Siemsgluss & Sohn(A Firm) v. Yiu Shui Ching Anita also known as Lam Yiu Shui Ching t/a Everise Trading Co.
Read the full judgment text of HCA 361/1987 on BabelCite. This High Court CFI judgment.
1. The plaintiff, a German firm, sues the defendant, a Hong Kong firm, for breach of contract.
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HCA000361/1987 1987 No. A361 IN THE SUPREME COURT OF HONG KONG HIGH COURT ________________ BETWEEN
______________ Coram: Deputy Judge Sharwood Dates of Hearing: 10th, 11th, 12th, 13th, 25th & 26th of October, 1988. Date of Judgment: 11 NOV 1988 ___________ JUDGMENT ___________ 1. The plaintiff, a German firm, sues the defendant, a Hong Kong firm, for breach of contract. 2. It alleges that by written contracts dated 20 March and 18 April 1986, the defendant agreed to sell and the plaintiff agreed to buy 10 tons of Tetracycline (TCL), and 5 tons of Trimethoprim (TMP), respectively. 3. The plaintiff also alleges that in breach of both contracts, the defendant failed to deliver these goods to the defendant. 4. The plaintiff claims that it had to purchase the goods elsewhere at higher prices, and seeks damages for the difference between the contract prices, and the actual purchase prices. 5. The defendant, by its amended defence and counterclaim, alleges that by a further oral agreement between the parties, the TCL agreement was cancelled. It it was agreed that the defendant would pay to the plaintiff compensation in the sum of US$5,000, which sum was to be deducted from the purchase price of other goods which the plaintiff subsequently agreed to purchase from the defendants, namely Licomycine. 6. On 18 April 1986 the parties entered into three separate agreements for the sale and purchase of Lincomycine (LCM), Trimethoprim (TMP) and Inosital (ISL), respectively. (See PP13, 14, 15 of Agreed Bundle). 7. The defendant alleges that the TMP agreement provided for payment by way of irrevocable at sight Letter of Credit (LC), and that it was an implied term of this agreement that the said LC would be valid. However, the LC which was issued on 29 April 1986, misdescribed the TMP agreement number as "EX-86-31", instead of "EC-86-31", an error which rendered the LC worthless. The plaintiff wrongfully failed to amend the LC, thereby evincing an intention not to be bound by the TMP agreement, and the defendant informed the plaintiff by telex dated 17 May 1986 that unless it caused the amendment to be made by 20 May 1986, the transaction would be at an end, i.e. that it would accept the plaintiff's repudiation. The plaintiff failed to amend on or before the 20 May 1986, and the acceptance of the repudiation was complete. 8. Alternatively, the defendant alleges that the plaintiff cancelled the LC on or about 29 May 1986. 9. The defendant therefore denies that it was in breach of the TMP contract. 10. By its counter-claim, the defendant alleges that by reason of the plaintiff's breach of the TMP agreement, it sold the TMP at a loss, thereby suffering damages. 11. In relation to the ISL agreement, the defendant alleges that it shipped the goods to Germany, and that they arrived on 22 May 1986. The plaintiff wrongfully failed and/or refused to accept delivery, thereby evincing an intention not to be bound by the said ISL agreement. The defendant accepted the repudiation and sold the ISL at a loss, thereby suffering damages. 12. In its amended reply and defence to counter-claim, the plaintiff admits that the defendant informed the plaintiff that it would not be able to supply the TCL as agreed, following which it was orally agreed that the plaintiff would forbear claiming for loss and damage under the TCL agreement if, and only if, the defendant would pay the plaintiff forthwith the sum of US$5,000 as compensation. The defendant failed to make this payment. 13. The plaintiff denies that it cancelled the LC on 29 May 1986, and alleges that it became ineffective upon its expiry on 6 June, 1986. 14. Finally, the plaintiff alleges that the defendant unilaterally cancelled the TMP agreement. 15. Mr. Udo Siemsgluss, the person running the plaintiff firm, said that there were four separate contracts. 