Cluett H.K. Limited t/a Six Continents v. Hercules Knitters Limited

HCA001669/1985

Contract - sale of goods - whether garments sold for export were of acceptable quality - whether irrespective of quality garments accepted by plaintiff buyer - proof of loss - relationship of export quotas purchased by plaintiff to shipments of goods to its customer in United States - pending resolution of dispute plaintiff failed to pay for other purchases - Held: 1. Garments were not of acceptable quality; 2. Garments irrespective of quality were not accepted by plaintiff; 3. judgment for plaintiff in sums of US$73,948.23 and HK$30,996.01; 4. judgment for defendant on counterclaim for US$2,124 and HK$81,774.79; Judgment on counterclaim to be set off against judgment on claim - Sections 36, 37 and 57 Sale of Goods Ordinance, Cap. 26.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

H.C. Action No. 1669 of 1985

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Coram: Deputy High Court Judge Cruden

Dates of Hearing: 28th, 29th, 30th and 31st October 1986.

Date of Judgment: 21st November 1986

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JUDGMENT

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1. In January 1984 the plaintiff agreed to purchase from the defendant 2,483 ladies lambswool skirts and 6,770 ladies lambswool sweaters labelled with the brandname "Regatta" for a total price of US$57,937.30. These lambswool garments were, after payment, at the request of the plaintiff, shipped by the defendant during June 1984, to the plaintiff's parent company in New York, Six Continents Ltd. Six Continents Ltd. thereupon, in accordance with a pre-existing contract, sold them to an American wholesaler, Regatta Sport. After inspection, Regatta Sport rejected all the garments, because of various alleged colours shading, and other defects. Six Continents Ltd. attempted to resell the garments at a reduced price to another American wholesaler, Bounty Trading Corporation but it too rejected the garments on similar grounds.

2. Six Continents Ltd. then informed the plaintiff that the garments had been rejected and debited the plaintiff with the cost of the garments together with freight and other expenses. A meeting was held between the plaintiff and the defendant on 21st August 1985, when the plaintiff gave notice that it formally refused to accept the garments. Thereafter demand was made by the plaintiff for the US$57,937.30 it had paid for the garments; US$40,629.12 for the cost of export quotas and freight; HK$35,024.32 for yarn samples, repacking and other freight charges; and interest. The defendant denies liability and counterclaims for separate sums of US$2,124, HK$20,063.89, HK$62,030.40 in relation to other contracts between the parties unrelated to the contract for the 9253 garments which are the subject of the claim. The plaintiff admits the counterclaim subject to a small reduction in quantum of HK$319.50, but pleads that it is entitled to set off the admitted balance of the counterclaim, against its own claim.

3. The contract between the parties was evidenced in writing by seven contractual documents supplied by the plaintiff, executed by both parties described as Seller's Confirmation order forms. Five of those forms were dated 24th January 1984 and two were dated 26th January 1984. It was common ground that some of those Seller's Confirmation orders were subject to variations contained in 4 Notices of Change dated 20th April 1984. In addition to the particulars appearing on the face of the Seller's Confirmation order forms, each was subject to 14 written terms and conditions endorsed on the reverse side thereof.

4. Two principal issues arise for determination. First, whether the garments supplied were of acceptable quality. Secondly, irrespective of the question of quality, had the plaintiff nevertheless accepted the garments.

Whether the garments were of acceptable quality

5. Mr. T.T.P. Edwards, a director of the plaintiff with considerable experience of the textile industry and having spent the past 11 years in this field in Asia, gave evidence. He explained that originally Six Continents Ltd. informed him of the 5 colours selected by Regatta for the garments. Mr. Edwards conveyed these particulars to the defendant. In accordance with trade custom, the defendant produced samples of the natural yarn dyed in these five colours. The dyed samples are known as "lab dips". The lab dips were sent to the plaintiff mounted on a sheet which was produced by Mr. Edwards as Exhibit P.117(a). Mr. Edwards stated that the colours of the 5 lab dips were subsequently approved by the plaintiff which enabled the defendant to proceed to dye the balance of the yarn and manufacture the garments.

