Best Foodstuff Ltd v. Miumi International Food Company Ltd

DCCJ 2565/2022

[2025] HKDC 464

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2565 OF 2022

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BETWEEN

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JUDGMENT

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A. Introduction

1.This is the trial of the plaintiff’s claim against the defendant for breach of alleged contract(s).

2.The plaintiff claims to have manufactured and supplied 30,400 items of beef hamburgers[1] and 1,000 items of pork hamburgers (the “Subject Food Products”), which are worth a total sum of $607,800, and which the defendant has allegedly collected, but refused to pay for.

3.The defendant[2] denies ever purchasing or accepting delivery of the Subject Food Products, and accordingly denies liability to pay for them.

B. Defects in the Plaintiff’s pleaded case

4.The basic requirements for a contract are trite. Those requirements are that (1) the parties have reached an agreement, and that happens when one party makes an offer which the other accepts, which is (2) intended to be legally binding, (3) supported by consideration, and (4) sufficiently certain and complete to be enforceable. See: Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923, paras 17, 22.

5.In Himark Martin Tailors Ltd v Singh Arvinder & ors [2022] HKCFI 3427, para 15, the Court held that:

“In general, the pleading should state the date of the alleged agreement, the names of all parties to it, and whether it was made orally or in writing, in the former case stating by whom it was made and in the latter case identifying the document, and in all case setting out the relevant terms relied on…”

6.Whilst the plaintiff’s case rests on breach of contract, it is unclear from the pleadings what exactly the alleged contract(s) are. In its counsel Mr Richard Sham (who appeared with Ms Hannah Tang)’s oral opening submissions, Mr Sham submitted that the alleged contract(s) were pleaded in paragraphs 1(c) and 2 of the Statement of Claim, where he pleaded that:

“1(c). The Plaintiff and the Defendant had previous business dealings in which the Defendant, via its manager named Eric Chan and/or its director named Chan Ka Chung (“KC Chan”), would contact the staff of the Plaintiff named “Ling” to confirm unit price and place orders to buy certain food products mainly beef hamburgers, and then the Plaintiff would manufacture and sell the food products to the Defendant and the Defendant would arrange transportation to pick up the food products from the Plaintiff’s warehouse in Fanling, New Territories. The Defendant’s truck drivers named “朱立新” and/or “陳志雲” and/or “街車德哥” would sign the delivery note issued by the Plaintiff to confirm receipt of the food products when the Defendant picked up the food products, and the Plaintiff would issue the invoice to the Defendant for payment of the food products by direct deposit to the Plaintiff’s bank account on the date of delivery or invoice. (“Terms of the Contract of Sale”)

2. In performance of the Terms of the Contract of Sale, the Plaintiff had manufactured and supplied the food products to the Defendant pursuant to the Defendant’s orders and the Defendant had arranged transportation to pick up the food products and had confirmed the receipt of the food products for the period between 3 May 2021 and 5 July 2021 as follows:

No.	Date of Delivery/ Pick-up	Date of Invoice	Description of food products	Unit price (HK$)	Quantity (Quantity/ Carton)	Invoiced amount (HK$)
1	3/5/2021	3/5/2021	Beef hamburgers	19.50	4,000	$78,000
2	3/5/2021	12/5/2021	Pork hamburgers	15.00	1,000	$15,000
3	15/5/2021	15/5/2021	Beef hamburgers	19.50	4,000	$78,000
4	27/5/2021	27/5/2021	Beef hamburgers	19.50	5,400	$105,300
5	3/6/2021	4/6/2021	Beef hamburgers	19.50	4,700	$91,650
6	16/6/2021	16/6/2021	Beef hamburgers	19.50	4,300	$83,850
7	22/6/2021	22/6/2021	Beef hamburgers	19.50	4,000	$78,000
8	3/7/2021	5/7/2021	Beef hamburgers	19.50	4,000	$78,000
Total Outstanding Amount:						$607,800”

7.As pointed out by the defendant’s counsel Mr Adrian Kwan, nowhere in the Statement of Claim does the plaintiff aver anything on the provenance of the alleged contract(s) in respect of the Subject Food Products. In particular, there is no plea as to:

(a) When the Subject Food Products were ordered;

(b) How many orders or alleged contracts there were;

(c) What exactly each order was for;

(d) How the orders were placed – whether the alleged contract(s) are written, oral, or something else;

(e) Who represented the defendant in placing the orders specifically for the Subject Food Products; and

(f) What the payment terms and conditions were for each order.

8.Clearly, these matters have to be pleaded before the Court can begin to find whether the alleged contract(s) exist between the parties. It is not enough for the plaintiff to simply plead that the Subject Food Products were delivered and invite the Court to somehow infer a contract.

9.In fact, the Court does not even know what the alleged contract(s) are, when they were made and what their terms are. I can therefore only refer to the contract(s) generally as the alleged contracts in the rest of this judgment.

10.Further, whilst the plaintiff relies on paragraph 2 of the Statement of Claim as the terms of the alleged contracts, the opening words of that paragraph expressly state that what is pleaded in that paragraph was the alleged “performance of the Terms of the Contract of Sale”. Thus, what is pleaded in paragraph 2 is the purported performance of the alleged contracts by the parties, and not the terms of the alleged contracts. The terms of the alleged contract remain unpleaded.

