Jefferson Printing Factory Ltd. v. Equator International Ltd.

DCCJ017894/2000

DCCCJ 17894/2000

IN THE DISTRICTT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 17894 OF 2000

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Coram: Deputy Judge Joseph Yau in Court

Date of Hearing: 10-14, 17 and 24 December 2001

Date of Handing Down of Judgment: 23 January 2002

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JUDGMENT

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Background

The Plaintiff sues to recover the purchase prices, or alternatively damages, for three printing blankets which were sold to it by the Defendant in breach of a condition or warranty that they were reasonably fit for the purpose of high accuracy printing of fabrics.

2.It is common ground that the Defendant had sold to the Plaintiff a total of 4 printing blankets for use on fabrics printing machine. The Plaintiff alleges that with the exception of one of them all the printing blankets were not reasonably fit for the purpose.

Case of the Plaintiff

3.The Plaintiff is in fabrics printing business, founded by Mr WONG To-lap, the first Plaintiff witness (hereafter referred to as "PW1") and Mr PANG Chi-yu, the second Plaintiff witness (hereafter referred to as "PW2"). It purchased a total of four printing blankets from the Defendant for use in its printing machines in its factory in China. Three of these blankets did not work properly and had to be given up by the Plaintiff after using them for a short time.

4.PW1 founded the Plaintiff together with PW2 in 1990. He had joined the trade of fabrics printing in 1969 and had acquired knowledge on the job in respect of the process of fabrics printing and the function of various types of printing machine. PW2 had joined the trade of fabrics printing as an apprentice in early 1970's and worked through the ranks to the management level. He had started to run his own business in 1980's and set up the Plaintiff with PW1 in 1990.

5.There were 2 main types of fabrics printing machine, the flat bed printing machine and the rotary printing machine. The Plaintiff had 3 flat bed printing machine and 1 rotary printing machine at the time of purchase of the printing blankets. These machines had always been well maintained and were in good working conditions. The production of the Plaintiff was carried out in the factory of the Plaintiff in China which employed about 200 workers. All the heads of the departments and senior staff there were Hong Kong people and the workers were all trained by them. PW1 worked mainly in Hong Kong, responsible for getting business orders while PW2 worked mainly in China, responsible for production and technical control.

6.PW1 came to know Mr TO Yam-yuen, the first Defence witness (hereafter referred to as "DW1") in the 1980's. DW1 was a director of the Defendant. He came across DW1 again around 1998 and learned that he was selling printing blankets which were made in France. Having confidence in French-made printing blankets he bought one for use in their rotary printing machine brand-named "Stork" (hereafter referred to "the Stork machine") which the Plaintiff had purchased brand new from Holland for HK$7.8 million around 1990. He told DW1 that he needed the blanket for fabrics printing of a high accuracy. This blanket (hereafter referred to as "the good blanket") had worked well.

7.Printing blanket was an important component of a printing machine. It carried the fabrics forward during the process of printing and as one colour could only be printed at one time it was important that different colours were printed at the correct positions on the fabrics. The printing machine used by the Plaintiff could print as many as 14 different colours and the total deviation in the positions of printing of the different colours must not be more than 0.3 mm. The accuracy of the printing could be affected if the quality of the blanket was not good.

8.In early 1998 the Plaintiff ordered another blanket (hereafter referred to as "the first blanket") from the Defendant for use on the flat-bed printing machine which the Plaintiff had purchased second hand around 1995 or 1996 at a price of about HK$2 million. This was an Ichinose Model 6000 printing machine (hereafter referred to as "the model 6000 machine") which was made in Japan about 25 years earlier (from date of trial). The blanket cost HK$260,000 and was delivered in May 1998. It was installed on the machine and put to operation on 13 June 1998. The blanket, however, became slackened after about 2 months and failed to print the colours on the fabrics accurately.

