Borneo International Furniture (Hong Kong) Ltd v. Lau Wai Man t/a Hung Cheong Long Furniture Co

HCA005470/1996

HCA 5470/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 5470 OF 1996

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Coram: Hon Ma J in Court

Dates of Hearing: 24 - 26 June 2002 and 3 - 4 July 2002

Date of Judgment: 9 April 2003

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J U D G M E N T

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Introduction

1.In this action, the Plaintiff claims a sum in excess of $1.6 million under unpaid invoices in respect of the sale of furniture and other products from the Plaintiff to the Defendant. The relevant events took place principally in 1995 and 1996.

2.At all material times, both the Plaintiff and the Defendant dealt in furniture. The Plaintiff was a distributor in Hong Kong and Macau of products (principally office furniture) made under the brand name "BIF". The products were largely made in Korea by the Plaintiff's associated companies. The Defendant was a retailer of BIF furniture in Hong Kong and Macau.

3.By an agency agreement dated 25 April 1994 made between the Plaintiff and the Defendant ("the Hong Kong Agency Agreement"), the Plaintiff appointed the Defendant as a non-exclusive agent for the sale (whether wholesale or retail) of BIF products in Hong Kong. The following provisions of this Agreement are of note:-

(1) Under clause 2.c, the Defendant agreed that he would not sell any furniture manufactured from any company other than the Plaintiff during the term of the Agreement without the Plaintiff's consent.

(2) Under clause 2.d, it was stated that the Agreement would continue for a period of three years from 26 April 1994 to 24 April 1997.

(3) Although the Defendant was appointed the Plaintiff's agent, the agreed mechanism was that he would purchase the relevant goods from the Plaintiff and then onsell these goods to his own customers.

(4) Payment for the goods ordered by the Defendant would be made either by cash or by Letter of Credit. Payment was to be made "at 10th of next month based on finish to delivery at the end of this month":- see clause 4.a. This meant (although the phraseology is clumsy) that where delivery was made to the Defendant in any given month, payment had to be made on the 10th of the following month. In the Plaintiff's evidence, however, it was stated that in practice, the Plaintiff would give the Defendant another month so that payment would only be due on the second month after delivery.

(5) If the Defendant failed to make payment on due date, he had to pay what was called "delay penalty":- see clause 4.a. However, no claim is made by the Plaintiff in respect of this in the present action.

(6) Under clause 6, the Plaintiff was liable for certain advertising expenses in relation to the promotion of its products. In particular, the Plaintiff was liable to pay expenses for the erection of neon signs.

(7) As far as risk of damage to goods was concerned, clause 8 stated that the Defendant would be responsible for any damage to the goods in the course of delivery to his customers while the Plaintiff would be responsible for any damage in the course of delivery to the Defendant. The effect of these provisions was of course that the Plaintiff would be responsible for the goods until delivery to the Defendant.

(8) Then came provisions directly relevant to the termination of the Agreement:-

(a) By clause 10.a, it was stated that in case of default of any obligation or responsibility in the Agreement by either of the parties, the other party would have the right to terminate the agreement by giving 60 days notice in written form.

(b) By clause 10.c, it was stated, inter alia, that the Agreement would cease to be valid where the Plaintiff came to the conclusion that the Defendant could not properly (or "truthfully" which is the actual term used) perform the Agreement by delaying payment for over two months.

4.By an agency agreement dated 1 January 1995 made between the Plaintiff and the Defendant ("the Macau Agency Agreement") the Plaintiff appointed the Defendant, this time on an exclusive basis, as its agent for the sale of BIF home, office and kitchen furniture and other products in Macau. This Agreement contained the following provisions:-

(1) Under clause 2.c, it was stated that the Defendant was not to sell any other furniture except for BIF products, his own products or "Italian products" during the contract period unless with the Plaintiff's consent.

(2) Under clause 2.d, it was stated that the agency would continue for a period of three years effective from 1 January 1996 to 31 January 1997.

(3) As in the case of the Hong Kong Agency Agreement, the agreed mechanism was once again that the Defendant would purchase BIF products from the Plaintiff to onsell to his customers in Macau.

(4) Payment terms were the same as in the Hong Kong Agency Agreement save that the time of payment was the 20th of the month following delivery rather than the 10th.

(5) Under clause 5, the Defendant was permitted credit of $300,000.00 a month, meaning that the amount outstanding at any one time could not exceed that amount.

