Wo Loong Hong v. Canton Overseas Trading Co

HCA000192/1947

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION No. 192 of 1947

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Coram: Mr. Justice E.H. Williams.

Date of Judgment: 19 June 1948

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JUDGMENT

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1. Plaintiffs claim against the defendants damages for breach of contract to accept and pay for goods. Defendants deny they are in breach of the contract and counterclaim for damages for breach of the contract, namely, non-delivery within the contract time.

2. The contract was dated the 29th April, 1947 and was for the sale of 500 buffalo hides of average weight 40 lbs., to be packed in bundles at the price of $245 per picul, less discount, f.o.b. lighter in Hong Kong, for shipment-May, 1947. A previous contract for similar hides but of lighter weight for shipment-May 1947 had been signed by the parties on 19th April. This latter contract is only relevant to the case in so far as certain facts connected with the carrying out of this contract throw light on the conduct of the parties during the period relevant to the contract in dispute.

3. In their Statement of Claim, the plaintiffs set out the terms of the contract stating that on the 23rd June the plaintiffs, at defendants request, packed the hides under the supervision of the defendants' employees but defendants thereafter refused to take delivery of the goods or pay the price and plaintiffs claimed $10,614.90 being the difference between the market price on 6th August, 1947 and the contract price. It is now admitted that this version of events is somewhat incorrect, the true facts being that 120 hides were packed on the 14th June and the remainder on the 22nd June.

4. In the Statement of Defence, defendants stated they had entered into a contract with their buyers in Turkey for resale of these goods and the plaintiffs had failed in breach of the contract to have the goods ready for shipment at the contract time. They admitted inspection on the two dates in June but claimed this was done at the request of the plaintiffs and on the express understanding that the defendants did not waive their right to reject the goods and would only take delivery later in the event of their buyers in Turkey agreeing to accept the late delivery to them, which consent they had failed to obtain.

5. Later defendants obtained leave to amend their Statement of Defence in two ways (1) by adding the words, 'The position between the defendants and their buyers was in fact more complicated than was disclosed by the defendants to the plaintiffs', at the end of paragraph 5 and (2) by striking out the statement 'The defendants had failed to obtain their buyers consent to accept the goods' in paragraph 6 and substituting therefor the words 'The defendants' buyers refused to accept the goods'. They were ordered to give partioulars of the complicated position to which they had referred and supplied them. These were as follows:-

The object of obtaining particulars being to elucidate such parts of the pleadings as are not clear and to confine the opponents to a definite story, it can hardly be said that the particulars supplied achieved this object. Such expressions as 'they hoped', 'they felt' serve no useful purpose in pleadings.

6. In their reply (as amended, consequent on defendants' amended defence) the plaintiffs claimed the goods were available for May shipment or in the alternative the defendants, by their inspection of the goods in June, had impliedly waived the condition 'Shipment-May'; they further denied that there was any express understanding that defendants waived their right to reject the goods, only taking delivery if their buyers agreed to do so.

7. In their counterclaim, the defendants claimed that even if they had waived their right to reject the goods, they were still entitled to damages for the breach of the contract.

8. To understand the course of events, it is necessary to consider the agreed correspondence which passed between defendants and the firm Messrs. Leon Belilios & Jacques Braunsten of Alexandria (hereafter referred to as Belilios) who describe themselves as 'Commission Selling Agents, the ultimate purchasers being Messrs. Mustafa Candour & Co., Istanbul, Turkey (referred to as 'Gandour'). The legal position of Belilios vis-a-vis defendants on the one hand and Gandour on the other is not clear but is completely immaterial for the purposes of the case.

9. The contract for the 500 buffalo hides between plaintiffs and defendants was signed on 29th April - about the same time, defendants had also contracted for the purchase of another 500 hides from another firm. They had been in correspondence with Belilios by letter and cable regarding sales to them of these 1000 hides. On 25th April, defendants cabled Belilios giving him information regarding the contemplated contracts. On 28th April, Belilios cabled in reply that Gandour accepted both lots of 500 for shipment-May and asked defendants to confirm adding the words 'To cable credit'. It is apparent that the final failure to cable this credit was the origin of the present legal proceedings. On the 29th April, defendants cabled to Belilios confirming the sale to him and at the same time sent by Air mail a letter giving details of the hides, mentioning that they were awaiting the arrival of the letter of credit. Belilios also wrote to defendants on the same day confirming the sale on defendants' account to Gandour, and as to payment stated 'Usual Bank L/C to be opened in your favour by our Customers at once'.

10. As regards the contracts between plaintiffs and defendants, the course of business followed was that either plaintiffs would notify defendants they had hides ready for inspection or the defendants would make inquiries from them the evidence is not explicit on this point, doubtless either might be done: then defendants would send over their employees - an inspector and another - to examine hides and pick out those approved. These hides were then marked in stencil with the name of defendants' firm - put on the scales in bundles of 25 - weighed - then bound up by wire - by plaintiffs' employess (i.e. packed): defendants next nominated a lighter on which plaintiffs would put the bales of hides. The packing was at plaintiffs' expense costing about $23 per bale.

11. The evidence of Chan Kwok Chuen, managing partner of plaintiffs' firm, was that about the middle of May he notified defendants that hides under this contract were ready for inspection but no one came to inspect. The evidence of Mak Wa Sang, sole proprietor of defendants' firm was that Chan Kwok Chuen rang him up on 30th May to say hides for the earlier (19th April) contract were ready but hides for the present contract would not be ready until 2nd June - and Mak replied he would send his men to inspect the hides which were ready but as regards hides for the present contract he would have to cable his buyers to secure their consent because the goods were contracted for shipment in May. It is admitted he sent his inspector to inspect hides for the earlier contract on the 31st May. To ascertain where the truth lies. I look at the correspondence between defendants and Belilios - remembering that Mak Wa Sang now claims that in this correspondence with the agent, he was misrepresenting the true state of affairs as between plaintiffs and himself in order to hasten the arrival of the L/C. On the 25th May, defendants wrote to Belilios regarding other matters, reminded him that the letter of credit covering the present contract had not yet arrived and requested him to expedite its trans-mission by cable to enable defendants to complete arrangements for shipment. On the 30th May, defendants cabled 'Telegraph letter of credit immediately: goods ready'. They received no answer to this cable until the 13th June.

12. I reject unhesitatingly Mak's evidence that on 30th May he told Chen (plaintiffs' manager) he would have to get Belilios' consent to shipment later then May. He was in fact shipping to Belilios in June the goods contracted under the earlier contract for shipment in May. In my opinion, Mak was in no hurry to examine the goods for the reason that he had not yet received the L/C: he was not at that time interested in whether the goods were ready. Chan states that about 2nd June, he again phoned Mak to send men to examine the goods and Mak replied his men were busy at the time examining a cargo of gall nuts. Chan now pressed him on this date and thereafter to make the examination and states in evidence that prior to the end of May he felt he had no right to do so. On this point Mak admits that Chan had repeatedly pressed him between 2nd to 12th June to inspect the hides but he did not do so as the goods had not been ready for May shipment.

13. On the issue therefore as to whether there was a failure by plaintiffs to fulfil their contract for delivery for May shipment, the onus being on plaintiffs to satisfy me they were ready with the goods for May shipment, I have come to the conclusion that plaintiffs were ready with hides for inspection in time for May shipment - defendants, however, not having received the necessary L/C from Belilios, were in no way anxious to take delivery. True they did examine on 31st May goods for the earlier contract and I am asked by counsel for the defendants to hold that goods for the present contract were not then available for inspection otherwise they would have been then inspected. I am more impressed with the admitted evidence that a day or two after that plaintiffs urged him to send the inspector and continued to do so until about 12th June. Had defendants received the necessary letter of credit on or about the 1st June, as they had the right to expect in answer to their cable: 'Telegraph letter of credit immediately' on the 30th May, I am certain they would have gone ahead with the contract and selected the hides. Chan, managing partner of plaintiffs' firm, impressed me by the way he gave his evidence: the same did not apply to Mak, the defendant. Admittedly he was in a difficult position. If his correspondence with Belilios revealed the truth, then plaintiffs had the goods ready before 30th May (vide his cable to Belilios of that date). He now states that he was not telling the truth because he wanted his contract with Belilios or Gandour to go through and so benefit himself and plaintiffs. Counsel for the plaintiffs has described Mak in anything but flattering terms. I hold the view that there is one standard of honesty applicable in our dealings with others, irrespective of whether they happen to be living in Hong Kong, or Alexandria or Turkey. I find that plaintiffs were not in breach of their contract and they therefore succeed. The counterclaim is dismissed.

14. Conslderable evidence was called regarding events after 12th June and I feel I should consider them though in view of my finding, this now become unnecessary.

15. On 13th June, Mak received a cable from Belilios stating that Gandour was away on a business trip and that Belilios would be 'after him' to open the I/C on his return. I take the expression 'after him' to mean he would press Gandour to cable the credit. This clearly come as a shock to Mak, the defendant, though in his own mind the failure to cable the L/C immediately after receipt of his cable of the 30th May must have caused him some misgiving. Next day he wrote to Belilios expressing surprise that the L/C had not yet been sent giving as excuse that Gandour was away and stating he looked to Belilios to have the credit wired with the least possible delay because the suppliers were pressing him to take delivery of the hides as early as possible. Mak's evidence was that on the 13th June he conveyed the contents of the cable over the phone to Chan who replied to the effect that there was no indication that Gandour, on his return from his trip, might refuse to accept the goods though shipment was late and he requested defendant to send an inspector to inspect the hides which would then be tied in bundles, thus saying godown space which Chan required and later, if Gandour did accept the goods, they would be ready for immediate shipment. Mak's answer was that the request was reasonable and he agreed stressing that he would only take delivery provided Gandour in turn agreed to the late shipment. Chan denier that any conversation to this effect took place.

