Jimmy Yao Yie Dee t/a Allied Advertising Agency v. The East Asiatic Co Ltd

DCCJ003174/1975

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

Action No. 3174 of 1975

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Coram: Garcia, D.J. in Court.

Date of Judgment: 30 July 1975

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JUDGMENT

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1. The plaintiff is the managing proprietor of the Allied Advertising Agency which is engaged in the placement and production of advertising materials with the mass media, such as newspapers, magazines and television, for clients. In carrying on such business, the plaintiff was assisted by a number of account executives and subsidiary employees, totalling at the relevant period, about 50 persons, and among the duties performed by the account executives were those of securing contracts for advertising materials for advertisers and also to suggest ideas and layouts and themes to clients in order to best advance the sale of the latter's products. In this connection, the plaintiff produces advertising films of from 15 seconds to 30 seconds duration for exhibition on local television stations, such films being made by the plaintiff's sub-contractors who specialise in the production of such films.

2. The defendant company is engaged, inter alia, in the import of Carlsberg Beer and other beverages and food products into Hong Kong, and in order to have these products marketed here, secured the services of the plaintiff to plan and execute the advertising campaign for them. As far as this action is concerned the advertising materials are confined to the abovementioned films, such films having as their central theme "with skill you can win" for the promotion and sale of Carlsberg Beer. The defendant company began its association in this respect with the plaintiff on the 1st day of January 1973.

