Bens Auto Ltd v. Sps Automotive Performance (HK) Ltd

HCA 477/2018

[2022] HKCFI 3001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 477 OF 2018

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Before:  Hon Ng J in Court

Dates of Hearing:  11-13 and 25 January 2022

Date of Judgment:  17 October 2022

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JUDGMENT

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Introduction

1.This is the trial of the Action.

2.The underlying subject matter of this Action is the aborted sale and purchase of a very luxurious Italian sports car under the brand name “Pagani”. It is common ground that the ultimate buyer was the late Mr Jiacipto Jiaravanon (“Jip”), an Indonesian Chinese who came from a very wealthy family. Jip usually lived in Hong Kong and could speak both Chinese and English. He passed away in December 2015 at the age of 40 before the car that he had bought had been manufactured. Jip’s family members were said to be ready to complete the purchase but nothing came of it.

3.It is common ground that Jip first entered into a contract to purchase a “Pagani Huayra” (“Pag 1”) in around August 2014. In early 2015, Jip changed his mind and entered into a contract to purchase a higher model “Pagani Huayra BC” (“Pag 2”) at the much higher price of over EUR2 million. The question is whether Jip purchased Pag 1 and later Pag 2 from the Plaintiff or the Defendant and, if from the Plaintiff, whether the Plaintiff had entered into a “back to back” contract with the Defendant for the purchase of the car. The Plaintiff’s case is that it had entered into a “back to back” contract with the Defendant and paid 2 deposits. Since the sale and purchase of Pag 2 was aborted, its claim herein is for the return of the 2 deposits in the sums of HK$3,135,000 and EUR1,075,000 respectively.

4.Both the Plaintiff and the Defendant are and at the material time were limited companies incorporated in Hong Kong carrying on business as automotive traders. However, the Defendant was an authorized dealer of Pagani cars in Hong Kong for Pagani Worldwide LLC (“Pagani[1]”). The Plaintiff was not, although by a “Motor Vehicle Sales Letter of Appointment” dated 28 January 2015, the Defendant appointed the Plaintiff as a Pagani vehicle sales distributor since 2014.

5.The 2 main protagonists and witnesses in this case are (i) Mr Tam Wai Ming (“Tam”)[2]on the Plaintiff’s side and (ii) Mr Nelson Woo (“Woo”) on the Defendant’s side. A second witness for the Plaintiff is Mr Chan Yau Ming (“Ming”), usually referred to in the materials before this court as “Ah Ming” or “Ming Gor”. Ming was the full time personal assistant of Jip since 2012 until his demise in 2015. After Jip died, Ming still took care of his home and his cars. Presently, he is working for Jip’s family company.

6.The Defendant was incorporated in 2004. Woo has been the Defendant’s Managing Director since 2004 and a shareholder since 2008. Tam had known Woo since 2004 when Tam worked as a supervisor of the Defendant from 2004 until 2008. After Tam had left the Defendant, he and Woo had been in contact with each other, either in a personal or business capacity.

7.In September 2013, Tam incorporated the Plaintiff as its sole founding member and director. He resigned as a director of the Plaintiff on 11 April 2014 and was replaced by a PRC resident Xue Jian Yi.

The parties’ cases

8.In summary, the Plaintiff’s case is this.

9.On or around 1 August 2014, Jip entered into a written sales and purchase agreement with the Plaintiff on the latter’s standard form for the purchase of Pag 1 for EUR1,198,000 (“P’s 1^st S&P Agreement”). The agreement provided for the payment of (i) 40% initial deposit of EUR479,200, (ii) 30% further deposit of EUR359,400 and (iii) balance 30% of EUR359,400 (on delivery in Hong Kong). P’s 1^st S&P Agreement was signed by Tam on behalf of the Plaintiff and Jip in front of Tam. After signing, Tam gave the original to Jip and kept a copy in the company. At or around the time of signing P’s 1^st S&P Agreement, the Plaintiff had received a cheque from Jip’s father for HK$5,050,000.

10.On or around 11 August 2014, Tam on behalf of the Plaintiff entered into an oral agreement with Woo on behalf of the Defendant for the purchase of Pag 1 from the Defendant at the price of EUR1,150,000 (“2014 Oral Agreement”). Pursuant to that agreement, the Plaintiff paid the Defendant HK$3,135,000 with a cashier order as deposit on or around 12 August 2014 (“P’s 1^st Deposit”).

