Power Printing Products Ltd v. The Creative Studio Ltd
Read the full judgment text of DCCJ 2921/2014 on BabelCite. This District Court judgment was delivered on 5 May 2017.
1. The plaintiff is a company carrying on business of printing services including printing of books. The defendant is a company carrying on trading business for overseas customers. It would get orders from overseas customers and then place orders with the plaintiff. The disputes in these proceedings arise from some purchase orders for the printing of some books placed by the defendant with the plaintiff.
Cites 7 cases
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DCCJ 2921/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 2921 OF 2014 -------------------------
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--------------------- JUDGMENT ---------------------- 1.The plaintiff is a company carrying on business of printing services including printing of books. The defendant is a company carrying on trading business for overseas customers. It would get orders from overseas customers and then place orders with the plaintiff. The disputes in these proceedings arise from some purchase orders for the printing of some books placed by the defendant with the plaintiff. The agreed issues 2.In the pre-trial review, the parties agreed that the issues set out in the plaintiff’s statement of issues in dispute dated 9 February 2017 (“the List of Issues”) are issues to be determined in this trial, which are as follows:-
3.Issues nos 1-3 are issues raised in the plaintiff’s claim, and issues nos 4 to 7 are issues raised in the defendant’s counterclaim. I will deal with these issues in turn in the paragraphs below. The evidence 4.Each side called one factual witness. The plaintiff’s factual witness is Mr Anthony Lai (“Mr. Lai”), who was the senior sales and marketing manager of the plaintiff from 1 August 2011 to 31 October 2015. The defendant’s factual witness is Madam Lau Kai Man (“Madam Lau”), who is a director of the defendant. Madam Lau also represents the defendant in these proceedings. 5.Mr Lai impresses me as a straightforward witness. His evidence is cogent and clear. I accept his evidence. 6.An example illustrating that Mr Lai is a candid witness with nothing to hide is his evidence on the US$47,900.00. The plaintiff’s case is that these sums are paper costs paid by the defendant and has been used to purchase papers, and hence it would not be possible to refund these sums to the defendant. The defendant’s case is that these sums are advance payments paid by the defendant to the plaintiff under the relevant purchase orders, and should be refunded to the defendant since the relevant purchase orders have been cancelled. 7.Under cross-examination, Mr Lai frankly admitted that the papers purchased had never been delivered by the plaintiff to the defendant. He explained in re-examination that it was because of the restriction imposed in Mainland China. The factory in Mainland China was not allowed to transfer imported goods (in this case, papers) to other factory without paying a 17% tax. Since the defendant was not willing to bear the tax, the plaintiff refused to deliver the papers to the defendant unless the defendant agreed to bear the tax. However, at a later time, the plaintiff agreed to bear the tax anyway to avoid further argument and asked the defendant to go to the factory in Mainland China to take up the papers. However, the defendant did not do so. 8.Mr Lai also frankly admitted that it was once agreed that the US$47,900 could be used in another purchase order, but that purchase order was later cancelled. Since it was cancelled, the US$47,900 remained as payment for paper costs. 9.I find that Mr Lai is an honest and reliable witness. 10.On the other hand, Madam Lau is not a reliable witness. She is evasive, and is unwilling or unable to offer explanations on some essential issues. 11.Madam Lau said that the defendant had partially settled invoice no 032901 was not an admission made by the defendant as to the liability to pay under that invoice. However, at the same time, she conceded that she did not know what was going on between the “bosses” of the two companies. 12.Madam Lau said that by the operation of the penalty clause on the purchase order no 13060713, the plaintiff was liable to pay damages to the defendant as a result of the delay in delivering the 75,000 copies to the defendant. However, Madam Lau said that she could not tell what should be the amount of the damages, for the plaintiff refused to discuss this with the defendant. With respect to Madam Lau, this explanation is unsound. Whether the defendant has suffered any loss and damage as a result of the delay in delivery is something within the defendant’s knowledge, and the defendant would be able to particularize the loss and adduce evidence on this issue. Indeed, the defendant is required to do so in order to claim damages against the plaintiff. The defendant would not be absolved from this obligation even if the plaintiff refuses to discuss with the defendant on this question. 