DRAGON CROWD GARMENTS FACTORY LIMITED v. MICHAEL TEXTILES LIMITED

1986, No. A1981

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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I. Findings of Fact

1. The plaintiff company is a garment manufacturer, specialising in knitted sweaters. It is in business in a substantial way, employing well over 100 workers. PW1 is the managing director of the plaintiff company. In the year 1984, the plaintiff company had taken a transfer-in of temporary quota in Category 5 for the export of a large volume of womens' sweaters to England. By about August or September in that year, the plaintiff company found itself with about 375 dozen of that temporary quota unused.

2. PW1 had a daughter studying at school in England. On one occasion, he went to farewell her at Kai Tak Airport. Another parent happened to be seeing a daughter off on her way to school in England. That was DW1 who is also the managing director of a garment manufacturing company - the defendant company. The defendant company, which employs over 100 workers, concentrates its efforts on the manufacture and sale of woollen garments. At the airport together on that occasion, PW1 and DWI made each other's acquaintance.

3. When PW1 found himself with these 375 dozen temporary quota unused in about August or September 1984, he decided to approach DWI to see whether the defendant company might be able to assist the plaintiff company in using it. Prior to that, PW1 and DW1 had never done any business together, their sole previous encounter having been the casual social meeting at the airport I have described. The plaintiff company had oddments of material already in stock. This was 60% cotton/40% polyester. Those oddments came in a multitude of colours. In all, there were 19 different colours (see Agreed Bundle p.2). From the colour of which it had most, the plaintiff estimated it could produce 97 dozen sweaters, whereas, of the colour of which it had least, the quantity was as small as 2 dozen. In all colours, the plaintiff estimated it had sufficient material to produce 332 dozen sweaters.

4. PW1 knew that the defendant company had customers in England. PW1 accordingly asked DW1in that phone call in August or September 1984 whether the defendant company would assist the plaintiff company to utilise its 375 dozen temporary quota which the plaintiff company would employ for the purpose of making up its stock of oddments of material I have described. DW1 explained to PW1 over the phone that he did have a good customer in England, namely, Derby Clothing Limited ("DCL"). In fact, DW1 owned one share in DCL. DW1 went on to explain. further to PW1 that the garments the plaintiff company was now offering were outside the range of products which DCL normally dealt in. The gist of the conversation was that DW1 told PW1 that the best he could do for PW1 was to ask DCL to take the plaintiff company's goods on consignment.

5. The phone conversation between PW1 and DW1 ended on the basis that DW1 would try to arrange for DCL to take the plaintiff company's proposed goods on consignment, and that from then on PW1 and DW1 would leave it to their respective subordinates to work out the details.

6. After his phone conversation with PW1, DW1 phoned DCL to explain the plaintiff's proposal. The person DW1 spoke to was Mr. Craft who was in charge of DCL. Mr. Craft was agreeable to handling the plaintiff's goods on consignment.

7. In or about September 1984, the plaintiff company supplied the defendant company with samples of two different styles of ladies' sweaters. Those styles were numbers 5525 and 5030. At the same time, the plaintiff company also gave the defendant company colour swatches from the plaintiff's stock of material intended for using up the quota. The defendant company transmitted the sample sweaters and the colour swatches to DCL to enable DCL to set about looking for prospective purchasers for the goods.

8. At the end of September 1984, the plaintiff company sent an original and duplicate of its standard Confirmation of Sale form to the defendant company. When sent by the plaintiff company, that original and duplicate were the same as the document to be found at Agreed Bundle, p.3. That original and duplicate were received by the defendant company on the 2nd October 1984. At the time the original and duplicate were sent to the defendant company, they had already been signed by PW1 on behalf of the plaintiff company. That original and duplicate were addressed to the defendant company and contained a printed confirmation of "having sold to you today the undermentioned goods on the terms as stated here below and upon the conditions specified on the back hereof". The goods were described as styles 5525 and 5030, the quantity being about 375 dozen. The price was shown as "FOB Hong Kong US$4.60 per piece". That was the same price which the plaintiff company had offered the defendant by telex on the 7th September 1984 (Agreed Bundle p.2), but at that time the plaintiff had indicated that price to be negotiable.

