Chow Tsz Ming t/a Pui Kee Transportation Co v. Tsang Woon Hung t/a Tsz Man

DCCJ 4409/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4409 OF 2003

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BETWEEN

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Coram: Her Honour Judge C.B. Chan in Court

Dates of Trial : 27th to 29th July and 1st August 2005

Date of Handing down of Judgment : 1st November 2005

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JUDGMENT

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1.In this action, the Plaintiff claims the sum of $238,149.00 being the price of transportation and delivery services provided by the Plaintiff to the Defendant.  The Defendant does not dispute that the Plaintiff provided such services.  In his Defence, the Defendant pleaded that the Plaintiff provided the said services for Wing Wo (Asphalt) Engineering Company (“Wing Wo”) and the Defendant merely acted as agent for Wing Wo a disclosed principal.  This is denied by the Plaintiff. 

Background Facts

2.The Plaintiff at all material times is carrying on a business of transportation and delivery services in Hong Kong.  At the time in question, the Defendant was carrying on a business of milling the old asphalt layer from road surfaces, as well as transportation and delivery.  

3.The Defendant got to know Wing Wo and its mother company Hung Mau Realty & Construction Limited (“Hung Mau”) through its former employer Wimpey Asphalt Co. Limited (“Wimpey”).  Whilst in his employment with the Defendant learnt the trade of milling and restructuring of road surface.  

4.The Defendant stated in his witness statement which was adduced into evidence that in around 1992, with Wing Wo and Hung Mau’s backing and support, he set up Tsz Man.  The road resurfacing works consisted of a number of process including the milling process of which Tsz Man was responsible.  Apart from the milling works, Tsz Man was also responsible for taking the milled debris away and transporting fresh asphalt back at the site for trowelling and/or resurfacing process.

5.In light of the substantial amount of debris generated from the milling process and also the required asphalt and/or other materials, Tsz Man was unable to provide sufficient delivery trucks to carry out the transportation and delivery works of Wing Wo and/or Hung Mau.  As a result, according to the Defendant, he was requested by Mr. Cheuk King (“Mr. Cheuk”), director and shareholder of Wing Wo to engage other delivery trucks for and on behalf of Wing Wo and/or Hung Mau to carry out the delivery works at their various work sites throughout the territory.  In or around 1994, the Plaintiff was introduced to him and he was subsequently engaged as a delivery truck driver by Tsz Man.  The Defendant alleges that he engaged the Plaintiff as agent, for and on behalf of Wing Wo and/or Hung Mau.  This is denied by the Plaintiff. 

The Issues

1. Whether the Defendant as agent of Wing Wo engaged the Plaintiff or whether the Plaintiff was the subcontractor of the Defendant.

2. Whether the Defendant is liable to pay the Plaintiff and if so how much.

The 1^st Issue

6.The Plaintiff stated that he was a sub-contractor of the Defendant.

7.In oral evidence the Defendant stated that in 1995, he agreed with the boss of Wing Wo, Mr. Cheuk that he will engage people to do transportation work for Wing Wo and he will be responsible for preparing the bills for Wing Wo and will invoice Wing Wo for the transportation charges of each driver and Wing Wo would pay them.  It is not in dispute that pages 1 to 14 of BD 2A contain the proforma records and accounts (公數表) of the work done by the Plaintiff for the Defendant and these covered the work in respect of the sum claimed by the Plaintiff.  The Plaintiff would complete the columns on the left of the proforma with the two columns on the right to be filled in by the Defendant.  The Plaintiff also completed the delivery orders for each client found at page 15 to 99 of BD – 2A.  

8.The Defendant then engaged the Plaintiff.  According to the Defendant, he told the Plaintiff that he was finding drivers for Wing Wo.  He told the Plaintiff that he would prepare the invoice for the work done by him for Wing Wo.  Under cross-examination, the Defendant stated that he had told the Plaintiff that he was acting as agent for Wing Wo in engaging him.  The Plaintiff denied this.  

