UHRENHOLT MEAT A/S v. NEW TALENT WIN INTERNATIONAL INVESTMENT LTD

HCCL7/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 7 OF 2013

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JUDGMENT

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Introduction

1.  This is an assessment of damages consequent upon the entry of an interlocutory judgment on 16 March 2013 against the defendant for damages to be assessed with costs to be taxed.  By order dated 11 April 2013, the automatic directions under Order 37 rule 1A were dispensed with.

Background

2.  The plaintiff claims against the defendant damages for breach of 16 contracts contained in and or evidenced by the plaintiff’s sales confirmations and invoices.  By each of these contracts, the plaintiff agreed to sell and the defendant agreed to purchase various amounts of pork products, namely pork hind feet and entire ears (“the goods”).  Details of the goods including the respective sales confirmations and invoices have been helpfully set out in a schedule exhibited as CYCR-2 in the 2^nd affirmation of Cheung Yick Chung Ronald for the plaintiff (“Cheung’s affirmation”).

3.  For ease of reference that schedule is reproduced entirely below.

4.  Each of the 16 contracts was on the evidence subject to the plaintiff’s terms of sale and delivery.  Those terms entitled TERMS OF SALE AND DELIVERY OF THE UHRENHOLT GROUP (“Terms of Sale”) were exhibited as CYCR-3 in Cheung’s affirmation.  Each of the invoices contained the words ‘We refer to our general “Terms and conditions of sales and delivery”, which we have previously sent to you’.  The defendant was aware of them and had accepted them at the time of contract.

5.  Pursuant to contract, the goods being perishable frozen foods were duly shipped in refrigerated containers from Genoa, Venice, Rotterdam and Hamburg from April 2012 to September 2012 and arrived in Hong Kong on divers dates between June 2012 and September 2012.  The proof of such shipments can be found in the relevant bills of lading and the schedule summarizing them exhibited as CYCR-4 to Cheung’s affirmation.  The schedule at bundle B tab 4 page 135 is set out below.

6.  Wrongfully and in breach of its contractual obligations, the defendant failed to take delivery of the goods or to pay for them.  In consequence, the plaintiff has suffered loss and damages now claimed under various heads of claim that will be addressed in turn.

Loss arising from resale

7.  In mitigation of its loss as it was duty bound to do, the plaintiff resold the goods to two other buyers, namely Winfield Trading (China) Company limited (Nanjing Binli) and Fortuner Food Trading Company Limited (Yufai) at prices lower than what the defendant would have paid for them.  In the result, the plaintiff sustained losses of US$252.780.11.  The resales occurred in August 2012 and September 2012.

8.  In support of this claim are the plaintiff’s “Schedule - Sale Confirmations and invoices for the Re-selling” and copies of such confirmations and invoices, collectively exhibited as CYCR-5 to Cheung’s affirmation at bundle B tab 5 page 157 to 221.

9.  For clarity, the Schedule is set out below.

10.  The plaintiff has demonstrably suffered losses in the resales and may legitimately look to the defendant for redress.  There was no evidence suggesting that the resale prices were unreasonably low or that much higher prices or even prices comparable to the aborted contracts could have been achieved in the market at the relevant time.  Further, such losses are a reasonably foreseeable consequence of the defendant’s breach of the 16 contracts, and therefore recoverable in full within the principles enunciated in Hadley v Baxendale (1854) 9 Ex. 341 and in subsequent cases.

11.  I find the claim for US$252.780.11compentent, wholly justified and therefore recoverable.

Container detention, terminal handling and container yard charges

12.  Such expenses and charges, if reasonably incurred and proven to have been paid, are recoverable in my judgment as damages that are not too remote and within the contemplation of the parties as naturally flowing from the breach of these contracts.  Further, the Terms of Sale specifically provided for their recovery.  Clause 5.2 thereof stipulates:

“If the Buyer fails to collect or receive the purchased goods in due time, Uhrenholt shall be entitled to cancel the purchase. In addition, Uhrenholt shall be entitled to sell or dispose of the goods at the Buyer’s expense and risk and to claim compensation. The purchased goods shall be deposited at the Buyer’s expense and risk at Uhrenholt’s warehouse until they are collected/received or until the purchase has been cancelled or the goods have been sold or disposed off. Uhrenholt shall be entitled to charge warehouse rent and to have its costs, etc. covered.”

13.  Following the defendant’s failure to take delivery of the goods, the plaintiff had to arrange to collect them from the carriers and to properly store them until such time as they could be sold and delivered to other buyers.

