深圳市永利興印刷有限公司 v. Topstyle Printing Equipment Ltd and Another
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DCCJ 378 OF 2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 378 OF 2008 _____________________ BETWEEN
__________________________ Coram : H. H. Judge YUNG, District Judge Dates of Hearing : 19th , 20th & 21st January, 2009 Date of Handing ___________________________ J U D G M E N T ____________________________ Background 1.The 2nd Defendant, Mr. Chiu, was a used-machines dealer of some twenty years experience. At the time of the present instant, he had been operating his business in the name of the 1st Defendant, a Hong Kong registered limited company under his control. 2.In May 2007 through the introduction of one Mr. Tai, the Plaintiff came to know of Mr. Chiu. Ms Lee of the Plaintiff then contacted him for assistance for purchasing a set of printing equipment of value about RMB 6 million. Mr. Chiu managed to find one suitable set in France. Naturally the Plaintiff required inspection and demonstration of the equipment. Ms Li and Mr. Chiu then signed, respectively on behalf of the Plaintiff and the 1st Defendant, an agreement entitled “購機協議” (“the Sale Agreement”). The sale price is mentioned in two clauses of the agreement, both to the effect that the final price is yet to be agreed . Clause 1 describes the sale price of the machine as reference price RMB 5.98 million to be finalized after inspection. (“售價：参攷價人民幣伍佰玖拾捌萬元正—上述機價于歐洲驗機後雙方最後確定”)。Clause 2(2) restrains the Plaintiff from dealing directly with the supplier while the 1st Defendant undertakes to make the best the endeavour to obtain the best price from the supplier: “驗機後甲方(the Plaintiff)及其有關單位承諾不與歐洲供應方洽談購機事宜，乙方(the 1st Defendant) 全力爭取最優惠機價, 而甲方則需配合乙方之付款方式。” 3.Under the agreement the Plaintiff was required to make a RMB 0.5 million deposit with the 1st Defendant and which deposit it paid to a bank account as directed by the 1st Defendant. Thereafter Mr. Chiu arranged for the two representatives of the Plaintiff to visit France for the purpose viewing the machine. One of these two persons was Ms Li of the Plaintiff. Mr. Chiu alleged that while still in France, he and Ms Li had agreed on the sale price, i.e. RMB 5.88 million. 4.Ms Li denied that she had ever agreed on the price in France. According to her she had to report back to her master printer in Shenzhen bringing back the video tape recording of the inspection and the printed works produced during demonstration. After obtaining the master printer’s opinion , Ms Li said she negotiated the sale price with Mr. Chiu. According to her the parties reached a deadlock and the deal fell through. When Ms Li failed to secure the refund of the deposit, she asked Mr. Tai for assistance. Mr. Tai managed to arrange a meeting with Mr. Chiu in a café in Shenzhen. The meeting last for about 5 hours and at the end Ms Li and Mr. Chiu signed an settlement agreement. It was on this settle agreement the Plaintiff bases its claim for the partial return of deposit. 5.Both defendants denied liability under this settlement agreement. Mr. Chiu alleged that he signed the document under threat and in any event he did not sign in his personal capacity. The 1st Defendant is also counter-claiming for loss of profits. Counter-Claim /Nature of the “Sale Agreement” 6.Standing alone the Sale Agreement is a not sale and purchase contract which would bind either party to the sale at a certain price. Among other things the price of the machine had yet to be agreed. Mr. Cheung, counsel for the Defendants ably argued that the court should try its best to give effect to it, taking into account the trade practices and the particular circumstances of the case. 7.I do not think it proper to interpret the Sale Agreement in a way to imply terms as suggested by Mr. Cheung. In the particular circumstances of this case, the basis of the counter-claim is a simple breach of contract which is partly in writing and partly oral. 8.The Sale Agreement itself is an agreement, albeit not a complete sale and purchase agreement. Mr. Cheung argued that as the price provided therein is uncertain it should be implied into the agreement that a reasonable price is intended and that RMB 5.88 million is the reasonable price. I fail to understand his argument. The 1st Defendant did not claim that a reasonable price should be implied to the Sale Agreement. Its claim is simply this. Ms Li on behalf of the Plaintiff agreed in France to pay this price of RMB 5.88 million. If she had really agreed to the price in France, this must be in pursuance of the Sale Agreement. The oral agreement together with the Sale Agreement would have formed a complete contract is so far as the price is concerned. 9.There is no need to imply terms to an agreement to give effect to it if by itself the agreement is clear. This general principle has not been submitted to me. The Sale Agreement had a clear purpose which the parties intended. The provisions were there to protect both parties. 10.The Sale Agreement does not provide, as the Defendants argues, that if the equipment satisfies the specified inspection standards, the price would be the so called reference price or a reasonable price. It clearly provides that the parties had yet to agree on the price after inspection and demonstration of the equipment. The specified inspection standards together with other specification of the equipment are set down to provide the protection for the Plaintiff. The equipment to be inspected in Europe had to comply with these specifications. The Plaintiff had to provide a substantial good faith deposit. It is only natural that a set of equipment complying with its requirements and expectation was there for it to inspect with a view to acquiring it. 11.Clause 6 also lends support to the above interpretation. It provides that ‘如果歐洲驗機不滿意，甲方(the Plaintiff)有權要求乙方(the 1st Defendant)或要求其他設備(printing equipment)作選擇或要求乙方退回所付款項，而歐洲驗機之有關費用則由雙方各自承担。’ “Not satisfied” must mean “ the Plaintiff for any reasons is not satisfied.” In that event the Plaintiff had to bear its costs for the trip to Europe. I do not accept Mr. Cheung’s submission that “Not satisfied” means the equipment failed to conform to the specified inspection standards. The fallacy of this argument can be seen if one imagined the scenario that the 1st Defendant was to arrange an entirely sub-standard or even a totally different type of machine for inspection. In this scenario, the Plaintiff had to bear its costs for the trip which was doom to achieve its purpose before it started. This is clearly not what the parties intended, but this would be the effect if the words “not satisfied” were given the meaning urged upon me by Mr. Cheung. 12.Clause 2(2) of the Sale Agreement restrains the Plaintiff from negotiating with the seller in Europe for the equipment. On the one hand this provides protection of the 1st Defendant from the Plaintiff dropping it out. On the other, it indirectly shows that the parties were well aware that the deal between them might not materialise. 13.My conclusion is that the Sale Agreement has a clear purpose to serve. It protects the parties respective interest so that serious negotiation on the price can be undertaken after the inspection by the Plaintiff. It also provides clearly what to follow when parties failed to reach agreement on the sale and purchase of the equipment. That being the case there is no room for me to interpret the Sale Agreement as a complete sale and purchase agreement with a reasonable price to be implied into it. 14.It follows that success of the counter-claim hinges upon whether Ms Li had orally agreed in France to pay RMB 5.88 million for the equipment. Evidence 15.Mr. Chiu is the only defence witness. He was shaken in cross-examination. Without looking at the totality of the evidence, his unsatisfactory demeanour might have been excused, at times that it might have been due to his slips of tongues and at others being carried away by his own dramatics or trying to get out of a difficult situation. However after considering all circumstances of the case, I find he was a dishonest and unreliable witness. 16.At the very early stage of cross-examination he was asked if he had paid the deposit required to the French supplier to reserve the equipment. He said he had by way of set off. He had an outstanding claim against the supplier of a similar amount outstanding for about 6 months. He set this claim off as a payment for the deposit. When pressed with the absence of documents, he claimed he had the documents. When he resumed his evidence after a short break, he said he had just rang his office and his secretary could not locate the document at such short notice. Further questions showed that there was in fact no documents evidencing the set-off. His final version is that the supplier merely agreed to the set off over the phone and there was not any documents evidencing acknowledgement of the set off. 17.On being questioned why he failed to include this amount in the damages the 1st Defendant is counter-claiming, he said he did not want the Plaintiff to suffer that much. He must have forgotten just moments ago he said it loud and clear stressing his duty to protect the interest of the company, i.e. 1st Defendant. This amount of this deposit is in the order of a quarter million. I do not believe he was that generous. In any event he could have made it clear in the pleadings that he was waiving such substantial sum. I find he was telling a blatant lie about having paid a deposit to the supplier. 