GHIM LI GLOBAL INTERNATIONAL LTD v. WAH HUNG INTERNATIONAL (CHINA HONG KONG) TRANSPORTATION LTD

DCCJ 2257/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2257 OF 2009

(TRANSFERRED FROM HIGH COURT ACTION NO. 2476 OF 2006)

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BETWEEN

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JUDGMENT

1.  The Plaintiff Ghim Li Global International Limited (“Ghim Li”) is a limited company incorporated in Hong Kong carrying on the business of marketing garment export. The Defendant Wah Hung International (China Hong Kong) Transportation Limited (“Wah Hung”) is a limited company incorporated in Hong Kong carrying on the business of warehousing, transportation and container consolidation.

2.  In or about 2003, Ghim Li began to engage the services of Wah Hung for transportation and container consolidation. In April 2006, Ghim Li started to use Wah Hung’s warehouse for storage of goods pending transfer. On 10 May 2006, Ghim Li and Wah Hung signed a written agreement in Chinese whereby Wah Hung agreed to store Ghim Li’s goods in its warehouse and to consolidate its goods into containers for delivery on instructions from Ghim Li (“the agreement”).

The Plaintiff’s Case

3.  Ghim Li claimed that on or about 19 October 2006, Ghim Li requested Wah Hung to deliver heat transfer labels (PO no. 1090) to its factory in China (“the said goods”). Ghim Li claimed Wah Hung had wrongfully delivered the said goods to Ghim Li’s factory in Cambodia instead. Upon discovery of the wrong delivery on or about 20 October 2006, Ghim Li re-ordered and forwarded the re-ordered labels to its factory in China, as a result, extra charges were incurred.

4.  On about 3 November 2006, Ghim Li informed Wah Hung by email on the wrongful delivery of the heat transfer labels under PO 1090 and requested for re-imbursement of US$22,000 by deducting the amount from Wah Hung’s service charges. In response to Ghim Li’s email, Wah Hung demanded payment for all outstanding services and warehouse charges for the months of May, July, August and Setptember 2006. At the same time, Wah Hung stopped its services and refused to release, transfer and deliver Ghim Li’s goods unless Ghim Li settled all outstanding warehouse charges within 5 days. Ghim Li alleged that prior to 3 November 2006, Wah Hung had failed to supply Ghim Li with any invoices or documents in support of the alleged outstanding warehouse charges in respect of May, July, August and September 2006.

5.  Between 3 and 6 November 2006, Ghim Li attempted to obtain possession of all its goods stored at Wah Hung’s warehouse without success. On 7 November 2006, Mr. Ricky Au of Wah Hung, informed Ghim Li that unless Ghim Li agreed to make full settlement of the outstanding warehouse charges without further clarification, verification and adjustment arising from Wah Hung’s invoices, Wah Hung would not release Ghim Li’s goods. Ghim Li agreed to pay the outstanding warehouse charges it claimed to be in dispute, but refused to waive its right to make clarification and adjustment of Wah Hung’s charges after the goods were released. This was rejected by Wah Hung. As a result, Ghim Li applied to the Court of First Instance on 11 November 2006 for an ex parte injunction order to have the goods released on full payment into court the alleged outstanding warehouse charges in the sum of HK$315,698.40 claimed by Wah Hung on 7 November 2006.

6.  An injunction order was granted by Mrs. Justice Bokhary on 11 November 2006. It was not until a specific delivery order was made by the Court that Wah Hung eventually released the goods on 15 November 2006.

7.  Ghim Li claimed that due to the 12 days delay before all its goods were retrieved from Wah Hung, it had to deliver some of its goods by air freight and reschedule the containers to accommodate part of the goods and further pay its customers’ workers overtime in order to catch up with the delay in production. Furthermore, it had to obtain an extension of time from its customers in the United States of America.

8.  Ghim Li claimed that Wah Hung’s detention of its goods requiring it to waive its right of verification and adjustment was oppressive, and it was premature to demand for payment of the entire sum of $315,698.40. Ghim Li further claimed that the detention of goods by Wah Hung was unreasonable when Ghim Li’s solicitor offered to hold the disputed sum as stake-holder. Consequently, Wah Hung is liable to its loss caused by the wrongful detention of goods including the following:

(a)	cost of application for ex parte injunction HK$107,000;
(b)	cost of application for writ of specific delivery HK$60,000;
(c)	overtime cost charged by Ghim Li Fashion (M) Sdn Bhd S$5,281.90;
(d)	extra freight charges incurred S$142,586.31; and
(e)	(e)  thread replacement cost HK$6,048.66.

9.  Ghim Li asked for an order of payment out of the secured amount of HK$315,698.40 with the deduction of HK$222,901.40 which Ghim Li admitted to be the outstanding warehouse charges due to Wah Hung. Ghim Li further claimed the costs incurred in the application for the injunction order and the writ of specific delivery set out in paragraph 8 above with interests.

The Defence Case

10.  The Defence denied there was any wrongful delivery of the said goods to Ghim Li’s factory in Cambodia because all deliveries were made on the email instructions from Ghim Li and its staff. Ghim Li was therefore wrong to have demanded the reimbursement of US$22,000 to be deducted from outstanding charges due to Wah Hung on 3 November 2006. Wah Hung alleged that all the outstanding invoices delivered to Ghim Li were acknowledged by Mr. Wilson Cheung of Ghim Li and endorsed with Ghim Li’s company chop. Wah Hung claimed the following were delivered to Ghim Li:-

(a)  77 invoices for the months May 2006 on 6 June 2006;

(b)  121 invoices for the month of July 2006 on 3 August 2006;

(c)  94 invoices for the month of August 2006 on 5 September 2006;

(d)  131 invoices for the month of September 2006 on 4 October 2006; and

(e)  84 invoices for the month of October 2006 on 2 November 2006.

11.  The total amount covered by the aforesaid invoices came to $315,698.40. It is Wah Hung’s case that the invoices were attached with bundles of documents for Ghim Li’s reference at the time of delivery.

12.  Wah Hung claimed that it was only informed of the wrongful delivery and demand for reimbursement of US$22,000 to be deducted from outstanding warehouse charges on 3 November 2006 by email from Ghim Li at 12:19 p.m. Wah Hung denied the delivery was wrongful and that it should compensate Ghim Li.

13.  Wah Hung further claimed that by Ghim Li’s failure to settle outstanding invoices for the months of May to October in spite of repeated requests, Ghim Li had wrongfully repudiated the contract between them. Because of Ghim Li’s wrongful repudiation of the said contract, Wah Hung claimed it was entitled to hold Ghim Li’s goods at its warehouse on lien. Wah Hung denied it had any knowledge of the value of the goods stored by Ghim Li at Wah Hung’s warehouse or that Ghim Li had an urgent requirement for the goods.

14.  Wah Hung further relied on Ghim Li’s agreement to settle all outstanding payments of $315,698.40 by Ghim Li’s staff Miss Boeing Kwan. The email on 7 November 2006 from Miss Kwan to Wah Hung’s staff Ricky Au agreed to the payment of $315,698.40 in exchange for the full release of Ghim Li’s goods stored at Wah Hung’s warehouse.

15.  Wah Hung therefore counterclaimed against Ghim Li for the payment of the said $315,698.40 plus interest and costs and asked for the dismissal of Ghim Li’s claim against Wah Hung.

Issues

16.  The issue identified by Mr. Siu, Counsel for Ghim Li, is whether Wah Hung’s detention of the goods until full settlement of outstanding charges by Ghim Li was justifiable.

17.  In order to decide whether Wah Hung was justified in detaining Ghim Li’s goods, the following questions have to be considered:

(a)	Did Wah Hung deliver all invoices for the months of May to October 2006 to Ghim Li promptly?
(b)	From which date did the 30 days credit for settlement of service charges commence?
(c)	Was it Wah Hung’s fault to have forwarded goods under PO 1090 together with 2 other lots of Ghim Li’s goods to Cambodia?
(d)	Was Wah Hung bound by clause 6.4 of the agreement?
(e)	Is Ghim Li entitled to recover damages and costs of the injunction and special delivery applications in the High Court and the overtime charged by Ghim Li Fashion Singapore plus extra freight charges and thread replacement costs from Wah Hung?

(a) Did Wah Hung deliver all invoices for the months of May to October 2006 to Ghim Li promptly?