16. Mak sent his inspector on the 14th, 120 hides being selected and stencil marks of defendants' firm were put on them, they were weighed in bundles and put aside. The remainder were selected on the 22nd. Mak's inspector stated that the reason the 500 were not selected on the 14th was that they were not then available. Chan's godown keeper gave evidence that there were ample hides from which to select.

17. Apart from the evidence of the witnesses including Chan's emphatic denial that he had made any such agreement with Mak, I consider it extremely unlikely that Chan would permit the mark of defendants' firm to be put on the hides and that he would go to the expense of having the bales tied up with wire merely to save godown space with the possibility that defendants might later not accept delivery if Gandour in turn refused. As I have already stated, Mak was not prepared to go on with the contract here until he had received the necessary L/C. True he did convey to Chan on or about the 14th June that he was having some difficulty with his buyer or agent for Chan states he got the impression - an impression only - from Mak's conversation that the buyer might refuse to take the goods in which case defendants might ask him to reduce the price.

18. The evidence for the plaintiffs is that on the 23rd June. Chan's assistant handed Mak a debit note for the 500 hides but was put off with an excuse. Mak denies that the note was presented until about the 2nd July.

19. It is admitted that early in July, Chan was informed by Mak, that the buyer had definitely refused to take the goods as they were too late and that he therefore repudiated the contract with plaintiffs.

20. On the 3rd July, defendant (Mak) again cabled Belilios to telegraph the L/C immediately - this crossed a cable from Belilios to say Gandour was still away. It is to be observed that from May onwards, the price of buffalo hides was falling both in Hong Kong and in the Middle East - clearly defendant now realised that Gandour would not fulfil his contract. Hence defendant's desire to escape from his contract with plaintiffs.

21. On 7th July, Mak wrote to Belilios to the effect that the suppliers were repeatedly pressing him to take delivery and expressing surprise that the pretext that Gandour was absent was being put forward by Belilios to explain the failure to send the L/C: he urged Belilios to apply pressure to Gandour to wire the credit immeditately.

22. On 16th July, Belilios wrote to Mak informing him that Gandour had returned: that a 'terrible discussion' had taken place between them over the contract but without result. Belilios urged Mak to take energetic steps against Gandour by representations to the British Embassy at Cairo or the British Chamber of Commerce at Alexandria. The letter gave reasons for Gandour's decision to treat the contract as void, the main one being defendants' delay until the 30th May before notifying by cable that the L/C had not arrived, instead of cabling about 10th - 15th May.

23. This letter probably reached Mak about 23rd July. In the meantime, Chan had given his solicitors instructions and a letter of the 15th July was written by them to defendants requesting them to take delivery of the hides. Defendants' solicitor replied on the 18th July that the contract provided for shipment in May but the goods were not ready in June and inspection was then only made on the understanding that the consent of Gandour was obtained for late acceptance. The letter went on to say that defendants had already cabled several times to their agents (i.e. Belilios) in Alexandria 'in the matter', but had received a reply that the agents were unable to contact the buyer in Turkey. Obviously the words 'In the matter' must mean that defendants had cabled to ask the buyers' consent to take late delivery; in fact they had never done so - the sole purport of their cables was to ask for the L/C. It is of interest also to observe that on the 26th July i.e. after defendants, through their solicitors, had definitely refused the request to accept the goods, defendants cabled to Belilios acknowledging the receipt of the letter of 16th July and offered to let Gandour have the goods at a reduced price otherwise they (defendants) would sell the goods. They also followed this up with a letter of the 30th July to Belilios again stating that they might have no alternative but to dispose of the goods in Hong Kong and hold Belilios and Gandour responsible for the loss.

24. Regarding the amount of the damages, a dealer in cowhides gave evidence for plaintiffs that on 28th July, his firm had sold hides at $170 per picul - on 19th July his firm had sold at $179 per picul. In their letter of 15th July to defendants, plaintiffs' solicitor advised that the goods would be sold on 22nd July if delivery was not taken. The figure claimed by plaintiffs being $175 on the 6th August is, if anything, in favour of defendants as prices were falling. I therefore give judgment for plaintiffs for $10,614.90 and costs on the claim: defendants' counterclaim is dismissed with costs to the plaintiffs.