Universal Lighting Asia Ltd v. Yook Tong Electric Co Ltd
Read the full judgment text of DCCJ 4948/2003 on BabelCite. This District Court judgment.
1. Universal was a manufacturer, wholesaler and exporter of lighting products, including ballasts. Its factory, Universal Lighting China Company Limited (“ULCC”), was in Shanghai. Universal had an associated company, MagneTek Asia Limited (“MagneTek”), in Hong Kong. For the purpose of the present proceedings, ULCC and MagneTek can be regarded as the same entity as Universal. Yook Tong was Universal's authorized dealer in Hong Kong. Universal knew Yook Tong would sell certain ballasts to Un
Cited by 1 case
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DCCJ 4948/ 2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 4948 OF 2003 ____________________ BETWEEN
____________________ DCCJ 1041/ 2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1041 OF 2004 ____________________ BETWEEN
______________________ Coram : Deputy Judge E. Yip in Court Date of Hearing : 10th July 2006 – 13th July 2006 Date of Handing Down Judgment : 10th August 2006 __________________________________ REASONS FOR DECISION __________________________________ A. Introduction 1.Universal was a manufacturer, wholesaler and exporter of lighting products, including ballasts. Its factory, Universal Lighting China Company Limited (“ULCC”), was in Shanghai. Universal had an associated company, MagneTek Asia Limited (“MagneTek”), in Hong Kong. For the purpose of the present proceedings, ULCC and MagneTek can be regarded as the same entity as Universal. Yook Tong was Universal's authorized dealer in Hong Kong. Universal knew Yook Tong would sell certain ballasts to Union Data. Union Data would install the ballasts in Queen Mary Hospital (“QMH”). The ballasts delivered were suspected to have 3 quality problems: compliance problem, switching problem, and noise problem. Various tests were conducted. QMH through Government Supplies Department (“GSD”) cancelled part of Union Data's contract. Union Data thereby suffered loss and damage. Union Data held Yook Tong liable. Yook Tong held Universal liable. 2.Unless otherwise stated, all references to the pleadings shall be to the most recent version. The Statement of Claim shall be “S/C”, the Defence and Counterclaim “DCC”, and the Reply and Defence to Counterclaim “RDCC”. The Pleading Bundle is “A”, and, say, p. 1 thereof is “[A1]”. The same goes for the Exhibit Bundle [“B”]. Yook Tong has filed a most recent version of Defence and Counterclaim in DCCJ 4948/ 2003. It has not been included in the bundles or paginated. The amendment is to clarify an understandable typo. I will only refer to its preceding and paginated version. B. Universal's Case 3.At an early stage, Universal had already informed Yook Tong that for FBT-218 and FBT-136 ballasts, the metal-case version was compliant with the EN55015 Standard (“EN55015”) whereas the plastic-case version was not. Universal supplied both compliant and non-compliant ballasts to Yook Tong. It was Yook Tong's own fault in supply the non-compliant ballasts to Union Data. For FBT-218 ballasts, Union Data's complaint of the switching problem was unfounded. For FBT-258 ballasts, Union Data's complaint of the noise problem was unfounded. C. Yook Tong's Case 4.For FBT-218 and FBT-136 ballasts, Universal had never informed Yook Tong that the metal-case version was compliant with EN55015 whereas the plastic-case version was not. Yook Tong had thought that whatever the case version was, all ballasts supplied by Universal were compliant with EN55015. It was Universal's fault in not supplying compliant ballasts. Union Data's complaint of the switching problem with model no. 218 and the noise problem with model no. 258 also arose from the fault of Universal. D. Union Data's Case 5.For FBT-218 and FBT-136 ballasts, Universal or Yook Tong Union Data had never informed Union Data that the metal-case version was compliant with EN55015 whereas the plastic-case version was not. Union Data's purchase orders all related to the QMH Project. In a series of meetings prior to the purchase orders, Yook Tong was made aware that Union Data would only purchase compliant ballasts. For FBT-218 ballasts, there was a switching problem. For FBT-258 ballasts, there was a noise problem. In consequence, the QMH Project was cancelled. It was Universal's and Yook Tong's fault in supplying those ballasts to Union Data. E. Matters to be determined by this Court 6.In DCCJ 4948/ 2003, I have to determine, as between Universal and Yook Tong, the following:
7.In DCCJ 1041/ 2004, I have to determine, as between Union Data and Universal, the following:
and as between Union Data and Yook Tong, the following:
F. Facts not in dispute 8.In September 2000, GSD issued a tender for the supply and installation of electronic ballasts (“ballasts”) for QMH. Yook Tong had a potential new customer, Union Data, who was interested in bidding for the tender (“the QMH Tender”). Yook Tong sent a copy of the technical specifications to Universal. Those specifications were more stringent than MagneTek's factory standard. 9.On 4 December 2000, Universal confirmed [B30-46] that the following models, among others, met all the QMH Tender's mandatory technical specifications, including EN55015, which concerned Electro-Magnetic Interference:
10.On 13 June 2001, GSD awarded the QMH Tender to Union Data at $2,010,450.00 (“the QMH Project”) [B259-264]. The works had to be completed within one year of the date of acceptance of offer. 11.On 29 August 2001 [B268], Yook Tong issued Quotation, no. 04-Q791-01, to Union Data for the QMH Project. It stated as follows:
12.On 6 September 2001, representatives from Universal, Yook Tong, Union Data, and QMH had a meeting to discuss the QMH Project. Subsequent meetings were held among them. 13.On 24 September 2001 [B267], Yook Tong issued a Quotation, no. 04-Q810-01, to Union Data for the QMH Project. It contained the same remark. 14.From about 5 October 2001 to 26 March 2002, Yook Tong supplied 1,067 pieces of FBT-218, 1,091 pieces of FBT- 136, and 242 pieces of FBT-258 ballasts, among others, to Union Data for the QMH Project. Yook Tong's invoices [B280-294] to Union Data amounted to $259,438.00 in total. Union Data had a deposit of $50,000.00 to Yook Tong as caution money [DCC 83 para 9]. 15.In March 2002, Union Data complained to Yook Tong of a noise problem with FBT-258 ballasts. 16.In May 2002, Union Data complained to Yook Tong of a switching problem with FBT-218 ballasts. 17.On 16 May 2002, Yook Tong had a site inspection of the noise problem with FBT-258 ballasts. However, it could not get close enough to the site and besides, only 4 offending samples could be accessed. 18.On 18 June 2002, Yook Tong wrote to Union Data to ask for a closer and less restricted site investigation and more samples of offending FBT-258 ballasts [B188]. 19.On 6 August 2002, Union Data wrote to Yook Tong [B73]. Union Data accused Yook Tong of delay in responding to Union Data's 2 complaints. Union Data urged Yook Tong to provide a test report for the switching problem with FBT-218 and the noise problem with FBT-258. 20.On 12 August 2002, Yook Tong wrote to Union Data [B74]. Yook Tong asked Union Data to provide samples of offending FBT-218 ballasts. Yook Tong would pass the same to Universal for testing. 21.On 19 August 2002, Universal provided MagneTek's Report [B76-94] to Yook Tong. The FBT-136 and FBT-218 ballasts were found with no quality defects. The FBT-258 ballast was found possibly affected by external factors like the lighting device and installation. MagneTek would not recommend using FBT-258 in quiet locations like hospitals. The report suggested using the FBA series of ballasts instead. 22.On 24 October 2002, GSD provided a test report from Intertek Testing Services (“ITS”) [B109-131] on the non-compliance of FBT-136 and FBT-218 with EN55015. Union Data got hold of this report. 23.On about 11 December 2002, Yook Tong wrote to Universal [Exh. No. 10]. It contained Yook Tong's draft letter to Union Data. Yook Tong asked Universal to comment on it. It purported to interpret the Remark in Yook Tong's Quotations [B267-268] (“Please note that due to small quantities QMH specification is not offered”) as meaning that Yook Tong would not supply ballasts compliant with EN55015. Yook Tong eventually decided not to sign or send the letter to Union Data. 24.In November and December 2002, Yook Tong offered to return the ballasts in stock to Universal but Universal rejected the offer. 25.On 26 November 2002, based on ITS's Report, Union Data complained [B194] to Yook Tong that the FBT-136 and FBT-218 ballasts were non-compliant with EN55015. Union Data requested Yook Tong to get MagneTek to explain. 26.On 7 January 2003, Universal wrote to Yook Tong to state that Universal had already told its clients in early December 2001 that the metal-case version was compliant with EN55015 whereas the plastic-case version was not [B151]. 27.On 13 January 2003, Yook Tong wrote to Universal to propose either testing Yook Tong's stock for compliance with EN55015 by an independent expert or returning all stock to Universal [B163-164]. 28.On 27 January 2003, Yook Tong wrote to Union Data by reference to Universal's explanation of the compliance aspect [B173]. Yook Tong stated, among others, that:
29.On 4 March 2003, GSD on behalf of QMH wrote to Union Data in cancellation of the following quantities of the 3 models, among others, in the QMH Project [B355-357]:
30.On 10 March 2003, Universal's solicitors demanded payment [B178] from Yook Tong for ballasts supplied to Yook Tong in the sum of $374,614.20. 31.On 18 March 2003, Yook Tong's solicitors wrote back. They stated that the sum was withheld by Yook Tong because Yook Tong might face a substantial claim from its customers, such as Union Data, due to the various quality problems. 32.On 23 July 2003, Union Data agreed with GSD that Union Data could only recover part of the contract deposit in the sum of $37,722.25 whilst other outstanding amount for works performed and retention money were to be withheld by GSD. 33.Union Data and Yook Tong still possessed quantities of ballasts supplied by Universal that were suspected to be non-compliant with EN55015. 34.At the present moment, Yook Tong still keeps Union Data's caution money of $50,000.00. Union Data has not paid Yook Tong on the outstanding invoices [B280-294] amounting to $259,438.00 [DCC para 14: A85-86]. Yook Tong has not paid $374,614.20 to Universal on outstanding invoices. G. The testing or investigation of the ballasts 35.There were various instances of test or investigation of the FBT-218, FBT-136, and FBT-258 ballasts as follows:
H. Universal's evidence 36.Celinea Lam, the sale assistant of Universal gives evidence. Universal had confirmed [RDCC para. 7: A61; Celinea Lam's Statement para 5: A187] that the ballasts were compliant with EN55105 in December 2000. Celinea Lam is unable to explain in Court as to why Universal had not expressly stated in the written confirmation to Yook Tong and Union Data that only the metal-case version was compliant with EN55015, or that Universal would only do the compliance modifications if large-enough quantities were ordered. 37.All the parties wanted to take part in the QMH Project. EN55015 was a fundamental and mandatory requirement. I find Universal's confirmation incorrect and misleading. I do not find her a reliable witness. I reject her evidence on all facts in dispute. I reject her evidence, in particular, that prior to Universal's letter to Yook Tong dated 7 January 2003 [B151], Universal had ever informed Yook Tong or Union Data that only the metal-case version was compliant with EN55015. I. Yook Tong's evidence 38.Peter Wong gives evidence. He is the only witness in Yook Tong's case. No prior information had ever revealed to Yook Tong that only the metal-case version was compliant. He first learned of this on 7 January 2003 by virtue of Universal's letter dated the same [B151]. In December 2000, when negotiating for the QMH Tender, Universal had confirmed without qualification that its ballasts were compliant with EN55015. 39.He had known at a time around 24 May 2002 [B330] through his staff that there was a metal-case version and a plastic-case version. His understanding had remained that both versions were compliant with EN55015. The mention of “metal case” or “plastic case” on Yook Tong's purchase orders [B330, B333, B335] was purely to put forward the customers' express choice of the case version. 40.He agrees with (Union Data's) Stephen Sin's evidence that the Remark in Yook Tong's Quotations [B267-268] was not meant to abrogate Union Data's fundamental and mandatory requirement for ballasts compliant with EN55015. 