XCHRX E. BON BUILDING MATERIALS CO. LTD. v. SUN WEALTH INTERNATIONAL LTD.

HCA19841/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.19841 OF 1998

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J U D G M E N T

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1. This is an appeal by the defendant from summary judgment entered by the master against the defendant in two different sums, one in the sum of $460,262.19, said to be the balance of the transportation charges under the Sales Confirmation No.HB101 (at page 97) and another Sales Confirmation most of which had been paid, and the other sum is in respect of the sum of $70,766.55 being balance for goods sold and delivered.

2. Most of the money under the five contracts of sale of goods and the two contracts of transportation had been paid, but there is an outstanding balance, and that is the subject of the judgment entered by the master against the defendant.

3. At the hearing, it seems to me, the only point which was insisted upon by Mr Ng, for the defendant, is that there is a defence of illegality. The illegality is supposed to have arisen in this way. The contracts provided for the plaintiff to supply the goods to the defendant under the five contracts and they are CIF for delivery in Hong Kong. There were two separate transportation contracts amounting to some thing like $1.1 million for delivery and import to Shanghai from Hong Kong. Mr Ng's point is that in relation to the transportation into Shanghai, there was an implied term that import duty would be paid and taken care of by the plaintiff. There was a breach of the law of China because the plaintiff had not paid the import duty and exposing the defendant, so the speak, to a possible penalty vis-à-vis the Chinese customs. The goods, according to the evidence, were transported from Hong Kong to Shanghai. They safely arrived, full receipt had been given for them. There was no evidence of any trouble with the customs nor had the customs asked any questions. The goods were freely available to be used by the defendant and the defendant could made good use of it although it is pleaded in the pleadings that the defendant did not know what to do with them and they had not used them for six months. I find that difficult to believe. The impression I have of the case is that because the hotel project had been abandoned the defendant is desperately trying to put off the evil day of making full payment for what it was obliged to do under the contract.

4. There is no question that there could be a proper counterclaim for illegality because the defendant had suffered no damages or loss whatsoever. They had received the goods and they could use the goods and I am sure they probably did, certainly before the hotel project was abandoned. The manufactured defence, as far as I can see, of the defendant is to bring in the illegality point to attempt to defeat the transportation claim as well as the sale of goods claim. I think there is no substance in the defence and summary judgment was rightly ordered against the defendant.

5. This being my view, it remains strictly speaking unnecessary for me to say too much about the freight point. The freight point being this : there is in law, following the Aries principle, no defence to a claim for freight because freight is considered as cash. The defence that the defendant would wish to run on the freight point is that the freight for transportation from Hong Kong to Shanghai cannot possibly be as high as $1.1 million, and they relied on the new affidavit evidence in paragraph 4 of the 3rd Affirmation of Sun Yin Piu where there was a quotation of some goods carried to Shanghai for only $25,000. The quality of the evidence is such as to be difficult for the court to say whether there is a sufficient linkage between the transportation cost of $1.1 million and the quotation. It is clear that the goods arrived at different times in Hong Kong, from different parts of the world, and then there would be handling, transportation and import arrangements covered by the transportation contract. So I am not satisfied, even on the freight principle point, that there is necessarily any defence by the defendant under that point. As I said earlier, it is not necessary for me to say too much about this.

6. I therefore conclude that the summary judgment was rightly given and the appeal should be dismissed with costs.