United Non-ferrous Trading Ltd v. Neo China Ltd
Read the full judgment text of DCCJ 3322/2003 on BabelCite. This District Court judgment was delivered on 15 November 2001.
1. The Plaintiff claimed against the Defendant for the outstanding balance price of scrap metals/materials (the “ Scrap ”) sold to the Defendant (the “ Balance Price ”) under 2 sales contracts dated 15 th and 30 th November 2001 respectively (the “ 1 st and 2 nd Contracts ” or collectively, the “ Contracts ”) in the sum of US$16,480.92.
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DCCJ3322/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 3322 OF 2003 ____________ BETWEEN
____________ Before: Her Honour District Court Judge Marlene Ng in Court Dates of Hearing: 17th, 18th and 19th May, 2nd June and 27th October, 2005 Date of Handing Down Judgment: 19th April, 2006 _______________ J U D G M E N T _______________ I. Introduction 1.The Plaintiff claimed against the Defendant for the outstanding balance price of scrap metals/materials (the “Scrap”) sold to the Defendant (the “Balance Price”) under 2 sales contracts dated 15th and 30th November 2001 respectively (the “1st and 2nd Contracts” or collectively, the “Contracts”) in the sum of US$16,480.92. 2.The Defendant denied it was the buyer under the Contracts. The Plaintiff all along sold the Scrap to a scrap metal recycling business in Qingyuan called Wing Fat Metal Factory (“WF”) operated by Madam He Cui Wei (“Mrs Pan”) and her husband Mr Winson Pan (“Mr Pan”) (collectively, the “Pans”). In October 2001 (formal establishment date was 29th September 2001), WF was renamed as Neo Qingyuan Materials Recycling Limited Company (“NQ”). The Plaintiff knew (a) the Defendant and WF/NQ were 2 independent companies and (b) WF/NQ was the true buyer. The Defendant only acted as intermediary to facilitate transhipment of the Scrap from Hong Kong to Mainland China and remittance of certain price payments by WF/NQ to the Plaintiff. The Plaintiff later appointed the Defendant as its debt collecting agent to collect the Balance Price from NQ. When recovery became difficult, the Plaintiff unreasonably “transferred” NQ's liability for the Balance Price to the Defendant. 3.The issues are as follows : (a) who was the true contracting buyer of the Scrap under the Contracts; (b) whether the Plaintiff delivered the Scrap to the Defendant or to its order pursuant to the Contracts; (c) what was the outstanding amount of the Balance Price (if any). II. Dramatis personae 4.Plaintiff Mr Gert August van Steenbergen (“Mr Steenbergen”), the Plaintiff's managing director with 11 years' experience in metal recycling, was its sole witness. Mr Paul Veulemens (“Mr Veulemens”) was a joint managing director of the Plaintiff from 2000 to March/April 2002. Mr Paul Delwaide (“Mr Delwaide”) was the Plaintiff's 1stcommercial manager in 2001 and later also became a managing director. 5.Mr Yip Fai Kelvin (“Mr Yip”) was the Plaintiff's trader from 1997 to 2003 dealing with day-to-day trading. He left in 2003 to join a competitor and was unwilling to be the Plaintiff's witness. The Plaintiff's administrator/financial controller, Ms Alice Lai (“Ms Lai”), did not give evidence even though she still worked for the Plaintiff. I find it unnecessary to draw adverse inferences from the Plaintiff's failure to call/subpoena Ms Lai and Mr Yip as witnesses in coming to my conclusions. 6.Defendant The Defendant's directors/shareholders, Mr Chan Hung Lap (“Mr Chan”) and Mr Jimmy Tam (“Mr Tam”, also chief executive officer), were respectively responsible for external and internal affairs. Both of them gave evidence. Neo Wuzhou Materials Recycling Limited Company (“NW”) established in the PRC in September/October 2001 was the Defendant's solely owned foreign enterprise that traded in Scrap and recycled products (the “Products”). 7.WF/NQ Mr Chan came to know the Pans in early 1997. Mr Pan gave a witness statement for the Defendant, but did not give evidence. I accept the Defendant's explanation that Mr Pan could not be found. The company search records revealed that the Pans were not the Defendant's directors/shareholders. III. Overview of the witnesses 8.Mr Steenbergen's evidence has a substantial hearsay element. He was not involved in the day-to-day trading and could not recall every day-to-day event. It was Messrs Veulemens and Yip who were involved in the early stages. On balance I do not find him reliable and his evidence on various matters is unconvincing. I prefer the evidence of Messrs Chan and Tam whom I find to be honest and reliable on the core issues. IV. Contracts 9.Plaintiff's case At the Defendant's request, the Plaintiff agreed to supply (and it duly delivered) the Scrap under the Contractsto locations advised by the Defendant and its accounts department faxed relevant invoices/credit notes to the Defendant :
10.Summary The Plaintiff's case turns not on direct evidence in respect of the Contracts (since Mr Steenbergen had no personal knowledge and the Plaintiff did not retain records of its faxed despatch of the invoices) but on the course of dealings between the parties. The Plaintiff put the Defendant's name on the sales contracts/invoices (including the Contracts and their corresponding invoices/credit notes), but Mr Mumford SC, senior counsel for the Defendant, noted that apart from the sales contract for the 1st transaction and 2 commercial invoices for the 2nd transaction the Defendant did not countersign any sales contracts/invoices for (according to the Plaintiff) nearly 50 transactions between March 2001 and May 2002. The burden is on the Plaintiff to establish the oral agreement and/or course of dealings on the balance of probabilities. But for reasons explained below, I am not persuaded the evidence on the course of dealings between the parties supports the Plaintiff's contention that the contracting buyer in respect of the sales contracts and/or the Contracts was the Defendant. V. Getting to know one another 11.Introduction Mr Steenbergen suggested that his impressions from the start were that the Plaintiff dealt with the Defendant and that NQ was a “related” factory or part of the Defendant. 12.Plaintiff's case Mr Steenbergen's 1st witness statement stated that in/about January 2001 (a) Mr Yip reported he was introduced to the Defendant's Messrs Chan and Tam who expressed interest in buying the Scrap for processing by its PRC factories and (b) Mr Steenbergen was shown copies of the name cards of Messrs Chan and Tam given to Mr Yip during the introduction. Their name cards were in different styles (see below). But when Mr Steenbergen was cross-examined, he said he could not recall when he saw the name cards, yet later he was prepared to swear to his assertions in his 1st witness statement. Such wavering stance is unimpressive. 13.Mr Yip told Mr Steenbergen that Messrs Chan and Tam introduced him to the Pans who were in charge of the Defendant's China business and “related” PRC factories (ie NQ/NW). Mr Yip was given Mr Pan's name card which was similar in style/contents to Mr Tam's name card, both of whichreferred to the names/addresses/contact details of the Defendant, NQ and NW (“Pan's and Tam's New Cards”). Mr Chan's name card only referred to the Defendant. Mr Steenbergen thought Messrs Chan and Tam and the Pans were “partners” in the Defendant and/or “of the same group of the Defendant which consisted of an office in Hong Kong and factories in the PRC”. But he had no knowledge of the actual ownership of the Defendant/NQ/NW or how NQ/NW were “related” to the Defendant. 14.On balance I reject Mr Steenbergen's evidence. WF only changed its name to NQ in October 2001 and NW was only established in September/October 2001. It is implausible for Mr Yip to have received Tam's/Pan's New Cards that referred to both NQ and NW in early January 2001 or at least before the 1st sales contract in March 2001. Mr Steenbergen's evidence of having no recollection of WF is unconvincing given his allegation that Mr Yip reported to him about a meeting with the Pans in early 2001 (ie prior to WF's name change). 15.