FUJI PHOTO PRODUCTS CO. LTD. v. WAN KA LEI GARY t/a PHOTO-SPEED CO.

DCCJ 13688/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINSTRATIVE REGION

CIVIL ACTION NO.13688 OF 2000

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JUDGMENT

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The Action

1. The Plaintiff is a seller and distributor of, inter alia, photograph printing machines and accessories in Hong Kong. They would sell such printing machine to its dealers only.

2. It is not disputed that the Defendant had been a dealer of the Plaintiff since 1995. She was then trading under the tradename of "Photo-speed Company" (hereinafter called "Photo-speed") at Shop 3B, G/F., 50 Soy Street, Kowloon (hereinafter called "the Soy Street Shop"). The dealership agreement appears at A-5. As a dealer, she would purchase, from time to time, accessories such as chemical and photo-papers from the Plaintiff to be used for printing.

3. The Plaintiff claims against the Defendant for goods sold and delivered to the Defendant between March 1999 and January 2000 as set out in paragraph 2 of the Statement of Claim (hereinafter called "the said goods"). The said goods are accessories to be used with the printing machine. The Defendant denies that she had purchased the said goods from the Plaintiff or taken delivery, and contends that she had closed down her business as a photo and firm developer since June 1998. The said goods were purchased by one Madam Choi Mei Chi (DW3) trading as Photo Speed Photo Finishing Co. (hereinafter called "Photo Finishing").

4. It becomes necessary to investigate how the Plaintiff sold the said goods and delivered the same to the Defendant.

Formation of Contract of Sale of Goods

5. The said goods were ordered on a number of occasions and therefore there are a number of contracts of sale.

6. According to the Plaintiff, part of the goods was ordered by the Defendant through telephone calls to the Sales Department. PW1 is a liaison staff of the Sales Department of the Defendant. Her duties include receiving incoming calls from the dealers to order goods. When a call comes in, she would record the name and customer number of that dealer. Each dealer has a customer number to represent him/her. PW1 would also check against the computer record of the Plaintiff before she drops down the information in an order form. She would also put down the item to be purchased.

7. PW1 had to check the credit limit of the dealer and when the limit was exceeded, she had to get the approval from senior officer of the Sales Department and Account Department before she input the data. When she input the data into the computer, an invoice would be printed and forwarded to the Warehouse Department of the Plaintiff.

8. The Order form of the said goods appears at A14 to A47. The following orders were taken by PW1 or other liaison staff in the Sales Department:-

833118, 834235, 836593, 839138, 839120, 838939, 853340, 857789, 861539.

In all these Order Forms, the customer number of the Defendant appears. But the name of the dealer/buyer was often referred to as "Photo Speed" only.

9. Alternatively, the dealer may call the salesman directly for ordering supplies. The salesman will fill up the order form and give it to the liaison staff. PW1 or her colleague would input the data into the computer and the rest of the procedure follows.

10. According to PW1, the rest of the order for the said goods was ordered through Law Hing Wai ("Mr. Law"), the salesman responsible for the account of the Defendant. The customer number of the Defendant was also used in all these Order Forms.

11. The Plaintiff contends that these are orders from the Defendant because the Defendant's customer number was given in these telephone orders. Surely, PW1 cannot remember each transaction and she is relying on the system of work. Mr. Law was not called as a witness.

12. DW2 was the employee of the Defendant before she closed Photo-speed. He was responsible for the daily management of the business including ordering of goods. He does not dispute that he placed the order of the said goods with the Plaintiff, but only on behalf of DW3.

13. He said that the Plaintiff had ceased business in June 1998. He used the shop to carry on the business of a food stall for a short while. He was then requested by DW3 to establish a new photo shop. He was employed by DW3 to manage the daily business. In ordering the said goods, he acted as the agent and/or employee of DW3 and the goods were order by DW3. It has nothing to do with the Defendant. He also said that the Defendant through Mr. Law allowed him to use the same customer number of the Defendant.

14. DW3 also gave evidence and said that she provided the capital for Photo Finishing and DW2 assisted her to look after the daily business. Before buying a new printing machine from the Plaintiff in July 1998, she signed a dealership agreement with the Plaintiff. Mr. Law through DW2 gave the document to her. She did not have a copy of the agreement. She was allowed to use the same customer number of the Defendant.

15. Later, in March 1999, she signed another dealership agreement with the Plaintiff, A8-9, for her 2nd Shop at Castle Peak Road. There is no dispute that she did sign this dealership agreement with the Plaintiff and she was given a new customer number. But the Plaintiff denies that she had signed any dealership agreement in July 1998. PW2 said each dealer would only have one customer number.

Delivery of Goods

16. For delivery of goods, there are at least 3 methods. Firstly, the Warehouse Department would send the goods to the dealer directly. Secondly, the salesman would take the goods and deliver it to the dealer. Thirdly, the dealer come himself to collect the goods. For the goods in issue, part of them is delivered to the Soy Street Shop and the rest is taken from the warehouse of the Plaintiff. According to the record on the Invoice:-

Goods sent to Soy Street Shop
9903-73490, 9903-74075, 9903-74686, 9904-74981, 9904-76008, 9904-76633, 9904-77675, 9905-77902, 9905-78094, 9905-78193, 9905-78232, 9905-78674.
Pick up by Salesman
9904-76573
Pick up by Customer
9904-74911, 9910-95351, 9911-99475, 9911-99881, 9911-00918, 9912-02229, 9912-03909, 0001-07666.

