Unima Trading (HK) Ltd v. Siu Wing Kuen Rocky t/a Toys Station

DCCJ 3131/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3131 OF 2008

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BETWEEN

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Coram:  Deputy District Judge Raymond Tsui in Chambers (open to the public)

Date of Hearing:   24^th March 2009

Date of Handing Down Judgment:  6^th April 2009   

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JUDGMENT

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1.This is an application taken out by the Defendant to set aside a default judgement entered against him on 26^th August 2008 (the “Default Judgement”).

2.By way of background, it should be noted that the Plaintiff was a manufacturer of puzzles. The Defendant was a sole proprietor under the trading name of “Toys Station” and engaged in wholesaling and manufacturing of toys. The present dispute arose from transactions between the Plaintiff and the Defendant whereby the Plaintiff agreed to sell to the Defendant four lots of puzzles the first of which being in or about February 2008. 

3.As the Defendant failed to pay for some of the puzzles ordered, the Plaintiff issued a Writ of Summons with an Indorsement of Claim on 18^th July 2008 and served the same on the Defendant by registered post on 19^th July 2008. As the Defendant failed to acknowledge service of the Writ of Summons, the Plaintiff proceeded to enter the Default Judgement for the sum of HK$365,950.80 against the Defendant. Execution of the Default Judgement had commenced.

4.By an inter parte summons filed on 23^rd September 2008, the Defendant applied to set aside the Default Judgement and for leave to file the Acknowledgement of Service.

5.I was informed by the parties at the hearing that there was a bankruptcy petition against the Defendant based on the Default Judgement. The hearing of the bankruptcy petition was ordered to be adjourned to 8^th April 2009 pending the outcome of today’s hearing.

6.Mr Lee, solicitor appearing for the Defendant, accepted at the outset of the hearing that the Default Judgement was a regular judgement.

7.As commented in paragraph 13/9/12 of the Hong Kong Civil Procedure 2009, the power of the court to set aside a default judgement which has been entered regularly is discretionary and such power is unconditional.

8.It is incumbent upon the Defendant to show a meritorious defence with a real prospect of success or which carries some degree of conviction. As to real prospect of success, Godfrey JA commented in Premier Fashion Wears Ltd v Lee Hing Chung [1994] 1 HKC 213, 219I-220A that “unless potentially credible affidavit evidence from the defendant has demonstrated a real likelihood that he will succeed on fact, he cannot have shown that he has a real prospect of success.”

9.The burden is an onerous one. Kaplan J said in Tong Yi Sang & Anr v Fung Law & Ng & Ors [1993] 2 HKC 665, 672B-D:

“… I believe that there is a substantial onus on an applicant who seeks to set aside a regular judgement. This is clear from The Saudi Eagle [1986] 2 Llyod’s Rep 221. In a case such as this, I would expect a defendant to condescend to particulars of his defence on the merits in his own words. To verify a draft defence, drafted, no doubt on the basis of instructions given by the defendant and expressed in the usual obscure wording of a pleading, may not be sufficient to discharge the onus placed on a defendant in a situation such as this. What is far more preferable (and I leave over the question of whether it is strictly necessary) is an affidavit in narrative form explaining precisely what the proposed defence will be so that the court can be assisted in forming a value judgment as to whether it can be satisfied that there is some degree of conviction and a real prospect of success in the proposed defence.”

10.Ma J, as he then was, commented in Chekiang First Bank Limited v Ng Chun Hing Benjamin (HCA No. 3473/2000) that there were a number of considerations that the court may consider in determining whether to set aside the default judgement, such as the reason why the default judgement was allowed to occur, any delay in setting aside the default judgement and any consequential prejudice to be caused to the plaintiff. The court would have to form a provisional view on the merits of the case.

11.Ma J further pointed out in Chekiang First Bank Limited (paragraph 14) that “[t]he critical factor and starting point in applications to set aside default judgement … under Order 13 rule 9 … are the merits of the defence. If the defence has no real prospect of success, there is no point in setting aside.”

