EVERHARVEST GODOWN COMPANY LIMITED v. CHEUNG CHAP MING AND ANOTHER

1987 No.A6968

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Judgment handed down on 8.6.88

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ASSESSMENT OF DAMAGES

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1. This action for breach of contract arises from the Defendant's failure to deliver to the Plaintiff under contract 55 bales of 21s/2 cotton yarn on cone (Chinese origin) at the agreed unit price per bale of $2,335.00. Judgment was entered by consent on 20th January 1988 for the full contract sum of $128,425.00 and for damages to be assessed.

2. At the assessment of damages Counsel for the Plaintiff produced by consent a Bundle of pleadings and court documents and also a Bundle of Documents to he relied upon at the assessment The Plaintiff had given due notice to the Defendant under Order 38 P.S.C. to produce this documentary evidence and no counter-notice has been filed.

3. The Plaintiff at this assessment was claiming as damages the difference between the contract price at the date of the breach of the contract and the market price as at that date. Counsel for the Plaintiff called as its first witness, Chu Tah Yung, the manager of the Plaintiff company. This witness referred to the sales contract dated 29/12/86 between the Plaintiff and the Defendant being Document 3 in the Bundle produced. The shipment date for the goods to be delivered was stated to be 30/12/86. This witness said that the Defendant did not deliver the cotton yarn on that date and when contacted by telephone the Defendant kept postponing the delivery date. This happened on about 20 occasions until Plaintiff's solicitors wrote on 16/10/87 to Defendant demanding delivery within 7 days. This witness confirmed that the goods were not delivered within that deadline and that the Plaintiff's solicitors wrote on 30/10/87 to accept the Defendant's breach of the contract for non-delivery of the goods. This witness was referred to Document 2 in the Bundle being a quotation dated 30/10/87 from Fortune Co. for identical cotton yarn and he said that the quoted unit price of $4,650.00 per bale was a fair market price as at that date (30/10/87). This witness was also referred to Documents in the Bundle being a quotation dated 28/10/87 from Yang Fung Cotton Company for identical cotton yarn and where the same unit price of $4,650.00 was quoted as the market price.

4. In cross-examination Mr. Chu agreed that on each postponement of the delivery date no date was fixed or agreed between the parties as the Defendant promised to deliver as soon as the goods were received. The witness also said that in terms of the contract the goods should have been in Hong Kong on the date of the contract even though the cotton yarn was of Chinese origin. This witness explained that the price of this type of cotton increased sharply between the end of l986 and the end of October 1987 because of the large demand for these goods and the limited supply available on the market at that time. Mr. Chu said the Plaintiff could have purchased the goods on the market but at an increased price.

5. The 2nd witness called by the Plaintiff was Yeung Yung Ping, the production controller of Dora Knitwear Ltd. This witness said that Dora Knitwear Ltd. periodically purchased cotton yarn on the market in the course of its business. This witness was referred to Document 18 of the Bundle being an invoice dated 17/10/87 for the purchase of identical cotton yarn from Colour Best Dyeing Factory Ltd. by his company. The unit price for the goods was $4,090.00 per bale which the witness confirmed was a fair market price as at that date (17/10/87). The witness confirmed that Dora Knitwear Ltd. had purchased the cotton yarn at the price stated on that date. This witness was also referred to Document 19 in the Bundle being a Debit Note dated 15/10/87 from a Japanese company for similar cotton yarn but of Pakiston origin rather than Chinese origin. Mr. Yeung stated that there is no difference between the cotton yarn because of its origin and that such yarn is used interchangeably in textile production. The witness produced as an Exhibit a Confirmation of Sale dated 1/8/87 relating to the said Debit Note (Document 19 in Bundle) where the unit price for the cotton yarn was given as$4,475.00 per bale after taking, account of the freight adjustment. This witness confirmed that the unit price of this cotton yarn was a fair and reasonable market price when the order was placed on 1/8/87. This witness also stated in cross-examination that the market price for identical cotton yarn had been rising since the end of 1986.

6. Mr. R. Lee elected not to call any witnesses or to produce any evidence on behalf of the Defendant. Mr. Lee submitted that the date for Defendant's breach of contract should be fixed at the contract delivery date of 30/12/86 or a reasonable time thereafter, As Counsel for the Defendant he contended that as the parties had not set any definite alternative date or dates for delivery of the goods the Plaintiff should not he allowed to take advantage of a rising or increased market price. Mr. Lee submitted that the goods were available on the market throughout 1987 even though at a higher price so that the Plaintiff should not have waited until October 1987 before accepting Defendant's breach of the contract.

7. Mr. A. Leung as Counsel for the Plaintiff, submitted that the contract delivery date of 30/12/86 was repeatedly extended by the parties on Defendant's promise to deliver the goods as soon as they became available. Plaintiff's Counsel contented that the only reasonable date at which the breach of contract should be fixed is the end of October 1987 after Defendant had failed to meet the Plaintiff's delivery deadline and as the date that the Plaintiff accepted by Letter the Defendant's breach for non-delivery of the goods under the contract. Mr. Yeung pointed out that the Plaintiff's evidence had not been challenged or rebutted in any way by the Defendant so that it should be accepted that the delivery date was repeatedly extended at the Defendant's request. Counsel for Plaintiff submits that the Defendant should not be allowed to benefit from the Plaintiff's concession to extend the delivery date. In particular, the Plaintiff relies on the provisions of Section 53 of the Sale of Goods Ordinance, to laim damages for non-delivery of the goods as being the difference between the contract price and the market or current price of the goods at the time when the Defendant neglected or refused to deliver the goods. The Plaintiff relies on the evidence adduced on its behalf that the market price of this type of cotton yarn at the date of the breach in October 1987 was $4,650.00. per bale. Therefore the Plaintiff claims damages as follows:

8. There is no hesitation in accepting the Plaintiff's submission in support of its claim for damages. On the evidence adduced the Plaintiff has been able to establish that its action in deferring the delivery date for the goods at the repeated request of the Defendant was reasonable in the circumstances. The date for the Defendant's breach of contract for non-delivery of the goods is fixed at the end of October 1987 when Plaintiff gave written notice of acceptance of the breach. The Plaintiff in this case can rely on the statutory provisions in Section 53 of the Sale of Goods Ordinance to fix the measure of its damages as the estimated loss directly and naturally resulting from the Defendant's breach of contract. Furthermore, the Plaintiff's evidence has clearly established an available market price for the goods in question so that the measure of damages is ascertained as the difference between the contract price and the market or current price of the goods at the time of the neglect or refusal to deliver same. On this basis the measure of damages is as calculated above, namely, $127,325.00.

9. Judgment will be entered for the Plaintiff in the sum of $127,325.00 against the Defendant, There will be interest on the said sum at the judgment rate from the date of this assessment until payment. The costs of this assessment to the Plaintiff to be taxed if not agreed. Certificate to Bsue for Counsel.