Yuen Cheonc Timber Co (A Firm) v. Wong Kwan
Read the full judgment text of HCA 2356/1976 on BabelCite. This High Court CFI judgment.
1. This is a claim for $89,230.80 being the alleged outstanding balance of price for goods sold and delivered by the plaintiff to the defendant in 1976. There is a Defence and a Counterclaim for $54,351.40.
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HCA002356/1976
IN THE SUPREME COURT OF HONG KONG HIGH COURT -----------------
----------------- Coram: Mr. Commissioner LIU, Q.C. in Court Date of Judgment: 28th November 1977. ----------------- JUDGMENT ----------------- 1. This is a claim for $89,230.80 being the alleged outstanding balance of price for goods sold and delivered by the plaintiff to the defendant in 1976. There is a Defence and a Counterclaim for $54,351.40. 2. The facts of and relating to the transactions between the parties to this action are not at all complicated. In or about the beginning of April, 1976, the defendant approached the plaintiff with a view to entering into an agreement for the supply of timber for wooden door frames for 2,450 doors the installation of which to a building under construction was undertaken by the defendant as a sub-contractor. This was by no means the first dealing of its kind between the same parties. The defendant had, in 1975, ordered timber materials from the plaintiff for another building site, and the 1975 transactions between the plaintiff and the defendant are set out in what has been described as a Statement of Account produced in these proceedings as Ex. P38. It is common ground that at the end of the 1975 transactions, the defendant stood $1,536.70 debited. It is also not disputed that the defendant was then not in a position to settle that debit balance of $1,536.70 which was by consent left outstanding until such time as the defendant succeeded in securing another subcontracting job. The plaintiff was considerate enough not to press the defendant for the payment of this unpaid balance and instead agreed with the defendant in April 1976 to supply door frames timber for use in another building site. 3. It was therefore the position that the defendant had earlier proved himself to be impecunious even to settle a sum of slightly over $1,500, and in the 1976 April encounter the plaintiff understandably insisted on "payment on spot" which was meant to be a term for payment against delivery. The plaintiff told the Court that the unit price was agreed without negotiation at $22.50 per cu.ft. Delivery was to be effected between June to September 1976. Size and specifications were to be given in due course. Payment was to be made against each delivery. The defendant's evidence presents a direct conflict in all material respects. He told the Court that the price was a matter of active negotiation. Whilst the defendant accepted the market price as $22.50 per cu.ft., he claimed that for a large quantity such as that in his order he was able to extract a concession from the plaintiff at a bargain unit price of $20 per cubic foot. Delivery was also a subject-matter in controversy. The defendant's case is that the whole quantity was to be delivered within one month after the end of April. According to the defendant's first version, he was given credit until all the quantities had been delivered This was an assertion which even the defendant found it cumbersome to maintain. 4. Size and specifications were subsequently given by the defendant in P1(1)-(6). What was not disagreed was that sufficient materials were ordered for the installation of 2,450 wooden doors. According to the plaintiff, the quantities subsequently delivered were 3,141.76 cubic feet, but the defendant complained that timber only sufficient for 2,100 door frames had been delivered. The quantity given in the further Amended Defence is 2,548 cubic feet. The defendant failed to substantiate this alleged lesser quantity. The defendant's stand is that although he is unable to say precisely how much was delivered, when his carpenters came to construct the doors for installation, the stock pile was exhausted after 2,100 doors frames. 5. Before we go any further, it would not be out of place here to dispose of the disputed terms of this oral April contract. I will deal, first of all, with the price. That $22.50 was the then market price is not disputed. The difference between the plaintiff and the defendant lies in $2.50 per cubic foot. There is little evidence either in favour of or against one party or another on this aspect, but there had been no complaint as to overcharging even in the solicitors' correspondence just prior to proceedings. Next I turn to the time for delivery. The building was under construction, and the defendant described it as then reaching to a height of six storeys with the progress of erection of the cement structure as two storeys per week. The defendant was never bold enough to suggest that doors could have been installed on any floor before the completion of its R.C.C. structure. The building was to be a 24-storeyed structure, and with 18 more floors to come in mid April 1976, the R.C.C. frame was not expected to be wholly completed until the end of August or early September. It was suggested on behalf of the plaintiff that doors could only be installed after the brick walls on each floor With that suggestion the defendant initially disagreed, but eventually the defendant gave evidence to the effect that doors were to be put in before the plastering of the walls. Be that as it may, it would have been futile for the defendant to be supplied with the entire quantity thus, even according to his evidence, tieing down capital unnecessarily before the materials would be required. The programme for the construction of the R.C.C. shell necessitated the installation of