J.A. Moeller Gmbh v. Kim Watt-tall Trading Co Ltd and Others

HCCL000087/1989

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

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BETWEEN

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Coram: Hon. Liu, J. in Court

Date of hearing: 19 June 1990

Date of delivery of judgment: 19 June 1990

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RULING

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1. Before commencement of the hearing, an application is made on behalf of the Third Party for what, in effect, will be an adjournment of the entire proceedings. Mr Chain, counsel for the Third Party, makes a statement to the court that he would feel embarrassed without inspection in Hong Kong or in Hamburg of the goods in question. Hence the Third Party requires an adjournment for the goods to be so inspected. Counsel submits that the goods had not been inspected in time for the trial because of delay or inaction on the part of the plaintiff and/or the defendant.

2. Miss Kwan for the defendant is prudent enough to invite the Court not to entertain the proceedings between the plaintiff and the defendant separately, in isolation if only for the fact that the defendant is entitled to peruse the report and, if necessary, take advantage of the result of inspection at the instance of the Third Party.

3. Mr Barretto, counsel for the plaintiff, resists the application of Mr Chain and the possible application to follow of Miss Kwan. The Court has been led through a hugh volume of correspondence between the plaintiff, defendant and the Third Party. It would appear that the Third Party have been consistent in their demand for a separate inspection of their own.

4. The goods in question were rejected by the plaintiff. What falls to be decided is whether the rejection was lawful or unlawful. It seems to be common ground that property of the goods has throughout remained with the defendant. The defendant. had intended to have the goods reshipped back to Hong Kong for resale. The Third Party preferred to have the goods reshipped back to Hong Kong for their own inspection. So the purposes of the defendant and the Third Party converge.

5. The Third Party's request for the reshipment of goods back to Hong Kong was therefore supported by the defendant. Assistance had, at least at the inception, been also rendered by the plaintiff. One personality appeared to be the cause of all our present problems, that is the Cosric Shipping Agency, a shipper recommended by the plaintiff to the defendant.

6. At the very early stage, satisfactory arrangments seemed to have been made for reshipment of the goods back to Hong Kong. Particulars were requested by Cosric Shipping Agency and were accordingly furnished by the defendant.

7. Matters came to a halt on the 1st May. Solicitors for the defendant notified solicitors for the Third Party that it was unlikely that the goods could be repatriated to Hong Kong for inspection before trial. It was suggested to solicitors for the Third Party that perhaps it was desirable to consider a Hamburg inspection in Germany. In a further letter of the same date, solicitors for the defendant set out the past communications with a view to explaining to solicitors for the Third Party the efforts and endeavours that they had made for arranging reshipment of. goods back to Hong Kong. It was asserted by solicitors for the defendant that despite all their efforts, no positive response came from the shipping agency.

8. On 11th  May, solicitors for the defendant wrote to the plaintiff's solicitors complaining, inter alia, that even after particulars had been requested and supplied to the shipping agent, their clients, the defendant, had still not been able to obtain the return of the goods. On that note, disappointment was expressed by solicitors for the defendant in this May 11 letter to the plaintiff's solicitors. To that communication, the plaintiff's solicitors retorted in these terms . "It is a matter for you, or your clients, to contact the freight forwarder in Hamburg". Cosric's failure to reship goods back to Hong Kong has been left unexplained.

9. The defendant would seem to have taken all reasonable steps assisting the Third Party in reshipment. On the surface, the plaintiff does not seem to be blameworthy, but nevertheless, the defendant seemed to have ample justification in airing their disappointment with the shipper in Germany, recommended by the plaintiff.

10. The Third Party was apparently inactive until the 18th May when they also aired their grievances, and on 25th May, the present summons for an adjournment was filed.

11. Counsel for the Third Party concedes at the commencement of his submissions in support of the Third Party's application for an adjournment that there was a period of delay from the 1st to the 18th May on the part of the Third Party. But counsel implores this court to take a global view of the situation. It is suggested firstly that the attitude of the Third Party as to inspection of the goods in question has been consistent.  It is pressed upon this Court that the plaintiff and/or the defendant have themselves been dilatory in arranging for the reshipment of goods to Hong Kong.

12. In the light of the communications, the neglect on the part of the shipping agent could likely have been encouraged by one or the others of the parties to these proceedings. It is argued that compared to the protracted dilatory arrangement made by the plaintiff and the defendant, the Third Party's delay from the 1st to the 18th May was minimal. It is further suggested on behalf of the Third Party that for the Shenzhen San Ho Ltd., not being a Hong Kong corporation, instructions taken from and communication with that Shenzhen company could be expected to take a little time. Hence, the Third Party's application, despite the brief gap between the 1st and 18th May, should be favourably received.

13. It is quite correct that both the plaintiff and the defendant seemed to be somewhat dilatory in arranging for the goods to be reshipped. But the Third Party had ample notice on the 1st May. There was all the more reason, in the light of the alleged previous delay on the part of the plaintiff and the defendant, for the Third Party to take immediate steps to protect their interest for securing an inspection in Hamburg, Germany soon after the 1st May, so as to obtain the necessary information for the present trial. Delay or dilatory conduct on the part of each party to these proceedings would give rise to deserving consequences. It would seem illogical to link the alleged dilatory conduct on the part of plaintiff and/or the defendant to any excuse for the Third Party's own delay from the 1st to 18th May.