6. The major complaint of the plaintiff was that when the garments were delivered the colour of the garments did not correspond with the colour of the lab dips. Further, that within each colour there were several different shades. Mr. Edwards stated that not only did the colours of the garments not correspond with the lab dips but that the colour defects also resulted in the garments being unco-ordinated. The original colours were chosen so that the various skirts and sweaters could be worn together as part of an overall co-ordinated colour scheme. In the trade this concept is referred to as "mix and match". Mr. F.Y.K. Ng, the defendant's Sales Manager, stated that the defendant was never told that the garments were to make up a co-ordinated range of colours. Mr. Ng stated that if that fact had been known particular care would have been taken to ensure that all the yarn for each colour was dyed in the same cyclinder. The defendant had dyed yarn and supplied garments for the plaintiff under previous orders but had never been asked for co-ordinated or matched colours. Mr. Ng stated that where colours were not required to be co-ordinated, yarn of the same colour might be dyed in different cylinders, resulting in different shades of the same colour.

7. Mr. Edwards was uncertain whether when the order was placed the plaintiff expressly pointed out that the garments were colour co-ordinated. In his view it was not necessary to make such an express request, because if the dyed yarn had corresponded with the Exhibit 117(a) lab dips, the garments would necessarily have matched. I find that no express request was made by the plaintiff for co-ordinated or matched garments. The residual question is whether the colour of the garments corresponded with the colour of the lab dips to the extent the contract between the parties required.

8. As to the factual position, Mr. Edwards was emphatic that the colour of a large number of the garments did not correspond with the lab dips. I found him to be a reliable witness. During his evidence he referred to Exhibit P.4 which comprised 85 samples selected from the garments and submitted earlier this year to Textest Inc. a textile testing laboratory, which carries on business in Hong Kong. Mr. Edwards pointed out the differences in shades within various colours. The first colour on Exhibit 117(a) was vicuna. Cards 3 and 9 of Exhibit P.4 were made up of 17 samples of finished sweaters in that colour. Mr. Edwards stated that the majority of those samples were of different shades of vicuna. Mr. Edwards made similar criticisms of other samples in Exhibit P.3. The Court's own inspection of the garments confirmed Mr. Edward's criticism. This criticism included both variations between the garments and the lab dips and variations of shades within the same garment colour.

9. There was other evidence which the plaintiff adduced, relevant to colour. This evidence consisted of the action of buyers rejecting the garments and the reports of two testing laboratories. As to the former evidence, it arose as a result of what occurred after the garments were completed by the defendant. The defendant , on the instructions of the plaintiff, sent the garments to Six Continents Ltd. in New York. Six Continents Ltd. in accordance with a pre-existing contractual obligation, sent them on to Regatta. Regatta rejected the garments. Six Continents Ltd. attempted to resell them at a reduced price to another American wholesaler, Bounty Trading Corporation which in turn rejected them. Six Continents Ltd. then returned the garments to the plaintiff and debited it with the original cost plus consequential expenses. Counsel for the defendant correctly submitted, that its sole contractual obligation was to the plaintiff and not to the 3 American companies. I accept that submission but that does not make the actions of the American companies irrelevant. The action the American companies took contractually does not have any direct contractual affect on the defendant. However, the action those American companies took is relevant to the issue, whether the garments, as between the plaintiff and the defendant, were acceptable.

10. Regatta by letter dated 15th September 1984 confirmed to Six Continents Ltd. defects found by their quality control department which included colour and shading defects. The defective garments involved were 9000 approximately and according to Regatta that number of defects made the whole package unshippable to their customers. After an attempted resale to Bounty Trading Corporation, the latter by letter dated 1st October 1984, similarly rejected the garments due to colour, shading and other defects. The grounds for rejection by both those wholesalers relate to the same defects itemised by Mr. Edwards. Those rejections reinforce Mr. Edwards detailed criticisms.

