Chan Chi-yin t/a Sui Wah Mould Factory v. Superstrong Industries Ltd. t/a M & T International
Read the full judgment text of DCCJ 26180/1998 on BabelCite. This District Court judgment was delivered on 1 March 2001.
1. This is a modest claim for $114,000, the trial of which has taken 2 1/2 days with the result that the costs of the action will mean that even the successful party will be out of pocket.
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DCCJ026180/1998 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 26180 OF 1998
Coram: H H Judge Carlson in Court Dates of Hearings: 17 and 18 January, 10 February Date of Judgment: 1 March 2001 ___________________ J U D G M E N T ___________________ 1. This is a modest claim for $114,000, the trial of which has taken 2 1/2 days with the result that the costs of the action will mean that even the successful party will be out of pocket. 2. The plaintiff is in business in a fairly modest way manufacturing, amongst other things, plastic moulds for electrical and electronic products. The defendants are a much larger enterprise, employing a number of persons both in their offices and on the production side. 3. The claim relates to two invoices issued by the plaintiff to the defendants in respect of orders placed by the defendants which the plaintiff has duly manufactured and delivered. The particulars are the following: invoice No. 2389 dated 29 April 1997, $24,900 and invoice No. 2414 dated 8 October 1997, $89,100. 4. It is agreed by the defendants that the orders were placed by them and properly manufactured and delivered by the plaintiff. They allege that both invoices have been paid and that nothing is owing to the plaintiff. 5. When the issue is stated in this way, it might be thought that this would have been a very straightforward case to try. On the contrary, it has been necessary to consider every transaction between these parties which goes back to 1996 as each side has sought to make out the correctness of their account and accounting systems culminating in an allegation by the defendants that they have in fact overpaid the plaintiff. 6. Before I embark on what may be a rather laborious exercise, I am bound to observe that both parties have only themselves to blame for having become drawn into this uneconomic litigation by virtue of a less than perfect accounting system and a haphazard method of payment by the defendants who, as will become very clear in a moment, would by one large cheque pay parts of purchase orders and invoices. Whilst the parties remained on good terms, they were able to accommodate each other satisfactorily. 7. Once they fell out, all the ingredients for a dispute of this sort, which they had provided by their way of settling accounts, had now surfaced and been fully deployed. The most helpful way of describing the dispute is to explain each party's case separately before deciding whether, on a balance of probabilities, the plaintiff has discharged the burden of showing that his version is the correct one. 8. I take the plaintiff's case first. The claim relates to two purchase orders placed by the defendants. Firstly, POMT19/-96/-0536, which is at page 1 of the documents bundle. The order was for $83,000. Three invoices relate to this purchase order of which two have been paid and one for $24,900 has not. The details are as follows:
9. Next, purchase order MT19/-97/-0616, page 8 of the bundle which is for $297,000:
10. If this was all that the parties had transacted, the plaintiff might reasonably have expected to have made his case out. Nevertheless, the irony is that by May 1997 the parties' relationship was so good that they decided to form a Joint Venture company called Superstrong Moulding with 70 per cent of the shares owned by the defendants and the remaining 30 per cent by the plaintiff. 11. Under this Joint Venture, the defendants would be the Joint Venture's only client and place their orders with the Joint Venture company which would be operated largely by the plaintiff, whose track record thus far had impressed Mr Law, the defendant's principal director. It therefore becomes necessary for me to detail these transactions as well, which have in fact caused this dispute and this action. 12. There were two purchase orders, firstly MT19/-97/-1411, page 18 of the bundle for $298,800 and the other at page 23, MT19/-97/-1720 for $585,000. It is clear that these orders were only partly completed. I assume the parties' relationship had soured during the course of this process and according to the plaintiff, three payments of $50,000 were made to the Joint Venture company by the defendants. These are as follows:
13. One can see therefore that at this stage the plaintiff's case appears to be both logical and compelling. 14. But I now turn to the defence. Miss Catton Chan, who appears for them, has helpfully prepared a schedule which sets out the defendant's case which has been marked for the purposes of identification only, Exhibit D1. This is as follows, purchase order MT19/-96/-0536 dated 4 July 1996:
15. Then purchase order MT19/-97/-0616, 5 March 1997:
16. From that version, one can readily see the differences in the parties' cases. As to invoice 2389 for $24,900 (page 16), which the plaintiff says remains unpaid, the defendants say that this was settled by part of cheque 333992 for $50,000 on 19 May 1997 and which was receipted by receipt 2403 on 24 June 1997 (page 29). As to this cheque, the plaintiff's case is that this was used to settle part of invoice 2390, 24 April 1997, for $89,100, the balance being settled by cheque 334992 on 22 August 1997. There is force in that because the receipt itself recites purchase order MT19/-97/-0616 as does its corresponding stub (part of Exhibit P1), whereas invoice 2389 for $24,900 relates to purchase order MT19/-96/-0536 and there is simply no receipt relating to invoice 2389 under purchase order MT19/-96/-0536. For this reason and for others which I will make reference to presently, I am entirely satisfied that invoice 2389, $24,900, remains unpaid by the defendants and that the plaintiff must have judgment in respect of this part of his claim. 