18.  It is the evidence of the sole witness for the Plaintiff, Miss Surina Gan, a director of Ghim Li, that Ghim Li’s Procurement Manager Miss Boeing Kwan had notified Wah Hung by email on 3 November 2006 at 12:19 p.m. that Ghim Li would be deducting the additional shipping costs incurred at US$22,000 from Wah Hung’s warehouse and other charges due to wrongful delivery to Cambodia a shipment of goods intended for China. At 2:36 p.m. on the same day, Wah Hung replied alleging Ghim Li had failed to pay Wah Hung’s warehouse charges for the months of May, July, August and September 2006. Wah Hung threatened to stop all services to Ghim Li unless outstanding payments were settled within 5 days. Ghim Li’s staff quickly checked its records but could not locate the outstanding invoices from Wah Hung for the months of May and July 2006. It immediately requested Wah Hung to provide copies of outstanding invoices for Ghim Li’s verification by an email at 3:34 p.m. Ghim Li further informed Wah Hung that a cheque had been prepared for payment of some of the invoices for August 2006 and Ghim Li was disputing some of the invoices pending verification by its staff Mr. Wilson Cheung. So far as the warehouse charges for September 2006 were concerned, Ghim Li informed Wah Hung that it had only received those invoices at the end of October 2006 and they were pending verification. On the same day at 7:21 p.m., Ghim Li notified Wah Hung that it had not received any statement, letter or information from Wah Hung beforehand for the alleged outstanding warehouse charges. Ghim Li assured Wah Hung by email that it would settle all outstanding warehouse charges upon receipt of a statement of outstanding charges from Wah Hung and requested Wah Hung to release specific goods to Ghim Li immediately as they were urgently required for production.

19.  On the next day, Ghim Li instructed its solicitor Messrs. Dominic Y.K. Lai & Co. to send a demand letter to Wah Hung demanding the release of all Ghim Li’s goods by 5:00 p.m. that day, it further reminded Wah Hung that it was not entitled to detain or deal with Ghim Li’s goods without consent. On the same day, Ghim Li reported to the police that Wah Hung had wrongfully detained its goods.

20.  The evidence of Wah Hung’s director Mr. Chang Ho Yeung (“Joe Chang”) was Wah Hung had been supplying services to Ghim Li for some time before it was requested by Ghim Li to sign the 10 May 2006 agreement. Mr. Chang was told by Ghim Li that if Wah Hung did not sign the agreement prepared by Ghim Li, Ghim Li would consider terminating their business relationship. Wah Hung was left with no choice but to sign the agreement. Under the service charges quotation signed and agreed to by the parties, Ghim Li agreed to settle all service charges and disbursements paid by Wah Hung within 30 days of the date of invoice meaning of (「月結30 天」 see paragraphs 27-28 below).

21.  According to Mr. Chang, in July 2006, Wah Hung requested Ghim Li to pay all outstanding charges for the month of May and the months prior to May 2006; however, Ghim Li failed to do so claiming various excuses. The excuses included: Ghim Li had not received the invoices, or it had lost the invoices and documents submitted by Wah Hung or it had yet to complete the verification of the invoices, etc. In fact, on a monthly basis, Wah Hung had delivered by hand all invoices for the previous month with complete vouchers, receipts and documentations to Ghim Li’s Shipping Department. These documents and invoices would be checked and counted before their receipt was acknowledged by signature and the chop of Ghim Li. The procedure was imposed to prevent any claim of misunderstanding or loss of invoices and documents submitted by Wah Hung to Ghim Li.

22.  Mr. Chang claimed that Ghim Li had failed to comply with its agreement to settle the outstanding invoices within 30 days since the agreement was signed. However, as Ghim Li was an important customer to Wah Hung, Wah Hung had tolerated the delay and continued its services to Ghim Li but continued to request for early settlement of outstanding charges. By September 2006, due to Ghim Li’s late settlement of charges, Wah Hung was facing liquidity problems. In mid-September, Wah Hung sent a representative to Ghim Li’s office in an attempt to obtain early settlement of outstanding charges. At the meeting, Ghim Li’s director Miss Surina Gan promised Ghim Li would settle the outstanding charges for May to July 2006 immediately and by early October 2006 charges for August 2006. There were no complaint or request for replacement of lost invoices or monthly statements at the meeting.

23.  Unfortunately, by mid-October, Wah Hung still failed to receive any settlement of outstanding charges from Ghim Li. Wah Hung therefore notified Ghim Li that it will terminate all services to Ghim Li unless Ghim Li honoured its promise to Wah Hung at the mid-September meeting by early November 2006. It is Wah Hung’s case that instead of settling outstanding charges, Ghim Li complained to the Police Department in early November 2006 and applied to the High Court for an injunction against Wah Hung for wrongful detention of its goods.