3. The subjects chosen for the advertising films, after some considerable discussion, were "Car Racing" and "Billiards". These two films were to have been produced ready for delivery one month after firm order, that is, as from the date set out in the receipt (P25) which is 30th April 1973, but as hereafter appears this date was not adhered to. A quotation for these two films was sent to the defendant company on 25th April 1973 (Exh. P4). The price of the two films was quoted at $30,000 and the time for completion of the "answer prints" of these films was 30 days after firm order, with a payment of 40% deposit after firm order. Discussions regarding these two films began as early as 25th January, 1973 and a record of the meeting held that day indicated: "(1) T.V. time slots for 7.45 p.m. (Mondays) 11.15 p.m. (Saturdays) for summer and 7.45 p.m. (Mondays) 11.15 p.m. (Fridays and Saturdays) for winter approved. Allied Advertising Agency will make bookings accordingly." Apparently bookings for exhibition of such films on the television stations had to be made long before the films were completed. Another meeting was held on 15th February 1973 and the record of the discussion relating to the Carlsberg advertisments was as follows: "(1) Proposed schedule for T.V. and radio to be confirmed at next meeting on February 21, 1973, to be held at client's office." It seems that no meeting was held on the date mentioned, at least there was no record produced for such a meeting, but on 7th March 1973 a meeting was held at the defendant company's office, attended by Mr. John Madsden, Ma Churn, M.F. Chan and Jekyll Huang on behalf of the defendant company, whilst the plaintiff was represented by Mr. Andrew Lee and Miss Vivien Chin. With regard to the Carlsberg advertisements the following is a record of the discussion: "2, Story board for 2 new commercials at the production cost of HK$30,000, which includes charges up to the first answer print for both Chinese and English 30-second and 20-second approved in principle with amendments on the first four shots of "Billiards". Allied Advertising Agency to submit new proposal before March 13, 1973." These are the only records produced of discussions on the subject of the two films for advertising Carlsberg Beer before the abovementioned quotation was submitted. It would appear that at no time prior to the submission of the said quotation was the plaintiff personally present at any of the said meetings, although he says that he had a sight of the Call Reports, (which are very brief summaries of what occurred at the meetings), and also of the quotation mentioned above, after it had been submitted to the defendant company. Two days following the submission of the quotation a meeting was held, and again, the plaintiff was not present, and the following record in respect of the films was made: "1. Evaluation of the new T.V. Commercial is required. Mr. Andrew Lee will submit an evaluation at the next EAC meeting." On the 30th April 1973 a debit note No. 73/0459 (Exh. P25) was sent to the defendant company in respect of the deposit of 40% of the price of the 2 films agreed upon and the sum of $12,000 was paid. A further meeting was held on 2nd May 1973 after the payment of the deposit and the following persons were present at that meeting: Messrs. John Madsden, Jekyll Huang and Andrew Lee. At that meeting it was reported that "1. approval has been given for production of Carlsberg commercial. Allied Advertising Agency is required to submit photos of talents for client's approval before actual shooting. Allied Advertising Agency will submit photos before May 9, 1973". One would have expected that the plaintiff himself would have attended a meeting such as this where it was announced that the defendant company had given its approval for the production of the two films after protracted negotiations had been conducted between his employee, Mr. Andrew Lee, and the defendant company's representative. The result is that according to the plaintiff's own words "I first knew of quotation on 11.5.73". The action required of the plaintiff's representative, that is submitting photographs of talents (actors) for the approval of the defendant company, Was carried out, as at another meeting on 21/5/73, the following record was made: "1. Client selects photos of talent to be used in the Carlsberg commercial, but a final meeting of all talents chosen will be held for final confirmation. Allied Advertising Agency to arrange the meeting before May 26, 1973." At a meeting held on June 8, 1973, the film "Motor Racing" proposed for the Carlsberg commercial was according to the Call Report "abandoned for policy reasons" and the plaintiff was asked to submit another proposal "in substitution before June 13, 1973." Only 3 persons were at that meeting: Messrs. John Madsden, Jekyll Huang and Andrew Lee." Although not present at that meeting, the plaintiff is able to say that the policy reasons were that "beer drinking should not be connected with motor driving and the policy of Carlsberg was not to use car racing in commercials. I was not aware of that when idea was submitted." This, in my view, is an oversimplification, after having heard Messrs. Madsden and Andrew Lee on this matter, of the reasons advanced for the abandonment of the film "Car Racing" quoted in Exh. P4. Sometime in May 1973, Mr. Andrew Lee and Mr. Howard Digby Johns, another account executive of the plaintiff, visited the office of the Carlsberg Breweries in Kuala Lumpur and after returning to Hong Kong stated that the policy of the principals, i.e. Carlsberg Breweries, was not to associate motor driving with drinking, and suggested to the defendant company's representatives that the subject of the film "Car Racing" would not be a suitable one for advertising Carlsberg Beer. This reason was according to both Mr. Madsden and Mr. Andrew Lee only a subsidiary reason. Mr. Madsden asserts that his company has no such policy although in his opinion and for obvious reasons it would be prudent if such a film were made it should not depict the driver drinking beer whilst in the act of driving. The main reason he gives for abandoning the "car racing" film was the inability of the plaintiff and the staff of the Allied Advertising Agency in obtaining suitable materials for producing such a film. A library film of the Macao Grand Prix, presumably for 1972, was obtained for the purpose of providing the necessary background for the "car racing" film but this was found to be completely unsuitable because the Grand Prix film already contained super-impositions of advertising matter for products of other manufacturers. Moreover, Mr. Madsden and Mr. Lee state that throughout that film, there appeared advertisements all along the racing circuit of the Macao Grand Prix which would have clashed with the proposals for advertising Carlsberg Beer on television. Additionally, the plaintiff was unable to provide the requisite sports cars for the purpose of producing another film without the offending advertisements. Mr. Andrew Lee confesses that this reason was the main one as to why the suggestion for a replacement of the "Car Racing" film was proposed, and the reason mentioned in the Call Report of June 8, 1973 was for the purpose of covering up the inability of the Allied Advertising Agency in producing such a film to the satisfaction of the defendant company.

