Mee Sun Manufacturing Co Ltd v. Ngai Cheong Metal Manufactory
Read the full judgment text of DCCJ 1132/1981 on BabelCite. This District Court judgment was delivered on 20 April 1982.
1. The plaintiff (''the buyer") is a limited company engaged in a wide range of import/export activities. The defendant ("the seller") is the sole proprietor of a firm which manufactures various metal products. On the 26th April, 1979 they entered into two written contracts whereby the seller agreed to sell 2,000 dozen pairs of cufflinks to the buyer for delivery "within May/June 1979" for a total price of HK$73,500, less a discount for cash payment. The first contract (MS 391/79) related to 1,0
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DCCJ001132/1981 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT TSUEN WAN CIVIL JURISDICTION ACTION NO. 1132 OF 1981 _______________________ Between
___________________ Coram: His Honour Judge Downey Date: 20 April 1982 --------------------------- JUDGMENT --------------------------- 1. The plaintiff (''the buyer") is a limited company engaged in a wide range of import/export activities. The defendant ("the seller") is the sole proprietor of a firm which manufactures various metal products. On the 26th April, 1979 they entered into two written contracts whereby the seller agreed to sell 2,000 dozen pairs of cufflinks to the buyer for delivery "within May/June 1979" for a total price of HK$73,500, less a discount for cash payment. The first contract (MS 391/79) related to 1,000 dozen pairs at a price of HK$38 per dozen (less a discount of 1% for cash); the second (MS 392/79) related to 1,000 dozen pairs at a price of HK$35. 50 per dozen (loss a discount of 2% for cash). The buyer ordered the cufflinks from the seller in order to perform subcontracts with a customer in Saudi Arabia, made by the buyer's agents there on the 22nd April 1979 and confirmed by the buyer on the 28th April 1979, at prices of US$9.00 per dozen for the cufflinks covered by MS 391/79, and US$8.00 per dozen for those covered by MS 392/79. The prices in the contracts between the buyer and the seller were expressed as "FOB HONG KONG"; those in the contracts with the sub-buyer were "CIF JEDDAH". 2. Although it has not really been disputed, I find as a fact that, at the time of the contracts, the seller knew or ought reasonably to have contemplated that the buyer required the cufflinks for re-sale by way of export from Hong Kong, and that the ultimate destination was very likely to be somewhere in the Middle East. Mr. Yung Wing Cheung, the managing director of the plaintiff, visited the Middle East in March 1979 to negotiate sales of cufflinks. There is his evidence (which I accept) that he had with him samples provided by the seller, and that he telexed back to his staff in Hong Kong, asking them to discuss prices with the seller. However he was unable to agree prices with his Saudi Arabian customer until after his return to Hong Kong, when he discussed prices with the seller, and various telex exchanges took place between him and his Saudi Arabian customer. 3. It is common ground that the seller delivered only 325 dozen pairs of cufflinks to the buyer, in August 1979, and that these were paid for at the contract price. It is also not disputed that on the 7th May 1979 the buyer paid to the seller HK$5,000 as a deposit or part-payment of the price in advance. All these transactions are covered by contemporaneous documentary evidence, consistent with the apparently business-like approach adopted by the parties at the beginning of their relationship. But, in all other material respects, neither the seller nor the buyer has acted in a manner which is consonant with their earlier prudent and business-like approach. Indeed, the extraordinary casualness on the part of both parties to the actual performance of their contractual obligations leaves me with a distinct, if somewhat intuitive, feeling that the issues, which I am expected to resolve in these proceedings, are not genuine issues or do not fairly and accurately reflect the problems experienced by the parties. I do not wish to exaggerate my difficulties but I must confess that, not for the first time, I find myself in a situation similar to that described in chapter 2 of Myself A Mandarin by Austin Coates (Frederick Muller Ltd: 1968) , with the exception that I am no able to say that, at the end of the day, I am sure that I have arrived at the true nature of the dispute between the parties. As a result, I am virtually forced to resolve the issues, which arise on the pleadings. in this case, in accordance with my assessment of the credibility of the oral evidence of the parties, with little, if any reliable circumstantial evidence, against which such subjective assessment can be tested. 