Samsung Hong Kong Ltd. v. Keen Time Trading Ltd.

CACV000087/1997

IN THE COURT OF APPEAL

1997, No. 87
(Civil)

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Coram: Hon Nazareth, V.-P., Liu and Mayo, JJ.A. in Court

Date of hearing: 16 July 1997

Date of handing down judgment: 1 August 1997

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the defendant ("Keen Time") against the assessment of damages made by Master O'Donnell in favour of the plaintiff, Samsung Hong Kong Ltd ("Samsung") comprising the sum of US$3,320 as being Samsung's loss of profit and HK$607,667.51 as damages Samsung was found liable to pay Reter Trading Limited ("Reter"), the supplier, in High Court Action No 13154 of 1996. The facts are as follows.

2. By a sales contract dated 13th November 1995, Samsung as agent of Samsung Co Ltd, Seoul, Korea, confirmed having sold to Keen Time 200,000 kgs of "polyester staple fibre 1.5 DX38MM semi-dull raw white A grade" for the sum of US$332,000.00. It also included the following "Pls issue L/C in favour of: Reter Trading Limited, Flat A, 24/F., CMA Bldg, 64 Connaught Road C, Hong Kong". In the space for "L/C Opening Date:", the following was inserted "prompt (30 Nov 1995)".

3. Keen Time's customer, Wah Ming, had cash flow problems, with the result that Keen Time was not able to open the L/C. Later, Wah Ming's cash flow improved and it is said to have attempted to buy back the goods.

4. Notwithstanding that the letter of credit was never opened, the goods were shipped from Taiwan to Hong Kong, later stowed in warehouses, and ultimately sold to other purchasers.

5. On 5th December 1995, Samsung took out a writ against Keen Time claiming for loss and damages, which it originally particularised as "price of the goods and/or loss of profits; freight charges and other expenses, to be assessed". Later those particulars were by amendment changed to "loss of profit in the sum of US$3,320.00" and "the plaintiff's liability to Reter" equal to the amount of damages in High Court Action No. A13154 of 1996, in which Reter sued Samsung. Samsung obtained consent judgment in this case on 11th June 1996 for damages to be assessed.

6. The claim then came before Master O'Donnell for the assessment of the damages. He part heard the matter on 26th September 1996 and completed his hearing on 14th February 1997. He gave his decision on 10th March 1997. He noted that damages in High Court Action No. A13154 of 1996 between Reter and Samsung had been assessed by Master Cannon on 12th February 1997, just two days before the resumed hearing before him. He added:

"This Master is not prepared and does not consider it appropriate to re-open the assessment made by Master Cannon in HCA No A13154/96 where damages were assessed against Samsung Hong Kong Limited in the sum of HK$607,667.51. In the course of this assessment counsel for the defendant eventually conceded the loss of profit to the plaintiff (Samsung Hong Kong Limited) as being 1% of the purchase price of the goods in the sum of US$3,320.00. Accordingly the damages assessed in this action under the amended writ of summons and Statement of Claim are as follows:

(1) Loss of profit USD$3,320.00

(2) The plaintiff's liability to Reter Trading Limited in HCA No 13154/96 HKD$607,667.51."

He went on to award interest at judgment rate from the date of the amended writ and the Statement of Claim, namely 7th December 1996 to the date of payment and awarded costs to Samsung against Keen Time.

7. On 30th April 1997, Keen Time appealed, setting out four grounds of appeal in its Notice.

8. We refused to let Samsung raise the new point that it was only the disclosed agent of Samsung Korea, as that goes to liability in respect of which there was judgment by consent.

9. Keen Time complains of several matters, mainly that although it consented to judgment because it did not open the letter of credit, it had reservations about what damages were sustained, yet the Master failed to look into those matters and adjudicate upon them. All he did was rely upon the assessment by Master Cannon in HCA No. 13154 of 1996 as if he was bound by it.

10. Keen Time had put Samsung to strict proof and says it had raised the following issues before the Master.

(1) As Keen time had not opened the letter of credit the goods should not have been shipped. It was this that appeared to have accounted for most of the damages awarded.

(2) Goods of a different description from that in the sales contract appear to have been shipped. "Staple fibre 1.5D" was contracted for. The confirmation of sales between Reter (Samsung's supplier) and Samsung described the goods as "Staple 1.4D or 1.5D". The ultimate user and intermediate parties would be entitled to repudiate and claim damages. Evidence of trade practice as to these descriptions, which Samsung said were equally acceptable, would have to be procured and the issue adjudicated upon.

(3) The reasonableness of very high storage charges would have to be decided.

(4) Keen Time claims to have offered to buy the goods at the contractual price, which Samsung disputes.

(5) Samsung alleges that the goods were sold to Skybest; the evidence is confusing.

(6) Keen time says there was a double claim for the US$3,320.00 as it was included in the HK$607,667.51. Samsung accepts that it is not entitled to recover the amount twice in effect. The Master's order has to be set aside in any case on this account.

11. In addition, the assessment was heard in two hearings separated by a long adjournment. Prior to the second, Reter obtained a consent judgment against Samsung with an order that damages be assessed. Subsequently, Reter consented to an order that the assessment of damages in these proceedings should be heard immediately after the assessment of damages in the proceedings between Reter and Samsung. Even if difficulties with counsel's diaries caused this, they are hardly a satisfactory explanation. The gravamen of that is that Keen Time was not able to intervene in the assessment in HCA 13154 of 1996.

