P.T. WEARWEL INTERNATIONAL v. COSMOPOLITAN MERCHANDISE (INTERNATIONAL) LTD.

1989 No. A4364

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is a sale of goods and agency case where the pleadings were by no means easy to follow; the pleaders appeared to lack a proper sense of direction and did not appear to appreciate that a documentary letter of credit was concerned with documents, not goods, and that in a documentary credit transaction, there was a number of contracts all distinct from the underlying contract or requests for particulars and the answers ran from p. 30 to p. 69 of the Pleadings Bundle, the prolixity of which far exceeded their usefulness or relevance; discovery was incomplete with material documents not having been disclosed; none of the witnesses called came anywhere near being rated high for credibility; and there was an appalling absence of any oral evidence on some real issues. Having said that, I must record my gratitude to both Counsel who appeared before me for rendering every assistance and making every effort to make the best out of what was before the Court.

2. The trial commenced on the 16th June, 1994 and was adjourned on the 22nd June, 1994 for reasons given in my Decision delivered on that date.

3. On the 10th August, 1994, I dismissed the Plaintiff's Action and I also dismissed the Defendant's Counterclaim. I indicated that reasons for my decision would be handed down on the 26th August, 1994. This I now do.

The parties

4. The Plaintiff was a company incorporated in Indonesia and carrying on the business of manufacturing garments.

5. The Defendant was a company incorporated in Hong Kong and carrying on the business of purchasing garments. On the Plaintiff's case, the Defendant purchased for re-sale to its customer in New York, Private Touches ("PT"). On the Defendant's case, the Defendant acted as agent for PT.

The Plaintiff's Claim (or Action)

6. By its Amended Statement of Claim ("the Statement of Claim"), the Plaintiff sued the Defendant for breach of 2 contracts.

7. The 1st Contract dated the 26th March, 1987 was numbered 3641 ("the 1st Contract") and was for 4,950 dozens of "Ladies' 100% flannel printed night shirt. (Cat. 351) 336" at US$49.50/doz. The 1st Contract had been crossed out in the middle and marked "Cancelled. June 1, 1987". The 2nd Contract dated the 26th March, 1987 was numbered 3642 ("the 2nd Contract") and was for 2,900 dozens of "Ladies' 100% flannel printed night shirt. (Cat. 351)" at US$47.00/doz. The 2nd Contract had been crossed out in the middle and marked "Cancelled". There were 2 revised Contracts both dated the 29th May, 1987. The 1st Revised Contract numbered 3641 (1st revised) ("the 1st Revised Contract") was for 3,750 dozens of 'Ladies' 100% flannel printed duster 43"' at US$49.50/doz. The 2nd Revised Contract numbered 3642 (1st revised) ("the 2nd Revised Contract") was for 4,200 dozens of "Ladies' 100% flannel printed night shirt 35". (Cat. 351)" at US$47.00/doz.

8. By Paragraph 14 of its Statement of Claim, the Plaintiff alleged that "Between the 19th August and 9th September, 1987, at the request and with the agreement of the Defendant the Plaintiff airfreighted a total of 2,832 dozens of the goods contracted under the second revised contract, as varied pursuant to paragraph 12 above, to the Defendant's customer Private Touches in New York. The said goods were received and cleared by Private Touches ..."

9. Paragraph 15 of the Statement of Claim went on to allege that "Between 16th September and 30th September 1987 the Plaintiff shipped a total of 3,446 dozens of goods contracted under the first revised contract to the Defendant's customer Private Touches in New York. The Defendant wrongfully failed and/or refused to take delivery of the same in breach of its contractual obligations".

10. Paragraph 16 alleged that "Despite repeated requests by the Plaintiff, the Defendant has failed and/or refused to pay the Plaintiff for the goods delivered under the said two contracts and thereby causing loss and damage to the Plaintiff". Under the Particulars, the Plaintiff claimed to have suffered a loss of US$71,946.72 under the 1st Revised Contract, and US$46,116.98 under the 2nd Revised Contract". The Plaintiff claimed these sums, alternatively, damages for breach of contract, with interest and costs.

