REGENT STYLE INTERNATIONAL LTD v. SPORT GRAPHICS USA (HK) LTD

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JUDGMENT

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1. This is an appeal from the Master's granting of unconditional leave to defend on the Order 14 application by the Plaintiff. The Plaintiff by contract dated 6th October 1995 sold 2,000 pieces of Men's jacket to the Defendant at the price F.O.B. of HK$190,000. On the 16th November 1995, the Plaintiff sent to the Defendant an invoice for HK$188,100 as only 1,980 pieces would be delivered. The next day, the 17th November 1995, the Plaintiff delivered to the Defendant the 1,980 pieces ("Goods") which were examined not only by the Defendant but also by the Defendant's surveyor who made an Inspection Report dated 17th November 1995 expressed to be a final report declaring the goods to be OK which Inspection Report was sent to the Plaintiff on the 17th. The Goods were received into the custody of the Defendant after the inspection on the 17th November. On the 18th November 1995, namely the day after the inspection, the Defendant gave to the Plaintiff the cheque of $181,638 the subject of the claim in this Action. The cheque by the Defendant was sent together with its Payment Advice dated 18th November 1995 which showed why the Cheque was for only $181,638.00 because there were certain deductions made by the Defendant from the sum of $188,100. The cheque was post-dated to 6th December 1995.

2. It is not in dispute and it had been acknowledged by Miss Chan for the Defendant at the hearing that after the inspection and the giving of the Cheque by the Defendant, the Defendant then sent the Goods by air-freight, with the Airway Bill issued in its name, to its sub-buyers in Turkey. The Turkish sub-buyers apparently sometimes in late November 1995 or early December 1995 then purported to reject the Goods and it would seem that around this time the Defendant then informed the Plaintiff that the Defendant was rejecting the Goods. The Defendant however took no steps to bring the Goods back from Turkey to Hong Kong and it is really not clearly established that the Goods still exist today or had not been used by the Turkish sub-buyers.

3. The Defendant countermanded the Cheque and the Plaintiff therefore sued on the Cheque. At the hearing, it was accepted by both parties that the only issue in the case is whether the Defendant could establish an arguable case that consideration had totally failed because it had not accepted the Goods. The case of the Defendant is that there had been no acceptance or that there was an arguable rejection in late November 1995 and that therefore unconditional leave to defend should be given.

4. The following facts cannot possibly be in dispute, namely:-

On these facts, I do not see how it could ever be argued that the Goods had not been accepted by the Defendant. Of course a buyer can reject goods delivered but if after he had examined the goods and he did not reject them immediately or reasonably thereafter but instead he effected payment together with an unequivocal Payment Advice and thereafter sent the Goods abroad, then I do not see how it could be said that he had rejected them or had not accepted them. The fact that the Defendant never brought the Goods back to Hong Kong simply made the point of rejection wholly unarguable because it could not be the law that a buyer can send goods abroad to a far off place and then said that he rejects the goods at that far off place and the seller had the obligation to collect them back from that far off place. If there is rejection that act must be an act in Hong Kong with the goods available to be collected back by the seller at the place of delivery and not at some far away place which was not the place where the goods were delivered. On this ground of the Goods not being brought back to Hong Kong, this case can be readily distinguished from the John MacClean v Meharban judgment of the Court of Appeal cited to me.

5. In my view, the law does not in any way help the Defendant and there is nothing in Section 37 cited to me which changes my view that as a matter of fact or law, any arguable case has been made out that the Defendant had not accepted the Goods.

6. I was urged by Miss Chan at the hearing to look at what is alleged to be one of the jacket delivered and compare it to an alleged half jacket sample in support of her case that there was an arguable case of rejection. Having seen the two jackets, I can only say that it only further confirmed my view that the Goods had been accepted on the 18th of November 1995 when payment was made by the Defendant. There was to my mind and to my eyes no appreciable difference between the sample and the Jacket from the Goods delivered and any reasonable person would have accepted the Goods delivered and this merely fortified my view that there was acceptance by the Defendant and that is why the Defendant effected payment by giving the Cheque on the 18th November.

7. It follows therefore in my view, that Judgment must be given for the Plaintiff against the Defendant. The appeal is allowed and the order of the Master granting unconditional leave must be set aside. I also make an order nisi that costs of the appeal and costs below should be awarded to the Plaintiff against the Defendant.