Hopeful Meat Ltd v. Tai Po Frozen Meat Co Ltd
Read the full judgment text of DCCJ 15918/2000 on BabelCite. This District Court judgment.
1. The dispute between Plaintiff and Defendant occurred in 1999. They started legal proceedings in 2000. Summary judgment in the amount of $64,399 was entered against a disnonoured cheque by the Honourable Judge Wong for part of the claim in favour of Plaintiff on 17.4.2001.
Cited by 1 case
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DCCJ 15918/2000 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION -------------------- BETWEEN
-------------------- Coram: Deputy Judge J. Lam in Open Court Dates of Hearing: 20th - 21st April 2004, 8th - 10th May 2006 & 17th June 2006 Date of Handing Down Judgment : 26th July 2006 -------------------- Judgment -------------------- Background 1.The dispute between Plaintiff and Defendant occurred in 1999. They started legal proceedings in 2000. Summary judgment in the amount of $64,399 was entered against a disnonoured cheque by the Honourable Judge Wong for part of the claim in favour of Plaintiff on 17.4.2001. 2.Trial began in April 2004. In the course of the trial, Defendant applied to amend its defence and counterclaim substantially. After much argument, the amendment was allowed with costs to Plaintiff. The hearing was adjourned for both parties to rectify their pleadings in light of the amendment with liberty to restore. However, there was no application for restoration until December 2005. The resumed trial took place in May 2006 and parties made their final submission in June. 3.I am now to give judgment in this long and protracted litigation. Both parties agree that for the sake of comprehension, the judgment I rendered in chambers in November 2004 over the amendment application should be now announced as an open-court judgment. I so order. Dispute 4.Plaintiff and Defendant were (and still are) limited companies trading in frozen meat. They had had business for several years by 1999. Defendant bought from Plaintiff. There were 3 kinds of sales: (i) cash sales with simultaneous payment and delivery; (ii) credit sales in which Plaintiff issued invoices to Defendant and the latter could then take delivery from the godown; and (iii) contract sales of future goods in which Plaintiff issued invoices to Defendant when the goods arrived at the godown and Defendant could then take delivery. Plaintiff would issue invoices in the last two situations from time to time and send to Defendant in a matter of days after issuing them. Those issued in the 1st half (1st – 15th) of a month would be payable by the last day of that month; those issued in the 2nd half (16th – last day) of a month would be payable by the 15th day of the next month. Plaintiff would further issue half-monthly statements to Defendant. Defendant could take delivery of all or part of the goods under an issued invoice even before payment (if that invoice was not yet due). Those goods remaining in the godown would be subject to storage charges but the first month was free. 5.Plaintiff and Defendant had a serious dispute in September 1999. The former alleges the latter short paid $2,394.35 over the July invoices and $32,200 ($32,200.40 to be exact) over the August 2nd half invoices. Defendant refused to make up for the payment. Sometime in September, Plaintiff instructed the godown (Yiu Fung Warehouse) not to release any goods to Defendant (the ban) unless the latter would pay all the invoiced amounts. Defendant would not succumb but it could not take delivery of any goods since the ban. Nevertheless, Plaintiff retained the contract stock in the godown and charged Defendant for the storage. When the meat was close to its expiry (around 2 years after import), Plaintiff would sell it to other customers but order new goods to replace the old ones. 6.Plaintiff now sues for the price of goods under 6 contracts and 4 credit sales plus storage costs. The price is in 13 invoices (one contract sale might have split invoices) issued to Defendant as follows:
The total price is $ 315,100.55 . Pleadings 7.In its Statement of Claim (dated 3.4.2000), Plaintiff claims $315,100.55 as the price of goods, $69,549.65 as storage charges between October 1999 and March 2000 plus continuing storage charges and further damages to be assessed. Plaintiff never specifies what those damages are. 8.In its Defence & Counterclaim (dated 2.5.2000), Defendant alleges Plaintiff had wrongfully interfered with its title, ownership and property of the goods stored in the godown. It refuses to pay the claim and counterclaims Plaintiff for loss of re-sell profit, damages that may arise should Defendant be sued by its customers plus damages for the loss of 7 valuable customers due to Plaintiff's failure to supply goods. 9.Plaintiff filed its Reply & Defence to Counterclaim on 12.6.2000. It was amended on 18.3.2004. Further and better particulars were provided to show another $375,969 was incurred as storage charges between April 2000 and February 2004. 10.In its Amended Defence & Counterclaim dated 22.11.2004, Defendant gives up its argument on wrongful interference of goods. It now says Plaintiff breached the contracts and Defendant accepted such repudiation through Plaintiff's agent, Lam Yuk-on (Lam), on or about 18.9.1999. Defendant counterclaims $194,028 as loss of re-sell profit plus loss of profit relating to the 7 valuable customers in the amount of $162,043. It still mentions damages that may arise should Defendant have to compensate its customers due to Plaintiff's failure to supply goods. However, Defendant fails to provide any information on this head of counterclaim throughout the proceedings. 11.As part of its defence, Defendant says if the court finds it was Defendant which had breached the contracts, Plaintiff should have mitigated its loss. 12.Plaintiff filed its Re-amended Defence & Counterclaim on 16.3.2006. It disclosed a further amount of $355,308.30 was incurred between March 2004 and April 2006. Plaintiff Counsel says in court that Plaintiff would not claim any storage after 28.4.2006. 