UNIVERSITY OF HONG KONG, DEPARTMENT OF PROFESSIONAL LEGAL EDUCATION

2024-2025 CIVIL ADVOCACY BRIEF [2]

COVER PAGE FOR SKELETON SUBMISSIONS,

LIST OF AUTHORITIES AND AUTHORITIES

FROM: STUDENT/COUNSEL : TAI Hong Man for Respondent

STUDENT’S PDF BUNDLE: 2024-AM-#275-TAI-25-RES-C-FTCASG2.pdf

TO: STUDENT/COUNSEL : QIN Yifei for Applicant

TO: TUTOR/MASTER : Jason Ko

Max. 15 Applicant – Respondent –

minutes grace 13/11/2024 14/11/2024
period 7:00 pm 7:00 pm
(latest) (latest)

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For hearing before Master Jason Ko in chambers
at 9:00 a.m. on 16 November 2024

DCCJ 1200/2024

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 1200 OF 2024

****************
BETWEEN

HOMER APPLIANCES COMPANY LIMITED Plaintiff

MONTY (HK) LIMITED Defendant

****************

SKELETON SUBMISSIONS OF THE DEFENDANT / RESPONDENT

The law relating to summary judgment

1. Under O.14, r.1 of the Rules of the District Court (Cap. 336H) (“the RDC”), the Plaintiff
may apply to the Court for judgment against the Defendant, on the basis that the
Defendant has no defence to a claim or a part of a claim.

2. Under O.14, r.4 of the RDC, the Court may give the Defendant leave to defend a claim
or any part of a claim, either unconditionally or on such conditions as it thinks fit.

3. The said procedure is not appropriate where there is a material factual dispute between
the parties, since it intends inter alia to prevent a party from delaying judgment. Save
that the defence put forward by the Defendant is “frivolous and practically moonshine”,
summary judgment ought not to be applied: see Man Earn Limited v Wing Ting Fong
[1996] 1 HKC 225.

4. The question is whether the Defendant’s allegations are believable at this stage, rather
than they are to be believed. If the defence asserted shows no sign of bad faith or
suspicion, the Court may grant unconditional leave to defend.

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Goods supplied are not of merchantable quality

5. S.16(2) of the Sale of Goods Ordinance (Cap. 26) (“SOGO”) implies a condition that
the Goods supplied under contract are expected to be of “merchantable quality” as
interpreted under s.2(5). The Defendant’s defence and counterclaim is founded on the
assertion that certain electrical appliances supplied by the Plaintiff (“the Goods”) are
in breach of the applicable condition(s):

a. The testing report prepared by Springfield Electronics (“Testing Report”) reveals

the blemishes and defects of the Goods: see exhibit MB-2, p. 71-78; and

b. The Defendant had made known to the Plaintiff the particular purpose for which
the Goods are being bought, namely, to re-sell the Goods overseas; there is an
implied term that the Goods supplied by the Plaintiff are reasonably fit for the said
purpose: see Grant v Australian Knitting Mills Ltd [1936] AC 85; 2nd Affirmation
of Homer Sim Sung, p. 105.

6. It is the Plaintiff’s assertion that the Defendant had accepted the Goods and hence no
right to reject, as the Defendant had inter alia sent their representative to the Plaintiff’s
factory for quality inspection:

a. The Defendant had issued a debit notice to the Plaintiff dated 19 April 2023 (“the
Debit Notice”) to claim reasonable damages for some Goods of unsatisfactory
condition that were returned from July 2021 to December 2021, which were
supplied by the Plaintiff: see exhibit MB-3, p. 80;

b. Despite the Goods having passed the inspection prior to shipment, it is noted from
the inspection reports (“Inspection Reports”) that merely patent defects were
identified: see exhibit HSS-8, p. 117- 118. This is in contrast to the current situation,
which involves serious but hidden problems say cooling leaks; a significant
amount of time is required to identify the said defects; and

c. Since the Goods have latent defects that, likely, cannot be identified through
normal diligence at the delivery location or in the course of examination, the initial
inspection conducted is not binding on the Defendant; it is submitted that the
Defendant retains the right to reject the Goods upon subsequent inspection:
Heilbutt v Hickson [1872] LR 7 CP 438.

7. S.37(6) SOGO provides that “the buyer is not deemed to have accepted the goods merely
because the goods are delivered to another under a sub-sale or other disposition”.

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Reasonable time needed for defects to arise

8. Despite the possibility of future disagreements on the actual meaning of the

memorandum dated 3 January 2023 (the “Memorandum”), the signing of the said
document alone does not constitute a waiver on the Defendant’s part to counterclaim for
defective products: see exhibit HSS-4, p.55-56.

9. It is trite that acceptance of goods occurs after a reasonable amount of time has lapsed;
s.58 SOGO prescribes that it is a factual question to be determined.

a. It is Defendant’s assertion that the Plaintiff knew the Goods were intended for
resale and was given to understand that the Defendant would conduct random
quality checks, rather than examining every single product upon receipt;

b. The Defendant would merely become aware of any defects in the quality of the
Goods, after the Goods had been sold to its customers, and those customers had
reported the possible defects; the said arrangement shall take commercial risk into
account: Rickeed Industries Ltd and Another v. Hong Kong Tohkoh Co Ltd [2022]
HKCFI 106. The Court held that the said consideration to be a significant factor
in determining the reasonable period for rejection; and

c. Where the Goods are sold for resale, the period for notifying rejection shall include
the time taken to resell the Goods and an additional period for the sub-purchaser
to inspect and test them.

A bona fide counterclaim

10. Attention shall be drawn to the Court’s analysis in Shenzhen Baoming Ceramics Co Ltd
v Companion-China Ltd [2000] 2 HKC 790 (CA). Where the Defendant sets up a bona
fide counterclaim claim arising out of the same subject-matter as the claim and
connected with the grounds of defence, the usual order shall be for unconditional leave
to defend.

11. It is the Defendant’s case that sufficient particulars and explanations are provided:

a. The Testing Report prepared by Springfield Electronics, an independent expert,

details the model numbers and specific defects related to the defective Goods. The
Plaintiff has not disputed the authenticity of the contents of the Testing Report;

b. Although there are some differences in the specific model numbers claimed by the
Plaintiff and counterclaimed by the Defendant, the purchase orders and defective
Goods pertain to the ongoing dealings and transactions between the Plaintiff and
the Defendant during the said period. The fact that the Defendant continued to

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 place orders with the Plaintiff over several years underscores their longstanding
business relationship, which has never been disputed.

12. The Defendant submits that the assertions regarding the defects are not baseless. Unlike
the case of Rajeshkumar Nareshchandra Kantilal t/a K.L. Gems v. D.R.A. Trading Ltd
(HCA4193/2003), where the defence was rejected due to a “complete absence of any
corroborating evidence to substantiate an assertion of substandard goods” and the
party’s conduct being inconsistent with his own assertions, the Defendant in the present
case has provided substantial and clear evidence.

Lateness in tending particulars

13. The Court in Goldful Dragon Knitting Factory Ltd v. Tradeventure International Ltd
(HCA985/2006) dismissed the notion that a late disclosure of defence automatically
implies recent fabrication and falsification.

a. In Goldful Dragon, despite the payment vouchers being internal documents, the
Court still regarded them as persuasive evidence supporting the Defendant’s claim.
Similarly, in our case, the third-party Springfield Report should be given
comparable, if not greater, weight; and

b. The evidence presented by the Defendant in MB-3, MB-4, MB-5, and MB-6
indicates there is some validity to its claim. Therefore, the Defendant’s right to
counterclaim on defects should be further explored after discovery and decided at
trial.

Conclusion

14. Given the aforementioned matters, the Defendant denies that the Plaintiff is entitled to
the relief sought and respectfully requests that unconditional leave to defend be granted.

15. Alternatively, even if the Defendant is found liable to pay the Plaintiff the claimed
amount, the Defendant submits that it is entitled to an equitable set-off against the
awarded sum by way of counterclaim.

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For hearing before Master Jason Ko in chambers
at 9:00 a.m. on 16 November 2024

LIST OF AUTHORITIES OF THE DEFENDANT / RESPONDENT

Listed in order of citation

1. Sales of Goods Ordinance (Cap. 26)

2. Man Earn Limited v Wing Ting Fong [1996] 1 HKC 225.
3. Grant v Australian Knitting Mills Ltd [1936] AC 85.
4. Heilbutt v Hickson [1872] LR 7 CP 438.
5. Rickeed Industries Ltd and Another v. Hong Kong Tohkoh Co Ltd [2022] HKCFI 106.
6. Shenzhen Baoming Ceramics Co Ltd v Companion-China Ltd [2000] 2 HKC 790 (CA).
7. Rajeshkumar Nareshchandra Kantilal t/a K.L. Gems v. D.R.A. Trading Ltd
(HCA4193/2003).
8. Goldful Dragon Knitting Factory Ltd v. Tradeventure International Ltd (HCA985/2006).

Dated 14 November 2024

Counsel for the Defendant

To: Clerk to Master Jason Ko

Qin Yifei, Barrister-at-law, Counsel for the Plaintiff

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 C-1

《貨品售賣條例》
( 第 26 章 )
Sale of Goods Ordinance
(Cap. 26)

版本日期
Version date
20.9.2018

經核證文本
Verified Copy
( 法例發布條例》( 第 614 章 ) 第 5 條 )
《
(Legislation Publication Ordinance (Cap. 614), section 5)

如某內頁的頁底標明 : A provision is presumed to be correctly stated as at the above

․“經核證文本”；及 version date if it is on a page marked at the bottom with:
․ 以下列表顯示的該頁的最後更新日期， ․ the words “Verified Copy”; and
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此文本所載條文，如並非正在實施，會有附註作說明。 Any provision included in this copy that is not in force is marked
accordingly.

條文 Provision 頁數 Page number 最後更新日期 Last updated date

第 I 部 Part I 1-1—1-24 20.9.2018
第 II 部 Part II 2-1—2-12 20.9.2018
第 III 部 Part III 3-1—3-12 20.9.2018
第 IV 部 Part IV 4-1—4-12 20.9.2018
第 V 部 Part V 5-1—5-6 20.9.2018
第 VI 部 Part VI 6-1—6-6 20.9.2018
 C-2
尚未實施的條文 / 修訂 —— Provisions / Amendments not yet in operation —
尚未實施的條文及修訂的資料，可於「電子版香港法例」(http://www.elegislation.gov.hk) Please see Hong Kong e-Legislation (http://www.elegislation.gov.hk) for information of
閱覽。 provisions and amendments not yet in operation.
 《貨品售賣條例》 Sale of Goods Ordinance

E-1 E-2
第 26 章 Cap. 26

制定史 Enactment History

本 為 1896 年 第 7 號 ( 第 26 章，1950 年 版 ) —— 1911 年 第 50 號， Originally 7 of 1896 (Chapter 26, 1950) — 50 of 1911, 8 of 1912, 5 of
1912 年 第 8 號，1924 年 第 5 號，1969 年 第 47 號，1970 年 第 21 號， 1924, 47 of 1969, 21 of 1970, 58 of 1977, R. Ed. 1977, 52 of 1987, 59 of
1977 年第 58 號，1977 年編正版，1987 年第 52 號，1989 年第 59 號， 1989, 85 of 1994, L.N. (C) 27 of 1995 (Chinese authentic version), L.N.
1994 年第 85 號，1995 年第 (C)27 號法律公告 ( 中文真確本 )，1998 年 315 of 1998, 37 of 1998, 66 of 2000, E.R. 4 of 2018
第 315 號 法 律 公 告，1998 年 第 37 號，2000 年 第 66 號，2018 年 第 4
號編輯修訂紀錄

最後更新日期 Last updated date

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 《貨品售賣條例》 Sale of Goods Ordinance

T-1 T-2
第 26 章 Cap. 26

《貨品售賣條例》 Sale of Goods Ordinance

( 第 26 章 ) (Cap. 26)
目錄 Contents

條次 頁次 Section Page
1. 簡稱 1-1 1. Short title 1-2
2. 釋義 1-1 2. Interpretation 1-2
2A. 以消費者身分交易 1-5 2A. Dealing as consumer 1-6
第I部 Part I
合約的成立 Formation of the Contract
售賣合約 Contract of sale
3. 售賣和售賣協議 1-7 3. Sale and agreement to sell 1-8
4. 買賣的行為能力 1-9 4. Capacity to buy and sell 1-10
訂立合約的手續 Formalities of contract
5. 售賣合約的訂立方式 1-9 5. Mode of making contract of sale 1-10
6. ( 廢除 ) 1-9 6. (Repealed) 1-10
合約之標的物 Subject-matter of contract
7. 現貨或期貨 1-9 7. Existing or future goods 1-10
8. 已毀消的貨品 1-11 8. Goods which have perished 1-12
9. 貨品在達成售賣協議後但在售賣前毀消 1-11 9. Goods perishing before sale but after 1-12
agreement to sell
貨價 Price

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 《貨品售賣條例》 Sale of Goods Ordinance

T-3 T-4
第 26 章 Cap. 26

條次 頁次 Section Page
10. 貨價的確定 1-11 10. Ascertainment of price 1-12
11. 按估值定價的售賣協議 1-11 11. Agreement to sell at valuation 1-12
條件和保證條款 Conditions and warranties
12. 時限的規定 1-13 12. Stipulations as to time 1-14
13. 將條件視為保證條款的情況 1-13 13. When condition to be treated as warranty 1-14
14. 有關所有權等的隱含責任承擔 1-15 14. Implied undertaking as to title etc. 1-16
15. 憑貨品說明的售賣 1-17 15. Sale by description 1-18
16. 有關品質或適用性的隱含責任承擔 1-19 16. Implied undertakings as to quality or fitness 1-20
憑樣本售貨 Sale by sample
17. 憑樣本售貨 1-21 17. Sale by sample 1-22
第 II 部 Part II
合約的效力 Effects of the Contract
賣方與買方之間的產權轉讓 Transfer of property as between seller and
buyer
18. 貨品必須予以確定 2-1 18. Goods must be ascertained 2-2
19. 產權在擬轉移時轉移 2-1 19. Property passes when intended to pass 2-2
20. 確定意向的規則 2-1 20. Rules for ascertaining intention 2-2
21. 貨品處置權的保留 2-5 21. Reservation of right of disposal 2-6
22. 風險表面與產權同時轉移 2-5 22. Risk prima facie passes with property 2-6
所有權的轉讓 Transfer of title
23. 由非擁有人售賣 2-7 23. Sale by person not owner 2-8
24. 公開市場 2-7 24. Market overt 2-8

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 《貨品售賣條例》 Sale of Goods Ordinance

T-5 T-6
第 26 章 Cap. 26

條次 頁次 Section Page
25. 根據可使無效的所有權而售賣 2-9 25. Sale under voidable title 2-10
26. ( 廢除 ) 2-9 26. (Repealed) 2-10
27. 賣方或買方在售賣後的管有 2-9 27. Seller or buyer in possession after sale 2-10
28. ( 廢除 ) 2-11 28. (Repealed) 2-12
第 III 部 Part III
合約的履行 Performance of the Contract
29. 買賣雙方的責任 3-1 29. Duties of seller and buyer 3-2
30. 付款與交付貨品為須同時履行的條件 3-1 30. Payment and delivery are concurrent 3-2
conditions
31. 交付規則 3-1 31. Rules as to delivery 3-2
32. 交付數量錯誤 3-3 32. Delivery of wrong quantity 3-4
33. 分期交付 3-5 33. Delivery by instalments 3-6
34. 交付承運人 3-5 34. Delivery to carrier 3-6
35. 遠地交付貨品的風險 3-7 35. Risk where goods are delivered at distant 3-8
place
36. 買方驗貨的權利 3-7 36. Buyer’s right of examining goods 3-8
37. 接受貨品 3-7 37. Acceptance of goods 3-8
38. 買方不必退回拒收的貨品 3-9 38. Buyer not bound to return rejected goods 3-10
39. 買方忽略提貨或拒絕提貨而須承擔的法律 3-9 39. Liability of buyer for neglecting or refusing 3-10
責任 to take delivery of goods
第 IV 部 Part IV
未獲付款的賣方對貨品的權利 Rights of Unpaid Seller against the Goods
40. 未獲付款的賣方 的定義 4-1 40. Definition of unpaid seller 4-2

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 《貨品售賣條例》 Sale of Goods Ordinance

T-7 T-8
第 26 章 Cap. 26

條次 頁次 Section Page
41. 未獲付款的賣方的權利 4-1 41. Unpaid seller’s rights 4-2
42. 扣貨不交付 4-3 42. Withholding delivery 4-4
未獲付款的賣方的留置權 Unpaid seller’s lien
43. 未獲付款的賣方的留置權 4-3 43. Unpaid seller’s lien 4-4
44. 交付部分貨品 4-3 44. Part delivery 4-4
45. 終止留置權 4-3 45. Termination of lien 4-4
途中停運 Stoppage in transitu
46. 途中停運權 4-5 46. Right of stoppage in transitu 4-6
47. 運送期 4-5 47. Duration of transit 4-6
48. 如何途中停運 4-7 48. How stoppage in transitu is effected 4-8
買方或賣方另售貨品 Re-sale by buyer or seller
49. 買方轉售或質押的效力 4-9 49. Effect of sub-sale or pledge by buyer 4-10
50. 售賣一般不因行使留置權或途中停運權而 4-9 50. Sale not generally rescinded by lien or 4-10
撤銷 stoppage in transitu
第V部 Part V
就違約而提出的訴訟 Actions for Breach of the Contract
對賣方的補救 Remedies of seller
51. 就貨價而提出的訴訟 5-1 51. Action for price 5-2
52. 因對方不接受貨品而要求損害賠償 5-1 52. Damages for non-acceptance 5-2
對買方的補救 Remedies of buyer
53. 因對方不交付貨品而要求損害賠償 5-3 53. Damages for non-delivery 5-4
54. 強制履行 5-3 54. Specific performance 5-4

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 《貨品售賣條例》 Sale of Goods Ordinance

T-9 T-10
第 26 章 Cap. 26

條次 頁次 Section Page
55. 違反保證條款的補救 5-3 55. Remedies for breach of warranty 5-4
56. 利息和特別損害賠償 5-5 56. Interest and special damages 5-6
第 VI 部 Part VI
補充條文 Supplementary
57. 免除隱含的條款及條件 6-1 57. Exclusion of implied terms and conditions 6-2
57A. ( 廢除 ) 6-1 57A. (Repealed) 6-2
58. 合理時間乃事實問題 6-1 58. Reasonable time a question of fact 6-2
59. 權利等可藉訴訟強制執行 6-1 59. Right, etc., enforceable by action 6-2
60. 拍賣 6-1 60. Auction sale 6-2
61. 競投權利的保留 6-3 61. Reservation of right to bid 6-4
62. 保留條文 6-3 62. Saving 6-4

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 《貨品售賣條例》 Sale of Goods Ordinance

1-1 1-2
第 26 章 第1條 Section 1 Cap. 26

本條例將與貨品售賣有關的法律編纂為成文法則。 To codify the law relating to the sale of goods.

[ 比照 1893 c. 71 U.K.] [cf. 1893 c. 71 U.K.]

[1896 年 8 月 1 日 ] [1 August 1896]

( 格式變更 ——2018 年第 4 號編輯修訂紀錄 ) (Format changes—E.R. 4 of 2018)

1. 簡稱 1. Short title
本條例可引稱為《貨品售賣條例》。 This Ordinance may be cited as the Sale of Goods Ordinance.
( 由 1924 年第 5 號第 6 條修訂 ) (Amended 5 of 1924 s. 6)

2. 釋義 2. Interpretation
(1) 在本條例中，除文意另有所指外 —— (1) In this Ordinance, unless the context otherwise requires—
交 、交付 (delivery) 指任何人自願將管有權轉讓給另一人； action (訴訟) includes suit, counterclaim, and set-off;
保證條款 (warranty) 指與貨品有關的協議，而該等貨品為某售 business (業務) includes a profession and the activities of a
賣合約之標的物，但該協議是附屬於該合約之主要目的； public body, a public authority, or a board, commission,
違反該協議可引致提出損害賠償的申索，但並不產生拒 committee or other body appointed by the Chief Executive
絕收貨及將該合約視作已廢除的權利； or Government; (Added 58 of 1977 s. 2. Amended 59 of 1989
原告人 (plaintiff) 包括提出反申索的被告人； s. 20; 66 of 2000 s. 3)
特定貨品 (specific goods) 指訂立售賣合約時經認定及議定的貨 buyer (買方) means a person who buys or agrees to buy goods;
品； contract of sale (售賣合約) includes an agreement to sell as well
售賣 (sale) 包括議價和售賣，亦包括售賣和交付； as a sale;
售賣合約 (contract of sale) 包括售賣協議及售賣； delivery (交、交付) means voluntary transfer of possession from
one person to another;
產權 (property) 指貨品的一般產權，而不單指某一項特殊產權；
document of title to goods (貨品的所有權文件) includes any bill
貨品的所有權文件 (document of title to goods) 包括任何提單、 of lading, dock warrant, warehouse keeper’s certificate, and
碼頭倉單、倉庫經理人證明書、交貨授權證或交貨單、 warrant or order for the delivery of goods, and any other
在通常業務運作中用以證明對貨品的管有或控制的任何 document used in the ordinary course of business as proof
其他文件，或任何以背書或交付方式授權或看來是以該 of the possession or control of goods, or authorizing or
方式授權文件管有人轉讓或收取文件所代表貨品的文件； purporting to authorize, either by indorsement or by delivery,
貨品品質 (quality of goods) 包括貨品的狀態或狀況；

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 《貨品售賣條例》 Sale of Goods Ordinance

1-3 1-4
第 26 章 第2條 Section 2 Cap. 26

貨 、貨品 (goods) 包括所有非土地實產，但不包括據法權產及 the possessor of the document to transfer or receive goods
金錢。此兩詞亦包括庄稼、農作物及附屬於土地或作為 thereby represented;
土地一部分的東西，而該等庄稼、農作物及東西是議定 fault (錯失) means wrongful act or default;
須在出售前或根據售賣合約與土地劃分者；
future goods (期貨) means goods to be manufactured or acquired
期貨 (future goods) 指賣方在訂立售賣合約後才製造或取得的 by the seller after the making of the contract of sale;
貨品；
goods (貨、貨品) includes all chattels personal other than things in
訴訟 (action) 包括訟案、反申索和抵銷； action and money. The term includes emblements, industrial
買方 (buyer) 指購貨或同意購貨的人； growing crops, and things attached to or forming part of the
業務 (business) 包括專業，亦包括公共機構、公共主管當局、 land which are agreed to be severed before sale or under the
由行政長官或政府委任的專責委員會、專責組織、委員 contract of sale;
會或其他團體的活動； ( 由 1977 年第 58 號第 2 條增補。 plaintiff (原告人) includes a defendant counterclaiming;
由 1989 年 第 59 號 第 20 條 修 訂；由 2000 年 第 66 號 第 3 property (產權) means the general property in goods, and not
條修訂 ) merely a special property;
賣方 (seller) 指售貨或同意售貨的人； quality of goods (貨品品質) includes their state or condition;
錯失 (fault) 指錯誤的作為或不履行責任。 sale (售賣) includes a bargain and sale as well as a sale and
( 由 1989 年第 59 號第 20 條修訂 ) delivery;
(2) 凡誠實作出的事情，不論作出時是否有疏忽，均當作是 seller (賣方) means a person who sells or agrees to sell goods;
出於真誠 (in good faith) 作出的。 ( 由 1912 年第 8 號第 47 specific goods (特定貨品) means goods identified and agreed upon
條修訂 ) at the time a contract of sale is made;
(3) 任何人如在通常業務運作中已停止償還債項，或債項到 warranty (保證條款) means an agreement with reference to goods
期而不能償還，則不論他是否已被判定破產，均當作無 which are the subject of a contract of sale, but collateral to
力 償 債 (insolvent)。 ( 由 1912 年 第 8 號 第 47 條 修 訂；由 the main purpose of such contract, the breach of which gives
1998 年第 37 號第 4 條修訂 ) rise to a claim for damages, but not to a right to reject the
(4) 貨品處於買方根據合約必須收貨的狀態時，即處於可交 goods and treat the contract as repudiated.
付狀態 (deliverable state)。 ( 由 1912 年第 8 號第 47 條修訂 ) (Amended 59 of 1989 s. 20)
(5) 任何一種貨品，如其 —— (2) A thing is deemed to be done in good faith (出於真誠) when
(a) 對於通常購買該種貨品所作用途的適用性； it is in fact done honestly, whether it is done negligently or
(b) 外觀及最終修飾的水準； not. (Amended 8 of 1912 s. 47)
(c) 並無缺點 ( 包括輕微缺點 ) 的程度； (3) A person is deemed to be insolvent (無力償債) who either
has ceased to pay his debts in the ordinary course of business

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(d) 安全程度；及 or cannot pay his debts as they become due, whether he has
(e) 耐用程度， been adjudged bankrupt or not. (Amended 8 of 1912 s. 47; 37
of 1998 s. 4)
是在顧及就該貨品所作的貨品說明、貨價 ( 如屬有關者 )
及其他一切有關情況後可合理預期者，則該貨品即具本 (4) Goods are in a deliverable state (可交付狀態) when they are
條 例 所 指 的 可 商 售 品 質 (merchantable quality)；在 本 條 in such a state that the buyer would, under the contract, be
例中，凡提述不可商售的貨品之處，須據此解釋。 ( 由 bound to take delivery of them. (Amended 8 of 1912 s. 47)
1994 年第 85 號第 2 條代替 ) (5) Goods of any kind are of merchantable quality (可商售品質)
( 編輯修訂 ——2018 年第 4 號編輯修訂紀錄 ) within the meaning of this Ordinance if they are—
(a) as fit for the purpose or purposes for which goods of
that kind are commonly bought;
(b) of such standard of appearance and finish;
(c) as free from defects (including minor defects);
(d) as safe; and
(e) as durable,
as it is reasonable to expect having regard to any description
applied to them, the price (if relevant) and all the other
relevant circumstances; and any reference in this Ordinance
to unmerchantable goods shall be construed accordingly.
(Replaced 85 of 1994 s. 2)
(Amended E.R. 4 of 2018)

2A. 以消費者身分交易 2A. Dealing as consumer

(1) 售賣合約的一方如屬以下情況，則對另一方而言是以消 (1) A party to a contract of sale deals as consumer (以消費者身
費者身分交易 (deals as consumer) ——  ( 由 1998 年第 315 分交易) in relation to another party if— (Amended E.R. 4 of
號法律公告修訂；編輯修訂 ——2018 年第 4 號編輯修訂 2018)
紀錄 ) (a) he neither makes the contract in the course of a business
(a) 他並非在業務運作中訂立合約，亦沒有顯示自己是 nor holds himself out as doing so;
如此行事； (b) the other party does make the contract in the course of a
(b) 另一方是在業務運作中訂立合約的；及 business; and

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(c) 根據或依據合約轉移的貨品屬通常供應作私人使用 (c) the goods passing under or in pursuance of the contract
或耗用的類別。 are of a type ordinarily supplied for private use or
(2) 儘管有第 (1) 款的規定，凡藉拍賣方式或競爭性投標方式 consumption.
售賣貨品，買方在任何情況下均不得被視作以消費者身 (2) Notwithstanding subsection (1), on a sale by auction or by
分交易。 competitive tender the buyer is not in any circumstances to be
(3) 任何人如聲稱某一方並非是以消費者身分交易，則須證 regarded as dealing as consumer.
明該一方並非是如此交易。 (3) It is for the person claiming that a party does not deal as
( 由 1994 年第 85 號第 3 條增補 ) consumer to prove that he does not.
(Added 85 of 1994 s. 3)

第I部 Part I
合約的成立 Formation of the Contract
售賣合約 Contract of sale

3. 售賣和售賣協議 3. Sale and agreement to sell

(1) 售貨合約是賣方為了換取稱為貨價的金錢代價而將貨品 (1) A contract of sale of goods is a contract whereby the seller
產權轉讓或同意將貨品產權轉讓給買方的合約。有部分 transfers or agrees to transfer the property in goods to the
擁有權的人可與另一有部分擁有權的人訂立售賣合約。 buyer for a money consideration, called the price. There may
(2) 售賣合約可為不附帶條件的，亦可為附帶條件的。 be a contract of sale between one part owner and another.
(3) 凡貨品的產權根據一份售賣合約由賣方轉讓給買方，該 (2) A contract of sale may be absolute or conditional.
份合約稱為一宗售賣；但如貨品的產權將來才轉讓，或 (3) Where under a contract of sale the property in the goods is
待某些須於其後符合的條件得以符合後才轉讓，則該份 transferred from the seller to the buyer, the contract is called
合約稱為一項售賣協議。 a sale; but where the transfer of the property in the goods is
(4) 當售賣協議內議定將貨品產權轉讓的時間屆滿，或當貨 to take place at a future time or subject to some condition
品產權轉讓前須予符合的條件已獲符合，售賣協議即成 thereafter to be fulfilled, the contract is called an agreement
為一宗售賣。 to sell.
(4) An agreement to sell becomes a sale when the time elapses
or the conditions are fulfilled subject to which the property in
the goods is to be transferred.

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4. 買賣的行為能力 4. Capacity to buy and sell

(1) 買賣的行為能力受與訂立合約的行為能力及轉讓和取得 (1) Capacity to buy and sell is regulated by the general law
產權的行為能力有關的一般法律規管︰ concerning capacity to contract, and to transfer and acquire
但幼年人或未成年人，或因心智上無行為能力或醉酒而 property:
無訂立合約能力的人，如獲售賣和交付必需品，須就該 Provided that where necessaries are sold and delivered to
等必需品繳付合理的貨價。 an infant or minor, or to a person who, by reason of mental
(2) 在本條中，必需品 (necessaries) 指適合幼年人或未成年人 incapacity or drunkenness, is incompetent to contract, he must
或其他人士的生活狀況，且在售賣和交付時是適合其實 pay a reasonable price therefor.
際需要的貨品。 (2) In this section, necessaries (必需品) means goods suitable to
the condition in life of such infant or minor or other person,
and to his actual requirements at the time of the sale and
delivery.

訂立合約的手續 Formalities of contract

5. 售賣合約的訂立方式 5. Mode of making contract of sale

除本條例及任何有關的成文法則另有規定外，售賣合約可以 Subject to the provisions of this Ordinance and of any enactment
書面 ( 蓋有印章或並無蓋印章 ) 訂立，或以口頭訂立，或部分 in that behalf, a contract of sale may be made in writing (either
以書面而部分以口頭訂立，亦可憑雙方的行為而默示合約關 with or without seal), or by word of mouth, or partly in writing
係︰ and partly by word of mouth, or may be implied from the conduct
但本條並不影響關於法團的法律。 of the parties:
Provided that nothing in this section shall affect the law relating to
corporations.

