Decency Industrial Co Ltd v. World of Wigs Ltd

HCA001363/1970

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

Action No.1363 of 1970

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Coram: Briggs, J. in Court

Date of Judgment: 7th April, 1971

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JUDGMENT

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1. The Plaintiff's Company are manufacturers of wigs including wigs made of synthetic hair. The Defendant amongst other operations exports such wigs abroad.

2. In April 1970 the Defendant contracted with the Plaintiff for goods to the value of $45,113.67. The goods were delivered to the Defendant and have not been paid for, the Defendant admits this in his defence.

3. In June 1970 the Plaintiff contracted with a company called Melati Wigs Corporation. I shall refer to this corporation as "Melati" in this judgment.

4. Melati supplied the Plaintiff with a quantity of fibre and requested the Plaintiff to make it up into wigs. There was a dispute between the parties and the contract was cancelled, the Plaintiff returning the wigs which had been completed together with some fibre which had been partially processed and the fibre which remained in its pristine state.

5. As a result Melati debited the Plaintiff with $37,810.80.

6. At the material time Melati was a Sister Company to the Defendant, World of Wigs Ltd. It has since been merged into another Company. But at the time both Melati and the Defendant were subsidiaries of a holding Company called Globa Enterprises Ltd. Melati and the Defendant was very closely related, most of the staff were common to both Companies. And there was a common accounts Department.

7. On June 18th 1970 Melati assigned the debt of $37,810.80 which they say was owed to them by the Plaintiff to the Defendant. Notice of the assignment was given to the Plaintiff.

8. When in July 1970 the Plaintiff demanded from the Defendant payment of the debt of $45,113.67 in respect of the contract between the Plaintiff and the Defendant, the Defendant replied that taking into account the assignment, the true position was that the Defendant owed the Plaintiff $7,092.87 and no more. A check was sent for this amount which was returned to the Defendant and these proceedings were commenced.

9. The sum is $7,092.87 and not $7,197.81 because an adjustment of the price had been agreed between the parties to the contract. This was not contradicted by the Plaintiff's evidence and I will accept it as a fact. I also accept that there was an assignment of Melati's debt to the Defendant. This was proved by the Defendant and not questioned by the Plaintiff.

10. The Defendant denies that he is liable to Melati for any sum or that they owe Melati anything. He admits that there was a contract. Indeed in the reply the Plaintiff states that the contract between the parties that is between Melati and the Plaintiff was compromised. The terms of the compromise are clearly set out in the Reply which states that Melati agreed to pay the Plaintiff $8,418.20 for the work the Plaintiff had done: and that the Plaintiff would return to Melati all the wigs made and other pieces of fibre still in their possession.

11. However, the Managing Director of the Plaintiff gave evidence that there was no such compromise. He was quite unable to explain why a compromise of the agreement was pleaded when in fact there was no such compromise. This is important because the Plaintiff's case according to the pleading is that he owes Melati nothing because of this compromise. Since October 6th 1970 the date on which the Reply was filed therefore the basis of the Plaintiff's case has totally changed. No application was made to amend the pleadings.

12. If I understood counsel for the Plaintiff aright the Plaintiff's case now is that he is not liable under the contract made with Melati because there is no adequate proof that the workmanship of the Plaintiff was not up to standard. It was also suggested that if the workmanship was sub-standard it was due to inferior fibre. This however was not followed up. It was also said that the contract broke down, because of a basic fault in the design of the netting, the foundation of the wigs. Again this was not followed up. Finally it was said that the reason that the contract was cancelled was that the Plaintiff was given insufficient time in which to complete the number of wigs contracted for, and so they returned all the goods and expected to be paid for their labour. It is enough to say that not only was this not pleaded it was not even put to any of the witnesses called by the Defendant.