13.To sum up, Plaintiff's quantified claim is $315,100.55 as the price of goods and $800,826.95 as storage charges (1st storage invoice dated 25.10.1999; last dated 28.4.2006). The total quantum is $1,115,927.5. Plaintiff has already obtained summary judgment on $64,399. The remainder of its quantified claim is, therefore, $1,051,528.5. On the other side, Defendant's quantified counterclaim is a total of $356,071. 14.Plaintiff's final claim has gone over the maximum of the District Court's jurisdiction. Neither party takes issue of this. No one asks for transfer to the Court of First Instance. As such, any award made to either party by this court would be capped at the maximum of $1M. Witnesses 15.Each side has only one witness to call. They are Plaintiff's manager Mr. Chun (Chun) and Defendant's proprietor, Mr. Chong (Chong). Each of them made 2 statements before the trial (Chun: WS10-54 & 55-88; Chong: WS1-9 & 89-113) and one more during the adjournment (Chun: WS128-233; Chong: WS114-127). Chong 16.In his pre-trial statements, Chong says that in late 1998 he found some of the 18.00K (18.00K means 18 kg. in weight per carton) pork loin defective. He complained to Lam, who promised that would not happen anymore. In April 1999, Plaintiff again supplied Defendant some 18.00K pork loin with defects. This time, Lam agreed to provide 19.00K goods in the future. However, Defendant still got 18.00K goods in the following months. Lam once more promised Chong that no more 18.00K goods would be supplied. Yet, in August 1999 Defendant still received 18.00K goods. 95 'pieces' were of defects and not fit for human consumption. Thus, Defendant made a deduction for the price and storage of those 'pieces'. It deducted $32,200 ($32,200.04 to be exact) from the invoiced amounts of $96,599.40 billed by Plaintiff for the 2nd half of August 1999. Defendant sent a post-dated cheque of $64,399 to Plaintiff in mid-September. It then found Plaintiff instructing the godown not to allow any delivery. Defendant made repeated demands of delivery but to no avail. On the other hand, Plaintiff pressed for payment of all the invoiced amounts. 17.In late September, Defendant asked Plaintiff for an account of current liability and stock. After getting such information, Defendant issued on 19.10.1999 a cheque of $22,854.90 to try to settle all its liability. Plaintiff banked in the cheque but still chased Defendant for the price of goods and storage charges. The stalemate continued. Defendant offered to make certain payment to settle the invoices but Plaintiff insisted on its demand of storage charges. The matter was not settled. Plaintiff had sold the perishable goods already. Defendant considers it has no duty to pay Plaintiff beyond the cheque amount of $22,854.90. 18.In his 3rd statement, Chong clarifies the 95 'pieces' of pork loin mentioned in his 1st witness statement were actually 95 cartons (60 among the goods delivered in August and 35 still in the godown due to the ban). Chong explains his deduction of $32,200 (consisting $28,650.98 as the price of the 95 cartons, $1,696.44 as their storage charges and $1,736.12 plus $116.46 as deductions over other sales; WS124-125). On or about 18.9.1999, he informed Lam that he would cease all business with Plaintiff immediately. On or about 28.9.1999, he instructed his bank not to honour the $64,399 cheque because it covered some goods in the godown and Plaintiff would not let Defendant take delivery at all. Based on Plaintiff's information of current liability ($185,618.20) and retained stock (Chong made his own calculation from the quantity as $162,763.38), he opined that Defendant only owed Plaintiff $22,854.90. He sent a cheque of this amount to Plaintiff. The cheque was cleared on 20.10.1999. Chong believes it had cleared all of Defendant's liability. He now also believes the goods in the godown were only general goods. 19.Chong repeats that there had been negotiation to settle the dispute later. He had offered to buy the goods at the contract rate but Plaintiff insisted on the demand of storage charges, so there was no deal finally. Chun 20.On the opposite side, Chun says in his pre-trial statements that Defendant refused to take delivery and failed to settle the invoices. 21.In response to Chong's allegations, Chun says not all goods were pork loin. The x.00K description for pork loin was only a way of quantification by overseas suppliers to signify the net weight per carton. The goods Plaintiff sold to Defendant were at how much per pound. The weight per carton had no effect on the sales. Chun refers to Clauses 7 and 8 of the terms and conditions on the back of the written contracts (the Terms & Conditions). Plaintiff was aware of only one complaint by Defendant over 35 cartons of pork loin in April 1999. Chun denies the goods in the present dispute were of any defect. He also points out Clauses 10 and 17 of the Terms & Conditions to show there was express agreement on how disputes over sales should be dealt with. 22.Chun says Plaintiff issued invoices amounting to $96,599.40 for the 2nd half of August 1999 but Defendant only sent a post-dated cheque of $64,399 for settlement without explaining why $32,200.40 was deducted. Thus, on 22.9.1999 or 23.9.1999 Plaintiff instructed the godown not to release any goods to Defendant until the latter would pay the balance of $32,200.40. Chun says Defendant had also short paid for the invoices issued in July 1999 to the extent of $2,394.35. 23.Chun complains the $64,399 post-dated cheque was dishonoured when Plaintiff presented it to the bank for payment on 4.10.1999. Both parties then negotiated for settlement. However, Defendant refused to pay storage charges. The deal fell through. Plaintiff pressed Defendant for payment of all the invoiced sums but Defendant only sent a cheque of $22,854.90 on about 20.10.1999. Plaintiff banked in the cheque but did not accept it as full and final settlement. 