6. ( 由 1977 年第 58 號第 3 條廢除 ) 6. (Repealed 58 of 1977 s. 3)

合約之標的物 Subject-matter of contract

7. 現貨或期貨 7. Existing or future goods

(1) 成為售賣合約標的物之貨品，可以是由賣方擁有或管有 (1) The goods which form the subject of a contract of sale may
的現貨，亦可以是賣方在訂立售賣合約後才製造或取得 be either existing goods, owned or possessed by the seller, or
的貨品，即在本條例中稱為 “ 期貨 ” 者。 goods to be manufactured or acquired by the seller after the
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(2) 凡賣方可否取得貨品視乎某宗可能發生或可能不發生的 making of the contract of sale, in this Ordinance called “future
或有事件而定，售賣該等貨品的合約仍可訂立。 goods”.
(3) 凡賣方本意是藉售賣合約達成即時出售期貨，該合約具 (2) There may be a contract for the sale of goods, the acquisition
有作為售賣該等期貨的協議的效用。 of which by the seller depends upon a contingency which
may or may not happen.
(3) Where by a contract of sale the seller purports to effect a
present sale of future goods, the contract operates as an
agreement to sell the goods.

8. 已毀消的貨品 8. Goods which have perished

凡訂立售賣特定貨品的合約，而在訂立合約時該等貨品已毀 Where there is a contract for the sale of specific goods, and the
消，但賣方對此並不知情，則該合約屬無效。 goods, without the knowledge of the seller, have perished at the
time when the contract is made, the contract is void.

9. 貨品在達成售賣協議後但在售賣前毀消 9. Goods perishing before sale but after agreement to sell

凡訂立售賣特定貨品的協議，而其後在買方及賣方均無錯失 Where there is an agreement to sell specific goods, and
的情況下，該等貨品於風險轉移給買方前毀消，該協議即因 subsequently the goods, without any fault on the part of the seller
此失效。 or buyer, perish before the risk passes to the buyer, the agreement
is thereby avoided.

貨價 Price

10. 貨價的確定 10. Ascertainment of price

(1) 售賣合約的貨價，可由合約定出，或可留待按合約議定 (1) The price in a contract of sale may be fixed by the contract,
的方式定出，或可藉雙方的交易過程予以釐定。 or may be left to be fixed in manner thereby agreed, or may
(2) 凡貨價並非依照上述條文釐定，買方必須繳付合理的貨 be determined by the course of dealing between the parties.
價。何謂合理貨價乃事實問題，視乎個別情況而定。 (2) Where the price is not determined in accordance with the
foregoing provisions, the buyer must pay a reasonable price.
What is a reasonable price is a question of fact dependent on
the circumstances of each particular case.

11. 按估值定價的售賣協議 11. Agreement to sell at valuation

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(1) 凡根據售賣貨品協議的條款，須根據第三者的估值定出 (1) Where there is an agreement to sell goods on the terms that
貨價，而該第三者不能或沒有作出此項估值，該協議即 the price is to be fixed by the valuation of a third party, and
屬無效︰ such third party cannot or does not make such valuation, the
但如該等貨品或其中任何部分已交付買方，並由買方取 agreement is avoided:
用，則買方必須就此繳付合理的貨價。 Provided that if the goods or any part thereof have been
(2) 凡該第三者因賣方或買方的錯失而未能作出估值，無錯 delivered to and appropriated by the buyer, he must pay a
失的一方可向犯錯失的一方提出訴訟，要求給予損害賠 reasonable price therefor.
償。 (2) Where such third party is prevented from making the
valuation by the fault of the seller or buyer, the party not in
fault may maintain an action for damages against the party in
fault.

條件和保證條款 Conditions and warranties

12. 時限的規定 12. Stipulations as to time

(1) 除合約的條款顯示有不同意向外，付款時限的規定並不 (1) Unless a different intention appears from the terms of the
當作售賣合約的要素。任何其他有關時限的規定是否合 contract, stipulations as to time of payment are not deemed
約的要素，視乎合約的條款而定。 to be of the essence of a contract of sale. Whether any other
(2) 在售賣合約中，月 (month) 表面即指公曆月。 stipulation as to time is of the essence of the contract or not
depends on the terms of the contract.
(2) In a contract of sale, month (月) means prima facie calendar
month.

13. 將條件視為保證條款的情況 13. When condition to be treated as warranty

(1) 凡售賣合約規定賣方須符合某項條件，買方可放棄該項 (1) Where a contract of sale is subject to any condition to be
條件，或可選擇將違反該項條件視為違反保證條款，而 fulfilled by the seller, the buyer may waive the condition, or
非視為將該合約視為已廢除的理由。 may elect to treat the breach of such condition as a breach
(2) 售賣合約中某項規定是條件或是保證條款，在個別情形 of warranty, and not as a ground for treating the contract as
下視乎對合約的解釋而定；違反條件可產生將該合約視 repudiated.
作已廢除的權利，而違反保證條款則可產生損害賠償的 (2) Whether a stipulation in a contract of sale is a condition, the
申索，但並不產生拒絕收貨及將該合約視作已廢除的權 breach of which may give rise to a right to treat the contract
as repudiated, or a warranty, the breach of which may give

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利。任何規定縱使在合約中稱為保證條款，亦可以是一 rise to a claim for damages but not a right to reject the goods
項條件。 and treat the contract as repudiated, depends in each case
(3) 凡屬不可劃分的合約，而買方已接受貨品或接受部分貨 on the construction of the contract. A stipulation may be a
品，則賣方違反其須符合的條件，只可以視為違反保證 condition, though called a warranty in the contract.
條款，而不得視為可拒絕收貨及將該合約視作已廢除的 (3) Where a contract of sale is not severable, and the buyer
理由，但如該合約中有表明此意的明訂條款或隱含條款， has accepted the goods or part thereof, the breach of any
則不在此限。 ( 由 1969 年第 47 號第 5 條修訂 ) condition to be fulfilled by the seller can only be treated as
(4) 對於因不可能符合或因其他理由而依法可免符合的條件 a breach of warranty, and not as a ground for rejecting the
或保證條款，本條並無影響。 goods and treating the contract as repudiated, unless there
is a term of the contract, express or implied, to that effect.
(Amended 47 of 1969 s. 5)
(4) Nothing in this section shall affect the case of any condition
or warranty, fulfilment of which is excused by law by reason
of impossibility or otherwise.

14. 有關所有權等的隱含責任承擔 14. Implied undertaking as to title etc.

(1) 除第 (2) 款適用的售賣合約外，每份售賣合約均有 —— (1) In every contract of sale, other than one to which subsection
(a) 一項賣方須符合的隱含條件︰如該合約是一宗售賣， (2) applies, there is—
他有權售賣有關貨品，如該合約是一項售賣協議， (a) an implied condition on the part of the seller that in the
則他在貨品產權轉移時，將有權售賣該等貨品；及 case of the sale, he has a right to sell the goods, and in
(b) 一項隱含的保證條款︰該等貨品並無任何在訂立合 the case of an agreement to sell, he will have a right to
約前未向買方披露或未為買方所知的押記或產權負 sell the goods at the time when the property is to pass;
擔，而在產權轉移前亦不會有這樣的押記或產權負 and
擔；此外，買方將安寧地享有對該等貨品的管有， (b) an implied warranty that the goods are free, and will
但如對該項管有的干擾是由有權享有已向買方披露 remain free until the time when the property is to pass,
或已為買方所知的任何押記或產權負擔的利益的擁 from any charge or encumbrance not disclosed or known
有人或其他有權享有該等利益的人作出的，則不在 to the buyer before the contract is made and that the
此限。 buyer will enjoy quiet possession of the goods except so
(2) 如售賣合約所顯示或從合約的情況所推定的意向，是賣 far as it may be disturbed by the owner or other person
方只轉讓其本身的所有權或第三者的所有權，則合約中 entitled to the benefit of any charge or encumbrance so
有 —— disclosed or known.

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(a) 一項隱含的保證條款︰賣方所知但不為買方所知的 (2) In a contract of sale, in the case of which there appears from
所有押記或產權負擔，在合約訂立前已向買方披露； the contract or is to be inferred from the circumstances of the
及 contract an intention that the seller should transfer only such
(b) 一項隱含的保證條款︰下列人士不會干擾買方安寧 title as he or a third person may have, there is—
地管有貨品 —— (a) an implied warranty that all charges or encumbrances
(i) 賣方；及 known to the seller and not known to the buyer have
been disclosed to the buyer before the contract is made;
(ii) 如合約雙方的意向是賣方只轉讓第三者的所有 and
權，則該第三者；及
(b) an implied warranty that neither—
(iii) 任何透過或藉着賣方或第三者提出申索的人，
而該項申索並非根據在合約訂立前已向買方披 (i) the seller; nor
露或已為買方所知的押記或產權負擔而提出的。 (ii) in a case where the parties to the contract intend
( 由 1977 年第 58 號第 4 條代替 ) that the seller should transfer only such title as a
third person may have, that person; nor
[ 比照 1973 c. 3 s. 1 U.K.]
(iii) anyone claiming through or under the seller or
that third person otherwise than under a charge
or encumbrance disclosed or known to the buyer
before the contract is made,
will disturb the buyer’s quiet possession of the goods.
(Replaced 58 of 1977 s. 4)
[cf. 1973 c. 13 s. 1 U.K.]

15. 憑貨品說明的售賣 15. Sale by description

(1) 憑貨品說明售貨的合約，均有貨品必須與貨品說明相符 (1) Where there is a contract for the sale of goods by description,
的隱含條件；如既憑貨品說明又憑樣本售貨，而貨品與 there is an implied condition that the goods shall correspond
貨品說明不相符，則即使整批貨品與樣本相符，亦不足 with the description; and if the sale is by sample, as well
夠。 ( 由 1977 年第 58 號第 5 條修訂 ) as by description, it is not sufficient that the bulk of the
(2) 一宗貨品的售賣，不得僅因貨品在陳列以作售賣或租賃 goods corresponds with the sample if the goods do not also
時為買方所選定而不屬於憑貨品說明的售賣。 ( 由 1977 correspond with the description. (Amended 58 of 1977 s. 5)
年第 58 號第 5 條增補 ) [ 比照 1973 c. 13 s. 2 U.K.] (2) A sale of goods shall not be prevented from being a sale by
description by reason only that, being exposed for sale or

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第 26 章 第 16 條 Section 16 Cap. 26

hire, they are selected by the buyer. (Added 58 of 1977 s. 5)

[cf. 1973 c. 13 s. 2 U.K.]

16. 有關品質或適用性的隱含責任承擔 16. Implied undertakings as to quality or fitness

(1) 本條規定在何情況下及在何範圍內，就根據售賣合約所 (1) This section provides for the circumstances in which, and the
供應貨品的品質或該等貨品對某特定用途的適用性，有 extent to which, there is any implied condition or warranty as
任何隱含條件或隱含保證條款。 ( 由 1994 年第 85 號第 4 to the quality or fitness for any particular purpose of goods
條代替 ) supplied under a contract of sale. (Replaced 85 of 1994 s. 4)
(2) 凡賣方在業務運作中售貨，有一項隱含的條件︰根據合 (2) Where the seller sells goods in the course of a business, there
約供應的貨品具可商售品質，但在以下事項方面則並無 is an implied condition that the goods supplied under the
該項條件 —— contract are of merchantable quality, except that there is no
(a) 在合約訂立前曾明確地促請買方注意的缺點；或 such condition—
(b) 如買方在合約訂立前驗貨，則該次驗貨應揭露的缺 (a) as regards defects specifically drawn to the buyer’s
點；或 ( 由 1994 年第 85 號第 4 條修訂 ) attention before the contract is made; or
(c) 如合約是憑樣本售貨的合約，則在對樣本進行合理 (b) if the buyer examines the goods before the contract is
檢驗時會顯現的缺點。 ( 由 1994 年第 85 號第 4 條 made, as regards defects which that examination ought
增補 ) to reveal; or (Amended 85 of 1994 s. 4)
(3) 凡賣方在業務運作中售貨，而買方以明示或默示方式令 (c) if the contract is a contract for sale by sample, as
賣方知悉，買方是為了某特定用途而購買該貨品，則有 regards defects which would have been apparent on a
一項隱含的條件︰根據合約供應的貨品在合理程度上適 reasonable examination of the sample. (Added 85 of
合該用途，不論該類貨品是否通常供應作此用途；但如 1994 s. 4)
有關情況顯示買方不依靠賣方的技能或判斷，或顯示買 (3) Where the seller sells goods in the course of a business and
方依靠賣方的技能或判斷是不合理的，則不在此限。 the buyer, expressly or by implication, makes known to the
(4) 關於貨品品質或對某特定用途的適用性的隱含條件或隱 seller any particular purpose for which the goods are being
含保證條款，可按慣例附加於售賣合約上。 bought, there is an implied condition that the goods supplied
under the contract are reasonably fit for that purpose, whether
(5) 第 (1)、(2)、(3) 及 (4) 款適用於由任何在業務運作中以另 or not that is a purpose for which such goods are commonly
一人的代理人身分行事的人所作的售賣，猶如該等條文 supplied, except where the circumstances show that the buyer
適用於由一名主事人在業務運作中所作的售賣一樣，但 does not rely, or that it is unreasonable for him to rely, on the
如該另一人並非在業務運作中作售賣，而此事實在合約 seller’s skill or judgment.
訂立前已為買方所知，或在合約訂立前已採取合理步驟
令買方知悉此事實，則屬例外。

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第 26 章 第 17 條 Section 17 Cap. 26

(6) 對於買價或部分買價可分期繳付的售貨協議，在應用第 (4) An implied condition or warranty as to quality or fitness for

(3) 款時，凡提述賣方之處，須包括提述進行任何事先商 a particular purpose may be annexed to a contract of sale by
議的人。 usage.
(7) 在 第 (6) 款 中，事 先 商 議 (antecedent negotiations) 指 與 買 (5) Subsections (1), (2), (3) and (4) apply to a sale by a person
方所作的任何商議或安排，而該商議或安排是誘使買方 who in the course of a business is acting as agent for
訂立該協議，或促成與該協議有關的交易的。 another as they apply to a sale by a principal in the course
(8) 除本條及第 17 條以及任何其他成文法則另有規定外，就 of a business, except where that other is not selling in the
根據售賣合約所供應貨品的品質或該等貨品對某特定用 course of a business and either the buyer knows that fact
途的適用性，並無任何隱含條件或隱含保證條款。 ( 由 or reasonable steps are taken to bring it to the notice of the
1994 年第 85 號第 4 條增補 ) buyer before the contract is made.
( 由 1977 年第 58 號第 6 條代替 ) (6) In the application of subsection (3) to an agreement for the
sale of goods under which the purchase price or part of it
[ 比照 1973 c. 13 s. 3 U.K.] is payable by instalments any reference to the seller shall
include a reference to the person by whom any antecedent
negotiations are conducted.
(7) In subsection (6) antecedent negotiations (事先商議) means
any negotiations or arrangements with the buyer whereby
he was induced to make the agreement or which otherwise
promoted the transaction to which the agreement relates.
(8) Except as provided by this section and section 17, and subject
to the provisions of any other enactment, there is no implied
condition or warranty as to the quality or fitness for any
particular purpose of goods supplied under a contract of sale.
(Added 85 of 1994 s. 4)
(Replaced 58 of 1977 s. 6)
[cf. 1973 c. 13 s. 3 U.K.]

憑樣本售貨 Sale by sample

17. 憑樣本售貨 17. Sale by sample

(1) 凡售賣合約中有一項明訂或隱含的條款，意思是該合約 (1) A contract of sale is a contract for sale by sample where there
是憑樣本售貨的，該合約即憑樣本售貨的合約。 is a term in the contract, express or implied, to that effect.

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第 26 章 第 17 條 Section 17 Cap. 26

(2) 憑樣本售貨的合約，有以下各項隱含條件 —— (2) In the case of a contract for sale by sample—

(a) 整批貨品須在品質上與樣本相符； (a) there is an implied condition that the bulk shall
(b) 買方須有合理機會，將整批貨品與樣本作比較； correspond with the sample in quality;
(c) 貨品並無任何令其不可商售且不會在對樣本進行合 (b) there is an implied condition that the buyer shall have a
理檢驗時顯現的缺點。 reasonable opportunity of comparing the bulk with the
sample;
(c) there is an implied condition that the goods shall be free
from any defect, rendering them unmerchantable, which
would not be apparent on reasonable examination of the
sample.

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2-1 第 II 部 Part II 2-2

第 26 章 第 18 條 Section 18 Cap. 26

第 II 部 Part II
合約的效力 Effects of the Contract
賣方與買方之間的產權轉讓 Transfer of property as between seller and buyer

18. 貨品必須予以確定 18. Goods must be ascertained

凡訂立合約售賣未確定的貨品，貨品的產權不轉讓給買方， Where there is a contract for the sale of unascertained goods no
除非及直至貨品已予確定。 property in the goods is transferred to the buyer unless and until
the goods are ascertained.

19. 產權在擬轉移時轉移 19. Property passes when intended to pass

(1) 凡訂立合約售賣特定貨品或已確定的貨品，該等貨品的 (1) Where there is a contract for the sale of specific or ascertained
產權在合約雙方擬將其轉讓時轉讓給買方。 goods, the property in them is transferred to the buyer at such
(2) 為確定雙方的意向，須考慮合約的條款、雙方的行為及 time as the parties to the contract intend it to be transferred.
有關個案的情況。 (2) For the purpose of ascertaining the intention of the parties,
regard shall be had to the terms of the contract, the conduct
of the parties, and the circumstances of the case.

20. 確定意向的規則 20. Rules for ascertaining intention

除非有不同的意向顯示，否則為確定雙方就貨品產權轉移給 Unless a different intention appears, the following are rules for
買方的時間方面的意向，有以下規則 —— ascertaining the intention of the parties as to the time at which the
規則 1. property in the goods is to pass to the buyer—
凡訂立不附帶條件的合約，售賣處於可交付狀態的特定貨品， Rule 1.   
貨品的產權於合約訂立時轉移給買方，而付款日期或交付日 Where there is an unconditional contract for the sale of specific
期是否延遲，或兩個日期是否均延遲，則無關重要。 goods in a deliverable state, the property in the goods passes to the
規則 2. buyer when the contract is made, and it is immaterial whether the
time of payment or the time of delivery, or both, be postponed.
凡訂立合約售賣特定的貨品，而賣方必須對該等貨品作出某
種處理，以使該等貨品達致可交付狀態，則貨品產權並不轉 Rule 2.   
移，直至賣方作出該種處理，而買方亦獲得有關此事的通知 Where there is a contract for the sale of specific goods and the
為止。 seller is bound to do something to the goods, for the purpose of
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第 26 章 第 20 條 Section 20 Cap. 26

規則 3. putting them into a deliverable state, the property does not pass
凡訂立合約售賣處於可交付狀態的特定貨品，但賣方必須稱 until such thing be done, and the buyer has notice thereof.
量、量度、測試或就該等貨品作出某種其他作為或事情以確 Rule 3.   
定貨價，則貨品產權並不轉移，直至賣方已作出該種作為或 Where there is a contract for the sale of specific goods in a
事情，而買方亦獲得有關此事的通知為止。 deliverable state, but the seller is bound to weigh, measure, test,
規則 4. or do some other act or thing with reference to the goods for the
當貨品是按有待同意或 “ 售賣或退回 ” 原則或其他類似條款交 purpose of ascertaining the price, the property does not pass until
付買方時 —— such act or thing be done, and the buyer has notice thereof.
(a) 該等貨品的產權即於買方向賣方表示同意或接受， Rule 4.   
或作出任何其他接納該宗交易的作為時轉移給買方； When goods are delivered to the buyer on approval or “on sale or
(b) 如買方沒有向賣方表示同意或接受，卻保留該等貨 return” or other similar terms, the property therein passes to the
品而不給予拒絕收貨通知，則若有定出退回貨品的 buyer—
期限，該等貨品的產權即於該期限屆滿之時轉移給 (a) when he signifies his approval or acceptance to the
買方，若無定出退回貨品的期限，該等貨品的產權 seller or does any other act adopting the transaction;
即於一段合理時間屆滿之時轉移給買方。何謂合理 (b) if he does not signify his approval or acceptance to the
時間乃事實問題。 seller but retains the goods without giving notice of
規則 5. rejection, then, if a time has been fixed for the return of
(1) 凡訂立合約，憑貨品說明售賣未確定的貨品或期貨，而 the goods, on the expiration of such time, and if no time
符合該貨品說明並處於可交付狀態的貨品，由賣方在買 has been fixed, on the expiration of a reasonable time.
方贊同下，或由買方在賣方贊同下，無條件地撥歸該合 What is a reasonable time is a question of fact.
約，則該等貨品的產權即轉移給買方。上述贊同可以是 Rule 5.   
明示或默示的，亦可在貨品撥歸之前或之後作出。 (1) Where there is a contract for the sale of unascertained or
(2) 凡賣方依據合約，將貨品交付買方或交付承運人或其他 future goods by description, and goods of that description,
受寄人 ( 不論是否由買方指名 ) 以轉交買方，並且不保留 and in a deliverable state, are unconditionally appropriated to
該等貨品的處置權，賣方即被當作已將該等貨品無條件 the contract, either by the seller with the assent of the buyer,
地撥歸該合約。 or by the buyer with the assent of the seller, the property in
the goods thereupon passes to the buyer. Such assent may be
express or implied, and may be given either before or after
the appropriation is made.
(2) Where, in pursuance of the contract, the seller delivers the
goods to the buyer or to a carrier or other bailee (whether

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第 26 章 第 21 條 Section 21 Cap. 26

named by the buyer or not) for the purpose of transmission

to the buyer, and does not reserve the right of disposal, he is
deemed to have unconditionally appropriated the goods to the
contract.

21. 貨品處置權的保留 21. Reservation of right of disposal

(1) 凡訂立合約售賣特定貨品，或貨品其後撥歸該合約，賣 (1) Where there is a contract for the sale of specific goods, or
方可根據合約或撥歸的條款，保留該等貨品的處置權， where goods are subsequently appropriated to the contract,
直至某些條件已獲符合為止。在該情況下，即使該等貨 the seller may, by the terms of the contract or appropriation,
品交付買方，或交付承運人或其他受寄人以轉交買方， reserve the right of disposal of the goods until certain
該等貨品的產權並不轉移給買方，直至賣方所施加的條 conditions are fulfilled. In such case, notwithstanding the
件已獲符合為止。 delivery of the goods to the buyer, or to a carrier or other
(2) 凡貨品已經裝運，並且憑提單可交付賣方或其代理人所 bailee for the purpose of transmission to the buyer, the
指定的人，即表面當作賣方保留該等貨品的處置權。 property in the goods does not pass to the buyer until the
conditions imposed by the seller are fulfilled.
(3) 凡貨品的賣方向買方提取貨款，並為了保證取得匯票的
承兌或支付而將匯票及提單一併轉交買方，買方如不兌 (2) Where goods are shipped, and by the bill of lading the goods
現該匯票，則必須退回提單；如買方錯誤地保留提單， are deliverable to the order of the seller or his agent, the
該等貨品的產權並不轉移給他。 seller is prima facie deemed to reserve the right of disposal.
(3) Where the seller of goods draws on the buyer for the price,
and transmits the bill of exchange and bill of lading to the
buyer together to secure acceptance or payment of the bill of
exchange, the buyer is bound to return the bill of lading if he
does not honour the bill of exchange, and if he wrongfully
retains the bill of lading the property in the goods does not
pass to him.

22. 風險表面與產權同時轉移 22. Risk prima facie passes with property

除另有議定外，貨品的風險由賣方承擔，直至貨品的產權轉 Unless otherwise agreed, the goods remain at the seller’s risk
讓給買方為止，但貨品的產權一旦轉讓給買方，則不論有否 until the property therein is transferred to the buyer, but when the
作出交付，貨品的風險由買方承擔︰ property therein is transferred to the buyer the goods are at the
但如因賣方或買方的錯失以致延誤交付，則就任何若非因該 buyer’s risk, whether delivery has been made or not:
項錯失則可能不會發生的損失而言，貨品的風險由犯錯失的 Provided that where delivery has been delayed through the fault of
一方承擔︰ either seller or buyer, the goods are at the risk of the party in fault

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第 26 章 第 23 條 Section 23 Cap. 26

但本條並不影響賣方或買方作為另一方的貨品受寄人所須承 as regards any loss which might not have occurred but for such
擔的責任或法律責任。 fault:
Provided, also, that nothing in this section shall affect the duties or
liabilities of either seller or buyer as a bailee of the goods of the
other party.

所有權的轉讓 Transfer of title

23. 由非擁有人售賣 23. Sale by person not owner

(1) 除本條例另有規定外，凡貨品是由並非貨品擁有人的人 (1) Subject to the provisions of this Ordinance, where goods are
售賣，而該人並非是在擁有人的授權或同意下售賣該等 sold by a person who is not the owner thereof, and who does
貨品的，則除非該等貨品的擁有人本身的行為令他不能 not sell them under the authority or with the consent of the
否定賣方的售賣權，否則買方所取得的該等貨品的所有 owner, the buyer acquires no better title to the goods than the
權，並不優於賣方的所有權。 seller had, unless the owner of the goods is by his conduct
(2) 但本條例並不影響 —— precluded from denying the seller’s authority to sell.
(a) 《代理商條例》( 第 48 章 ) 的條文，或任何使貨品的 (2) Provided, also, that nothing in this Ordinance shall affect—
表面擁有人能夠猶如貨品的真正擁有人般處置貨品 (a) the provisions of the Factors Ordinance (Cap. 48), or
的成文法則的條文；或 ( 由 1912 年第 8 號第 47 條 any enactment enabling the apparent owner of goods to
修訂 ) dispose of them as if he were the true owner thereof; or
(b) 根據任何特別普通法或法定售賣權力，或根據有司 (Amended 8 of 1912 s. 47)
法管轄權的法院所作命令而訂立的任何售賣合約的 (b) the validity of any contract of sale under any special
有效性。 common law or statutory power of sale or under the
order of a court of competent jurisdiction.

24. 公開市場 24. Market overt

(1) 凡貨品在香港的任何商店或市場公開售賣，並且是在該 (1) Where goods are openly sold in a shop or market in Hong
商店或市場的通常業務運作中售賣者，買方如出於真誠 Kong, in the ordinary course of the business of such shop or
購買該等貨品，且並不知悉賣方在貨品的所有權方面有 market, the buyer acquires a good title to the goods, provided
任何缺點或欠缺所有權，即取得該等貨品的妥善所有權。 he buys them in good faith and without notice of any defect
(2) ( 由 1977 年第 58 號第 7 條廢除 ) or want of title on the part of the seller. (Amended 66 of 2000
s. 3)
(2) (Repealed 58 of 1977 s. 7)

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2-9 第 II 部 Part II 2-10

第 26 章 第 25 條 Section 25 Cap. 26

25. 根據可使無效的所有權而售賣 25. Sale under voidable title

凡賣方對貨品有可使無效的所有權，但在售賣時其所有權尚 When the seller of goods has a voidable title thereto, but his title
未成為無效，買方如出於真誠購買該等貨品，且並不知悉賣 has not been avoided at the time of the sale, the buyer acquires a
方的所有權有缺點，即取得該等貨品的妥善所有權。 good title to the goods, provided he buys them in good faith and
without notice of the seller’s defect of title.

26. ( 由 1970 年第 21 號第 35 條廢除 ) 26. (Repealed 21 of 1970 s. 35)

27. 賣方或買方在售賣後的管有 27. Seller or buyer in possession after sale

(1) 凡已將貨品售賣的人繼續管有或正在管有該等貨品或該 (1) Where a person having sold goods continues or is in
等貨品的所有權文件，而該人或代該人行事的商業代理 possession of the goods, or of the documents of title to
人根據該等貨品或文件的任何售賣、質押或其他處置， the goods, the delivery or transfer by that person, or by a
將該等貨品或文件交付或轉讓給某人，而此人收受該等 mercantile agent acting for him, of the goods or documents
貨品或文件是出於真誠，且並不知悉之前的該宗售賣， of title, under any sale, pledge, or other disposition thereof,
則該項交付或轉讓的效力，猶如作出交付或轉讓的人已 to any person receiving the same in good faith and without
獲該等貨品的擁有人明確授權作出該項交付或轉讓一樣。 notice of the previous sale, shall have the same effect as if
(2) 凡已購買貨品或已同意購買貨品的人，在賣方同意下取 the person making the delivery or transfer were expressly
得該等貨品或該等貨品的所有權文件的管有，而該人或 authorized by the owner of the goods to make the same.
代該人行事的商業代理人根據該等貨品或文件的任何售 (2) Where a person having bought or agreed to buy goods
賣、質押或其他處置，將該等貨品或文件交付或轉讓給 obtains, with the consent of the seller, possession of the goods
某人，而此人收受該等貨品或文件是出於真誠，且並不 or the documents of title to the goods, the delivery or transfer
知悉原賣方對該等貨品享有任何留置權或其他權利，則 by that person, or by a mercantile agent acting for him, of
該項交付或轉讓的效力，猶如作出交付或轉讓的人是在 the goods or documents of title, under any sale, pledge, or
該等貨品的擁有人同意下管有該等貨品或該等所有權文 other disposition thereof, to any person receiving the same
件的商業代理人一樣。 in good faith and without notice of any lien or other right of
(3) 在本條中，商業代理人 (mercantile agent) 的涵義與《代理 the original seller in respect of the goods, shall have the same
商條例》( 第 48 章 ) 中該詞的涵義相同。 ( 由 1912 年第 8 effect as if the person making the delivery or transfer were a
號第 47 條修訂；由 1924 年第 5 號第 13 條修訂 ) mercantile agent in possession of the goods or documents of
title with the consent of the owner.
(3) In this section, mercantile agent (商業代理人) has the same
meaning as in the Factors Ordinance (Cap. 48). (Amended 8
of 1912 s. 47; 5 of 1924 s. 13)

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2-11 第 II 部 Part II 2-12

第 26 章 第 28 條 Section 28 Cap. 26

28. ( 由 1987 年第 52 號第 45 條廢除 ) 28. (Repealed 52 of 1987 s. 45)

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3-1 第 III 部 Part III 3-2

第 26 章 第 29 條 Section 29 Cap. 26

第 III 部 Part III

合約的履行 Performance of the Contract
29. 買賣雙方的責任 29. Duties of seller and buyer
賣方有責任按照售賣合約的條款交付貨品，而買方則有責任 It is the duty of the seller to deliver the goods, and of the buyer
按照售賣合約的條款接受貨品及就貨品付款。 to accept and pay for them, in accordance with the terms of the
contract of sale.