“Related” factory and “one group of business entity” Mr Mumford SC criticised Mr Steenbergen's vague references to “related” factory or “one group of business entity”. Even on the Plaintiff's case that (a) 60-65% of its turnover came from purchases by PRC companies, (b) the Plaintiff had no reluctance to contract with PRC companies, (c) it was common for Hong Kong businesses to have PRC factories and (d) the Plaintiff was about to commence a new business relationship with the Defendant/WF, I find it unlikely that the Plaintiff would accept such vague references without clearly ascertaining the relationship between WF and the Defendant to determine which entity should be accepted as the contracting buyer.The corporate documents eventually showed the Defendant and WF/NQ were separate legal entities with no common shareholders/directors at least until late 2002 (see below). 16.Defendant's evidence I prefer on balance the Defendant's evidence. In early 2001 Messrs Chan and Tam came to know Mr Yip who told them (a) the Plaintiff had business relations with scrap metal businesses in Qingyuan, (b) he often visited Qingyuan to liaise with customers or to negotiate business, and (c) the Plaintiff could supply large quantities of the Scrap to PRC buyers. Messrs Chan and Tam then visited the Plaintiff's office in Sheung Wan (the “Plaintiff's Office”) to meet Mr Veulemens. At the meeting Messrs Chan and Tam (i) distributed name cards with only the Defendant's name/contact details (ie in the same style as Mr Chan's name card), (ii) outlined the Defendant's business, (iii) indicated that WF (with the Defendant acting as intermediary) would be interested in buying the Scrap from the Plaintiff. Mr Veulemens said he was about to leave Hong Kong and someone else from the Plaintiff would deal with them. In February/March 2001 Messrs Chan and Tam arranged for Mr Yip to meet and negotiate business with the Pans in their presence. VI. Name cards 17.Plaintiff's case The Plaintiff claimed that in early 2001 prior to entering into any sales contracts, Messrs Pan and Tam held out Pan's/Tam's New Cards with similar style/contents under the same umbrella, namely, WF/NQwas “related” to the Defendant. The Plaintiff claimed this showed it never contracted with WF/NQ as distinct from the Defendant. 18.Defendant's case The Defendant claimed that prior to late 2002 the old name cards of Messrs Chan and Tam only described their positions with the Defendant. These name cards were given to Messrs Yip and Pan. Messrs Chan and Tam did not use their new name cards (eg Tam's New Card) or see Pan's New Card (all of which referred to the Defendant/NQ/NW and their addresses/contact details) until in/about late 2002 (ie long after the dates of the sales contracts with the Plaintiff, including the Contracts). Such new name cards were in beige paper with some green lettering and red logo and had the same slogan “Enriching Our World More Green” at the bottom. Pan's New Card described him as the Defendant's “Executive Director (China)”. Mr Tam received a different style name card from Mr Pan back in 1998. The Defendant claimed it never authorised NQ to use the Defendant's name on Pan's New Card. 19.Defendant's first use of the new style name cards I accept on balance the Defendant started to use the new style name cards in late 2002. In October 2002, NW (which did not carry on business since its formation in September/October 2001) received approval of its application for a 7-type licence necessary for carrying on the recycling of the Scrap, so the Defendant wanted to start promoting NW. Also by that time, the Defendant wanted to take legal action in the PRC against NQ for outstanding trade debts. 20.Since 1997 the Defendant and WF cooperated commercially by (a) the Defendant purchasing the Scrap for WF and paying the overseas suppliers, (b) WF processing the Scrap and selling/distributing the Products and (c) both parties sharing profits/losses after deducting overhead expenses. By March 1999 WF became heavily indebted to the Defendant, who ceased to buy Scrap for WF. At Mr Pan's request, (i) WF bought the Scrap directly from the supplier(s), (ii) the Defendant handled shipping documents as WF's agent and (iii) WF paid the Defendant from the sale proceeds of its Products. 21.By late 2002, the Defendant was concerned that it might not be able to recover the trade debts if NQ collapsed. I accept on balance Mr Pan/WF/NQ all along acknowledged such trade debts, so when Mr Chan told Mr Pan the Defendant intended to take legal action, NQ admitted inability to pay and gave an acknowledgement. The Defendant's PRC lawyers confidently advised a very high chance of success against NQ. Mr Chan said Mr Pan also agreed during discussionsto let the Defendant use NQ's name on the name cards. In reliance of the above matters, the Defendant printed the new style name cards and commenced legal proceedings against NQ on 7th November 2002. The PRC lawyers confirmed no other parties were suing NQ. The trial took place on 27th November 2002 and the People's Court of Qingyuan City (the “PRC Court”) delivered judgment on 9th December 2002 (the “PRC Judgment”), which held inter alia that NQ owed the Defendant RMB¥963,314.50 (the “Debt”) in outstanding trade debts incurred between August 1997 and March 1999. 22.Mr Chang, counsel for the Plaintiff, submitted that the Defendant's act of prematurely “taking over” NQ by including NQ's name on its name cards defied common sense/legal justification. But given the then commercial context (namely, NQ acknowledging the Debt and admitting liability during the trial by the PRC Court as well as Mr Pan's acquiescence), I find it probable the Defendant relied on the legal advice that it would be able to enter judgment against NQ and “take over” its assets shortly, which advice so buoyed the confidence of Messrs Chan and Tam as commercial men to incorporate NQ's name/address/contact details in the Defendant's new style name cards. 23.Mr Chang next argued it affronted common sense for the PRC lawyers to have advised the Defendant to “take over” NQ via the new style name cards when other Scrap suppliers to WF (since the Defendant ceased supply in March 1999) might have even more substantial claims against NQ that might entitle them to take control over its assets. I reject such argument as speculative. There is no evidence NQ owed other suppliers money or that it was sued by others. On the Defendant's case (which I accept), WF/NQ had no problem paying for the Scrap supplied by the Plaintiff pursuant to numerous sales contracts in 2001/2002 (other than the Balance Price). 24.Pan's New Card authorised by the Defendant? I accept on balance the Defendant did not authorise such printing/distribution. First, when Mr Tam compared Tam's and Pan's New Cards, he noted some differences in paper texture and colour of the logo/lettering. Secondly, I reject below Mr Chang's submission that the Defendant and WF/NQ wanted to mutually benefit from the reciprocal adoption by WF of the “Neo” (勵安) name when it changed its name to NQ and by the Defendant of the reference to the PRC factories (ie NQ and NW) in its name cards. But even if such submission stands, there is no plausible reason for the Defendant to authorise Mr Pan to lie in Pan's New Card that he was its executive director. It is unnecessary for me to determine Mr Pan's motive in printing Pan's New Card, but it is not improbable he wanted to enhance his business image in the difficult times following Mrs Pan's departure from NQ (see below). 25.First knowledge of Pan's New Card I have found that Mr Yip could not have received such card in early 2001. I accept on balance the Defendant was unaware of it until late 2002 when Mr Yip showed it to Mr Chan during a meeting with Mr Steenbergenat the Plaintiff's Office to discuss progress by the Defendant as the Plaintiff's debt collecting agent in chasing Mr Pan for the Balance Price (see below). 26.Mr Chang submitted Mr Chan's description of the meeting was unconvincing and his memory selective. I accept on balance the meeting took place as described by Mr Chan. The Balance Price has been outstanding for some time and in late May 2002 the Plaintiff appointed the Defendant as its debt collecting agent (see below). By late 2002, Messrs Steenbergen and Delwaide (but not Mr Yip) were directly in charge of the discussions for the recovery of the Balance Price (see discussions on the emails of October/November 2002 below). It is only logical/natural they would want to follow up with Messrs Chan and Tam on their progress in chasing NQ for the Balance Price. I further accept Mr Chan's evidence that Mr Yip only just showed him Pan's New Card at the meeting and did not say anything or participate in the discussions. 