4. On 18th June 1973 a meeting was held between representatives of the defendant company and the plaintiff and Andrew Lee and other of the plaintiff's employees, and with regard to the films advertising Carlsberg Beer the following item appears in the Call Report for that meeting:

"1. New Carlsberg commercials to be shot immediately. "Golfing" and "Water-skiing" approved to replace "Ice-skating" and "Car Racing". Allied Advertising Agency to follow up". The plaintiff's evidence regarding this item is that the film subject "Billiards" was replaced by "Ice-skating" because the former game was considered "low class" whereas the latter was high class and would project a better image of the product (Carlsberg Beer) to be advertised in the film. Following this meeting, some suggestions were made by Andrew Lee, because of the urgent requirement of the defendant company to have a film ready for exhibition on television, for an additional film called "Bowling" to be produced so as to allay the demands of the defendant company which was already fretting over the delay in having any of the original or substitute films produced in time. The detailed cost of the "Bowling" film was not discussed at the time the suggestions were made but there was some mention by Andrew Lee that the price would be lower than either of the two films previously ordered on 30th April 1973. The plaintiff says that the "Bowling" film forms part of the original contract and that that film was in substitution of the "Water-skiing" film and therefore the price of that film if quoted individually would be $20,000 and not $12,000 or even $15,000 as being one-half of the price originally agreed upon when the two films "Car Racing" and "Billiards" were proposed. Some explanation, mostly regarding the use of one jingle for both films and a sound track common to both films, has been given as to why it would be cheaper to quote for two or more films than for a single film but these explanations are in my view unsatisfactory primarily because the one contract covered both films and the agreed price was $30,000 for two films, no separate price having been quoted for each individual film. No conditions were attached, whether in writing or in any of the discussions before or after the order, to the contract that if only one film were made, then the price for the single film would be $20,000. Moreover the price of $30,000 had been increased from an earlier discussed price of $25,000 for no apparent reason, prior to the quotation, and the defendant company had accepted the increase; yet on that occasion no conditions were either proposed or even suggested by the plaintiff. The conditions attached to that contract are only those set out in the quotation and the agreement of both parties from time to time as to the alteration of the subject of the films and it seems to me that even in the many changes and discussions on the film subjects, no additional conditions were proposed. The claim made by the plaintiff that for an individual film a sum of $20,000 was to be charged is in my judgment completely without foundation. Returning to the "Bowling" film, it is the contention of the defendant company that since this film was to be additional to the two films previously ordered, a different price was negotiated therefor. The "Bowling" film was completed and delivered sometime in August 1973 but there is no record in any Call Report that there were negotiations for such a film although there is some mention of the film in a Call Report for the meeting held on 20/12/73, as follows:

"8. Existing Carlsberg jingle on "Bowling" commercial must be replaced with the old jingle with a male voice singing - Allied Advertising Agency promises to cut the original sound-track down to 15-second. If the effect is not satisfactory Allied Advertising Agency will have to have the whole jingle replayed and East Asiatic Co. will be notified of the additional cost involved before January 3, 1974."

5. At that same meeting the following record of the defendant's complaints appear:

"1. Client complains about the following:

6. If the plaintiff's contention is correct that the "Bowling" film is part of the contract for the two films, it would appear to me that Item 1(b) would not have been recorded separately, since the "Bowling" film was completed and the "Bowling" film received separate coverage at the same meeting. Mr. Andrew Lee himself states in evidence that the down payment of $12,000 for the two films quoted on 20th April 1973 was transferred to the credit of the amount due on the "Bowling" film and that such amount, that is $12,000, would be in full and final settlement of any amount owing on the "Bowling" film. Mr. Andrew Lee has been described as a senior Account Executive of the plaintiff firm by the plaintiff and throughout the period that the defendant company was in business relationship with the plaintiff he conducted practically all the negotiations and discussions with Mr. Madsden as the principal representative of the plaintiff. There is no doubt in my mind that Mr. Andrew Lee had implied, as well as actual authority to conduct financial negotiations on behalf of the plaintiff, no notice having been given to the defendant company or to Mr. Madsden to the contrary. Mr. Madsden was entitled in my judgment to consider that as far as Andrew Lee was concerned, the latter had full authority to negotiate with him on the subject of payment for the "Bowling" film.

