Chan Kwok Hing t/a Chip Hing Machine Works v. Chun Ming Machinery Engineering Ltd
Read the full judgment text of DCCJ 3889/2017 on BabelCite. This District Court judgment was delivered on 30 September 2019.
1. The plaintiff was and is a sole proprietor selling tools and accessories for reclamation works. The defendant is a limited company incorporated in Hong Kong carrying out the business of marine works. Chan Yip Ming (“Chan”) was and is the director holding 50% shareholdings of the defendant company at the material times.
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DCCJ 3889/2017 [2019] HKDC 875 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 3889 OF 2017 _________________ BETWEEN
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_________________ J U D G M E N T __________________ BACKGROUND 1.The plaintiff was and is a sole proprietor selling tools and accessories for reclamation works. The defendant is a limited company incorporated in Hong Kong carrying out the business of marine works. Chan Yip Ming (“Chan”) was and is the director holding 50% shareholdings of the defendant company at the material times. 2.The issues in dispute are: (1) whether the defendant ordered goods from the plaintiff at a total price of $105,000 under invoices 1256 and 1257 (“the Invoices”); (2) whether the goods under the Invoices were delivered to the defendant; and (3) whether the defendant is liable to pay the said purchase price of $105,000. PLAINTIFF’S CASE AND EVIDENCE 3.The plaintiff testified at trial. He has been doing business in the reclamation works industry for more than 30 years. He did not have much business dealings with the defendant except that they transacted more frequently only after 2014. There were around 4 transactions between 2014 and 2015, involving the respective sums of $432,000, $250,000, $102,000 and $3,000. 4.Most of the transactions were conducted by Chan placing verbal orders, followed by subsequent delivery of the goods through third party carrier to the defendant’s shop. It was only on rare occasion that Chan would attend the plaintiff’s shop to collect the goods personally. 5.The subject incident on 16 January 2015 was one of such rare incidents. The plaintiff recalls that on 16 January 2015, Chan drove a van to his shop to purchase the following products as stated on the Invoices, contents of which are appended below[1]:- Invoice 1256
Invoice 1257
6.As the plaintiff had stocks of those goods in shop, he immediately took the goods from a metal barrel and passed them to Chan. Chan further asked the plaintiff to give him the metal barrel for free which the plaintiff agreed. The plaintiff then issued two invoices bearing numbers 1256 and 1257 respectively (i.e. the Invoices) and asked Chan to sign on the invoices to acknowledge receipt of the goods. However, Chan refused to sign but replied that “你驚我走你數咩”. 7.The plaintiff did not insist that Chan must sign as he thought doing business with customers was based on trust and should involve some degree of risk taking. But to the contrary, Chan asked the plaintiff to sign and stamp on the invoices. The plaintiff acceded to Chan’s request as he always did in the past. 8.The purchase price under the Invoices in the total sum of $105,000 remains outstanding up to present which led to the commencement of the present proceedings. DEFENDANT’S CASE & EVIDENCE 9.Chan testified for the defendant at trial. It is the defendant’s case that on or about 16 January 2015, Chan did not purchase nor receive the goods from the plaintiff. 10.The defendant makes the following arguments. First, there is a lack of documentary evidence on the plaintiff’s part to show the existence of a contract. Chan casts doubts on the Invoices which, according to him, were only received by him for the first time on 28 April 2017 upon receiving a demand letter from the plaintiff’s solicitors. For previous transactions, signed invoices were habitually issued to the defendant but the Invoices were not signed by either the plaintiff as the issuer or the defendant as the recipient (“lack of proof of existence of contract”). 11.Secondly, there is a lack of documentary evidence on the plaintiff’s part to show the actual receipt of the goods by the defendant. The invoices produced by the plaintiff simply do not bear any signature of Chan or company chop of the defendant company as proof of receipt of the goods (“lack of proof of receipt of goods”). 12.Thirdly, the plaintiff would unlikely release goods to the defendant if Chan refused to acknowledge receipt because the plaintiff had adopted a practice of requiring customers to sign on invoices to acknowledge receipt of goods since 2014 (“Inherent unlikeliness of plaintiff’s evidence”). 