CHANGMING ELECTRICAL LTD v. GOLDEN VIEW LOGISTICS (HK) LTD

DCCJ 3475/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3475 OF 2009

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JUDGMENT

Introduction

1.  The Plaintiff’s claim is for damages for goods lost during transportation carried out by the Defendant under an overall agreement leading to a series of transactions. The claim is for RMB255,916. The Defendant denies and contends that the Plaintiff’s goods were duly delivered and received by authorized receivers in Shenzhen.　Further or in alternative, the Defendant alleges that clause 5 printed at the back of the courier forms (“ the Limitation Clause”) applied to restrict compensation due if any.  The Defendant further counterclaims against the Plaintiff for (i) a sum of HK$53,016.40 being outstanding amount of transportation services and (ii) a sum of Rmb143,868.17 being tax imposed by the relevant PRC authorities on the Plaintiff’s goods.

2.  The Defendant did not attend the trial.  It had been legally represented until 16 October 2012 when an order was made to grant leave for the solicitors to cease to act. I have read the Affirmation of Service produced by Mr Chan representing the Plaintiff. I am satisfied that the documents had been duly served on its registered office which is the last known address of the Defendant. Further, I am of the view that the Defendant had all along been aware of the proceedings. I therefore ordered the trial to proceed in its absence.

3.  Mr Chan has in his opening submissions set out the issues for the present hearing. From the Defence and Counterclaim, it is not disputed that:

(a)  Since about 2007, the Plaintiff and the Defendant had business dealings;

(b)  There were transportation agreements between the Plaintiff and the Defendant as evidenced by various courier forms prepared by the Defendant.

(c)  There were standard terms printed on the back of each of the courier form including the Limitation Clause [p.219]. 

4.  Mr Chan has also informed this court that the parties have on 12 July 2012 filed the Agreed Statement of Issues in Dispute [pp.39-41].

Issue 1:  Whether the terms and conditions set out on the back of each of the courier form constituted part of the agreement between the Plaintiff and the Defendant.

5.  It is Mr Chan’s submission that the effectiveness of an exemption clause depends on:

(a)  whether the exemption clause has been properly incorporated into the contract either by, inter alia, (i) signature; (ii) reasonable notice; or (iii) course of dealings (paragraph 11.010, Contract in Hong Kong);

(b)          whether the exemption clause is reasonable (section 7(2) and section 8 of the Control of Exemption Clauses Ordinance).

Case of the Plaintiff

6.  Mr Y Zhang of the Plaintiff (“PW1”) gave evidence. He said there was an express overall agreement reached between himself for the Plaintiff and a Chu Lai Kuen for the Defendant that the Defendant would provide transportation service for the Plaintiff. The freight would be charged by weigh, i.e. 8 times of weight in kilogram, It was also agreed that as part of the service the Defendant would deal with the custom process and pay the dues; and in the event of loss the Defendant would compensate the full value of the lost goods (照貨價賠償). He emphasized that if there was no such agreement, the Plaintiff would not have entered into an agreement with the Defendant.

7.  PW1 further explained to this court that it had always been the practice of the Defendant to compensate the full value of the goods. The calculation would be the cost of the goods plus necessary and reasonable expenses such as freight and administration cost. Such expenses were usually about 10% to 15% of the suppliers’ selling price. He further said that there was not a single incident that the Plaintiff was compensated 3 times of freight charges.  

8.  He referred to documents produced [pp 112,113,114,115] and said that such documents entitled Notice of Compensation (“Notice”) were issued by the Defendant on previous occasions of loss goods. It was said in the Notice that the compensation was made according to clause 4 of the courier form. PW1 then showed to me why and how it was said that the compensation named in the Notice was full costs of the lost goods and not 3 times of the freight. He relied on first the relevant courier form to identify the lost goods by its description and relate them to the invoices issued for the same goods. Sometimes there were two types of invoices; those issued by suppliers to the Plaintiff which showed the cost of the goods or those issued by the Plaintiff to its customers showing the price of the goods which included the profit margin, but PW1 said that the calculation for compensation would not include the profit.     

9.  Further, he invited this court to read one of the correspondences in which the Defendant had proposed to compensate the Plaintiff for the loss of the present case in future 20 times of the transportation charges (“the Defendant’s Proposal”) [p106] to prove that the Defendant had never been relying on the Limitation Clause.

10.  As to the incorporation of the Limitation Clause, it is the evidence of PW1 that when an order for transport of goods was confirmed, the courier forms would be faxed to the Defendant but they showed only the front page and not the back page where the Limitation Clause was said to have been printed on. The Plaintiff would only receive the original or carbon copy of the courier forms upon delivery of the goods. He said that the Defendant had never brought the Limitation Clause to the attention of the Plaintiff.