24.  In support of Mr. Chang’s evidence, Wah Hung adduced evidence from witnesses who were former employees of Ghim Li, namely, Mr. Wilson Cheung Fat Hung, the Shipping Executive of Ghim Li from 15 September 2002 to 11 November 2006, and Mr. Kyle Chan Kar Leung, the shipping clerk working under Mr. Wilson Cheung. Mr. Wilson Cheung admitted he was the person who had acknowledged receipt of all original invoices and supporting documents delivered to Ghim Li by Wah Hung monthly. He further confirmed that the original invoices for May to October 2006 were received well before 3 November 2006 and he had personally signed and verified each covering sheet after checking the bundle of invoices listed on the covering sheet with Ghim Li’s company chop. He further claimed that after receipt of the invoices, he would forward them with supporting documents to the Accounts Department of Ghim Li for follow-up. He admitted he could not understand why Ghim Li claimed some of the invoices were missing. He further admitted that on the instance of wrongful delivery of the said goods under PO 1090 to Cambodia, blame should not be attributed to Wah Hung. He admitted the purchase orders for two different lots of goods had the same number, PO 1090. They were sent separately by Gilt Holdings Pte Ltd. (Ghim Li’s parent company in Singapore) and Ghim Li (Combodia) Pte Ltd. (Ghim Li’s subsidiary in Cambodia) to a label manufacturer named Shore to Shore for labels to be made. It was unfortunate that the two different companies had used the same purchase order number resulting in labels intended for different destinations delivered by Shore to Shore to Wah Hung were sent without clear instructions on their separate destinations.

25.  Mr. Kyle Chan’s evidence supported the evidence of Mr. Wilson Cheung. He confirmed he had sent the email instruction to Wah Hung on behalf of Ghim Li on 13 October at 19:45 hours requesting Wah Hung to effect the PO 1090 shipment to Cambodia. He exhibited with his witness statement (p. 26 of bundle B) the 13 October 2006 email instruction to Wah Hung. He admitted he and Mr. Wilson Cheung had followed the instruction from Shore to Shore with the packing list and instructed Wah Hung to forward the labels from Shore to Shore to Cambodia.

26.  Based on the evidence of Mr. Joe Chang and Mr. Wilson Cheung, it is clear that Wah Hung did deliver all invoices for the months of May, July, August and September 2006 promptly to Ghim Li. The documents exhibited in Mr. Wilson Cheung’s supplemental witness statement (p. 33 to 78 of bundle B) clearly showed that he had acknowledged receipt of the invoices and monthly statements from Wah Hung on divers dates. Furthermore, each monthly statements clearly set out all the invoice numbers for that month, the invoice issue dates, the transfer dates, the nature of goods, their weight, number of cartons and the amount of charges to enable Ghim Li to verify each item delivered by Wah Hung on Ghim Li’s instruction.

(b) From which date did the 30 days credit for settlement of service charges commence?

27.  The six page agreement signed by both parties on 10 May 2006 was drafted by Ghim Li on Ghim Li’s stationery. Charges for warehousing, handling or packing appeared in a separate sheet of paper signed by both parties, this was a quotation of charges from Wah Hung to Ghim Li dated 2 May 2006. Under the remarks column at the bottom of the page, it specified that payments should be made within 30 days of monthly statements (月結30天) (p. 49 of bundle C1). Clearly this meant settlement of payment to be within 30 days of receipt of monthly statements, it did not specify a credit of 30 days after verification completion by Ghim Li. It is not disputed that Wah Hung had delivered to Ghim Li monthly statements which set out the dates and numbers of all the invoices for each month, it follows that settlement of charges should be made within 30 days of the relevant monthly statement. There is nothing to indicate in the evidence before me that settlement of payment should be made after Ghim Li completed its verification of all the invoices in the relevant monthly statement. If it was so, it is pointless to set a credit limit of 30 days when it was up to the paying party to decide when it would finish its verification of the invoices contained in each monthly statement. This could not be what 「月結30 天」meant in the agreed quotation.

28.  The logical and plain meaning of the words「月結30 天」 I find is “within 30 days of the date of the monthly statement”. Therefore, by early November 2006, Ghim Li should have settled Wah Hung’s monthly invoices up to the September statement which were delivered to Ghim Li in early October.

(c) Was it Wah Hung’s fault to have forwarded goods under PO 1090 together with 2 other lots of goods to Cambodia?