11.On or around 30 January 2015, Jip entered into another agreement with the Plaintiff on the latter’s standard form for the purchase of Pag 2 for EUR2,350,000 (“P’s 2^nd S&P Agreement”). The agreement provided for the payment of (i) initial deposit of EUR1.8 million and (ii) balance of EUR550,000 (on delivery in Hong Kong). P’s 2^nd S&P Agreement was signed by Tam on behalf of the Plaintiff and Jip in front of Tam and Ming. After signing, Tam gave the original to Jip and kept a copy in the company.

12.Also on or around 30 January 2015, as requested by Jip’s mother, Tam attended a solicitors firm “CC Partners” to sign, which he did, a personal guarantee in favour of Jip in order to undertake and guarantee the performance of the Plaintiff’s obligations under P’s 2^nd S&P Agreement.[3]

13.Pursuant to the P’s 2^nd S&P Agreement, Ming arranged for the remittance from Jip’s family in Indonesia the deposit of EUR1.8 million into the Plaintiff’s bank account on 30 January 2015.

14.On or around 2 February 2015, Tam on behalf of the Plaintiff entered into another oral agreement with Woo on behalf of the Defendant for the purchase of Pag 2 at the price of EUR2,150,000 (“2015 Oral Agreement”). Pursuant to that agreement, on 2 February 2015, the Plaintiff paid the Defendant a further deposit of EUR1,075,000 (“P’s 2^nd Deposit”).

15.It was agreed between the Plaintiff and the Defendant that P’s 1^st and 2^nd Deposits would be deducted from the total purchase price of Pag 2 under the 2015 Oral Agreement. It was an express alternatively an implied term of the 2015 Oral Agreement that if there was no delivery of Pag 2 to the Plaintiff, the Defendant would refund P’s 1^st and 2^nd Deposits to the Plaintiff.

16.There is no dispute that there was no delivery to the Plaintiff. In this regard, it should be noted that while production of Pag 2 in Italy was said to be complete sometime in 2017, there was no delivery of Pag 2 from the factory in Italy - the reason being Pagani had cancelled the order for not having received the balance of purchase price from the Defendant despite repeated demands and had sold Pag 2 to another customer. There is a dispute between the Plaintiff and the Defendant as to who was responsible for the non-payment or late payment of the balance which led to the cancellation.

17.The Plaintiff’s claim herein is for the return of the P’s 1^st and 2^nd Deposits in the sums of HK$3,135,000 and EUR1,075,000, both by reason of the aforesaid express/ implied term of the 2015 Oral Agreement, alternatively on the basis of unjust enrichment.

18.On the other hand, the gist of the Defendant’s case is that the only contracts to purchase Pag 1 and later Pag 2 were reached between Jip and the Defendant. Tam was merely acting as a middleman to facilitate the sale and purchase - there was no contract between the Plaintiff and Jip and no oral agreement between the Plaintiff and the Defendant as alleged.

19.In about May or June 2014, Jip, often through Ming and accompanied by Tam, approached Woo to make enquiries about Pagani cars. Woo understood Tam and Ming to be the persons authorized by Jip to handle the intended purchase. Various meetings were held among the aforesaid parties.

20.By an oral agreement evidenced in writing by the Defendant’s standard form Vehicle Sales and Purchase Contract dated 11 August 2014 between the Defendant and Jip (“D’s 1^st S&P Contract”), the Defendant agreed to sell and Jip agreed to buy Pag 1 at the price of EUR1,150,000 plus options for further specifications.

21.D’s 1^st S&P Contract expressly provided for:

(1)  The payment of initial deposit in the sum of EUR300,000 or HK$3,135,000.

(2)  The payment of 40% of the price on or before May 2015;

(3)  The balance must be paid before delivery.

22.Pursuant to the aforesaid terms, a cashier order in the sum of HK$3,135,000 was issued to the Defendant as initial deposit. The Defendant’s case is that the payment was made by Jip as purchaser, not the Plaintiff.

23.Between about 11 August 2014 and 2 February 2015, a number of meetings among Jip, often through Tam and/or Ming, and Woo were held at various places including different clubhouses. During these meetings, Jip by himself and sometimes also through Tam and Ming, requested Woo to upgrade his purchase of Pag 1 to Pag 2.

24.By an oral agreement evidenced in writing by the Defendant’s standard form Vehicle Sales and Purchase Contract dated 2 February 2015 between the Defendant and Jip (“D’s 2^nd S&P Contract”), the Defendant agreed to sell and Jip agreed to buy Pag 2 at the price of EUR2,150,000 plus options for further specifications. D’s 2^nd S&P Contract superseded D’s 1^st S&P Contract.

25.D’s 2^nd S&P Contract expressly provided for:

(1)  The payment of initial deposit in the sum of EUR1,075,000.

(2)  The final payment of EUR1,075,000 plus options amount must be made before delivery.

26.It was expressly agreed between Jip and Woo of the Defendant or implied by reason of business efficacy that the deposit paid pursuant to D’s 1^st S&P Contract would be treated as part of the consideration paid pursuant to D’s 2^nd S&P Contract. There is also a term in D’s 2^nd S&P Contract, implied by reason of business efficacy, that if Jip failed to complete the purchase, the Defendant shall forfeit the deposits paid by him.

27.By order of the Plaintiff, a telegraphic transfer of EUR1,075,000 was made to the Defendant as initial deposit under D’s 2^nd S&P Contract. The Defendant’s case is that this payment was made by the Plaintiff on behalf of Jip.

28.As stated earlier, Jip passed away in December 2015. Woo was not notified of the same and communication was continued to be made through Ming and/or Tam. It was only in April 2017 that Woo was informed of Jip’s death but was reassured that the purchase of Pag 2 would proceed by Jip’s family members.

29.In around April 2017, Pagani informed the Defendant that the manufacture of Pag 2 was complete and demanded for payment of the outstanding purchase price from the Defendant in the sum of EUR1,029,281 by an invoice dated 9 April 2017. Between April and September 2017, Woo had been demanding payment of the balance of the purchase price of EUR745,900 from Jip’s family through Tam and/or Ming but to no avail.

30.As a result of the Defendant’s non-payment of the outstanding balance, on 21 September 2017, Pagani cancelled the order for Pag 2 and informed the Defendant accordingly. The Defendant then sent a letter dated 28 September 2017 to the Plaintiff (“September 2017 Letter”). The letter reads:

“Regarding your order on February 2^nd 2015 for purchasing the above vehicle from Pagani Worldwide, LLC.

This is to inform you that the above vehicle was ready for delivery from April, 2017. We have met you and discussed with you for five months. However, the balance amount has not been settled to SPS Automotive Performance (Hong Kong) Ltd ‘SPS’ over four months by your company.

Due to Pagani Worldwide, LLC, HAS NOT RECEIVED the Remaining Payment for Over Four Months, on September 21^st, 2017 Pagani CANCELLED this deal with SPS.

Hence, once SPS receives refund from Pagani Worldwide LLC., SPS will deliver refund to Bens Auto Limited.”

31.Despite the last paragraph of the letter, the Defendant’s case is that it had no intention to waive its right to forfeit the deposits paid by Jip under D’s 2^nd S&P Contract for failing to complete the agreement. Anyway, according to Woo, the deposits paid by the Defendant had been retained and kept by Pagani. The Defendant claims it is under no obligation to refund the 2 deposits whether to Jip or the Plaintiff. It also counterclaims inter alia for a declaration that it is entitled to forfeit the HK$3,135,000 and EUR1,075,000.

Deliberation

The issues and witnesses

32.The issues agreed between the parties are:

(1)  Whether there exists any valid sale and purchase agreement(s) between:

(a)  Jip and the Plaintiff;

(b)  Jip and the Defendant; and/or

(c)  the Plaintiff and the Defendant;

and on what terms.

(2)  If there exists valid sale and purchase agreement(s) between the Plaintiff and the Defendant:

(a)  whether the Plaintiff was late in making final payment to the Defendant under such sale and purchase agreement(s);

(b)  whether there is any enforceable implied term(s) in such sale and purchase agreement(s) which entitled the Defendant to forfeit the Plaintiff’s deposit(s) should the Plaintiff be late in payment;

(c)  whether the agreement was terminated and if so when;

(d)  whether the Defendant has been unjustly enriched at the expense of the Plaintiff, and if so, whether it has any applicable defence;

(e)  whether the Defendant is estopped from not refunding the Plaintiff by reason of the letter from the Defendant to the Plaintiff dated 28 September 2017; and

(f)  whether the Plaintiff is entitled to a refund from the Defendant.