41.Yook Tong had exerted all timely and reasonable efforts to handle the complaints of the switching problem, noise problem, or compliance problem with FBT-136, FBT-218, or FBT-258, as the case may be. 42.The draft letter [B135-6] was not signed or sent because he eventually did not think the contents correct. At that time, he was drafting it to see if it could avoid liability for the quality problems. No doubt Peter Wong was opportunistic when he drafted the letter to look for a way out. However, I accept his explanation and find him a credible and reliable witness. I accept his evidence, in particular, that prior to Universal's letter to Yook Tong dated 7 January 2003 [B151], Universal had never informed Yook Tong that only the metal-case version was compliant with EN55015. 43.He agrees with Celinea Lam (of Universal) the fact that Yook Tong sometimes ordered the plastic-case version which was smaller in size and fit smaller lighting devices better. J. Union Data's evidence 44.Stephen Sin gives evidence. He calls Billy Chow to give evidence on ITS's Report. Throughout and up to the time Yook Tong issued the Quotations [B267-268] to Union Data, there had been meetings where representatives from Union Data, Yook Tong, Universal and QMH were all present. Every party was aware that compliance with EN55015 was a fundamental and mandatory requirement. Union Data had only this batch of purchase orders with Yook Tong. There could be no misunderstanding on the part of any party that Union Data would only purchase compliant ballasts. His interpretation of the Remark in Yook Tong's Quotations was that it was not meant to abrogate Union Data's fundamental requirement for ballasts compliant with EN55015. I accept Stephen Sin's evidence to be credible and reliable. Billy Chow's evidence is not challenged and I accept it to be credible and reliable. K. My findings 45.I have considered the full written submissions of all parties. L. The implications of the test results 46.As regards the compliance problem, ITS's Report found all 5 out of 1,067 pieces of FBT-218 ballasts and all 5 out of 1,091 pieces of FBT-136 ballasts non-compliant. I reject Universal's submission [para 23-27] that too few samples were tested. Although MagneTek's Report in 2004 found 2 pieces, each of FBT-218 and FBT-136 compliant, I accept Union Data's submission [para 21] that it might or might not come from the same batch as supplied to Union Data. Besides, Celinea Lam (of Universal) has given evidence, which is uncontradicted and I accept to be true and accurate, that the plastic-case version was tested in 2002 whereas the metal-case version was tested in 2004. Given the difference in time and case version, I do not find it right to use MagneTek's Report in 2004 to contradict ITS's Report in 2002. I find it proved on the balance that the bulk of FBT-218 and FBT-136 as supplied to Union Data in 2002 was non-compliant with EN55015. 47.As regards the switching problem with FBT-218, Union Data has no evidence to substantiate its complaint. On the contrary, MagneTek's Report in 2002 had already proved that there was no switching problem. 48.As regards the noise problem with FBT-258, MagneTek's Report in 2002 found that the ballast was possibly affected by the lighting device and installation. Despite Universal's request, Union Data had failed to arrange for a better investigation on site. I think it only reasonable for MagneTek to indicate that it would not recommend using FBT-258 in quiet locations like hospitals. I find it not proved on the balance that there was any noise problem in the ballast itself. 49.GSD on behalf of QMH eventually cancelled the following quantities of the 3 items, among others:
50.On the assumption that there was a breach on the part of Yook Tong in supplying non-compliant FBT-218 and FBT-136 ballasts, I reject Yook Tong's submission [para 33-34] that Union Data had failed to mitigate loss. According to McGregor on Damages 17th ed., para 7-019:
51.I accept Union Data's submission [para 50] to the extent that the non-compliance of FBT-218 and FBT-218 ballasts, hence failure to complete the contract, had caused the cancellation of such quantities of non-compliant FBT-218 and FBT-136 ballasts in the QMH Project as seen in GSD's letter [B355-357] and reflected in QMH's defence in the Small Claims Tribunal case [B341]. Union Data's loss and damage should go along this line. In DCCJ 4948/ 2003 M. The terms of the contract between Universal and Yook Tong 52.Peter Wong (of Yook Tong) and Stephen Sin (of Union Data) both allege that in all meetings prior to the purchase orders, it was clear that compliance with EN55015 was a fundamental and mandatory term of the contract, and that the