COMBI (SINGAPORE) PTE LTD v. WINSTON CAMERA AND RADIO CO LTD

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J U D G M E N T

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Kempster, J.A. :

1. On 3rd October 1986 the plaintiffs, Combi (Singapore) Ltd, commenced proceedings claiming from the defendants, Winston Camera and Radio Company Ltd., damages for breach of contract. The defendants, while denying the existence of any contract, counterclaimed damages in the alternative. Claim and counterclatim were tried before Judge H. Wong, sitting as a Deputy Judge of the High Court, during September 1987. By his reserved judgment, delivered on 23rd October, he dismissed the plaintiffs' claim and awarded the defendants nominal damages of HK$100 on their counterclaim. Against that judgment both parties appeal; the defendants seeking substantial damages and the plaintiffs, by Respondent's Notice, that the judgment in favour of the defendants be set aside and that judgment for damages for breach of contract be entered in their favour instead. It seems logical to consider the cross-appeal first.

2. The contract related to "China returned goods" being video tapes of Japanese manufacture in sealed cartons originally shipped to China and timeously available in that country at advantageous prices for sale elsewhere. The defendants sent the plaintiffs a sanple on 8th January 1986.

3. It was alleged by the plaintiffs, in their Amended Statement of Claim, that the agreement was concluded by facsimile messages sent by them to the defendants on 22nd and by the defendants to them on 24th January 1986. The material terms of those communications were, respectively:

"... re your telex 16176 we can confirm your offer of Sony video tapes as follows 170,000 L500 US$2.695 .... FOB Hong Kong ...."

"We .... confirm your order of 170,000 Sony L500 tape at US$2.695 each FOB Hong Kong. Please open letter of credit ...."

4. The defendants pleaded not only these two communications but also telex 16176, referred to in the first message, which they had dispatched to the plaintiffs on 18th January. It read:

".... 170,000 x Sony L500 each S$ 3.065 .... all FOB Hong Kong .... can ship out goods within 14 days after receipt of your letter of credit ...."

5. I construe the telex of 18th January as an offer, the facsimile message of 22nd as a counter-offer impliedly requiring a letter of credit and that of 24th as an acceptance. The resulting contract, accurately spelt out by the Deputy Judge, required the plaintiffs to establish a letter of credit in the defendants' favour within a reasonable time and as a condition precedent to their obligation to deliver. Soproma v. Marine and Animal By-Products Corporations⁽¹⁾ at p. 386. Normally a reasonable time for relevant purposes is to be calculated back from date of shipment. Sinaison-Teicher Inter-American Grain Corporation v. Oilcakes and Oilseeds Trading Co. Ltd.⁽²⁾. In the instant case, however, no date for shipment was expressly provided but, having regard to the matrix of fact surrounding the conclusion of the material agreement, I am satisfied that nothing less than the immediate opening of a letter of credit could be regarded as being reasonable so as to assure the defendants who, like the plaintiffs, were middlemen of limited means, that their payment was secured before they in turn committed themselves to the purchase from Zhuhai of goods which, as in the event occurred, might at any time be sold to other interested parties. "Immediately" in this context has been held to mean "within such time as is required for a person of reasonable diligence to establish the credit". Garcia v. Page & Co.⁽³⁾. While a transferable letter of credit would have been a convenience to the defendants it was no part of the contract that it should take that form.

6. Although the plaintiffs' agent was able to inspect the goods in China on 29th January and they repeatedly asserted that arrangements for the opening of a letter of credit had been made it had not been established by 1st February; a reasonable time having by then elapsed. At 2.35 p.m. that day the defendants sent the plaintiffs a telex reading:

"Re letter of credit for Sony L500 tape please do not open the letter of credit if you have not yet opened (it)".

They thereby informed the plaintiffs that if they had already complied with their obligations the contract would remain on foot but if they had not then it was at an end. Perhaps information from Zhuhai had disclosed that the goods were about to be sold elsewhere. By the 4th they had so been sold.

7. Again I agree with the Deputy Judge that the defendants were entitled to treat the plaintiffs' failure to open a letter of credit within a reasoanble time, that is immediately, as discharging them from any further obligations under the contract. They were also entitled to accept such failure as a repudiation and the telex of 1st February was apt for the purpose.

8. The Amended Reply and Defence to Counterclaim alleges an oral variation of the terms of the pleaded contract. The evidence adduced in support was disbelieved by the trial judge. Waiver was not alleged but, relying on a telex sent at 3.15 p.m. on 31st January which called on the plaintiffs to establish the letter of credit Mr. Sussex, for the plaintiffs, sought to argue the point before us. It does not avail him. Even if the plaintiffs had thereby been granted the further time required immediately to provide a letter of credit they could, as their Managing Director Mr. Rupani said in evidence, by the exercise of reasonable diligence in Singapore have established it in Hong Kong within 24 hours if not by 2.35 p.m. on the following day. But they did not and it is apparent from the evidence that no letter of credit would have been established however long the indulgence granted. As late as 12th February they sent a telex with the familiar and false refrain ".... L/C already in bank ...." while paragraphs 2A of the Amended Statement of Claim and 7 of the Reply allege that no obligation to establish such letter arose in any event until after inspection of the goods in Hong Kong. Etablissements Chainbaux S.A.R.L. v. Harbormaster, Ltd.⁽⁴⁾ at p. 312 per Devlin J. For these reasons I would dismiss the Plaintiffs' cross-appeal.

9. The Deputy Judge concluded his judgment with these words:

".... since it is not denied that Defendants had purely received an offer from the Chinese supplier and had not even gone one step further it cannot be said that it had incurred any loss upon its being discharged form contractual obligation towards the Plaintiffs".

That was quite correct as far as it went. The defendants were under no liability to suppliers in China. However, by making his subsequent award of nominal damages only the judge declined or failed to take into account let alone to assess the loss of profit probably sustained by the defendants in the absence of any available market in which they could acquire Sony L500 video tapes. Albeit there was no contract with the Chinese suppliers the goods were apparently still in their physical possession on 29th January when inspected and the defendants' willingness to accept their contractual obligations on 1st February if the plaintiffs had by then complied with theirs strongly suggests that such goods were on that date still available. This matter the defendants would surely have clarified in evidence. It was, in my opinion, none the less incumbent upon the judge, in the circumstances outlined, to assess the defendants' loss as best he could despite the surprising absence of important direct evidence in point. Certainly loss of profit to the defendants would have been in the contemplation of the plaintiffs as a consequence of breach of contract on their part. Ian Stach Ltd. v. Baker Bosley Ltd.⁽⁵⁾ at p. 145 per Diplock J.

10. The sale price agreed between the parties was US$458,150 and the cost to the Defendants would have been HK$3,230,000 FOB Zhuhai. Taking the value of US$1 to be HK$7.60 the figure of some UK$343,570 results from which a sum must be deducted to allow for freight and insurance Zhuhai to Hong Kong and also for the possibility that the goods might have been sold by 1st February. Having failed to adduce relevant evidence the defendants can hardly complain if the odds are weighed against them. With that approach I arrive at a round figure of HK$200,000.

11. I would allow the defendants' appeal and substitute for the HK$100 awarded at trial a sum of HK$200,000. I see no grounds for interfering with the judge's exercise of discretion in relation to the number of counsel retained by the defendants.

Yang, V.-P.:

12. I agree.

Power, J. A.:

13. I too agree.

(1) [1966] 1 LLOYD'S Rep. 367

(2) [1954] 1 WLR 935

(3) [1936] 55 LLOYD'S LIST Rep. 391

(4) [1955] 1 LLOYD'S Rep. 303

(5) [1958] 2 QB 130

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J U D G M E N T

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Kempster, J.A.

14. On 9th March 1988 we gave judgment allowing the defendants' appeal in this matter and substituted for the sum of HK$100 awarded by way of damages at trial a sum of HK$200,000. We dismissed the cross-appeal. Following our judgment and somewhat to our surprise no application was made in relation to interest or costs.

15. Although, shortly afterwards, a letter passed between solicitors in which the omission was adumbrated the order was duly drawn up and perfected and today we are faced with an application by the defendants for costs and interest.

16. Mr. Tang, who appears for the defendants, bases his application on the terms of RSC Order 20 rule 11 and has cited authorities, one of which prima facie binds us showing that "a mistake" deriving from the "accidental slip or omission" of counsel in failing to ask for relief consequential upon a judgment may come within the parameters of this rule. Tak Ming Company Ltd. v. Yee Sang Metal Supplies Company⁽¹⁾ at p. 573. Mr. Hunting, who appears for the plaintiffs, seeks to draw a distinction between mistake by counsel on the one hand and accident or forgetfulness on his part on the other; relying on what Mr. Tang, told us in relation to the reasons for the failure of junior counsel present when judgment was gven to ask for the relevant relief. With all respect to Mr. Bunting we think that he is inviting us to draw a pretty fine distinction. Indeed, his whole argument appears to us to be a matter of semantics.

17. Whether or not this court has power to grant the relief now sought otherwise than pursuant to the terms of RSC Order 20 rule 11 we leave open being satisfied that this rule does give us the necessary jurisdiction to correct the perfected order. We should have made an order for payment of the defendants' costs of appeal and cross appeal had application been made on 9th March and we do so now.

18. We have jurisdiction to award interest under Section 48 of the Supreme Court Ordinance and, since this was a commercial action, such an award is proper and the appropriate rate, in our view, 2% over bank's best lending rate from time to time prevailing during the period during which interest is claimed namely from 23rd October 1986 until 9th March 1988. We so order.

19. The costs of today will be the plaintiffs'.

(1) [1973] 1 All ER 569