24.Chun says his company has always been willing and prepared to perform the contracts. When the goods were about to perish after 2 years of import, they were sold to other customers. Plaintiff, however, would order new goods to be placed in the godown for Defendant to collect. In court, Chun agrees his company would only allow delivery upon Defendant's making payment of all the invoiced amounts. 25.In his 3rd statement, Chun says Defendant in the past years of dealing always paid according to the statements issued by Plaintiff at half-monthly intervals. Defendant had never made any unilateral deduction apart from the one in August 1999. Chun says that of the 2 contracts each involving 150 cartons of frozen pork loin, Defendant had taken away most of the goods (including the 95 cartons alleged to be defective) by several lots in a matter of months. Only 35 cartons now remain in the godown. Defendant had already settled the price of all the 300 cartons and all the storage charges of the 265 cartons taken away. 26.Chun says the settlement discussion in October fell through because Defendant refused to pay $3,397.55 storage charges. 27.Chun says when the frozen meat arrived at the godown, Plaintiff would input into its computer the reference number of the lot containing Defendant's portion. This was for identification purpose. Chun explains in court that one lot might contain goods of many customers. Plaintiff just input into its computer the quantity (how many cartons) that had to be retained of the lot for Defendant to pick up. For example, if there were 20 cartons belonging to Defendant in a lot of 100, the godown could give Defendant any 20 out of that lot. Defendant's portion was not severed from the others'. 28.Chun disagrees to Defendant's deduction of $32,200, saying he had no idea as to how it was calculated. 29.About his subordinate (Lam), Chun says Lam was dismissed for poor performance in late September 1999. The company later found out Lam was dishonest in other matters he had handled during employment. Chun says due to the lapse of time, he cannot remember now if Lam had ever reported to him on Defendant's complaint of the goods in question or on Defendant's alleged acceptance of repudiation. 30.Chun says the market value of the goods has remained approximately the same throughout the years and his company has always been willing to honour the contracts with Defendant. 31.In court, both witnesses were strenuously cross-examined by counsel of the other side. They stick basically to their statements. Credibility & Reliability 32.Both counsel try to show the other side's witness is incredible and unreliable. 33.Plaintiff Counsel describes Chong as a totally incredible and unreliable witness. He refers to the latter's shifting his defence from wrongful interference of title to accepting repudiation. He comments adversely on Chong's allegation of frequent deductions of payment. Most of all, counsel attacks Chong on his denial of any discussion of settlement in October 1999. 34.I have explained in my 2004 judgment why I find Chong not mala fide in changing his case. However, after the whole trial I accept Plaintiff Counsel's criticism of his credibility and reliability in the other areas. In court, Chong first states in no unambiguous terms that he made deduction in every payment and nothing happened (meaning Plaintiff did not object). Then he changes to say Plaintiff would pursue the short payment if the latter did not agree to the deduction. Defendant would simply pay up when both parties could not come to agreement. 35.I bear in mind Chong is not a good speaker. He does not seem to be a coherent witness. He at times appears to be nervous while giving evidence. These alone do not mean he is lying. Chong may just be confused as I so find him in my 2004 judgment about his giving instruction to lawyers. I would give him allowance as I would give it to any witness, who appears to be confused. Nevertheless, on the issue of past deductions, I really cannot accept his evidence. Chong refers to his own record of deduction (D403-433) but that is less than clear. It is also contradictory to the undisputed payment schedule (WS183-185), which shows Defendant always paid up as Plaintiff demanded. I disbelieve what Chong says about the practice of frequent deductions in the past. Although the schedule was only for the period of February 1998 to August 1999 (earlier records could not be retrieved, according to Plaintiff), it is still sufficient to reflect the practice between Defendant and Plaintiff. It is clear there were no frequent past deductions as alleged by Chong. 36.On whether there was discussion of settlement in October 1999, I also find it difficult to accept Chong's saying in court that there was no discussion at all. He first denies having received the credit notices (D446) in October 1999. He only agrees he must have got them then when he is pointed out the fax dates and times on these documents. These contemporaneous documents speak for themselves. There was no doubt discussion of settlement as Chun testifies leading to his issuing the credit notices. In fact, Chong himself mentions negotiation of that kind in his witness statements (WS7: para 15 & WS121: para 23). I am really baffled by his plain denial in court of any settlement discussion. It cannot be treated as a mere confusion or mistake. Chong gives different versions. He is unreliable. 37.On the other side, Defence Counsel comments on Chun's allegation of settlement discussion and his changing from denial to alleging he now cannot remember whether Lam had reported to him on Defendant's complaint in August 1999 and accepting repudiation in September 1999. 