Liu Chong Hing Bank Ltd v. International (L. & M.) Co Ltd and Another

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 2172 OF 1970

__________________

Coram: McMullin J.

Date : 20^th November 1972.

__________________________

RIDER TO JUDGMENT
DATED 7th November 1972

__________________________

1. Since the delivery of the foregoing judgment counsel have  approached me to point out that although the judgment which has been given for the plaintiff contains an award (based on an agreed figure) in respect of interest and storage charges I have not specifically mentioned, in the reasons for my decision, that I was acceding to the plaintiff’s claim on these matters.  That is true, the reason being that the necessity, or at least the desirability, of doing so was overlooked in the task of  resolving the major issues as defined and agreed by counsel.  Having carefully perused a note extending to about 170 pages the major part of which records the submissions of  counsel before, in the course of and at the conclusion of the taking of the evidence I have been able to find only half a dozen lines or so specifically directed to the issue as to whether interest and storage charges should be awarded and if so whether the figure relating to storage charges should be reduced to any extent (and if so to what extent) on the basis that the plaintiff could and ought to have mitigated its damages by selling the goods presently held in storage in America.

2. At the invitation of counsel therefore and I without further calling upon counsel.  I propose to add this note by may of rider, to the reasons for judgment already given.

3. No evidence and indeed virtually no argument has been advanced in the course of the trial specifically directed to this subsidiary issue.  Mr. Jackson-Lipkin merely pointed out that there was such an issue to be decided and Mr. Cheung referred me to a passage from the 7^th Edition of Pagets Law of Banking and the cases of Stein v. Hambros Bank[1] and Urquhart Lindsay and Co. Ltd. v. Eastern Bank, Ltd.[2] and that damages awarded should include interest from the due date (i.e. date of presentation) of the bills and that the plaintiff should be reimbursed for the moneys expended on keeping in storage the goods covered by the L/C drafts which the second defendant refused to honour and the supporting documents of title to which were returned to the plaintiff through the Chartered Bank and which are still in the plaintiff’s possession.  I understood the purport of his submission to be (although it was not elaborated) that in the circumstances it was the clear duty of the second defendant to pay on the L/C drafts and if the buyers refused to redeem the commercial documents by reimbursing the second defendant then the second defendant should themselves have had recourse against the goods.  They had not chosen to do this and he denied that the plaintiff was – in view of the absolute and unconditional nature of the second defendant’s liability under the L/C to take up the plaintiff’s drafts and the wholly unjustified broach of that obligation – under any duty to mitigate by selling the goods stored.  It was for the second defendant to pay the plaintiff and so effect release of the documents and the sale of the goods.

4. I have no doubt that the plaintiff is entitled to the interest claimed as part of its damages which must be held to have been in contemplation of the parties should the defendant wrongfully refuse to honour its promise represented by the terms of the L/C, Mr. Cheung’s contention as to the storage charges seems to me to be correct.  It is in any event doubtful on the authorities whether a beneficiary under a letter of credit must do what he can to minimize damages (Halsbury Vol. 2 P 221 – para. 409 – which refers to the two cases cited above.) I have found that the second defendant was wholly unjustified in doing what it did and, being clearly in default of its contractual obligation to the plaintiff as holder of the L/C, everyday’s additional expense incurred as a result of non-redemption of the documents and sale of the goods should be borne by the defendant bank.  This is the view which was implicit in the award of damages made at the conclusion of the judgment.

[1]  9 LL.L.R. 507

[2]  1922 1 K.B. 318