16. The TCL agreement was signed on 20 March, 1986. The other three agreements were signed on 18 April. Thereafter, he went to the Canton Trade Fair, where he was told that the defendant could not deliver the TCL as agreed. When he "saw these problems", he bought TCL in Shanghai. He said that "I had to buy elsewhere at a higher price", and in order "to be on the safe side". In fact he bought 25,000 kg, although the agreement with the defendant was only for 10,000 kg, because he sold "200 metric tons a year”. 17. When the defendant informed him that it could not deliver, he had to buy elsewhere. The defendant agreed to pay USD5000. This was a separate agreement. "In principle it was agreed I would get it (i.e. USD5000) in cash, within a few days. I didn't get it. I tried. I considered it an amicable agreement and when breached, I should get the amount lost. In return, I was prepared to release them from the first contract". 18. On the other hand, Mrs. Lam, the sole proprietess of the defendant firm, said that she spoke to Mr. Siemsgluss in April 1986, and told him that she could not supply the TCL as agreed. On 18 April she apologised and told him that "they wanted an increase in price, and his reaction was that it did not matter. He further told me that he knew the people in Shanghai and he further stated he would not take me to the law courts". She said that he told her that he would get the goods from Shanghai. Later she spoke to him on the phone and she told him that he had three days, namely 21, 22, 23 April to decide whether he wanted to purchase TCL at USD23.50. She said he complained about the increase in price to USD23.50. He asked her to "compensate him USD5000, so each of us would bear some loss in the transaction and I said alright, I agree to pay, but you must agree to take delivery of goods from Shanghai. But he didn't reply in the three day period, and the deadline passed." Thereafter she couldn't obtain the goods from Shanghai, but "it was said when he was in Hong Kong that I should pay USD5000 compensation and he would take delivery in Shanghai, but even If be did not take delivery in Shanghai the transaction would be considered cancelled after I paid USD5000 and I was no longer obliged to supply the TCL. Subsequently, I became aware that he had not taken delivery in Shanghai and was chasing me for supply of goods and USD5000. I thought I had no safeguards so I asked for something in writing as to what we agreed". Again, "it was agreed I would pay USD5000 if he took goods in Shanghai at USD23.50, but also if he didn't". 19. She said that the plaintiff would not confirm the cancellation in writing. She wouldn't pay "because I had a feeling regarding TMP. All along he refused to amend the LC for me, and as a result I couldn't make delivery of the goods. He was indecisive". 20. In summary, Mrs. Lam said that when the defendant could not deliver at USD22.50 under the original agreement, it was agreed that this contract would he cancelled and it would pay USD5000 compensation. She wanted to vary the original contract to USD23.50, but the plaintiff did not confirm the variation. There was therefore no varied contract at USD23.50. She was prepared to pay the USD23.50, but the plaintiff continued to demand both the goods and the money, despite the fact that it had elected not to go ahead at USD23.50. In addition, the plaintiff would not confirm the cancellation of the first contract in writing. Subsequently, the plaintiff refused to amend a LC in relation to TMP. 21. The common factor in their respective accounts is that there was an agreement for the payment of USD5000 in full settlement of the original TCL agreement. 22. Mr. Siemsgluss did not, in evidence, even mention that there was an agreement at USD23.50, which varied the original agreement. Mrs. Lam suggested that she sought to bring about such an agreement, but said that it never came into existence. The telexes which passed between the parties raise the possibility that there was an agreement at USD23.50, in variation of the original agreement, but in the end it is clear that there was not. 23. I turn, therefore, to an examination of these telexes. 24. On 24 April, 1986, Mr. Lam telexed Dr. Lutz Siemsgluss as follows: (p.107)
25. The date of this telex, as well as its content, tends to cast considerable doubt on Mrs. Lam's evidence that she spoke to Mr. Udo Siemsgluss on the phone and told him that he had three days, i.e. 21, 22, 23 April, to decide whether he wanted to buy at USD23.50. 26. On 1 May, Mrs. Lam telexed Mr. Siemsgluss as follows: (P114)
