CRYSTAL MARTIN (HONG KONG) LTD v. HWA SUNG CO LTD

DCCJ 3462/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3462 OF 2009

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BETWEEN

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JUDGMENT

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BACKGROUND

1.  H&M Hennes & Mauritz GBC AB (“H&M”) is a well-known Swedish clothing retailer having around 2,000 stores in 35 different countries.

2.  The plaintiff is a garments manufacturer in Hong Kong.  H&M was and is one of its customers.

3.  On around 25^th November 2008, H&M placed 3 orders with the plaintiff for bulk production of certain garments.  Three colours of garment were ordered.  The garments were required to be shipped to various countries and the agreed delivery dates were between 30^th March 2009 and 18^th May 2009.

4.  It was specified by H&M that the shiny satin part of the garments should be made of fabric materials supplied by its designated suppliers, and the defendant was one of those designated suppliers.

5.  On around 10^th December 2008, the plaintiff issued a Purchase Order No.8110006305 (“the 1^st P.O.”) to the defendant to purchase 20,004 metres of fabric materials from the defendant.  The name of the plaintiff was printed at the header of the 1^st P.O..

6.  On around 22^nd December 2008, the defendant issued a Contract Note for the fabric materials ordered under the 1^st P.O..  This Contract Note was addressed to “Crystal Martin (Zhong Shan)”.

7.  On around 6^th January 2009, the Plaintiff issued another Purchase Order No.8110006402 (“the 2^nd P.O.”) to the defendant to purchase 8,506 metres of fabrics from the defendant.  Again, the name of the plaintiff was printed at the header of the 2^nd P.O..

8.  On around 12^th January 2009, the defendant issued a Contract Note for the 2^nd P.O..  The format of this Contract Note was as same as the one issued in respect of the 1^st P.O. and it was also issued to “Crystal Martin (Zhong Shan)”.

9.  In the 1^st P.O. and the 2^nd P.O., it was stipulated that the defendant as the supplier was required to confirm the delivery date of the materials ordered. 

10.  Pursuant to the said stipulation, the defendant confirmed in writing on 11^th December 2008 that in relation to the 1^st P.O., the delivery dates were going to be 25^th January 2009 for 14,500 metres of fabrics and 20^th February 2009 for the balance amount.  In the end, the defendant delivered the fabric on various dates between 23^rd January 2009 and 27^th February 2009.

11.  The defendant further confirmed in writing on 9^th January 2009 that in relation to the 2^nd P.O., the delivery date was going to be 28^th February 2009.  Subsequently, delivery was made on 11^th March 2009.

12.  Both the plaintiff and the defendant were well aware of the chemical requirement of H&M as they had signed a document known as “Chemical Restrictions Compliance Commitment”.  Attached with the said document was a list of Restricted Chemical under which “Alkylphenol Ethoxylates” (also known as “APEO”) was included.

13.  After the said deliveries, the plaintiff made use of some of the defendant’s fabric materials and manufactured some sample garments.  These finished products were then sent for an APEO test so as to confirm that they did not breach the chemical restrictions imposed by H&M.

14.  According to the APEO test report dated 11^th March 2009, the shiny satin parts of the plaintiff’s products failed the APEO test.  In other words, the fabric materials supplied by the defendant were found to have breached H&M’s chemical restrictions.

15.  As a result, Ms Li Yuk Lin (the Sales Manager of the plaintiff) met Mr. Lee Sang In (a director of the defendant) on 13^th March 2009 at the plaintiff’s office and discussed the way forward.  It was agreed in the said meeting that in order to speed up the production process, the plaintiff would cause further chemical testings to be done on different lots of fabrics supplied by the defendant, and if any lot was found to have passed the APEO test, garments samples would be produced out of those lots of fabrics and such samples would be re-submitted for APEO testing.   If they could pass the test, then bulk production would be proceeded with thereafter.

16.  In the meeting, the plaintiff further warned the defendant that if bulk production had to be put on hold by reason of the said quality problem of the defendant’s fabrics, and if as a result any extra costs on transportation were resulted, the defendant should be liable for the same.   The defendant should also be liable for all the re-testing charges.

17.  The discussion referred to above was put on record in an email which was sent by the plaintiff to the defendant on the same day. 

18.  Further APEO tests were then conducted accordingly.  On 19^th March 2009, it was confirmed that while the black fabric materials supplied by the defendant to the plaintiff passed the APEO test, the fabrics in off white and light purple colours failed the test.

