REJEUNE INTERNATIONAL HOLDINGS LTD v. ENJOY2ALL TECHNOLOGY INTERNATIONAL LTD

DCCJ 3999/2018
DCCJ 5164/2018
(Consolidated)
[2021] HKDC 855

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NOS 3999 & 5164 OF 2018

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JUDGMENT

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INTRODUCTION

1.  In DCCJ 3999/2018, ReJeune International Holdings Limited (“ReJeune”) claims against Enjoy2All Technology International Limited (“ETIL”) for damages arising from breaches of contract for the provision of online marketing and consultation services.

2.  By counterclaim in DCCJ 3999/2018, and simultaneously by a fully overlapping claim in DCCJ 5164/2018 (transferred from SCTC 26681/2018), ETIL claims against ReJeune for unpaid consultancy and professional fees (the “Counterclaim”).

3.  At a case management hearing held on 19 December 2018, which was attended by ReJeune’s legal representatives and ETIL’s representative in person, Registrar Ho ordered consolidation of the two actions and made various consequential directions (the “Consolidation Order”). 

4.  This is the trial of the two consolidated actions.

5.  ETIL did not appear at trial.  Having been satisfied that ETIL was properly served with these proceedings and was given notice of the trial, I directed that the trial proceed in ETIL’s absence, pursuant to RDC O 35 r 1.

6.  Prior to trial, the Counterclaim was ordered to be dismissed.  In particular:-

(a)  An unless order was made by Master B Mak on 26 June 2019, for ETIL to file its list of documents within 21 days, failing which ETIL would be barred from adducing documentary evidence at trial. 

(b)  ETIL failed to file any list of documents.

(c)  A further unless order was made by Master B Mak on 8 January 2020, for ETIL to inform the court in writing as to whether it intended to proceed with the Counterclaim within 14 days, failing which the Counterclaim would be dismissed.

(d)  ETIL failed to write to the court. 

(e)  As a consequence, by a further order made by Master B Mak on 20 May 2020, the Counterclaim was dismissed with costs (including all reserved costs) to ReJeune. 

(f)  As the aforesaid orders were made after the Consolidation Order, the dismissal of the Counterclaim in the consolidated action includes a dismissal of both ETIL’s counterclaim in DCCJ 3999/2018 and ETIL’s claim in DCCJ 5164/2018 (which, in any event, fully overlap with each other).

(g)  For completeness, I note that (1) there has been no attempt by ETIL to appeal or set aside the aforesaid orders of Master B Mak; and (2) ETIL has also failed to file any witness statement. 

7.  Therefore, at this trial, the only live issue is whether ReJeune has established its claim against ETIL for breaches of contract.

FINDINGS OF FACT: CONTRACTS ENTERED INTO BY REJEUNE AND ETIL

8.  ReJeune called three witnesses to testify, namely:-

(a)  Ms Winnie Kam, the general manager of ReJeune (“Kam”);

(b)  Mr Wai Hok Ching (“Wai”), husband of Kam who assisted Kam in her running of ReJeune’s business; and

(c)  Mr Chung Chin Pang, IT manager employed by ReJeune (“Chung”).

9.  In the absence of any contradiction, and having regard to the totality of the documentary evidence placed before the court, inherent plausibility, as well as the demeanour of ReJeune’s witnesses, I find that each of Kam, Wai, and Chung are honest and reliable witnesses.

10.  Based on the testimony of ReJeune’s three witnesses and the contemporaneous documentary evidence, and having given due consideration to the bare assertions advanced in the limited documents filed by ETIL in these proceedings (namely, the Amended Defence and Counterclaim dated 14 November 2018 filed in DCCJ 3999/2018, and the Form of Claim dated 27 June 2018 filed in SCTC 26681/2018 prior to the case being transferred to DCCJ 5164/2018), I make the following findings of fact.

11.  ReJeune is a company carrying on the business of, amongst other things, selling beauty and cosmetic products and equipment, and providing beauty and beauty training services.  Kam represented ReJeune in its dealings with ETIL.

12.  ETIL is a company carrying on the business of, amongst other things, providing services for the design of websites, computer software, online applications, and marketing consultation.  Ms Apple Chan Siu Ping (“Chan”) and Mr Lam Chung Ho Bruce (“Lam”) represented ETIL in its dealings with ReJeune.

13.  From around July 2017 to around September 2017, Kam on behalf of ReJeune and Chan and Lam on behalf of ETIL engaged in a series of discussions, for ReJeune to engage ETIL to provide various computer and marketing services.

