Ricoh Hong Kong Ltd v. Wallbanck Brothers Securities (Hong Kong) Ltd
Read the full judgment text of DCCJ 2454/2013 on BabelCite. This District Court judgment was delivered on 25 June 2015.
1. This is a dispute over some outstanding charges on two photocopying machines.
Cited by 1 case · Cites 12 cases
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DCCJ2454/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 2454 OF 2013 --------------------
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--------------------- JUDGMENT ---------------------- 1.This is a dispute over some outstanding charges on two photocopying machines. BACKGROUND 2.The plaintiff is a company which provides photocopying equipment and its related services under the “RICOH” brand in Hong Kong. 3.The defendant is a company involves in securities trading and related financial services. Its director and chief executive officer Mr Chan Kin Fung, Phil (“Mr Chan”) is also a practising solicitor. The defendant is not legally represented in these proceedings although Mr Chan has all along acted on behalf of the defendant in his capacity as the director and CEO of the company. 4.By an Easy Printing Service Agreement No: W6002803 dated 23 April 2008 (“the 1st Agreement”), the plaintiff agreed to supply the defendant one photocopying machine as particularized in the table below (“the 1st Machine”) with a minimum period of 60 months at a monthly charge of HK$606 (inclusive of 4,000 free black & white page volume per billing period) commencing from 23 April 2008:-
5.The defendant will be charged HK$0.08 per excess black & white page during any billing period under the 1st Agreement. 6.By an Easy Printing Service Agreement No: W6007071 dated 2 October 2009 (“the 2nd Agreement”), the plaintiff agreed to supply the defendant one photocopying machine as particularized in the table below (“the 2nd Machine”) with a minimum period of 60 months at a monthly charge of HK$800 (inclusive of 30 free colour page and 5,000 free black & white page volume per billing period) commencing from 2 October 2009:-
7.The defendant will be charged HK$0.9 for any excess colour page and HK$0.084 for any excess black & white page during any billing period under the 2nd Agreement. 8.The 1st and 2nd Agreements contain a number of express terms which are relevant to the current dispute. They are pleaded in §7 of the statement of claim and can also be found in the Agreements. 9.In essence, the plaintiff says that the defendant was in breach of the Agreements by failing to pay the invoiced sums and return the Machines to the plaintiff. 10.The defendant on the other hand says that the plaintiff had been in breach of the various implied duties and/or implied terms of the Agreements and committed acts of fraud, deception, fraudulent misrepresentations and making false statements which would entitle it to terminate the Agreements and hence not making the payments. 11.Thus, the issues I am asked to decide are:-
DISCUSSION The plaintiff’s case 12.The plaintiff in the statement of claim pleaded that the Agreements were one of rental nature whereby the plaintiff agreed to rent to the defendant and the defendant agreed to rent from the plaintiff the Machines at a minimum rental period of 60 months at the aforementioned agreed monthly rental. 13.Whatever label the plaintiff has placed on the Agreements, the plaintiff’s case is simply that the defendant has failed to pay the invoiced sums according to the terms of the Agreements. 14.The plaintiff claims that by various subsequent agreements and/or notices, the monthly charge of the 1st Machine was increased to HK$636.40 with effective from 23 April 2009 and it was further increased to HK$662.00 with effective from 23 April 2010. For the 2nd Machine, the monthly charge was increased to HK$832.20 with effect from 2 October 2010. 15.For the period of April 2011 to March 2013, the plaintiff invoiced the defendant a total sum of HK$22,311.50, being the outstanding payment owed under the 1st Agreement. As the 1st Agreement had expired on 22 April 2013, no further monthly charge was added to the invoiced sum after that date. 16.For the period of April 2011 to June 2013, the plaintiff invoiced the defendant a total sum of HK$22,115.10, being the outstanding payment owed under the 2nd Agreement. 17.Despite repeated requests and demands for payment, the plaintiff claims that the defendant has wrongfully failed and/or refused to settle the said sum of HK$44,426.60 (ie HK$22,311.50 + HK$22,115.10). 18.The plaintiff says that, by failing to pay the outstanding sum, the defendant has evinced an intention no longer to be bound by the 2nd Agreement and has thereby repudiated the same. The plaintiff therefore by issuing the writ in this action has accepted the repudiation of the 2nd Agreement. Thus, the plaintiff considers that the 2nd Agreement has been terminated on the date when the writ was issued. 