11.During Mr Sham’s oral opening submissions, when being asked to address the above defects in the Statement of Claim, he:

(a) accepted that the date on which the Subject Food Products were ordered is not pleaded;

(b) submitted that the alleged orders are those 8 items pleaded in paragraph 2 of the Statement of Claim ( “Item 1” to “Item 8” respectively, and collectively, the “8 Items”);

(c) accepted that it was not pleaded which of Eric Chan (who was the defendant’s manager) and KC Chan (who was the defendant’s director) ordered each of the 8 Items, nor is this referred to in the witness statements filed by the plaintiff;

(d) claimed that the “previous business dealings” mentioned in the Statement of Claim were not actually with the plaintiff, but with the plaintiff’s predecessor, which was an unlimited company known as Best Foodstuff Company (“Best Foodstuff”). Mr Sham nonetheless invited the Court to conflate the two as being the same entity. This cannot be right. There is no dispute that the plaintiff was only incorporated on 7 April 2021 and did not exist before then.

12.Mr Sham submitted that, based on his instructions:

(a) All 8 Items were ordered by KC Chan by telephoning Lo Chui Ling (“Ling”) of the plaintiff at a date approximately one week before the delivery date of each of those 8 Items.

(b) Despite what is pleaded, Eric Chan had no part to play in placing orders for those 8 Items.

(c) The payment terms and conditions were agreed over the phone and stated in the invoices. At first, Mr Sham said that the defendant should make payment directly to the plaintiff’s bank account on the date of delivery or date of invoice. He later on submitted that payment should be made within a reasonable time after the date of delivery or date of invoice instead.

(d) The alleged contracts were made partly orally and partly in writing with the terms of payment stated in the invoices. It is however unclear as to how the defendant accepted the terms of the alleged contracts, as this is not pleaded.

(e) He later on changed his case and said that the alleged contracts were entered into orally by KC Chan and Ling. All terms of the alleged contracts, including price, food product, quantity and date of delivery, were agreed orally in the telephone conversations.

None of Mr Sham’s submissions above were pleaded, and they therefore do not form part of the plaintiff’s pleaded case.

13.The above defects in the Statement of Claim only came to this Court’s notice very shortly before the first day of trial. Order 1B r 2 of the Rules of the District Court (Cap 336H) requires the Court to give the parties at least 3 days’ notice of a hearing to decide whether the Court would make any order on its own motion. Had there been sufficient time, this Court would have proposed to hold a hearing to decide whether to make an order to strike out the Statement of Claim on its own motion for disclosing no reasonable cause of action.

14.Putting aside the question of striking out, for all the reasons above, I find that the plaintiff has failed to show even a prima facie case on pleadings that the alleged contracts for the sale and purchase of the Subject Food Products exist.

15.If I am wrong about that, I set out below my view on the plaintiff’s evidence.

C. Relevant legal principles on contract

16.Whilst there is no legal requirement that a contract must be concluded in writing, or be evidenced in some form of written record, “it is obvious that the absence of a written record may make the existence and terms of a contract harder to prove. Anyone with business experience will understand the value of a written record. Therefore, the absence of any written record may – depending on the circumstances – tend to suggest that no contract was in fact, concluded”: see Yu Man Fung Alice (supra), paras 18-19.

17.The relevant principles for inferring a contract from the conduct of the parties are trite and were summarised by Kwan VP in Redland Precast Concrete Products (China) Limited v Permasteelisa Hong Kong Limited [2023] HKCA 1278, para 11:

“(1) The burden of establishing such a contract is on the party asserting its existence.

(2) The court will not imply a contract from conduct lightly. There is an obvious difference between the situation where the court is asked to imply a term where there is already an existing agreement and where the court is asked to imply an agreement from scratch. The latter situation demands a stricter requirement for the implication to be made.

(3) It is not enough to show that the parties have done something more than or different from, what they were bound to do or intent on doing. It is necessary that the conduct relied upon is unequivocally referable to the contract contended for, in the sense that it is consistent only with there being the contract sought to be implied and inconsistent with there being no such contract. In other words, the party propounding the contract must be able to point to some conduct of the parties which is consistent with, and only with, the contract contended for. This is an objective test.

(4) …”

18.The above principle (3) comes from Staughton LJ’s judgment in Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311, p 320, where his Lordship put the requirement of unequivocality in the following terms:

“… it is not enough to show that the parties have done something more than or something different from, what they were already bound to do under obligations owed to others. What they do must be consistent only with there being a new contract implied, and inconsistent with there being no such contract.” [emphases added]

19.Further, as observed by Harris J in Moorthy Selvaraj v Karupayee Ammal & ors [2024] HKCFI 403, para 13:

“… although it is open to a party to pursue a claim based on an oral agreement, understanding or a recollection of an event, for which there is little, if any, corroborating documents the party should be informed that proving the claim may be very difficult because of the difficulties I have described in a court choosing between alternative narratives in the absence of contemporaneous records. The court does not have to choose who to believe; if it takes the view that the evidence is unreliable, it can decide the case on the burden of proof.”

D. The Plaintiff’s evidence

20.Having pointed out the defects in the plaintiff’s pleadings, in analysing the plaintiff’s evidence this Court bears in mind that:

“It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced.”

See: Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663, para 21.

21.Further:

“Unless and until the pleadings are properly amended, unpleaded matters raised in witness statements are irrelevant for trial and do not require to be dealt with for purposes of discovery or particulars.”

See: Hydrotech Waterproofing Solutions Ltd v Shun Yuen Construction Co Ltd [2021] HKCFI 2785, para 4.

22.Whilst the plaintiff relies on certain “previous dealings” in paragraph 1(c) of its Statement of Claim, it is not in dispute that the plaintiff was only incorporated on 7 April 2021. Prior to that, it carried on business in the form of an unlimited company known as Best Foodstuff.

23.According to the witness statements filed by the plaintiff, its case is that:

(a) Best Foodstuff had business dealings with the defendant for many years. Best Foodstuff mainly produced and sold beef hamburgers to the defendant through a wholesaler, namely Century Billion Limited (“Century Billion”). The defendant would then sell the hamburgers to retailers.