ballasts would be used by QMH. Universal argues in its submission [para 21] that the Remark (“due to small quantities QMH specification is not offered”) necessarily excluded compliance with EN55015 because the singular “specification” was used. I disagree with this submission. I think compliance with EN55015 was a fundamental and mandatory requirement of the QMH Project. It is too fundamental to be excluded by a singular form of this word. Obviously, it was only referring to a certain optional specification. N. Whether Yook Tong was in breach 53.Universal supplied to Yook Tong quantities of ballasts which were not compliant with EN55015 (i.e., FBT-218 and FBT-136). As a result, Yook Tong withheld payment for Universal's goods in the total sum of $374,614.20. Universal was in breach to the extent of having supplied non-compliant FBT-218 and FBT-136 ballasts. Yook Tong was in breach of its duty to pay for other ballasts although Yook Tong can rely on a set-off, if any, after trial. O. Universal's remedies (in Universal's claim against Yook Tong) 54.Universal did not agree to the return of the ballasts it had sold to Yook Tong. Yook Tong shall deduct the value of FBT-218 and FBT-136 ballasts in Yook Tong's possession from the sum of $374,614.20, which Yook Tong still owed to Universal on the invoices. P. Yook Tong's remedies (in Yook Tong's counterclaim against Universal) Prayer (1) 55.Yook Tong counterclaimed the legal and related costs in the total sum of $25,635.00 for its action suing Union Data in the Small Claims Tribunal. There is no evidence that these sums were reasonably incurred. I find Universal not liable under this head. Prayer (2) 56.Yook Tong counterclaimed the replacement costs in the sum of $1,998.00 incurred to a customer, Win Glory. There is no evidence why replacement of certain goods had to be made to Win Glory, or on what basis Universal is liable. I find Universal not liable under this head. Prayer (3) 57.Yook Tong counterclaimed the replacement costs in the sum of $690.00 to QMH. The invoice [A44] shows that it concerned FBT-158 ballasts. There is no proof that this model had any defects. I find Universal not liable under this head. Prayer (4) 58.Yook Tong counterclaimed the total sum of $79,997.22 as costs of ballasts, storage and insurance as follows:
There is no evidence of how the cost of storage and insurance charges were computed. I find Universal only liable for the value of 508 pieces of FBT-218 ballasts in the sum of $18,801.08. Prayer (5) 59.Yook Tong counterclaimed the sum of $60,303.49 as loss of profits on existing contracts with customers. There is no evidence of the terms of those contracts. I find Universal not liable under this head. Prayer (6) 60.Yook Tong counterclaimed the sum of $40,000.00 as costs of disposing of goods in attempting to mitigate the loss. There is no evidence as to why these costs were incurred. I find Universal not liable under this head. Q. The net position between Universal and Yook Tong in DCCJ 4948/ 2003 61.Yook Tong had a stock of $18,801.08 FBT-218 ballasts in the value of $18,801.08 and no FBT-136 ballasts (see para 58 hereinabove). Yook Tong still owed Universal the total sum of $374,614.20. The net position is that Yook Tong shall pay to Universal $355,813.12 (i.e., $374,614.20 less $18,801.08). In DCCJ 1041/ 2004 R. The legal relationship between Union Data and Universal 62.There is no contractual relation between Union Data and Universal. Union has no specific pleadings on the circumstances of negligence. Universal contends in its submission [para 1] that Union Data had not sufficiently pleaded a course of action based on the tort of negligence against Universal. However, as seen at trial, it is clear that Universal in fact knows of this course of action and is not in any way prejudiced. Universal maintains its stance in admission of having confirmed in various instances (such as December 2001) the compliance with EN55015. However, based on 2 factors, it does not admit liability to Yook Tong and Union Data. 63.Firstly, it alleges that it was only a qualified confirmation, which would be subject to a sufficiently large quantity being ordered so that modifications would be done to upgrade standard ballasts to be compliant with EN55015. As I see it, this allegation must fail because neither the written confirmation to Yook Tong nor the brochure (citing an equivalent standard) was qualified in those terms or at all. 64.Secondly, it alleges that Yook Tong had customers for compliant ballasts as well as customers for non-compliant ballasts. Yook Tong had not mentioned in any relevant purchase orders either:
I find this allegation unsustainable on 2 grounds. Firstly, even Celinea Lam (of Universal) says that if the purchase order did not mention it, Universal would supply the compliant (i.e., metal-case) version. I think it then follows that no mention would have been required of Yook Tong at all. Secondly, the evidence of Peter Wong (of Yook Tong), which I accept to be true and accurate, is that before receiving Universal's letter dated 7 January 2003, Yook Tong had never been informed by Universal that the plastic-case was non-compliant. Prior to that, its understanding in view of Universal's confirmation in various instances (such as December 2001) had been that all case versions were compliant. Compliance was too obvious to require express mention in its purchase orders. 65.I am satisfied that Universal had a duty to give correct information to, and supply non-compliant ballasts through Yook Tong to, Union Data. Universal knew Union Data would rely on the information and the supply. Universal failed to perform this duty. In consequence, Union Data suffered loss and damage from Universal's negligence. S. Whether it could give Union Data a right to claim against Universal 66.Union Data had a right to claim against Universal based on negligence. T. Union Data's remedies against Universal 67.Union Data's measure of damages is that, insofar as money can compensate for loss and damage, which is not too remote, the injured party is to be returned to the same position as he would have been in had it not been for the defendant's negligence. Prayer (6) 68.Union Data claimed against Universal the loss of profits on cancelled items due to termination of contract in the sum of $11,5,578.00 as follows [A78]:
69.Universal is liable for the sum of $17,894.00 for the bulk of FBT-218 and FBT-136 ballasts as follows:
Prayer (7) 70.Union Data claimed against Universal other loss and damage due to termination of Union Data's contract with QMH. There is no evidence or particulars of this head. I find Universal not liable. Prayer (8) 71.Union Data claimed against Universal the already incurred costs for the performed and outstanding works and contract in the sum of $270,00.00 [A78]. This sum consisted of various amounts [para. 14.1-14.4: A76-77]. 72.The first amount [para. 14.1: A76] was the insurance cost incurred for the entire contract in the sum of $10,000.00. Stephen Sin (of Union Data) accepts, however, that this sum had to be incurred even if Universal had duly performed the contract. I find Universal not liable under this head. 73.The second amount [para. 14.2: A76] was the EMSD laboratory testing cost incurred for the entire contract in the sum of $20,000.00. Stephen Sin (of Union Data) accepts, however, that this sum had to be incurred even if Universal had duly performed the contract. I find Universal not liable under this head. 74.The third amount [para. 14.3: A76-77] was the legal expenditure Union Data incurred in the Small Claims Tribunal action against QMH for the recovery of the performed and outstanding works for the contract from QMH. Union Data particularized this head as follows [A77]:
There is no evidence that they were reasonably incurred. I find Universal not liable under this head. 75.The fourth amount [para. 14.4: A-77] was the staff and management expenses and labour expenses for the period from Nov. 2002 to Sep. 2003 in rectification of the defects and negotiation with QMH and related parties, including EMSD, ITS values at $20,000.00/month for 11 months in the sum of $220,000.00. There is no evidence of how such expenses were incurred, and if incurred, whether they were reasonably incurred. I find Universal not liable under this head. Prayer (8) 76.Union Data claimed the loss of good reputation in tendering for HKSAR contracts. Union Data claimed on an indemnity basis in the sum of $150,000.00 for the loss in other potential HKSAR contracts, including Red-Light Camera, Speed Camera, Bollards and Audible Signals. There is no evidence to support this. I find Universal not liable under this head. Prayer (9) 77.Union Data claimed for costs on an indemnity