13.Fourthly, it is inherently unlikely that the plaintiff, having released goods to the defendant, would have a complete lack of supporting documentation whilst such documents are available with the plaintiff’s other customers (“lack of supporting documentation as compared with other customers”). 14.Fifthly, the defendant had ordered the same goods from the plaintiff in 2014 which were expected to be delivered in February 2015. There was therefore no need for the defendant to purchase the same goods from the plaintiff in January 2015 when such goods were expected to be arriving soon (“no necessity to purchase”). 15.Lastly, the plaintiff is not trustworthy as his oral evidence contradicts his witness statement, and are inconsistent in and of itself (“inconsistency in evidence”). 16.On the whole, the defendant submits that given “the complete lack of documentary evidence”, the plaintiff has failed to meet its burden of proof and his claim should be dismissed. LEGAL PRINCIPLES 17.This case concerns dispute of facts between the plaintiff and the defendant which primarily turns on the credibility of witnesses. The parties have no dispute that the following legal principles on assessing the credibility of witnesses are applicable. 18.In assessing the credibility of witness, DHCJ Au (as he then was) said in Lee Fu Wing v Yau Po Ting Paul [2009] 5 HKLRD 513 at 524:-
19.DDJ Cheung in Lee Chui Ying v Cheung Man Kok DCPI 1665/2011 summarized Chu J’s judgment in Ip Fung Kuen HCA 1897/2009 at §14 (pp 6-8):-
ANALYSIS 20.I first deal with the defendant’s arguments. Lack of proof of existence of contract 21.It is the defendant’s argument that as the subject invoices produced by the plaintiff do not bear the plaintiff’s company chop and signature, there is no proof that transaction did take place on 16 January 2015. 22.I note that one of the undisputed evidence is that white invoices could be issued to customers just for quotation purpose without transaction at the end. It is also undisputed that the plaintiff always acceded to Chan’s request to sign and stamp on the white invoice regardless whether the quotation led to actual transaction finally. One documentary evidence to this point is invoice 5222[2]. This invoice bears the plaintiff’s company chop and signature despite it was issued only for quotation purpose without actual transaction finally. Another example is invoice 5226[3]. 23.Clearly, the existence of the plaintiff’s company chop and signature on the invoices does not necessarily correlate with the existence of transactions between the plaintiff and the defendant. By the same token, the non-existence of the plaintiff’s company chop and signature on the Invoices does not necessarily point to non-existence of a transaction either. Before I elaborate this point, I shall pause to set out below the plaintiff’s evidence in relation to how transactions were normally done and under what circumstances invoices were issued for the sake of clear illustration. 24.The plaintiff had a factory at Shenzhen and a shop in Hong Kong. He conducted transactions by using booklets of invoices. When he was issuing invoices in Hong Kong, he would normally use the invoice book bearing Hong Kong shop address. If that invoice book was used up, he would temporarily use the invoices bearing Shenzhen factory address even though transactions actually took place in Hong Kong. This explains why the Invoices bear Shenzhen factory address. 25.Each invoices consists of three tiers of paper. The top tier is the original and is white in colour, it was to be handed to customers. The second and third tiers are in pink and yellow respectively which reproduce what are written on the white invoice through tracing paper. 26.It is the plaintiff’s evidence that when Chan asked him to sign and stamp on the white invoices, he would usually sign and stamp thereon after tearing them apart from the invoice book. As a result, the two tiers of copy invoices beneath in pink and yellow respectively certainly would not have any marking of the plaintiff’s chop and signature. Such evidence of the plaintiff is not countered by Chan who said that he did not pay attention to how exactly the plaintiff signed and stamped on the invoices. I see no reason why I should disbelieve the plaintiff’s evidence in this regard which is consistent with the documentary evidence produced by the parties as analyzed below. 27.Invoices 5226, 5222, 5227 and 1261 produced by the defendant[4] were copied from the white invoices retained by the defendant and they all bear the plaintiff’s company chop and signature. The same invoices (i.e. 5226, 5222, 5227 and 1261) disclosed by the plaintiff[5] were copied from the pink/yellow invoices retained by the plaintiff and they do not contain the plaintiff’s company chop and signature. This lends support to the plaintiff’s evidence that he usually signed and stamped on the white invoices after tearing them from the invoice book without any tracing paper beneath. 