4. Mr. Yeung submitted that the onus is upon the seller to justify his admitted failure to deliver the 1,675 dozen pairs of cuff-links, and if the grounds or reasons assigned for his failure, which also for the basis of his Counterclaim, are not sufficiently proved, because he is not a credible witness, the buyer must succeed. I think that that is the correct approach to adopt to the issues now before me, but, with respect, I do not think that the solution should turn solely upon my choice or preference as to the relative credibility of the parties. On some issues of fact I may prefer the evidence of the buyer or the seller. Indeed, on some issues of fact I may be convinced that one of the parties has told me a complete pack of lies. But, it does not follow that I should automatically reject that party's evidence on other issues of fact, because the conduct of the other party may lend some credence to the supposedly discredited party's assertions with regard to such other issues. The parameters of the system of trial of disputes in our courts permit some degree of selectivity or choice, on the part of the judge or arbiter. Even in cases where it is possible to come to a clear decision to prefer the evidence of one party that party's version of the facts may still be rejected as insufficient if it is inconsistent with the inherent probabilities of the case, such circumstantial evidence as may exist, and the undisputed facts. 5. One of the grounds upon which the seller seeks to excuse his failure to deliver the balance of the goods is the failure of the buyer to send shipment advices within the period of May/June 1979. It is not disputed that no shipment advices were issued during the period. The first was dated the 14th July 1979 and related to 350 dozen pairs of cufflinks under the first contract. Whether the buyer was obliged to issue such advices before the seller's duty to deliver could arise, might be of fundamental importance if their contractual relationship is governed by the normal obligations which arise in a F. O. B. contract. Both contracts are silent on this matter, except that they provide that Shipping Marks are "to be advised." I regard thin as merely an indication of the manner in which the goods were to be packaged once they were ready for delivery and not an indication that the buyer must take some positive steps before the seller's obligation to make delivery would arise. It is not disputed that the buyer was to be responsible for making all arrangements for shipment of the goods, such as booking shipping space and collecting the goods from the seller's place of business. Apart from co-operating with the buyer in obtaining the Certificates of Origin, the seller's only other duty was to pack the goods into cartons suitable for export. 6. I have not been referred to any authorities on this aspect of the contractual obligations of the parties. Having regard to the fact the contracts were for goods to be manufactured by the seller, and in the absence of any clear express provision in the contracts, I con-sider that a term to the effect that the buyer was not bound to issue shipment advices until it had been notified by the seller that the goods were ready for collection should be implied to give business efficacy to the contracts. Unless this were done, the buyer might be obliged to issue perfectly useless shipping advices. 7. It is the buyer's case that, although it continued to press for delivery, the seller was unable or unwilling to give any firm confirmation that the goods were ready for collection until July 1979, when he undertook to deliver 350 dozen pairs under the first contract. As a result, a set of documents (see Exhibit P.2), including a shipment advice, was prepared and despatched on the 14th July 1979 (see page 21 of agreed bundle). As the seller only delivered 325 dozen pairs, revised sets of documents had to be prepared before this quantity could be shipped to the Middle East. The seller contends that, in May 1979, he notified the buyer that the goods would be ready by the end of June, and, in fact, that all 2,000 dozen pairs were then manufactured by him, but was told by Mr. Yung and Miss Liany Kam that the buyer could not issue shipment advices because it had not received any Letter of Credit from its customer in Saudi Arabia. The seller further contends that Mr. Yung advised him to resell the cufflinks to another customer, if he could do so. 8. Whether, in or about June 1979 the buyer repudiated the contracts, or they were cancelled by mutual rescission between the buyer and seller, because of the failure of the buyer's customer to open the Letter of Credit, are, in my view, the crucial questions in this case. I will return to them later. At this stage, assuming that the buyer was in breach in not sending shipping advices during the period of May/June 1979, I do not consider that such breach per se amounted to a repudiation by the buyer. If it did, the seller did not accept it as a repudiation. On the contrary, the seller endeavoured to comply with the shipment advice dated the 14th July 1979, by deliver-ing 325 dozen pairs, and seeking to explain the "short-fall" of 25 dozen. (Mr. Lee Chuen Leung testified that one carton, containing 25 dozen pairs, was broken when the forwarder, engaged by the buyer, arrived to collect the 350 dozen pairs. ) he did not then refuse to make this partial delivery, on the ground that the contracts were already "dead". Nor did he insist upon the buyer taking delivery of the balance of the goods under the two contracts. Accordingly, I do not consider that the buyer's failure to send shipping advices during May/June 1979, alone constituted a repudiation discharging the seller from his obligation to deliver, and entitling him to damages, as claimed in his Counterclaim. 