DCCJ 1978/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1978 OF 2010

____________

ASSESSMENT OF DAMAGES

1.  The Plaintiff’s claim is for damages for breach of agreements for supply of goods made between the Plaintiff and the Defendant.

2.  The service of the Writ of Summons together with the Statement of Claim herein was effected on 8^th June 2010 by leaving the same at the registered office of the Defendant.  The Defendant having failed to give notice of intention to defend, interlocutory judgment was entered against the Defendant for damages to be assessed and costs on 27^th July 2010.

3.  Pursuant to the Order of Master J. Chow made on 24^th September 2010, the hearing of assessment of damages was fixed to take place on 4^th November 2010 at 9:30 a.m. before Court 45 with 3 hours reserved.  Notice of the hearing was given to the Defendant by the Registry of this Court by post sending to the Defendant’s registered office on 28^th September 2010.  The Defendant was absent today.  After having carefully considered, I am satisfied that the hearing of the assessment of damages should continue despite the Defendant’s absence.

4.  At all material times, the Defendant is and was a company incorporated in Hong Kong with limited liability carrying on business as,  inter alia, a supplier of bamboo baskets and bamboo sweeping brooms.

The First, Second and Third Agreements

5.  By an agreement contained in and evidenced by the contract with Contract No. FEHD S C/113/05 and Quotation Ref. FEHQ1045/05 dated 14 March 2006 (“the First Agreement”), the Plaintiff agreed to purchase and the Defendant agreed to sell 103,510 bamboo sweeping brooms, handle with palm ribs 66 cm (“the Goods A”) at the total price of HK$554,813.60.  The Goods A were to be delivered by 9 consignments in June 2006, August 2006, October 2006, December 2006, February 2007, April 2007, June 2007, August 2007 and October of 2007 to various locations, free into stores. The Plaintiff would place orders in these months for delivery of the goods within 21 days from the date of the orders.

6.  By an agreement contained in and evidenced by the contract with Contract No. FEHD S C/20/06 and Quotation Ref. FEHQ1019/06 dated 28 June 2006 (“the Second Agreement”), the Plaintiff agreed to purchase and the Defendant agreed to sell 71,614 bamboo sweeping brooms, handle with palm ribs 84 cm (“the Goods B”) at the total price of HK$517,769.22.  The Goods B were to be delivered by 6 consignments in November 2006, January 2007, March 2007, May 2007, July 2007 and September 2007 to various locations, free into stores.  The Plaintiff would place orders in these months for delivery of goods within 21 days from the date of the orders.

7.  By an agreement contained in and evidence by the contract with Contract No. FEHD S C/43/07 and Quotation Ref. FEHQ1008/07 dated 22 August 2007 (“the Third Agreement”), the Plaintiff agreed to purchase and the Defendant agreed to sell 8,474 bamboo baskets of 56 cm diameter at the total price of HK$81,774.10, 66,636 bamboo sweeping brooms, handle with palm ribs 66 cm at the total price of HK$416,475.00 and 75,074 bamboo sweeping brooms with handle and palm ribs 84 cm at the total price of HK$645,636.40 (“the Goods C”).  The Goods C were to be delivered by 5 consignments in August 2007, November 2007, February 2008, May 2008 and August 2008 to various locations, free into stores, as per the special conditions of contract.  The Plaintiff would place orders in these months for delivery of the goods within 21 days from the date of the orders.

8.  In the abovementioned agreements, the General Conditions of Contract provided that if the Defendant failed to deliver the goods ordered within the time specified in the order, the Plaintiff might at its absolute discretion terminate the whole or any part of the agreement by notice in writing to the Defendant, but without prejudice to any claims by the Plaintiff for breach of contract including but not limited to its right to procure any goods then outstanding from any other source, and the Defendant should be liable for any sums so incurred in excess of the contract price.

9.  The General Conditions of Contract also provided that whenever under the agreement any sum of money shall be recoverable by the Plaintiff from or payable to the Plaintiff by the Defendant, the same might be deducted from any sum then due or which at any time thereafter might become due to the Defendant under the agreement.

10.  In relation to the First Agreement,

(1) On 9 July 2007 and 4 September 2007, the Plaintiff placed six orders to the Defendant for delivery of 3,994 number of bamboo sweeping brooms, handle with palm ribs 66 cm in August and October 2007 respectively.

(2) Despite repeated requests and demands by the Plaintiff’s letters dated 6 March 2008, 27 May 2008, 8 October 2008 and 17 October 2008 respectively, the Defendant failed to deliver the goods under the abovementioned six orders.

(3) By a letter dated 14 November 2008, the Plaintiff cancelled the outstanding orders under the First Agreement.

11.  In relation to the Second Agreement,

(1) On 8 August 2007, the Plaintiff placed two orders to the Defendant for delivery of 748 numbers of bamboo sweeping brooms, handle with palm ribs 84 cm.  The goods should have been delivered in September 2007.

(2) Despite repeated requests and demands by the Plaintiff’s letters dated 6 March 2008, 27 May 2008, 8 October 2008 and 17 October 2008 respectively, the Defendant failed to deliver the goods under the abovementioned two orders.

(3) By a letter dated 14 November 2008, the Plaintiff cancelled the outstanding orders under the Second Agreement.

12.  In relation to the Third Agreement,

(1) On 7 September 2007, 1 November 2007, 25 January 2008, 22 April 2008 and 1 August 2008 respectively, the Plaintiff placed five batches of orders to the Defendant for the delivery of the Goods C within 21 days from the dates of the orders.

