CHIMBUSCO PAN NATION PETRO-CHEMICAL CO LTD v. SILVER LOYAL PETROLEUM LTD

DCCJ 2641/2020

[2024] HKDC 186

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2641 OF 2020

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ASSESSMENT OF DAMAGES

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Background

1.  This is the assessment of damages pursuant to judgment on liability granted by His Honour Judge H Au-Yeung on 22 October 2021.

2.  On 5 June 2020, the Plaintiff commenced the present action against the Defendant for breach of contract for the sale and purchase of marine gas oil.

3.  On 2 March 2021, upon the Plaintiff’s application for summary judgment, final judgment was granted in favour of the Plaintiff for the sum of US$257,397.50. The Defendant appealed against Master’s decision in granting summary judgment.

4.  On 22 October 2021, His Honour Judge H Au-Yeung, upon hearing the appeal, ordered inter alia that interlocutory judgment be entered against the Defendant with damages to be assessed.

The Present Proceedings

5.  On 15 July 2022, the Plaintiff issued a notice of appointment of hearing of assessment of damages pursuant to the interlocutory judgment entered against the Defendant.

6.  On 6 October 2022, the Defendant filed a notice to act in person.

7.  On 1 November 2022, directions were given for the assessment of damages proceedings when the Defendant was no longer legally represented. Despite the directions by the Court, the Defendant did not file any evidence for these proceedings.

8.  At the hearing of assessment of damages, the Plaintiff was represented by Counsel. The Defendant was absent at the hearing.

9.  Solicitors for the Plaintiff have filed an affirmation of service confirming that, the order dated 3 May 2023 setting out the date and time of the hearing for assessment of damages, the hearing bundle, and the Plaintiff’s written submissions and list of authorities had all been served on the Defendant.

10.  I am satisfied that, the Defendant had been properly notified of the hearing. Upon the Plaintiff’s application pursuant to Order 35, rule 1(2) of the Rules of the District Court, Cap. 336H, I proceed with the hearing in the absence of the Defendant.

The Plaintiff’s Pleaded Case

11.  Interlocutory judgment was entered into based on the Plaintiff’s pleaded case that: -

(1)  On or around 23 January 2020, the Defendant agreed to buy and the Plaintiff agreed to sell 7,500 barrels (ie 1,000 metric tons) of marine gas oil (“the Oil”). (the “Agreement”)

(2)  It was an implied term of the Agreement that the Defendant was obliged to take delivery of the entirety of the Oil ordered within the month of February 2020.

(3)  The Defendant has failed to take any of the Oil ordered under the Agreement in February 2020.

(4)  Despite so, the Plaintiff agreed to extend the deadline for the Defendant to take delivery of the Oil to April 2020.

(5)  Even with the extended deadline, the Defendant has failed to take any of the Oil by the end of April 2020.

(6)  As a result of the Defendant’s breach of the Agreement, the Plaintiff has suffered loss and damage.

12.  As pleaded in the Statement of Claim, the Plaintiff claims damages for US$257,397.50 or alternatively for damages to be assessed.

The Plaintiff’s Evidence

13.  At the hearing, Ms Ho Chin Yan gave evidence for the Plaintiff. She adopted her witness statement filed on 31 January 2023 and answered questions from the Court.

14.  For purposes of assessment of damages, her evidence can be summarised as follows: -

(1)  Generally, the price of the marine gas oil is fixed with reference to the value of Mean of Platts Singapore GO (Gasoil) 10 ppm (the “MOPS”), which is widely used by the industry.

(2)  Under the Agreement, the price of the Oil would be fixed as the average value of MOPS for the period 1 to 29 February 2020 plus US$3.80 per barrel.

(3)  With reference to the MOPS record for the month of February 2020, the contract price of the Oil is US$519,786.50.

(4)  In breach of the Agreement, the Defendant failed to take delivery of the Oil by the end of February 2020.

(5)  By a letter sent to the Defendant by the Plaintiff on 25 March 2020, it is stated that the Defendant has failed to take delivery as agreed and the Plaintiff has suffered loss in the sum of US$197,650 being the difference between the price of the Oil on 29 February 2020 and on 24 March 2020, for which the Defendant is liable.

(6)  On the same day, Mr. Tse of the Defendant sent a WhatsApp message to Ms. Ho of the Plaintiff, informing her that the Defendant refused to terminate the Agreement and asked to take delivery of the Oil.

(7)  On 31 March 2020, Ms. Ho replied by WhatsApp message that the Plaintiff agreed to extend the deadline for the Defendant to take delivery of the Oil to April 2020.

(8)  Despite the agreement to extend the deadline, the Defendant has failed to take delivery of any of the Oil by the end of April 2020.

(9)  Since late March 2020, the price of oil has started to fall, and the price of oil has plummeted to a near historic low by April 2020.

(10)  Similarly, with reference to the MOPS record for the month of April 2020, the price of the Oil as at 30 April 2020 is US$262,389.

(11)  As such, the Plaintiff has suffered losses being the difference in contract price and price of the Oil as at 30 April 2020.

(12)  There were no mitigation measures available to the Plaintiff as it could only sell the Oil to another buyer at the end of April at the market price of US$262,389.

15.  I find Ms Ho’s evidence consistent and supported by contemporaneous records, which includes the relevant public MOPS records and the correspondence by way of fax and messages between the representatives of the Plaintiff and the Defendant. Her evidence was unchallenged by the Defendant. I accept her evidence in its entirety.

Applicable Legal Principles

16.  Counsel for the Plaintiff refers me to McGregor on Damages 21^st edition at §4-015 at [39], where it sets out the normal measure of damages of a breach of contract claim in case of default on the part of the transferee, be it for property, loan or services: -

“Non-performance is easily the most important: it will consist of failure to pay for the property, loan or services. The normal loss is worked out as the converse of the normal loss which arises on the transferor’s non-performance; in other words, it is the contract price less the market price. This is so where goods sold, hired or hire-purchased are not accepted, where shares sold are not accepted, and in the case of sale and lease of land.”

17.  As further explained in McGregor on Damages at §25-117 at [849], the normal measure of damages is the contract price less the market price, which is ascertained at the time of acceptance under the contract. This measure of damages represents the amount the seller should obtain to put themselves in the position they would have been in had the contract been carried out.

18.  In cases where the time for acceptance is extended, the following principles apply as stated in McGregor on Damages at §25-125 at [854]: -

“Where the time fixed for acceptance has been postponed at the buyer’s request and the buyer ultimately fails to accept in the extended period, the point in time at which breach takes place is deferred and the damages will be calculated at the market price on the last day to which the contract was extended if a date was fixed, or at the date when the claimant refused to grant further indulgence, or at a reasonable period after the last grant of indulgence.”

Damages Awarded

19.  Applying the legal principles cited in the section above, I find that the Plaintiff is entitled to damages measured by the difference between the contract price of the Oil and the market price of the Oil as at 30 April 2020, which is the date when the Defendant ought to have accepted delivery of the Oil.

20.  I accept the Plaintiff’s evidence that, the contract price of the Oil is US$519,786.50; and the market price of the Oil as at 30 April 2020 is US$262,389. Therefore, the amount of damages is assessed at US$257,397.50.

21.  I also find that the Plaintiff is entitled to interests on the sum at 1% above the best lending rate of HSBC from the date of writ to the date of this judgment, and thereafter at judgment rate until payment in full.

Costs

22.  Costs should follow the event and the Plaintiff should be entitled to costs of the assessment.

23.  Counsel for the Plaintiff submits that, costs should be awarded on an indemnity basis because the Defendant has unreasonably contested these proceedings without filing any evidence. I note that the Defendant has been absent throughout these proceedings. In the circumstances, it cannot be said that it has contested these proceedings unreasonably. I am not satisfied that there is basis to award costs on an indemnity basis and I shall order costs on the usual party and party basis.

24.  The Plaintiff seeks costs of the assessment with certificate for counsel and for those costs to be summarily assessed. The Plaintiff has submitted its statement of costs. On a broad-brush approach, I have considered the nature and complexity of the case and summarily assess the Plaintiff’s costs at HK$128,000.

Orders Made

25.  Accordingly, I make the order awarding damages to the Plaintiff in the sum of US$257,397.50. I award interest on the sum at 1% above the best lending rate of HSBC from the date of writ to the date of this judgment, and thereafter at judgment rate until payment in full.

26.  I also order that the Defendant should pay costs of the assessment to the Plaintiff, with certificate for counsel and on a party and party basis, summarily assessed at HK$128,000.

27.  I thank counsel for his assistance rendered to the Court.