12.In a case where the outcome depends on whose evidence is to be preferred, the test to be adopted to determine whether the defendant’s defence has a real prospect of success is to ask the question whether the defence could well be established at trial (Guangdong International Trust & Investment Corp HK (Holdings) Ltd v Yuet Wah (HK) Wah Fat Ltd [1997] 2 HKC 696, 704H.

13.In support of this application, the Defendant filed his own affirmation on 23^rd December 2008 (the “Defendant 1^st Affirmation”).

14.In opposition to the application, the Plaintiff filed an affirmation of Mr Li Kin Man (the “Plaintiff Affirmation”) who was and still is a sales representative of the Plaintiff. The Plaintiff Affirmation was filed on 11^th February 2009 and was filed out of time. There was no suggestion from Mr Lee that there was any prejudice caused to the Defendant as a result of the late filing of the Plaintiff Affirmation. Nor did he suggest that the Defendant needed more time to deal with the matters raised by the Plaintiff. In fact the Defendant was able to file an affirmation in reply on 2^nd March 2009 (the “Defendant 2^nd Affirmation”). As appeared in the Defendant 2^nd Affirmation, the Defendant was able to deal fully with the matters raised in the Plaintiff Affirmation. I, therefore, do not see any reason why leave should not be granted to the Plaintiff to file its affirmation out of time. I thus grant leave to the Plaintiff to file the Plaintiff Affirmation out of time.

15.The Plaintiff’s case is that there were four transactions between the Plaintiff and the Defendant.

16.The first transaction was represented by Invoice No. TI 006/08 (the “First Invoice”) for a sum of HK$292,089.60. On or about 1^st February 2008, the Defendant placed the first purchase order with the Plaintiff under a reference no. PI 001/08 and purchased from the Plaintiff 2,256 pieces (94 cartons) of Mickey puzzles and 912 pieces (38 cartons) of Minnie puzzles with delivery date on or before 12^th February 2008.

17.The said puzzles were purchased by the Defendant who had contracted to supply the same to Circle K Convenience Stores (HK) Ltd (“Circle K”). It was the instruction of the Defendant that the 132 cartons of puzzles were to be transported directly to Circle K Central Warehouse in order to save transport costs from the Defendant’s office to Circle K. The said 132 cartons of puzzles were duly delivered to Circle K on 5^th February 2008. The delivery note dated 5^th February 2008 (the “Plaintiff Delivery Note”) and a printout of Circle K (the “Circle K Printout”) were stamped with the chop of Circle K Central Warehouse.

18.The First Invoice was then issued to the Defendant on 11^th February 2008 for payment. The First Invoice remains unpaid up to the date of today’s hearing. 

19.The Defendant placed the second purchase order on or about 15^th February 2008 under a reference no. PI 002/08 for the purchase of 1,080 pieces (45 cartons) of Stitch puzzles with delivery date on or before 22^nd February 2008.

20.The Plaintiff sent an Invoice No. TI 007/08 (the “Second Invoice”) to the Defendant on or about 15^th February 2008 because the Plaintiff was required by its Japanese supplier to pay a deposit of half of the sale price. Thus, the Second Invoice requested the Defendant to pay 30% of the sale price as deposit before delivery. No deposit was paid. But as the Plaintiff did not want to cancel the deal, it did not insist on payment of deposit but proceeded with the order. 

21.Again, to save transport costs, the Defendant instructed the Plaintiff to deliver the puzzles directly to Circle K Central Warehouse. The Plaintiff thus instructed its Japanese agent to deliver the puzzles to Circle K Central Warehouse through FedEx. The puzzles were duly delivered to Circle K Central Warehouse on or about 18^th February 2008. As directed by the Defendant, the Plaintiff used the Defendant’s FedEx account to settle the charge for the delivery.

22.The Defendant by its cheque No. 921743 dated 15^th March 2008 for a sum of HK$31,654.80 paid 30% of the Second Invoice. By a further cheque No. 921724 dated 16^th June 2008 for a sum of HK$73,861.20 paid the outstanding balance of the Second Invoice. Thus, this Invoice was fully settled.  

23.The Plaintiff produced a printout of delivery tracing record from the website by using the code as appeared on the FedEx delivery note dated 18^th February 2008. The said printout showed that the goods were delivered on 19^th February 2008 at 11:45 am.  

24.The third purchase order under reference No. PI 003/08 was placed by the Defendant on or about 21^st February 2008 for the purchase of 1,080 pieces (45 Cartons) of Doraemon puzzles with delivery date on or before 27^th February 2008.

25.Again, as the Plaintiff was required to pay half of the sale price of this purchase order to the Japanese agent in advance, the Plaintiff requested the Defendant to pay 30% of the purchase price as deposit. The Plaintiff sent an Invoice No. TI 0010/08 (the “Third Invoice) to the Defendant on or about 22^nd February 2008. No deposit was paid by the Defendant before delivery.

26.The fourth purchase order under a reference No. PI 004/08 for the purchase of 192 pieces (8 cartons) of Stitch puzzles with delivery date on or before 29^th February 2008 was placed by the Defendant on or about 26^th February 2008. 

27.Since the Plaintiff was required to pay its Japanese agent a sum amount to about half of the sale price of the purchase order, the Plaintiff requested the Defendant to pay 30% deposit of the purchase price as deposit before delivery. To that end, Invoice No. TI 011/08 (the “Fourth Invoice”) was sent to the Defendant on or about 26^th February 2008.

28.The Plaintiff proceeded with the last two purchase orders even though the Defendant failed to pay the deposit as requested. Similar to the previous transactions and to save transport costs of transporting the goods from the Defendant’s office to Circle K, the Defendant instructed the Plaintiff to deliver the puzzles directly to Circle K Central Warehouse. The Plaintiff then delivered, through FedEx, 53 cartons of puzzles (being 1,080 pieces (45 cartons) of Doraemon puzzles and 192 pieces (8 cartons) of Stitch puzzles ) to Circle K Central Warehouse as instructed on or about 26^th February 2008. The Defendant again asked the Plaintiff to use the Defendant’s FedEx account for the delivery and the Defendant directly settled the charge of FedEx. The Plaintiff also produced another printout of delivery tracing record that showed that the goods were delivered on 27^th February 2008 at 11:30 am. 

29.In relation to payment for the Third Invoice, the Defendant by its cheque No. 921741 dated 15^th March 2008 for a sum of HK$31,654.80 paid 30% of the Third Invoice. The outstanding balance of the Third Invoice in the sum of HK$73,861.20 remains due and unpaid. As to payment relating to the Fourth Invoice, the Defendant by cheque No. 921723 dated 31^st May 2008 for a sum of HK$18,758.40. The Fourth Invoice was fully settled. 

30.In summary, the Second Invoice and the Fourth Invoice were fully settled. The unpaid balances for the First Invoice and the Third Invoice were HK$292,089.60 and HK$73,861.20 respectively. The total balance remains unpaid is HK$365,950.80 which is the sum claimed in the Indorsement of Claim and the sum entered by the Default Judgement. 

The Defendant’s Case

31.The Defendant was the sole proprietor of the business. In or about February 2008, he agreed orally with Mr Li Kin Man of the Plaintiff (i.e. the affirmant of the Plaintiff Affirmation) to purchase from the Plaintiff four lots of puzzles which would be supplied to Circle K. The Plaintiff later issued 4 proforma invoices to him. 