14.  As a result of such discussions, ReJeune and ETIL agreed upon a broad basis and framework of cooperation (“Cooperation Framework”), for ReJeune to pay fees to and engage ETIL to:-

(a)  Provide marketing consultation services to ReJeune including but not limited to promoting ReJeune’s business, introducing affiliates to ReJeune, and providing training sessions for ReJeune’s products (collectively, “Marketing Consultation Services”); and

(b)  Design and develop a website (“Website”) and online multi-level marketing system for ReJeune’s business (“MLM System”), and the provision of marketing materials (collectively, “Online Marketing Services”).

15.  The specific Marketing Consultation Services and Online Marketing Services to be provided by ETIL, including the details and specifications, as well as the fees to be paid by ReJeune, were to be further discussed and agreed from time-to-time.

16.  Under the auspices of the Cooperation Framework, from around September 2017 to May 2018, a series of contracts for specific Marketing Consultation Services were further agreed and entered into between ReJeune and ETIL, as evidenced by various invoices and/or receipts issued by ETIL. However:-

(a)  Whilst ReJeune maintains that ETIL committed breaches of the contracts for Marketing Consultation Services, I was informed by ReJeune’s counsel at trial that no losses are claimed in respect of such breaches.

(b)  It is therefore unnecessary for me to set out the invoices, receipts, payments, and terms of the contracts for Marketing Consultation Services in detail, and unnecessary for me to make any further findings of fact thereon. 

17.  Under the auspices of the Cooperation Framework, from around October 2017 to June 2018, a series of contracts for specific Online Marketing Services were further agreed and entered into between ReJeune and ETIL, as evidenced by various invoices and/or receipts issued by ETIL.  The invoices and/or receipts are set out in the following table, together with evidence of corresponding payments made by ReJeune to ETIL.

CONTRACTS FOR ONLINE MARKETING SERVICES
Invoice/Receipt No.	Date	Fees payable by ReJeune (HKD)	Evidence of Payment made by ReJeune
“Website & MLM System Contracts”
“1018” numbered invoices/receipts
E2A-2017-1018R (1st payment)	18 Oct 2017	$39,000	Cheque no. 340134 23 Oct 2017
Invoice/receipt missing from trial bundle (2nd payment)	-	$19,500	Cheque no. 340210 16 Nov 2017
E2A-2017-1018R3 (3rd payment)	7 May 2018	$19,500	Cheque no. 340592 4 May 2018
“1227” numbered invoices/receipts
E2A-2017-1227I1 (1st payment)	27 Dec 2017	$74,000	Cheque no. 340369 25 Jan 2018
E2A-2017-1227R2 (2nd payment)	21 Feb 2018	$37,000	Cheque no. 340427 21 Feb 2018
E2A-2017-1227I3 (3rd payment)	3 May 2018	$37,000	Cheque no. 340594 4 May 2018
“031201” numbered invoices/receipts
E2A-2018-R031201A (1st payment)	3 Apr 2018	$45,500	Cheque no. 340524 3 Apr 2018
E2A-2018-R031201B (2nd payment)	18 Apr 2018	$22,750	Cheque no. 340556 17 Apr 2018
E2A-2018-R031201C (3rd payment)	8 Jun 2018	$22,750	Cheque no. 340676 7 Jun 2018
“Marketing Materials Contracts”
“1025” numbered invoices/receipts
E2A 2017-1025R	25 Oct 2017	$30,000	Payment evidenced by receipts issued by ETIL (no separate evidence of payment in trial bundle)
E2A-2017-1025R2	25 Oct 2017	$26,000
“1201” numbered invoices/receipts
E2A-2017-1201R	1 Dec 2017	$13,000	Cheque No. 340261 5 Dec 2017
E2A-2017-1201R2	1 Dec 2017	$20,000
“0101” numbered invoice/receipt
E2A-2018-0101R2	28 Dec 2017	$20,000	Cheque no. 340311 3 Jan 2018
Total fees paid by ReJeune under contracts for Online Marketing Services (HKD):		$426,000

18.  At this juncture, I note that ReJeune’s pleaded case is that there was one single contract for Online Marketing Services, agreed with ETIL from mid-2017 onwards.  However, it is clear from the contemporaneous invoices and receipts issued by ETIL itself that the parties had entered into multiple related contracts under a broader Cooperation Framework, as I have found as facts above, rather than a single contract.  In particular, as of mid-2017, the key terms of fees payable by ReJeune and scope of work to be done by ETIL had clearly not been agreed yet; rather such key terms were agreed subsequently on an ongoing and invoice-by-invoice basis.