28.With regard to the subject invoices 1256 and 1257 (i.e. the Invoices) produced as evidence by both parties in this action, they were not copied from the white original invoices retained by the defendant but were copied from the pink/yellow invoices retained by the plaintiff. As the plaintiff stamped and signed on the white invoices only after tearing them from the invoice books (which means no tracing paper or pink/yellow copies underneath), it comes naturally that the evidence we now have, which was copied from the pink/yellow invoices, would not contain the plaintiff’s chop and signature. 29.To conclude, the absence of the plaintiff’s company chop and signature on the copy invoices produced as evidence in this action does not necessarily mean that the original white invoices (which have not been produced by the parties as evidence[6]) do not contain the same. The defendant’s assertion that the non-existence of the plaintiff’s chop and signature on the invoices produced as evidence in this action indicates non-existence of transaction between the plaintiff and the defendant on 16 January 2015 is unconvincing. Lack of proof of receipt of goods 30.The defendant also challenges that the Invoices do not bear the defendant’s signature acknowledging receipt of the goods, hence there is no proof that the goods were actually received by the defendant. 31.In his witness statement, Chan stated that in his business dealings with the plaintiff he would not refuse to acknowledge receipt of goods. According to prior practice, goods delivered by the plaintiff would be checked and the defendant would acknowledge receipt by signing. 32.During oral testimony, Chan clarified that the goods from the plaintiff were normally bulky and hence were delivered to him from third party courier. He would be required by the third party courier to sign on their delivery note in order to receive the goods. 33.When being specifically cross-examined on this point, Chan clarified that there was/were actually previous occasion(s) when he did instantly purchase and personally collect goods at the plaintiff’s shop though he could not recall exactly when that happened. Chan admitted that on such previous occasion(s), he did not sign on the white invoice of the plaintiff to acknowledge receipt. Chan further admitted that throughout the 20 years of business dealings with the plaintiff, he had never signed on any white invoice to acknowledge receipt of goods. Such oral evidence of Chan clearly contradicts with the defendant’s assertion that actual receipt of goods by Chan must be evident by Chan’s acknowledgment signature on the white invoice. 34.In my view, whilst the absence of Chan’s signature on the white invoice should not positively indicate actual receipt of the goods on 16 January 2015, this should not indicate non-receipt of the goods by Chan on 16 January 2015 either. No necessity to purchase 35.The defendant also attacks the plaintiff’s case by saying that around 7 months before the subject incident in January 2015 i.e. in June 2014, the defendant already obtained quotation or ordered from the plaintiff the same goods[7]. Since then, Chan had been in touch with the plaintiff and expected that the goods would be delivered in February 2015. There was therefore no need for the defendant to purchase the same goods from the plaintiff in January 2015 knowing that the goods would be delivered very soon within a month. 36.I consider such argument of the defendant flawed. First of all, the goods delivered in February 2015 were “彩選爪 (大夾) 包牙仔牙王 (美國造)”[8] but the goods under the Invoices are “44D牙王 (Weld On Nose) (美國造)、44D牙仔 (Chisel Point) (美國造)、44D胶 (Dredge Lock) (美國造) and 44D邊 (Dredge Pin) (美國造)”[9]. They are not the same as alleged. 37.When being cross-examined, Chan corrected that the goods under the Invoices were component part(s) of the goods delivered in February 2015 and those components parts are durable hence there was no need for the defendant to order those component parts anyway. 