UNITED RELIANCE CORPORATION LIMITED v. METALIMEX (HONG KONG) LIMITED

IN THE COURT OF APPEAL

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JUDGMENT

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Fuad, J.A.:

1. This is an appeal from the judgment of His Honour Judge O'Dea, sitting as a Deputy Judge of the High Court, whereby he found for the Plaintiffs, United Reliance Corporation Limited ("United") in their claim for US$330,000, the price of sheet glass sold under a C.I.F. contract; against the Defendants, Metalimex (Hong Kong) Limited ("Metalimex").

2. The story begins in 1983. On 10 May of that year Metalimex entered into an agreement with China National Light Industrial Products Import and Export Corporation ("China National") to supply them with 200,000 square metres of "clear plain sheet glass.... Thailand Product B Grade". The quality demanded was as follows: "(1) Each piece must be flat, smooth, transparent, without water streak, without bubble, without specks. (2) The product must not warp. Cut edge must remain in line." The sheets had to be of a stipulated size and 5 mm. thick.

3. Pursuant to this contract, the Bank of China issued an irrevocable documentary credit on China National's application, with Metalimex as the beneficiary.

4. Metalimex approached United to supply the glass, and after China National had agreed to accept Japanese glass, and Metalimex had decided to reduce the quantity of their order to 100,000 square metres, a written contract was drawn up to reflect the agreement between hietalimex and United.

5. The salient features of this contract, which was dated 6 June 1963, were as follows: United, would sell., and hietalimex would buy, 100,000 square metres of "clear, plain sheet glass A-B Grade of Japanese J.I.S. Standard". The size and thickness of the sheets were provided for and the following "Quality Requirement" was one of the "terms and conditions" of the contract:

" Each piece should be flat and smooth, and of good transparency without any water streaks, seeds or sandholes. The product admits of no burns and the cutting should allow no edge dislocations."

6. The contract stated a unit price, and the total price was to be US$330,000 C.I.F. Canton/Whampoa. The glass was to be shipped from Japan. Payment was to be by irrevocable letter of credit, which was to be subject to certain conditions. I think that the only other clause, in the contract I need mention is clause (16), the side-note of which is "Inspection and Compensation Claims". The clause reads as follows:

" At the port of destination where the goods are unloaded, the purchaser shall have the right to apply to the Guangzhou Commodity Inspection Bureau for re-inspection. If it is found that the quality of the goods, or the specification, or the quantity does not conform with that as stipulated in the contract, or the Letter of Credit, or the invoice, then save those which the insurance company or shipping company is held responsible for, the purchaser shall have the right to claim, within 90 days of the unloading at the port of destination, and on the basis of the certificate issued by the Commodity Inspection Bureau in China, for compensation against the seller."

7. The irrevocable letter of credit was duly issued by the Bank of Tokyo, and accepted by United by causing a letter of guarantee to be issued by the Bank in favour of Metalimex, as envisaged by the contract.

8. The sheet glass, packed into 2,243 cases, arrived in Whampoa on 14 August 1983. It is common ground that China National eventually received the whole consignment but there was a sharp conflict of evidence in the cases of the respective parties regarding the circumstances in which they came to be in possession of the glass.

9. The glass was inspected by the Guangzhou Import and Export Inspection Bureau and there is a "Quality Certificate" signed by a Chief Inspector dated 5 October 1983, the inspection having taken place on 26 September.

10. It is to be noted that the Certificate refers to the contract between Metalimex and China National and not to the contract between United and Metalimex. About quality, the Certificate said:

11. Then the identifying number of each of the 15 boxes examined is given, and the number of pieces in each box "with water streaks" noted. Each box contained 20 sheets of glass. According to the Certificate, all the sheets in six boxes had "water streaks", as had 19 in two boxes; 18 in two boxes; 17 in one box; 15 in one box; 14 in one box; and 13 in two boxes.

