Sportoys Sales Inc. v. Stallion (Asia) Ltd

DCCJ 1075/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1075 OF 2010

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BETWEEN

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Before: Deputy District Judge Jonathan Wong in Chambers

Date of Hearing: 24 December 2010

Date of Judgment: 20 January 2011

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JUDGMENT

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A   Introduction

1.On 1^st January 2006, the plaintiff and the defendant executed an agreement by which the plaintiff appointed the defendant as its non-exclusive representative for the sale of, inter alia, wetsuits and related inter accessories in Canada (“the Agreement”).  It is common ground that all products forming the subject matter of these proceedings fell within the list of products covered in the Agreement.

2.As one might expect, the plaintiff was to be remunerated by commissions under the Agreement.  Disputes have arisen between the parties on the commissions said to be payable by the defendant to the plaintiff, both as to quantum and entitlement.  

3.On 25 March 2010, the plaintiff commenced this action.  The defendant filed its Defence on 2 June 2010, the content of which has been characterized and criticized by the plaintiff in evidence as consisting of little more than bare denials.  On 21 October 2010, the plaintiff amended its claim to include the 3^rd Sum (as defined below) and the present application for summary judgment was issued shortly thereafter 3^rd November 2010.

4.The Amended Statement of Claim is a claim for commissions under the Agreement. Essentially, the plaintiff avers that in breach of the Agreement, the defendant has failed to pay commissions due and owing to the plaintiff in relation to sales solicited by the plaintiff on the defendant’s behalf in 2008 and 2009.  The following relief are sought: (1) an account of all sales made and/or solicited by the plaintiff on behalf of the defendant, including specifically all sales made by the defendant to Canadian Tire Corporation (“CTC”) in 2009 (“the Account Claim”), (2) US$920.70 being contractual commissions for certain sales made to Giant Tiger Stores Limited (“the 1^st Sum”), (3) US$49,301.94 being contractual commissions payable for sales made to CTC in the 1^st and 2^nd quarters of 2009 (“the 2^nd Sum”) and (4) US$62,597.77 being the remainder of commissions payable for the sale of Nylon PFDs and Seadoo products to CTC in 2008 (“the 3^rd Sum”).

5.As stated above, the present application was taken out before the defendant amended its Defence to deal with the addition of the 3^rd Sum in the Amended Statement of Claim.  In its current formulation, two broad grounds are advanced.  First, it is averred that the plaintiff and the defendant would agree on the commission payable on a case-by-case basis and that during the relevant period the plaintiff had confirmed and accepted each and every payment of commission for the period up to the end of 2008.  Secondly, the defendant contends that the plaintiff had not solicited and/or obtained any order from customers for 2009 save and except that relating to the 1^st Sum. 

6.The Summons seeks summary judgment on (1) the Account Claim, (2) the 1^st Sum, (3) the 2^nd Sum and (4) US$10,035.45 being part of the 3^rd Sum. As has been made clear by the plaintiff’s evidence and the submissions of Mr.  Liu (appearing for the plaintiff), for the purpose of the present application, the Account Claim is in reality a claim for account of sales made to CTC for the 2^nd half of 2009.

B   Various housekeeping matters

7.At the hearing, Mr. Ho (appearing for the defendant) accepted that judgment should be entered in respect of the 1^st Sum. On Mr. Liu’s part, he indicated that the Account Claim (as clarified) is not one which he would pursue with enthusiasm.  With these helpful indications, the focus of the hearing was on the 2^nd and 3^rd Sums; although the Account Claim, not having been formally abandoned by the plaintiff, remains one to be dealt with by the Court.

8.In relation to the 3^rd Sum, Mr. Liu in his written submissions departed from the Amended Statement of Claim and the Summons and invited the Court to enter judgment for US$62,598.07.  At the hearing, Mr. Liu explained that the very slight difference was due to an arithmetical, or perhaps mechanical, error but recognized that he was bound by the pleading.  He therefore made an application to amend the Summons so as to delete the figure of US$10,035.45 and replace it with the 3^rd Sum.

