Jumbo Smart Ltd v. Li Yim Tso t/a Faithful Trading Center
Read the full judgment text of DCCJ 3636/2014 on BabelCite. This District Court judgment was delivered on 20 April 2017.
1. By this summons (“the Summons”), the plaintiff applied for summary judgment against the defendant for, inter alia, damages in the sum of US$32,874.97, being the total amount of deposits paid by the plaintiff to the defendant under two purchase orders respectively dated 9 July 2014 (“the 1st Purchase Order”) and 14 July 2014 (“the 2nd Purchase Order”).
Cites 5 cases
|
DCCJ 3636/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 3636 OF 2014 -------------------------
-------------------------
----------------------- DECISION ---------------------- 1.By this summons (“the Summons”), the plaintiff applied for summary judgment against the defendant for, inter alia, damages in the sum of US$32,874.97, being the total amount of deposits paid by the plaintiff to the defendant under two purchase orders respectively dated 9 July 2014 (“the 1st Purchase Order”) and 14 July 2014 (“the 2nd Purchase Order”). The legal principles applicable 2.The legal principles for an Order 14 application were set out in the judgment of To J in Maintek Computer (Suzhou) Co Ltd. & Others v Blue Anchor Line & Others, unreported, HCAJ 106/2008, 2 April 2013, at paragraphs 10 to 17:-
The parties and the factual background 3.The plaintiff was a Hong Kong company which carried on the business of energy drink trade. It had an associated company in Australia in the name of Alpha Global Brands Group Pty Ltd (“AGB”) engaging in the same business, and one Penny Ziakas (“Penny”) was the shareholder and director of both companies. 4.In about early May 2014, Penny came to know the defendant who traded in Hong Kong as a supplier of energy drinks. On 2 June 2014, Penny acting for AGB placed a purchase order with the defendant for the purchase of certain quantity of Red Bull energy drinks (“the AGB’s goods”) at the price of US$195,022.08, and this was accepted by the defendant on 4 June 2014 (“the AGB’s Agreement”). 5.On 9 July 2014, while the AGB’s Agreement was in progress, the plaintiff through Penny placed the 1st Purchase Order with the defendant for the purchase of 2,808 trays of V-Energy drinks at the price of US$36,840.96 and this was accepted by the defendant on the same day (“the 1st Agreement”). Under the 1st Agreement, the goods were to be delivered by the defendant to Auckland, New Zealand and the payment term as evidenced by the 1st Purchase Order was stated to be “30% deposit & Balance 70% upon B/L”. 6.Further, on 14 July 2014, the plaintiff through Penny placed the 2nd Purchase Order with the defendant for the purchase of 3,672 trays of Red Bull drinks at the price of US$72,742.32, and this was accepted by the defendant on 16 July 2014 (“the 2nd Agreement”). Under the 2nd Agreement, the goods were to be delivered by the defendant to Sharjah, Dubai and the payment terms as evidenced by the 2nd Purchase Order was stated to be “30% deposit & 70% payment upon B/L and SGS report”. 7.No delivery dates were however provided under the 1st and the 2nd Agreement. 8.Subsequently, pursuant to the 1st and the 2nd Agreement, deposits[1] respectively in the sum of US$11,052.20 and US$21,822.70 were paid by the plaintiff to the defendant on 9and 16 July 2014. 9.All things have gone smoothly until AGB’s custom agent reported to Penny that the former could not find the 2 bills of lading previously sent by the defendant to AGB in relation to the shipments of the AGB’s goods. This caused AGB’s concern about the authenticity of those 2 bills of lading. 10.Thereafter, since 22July 2014, Penny has written various emails to the defendant to find out what happened but with no satisfactory answers. Consequently, by an email dated 24July 2014, Penny asked the defendant to return all monies paid under the AGB’s Agreement together with the deposits paid under the 1st and the 2nd Agreement. 11.Notwithstanding the aforesaid request, no refunds were effected by the defendant. Nor were any goods delivered to the designated cities under those 2 agreements. 12.Accordingly, on 23 September 2014 the plaintiff commenced the present proceedings against the defendant for breach of the 1st and the 2nd Agreement, and asked for the return of the deposits paid. The plaintiff’s case 13.It was the plaintiff’s case that the defendant was in breach of the 1st and the 2nd Agreement for non-delivery of goods. 14.According to the plaintiff, while no delivery dates were expressly provided under the agreements, the goods should be delivered by the defendant within a reasonable time which the plaintiff suggested to be 50 days from the date of the respective purchase order. It followed that the defendant should have delivered the goods by 27 August 2014 under the 1st Agreement and by 3 September 2014 under the 2nd Agreement. 