11. Early in 1985, Six Continents Ltd. requested Better Fabrics Testing Bureau Inc. in New York, to test the colours and shades of the rejected garments. Under the hearsay rules, the Test Report of the Bureau dated 7th June 1985, was admitted in evidence. The Report showed that the Bureau randomly selected 5 sealed cartons of the shipment from which they tested 436 garments. The test was carried out against an approved colour swatch for each colour submitted to the Bureau by Six Continents Ltd. In respect of those 436 garments, 232 units did not match the approved standard, representing an overall percentage of 53.2%. The individual rejection percentage of the 5 boxes opened were 56.8% for Box 1; 58.6% for Box 2; 32.9% for Box 3; 76.1% for Box 4; and 38.7% for Box 5.

12. At the request of the plaintiff, Six Continents Ltd. earlier this year sent 100 samples of the rejected shipment back to Hong Kong to enable the plaintiff to carry out further tests. The garments were also made available for testing to the defendant, which elected not to carry out its own tests. The plaintiff sent the 100 garments to TexTest Inc. The tests were carried out against 5 different colour samples of yarn which, from the Court's own comparision, appear to be the same as the 5 colours in Exhibit P.117(a). The Report of TexTest Inc. was that the quality of the samples taken from 100 garments was unacceptable. That conclusion was based on a threefold colour comparision, the third of which, I appreciate, involved a matching evaluation test. The findings indicated that 79 out of the 100 samples did not correspond with the lab dips. Other colour inconsistencies were also found.

13. The defendant launched a number of attacks on the plaintiff's evidence on quality. I have already dealt with the non-contractual relationship between the defendant and the 3 American companies. As to the results of TexTest Inc., I accept that it shares in part a common shareholding with the plaintiff. I have taken that factor into account. Mr. Peter Chiu, the Managing Director of TexTest Inc., whose qualifications include a Masters degree in Textiles from Leeds University, gave evidence. He stated that TexTest was established in Hong Kong in 1978 and carries out quality and other tests for the textile industry. Mr. Chiu stated that the 100 samples were tested by TexTest Inc. according to their usual procedures and that he reviewed the results of the tests before the report, Exhibit P.4, was delivered to the plaintiff. He explained that the detailed tests were carried out by his subordinate, Miss P. P. Pao, the Laboratory Director, who in turn was assisted by 3 technicians.

14. The defence submitted that no weight should be given to Mr. Chin's evidence as he did not personally carry out the tests. In addition, it was submitted, that the card containing the 5 standard stock yarns submitted by the plaintiff to TexTest Inc., against which the garment samples were compared, had not been identified as having the same colours as those which made up the lab dips in Exhibit P.117(a). Dealing with the last objection first, I accept that no witness identified those two sets as being of the same 5 colours. However, from Mr. Edwards evidence I find that they were submitted by the plaintiff, for the test purpose already described. I have had an opportunity to compare the two sets of colours. The 5 lab dips are mounted on cardboard and each colour is described by name and number. A photo copy of the cardboard including those references was used to mount the colours in Exhibit P.4. The coloured yarn is also mounted on the photo copy in the same places as the yarn on the cardboard of Exhibit P.117(a). A direct comparison of the 5 sets of coloured yarn satisfied me that the respective colours on Exhibit P.4 and Exhibit P.117(a) are the same.

15. I accept that Mr. Chiu did not personally carry out the tests. However, they were carried out by his subordinates who were responsible to him and he reviewed the results before the report was issued. When giving evidence he explained the international testing procedures and standards followed by TexTest Inc. and referred to the major international textile firms for whom his Company carries out tests. Mr. Chiu produced Exhibit P.4 and explained its more than 50 pages which included samples of all the 100 garments tested. I hold that Mr. Chiu is an expert in textile testing and as a matter of law was competent to produce his Company's report. I further hold that he was competent to give his opinion on the garments and was entitled to base, his opinion in part on the results of the tests carried out by other members of his Company under his general supervision. I found Mr. Chiu to be both an expert and a reliable witness.

16. The defence also submitted that there had been no evidence that the colour swatches used as the testing standard by Better Fabrics Testing Bureau Inc. contained the same colour yarn as Exhibit P.117(a). I find there was no such direct evidence. The evidence was limited to Mr. Edwards statement that he had requested Six Continents Ltd. to have samples of the garments rejected by Regatta and the Bounty Trading Corporation, tested by an independent American laboratory. On this point I also remind myself that the lab dips were produced by the defendant in conformity with original colour samples, supplied to it by the plaintiff. Those colour samples had earlier been selected by Regatta and handed to Six Continents Ltd., who in turn had sent them on to the plaintiff. After the lab dips were produced they, in turn, were conveyed to Regatta through the defendant - plaintiff - Six Continents Ltd. reverse chain, for approval by Regatta. When I review the whole of the evidence I find that it is more probable than not, that the colour swatches used as the testing standard, were the same as the 5 colours which make up Exhibit P.117(a).

17. As to the expertise of Better Fabrics Testing Bureau Inc., Mr. Edwards, himself an American, stated that it is a well known textile testing Company in the United States. The presentation of the report is consistent with that evidence. In addition, when Mr. Chiu gave evidence he was questioned on this issue. Mr. Chiu stated that Better Fabrics Testing Bureau Inc. was a member of the large Inchcape Group. He stated it was a well known textile testing company and a competitor of his own Company in the testing field. I am satisfied that Better Fabrics Testing Bureau Inc is an expert and reputable textile testing Company.

18. Turning to the contractual position, the question of quality had been contemplated by the parties and expressly provided for in the Seller's Confirmation order forms. Clause 2 required that the garments were to be of "first quality". The Clause went onto provide that colours were to conform to the accepted colour swatches "within commercially acceptable standards". Clause 3 provided that the plaintiff had the right to cancel an order if 1% of the finished goods tendered for shipment were substandard. The evidence that the colours were not of a commercially acceptable standard is overwhelming. I further find that the proportion of substandard garments, was well in excess of 1%.

19. On the first issue I find that the garments were not of acceptable quality.

20. Whether irrespective of quality the plaintiff accepted the garments.

21. I accept the defence submission, that both during the manufacturing process and after the garments were completed but before packaging, the plaintiff on several occasions carried out inspections. I find that the plaintiff both had the opportunity to inspect the garments at those various stages and did in fact inspect the garments. I further find that during the manufacturing process faults were found and that these were remedied to the plaintiff's satisfaction or other action taken. The manuscript memorandum made on 6th May 1984 in respect of the discrepancies therein noted, is one example of this procedure. Another is the written agreement of the defendant on 10th May 1984 to a reduction in the contract price of US$2,400.20 in relation to a particular colour variation therein particularised. On 9th June 1984 the defendant, by letter, agreed to indemnify the plaintiff for any claims made by customers against the plaintiff in respect of certain creases therein mentioned.

22. I also accept that before the garments were shipped by the defendant to the American address nominated by the plaintiff, the garments were inspected by the plaintiff and Inspection Certificates issued in respect of all the shipments. The defence assert that in view of the various inspections carried out by the plaintiff, culminating in the issue of Inspection Certificates immediately before shipment, it was not open to the plaintiff, several months later, to reject the garments. It was submitted that the rejection of the garments at that later stage, by the end customer with whom the defendant had never had any contractual relationship, does not entitle the plaintiff to reject the garments as against the defendant.

23. There were several Inspection Certificates issued by the plaintiff and they are all in common form concluding with these two paragraphs:

"This is to certify that the stock of the above order has been inspected by our representative who found it acceptable. Therefore, we agree to release the goods for shipment.

This certificate of inspection in no way exonerates the manufacturer's responsibility for the goods and any recourse from the customer shall be the liability by the seller. "

The Certificates were signed by Mr. Edwards on behalf of the plaintiff and also signed by the employee of the plaintiff, who carried out the inspection. The Certificates were not signed by the defendant. Counsel for the defendant rightly points out, that the conditions set out therein, were not agreed to by the defendant. In fact they are unilateral declarations by the plaintiff. The final part of the second paragraph, I accept, does not impose any contractual obligation on the defendant to be responsible for any liability which the plaintiff may be under to its customer. However, by the opening words of the second paragraph, the plaintiff does purport to qualify its acceptance of the goods. It is, of course, open to a buyer to qualify acceptance.

