ZEGO LTD v. VALDIVIA LTD

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JUDGMENT

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Sir Derek Cons, V.P., delivered the judgment of the Court:

1. It is common. ground between the parties to this appeal that by at least the 22nd June 1989 it had been agreed between the Plaintiff and the defendant that the Plaintiff would buy and the Defendant would sell 320 kilograms of Chinese white Angora rabbit hair off grade at US$10 per kilogram. The parties' representatives responsible for the agreement were on the one hand Mr. Joseph Ng, a clerk of the Plaintiff, and on the other, Mr. Peter Cheung, whose actual position with the Defendant is not all that clear.

2. In the documents which, it is common ground, evidenced this agreement no date was mentioned for delivery, although it is accepted that delivery would necessarily have taken place at the Defendant's godown in Wong Chuk Hang. Subsequently, but still on the 22nd June, the Plaintiff communicated by fax with the Defendant, asking, albeit in not so many words, for delivery by the 28th June in order to accommodate a re-sale made by the Plaintiff to its own customer. No reply was given to this request, the reason being that Mr. Cheung had gone off for holiday or into China on business of his own and Mrs. Capelvenere, the managing director of the Defendant, had only just returned to Hong Kong.

3. On the 3rd July the Plaintiff faxed again, asking for "details about your delivery within today". By her reply Mrs. Capelvenere sought to raise the price to US$12 per kilogram, suggesting that there had been a mistake in the original offer. The suggestion was immediately rejected by the Plaintiff. Mr. Ng's fax concluded:

4. The same day, or perhaps a few days later, Mr. Ng and Mrs. Capelvenere spoke with each other on the telephone. There is sharp disagreement as to the contents of the conversation. According to Mr. Ng Mrs. Capelvenere refused point-blank to sell the goods at all, on the ground that a re-sale to the Plaintiff's customer in Italy would be in competition with her own business; according to Mrs. Capelvenere she agreed to the price again at US$10 per kilo and told Mr. Ng that "he could come to get the goods, but must come up with the money first".

5. There matters rested until the 3rd August, when solicitors for the Plaintiff wrote claiming that the Defendant had "failed and/or refused to make delivery" with resulting loss of profit to the Plaintiff. The Defendant refuted the claim the following day, alleging that Mr. Ng   had been informed "that the goods were ready for him to collect as soon as he was able to produce the necessary funds".

6. The Plaintiff's claim was heard by Mr. M.D. Hill sitting as a deputy judge of the District Court on the 20th July last year. Only two witnesses were called, Mr. Ng for the Plaintiff and Mrs. Capelvenere for the Defendant. It is obvious from what we have set out above that acceptance by the judge of Mrs. Capelvenere's evidence in preference to that of Mr. Ng would have swiftly disposed of the case. Clearly then the failure of the contract would have been the fault of the Plaintiff. The judge was reminded of this by Mr. Pritchard, who appeared then as he does today for the Defendant, at the beginning of his closing address. The judge's note reads:

7. But the judge declined the invitation. In his reserved judgment he said he found it:

8. Instead the ratio of his decision was that:

9. Both sides now complain, the one by the Notice of Appeal and the other by a Respondent's Notice, of the judge's failure to resolve the conflict. Both have further sought to persuade us, by reference to the documents and the evidence, that had the judge in fact directed his mind to the question of credibility he would inevitably have found in their favour.

10. We do not think that either side has made good that contention. Nevertheless we are content to assume, for the purposes of this appeal, that the version given by Mr. Ng is correct, i.e. that Mrs. Capelvenere clearly indicated on the 3rd July that the Defendant did not intend to be bound further by the contract. The Plaintiff then had the choice explained by Lord Ackher in Fercometal v. The Mediterranean Shipping CO. 1989 AC 768 at 805:

The Plaintiff chose the first option, thereby remaining subject to the obligations which the contract imposed upon it as well as retaining the benefits it conferred.

11. The obligation of the Plaintiff was to snow that it was "ready and willing to pay the price in exchange for possession of the goods": s. 30, Sale of Goods Ordinance, Cap. 26. Normally this would be by way of tender of the appropriate amount at the place of delivery, although there are of course other possibilities depending on the circumstances. In the present instance, however, the Plaintiff made no attendance or tender, although it was well aware of the address of the Defendant and the fact that the goods were stored next door. Mr. Mitchell, for the Plaintiff, suggests that the Plaintiff's ability to pay is a necessary inference from the circumstances of its frequent demands for delivery. In our view that is not so; if it were, it would equally follow from the mere fact of entering into the agreement itself.

12. Alternatively Mr. Mitchell suggests that the refusal of Mrs. Capelvenere to complete, coupled with the Plaintiff's fax of the 3rd July, put the ball as it were in the Defendant's court and required the Defendant to give some indication of the arrangements necessary for delivery. With respect that is the very position which Lord Ackher in Fercometal specifically went on to preclude:

13. In our judgment the deputy judge was correct in his conclusion that the Plaintiff had not done what vas required on his part to show that the Defendant had, as alleged in the Particulars of Claim, failed to meet his obligation to deliver. The appeal must therefore be dismissed and, subject to any submission by counsel, with costs.