Lam Suet Mui v. Wigsfield & Co Ltd
Read the full judgment text of DCCJ 1924/1974 on BabelCite. This District Court judgment was delivered on 22 April 1975.
1. The plaintiff was on the relevant dates in 1972 the sole proprietress of the Worldwide Umbrella Factory, a firm engaged in the manufacture of Ladies' Vinyl Umbrellas whilst the defendant company was an Exporter of such products to the United States of America. At that time, the defendant company had as buyers for such goods a company known as Suzanne International Inc. of 6130 Foxwood Lane, Indianapolis, Indiana, U.S.A., of which company, Mr. Samuel Henry Bundles, Jr. is the proprietor.
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DCCJ001924/1974 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION ACTION NO. 1924 OF 1974 -----------------
----------------- Coram: Garcia, D.J. in Court. Date of Judgment: 22 April 1975 ----------------- JUDGMENT ----------------- 1. The plaintiff was on the relevant dates in 1972 the sole proprietress of the Worldwide Umbrella Factory, a firm engaged in the manufacture of Ladies' Vinyl Umbrellas whilst the defendant company was an Exporter of such products to the United States of America. At that time, the defendant company had as buyers for such goods a company known as Suzanne International Inc. of 6130 Foxwood Lane, Indianapolis, Indiana, U.S.A., of which company, Mr. Samuel Henry Bundles, Jr. is the proprietor. 2. Two contracts for the supply of such umbrellas were entered into between the plaintiff and the defendant company on the 14th day of February 1972, and 23rd day of February 1972, as follows:
3. Some of the goods under the said contracts were for shipment to the said Suzanne International Inc., and in accordance with the terms of the two contracts, the umbrellas were duly manufactured and packed for shipment f.o.b. to the latter company. With regard to contract no. LY 1082 particulars of the goods are as follows:
In fact the goods mentioned in these two invoices were forwarded in the same ship, the s.s. San Juan, the freight charges on the first invoice being US$617.87 and on the second US$610.03. 4. In respect of contract no. LY 1084 the particulars of the goods shipped are as follows:
Sailing date: 20th April 1972 by s.s. Pacsun. The freight charges were US$748.20. 5. Following the shipment of the goods, the plaintiff was paid the following sums:
6. The balance of $18,500 remains unpaid and the plaintiff claims this sum against the defendant company. 7. There is no dispute by the defendant company that they have not paid the balance of $18,500 to the plaintiff in respect of goods supplied under contract No. LY 1082 but because they allege that the plaintiff has supplied them with defective goods, they claim a set off of US$3,700 or $18,500, at the exchange rate of US$1=HK$5, and in addition, counterclaim the sum of H$8,382.94 against the plaintiff. 8. Towards the latter part of 1971 and the early months of 1972, there was apparently a big demand for Ladies' Vinyl umbrellas in the United States and the defendant company shipped a large quantity of these goods to the said Suzanne International Inc. These goods were supplied to the defendant company by 5 different manufacturers, among them the plaintiff's firm, through the medium of Mr. Lam Hung Biu, the manager of the defendant company's Sundries Department. He is also the husband of the plaintiff. Among his duties in the company was the placing of orders for the supply of the said umbrellas and procuring the necessary contracts to be signed in connection therewith. Mr. Michael Lung, a Director of the defendant company, alleges that Mr. Lam was able, by reason of his employment, to secure the 2 abovementioned contracts for his wife's firm, although at the time when these contracts were signed by the parties, the real relationship between Mr. Lam and his wife was not known to him. This allegation is not without foundation as it appears that the plaintiff, who had previously been employed as a clerk, and had no experience whatsoever in operating an umbrella factory, established such a factory by herself in order to take full advantage of the demand for such goods after entering into the said contracts with the defendant company. 9. Besides the duties mentioned earlier, Mr. Lam was also responsible for seeing that the goods manufactured for export by the defendant company complied with the specifications set out in the various contracts, and in this task he was assisted by Mr. Lung Din Wah, the younger brother of Mr. Michael Lung. It was Mr. Lung Din Wah's duty to go to the plaintiff's factory, sometimes by himself and sometimes in the company of Mr. Lam, to examine the manufactured products before delivery on board ship and to make any necessary report on their condition to Mr. Lam The duty of inspecting goods was also performed by Mr. Lam himself on behalf of the defendant company. Some ten days before the delivery of goods under contract no. LY 1084 was made, Mr. Lung Din Wah inspected the plaintiff's goods and it is his evidence that he was so appalled by the poor quality of the umbrellas produced in the plaintiff's factory that he decided to report directly to his brother. Mr. Michael Lung says that on receiving that report, he informed Mr. Lam that delivery of such goods to the ship should not proceed but Mr. Lam assured him that he would "fix up the matter." Despite his orders, Mr. Michael Lung says that the plaintiff delivered the goods on board ship which were eventually forwarded to Suzanne International Inc. Mr. Lam's version of this episode is that he had received a long distance telephone call from Mr. Elmer Wong, one of the directors of the defendant company who was then in the United States, saying that no further umbrellas should be shipped to the United States as Suzanne International Inc. were overstocked with such goods. He says that he communicated this information to Mr. Lung the same day but the advice was received a little too late as the goods had already been delivered on board ship and there was no way in which they could then be taken off the ship. There was no reason why Mr. Wong should have called Mr. Lam, instead of telephoning Mr. Lung, his fellow Director, if such a telephone call was made and Mr. Lam has no explanation as to why he was so contacted. One would have thought that in a matter as important as this, Mr. Wong would have communicated with his fellow Director. Mr. Lam struck me as being neither an honest nor a reliable witness and in my view, Mr. Lung's account is the true one. 10. There is also implicit in Mr. Michael Lung's evidence, an allegation that Mr. Lam did not do his job properly by reason of his relationship with the plaintiff, as far as the plaintiff's goods were concerned, thereby resulting in defective goods being shipped to Suzanne International Inc. This allegation is, in my view, well- founded. 