11. Thus, on the Plaintiff's pleaded case, the 2 Revised Contracts were the contracts which the Plaintiff was suing the Defendant for breach.

12. By its Re-Amended Defence and Counterclaim ("the Defence and Counterclaim"), the Defendant denied liability, inter alia, on the ground that the Defendant was acting as agent for and on behalf of PT, and that the Defendant expressly or impliedly excluded its personal liability (if any, which was denied) to the Plaintiff.

Witnesses called by the Plaintiff

13. The Plaintiff called 2 witnesses, Mr. Prem Buxani ("PB") and Mr. Shyam Lal Uttam ("SU"), both being former employees of the Plaintiff. Neither witness' evidence was of any much value on the real issues, such as the question of who was the buyer from the Plaintiff. Nor was I impressed by either of them.

Witnesses called by the Defendant

14. The Defendant also called 2 witnesses, Mr. Louis Pollicastri ("LP") of PT and Mr. John Yen ("JY") of the Defendant. LP positively impressed me as a wholly unreliable witness, and LY did not impress me as a witness of truth, though not as bad as LP. The worst aspect of their evidence was what each had respectively said when cross-examined about p. 663 of the Bundle which was disclosed by the Defendant as a communication received from PT. It purported to be a hand-written fax by LP to JY and it read:-

"Attn: John
Do not pay P.T. Wearwell [i.e. the Plaintiff]
Do not O.K. documents.
We have a curious problem.
Thanks
Louis
Call Me!"

I should add that Mr. Yen said that it was not "curious", but "serious". Whether the note read "curious" or "serious" was not in my judgment material. LP said it was neither written nor signed by him. JY said he did not know who wrote it but he did not think it was signed by LP. I do not wish to burden this Judgment by setting out further extracts from what they said.

The agency point

15. According to Paragraph 3 of the Statement of SU, Miss Yunnie Tan, then Marketing Director or Manager of the Plaintiff, visited LP of PT in the United States towards the end of 1986 and early 1987, and "secured an order for 4,950 dozens Night Shirts under Cat. 351 at US$46.00 per dozen."

16. The Bundle started with a fax dated the 5th February, 1987 from the Defendant to the Plaintiff asking for a copy of the notes taken by Miss Tan of her discussion with LP The "notes" had not been disclosed. Nor had the telex dated the 15th January, 1987 referred to in the fax been disclosed by either party. Miss Tan had not been called.

17. Miss Tan signed a Sales Confirmation No. 058/II/87 dated the 18th February, 1987, made out to PT as "buyer" confirming sale of 4,950 dozens of Ladies Night Shirt Cat. 351 at US$46.00/doz. The Sales Confirmation was sent to PT and on the face of the document copied to the Defendant.

18. I rejected the case of the Defendant that PT had signed and returned the Sales Confirmation: If the Plaintiff and PT had reached a binding contract in terms of the Sales Confirmation, there would have been no reason for PT to agree shortly after the date of the Sales Confirmation to the increase in price from US$46.00 per dozen to US$49.50 per dozen.

19. The significance of the Sales Confirmation did not lie in its having been accepted by PT, but in its evidencing that the Plaintiff, the Defendant and PT dealt with each other at the time of the signing thereof by the Plaintiff on the footing that the Plaintiff was selling to PT, not to the Defendant. In the absence of any evidence from the Plaintiff as to why it was copied to the Defendant, I drew the inference that it was copied to the Defendant because the Defendant was known by the Plaintiff to be the agent of PT.

20. On the 21st February, 1987 the Defendant caused the Hongkong Bank to issue a letter of credit in favour of the Plaintiff for US$129,937.50. I did not regard the fact that the Defendant caused the Hongkong Bank to issue this letter of credit, though a factor to be considered, as of any real assistance to the Plaintiff in the circumstances of this case in its contention that the Defendant was the buyer. There was no requirement in law and no evidence on any factual contractual requirement that payment must be effected by the buyer personally. A buyer could request, instruct or cause an agent to effect payment. When a seller agreed to payment by letter of credit, the seller was really looking to the issuing bank, not the applicant, for payment. The Plaintiff relied on the fact that the Defendant caused this letter of credit to be issued to contend that the Defendant was the buyer. Such contention must fail in the light of the evidence of BP.

