Lam Yuk Cheung t/a Corbieres Wine Co v. Maison Riviere Fils
Read the full judgment text of DCCJ 1364/2012 on BabelCite. This District Court judgment was delivered on 17 January 2017.
1. This is a case about the sale and purchase of wine from a supplier in France to a merchant in Hong Kong.
Cited by 1 case · Cites 6 cases
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DCCJ 1364/2012 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 1364 OF 2012 ------------------------------------
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------------------------------- JUDGMENT ------------------------------- INTRODUCTION 1.This is a case about the sale and purchase of wine from a supplier in France to a merchant in Hong Kong. BACKGROUND The parties 2.Mr Lam Yuk Cheung (“the plaintiff”), at all material times, was and is the sole proprietor of Corbieres Wine Company (“Corbieres”). Corbieres carries on business in Hong Kong of importing and selling wine. 3.Maison Riviere Fils (“Maison”) is a family company in France that exports and sells wine to a number of countries, including Hong Kong. Mr Philippe Riviere (“Riviere”) is the managing director of Maison, and Mr Guillaume Faugeron (“Faugeron”) is the export manager of Maison in Asia. 4.Corbieres and Maison have had business dealings since 2001. 5.A crucial person in the dealings between Corbieres and Maison is one Mr Eric Ka (“Ka”). Ka was all along the person in contact with the defendant on behalf of the plaintiff and acted as a go-between amongst the parties. It is not disputed by the plaintiff that Ka had full authority to handle the purchasing of wines from Maison on his behalf. It is also the plaintiff’s case that the plaintiff himself did not deal with Maison directly when making purchases from Maison. 6.However, behind the plaintiff’s back and without his knowledge, Ka has since or about 2004 been involved in another entity called ‘Collectionneur du Vin’ (“Collectionneur”). In this regard, Ka had requested Maison to help Collectionneur to set up its own account with Maison which was separate from the Corbieres’ account. Collectionneur is also presently indebted to Maison with sums due and outstanding from deliveries of wines to it. Collectionneur was registered and is still under the name of Ka’s wife, Freda Li. 7.The defendant was given to understand that both Corbieres and Collectionneur were operated by Ka and his partners, with Ka being the person in charge of all import matters for Corbieres and Collectionneur. 8.Although Ka had played a crucial role in the factual matrix surrounding these proceedings and had on one occasion even filed an affirmation on behalf of the plaintiff in an interlocutory application, the plaintiff has opted not to call him as a witness at the trial. This is despite the fact that Ka was apparently available as a witness and was seen outside of the court room conferring with the plaintiff on the first day of trial. Further, perhaps more importantly in the context of this case, the plaintiff has not sought to make any claims against Ka or join him a party to the present proceedings. The claim and counterclaim 9.The plaintiff’s claim arises in the following manner:-
10.For these reasons, the plaintiff alleges that it is entitled to and claims for:-
11.The defendant’s defence and counterclaim are based on the following:-
12.For these reasons, the defendant says that it is not liable to make any further deliveries to the plaintiff and the defendant is entitled to and counterclaims against the plaintiff for:-
Issues to be decided 13.The issues which the court is asked to decide are as follows:-
DISCUSSION 14.First and foremost, one special feature which stands out in this case is the dire lack of documents from the plaintiff to support his case. In fact, a closer analysis of the plaintiff’s case actually reveals that he does not have much of a case to speak of at all. The defendant, on the other hand, has plenty of contemporaneous documents to prove not only the course of dealings between them but also the crucial role played by Ka in all these transactions. The defendant’s accounts 15.A crucial document showing the payments made to the defendant from the plaintiff and the invoices issued by the defendant to the plaintiff since 2003 can be found in the defendant’s account ledger (“the defendant’s accounts”). The defendant has also particularized further invoices issued to the plaintiff since 2002. 16.The defendant’s counsel Mr Robin D’Souza has very helpfully produced a table incorporating the defendant’s accounts and the invoices since 2002 and attached it as “Schedule 1” to his opening submissions. 