11. Sometime in April 1972, Mr. Michael Lung received a long distance telephone call from Mr. Bundles complaining about defective goods in the various shipments, among them goods under Invoices Nos. 1072 and 1073 and that damages for breach of contract would be claimed against the defendant company, although the extent of their claim was not then specified. This information was conveyed to Mr. Lam, as he was the intermediary for the plaintiff as far as payment was concerned. The result of this was that the plaintiff was only paid one-half of the total contract price of $74,000 under LY 1082, on 2nd May 1972, followed by two other payments of $10,000 and $8,500 respectively on 15th and 18th May 1972. Mr. Lung says that the 2 latter payments were made as a result of a plea by Mr. Lam that the plaintiff's firm would close down if no further payments were made. 12. Subsequently, negotiations were entered into between Mr. Elmer Wong and Mr. Bundles and Mr. Childrey of Suzanne International Inc. regarding the defective goods, as a result of which credit terms were extended and by way of settlement of their claim, an overall reduction of US$2.00 per dozen on the price of a number of umbrellas shipped to Suzanne International Inc. by the defendant company, was made. However, on 13th July 1972, the following telex message was received by the defendant company from Mr. Bundles:
Mr. Bundles has attempted to explain this further reduction of the price from US$5.00 per dozen umbrellas to US$4.04 per dozen by putting forward percentages of returns, etc. from Suzanne International Inc.'s customers in the United States but his explanations are not acceptable since not all of the umbrellas were invoiced at the same price of US$7.00 per dozen, some having been invoiced at US$6.85 per dozen. He himself is unable to explain how the advance of US$20,000 to the defendant company affected the price reduction to US$4.04 per dozen for the invoices listed in the abovementioned telex message. This further reduction in price was accepted by the defendant company in full settlement of the claims made by Suzanne International Inc., and it is surprising how the letter dated 16th July 1973, came to be written. It is upon this letter that the defendant company now bases its set-off and counterclaim. That defective goods had been shipped to Suzanne International Inc. there is no doubt and this information should have been conveyed to the plaintiff by Mr. Lam Hung Biu in April 1972. Moreover, the plaintiff's solicitors were informed on 17th October 1972 that there were claims pending from Suzanne International Inc. I therefore accept the evidence of the defendant company that of the various shipments to Suzanne International Inc. of goods manufactured by the plaintiff, the following numbers of defective umbrellas were found:
13. Paragraph 9 of the defendant company's statement of Defence and Counterclaim in respect of the said defective umbrellas reads as follows:
14. I have already referred to the fact that the claims of Suzanne International Inc. had already been satisfied by a reduction of the unit price of the umbrellas supplied by the defendant company and it has been submitted that any settlement which has been made between the defendant company and Suzanne International Inc. ought not to be taken into account in assessing damages to be awarded to the defendant company as a result of the said defective goods. In my view the amounts set out in the letter of 16th July 1973, aside from the first three items, which can be calculated from the various documents produced in evidence are only notional and the letter dated 16th July 1973 (1974? on page 2) was written merely for the purpose of the present proceedings since no documentary evidence has been adduced by the defendant company on the other items claimed under that paragraph, even though Mr. Bundles was in Hong Kong to give oral evidence. * I cannot imagine that Suzanne International Inc. could have suffered any loss of profit on the defective umbrellas since the settlement of their claims by a reduction of the price would have fully covered this contingency and in any event, no evidence has been given as to how these figures were arrived at. 15. There is moreover an error in calculating the f.o.b. cost of defective umbrellas in respect of Invoice No. LY-1091, since the f.o.b. cost here had been reduced from US$6.85 per dozen umbrellas to US$4.04 per dozen. The amount due under that item should therefore be US$693.51 and not US$823.66 as claimed. I would therefore give judgment for the defendant on the set-off in the amount of HK$16,639.95 (US$3,327.99 at the rate of HK$5 to US$1). It has been agreed that a sum of $1,480.00 is due by the plaintiff to the defendant company in respect of 2% commission on HK$74,000, and in addition a sum of HK$15 in respect of charges for certificates of origin. No evidence has been adduced at all in respect of items (2) (3) and (4) of para. 12 of the Defence and Counterclaim and it is not known what those amounts refer to since the evidence given by Mr. Bundles on behalf of the defendant company is that the defective umbrellas had been destroyed between November and December 1973. 16. There will therefore be judgment for the plaintiff on the claim in the net amount of $1,860.05 and judgment for the defendant on the counterclaim in the sum of $1,495. 17. There will be no order as to costs.
Representation: Messrs. Fairbairn Kwok & Wang, Solicitors for plaintiff. Messrs. Chan & Ho, Solicitors for defendant. * I would like to add that if the said letter had been written on the date shown thereon the summons to amend the Defence and Counterclaim to show the abovementioned figures would not have been delayed till 6/11/74 after this action had been set down for trial on 3 previous occasions prior to the latter date. |
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