32.The Defendant said that Mr Li Kin Man had told him that the Plaintiff would deliver the 4 lots of puzzles to the central warehouse of Circle K directly. The Defendant explained that as he was badly in need of the puzzles, he had no alternative but had to accept the suggestion of the Plaintiff relating to delivery. After receiving the confirmed purchase orders from the Plaintiff, he sent by post to the Plaintiff 6 post-dated cheques drawn in favour of the Plaintiff for the settlement of the sale price. Among the 6 post-dated cheques posted to the Plaintiff were cheques No. 921710 and 921722 in the respective amounts of HK$292,089.60 and HK$73,861.20 drawn from the account maintained with the Hongkong and Shanghai Banking Corporation Limited. The total amount for these two cheques was HK$365,950.80. 

33.The Defendant was informed by Circle K by a letter dated 25^th March 2008 that a total amount of 1,845 puzzles, including 1,242 Mickey Puzzles, 258 Minnie Puzzles, 10 Stitch Puzzles and 89 Doraemon Puzzles (the “Returned Puzzles”), had to be returned to him on the ground that the promotion period of the puzzles of Circle K had ended. There were 146 Hello Kitty Puzzles mentioned in the said letter from Circle K. But they were not provided by the Plaintiff. To make sure that the Plaintiff would accept the return of the Returned Puzzles before the Defendant settling any outstanding sum owed to the Plaintiff, the Defendant countermanded the two cheques No. 921710 and 921722.  

34.The Defendant’s case is that in early June 2008, he talked with Mr Li Kin Man on the phone and Mr Li Kin Man orally agreed that the Plaintiff would accept the return of the Returned Puzzles and requested the Defendant to send him the list of the Returned Puzzles. I note that from the e-mail messages produced by the Defendant, there was no mention of the alleged oral agreement between him and Mr Li Kin Man.

35.Apparently, nothing happened until the Plaintiff issued a demand letter dated 7^th July 2008 through its solicitors for the sum of HK$365,950.80. There was no reply from the Defendant. The Plaintiff then commenced the present action for the recovery of the said sum of HK$365,950.80.

36.I should also mention that the Defendant said that he had participated in the Hong Kong Ani-Comic Festival held in the Hong Kong Convention Centre which was held between 1^st to 5^th August 2008 and preparation started in mid-July 2008. Before the said Festival, he had to travel back and forth between Shenzhen and Hong Kong to arrange delivery of toys to Hong Kong to be sold in the said Festival. After the said Festival, he and his staff went on vacation until 11^th August 2008. He also said that his desk in the office was always in a messy state and piled with documents and toy samples. He discovered the Writ of Summons of the present action and a Garnishee Order obtained by the Plaintiff only when he cleaned up his desk in October 2008. 

37.From 18^th November 2008 onwards, the Defendant’s solicitors started negotiating with the Plaintiff’s solicitors for settlement. On 25^th November 2008, the Defendant’s solicitors wrote to the Plaintiff’s solicitors requesting evidence in support of delivery of goods. I note that the alleged oral agreement between the Defendant and Mr Li Kin Man was not mentioned. The Defendant claimed that the Plaintiff’s solicitors failed to provide him with documents supporting delivery of the ordered puzzles to Circle K. He further claimed that as the puzzles were delivered by the Plaintiff directly to Circle K, he did not have records of goods delivered and the quantity thereof.

38.In further support, the Defendant produced an e-mail message dated 22^nd December 2008 from a Mr Ben Chuk who was the buyer of Circle K (the “Mr Chuk E-mail”) and confirmed that “there is no [Plaintiff] delivery note in our record”.  

39.As to the various invoices, the Defendant said he had not seen these four Invoices before. As regards the cheque No. 921710 for the sum of HK$292,089.60, the Defendant said that the same was issued to settle payment in respect of the relevant purchase order but not for settlement of the First Invoice. The cheque No. 921722 for the sum of HK$73,861.20 was issued to settle the payment in respect of the balance of the purchase price (being 70% thereof) but not for settlement of payment under the Third Invoice. In other words, the Defendant sent post-dated cheques to the Plaintiff once the purchase orders were confirmed without waiting for confirmation from Circle K whether those ordered puzzles had been delivered. 