30. 付款與交付貨品為須同時履行的條件 30. Payment and delivery are concurrent conditions

除另有議定外，交付貨品與支付貨價為須同時履行的條件， Unless otherwise agreed, delivery of the goods and payment of the
即賣方必須作好準備，並願意將對貨品的管有交予買方以換 price are concurrent conditions, that is to say, the seller must be
取貨價，而買方則必須作好準備，並願意支付貨價，以換取對 ready and willing to give possession of the goods to the buyer in
貨品的管有。 exchange for the price, and the buyer must be ready and willing to
pay the price in exchange for possession of the goods.

31. 交付規則 31. Rules as to delivery

(1) 由買方取得貨品的管有抑或由賣方送貨給買方，在每宗 (1) Whether it is for the buyer to take possession of the goods
個案中視乎雙方訂立的合約 ( 不論是明訂或默示的 ) 而定。 or for the seller to send them to the buyer is a question
除任何此等明訂或默示的合約另有訂定外，如賣方有營 depending in each case on the contract, express or implied,
業地點，交付地點為其營業地點；如賣方無營業地點， between the parties. Apart from any such contract, express or
則為其住所︰ implied, the place of delivery is the seller’s place of business,
但如屬售賣特定貨品的合約，而雙方於訂立合約時已知 if he has one, and if not, his residence:
道該等貨品在另一地方，則該地方即為交付地點。 Provided that, if the contract is for the sale of specific goods,
(2) 凡賣方根據售賣合約必須送貨給買方，但並無訂定送貨 which, to the knowledge of the parties when the contract is
時間，則賣方必須在合理時間內送貨。 made, are in some other place, then that place is the place of
delivery.
(3) 凡貨品在售賣時為第三者所管有，賣方並無將貨品交付
買方，除非及直至該第三者向買方承認是代買方持有該 (2) Where under the contract of sale the seller is bound to send
等貨品︰ the goods to the buyer, but no time for sending them is fixed,
the seller is bound to send them within a reasonable time.
但本條並不影響貨品所有權文件的簽發或轉讓的效用。

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3-3 第 III 部 Part III 3-4

第 26 章 第 32 條 Section 32 Cap. 26

(4) 凡要求交付或提供交付，除非是在合理時間作出，否則 (3) Where the goods at the time of sale are in the possession of
可被視為無效。何謂合理時間乃事實問題。 a third person, there is no delivery by seller to buyer unless
(5) 除另有議定外，用於使貨品達致可交付狀態的開支及附 and until such third person acknowledges to the buyer that he
帶開支，必須由賣方負擔。 holds the goods on his behalf:
Provided that nothing in this section shall affect the operation
of the issue or transfer of any document of title to goods.
(4) Demand or tender of delivery may be treated as ineffectual
unless made at a reasonable hour. What is a reasonable hour
is a question of fact.
(5) Unless otherwise agreed, the expenses of and incidental to
putting the goods into a deliverable state must be borne by
the seller.

32. 交付數量錯誤 32. Delivery of wrong quantity

(1) 凡賣方交付買方的貨品數量少於他約定售賣的數量，買 (1) Where the seller delivers to the buyer a quantity of goods
方可拒絕收貨；但如買方接受如此交付的貨品，則必須 less than he contracted to sell, the buyer may reject them, but
按合約貨價率就該等貨品付款。 if the buyer accepts the goods so delivered, he must pay for
(2) 凡賣方交付買方的貨品數量超過他約定售賣的數量，買 them at the contract rate.
方可接受合約內所包括的貨品而拒收其餘貨品，或可拒 (2) Where the seller delivers to the buyer a quantity of goods
收全部貨品。如買方接受如此交付的全部貨品，則必須 larger than he contracted to sell, the buyer may accept the
按合約貨價率就該等貨品付款。 goods included in the contract and reject the rest, or he may
(3) 凡賣方交付貨品給買方，但在他約定售賣的貨品中，混 reject the whole. If the buyer accepts the whole of the goods
入合約內並不包括且屬於不同種類的貨品，買方可接受 so delivered he must pay for them at the contract rate.
符合合約規定的貨品而拒收其餘貨品，或可拒收全部貨 (3) Where the seller delivers to the buyer the goods he contracted
品。 to sell mixed with goods of a different description not
(4) 本條條文須受任何行業慣例、特別協議或雙方的交易過 included in the contract the buyer may accept the goods
程所規限。 which are in accordance with the contract and reject the rest,
or he may reject the whole.
(4) The provisions of this section are subject to any usage of
trade, special agreement, or course of dealing between the
parties.

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3-5 第 III 部 Part III 3-6

第 26 章 第 33 條 Section 33 Cap. 26

33. 分期交付 33. Delivery by instalments

(1) 除另有議定外，貨品的買方不必接受分期交付的貨品。 (1) Unless otherwise agreed, the buyer of goods is not bound to
(2) 凡售貨合約訂定貨品須以述明的期數交付並分期付款， accept delivery thereof by instalments.
而賣方有一期或多於一期交付不妥，或買方有一期或多 (2) Where there is a contract for the sale of goods to be delivered
於一期忽略或拒絕收貨或付款，則在每一個案中，該項 by stated instalments, which are to be separately paid for, and
違約是否將整份合約廢除，或是否屬可劃分的違約而只 the seller makes defective deliveries in respect of one or more
產生賠償申索但並不產生將整份合約視作已廢除的權利， instalments, or the buyer neglects or refuses to take delivery
視乎合約的條款及該個案的情況而定。 of or pay for one or more instalments, it is a question in
each case depending on the terms of the contract and the
circumstances of the case, whether the breach of contract is a
repudiation of the whole contract or whether it is a severable
breach giving rise to a claim for compensation but not to a
right to treat the whole contract as repudiated.

34. 交付承運人 34. Delivery to carrier

(1) 凡賣方依據售賣合約獲授權或被要求將貨品送交買方， (1) Where, in pursuance of a contract of sale, the seller is
則將貨品交付承運人 ( 不論是否由買方指名者 ) 以轉交買 authorized or required to send the goods to the buyer, delivery
方，即表面當作將貨品交付買方。 of the goods to a carrier, whether named by the buyer or not,
(2) 除買方另有授權外，賣方代買方與承運人訂立的合約， for the purpose of transmission to the buyer is prima facie
必須是在顧及貨品性質及個案的其他情況後屬合理的。 deemed to be a delivery of the goods to the buyer.
如賣方不如此辦理，而貨品在運送途中遺失或損壞，則 (2) Unless otherwise authorized by the buyer, the seller must
買方可拒絕將對承運人作出的交付視為對其本人作出的 make such contract with the carrier on behalf of the buyer as
交付，或可要求賣方負責支付損害賠償。 may be reasonable having regard to the nature of the goods
(3) 除另有議定外，凡賣方將貨品送交買方的路線涉及海運， and the other circumstances of the case. If the seller omits to
而在該種送貨情況下通常是會投購保險的，則賣方必須 do so, and the goods are lost or damaged in course of transit,
給予買方通知，而該通知是使買方能夠為貨品投購海運 the buyer may decline to treat the delivery to the carrier as
期間保險的；賣方如沒有如此辦理，則貨品在海運期間 a delivery to himself, or may hold the seller responsible in
的風險須當作由賣方承擔。 damages.
(3) Unless otherwise agreed, where goods are sent by the seller
to the buyer by a route involving sea transit, in circumstances
in which it is usual to insure, the seller must give such notice
to the buyer as may enable him to insure them during their
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3-7 第 III 部 Part III 3-8

第 26 章 第 35 條 Section 35 Cap. 26

sea transit, and, if the seller fails to do so, the goods shall be
deemed to be at his risk during such sea transit.

35. 遠地交付貨品的風險 35. Risk where goods are delivered at distant place
凡貨品在售賣時是在某一地點，而賣方同意在該地點以外的 Where the seller of goods agrees to deliver them at his own risk at
地點交付貨品並承擔風險，除另有議定外，買方仍必須承擔 a place other than that where they are when sold, the buyer must,
運送過程必然附帶的貨品變壞的風險。 nevertheless, unless otherwise agreed, take any risk of deterioration
in the goods necessarily incident to the course of transit.

36. 買方驗貨的權利 36. Buyer’s right of examining goods

(1) ( 由 1994 年第 85 號第 5 條廢除 ) (1) (Repealed 85 of 1994 s. 5)
(2) 除另有議定外，當賣方向買方提供貨品的交付時，賣方 (2) Unless otherwise agreed, when the seller tenders delivery
在買方要求下必須給予買方合理的驗貨機會，以確定貨 of goods to the buyer, he is bound, on request, to afford the
品是否符合合約規定。 buyer a reasonable opportunity of examining the goods for
the purpose of ascertaining whether they are in conformity
with the contract.

37. 接受貨品 37. Acceptance of goods

(1) 除第 (2) 款另有規定外，在以下情況下，買方被當作已接 (1) Subject to subsection (2), the buyer is deemed to have
受貨品 —— accepted the goods—
(a) 他告知賣方他已接受貨品；或 (a) when he intimates to the seller that he has accepted
(b) 貨品已交付予他，而他就貨品作出的任何作為與賣 them; or
方的擁有權不相符。 (b) when the goods have been delivered to him and he does
(2) 凡貨品已交付買方，而他之前並未檢驗該等貨品，則直 any act in relation to them which is inconsistent with the
至他已有合理機會為以下目的檢驗該等貨品，他並不被 ownership of the seller.
當作已根據第 (1) 款接受該等貨品 —— (2) Where goods are delivered to the buyer, and he has not
(a) 為確定該等貨品是否符合合約規定；及 previously examined them, he is not deemed to have accepted
them under subsection (1) until he has had a reasonable
(b) 如屬憑樣本售貨的合約，為將整批貨品與樣本比較。 opportunity of examining them for the purpose—
(3) 以消費者身分交易的買方，不得因協議、放棄權利或其 (a) of ascertaining whether they are in conformity with the
他情況而喪失其可倚賴第 (2) 款的權利。 contract; and

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3-9 第 III 部 Part III 3-10

第 26 章 第 38 條 Section 38 Cap. 26

(4) 當經過一段合理時間後，買方仍保留貨品而並未告知賣 (b) in the case of a contract for sale by sample, of

方他已拒絕收貨，買方亦被當作已接受貨品。 comparing the bulk with the sample.
(5) 在為施行第 (4) 款而決定是否已經過一段合理時間時，具 (3) The buyer who deals as consumer cannot lose his right to rely
關鍵性的問題包括買方是否已有合理機會為第 (2) 款所述 on subsection (2) by agreement, waiver or otherwise.
目的而檢驗貨品。 (4) The buyer is also deemed to have accepted the goods when
(6) 買方不得僅因貨品根據一項轉售或其他處置交付另一人 after the lapse of a reasonable time he retains the goods
而憑藉本條被當作已接受貨品。 without intimating to the seller that he has rejected them.
( 由 1994 年第 85 號第 6 條代替 ) (5) The questions that are material in determining for the
purposes of subsection (4) whether a reasonable time has
elapsed include whether the buyer has had a reasonable
opportunity of examining the goods for the purpose
mentioned in subsection (2).
(6) The buyer is not by virtue of this section deemed to have
accepted the goods merely because the goods are delivered to
another under a sub-sale or other disposition.
(Replaced 85 of 1994 s. 6)

38. 買方不必退回拒收的貨品 38. Buyer not bound to return rejected goods

除另有議定外，凡貨品交付買方，而買方在有權拒絕接受貨 Unless otherwise agreed, where goods are delivered to the buyer,
品的情況下拒絕接受貨品，則買方不必將貨品退回賣方，只 and he refuses to accept them, having the right to do so, he is not
須告知賣方他拒絕接受貨品即已足夠。 bound to return them to the seller, but it is sufficient if he intimates
to the seller that he refuses to accept them.

39. 買方忽略提貨或拒絕提貨而須承擔的法律責任 39. Liability of buyer for neglecting or refusing to take delivery of
如賣方作好準備，願意交付貨品，並要求買方提貨，而買方在 goods
該項要求提出後的一段合理時間內仍不提貨，則買方須就其 When the seller is ready and willing to deliver the goods and
忽略提貨或拒絕提貨所引致的損失及照顧與保管貨品的合理 requests the buyer to take delivery, and the buyer does not within a
費用，對賣方負法律責任︰ reasonable time after such request take delivery of the goods, he is
liable to the seller for any loss occasioned by his neglect or refusal
to take delivery, and also for a reasonable charge for the care and
custody of the goods:

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3-11 第 III 部 Part III 3-12

第 26 章 第 39 條 Section 39 Cap. 26

但本條不影響賣方在買方忽略提貨或拒絕提貨相等於廢除合 Provided that nothing in this section shall affect the rights of the
約時的權利。 seller where the neglect or refusal of the buyer to take delivery
amounts to a repudiation of the contract.

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4-1 第 IV 部 Part IV 4-2

第 26 章 第 40 條 Section 40 Cap. 26

第 IV 部 Part IV
未獲付款的賣方對貨品的權利 Rights of Unpaid Seller against the Goods
40. 未獲付款的賣方 的定義 40. Definition of unpaid seller
(1) 在以下情況下，賣方即被當作為本條例所指的未獲付款 (1) The seller of goods is deemed to be an unpaid seller (未獲付
的 賣 方 (unpaid seller) —— ( 編 輯 修 訂 ——2018 年 第 4 號 款的賣方) within the meaning of this Ordinance— (Amended
編輯修訂紀錄 ) E.R. 4 of 2018)
(a) 全部貨價未獲支付或未獲提供支付； (a) when the whole of the price has not been paid or
(b) 匯票或其他可流轉票據已獲接受作為有條件的付款， tendered;
但因票據不兌現或其他原因，該匯票或可流轉票據 (b) when a bill of exchange or other negotiable instrument
獲接受的條件未獲符合。 has been received as conditional payment, and the
(2) 在本部中，賣方 (seller) 包括處於賣方位置的任何人，例 condition on which it was received has not been
如，作為提單承背書人的賣方代理人，或自行支付貨價 fulfilled by reason of the dishonour of the instrument or
或直接負責支付貨價的付貨人或代理人。 ( 由 1924 年第 otherwise.
5 號第 13 條修訂 ) (2) In this Part, seller (賣方) includes any person who is in the
position of a seller, as, for instance, an agent of the seller to
whom the bill of lading has been indorsed, or a consignor or
agent who has himself paid, or is directly responsible for, the
price. (Amended 5 of 1924 s. 13)

41. 未獲付款的賣方的權利 41. Unpaid seller’s rights

除本條例及任何有關的成文法則另有規定外，即使貨品的產 Subject to the provisions of this Ordinance and of any enactment
權可能已轉移給買方，法律上仍隱含該等貨品的未獲付款的 in that behalf, notwithstanding that the property in the goods may
賣方有以下權利 —— have passed to the buyer, the unpaid seller of goods as such, has
(a) 對該等貨品的留置權，或當他正管有該等貨品時， by implication of law—
可保留該等貨品以抵貨價的權利； (a) a lien on the goods or right to retain them for the price
(b) 如買方無力償債，在買方不再管有該等貨品後對該 while he is in possession of them;
等貨品的途中停運權； (b) in case of the insolvency of the buyer, a right of
(c) 受本條例限制的另售權。 stopping the goods in transitu after he has parted with
the possession of them;

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4-3 第 IV 部 Part IV 4-4

第 26 章 第 42 條 Section 42 Cap. 26

(c) a right of re-sale as limited by this Ordinance.

42. 扣貨不交付 42. Withholding delivery

凡貨品的產權並未轉移給買方，未獲付款的賣方除有其他補 Where the property in goods has not passed to the buyer, the
救外，尚有扣貨不交付的權利，該權利類似並在程度上相等 unpaid seller has, in addition to his other remedies, a right of
於他在產權已轉移給買方的情況下所享有的留置權和途中停 withholding delivery similar to and co-extensive with his rights of
運權。 lien and stoppage in transitu where the property has passed to the
buyer.

未獲付款的賣方的留置權 Unpaid seller’s lien

43. 未獲付款的賣方的留置權 43. Unpaid seller’s lien

(1) 除本條例另有規定外，未獲付款的賣方如仍管有貨品， (1) Subject to the provisions of this Ordinance, the unpaid seller
則在以下情況下，有權保留對該等貨品的管有，直至他 of goods who is in possession of them is entitled to retain
獲支付貨價或獲提供貨價的支付為止 —— possession of them until payment or tender of the price in the
(a) 售貨時並無信貸的規定； following cases, namely—
(b) 以信貸方式售貨，但信貸期限已經屆滿； (a) where the goods have been sold without any stipulation
as to credit;
(c) 買方無力償債。
(b) where the goods have been sold on credit, but the term
(2) 賣方即使以買方代理人或受寄人身分管有貨品，仍可行 of credit has expired;
使其留置權。
(c) where the buyer becomes insolvent.
(2) The seller may exercise his right of lien notwithstanding that
he is in possession of the goods as agent or bailee for the
buyer.

44. 交付部分貨品 44. Part delivery

凡未獲付款的賣方已交付部分貨品，他可對餘下貨品行使其 Where an unpaid seller has made part delivery of the goods, he
留置權或保留權，但如交付部分貨品的情況顯示有放棄留置 may exercise his right of lien or retention on the remainder, unless
權或保留權的協議，則屬例外。 such part delivery has been made in such circumstances as to show
an agreement to waive the lien or right of retention.

45. 終止留置權 45. Termination of lien

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4-5 第 IV 部 Part IV 4-6

第 26 章 第 46 條 Section 46 Cap. 26

(1) 未獲付款的賣方在以下情況下喪失其對貨品的留置權或 (1) The unpaid seller of goods loses his lien or right of retention
保留權 —— thereon—
(a) 他將貨品交付承運人或其他受寄人以轉交買方而並 (a) when he delivers the goods to a carrier or other bailee
無保留對貨品的處置權利； for the purpose of transmission to the buyer, without
(b) 買方或其代理人合法地取得對貨品的管有； reserving the right of disposal of the goods;
(c) 他放棄該等權利。 (b) when the buyer or his agent lawfully obtains possession
of the goods;
(2) 未獲付款的賣方如對貨品有留置權或保留權，並不僅因
他獲判可得貨品的貨價而喪失其留置權或保留權。 (c) by waiver thereof.
(2) The unpaid seller of goods, having a lien or right of retention
thereon, does not lose his lien or right of retention by reason
only that he has obtained judgment for the price of the goods.

途中停運 Stoppage in transitu

46. 途中停運權 46. Right of stoppage in transitu

除本條例另有規定外，當貨品的買方無力償債時，不再管有 Subject to the provisions of this Ordinance, when the buyer of
貨品而又未獲付款的賣方對貨品有途中停運權，即只要貨品 goods becomes insolvent, the unpaid seller who has parted with the
是在運送途中，他可重新管有貨品，並可將其保留，直至獲支 possession of the goods has the right of stopping them in transitu,
付貨價或獲提供貨價的支付為止。 that is to say, he may resume possession of the goods as long as
they are in course of transit, and may retain them until payment or
tender of the price.

47. 運送期 47. Duration of transit

(1) 貨品自交付陸路或水路承運人或其他受寄人以轉交買方 (1) Goods are deemed to be in course of transit from the time
時開始，直至買方或其在此方面的代理人從該承運人或 when they are delivered to a carrier by land or water, or other
其他受寄人處提貨為止，一直被當作在運送途中。 bailee for the purpose of transmission to the buyer, until the
(2) 如買方或其在此方面的代理人在貨品尚未抵達指定目的 buyer, or his agent in that behalf, takes delivery of them from
地前取得貨品的交付，運送即告完結。 such carrier or other bailee.
(3) 如貨品抵達指定目的地後，承運人或其他受寄人向買方 (2) If the buyer or his agent in that behalf obtains delivery of the
或其代理人承認他是為買方或其代理人持有貨品，並以 goods before their arrival at the appointed destination, the
買方或其代理人的受寄人身分繼續管有貨品，運送即告 transit is at an end.

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4-7 第 IV 部 Part IV 4-8

第 26 章 第 48 條 Section 48 Cap. 26

完結，而即使買方可能曾表示貨品另有目的地，亦無關 (3) If, after the arrival of the goods at the appointed destination,
重要。 the carrier or other bailee acknowledges to the buyer, or his
(4) 如買方拒絕收貨，而承運人或其他受寄人繼續管有貨品， agent, that he holds the goods on his behalf and continues
則即使賣方拒絕收回貨品，運送亦不當作已完結。 in possession of them as bailee for the buyer or his agent,
the transit is at an end, and it is immaterial that a further
(5) 當貨品是交付至買方租用的船隻上，貨品是由船長以承 destination for the goods may have been indicated by the
運人抑或以買方的代理人身分管有的問題，視乎個別個 buyer.
案的情況而定。
(4) If the goods are rejected by the buyer, and the carrier or
(6) 凡承運人或其他受寄人錯誤地拒絕將貨品交付買方或其 other bailee continues in possession of them, the transit is
在此方面的代理人，運送即當作已完結。 not deemed to be at an end, even if the seller has refused to
(7) 凡已將部分貨品交付買方或其在此方面的代理人，餘下 receive them back.
貨品可途中停運，但如交付部分貨品的情況顯示有放棄 (5) When goods are delivered to a ship chartered by the buyer, it
管有全部貨品的協議，則屬例外。 is a question depending on the circumstances of the particular
case whether they are in the possession of the master as a
carrier, or as agent to the buyer.
(6) Where the carrier or other bailee wrongfully refuses to deliver
the goods to the buyer or his agent in that behalf, the transit
is deemed to be at an end.
(7) Where part delivery of the goods has been made to the buyer
or his agent in that behalf, the remainder of the goods may be
stopped in transitu, unless such part delivery has been made
in such circumstances as to show an agreement to give up
possession of the whole of the goods.

48. 如何途中停運 48. How stoppage in transitu is effected

(1) 未獲付款的賣方，可藉取得對貨品的實際管有，或向管 (1) The unpaid seller may exercise his right of stopping in
有貨品的承運人或其他受寄人發出申索通知，以行使其 transitu either by taking actual possession of the goods or
途中停運權。該通知可發給實際管有貨品的人或其委托 by giving notice of his claim to the carrier or other bailee in
人。如發給委托人，則為使通知有效，在發出通知的時 whose possession the goods are. Such notice may be given
間及情況方面，必須讓委托人在經合理的努力後，可及 either to the person in actual possession of the goods or to
時知會其僱工或代理人，以阻止將貨品交付買方。 his principal. In the latter case the notice, to be effectual,
must be given at such time and in such circumstances that
the principal, by the exercise of reasonable diligence, may
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4-9 第 IV 部 Part IV 4-10

第 26 章 第 49 條 Section 49 Cap. 26

(2) 當賣方向管有貨品的承運人或其他受寄人發出有關途中 communicate it to his servant or agent in time to prevent a

停運的通知，該承運人或其他受寄人必須將貨品重新交 delivery to the buyer.
付賣方，或按照賣方的指示將貨品重新交付。該次重新 (2) When notice of stoppage in transitu is given by the seller to
交付的開支必須由賣方負擔。 the carrier or other bailee in possession of the goods, he must
re-deliver the goods to, or according to the directions of, the
seller. The expenses of such re-delivery must be borne by the
seller.

買方或賣方另售貨品 Re-sale by buyer or seller

49. 買方轉售或質押的效力 49. Effect of sub-sale or pledge by buyer

除本條例另有規定外，未獲付款的賣方的留置權、保留權或 Subject to the provisions of this Ordinance, the unpaid seller’s
途中停運權，不受買方對貨品可能已作出的售賣或其他處置 right of lien or retention or stoppage in transitu is not affected by
影響，但如賣方曾對此表示贊同，則屬例外︰ any sale or other disposition of the goods which the buyer may
但如貨品的所有權文件已合法地轉讓給任何身為貨品的買方 have made, unless the seller has assented thereto:
或擁有人的人，而該人將該文件轉讓給另一出於真誠和以有 Provided that where a document of title to goods has been lawfully
值代價換取該文件的人，則如該後述一次轉讓是以售賣方式 transferred to any person as buyer or owner of the goods, and that
進行，未獲付款的賣方的留置權或保留權或途中停運權即告 person transfers the document to a person who takes the document
廢棄，但如該後述一次轉讓是以質押或其他有值處置方式進 in good faith and for valuable consideration, then, if such last-
行，則未獲付款的賣方的留置權或保留權或途中停運權，只 mentioned transfer was by way of sale, the unpaid seller’s right of
可在受承讓人權利限制的情況下行使。 lien or retention or stoppage in transitu is defeated, and if such last
mentioned transfer was by way of pledge or other disposition for
value, the unpaid seller’s right of lien or retention or stoppage in
transitu can only be exercised subject to the rights of the transferee.

50. 售賣一般不因行使留置權或途中停運權而撤銷 50. Sale not generally rescinded by lien or stoppage in transitu
(1) 除本條另有規定外，售賣合約並不僅因未獲付款的賣方 (1) Subject to the provisions of this section, a contract of sale is
行使其留置權或保留權或途中停運權而撤銷。 not rescinded by the mere exercise by an unpaid seller of his
(2) 凡未獲付款的賣方已行使其留置權或保留權或途中停運 right of lien or retention or stoppage in transitu.
權而將貨品另售，相對於原買方而言，買方取得貨品的 (2) Where an unpaid seller who has exercised his right of lien or
妥善所有權。 retention or stoppage in transitu re-sells the goods, the buyer
acquires a good title thereto as against the original buyer.

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4-11 第 IV 部 Part IV 4-12

第 26 章 第 50 條 Section 50 Cap. 26

(3) 凡貨品屬易毀消性質，或未獲付款的賣方向買方發出其 (3) Where the goods are of a perishable nature, or where the
擬另售的意向通知，而買方未有在合理時間內支付貨價 unpaid seller gives notice to the buyer of his intention to re-
或提供貨價的支付，則未獲付款的賣方可將貨品另售， sell, and the buyer does not within a reasonable time pay
並可向原買方就其違約所造成的任何損失追討損害賠償。 or tender the price, the unpaid seller may re-sell the goods
(4) 凡賣方明確保留另售權利，以防買方不履行責任，而又 and recover from the original buyer damages for any loss
在買方不履行責任時將貨品另售，原售賣合約即因此而 occasioned by his breach of contract.
撤銷，但對賣方可能提出的任何損害賠償申索並無影響。 (4) Where the seller expressly reserves a right of re-sale in case
the buyer should make default, and on the buyer making
default, re-sells the goods, the original contract of sale is
thereby rescinded, but without prejudice to any claim the
seller may have for damages.

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5-1 第V部 Part V 5-2

第 26 章 第 51 條 Section 51 Cap. 26

第V部 Part V
就違約而提出的訴訟 Actions for Breach of the Contract
對賣方的補救 Remedies of seller

51. 就貨價而提出的訴訟 51. Action for price

(1) 凡貨品的產權已根據售賣合約轉移給買方，而買方錯誤 (1) Where, under a contract of sale, the property in the goods
地忽略或拒絕依照合約條款支付貨價，賣方可向他提出 has passed to the buyer, and the buyer wrongfully neglects
訴訟以追討貨品的貨價。 or refuses to pay for the goods according to the terms of the
(2) 凡根據售賣合約，不論貨品有否交付，貨價須在確定的 contract, the seller may maintain an action against him for the
某一天支付，而買方錯誤地忽略或拒絕支付該貨價，則 price of the goods.
雖然貨品的產權未有轉移，而貨品亦未經撥歸該合約， (2) Where, under a contract of sale, the price is payable on a
賣方仍可提出訴訟以追討貨價。 day certain irrespective of delivery, and the buyer wrongfully
neglects or refuses to pay such price, the seller may maintain
an action for the price, although the property in the goods has
not passed, and the goods have not been appropriated to the
contract.

52. 因對方不接受貨品而要求損害賠償 52. Damages for non-acceptance

(1) 凡買方錯誤地忽略或拒絕接受貨品和就貨品付款，賣方 (1) Where the buyer wrongfully neglects or refuses to accept and
可向他提出因貨品不獲接受而要求損害賠償的訴訟。 pay for the goods, the seller may maintain an action against
(2) 損害賠償的計算，是在事件的正常過程中，因買方違約 him for damages for non-acceptance.
而直接及自然地造成的估計損失。 (2) The measure of damages is the estimated loss directly and
(3) 凡有關貨品是有現成市場的，則損害賠償的計算，表面 naturally resulting, in the ordinary course of events, from the
須按合約價與貨品應獲接受時的市價或時價之間的差額 buyer’s breach of contract.
而予以確定；如並無訂定接受貨品的時間，則按合約價 (3) Where there is an available market for the goods in question,
與買方忽略或拒絕接受貨品時的市價或時價之間的差額 the measure of damages is prima facie to be ascertained by
予以確定。 the difference between the contract price and the market or
current price at the time or times when the goods ought to

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5-3 第V部 Part V 5-4

第 26 章 第 53 條 Section 53 Cap. 26

have been accepted, or, if no time was fixed for acceptance,

then at the time of the neglect or refusal to accept.

對買方的補救 Remedies of buyer

53. 因對方不交付貨品而要求損害賠償 53. Damages for non-delivery

(1) 凡賣方錯誤地忽略或拒絕將貨品交付買方，買方可向他 (1) Where the seller wrongfully neglects or refuses to deliver the
提出因不獲交付貨品而要求損害賠償的訴訟。 goods to the buyer, the buyer may maintain an action against
(2) 損害賠償的計算，是在事件的正常過程中，因賣方違約 the seller for damages for non-delivery.
而直接及自然地造成的估計損失。 (2) The measure of damages is the estimated loss directly and
(3) 凡有關貨品是有現成市場的，則損害賠償的計算，表面 naturally resulting, in the ordinary course of events, from the
須按合約價與貨品應交付時的市價或時價之間的差額而 seller’s breach of contract.
予以確定；如並無訂定交付的時間，則按合約價與賣方 (3) Where there is an available market for the goods in question,
忽略或拒絕交付貨品時的市價或時價之間的差額予以確 the measure of damages is prima facie to be ascertained by
定。 the difference between the contract price and the market or
current price of the goods at the time or times when they
ought to have been delivered, or, if no time was fixed for
delivery, then at the time of the neglect or refusal to deliver.

54. 強制履行 54. Specific performance

在任何因違約不交付特定貨品或經確定貨品而提出的訴訟中， In any action for breach of contract to deliver specific or
法院如認為適當，可應原告人的申請，藉法院的判決指示合 ascertained goods, the court may, if it thinks fit, on the application
約須予強制履行而不給予被告人在繳付損害賠償後保留貨品 of the plaintiff, by its judgment direct that the contract shall be
的選擇。該項判決可不附帶條件，或可在損害賠償、貨價的繳 performed specifically, without giving the defendant the option of
付或其他方面附帶法院認為公正的條款及條件。原告人可隨 retaining the goods on payment of damages. The judgment may
時在法院作出判決前提出該項申請。 be unconditional, or on such terms and conditions as to damages,
payment of the price, and otherwise, as to the court may seem just.
The application by the plaintiff may be made at any time before
judgment.