33.At this stage, this court would make 3 preliminary observations.

34.First, neither party suggests that Jip had entered into valid contracts with both the Plaintiff and the Defendant for the purchase of the same car.

35.If this court should find there exists a valid contract between Jip and the Plaintiff for the purchase of Pag 2, it is more probable than not that there would be a “back to back” contract between the Plaintiff and the Defendant. This is because the Defendant was the authorised dealer in Hong Kong and there is no evidence that the Plaintiff did try to directly purchase Pag 2 from Pagani or other authorized dealers in areas outside Hong Kong, say the PRC or Taiwan.

36.On the other hand, if this court should find there exists a valid contract between the Defendant and Jip, there was no reason why the Defendant would also enter into an oral agreement with the Plaintiff for the sale of Pag 2 to the Plaintiff.

37.Second, if this court should find there was no oral agreement between the Plaintiff and the Defendant, then the Plaintiff’s case fails automatically, as Ms Wong correctly submits. The other issues are relevant only if this court should find there was an oral agreement between the Plaintiff and the Defendant.

38.Third, given the Defendant has not pleaded the existence or the terms of any agreement between the Plaintiff and itself at all, in the event the Court should rule that there was an oral agreement between the Plaintiff and the Defendant, the terms of such an agreement could only be along what the Plaintiff has pleaded in the Statement of Claim including inter alia there is an express term that the deposits paid by the Plaintiff would be refunded by the Defendant in the event of non-delivery.

39.Obviously, the Plaintiff has to make good its plea but some of the so-called agreed issues would fade away including (i) whether the Plaintiff was late in making the final payment to the Defendant (since neither party has pleaded any definite time for payment of the balance of purchase price) and (ii) whether there is an implied term which entitled the Defendant to forfeit the Plaintiff’s deposits should the Plaintiff be late in payment (since neither party has pleaded such an implied term). The issue of estoppel by reason of the 28 September 2017 letter would also become academic.

40.At the trial, the Plaintiff called 2 witnesses: Tam and Ming. The Defendant called 1 witness: Woo.

41.This court has carefully considered the manner in which the witnesses testified and assessed it against the known and undisputed circumstances of this case. But in a case like the present, this court considers it particularly important to (i) assess the inherent probabilities or otherwise of the party’s case and the contemporaneous documentary evidence and (ii) pay special attention to the testimony of the only independent witness with no interest in these proceedings viz Ming.

42.Since Jip was not available to testify in this Action, Ming, as his full time personal assistant who took care of all aspects of his daily life while he was in Hong Kong, is the best available source of information as to what Jip had or had not done and with whom he had dealt with in relation to the purchase of Pag 1 or Pag 2. In this regard, this court finds Ming a truthful witness. His answers to questions were mostly direct and to the point. There was no sign that Ming was making up his answers along the way. His testimony has withstood Ms Wong’s cross-examination. This is not surprising since there is no suggestion that he has any interest in siding with either the Plaintiff or the Defendant. In fact, there was no specific attack by Ms Wong on his credibility during cross-examination or in her closing submissions, and, to the credit of Ms Wong, quite rightly so.

Valid sale and purchase agreements between the Plaintiff and Jip

43.In this court’s view, the issue is open and shut.

44.Ms Kong submits that the Plaintiff’s case on P’s 1^st and 2^nd S&P Agreements is supported by the testimony of Tam and Ming, both of them are adamant that the only sale and purchase agreements for Pag 1 and Pag 2 were between the Plaintiff and Jip and that Jip had not entered into any contract with the Defendant. Importantly, the Plaintiff’s case is corroborated by significant contemporaneous documents as well as by the conduct of Jip, his family and Ming. This court agrees.

45.To start with, P’s 1^st and 2^nd S&P Agreements were in the Plaintiff’s standard form with the Plaintiff as seller and Jip as buyer, and signed by Tam on behalf of the Plaintiff and by Jip. Jip’s signatures on the two agreements were verified by Ming in Court. Jip’s signature on the second agreement was actually witnessed by Ming at the time. Tam gave the original agreements to Jip who passed them to Ming for safekeeping.

46.Second, the initial deposits paid under P’s 1^st and 2^nd S&P Agreements were HK$5,050,000 and EUR1,800,000 respectively.

