ESSENCORE LTD v. ONTOP TECHNOLOGY LTD

HCA1027/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1027 OF 2016

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ASSESSMENT OF DAMAGES

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1.  This is a breach of contract claim. Interlocutory Judgement was entered on 8 June 2016.

2.  The plaintiff is a company which manufactures and distributes various computer memory products including DRAM products.  The plaintiff contracted with the defendant to test and assemble the DRAM products before returning the same to the plaintiff to sell to international buyers.

3.  The plaintiff’s claim is that a total of 816,033 pieces of such DRAM products have been delivered but the defendant has failed to return them.  As interlocutory judgment has been entered, the court has to assess the damages by determining the loss of profit suffered by the plaintiff.

4.  Mr. Sung Jae Byun, the general manager of the plaintiff, informed the court that the market price of such DRAM products would vary with time so the calculation of value was assessed at the sale price to various clients at the time closest to the breach, that is, from around April to June 2015.  Various invoices and orders were produced to support this.

5.  The DRAM products were of different densities so they commanded different market prices.  Further, within the same density type, the DRAM products also commanded different prices depending on whether they were tested “good” or “failed”, or if they were untested.  The plaintiff has demanded the return of a certain number of DRAM products before they were tested.  These were the “raw” chips.

6.  As explained by Mr. Sung, despite the failure of the defendant to return the DRAM products, the plaintiff was aware of the test results because of a “shared” computerised system.  There was still a scrap value for the “failed” DRAM products because of the gold content inside.  The “raw” untested DRAM products commanded lower prices than the “good” ones because some buyers were willing to pay for untested products, accepting that a portion of them would fail.

7.  Mr. Sung further informed the court that the plaintiff was a subsidiary of one of the biggest computer chip manufacturer in the world and thus was able to obtain such products at very competitive prices.  As such, the plaintiff would have been able to sell all the DRAM products in question at the stated market prices.

8.  I accept Mr. Sung’s evidence and would assess the damages (in US dollars) as follows:

a)  The “good” DRAM products in the following batches:-

i)	DDR3 16Gb: 720 units at $9.50 per unit price = $6,840.00
ii)	DDR3 16Gb: 720 units at $9.50 per unit price = $6,840.00
iii)	DDR2 12Gb: 2,228 units at $4.70 per unit price = $10,471.60
iv)	DDR2 8Gb: 64,923 units at $4.70 per unit price = $305,138.10
v)	DDR2 8Gb: 33,943 units at $4.50 per unit price = $152,743.50
vi)	DDR2 16Gb: 110,103 units at $7.50 per unit price = $825,772.50
vii)	DDR2 16Gb: 2,215 units at $7.50 per unit price = $16,612.50
viii)	DDR2 16Gb: 10,844 units at $7.50 per unit price = $81,330.00
ix)	DDR2 16Gb: 13,378 units at $7.50 per unit price = $100,335.00
x)	DDR2 8Gb: 100 units at $4.70 per unit price = $470.00
xi)	DDR3 16Gb: 24,378 units at $9.50 per unit price = $231,591.00
xii)	DDR2 12Gb: 13,072 units at $4.70 per unit price = $61,438.40
xiii)	DDR2 12Gb: 13,670 units at $4.70 per unit price = $64.249.00
xiv)	DDR2 16Gb: 1,703 units at $8.00 per unit price = $13,624.00
xv)	DDR3 16Gb: 6,963 units at $9.50 per unit price = $66,148.50

The sub-total value for the “good” DRAM products was US$1,943,604.10

b)  The “raw” DRAM products in the following batches :-

i)	DDR3 16Gb: 900 units at $6.30 per unit price = $5,670.00
ii)	DDR2 8Gb: 945 units at $3.80 per unit price = $3,591.00
iii)	DDR3 16Gb: 4,364 units at $6.30 per unit price = $27,493.20
iv)	DDR3 16Gb: 6,588 units at $6.30 per unit price = $41,504.40
v)	DDR3 8Gb: 6,243 units at $3.80 per unit price = $23,723.40
vi)	DDR2 12Gb: 19,397 units at $3.80 per unit price = $73,708.60
vii)	DDR2 12Gb: 39,980 units at $3.80 per unit price = $151,924.00
viii)	DDR3 16Gb: 291,265 units at $6.30 per unit price = $1,834,969.50

The sub-total value for the “raw” DRAM products was US$2,162,584.10

c)  The “failed” DRAM products in the following batches:-

i)	DDR3 16Gb: 180 units at $0.04 per unit price = $7.20
ii)	DDR3 16Gb: 180 units at $0.04 per unit price = $7.20
iii)	DDR2 8Gb: 13,814 units at $0.04 per unit price = $552.56
iv)	DDR2 16Gb: 48,777 units at $0.04 per unit price = $1,951.08
v)	DDR2 12Gb: 459 units at $0.04 per unit price = $18.36
vi)	DDR2 12Gb: 28,805 units at $0.04 per unit price = $1,152.20
vii)	DDR2 8Gb: 17,349 units at $0.04 per unit price = $693.96
viii)	DDR2 16Gb: 423 units at $0.04 per unit price = $16.92
ix)	DDR2 8Gb: 9,800 units at $0.04 per unit price = $392.00
x)	DDR2 8Gb: 4,018 units at $0.04 per unit price = $160.72
xi)	DDR2 16Gb: 3,908 units at $0.04 per unit price = $156.32
xii)	DDR2 8Gb: 18 units at $0.04 per unit price = $0.72
xiii)	DDR3 16Gb: 5,106 units at $0.04 per unit price = $204.24
xiv)	DDR2 12Gb: 1,702 units at $0.04 per unit price = $68.08
xv)	DDR2 12Gb: 7,062 units at $0.04 per unit price = $282.48
xvi)	DDR2 16Gb: 293 units at $0.04 per unit price = $11.72
xvii)	DDR2 8Gb: 3,845 units at $0.04 per unit price = $153.80
xviii)	DDR3 16Gb: 1,652 units at $0.04 per unit price = $66.08

The sub-total value for the “failed” DRAM products was US$5,895.64

9.  The total value of DRAM products was therefore US$(1,943,604.10 + 2,162,584.10 + 5,895.64) = US$4,112,083.84

ORDER

10.  I would make the following order :-

i)	The damages award is assessed at US$4,112,083.84 together with interest at half judgment rate from the date of the breach (taken to be 18 June 2015) to the date of judgment.
ii)	The costs of the action be to the plaintiff to be taxed if not agreed with certificate for Counsel.