17.I accept the accuracy of these accounts and the evidence given by Riviere who has verified them in court. Correspondence 18.The defendant has also produced the history of the correspondence, principally by way of emails exchanges but sometimes through facsimile letters, between Ka and the defendant. Reading from those emails and correspondence, it is obvious that Ka had been using the plaintiff’s money to settle debts from orders placed in the name of his own company. 19.The defendant’s counsel has also very helpfully produced a table putting all the relevant documents in chronological order which was attached to the opening submission as “Schedule 2”. I accept these documents are accurate and truthful and reflect the business relationship between the parties at the time. The Plaintiff’s evidence 20.In my judgment, both in the plaintiff’s pleadings and in his evidence, the plaintiff has taken a blinkered approach to the entire case. He has merely attempted to state each and every transaction it had with the defendant without as much as even tried to find out what Ka had done on his behalf in between these transactions. Not only his version of events (except for the last few orders) does not corroborate with the documentary evidence, the plaintiff has not been able to adduce all the invoices or receipts of the payments from the defendant to support whether his case is accurate at all. 21.The plaintiff was the only witness testified for his own case. I have no hesitation at all to reject his case for the following reasons:-
22.On the other hand, there are plenty of documents to show that Ka had deliberately tried to mislead the defendant into believing that he was one of the “partners” of the plaintiff while at all material time the plaintiff was a sole proprietorship: see, for example, a fax dated 18 October 2005 and a letter dated 10 July 2007 from Ka to Maison. 23.The reasons offered by the plaintiff during cross-examination of why he had to rely on Ka in all these transactions are that: (i) Ka was the person who had introduced him to Maison and; (ii) his inability or limited ability to communicate in French and English. In my view, such are not valid reasons of why he should delegate the authority to Ka without as much as questioning him or checking the record of correspondence Ka had purportedly communicated on behalf of the plaintiff. As the plaintiff has admitted during cross-examination, Ka was responsible for all import matters on behalf of the plaintiff. As such, he was conferred actual or apparent authority by the plaintiff. Thus, what Ka did, as agent of the plaintiff, would be binding on the plaintiff. He cannot now turn around and says that he did not know Ka was acting against his own interest without his knowledge. 24.Further, the plaintiff was not able to explain the shortfall between the price of the invoices and the payments made to the defendant over the years as shown in the defendant’s accounts and the bank statements. He would very conveniently rely on a purported debt owed by Ka to him to say that such sums were paid for by Ka. However, not a single document has been produced by the plaintiff of the existence of such loan and that Ka had in fact made those payments to the defendant on behalf of the plaintiff. In my judgment, such allegation is simply not believable. 25.The plaintiff also relies on the payment of €3,240 purportedly paid to Masion on or about 12 July 2005 as part of his case to show that his version of payment is correct. However, such claim is defective at least on 2 counts. First, the only evidence adduced by the plaintiff is his passbook record kept with Nanyang Commercial Bank showing there was a withdrawal (by way of remittance) in the sum of HK$30,634.68 on 14 July 2005. It is not even clear from the passbook record to whom the remittance was made to. Second, as Riviere explained, such a payment was never received by the defendant, as the bank statements of the defendant have clearly shown. Thus, I find the plaintiff has failed to prove that such sum was in fact remitted to the defendant’s account. 26.In addition, during the course of the trial, the evidence reveals that the following purported payments from Ka, although supported by payment slips from his bank which were shown to the plaintiff, had never been received by Maison:-
