Valiant Advertising Agency (A Firm) v. Pacific Trading Co (A Firm)

DCCJ001675/1970

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO.1675 OF 1970

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Coram: D. Cons, D.J.

Date of Judgment: 21 December 1970

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JUDGMENT

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1. The plaintiff in this action is the sole proprietor of an advertising agency which he appears to run with the assistance of his two brothers. The defendant is a firm, also apparently to a large extent a family concern, which has for the past 4 years instructed the plaintiff to prepare and insert advertisements in various daily newspapers. Other transactions have also taken place between them. The action now is to recover almost $10,000 said to be due in respect of services rendered during last year and the first few days of this year.

2. The greater part of 8 1/2 days of trial was taken up with the proof of individual and particular items which could have been much more conveniently dealt with by way of taking an account had those responsible for advising the parties to this action applied their minds to the circumstances before the case came before trial. There were only 2 witnesses called, the plaintiff on the one hand and a Mr. Chin Yiu Chung who claims to be a partner in the defendant firm, on the other. I merely say "claims" because although he tells me that he became so two years ago, the registration with the Commissioner of Inland Revenue has remained unchanged as a sole-proprietorship of his mother since the inception of the firm in 1965, although changes were made last year in the registered particulars of another firm of which he is also a partner and which trades under precisely the same English name. These two gentlemen gave evidence in direct contradiction of each other on most, if not all occasions, when this was possible. Unhappily the case, despite the plethora of documents produced, turns ultimately upon personal credibility. Eventually after considerable deliberation and without very great confidence I have come to the conclusion that generally the evidence of the plaintiff is more reliable. I appreciate that he was not the most impressive witness and I by no means accept everything that he says as true. At times his anger led him into reckless evidence, as for example when referring to the garage that he had, so he said, personally seen at 787 Nathan Road. But Mr. Chiu was equally unsatisfactory and I formed, the opinion that his evidence, although not so patently false, was more deliberately calaculated.

3. As far as I understand this action there are three issues which require to be decided generally before any account can be worked out, and 3 further issues relating to individual transactions. The 3 general issues are whether or not the plaintiff delivered to the defendant copies of the newspapers containing the advertisements which he inserted on the defendant's behalf; whether or not the defendant is liable to pay the photo-engraving charges which were incurred with regard to certain of the advertisements; and whether the defendant should pay the reasonable charges for designing where necessary and preparing the advertisements for printing - "painting" as it has been called throughout these proceedings - or whether a flat rate had been agreed between the parties at $15 for each item.

4. The necessity of delivering newspapers in support of the plaintiff's invoices is one of the few instances where the witnesses are in agreement. But the agreement goes no further. The plaintiff contends that throughout the period in question he delivered invoices from time to time with newspapers attached; the defendant that at first they were brought in bulk on such occasions as accounts were settled but that since the middle of August last year not one has been produced. On this issue I find in favour of the plaintiff and I am satisfied that a copy of the appropriate newspaper was delivered in support of each advertisement for which he is entitled to recover. I do so principally on the more favourable view that I take of his evidence but I am confirmed in my opinion by the admission of Mr. Chin that in January this year he offered to pay extra if newspapers were then produced. This would have seem an unnecessary and unwarranted expense and out of keeping with his character, if he had not already received the copy of which he was entitled under the standing contract.

5. It may be more convenient if I turn now to one of the particular issues, namely whether the sum of $7060.32 paid by the defendant and acknowledged by the plaintiff in 3 receipts dated as to two on the 8th of August and the third on the 29th of October (Ex.13(2)(3)(7)) was payment in respect of charges included in the agreed bundles of invoices or whether it related to other fees outside this action. The plaintiff supported the latter allegation by several documents now contained in Ex.6. The figure shown in what appears to be a copy of an invoice dated the 9th of July and initialled by somebody on the 1st of August coincides with that shown on the receipt Ex.13(2). The total of the figures shown on 2 further copies dated as to two on the 20th of June and as to one on the 24th of July and all initialled on the 8th of August, less a receipt issued by the defendant dated the same date coincides with the figure shown on the receipt Ex. 13(3); the total of 2 further copies dated the 26th and 27th of October and both initialled on the 28th coincides with the figure shown on the receipt Ex.13(7). The defendant maintains that he has never received or seen the originals of the copies which make up Ex.6; that payments acknowledged by the receipts Ex.13(2) and (3) were made against settlements of accounts supported by newspapers and receipt Ex.13(7) was against an invoice which he produced and is now Ex.17. This invoice, unlike the copies of all the others produced in this action, is handwritten, obviously not in the writing of the plaintiff and denied by him to be in the writing of any person connected with his firm. It is undoubtedly upon paper belonging to his firm but he mentions that at one stage Mr. Chin's younger brother, with whom he was upon very friendly terms, at least at that time, asked to be given about 20 sheets of the papers in question and this may well have proved the source of the document in question. The plaintiff's explanation is not completely satisfactory, for it is difficult to see why Mr. Chin should, in the middle of a series of payments made for whatever reason in round figures from the 1st of October to the 20th of December, pick out for individual settlement the two small invoices at the end of Ex.6. But the difficulties attendent upon the faking of such a bundle of documents during the course of the trial or of collecting genuine but unconnected documents which so conveniently but by no means simply coincide with the figures in question seem to me too great to admit for such possibilities. I therefore accept the plaintiff's explanation of these payments and reject that of Mr. Chin.