9. Payment was shown in the original and duplicate of that Confirmation of Sale sent by the plaintiff company as "DA 90 days". Delivery was shown as mid November 1984 and under the heading "Remarks" appeared "c/o Derby Clothing Limited, Derby Street, Cheetham, Manchester, M8 8AT, United Kingdom".

10. The defendant company did not accept the offer contained in the original and duplicate of the Confirmation of Sale sent by the plaintiff company. Instead, the defendant company deleted the words "DA 90 days" under the heading "Payment", and substituted the words "On Consignment" in both the original and the duplicate. The duplicate signed by DW1 on behalf of the plaintiff, was posted to the plaintiff company. It was posted in one of the defendant company's envelopes which would have been returned to the defendant company in the event of non-delivery to the plaintiff company. It was not returned to the defendant company, and I am satisfied as a matter of reasonable inference that the duplicate was duly delivered to the plaintiff company. The original (Exh. D1) signed by DW1 was retained by the defendant company.

11. The plaintiff company made no acknowledgement of what was in effect a counter-offer embodied in the duplicate sent by the defendant company to the plaintiff.

12. Despite a reference in that duplicate to delivery being in November 1984, nothing was delivered by the plaintiff company in that month. If the plaintiff had delivered its sweaters then, they should have arrived in England before Christmas and it might have been easier to sell them, perhaps avoiding the problems which eventually brought the parties to court. The deadline for exporting goods from Hong Kong under the 1984 quota was 31st December 1984. The plaintiff just caught the deadline by shipping 3,353 sweaters in styles 5525 and 5030 to DCL on the 30th December 1984. That meant that the plaintiff company was able to use 279 dozen of the 375 dozen temporary quota which it had. The plaintiff company, which was the shipper of the goods, sent then "freight collect" by the Benline vessel "Benavon". The relevant dock receipt and bill of lading will be found in the Agreed Bundle at pp. 5 and 8, respectively.

13. The shipping documents under cover of a "Despatch Advice" (Agreed Bundle 6) were sent by the plaintiff company direct to the defendant company on the 15th January 1985, the defendant company acknowledging receipt of them by "chopping" that Despatch Advice. Those shipping documents comprised the plaintiff company's invoice (Agreed Bundle p.7), the bill of lading in triplicate (Agreed Bundle p.8), the packing list (Agreed Bundle, pp. 9 to 12), the export licence (Agreed Bundle pp. 13 and 14) and the certificate of origin (Agreed Bundle p.60).

14. The plaintiff's invoice (Agreed Bundle p.7) in the sum of US$15,423.80, being the price of 3,353 pieces at US$4.60 each, bore the words "for account and risk of" defendant. That invoice included a reference to "DA90 days sight", but no bill of exchange accompanied the invoice. At no stage did the plaintiff company ask the defendant company to accept a 90 day bill of exchange (or any other type of bill of exchange). The defendant company forwarded all those shipping documents including the invoice (Agreed Bundle, p.7) to DCL.

15. The goods arrived in England aboard the Benavon at about the end of January 1985. I am not sure when they reached their destination, which was Manchester, under the combined transport bill of lading, but it would presumably have been sometime in February 1985. The goods stayed free for seven days in Benline's warehouse, but, after that, warehouse charges would have to be paid to Benline if the goods were to be released.

16. On 4th March 1985, DCL obtained the release of the goods from Benline by paying approximately £700 for freight and warehouse charges to date. However, this did not enable DCL to take possession of the goods. Import duty and V.A.T. still needed to be paid. The goods were moved into a bonded warehouse where the storage rate would be less than the dumurrage charged by Benline for keeping the goods in its warehouse.

17. When the goods arrived in England, DCL was unable to find buyers for them at anything like the price of US$4.60 per sweater which is what the plaintiff company had originally wanted. As I have already mentioned, if the goods had arrived before Christmas, a price of that nature might have been possible, but it no longer was in February/March/April 1985. Mr. Craft of DCL explained the problem to DW1 who relayed the information to PW1. On or about the 3rd April 1985, PW1 indicated to DW1 that the plaintiff company was agreeable to accepting £1.30 per sweater FOB. DW1 communicated PW1's decision to Mr. Craft. Part of the understanding between PW1 and DW1 in relation to this agreement about a price of £1.30 per item was that the plaintiff company would furnish DCL with an invoice showing this price of £1.30 per piece, rather than the price of US$4.60 appearing on the invoice Agreed Bundle p.7. This lower price of £1.30 would enable DCL to pay less ad valorem import duty and V.A.T. when getting the goods released from the bonded warehouse.