27. This telex suggests that Mr. Siemsgluss was willing to go ahead at USD23.50, and that the transaction did not proceed because goods were not available, and not because Mr. Siemsgluss wouldn't confirm at the higher price, as stated by Mrs. Lam. 28. On 2 May 1986, (P24), the plaintiff responded to the defendants telex of 1 May, as follows:
29. It appears that the plaintiff was insisting on delivery at USD23.50, and was confirming that it was "okay" to deduct USD5000 from the Lincomycin invoice. (DM5000 should obviously be USD5000). An actual agreement at USD23.50 is also suggested. Mrs. Lam said that she understood this telex to be a demand for delivery of the goods, as well as for USD5000. She thought that there were "two different meanings. According to his practice, no such word as "stop" had ever appeared. I got the impression he was asking for the goods and the money, because he was chasing me for both subsequently". 30. In my view, it is quite obvious that the word "stop" has no substantive meaning. The plaintiff would hardly be insisting on delivery at USD23.50, which itself involved a contribution by the defendant of USD5000, and simultaneously be demanding that it not be paid USD5000!! 31. It was pointed out by counsel that in no other telex is the word "stop" used to denote a "full stop", and I accept that. There is no explanation for the presence of the word. But I am perfectly satisfied that in the context of the transaction which was being referred to, it could not have caused any confusion. 32. There is no reference to any confusion in Mr. Lam's telex of 5 May (P115):
33. Once again, this suggests that the transaction did not fall through because of anything which Mr. Siemsgluss did, or did not do, but for other reasons. 34. On the same day, the plaintiff replied (P25):
35. The plaintiff is here adopting a more conciliatory tone. It is no longer insisting on delivery, but merely urging further efforts. This telex also suggests that there had been no actual agreement at USD23.50, but merely an attempt to get confirmation at USD23.50, an attempt which had failed. 36. The telex also puts to rest any suggestion that the plaintiff wanted the USD5000 "stopped", or, indeed, that it was subsequently demanding both the goods and the money, as was alleged by Mrs. Lam. 37. On 7 May, the Lam's telexed Mr. Siemsgluss (P27, 116):
38. This telex suggests that so far as the Lam's are concerned, the plaintiff had still not agreed to cancel the original TCL agreement. They propose that if the full amount for the Lincomycin is paid, TCL may he obtained at the original price of USD22.50 kg, with delivery in June. They say that if "China can't supply the goods again", the defendant will guarantee payment of USD5000. They are, in effect, again conceding that the USD23.50 transaction fell through because of "China". 39. On 7 May, at P29, Mr. Siemsgluss telexed Mr. Lam as follows (P29):
40. This is an important telex. It is quite clear that Mr. Siemsgluss is now only asking for USD5000. He is not demanding delivery of the TCL at USD23.50. Neither does he ever subsequently do so. 41. Although he refers to a final agreement, he is not doing so on the basis that it was a firm contract, but rather on the basis of an agreement to try and obtain TCL at USD23.50, which has failed. He only asks for the money, and makes no reference to a breach of an agreement at USD23.50. 42. On 15 May, the plaintiff telexed the defendant (P31) to the effect that no instructions had been given to deduct USD5000. "Unless arranged by TT here tomorrow our solicitors Deacons starting tomorrow legal steps for USD30000.... As due non delivery 10 to tetra inspite of firm contract we were forced now to buy local material". 43. The defendant is here given another chance to settle for USD5000. There is no demand for TCL. 44. By an undated letter (P128), Mrs. Lam wrote to Mr. Siemsgluss:
45. It is likely that this letter was written in late May. 46. On 3 June 1986, the defendant wrote to the Bank of Communications (P125), and a copy must have been sent to the plaintiff, for on 12 June, 1986, it wrote to the defendant as follows:.
