Hoview Industrial Ltd v. Walex Electronic Ltd
Read the full judgment text of DCCJ 5744/2004 on BabelCite. This District Court judgment.
1. This is an action brought by the Plaintiff against the Defendant for the price of goods sold to the Defendant between 5/2004 and 9/2004, the price being $206,020.13
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DCCJ 5744/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 5744 OF 2004 ____________ BETWEEN
____________ Coram: Deputy District Judge M. Chow Date of Hearing: 13th, 14th, 15th of June, 2006 Date of Submission: 22nd June, 2006 Date of Handing Down Judgment: 12th July 2006 ___________________ JUDGMENT ___________________ 1.This is an action brought by the Plaintiff against the Defendant for the price of goods sold to the Defendant between 5/2004 and 9/2004, the price being $206,020.13 2.The goods were plastic pellets which contained cadmium (short form: cd) and lead. For the present hearing, the parties only concerned the cadmium level contained in the plastic pellets. 3.The Defence was defective goods as the cadmium level in the plastic pellets exceeded 5 ppm by applying the EN1122 test. 4.The Defence counterclaims $231,287.21. 5.The reference for this plastic pellets used by respective parties in their ordinary course of business is:- Plaintiff : P55000AF Defendant: 0999-990-3911 and subsequently changed to 0999-990-3911P The Plaintiff Case 6.The Plaintiff called one witness. Mr. Peter Cheung who is the Director of the Plaintiff. 7.Since 1999, the Plaintiff had sold plastic pellets to the Defendant . 8.King Fook was owned by the Plaintiff and it was the manufacturer of the plastic pellets in issue. 9.Between 5/2004 to 9/2004, plastic pellets were also sold to the Defendant. It was in September, 2004 that the Defendant complained about the cadmium level exceeded the required standard. 10.The Plaintiff case was that for all the plastic pellets marked in the Defendant’s purchase orders with “Cd < 5ppm”:
11.On the contrary, for those purchase orders without “Cd < 5ppm” specification: -
The Defence Case 12.The Defence called Ivan Chow as witness. His position in the company is a Sales Manager. 13.The Defence said that since February, 2004 the cadmium level in all plastic pellets should not exceeded 5ppm by using the EN1122 testing method. 14.There was no difference in the cadmium level whether or not there was specification of cadmium content <5ppm in the purchase orders. 15.The plastic pellets were manufactured by the Defendant into end products, namely, sockets head and resold to a third party PI Electronics. It was important that the plastic pellets should not exceed 5ppm by applying the EN1122 test. 16.The Defendant only complained the plastic pellets with its’ reference number 0999-990-3911P specified in the purchase orders with “ cd < 5ppm”, they were not suitable for resale and/or not of merchantable quality. 17.The Defendant incurred $231,287.21 in labour and administrative costs to rectify the defects in the end products. 18.Although there was no problem with other plastic pellets without the specification of “cd < 5ppm, the Defendant still stored these plastic pellets in its warehouse in China. 19.Mr. Chow also said that in a training session held on 21.2.2004, the Defendant had informed King Fook that the cadmium content should not be over 5ppm by applying EN1122 test. 20.In the training session, two forms/certificates ( P.117 and 118 ) were distributed to King Fook. The Issues :- 21.What was the test to be used in measuring the cadmium content of the plastic pellets, EN71 or EN1122? 22.There was a dispute whether the Defendant had informed King Fook in a training session, of the new standard of the plastic pellets? The training session 21/2/2004 23.The Defendant said that after the training session, the cadmium level in the plastic pellets should not exceed 5 ppm by EN1122 standard. 24.The Plaintiff said there was no variation of the required standard in the plastic pellets. 25.Both PW1 and DW1 did not attend the training session. PW1 relied on the “information” provided by Mr. Au Yeung who attended the training session. 26.DW1 relied on the documents and information provided by Mr. Lau who was the speaker of the training session. 27.Mr. Au Yeung told PW1 that the training session only covered topics such as environmental protections. There was no mention or discussion of the cadmium level should be less than 5 ppm by EN1122 standard. Mr. Au Yeung did not receive the two alleged forms/ certificates (P.117 and P.118). In return, PW1 had never seen P.117 and P.118 prior to this proceeding. 