(6) As to risk of damage, clause 8 stated that the Plaintiff would be responsible for manufacturing defects only while the Defendant would be responsible for any damage to goods during transit. This was in slightly different terms to clause 8 of the Hong Kong Agency Agreement.

(7) As to termination, this Agreement contained (in clause 10 thereof) the same terms as in the Hong Kong Agency Agreement.

5.These Agency Agreements were the latest in what had been a ongoing relationship between the Plaintiff and the Defendant that had gone back as far as 1983. I assume that there must have been other agency agreements over the years but none was produced before the court at trial.

6.The Plaintiff's claims in this case relate to some 575 invoices issued between 1994 and 1996 for which it is alleged that payments have not been made (either fully or at all) by the Defendant. These invoices were identified in two account receivables statements both dated 31 March 1996 in relation to each agency agreement ("the Account Receivables Statements"). The details of these Statements have been reproduced in the Schedule to the Amended Statement of Claim. These Account Receivables Statements show an alleged indebtedness on the part of the Defendant of some $1,823,773.00.

7.By a letter dated 2 March 1996 from the Defendant to the Plaintiff, it was stated by the Defendant that due to his "tight cash position", this explained the late payments made on his part to the Plaintiff. It was also stated, "We have to delay our payment to [the Plaintiff] on March 31 1996 with your agreement."

8.By a letter dated 29 March 1996 from the Plaintiff to the Defendant, reference was made to a meeting at which the Defendant had stated his inability to meet outstanding payments. Reference was also made to the said letter dated 2 March 1996. The letter continued by stating that the Defendant was in breach of both Agency Agreements and that as a consequence, the Plaintiff would stop supplies to the Defendant. A demand was made for payment in the sums of $785,372.00 (under the Hong Kong Agency Agreement) and $1,204,652.00 (under the Macau Agency Agreement). It is to be noted that at that time, as shown by the two Account Receivables Statements to which I have earlier referred, there were substantial amounts which had been due and owing for well in excess of two months. This is relevant when the effect of clause 10.c of both Agency Agreements is considered later in this judgment.

9.On 30 March 1996, the Defendant's solicitors responded to the Plaintiff by denying that their client, the Defendant, was in breach of the Agency Agreements.

10.By a letter dated 9 April 1996 from the Plaintiff's solicitors to the Defendant, reference was made to an alleged indebtedness of $2,042,857.00 and to the said letter dated 29 March 1996. It was stated that in view of the Defendant's failure to settle outstanding balances, notice was given of the termination of both Agency Agreements.

11.On 16 May 1996, the present proceedings were commenced by the Plaintiff.

The proceedings

12.Although at one stage the Defendant was legally represented, this ceased on 29 March 2000. At trial, the Defendant was unrepresented while the Plaintiff was represented by Ms Janine Cheung.

13.Two witnesses gave evidence for the Plaintiff:- Mr Wee Joon Yong, the general manager of the Plaintiff ("Mr Wee") and Mr Cheung Tai Chuen, Edmund, the Plaintiff's sales manager ("Mr Cheung"). The Defendant gave evidence on his own behalf.

14.Although witness statements had been served by both Mr Wee and Mr Cheung, Ms Cheung took the view that it was best, in view of the Defendant being unrepresented, to elicit their evidence the traditional way. As for the Defendant, the contents of the Defence and Counterclaim dated 29 June 1996, his affirmation dated 25 November 1996 (served in opposition to the Plaintiff's application for summary judgment) and his witness statement in Chinese (called a Defence Response) dated 3 January 2001, were all treated as part of his evidence in chief. Again, this was at the suggestion of Ms Cheung.

15.The findings of fact I reach in this judgment are based on the documents before me and the evidence from the witnesses I have just referred to. The facts referred to in the Introduction are also findings of fact reached on this basis or are facts which are common ground between the parties.

16.I now identify the respective claims of the Plaintiff and the Defendant. These represent the issues I have to resolve in this action.

The parties' claims

17.The Plaintiff's claims comprise simply the outstanding amounts due under invoices for the sale of BIF products to the Defendant. Although the amount claimed in the Amended Statement of Claim is quantified at $1,823,377.00, the final amount claimed in Ms Cheung's closing submissions came to $1,610,584.60, following various concessions made by the Plaintiff in the course of the trial.

