Case Document

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CACV000013/1969

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO.13 OF 1969

(On appeal from K.C.J. Action No.905 of 1969)

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BETWEEN
	JACOBSON VAN DEN BERC (HONG KONG) LTD.	Plaintiff (Respondent)
	AND
	LEE YUEN WING also known as LEE CHI MING trading as KOWLOON KNITTING FACTORY	Defendant (Appellant)

Coram: Scholes, J. and Blair-Kerr, J.

Date of Judgment: 2 October 1969

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JUDGMENT

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Scholes, J.:

1. This appeal arises out of an action in the District Court for damages for the breach of three contracts made between the plaintiff and the defendant for the sale of goods by the defendant to the plaintiff. The defendant supplied the goods and the plaintiff received and paid for the goods, but claimed inter alia that a considerable portion of the goods were defective and not in accordance with the contracts, as a result of which the plaintiff had suffered damages. The learned trial judge preferred the evidence adduced on behalf of the plaintiff company to that of the defendant's, and found that evidence to be creditable, and he held the goods to be defective and the damages proved, and gave judgment for the plaintiff for $10,000 and costs.

2. The defendant has appealed against that decision, and Mr. Swaine, counsel for the defendant, has argued two grounds of appeal which are as follows:-

	(1)	There was no evidence to prove that the goods were defective as alleged by the plaintiff or at all.
	(3)	The judge wrongly held that the defendant's conduct amounted to an admission of the alleged defects and damages.

3. Mr. Swaine limited the appeal to liability only, and said that the last two words in ground 3 "and damages" were no longer relevant. He said that the only evidence that defects existed, and that there was no other evidence of defects before the judge; that the defendant's two purported admissions were firstly the defendant not answering the plaintiff's letter of demand, Ex. P4, and secondly the defendant's agreement to pay to the plaintiff the amount of his claim, less certain deductions, by instalments, the first instalment in cash and the balance against future orders. He said that he took issue with the finding of the trial judge that the defendant's failure to reply to the plaintiff's letter, Ex.P4, was an admission by the defendant, because, within days of that letter being sent, the plaintiff and defendant negotiated to settle the claim, and the defendant could not be said to have admitted the quantum merely by not disputing the amount claimed because the defendant could not have had personal knowledge of the quantum claimed, and further that the general rule was that no inference was to be drawn from silence, although there were exceptions. He submitted that in the cases where conduct had been held to amount to an admission it had been an admission to a simple question of fact, whereas in the present case the matters the defendant was said to have admitted were detailed and complex relating to great numbers of garments including allegations of over-sizing. He contended that the trial judge had gone much too far in his finding for making a reasonable inference. Mr. Swaine submitted that the defendant's conduct at the highest was an admission that there might be something wrong with the goods, he did not want trouble with the plaintiff and wanted future business with him, and so he preferred to pay some compensation against future orders, and counsel alleged that that was all that could reasonably be inferred, and it could not be reasonably inferred that the defendant admitted the defects claimed. Mr. Swaine asked if it could be said that the defendant admitted all the details of defects of which the defendant could not have known, and submitted that the defendant could not be taken to have admitted all the details of the alleged defects, and all that could be inferred was that the defendant thought there might be some defects and offered compensation, but that did not amount to proof of the alleged defects.

4. The plaintiff was not legally represented in the court below, and the learned trial judge found that letters from London containing details of alleged defects tendered in evidence by the plaintiff were not admissible, but in his judgment he stated:-

"

Though there is no direct evidence as to the type and extent of the defects in the garments complained of, the conduct of the defendant from the time he received the letter of the plaintiffs dated 7th November to the time he was handed the plaintiff's letter of the 2nd January clearly amounts to an admission of the contents of the first letter and of his liability for the defects specified therein. Any reasonable businessman would promptly repel any unfounded charges and claims made against him."

5. On the 7th November, 1968, the plaintiff wrote to the defendant setting out details of the defects alleged, and the amount claimed, to which letter the defendant made no reply.

6. Subsequent to that letter there were meetings between representatives of the plaintiff and the defendant. What then happened at these meetings. As already stated the learned trial judge in his judgment said that he preferred the evidence adduced on behalf of the plaintiff company to that of the defendant's, and found that evidence to be creditable.