47.For the HK$5,050,000, Jip’s father had issued a personal cheque in that amount payable to the Plaintiff. The cheque was then deposited into the Plaintiff’s bank account on 1 August 2014, the same date of P’s 1^st S&P Agreement.

48.For the EUR1,800,000, it was Ming who arranged for the transfer of that sum from Jip’s family in Indonesia to the Plaintiff’s account on 30 January 2015, the same day when P’s 2^nd S&P Agreement and Tam’s personal guarantee to Jip were entered into.[4] It should be noted that by then, Jip had paid for the Pag 2 in full, if HK$5,050,000 was converted into EUR550,000.[5]

49.Third, as stated earlier, on or around 30 January 2015, as requested by Jip’s mother, Tam attended a solicitors firm “CC Partners” to sign, which he did, a deed of guarantee in favour of Jip in order to undertake and guarantee the performance of the Plaintiff’s obligations under P’s 2^nd S&P Agreement. The guarantee was prepared by “CC Partners” and it expressly referred to Contract BA133 ie P’s 2^nd S&P Agreement. The knowledge of Jip’s mother about P’s 2^nd S&P Agreement could only have come from Jip or Ming. Tam’s willingness to give a personal guarantee to Jip can only be explained on the basis of the existence of P’s 2^nd S&P Agreement because that was what the guarantee was about. It is inconceivable that Tam would have given such a guarantee if the only contract for Pag 2 was entered into between the Defendant and Jip. If that were the case, it should be Woo, instead of Tam, who gave the personal guarantee.

50.Fourth, after Jip had passed away in December 2015, Ming told Tam that Jip’s family had wished to proceed with the purchase and keep Pag 2 in memory of Jip. Jip’s family was even willing to pay for whatever outstanding balance such as transportation costs, even though the purchase price had already been paid in full. In 2017, when Tam/the Plaintiff was in financial difficulties in paying the outstanding balance of purchase price to the Defendant, Jip’s father was also willing to lend HK$5 million to Tam at the suggestion of Ming.

51.In her closing submissions, Ms Wong stated that although the form of what she describes as “the Plaintiff’s Purported Contract 1 and Contract 2”[6] creates an illusion that Jip was purchasing Pag 2 directly from the Plaintiff, it is important that the Court should not look at these purported contracts at face value. Ms Wong further submits that the real effect of these documents is to allow the Plaintiff to earn the difference in price stated in the Plaintiff’s Purported Contract 2 and the price payable to the Defendant under what she describes as “the 2015 S&P Contract”[7]. To her credit, Ms Wong stops short of saying the 2 written contracts between the Plaintiff and Jip were forgery.

52.Nevertheless, the problem with these submissions is two-fold. First, Ms Wong acknowledges that, from the Defendant’s point of view, it had no idea about the dealings between Tam and Jip so long as Tam did have the authority from Jip to enter into the transaction. But if the Defendant had no idea about the dealings between Tam and Jip, how can Ms Wong submit that the Plaintiff’s Purported Contract 1 and Contract 2 merely creates an illusion that Jip was purchasing Pag 1 and Pag 2 directly from the Plaintiff, instead of them being legally binding contracts. Second, why Jip would be willing to assist Tam to create an illusion by signing on the 2 written agreements with the Plaintiff if, as the Defendant suggests, Tam was just a middleman or agent of Jip. If Jip wanted to pay for the service of Tam as a middleman or agent, all he had to do was to agree to pay Tam a lump sum instead of entering into 2 written agreements with the Plaintiff. The idea that Jip entered into 2 written agreements with the Plaintiff and then entered into another 2 written agreements so as to enable the Plaintiff to earn the difference in price is just too convoluted to be believable.

53.For these reasons, this court is of the firm view that there existed valid sale and purchase agreements between Jip and the Plaintiff in the form of P’s 1^st and 2^nd S&P Agreements.

Valid sale and purchase agreements between the Defendant and Jip?

54.In view of this court’s conclusion on the previous issue, the answer is also open and shut.

55.The Defendant has pleaded a defence in that it had entered into oral agreements with Jip, through Tam, as evidenced by the written contracts for the sale and purchase of Pag 1 and Pag 2 ie D’s 1^st and 2^nd S&P Contracts. In her closing submissions, Ms Wong submits that the 2 written contracts must be genuine. When the oral agreements with the Defendant were reached with Jip, there must have been some form of evidence in writing. The only documents that were available which state the terms are the standard form contracts prepared by the Defendant. There could not be another explanation why the parties could reach an agreement if there is not a single piece of document stating the terms.