27.When Mr Chan told Mr Tam about Pan's New Card, Mr Tam was not surprised since he believed PRC businessmen adopted a looser attitude towards name cards. He had seen PRC corporate name cards bearing names of well-known Hong Kong companies or Taiwanese scrap metal merchants. But Mr Chan queried Mr Pan who neither admitted nor denied he printed Pan's New Card. I find Mr Pan had no good answer because the Defendant did not authorise him to print/use Pan's New Card. Mr Chan was dissatisfied but did not follow up. Mr Chang criticised the Defendant for letting Mr Pan go without taking strong action, but conceded by that time the Defendant was already contemplating to sue NQ. In my view, the Defendant was plainly contemplating strong action, which would put an end to any further holding out by NQ. 28.Limited time window for copying the new style name cards Mr Chang next suggested that, even on the Defendant's case, there was insufficient time during the 1-month window for Mr Pan to copy the Defendant's new style name cards and print Pan's New Card. I do not think the Plaintiff's criticism aids its case. After all, printing a name card cannot be a difficult affair. In any event, given my rejection of Mr Steenbergen's evidence about the name cards, the Plaintiff has no reliable evidence to show how/when they came into its possession or how they affect the parties' contractual relationship. VII. WF's name change to NQ 29.In October 2001, the Pans renamed WF as NQ by adopting “Neo” (勵安) in its new name because (a) the Defendant used “Neo” for many years in connection with the scrap metal business and (b) the fortune-teller said “Neo” was auspicious. The Defendant objected, but Mr Chan thought nothing further could be done since it was common for PRC companies to adopt the names of well-known Hong Kong companies. 30.As discussed above, Mr Chang submitted that WF's name change was the result of a mutual adoption by WF of “Neo” for its new name and by the Defendant of the reference to the PRC factories (ie NQ and NW) on its name cards. He further argued that since NW was set up in October 2001, the Defendant would have been keen to explore the PRC market. I do not accept Mr Chang's hypothesis. First, Mr Steenbergen had no real knowledge of the matter. Secondly, the alleged reciprocity is improbable. WF's name change and NW's formation only took place in October 2001, but Mr Steenbergen claimed he was shown Tam's New Card that referred to NQ/NW (ie the alleged PRC factories) in January 2001 (see below). This discredits both Mr Steenbergen's evidence and the Plaintiff's case. Thirdly, there is no plausible reason for the Defendant to be interested in any corporate “affiliation” when WF had not settled the Debt for 2 years. 31.In my view, WF probably changed its name to benefit from the goodwill of the “Neo” name. The Defendant's protest was less than vigorous, but the relevant evidence is insufficient for concluding that the Defendant consented to WF's use of “Neo” in its new name. VII. First and second sales contracts 32.First Sales Contract The Plaintiff required written confirmation for the 1sttransaction. The Defendant signed and affixed its company chop (the “Chop”) on the 1st sales contract dated 12th March 2001 (the “First Sales Contract”) and gave it to the Plaintiff. The Plaintiff issued an invoice dated 21st March 2001 which was settled. 33.Second Sales Contract The Defendant did not countersign the 2nd sales contract dated 19th March 2001 (the “Second Sales Contract”), but signed and affixed the Chop on 2 corresponding invoices both dated 19th April 2001 (the “Second Sales Invoices”). These invoices were settled. 34.Plaintiff's contention The First Sales Contract and the Second Sales Invoices were the only sales contract/invoices signed by the Defendant. Mr Chang suggested it was inherently likely the Defendant was the contracting buyer for the First/Second Sales Contracts, which “set in train the series of transactions between [the parties]” including the Contracts. But Mr Yip did not give evidence and Mr Steenbergen had no personal recollection. So the Plaintiff had no direct evidence on the First/Second Sales Contracts and no reliable evidence on how the first/second transactions came about to support its contention that the Defendant was the contractual buyer. I am not persuaded by Mr Steenbergen's “impression” that the Plaintiff contracted with the Defendant. 35.Defendant's case On balance I prefer the evidence of Messrs Chan and Tam as to why the Defendant countersigned the First Sales Contract and the Second Sales Invoices that named the Defendant and their evidence that Mr Yip knew WF was the contracting buyer. 36.After negotiations in/about February/March 2001, Mr Yip for the Plaintiff orally agreed with the Pans to sell the Scrap to WF. WF was prepared to pay the Plaintiff upon delivery to its factory in Qingyuan according to usual PRC industry practice. Mr Tam said (and I accept) since this was the 1st transaction, Mr Yip requested the Pans to sign the sales contract, pay a deposit and pay the balance of the price upon arrival of the Scrap in Hong Kong to enable Mr Yip to account to the Plaintiff (向原告人公司交代). At the same time, the Pans preferred to remit the price to the Defendant's bank account for the Defendant to pay the Plaintiff by cheque on WF's behalf. 37.Plainly both the Plaintiff and WF wanted to do business, but they also wanted some commercial protection. The Plaintiff drew comfort from WF's signature on the sales contract, partial upfront deposit payment and full payment upon arrival of the Scrap in Hong Kong. WF drew comfort by routing the price payable to the Plaintiff through the Defendant, its agent for handling the transhipment and/or customs clearance. 38.Written record of intermediary arrangement? Mr Chang queried the absence of any written record of the Defendant's intermediary role. Messrs Chan and Tam fairly accepted that with hindsight a written record would have been desirable, but at the material time there was no mistrust and the parties were eager to build up a business relationship. Indeed, Mr Steenbergen himself said the Plaintiff relied on trust in allowing the Defendant not to countersign the subsequent sales contracts/invoices. The Defendant's role was also consistent with the fact that the Defendant had been handling shipping matters as WF's agent since March 1999. Further, in February/March 2001 Messrs Chan and Tam had already outlined the Defendant's intermediary role to Messrs Veulemens and Yip. 39.Signing of the First Sales Contract and Second Sales Invoices I prefer on balance the Defendant's evidence. WF did not have any Hong Kong office and the Pans were in Mainland China. Mr Yip insisted on signing the First Sales Contract here and also threatened to sell the Scrap elsewhere. So the First Sales Contract had to be signed in a hurry. Mr Pan requested Mr Tam to immediately sign the First Sales Contract on WF's behalf and Mr Yip also made a similar request, so Mr Tam went to the Plaintiff's Office to sign and affix the Chop on the First Sales Contract to oblige the Plaintiff and the Pans/WF. But he told Mr Yip (a) this was only a temporary measure to facilitate the Plaintiff and the Pans/WF and (b) the Defendant was not the true buyer. Mr Tam subsequently signed and affixed the Chop on the Second Sales Invoices pursuant to similar requests by Mr Pan and Mr Yip. Although Mr Chan said the Second Sales Invoices were not signed in a hurry, Mr Tam had to hurry from Kowloon to Hong Kong to give the cheque to the Plaintiff. 40.Mr Chang's submissions I do not accept Mr Chang's submissions that there were no plausible reasons (a) for Mr Yip to sell the Scrap to “Pan”, (b) why Mr Yip could not have brought/faxed the sales contracts/invoices for the 1st/ 2nd transactions to WF for signature, (c) why Mr Yip would let the Defendant sign on the First Sales Contract and the Second Sales Invoices and (d) why the Defendant would sign on them if WF were the true buyer. 