Famous Mark Industrial Ltd v. Ka Lam Trading Co (A Firm)

HCA006424/1987

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Liu J. in Chambers

Dates of hearing: 20 April 1988

Date of delivery of judgment: 20 April 1988

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JUDGMENT

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1. I need not trouble Mr Yu any further.

2. Counsel have been cooperative, in the sense that the main points to be canvassed by the plaintiff in support of the order made by learner Master were disclosed in advance, and they may be summarised as follows:

3. To those five main points so enumerated by Counsel for the plaintiff, Counsel for the defendant responded in a clear-cut but brief submission.

4. The facts are certainly far from being complicated. An alleged home-made Chinese contract dated the 4th September 1987 was signed for the supply of 200,000 yards cotton sheeting, at $4.50/yard to be delivered on or before the 15th September 1987 together with an import licence. The quality and dimensions of the fabrics were described as 68x68/30x30 or 68x68/33x33. I shall call them fabrics A and fabrics B respectively. When time came for delivery the plaintiff was said to have been let down by the defendant. Thereupon in the open market some 204, 890 yards were acquired but without some of the qualities in the cotton sheeting as ordered under the alleged contract of the 4th September. They were not semi-bleached, nor kink-free nor pre-shrunk. Additional processes had to be done, thus causing further damage and loss to the plaintiff. The plaintiff claims against the defendant over $355,000 together with interest and costs.

5. The defence is equally straight-forward. First, according to the defendant, the alleged contract of the 4th September 1987 was a mere draft tantamount to no more than a letter of intent. Secondly, the defendant asserts that it was under no contractual obligation to deliver the fabrics without a pre-determination, if the document be properly construed, by the plaintiff on the type of fabrics for delivery. In addition, it is contended on behalf of the defendant that it was an express term of the contract or otherwise a collateral agreement between the same parties that the plaintiff must notify the defendant as to whether fabrics A or fabrics B was required. Mr Yu informs me that the defendant is taking no point on the best evidence rule.

6. Turning back to the five main headings of the plaintiff: first, the purchases by the plaintiff in the middle of September and early October of substitute fabrics would reflect no more than the plaintiff's own understanding and conviction that the defendant was contractually bound to deliver either fabrics A or fabrics B without further ado. The defendant claims that on the 16 September as well as the 25th September 1987, over the telephone Mr Lam pressed Mr. Tang of the plaintiff to decide on the type of fabrics and that Mr Lam allegedly also protested to Mr Tang as to the letters, including the letter of demand written by or on behalf of the plaintiff. The conduct of the plaintiff in the purchase of substitute fabrics tells against those telephone conversations but it does not, in any way, affect the question of proper construction of that provision in the contract with reference to the alleged notified selection of fabrics for delivery. It would have some bearing on the disputed document but it could hardly have resolved matter in favour of the plaintiff.

7. Secondly, the defendant's case is that it was a provisional draft no more than a letter of intent, subject to formal contract in English. Examination of the 5 contracts exhibited reveals that those documents do not support the plaintiff but rather corroborate the version of the defendant's. The defendant maintains that there was a similar Chinese document dated the 7th April 1987 providing also for two alternatives but that the plaintiff's failure to select the type of fabrics for delivery on that occasion was also the cause for that particular document not being proceeded with and followed by a formal contract in English. Counsel for the plaintiff agrees that the document of the 7th April was in fact not implemented, but counsel state's that he has no instructions as to why the document of the 7th April did not contractually materialize. So far as these documents are concerned, they seem to better corroborate the defendant's version that the rough Chinese draft was to be validated by a binding formal English contract.

8. Thirdly, Mr Lam Hoi has corrected himself in more ways than one, but that has no bearing on the question of pure construction though his creditability at the trial would affect the question of the alleged collateral agreement for the plaintiff to notify the defendant as to the type of fabrics and the defendant's general case that the document in question dated the 4th September 1987 was no more than a draft.

9. Fourthly, The Guangzhou Textiles Catelogue puts fabrics A and fabric B in ajacent slots. Even assuming the two types of fabrics sell for the same price and have the same visual appearance and similarity in quality, that would not conclusively decide as to whether or what the defendant was contractually bound to deliver.

10. Lastly, the document dated the 4th September 1987 is evidently a home-made Chinese document. There is some force in Mr Leong's submission that the disjunctive provision in a contract would not per se release a party thereto from its observance performance. However, construction is a matter that deserves careful consideration, particularly when the document is a home-made one. More care than brief submissions on an 0.14 applcation has decidedly to be exercised, particularly when another home-made document signed in similar circumstances was said to have been discarded.

11. Properly analysed, there can be no justification for granting leave to the plaintiff to sign judgment against the defendant. Nor is there any warrant for conditional leave to be granted as suggested by Counsel for the plaintiff in a case involving proper construction of a home-made document. For all these reasons, I am virtually driven to set aside the judgment, grant unconditional leave to the defendant and order pleadings, if I am so invited to do. Subject to what Counsel have to say, costs before the learned Master should be costs in the cause, and costs of this appeal should be costs for the defendant against the plaintiff.

Representation:

Mr Denis Yu instructed by Messrs Peter Mo & Co. for the Appellant/Defendant.

Mr Allan Leong instructed by Messrs Kenneth C.C. Man & Co. for the Respondent/Plaintiff