18. By mid-May 1985, the plaintiff company still had not supplied an amended invoice showing this reduced price of £1.30 per item. On 16th May 1985, DCL sent the plaintiff a telex, copied to the defendant, asking for the amended invoice. That telex (Agreed Bundle 17) set off a flurry of letters and telexes between the plaintiff, the defendant and DCL. On 17th May 1985, the plaintiff company wrote to the deferdant company demanding payment of US$15,423.80 under the invoice of 9th January 1985 (Agreed Bundle 7). DW1, for the defendant company, countered with a telex (Agreed Bundle P.19) to the plaintiff company next day, pointing out that the shipment had been on a consignment. basis only, and that, in any event, PW1 had agreed with DCL in April to accept a price of £1.30 per item FOB. DW1's telex continued that because PW1 was now denying that he had agreed to sell to DCL at £1.30 per item FOB, the defendant company would advise DCL not to handle this shipment but instead to return the shipping documents to the plaintiff company so that the plaintiff company could immediately arrange the return of the goods to itself.

19. That prompted a reply 2 days later (i.e. 20th May 1985) from PW1 to the effect that if the defendant company was having difficulty selling these goods, it should return the shipping documents to the plaintiff so that the plaintiff could arrange for the goods to be shipped back to Hong Kong. At the same time, PW1 denied DW1's contention that a price of £1.30 had been agreed. That telex is to be found at Agreed Bundle p.20.

20. DCL now joined the fray by sending the plaintiff a telex (Agreed Bundle, p.21) on the 20th May 1985 saying that if the plaintiff wanted its shipping documents back, it would first of all have to pay DCL the sum of approximately £700 sterling which DCL had incurred for freight etc. That telex also pointed out that it was no longer possible to return the original bill of lading and export licence to the plaintiff because they had been used to put the goods into bond.

21. The plaintiff company followed up with a telex (Agreed Bundle, p.22) dated 1st June 1985 to the defendant, asking what arrangements were being made to furnish the plaintiff with a full set of shipping documents so it could get its goods back.

22. There was then a long pause. The next development was when the plaintiff company telexed DCL on the 7th August 1985, enquiring at what price DCL would accept the cargo. This telex (Agreed Bundle, p.23) was not copied to the defendant company. From now on, all the telexes are directly. between the plaintiff company and DCL.

23. On the 30th August 1985, the plaintiff offered the goods to DCL at a price of £1.30 per item FOB (Agreed Bundle, p.27).DCL countered the same day with a telex (Agreed Bundle p.28) offering £12 per dozen "nett nett" on consignment.

24. Then, on the 2nd September 1985, PW1 and Mr. Craft spoke together on the phone. They agreed that the plaintiff company would sell the goods to DCL at £1.20 per sweater FOB Hong Kong. As a result of that telephone conversation, PW1 sent DCL a confirming letter on the 3rd September 1985 (Agreed Bundle p.31) together with an invoice (Agreed Bundle p.32) showing DCL as the buyer. The total purchase price based on £1.20 per sweater was £4,023.60.

25. The story did not have a happy ending. From the end of September 1985 (see Agreed Bundle p.42), the plaintiff company kept pressing DCL for the sum of £4,023.60, but DCL kept fobbing the plaintiff company off with empty promises of the "cheque is in the post" variety. By January 1986, the plaintiff company was thoroughly fed up with DCL and threatened legal action for recovery of the £4,023.60.

26. Instead of suing DCL, the plaintiff company decided instead to try to recover US$15,423.80 from the defendant company under the original invoice (Agreed Bundle p.7). Hence, the present proceedings in which the opening shot was a letter of demand dated 5th March 1986 from the plaintiff company's solicitors to the defendant (see Agreed Bundle p.62).

27. DCL went into receivership and all its goods, presumably including those in the bonded warehouse, have now been sold off by the receiver. The defendant company includes itself among DCL's creditors.

II.     Reasons for Findings of Fact

28. My findings of fact stem from the usual weighing exercise at the end of the day, based on the impression the witnesses made on me in the light of the documentary evidence and inherent probability.

29. The main conflict was between the oral testimony of PW1 and the oral testimony of DW1. The conclusion that I ultimately reached was that DW1's testimony was to be preferred where it conflicted with PW1's testimony. Besides accepting the evidence of DW1, I also accepted the evidence of each of PW2 and DW2. PW2 dealt with samples and production documents for the plaintiff company at the material time, whereas DW2 was DW1's secretary then. PW2 and DW2 testified mainly on peripheral matters and I saw no reason to disbelieve either of them.

30. PW1, as principal protagonist for the plaintiff company, sought to portray the arrangements between the plaintiff and the defendant as a routine sale of goods from one manufacturer to another, using the plaintiff's standard form of written sales contract. As the plaintiff's case was put, here was the plaintiff as an ordinary seller and the defendant as an ordinary buyer exchanging written contracts for the sale of goods in such a way that there was no scope for contending that the transaction was other than a sale. Moreover, according to the plaintiff company's way of looking at things, the written contract brought the parol evidence rule into play with the result that the defendant company was precluded from contending that the arrangement between the parties was for the plaintiff to deliver the goods to DCL on consignment. Unfortunately for the plaintiff company, there simply was no exchange of written sales contracts between the parties. What happened was that the defendant company sent the plaintiff company the duplicate of exhibit D1, incorporating the words "on consignment". After receiving that duplicate, the plaintiff company saw fit to despatch its goods to DCL in England. Rather than a written contract, the contract, if any, between the parties was one which was partly in writing, partly by conduct, and partly oral.

31. PW1's version of events started looking less than water-tight from the moment he was unable to produce a contract of sale signed by the defendant company. According to PW1, the plaintiff company never received any signed contract document from the defendant company, but, nonetheless, was prepared to despatch its goods to England because it assumed that the defendant company was trustworthy.

32. In the light of all the evidence in the case, I could not find my way to accepting PW1's suggestion that the plaintiff company had not received a signed contract document from the defendant company. I am satisfied that the plaintiff company received the duplicate copy of Exhibit D1 i.e. bearing the words "Payment on Consignment". It is inherently improbable that the plaintiff company would have allowed its goods to leave Hong Kong without getting some document signed by the defendant company. At the time of receiving the duplicate of Exhibit D1, the plaintiff company must have been so desperate to use its quota that it was prepared to despatch its goods on the strength of the duplicate of Exhibit D1. It now looks as if the plaintiff company is not willing to reveal that it received the duplicate of Exhibit D1 because a document in that form is obviously an obstacle to the plaintiff company seeking to recover the price under a sales contract.

33. Perhaps the strongest piece of evidence in support of the plaintiff company's version is the fact that the defendant company did not reject the plaintiff company's invoice dated the 9th January 1985 "for the account and risk of" the defendant company in the sum of US$15,423.80 which was the price of the goods After receiving that invoice on the 15th January 1985 (see the Despatch Advice at Agreed Bundle p.6), the defendant company merely forwarded it to DCL. An invoice like the one at Agreed Bundle p.7 is in the nature of a self-serving document which, by itself, can only add somewhat limited support to the plaintiff company's contention that it sold its goods to the defendant company. I do not think any great weight can be attached to the defendant company's failure to protest at this invoice as soon as it was received: more likely than not the defendant company thought that the plaintiff company had made a mistake in the name of debtor on the invoice. Instead of doing anything to acknowledge its own liability as the debtor, the defendant company promptly sent the invoice off to DCL.

34. A circumstance which at first sight seems to tend in the plaintiff company's favour is that style numbers 5525 and 5030 were not the plaintiff company's style numbers. I accepted PW2's evidence about that,. The evidence as a whole satisfies me, though, that those were not the defendant company's style numbers either. If the sweaters had been made to the defendant company's design, that would certainly have supported the plaintiff company's contention that the defendant company was a buyer.PW2 could not remember having seen any designs from the defendant company, and the plaintiff company certainly did not produce any such design from the defendant company in evidence. I do not know how the plaintiff company got this design, but I am satisfied it was not from the defendant company.

35. The defence version of what happened is that far from contemplating a sale between the two parties, the transaction was a sui generis arrangement to assist the plaintiff company to ship its quota to England. If, viewed objectively, that arrangement was in fact a sale between the parties, the defendant company would, of course, have to accept the consequences, but,on the view, I take nothing like a contract of sale existed. Whether one looks at the situation prior to DW1 signing Exhibit D1, at the time of DW1 signing Exhibit D1, or after DW1 signed Exhibit D1, the more plausible explanation always is that the parties were not acting on the footing of a sale, but, rather in relation to some peculiar quota-related arrangement.

36. It is unlikely for a start that any normal purchaser would be interested in what the plaintiff company had to offer, namely, whatever quantity in whatever colours the plaintiff company happened to have. As PW1 himself had to concede under cross-examination, the gist of the contract was to help the plaintiff company use up its 375 dozen quota. In one of the early telexes (Agreed Bundle p.2), the plaintiff company made the following observation to the defendant company : "really hope for your tremendous help to use 375 dozen". The idea of one textile company agreeing to purchase another textile company's goods in order to help the latter hardly accords with notions of common sense. While companies undoubtedly do help each other, such help does not normally go to the length of one buying the other's goods. That sort of philanthropy would soon put a company out of business. Help will normally stop well before the point where any financial obligation on the part of the helper is likely to arise.

37. I accepted DW1's evidence that the defendant company normally only deals in woollen goods.   I regard it as unlikely that such a company would agree to buy the plaintiff's cotton/ polyester goods, but I see nothing surprising in DW1 being willing to do a favour for PW1 by entering into an arrangement of the type described by DW1.

38. Still dealing with the phase before DW1 signed Exhibit D1 and its duplicate, I find support for DW1's version in the circumstance that the defendant company did not trouble to negotiate a lower price than the US$4.60 per item originally offered by the plaintiff company on the 7th September 1984 (see Agreed Bundle p.2), despite the plaintiff's invitation to the defendant company to come back with a counter-offer. If the defendant company had been buying, one would expect it to try to drive a hard bargain in the usual way. PW1 seeks to explain away the circumstance that the price per item in Exhibit D1 finished up as US$4.60, the same as in the telex at Agreed Bundle p.2, on the basis that the earlier offer was for a basic style whereas the price finally appearing in Exhibit D1 was for a more sophisticated style. I regard it as at least a little odd that the price originally quoted and the final price finished up exactly the same, and whilst what PW1 contends is possible, it, nonetheless, tends to be unlikely.

39. Next, attention can be turned, to what transpired in relation to the signing of Exhibit D1 and its duplicate by DW1, and the despatch of the duplicate through the post to the plaintiff company. DW1's version is supported by DW2 insofar as her evidence covered the same ground. Common sense, too, points to the defence version being more likely as to what happened in relation to the exchange of documents. I have already indicated that I am satisfied that the plaintiff company would have received the duplicate of Exhibit D1 in the normal course of the post.

40. Events subsequent to the defendant company sending the duplicate of Exhibit D1 to the plaintiff company point away from the existence of any contract of sale.

41. When the plaintiff company missed the delivery deadline of mid-November referred to in the duplicate of Exhibit D1, the defendant company did not bat an eyelid. Such indifference is not the typical reaction of a purchaser.  It is what one might expect if the defendant company were merely doing the plaintiff company a favour by arranging for it to try to get rid of the plaintiff company's goods through an on consignment arrangement with DCL. The plaintiff's reaction in its telex of the 20th May 1985 (Agreed Bundle p.20) after the defendant company's refusal to pay the invoice is hardly what one might expect if the plaintiff company really did believe itself to be in the position of a seller. Instead of saying "Pay up the full price of the goods you have bought," the plaintiff company says "If your company are difficult to sell please return the full set of documents to us in order we can arrange to ship back the goods". Then, on the 2nd September 1985 (Agreed Bundle pp.31 and 32) the plaintiff company sold the goods to DCL. What could be less consistent with the plaintiff's version of having sold the goods to the defendant company?  PW1 sought to explain away his willingness to take back the goods or to sell them to another on the basis of wanting to promote harmony. I find such an explanation unpersuasive. A far more likely explanation is that PW1 knew full well that he had never sold the goods to the defendant company.

