Chan Siu Hoi Trading As Tri-co Trading v. Euro-america Industries Manufacturing Limited

HCA006624/1984

BETWEEN

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Coram: The Hon. Mr Justice Nazareth in Court

Dates of Hearing: 14th & 15th January, 1986

Date of Delivery of Judgment: 21st January, 1986

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JUDGMENT

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1. The Plaintiff claims under 2 contracts in respect of the balance of the purchase price of garments shipped and for damages for breach of contract.

2. The facts as I find them are as follows. The Plaintiff and the Defendant entered into 2 written contracts dated 24th November, 1983. The 1st contract provided for the sale of 42,300 pieces to be delivered between January and March 1984 at a price of US$46 per dozen excluding quota. Of that number 1,000 dozen were to be shipped about 20th January, 925 dozen before 10th February and the balance by the end of March.

3. The 2nd contract provided for the sale of 13,200 pieces to be delivered also between January and March 1984 but at a price of US$56 per dozen excluding quota. Of that number 750 dozen were to be shipped about 30th January and the balance by the end of March 1984.

4. Under the 1st contract 1,000 dozen were delivered and paid for. It had become apparent to the Plaintiff about the end of December 1983 that for reasons that do not matter, it was not going to be possible to make the shipment of 750 dozen by 30th January and 925 dozen by 10th February. So the manager of the Plaintiff firm, one Mr Wong Kar Kam asked a director of the Defendant Mr Ko Chun Hing, whether the time might be extended. Mr Ko agreed and provided him with a letter to the bank as the letters of credit under which payments under the contracts were to be effected were due to expire on 7th February 1984 and 11th February 1984. The letter, which was produced to me, stated under the letterhead of the Defendant as follows:

"We hereby accept the whole discrepancy of late shipment under L/C No. TKS 393621 B/B and TKS 393620 B/B to the end of February of Ladies Knitted Blouse. "

5. The letter is illegibly signed under the typed name "Mr Ko Chun Hing" and stamped "For and on behalf of the" Defendant. The Defendant took other steps to effect shipment. In reliance upon these the Plaintiff delivered for shipment 916 dozen and 750 dozen pieces. These were inspected by the Defendant which arranged for shipment. The goods were in fact shipped, but when the Plaintiff invoiced them and drew 2 bills of exchange under the letters of credit, they were dishonoured.

6. Some time about 23rd March 1984, one Jeffery F.M. Lau, the Defendant's foreman orally informed Mr Wong that the Defendant wished to cancel the contracts upon which the final balance of shipments were still outstanding. Furthermore the Defendant did not provide facilities under the letters of credit as required by the 2 contracts. The letters of credit I have referred to, which only provided for part of the payment that was to be made, having expired. Nor was delivery called for or shipment instructions given. In my' finding that constituted a repudiatory breach, which I find the Plaintiff accepted. The Defendant is accordingly liable for the damages consequently sustained by the Plaintiff.

7. These are as follows. First the Plaintiff purchased the necessary amount of fabric to complete the contract. When the contract was repudiated 11,000 lbs of fabric was left over. Approximately 2,000 pounds of that was stolen from the plaintiff's possession, for which the Defendant cannot be liable. There remaining 9,072 pounds was duly sold after the Plaintiff's reasonable and best endeavours at the price of HK$38,556. At its original purchase price 9,072 pounds cost HK$195,955.20. There was therefore a loss of HK$157,399.20, but only $156,000 has been claimed and that is what I would allow.

8. Then the loss of profit on each contract on undelivered items was a little over the amount of $35 per dozen claimed on the 1,609 dozen under the first contract which works out at $56,315; and a little over the amount of $43 per dozen claimed on 350 dozen undelivered under the 2nd contract, which works out at $15,050.

9. As respects the shipment of 916 dozen at US$46 per dozen, and 750 dozen at US$56 per dozen, the amount that should have been paid is US$84,136. When the Plaintiff sought payment on their bills being dishonoured the Defendant asked them to arrange for disposal of the shipments which were stored in a warehouse in the United States consequent upon their arrival there. To mitigate its losses the Plaintiff's Mr Wong went to New York and ultimately arranged for the sale of the two shipments to a discount store realizing net proceeds of US$19,174 prior to deducting his total travelling and other expenses of HK$25,480. Deducting US$19,1 from the price of US$84,136 that should have been realized, leaves a balance of US$64,964 due to the Plaintiff.

10. The Plaintiff is therefore due first on the loss incurred on the fabric sold HK$156,000; second on the loss of profit of undelivered items HK$71,365; third on the expenses incurred in disposing of the shipment in the United States HK$25,480 i.e. a Hong Kong dollar total of $252,845; and fourth on the shipments to the United States US$64,964. In addition the Plaintiff is entitled to interest, and in my judgment this should be at the rate of prime plus 1% on the sum of US$64,964 from the 10th of March 1984 when the later of the two dishonoured bills should have been paid.

11. On the Hong Kong dollar amounts there should be interest at the like rate on the sum of $156,000 from 6th November, 1984 when the fabric sold was paid for; on the sum of $71,365 from the 1st April 1984 when the undelivered shipment would in the ordinary way have been paid for; and on the sum of $25,480 from 13th April 1984 when Mr Wong completed his visit to the United States. The Plaintiff is also entitled to costs.

12. Before I record my judgment there is one matter upon which I should touch. Some time after the Defendant's solicitors filed the defence in November 1984, with leave they ceased to act for the Defendant in September 1985, and the Defendant has since been unrepresented. The Defendant was, I am told, warned by the Chief Justice in September 1985 when the case was set down for trial of the necessity to be represented by Counsel. And in December 1985 it were warned again by the Plaintiff's solicitors of that require-ment and that the Plaintiff would not consent to an adjournment. In the event no adjournment was sought, but the Defendant attempted to appear by its general manager, Mr Lee Yiu Hing Conston, who was present throughout the hearing. Mr Lee said the Defendant had no money to obtain legal representation. In accordance with the provisions of Order 5 rule 6 he was not permitted to represent the Defendant.

13. The Defence filed relied upon 2 grounds. First that the Defendant acted expressly as agent for a Mr James Trani. There was not a shred of evidence to support that contention. Indeed correspondence from the Defendant's first solicitor tended to contradict such a possibility.

14. Second it was contended that Mr Ko on behalf of the Defendant did not extend time but told the Plaintiff that it could continue production of and ship the 916 and 750 dozen items at its own risk and the Defendant would simply try and assist the Plaintiff but that it would be at the Plaintiff's own risk. Again there was no evidence to support that and the Defendant's letter to the bank and its steps to procure shipment in my view clearly establish the falsity of the Defendant's contention.

15. Nevertheless whatever may have been the origin of Order 5 rule 6 and whatever its general justification, in cases of the present sort its effects are less than satisfactory. Justice, it would seem, is not seen to be done. It may be that special provision should be made for cases of the present sort in which a duly authorised representative may well have ventilated aspects of the matter that the Plaintiff's counsel with the best will in the world could not do. I have of course to form my judgment on the evidence before me. That I have done and clearly on the overwhelming probabilities there must be judgment for the Plaintiff.

16. There will accordingly be judgment for the Plaintiff in the sums and together with the interest I have indicated subject to correction of any of the figures I have mentioned which I will now give counsel an opportunity to do; also I award costs to the Plaintiff.

Representation:

Mr Louis Chan instructed by Messrs. Cheung, Tng& Rosa for Plaintiff.

Mr Lee Yui Hing, Conston, general manager of the Defendant Company in person.