PLAYMATES INDUSTRIAL CO LTD v. RICHARD LAU LAP CHE

HCA001574/1979

IN THE HIGH COURT 1979 No. 1574

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BETWEEN
PLAYMATES INDUSTRIAL CO. LTD. Plaintiff

AND

RICHARD LAU LAP CHE Defendant

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Coram: Mr. Commissioner Gittins, Q.C.

Date of Judgment: 12 December 1979

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JUDGMENT

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1. The Plaintiff claims from the Defendant $28,271 being the purchase money and insurance premium of a motor car paid to a motor cardealer for and on behalf of the Defendant at his request. The Plaintiff claims that the parties had agreed that this sum would berepaid to the Plaintiff out of commission earned by the Defendant whilst employed by the Plaintiff’s associated company Play-N-JoyLtd., and that it was an expressed and/or implied condition that the said sum or any balance thereof unpaid would be immediatelypayable upon the determination of the Defendant’s said employment. The Defendant’s employment was duly determined.

2. The Defendant admits the payment of the said sum of $28,271 by the Plaintiff to the motor car dealer but alleges that the motor carpurchased was a gift to him from the Plaintiff in the following circumstances:-

(a) In May 1978 the Defendant was approached by CHAN Tai-ho the managing director of the Plaintiff to set up Play-N-Joy Ltd. with a factoryin Tuen Mun, New Territories.
(b) At that time the Defendant was employed in the Hong Kong branch of a big American company with good prospects and his place of workwas near his residence.
(c) The Defendant was unwilling to leave his job particularly as the job contained in CHAN Tai-ho’s offer meant travelling to Tuen Munto work.
(d) In order to induce the Defendant to take up employment with his organisation CHAN Tai-ho offered him a five year contract, annualincrements, a commission on all sales by the new company, and the gift of a new motor car not exceeding $30,000 in cost.
(e) The Defendant agreed to take up employment on these terms.
(f) On about 1st September 1978 the Defendant purchased a new motor car for $29,271 and personally paid $1,000 deposit.
(g) On or about 12th September 1978 the motor car was delivered to the Defendant and CHAN Tai-ho gave the Defendant a cheque for $28,271in favour of the dealer drawn on the Plaintiff’s account.
(h) The motor car was registered in the name of the Defendant as owner.

3. The Defendant entered into two employment agreements in writing. The first is dated 7th June 1978 with the Plaintiff company andsecond dated 19th July 1978 with Play-N-Joy Ltd. It is not disputed that the first agreement was executed because the Defendant wishedto have formal terms of employment when Play-N-Joy Ltd. had not been incorporated, and the second agreement was entered into afterthe incorporation of Play-N-Joy Ltd. to replace the first agreement. The agreements are in identical terms except that the 5 yearterm commenced on 1st August 1978 in the first agreement and on 1st September 1978 in the second agreement.

4. Both agreements stipulated identical terms as to the term of employment, salary, increments, commission, holidays and a provisionthat the employer may determine the agreement by 6 months prior written notice.

5. The matter of a motor car was not mentioned in either agreement whether as a gift or whether there would be a loan of the purchaseprice and its repayment.

6. CHAN Tai-ho’s evidence was that the 2 agreements in writing contained all the terms of agreement between the parties, that the Plaintiff’soffice and that of Play-N-Joy Ltd. were at Tsim Sha Tsui although there was a factory at Tuen Mun and there was no great emphasison the Defendant having to be at the factory, that the matter of a motor car was not mentioned in the negotiations between him andthe Defendant and that it was at the beginning of September 1978 or shortly before that the Defendant asked for a loan of $27/28,000to buy a car to which request CHAN Tai-ho acceded. When cross-examined by the Defendant as to why, if it was a loan, the sum owingthereon was not deducted from the 6 months’ pay in lieu of notice given to the Defendant on the termination of his employment, CHANTai-ho’s reply was that he considered the loan and termination to be two separate matters. The Defendant also relied on the factthat despite the Plaintiff’s allegation of a loan he had not been required to sign a promissory note or voucher to that effect.

