MINH DUC CONCRETE & CONSTRUCTION CO LTD v. HONG KONG LEE YUAN INTERNATIONAL GROUP LTD

HCAJ 55/2021

[2023] HKCFI 377

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 55 OF 2021

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JUDGMENT

1.  This is the assessment of damages due from the Defendant to the Plaintiff following from an interlocutory judgment entered herein on 26 April 2022.

2.  The Plaintiff’s claim is in respect of a cargo of high strength piles (“Cargo”) carried on board the Defendant’s vessel Chang Da 366 (“Vessel”) which set sail from Vietnam to Taiwan in October 2021 and in the course of the voyage sank, or was beached, in shallow water near Zhuhai, PRC on 4 October 2021 during typhoon ‘Lion Rock’ resulting in the actual or constructive total loss of the ship and the Cargo.

3.  The Plaintiff is the seller, shipper and owner of the Cargo while the Defendant, the owner of the Vessel, is a Hong Kong company which gave no notice of intention to defend herein, hence the interlocutory judgment.

4.  On 21 June 2022, in light of the fact that the Plaintiff’s only witness would be in Vietnam, Mr. Justice Anthony Chan granted the Plaintiff leave to rely on affirmation evidence at the hearing of the assessment of damages in lieu of live witness evidence.

5.  On 3 November 2022, the learned Judge further granted an order to the effect that the Plaintiff is allowed to rely on the 3^rd Affirmation of Ta Quyet Thang made in Vietnamese and the exhibits thereto together with the duly prepared English translation thereof, which in turn form the evidential basis of the following account of the events leading to these proceedings.

Background

6.  The Plaintiff entered into a foundation materials purchase contract (“Purchase Contract”) with a Taiwanese buyer (“Buyer”) under which the Plaintiff agreed to sell inter alia 8,372 pieces of high strength concrete pile to the Buyer at a unit price of US$130.50 on modified CIF terms.

7.  The Plaintiff and the Buyer subsequently agreed to vary the Purchase Contract so that the Buyer would pay the entire contract price only upon delivery of the Cargo in Taiwan.

8.  Pursuant to the CIF terms, P arranged, inter alia, to ship the Cargo via two fixture notes which led to the issuance of a bill of lading by or on behalf of the Defendant with the Plaintiff named as the shipper and the Buyer as the consignee.

9.  According to the master of the Vessel, in the early morning on 3 October 2021 and in the course of the voyage of the Vessel, the crew found the hull of the Vessel to have been damaged and seawater was accumulating in a cargo hold.  On the following day, sea water ingress became so severe that the master had to take steps to beach the Vessel in shallow water for safety.  The Vessel was finally grounded somewhere on the south side of an island not far off Zhuhai Port and subsequently sank together with the Cargo, resulting in total loss of the Cargo.  

10.  Given the Cargo was a total loss (like the Vessel), the Plaintiff issued a Notice of Abandonment on 11 November 2021 to the cargo insurer.  As the Cargo never arrived in Taiwan, the Buyer was not bound to pay the contract price for the same.

11.  By reason of the Defendant’s failure to deliver the Cargo, the Plaintiff as shipper maintains a claim against the Defendant for the total value of the Cargo at US$1,057,314.

Applicable principles

12.  As submitted by Counsel for the Plaintiff, this is an in personam writ action issued in the Admiralty List and O.75, r.21(3) which concerns in rem writs only does not apply.  In in personam Admiralty cases, in the absence of filing of an acknowledgement of service, the usual provisions of O.13, r.2 and O.37, r.1 apply.

13.  The Plaintiff’s claim lies primarily in contract under the terms of a bill of lading dated 1 October 2021 with fall back causes of action in tort and bailment.  A failure by a carrier under a bill of lading to deliver cargo as agreed gives rise to a prima facie right of claim on the part of the shipper.

14.  Counsel for the Plaintiff drew my attention to the fact that there is no governing law clause in the relevant bill of lading or the related fixture notes. Nonetheless, issues of pure quantification of damages in contract should generally be resolved under the law of the forum which is Hong Kong law here, see Johnston, The Conflicts of Laws in Hong Kong, 3^rd Ed, §2.025-026.  In the absence of submissions and evidence to the contrary, this assessment as to all causes of action should be conducted wholly under Hong Kong law.

15.  The principles for assessment of damages in contract are well established and are summarised in Aikens et al, Bills of Lading, 3^rd Ed, §14.2-§14.7. The measure of damages for loss of commercially sold cargo is the ‘sound arrived value’, that is, the market value of the cargo at the time and place at which they should have been delivered.  Although in theory the measure of loss can be different in contract and tort, Aikens at §14.5 points out that in practice this should make little or no difference in a cargo claim.

16.  For loss of a commercial cargo, invoice value is good prima facie evidence of sound arrived value, Carewins Development (China) Ltd v Bright Fortune Shipping Ltd [2006] 4 HKLRD 131 at §217, per Stone J.

17.  On the evidence before me which I have no reason to question, I find the Plaintiff to have proven its loss and order the Defendant to pay the Plaintiff damages in the sum of US$1,057,314.

18.  The award shall carry interest at 1% above the US prime rate from 15 October 2021 to the date of judgment and thereafter at judgment rate until payment.  For the authority for awarding interest in the relevant currency prime rate, see Sahara Investment Group Private Ltd v Liu Zhijia [2018] HKCFI 16 at §15.

19.  At the invitation of the Plaintiff, I have summarily assessed the Plaintiff’s costs of the whole action including its costs of assessment of damages.  I further order the Defendant to pay to the Plaintiff the costs of this action including assessment of damages, summarily assessed at HK$675,330 and payable forthwith.