55. 違反保證條款的補救 55. Remedies for breach of warranty

(1) 凡賣方違反保證條款，或買方選擇或被迫將賣方的違反 (1) Where there is a breach of warranty by the seller, or where
條件視為違反保證條款，買方無權僅以該項違反保證條 the buyer elects, or is compelled, to treat any breach of a

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5-5 第V部 Part V 5-6

第 26 章 第 56 條 Section 56 Cap. 26

款為理由而拒絕收貨；但他可 —— condition on the part of the seller as a breach of warranty,

(a) 向賣方提出因該項違反保證條款而要求降低或免收 the buyer is not, by reason only of such breach of warranty,
貨價；或 entitled to reject the goods; but he may—
(b) 向賣方提出因該項違反保證條款而要求損害賠償的 (a) set up against the seller the breach of warranty in
訴訟。 diminution or extinction of the price; or
(2) 就違反保證條款要求損害賠償的計算，是在事件的正常 (b) maintain an action against the seller for damages for the
過程中，因違反保證條款而直接及自然地造成的估計損 breach of warranty.
失。 (2) The measure of damages for breach of warranty is the
(3) 如屬違反關於貨品品質的保證條款，該項損失表面是貨 estimated loss directly and naturally resulting, in the ordinary
品交付買方時的價值與貨品若與保證條款脗合則會具有 course of events, from the breach of warranty.
的價值之間的差額。 (3) In the case of breach of warranty of quality, such loss is
(4) 如買方曾蒙受進一步的損害，則買方已提出因違反保證 prima facie the difference between the value of the goods at
條款而要求降低或免收貨價的事實，並不阻止他就同一 the time of delivery to the buyer and the value they would
項違反保證條款而提出訴訟。 have had if they had answered to the warranty.
(4) The fact that the buyer has set up the breach of warranty in
diminution or extinction of the price does not prevent him
from maintaining an action for the same breach of warranty if
he has suffered further damage.

56. 利息和特別損害賠償 56. Interest and special damages

凡依法可追討利息或特別損害賠償，本條例並不影響買方或 Nothing in this Ordinance shall affect the right of the buyer or the
賣方追討利息或特別損害賠償的權利；凡付款的代價已消失， seller to recover interest or special damages in any case where by
本條例亦不影響買方或賣方追討已付款項的權利。 law interest or special damages may be recoverable, or to recover
money paid where the consideration for the payment of it has
failed.

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6-1 第 VI 部 Part VI 6-2

第 26 章 第 57 條 Section 57 Cap. 26

第 VI 部 Part VI
補充條文 Supplementary
57. 免除隱含的條款及條件 57. Exclusion of implied terms and conditions
(1) 凡法律上隱含任何權利、責任或法律責任根據售貨合約 (1) Where any right, duty or liability would arise under a contract
而產生，該權利、責任或法律責任可在不抵觸《管制免責 of sale of goods by implication of law, it may (subject to
條款條例》( 第 71 章 ) 的情況下，藉明訂的協議，或藉雙 the Control of Exemption Clauses Ordinance (Cap. 71)) be
方交易過程，或藉慣例 ( 如該慣例對合約雙方均具約束力 ) negatived or varied by express agreement, or by the course of
而予以否定或變更。 ( 由 1989 年第 59 號第 20 條修訂 ) dealing between the parties, or by usage if the usage is such
(2) 任何明訂的條件或保證條款，除非與藉本條例隱含的條 as to bind both parties to the contract. (Amended 59 of 1989
件或保證條款有矛盾，否則對後者並不加以否定。 s. 20)
(3)-(11) ( 由 1989 年第 59 號第 20 條廢除 ) (2) An express condition or warranty does not negative a
condition or warranty implied by this Ordinance unless
( 由 1977 年第 58 號第 8 條代替 ) inconsistent therewith.
[ 比照 1973 c. 13 s. 4 U.K.] (3)-(11) (Repealed 59 of 1989 s. 20)
(Replaced 58 of 1977 s. 8)
[cf. 1973 c. 13 s. 4 U.K.]

57A. ( 由 1989 年第 59 號第 20 條廢除 ) 57A. (Repealed 59 of 1989 s. 20)

58. 合理時間乃事實問題 58. Reasonable time a question of fact

在本條例中，凡提述合理時間時，何謂合理時間乃事實問題。 Where, by this Ordinance, any reference is made to a reasonable
time, the question what is a reasonable time is a question of fact.

59. 權利等可藉訴訟強制執行 59. Right, etc., enforceable by action

本條例所公布的任何權利、責任或法律責任，除本條例另有 Where any right, duty, or liability is declared by this Ordinance, it
規定外，均可藉訴訟強制執行。 may, unless otherwise provided by this Ordinance, be enforced by
action.

60. 拍賣 60. Auction sale

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6-3 第 VI 部 Part VI 6-4

第 26 章 第 61 條 Section 61 Cap. 26

在拍賣中 —— In the case of a sale by auction—

(a) 凡貨品是分批拍賣，每批貨品表面均當作為一份獨 (a) where goods are put up for sale by auction in lots, each
立售賣合約之標的物； lot is prima facie deemed to be the subject of a separate
(b) 當拍賣商憑下鎚或其他慣用方式宣布拍賣成交，拍 contract of sale;
賣即告完成。在此項宣布作出前，任何競投人均可 (b) a sale by auction is complete when the auctioneer
撤回其競投； announces its completion by the fall of the hammer, or
(c) 凡在拍賣中未有作出通知表示有權代賣方競投，在 in other customary manner. Until such announcement is
該次拍賣中賣方親自競投或僱用任何人代為競投， made any bidder may retract his bid;
或拍賣商明知而接受賣方或任何該等人士的競投， (c) where a sale by auction is not notified to be subject to a
均屬不合法。買方可將任何違反本規則的售賣視為 right to bid on behalf of the seller, it shall not be lawful
欺詐售賣； for the seller to bid himself or to employ any person to
(d) 在拍賣中可作出通知表示拍賣受保留價或底價限制， bid at such sale, or for the auctioneer knowingly to take
亦可由賣方本人或由他人代賣方明示保留競投權利。 any bid from the seller or any such person. Any sale
contravening this rule may be treated as fraudulent by
the buyer;
(d) a sale by auction may be notified to be subject to a
reserve or upset price, and a right to bid may also be
reserved expressly by or on behalf of the seller.

61. 競投權利的保留 61. Reservation of right to bid

凡競投權利獲予明示保留，並僅在此情況下，賣方或代其行 Where a right to bid is expressly reserved, but not otherwise, the
事的任何一名人士均可在拍賣中競投。 seller, or any one person on his behalf, may bid at the auction.

62. 保留條文 62. Saving

(1) 儘管本條例另有規定，與售賣合約有關的破產規則對售 (1) The rules in bankruptcy relating to contracts of sale shall
賣合約仍繼續適用。 continue to apply thereto, notwithstanding anything in this
(2) 普通法的規則 ( 包括商法 )，尤其是與委託人和代理人的 Ordinance.
法律有關的規則，及與欺詐、失實陳述、威迫或脅迫、 (2) The rules of the common law, including the law merchant,
錯誤或其他致使無效的因由的影響有關的規則，除非與 save in so far as they are inconsistent with the express
本條例的明訂條文有矛盾，否則繼續適用於售貨合約。 provisions of this Ordinance, and in particular the rules
relating to the law of principal and agent, and the effect of
fraud, misrepresentation, duress or coercion, mistake, or other

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6-5 第 VI 部 Part VI 6-6

第 26 章 第 62 條 Section 62 Cap. 26

(3) 本條例或本條例所作的任何一項廢除，並不影響與賣據 invalidating cause, shall continue to apply to contracts for the
有關的成文法則，亦不影響本條例未予明示廢除的任何 sale of goods.
與售貨有關的成文法則。 (3) Nothing in this Ordinance or in any repeal effected thereby
(4) 本條例中關於售賣合約的條文，對任何形式上屬售賣合 shall affect the enactments relating to bills of sale, or any
約而又擬以按揭、質押、押記或其他保證形式運作的交 enactment relating to the sale of goods which is not expressly
易，概不適用。 repealed by this Ordinance.
(5) ( 由 1989 年第 59 號第 20 條廢除 ) (4) The provisions of this Ordinance relating to contracts of sale
(6) 《1977 年貨品售賣 ( 修訂 ) 條例》*(1977 年第 58 號 ) 所作 do not apply to any transaction in the form of a contract of
有關本條例的修訂，對凡屬本條例適用且在該條例生效 sale which is intended to operate by way of mortgage, pledge,
日期 # 前訂立的合約，概不適用；所有該等合約均繼續受 charge, or other security.
在緊接《1977 年貨品售賣 ( 修訂 ) 條例》*(1977 年第 58 號 ) (5) (Repealed 59 of 1989 s. 20)
生效日期 # 前施行的本條例條文所管限。( 由 1977 年第 (6) The amendments of this Ordinance made by the Sale of
58 號第 10 條增補 ) Goods (Amendment) Ordinance 1977 (58 of 1977) shall not
apply to contracts to which this Ordinance applies which
編輯附註： were entered into prior to the date of commencement# of
* 《
“ 1977 年 貨 品 售 賣 ( 修 訂 ) 條 例》” 乃 “Sale of Goods (Amendment) that Ordinance; and all such contracts shall continue to be
Ordinance 1977” 之譯名。 governed by the provisions of this Ordinance in operation
# 生效日期：1977 年 7 月 15 日。
immediately prior to the date of commencement# of the Sale
of Goods (Amendment) Ordinance 1977 (58 of 1977). (Added
58 of 1977 s. 10)

Editorial Note:
#
Commencement date: 15 July 1977.

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IN THE COURT OF APPEAL 1995, No. 94
(Civil)

BETWEEN

Man Earn Ltd Appellant/

Plaintiff

and

Wing Ting Fong Respondent/

Defendant

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

Coram : Hon. Litton, V.P., Godfrey & Ching, JJ.A.

Date of hearing : 31 October 1995
Date of delivery of judgment : 22 November 1995

----------------------
JUDGMENT
----------------------

Godfrey, J.A. :

Introduction

This is an interlocutory appeal, from an order of Jerome Chan J,

dated 17 March 1995, made on an application by the plaintiff for summary
judgment against the defendant in an action for specific performance of a
contract for the sale of land. The master had acceded to the plaintiff’s
application for summary judgment and had made an order for specific
performance of the contract against the defendant. The defendant
successfully appealed to the judge, whose view it was that the plaintiff’s
 - 2 -

application ought to be dismissed; accordingly he allowed the appeal and

dismissed the plaintiff’s application, with costs. The plaintiff now appeals to
this court. The plaintiff says the case is one in which it has properly invoked
the provisions of the Rules of the Supreme Court which enable a plaintiff, in
an appropriate case, to apply for summary judgment against the defendant,
and that accordingly this court ought to make an order for specific
performance against the defendant.

Summary judgment

This appeal has demonstrated once again that, although the Rules
of the Supreme Court have provided for many years a procedure whereby a
plaintiff can in an appropriate case apply for summary judgment against the
defendant, the purpose of this procedure, and the sort of case for which it is
suitable, is not always properly appreciated.

The Rules of the Supreme Court, so far as ordinary civil

proceedings are concerned, are designed for the resolution of genuine
disputes. They enable the issues to be defined; the parties to prepare for trial;
and the trial to take place in an orderly and effective manner. But all this is
inappropriate where there is no genuine dispute and the defendant, although
he has no real defence, finds it advantageous to keep the plaintiff out of the
latter’s entitlement as long as possible, e.g. because it will help the
defendant’s cash-flow if he keeps the plaintiff waiting for his money, rather
than borrowing what he needs from a commercial institution in order to pay
the plaintiff. The typical case is that of a defendant who takes delivery of
goods and then, on some spurious pretext, dishonours the cheque which he
has issued in payment for the goods. Although (in general) he will have no
defence to the plaintiff’s action on the dishonoured cheque, he will be able, if
the plaintiff is required to proceed to trial in the ordinary way, to keep the
plaintiff out of his money for months and possibly longer. Until 1855, a
plaintiff could do nothing about this. But the abuse of the court’s procedure
by defendants seeking to obtain free or cheap credit at the expense of
plaintiffs led in that year to the passing of the Act known as “Keating’s Act”
under which the defendant was allowed to defend the plaintiff’s action on a
bill of exchange drawn by the defendant only if he paid the money alleged to
be due into court, or alternatively, was able on affidavit to demonstrate a
genuine defence to the action. This “summary procedure” worked well, and
 - 3 -

its scope has been progressively extended to almost all actions, including
(under O.86 of the Rules of the Supreme Court) actions for specific
performance of contracts for the sale of land. But those familiar with the
history of the “summary procedure” do not forget its extraordinary nature :

“It is a procedure in which, instead of trial first and then judgment, there is
judgment at once and never any trial” :

see Symon & Co. v. Palmer’s Stores (1903) Ltd [1912] 1 KB 259
per Buckley L.J. at p.266.

Since the policy which underlies the summary procedure is to

prevent the defendant from delaying the plaintiff from obtaining judgment in
a case in which the defendant has clearly no defence to the plaintiff’s claim,
the procedure should be invoked only where this condition is satisfied.
Practitioners, and sometimes judges, are in danger of losing sight of this :

“People do not seem to understand that the effect of Ord. 14 is that, upon the
allegation of the one side or the other, a man is not permitted to defend
himself in court; that his rights are not to be litigated at all. There are some
things too plain for argument; and where there were pleas put in simply for
the purpose of delay, which only added to the expense, and where it was not
in aid of justice that such things should continue, Ord. 14 was intended to put
an end to that state of things, and to prevent sham defences from defeating the
rights of parties by delay and at the same time causing great loss to the
plaintiffs who are endeavouring to enforce their rights. But when in such a
case as this, Ord. 14 is applied, there are a great many things to be said. I do
not propose to enter into the merits of the case or the comprehension of it,
which is necessary to some extent in order to deal with the merits. That
question would have to be dealt with when the case is tried. But I am bound
to say that it startles me to think that in a case of this sort an order should be
made, the effect of which is that the defendant is not to be heard to make his
defence.” :

see Jacobs v. Booth’s Distillery Co. (1901) 85 L.T 262, per Lord
Halsbury LC.

Unless it is obvious that the defence put forward by the defendant is

“frivolous and practically moonshine, Ord. 14 ought not to be applied” : see
Codd v. Delap (1905) 92 LT 510, per Lord Lindley, at p.511.
 - 4 -

For those who may believe that these sentiments are outdated, a
salutary reminder is provided in Crown House Engineering v. Amec Projects
Ltd (1990) 6 Const. Law Journal 141, where (at p.154), Bingham LJ says
this :

“..... Ord. 14 is for clear cases; that is, cases in which there is no serious
material factual dispute and, if a legal issue, then no more than a crisp legal
question as well decided summarily as otherwise ..... The procedure is
entirely inappropriate where the plaintiff’s entitlement to recover any sum is
the subject of any serious dispute, whether of law or fact. This is not to
say ..... that a defendant with no or no more than a partial defence can cheat a
plaintiff of his just deserts by producing hefty affidavits and voluminous
exhibits to create an illusion of complexity where none exists. Where the
point at issue is at heart a short one the court will recognise the fact and act
accordingly no matter how bulky its outer garments. But it does mean that
where there are substantial issues of genuine complexity the parties should
prepare for trial ..... rather than dissipate their energy and resources on
deceptively attractive short-cuts.”

I would express the hope that those practitioners, of whom there

are too many, who appear to be prepared to advise every client with what
seems to be a good case to invoke this extraordinary procedure, without
reflecting on the fact that, if the attempt fails, the result will be to keep the
plaintiff out of the judgment to which he may well be entitled for far longer
than would have been the case if they had concentrated, instead, on bringing
the matter to trial, will in future think twice before giving such advice.

The present case

I regret to have to say that the present case is one to which the
summary procedure which the plaintiff has sought to invoke is manifestly
inappropriate. The plaintiff’s case depends on a contract of an unusual
nature, made as long ago as 1987; it is one of a number of such contracts
made with villagers in the New Territories in order to acquire their land for
development purposes, and, arguably, mutually dependent on each other. The
writ was issued on 29 September 1992 and the defendant put in a defence as
long ago as 12 January 1993; the present application for summary judgment
was launched only following an amendment to the statement of claim made
 - 5 -

on 12 July 1994. There are issues between the parties as to want of fairness
in the contract and as to the certainty of the contract; both as to the time of
completion, and the subject matter of the sale. There are issues of
misrepresentation, and as to whether, by his conduct, the defendant has
waived his right to rely on any such misrepresentation. Although the plaintiff
protests otherwise, what the court has really been asked to do is to try these
issues on affidavit evidence (no less than 8 affidavits have been filed on the
application), with the assistance of a number of authorities as to the law (no
less than 9 are listed, including 2 from the High Court of Australia). Since the
case will have to go to a proper trial, it is neither necessary nor desirable that
we in this court should review the detailed facts which give rise to the dispute
between the parties. The judge need not have done so either; but he did do
so, and having done so, he came to the clear conclusion that the plaintiff’s
attempt to invoke the summary procedure here, and thus to shut out the
defendant from having his case heard at all, was unjustified.

Conclusion

I agree with the judge. I would dismiss this appeal, with costs.

Ching, J.A. :

I agree.

Litton, V-P :

I agree that this appeal should be dismissed, for the reasons given
by Godfrey JA. I am, like him, concerned with the manner in which the
procedure under Order 86 rule 1 was used in the court below.

The judge, in his endeavour to deal with every point of defence

raised and to give full reasons for his decision, had, in my view, strayed
beyond the scope of Ord 86 r1.

The reason for dismissing the plaintiff’s application for summary

judgment was simply because the case did not come within Order 86 r1. In
 - 6 -

other words, the plaintiff had failed to satisfy the court that the defendant had
no defence to the action. This meant, of course, that the matter must proceed
to trial.

The defendant is, in these circumstances, entitled to set up all the

defences available to him legitimately to resist the plaintiff’s claim:
untrammelled by the judge’s preliminary observations on the strength or
weakness of his case.

In the court below, what the judge did, in effect, was to have
conducted a “mini-trial” on affidavit evidence and, on the basis of such
evidence, he made certain “findings”. Such “findings”, by their very nature,
have no standing. It would be unfortunate if, as a result of those “findings”,
the plaintiff should be encouraged to embark upon more interlocutory
skirmishes, seeking to strike out some of the paragraphs in the Defence under
Order 18 r19(1) of the Rules of the Supreme Court, relying upon the
observations of the judge. Such a proceeding would, in my view, be
unwarranted.

In my judgment, all that the judge was called upon to do - and all
that he should have done - was to have stated in a few words why he
concluded that the plaintiff had failed to satisfy him that the defendant had no
defence. Any observations beyond that were unnecessary and otiose.

I would dismiss the appeal and make an order nisi that the
plaintiff pays the costs of the appeal.

(Henry Litton) (G.M. Godfrey) (Charles Ching)

Vice President Justice of Appeal Justice of Appeal

Mr. Ronny Tong QC & Mr. H.Y. Wong (M/s. Lo & Yip) for Appellant/
Plaintiff
 - 7 -

Mr. Ronny Wong QC & Mr. Simon Leung (M/s. Richard Bryson, Victoria
Chan & Co.) for Respondent/Defendant
 HCA 2280/2015
A A
[2022] HKCFI 106

B IN THE HIGH COURT OF THE B

HONG KONG SPECIAL ADMINISTRATIVE REGION

C C
COURT OF FIRST INSTANCE
D ACTION NO 2280 OF 2015 D

________________
E E
BETWEEN
F RICKEED INDUSTRIES LIMITED 1st Plaintiff F

G GREDMANN TECHNOLOGY (SHENZHEN) CO. LTD 2nd Plaintiff G

(格雷蒙科技 (深圳) 有限公司)
H H
and
I I
HONG KONG TOHKOH COMPANY LIMITED Defendant

J J
__________________

K K

L
Before: Deputy High Court Judge P Fung SC in Court L
Dates of Hearing: 15 - 21, 24 - 25 June and 2 July 2021
M M
Date of Judgment: 13 January 2022
N N
_____________________
O O
J U D G M E N T
_____________________
P P

Q THE ACTION Q

R R
1. This is an action by the 1 Plaintiff (“P1”) and the 2 Plaintiff
st nd

S (“P2”) (together “the Plaintiffs”) against the Defendant (“D”) for damages S

arising out of the sale of allegedly defective goods by D to the Plaintiffs.

T T

U U

V V
 - 2 -
A A

2. By its Re-Amended Defence and Counterclaim, D has

B B
counterclaimed against the Plaintiffs for various relief, including
C substantially, damages for breach of an undertaking allegedly made by the C

Plaintiffs to D.
D D

E THE PARTIES E

F F
3. P1 is a company incorporated in Hong Kong. At all material
G times, it was carrying on the business of, inter alia, purchasing industrial G

materials from overseas on the instruction of P2.

H H

I 4. P2 is a company incorporated on the Mainland carrying on the I

business of, inter alia, trading in sheet materials made of Poly

J J
(Methylmetacrylate) (PMMA).
K K

5. The Plaintiffs are in turn owned by a company incorporated

L L
and based in Taiwan by the name of “Gredmann Taiwan Ltd” “臺灣格雷
M 蒙股份有限公司”(“Gredmann Taiwan”). M

N N
6. D is a company incorporated in Hong Kong. At all material
O times, it was carrying on the business of selling acrylic sheet materials O

manufactured by the Mitsubishi Rayon Co Ltd (“MR”) in Japan.

P P

Q 7. D is also a subsidiary of its parent company incorporated in Q

Japan by the name of Tohkoh Jushi Company Limited (“Tohkoh Japan”).

R R

S 8. MR would not sell its products directly to any customer and S

would only sell such products through about 10 of its authorized agents.
T T
Tohkoh Japan was and is such an authorized agent.
U U

V V
 - 3 -
A A

9. The modus operandi of D and Tohkoh Japan was that when D

B B
received an order for the products of MR, it would pass such order to
C Tohkoh Japan which would in turn order the same from MR. It would C

then be arranged that MR would ship the goods from its factory or
D D
warehouse to the customers of D directly.
E E

THE HISTORY OF THE TRANSACTIONS BETWEEN THE PARTIES

F F

G 10. P1 started trading with D in December 2010. Their trading G

activities lasted from that time to the early part of 2014. During such
H H
period, P1 entered into various purchase contracts with D for the supply of
I acrylic sheets known and described as “MR 200G PMMA” (“acrylic I

sheets”) with various degrees of thickness with descriptions such as

J J
“0.8*1120*1320mm”, “1.0*1120*1320mm” and “1.2T*1120*1320mm”.
K The acrylic sheets were suitable for being used as covers for the mobile K

phones of Nokia, Motorola, Ericsson and similar brands, which mobile

L L
phones can be described as of the last as opposed to the present generation.
M M

11. P has produced a table at Trial Bundle E page 23-1 setting out
N N
the basic information about the various purchase orders. There is no
O dispute about the basic information appearing on the face of this table as O

both the Plaintiffs and D have referred to it in the course of the trial. An
P P
important issue, however, arose after the end of the trial relating to the
Q Q
nature of the last contract between the parties. I shall deal with this later

R
in this Judgment. In the meantime, the table is useful as a convenient R
summary of the purchase orders in chronological order. I annex hereto a
S S
copy of it marked as “Annexure 1”.

T T

U U

V V
 - 4 -
A A

THE CASE OF THE PLAINTIFFS

B B

C 12. The case of the Plaintiffs can be summarized as follows : - C

D (i) D had always known that the Plaintiffs were purchasing the D

E
acrylic sheets for resale to customers. E

F (ii) The acrylic sheets supplied by D under the various purchase F

orders had always had a history of defectiveness, sometimes

G G
in a larger quantity and sometimes in a smaller quantity.
H H
(iii) The acrylic sheets originally supplied by D under the relevant
I I
purchase orders and the replacement acrylic sheets

J subsequently supplied by D by agreement (all being the J

subject-matter of this action and to be described below) were

K K
substantially defective.
L L
(iv) The defects in the acrylic sheets were not attributable to any
M misconduct or mishandling or storage by the Plaintiffs or their M

sub-purchasers but were inherent defects, most probably

N N
caused by the manufacturer, MR, in the course of its
O manufacture, handling (including its application of the O

P
protective sheets or the quality of the protective sheets itself), P
storage and/or transportation of the acrylic sheets.
Q Q

(v) D and/or Tohkoh Japan had on various occasions, by conduct

R R
and/or by emails and/or by the “Negotiation Document” and
S the “Replacement Agreement” (both to be described below), S

made admissions about the defective quality of the acrylic

T T
sheets.
U U

V V
 - 5 -
A A

(vi) The Replacement Agreement was signed by Ikegami on

B B
behalf of D and it was not signed under duress as alleged
C by D. C

D D
(vii) As a result of the said defective quality, the Plaintiffs and/or

E their sub-purchasers had to sell the defective acrylic sheets at E

a loss in the market in mitigation of damage.
F F

(viii) Despite the fact that, in respect of some of the defective

G G
acrylic sheets, the Plaintiffs did not notify D about the defects
H until many months after delivery of the same to the Plaintiffs, H

the Plaintiffs had not by reason of that fact accepted the goods
I I
because it was reasonable for the Plaintiffs not to have
J discovered the defects until the acrylic sheets were sold and/or J

delivered to their sub-purchasers who would then remove the

K K
protective sheets for the first time.
L L

(ix) Hence, the Plaintiffs claim against D for the loss and damage
M M
they have suffered and also for an indemnity by D against any
N potential claims by their sub-purchasers. N

O O
(x) D had never made it a term of any contract between D and the

P Plaintiffs that, since it was only acting as an agent, it would P

not provide any warranty as to the quality of the acrylic
Q Q
sheets.
R R
(xi) Furthermore, D had never extracted any undertaking from the
S Plaintiffs and the Plaintiffs had never given any undertaking S

to D that they would not resell the acrylic sheets to any

T T
competitor of D, including a company by the name of 「深圳
U U

V V
 - 6 -
A A

市金凱新瑞光電股份有限公司」(Shenzhen Golden Ken

B B
Optics Electromonic Co Ltd) (“GK”).
C C

(xii) In any event, GK was not and is not a competitor of MR.

D D

E THE CASE OF D E

F F
13. The case of D can be summarized as follows : -

G G
(i) D had made it clear to the Plaintiffs from the start of their
H trading relationship that it was acting as a general dealer only H

and therefore would not provide any warranties as to the

I I
quality and fitness of the acrylic sheets sold to the Plaintiffs.
J J

(ii) D puts the Plaintiffs to strict proof of the existence and

K K
causation of the alleged defects.
L L
(iii) Furthermore, D alleges that the defects (if any) were caused
M by the handling and storage process by the Plaintiffs. M

N N
(iv) In any event, the Plaintiffs had in effect accepted the acrylic
O sheets by the absence of any rejection within a reasonable O

time after delivery and would no longer be able to reject the

P P
same or claim damages.
Q Q
(v) Insofar as any reliance is placed by the Plaintiffs on the
R R
Replacement Agreement, the same was entered into between

S the Plaintiffs of the one part and Tohkoh Japan of the other S

part and is, therefore, not binding on D.

T T

U U

V V
 - 7 -
A A

(vi) Furthermore, Ikegami signed the Replacement Agreement as

B B
a result of duress exercised by the Plaintiffs and it is therefore
C void or voidable. C

D D
(vii) Regarding the claim for damages by the Plaintiffs, they have

E failed to prove their alleged loss and damage and/or have E

failed in their duty of mitigation.
F F

(viii) The Plaintiffs had been in breach of their undertaking that

G G
they would not sell the acrylic sheets to a competitor of D by
H reselling some of the acrylic sheets to GK. Hence, D is H

entitled to counterclaim against the Plaintiffs for breach of

I I
such undertaking.
J J

14. At the beginning of the trial, however, the Court was

K K
informed by Mr Wright, counsel for D, that D was no longer
L pursuing its counterclaim. L

M M
THE WITNESSES
N N

15. The Plaintiffs called two witnesses, namely: -

O O

P (i) a Mr Lin Chia-Hsiang, also known as Justin Lin (“Lin”); and P

Q (ii) a Ms Yin Meng (“Ms Yin”). Q

R R
16. D also called two witnesses, namely: -
S S
(i) a Mr Nakayama Masahito (“Nakayama”); and
T T

(ii) a Mr Manabu Ikegami (“Ikegami”).

U U

V V
 - 8 -
A A

17. The parties had also agreed on a single joint expert, a

B B
Dr Norah Sophienaz Parsons (“Dr Parsons”). She was also called by the
C parties to give evidence as such single joint expert. C

D D
THE EVIDENCE
E E

A. Lin Chia-Hsiang (Lin)

F F

G 18. Lin has made 3 witness statements. The gist of his evidence G

is as follows : -
H H

I (i) He has been the general manager of Gredmann Taiwan since I

1984. That is the headquarters and there are branch
J J
companies in Beijing, Shanghai, Guangzhou and Shenzhen.
K The group employs about 400 staff members and has a K

business turnover of about US$500 million per year.

L L

M (ii) In April 2011, Gredmann Taiwan was certified as an M

“authorized distributor” of acrylic sheets manufactured by
N N
MR through Tohkoh Japan for the areas of Mainland China,
O Hong Kong and Taiwan. After that the group started O

ordering the acrylic sheets from D.

P P

Q (iii) As shown in Annexure 1, the first order placed by the Q

Plaintiffs with D was GKOF 199B dated 6 December 2010
R R
for 3,200 pieces of the acrylic sheets.
S S
(I should note here that I have been informed by counsel that,
T T
although the purchase orders were all signed between D as the

U U

V V
 - 9 -
A A

seller and P2 as the buyer, the invoices were all sent to P1;
B B
there is no issue between the parties regarding the fact that
C both P1 and P2 are suing as the Plaintiffs.) C

D D
(iv) Very soon after re-selling the acrylic sheets to their customers,
E the Plaintiffs already received complaints from such E

customers on the defective quality of the acrylic sheets. The

F F
defects included the following on the face of the acrylic
G sheets : - G

H (a) fogging and/or scratching; H

I I
(b) defective gum/staining residue;
J J
(c) watermark;
K K
(d) colour staining;
L L
(e) dirt.
M M

N
(v) The complaints were communicated by the Plaintiffs to D and N
there then followed correspondence by emails between the
O O
two sides in which D made admissions regarding the defects.