38.I note that for the purchase in February 2015, the quotation/order thereof was actually obtained/placed in 15 June 2014, about 7 months before the transaction under the Invoices in January 2015. There could be many reasons why the defendant purchased some durable component parts of certain tools in January 2015 knowing that the tools themselves would be delivered one month afterwards in February 2015. One possibility was the defendant was in urgent need of some component parts in January 2015 and did not wish to wait until delivery of the tools in February 2015. Another possibility was that the component parts purchased in January 2015 were intended for some already existing tools which required urgent parts replacement. Alternatively, the component parts purchased in January 2015 could be for the purpose of other projects or customers of the defendant which did not relate to the transaction in February 2015 at all. 39.Given the many possibilities as aforementioned, the defendant’s argument that it was unnecessary for them to order the component parts of certain tools in January 2015 because the tools would be delivered in February 2015 is overly generalized and unconvincing. 40.I have one further observation on this argument of the defendant. It is noted that the defendant in running this argument is not saying that the plaintiff as a matter of fact did issue the Invoices to the defendant for purposes other than transaction (e.g. only for quotation purpose which did not lead to transaction finally) hence despite the existence of the Invoices, the defendant has no obligation to pay. The underlying meaning of the defendant’s argument is that, as a matter of fact, the Invoices were not issued by the plaintiff to the defendant for any of the three purposes[10] but, for some unknown reasons, they now exist as evidence in the present proceedings. 41.It is unclear for what unknown reasons the Invoices now exist as evidence the defendant may wish to implicate. The only possible implication appears to be faking or fabrication of evidence on the plaintiff’s part. However, such allegation has not even been pleaded in the defendant’s pleading at all, not to mention pleaded with any particularity therein. Inherent unlikeliness of plaintiff’s evidence 42.It is the plaintiff’s evidence that his customers usually ordered goods from him orally. In the past, he seldom asked his customers to sign on the invoice to acknowledge receipts. After 2014, he started to request his customers to sign on the invoice upon receiving goods for better protection of his own interests because of the defendant’s trait of non-payment. 43.The plaintiff distinctively recalled that on 16 January 2015 when Chan took the goods at his shop, he issued the Invoices and asked Chan to sign thereon to acknowledge receipt. However, Chan refused to sign and replied that “你驚我走你數咩”. The plaintiff did not insist that Chan must sign because the plaintiff believed that doing business would involve some degree of risk taking and he also held himself to the thinking that customers were always right. 44.It was submitted on behalf of the defendant that as the plaintiff had implemented a system requiring customers to acknowledge receipt by signature since 2014 due to the defendant’s failure to settle previous invoices, it was inherently unlikely and also did not make sense for the plaintiff to let Chan take his goods on 16 January 2015 without insisting Chan to acknowledge receipt. 45.In my opinion, the plaintiff’s starting to have the intention to better protect his interests by requiring his customers to sign on the invoices is one thing and how well he could execute such measure is quite another. Whilst I have cautioned myself against the danger of too readily drawing conclusion about the truthfulness and reliability of the plaintiff solely or mainly from his characters, I take the view that whether it was inherently likely or unlikely for a person to act in a particular manner shall be considered in light of the particular characters of that person. 46.From documentary and witness evidence, one could see that the plaintiff was a person who conducted business based on trust. He allowed his customers to take his goods without acknowledging receipt before 2014, without immediate payment and even without clear agreement as to when payment should be made. According to the plaintiff, customers would pay within 30 days after receipt of goods but if they wished to pay by instalments, they would raise with him and he would normally agree. During oral testimony, Chan also admitted that very often the defendant would not immediately pay for the goods upon collection but would pay afterwards (賒數). 47.The dishonoured cheque incident was another illustrative example of the plaintiff’s characters and his way of doing business. On 15 June 2014 i.e. about 6 months prior to the subject incident, the defendant obtained quotation (and also ordered goods) of a total value of $432,000 from the plaintiff under invoice 5222[11]. 