19.  On 20^th March 2009, Ms Li and Mr. Lee had had another meeting at the plaintiff’s office.  In the light of the latest APEO test results (in fabrics form), it was agreed that all the off white and light purple fabric materials would be returned to the defendant as soon as possible for re-processing in Korea.  Mr. Lee agreed to re-deliver the re-processed fabric materials under the 1^st P.O. and the 2^nd P.O. to Hong Kong by the 1^st week of April 2009 and 30^th March 2009 respectively.  Mr. Lee further agreed to bear the additional APEO test charges.

20.  Ms Li also reiterated in the said meeting that in case the APEO issue led to “air penalty” (air freight charges which the plaintiff had to bear), a reduction of price or cancellation of order by H&M, the defendant should be held responsible.

21.  Ms Li also reminded Mr. Lee in the said meeting that even though the black fabric materials had passed the APEO test, the garments made out of those fabric materials had to be submitted to H&M for re-testing before H&M would accept them.  Further, Mr. Lee was also warned that H&M might not accept partial delivery (delivery of goods of single colour instead of three colours as ordered).

22.  The matters which were discussed and agreed in the said meeting had also been put on record in an email issued by Ms Li to Mr. Lee on the same day of the meeting.

23.  On around 24^th March 2009, Mr. Lee informed the plaintiff that the defendant’s fabric materials had failed the APEO test because they had not been washed sufficiently.

24.  The fabric materials which had failed the APEO test were sent back to the defendant for re-processing in Korea as agreed at the defendant’s costs. They were eventually re-delivered back to the plaintiff mainly in 2 lots.  For those which were ordered under the 1^st P.O., 10,234 metres of which were re-delivered to the plaintiff on 17^th April 2009.  In respect of those ordered under the 2^nd P.O., 4,287 metres of which were re-delivered on 2^nd April 2009.  The balance quantity was delivered in 3 further different lots on 28^th April 2009, 11^th May 2009 and 12^th May 2009 respectively.

25.  The plaintiff could not meet the original delivery dates as initially agreed between the plaintiff and H&M.  In order to deliver the finished garments to H&M as soon as possible, the plaintiff had delivered them to H&M by air.  Freight charges in the total sum of US$96,142.13 were incurred as a result.  The plaintiff had paid the said freight charges.  By this action, the plaintiff sought to recover the said amount of freight charges from the defendant.

26.  The matters referred to in the preceding paragraphs are either undisputed or should not be controversial because they are well supported by contemporaneous documents.

THE ISSUES

27.  The plaintiff’s solicitors and the defendant had filed an “Agreed Statement of Issues in Dispute” pursuant to this Court’s direction.  The followings were the issues identified in the said Statement:

(1)   Whether it was Crystal Martin (Zhong Shan) Limited or the plaintiff which entered into the contracts with the defendant for sale and purchase of fabrics;

(2)   If the plaintiff was the contracting party, whether the terms in the 2 purchase orders formed part of the contracts, or, in case the defendant delayed in delivering the fabrics under the contracts, whether the defendant is liable for the extra freight costs incurred by the plaintiff in delivering the garments made out of the fabrics to its customers;

(3)   If the defendant is liable for such extra freight costs under the contracts, whether the defendant’s delay was so significant that it caused the plaintiff’s delay in manufacturing and delivering its garments to its customers.  If so, what is the extent of the plaintiff’s delay which the defendant has caused;

(4)   Whether the amount of extra air freight charges is exorbitant and whether the plaintiff has mitigated its loss;

(5)   Which delivery method is the plaintiff’s original shipment method.

28.  I would not follow the said Statement as set out above.  In my view, the issues should be re-framed as follows:

(1)   Who were the contractual parties of the contracts;

(2)   What were the terms of the contracts;

(3)   What was the original means of delivery under the contracts between the plaintiff and H&M;

(4)   Whether the defendant should be liable to pay the air freight charges incurred.

29.  Although “mitigation of loss” was listed as one of the agreed issues, the defendant in fact had not included any ground in its Defence in support of its case that the plaintiff had failed to mitigate its loss.  “Mitigation of loss” was simply not mentioned at all in the Defence.  Having heard the parties’ submissions at the beginning of the trial, I had told the parties that “mitigation of loss” should not and would not be treated as an issue despite the parties’ previous agreement.