56.With respect, the submission is completely circular. The Defendant’s case, which it has to prove to the satisfaction of this court, is that it had entered into oral agreements with Jip for the sale and purchase of Pag 1 and Pag 2 and relied on inter alia the 2 written contracts as evidence in support. Yet, the submission presupposes the very existence of the oral agreements and uses it to argue that the 2 written contracts must be genuine. The submission has only to be stated to be rejected.

57.It should be noted that the written contracts were in the Defendant’s standard forms with space reserved for the buyer’s and seller’s signatures. Yet, they were unsigned by either Jip or the Defendant. Notwithstanding Woo’s testimony that after D’s 1^st and 2^nd S&P Contracts were prepared by his secretary, he had passed a copy to Ming and/or Tam for them to pass to Jip, both Tam and Ming confirmed that they had not seen the 2 written contracts until they were produced by the Defendant in these proceedings.

58.Further, Woo’s testimony, when enquired by this court, is that D’s 1^st S&P Contract was agreed with Jip about or within one week prior to 11 August 2014 ie sometime between 4 and 11 August 2014, and D’s 2^nd S&P Contract was agreed with Jip within 2 days prior to the date of the contract, which would be between 31 January and 2 February 2015. By then, Jip had already signed the 2 written contracts with the Plaintiff ie P’s 1^st and 2^nd S&P Agreements and paid the full purchase price to the Plaintiff.

59.It seems to this court ludicrous to suggest that Jip would have entered into contracts with both the Plaintiff and the Defendant for the purchase of the same car(s) and neither party suggests that Jip had done so. In view of this court’s finding that there existed valid sale and purchase agreements between Jip and the Plaintiff in the form of P’s 1^st and 2^nd S&P Agreements, the Defendant’s case on D’s 1^st and 2^nd S&P Contracts must fail. Needless to say, this court has no hesitation in rejecting Woo’s testimony as wholly unbelievable.

60.In this regard, this court has not overlooked the Defendant’s closing submissions at paras 17 to 37 that because Jip was so rich, the difference between the price stated in P’s 2^nd S&P Agreement ie EUR2,350,000 and D’s 2^nd S&P Contract ie EUR2,150,000 might not have been noticeable to Jip. Also, Ms Wong submits that Jip might have been prevented from knowing about the difference in price between EUR2,350,000 and EUR2,150,000 because Tam/the Plaintiff was acting as a middleman and did not convey to Jip the difference. But it is difficult to see how these submissions assist the Defendant in overcoming the inherent improbabilities that Jip would have entered into oral agreements with the Defendant for the same car(s) days after he had executed P’s 1^st and 2^nd S&P Agreements with the Plaintiff and paid the Plaintiff in full. Once Tam, on behalf of the Plaintiff, had secured valid sale and purchase agreements with Jip, why should Tam then act as Jip’s agent to enter into oral agreements with the Defendant for the same Pag 1 or Pag 2.

61.To conclude, the submissions that there were valid sale and purchase agreements between the Defendant and Jip are hopeless and must be rejected.

Oral Agreements between the Plaintiff and the Defendant

62.As this court observes earlier, if there exist valid contracts between Jip and the Plaintiff for the purchase of Pag 1 or Pag 2, it is more probable than not that there would be “back to back” contracts between the Plaintiff and the Defendant. This is because the Defendant was the authorised dealer in Hong Kong and there is no evidence that the Plaintiff tried to directly purchase Pag 1 or Pag 2 from Pagani or other authorized dealers in areas outside Hong Kong, say the PRC or Taiwan.

63.Importantly, it makes sense for the Plaintiff to enter into the oral agreements with the Defendant, given the undisputed commercial background and personal history between Tam and Woo.

64.First, Tam used to work in the Defendant between 2004 and 2008 and got to know Woo there. Even after Tam had left the Defendant’s employment, he maintained personal and business contact with Woo. By 2014, Tam and Woo would have known each other for a decade. Second, it is common ground that on 28 January 2015, at the request of Tam, Woo on behalf of the Defendant issued a “Motor Vehicle Sales Letter of Appointment” to the Plaintiff to confirm the Plaintiff had been appointed as a Pagani vehicle sales distributor since 2014. It is also Woo’s evidence in his supplemental witness statement that as at the date of the said letter of appointment, the Plaintiff and the Defendant had cooperated in arranging the sale and purchase of around 30-40 cars.