41.WF had a metal recycling factory that needed regular supplies of the Scrap. Plainly, Mr Yip was keen for WF to commit on the 1st transaction and to build up a business relationship and WF on the other hand wanted the supply of the Scrap. In my view, the threat to sell elsewhere is clearly a business pressure tactic. 42.Further, the sales contracts/invoices for these initial transactions were in English which no one at WF then understood, so it is not unreasonable for the Pans to request for the Defendant's assistance. Mr Chan said the Defendant later faxed the First Sales Contract and the Second Sales Invoices to WF. I disagree with Mr Chang's submission that it was incredible since no one at WF understood English. It is one thing to fax these documents for WF to appreciate their contents and sign them, but quite another to fax them to WF for record after the deals were put through via telephone arrangements and after the Defendant had signed as intermediary. Further, all parties (including Mr Veulemens) knew of the Defendant's intermediary role. There is also little risk for the Plaintiff since Mr Yiphad asked for a deposit and full payment upon arrival of the Scrap in Hong Kong and not on delivery to Qingyuan. 43.Until late 2002 when it took legal action, the Defendant all along intended to preserve WF's commercial viability with a view to recover the Debt. I also accept the Defendant was prepared to act as intermediary in the hope that (a) with access to supplies of the Scrap for recycling into the Products it would facilitate more business for WF to pay of the Debt out of profits and (b) such assistance might nurture its own future business potential with the Plaintiff (which had vast sources of the Scrap in Europe). 44.Defendant's sales contracts/invoices? The Defendant did not issue its own sales contracts/invoices to WF for the Scrap under the First/Second Sales Contracts and there was no mark up of the price to be paid by WF/NQ. Despite the Plaintiff's vague references to “related”/“affiliated” factory, the Defendant and WF were in fact 2 separate companies. If the Defendant were the contractual buyer vis-à-vis the Plaintiff, it is strange the Defendant did not have sales contracts/invoices and/or accounting entries to reflect the “transfer” of the Scrap bought by the Defendant to WF/NQ. VIII. Mr Steenbergen's alleged meetingswith the Pans and Messrs Chan and Tam 45.Plaintiff's case In/about April/May 2001 (ie after 2-3 transactions with the Defendant) Mr Steenbergen accompanied Mr Yip to meet the Pans at the NQ factory where they discussed the quality/delivery/payment of the Plaintiff's Scrap supplies and mutual future business opportunities. After 6 months (ie in/about October/November 2001) Messrs Steenbergen and Yip visited NQ and met Messrs Chan and Tam in the presence of the Pans. Messrs Chan and Tam referred to the Pans as “their other partners of the Defendant” in Mainland China. Mr Steenbergen understood from such discussions that the Defendant was the contracting buyer. 46.Analysis If the Defendant were the true buyer, it would have been easier and more logical for Mr Steenbergen to first visit the Defendant's Office in Tai Kok Tsui (the “Defendant's Office”) in Hong Kong and hold discussions with its directors Messrs Chan and Tam, particularly as Mr Tam signed the First Sales Contract and the Second Sales Invoices. In my view, the fact Mr Steenbergen attended WF first and held core commercial discussions on the sale/purchase of the Scrap with the Pans in the absence of Messrs Chan and Tam speaks loudly, even on the Plaintiff's case, that the Plaintiff regarded WF as the contracting buyer. 47.On balance I disagree that discussions with the Pans were “understood” to be discussions with the Defendant.Mr Steenbergen admitted he had no knowledge of PRC law, the ownership of the PRC factories or any official document. Moreover, his ignorance of WF (when WF had not yet changed its name to NQ) and his reference to NQ and NW (which name change and formation did not happen until September/ October 2001) in April/May 2001 are very telling. In my view, Mr Steenbergen could not have any understanding about NQ and/or NW in April/May 2001. 48.I find Mr Steenbergen's evidence of another meeting with Messrs Chan and Tam in October/November 2001 unreliable. Given that WF changed its name to NQ and NW was established at about that time, it is strange Messrs Chan and Tam and the Pans did not refer to these changes or discuss their consequential implications on business development at the alleged meeting. I further find Mr Steenbergen's assertion that the meetings reinforced his understanding all along that the Defendant was one entity without having regard to “its inter-relationship with …… [NQ] and [NW]” unreliable. 49.Summary I prefer on balance the Defendant's evidence that Messrs Chan and Tam did not meet Mr Steenbergen until a meeting on 27th May 2002 at the Plaintiff's Office (the “Meeting”). My rejection of Mr Steenbergen's evidence in this respect undermines his overall credibility. IX. Course of dealings and the Contracts 50.Plaintiff's case on the course of dealings Mr Steenbergen claimed that after the First/Second Sales Contracts, as was normal in the trade, the Plaintiff relied on mutual trust and no longer required the Defendant to sign the sales contracts/invoices. Therefore, so long as any of Mr Pan, Mrs Pan, Mr Chan and Mr Tam (acting on behalf of the Defendant) verbally confirmed an order for the Scrap, the Plaintiff would (a) issue a sales contract to the Defendant to evidence its acceptance of the order, (b) arrange for shipment of the Scrap to the Defendant or to order and (c) issue invoice(s) to the Defendant for settlement. Mr Steenbergen was not involved in the day-to-day trading and could not recall who negotiated the transactions allegedly on behalf of the Defendant. Although he disagreed it was always the Pans who did the negotiations, he was unable to refer to any particular contract that was negotiated by someone else. 51.Findings on the course of dealings On balance I accept the evidence of Messrs Chan and Tam on how the transactions were carried out. First, Mr Yipwould send electronic pictures of the Scrap to WF/NQ with copy to the Defendant. Mr Yip would then telephone Mrs Pan to confirm the quality/quantity/price of the Scrap prior to overseas shipment. When the containers arrived in Hong Kong, the Defendant would fax to the Plaintiff or verbally notify Mr Yip the details of the transport company and/or the PRC customs clearance agent. As the Pans were unfamiliar with customs clearance procedures and did not understand English, the Defendant acted as intermediary in choosing the appropriate PRC customs clearance agent and would sometimes help in translating documents. Mr Yip would personally visit WF/NQ to resolve any problems concerning the quality/quantity of the Scrap or any compensation issue. 52.Despatch/receipt of the sales contracts/invoices Mr Tam was sure the Defendant did not receive all sales contracts/invoices for nearly 50 transactions as listed at A/97 of the trial bundle (the “Contract List”). Mr Mumford SC submitted it was extraordinary that apart from the first 2 transactions the Plaintiff was unable to adduce any secondary documentary evidence of the despatch of the sales contracts/ invoices (particularly those for the Contracts) to the Defendant. He further notedthat despite its reliance on the course of dealings between the parties, the Plaintiff failed to discover 7 out of about 50 sales contracts in the Contract List, which raised questions as to whether they actually existed, whether they had been sent to the Defendant and whether the Defendant was named in the sales contracts. This is particularly so given Mr Steenbergen's confirmation that the Plaintiff maintained accounting records that he and Mr Veulemans respectively checked on a weekly and daily basis as well as both soft and physical files containing inter alia the sales contracts, shipping documents, suppliers' invoices, Plaintiff's invoices and other documents for each transaction. On balance I prefer the evidence of Messrs Chan and Tam that the Defendant only received some sales contracts/invoices. 