29.  According to the evidence of Mr. Wilson Cheung and Mr. Kyle Chan, the fault did not lie with Wah Hung. The purchase orders from Ghim Li Cambodia and Gilt Holdings Singapore (p. 50 and 51 of bundle C1) were sent separately by the two companies to Shore to Shore. The one from Gilt Holdings Singapore of 1 September 2006 named the buyer and merchandise as Sprocket Infant Girls. Shore to Shore was supposed to have made labels specifying the contents of the garments and the country where it was manufactured. In this case, the garments were made in China (p. 50 of bundle C1). While the second purchase order also bearing the same PO number, PO 1090 (p. 51 of bundle C1) was sent to Shore to Shore by Ghim Li Cambodia, the buyer was Target and the labels Shore to Shore produced was to specify the garments were made in Cambodia. The date of this purchase order to Shore to Shore was 11 September 2006. The wrongful delivery to Cambodia of garment labels for garments made in China was discovered on 19 October 2006. This can be seen on the email from Mr. Wilson Cheung to his colleagues at Ghim Li requesting their help to check a shipment under PO 1090 on invoice no. GGC-0691/2006CB which should have arrived on the day of the email. The reason he gave was:

“Due to PO No. 1090 same with China factory PO 1090, please check with PO No. 1090 under GLC 15220 have included in this shipment or not.

If yes, please pull it out courier to China which addressed as follows ……..” (p. 96 of bundle C1)

30.  Both Mr. Wilson Cheung and Mr. Kyle Chan who were on the staff at the Shipping Department of Ghim Li at the relevant time admitted it was not Wah Hung’s fault to have forwarded two lots of garment labels both bearing PO no. 1090 to Cambodia because Shore to Shore had made a mistake and the mistake was not detected by either Mr. Cheung or Mr. Chan at the time. Consequently, they had instructed Wah Hung to forward both lots of labels to Cambodia.

(d) Was Wah Hung bound by clause 6.4 of the agreement?

31.  Ghim Li claimed Wah Hung is bound by clause 6.4 of the agreement. Clause 6.4 of the agreement stated:-

“所有甲方寄存於乙方倉庫的物品，及乙方代甲方收取保存的物品，均全部屬於甲方的資產，乙方不能用作抵押，借貸，變賣，轉售，償還債務等，及一切不當的行為。否則甲方會向乙方提出法律起訴，並要求補償甲方一切有關的損失。”

32.  Wah Hung claimed that Ghim Li had failed to settle warehouse and other service charges since May 2006 in spite of Miss Gan’s mid-September promise to settle outstanding charges for May and June immediately and the August statement by mid-October. When Ghim Li failed to do so by early November, Wah Hung was entitled to repudiate the agreement due to Ghim Li’s breach of agreement.

33.  On 3 November, Mr. Ricky Au representing Wah Hung sent 2 emails, the first one in Chinese at 2:36 p.m. and the second one in English at 17:19 hours to Miss Surina Gan (p. 103 and p. 88 of bundle C1). The English email said:-

“Dear Surina

first of all, many thanks for the kind support of your company in the past few months

however despite our effort in providing our invoice to your shipping dept on time.  Our record shows there are outstanding payment of overdue by your company since may 2006.

According to the contract between us, the credit terms for payment is only 30 day, your failure in complying with this agreement has seriously jeopardized the normal functioning of our company and might even cause our company to close down.

Therefore with immediate effect we have no alternatives but to stop providing any services to your company in order for us to resume our duty, please kindly settle all the outstanding payment within 5 days from now!

We sincerely apologize for any inconvenience this may have caused to you and many thanks for your kind understanding and co-operation

Best regards,

Ricky”

34.  The Chinese email sent earlier at 2:36 p.m. said:-

“Dear Surina

在此先感謝貴公司對本公司多月來的支持及合作，但截至本月為止，本公司仍未能收取由二零零六年五月，七月份之部份款項和八月，九月份之全數款項，所有有關費用之帳單亦已經如期交到貴公司的船務部門，貴公司與本公司所簽訂之合約已經清楚列明付款細則（月結30天），但直至今天仍未能收取由二零零六年五月，七月份之部分款項和八月，九月全數款項之付款紀錄，因而影響到本公司之正常運作，亦因此問題以至本公司對外業務深受影響，令到本公司面臨結業危機，由於上述原因以至本公司對貴公司的誠信大失所望，合作基礎儘失，希望貴公司明白，本公司不可能提供無償的服務，基於貴公司未能履行雙方簽訂之合約，現本公司暫停貴公司在本公司一切倉庫發貨，運輸派送之所有服務，亦由於貴公司未能履行雙方簽訂之合約所以煩請貴公司於五天內繳清由二零零六年五月份至今天的所有費用，以便解決問題，如對貴公司造成不便，深感抱歉，敬請諒解。

Ricky Au”

35.  It is not disputed that Ghim Li failed to settle any of the outstanding accounts or made any payments to Wah Hung within 5 days of the date of the two emails. Ghim Li’s excuse was it did not have some of the monthly statements and invoices. Consequently, Wah Hung sent an account of all the outstanding monthly sums to Ghim Li informing Ghim Li that Wah Hung would not release Ghim Li’s goods unless payment was settled.

