Conbarter Trading Ltd v. Wolfman Jack Entertainment (H.K.) Ltd

DCCJ 4033/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4033 OF 2008

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BETWEEN

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Coram : Her Honour Judge Mimmie Chan in Court

Dates of hearing : 24 - 26 November 2009, 7 & 8 April & 24 June 2010

Date of handing down Judgment : 23 July, 2010

JUDGMENT

Background

1.The Plaintiff ("Econvey") is in the business of leasing out advertising spaces on the outer walls of buildings in Hong Kong. The Defendant ("WJ") organizes and promotes concert events featuring performers from overseas and targeting a more mature audience in Hong Kong. Between May 2004 and March 2007, WJ organized and promoted concerts for performers such as Don McLean, the Stylistics, Robin Gibb, Luciano Pavarotti, Paul Anka, Art Garfunkel and Elaine Page in Hong Kong, advertising such concerts on spaces leased from Econvey.

2.These proceedings are instituted by Econvey for payment of a sum of $647,829.32 claimed to be due from WJ, and representing the outstanding sums payable under its contracts made with WJ for the lease of advertising spaces. WJ denies that the amount is payable in cash, and claims that the advertising charges have been settled and discharged by concert tickets supplied by WJ to Econvey under their barter agreement. WJ further counterclaims for payment of the sum of $791,479.68, being the value of concert tickets supplied to Econvey under the barter agreement over and above the value of tickets they had agreed to supply under the agreement.

3.The first contract between Econvey and WJ, which was for the Don McLean concert, was made in April 2004. Prior to that, however, there had been dealings and contracts between WJ and Convey Advertising Company Ltd. ("Convey"), an associated company of Econvey, from as early as 2001. WJ leased advertising spaces from Convey between 2001 and 2004, before Econvey continued the leasing arrangements with WJ.

4.According to the evidence of Mr. Roks Lam Chung Wing ("Mr. Lam") and Mrs. Catherine Lam ("Mrs. Lam") of WJ, they were first approached by Convey in about February 2001, when one Johnny Tsang ("Tsang") of Convey presented to them a new idea of a barter trade arrangement. According to Tsang, Convey would be prepared to offer advertising space to WJ in exchange for tickets for the concerts promoted and organized by WJ, and both Convey and WJ could benefit from such a barter arrangement. Mr. Lam's evidence is that although Tsang had mentioned different charges for the services to be provided by Convey, the understanding reached was that irrespective of the labels attached to the different charges imposed by Convey, the essence of the arrangement was that property would be exchanged for property ("以物換物") and WJ would pay for Convey's charges for its advertising space by way of WJ's concert tickets.

5.From around March 2004, Convey's associated company Econvey began to deal with WJ in place of Convey. Tommy Ho ("TH"), the General Manager of Econvey, also took over the role of Tsang (who had by then left Convey) as the main contact person in Econvey's dealings with WJ.

The contract documents

6.From the course of dealings between Econvey and WJ, it is apparent that various documents were produced in relation to the leasing agreement made between them for WJ's use of the advertising spaces in question. There would be a "Space Booking Contract", in which the location and size of the advertising space, the type of signage, the term of the lease (usually spanning 1 to 2 months) and the "rental package fee" are all designated. On the face of the Space Booking Contract, it is stated that full payment of the monthly rental amount is to be paid "by contra deal" of the equivalent value of concert tickets. The Space Booking Contract is signed on behalf of both Econvey and WJ, with terms and conditions of trading imprinted on a back sheet.

7.Clause 2 of the terms and conditions imprinted on the back sheet of the Space Booking Contract ("Clause 2") expressly provides that no modifications to the terms shall be effective unless made by express written agreement between the parties.

8.Separately, a "Production Cost, Monthly Service and Maintenance Contract" ("Production/Service Contract") would also be signed by Econvey and WJ. It is not in dispute that on the face of the Production/Service Contract, Econvey's costs of procuring the advertising space for WJ are stated to include: a monthly rental charge of the space in question; the cost of the production, installation and dismantlement of the advertising sign; monthly service charges for the maintenance of the lit billboard; and a charge for "government rates and electricity consumption". It is not in dispute that the payment terms specified in the Production/Service Contract state that the monthly rental, the one-time production cost, government rates and electricity consumption amount are "to be paid by contra deal of equivalent value of concert tickets", and that the monthly service and maintenance charges are "to be paid by cash in advance" upon WJ's confirmation of the Production/Service Contract.   The production, installation and dismantlement costs together with the government rates and electricity consumption charges make up the bulk of the costs, whereas the monthly service and maintenance costs make up the smaller proportion of the total charges.

9.In this Judgment, I shall refer to the charges under the Contract as "Billboard Charges" collectively, to the part of the charges stated in the Contract to be payable in cash to be "Cash Value", and the part of the charges stated in the Contract to be payable by the equivalent value of concert tickets to be "Ticket Value". Since this Judgment does not turn on the difference in the contents of the Space Booking Contract and the Production/Service Contract, I shall refer to both these documents as "Contract" to distinguish between the oral agreements alleged to subsist between the parties and the written contractual documents.

10.On Econvey's case, the total Cash Value of the Contracts made between Econvey and WJ between April 2004 to some time around November 2006 is $647,829.32, i.e. the total amount stated to be payable in cash. Invoices had been issued by Econvey, but WJ has failed to make payment.

11.To summarize WJ's pleaded case and evidence, it is alleged by WJ that when Econvey commenced dealings with WJ in 2004, TH on behalf of Econvey had agreed that the manner of operation hitherto adopted and put in place by Tsang on behalf of Convey and Mr. and Mrs. Lam on behalf of WJ would continue to be adopted for the dealings between Econvey and WJ. WJ's case is that it had been orally agreed between Tsang and Mr. Lam that Convey would not insist on the payment terms specified in the written Contracts, that WJ would supply such number of tickets as may be requested by Convey even if the number of tickets exceeded the number or value expressly stated in the Contracts, and that the parties had agreed that the value of the concert tickets actually supplied by WJ would be used to settle all the Billboard Charges specified to be payable by WJ under the Contracts. WJ claims that it was agreed between Tsang and Mr. Lam that the value of the concert tickets supplied by WJ over, or below, the value of the Billboard Charges specified under each Contract would be carried forward as a debit, or credit, balance for future contracts ("Rollover Agreement") between Econvey and WJ. It is WJ's case the value of all the concert tickets supplied by WJ to Econvey from March 2004 to March 2007 is $3,310,524, whereas the Ticket Value stated in the Contracts between Econvey and WJ for the period is merely $1,929,900.

12.In addition, WJ claims that some time in August 2003, TH then acting for Convey had agreed to pay $11 ("Handling Fee") for each concert ticket supplied by WJ to Econvey, by way of reimbursement of the handling fees which WJ had to pay to Hong Kong Ticketing Ltd. in respect of all the tickets issued ("Handling Fee Agreement"). It was allegedly agreed that the Handling Fees payable under the Handling Fee Agreement were to be set-off against the Billboard Charges payable by WJ under the Contracts. According to WJ, the total amount of Handling Fees payable for the tickets actually issued under the Contracts is $58,685.

13.It is WJ's case that in June 2004, TH on behalf of Econvey confirmed with Mr. Lam that the Handling Fee agreement and the Rollover Agreement continued to operate between Econvey and WJ, as it had between Convey and WJ.

14.By way of counterclaim and set-off, WJ therefore claims from Econvey the total sum of $1,439,309, representing the total sum of the Handling Fees of $58,685 and the difference between the Ticket Value under the Contracts (i.e. $1,929,900) and the value of the concert tickets actually supplied by WJ to Econvey (i.e. $3,310,524).

15.On its part, Econvey denies the existence of the Rollover Agreement and the Handling Fee Agreement. It relies on Clause 2 to claim that any modifications to the payment terms which were not by express written agreement are ineffective. Further, Econvey denies that TH had the authority either to make any variation to the Contracts, to enter into the Rollover Agreement and the Handling Fee Agreement, or to agree that any debt due from WJ to Econvey could be extinguished or discharged by concert tickets supplied by WJ over and above the Ticket Value under the Contracts.

The Issues

16.In the course of the trial, WJ sought to dispute the Cash Value due to be paid under the Contracts, in the sum of $647,829.32. I accept the submissions made by Counsel for Econvey that, as evidenced by paragraphs 5(d) and 5(e) of its Amended Defence and Counterclaim, WJ has admitted the total Cash Value to be $647,829.32 as claimed, and as particularized in the Schedule to the Statement of Claim. Accordingly, it is not open to WJ to dispute this amount in evidence and by way of submissions.

17.As part of its dispute over the Cash Value, it has been submitted that Econvey is not entitled to claim the Billboard Charges for the advertising spaces in question, as Econvey is not the owner of the spaces. The essence of the agreement between Econvey and WJ is that Econvey agreed to provide or to make available the advertising space and the billboard for WJ's use during the term specified, and to provide the services specified in the Contract such as the production and installation of the advertising sign. I agree with Counsel for Econvey that whether or not Econvey is the owner of the advertising spaces in question is not material to its claim for the Billboard Charges.

18.Bearing in mind the admissions made in WJ's pleadings, the remaining issues for determination by the Court at trial are whether the Rollover Agreement and the Handling Fee Agreement relied upon by WJ were effectively made, and whether the terms of the Contracts had been effectively varied.  These turn on the question of whether TH had the authority to act on behalf of and to bind Econvey in his dealings with WJ.

19.By way of summary of and taking into consideration all the arguments raised on behalf of WJ, Counsel for Econvey has helpfully put forward the following issues which he identified to be, effectively, the practical questions for the Court to decide in resolving the issues in dispute between the parties:

(1)   Were excess tickets given by WJ to Econvey at Econvey's requests, with the knowledge that the value of the excess tickets had to be brought into account in subsequent transactions between the parties?

(2)   Did TH agree on behalf of Econvey that the Handling Fee was to be borne by Econvey?

(3)   Did WJ pay the Handling Fees?

(4)   What was the value of the excess tickets given by WJ to Econvey?

These, and the question of TH’s authority, will be the issues I deal with in the Judgment.

Were Excess Tickets given by WJ to Econvey at Econvey's requests, with the knowledge that the value of the Excess Tickets had to be brought into account in subsequent transactions between the parties?

20.In this case, the key issues in dispute between the parties are primarily factual in nature. When deciding the factual disputes involved, my considerations include the inherent probability of the parties' assertions, whether the parties' assertions are consistent with their conduct and contemporaneous documents, and the credibility and demeanor of witnesses. The Courts have often warned against the risks of a trial judge merely relying on his or her assessment of a witness's credibility based simply on the witness's demeanor in court.

21.It cannot be disputed in this case that a substantial number of concert tickets were in fact supplied by WJ to Econvey under the Contracts between May 2004 and March 2007. The face value of these tickets amounts to $3,310,524. Under all the Contracts made between Econvey and WJ between April 2004 and October or November 2006, the total Ticket Value of the concert tickets to be supplied by WJ is (on Econvey's case) $1,660,750. The total value of tickets supplied over and above the amount specified in the Contracts ("Excess Tickets") is $1,649,774. Apart from the value of $36,064 in respect of the tickets supplied for the Whitney Houston concert held on 28 July 2004, Econvey had acknowledged receipt of the tickets by documents which bear the company chop of Econvey and the signature of Econvey's employees.

