ASIAN COMPUTER EMBROIDERY FTY. (A Firm) v. CHOICES LTD

DCCJ231/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 231 OF 2006

D E C I S I O N

1.  This is an application by the plaintiff for summary judgment under Order 14 of the Rules of the District Court.  

2.  The claim of the plaintiff against the defendant is for the sum of $165,112 being the balance of the price of goods sold and delivered by the plaintiff to the defendant in respect of certain invoices dated between 7 May 2005 to 30 June 2005, as particularised in paragraph 1 of the statement of claim. 

3.  The plaintiff is an embroidery factory.  On or about 3 March 2005, the defendant requested the plaintiff to quote a price for processing garments which were to be provided by the defendant .  The facts by which the defendant requested quotes from the plaintiff related to processing work on four styles of garments, is at page 50 of the bundle of documents and is dated 3 March 2005.

4.  It is the plaintiff’s pleaded case in the reply and defence to counterclaim that the date of delivery of the processed garments by the plaintiff to the defendant was to be 13 May 2005.  However, this is not stated in the affirmation in support of the plaintiff’s application filed by Chan Kai-sui.  It is the defendant’s pleaded case that delivery of the processed garments was specified on the fax, dated 3 March 2005, which was referred to being the fax from the defendant to the plaintiff seeking a quotation for the price of processing the garments.  The delivery date stated therein was 30 April 2005.  This was referred to in the affirmation of Yiu Ying, dated 10 April 2006, on behalf of the defendant in support of the defendant’s opposition to the application.

5.  There is no evidence from the plaintiff to state the agreed date for delivery of the processed garments to the defendant and there is no evidence from the plaintiff to contradict the defendant’s stated date for delivery of the processed garments by the plaintiff to the defendant. 

6.  The plaintiff’s pleaded case in the reply and defence to counterclaim was that it was an agreed term that the plaintiff would finish all the processing within 21 days from the date of the delivery of the garments by the defendant to the plaintiff for processing.  The plaintiff also pleaded that the defendant delivered the garments to be processed by the plaintiff on 24 April 2005 and 26 April 2005, respectively.  However, these pleaded facts were not stated in the affirmation of Chan Kai-sui on behalf of the plaintiff and does not form the evidence of this application. Hence, there is no evidence on the plaintiff’s part related to the terms of contract between the parties, particularly the term for the date of delivery.

7.  On affidavit, the defendant seeks to state a case of set-off and counterclaim on the basis of loss incurred by them arising from the plaintiff’s alleged late delivery.  In the plaintiff’s reply and defence to counterclaim, as referred to aforesaid, the plaintiff pleaded that the actual date for delivery of the processed garments by the plaintiff to the defendant was 13 May 2005.  The defendant has no evidence to contradict this date.  However, the plaintiff’s affirmation of Chan Kai-sui was drafted in such a poor manner that it did not even clearly state the date of delivery of processed goods but it was very confused and referred to the dates of invoices as dates of goods sold and delivered. 

8.  There is a lot to be desired in the way this application is prepared and the affirmations are to be prepared - by both parties.

9.  The defence of set-off has two items:

(1)   expenses for air freight services in the sum of $83,006.10, as evidenced by two airway bills dated 4 June 2005, at page 55 of the bundle of documents, and that dated 11 June 2005, at page 57 of the bundle of documents, respectively;

(2)   loss of profit due to the plaintiff’s alleged failure to deliver the goods on time.

10.  The defendant’s case in relation to this is stated at paragraphs 10 and 11 of the affirmation of Yiu Ying, at page 45 of the bundle of documents.  He states:

“It was the first occasion for the defendant to place an order to the plaintiff for the production of ladies jackets, which were supplied to the US buyer, City Girl Inc.  Before this order, the defendant had received two seasonal orders from the US buyer, City Girl Inc., for the supply of ladies jackets.  The turnover of these previous orders was the range of US$300,000 to US$500,000 and the defendant would gain 20 per cent to 25 per cent profit margin from the transactions.  In other words, the defendant would at least earn $60,000 by each order from City Girl Inc.”