48.The goods under that invoice were delivered to Chan on or about 11 February 2015 i.e. about a month after the subject incident. Chan proposed to pay by two instalments in the respective sums of $232,000 and $200,000. Two post-dated cheques dated 6 March 2015 and 21 March 2015 respectively were drawn in favour of the plaintiff[12]. The plaintiff agreed to Chan’s proposed way of payment by post-dated cheques plus installments and issued another invoice bearing number 1261 upon Chan’s request[13]. 49.When the plaintiff tried to bank in cheque no.379580 in the sum of $232,000, it was dishonoured and returned. The plaintiff tried to call Chan to enquire but Chan refused to take his call. After repeated demands from the plaintiff, Chan finally paid the plaintiff a sum of $200,000 on 5 February 2016, i.e. about 1 year after Chan took the plaintiff’s goods, but the remaining sum of $232,000 remained outstanding. 50.The plaintiff’s friend suggested that he could chase for payment through WhatsApp. On 28 March 2017, the plaintiff sent to Chan a photo showing a piece of paper with such wording “至陳月明大老板：條數幾時可以找 請你聽電話 多謝你 Cheque No.: 379580 銀碼：232,000--”. During oral examination, the plaintiff added that he actually did not know how to use WhatsApp and it was only with the help of his friend that he managed to send that chaser to Chan. In that WhatsApp, the plaintiff only asked about the debt of $232,000 but did not seize that opportunity to demand payment of the Invoices as well because he was worried that if he chased all outstanding sums in one go, it would only make it more unlikely for Chan to pay. 51.Despite the chaser, the plaintiff heard nothing from Chan. He therefore instructed lawyer to issue demand letters to Chan/the defendant demanding payment of the dishonoured cheque in the sum of $232,000 as well as the outstanding prices in the total sum of $105,000 under the Invoices. 52.The defendant finally paid the sum of $232,000 under the dishonoured cheque on 30 June 2017 (i.e. more than three years after Chan took the plaintiff’s goods) but the outstanding sum under the Invoices have remained unpaid. 53.From the above sequence of incident, one could see that by the time the chaser was sent via WhatsApp on 28 March 2017, the sum of $232,000, which is not a modest sum relative to the plaintiff’s scale of business, stood outstanding for more than 2 years already. Instead of forcefully and aggressively demanding Chan to make such a long-overdue payment in the capacity as a creditor, in the WhatsApp message the plaintiff still humbly addressed Chan as “陳月明大老板” and politely enquired with Chan when he could make payment and asked Chan to pick up his call for conversation. 54.The above demonstrates the accommodating, humble and non-confrontational characters of the plaintiff in his way of doing business. In my view, the plaintiff’s not insisting Chan must sign on the white invoices upon collection of goods on 16 January 2015 actually tallies very much with his characters. I do not observe any inherent unlikeliness in such evidence of the plaintiff. Lack of supporting documentation as compared with transactions with other customers 55.The defendant’s counsel also submitted that it is inherently unlikely that the plaintiff, having released goods to the defendant, would have a complete lack of supporting documentation whilst such documents are available with the plaintiff’s other customers. 56.The plaintiff disclosed some invoices issued for other customers during the period from 2011 to 2018. Other than those, I do not see any other supporting documentation available with the plaintiff’s other customers in the trial bundle. From those invoices one could see that some of them bear customers’ acknowledgment signatures whilst some do not. 57.If in saying that there was a “complete lack of supporting documentation (of the subject transactions) whilst such documents are available with the plaintiff’s other customers”, the defendant actually means the Invoices do not contain Chan’s signature whereas the invoices concerning other customers contain customers’ signatures, this challenge of the defendant could be easily answered by the plaintiff’s evidence that many of his customers would co-operate to sign on the invoices to acknowledge receipts since 2014 (which is reason why their “documentation” bears acknowledgment signature) except Chan who refused to sign (which is reason why the Invoices do not bear Chan’s acknowledgment signature). Inconsistency in evidence 58.The defendant’s counsel pointed out to this Court the inconsistency in the plaintiff’s evidence, one concerns the reason why the plaintiff had, in around 2014, changed from the old practice of not requiring customers to sign on the white invoices to acknowledge receipt of goods to a new practice of requiring such signature. 