Hong Kong Kapok Vacuum Flask Enterprises Pty Ltd v Megavest International Pty Ltd
[2003] VSC 330
•5 September 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL LAW DIVISION
No. 5181 of 2001
| HONG KONG KAPOK VACUUM FLASK ENTERPRISES PTY LTD | Plaintiff |
| v | |
| MEGAVEST INTERNATIONAL PTY LTD (ACN 40 064 140 530) | Defendant |
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JUDGE: | DODDS-STREETON J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 4 September 2003 | |
DATE OF JUDGMENT: | 5 September 2003 | |
CASE MAY BE CITED AS: | Hong Kong Kapok Vacuum Flask Enterprises Pty Ltd v Megavest International Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 330 | |
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CONTRACT: Contract for sale of goods – failure to pay full purchase price – defendant alleged some goods unsolicited – set off and breach of express and implied terms – liability for purchase price established – defence and counterclaim not made out.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R.H. Miller | Chua Tan & Associates |
| For the Defendant | No appearance |
TABLE OF CONTENTS
BACKGROUND................................................................................................................................. 2
THE PLEADINGS.............................................................................................................................. 2
THE PLAINTIFF’S CLAIM.............................................................................................................. 3
THE EVIDENCE................................................................................................................................. 4
The evidence of Mr Cao............................................................................................................... 4
The evidence of Mr Kung............................................................................................................ 5
The Videotape Contract.................................................................................................................... 6
The First Contract............................................................................................................................... 6
The Second Contract......................................................................................................................... 6
The Third Contract............................................................................................................................ 6
The Fourth Contract........................................................................................................................... 7
The Fifth Contract.............................................................................................................................. 7
The Sixth Contract............................................................................................................................. 8
The Seventh Contract........................................................................................................................ 8
CONCLUSION................................................................................................................................... 8
HER HONOUR:
BACKGROUND
In this proceeding the plaintiff, Hong Kong Kapok Vacuum Flask Enterprises Pty Ltd, a company incorporated in Hong Kong, seeks damages for breach of contract from the defendant, Megavest International Pty Ltd (“Megavest”).
The plaintiff exports products obtained from the People’s Republic of China. It also manufactures vacuum flasks in China. The defendant carries on business from premises in Box Hill. It is an importer of products from China and Hong Kong.
THE PLEADINGS
By statement of claim dated 27 March 2001 the plaintiff pleads eight contracts made between April 1995 and April 1999 pursuant to which it provided goods to the defendant.
The goods supplied included video tapes, vacuum flasks and vacuum bottles of various types, and leather jackets.
The plaintiff alleges that in each case, the contract was partly oral, consisting of conversations between its deputy managing director, Mr Chan, and Mr Woo, a director of the defendant, partly in writing constituted by identified invoices or contracts, and partly to be implied from the conduct of the parties and the need to give commercial efficacy to the arrangements.
The plaintiff alleges that in relation to each contract the defendant ordered and took delivery of the goods but failed to pay the agreed purchase price in full, leaving the unpaid balances set out in the following table:
Details of money alleged to be owed by Megavest International Pty Ltd
INVOICE NUMBER TOTAL AMOUNT MONEY RECEIVED MONEY OWING (USD) SHIPMENT DATE AMOUNT PAYABLE BY VF950401 75,530.00 25,000.58 50,529.42 04/04/95 28/05/95 p.3 VF980302 82,840.46 72,823.26 10,017.20 10/03/98 10/04/98 p.13 VF980407 54,958.82 35,489.32 19,469.50 17/04/98 02/06/98 p.14 VF980705 47,580.00 18,000.00 29,580.00 16/07/98 16/10/98 p.17 VF980812 47,840.00 4,114.39 43,725.61 21/08/98 08/11/98 p.22 VF990307 86,184.00 17,236.80 68,947.20 27/03/99 12/06/99 p.34 VF990504 41,580.00 3,893.00 37,687.00 08/05/99 22/07/99 p.42 KVF/0038/99 26,728.60 0.00 26,728.60 22/05/99 22/06/99 p.59 USD286,684.53 VF980813 AUD162,678.00 AUD162,678.00 06/09/98 06/11/98 p.26
By defence and counterclaim dated 23 August 2001 the defendant admits ordering the goods (save in the case of two of the contracts alleged). Broadly, it alleges that the goods supplied did not comply with the express terms of the relevant contract or with implied terms of merchantable quality and fitness for the known purpose of resale to the defendant’s client distributors. It also alleges an agreement between the parties that the defendant could set off an amount owed to the plaintiff against an amount claimed by the defendant for loss and damage suffered due to the alleged breaches of condition by the plaintiff.
In relation to two of the alleged contracts the defendant does not admit ordering the relevant goods, but claims that the goods were forwarded to it unsolicited.
THE PLAINTIFF’S CLAIM
The plaintiff claims the sums of US$286,684.53 and AS$162,678 from the defendant in relation to the total unpaid balances of purchase price in relation to the contracts. The plaintiff seeks in relation to the claim in a United States dollar amount, that the Court give judgment in an amount expressed in a foreign currency, pursuant to Rule 21.03 of the Supreme Court Rules.
At trial, the defendant did not appear. The proceeding was not defended.
THE EVIDENCE
The evidence of Mr Cao
Mr Cao, a director and the general manager of the plaintiff, gave evidence through an interpreter on behalf of the plaintiff. He identified the certificate of incorporation of the plaintiff. The plaintiff is a subsidiary or division of a large light industry company, of which Mr Cao is also a director.
A director of the defendant, Mr Robert Woo, based in Melbourne, routinely visited Hong Kong to order products. He ordered goods from the plaintiff, including video tapes, leather jackets and vacuum flasks.
Mr Cao took over the management of the plaintiff in 1998 after the dismissal of the previous deputy manager, Mr Chan, in August 1998, following a HK$4 million loss sustained by the plaintiff.
Mr Cao was familiar with the business practices and business records of the plaintiff.
He testified that the plaintiff manufactured stainless steel vacuum flasks for export. The plaintiff is one of the world’s largest manufacturers of vacuum flasks. The vacuum flasks are tested for quality and carry a ten year guarantee. The S91 model accounts for about 50% of total sales. The plaintiff produces about 20 to 30 different models. It has a warehouse in Hong Kong. There is also a display room. A customer can inspect the plaintiff’s products at the warehouse. Once an order is completed, the Hong Kong branch of the plaintiff gives the Chinese manufacturing division an order for manufacture. The manufacture is completed and the goods are then usually shipped to the appropriate port.
The plaintiff does not manufacture video tapes. It purchases tapes from a Chinese manufacturing company and re‑sells them. The plaintiff sold some videotapes to Megavest.
Mr Cao gave evidence that the plaintiff does not manufacture leather jackets but purchases them from a factory in China for re-sale.
Mr Cao testified that Mr Chan, his predecessor until August 1998, did not require Megavest to pay a deposit or other down payment prior to delivery. The relevant contracts were principally made orally. In 1998, Mr Cao discovered that Megavest had ordered goods from the plaintiff, but had not paid for them in full. He took steps to investigate. Megavest confirmed, through its director, Robert Woo, that there were payments outstanding.
The evidence of Mr Kung
Mr David Kung, an officer of the plaintiff, gave evidence through an interpreter on behalf of the plaintiff. He had been employed by the plaintiff since 1993 as a sales manager. He worked with Mr Chan, the predecessor of Mr Cao. He was familiar with the placement of orders by Megavest with Mr Chan. Normally, Mr Chan was contacted by Robert Woo of Megavest by telephone. Mr Woo also frequently visited Hong Kong and made visits to the plaintiff’s warehouse. Mr Woo inspected the goods at the plaintiff’s manufacturing plant in China. According to Mr Kung, Mr Woo was very familiar with the plaintiff’s products.
Mr Woo usually gave Mr Chan oral orders. Written contracts were not prepared. Only the amount of the purchase price was written down, and invoices were prepared upon the delivery of the goods. Mr Kung testified that the invoices prepared accurately recorded the sales.
Mr Kung was familiar with the business records, including invoices, of the plaintiff.
He testified that Mr Chan typically directed the goods to be shipped to Megavest in Australia. Mr Chan never required a deposit or a down payment from Megavest.
Mr Kung, as sales manager, met customers, including prospective customers, showed samples of the products and took orders. He normally used a written contract to record sales. He also showed samples of goods not manufactured by the plaintiff to prospective customers.
Mr Kung stated that Mr Woo frequently inspected goods at the warehouse and at the Chinese manufacturing plant.
The Videotape Contract
Mr Kung identified invoice dated 1 April 1996 for sale by the plaintiff to Megavest of 91,000 video tapes for US$75,530.00 as recording accurately the relevant sale to Megavest. He identified writing of the plaintiff’s account clerk. The invoice shows receipt of the sum of US$25,000.00. The invoice was signed by Mr Chan and another officer of the plaintiff. The outstanding balance is US$50,529.42.
The defendant admits the contract, the payment and the balance outstanding.
