Wong Wai Sun t/a Kin Fung Industrial Co v. Wyldar and Co (A Firm)

HCA000278/1982

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

Coram: Mr. Commissioner Wei, Q.C,

Date:  23rd July, 1983

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JUDGMENT

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1. This is a sale of goods case. The plaintiff bought a mould making machine from the defendant at the price of $250,000. He paid on the making `of the contract a deposit of $25,000. After delivery and installation on his premises, he found the machine unsatisfactory and rejected it.  He claims that he was entitled to reject the machine on the grounds, inter alia, that it was not reasonably fit for the purpose of malting moulds and that it was not of merchantable quality. He also claims the repayment of deposit in the sum of $25,000. The defendant denies these allegations and counterclaims the balance of the purchase price, namely, $225,000.

2. Before the contract was entered into, Mr. Cheung Chi Kit a representative of the defendant (DW1) visited the plaintiff at his factory two or three times. He showed a catalogue (Ex.D5) to the plaintiff and explained the specifications to him. Cheung asked the plaintiff for what purpose he was interested to buy the machine.  The plaintiff showed him some samples of toys and told him that he was thinking of using the machine to make products like the samples, i.e. toy animals. The plaintiff's line of business was in fact the making of plastic dolls and other toys. The catalogue claims that the machine is "best for making masters for plastic, die-cast metal, presses, rubber, glass .... and even the newer substances such as a graphite." The machine was also described as being able to give a "precise response".  In my view the defendant knew before the contract the purpose for which the plaintiff was buying the machine, i.e., precision engraving of master moulds.  The contract was signed on about the 3rd October 1981 and the machinery installed at the plaintiff's factory shortly afterwards. However, before he would pay the balance of the purchase price the plaintiff demanded a demonstration by the defendant of the performance of the machine, and for that purpose he supplied Cheung and a Mr. Lee Pui Tin, another representative of the defendant (DW2) with a plastic toy motorcar as a sample for a master mould to be engraved by the machine.   Cheung and Lee spent some little time in getting the cutter sharpened properly before they started the machine. It took them altogether about ten days to produce a mould Ex.D1 consisting only of the roof and the windows of the car. The plaintiff found this performance unacceptable, because it would only take him four to five hours to make a rough product like Ex.D1 on a manual mould engraving machine, although a manual machine cannot do one to one scale engraving.

3. By letter dated the 23rd November 1981, the plaintiff through his then solicitors wrote to the defendant rejecting the machine and demanding the return of the deposit within seven days. As a result the defendant arranged for an expert to come to Hong Kong from Japan to test the machine. He came and checked the machine and gave his opinion that there was nothing wrong with it. Cheung and Lee then gave another demonstration of the perform - of the machine; this time a plastic toy frog was used as a sample.  Cheung and Lee were in charge of the operation under the observation and guidance of the Japanese expert. Lee was with the machine all the time whilst Cheung would look in from time to time. It took them six to seven days working seven to eight hours a day to produce a mould Ex.D2. The plaintiff found that there were two deep cuts below the bow-tie and that all the edges were rough, particularly those round the head of the frog. He found Ex.D2 unacceptable and told Cheung and Lee so, stressing the defects. Cheung says in chief that the object of the exercise was merely to teach the plaintiff's workers how to work the engraving machine. I reject that evidence and find that the purpose was to produce a master mould reasonably suitable for the purpose of manufacturing toy frogs. Neither Cheung nor Lee was able to explain away these defects.  With regard to the deep cuts, Cheung's evidence was that that was caused by the fact that the machine was turned off at night.  In the morning when the machine was turned on again the depth of the previous engraving had to be measured correctly so what the engraving might continue evenly. The deep cuts were made because the previous engraving was not measured correctly.  A hand wheel on the extreme left of the machine as shown in the photographs in the catalogue is a device to measure the depth. Here there are two possibilities. Either it was the fault of the wheel or the fault of the hand that was turning the wheel.  In my view the latter possibility should be discounted because the whole operation was under the observation and guidance of the Japanese expert. As for the roughness of the edges, both Cheung and Lee talked about an occasion when the mould got loose and out of position, Cheung says that the result was the rough edges round the head whilst Lee says the. result was the rough cut's in the bottom part of the figure. Cheung was unable. to explain why the roughness only appears at the edges.  I can attach no weight to Cheung's or Lee's explanations.   Furthermore, the defendant's expert and technicians left the mould as it was and discontinued the engraving in spite of the fact that the plaintiff was complaining about these defects. That is far more consistent with their inability to improve the performance of the machine or the quality of Ex.D2 than with the defendant's case that the defendant's men were there merely to teach the workers how to operate the machine.  Ex.D.2 is obviously defective.  I therefore find that the machine is not reasonably suitable for the purpose of precision engraving of master moulds.

4. By letter dated the 21st December, 1981, the plaintiff through his then solicitors wrote to the defendant's solicitors confirming his rejection of the machine and demanding repayment of the deposit of $25,000 within seven days. That demand was not met and this action was commenced on the 13th January, 1982.

5. On the evidence I find that the implied condition of merchantable quality is also breached.   The machine is not as fit for the purpose of precision engraving of master moulds as it is reasonable to expect having regard to the description "precision engraving" in the contract and its price which is more than twenty times that of a manual mould engraving machine.

6. Counsel for the defendant reminded me that the plaintiff did not produce the original plastic frog sample for Ex.D2 and that therefore it was impossible to make a comparison as to quality. But these are obvious defects. If they were also present in the original sample, Cheung and Lee would surely have referred to that. It is true that Lee said there was some rough cut in the plastic frog sample but he did not identify the cut. with either of the two deep cuts in Ex.D2. On the other hand Cheung went to great lengths about stopping the machine at night and the need for and the difficulty in measuring the depth of the engraving. As for the rough edges, neither Cheung nor Lee suggested that they were also present in the original sample.

7. I am satisfied that the plaintiff was justified in rejecting the machine. There will, therefore, be judgment for the plaintiff in the sum of $25,000 with interest at the rate of 13½% Per annum from the 28th December, 1982, until payment.  The counterclaim is dismissed.

Representation:

The plaintiff in person

Mr. David Yam (P.C. Woo & Co.) for the defendant