9.Mr. Ho did not object to the amendment application, but maintained that the shift in stance only highlighted why the 3^rd Sum ought to go to trial.  Despite Mr. Ho’s magnanimous stance, it seems to me that the amendment application is formally defective.  At paragraph 4 of the 3^rd Affidavit of Mr. Frank Evans (“Mr. Evans”) leading the present application, he only deposed to the fact that “the Defendant is justly and truly indebted to the Plaintiff in the sums of US$49,301.94, US$10,035.45 and US$920.70…”  I do not believe that the entire body of evidence filed by the plaintiff, when fairly read, is capable of having the result of complying with Order 14, rule 2 of the Rules of the District Court such that judgment on the 3^rd Sum can be entered.  For this formality reason, and the substantive ones I set out in section F below, the plaintiff’s oral application to amend the Summons is dismissed. 

C   Terms of the Agreement

10.The Agreement contains the following provisions:

(1)   “[The plaintiff] shall solicit and take orders within the Territory for the purchase of the Products at prices specified on [the defendant’s] written lists or special written quotations, and on the standard terms and conditions of quotation of sale specified by [the defendant]” (Clause 2A).

(2)   “All orders solicited and taken by [the plaintiff] shall be subject to acceptance and confirmation in writing by a duly authorized representative of [the defendant].  Decisions regarding the creditworthiness of, billings and shipments to any particular customer shall and can be made only the [the defendant].  [The plaintiff] shall, on request, assist [the defendant] in obtaining credit information relating to any and all customers, current or prospective.  All sales made by [the plaintiff] are expressly subject to receiving approval and confirmation and are not final until given in writing by [the defendant]” (Clause 2B).

(3)   “The defendant reserves the right to decline or accept, in its sole discretion, any order solicited or taken by [the plaintiff] and to discontinue the sale of any Products, or to allocate such Products during periods of shortages, without incurring any liability to [the plaintiff] for the payment of commissions hereunder” (Clause 2C).

(4)   “Unless otherwise specified or agreed to by [the defendant], [the defendant] will pay and [the plaintiff] shall, at the time of shipment, be deemed to have earned a commission on all uncanceled customer orders in an amount equal to the calculation as set forth in Exhibit C attached hereto for Products sold within the Territory” (Clause 3A).

(5)   ““Net Selling Price”, if applicable in the determination of commission due [the plaintiff], is defined as the gross amount of invoices rendered to customers, less average expected deductions for state, federal or local taxes, freight allowances, trade and/or cash discounts, returns, refunds, and any and all costs incurred in the prosecution or defense of claims or actions relating to billing and collection of customer accounts” (Clause 3B).

(6)   “Unless otherwise specified or agreed to by [the defendant], [the plaintiff] shall not be entitled to any commission on those orders solicited and taken directly by [the defendant] from customers in the Territory.  [The defendant] shall send [the plaintiff] copies of all invoices covering sales of Products for which [the plaintiff] is entitled to a commission” (Clause 3C).

(7)   “Commissions due [the plaintiff] based upon Net Selling Price for Products sold by [the plaintiff] within the Territory shall be payable by [the defendant] thirty (30) days after the end of the month in which invoices are made upon such sales” (Clause 4).

(8)   “In the event that a customer fails to pay an invoice to the satisfaction of [the defendant] within one hundred twenty (120) days after the due date thereof, the commission on that invoice shall be forfeited by [the plaintiff].   Any forfeiture or reduction of a commission shall be deducted from commissions which are or may become payable to [the plaintiff], or at the election of [the defendant], shall be paid to [the defendant] by the [plaintiff].  The provisions of this section shall survive any termination of this Agreement” (Clause 5).

(9)   “[The plaintiff] agrees to use best efforts to promote the sale and use of, and to solicit and secure orders for [the defendant’s] Products within the Territory…” (Clause 6A).

(10)   “[The plaintiff] agrees to indemnify [the defendant]…. Against any and all claims, damages, losses and expenses including reasonable attorney’s fees, arising out of or related to performance of [the plaintiff’s] work hereunder, and caused in whole or in part by the negligent act or omission of [the plaintiff]…  whether within or outside the scope of this Agreement” (Clause 12A).