47. Here, finally, was the unequivocal cancellation of the TCL agreement which Mrs. Lam had been so eager to obtain. But she was by now no longer interested. 48. Neither Mr. Siemsgluss, nor Mrs. Lam, were impressive witnesses. Neither gave evidence which was consistent with the stream of telexes which passed between them. They were, of course, attempting to communicate in English, which is not the native tongue of either of them. Mrs. Lam spoke of having trouble understanding Mr. Siemsgluss, and I am bound to say that I am not surprised. 49. The matter could so easily have been resolved. There was undoubtedly an agreement to cancel the original TCL agreement upon payment of USD5000 by the defendant. The matter was perhaps complicated by the attempt to obtain other TCL at USD23.50. But there was never an agreement to that effect. The original agreement was never actually varied. Mrs. Lam wanted it varied, and blamed Mr. Siemsgluss for not acting promptly. Mr. Siemsgluss didn't even refer to the matter in evidence, but the telexes strongly suggest that he too wanted an agreement at USD23.50, with the defendant paying USD5000. The telexes suggest that it was "China" or "Shanghai" and not the plaintiff, who was responsible for TCL not being available at USD23.50. 50. Be that as it may, there was a firm and concluded agreement to settle for USD5000. 51. The defendant did not pay because Mrs. Lam thought that Mr. Siemsgluss was insisting on the goods and the money. That was the purport of his telex at P24. I can understand her confusion about this. If there was no agreement at USD23.50, how could he "insist" on the goods? But Mr. Siemsgluss did not thereafter insist on the goods, and very soon backed down. It must have become obvious that he wasn't pressing for both the goods and the money. 52. During this period (early May), both parties tended to be irrational. The plaintiff refused to amend a misdescription in a LC in relation to TMP unless it received USD5000. Mrs. Lam became nervous and uncertain. She wanted an unequivocal cancellation of the original TCL agreement before she would pay USD5000. She didn't get it. With hindsight it is perhaps much easier to see that the demand for the USD5000 could only have been made on the basis that the TCL agreement would be cancelled. The acceptance of a payment of USD5000 could not have been construed in any other way. 53. The cancellation was unequivocally promised on 12 June (P39), but by this time, the plaintiff had refused to amend a LC which contained a misdescription, and had refused to take delivery of a consignment of ISL which had arrived in Germany. Mrs. Lam was not therefore well disposed towards Mr. Siemsgluss. 54. The question now arises whether the plaintiff is entitled to claim damages under the original agreement, or whether it is restricted to claiming USD5000. 55. Even if the acceptance by the plaintiff of USD5000 in full settlement of its claims under the original TCL agreement was a mere forbearance, without consideration, and did not constitute a variation of the original agreement, (and the proposition is obviously arguable), I am satisfied in all the circumstances of the case, that the plaintiff has waived its right to enforce the original contract. 56. In W.J. Alan & Co. v. El Nasr Export, ([1972] 2 Q.B. 189, 213), Lord Denning, M.R. said:
57. In the present case, the plaintiff clearly led the defendant to believe that its rights under the original TCL contract would not be insisted upon, intending that the defendant should act on that belief. The defendant did act upon it. It tried to negotiate a new contract at USD23.50, and it even proposed that it try again to obtain TCL at USD22.50 (P27). 58. In addition, Mrs. Lam said that she sold Mr. Siemsgluss LCM at a low price, and ISL and TMP were sold "without making any profit, to give him compensation, because he said he wouldn't take action or ask me to complete the contract. That is why I sold TMP, because I was grateful." She made it clear that none of this was part of the settlement for non-delivery of the TCL, but "I thought that since I failed to provide TCL, therefore I should supply these goods cheaply." She told Mr. Siemsgluss that she was selling cheaply. 59. In my view, there is evidence that Mrs. Lam acted upon the belief that the original contract would not be enforced, and it would now be inequitable for the plaintiff to insist on its rights under the original contract. It is too late. 60. Mr. Siemsgluss said that he "considered it an amicable agreement and when breached, I should get the amount lost. In return, I was prepared to release them from the first contract". 