38.I have already held there was settlement discussion as Chun testifies. As to Lam's reporting, there is certainly a difference between the two versions of Chun's but it is explicable in the circumstance of the case. The incident occurred several years ago. Apparently, there was no record kept of any verbal communication between Chun and Lam that can assist the former's memory. I do not find it strange for Chun to say he cannot remember now what Lam reported to him in 1999. His memory of such conversation with Lam, if it ever took place, must be vague after years. If one cannot remember whether certain things have happened, it would be natural for him to deny those things have ever existed. However, evidence comes out in detail in the trial and the issue of repudiation is pinpointed. Under examination and cross-examination, Chun has to think hard. Now, he can at most say he is unable to recall if Lam had ever reported so. It is a fair statement. Nevertheless, Chun still believes that was not the case. Defendant has not called Lam to rebut Chun's evidence. Nor has Lam given any witness statement though he has given 2 affirmations, which mention nothing of accepting repudiation and are also vague on report of complaint to Chun other than the April one. Chong says it is difficult to get Lam to give a statement or to get him to come to court. That may be the case but the fact remains that there is no evidence to rebut Chun's. I find Chun fair, credible and reliable as a witness. 39.Defence Counsel criticizes Chun for trying to describe the goods as specific goods. I do not accept such criticism. Actually, Chun told everyone in court in 2004 that the goods were general goods. Defendant then changed its case. 40.Whether goods are specific or general is a question of fact and law. It is not always an easy question. At least, in the present case counsel from both sides have been shifting on their claim of property. Lawyers representing Defendant before the present counsel (Mr. Wong) believed the goods in question were specific and Defendant thus had the property of goods. After hearing Chun's evidence in the first part of the trial, Mr. Wong opined the goods were just general goods and applied to amend Defendant's case. On the other side, counsel appearing for Plaintiff in the summary judgment argument said the property of goods had passed but the present counsel (Mr. Ng) thinks otherwise, at first. Mr. Ng, however, argues later that the property of goods had passed to Defendant and Plaintiff should be entitled to the price of goods under s. 51(1) of the Sales of Goods Ordinance (SOGO), Cap. 26. 41.Chun describes in his 3rd statement how his company entered the lot number(s) into its own computer to signify Defendant's portion. He produces inventory reports and photos as exhibits CKW-20 and CKW-21 (WS134; para. 18 there). Nevertheless, Chun unreservedly states in court what it really means (see para. 27 above). His clarification is consistent with his initial disclosure that the goods were general goods. I do not suspect Chun of making up the issue or trying to mislead or confuse anyone. Apparently, the property issue is an intellectual brawl of the various lawyers involved. I believe Chun is an honest witness. 42.I accept Chun as a credible and reliable witness. I accept his statement that his company only imposed the ban on 22.9.1999 or 23.9.1999. Chun cannot now remember if Lam had told him of Defendant's complaint and acceptance of repudiation. On balance of probability, I hold that Lam had not. As this judgment later reveals, whether there were such reports is not important. Defendant's 'Accepting' Repudiation 43.Plaintiff complains that Defendant only raised acceptance of repudiation when the latter filed its Amended Defence & Counterclaim in November 2004. As I say in my 2004 judgment, Defendant has always been pleading Plaintiff's refusal to release the goods. That is saying Plaintiff had not been performing the contracts and that amounts to an allegation of repudiation. 44.Nevertheless, the reference of accepting repudiation is really a late statement, only emerging from the 2004 trial. I have to treat such late allegation with caution because it may be a recent fabrication by Defendant. There is, however, undisputed contemporaneous evidence that Defendant asked Plaintiff to provide the current liability list and stock list. Plaintiff gave them (WS108 & 107) to Defendant on 11.10.1999 and 12.10.1999, respectively. On 19.10.1999, Defendant sent (D387: postal receipt) a cheque of $22,854.90 with a note (D386) to Plaintiff declaring that settled mutual liabilities and none owed the other thereafter. The note speaks for itself. It is unequivocal. Defendant was announcing cessation of further deals with Plaintiff. 45.When he issued the note, Chong must be of the firm view that he was right with the deduction of $32,200. He thought Plaintiff was wrong to refuse to release any goods. He must be thinking Plaintiff was in repudiation. I hold that with the note issued on 19.10.1999, Chong was announcing acceptance of repudiation (only as he thought) and settlement at the same time in an unambiguous way. 46.I, however, do not believe Chong had been so determined and had made such announcement through Lam to Plaintiff as early as around 18.9.1999. That was only a short time after the dispute and Plaintiff had not imposed the ban yet. I do not believe Chong would give up a long-term and major supplier so hastily when the dispute was still not fully blown. I believe he just hinted to Lam then the possibility of breaking all deals should the dispute continue. That was not accepting repudiation. That was merely an indication by mid-September. I hold Chong had not done any act sufficient to constitute acceptance before 19.10.1999. I find he is not truthful and has exaggerated on the issue of when he accepted repudiation. I find he advertently puts the important date forward by more than a month. 