6. I took this item out of turn because it provides the answer to two other general questions raised. If the invoices in Ex.6 are, as I have found, both genuine documents and documents which have been settled by the defendant, these show that in August and October the defendant was quite willing to pay photo-engraving charges incurred in July and August, thereby effectively disposing of Mr. Chin's contention that eqrlier in the year he had agreed with the plaintiff that in future no such charges should be levied; similarly they show that the defendant was willing to pay "painting" charges as assessed by the plaintiff rather than at a set rate of $15 each. The photo-engraving charges for the period with which I am concerned were admitted during the trial to be claimed by the plaintif if payable; there is no evidence to support the painting charges except the agreed invoices themselves, but in the absence of any thing to show otherwise I think they are probably correct.

7. I turn now to the charges for the neon signboard, the second of the individual items (agreed bundle No.1 invoice dated the 17th of May.) A certain confusion persisted throughout the trial as to what actually was involved in this item but I think I am right in saying that the plaintiff includes therein the original erection of the neon sign, its subsequent removal and re-erection at a different part of the same building, and also the repainting of a name-board on the wall of the building. For this whole operation he at first charged the sum of $1700 but later reduced it to $1160 at the request of Mr. Chin, a sum which has not yet been paid. Mr. Chin on the other hand suggests that payment for the original installation has long been settled, but that the installation was not in the exact place that he had requested. However, as he later had second thoughts about the correct location it was agreed that removal costs should be borne by the defendant company to the extent of $400 and that a further $300 odd was agreed upon as the costs for the painting of the name-board, and item which had not been part of the original request. The plaintiff did not carry out any of this work himself but engaged an outside contractor to whom he paid a total sum of $920 (Exs. 3, 4 and 5). If his story is correct it would appear to me that he surcharged the defendant almost 75% for doing no more than passing on instructions to the contractor, a rather expensive form of agency. But apart from this the receipts given by the contractor make Mr. Chin's story look the more reliable. Exs.4 and 5, totaling $600, appear likely to relate to the moving of the sign to its second position for which a share of $400 would not be unreasonable, and Ex.3 to the painting of the nameboard later. This item must therefore be reduced to $720.

8. The third and the last individual item relates to Exs. 19 and 20. Ex.19 is a copy of debit note apparently issued by the defendant on the 23rd of January this year against the plaintiff in the sum of $5000 and in respect of 20 tape-recorders. There are also some pencilled Chinese characters near the foot which bear the date the 25th of February this year but I have been provided with no translation thereof, nor do I know who wrote them. Ex. 20 is an informal receipt for the same sum admitted to be written by the plaintiff but bearing no date. Mr. Chin alleges that the receipt was given to acknowledge that the value of the tape-recorders had been set off against advertising fees due and in return for a copy of a delivery note signed by the plaintiff at the time of the actual delivery of the sets. But if this were so one would have expected a formal receipt like those in Ex. 13 and some mention thereon of the purpose for which it was given. I think it more likely that Ex.20 was, as the plaintiff says, a temporary receipt for some other payment and retained by Mr. Chin after the formal receipt was later issued. There is no express claim in either the original or the amended defence to set off or claim any amount due for 20 tape-recorders sold by the defendant to the plaintiff and I therefore deliberately express no opinion as to whether or not Ex.19 is a genuine document; I content myself by saying that there shall be no set off in respect of the $5000 mentioned in Ex.20.