30.  I will now turn to the issues identified. 

The contractual parties

31.  The defendant alleged that the plaintiff was not the buyer which the defendant had done business with.  In his evidence, Mr. Lee stated that the defendant only had contractual relationship with “Crystal Martin (Zhong Shan)” (“CM(ZS)”).  He further said that:

(a)   It was Ms Sharly Chan who first approached him for the order of fabric materials by email on around 27^th November 2008.  At the end of that email, under her name, the following was printed:

“Crystal Martin (Zhong Shan)

Purchasing Dept.

0760-865122222-6087

ShunJing Industrial Area, Banfu Town, Zhongshan City, Guangdong Province, China”

(b)   The 1^st P.O. and the 2^nd P.O. were sent to him directly by CM(ZS) but not by the plaintiff.  Although he was aware that they were issued by the plaintiff (the plaintiff’s name was printed at the top of both documents), he suspected that the plaintiff was only issuing them on behalf of CM(ZS).  He did not clarify with the plaintiff or CM(ZS) as to who in fact the buyer was.

(c)   It was CM(ZS) which sent Mr. Lee the letter of credit application form for him to fill in.

(d)   While he knew that the letter of credit was issued by the plaintiff, he thought the plaintiff did that on behalf of CM(ZS). 

(e)   Before the quality issue arose, the plaintiff’s staff in Hong Kong had never had any contact with the defendant directly.

(f)   No one had ever explained the relationship between the plaintiff and CM(ZS) to him and he was only aware of the relationship between the plaintiff and CM(ZS) at the trial.

(g)   The defendant had entered into the present transactions because it was one of H&M’s designated suppliers of fabric materials.  The defendant was willing to supply fabric materials to any manufacturers who were going to manufacture garments for H&M, no matter who the manufacturers were.  It did not matter to the defendant whether it was the plaintiff or CM(ZS) which was placing the orders for fabric materials back in early 2009.  The defendant would have accepted the order anyway because the finished garments were going to be sold to H&M. Even if the plaintiff had made it clear to the defendant that it was the plaintiff instead of CM(ZS) which was the actual buyer (and hence the contractual party), the defendant would have accepted such orders.

32.  Ms Li of the Plaintiff told this Court that in fact there was no company which was known as CM(ZS) and that this name was only used in documents such as emails to distinguish the plaintiff’s factory and Purchase Department which were located in Shenzhen on one hand from the plaintiff’s main office in Hong Kong on the other hand.  The defendant had not produced any evidence to show that that was not the case.

33.  Mr. Lee said he had seen correspondence between solicitors in which the name of “Crystal Martin (Zhong Shan) Limited” was mentioned.  However, he could not produce any such correspondence.  He later changed his evidence and said that this name might have been mentioned in some emails, but again, no such emails were produced.

34.  In my judgment, it is quite clear on the facts that the plaintiff was a contractual party to the contracts.  Although the first point of contact was done via CM(ZS), the 1^st P.O. and the 2^nd P.O. were issued by the plaintiff to the defendant.

35.  In Shogun Finance Ltd v Hudson [2004] 1 AC 919, a rogue wanted to acquire a vehicle displayed by a car dealer.  He showed the said car dealer a driving licence in the name of a Mr. Patel.  The car dealer contacted the finance company claimant and, after the claimant had completed a satisfactory credit check of Mr. Patel, a financing agreement with the claimant was arranged under the name of Mr. Patel.  After the rogue had paid a deposit partly in cash and partly by cheque (which was subsequently dishonoured), the car dealer allowed the rogue to take the vehicle.  The defendant subsequently purchased the vehicle in good faith from the rogue.  In the legal proceedings, the claimant sought damages for conversion from the defendant who counterclaimed that he had acquired good title to the vehicle.  The trial judge allowed the claimant’s claim.  The defendant’s appeal to the England Court of Appeal failed.  The defendant then further appealed to the House of Lords.  It was held by the majority in the House of Lords that when the dealings were carried out in writing, the identification of the parties to the agreement is a question of the construction of the contract.  If an individual is unequivocally identified by the description in the writing, that precludes any finding that the party to the agreement is anyone other than the person so described.[1]  Lord Hobhouse had this to say in his speech:

“…The gist of the argument is that oral evidence may be adduced to contradict the agreement contained in a written document which is the only contract to which the finance company was a party. The agreement is a written agreement with Mr. Durlabh Patel. The argument seeks to contradict this and make it an agreement with the rogue. It is argued that other evidence is always admissible to show who the parties to an agreement are. Thus, if the contents of the document are, without more, insufficient unequivocally to identify the actual individual referred to or if the identification of the party is non-specific, evidence can be given to fill any gap…But…where the party is, as here, specifically identified in the document: oral or other extrinsic evidence is not admissible…” (at paragraph 49) (emphasis added)

36.  Given the fact that the 1^st P.O. and the 2^nd P.O. were clearly stated to be issued by the plaintiff, the defendant is not allowed to adduce evidence and show that it was in fact another company which was a party to the contracts.  Therefore, even if there was a company known as “Crystal Martin (Zhong Shan) Limited”, no evidence should be admissible to show that it, instead of the plaintiff, was the company which was doing business with the defendant.