(b) Eric Chan and KC Chan would call Ling to place orders of beef hamburgers, stating the quantity and confirming the price. After the beef hamburgers were produced, Ling would inform Wan Ka Chun (“Wan”) by WhatsApp, who would then arrange for the defendant’s trucks to pick up the hamburgers from the plaintiff’s warehouse in Fanling. The defendant’s truck drivers would then sign on the delivery notes.

(c) Prior to the plaintiff’s incorporation, the defendant would first pay Century Billion, who would then pay Best Foodstuff after deducting its share of profit. As submitted by the defendant, there was therefore no obligation for the defendant to pay Best Foodstuff.

(d) After the plaintiff’s incorporation, Madam Cho instructed Ling to call Eric Chan to inform him that for products delivered in May 2021 onwards, the purchase price should be deposited directly into the plaintiff’s bank account maintained with HSBC. Eric Chan agreed.

24.As pointed out by Mr Kwan, the alleged giving of payment directive to Eric Chan by Ling changes the modus operandi of the parties. It was from this point onwards that the defendant became obliged to pay the plaintiff for the hamburgers for the first time. Prior to this point, the mere delivery of hamburgers did not give rise to any obligation on the defendant’s part to pay Best Foodstuff / the plaintiff.

25.However, this material fact was never pleaded. The Court refers to the legal principles on the importance of pleadings explained above.

26.In fact, the change of modus operandi is inconsistent with the alleged “previous business dealings” pleaded in paragraph 1(c) of the Statement of Claim. This is because, contrary to what is pleaded, the “previous business dealings” were that the defendant was purchasing the plaintiff’s hamburgers through Century Billion and was only obliged to pay Century Billion. There was no contractual relationship between the plaintiff / Best Foodstuff and the defendant.

27.It is undisputed that there is no purchase order or any other contemporaneous record of the alleged placing of order for any of the Subject Food Products by Eric Chan or KC Chan. In this regard, as observed by DHCJ Jin Pao SC in Leung Chin Sing, Rabo & anor v Ko Chun Hay, Kelvin [2021] HKCFI 2242, para 42:

“It is rare in modern commercial litigation to encounter a claim based on an agreement which is not only said to have been purely by word of mouth but of which there is no contemporaneous documentary record of any kind. The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint… Because the value of a written record is understood by anyone with business experience, its absence may, depending on the circumstances, tend to suggest that no contract was concluded…”

28.The only relevant documents relied on by the plaintiff which are referable to the Subject Food Products are the WhatsApp messages between Ling and Wan, invoices and the delivery notes. However:

(a) The WhatsApp communications between Wan and Ling concerning the picking up of the deliveries merely show that the defendant was asked to pick up some food products from the plaintiff. They do not show that the alleged orders were made by the defendant or that there existed a contract between the parties for the sale.

(b) There is no evidence of how those invoices were allegedly sent by Ling to Eric Chan. There is no email, Whatsapp record or fax transmission report.

(c) Although there is a designated space for the defendant’s authorised signature and company chop in all of those invoices, none of them was signed or chopped by the defendant. This is the plaintiff’s own document. If the defendant has never signed or affixed any chop on the invoices and there was no need for it to do so, then why would the plaintiff consistently designate such a space for the defendant’s authorised signature and company chop in all those invoices.

(d) As to the delivery notes, whilst they contain illegible signatures, it is unclear who signed them. In this regard, this Court notes that the defendant does not admit that any of the alleged named drivers[3] has signed the delivery notes and denies that they had authority to confirm receipt of food products on behalf of the defendant.

(e) It is clear from the delivery notes that not all products allegedly delivered were for the defendant, as some were expressly stated to have to be passed to John or Leona, both of Century Billion.

(f) The purported delivery note dated 3 May 2021 for Item 2 (which does not provide for any pork hamburgers for the defendant) does not match with the purported invoice dated 12 May 2021 (which states a quantity of 1,000 items of pork hamburgers).

(g) For Item 5, the date on which the driver purportedly picked up the food products and signed on the delivery note, ie 5 June 2021, does not match with the date of delivery pleaded in the Statement of Claim, ie 3 June 2021.

29.The plaintiff called three witnesses at trial:

(a) Madam Cho Lai Ngan (“Madam Cho”), who is the director and shareholder of the plaintiff;

(b) Ling, who is the plaintiff’s clerk; and

(c) Wan, who was the defendant’s former employee.

PW1 – Madam Cho

30.Madam Cho is an evasive witness. She was determined to tell the Court only matters that she wanted to tell. When being asked about matters which she sensed may weaken the plaintiff’s case, she would tell the Court to ask Ling. She even said that she was worried about answering a question wrongly, and so she would not answer it and would leave it to Ling.

31.She was mainly responsible for the production side of Best Foodstuff / the plaintiff and has left the operation side of the business to Ling. She said that her education level is low. She does not know many words and cannot read or understand the documents, nor does she know how to use the computer or to search for documents in the computer.

32.I find Madam Cho’s evidence that there is no written record for any of the 8 Items unbelievable. According to her:

(a) Best Foodstuff / the plaintiff produces around 100,000 items of beef hamburgers a month. Other than that, they also produce many other products, such as lamb slices, lobsters, and a few types of fish.

(b) Ling allegedly took all the orders over the phone. She would write down the names of the company who ordered the products, the products, the quantities and the delivery dates on the blackboard.

(c) Madam Cho would only look at the blackboard to see what she has to produce.

(d) Ling would not write down the date on which the food products were ordered on the blackboard.

(e) The blackboard would be erased once a month, and sometimes half a month, when half of it would be erased and items would be moved upwards.

33.During her cross-examination, on the topic of whether there is any written record for the 8 Items, Madam Cho:

(a) sometimes said that there was none;

(b) other times she said one has to ask Ling about it;

(c) some other times she said there are some documents but she does not know how to read them.