53.Defendant named in the sales contracts/invoices There is no dispute that the Defendant was named in all of the discovered sales contracts/invoices (except Contract no.YO1037 at B/14 of the trial bundle). Mr Chan explained under cross-examination (which I accept) that he had asked Mr Yip to change the buyer's name to WF, but Mr Yip wanted to maintain the status quo to avoid making changes to the Plaintiff's computer data that would require management re-approval. The Defendant therefore refused to further countersign the sales contracts/invoices. In any event, I accept the Plaintiff knew (at least through Mr Yip) of the Defendant's intermediary role in providing details of the transport company and/or the PRC customs clearance agent. 54.First, without knowing the Plaintiff's software system or corporate policy and without discovery by the Plaintiff computerised record of the buyer (which particulars were said to be given by Mr Yip to Ms Lai for inputting into the Plaintiff's computer system), I am unable to speculate (as Mr Chang urged me to) that such computer data alteration would be simple and management re-approval would not have been required or refused. Secondly, I disagree it was “startling” that the Defendant did not complain to the Plaintiff's higher management about the continued receipt of the invoices/receipts naming the Defendant. The Defendant had already made clear its intermediary role to Messrs Veulemens and Yip from the beginning and it refused to further countersign the sales contracts/invoices. Subsequent transactions went well between the Plaintiff and WF/NQ and did not give rise to any mistrust/concern that necessitated writing to the Plaintiff. Mr Chan frankly said he did not think of doing so at the time. I also disagree that the Defendant's case amounts to an allegation of fraud as suggested by Mr Chang. Both Mr Veulemens (ie senior management) and Mr Yip knew the true position of the Defendant's intermediary role from the beginning. X. Delivery of the Scrap 55.The Plaintiff claimed it had duly delivered the Scrap under the sales contracts including the Contracts. But Mr Steenbergen had no personal knowledge and confessed he would have to check the Plaintiff's shipping files for the bills of lading or other documents. Instead, the Plaintiff relied on inter alia (a) the absence of complaint of non-delivery and (b) the payment of all invoices other than a few under the Contracts. 56.Mr Steenbergen's lack of knowledge of delivery matters is illustrated by his evidence in relation to the land haulage fees. He claimed the Plaintiff did not have to pay land transport charges under CIF delivery and said the references to prepaid destination land haulage fees on the bills of lading at B/103 and B/114 of the trial bundle were erroneous. In my view, Mr Steenbergen was surmising without personal knowledge. The relevant multimodal bills of lading show that the port of discharge was Hong Kong but the through transport place of delivery was Huangpu, Mainland China, so there would have been destination land haulage fees for the leg from Hong Kong to Huangpu. These bills of lading were different from other bills of lading found in the trial bundle where the port of discharge was Huangpu or Sanshui, Mainland China. 57.The Defendant on the other hand claimed that due to its limited role it did not know whether the Scrap under the sales contracts were actually delivered to WF/NQ or not, and the Plaintiff never required the Defendant to sign or affix the Chop on the delivery documents. There is no dispute that the Scrap was not physically delivered to the Defendant in Hong Kong. I accept on balance that the Scrap under the sales contracts was delivered to WF/NQ. There is no evidence of delivery of documents giving possession of the Scrap to the Defendant, but Mr Tam admitted he arranged the transhipment on behalf of WF/NQ. There is no endorsement on the discovered bills of lading to the Defendant, but the consignee was “to order” with the final destinations in Mainland China. I find on balance that the Scrap under such bills of lading were delivered to WF/NQ in Qingyuan. 58.If there been any short or non-delivery of the Scrap not already dealt with by credit notes, it is unlikely WF/NQ would have paid the invoices for other sales contracts or continued to deal with the Plaintiff for the numerous transactions during 2001/2002. Further, although Mr Pan said he had to check NQ's records, he did not expressly deny having received the Scrap under the Contracts and/or other sales contracts. In the circumstances, I find on balance that the Scrap under the Contracts and other sales contracts issued by the Plaintiff had been delivered to WF/NQ in Qingyuan. XI. Payments 59.Payments A list of 29 payments to the Plaintiff between July 2001 and May 2002 (the “Payment List”) was annexed to Mr Steenbergen's 1st witness statement. It is agreed the Defendant made the cheque payments in items 1-9, 11 and 23-29 of the Payment List. The Plaintiff claimed the Defendant made the cash payment and bank transfers in item 10 and items 12-22 respectively (but Mr Steenbergen admitted he had to check before he could say that). The Defendant claimed such payments were made by WF/NQ. It is impossible to correlate the generally round figure payments in the Payment List to the invoiced amounts. Mr Steenbergen claimed the Plaintiff could give full particulars of the sales contract, invoices, receipts and credit notes of every transaction from its records, but these documents were not discovered. 60.Defendant's case on the payments The Pans liaised directly with Mr Yip on (and the Defendant had no knowledge of) the mode of payment and the time/amount of the remittance. Sometimes WF/NQ paid cash or remitted monies directly to the Plaintiff's bank account. Sometimes WF/NQ remitted monies to the Defendant's bank account and Mr Tam would write the Defendant's cheques to pay the Plaintiff on behalf of WF/NQ. The Payment List showed cheque payments of about HK$2,000,000.00 and they were booked in the Defendant's accounts as receipts from “NQ” under the description “agent”. On most occasions Mrs Pan would telephone Mr Tam on the amounts remitted to the Defendant's bank account and the sums to be paid to the Plaintiff. On about the same day Mr Yip would telephone Mr Tam to check whether the Defendant had received WF's/NQ's remittance. Mr Yip would not tell Mr Tam the payment was for which Scrap delivery or for which invoice, but it was plain Mrs Pan and Mr Yip knew about each particular payment/invoice. 61.I do not speculate as to why the Plaintiff (even though it relied on the course of dealings between the parties) did not discover its records in order to show the Defendant made the cash payment and/or bank transfers in the Payment List. But on balance there is no sufficient evidence to refute the Defendant's assertion it only made the cheque payments. Despite Mr Chang's criticisms, I find on balance Mr Tam's evidence in this respect is reliable. 62.In my view, the fact that most payments were in round figure sums (which evidence a running account with the Plaintiff) helps to show they were made by WF/NQ. If the Plaintiff had sent all its invoices to the Defendant, the Defendant would have been able to settle the specific invoices by issuing particular cheque payments rather than by way of a running account. The running account payments in round figure sums is more compatible with the fact that (a) not all invoices were sent to the Defendant, (b) Mr Yip made verbal arrangements with the Pans and (c) some payments were made by remittances from WF/NQ. 63.Defendant's intermediary role as paying agent Mr Chang submitted there was no reason (a) for the Pans/Mr Yip not to deal directly when the Defendant claimed WF/NQ made some direct remittances to the Plaintiff or (b) for the Defendant to provide gratuitous assistance to WF/NQ when it ceased to supply the Scrap to the Pans since March 1999 and they failed to pay the Debt. 64.After March 1999, the Defendant acted as WF's/NQ's agent in dealing with transhipment matters. Messrs Chan and Tam also provided translation service to the Pans and acted as a bridge to the Plaintiff's management. Thus the Defendant was already a liaison point between the Plaintiff and WF/NQ. The mode of payment specified on the invoices was generally for (a) payment of a deposit with the balance of the pricepayable upon arrival of the Scrap in Hong Kong or (b) cash against documents, ie before WF/NQ received the Scrap in Qingyuan. It is not surprising WF/NQ would wish to route payment through the Defendant. Given the above-discussed background and the relationship between the parties, it is also not unnatural for the Defendant to facilitate remittance payments even though Mr Tam frankly admitted he did not know why the Pans chose to pay through the Defendant only on some occasions. He said (and I accept) he did not ask the Pans as he had not thought about it at the time. 65.WF's/NQ's ability to pay the price Mr Chang submitted it was doubtful whether WF/NQ would be able to pay the price for the Scrap under the sales contracts. I disagree WF/NQ had no income. It bought and recycled the Scrap and sold the Products, so it would have funds from the sale proceeds to pay for the Scrap supplied by the Plaintiff. The Defendant's approach was to avoid disturbing WF's/NQ's regular trading and to only seek payment of the Debt out of profits if any. Since WF/NQ did not pay the Debt, presumably the sales proceeds of the Products were utilised for other expenses, say, for supplies of the Scrap. 