Intercontinental Chemical Corporation Ltd v. Fung Seng Industrial Co

HCA003077/1978

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 3077 OF 1978

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Coram: Mr. Commissioner Mayo

Date of Judgment: 20th February 1980

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JUDGMENT

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1. The Plaintiff Company, which deals in plastic materials is sueing the Defendant for the balance of an account for the price of plastic goods supplied to it. The Defendant firm, which at the time the goods were supplied was conducted by Mr. Lam Wing Fan, disputed the claim as he contended that he had concluded an agreement with the Plaintiff whereby it was agreed that he could appropriate moneys payable to him under an earlier contract between the parties, to the credit of this subsequent transaction. The Plaintiff denied that the earlier contract was in fact between the parties and claimed that it was between themselves and a Mr. Lam Hoi.

2. The only witness to give evidence for the Plaintiff was its manager Mr. Charles Broquard. He gave evidence of a meeting which took place on the 8th February 1977 which was attended by Mr. Lam Wing Fan, a Mr. Lau Siu Ngai who acted as an interpreter, Mr. Lam Hoi and one of the Plaintiff's employees Mr. Choy. He said that there had been litigation between the Plaintiff and Mr. Lam Hoi and that a settlement had been concluded in the litigation, a term of which provided that Mr. Lam Hoi was obligated to purchase over a 6 month period between November 1976 and May 1977 large quantities of plastic materials. He assumed that the purpose of the meeting was for Mr. Lam Hoi to comply in part with this obligation and he denied that his Company entered into any contract with Mr. Lam Wing Fan notwithstanding his admission that his Company issued a receipt for 3 cheques for HK$6,801.60 each to Fung Seng the Defendant which stated that the moneys represented a deposit for the sale of 80 metric tons of Polypropylene under contract no. 187/77.

3. The explanation Mr. Broquard gave for this apparent inconsistency was that he did not attach much importance to the question of whose name the receipt was issued in as he assumed that Mr. Lam Wing Fan was loaning moneys to Mr. Lam Hoi or there was some other arrangement between them of which he had no knowledge.

4. Mr. Broquard further gave evidence that his Company drew a contract to reduce the agreement to writing and the parties to the contract were the Plaintiff of the one part and Lam Hoi of the other. This contract has not deduced as evidence because Mr. Broquard said that the original copy which he claimed bore Mr. Lam Hoi's signature or initials had been left with the solicitors previously instructed by his Company, W.S. Lo., and had not been returned. Mr. W.S. Lo was not subpoenaed as a witness.

5. Mr. Broquard said that he ordered 80 metric tons of Polypropylene from Esso chemical in the U.S. and that it arrived in June 1977. He notified Mr. Lam Hoi of the arrival and received a Bankers Draft for US$14,834.90 form Mr. Lam Hoi and delivered approximately 27 metric tons of Polypropylene to Mr. Lam Hoi. He said Mr. Lam Hoi was unable to pay for the balance of the goods and it was necessary for the Plaintiff to dispose of the material through other channels.

6. Mr. Broquard denied any knowledge of an agreement to allow Mr. Lam Hoi's deposit under the contract I have referred to to be assigned to the Defendant. He also gave evidence that his employee Mr. Choy was only a salesman and did not have authority to enter into any agreement of such a nature. Mr. Choy was not called as a witness.

7. Mr. Broquard did however remember in June selling a quantity of Polyprostyrene "off grade" material to the Defendant for $33,539.45 on terms that payment be effected within 60 days. As payment was not effected on the due date he instructed his solicitors to write a letter of demand. In response to this demand the Defendant made a payment of $10,000 and subsequently made a further payment of $3,298.42 which Mr. Broquard claimed represented interest which was payable for the outstanding moneys owed by the Defendant at the rate stipulated in the contract of 1% p.m. on such moneys after the due date for payment. The original statement of account in respect of this payment was exhibited as evidence and there is no reference in the statement to the balance of the moneys representing the amount of the disputed deposit. The explanation given by Mr. Broquard for this omission was that the amount of interest payable in respect of the balance could not be calculated as Mr. Broquard did not know when payment would be made. Also he claimed that there was no point in including reference to the moneys as the Defendant was unwilling to make payment.

8. Mr. Lam Wing Fan gave a rather different version of what transpired. He was emphasic that it was clear to everyone that the meeting on the 8th February 1977 that the contract for the purchase of the materials was between him and the Plaintiff. Initially when he paid the deposit he was given a receipt in the name of Mr. Lam Hoi and he rejected this and insisted upon the receipt being made out in his name. Mr. Lau Siu Ngai acted as an interpreter for him at the meeting and he gave evidence which corroborated the Defendant's version of the meeting. Mr. Lam Wing Fan said that it was a term of the contract that the 80 metric tons of Polypropylene he had purchased should be delivered by 3 instalments in the months of March, April & May 1977. In spite of his repeated requests deliveries were not made until June 1977 when he took delivery of 27.2 metric tons of the material. He said that it became fairly clear to him that it was unlikely that he would obtain delivery of the balance of the material covered by his deposit. After various discussions with Mr. Choy he decided to cut his losses and purchase a further quantity of plastic material on the basis that that deposit moneys being held by the Plaintiff could be appropriated as part payment for the said materials. He said that the next thing he knew was the receipt of a solicitor's letter of demand for the purchase price payable. He said that he immediately attended upon Mr. Choy and again confirmed the arrangements for the transfer of the deposit and paid HK$10,000 which made up most of the balance of the moneys which were payable to the Plaintiff. He did not pay all of the moneys as Mr. Choy was unable to advise him exactly what amount was payable. Subsequently he was advised that the balance was $3,298.42 which sum he paid.

9. Nothing further happened for 11 months. He was then, without any prior notification, served with the writ in the present proceedings.

10. I have not been able to derive much assistance from the supporting documentation. Two of the relevant invoices are ostensibly in the name of the Defendant but on closer examination it is apparent that Mr. Lam Hoi's name has been deleted and the Defendant's name typed over the deletion. A similar situation prevails in respect of the receipt which was issued when the materials were delivered in June and in the document which was issued by the Plaintiff giving notice of the arrival of the goods. These documents were in the possession of the Defendant and he strenuously denied having tampered with them or being a party to other persons doing so. Mr. Broquard likewise insisted that neither he nor any members of his staff had altered the documents. He said that any documents issued by his Company had to go through a number of hands culminating in them being produced to him for signature. He said that it was inconceivable that altered documents of this nature would have passed his scrutiny and been issued.

11. Having considered all of the evidence carefully I am in no doubt that where there are conflicts of evidence between Mr. Broquard and Mr. Lam Wing Fan I should accept the evidence of Mr. Lam. He made an excellent impression upon me as a witness. I have no doubt that the first contract was made between Mr. Lam Wing Fan and the Plaintiff. I also accept that there was an agreement for the appropriation of the deposit to the second contract and accordingly the Plaintiff's claim must fail.

12. I am not necessarily convinced that Mr. Broquard has deliberately attempted to deceive the Court. It may be the case that he has been let down by members of his staff.

13. Judgment is entered for the Defendant who shall be entitled to his costs. During the hearing Counsel for the Defendant indicated that if the Plaintiff's claim failed he did not wish to pursue the Defendant's counterclaim. I therefore make no order in respect of the counterclaim.

Representation:

Mr. Petrus Chan (Hampton, Winter & Glynn) for Plaintiff.

Mr. Ronny Wong (Hwang & Co.) for Defendant.