34.On the topic of who within the defendant placed the orders with Ling, Madam Cho’s evidence evolves throughout her cross-examination.

(a) In the beginning, she said that Ling would only put down the name of the company who ordered the products on the blackboard, but not the individual in the company who called her.

(b) She said that Ling would not tell her the name of the person who ordered it, nor would Madam Cho ask Ling for such information.

(c) When it was pointed out to her that she stated in her witness statement that it was mostly Eric Chan and KC Chan who placed the orders with Ling, she changed her evidence to saying that she knew it was them who ordered the products.

(d) Later on, she changed her evidence again and said sometimes Ling would tell her who placed the orders, then she would know. But sometimes Ling would not tell her about it. Other times Ling would write it down on the blackboard.

(e) But when it comes to Century Billion’s order, inexplicably she said Ling would act differently and only write Century Billion’s name on the blackboard, but not the name of the individual who ordered the products.

She was clearly making up her evidence and changing it as she goes along.

35.On the topic of the lack of purchase orders for the 8 Items, first, Madam Cho’s evidence that there was not a single purchase order from the defendant is contradicted by the two purchaser orders placed by the defendant with Best Foodstuff respectively dated 29 December 2016 and 7 January 2017 (the “two said purchase orders”).

36.Secondly, Madam Cho’s evidence is inconsistent.

(a) At first, Madam Cho was adamant that Best Foodstuff / the plaintiff has never received any purchase orders from the defendant.

(b) Later on, when being shown the two said purchase orders, she did not deny receiving them, but resorted to saying that one has to ask Ling about whether there are other purchase orders.

(c) In re-examination, Madam Cho stated that Best Foodstuff / the plaintiff did not receive the two said purchase orders.

37.Thirdly, Madam Cho admitted that the two cheques dated respectively 26 January 2017 and 17 February 2017 issued by the defendant to Best Foodstuff were duly received. The amount on the cheques is exactly the same as the amount stated in the two said purchase orders. This shows that even before the incorporation of the plaintiff, the defendant would pay Best Foodstuff directly by cheques. This casts serious doubt on the plaintiff’s case that all along prior to its incorporation, the defendant would pay the middleman Century Billion, who would be responsible for paying Best Foodstuff.

38.Finally, it is unbelievable that Madam Cho would know that Best Foodstuff had never received the two said purchase orders from the defendant. It is her evidence that all documents were handled by Ling and she does not understand the documents. This begs the question as to how she would know whether Best Foodstuff / the plaintiff had received the two said purchase orders. Further, the purchase orders are in English. This makes it all the more unlikely for Madam Cho to be able understand what they are about, before she could even tell whether Best Foodstuff had received them.

39.It is Madam Cho’s evidence that on 1 December 2021, she asked John Liu of Century Billion why Century Billion still had not paid the plaintiff for the 8 Items, rather than the defendant. According to her, John Liu said the defendant told them that the defendant was not doing well. Therefore, John had allowed the defendant to postpone payment, and this had led to the 8 Items remaining unpaid.

40.Whilst Madam Cho disagreed that the 8 Items were ordered by Century Billion, it is inexplicable as to why she would chase Century Billion for payment of the 8 Items. The only implication of her chasing Century Billion for payment of the 8 items is that they were ordered by Century Billion, who is liable for such payment.

41.Although Madam Cho later on tried to explain that she was merely trying to find out about the situation of the defendant from Century Billion, this is inconsistent with her evidence that she asked John Liu why Century Billion had failed to pay the plaintiff for the 8 Items, rather than the defendant.

42.This is also consistent with the audio recording of the meeting on 2 December 2021 (the “2/12/21 Meeting”), when Madam Cho attended a meeting at the defendant’s office with the defendant’s senior management. During the meeting, Madam Cho said[4] that John of Century Billion told her that the defendant could not pay him, and Madam Cho would have to chase for the payment herself because the relationship between Century Billion and the plaintiff has terminated.

43.This shows that the defendant was supposed to pay Century Billion, not the plaintiff, for the 8 Items.

44.The plaintiff complained about the secret recording of the conversations in the 2/12/21 Meeting. Whilst I accept that there may be limitations to the probative value and weight of the recording, this depends on all the circumstances of the case. Here, it is not Madam Cho’s evidence or the plaintiff’s case that the recording was inaccurate, nor does Madam Cho resile from what is stated in the recording. Madam Cho merely contended that she had said something else which was not recorded, ie Moon Tsen and Thomas Chui of the defendant’s senior management admitted receiving the Subject Food Products and having paid Century Billion for the same, and they asked Madam Cho to chase Century Billion for payment. I will deal with this when I come to the defendant’s witness Ms Yan Sui Shan (“Ms Yan”)’s evidence below.

45.For the reasons above, I find Madam Cho an incredible, unreliable and unbelievable witness.

PW2 – Ling

46.Ling is responsible for receiving orders for Best Foodstuff’s / the plaintiff’s products, informing clients when to collect the products and issuing invoices to them.

47.According to her, she only takes orders over the phone. Then she will write down the orders on the whiteboard in the office, which is cleaned once every 2 to 3 weeks. This is inconsistent with Madam Cho’s evidence that the orders are written on the blackboard in the office. It is inconceivable that if there is such an important board in the office on which all orders are written, Madam Cho and Ling would mix up its colour.

48.Ling said there is no other form of record of any of the orders made with Best Foodstuff / the plaintiff – no email, WhatsApp or any other form of written record. This is so even though:

(a) Best Foodstuff / the plaintiff produces around 50,000 to 60,000 items of beef hamburgers a month, alongside other products such as beef slices, lamb slices and seafood.

(b) Best Foodstuff / the plaintiff has over 20 clients, with some of them ordering as often as once a week, and others ordering around once every 2 weeks or one month.

49.I find the plaintiff’s case that all orders of the entire business are written on the blackboard / whiteboard, with no other form of written record, and that its clients, including the defendant, have never sent them any purchase orders utterly unbelievable.

(a) First, putting aside the inconsistency between Madam Cho’s and Ling’s evidence, it defies common and commercial sense that a company producing around 100,000 items (according to Madam Cho) or 50,000 to 60,000 items (according to Ling) of beef hamburgers a month, alongside other products, and with over 20 different customers, would only write those orders on a blackboard / whiteboard. See Leung Chin Sing Rabo (supra), para 42.

(b) This is especially so when Madam Cho and Ling said the blackboard / whiteboard would be cleaned around once every two weeks. This Court struggles to understand how it is possible for Best Foodstuff / the plaintiff to have an accurate record of all the orders when there are so many orders for different products from so many different customers at different times and frequencies.

(c) According to Madam Cho, Ling would not even write down the date of the orders on the blackboard, and depending on which version of her evidence we are looking at, Ling would not even write down the name of the contact person on the blackboard. This makes no commercial sense at all. How then can anyone follow up with the orders, schedule deliveries and issue invoices.

(d) Secondly, the plaintiff’s case that it has never received any purchase orders from any customer, including the defendant, is flatly contradicted by the production of the two said purchase orders by the defendant. It is Madam Cho’s evidence that she has received payment from the defendant by two cheques. As mentioned above, the sums stated in those two purchase orders are exactly the same as the amount paid for by those two cheques drawn roughly a month after the issuance of the two said purchase orders.

(e) Thirdly, there is clear evidence of email communications between Ling and Eric Chan and the defendant’s accountant Ellen Chan in March 2020 in relation to the defendant’s order of certain labels. Such transaction is well documented by emails, invoice and cheque paid by the defendant to Best Foodstuff. The presence of email communications and documents for this transaction renders Ling’s evidence of there being absolutely no written record for any orders unbelievable.

50.On the topic of who placed orders with her, Ling’s evidence is inconsistent.

(a) In her witness statement, she stated that in all these years, the orders were mainly placed by Eric Chan or KC Chan.

(b) During cross-examination, she first said it was Eric Chan and KC Chan who placed orders with her whether before or after the plaintiff was incorporated.

(c) Later on, she said that before the plaintiff’s incorporation, all orders delivered to the defendant were placed by John Liu of Century Billion, and not Eric Chan or KC Chan.

(d) When it was pointed out to her that this is inconsistent with what she stated in her witness statement, she tried to correct herself by saying that normally it was KC Chan who called her and placed the orders, and John Liu only rarely participated in placing orders, around one out of 10 times.

51.Putting aside the fact that it this is unpleaded, and therefore irrelevant, Ling’s evidence on her informing Eric Chan about the change of modus operandi after the plaintiff’s incorporation is also inconsistent.

(a) In her witness statement, she stated that after the incorporation on 7 April 2021, Madam Cho instructed her to call Eric Chan to request that for products delivered from May 2021 onwards, payment should be made by way of direct payment into the plaintiff’s HSBC account numbered 454-822362-838. Eric Chan said there was no problem as this could eliminate the need to pay Century Billion.

(b) During cross-examination, Ling said she made that phone call to KC Chan, rather than Eric Chan as stated in her witness statement.

(c) Ling further said that she made that phone call one to two days after the incorporation. As to the reason why the change of modus operandi would only take place for orders delivered in May 2021 onwards, she said that was because it took time to set up the company’s bank account.

(d) The Court then asked if the bank account was not set up yet, how she could give the account number to Eric Chan as alleged in the witness statement. She accepted that it was not possible for her to give the account number in the phone call as alleged and she said that the account number was only given when it was stated on the invoices.

(e) When being asked whether she made another call to Eric Chan to inform him when the bank account was set up so that the change of modus operandi could take place. She said no. This makes no sense especially when her evidence is that the defendant was still placing orders through Century Billion in April 2021, the payment of which was to be made to Century Billion.

(f) In fact, given that the defendant allegedly placed orders with the plaintiff every week, and it normally takes the plaintiff one week to produce the products, the order for Item 1 allegedly delivered on 3 May 2021 would have been placed before the change of modus operandi when the defendant remained obliged to pay Century Billion. It defies common sense for Ling not to inform Eric Chan about when the bank account was set up so that the change of modus operandi could take place.

(g) Clearly, all three parties would require clarity as to when exactly the change of modus operandi, which would result in important changes in the parties’ commercial relationship and payment obligations, was to take place.

52.All in all, for the reasons above, I find Ling an unbelievable and unreliable witness.

PW3 – Wan

53.Wan was the defendant’s employee. His evidence is limited in scope. According to him, after becoming the defendant’s warehouse supervisor in around 2015/16, whenever the defendant did not have enough hamburgers, he would order some from Ling after informing his supervisor KC Chan about it. He said KC Chan had authorised him to contact Ling to ask her to produce more hamburgers. When the hamburgers were ready to be collected, Ling would inform Wan, who would then inform his supervisor “Ho Gor”, and Ho Gor would arrange a truck to collect the hamburgers.

54.I find that Wan is a generally honest witness. In any event, apart from his evidence above, I do not consider his evidence to be particularly controversial.

Analysis

55.All in all, I find the plaintiff’s case unbelievable:

(a) First and foremost, almost all of the plaintiff’s evidence in the witness statements and its witnesses’ oral evidence goes to issues beyond the scope of the pleadings. As explained above, unpleaded matters are irrelevant and inadmissible.