66.Defendant's faxes Mr Chang submitted Mr Tam's evidence that he was normally not given particulars about the transactions/payments was unreliable in light of the Defendant's 2 faxes dated 13th and 23rd June 2001 respectively. These 2 faxes contained copy pay-in slips for (a) the price of the Scrap for specified containers and (b) telex release fees, but these payments were not reflected in the Payment List. On balance I accept Mr Tam's explanation that these 2 transactions were special because Mr Yip gave him the relevant information to ask him to split the payments for the price of the Scrap and the telex release fees. There is no evidence of telex release fees for the other transactions. 67.Receipts I find on balance the Defendant did not pay the Plaintiff the 2 sums of HK$150,000.00 and HK$100,000.00 on 5th February and 1st March 2002 respectively (which payments seem to correspond to items 20 and 22 (bank transfers) of the Payment List). Mr Tam said (and I accept) the Plaintiff would occasionally fax documents relating to the sale/purchase transactions (including invoices and the receipts for 2 above-mentioned payments) to the Defendant, but the Defendant was not required to countersign them. Mr Tam had no recollection whether the Plaintiff issued other receipts to the Defendant, but the Plaintiff did not disclose any other receipt and did not explain why only these 2 receipts were available. Further, all parties (ie the Plaintiff, the Defendant and WF/NQ) knew all along the Defendant was merely an intermediary, so the Defendant did not treat these documents seriously. 68.Gifts Mr Tam said sometimes WF/NQ would remit a larger sum (usually in a round-up figure). Part of such sum would be used for paying the price to the Plaintiff and the Pans would instruct Mr Tam to buy gifts, eg mobile telephones, with the balance. Mr Tam would keep the receipts to account for the “excess” payment but he could not remember how these items were booked in the Defendant's account books. Mr Chang submitted this was “blatant nonsense” not found in Mr Tam's witness statement and no reason was given as to why the “excess” payments could not be used to partially pay the Debt. 69.Since the “excess” payments were part of the remittances to the Defendant from WF/NQ, the natural inference is (and I so find) the gifts were acquired as business gifts. The Defendant knew WF's/NQ's business was dependent on its good connections in Mainland China. There is no dispute the payments were in round figures. I accept on balance there were times when WF/NQ instructed the Defendant to use the “excess” payments to buy gifts. XII. Quantum of the Balance Price 70.There were 4 partial settlements of the invoices for the Contracts made on 5th and 6th February and 1st March 2002 respectively, but they cannot be correlated to the payments in the Payment List. The Plaintiff claimed the sum of US$16,480.92, but Mr Mumford SC submitted such amount could not be verified from the Payment List. The Defendant claimed it did not know the amount of the Balance Price between the Plaintiff and NQ. 71.The Pans had a row shortly after Chinese New Year in 2002. By March/April 2002 they separated. Mrs Pan ran away with a substantial amount of NQ's monies. Since Mrs Pan was previously responsible for NQ's operations/trading and accounts/financial arrangements, Mr Pan was uncertain of the quantum of the Balance Price and said he had to check NQ's records. However, in late 2002, in order to resolve the Plaintiff's claim for the Balance Price, Mr Pan told Mr Chan NQ would pay the sum of US$16,480.92 to the Plaintiff by instalments (see discussions on the emails below). I therefore accept on balance the outstanding Balance Price owed by NQ to the Plaintiff is US$16,480.92. This also supports my above conclusion that the Scrap under the Contracts had been delivered to NQ or NQ was at least not disputing the delivery of the invoiced quantity. XIII. Recovery of the Balance Price – the Meeting 72.Demands for payment Mr Steenbergen claimed he made several attempts to telephone the Defendant and to visit the Defendant's Office to demand the Balance Price. He said Mr Tam gave various excuses for not paying, including the suggestion that its monies were tied up in some other investments (which reason did not appear in Mr Steenbergen's witness statements). Mr Chan frankly accepted he mentioned to Messrs Steenbergen and Delwaide about such investments, but on balance I do not accept they caused any non-payment of the Balance Price by the Defendant or Mr Tam gave such excuses to Mr Steenbergen. 73.Mr Steenbergen accepted it was possible Mr Yip also chased Mr Pan for payment of the Balance Price since Mr Pan was part of the Defendant and Mr Yip would have tried to recover the outstanding price from every angle. I disagree that such evidence was unchallenged; Messrs Chan and Tam said (and I agree) all along Mr Yip did not chase the Defendant but only chased the real buyer NQ for payment. 74.Representations Mr Steenbergen claimed that in/about 2-3 meetings in/about April/May 2002 between himself and Messrs Chan and Tam, Messrs Chan and Tam misrepresented that (a) there was a nasty divorce between the Pans that would adversely affect the financial/business relationships between the Defendant and NQ, (b) Mrs Pan ran away with a large sum of money belonging to the Defendant including the Balance Price under the Contracts payable to the Plaintiff (so NQ could not pay the Defendant and the Defendant in turn could not pay the Plaintiff), and (c) to facilitate the Defendant in recouping such monies more quickly, the Plaintiff should appoint the Defendant as its debt collecting agent to enable the Defendant to use the Plaintiff's name to chase NQ for payment of the Balance Price (the “Representations”). 75.Messrs Chan and Tam denied the Representations. I am unable to accept Mr Steenbergen's evidence. He was unable to say that (a) above was a misrepresentation or (b) was untrue. He did not know the business relationship between the Defendant and NQ. If, as the Plaintiff claimed, the Balance Price was owed by the Defendant, there is no logical or commercial reason for the Plaintiff to appoint the Defendant as its debt collecting agent to chase NQ for the Balance Price. There is also no plausible explanation on how such appointment or the use of the Plaintiff's name would help. The only sensible explanation is that NQ owed the Plaintiff the Balance Price. Further, given Mr Steenbergen's extensive commercial experience and his claimed understanding all along that the real buyer was the Defendant, it is inconceivable that he did not query the usefulness or relevancy of the appointment of the Defendant as the Plaintiff's debt collecting agent in any of the 2-3 meetings. 76.I prefer Mr Chan's evidence that the Plaintiff placed great pressure on Mr Yip to collect the Balance Price and that Mr Yip went to Qingyuan many times to chase Mr Pan for payment but in vain. In/about May 2002, Mr Yip telephoned to request Mr Chan to help collect the Balance Price from NQ. Mr Chan agreed but insisted the Plaintiff issue a letter addressed to Mr Pan/NQ appointing the Defendant to chase and collect the Balance Price from NQ. The purpose of the letter was to confirm/validate (and thereby avoid dispute over) the Defendant's role/capacity as the Plaintiff's debt collecting agent. 77.The Defendant's relationship with NQ was more long-standing and, as Mr Mumford SC submitted, Messrs Chan and Tam knew the language, the people and the location. So it is unsurprising Mr Yip turned to the Defendant for help. It was suggested the Defendant was unlikely to agree to help the Plaintiff recover monies from NQ when NQ still owed the Debt. But in April/May 2002 the Defendant still hoped to receive some payment from NQ and for that NQ needed supplies of the Scrap to carry on trading. If NQ preferred payment of the Debt over the price for supplies of the Scrap, it would not have been able to carry on its recycling business at all. 78.Undisputed facts of the Meeting and the Plaintiff's letterof 27th May 2002 to NQ (the “Letter”) Messrs Chan and Tam attended the Plaintiff's Office on 27th May 2002 and the Plaintiff issued the Letter as follows :
