Tengyue International Ltd v. Sunil Melwaney t/a Nushi Electrical Appliances

DCCJ 3330/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3330 OF 2008

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Coram : His Honour Judge Chow

Dates of hearing : 4^th , 5^th , 6^th January, 29th March and 3^rd May, 2010

Date of handing down Judgment : 15^th June, 2010

JUDGMENT

1.This is the Plaintiff’s claim against the Defendant for the price of goods sold and delivered to the Defendant in the sum of US$27,034.50.  The Defendant counterclaims for the return of deposit in the sum of US$4,000, by reason of the cancellation of the two contracts in question.

Evidence of the Plaintiff

2.Miss Ng Suk Ting (“Crystal”) testified for the Plaintiff.  It is her evidence that on 26.2.2008, the Plaintiff confirmed the first purchase order (Contract No. TY080122) with the Defendant.  The Defendant paid US$4,000 as deposit.

3.The contracts in dispute in this case are TY80331-1 (“Contract 1”) and TY80331-3 (“Contract 3”).  The parties entered into these two contracts in early April, 2008, and the deposit of US $4000 paid under Contract No. TY080122 was transferred as the deposit of these two contracts.  Under Contract 1 and Contract 3, a total of 3750 units of electric fans (“the goods”) were ordered.  Hand written on these contracts are : “Max Delivery time 8^th May 2008”.  Typed next to the monetary figure underneath the column “Unit Price” were the letters “FOB”, which indicate that it was a term of the contracts that the goods were to be sold free on board.

4.In or about late April/May 2008, the parties agreed to extend the delivery date of the goods to 15.5.2008.  On or about 13.5.2008, the Plaintiff received the Shipping Order from the China Shipping Container Lines (Hong Kong) Agency Co., Ltd., the agent of the shipping company for shipping the goods, that the deadline for loading the containers was on 19.5.2008 at 1800 hours.

5.On 14.5.2009, the Plaintiff requested the Defendant to extend the delivery time to 19.5.2009 over the phone.  The Defendant agreed to such a request.

6.On 15.5.2008, Mr. Punjabi Jeramadas (“Jimmy”), witness of the Defendant, an employee/agent of the Defendant) inspected the 12 inches fans (i.e. Contract 2 and Contract 3) and the 16 inches floor fans (i.e. under Contract 1) in the presence of Leung Hon Lam (“Leung”), the director of the Plaintiff.  After the inspection, Jimmy confirmed that the 12 inches fans could be put into the container.  By the morning of 16.5.2008, the Plaintiff had put all the goods into 2 containers and completed all the obligations under the FOB terms.

7.On 16.5.2008, Jimmy went to the Plaintiff’s factory in Zhongshan to inspect the 16 inches floor fans.  During the inspection in the presence of Leung and Crystal, Jimmy confirmed that there was no problem with the 16 inches floor fans, and that the same could be loaded.  When these fans were being loaded, Jimmy stood in front of the container and pictures of him were taken.  The loading of the fans was completed at about 0100 hours at 17.5.2008, and the container was then hauled back to the pier for customs declaration and the return of the container.

8.From 19.5.2008, the Plaintiff started to chase after Nushiman Sairam (the Defendant) for outstanding payment in respect of Contract-1 and Contract-3 via MSN communications, as evidenced by the following MSN messages:-

9.On 26.6.2008, Jimmy sent an email to Crystal, saying that the Plaintiff was in breach of contract, and the Defendant was not in a position to accept the goods.  He asked for the return of deposit.

“We have clear understanding and agreement with you that shipment after 15^th May not acceptable under force circumstance we accepted shipment on 16^th May and S/O order was given you to make sure shipment is done … … … … … Later after on 30^th May I came to know that goods were unable to ship as per S/O and it have been delay further and on board date will be 27 or 28^th May.”

The evidence of the Defendant

10.Jimmy testified for the Defendant.  He said that the goods ordered from the Plaintiff would be sold to an overseas buyer.  He agreed that the original delivery date was extended.  As long as the overseas buyer accepts the goods, the Defendant will also accept the goods from the Plaintiff.  The overseas buyer said that as long as the goods were loaded on 15.5.2008, it will accept the goods.  But the Plaintiff failed to do so.  Hence it was in breach of the contractual terms of the two contracts.

Analysis of the evidence

11.Contract 1 and Contract 3 are FOB contracts.  According to section 34(1) of the Sales of Goods Ordinance (“SOGO”), once the goods are delivered by the Plaintiff to the shipping company, the Plaintiff is deemed to have delivered the goods to the Plaintiff.  Section 34(1) reads: -

“Where, in pursuance of a contract of sale, the seller is authorized to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the goods to the buyer.”

So by delivering the goods to the shipper’s warehouse, the Plaintiff fulfilled its obligation under Contract 1 and Contract 3.

12.The loading deadline given by the shipping company for the loading of the goods was 19.5.2008.  Thus whether the goods were loaded on 15^th or 16^th May 2008, it would not have made any difference.  The shipment was delayed to 27^th or 28^th May, according to Jimmy’s email.  Such delay was caused by the shipping company, and not by the Plaintiff.  So the Plaintiff is not liable for it.

13.The main crux of this case is whether the Defendant accepted the goods despite the fact that the delivery of the goods was made after 15.5.2008.  Section 37(1) of SOGO provides:-

“….. the buyer is deemed to have accepted the goods –

(a)    when he intimates to the seller that he has accepted them;”

Firstly, the Defendant did not reject the goods at the time of loading on 15.5.2008 and 16.5.2008.  On each of these two days Jimmy confirmed that the goods could be loaded.  Secondly, the MSN communications show that the Defendant was prepared to make payment for the goods.  In the MSN communications on 2.6.2008 and 3.6.2008 respectively, the Defendant said that he would make the payment in the following week.  That indicates that he had accepted the delivery of the goods, otherwise he would not have made such a statement.  It was only on 26.6.2008 that the Defendant changed his mind when Jimmy sent an email to Crystal asking for the return of the deposit and for compensation.

14.By reason of the matters aforesaid I find that the Defendant accepted delivery of the goods under Contract 3 and Contract 1 on 17.5.2008.  But he has not paid for the price of the good.  He only made a deposit of US$4,000.  Hence there is no defence to the Plaintiff’s claim.  Accordingly I enter judgment in favour of the Plaintiff as claimed.  I dismiss the counterclaim because the contracts were not cancelled as alleged by the Defendant.  I order that the Defendant do pay the Plaintiff, within 14 days from today, the sum of US$23,034.5 (US$27,034.50 – US$4,000), with interest thereon, at judgment rate, commencing from 10.6.2008 until satisfaction.

Costs

15.I make an order nisi, to be made absolute within 14 days from today, that the Defendant do pay to the Plaintiff costs of this action, to be taxed, if not agreed (with no certificate for Counsel).

The Plaintiff  : represented by Mr. Ernest Yuen, instructed by M/S. Ivan Tang & Co., Solicitors

The Defendants  :  represented by Mr. Jeramdas Punjabi