19.Pursuant to Clause 10.1, the plaintiff claims that the defendant is liable to the plaintiff for the total amount of HK$31,393.54 under the 1st Agreement, being the outstanding payment of $22,311.50 and the interest of HK$9,082.04 (calculated up to 3 July 2013). 20.Further, the interest calculated according to clause 10.1 of the 2nd Agreement amounted to $6,860.96 (up to 3 July 2013), thus making the total sum claimed under the 2nd Agreement at $28,976.06 ($22,115.10 + $6,860.96). 21.As the 2nd Agreement contains the express term that the minimum period of the contract was one of 60 months, the plaintiff says that the defendant is liable to the remaining 14 months of payment under the 2nd Agreement in the sum of HK$11,650.80 (ie HK$832.2 x 14 months). 22.Under such circumstances, the plaintiff says that the defendant is liable to the plaintiff for a sum of HK$72,020.40 under the 1st and 2nd Agreements, being the sum total of HK$31,393.54, HK$28,976.06 and HK$11,650.80. 23.The plaintiff also claims that pursuant to Clause 2.1, the 1st and 2nd Machines will always remain the plaintiff’s property or the property of any assignee or transferee of the plaintiff. 24.By serving the writ, the plaintiff claims that it constitutes to a notice of termination and the defendant must immediately return the 1st and 2nd Machines to the plaintiff pursuant to Clause 17.3 of the Agreements. 25.The plaintiff hence seeks for an order against the defendant for the repossession of the 1st and 2nd Machines and/or return of the 1st and 2nd Machines from the defendant. The defendant’s case 26.The defendant claims that there had been breaches of the implied duties of care owed by the plaintiff. They included (i) the implied duty of care of not to deceive the customer; and (ii) the implied duty of care to exercise reasonable skill and care during the service of the defendant. 27.The defendant also claims the plaintiff had committed acts of fraud, deception, fraudulent misrepresentation, making false statements and/or omissions. 28.The alleged fraud, deception and/or fraudulent misrepresentation, etc. include the claims that (i) the plaintiff had made false statements with the express intention to deceive the court concerning the express termination of the Agreements by the defendant; (ii) the continuous deception and/or fraudulent misrepresentation made by the plaintiff concerning the follow-up, investigating and handling of the complaints for over 2 years since August 2010; (iii) misrepresentation made by the plaintiff concerning the hire and purchase nature of the 2nd Agreement made in 2009; (iv) express intention to incur further costs, expenses, loss and damages of the defendant by continuing charging the defendant service charges; and (v) deliberate failure to comply with the specific discovery orders of the Small Claims Tribunal (“SCT”) to disclose full record of the relevant client’s folders and documents. 29.The defendant also alleges that an abuse of process had been committed by the plaintiff by issuing proceedings in the District Court and the failure to mitigate the loss and damages allegedly suffered by the plaintiff in the case. 30.Based on the above, the defendant says that it is entitled not to pay the plaintiff the outstanding invoiced sums and interest. Determination of Issues Issue (1): Was the defendant in breach of the 1st and 2nd Agreements? 31.Under this issue, there are two sub-issues which the court has to resolve. First, whether the Agreements were of a rental, hire purchase or service nature. Second, by failing and/or refusing to pay the invoiced sums, was the defendant in breach of the terms of the Agreements. (a) Was it a rental or hire purchase or service agreement? 32.In §§3 and 5 of the statement of claim, it has been pleaded that the plaintiff agreed to rent to the defendant and the defendant agreed to rent from the plaintiff the 2 Machines for the minimum rental period of 60 months and at a monthly rental sum specified under the respective Agreements. 33.In the defence, the defendant has admitted to §§3 & 5 of the statement of claim, ie that the Agreements were of rental nature. The defendant however at the same time avers that the Agreements contained a “hire and purchase clause” whereby the defendant is entitled to purchase the Machine(s) at a cost of HK$200 “provided that it has duly observed and performed all terms and conditions of the (Agreements) and agreed to enter a service agreement with the plaintiff for maintenance and copy charge of the (Machines).” 