37.  The defendant stated that it had issued Contract Notes upon its receipt of the 1^st P.O. and the 2^nd P.O., and “Crystal Martin (Zhong Shan)” instead of the plaintiff was named therein as the buyer of the defendant’s fabric materials, hence, CM(ZS) should be regarded as the buyer instead.

38.  While there is no dispute on the part of the plaintiff that these Contract Notes had indeed been issued by the defendant, it is evident (and admitted by Mr. Lee in his evidence) that the transactions were all along conducted according to the terms and particulars laid down in the 1^st P.O. and the 2^nd P.O. only.  In all the subsequent documents and correspondence[2] (and in particular, the letter of credit which Mr. Lee treated as an important document in the transactions), references were only made to the numbers of the 1^st P.O. and the 2^nd P.O..  The Contract Notes had never been referred to.  It is thus clear that only the 1^st P.O. and the 2^nd P.O. should be regarded as the written agreements between the parties.

39.  The conclusion that the defendant had entered into contracts with the plaintiff may also be arrived at by another route.

40.  While it was the plaintiff’s staff members in Zhong Shan who were in contact with the defendant at the material time (up to the time when the quality issue arose), it cannot be disputed that CM(ZS) was non-existent because it was not a company as such.  At all material times, no one had ever told Mr. Lee that CM(ZS) was a company.  Given the fact that CM(ZS) was a non-existent entity, the defendant simply could not have entered into any contract with it.  Giving full effect to what Mr. Lee said in Court, it might be said that he had made a mistake as to which actually was the party which placed orders with the defendant.  However, in law (which will be explained below), such a mistake would not absolve the defendant’s liability.

41.  In an earlier House of Lords case, Lake v Simmons [1927] A.C. 487, Viscount Haldane stated the followings in his speech:

“Jurists have laid down, as I think rightly, the test to be applied as to whether there is such a mistake as to the party as is fatal to there being any contract at all, or as to whether there is an intention to contract with a de facto physical individual, which constitutes a contract that may be induced by misrepresentation so as to be voidable but not void. It depends on a distinction to be looked for in what has really happened. Pothier (Traité des Obligations, section 19) lays down the principle thus, in a passage…:

Does error in regard to the person with whom I contract destroy the consent and annul the agreement? I think that this question ought to be decided by a distinction. Whenever the consideration of the person with whom I am willing to contract enters as an element into the contract which I am willing to make, error with regard to the person destroys my consent and consequently annuls the contract…On the contrary, when the consideration of the person with whom I thought I was contracting does not enter at all into the contract, and I should have been equally willing to make the contract with any person whatever as with him with whom I thought I was contracting, the contract ought to stand…” (at 501) (emphasis added)

42.  Applying the above principle, even on the assumption that Mr. Lee (and thus the defendant) had made a mistake as to the identity of the real buyer of the fabric materials, the contracts in question would not be annulled.  This is because Mr. Lee had admitted in his evidence that the defendant would have agreed to enter into the contracts with the plaintiff even if it was made clear to him at the very beginning that the buyer of the fabric materials was not CM(ZS) but the plaintiff.  According to Mr. Lee, the most important consideration to the defendant was that the buyer was manufacturing garments for H&M.  It did not matter which company was coming forward as the buyer of the defendant’s fabric materials.

43.  In the circumstances, it is my finding that the plaintiff was the buyer with which the defendant had entered into two contracts for the supply of fabric materials.

The terms of the contracts between the parties

44.  As aforesaid, Mr. Lee agreed that the subject transactions were conducted according to the 1^st P.O. and the 2^nd P.O..

45.  As a result, I have no hesitation in finding that the terms in the two purchase orders (but not those contained in the Contract Notes) are the terms of the transactions between the parties.