18.Ms Li denied that she agreed to the price in France. In fact she refused to sign on a document entitled supplemental agreement “補充協議” when requested by Mr. Chiu. She was surprised that such request was made when the price had not yet been agreed. Mr. Chiu explained why Ms Li did not sign the document if she had agreed to the price as alleged. He said that at the time Ms Li was making an excuse that she did not have a company chop with her. If that really happened , I did not see any reason why Mr. Chiu did not make an attempt to persuade Ms Li to sign on it first and append the company chop later. After all the Sale Agreement was signed by Ms Li without appending the company chop. He explained that she trusted her. After the visit to France, according to Ms Li, bargaining for the price continued, and eventually the parties could not bridge the gap of RMB 0.48 million. The descriptions given by Mr. Chiu about the contacts after the visit to France were simple, lacking details. In his witness statement he barely mentioned, if at all, the bargaining. The purpose of those contacts disclosed in his witness statement were merely for the purpose of pressing for payment of the equipment. Mr. Leung, counsel for the Plaintiff, cross-examine him quite rightly why he had not given out detailed instructions as to form of payment. He prevaricated. Furthermore, he gave himself away when dealing with other matters, confirming that there was a final offer Ms Li had made which he could not accept. This shows that bargaining did take place after the parties came back from France. 19.Ms Li version of events is reasonable. There was no need for Ms Li to make a hasty decision to agree to the price in France. It was only natural to have the feedback from her master printer after examination of the printed work. The bargaining process were outlined in sufficient details in her witness statements. She was not shaken in cross-examination. I find he a truthful and reliable witness. I reject the defence allegation that she had agreed to the price of the equipment while in France. 20.The price of the equipment has never been agreed and there is no binding contract of sale on which the 1st Defendant bases its claim. The counter-claim is hereby dismissed. Settlement Agreement 21.On the true construction of the Sale Agreement the Plaintiff would have been entitled to a full refund of the deposit subject to the deduction of expenses as provided in clause 6. The refund must be made within 2 weeks of demand. 22.The 5-hour meeting is for the parties to settle the dispute arsing from the Sale Agreement and the dealing of the parties. It is unmeritorious argument that there was no consideration on the part of the Plaintiff rendering the settlement void. 23.The other equally unmeritorious argument is that there was mistakes about the name of the parties. When the parties singed, the identities of parties purported to be bound were clear. A typing error or inaccurate description of the parties in the instant affords no defence. 24.One defence common to both defendants is that Mr. Chiu signed the agreement under duress or threat. As pointed out by Mr. Leung, counsel for the Plaintiff, he did not even identify the person who uttered the threat. There were no details given by Mr. Chiu. Mr. Chiu even made a mistake about the name of the café and could not remember its location. The witnesses for the Plaintiff denied there have been any threats. It is common ground that Mr. Leung Zhing, a former business associate of Mr. Chiu, was instrumental in bringing the meeting. It appears that he played quite a mediatory role. Contrary to what Mr. Chiu’s dramatic and loud protest when cross-examined that he would not sign such agreement if not threatened, I find it was reasonable for him to sign the document. Firstly, the term is not unfavourable to the 1st Defendant. It was settled according to the effect of the Sale Agreement. The 2nd Defendant practically owned the 1st Defendant, (subject to some bonus shares his sister/secretary owned) and he was still in business using the 1st Defendant’s goodwill. In fact he bragged about the achievement and reputation of the 1st Defendant. Therefore it would not be too onerous for him to assume personal liability. From evidence I have heard not much difference would be made in so far as the 2nd Defendant was concerned. 25.The 2nd Defendant argued that in any event he did not sign in his personal capacity. There is no merit in the argument. It is clear in the wording of agreement that Mr. Chiu has to bear personal liability in case the 1st Defendant defaults. What might be unclear is what responsibility is envisaged and intended. The meaning was made clear by the witnesses for the Plaintiff, namely, if the 1st Defendant defaulted, Mr. Chiu paid. This meaning was not challenged, in fact it was one of the building blocks the defendants use to show there was no reason for Mr. Chiu to sign if not threatened. 26.I reject the evidence of Mr. Chiu. I find he signed the settle agreement out of his free will. The 1st Defendant has defaulted payment and the 2nd Defendant is therefore also liable. I gave judgment for the Plaintiff. As to the claim for interest, I do not think there is any basis contractual or otherwise. Orders 27.The counter-claim be dismissed. Judgment be entered for the Plaintiff in the main claim against both defendants for the sum of RMB 450,000 with interest thereon from 13th February 2008 at court rate. There be an costs order nisi in favour of the Plaintiff in the claim and counter-claim with certificate for counsel.
Mr. Kelvin Leung, instructed by M/S Li, Kwok & Law for the Plaintiff. Mr. Ivan Cheung instructed by M/S Tam, Pun & Yipp for the 1st and 2nd Defendants. |