basis for loss of good faith in the sum of $150,000.00. There is no evidence of this loss. I find Universal not liable under this head. U. The terms of the contract between Union Data and Yook Tong 78.I find that compliance with EN55015 was a fundamental and mandatory term of the contract. V. Whether Yook Tong was in breach 7950.Yook Tong was in breach because it supplied FBT-218 and FBT-136 ballasts non-compliant with EN55015. W. Union Data's remedies against Yook Tong (in Union Data's claim) Prayer (1) 80.Union Data claimed against Yook Tong the costs of those ballasts in the sum of $31,849.00 that were supplied to Union Data but not installed and still in Union Data's custody together with the cost of storage of the same to be estimated at 1% per month to be payable from 26 November 2002 till the present time (30December 2005) [A77]. Union Data particularized this head as follows [A74]:
I think Union Data shall return this item as follows:
There is no evidence of the cost of storage. I find Yook Tong not liable for the cost of storage. Prayer (2) 81.Union Data claimed against Yook Tong the loss of profits on the non-compliant ballasts supplied to Union Data but not installed in the sum of $8,251.00 [A77-78]. Union Data particularized this head as follows [A74]:
This does not relate to FBT-218 or FBT-136 ballasts. I find Yook Tong not liable under this head. Prayer (3) 82.Union Data claimed against Yook Tong the return of Union Data's retention money (kept by QMH) for works performed on all installed ballasts in the sum of $22,033.25 [A78]. QMH's defence in the Small Claims Tribunal case described such item as follows [B342]:
There is no evidence of the terms governing such retention money. It is difficult to speculate their effects. I find Yook Tong not liable under this head. Prayer (4) 83.Union Data claimed against Yook Tong the outstanding charges for the April/May 2002 installation of 232 pieces of non-compliant FBT-218 ballasts in the sum of $26,680.00 [A78]. QMH has not paid it. Except for some information given in QMH's letter dated 13 July 2002 [B354], the full circumstances are not revealed. This letter did not deny payment. It only stated that payment would be made “until a satisfactory explanatory report is provided by the manufacturer. I cannot tell whether such 232 pieces were subsequently accepted or cancelled by QMH. GSD's letter dated 4 March 2003 [B355-357] stated the installation charges in a lump sum of $264,060.00 [B356]. This comprised various items. Only an unascertainable part of it related to FBT-218 and FBT-136 ballasts. I do not find Union Data's case made out on the evidence. I find Yook Tong not liable under this head. Prayer (5) 84.Union Data claimed against Yook Tong for other loss and damage due to the supply of non-compliance goods from Yook Tong [A78]. There is no evidence of such loss and damage. I find Yook Tong not liable under this head. Prayer (6) 85.Union Data claimed against Yook Tong the loss of profits on cancelled ballasts items due to termination of contract in the sum of $115,578.00 [A78]. Union Data particularized this head as follows [A74]:
86.Yook Tong is only liable in the sum of $17,894.00 as follows:
Prayer (7) 87.Union Data claimed against Universal other loss and damage due to termination of Union Data's contract with QMH. There is no evidence or particulars of this head. I find Universal not liable. Prayer (8) 88.Union Data claimed against Yook Tong the already incurred costs for the performed and outstanding works and contract in the sum of $270,00.00 [A78]. This sum consisted of various amounts [para. 14.1-14.4: A76-77]. 89.The first amount [para. 14.1: A76] was the insurance cost incurred for the entire contract in the sum of $10,000.00. Stephen Sin (of Union Data) accepts, however, that this sum had to be incurred even if Yook Tong had duly performed the contract. I find Yook Tong not liable under this head. 90.The second amount [para. 14.2: A76] was the EMSD laboratory testing cost incurred for the entire contract in the sum of $20,000.00. Stephen Sin (of Union Data) accepts, however, that this sum had to be incurred even if Yook Tong had duly performed the contract. I find Yook Tong not liable under this head. 91.The third amount [para. 14.3: A76-77] was the legal expenditure Union Data incurred in the Small Claims Tribunal action against QMH for the recovery of the performed and outstanding works for the contract from QMH. Union Data particularized this head as follows [A77]:
There is no evidence that they were reasonably incurred. I find Yook Tong not liable under this head. 92.The fourth amount [para. 14.4: A-77] was the staff and management expenses and labour expenses for the period from Nov. 2002 to Sep. 2003 in rectification of the defects and negotiation with QMH and related parties, including EMSD, ITS values at $20,000.00/month for 11 months in the sum of $220,000.00. There is no evidence of how such expenses were incurred, and if incurred, whether they were reasonably incurred. I find Yook Tong not liable under this head. Prayer (8) 93.Union Data claimed the loss of good reputation in tendering for HKSAR contracts. Union Data claimed on an indemnity basis in the sum of $150,000.00 for the loss in other potential HKSAR contracts, including Red-Light Camera, Speed Camera, Bollards and Audible Signals. There is no evidence to support this. I find Yook Tong not liable under this head. Prayer (9) 94.Union Data claimed for costs on an indemnity basis for loss of good faith in the sum of $150,000.00. There is no evidence of this loss. I find Universal not liable under this head. X. Yook Tong's remedies against Union Data (in Yook Tong's counterclaim) Prayer (1) 95.Yook Tong claimed a set-off payment of the outstanding invoices owed by Union Data in the sum of $50,000.00 [A90] as follows:
There is no evidence of how legal expenses in the sum of $2,000.00 were incurred by Yook Tong. Yook Tong is entitled to a set-off of only $48,000.00 (i.e., $50,000.00 less $2,000.00). Prayer (2) 96.Yook Tong claimed outstanding payment on invoice no. P44036 in the sum of $3,695.00 [A90]. I agree that Union Data should pay this. Prayer (3) 97.Yook Tong counterclaimed outstanding payment on invoice no. P44033 in the sum of $20,160.00 [A90]. I agree that Union Data should pay this. Prayer (4) 98.Yook Tong counterclaimed the return of any goods unpaid for but still in the custody of Union Data. I agree that Yook Tong is entitled to this. Prayer (5) 99.Yook Tong counterclaimed the payment of legal and related expenses [A89] in the total sum of $26,635.00 as follows:
There is no evidence that how these sums were computed. It is possible for Union Data to recoup the deposit after the winding-up proceedings. I find Yook Tong not liable under this head. Y. The net position between Union Data, Yook Tong, and Universal in DCCJ 1041/ 2004 100.In its claim, Union Data is entitled to return 386 pieces of FBT-218 ballasts to Yook Tong [prayer (1)]. Union Data can also recover from Yook Tong and Universal the sum of $17,894.00 as loss of profit [prayer (6)]. There was also a deposit of $50,000.00 belonging to Union Data kept by Yook Tong. 101.In its counterclaim, Yook Tong can recover the total sum of $71,855.00 comprising:
102.Yook Tong can offset this sum of $71,855.00 against firstly, Union Data's deposit of $50,000.00 kept by Yook Tong and secondly, Yook Tong's liability for such part of the said sum of $17,894.00 [see para 98 hereinabove]. Z. The conclusion 103.In DCCJ 4948/ 2003, Universal succeeds in its claim and Yook Tong succeeds in its counterclaim. I make no order as to costs. In DCCJ 1041/ 2004, Union Data succeeds in its claim against Yook Tong and Universal. However, Yook Tong also succeeds in its counterclaim against Union Data. I make no order as to costs between Union Data and Yook Tong. As Union Data's pleadings have posed some uncertainties at the early stages of the trial, I order that Universal shall only pay half of Union Data's costs for the trial. I do not allow costs to Union Data before the trial. This costs order nisi will become absolute after 14 days from today. All outstanding sums shall carry interest at judgment rate from today. Dated this 10 August 2006
Mr. SIN Tin-lok, in person, for Union Data Industries Limited. Mr. John HEMMINGS instructed by Messrs. Massie & Clement for Yook Tong Electric Co Limited. Mr. CHAN Chung instructed by Messrs. Katherine Y.W. Or & Co. for Universal Lighting Asia Limited. __________________________________ REASONS FOR DECISION __________________________________ INDEX (Page numbers in brackets)
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Other judgments that cite this case
Further hearings and rulings under DCCJ 4948/2003