O.D.C. Ltd v. Best Billion Jewellery (HK) Co Ltd
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DCCJ 6325/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 6325 OF 2006 -------------------- BETWEEN
-------------------- Coram : H.H. Judge Chow Dates of Hearing : 25th to 27th June 2007 Last day of submission of written submission : 27th July 2007 Date of handing down Judgment : 10th October 2007 JUDGMENT 1.This is the Plaintiff’s claim for the sum of US$130,007.25, being outstanding balance of the value of diamonds sold or sold on consignment to the Defendant. The Defendant refutes this claim, averring that the Plaintiff was doing private business with its employee, a Mr Jimmy Leung, at the material times. The Plaintiff’s case 2.The Plaintiff called 3 witnesses to testify. They are Mr. Amit Cohen, Mr. Eilad Cohen, and Mr. Yosef Hadad. In my judgment, the evidence of the first two witnesses is relevant to the issue of this case. 3.Mr. Amit Cohen commenced employment with the Plaintiff since September 2005. He visited the Defendant’s shop (“the Shop”) at 375-381 Nathan Road for the first time on 22 November 2005 on a “cold call”. In the Shop he met Rica Leung and Jimmy Leung who was a supervisor. At that time both of them were wearing badges which showed their names. He only came to know that Rica Leung was a manager in February 2006 after he receiving her name card. 4.He made the initial contact with Jimmy Leung. Jimmy Leung agreed to take 2 diamonds from him on consignment for sale in the Shop. He used a memo (number 0490) to record that transaction. It was chopped with the Defendant’s chop and signed by Rica Leung. On the memo it was written “Return after 10 days”. 5.In the Shop Jimmy Leung gave him his mobile phone number by writing the same on the name card. A day or two before 29 November 2005, Jimmy Leung telephoned him and came to the office of Novel Collection Limited at 9 Queen’s Road Central to do business. He used the same address to operate the Plaintiff’s business. At that meeting, he consigned to Jimmy Leung 22 pieces valued at US$22,553.60 and the transaction was made out by memo number 0494. 6.On or about 9 December 2005, Jimmy Leung telephoned him and they made an arrangement to meet each other. He met Jimmy Leung outside the Shop and they went for coffee. They talked about business and he gave Jimmy Leung the stones on consignment (memo 0497) with a consignment period of 5 days. They were 2 diamonds valued at US$38,650.92. 7.On or about 12 December 2005, Jimmy Leung arranged to visit his office again. He returned the 2 stones, the subject matter of the first memo 0490, and he took on consignment a diamond with a consignment period of 14 days in the sum of US$57,333.00 and agreed to purchase (invoice 0499 with 30 days for payment) at US$30,241.21. Memo 0498 and invoice 0499 were both signed by Jimmy Leung and chopped with what he believed to be the Defendant’s chop by Jimmy Leung in front of him. Jimmy Leung also returned on that date the 22 diamonds at US$22,553.60 (memo 0494 dated 29 November 2005). Jimmy Leung also paid on that day HK$30,000 (endorsed on invoice 0493). The chop is different from the chop appearing on the first memo 0490 by the inclusion of Chinese characters in the centre and the words “(HK) Co. Ltd” appearing thereon, but which did not appear on the first chop. However, it is the same as the chop from the Defendant on their letter dated 13 January 2006. 8.On or about 21 December 2005, Jimmy Leung arranged to come to his office and agreed to buy 2 diamonds for a total of US$38,827.40 with 30 days payment. Invoice number 290667 was made out to Jimmy/Best Billion. It was signed by him and chopped with the same chop as invoices 0493, 0498, 0499. Jimmy Leung also paid cash HK$60,753.00. 9.On or about 23 December 2005, Jimmy Leung telephoned to him to do more business and attended his office on that date. On that day Jimmy Leung returned the 2 diamonds which is the subject matter of memo 0497. 10.Between 24 December 2005 and 3 January 2006, Jimmy Leung and he spoke on the phone every 2-3 days about business. 