9.The Plaintiff made a complaint to DW1 immediately and was told by the latter to tighten it up. The Plaintiff did so for the first time on 24 August 1998. The blanket worked properly for a few days, but became slackened again. The plaintiff was told by DW1 to tighten it up for the second time and the Plaintiff did so on 2 September 1998. The tightening up had then been repeated for 2 more times on 27 September and 28 October 1998 before the Plaintiff gave up. The blanket had been stretched for a total of 20 cm due to the tightening up. PW1 talked to DW1 every time the blanket became slackened, but he was not sure whether DW1 told him to tighten up the blanket every time. He, however, was sure that DW1 had told him to tighten up the blanket at the beginning.

10.PW1 and PW2 talked to DW1 about the problem of the blanket and discovered from DW1 that the blanket was in fact made in USA, not in France as DW1 had all along told them. Finally, the Plaintiff and the Defendant came to a conditional compromise by which the Defendant would sell another printing blanket (hereafter referred to as "the second blanket") to the Plaintiff for HK$130,000 for use on the same machine which was the model 6000 machine. The contract of sale was signed on 16 July 1999. This blanket was made in France. DW1 had guaranteed that the thickness of 2.6 mm of this blanket was suitable for use on the machine. The Plaintiff would not pursue the matter with respect to the first blanket further if the second blanket worked properly.

11.The second blanket was delivered to Hong Kong and was conveyed to China within a very short time. It was installed on the machine and put to operation on 6 October 1999. It soon became slackened and failed to produce accurate printings on the fabrics. PW1 informed DW1 about it and DW1 said that the blanket had to be tightened up as far as possible. The Plaintiff did accordingly for the first time on 27 October 1999. Thereafter the blanket was required to be tightened up for 7 more times on the advice of DW1, the last time being 8 August 2000.

12.In May 1999 the Plaintiff purchased another printing blanket (hereafter referred to as "the third blanket") from the Defendant for use as a spare blanket for the Stork machine at a price of HK$57,300. It was installed on the machine and put into operation on 26 June 2000. This blanket became slackened and was required to be tightened up for the first time on 25 July 2000. PW1 informed DW1 about it. DW1 did not raise many queries and asked if he could replace it with another one. PW1 refused, saying that its quality was too poor. The third blanket was required to be tightened up for 2 more times before the Plaintiff gave it up. The contract for the purchase of the third blanket stipulated that the blanket was 2.4 mm +/- 0.1 mm in thickness. But when the blanket was delivered it was discovered from the shipping document that it was 2.3 mm +/- 0.1 mm. The Plaintiff informed DW1 immediately.

13.On 9 August 2000 PW1 wrote a letter to the Defendant, asking DW1 to arrange for an engineer of the French manufacturer of the second blanket to go the factory of the Plaintiff in China to examine the blanket before October so that the second blanket could be removed from the machine to give way to a new printing blanket which the Plaintiff had purchased from Japan. PW1 wrote another letter to the Defendant on 6 September 2000 to reserve its rights to claim against the Defendant for all losses resulting from the poor quality of the first and second blankets. A third letter was written on 29 September 2000 to the Defendant in respect of the poor quality of the third blanket and the possible solutions.

14.DW1 together with a Mr Lam (the second Defence witness) had visited the factory of the Plaintiff at the end of August 2000. DW1 introduced Mr Lam as from the technical personnel of the printing blanket manufacturer. PW2, however, did not get the impression that he had much knowledge about the matter. DW1 and Mr Lam examined the second blanket and said that the Plaintiff had damaged the blanket by over tightening it. They suggested that the second blanket should be loosened for a period of time and then tightened up again to see if it would function properly. The Plaintiff had done accordingly but to no avail. During the visit PW2 had also taken DW1 and DW2 to look at the third blanket which was not functioning properly.

15.PW1 said that DW1 had agreed to go to examine the printing blankets with the personnel of the French printing blanket manufacturer on 18 October 2000. However, nobody had turned up on that day and there was no news at all from DW1. As a result PW1 wrote a fourth letter to the Defendant on the same day asking for refund of the purchase price of the third blanket.

16.The Plaintiff knew that a printing blanket should not be repeatedly tightened up under normal circumstances and it would become useless if it was over-stretched. However, as the supplier of the blankets did nothing about the problem it could do nothing else. Under the instructions of PW1 the staff of the Plaintiff had complied a maintenance record of the printing machine.