12. The Chief Inspector added the following comment: "Because packings were perfect, the defects of the above -mentioned goods were the original condition of the goods." He also noted that the glass was of Japanese and not Thailand manufacture.

13. The Certificate was sent by China National to Metalimex under cover of a letter dated 15 October 1983. The letter said that according to the report "the defect in quality by reason of the water streaks is very serious." Because of the poor quality, the goods had been deposited in a godown and could not be sold and this had caused them economic loss. They suggested their idea of appropriate compensation: a reduction of 30% of the contract price.

14. China National wrote again on 17 October repeating the complaint about quality and saying again that a 30% reduction of the price would be acceptable, but pointing out that if United refused to pay compensation, they would refuse to pay and return the goods. If United agreed to pay compensation, then someone should be sent by Metalimex to contact them within 10 days.

15. A few days later, Metalimex telexed the Japanese manufacturers about the complaints and enquired whether United had really ordered the right quality of glass "J. I. S. Standard of B Grade". The reply they received was that United had indeed ordered the correct grade of glass and that glass of the J.I.S. Standard, B Grade had been supplied. The Japanese manufacturers added that they had considerable experience of exporting their sheet glass to many countries, including China, and on question of this kind had ever been raised before.

16. On 22 November 1983 Metalimex received US$708,392 from China National (the contract price between them had been US$710,000) and a letter sent by China National to Metalimex noted out that they had despatched this amount in two separate sums, They asked for an acknowledgment. They said that they were handling the question of the inferior quality of part of the goods, instructing Meialimex that the money they had sent should not be appropriated until the problem of compensation been sorted out. Only after the problems had been solved, should the amount be applied as they would direct.

17. Another letter, of 3 May 1984, from China National to Metalimex stated that since nothing had happened within the 10 days they had stipulated, they were going to return the goods and demand compensation for various transportation and other charges. They asked Metalimex to tell United to arrange to collect the goods.

18. Neither party to this action called any oral evidence from anyone connected with China National.

19. I will now, as briefly as possible, review the pleadings. The Re-Amended Points of Claim start by outlining the background and the terms of the contract sued upon. It is averred that on or about 23 July the parties had orally agreed that United should release a copy of an original bill of lading to Metalimex and that after delivery of the glass, payment would be made under the letter of credit or by some other means.

20. It was, it is pleaded, an express or implied term of the oral agreement that Metalimex would immediately pay United US$330,000 after delivery of the glass in Whampoa. The bill of lading had been duly delivered to an named employee of Metalimex in Canton on 28 July 1983. Metalimex or their agents had taken delivery of the glass in Whampoa on 14 August 1983 and Metalimex had failed or refused to pay the amount.

21. In the Re-Amended Defence and Counterclaim, the oral agreement was denied. It is said that if there had been such an agreement, the person named had no authority to agree or, to collect or receive the bill of lading on behalf of Metalimex. None of the goods had been received by Metalimex or their agents, at their request or at all. They also pleaded that even if the glass had been delivered to China National, this was done without their knowledge or consent and China National was not their agent.

22. It is further pleaded in the alternative: (a) that it was an implied condition of the contract that the glass should be of merchantable quality and that it would comply   with the description of quality requirements in the contract; (b) there was an express term in the contract that the glass should be without water streaks and (c) there were express or implied conditions in the contract that the quality of glass shown in the Certificate issued by the Commodity Inspection Bureau of China should be conclusive evidence of its quality. It is then averred that in breach of the contract, defective glass was shipped; it was not in compliance with its description and was unmerchantable because of the water streaks.

23. The loss and damage is then pleaded and it is said that if United is entitled to any part of the purchase price of the glass, Metalimex is entitled to set off the damage they have suffered in full or partial satisfaction. There is then a counterclaim founded on the non-delivery of the glass or on the basis that Metalimex's customer had rejected the glass supplied to them. Particulars of the damage are given. A sum of US$25,000 is claimed, or damages, and an order that United should indemnify Metalimex against the claims of their customer for the non-delivery, or the defective quality of the glass. There are further pleadings into which it is not necessary to go.