P
The contents of the emails will be examined below. P

Q (vi) As can be seen from Annexure 1, after delivery to the Q

R
Plaintiffs of 3,200 pieces of acrylic sheets in December 2010 R
under GKOF 199B and 20,000 pieces in April 2011 under
S S
GKOF 225B, on 5 August 2011, D delivered to the Plaintiffs

T
another lot of 14,800 pieces in exchange for the defective T
ones.
U U

V V
 - 10 -
A A

(vii) After that, as can be seen from Annexure 1 again, between

B B
August and November 2011, the Plaintiffs continued to place
C purchase orders with D under GKOF 250B, GKOF 258B, C

GKOF 273B, GKOF 277B and GKOF 278B. A total of

D D
57,000 pieces of acrylic sheets were delivered to the Plaintiffs
E between 5 August and 10 November 2011 under those E

purchase orders.
F F

G (viii) On 15 December 2011, the Plaintiffs placed purchase order G

GKOF 283B (“the 1st PO”) for 1 lot of 24,800 pieces and
H H
another lot of 20,000 pieces of acrylic sheets. The total
I quantity was later reduced by agreement between the parties I

to 30,000 pieces. They were delivered to the Plaintiffs on

J J
4 January 2012.
K K

(ix) On 27 March 2012, the Plaintiffs placed another purchase

L L
order GKOF 289B (“the 2nd PO”) for 20,000 pieces of acrylic
M sheet. They were delivered by D to the Plaintiffs on M

10 April 2012.
N N

O (x) On 19 March 2013, the Plaintiffs placed purchase order O

GKOF 305B for 2 lots of acrylic sheets, 1 lot of 10,000 pieces

P P
and another lot of 7,600 pieces. They were delivered by D
Q to the Plaintiffs on 8 and 16 April 2013 respectively. Q

R R
(There is an issue between the parties as to whether the

S
17,600 pieces delivered in April 2013 were actually S
replacements for defective sheets previously delivered under
T T

U U

V V
 - 11 -
A A

the 1st PO and/or the 2 nd PO. I shall deal with this point
B B
later.)
C C

(xi) Out of the said 17,600 acrylic sheets delivered by the

D D
Defendant to the Plaintiffs in April 2013, the Plaintiffs
E delivered 5,000 pieces to GK in May or June 2013 in E

exchange for 5001 defective pieces returned by GK. They

F F
were also found to be of inferior quality.
G G

(xii) On 26 January 2014, the Plaintiffs returned 14,800 pieces of

H H
acrylic sheets to D.
I I

19. Having set out the broad history of the dealings between the
J J
Plaintiffs and D in paragraph 18 (vi) - (xii) above, basically by reference to
K the information set out in Annexure 1, I shall examine in more detail below K

the evidence relating to the conduct and exchanges between the parties
L L
regarding the various purchase orders and the complaints about the alleged
M defective quality of the acrylic sheets as given or as relied on by Lin. M

N N
20. As stated above, the 3,200 pieces under purchase order GKOF
O 199B were delivered to the Plaintiffs on 24 December 2010. O

P P
21. On 28 December 2010, a Chris Lai of the Plaintiffs already
Q sent an email to Nakayama to say that their customers had noticed some Q

problems with the MR 200G sheets in that : -

R R

(1) the sheets were yellowish in colour;

S S

T (2) the sheets would stick on the knife when being processed and T

were different from the standard MR 200 sheets.

U U

V V
 - 12 -
A A

Furthermore, under the FTIR infrared spectrum analysis, it was shown that
B B
the composition of the sheets were not the same as the standard MR 200
C sheets. He inquired whether the production process was different. C

D D
22. I should point out at this juncture that it is common ground
E that the letter “G” was added to the description of “MR 200” at the request E

of the Plaintiffs for the purpose of denoting that the goods were ordered by
F F
“Gredmann”. It is the case of the Plaintiffs that at least some of the
G acrylic sheets delivered to them were with the model number of G

“MR 200Z” or “MR Z 200”, which were of a quality inferior to that of the
H H
standard “MR 200”. On the other hand, it is the case of D that MR would
I only manufacture one kind of acrylic sheets with the model number of I

“MR 200” (and “MR 200G”) and that there was no model number of
J J
“MR 200Z” or “MR Z 200”. I shall deal with this issue later.
K K

23. By an email dated 5 January 2011, Nakayama replied to the

L L
Plaintiffs’ email of 28 December 2010 and said as follows : -
M M
“Let me explain the following problems

N ※It will stick on the knife when processing>>>It should mean N

that during CNC Processing, the swarf that comes out sticks to
the knife.
O O
The specifications and base materials of MRZ200 and MR200
P
are the same, so the processing conditions are the same. The P
acrylic sheet is not an extruded sheet, but for sticky problems,
please increase the speed of CNC a little bit. If you grasp the
Q processing technique, the problem should not happen. Q

※It is estimated that the material is too pliable and tough or

R R
the static electricity is strong, Mitsubishi should know it clearly

S It is true that MR200 has been stored in the warehouse for S

about 7 months, and there shall be a problem of warping of the
sheet. But I think the defect rate will not be too high.
T T
The future products will not have this problem.
U U

V V
 - 13 -
A A

In addition, the yellowish problem of the acrylic sheet is

B because its hardened layer is thicker than other manufacturers B
produces, (MR200 also has this phenomenon), but there is no
problem when using it.”
C C

[translation from the Chinese text]

D D
[emphasis added, except for the first underlining appearing above which
E is in the original text] E

F F
24. As can be seen from Annexure 1, there was a delivery to the
G Plaintiffs of 20,000 acrylic sheets on 8 April 2011 under GKOF 225B. G

H H
25. On 30 June 2011, one Michael Chen of the Plaintiffs wrote to
I Nakayama by email as follows : - I

“You should have arrived safely in Japan by the time you

J J
received the email! I appreciate the visit of Department
Manager Ikegami, you and Vincent today, I will describe the
K conclusions and follow-up actions of the meeting as follows: K

Shanghai Tohkoh agreed with Gredmann that Tohkoh will

L purchase the defective MRZ sheets (0.8/1.0mm) and replace all L
of them with MR200.
M Emma, MR200 goods will arrive from Japan, store the MRZ M
temporarily in our warehouse, there is no need to return them
to Japan. You are responsible for coordinating with Tohkoh
N N
on how to operate.

O Gredmann agrees to work with Tohkoh to handle MRZ O

inventory (including the existing inventory of 10,000 PCS in
Tohkoh of Japan)
P P
Bob, you and Nakayama are responsible for updating the
progress of MRZ processing once a week and summarizing it
Q to Department Manager Ikegami and me Q

Gredmann promises to work with Tohkoh to deal with Tohkoh

R R
Japan’s existing inventory of 40000 PCS of MR200 and
expand subsequent sales”
S S
[translation from the Chinese text]
T T
[emphasis added]

U U

V V
 - 14 -
A A

26. By an email dated 1 July 2011, Nakayama replied to Michael

B B
Chen as follows : -
C “Good afternoon C

Thank you very much for your exchange of views yesterday

D D
Regarding the manner to resolve MR200Z that you send us, let
me explain our company views
E E
Shanghai Tohkok agreed with Gredmann that Tohkoh will
purchase the defective MRZ sheets (0.8/1.0mm) and replace all
F of them with MR200. F

Emma, MR200 goods will arrive from Japan, store the MRZ
G temporarily in our warehouse, there is no need to return them G
to Japan. You are responsible for coordinating with Tohkoh
H
on how to operate. H
▓Please understand that Shanghai Tohkoh has nothing to do
with this trade, so it is very difficult to exchange goods with
I I
Shanghai Tohkoh.
We hope that
J J
In respect of the defective goods of more than 10,000 PCS of
MR200Z which were sold by our company to your company,
K K
When you purchase MR200 next time, could we change the
payment terms of approximately 10,000 PCS among them to
L “monthly statement, pay after 4 months”?? L

※With regard to the MR200 sales expansion meeting, we

M would like to thank you vey much for your suggestions. I will M
be in Mainland China on July 10-15
N Our latest Japanese inventory status N
1 · The inventory of MRZ200 0.8t 11,200 PCS
O O
2 · The inventory of MRZ200 1.0t 200 PCS
------------------------------------------------------------
P P
3 · The inventory of MR200 0.8t 39,800 PCS

Q 4 · The inventory of MR200 1.0t 29,200 PCS ” Q

R [translation from the Chinese text] R

[emphasis added]
S S

T T

U U

V V
 - 15 -
A A

27. By an email dated 7 July 2011, Nakayama wrote further to

B B
Michael Chen as follows : -
C “I hope that the replacement and purchase of MR200 could be C
carried out at the same time.
D I can’t make this thing too obvious in the company. I can D
only replace MR200Z with MR200 first. Please understand. ”
E E
[translation from the Chinese text]
F F
[emphasis added]

G G
28. I note at this stage four points which appear from the email
H H
correspondence referred to above : -

I I
(i) It would appear that MR did produce acrylic sheets with the
J model number “MR 200 Z” in addition to “MR 200”. J

K K
(ii) The Plaintiffs did make a complaint about the quality of
L acrylic sheets, including the “MR Z 200” sheets. L

M (iii) Nakayama did accept that a very substantial quantity of M

acrylic sheets (“more than 10,000 PCS of MR 200 Z”)

N N
delivered to the Plaintiffs had quality problems. It is to be
O noted that up to that stage only 23,000 pieces of acrylic sheets O

had been delivered to the Plaintiffs so far. Thus, 10,000 out

P P
of 23,000 is quite a sizeable proportion.
Q Q

(iv) Nakayama was voluntarily proposing to compensate the

R R
Plaintiffs by agreeing to better payment terms for future
S orders. S

T T

U U

V V
 - 16 -
A A

29. Within 1 month of the said email dated 7 July 2011, on

B B
5 August 2011, D did in fact deliver to the Plaintiffs 14,800 pieces of
C acrylic sheets as replacement, as referred to in paragraph 18 (vi) above. C

D D
30. The complaints about the defective quality of the acrylic
E sheets had been passed by D to MR. E

F F
31. By an email dated 3 December 2011, Nakayama wrote to one
G Bill Chen of the Plaintiffs and enclosed a report in Japanese by MR dated G

November 2011. The report is entitled “Report on appearance defect of

H H
SHINKOLITE MR 200 (Reply)” (translated from Japanese) (“the MR
I Report”). The relevant parts of the MR Report (as translated from the I

Japanese text) contained the following comments : -

J J
(i) “Regarding the samples of unperceivable scratches, it is
K
confirmed that the scratches indicated by you can be K
observed under strong light. The observation results of
each sample are as below.”
L L
[emphasis added]

M (ii) There then followed a table regarding the various M

samples and, under the column “Reason of defect
(presumption)” against each sample, there appeared the
N words “Caused by our manufacturing process”. N

(iii) “Since all of the scratches are in convex shapes, it can be

O O
confirmed that they were caused during our
manufacturing process. Upon comparison between the
P samples and the appearance standard of our products, all P
samples are qualified. In connection with the
abovementioned scratch problems, we will conduct
Q maintenance on a regular basis and repair in sequence of Q
their damage levels. We believe the quality of products
R would improve gradually. R

Regarding the crystal point problem indicated by you,

S we have observed the samples but since the protective S
films have been torn off, the acrylic sheets are being
mixed with foreign materials and with dirt being stuck to
T T
their surface such that the defects indicated by you could
not be confirmed.
U U

V V
 - 17 -
A A

We presume that the possible reason for the crystal

B points could be attributable to the defective gum/staining B
residues problems caused by the protective films, which
were attached to the acrylic sheets in order to protect
C C
their surfaces.

D In connection with the defective gum/staining residues D

problem, we are considering introducing protective films
with better quality and we are currently examining it in
E the introductory stage. E

We sincerely apologize for the inconvenience caused by

F F
this issue. We will continue to improve the quality of
our products and wish to have your understanding and
G continued support. Thank you.” G

[emphasis added]
H H

I 32. As stated in paragraph 18 (viii) above, the 1st PO was placed I

on 15 December 2011 and delivery of 30,000 pieces to the Plaintiffs was
J J
made on 4 January 2012.
K K
33. According to Annexure 1, on 22 December 2011, the
L L
Plaintiffs made payment to the Defendant for the goods under the 1st PO.

M M
34. On 16 January 2012, very soon after delivery of the acrylic
N N
sheets under the 1st PO, Bill Chen of the Plaintiffs sent an email to

O
Nakayama and referred him to complaints by their various customers. O
The email read as follows : -
P P

“1. Kaneka’s film has also been sent to Hongxun (宏 訊)/

Q Langfang ( 廊 坊 ) Foxconn Text result of Hongxun Q
(宏 訊) was Tabot NG (surface hardness failed), Langfang
R (廊 坊) has yet tested it (because there was a problem R
with the Tabot mold at that time), Qunda (群達) (Pulling
S
up was OK, surface hardness failed, not put on the mold). S
2. In respect of the return of 5roll sd-025 by Tongda (通達)
T
last time, they urged us tightly and expected us to take it T
away immediately. Gredmann Shanghai company hopes

U U

V V
 - 18 -
A A

to handle the return. Please help to confirm Tohkoh’s

B opinion B
3. MR200 0.8T’s recent arrival of goods has seen grave
C abnormalities. All 1200pcs currently shipped to Aojin C
(奧金) are NG, the causes of the abnormalities are (hard
coating with water mist, uneven color after printing,
D D
cannot be wiped) when will there be time to confirm the
anomaly?
E 4. MR200 1.2T and MR200 0.8T 400pcs each. These two E
abnormal acrylic sheets were returned by Xinhao (信濠).
F The abnormality form has been sent out before. F
Mitsubishi and Tohkoh have confirmed it. Our company
hopes to return or replace the goods. Please help to
G confirm Tohkoh’s suggestion. G

5. According to Tohkoh’s request, our company may not

H trade with Xinhao (信濠) in future. Please confirm again. H
I need to communicate with customers clearly. At
I
present, our company has to deal with customer I
complaints and receivables with Xinhao (信濠). It will
take some time, please understand.
J J
Yours sincerely, these are for reference. Waiting for your
reply.”
K K
[translation from the Chinese text]
L L
[emphasis added]

M M

35. By an email also dated 16 January 2012, Nakayama replied to

N N
Bill Chen as follows : -
O O
“2. In respect of KANEKA’s matters, meeting with Mr Wada
P
(和田先生) and Mr Shimamoto (嶋本先生) at 14:30 pm P
on Friday. After the meeting, the specific measures will
be advised.
Q Q
3. Can we go and confirm the abnormalities after Chinese
New Year? Will it be too late? Such as the week of
R February 5. R
4. I will discuss the solution with Ikegami Department
S Manager. Do customers demand replacement of all the S
1.2t goods?

T 5. I will contact Mitsubishi’s Yoshioka (吉岡) about this T

problem to find out his true intention. It’s possible that
it’s not ok to trade just on the face of it.
U U

V V
 - 19 -
A A

Sorry for putting you in a difficult position. Thank you very

B much!” B

[translation from the Chinese text]

C C

D 36. As stated in paragraph 18 (ix) above, the 2nd PO was placed D

on 27 March 2012 and delivery of 20,000 pieces thereunder to the

E E
Plaintiffs was made on 10 April 2012.
F F

37. By an email dated 12 June 2012, one Ivy Huang of the

G G
Plaintiffs wrote to Nakayama as follows : -
H “Subject : GKOF 283B H

Dear Nakayama,
I I
Could you tell me whether the attached order GKOF283B of
10,000 PCS 0.8t and 20,000 PCS 1.0t delivered around
J December 2011 can be divided into MR200Z and MR200G? J
(in another word, is there any difference in quality?) Is there
any difference in the labelling? The other 14800 PCS of 0.8t
K (which have been delivered to Hong Kong before) in this order K
are MR200Z, which are of inferior quality, right?”
L L
[translation from the Chinese text]

M [emphasis added] M

N Since the caption is a reference to the 1st PO, the last sentence in the N

quoted passage would appear to be a reference to 14,800 acrylic sheets

O O
st
delivered under the 1 PO.
P P

38. By an email dated 13 June 2012, Nakayama replied as

Q Q
follows : -
R R
“Subject : GKOF 283B
Miss Ivy,
S S
Good morning!
There is no difference on the labels of the goods in December,
T the other 14800 PCS of 0.8t are indeed of slightly inferior T
quality.”
U U

V V
 - 20 -
A A

B [translation from the Chinese text] B

[emphasis added]
C C

D 39. By an email dated 17 September 2012, one Louis Yang of the D

Plaintiffs wrote to Nakayama and complained about defects in the acrylic

E E
sheets. The email read as follows : -
F “About the 0.8T MR200 s Our company delivered to Langfang F
Foxconn (廊坊富士康), after the protective film was removed,
G dirt was found on part of the surface of the acrylic sheets. G
It is more obvious after the PVD sputtering process. The
H sample have been arranged to be sent to Miss. Quan. Please H
ask Mitsubishi to provide feedback on this customers’
complaint.”
I I
[translation from the Chinese text]
J J

40. In the meantime, between March and December 2012, there

K K
had been correspondence between the Plaintiffs and Nakayama about a
L price reduction as compensation. Finally, by an email dated L

19 December 2012 from Nakayama to Ivy of the Plaintiffs, the former

M M
said :
N “Please confirm the following contents with Mr Leo again. N

On 18 December, decided in the meeting between Ikegami

O Department Manager of our company and Mr Chen Dongshan O
(陳東山) of your company, US$534,000 will be fully paid this
P time. The issue of payment deduction will be calculated after P
March 2013.”

Q Q
41. By his email dated 22 January 2013, Nakayama sent to
R Michael Chen an email in Chinese enclosing a draft document in Japanese. R

The email bears the caption : -

S S
“RE : The payment of MR 200 compensating the defective part
T by Mitsubishi and Tohkoh”. T

[emphasis added]
U U

V V
 - 21 -
A A

The title of the said draft document enclosed therewith as translated

B B
reads :-
C “Negotiation on Compensation for Defective MR 200”. C

D [emphasis added] D

E E
The relevant parts of the contents thereof read as follows : -

F “In respect of the captioned matter, the result of discussion of F

Tohkoh Jushi Co., Ltd are as follows
G Tohkoh Jushi agrees that upon mutual negotiation Mitsubishi G
Rayon, Tohkoh and Gredmann jointly bear the loss of the
defective MR200 that were already delivered and in subsequent
H H
sales (including those completely unusable parts and parts that
need to be compensated to the customers)
I I
The specific details are as follows
J 1. In respect of the goods already returned due to J
customers’ complaints, price adjustment will be
performed at the next batch of new purchase orders.
K K
The amount for goods that had been returned to
Gredmann and of which Gredmann had made
L compensation to the customer will be deducted from the L
payment for this order.
M 2. For defective goods that occur in subsequent sale, the M
three companies must confirm the cause of the defective
N products (residual glue, scratch). For defects which have N
been determined and confirmed not to meet the quality
standard of Mitsubishi, Tohkoh and Mitsubishi will be
O responsible for it. If it is not caused by defective O
incoming materials, it will be the responsibility of
Gredmann.
P P
3. For goods sold at lower price (loss arising from selling
Q price below $26.7), Gredmann will truthfully provide Q
the sales price and report to Tohkoh and Mitsubishi
company. Tohkoh and Mitsubishi are responsible for
R the said loss. There will be unit price adjustment in R
subsequent PO to compensate for Gredmann’s loss.”
S S
[translation from the Chinese/Japanese text]
T T
[emphasis added]

U U

V V
 - 22 -
A A

42. By another email dated 24 January 2013, Nakayama informed

B B
Michael Chen that the terms of the said document referred to in paragraph
C 41 had been confirmed by Ikegami. C

D D
43. Two days later, Ikegami actually signed a document in the
E E
terms of the said draft document (“the Negotiation Document”) addressed

F to P2. Below his signature is the description : - F

“Tohkoh Jushi Co., Ltd. Overseas Business Promotion

G Department Manabu Ikegami”. G

H 44. Soon after that, on 4 February 2013, Lin wrote an email to H

Nakayama referring to the complaints by customers of the Plaintiffs about

I I
the serious defects in the quality of the acrylic sheets in large quantities.
J J
He also asked for a price reduction in relation to the 2nd PO.

K K
45. By his reply email dated 5 February 2013, Nakayama
L suggested a meeting to be held between the two sides in Shenzhen or L

Taiwan.
M M

N 46. The parties did eventually have a meeting in the office of P2 N

in Shenzhen attended by both Ikegami and Nakayama for the Defendant

O O
and Lin and other personnel of the Plaintiffs. Lin says that that meeting
P P
took place on 5 March 2013 and not in January or February 2013 as

Q
alleged by D. Q

R 47. Consequently, an undated document in Chinese (“the R

Replacement Agreement”) was signed between the two sides. It was

S S
drafted by a secretary of the Plaintiffs in accordance with the agreement
T reached between the parties at the said meeting in Shenzhen. It was faxed T

U U

V V
 - 23 -
A A

by the Plaintiffs to Japan and returned to the Plaintiffs by email. It was

B B
chopped with the chop of P2 and signed by Ikegami above the chopped
C description of : - C

D
“MANABU IKEGAMI D
OVERSEAS DEPARTMENT
GENERAL MANAGER”.
E E

F The English translation of the Replacement Agreement reads as follows : - F

“Gredmann MR200 Solutions to bad inventory

G (Memorandum of Understanding of the defective MR200 in G
Gredmann’s stock)
H H
1. For the 21400pcs of MRZ200 in the existing inventory,
Tohkoh is responsible for returning the goods and
I replacing them with 21400pcs of MR200. For the I
replacement goods, Gredmann shall provide the required
quantity and time schedule within one week. For the
J J
specific return and exchange operation, it shall be
discussed and determined by both parties within one
K week. K

2. In respect of the 21400pcs of MRZ200 inventory in

L L
Gredmann’s warehouse, Tohkoh entrusts to store
temporarily in Gredmann’s warehouse and that
M Gredmann shall sell them on behalf of Tohkoh. The M
exact selling price will be determined by Gredmann and
Tohkoh according to the situation of the customer. The
N mode of transaction between Gredmann and Tohkoh N
regarding this specific sales of goods by agency is to be
O determined. O

3. Tohkoh shall bear all taxes and related expenses incurred

P in the replacement or replenishment of defective goods P
during the import process, it shall reimburse Gredmann
by way of cash.
Q Q

4. If the MR200 project is confirmed to be terminated (i.e.,

R both parties confirm that Gredmann stops purchasing new R
MR200), Tohkoh shall be responsible to compensate
Gredmann by cash in relation to the available inventory
S owned by Gredmann at the time of termination which is S
subject to customer complaints of poor quality
T (Gredmann’s current MR200 inventory is 50528pcs, the T
estimated defect rate is 10%~15%).

U U

V V
 - 24 -
A A

5. After Tohkoh confirms and signs the above agreement,

B Gredmann shall immediately pay the outstanding B
payment of the remaining 20,000 PCS.”
C C
[emphasis added]

D D

48. On 28 March 2013, the Plaintiffs made payment to D of the

E E
price of the goods under 2nd PO.
F F

49. According to Lin, the reason for the late payment by the
G G
Plaintiffs for the goods under the 2 nd PO was that, during the relevant
H period, the Plaintiffs were urging D to confirm as to how it was going to H

deal with the complaints by the Plaintiffs’ sub-purchasers and

I I
compensation to the Plaintiffs by way of reduction in price and improved
J terms of payment for goods, and that D had delayed or failed to give such J

confirmation. In support, Lin has also referred to the email from

K K
Nakayama to Ivy Hung of the Plaintiffs dated 19 December 2012 (see
L paragraph 40 above) in which he said : - L

M
“On 18 December, decided in the meeting between Ikegami M
Department Manage of our company and Mr Chen Dongshan
(陳東山) of your company, US$534,000 will be fully paid this
N time. The issue of payment deduction will be calculated after N
March 2013.”
O O
[translation from the Chinese text]

P [emphasis added] P

Q Q
The Plaintiffs paid to the Defendant the sum of US$534,000 under the

R 2nd PO on 28 March 2013. R

S S
50. The matters set out in paragraphs 40 - 49 above would tend to
T have the effect of refuting the Defendant’s allegation that the Plaintiffs T

U U

V V
 - 25 -
A A

exercised duress on D by threatening not to pay for the goods under the
B B
2nd PO unless D were to sign the Replacement Agreement.
C C

51. Subsequently, there were other complaints by the customers

D D
of the Plaintiffs such as Xinhao and GK about the quality of large
E quantities of the acrylic sheets in April - June 2013. E

F F
52. It was fairly obvious that D admitted that a lot of the acrylic
G sheets had quality problems. G

H H
53. On 20 November 2013, Nakayama wrote an email to the
I Plaintiffs. As translated, the caption of the email reads : - I

J J
“Subject : Tohkoh’s formal answer to 21,600 PCS of the MR 200
inventory”.
K K

The contents of the email read as follows : -

L L
“About the captioned matter, Tohkoh formally decided on the
following : -
M M
In respect of 21,600 PCS of MR200 current inventory in
Hong Kong
N N
Due to quality problems, cannot be sold at normal price and
O will be returned to Japan in the short term. Return details will O
be discussed another time.

P (After the occurrence of the quality problem, Tohkoh shipped P

17,600 PCS from Japan in March 2013 to replace the
Q above-mentioned sheets)” Q

[emphasis added]
R R

54. As mentioned in paragraph 18(xii) above, on 26 January 2014,

S S
the Plaintiffs did in fact return 14,800 pieces of acrylic sheets to the
T Defendant. T

U U

V V
 - 26 -
A A

55. The customers of the Plaintiffs continued to make complaints

B B
about the quality of the acrylic sheets. For instance, in July 2014, the
C Tensui Company made complaint about over 15,000 pieces of the acrylic C

sheets sold to it.

D D

E 56. The customers’ complaints, mostly by email, had been E

forwarded to D and checked by the latter. D had not queried about the
F F
truth of such complaints.
G G

57. Indeed, in the MR Report referred to in paragraph 31 above,

H H
MR had admitted that the problems in the quality of the acrylic sheets,
I such as the linear scratches, were caused by their manufactory process. I

J J
58. The Plaintiffs had made sure that the warehouses which they
K had rented all satisfied their requirements regarding temperature and K

humidity so as to make sure that the acrylic sheets were properly stored
L L
before their sale to their customers.
M M

59. The Plaintiffs would not have opened the protective sheets to
N N
check about the integrity of the acrylic sheets because once the protective
O sheets were opened, they could not be properly put back and no customer O

would accept the same as new acrylic sheets. They would have to wait
P P
for complaints (if any) by their customers after the acrylic sheets had been
Q sold to them before they knew about the defects. Q

R R
60. Subject to the point about the true nature of the 17,600 acrylic
S sheets delivered by D to the Plaintiffs in April 2013 which I will deal with S

hereinbelow and the evidence regarding the loss and damage alleged to
T T

U U

V V
 - 27 -
A A

have been suffered by the Plaintiff, the above is the main evidence on
B B
liability adduced and/or relied on by the Plaintiffs.
C C

B. Ms Yin Meng (Ms Yin)

D D

E 61. Ms Yin has made 2 witness statements. E

F F
62. She joined the Plaintiffs only at the end of 2013. Thus, for
G the transactions and activities between the parties which took place prior to G

her joining the Plaintiffs, she had no personal knowledge and only got to
H H
know about them from information given by her colleagues.
I I
63. She, however, was able to say that, pursuant to the
J J
Replacement Agreement, at the end of 2013, Nakayama went to the
K warehouse used by the Plaintiffs to check on the defective goods and K

confirmed that there were still 14,800 pieces of such in stock. Upon
L L
Nakayama’s confirmation, the Plaintiffs arranged for the said 14,800
M pieces to be returned to Tohkoh Japan in January 2014. M

N N
64. The rest of her evidence mainly concerns the sale of the
O defective goods by the plaintiffs at prices much lower than the cost prices O

of them and the loss and damage suffered by the Plaintiffs. I shall deal
P P
with the same hereinbelow.
Q Q
C. Nakayama Masahito (Nakayama)
R R

S
65. Nakayama has made a total of 6 witness statements. S

T T
66. The gist of his evidence is as follows : -

U U

V V
 - 28 -
A A

(i) He was employed by Tohkoh Japan before 2016. He has

B B
been working in another company since 1 April 2017.
C C
(ii) He was also a sales manager of the Defendant, a subsidiary of
D D
Tohkoh Japan, for about 10 years between 2005 and 2016 and

E was the key person handling the sale and purchase E

transactions relating to MR acrylic sheets between the
F F
Defendant and P2.
G G
(iii) In the latter part of 2009, one Jin Yang of P2 approached him
H whilst he was working in the head office of Tohkoh Japan H

with a view to becoming an authorized distributor of MR

I I
acrylic sheets in Mainland China, Hong Kong and Taiwan.
J They met up in Japan and he told Jin Yang that save for the J

warranties provided by the manufacturer, MR, namely, that

K K
MR would only replace acrylic sheets sold with inherent
L L
defects, such as defects caused by defective design, materials

M
and workmanship which were discovered shortly after M
delivery, Tohkoh Japan would not provide warranties.
N N

(iv) In or about May 2010, he and a Mr Kamata of MR went to

O O
Gredmann Taiwan’s office in Taiwan and met with Jin Yang
P and his superior, Michael Chen. After some discussion, P

Mr Kamata agreed to certify P2 as an authorized distributor of

Q Q
MR acrylic sheets in Mainland China, Hong Kong and
R Taiwan on condition that P2 would undertake not to sell the R

same to any company whose business was competitive in

S S
nature with Tohkoh, such as GK, because GK had been
T working with a Chinese company called AJA (Qingdao) T

Chemical Co Ltd to sell acrylic sheets to Nokia at

U U

V V
 - 29 -
A A

unreasonably low prices. Michael Chen and Jin Yang

B B
agreed to give the undertaking.
C C
(v) They also asked P2 to supply a list of their customers on a
D D
monthly basis to which Michael Chen and Jin Yang also

E agreed. E

F (vi) It was P2 who requested for various letters to be added at the F

end of the model number MR 200, but irrespective of the

G G
added letters, the acrylic sheets were all of the same quality.
H H

(vii) MR was always careful in its manufactory process, including

I I
sample testing, and was very strict with its own quality
J control. J

K (viii) As a result of the Plaintiffs’ delay in settling the prices K

L
payable for the goods supplied, the parties had a meeting in L
the office of P2 in Shenzhen in January or February 2013. It
M M
was only at that meeting that the Plaintiffs claimed for the

N
first time that the goods delivered under the 1st PO and the N
nd
2 PO were defective. It was also on that occasion that the
O O
Plaintiffs disclosed for the first time that they had sold the MR

P acrylic sheets to GK. P

Q (ix) Nakayama and Ikegami suspected that the Plaintiffs and/or Q

their customers, including GK, were trying to create an excuse

R R
for getting out of their respective contracts for the purchase of
S MR acrylic sheets because the demand for acrylic sheets S

suitable for the manufacture of the last generation mobile

T T
phones was decreasing.
U U

V V
 - 30 -
A A

(x) At the end of the said meeting, Lin presented to Ikegami a

B B
Memorandum of Understanding (“MOU”) for him to sign to
C acknowledge that the Defendant would replace 20,000 pieces C

of acrylic sheets for the Plaintiffs. At first, Ikegami refused

D D
to sign it. Then Lin threatened that, if he did not sign it, the
E outstanding invoices would not be settled. Under pressure, E

Ikegami signed the MOU (the Replacement Agreement).