61. If that was truly the case, I would have expected him to immediately and forcefully assert that unless the USD5000 was paid, he would claim damages for USD12,500. He had already bought TCL at USD23.75 in China, and he must have known precisely what his loss was. Yet he never mentioned this in any telex. 62. I am not satisfied, therefore, that it was a term of the agreement that if the USD5000 was not paid, the plaintiff could insist on his rights under the original TCL agreement. 63. I hold that the plaintiff waived its right under the original TCL agreement, and I therefore award it USD5000. 64. If I am wrong about that, I will state the alternative case. The plaintiff claims USD12,500, which represents the difference between the original contract price of the TCL and the price actually paid by the plaintiff (P17). I have referred to the fact that the plaintiff purchased 25,000 kgs. of TCL from another supplier at USD23.75 kg., whereas the original contract with the defendant was for 10,000 kg. at USD22.50 kg. 65. It was submitted on behalf of the defendant that damages is the difference between the contract price and the market price at the time at which the goods ought to have been delivered. It was further submitted that there was no evidence of the market price when the TCL ought to have been delivered. Under the original contract (P8), delivery time was:
66. Mr. Mark Paradise, the managing director of Flavine Trading Company in Hong Kong, a company involved in the import and export of pharmacenticals, said that he went to the Canton Fair in April/May 1986. He said that "they try to establish a price level. This was at the beginning of the fair. Events determine what happens to price." There was the possibility of fluctuation. But generally there was a "trend over a period of months. Markets have to consolidate". 67. In my view, this matter has to be approached realistically. The only evidence of actual price in April/May was the purchase by the plaintiff at USD23.75 on 20 April (P17). I readily assume that this represented a purchase at the then best possible price. I am satisfied that the plaintiff was an experienced trader in TCL, and an experienced trader in China. (Mr. Siemsgluss said, in a telex dated 15 May (P31), that "since 30 years trade with Chinese people ........"). The telexes suggest that the transaction at USD23.50 fell through because TCL was not easily available. 68. I am satisfied therefore that USD23.75 represented the market price on 20 April, and I find no difficulty in inferring that it remained at or about that level through May, 1986. 69. To the extent therefore that the goods ought to have been delivered sometime in April and May, I am satisfied that the plaintiff could not have obtained them at a lesser price during that time. 70. I would therefore have awarded the plaintiff damages for the wrong which it suffered, in the sum of USD12,500 (10,000 kg x USD1.25 kg). 71. The plaintiff also claims damages in relation to the non-delivery of TMP. In furtherance of this transaction, the plaintiff caused to be issued a LC which contained a small error. Mr. Siemsgluss said that it was merely a typing error, and not deliberate. Whereas the actual number of the contract was EC-86-31(pl4), it was described in the LC as EX-86-31(P22). Both Mr. Siemsgluss and Mr. Paradise said that this misdescription in the LC made absolutely no difference to its validity. They were sure that the bank in Hong Kong would have made payment on this LC, provided only that the documents specified therein were duly presented. 72. The matter arose in this way. On 8 May 1986 (117), the Lam's telexed Mr. Siemsgluss, as follows:
73. As indicated, the LC referred to EX and not EC. 74. By this time, Mr. Siemsgluss was obviously in a great rage because of the defendant's failure to pay the USD5000, and he caused a telex to be sent on 9 May 1986 (P30) as follows:
75. On 17 May (P32), Mr. Lam again requested the amendment, and on 20 May (P33) the plaintiff again refused to amend unless USD5000 was paid. 76. In the event, the defendant did not ship the TMP, and the plaintiff now claims damages for non-delivery. 77. On the other hand, the defendant alleges that the LC was worthless, and since it was an implied term of the TMP agreement that the LC would be valid, the plaintiff acted in breach thereof. The defendant therefore claims damages insofar as it sold the TMP at a loss. 78. Mr. Siemsgluss said that the error did not affect the validity of the LC. All the necessary details were there. "In my experience this kind of thing is Irrelevant. There are often mistakes of this sort, but if all matters are clear, the LC is good." He explained that he refused to amend because "we still wanted to get the USD5000 and this was a kind of policy to get USD5000. If we got USD5000 we would make in principle the unnecessary amendment." 