21. In his evidence in chief on the 7th June, 1994, PB said that he became involved around March, 1987 when LP and JY came and negotiated with Miss Tan and him, and that they all understood that the Defendant was acting as an agent of PT.

22. Against such background, it was significant that the Plaintiff adduced no evidence on why or how it would and did in fact agree to change the identity of the buyer from PT to the Defendant and why or how the Defendant would and did in fact agree to assume personal liability as buyer in place of its principal, PT.

23. The 2 Contracts dated the 26th March, 1987 were both on the Defendant's standard forms. The Defendant appeared on the face of the documents to be the buyer, except possibly when one came to the printed words for the signature on behalf of the Defendant. They were signed by the Defendant as follows :-

"COSMOPOLITAN MERCHANDISE (INTERNATIONAL) LTD.
	[signature]
	ON BEHALF OF"

24. If the phrase "on behalf of" was intended to indicate that the person signing was signing on behalf of the Defendant, the phrase should not have been printed below the dotted lines. If the phrase was intended to indicate that the Defendant was signing on behalf of its principal, then the name of the principal should have been inserted underneath the phrase.

25. But, in March, 1987, as BP said they all understood that the Defendant was acting as agent of PT. Moreover, the Plaintiff was not suing on the 2 Contracts. The 2 Contracts had been crossed out and marked "Cancelled". The Plaintiff was suing on the 2 Revised Contracts.

26. Before the 2 Revised Contracts were signed by the Plaintiff and the Defendant, the Plaintiff signed a "Trust Receipt" dated the 22nd April, 1987 in these terms :-

"PRIVATE TOUCHES
[ADDRESS] AGENT:	COSMOPOLITAN MERCHANDISE (INTERNATIONAL) LTD. [ADDRESS] TRUST RECEIPT

In consideration of PRIVATE TOUCHES placing their order for the supply and delivery of wearing apparel with P.T. WEARWEL INTERNATIONAL according to design, style and quantity as per PRIVATE TOUCH ORDER/COSMOPOLITAN CONTRACT No.: 3641, 3642 dt: March 26, 1987.

P.T. WEARWEL has requested COSMOPOLITAN to supply the required quantity of fabric in order that PRIVATE TOUCH order/s (as described above) can be fulfilled.

P.T. WEARWEL acknowledge and confirm that the said fabric will not be sold, pledged, mortgaged to any third party.

P.T. WEARWEL also fully indemnify PRIVATE TOUCH/COSMOPOLITAN against all consequences, losses, damages that may occur during the processing of the fabric into garments ..."

27. It was clear from the "Trust Receipt" that by about the 22nd April, 1987, the Plaintiff was still regarding PT as its buyer and the Defendant as the agent of PT, and that the "order" was placed by PT, the details of which "order" appeared in the 2 Contracts. I turn now to the 2 Revised Contracts which were signed by the Defendant as follows:-

	For and on behalf of
"COSMOPOLITAN MERCHANDISE (INTERNATIONAL) LTD.
	[signature] PRIVATE TOUCHESLTD.
	ON BEHALF OF"

28. The words "For and on behalf of" were type-written. The words "PRIVATE TOUCHES LTD." were hand-written. The rest (apart from the signature) was printed. Had the hand-written words "PRIVATE TOUCHES LTD." been written immediately below "ON BEHALF OF", or had "For and on behalf of" been typed between the printed name of the Defendant and the hand- written name of PT, the case of the Defendant would have been open and shut.

29. It was not surprising that neither Counsel was able to draw my attention to any case which is directly on the point. I was referred to Gadd v Houghton, (1876) 1 Ex. D. 357, where:

(a) Mellish L.J. said at p. 360 that:
"I can see no difference between a man writing 'I, A.B., as agent for C.D., have sold to you', and signing 慉 .B.;' and his writing, 'I have sold to you' and signing 'A.B. for C.D. the seller.' When the signature comes at the end you apply it to everything which occurs throughout the contract."