9.The Plaintiff adduced witnesses Mr. Yeung Chau Wing who was a former employee of the Defendant and Mr. Choi Chor Sing who both stated that the Defendant had subcontracted transportation work to different drivers.  They were not present when the contract was made between the Plaintiff and the Defendant.  Mr. Choi Chor Sing was also a driver in the same position as the Plaintiff and spoke from that position. 

10.I set out evidence adduced by respective parties that support each of their positions hereunder for the purpose of analysis.

Evidence That Supports the Plaintiff’s Contention

11.At page 106 – 108 is a contract between Wing Wo and the Defendant.  It sets out the agreed price between the Defendant and Wing Wo for the contracted works.  At the bottom of each of these pages it states that Wing Wo was the principal contractor and the Defendant was the subcontractor.  This contradicts the Defendant’s assertion that he was merely the agent for Wing Wo.  The Defendant seeks to say that the engagement of drivers by the Defendant for Wing Wo was a contract separate from this contract.  It seems rather strange that there would be two separate contracts for the Defendant with Wing Wo.  There is no written evidence of the second contract between the Defendant with Wing Wo as asserted.  The Defendant stated that the contract with Wing Wo for engagement of drivers as agent of Wing Wo was an oral contract made in 1995.  It seems strange that if such terms existed in the light of the written contract referred to here with Wing Wo, this is not mentioned in the written contract.

12.At page 513 of BD – 2B is a letter from Wing Wo which states that the Defendant was not its agent but was it’s subcontractor for certain works.  It further states that Wing Wo did not know the Plaintiff.

13.According to the Defendant, the contract between Wing Wo and the Defendant was for the milling of asphalt from road surfaces and the transportation away of the trash asphalt, which the Defendant was able to sell to its own customers at a price of $350 per truckload.  It is not disputed that the drivers transported asphalt to the sites of Wing Wo as well as delivered trash asphalt away from Wing Wo sites to the Defendant’s customers.  The Defendant received a fixed fee from Wing Wo for transportation charges but the charges which was paid to lorry drivers exceeded the price which the Defendant received from Wing Wo for the transportation charges.  The Defendant’s Counsel argues that this shows that the drivers could not be the subcontractors of the Defendant and the Defendant merely acted as agent for Wing Wo in engaging them.  However it is clear that in the delivery of the trash asphalt to the Defendant’s customers, the Defendant gained a profit which would exceed the little extra that was paid to lorry drivers that exceeded the payment from Wing Wo.  As the delivery of trash asphalt was to the Defendant’s customers pursuant to contracts of sale between the Defendant and its customers and the Defendant derived a profit from such, it seems to me that the Defendant had a personal interest in such delivery to its customers.  The Defendant instructed the Plaintiff as to the time, the place of delivery and the name of his customer to whom the delivery should be made.  When the Defendant gave instructions to the Plaintiff related to the delivery of trash asphalt to his customers the Defendant was acting on his own behalf in his own interest.  He could not have acted as agent for Wing Wo in this.  This is indicative of a package deal between the Defendant and Wing Wo where Wing Wo paid a large proportion of the costs of delivery and transportation by drivers with part of such costs to be paid by the Defendant who would gain a profit from the sale of the trash asphalt.  The Defendant was also paid for the work of milling the asphalt from road surfaces in addition to the aforesaid.  From the complexities of the arrangement between the Defendant and Wing Wo, it seems clear that the Defendant could not have been merely the agent of Wing Wo when engaging the Plaintiff for transportation work.

14.The Defendant gave instructions to the Plaintiff in relation to the work orders.  He gave oral instruction about the place or collection or delivery, the time of collection or delivery and the name of the company from whom the delivery or collection would be made.  None of these came from Wing Wo.

15.It is not in dispute that should the Plaintiff fail to carry out the orders pursuant to instructions of the Defendant, the Plaintiff’s liability was to the Defendant and not to Wing Wo.

16.The Defendant had a price list at page 104 of BD – 2A related to transportation charges, which he communicated to the lorry drivers.  This was the price list of the Defendant and not Wing Wo.  It was specifically headed with the name of the Defendant.  The Plaintiff was to be paid in accordance with the fees fixed by the Defendant, not by Wing Wo. 