9. Before I attempt to deal with what I have described as the "crucial" questions, it is, I think, convenient to consider the evidence in support of the seller's Counterclaim, notwithstanding the fact that it cannot wholly be severed from the evidence and circumstances surrounding the "crucial" question. 10. In essence, the seller's Counterclaim, as finally formulated, is founded on expenses allegedly incurred by the seller in acquiring raw materials with which to manufacture the cufflinks, loss suffered by reselling 500 dozen pairs under the first contract at HK$2.00 below the contract price, and being left with 1,000 dozen pairs, under the second contract, as yet unsold. In my view, the seller has failed to prove, on the balance of probabilities, that he has suffered such damages as a result of the buyer's breach, assuming for the time being that such breach has been established. Apart from the fact that the invoices produced by the seller (Exhibits D1 to D6) to prove various expenditures in manufacturing the goods bear no relation to the expenses pleaded in paragraphs (a) and (b) of the particulars in, tire Amended Counterclaim, Mr. Yeung's able cross-examination of Mr. Lee, on the nature and quantities of the goods supposedly acquired under these exhibits leads me to conclude that the seller has failed to discharge the burden of proving that such expanses were incurred in an attempt to perform his contracts with the buyer, if at all. Indeed, Mr. Lee's evidence on this aspect of the case was hesitant and evasive, and caused me to suspect his assertion that he had finished manufacturing all the cufflinks, i. e. 2,000 dozen pairs under both contracts, by the end of June 1979. On this evidence alone I cannot say (or find) with any conviction that the seller did not succeed in manufacturing the cufflinks by the end of June 1979, or subsequently I simply cannot be satisfied by that evidence that the seller has established a claim to recover any damages other than purely nominal damages, for the assumed breach on the part of the buyer. 11. As to the alleged loss on the re-sale of 500 dozen pairs to Inter-Ocean Import & Export Co. (H.K.) Ltd., the evidence before me is somewhat neutral or ambiguous. The only "evidence" to support Mr. Lee's oral evidence of such resale ale is his own invoice dated 2nd October 1979 (Exhibit D7). The alleged purchaser was not called as a witness. The genuineness of this document, and the fact of the alleged re-sale are, in my view, placed in question, because of the seller's failure to make use of part of these supposedly finished goods to make good the "short-fall" of 25 dozen pairs under the shipping advice dated the " July 1979 (page 21 of agreed bundle), and his failure to insist upon delivery of the balance or payment of the contract price therefor. If the seller genuinely considered that he had performed his obligations under his contract with the buyer, one would expect him to make such demands before re-selling the unaccepted goods at a loss. But, if his failure to take these preliminary tactical steps is understandable, it is odd that his alleged re-sale at a loss was not immediately followed by some complaint. On the evidence before me, he merely explained that he had already sold the goods. That he did so at a loss was not made known until his then solicitors' letter dated the 31st July 1980, in reply to the letter before action from the buyer's solicitors (see pages 52 & 51 of the agreed bundle). Despite the reservation in the final paragraph of that letter, the amounts given therein, as the seller's alleged loss, are, in my view, so far removed from, or so unrealistically related to, the figures pleaded in the Amended Counterclaim and the seller's evidence that I could not properly conclude that the seller has proved the substance of his Amended Counterclaim, even allowing for his belief that he was entitled to retain the deposit of $5,000 by way of set-off or diminution of his losses. In all the circumstances, and bearing in mind the undisputed fact that, in or about July 1979, the seller relocated his factory, I am not persuaded, even on the balance of probabilities', that the seller had completed the manufacture of the 2,000 dozen pairs of cufflinks by the end of June 1979. That he had completed the manufacture of some of the cufflinks at a later date cannot be denied, because of the partial delivery in august 1979. Whether he actually manufactured the balance, or part thereof, at a later date is, in my view, uncertain. On the evidence before me, I can only conclude that the seller had failed to discharge the onus upon him of proving his Amended Counterclaim. It must, in my view, be dismissed. 