24. In an extempore judgment, the Deputy Judge said that the two issues before him were, firstly whether delivery of the goods was effected to Metalimex and secondly, did the goods conform with the standards required? He concluded that United had not accepted Metalimex's letter of credit which contained stipulations additional to the letter of credit issued on behalf of China Mational or the payment conditions outlined in the contract. He said he found it absurd to suggest that United made no attempt to persuade Metalimex to amend the terms of its documentary credit, and in turn, utterly unreasonable of Metalimex to refuse to do so, as they had undoubtedly done.

25. The Deputy Judge accepted that there had been an oral agreement between the parties to the effect that on the delivery up of the bill of lading, payment would be made to United even if the discrepancies in the letter of credit could not be overcome.

26. He further accepted that a Mr. Hung Kam Tim, who is in the transportation business and a customer of United, had handed over the bill of lading to a Mr. Lee, then employed by Metalimex, and that Mr. Lee had been specifically instructed by Metalimex to accept the bill of lading and pass it on to the Chinese buyer, China National. Delivery had, in his view, been "effected in terms of the contract" I will discuss the judge's finding on the second issue presently.

27. The Managing Director of United, Mr. Cheong Yim Chong told the Court how the contract with Metalimex had come about. He spoke about the opening of the back to back letter of credit, of the problems that had arisen, and of his request to Metalimex to amend their letter of credit. This had not been done by the time they came to negotiate it with the bank.

28. When, on 26 July 1983, he knew the glass had already arrived in China and they had been unable to negotiate the letter of credit, he had realised he would have to negotiate with Metalimex. He had therefore telephoned them and thought he was talking to a Mr. Lau Chuk Yee of Metalimex. He explained the problem - the glass might be unloaded and there might be breakages, pointing out that even if the letter of credit was amended, the bill of lading could not be handed over in less than five days or one week. The person he spoke to suggested that the glass should be handed over to them first, adding "As far as the L/C was concerned just try to settle it but if it couldn't we will pay for the goods."

29. According to the witness, it was agreed that he would get the bill of lading from the bank and send it to them. It was also arranged that United would send a transporter experienced in handling sheet glass, Mr. Hung Kam Tim, to help in unloading it. Mr. Hung went to China and returned saying that the glass had not yet been unloaded because the ship carrying it could not berth.

30. After making continual enquiries he was told, on about 20 August, by Mr. Lau Chuk Yee that the glass had been received, and on the following day, Mr. Lau had promised  that payment would soon be made. After he had pressed for payment Mr. Lau had told him that there were water streaks in the glass. He had replied that all sheet glass has some waves in it.

31. In October they had received the Quality Certificate from China add had sent Mr. Hung Kam Tim there to look into the position and bring back a sample. He had done so. The witness had inspected the sample (which later got lost in an office move); and he said "Although I am not an expert, I saw waves on the sample and consider it was A Grade J.I.S.".

32. In cross-examination, he agreed that although different wording was used, the standard for S Grade glass in Thailand, China and Japan is the same. He said he did not know what was meant by the words "water streaks" in the contract in this part of his evidence. He agreed that he had gone to China in connection with this consignment to explain that there were always waves in sheet glass. He had not inspected the glass there, nor had he or Mr. Hung handed the bill of lading to China National. As far as he knew, Mr. Hung had given it to Mr. Lee. He had not tried to persuade China National to accept the glass.

33. He rejected the suggestion that the oral agreement had been an invention. He accepted that in view of entries on his own travel document, he could not have made the oral agreement with him on 26 July 1983. He told the Court that he may have been mistaken about the date of the telephone conversation.

34. The witness was asked about the Chinese Quality Certificate. He said it was correct if water streaks meant waves, but as he had earlier said, all sheet glass has waves.