42. On the view I take of the evidence, DW1 aptly characterized the role of the defendant company when he described it as that of a "match-maker". For the plaintiff company, submissions were made along the lines that a scrutiny of DCL's conduct disclosed it was more likely that the defendant company had been a purchaser rather than a mere match-maker. The plaintiff company contended such a conclusion could be drawn from the circumstance that DCL apparently must have uttered the bill of lading (Agreed Bundle p.8) to take delivery of the goods for the purpose of putting them in the bonded warehouse. In my view, such conduct by DCL was more consistent with DCL taking delivery on behalf of the plaintiff company rather than on behalf of the defendant company. That DCL took delivery in such circumstances was in no way indicative that the defendant company had ever been a purchaser from the plaintiff company. Earlier involvement by DCL was no more helpful to the plaintiff company in its endeavour to show that the defendant company was a purchaser. In particular, the plaintiff company contended an inference adverse to the defendant company should be drawn from the circumstance that the defendant company had forwarded samples to DCL. According to the plaintiff company's way of thinking, if the reality was that DCL was merely taking the goods on consignment from the plaintiff company, then why would DCL concern itself with the style of the garments? DCL's taking some interest in the styles of the pullovers did not strike me as strange for a company taking goods on consignment in the circumstances described by DW1. DCL was in effect doing the plaintiff company a favour at the request of the defendant company. For DCL to be able to help the plaintiff company it would need to try to find some buyers for the plaintiff company's goods and the provision of samples by the plaintiff company to DCL through the defendant company was merely in furtherance of that purpose.

III.     The Issue

43. The issue for the court's determination is whether the plaintiff company is entitled to recover the sum of US$15,423.80 from the defendant company, either as the price of the goods, or on some other basis.

IV    Determinations

44. It is well recognized that there exists a twilight zone where it is not always easy to determine whether a transaction amounts to a sale (perhaps on a sale or return basis), a bailment, or perhaps an agency arrangement: see Benjamin on Sale Of Goods (2nd Edition), paragraphs 47, 48, 328 and 329.

45. On the facts I found, ^I am satisfied there was never any sale by the plaintiff company to the defendant company. Merely because the words "Confirmation of Sale" appeared on the duplicate of Exhibit. D1, the plaintiff company has deluded itself into imagining that it enjoys the normal benefits of a contract of sale, including the right to recover the price from the buyer. However, the inclusion of the wordy "On Consignment" in the circumstance of the present case were repugnant to any possibility of a sale between the plaintiff company and the defendant company. The whole tenor of the arrangement between the plaintiff company and the defendant company was that the plaintiff company's goods were to be consigned to DCL in England. It is unrealistic for the plaintiff company to seek to argue that by allowing the plaintiff company's goods to be sent overseas the defendant company somehow appropriated them with the result that the defendant company became a buyer under a sale or return contract. Such an approach would render the words "On Consignment" redundant, and the Confirmation of Sale document would then have the same meaning whether those words were there or not.

46. Some idea of the problems and uncertainty which can be created by the use of the words "On Consignment" can be gathered from the following passage :-

" It is true that some difficulty and confusion arises through the use of the phrase 'on consignment' which is ordinarily used in commercial transactions in reference to the delivery of goods to an agent for sale by him on behalf of the consignor as principal. But the phrase need not necessarily bear this meaning. It is frequently used where goods are delivered 'on approval' or 'on sale or return' where a sale to and not by the consignee is contemplated." Universal Guarantee Pty. Ltd. v. Metters Ltd. [1966] W.A.R. 74, per Jackson, J., at p.79."

47. The correct way of looking at the facts, in my view, is that the plaintiff company constituted DCL as its agent. Both the plaintiff company and the defendant company contemplated that DCL would hold the plaintiff company's goods as bailee.DCL would try to find customers to purchase the plaintiff company's goods. Quite what would happen if DCL could not find purchasers at the specified price of US$4.60 per pullover had probably not being fully thought through by the plaintiff company. When DCL paid the freight, it was doing so on behalf of the plaintiff company. Even if I am wrong in that analysis of the position of DCL, that will not necessarily avail the plaintiff company anything. The plaintiff company has to show that, either as buyer or in some other capacity, the defendant company is liable to pay it. I can see no basis on which the defendant company could be liable to pay. Having failed in its effort to get payment from DCL, the plaintiff is now casting around for someone else to foot the bill, but has failed to establish any basis on which the defendant company could be held liable to do that. I accordingly give judgment for the defendant company.

48. This is a judgment reserved under 0.42, r.5B. As I see the position at present, there seems no good reason why costs should not follow the event. I therefore make an order nisi for costs in the defendant company's favour.