40.The Defendant also explained that he usually paid only after he had received delivery notes from his suppliers showing that receipt of the goods had been duly acknowledged. But as the Plaintiff insisted on receiving payment first before sending the relevant delivery notes of the goods acknowledged by Circle K and that he had to supply the puzzles to Circle K on an urgent basis, he compromised by issuing the post-dated cheques hoping that he would have received the delivery notes acknowledged by Circle K first before the Plaintiff presented the cheques for clearance.  He further said that since the Plaintiff had failed to produce to him any delivery notes acknowledged by Circle K in respect of the puzzles he ordered, he had not received any payment from Circle K. 

Lack of Sufficient Particulars  

41.Mr Lee submitted that the court had a discretion to set aside the Default Judgement. He suggested I should exercise the discretion in favour of the Defendant because of the inadequacy of the Indorsement of Claim which is in the following terms:

“The Plaintiff claims against the Defendant a sum of HK$365,950.80 being an outstanding balance of the price of the goods sold and delivered to the Defendant at the Defendant’s request. The Plaintiff claims against the Defendant for:-

a. A sum of HK$365,950.80;

b. Interest;

c. Costs; and

d. Further and/or other relief.”

42.Mr Lee cited Order 6 Rule 2 of the Rules of District Court in support of his contention. Order 6 rule 2 provides that where a statement of claim is not indorsed on the writ, “a concise statement of the nature of the claim made or the relief or remedy required in the action begun thereby”. Mr Lee further invited the attention of the court to the relevant commentary in paragraph 6/2/2 of the Hong Kong Civil Procedure 2009 where it is commented that in a case where “the claim arises out of a contract, the indorsement should state the date of the contract (and whether oral or written), between whom made, the nature of the claim or the relief of remedy thereunder … The indorsement is not required to be a précis of the proposed statement of claim, but it must give sufficient information to enable the recipient to identify the occasion when the breach of contract or other wrong relied upon is alleged to have occurred …”.

43.Referring to the Indorsement of Claim of the present case, Mr Lee submitted that it had failed to identify:

a. the occasion(s) when the goods were sold and delivered;

b. the nature of the goods sold and delivered; and

c. whether the contract for the sale and purchase of the goods was written or oral.

44.Mr Lee conceded that the lack of particularity did not render the Writ a nullity as the Defendant was at all material times aware of the nature of the action. But he described it as unjust and embarrassing for the Defendant to guess the Plaintiff’s claim and to set out the relevant facts in order to set aside the Default Judgement as the burden was always on the plaintiff to prove its claims by setting out all the relevant facts. He said that the Defendant was entitled to know from the Indorsement the limits of claims he was faced with. 

45.In reply to the argument that there was a lack of sufficient particulars in the Indorsement of Claim, Mr Chan, counsel for the Plaintiff, submitted that the same commentary in paragraph 6/2/2 of the Hong Kong Civil Procedure 2009 contained the following passages:

“Where an indorsement of claim lacks particularity, the defect does not render the writ a nullity … The defect may be cured by amendment or by service of a statement of claim … or by the defendant’s delay, especially where he is at all times aware of the nature of the action which the writ was intended to initiate … but the indorsement of the nature of the claim may be sufficient without amendment of the writ to justify a claim pleaded in a later statement of claim …”

46.Mr Lee further submitted that the Court had a wide power to set aside a regular judgement. He cited the commentary in paragraph 13/9/12 of the Hong Kong Civil Procedure 2009 in support.

“The purpose of the discretionary power is to avoid the injustice which may be caused if judgement follows automatically on default.”   