27.In the absence of any explanation from Ka, the only reasonable inference I think the court can draw is that Ka had somehow managed to cancel the remittances after showing the plaintiff the payment slips. 28.Based on the above, I find the plaintiff’s claim that payments for all the orders were made before the delivery is simply inconsistent with the contemporaneous documents. Further, such claim is not supported by the documents adduced by the plaintiff. The defendant’s evidence 29.On the defendant’s part, the defendant has called Riviere as its main witness. I find him to be a straight-forward and honest witness. He explained clearly how the accounting system of the defendant works and confirmed the bank statements which had been produced on the first day of the trial as true and accurate copies. I accept his evidence. 30.Equally, I find the defendant’s second witness Faugeron as a credible witness. Despite the plaintiff’s counsel having previously indicated that there would be questions for the witness, when the witness returned to court over the weekend to give evidence, not a single question was put to him during cross-examination. In such situation, the witness’s evidence stands unchallenged and the court has no reason not to accept his evidence in its entity. 31.The defendant has adduced the defendant’s accounts and documentary evidence to the latest 3 orders that make up the bulk of the outstanding amount due to it. These 3 orders included:-
32.Prior to these three orders, the amount due to the defendant from the plaintiff was at €6,196.70 only. Although some subsequent payments were made to the defendant, it was not sufficient to cover the entire amount due. 33.When giving his evidence, Riviere explained (of which I accept) that before 2003 Maison had been using a different accounting software programme. The old accounts were “migrated” into a new accounting programme since 1 January 2003 and that is the reason why the ledger does not show the transactions prior to 2003. However, the ledger shows that, as of 1 January 2003, there was an outstanding sum of €15,891.28 already owed by the plaintiff to the defendant. I have no reason to believe that Maison would make up such accounts or that Reviere would lied under oath about this matter. More importantly, the fact that the plaintiff had been running a deficit account in the purchase of wine over the years with the defendant can be found in the correspondence between Ka and the defendant. 34.A good example of how Ka had abused the trust placed in him by the plaintiff can be found in a letter written by Ka to Maison on 27 October 2004. In this letter, Ka made a request to Maison to transfer €8,871.00 of the plaintiff’s money into a new account set up by Collectionneur. It is clear that it was used to pay for orders made by Ka’s newly set-up company. When confronted with such blatant act of breach of trust during cross-examination, the plaintiff still chose to bury his head under the sand and refused to acknowledge any wrongdoing on the part of Ka. In my judgment, such blinkered approach of the plaintiff not only shows his naivety of commercial reality but also his stubbornness in refusing to accept that Ka had done anything wrong when the evidence clearly shows otherwise. 35.I further find that there was no double charge or double payment of the sum of €25,506.00 or €23,506.00 under Invoice No F0099408 dated 20 November 2006 as alleged by the plaintiff. The accounts clearly shown that such sums were only carried forward for accounting purposes from 2006 to 2007 and had not been double counted. Sadly, despite of such clear evidence, the plaintiff and his legal representatives have steadfastly refused to accept the defendant’s case on this issue. 36.In addition to the above, I further find that the following contemporaneous documents show that the plaintiff was indeed indebted to the defendant. Such debts had either been acknowledged or admitted by Ka on the plaintiff’s behalf:-
37.In the aforesaid circumstances, I accept the defendant’s submission and so find that the plaintiff is not entitled to now claim ignorance of the defendant’s accounts as it is clear from the correspondence that Ka would from time to time acknowledge debts due by the plaintiff to the defendant. I further find that any alleged ignorance on the part of the plaintiff is a matter between the plaintiff and Ka, and not the defendant. From the defendant’s perspective, it was all along dealing with Ka who had full authority to conduct purchases on the plaintiff’s behalf, a matter not disputed by the plaintiff. In my view, the plaintiff cannot now choose to bury his head under the sand and to pretend as if the dealings between Ka and the defendant had nothing to do with him at all. 38.In the aforestated premises, I accept the calculations worked out by the defendant’s counsel in Schedule 1 and find that as at 24 July 2009, a sum of €37,422.50 was still due and owed by the plaintiff to the defendant. Agreement to deduct money under the October 2011 Order 39.It is not in dispute that in around October 2011, Ka contacted Maison to make a further order of wine on behalf of the plaintiff in the sum of €37,519.20. The plaintiff was provided with a pro forma invoice for that order (“the October 2011 Order”). 