13.Mr Stephen Wong (who is the accounting/financial staff member of the defendant), in his email to Mr Lai dated 20 February 2014, clearly and unequivocally stated that the US$47.900.00 and the US$3,492.00 were paper costs. Counsel for the plaintiff, Ms Rachael Siu, put this email to Madam Lau in cross-examination. Madam Lau tried to blame Mr Stephen Wong for not knowing the “exact situation” between the companies and claimed that it was impossible for the staff to know everything. Clearly, this is not a satisfactory explanation at all. 14.In her own letter to the plaintiff’s solicitors dated 6 June 2014, Madam Lau proposed to set off the payments due to the plaintiff against the paper costs. This is evidence showing that the US $47,900.00 and the US$3,492.00 are paper costs and not advance payments as alleged by Madam Lau. Ms Siu put this letter to Madam Lau in cross-examination. Madam Lau offered no explanation about what she wrote but simply disagreed that it was an admission of liability to pay. 15.When Madam Lau was asked whether the claim by the plaintiff is to be set off by the payments for paper costs, or the payments for paper costs should be refunded to the defendant, Madam Lau did not give an answer. 16.Madam Lau also gave evidence about the counterclaim for return of digital files. Madam Lau stated that the files were created by the defendant’s designer and the files were to be uploaded to a FTP portal. The plaintiff was given access when an order was placed. The plaintiff would then download the files and made revision and print the books. Madam Lau admitted that the defendant and the designer would also have a copy of the digital files uploaded. She also agreed that when other printers “return” the files by sending them back digitally or burning them into a disc, the printers would still have a copy. 17.I find that Madam Lau is not a satisfactory witness. 18.Wherever there is conflict between Mr. Lai’s evidence and Madam Lau’s evidence, I prefer Mr Lai’s evidence. Issue No 1 19.In her final submissions, Madam Lau on behalf of the defendant concedes that the defendant is liable to pay the outstanding balance of invoice no 032901 to the plaintiff, but Madam Lau submits that the following sums should be deducted from the outstanding balance:-
20.The US$6,040.00 is the subject matter in issue no 4. Ms Siu in her opening submissions have conceded that the plaintiff should pay this sum to the defendant. In these circumstances, a credit of US$6,040.00 should be given to the defendant. 21.The US$47,900.00 and the US$3,492.00 are the subject matters in issues nos.5 and 6. For the reasons set out below, I hold that the defendant is not entitled to have these sums. Accordingly, there should be no deduction of these sums from the outstanding balance. 22.As to the delay in delivering the 75,000 copies to the defendant, the plaintiff admitted the delay in its statement of claim. In Mr Lai’s evidence, Mr Lai told this court that the plaintiff should deliver the 75,000 copies to the defendant on 27 August 2013, but the plaintiff only delivered the first batch to the defendant on 29 August 2013, and managed to deliver all the 75,000 copies to the defendant by 26 September 2013. 23.The amount due for these 75,000 copies, which is US$184,890.00, has been partially settled by the defendant by 3 payments:-
24.By accepting the delivery and making the aforesaid partial payments without reserving any right, the defendant has waived its right to require delivery within the fixed period. See Chitty on Contracts – Hong Kong Specific Contracts, 5th Ed, §20-339:-
25.In fact, the position adopted by Madam Lau in the trial is that damages for the delay should be deducted from the outstanding balance, not that the defendant is not liable to pay the balance because of the delay. 26.Madam Lau relied upon the following provision in the purchase order no 13060713 to support the defendant’s claim for damages:-
27.In relation to the delay, the defendant made the following averment in its defence:-