12. In the rather unusual circumstances of this case, I do not think that the conclusions I have reached on the fate of the seller's Amended Counterclaim inevitably oblige me to find in favour of the buyer's claim. In the first place, such conclusions should not be automatically interpreted as positive findings of fact favourable to the buyer's claim, which, I conceive, must still be established, in the light of all the evidence laid before me. Secondly, my conclusion that the seller's counterclaim must be dismissed does not inevitably mean that the buyer's claim must succeed, because much, if not all, of the factual basis of that claim depends upon what precisely transpired between the parties between May and June 1979, or between June and July 1979. Insofar as I consider that the seller's Amended Counterclaim must be dismissed, I do so mainly because of my assessment of the evidence related to events which occurred in or about August 1979 and subsequently. 13. At the hearing, Mr. Leung sought further and better particulars of the allegations that the seller was advised to sell the goods to third parties as the buyer had not received deposits from its purchasers. The particulars given indicated that this alleged advice was given by Mr. Yung Wing Cheung to the seller in May, June, August and September 1979. In evidence, Mr. Lee Chuen Leung said that these oral conversations took place in June, July and August 1979. Mr. Yung denied ever giving that advice, or telling Mr. Lee that he had not received any deposit or payment from his customer. 14. On this aspect of the case, I regard none of the witnesses as completely reliable or satisfactory. Mr. Yung said that he first spoke to Mr. Lee about the difficulties over delivery at the beginning of June, yet his assistant, Miss Liany Kam, to whom he delegated this responsibility, said that she did not report the difficulties to her superior until about the 10th July 1979 Mr. Lee said that he was told by Miss ham in May, and by Mr. Yung in June, that no Letter of Credit had been received from the buyer's customer. Miss Kam was never asked whether she disclosed this information to Mr. Lee. Mr. Yung was never specifically asked whether he told Mr. Lee that no Letter of Credit had been received, possibly because Miss He's apparent instructions, at that stage, related to deposits rather than a Letter of Credit. I do not regard the discrepancy between deposits and Letter of Credit as signi-ficant. In essence, I consider that the seller is saying that he was given certain advice because the buyer had not received expected guaran-tees of payment from its customer in the Middle East. The nature of that advice is the important and difficult issue of fact I must attempt to resolve. However, on the totality of the evidence before me, I think that it is more probable that Mr. Lee was told by Miss Kam that the buyer had not, received the Letter of Credit from its customer and that this was one of the reasons why shipment advices could not be issued, and the contractual date for delivery was waived by the buyer. 15. I reach those conclusions on the bases of the following facts, which I am able to find, and the inferences I draw from those, and other facts, fully conscious of the danger of elevating speculation into the, permissible category of reasonable inference - a danger which is always present when the evidence is scanty. Although the buyer's contract with' its customer in the Middle East stipulated for payment by a confirmed and irrevocable Letter of Credit, none was ever made available to the buyer. In the absence of such guaranteed payment, a buyer would, in my view, be reluctant to despatch good to a distant and relatively unknown customer. Indeed, he would be justified in law in treating his customer's breach as discharging him from his obligation to ship the goods. Mr. Yung told me that the method of payment was changed to "DIP sight" and that this was done "at the end of April when the customer arrived. " In this respect, Mr. Yung must be mistaken. Apart from the fact that the contracts with his customer were only confirmed on the 28th April 1979 he had earlier testified that when he spoke to the seller in June 19'79 he said "the customer is now in Hong Kong pressing for shipment of goods." I think that it is more probable that the method of payment was changed in June 1979, and I so find. This would mean that, during the period stipulated for delivery in the contracts with the seller, the buyer would be in a state of considerable uncertainty, not knowing whether he would get paid by his customer and anxious to persuade the seller to cancel, or post-pone performance under, their contracts. In order to get the seller's agreement to such course, the natural thing would be for the buyer to explain that he had not yet received an assurance of payment from his customer, and I think that this was very probably done in this case, either by Miss Kam or by Mr. Yung, or both of them. If they did not reveal the fact that the buyer was having difficulties with its customer over payment, it is difficult to see how the seller could have been aware of this fact in October 1980, when his Defence was filed. 