18.The Defendant resists the Plaintiff's claims on the following grounds as pleaded in paragraph 7 of his Defence and Counterclaim (this pleading was drafted by his solicitors):-

"7. Alternatively, if, which is denied, the relationship between the parties hereto is one of contract for sale and purchase of goods, the Defendant is not liable to pay the sum claimed by the Plaintiff on the grounds:-

(a) that goods alleged to have been delivered were actually not delivered to the Defendant;

(b) that goods delivered to the Defendant were defective or not of merchantable quality;

(c) that goods delivered to the Defendant were actually paid for;

(d) that figures and/or quantities stated in the invoices issued by the Plaintiff were wrong;

(e) that more than one invoice was issued for the same goods; and/or

(f) that goods delivered to the Defendant were not those ordered."

I will elaborate on these grounds when I come to deal with the Defendant's case.

19.In addition, at trial, the Defendant raised the following issues which, in his submission, amounted to breaches by the Plaintiff as well as defences to the Plaintiff's claims (some of these were pleaded in paragraph 5 of the Defence and Counterclaim, others not pleaded at all):-

(1) The Plaintiff failed to maintain adequate stocks of products with the result that deliveries were either not made at all or not made on time, with the consequence that the Defendant's customers cancelled orders or delayed payment.

(2) The Plaintiff supplied inferior products which were not made in Korea, but in the PRC or Indonesia.

(3) In relation to Hong Kong, the Plaintiff offered generous discounts (of up to 40%) to its customers while effectively restricting the amount of discounts that the Defendant could offer to his own customers. I say "effectively" because under the Hong Kong Agency Agreement, the Plaintiff reserved to itself the right to decide the price of products sold to the Defendant and there were other provisions in that Agreement regarding retail prices (see in particular clause 3 thereof).

(4) The Plaintiff breached the Macau Agency Agreement in that at least on one occasion, it made sales of BIF products to a customer in Macau (namely Asiana Airlines) when under that Agreement, the sole agent for sales was the Defendant.

(5) The Defendant also claims against the Plaintiff the cost of erecting and dismantling a neon sign (presumably advertising the BIF brand name). The cost of erection was quantified at $45,000.00, the cost of dismantling at $22,000.00 (in respect of which the Defendant claimed half of that sum).

20.Apart from denying the Plaintiff's claim, the Defendant also asserts that the termination by the Plaintiff of the two Agency Agreements by the said letter dated 9 April 1996 (see paragraph 10 above), was wrongful. One of the grounds stated in support of this contention was the fact that under clause 10.a of both Agency Agreements, 60 days notice of termination had to be given.

21.The Defendant also counterclaims on the basis of the Plaintiff's breaches and the wrongful termination of the Agency Agreements by the Plaintiff. Paragraphs 21 and 22 of the Defence and Counterclaim plead as follows:

"21. By reasons of the matters aforesaid, the Defendant was forced to close down its business in Macau, to abandon all the dead stock, and to cease sale of goods manufactured by the Plaintiff in Hong Kong and has suffered substantial loss and damage.

22. The Defendant seeks an indemnity and/or to be indemnified by the Plaintiff against any claim made or to be made by the Defendant's landlords against the Defendant for the balance of rent and/or further damages."

22.I propose to deal with the following issues in turn:-

(1) The Plaintiff's claim.

(2) The termination of the Hong Kong and Macau Agency Agreements.

(3) The Defendant's counterclaim.

The Plaintiff's claim

23.It emerged during the trial that the Defendant was not really disputing the fact that some indebtedness was due to the Plaintiff. The Defendant was quite candid about this in the course of his evidence and for this, he is to be commended.

24.The contemporaneous correspondence of course confirms this position. I have already referred to the said letter dated 2 March 1996 in which the Defendant was somewhat apologetic for his inability to make payments on time. During cross-examination, the Defendant tried to explain away this letter by saying that it was typed by his staff on the Plaintiff's instructions. He was in effect told by the Plaintiff to sign it. I find these assertions quite incredible and do not believe the Defendant here. No previous mention had been made of these matters, particularly in the Defendant's said affirmation dated 25 November 1996 which had been made in response to an affirmation served on behalf of the Plaintiff in which the 2 March 1996 letter was exhibited. The Plaintiff's motives in making the Defendant sign this 2 March 1996 letter were not explained. Even if the Defendant were correct in his assertion that he was made to sign the letter, he did not say that the contents of the letter were somehow not accurate. There was never any suggestion (whether in any subsequent correspondence or in the Defendant's evidence) that the Defendant could and did meet his payment obligations. When on 29 March 1996, the Plaintiff demanded outstanding sums from the Defendant (totalling some $1,990,024.90), the response from the Defendant's solicitors, although denying liability, did not assert that in fact payments had been made. Indeed, in the Defendant's affirmation dated 25 November 1996, he says, "I confirm that my company did not make any payment during that time".

