SMART SHOES LTD v. SO KA KING AND ANOTHER

BETWEEN:-

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JUDGMENT

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1. This claim calls for an interpretation of Clauses 8 and 9 in the agreement entered into between the plaintiff and the defendants on the 8th June 1983 whereby the plaintiff agreed to sell and the defendants agreed to buy some shoe-making machinery which was at that time stored in a Shatin godown. There is conflicted evidence as to what was said as to how long this machinery had been in the godown but it is clear that it had been there for some time. It is also clear that it was well-used machinery and indeed the plaintiff had bought it second-hand so that the defendant was buying it third-hand. The machinery at the time was sold was some 6 years old.

2. I am satisfied that from the terms of the contract the goods would be delivered at the godown and payment of the balance owing, $125,000 was to be made by a letter of or credit. I am satisfied that the defendant was given ample opportunity at the godown to examine the goods and indeed he did so. If he wished to make a further and more detailed examination the opportunity was there. He says in fact that he did not know anything about machinery but that is not the fault of the plaintiff. I am satisfied that the machines were in apparent good order and condition and indeed the defendant gave the plaintiff a receipt to that effect. It is clear also, however, that the machines could not be tested in the godown because they were packed away in boxes. The plaintiff was aware that the machines were to be sent to China but I am satisfied he did not know they were to be re-sold at a profit.

3. I am satisfied by Clause 8 that the plaintiff did have an obligation to send technicians to install the machines in China and "installation" in the context of this particular transation meant getting the machines into working order. This however was to be done at the defendants' expense.

4. If the machines had been damaged in transit the plaintiff would have had no obligation to out them in order and there is considerable dispute in evidence either way as to whether they were damaged in transit. However, I am satisfied that it is only after that that Clause 9 would have come to effect and the plaintiff would have been obliged at his own expense to supply somebody to actually start the machines. I think a reasonable interpretation of that clause means to do a final check to see that machines were safe and could be started and to actually turn them on and have a trial production run. I am satisfied that the plaintiff was not given the opportunity of complying with Clause 8. No request was made to him to send anybody to install the machine. And indeed, in a letter from the plaintiff's solicitors the name of a technician's address and telephone number were given but the defendant says no effort was made to contact this man because he did not consider that he was under any obligation to pay the technician's expenses. I am satisfied that under Clause 8 a technician was made available and the contract called on the defendant to pay his expenses. He did not avail himself of that opportunity. I am unable to say whether the defects in the machinery, and clearly there were some, were caused by long storage or by rain damage in transit - but I am satisfied that the plaintiff was not given an opportunity to remedy those defects. In any event, however, according to the evidence which is in a letter of complaint from the Chinese buyers, these defects were not particularly serious. The letter dated 10th September referred to replacement of valves and air lines and one would expect indeed that due to the age of these machines, and the time they had been stored and the fact that they had been transported by land and sea, whether or not it was raining, things like valves and airlines would have to be replaced. In the context of this particular agreement I did not consider that would render the machines to be not of merchantable quality.

5. The defendant in his evidence says he made many oral requests to the plaintiff to send somebody to repair the machine. I find that evidence somewhat strange and I do not accept it because there is no reflection whatever of any those requests in the letters sent by the defendant or by his solicitors to the plaintiff. If there were such defects I am unable to believe that would not have been said in at least one of those letters. I am therefore satisfied that the plaintiff has complied with the terms and conditions of the agreement and that he is entitled to payment for the goods. It may be that the defendant would have been entitled to payment for spare parts used where necessary and for the cost of repair in the machines. There is no evidence that I can rely on before me whereby I could begin to assess how much that was. The plaintiff is therefore entitled to the amount which he claims.

The defendant's counterclaim

6. The reason that I have given I am satisfied that the defendant's counterclaim has failed. It is based on the cost of sending replacement machines plus the transportation and other charges occurred and in any event on the documents quite clearly the most that he could ever claim against the plaintiff was the sum of $60,000 which was what the Chinese buyers originally asked for. I am satisfied that their claim could have been settled for that amount, if not considerably less.

7. The plaintiff is entitled to interest on the amount from the date of the issue of the writ. He says he would prepare to accept 8% which seems to me reasonable. The plaintiff is entitled to his costs on the claim and on the counterclaim.