22.Mr. Mak claims that with the exception of 20 tickets supplied for the Elaine Page concert held on 23 March 2007, all the Excess Tickets had been supplied by WJ on a complimentary basis, and were never requested by him or anyone authorized by Econvey. Econvey denies that the Excess Tickets were accepted as payment for any part of the Billboard Charges under the Contracts. In respect of the Elaine Page tickets, the Acknowledgment signed on behalf of Econvey states that the tickets were received "as the settlement of Cash Payment of $33,600 for the outstanding balance of (WJ)". However, it was argued on behalf of Econvey that if there was indeed a Rollover Agreement as alleged by WJ, it was not necessary to have the Acknowledgment for the Elaine Page concert. It was further argued that the fact that there was such an express Acknowledgment for the Elaine Page concert tickets to be used as a set-off, but not for the other concert tickets, supports the absence of such a general Rollover Agreement. Counsel for Econvey also highlighted the fact that as at March 2007 when the Acknowledgment for the Elaine Page tickets was signed, there was in fact no "outstanding balance" due from WJ at all if there was indeed a Rollover Agreement that the value of the Excess Tickets could be used to set-off both the Cash Value and the Ticket Value stated in the Contracts made.

23.The Contracts were essentially a barter arrangement, whereby with the exception of a small portion of service and maintenance charges which were stated to be payable in cash by WJ to Econvey, the parties were exchanging the use of the advertising space and the billboard made available by Econvey for concert tickets to be made available by WJ. The barter agreement was entered into by Econvey and WJ in the course of their respective trade. It had operated for over 3 years. It is inconceivable and in my view inherently improbable that WJ would provide $1,649,774 worth of Excess Tickets free of charge, on a complimentary basis as Mr. Mak claims.

24.Mrs. Lam drew distinction between “complimentary tickets”, which had a “nil” value stated on the face of the tickets, and those tickets which were supplied by WJ to Econvey.  According to Mrs. Lam, the latter had the value of the tickets stated on their face, be it $680, or $480, or $980, and these were the value used in the calculation of the Ticket Value under the Contracts.

25.Mr. Mak claims that the Excess Tickets were provided to Econvey to help WJ's promotion of the concerts organized by them. This has been strenuously denied by Mrs. Lam who claims that it would not be necessary for WJ to promote the concerts by the provision of this substantial value of the Excess Tickets to Econvey. According to Mr. and Mrs. Lam, on each occasion when tickets were requested by Econvey over and above the amount of the tickets specified in the Contracts as the Ticket Value, the requests were made by TH who would often ask for them just before the concert and on an urgent basis. Mrs. Lam's evidence is that she was reluctant to supply such a large number of tickets as TH requested, but TH would insist on speaking to Mr. Lam. According to Mr. Lam, TH always justified his request for Excess Tickets by stating to him that they were required for some specific purpose of Econvey, including the need to entertain its VIP clients, or that the tickets were required by Mr. Mak. Mr. Lam's evidence is that he had agreed to supply the Excess Tickets sought by TH, but had made it clear to TH and to WJ's staff that there must be a clear record of the actual number of tickets actually supplied, and that the Excess Tickets must be taken into account in subsequent transactions, to which TH agreed. Mr. and Mrs. Lam claim that they only acceded to TH's requests for Excess Tickets upon his assurances that the value of the Excess Tickets could be used in subsequent transactions, to be set-off against both the Cash Value and the Ticket Value stated in the Contracts.

26.With regard to Mr. Mak's claim that the Excess Tickets were given to Econvey because their concert tickets were not selling well, Mrs. Lam has drawn attention to the fact that the largest number of Excess Tickets (for the Robin Gibb concert) was in fact supplied to Econvey for concerts which were the most popular and which had been sold full house.

27.Despite the fact that the Contracts state that a part of the Billboard Charges, such as the monthly service charges, was to be paid in cash upon WJ's receipt of Econvey's debit note, there is no evidence that Econvey had ever enforced these terms as I have seen no evidence of any cash payment made by WJ since the date of the first of the Contracts and the date of the first debit note issued thereunder.