14.  To ensure that the goods remain in good condition and unspoiled for resale, the plaintiff incurred charges for the late return of the containers which held the perishable frozen goods.  The plaintiff also incurred the terminal’s handling and processing charges for the containers that held the goods.  Additionally, the plaintiff had to pay the rental fees charged by the container yard for keeping the containers.  All these charges have been explained in paragraphs 13 to 17 of Cheung’s affirmation and supported by the schedule and copy invoices exhibited thereto (see exh. CYCR-6).

15.  There is ample evidence that the plaintiff settled all these charges by remittance of funds in US dollars totaling US $156,312.80 from the plaintiff’s bank account to the bank account of Central Trading International Limited. Details of those 6 remittances between 27 August 2012 and 17 September 2012 are set out in paragraphs 5 and 6 of the 1^st affidavit of Chan Sze Wah and the associated exhibit CSW-1 (Chan’s affidavit).  As Miss Chan for the plaintiff has explained and readily discernible from the payment records, various unrelated charges in the invoices settled by those remittances at the same time have been deducted, leaving the net amount of US $156,312.80 that the plaintiff had to pay in this case.

16.  This amount of US $156,312.80 is plainly recoverable from the defendant.

Demurrage

17.  When the defendant failed to take delivery of the goods, there was a consequential delay in taking delivery from the carriers.  In the result, demurrage charges were levied against the plaintiff.  The schedule detailing these charges of the 2 carriers, UTI Forwarding (“UTI”) and LERO Internationale Spedition GmbH (“LERO”) and the related invoices have been exhibited as CYCR-7 to Cheung’s affirmation.

18.  The plaintiff settled the demurrage charges of UTI by remittance of funds in US dollars from the plaintiff’s bank account to the bank account of UTI on 9 July 2012 in the amount of US $43,425.00.  The table setting out the invoices settled by this remittance, a copy of the relevant remittance record and copies of the invoices are exhibited as CSW-1 (pages 66-74) to Chan’s affidavit.

19.  In a similar fashion, LERO’s demurrage charges were settled by a bank remittance of US $54,277.57 on 4 September 2012 as explained in paragraphs 9 and 12 of Chan’s affidavit and evidenced by exh. CSW-1 (pages 75-82) to that affidavit.

20.  As explained in Chan’s affidavit and in submission, the remittances covered other unrelated invoices settled at the same time.  With the unrelated payments deducted, the net demurrage charges paid to both carriers amounted to US $68,110.07.

21.  In my judgment, the plaintiff is entitled to look to the defendant to make good this sum both under clause 5.2 of the Terms of Sale above and as damages that are reasonably foreseeable as flowing from the defendant’s breach of contract.

Summary of damages

22.  There shall be final judgment in the sum of US $477,202.98 for the plaintiff against the defendant.

Pre-judgment interest

23.  The plaintiff seeks pre-judgment interest at the rate of 7.2% per annum for its loss pursuant to the Terms of Sale.

24.  Clauses 3.1 and 3.2 respectively provide:

“3.1 Unless otherwise stated in Uhrenholt’s invoice, the purchase price shall be payable on the invoice date.

  3.2  If the buyer fails to pay in due time, default interest shall accrue from the due date of the payable amount at the default rate in force at any time according to the Danish Act on Interest.”

25.  In support of its claim, the plaintiff has exhibited a copy of the Danish Act on Interest for late payment with English translation.  They can be found in exh. CYCR-9 to Cheung’s affirmation.  It can be seen that the Danish legislation provides that interest for late payment shall be the official lending rate of the National Bank plus 7 per cent.

26.  A copy of a list of historical lending rates from the website of Danmarks Nationalbank obtained on 30 April 2013 stated that the lending rate was 0.2% from 6 July 2012 to 24 January 2013, the period when the plaintiff’s loss was sustained.  The copy list is at CYCR-10 to Cheung’s affirmation.

27.  In determining the period when the loss was suffered, the plaintiff very fairly adopted the date of the last invoice issued in the resale process, namely 31 August 2012.

28.  I am therefore prepared to accede to the plaintiff’s request and order pre-judgment interest at the rate of 7.2% per annum on the sum awarded above from 31 August 2012 until the date hereof and thereafter at judgment rate until full payment.

Costs

29.  As regards the costs of the assessment, the plaintiff has put in a costs statement latterly enhanced by $8,000.  I have considered that costs should be awarded to the plaintiff in the sum of $165,000 on a gross sum basis.  I so order.