KAREX INDUSTRIAL COMPANY v. LAI HING t/a HANG TAT PLASTICS FACTORY AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. The Plaintiff is, inter alia, an exporter of radios. It is the owner of a set of moulds for the manufacture of the plastic parts of a portable radio the design of which is registered in the United Kingdom.

2. In circumstances which are not relevant to this assessment those moulds were in the possession of the Defendants, who refused to return them to the Plaintiff.

3. The writ herein, claiming delivery up by the 2nd Defendant and damages against both, was issued on 16th November 1984. Interlocutory judgment was ordered pursuant to Order 14 rule 3 on 7th March 1985.

4. The Plaintiff called one witness, Mr. Tsang Shiu Kung, who is it's marketing director. No documents were adduced in evidence of the contracts he told me had been lost as a direct result of the Defendants' act, and quite clearly he was making a number of vital calculations as he gave his evidence. On more than one occasion he simply made arithmetical errors. However, I accept his evidence that the Plaintiff was sent six overseas orders which it was not able to complete without the relevant moulds.

5. I also accept his evidence that a new set of moulds could have been made; but would have taken 90 days and cost between $70,000.- and $80,000.-. Mr. Chow argued that this was an obvious step the Plaintiff should have taken to mitigate it's loss. After the event it can indeed be seen that after 90 days orders did arrive that would have justified the expenditure on new moulds. Without such hindsight it would have been speculation of a nature not required of a Plaintiff. This is particularly so as the Defendants might at any time have returned the original moulds. Whether the question of failure to mitigate arises at all in such circumstances was not canuassed before me.

6. Having accepted that the Plaintiff's damage is it's loss of profit on six particular orders. I have grant difficulty in finding with any certainty what that profit would have been.What Mr. Tsang did was to take the sale price and deduct from it what he first described as the cost of materials. This gave him a percentage figure of the sale price as profit. Thus on the first order the buyer called for 4,000 pieces at a price of $45.- each. Mr. Tsang calculated on an 11.5% profit for that order, giving the figure as 4,000x 45x11.5% = $20,700.00.

7. Similar calculations were made in respect of all contracts, though with different percentages and in some converting from US$ to HK$. After much consultation with his pocket calculator Mr. Tsang produced a grand total of $109,949.20.

8. Although not even the documents containing the orders were produced I accept Mr. Tsang's evidence they were received and at the prices he said. The real uncertainty lies in the "costof materials". When he was asked about labour costs he said they were included in the expression so was insurance, so indeed were all overheads. He gave no breakdown of these elements, no demonstration of how his figure was arrived at. What his evidence really amounted to in respect of each order was a bland and unsupported assertion that the profit would have been a particular percentage of the selling price. The basis of these calculations must have been in the Plaintiff's possession and I shared Mr Chow's frustration at being presented with no real material on which to base a proper assessment or to test Mr. Tsang's assertions. I am tempted by Mr. Chow's suggestion that the result should be that the assessment should be for nominal damages only. I cannot go so far. I have Mr. Tsang's evidence that the loss to the Plaintiff has been in accordance with his calculation. From the way that evidence was presented I am wholly unconvinced that it was entirely accurate. I cannot say how far it was inaccurate but must make the best estimate I can at the extent, if any, the figure is an exaggeration.

9. From the way Mr. Tsang's evidence was given I think it more likely than not that when he first referred to the "cost of materials" he meant what he said.

10. An example of his evidence may be seen in relation to the fourth order, from Corona Electronics Manufactory, for 20,000 pieces at $6.50 each First Mr. Tsang gave the profit margin as 62%. Then he amended that to 30.5%. Then he said the actual loss was $40,000. 62% would be $80,600. 30.5% would be $39,650. $40,000 was never converted into a percentage.

11. I am left, without any evidence to help me, to estimate by what amount labour costs and other overheads would have reduced the Plaintiff's claim.

12. As the Plaintiff could have provided that evidence but chose not to my estimate must favour the Defendant. I think it likely the additional costs might have equalled the cost of raw materials. This would have the effect of halving the Plaintiff's calculation of loss on each order and consequently the total.

13. I therefore assess the damges in this case as $109,949.20 ÷2 =$54,974.6.

14. The Plaintiff gave no evidence of when payment under the six orders would have been due so I am not able to assess interest by reference to any relevant date save that of the issue of the writ herein. Interest will run from that date to the date of judgment at the rate of 5.6% per annum. There will be an order for costs in favour of the Plaintiff.