17.In paragraph 9 of the Defendant’s witness statement, at page 45 of BD – 1, the Defendant stated that around early 2000, some delivery truck drivers including the Plaintiff complained about the frequent delay by Tsz Man in paying the delivery and/or transportation charges.  To resolve the matter, 7 to 8 delivery truck drivers including the Plaintiff and the Defendant attended the office of Mr. Cheuk of Wing Wo to discuss the payment arrangement.  It was agreed during that meeting that, with immediate effect, the delivery and/or transportation charges due to the various delivery truck drivers would be paid by Wing Wo and/or Hung Mau directly to them without involving Tsz Man.  However, Mr. Cheuk requested the Defendant to continue to be responsible for compiling the work sheets and/or delivery slips and/or payment vouchers for and on behalf of all engaged delivery truck drivers and to submit the same to Wing Wo and/or Hung Mau for payment.  The Defendant’s position is that to maintain the good relationship between Tsz Man and Wing Wo and/or Hung Mau, he agreed to such proposition.  From then, Wing Wo and/or Hung Mau started paying the delivery charges to the delivery truck drivers direct.  The Defendant contended that from the aforesaid it could be seen that he was the agent of Wing Wo who was ultimately responsible for paying the drivers.  It is difficult to argue this contention as Wing Wo had a contract with the Defendant shown at page 106 to 108 of BD – 2A which showed that Wing Wo agreed a fixed rate for transportation charges at a lower rate that the Defendant agreed to pay to the drivers.  The Plaintiff’s position was that he and other drivers found out that the Defendant failed to pay him and other drivers after he received payment from Wing Wo.  That was why the drivers complained to Wing Wo and sought payment from Wing Wo direct. 

18.As the amount that Wing Wo agreed to pay the Defendant for the drivers is less than the amount the Defendant agreed to pay the drivers, it is highly unlikely that Wing Wo would agree to be out of pocket in paying the drivers a sum higher than that it had agreed to pay to the Defendant for the driver’s charges.  There is no dispute that in the contract between Wing Wo and the Defendant, the Defendant agreed to supply the service of milling of old asphalt from road surfaces on Wing Wo sites and the transportation of new asphalt and removal of trash asphalt from such sites.  The Defendant was entitled to sell the trash asphalt to its customers and the drivers would deliver the trash asphalt to the customers of the Defendant according to the Defendant’s directions and instructions.  Wing Wo was obliged to pay the Defendant the charges for the milling of old asphalt from road surfaces in addition to the payment the transportation charges according to the rate fixed by Wing Wo.  It seems from this that it is highly possible that Wing Wo paid the drivers out of money it owed the Defendant in order to ensure that the drivers were paid and that the contracted work to be carried on by the Defendant on Wing Wo sites would not be disrupted because the drivers were not paid by the Defendant.  In my view, the fact that Wing Wo paid the drivers in the circumstances aforesaid is not suggestive of the fact that the Defendant acted as the agent of Wing Wo in engaging the drivers.  In fact it supports the Plaintiff’s contention that Wing Wo paid the drivers out of monies that it owed to the Defendant and not because Wing Wo was personally liable to the drivers.

19.According to the evidence of Choi Chor Sing, in February to May 2003, owing to the fact that the Defendant owed the drivers a lot of money, the drivers sought the help of their trade union.  The leader of their trade union had discussions with Wing Wo and it was agreed that Wing Wo would use the balance of sum owed by them to the Defendant of about $300,000.00 to pay the drivers.  However, according to the Plaintiff, by then the Plaintiff had issued a solicitor’s letter to the Defendant and did not join in this action.  Pages 515 to 518 contain a list of drivers with the amount of sums due to them.  These drivers sought payment from Wing Wo.  Page 518a of BD – 2A is a statement wherein it is stated that because Wing Wo had failed to pay the sum due to the Defendant, the Defendant was not able to pay the drivers the sums due in the period from February to May 2003 to May.  The statement then refers to discussions about payment by Wing Wo of sums owed to the drivers and lists out the sum owed.  There is also a cheque in the sum of $300,000.00 issued to Hui Chi Man the leader of the trade union on behalf of the drivers.  Again, the significance of this has to be seen in the context of the facts of the case. 