Both parties accepted no schedules were attached when the Letter was given to the Defendant on 27th May 2002. The above Balance Price of US$20,979.12 was larger than the claimed sum of US$16,480.92. It was probably because the former sum had not yet taken into account the 2 subsequent credit notes dated 3rd June and 2nd July 2002. 79.Meeting I refer to my conclusion in paragraphs 49 above and prefer the evidence of Messrs Chan and Tam that they first saw Mr Steenbergen at the Meeting. 80.I find Mr Steenbergen's recollection of the Meeting uncertain and unreliable. He claimed the Meeting was more than just a brief visit to collect the Letter, but he could not remember clearly where the various persons were positioned in the Plaintiff's Office. When it was suggested to him that Messrs Chan and Tam merely stood at the main entrance (since they were only there to collect the Letter), Mr Steenbergen said the Plaintiff would normally offer visitors a seat as they came in. Mr Steenbergen claimed that to facilitate the Defendant in recouping monies from NQ quickly, Messrs Chan and Tam at the Meeting requested the Plaintiff to appoint the Defendant as its debt collecting agent to enable the Defendant to use the Plaintiff's name to chase NQ for payment of the long overdue Balance Price, so the Letter was prepared during the Meeting.I reject such evidence. Mr Steenbergen had 11 years' experience in the industry and he was the Plaintiff's managing director, whose duties included managing overdue business accounts. If, as he claimed, he knew the Defendant was the real buyer, I find his unquestioning acceptance of the Representations incredible and unconvincing. 81.I prefer on balance the evidence of Messrs Tam and Chan as follows. Following Mr Chan's request described in paragraph 76 above, Mr Yip telephoned Mr Chan on 27th May 2002 to ask him to come to the Plaintiff's Office as soon as possible to collect the signed Letter. Messrs Chan and Tam went to the Plaintiff's Office in the late evening. Only Messrs Steenbergen and Yip were there. They did not enter the Plaintiff's Office, but stood by the main entrance. Mr Yip gave the Letter to Mr Chan, who checked that the Letter was correct. They promised to do their best to chase Mr Pan on behalf of the Plaintiff. Mr Steenbergen was seated at a desk behind a partition and did not speak with them. When Messrs Chan and Tam left, Mr Yip patted Mr Tam's shoulder and said “troubling you to help us chase for the sum” (麻煩你哋幫我哋追番條數). 82.Letter The Plaintiff's pleadings and Mr Steenbergen's witness statement stated that at the Meeting the Defendant “provided a draft “appointment letter” for the purported appointment with the Plaintiff to issue” and that the Letter was in the form so drafted by the Defendant. But the Plaintiff could not produce a copy of the draft appointment letter upon request. Instead it claimed Messrs Chan and Tam only verbally provided the contents of the Letter during the Meeting with no note/record taken. Mr Steenbergen clarified that such “verbal draft” was only in respect of the last paragraph of the Letter and NQ's name/address. I find such evidence unconvincing. 83.Mr Steenbergen claimed that Ms Lai (who was not involved at the Meeting) probably typed the Letter, but I find it unlikely that he verbally conveyed the contents of the last paragraph of the Letter that included the Defendant's full name/address to Ms Lai when, according to him, the Plaintiff's computer system already had such details and when other parts of the Letter “basically [came] out of – straight out of an accounting software”. I find it more probable that the Plaintiff prepared the entire Letter on its own. As Mr Mumford SC submitted, if the Defendant only drafted the last paragraph, there was no reason why the Plaintiff should take on the burden to say in the beginning of the Letter that “you” (ie the addressee NQ) owed the Balance Price. 84.There is no dispute that Mr Steenbergen could read/understand the Letter. He said Ms Lai gave the figures of the Balance Price in the Letter for him to check. If he had checked the Letter, then even on the Plaintiff's case, he would have realised the Letter misidentified the buyer. Eventually, Mr Steenbergen was constrained to accept under cross-examination the Letter “doesn't make sense to me”. 85.Post-Meeting After Messrs Chan and Tam collected the Letter, they went to Qingyuan many times to meet with Mr Pan to discuss the Balance Price in search of an acceptable resolution. Mr Pan told them NQ had cash flow problems following Mrs Pan's departure with NQ's monies and he needed time to check NQ's accounts/records, but NQ would pay any proven debt due to the Plaintiff. Mr Chan reported to Mr Yip. 86.Use of the Letter I accept on balance that the Letter was shown to Mr Pan whose then girlfriend understood some English. Mr Chang submitted no useful purpose was served in showing an English letter to Mr Pan and the suggestion of Mr Pan's girlfriend was a last-ditch effort to create some sense out of Mr Tam's testimony. Mr Tam fairly accepted that with hindsight a bilingual Letter would have been more desirable, but they had not thought of it at the time. I find it understandable that the Letter (which was signed by Mr Steenbergen) was prepared in English. Further, the Letter is useful as it served as proof of the Defendant's role/capacity as the Plaintiff's debt collecting agent in case NQ refused to deal with the Defendant or challenge its debt-collecting efforts. 87.Mr Chang suggested that “[to the Plaintiff], the [Letter] was never a formal, legal document serving to assign the debt or formally appoint [the Defendant] as agent, and for this reason naturally it is not necessary (nor was any attempt made) to “cancel” the same.” However, the plain language of the Letter speaks otherwise. Mr Steenbergen accepted that literally speaking the Letter suggested that the long overdue invoices were for NQ and that the Defendant was appointed to collect monies due to the Plaintiff from NQ. 88.Summary I find on balance Mr Steenbergen's evidence in relation to the Meeting and the Letter is wholly discredited, which undermines his overall veracity. I am not persuaded that the Defendant was the contracting buyer for the Contracts. I find that the Defendant was only an intermediary/debt-collecting agent. XIV. Emails 89.Introduction The Plaintiff claimed the emails that passed between the parties in October/November 2002 showed the Defendant regarded itself as the true buyer. The Defendant denied this and said it only negotiated the Pertinax Deal (see below) and made proposals for payment of the Balance Price on NQ's behalf. 90.The Plaintiff claimed that since there was no progress after the Letter, it resumed its demand for the Balance Price against the Defendant. I disagree. On 30th October 2002, Mr Delwaide sent 2 electronic pictures of the Scrap. Mr Steenbergen did not explain why the Plaintiff was prepared to contemplate further transaction with the Defendant under such circumstances. I prefer the Defendant's explanation that Messrs Chan and Tam were invited to attend a meeting at the Plaintiff's Office on 30th October 2002 to discuss progress of the recovery of the Balance Price. In anticipation of such meeting, Mr Chan liaised with Mr Pan, who insisted that (a) the Plaintiff should continue to supply the Scrap to NQ and (b) NQ would pay the Balance Price together with the price for the new Scrap. Messrs Steenbergen and Delwaide agreed to such terms at the meeting. They therefore sent the electronic pictures of the Scrap afterwards. 