28.If it was indeed the intention of Econvey that the part of the Billboard Charges stated to be the Cash Value had to be paid in cash and not by way of barter in exchange for tickets, I find it inherently improbable and incredible that Econvey would not demand and insist on payment of the Cash Value when payment fell due, but instead refrained from making any demand for payment for over 3 years. It was not until 30 November 2006 that Econvey issued monthly statements to show the state of the running account between the parties, and it was not until late 2007 that legal action was first taken by the Convey group of companies to enforce payment of the Cash Value payable under the contracts with WJ. The Writ in these proceedings was not issued until September 2008.

29.For the second set of Contracts in respect of the Whitney Houston concerts, it should have been readily apparent to Econvey in July 2004 that even on WJ's case, the value of the tickets supplied by WJ ($36,064) was far short of the Ticket Value specified in the Contract for the concert in question ($218,000). Econvey in fact denies that it had received the Whitney Houston tickets. Nevertheless, whether it was $36,064 value of Whitney Houston tickets supplied, or no tickets at all, Econvey did not take any step to pursue the shortfall and the consequent failure on WJ's part to furnish the stated consideration under the Contract in question. It can be seen from the evidence that WJ supplied tickets to a value of $373,920 in respect of the next concert for the Seekers, under the third set of the Contracts in September 2004, over and above the Ticket Value of $115,000 under the relevant Contracts. By this time, there was a "credit" balance of $76,864 in Excess Tickets in favor of WJ (or more, if no Whitney Houston tickets were supplied, as Econvey claims), and a total Cash Value of approximately $19,729.32 due from WJ.

30.On the evidence available, by the time of the conclusion of the Robin Gibb concert in June 2005, WJ had supplied Excess Tickets of a value of approximately $750,000 over and above the Cash Value and the Ticket Value specified under the Contracts made before June 2005. In fact, by early 2007, WJ had supplied Excess Tickets of a value of $1 million. Counsel for Econvey stressed that notwithstanding this, the payment terms of the Contracts made throughout the period after June 2005 continued not only to provide for WJ to make payment for the Billboard Charges, but also to make distinction between payment by way of cash and payment by concert tickets. It was argued that this does not make sense, and can only suggest that there was never a Rollover Agreement as WJ alleges.

31.I believe Mr. and Mrs. Lam's evidence that TH had made requests for Excess Tickets in the circumstances described by Mr. and Mrs. Lam. TH has not come forward to give evidence to challenge the claims made by Mr. and Mrs. Lam. This is so notwithstanding that TH remains in Econvey's employment, and it has been made clear from the outset when WJ's evidence was filed in these proceedings that the oral agreements and the requests for tickets were all made with and by TH.

32.As I have stated in the earlier parts of this Judgment, it is inconceivable that TH would not expect WJ to charge Econvey for the value of the substantial number of the Excess Tickets supplied. On Mr. Lam's evidence, he had made it clear to TH that the value of the Excess Tickets had to be taken into account in subsequent transactions, and TH had agreed to the rollover arrangement, whereby the value of the Excess Tickets could be set-off against the Cash Value and the Ticket Value specified in the Contracts entered or to be entered into. On the entirety of the evidence, I consider on a balance of probabilities that the account of the rollover arrangement given by Mr. and Mrs. Lam is inherently more probable, and is in fact supported by the conduct of the running account maintained between the parties. From the way the parties had maintained and operated their running account, it can be seen that they had accepted a pattern of settlement of the Billboard Charges by way only of the supply of concert tickets, with the absence of any form of cash payment over the years, and by each party's restraint from taking any action over the years to enforce any credit balance in its favor in the running account. From their conduct, it is clear that Econvey had waived not only Clause 2 but also the right to strictly enforce the terms in the Contract with regard to the payment method of the Billboard Charges.