16. I come, therefore, to the crucial issue : was the seller told by the buyer to find another purchaser for the cufflinks? If the buyer had rescinded the contracts with its customer because of the latter's failure to open the Letter of Credit, one would expect the buyer to seek to get out of his contracts with the seller. I cannot rule out the possibility that this happened in this case, as there is very little evidence as to the state of the relations between the buyer and its customer in May of 1979. But, I think that it is unlikely in view of the evidence, which I accept, that the customer came to Hong Kong in June 1979 and agreed to pay by bill of exchange, and the fact that 325 dozen pairs were delivered by the seller in August, without any protest or complaint on his part, I do not think that Mr. Lee was ever told to re-sell the goods to others. If he had been so told, and he had already completed the manufacturing of 2,000 dozen pairs of cufflinks, I am sure that he would have registered his complaint, there and then, in some formal or written manner. He never did so until his solicitors wrote to the buyer solicitors on the 31st July 1980. I am satisfied that the parties mutually agreed to waive the date for delivery. Such a course would have been to their advantage. The buyer would not have to take the risk of being left with a large quantity of cufflinks, hoping that his customer would later guarantee acceptance and payment of the price; and the seller would gain more time to manufacture the goods, bearing in mind that he was about to move hie factory from Kowloon to the New Territories. As I have already indicated, I am not persuaded that he had manufactured all the goods by June 1979. Nor am I persuaded that he had partly done so to any appreciable extent by the end of May or beginning of June. 17. My conclusions that the buyer did not, at that time, repudiate the contracts by renouncing its obligations thereunder, and that they were not then cancelled by mutual rescission, are, in my view, further supported by the fact that nothing was said, at this stage, regarding the return or retention of the deposit of $5,000 paid by the buyer on the 7th May 1979. The buyer's failure to ask for repayment, at that time, coupled with the fact that there was, apparently, no attempt to deduct that sum from the amount of the seller's invoice (page 40 of agreed bundle) for the goods delivered in August 1979, leads me to infer that the buyer intended to accept, and expected to receive delivery of, the goods, or, at least, some of them, after the contractual date for delivery. At that time, the seller may have thought that the $5,000 then in his hands was adequate to compensate him for the loss he might suffer as a result of the buyer's assumed repudiation. However, I think that this is an extremely unlikely explanation for the seller's failure to claim, at that time a right to retain that deposit and to reserve his rights to claim other losses, as a result of the supposed breach by the buyer. Furthermore, if the seller genuinely thought that the contract or contracts with the buyer were "dead", it is distinctly odd that he did not immediately complain to the buyer about his loss, as a result of the alleged resale of 500 dozen cufflinks to Interocean Import & Export Co. (HK) Ltd. in October 1979. Details of this alleged loss were not revealed to the buyer until 8th October 1980, when the original Defence and Counterclaim was filed. 18. Although the evidence before me does not persuade me to come to the conclusion that the seller was told, in or about May or June 1979, that delivery of the goods, in accordance with the contracts, could not or would not be accepted by the buyer because of difficulties with its customer , and that he should re-sell the goods to others, if he could, at the same time I am not convinced that the buyer continued to press for delivery of the goods after the partial deliver] in August 1979. Mr. Yung's answers to this effect (and those of Miss Kam) were rather like the unvarying responses of a litany. When asked how he continued to press for delivery, he said that he, or one of the female employees of the buyer, would simply telephone the seller. Yet, although these efforts allegedly met with no response, either because the seller could not be located or declined to return messages left for him, the buyer never followed up these alleged oral requests for delivery with any written demand until 11th March 1980, when a set of documents, in the form of Exhibit P.2, was allegedly prepared (see pages 44-46 of agreed bundle). In his opening address, Mr. Yeung told me that the Shipment advice, which would normally be a carbon copy of this set, was sent to the seller by registered post but returned unopened to the buyer, and had since been "lost". However, no evidence was led before me to this effect or to explain the alleged loss of the document in question. The further suggestion that a "duplicate" shipment advice was later sent to the buyer under plain cover, though not supported by any evidence adduced by the buyer, is confirmed by the seller's admission that he received such a document in April 1980, although the sailing date of the vessel was inserted by hand, instead of being typed therein. 