65.The existence of the oral agreements between the Plaintiff and the Defendant is not merely supported by Tam’s testimony, but it is also supported by the undisputed contemporaneous documents. They show that after entering into the 2014 Oral Agreement, the Plaintiff used money in its own HSBC bank account to purchase a cashier order in the sum of HK$3,135,000 in favour of the Defendant on 12 August 2014 as deposit. Similarly, after entering into the 2015 Oral Agreement, the Plaintiff telegraphic transferred EUR1,075,000 from its HSBC bank account to the Defendant’s bank account at BNP Paribas as deposit. As this court has rejected the Defendant’s case that there were valid sale and purchase agreements between the Defendant and Jip, these payments of deposits cannot be explained as payments by the Plaintiff as agent on behalf of Jip, even though the amount of the deposits were the same as those set out in D’s 1^st and 2^nd S&P Contracts. Rather, this court finds that these payments were made by the Plaintiff in its own right and with its own money.

66.In her closing submissions, Ms Wong submits that the Plaintiff’s version of “oral agreements” is implausible. The gist of Ms Wong’s submission is that for such an expensive car like Pag 2, it is unbelievable that no written contract exists to set out the terms in full. In so far as Tam’s explanation in his witness statement is that he trusted Woo and had not insisted on signing any formal sales and purchase agreement between the Plaintiff and the Defendant, Ms Wong also criticizes this explanation as highly unbelievable.

67.Ms Wong goes on to submit that the Statement of Claim only pleaded an oral agreement with the price and the model “Pagani Huayra BC” ie Pag 2. But that is not quite right. Ms Kong, for the Plaintiff, has in fact pleaded 3 more terms: (i) a deposit of EUR1,075,000; (ii) P’s 1^st and 2^nd Deposits would be deducted from the total purchase price of Pag 2 and (iii) if there was no delivery of Pag 2 to the Plaintiff, the Defendant would refund P’s 1^st and 2^nd Deposits to the Plaintiff.

68.If there were further terms to the oral agreement, obviously the pleader should have pleaded those terms in the Statement of Claim in so far as they are material to the claim. But if not, then the Plaintiff will just have to establish its claim based on what had been agreed. It should be noted that it is Tam’s testimony at para 27 of Tam 1 that:

“By reason of Pagani vehicles being made to order, there was no specific date of delivery. From my personal experience, the manufacturing process would take around 2 or more years. Given the Plaintiff and the Defendant has[sic] never signed any formal sales and purchase agreement, there was no agreement made as to when the Plaintiff should pay the outstanding amount of the purchase price (being €745,900) to the Defendant.”

69.If the parties had not reached any agreement as to the date of delivery of Pag 2 or the date for payment of the outstanding balance of purchase price, there is nothing more for the pleader to plead. But that does not make the Plaintiff’s case on the oral agreement with the Defendant implausible.

70.All in all, this court is satisfied that there was an oral agreement between the Plaintiff and the Defendant in relation to the purchase of Pag 1 which was substituted by another oral agreement in relation to the purchase of Pag 2. In other words, this court accepts Tam’s testimony and rejects Woo’s testimony as unbelievable.

71.At paragraph 30 of the Defendant’s Counterclaim, it is pleaded that if, which is denied, the Plaintiff is a party to the 2015 S&P Contract ie D’s 2^nd S&P Contract, it is averred that the Plaintiff had breached the 2015 S&P Contract by failing to complete the same. At paragraph 31 of the Defendant’s Counterclaim, it is further averred that by reasons of the implied term of the 2015 S&P Contract, the Defendant is entitled to forfeit the deposits of HK$3,135,000 and EUR1,075,000.

72.However, these are all hypothetical averments and the Defendant has not pleaded or proved any facts which explain how the Plaintiff had become a party to that contract instead of Jip. The pleas are in fact contradicted by the testimony of Woo and the Defendant’s documentary evidence, including in particular the 2 written contracts which are said to evidence D’s 1^st and 2^nd S&P Contracts with Jip.

73.As for the terms of the oral agreement, as explained by this court earlier, they could only be along the lines of what the Plaintiff has pleaded in the Statement of Claim.