47.Chong's announcement of 'acceptance' in late October 1999 is one thing but whether Plaintiff had been in repudiation is another. This will be dealt with later. Defective Goods 48.Chong says some of the goods he got in late 1998 were defective. He talked to Lam. However, he got defective goods again in April 1999 and it ignited the present dispute, which was blown up in August when Plaintiff continued to supply defective goods. Chong complained further to Lam. The latter tried to soothe him. Chong nevertheless unilaterally deducted the cost of the defective goods. Plus other deductions, he short paid Plaintiff a total of $32,200 ($32,200.40 to be exact) and just sent a cheque of $64,399 to Plaintiff against the invoiced amounts of $96,599.40 for the 2nd half of August. 49.I am sure there must be something wrong with some of the 18.00K pork loin that caused Chong to complain and to make a deduction by himself. However, apart from his words there is no proof the goods were so defective that he could refuse to pay. Lam has not been called to testify. (He has made 2 affirmations but without sufficient details in this area.) No surveyors' report or other witnesses' statements have been produced regarding the quality of the complained goods. 50.Despite Defendant says it had been complaining to Lam about the quality of some pork loin, it did not stop taking delivery. Rather, the undisputed evidence is that Defendant continued to take delivery of the same goods and other goods until Plaintiff imposed the ban. I find Defendant has not proved on balance of probability the complained goods were defective or so defective that constituted repudiation on the part of Plaintiff. Chong has not proved on balance of probability that he was justified to deduct $32,200 or any amount against the invoices issued by Plaintiff in the 2nd half of August. Deduction as Past Practice 51.Chong says that in the past course of dealing with Plaintiff, he often made deductions against the invoiced amounts and Plaintiff had no objection. Later, he changes to say if Plaintiff objected he would make up for the short payment. 52.I have already said in para. 35 why I find Chong incredible in this regard. The undisputed payment schedule shows Defendant even paid back in mid-January 1999 a small sum of $22.95 ($13.50 plus $9.45), which it failed to pay in the previous months. It is clear Defendant always paid up as Plaintiff demanded except for the present dispute. I hold unilateral deduction by Defendant was never a practice in the course of dealing between both parties. Terms & Conditions of Contracts 53.I have held Defendant fails to prove any goods were defective to justify deduction of payment. Even if there were such goods, I still hold Defendant could not make any unilateral deduction because it was never a practice or agreement between both parties. Plaintiff Counsel is right to point out the terms and conditions printed on the contracts are binding on both parties in all sales. He relies on Clauses 7, 8, 10 & 17 in particular.
Plaintiff Counsel also mentions Clauses 12 and 13.
I further note Clauses 21.
54.The above terms and conditions speak for themselves. They clearly spell out how disputes should be dealt with. 55.Defence Counsel submits there is room for argument as the terms and conditions are confusing and do not reflect the true position. He says, for example, Defendant had no chance to inspect the goods before taking delivery from the godown. He says the rule of contra proferentem should apply and Defendant could negotiate payment as it did in 1999 on such matters as allowance. 56.Defendant might never have inspected the goods before taking delivery from the godown but if it wanted to do so, it could simply open the cartons (perhaps by random check) while still in the godown. It might also be the case that no surveyor or referee had ever been appointed in the years of dealing between both parties. However, there had never been any real dispute before August or September 1999. I hold the negative phenomena merely reflect that both parties had not invoked the express terms and conditions rather than having no right to do so or that the terms and conditions were not binding. 57.Plaintiff and Defendant had been trading for years. They had been in the business for long enough to know their trade well and the risks attached thereto. Although Defendant was a small shop compared to Plaintiff, I do not think the former would let the terms and conditions printed on the back of the written contracts if they did not reflect the agreement between the seller and the buyer. Nor would Defendant leave out the important right to negotiate on payment if it so minded. I do not accept Defence Counsel's submission on the invalidity or ambiguity of the express terms and conditions. I find those terms and conditions are clear, binding and enforceable. They spell out mutual rights and obligations including what could/should be done regarding matters such as defects of goods, taking delivery (failing to take delivery) and allowance. 58.I have already held that there was no past practice of unilateral deduction so the question of whether such conduct had created an implied term does not arise. There is no question of displacement or revocation of the terms and conditions printed on the back of the contracts of future goods. I rule all the written terms and conditions are also binding in credit sales as part of the overall agreement between Plaintiff and Defendant. Defendant's Repudiation 59.I have held Defendant fails to prove any goods were defective and there was no practice of unilateral deduction in the course of dealing between both parties. 60.Defendant disputed about 95 cartons of 18.00K pork loin. It, however, had taken delivery of 60 cartons of the 95 in a matter of months before the ban. If Defendant wanted to reject the goods or raise dispute or claim allowance, it should do so in accordance with the express terms and conditions of the contracts. Defendant was not entitled to make the unilateral deduction of $32,200.40 in September 1999 against the August 2nd half invoices. Any non-payment or short payment was a material and fundamental breach of the contract(s) affected by this deducted amount. 