F F

G (xi) In paragraph 49 of Nakayama’s 1st Witness Statement, he G

went on to say : -
H H
“Shortly thereafter, in or about April 2013, Tohkoh replaced
17,600 pieces of acrylic sheets with Gredmann and Gredmann
I I
returned 14,800 pieces of acrylic sheets to Tohkoh.”

J J
(xii) The agreement by D to replace large quantities of acrylic
K sheets alleged by the Plaintiffs to be of defective quality was K

motivated simply by D wishing to maintain a good

L L
relationship with its customers, the Plaintiffs. The replaced
M M
acrylic sheets were actually not defective or only had minor

N
defects. N

O O
(xiii) Regarding the signing of the Replacement Agreement by

P
Ikegami, first, Ikegami was acting only for and on behalf of P
Tohkoh Japan and not D. Secondly, as said above, it was
Q Q
signed under duress exercised by the Plaintiffs who threatened

R not to settle the prices payable under the 1st PO and/or the R

2nd PO.
S S

(xiv) In paragraph 7 of his 3rd Supplemental Witness Statement, he

T T
said as follows : -
U U

V V
 - 31 -
A A

“Replacement goods were supplied free of charge

B B
6. ……………………….. The Defendant had only agreed
to replace 17,600 pieces of acrylic sheets under
C P/O:GKOF283B and P/O:GKOF289B for the sole C
purpose of maintaining a good customer relationship with
D the Plaintiffs. The replacement goods were supplied to D
the Plaintiffs free of charge, while without admitting that
the acrylic sheets at issue had any inherent defects
E attributable to the Defendant, if any, or at E
all. ………………………………..”
F F
[emphasis added]
G G

(xv) Regarding his admission about the 14,800 acrylic sheets being
H H
of “slightly inferior quality” as contained in his email dated
I 13 June 2012 in reply to Ivy Huang’s email to him dated I

12 June 2012, under cross-examination, he said that he was

J J
actually referring to the acrylic sheets supplied to the
K Plaintiffs under an earlier contract and not under GKOF 283B K

(the 1st PO).

L L

M (xvi) In paragraph 8 of the same witness statement, he said that, as M

far as he was aware, there was no secondary market for the
N N
sale of defective or second class acrylic sheets.
O O
D. Manabu Ikegami (Ikegami)
P P

Q
67. Ikegami has made 2 witness statements. Q

R 68. The gist of his evidence is as follows : - R

S S
(i) He is the Sales Department Director of Tohkoh Japan and is
T also a director of D. He has worked for Tohkoh Japan since T

U U

V V
 - 32 -
A A

1989 and is in charge of and overseeing its sales of, inter alia,
B B
MR acrylic sheets.
C C
(ii) D started trading with P2 in MR acrylic sheets in July 2010.
D D

(iii) In or about August 2012, P2 started to delay and default in

E E
paying to D for goods and to complain about the quality of the
F acrylic sheets when the demand for Nokia’s traditional mobile F

phones had dropped drastically owing to consumers’ switch to

G G
using smart phones.
H H

(iv) In October 2012, Nakayama reported to him that the invoices

I I
for goods issued to the Plaintiffs had been long overdue,
J despite D’s constant demands for payment. He decided to J

go to the office of P2 in Shenzhen to follow up the matter.

K K

L
(v) The said meeting took place in January or February 2013. L
When asked for the reason as to why the Plaintiffs had not
M M
paid for the goods, Lin responded by saying that it was

N
because part of the acrylic sheets delivered to the Plaintiffs N
were of a different model and also that part of them was
O O
defective in quality Lin also said that the Plaintiffs would like

P Tohkoh Japan to replace about 20,000 pieces of acrylic sheets, P

otherwise they would not settle the price for the goods.
Q Q

(vi) Ikegami then suggested that D should carry out an inspection

R R
of the goods to check about the quality and to check whether
S the acrylic sheets in question were actually manufactured by S

MR.
T T

U U

V V
 - 33 -
A A

(vii) Lin also disclosed that some of the acrylic sheets had been
B B
sold to GK and GK had complained that part of the acrylic
C sheets supplied by D had not been manufactured by MR and C

also bore a different model number.

D D

E (viii) Upon hearing that, he protested that the Plaintiffs had been in E
breach of their undertaking not to sell the acrylic sheets to
F F
GK.
G G
(ix) After negotiation with Lin, he made a concession and agreed
H to accommodate the Plaintiffs by replacing part of the H

so-called “different model number acrylic sheets” for the sake

I I
of good customer relationship.
J J

(x) Lin then produced the MOU which was the draft Replacement
K K
Agreement with the threat that, if he did not sign it, the
L Plaintiffs would not settle any of the invoices issued by D. L

Feeling under duress, he finally signed the Replacement

M M
Agreement and promised to replace about 20,000 pieces of
N acrylic sheets. N

O O
(xi) He signed the Replacement Agreement as well as the

P Negotiation Document only on behalf of Tohkoh Japan but P

not D.
Q Q

(xii) In paragraph 22 of his Witness Statement, he said : -

R R
“22. Subsequently, in or about April 2013, Tohkoh replaced
S 17,600 pieces of MR’s acrylic sheets with Gredmann, and S
Gredmann returned 14,800 pieces of acrylic sheets to Tohkoh
(“the Returned Acrylic Sheets”).”
T T

U U

V V
 - 34 -
A A

(xiii) In February 2017, about 4 years later, he sent 8 samples from

B B
the Returned Acrylic Sheets to MR for testing. MR
C confirmed that they had been manufactured by it and that they C

were genuinely of the MR 200 model.

D D

E E. Dr Norah Sophienaz Parsons (Dr Parsons) E

F F
69. Dr Parsons, the Single Joint Expert, has made one report
G dated 19 March 2018. She has a B Eng (Hons) Degree and a PhD (Eng) G

Degree both from Queen Mary College, University of London. Her

H H
discipline is in Biomedical Materials Science and Materials Science and
I Engineering. She is a chartered engineer and a consultant engineer I

specializing in the investigation of engineering, materials and corrosion

J J
related failures. With her academic qualifications and extensive practical
K experience, I have no difficulty in accepting that she is well qualified as an K

expert to give evidence in the present case.

L L

M 70. She gave oral evidence from abroad by video link. Before M

she did that, the parties had submitted further questions to her by
N N
permission of the Court.
O O

71. The instruction to Dr Parsons was for her to carry out an

P P
investigation into the cause of damage to some acrylic sheets. The gist of
Q her evidence is as follows : - Q

R R
(i) She had been given two cardboard packages each containing

S 10 acrylic sheets, both sourced from D. One package S

contained exemplar sheets and the other package was
T T
supposed to contain acrylic sheets returned by the Plaintiffs to

U U

V V
 - 35 -
A A

D. She had examined all the 20 acrylic sheets. Each base

B B
acrylic sheet was protected by polyethylene protective sheets
C on the outside. C

D D
(ii) According to her Expert Report, in general, the 10 exemplar

E sheets showed minor scratch details on the outer protective E

layers, with no scratches on the base acrylic sheets, ie, no
F F
“through scratches”.
G G
(iii) On the other hand, the 10 returned sheets showed more
H scratch details on their outer protective layers relative to their H

exemplar counterparts and, in some cases, there were through

I I
scratches (scratches which were present on the protective
J sheets which had penetrated through to the base sheet). The J

scratches on these sheets were up to 400mm in length. She

K K
also noted there to be white staining on the edges of the sheets,
L L
similar to those found on the exemplars.

M M
(iv) She had repeatedly asked for the material specifications of the
N protective sheets in order to find out the protective effect of N

the same but no such information was supplied to her.

O O

P (In this regard, it is to be noted that D’s case is that it was not P
able to obtain such information from either Tohkoh Japan or
Q Q
MR. D has also made the point that the Plaintiffs would be
R in an equally good position to request MR to give the R

information and that that they should have done so.)

S S

(v) Regarding the product quality of the acrylic sheets, in order to

T T
confirm if the products were below specification/substandard,
U U

V V
 - 36 -
A A

she would need to have the material specifications of the

B B
products. Unfortunately, again, she had not been supplied
C with what she really wanted. Thus, she was unable to C

compare the analysis result of the products with the

D D
specifications.
E E
(vi) She opined as follows : -
F F
“4.2 [sic] Based on the available evidence, the most likely
scenario to account for the scratch damage and staining on the
G exemplar and returned products that I examined, would be the G
manner in which the products were handled and stored
H following their manufacture. ..……..” H

I (vii) Finally, she concluded in the Expert Report as follows : - I

J
“5.5 Given the extent of through-scratch damage noted and J
the fact that their appearance specifications were not met, I
consider the returned products that I examined to be unsuitable
K for manufacturing the display screen of mobile telephones, K
which I understand to be their intended use.”
L L

(viii) In giving oral evidence, she made the following points : -

M M
(a) She had actually written to D’s solicitors 6 times during
N January to March 2018 to ask for the material N
specifications. D’s solicitors said that they would revert
to her when they had obtained the same but they never did.
O O
(b) She confirmed that without the material specifications, she
would have difficulty determining whether the protective
P P
sheets did meet the industry criteria.

Q (c) She said that the integrity of the protective sheets might Q
have been compromised and, consequently, they would
not provide adequate protection to the base sheets.
R R
(d) She also said that some of the scratches were 10 - 14cm in
length.
S S

T T

U U

V V
 - 37 -
A A

THE NATURE OF THE 17,600 ACRYLIC SHEETS DELIVERED IN

B B
APRIL 2013
C C

72. I now deal with the true nature of the 17,600 acrylic sheets
D D
delivered by D to the Plaintiffs on 8 and 16 April 2013 as mentioned in
E paragraphs 18 (x) and 60 above. E

F F
73. After the hearing had been completed, I sought clarification
G from the parties and called for submissions by them as to the exact nature G

of the said delivery of the 17,600 sheets referred to in paragraph 18 (x)

H H
above. The reason was that I came to realise the following : -
I I

(i) In paragraph 19 of Lin’s Supplemental Witness Statement, he

J J
said the following : -
K “During that period of time, there were persistent quality K
problems in small batches of goods and both parties also
L
settled the matter by replacing the defective goods. After that, L
two batches of goods that were dated 15 December 2011 (P/O:
GKOF283B) and 27 March 2012 (P/O: GKOF289B) were
M seriously defective. Gredmann had notified Hong Kong M
Tohkoh immediately and by negotiation between both parties,
Hong Kong Tohkoh agreed to replace 17,600 pieces first and
N N
replaced the 17,600 pieces on 8 April 2013 (P/O: GKOF305B).
However, after inspection by a third-party customer GK, to
O which Gredmann delivered 5,000 pieces of the replaced goods O
for its use, those replaced goods wee still seriously defective.
Eventually, in January 2014, Gredmann arranged delivery by
P itself to return 14,800 pieces of acrylic sheets to Japan.” P

Q
[emphasis added] Q

R (ii) It had all along been the case of the Plaintiffs that the said R

17,600 pieces were supplied to them as replacements. At the

S S
same time however, there was reference to Purchase Order
T GKOF 305B in relation to the said 17,600 pieces in the T

quotation above as well as in Annexure 1.

U U

V V
 - 38 -
A A

(iii) That point did not seem to have been challenged by counsel
B B
for D in cross-examination or in submission.
C C
(iv) Hence, I was not sure about the true nature of the delivery of
D D
the said 17,600 pieces.

E E
74. The Plaintiffs sent in their Supplemental Submission dated
F F
18 November 2021. It was pointed out to me by the Plaintiffs that they

G
were in fact replacements for defective acrylic sheets supplied by the G
Defendant to the Plaintiffs under the 1st PO and the 2nd PO and were
H H
actually not goods delivered under a contract of sale and that they were

I delivered to the Plaintiffs free of charge. In support of this point, the I

Plaintiffs have drawn my attention to the following : -
J J

(i) In paragraph 11 of the Re-Amended Defence and

K K
Counterclaim, the Defendant pleaded as follows :
L L
“……the replacement of 17,600 pieces of acrylic sheets was
only to accommodate the Plaintiffs as a matter of good gesture
M without admitting liability.” M

N (ii) In paragraph 20 of the Defendant’s Opening Submission, it is N

said :
O O
“20. D subsequently shipped a further 17,600 acrylic sheets
P to Ps and Ps returned 14,800 sheets to D. These sheets were P
exchanged by D in the hope that the established customer
relationship with Ps could be maintained [C/191, §45].”
Q Q

(iii) In paragraph 23 of the Defendant’s Closing Submission, it is

R R
said :
S S
“23. It appears to be common ground that in early April 2014
D subsequently shipped to Ps a further 17,600 acrylic sheets
T (“the Replacement Sheets”) [E1/23]. Nakayama subsequently T
visited the warehouse used by Ps in order to conduct an
inventory check.”
U U

V V
 - 39 -
A A

(I assume that the reference to the year “2014” is actually a

B B
typographical error for “2013”.)
C C

(iv) In the Witness Statement of Nakayama, he said in paragraph

D D
49 as follows :
E “49. Shortly thereafter, in or about April 2013, Tohkoh E
replaced 17,600 pieces of MR’s acrylic sheets with Gredmann
F and Gredmann returned 14,800 pieces of acrylic sheets to F
Tohkoh.”

G G
(v) In the 4th Supplemental Witness Statement of Nakayama, he
H said in paragraph 11 (f) as follows : H

“The free replacement of the 17,600 pieces of acrylic sheets

I I
was only made as a matter of good gesture without admitting
liability.”
J J

(vi) In the 5th Supplemental Witness Statement of Nakayama, he

K K
said in paragraph 5 as follows :
L “5. ……. The Defendant nevertheless, gratuitously and in L
good faith, offered to replace 17,600 pieces of the acrylic
M sheets for free. As a result thereof, the Defendant incurred a M
total of Japanese Yen 1,000,000, being courier fees,
transportation fees and travelling expenses, in sending a total of
N 17,600 pieces of replacement acrylic sheets to the Plaintiffs.” N

O (vii) In the Witness Statement of Ikegami, he said in paragraph 22 O

as follows :
P P
“22. Subsequently, in or about April 2013, Tohkoh replaced
Q 17,600 pieces of MR’s acrylic sheets with Gredmann, and Q
Gredmann returned 14,800 pieces of acrylic sheets to Tohkoh
(the “Returned Acrylic Sheets”).”
R R

(viii) In an email in Chinese dated 20 November 2013 sent by

S S
Nakayama to Leo Quyanag Wei of the Plaintiffs, he said as
T follows (as translated) : T

U U

V V
 - 40 -
A A

“In respect of 21,600 PCS of MR200 current inventory in

B Hong Kong B

Due to quality problems, cannot be sold at normal price

C C
and will be returned to Japan in the short term. Return details
will be discussed another time.
D (After the occurrence of the quality problem, Tohkoh shipped D
17,600 PCS from Japan in March 2013 to replace the
E above-mentioned sheets)” E

F 75. The Plaintiffs submit that, in the circumstances set out in F

paragraph 74 above, it is clear that the 17,600 acrylic sheets delivered by D

G G
to the Plaintiffs were replacements for the defective acrylic sheets
H previously supplied, despite the fact that they were supposed to have been H

delivered under GKOF 305B. They further submit that even if there was
I I
supposed to be payment for the 17,600 acrylic sheets under GKOF 305B,
J J
the inference can be drawn that such payment was refunded or somehow

K
credited back to the Plaintiffs. K

L 76. In response, in the letter dated 18 November 2021 from D’s L

solicitors to the Court, D submitted that the Plaintiffs’ evidence was

M M
deficient in that they had not produced the primary documents to show the
N N
actual dates of payment and the amounts paid for the goods. I am afraid

O
that there are some points made in that letter which I do not quite O
understand. In one paragraph, the letter says : -
P P
“There was clear evidence at the trial from the Defendant’s
witnesses that the Plaintiff did not make payment for the goods
Q shipped under either the 1 st Purchase Order or the 2 nd Purchase Q
Order.”
R R
Later in that letter, it is said : -
S S
“It is therefore clear that the invoices in respect of both the
1st Purchase Order and the 2nd Purchase Order were
T outstanding in early 2013. T

U U

V V
 - 41 -
A A

On the Plaintiffs’ own case, they did not make payment of the
B invoice in respect of the goods shipped under the 2 nd Purchase B
Order until 28 March 2013, almost a full year after the goods
were delivered.
C C
As the Plaintiffs have not placed before the Court the
documentary evidence to establish the date on which the goods
D D
shipped under the 1 st Purchase Order was actually made, the
Court cannot come to a clear conclusion as to this date.
E E
It is however clear beyond any doubt that payment was not
made in respect of goods shipped under the 1 st Purchase Order
F until long after they were delivered. F

The Plaintiffs have clearly not paid for both the goods shipped
G under the 1st Purchase Order and the goods shipped under G
GKOF305B. The most probable explanation appears to be
H that the Plaintiffs only paid for the 17,600 acrylic sheets on H
16 January 2014. On this basis, the payment did not relate to
the goods originally delivered but to the replacement goods.
I I
As a consequence of the delivery of the replacement sheets to
the Plaintiff and the re-delivery of the returned sheets to the
J Defendant, the Plaintiffs in fact received a total of 52,800 J
acrylic sheets. The Plaintiffs’ claim relates solely to these
K
52,800 sheets. The Plaintiffs’ pleaded claim does not concern K
the returned sheets.

L The Plaintiff is bound by its pleadings. There is no evidence L

whatsoever that the acrylic sheets which form the subject
matter of the Plaintiffs’ pleaded claim were in any was
M defective.” M

N 77. First, I am not clear as to whether D is saying that the N

O
Plaintiffs have not made payment of the price of the goods shipped under O
st nd
the 1 PO and/or the 2 PO and/or GKOF 305B. This is particularly so
P P
in light of D’s Counterclaim which claims in the prayer the following

Q
relief : - Q

“(e) Settlement by the 1 st and 2nd Plaintiffs of any and all

R outstanding invoices relating to the AS Contracts (including R
but not limited to the 1 st and 2nd POs) which remains unpaid
to date;”.
S S

In this regard, I have of course not forgotten that counsel for D indicated at
T T
the beginning of the trial that D was no longer pursuing its Counterclaim.
U U

V V
 - 42 -
A A

78. Secondly, I am not clear as to how the dates of payment for

B B
any goods would have any bearing on the question whether certain
C consignment is defective or not. C

D D
79. In any event, in the letter dated 19 November 2021 from the
E Plaintiffs’ solicitors to the Court, the Plaintiffs responded as follows : - E

F F
(i) Counsel for D did not cross-examine the Plaintiffs’ witnesses

G
on the date of payment for the goods under the 1st PO. D is G
now estopped from denying that such payment was made on
H H
22 December 2011 as shown in Annexure 1.

I I
(ii) It is D’s pleaded case that that the Plaintiffs only paid for the
J goods under the 1st PO and the 2nd PO later and not that they J

did not pay for such goods at all. In any case, D has
K K
expressly abandoned its Counterclaim.
L L

(iii) Insofar as D now attempts to suggest that the 17,600 acrylic

M M
sheets delivered in April 2013 were not free replacements,
N such attempt is wholly contradictory to D’s pleaded case, N

submissions and the admissions made by it as set out in

O O
paragraph 74 above.
P P

80. In further response to the Plaintiffs, D’s solicitors sent a letter

Q Q
dated 25 November 2021 and made, inter alia, the following points : -
R R
(i) The Plaintiffs’ pleaded case is that the defective goods were
S S
those delivered under the 1st PO and the 2nd PO and not those

T
under the Replacement Agreement. T

U U

V V
 - 43 -
A A

(ii) The Plaintiffs had not adduced admissible evidence to

B B
establish the relevance of the Replacement Agreement.
C C
(iii) The Plaintiffs had failed to establish their pleaded case that
D D
the goods delivered to the Plaintiffs were already damaged

E before the risk is the good had passed to them. They had E
st
also not established that it was the goods under the 1 PO and
F F
the 2nd PO were defective, or that it was the 21,400 pieces out
G of those two orders which were to be returned and replaced. G

H (iv) In the chronology appearing on page 4 of the Plaintiffs’ H

Closing Submissions dated 30 June 2021, the date of payment

I I
st
of the goods shipped under the 1 PO was stated to be
J “22 December 2012”. This was inconsistent with Annexure J

wherein it was stated that the said date of payment was

K K
“22 December 2011”.
L L

(v) “It is clear from the chart at E1-23-1 that the Plaintiffs did indeed pay
M for the 17,600 acrylic sheets delivered pursuant to Purchase Order M
GKOF305B: the chart expressly states that the sums of US$267,000 and
US$202,920 were paid on 16 January 2014.
N N
The Plaintiffs’ payment for the goods is inconsistent with their
O suggestion that the so-called Replacement Agreement constitutes an O
admission of liability.

P The Defendant notes that the chart at E1-23-1 also records that on P
26 January 2014, 14,800 acrylic sheets described as “returned goods”
were delivered and that a payment of US$395,160.00 was made. The
Q Q
inference is to be drawn that these acrylic sheets were delivered by the
Plaintiffs to the Defendant and that the refund of US$395,160.00 was
R made. R

The contents of the chart at E1-23-1 therefore demonstrate that the

S Plaintiffs’ attempts to rely on the so-called Replacement Agreement are S
fundamentally flawed.
T T
The so-called Replacement Agreement was signed by Mr Ikegami
because it was the only practical way of obtaining payment of the long
U U

V V
 - 44 -
A A

outstanding invoices which the Plaintiffs had failed to pay. The

B Defendant was not a party to the Replacement Agreement which was B
made with a different company, Tohkoh Jushi Co. Ltd.
C Following the making of the Replacement Agreement, on the basis of C
their own document, namely the chart at E1-23-1, the Plaintiffs paid a
D total sum of US$469,920 to the Defendant. The Plaintiffs would not D
have been expected to have made such a significant payment for further
acrylic sheets if the goods previously supplied had been defective.
E E
The so-called Replacement Agreement therefore provides no assistance
to the Plaintiffs.”
F F

G 81. After consideration of the matters set out in paragraphs 72 - 80 G

above as well as the email dated 20 November 2013 from Nakayama to the
H H
Plaintiffs referred to in paragraph 53 above, I have come to the conclusion
I that the said 17,600 pieces of acrylic sheets delivered by D to the Plaintiffs I

in April 2013 were actually replacements for the defective goods delivered
J J
under the 1st PO and/or the 2nd PO.
K K

MY FINDINGS IN RELATION TO THE QUESTION OF LIABILITY

L L

M
82. First, I find as a fact that there was no agreement between the M
Plaintiffs and D and/or any undertaking by the Plaintiffs to the effect that: -
N N

(i) D would give no warranty for the quality of the goods to be

O O
sold to the Plaintiffs;
P P

(ii) the Plaintiffs could not re-sell the acrylic sheets to competitors
Q Q
of D, including, in particular, GK.
R R
I take the view that if there had been such agreement or undertaking, the
S same would have been recorded in writing between the Plaintiffs and the S

Defendant. Furthermore, if there had been such an agreement or

T T
undertaking and the Plaintiffs had committed a breach thereof, the same
U U

V V
 - 45 -
A A

would have been raised D in the correspondence between the parties much
B B
earlier on and not only just after the commencement of the litigation.
C I therefore do not accept the evidence of Ikegami and Nakayama in this C

regard.
D D

E 83. Secondly, in any event, I fail to see how GK could be a E

competitor of D in light of the fact that it was purchasing goods as a

F F
sub-purchaser from the Plaintiffs who themselves had to buy the goods
G from D. GK must have paid a price for the goods higher than that paid by G

the Plaintiffs to D and GK would naturally sell the same goods at an even
H H
higher price to the purchasers from itself. In those circumstances, GK
I would only be an indirect purchaser from D and not its competitor. I

J J
84. Thirdly, on the basis of the course of conduct between the
K parties from the commencement of their trading relationship and all the K

admissions made on behalf of D, mostly by Nakayama, including all the

L L
emails referred to above, in particular, those set out in paragraphs 23, 34,
M 37 and 53 above, and the contents of the MR Report sent by Nakayama to M

the Plaintiffs on 3 December 2011 as referred to in paragraph 31 above, I

N N
find that it has been proved by the Plaintiffs that the acrylic sheets sold by
O D to the Plaintiffs during their trading relationship had always had O

substantial quality problems.

P P

Q 85. Fourthly, on the basis of the matters referred to in paragraphs Q

82 and 83 above and on the basis of the draft of the Negotiation Document
R R
sent by Nakayama to Michael Chen on 22 January 2013 as referred to in
S paragraph 41 above, the forwarding to the Plaintiffs of the actual S

Negotiation Document signed by Ikegami two days later as referred to in

T T
paragraph 43 above, the signing of the Replacement Agreement by
U U

V V
 - 46 -
A A

Ikegami as referred to in paragraph 47 above and the delivery of the

B B
17,600 replacement acrylic sheets in April 2013, I find that the majority of
C the acrylic sheets delivered under the 1st PO and the 2nd PO were defective. C

D D
86. The quality problems are to an extent confirmed by the Report
E of Dr Parsons as referred to above. With the limited information and E

materials supplied to her, she was able to come to conclude and consider
F F
“the returned products that I examined to be unsuitable for manufacturing
G the display screen of mobile telephones, which I understand to be their G

intended use.”
H H

I 87. Having found that the goods under the 1st PO and the 2nd PO I

were defective, I do not think it really matters whether they were actually
J J
“MR 200 G” models or “MR 200 Z” models.
K K

88. I do not accept the allegation by Ikegami that he signed the

L L
Replacement Agreement only for and on behalf of Tohkoh Japan. I find
M as a fact that he signed it and made the admissions contained therein for M

and on behalf of D. Quite clearly, at all material times, both Nakayama

N N
and Ikegami were acting with the Plaintiffs as the representatives of D.
O There was no contractual relationship or direct dealing between the O

Plaintiffs and Tohkoh Japan.

P P

Q 89. I also do not accept the allegation by Ikegami and Nakayama Q

that the Replacement Agreement was signed by Ikegami under duress in

R R
the sense that the Plaintiffs threatened not to pay for the goods under the
S 1st PO and/or the 2nd PO. Whether a threat of such nature can ever S

constitute a proper defence of duress in the law of contract is questionable.

T T
In any event, the simplest remedy for an unpaid seller is just to sue for the
U U

V V
 - 47 -
A A

price. There is no credible evidence adduced by them that it would be

B B
fruitless for D to sue the Plaintiffs in a Mainland court. Furthermore, I do
C not accept their allegation that D agreed to replace large quantities of the C

acrylic sheets for the Plaintiffs only because it wanted to retain a good
D D
relationship with its customer.
E E

90. I further do not accept Nakayama’s evidence that, in his email

F F
dated 13 June 2012 to Ivy Huang as referred to in paragraph 37 above, he
G was referring to 14,800 acrylic sheets under an earlier contract which were G

defective. Quite obviously, he was referring to 14,800 acrylic sheets

H H
st
under the 1 PO. His evidence on this point is simply disingenuous.
I I

91. Again, I do not find that D has proved that the defects had
J J
been caused as a result of the mishandling or improper storage by the
K Plaintiffs. According to both Lin and Ms Yin, the Plaintiffs would as K

soon as the goods arrived in Hong Kong cause them to be transported to

L L
the relevant warehouses without opening the packages. They would
M make sure that the warehouses they used had proper humidity and M

temperature contract. Then if a customer were to buy some of the goods,

N N
the Plaintiffs would cause the same to be delivered to the customers. In
O all probability, this would be the natural procedure to be followed. O

Furthermore the evidence is that in the course of the dealings between the
P P
Plaintiffs and D, whenever there were complaints about quality, Nakayama
Q would go to the warehouses to check the goods. If he had thought that Q

there were mishandling by the Plaintiffs or if the warehouses in question

R R
were not up to standard, surely he would have raised such complaints in
S S
correspondence. The fact is that there was no such complaint.

T T

U U

V V
 - 48 -
A A

92. Against what is said in paragraph 91 above, on the other hand,

B B
there have been admissions by Nakayama which show that there were
C problems in the storage and the protective sheets used by MR. See, eg C

the email from Nakayama dated 5 January 2011 referred to in paragraph 23

D D
in which he said: -
E E
“it is true that MR 200 has been stored in the warehouse for
about 7 months, and there shall be a problem of warping of the
F sheet.” F

G In the email from Nakayama dated 3 December 2011 referred to in G

paragraph 31 above, he also said: -

H H
“In connection with the defective gum/staining residues
problem, we are considering introducing protective films with
I better quality and we are currently examining it in the I
introductory stage.”
J J

93. I now deal with D’s defence that the Plaintiffs were too late in
K K
complaining about the defective quality of the goods. It is clear that D
L L
knew that the Plaintiffs had bought the goods from it for the purpose of

M
resale to customers. It must also be well understood by D that, on M
receiving the goods, the Plaintiffs would not remove the protective sheets
N N
in order to check the quality of the acrylic sheets because, once the

O protective sheets had been removed or tampered with, their customers O

would not accept the acrylic sheets as being new. Thus, it would be
P P
natural for the Plaintiffs to learn about any defect in the quality of the

Q goods only after the goods had been sold to the Plaintiffs’ customers and Q

after they had been told by such customers about the defects.
R R

S 94. In the case of Truk (UK) Ltd v Tokmakidis GmbH [2000] 2 S

All E R (Comm) 594, the court held that, in a case where a purchaser had
T T
purchased goods for the purpose of resale, that was an important factor to

U U

V V
 - 49 -
A A

be taken into account in the court’s determination of the reasonable period

B B
for rejection in the context of section 35 (4) of the Sale of Goods Act 1979.
C In such circumstances, it would often be the case that a particular defect C

could or would only be discovered by the sub-purchaser when a resale took

D D
place. The court said at page 605 D-F as follows : -
E E
“Where goods such as machines of one kind or another are sold
for the purposes of resale, and they turn out to be defective, it
F often happens – I would suggest more often than not – that the F
defect is discovered only when the sub-buyer comes to use the
goods. He then rejects them and causes the buyer in turn to
G reject them. That is an everyday event in both consumer and G
non-consumer transactions. Section 35 refers to it in sub-s
H (6)(b), where it is provided that acceptance shall not be deemed H
to have occurred merely by reason of delivery under a sub-sale.
This leads to the conclusion that, where goods are sold for
I resale, a reasonable time in which to intimate rejection should I
usually be the time actually taken to resell the goods together
with an additional period in which they can be inspected and
J J
tried out by the sub-purchaser. As an example, consider the
position of a trader who has bought for stock an item of
K electrical equipment which may be sold in a week or in several K
months. Certainly it would usually be right in such cases at
least to take account of the period likely to be required for
L resale. In the present case I have to decide whether the period L
should last at least until the date for payment – which is the
M earlier of the date of resale or six months from delivery. I am M
satisfied that in the circumstances it should. That reflects the
reasonable interests of both the buyers and the sellers, and
N takes account of the terms of the contract itself. So I conclude N
that a reasonable time in which to intimate rejection had not
passed when December 1996 came and Tokmakidis questioned
O O
compliance with the Iveco guidelines and refused to pay.”

