Maxx Marketing Ltd v. Ppm Toys Ltd
Read the full judgment text of DCCJ 114/2023 on BabelCite. This District Court judgment was delivered on 8 May 2026.
1. This is the trial of the plaintiff’s claim for the unpaid price of goods supplied.
Cited by 1 case · Cites 5 cases
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DCCJ 114/2023 [2026] HKDC 749 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 114 OF 2023 ------------------------------ BETWEEN
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------------------------------ JUDGMENT ------------------------------ A. Introduction 1.This is the trial of the plaintiff’s claim for the unpaid price of goods supplied. B. Undisputed facts 2.The plaintiff is a trading company engaged in the manufacture, sale and delivery of toy related products. The Chief Operating Officer and Director is Ms Ann Wong On Kee (“Ms Wong”). 3.The defendant is a Hong Kong incorporated company. At all material times, it was represented by: (i) Mr Carlos Eugenio Iga Villarreal (“Carlos Junior”) who is a director and sales manager of the defendant; and (ii) Carlos Junior’s father, Mr Carlos Iga Saade (“Carlos Senior”), the Chief Executive Officer, director and a 30% shareholder of the defendant. 4.On 18 March 2020, Ms Wong for the plaintiff and Carlos Senior for the defendant signed a Non-Exclusive Distributor Agreement (the “Distributor Agreement”). The salient terms of the Distributor Agreement are as follows:-
C. The plaintiff’s case 5.In gist, the plaintiff’s case is that at all material times, PPM Mexico was the defendant’s agent. Similarly, Maxx Marketing Sa De CV (“Maxx Marketing Mexico”), a Mexican company which was 99.99% owned by the plaintiff, was acting as the plaintiff’s agent. Even before the execution of the Distributor Agreement, the plaintiff entered into its first transaction for sale of toy products to the defendant in January 2020 under sales confirmations no 20130101 and 20120102 both dated 13 January 2020. Under the defendant’s instruction, the said confirmations were invoiced to an entity named Processed Plastic de Mexico S.A.P.I. de C.V. (“PPM Mexico”), a Mexican company. 6.The defendant paid for the goods purchased through sales confirmations numbered 20130101 and 20120102 from a bank account held in the name of the defendant. 7.Further, the plaintiff claims that the Distributor Agreement contains the following implied terms:-
8.The plaintiff claims that the defendant has failed to pay for the goods delivered in the following transactions as evidenced by 3 sales confirmations (the “Sales Confirmations”):-
D. The defendant’s case 9.The defendant denied liability on the following grounds:-
E. The proceedings at trial 10.The defendant was absent at the trial. I note that the defendant was legally represented until 8 August 2024, after which it had not taken any active part in these proceedings. The defendant was also absent at the 3rd and 4th case management hearings and the pre-trial review which took place on 12 September 2024, 31 October 2024 and 2 September 2025, respectively. 11.As the plaintiff’s solicitors have produced an affirmation of service showing that the plaintiff’s opening submissions and other documents were served on the defendant at its registered office and last known address, I am satisfied that the defendant has sufficient notice of this trial and that the trial should proceed in its absence. 12.The plaintiff then called Ms Wong as its only witness who adopted her witness statements as her evidence in chief. Pursuant to my direction, the plaintiff’s counsel also filed his written closing submissions on 2 December 2025. F. The issues 13.The primary issues to be determined are as follows:-
G. Issue (1) - Whether the Distributor Agreement was renewed? 14.It is not disputed that the Minimum Annual Purchase Guarantee was not satisfied in the Initial Term. However, the plaintiff argued that it had waived the requirement so that the Distributor Agreement was renewed, and that it remained in force when the Sale Confirmations were concluded. 15.It is trite that a waiver by estoppel can arise where a party (without any request) represents to another party that he will forbear to enforce or rely on a term of the contract to be performed or observed by the other party, and the other party acts in reliance of that representation, see: Chitty on Contracts (35th Ed, 2025) at §26-043. What is material is that there must be evidence of the forbearance, which may be communicated orally or inferred from conduct, see: SNE Engineering Co Ltd v Chim Kee Machinery Co Ltd HCA 2025/2012 (unreported, 24 March 2016) at §20. 16.Where a clause is inserted solely for the benefit of one party, he may, without the assent of the other, waive compliance with that provision and enforce the contract as if that provision has been omitted, see: Chitty at §26-049; Righttop Investment Limited v Yu Tsui Sheung and another HCA 2691/2001 (unreported, 10 March 2005) at §78. 17.The effect of the waiver is that, the party seeking the forbearance will not be permitted to repudiate the waiver and to rely on the letter of the agreement. No consideration is required for establishing a waiver, see: Chitty at §§26-046 to 26-047. 18.In the circumstances, I am satisfied that the issue of waiver has been properly raised in the pleadings even though the plaintiff did not expressly use the term “waiver” in its Amended Statement of Claim (“ASOC”):-