36.  I agree with Mr. Mui’s submission that because the agreement was drafted by Ghim Li, the principle of contra proferentum applies. Furthermore, due to Ghim Li’s conduct in failing to settle Wah Hung’s accounts for May, July, August, September and October by early November, Wah Hung is entitled to regard Ghim Li’s failure to settle payment as a breach of contract and treat the agreement as discharged by breach and terminated all further services to Ghim Li. Upon the termination of the agreement, clause 6.4 was no longer binding on Wah Hung.

37.  Evidence of the agreement Ghim Li made with Wah Hung in mid-September 2006 on the payment of outstanding charges can be found in a letter dated 6 November 2006 from the director of Wah Hung, Mr. Daniel Chang, to Miss Surina Gan (whom Mr. Chang addressed as ‘Miss Ngai’). It was an attempt to settle the dispute between the parties, the letter referred to their earlier telephone conversation at 18:30 hours on 6 November when Ghim Li requested Wah Hung to release the goods and Mr. Daniel Chang requested Ghim Li to pay the sum of $30,000 for part of the goods to be released. The letter further set out what Ghim Li had promised at the meeting in mid-September 2006:-

(1)  Ghim Li will settle the outstanding transportation and storage fee for May, June and July 2006 by September 2006;

(2)  Ghim Li will settle the outstanding transportation and storage fee for the month of August 2006 by 15 October 2006; and

(3)  Ghim Li will settle the transportation and storage as stated in the contract in the future.

38.  The same letter further recorded that Miss Gan had informed Mr. Chang her company lacked the cash to settle the outstanding charges as agreed in September 2006 during a telephone conversation on 6 November 2006. Wah Hung expressed it doubted the truth of the claim and its belief that Ghim Li had no intention to settle the outstanding payment as promised in mid-September 2006 (p. 104 of bundle C1).

39.  Mr. Siu, Counsel for the Plaintiff, submitted that the law on lien only assisted an agent who is in possession of the principal’s goods. He relied on para. 31-162 of Chitty on Contracts, 13^th ed. Vol. 2 at p. 102 which stated:-

“The agent must be in lawful possession of the goods in the course of his agency and hold them in the same capacity as that in which he claims the lien.”

However, the same paragraph of Chitty continued as follows:-

“An agent’s lien is usually a particular lien unless by agreement or custom or usage he is given a general lien, e.g. factors, insurance brokers, stockbrokers, solicitors, bankers and wharfingers have general liens.”

40.  Para. 6-088 of Chitty on Contracts, Hong Kong Specific Contracts 2^nd ed. at p. 561 stated the following:-

“General.  A possessory lien entitles a person (the lienee) who has done work for another person to detain an asset in his possession belonging to that other person until the charges for the work done have been paid.  While a possessory lien is a right conferred by law on persons engaged in certain callings (e.g. repairers, solicitors, bankers), it may also be created by contract.  While both a pledge and a lien are dependent upon possession of the assets, a lien differs from a pledge as the former does not confer a right of sale and a licensee’s interest is not assignable.

A special lien is one which entitles the lienee to detain not only those assets in relation to which the charges outstanding are incurred (e.g. a repairer’s lien), whereas a general lien is not so restricted and extends to any assets of the debtor which are for the time being in the possession of the lienee (e.g. a solicitor’s or banker’s lien).”

41.  It is clear Wah Hung had a general lien on the goods of Ghim Li stored at Wah Hung’s warehouse. As a warehouseman and freight forwarder, Wah Hung would invoice Ghim Li for freight charges upon the delivery of the cargo after removal from Wah Hung’s warehouse. This would not prevent Wah Hung from claiming a lien on other goods belonging to Ghim Li in its warehouse; for in this case, it had a general lien on Ghim Li’s goods remaining in Wah Hung’s warehouse for unpaid warehouse and freight charges similar to a solicitor’s or banker’s lien.

(e) Is Ghim Li entitled to recover damages and costs of the injunction and special delivery applications in the High Court and the overtime charged by Ghim Li Fashion Singapore plus extra freight charges and thread replacement costs from Wah Hung?