24. On the issue of acceptance I was also referred to the Sale of Goods Ordinance, Cap. 26 and the terms and conditions of the Seller's Confirmation order forms. Counsel for the defendant referred to Sections 36 and 37 of the Sale of Goods Ordinance. Section 36 is the provision under which a buyer is entitled to a reasonable opportunity to examine the goods. The defendant submits that opportunity was given before shipment and resulted in the buyer delivering to the defendant the Inspection Certificates. Section 37 sets out the various circumstances whereupon the buyer will be deemed to have accepted the goods. One of those circumstances the defendant relied on, was where the buyer "... does any act in relation to them which is inconsistent with the ownership of the seller..."   Counsel for the defendant points out that it is undisputed that after the plaintiff, as buyer, took delivery it sold the goods to Six Continents Ltd. which in turn sold the goods to Regatta and later attempted to resell them to the Bounty Trading Corporation. Those transactions, it was submitted, were inconsistent with the ownership of the goods by the plaintiff. The plaintiff, it was submitted, is therefore deemed to have accepted the goods.

25. While those well known provisions of the Sale of Goods Ordinance, generally apply to contracts, the parties to a particular contract may exclude them. Section 57 provides that implied conditions may be negatived or varied by express agreement. Further, that a condition implied by the Ordinance is negatived if it is inconsistent with an express condition in the actual contract. Clanse 9 of the terms and conditions of the contract is concerned with acceptance. Under Clause 9, acceptance of all or any part of the goods is not deemed to be a waiver of the buyer's right either to cancel or return all or any portion of the goods because of failure to conform to order, or by reason of defects latent or patent.

26. In any event the instant factual position is rather different to what frequently occurs when a buyer purchases goods from the seller and later proceeds to resell them. In the instant case, in accordance with common usage in the textile garment trade, the original contracts between Regatta and Six Continents Ltd. and between Six Continents Ltd. and the plaintiff, were negotiated before the now disputed contract between the plaintiff and the defendant. I also record that the attempted resale to the Bounty Trading Corporation was pursuant to Clause 4, which empowered the plaintiff to resell any substandard goods to a third party and recover any difference in price from the defendant.

27. I hold that the provisions of Section 37 of the Sale of Goods Ordinance are inconsistent with the express terms of the contract and therefore do not apply. The original contracts variously between the plaintiff and the American companies were, I find, for the sale of these fashion garments on the American market. I have found that the garments were substandard. The American companies on that ground rejected the garments. Under Clause 9 the plaintiff was in those circumstances entitled to cancel the contract with the defendant. When the plaintiff completed the Inspection Certificates, it effectively preserved its position under Clause 9, by the conditional nature of the Certificates already described. I hold that the garments were not accepted by the plaintiff.

Quantum

28. The plaintiff is therefore entitled to damages for its proven loss. There was no dispute that if the plaintiff succeeded on liability, the purchase price of US$57,937.30 paid by the plaintiff, was recoverable and that sum is awarded. The plaintiff is also awarded HK HK$30,996.01 for yarn samples and certain air freight charges which were similarly undisputed.

29. The remaining damages sought, relate to the following items:

30. On Mr. Edwards oral evidence, supported by documentary evidence, I am satisfied that Corbett International Inc., the customs brokers for Six Continents Ltd., paid US$1,056.21 and US$10,442.94 to the United States Government, for import duty on the garments: sold by the plaintiff to Six Continents Ltd. I am further satisfied that as a consequence of Six Continents Ltd. lawfully rejecting the garments, it had a proper claim against the plaintiff for the amount of duty paid. Six Continents Ltd. has made demand for payment, by debiting its current account with the plaintiff. The plaintiff has accepted that debit. I am satisfied that the plaintiff has established its claim against the defendant for duty which totals US$11,499.15.

31. The freight charges of US$5,873.28 were in respect of charges incurred in the United States and originally charged to Six Continents Ltd. I am satisfied that, where such charges are proven, they are recoverable by the plaintiff for the reasons already given in respect of import duty. At the hearing freight accounts were produced totalling US$4,511.78. Mr. Edwards explained that accounts for the balance were not available but that the plaintiff had accepted liability for the larger sum of US$5,873.28. So far as the claim against the defendant is concerned, only the lesser sum of $4,511.78 has been proven and I allow damages in that sum. I do not find the claim for repacking charges of HKS4,028.31 proven and it is disallowed.

32. The remaining claim for US$23,256.69 being the alleged cost of export quotas is made up as follows:

33. The plaintiff had to obtain quotas for the export of the garments to the United States. Export quotas are divided into different categories. Skirts came within Category 442 and sweaters within Category 438. There were also 3 types of quotas, namely permanent quotas, temporary quotas and free quotas. The quantity of goods exportable under a quota are calculated in dozen lots. The quantity of skirts to be exported totalled 207 dozen approximately while the sweaters totalled 565 dozen approximately.

34. Mr. Edwards stated that the plaintiff periodically purchased quotas to meet anticipated orders. As orders were completed and ready for export, the plaintiff used earlier expiring quotas from its bank of quotas, for those goods first ready for export. The quantity of goods to be exported under an order might not correspond with the quantity of a particular quota but sufficient quota were provided from, if necessary, a number of quotas, to enable the export of that order to proceed. For these reasons, he was unable to state whether a particular quota purchased in anticipation of the Regatta order, was in fact used for the subsequent export of that order.

35. However a large number of documents relating to the purchase of Category 438 and 442 quotas were produced. So far as permanent quotas were concerned, documents evidencing the purchase of 2028 dozen Category 437 quotas and 425 dozen Category 442 quotas were produced. Within those purchases 543 dozen Category 438 quotas, were purchased for the Regatta order and part of a further 200 dozen was also initially marked for that order. Under Category 442 all 425 dozen were initially marked for the Regatta order. During the same period the plaintiff also purchased temporary quotas for 243 dozen pieces under Category 438 and 175 dozen under Category 442. In addition, the plaintiff received an entitlement of 79 dozen of Category 442 pieces, under the free quota scheme authorised by the Import and Export Ordinance.

36. Mr. Edwards stated that the temporary quotas could only be used once but the permanent quotas continued to exist from year to year. Permanent quotas are transferable and have a market value which may widely fluctuate. The plaintiff's procedure was to charge the cost of a temporary quota against the order it was purchased to service. However, in the case of permanent quotas their cost was not wholly charged against the first year's orders but amortised over the full currency of the quota. The amortisation calculations were carried out by the plaintiff's parent company, Six Continents Ltd., in New York. Mr. Edwards stated that the US$1.64 per piece and US$2.83 per piece rates, were calculated in New York. In the case of permanent quotas the calculations were made not for their full cost but in accordance with the Company's usual amortisation practice. Six Continents Ltd. had charged the plaintiff with those amounts. The plaintiff accepted that liability.

37. Counsel for the defendant attacked the quota claim on several grounds. He pointed out that the plaintiff was unable to relate a specific quota to a particular order, and was unable to give details of the amortisation formula. In the defence submission the plaintiff, at most, would be entitled to recover the cost of the temporary quotas. However, on the evidence it was impossible, it was submitted, to determine what proportion of the order was exported under either permanent, temporary or free quotas.

38. I hold that the plaintiff, subject to proof, is entitled to recover the cost of purchasing quotas for the export of the 2483 skirts and 6779 sweaters. I accept the defendant's submission that the difficulty is in ascertaining the actual cost of those quotas to the plaintiff. The plaintiff's quantification of loss is based on calculations made by Six Continents Ltd. in New York which included the amortisation of the value of the permanent quotas. Mr. Edwards candidly conceded that he was not familiar with the methods used in making those calculations but as between the plaintiff and Six Continents Ltd. the former accepted those calculations as accurate and reasonable.