28.According to DW1, Mr. Lau informed all the suppliers that all the goods sold to the Defendants should comply with EN1122 standard, that cadmium level should not exceed 5 ppm. Mr. Lau also recorded all the topics which he needed to talk in the training session. P.119. 29.The Defence also relied on P.119 that in fact one of the purposes of the training session was to inform of its suppliers of the new standard of the cadmium level. 30.Both the Defence and the Plaintiff agreed that EN1122 was a higher standard than EN71. The Plaintiff therefore questioned why there was no writing to inform the Plaintiff of the new standard. The Defence agreed there was no writing to inform the Plaintiff of the new standard. 31.In the past, the Defendant had requested the Plaintiff in writing to provide a report on EN71 standard. P.258 and P260 refers. It is difficult to understand, in the light of this background, why the Defendant had not informed the Plaintiff in writing. 32.In respect of the commencement date of the new requirement of the cadmium level, DW1’s answers were very evasive. In his witness statement, it was 6/2004 (paragraph 7 of his witness statement). In his evidence in Court, he said that it was immediately after the training session, that was 21/2/2004. 33.DW1 said that a four months (2/2004 – 1/6/2004) grace period would be given to any supplier who had problems to comply with the new requirement. As a matter of fact, it was the Defendant’s internal decision that the commencement date would fall on 1/6/2004. This coincide with the Plaintiff’s claim that the very first unpaid invoice was dated 1/6/2004. 34.In another words, the Defendant would accept the “old standard” before 1/6/2004. 35.The new commencement date was not mentioned in any document. It was certainly not mentioned in P.117 or P.118. 36.DW1 said that P117 and 118 were distributed to King Fook during the training session and the Defendant expected to receive “signed copy of P117 and P118” from the Plaintiff within one or two weeks after the training section. However, the Defendant had never received one from the Plaintiff. 37.Again, in respect of this part of the evidence, DW1 was very vague . He only said in a general statement that the matter had been followed up. In essence, there was no reasonable explanation from DW1 why the Defendant failed to follow up the matter. 38.It is obvious that P.118 was not the first page of the form/ certificate. When DW1 was asked about this, he did not know the content of the previous page/ paragraph in P.118. 39.On the face of the P117 / P118, the Plaintiff was required to fill in the two forms/ certificates to state the cadmium level was less than 5ppm when delivered the plastic pellets to the Defendant. Between 2/2004 to 9/2004, the Defendant had never received any forms/ certificates from the Plaintiff. In fact, the Defendant had never asked the Plaintiff to fill in the forms/ certificates. (P.117 and P.118) 40.From all the purchase orders from the Defendant to the Plaintiff ( p.228 to p257 ), when there was a specification of PVC PLASTIC BLACK P55000AF ( Cd<5 ppm PB<90ppm) , the unit price was $11.3. Whereas other non ‘specified order” , i.e. those orders without specification of cd< 5ppm , the unit price was between $8.65 - $10.55. 41.PW1 said that if the Defendant required a higher standard of goods, the unit price would be increased by 20% because of different material to be used and of different manufacturing process. Therefore, it follows that the Defendant had to pay a higher price for the plastic pellets which cadmium level was less than 5 ppm by EN1122 standard. 42.In 8/2003, the Plaintiff provided a SGS report (P.64) to the Defendant. The report stated that the testing method was EN71 and the cadmium level was then less than 5 mg/kg, allowable limit was 75 mg/kg. 43.The Defendant admitted that it relied on this SGS report to place orders with the Plaintiff. If there was a change of requirement, why the Defendant did not request a new report for the plastic pellets? 44.In conclusion, after I assessed all the evidence before me, I found that PW1 was a reliable and honest witness. Whereas DW1, I found him evasive and vague when giving evidence. 45.I accepted PW1’s evidence that there was no variation of the cadmium level as alleged by the Defendant. The test to be applied for the plastic pellets in issue should be EN71 instead of EN1122. 46.In the premises, there will be judgment for the Plaintiff. Defendant’s counterclaim be dismissed. Costs to the Plaintiff in respect of the both Plaintiff’s claim and the Defendant’s counterclaim, together with Counsel’s certificate, to be taxed if not agreed. Costs order nisi, to be made absolute in 14 days.
Mr. Arthur WONG, instructed by Messrs William Sin & Co. for the Plaintiff. Ms. Pauline LEUNG, instructed by Messrs Huen & Partners for the Defendant |