LESSY S.A.R.L v. PACIFIC STAR DEVELOPMENT LTK. AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. This is a case about commission or, more precisely, the non-payment of commission. It is brought by the Plaintiff, a French company, against the Hong Kong based Defendants. The Plaintiff claims sums due by way of commission in respect of the introduction of French customers by the Plaintiff to the Defendants, together with the performance of other agency services, commission which the Plaintiff claims is payable either pursuant to a primary agreement entered into between the parties in January 1991, and/or pursuant to a subsequent settlement agreement of May 1993 whereby the parties agreed that the Plaintiff's agency would be terminated as from July 1993, at which point it was agreed that the Defendants would pay the sum of FF97,523.31 (representing the balance then due and owing to the Plaintiff as shown in the relevant statement of account, after adjustment for credit notes issued by the 1^st Defendant), together with all outstanding commissions due to the Plaintiff in respect of three garment seasons:- the 1993 Summer season, the 1993-1994 Winter season, and the 1994 Summer season.

2. So much for the broad shape of the case. Regrettably, however, this trial has taken place in the absence of the 1^st and 2^nd Defendants. By Order of Master Betts dated 18^th March 1998, that is, some five days before the commencement of this trial, the Defendants' solicitors were granted leave to come off the record, and ceased therefore to be the solicitors acting for the Defendants. Concern on the part of the Court at the outset of the hearing as to whether the Defendants did in fact know that the trial was taking place caused telephone enquiries to be made prior to the actual commencement of the trial; such enquiries confirmed, through the person of Mrs Ko, also known as Miss Kwong (whom, I understand, is the wife of Mr Patrick Ko, the Defendants' principal witness, and is also a Director of the Defendants) that the Defendants were indeed aware of the trial as scheduled, but had elected not to attend. In this connection, I have also had my attention drawn to correspondence from the 1^st Defendant, under the name of Mr Ko, which was exhibited to the affidavit of Mr Glass, the Defendants' former solicitor, regarding the Defendants' instructions requiring Messrs Hastings to come off the record, and further indicating a wish that Counsel was not to be briefed for the trial.

3. In the circumstances prevailing, therefore, the trial then formally commenced, and the Plaintiff was required to prove its case. In my view, it has done so. I found Monsieur Rachou, who gave evidence on behalf of the Plaintiff, to be an eminently believable witness, and I had no difficulty whatever in accepting his evidence in its entirety.

4. At the outset of the case Mr Burns, Counsel appearing on behalf of the Plaintiff, made an application to amend his pleadings. The original claim put forward was for the sum certain of FF97,526.31, together with a claim for an account for the three outstanding seasons for which commission had not been paid, the last statement of account the Plaintiff having received from the Defendants being as at 31^st March 1993. The action had been formulated thus at the outset because the Plaintiff had not then had discovery of the relevant invoices it required to calculate the commission it claimed was payable. Such invoices (or, at least, invoices to the end of December 1993) were disgorged by the Defendants pursuant to an order for specific discovery made by Master Jones on 4^th October 1996; this in turn, said Mr Burns, enabled the Plaintiff to calculate such sums as were due and owing, on the basis of that data at least. I permitted the application to amend. As Mr Burns pointed out, all the primary information underpinning the specific sums that were now specifically claimed had been supplied by the Defendants themselves, and in the circumstances I could see no good reason why such matters could not be dealt with at trial on the basis of the Defendants' own data, rather than be deferred to be the subject of the taking of an account. I think there is little doubt that I should have been inclined to permit such amendments had the trial taken place in the normal course, with the benefit of representation from both sides; and the Defendants, it seems to me, cannot and should not be in a better or a more advantageous position in this regard by simply electing not to appear at the trial.