91.Mr Chan liaised with Mr Pan on a price offer. On 31st October 2002, Mr Chan emailed the Plaintiff to give a range of “our” acceptable prices and other terms for the proposed supply of Pertinax CNF Hong Kong or CNF Wuzhou (the “Pertinax Deal”). Although the email did not expressly say the Pertinax Deal was for Mr Pan/NQ and Mr Chang suggested the word “our” referred to the Defendant and not NQ, I accept on balance that the Defendant sent the email on NQ's behalf. The Plaintiff knew from the meeting that the intended buyer was NQ. Mr Chan said his English standard was not high and he was then unaware of a need to spell things out precisely. Mr Chang next suggested the Defendant's assertion was inconsistent with the case put by Mr Mumford SC in cross-examination that the Pertinax Deal was for NW. Messrs Chan and Tam fairly accepted there was some confusion (the email specified Wuzhou as the port of discharge) but confirmed (and I accept) the Pertinax Deal was for NQ and not NW. 92.Mr Steenbergen replied by email that he was “[looking] forward on your agreement on the payment schedule”. He claimed he gave out a number of payment schedules for the Balance Price to the Defendant for consideration, but the Plaintiff did not give particulars or discovery of such proposals. I prefer the Defendant's evidence that the payment schedule was a reference to Mr Pan's promise (as Mr Chan informed the Plaintiff at the meeting) for NQ to pay the Balance Price by instalments. So by such email the Plaintiff was probably chasing Mr Pan/NQ through the Defendant for the payment schedule. 93.Mr Chan replied by email as follows :
94.The above payment proposal was different. Mr Chan explained that after the meeting he telephoned Mr Pan for instructions and Mr Pan proposed to pay by 2 instalments. Mr Chang argued there was no reason for the Defendant (if it were not the buyer) to preview the draft contract and payment agreement. Mr Chan explained (and I agree) that the Defendant would forward the drafts to Mr Pan for consideration. By this time all involved knew the Defendant acted as intermediary in negotiations over the payment of the Balance Price and as “Hong Kong representative” for the Pertinax Deal from inter alia the past dealings, the Letter and the meeting of 30th October 2002. Mr Chan testified (and I accept) he was still not alerted to give precise descriptions but all involved knew “us” in the email meant the Plaintiff and Mr Pan. By this stage, Mr Yip was no longer involved in the discussions, which were handled directly by Messrs Delwaide and Steenbergen. Since they spoke English and Mr Pan Chinese, I find the Defendant's participation logical/reasonable. 95.Mr Steenbergen replied by email to insist that payment of the Balance Price must be separate from payment for a new supply of Scrap. He demanded a goodwill payment of at least US$4,000.00 in November 2002 and suggested a meeting on 5th November 2002. No one recalled any meeting on 5th November 2002, but there were subsequent meetings to discuss the collection of the Balance Price on the Plaintiff's behalf in November 2002. 96.Mr Pan eventually agreed to pay the Balance Price separately by 4 instalments. He told Mr Chan he wanted to cooperate with the Plaintiff in order to maintain their business relationship. So the Defendant emailed Mr Delwaide on 25th November 2002 stating that “[according] to [NQ] Mr. Pan's information, Mr. Pan promise to settle the outstanding USD16,480.92 by [4 monthly instalments commencing in December 2002]”. 97.Mr Steenbergen did not recall reading such email. Mr Chang submitted this first faint suggestion that the Balance Price was owed by Mr Pan/NQ was suspect as it coincided with the Defendant's PRC legal proceedings against NQ. He argued it was not impossible (though I need not rule on this) that the Defendant might have decided to conveniently push all liability to Mr Pan/NQ since it was unlikely for the Defendant to recover anything from Mr Pan/NQ. However, I do not accept the Defendant was thinking of shifting liability at that time. 98.On balance I prefer Mr Chan's evidence. He said that since 30th October 2002 he kept in telephone contact with Mr Delwaide. By November 2002 he felt the Plaintiff was beginning to suggest the Defendant was liable as principal for the Balance Price and it might take action against the Defendant, so he believed there was then a precautionary need to expressly distinguish between the Defendant and Mr Pan/NQ to make clear it was NQ who owed money to the Plaintiff. His concern was justified by Mr Delwaide's reply email that attached a soft copy draft letter to be signed by Messrs Steenbergen and Delwaide, Messrs Chan and Tam and Mr Pan, which stated that the Plaintiff and the Defendant had agreed that the outstanding sum of US$16,480.92 due to the Plaintiff would be paid by 4 instalments. Mr Delwaide's email said the Plaintiff would give the Defendant “some time to pay back and agree to this proposal”, but insisted the payment schedule could not be changed under any circumstances. On 27th November 2002, Mr Delwaide chased Mr Chan for the letter. But Messrs Chan and Tam refused to sign such letter because the Balance Price was owed by NQ and not the Defendant. 99.On 16th December 2002, Mr Tam sent a fax to Mr Steenbergen (but Mr Steenbergen did not recall reading such fax) as follows :
100.The Defendant claimed that Mr Steenbergen sent an unreasonable and threatening email on 23rd December 2002, and Messrs Chan and Tam replied by reiterating the Defendant's stance and requesting the Plaintiff to use civilised, reasonable and legal methods to resolve the dispute. I place no weight of this assertion as neither of these 2 emails was produced. However, this does not affect the veracity of the Defendant's witnesses. 101.In light of the above analysis, I do not consider that the above emails assist the Plaintiff's contentions. XV. Messrs Steenbergen's and Delwaide's visit to the Defendant's office 102.After the PRC Judgment was granted on 9th December 2002, the Defendant took over NQ's assets, but it did not carry on its business. Mr Pan was no longer NQ's legal representative/shareholder. But the Defendant could not get NQ to pay the Plaintiff as there was no money. 103.In late January 2003, Messrs Steenbergen and Delwaide visited the Defendant's Office. They were greeted by a female staff. There is dispute as to whether they behaved violently and emotionally. Mr Steenbergen denied any such behaviour, saying that they waited for over 2 hours for Messrs Chan and Tam to turn up, but eventually left in vain. Messrs Chan and Tam claimed the Defendant's female staff was scared as a result of Messrs Steenbergen and Delwaide becoming agitated and forcefully kicking the entrance door of the Defendant's Office when she told them Messrs Chan and Tam were not in. The Defendant did not report to the police. 104.On balance I do not accept Mr Steenbergen's evidence that he and Mr Delwaide waited for over 2 hours without knowing if Messrs Chan and Tam would return to the office at all. I accept the Defendant's female staff was worried and told Messrs Chan and Tam so. But since Messrs Chan and Tam were not present when the alleged incident happened, I am not prepared to find as a fact on the available evidence that Messrs Steenbergen and Delwaide acted violently. I also do not consider such subsequent events could substantially aid in determining who was the true buyer. XVI. Conclusion 105.In the circumstances, I find the Plaintiff has failed to prove that the Defendant was the true contracting buyer under the Contracts or that it owed the Plaintiff the Balance Price of US$16,480.92. The Plaintiff's claim is therefore dismissed. There is no reason why costs should not follow event. I therefore grant a costs order nisi that the Plaintiff do pay the Defendant costs of the action including all costs reserved (if any) with certificate for counsel.
Mr Jonathan Chang instructed by Messrs Sit, Fung, Kwong & Shum for the Plaintiff. Mr E C Mumford SC instructed by Messrs Peter W K Lo & Co for the Defendant. |