the wooden doors to be in stages. The first delivery of the materials under the April contract was effected in June as borne out by the agreed Ex. P2, and the unqualified acceptance of this delivery by the defendant is in my view, telling against him. The same line of reasoning would run through the rest of the subsequent deliveries. It is therefore more probable that timber for door frames was agreed by the parties to be supplied in stages between June and September as given in the evidence of the plaintiff. The third term of the oral April agreement is the term of payment. It is so much against business efficacy for a timber merchant such as the plaintiff to permit a delayed payment of materials supplied until the quantum reached well over $70,000, particularly when the defendant had a recent history of deficiency only at the end of 1975. In addition, the 1975 debit balance was no more than a meagre $1,500. In that state of affairs and with that experience, would the plaintiff have been prepared in 1976 to agree to extend credit to the defendant to the extent of as much as $70,000? One must not lose sight of the document P38 which, I am told, is the Statement of Account for the 1975 transactions. In that Statement, payment was not made as at the end of all deliveries, but periodical settlements were effected by the defendant with the plaintiff. Last but not least, prevarication of the defendant in his evidence must not be overlooked. It was rightly pointed out by Mr. Woo that he first testified to a payment term for a final settlement to be made only at the end of all the quantities. Then the defendant seemed to suggest that it is a business practice of his firm and others to pay a deposit up to a third of the total contract price, and finally the defendant appeared to take shelter behind the allegation that non-payment on his part was attributable entirely to the default in making delivery in time or at all by the plaintiff. These versions may not be prevarication as such. They may be just unfavourable impressions from the vagueness of his evidence. On an overall evaluation, I do not accept the defendant's evidence that payment was not agreed to be against each delivery. Payment, I find, was agreed between the parties to be against each delivery. 6. This is just as good a time as any to go to the nature of the term stipulated for payment. Bearing in mind the finacial predicament of the defendant at the end of 1975 and the insistence of the plaintiff's on this particular mode of immediate payment in the 1976 encounter, whose evidence I accept, the obvious intention of the parties must be to make the term for payment against each delivery essence of the contract. It is also worthy to note that there was no specific time for any individual delivery. Delivery was to follow one and the other in succession. That, I consider, is of importance and goes some way also to support the intention that payment against each delivery was and was to be treated as of the essence of the contract. 7. Under this 1976 April agreement, deliveries were made. I was told by plaintiff and his foki, Mr. Chan Kuen, that most of the time the plaintiff himself was a driver of the delivery lorry and that on the rare occasions when an outside lorry was hired, Mr. Chan invariably accompanied the delivery lorry together with other fokis of the plaintiff's timber yard. The foki, Mr. Chan Kuen, of the plaintiff told the Court that every time he left a delivery note for Mr. Lai, a foki for the defendant. Delivery notes were admittedly signed only on three occasions as evidenced by Delivery Notes P2, P10 and P16. Mr. Chan Kuen explained that on the occasions when they were not signed, Mr. Lai was not in good mood and that Mr. Lai had told him, Mr. Chan, that as the parties were well acquainted, Delivery Notes need not be signed. Mr. Lai admitted as being in charge of accepting deliveries, but he claimed that on other occasions, apart from those evidenced by P2, P10 and P16, no Delivery Notes were in fact given and that therefore he was unable to check the quantities so delivered. That explanation stands by itself must sound all very strange, but apart from that, Mr. Lai was keen to convey an impression to the Court that he was extremely dutiful in checking quantities on deliveries, and on one of the three occasions on which the Delivery Note was signed as instructed by his subordinate, one Mr. Ng Yuk, he took the precaution subsequently of personally checking through the same quantities. It is inconceivable that Mr. Lai could have permitted himself to neglect his bounden duty of checking quantities delegated to him by the defendant. Furthermore, if one looks at the Delivery Note, P28, which was not signed by or on behalf of the defendant, one would wonder how Mr. Lai would have enough information to endorse on the invoice, P29, to the effect that 50 boards were short delivered if he had not checked the quantities or checked them without the Delivery Note as alleged. After all some 27 deliveries were made with, I am told, no less than 17 Delivery Notes and an equal number of invoices. It would require very cogent evidence to support an allegation that all these documents were deliberately manufactured for the benefit of the court. 8. The defendant through Mr. Lai admitted delivery only on these three occasions on which Delivery Notes were signed. The coincidence, as submitted by Mr. Woo, is too much for comfort. The defendant was unable to say how much quantity was delivered under the April oral contract. All he could offer to substantiate his Defence and Counterclaim was that at the end of the day only sufficient materials for 2,100 door frames were available. He told the Court that he purchased materials elsewhere. His evidence in support leaves much to be desired. In recounting the alleged extra expenditure incurred as a result of this alleged breach of contract, the defendant could do no better than stating a sum of about $10,000. Such laxity can hardly be interpreted as the conduct of a bona fide and honest aggrieved party with a valid Counterclaim. 