40.I accept Faugeron’s evidence (which is unchallenged by the plaintiff) that Ka had agreed to settle all outstanding sums due and owing by the plaintiff to the defendant before the defendant would deliver the wine under the October 2011 Order. I further accept Faugeron had informed Ka that the remittance of €35,494.20 received by the defendant from the plaintiff at the end of October 2011 would be applied as part payment of the outstanding sums due and owing by the plaintiff to the defendant. 41.In any event, in a commercial transaction, it is not unusual for the defendant to withhold any further deliveries until it was paid amounts due to it: see Pearl Pond Limited v Tung Ga Linen & Cotton Mills (DCCJ 2629/2007; unreported; HH HC Wong; 9 November 2010). I do not find anything wrong with this given the history of the case and particularly the debts accumulated by Ka on behalf of the plaintiff over the years. Further, under the defendant’s General Sales Conditions, it expressly states that the defendant can withhold any deliveries until it has received payment. Thus, even without the expressed agreement made by Ka on behalf of the plaintiff, I find that the defendant is entitled to make such deductions under the General Sales Conditions. 42.In any event, I accept the defendant’s case that Ka had expressly agreed on the plaintiff’s behalf that the sums paid by the plaintiff will be first used to pay the outstanding amounts due to the defendant from the plaintiff. This was not only could be found in the correspondence between Ka and the defendant but was supported by Riviere’s oral evidence of which I accept. 43.Hence, I find the defendant was entitled to apply the sums of €167.80 and €35,494.20 received from the plaintiff on 27 & 28 October 2011 respectively to re-pay the outstanding sums under the December 2007 invoice and July 2009 invoice. 44.Even with those deductions, I find that a sum of €1,760.50 remained outstanding under the December 2007 invoice as at 28 October 2011. As such, as the defendant was not fully paid for the outstanding amount owed to it, it has no obligation to process the October 2011 Order. 45.In conclusion, based on the aforesaid reasons, I find that the defendant was entitled to set-off or otherwise apply the payment of €35,662.00 to the sums outstanding from the plaintiff for the December 2007 and July 2009 invoices; and (2) a sum of €1,760.50 by way of counterclaim. Terms of agreement 46.There is an issue as to whether the defendant’s General Sales Conditions form part of the agreement between the parties. The relevance of the adoption of the General Sales Conditions relates to only the penalty clause and the one-time 15% charge on the amounts outstanding. 47.There are both factual elements and legal elements to this issue. 48.There are two factual disputes on this issue. The first is that the plaintiff alleges that Corbieres has never received the defendant’s General Sales Conditions because Corbieres only issued the invoices issued by the defendant via email and the back page of the invoices (where the General Sale Conditions could be found) was not sent to Corbieres. On the other hand, the defendant’s case is that Corbieres has received copies of the defendant’s invoices and the General Sale Conditions with them. 49.The second factual dispute is in relation to the penalty clause. The plaintiff says that as the defendant did not bring the penalty clause to the attention of Corbieres such a clause is not binding on Corbieres. The defendant on the other hand says that Eric had notice of the penalty clause and had even agreed to it. 50.As to the legal issues, the plaintiff raises two points. First, the plaintiff says that the terms contained in the invoices do not form part of agreement between the parties. And secondly, even if it did, it does not bind Corbieres as the language of the General Sales Conditions is in French, which Corbieres does not understand. 51.In relation to the first legal issue, I accept the defendant’s submission that it is an established principle in law that standard conditions can be incorporated “by a “course of dealing” between the parties where each party has led the other reasonably to believe that he intended that their rights and liabilities should be ascertained by reference to the terms of a document which has been consistently used by them in previous transactions”: see Chitty on Contracts (32nd ed), §13-011. 52.Further, I accept the following statement relied on by Mr D’Souza which can be found in Circle Freight International Ltd v Medeast Gulf Exports Ltd [1988] 2 Lloyds Rep 427, where Taylor LJ stated as follows (p 33):-
53.In relation to the second legal issue, I accept the defendant’s contention that the lack of familiarity of the language of the contractual document or terms is not to be equated with the person bound by the contract as lacking capacity: see Chitty on Contracts (32nd ed), §9-001. 54.Not knowing the language of a contract document does not mean that the contract does not bind the person agreeing to the contract, unless the person has been positively misled to the nature of the document or the terms: Kincheng Banking Corporation v Chan Siu Kit (CACV 160/1985; Court of Appeal; 25 April 1986). There is no reason why the plaintiff could not have them translated or otherwise requested Maison for an English version of it. 55.On the factual issue, I would also reject the plaintiff’s case for the following reasons. First, Corbieres and Maison had more than 10 dealings throughout the years. Second, in all the invoices sent to the plaintiff, it would contain the same General Sales Conditions in French in the back. Third, the plaintiff admitted to have received the original invoices as those invoices would be needed to enable him to clear the customs in Hong Kong. 56.In this regard, I accept the defendant’s submission that as both the plaintiff and the defendant are business entities, they are expected to conduct themselves and act as such. The fact that the plaintiff had accepted the previous goods without disputing the terms of the sales would have led the defendant reasonably to believe that the plaintiff had accepted the General Sales Conditions: Circle Freight, supra at p 433 per Taylor LJ. 57.In the circumstances, I agree with the defendant’s counsel submission that none of the objections made out by the plaintiff can be made out. I further agree that, in any event, these objections only go to the penalty clause aspect of the defendant’s case and not to the amounts due to the defendant and not whether or not the defendant can charge interest. Penalty Clause 58.In the context of the present case, I do not find the one-off 15% payment for any outstanding sum due as unconscionable, oppressive or extravagant for 2 reasons: (i) it was not charged on a continuous bases; and (ii) this fixed rate reflects what the defendant could have earned from selling its stock in the open market had there been no default made by the plaintiff: (See Re Mandarin Container & Others [2004] 3 HKLRD 554 at 558 §8. 59.In the premises, I find that the Penalty Clause is in fact not a penalty clause but a liquidated damages clause. 60.As for the calculations of the penalty clause, I find that the defendant is entitled to charge the sum of €264.08 (€1,760.50 x 15%) only. Interest 61.One of the aspects of the defendant’s claim is that it claims for interest on the outstanding amounts due to it at the rate of 1% per month resulting in the sums of €17,881.44 and €3,535.20 payable as interest. The defendant’s alternative case is that it is entitled to pre-judgment interest at a rate and for such period as determined by this court. The usual interest rate awarded by the courts is prime rate plus 1%: Li Xiao Yun & Anor v China Gas Holdings Limited (CACV 215/2013; Court of Appeal; 26 May 2016). 62.I consider that in a commercial context as in this case, the usual interest at 6% (prime rate plus 1%) should be adopted. 63.Based on the interest at 6% per annum, I allow the following as interest in this case:-
64.Hence, based on the above, the total interest allowed in this case is at €9,821.50. CONCLUSION 65.Based on the above discussions, I find that the plaintiff has failed to prove his case against the defendant and accordingly his case is dismissed with costs. 66.Further, the defendant has been able to prove its counterclaim against the plaintiff and the plaintiff is hereby ordered to pay a sum of €11,846.08 to the defendant:-
Costs 67.Costs should follow the event. There is no doubt that the defendant being the winning party in this case is entitled to have costs of this action, including the costs of the counterclaim against the plaintiff, with certificate for counsel. The only question is on what basis such costs should be allowed in the circumstances of this case. 68.In exercising the discretion as to costs, the court shall, to such extent, if any, as may be appropriate in the circumstances, take into account, inter alia:-
69.The leading case in the discussion of whether or not costs should be awarded on an indemnity basis is the case of Town Planning Board v Society for Protection of the Harbour Ltd (No 2) [2004] 7 HKCFAR 114. The principles can be summarized as follows:-