(11)   “No waiver or modification of any of the terms or provisions of this Agreement shall be valid unless contained in a single written document signed by both parties” (Clause 14C).

(12)   “This Agreement contains the entire understanding of the parties concerning the subject matter hereof, and supersedes and cancels all previous agreements between the parties or their affiliates containing the subject matter hereof” (Clause 14H).

11.Exhibit C of the Agreement is headed “Percentage of Net Selling Price Earned as Commission” and stipulates that a rate 2% is applicable to Costco, Sam’s Club and Wal-Mart and a rate of 5% to all other accounts (of which CTC is one).

D   The documentary evidence

12.I first set out the documentary evidence relating to the Account Claim and the 2^nd Sum.

13.By email dated 22 April 2008, CTC requested its vendors to provide information for the 2009 Spring/Summer season.  As part of that request, vendors had to complete certain documentation described as “Section C”.  On 11 and 12 May 2008, CTC submitted the requested “Section C” documentation to CTC in respect of products manufactured by the defendant.  It is clear from the contemporaneous correspondence that considerable effort was expended by the plaintiff to compile the information provided to CTC.

14.Between 20 May and 2 June 2008, a number of emails were exchanged between the plaintiff, the defendant and CTC.  It was mentioned that CTC would visit the defendant’s factory on 14 June 2008, the purpose of which was apparently to discuss new product concepts for 2009.

15.It appears that CTC’s visit on 14 June 2008 did take place, and that the plaintiff continued to have some involvement thereafter.  Between 20 and 22 June 2008, the plaintiff exchanged email correspondence with the defendant and CTC.

16.By an email dated 19 September 2008, CTC’s Representative Office in Hong Kong (“CTC Hong Kong”) informed the defendant that changes had been made to user IDs and passwords for logging on into CTC’s computer system.

17.The plaintiff was thereafter unable to access CTC’s system.  By email dated 27 October 2008, Ms. Linda Evans of the plaintiff (“Ms Evans”) requested assistance from the defendant since the plaintiff was “unable to track purchase orders and work with [CTC] in regard to current and pending order status issues.”

18.On 28 October 2008, Mr. Joseph Lin, the defendant’s Chief Executive Office, replied as follows:

“We checked with HK team and came to know that CTC has changed to process their orders thru CTC Hong Kong. It is the direction from CTC Hong Kong with regard to the list of people having access to log on.”

19.By email dated 17 January 2009 from Ms. Evans to Ms. Zerol Tse of the defendant, the plaintiff pointed out to the defendant that it had only received commissions due up to the end of March 2008 for CTC and that, according to its records, there were still commissions owed from 2008.  By email dated 19 January 2009, Ms Tse invited Ms Evans to mutually review and check their respective records and promised to provde an update status to the plaintiff as soon as possible. 

20.On 6 May 2009, Ms. Evans confirmed that it had received commissions due for 2008 but then stated that the plaintiff had not received any commissions for the 2009 season (“the 6/5/09 Email”).  For reasons elaborated below, this email has formed an important part in my deliberation of the matter, but in the context of the 3^rd Sum.

21.On 17 July 2009, Mr. Sam Yu, the defendant’s Group Financial Controller, replied that having checked with the defendant’s system, the agent for the 2009 CTC program was not the plaintiff but CTC Hong Kong and, therefore, no commission was payable.  Ms. Evans was clearly incensed by Mr. Yu’s response and on the same day threatened legal action.

22.That threat attracted the attention of Mr. Lin.  By email dated 19 July 2009, Mr. Lin explained to Mr. and Ms. Evans as follows:

“As you are already aware, 2009 CTC program went through [CTC Hong Kong] since as of 2009 all CTC overseas supplier without the office in Canada but based in Hong Kong or China must work with [CTC Hong Kong] which serves as the sole agent for all overseas suppliers. No other agents were allowed to use by CTC.”

23.It was clear that Mr. Lin was prepared adopt a conciliatory stance.  His email went on to say as follows:

“I certainly do not wish to see any legal action happen between us, thus ending our 6 years’ good relationship being built on trust and understanding. I would propose you apprise me of what you have done for [the defendant] in 2009? How much is the cost you require? Then we go from there in settlement.”

24.In his email to Mr. Lin dated 1 August 2009, Mr. Evans listed out 13 matters (“the 13 Matters”) which, in his opinion, were the plaintiff’s contribution to the defendant’s business with CTC for 2009.  Mr. Lin forwarded that email to his staff, Mr. Mason Cheung and Mr. Alex Fung on 3 August 2009 and invited their comments. Suffice it to say that Mr. Cheung and Mr. Fung disagreed with most, if not all, of Mr. Evans’ contentions in their reply email to Mr. Lin (“the Staff Comments”).  By way of example:

(1)   As against Mr. Evans’ contention that the plaintiff had created the quotes and presented them to CTC, Mr. Fung and Mr. Cheung pointed out that whilst they agreed that the plaintiff had created the “Section C” documents, CTC Hong Kong had said that “Section C “ was irrelevant due to the policy change.

(2)   As against Mr. Evans’ contention that he travelled to Hong Kong and China to attend the finalization meetings, Mr. Fung and Mr. Cheung agreed that Mr. Evans did attend one meeting in mid June 2008 but pointed out that CTC Hong Kong picked up all the finalizations with the business after the meeting since all FOB direct import programs were to go through CTC Hong Kong.

(3)   As against Mr. Evans’ contention that the plaintiff had followed up with CTC, Mr. Fung and Mr. Cheung pointed out that “weekly forecast checking, daily PO receiving [CTC’s] VMS system, PLI set up, New Prototype Testing, Samples for Planogram, Samples and POP for their Product Parade, Product and shipment scheduling etc” were done between the defendant and CTC Hong Kong and did not involve the plaintiff at all.

25.On 5 August 2009, Mr. Lin forwarded the Staff Comments to Mr. Evans but nevertheless proposed a settlement.  He stated in his email:

“You can refer to below reply from [the defendant] team who had worked with you on CTC account.

I also worked with [Mr. Yu].  [The defendant] is ready to pay you the amount per attachment herewith to cover all your work for [the defendant] since the beginning of 09 season.”

26.In the attachment, the defendant set out the Net Selling Price for products sold to CTC in the 1^st and 2^nd quarters of 2009, respectively at US$206,559.96 and US$779,478.80 and offered to pay to the plaintiff 1% commission on those figures (“the Purported Admission”).

27.There was no without prejudice point taken by the defendant, thereby enabling the plaintiff to rely on the Purported Admission as the basis for claiming the 2^nd Sum.  It is said that the defendant had clearly admitted that [US$206,559.96 + US$779,478.80 =] US$986,038.76 worth of sales were made to CTC and that work was done for the defendant since the beginning of the 2009 season.  Therefore, the plaintiff is entitled to 5% on that total figure, namely the 2^nd Sum.

28.I now set out the documentary evidence in relation to the 3^rd Sum.  As summarized above, the 3^rd Sum is in respect of commissions said to be payable for Nylon PFDs and Seadoo products sold to CTC in 2008.

29.By an email dated 31 May 2008, Ms. Evans complained to the defendant that the plaintiff had not received any payments for CTC shipments.  There was no substantive response from the defendant, and Ms. Evans sent a reminder on 21 June 2008.

30.On 23 June 2008, Ms. Evans again sent an email to the defendant.  In that email, Ms. Evans stated that the plaintiff was “expecting commissions of 2.5% for [CTC]”.

31.On 25 June 2008, the defendant replied and stated that the commission rate should be 2% and that drew a response from Ms. Evans on 27 June 2008, reiterating that “the commission rate on CTC is 2.5%”.  On the same day, the defendant maintained that the commission rate should be 2% and requested supporting documents from Ms. Evans.