15.Allegedly, since the defendant has failed to deliver the goods to the designated cities by the aforesaid deadlines, he was guilty of repudiatory breach of the 1st and/or the 2nd Agreement and such repudiation was accepted by the plaintiff by the issuance of the writ herein on 23 September 2014. Alternatively, the plaintiff claimed that there was a total failure of consideration in the circumstances. No reliance on anticipatory breach 16.At the outset of the present hearing, Mr Ho who appeared for the plaintiff confirmed to me that there was no claim against the defendant for anticipatory breach of contract in relation to the 1st and the 2nd Agreement. In this regard, I noted also that no such cause of action was pleaded in the Statement of Claim. 17.In essence, the claim against the defendant as pleaded was one of non-delivery as opposed to late delivery. This formed the basis on which the plaintiff asked this court to enter summary judgment against the defendant. As Bokhary JA put it in Super Electric Motor Limited v Pai Chung Ying, CACV 225/1994, unreported, 6 April 1995 at paragraph 4:-
Not a claim founded on fraud 18.Much was said in the plaintiff’s supporting affirmations and Mr Ho’s skeleton submission concerning the authenticity of the bills of lading sent under the AGB’s Agreement. Nonetheless, it was confirmed by Mr Ho that the plaintiff did not base its claim against the defendant on any allegations of fraud. Nor was this court asked by the plaintiff to decide on the authenticity of those bills of lading. The AGB’s Agreement was merely referred to by the plaintiff as the background which led to Penny’s demand for the return of the deposits paid under the 1st and the 2nd Agreement. 19.After checking against the Statement of Claim, I am satisfied that the plaintiff’s claim as pleaded was not a claim based on any allegations of fraud. Therefore, there is no question of the court’s jurisdiction to hear the plaintiff’s Order 14 application (see Order 14, r 1(2)(b) of the Rules of the District Court). Delivery within a reasonable time 20.The main thrust of the defendant’s contentions was directed against the plaintiff’s case regarding what amounted to the reasonable time within which the goods should be delivered under the 1st and the 2nd Agreement. 21.In the absence of any time stipulations for delivery in the 1st and the 2nd Agreement, the defendant accepted that he should be under a duty to deliver the goods within a reasonable time. The defendant however disputed the plaintiff’s suggestion that 50 days from the date of the respective purchase order should be such a reasonable time. It was criticised by the defendant that the plaintiff’s suggestion in this respect was arbitrary and without any basis. 22.In his affirmation dated 30 December 2014, the defendant alleged that at the negotiation stage he had made it clear to Penny that the goods he sold were obtained from other suppliers in the parallel market and that the goods could only be shipped after they were collected from those suppliers. Therefore, the place of shipment and the shipment date would vary depending on the location and availability of the goods in the parallel market. As to this, the fact of the defendant telling such things to Penny at the negotiation stage was not disputed by the plaintiff in any part of its supporting affirmations. 23.On the other hand, Mr Ho referred me to the AGB’s Agreement whereby the AGB’s goods were agreed to be delivered from Hamburg to Sydney within 39 days. Accordingly, Mr Ho argued that 50 days should be more than enough time for delivering the goods under the 1st and the 2nd Agreement. 24.In this regard, I note that not only the designations to which the goods to be sent under the 1st and the 2nd Agreement were different from that in the AGB’s Agreement, there was also nothing to suggest that the places of their shipments would be the same. Therefore, I do not find the reference to the shipment term in the AGB’s Agreement to be of any assistance. 25.There was another email dated 11 July 2014 sent by the defendant to Penny whereby the defendant reported that the goods under the 1st Agreement would be loaded about 8 days later and the bill of lading would be issued 2 to 3 days thereafter. This, as Mr Ho submitted, tended to show that shipment of the goods could be arranged within a relatively short time after acceptance of the purchase order. Again, I do not find this email of any usefulness insofar as it provided no information as to the time that took for the delivery of the goods under the 1st Agreement. In any event, given that the intention of the parties should be ascertained at the time of the agreement, this email having been sent only after the conclusion of the 1st Agreement should be irrelevant to determine what was intended by the parties to be the reasonable time for the delivery of the goods insofar as the 1st Agreement was concerned. 