25.Of the 575 invoices in respect of which the Plaintiff claims, the question for me to decide then becomes how much is due from the Defendant to the Plaintiff thereunder? This question depends on the integrity of the figures stated in the two Account Receivables Statements dated 31 March 1996.

26.The Plaintiff's evidence was as follows:-

(1) As can be seen from the Account Receivables Statements, they refer to invoices and the relevant delivery dates. Mr Cheung said in his evidence that, generally, no invoice would be issued and sent to the Defendant unless delivery of all goods stated therein had actually been made or the Plaintiff was sure that they could be made. It was his evidence at the end of the day that no entry in the Account Receivables Statements would be made where no delivery had been effected.

(2) The Account Receivables Statements follow a pattern of similar documents that were generated every month by the Plaintiff and sent to the Defendant. Mr Cheung made reference to the practice of the Plaintiff's accounts department (specifically one Mr Gordon Chan). The statements were sent either by post or faxed to the Defendant. The Defendant did not dispute this, but said that complaints were made from time to time to the Plaintiff. Mr Wee confirmed that such Account Receivables Statements (and obviously including the two Statements with which we are concerned) would be checked by the Plaintiff's accounts staff for accuracy.

(3) Mr Wee said in his evidence that after he became the general manager of the Plaintiff in July 1995, he regularly chased up the Defendant for outstanding payments. At one stage, he was doing this every week. He was particularly concerned since the Plaintiff had to make advance payments for any goods ordered from their own suppliers. Mr Wee also recalled that at meetings with the Plaintiff, the Defendant talked more about his difficulties in meeting payments than about the service he was getting from the Plaintiff.

(4) Mr Wee said that although under the Hong Kong Agency Agreement, payment for goods was due on the 10th of the month following delivery, in practice the Defendant was allowed another month. Under the Macau Agency Agreement, the Defendant was given 60 days credit.

(5) Despite demands to pay, the Defendant failed to do so.

27.In my judgment, the parts of the Plaintiff's evidence set out in the previous paragraph are credible. They are consistent with the contemporaneous documents and with commonsense. The evidence of Mr Cheung in particular was detailed as to how invoices were generated, deliveries effected and how the entries in the Account Receivables Statements were made. However, I should point out that while I accept this evidence, both Mr Wee and Mr Cheung made some concessions in relation to the Defendant's case, to which I now turn to resolve.

28.The Defendant was unable for many of the relevant invoices (identified in the two Account Receivables Statements) to give detailed evidence of the various complaints he makes. He made generalised statements admitting that the gap of some six or seven years between the relevant events and trial, had taken their toll. I would add here that at trial, the Defendant told the court he was 62 years old. I even allowed the Defendant an adjournment of a week to enable him to find more evidence (a luxury, I might add, that would not have been allowed had the Defendant not acted in person). In these circumstances, in terms of deciding matters of detail, apart from the oral evidence, I have had to pay particular attention to what contemporaneous documents there are and the sworn evidence (in the form of affirmations) made soon after the relevant events. In this latter regard, I refer of course to the Defendant's said affirmation dated 25 November 1996 (which, as recorded above, formed part of his evidence in chief). With the above in mind, I turn to the specific issues raised by the Defendant.

29.First, as to the allegation that goods were defective and not of merchantable quality:-

(1) The particular invoices were identified in the said affirmation of the Defendant in relation to both Agreements. The complaints included allegations that, in some cases, spare parts were missing or damaged, or the goods were not new goods but merely renewed old goods.

(2) It was the Defendant's evidence that complaints were made, mainly orally, by him or his staff. In further support of the allegation, apart from the said affirmation, the Defendant also relied on certain comments (handwritten in Chinese) made by the Defendant's staff on the two said Account Receivables Statements dated 31 March 1996. These comments were said to have been made some time in April 1996 but were provided to the Plaintiff only during the discovery stage of the present proceedings.