61.Defence Counsel submits that before countermanding the $64,399 cheque, the short payment was only $32,200.40 and not against all the invoices issued in the 2nd half of August 1999. I agree. I accept the cheque was only countermanded when Chong so instructed the bank after Plaintiff had imposed the ban. The cheque was valid payment before its countermand. Thus, according to the rule of first-in-first-out, the short payment of $32,200.40 was only in relation to the last invoice issued in the 2nd half of August, i.e., IN6016693 dated 31.8.1999 in the amount of $39,583.60 for part of Contract SI5000645 on 19.00K pork loin. Clause 13 62.Defence Counsel submits that Plaintiff was not entitled to withhold all goods then. Again, I agree with him. Although Clause 13 allowed Plaintiff not to carry out other contracts due to Defendant's breach of one contract, the various contracts were clearly separate and distinct. 63.Clause 13 entitled Plaintiff not to carry out other contracts unless Defendant had remedied the breached one. It means Plaintiff could refuse to perform the other contracts and Defendant could not sue Plaintiff for such refusal. It does not mean that by refusing to perform the other contracts, Plaintiff had the further right to sue Defendant as if the latter had also breached those other contracts. If that were the intention of the parties, the detailed terms and conditions would definitely spell out such significant right/obligation rather than remaining silent. I hold Clause 13 is clear and means just what I say. When Defendant breached Contract SI5000645, Plaintiff had a right not to carry out (i.e., a right to suspend or rescind) other contracts but it could not rely on it to say Defendant had also breached those other contracts. 64.Plaintiff says it all along has been prepared to perform all the contracts rather than refusing to carry out any. The facts, however, do not support such contention. 65.Although subsequent to the dispute Plaintiff issued further invoices to Defendant and told the latter it could collect the goods, the facts remain that Plaintiff would not release goods under any contract unless and until Defendant paid up for all issued invoices. 66.This 'payment before taking delivery' was never a requirement before the ban. Before that, Defendant could take delivery after invoices were issued (even when the invoices had not been settled before the due dates or even before the invoices were sent out by Plaintiff). By imposing the comprehensive ban on 22.9.1999 or 23.9.1999, Plaintiff was in fact refusing to perform all contracts (whether breached or non-breached) unless Defendant would remedy the breach. Plaintiff's telling Defendant that the latter could take delivery upon payment was merely an intimation of Plaintiff's willingness to resume performance when its 'payment first' demand was met. It was not due performance by itself.Defence counsel is right to point out with the assistance of the English case Fercometal S.A.R.L. v Mediterranean Shipping Co. S.A. [1989] A.C. 788 that a non-repudiating party choosing to affirm a contract could not be absolved from tendering further performance. 67.Of course, Plaintiff could refuse delivery of those goods over which payment was already due before the ban but unpaid then. I have held that there was only one such contract: Contract SI5000645. Plaintiff could affirm or refuse to perform further on this breached contract. For the other contracts, Clause 13 only entitled Plaintiff to refuse to perform without the risk of being sued. 68.If Plaintiff chose to perform those other contracts, it should allow Defendant to take delivery of the invoiced goods in accordance with the past practice, i.e., upon issue of invoices rather than upon payment of invoices. It could not unilaterally adopt a new mode of dealing, i.e., payment before delivery. However, from 22.9.1999 or 23.9.1999, Plaintiff simply refused to let Defendant take any delivery unless Defendant paid first. That was contrary to the past course of dealing, which was agreement by conduct and part of all the contracts. Thus, despite Plaintiff says it had elected to carry out the other contracts, I hold it had not. Plaintiff's Accepting Repudiation 69.Plaintiff had the right to affirm or rescind the single breached contract (due to Defendant's repudiation) and the non-breached ones (according to Clause 13). Letters such as WS54 (dated 28.10.1999) and WS53 (dated 16.11.1999) contain Plaintiff's indication to sell Defendant's goods and to sue for losses. WS50 (dated 19.1.2000) says in the most affirmative way that if Defendant did not pay within the next 7 days, Plaintiff “shall” treat Defendant as repudiating its agreement with Plaintiff and Plaintiff would “terminate the same and sue for all losses and damages without further notice”. This is unequivocal. I hold Plaintiff had actually accepted Defendant's repudiation and chosen to rescindall contracts, despite its pleading of continual performance. 70.Thus, even though I accept Defendant announced to cease business with Plaintiff on 19.10.1999, such annunciation was not acceptance of repudiation because Plaintiff had not been in any breach. On the contrary, I find Defendant had been in breach of the single contract of Contract SI5000645. Plaintiff had accepted repudiation of that and proceeded to rescind all contracts. Although Defendant does not plead so specifically, it does plead mitigation of loss required of Plaintiff. I am entitled to make the ruling that Plaintiff had accepted Defendant's breach as aforesaid. Res Judicata 71.Plaintiff Counsel submits that Defendant drew the cheque of $64,399 in mid-September 1999 against the August 2nd half invoices. Since the court in 2001 had granted judgment in favour of Plaintiff over the disnonoured cheque, Defendant should not be allowed to argue about the cheque or excessive payment of that. Plaintiff Counsel even says Defendant cannot argue about all the August 2nd half invoices. Defence Counsel replies his client had unconditional leave to defend. 