FINDINGS OF FACT: TERMS OF AND BREACHES OF WEBSITE & MLM SYSTEM CONTRACTS

19.  From the descriptions of work expressly set out in the invoices and/or receipts for the Website & MLM System Contracts, as further explained in context by Kam, I find as facts that, under the terms of the Website & MLM System Contracts, ETIL agreed to and was obliged to develop and handover (via provision of a master access code) to ReJeune a website and MLM System with inter alia the following functions and specifications:-

(a)  An affiliate management and reward function, that would allow ReJeune to track and generate reports on affiliate’s information, sales commissions, signup referrals, payment history, and order history, that would allow ReJeune to calculate bonuses due to affiliates as well as delineating affiliates into different ranks based on criteria which could be customized by ReJeune (as stated in the “1227” and “031201” numbered invoices/receipts);

(b)  A sales system that would allow affiliates to (1) check customer and sub-affiliate information; (2) check and manage order information and status, including the sale and storage of products and tracing of goods in transit; (3) check and manage customer payment information; and (4) check and manage customer order history (as stated in the “1227” numbered invoices/receipts);

(c)  Facebook login integration functions (as stated in the “1018” numbered invoices/receipts);

(d)  Bilingual display, in Traditional Chinese and in English (as stated in the “1018” and “031201” numbered invoices/receipts); and

(e)  Hosting services for the Website and MLM System for one year (as stated in the “1227” numbered invoices/receipts).

20.  I find as facts that ETIL was in breach of the aforesaid terms of the Website & MLM System Contracts.  In particular:-

(a)  ETIL did create a Website and MLM System for ReJeune, which was provided to ReJeune to test run in around April 2018.

(b)  However, various problems with the functionality of the Website and MLM System were encountered during their test run from April to June 2018.

(c)  As neither Kam nor her husband Wai had expertise with computers and websites, on 19 June 2016 ReJeune hired Chung as its IT manager to review the functions and specifications of the Website and MLM System provided by ETIL.

(d)  Upon review, Chung discovered that the Website and MLM System provided by ETIL simply did not have the aforesaid agreed upon functions and specifications.

(e)  Despite repeated requests from ReJeune (particularly requests made from 19 June 2018 to 22 June 2018 in a WhatsApp messaging group containing Kam and Wai of ReJeune and Chan and Lam of ETIL):-

(i)  ETIL did not further fix, rectify, or update the Website or MLM System to include the agreed functions and specifications; and

(ii)  ETIL never handed over to ReJeune the master access code for the Website and the MLM System.  ReJeune was therefore unable to take control of and make changes to the Website and MLM System provided by ETIL.

21.  As a result of ETIL’s breaches of the Website & MLM System Contracts:-

(a)  ReJeune was left with a defective Website and MLM System, which did not comply with the agreed upon specifications and was not fit for the purposes of ReJeune’s business, and which ReJeune did not have full access to o control over in any event as ETIL had never provided the master access code to ReJeune.

(b)  ReJeune therefore instructed other companies to design and set up a new Website and MLM System.  In particular:-

(i)  ReJeune instructed Aigniter Technologies Limited (“Aigniter”) to develop a new Website at the cost of HK$12,000.  This is evidenced by an invoice issued by Aigniter.  Despite documentary evidence of payment not being placed before this Court, I accept the evidence of Kam, Wai, and Chung that this HK$12,000 fee was paid to Aigniter by ReJeune.

(ii)  ReJeune instructed TopMate Technology Limited (“TopMate”) to design a new MLM System at the cost of HK$268,000.  This is evidenced by a quotation issued by TopMate in the sum of HK$250,000 dated 11 July 2018.  I accept Chung’s evidence explaining that the initial fee of HK$250,000 quoted by TopMate was subsequently increased to HK$268,000 by agreement between ReJeune and TopMate due to additional work requested by ReJeune.  Despite documentary evidence of payment not being placed before this court, I further accept the evidence of Kam, Wai, and Chung that this HK$268,000 fee was paid to TopMate by ReJeune.

(iii)  ReJeune further engaged TopMate to provide hosting services for the Website and MLM System, at TopMate’s standard annual hosting fee of HK$12,000, as evidenced on the backside of TopMate’s quotation of 11 July 2018.  Despite documentary evidence of payment not being placed before this court, I accept the evidence of Kam, Wai, and Chung that this HK$12,000 fee was paid to TopMate by ReJeune.

(c)  Therefore, in order to acquire a properly functioning Website and MLM System with the agreed upon specifications, and to put itself into the position it would have been in had the Website & MLM System Contracts been duly performed by ETIL, ReJeune incurred additional fees of HK$292,000 (i.e. HK$12,000 + HK$268,000 + HK$12,000). 

(d)  ReJeune therefore claims this sum of HK$292,000 as damages resulting from ETIL’s breaches of the Website & MLM System Contracts.

FINDINGS OF FACT: TERMS OF AND BREACHES OF MARKETING MATERIALS CONTRACTS

22.  From the descriptions of work expressly set out in the invoices and/or receipts for the Marketing Materials Contracts, as further explained in context by Kam, I find as facts that, under the terms of the Marketing Materials Contracts, ETIL agreed to and was obliged to design and provide to ReJeune:-

(a)  Various marketing materials including posters, brochures, visual identity items, and PowerPoint presentations (as stated in “R” of the “1025”, “1201” and “0101” numbered invoices/receipts); and

(b)  30 promotional videos, inclusive of production and editing services (as stated in “R2” of the “1025”, “1201” and “0101” numbered invoices/receipts).