26.Further, Mr Ho invited me to draw adverse inferences against the defendant from his evasive responses after he was asked by Penny for a refund. 27.As mentioned above, by an email dated 24July 2014, Penny asked the defendant to return all monies paid under the AGB’s Agreement together with the deposits paid under the 1st and the 2nd Agreement. In reply, the defendant by an email dated 25 July 2014 indicated that he was going to give Penny US$15,000 first. Later, by an email dated 28 July 2014 the defendant said to Penny that the transfer of the money had not yet been made and that he was really ashamed and had no face to talk to Penny. By a further email dated 30 July 2014, the defendant told Penny that he wanted to pay Penny but really had “no power” and he offered to replace the cargoes with the Bio oil. Thereafter, according to the plaintiff, the defendant has deliberately avoided Penny. 28.The question whether and if so what adverse inferences are to be drawn against the defendant should not be considered in a vacuum and must be viewed in the context of the plaintiff’s claim. 29.As confirmed by Mr Ho, there was no claim for anticipatory breach of contract against the defendant. As such, the plaintiff’s claim was premised solely on the basis that the defendant has failed to deliver the goods within a reasonable time. However, even according to the plaintiff’s case, by the time when the defendant wrote those emails to Penny, the time for delivery has not yet expired. Accordingly, however, evasive and dubious the defendant’s responses might be, I do not consider that they could be taken to be an admission that the defendant has by then failed to deliver the goods within a reasonable time. The plaintiff’s right to terminate 30.What was the reasonable time for delivery under the 1st and the 2nd Agreement clearly has an implication on the plaintiff’s right to terminate those agreements. It goes to the fundamental question whether the plaintiff’s cause of action has accrued by the time the plaintiff commenced the present proceedings and filed its writ herein on 23 September 2014. Put it in simple terms, there could be no actionable claim for non-delivery of goods if the last date for delivery should fall beyond 23 September 2014, and vice versa. The question was essentially a question of fact depending on all circumstances of the case and cannot be resolved summarily at this stage. This, in my judgment, amounts to a triable issue which should allow the case to go to trial. 31.Besides, not every breach of contract entitles the innocent part to terminate the contract. In order for the innocent party to be so entitled, the term that has been breached by the defendant must be of the essence of the contract. 32.In the present case, it was not disputed that since no dates were fixed for the defendant’s delivery of the goods under the 1st and the 2nd Agreement, the defendant should be under an implied duty to deliver the goods within a reasonable time. As such, insofar as the defendant’s obligations to make delivery under those 2 agreements were concerned, time was not originally of the essence of the contract. However, no notice was given by the plaintiff to the defendant to make time of the essence and to require the contract to be performed within a reasonable time. Thus, even assuming that there was an undue delay on the part of the defendant, I consider it arguable that the plaintiff was not entitled to terminate the 1st and the 2nd Agreement. 33.Likewise, for similar reasons, I find that there is an arguable defence to the plaintiff's alternative claim of a total failure of consideration. See Wong Wai Lung and another v Bondfield Development Limited and another, CACV 214/2006, unreported, 31 August 2006 at paragraph 6 where the Court of Appeal held that:-
Conclusion 34.For the reasons given above, I order that the defendant be granted unconditional leave to defend the action. Costs 35.I make an order nisi that costs of the Summons be costs in the cause with certificate for counsel. This order nisi will become absolute after 14 days in the absence of any application to vary the same.
Mr P M Ho of Ho & Tam, for the plaintiff Mr Tim Wong, instructed by Huen & Partners, for the defendant [1] The total amount of deposits paid under both agreements should be US$32,874.90 (i.e. US$11,052.20 + US$21,822.70) which was noted to be slightly different from the amount of US$32,874.97 claimed by the Plaintiff in its Statement of Claim. In this regard, I believe that the difference was attributed to some innocent typo in the plaintiff’s pleadings and the correct amount of total deposits paid should be US$32,874.90. |
Cases cited in this judgment