19.I am also satisfied that, by entering into the Sales Confirmations, the Distributor Agreement had been extended as the plaintiff did not take issue with the defendant concerning its inability to satisfy the Minimum Annual Purchase Guarantee. 20.On a plain reading of Clauses 2.3 and 3.2, it is clear that the Minimum Annual Purchase Guarantee requirement was inserted for the plaintiff’s benefit as the obligation is solely on the defendant on making the requisite amount of purchase. Hence, it is not strictly necessary for the defendant to agree to the waiver. 21.In any event, I am satisfied that the Sales Confirmations amounted to unequivocal conduct by the parties which could give rise to an acknowledgment of the waiver of the Minimum Annual Purchase Guarantee:-
22.However, whether the Sales Confirmations can amount to a waiver which is attributable to the plaintiff and the defendant as parties to the Distributor Agreement depends largely on whether PPM Mexico was acting as an agent of the plaintiff. This will be considered in Section H below. 23.Accordingly, subject to the agency issue as described above, I find that the Distributor Agreement was extended by reason of mutual conduct of the parties in entering into the Sales Confirmations. H. Issue (2) - Whether the defendant could be held liable for the Sales Confirmations as principal of PPM Mexico? 24.Irrespective of whether the Distributor Agreement was extended (so as to apply to the Sales Confirmations), it is clear that each of the Sales Confirmations is capable of being regarded as an individual contract given that each Sale Confirmation contains the essential terms (including terms of payment, description and quantities of the relevant products sold and the terms of delivery). Hence, the crucial issue to be determined is whether the defendant can be held liable even though it was not named as a party to the Sales Confirmations. 25.On the face of it, the Sales Confirmations were between the plaintiff as vendor[6] and PPM Mexico as buyer. However, this is not the end of the matter as the plaintiff argued that PPM Mexico is the defendant’s agent. Hence, the defendant should nevertheless be held liable as principal. As said in Bowstead & Reynolds on Agency (23rd Ed, 2025) at §8-001[7]:-
26.Even where the principal is not named in the contract, it is possible that the party to the contract may act as an agent where the contractual matrix surrounding the agent’s dealing with a third party gives the third party reason to know that the agent dealt only as the principal’s representative, see: Bowstead at §8-002. 27.Applying these principles, I agree with the plaintiff that, in the circumstances, PPM Mexico entered into the Sales Confirmations as agent for the defendant. 28.First, I accept that on the evidence, it is clear that PPM and PPM Mexico are affiliates which acted through the same individual(s) in their dealings with the plaintiff:-
29.It follows that Carlos Junior is capable of having the actual authority to act for the defendant or both the defendant and PPM Mexico in dealing with the plaintiff concerning the Sales Confirmations. As Carlos Junior did not attend court to give evidence at trial, the court would have to consider the objective evidence, such as the contract itself, pre-contractual as well as post-contractual words and conduct of the parties and the surrounding circumstances (particularly that of the agent and the supposed principal regarding their assertions as to what their intentions were at the time) to decide which principal(s) he acted for at the material time[8]. 30.Second, I am satisfied that it was the defendant’s practice to use PPM Mexico as a nominee in purchase transactions with the plaintiff by reference to parties’ prior course of dealing. 31.As mentioned above, on or about 13 January 2020, when the plaintiff first began to sell products to the defendant, two order confirmations were sent in the name of defendant (numbered 20130101) and PPM Mexico (numbered 20130102) respectively to the plaintiff. As shown from a subsequent email dated 2 April 2020 (at 4:05 am) from Connie Tseung of the plaintiff to Carlos Junior, the shipment destination of order numbered 20130101 was Liverpool, the UK whilst the destination of order numbered 20130102 was Mexico. 32.Notwithstanding the different contracting entities used in the confirmations no 20130101 and no 20130102, the purpose of using two different entities was explained in Carlos Junior’s cover email dated 13 January 2020 (at 10:44 am) as follows:-
33.It is clear from the above that for the purpose of the “first shipment” (ie order numbered 20130102 bound for Mexico), the reference to the contracting party was to the defendant’s company in Mexico (which must be a reference to PPM Mexico, a Mexican company). In the same email, Carlos Junior also explained to the plaintiff this “first shipment” was in fact a shipment for “PPM Toys” (ie the defendant) even though the contracting entity is PPM Mexico. The term “PPM Toys” in the email must be a reference to the defendant rather than PPM Mexico as it is the only entity which contains the words “PPM Toys” in its name. This is further illustrated by Carlos Junior’s careful distinction between “our company in Mexico” (ie PPM Mexico) and “our company in Hong Kong” (ie the defendant) in his email. 34.It follows that, even though PPM Mexico was named as the contracting party for the purpose of sales confirmation numbered 20130102, the defendant was intended to be the actual principal. This is further fortified by the undisputed fact that the purchase price for sales confirmation numbered 20130102 was ultimately settled by the defendant but not PPM Mexico. 35.The use of affiliates as contracting entities involved in the purchase transactions with the plaintiff was also envisaged in the Distributor Agreement given the various express references to the parties’ affiliates as parties to the distributorship[9], in particular that the defendant’s affiliates and subsidiaries were also appointed as “Distributor” of the plaintiff (and its affiliates and subsidiaries). 36.The above practice of the defendant in using PPM Mexico as its nominee had continued at least up to October 2021 (ie after the Sales Confirmations were entered into):-