47.But was the Defendant really embarrassed? The answer must be a resounding “no”. As pointed out by Mr Chan, even before the Plaintiff had filed the Plaintiff Affirmation, the Defendant was able to pin-point the relevant transactions and the cheques involved. This is even confirmed by Mr Lee in his submission. The Defendant’s own case is that he countermanded the two cheques No. 921710 and 921772 with a total amount of HK$365,950.80 which is precisely the sum of the Default Judgement. Furthermore, the demand letter dated 7^th July 2008 issued by the solicitors for the Plaintiff has set out the claims of the Plaintiff. The Defendant has not denied receipt of this demand letter. In any event, even if the Defendant was embarrassed, the starting point of considering whether the discretion should be exercised in his favour is always the merits of the defence. For there is no point in setting aside a default judgement where the defence is doomed to fail.  

Real Prospect of Success

48.The gist of the defence of the Defendant is that while he accepts that the Plaintiff did deliver some quantity of puzzles ordered to Circle K, the Plaintiff has failed to provide sufficient evidence showing that it had delivered all the quantity of puzzles as ordered by the Defendant to Circle K. Thus, the claims of the Plaintiff are suspicious.

49.But since the burden is on the Defendant to show that his defence has a real prospect of success, it is incumbent upon the Defendant to provide sufficient evidence to show that the Plaintiff had failed to deliver the right puzzles and the right quantity thereof to Circle K. Mr Lee submitted that the documents produced by the Plaintiff failed to serve this purpose.

50.Mr Lee pointed out the defects in the documents relied upon by the Plaintiff:

a. Purchase Order No. PI 001/2008 (First Invoice):

i. the Plaintiff Delivery Note was illegible; 

ii. the Circle K Printout which was imprinted with the chop of “Supply Chain Management Logistics Division I” of Circle K was actually stamped at the entrance of warehouse of Circle K. The chop did not show that the goods delivered had been verified against the contents of the said printout;

b. the other three Purchase Orders:

i. the airway bills issued by FedEx did not specify the nature and quantity of the goods; 

ii. the delivery tracing records did not show particulars of the goods.

51.Mr Lee further submitted that some of the supporting documents produced by the Plaintiff, namely, the delivery tracing records, were generated as late as November 2008 and January 2009. This, as the arguments go, tends to show that the Plaintiff did not have any documents in support of delivery. 

52.It is of course true that the delivery tracing records provided by the Plaintiff do not specify the contents and the quantity of the goods delivered. But is the Plaintiff in the position to produce the documents in support of delivery?

53.There is no doubt that the person who is in the best position to produce those documents in support of delivery is Circle K. As supplier of the Defendant, the Plaintiff did not have any contractual relationship with Circle K. Thus only the Defendant, but not the Plaintiff, would be entitled to request documents from Circle K to show what quantity of puzzles had been delivered by the Plaintiff. It is thus not open to the Defendant to say in paragraph 16 of the Defendant 2^nd Affirmation that “in the absence of direct evidence from Circle K to which the goods were actually delivered showing the description and amount of the goods, I have no clue as to what goods the Plaintiff had actually delivered to Circle K and their amount”.

54.The Defendant placed much reliance on the Mr Chuk E-mail. In my view, the reliance is misplaced. For a start, the Defendant asked a wrong question that prompted the reply in the Mr Chuk E-mail. Instead of asking a direct question of the quantity of puzzles delivered by the Plaintiff, the Defendant asked whether there were any delivery notes available in the name of the Plaintiff. There is no explanation as to why the direct question was not asked. As a consequence, the answer that there was no delivery note in the name of the Plaintiff is neither here nor there. For it is known to the Defendant that save for the first purchase, the delivery was made by FedEx directly to Circle K and the FedEx account was maintained in the name of the Defendant. The Plaintiff could not possibly produce any documents when it had no contractual relationship with both FedEx and Circle K. Thus, the fact that there was no delivery note in the name of the Plaintiff does not mean that there were no deliveries made by the Plaintiff. For even the Defendant’s own case admits that some, if not all, of the puzzles had been delivered. 