32.On 27 June 2008, Ms. Evans replied as follows:

“Our contract with [the defendant] is a 5% commission on all Canadian Business. It always has been… Because [CTC] purchased the Nylon PFDs through an auction process and sold them at a lower than original cost, an agreement was made with [Mr. Lin] for a lower that 5% on these items only… The Agreement between [Mr. Evans] and [Mr. Lin] for [CTC] Nylon PFD’s was 2.5%. Any and all other business still has a commission rate of 5%...”

33.The defendant subsequently made 2 payments, respectively on 7 July 2008 and 6 Feburary 2009 totaling US$57,376.12.  The issue was then in left abeyance until the plaintiff raised the issue again in early January 2009 (chronicled above).  As stated above, Ms. Evans subsequently accepted that all commissions for 2008 were paid in the 6/5/09 Email.

D   The affidavit evidence

34.I have set out in Sections B and C above in some detail the undisputed contractual terms and the contemporaneous documents.  It has been said on numerous occasions that whether the defendant’s case is capable of being believed should be assessed against the contemporaneous documents and any undisputed factual matrix.

35.Save one aspect (which I will deal with in section F below), I do not believe Mr.  Evans’ 3^rd Affidavit add a significant dimension to the plaintiff’s pleaded case and the contemporaneous documents.

36.The defendant relies on the 3^rd Affirmation of Hui Ki Hung Seline.   Miss Hui was the person who signed the Agreement on behalf of the defendant.

37.In that Affirmation, Miss Hui confirmed the matters pleaded in the Defence and deposed, in gist, to the following matters:

(1)   As regards the Account Claim and the 2^nd Sum, in or about July 2008, CTC decided to deal with suppliers direct instead of their sales representative.

(2)   Although the plaintiff attended some meetings with CTC’s staff and submitted some quotation to CTC for the 2009 season, CTC did not accept any of the quotation from the plaintiff.

(3)   Any sale to CTC for the 2009 season was solicited and taken by the defendant directly with CTC.

(4)   The Purported Admission was made by reason of the long-term relationship between the parties and did not amount to an admission that any sales to CTC for the 2009 season was solicited and taken by the plaintiff.

(5)   As regards the 3^rd Sum, the plaintiff had by the 6/5/09 Email accepted the defendant’s payment of US$57,376.12 as the correct commissions payable for sales to CTC for the 2008 season.

38.In Mr. Evans’ 4^th Affidavit:

(1)   He stated that the plaintiff started doing business with CTC in 1994.

(2)   He denied that there was an agreement between the parties that the commissions would be paid on a customer-by-customer basis but agreed that the plaintiff exercised a degree of flexibility to any changes to the commission rates in the Agreement in order to accommodate the 7-year business relationship. However, he maintained that any such changes would be recorded into writing and signed by both parties pursuant to Clause 14C of the Agreement.

(3)   He suggested that CTC’s Spring/Summer 2009 program was, for all intents and purposes, finalized and that all that was left was for CTC to issue purchase orders in October 2008 before the selected products are manufactured and questioned why the defendant had chosen not to adduce any evidence from CTC’s representatives in support of its case.

(4)   There was also a suggestion that the plaintiff was coincidentally removed from CTC’s VMS system in September 2008 immediately after the program had been finalized.

(5)   He stated that the plaintiff had at all material times submitted all quote information to CTC and other customers under the defendant’s header, and therefore, by definition, all sales order would be placed directly from the customer to the defendant.

(6)   He confirmed that 2.5% was the applicable commission rate for Nylon PFDs.

E   The 2^nd Sum and the Account Claim

39.Against the above material, Mr. Ho submitted that the plaintiff’s claim and evidence are, quite simply, defective, in that the plaintiff’s pleaded case and evidence, at best, only reveal a case of soliciting orders from CTC for the 2009 season.  He made these submissions firstly by reference to Clauses 2A and 2B of the Agreement pursuant to which the plaintiff was required not only to solicit but also to take orders and secondly by reference to the evidential point that there can be no dispute that the orders for the 2009 season were not physically taken by the plaintiff following CTC’s policy change in September 2008.