(b) Quain J. said at pp. 360 - 361 that:
"It is said that in order to relieve the agent from liability, he must sign 'as agent' or 'on account of Morand & Co. I cannot see the necessity for adding those words to the signature if you can gather from the contract that he makes it on account of Morand & Co. Those words at the end of the signature would add nothing to what has been stated in the body of the contract. The agent, therefore, does not render himself personally liable by not adding them."

(c) Archibald, J. said at p.361 that:
"The usual way in which an agent contracts so as not to render himself personally liable is by signing as agent. That, however, is not the only way, because, if it is clear from the body of the contract that he contracted only as agent, he would save his liability."

30. I regarded H. O. Brandt & Co. v H. N. Morris & Co. Limited [1917] 2 K.B. 784 as a case on the construction of the contract in that particular case and thus of no assistance to me. In any event, I was not bound by that decision, and with respect, I did not see how Scrutton L.J. could seek to distinguish Gadd v Houghton on the ground that "in the present case there is no such statement or qualification in the body of the document" (at p. 797, emphasis added), when the judges in Gadd v Houghton were at pains to point out that it did not matter whether the qualification appeared in the body of the document or the qualification was of the signature.

31. If H. O. Brandt & Co. v H. N. morris & Co. Limited purported to decide any principle of construction of the phrase "for and on behalf of" beyond the facts of that case, I, with respect, disagree.

32. As Bokhary J. (as he then was) said in Castlespring Enterprises Limited v Core Resource (HK) Limited, H.C. Action No. A4876 of 1987, 9th May, 1989, unreported, at p. 3

"The formula 'for and on behalf of is a well-known one for indicating agency."

and at p. 4

"The formula 'for and on behalf of is very telling (even bearing in mind that, as Mr. Rund frankly told the court, the Defendant has used purchase order forms containing those words even on the rare occasions when it was buying on its own account)".

33. In Toymax (H.K.) Limited v Redsmith International Limited, H.C. Action No. A4178 of 1992, 25th May 1994, unreported, at p. 8, Rhind J. had this to say about the formula "for and on behalf of" and "As agents for overseas buyers":-

"As put by Bokhary J. (as he then was) in Castlespring Enterprises Limited v Core Resource (H.K.) Limited (1987 No. A4876, unreported), a sale of goods and agency case, 'The formula "for and on behalf of" is very telling'. Likewise, 'As agents for overseas buyers', is very telling, too."

34. The Defendant inserted the formula "For and on behalf of" by typing it onto both Revised Contracts. It was a well-known formula for indicating agency. The Defendant further inserted the name of PT. In my judgment, I found that it was more probable than not that the phrase "For and on behalf of" and the name of PT were inserted in both Revised Contracts to indicate what the Plaintiff knew from beginning to end, i.e. the Defendant was acting as agent for PT. In my judgment, the 2 Revised Contracts should be construed as being signed by the Defendant as agent for PT so as to give effect to the insertion of the well-known formula and the addition of the name of PT.

35. For the reasons which I have given above, I found in favour of the Defendant on the agency point. As such finding was fatal to the Plaintiff's Claim, it was unnecessary for me to deal with the other defences raised by the Defendant which I otherwise would have to do so, on the basis of incomplete discovery, scarce evidence on what happened (such as why the Plaintiff had appeared to use the previous year's quota and why there were shipping documents dated June, 1987 when the Plaintiff's case was that the first shipment was made in August, 1987) and what had been agreed, and massive evidence on discussions, negotiations and arguments which led to nowhere. I dismissed the Plaintiff's claim against the Defendant.

The Defendant's Counterclaim

36. I turn now to the Counterclaim. Mr. Houghton had the unenviable task of trying to explain to me what precisely the pleader (not Mr. Houghton) was claiming in the Counterclaim.

37. When Mr. Houghton opened his case for the defence, he told me that the Defendant's net counterclaim was in Paragraph 15 of the Counterclaim and Prayer 1A was what the Defendant was seeking.