13. Though it is not referred to in the pleadings speciffically a written contract was entered into by the Plaintiff and Melati on May 11th 1970. This was exhibited. In this contract the Plaintiff agreed to make wigs for Melati with Melati's fibre. There is evidence that Melati produced a sample of the synthetic wig they wanted. This was copied by the Plaintiff. After two unsuccessful attempts an acceptable wig was made, referred to in the case as "the counter-sample". The sample and counter-sample were not put in as exhibits. The Defendant's case is that they were both in the Plaintiff's possession.

14. Melati provided bundles of sets of fibres which were straight but of different lengths. They gave written instructions and a sample wig to the Plaintiffs. The straight fibres were first to be wefted, that is to say sewn in bands. These bands were then to be curled. The curled weft-bands would then be posted on to netting caps and thus the wig would be made. Other processes were necessary into which it is unnecessary to go. The netting was to be provided by the Plaintiff.

15. When the work was in progress, Melati sent an inspector one Mr. Hau, to oversee the work. He found that the wigs made were unsatisfactory.

16. The work done was unsatisfactory according to Melati because the wefting was poorly done. Mr. VAJNA who was the Manager of Melati said that you cannot make a decent wig out of poorly sewn or inferior wefts. He also said that not only were the wefts bad but the curling was insufficiently tight. He said the defects were obvious to the naked eye. A weft and a curled weft, part of the goods returned to Melati by the Plaintiff, were both exhibited, the witnesses called by the Plaintiff had to agree that they were not up to standard.

17. There was also evidence from the Defendant's witnesses that once the wefts have been made faults cannot be corrected. This I think is self-evident from looking at the article itself. In addition it is not feasible to re-curl insufficiently curled wefts when they are made of artificial fibre.

18. Mr. Chan, Mr. Chan Fei and Mr. Vajna who gave evidence on this aspect of the case were careful witnesses and obviously telling the truth about matters within their experience. I accept this part of the Defendant's evidence.

19. When Chan Fei found the goods produced by the Plaintiff were no good he cancelled the contract and asked for the return of the fibres and completed and half completed goods.

20. Clause 6 of the contract states that the Plaintiff is responsible for "sewing mistake, damage or loss of the supplied raw material." The price agreed was $60 per 1 lb. fibre. Melati delivered 1157.12 lbs. of fibre and 526.94 lbs. was returned by the Plaintiff. This leaves a balance of 630.18 lbs. At $60 per 1 lb. this makes $37,810.80 which is the sum claimed for the Plaintiff and the amount of the debt assigned to the Defendant.

21. Evidence as to the amount of fibre despatched and returned to the Plaintiff was given by witnesses called by the Defendant. I accept this evidence which is in certain respects corroborated by documents.

22. The fibre was weighed at the premises of Melati and handed over to the Plaintiff. The contract says that once the fibre has left the Melati factory any loss shall be borne by the Plaintiff. A Mr. Lui, a sales manager of the Plaintiff, stated that some of the fibre was weighed and be insinuated that some was also counted in pieces. He said that when he reached the premises of the Plaintiff a check was made by another employee of the Plaintiff and as much as 47 lb. of fibre was short. This evidence is directly contrary to the evidence of the Melati's witnesses and to the express terms of the contract. I do not believe it. Mr. Lui also said that Mr. Chan Fei the Melati factory manager agreed that Melati would make up any short weight. Chan Fei denied this. When the evidence of these two witnesses conflicts I accept that of Chan Fei without question. As I have already said that he was a transparently honest witness.

23. I find as a fact therefore that the Plaintiff is in breach of his contract with Melati. The quality of the goods was inferior to what was ordered and the claim of Melati was a valid claim under that contract.

24. The Defendant owes the Plaintiff $7,092.82 and I understand is willing to pay this to the Plaintiff. There will be judgment for the Plaintiff for that amount. But the costs of this action are to be borne by the Plaintiff.

Representation:

H. C. Mui (L.S. Shum & Co.) for Plaintiff.

D. Chang (Lennox Bywater & Co.) for Defendant.

Judgment read in Court.