11.On 3 January 2006, Jimmy Leung called again and came to his office to do more business. Jimmy Leung bought 43 pieces of stones worth US$62,098.52 to be paid for within 25 days (invoice number 290672). On or about that time Jimmy Leung/the Defendant had goods exceeding US$199,450 unpaid. He also paid HK$50,000 in cash on that day. 12.On 4 January 2006, he discussed the situation with his friend, Mr. Eilad Cohen, and they decided that he should call Jimmy Leung. He therefore telephoned Jimmy Leung on his mobile phone but could not get through. He telephoned the Defendant’s number in order to speak to Jimmy Leung but he was told that he no longer worked there. He became suspicious. He telephoned Jimmy Leung on his mobile number 5 minutes later and Jimmy Leung answered the call. He asked him to return the 43 pieces which he had taken the day before. Jimmy Leung agreed to meet him on the same day. 13.On 4 January 2006, he met Jimmy Leung, and accompanied him to the toilet in the Landmark; later on he went with him to meet his girlfriend in Central, but he ran away somewhere between Stanley and Wellington Street. Approximately half an hour later Jimmy Leung called him, saying that he had run away because he was scared and that he was not a thief. 14.On or about 9 January 2006, he received a call from Jimmy Leung who said that he had left 9 pieces of diamonds at the management office of the building at 9 Queen’s Road Central. He subsequently collected these diamonds. He did not hear from Jimmy Leung since that day. 15.On 16 January 2006 he made a report to the police; he also wrote to the Defendant, setting out the total outstanding amount, namely US$130,007.25. The evidence of Mr. Eilad Cohen 16.Mr Eilad Cohen (a director of Novel Collection Limited) gave a description of what had happened on 4 January 2006. According to him, at about 12:30 p.m. on that day, the meeting with Jimmy Leung commenced. Jimmy Leung returned diamonds in the value of US$62,098.52, leaving a balance of approximately US$80,019.75 (not including memo 0498) owing to the Plaintiff. Jimmy Leung assured him and Mr. Amit Cohen that he would return further diamonds the next day and that he would give a cheque there and then for the outstanding which was equivalent to US$80,019.75 (namely HK$624,154). He produced a cheque which had already bore a signature and the chop of the Defendant. It was dated 17 January 2006 and made out to Novel Collection Limited. It included the words “Six Hundred and Twenty Four Thousand One Hundred and Fifty Four”. 17.During the meeting he phoned up the Defendant. He was told that Jimmy Leung was not working for the Defendant anymore. He told Jimmy Leung that they were worried because the Defendant said that he was no longer employed there. Jimmy Leung denied that. He suggested that they should go to the Defendant company to ascertain whether the allegation was true or not. He telephoned the Defendant; Jimmy Leung took the phone and spoke to the person at the other end and they were speaking in Cantonese so he did not understand what was being talked about. 18.Subsequently, Jimmy Leung hung up the phone. When Jimmy Leung and Mr. Amit Cohen went to the lavatory, he phoned up the Defendant. He asked Mr. Tse of the Defendant whether the cheque which Jimmy Leung had given me was good or not. Mr. Tse asked him to fax a copy of the cheque and he would let him know. He tried to fax a copy from the café in the Landmark but the machine was not working. It was then agreed that he would go to his office to send a fax from 9 Queen’s Road. Subsequently Mr. Amit Cohen accompanied Jimmy Leung to go to see his girlfriend. At about 1:30 p.m. he went to his office. Then Mr. Amit Cohen phoned him up, saying that Jimmy Leung had run away. He went to Wellington Street where Amit Cohen was. Jimmy Leung could not be found. About half an hour later, Jimmy Leung telephoned up Mr. Amit Cohen, saying that he had run away because he was scared, but he was not a thief. If he was, he would not have returned the diamonds valued at US$62,098.52. The Defendant’s case 19.The Defendant called upon Mr. Tse Man Chun and Miss Rica Leung to testify on its behalf. The evidence of Tse Man Chun 20.He is the Group Accounting Manager of the Defendant. It is his evidence that Jimmy Leung was employed by the Defendant as a supervisor in the Yaumatei outlet from 1 November 2005 to 28 December 2005. His duty was restricted to the retailing sales of the Defendant’s jewellery in the Yaumatei Outlet. The Defendant never authorized Jimmy Leung to purchase diamonds from the Plaintiff. 