P P
95. In my judgment, the same reasoning applies in the present
Q case. Moreover, it appears that the Plaintiffs had in fact been informing Q

and complaining to D about the defects in the goods very soon after they
R R
had been notified by their customers. I therefore find that the Plaintiffs
S were not too late in rejecting or complaining about the goods vis-à-vis D. S

Indeed, it is to be noted that the Plaintiffs in the present case were not
T T
seeking to reject the goods. They only claim damages for breach of
U U

V V
 - 50 -
A A

warranty and/or condition. In Halsbury’s Laws of Hong Kong (2nd ed)

B B
Vol 45, it is said at paragraph [355.272] on page 690 as follows : -
C “[355.272] Buyer’s remedies on breach Where there is a C
breach of warranty by the seller, or where the buyer elects or is
D compelled to treat any breach of a condition on the part of the D
seller as a breach of warranty, the buyer is not by reason only
of such breach of warranty entitled to reject the goods; but he
E may set up against the seller the breach of warranty in E
diminution or extinction of the price, or maintain an action
against the seller for damages for the breach of warranty.”
F F

[emphasis added]
G G

H 96. I do not think that the argument by D that the risks in the H

goods had already passed to the Plaintiffs on the basis of the shipping
I I
documents has any relevance at all. There is no evidence or suggestion
J by D that the defects were caused by something which occurred whilst the J

goods were in transit.

K K

L 97. Regarding the allegation by D that the reason for the L

purchasers from the Plaintiffs and, in turn, the Plaintiffs themselves,

M M
wanting to reject the goods as a result of the decline in the market for the
N acrylic sheets in question because of the decrease in popularity of mobile N

phones such as Nokia, Ericsson and Motorola, Lin said that the market
O O
only dropped a bit. There is no evidence adduced by D that the drop was
P so sudden and severe that the Plaintiffs and their sub-purchasers would be P

motivated to try to get out of orders already placed for the acrylic sheets.
Q Q

R 98. Furthermore, if the allegation referred to in paragraph 97 R

above were true, it would mean that the Plaintiffs and their customers were
S S
actually conspiring to cheat D. Such a defence had never been raised in
T the correspondence between D and the Plaintiffs. I find that D has not T

made out such a case.

U U

V V
 - 51 -
A A

99. Regarding the point made by D as referred to in paragraph 80

B B
(iv) above, I believe that the date “22 December 2012” stated on page 4 of
C the Plaintiffs’ Closing Submissions dated 30 June 2021 must be a C

typographical error for “22 December 2011” which also caused that date to
D D
be inserted in the wrong place in the chronology because it was pointed out
E by the Plaintiffs that the source of that date was “E1/23”, ie, the chart E

annexed hereto as Annexure 1 which makes it clear that the date of

F F
payment for the goods under the 1st PO was “22 December 2011”. Thus,
G there is nothing in that point. In any event, in light of all the evidence G

set out above, I do not think that the question as to whether payment
H H
st
for the goods under the 1 PO was made on 22 December 2011 or
I 22 December 2012 would affect my findings in the case. I

J J
100. In view of my finding in paragraph 81 above, I find that the
K 17,600 replacement acrylic sheets were also goods supplied the Plaintiffs K

by D under the 1st PO and the 2nd PO.

L L

M 101. In the above circumstances, I find that D has breached its M

obligations under the 1st PO and the 2nd PO by supplying defective goods
N N
to the Plaintiffs which were not of merchantable quality or suitable for the
O purpose of the Plaintiffs in breach of the conditions implied under section O

16 (2) and (3) of the Sale of Goods Ordinance Cap 26. D should be liable
P P
to the Plaintiffs in damages.
Q Q

102. In prayer (2) in the Amended Statement of Claim, the

R R
Plaintiffs claim : -
S S
“(2) A declaration that the Defendant is to indemnify the 1 st
and/or 2nd Plaintiffs from the claim of 金凱 [GK]
T against the 1st and/or 2nd Plaintiffs.” T

U U

V V
 - 52 -
A A

The supply of goods by the Plaintiffs to GK took place in 2013. There is

B B
no evidence that GK has actually lodged any claim or serious claim against
C the Plaintiffs. I will therefore not make any declaration of indemnity as C

claimed by the Plaintiffs.

D D

E 103. I shall deal with the question of damages below. E

F F
QUANTUM OF DAMAGES
G G

104. As pointed out above, the Plaintiffs’ claim is not rejection of

H H
the goods in question but damages in breach of warranty and/or condition.
I They do not appear to be claiming for loss of profits on resale of the goods I

which they would have made had the goods not been defective. They
J J
only claim the difference between the price of the goods paid by them to D
K and the prices of the defective goods sold by them to sub-purchasers. K

L L
105. In the Amended Statement of Claim, the Plaintiffs claim
M damages under 3 heads: - M

N (i) “Loss arising from the sale of 26,336 pieces of MR 2000 0.8T N

Acrylic Sheets (P/O : GKOF 283B & GKOF 289B) at a lower

O O
unit price in the sum of RMB3,417,958.51”;
P P

(ii) “Loss arising from the sale of 16,265 pieces of MR 200 1.0T
Q Q
Acrylic Sheets (PO : GKOF 283B) at a lower unit price in the
R sum of RMB1,607,068.06”; R

S S
(iii) “Tax in the sum of RMB225,568.75 for delivery 5,000 pieces

T of MR200 Acrylic Sheets to 金凱”. T

U U

V V
 - 53 -
A A

106. I take the view that item (iii) in paragraph 105 above is too
B B
remote and should not be borne by D.
C C

107. The evidence on the quantum of damages is basically given

D D
by Ms Yin in her Supplemental Witness Statement. The relevant parts of
E her Supplemental Witness Statement read as follows : - E

“3. From 013 to 2016, Gredmann sold the defective acrylic

F F
sheets MRZ200 at lower prices successively. The sales
volume was:
G i. 26,336 pieces of MRZ2000.8T; and G
ii. 16,265 pieces of MRZ200 1.0T.
H H
4. In respect of the losses arising from selling the 26,336
pieces of MRZ200 0.8T at lower prices by Gredmann,
I please refer to the following chart: I
Losses arising from selling MRZ200 0.8T at lower prices
J J
Name of Sub-purchaser Quantity Losses (RMB) Exhibit

K 1 深圳市富諾包裝制品 1,600 $216,930.34 “YM-1” K

有限公司

L 2 深圳市海楓茂光學科 15,700 $2,376,492.05 “YM-2” L

技有限公司
M M
3 深圳市雷克斯科技有 20 $2,626.16 “YM-3”
限公司
N N
4 深圳市信濠精密組件 1,200 $27,655.02 “YM-4”
有限公司
O O

5 上海偉技貿易有限公 7,816 $794,254.94 “YM-5”

P 司 P

Total: 26,336 $3,417,958.51

Q Q

The relevant documents are annexed to this Supplemental Witness Statement

R as exhibits “YM-1”, “YM-2”, “YM-3”, “M-4” and “YM-5”. R

5. Taking “YM-1” as an example, the chart on page 1 listed

S the information in respect of Gredmann’s sales of S
MRZ200 0.8T to 深圳市富諾包裝制品有限公司 at lower
prices form August 2016 to December 2016. The rows of the
T T
chart show the delivery date of each order and the columns
show the sales quantity, unit price, loss per piece, total losses,
U U

V V
 - 54 -
A A

and the reference number of the relevant supporting document.

B For example, the first row is related to the first purchase order. B
The delivery date was 5 August 2016, quantity was 100 pieces,
unit price was RMB47.01, loss per piece was RMB135.58 (the
C purchase price of RMB182.59, as mentioned in the above C
paragraph 2, minus the unit price of RMB47.01). The
supporting documents of this order are marked as “1” that I
D have marked the relevant purchase order, delivery note and tax D
receipt as “1-1”, “1-2”, “1-3” and “1-4” for convenience sake.
The second row of the chart is related to the second purchase
E order and the supporting documents are marked as “2”, which E
involving “2-1”, “2-2” and “2-3” that are respectively the
purchase order, delivery note and tax receipt. The third row is
F F
related to the third purchase order and the supporting
documents are marked as “3”, and so forth. I have adopted the
G same system in :YM-2”, “YM-3”, “YM-4” and “YM-5”. G

6. Losses suffered by Gredmann as a result of selling the

H 16,265 pieces of MRZ200 1.0T at lower prices are as H
follows:
I Losses arising from selling the MRZ200 1.0T at lower prices I

Name of Sub-purchaser Quantity Losses (RMB) Exhibit

J J
1 深圳市尊寶精密光學有 400 $59,360.79 “YM-6”
K 限公司 K

2 深圳市旭成光電有限公 995 $139,155.68 “YM-7”

L 司 L

3 深圳現代富博科技有限 100 $13,130.79 “YM-8”

M M
公司

N 4 深圳市富諾包裝制品有 800 $108,465.16 “YM-9” N

限公司

O 5 深圳市雷克斯科技有限 3,198 $474,589.49 “YM-10” O

公司
P P
6 上海偉技貿易有限公司 3,057 $182,701.38 “YM-11”

Q 7 深圳市友強光學科技有 1,195 $165,844.63 “YM-12” Q

限公司
R “YM-13” R
8 深圳市泰源興科技有限 3,520 $415,195.42
公司
S S
9 深圳市信濠精密組件有 3,000 $48,624.72 “YM-14”
限公司
T T
Total: 16,265 $1,607,068.06
U U

V V
 - 55 -
A A

The relevant documents are annexed to this Supplemental Witness Statement

B as exhibits “YM-6”, “YM-7”, “YM-8”, “YM-9”, “YM-10”, “YM-11”, B
“YM-12”, “YM-13” and “YM-14”. ”

C C
The detailed supporting documents exhibits “YM-1” to “YM-14” have
D been included in the Hearing Bundles E1/93 to E2/287. D

E E
108. D did not appear to have seriously challenged the

F documentary evidence referred to in paragraph 107 above or the figures F

therein, whether by adducing counter-evidence or in cross-examination,
G G
except in a sort general denial manner. Furthermore, D had not adduced
H any evidence to support its contention that the Plaintiffs had failed in their H

duty of mitigation, for instance, by suggesting that the goods sold at a

I I
lower prices should have fetched higher prices.
J J

109. In the above circumstances, I find that the Plaintiffs have

K K
proved the loss and damage which they have suffered.
L L
110. Regarding the quantum under item (ii) set out in paragraph
M 105 above, Lin in paragraph 26 (i) of his Supplemental Witness Statement M

says that the figure “RMB1,607,068.06” should be reduced to

N N
“RMB1,604,310.36”. I have noted it.
O O

CONCLUSION
P P

Q 111. I give judgement as follows : - Q

R (i) There be judgment in favour of the Plaintiffs on their claim R

against D in the sum of RMB5,022,268.87 with interest

S S
thereon at the rate of 1% above the HSBC Best Lending Rate
T from time to time from the date of the Writ until the date of T

Judgment.
U U

V V
 - 56 -
A A

(ii) The Counterclaim is dismissed.

B B

(iii) There be a costs order nisi that the costs of the action and of
C C
the Counterclaim be paid by D to the Plaintiffs, the same to be
D D
taxed on a party and party basis, if not agreed.

E E

F F

G G

(Patrick Fung SC)

H Deputy High Court Judge H

I I

J Ms Queenie W S Ng and Mr Kev L H Wan, instructed by Cheung & Co, J

for the 1st and 2nd Plaintiffs
K K
Mr Colin Wright and Ms Jacqueline K K Chan, instructed by Robert Lee
L Law Offices, for the Defendant L

M M

N N

O O

P P

Q Q

R R

S S

T T

U U

V V
 CACV 93/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 93 OF 2000
(ON APPEAL FROM HCA NO. 9059 OF 1999)

______________

BETWEEN
SHENZHEN BAOMING CERAMICS
COMPANY LIMITED Plaintiff

and

COMPANION-CHINA LIMITED Defendant

______________

Before: Godfrey V-P and Keith JA in Court

Date of Hearing: 3 May 2000
Date of Judgment: 17 May 2000

_______________

JUDGMENT
_______________

Keith JA (giving the judgment of the Court):

 - 2 -

Introduction

In May 1997, the Plaintiff, Shenzhen Baoming Ceramics Co.

Ltd, concluded an agreement (“the original agreement”) with the
Defendant, Companion-China Ltd, for the manufacture by the Plaintiff
and the sale to the Defendant of quantities of ceramic tiles. By a
subsequent agreement concluded in September 1997 (“the settlement
agreement”), the parties agreed that they should be discharged from
performing their obligations under the original agreement. One of the
terms of the settlement agreement was that certain payments would be
made by the Defendant to the Plaintiff, and the settlement agreement
included a timetable setting out the deadlines for those payments.

In due course, the Plaintiff commenced proceedings against

the Defendant. One of its claims was that sums of $2,349,394.86 and
RMB7,447.86 (which were part of the sums owed by the Defendant
under the settlement agreement) had not been paid. The Plaintiff
applied for summary judgment for these amounts plus interest under
Ord. 14. The Defendant admitted that sums totalling $1,859,755.88 due
under the settlement agreement had not been paid. Master Lau gave the
Plaintiff summary judgment for that amount plus interest, and gave the
Defendant unconditional leave to defend the balance of the Plaintiff’s
claim.

The Defendant appealed against the award of summary

judgment. The appeal was heard by Cheung J. He allowed the appeal,
and gave the Defendant unconditional leave to defend the whole of the
Plaintiff’s claim. The Plaintiff now appeals. It seeks to have Master
Lau’s orders restored.
 - 3 -

The defence of agency

The defence which caused the judge to grant the Defendant

unconditional leave to defend the whole of the Plaintiff’s claim related to
the status of the Defendant. The Defendant’s case was that when it
entered the original and subsequent agreements it was not acting as
principal. It was acting as an agent, and entered the agreements as agent
for and on behalf of Saint Galarie Tiles Ltd (“SGT”). Both the fact of
this agency, and the identity of the principal, were said to have been
disclosed to the Plaintiff. Accordingly, it was said that the Plaintiff’s
claim for the amounts unpaid under the settlement agreement could not
succeed against the Defendant, and that the Plaintiff’s cause of action was
against SGT. The judge allowed the appeal because he thought that this
defence raised a triable issue.

The basis on which the Defendant claims that it was acting

as the agent of SGT appears from the affirmation of Leung Kwok Wa,
one of its directors. In essence, Mr Leung’s evidence was that the
Defendant is a member of the Companion Group of Companies. It is
principally engaged in investment holding. It is not one of the operating
companies in the Group, and owns no factory or machinery. SGT is its
wholly-owned subsidiary. It is SGT which carries on the business of
supplying ceramic tiles to local and overseas customers. That was
known to the Plaintiff’s representative with whom Mr Leung negotiated
the original agreement. Since
(a) the Plaintiff was owned by a County Government on
the mainland,
(b) the Companion Group of Companies was well known
on the mainland for its trade in ceramic tiles, and
 - 4 -

(c) this was the first time that the Group had dealt with
the County Government,
Mr Leung thought that “it would be better to use the Defendant’s name to
enter” the original agreement with the Plaintiff. Accordingly, he told the
Plaintiff’s representative that the agreement “would be signed in the name
of the Defendant but the buyer was SGT”. He mentioned that both
during the visit of the Plaintiff’s representative to SGT’s retail outlets in
Hong Kong and when the terms of the original agreement were finalised
on the mainland. He claims that on neither occasion did the Plaintiff’s
representative raise any objection.

Mr Leung’s evidence on the topic concluded with the

following statement:

“Other than lending its name to the [original] agreement, the

Defendant took no part in the deal. There was no contract of
sale and purchase between the Defendant and SGT. Raw tiles
would bear SGT’s logo and be sent to SGT direct. [The]
[c]oating process would be carried out by SGT. SGT paid the
Plaintiff for raw tiles supplied to SGT. SGT was solely
responsible for the sale of the ceramic tiles. The profit and
loss from the [original] agreement would be attributed to SGT.”

It was on the basis of this extrinsic evidence from Mr Leung that the
judge held that there was a triable issue as to whether the Defendant was
liable to the Plaintiff for the sums due under the settlement agreement.

The admissibility of the extrinsic evidence

The admissibility of extrinsic evidence is the subject of

Art. 102 in Bowstead and Reynolds on Agency, 16th ed. At para. 9-037,
the authors write:
 - 5 -

“Where it is clear from the terms of a written contract made by

an agent that he contracted personally, extrinsic evidence is not
admissible to show that, notwithstanding the terms of the
contract, it was the intention of the parties that he should not be
personally liable on it, because such evidence would be
contradictory to the written contract.”

A similar statement of principle appears in Halsbury’s Laws of England,

4th ed., vol. 1(2), para. 137:
“If …. the agent contracts in such terms as to imply that he is
the real and only principal, evidence to contradict the terms of
the contract will not be admitted.”

That is to be contrasted with the case of an agent who “contracts in his

own name but not in terms which are consistent only with his having
done so as principal”. In such a case, “oral evidence may be admitted to
prove the identity of the principal”. These are also quotations from
Halsbury, op. cit., para. 137, as is the statement that “[w]hether he has
contracted in such terms or not depends upon the construction of the
particular contract”.

Against this background, we turn to the agreements

themselves. Both of them were in Chinese, but they have been
translated into perfect English. Although the translation has not been
certified, there is no dispute that the translation is correct. The
Defendant is named in each of the agreements as the contracting party,
each of the agreements was signed by a person who purported to be a
representative of the Defendant, and who purported to be signing the
agreements on behalf of the Defendant, and each of them bore the
Defendant’s chop. So far as the original agreement is concerned,
although it provided for the tiles to be delivered to SGT,
(a) the agreement recorded that the specifications for the
tiles had to be provided by the Defendant,
 - 6 -

(b) it required the tiles to be manufactured by a process

agreed by the production engineers of the Defendant,
(c) it required the Defendant to assign technicians to
conduct tests of the tiles, and
(d) it required the Defendant to pay the purchase price, as
well as the customs declaration, fees and taxes.
Indeed, the settlement agreement referred to the fact that it was the
Defendant which owed the sums unpaid under the original agreement.
So far as the settlement agreement itself is concerned, it required the
Defendant to pay the sums due under the settlement agreement.

Having looked at the two agreements as a whole, it is plain

that the Defendant contracted with the Plaintiff in such terms as to imply
that it was the real and only principal and in terms which are consistent
only with it having done so as principal. It follows that the conditions
necessary for Mr Leung’s extrinsic evidence to be admissible have not
been satisfied, and that the Defendant has to be treated as the party with
whom the Plaintiff contracted. For these reasons, the defence of agency
does not, in our view, raise a triable issue.

The defence of set-off

Since the judge was giving the Defendant unconditional

leave to defend the whole of the Plaintiff’s claim on the basis of the
defence of agency, he understandably did not address the question
whether any of the Defendant’s other pleaded defences raised triable
issues. Mr Francis Yip for the Defendant relied only on one other
 - 7 -

pleaded defence as raising a triable issue, and that is the defence of

set-off.

The Defendant’s pleaded case is that in September 1998

another agreement was entered into with the Plaintiff (“the third
agreement”), this time for the purchase of 60,000 tiles in order to fulfil a
contract which SGT had concluded with one of its customers. However,
a substantial number of the tiles delivered to SGT pursuant to the third
agreement were defective. In the light of SGT’s inability to honour its
agreement with its customer, SGT’s customer terminated that agreement,
and SGT suffered losses under various heads amounting to $5.2m. The
Defendant, alternatively SGT, claim that sum from the Plaintiff, and they
claim that one or other of them is entitled to set off that amount by way of
defence to the Plaintiff’s claim.

The question which arises is which of the Defendant or SGT

was the contracting party with the Plaintiff in the third agreement. The
third agreement was in the form of a memo sent to the Defendant
containing the terms of the agreement. It was countersigned by an
unidentified person who agreed to the terms proposed in the memo.
That person did not identify for which company he was agreeing the
terms, but since
(a) the memo was expressly addressed to the Defendant,
(b) it referred at various places to “your company”,
(c) the person who countersigned it referred to “our
company” appointing someone to be the factory
representative, and
 - 8 -

(d) the only company referred to in the memo was the

Defendant and SGT was not mentioned in it at all,
it is plain that it was the Defendant who was contracting with the Plaintiff,
and doing so in such terms as to imply that it was the real and only
principal. Thus, the cause of action for breach of the third agreement
vests in the Defendant, not SGT.

In these circumstances, the potential difficulty for the

Defendant is that the Defendant is counterclaiming damages for losses
which were sustained by SGT. Are damages for such losses claimable
by the Defendant? The answer to that question does not depend, as has
been contended, on the following principle in the law of agency:
“Where the agent is sued on the main contract, he can
presumably plead defences arising out of the contract, and
defences personal to himself, but not defences personal to the
principal”: Bowstead and Reynolds, op. cit., para. 9-027.

That is because the Defendant had not been acting as SGT’s agent when it
concluded the third agreement. The answer to the question depends on
the law of privity of contract. Where X breaks its contract with Y which
was made for the benefit of Z and which causes loss to Z, can Y claim
from X damages for Z’s loss? The common law on this topic is in a
state of flux: see the discussion on the topic in Chitty on Contracts, 28th
ed., vol. 1, paras. 19-046 and following. Indeed, in the United Kingdom,
Parliament has intervened to legislate in the field: see Contracts (Rights
of Third Parties) Act 1999. In our view, although this is a crisp question
of law, it is one which requires mature and detailed consideration, and is
not one which is susceptible to resolution in a summary procedure of the
kind provided for by Ord. 14. In any event, we have not had the benefit
of any submissions of counsel on this topic. Accordingly, there is a
 - 9 -

triable issue as to whether the loss alleged to amount to $5.2m. sustained

by SGT can be counterclaimed by the Defendant.

What order, then, should be made in these circumstances?

The law in this area has been usefully summarised in the Supreme Court
Practice 1999, vol. 1, at p. 179 as follows:
“An analysis of the authorities as to what order should be made
where the defendant raises a set-off or counterclaim shows that
there are four different classes or groups of such orders,
namely:
(a) where the defendant can show an arguable
set-off, whether equitable or otherwise, he is
entitled to defend to the extent of the set-off and
the court has no discretion;
(b) where the defendant sets up a bona fide
counterclaim arising out of the same subject
matter as the action and connected with the
grounds of defence, the order should not be for
judgment on the claim, subject to a stay pending
trial of the counterclaim, but should be for
unconditional leave to defend, even if the
defendant admits the whole or part of the claim;
(c) where there is no defence to the claim but a
plausible counterclaim of not less than the claim
is set up, judgment should be for the plaintiff on
the claim with costs, stayed until trial of the
counterclaim;
(d) where the counterclaim arises out of a separate
and distinct transaction or is wholly foreign to
the claim, judgment should be for the plaintiff
with costs without a stay;
the lack of clarity between classes (b), (c) and (d) gives
the court freedom to respond to the perceived justice of
the individual case (United Overseas Ltd v. Peter
Robinson Ltd, March 26, 1991, CA Transcript 91/0297,
per Bingham LJ).”

The Defendant’s counterclaim does not come within category (a) or

category (b). Accordingly, there is no defence to the Plaintiff’s claim
for $1,859,755.88 plus interest, and there must be judgment for the
 - 10 -

Plaintiff for that sum. The issue is whether the Defendant’s

counterclaim comes within category (c) or category (d). In our view, it
comes within category (c). Both the settlement agreement and the third
agreement arose out of orders given to the Plaintiff for ceramic tiles
pursuant to an ongoing trading relationship. In our judgment, it would
be unjust to require the Defendant in such a relationship to pay a sum
which represents a compromise as to the balance of the purchase price of
goods to which the original agreement related before the determination of
the seller’s liability to compensate the buyer for losses alleged to have
been incurred as a result of sub-standard goods being delivered under the
third agreement.

Conclusion

In these circumstances, we allow the appeal, we set aside the

order made by the judge, and we substitute for it the following orders:
(i) judgment be entered for the Plaintiff against the
Defendant for the sum of $1,859,755.88, with interest
thereon at 1.5% per month from 25 February 1999,
(ii) execution of that judgment be stayed pending the trial
of the Defendant’s counterclaim, and
(iii) the Defendant be granted unconditional leave to
defend the balance of the Plaintiff’s claim.
As for costs, the orders nisi which we make are that the Defendant must
pay to the Plaintiff the Plaintiff’s costs of the summons under Ord. 14 up
to and including the hearing before the master in any event, to be taxed if
not agreed, but that the costs of the summons thereafter, including the
 - 11 -

costs of the appeals to Cheung J and the Court of Appeal, should be in the
counterclaim.

(Gerald Godfrey) (Brian Keith)

Vice-President Justice of Appeal

Mr Patrick Chong, instructed by Messrs So & Co., for the Plaintiff.

Mr Francis Yip, instructed by Messrs Amelia Cheung & Co., for the
Defendant.
由此

A -1- A

B HCA 4193/2003 B

C C
IN THE HIGH COURT OF THE

D HONG KONG SPECIAL ADMINISTRATIVE REGION D

COURT OF FIRST INSTANCE

E E
ACTION NO. 4193 of 2003
F ____________ F

G G
BETWEEN
H H
RAJESHKUMAR NARESHCHANDRA KANTILAL
trading as K.L. GEMS Plaintiff
I I
and
J J
D.R.A. TRADING LIMITED Defendant
K K

____________
L L

M M

Before: Deputy High Court Judge Saunders in Chambers (Open to public)

N N
Date of Hearing: 23 August 2005
O Date of Judgment: 23 August 2005 O

P P
_______________
Q Q
JUDGEMENT
_______________
R R

S S
1. This is an appeal by the defendant, (DRA), from the judgement
T of the Master on (a) the plaintiff's, (K. L. Gems), application for summary T

judgement under O.14, and (b) DRA.’s application for security for costs.
U U

V V
由此

A -2- A

B On the O.14 application DRA was given leave to defend as to part of the B
amount claimed, conditional upon the payment of the total of
C C
US$61,966.16 and HK$161,722.08 into court. Judgement was entered

D against DRA for a sum of US$10,354, together with certain sums of D

interest, and a further sum to be calculated according to a formula set out in

E E
the order. The application for security for costs was dismissed.
F F

2. There is no dispute as to the calculation of the amount of the

G G
judgement. The issue between the parties is whether DRA should have
H unconditional leave to defend, and security for costs. The action relates to H

the supply by KL Gems of diamonds to DRA.

I I

J 3. Mr Yip says that there are four matters upon which a triable J

issue is raised, and upon which unconditional leave to defend should be

K K
given. They are first, that the goods were supplied under a trade practice or
L custom of consignment, and that consequently no property has passed in L

the goods and no liability arises for payment. Second, that in respect of the
M M
three invoices in relation to which conditional leave was given to defend,
N DRA is a mere agent and is not liable on the contracts. Third, that certain N

of the goods were defective and accordingly no liability arises. Fourth, that
O O
there was agreement to take back the allegedly defective goods.
P P

4. The primary argument made by DRA is as to a trade practice

Q Q
or custom of goods being delivered on consignment. There are two matters
R which satisfy me that there can be no basis in this defence. R

S S
5. First, with the exception of one invoice only, the suggestion
T that the diamonds were delivered by way of consignment is diametrically T

U
opposed to the specific terms of the invoices by which they were supplied. U

V V
由此

A -3- A

B It is well established that collateral contracts, the effect of which is to vary B

or add to the terms of an existing agreement, must be strictly proved: see
C C
Bank of India v Surtani Murlidhar Paramand t/a Ajanta Trading Corp

D [1994] 1 HKC 7 CA. It is worth noting that when demand was made of D

DRA in December 2003, by solicitors letter, there was no suggestion in the

E E
reply that the goods had been supplied pursuant to a trade practice or
F custom of consignment. Quite to the contrary, through their solicitors, F

DRA made a series of partial payments without any reservation at all.

G G

H 6. It is right that on one occasion the goods were delivered on H

consignment. The documentation in relation to that transaction is quite

I I
different. The existence of that transaction serves only to emphasise the
J correctness of KL Gems’ position. J

K K
7. Mr Yip says that the documents establish that the parties,
L whilst using apparently plain legal documents, did not conduct themselves L

in accordance with those documents. To justify the submission he relies

M M
upon what was described as a “consignment invoice” produced by KL
N Gems. It is correct that that document is better described, as on its face, as N

a receipt and bailment. However it is plain from the terms of the document
O O
that it is intended that it should not be a pure bailment, but that in the event
P that the recipient wishes to acquire and sell on the diamonds he need only P

inform KL Gems, who will then issue a formal invoice for sale. In fact the
Q Q
existence of that document again serves only to reinforce KL Gems’
R position that the transactions upon which it relies were not consignment R

transactions but sales.

S S

T T
8. Mr Yip said that the transactions should be looked at in two

U
stages: first the delivery of the diamonds pursuant to a custom of U

V V
由此

A -4- A

B consignment, later the issue of an invoice, subject to that practice of B

consignment. Even if there were two such stages, and there is nothing in
C C
the evidence to establish two such stages, the argument falls on its own

D statement, as there is nothing in the invoice to indicate that its plain terms D

should not then the govern the situation. If Mr Yip is right, once invoices
E E
issued, any suggestion of consignment would come to an end, and it would
F follow that DRA is liable to pay the purchase price. F

G G
9. Second, there is simply no evidence of such a trade practice or
H custom. The only evidence there is, is that from Mr Gad, a director of H

DRA. His bare assertion is not supported in any way by any evidence
I I
either from other persons in the trade or a suitably qualified expert. It is
J right, as Mr Yip says, that Mr Gad, being in the diamond trade, may be an J

expert. But he cannot be an expert in his own cause. The admission of

K K
expert evidence is by way of an exception from the rule that a person may
L give evidence of facts, but may not give evidence of an opinion. For a L

person to be an expert the law is clear. He must be:

M M

N “uninfluenced as to the form or content by the exigencies of the litigation”: N

O O
see National Justice Compania Naviera SA v Prudential Assurance Co Ltd,
P (The Ikranian Reefer) [1993] 2 Lloyds Rep 68 at 81. Plainly, a party to P

proceedings can never come within such a definition.

Q Q

R 10. There is no basis at all to give leave to defend based upon a R

trade practice or custom of delivery by way of consignment.