40.Mr. Liu, on the other hand, argued that physically taking an order was not an essential part of the plaintiff’s obligations under the Agreement.  He submitted as follows:

(1)   Clause 2A is only an enabling clause in that the plaintiff is authorized to “solicit” as well as to “take” orders.  Ultimately, however, the plaintiff’s obligation is only to use best efforts to solicit and secure orders for the defendant.

(2)   In so far as the commission clause (Clause 3A) is concerned, the only criterion for the plaintiff to be entitled to commissions is that the relevant products must be sold within Canada.

(3)   The above is subject to one exception, ie those orders solicited and taken directly by the defendant from customers (Clause 3C).  As such, if orders are only “taken” but not “solicited” by the defendant, the defendant is not entitled to withhold commissions from the plaintiff.

(4)   This construction accords with commercial sense, and ensures that the defendant cannot steal the fruits of the plaintiff’s solicitation efforts without paying the plaintiff’s commissions.

41.At the hearing, Mr. Liu accepted that “solicitation” in the present context must have some causative effect with the orders subsequently and in fact placed and means something more than mere introduction.  Otherwise, it may lead to a situation where the plaintiff is perpetually entitled to commissions whenever an order is placed by CTC, there being no dispute that the defendant first started sending products to CTC at the plaintiff’s introduction.

42.I am also of the view that there can be no readily exhaustive definiton of what types or forms of contact made with a customer can amount to “solicitation” of an order. Adopting Mr. Liu’s definition, it appears that any act which may be said to be causative to the eventual placing of an order can amount to solicitation.  The 13 Matters referred to Mr. Evans ranged from preparation of quotations, meeting with buyers, servicing customer complaints and defects, working on product development and design, preparation of sample, etc.

43.However, once that definition is accepted, it seems to me that there must be triable (factual) issues on causation.  I say this for the following reasons:

(1)   Clause 3C, as Mr. Liu recognized, creates an exception disentitling the plaintiff from commissions for products sold, namely those solicited and taken directly by the defendant.  The defendant has clearly met the latter criterion, namely “taking orders directly”.  Perhaps more importantly, insofar as “solicit” is concerned, Clause 3C does not require that the solicitation has to be done exclusively by the defendant, nor does it specify the minimum degree of solicitation required of the defendant to trigger its ability to place reliance on it . 

(2)   There is at least a triable issue as to Mr. Evan’s contention that all that was left to be done in October 2008 was for CTC to issue purchase orders. The documentary evidence only shows the plaintiff’s active involvement until late June 2008, with the exception of an email from Ms Evans in October 2008 requesting for assistance to log on to CTC’s system.  There was a gap between late June and October 2008 during which the plaintiff’s involvement is uncertain.  The period of inactivity on the plaintiff’s part (if there was such) may, for example, support Mr. Evans’ contention that nothing was to be done since the 2009 program was already finalized.  But equally, that period of the plaintiff’s inaction may support the defendant’s contention that all any communication with CTC was done exclusively by the defendant.  Taking a common sense view, I would have thought it unlikely that there would be a lengthy period of inactivity when trading with entities such as CTC, especially during the period when programs for an upcoming season were being finalized.

(3)   As mentioned above, the Staff Comments enumerated a number of matters which the defendant carried out (eg. weekly forecast checking, New Prototype Testing, Samples for Planogram, Samples and POP for Product Parade etc) which Mr. Evans has not specifically addressed.  Whether any of the above matters was partly causative to some or all of the products sold cannot be determined on the existing material.

(4)   On the present state of evidence, it would be wrong to accept Mr. Liu’s characterization that the defendant had adopted a simple and commercially naïve tactic of asking CTC to directly send the orders solicited by the plaintiff so as to rob the fruits of the plaintiff’s “solicitation”.  There is no dispute that CTC Hong Kong was in fact set up and there is no denial by the plaintiff that there was change in CTC’s policy.

44.Mr. Liu accepted at the hearing that the Staff Comments on the 13 Matters of “solicitation” set out in Mr. Evans email dated 1 August 2009 were matters for trial.  He, however, submitted that the plaintiff was entitled to the Purported Admission in obtaining judgment for the 2^nd Sum.