Discussion on Issue 1

11.  I read the relevant documents including the back of the courier form. Clause 5 reads

“a. 因意外受損或遺失如天災，被劫和交通意外等本公司可退回運費。

b. 若非意外遺失，對已購買保險之貨件，本公司將按所購保險額給予賠償如沒購買保險，本公司僅會按運費的三倍內作出賠償，且單票快件的賠償額最高不超過1000元。

c. 本公司不承接價值超過港幣5000的快件。(特別約定除外)

d..任何索賠，查件僅限在到件后七天內，逾期將不再受理。快件最長保管期為30天，逾期本公司將自行處理。”

12.  I agree with Mr Chan that there was no evidence to prove that the lost goods were uninsured and therefore the Defendant was entitled to rely on the Limitation Clause to limit compensation to 3 times of the freight as alleged. 

13.  I also accept Mr Chan’s submission that the reliance on the Limitation Clause by the Defendant was not a regular and consistent course of dealing between the parties. I accept from evidence before me that there had been occasions where the Defendant had compensated the Plaintiff by paying or setting off sums equivalent to the value of goods lost or damaged. I also notice that even in the Notice in which the Defendant set out its compensation to the Plaintiff, it did not rely on the Limitation Clause, but Clause 4.

14.  I agree with Mr Chan that it is the burden of the Defendant to prove that the Limitation Clause is reasonable (section 3(6) of Control of Exemption Clauses Ordinance).  I also agree that there is no evidence to prove the same.

15.  I notice that X Zhang (PW2) said that he was aware of the Limitation Clause and he had informed PW1 of it and discussed with Ms Chu of the Defendant about this. He said Ms Chu confirmed that the compensation would be for the value of the goods. Apparently PW2’s evidence was inconsistent with that of PW1 who insisted that he had never noticed the existence of the Limitation Clause. 

16.  I have considered the whole of the evidence, I am of the view that although there were some inconsistencies in the evidence of PW1 and PW2, it is my finding that the Defendant had failed to prove on balance that the Limitation Clause was operative to restrict the compensation on those transportation orders relevant to this claim.

Issue 2: Whether the Plaintiff’s goods were duly delivered to, received and signed by the authorized receiver of the Plaintiff’s in Shenzhen.

17.  PW2 produced the records kept and updated by him in relation to goods transported by the Defendant from time to time [pp194-204].  He also explained the signatures of the representatives or employees of the Plaintiff on the courier forms. He also said that he would from time to time send a claim form to the Defendant to locate lost goods and discuss compensation. He referred this court to pages 99 and 111. He said upon instruction of PW1, he sent to the Defendant a list of lost goods that had not yet been dealt with by the Defendant [p126]. They were the lost goods under the present claim. He said after the Defendant had received this, they had never disputed the lost items or the value thereof. 

18.  The Plaintiff also relied on the correspondences between the parties to prove that the Defendant had never disputed lost of goods. PW1 referred me to an email attaching a document entitled Agreement on Dispute Dissolution (協商解決協議) [pp 100, 101 ]. He said that as shown in the document, the Defendant had all along admitted the value of the lost goods as worked out by the Plaintiff. The discussion between them had not been on quantum of damages but how such damages were to be paid.

19.  PW2 told this court that he brought along a schedule with him [p126] when he had a meeting with Mr Wong Tak Fai (transliteration) and Mr Lam Chun Man (transliteration) of the Defendant on 22 October 2008. He said that the total value of lost goods was never in dispute, the discussion was mainly on how the damages were to be paid. He referred this court to the documents at p106 saying that this was the last offer made by the Defendant subsequent to the meeting. He also referred this court to the records of telephone conversation between himself and a Mr Wong of the Defendant by which Mr Wong the Plaintiff said the Defendant had admitted a sum of $262,100 for the loss goods.

Discussion on Issue 2

20.  After hearing PW2’s explanation on the records kept by him, I am satisfied that they were contemporaneous record kept and updated by him in the course of business. I accept that they have reflected the real situation of the goods on whether they had been received. I accept that those goods as show in the schedule attached to the Amended Statement of Claim to the amount of Rmb255,916 had not been received by the Plaintiff and were lost.

