IMEX ASIA LTD. v. YAN YUI KEA t/a TRANS-ASIA TEXTILE RESOURCES CO.

1995, No.A11479

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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Facts

1. The Plaintiff is claiming $121,320 from the Defendant. In June 1993, the Plaintiff purchased woven fabric from the Defendant. The price was $121,320. The fabric delivered by the Defendant was defective and was returned by the Plaintiff to the Defendant. The Defendant agreed to repay the Plaintiff $121,320 by four instalments. The payment was to be effected by deducting $30,330 each from the orders of the goods to be placed by the Plaintiff with the Defendant.

2. The agreement was evidenced by a letter dated 21st October 1994 from the Defendant to the Plaintiff. The letter referred to another payment of $23,231.40. This was paid by the Defendant subsequent to the letter.

3. From October 1994 to July 1995, the Defendant offered fabric to the Plaintiff. The Plaintiff finally placed an order for 3,000 yards of fabric. The Defendant gave a quotation on 5th August 1995 and requested $10,000 to be deducted from the price. Upon receipt of the quotation, Mr Si Chor Kit, Freddie ("Mr Si"), the former merchandiser of the Plaintiff telephoned the Defendant and spoke to Mr Paul Yan ("Mr Yan") stating that the Plaintiff would not accept $10,000 deduction because there was already an agreement to repay $121,320 by four instalments of $30,330 each.

4. On 30th August 1995, the Plaintiff placed the purchase order for the 3000 yards of fabric with the Defendant. The delivery date was stated to be 20th September 1995. On 18th September 1995, the Plaintiff faxed a reminder to the Defendant asking the Defendant to confirm the delivery and to send the pro forma invoice. On 23rd September 1995, another fax was sent together with the letter in which the Defendant agreed to pay the $121,320 by four instalments.

5. The Defendant failed to respond or deliver the fabric. By letter dated 30th September 1995 from the Plaintiff's solicitors, the Plaintiff accepted the Defendant's repudiation of the agreement to repay $121,320.

6. Two witnesses were called on behalf of the Plaintiff, namely Ms Rosalina Chan and Mr Freddie Si. The Defendant chose not to give evidence in this case.

Implied term

7. It must be implied in the agreement reached for the settlement of the earlier dispute that if the Defendant did not agree to accept $30,330 deduction, the Plaintiff was entitled to recover the whole of $121,320 from the Defendant. I gave leave to the Plaintiff to plead the implied term.

Agreement to accept $10,000

8. It was not disputed by the Defendant that it had to repay $121,320 by four instalments by way of deducting $30,330 from orders placed by the Plaintiff.

9. Two points were raised by way of defence to the Plaintiff's claim. First of all, it was said that the Plaintiff had agreed to a deduction of $10,000 only. Although initially Mr Yan in the cross-examination of Ms Chan stated that Mr Si had agreed to deduct $10,000, in the cross-examination of Mr Si, Mr Yan agreed that Mr Si did not formally agree to that but rather he, i.e. Mr Yan, had told him that if the fabric was to be produced, then it would be proceeded on the basis of the quotation. Mr Si accepted that Mr Yan had made such a statement but he, i.e. Mr Si, immediately told him that the deduction of $10,000 was not acceptable. Mr Si said that his company had given him instruction that the Defendant would have to repay $121,320 by four instalments which was to be deducted from the orders placed, so he knew it would not be possible to accept a lesser sum.

10. Mr Si said that he had placed an oral order with the Defendant in July. After the discussion with Mr Yan when the quotation was sent, he placed a written purchase order to ensure that the Defendant would perform the order. This was not a confirmation that the Plaintiff agreed to deduct $10,000 only. There was a further discussion after the purchase order was placed, but again it was on the question of deduction of $30,330. In the reminder of 23rd September 1995, the Plaintiff asked the Defendant to confirm if there was a deduction of $30,330 in accordance with the credit note ( the credit note is the agreement of 21st October 1994.

11. I accept Mr Si had already, prior to the reminder, insisted that the deduction was $30,330. I accept Mr Si's evidence that the reminder was merely a courteous way of dealing with the Defendant and was not a concession that he had previously agreed to $10,000 and only changed his mind later on. I accept Mr Si to be an honest witness and there was never any agreement on the deduction of $10,000.

Time limit

12. The second defence raised is that the Defendant said that the quotation specified 30 days of production time. Further, shipment time would be needed, therefore the purchase order enforced a deadline which was impossible for it to perform.

13. The purchase order was an order placed by the Plaintiff. It was not in the nature of a binding contract as far as the delivery date was concerned. If the Defendant had protested but the Plaintiff insisted on the deadline, then obviously the Defendant had a justifiable complaint. In this case, the Plaintiff had, in the purchase order, clearly asked the Defendant to confirm the delivery date. I am satisfied from the evidence that the Defendant had totally ignored the Plaintiff despite repeated requests by the Plaintiff to confirm the delivery date. I accept Mr Si's evidence that the Defendant had not said that the delivery time was impossible for the Defendant to perform.

Conclusion

14. In the circumstances, the only inference to be drawn from the conduct of the Defendant is that the Defendant was not prepared to abide by the agreement to deduct $30,330 from the purchase price. The Plaintiff is accordingly entitled to the claim. There shall be judgment for the Plaintiff at $121,320 with interest at 8% from 11th November 1995 to date and thereafter at judgment rate until payment. Costs of the action is to the Plaintiff.