12. Of course, the assessment in HCA 13154 of 1996 did not bind Keen Time.

13. Plainly, Keen Time is entitled to have its contentions and reservations on the damages adjudicated upon. Miss Eu SC who, with Mr Paul Lam, appeared for Samsung, submitted that there was nothing in the several points, answers to which existed in respect of all of them. I do not find it necessary (nor, in the light of the conclusion I have reached) appropriate to canvass these. Having considered them, I am satisfied that Keen Time is entitled to have its contentions on the quantum of damages adjudicated.

14. I would allow the appeal, set aside the Master's order, and remit the matter for assessment of damages by another Master. I would also make an order nisi giving Keen Time its costs of the appeal and the assessment below.

Liu, J.A.:

15. For the criticisms ventilated in the judgments of the Vice President and my Lord Mayo, which I have had the opportunity of reading in draft, I would also allow the appeal. I agree with the orders the Vice President proposes to make.

Mayo, J.A.:

16. The main complaint which is made by the appellant is that as a result of the way in which the master dealt with this assessment of damages they have been afforded no real opportunity of making effective representations to contest the quantum of damages being claimed by the respondents.

17. When the assessment was initially heard the respondent's suppliers Reter had not yet commenced legal action against the respondents to recover the loss they had sustained consequential upon the appellant's breach of contract. The respondent applied for an adjournment and this was granted.

18. Prior to the hearing of the adjourned assessment Reter obtained a consent judgment against the respondent together with an order that the quantum of their claim should be assessed by a master.

19. Subsequent to this Reter and the respondent consented to an order that the assessment of quantum in the present proceedings should be heard immediately after the assessment of quantum in the proceedings between Reter and the respondent.

20. Notwithstanding this Court order the 2 assessments were not heard one after the other. This was beyond the control of the appellant as they were not parties to HCA 13154/1996.

21. No convincing explanation has been forthcoming for the non-compliance with a Court order. We were informed that there were difficulties with counsels' diaries but this would not appear to be justification for non-compliance with a Court order and the unsatisfactory and wasteful necessity of having separate assessments of damages dealing with what was essentially the same subject matter.

22. To make matters worse the assessments were heard by different masters.

23. It is necessary to consider the extent (if any) to which the appellants have been prejudiced as a result of this state of affairs.

24. I think that they have been prejudiced. Although Master O'Donnell did hear the evidence which was adduced before him there can be no doubt that he was influenced by what had transpired before Master Cannon the master who heard the assessment in HCA 13154/96.

25. At p2 of the brief reasons given by Master O'Donnell for his assessment he states:

" This Master is not prepared and does not consider it appropriate to reopen the assessment made by Master Cannon in HCA No. A13154/96 where damages were assessed against Samsung Hong Kong Limited in the sum of HK$607,667.51. In the course of this assessment Counsel for the Defendant eventually conceded the loss of profit to the Plaintiff (Samsung Hong Kong Limited) as being 1% of the purchase price of the goods in the sum of USD$3,320.00. Accordingly the damages assessed in this action under the amended Writ of Summons and Statement of Claim are as follows:-

(1) Loss of profit	USD$3,320.00
(2) The Plaintiff's liability to Reter Trading Limited in HCA No. 13154/96"	HKD$607,667.51

26. It is clear from this that the master was reluctant to go behind the findings of Master Cannon.

27. This was a matter of particular importance so far as the claim was being made by the appellant that the goods which had been supplied under the contract were not the same as the goods specified in the contract. The goods specified in the contract were described as "100% polyester staple fibre 1.5D x 38mm semi-dull raw white A grade".

28. It would appear from the available evidence that the goods which were shipped were 100% polyester staple fibre 1.4D x 38mm semi-dull raw white A grade.

29. Both parties adduced evidence in support of their contentions on this issue. What was clear though was that neither of the witnesses who testified in this connection was able to provide a convincing explanation as to the significance of this deviation.

30. Certainly no witness was called by either party who professed a measure of expertise which would enable him to illuminate this topic.

31. Without some evidence as to what the trade custom or practice was in this connection it is difficult to see how the master could make an adjudication.

32. This was a matter of some importance because if the appellant was able to demonstrate that the goods which had been sold to Skybest did not correspond to the goods described in the contract they would have been unable to prove the damages they were claiming for the loss they sustained as a result of the distress sale.

33. If the reasons given by Master O'Donnell are read as a whole there must be some doubt as to whether he weighed all of the evidence which was before him and made an adjudication on this issue.

34. One of the consequences of the breach of the order that the assessments of damages should be heard one after the other was that the appellant was effectively prevented from ventilating all of the issues they wished to canvass at the hearing.

35. This included being able to satisfactorily resolve apparently conflicting evidence concerning the distress sale to Skybest.

36. I accept that but for the existence of the order there was nothing to prevent the respondent from proceeding in the way they did. It was however in the particular circumstances of this case unsatisfactory that they should have done so. By doing so the respondents were not in a position to bind the appellants to the findings which were made by Master Cannon.

37. In my view Master O'Donnell appears to have been unduly influenced by the assessment of damages undertaken by Master Cannon and there must be some uncertainty as to whether he attached sufficient weight to all of the evidence which was before him.

38. I am satisfied that his order should be set aside and that there should be a fresh hearing before another master.

Nazareth, V.-P.:

39. The appeal is accordingly allowed, the Master's award set aside and the claim remitted for assessment of damages before a different Master. There will also be an order nisi that Keen Time is to have its costs of the appeal and the assessment below to be paid by Samsung.

Representation:

Mr Warren Chan SC and Mr Dominic Yeung (M/s Chu & Lau) for the Appellant

Miss Audrey Eu SC and Mr Paul Lam (M/s Siao, Wen & Leung) for the Respondent