59.I do not consider that the plaintiff’s uncertainty on certain questions shall affect the overall credibility of his evidence. I actually observe that uncertainty or changes in evidence also happen in Chan’s oral testimony. One of the inconsistencies happens in paragraph 9 of Chan’s statement which states that “間中(但極少) 亦會在原告人香港的處所交收，每一次均會逐件點算及簽收”. During cross-examination, Chan admitted that he actually had never signed on any invoices to acknowledge receipt of the goods he personally collected despite he said he did in his witness statement. Assessment of plaintiff’s evidence 60.On the whole, I am of the view that the plaintiff is a credible and truthful witness. He could describe each and every transaction (including one intended transaction which was not concluded eventually) from 2014 with clarity. As regards the subject transaction on 16 January 2015, the plaintiff re-counted with particulars as to how Chan came to his shop that day and how the goods were passed to Chan together with a metal barrel. The undisputed evidence is that the plaintiff and the defendant only had about 4 transactions after 2014 and that Chan’s personal collection of goods at the plaintiff’s shop was an unusual occurrence. Given the rarity of transactions and the subject incident, I would not cast doubt on the plaintiff’s distinct memory about those transactions. I find that the plaintiff’s oral evidence is consistent internally and also by and large consistent with what are stated in his written statement. On the other hand, I observe that Chan was evasive in his way of answering some questions. Some of his answers are devoid of logic[14] and demonstrate his untrustworthy way of business operation. 61.On documentary evidence, the plaintiff disclosed some invoices that were issued to other customers. Invoice 1273 was issued on 24 April 2015 to “宜順23”; invoice 1274 was issued on 24 April 2015 to “利航8”; invoice 1280 was issued on 31 July 2015 to “聯興618”; and invoice 1282 was issued on 24 August 2015 to “和泰鋼鐵有限公司”. It is noted that the Invoices bear smaller invoice numbers (i.e. 1256 and 1257) and they correspondingly bear earlier dates of issue as compared with the aforesaid invoices issued to other customers. I do not observe any sign of suspicion when comparing the serial numbers and the issue dates of the Invoices with the serial numbers and the issue dates of the invoices to other customers. 62.During trial, the plaintiff submitted to this Court a booklet of yellow invoices containing the Invoices for inspection. I observe no sign of tampering of evidence having carefully inspected the two Invoices. 63.Based on the above analysis, I make a finding of fact that on 16 January 2015, the plaintiff and the defendant had transactions of goods to the value of $102,000 and $3,000 as stated in the Invoices (i.e. invoices 1256 and 1257) respectively and that the goods were personally collected by Chan at the plaintiff’s shop on behalf of the defendant on 16 January 2015. I am satisfied on a balance of probabilities that the plaintiff has proved his case. The defendant is liable to pay the plaintiff a total sum of $105,000 for the goods purchased under the Invoices. ORDER 64.I order the defendant to pay the plaintiff the sum of $105,000 together with interest thereon at judgment rate from the date of judgment until date of payment. 65.As the parties agreed that costs should follow the event, I order the defendant to pay the plaintiff’s costs of this action, with certificate for both counsel, to be taxed on the District Court scale if not agreed.
Mr Colin Leung, instructed by Lawrence Y W Ng & Co, for the plaintiff Mr Sunny Chan, instructed by Fan Wong & Tso, for the defendant [1] Trial Bundle pp111 - 112 [2] Bundle p114 [3] Bundle p113 [4] See Bundle pp111-117 [5] See Bundle pp 69-2, 69-1, 69-3 and 69 [6] The plaintiff would not be able to produce the white invoices since the white invoices are retained by customers. The defendant has not produced the white invoices as Chan claims that the transaction on 16 January 2015 had never taken place and that he had not been given the white invoices. [7] See Bundle p114 [8] See Bundle p116 [9] See Bundle pp67-68 [10] The undisputed evidence is that white invoices could be issued by the plaintiff for three purposes, firstly for quotation purpose, secondly upon placement of order by customers or thirdly, upon delivery/collection of the goods to/by customers. [11] See Bundle p114 [12] See Bundle pp63-64 [13] See Trial Bundle p116 [14] When being asked why he did not sign on the invoice to acknowledge receipt of the goods on the occasion when he personally collected goods, Chan for more than once answered that it was not necessary for him to sign to acknowledge receipt of the goods because he had already received the goods. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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