GREAT TIME INDUSTRIAL (HONG KONG) LTD v. TANHOUSE LTD

HCMP 3162/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 3162 OF 2013

(ON AN INTENDED APPEAL FROM DCCJ 2862/2010)

________________________

_____________

JUDGMENT

_____________

Hon Cheung CJHC (giving the judgment of the court):

1. This is the defendant’s application for leave to appeal from the judgment dated 22 July 2013 of HH Judge Michael Wong. By his judgment, the learned judge gave judgment for the plaintiff for the outstanding price of garments sold and delivered to the defendant for resale to a German end buyer (Bonita), and dismissed the defendant’s counterclaim for damages based on defective goods and unfitness for purpose.

2. Essentially, the defendant argues that the judge has failed to appreciate its case on unfitness for purpose in that he has mistakenly equated it with a case on defective goods only.  The defendant argues that the garments were purchased for resale to Bonita as the plaintiff well knew, and the garments delivered had to satisfy the quality standards of Bonita.  Secondly, the defendant complains that the judge has wrongly put the burden of proving that the garments were not of the requisite standard on the defendant (Hayden v Hayward (1808) 1 Camp 180).  Thirdly, the defendant argues that the judge was wrong to reject the evidence adduced by the defendant and conclude that the defendant had failed to prove that the garments did not meet the requisite standard.  The defendant also complains that the judge failed to find that the goods were delivered to Germany under a (post‑contract) express oral guarantee by the plaintiff that no payment would be made if they were not accepted by Bonita.

3. As regards the first argument, we do not accept that the judge has confused merchantable quality with fitness for purpose.  The problem with the defendant’s case is that there was never pleaded any specific or higher standard employed by Bonita regarding the garment quality which was, expressly or by implication, made known to the plaintiff at the time of contract.  In those circumstances, the normal commercial standard for this type of garment applied.

4. As regards the burden of proof, the judge found that there were pre‑shipment inspections and the garments were accepted by the QC team sent by the defendant.  They were only found to be unacceptable by Bonita after shipment to Germany.  Even the independent examiner retained by Bonita in Germany found, on two occasions, that substantial proportions of the garments delivered were acceptable.  On those accepted facts, the evidential burden was clearly on the defendant to show that the garments were nonetheless defective or not of the requisite quality thus justifying their rejection in total.

5. Thirdly, as regards the primary findings of fact by the judge, the judge has given adequate reasons for his findings based on the evidence before him, and in particular reasons why he was not satisfied with the evidence adduced by the defendant.  His findings of primary fact are not “plainly wrong”:  Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336.  There is no scope for intervention by this court.

6. The application for leave to appeal is refused.  Pursuant to Order 59, rule 2A(8), we order that the defendant may not request our determination to be reconsidered at an oral hearing inter partes.  We also order that the costs of this application for leave to appeal, summarily assessed by us at $40,000, be paid by the defendant to the plaintiff.