79. Mr. Paradise said that "as a seller, I wouldn't do a thing. It (the LC) would be negotiable. I would get my money. Its a minor point. A typographical error. It wouldn't impede its negotiation". He said that it wasn't "even a discrepancy". 80. He said that as a seller he would not have brought it to the attention of a buyer. In his view, the bank could not have refused payment, "no, absolutely not". 81. Finally, he was asked in cross-examination if he, as a seller, would have done anything. "Nothing. Not for getting paid. Unless I was a fanatic about this sort of thing. Its a way to get paid. The buyer issues the LC and if its acceptable and negotiable, I would present it and get paid. We receive LC's from India which are incredible, but we conform and get paid. In my opinion I don't know what the problem is." 82. On the other hand, Mrs. Lam felt she had to insist that the plaintiff amend the LC. "According to our practice, once we receive LC from a client and when we notice something incorrect about the LC, we request the client to amend it ........ if not corrected, I would have trouble to collect payment." She said that she checked with the bank, and was told that even though there was a minor mistake, "they would reject payment". She went on to say that the manager at the Bank of Communications, Mr. Ng Kan Ching, said "that although it was only minor, but if I issued documents, the bank in Hong Kong would pay on condition I would be able to provide a guarantee, but once the documents reached the bank in Hamburg they could reject on grounds of mistake and then I would have to repay the bank in Hong Kong." 83. The LC in question is at P22 and the contract at P14. There can be no doubt that the LC bears reference to the contract. 84. There is no suggestion in the LC that the contract was one of the documents which had to be presented to obtain payment. 85. I am satisfied that the defendant could have obtained payment, despite the incorrect description. In my view the nature of the error is so insignificant in the overall context of the transaction, that it would be fanciful to suggest that it could realistically have led to any real difficulties. 86. I have not ignored the fact that the plaintiff refused to amend, thereby conceivably reinforcing any doubts which might have lingered in Mrs. Lam's mind about the matter, but the fact is that she would, on her own evidence, have been paid. As I have said, it is quite inconceivable that real difficulties could have arisen in Hamburg, and even if they had, the matter would surely have been speedily resolved. 87. It is most regrettable that no banker was called, by either side, for the matter is essentially one for an expert, but having regard to all the facts and circumstances, and to the realities of the situation, I am satisfied on the balance of probabilities that the plaintiff caused to be issued a valid LC, and that the defendant, in breach of the contract, failed to deliver the TMP to the plaintiff. When the defendant gave notice on 17 May that it would repudiate on 20 May, the plaintiff accepted the repudiation and sought to have the LC cancelled on 23 May. 88. The plaintiff claims damages, insofar as contracted to pay USD25.45 to the defendant, but had to pay USD26.50 to the eventual seller i.e. 5000 x USD1.05 or USD5,250. Mr. Siemsgluss said that the document at P38 evidenced the transaction whereby the plaintiff bought at USD26.50 on 4 June, 1986. It appears that the plaintiff purchase TMP from a Swiss firm, Seimsgluss AG. There was no evidence as to whether there was any connection between this firm and the plaintiff. On the face of it, they are separate firms. 89. I accept that this was a bona fide transaction and I award the plaintiff USD5250 as claimed. 90. It follows that the defendant fails in its counterclaim for USD12,230, in respect of the plaintiffs alleged breach of the TMP agreement. If I am wrong about the LC, the defendant must succeed, and I am satisfied that it sold the goods at a loss of at least USD12,230. I am further satisfied that Mrs. Lam did what she reasonably could in all the circumstances to sell the goods at the best possible price, and I would therefore have awarded the defendant damages of USD12,230, if I had come to the conclusion that the plaintiff had caused to be issued a defective LC. I am satisfied that it was an implied term of the agreement that a valid LC would be issued. 91. Finally, I turn to the Inosital (ISL). These goods actually arrived in Hamburg on 22 May 1986. But the plaintiff would not accept them unless the USD5000 was paid. I have already referred to the telex at P39. In it, the plaintiff states as follows:
92. There can be no doubt that the plaintiff had acted in breach of the ISL agreement by refusing to accept the ISL. It was obliged to accept delivery. 93. I therefore find for the defendant in relation to this matter. 94. I turn to consider the question of damages. Mrs. Lam said that the defendant had to resell the ISL. It was first stored in a godown, and remained there for about three months. Eventually, it was sold at a loss. She tried to find a buyer, by sending out telexes "to those with whom I had business connections". But she received no response and people didn't want to buy. Mr. Paradise's firm, Flavine Trading Company, made an offer to purchase at USD11.50 kg. (The actual resale was at USD11.80.) 95. I accept this evidence, and I also accept that the defendant lost DM6,097.01 on the resale. (I deduct deduct DM104.30 for transportation and DM19.29 for insurance from the amounts claimed). I accept that the market price at the time when the goods should have been accepted was no higher than at the time of sale. 96. It was submitted on behalf of the plaintiff that the defendant had not taken all reasonable steps to mitigate its loss consequent upon the plaintiff's breach of contract. It was further submitted that the defendant could have avoided all or any loss by merely paying the USD5000. The plaintiff would then have taken delivery of the ISL (P39). Morover, the festering TCL matter would have been completely resolved. 97. Counsel for the plaintiff referred to McGregor on Damages, 15th Edition, from paragraph 275 onwards. He relied upon "the most authoritative expression" of the rule, by Viscount Haldane, L.C. in British Westinghouse Co. v. Underwood Ry ([1912] A.C. 673, 689):
98. I accept that in the present case, the onus of proof on the issue of mitigation is on the plaintiff. It is for the plaintiff to show that the defendant ought reasonably to have taken mitigating steps. 99. I note also, that whether a loss was avoidable by reasonable action on the part of the defendant is a question of fact, and not of law. Whether the defendant acted reasonably is also a question of fact. 100. In a certain way, Mrs. Lam did act unreasonably. She should have realised that by paying USD5000, she could immediately have resolved both the TCL and the ISL problems. She could have avoided the loss. 101. But the blame was far from being hers alone. Mr. Siemsgluss had been very, very difficult. For some reason, he had failed to make it clear beyond doubt that the TCL agreement was cancelled. He could so easily have done so. 102. On 7 May 1986, the Lam's asked him to "agree to cancel the contract about 10 Tons Tetra. Then we will inf bank to deliver USD5000 mm, but still receive no answer fm u" 103. Mr. Siemsgluss never replied in a clear, unequivocal way. He never said, "TCL contract cancelled upon payment of USD5000", or words to that effect, until 12 June, 1986. But by then he had already refused to amend the LC, he had refused to take delivery of the ISL, and Mrs. Lam was, understandably, very upset. 104. I have already commented on the problem of communication, and I have no doubt that it played an important part in these events. 105. It is easy, with hindsight, to say that a particular thing should have been understood, or acted upon. However, at the time, the parties were having real problems in understanding one another, and were growing increasingly frustrated and angry. 106. Nothing could have been more childish than Mr. Siemsgluss's refusal to amend the LC. I have found that it probably didn't affect the validity of the LC, but it certainly caused Mrs. Lam a lot of heartache. In the same way, his refusal to accept the ISL was a flagrant breach of contract. 107. Looking at all the facts and circumstances, I am not satisfied on the balance of probabilities that Mrs. Lam ought to have paid USD5000 to mitigate her loss on the ISL contract. The plaintiff's conduct was probably worse than that of the defendant, and it was the author of much of its misfortune. 108. In my opinion, the defendant should have damages for the breach of the ISL agreement. 109. There will therefore be judgment for the plaintiff on the claim in the sum of USD10,250, and for the defendant on the counter-claim in the sum of DM6097.01. 110. I will hear counsel on costs.
Representation: Mr. Petrus Chan instructed by Messrs. K.C. Tsang & Co. for the Plaintiff. Mr. Joseph Tse instructed by Messrs. Lo & Co. for the Defendant. |