28.Madam Lau in her final submissions claims that the defendant should be awarded of damages of US$15,000.00 for the delay in delivering the 75,000 copies. In the absence of any particulars of loss and damage suffered by the defendant as a result of the delay and any reliable evidence on loss and damage, I refuse to accede to this claim. 29.In my judgment, there is no reliable evidence before me proving this averment. Accordingly, the claim for damages as a result of the delay in delivering the 75,000 copies is not established. That being the result, there should be no deduction of any damages from the balance claimed by the plaintiff under this head. Issue No 2 30.The parties agreed that the US$11,833.04 have been paid by the defendant. I have no need to make a judgment on this issue. Issue No 3 31.In respect of invoice no 030796, the defendant has almost settled the whole invoice. The outstanding balance is a tiny sum, ie US$59.24. The defendant refuses to pay this sum because, according to Madam Lau, some copies on this invoice are samples, which should be provided to the defendant free of charge. The plaintiff denies this. 32.Madam Lau submits that according to the terms on the purchase order no CJP-012049, the samples provided by the plaintiff to the defendant should be free of charge. Madam Lau says that the said terms can be found on pages 2 and 3 of the said purchase order. However, the copy of the said purchase order contained in the trial bundle is a document of 1 page only. The said purchase order is a document disclosed by the defendant. I ask Madam Lau whether she has tried to find the said pages 2 and 3, she replied that she has tried to do so but she is unable to locate these 2 pages. 33.I have to proceed on the basis of the evidence before the court. There is no reliable evidence before the court showing any contractual terms between the parties exempting the defendant from paying the US$59.24. I also note the point made by Madam Lau in trial, ie there are terms on pages 2 and 3 of the said purchase order stipulating that samples would be provided by the plaintiff free of charge, has never been raised by the defendant on its pleading. 34.In my judgment, the defendant has no defence in this issue, and I hold that the defendant should pay the US$59.24 to the plaintiff. Issue No 4 35.The plaintiff has conceded in this issue. I hold that the plaintiff should pay US$6,040.00 to the defendant. Issue No 5 36.There is ample evidence showing that the US$47,900 are paper costs and not advance payment:
37.Although the plaintiff has agreed that the payment for paper costs could be deducted in a particular purchase order, when there was no further purchase order, or when that purchase order was cancelled, the payment of the US$47,900 remained as a payment for papers. As agreed by Madam Lau during cross-examination, if there is no further order, the costs of paper have to be paid and the paper should be given to the defendant. The relevant question and answer in cross-examination are as follows:-
38.On the basis of Mr Lai’s evidence, I find that the US$47,900.00 has been used to purchase papers, and the defendant can make arrangements to collect the papers. 39.I hold that the plaintiff has no obligation to refund the US$47,900.00 to the defendant. 40.The defendant in its pleadings claims that the plaintiff had used the wrong paper to produce the mocked up sample of the end product in relation to the purchase order no 140111611 and provided the wrong sample to the defendant’s customer, leading to the cancellation of the said purchase order. As a result, the defendant has suffered loss and damage. In my judgment, there is no reliable evidence before me supporting this claim. I dismiss this claim. Issue No 6 41.There is clear evidence showing that the US$3,492 are paper costs.
42.I hold that the sum of US$3,492.00 is paper costs as contended by the plaintiff, and not advance payment as suggested by the defendant. The defendant has not put forward a valid basis justifying a claim for the return of the US$3,492.00. Issue No 7 43.In the trial, Madam Lau on behalf of the defendant claims damages in the amount of US$60,000.00 as a result of the plaintiff’s failure to return the digital files. 44.The only evidence in support of this claim is Madam Lau’s evidence summarized in paragraph 16 above. Even if I accept that evidence, it is difficult to see how the defendant can claim damages against the plaintiff under this head. Although the defendant has provided the digital files to the plaintiff, the defendant still keeps those digital files. At all times, the defendant is having the digital files. 45.I dismiss the defendant’s claim under this head. The outcome 46.For the reasons above, the net result would be that the defendant has to pay to the plaintiff (US$57,717.12 + US$59.24 – US$6,040.00) = US$51,736.36 47.I order that the defendant shall pay US$51,736.36 to the plaintiff. I further order that there be interest on the aforesaid judgment sum at 1% over the HSBC prime rate from the date of the writ until the date of this judgment, and thereafter at the judgment rate until payment. 48.I dismiss the defendant’s counterclaim as set out in issues nos 5, 6 and 7 in the List of Issues. 