XCHRX EVER CHINA POLYMERS CO. LTD. v. REGENT ALPHA CHEMICALS INTERNATIONAL LTD.

HCA 1228/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1228 OF 2000

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J U D G M E N T

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1. This is the Defendant's appeal against the Judgment of Master de Souza dated 2 June 2000 whereby he entered summary final judgment against the Defendant in the sum of $532,496.23.

2. The Plaintiff brought this action against the Defendant claiming the said sum as damages suffered as a result of the Defendant's failure/refusal to accept the second shipment of goods sold and delivered under a written agreement dated 9 November 1999.

3. In the Defence and Counterclaim filed on 29 February 2000, the Defendant denies the claim and alleges that:-

(a) the original agreement was terminated by consent as a result of a letter dated 5 January 2000 from the Plaintiff and a new shipment which was to arrive on 5 January 2000 was arranged;

(b) the Defendant was prepared to take delivery of the new shipment but it was entitled to a reasonable period to arrange receipt of the new shipment and cash payment therefor;

(c) the reasonable period should last until 19 January 2000;

(d) the Plaintiff has breached the new arrangement by selling the goods to a third party on 18 January 2000.

("the new arrangement defence").

4. In an affirmation of a Mr Sukhon dated 11 April 2000 in opposition to the Plaintiff's O.14 application, the Defendant alleges that:-

(a) in every transaction between the Plaintiff and the Defendant (including the transaction in issue herein), the Defendant was only obliged to take delivery of the goods and to pay for them upon the Plaintiff delivering release orders to the Defendant;

(b) when the Defendant negotiated with the Plaintiff for the agreement in issue herein, the parties agreed that the goods should only be delivered within the time period specified therein, that is, "around 1 to 7 January 2000";

(c) despite the Plaintiff's non-compliance with the agreed time for delivery (by delivering the goods earlier), the Defendant agreed to take delivery of the shipment arriving on 5 January 2000;

(d) however, the Plaintiff breached the agreement by failing/refusing to deliver any release order to the Defendant.

("the non-compliance defence"). Further, the contents of the Defence and Counterclaim were confirmed in this affirmation.

5. I agree with the Plaintiff's arguments that the defence raised by the Defendant is unbelievable and should be rejected.

6. As regards "the new arrangement defence":-

(a) this is inconsistent with the letter dated 12 January 2000 from the Defendant's solicitors. This letter refers to the original agreement as "the Contract" and stated inter alia that "in any event our client now prepares [sic] to liaise further with your client on an entirely without prejudice basis for the smooth completion of the Contract ...... In this connection we would take delivery of the cargo from the carrier to avoid expensive terminal charges." (emphasis supplied);

(b) the alleged entitlement to a reasonable time to take delivery (which was to last until 19 January 2000) was never raised in the contemporaneous correspondence;

(c) this defence is also inconsistent with the letters dated 11 January 2000 from the Plaintiff's solicitors (specifying 13 January 2000 to be the deadline for delivery) and the said letter of 12 January 2000 from the Defendant's solicitors (in effect agreeing to the same).

7. As regards "the non-compliance defence":-

(a) the alleged "pre-mature" delivery became irrelevant when the Defendant accepted that notwithstanding this alleged non-compliance, the Defendant still agreed to accept the shipment arriving on 5 January 2000;

(b) the alleged failure/refusal to deliver release orders was never raised in (1) the contemporaneous correspondence between the parties' respective solicitors during the period from 5 January 2000 to 18 January 2000, or (2) the Defence and Counterclaim filed herein in February 2000, or (3) the Statement of Claim filed in HCA 1244/2000 in May 2000 by the Defendant herein (as the plaintiff);

(c) the Defendant's allegation is inherently implausible because:-

(1) the goods in question were already in Hong Kong and there is no evidence or other basis indicating any difficulty on the Plaintiff's part to obtain the release orders from the carrier for onward transmission to the Defendant;

(2) there was no reason why the Plaintiff should withhold the release orders to prevent the transaction from being completed and later sell the goods to a third party for about $500,000 less than the price payable by the Defendant.

8. For the above reasons, I do not find that the Defendant's allegation are believable. Mr Yip for the Defendant argues that the Plaintiff's reply affirmation fails to set out what happened after 6 January 2000 and this may support "the non-compliance defence". With respect, I disagree and find that the events subsequent to 6 January 2000 were sufficiently established by the contemporaneous correspondence up to 18 January 2000.

9. It appears from the Court documents that no issue has been raised by the Defendant over the quantum of loss. However, Mr Yip indicates in this appeal that this is a live issue. There is no evidential or other basis established by the Defendant to show that there is a triable issue over this aspect or that it ought to be tried for some other reason.

10. By reason of the matters aforesaid, I find that there is no valid reason for leave to defend to be given. I therefore agree with the learned Master's conclusion and dismiss this appeal.