9. According to the evidence of the plaintiff, he pressed the defendant for payment and although he was entitled, as I have found and held he was, to hold the defendant in breach, he continued to supply materials to the defendant until the 20th of July when he successfully managed to extract some payment from the defendant in the form of a cheque of $40,000 which was intended to be partly in part payment of the materials which had been delivered and partly as deposit for teak plywood ordered by the defendant from the plaintiff. The plaintiff explained, and I accept his explanations, as to why he entered into a second agreement in July 1976 with the defendant to supply him with teak plywood for delivery in between the months of July and September and 800 pieces Polai boards. The plaintiff further told the Court that the defendant claimed to be in desperate need to expedite his installation and begged for his assistence and that besides part of the $40,000 cheque, the receipt of which, D1, was given in advance, was a deposit for the future supply of the teak plywood boards which he, the plaintiff, was to order through a firm by the name of Tin Fat Cheung. The plaintiff also relied on the defendant's solemn promise to pay against each delivery. According to the plaintiff, the price for teak plywood was $0.92 per square foot, and he said that there was a written order which he in turn gave to Tin Fat Cheung for specifications and was not in a position to produce. The plaintiff testified that for the delivery of teak plywood his firm gave the defendant a Delivery Note as usual and, as usual, followed by an invoice. No dispute came from the defendant as to the price of teak plywood even at a very late stage in his solicitors' letter dated 8th November at page 2 of the agreed bundle 'A'. 10. I accept the evidence of Mr. Chan that upon return to the timber yard after each delivery, he calculated, from the quantities on the Delivery Note which had earlier been checked on loading before departure from the timber yard, the price for the materials so delivered and caused to be sent to the defendant the invoices. I do not accept the evidence of the defendant and his foki Mr. Lai, that the defendant was never in receipt of any of the rest of the Delivery Notes and these invoices. Without such denials, the defendant may find it difficult to prop up his allegations of lower price and short delivery. The plaintiff's wife told the Court that she gave Ex. P35 to the defendant who accepted it and that subsequently she delivered to him Ex. P36 together with some invoices. The defendant accepted P36 but requested her to keep the invoices the information in which, he explained, could be found in P35. 11. As far as the door frames timber and teak plywood boards are concerned, I accept the evidence by and given on behalf of the plaintiff. I find that quantity specified in Delivery Notes, P2 - P26 in even numbers, and invoices, P3 - P27 in odd numbers, were delivered by the plaintiff to and accepted by the defendant. I also accept the evidence of the plaintiff that the price was agreed at $22.50 per cubic foot. Therefore, for these deliveries the defendant is indebted to the plaintiff in the sum of $70,689.65. As for the teak plywood boards I find that the quantity in the Delivery Note P28 less fifty pieces and the amended invoice P30 were duly delivered by the plaintiff to and accepted by the defendant at $0.92 per square foot. In conclusion, I find delivered to the defendant 3,141.76 cubic feet timber for door frames and 3,440 pieces teak plywood i.e. 58,440 square feet which at $0.92 per square foot amounted to $53,764.80. 12. The plaintiff continued to make deliveries to the defendant despite the defendant's delay in payment. But by the month of August, the plaintiff was pressing the defendant hard and had earlier managed to secure some payment by a cheque for $40,000. Thereafter, the plaintiff continued to press the defendant for payment, and after full deliveries of all the door frames and all the teak plywood except for fifty pieces, the plaintiff gave the defendant an ultimatum that unless the defendant paid for all the deliveries which had been made forthwith, he was to deliver no more. By this time, frequently the defendant avoided the plaintiff. As far as the door frames are concerned, I have found that it was the intention of the parties to make the term for payment of the essence of the contract. The plaintiff was entitled to immediate payment on each delivery. It is understandable that indulgences were granted in circumstances such as these in this case. The plaintiff had given the defendant ample notice to effect payment after numerous demands before finally exercising his right to treat the contracts as at an end. Come what may, by this time in or about September the conduct of the defendant in the circumstances evinced an intention on his part not to be further bound by any of the contracts. The persistent refusal of the defendant to pay as demanded for timber and the teak plywood boards, with the exception of fifty, is clear evidence of his repudiation, and the plaintiff was thus released from further performance. 13. In July, under the same oral agreement the plaintiff agreed to supply certain Polai boards. In the Defence, it is alleged that the plaintiff offered Polai boards at $11.50 per piece, but in his evidence the defendant said that it was agreed at $1.00 per square foot. From an invoice, P33, the plaintiff charged the defendant $1.20 per square foot. The plaintiff duly delivered 800 pieces of Polai boards to the defendant whose main contractor rejected them as being unfit or unsuitable. The plaintiff accepted their return without complaint. It could be taken as an implied admission of incorrect quality indicative of an error on the part of the plaintiff. The defendant claimed he ordered non-shiny surface Polai boards but was supplied with shiny surface Polai boards. Despite his acceptance of the return of these Polai boards. the plaintiff denied the defendant's allegation. Be that as it may, according to the evidence of the plaintiff:
Whatever dispute there was between the plaintiff and the defendant on the first delivery, the plaintiff was prepared and willing to supply the defendant with Polai boards on yet a second delivery. The plaintiff was entitled to payment on delivery, and by this time he saw fit to insist on strict performance. The supply was not forthcoming only as a result of the defendant's refusal to pay as requested, and in these circumstances it does not lie in the mouth of the defendant to claim damages for non-delivery of the Polai boards. It is the defendant who refused to pay for the 800 pieces of Polai boards, and the price for the Polai boards has never been suggested in evidence to be in dispute at that juncture. 14. A little later in the month of July last year, plywood edges for 2,450 wooden doors were, according to the defendant, ordered. The plaintiff told the Court that the price could not be agreed and the discussion was fruitless. Here again, there is a plain conflict of testimony between the parties to this action. From the evidence, the following matters transpired: First of all, it would seem that the defendant was able to carry out installation of some doors without any door edges from the plaintiff, and it has never been suggested that there was any written protest sent on behalf of the defendant to the plaintiff. Furthermore even in the defendant's solicitors' letter which is at page 2 of the agreed bundle "A", not a word was breathed on behalf of the defendant as to non-delivery of any of these teak plywood edges. On the balance of probabilities, I find in favour of the plaintiff that the price was indeed not agreed and there was no contract. 15. In view of my findings, it is not necessary to go into the Counterclaim, but it would be of interest to note the unsatisfactory evidence from the defendant despite the best effort of his counsel. The defendant was unable to give a more precise estimate than $10,000 for the replacement of the door frames, some $17,000 for the second-hand cuttings, $7,000 for labour in converting the second-hand cuttings into usable materials, $28 per piece for the Polai boards and $14 per set of the door edges for 2,450 wooden doors. Extra labour of 600 working days at $60 per day to the extent of $36,000 was also claimed. The manner in which the Counterclaim was sought to be substantiated did the defendant little credit. 16. I find the plaintiff not to blame in these circumstances, and he must be entitled to recover $70,689.65 for the door frames and $53,764.80 for the supply of the teak plywood boards. The plaintiff has also established, I find, by P31 and his evidence, the wood cutting expenses incurred for and at the request of the defendant in the sum of $307.40. The outstanding debit balance of $1,536.70 for 1975 is not disputed. 17. Under the first contract, according to the plaintiff, he was to supply from time to time lorry loads of wood cuttings or wood wastes to the defendant. The plaintiff told the Court that he did not undertake to supply any fixed quantities although the defendant disclosed that some 60 lorry loads would be required. Each lorry load, according to the evidence of the plaintiff, was agreed at $200 to be paid on collection. I accept his evidence in its entirety. I have had the opportunities of observing the demeanour of the defendant as well as assessing his credibility. I prefer the evidence of the plaintiff to that of the defendant. The defendant's case is that cuttings were to be supplied for at $150 per lorry load and that the plaintiff categorically agreed to supply 60 lorry loads the payment of which was not to be made until the last lorry load of wood cuttings. What I have said about time of payment and essence of the contract in relation to the April contract is equally applicable to the agreement in relation to the supply of the wood cuttings. The plaintiff told the Court that because of the defendant's refusal to pay after 13 lorry loads, he stopped to allow the defendant to take any more wood cuttings in September. 12 lorry loads were wood cuttings at $200 per lorry load, and one was wooden squares which is not a subject matter in dispute and attracted $250. Therefore the total quantity supplied amounted to $2,650 the calculation of which is not in dispute. $2,650, I find, is also due and owing by the defendant to the plaintiff. 18. There is evidence in relation to the loss or absence of eight Polai boards. Suffice it for me to say the evidence was not quite satisfactory for establishing that the eight Polai boards were lost or not returned by the defendant. I therefore do not allow the claim of $282.25. 19. All that could possibly be said has been said for the defendant. The total claim of the plaintiff on my calculation comes to $128,948.55 which is to be less the $40,000 cheque paid to the plaintiff by the defendant in July. The net total found due from the defendant to the plaintiff is $88,948.55. I order (1) Judgment for the plaintiff in the sum of $88,948.55, (2) Counterclaim dismissed, and (3) Costs against defendant.
Representation: Mr. Patrick Woo instructed by Messrs. H.M. So & Co. for plaintiff. Mr. Lester Kwok instructed by Messrs. Ford Kwan & Co. for defendant. |