The Marconi International Marine Co Ltd v. Kam Kee Navigation Co Ltd

HCA002058/1973

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

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Coram: Mr. Registrar Silke in Chambers.

Date of Judgment: 18th October, 1973.

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DECISION

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1. This is an assessment of damages upon interlocutory judgment in default of appearance entered on the 15th August 1973.

2. The plaintiff was represented by Mr. Brown of Wilkinson and Grist and the defendant company was absent, though Notice of the Assessment had been served.

3. The plaintiff was the owner of certain equipment in a ship - the "Shun Wing" owned by the defendant company - which was broken up having been sold by the defendant company with the equipment still aboard and without notification to the plaintiffs.

4. There is in existence an agreement made on the 17th December 1959 between the two parties and it is on the basis of this agreement that the plaintiffs claim their damages and assess what the quantum of these damages should be.

5. The difficulty the plaintiffs are in, and this was frankly admitted by Mr. Brown, is that first: there is no evidence before me as to the actual cost of the equipment in the ship at the time of its breaking up nor second: when it was installed in the first instance. I have but rental charges.

6. The system under which Marconi work is that they enter into an original agreement with the shipowner and install telegraphic equipment: it then charges rent for this equipment and maintains it and it remains the property of the company. The company expects to start to make a profit after five years, the equipment then being discounted to zero as regards the original price. The longer the ship continues to sail with the equipment the greater the profit to the company.

7. The system is complicated however by the equipment being updated from time to time - here the new schedule of Radio and Allied Apparatus was dated 23rd September 1968 and related to (1) Reliance Emergency transmitter; (2) alert receiver; (3) A.D.K. (4) seagraph Echometer and (5) Saloita Lifeboard set at a total rental of £332.00 per annum.

8. Clause 6 of the agreement creates a liability on the shipowner in certain specified cases: "(1) failure of the Shipowner to comply with his obligation under Clause 4; (2) pilferage not attributable to the act or neglect of the Company or its servants or agents; or (3) the wilful act, default or neglect of the Shipowner his servants or agents or of the passengers in the vessel;" but purports to limit the liability to a sum not exceeding five times the rental payable. The plaintiff invokes (3) above.

9. Clause 7 of the agreement requires first the payment of rental and then goes on in its third paragraph "In the event of any payment under this clause being in arrear and remaining unpaid after two months notice in writing thereof shall have been given by the Company to the Shipowner the Company shall be entitled to enter upon the vessel or any place where the apparatus may be and to seize and take away the same and in the case of such seizure this Agreement shall stand determined in respect of such apparatus at the date of such seizure and the Shipowner shall be liable for and shall pay the reasonable cost of dismantling the apparatus and if the ship is at a port outside the United Kingdom of packing transporting and insuring the apparatus to a port in the United Kingdom and shall also pay by way of liquidated damages for breach of contract a sum equal to one half of the total rental for the unexpired period of this Agreement."

10. It is conceded that no notice was in fact given as the company only became aware of the exit of the ship sometime after it happened.

11. Clause 12 of the agreement reads:

"12. In the event of the Shipowner negotiating for the sale of the vessel he shall inform the intending purchaser that the apparatus is the property of the Company and notify the Company of the intended transfer. Thereupon the Company at their sole discretion may negotiate with the intending purchaser for the acceptance by him of the rights and obligations of the Shipowner under this Agreement in respect of the vessel and in the event of the intending purchaser agreeing to accept those rights and obligations this Agreement shall terminate in respect of the apparatus in that vessel. If the Company do not negotiate or the intending purchaser does not agree to accept the rights and obligations as aforesaid the Shipowner shall cither (1) before parting with his interest as aforesaid exercise the option of purchase contained in Clause 13 hereof or (2) at his own cost transfer the apparatus to another vessel of his fleet for the unexpired balance of the term in which event the apparatus so transferred to such other vessel shall remain subject in all respects to the terms and conditions of this Agreement or (3) determine the Agreement in respect of the apparatus and pay to the Company as compensation a sum equivalent to one half of the total rental that would otherwise be payable during the outstanding period of the Agreement and dismantle and return the apparatus to the Company at a port in the United Kingdom at his own cost and risk and without further liability on the part of the Shipowner".

12. None of the eventualties allowed for in this clause in fact occurred. I am not aware of any information to the intending purchaser, the option to purchase was not exercised, the apparatus was not transferred, the agreement was not expressly determined - though it could be said that it was impliedly so.

13. By clause 3 the agreement permits the termination of the agreement by six months notice on either side.

14. What I am being asked to do is to assess the damages - apart from the charges incurred to which I shall refer later - at five times the rent of £332.00 under clause 6, at one half of the rent for 6 months under clause 7 and one half of the rent for 6 months under clause 12, a total of five and one half years rent.

15. In the light of the diminishing value of the apparatus and the paucity of evidence as to its actual value I think the above to be more in the nature of a penalty than compensation for breach of contract.

16. What therefore should be the quantum? Given that the agreement was terminable at six months' notice that it had run from 1959 with a new schedule from 1968 and that it "determined" on the 23rd September 1972 I would think one year's rental to be reasonable as to quantum. That is £332.00 at the rate of exchange of $12.80 - as in the Statement of Claim - or HK$4,249.60. The apparatus had a hire life of under one year and six months' notice is required and I also bear in mind the continuing profit to the company from the use of the apparatus.

17. Coming now to the matter in respect of hire and telegraphic charges. I accept that these have been proved and are due. I would allow this sum as claimed at £638.72 or HK$8,175.62 at the rate of $12.80 to £1.

18. I would therefore assess the total damages at $12,425.22 with costs of the action and the assessment to be taxed.

19. There will be interest at the rate of 8% per annum from today to the date of payment.

20. Dated this the 18th day of October, 1973.

Representation: