Brand Visionaire Ltd v. Debreu Ltd

DCCJ 1281/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1281 OF 2011

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DECISION

LEAVE TO APPEAL

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1.The Plaintiff took out a summons on 28 May 2013 asking for leave to be granted to appeal against my Judgment dated 30 April 2013(“the Judgment” and/or “the Order”).  By the Order the Plaintiff’s claim for damages suffered by it as a result of the alleged breach of the two sales contracts on the part of the Defendant was dismissed.

Background

2.The Plaintiff had made two purchase orders for some aroma USBs for a total amount of $34,450 from the Defendant.  The Plaintiff later alleged that the USBs broke and therefore it suffered damages.  Its claim was for $477,418.79.  I dismissed the claim after trial with costs.  The Plaintiff now applies for leave to appeal against the Order. The grounds of the intended appeal as set out by the Plaintiff  are as follows: -

(i) I have put a duty on the Plaintiff to prove that it was the chemical reaction between two components, namely ABS and DPM, which have caused the damage to the ARD-11 USBs;

(ii) I have erroneously rejected the Plaintiff’s case that the HKSTC test were carried out with oils supplied by the Defendant;

(iii) I have erroneously rejected the findings of the Plaintiff’s test report;

(iv) I have wrongfully applied the law and held that the Defendant could rely on the exception in s.16(2) (b) SOGO which is inapplicable in the present case;

(v) I have come to the wrong conclusion that it was not reasonable for the Plaintiff to rely on the seller’s skill or judgment and therefore there is no implied condition in regard to fitness for purpose as the exception in s16(3) of SOGO applies; and

(vi) I have made erroneous findings on the allegation of misrepresentation and had wrongfully dismissed the complaint of the Plaintiff thereunder.

3.At the hearing, the complaint of Mr Cheung is mainly on my ruling on the burden of proof and whether the Defendant had a duty to disclose to the Plaintiff that the USBs contained an ingredient called ABS (a chemical which might cause chemical reaction when it came into contact with a fragrant solution DPM).

4.I think it would be easier to discuss the arguments raised by Mr Cheung in the order of his skeleton submission.  By paragraph 2, Mr Cheung seeks to affirm that the tests conducted by HKSTC were primarily based on deploying oils supplied by the Defendant.  I cannot agree with him that there were uncontroverted evidences supporting such assertion.  In paragraph 27 of the Judgment, I have concluded that I would not rely on the HKSTC report in resolving the disputes before me.  I have given my reasons in paragraphs 24 to 27.  I have in particular made a finding as could be seen in paragraph 26 that there was no independent proof on the source of the apple taste oil.  The most Mr Chan, the maker of the HKSTC Report, could say was that the oils were supplied by his client, the Plaintiff.

5.Mr Cheung contends that I have given insufficient or no weight to the duty of the Defendant to disclose to the Plaintiff that the ABS in the USBs would have chemical reaction with DPM in the fragrance oil.  I think this goes back to the question of whether the Plaintiff has proved its case that the breakage of the USBs if any was caused by the chemical reaction of DPM and ABS.  Further I agree with the submission of Mr Lam acting for the Defendant that all along the Defendant was not made to know the ingredient of the fragrance oil by the Plaintiff.  I am of the view that the burden to disclose would have been on the Defendant if it was proved that DPM is a common solvent used to dilute in fragrance; that it would, probably than not, have chemical reaction with DPM; and for these reasons the presence of ABS may amount to a general unsuitability.  In the present case, such evidence was lacking.  In the circumstances I do not think it calls for a duty on the Defendant to disclose to the buyer that the USBs contained ABS.  The orders placed by the Plaintiff were quite different from the Defendant’s usual trade practice as the Defendant normally supplied its own oil together with the USBs in a package.  This is more so when the USBs were tested by the Plaintiff with its own oil before the 1^st Order was made.

6.Mr Cheung relies on a passage in Chris. Hill Ltd. v. Ashington Piggeries (1972)AC 441 at 490 B-E.  I think the passage relied on by Mr Cheung is rather fact sensitive.  Lord Wilberforce said “The field thus left to the sellers can be described in terms of their responsibility as merchants, to obtain and deliver ingredients, and relevant herring meal, not unfit by reason of contaminationto be fed to animals, including mink. The field reserved to the buyers, on the other hand, was that of particular or specific suitability for mink.” I do not think this passage could assist the Plaintiff.  There was no evidence to say so before me that the presence of ABS, an ingredient of plastic, amounted to contamination for some fragrance solution.

7.Lord Wilberforce raised the question on the nature of unsuitability if it was caused by the presence of DMNA in the food.  He went further to say “If mink possessed an idiosyncrasy, which made the food as supplied unsuitable for them though it was perfectly suitable for other animals, this would be the buyer’s responsibility, unless, as is not the case here, they had made this idiosyncrasy known to the sellers so as to show reliance on them to provide for it.  But any general unsuitability would be the sellers’ responsibility.” 

8.To further demonstrate the application of the principle, Lord Wilberforce said that “So the question arises, what does the buyer, alleging unfitness, have to prove? If the fact were that the herring meal supplied, while damaging to mink, was perfectly harmless to all other animals to whom it might be fed, it would be unjust to hold the sellers liable.  If on the other hand, the herring meal was not only lethal to mink but also deleterious, though not lethal, to other animals, the sellers’ responsibility could be fairy engaged. ……The critical question in this part of the appeal is whether the buyers proved enough to show that their mink died because of some general, that is, non-specific, unsuitability of the herring meal through contamination.  The burden was upon the buyers to show that this was so.”    

9.In my Judgment, to seek assistance from this passage, there should be evidence from the Plaintiff showing that they had disclosed to the Defendant the ingredient of their fragrance and their particularities which would call for the Defendant to exercise their skill and judgment towards those particularities.  That was not the case of the Plaintiff.  Quite to the contrary, they took the USBs to carry out their own tests with their own oil and found that the USBs worked well.

10.Further in Ashington, supra, the evidence although not very complete, it is sufficiently shown that mink are more sensitive to DMNA than most other animals to whom compound foods would be sold.  The allegation that ABS has chemical reaction with DPM has not been proved in the present case.  I have made my finding that the cause of damage to the USBs if any were damaged, had never been proved.

11.In paragraph 4, Mr Cheung raised the issue of burden of proof.  Mr Cheung submitted that the breakdown or malfunctioning of USBs within an unusually short period of time after delivery at least raised a presumption that the goods were not of proper quality and condition at the time of delivery.  To further his submission he referred me to a passage in Commercial Law by R.M.Goode 1^st ed.  At page 288 where it is said that:

“It has been urged in a number of Reports that there should be an implied term that the goods comprised in a contract of sale shall be durable for a reasonable period of time. It is, however, necessary to examine this concept of durability a little more closely to see what it means and what changes its introduction would have on existing law. There is no doubt that, as the law now stands, the breakdown or malfunctioning of goods within an unusually short time after delivery at least raises a presumption that the goods were not of proper quality and condition at the time of delivery. ”

12.In reply Mr Lam acting for the Defendant pointed out that it had always been the pleaded case of the Plaintiff that the defect was caused by chemical reaction of DPM in the fragrance with ABS in the plastic.  The complaint was not on quality of the USBs.  I agree with Mr Lam on this.  Further he said that there was in fact no evidence on the alleged non-durability to raise the presumption.  It is also my view that  the principle does not apply in the present case.  In the Judgment, I have already excluded the HKSTC Report, I have ruled that the complaint made on the first order has not been proved (paragraph 58 of the Judgment); and that the circumstances in which that particular USB in the 2^nd order broke was not clear, there was only one email from the Plaintiff to the client and there were exaggerations in the account of Mrs Klitsie regarding this (paragraph 58 of the Judgment).  This incident carried little value to show that the USBs were not durable to invoke the presumption.

13.In paragraph 5 Mr Cheung contends that general unsuitability was proved.  I find this assertion not supported by evidence.  I believe I have dealt with this already.

14.The application for leave is made under section 63 of the District Court Ordinance.  Section 63A provides that:

(1) Leave to appeal granted under section 63 may be granted—

(a) in respect of a particular issue arising out of the judgment, order or decision; and

(b) subject to such conditions as the judge, the master or the Court of Appeal hearing the application for leave considers necessary in order to secure the just, expeditious and economical disposal of the appeal.

(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that—

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.

15.For reasons set out in the above, I do not see that the Plaintiff has reasonable prospect to succeed in its intended appeal and I do not see any other reason in the interest of justice why the appeal should be heard.  This application is therefore dismissed.

Costs

16.Costs of this application should follow the event.  I order that the Plaintiff do pay the costs of the Defendant, such costs are to be taxed if not agreed.  This is an order nisi to become absolute within 14 days if no application is made to vary the same.

Mr Jeremy Cheung, instructed by Messrs. Chak & Associates, for the Plaintiff

Mr Edmund Lam, of Messrs. Chan, Wong & Lam, for the Defendant

Please refer to HCMP2637/2013 for the relevant appeal(s) to the Court of Appeal.