SUPPLY CHAIN & LOGISTICS TECHNOLOGY LTD v. JARDINE ONESOLUTION (HK) LTD

HCA 1447/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1447 OF 2007

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BETWEEN

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REASONS FOR JUDGMENT

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1.  This Action concerned the supply by the Defendant to the Plaintiff of certain computer software and hardware products.

2.  The Defendant carried on, and still does, the business of providing office equipment, office stationery, information-technology-related products and services.  The Defendant has been an authorized distributor of Hewlett Packard Hong Kong Limited (“HP”) in relation to the HP’s products since the early 1990’s.

3.  On the other hand, the Plaintiff was in the business of providing integrated information technology solutions, in particular, the Radio Frequency Identification Solution (“RFID”) and related services to its clients.  One of the Plaintiff’s clients was the Leo Paper Group, a large paper-product manufacturer in Hong Kong.

4.  In about March 2006, Leo Paper was interested in installing a system known as the Storage Area Network (“SAN”) Storage Solution for organising and storing data.  HP, as one of the providers of such a system, planned to bid for the project.  In the process, HP’s representatives had visited Leo Paper’s factory in the Mainland and had met with Leo Paper’s personnel.

5.  Eventually, the parties came to a collaboration agreement whereby the Plaintiff would order from the Defendant and the Defendant would supply the HP system and products, and upon delivery, HP would install the system for Leo Paper at the various designated locations.

6.  In this Action, the Plaintiff complained that there were problems with the performance of the products.  It was alleged that a part of the system, the HP Storage Works Fast Recovery Solution (“FRS”) failed to backup data automatically or timely as required.  The products were alleged to be not of merchantable quality nor were they fit for the purpose for which they were supplied.  It was alleged that in consequence of such defects, the Plaintiff suffered loss by reason of having to incur extra costs in importing and transporting additional or replacement hardware and software to the relevant locations and in deploying extra manpower to attend to the problems.  The Plaintiff also alleged that it had suffered loss of interest by reason of Leo Paper’s delay in payment as a result of the defects in question.  The defects had also allegedly caused the Plaintiff to suffer loss of goodwill and future profits.

7.  The Defendant denied any defects with the products.  The Defendant further counterclaimed for the price outstanding under 4 invoices in respect of the hardware and software delivered and services rendered.

8.  No representative of the Plaintiff turned up at the trial.  The trial proceeded in the Plaintiff’s absence.  Since no admissible evidence had been adduced to substantiate the Plaintiff’s assertions in its pleadings, I find that the Plaintiff’s case has not been proved.

9.  On the other hand, oral evidence has been received from Mr Gordon Young of the Defendant, together with the documents attached to his witness statement.

10.  Having regard to Mr Young’s evidence, the several purchase orders and the relevant delivery notes, I am satisfied that the Defendant is entitled to the outstanding price under the several invoices, namely, G080900578 dated 9 August 2006 for the sum of HK$241,737.60; G081600636 dated 16 August 2006 for the sum of US$46,765.96; and G082803922 dated 28 August 2006 for the sum of US$41,083.59.

11.  In addition, I accept that the products and services under the purchase order SCP 06-017 dated 19 June 2006, totaling HK$896,765.00 in value had been duly provided.  The Plaintiff only made partial payment under the said purchase order, and the sum HK$120,713.00, the subject of the invoice DG0628A011 dated 19 July 2006, remained due and outstanding from the Plaintiff.

12.  The total outstanding sum due under the 4 invoices amounted to HK$1,045,924.59, and I would accordingly give judgment to the Defendant for the said sum.

13.  I would award interest on the said sum from 30 June 2008, being the date when the project was complete according to the Acceptance Certificate.  Such interest is to be paid at the rate of 1% above HSBC’s Best Lending Rate from time to time, from 30 June 2008 until this judgment on 4 July 2011, and thereafter at judgment rate until payment.

14.  The Plaintiff’s claim is dismissed.

15.  As for costs, having taken into account the fact that the Plaintiff has now been adjudged to be liable for more than the Defendant’s sanctioned offer made in the letter of 8 March 2011, I find it appropriate to exercise my discretion to order the Plaintiff to pay costs on an indemnity basis from 6 April 2011, being after the 28-day period when the offer could have been accepted.  Accordingly, the Defendant is entitled to costs of the Action up to 5 April 2011, to be taxed on a party-and-party basis, and thereafter on an indemnity basis.