7. Three witnesses gave evidence on behalf of the plaintiff as to what occurred at the subsequent meetings between the representatives of the plaintiff and the defendant, that of Mr. Schwarting being rather brief. Mr. Chan, the second P.W., said as follows:-

"

I look at Ex.P4 - from us to the defendant - which lists details of the claim - signed by Mr. Black and initialled by me. After the defendant had received this letter, we had several conversations (the defendant and me). The defendant said the amount of this claim was too high and he asked me to negotiate with London to reduce the amount. He said the amount was too big for him to pay. He did not offer any sort of settlement. We therefore wrote to London and got a reduction of about £180. We had telephone conversations and I also went to defendant's factory. Later London allowed a reduction (Ex.P15). I told the defendant over the telephone about the reduction. In early December 1968 Barnett and I went to see the defendant in his factory. We asked the defendant to pay and the conversation only related to when he could pay the claim which we had paid to our London office. The defendant's reply was that he was short of cash. The defendant never said the garments were in good order. He never questioned the authenticity of the claim. He only argued about the amount. A week later we went to see defendant again and the conversation was the same. On 27th December 1968 the defendant came to our office - P.W.1, me, Barnett and the defendant were present. We tried to get our money back from the defendant. We had paid our London office the amounts claimed in the Debit Notes from them to us by off-setting the accounts between us. At that meeting we had a lengthy discussion. The defendant said the claim was too high. Finally we reached verbal agreement that the defendant was to meet the claim by paying 2/5th thereof in cash before 2nd January 1969 and the balance to be deducted from future orders from our company to his factory. Details of the deductions were not fully discussed. The claimed amount was £1,435.6.4d. The defendant did not dispute the amount. He only discussed when payment of 2/5th was to be made because we wanted payment at once. He said the quickest would be 2nd January 1969. The meeting ended amicably. On 2nd January 1969 the defendant should have paid the 2/5th but did not. So Barnett and I went to see him in his factory in the afternoon of 2nd January 1969. I refer to Ex.P5 which I took with me. On arrival I told defendant this was the day due for payment. The defendant still said the claim was too high. I said an agreement had already been reached on this and asked him to pay. The defendant said he had not got the money. I said I would accept a postdated cheque. He said he did not have a cheque book with him. Then he said he would send the cheque over in a few days but did not".

Mr. Chan also said, in Cross-Examination, that the defendant admitted that the goods he had supplied were wrong.

8. The third witness for the plaintiff to give evidence about the meetings was Mr. Barnett, the fourth P.W., and about them he said this:-

"

P.W.2 and I visited defendant's factory in the beginning of December 1968 to try and get the claim from London settled. I spoke through David CHAN as an interpreter. Defendant asked to be given more details about the claim. Not very much was accomplished. Defendant did not consider the details in Ex.P4 sufficient. About a week later we called on defendant again and brought the Debit Notes and showed the details to defendant. After a long discussion, defendant said he would like to pay this claim against future shipments as he did not have such a lot of money. He did not dispute the amount in Ex.P4, only saying that the amount was such a large amount. The defendant did not dispute our statements in Ex.P4 that the goods were faulty. Defendant said he would only want wool from us in the future as he was not used to acrylic yarn so that was probably the reason of the faults complained of. He did not contest our complaints in Ex.P4. Defendant wanted even more details during the second visit. We agreed. He wanted to know how we arrived at this figure. We worked out the accounts. On 27th December 1968 defendant came to us. P.W.1, P.W.2 and I and defendant were present. P.W.2 acted as interpreter. On 27th December 1968 we went through the details of the claim. The defendant then said he would like to pay the claim off against future shipments. The claim had by then been reduced to £1,400. - odd. We did not agree. After a long time, defendant agreed to pay 2/5th in cash, 3/5th against future orders. It took about 3 1/2 hours for us to reach an agreement. The amount was not disputed, nor that the quality of goods were faulty. The question of faults were not mentioned at all at that meeting. We were to receive a cheque from defendant on 2nd January 1969. On 2nd January 1969 David CHAN and I went to see defendant and asked for a cheque. Defendant said he was in the middle of changing his bank and showed P.W.2 some documents. We didn't get a cheque or cash from defendant".