9. Before turning to a consideration of how much money, if any, may be due to the plaintiff I must refer to two other matters. In paragraph 1(D) of the amended defence it is alleged that payment was due only upon production of the appropriate newspapers and the receipts from the news-paper companies. I have already dealt with the newspapers, and to the receipts I shall turn shortly. In evidence however Mr. Chin added a third requirement namely the production of written instructions. It was his evidence that for every advertisement, however small, placed by him he would issue written instructions to the plaintiff and that he would require their production before payment in order to check that the advertisement had been in accordance therewith. He was adamant that his brothers would have adopted the same practice, for he had impressed upon them the need for being proper in their work. It is indeed surprising that if he was so meticulous in his approach he failed also to make and retain copies of those instructions. But it seems to me most unlikely that he was. Written instructions for advertisements like that referred to in Ex.26 are understandable; however I find it impossible to believe that they were invariably issued for classfied advertisments like the sale of second hand motor cars and classified advertisements figure largely in the invoices. Moreover if the production of such instructions at the time of payment had in fact been a pre-requisit of payment there would seem to be no reason why it was excluded from paragraph 1(D) to which I have just referred. I am satisfied that it is an excuse thought up by Mr. Chin during the course of the trial.

10. Secondly this action is brought against the Pacific Trading Company of 787, Nathan Road, ground floor, Kowloon. The Business Registration Certificate of this firm (Ex. 28(A)) shows a sole proprietor-ship in one Lee Wai Fong who is Mr. Chin's mother. However, as I mentioned earlier, Mr. Chin claims claims also to be a partner in this firm and I accept it to be so. The Chinese name under which the firm trades may be romanized as the Tai Ping Mau Yik Hong. But there is another Pacific Trading Company carrying on business from 77A Waterloo Road, ground floor, Kowloon, of which the registered partners (Ex.28(B)) are Mr. Chin and his elder brother. This firm trades under the Chinese name of the Ko Tat Hei Che Hong. Its business includes the retail of Skoda Motor cars and the sale of second hand vehicles of all kinds. Mr. Chin was insistent that apart from business transactions between them these two firms are in every single respect separate and independent and should therefore not be responsible for the liabilities of each other. The Plaintiff, while accepting that he was at all times aware of the existence of two firms, maintains that he accepted instructions indifferently from each and that no distinction had ever been drawn in the payment of his accounts. I have some doubts myself as to how separate these two firms are kept, for on its debit note (Ex.19) the Tai Ping Company purports to operate also from the address of the Ko Tat Company, More importantly, although I do not have details of the advertisements covered by Ex.6, most of them are classified advertisements and I find it hard to believe that none in that bundle relate to the business of the Ko Tat Company. I am told that the cheque Ex.29 by which a certain amount of money was paid to the plaintiff was drawn on an account maintained by the Ko Tat Company but there is nothing on the face of it to show to which Pacific Trading Company or to which advertisement fees it relates. I am satisfied that a course of dealing had been established between the two firms and the plaintiff whereby the plaintiff was entitled to treat them as one and he may therefore bring his action for the total amount against either.

11. I do not propose to go into detail with regard to the accounts that I have worked out between the parties. My figures are retained in the Court file should at any stage it become necessary for anyone to consult them. At the time of the trial I noted on the record the manner in which each item in the invoices was checked against the newspaper receipts produced. In many incidences the plaintiff appears to have over-charged and I have reduced the items accordingly, although sometimes only to approximate round figures. I have excluded items not supported by receipts or where the receipts or debit notes had been issued by the plaintiff himself. As an employee of the Sing Po Newspaper he may in some cases have had authority to issue debit notes on behalf of that paper but in the circumstances of this case I am not disposed to accept them now as evidence in support of his own separate claims. Similarly I have excluded items for which the receipts on their face bear no relation to either of the two firms. Objection was taken to 5 advertisements or series of advertisements on the ground that the actual advertisement shown in the newspaper which I saw in Court did not measure correctly, but I find as to one that the charge has already been reduced by me on the invoice and as to three others that the plaintiff based his price on a smaller amount than that actually charged by the newspaper concerned. In the third instance the measurement is correct. It is agreed by the plaintiff that in certain circumstances he was entitled to further benefits from newspapers for which he may not have accounted to the defendant, as for example where the same advertisement was placed in both the morning and the evening editions of a newspaper, but the evidence as to the extent of such benefits was too vague to allow for calculation. It may perhaps be represented by the odd instance of undercharging which incidentally I have made no effort to correct.

12. The result of my calculations is as follows:-

13. There will therefore be judgment for the defendant upon the claim and judgment also for the defendant upon the counterclaim in the sum of $1,240.82. Unless the plaintiff wishes to argue the matter it would seem to follow naturally that the defendant is entitled to his appropriate costs for the whole action.

21 DEC 1970

Receipts excluded from account

Representation:

Mr. Yu (Peter Mo & Co) for the plaintiff.

Mr. Mak (Mak & Co) for the defendant.