33.As businessmen, the parties must be presumed to know what they were doing when they permitted their business dealings and the state of their accounts to be operated and maintained in the manner in which they were in fact run. The fact that the parties continued to retain provisions in the Contracts which make distinction between payment of a part of the Billboard Charges by cash, and other parts by way of concert tickets is not, in my Judgment, necessarily inconsistent with their understanding that debit and credit balances would be kept on running account, for final accounts to be taken and adjustments or set-offs to be made at some appropriate time. It is not necessary for the court to speculate whether the parties intended to make adjustments by cash payment by the party in debit, or by payment in kind by the provision of goods or services in the form of advertising space or concert tickets. Suffice it to say that the Rollover Agreement is sufficiently certain to be commercially workable, and hence is inherently probable.

34.I accept therefore that the Rollover Agreement had been made and subsisted between Econvey and WJ, and confirmed when TH asked for Excess Tickets and agreed with Mr. and Mrs. Lam that the value of the Excess Tickets would be taken into account and set-off against the Billboard Charges in Contracts entered into or to be entered into between Econvey and WJ.

35.Counsel for Econvey referred to documents and in particular the affirmation made by Mrs. Lam in DCCJ 5138/2007 which are proceedings between Convey and WJ and relate to license fees due for the Andy Williams concert. Judgment in default of defence was obtained in those proceedings and Mrs. Lam made an affirmation to apply to set aside the judgment. The Andy Williams concert which was scheduled to take place in April 2003 and advertised in February to April 2003 was eventually cancelled because of the outbreak of SARS. I consider that the circumstances of the cancellation of the Andy Williams concert make that concert and the claim for the licence fees and the tickets supplied for the concert distinguishable from the concerts and tickets which are the subject matter of these proceedings. In any event, I do not regard the matters stated in Mrs. Lam's affirmation made in DCCJ 5138/2007, which was made without the assistance of lawyers, to be totally inconsistent with WJ's case in these proceedings.

Was TH authorized to act on behalf of and to bind Econvey?

36.Having found that the Rollover Agreement was made between TH on behalf of Econvey and Mr. and Mrs. Lam on behalf of WJ, I will deal with TH's authority before turning to the question of the Handling Fee Agreement.

37.There is no evidence to contradict the claims made by Mr. and Mrs. Lam that at the material time, TH was the general manager of Convey and Econvey respectively, and that he had a business card describing his position as such. This is in fact accepted by Econvey. On the evidence, TH was the main person in charge of Econvey's contract dealings with WJ and, apart from Mr. Mak, also the most senior person of Econvey who had contact with WJ.

38.Mr. Mak, the only witness called to give evidence on behalf of Econvey, was the Managing Director and most senior person in charge of Econvey. He claims to have signed all the Contracts with WJ, and to be the only person authorized to decide on the method of payment of Econvey's charges under the Contracts.  However, it is clear even from his testimony that he would and did leave the daily contacts at work and the dealings with WJ's concert tickets to his staff, such as Brenda Lo and Polly Chan and their superior, TH.

39.Despite Mr. Mak's claim that all the Contracts with WJ were signed by him, it is also clear that many Contracts were in fact not even signed but were acted upon by both parties, when invoices were issued by both sides in respect of the concerts covered by the Contracts in question, and when concert tickets were supplied by WJ to Econvey.

40.Although Econvey has throughout relied on Clause 2 to claim that oral variations to the Contracts are ineffective, Mr. Mak has also come to accept in cross-examination that not all fine details could be based on the written Contracts, and that oral variations were acceptable and in fact served as a supplement to the written Contracts.

