XCHRX WORLD HOPE INDUSTRIES LTD. v. ELECTRA CONSUMER PRODUCTS LTD.

1996 No. A9037

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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R E A S O N S  F O R  D E C I S I O N

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1. In this action, the Plaintiff claims against the Defendant for damages in the sums of US$739,035.45 being the unpaid amount of goods sold and delivered to the Defendant in Israel. The Plaintiff applied and obtained leave to issue and serve a concurrent Writ of Summons out of jurisdiction to the Defendant in Israel.

2. The Defendant now applies under O.12 r.8 of the RSC to set aside the service of the Writ of Summons.

3. There is no denial that there was a concluded contract entered into between the Plaintiff and Defendant except that according to Ehud Lurie, the Chief Financial Officer of the Defendant, it was entered into orally by a Dov Larom on behalf of the Plaintiff and Shaul Levy, the Defendant's Plant Manager on behalf of the Defendant during discussions which took place at the Defendant's office in Israel in Hebrew. Hence the contract was made in Israel.

4. Lurie in his 1st affidavit deposed that he believed it has good defences on the merit without disclosing any. I am therefore not prepared to speculate as to what could be its defence. Hence I am not able to say what is the defence to a rather straightforward claim by the Plaintiff.

5. Lurie agreed that there was a concluded contract and a number of sub-contracts concluded under the principal contract by the Plaintiff's acceptance and the terms were contained in the pro-forma invoices (Ex. "MDR-2" of MD Roger's affidavit.)

6. The Defendant contended that these sub-contracts were concluded in Israel on the basis that the pro-forma invoices were faxed by the Plaintiff and received by the Defendant in Israel. The Defendant relied on Godfrey J.'s judgment in Susanto-Wing Sun Co. Ltd v. Yung Chi Hardward Machinery Co. Ltd. [1989] 2 HKC 504 at 506 to say that those sub-contracts were concluded and made in Israel.

7. The material terms of each of the pro-forma invoices were as follows:-

1) It was issued by the Plaintiff to the Defendant in Israel

2) The goods were shipped FOB Hong Kong

3) Payment was by Letter of Credit in favour of the Plaintiff and the Letter of Credit confirms, inter alia, that

(i) it was divisible

(ii) it allowed partial shipment by sea and/or by air

(iii) acceptable of House Bill of Lading Airway Bill/Air Consignment Note

4) The Plaintiff was the beneficiary of the L/C

5) The amount in the invoice was to be paid into the Plaintiff's account opened with the Hong Kong and Shanghai Banking Corp. Ltd. (Central Main Branch) A/C No. 511-290090-001.

8. Pursuant to the principal contract the Defendant opened a Letter of Credit (Ex. "MDR-1" of Roger's 1st affidavit -) and one of its terms was that loading/dispatch was from Hong Kong port or airport.

9. In the Statement of Claim the Plaintiff stated that pursuant to the agreement the Plaintiff supplied complete air conditioning units in batches to Defendant and received a total of about $48 million under the L/C between September 1994 and September 1995.

10. During September 1995 the Plaintiff shipped goods totalling US$739,035.45 to the Defendant. The Plaintiff was unable to obtain payment pursuant to the said L/C because the Plaintiff was unable to present the Bills of Lading as those were removed and are in the Defendant's possession.

11. There is no evidence from the Defendant that it was not in possession of those B/L or for any reason why they were kept by the Defendant.

12. On the evidence I am satisfied that this Court has jurisdiction in this case in that according to O.11 r.1(e) the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of jurisdiction for the following reasons:-

1) The performance of the Contract is in Hong Kong and the term according to the pro-forma invoices was FOB Hong Kong.

2) The breach was in respect of non payment of purchase prices and it was accepted by the Defendant that payment was to be made by paying into the Plaintiff's account with Hong Kong and Shanghai Bank.

3) The act of removing the bills of lading and conveyed to the Defendant took place in Hong Kong.

13. Further this Court has jurisdiction under O.11 r.1(d) (iii) in that the contracts by their terms or by necessary implication are governed by Hong Kong Law in that the Plaintiff company is incorporated in Hong Kong and Hong Kong is the Plaintiff's place of business. The goods were shipped by the Plaintiff FOB Hong Kong.

14. Having satisfied myself that this Court has jurisdiction I go on to consider:

1) whether there is a good arguable case

2) whether there are serious issues to be tried and

3) which is the appropriate court to try this case.

15. There is no doubt from the Statement of Claim that the Plaintiff has a good arguable case and as there is no disclosure of any defence there are serious issues to be tried.

16. For the Plaintiff to prove its case this Plaintiff has to call witnesses in Hong Kong concerning shipment of the goods in Hong Kong. Non payment has to be proved by Hong Kong Bank and finally witnesses from Hong Kong have to be called to give evidence as to what happened to the bills of lading and to produce the written confirmation that the Defendant is in possession of the bills of lading.

17. Whether the contracts were concluded in Hong Kong or Israel is in my view immaterial as this is only technical. In any event according to the Defendant there is no substantial difference between the Israel Law and Hong Kong Law.

18. The Defendant has raised the point that there was material non-disclosure in the Plaintiff's ex parte application. Having carefully considered the points raised I do not find those points to be material non disclosure which could have affected the decision of the master in granting leave under O.11 r.1. The Defendant has also raised the point on the law in respect of L/C. I consider this to be peripheral.

19. In the premises the Defendant's application to set aside the service of the concurrent Writ of Summons is dismissed with costs.