17.The Plaintiff employed the Mr YUE Huen-kwong, the fourth Plaintiff witness (hereafter referred to as "PW4"), as a consultant for the maintenance of its machinery. PW4 had been working as a technician in electrical engineering for 40 years of which 29 years were in fabric-printing industry. He had been serving as the consultant in the maintenance of the printing machine of the Plaintiff since it started business in 1990. Mr WONG Shing-kan, the third Plaintiff witness (hereafter referred to as "PW3"), was the proprietor of Wing Yip Engineering Works which had carried on business for more than 35 years. Its business included manufacturing and repairing machines, assembling machinery and installation of printing blankets on printing machine. It had been providing services to the Plaintiff for assembling machinery and installation of printing blankets since the founding of the Plaintiff.

18.PW1 said that there were no instructions manuals delivered together with all the blankets and he had not asked the Defendant for them because the installation procedures of different types of printing blankets were more or less the same. The printing blankets were installed on the machine by PW4 together with PW3 and the technical staff of the Plaintiff. The printing machines of the Plaintiff were well maintained and in good working conditions when the problematic blankets were being used. After giving up these blankets the Plaintiff had purchased NBK printing blankets from Japan and had been using them for about a year on the flat-bed and rotary machines without any problem.

19.According to PW2 a rotary printing blanket had a normal working life of about 2 to 3 years while that of a flat-bed printing blanket was about 10 years. PW4, however, said that the normal life span of a rotary printing blanket was about 5 years and that of a flat-bed printing machine was about 10 years. PW2 agreed that the tolerance of a printing blanket is about 10% of the length of the blanket. For the second blanket, the Plaintiff asked for a thickness of more than 2.6 mm but DW1 said that the blankets produced by France were only 2.6mm in thickness and DW1 guaranteed that there would be no problem. PW2 insisted that it was a guarantee given by DW1, not the French manufacturer as stated in the contract. PW2 agreed that a deviation of not more than 0.3 mm in the printing of fabrics was ordinary accuracy.

Case of the Defendant

20.The Defendant was set up by DW1 who is its majority shareholder and director. DW1 graduated from the Hong Kong Polytechnic (now known as the Hong Kong Polytechnic University) in 1986 and obtained the Higher Diploma in Textile Chemistry. His studies included fabrics printing equipment and the causes of inaccurate fabrics printing. After graduation he had joined a Dutch company as a sales engineer in the China Trade Department involved in sales of textile machinery. He was promoted to sales manager in 1989.

21.The Defendant sold the good blanket to the Plaintiff at the end of 1997. PW1 did not know whether his company was a distributor or an agent. He bought the blanket from Polyfibron, and sold them to the Plaintiff at a profit. Polyfibron was the manufacturer of the blanket. It merged with Macdermid Graphic Arts Link (hereafter referred to as "Macdermid") in December 1999 and adopted the name of the latter. Rollin is the brand name of printing blanket manufactured by Polyfibron. In June or July 1999, Rollin was sold to Siegling GmbH. Macdermid continued to handle the sale of Rollin blankets for about 6 months thereafter but had stopped dealing in them completely since 2000.

22.In 1998, the Plaintiff approached the Defendant for the purchase of a flat-bed printing blanket of 3 mm in thickness. DW1 told the Plaintiff that French printing blankets were only 2.6 mm thick, but that a sister company of Polyfibron in the USA produced printing blankets of 3 mm in thickness under the brand name Darex. He told PW1 about it and the Plaintiff agreed to buy one at the price of HK$260,000 in January 1998. This is the first blanket referred to above. It was delivered in April of the same year. In June or July 1999, PW1 complained to the Defendant by telephone that the first printing blanket was not working properly, saying that it had become slackened or, in the terminology of DW1, elongated. DW1, however, later changed to say that what PW1 had told him was that the blanket had been damaged by being tightened up without saying that it had become elongated. PW1 asked him for a replacement of the printing blanket.

