F. UHRENHOLT MEAT A/S v. GLITTER HONOUR LTD.

DCCJ674/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.674 OF 2002

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JUDGMENT

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Introduction

1. In this action, the plaintiff claims against the defendant damages for damages for a breach of a contract made between the parties on 18 May, 2001. Under the contract, the plaintiff agreed to sell and the defendant agreed to buy approximately 24,000 kg of frozen whole pork ears of French origin at the price of US$1.168 per kilogram to be shipped in late May, 2001 to Hong Kong. While some 21,320 kg of frozen whole pork ears ('the Goods") were being shipped to the defendant under the contract, the defendant notified the plaintiff by a facsimile dated 1 June, 2001 that the defendant would not collect the goods because the Goods were banned from import into China. This was treated by the plaintiff as a repudiation of the contract. By 2 facsimiles dated 13 and 22 June, 2001, the plaintiff accepted the repudiation of the contract.

2. On 29 January, 2002, the plaintiff issued this writ of summons claiming against the defendant for the breach of the contract. On 14 May, 2002, the plaintiff took out this application for summary judgment. In the original Statement of Claim, the plaintiff claimed a liquidated sum of DKK191,298.90. Likewise the plaintiff applied for a final judgment for the sum of DKK191,298.90 in this Order 14 summons. Certainly the appropriate relief for a claim for breach of contract should usually be a claim for unliquidated damages. At the hearing, leave was granted to the plaintiff to amend the Statement of Claim and the Order 14 summons accordingly.

The defence

3. The facts of this case lack controversy. The only defence raised by the defendant is one of illegality. The defendant's case is this. It says that by late May, 2001, when it intended to apply for an import licence for the Goods from the Food and Environmental Hygiene Department, it was told that the department would not issue new import licence for the import of scrap meat including pork ears from France. This, I understand, was because of the outbreak of foot and mouth disease in France. As a result, the defendant asked the plaintiff not to ship the Goods to Hong Kong. Mr. Chun, Counsel for the defendant, submits that if judgment is given here in favour of the plaintiff, this amounts to enforcing an illegal contract. This, says the defendant, raises a triable issue. Mr. Chun also seeks to rely on 2 letters dated 16 August, 2002 and issued by the Food and Environmental Hygiene Department to the effect that it was the policy of the department in 2001 the import of frozen scrap meat including pork ears from France to Hong Kong for local consumption was not allowed except for re-exporting to the Mainland.

4. Regulation 4(1)(b) of the Imported Game, Meat and Poultry Regulations (Cap.132) provides, inter alia, that no person shall import prohibited meat (including pork ears) whether directly imported or transhipped, otherwise than with the permission in writing of a health officer. It is therefore clear that the import of pork ears is not banned completely, but it can only be done with a written permission of a health officer. This was the position in 2001. It is common ground that the contract in question was subject to terms and conditions under Incoterms 2000 ('the Trade Terms"). The Trade Terms contain the following relevant provisions:

4.1 The buyer must obtain at his own risk and expense any import licence or other official authorisation and carry out, where applicable, all customs formalities for the import of the goods and for their transit through any country (Clause B2).

4.2 The buyer must bear all risks of loss of or damage to the goods from the time they have passed the ship's rail at the port of shipment (Clause B5).

5. As a matter of fact, it was also expressly stated in the contract between the parties, namely the Order Confirmation dated 18 May, 2001, that the defendant had the full responsibility of the load when arriving in Hong Kong if there was any problem concerning foot and mouth disease in Europe and that the Goods were coming from a district in France which had foot and mouth disease. What in fact happened here was simply that when the defendant entered into the contract, it failed to ensure that the necessary import licence was available. Of course this cannot amount to a defence. It was the responsibility of the defendant to obtain the necessary permission to import the Goods, and it cannot make use of its own failure to obtain the permission as a defence to the plaintiff's claim. This is different from a case where 2 parties conspire to smuggle goods into Hong Kong.

6. I also reject Mr. Chun's submission that I would be enforcing an illegal contract if I give judgment in favour of the plaintiff. In the present case, in recovering damages for breach of contract, the plaintiff is not forced to plead or rely on an illegality: see Tinsley v. Milligan [1994] 3 WLR 126. I am not satisfied at all that the defendant has raised a triable issue in this action. The defence of illegality is a non-starter here. In any event, I fail to see any reason why the plaintiff has to bear any loss in this case, when the defendant was the author of its own misfortune.

Conclusion

7. In the end I am satisfied that the plaintiff is entitled to an interlocutory judgment on liability with damages to be assessed. I shall hear the parties on the question of costs.