Ricky Ng Ka Nung t/a King's Land Trading Co v. Mee Ngai Knitting & Embroidery Co (A Frim)

HCA000900/1978

Coram: Zimmern, J.

Date of Judgment: 4th December, 1978.

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JUDGMENT

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1. By an agreement in writing dated the 7th September, 1977 the Defendants sold to Starry & Co. 10,000 pounds of woollen yarn at $22.50 per pound for delivery as to 5,000 pounds October, 1977 and as to the balance of 5,000 pounds November, 1977. It is clear on the face of this contract that Starry & Co. had sub-sold the goods to an entity by the name of Lap Shing Woollen Garment Co. Limited in as much as the Defendants were bound to deliver to Lap Shing against 30 days post-dated cheques of Lap Shing endorsed by Starry & Co. According to the evidence and I think it is common ground certainly between Starry and the Defendants that 5,000 pounds arrived in Hong Kong in due time and was delivered to Lap Shing Woollen Co. against three post-dated cheques issued by Lap Shing and endorsed by Starry & Co. The first cheque which is exhibit F was due on the 3rd November, 1977 in the sum of $46,400 and was dishonoured upon presentation. Starry then exchanged its own cheque for Lap Shing's cheque though Lap Shing's cheque still remained in the possession of the Defendants. Starry's own cheque dated the 5th November, 1977 was dishonoured. Lap Shing's second cheque dated 15th November in the sum $34,800 was dishonoured upon presentation and at material time that is the 17th November, 1977 Lap Shing's third cheque in the sum of $34,800 was not due for payment. No doubt the Defendants and Starry were worried. Yeung of Starry said that he had been to Lap Shing and pressed them and eventually found Lap Shing's doors closed. He had kept the Defendants informed, was short of funds and indeed on three separate occasions had written to the Defendants "Please do not cash our cheque, we are pressing Lap Shing for payment."

2. On the 17th November the Plaintiff Ricky Ng presented himself at the offices of the Defendants the bearer of a letter from Starry to the Defendants in the Chinese language. The letter as translated reads:

"Now present goods price and contract S.77 - S.1 to take the balance of Angora Nylon Lambswool Rabbit Hair 5,000 pounds. Please hand over to the bearer to bring back."

The letter was addressed to the Defendants Mee Ngai Knitting and Embroidery Co. manager Mr. Chan Sing Yit and is dated 16th November, 1977. According to Ricky Ng the sole proprietor of the Plaintiff firm, he had in the past bought wool from Starry and he had an oral agreement to buy the balance of the 5,000 pounds from Starry at the price of 90 cents above Starry's contract price with the Plaintiff that is $23.40 a pound. He said Yeung of Starry had told him to go to the Defendants to take delivery of the goods but in view of a sad experience he will have to pay by cashier orders or cash. He went along to the Defendants that morning saw the addressee of the letter Mr. Chan, showed him the three cheques he had brought with him and said he was there to take delivery of the 5,000 pounds. Mr. Chan the manager, senior partner no doubt, of the Defendants directed him to see Mr. Ho, a junior partner who according to Mr. Ho himself dealt with office matters. Here lies the pith of the matter, the conversation between Mr. Ho and Mr. Ricky Ng. According to Ricky Ng he handed three cheques and the letter exhibit E to Mr. Ho, and Ho told him to sign a copy of a delivery order. He said he also delivered to Ho a copy of a delivery order directing the Defendants to deliver first 2,500 pounds on the morrow to a third party and on which date he Ng would also give instructions as to the delivery of the balance of 2,500 pounds. He received a receipt for the money being exhibit E. According to Ho, that was not the story at all. He said Ng came out of the blue before him showed him the letter put three cheques on the table and Ho asked him who he was. The necessary introductions having been made Ho took out Starry's file and told Ng that there will be no question of delivery of the balance of 5,000 pounds to him or to anybody until and unless the full sum of $112,500 owing by Starry & Co. on the first 5,000 pounds had been paid. He said Ng thought for a while and told them "Right you take the money". Whereupon Ho went in to see Mr. Chan the senior partner and Mr. Chan gave him certain instructions after which he typed out a temporary delivery order dated November 16th, 1977 countersigned by Ng and he gave Ng a temporary receipt. Ho told the court that Ng never saw Mr. Chan on that day the 17th of November and this was confirmed by Mr. Chan himself. Mr. Chan said he had no knowledge from Yeung of Starry that Ng might turn up to take delivery and Ho had never advised him that a representative of Starry had attempted to pay the old debt.

3. I am unable to accept the evidence of Mr. Ho and Mr. Chan in this respect. Yeung had told the court that on the 16th he had telephoned Mr. Chan to tell him that he Yeung of Starry had sold the 5,000 pounds to King's Land and that King's Land will attend to take delivery of the goods and pay by cashier orders. I do not have to make a finding whether Yeung in fact had telephoned as he said he had but let me say I was very impressed by Yeung's evidence in this case. Be that as it may it was known to the Defendants that Ng was a completely different entity from Starry and that Ng was there to take delivery of the goods against payment with a letter of authority from Starry. Whether the Defendants were prepared to deliver the goods against payment or not was a matter for them but the fact remains that Ho issued a receipt in the sum of $112,500 dated 17th November stating that sum had been received from Starry & Co. and yet it was set down that the sum was in payment of sales contract No. 577/51 - 5,000 pounds wool at $22.50 per pound. If this was an intended receipt in respect of the first 5,000 pounds of wool in which an invoice with a number had been issued to Starry then one would expect the receipt in payment of that invoice would show that invoice number. Mr. Ho's explanation of why it wasn't so inserted when the Starry's file as he said was in front of him was completely unconvincing and unacceptable.

4. What was further unacceptable was the so called delivery order. It is not a delivery order at all. It is no more than an advice of shipment dated 16th November, 1977 and I do not accept Mr. Ho's evidence that he had typed it on the instructions of Mr. Chan on the 17th November. The Defendants relied heavily on the last phrase "Sales confirmation No. 677/61 must be cleared up or required payment before delivery". I ask the rhetorical question why did not Mr. Ho type on this document clearly seeing that he was going to ask Ricky Ng to sign it "That there will be no delivery until and unless the previous invoice for 5,000 pounds had been settled and that payment of $112,500 was for that invoice". I have no doubt that the Defendants were minded to retain the $112,500 knowing that it did not come from Starry & Co. with a prayer and a hope that Starry and Ricky Ng of King's Land would settle the matter between themselves.

5. Going through the Statement of Claim and the pleading of a contract between the Plaintiff and the Defendants I find there was no contract of sale and purchase entered into between them at all. The sting of the claim really comes from paragraph 9 where it is alleged that the sum of $112,500 referred to in paragraph 5 was received and applied to the use of the Plaintiff. For the Defendants who had acknowledged receipt of this sum from Ricky Ng to succeed on their defence they would have had to show that Ricky Ng had paid the sum to them voluntarily to settle the debt of Starry. That was the last thought in Ricky Ng's mind when he paid the sum over. I hold the sum was paid over for the purpose of taking delivery of the 5,000 pounds wool. The Defendants failed to deliver the goods. It doesn't matter whether it is expressed as money had and received by the Defendants to the use of the Plaintiff or whether it was money paid over to the Defendants under a mistake of fact the fact remains that there must be restitution in this case. There will be judgment with costs for the Plaintiff in the sum of $112,500 with interests thereon at the rate of 8% per annum from the 17th November to today's date.

Representation:

A.R. Suffiad (Thomas Wang & Co.) for Plaintiff

K.H. Woo (Yu, Tsang & Loong) for Defendants