42.  Ghim Li claimed it had no option when Wah Hung refused to release the goods to Ghim Li as it was in danger of losing HK$1M had the goods not being forwarded. Ghim Li further claimed that Wah Hung’s conduct was oppressive.

43.  In its defence, Wah Hung relied on an email dated 7 November 2006 at 14:46 hours from Miss Boeing Kwan of Ghim Li to Mr. Ricky Au copied to Miss Gan and other staff of Ghim Li. The email said:-

“Hi, Ricky, as spoken at yr warehouse this morning.

Wah Hung wl release 100% of Ghimli’s goods upon payment received for blw:

a>

discrepancy amount from May and July – Wah Hung’s records versus received amount from Ghimli.  Understd there is no room for clarification on the discrepancy amount as Wah Hung wl only release goods upon payment received.

b>

August, September and October payment – amount paid must be per Wah Hung’s faxed invoice summary. Understd there is also no room for verification as full amount per invoice summary must be fulfilled. *Ntd estimated amount of abv point a/b is HKD310,000 Pls immdly provide discrepancy amount from May and July for review. WE WL IMMDLY PREPARE THE REQURIED AMOUNT FOR 100% GOODS RELEASE UPON YOUR ADVICE OF REQUIRED AMOUNT WITHOUT FURTHER VERIFICATION AS ALL GARMENT DELIVERY IS AT STAKE.  EXPECT PAYMENT BY T/T WL BE EXPEDITED BY TMRW.  WE WL IMMDL ARRANGE TO PICK UP 100% OF GHIMLI’S GOODS BY TMRW ONCE WAH HUNG RELEASE GOODS. With immediate effect, Ghimli will terminate Wah Hung as our appointed warehousing consolidator.  Pls cfrm understdg of the above. Rgds. Boeing Kwan” (p. 116 of bundle C1)

44.  In reply to Miss Boeing Kwan’s email at 14:46 hours of 7 November, Mr. Ricky Au sent an email at 6:11 p.m. on the same day setting out the outstanding payments for the month of May, July, August, September, October and November 2006 and the total sum came to HK$315,698.40. He further stated the following:

“請於明天（8 November 2006）手同現金（cash）HKD315,698.40和貴公司印章到本公司

繳清貴公司所欠本公司之全部費用，便可提取全數貨物

Best regards,

Ricky”

(p. 117 of Bundle C1)

45.  Miss Boeing Kwan’s email of 14:46 hours on 7 November 2006 clearly indicated to Wah Hung that Ghim Li intended to pay up all outstanding charges in return for the release of all Ghim Li’s goods stored at the Wah Hung warehouse. She had emphasised the intention in capital letters in the email to Ricky Au. In return, Ricky Au agreed to release all of Ghim Li’s goods upon Ghim Li’s full settlement of all outstanding charges of $315,698.40. It is beyond doubt that was the agreement reached between the two parties on 7 November 2006. The evidence of Mr. Joe Chang, son of Mr. Daniel Chang, was that even though his father had in his letter of 6 November 2006 requested for $30,000 for the release of the goods required by Ghim Li, this offer was superseded by the later demand and discussion between Miss Boeing Kwan of Ghim Li and Mr. Ricky Au of Wah Hung on 7 November 2006 when Wah Hung demanded settlement of all outstanding charges for the discharge of all of Ghim Li’s goods stored at Wah Hung’s warehouse. It was Mr. Joe Chang’s evidence that although Daniel Chang’s letter did not specify the payment to be made in cash, Wah Hung had in fact notified Ghim Li by telephone on the same day that the payment of $31,727.30 should be in cash. It was Wah Hung’s position that because the demand for cash payment for the release of specific goods was not settled in cash when Miss Boeing Kwan brought a cheque for $31,727.30 to the warehouse on the morning of 7 November 2006, Wah Hung was entitled to demand full settlement for the release of all of Ghim Li’s goods in its warehouse. This was accepted by Miss Boeing Kwan, that was why Mr. Ricky Au emailed the exact outstanding charges to Miss Kwan confirming the parties’ agreement to Miss Kwan at 14:46 hours on 7 November 2006.