34.A last minute attempt on the part of the defendant to try to withdraw the admissions on the first day of the trial was rejected by the court on the grounds of lateness and the lack of any satisfactory explanation as to why such amendments could not be made earlier. Further, it was rejected because it involved with the withdrawal of an admission which would not normally be allowed if the application is not made in good faith: see §20/8/17 of the Hong Kong Civil Procedure 2015 and Burlington Air Express Ltd v Nvovo Collection Ltd (unrep., DCCJ 8865 of 2001; 15 August 2002). 35.Similarly, a last minute attempt on the part of the plaintiff to try to amend the statement of claim to change the “rental” nature of the Agreements to one of “providing printing services and the use of the photocopying machine” was also rejected by the court for the reasons of lateness and lack of reasonable explanation. 36.In the normal course of event, the effect of the defendant’s admission to the facts pleaded in the statement of claim is that there will no longer be any issue between the parties on that part of the case which is concerned with those matters of fact and therefore no evidence is admissible in reference to those facts: Pioneer Plastic Containers Ltd v Commissioners of Customs and Excise [1967] Ch 597. Thus, by making admissions to §§3 & 5 of the statement of claim, the defendant agrees to the plaintiff’s plea that the Agreements were of a rental nature (despite of the fact that at the same time it avers that the Agreements contained a “hire and purchase” clause). 37.It is trite that the purpose of pleadings in a civil case is to define the issues and thereby to inform the parties in advance of the case they have to meet, enabling them to take steps to deal with it: See §18/8/3 of the Hong Kong Civil Procedure 2105. Where a version of events as pleaded or advanced by a party was found not to be true or accurate and another version was held to be true, it is still open to the court to make such finding provided the court must be satisfied that the other party was fully aware of the case it has to meet and had been given a full opportunity to deal with them. It has been held that, in the absence of exceptional circumstances, no person who has concluded a contact can be said to have been taken by surprise by the terms he has agreed. This is so regardless of whether the other party has precisely pleaded those terms: see Mak Kang Hoi v Ho Yuk Wah David (2007) 10 HKCRAR 552, at §§ 96-107. 38.In this case, I do not consider the Agreements were either one of rental or hire purchase nature. Rather, as the title of the Agreements itself suggests, they are printing service agreements whereby the plaintiff agreed to provide printing service, which included the supply of the two photocopying machines and its affiliated service like maintenance and provision of toners during the periods as specified. I shall make such finding accordingly. 39.As all the relevant terms of the contract can be found in the Agreements and have been pleaded by the plaintiff in the statement of claim, there is in my judgment no question of the defendant having been taken by surprise by this. Further, I consider that the title of the Agreements has accurately described the nature of the contracts, namely they are service agreements rather than rental agreements. Thus, I am of the view that the parties were wrong to describe or admit them as rental agreements. (b) Was the defendant in breach of the agreements by failing and/or refused to pay the invoiced sums? 40.The court’s approach in making finding of facts and assessment of credibility has been succinctly summarised in the recent case of Hui Cheung Fai v Daiwa Development Ltd (unreported) HCA 1734/2009; 8 April 2014 by Deputy High Court Judge Eugene Fung SC where he stated the following:-
41.I shall respectfully adopt the above approach in making the finding of fact and assessing the credibility of witnesses in this case. 42.The plaintiff has called one witness to give evidence at the trial, namely Mr Lee Ka Lun (“Mr Lee”) who was the credit control supervisor of the company. 43.Mr Lee in his evidence told the court that the defendant had entered into the two Agreements with the plaintiff respectively in April 2008 and October 2009. Under the Agreements, the defendant agreed to purchase service from the plaintiff according to the terms of the Agreements. From his perspective, the monthly payment charged by the plaintiff can be regarded as monthly rental or monthly service charge. To him, it was just a label. 