affirmation herein states that:

“27. On 26^th February 2011, I met with Mr. Jimmy Wong over lunch in a Chinese restaurant in Diamond Hill. During that meeting Mr. Wong explained to me once more the cash flow problem of the Defendant. He urged me to accept the Defendant’s counter-proposal. In response, I said that the Defendant had to increase the amount of the monthly payment. In particular, the Defendant must increase the amount of repayment in the first few months to give assurance to the Plaintiff. No agreement was reached between us at the meeting.”

The Defendant did not deal with the above at its affirmation in opposition.

(c)  All the contemporaneous documents point to the fact that the Defendant is the contracting party. Before engaging services from the Plaintiff, the Defendant applied for credit terms to be allowed. The Plaintiff granted the same. Thereafter, on each occasion, the Plaintiff issued quotation at the request of the Defendant. If the latter would give instruction with shipping order attached, the Plaintiff proceeded to arrange the shipment to be done. Invoices were issued and the Defendant paid some of them, leaving those under the present proceedings.

(d)  With respect, by disclosing the documents relating to both Xinggo Zhixing and Sky Sense will not help the Defendant evading its liability because they are merely the documents showing how and why the Defendant had to engage the shipping services of the Plaintiff.

(e)  Finally, although it is true that the name of the Defendant did not appear as “shipper” on the shipping documents, such argument fails because there is again the following un-contradicted evidence, as contained in the supporting affirmation herein, before me.

“18. The Defendant is a trader in garment, not a manufacturer. To the best of my knowledge, the garment it exported was manufactured by the Alleged Principals. It is very common for garment traders who use the Plaintiff’s shipping services to put down the names of the manufacturers as shipper in the shipping orders. Indeed, in my experience, this is a common practice in our industry. As such, the Defendant has also put down the name of the manufacturers of its exports, i.e. the Alleged Principals, in the shipping orders attached to the Shipping Instructions. As far as I understand, the Defendant would put down the name of Xingguo Zhixing Knitting Company Limited for those shipments to be exported from the Mainland China, whereas the name of Sky Holding Limited would be put down for shipments to be exported from Hong Kong.”

(f)  The Defendant also said that the Plaintiff knew of the agency. However, it is nothing more than a bare assertion. I do not consider that the Defendant has been able to demonstrate it with reference to any document at all. Those alleged correspondence as per “WCM-05” cannot support such point because they were related to supplier 煙台潤重 as well as local charges only.

9.  I now move to the second question. In my view, even assuming that the Defendant’s case might be believable, its Defence is still bound to fail in law. In this respect, it suffices for me to recap what was submitted by Mr. Siu. I did not hear anything from Mr. Hon to the contrary in both his skeleton and oral submissions.

“34. Even assuming that the Defendant is indeed the agent of Zingguo and Sky Sense and acted for them in entering into the carriage contracts with the Plaintiff, it is still liable to the Plaintiff as agent.

35. It is well established that where the principal is undisclosed at the time of contracting, the contract is made with the agent, and the agent is personally liable and entitled on it: Bowstead…

36. Even in the case of disclosed principal, the mere fact that a person acts as agent and is known to do so does not necessarily negate his involvement in the transaction. It is not the case that if a principal is liable, his agent cannot be. A person is liable for his engagements even though he acts for another, unless he can show that by law of agency he has expressly or impliedly waived his personal liability: Bowstead…  

37. In this case, when applying for credit terms, sending instructions to the Plaintiff…the Defendant had never stated that it was as agent for Zingguo and Sky Sense. Putting at its best, the Defendant’s case is one of undisclosed principal…

38. Even on the assumption that this is a case of disclosed principal, the Defendant is still liable for is engagements with the Plaintiff, as it has not waived its personal liability.  If the Defendant is to rely on the purported Authorized Agency Agreements, the following should be noted:-

(1)   It is not the Defendant’s evidence that the Plaintiff has been informed of the existence of the Authorized Agency Agreements and the provisions therein.

(2)   Even the Authorized Agency Agreements do not provide that the Defendant’s personal liability is waived.

(3)   The Defendant’s course of conduct in settling the invoices and negotiating with the Plaintiff shows it has not waived its personal liability.”

Summary

10.  Having heard further from the parties on the question of costs, I made the following orders. 

(a)  The Defendant shall pay the Plaintiff the sum of   $1,757,812.94 together with interest at the rate of 8% per annum from 26 May 2011 until 18 November 2011, and thereafter at judgment rate until payment.

(b)  The Defendant shall also pay the Plaintiff costs of the proceedings and application, including counsel fee for the hearing on 18 November 2011 and all costs reserved, in the assessed sum of $53,557.