41.On all the evidence, I do not accept Mr. Mak's assertion that TH was not authorized to act on behalf of Econvey when he made oral agreements with Mr. and/or Mrs. Lam in the course of their dealings under the Contracts, or when he requested for tickets over and above the amount specified in the Contracts. Even if it was true that TH did not have Mr. Mak's or Econvey's express authority in his dealings with WJ, being the General Manager of Econvey, and being put in charge of Econvey's daily business dealings with WJ, I consider that TH had the usual or apparent authority as a General Manager to act on behalf of and to bind Econvey in its business dealings with WJ under the Contracts. On the evidence, TH had been clothed with such authority when he was held out as General Manager, and allowed to act in the conduct of Econvey's business dealings with WJ.  He was the person who was put in the position of establishing and maintaining contact with Mr. and Mrs. Lam after Tsang (who had negotiated and concluded the initial contracts between Convey and WJ) left Convey after more than 2 years of dealings, and also of establishing contact between Econvey and Mr. and Mrs. Lam of WJ.

42.Dealing with a person held out as "General Manager", I consider that it is reasonable for Mr. and Mrs. Lam to accept and assume that TH would have the authority to assure them that WJ's dealings with Econvey would continue as before when they had been dealing with Tsang and Convey, to ask for Excess Tickets over and above the Ticket Value specified in the Contracts, and to assure them when he did so that the value of the Excess Tickets would be brought into account in subsequent transactions. Third parties dealing with TH, such as WJ and Mr. and Mrs. Lam, can assume that Econvey's internal procedures, such as TH reporting to Mr. Mak and seeking clearance before agreeing to any variation in the payment method specified in the Contracts, and before requesting Excess Tickets, have been complied with.

43.I have no doubt in finding that TH had the authority to act on behalf of and to bind Econvey in his dealings with WJ.

Did TH agree on behalf of Econvey that the Handling Fee was to be borne by Econvey, and did WJ pay the Handling Fee?

44.According to the evidence of Mrs. Lam, for every concert ticket issued, a sum of $11 has to be paid to Hong Kong Ticketing Office. I believe Mr. Mak when he said in evidence that the question of handling fees for the concert tickets had never been raised in the initial negotiations and discussions between the parties.

45.WJ does not deny that only the face value of the concert tickets was used to calculate the Ticket Value and the number of concert tickets to be supplied by WJ under the Contracts, without reference to the Handling Fees payable on top of the face value of the tickets.   According to Mr. Lam, it was Mrs. Lam who first raised the issue of the Handling Fees payable for the concert tickets to be supplied for settlement of the Billboard Charges payable by WJ. Mr. Lam claims that he then told TH that the Handling Fees of $11 for each ticket should be payable by Econvey, adding that it was only a very petty sum. According to Mr. Lam's evidence, TH agreed to bear the Handling Fees, and it was further agreed that the Handling Fees payable would be included in the Rollover Agreement to be used to set-off against the Billboard Charges payable by WJ.

46.Instead of adding the Handling Fees to the face value of the concert tickets when calculating the Ticket Value under the Contracts, WJ simply issued separate invoices to Econvey for the Handling Fees payable in respect of the concert tickets supplied, and relied on the Rollover Agreement and the set-off arrangement.

47.Mr. Mak claims that upon receipt of WJ's invoices in respect of the Handling Fees, he had informed his staff as well as TH that Econvey would not be responsible for the Handling Fees. He claims that he had also raised objection to the Handling Fees with WJ, but it is obvious that WJ continued to issue invoices for the Handling Fees. There is no evidence from TH as to how he resolved the matter with Mr. or Mrs. Lam after learning of Mr. Mak's objections.

48.Mr. Mak accepted, however, that he did agree to pay the Handling Fees for the Boney M concert tickets which he had specifically asked for. Mr. Mak claims that WJ had informed him that they had to purchase the tickets from "an outside dealer", whereupon he agreed that the Handling Fees on the tickets should be borne by him. According to Mr. Mak, no Handling Fees are payable for tickets issued by the organizer, WJ.

49.No evidence has been adduced in this case as to how the Handling Fees of $11 for each concert ticket issued were paid by WJ to Hong Kong Ticketing Ltd., in respect of which reimbursement is sought from Econvey for the expense. Bearing in mind that the burden of proof for the Counterclaim is on WJ to establish that there was agreement made between Econvey and WJ for reimbursement, and that WJ is entitled to the reimbursement sought, I am not satisfied that WJ has proved its entitlement to the Handling Fees of $58,685 it had allegedly paid.