45.I am afraid I cannot subscribe to that view.  As stated above, the Purported Admission only states that the defendant was “prepared to pay for the plaintiff’s work for the defendant since the beginning of the 09 season” at 1% of the Net Selling Price (as opposed to 5% under the Agreement).  It is clear that the Purported Admission is not an admission of the plaintiff’s rights under the Agreement.  It certainly is not an admission that the defendant is not entitled to rely on Clause 3C.  In fact, the Purported Admission expressly referred to the Staff Comments.

46.Viewed in the above light, it appears arguable that CTC’s change in policy (in the middle of the procurement process of the 2009 season) was an event not contemplated by the parties at the time of entering into the Agreement.  The parties have chosen to argue about their rights within the confines of the express terms of the Agreement.  Whether there are other causes of action outside the confines of the express terms of the Agreement which may lead to a fairer result for all is, of course, not an issue I need to decide in this application.

47.Criticisms were levied at the fact that Miss Hui did not have personal knowledge of many, if not all, of the matters deposed to in her affirmation.  For example, Mr. Liu pointed to the fact that Mr. Lin should have filed an affirmation explaining the Purported Admission.  Another example is relied on is that there is no document to evidence that the defendant had ever solicited any order from CTC.

48.The criticisms are valid, but insufficient, reasons to persuade me that Miss Hui’s evidence is so lacking in cogency or reliability such that my deliberation should be materially so affected.  I say this because the matters I find relevant are contained in the contemporaneous documents, the terms of the Agreement or not conclusively denied by the plaintiff such that I can come to a clear view that there are no triable issues. 

49.For the above reasons, despite the persuasion with which Mr. Liu put his submissions, the claim for the 2^nd Sum (for commissions on sales in the 1^st half of the 2009 season) must go to trial.  It follows therefore that, the Account Claim (for sales in the 2^nd half of the 2009 season), being temporally and causatively even more removed, must also go to trial. 

50.In any event, the plaintiff’s Account Claim is based on Clause 3C of the Agreement, which stipulates the defendant’s obligation to send to the plaintiff copies of all invoices covering sales of Products for which the plaintiff is entitled to a commission.  Since there are triable issues on entitlement, it should follow that no account is to be taken at this stage on that entitlement.  

F   The 3^rd Sum

51.It will be remembered that the 3^rd Sum was only added in the Amended Statement of Claim and relates to commissions said to be payable for the sale of Nylon PFDs and Seadoo products.

52.As stated earlier, there is one aspect in Mr. Evans’ 3^rd Affidavit worth mentioning.  That aspect is this.  At paragraphs 25 to 26 of his 3^rd Affidavit, Mr. Evans explained why the Summons only pursued US$10,035.45, being part of the 3^rd Sum.  He explained that US$334,515.19 worth of Seadoo products was sold to CTC in 2008.  Under the Agreement, the plaintiff was entitled to 5% on that sales figure (ie. US$16,725.75).  Since the defendant had only paid 2% (namely US$6,690.30), the plaintiff is entitled to the difference [US$16,725.75 – US$6,690.30 =] US$10,035.45.  No mention was made in relation to the Nylon PFDs.

53.Also mentioned above is Mr. Evans’ acknowledgement in his 4^th Affidavit that an agreement was reached between the plaintiff and the defendant that Nylon PFDs attracted a commission rate of 2.5%.

54.As such, there is clearly no foundation for the plaintiff to ask for summary judgment for the entirety of the 3^rd Sum, whether in the amount pleaded in the Amended Statement of Claim or the figure asked for in Mr. Liu’s submissions since on either basis such a claim is predicated upon 5% being the applicable commission rate for both Nylon PFDs and Seadoo products.

55.As I have already dismissed the plaintiff’s oral application to amend the Summons, I am only concerned with the claim of US$10,035.45 in respect of Seadoo products.  But that does not mean that the evidence on Nylon PFDs becomes irrelevant.

56.According to Mr. Evans, any changes to the commission rates would always be recorded into writing and signed by both parties pursuant to Clause 14C of the Agreement.  In this application, no such document, created in compliance with Clause 14C, in relation to the change in commission rate for Nylon PFDs was produced in evidence.