                   Then it is stated:

“By reason of the delay in delivery caused by the plaintiff after this order, the US buyer, City Girl Inc., decided not to place any further order to the defendant.”

                   The averment then states that the defendant:

“suffered loss of business opportunity with the US buyer, City Girl Inc.  Given the previous dealing with the US buyer, City Girl Inc., it is expected US buyer, City Girl Inc., that would at least place one more seasonal order if the plaintiff had not been delayed in delivering the goods.” 

                   Then the defendant seeks to justify a loss of profit in the area of HK$468,000.

11.  The plaintiff’s argument is that the items of counterclaim are bare allegations and are not believable for the following three reasons: 

(1)   A careful look at the column, headed “Nature and description of goods” in the right middle of each of the two airway bills, shows descriptions of goods, some of which are not those descriptions set out in the order in the fax seeking quotation dated 3 March 2005, at page 50 of the bundle of documents, although each of these airway bills also contain description of an item of goods processed by the plaintiff, being Style No. 3232M05.  The plaintiff’s counsel seeks to argue that the air freight charges would seem to include freight charges for goods which had nothing to do with the defendant’s order placed on the plaintiff.  The plaintiff’s counsel also submitted that these deliveries by air freight were made on 4 and 11 June, respectively.  The plaintiff’s uncontested case is that deliveries were made to the defendant on 13 May 2005.  However, this date is not stated on affirmation and the defendant did not state any date at all in relation to the actual date of delivery of the goods by the plaintiff to the defendant.  The plaintiff’s counsel submitted that there is no explanation as regards why the defendant sent the goods processed by the plaintiff by air freight on 4 and 11 June, more than three weeks after the plaintiff’s pleaded delivery date, being 13 May 2005.

(2)   The defendant made no written or oral complaints for late delivery, and this is stated in the affirmation of Chan Kai-sui.  There is no reference to any complaint for late delivery made by the defendant to the plaintiff in the affidavit of Yu Ying to contest the statement of Chan Kai-sui that no complaints were made, either oral or written, and the defendant made three part-payments to the plaintiff in respect of the invoices for the processed goods, and these are as follows:  on 28 July 2005, $2,000; 27 August 2005, $20,000; 15 November 2005, $37,980, totalling a sum of $59,980.

       The plaintiff’s counsel argues that if the defendant had a claim against the plaintiff for late delivery or for air freight charges incurred as a result of late delivery, the defendant would not have made payment to the plaintiff without either oral or written complaint of late delivery.

(3)   The allegation of loss of profit on the basis that City Girl Inc. did not place any further orders on the defendant is speculative.  There is no documentary evidence to support the assumption that City Girl Inc. would have placed further orders on the defendant and that it did not do so because of the late delivery of the specific goods processed by the plaintiff.  The plaintiff’s counsel submits that this claim for loss of profit is speculative and has no evidential basis.   

12.  Having considered the aforesaid arguments advanced by the plaintiff’s counsel, I look closely at the evidence supplied by the defendant.  In respect of the defendant’s counterclaim for loss of profit.  On  a close look at the paragraphs 10 to 13 of the affirmation of Yiu Ying, it is clear there is no clear evidence that the defendant could submit that City Girl Inc. had either placed an order on the defendant and cancelled because of earlier late delivery, or had indicated it would have placed an order on the defendant but for the late delivery of the goods processed by the plaintiff.  Hence, it is clear that this claim for loss of profit is highly speculative and this item of claim is entirely shadowy. 

13.  Having considered the other claim, being that for air freight, at best the defendant may be able to advance the set-off and counterclaim in respect of part of the item for the air freight, being $83,006.10.  On the basis of the aforesaid I am of the view that the following order is fair and just and that is, conditional leave to defend upon payment into court of the sum of $165,112, subtract $83,006.10, which equals $82,105.90, within 21 days.  Costs in the cause.  Certificate for counsel.  Upon failure to comply with the order for payment in within 21 days, I give judgment to the plaintiff for the sum claimed, together with costs of the action and of this application with certificate for counsel, and interest on the sum claimed at judgment rate from date of writ to date of payment.