38. In the course of his final submission, Mr. Houghton submitted that if I should find in favour of the Defendant on the agency point, then the Defendant's counterclaim was in Paragraph 14 of the Counterclaim, leaving out the claim for 7% commission.

39. By Paragraph 18 of the Counterclaim, the Defendant :-

"counterclaims for damages and loss of profit suffered by the Defendant under Paragraphs 13, 14, and 15 hereinabove."

40. Paragraph 13 had 11 sub-paragraphs, none of which alleged any loss or damage on the part of the Defendant.

41. What Paragraph 15 pleaded was a set-off subject to the agency point, not loss and damage. It averred that:-

"Without prejudice to the matters pleaded in paragraph 8(2) above [the agency point], the Defendant will give credit to the Plaintiff for the amount claimed under the 2nd revised contract. The total calculations under both contracts is as follows ... Net amount due to the Defendant: US$66,548.19."

42. The Defendant was thus left with only Paragraph 14 which I quote :-

"As a result of the Plaintiff's breaches under the 1st revised contract and as pleaded hereinabove and without prejudice to the matters pleaded in paragraph 8(2) above, the Defendant has suffered loss and damages in respect of (sic) on the following:-

(i) loss of fabric cost paid by the Defendant in the amount of US$90,726.23;

(ii) 7% commission on F.O.B. value of the goods in the amount of US$11,940.39;

(iii) Fabric commission of US$7,904.05;

(iv) logo charge under D/N No. 3925 of US$2,069.00;

(v) courier charge under D/N No. 3823 of US$25.45."

43. As I had found in favour of the Defendant on the agency point, it followed that the Defendant's counterclaim for breach of the 1st Revised Contract must necessarily fail. However, Mr. Houghton submitted that that was not the end of the matter and he relied on the words "and as pleaded hereinabove" and the allegation in Paragraph 13 h. and hi. of breaches of the Indemnity Agreement. I assumed, without deciding, that the Defendant was also complaining of "breaches ... as pleaded hereinabove".

44. The Counterclaim pleaded the following as material provisions of the Indemnity Agreement dated the 18th May, 1987 made between the Plaintiff (referred to as "the Manufacturer") and the Defendant (referred to as "the Company"):-

"2. The Manufacturer declares that:

(a) the property to all the piece goods and sundries (the material) shipped to the Manufacturer by the Company as evidenced by the Company's shipping paper which is to be conclusive shall remain in the Company.

(b) notwithstanding that payment of production costs have not been made by the Company, the title to the finished garments made from the material rests in the Company.

...

(e) the Manufacturer shall indemnify the Company for any loss or damage to the material subsequent to delivery to the Manufacturer and arising from the neglect or default of the Manufacturer."

"5. ... the Manufacturer undertakes to indemnify the Company from any claims resulting in late delivery due to default of the Manufacturer.

6. ...

(b) The Manufacturer shall indemnify the Company fully and effectually for any rejected finished garments due to bad workmanship or otherwise."

9. ...

(b) Upon termination of this Agreement for whatever reason:

(i) The Manufacturer shall forthwith deliver up to the Company all the material supplied to it by the Company.

(ii) The Manufacturer shall deliver to the Company at 180 Madison Avenue, New York, N. Y. 10016, U.S.A. all the finished garments then in its possession."

45. Clause 9(a) (i) was in my judgment material and I will set it out below:-

"9. (a) Either party shall have the right at any time during the continuance of this Agreement by giving notice in writing to the other to terminate this Agreement forthwith in any of the following events:

(i) If the other commits a breach of any of the terms and conditions of this Agreement and where such breach is capable of remedy shall neglect or otherwise fail to remedy such breach within 30 days of being required in writing to do so by the other party."

46. I had read the pleaded provisions and the whole of the Indemnity Agreement carefully more than once. The Indemnity Agreement contained no agreement by the Plaintiff to pay, and conferred no right upon the Defendant to be paid, any fabric cost, the 7% commission which was a commission which PT agreed to pay to the Defendant (Mr. Houghton had conceded this item), any fabric commission, any logo charge, or any courier charge. I did not see how any of the items counterclaimed under Paragraph 14 could be said to have arisen from any alleged breach of the Indemnity Agreement. At least the 7% commission and the logo and courier charges must fail.