5. In the event, I am grateful to Mr Burns for what, if I may say so, was a wholly meticulous approach to what could have become a factually confusing case. I have had the considerable benefit of written opening and closing arguments, and very considerable care has been taken (including an adjournment for the best part of one day) to ensure the accuracy of the revised schedule (marked "P1") produced and verified by Monsieur Rachou, which provides the analysis of the commission payable pursuant to the now discovered invoices, and which forms the basis of the specific sums which now find their place on the face of the claim, as amended.

6. In the event, on the evidence before me, I have no doubt whatever that the Plaintiff is to have judgment in the specific terms to which I shall shortly advert. The case is, in my view, amply proved; indeed I found considerable difficulty in locating, on the face of the pleadings, any substantive or realistic defence (other than a tenuous and wholly unparticularised allegation of set-off) which could serve to act as a defence to the Plaintiff's claim for the outstanding commissions.

7. Notwithstanding the broad merits, however, there were, within the Plaintiff's case, a number of sub-issues requiring resolution. Suffice to say that I had had no difficulty, on the oral and documentary evidence, in accepting Lessy as the correct Plaintiff (as opposed to Monsieur Rachou personally), and I further accepted Mr Burns' contentions as to the correct commission levels payable (there being no evidence before the Court that circumstances had arisen which would have required the minimum stated rates in any given case). Further, and after some hesitation, I also accepted Mr Burns' further submissions as to the status of the 1993 settlement agreement as being discharged and of no effect by reason of the Defendants' repudiatory conduct, thereby permitting claim and recovery of the full amount of commissions for the Summer 1994 season (as opposed to the 2/3 figure therefore which would have been relevant had the settlement agreement not been so regarded). The difference in the figures in this regard is relatively insubstantial, but the analytical point provided interesting debate, and after some reflection I acceded to his argument on the basis, inter alia, that the figure of FF97,523.31 was a sum certain which had been calculated to be due and owing as at 31^st March 1993. As I think Mr Burns accepts, however, given the course of the trial and the amendments that have been made, I am disinclined to order an account for other than the 1994 Summer season, although for this season alone I accept that invoices relevant thereto (and hence to the calculation of commission) may well post-date 31^st December 1993, the date of the last specifically discovered invoice.

8. It follows from the foregoing, therefore, that the Plaintiff herein is entitled to judgment in the following terms:-

As against the 1^st Defendant

	(1)	Judgment in the sum of FF97,523.31;
	(2)	Judgment in the sums of US$132,495.75, FF302,726.14 and HK$15,560.49;
	(3)	An Order that an account be taken of outstanding commissions due to the Plaintiff from the 1st Defendant in respect of the 1994 Summer season, and an order for payment of all sums found to be due upon the taking of such account after giving credit for such amounts in the figures in (2) above as are referable to the 1994 Summer season.

As against the 2^nd Defendant

(4)

The sum of US$2,017.

As against the 1^st and 2^nd Defendants

(5)

Interest

As to interest, this is potentially very complex, and in my view the correct and appropriate order is as follows: The Plaintiff is to have interest payable on such specific sums specified as aforesaid at the rate of 8% for the period from the date of the issue of the writ herein (namely 24th December 1993) to the date of judgment (that is, 25th March 1998), and thereafter at the judgment rate prevailing from time to time until payment.

(6)

Costs

	The Plaintiff is to have its costs of this action, to be taxed if not agreed.
	(7) The Defendants' counterclaim is dismissed with costs to the Plaintiff and Paul Rachou (as Defendants to the counterclaim), to be taxed if not agreed.

9. That, I think, deals with all outstanding issues. I will, if necessary, hear Counsel upon the precise form of the order.

[Counsel's submission]

10. Mr Burns helpfully reminds me that there is one further procedural housekeeping matter which I have overlooked. It is this. On the 2^nd February 1994, Master Gould made an order that the Plaintiff do pay into Court the sum of HK$65,000 as security for the Defendants' costs. This I understand was paid in on 4^th February 1994. Mr Burns now asks that that sum, together with any interest accrued thereon, be paid out to the Plaintiff's solicitors. I accede to that application, and I so order.