21.On 1 June 2006 Mr. Amit Cohen called him, asking whether Jimmy Leung was still in the employment of the Defendant and saying that Jimmy Leung had purchased on behalf of the Defendant some diamonds with unpaid balance at US$21,266.85. He replied that the Defendant had not received any diamonds from the Plaintiff. He clarified that any staff of the Defendant whose rank was lower than a manager could never have the authority to purchase any goods on behalf of the Defendant. 22.The Defendant had never received any invoices, memos, memorandum or any other documents from the Plaintiff until for the first time when Amit Cohen of the Plaintiff sent to the Defendant a letter dated 12 January 2006 enclosing an Invoice No. 0499 with the balance amounted at US$21,266.85. The evidence of Leung Nam Che (Rica Leung) 23.She was the manager of the Shop. She has been employed by the Defendant since 26 July 2004. 24.In her witness statement dated 28 November 2006, she said that she had never seen Jimmy Leung ordering or receiving any diamonds from any supplier in the Yaumatei Outlet. 25.On 22 November 2005, after Mr. Amit Cohen had come into the Shop, Jimmy Leung told her that he was a supplier. He made an introduction of her to Amit Cohen that she was the shop manager, and said that Amit Cohen intended to leave 2 stones on consignment. She asked Jimmy Leung if he had checked the stones. Jimmy Leung answered in the affirmative. Then she made another check of the stones. After that she made a chop mark (on Memo 490) signed it and then she put the stones and the duplicate of the memo into a safe. Analysis of the evidence 26.I accept the evidence of Mr. Amit Cohen and Mr. Eilad Cohen. I am satisfied that they are honest witnesses. Their evidence is not contradicted. 27.The issue I have to decide is whether Jimmy Leung had actual authority to purchase diamonds. Clause 6 of the employment contract of Jimmy Leung states: “The duty of the employee shall be selling of diamond and gold at the retailing out.” It is silent on whether Jimmy could purchase diamonds. It does not say that Jimmy Leung could not do so. Therefore this clause is not conclusive evidence that Jimmy Leung did not have the authority to purchase diamonds When Mr. Amit Cohen entered the shop, he specifically asked to see someone in charge of the Shop. He was directed to Jimmy Leung by an unknown staff member. At the meeting with Jimmy Leung, Rica Leung came across to assist in the weighing of the stones. 28.The evidence of Rica Leung is that Jimmy Leung said that the person (Mr. Amit Cohen) was a supplier. He made an introduction of her to Mr. Amit Cohen, saying that she was the shop manager. Then Jimmy Leung told her that Mr. Amit Cohen was intending to lease 2 stones on consignment. She asked Jimmy Leung if he had checked the stones. He said “yes”. Then she made another check of the stones. 29.In her witness statement dated 28.11.2006, regarding the incident on 22.11.2005, she said,
Nowhere in this statement and all her three supplemental witness statements she had referred to the fact that Jimmy Leung introduced her as the manager of the Shop. Hence I do not accept such a piece of evidence. 30.As previously stated, I accept the evidence of Mr. Amit Cohen. At that time there were several staff in the shop. Before entering the Shop, he must have the intention of leaving the stones with the Shop on consignment for sale. Having that idea in mind, he must have intended to see the person in charge of the Shop in order to ascertain from him whether he could leave the diamonds for sale on consignment. For that purpose he must have asked the staff member there to see the person in charge of the Shop. The staff member knew that Rica Leung was the manager of the Shop, and Jimmy Leung was only a supervisor. Yet instead of taking him to see Rica Leung, that staff member led him to see Jimmy Leung. So Amit Cohen must have regarded Jimmy Leung as the person in charge of the Shop. Before Rica Leung made the second checking of the stones, Jimmy Leung had already made a checking of the stones (in respect of their weight). Before Jimmy Leung made the checking, Mr. Amit Cohen must have asked him if he could