(b) In any event, the plaintiff’s case rests on the defendant’s Eric Chan and KC Chan placing orders with Ling over the phone. This is not supported by any contemporaneous evidence – no WhatsApp messages, emails, fax, or any form of written record. This is also contradicted by the two said purchase orders sent by the defendant to Best Foodstuff and certain email correspondence between Ling and Ellen Chan and Eric Chan of the defendant in relation to the ordering of food labels.

(c) It is inconceivable for the plaintiff to have accepted orders from the defendant for 4,000 pieces of hamburger per week and around 20,000 pieces of hamburgers per month without any written record other than the blackboard or whiteboard.

(d) The plaintiff’s case on which person in the defendant placed orders with Ling is also inconsistent.

(i) In the Statement of Claim, the plaintiff pleaded that the “previous business dealings” was that Eric Chan and/or KC Chan would place orders with Ling.

(ii) In Madam Cho’s and Ling’s respective witness statements, they both stated that Eric Chan and/or KC Chan would place orders with Ling.

(iii) In his opening submissions, Mr Sham said he was instructed that all 8 Items were ordered by KC Chan, and that Eric Chan had nothing to do with them.

(iv) During her cross-examination, Madam Cho said that it was Eric Chan who ordered the 8 Items from Ling.

(v) During her cross-examination, Ling first said it was Eric Chan and KC Chan who placed the orders whether before or after the plaintiff’s incorporation. Then she said it was John Liu of Century Billion who placed the orders for the defendant, and not Eric Chan or KC Chan. When it was pointed out to her that this is not what she stated in the witness statement, she tried to explain it away by saying that John Liu only placed orders around one out of 10 times.

(vi) In Wan’s oral evidence, he stated that whenever there was not enough hamburgers in the warehouse, he would call Ling to place orders.

There are so many versions of who placed orders with the plaintiff throughout the proceedings that I find the plaintiff’s case so inherently unbelievable.

(e) As for the invoices allegedly issued by the plaintiff to the defendant, there is no contemporaneous evidence of the plaintiff sending them to the defendant. According to Ling, the invoices were sent by her to Eric Chan mainly by fax, and sometimes by email if he asked for it. This is not supported by any contemporaneous evidence – no emails and no fax transmission reports.

(f) There is no evidence of the plaintiff ever chasing the defendant for payment of any of the 8 Items until 20 October 2021. According to Mr Sham’s instructions, the defendant should pay for the Subject Food Products on the date of the invoice or delivery or within a reasonable time from the date of invoice or delivery. It is inconceivable that if payment had been outstanding since May 2021:

(i) The plaintiff would continue to accept the defendant’s orders until July 2021; and

(ii) The plaintiff would not chase the defendant for payment until late October 2021.

(g) The plaintiff also relies heavily on the delivery notes and the WhatsApp communications between Wan and Ling. However:

(i) First, the WhatsApp communications between Wan and Ling concerning the picking up of the deliveries merely show that the defendant was asked to pick up some food products from the plaintiff. They do not show that the alleged orders were made by the defendant or that there existed a contract between the parties for the sale and purchase for what was being picked up.

(ii) Secondly, as explained above, it is clear from the delivery notes that not all products allegedly delivered were for the defendant, as some were expressly stated to have to be passed to John or Leona, both of Century Billion.

(iii) Thirdly, for Item 2, the items stated on the delivery note does not match with those stated in the corresponding invoice. It is unclear as to whether what was allegedly being picked up were in fact the Subject Food Products.

(iv) Fourthly, for Item 5, the date on which the driver purportedly picked up the food products as shown on the delivery note does not match with what is pleaded in the Statement of Claim.

(v) Finally, the Court simply cannot tell from the delivery notes who has picked up the alleged orders, nor does the plaintiff puts forward any positive case as to who picked up each order on behalf of the defendant.

(h) The evidence suggests that the defendant has been purchasing from Century Billion, instead of the plaintiff. This is consistent with what was said in the 2/12/2021 Meeting, the purchase order placed by the defendant with Century Billion dated 12 May 2021, the invoice issued by Century Billion to the defendant dated 1 March 2021[5], the payment advice issued by the defendant to Century Billion dated 29 May 2021 and the banking documents showing payment for the products.

(i) Whilst the plaintiff’s case is that the above arrangement only represented the parties’ previous course of dealing and that there was a change of modus operandi after its incorporation on 7 April 2021. First, this is not pleaded. Secondly, the Court fails to understand the reason for such change – incorporating the plaintiff does not necessitate the elimination of Century Billion. Thirdly, and in any event, according to Madam Cho’s oral evidence and the audio recording of the 2/12/2021 Meeting, Madam Cho actually chased Century Billion for payment of the 8 Items, rather than the defendant.

(j) The plaintiff relies on two sales invoices issued by the defendant to its customers and contends that the defendant was selling beef hamburgers produced by the plaintiff in June and July 2021, such that those food products must have been the Subject Food Products. However:

(i) First, despite the plaintiff’s allegation that the beef hamburgers stated on the invoices were exclusively produced by it, there is no evidence in support of such allegation.

(ii) The invoices simply refer to “wagyu hamburg beef”. There is no reference to the plaintiff at all. I do not accept that those products sold by the defendant are the beef hamburgers produced by the plaintiff.

(iii) Secondly, even if those food products were produced by the plaintiff, it does not necessarily mean that they were sold by the plaintiff to the defendant. It could be Century Billion who sold them to the defendant.

(iv) Thirdly, there is in fact evidence showing that Century Billion had sold and delivered 22,000 items of beef hamburgers to the defendant on 12 May 2021.

(k) Finally, the plaintiff placed reliance on (i) the High Court proceedings in HCA 1952/2021 in which the defendant claims against inter alios Eric Chan and KC Chan for fraud perpetrated against the defendant and (ii) KC Chan’s admission in an audio recording of his misconduct. However, nowhere in KC Chan’s purported admission refers to the plaintiff or the Subject Food Products. Further, even if Eric Chan and/or KC Chan did smuggle the defendant’s products to the Mainland, it does not mean that those were the Subject Food Products or that the alleged contracts exist between the plaintiff and the defendant.