44.After signing the Agreements, the plaintiff supplied the Machines to the defendant and provided maintenance and other related service like the supply of toners as agreed. The plaintiff also issued monthly invoices to the defendant pursuant to the terms of the Agreements, including charges for any excessive use. The defendant paid the monthly invoiced sums until sometime in March 2011. In fact, according to the plaintiff’s records, maintenance and toner services were provided to the defendant up to 18 March 2011. 45.I accept Mr Lee’s evidence that since April 2011 the defendant has failed to settle the invoices. This is supported by the indisputable evidence in the form of invoices issued by the plaintiff to the defendant. Hence, the sum owed by the defendant to the plaintiff, including interest calculated at 2.5% per month pursuant to clause 10.1, was at $60,369.61. 46.I further accept Mr Lee’s evidence that the defendant has failed to pay the remaining 14 months of the monthly payment under the 2nd Agreement in the sum of $11,650.80, making the total outstanding sum at $72,020.40. Again, this is supported by the indisputable documents. 47.As far as the increased monthly rates charged by the plaintiff is concerned, according to the records produced by the plaintiff, the defendant had previously paid the increased rates before stopping to make any further payments in April 2011. Thus, in my view, there is no doubt that the defendant had been informed or notified of the newly charged rates and agreed to pay according to the new rates. 48.One very important matter which I have noticed in this case is that, even after the purported termination of the Agreements by the defendant in March 2011 and after it had stopped making monthly payments, the defendant continued to make use of the Machines. This can be seen in the monthly meter reading of the Machines shown in their respective invoices. For example, for the 1st Machine, there was a usage of 680 copies for the month of March/April 2011[1], 31,729 copies for the month of April/May 2011[2]; 17,937 copies for the month of June/July 2011[3]; 24,317 copies for the month of July/August 2011[4], etc. The usage continued until January 2012 when 13,936 copies were made for the period ending 22 January 2012. There was no reported usage during the period from March 2012 to end of February 2013[5]. Thus, in total, 134,556 (387,559 – 253,003) copies were made on the 1st Machine during the period between 23 March 2011 and 22 January 2012[6]. In other words, an average of around 4,950 pages per month was printed on the 1st Machine during this period. I note in particular that all these very high volume usage was made while the defendant was disputing its liability to pay and when it had already purportedly terminated the Agreements. 49.For the 2nd Machine supplied under the 2nd Agreement, the situation is similar in that there was continuous use of the Machine while the defendant refused to pay for the monthly payments. Similar to the 1st Machine, the defendant stopped using the 2nd Machine from around January 2012 onwards[7]. Nonetheless, from a reading of 39,302[8] on 2 April 2011, it ended with a reading of 68,512 for the period ending 1 January 2012 for black and white pages[9]. In other words, during this period, the defendant used up 29,210 (68,512 – 39,302) black and white copies without paying for them. During the same period, a total of 4,489 colour copies were made by the defendant on the 2nd Machine according to the records[10]. Again, the defendant had not paid for them. 50.The above usages are not disputed by the defendant as it has not called any evidence to refute the claim at the trial. In fact, I cannot see how the defendant could refute such claim in view of the very clear documentary evidence produced by the plaintiff. Seen in such light, I regard any complaints made by the defendant from March 2011 onwards sounds rather hollow as it was hypocritical for it to say on one hand that it was entitled to repudiate the Agreements due to the various breaches and misconducts on the part of the plaintiff while on the other hand made full use of the Machines without paying for them. More importantly, it casts serious doubts on the veracity and integrity of the defendant’s defence. 