46.  Ghim Li’s solicitor wrote to Wah Hung requesting the release of goods from Wah Hung’s warehouse on 4 November 2006 in response of Wah Hung’s demand for outstanding warehouse charges. Ghim Li reiterated the request for documents in support of Wah Hung’s demand for payment and that Wah Hung had failed to supply the documents to Ghim Li. Presumably, after the letter was sent, negotiations took place between the parties on the settlement of outstanding charges and the release of Ghim Li’s goods. In spite of the agreement recorded in the email of Miss Boeing Kwan and the response from Mr. Ricky Au in the afternoon of 7 November, Ghim Li sent a second solicitor’s letter on 8 November 2006 to Wah Hung (p. 127 of bundle C1). By that letter, Ghim Li agreed to pay the full amount claimed by Wah Hung of $315,698.40 to a stake-holder pending resolution of the dispute for the immediate release of Ghim Li’s goods. The letter demanded all goods belonged to Ghim Li stored at Wah Hung’s warehouse be released before 7:00 p.m. on 9 November 2006 or legal proceedings would be commenced against Wah Hung. This was rejected by Wah Hung.

47.  In spite of the injunction order obtained by Ghim Li on 11 November 2006, Wah Hung failed to release any of Ghim Li’s goods; consequently, an application for special delivery was obtained under Order 45 Rule 4(1)(a) of the rules of High Court on 14 November 2006. Pursuant to the specific delivery order, Ghim Li obtained the release of all its goods at Wah Hung’s warehouse.

48.  I have found above that the wrongful delivery to Cambodia of labels meant for Ghim Li’s factory in China was not a mistake on the part of Wah Hung, it follows the extra freight charges of US$22,000 should not be borne by Wah Hung. The mistake was caused by Shore to Shore, the label manufacturer and Ghim Li’s staff in Hong Kong.

49.  As to the delay in the release of Ghim Li’s goods, this was caused by Ghim Li’s failure to settle outstanding storage and service charges that it promised to settle in September and mid-October. Had Ghim Li honoured its promise made by Miss Gan in mid-September, Wah Hung would not have discharged the agreement and refused to release Ghim Li’s goods stored at its warehouse holding Ghim Li’s goods on lien. The consequential cost of extra air freight charges incurred by Ghim Li was entirely caused by Ghim Li for its failure to settle months of service charges owed to Wah Hung.

50.  As to the legal costs incurred in the application for the injunction order, I am not satisfied that Ghim Li was entitled to recover them. Ghim Li’s payment into court indicated it did have sufficient funds to pay the outstanding charges. If Ghim Li had the funds to settle the outstanding charges, I fail to understand why Ghim Li should refuse to settle the outstanding accounts to Wah Hung and opted for an injunction order against Wah Hung. It was Ghim Li which had committed a breach of a term of the contract by failing to settle monthly statements within 30 days of date of monthly statements. If Ghim Li wished to verify the invoices before settlement, it should have done so within the 30 days credit period.

51.  A specific delivery order was obtained by Ghim Li because Wah Hung failed to release the goods to Ghim Li after the injunction order. By doing so, Wah Hung had clearly failed to comply with the court order, therefore it should bear the cost for the application of the specific delivery in the sum of $60,000.

Conclusion

52.  For reasons set out above, I dismiss Ghim Li’s claim for damages for the actual loss incurred due to the wrongful delivery of the Shore to Shore labels under PO 1090 to Cambodia. I further reject Ghim Li’s claim for extra freight charges incurred in the sum of S$142,586.31, overtime cost of S$5,281.90 and the thread replacement costs of HK$6,048.66. Ghim Li was in breach of the agreement in failing to settle outstanding warehouse and service charges within 30 days of invoice and further failed to settle the Wah Hung invoices for the month of May, July in September and the August payment in October in spite of Miss Gan’s promise in September 2006. Therefore Wah Hung was entitled to regard the agreement as discharged and demand immediate settlement of all outstanding charges and claim a lien over Ghim Li’s goods. Furthermore, Ghim Li has failed to settle outstanding charges in spite of the promise of Miss Bowing Kwan in her email of 7 November 2006. Consequently, all outstanding charges including those for the month of November 2006 should have been paid to Wah Hung if Ghim Li wanted its goods to be released. I give judgment on the counterclaim to the Defendant in the sum of HK$250,698.40 after deduction of the $60,000 cost from the sum paid in by Ghim Li to be released to Wah Hung. The remaining $60,000 be released to Ghim Li.

Costs

53.  Costs to follow the event. I order the Plaintiff to pay the Defendant’s costs, to be taxed if not agreed with certificate for counsel (with the exception of $60,000 costs on the application for specific delivery). Should there be no application on costs within 14 days hereof, the cost order will be made absolute.

Parties