35. Mr. John Hui, a Director of Metalimex, supported Mr. Cheong's evidence. He said that he had been in the office when Mr. Cheong had secured agreement with Metalimex that attempts should be made to amend the letter of credit but if this could not be arranged, Metalimex should receive the bill of lading and they would pay later for the glass.

36. Mr. Hung Kam Tim told the Court that he had gone with Mr. Lee Wing Yim of Metalimex to assist him in unloading the glass, on 27 July 1983. He had met Mr. Lee the day before, when they had arranged to meet at the Railway Station on the following day. He had the bill of lading with him and handed it over to Mr. Lee in Canton on the day after they arrived there. They stayed in the same hotel together. He returned with Mr. Lee to Hong Kong when they realised that the ship could not dock.

37. Mr. Hung then told the Court that, after an abortive trip to Canton on 14 September, he had returned again on 6 October. This time again he was with Mr. Lee. Eventually he went to a godown with Mr. Lee to examine the glass. The "people from China National" said there were waves in it. He had said the quality of the glass was "medium". He brought back a sample to Hong Kong.

38. I will interpolate here that the Deputy judge was clearly not greatly impressed with Mr. Cheong as a witness but, in the judge's words: "Overall, I could not say that at any, stage during his evidence. I felt he deliberately misrepresented the truth." The judge was, however, impressed by Mr. Hui. He found him a persuasive witness and believed him. He found Mr. Hung to be a reliable, honest and convincing witness.

39. The Managing Director of Metalimex, Mr. Lau Chuk Yee, was the first witness for the defence. He had not handled the matter after the contract was signed. He denied emphatically that he had had a telephone conversation with anyone from United about the matter.

40. Mr. Lau Chor Sum, who is the elder brother of Mr. Lau Chuk Yee, told the Court he was present when the contract was signed. He had never spoken to Mr. Cheong on the telephone in July 1983. He pointed out that Mr. Lee Wing Yim was only a trainee who had been in the firm for a few months from March to December 1983 and had no authority to accept bills of lading on behalf of Metalimex. Mr. Lee's presence in China was only in connection with a scrap paper deal and had nothing to do with the glass consignment.

41. Mr. Lee Wing Yim himself gave evidence and said that he had met Mr. Hung in the offices of United in Hong Kong and had happened to meet him again on the train to Canton on about 27 July 1983. This was quite by chance. He was going to China in connection with a scrap paper transaction. He did not know why Mr. Hung was going there. They found they were staying in the same hotel. On the day  following their arrival, he had found out that Mr. Hung was also going to China National, so they had gone together. They went about their respective business. They next met up again outside China National's premises and went to the hotel. They agreed to return to Hong Kong together on the next day.

42. He had gone to Canton again in connection with scrap paper, on 6 October. A day or two later he had found Mr. Hung again staying in the same hotel. He was asked to assist Mr. Hung to inspect some glass so he had gone along.  Mr. Hung had inspected the glass and said it was of a standard lower than Grade B glass. On the next day, they went sightseeing together and on the day following, they took the same train back to Hong Kong. He had seen Mr. Hung cut and take away two samples of the glass. He denied having been given the bill of lading.

43. I do not think it is necessary for me to review the rest of the evidence, except to point out that Mr. Lau Wing Kai denied having had any telephone conversation with Mr. Cheong about the change in the arrangements and said that he had certainly not asked Mr. Lee to collect the bill of lading. In fact, he told the Court, he had been told later by China National that they had received the bill of lading from United.

44. The Deputy Judge found Mr. Lau Chuk Yee to be evasive and "thoroughly biased to his own case". He thought that Mr. Lau Chor Sum had been lying in part of his testimony. ''He like his younger brother", he said, "tailored his evidence to fit the version being put forward by the Defendant rather than telling the Court the complete truth and I could place no reliance on his account". His view was that Mr. Lee Wing Yim was wholly unconvincing. He had given "an improbable account" which he found "quite unacceptable". The judge said he had formed no strong impression of Mr. Lau Wing Kai, but where his account differed from his overall findings, "he did little to persuade me that his version was the correct one."

45. I turn to the evidence about the quality of the glass. I should mention first that it is clear from the notes of the submissions made to the lower Court that during the hearing, the parties agreed that "water streaks" and "waves" meant the same thing. As we have seen, there was the telex from the Japanese manufacturer that they had despatched glass of the J.I.S. Standard, B Grade, as ordered. There is also their certificate that the goods they supplied had been "manufactured in conformity with the Japanese Industrial Standard".

46. Then we have the evidence, on behalf of United, of Mr. Nerimoto Kogima who has been in the glass trade for some 35 years and has held the post of Chief Engineer with the Japanese manufacturers for the past 10 years. He could not testify about the consignment in question but is responsible for inspections for quality control. He said that he visited the factory in question twice a month. In 1983 the factory had not produced glass lower than B Grade. A check was made for waves every four hours. If excessive waving was ever found, all the previous production in that batch would be destroyed. About 85% of the production met the standard. Almost none of the glass that did not meet the standard had to be rejected on account of waves.

47. It will be recalled that Mr. Cheong Yim Chong of United said that there were always waves in sheet glass but that the sample he had seen was of the J.I.S. B Grade standard. He admitted he was not an expert. Mr. Hung, the carrier, was not accepted by the judge to be sufficiently knowledgable about glass to be of any assistance.

48. For Metalimex, there was the Quality Certificate issued by the Guangzhou Inspection Bureau whose contents I have already reviewed. Although the inspection was made against the earlier contract between China National and Metalimex and not against the contract with which we are concerned, we have seen how Mr. Cheong Yim Chong agreed that B Grade glass manufactured in China, Japan and Thailand was of the same standard.

49. In his judgment, on this issue, the Deputy Judge said that J.I.S. A/B Grade stipulated in the contract simply meant glass which met the A or B grade of the Japanese Industrial Standard. He added that the later mention of water streaks, sandholes etc. must be read as being superfluous or not in excess of B glass stipulations as to such defects. The judge expressed himself to have been impressed by the evidence of Mr. Kogima. In the light of his testimony he felt it would be highly unlikely that "inferior glass" could "slip through such stringent checking procedures".

50. As regards the Quality Certificate issued by the Inspection Bureau of Guangzhou, the judge said that there was no indication that the Inspector understood the criteria for judging A/B Grade glass, whether of Thai or Japanese industrial standards. He accepted the evidence that all sheet glass has waves or water streaks in it and noted that the report was silent as to the degree of waves or water streaks found in the glass. In his view the Certificate was of little or no assistance in deciding the issue before him.

51. The long and detailed Notice of Appeal attacks the three findings upon which the judge found for United:

52. As the written submissions presented to the trial court show, all the points raised were made to the judge, and it was said then, as it is said now to us, that the judge should have reached the contrary conclusion on each of his findings. It is suggested that the judge either failed to consider or did not give sufficient weight to the weaknesses of the United's case. I will not mention all the points raised by the Notice of Appeal because Mr. Litton was kind enough to present us with a useful skeleton.

53. Mr. Litton began by addressing the stark contrast between the case presented by United and Metalimex. United were trying to put forward an oral agreement, and Metalimex's case was that no such agreement had been made. Mr. Litton contended that the Plaintiff had to rely heavily on the oral agreement, for without it they did not begin to have a case. Mr. Litton who, I should mention, was not in the case before the Deputy Judge, took us through the evidence of Mr. Cheong Yim Chong.

54. He showed us that he had first told the Court that he had asked to speak to Mr. Lau, the Managing Director of Metalimex, on 26 July 1983 and saying in effect, therefore, that there had been an oral agreement at high level between the Managing Directors of the two firms involved. This story as first given was consistent with Mr. Hui's version in his affirmation early in 1984, in Order 14 proceedings  when United had tried to get summary judgment against Metalimex. His version was also confirmed by the witness's own affirmation that he had given in March 1984.

55. Then, Mr. Litton drew our attention to the fact that in another affirmation, this time made in April 1984, Mr. Hui had sought to put the story "in its proper context" by showing that there was documentary proof of the date when United presented documents to the Bank of Tokyo, thus pinpointing the alleged oral agreement as having been made on 27 July. And it was quite clear from that document that one copy of the bill of lading had indeed been released on that day.

56. Mr. Litton emphasised that Metalimex had always said that this was a pure fabrication, and he asked us to consider the following factors as supporting Metalimex's case: the letter before action had said nothing about the oral agreement, and in the points of claim as originally formulated, the alleged oral agreement was reached between Mr. Hui and Mr. Lee of the respective firms, and no date was mentioned. Mr. Litton suggested that this was an extraordinary mistake to make if the witnesses were telling the truth. They might be mistaken about dates but they could hardly have been mistaken about who took part in making arrangements as important as these to vary the terms of a written contract.

57. He suggested that it was probably only when United realised that Mr. Lee was merely a trainee earning a small salary, that the personalities involved in making the new agreement had to be altered. No explanation had ever been offered as to why Mr. Cheong had taken the place of Mr. Hui as a party to the agreement.

58. Mr. Litton pointed out, too, that it was quite obvious that the original story could not be true when it was shown that Mr. Lau Chuk Yee of Metalimex was not even in Hong Kong on 26 July. He had been away in China, as his travel documents showed, between 12 July and 16 August. United had become aware of this before the trial. So, he suggested, Mr. Cheong had had to fudge the facts by saying: "Well, may be it was Mr. Lau Chuk Yee, I am not certain, but it could have been another Mr. Lau". He suggested that this was an extraordinary line to take because, according to the first version of his story, he had asked to speak to "Mr. Lau, the Managing Director".

59. Mr. Litton said that the evidence demonstrated that Mr. Lau and Mr. Cheong had earlier met each other on at least five occasions and that it was impossible to imagine how the mistake could have been made, if Mr. Cheong was telling the truth.

60. Moreover, when Mr. Cheong came to give evidence, it was shown that he himself had been in China from 24 July to 7 August and so it became clear that the agreement could not have been made on 26 July.

61. When it had become obvious that the story was untenable, the date for the oral agreement had had to be shifted to 23 July. But, Mr. Litton suggested, this did not fit in with the other primary facts which were common  ground. Firstly, the main hook upon which the original version had been hung was the bill of lading which showed that it had been released on 26 July 1983; this was the day upon which the oral agreement was first said to have been reached, and the shipping document for drawing on the letter of credit was dated 25 July, as was the application to negotiate.

62. Mr. Litton asks what was the point of this when the bill of lading was to be delivered to Metalimex? He suggested that, faced with the fact that Mr. Cheong was not in Hong Kong on 26 July, Mr. Hui's story had collapsed and become almost unintelligible when one read it in the way his evidence had been recorded.

63. Mr. Litton also drew our attention to the original pleadings which, he assumed, had been drafted on instructions given by Mr. Hui, who was handling the case. These showed how different the story had become as the proceedings had developed. It had never been explained why the 23 July had been settled upon as the correct date for the oral agreement.

64. Mr. Litton asked us to consider the inherent probabilities in the case, although he stressed that it was not for him to establish those probabilities by evidence. The parties were dealing with each other for the first time in connection with a contract involving a large amount of money (something over HK$2,000,000) and it was a very casual way to enter into an oral agreement varying the written terms of the contract. It was extraordinary, too, that the bill of lading, which had been endorsed by the shipper, had been handed over without any kind of written acknowledgment by Metalimex. Mr. Litton suggested that it was not improbable that Mr. Cheong had had direct dealings with China National. After all, he was frequently in China and had been in contact with that organisation even after he had received the Quality Certificate. There must have been an incentive to sell direct in the circumstances.