50.However, as Mr. Mak admits agreement to pay the Handling Fees for the Boney M concert tickets, I will allow WJ's claim for the sum of $110 in respect of the 10 tickets received under Econvey's chop of 25 February 2005, which is the subject of WJ's invoice No. 2005-WJ-BM004 dated 18 March 2005.

What was the value of the Excess Tickets given by WJ to Econvey?

51.Econvey disputes the receipt of 28 tickets for the Whitney Houston concert held on 28 July 2004, for the value of $36,064. WJ has not been able to produce any written acknowledgment from Econvey relating to the supply of these tickets. Although WJ has been able to produce an invoice issued to Econvey in September 2004 for the Handling Fees of $264, covering 24 tickets for the Whitney Houston concert, because WJ's invoices for all the Handling Fees are disputed (with the exception of that for the Boney M concert), I consider that it is unreliable to accept the invoice as evidence of Econvey's receipt of the Whitney Houston tickets in question.

52.Econvey disputes WJ's claim that the total Ticket Value under the Contracts is $1,660,750 as WJ claims in the pleadings. According to Mr. Mak, the total Ticket Value should be $2,648,628.20, claiming that 8 additional invoices should be included in the calculation. Of these 8 invoices, WJ has admitted 6, conceding that the correct Ticket Value under the Contracts should be $1,929,900. The 2 other invoices are for the sum of $718,728.20.

53.The first disputed invoice dated 31 March 2005 is for the sum of $678,728.20, and relates to 770 tickets for the Andy Williams concert which were returned to WJ after the cancellation of the concert. There is some confusion as to whether Econvey or Convey was entitled to receive the concert tickets, but it is clear that the concert for which the tickets were issued was cancelled, and that the tickets were returned by Econvey to WJ.  I am not satisfied that the value of the 770 tickets should be included in the Ticket Value under the Contracts.

54.The other invoice produced by Econvey, to support its claim that the total Ticket Value is $2,648,628.20, is for the sum of $40,000 in relation to the "one-time production and installation of a single backlit signage at 169 Gloucester Road". In dispute, WJ points out that there is another invoice (of a different invoice number) issued by Econvey, of the same date for the same amount and under the same Contract. The Contract and the invoices refer on their face to the "one-time production and installation" of the billboard in question, and WJ claims that the charge in question has been duplicated. No evidence has been adduced on behalf of Econvey to explain the charges or the production and installation work involved to clarify the 2 invoices in question. On the limited evidence, I am not satisfied that the $40,000 should be included in the total Ticket Value, as Econvey alleges.

55.Discounting the value of the Whitney Houston concert tickets from the value of all the tickets actually supplied by WJ to Econvey (in the sum of $3,310,524 as WJ claims), the correct value is $3,274,460. The value of the Excess Tickets is accordingly $1,344,560 ($3,274,460 - $1,929,900).

Conclusion

56.The total Cash Value under the Contracts, as admitted in the Amended Defence and Counterclaim, is $647,829.32. WJ has a valid Defence of set-off to Econvey’s claim, and after giving credit to Econvey for the Cash Value, I allow WJ's Counterclaim in the sum of $696,840.68 (the value of the Excess Tickets [$1,344,560] + Handling Fees for the Boney M concert tickets [$110] less the total Cash Value [$647,829.32]). Econvey is to pay to WJ $696,840.68, with interest at judgment rate from the date of service of the Counterclaim until payment. I will make an order nisi that WJ's costs of the entire action are to be paid by Econvey, with Certificate for one counsel, to be taxed if not agreed.

Mr. Walter Lau, instructed by Messrs. Kam & Fan, for the Plaintiff

Mr. Tim Wong & Mr. Adrian Wong, instructed by Messrs. Eddie Lee & Co., for the Defendant