S S

T 11. Next, it is contended that certain of the diamonds were T

defective. There is not a single piece of documentary evidence before the

U U

V V
由此

A -5- A

B court to suggest that, prior to the issue of the writ, there was any complaint B
by DRA of defective goods. It is right as Mr Yip says, that there is no
C C
requirement in the invoice for a complaint to be in writing. But in the

D present case the mere existence of any complaint is seriously open to doubt. D

On 5 January 2004, shortly after the issue of the writ, DRA’s solicitors
E E
wrote to KL Gems’s solicitors offering to return certain of the diamonds
F under six of the invoices, including those relating to the alleged F

substandard diamonds. There was not the slightest suggestion in that letter
G G
that there were any substandard diamonds. The defence was filed on 14
H January 2004. There was no mention of substandard goods in the defence. H

It was not until 12 October 2004, that the issue of substandard diamonds
I I
was first raised in an amended defence.
J J

12. Mr Yip says further that the assertion of defective goods is

K K
sufficient to raise a triable issue. But that submission ignores the
L requirement that, for there to be a triable issue, the assertion of defective L

goods must be believable, and not a mere assertion. There is no expert

M M
evidence put before the court giving support to the existence of alleged
N defects or substandard quality. There is a bare assertion, not particularised, N

by Mr Gad of defects and substandard quality. Again, Mr Gad cannot give

O O
expert evidence of defects. His affidavit is singularly silent as to the
P precise nature of any defects. P

Q Q
13. Mr Gad asserts that KL Gems agreed to take back the defective
R diamonds. Again this matter was not raised following the demand for R

payment. Instead of reminding KL Gems’ solicitors that there was an

S S
agreement that the goods would be taken back, DRA’s solicitors offered to
T T
give them back. That is quite inconsistent with an assertion that it had been

U
previously agreed that the goods would be taken back, with a responsibility U

V V
由此

A -6- A

B for collection on KL Gems. B

C C
14. In the complete absence of any corroborating evidence to

D substantiate an assertion of substandard goods, and in the light of the D

conduct of DRA being quite inconsistent with such an assertion, this

E E
allegation in the defence is properly characterised as moonshine. I am
F satisfied that the Master was quite right to reject defences based upon F

defective goods and an agreement to return goods.

G G

H 15. The Master gave conditional leave to defend in relation to H

three invoices. There is no cross-appeal against this decision.

I I

J 16. In this respect the argument is made for DRA that three of the J

invoices were not issued to DRA, but to other legal entities, and
K K
accordingly DRA should not be liable. In his affidavits Mr Gad carefully
L does not say that he did not receive the diamonds referred to in those three L

invoices. The contention apparently is that DRA was a mere agent in the
M M
transactions and ought not to be liable on the contracts. Two of the
N invoices have the chop of the defendant company endorsed as the “buyer” N

of the goods. At no stage in any of the affidavits does Mr Gad condescend

O O
to particulars of his relationship with the entities named on the invoices.
P P

17. Based upon the general principle that the contract of an agent
Q Q
is the contract of the principal, it is often said that an agent is prima facie
R neither liable upon any agreement into which he enters in a representative R

capacity nor able to sue on it. However, as noted in Chitty on Contracts

S S
Vol. 2 para 32-082:
T T

“….this formulation can be relied on too much. It has been

U U

V V
由此

A -7- A

pointed out that ‘It is not the law that, if a principal is liable, his
B B
agent cannot be. The true principle of law is that a person is
liable for his engagements (as for his torts) even though he is
C acting for another, unless he can show that by the law of agency C
he is to be held to have expressly or impliedly negatived his
personal liability’.”
D D

E See Yeung Kai Yung v Hong Kong & Shanghai Banking Corporation E
[1981] AC 787 at 795, per Lord Scarman.
F F

G 18. There is nothing in the documents or the conduct of the parties G

upon which it may properly be said that DRA has negatived any personal
H H
liability. In fact, the documents demonstrate the opposite. In his affidavit
I Mr Gad supplied a schedule of previous dealings which he said DRA had I

with KL Gems. No suggestion was made that any of those transactions

J J
were transactions in which DRA was a mere agent, and not personally
K liable. Documents produced by KL Gems establish that three of the K

transactions in the schedule produced were dealings, apparently on behalf

L L
of other parties, but in respect of which payment in full was made by DRA.
M If the transactions were agency transactions, one would have expected M

payment to be made by the principal, and not by DRA.

N N

O 19. It may well be that DRA was acting as an agent for other O

parties in the transactions. But there is nothing to establish a basis upon

P P
which it may be argued that DRA had either expressly or impliedly
Q negatived its personal liability in the transactions. DRA may well have a Q

claim against its principals in those transactions and is free to pursue that
R R
claim if it wishes. But that is no reason to deny KL Gems payment in the
S circumstances. DRA was fortunate to get conditional leave to defend upon S

payment of the sums due into court.

T T

U U

V V
由此

A -8- A

B 20. For these reasons the appeal against the O. 14 judgement is B

dismissed. It follows that the appeal against the refusal to grant security for
C C
costs must also be dismissed. DRA must pay K L Gem’s costs on the

D appeal to be taxed on a party and party basis. D

E E

F F

G G

H H

(John Saunders)
I I
Deputy High Court Judge
J J

K K

L Mr Joseph Vaughan, instructed by Messrs Johnson, Stokes & Master for the L
Plaintiff
M M
Mr Simon SM Yip, instructed by Messrs KM Cheung & Co for the
Defendant
N N

O O

P P

Q Q

R R

S S

T T

U U

V V
由此
A A
HCA 985/2006
B B
IN THE HIGH COURT OF THE
C HONG KONG SPECIAL ADMINISTRATIVE REGION C

COURT OF FIRST INSTANCE

D D
ACTION NO. 985 OF 2006
E ____________ E

F BETWEEN F

GOLDFUL DRAGON KNITTING Plaintiff

G G
FACTORY LIMITED
H H
and
I I
TRADEVENTURE INTERNATIONAL LIMITED Defendant
J J

____________
K K

L
Before: Deputy High Court Judge To in Chambers (Open to Public) L
Date of Hearing: 8 February 2007
M M
Date of Decision: 8 February 2007

N N
______________

O O
DECISION

P ______________ P

Q Q
Background
R R
1. This is the Defendant’s appeal against the order of Master
S Andy Ho made on 18 January 2007 entering summary judgment under S

Order 14 rule 1 of the Rules of the High Court against the Defendant in the
T T
amount of US$4,863,131.50 together with interest and costs.
U U

V V
由此
A
-2- A
2. The Plaintiff and the Defendant are companies incorporated
B B
under the laws of Hong Kong. The Plaintiff carries on business as a
C garment manufacturer. The Defendant carries on business in garment C

trading. They had business transactions prior to 2005. It is common

D D
ground that between 7 January and 5 November 2005, the Plaintiff sold and
E delivered knitwear products to the Defendant in the total value of E

US$24,632,637.90. The purchases were supported by invoices issued by

F F
the Plaintiff, the authenticity of which is not in dispute. The Defendant
G even admitted making partial payments up to US$19,769,506.40. Based on G

the Defendant’s admission, the Plaintiff amended their statement of claim

H H
reducing their claim to the amount as adjudged by Master Ho.
I I

3. For the purpose of this appeal, the Defendant filed a second

J J
affirmation of Miss Lee Sau Lai Sandy deposing to some additional facts.
K The Plaintiff filed a third affirmation of Mr Wong Tsan Sang in reply. K

L L
4. The Defendant’s defence is that the sales and purchases of the
M knitwear products between the parties were governed by an oral agreement M

entered into between Mr Wong Tsan Sang on behalf of the Plaintiff and
N N
Miss Lee Sau Lai Sandy on behalf of the Defendant in November 2004.
O Under that oral agreement, the Defendant would place purchase orders for O

knitwear products to be manufactured in the People’s Republic of China

P P
(the “PRC”) for sale by the Defendant to their customers in the United
Q States on the following terms and conditions: Q

R (a) the Defendant would arrange for the manufacture of R

the knitwear products by knitwear manufacturers in

S S
the PRC nominated by the Defendant;
T T

U U

V V
由此
A
-3- A
(b) the Defendant would arrange for the supply of yarn,
B B
accessories and other raw materials for
C manufacturing the knitwear products by the C

Defendant’s nominated knitwear manufacturers;

D D

(c) the Plaintiff would make prompt payments for the

E E
yarn, accessories and other materials to the
F suppliers and the manufacturing costs of the F

knitwear products to the Defendant’s nominated

G G
knitwear manufacturers;
H H
(d) the Plaintiff would arrange for transportation of
I the knitwear products from the PRC to Hong Kong I

and pay freight and other ancillary charges; and

J J

(e) the Defendant would be entitled to deduct 3% of

K K
the price of each purchase order as commission for
L their services to be rendered under (a) and (b) L

above.
M M

N In breach of the above oral agreement, the Plaintiff failed to make prompt N

payments for the knitwear materials to the yarn suppliers and

O O
manufacturing costs to the knitwear manufacturers. At the requests of
P those knitwear material suppliers and manufacturers; and with the P

knowledge and consent of the Plaintiff, the Defendant made payments on

Q Q
behalf of the Plaintiff in the total amount of US$4,432,042.82.
R Furthermore, at the requests of the Plaintiff, the Defendant had supplied to R

the Plaintiff a quantity of yarn panels for manufacture of the knitwear

S S
products in the total value of US$56,997.85 and paid freight and other
T charges in respect of the transportation of the knitwear products from the T

PRC to Hong Kong in the total sum of US$336,089.97. The Defendant

U U

V V
由此
A
-4- A
claims that after deducting the 3% commission from the invoiced prices,
B B
the amounts thus paid on behalf of the Plaintiff exceeded the outstanding
C balance of the unpaid invoiced prices net of 3% commission by C

US$700,977.28. The Defendant counterclaims for that amount together

D D
with interest and costs.
E E

The applicable legal principles on an Order 14 application

F F

5. The legal principles applicable to an application for summary

G G
judgment under Order 14 of the Rules of the High Court are well-known:
H see Hong Kong Civil Procedure 2007 Note 14/4/9. To resist such an H

application, a defendant only needs to satisfy the court that there is a triable
I I
issue or question, or that for some reason there ought to be a trial. What
J the defendant says does not have to be believed but has to be capable of J

belief. As is often put, unless it is obvious that the defence put forward is
K K
frivolous and practically moonshine, summary judgement should not be
L granted. L

M M
6. Leave to defend should be given where a defendant raises any
N substantial question of fact which ought to be tried: see Hong Kong Civil N

Procedure 2007 Note 14/4/11. Thus, where an oral contract is sued on and
O O
its terms are in dispute and that a breach of the terms of the oral contract by
P one party results in the other party being entitled to a remedy by way of set P

off, summary judgment must be refused: Mathind v E Turner & Sons (1992)
Q Q
23 Con LR 16, CA.
R R

S
7. If a defence of set off is raised, the amount of the defendant’s S
cross-claim is known and is capable of being set off at law against the
T T
plaintiff’s claim, the defendant is entitled to unconditional leave to defend:

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由此
A
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see Axel Johnson Petroleum A B v M G Mineral Group A G [1992] 1 WLR
B B
270, CA at 274E-275B and see Hong Kong Civil Procedure 2007 Note
C 14/4/14. C

D D
8. Where there are unexplained features in both the claim and
E defence, no tentative assessment of strengths should be made, but E

unconditional leave to defend should be given: see Hong Kong Civil

F F
Procedure 2007 Note 14/4/9.
G G

9. The above legal principles are not in dispute. Mr Pow SC

H H
submits that the defence and counterclaim is “practically moonshine”.
I I

J
The late revelation of the defence J

10. The general thrust of Mr Pow SC’s submission is that the

K K
alleged oral agreement and payments made on behalf of the Plaintiff were
L not raised until filing of the defence, which is suggestive of recent L

concoction and moonshine. He referred to the letter dated 16 March 2006

M M
from the Defendant’s then solicitor in reply to the Plaintiff’s solicitor’s
N letter before action. In that letter, the Defendant’s then solicitor wrote as N

follows:
O O
“We are instructed that your client had received from our client
P US$393,083.81 being freightage and garment accessory P
reimbursement. And on or around 21 st December 2005, your
client had received US$447,820.28 from our client. We are
Q instructed to deny our client owing the indebtedness alleged by Q
your client. …”
R R

11. It is true that the oral agreement was not raised in that letter as
S S
one would have expected otherwise if such an oral agreement had really
T existed. However, the letter referred to the amount of US$393,083.81 T

U U

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由此
A
-6- A
being freightage and material reimbursements is consistent with two of the
B B
terms of the oral agreement pleaded. Indeed, the amount claimed by the
C Defendant in their Defence and Counterclaim for freight and ancillary C

charges and value of yarn panels supplied to the Plaintiff was $393,087.82,
D D
which is only US$4.01 more than that referred to in that letter. This takes
E away much of the colour which Mr Pow SC painted on that letter. E

F F
12. Mr Pow SC also argues that if the Defendant’s case is true, as
G of the date of the Plaintiff’s letter before action on 27 February 2006, not G

only had the Defendant fully paid for the invoices, the Defendant had even
H H
over-paid the Plaintiff in the sum of US$700,977.28. He submits that it is
I utterly inconceivable that the Defendant’s then solicitor would have I

mentioned not a word about the over-payment in the reply to the letter
J J
before action. This is a forceful argument. However, by itself, it is not
K determinative of lack of credibility of the Defendant’s case. In the light of K

the evidence tendered by the Defendant, the inference that the Defendant’s
L L
defence is practical moonshine cannot be drawn. The letter could be
M reflective of a lack of full and detailed instructions or lack of proper M

account keeping than of bad faith on the part of the Defendant. There
N N
could be many plausible reasons to explain the Defendant’s failure to give
O full instructions to their then solicitor. O

P P

The oral agreement offends the parole evidence rule

Q Q
13. Mr Pow SC submits that each transaction between the parties
R R
was embodied in a purchase order issued by the Defendant setting out the

S
terms of the purchase. It must be noted that there were numerous S
transactions between the parties. In monetary terms, the knitwear products
T T
supplied under those transactions amounted to almost US$25 million. It is

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由此
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not uncommon for parties engaged in a continuous relationship such as this
B B
may operate under some sort of an umbrella agreement and it is arguable
C that the purchase orders in respect of each of the transactions are evidence C

of that umbrella agreement which do not exclusively provide for all the
D D
terms of that agreement.
E E

14. Returning to Mr Pow SC’s submission, according to the

F F
Plaintiff’s Reply and Defence to Counterclaim and as evidence by the
G purchase orders, not all the knitwear products ordered were to be produced G

in the PRC but most of them were products with Hong Kong as the place of
H H
origin. Hence, Mr Pow SC submits that the alleged terms under the oral
I agreement that the Defendant would purchase knitwear products to be I

manufactured in the PRC and arrange for their manufacture by factories in

J J
the PRC nominated by the Defendant with raw materials, yarn and
K accessories to be supplied by suppliers nominated by the Defendant plainly K

contradict the written terms of the purchase orders.

L L

M 15. The three schedules attached to the Plaintiff’s Reply and M

Defence to Counterclaim shows that there were more than three-hundred

N N
purchase orders of which only about one-third were for knitwear products
O made in the PRC. It is not known whether those purchase orders O

represented about one-third of the total quantity of knitwear products

P P
purchased. However, it is not an insubstantial quantity. It is also common
Q knowledge that goods may be described as of Hong Kong origin despite Q

that some of the manufacturing processes were carried out outside Hong
R R
Kong. In the circumstances, it is not incredible that some not insubstantial
S S
manufacturing process were carried out in the PRC in respect of the

T
remaining about two-thirds of the knitwear products of Hong Kong origin. T

U U

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由此
A
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Thus, the fact that the majority of the knitwear products ordered were of
B B
Hong Kong origin does not preclude the existence of the oral agreement.
C C

16. Furthermore, it should also be noted that on the contracts

D D
issued by the Defendant to the Plaintiff or its associated factory, it is stated
E clearly that the content labels and care labels are “to be ordered by us (i.e. E

the Defendant) on your (i.e. the Plaintiff’s) behalf”. This term is wholly
F F
consistent with the alleged term under the oral agreement that the
G Defendant would arrange for the supply of accessories to be used in the G

manufacture of the knitwear products.

H H

I I
Defendant’s entitlement to 3% commission on the price of each purchase
order
J J
17. Mr Pow SC submits that the alleged right of the Defendant to
K K
deduct 3% of the purchase price as commission tentamounts to adding to or

L varying the terms of the purchase orders. Again, it is arguable that the L
purchase orders may not set out exclusively all the terms of the oral
M M
agreement. The Defendant’s assertion is not an empty one but is supported
N by credible evidence. N

O O
18. The Defendant produced eleven payment vouchers dating
P between 24 January and 15 December 2005. Those vouchers show the P

payments were made by cheques to settle the Plaintiff’s invoices after

Q Q
deducting 3% of the invoiced price as commission. In each payment
R voucher is recorded the cheque number and date of the cheque issued in R

settlement of the Plaintiff’s invoices. Mr Pow SC argues that those

S S
payment vouchers are internal documents of the Defendant and are self
T serving. Be that as it may, the eleven payment vouchers tally with the T

payment schedule prepared by the Plaintiff which shows the various

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由此
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amounts received from the Defendant by letters of credit and cheques and
B B
the dates of the receipts. The total amount received from the Defendant
C was US$19,769,506.40. which is not in dispute. The payments schedule C

shows there were seven payments by cheque. Four of the payments

D D
recorded in the Defendant’s payment vouchers tally with four payments by
E cheques recorded in the payment schedule prepared by the Plaintiff. E

Interestingly, the total amount paid under the remaining seven payment
F F
vouchers was US$40,613.60 which corresponds with the total of two
G payments by cheque recorded in the Plaintiff’s payment schedule and G

correct to the cent. Very interestingly, the remaining payment by cheque as

H H
recorded in the Plaintiff’s payment schedule is referenced in a dialogue on
I the internet between the Defendant’s and the Plaintiff’s staff: see paragraph I

25 below. All those payments could not have been mere coincidences and
J J
suggest that there is some truth in the Defendant’s claim of 3% commission.
K The particulars of the Plaintiff’s invoices allegedly settled by those cheques K

were recorded in the Defendant’s payment vouchers. The correctness of

L L
those particulars could have been easily verified by the Plaintiff. But the
M Plaintiff chose not to file any evidence to contradict the Defendant’s and M

offered no explanation as to how those payments could have been

N N
calculated otherwise without deducting 3% of the invoiced price as
O commission. O

P P
19. Furthermore, according to the evidence of the Defendant, the
Q Defendant had sent statements of account as at 27 September 2005 and 21 Q

October 2005 and a contra statement as at 15 December 2005 to the

R R
Accounts Department of the Plaintiff. All the statements show a deduction
S S
of 3% as commission on the invoiced price (see paragraphs 28 to 31).

T T

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由此
A
- 10 - A
20. I am satisfied that the Defendant has demonstrated that there
B B
are serious disputes as to the Defendant’s entitlement to commission which
C should be explored further after discovery and determined at trial. C

D D
The Plaintiff’s agreement to arrange for transportation of the knitwear
E products from the PRC to Hong Kong contradicts the terms of the purchase E

orders
F F
21. Mr Pow SC submits that the term under the alleged oral
G agreement that the Plaintiff would arrange for transportation of the G

knitwear products from the PRC to Hong Kong and to pay freight and other
H H
ancillary charges plainly contradicts the written term of the purchase orders
I that the knitwear products were sold FOB Hong Kong. Mr Coleman SC’s I

answer is that under the terms of an FOB contract, the seller is responsible
J J
for the cost of transportation of the goods from wherever they were to
K Hong Kong and the cost of loading the goods on the ship. If the K

transportation cost had been paid by the Defendant pursuant to the oral
L L
agreement, the cost was recoverable as contra charges which is what the
M Defendant’s case is about. I agree that Mr Coleman SC’s point is at least M

N
arguable. Furthermore, though not so argued by Mr Coleman SC, a N
substantial quantity of the knitwear products purchased were of Hong Kong
O O
origin, a description which permits part of the manufacturing process to be

P
carried out in the PRC. It may well be the parties’ arrangement that while P
the finished knitwear products were sold on FOB Hong Kong terms, the
Q Q
Plaintiff would pay for transportation of the semi-finished products

R between its nominated factories in the PRC and the Plaintiff’s factory in R
Hong Kong. Such arrangement is consistent with the oral agreement.
S S

T T

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由此
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- 11 - A
The term of the alleged oral agreement that the Plaintiff would make
B B
prompt payment to its own manufacturers and suppliers is extraneous to
the written terms of the purchase orders
C C
22. Mr Pow SC submits that it goes without saying that the
D D
Plaintiff would be responsible for the manufacturing cost of the knitwear

E
products and the term of the alleged oral agreement that the Plaintiff would E
make prompt payment to the Defendant’s nominated manufacturers and
F F
suppliers who are the Plaintiff’s own manufacturers and suppliers is

G extraneous to the written terms of the purchase orders. Mr Coleman SC G

submits that the oral agreement must be viewed under the surrounding
H H
circumstances. The knitwear products were to be sold to JC Penney
I Purchasing Corporation, an outlet for quality goods in the United States. I

JC Penney Purchasing Corporation demands high standards in respect of

J J
goods it purchases for retail. Under such circumstances, it is not unusual
K for its supplier, such as the Plaintiff, to have a close monitor on the K

manufacturing process and the quality of the knitwear products, including

L L
specifying the manufacturing factories and suppliers of raw materials and
M accessories. Equally important is the monitoring of the delivery schedule. M

In the circumstances, it is not unusual for the purchaser, such as the

N N
Defendant, to ensure that the manufacturer would promptly pay its sub-
O contractors down the production line so as to ensure on-time delivery. It is O

also not incredible that the Defendant would have secured such terms in the
P P
oral agreement as alleged and paid the sub-contractors upon the Plaintiff’s
Q failure to make prompt payment. I think the Defendant has demonstrated Q

an issue to be tried.
R R

S S

T T

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由此
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- 12 - A
Whether the knitwear products were manufactured by the Defendant’s
B B
nominated manufacturers

C 23. Mr Pow SC submits that on the basis of the export certificates, C

the Combined Forms for Export/Import of Goods under Outward

D D
Processing Arrangement, 內地海關及香港海關陸路出/*進境載貨清單 (i.e.
E import/export declarations) and export licences of the finished goods to the E

USA, the knitwear products were manufactured by the Plaintiff’s own

F F
subsidiary Kingsberg Knitting Fashion Co Ltd (東莞運展針織時裝有限公
G 司) in the PRC and the Defendant’s allegation that the knitwear products G

were manufactured by the Defendant’s nominated knitwear manufacturers

H H
is just moonshine. The Defendant has demonstrated that there was at least
I one dialogue on the internet on 24 March 2005 in which the Defendant’s I

nominated knitwear manufacturer 深圳市金德開紡織品有限公司 (“Kam

J J
Tak Hoi”) discussed with the Plaintiff’s factory manager, Mr Andrew Yiu,
K K
about a purchase order. This is consistent with sub-contracting from the

L
Plaintiff’s own subsidiary to the Defendant’s nominated manufacturers. It L
also explains why the import/export licences were under the name of the
M M
Plaintiff’s subsidiary. The Defendant’s evidence is credible. There are

N clear disputes on the facts which should be explored by further discovery. N

Summary judgment is inappropriate at this stage.
O O

P Whether accessories and raw materials were supplied by the Defendant’s P

nominated suppliers
Q Q
24. The Defendant produced a table showing payments made to
R six named yarn suppliers. Each payment bears reference to an invoice R

number of the Plaintiff. Mr Pow SC argues that the invoice numbers show
S S
that the alleged payments were unrelated to those purchase orders which
T required the knitwear products to be manufactured in the PRC. I am not T

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由此
A
- 13 - A
sure of the validity of Mr Pow SC’s argument of limiting the supplies to
B B
purchase orders in respect of knitwear products to be manufactured in the
C PRC only. At least there is no argument that the yarn was not supplied to C

the Plaintiff in respect of the various non-PRC invoices which formed the
D D
subject matter of the Defendant’s counterclaim. It is also not in dispute
E that it is permissible to have part of the manufacturing process performed E

outside Hong Kong even for goods described as of Hong Kong origin.
F F
Such criticism does not make the defence incredible. Mr Pow SC criticised
G another table showing payments made to other suppliers as apparently G

having little or no relevance to the supply of yarn. I agree with those

H H
criticisms. However, the Defendant has demonstrated substantial payments
I made in respect of the six major yarn suppliers. I

J J
25. Furthermore, the Defendant has demonstrated at least there
K was one occasion during an internet dialogue between Miss Rita Liao of K

the Defendant and Mr Anthony Lau of the Plaintiff on 5 December 2005 in

L L
which Miss Rita Liao informed Mr Anthony Lau that the Defendant had
M deposited the sum of US$311,845.20 by cheque into the Plaintiff’s account M

and the Plaintiff was instructed to keep US$146,016.82 and pay the balance
N N
of HK$1,282,682.50 to Kam Tak Hoi’s agent in Hong Kong, Century Link
O (HK) Ltd (興順(香港)有限公司) for yarn supplied by Kam Tak Hoi. This O

P
payment of US$311,845.20 is also recorded in the payment schedule P
prepared by the Plaintiff. The Plaintiff could offer no explanation for this
Q Q
dialogue. I think the Defendant has demonstrated genuine dispute of facts

R
and this issue deserves to be fully explored by way of discovery and if R
necessary adjudicated at trial.
S S

T T

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由此
A
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An overall view of the defence case
B B
26. An overall view of the defence case is that the parties had all
C along conducted themselves in accordance with the oral agreement. The C

Defendant deducted 3% of the invoiced price from the Plaintiff’s invoices

D D
as commission and settled the balance by letter of credit or by cheque. The
E parties maintained a running account showing the amounts payable by the E

Defendant, the amounts paid and the amount chargeable against the
F F
Plaintiff pursuant to the terms of the oral agreement.
G G

H
27. The Defendant produced two monthly statements dated 27 H
September 2005 and 21 October 2005 and a contra statement dated 15
I I
December 2005 which they alleged had been given to the Plaintiff. The

J
Plaintiff denied having received those statements and doubted their J
authenticity. I have analysed those statements carefully and compared
K K
them with the payment schedule prepared by the Plaintiff.

L L
28. The September 2005 statement is an eight-page statement with
M M
more than three hundred entries. It shows a total amount of
N US$7,319,417.33 paid by the Defendant by letters of credit and other N

amounts chargeable by the Defendant against the Plaintiff for its various
O O
services. Six of the payments by letter of credit correspond exactly in
P amount and approximately in time with the payments shown in the P

payment schedule prepared by the Plaintiff. There is a seventh payment

Q Q
recorded in the statement as partial payment in the amount of
R US$1,011,616.95 and a corresponding payment in the amount of R

US$1,493,754 recorded in the payment schedule on approximately the

S S
same date. I assume that was an apportionment. Thus, the Defendant’s
T September 2005 statement tallies with the Plaintiff’s payment schedule. T

The statement also shows the price of knitwear products purchased from
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由此
A
- 15 - A
the Plaintiff net of 3% commission in the amount of US$226,373.73. The
B B
balance due to the Plaintiff was zero as the amount paid and chargeable by
C the Defendant equals the net amount of purchases due to the Plaintiff. All C

those payments and receipts are not in dispute. The various entries are
D D
referenced to the Plaintiff’s factory invoices and debit notes.
E E

29. The October 2005 statement is a similar statement of two

F F
pages. It shows a total amount of US$5,998,308.29 paid by the Defendant
G by letter of credit and other amounts chargeable against the Plaintiff. G

Again, six of the payments by letter of credit correspond exactly in amount

H H
and approximately in time with the payments shown in the payment
I schedule prepared by the Plaintiff. The statement also shows the price of I

knitwear products purchased from the Plaintiff net of 3% commission in

J J
the amount of US$6,211,816.03. This statement shows a balance in the
K amount of US$213,507.74 in favour of the Plaintiff. The Defendant’s K

payment voucher dated 21 October 2005 shows that a cheque drawn on the
L L
Hong Kong Bank No 119016 in that amount was issued to the Plaintiff.
M The payment schedule prepared by the Plaintiff also shows a corresponding M

amount received on 23 November 2005. Thus, the Defendant’s October

N N
2005 statement also tallies with the Plaintiff’s payment schedule.
O O

30. There are thirteen entries in the December 2005 contra

P P
statement. It shows a balance in the amount of US$447,820.28 due to the
Q Plaintiff after setting off invoiced price of knitwear products net of 3% Q

commission. The Defendant’s payment voucher dated 15 December 2005

R R
shows that a cheque drawn on the Heng Seng Bank No 032121 in that
S S
amount was issued to the Plaintiff. The payment schedule prepared by the

T
Plaintiff also shows a corresponding amount received on 22 December T

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由此
A
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2005. The amount paid by the Defendant is consistent with the existence
B B
of the oral agreement.
C C

31. All the payments and receipts I referred to in the three

D D
statements are not in dispute. The various entries in the September 2005
E and October 2005 statements are referenced to the Plaintiff’s factory E

invoices and debit notes. It is difficult to fabricate statements of that kind.

F F
It is likely that the statements are genuine. If they are not, the falsity could
G have been easily proved by the Plaintiff producing its own copies of G

invoices and debit notes. The Plaintiff chose not to file evidence is rebuttal.
H H
Those statements support the Defendant’s assertion of their entitlement to
I deduct 3% the invoiced price as commission under the alleged oral I

agreement. The contra statement and payment made by the Defendant is

J J
consistent with the term under the alleged oral agreement that the Plaintiff
K would pay for freight for the knitwear products from the PRC to Hong K

Kong and other ancillary charges.

L L

M 32. On the whole, the Defendant’s case is capable of belief, to say M

the least. There may be some gaps in the Defendant’s pleading which
N N
needs to be perfected. But the Defendant has demonstrated there are
O genuine disputes as to facts and that there are issues to be tried. Summary O

judgment is inappropriate.
P P

Q Q
Conclusion
R 33. For the above reasons, I am satisfied that the Defendant has a R

S
real and bona fide defence and counterclaim against the Plaintiff. S
Accordingly, I allow the Defendant’s appeal and set aside the order of the
T T
master. I grant the Defendant unconditional leave to defend.

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A
- 17 - A
34. As the appeal is allowed upon the new evidence filed by the
B B
Defendant, it is appropriate that the costs of the appeal and the costs of the
C application before the master be costs in the cause, with certificate for two C

counsel.
D D

E E

F F

(Anthony To)
G G
Deputy High Court Judge

H H

Mr Jason Pow, SC and Mr Adonis Cheung, instructed by Messrs Y T Chan

I I
& Co, for the Plaintiff
J J
Mr Russell Coleman, SC and Mr Anthony Chan, instructed by Messrs C L
K Chow & Macksion Chan, for the Defendant K

L L

M M

N N

O O

P P

Q Q

R R

S S

T T

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