(3) In monetary terms, the Defendant's contentions are set out in his affirmation in paragraphs 11(a), (e), (f), (g) and (h), amounting to, respectively, $12,854.00, $110,394.00, $170,689.00, $40,942.00 and $8,961.00. In the course of his evidence, the Defendant frankly accepted that these figures were probably excessive. His claims here became, respectively:-

(a) Under paragraph 11(a), $7,712.40 (60% of the claim).

(b) Under clause 11(e), $55,197.00 (50% of the claim).

(c) Under paragraph 11(f), $68,275.60 (40% of the claim. I have taken the lower of the figures stated by the Defendant).

(d) Under paragraph 11(g), $20,471.00 (50% of the claim).

(e) Under paragraph 11(h), $8,961.00 (no discount was given by the Defendant as he said that these were old goods which could not be resold).

(f) In total, these sums amount to $160,617.00. Other than this sum, the Defendant accepted he was liable in relation to the other sums claimed under the relevant invoices here.

(4) On the Plaintiff's part, both Mr Wee and Mr Cheung said that any defective goods ought to have been replaced and not charged to the Defendant. However, both were equally frank in accepting the possibility that defects could have existed. Mr Wee said under cross-examination, "I cannot say I delivered perfect goods to you [the Defendant] or provide perfect service to you". Mr Cheung added, "We are not perfect". Mr Cheung also said that when goods arrived from Korea, they would of course be packed. The Plaintiff did not open the packed goods to check for quality unless the packing was itself damaged. He accepted that with furniture, damage usually occurred during the assembly process or during transit.

(5) I have already referred to the handwritten comments made by the Defendant staff. I was also shown a letter in Chinese dated 23 April 1996 from the Defendant to the Plaintiff in which details of defective goods were given in relation to certain invoices.

(6) In my judgment, though precise details could not be given by the Defendant in support of this ground in relation to all the invoices, I nevertheless find on the basis of what evidence there is that there were defects to the extent as claimed by the Defendant. I find his evidence credible in this regard. I therefore conclude that in respect of defects and goods not being of merchantable quality, there should be a deduction of $160,617.00.

30.Secondly, as to the allegation that the goods were not delivered, either wholly or in part:-

(1) The relevant invoices are identified in paragraphs 11(b) and (i) of the Defendant's affirmation and the reduction that the Defendant seeks comes to $65,215.50 and $10,755.20 respectively. These figures were revised after the Defendant said in his evidence that discounts should be given on the figures referred to in the affirmation.

(2) Although some queries were raised in the handwritten comments on the two Account Receivables Statements I have earlier referred to, these do not really assist to prove that no deliveries were in fact made, only that queries were raised as to evidence of delivery. In my judgment, given the evidence of both Mr Wee and Mr Cheung as to deliveries and to the Account Receivables Statements, I am of the view that the invoices specified in the Statements were in respect of goods that were actually delivered.

(3) I therefore make no deductions in relation to this allegation.

31.Thirdly, as to the allegation that invoices stated wrong amounts or incorrect quantities:-

(1) In his evidence, the Defendant has given the following discounted figures:

(a) $66,280.00 (being 80% of the figure stated in paragraph 11(c) of the Defendant's affirmation).

(b) $23,478.30 (being 90% of the figure stated in paragraph 11(j) of the affirmation.

(c) $9,660.60 (being 90% of the figure stated in paragraph 11(k) of the affirmation).

(2) The Plaintiff has agreed that some deductions should be made under this head but not to the extent contended by the Defendant.

(3) In my view, there is some hint in support of the Defendant's allegations to be found in the said handwritten comments in the Account Receivables Statements. This, together with his affirmation and testimony, leads me to conclude that his version is to be preferred. In the circumstances, I will allow the sum of $99,418.90 under this head.

32.Fourthly, as to the allegation that an invoice (G600313) in respect of Hong Kong goods was repeated (see paragraph 11(d) of the Defendant's affirmation), the deductions which the Defendant contends, $1,772.00, is accepted by the Plaintiff.

33.Fifthly, as to the allegation that for a number of invoices in respect of Macau goods, the sums claimed by the Plaintiff had already been paid (see paragraph 11(l) of the Defendant's affirmation), this was again fully accepted by the Plaintiff. Thus, the sum of $140,418.00 falls to be deducted.