74.For the present purpose, the most important term pleaded by the Plaintiff, and supported by the testimony of Tam, is that if there was no delivery of Pag 2 to the Plaintiff for whatever reason, the Defendant would refund all deposits to the Plaintiff. Having rejected Woo’s denial of the oral agreements between the Plaintiff and Defendant as unbelievable, this court is satisfied that there was such an express term in the 2015 Oral Agreement on the basis of Tam’s testimony which this court accepts. If so, the Plaintiff is entitled to a refund of the sums of HK$3,135,000 and EUR1,075,000.

Whether the Plaintiff was late in making the final payment to the Defendant and whether there is any enforceable implied term which entitled the Defendant to forfeit the Plaintiff’s deposit(s) should it be late

75.Neither party has pleaded any definite time for payment of the balance of purchase price for Pag 2. As Ms Kong submits in her closing, the prerequisite for “lateness” is an agreed time between the parties for payment of the balance and the failure of one party to pay before such time. Without such agreed time, whether express or implied, any accusation of lateness must fail. This court agrees.

76.Nor have the parties pleaded or conceded any implied term which would entitle the Defendant to forfeit the Plaintiff’s deposits should the Plaintiff be “late” in payment. In this regard, the only implied term pleaded by the Defendant is that in D’s 2^nd S&P Contract with Jip, not with the Plaintiff, there was an implied term that if Jip failed to complete the purchase, the Defendant shall forfeit the deposits paid by him. But this court has found no contract between the Defendant and Jip and no deposits had been paid by Jip to the Defendant.

77.In these circumstances, the short answer is that the Plaintiff was not late in making the final payment to the Defendant under the 2015 Oral Agreement and there is no implied term which would entitle the Defendant to forfeit the Plaintiff’s deposits.

Whether the agreement between the Plaintiff and the Defendant was terminated and when

78.This is an immaterial issue despite what the parties had agreed, save for the calculation of interest. The fact is that Pag 2 was never delivered by the Defendant to the Plaintiff and in the September 2017 Letter, the Defendant had made it clear to the Plaintiff that there would be no delivery of Pag 2 - the only matter left was the refund of the deposits paid. Obviously the agreement between the Plaintiff and the Defendant had been terminated by the September 2017 letter. Hence 28 September 2017 would be the date of termination.

Unjust Enrichment

79.This court has already made a finding that there was an express term in the 2015 Oral Agreement that if there was no delivery of Pag 2 to the Plaintiff for whatever reason, the Defendant would refund all deposits to the Plaintiff. This court has also come to the conclusion that, on the basis of the said express term, the Plaintiff is entitled to a refund of the sums of HK$3,135,000 and EUR1,075,000.

80.Nevertheless, this court should point out that in Ms Wong’s Opening submissions at paras 21 and 39, she submits that “[t]he legal basis for refunding money advanced is restitution on the basis of unjust enrichment. The Plaintiff must show enrichment at the expense of the Plaintiff. Here, any enrichment was at the expense of [Jip] but not the Plaintiff” and that “it is clear that the Plaintiff is not entitled to the Claimed Deposits which was[sic] not received by the Defendant at the expense of the Plaintiff. Instead, it was received at the expense of [Jip]. The Plaintiff’s claim shall fail on this basis alone.”

81.Since this court has made a finding that the payments of HK$3,135,000 and EUR1,075,000 were made by the Plaintiff in its own right and with its own money, Ms Wong’s aforesaid submission must be rejected. If so, the Plaintiff’s alternative claim based on unjust enrichment also succeeds on the facts as found.

Estoppel by the September 2017 Letter

82.By reason of this court’s findings aforesaid, this issue has become academic.

Conclusion

83.For all the above reasons, the Plaintiff is entitled to a refund of the sums of HK$3,135,000 and EUR1,075,000 from the Defendant.

Disposition and costs

84.There shall be judgment in favour of the Plaintiff against the Defendant in the sums of HK$3,135,000 and EUR1,075,000 together with interest at the rate of Prime plus 1% from 28 September 2017 until judgment and thereafter at judgment rate until payment.

85.The Defendant’s counterclaim is hereby dismissed.

86.The parties having agreed that costs should follow the event, there shall also be an order that costs of the Action be to the Plaintiff, to be taxed if not agreed, and paid by the Defendant forthwith, certificate for counsel.

Ms Cindy Kong, instructed by Mandy Wan & Co, for the Plaintiff

Ms Carol Wong, instructed by King & Co, for the Defendant