51.Based on the above, I have little difficulty to find that the defendant was in breach of the Agreements by refusing to pay for the invoiced sums. I further find that the plaintiff is entitled to the interest charged in accordance with the terms of the Agreements. Thus, subject to any defence to be successfully put up by the defendant, I find the plaintiff is entitled to judgment in the sum of $72,020.40 as claimed under the statement of claim. Issue (2): whether the plaintiff is liable for fraud, deception, fraudulent misrepresentation and/or breach of the implied duties of the Agreements 52.In considering the defendant’s defence, first and foremost, it is important to note here that despite the very serious allegations made by the defendant against the plaintiff, the defendant had chosen not to call any witness to testify at the trial. This is despite the very elaborate witness statement of Mr Chan filed by the defendant for the purpose of the trial and the lengthy cross-examination conducted by Mr Chan on the plaintiff’s witness when the positive case of fraud, deception and fraudulent misrepresentation, etc. was put to the witness. Thus, we now face with a situation where not only the defendant’s claims are not supported by any viva voce evidence, they have not been subjected to any scrutiny by way of cross-examination from the plaintiff. 53.In Ng Choi Sang v Chu Yu Tim [2009] 4 HKLRD 747, Recorder Kenneth Kwok SC at pp 757-758 stated the following:-
54.In view of the very serious allegations made against the plaintiff in the defence, it is difficult to understand the defendant’s decision in not calling any witness to testify in support of its case at the trial. But whether to call a witness to testify at a trial is within the prerogative of a party and it is not for the court to speculate the true reasons behind the decision. In this case, when the decision was made suddenly and unexpectedly on the fourth day of the trial after the close of the plaintiff’s case the day before, Mr Chan was asked repeatedly by the court if he understood the full implication of not calling any witness to testify in a civil case and whether he was sure about the decision. Mr Chan confirmed that he understood and would stick by the decision. Given the fact that Mr Chan is a qualified solicitor, the court has to believe that he knew what he was doing. 55.Following the principles laid down in the aforementioned authorities, I consider that adverse inferences could be more easily drawn against the defendant in this case and any inferences favourable to the plaintiff can be more confidently drawn as well. 56.Instead of going through each and every single allegation made by the defendant in the defence (of which there are many), I propose to discuss them under the following sub-issues:-
(i) Fraud, deception and/or fraudulent misrepresentation allegedly committed by the plaintiff 57.The defendant’s dissatisfaction with the plaintiff’s service seems to have stemmed from the fact that sometime after the 2nd Agreement was signed in October 2009, the defendant wished to have volume sharing of the two Machines at a reduced cost. It is apparent that the sales representative of the plaintiff had explained and advised the defendant the advantage of sharing the copy volume of the 2 Machines before the 2nd Agreement was signed by the parties. However, the proposal was rejected by the defendant at the time on the ground that the two Machines were located in different offices for different business nature: See complaint record kept by the plaintiff’s customer service department (“CS Complaint Record”) and letter from the plaintiff to the defendant dated 30 December 2010[11]. 58.According to the CS Complaint Record, Mr Adrian Cheng (also known as Cheng Ka Shing) (“Mr Cheng”), the former sales representative of the plaintiff, had explained to the defendant that it had to combine the 2 Agreements in order to enjoy the share copy volume of the Machines. However, this was rejected by the defendant on the ground that the Machines were located at different offices and for different business nature, ie investment firm vs solicitor firm. Further, according to the SC Complaint Record, in or around August 2010 (ie 10 months after the 2nd Agreement was signed), Mr Chan called the plaintiff and queried why there was no share copy volume under the 2 Agreements. The sales representative explained the reasons to Mr Chan again and submitted a new proposed agreement with a combined volume of use at a reduced cost. However, according to the record, the proposal was rejected by the defendant due to cost issue. Apparently, a copy of the draft agreement which had not been signed and chopped by the defendant was kept by the customer service department of the plaintiff on its file at the time, indicating that no agreement had been reached by the parties for a “combined” contract. 59.Also according to the CS Complaint Record, Mr Chan called Mr Patrick Sing, the sales manager of the plaintiff, on 17 December 2010 to ask why there was still no sharing in the copy volume eventhough, according to him, “the contract was signed few months ago.” When he realised that no contract had ever been signed by the parties, “he shouted and requested the contacts of Senior Management of RHK and RJ as he suspected it is a fraud case.