19. This written demand was for delivery of 650 dozen pairs of cufflinks under contract 391/79. It was repeated by similar documents dated 30th June 1980 (see pp 48-50 of agreed bundle). The seller did not comply with the demand. Mr. Lee told me that he telephoned the buyer and explained that the goods had been sold, presumably to Inter-Ocean Import & Export Co. (HK) Ltd. But, there is no evidence before me that he invited the buyer to take delivery of the other 175 dozen, under contract 391/79, which he supposedly had in his factory, assuming, as he claims, that he had manufactured all the goods under that contract. I do not think that that telephone call was made to the buyer by the seller. Yet, at the same time, it is very odd that the buyer's demand was limited to 650 dozen pairs, when the undisputed facts and the documents on the buyer's file clearly showed that only 325 dozen pairs had been delivered under that contract. If the buyer seriously regarded that contract as still subsisting, and wanted it to be performed, it is very strange that it did not require delivery of 675 dozen pairs. 20. The matter, which quite frankly troubles me greatly in this case, is that the evidence before rue leaves me with a distinct impression that the buyer regarded the contracts as "dead" or had slept on its rights thereunder, and only went through the formalities of sending shipment advices to the seller in order to provide some documentary basis on which their solicitors could subsequently write to the seller in the terms of the letter which was eventually sent. (cf page 51 of agreed bundle). Another impression or inference which can be gained from the undisputed facts and documentary evidence, as distinct from findings which depend upon the credibility of the witnesses' oral testi-mony, is that the buyer was not over-anxious to insist upon strict or immediate performance of the seller's obligations under the contracts in question, because it was uncertain whether its customer was still interested in receiving the goods or would pay for any deliveries made after August 1979. Indeed, on the documentary evidence before me there is some slight support for the inference that the buyer may have decided, after agreement with its customer or for other reasons, to postpone the date for performing its contracts with its customer until June or July of 1980. On the duplicate of the second contract (MS 392/79), which has remained at all times on the file kept by the buyer (page 9 of the agreed bundle), someone has written, in manuscript, alongside the typed dates for shipment delivery (i. e. "within May/June, 1979") the following words :- "End [(?)] June/July 80" There was, no evidence to explain this annotation. Indeed, there was scarcely any evidence at all relating to the second contract, apart from Mr. Lee's assertions that he had manufactured the goods under that contract and still had them in his factory, and Mr. Yung's remark that he "just left the second contract aside." In March 1980, when the buyer sent a shipment advice in respect of the first contract, because, according to the evidence of Mr. Yung, Mr. Lee didn't return the telephone calls made to him, no shipment advice or formal written demand for delivery of the goods under the second contract was sent to the seller. The only formal demand is contained in the letter from the buyer's solicitors dated 24th July 1980. There is nothing in that letter to suggest that the delivery dates for the goods covered by the second contract had been postponed to July 1980 by agreement between the parties. 21. Bearing in mind the obvious contrast between the business efficiency displayed, at least on the art of the buyer, before and shortly after the conclusion of the various contracts and the subsequent slack and rather desultory concern with, or approaches to, the actual performance of these obligations, and left with evidence which is scanty and unsatisfactory in many respects, I have found it very difficult to come to firm conclusions on the factual aspects of the issues between the parties to these proceedings. If this trial were one which required me to apply the standard of proof normally applied to criminal prosecutions, I would dismiss the buyer's claim without hesitation. But, of course, I must not apply that high degree of proof to the issues before me in this case. In all the circumstances, the documentary evidence and undisputed facts go no further than persuading me that the scales are evenly balanced. Although I think that Mr. Yung is more credible, as a witness, than Mr. Lee in general terms, I feel unable to conclude that I should prefer his evidence to that of Mr. Lee on every aspect in respect of which they differ.
