Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Gilman & Co Ltd v Yau Shun Printing Press (A Firm)

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date06 May 1978
Year1978
Judgement NumberDCCJ4040/1977
Subject MatterCivil Action
CourtDistrict Court (Hong Kong)
DCCJ004040/1977 GILMAN & CO LTD v. YAU SHUN PRINTING PRESS (A FIRM)

DCCJ004040/1977

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

ACTION NO. 4040 OF 1977

-----------------

BETWEEN
Gilman & Company, Limited Plaintiff
and
Yau Shun Printing Press (a firm) Defendant

-----------------

Coram: A.L. Leathlean, D.J.

Date of Judgment: 6th May, 1978.

-----------------

JUDGMENT

-----------------

1. In this action the plaintiff company sues upon what it pleads as an agreement for hire. The defendant firm, in its defence, refers to the agreement as a letting. However, Mr. Patrick Chan, a sales representative in the employ of the plaintiff company, describes the transaction as a sale, and Mr. Hung, an erstwhile partner in the defendant firm, says that he would not have bought the machine but for certain representations which he would have it were made to him by Mr. Chan, of which more hereafter. It transpires that the defendant firm contends that the agreement was one of hire-purchase.

2. At this juncture it is convenient to set out the written agreement Exhibit P.2 in extenso. It reads as follows:

" THIS AGREEMENT is made the 4th day of October, One thousand nine hundred and seventy six BETWEEN GILMAN OFFICE MACHINES having its offices at 41st Floor Connaught Centre, Connaught Road, Hong Kong (herein-after called "GILMANS") of the one part and the person described as the lessee in the Schedule (hereinafter called "the LESSEE") of the other part.
1. The Lessee shall punctually pay Gilmans during the Period mentioned below the Payments at the times and in the manner stated at Gilmans' offices or at such other place as Gilmans may specify. This Lease shall be treated as repudiated by Gilmans at their sole option if any Payment is outstanding for more than 14 days after becoming due and overdue payments shall bear interest of 1¼% per month until paid.
2. The Lessee will
(1) keep the copying machine in good and serviceable repair and condition (fair wear and tear expected) and ensure that it is serviced regularly by Gilmans at intervals to be specified by Gilmans.
(2) keep the copying machine at all times in his possession and control and not remove the same from the Colony.
(3) promptly notify Gilmans of any change in his address and in the place where the copying machine is kept.
(4) indemnify Gilmans against loss of or damage to the copying machine or any part thereof from whatever cause arising and whether resulting from his negligence or not.
(5) indemnify Gilmans against all claims and demands made on it by reason of loss, injury or damage suffered by any person from the presence of the copying machine or the use thereof.
(6) if in default hereunder pay to Gilmans all expenses including legal costs on an indemnity basis incurred by Gilmans or on its behalf in connection with finding, taking possession of, preserving and storing the copying machine and of any legal proceedings to enforce this Agreement.
(7) at all times during this Agreement, use only Ricoh, toners and developers supplied by Gilmans.
3. If the Lessee shall be in default hereunder Gilmans may without prejudice to any pre-existing liability of the Lessee by notice in writing forthwith determine this Agreement and thereafter the Lessee shall no longer be in possession of the copying machine with Gilmans consent. Subject as hereinafter provided and to any pre-existing liabilities neither party shall then have any rights against the other.
4. This Agreement shall terminate automatically but without prejudice to any pre-existing liabilities and subject as hereinafter provided if the Lessee being a company enters into liquidation or being an individual commits any act of bankruptcy or if any distress or execution is levied or threatened against the copying machine or any of the Lessee's property or if any judgment against the Lessee remains unsatisfied for more than 14 days.
5. If this Agreement terminates under the provisions of Clauses 3 or 4 and Gilmans suffers loss as a result Gilmans shall be entitled to recover such loss from the Lessee.
6. In the event that this Agreement is terminated by Gilmans in accordance with the terms hereof Gilmans may without notice retake possession of the copying machine and for that purpose may enter upon any land or buildings where the copying machine is or is believed to be and remove and copying machine therefrom, the Lessee being responsible for any damage caused.
AS WITNESS, etc."

