Takmay Industrial Co. Ltd. v. Linkon Trading Limited

HCA000296/1985

IF THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

Coram: Hon. Mantell, J.

Date of hearing: l0th June, 1985

Date of delivery of Judgment: l0th June, 1985

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JUDGMENT

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1. The Plaintiff company makes toys. The Defendant company, among other things, acts as agent for goods from Hong Kong on behalf of overseas buyers.

2. This is a claim by the Plaintiff against the Defendant for the price of goods, namely, toys which were sold by the plaintiff through the Defendant company to buyers in the United States of America. The only question which arises on the pleadings is whether or not under the contract the Defendant company made itself liable It is said for the Plaintiff that the contract had been entered into on behalf of undisclosed principals in circumstances which would make the Defendant liable and it is said contrariwise for the Defendant that its part in the matter was purely and simply as agent for disclosed buyers overseas, and consequently that no liability under the contract rests upon it. There is no question but that goods were sold under the contract.  Four out of six invoices had been met by the Defendant by means of cheques drawn by the Defendant on its bank accounts but the last two invoices remain unpaid and form the subject matter of this claim.

3. It is really a question of construction of the written contract, or would have appeared so at the beginning of this action, subject to the parties being permitted to set the contract in context, in other words, to lead evidence as to what is sometimes called the matrix of facts against which he contract was entered into. Looking at the contract itself, I would not have had the slightest difficulty in construing it as a contract under which the defendant undertook liability for payment. It is perfectly true that they are described in what is their own document in terms as the buying agents and agents for overseas buyers. But in the written contract the two United States purchasers, and it is important to remember that there were two, are not identified and payment terms are expressed to be by cheque 7 days after the shipping date In the terms and conditions which are found on the reverse of the purchase order, the buying agents are said to be acting as agent for overseas buyers but it is an express term of the agreement that they in addition to the buyers themselves shall be entitled to enforce the agreement against the sellers. There is no parallel provision with regard to the rights of the sellers as against the defendant as agent but the very fact that this is a contract with overseas purchasers in which credit is extended, in other words, when no provision has been made to secure payment to the manufacturer or seller, gives rise to strong inference quite apart from the question of construction that it was intended that the agent would be liable for payment And the fact that the agent reserves to itself the right to sue for breach under the contract goes no way towards reducing or weakening that inference - quite to the contrary in my judgment. The fact that the payment is by cheque 7 days after the shipping date is also in my view a strong indication because in the ordinary course of business dealings it would be quite impossible for the buyers who are not named to fulfil that term of payment being as they were in the United States of America. But it seems to me that overwhelmingly in favour of the construction which I have found to be the correct one in this case is the fact that the purchase order itself does not disclose the identity or names of the purchasers and the party suing upon the written instrument would be bound to look to the agent for payment. In so far as it is permissible to look to what has been termed the matrix of fact I have had regard to the fact that there was a meeting between one of the two purchasers from the United States concerned in this purchase order and a director of the Plaintiff company so that on the evidence, which is uncontradicted and which I am bound to accept, there was brought to the notice of one of the directors the identity of one of the parties in the sense that one of the buyers was known to the Plaintiff before the date that this contract was entered into. But the order which the Defendant was seeking to fulfil with its customers or principals encompassed other matters besides those included in this agreement. And it was it which invoiced the purchasers separately in the United States of America not the Plaintiff. And it was it, which in the event, received payment and it was it, which with regard to the first four such payments discharged them by cheque. Now in so far as it is permissible to look to those surrounding circumstances as part of the matrix of fact they all point to this being a contract in which the agent was to be liable for payment.

4. Then astonishingly it emerged during the course of evidence that this was not a case as everyone has supposed including, I think, Mr. Chan on behalf of the Defendant, in which the agents have not received payment from the purchasers or principals in the United States. They have received payment, in one case under the terms of a documentary credit and in the other in response to an invoice which they submitted for payment upon presentation of documents. So whatever may have been the contractual position as between the Defendant and the Plaintiff originally and whatever may have been the true construction of the document there could not be any defence to this claim. In the event Mr. Chan did not take his principal witness through her evidence at length nor did he seek to address me. The most he would say, I think on his present instructions, was that he was not prepared to consent to judgment being entered against the Defendant but that he did not wish to make any submission in support of the Defendant's case. Inevitably in the circumstances and against the background which I have summarised there must be judgment for the Plaintiff in the full amount of the claim with costs.

Representation:

Clement Luk (Kwong & Siu) for Plaintiff.

Benjamin Chain (Kings & Co.) for Defendant.