55.If insufficient quantity had been delivered to Circle K by the Plaintiff, there would at least be some complaints from Circle K. But Circle K had not made any complaints at all. The contract between the Defendant and Circle K not being before the court, I do not know whether the lack of complaints from Circle K is something to be expected because of the terms of the contract.

56.Nor had the Defendant made any complaints to the Plaintiff on the ground of insufficient quantity of puzzles delivered until the letter from his solicitors dated 25^th November 2008. I agree with Mr Chan that any short delivery to Circle K by the Plaintiff would mean a breach of contract with Circle K on the Defendant’s part which the Defendant would be careful to avoid. 

57.The lack of complaint from the Defendant is significant because save the alleged oral agreement of accepting the return of the Returned Puzzles between the Defendant and Mr Li Kin Man in early June 2008, virtually nothing happened on the part of the Defendant after he had countermanded the cheques No. 921710 and 921722 until 25^th November 2008 when his solicitors wrote to the solicitors for the Plaintiff requesting documents in support of delivery of the ordered puzzles. There is no evidence as to what happened to the Returned Puzzles. Had they been returned to the Plaintiff? Had the Defendant taken any action to press the Plaintiff to accept the Returned Puzzles?  

58.The Defendant said in paragraph 24 of the Defendant 2^nd Affirmation that “as the Plaintiff did not produce to me any delivery notes acknowledged by [Circle K Central Warehouse] in respect of the goods I ordered from them, I have not got any payment from [Circle K].” There is, however, no evidence showing that the Defendant had ever asked the Plaintiff to produce evidence of delivery before his solicitors letter dated 25^th November 2008. It is, therefore, particularly strange that when payments from Circle K were not forthcoming, the Defendant did not even try (or at least there is no such evidence) to ascertain from Circle K as to the true situation of the Plaintiff’s delivery, bearing in mind the allegation of the Defendant that he issued the post-dated cheques to the Plaintiff in the hope that he would have received delivery notes acknowledged by Circle K before the Plaintiff presented the cheques for payment.

59.In my view, such a scenario does not make any commercial sense. It is just incredible that the Defendant did not make enquiry with Circle K as to the state of delivery made by the Plaintiff as Circle K must have record of the delivery made by the Plaintiff, particularly in view of the stance of the Defendant that some delivery had been made. The lack of enquiries of the Defendant to Circle K tends to show that the delivery of puzzles made by the Plaintiff could not be impeached.   

60.What actually happened was Circle K, by an e-mail on 9^th May 2008 to the Defendant, informed the Defendant that payment for February 2008 would be delayed because of “over-stock situation” (the “Delay Payment E-mail”). Upon receiving this Delay Payment E-mail, the Defendant then on the same day asked the Plaintiff to postpone banking a cheque from 10 February 2008 to “30 (sic) Feb 2008”. These e-mail messages are important in that first, there was no mention of short delivery; secondly and most important of all, this cast serious doubt on the allegation of the Defendant that Circle K did not pay because the Plaintiff had failed to produce the delivery notes acknowledged by Circle K. 

61.Circle K returned the Returned Puzzles not because of insufficient quantity of puzzles delivered but because the promotion period had expired. It is not known why that allowed the Defendant to countermand payment to the Plaintiff. The purchase orders between the Plaintiff and the Defendant certainly did not contain any terms to that effect.

62.In fact, it is also not known why Circle K was entitled to return the Returned Puzzles. This court is in fact in the dark as to the terms of the contract between Circle K and the Defendant. The Defendant has not produced his contract with Circle K. The only corresponding purchase order between the Defendant and Circle K before the court is the Circle K Printout and was produced by the Plaintiff, not the Defendant. What is more unusual is that the Circle K Printout stated that the “Expect Delivery Date” to be 5^th February 2008. Yet the corresponding purchase order between the Plaintiff and the Defendant (i.e. PI 001/08) allowed the Plaintiff to deliver on or before 12^th February 2008. When this is looked at in conjunction with the ground of Circle K of returning the Returned Puzzles, namely, the promotion period had ended, it seems that the Defendant might have got the delivery date wrong so that the puzzles did not arrive before the promotion period had ended. No explanation was given by the Defendant. But in any event, as mentioned earlier, the puzzles were delivered by the Plaintiff to Circle K Central Warehouse on 5^th February 2008.