56.Against the above background, the mere fact that some food products (if any) were delivered to the defendant is equivocal and is not unequivocally referable to the alleged contracts. Further, as mentioned above, the invoices and delivery notes relied on by the plaintiff as evidence of the alleged deliveries are not without problems in the first place.

57.The plaintiff has failed to point to any conduct of the parties which is consistent with, and only consistent with, the alleged contracts, and inconsistent with there being no such contracts.

58.Indeed, even if the defendant had taken delivery of the Subject Food Products (which the plaintiff fails to prove in any event), such conduct is consistent with the alleged previous course of dealings between the parties, whereby the plaintiff sold its food products to Century Billion, who then sold them to the defendant. The defendant only had contractual relationship with Century Billion and was not obliged to pay the plaintiff.

59.For all the reasons above, I find that the plaintiff has clearly failed to prove the existence of the alleged contracts for the sale and purchase of the Subject Food Products on the balance of probabilities.

E. The Defendant’s evidence

60.Having reached the above conclusion, it is not for the defendant to put forward any positive case and to convince the Court of the truth of it. The plaintiff’s case is so unbelievable and its evidence is so unreliable that the Court does not have to choose who to believe, and can decide the case on the burden of proof. For the sake of completeness, the Court will discuss the defendant’s evidence in the paragraphs below.

61.As mentioned above, the defendant denies the existence of the alleged contracts or that it has ever purchased or accepted delivery of the Subject Food Products. Further, the defendant does not admit that any of the alleged named drivers had signed the delivery notes and denies that one of the alleged drivers was its employee. It also denies the authority of any of the alleged drivers to confirm receipt of food products on behalf of the defendant.

62.The defendant called one witness, Ms Yan, who is the Regional Audit Manager of the defendant. Aside from a few areas of limited relevance, which I will address below, she did not take part in the defendant’s business transactions, and hence does not have personal knowledge of the dealings (if any) which form the subject matter of the documents produced by the parties.

63.That said, for matters which she has no personal knowledge of, Ms Yan fairly accepted the same, and tried her best to assist the Court by referring to the relevant documents. I find that Ms Yan is an honest and reliable witness.

64.Ms Yan’s evidence is that the defendant maintains an internal system recording transactions with food suppliers. Based on the records in the defendant’s system, it has only entered into two transactions with the Best Foodstuff / plaintiff between 1 January 2016 and 31 August 2023. Those two transactions were well documented by the two said purchase orders, invoices (which were endorsed with the defendant’s company chop confirming receipt of the subject food products) and cheques issued by the defendant to Best Foodstuff. The defendant does not have any record of any other transactions with the plaintiff / Best Foodstuff.

65.Further, the defendant has an established practice concerning the placing of orders and acceptance of food products from its suppliers. Every order placed by the defendant must be made by way of a purchase order. After the ordered goods are delivered to the defendant’s warehouse, designated warehouse staff will sign and affix the defendant’s chop on the supplier’s delivery note or invoice to confirm receipt of the goods after verifying the quantity and quality of the goods. Alternatively, some suppliers would send their delivery note or invoice to the defendant’s purchasing team directly, who would affix the defendant’s chop to confirm receipt upon verifying the quantity and quality of the goods with the defendant’s warehouse staff. A truck driver is not an authorised representative of the defendant to confirm delivery of the purchase orders.

66.Ms Yan’s evidence on the aforesaid internal record system and established practice of the defendant was not challenged in cross-examination. But Ms Yan fairly accepted that she does not know whether such established practice was actually followed when a particular transaction was carried out.

67.As explained above, the plaintiff’s case is so unbelievable and its evidence is so unreliable that the Court does not have to choose who to believe. Even if I have to decide whether to accept the defendant’s case that it has not ordered, purchased or accepted delivery of the Subject Food Products, I would have done so.

(a) First, as explained above, given the value of a written record, especially between commercial parties like the plaintiff and the defendant, the absence of any form of written record or electronic imprint, suggests that no alleged contract was concluded. I therefore accept Ms Yan’s evidence that the lack of written record suggests that no order has been placed by the defendant and no contract was entered into between the parties.

(b) Whilst the plaintiff contended that the purchase of food labels by the defendant from the plaintiff in March 2020 suggests that the plaintiff had sold beef hamburgers to the defendant, I find such purchase of food labels equivocal. On the plaintiff’s own case, the defendant had been purchasing the plaintiff’s beef hamburgers through Century Billion. The purchase of food labels by the defendant is consistent with the defendant purchasing plaintiff’s beef hamburgers through Century Billion, rather than the plaintiff.

(c) Secondly, I accept Ms Yan’s evidence that the defendant has not received the invoices relied on by the plaintiff. Had the invoices been received, there is no reason why they do not appear in the defendant’s internal system or that the defendant would not affix its company chop and sign on it.

(d) Thirdly, I accept Ms Yan’s evidence that the drivers do not have actual or apparent authority to accept delivery of the food products. First, the name of the driver 街車德哥 itself suggests that he was not the defendant’s employee. Secondly, I do not find that a driver employed to pick up products for the defendant is thereby authorised to accept delivery of those products. One has to look at the circumstances and the relevant business practices.

(e) There is no evidence that the drivers verified the quantity and quality of the products when they picked the products up from the plaintiff’s warehouse. Clearly, after driving the products back to the defendant’s warehouse, someone would have to verify the quantity and quality of the products before they could be accepted. Even if the drivers had picked up the food products, it does not mean that the defendant had accepted the same. The plaintiff could not reasonably have believed that the defendant had held the drivers out as having the authority to accept any food products.