23.  I find as facts that ETIL was in breach of the aforesaid terms of the Marketing Materials Contracts as follows:-

(a)  ETIL simply failed to provide any marketing materials to ReJeune at all (whether posters, brochures, visual identity items, or PowerPoint presentations).

(b)  Whilst ReJeune maintains that ETIL committed breaches of the Marketing Materials Contracts by providing ReJeune with fewer than the 30 promotional videos agreed, at trial ReJeune’s did not advance any claim for loss in respect of such breaches.  It is therefore unnecessary for me to make any findings of fact in this regard. 

24.  As a result of ETIL’s aforesaid breaches of the Marketing Materials Contracts:-

(a)  ReJeune claims damages in the sum of HK$30,000 as reliance loss, being the sum paid by ReJeune to ETIL under invoice/receipt no. E2A 2017-1025R for which no marketing materials and services whatsoever were provided by ETIL.

(b)  ReJeune also claims damages in the sum of HK$13,000 as reliance loss, being the sum paid by ReJeune to ETIL under invoice/receipt no. E2A-2017-1201R for which no marketing materials and services whatsoever were provided by ETIL.

REJEUNE’S CLAIMS FOR BREACHES OF CONTRACT ARE ESTABLISHED ON THE FINDINGS OF FACT

25.  In light of my findings of fact above, ReJeune has successfully proven and made out its claim against ETIL for:-

(a)  Damages in the total sum of HK$292,000, resulting from ETIL’s breaches of the Website & MLM System Contracts; and

(b)  Damages in the total sum of HK$43,000, resulting from ETIL’s breaches of the Marketing Materials Contracts.

26.  For completeness, I briefly deal with an alternative claim advanced by ReJeune on the basis of unjust enrichment, seeking the sum of HK$43,000 paid under the Marketing Materials Contracts, on grounds of total failure of consideration.  In particular:-

(a)  ReJeune contends that, as no marketing materials and services whatsoever were provided by ETIL under invoice/receipt nos. E2A 2017-1025R and E2A-2017-1201R, there has been a total failure of consideration in respect of those invoices/receipts.

(b)  In argument, ReJeune raised a novel legal point.  To satisfy the requirement that a failure of consideration must be total and not partial for it to constitute an unjust factor in a claim for unjust enrichment, ReJeune argued that there was a total failure of consideration for a severable part of a single contract.  In particular:-

(i)  Such argument was advanced on the basis of ReJeune’s pleaded case that the Online Marketing Services were the subject of a single contract made in mid-2017.

(ii)  To date, there has been no authority in Hong Kong which has substantively considered the issue of whether an unjust enrichment claim can be allowed for total failure of consideration of an apportionable and severable part of a single contract.

(iii)  I was referred by ReJeune’s counsel to inter alia the English High Court case of Giedo Van Der Garde BV v Force India Formula One Team Limited [2010] EWHC 2373 (QB) (24 September 2010) at §§233-323 per Stadlen J, where the learned judge reviewed the lines of authorities in support of ReJeune’s proposition in detail with a great degree of clarity and analysis.

(iv)  However, as I have found as facts that the Online Marketing Services were the subject of multiple contracts and not a single contract, the novel legal point simply does not arise on the facts of the present case.

(c)  Further, whilst in the circumstances of the present case there is a minor technical difference in the remedy awarded between an unjust enrichment claim (i.e. a liquidated sum of HK$43,000) and a breach of contract claim (i.e. unliquidated damages assessed at HK$43,000), I confirmed with ReJeune’s counsel at trial that that ReJeune was not particularly insisting on one remedy over the other. 

(d)  Therefore, in light of my findings above that ReJeune has successfully made out its breach of contract claim on the Marketing Materials Contracts, it is unnecessary for me to make any findings or reach any conclusions (whether on the novel legal point or otherwise) on the alternative unjust enrichment claim. 

DISPOSITION

27.  In accordance with my findings and conclusions above, I order that:-

(a)  Judgment shall be entered in favour of ReJeune against ETIL for damages assessed in the total sum of HK$335,000 (i.e. HK$292,000 + HK$43,000).  Interest shall accrue on this sum at rate of prime + 1% from the date of the Writ herein to the date of judgment, and thereafter at judgment rate until payment.

(b)  Costs of the action (including all reserved costs) be paid by ETIL to ReJeune, with certificate for counsel for trial, to be taxed if not agreed. The aforesaid costs order shall be made on a nisi basis; unless an application to vary is made by either party within 14 days, the costs order nisi shall become absolute without any further order from the court.