63.Finally, Mr Lee also challenged the authenticity of the Plaintiff Delivery Note and the Circle K Printout. The issue of authenticity of both documents had never been raised in the Defendant 2^nd Affirmation. In fact as far as the latter is concerned, the same was thoroughly dealt with in paragraph 5 of the Defendant 2^nd Affirmation. The only challenge raised was that the goods delivered had not been inspected at the entrance of the warehouse of Circle K and that the stamping of a chop was only a routine procedure to allow the bearer of the relevant purchase order issued by Circle K to deliver the goods inside so that the nature and quantity of the goods delivered had not been ascertained. The Defendant did not produce the authentic purchase order to support his challenge which, I believe, is well within his power to do so. This authenticity issue is nothing more than a last-ditch effort to cast doubt on the case of the Plaintiff. I do not think there is any substance to it. 

64.As far as I understand the case of the Defendant from his affirmations and the submission of Mr Lee, the Defendant is in effect saying that the Plaintiff has to strictly prove its case. That, unfortunately, is not the law. The burden is plainly on the Defendant to show a defence that has a real prospect of success or carries some degree of conviction. Merely suggesting the seemingly deficiencies of the Plaintiff’s claim does not discharge the Defendant’s onerous burden. The case may be different where the documents and the evidence that could advance the case of the Defendant are under the control, or in the possession, of the Plaintiff. The present case clearly does not fall within this latter category. 

Oral Agreement  

65.The Defendant claims that there was an oral agreement made between him and Mr Li Kin Man in early June whereby the Plaintiff would accept the Returned Puzzles. The Defendant said that, at the request of Mr Li Kin Man, he e-mailed the letter from Circle K asking for the return of the delivered puzzles to Mr Li Kin Man. The said e-mail from the Defendant was exhibited. There was no mention of the alleged oral agreement. In fact the letter of Circle K was dated 25^th March 2008 and the alleged oral agreement was only reached in early June 2008. There was a lapse of nearly three months. Yet there is no evidence as to what the Defendant did save and except countermanding the cheques after the receipt of the said letter from Circle K. Since it is the Defendant’s case that he only came to know about the possible short delivery in November 2008 when enquiries were made by his solicitors, I would have thought that he would have investigated the matters after he had received the said letter from Circle K. As mentioned above, there was no such investigation. 

66.What is more important, however, is the alleged oral agreement was not supported by contemporaneous documents. After the Defendant had e-mailed to Mr Li Kin Man the list of the Returned Puzzles, the latter replied by an e-mail on 24^th June 2008 in which it was specifically pointed out to the Defendant that, in the course of negotiation, both parties agreed the Plaintiff would not accept any return of the puzzles and that his boss did not accept the return of the goods. Mr Li Kin Man asked for immediate payment. There was no mention of any oral agreement. And, above all, there was no reply to this e-mail from the Defendant citing the alleged oral agreement. 

67.When viewed in isolation, the oral agreement would meet the test of whether it could well be believed. But when it is looked at in the context of the present case and against the evidence available to the court, the claim of an oral agreement is completely without support. It is a bare allegation. 

Conclusion 

68.In conclusion, I do not think the Defendant has discharged his burden of showing a defence that has a real prospect of success or carries some degree of conviction. 

69.I would therefore dismiss the application of the Defendant with an order nisi for costs to the Plaintiff with Certificate for Counsel, to be taxed if not agreed. The order nisi for costs shall become absolute in 14 days.

Representation:

Mr. David Chan instructed by Messrs Cheung & Yip for the Plaintiff.

Mr. Edwin Lee of Messrs Simon Wong & Co. for the Defendant.