DCCJ No. 2713/2005
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 2713 OF 2005
||ACTEX TEXTILES LIMITED
||THIRD MILLENNIUM ASIA LIMITED
Coram : HH Judge Lok in Court
Date of hearing : 26, 27 & 28 November 2007
Date of handing down of Judgment : 4 February 2008
1. The Plaintiff’s claim is for the sum of $72,051.47, being the price of non-delivered goods that were ordered and paid for pursuant to a sale of goods and service agreement concluded between the parties in or around April 2004. In the counterclaim herein, the Defendant claims against the Plaintiff for service fee in the total sum of $117,680.59.
Background of the case
2. In February 2004, Mr. Chiu Ka Lun (“Mr. Chiu”), who was one of the directors of the Plaintiff, bought a property known as Penthouse, Block 1, No. 1 Po Shan Road, Hong Kong as his new home (“the New Home”). For his enjoyment, Mr. Chiu wanted to install a luxurious high-tech audio-visual system at the New Home. Through the introduction of his nephew, Mr. Michael Wong who was a fan in hi-fi appliances, Mr. Chiu came to know Mr. Anthony Nam (“Mr. Nam”) of the Defendant. The Defendant was in the business of helping its clients to design and set up high-tech audio-visual systems, and Mr. Chiu therefore sought the assistance of Mr. Nam to design and set up the audio-visual system at the New Home (“the AV System”).
3. The Defendant itself was an authorized dealer of certain high-end audio-visual equipments in Hong Kong. To set up the AV System at the New Home, the Defendant recommended Mr. Chiu to purchase from it various audio equipments, and Mr. Chiu agreed.
4. One of the requirements of Mr. Chiu was that all the audio-visual equipments in different parts of the New Home could be controlled from one single location through remote control devices. As the Defendant did not supply such kind of equipments, Mr. Nam recommended Mr. Chiu to install a particular high-tech remote-control system known as the “AMX Control System”. Mr. Chiu also agreed. Mr. Nam therefore introduced Mr. Chiu to one Mr. Stephen Shi (“Mr. Shi”) who was responsible for the AMX Control System. Mr. Chiu did not by then know the relationship between Mr. Shi and the Defendant, but it was later revealed that Mr. Shi was working for a company known as PAV Technology Limited (“PAV”) which was the supplier of the AMX Control System in Hong Kong.
5. For the services provided by the Defendant, Mr. Nam proposed that Mr. Chiu would have to pay a 10% service fee to the Defendant. However, there is serious dispute between the parties about the discussion leading up to the agreement for the payment of the service fee. Firstly, the Plaintiff alleges that such fee was to be calculated by reference to 10% of the total costs of the equipments supplied by the Defendant only, and not to cover those equipments sourced by the Defendant and supplied by other suppliers. On the other hand, the Defendant claims that the service fee should be calculated based on the total costs of all the components and equipments supplied, sourced and recommended by the Defendant. Secondly, there is dispute as to when the 10% service fee became due and payable. In any event, the existence of such agreement is not in issue.
6. Upon the advice of Mr. Nam, Mr. Chiu purchased from the Defendant various audio equipments and appliances, including the ADA Home and Theater Receiver (“the Receiver”) and the ADA All Weather Outdoor Control Device (“the Outdoor Control”). In the period from May to August 2004, the Defendant issued 4 invoices to Mr. Chiu or the Plaintiff for the items ordered by Mr. Chiu, and the Plaintiff paid those invoices, which amounted to $287,100.07, without much delay.
7. The evidence also shows that PAV issued separate quotations and invoices to Mr. Chiu for the purchase of the various components of the AMX Control System. The contract sum of the whole AMX Control System was agreed at $382,872, and the Plaintiff paid the invoices of PAV again without much delay.
8. It is common ground that Mr. Chiu was quite generous about the budget for the installation of the AV System, and there had not been much negotiation on the prices of the various components and equipments of the system.
9. It is also not in dispute that the Defendant would provide consultancy services for the installation of the AV System. Hence, after the decoration of the New Home had started, Mr. Nam went there on a number of occasions to liaise with the decoration contractor about the installation of the AV System. The decoration work was scheduled to be completed near the end of 2004. However as there was delay in the decoration work, Mr. Chiu requested the Defendant to defer delivery of the Defendant’s products to the New Home.
10. As to the various television sets for the New Home, Mr. Nam recommended Mr. Chiu to buy the models distributed by the Defendant. However as the prices were too high, Mr. Chiu asked Mr. Nam to recommend models from other suppliers. Mr. Nam therefore introduced Mr. Chiu to one Meide Wholesale Company (“Meide”), and Mr. Chiu eventually purchased various television sets from Meide in the total sum of $269,000.
11. Back in August 2004, the Defendant issued the first invoice to the Plaintiff which included a claim for the payment of service fee. By that time, only a sum of $28,110 was claimed which covered 10% of the costs of the equipments supplied by the Defendant at that stage. However, Mr. Chiu did not then pay for the service fee, taking the view that such fee was only due for payment when the Defendant completed the services under the consultancy agreement and the whole AV System was set up and functional. Later, Mr. Chiu also disputed the basis for the calculation of the service fee.
12. There were also other disputes between the parties when Mr. Shi commenced the installation work of the AV System near the completion of the decoration work. Despite various attempts to set up the AV System, the system still did not work. Later, it was found out that the problem was caused by the lack of a control device which acted as an interface between the AMX Control System and the audio equipments supplied by the Defendant (“the...