Takashi Holding Ltd v Lo Chap Fai T/a Y&h Trading Co And Others

DCCJ 6317 & 6348/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6317 & 6348 OF 2006

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JUDGMENT

1. The Plaintiff is a trading company, whereas the 1^st Defendant is a shareholder and a director of the 2^nd and 3^rd Defendants respectively. Its claims against the Defendants are for losses and damages it suffered due to the wrongful acts of the Defendants.

2. In August 2005, the Plaintiff received a purchase order from a company in Singapore known as Rich Brothers Pty Limited (“the Rich Brothers”), ordering 4 containers of television sets. There was also another order from an Egyptian client placing an order of 1 container of television sets. Consequently on or about 5^th and 26^th August 2005 respectively it entered into 4 sales contracts with the 3^rd Defendant, as particularized under Paragraph 2 of the Amended Statement of Claim. The 1^st Defendant was named as the beneficiary under these 4 sales contracts, each of which contained an express term that the terms of delivery were FOB (free on board) Shenzhen.

3. By 21^st September 2005, the Plaintiff had paid the 1^st Defendant all the money due and owing under the first 3 contracts and 30% under the 4^th contract. On 23^rd September 2005, the Plaintiff received the original bill of lading for the 1^st contract. However, it never received the remaining 4 containers of goods to Madagascar and their original bills of lading. Hence it instituted the present action against the Defendants. The defence case is that because the Plaintiff owed a debt of US$25,000, a tri-parte meeting was held and an agreement was entered into between the Plaintiff, the Defendants and the Rich Brothers for the settlement of the matter. Hence it is not liable for the claims.

4. When the sale contracts were signed, the Plaintiff was required to pay 30% of the total sum of the sales contracts in advance as deposit before shipment. After payment of this 30%, in or around mid-September 2005, the 3^rd Defendant required the Plaintiff to pay the remaining 70% before shipment. On 21.9.2005, the Plaintiff paid this remaining 70% into the account of the 2^nd Defendant.

5. According to his witness statement, the 1^st Defendant gave an account of what allegedly happened around that time:-

“10. …… However, I was reported form the Shipping Department of HKC that the Plaintiff refused to give the forwarder the freight. As such, the forwarder could not provide the Plaintiff with the bills of lading. For such matter, 2 staff of the Plaintiff, Roger and Victor met with the forwarder in a street in Shenzhen. However, Roger and Victor in the meeting suddenly scrapped the bills of lading from the forwarder and ran away. After such incident, even though Roger and Victor returned the said bills of lading back to the forwarder who had called the police for help, the forwarder and HKC totally lost confidence on the Plaintiff. In order to escape from the risk of the Plaintiff, HKC asked the forwarder to change the parties in the said bills of Lading.

The Plaintiff’s evidence is that, it is the forwarder who seized the bills of lading from the Plaintiff. Mr. Rajsekar Swampypc (“Roger”), witness for the Plaintiff, said that on 11.10.2005, he went to the forwarder’s office at Shenzhen to collect the three original bills of lading, because when he was to collect the goods at Africa, he needed the original bills of lading. The forwarder’s staff (David) refused to hand over the bills of lading. David said that he would talk to the Defendants first. Then they hired a taxi and went to the Defendants’ office. On the way Roger asked the taxi driver to take them to a police station. There be explained the situation to a police officer. Then that police officer told David to hand over the bills of lading to him. David did so. Then he made a number of phone calls. When he and Victor (who accompanied him) went out of the police station and walked down to it’s compound, four unknown Chinese males suddenly confronted them, and one of them threatened them to return the bills of lading to him, or that it would be dangerous for them to leave with them and cross into Hong Kong. To avoid danger to himself and Victor, he gave the bills of lading back to David. Just about this time he saw a car arriving there. He saw Virginia Chen and Andrew Xu (the manageress of the 3^rd Defendant and her superior respectively) inside the car. He asked her why they would not release the bills of lading to them. She said that was the the instructions of her boss. Subsequently David, Virginia Chen and Andrew Xu went away in the car. The evidence of Plaintiff’s witnesses impressed me as honest witness. I accept their evidence.

6. The Defendants admit that the 3^rd Defendant gave a shipping guarantee to the shipping forwarder, on 12.10.2005 and requested that forwarder to change the names of the shipper in the 3 bills of lading in question from that of the Plaintiff to the name of the 3^rd Defendant, and that the names of the Plaintiff on these 3 bills of lading were changed or converted to the name of the 3^rd Defendant on 14.10.2005. By so doing, the Defendants took away the Plaintiff’s rights of entitlement to the goods without the Plaintiff’s permission. On 15.10.2005, the Plaintiff’s legal representative wrote to the 3^rd Defendant to enquire about the 3 bills of lading. By that time the names of the Plaintiff on these bills of lading had been changed to the name of the 3^rd Defendant. In its letter dated 19.10.2005 to the Plaintiff’s legal representative the 3^rd Defendant replied that it did not receive any of the bills of lading. Thus it was telling a blatant lie to the Plaintiff. The 2^nd Defendant was named as the notifying party when the names of the original bills of lading were altered. The Defendants eventually sold the Plaintiff’s goods to the Plaintiff’s original buyers and received from their payment of the goods. The Plaintiff made a 100% payment for the goods to the Defendants, but it never received any of the goods.

7. When asked why the balance was not returned to the Plaintiff, which paid over US$100,000 for the television sets, but the debt was US$25,000, Miss Virginia Chen gave an account of all the charges which were never...