21.  Further the Plaintiff also relied on admission of the Defendant made in the course of negotiation. I have heard evidence in relation to the meeting dated 22 December 2008 and read those correspondence with documents issued subsequently. I notice that the proposal of the Defendant produced at p106 was not marked “without prejudice”.   The Defendant did not oppose to the production of such documents when they were still being legally represented. I have no reason to say on behalf of the Defendant that such documents should not be admitted as evidence. I would have to consider the whole of the circumstances to see how much weight I should attach to such evidence. I have read the witness statement of a Chan Yan Lui of the Defendant. The stance of the Defendant was that Mr Wong and Mr Lam were never authorized to make any admission or reach any agreement. I do not think such assertion would assist the Defendant.  I attach due weight to the evidence as shown in the Defendant’s Proposal and the telephone conversation between PW2 and Mr Wong. I find from such evidence that the Defendant did not dispute the total sum of lost goods in the course of negotiation.

Issue 3: Whether the value of the Plaintiff’s goods alleged lost during the transit undertaken by the Defendant is Rmb255,916

22.  I have considered evidence relevant to Issue 2. I am satisfied that the Plaintiff had proved on balance the value of the lost goods as claimed. 

Issue 4: Whether the Defendant have ever admitted any liability and agreed to compensate the Plaintiff for the alleged loss of goods during the meeting held on 22 December 2008

23.  For reasons set out in paragraph 21, I find that the Defendant had admitted liability.

Issue 5: Whether the Plaintiff liable to pay taxes and duties to the relevant PRC authorities.

24.  In the Amended Defence and Counterclaim, the Defendant claims against the Plaintiff for freight due and owing and also penalty and taxes they had paid to the Chinese government on behalf of the Plaintiff.

25.  In his witness statement, PW1 stated that the Defendant had never charged the Plaintiff for such taxes and duties. He went further to say that on one occasion, the Defendant had borrowed money from the Plaintiff to pay those taxes and have the same set off from the Plaintiff’s freight.

26.  Mr Chan submitted that the Defendant has failed to adduce sufficient evidence supporting the allegation that the Plaintiff itself should be responsible for payment of such taxes and duties. Furthermore, in the negotiation of settlement before litigation, particularly the email of the Defendant dated 27 April 2009 (pp.105-106) and the transcript of the telephone conversation between PW2 and Mr. Wong of the Defendant, the Defendant had never mentioned the claim or set-off of “tax and duties payable to the PRC authorities”.

27.  I accept Mr Chan’s submission and find that the Defendant had failed to prove that the Plaintiff shall be liable to reimburse the Defendant for taxes and duties paid by the defendant in relation to the goods of the Plaintiff. 

Issue 6: Whether the Defendant is entitled to the counterclaim as alleged

28.  The Counterclaim was for (i) taxes and duties paid on behalf of the Plaintiff and (ii) freight due and owing by the Plaintiff.

29.  Mr Chan said that the Defendant had failed to prove its counterclaim as it had simply produced no evidence. For reasons set out in the above, I find that the Defendant had failed to prove the liability of the Plaintiff on taxes and duties. However, I find that there Plaintiff had owed to the Defendant freight to the amount of HK$53,016. In its Reply and Defence to Counterclaim, the Plaintiff’s pleaded defence against freight as counterclaimed was that the transportation services related to the Disputed Courier Forms had not yet been completed due to loss of the goods. There was no challenge to the amount. I am of the view that if the Plaintiff is awarded damages on the lost goods, credit should be given to freight due and owing.

Conclusion

30.  I find that the Plaintiff has proved its claim for loss of goods to the value of RMB 255,916. I also find that there was freight at the amount of  HK$ 53,016  due and owing to the Defendant.

Order

31.  It is adjudged that the Defendant do pay to the Plaintiff RMB255,916 or the Hong Kong dollars equivalent at the time of payment. The Plaintiff do pay the Defendant the sum of HK$ 53,016 to be set off from the amount payment to the Plaintiff under this judgment.

Interest

32.  The Defendant shall pay interest at judgment rate from date of Writ to date of judgment and at same rate from date of judgment until the sum is fully paid; likewise, the Plaintiff shall pay interest on same terms at same rate for the judgment sum against it.

Costs

33.  I make an order nisi that the Defendant do pay costs of the Plaintiff in respect of the Plaintiff’s claim. As the Defendant failed in part of its counterclaim I order that there be no order as to costs in respect of the Defendant’s Counterclaim. This is an order nisi which will become absolute if no application is made to vary the same within 14 days from the date hereof.      I consider summary assessment of costs to be suitable.  For that purpose, unless an application to vary the costs order in this paragraph is made within 14 days herefrom :-

(i) the Plaintiff is at liberty to lodge with court and serve a statement of costs within 21 days from the date of decision; and

(2) the Defendant be at liberty to lodge with court and serve a statement of objections within 7 days thereafter.