[12]” 60.Given the contemporaneous nature of the record, I have no reason to doubt the accounts provided by the plaintiff (which were kept as internal records and not for the purpose of litigation) are truthful and accurate. On the other hand, in view of the fact that the defendant had chosen to keep silent by choosing not to provide a material witness to testify on such important matters, I shall draw adverse inferences against it and hold that none of those serious allegations of fraud, deception and fraudulent misrepresentation has any real substance at all. 61.From December 2010 onwards, a number of phone calls had been made by Mr Chan to the plaintiff’s office, first to the sales manager of the plaintiff, then to the receptionist and later to its customer service manager Ms Winnie Sum (“Ms Sum”). Some of those phone calls had been recorded by the plaintiff and the recording of two of the phone calls made by Mr Chan to Ms Sum was played in court when Mr Lee gave evidence. The conversation dated 30 January 2011 is of particular importance as it was at the beginning of the dispute and before the defendant had allegedly terminated the Agreements. 62.To say the tone used by Mr Chan during that conversation was abusive and demeaning perhaps is an understatement. Instead of speaking in a civilised manner, Mr Chan was heard literally shouting at Ms Sum on the telephone. However, what is more important is not the tone employed by Mr Chan but the contents of that conversation. In my view, the contents clearly show that the defendant, while at the very early stage of the dispute claimed that the plaintiff through its staff had committed acts of dishonesty, deception, fraud, misrepresentation, etc., was not really able to articulate what those acts were and the basis of making such serious allegations. 63.During that conversation, for example, Mr Chan insisted to use English as a medium of communication eventhough it is apparent that it is not his mother tongue. He had on no less than 7 or 8 occasions during that conversation told Ms Sum that she was not a lawyer and therefore somehow implying that she was not qualified to speak to him. Further, he threatened to bring in the police to arrest her at her office. At one stage, he even asked Ms Sum to bring her brain to work and at another stage asked her to shut up as she was wasting his time. Towards the end of the conversation, Mr Chan told Ms Sum to go to university to study for a law degree before she should talk to him. 64.To Ms Sum’s credit, she was able to stay calm and kept her composure in spite of the extremely provocative manner adopted by Mr Chan during the conversation. 65.In my view, what the telephone recording is able to demonstrate is that, like the allegations made in the defence, while there was a great deal of anger and frustration shown on the part of the defendant, there was not much substance in its complaints. 66.I shall proceed to consider the claims of fraud, deception and fraudulent misrepresentation in such light. Any fraud, deception or fraudulent misrepresentation in this case? 67.It is trite that fraud can only be pleaded when there is evidence and the party making the allegations must give full particulars of them: see for example Aktieselsjabet Dansk Skibsianasiering v Wheelock Marden & Co Ltd [1994] 2 HKC 264; §18/8/13 & 18/12/16 of the Hong Kong Civil Procedure 2015. 68.Where fraud is alleged, the plaintiff bears the burden of adducing cogent evidence to prove the allegation, as said by Muttrie DHCJ in China Everbright Finance Ltd v Chan Yung HCA 18300/1999 (24 October 2006) at §46:-
69.The principle of fraudulent misrepresentation is well-established. It is succinctly summarized by Recorder Edward Chan SC at §35 of Queenston LLC v Serlen Ltd HCA 7585/2000 (27 April 2001):-
70.Bearing the above principles in mind and particularly in view of the fact that the defendant has chosen not to call any witness at trial to support its case, I make the following findings in relation to the defendant’s defence:-
71.Both in the cross-examination of the plaintiff’s witness and in its closing submission, the defendant has heavily relied on the evidence of the plaintiff’s witnesses (in particular that of Mr Cheng) given at the SCT case, namely SCTC 11439/2011. In that case, the plaintiff sought to recover from the defendant the then outstanding photocopying charges from the defendant in the sum of $6,319 under the 1st and 2nd Agreements. 