17. All these Invoices are issued in the name of Photo-speed at the Soy Street Shop. All were chopped with a receipt chop appears to be a chop of Photo Finishing.

18. In giving evidence, PW2 said that the Plaintiff would allow a dealer to take delivery of goods for another dealer. As the Account Officer, she said she was not concerned with the receipt chop as long as the monthly statement was sent to the dealer and there was no complaint of any error. And in the case of the Defendant, the monthly statement including the above invoices had been sent to the Defendant's address at Soy Street Shop. There was no complaint or objection.

19. DW2 admits that he knew that the invoices were issued in the name of the Defendant. But he paid little attention. He was only concerned with the contents of the invoice, namely, the items covered by the invoices. He had not complained or sought correction from the Plaintiff. He did not inform the Defendant either until receipt of the demand letter. It is not clear as to who chopped on the invoices. DW2 did not deny that he had chopped the receipt chop, but as an employee of DW3. There appears to be a Mr. Ma named on the Invoices but I have no information about him.

20. The Plaintiff in the Reply claims that the Defendant is estopped, by her act of failing to notify the Plaintiff that she no longer carried on business, from denying that DW2 act on her behalf. It is contended that since June 1998, the Defendant or her agents or employees continued to order goods from the Plaintiff using the customer number assigned to the Defendant. Further, the Defendant or her agents or employee caused the Plaintiff to affix a new signboard at he Soy Street Shop with the English and Chinese trade name of the Defendant.

21. But the Plaintiff is not basing any claim on misrepresentation of the Defendant or for damages. Before I consider whether the Defendant is liable, I would rule on 2 major issues first.

Was the Plaintiff Informed of the Cessation of Business?

22. It is not disputed by the Plaintiff that the Defendant did cease business in June 1998.

23. According to the evidence of the Defendant, she did not personally inform the Plaintiff or issue any notice in writing about the cessation of business. She only instructed her brother DW2 to inform the salesman of the Plaintiff, Mr. Law. DW2 said in his evidence that he had informed Mr. Law that the Defendant would cease business in June 1998. Both the Defendant and DW2 said Mr. Law had confirmed in front of them that the Plaintiff had notice already.

24. It is not disputed that when the Defendant ceased business in June 1998, she still owed the Plaintiff money for goods sold, which was repaid after the cessation of her business. There is no suggestion that Mr. Law or the Plaintiff had demanded or made arrangement with the Defendant for repayment. It is provided in the dealership agreement that on termination, all the outstanding had to be settled. I would be surprised if the Plaintiff took no action had it been informed.

25. DW2 said he informed Mr. Law about the cessation of business and Mr. Law confirmed to him that the Defendant knew about it in front of him and the Defendant. But this important fact had never been stated in his witness statement. I do not believe his evidence.

26. The Defendant does not mention in her witness statement the important fact that Mr. Law confirmed to her and DW2 that the Defendant knew of the cessation of business of the Defendant either. In her original statement, she only requested DW2 to inform the Plaintiff. No explanation had been offered for the missing of such an important fact from the witness statement of both the Defendant and DW2. I do not believe her evidence either.

27. On the balance, I found that the Defendant could not prove that notice had been given to the Plaintiff, either orally as alleged, or in writing around June 1998.

Photo-speed Photo Finishing Co.

28. The second important issue is whether the Plaintiff knew that there is a new business of DW3 under the name of "Photo-speed Photo Finishing Co." in July 1998.

29. All the Plaintiffs' witnesses deny that they had at the material time knew of this business. But it is not disputed by the Plaintiff that in July 1998, they did sell a printing machine to Photo Finishing. The hire purchase agreement appears at A149-A153.

30. By this agreement, the Bank leased out a machine to "Photo-speed Photo Finishing Co.", a trade-name unknown to the Plaintiff in accordance with their evidence. It was signed by DW2 as the Hirer and chopped with the chop of Photo Finishing. DW3 signed as the guarantor. PW3 also signed as the witness to the signature of the Hirer. In his evidence, PW3 said he did not know who signed for the Hirer as he did not actually witness the signature. He also denies that he knew that the Hirer is Photo Finishing. He said, to his understanding, the Hirer is the Defendant. And he had paid no attention to the description of the company that purchased the machine.

31. Surely, the Plaintiff also signed as the other guarantor to this agreement, and 2 senior officers signed the guarantee to the Bank (in the same hire purchase agreement) on behalf of the Plaintiff.

32. It is ridiculous to suggest that none of these employees/agents of the Plaintiff would not check the contents of such an important document before they sign it. If they check, they must know that the hirer is Photo Finishing and not the Defendant. Their knowledge is binding on the Plaintiff. The 2 officers signing the guarantee for the Plaintiff did not give evidence and I am bound to find that they knew that they sign the agreement with Photo Finishing.