(2) Despite repeated requests and demands by the Plaintiff’s letters dated 6 March 2008, 22 April 2008, 27 May 2008, 8 October 2008 and 17 October 2008 respectively, the Defendant failed to deliver any of the abovementioned goods.

(3) By a letter dated 27 October 2008, the Plaintiff cancelled the outstanding orders under the Third Agreement.

13.  The following items were outstanding by reason of the default of the Defendant:

(1) Contract No. FEHD S C 113/05: 3,994 bamboo sweeping brooms, 66 cm.

(2) Contract No. FEHD S C 20/06: 748 bamboo sweeping brooms, 84 cm.

(3) Contract No. FEHD S C 43/07: 5,327 bamboo baskets of 56 cm diameter, 45,340 bamboo sweeping brooms, 66 cm, 50,547 bamboo sweeping brooms, 84 cm.

14.  The Plaintiff procured the outstanding goods from other sources through quotations and tender exercises.

15.  Pursuant to the General Conditions of Contract, the Plaintiff claims against the Defendant the extra costs incurred, more particularly shown as follows:

	(A) Original Rate (HK$)	(B) Outstanding Quantity (No.)	I New Rate (HK$)	Excess Cost (C-A)xB (HK$)
Contract No.: FEHD S C 113/05 Bamboo Sweeping Brooms, 66 cm	5.36	3,994	9.11	14.977.5
Contract No.: FEHD S C 20/06 Bamboo Sweeping Brooms, 84 cm	7.23	748	10.79	2,662.88
Contract No.: FEHD S C 43/07 Bamboo Basket of 56 cm diameter	9.65	5,327	19.80	54,069.05
Bamboo Sweeping Broom, 66 cm	6.25	45,340	9.11	129,672.40
Bamboo Sweeping Broom, 84 cm	8.60	50,547	10.79	110,697.93
			Total:	312.079.76 ========

The Rakes Agreement

16.  By an agreement (“Rakes Agreement”) contained in and evidenced by the order ref. FEHD/DP032/06(A)(vi) dated 14 December 2006, the Plaintiff agreed to purchase and the Defendant agreed to sell 36 rakes, iron with handle 5 prong at the total price of HK$1,134.00, which were to be delivered within 14 days from 14 December 2006.

17.  The Defendant delivered the goods in December 2006 but the goods were rejected at the time of delivery as rust was found on the goods.  The Defendant collected the rejected goods on the same day. Despite repeated requests and reminders by the Plaintiff’s letters dated 21 November 2007, 6 December 2007, 15 August 2008 and 25 August 2008 respectively, the Defendant failed to re-deliver the abovementioned goods.  By a facsimile message dated 26 August 2008, the Defendant informed the Plaintiff that it had difficulty in making up the replacement and suggested cancellation of the order.  The Defendant asked the Plaintiff to procure the said goods from other sources.

18.  By a letter dated 1 September 2008, the Plaintiff terminated the Rakes Agreement.

19.  The Plaintiff procured the outstanding goods from other sources through quotations and tender exercises. The lowest offer was HK$78 per rake.

20.  The Plaintiff claims against the Defendant for the extra costs incurred, i.e. ($78 (new price) - $31.5 (original quoted price)) x 36 = $1,674.

21.  Despite repeated requests and demands dated 14 October 2008, 17 November 2008 and 4 December 2008 respectively, the Defendant failed to make up the said extra costs, or any part thereof.

Set-off

22.  There is an outstanding sum of $50,272.40 due from the Plaintiff to the Defendant under the Third Agreement.

23.  The Plaintiff will deduct the said sum of $50,272.40 from the said claims for extra costs, in accordance with the General Conditions of Contract, reducing the claim amount to:

Excess costs incurred in purchasing outstanding goods	$312,079.76
Plus: Outstanding sum from Defendant to Plaintiff	$1,674
Less: Outstanding sum from Plaintiff to Defendant	($50,272.40)
Total:	$263,481.36
	=========

Staff Costs and Accommodation Costs

24.  The Plaintiff also claims Staff Costs and Accommodation Costs for arranging the extra tender and quotation exercises in the sum of $5,306.1, the breakdown of which is as follows:

Contract / DPA Ref.	Staff Costs (HK$)	Accommodation Costs (HK$)	OTHER COST (HK$)	Total (HK$)
FEHD/DP/624/08(A) & FEHD/DP/625/08(A)	859.8	55.6	0	915.4
FEHD/DP/627/08(A) & FEHD/DP/628/08(A)	1,114.9	61.1	0	1,176
FEHQ 1044/08	3,039.7	170.3	4.7	3,214.7
			Total	5,306.1 =====

25.  The Staff Costs represent the salaries of the members of staff involved, calculated by reference to the time they spent on the extra tender and quotation exercises.  The Accommodation Costs represent the rental of the space occupied by members of staff involved, calculated by reference to the time that they spent on the extra tender and quotation exercises.  The members of staff involved are part of the permanent establishment of the Food and Environmental Hygiene Department (“FEHD”).  There is no evidence showing whether those members of the staff in fact had any things better to do had they not required doing the extra tender and quotation exercises.  For my part, I fail to see why the Defendant should be held liable for the day to day overheads of FEHD.

26.  I disallow this claim for Staff Costs and Accommodation Costs.

27.  It is ordered that the Defendant do pay the Plaintiff damages in the sum of $263,481.36, interest thereon and costs of this action, assessment summarily in the sum of $21,017.50.