20.Finally Wing Wo went into liquidation and the Defendant filed a claim for voting at page 538 of BD –2B.  It is interesting to note that the Defendant filed a claim, which included the sum due to the drivers as well as the sum owed by Wing Wo to the Defendant.  The Defendant also wrote to Wing Wo stating the amounts owed to him by Wing Wo and this sum included all the sums due to the drivers including the sum owed to the Plaintiff.  The Plaintiff’s Counsel submits that for the Defendant to file such a claim against Wing Wo stating that Wing Wo owed this composite sum to him, the accounts of the Defendant must state the sum due to the drivers was a sum, which the Defendant is liable for.  

21.The Defendant issued a Hang Seng Bank cheque number 957605 dated 27 May 2003 in the sum of $80,141.00.  The Plaintiff stated that this was in partial payment of the sums owed by the Defendant to him being transportation charges for the period from February to May 2005.  The Defendant states that the cheque was issued because the Plaintiff sought a cheque as security whilst it sought payment from Wing Wo.  The cheque was not banked until after its expiry when upon banking it was dishonored.  The Defendant contends that the fact that the Plaintiff did not bank it supports his contention that it was issued as security.  The Plaintiff’s Counsel contends that the Defendant would not have been so foolish as to issue a cheque as security when the cheque was as good as cash and could be banked.  

22.The Plaintiff’s claim includes sums alleged due between April to September 2000 and the Plaintiff supports this claim by two Hang Seng Bank cheque numbered “654424” and “65441” issued to him by the Defendant.  However these two cheques were never banked.  The Defendant again asserts that these were issued as security.  That was why they were never banked.  In any event, the Defendant stated that Wing Wo had paid the sums.  

Evidence that Supports the Defendant’s Contention

23.The price paid by Wing Wo to the Defendant in respect of transportation charges was less than the fixed price that the Defendant had agreed to pay its drivers.  The Defendant’s Counsel submits that this suggests that the contract between the Defendant and the drivers was a separate contract and was not the same as the contract between the Defendant and Wing Wo at pages 106 to 108 of BD – 2A.  However, as stated earlier, the contract between the Defendant and Wing Wo comprises of different works to be done by the Defendant and in the composite contract including delivery, collection, sale of trash asphalt by the Defendant, milling of old surface asphalt from road surfaces the Defendant made a profit.  

24.The fact that other drivers sought payment from Wing Wo in 2003 through their trade union is suggestive that they saw that Wing Wo is liable.  However, it could equally be true that they saw Wing Wo as the principal contractor and that money was due by Wing Wo to the Defendant.  That was why they went to Wing Wo who agreed to pay what it owed the Defendant to the drivers so that the work would not be disputed. 

25.The Defendant stated in oral evidence under cross-examination that he told the Plaintiff in 1995 that it was the agent of Wing Wo.  However, this has never been stated in his witness statement.  I find that there was no conviction of truth when he stated that in evidence and I formed the view he was not truthful when he said it.  

26.The Plaintiff had never issued an invoice to the Defendant in respect of the transportation work.  However the Plaintiff said that the statement of accounts at pages 1 – 14 of BD – 1 had the same effect as invoices issued to the Defendant.  As to whether the Plaintiff issued invoices, it would seem that it is not crucial as the parties had agreed a certain practice between them and the statements of account was as good as an invoice with details of work with the request for payment.  

27.The Defendant relies on the claim of the drivers for payment directly from Wing Wo with the help of their trade union leader as referred to in paragraph 17 aforesaid.  It was contended by the Defendant’s Counsel that this signified that the Plaintiff who was a driver, even though he himself did not seek payment from Wing Wo at that time, showed that the drivers were direct subcontractors from Wing Wo.  In my view, this is not necessarily the case as the drivers knew that Wing Wo owed money to the Defendant and they could approach Wing Wo to pay them from the money that Wing Wo owed to the Defendant.  In my view this fact could be explained either way.  