65. Mr. Litton acknowledged the difficulty he faced in persuading this Court to overrule the findings of fact of a judge who had had the benefit of seeing and hearing the witnesses. He drew our attention to a case that reached the Privy Council from Hong Kong, David Ng Pak Shing & Others v. Lee Tag Chee, Privy Council Appeal No. 20 of 1980, where their Lordships had allowed the appeal and in so doing had reversed findings of fact made by the trial judge and upheld by the Court of Appeal of Hong Kong.

66. If I may say so with respect, I do not read that case as departing from the fundamental approach of an appellate court to findings of fact by trial courts. The cases are so well established that they need not be mentioned. Of course, as they make clear, an appellate court must appreciate that its duty is to re-hear the case and therefore, it must re-consider all the material before the judge, and must make up its own mind, but not disregarding the judgment appealled from. The appellate court must carefully weigh and consider the evidence and, of course, not shirk from the responsibility of overruling the decision if it comes to the conclusion, after full consideration, that the lower Court was wrong. But the cases also show that great weight must be given to the decision of a judge at first instance.

67. Speaking for myself, I can find no justification for coming to a contrary conclusion on the facts relating to the first issue that the judge found. It was not an easy case for him to try, but he was fully alive to the difficulties in United's case as it developed and he gave us the benefit of a careful note of his impressions of the witnesses. He was, as I have mentioned, particularly impressed with the evidence of Mr. Hung, and it must be recognised that if Mr. Hung was telling the truth, it is not possible that the evidence led by Metalimex about the essential facts surrounding the delivery and acceptance of the glass was also true.

68. In my judgment, on the evidence before him, the judge was justified in coming to the conclusion that the original arrangements had been altered and that the bill of lading had been handed over to Metalimex so that they were able to take delivery of the goods and thus pass them on to China National. I do not consider that the judge's findings on the first issue have successfully been challenged.

69. As regards the second issue, I cannot help remarking that neither party was very helpful in presenting evidence to the judge upon which he could decide the issue of quality, but Mr. Litton has very fairly conceded that the onus was upon Metalimex to show that the goods were not of the quality stipulated in the contract. I think that it is a pity that someone from China was not called to give oral evidence about the matter in view of the arguments that developed in Court over the value of the Quality Certificate issued by the Inspection Bureau of Guangzhou.

70. I have reviewed what the judge said about the Certificate. I would not myself, perhaps, have dismissed it from consideration in quite the terms he used but, as the judge pointed out, there was no reference to B Grade, or Japanese manufacture, in the Certificate and it may be that the Chief Inspector who inspected the glass and signed the Certificate was not aware of the rather elaborate procedures by which the test must be conducted to determine whether the glass satisfied the B Grade of the Japanese Industrial Standard.

71. While it is possible that B Grade glass from China or Thailand is tested in much the same way, we do not know what test was actually carried out. It might be that the Inspector was merely indicating which pieces out of the samples he examined had water streaks in them. It is common ground (whether these are called "water streaks" or "waves") that all glass of the Japanese J.I.S. Standard B has "water streaks" in it. The Inspector was not necessarily stating that the water streaks were so excessive as to make the glass unacceptable as B Grade glass. In view of this ambiguity, I do not think that the judge has been shown to be wrong in finding that there was insufficient evidence before him to show that the glass was below the quality stipulated.

72. It may be that the judge placed undue reliance on the evidence of the Japanese quality controller, but that does not affect the position, once one accepts, as Mr. Litton did, that the onus was on Metalimex to establish that the goods did not match the contract quality.

73. Mr. Litton had a difficult brief but despite his able submissions, and for the reasons I have given, I am not persuaded that the judge erred in his findings on the issues before him.

74. I would dismiss the appeal.

Roberts, C.J.:

75. I would also dismiss the appeal. I have nothing to add.

Kempster, J. A.:

76. I, too, would dismiss the appeal for the reasons given by my Lord, Fuad, J.A.