SUCCESS UNION EXPRESS LTD v. CHANG MIN JER AND OTHERS

DCCJ 14712/1997

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

CIVIL ACTION CASE NO 14712 OF 1997

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JUDGMENT

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1. The plaintiff claims against the defendants a sum of HK$54,564.76 in respect of the freight charges and handling charges incurred towards the carriage of a consignment of 60 cartoon boxes of handbags on behalf of the defendants from Hong Kong to Moscow.

2. There was no dispute between the parties that in the year of 1996 the defendants instructed the plaintiff to arrange 2 consignments of goods to be flown from Hong Kong to the defendants' associate company "Heli" Company Limited (hereinafter called "Heli" for short) in Moscow of Russia. It was the outstanding freight charges of the 2nd consignment which is in dispute and which gives rise to the present legal suit.

3. The events happened in 1996. The plaintiff filed a writ on 15 July 1997 to demand payment of the freight charges from the defendants. This claim, however, was not set down for trial until some 6 1/2 years later in April this year by the solicitors on behalf of both parties. Shortly before the trial commenced, the defendants withdrew legal representation and Mr. Qiao entered personal appearance to defend the plaintiff's claim.

The Dispute

4. It is the plaintiff's averment that the freight service had been provided. The defendants ought to pay for the service charges.

5. The defendants on the other hand contended that representation had been made by the plaintiff that delivery would be effected within 7 days. Acting on the plaintiff's representation, the defendants entered into the carriage contract with the plaintiff. Delivery was, however, substantially delayed which resulted in the rejection of the goods by the buyer. The goods were re-sold 3 months later at a loss. The plaintiff was therefore in breach of its terms of delivery and would not be entitled to its service charges. Alternatively, the defendants are entitled to have the damages, arising out of the late delivery, to set-off against the plaintiff's claim. The defendants counterclaim against the plaintiff for the loss they suffered as a result of the late delivery. The defendants also prayed for an order that the plaintiff should indemnify the defendants against any claim brought by the customer against "Heli".

The Plaintiff's Evidence

6. Mr. Bennie Leung, sales manager of the plaintiff, testified in court. According to Leung he met Mr. Qiao Bin of the defendants at the defendants' office sometime in August 1996 for the promotion of the plaintiff's services. Leung was told by Qiao that the defendants experienced great difficulties in exporting goods to Moscow as the Moscow import tax and customs procedures were complicated and difficult to handle.

7. Subsequent to the meeting, on 19 August 1996 Leung sent Qiao the quotation for the delivery which stated the airfreight delivery charges of the goods, inclusive of tax and customs clearance charges, was US$4.5 per kilogramme for goods over 1000 kilogrammes.

8. After sending off the quotation, Leung had explained to Qiao the quoted carriage service involved sending the defendants' goods by air to Dubai and from Dubai to Russia by means of a chartered flight from Dubai. The forwarding agent in Dubai would attend to the Moscow import tax and customs clearance. Since there was only one chartered flight travelling between Dubai and Moscow per week, the delivery would take at least 7 days.

9. Instruction for the 1st batch of goods was received from the defendants on 22 August 1996. House airway bill SUE-0008159 was issued by the plaintiff on 27 August 1996. The said airway bill indicated the defendants' cargo was put on board of an Air France plane on 28 August 1996. According to the defendants' letter of 4 October 1996 the defendants acknowledged the cargo to have arrived in Moscow on 5 September 1996. Although one box of goods was missing, airfreight charges for this consignment of goods were paid in full.

10. Instruction for the 2nd batch of goods was given on 18 September 1996. House airway bill SUE-0008326 was issued by the plaintiff on 21 September 1996. According to the airway bill of Air Lanka limited, the defendants' goods were put on board an Air Lanka flight UL-423 leaving Hong Kong for Dubai on 21 September 1996. A 2nd copied airway bill produced by the plaintiff indicated the defendants' cargo was in Dubai on 1 October 1996. No flight number was endorsed on this 2nd airway bill.

11. As the defendants were making enquiry about the date for delivery of the 2nd batch of goods, Leung wrote on behalf of the plaintiff to the defendants on 8 October 1996. In this letter Leung stated the cargo had arrived Moscow on 4 October 1996, the delay in delivery was caused by the custom clearance procedures at Domodedov airport.

12. The defendants made no written complaint about late delivery of the 2nd batch of goods until the plaintiff made formal demand for payment through a firm of solicitors on 27 March 1997.

The Defendant's Evidence

13. Mr. Qiao elected not to testify in court. Information about the defendants' account of the events can only be found from the witness statement filed by Qiao prior to the trial.

14. In his statement Qiao suggested the defendants entered into agreement with the plaintiff on 23 August 1996 for the delivery of the 1st batch of 55 cartoons of handbags by air freight at the charge of HK$24 per kilogramme. 54 cartoons of the handbags arrived in Moscow on time and 1 cartoon was lost in the course of the said carriage arrangement. Despite shortage in delivery, the airfreight charges for the 1st consignment were paid in full.