17. As to the other outstanding invoice, 2414 for $89,100, the defendants say that this has been settled to an excess by four payments, 334224 for $50,000 (page 27), 334350 for $50,000 (page 28), 334992 for $39,100 (page 31), receipt No. 2407 and 335001 for $50,000, page 34. The plaintiff replies to that as follows, and in relation to this the Joint Venture company becomes highly significant: firstly, as to cheque 334992 for $39,100 receipted by receipt No. 2407, this went to part-payment of invoice 2390 also for $89,100. 18. In my judgment, the plaintiff must be right again on this entry because if the defendants are right, the plaintiff was issuing receipt No. 2407 on 22 August 1997 in respect of invoice 2414 which is dated six weeks after the receipt, that is to say on 8 October 1997. And notwithstanding Mr Law's explanation that the payments were frequently unsynchronised, I am unable to accept his reasoning on this matter. The inherent probabilities and logic clearly favours the plaintiff's case that cheque 334992 went in partial satisfaction of invoice 2390 dated 24 April 1997. 19. That being my view, this removes an important plank from the defendant's case on its alleged payment and indeed overpayment on invoice 2414 (see Exhibit D1). But the matter does not end there because as to three of the defendant's $50,000 cheques, 333992, 334224 and 335001, which Miss Chan has sought to attribute to payment in one form or another to the two disputed invoices, Mr Wong Po-wing for the plaintiff lays claim to these in relation to the Joint Venture under purchase order MT19/-97/-1411 and purchase order 19/-97/-1720, pages 18 and 23 respectively (see also receipt Nos. 2401, 2402 and 2408, page 32, and the original stubs being exhibit P1, to which I will need to make further reference). 20. In this regard, he also relies on the evidence of Miss Chan Kit-bing and her accounting report, Exhibit P2, which purports to show that these three cheques were entered into the relative accounts for the Joint Venture and not in the way attributed to them by the defendants. This exhibit, P2, is criticised by Miss Catton Chan because she submits that it is entirely self-serving for the plaintiff. It was compiled entirely from information provided by him. That of course is correct, but it is also correct that this was all done at a time in the parties' relationship when things were amicable and they were co-operating to their mutual benefit. 21. I can find no ground for impugning the correctness of these entries or the reason why the record was compiled in this way. I also accept the plaintiff's explanation why many entries were posted to his account which was before the Joint Venture company got its own bank account when those entries would have been reversed and were reversed to reflect the correct situation vis-à-vis the Joint Venture company. 22. I am perfectly content to say that Mr Wong's analysis of these three $50,00 cheques is to be preferred to that advanced by Miss Catton Chan. In saying this, I have also taken into account what in my view is the only troubling feature of the plaintiff's evidence, and this concerns Exhibit P1 being the original receipt stubs 2401 and 2402 where additions in pencil have been written into those stubs. 23. Miss Chan submits that the plaintiff has indulged in ex post facto justification of his case in order to explain away two of the $50,000 payments so as to attribute these to the Joint Venture. Both sides in fact accuse the other of dishonesty over these two receipts. The defence says, deliberate additions in pencil, and the plaintiff says the defendants have deliberately withheld production of the original receipts themselves because to do so would have destroyed their case. The defendants claim never to have had these receipts. The plaintiff has explained that he made the pencil entries when he returned to his office having issued the receipt itself to the defendants at their offices and having consulted the purchase orders; he then wrote in the details in pencil. 24. Mr Wong submits that it is clear that these receipts, coming at the beginning of this particular receipt book, had clearly been issued in the ordinary course of business by the plaintiff. He also relies on the fact that no dishonest person would be so inept as to write these additions in pencil if he were minded to create a document which was intended to deceive the court. He also submits that his client would hardly draw up false receipts in May, June and September 1997, receipt No. 2408, which has no alterations or additions, to support some future dispute which at that time was neither contemplated nor predictable. 25. I am conscious of the difficulties created by receipt Nos. 2401 and 2402 in the presentation of the plaintiff's case, but I am bound to say that I found the plaintiff himself to be a perfectly straightforward individual in the witness-box and in circumstances where the rest of his case has held up in logic - and the defendant's has not - in terms of the date of the receipts pre-dating the invoices, that I do feel able to say that I accept the plaintiff's case without reservation. I am satisfied that he has discharged the burden, and I am satisfied with the plaintiff's analysis of the payment of the invoices and that the two disputed invoices remain unpaid. 26. Accordingly, there must be judgment to the plaintiff in the sum of $114,000. There will also be interest thereon at half the judgment rate from the date of the writ until judgment, and thereafter at the judgment rate until payment. COURT: I suppose in this matter costs must follow the event. I do not suppose you can resist that, can you, Mr Lo? MR LO: Perhaps may I invite your Honour to make a cost nisi to be made absolute after 14 days. The reason is that since I am not counsel representing my lay client before the court, making the submission, therefore I will take counsel's advise on the costs. COURT: I am prepared to do that. So there will be an order nisi that the defendants pay the plaintiff's costs of the action, to be taxed if not agreed. I presume you want me to say, Miss Cheng, with certificate for counsel. MISS CHENG: Right. COURT: With certificate for counsel and that part of the order will also be an order nisi.
Representation: Present: Mr Wong Po-wing, instructed by Messrs Darin Leung & Partners, for the Plaintiff Mrs Julie Chan, instructed by Ko & Co., for the Defendant Present: Ms B Cheng, of Messrs Darin Leung & Partners, for the Plaintiff Mr S Lo, of Ko & Co., for the Defendant
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