9. The defendant in evidence said that 95% of the goods had been inspected by himself and his wife, and in Cross-Examination he said that he inspected 95% of his goods.

10. In the leading case of Wiedemann v. Walpole⁽¹⁾ Lord Esher M.R. said:-

"

Now there are cases - business and mercantile cases - in which the Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. So, where merchants are in dispute one with the other in the course of carrying on some business negotiations, and one writes to the other, "but you promised me that you would do this or that," if the other does not answer the letter, but proceeds with the negotiations, he must be taken to admit the truth of the statement."

In the same case Kay, L.J. said:-

"I decline to lay down any general rule on this matter. There are certain letters written on business matters, and received by one of the parties to the litigation before the Court, the not answering of which has been taken as very strong evidence that the person receiving the letter admitted the truth of what was stated in it. In some cases that is the only possible conclusion which could be drawn, as where a man states, 'I employed you to do this or that business upon such and such terms,' and the person who receives the letter does not deny the statement and undertakes the business. The only fair way of stating the rule of law is that in every case you must look at all the circumstances under which the letter was written, and you must determine for yourself whether the circumstances are such that the refusal to reply alone amounts to an admission."

11. It seems to me to be reasonable to think that a businessman receiving the letter Ex.P4, setting out the alleged defects, would reply denying or querying the alleged defects, if he did not admit them, or at least do so verbally, but the evidence is to the effect that he at no time did so, at least up to the 2nd January, 1969, and not only this, the evidence goes further, namely to the effect that he stated that he wished to pay the claim and entered into discussions as to how he was to pay it. The defendant did not even reply to the plaintiff's letter to him of the 2nd January, 1969, Ex.P5, delivered to him by Mr. Chan and Mr. Barnett at the meeting on that date, stating what had been agreed at the meeting on the 27th December, 1968.

12. In my view, on the evidence it was clearly open to the trial judge to find that the defendant by his conduct had admitted the defects in the goods alleged by the plaintiff, and as set out in their letter to him of the 7th November, 1968; and, on his own admission in evidence of inspecting 95% of his goods, even if in that figure there is some exaggeration, there is evidence that he had knowledge of the condition of the goods; further, according to the evidence, at the meeting about a week after the meeting at the beginning of December, 1968, Mr. Chan and Mr. Barnett called on defendant and showed him debit notes giving the details of the claim set out in the plaintiff's letter, Ex.P4, the defendant not disputing that the goods were faulty as alleged in Ex.P4, and at the meeting at the plaintiff's office between Mr. Barnett and Mr. Chan of the plaintiff company and the defendant on the 27th December, 1968, there was a lengthy discussion lasting some 3 1/2 hours at which Mr. Barnett and Mr. Chan went through the details of the claim with the defendant, the amount being £1,435-6-4, and the defendant said he would like to pay the claim, the amount of which was not disputed, nor was it disputed that the quality of the goods was faulty; with his knowledge the defendant did not seek to dispute the claim, and it may be said that by necessary implication he acknowledged that the goods were defective as indicated by the plaintiffs.

13. I would dismiss this appeal with costs for the plaintiff.

-2 OCT 1969

	(A.D. Scholes)
	Puisne Judge

(1) 1891, 2 Q.B. 534 at 537 to 538 and at 541.

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO. 13 OF 1969

(On appeal from K.C.J. Action No. 905 of 1969)

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BETWEEN
	JACOBSON VAN DEN BERG (HONG KONG) LTD.	Plaintiff (Respondent)
	AND
	LEE YUEN WING also known as LEE CHI MING trading as KOWLOON KNITTING FACTORY	Defendant (Appellant)

Coram: Scholes, J. and Blair-Kerr, J.

Date of Judgment: 2 October 1969

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JUDGMENT

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Blair-Kerr, J.:

14. I agree that this appeal should be dismissed. This is not merely a case of a businessman receiving a letter which he chooses to ignore. We have to look at the evidence as a whole, including the various meetings with the defendant. There was ample evidence upon which it was open to the judge to find that the defendant accepted the fact that the goods manufactured and sold by him to the plaintiff were not up to contract. The whole of the negotiations were concerned largely with the manner in which the defendant should discharge his obligations.