72.I agree with Plaintiff Counsel that the amount of $64,399 is res judicata. Defendant can only argue whether it need to pay more but not less. That also means Defendant can argue about the August 2nd half invoices to a limited extent, i.e., whether it need to pay more than the amount of the dishonoured cheque. Settlement 73.Defence Counsel submits the matter had been settled with Plaintiff's accepting a later cheque of $22,845.90. I do not agree. Plaintiff made it clear it was not so (WS88). Furthermore, such settlement argument is inconsistent with Defendant's counterclaim. In fact, Defence Counsel indicated clearly in 2004 that he would not advance such argument. It must be dismissed. Damages or Price of Goods plus Storage Charges 74.Plaintiff makes it clear that it is not after damages (which would be subject to mitigation) for breach of contract. It insists on claiming the full price of goods plus all storage charges. Plaintiff Counsel argues that upon Plaintiff's input into its own computer the identification reference of the lot(s) containing Defendant's portion, the property of such appropriated goods passed to Defendant under Rule 5(1) of s. 20 of SOGO. By the further operation of s. 51(1) of the same ordinance, Plaintiff can maintain an action against Defendant for the price of goods. 75.It is clear from Chun's evidence that the goods were neither specific goods to gain direct benefit of s. 51(1) of SOGO nor was Plaintiff's input into its computer sufficient appropriation to invoke Rule 5(1) of s. 20 and s. 51(1) to claim the price of goods. The computer reference only indicated Defendant's portion was within a certain lot in the godown. It did not sever Defendant's portion from those of others in the same lot. I hold Plaintiff cannot claim the price of goods under s. 51(1) of SOGO in any event. Payable on A Day Certain 76.Alternatively, Plaintiff Counsel argues that the issued invoices were payable on a date certain. According to s.51(2) of SOGO, Plaintiff can maintain an action for the price of goods if it is payable on a date certain although the property of the goods had not passed and the goods had not been appropriated to the contract. 77.Chong agrees that the credit period for settling the invoices was half a month. His counsel, however, argues that the contracts themselves did not specify payment dates. Counsel says invoices were only issued after the goods had arrived at the godown and the arrival dates were not certain. He further points out the undisputed evidence is Defendant often paid late and Plaintiff accepted late payment. 78.It is true the contracts themselves did not specify fixed payment dates but the credit period for issued invoices had been fixed by agreement as half a month. Those issued in the 1st half (1st – 15th) of a month would be due for payment by the last day of that month; those issued in the 2nd half (16th – last day) of a month would be due for payment by the 15th day of the next month. Although Defendant often paid late, I hold it only means Plaintiff would tolerate late payment at its will. It is absurd to say it rather means the agreed due dates had been waived. I do not believe merchants like Plaintiff and Defendant would intend so. Not only would Plaintiff as the seller insist on a certain due date for chasing payment, Defendant as the buyer would also want to be certain of the payable date lest the other side would press for payment unduly early. Thus, I hold that any invoices rightly issuedwould be payable according to the agreed due dates of the 15th or last day of the month, as the case might be. The price on those invoices issued in the normal course of dealing between the parties was thus payable on a day certain irrespective of delivery. Such invoices would be those issued before the ban, i.e., before 22.9.1999 or 23.9.1999. They were:
The total amount of the price of goods on these invoices is $146,889.15. 79.The last one of these 8 invoices was issued on 14.9.1999. The undisputed evidence is that Plaintiff would send out the issued invoices in a matter of days after their issue. There is no evidence that Defendant did not receive these invoices before the ban. In any event, the price of goods on these 8 invoices were payable on a date certain (albeit at a later late) once they were issued and irrespective of delivery. I thus hold Plaintiff can rely on s. 51(2) to claim for the price of the goods contained in these 8 invoices, which were duly issued (and actually sent) before the ban. The amount is $146,889.15.This is fair because Defendant could take delivery under these 8 issued invoices before the ban, though it did not do so then. White & Carter 80.Plaintiff Counsel says his client is entitled to the price of goods on all the issued invoices plus all storage charges because it could (and did) perform those deals by itself. He relies heavily on the ruling in White & Carter (Councils) Ltd. v McGregor [1962] A.C. 413. 81.The facts of White & Carter are different those of the present case. In that case, the appellant was an advertisement contractor. It had advertised for the respondent for 3 years before they renewed their contract. The respondent repudiated the renewal on the same day as it was made. The appellant nevertheless went on advertising for the respondent and held the latter liable for the full renewed contract. The final court held the appellant could do so. That court accepted the advertising contractor was able to perform the renewed contract without the respondent's assistance. 