47. The fabric commission was the US$0.07 per yard commission. Paragraph 5 of the Statement of Claim alleged that the Defendant would arrange for the opening of a documentary letter of credit directly in favour of the Plaintiff's fabric supplier in Taiwan, and arrange to open a separate documentary letter of credit in favour of the Plaintiff on a cut, manufacture, trim and quota basis, and Paragraph 6 of the Statement of Claim alleged that it was "in pursuance to this arrangement" that it was further agreed that the Plaintiff would pay to the Defendant US$0.07 per yard. Paragraph 6 of the Defence admitted Paragraph 6 of the Statement of Claim, subject to the denial that the fabric commission was in pursuance to the agreement referred to in Paragraph 5 of the Statement of Claim. Neither in Paragraph 6 of the Defence nor anywhere in the Defence and Counterclaim was it pleaded how or when the agreement to pay fabric commission was made or the consideration therefor. This was a further reason why the Defendant's Counterclaim for fabric commission must fail.

48. For the same reasons I have given in respect of the fabric commission, the Defendant's Counterclaim for 3% commission on the FOB price under the 2nd Revised Contract, if pursued, would also have failed.

49. In respect of the counterclaim for fabric costs, Mr. Houghton relied on Paragraph 13 h. and hi. of the Defence which averred that:-

"h. Further or alternatively, by reason of the matters aforesaid, the Defendant avers that the Plaintiff was and is in breach of the Indemnity Agreement dated the 18th May 1987 between the Plaintiff and the Defendant pleaded in Paragraph 3(d) above in that:-

(i) the title . to the Defendant's goods and materials in the finished garments, rests at all times with the Defendant notwithstanding that payment of the production costs may not have been made by the Defendant, and/or

(ii) Upon termination of the Indemnity Agreement, the Plaintiff failed and/or refused to forthwith deliver up to the Defendant all the finished garments, and materials supplied by the Defendant.

hi. Further or in the further alternative, the Defendant avers that the Plaintiff has by: (1) recalling the goods as aforesaid, and/or (2) wrongfully taking and/or retaining the same in denial of the Defendant's title to the goods as aforesaid, converted the 1st contract goods to its own use."

50. To start with, there was no allegation and certainly no evidence that the Indemnity Agreement had been terminated.

51. Secondly, there was no evidence that the Plaintiff ever recalled the goods or the "furnished garments". The goods had been in the custody and control of US Customs authorities for months. I was not prepared to assume that those authorities would have agreed to the release of the goods on production of the documents of title without being paid any lawful charges which might include storage charges. While the Plaintiff clearly had had the documents of title returned to it or its bank, I was not satisfied that the Plaintiff had recalled the goods.

52. The documents of title had been tendered to the Hongkong Bank for payment under the letter of credit. The Hongkong Bank rejected the documents on the ground of discrepancies. Only 3 of the rejections had been disclosed. They all stated that the documents were held by Hongkong Bank at the disposal of the correspondent bank, i.e. the Plaintiff's bank, pending acceptance of discrepancies by the Defendant. The Defendant did not in the event accept the discrepancies. Thus, the Defendant rejected the documents of title. In the circumstances, I did not see how return of the documents to the Plaintiff or the Plaintiff's bank could amount to conversion of the goods by the Plaintiff. The Plaintiff might or might not be in breach of the underlying contract resulting in the Defendant's rejection of the documents of titles, but the underlying contract was made by the Plaintiff with PT, not the Defendant.

53. Clause 9 was in my judgment another fatal objection to the Defendant's counterclaim for conversion or for fabric costs. Any breach by the Plaintiff only gave the Defendant the right to terminate the Indemnity Agreement. It was when and only when the Indemnity Agreement had been terminated that the Defendant's entitlement to the delivery (or to sue for conversion) of the fabric (or "material") and goods (or "finished garments") accrued, not before. No termination had been alleged or proved.

For these reasons, I dismissed the Defendant's Counterclaim.