57.The plaintiff also did not, whether in submissions or in evidence, address the 6/5/09 Email in which Ms Evans acknowledged that commissions for sales to CTC in 2008 were received, despite the foregoing having been espressly raised in Miss Hui’s Affirmation.

58.At the putative trial, Mr. or Ms. Evans will likely be cross-examined on the 6/5/09 Email (especially when it was sent by Ms. Evans some time after Mr Tse’s invtation to carry out mutual checking of records in January 2009 and the second tranche of payment made by the defendant in February 2009) and also as to why the 3^rd Sum was only added by way of an amendment.  In order for summary judgment to be granted, I have to be convinced that no trial judge would be interested in the answers to be given by Mr. or Ms. Evans in coming to a conclusion on whether the plaintiff is entitled to further commissions on Nylon PFDs and Seadoo products.  I am not so convinced and have therefore come to the view that a trial on this claim cannot be averted.

59.In so deciding, I have considered Mr. Liu’s reliance on Clauses 6 and 12 of the Agreement.  In gist, Mr. Liu submitted that these clauses, when read together with Clause 3A, the phrase “unless otherwise specified or agreed to by [the defendant]” appearing in Clause 3A could not have the effect of allowing the defendant to unilaterally alter or cancel any commission entitlements of the plaintiff, especially when the plaintiff is contractually exposed to liabilities under Clauses 6 and 12.  Mr. Liu further submitted that existence of the non-modification clause (Clause 14C) and the entire agreement clause (Clause 14H) suggested that certainty was of paramount importance to the parties.  

60.I am inclined to agree with Mr. Liu that the foregoing is a commercially sensible construction, but the issue here is that the defendant’s case is based squarely on mutual agreement, not unilateral alteration.  As described above, there also appears to be a triable issue as to whether the plaintiff itself had religiously followed Clause 14C.  In any event, the non-modification clause would have no application if the parties had agreed to change the commissions pursuant to the express terms of the Agreement, namely Clause 3A.

61.As such, I agree with Mr. Ho’s submissions that there is at least a triable issue as to whether the parties had invoked Clause 3A of the Agreement to agree on a change in the contractual commission rate applicable to Nylon PFDs and Seadoo products.

G   Orders to be made

62.I make an order that judgment be entered for the 1^st Sum.

63.It seems to me that although there should be a trial for the remainder of the claims, they merit different treatment.  In relation to the Account Claim and the 2^nd Sum, I make an order that unconditional leave be granted to the defendant to defend, on the basis that it cannot be said to be an unreasonable stance on the plaintiff’s part to proceed with these parts of the application.  As regards the 3^rd Sum, for reasons set out in Section F above, I dismiss the application.  I also dismiss the related oral application to amend the Summons in respect of the 3^rd Sum.

64.As to interest on the 1^st Sum, I make an order nisi that interest is to run at the commercial rate (prime + 1%) from the date of the writ until judgment and thereafter at judgment rate until payment.

65.As to costs, I make the following orders nisi:

(1)   costs of and occasioned by the plaintiff’s application for summary judgment in respect of the 1^st Sum be to the plaintiff to be taxed if not agreed;

(2)   costs of and occasioned by the plaintiff’s application for the Account Claim and the 2^nd Sum be costs in the cause, to be taxed if not agreed;

(3)   costs of and occasioned by the plaintiff’s application for the 3^rd Sum and the plaintiff’s oral application be to the defendant to be taxed if not agreed;

(4)   there be certificate for counsel.

66.Absent any application to vary, the above orders nisi will become absolute within 14 days hereof.  In the foregoing regard, the parties may well wish for a simpler costs order, eg a percentage of the costs of the hearing be paid by one party to the other and the remainder be costs in the cause.  I would certainly entertain any such suggestion, if there be any.

67.I thank counsel for their able assistance.

Mr Harry Liu, instructed by Messrs Oldham, Li & Nie, for the Plaintiff

Mr B K Ho, instructed by Messrs Hon & Co, for the Defendant