(f) Fourthly, I accept Ms Yan’s evidence that the beef hamburgers sold by the defendant to its clients in June and July 2021 were from Century Billion, and not the plaintiff. This is supported by the contemporaneous documentary evidence of Century Billion selling and delivering 22,000 items of beef hamburgers to the defendant in around May 2021 mentioned above.

(g) Fifthly, the most important part of Ms Yan’s evidence is on what was said in the 2/12/2012 Meeting. It is not disputed that Ms Yan participated in the meeting. It is her firm and unshaken evidence that Moon Tsen and Thomas Chui of the defendant’s senior management never admitted accepting delivery of the Subject Food Products nor asked Madam Cho to chase Century Billion for payment. Although it is undisputed that the audio recording produced by the defendant is not complete, having considered their respective credibility, I believe Ms Yan’s evidence, and not Madam Cho’s, in this regard.

68.Finally, the plaintiff tried to challenge the defendant’s case by contending that the defendant has failed to call certain individuals who had allegedly dealt with the plaintiff as witnesses, eg the drivers, Paul (being the person in charge of a related company, Linson, which has business dealings with the plaintiff), Ellen Chan (being the defendant’s accountant), Leo (being the defendant’s procurement staff), “Ho Gor” (being the defendant’s warehouse supervisor) etc.

69.However:

(a) First, it is Ms Yan’s unchallenged evidence that all those individuals (other than Paul) have left the defendant’s employment. In fact, as mentioned above, the defendant is suing inter alios Eric Chan and KC Chan in HCA 1952/2021. There is therefore a good reason as to why the defendant did not call them.

(b) Secondly, as to Paul, it cannot be suggested that the practice of a related company of the defendant, which is a completely different entity, would have any bearing on the issues in dispute in these proceedings. Whatever practice adopted by Linson does not mean that the defendant has adopted the same practice.

(c) Thirdly, it is unclear what adverse inference the plaintiff invites the Court to draw against the defendant. It is incumbent on the plaintiff when inviting the Court to exercise its discretion to draw an adverse inference to set out clearly the point on which the inference is sought and identify the inference sought. See: Liao Zhiqiang & ors v Cheung Sin Ling, Vickki & ors [2022] HKCFI 892, paras 74-75.

(d) Fourthly, there is no property in a witness. Having considered it appropriate to call Wan, who was the defendant’s employee, as its witness, the plaintiff must have known that it was free to call the other former employees of the defendant had it wished to.

(e) Finally, and more importantly, as explained above, the plaintiff’s evidence is so unreliable that the Court does not even have to choose who to believe. As held by Harris J in Moorthy Selvaraj (supra), para 20:

“A defendant can proceed on the basis that although a prima facie case was advanced in pleadings and witness statements after cross-examination of the plaintiff’s witnesses it can be demonstrated that the case has not been proved on the balance of probabilities and the defendant need not call any evidence; which will normally result in a no case answer submission being made. What a failure to call a witness cannot do is to transform a plaintiff’s unsatisfactory evidence into satisfactory evidence.”

See also: Koo Ming Kown v The Baptist Convention of Hong Kong & ors [2024] HKCFI 2869, para 110, and DBS Bank (Hong Kong) Limited v Sit Pan Jit (unrep, HCA 382/2009, 2 April 2015), para 34.

70.I will therefore not draw any adverse inference against the defendant for failing to call those individuals as witnesses.

A. Conclusion

71.To conclude, first, the plaintiff’s case that the orders were placed by Eric Chan and/or KC Chan with Ling over the phone is unsupported by any form of written evidence. This makes no common or commercial sense at all. As explained above, the plaintiff’s evidence regarding the defendant’s placing of orders is inconsistent and unbelievable. The contention of lack of purchase orders and emails is also contradicted by contemporaneous documents.

72.Secondly, whilst the plaintiff relies on the invoices and the delivery notes to support its case:

(a) There is no evidence that the invoices were sent to the defendant other than Ling’s bare assertion that they were sent by fax to Eric Chan. However, her evidence in this regard is inconsistent as she later on told the Court that sometimes she would send them by email. Whichever method she used to send the invoices, the plaintiff has failed to adduce any contemporaneous documents to support its case.

(b) As to the delivery notes, for reasons explained above, they are not consistent with the alleged contracts. Putting aside the question of how the alleged drivers (one of whom does not even appear to the defendant’s employee) could have actual or apparent authority to accept delivery on behalf of the defendant, it is unclear from the delivery notes who has accepted the deliveries allegedly on behalf of the defendant.

73.Thirdly, the plaintiff’s evidence actually suggests that even after its incorporation, for the products ordered by the defendant, the defendant was obliged to pay Century Billion, rather than the plaintiff. Otherwise, it would not make sense for Madam Cho to chase Century Billion for payment of the 8 Items.

74.For all the reasons above, I find that the plaintiff has failed to point to “some conduct of the parties which is consistent with, and only consistent with, the contract contended for” and “inconsistent with there being no such contract”. Accordingly, I find that the alleged contracts for the sale and purchase of the Subject Food Products do not exist.

75.Even if anything turns on the defendant’s case, for reasons explained above, I would have found that the defendant has not ordered, purchased or accepted delivery of the Subject Food Products, and is accordingly not liable to pay for them.

76.I therefore dismiss the plaintiff’s claim against the defendant.

77.I make a costs order nisi that the plaintiff do pay the defendant’s costs of this action, including all costs reserved, with certificate for counsel, to be taxed if not agreed. Any application to vary the costs order nisi should be made within 14 days of the date of this judgment.

Mr Richard Sham and Ms Hannah Tang, instructed by Ivan Tang & Co, for the plaintiff

Mr Adrian Kwan, instructed by Piper Hong Kong, for the defendant