Reasons for rejecting application for leave to further amend the Statement of Claim At about 12:20 p.m. on the 1st August, 1994, Mr. Ramanathan applied for leave to further amend the Statement of Claim in terms which he read out to me. After hearing both Counsel, Mr. Ramanathan was asked to come up with a typed draft, with necessary particulars after the luncheon adjournment. After the luncheon adjournment, Mr. Ramanathan came up with a manuscript draft (pp. 70 - 71 of the Pleadings Bundle). When the hearing resumed on the 2nd August, 1994, Mr. Ramanathan handed up a new and type-written draft (pp. 72 - 74 of the Pleadings Bundle), and in the course of his submission, asked for leave to amend the Prayer by inserting the following claims:-

"3A. Further or alternatively, the sum of US$111,125.72 as pleaded in Paragraph 15A above.

3B. Further or alternatively, damages for breach of agreement as pleaded in Paragraph 15A above."

There was no claim for misrepresentation. I heard Counsel for both parties. At about 2:30 p.m. I refused the Plaintiff's application for leave to further amend the prayer and the Statement of Claim as per pp. 72 - 72 of the Pleadings Bundle. I told the parties that unless they had cause for requesting my reasons earlier, reasons for my decision would be given in my Judgment after trial. Neither party disagreed with my proposed course. I reserved the question of costs. I now give my reasons.

54. Paragraph 15A at pp. 72 - 74 of the Pleadings Bundle alleged an agreement and breach thereof in these terms:-

"15A Further or alternatively, the Defendant agreed to effect the necessary amendments to the documentary letter of credit opened on 21st February 1987 in order to enable the Plaintiff to obtain payment for the said shipments particularised in paragraphs 14 and 15 herein. In breach of the said agreement the Defendant failed to effect the necessary amendments thereby

depriving the Plaintiff of the right to obtain payment under the said documentary letter of credit.

PARTICULARS

...

(d) In the course of the manufacture and production of the contracted goods between July-September 1987 the Defendant acting through a Mr. Sherman on its behalf, gave instructions to further vary the quantities of particular body and pattern numbers of the goods to be manufactured. The Plaintiff accordingly manufactured the goods in the quantities as varied by Sherman on the basis that the Defendant would accept documents presented for payment by the Plaintiff based on such variations

...

(f) The Plaintiff avers that over the period from mid-July to end October 1987, the Defendant through its Mr. John Yen/Sherman represented to the Plaintiff that if it continued manufacturing the contracted goods in accordance with such variation instructions as given by the Defendant and presented documents for payment under the said documentary letter of credit accordingly, the Defendant would accept the same. Replying upon the said representation(s) the Plaintiff manufactured and shipped the contracted goods and presented documents for payment accordingly.

..."

Paragraph 16 went on the allege that:-

"Despite repeated requests by the Plaintiff, the Defendant has failed and/or refused to effect the said amendments and/or to accept the documents as presented and/or refused to pay for the goods delivered under the said two contracts, and thereby causing loss and damage to the Plaintiff.

PARTICULARS

The Plaintiff repeats the Particulars as set out in the Amended Answer 1 (a) to (d) to the Request for Further and Better Particulars of paragraph 15 of the Statement of Claim filed on 13th November 1993."

55. The Plaintiff made no application to amend Paragraph 13 of the Amended Reply ("the Reply") which alleged an agreement made on the 8th December, 1987 in these terms:-

"... It is averred that the discussions culminated in an agreement on 8th December 1987 whereby under the terms of the aforesaid agreements, the Defendant was to pay to the Plaintiff the outstanding sums payable under the 1st and 2nd revised contracts within 2 weeks of receipt of the documents under quota category 350 by the Defendant's bankers. Despite receiving the revised quota and the full set of documents on or about 19th December 1987 the Defendant failed and/or refused to pay the Plaintiff in breach of the aforesaid agreement."

56. If the Plaintiff was suing on the agreement pleaded in Paragraph 13 of the Reply, then such agreement should have been pleaded in the Statement of Claim. Be that as it may, given the agreement pleaded in Paragraph 13 of the Reply, I did not see how the Plaintiff could complain about any breach of the agreement or representations alleged in the proposed amendments. On the Plaintiff's pleaded case in Paragraph 13 of the Reply, the agreement made on the 8th December, 1987 was an agreement reached after disputes had arisen from earlier agreements and representations. For this reason, I declined to give the Plaintiff leave to amend.

