MYNG CHUANG ENTERPRISE CO., LTD. v. ERIC BEARING LTD

DCCJ 5475/2024

[2026] HKDC 1317

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5475 OF 2024

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ASSESSMENT OF DAMAGES

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A.  INTRODUCTION

1.  The Plaintiff (“P”) entered an interlocutory judgment against the Defendant (“D”) on 28 February 2025 upon D’s default to file a notice of intention to defend. The matter was set down for assessment of damages pursuant to court order dated 16 April 2026.

2.  P has provided an affirmation of service. I am satisfied that D has been notified of today’s hearing. I shall proceed in D’s absence pursuant to O.35, r. 1 of the Rules of the District Court, Cap 336H.

B.  P’s CLAIM

3.  P’s underlying claim is based on:- (a) breach of contract and/or (b) fraudulent misrepresentation. P’s case is as follows:-

(a)  P won 2 tenders from the Taiwan Railways Administration (“TRA”) for the procurement of 200 pieces of FAG-brand bearings on around 6 June 2023 (the “TRA Contract”).

(b)  P agreed to buy and D agreed to sell 200 pieces of FAG-brand bearings (the “Bearings”) for US$27,000 (the “SPA”) on around 9 June 2023. The SPA was effected through purchase orders.

(c)  The parties agreed that the Bearings must be original FAG-brand bearings and be accompanied with a conformity certificate from the original manufacturer (“Certificate”).

(d)  Subsequently, it was discovered that the bearings that P received from D were counterfeits, and the Certificate had been forged.

(e)  As a result, the TRA withheld payment to P, terminated its contracts with P, and blacklisted P as supplier on the E-Procurement System for 3 years.

4.  P now seeks to quantify its loss and damage under the following heads:-

(a)  Direct Losses;

(b)  Lost Profits under the TRA Contract; and

(c)  Consequential losses, including loss of business and reputational damage.

C.  ANALYSIS

C1.  Direct Losses

5.  P claims it has suffered the following direct losses:-

(a)  P’s payment to D under the SPA in the sum of NTD831,140.

(b)  P’s payment to third parties for import fees, customs clearance, warehouse and transport fees for the counterfeit bearings in the sum of NTD88,996.

(c)  P’s payment to the TRA being a “performance bond” in the sum of NTD135,240. As the TRA Contract could not be fulfilled, the same was forfeited.

(d)  P’s payment to the TRA for the transport costs in returning the counterfeit bearings from the TRA to P in the sum of NTD5,000.

6.  I consider these losses to be the direct consequence of D’s breach of the SPA. I consider such recovery to be reasonable and fair. It appears that D was aware of P’s bid with the TRA as shown in an email between the representatives of P and D dated 8 June 2023. As such, on the information available to D when the SPA was made, it should, or the reasonable man in its position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation: see Richly Bright International Ltd v De Monsa Investments Ltd (2015) 18 HKCFAR 232 at §§15-23 (Ribeiro and Fok PJJ).

7.  In the premise, I would allow the above in full.

C2.  Lost Profits under the TRA Contract

8.  P seeks to quantify the loss of profit it would have earned under the TRA Contract. It claims a total of NTD432,264 based on the value of the TRA Contract (being NTD1,352,400) less the sum paid under the SPA (being NTD831,140) and less the import fees and related costs (being NTD88,996).

9.  Standing back, I consider there is just sufficient pleading to sustain this claim: see SOC at §§7-11, 34. I consider P’s claim to be reasonable and fair. The same is foreseeable and not too remote: see Richly Bright International Ltd at §§15-23 (Ribeiro and Fok PJJ).

10.  In the premise, I allow the same in full.

C3.  Consequential Losses, including loss of business and reputational damage

11.  P claims that being blacklisted for 3 years prevents it from bidding on potential contracts during that period. P claims this has caused loss of trust and credibility with third parties, as well as loss of future business with the TRA. P sought to quantify this head of damage as NTD3.2 million, as follows:-

(a)  For the last three years, P received income from TRA approximating to around NTD10 million.

(b)  As such, “… P estimates a gross loss of income of approximately NT$10 million for the blacklisted three (3) years, and NT$3.2 million net loss of profits, based on a rough estimation of 30% profit rate.”

(c)  The 30% profit rate is solely based on the TRA Contract less P’s expenses and costs.

12.  I do not accept P’s claim.

13.  First, this claim is entirely unpleaded. There is no claim (let alone particularisation) for loss of business or loss of reputation in the Statement of Claim.

14.  Second, P’s evidence is insufficient. Madam Lin Yu Jhih’s witness statement (made on behalf of P) does not explain some 200 pages of bills, invoices and other documents as between P and the TRA. P has not demonstrated what are its actual profits. Further and in any event, P has not demonstrated this a proper basis for calculating “loss of business” and “loss of reputation”.

15.  Third, I am not prepared to extrapolate a 30% profit rate over the next 3 years based solely on the TRA Contract. As Mr. Tai (P’s solicitor) accepts, there is no evidence to demonstrate that the future/potential contracts would carry a 30% profit rate.

D.  OTHER MATTERS

16.  P seeks assessment in a different currency. There is no evidence nor submissions on the applicable conversion rate.

17.  Pursuant to PD 16.2 and Wong Chi Hung v Lo Wing Pun and Anor [2026] HKCFA 14 at §132 (per Ribeiro PJ), a court may give judgment for a sum of money expressed in foreign currency or its Hong Kong Dollar equivalent at the time of payment.

E.  CONCLUSION

18.  In light of the above, I assess damages being NTD1,492,640 as follows:-

(a)  Direct losses being NTD1,060,376; and

(b)  Lost profits under the TRA Contract being NTD432,264.

19.  I would further award interest on the sum as pleaded in the Statement of Claim.

20.  Costs should follow the event. Taking a broad-brush approach, I summarily assess at HK$70,000.

F.  DISPOSITION

21.  The Defendant do pay the Plaintiff NTD1,492,640 or the Hong Kong dollar equivalent at the time of payment together with interest thereon at 1% above the HSBC best lending rate from the date of writ (being 16 September 2024) to the date hereof, and thereafter at judgment rate until full payment.

22.  The Defendant do pay the Plaintiff’s costs of this action, including this assessment of damages, summarily assessed at HK$70,000 on a nisi basis which shall become absolute in the absence of application to vary within 14 days hereof.