The original means of delivery

46.  It seems that this issue was included in the Agreed Statement of Issues because the defendant had pleaded that as the plaintiff was required to pay air freight charges anyway, such charges should be taken into consideration even if the defendant was liable to the plaintiff.

47.  However, this argument is not supported by the documents disclosed at all.  In the original orders placed by H&M with the plaintiff (Nos.283630, 283640 and 283660), the following provision could be found:

“Transport by sea, free carrier (H&M pay freight)”

48.  This gives full support to Ms Li’s evidence, and I so find, that the original means of delivery to H&M was by sea and that the plaintiff was not required to pay any freight charges if the garments ordered were manufactured on time.

Whether the defendant should be liable to pay the air freight charges incurred

49.  There is no dispute that some of the fabric materials supplied by the defendant could not pass the APEO test and as a result, they had to be sent back to the defendant for re-processing before they could be made use of by the plaintiff for manufacturing purpose.

50.  It is also not disputed (and also proved by various Revised Orders issued by H&M and invoices issued by the freight forwarders) that the plaintiff was subsequently directed by H&M to deliver part of the finished garments by air and the plaintiff had paid a total sum of US$96,142.13 as air freight charges. 

51.  The question is whether the defendant should be liable to reimburse the plaintiff for such an amount.

52.  Clause 2 under “Terms and Conditions” of the 1^st P.O. and the 2^nd P.O. provides:

“All confirmed delivery must be kept. Suppliers could be held responsible for airfreight charge shipping finished products to final buyer to catch up garment delivery if it is affected by late material delivery.”

53.  It was Ms Li’s evidence, which I accept, that due to the delay on the part of the defendant in delivering fabric materials which complied with the chemical restrictions imposed by H&M, the plaintiff had to incur air freight charges so as to make sure that the finished garments could be delivered to H&M in accordance with the revised delivery schedule.  I also accept her evidence that H&M did not accept partial delivery in the sense that the plaintiff could not deliver the garments in black colour first (the black fabric materials passed the APEO test and could be used for bulk manufacture without going through the re-processing procedure).

54.  As a result, I do not see why the defendant should not be held liable to reimburse the plaintiff for such air freight charges. 

55.  Mr. Lee complained that the defendant was not consulted before the plaintiff incurred the additional freight charges and he had never been informed about the details of the contracts entered into between the plaintiff and H&M.  I do not think these are conditions which have to be satisfied before the plaintiff is entitled to judgment herein.  The air freight charges were not payable by the plaintiff (and would not have been incurred at all) if the defendant had delivered fabric materials which could pass the APEO test according to the original time schedule.  The defendant, being the party in default, must have the responsibility to bear such charges which no doubt were within the reasonable contemplation of the parties at the time when the contracts were entered into[3] – It was Mr. Lee’s evidence that he was aware of the existence of Clause 2 quoted above when he received the purchase orders from the plaintiff, and there is no doubt that he had accepted these terms by conduct.

56.  Mr. Lee stated in his final submissions that the defendant should only be responsible for the “extra” freight charges, and he suspected that the sum of US$96,142.13 was actually the original freight charges which the plaintiff had to pay no matter whether the defendant’s fabric materials could pass the APEO test or not.  I find this argument totally groundless.  As aforesaid, it is evident that the plaintiff was not required to pay the shipment costs at all under the original arrangement.  Such costs were supposed to be borne wholly by H&M.  It was only because of the quality problem of the defendant’s fabric materials that the plaintiff was required to pay the air freight charges incurred.

57.  As a matter of fact, Mr. Lee admitted in his evidence that he had orally agreed during the 13^th March 2009 meeting that the defendant should be responsible for the air freight charges incurred by the plaintiff which was caused by the delay.  He must have done so because he knew that the defendant’s delay in delivering fabric materials which were up to the expected standard was to such an extent that the plaintiff could not deliver the finished garments to H&M in time.

58.  It was also submitted by Mr. Lee on behalf of the defendant that the APEO test should have been done earlier.  He said that the APEO test result was only communicated to him 47 days after the 1^st shipment of fabric materials to the plaintiff.  He stated that if the APEO test was done earlier (for example, as soon as the plaintiff had received the defendant’s fabric materials instead of only after the sample garments were produced), the plaintiff could still deliver the finished garments to H&M according to the original delivery dates even if the defendant’s fabric materials could not pass the APEO test because the defendant could have sent in the replacement fabrics much earlier.