72.After hearing evidence from both sides, including evidence from Mr Chan and Mr Cheng, the deputy adjudicator rejected the defendant’s defence and found in favour of the claimant (who is the plaintiff in this case). In the learned deputy adjudicator’s reasons for decision, he found that the claimant’s case and the evidence of Mr Cheng more inherently probable than the defendant’s case and the evidence of Mr Chan. In other words, the SCT accepted Mr Cheng’s evidence and rejected Mr Chan’s evidence: see §§7 to 9 of Reasons for Decision of SCT dated 13 August 2012. Judgment in the sum claimed was entered against the defendant in the SCT case. 73.In light of the findings made by the deputy adjudicator, I cannot see how the defendant is now entitled to take the evidence of Mr Cheng given at the SCT hearing out of context and purportedly relies on the same as evidence of “fraud, deception and fraudulent misrepresentation” against the plaintiff in this case. In any event, the transcript at the SCT was never formally produced by the defendant at the trial and the same was never made subject of a hearsay notice. Thus, I cannot see how the defendant is entitled to rely on it. In the circumstances, I would reject the defendant’s reliance on those evidence. 74.In my judgment, there is absolutely no substance in the defendant’s claim based on fraud, deception or fraudulent misrepresentation and any defence based on those grounds must be dismissed. (ii) Implied duty of care not to deceive its own customers and implied duty of care owed by the plaintiff 75.In a contract for the supply of a service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill: see section 5 of the Supply of Services (Implied Terms) Ordinance, Cap 457. 76.However, in my judgment, the defendant has failed to establish by way of evidence how the defendant might have been in breach of such a duty. There is in my view simply no evidence to show that the plaintiff has failed to exercise reasonable care and skill in this case. 77.As to the defendant’s other allegations of breach of the implied duty of care not to “deceive the customer”; to act “honestly and diligently during the course of provision of the service to the defendant”; to “provide services in fast service response time”; to “follow up, investigation and handling of the complaints of services by the defendant in accordance with the complaint procedure of the defendant” and; to “provide and/or disclose the full information, documents and records of the client’s folder”, etc., I do not find such implied duties of care existed at all. 78.Further, if the defendant were to treat these as the implied terms of the Agreements, then as a matter of law, those claims must fail as well. 79.The test to determine whether there exists an implied term is that helpfully laid down by Sakhrani DHCJ in Ko Wang Ming v Hong Kong Forex Investment Ltd HCA 2320/2008 at §91:-
80.This is echoed by Lord Hoffman in Attorney-General of Belize v Belize Telecom Ltd [2009] 2 BCLC 148 at p156 at §27:-
81.There is scant doubt that the defendant’s plea comes nowhere near to fulfil the criteria of upholding an implied term in a case where all the terms of the Agreements can be found in the contract itself. 82.Even if there were such an implied duties of care as suggested by the defendant (other than the one provided by statute under s.5 of the Supply of Services (Implied Terms) Ordinance, Cap 457.), in my judgment, the defendant has failed to provide any evidence to show that the plaintiff were actually in breach of those duties. 83.Based on the above, I would reject the defendant’s defence under this head also. (iii) The defendant’s purported termination of the Agreements 84.The defendant claims that due to the fraud, deception and/or fraudulent misrepresentation of the plaintiff, it had effectively terminated the Agreements by notice in March 2011. However, the defendant has failed to establish by way of evidence why the purported termination notice issued by it in March 2011 (and the over 20 written monthly termination notices since that date) would amount to an effective termination under the Agreements. Obviously, if there is no substance in the defendant’s claim on its case of fraud, deception and fraudulent misrepresentation, etc. (as I have found above), then there was no basis for it to terminate the Agreements and any purported termination based on those grounds will not be effective. 