23.The Defendant liaised with the second defence witness, Mr Lam of Polyfibron (hereafter referred to as "DW2"). Finally it was agreed that Polyfibron would sell another printing blanket to the Plaintiff at half-price. The Plaintiff asked the blanket to be made in France but required a guarantee that the thickness of 2.6 mm would be of no problem. Defendant talked to DW2 and the French manufacturer than gave the guarantee. The Plaintiff purchased the blanket at HK$130,000 in July 1999. This is the second printing blanket referred to above. The Defendant received complaint of the quality of this blanket from the Plaintiff in June or July 2000 by means of a fax which was followed immediately by a telephone call.

24.DW2 graduated from University College London majoring in Chemical Engineering. He had been in the employment of Polyfibron since 1992, responsible for promotion and sale of the company's products. He had acquired knowledge about printing machines through learning from the French engineers and books.

25.The Defendant had asked the French manufacturer to send an engineer to examine the second blanket in the factory of the Plaintiff in China. However, after much discussion with the French manufacturer, no engineer was available. DW2 had tried to ask one Mr Chow, the representative of the French manufacturer in China to go there but it also turned out that he was not free to do so. So, DW1 and DW2 visited the factory to examine the second blanket themselves.

26.During the visit it was discovered that the blanket had been over-stretched for 10 cm. DW1 told PW2 that as they had over stretched the printing blanket the Defendant would not be responsible for it. DW2 suggested that the Plaintiff should loosen the blanket for some time to see if the blanket could be saved. No complaint of other printing blankets had been made to DW1 and DW2. On the contrary, PW2 had told DW1 that the third blanket was working well. DW1 denied to have ever asked the Plaintiff to tighten up the blanket. He said that the Defendant was the distributor and it was not its duty to make such suggestion to the Plaintiff.

27.On examining the model 6000 machine PW1 found that there was rust in the bearings and there were also scratches on the rollers. Part of the rollers had worn away and resulted in an uneven levelling of the printing surface. DW1 said that this would cause the fabrics to shift in position during the printing process, thus affecting the accuracy in the printing of the fabrics.

28.DW1 also denied to have ever agreed to go to the factory of the Plaintiff in China with a French engineer on 18 October 2000.

29.DW1 had sold more than 30 second hand printing machine and had performed after-sale service of printing machine with the Dutch engineers when he worked for the Dutch company. He had learnt much about printing machine. He had also sold more about 50 printing blankets and had never had any complaint of elongation of the blankets.

30.In May 1999, the Plaintiff purchased the third blanket from the Defendant. The Defendant, however, had only received complaint about the problem of this blanket for the first time in the letter of 29 September 2000, which was the third letter from the Plaintiff to the Defendant.

31.According to DW2, all instruction manuals were packed together with the printing blankets delivered to the buyers. He, however, agreed that the methods for the installation of blankets of different brand names were more or less the same. He said that Polyfibron was a large manufacturer of printing blankets and occupied about 45% of the market worldwide and that DW1 was the sales agent of Polyfibron.

Evaluation of Evidence

32.I have considered the evidence of PW1 and PW2 very carefully. I must say that they qre by no means impressive witnesses. Their evidence contradicted each other and was unreasonable and illogical in a number of aspects. The court rejects their evidence. On the contrary DW1 and DW2 gave evidence in a clear and straightforward manner. Their evidence make sense and are logical. The court accepts their evidence.

33.PW1 and PW2 said that they did not know the first blanket was made in the USA and had all along been misled by the DW1 who had said that the blanket was made in France. This is hard to believe. In the written contract of sale the blanket was described as "Darex 7-ply printing blanket". Having been in the business for such a long time it is surprising that they would not know that "Darex" was the brand name of an American blanket. Even if they really did not know about it, it would be extremely unlikely that DW1 would be bold enough to mislead them in such a manner, given that he knew full well that both PW1 and PW2 had substantial experience in the trade. DW1 would definitely know he would not be able to cover up the place of origin of the blanket for long because once the blanket was delivered to the Plaintiff anyone looking at its packaging would be able to tell at once that it was made in USA. DW1 impressed me as a businessman with good commercial sense. I do not believe that he would have done such a thing. I am of the view that he had told PW1 and PW2 the place of manufacture of the first blanket right at the very beginning.