57. In any event, Mr. Houghton told me that Mr. Sherman had left the Defendant in early 1989 and had not been in touch with the Defendant since about that time, and that his whereabouts were not known to the Defendant. It was a late application for leave to amend. The events happened more than 7 years ago. I was not persuaded why I should exercise my discretion to further adjourn the hearing to enable the Defendant to make enquiries to see if Mr. Sherman could be located. I proceeded on the basis that on the materials before me, the Defendant was prejudiced in that it was unable to deal with the allegation of representations made by Mr. Sherman. This was a further reason why I declined to give the Plaintiff leave to amend.

58. Other subsidiary reasons which I took into consideration were that it was a late application pleading a new cause of action; that sub-paragraph (f) while purporting to be Particulars of an alleged agreement to amend the letter of credit in fact pleaded representations which if made and relied on were said to be reasons why the letter of credit required no amendment; that in sub-paragraph (d), there was no allegation of any representation or reliance, but the Plaintiff went on to allege that the Plaintiff proceeded "on the basis that the Defendant would accept documents presented for payment by the Plaintiff based on such variations", as purported Particulars of an agreement to amend the letter of credit; that any representation alleged in sub-paragraph (f) but made after the last tender of documents for payment under the letter of credit in September, 1987 was irrelevant in any event; and that there was no particulars as to how precisely the letter of credit should have been amended and no particulars of the representations, allegedly made over a period of months.

Costs order

59. On the 10th August, 1994, after I had dismissed the Plaintiff's Action and the Defendant's Counterclaim, I heard Counsel on costs. Mr. Houghton asked that cost of the Claim be to the Defendant, costs of the Counterclaim be to the Plaintiff, that there be no order as to costs for the 20th June, 1994, and that costs of the Plaintiff's application for leave to amend be to the Defendant. Mr. Ramanathan did not oppose Mr. Houghton's suggestion that there be no order as to costs for the 20th June, 1994, and submitted that I should make no order as to costs. After hearing Mr. Ramanathan, and after having written out the following in my notes, I said that:-

"In the course of arguments for security for costs, Mr. Houghton contended that the Counterclaim was a set-of arising out of the same facts put forward as a defence to the Plaintiff's Claim and Mr. Ramanathan had not sought to contend otherwise. I was satisfied that the Counterclaim operated as a defence and no discount needed to be made to the sum which I intended to order as security. Having heard Counsel on costs, I order that each party pays its own costs, including all costs reserved, save and except that the costs of the application for leave to amend the Statement of Claim made when the Court resumed in August be taxed and paid by the Plaintiff to the Defendant."

60. After I had announced my decision on costs, Mr. Houghton told me that he had stood up seeking to address me further on the question of costs but I did not see him because I was writing out my decision. I asked him if I had jurisdiction to re-open my decision on costs, and Mr. Houghton contended that I had. Mr. Ramanathan contended that I did not have jurisdiction. Neither was able to produce any authority there and then. As it was 5:20 p.m., I said I would direct that my Order was not to be drawn up, sealed or perfected before the 26th August, 1994, and that if Mr. Houghton could find any authority by that time, he could address me on the 26th August, 1994. Solicitors for the Defendant had since written in indicating that the Defendant wished to make further submission on costs and that Mr. Houghton would not be available on the 26th August, 1994, a date fixed by me for handing down Judgment without consultation with Counsel's diary. Solicitors for the Plaintiff took exception to their writing in without prior notice. Solicitors for the Defendant further indicated that they intended to take out a formal application on the date of but after handing down of my Judgment. In the circumstances, in order to preserve the position, I direct that upon the Defendant taking out a formal application on the 26th August, 1994 to be heard in open Court in the week beginning on the 12th September, 1994 (so far as practicable), the Order on costs which I made on the 10th August, 1994 should not be drawn up, sealed or perfected until after disposal of such application.