15. On or about 13 September 1996 Qiao enquired with Leung of the plaintiff for an urgent air freight delivery to Moscow for a 2nd cargo of 60 cartoon boxes of handbags, valued at US$23,400, which was required to be sent to "Heli" not later than 30 September 1996. Leung, on behalf of the plaintiff, represented to Qiao that the plaintiff could arrange for the goods to reach "Heli" within 7 days after departure from Hong Kong.

16. Leung further represented to Qiao that there had been a sharp increase of the volume of goods for delivery to Moscow by air. In order to secure delivery of the defendants' goods to "Heli" before 30 September 1996, the plaintiff had to pay a higher freight charge of HK$35 per kilogramme of the goods, inclusive of customs clearance.

17. The goods were loaded onto the plane which departed Hong Kong on 21 September 1996. "Heli" was not able to obtain the goods until 15 October 1996 and the delivery was 2 weeks late. Repeated enquiry had been made with the plaintiff. On 8 October 1996 Leung wrote on behalf of the plaintiff to suggest the goods to have arrived Moscow on 4 October 1996; delivery was delayed solely on account of customs clearance.

18. According to a Russian document produced by the defendants, the defendants' customer "Agus Corporated" refused to accept delivery of the goods on account of late delivery. The next document produced was a delivery note which indicated 1,800 pieces of goods were sold for $13,500 to "I.I. Sergej" with a delivery date of 20 January 1997.

The Issues in Dispute

19. The issues in dispute between the parties are:-

(a) Had the plaintiff through its staff Mr. Bennie Leung made the representation that the goods would be delivered to Moscow within 7 days after the goods departed Hong Kong?

(b) If such representation was made, did it form part of the carriage contract between the plaintiff and the defendants?

(c) If the 7 days delivery time did not form part of the contract of carriage, did it constitute a collateral agreement between the parties? (There is no averment of collateral contract from the pleadings of the defendants.)

(d) If the 7 days delivery representation forms either a contractual term or a warranty, would the exemption clause at the back of the cargo shipping instructions limit the liabilities of the parties in accordance with the terms printed thereat?

Has there been a representation of 7 days delivery?

20. It is quite clear from the letter of 19 August 1996 addressed to the defendants by the plaintiff that the lowest charge quoted by the plaintiff to the defendants prior to the 1st consignment was US$4.5 per kilogramme. There is no truth in the defendants' allegation that the airfreight for the 1st consignment was charged at HK$24 per kilogramme and was subsequently increased to HK$35 per kilogramme to account for an expressed delivery service to be provided.

21. In a note of internal communication dated 6 October 1996 disclosed by the defendants, Qiao was asked by his business associates to arrange another air cargo with the plaintiff. In the same note Qiao was instructed to "please nego with SUE Co whether it is possible to re-arrange 30 cases each of A01 A03 by air cargo, but you must agree with shipping agent as to the price and delivery date". The fact that Qiao was instructed to agree with the shipping agent on the delivery date for the next shipment clearly suggests the defendants and his associates were aware of the fact that no delivery date had been agreed in previous consignments effected through the plaintiff.

22. The defendants had never lodged any written complaints with the plaintiff about the late delivery after receipt of the 2nd consignment nor evinced an intention to sue the plaintiff for the loss of profit on account of late delivery.

23. Balancing all the information, I accept there was no contractual agreement between the plaintiff and the defendants on a 7 days delivery nor was there an operative representation made about delivery must be made within 7 days after the goods were exported from Hong Kong.

24. I accepted 7 days delivery time had been mentioned by Bennie Leung on behalf of the plaintiff as an indication of the likely time for delivery to be effected. This was not intended as a contractual condition as it was never reduced into writing in the cargo shipping instructions given on 18 September 1996.

25. A 2 weeks delay in airfreight delivery is quite unacceptable. Nevertheless, falling short of contractual obligation or proof of negligence, the losing party might have to fall back on its insurance coverage.

26. Having ruled against the defendants on the issue of contractual representation of 7 days, one does not really need to consider the rest of the proposed questions.

27. If this court is called upon to adjudicate whether the plaintiff could rely on the exemption clauses printed at the back of their standard cargo shipping instructions, the plaintiff would have a real difficulty to overcome the hurdle of incorporation for only the front page of the cargo shipping instructions had been faxed to the plaintiff when the defendants gave instruction for the 2nd consignment to be sent. The terms and conditions at the back were never sent by fax nor was there any statement on the front page to incorporate the terms printed at the back of the cargo shipping instruction.

28. Having ruled against the defendants on the issue of misrepresentation, the defendants failed in their intended counterclaim and set-off. Judgment is entered in favour of the plaintiff against all the defendants in the sum of HK$54,564.76 with interest at judgment rate accruing from the date of judgment. The counterclaim of the defendants is dismissed.

29. This trial is fixed by the solicitors representing the plaintiff and the defendants. The failure of the 1st named and 2nd named defendants to attend does not deprive the plaintiff its right to have this trial to proceed as scheduled.

30. Parties had made attempts in November 2001 to withdraw these proceedings and to have the matter adjudicated in the Small Claims Tribunal to save costs. Such attempt was not fruitful on account of the decision of the defendants. Costs order nisi is granted in favour of the plaintiff, with the quantum to be taxed if not agreed. Certificate for counsel is granted in respect of the trial. Unless application for variation is received within 14 days after the handing down of this judgment, this costs order nisi would become absolute.