14. From the concession of Mr Chain that the Third Party had themselves caused some delay from the 1st to the 18th May, it would seem to be a fair implication that an inspection in Germany could have been conducted in time for the instant trial. Mr Chain contends that there is no evidence suggesting that the same could have been done. In my view, the ball, as it were, is in the court of Mr Chain or the Third Party. It would be encumbent upon the Third Party to adduce evidence to demonstrate that the situation could not have been salvaged as from the 1st May, in the sense that no German inspection could have been conducted after the 1st May in time for the trial. Despite the plea advanced for the Third Party by Mr Chain as to the inherent difficulty in the Third Party's dealings with the Shenzhen San Ho Ltd, in order to have this adjournment application properly supported, I take the view that the Third Party must establish by affidavit what they claim to be predicament or difficulty causing the further delay from the 1st to the 18th May.

15. In the result, whatever was the dilatory conduct on the part of the plaintiff and/or the 2nd defendant, it could not possibly, in my judgment, absolve the Third Party from their own delay after the 1st May. The unavailability of the result of their own inspection is brought about, in the circumstances, wholly by the Third Party themselves.

16. I would have no hesitation, without calling upon Miss Kwan for the defendant and Mr Barretto for the plaintiff, to refuse the application of Mr Chain. However, the failure of the shippers is inexplicable and suspect. The Third Party has throughout been desirous of having an inspection independently conducted under their supervision, preferably in the presence of the Shenzhen San Ho Ltd. Mr Chain has also made a strong plea for the Third Party for an opportunity to have the goods inspected by themselves.

17. I suggested before the Court rose a payment into court to appease, if not to satisfy the plaintiff of the Third Party's sincerity. I have attributed the whole blame to the Third Party who should be responsible for costs of today if an adjournment be granted. Having taken instructions, Mr Chain now accedes to the suggestion of the court. The Third Party is prepared to make a payment-in. The court is invited to take into consideration the value of the goods, now in the possession of the defendant. If an adjournment be granted, Mr Chain would seek directions as to inspection.

18. With new proposals coming from the Third Party, I have to apply my mind afresh to the new situation as I find it. I would now entertain submissions from Miss Kwan and Mr Barretto on an adjournment on those terms offered by Mr Chain on behalf of the Third Party.

(Submissions made)

19. With the offer from Mr Chain, counsel for the Third Party, it would appear, balancing the pros and cons, this case would simply have to be adjourned to enable full justice to be done to all.

20. Mr Barretto intimates that if an adjournment be granted he would not resist an order for payment-in of the full invoice value. Counsel suggests that as the plaintiff is not a party to the Third Party proceedings, the defendant ought to make a like payment-in to provide similar security for the plaintiff. Upon probabilities, on the matters disclosed before me today, it would appear that in reality, the plaintiff would have full, if not partial security of the amount ordered to be paid in by the Third Party to abid by orders made in this action in accordance with the determinations made. The defendant have not specifically asked for an adjournment independently of the application made on behalf of the Third Party.

21. In all the circumstances, I cannot accede to the request of Mr Barretto seeking a similar security from the defendant. The matter would therefore stand adjourned with new dates to be fixed, estimated time to be soon supplied by legal advisers for the parties before this court.

22. Mr Barretto would not resist an order for payment-in of the full invoice value. Miss Kwan is slightly more generous, and she would be content with three quarters of the full invoice value. Mr Chain suggests a fair quantum should not exceed 50%.

23. It is difficult to arrive at an amount appropriate in the circumstances and fair to all the parties to these proceedings. Doing the best I could, I would suggest a sum of US$70,000 to be paid in by the Third Party to abide by the order of the court to be made in accordance with its various determinations. The Third Party is to pay costs for the plaintiff and the defendant of today and I propose to adjourn for about ten minutes for proper directions to be drafted by Mr Chain in consultation with counsel for the plaintiff and the defendant. I would order that the defendant is to have all the necessary original documents from the plaintiffs with an undertaking from the plaintiff to give orders or instructions necessary or expedient for the reshipment of goods back to Hong Kong from Hamburg. I would also order that the delivery of goods upon arrival, warehousing, etc is not to betaken or arranged by the defendant without prior notice to the plaintiff and the Third Party and that no access to or inspection of the same be had without prior notice in writing by one of the parties to these proceedings to the others. With this indication, hopefully counsel could, in consultation, have the directions for inspection in reshipment drafted before the end of the day.

Representation:

Mr. Ray Barretto and Mr. Meyrick Wong instructed by M/s. Hampton, Winter & Glynn for the Plaintiff

Ms. Susan Kwan instructed by M/s. Wilkinson & Grist for the Defendant

Mr. Benjamin Chain instructed by M/s. Sit, Fung, Kwong & Shum for the 3rd Party