59.  This line of argument was not pleaded in the Defence at all.  Bearing in mind the fact that the defendant’s Defence was drafted by solicitors which represented the defendant up to quite recently, I do not think the defendant should be allowed to rely on this argument.

60.  Having said that, for the sake of completeness, I should deal with this argument by mentioning three points here.  Firstly, according to Ms Li’s evidence, the APEO test could not be done immediately upon the plaintiff’s receipt of the defendant’s fabric materials.  Contrary to Mr. Lee’s suggestion, H&M only accepted the result of APEO tests which were done on the finished garments but not on the fabric materials alone.   The requirement of “APEO test in garment form” had been emphasized in the plaintiff’s emails to the defendant on 13^th March 2009 and 20^th March 2009.  The defendant had never raised any queries in this regard in the past.

61.  Secondly, Mr. Lee said he had complained about the plaintiff’s delay in having the APEO test done.  He said he might have lodged his complaint about this either orally or by email.  He subsequently said he would put everything which is important in email, and this complaint is an important matter.  Nevertheless, the defendant could not produce any email in support of its case that it had lodged a complaint with the plaintiff concerning the delay of the conduct of the APEO test.  I find as a fact that Mr. Lee had never made such a complaint to the plaintiff.  This assertion about making of complaint had never been mentioned in the past and was only raised for the first time at the trial.  I find that Mr. Lee knew all along that only the result of the APEO test in garment form was acceptable by H&M, and that is why he had never raised any queries despite his receipt of the plaintiff’s emails on 13^th March 2009 and 20^th March 2009.

62.  Thirdly, I do not think Mr. Lee is fair in saying that there was delay on the part of the plaintiff in having the APEO test done by reference only to the 1^st shipment date of the fabric materials.  One should not lose sight of the fact that in the 1^st shipment, only 11,967 metres (out of a total of 28,510 metres) of fabric materials were delivered by the defendant to the plaintiff.  Further deliveries were only made by the defendant on 5^th February 2009 (8,037 metres[4]) and 11^th March 2009 (8,506 metres).

63.  Mr. Lee further argued that the delay on the part of the defendant was not serious because the defendant had delivered the replacement fabric materials to the plaintiff under the 1^st P.O. and the 2^nd P.O. on 17^th April 2009 and 2^nd April 2009 respectively, in other words, there was only a slight delay of 13 days and 3 days respectively (the new agreed delivery dates were the 1^st week of April 2009 and 30^th March 2009 – see paragraph 19 above).  With respect, I do not think it is correct for Mr. Lee to say that there was only a delay of 13 days and 3 days respectively because he should not ignore the fact that these were new deadlines imposed by reason of the need to return the defendant’s defective fabric materials for re-processing.  When determining the extent of the delay, one should look at the delivery dates initially confirmed by the defendant, namely, 25^th January 2009 and 20^th February 2009 for the fabric materials under the 1^st P.O. and 28^th February 2009 for the 2^nd P.O. (see paragraphs 10 – 11 above).

64.  Mr. Lee also went so far as to suggest that the plaintiff had intentionally delayed the manufacturing process so as to make sure that the delivery date as agreed with H&M could not be met.  This argument cannot be accepted.  I cannot see why the plaintiff had to do something which not only was prejudicial to the interest of the defendant but also to its own interest.

65.  It was also pleaded by the defendant in the Defence that the amount of air freight charges in the sum of US$96,142.13 was exorbitant as the total contract price under the 1^st P.O. and the 2^nd P.O. was only US$112,614.50.  In my view, so long as it is proved that these extra charges were caused by the delay on the part of the defendant in delivering the fabric materials, the plaintiff should be entitled to look to the defendant so as to be put into the financial position it would have been in if the defendant had fulfilled its contractual obligations.[5]  The defendant had to bear these extra charges even if they were of a high amount.  There is no evidence (and it is not the defendant’s pleaded case[6]) that the plaintiff could have delivered the finished garments at a lower cost.

ORDER

66.  I give judgment in favour of the plaintiff against the defendant in the sum of US$96,142.13 with interest thereon at the rate of 1% above the prime rate as from time to time quoted by HSBC from the date of the writ to the date of judgment, and thereafter at judgment rate until full payment. 

67.  I also make an order nisi that the defendant shall pay the plaintiff’s costs of this action, including any costs reserved.  Such costs shall be taxed if not agreed.  For the avoidance of doubt, I certify the engagement of counsel.  In the absence of application to vary within 14 days, the costs order shall become absolute.