34.Sixthly, in respect of the allegation that the Plaintiff failed to maintain adequate stocks of its products (see paragraph 19(1) above), I accept that there are documents suggesting at one stage that problems existed on the Plaintiff's part in failing to effect deliveries on time to the Defendant. A letter dated 27 December 1995 and a fax dated 22 March 1996 from the Defendant to the Plaintiff, evidence this. The Defendant alleges that the problem was that the Plaintiff had downsized its godown in Hong Kong from about 30,000 sq. ft. to 15,000 sq. ft. Mr Wee accepted that the Defendant's staff complained of delays from time to time, although he said these were minor. In my view, no figure has been put forward by the Defendant to reflect this allegation other than presumably what has already been referred to in paragraph 30 above. There is no suggestion either that such problems as there were, existed at the time demands for payment were made by the Plaintiff on the Defendant in relation to other invoices. They certainly do not excuse non-payment on the Defendant's part. I therefore reject this allegation.

35.Seventhly, as to the Defendant's allegation that inferior quality goods were supplied by the Plaintiff owing to their having been manufactured in the PRC or Indonesia (see paragraph 19(2) above), this was really no more than a bare assertion. Insofar as it was merely repeating the allegations of defects and goods not being of merchantable quality, this has already been dealt with in paragraph 29 above. No separate loss or damage was particularised by the Defendant. I also reject this allegation.

36.Eighthly, as to the allegation (see paragraph 19(3) above) that the Plaintiff was offering generous discounts of up to 40% to its customers in Hong Kong (which effectively restricted the Defendant from offering similar discounts to his own customers), I find there is nothing in the Hong Kong Agency Agreement that prohibited the Plaintiff from doing this, even if this allegation were true. It is correct that this had been the subject matter of complaint by the Defendant to the Plaintiff (see for example the said letter dated 27 December 1995 from the Defendant to the Plaintiff), but, as Mr Wee said, the Defendant had no say in how the Plaintiff charged its own customers. Mr Wee also said that while discounts of 40% were offered, these were only in relation to some old stock that the Plaintiff was clearing when its godown was downsized. He denied the Defendant's suggestion put to him in cross-examination that such levels of discounts were offered for new goods. In any event, as I have said, even if true, this did not represent any breach on the part of the Plaintiff. Again, I reject this allegation.

37.Ninthly, as to the allegation that in breach of the Macau Agency Agreement, the Plaintiff sold the BIF products to customers in Macau (see paragraph 19(4) above), Mr Cheung admitted that this took place but only in relation to one customer. That customer was Asiana Airlines (at the Macau Airport). The Defendant produced at trial some invoices evidencing sales of BIF products by the Plaintiff to Asiana Airlines. Although these invoices totalled about $80,000.00, Mr Cheung remembered the deal to be worth about $100,000.00. According to Mr Wee and Mr Cheung, this sale was effected by the Plaintiff with the Defendant's knowledge and assistance. Indeed, the Defendant does not really dispute this. His real complaint was that the profits from the sale to Asiana Airlines were kept by the Plaintiff. According to Mr Cheung, the profits made by the sale amounted to some $28,000.00. I am of the view that in the light of the sole agency given to the Defendant under the Macau Agency Agreement, these were profits that would have been made by the Defendant if the Plaintiff had not effected the sale itself. I therefore award the Defendant $28,000.00 in relation to this claim. The Defendant further submitted that the breach of the Macau Agency Agreement on the Plaintiff's part was not confined to just the Asiana Airlines deal. He said there were others. However, no details were given and accordingly I believe Mr Wee and Mr Cheung when they denied there were any other breaches.

38.Lastly, as to the neon signboard (see paragraph 19(5) above), the Plaintiff accepted liability in the sum of $45,000.00, but denied it was liable for any part of the dismantling fee of $22,000.00 alleged by the Defendant. In my view, the Plaintiff is right. There was no evidence of the alleged dismantling fee and I am accordingly of the view that the Defendant is only entitled to $45,000.00.