37.There is also no suggestion that there has ever been any transaction where PPM Mexico had independently made payments to the plaintiff on its own account for any of the transactions concluded under its name, or that the defendant was somehow acting as payment agent for PPM Mexico. 38.Finally, the argument that PPM Mexico (rather than the defendant) is liable for payment under the Sales Confirmations appears to be an afterthought, as t this was not raised by Carlos Senior or Carlos Junior in contemporaneous communication when the plaintiff chased for payment. 39.In the circumstances, I am satisfied that the defendant used PPM Mexico as its agent in its course of dealings with the plaintiff and its affiliates including those in respect of the Sales Confirmations. 40.It follows that, as principal, the defendant is liable for any sum outstanding under the Sales Confirmation. Since it is not disputed that (i) the plaintiff had made deliveries of the relevant sold under the Sale Confirmations (which are supported by the bills of lading produced by the plaintiff); and (ii) no payment was ever made for the Sale Confirmations, I am satisfied that the defendant shall be liable for the total purchase price of the Sale Confirmations as set forth in §8 above. 41.For completeness, it is noted that for Sales Confirmation SC-MX-210003, the named seller was Maxx Marketing Mexico rather than the plaintiff. Nevertheless, I am satisfied that the plaintiff is entitled to claim under SC-MX-210003 as principal of Maxx Marketing Mexico:-
42.In light of the analysis above, it is not necessary for me to consider whether the defendant should be held liable under the alleged implied term of the Distributor Agreement as set out in §7 above. I. Interest 43.The plaintiff is entitled to contractual interest of 2% per month for overdue payments as set out in the invoices for the Sales Confirmations. According to Clause 2.2 of the Distributor Agreement, such terms in the invoices shall govern the terms of sale and payment and are binding on the defendant. 44.As provided in the purchase orders, sales confirmation and invoices issued for the Sales Confirmations, the plaintiff is entitled to full payment by the date of issuance of the relevant bills of lading[13]. 45.I allow the plaintiff’s interest for the periods starting on the dates[14] as proposed by the plaintiff up to the date of judgment as follows:-
46.Interest shall accrue post-judgment at the judgment rate until payment in full. J. Costs 47.As the plaintiff’s claim is successful, there is no reason why costs should not follow the event. I make an order nisi that the defendant do pay to the plaintiff the costs of the action (including any costs reserved), to be taxed if not agreed with certificate for counsel. K. Disposition 48.Accordingly, I make the following order:
49.It remains for me to thank Mr Chau for his helpful assistance.
Mr Eric Chau Hin Chung instructed by Ng, Au Yeung & Partners, for the plaintiff The defendant was not represented and did not appear [1] As provided in the in the Distributor Agreement, references therein to the defendant (ie the “Distributor”) shall include its affiliates and subsidiaries. [2] Defined as the Territory in Schedule B. [3] See Schedule B. [4] See Clause 3.1. [5] Some of the Products purchased in the Sales Confirmations are not found in the original Schedule A to the Distributor Agreement. However, as already noted in §4(1) above, Clause 1.1 of the Distributor Agreement expressly permits the plaintiff to unilaterally revise the scope of Products which can be supplied. [6] Save as the case of SC-MX-210003 where the named vendor is Maxx Marketing Mexico. However, the plaintiff’s entitlement to claim is not affected, see §41 below. [7] It is also expressly provided in Clause 11.4 of the Distributor Agreement that the defendant shall bear personal responsibility for the acts of its agents. [8] See: Triple 8 Licensing Co Ltd v ASH (Hong Kong) Ltd [2021] HKCFI 917 at §§34-36 per Wilson Chan J (referring to Lai Wo Heung v Cheung Kong Fur Pty Co Ltd [2004] 1 HKLRD 959 at §§10-15 (per A Cheung J, as the Chief Justice then was)). [9] See §4(1) above. [10] Under sales confirmation no SC-HK-210127. [11] See ASOC at §2M(3). [12] Ms Wong’s Supplemental Witness Statement at §13. [13] The relevant documents provided for a partial 40% upfront payment but this point was not taken by the plaintiff. [14] These starting dates all fall 1-2 days after the dates of issuance of the bills of lading to exclude any effect of time difference. [15] The plaintiff’s interest calculations have omitted the agreed deduction of US$10,000, see §8 above. Accordingly, I have adjusted the daily rate by reducing the principal amount from US$144,000 to US$134,000. Hence, the daily rate should be US$134,000 x 24% x 1/365 = US$88.11. [16] Being the principal sum owed under the Sales Confirmations. [17] Representing the pre-judgment interest as allowed under Section I. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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