85.I note that while there is no counterclaim made by the defendant in the present case, the defendant had in its correspondence with the plaintiff claimed that it was entitled to charge a “custodial fee” of $1,000 per day for each of the photocopier uncollected from defendant’s premises. The “custodial fee” was unilaterally increased to $2,000 per day for each photocopier from January 2012 onwards. Hence, the “custodial fee” owed by the plaintiff allegedly had accumulated up to a sum of $2,326,000 for the 2 Machines as of 3 November 2014. The defendant then unilaterally converted the “custodial fee” into a “personal loan” which it says 3 of the defendant’s staff or former staff, viz. Winnie Sum, Cheng Wai Kong and Aaron Yim had “borrowed” from the defendant and of which they are “fully, jointly, severally and personally” liable to pay. 86.Needless to say, the imposition of such so-called “custodial fee” has absolutely no legal basis and the subsequent act of unilaterally converting the “custodial fee” into a “personal loan” is in my view nothing but an oppressive way of trying to put pressure on the plaintiff and its staff to settle the matter with the defendant. This is particularly in view of the fact that the defendant was making use of the Machines during most of that time without paying for them. 87.Accordingly, I find there is no substance in the defendant’s defence that it had validly terminated the Agreements by its notice in March 2011. (iv) Any abuse of process by the plaintiff in issuing proceedings in the District Court 88.The defendant claims that by issuing the present claim in the District Court, the plaintiff is abusing the process of the court as it could institute a claim in the SCT at an earlier stage after the purported termination of the Agreements by the defendant when the amount claim would be under the jurisdiction at the SCT. 89.In my judgment, there is no substance in this submission. It is entirely proper for the plaintiff to issue proceedings in this court in July 2013 as the claim fell within the jurisdiction of this court by the time of issuing of the writ. The fact that the defendant had purportedly terminated the Agreements in March 2011 does not mean that the plaintiff was under an obligation to issue proceedings straightaway. It was entitled to wait until the expiry of the 1st Agreement or at such a time when it was satisfied that the defendant had repudiated the contracts and evinced an intention no longer bound by them. 90.In the aforestated premises, I have no hesitation to dismiss the various defence raised by the defendant in this case. CONCLUSION 91.In conclusion, for the aforestated reasons, I find that the plaintiff has successfully established its claim against the defendant and I shall order judgment be entered in the sum of $72,020.40 in its favour accordingly. 92.The plaintiff is also entitled to interest on the said sum of $72,020.40. I would order that the defendant to pay interest on the said sum of $72,020.40 from the date of issue of writ to date of judgment at prime + 1% and thereafter at judgment rate until full payment is made. 93.Costs will follow the event. There is no doubt that the defendant will have to bear the costs of the plaintiff in this action, the only question is on what basis. 94.Given the way the defendant has conducted the defence in this case, including the oppressive manner in which it has pursued its groundless and unsubstantiated defence, I am of the view that the defendant should be ordered to pay the costs of the plaintiff on an indemnity basis: see §62/App/12 of Hong Kong Civil Procedure 2015. In particular, I agree with the observation that where accusations of fraud had been levied against the plaintiff which ought not to have been made in the first place and when those accusations were not even supported by any evidence from the defendant, the court should express its disapproval by ordering costs on such basis: see Jeremy Paul Egerton Hobbins v Royal Skandia Life Insurance Ltd [2012] 1 HKLRD 977 at 1002, per Reyes J. I shall therefore make an order that the defendant to pay the plaintiff’s costs in this case on an indemnity basis, such costs to be taxed if not agreed, with certificate for one counsel. 95.I also order that the defendant to return the two Machines under the Agreements to the plaintiff within 14 days from the date of this judgment pursuant to clause 17.3 of the Agreements. Alternatively, the defendant is ordered to allow the plaintiff’s staff to enter its premises within 14 days from the date of this judgment for the purpose of re-possessing the two Machines under the Agreements.
Ms Angela Gwilt & Ms Grace Chau, instructed by Huen & Partners, for the plaintiff The defendant represented by Mr Chan Kin Fung, Phil, the director and CEO of the defendant [1] See [B1/9]. Note: the starting date of the monthly reading for the 1st Agreement being 23rd day of each month and ending 22nd day in the following month. [2] See [B1/10] [3] See [B1/11] [4] See [B1/12] [5] See [B1/17] for invoice dated 8/2/2012 [6] See [B1/9] and [B1/30] [7] See [B/40] [8] See [B1/32] [9] See [B1/40] [10] See [B1/31-56] from 1370 pages on 1.4.2011 to 5,859 pages on 1.5.2013 [11] [B1/68-72] in particular para 2 & 3 on [B1/70] and [B1/73] [12] See [B1/70] para 3 sub para 3 of CS Complaint Record | |||||||||||||||||||||||||||||||
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