28.The Plaintiff had admitted in his answer to Requisition 5 at page 537 of BD – 2B that from April 2000 to May 2003, Wing Wo paid his delivery charges.  According to the Plaintiff and the Defendant, it was agreed from April 2000 that the drivers would be paid directly by Wing Wo from out of the money due to the Defendant from Wing Wo because the Defendant did not pay their charges punctually.  

29.Page 514 of BD – 2B has a statement wherein Wing Wo stated that it acknowledged a sum due to drivers for a certain period from February to May 2003.  In my view this statement did not relate to the Plaintiff and it did not specifically say that the sum was due from Wing Wo.  Further, this has to be seen in the context of the background of the claim by the drivers against Wing Wo as stated by Choi Chor Sing.  In my view the context of this contains a valid explanation, which shows that this statement is not necessarily suggestive of a sub-contractual relationship between Wing Wo and the drivers.

30.Having weighed all the factors for and against the Plaintiff and the Defendant’s contentions as referred to earlier, I come to the view that on the balance of probability the Plaintiff’s evidence that the Plaintiff was a subcontractor of the Defendant is more likely than not the true position between the parties.  In my view the Defendant’s contention that he was acting as an agent of Wing Wo, a disclosed principal, is not true.  The strongest evidence that suggests that the Defendant was a subcontractor of Wing Wo and not an agent is in the contract between them at pages 106 to 108 of BD – 2 A.  At the bottom of each page of the contract, the Defendant clearly signed as subcontractor and Wing Wo was stated to be the principal contractor.  Further the contract between the Defendant and Wing Wo was an entire contract which included the milling of asphalt road surface, transportation and delivery of trash asphalt from the sites on sale of such by the Defendant to its customers from which the Defendant gained a profit.  The delivery of the trash asphalt by the Plaintiff to the customers of the Defendant was to a large extent for the personal benefit of the Defendant as the Defendant gained a profit from it.  As the Defendant gained a profit from the sale of trash asphalt and the delivery to its customers was part of such sale, the Plaintiff when doing such delivery was doing it for the personal interest of the Defendant.  The Defendant could not have been an agent of Wing Wo in contracting with the Plaintiff for such delivery as the Defendant contracted with the Plaintiff in the furtherance of his own interests and not only that of Wing Wo. 

31.Further, Wing Wo’s statement in page 513 of BD - 2B that the Defendant was a subcontractor and not an agent is a statement, which should not be ignored, and some weight should be given to it.  Another strong indication is the claim by the Defendant against Wing Wo in respect of sums due to the Defendant this claim are seen in documents at page 109 of BD – 1 and page 538 of BD – 2B.  This includes the driver’s transportation charges.  If such sums were not due from the Defendant, there is no reason the Defendant would include such in its claim against Wing Wo.  

Credibility of Witnesses

32.I found the Plaintiff to have been a credible witness from the content of his evidence and his manner in giving evidence.  Conversely I found the Defendant not to be a credible or reliable witness from the content of his evidence and his manner in giving evidence.

33.I have considered all the factors aforesaid and come to the conclusion that the Plaintiff was a subcontractor of the Defendant.

The 2^nd Issue

34.The Plaintiff admits that it did not have any supporting documents in respect of the sum due from the Defendant for the period from June to September 2000 except the two dishonored cheques, which make up this sum.  I am not able to find that the Plaintiff has proved this sum due.

35.In respect of the sum of $183,457.00, the Plaintiff has supporting documents.   I find such sum due as proved.  

36.Having found as aforesaid, I give judgment for the Plaintiff against the Defendant in the sum of HK$183,457.00 together with interest thereon from date of Writ to date of judgment at judgment rate and thereafter at judgment rate until payment.  I give an order nisi for costs of the action against the Defendant to be taxed if not agreed with Certificate for Counsel.  Both parties’ own costs be taxed in accordance with the Legal Aid Regulations.

Representation:

Mr. Hylas Chung instructed by Messrs. T.K. Cheng & Co. assigned by D.L.A. for the Plaintiff.

Mr. Patrick Szeto instructed by Messrs. George Tung, Jimmy Ng & Valent Tse assigned by D.L.A. for the Defendant.