The First Contract
Mr Kung identified invoice VF980302 dated 10 March 1998 for leather jackets and vacuum flasks sold by the plaintiff to Megavest for US$82,840.46. The invoice was signed by officers of the plaintiff. A payment of US$72,823.36 was shown. The outstanding balance of US$10,017.20 was also shown.
The defendant admits the part payment and the outstanding balance.
The Second Contract
Mr Kung identified invoice VF980407 dated 16 April 1998 showing sale by the plaintiff to Megavest of leather jackets and vacuum flasks for US$54,958.82. The invoice was signed by Mr Chan and another officer of the plaintiff. The payment of US$35,464.98 and bank fee of US$24.39 was shown, with an outstanding balance of US$19,469.50.
The defendant admits the receipt of the goods, the part payment and the outstanding balance. The defendant, however, alleged that the relevant goods were consigned by the plaintiff unsolicited. Mr Kung denied that allegation. He testified that the plaintiff had never sent unsolicited goods to any customer.
The Third Contract
Mr Kung identified invoice VF980705 dated 13 July 1998 for the sale of vacuum flasks by the plaintiff to Megavest for US$47,580.00. The handwriting on the invoice was difficult to identify. A payment of US$18,000.00 and an outstanding balance of US$29,580.00 is shown.
The defendant admits the receipt of goods, the part payment and the amount outstanding.
The Fourth Contract
Mr Kung identified a contract No. VF980820 dated 19 August 1998 for the sale of (principally) vacuum bottles, by the plaintiff to Megavest for US$48,512.00.
Mr Kung identified invoice No. VF980812 dated 21 August 1998, being the matching invoice to the contract dated 19 August 1998. The invoice is signed by the plaintiff’s accounts department staff, including Mr Kung. It shows a payment of US$3,861.11 and bank charge of US$24.39 and a further receipt of US$228.89, leaving an outstanding balance of US$43,725.61.
Mr Kung explained that two documents were prepared in this case, because Mr Chan had left the plaintiff’s employ, and contracts were then required by his successor, Mr Cao.
The defendant admits receipt of the goods and the outstanding balance.
The Fifth Contract
Mr Kung identified invoice No. VDF980813 dated 27 August 1998 for the sale of vacuum flasks by the plaintiff to Megavest for AU$162,678.00. It was signed by Mr Kung. The invoice was in Australian dollars because of the prevailing fluctuations in the exchange rates during August 1998.
The defendant alleges that the plaintiff agreed that the sum of US$162,678.00 could be set‑off against moneys owed to the defendant by the plaintiff. Mr Kung denied that allegation.
The defendant admits receipt of the goods and the outstanding balance.
The Sixth Contract
Mr Kung identified invoice No. VF990307 dated 27 March 1999 for the sale by the plaintiff to Megavest of vacuum flasks for US$86,184.00. The invoice contains writing by officers of the plaintiff, including Mr Kung. The invoice shows a payment of US$17,215.64 a bank charge of US$21.16 and an outstanding balance of US$68,947.20. Mr Kung also identified the related contract.
The defendant admits receipt of the goods, the part payment and the outstanding balance.
The Seventh Contract
Mr Kung identified invoice No. VF990504 dated 8 May 1999 for sale of vacuum flasks by the plaintiff to Megavest for US$41,580.00. It is signed by Mr Cao and a clerk of the plaintiff. It shows a payment of US$3,893.00 and an outstanding balance of US$37,687.00.
Mr Kung also identified the related invoice KVF/0038/99 dated 22 May 1999 for the sale of vacuum flasks for US$26,728.60 which, with the outstanding sum of US$37,687.00, totals US$64,415.60.
The defendant alleges that the plaintiff sent the relevant goods to it unsolicited. Mr Kung denied that allegation. He confirmed that the goods were ordered. He testified that Megavest did not attempt to return the goods. According to Mr Kung, no‑one at the plaintiff authorised Megavest to retain the goods without charge or to dispose of them. The plaintiff has never been paid any amount in discharge of the US$64,415.60.
CONCLUSION
Having heard the testimony of the witnesses for the plaintiff and examined the relevant invoices, contracts and bills of lading, I am satisfied that the defendant incurred the liability to pay the relevant amounts to the plaintiff pursuant to valid contracts for the sale of goods. There has been no evidence to support any of the matters alleged in defence and counterclaim. I am satisfied that none of the defences alleged in the defence dated 23 August 2001 is made out. The counterclaim is not made out. I am satisfied that the outstanding balances claimed by the plaintiff remain unpaid. No statutory limitation period has expired.
The plaintiff is entitled to judgment in the proceeding.
The counterclaim must be dismissed.
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