70.In the present case, in my judgment, the plaintiff should have very early on, or at least since the exchange of documents, released that the case he was putting forward was diametrically opposed to the contemporaneous documents exchanged. 71.It must have also become clear to the plaintiff that Ka’s involvement was more than what it had appeared to be and that Ka’s explanations to him did not in any way explain the contradictions in the contemporaneous documents which his lawyers must have explained to him. Even during the plaintiff’s oral opening submissions, it became apparent to the court and the defendant that the only person on the side of the plaintiff who had any idea about the details of the transactions was Ka himself, and that the plaintiff should not have sued the defendant but should have sued Ka instead. Despite these obvious observations, the plaintiff decided to go through the whole case. 72.As said, Ka had made an affirmation to support the plaintiff’s case during interlocutory applications, but the plaintiff decided not to ask him to make a witness statement or to call him to give evidence at trial despite Ka’s apparent availability. I agree with the defendant’s counsel that the reasonable inference here is that either Ka is being protected by the plaintiff for reasons unknown to the court and the defendant or the plaintiff simply choose to believe Ka blindly despite the overwhelming evidence that he was cheating on him. 73.Further, as Riviere made clear in his witness statement, the defendant believes that the plaintiff does not have much assets and that is the reason why legal proceedings were not initiated against the plaintiff. However, notwithstanding being the one in debt, the plaintiff initiated proceedings against the defendant claiming for the specific performance of the contract or for repayment. 74.I further agree with Mr D’Souza that if the plaintiff, by chance somehow succeed in these proceedings, the plaintiff would have the benefit of the wines delivered as well as receive its payment back. If the plaintiff loses, then besides his own legal fees, he would have little else to lose. In these circumstances, it does appear to the court that the plaintiff initiated the present proceedings with an opportunistic view of gambling his chances to see if there is anything the plaintiff can get from the defendant, bearing in mind that it is a foreign company with witnesses residing overseas who may not be keen to come to Hong Kong to give evidence. The above observations in my view are consistent with the position stated in the plaintiff’s oral opening submissions where the plaintiff’s counsel expressly stated that the plaintiff would simply opt to “put the defendant up to strict proof”. 75.In my judgment, the above matters clearly amounted to an abuse of the court’s time and resources in an attempt to resolve a rather one-sided case from day one. For these reasons alone, I consider that they constitute to sufficient grounds to order costs on an indemnity basis against the plaintiff. 76.Another matter worth noting is on the issue of costs incurred by the parties on Day 3 of the proceedings. The evidence of Faugeron in-chief had lasted less than 10 minutes (9:30 am to 9:40 am). And the plaintiff’s counsel then informed the court that he had no cross-examination for the witness. Had the plaintiff’s legal team indicated on Day 2 that there would be no questions for Faugeron, his evidence could have been swiftly completed towards the end of Day 2 of the trial. In such case, the court would not have to waste its time and resources to allocate another full day for the trial and the parties would not have to incur one full day of costs for accommodating such evidence. 77.As mentioned above, I consider that it is plainly obvious that the plaintiff has taken a blinkered approach to this case from day one and refused to look at the clear documentary evidence which shows that Ka had accumulated substantial debts on his behalf throughout the year. Instead of trying to settle those outstanding amounts due to the defendant, it chose to issue proceedings against the defendant when he has no case at all right from the beginning. Whether he was badly advised by his legal advisers or merely being stubbornly refused to acknowledge that he has no case against the defendant and yet chose to sue is not a matter which the court is concerned with. What the court however is concerned with is that much judicial resources and time have been wasted for a case which has no merits at all almost from the word “go”. Much expenses have also been incurred by the defendant’s witnesses who have to travel from overseas in order to attend the trial. Under such circumstances, I see no reason why the plaintiff should not bear the costs of the defendant on an indemnity basis for this action. Such costs will be taxed by the court if they cannot be agreed by the parties. 78.I so make such an order.
Mr Johnny So Chun Man, instructed by So, Ho & Co., for the plaintiff Mr Robin D’Souza, instructed by Kam & Fan, for the defendant [1] There is a discrepancy of €0.80 allegedly due to a minor mistake in the defendant’s accounts. [2] Although the plaintiff pleads loss of profits, there is no evidence (documentary or otherwise) or allegation in the plaintiff’s witness statement that suggests the plaintiff has suffered any such loss. | |||||||||||||||||||
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