33. I found that the Plaintiff must know by July 1998 when this agreement was signed, that they sold the machine through a hire purchase arrangement, to Photo Finishing, and not the Defendant.

My Findings

34. How these 2 facts would affect the findings?

35. To begin with, there is no direct evidence that the goods were ordered by the Defendant herself. What the Plaintiff is saying is that, the goods were ordered by DW2. DW2 hold out to buy the goods for the Defendant when he gave the customer number of the Defendant. He had been held out to be an agent of the Defendant. Since the Defendant had not informed the Plaintiff she ceased business, she continued to hold out DW2 to be her agent. She would be bound by the contract entered into by DW2 with the Plaintiff.

36. But there is no evidence on the representation made by the Defendant on the authority of DW2. It is admitted by the Defendant that DW2 was her employee and he had ordered goods for the Defendant. But I have no evidence from the Plaintiff on what they were told by the Defendant, and what they believed to be the authority of DW2. I presume the highest of the Plaintiff's case is to ask me to draw an inference that DW2 was authorized by the Defendant prior to June 1998 to order goods for Photo-speed. But on what basis? There is no evidence to support this inference.

37. Further, for the argument that DW2 in using the customer number of the Defendant represented to the Plaintiff that he acted for the Defendant, the Plaintiff has to rely on their case that dealers have only one particular customer number. But as I found that the Plaintiff did sell a printing machine to DW3, and they only sell such machine to dealer, it is a reasonable inference that DW3 is a dealer of the Plaintiff around July 1998. The Plaintiff discloses no new customer number of DW3. How can they explain that DW3 had no customer number until March 1999? It is possible that the same customer number has been used again as said by DW2 and DW3. I cannot on the balance conclude that the customer number of the Defendant is allotted and used solely by the Defendant. The argument that DW2 in using the customer number of the Defendant is representing to the Plaintiff that he acted for the Defendant must fail.

38. As for the failure of the Defendant to object to the monthly statement, this is only helpful if it could be proved that the monthly statement had been brought to the attention of the Defendant. There is no evidence that she actually received the statement. The fact that DW2 or DW3 did not notify her is not going to advance the case of the Plaintiff. And the fact that the Invoices were chopped by a chop of Photo Finishing must be notice to the Plaintiff that Photo Finishing, not the Defendant, received the goods. There is no enquiry taken.

39. As for the signboard, it is not helpful. While the English name is that of the Defendant, the Chinese name is different.

40. On the balance, I do not find any binding contracts of sale by the Plaintiff with the Defendant for the said goods as contended by the Plaintiff.

Delivery

41. Even if I were wrong and there were binding contracts of sale between the Plaintiff and the Defendant, the Plaintiff must prove delivery before they got pay. I do not accept the submission that so long as the Plaintiff has delivered the goods, then the Defendant has to pay. It must be delivered to the Defendant.

42. Part of the goods was delivered to Soy Street Shop. The Invoices were chopped with the name of Photo Finishing. It is submitted that by sending the goods to the Soy Street Shop and it being chopped, the Plaintiff could safely assume that the Defendant has taken delivery. And further, there is no objection to the monthly statement sent to the Defendant at Soy Street Shop.

43. It speaks against common sense that the Plaintiff would accept another dealer to receive the goods to be delivered to the Defendant, unless there is authority form the Defendant. There is no evidence for such authority, express or implied.

44. The only evidence for delivery is the receipt chop on the Invoices and the fact that the goods were sent to the Soy Street Shop. Once delivery is dispute, the burden rest on the Plaintiff to prove on the balance of probability that they did delivered the goods to the Defendant. The chop speaks loudly against their case. There could not be any mistake that the goods were received by DW3 and not by the Defendant. The Plaintiff is turning a blind eye to material facts. One must not overlook the fact that, the chop of DW3 appears in all invoices; it is a series of transaction over 10 months' time.

45. I found that the Plaintiff fails to prove that the goods delivered to Soy Street Shop is received by DW2 as agent/employee of the Defendant. I accept the evidence of DW2 that he ordered and received the goods for DW3.

46. And for the goods that were taken from the warehouse department of the Plaintiff, there is no evidence beside these chops that the goods had been delivered to the Defendant. Again, there is no evidence that Photo Finishing has the authority to receive the goods for the Plaintiff. The delivery took place at the warehouse of the Plaintiff and the identity of the person who took the goods must be proved.

47. If the Plaintiff is loose enough in their system of delivery that they would not check who takes delivery, or the name appearing on the chop, they have only themselves to be blamed. The chop speaks for itself. If the Plaintiff were to establish that Photo-speed received the goods on behalf of the Defendant, there must be evidence of such authority being given by the Defendant to Photo Finishing. There is nothing to that effect.

48. In conclusion, the Plaintiff cannot establish the contract or performance thereof. I therefore dismiss the Plaintiff's claim with an order nisi of cost to the Defendant with certificate for counsel to be made absolute if no parties apply to the contrary within 14 days.