49.I have heard submissions on costs. In my judgment, the general rule of costs following the event should apply. I note that although the plaintiff succeeds in its claim against the defendant, the defendant also partially succeeds in its counterclaim in claiming US$6,040.00 against the plaintiff. I am of the view that the plaintiff’s claim and the defendant’s counterclaim are closely intertwined. In these circumstances, following the approach in Able Contractors Ltd v Wui Loong Scaffolding Works Co Ltd (HCA 2587/2008, 16 July 2012), for the purpose of facilitating taxation, I would make a costs order awarding the plaintiff the costs of the action, which would cover both the claim and counterclaim, with a reduction reflecting the defendant’s success in counterclaiming for the US$6,040.00. 50.During the trial, the time spent on the defendant’s claim for the US$6,040.00 is minimal, for the plaintiff has conceded this claim at the beginning of the trial. Having said that, the concession was offered at the beginning of the trial but not at an earlier time in these proceedings. Taking all these into account, I am of the view that a 10% discount should be given to the defendant to reflect its success on the claim for the US$6,040.00. 51.I order that the defendant should pay the plaintiff 90% of its costs of the action (including all costs reserved, if any), with a certificate for counsel. Wasted costs order 52.The trial lasted for 3 days. Due to numerous mishaps concerning the trial bundles prepared by the plaintiff’s solicitors, day 1 of the trial is almost entirely wasted, and the morning of day 2 is also wasted. 53.By the order made in the pre-trial review held on 15 February 2017 (“PTR Order”), the plaintiff’s solicitors are required to prepare the trial bundles in accordance with PD 5.6. Unfortunately, the plaintiff’s solicitors have failed to pay heed to the requirements set out in PD 5.6. When the trial bundles reached me, it consisted of 1 lever-arch file and a pile of papers. The lever-arch file was obviously overfilled, containing more than 400 pages. Further, some essential documents could not be found in that lever-arch file, including the List of Issues, and the sealed copy of the PTR Order. The copies of the pleadings provided in the lever-arch file were only barely legible and without colours showing the amendments. I have asked my clerk to notify the plaintiff’s solicitors to require them to rectify all these problems before the commencement of the trial. 54.Just before the commencement of the trial, I was provided with another set of trial bundles containing 3 lever-arch files (“the Old Bundles”). Not all the problems had been rectified, for example, the List of Issues was not yet in the bundles, and coloured copies of the pleadings were still missing. Ms Siu told this court that the plaintiff’s solicitors would follow up and would update the bundles to rectify all the problems. With this assurance, I started the trial. 55.Ms Siu made a brief opening speech and then called Mr Lai to give evidence. At that moment, Ms Siu discovered that the plaintiff’s solicitors had not prepared another set of bundles to be used by the witness. Ms Siu asked for a short adjournment to give some time to the plaintiff’s solicitors to prepare an extra set of the bundles. I reluctantly granted the adjournment, for it would not be possible to allow the witness to give evidence without placing a set of the trial bundles before him. After an adjournment for about 30 minutes, I resumed the trial. Madam Lau complained that some of the documents disclosed by the defendant had not been included in the trial bundles. I asked Ms Siu, and Ms Siu confirmed that Madam Lau was correct. I asked Ms Siu how much time the plaintiff’s solicitors would need to find the missing documents and to include them in the bundles, and Ms Siu said that the plaintiff’s solicitors would rectify these “within today”. It appears that the plaintiff’s solicitors have never discussed with the defendant as to what should be included in the trial bundles. Since Madam Lau might use the missing documents in cross-examining Mr Lai, the trial simply could not proceed before the plaintiff’s solicitors finding out those missing documents and putting them into the trial bundles. With no other alternative, I adjourned the trial to day 2. At that time, I have already told the plaintiff’s solicitors that I may make a wasted costs order in respect of the costs of the preparation of the trial bundles and the costs of day 1 of the trial. 