82.White & Carter only says an innocent party could elect to perform the contract (if it could perform by itself) to claim the full contract benefit, or to accept repudiation and sue for damages. Each case must be decided on its own facts. The present case is different from the White & Carter situation, where the appellant could just go on advertising for the renewed contract without involving delivery to or acceptance from the respondent. Here, Plaintiff's performance would need Defendant's cooperation on taking delivery and acceptance of the goods. Such were not forthcoming from Defendant. There was no way Plaintiff could perform the contracts on its own. I hold Plaintiff could not elect to perform the contracts by itself. It cannot claim the full benefits of the contracts. Furthermore, I have held in para. 69 that Plaintiff had accepted Defendant's repudiation of the single breached contract and actually rescinded all contracts, breached or non-breached. Mitigation 83.Plaintiff could have sued for damages of the breached contract if it had so chosen. However, Plaintiff Counsel makes it clear Plaintiff does not pursue damages for breach of contract. Although there is a general prayer in the Statement of Claim for damages to be assessed, counsel never focuses upon it during the trial. 84.Even if Plaintiff were entitled to any damages under the general prayer, the quantum would be subject to mitigation (as Defendant pleads). In this case, Defendant's intention not to make up for the short payment was apparent in September. That led to Plaintiff's imposing the ban on 22.9.1999 or 23.9.1999. As soon as Plaintiff knew Defendant would not fulfil its obligation to pay and there was no way for the contracts to be performed further, the former should accept the latter's breach and take steps to mitigate its loss. That is to say, Plaintiff should start to mitigate after imposing the ban by selling the goods to get back the price and to avoid further storage charges. That would be the right course to adopt in the circumstance. Plaintiff said it would do so in its letters to Defendant (see para. 69). However, Plaintiff changed its mind but that did not change the fact repudiation had already been accepted by Plaintiff and that it should mitigate its loss. 85.Chun says his company had other customers. It would import goods to store in the godown as general stock for customers to purchase. As such, Plaintiff could simply treat Defendant's untaken goods as general stock. There is no evidence that Plaintiff's business was insufficient around September 1999. On the contrary, the evidence is Plaintiff could always sell the goods before they were about to perish. I hold that Plaintiff could sell Defendant's goods to other customers at any time without difficulty. It could sell the goods soon after the ban if it so wanted. According to Chun, the price was about the same throughout the years. I thus hold Plaintiff would suffer no loss of price if it took reasonable steps to sell the goods without replacement. Unfortunately, Plaintiff did not act reasonably. It kept the goods in the godown until they were about to perish. After selling such goods, it ordered further goods to replace the old ones. Plaintiff had done nothing to mitigate the storage expenses, which accumulated unnecessarily in the circumstance. I hold Plaintiff has to bear its own making for failing to mitigate at all. 86.Plaintiff is entitled under s. 51(2) of SOGO to the price of certain goods. It does not mean Plaintiff must also be entitled to the storage costs of those goods. Plaintiff did not have to retain the goods. As I say, it had done nothing to mitigate its loss. It is not entitled to any damages in any event. Liability 87.To sum up, I find Defendant only liable to the extent of $146,889.15. That is the price of goods contained in the 8 invoices payable before the ban. Summary judgment was awarded to Plaintiff in 2001 to the extent of $64,399. That has to be set off. The amount Defendant need to pay Plaintiff further is $ 82,490.15. 88.For all the reasons I have stated above, Defendant's counterclaim must fail. It is, therefore, dismissed. I must add Chong is also unreliable here. On one hand, he says Defendant lost customers because it failed to fulfil the contracts with them due to Plaintiff's ban. On the other hand, he says he had purchased from other sources for his customers. He offers no explanation for such inconsistency. No concrete evidence is produced to support either version. His claims of damages for losing re-sell profit and losing 7 valuable customers are also bare allegations. Interest 89.Clause 12 of the Terms & Conditions allows interest to accrue at 10% per annum on the due amounts from the due dates. I rule $12,167.75 of the award in para. 87 was due on 15.9.1999 while the remainder $70,322.40 was due on 30.9.1999. Defendant has to pay interest at 10% per annum on these 2 amounts from their respective due dates. If there are still goods undelivered of the said 8 invoices, Defendant can take delivery of them upon payment of the award I just announce. Costs 90.Although the award won by Plaintiff is much less than its claim, it is still entitled to costs from Defendant because the latter's defence does not succeed by much and its counterclaim fails entirely. The total award is more than $50,000 (the Small Claims Tribunal's cap). Plaintiff's claim should be deemed as rightly brought in the District Court. 91.In 2004, I awarded Plaintiff certain costs due to the amendment. Now, of the remaining costs of the whole proceeding, I rule Plaintiff is entitled to 70 % of its costs on a party-to-party basis with certificate to counsel. The partial award of costs is due to the fact that Plaintiff has wasted quite some efforts on establishing the magnitude of the unacceptable storage charges. The invoking of Rule 5 (s. 20 of SOGO) and the White & Carter argument are also futile. The costs are to be taxed if not agreed and this order nisi shall become absolute 14 days after the date of this judgment.
Representation: Mr. Lawrence Ng instructed by Messrs. Lam & Partners for Plaintiff Mr. King Wong instructed by Messrs. Edmund W.H. Chow & Co. for Defendant |
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