22. With respect to the goods covered by the second contract, I am not satisfied that the buyer has proved its claim on the balance of probabilities. Prior to its solicitors' letter before action (page 51 of bundle), there is no documentary or objective evidence of any attempt to revive the seller's obligations under this contract. No shipment advice was ever sent in respect of this contract. The evidence of frequent attempts to reach the seller by telephone do not specifically relate to this contract, which was far slightly different goods, and which may not have retained the initial attraction, apparently shown by the buyer's customer in the Middle East! Furthermore, Mr. Yung, in his oral testimony, merely remarked that this contract was "just ..... loft aside. " He did not say, or even suggest, that this was done as a result of anything said or agreed between him and Mr. Lee. It was simply never explored in the course of the evidence adduced before me. 23. In all the circumstances, the conclusion I draw from this long period of inactivity on Goth sides is that the parties intended to abandon the second contract, and did so before the 24th July 1980. (see Chitty on Contracts : 24th edition Paragraphs 1371 and 4549). The period delay is not as long or extreme as in sore of the cases referred to, in Chitty on Contracts but this question must be one of fact and depend upon the nature of the contract and all the surrounding circumstances. In this case, the parties contemplated that these two contracts would be fully performed within two months of their making. The nature of the businesses carried on by both parties is such that the speedy 'turnaround' and despatch of goods from their respective premises would be very important, if not essential, to the ordinary conduct of their businesses and dealing with other customers. In Hong Kong, space is scarce and at a premium. For all these reasons, and having regard to the general state of the evidence in this case, a delay of more than a year in seeking delivery is, in my view, a strong indication of a mutual intention to abandon the second contract. Accordingly, I am satisfied that the buyer is not entitled to damages for the non-delivery of the goods under the second contract. 24. In the circumstances of this case, I consider that the buyer'. damages should be assessed on the basis of their loss of profit. It was agreed between the parties that the rate of exchange to be applied at the relevant time was US$1 = HK$5.13. On that basis, the buyer would have received from its Middle Eastern customer 331,164. 75 (US$9. 00 x 675 x 5. 13). The contract price would be $25,650 (HK$38 x 675). The loss of profit is therefore, prima facie, $5,514. 75. In order to receive that sum, the buyer would have had to incur expenses in respect of freight, insurance, bank charges, and other expenses. These must, in my view, be deducted from the figure of $5,514. 75. The freight rate in August 1979 was US$55 per cubic metre, and the charges for 14 cartons would have been US$47. 30. The 675 dozens which should have been delivered would have consisted of 27 cartons. What would have been its volume is impossible for me to assess on the evidence, but I propose to deduct $485. 30 for freight on the basis that the consignment would probably have been about twice that of the goods which were to be despatched in July/August 1979. I arrive at that figure by taking the figures on a document at page 43 of the bundle, i. e. US$47. 30 x 5. 13 x 2. The Debit Advice (at page 41) shows that the buyer's bankers charged interest for a month at an average of about 13. 6%, for discounting the bill from the customer in the Middle East. Assuming that the same would have happened in respect of the remaining 675 dozens, the figure for bank charges would be $353. 20. There is no evidence before me of what would have been paid for insurance. But doing the best I can, I will deduct $500 for insurance, which is just under 10% of the value of the consignment and approximately the same as the freight charges. Making all these deductions, I arrive at a figure of $4,176. 25. The buyer would also have had to pay transportation expenses in Hong Kong and fees for documentation. As there is no evidence on these, I consider that the fair and just solution is to round off the figure of $4,176. 25 to $4,500. That is the amount I award by way of damages for non-delivery. The buyer is also entitled to the return of the deposit of $5,000. Accordingly, there will be judgment for the Plaintiff in the sum of $9,000. If the seller had complied with the shipment advice dated 30th June 1980 (page 50), it is likely that the buyer would have received payment from its customer by the end of August 1980. In accordance with section 49 of the District Court Orainance (Cap. 336), I will award interest from the 1st September 1980 until the date of judgment on the sum of $9,000 at 15% per annum. The total judgment debt will carry interest at the rate of 17½% per annum from the date of judgment until satisfaction.
Representation: Mr. Wally Young, counsel instructed by Messrs. Tsang Chau & Suen for plaintiff. Miss Diary Ho, counsel instructed by Messrs. Haldane Midgely & Co. for defendant. |