39.Even where I have found that the Plaintiff has accepted it has committed breaches of contract or that the Defendant is entitled to reductions on some of the invoices, none of this excused the Defendant from not paying the bulk of the invoices in respect of which the Plaintiff claims. I am therefore of the view that the Defendant was in breach of both the Hong Kong Agency Agreement and the Macau Agency Agreement by not paying either on time or at all. The Plaintiff's claim was originally $1,823,377.00, but this was later reduced. However, in the light of my findings and conclusions above, there needs to be deducted from that sum an amount totalling $475,225.90 (see paragraphs 29, 31, 32, 33, 37 and 38 above). Thus, the total sum for which the Defendant is liable to the Plaintiff on its claim, is $1,348,151.10.

The termination of the Hong Kong and Macau Agency Agreements

40.I have already referred to the said letter dated 9 April 1996 from the Plaintiff's solicitors to the Defendant terminating the Hong Kong and Macau Agency Agreements. The Defendant contends that in view of the Plaintiff's breaches, this termination was wrongful. He also contends that it was wrongful in any event since clause 10.a of both Agreements required 60 days notice being given.

41.In my judgment, there was nothing wrong with the Plaintiff's termination of both Agreements by the said letter dated 9 April 1996. At that time, the Defendant had been in default of payment on many invoices for periods well in excess of two months (see the Account Receivables Statements). Even taking into account the Plaintiff's breaches and other complaints made by the Defendant, I have found the Defendant to be liable in the sum of $1,348,151.10. Clause 10.c of both Agency Agreements enabled the Plaintiff to terminate where settlement of purchase prices for goods had been outstanding for over two months and if the Plaintiff concluded that the said Agreements could not be properly (or "truthfully") performed by the Defendant. This was exactly what the Plaintiff did by the said 9 April 1996 letter. However much the Plaintiff had itself been at fault, the Defendant did not himself terminate the Agreements and, as I have already said, this did not excuse him from paying under the invoices claimed.

The Defendant's counterclaim

42.Insofar as the Defendant's counterclaim consists of the Plaintiff having wrongfully terminated the two Agency Agreements, it follows from my earlier conclusions that this must be dismissed. Insofar as it is alleged that he has suffered losses consequent upon breaches by the Plaintiff as alleged in paragraphs 21 and 22 of the Defence and Counterclaims, these claims are likewise dismissed: either there were no breaches at all or I am not at all satisfied that the alleged loss and damage flowed from such breaches.

43.I refer further to one of the claims that the Defendant has made, namely, that as a result of the Plaintiff's wrongful termination of the Agency Agreements, orders were cancelled by the Defendant's customers. I was referred to a number of invoices in this regard but some of them clearly showed that cancellations took place even before the Plaintiff's termination letter dated 9 April 1996.

44.The only aspects of his counterclaim on which the Defendant has succeeded are those in relation to the breach of the Macau Agency Agreement ($28,000.00) and the claims for the neon sign expenses ($45,000.00). These were not actually quantified in the Defence and Counterclaim but I have allowed these claims (see paragraphs 37 and 38 above).

Outcome

45.For the above reasons, I give judgment to the Plaintiff in the sum of $1,348,151.10. This takes into account all sums to which the Defendant is entitled in his Counterclaim. I will hear the parties on interest, costs and the form of the order in due course.

46.Finally, I would like just to mention two further matters:-

(1) The Defendant has on the whole conducted his case with much dignity and honesty. Prior to 1995, he had enjoyed a friendly, and I daresay profitable, relationship with the Plaintiff. In July 1995, the original shareholders of the Plaintiff sold out their shareholdings to a company called Ocean Forest Limited. It was from then on that the Defendant found that the agencies granted to him gradually turned sour. He repeatedly said that his mistake was not in looking more closely at the terms of the relevant Agency Agreements. The Defendant's predicament may be a common one but I would think that as a businessman, he would more than anyone else appreciate the importance of abiding by contracts.

(2) Ms Cheung has conducted this case on behalf of the Plaintiff with a degree of fairness to the Defendant that does her and her profession proud. Not only has she given the Defendant all due allowances (such as not taking any pleading points even though they could legitimately have been taken), but she has even summarised the Defendant's claims and submissions in written form so as to be as helpful as possible to him and the court. This is not to say that she has not advocated her client's cause with any less conviction and ability. She has. It is just that her conduct of the case against an unrepresented party has been exemplary and one that I hope others will emulate.

Representation:

Ms Janine Cheung,, instructed by Messrs Siao, Wen & Leung,, for the Plaintiff.

Lau Wai Man, the Defendant, in person.