3. Clearly, in my judgment, it is, ex facie, an agreement for hire. However, in accordance with a well-settled exception to the general rule, I admitted extrinsic evidence to prove the true nature of the agreement (vide Chitty on Contracts, 23rd (1968) edition, Volume I, paragraph 655). Such evidence consisted entirely of that given by Mr. Chan, and was as follows:

(Examined)
" I told Mr. Hung that the price of the machine was $18,000.
(examined by court)
Q. If I walk into your office and ask to buy one of these machines for cash what will it cost me?
A. $16,200.
(examined)
Mr. Hung could not afford to pay a lump sum and therefore had to pay by instalments.
Q. Did you tell him that the machine would be his when he had paid all the instalments?
A. I told him that the company would send him a letter telling him that the machine would be given to him when he had paid all the instalments in full. I told him so before he signed the contract exhibit P.2. I do not know when the letter would be sent. I do know that sometimes it is sent before and sometimes after all the instalments are paid. I did not explain exhibit P.2 to Mr. Hung in detail. I told him that under it he had to pay 36 monthly instalments of $500 each and that when those instalments had been paid in full the plaintiff would let him have the machine - that the machine would be given to him -
(examined by court)
would become his property.
(examined)
I also told him that the machine remained the property of the plaintiff unless and until each and every instalment was paid.
(examined by court)
I have been a sales representative continuously for 6 years to date. I began working for the plaintiff company in September, 1975. When I did so only my supervisors Messrs. Philip Chan and Andrew Ng briefed me as to how I was to go about my business. I can read the agreement exhibit P.2. I have read it. I did so for the first time in December, 1975, and concluded that it was a lease or a hiring. I know perfectly well that if a chattel is leased or hired it reverts to the lessor or hirer at the end of the agreed period. I told Mr. Hung that the machine would become his property if and when he duly paid all instalments on the authority of Mr. Philip Chan. He told me to tell customers that machines would be given to them if and when they duly paid all instalments. It did occur to me to enquire of Mr. Chan why the written agreements did not provide for this and he said that it was a lease. He said it was the policy of the company. He did not say why.
...........................................................
I agree that the effect of exhibit P.2 together with what I told Mr. Hung about the property in the machine passing to him if and when he duly paid all 36 instalments was a sale on hire-purchase. I agree that was what was in my mind and Mr. Hung's at the time that exhibit P.2 was executed."
...........................................................

4. Upon that evidence it will, I trust, come as a surprise to no one if I hold, as I do hold, that the agreement between the parties was one of hire-purchase. Why the plaintiff company, which is both long-established and prominent, should have chosen to conduct this affair in (to put it neutrally) so exceedingly unbusinesslike a manner instead of by means of a proper self-contained hire-purchase agreement in writing must remain an open question. Perforce, I content myself with the observation that the manner in which, upon the evidence, it did choose to conduct this transaction (and, apparently, other similar transactions), does not commend itself to me one whit.

5. There being as yet no hire-purchase legislation in Hong Kong the law applicable to contracts of hire-purchase here is the common law of England. According to Benjamin's Sale of Goods, 1st (1974) edition, paragraph 46:

"At common law, a hire-purchase agreement may be defined as a contract for the hiring of goods under which there is conferred on the hirer an option to buy the goods. The salient features of such an agreement are : first, that during the currency of the agreement, the property in the goods remains in the owner, while the hirer is a mere bailee having no power to dispose of them; and, secondly, that the hirer has an option to buy the goods but not a binding obligation to do so. In practice, hire-purchase is a device used in order to give possession and the use of goods to an intending buyer over a period during which he pays the price, with interest, by instalments while the seller retains the title to the goods as security for the unpaid balance of the price."

As I say, in my judgment, the agreement in the instant case was just such an agreement.

6. According to Chitty, op. cit., volume II, paragraph 824:

"When a hire-purchase agreement is...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT