United Textiles Ltd v. Golden City Weaving Factory Ltd

HCA002089/1980

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

-----------------

ACTION NO. 2089 OF 1976

-----------------

Coram: Penlington, J. in Court

Date of Judgment: 23 December 1980

-----------------

JUDGMENT

-----------------

1. This is a claim in respect of 13,680 yards of denim cloth which was delivered by the Plaintiff to the Defendant on the 24th and 25th of March 1976 for the purpose of a finishing process being carried out, consisting of starching and pre-shrinking. This pre-shrinking of the material was to be done by a process known as "Sanforisation" which is a process for which the Defendant is a registered licensee. The Plaintiffs claim that the contract contained terms that the Defendant would use reasonable care and skill in carrying out this finishing process and the cloth would not be rendered defective. It is alleged that the Defendant is in breach of this contract in that during the finishing process the cloth was so rendered defective in that its appearance was spoiled by the colour of the material running, in particular so that the weft yarn became stained and that also the general feel of the cloth was not satisfactory. It is also alleged that as a result of these breaches of contract the Defendant agreed to pay to the Plaintiff the sum of $124,552.30 and that the Defendant would then take over and retain the material. The Plaintiff says that as a result of that agreement the Defendant has in fact retained the material but has failed to pay the Plaintiff the said sum of $124,552.30.

2. The Defendant denies these allegations and says that when the cloth was put into the finishing machine after it had been starched a considerable amount of dye came out of the material and this caused the fabric to stick to the rollers which in turn resulted in it to becoming wrinkled. The material was then inspected by a representative of the Plaintiff and he asked the Defendant to continue with the finishing process and undertook that he would not hold the Defendant responsible for any damage that resulted. The Defendant alleges that any defects in the material were caused by the use of improper or inferior dyes or starches and that the Plaintiff should have known that this would cause the defects which became apparent. The Defendant denies that there was ever any agreement by which it would pay the Plaintiffs any money or take over the material. The Defendant also counterclaimed for money alleged to be still owing for processing charges amounting to $112,428.01 and also for storage and other charges amounting to $5,730. At the hearing of this matter it was agreed that the amount owing to the Defendant by the Plaintiff for finishing charges was in fact $100,000.

3. The principal witness called for the Plaintiff was Mr. Cheng Kam Ming. He said that he was the Manager of the Plaintiff firm in 1975 and 1976 and that his father was one of the Directors of the Company. He said that the Plaintiff was mainly engaged in the weaving and dyeing of denim cloth and that he was in charge of the weaving process. He said he had obtained a Master's Degree at the University of Manchester and that he had substantial academic knowledge as well as practical experience in the textile industry. He said that the cloth in question was delivered on the 24th and 25th of March in 1976. Denim material is woven so that the vertical or warp threads are dyed before weaving but the horizontal or weft threads are left in their natural colour which is a very light grey. This produces a material which has some of the natural colour of cotton still showing. The reverse side of the material shows this more than the upper side and some samples were produced. If the colour in the dyed thread is not colourfast it will stain the natural thread and, while this will probably eventually happen to same extent it should not occur during the finishing process. He said that the Plaintiffs had set a considerable amount of material to the Defendants before March 1976 and that the finishing process had always been carried out by the Defendants in a satisfactory manner. He said that the Sanforising process carried out by the Defendants was a specialised process in that after the material had been Sanforised the shrinkage was guaranteed to be no more than 1%. Expert evidence was later called by the Defendants relating to this process.

4. Mr. Cheng's evidence relating to the dyeing of the thread used in the material was important. He said that because indigo was at the time in short supply the Plaintiffs used part indigo dye and partly a synthetic dye made in Germany called Hydron. He said that these two dyes were mixed together and it was not in dispute that Hydron is a high quality dye, although some evidence was given for the Defendant that the method by which Hydron is supplied is different to that for indigo.

5. Mr. Cheng said that one or two days after delivery of the material for processing he received a telephone call from a member of the Defendant company. This person told him that there was a problem with the material in that it was wrinkling badly and would he please come over to the Defendant's factory to inspect it. This he did and he said he told a member of the Defendant company that the defect was nothing to do with the cloth itself and he asked that the damaged cloth be reprocessed. This they agreed to do. He said that the colour of the cloth was satisfactory and that there was no colour running at this stage. He also said that that the feel of the cloth was also satisfactory. He went on to say that the following day he received a telephone call from Mr. Chong Lai Hung, an employee of the Defendant company. Mr. Chong said that there was now a lot of colour running in the material and the back of the cloth had become stained, and again he asked him to come over and have a look. Mr. Chong said that he almost finished the material. Mr. Chong again went over to the Defendant company premises and again inspected the material. On this occasion Mr. Chong was present and also a Mr. Chiu who was from a firm called Textest. Mr. Chiu is an expert in the Sanforising process and he also gave evidence. Mr. Cheng said that he inspected the cloth, found there was a lot of colour running on the front and the back. He also said that the look of the cloth was different and it had a very stiff feel. However the wrinkles had now almost disappeared. A test was carried out with the material by which it was placed between some white cloth and put in a steam press. The colour came out of the denim and stained the white material. There was further expert evidence on this and it seems to be not in dispute that the dye in the relevant material is now loose, that is it is not colour-fast. Mr. Cheng said that some time towards the end of April he showed the material to a potential customer who did not accept it.

6. There was evidence from Mr. Chong that a further consignment of some 300 yards of material in 4 rolls was sent to the Defendant through an intermediary the Union Industry Company. While he could not say that this material was woven on the same day or at the same time as the material in dispute he said it was done at about that time and was very similar material. This material was subsequently returned to them having been processed by the Defendant and was found to be satisfactory.

7. There was then evidence relating to an alleged visit by a Mr. Chong Ming Cheung to the Plaintiff's office. Mr. Chong Ming Cheung is the uncle of the first witness called by the Defendant. This evidence was objected to on the grounds that the pleadings alleged that there was a conversation not with Mr. Chong Ming Cheung but with Mr. Chong Lai Hung. I allowed this evidence which was that there was a conversation with Mr. Chong Ming Cheung and that Mr. Chong agreed that the Defendant company would take over the defective material and would allow the Plaintiff a credit for it in the sum of $124,552.30. It was alleged that Mr. Chong agreed that he would issue a credit note for that sum. Mr. Cheng also gave evidence on that he had subsequent conversations with Mr. Chong Lai Hung relating to the non-delivery of the credit note.

8. Mr. Cheng then gave evidence that he engaged services of an expert in textiles a Miss Shiela Kemp and that he gave her some samples of material. These samples came from the 4 yards of cloth which had been sent via the Union Industry Company. This had been Sanforised and starched by the Defendant company.

9. As regards the use of the Hydron blue dye stuff Mr. Chong said that he had been using this for quite some time and that in his view it made the combined dye more colour-fast than pure indigo. He said that the yarn was dyed and starched first before weaving but there was an additional final starching once the weaving had been done before the Sanforisation. He said the starch that he was using for this particular material was no different from that he had used in material alleged defective material. He said that the allegation contained in the defence that the cloth was a defective in that it had an undue number of blemishes would have nothing whatever to do with any colour running. In cross-examination Mr. Cheng agreed that there were many factors which were important when considering whether thread had been properly dyed. These factors included the temperature when the dye stuff was applied, the length of time, the thread was exposed to the dye, the washing procedure following the dyeing process and of course other what he called human factors such as adjusting the speed of the machine. Mr. Cheng also identified in cross-examination the 3 delivery documents sent with the material from the Plaintiff which were list of yardages, P1 A, B, and C. The first one which refers to 7,790 yards of material is worded SANF which is apparently Sanforised and also "starching must be heavier than last time". This he said meant that there should be more starched applied so as to give a stiffer cloth than in previous consignments.

10. Evidence for the Plaintiff was also given by Mr. Lee Chi-kuen. He said he was, in 1976, employed by Intermerc Co. Ltd. as a buyer of denim material. He said that at the request of Mr. Cheng, the first witness for the Plaintiff, he went to the Defendant's factory and there he inspected the material in question. He said he found that the colour in the material had run that the material was too stiff and the feeling was wrong. He said he would not have accepted the material. He said that from purely the point of view of the colour of the material the only sample he would have accepted was one which is labelled D. He also said that the samples produced in court were too small for him to say whether the feel and the stiffness of the material was acceptable.

11. Mr. Lam Man Hing gave evidence that he was employed by Pacific Dye Works as a supervisor of their Sanforising Department. He said that in 1976 he received a substantial amounts of material from the Plaintiff company and that there were only minor problems involved in the Sanforising of this material. He said the shrinkage averaged about 10 to 12%. He said problems can arise with wrinkling in the Sanforising process and that the material sometimes has to be reprocessed. This involves restarching and reshrinking. He said that this is usually successful. If the starch is too heavy however, can cause problems because the absorption of water is not sufficient. He said that it is rare in the Sanforising process for the colour to run, but that as the process does involve both heat and pressure, if the dye-stuffs are not fast then there will be some colour running.

12. The Plaintiff called as an expert witness Mrs. Shiela Boyde. Mrs. Boyde said that she used her maiden name of Kemp in her profession which was that of an expert in textile quality. She gave her qualifications which included being an Associate of the Textile Institute which has its headquarters in Manchester and the Chartered Institute of Textile Arbitrators. She said that membership of this Institute was obtained by examination and by production of a thesis together with the holding of a responsible position. She said she had been a lecturer in testing and quality control at the Hong Kong Polytechnic and in 1975 she started her own business as a consultant. I was quite satisfied that these qualifications did enable her to give evidence as expert. Mrs. Boyde prepared a report which she produced.

13. Mrs. Boyde said that in May of 1978 at the request of the Plaintiff's solicitor she went to the Defendant's factory premises and there she inspected the material which is in dispute. There were 176 pieces of material and Mrs. Boyde examined some 12 pieces and she cut samples which were produced. Her evidence which is really not in dispute is that the pieces of material she saw had suffered form colour running and the weft had become stained with the dye. This is particularly noticeable on the reverse side of the material. Mrs. Boyde also examined the 4 pieces which had been processed by the Defendant via Union Industry Company and she found that these were satisfactory. Her report and her evidence is really based on a comparison between the pieces she examined in the Defendant's premises and those in the Plaintiff's premises. From this she concludes that if all these pieces came from the same material then clearly the fault laid in the finishing because the four pieces were satisfactory and the other pieces were not. Mrs. Boyde also said that in her view the colour running might have been caused when the material was first processed by the Defendant in that he fed the material unevenly through the Sanforising machine which caused to wrinkle and then, in an effort to rectify this error, he reprocessed using too much lubricant, or heat, or pressure. Miss Kemp stated that while she was an expert in weaving she did not regard herself as an expert in the Sanforising process. Her evidence is very largely based on a comparison between the materials she examined in the Defendant's premises, which is the material in dispute, and the other 4 pieces examined in the Plaintiff's premises which she has assumed is the same material. As I am unable to accept the evidence that in fact that is the case the value of her comparison between these materials takes the matter no further than to say that the Plaintiffs were producing at about the time of the production of the defective material other material which was satisfactory. However, that really is not in dispute.

14. Evidence was given for the Defendant by Mr. Peter Chiu who is a technical expert employed by a firm called Textest in Hong Kong. This firm recommends the issue of the Sanforising licences in Hong Kong. I accepted Mr. Chiu as being an expert in the Sanforising process. He said that on the 27th of March 1976 as a result of a phone call from Mr. Chong Lai Hung he went to the Defendant's factory and checked the machines. He said that the Defendants had three Sanforising machines. He noticed that the material that was being processed, which was the material in dispute, was wrinkled. The operators had tried various methods to eliminate the problem. He examined the material and the machines. He said the machine was in good operating order and he fed in some material. He said that it stuck to the surface of the rubber belt drum which is in the machine. This caused some irregular wrinkling. He also said there was some blue coloured starch stuck onto the drum. Mr. Gary Cheng was there at the time. Mr. Chiu suggested that some other denim material be sewed onto the problem material and that they both be Sanforised together. This was done and once more the problem material produced wrinkles and starch came out. The other denim material was satisfactory. Mr. Chiu said that it is impossible to feed material into a Sanforising machine at an angle as had been suggested as a possible cause for the problem by Mrs. Boyde. He said that there had been similar problems in other factories due to the presence in the denim of material which could not stand the high temperature of the Sanforising process. He said however that would not be the starch alone. He suggested on this occasion that the denim be washed and reprocessed. He said that some of the material was also tested with a Hoffman press and he found that some dye came out.

15. Expert evidence was given on behalf of the Defendant by Mr. Lee Wing Kai. Mr. Lee handed in a list of qualifications and that I was satisfied from this that he was highly qualified in the textile industry and in particular in the dyeing side of it. He has been employed as a lecturer at the Hong Kong Polytechnic since July 1973. Mr. Lee described that the dyeing process which is carried out onto the yarn when it is manufactured and that this process also involves not only a dyeing but also the adding of starch to the material. After the material has been woven the finishing may involve a further starching, depending on the requirements. He said that the second operation involved three components being used; the starch material, a softener and a wetting agent. The softener he said is used to plasticize or to make the starch more pliable and wetting agent is to enable the starch together with the softener to be spread evenly into the material. Mr. Lee said that he obtained some denim from normal commercial sources and he also obtained another sample which had been sized with the standard sizing material used by the Defendant and he also obtained some of the material which is the subject of the claim. All these materials were tested in a Hoffman press and once again the two samples of material which were not from the disputed lot showed no dye stains whereas the material obtained from the lot subject to be claimed showed severe dye staining. Mr. Lee also said that he carried out what he called the nitric acid test on the samples of denim material and this showed that in the samples obtained from the material in dispute the dye was not indigo dye but again this was not really in dispute. He went on to say however that if one used a mixture of two different dyes as was done in this case the selection and the control of the conditions are very critical. Mr. Lee said that whereas indigo dye was applied cold, Hydron should be applied hot and he suggested that a temperature of 80 ^o degrees centigrade would be about right. In Mr. Lee's opinion there were several possible explanations for the running of the dye stuffs in the defective material. He said this could be due to an inadequate washing of the yarn after it had been dyed or the selection of the dyes was not properly done (by that I assume he refers to the use of the indigo as well as Hydron) or that the sizing material applied to the yarn before it was then sent into the weaver had acted as a "stripping agent" for the particular dye stuff used. Mr. Lee gave evidence of two other matters which he had investigated. One was that he had treated three different pieces of material with the starch which was used by the Defendant company. One piece was given three times the normal amount of starch but even this did not cause any colour running. He was therefore of the view that even grossly excessive amount of starch would not cause the defects which had been found in the material which is the subject of the claim. He also said that he had looked at the amount of twisting of the threads in the four pieces of material which were processed by the Union Industry Company. He concluded from this test that the four pieces were not the same as the defective denim. Taking this evidence together with the other evidence I am satisfied that there is not sufficient for me to conclude that this four pieces processed by the Union Industry Company were the same as the defective denim and indeed the evidence seems to point to the contrary.

16. Evidence was given by Mr. Chong Lai Hung and who is a Director of the Defendant company and also by his uncle Mr. Chong Ming Cheung who is the financial controller. I do not think there is much to be gained by setting out that evidence in any great detail. I accepted that Mr. Chong Lai Hung as a witness of truth although in some aspects he was not clearly sure of exactly what had happened, the events having taken place a considerable time ago. His uncle Chong Ming Cheung I did not accept as a witness of truth but it seemed to me that his evidence did not really affect the matter one way or the other except as regards the alleged agreement between the Defendant and the Plaintiff that the Defendant would take over the defective material and pay for it. I was satisfied on that point, if on no other, that Mr. Chong Ming Cheung was in fact telling the truth and that there was no such agreement.

17. I am satisfied taking into account all the expert evidence that it is now impossible to say what was the cause of the defect in the denim. It might have come form the dye not being properly fixed in the material when it was at the stage of being only yarn or it may have been result of wrong finishing. I accepted that both Mrs. Boyde and Mr. Lee were experts in their own field. However Mrs. Boyde acknowledged that her particular expertise was not in a field of dyeing. Furthermore her evidence and her opinion was very largely based on the supposition that the four rolls of material processed via the Union Industry Company was the same as the defective material. On a balance of probabilities I am satisfied that it is more likely that the fault lay in the dyeing of the yarn by the Plaintiff, not in the finishing done by the Defendant. The Plaintiff's claim is therefore dismissed. It is not in dispute that there is a sum of $100,000 owing to the Defendant by the Plaintiff for processing charges. Judgment will be entered accordingly.

18. There is a further claim by the Defendant against the Plaintiff for storage charges of the material in its godown and a claim in respect of coolie hire. I find that there has been no agreement of any sort that the Plaintiff would be responsible for these charges. The material has been detained by the Defendant and I do not consider that the Defendant is entitled to any amount for storage charges or for coolic hire. The Defendant is entitled to costs in respect of the Plaintiff's claim and in respect of the its counterclaim for $100,000 plus interest at 10% per annum from 19th December 1977 to date of payment.

19. The Plaintiff is entitled to possession of the goods in dispute now held by the Defendant.

Representation:

Mr. Francis Eddis instructed by Gallant Y.T. Ho & Co for Plaintiff

Mr. Ronny Tong instructed by Deacons for defendant.