34.PW1 and PW2 said that the Plaintiff had kept a record of the dates of installation of the printing blankets on the printing machine and the tightening up of the printing blankets on every occasion. However, the record was far from being accurate. In the fourth letter of the Plaintiff to the Defendant it was mentioned that the third blanket was required to be tightened up on the day of the letter which was18 October 2000. However, there was no such entry in the record.

35.Subsequent to the complaint of the Plaintiff about the first blanket, the American manufacturer had posed seven questions for the Plaintiff to answer through the Defendant. In the answers faxed to the Defendant by the Plaintiff it was said that the blanket had been tensioned for 2 times since its installation. This is inconsistent with the record of the Plaintiff which stated that the blanket had been tensioned for 4 times. The conclusion of the court is that the record of the installation and the tightening of the blankets are not reliable record.

36.If the problem of the first blanket had really started in August 1998 it is impossible that the Plaintiff would still have chosen to buy the third blanket from the Defendant in May 1999. The Plaintiff explained that it was because the third blanket was for use on the Stork machine and was of the same type as the good blanket in which they had confidence. They also said that the blanket was relatively cheap. Such an explanation does not make sense. According to the Plaintiff there were arguments between the Plaintiff and the Defendant about the first blanket. No businessman would continue to place purchase orders with a supplier who was having arguments with him about the quality of goods delivered. He would have waited until the arguments were over and then decide what to do in light of the way the supplier dealt with his complaint. This is particularly true in the case of the third blanket which was only to be purchased as a spare one. As the Plaintiff was not in urgent need of this blanket it would not be necessary for it to make the purchase at such an early stage. The explanation given by them does not ring true at all.

37.The purchase of the third blanket by the Plaintiff in fact supports the evidence of the Defendant that there was no complaint and argument in relation to any of the blankets delivered when the purchase was made in May 1998. DW1 was obviously telling the truth when he said that the Defendant had only learned for the first time in June 1999 that the first blanket was not functioning properly.

38.The problem about the quality of the third blanket was not mentioned in the first letter of the Plaintiff to the Defendant dated 9 August 2000. PW1 explained that it was because he had not been informed about it when he wrote that letter. This is inconsistent with the evidence of PW2 who said that he had informed PW1 about the problems of all the blankets immediately after they had arisen. In fact the complaint was also not mentioned in the second letter of the Plaintiff which was dated 6 September 2000. The Plaintiff had only informed the Defendant about the problem of the third blanket in the letter dated 29 September 2000 which was the third letter. This tends to support the evidence of the Defendant that the Plaintiff had told them that the third blanket was working well during their visit to the factory of the Plaintiff in August 2000.

39.The Plaintiff said that DW1 had told them to tighten up the blankets when they referred the problems to him. This is illogical. The Defendant was not the manufacturer of the blankets. There was no reason for him to tell the Plaintiff to do this. He could have referred the complaint of the Plaintiff to the manufacturer of the blankets to let them deal with it. Moreover, he had been in the trade for a considerable of time and he knew very well that printing blankets could not be tightened up excessively. DW1 obviously took a serious view about this because he had faxed a document to the Plaintiff to show that the length tolerance of the second blanket was 100 mm. It is illogical that he would have run the risk of being held responsible for damages caused to the blankets when the Plaintiff followed his advice to tighten them up.

40.Even PW1 and PW2 themselves said in court that they knew that printing blankets could not be stretched too much otherwise they would become useless. Surprisingly, they still had tightened up the blankets every time they became slackened or elongated. They explained that as that was what DW1 had advised them to do they had no alternative but to do it. It is hard to believe that such an explanation would have come from PW1 and PW2 who had been in the trade for such a long time. Obviously, DW1 was telling the truth when he said that he had never given the Plaintiff such an advice. The Plaintiff on the other hand had all the motives to tighten up the blankets because it would otherwise be unable to continue with the production.