7. CHU So-ying the Plaintiff’s cashier gave evidence that she made out the cheque dated 12th September 1978 for $28,271 in favour ofthe motor car dealer for CHAN Tai-ho to sign in the following circumstances:-

(a) The Defendant produced to her a bill and asked for a cheque to be made payable to the motor car dealer.
(b) The witness pointed out to the Defendant that the bill was addressed to the Defendant and not to the Plaintiff company.
(c) The Defendant said that CHAN Tai-ho had promised to lend him the money and that repayment would be made out of his future commissions.
(d) The witness had this arrangement confirmed by CHAN Tai-ho and then made out the cheque for his signature. She handed the signed chequeto the Defendant.

8. The Defendant gave evidence in support of his pleading and was emphatic that he would not have taken up his employment if there wasno gift of a car. He said that he queried the provision in the agreement dated 7th June 1978 for 6 months notice for the terminationof employment which he said had not been previously agreed in negotiations, but that he did not mention the absence of any provisionabout the car because that was once for all and because he trusted CHAN Tai-ho to keep his promise to give him the car. He was askedin cross-examination why, if the car was a gift, he did not ask for the repayment of the $1,000 deposit he had personally paid, andhis reply was that since Chan had been so generous he did not ask for repayment of the $1,000.

9. The oral testimony given on behalf of the parties tend to neutralise each other although the unchallenged evidence of CHU So-yinggives the edge to the Plaintiff. On the other hand if the Defendant had been legally represented I would expect that his case wouldhave been put to that witness.

10. In my view what tips the scales in favour of the Plaintiff are letters written by its solicitors to the Defendant in connection withthe termination of the Defendant’s employment.

11. By a letter dated 9th March 1979 the said solicitors said in the second paragraph –

“We have also been instructed by our client that you have borrowed from our client a sum of HK$28,281.00 for the purpose of enablingyou to buy a motor vehicle. Could you please let us know what arrangement you would propose for the repayment of the loan to ourclient without prejudice to our client’s right.”

and by a further letter dated 12th March 1979 the said solicitors said in the last paragraph –

“Regarding the second paragraph of your letter, we have been instructed by our client that entirely without prejudice, our clientis prepared to accept from you a transfer of the car in question in satisfaction of the sum of HK$28,281.00 due from you to our clientprovided that the car is in good condition and you deliver up and sign all the necessary transfer documents to our client (includinginsurance policy) within two days from the date hereof. If you fail to do so, we have instructions from our client to institute legalproceedings against you for the recovery of the sum of HK$28,281.00 without further notice.”

12. These 2 letters set out clearly the Plaintiff’s claim that the $28,271 (and not $28,281.00 as claimed in the solicitors’ letters) was a loanand this was communicated to the Defendant concurrently with his dismissal. The Defendant made no attempt to refute this claim untilhe swore an affidavit on 14th May 1979 in reply on the Plaintiff’s application for summary judgment. The Defendant’s failure to denythis formal claim causes me to come to the conclusion that the Plaintiff has proved its case on the balance of probabilities.

13. I give judgment for the Plaintiff on its claim with costs.

14. The Defendant has counterclaimed for an account and payment of 0.6% commission on all orders obtained and executed by Play-N-JoyLimited and paid for by the purchaser. The Plaintiff has admitted that the Defendant is so entitled on transactions up to 30th September1979.

15. I give judgment for the Defendant on his counterclaim for an amount to be agreed between the parties, and in the absence of agreementto be determined by the Registrar. The Defendant is to have the costs on the counterclaim.

16. The above judgments on the claim and counterclaim are without prejudice to the costs of the first day and of the amendments to thepleadings to be the Defendant’s in any event.

17. The amounts adjudged on the claim and counterclaim shall bear interest at 8% per annum from the date of the Writ of Summons untilpayment.

(S.V. Gittins)
Commissioner of High Court

Representation:

R.E. Mayne (F. Zimmern & Co.) for Plaintiff.

Defendant in person.