39. I consider there is substance in the complaint of Counsel for the defendant, that not only have the details of those calculations not been supplied but there has been no opportunity to cross-examine any witness as to their soundness. I hold that the evidence that the plaintiff has accepted the calculations made by Six Continents Ltd. in relation to quota costs does not, for the purposes of this action, establish as against the defendant, the loss suffered.

40. I turn to consider whether the remaining evidence establishes, on the balance of probabilities, the amount of the plaintiff's loss. There is evidence before me from which it might have been possible to arrive at a figure on a notional basis. I will deal first with the Category 442 skirts quota required for 207 dozen pieces. The plaintiff's evidence was that its quota bank included 79 dozen free quota. If the free quota were applied to the Regatta order this would have left a quota balance of 128 dozen to purchase. The plaintiff's evidence also established that it purchased 600 dozen Category 442 quota of which 425 dozen was permanent quota and 175 dozen temporary quota. If the remaining balance of 128 dozen required was found from and apportioned between those different types of quota, approximately 70% would have been provided on a pro rata basis from permanent quotas and 30% from temporary quotas.

41. However, even if that notional apportionment could be accepted there is simply insufficient evidence to enable the annual value of the permanent quotas to be assessed. The lack of detailed evidence is further complicated by the fact that it was undisputed that the market value of permanent quota, which is legally negotiable, varies from year to year and within each year. On the evidence, it is not possible to quantify the cost of permanent quota for the Regatta order. If the notional amount of temporary quota, namely 38 dozen, being 30% of 128 dozen, is considered separately, the only evidence of value is the plaintiff's claim US$1.64 per piece. However, that cost, which equals US$19.68 per dozen, includes an element representing the amortised value of the permanent quotas. If a very broad approach ignoring this amortisation factor were adopted, the notional cost of temporary quota under Category 442 would in round figures be US$748. In relation to the US$4,072.12 claimed under this head I have considered whether, on the evidence it is open to the Court to award the lesser sum of US$748. I have reached the conclusion that any such notional assessment is based on too many hypotheses. In the result such an assessment would be more speculative than probable. On the evidence I am unable to make any award for the quota purchased for the skirts under Category 442. Similar evidential difficulties also prevent any award being made, for the quota purchased for sweaters under Category 438.

42. In the result the plaintiff is awarded under the amended statement of claim the following damages:

(a) Under paragraph 3 the sum of     US$57,937.30.

(b) Under paragraph 9 the sum of     US$16,010.93

(c) Under paragraph 10 the sum of     HK$30,996.01

43. Interest is awarded on those sums in terms of paragraph 11 of the amended statement of claim and liberty is reserved for the parties to make further submissions on the rate of interest, costs and any other consequential matters.

Counterclaim

44. The defendant claimed the various sums set out in its counterclaim, namely US$2,124, HK$20,063.89 and HK $62,030.40. The plaintiff admitted all those claims except an amount of HK$1,306.50 being the sum appearing on an invoice dated 23rd July 1984 which was included in the defendant's counterclaim for HK $20,063.89. In respect of that item, the plaintiff admitted the lesser sum of HK$987. No evidence was called on the counterclaim for the counterclaimed HK$20,063.89, The defendant is entitled, on the plaintiff's admission, to judgment for the lesser sum of HK$19,744.39. There will therefore be judgment for the defendant on the counterclaim for:

(a) Under paragraph 12(a) the sum of     US$2,124

(b) Under paragraph 12(b) the sum of     Hk$19,744.39

(c) Under paragraph 12(c) the sum of     Hk$62,030.40

The plaintiff is entitled to set off the amount of the judgment on the claim against the sum awarded under the counterclaim. Liberty is reserved in respect of interest, costs and any other consequential matters.

Representation:

Mr. S. F. Graham instructed by Robertson, Double & Boase for the plaintiff.

Mr. R.E. Mayne instructed by S. H. Leung & Co. for the defendant.