41.The Plaintiff gave evidence that its printing machine were well-maintained and would not have affected the operation of the printing blankets. However, DW1 gave evidence to the contrary. As pointed out above, when he visited the factory of the Plaintiff he saw that there were rust in the bearings of the model 6000 machine and there were scratches in the rollers. Some of the rollers had worn out due to prolonged use and had resulted in an uneven levelling of the printing surface. The purpose of PW1's visit to the factory was to find out why the second blanket was not working properly. Naturally he would have paid particular attention to the conditions of the printing machine concerned. His evidence is clear and unequivocal and rings true.

42.PW4 said that he had acted as a consultant to the Plaintiff in the maintenance of its printing machine while PW3 said that he had provided services to the Plaintiff in the assembling of printing machine and the installation of printing blankets. They said that the printing machine of the Plaintiff were in good working conditions. However, there was nothing in their evidence as to what kind of maintenance work they had done for the printing machine and how they had ensured that the printing machine were in good working condition.

43.The Plaintiff have submitted that they would not have became a miser in the maintenance of their printing machine when they were generous in spending money to retain the service of DW4. While it is simple and inexpensive to do repairs to parts like bearings of the printing machine, it is, as DW1 had pointed out, a complete different story when it comes to the repair of rollers. It will mean that the rollers have to be removed from the machine and put through the expensive process of polishing. A further and, in fact, very important consideration of the Plaintiff is that such repair will mean a suspension of production of that machine for a length of time. Obviously the Plaintiff could not afford and would not want this to happen. They would have inclined not to carry out such repairs until and unless it could not be put back any further. After considering all the relevant evidence the court is of the view that PW1 was telling the truth when he testified about the poor state of repair of the printing machine.

Issues

44.The main issues in the case are whether there was an implied term, be it a condition or warranty, in the contracts of sale of the three printing blankets that they were reasonably fit for the purpose of high accuracy printing of fabrics and, if there was such an implied term, whether the Defendant had breached it in the sale of the blankets to the Plaintiff.

Judgment

45.There were not much disputes between the two parties in relation to the first issue. This is a case of sale of goods. It is of no doubt that there must be an implied term in the contract of sale of the three blankets that they were reasonably fit for the purpose for which they were purchased. The Plaintiff said that they had made known to the Defendant that their purpose of buying the blankets was for "high accuracy printing of fabrics". The Defendant, however, said that there was no high accuracy in fabrics printing which allowed a deviation of different colours to be less than 0.01 mm. The Defendant said that the term was only used in paper and offset printing. The Defendant nevertheless agreed that accuracy in the printing of fabrics was important. DW1 said that the term used should be "good registration" in the printing of the different colours. The Plaintiff explained that by "high accuracy" it meant a deviation of less than 0.3 mm. This was never challenged by the Defendant. It can be seen that it was in fact only a difference in use of terminology by the parties. The extent of accuracy required of in fabrics printing was the same for both the Plaintiff and the Defendant.

46.In order to succeed in its action the Plaintiff must prove on the balance of probability that the inaccuracy in the printing of the fabrics was due to the poor quality of the printing blankets. There is no dispute between the parties that the first blanket did encounter problems in achieving accurate printing of the fabrics. I have found as fact that the Plaintiff had only informed the Defendant for the first time in June 1999 that the blanket was not working properly. This was more than a year after the blanket was delivered. There is evidence showing that the Plaintiff had not handled the printing blanket in a proper manner. The Plaintiff admitted that they had tightened up the blanket for a number of times although they knew that excessive stretching could damage the blanket. DW1 gave an explanation in court that the lack of maintenance of the model 6000 machine would have produced inaccurate printing of fabrics. Obviously, it was the improper handling of the printing blanket by the Plaintiff and the poor state of repair of the printing machine that had caused the inaccuracy in the printing of the fabrics.