7. I find therefore that the "Bowling" film does not form part of the original contract and that full payment had been made towards the production price thereof by the transfer of the deposit of $12,000 paid by the defendant company on the two films originally agreed upon.

8. There were, according to the case report for 20th December 1973, two films to be produced by the plaintiff for the defendant company, that is "Golfing" and "Water-skiing". We are now only concerned with the "Golfing" film since the plaintiff has made a claim of $10,000 in respect of this film for "total costs for services rendered in respect of the 1st shooting and all other services incidental thereto and thereafter due from the defendant to the plaintiff."

9. An answer print, that is, a film produced without a sound track for approval of the client and which required editing was produced for the "Golfing" item sometime in September 1973, but according to both Mr. Madsden and Mr. Lee who attended a preview of that film, the production was so unsatisfactory that it was rejected outright. However, no proposal was made up to the 20th December 1973 by either the plaintiff or defendant company that that film should be abandoned or replaced by another. A meeting was subsequently held on 20th December 1973 where complaints were made by Mr. Madsden on behalf of the defendant company concerning the delay in producing the two films for advertising Carlsberg beer on television. There is however a record in the Call Report for that meeting in respect of the "Golfing" film as follows:-

"7. Carlsberg "Golf" commercial is scheduled for shooting on January 4, 1974. It is expected that the first answer print will be completed by January 16, 1974. - Allied Advertising Agency will follow up."

The plaintiff was present at that meeting and he says in evidence that "it was agreed between him and defendant's representative that the "Golfing" film would be re-shot on 4th January 1974. That date for re-shooting was accepted by the defendant." In my view the Call Report for the 20th December 1973 in respect of the "Golfing" film indicated as much and it is surprising to me to hear Mr. Madsden say that he had not yet made up his mind and that a decision on "re-shooting" would require further consideration before a final answer was given. Mr. Madsden had the use of the telephone, he had his assistants who could call up either the plaintiff or Mr. Andrew Lee at any time, yet on no occasion had he taken the opportunity of having the Call Report for that meeting amended to reflect what had been said about his actual intentions at the meeting. This was not done and in my judgment, the defendant company had allowed the plaintiff an extension of time up to 16th January 1974 for the latter to produce the first answer print of the "Golfing" film. Having done so, the defendant company informed the plaintiff at a subsequent meeting held on 2nd January 1974 "to stop golfing TVC immediately". The reason given by Mr. Madsden for this request was that there was unreasonable delay on the part of the plaintiff to produce such a film. Having granted the plaintiff an extension of time up to 16th January 1974 to produce the first answer print of the "Golfing" film, the defendant company cannot now be heard to say that the contract was cancelled because of unreasonable delay, since the time of completion, at least as far as the "Golfing" film was concerned, had not then expired.

10. It has been submitted that following the cancellation of the "Golfing" film the defendant company made several requests for ideas on the production of two further T.V. Commercials for advertising Carlsberg Beer. These do not concern the present case since by agreeing that the $12,000 deposit be transferred to the credit of the "Bowling" film account subsequent to the meeting of 2nd January 1974, the defendant company had already evinced an intention of not going through with the original contract for the 2 films and in my judgment did so without good reason. This intention was carried into effect when on the 29th March 1974 the plaintiff was informed that the defendant company terminated his services completely.

11. The plaintiff bases his claim in respect of work done on the "Golfing" film on the supposition that each separate film was priced at $20,000. I have already stated that this was done without any foundation whatsoever and since his claim is equal to one-half of the price of each film, I assess his claim at $7500 in respect of work done on the "Golfing" film, this sum being one-half of $15000, the original price quoted. Accordingly there will be judgment for the plaintiff in the sum of $7500, with no order as to costs.

Representation:

Messrs. Fairbairn, Kwok & Wang, solicitors for plaintiff.

Messrs. Deacons, solicitors for defendant.