56.On day 2, the plaintiff’s solicitors replaced the Old Bundles with another set of trial bundles (“the New Bundles”). The Old Bundles contain 661 pages, while the New Bundles only consist of 403 pages. I asked Ms Siu why there was such a difference between the 2 sets of bundles. Ms Siu replied that there were many duplications in the Old Bundles. All the duplications have been removed in the New Bundles. Ms Siu said that all the documents in the Old Bundles could be found in the New Bundles. Madam Lau told me that she had made some notes by using the page references in the Old Bundles. I told Madam Lau that in cross-examining Mr Lai and in making submissions, Madam Lau might mention the page references in the Old Bundles, and I would request Ms Siu to provide the corresponding page references in the New Bundles. After these discussions, Ms Siu called Mr Lai to give evidence. Only the New Bundles were provided in the witness box. After the evidence-in-chief, Madam Lau started the cross-examination. Madam Lau asked Mr Lai to read the emails on pp 624 and 625 of the Old Bundles. I asked Ms Siu to provide the corresponding pages in the New Bundles so that the witness could read the documents. After a long pause of more than 10 minutes, Ms Siu told this court that these 2 pages could not be found in the New Bundles. Ms Siu apologized to this court and told me that what she had submitted a moment ago was incorrect, and not every document in the Old Bundles could be found in the New Bundles. I required the plaintiff’s solicitors to immediately bring back the Old Bundles and to provide the same to the witness. Ms Siu asked for a short adjournment. I granted the adjournment. After the adjournment, Ms Siu told me that the plaintiff’s solicitors could not bring back the Old Bundles, for the set in the plaintiff’s solicitors’ office had been dismantled. I asked Ms Siu that she should have another set. Ms Siu confirmed this, but the plaintiff’s solicitors would need time to reproduce another set. I therefore adjourned the hearing to 2:30 pm on day 2. I told the plaintiff’s solicitors that I might make a wasted costs order in respect of wasting 1½ days of the court time. I also required the plaintiff’s solicitors to show cause as to why a wasted costs order should not be made, and I would hear the plaintiff’s solicitors on day 3 after hearing the final submissions. 57.The plaintiff’s solicitors provided 2 letters to this court on day 3, one is the letter of the law firm and the other is a letter of a paralegal (“the paralegal”) working in the firm. 58.The law firm in their letter offered apologies to the court. As the handling solicitor, Mr AM Mui, was out of town, the law firm offered an explanation in writing. The gist of the explanation is that all the problems were caused by a clerk (“the clerk”) of the law firm, who has tendered her resignation on 13 April 2017. Notwithstanding the repeated and continuous reminders given by the handling solicitor, the clerk still committed all the mistakes. 59.The paralegal in her letter also offered apologies to the court. She said that after the hearing on day 1, she and her 2 other colleagues working in the law firm until about 5:30 am on day 2 to try to rectify all the problems. They have tried their best to solve the problems. 60.The principles concerning wasted costs orders have recently been summarized by HH Judge Andrew Li in Mir Moazzam v SJ for and on behalf of Director of Immigration, Subhan v SJ for and on behalf of Director of Immigration, Rana Shahzad Ahmed v SJ for and on behalf of Director of Immigration, Ahmed Zaheer v SJ for and on behalf of Director of Immigration, and Dhiman Jasvir v SJ for and on behalf of Director of Immigration (DCCJ 4591/2014, DCCJ 4751/2014, DCCJ 327/2015, DCCJ 341/2015, DCCJ 1616/2015, 24 August 2016), in which the learned judge said:-
61.I would add that the court is also required to consider in the first stage that the wasted costs proceedings are justified notwithstanding the likely costs involved. See Rules of the District Court, Order 62 rule 8B(1)(a)(ii). 62.I am of the view that, in the circumstances described above, a wasted costs order with the following terms (“the Wasted Costs Order”) is justified in the absence of any satisfactory explanation from the plaintiff’s solicitors:-
63.My reasons for the Wasted Costs Order are as follows:-
64.I am of the view that the impropriety in the preparation of the trial bundles by the plaintiff’s solicitors is clear and indisputable, and is definitely a serious problem. I have offered an opportunity to the plaintiff’s solicitors to show cause, and the plaintiff’s solicitors have offered written explanations. The costs involved in the wasted costs order proceedings are minimal. I am satisfied that the wasted costs proceedings here are justified notwithstanding the likely costs involved. 65.I have considered the explanations offered in the law firm’s letter and the paralegal’s letter. I am not persuaded that the Wasted Costs Order should not be made because of these explanations.
66.Having considered all the circumstances, I come to the conclusion that the Wasted Costs Order should be made. Conclusion 67.I make the orders as set out in paragraphs 47, 48, 51 and 62 above. 68.I thank Ms Siu and Madam Lau for the assistance given to this court.
Ms Rachael Siu, instructed by A M Mui & Kwan, for the plaintiff The defendant represented by Ms Lau Kai Man | |||||||||||||||||
Cases cited in this judgment