SANTON ENTERPRISES LTD. v. CHENG WAI MUI

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. HCA10352 OF 1999

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J U D G M E N T

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Introduction

1. The plaintiff, Santon Enterprises Limited, represented at the assessment of damages hearing before me by PW1, its director, Mr Danny Chan, brought suit against the defendant, Cheng Wai-mui, for damages for breach of contract.

2. Interlocutory and final judgment for damages to be assessed was entered on 3 September 1999, no notice of intention to defend having been filed by the defendant.

The Facts

3. The plaintiff was a trading company principally engaged in trading activities in China. On 10 January 1999 the plaintiff entered into a written agreement with a company called Chun Hing Industrial Company (Chun Hing) for the transport over land to Guangzhou in the PRC of six containers of raw rubber. The plaintiff undertook the responsibility for the transport as principal and was to have been paid HK$2,000 per container by way of remuneration. Time was of the essence to the contract as the containers held raw rubber which was subject to deterioration. It was therefore essential that the goods were to be delivered within schedule to their destination.

4. In order to carry out its contractual obligation to Chun Hing, the plaintiff entered into an oral agreement with the defendant to carry out the actual transportation. From the evidence it was apparent that time was equally of essence to this oral agreement.

5. Mr Danny Chan explained that the defendant would have charged about $10,000 per container, which expenses would have been added to the $2,000 remuneration that the plaintiff would have received on satisfactory completion of the transport of the goods, and the total would then be billed to Chun Hing for payment.

6. Seven days were granted to the defendant to carry out the transport of the containers, although taking the containers and their contents to Guangzhou by road and the empty containers back would have required no more than a day or two. So the defendant had been given due allowance and time for the performance of the contract.

7. The defendant, if he had satisfactorily discharged his duties, should have delivered the goods to Guangzhou and returned with the empty containers to Hong Kong, where the containers would be returned to their rightful owners.

8. The bills of lading in respect of the goods were delivered to the defendant on 20 January 1999 by the plaintiff upon their receipt by the plaintiff from Chun Hing.

9. There appeared to have been some difficulty clearing customs and Chun Hing decided that it wanted the documents of title, i.e. the bills of lading back. The defendant refused to surrender them and from Mr Danny Chan's evidence, principally his first witness statement that he adopted as his evidence-in-chief, this came about because of some financial dispute between Chun Hing and the defendant, a matter which did not concern the plaintiff.

10. The defendant refused to deliver the bills of lading and also refused to hand back the containers. In the result, alternative arrangement had to be made for the goods to be transported by another carrier. This was clearly not done within the time specified by Chun Hing and by the plaintiff. Chun Hing then turned to the plaintiff for compensation.

11. At about the time of the contract between the plaintiff and Chun Hing, the plaintiff had actually handed over a cheque of HK$260,000 to Chun Hing at Chun Hing's request as security for compensation for loss in the value of the goods. It was a term of the agreement between them that upon failure of delivery of the containers as per the agreed schedule, Chun Hing would be entitled to forfeit that deposit as compensation.

12. The plaintiff claims damages, which are set out very usefully in the schedule of loss and damage prepared by its solicitor, Mr Chan Chi-keung. That was marked P3. This schedule will be annexed to my judgment as Annexure 1. Briefly, the different heads of claim are as follows:

Profit loss	$12,000
Storage charge	$3,360
Detention charges	$7,595
Depreciated value of the two missing containers	$25,386.43
Loss of the goods in the two missing containers	$194,075.50
And finally, added this morning:
Terminal handling charge	$3,600
The total claimed amounts to:	$246,016.93

13. Following the failure of the defendant to perform his part of the bargain, these expenses and loss were necessarily incurred.

14. The plaintiff was only able to locate four of the containers and make alternative arrangement for their transfer to China. Two containers were missing and loss in respect of them consists of the value of the missing containers and the depreciated value of the rubber in them.

15. The evidence is of fairly short compass and is to be found in the two statements of Mr Danny Chan, as expanded upon this morning in testimony. There are, of course, the exhibits as well.

16. As for the loss of profit, amounting to $12,000, being $2,000 for each of the six containers, that is the sum of money which the plaintiff would have received as its fees had the defendant not breached his part of the bargain. That is plainly recoverable. The other items, namely storage charge, detention charges, depreciated value of the two containers, the value of the goods and finally, the terminal handling charges, are loss and damage which, in my view, must come within the contemplation of the contracting parties as flowing naturally and directly from the breach of contract by the defendant. Calculation for them has been set out in Exhibit P3, which is Annexure 1. I consider and adjudge that the plaintiff is wholly entitled to calculate loss upon the values and for the periods as set out in that annexure.

17. In conclusion, I assess, as invited by the plaintiff, its loss as amounting to $246,016.93 and I adjudge that amount to be payable by the defendant.

18. The defendant will have to bear the costs of this assessment, taxed if not agreed. There shall be interest at judgment rate on this sum from the date of the issue of the writ until full payment.