47.It is common ground of the two parties that after the Plaintiff had informed the Defendant about the problem of the first blanket the Defendant sold another blanket to the Plaintiff at half of the price of the blanket. Does this amount to acceptance by the defendant that the first blanket was of a quality that was not reasonably fit for its purpose? I find the explanation of the Defendant to be believable in this aspect. DW1 and DW2 said that they had done this in order not to upset and lose a customer. This was indeed something natural for a prudent businessman to do. The court does not accept that the arrangement was a compensation or a conditional compromise between the two parties in regard to the problem of the first blanket or an admission on the part of the Defendant that the blanket was not reasonably fit for its purpose.

48.The Defendant seemed to have accepted that the second blanket had problems in producing accurate printing of fabrics. When they visited the factory of the Plaintiff they found that the blanket had been excessively stretched. The staff of the Plaintiff had admitted that they had tightened up the blankets for a number of times. It was also during this visit that the Defendant discovered the poor maintenance of the model 6000 machine. The problem of the second blanket was obviously caused by the improper handling of the blanket by the Plaintiff and the poor state of repair of the model 6000 machine and was not due to the poor quality of the blanket.

49.There was a guarantee in the contract of sale of the second blanket that a thickness of 2.6 mm was suitable for use on the model 6000 machine. The guarantee was stated to be given by Rollin S.A., the manufacturer of the blanket. The Plaintiff maintained that it was given by the Defendant. The Defendant, however, said that they had made it clear to the Plaintiff that the guarantee was given by the manufacturer. What the Plaintiff said is inconsistent with the written contract. PW1 explained that he did not know English while PW2 said that he had not read the contract, as he was responsible for the production and technical control in the factory. Both PW1 and PW2 had been in the trade for a long time. It is inconceivable that PW1 would have signed a contract without knowing the contents of it and PW2 would have allowed this to happen. I am of the view that what the Defendant said rings true. But in any event, as the court has found that the problem of the second blanket had not been caused by its poor quality, the guarantee in the contract, no matter by whom it was given, had not been breached.

50.According to the evidence of the Defendant, PW2 had said that the third blanket was working properly during the visit of DW1 and DW2 to the factory of the Plaintiff. There was no dispute that the visit took place in August 2000. I have found as fact that what the Defendant said is true. It must follow that the blanket was working properly at that time. I do not accept the evidence of the Plaintiff in respect of this blanket. I am of the view that the Plaintiff has failed to prove on a balance of probability that there was a failure of the blanket to produce accurate printing of the fabrics, let alone whether such a failure was due to the poor quality of the blanket.

51.The thickness of the third blanket as stated in the contract of sale was 2.4 mm +/- 0.1 mm. When the blanket was delivered PW1 discovered from the shipping document that its thickness was 2.3 mm+/-0.1 mm. They informed DW1 about it immediately. According to the original specifications in the contract, the blanket would still be in conformation with the terms of the contract if its thickness was 2.3 mm. Judging from the shipping document the blanket delivered could still be of 2.3 mm in thickness. If the Plaintiff was to say that the blanket supplied was in breach of the thickness specified in the contract of sale, the burden of proof is on them. There is, however, no evidence at all that there was such a breach. More importantly, the Plaintiff had not rejected the blanket but had accepted it by installing it on its printing machine and putting it to operation despite discovering the discrepancy in the shipping document. The Plaintiff cannot, of course, make a complaint now.

52.During the course of trial both parties had produced some documents which were hearsay in nature. While the court had admitted them in evidence the court has placed very little weight, if any, on them.

53.As I have found as fact that the inaccuracy in the printing of fabrics of the first and second printing blankets has not been caused by the poor quality of the two blankets and that the Plaintiff has not discharged the burden of proof that it had been so caused in respect of the third blanket, the claims of the Plaintiff must fail. The claims of the Plaintiff are accordingly dismissed.

54.There will be an order nisi of costs in favour of the Defendant in this action, such costs to be taxed if not agreed. Unless any party applies to vary this order nisi within 14days from the date of this judgment, the same will become absolute on the expiry thereof.

Representation:

Mr Norman Yeung of Messrs T L Yip & Co for Plaintiff

Mr Lee Man Kin of Messrs Joseph Mok & co for Defendant