leave the stones there on consignment for sale. Jimmy Leung must have consented to his doing so before he weighed the stones. If he had not given consent to his request, he would not have weighed the stones, because this would not have been necessary. At the time Rica Leung made the second checking of the stones and thereafter, nothing was said regarding whether Mr. Amit Cohen was allowed to leave the stones on consignment for sale. If up to the time of the second checking of the stones no consent had been given by Jimmy Leung, Mr. Amit Cohen would have asked Jimmy Leung, or Rica Leung, for such consent, and Jimmy Leung would also ask Rica Leung if consent could be given. The absence of enquiry about consent up to the time of the second checking indicates clearly that Jimmy Leung had, before the second checking, given consent to Mr. Amit Cohen to leave the stones in the Shop. This is also tacitly reflected in the evidence of Rica Leung. Instead of saying anything or making enquiry about consent, she asked Jimmy Leung if he had checked the stones, then she proceeded to weigh the stones, signed and made a chop mark on memo 0490, and put the 2 diamonds into a safe. By doing this she must have regarded Jimmy Leung to have given consent to Mr. Amit Cohen to place the 2 diamonds in the Shop for sale on consignment. If Jimmy Leung had had no authority to receive the diamonds for sale on consignment, and that she had been the only person having authority in that regard, naturally she would have talked to Mr. Amit Cohen on the matter of consent herself. Without making any enquiry about such consent, she proceeded to weigh the stones, signed the memo and put them into a safe. That being the case, Jimmy Leung must have the actual authority to receive the diamonds on consignment for sale in the Shop. 31.Even if I am wrong in reaching this conclusion, in my judgment, Jimmy Leung had the apparent authority to receive the diamonds on consignment for sale in the Shop. The principle of “apparent authority” is set out in the case of Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd. [1964] 2 Q.B. 480 at 503 per Diplock L.J.:
Jimmy Leung was regarded by the other staff member of the shop as the person in charge of the Shop, and he gave his consent to Mr. Amit Cohen to put the stones in the Shop for sale. He was also assisted in checking the weight of the stone by Rica Leung. All such evidence reflects clearly that Jimmy Leung had the apparent authority to receive the diamonds, on behalf of the Defendant. 32.The Defendant submitted that if the dealings were conducted with the Defendant, why it was not conducted in the Shop, when on 9 December 2005 Mr. Cohen went to the Shop but chose to go for coffee for business? Hence the business dealings were conducted between Mr. Amit Cohen and Jimmy Leung, but not with the Defendant. In my judgment, once Mr. Amit Cohen regarded Jimmy Leung as the person in charge of the Shop, it would not be unreasonable for the two of them to have coffee outside the Shop and talk about business. It cannot be the case that once business talk was conducted outside the Shop, then it became a personal business between the two of them. There is no other evidence to support this allegation. There is no evidence in this case to show that the Plaintiff was doing private business with Jimmy Leung. I do not for one single moment accept this submission. 33.For the reasons stated above, I find that Jimmy Leung at all the material times acted as the agent of the Defendant on the basis of actual authority, or alternatively, on the basis of apparent authority. Hence the Defendant is liable for the loss and damages suffered by the Plaintiff. Accordingly I enter judgment in favour of the Defendant in the sum of US$130,007.25, with interest thereon, at judgment rate, from 7th March, 2006, until satisfaction. Costs 34.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant is to pay costs to the Plaintiff, to be taxed, if not agreed, with Certificate for Counsel.
The Plaintiff : represented by Mr. Paul Stephen, instructed by M/S Boase, Cohen & Collins Solicitors. The Defendant : represented by Mr. Kenneth C.L. Chan & Mr. David Y.F. Chum, instructed by M/S Simon C.L. Yung & Co., Solicitors. |
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