HCA005470/1987
1987, No.A5470
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
___________
BETWEEN
MO MUN TAI INC.
Plaintiff
and
JUNEJOIN LIMITED
Defendant
____________
Coram: Master Hill in Chambers
Appearance: Mr. Wong instructed by Messrs. Helen A. Lo & Co. for Plaintiff.
Mr. Wang instructed by Poon & Dissanayake for Defendant.
Date of Hearing: 28th January 1988
Date of Delivery:15 February 1988 (Reg. Dec. file)
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D E C I S I O N S
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1. The facts of this case are that the Plaintiff and the Defendant entered into an agreement whereby the Plaintiff was to supply cotton material to the Defendant to manufacture or have manufactured in China 600 dozen pairs of ladies shorts and pants.
2. After manufacture these garments were to be shipped to the U.S.A. to a company called Merry Mary. The Defendant was to provide the necessary export quota licence for entry into the U.S.A. of goods from China. The Plaintiff duly supplied the necessary fabrics for this and charged the Defendant $124,855.93 for the cost of the material which are items 14 and 15 in the Plaintiff's bundle.
3. The Defendant had the items manufactured in China and on the 6th April according to paragraph 6 of the Statement of Claim the goods were delivered to the Plaintiff. These did not amount to exactly 600 dozen pairs of shorts, but a few pairs less and the cost payable to the Defendant by the Plaintiff totalled $285,529.18.
4. The goods were then airfreighted to the U.S.A. with the so called export quota licence. However on arrival they could not be landed as the export licence turned out to be a forgery so that the clothes had to be returned to Hong Kong. Since then they have Leen stored by the Plaintiff. The Plaintiff now claims damages for the loss it has suffered as a result of the Defendant's default in supplying a valid export quota licence from China to the U.S.A. so frustrating the sale to Merry Mary.
5. Also it claims Merry Mary's loss on resale of $85,658.75 for which it says it is responsible also for airfreight to U.S. and the return sea freight to Hong Kong. A penalty of $18,844.80 to U.S. customs and storage charges for the goods since they have been landed in Hong Kong. Also for $124,855.93 being the cost of the fabrics supplied to the Defendant.
6. The question of liability as between the parties is not in issue as Interlocutory Judgment was entered on the 5th October 1987 with damages to be assessed.
7. The Plaintiff claims on the basis that because of the breech of condition (i.e. the forged export quota licence) it is entitled to rescind the contract and claim for damages.
8. The evidence adduced was not very satisfactory in some respects. The Defendant's Counsel Mr. Pow was in a very difficult position in that the Solicitors for the Defendant have been unable to obtain proper instructions from the Defendant so Mr. Pow had to do the best he could without specific instructions as to what line he should take.
9. There is some evidence on the court file that the Plaintiff when it became aware of the problem in the United States over the export licence rejected the goods.
10. This is contained in a letter dated the 14th May 1987 to the Defendant from the Plaintiff's solicitor. This letter is attached to the affirmation of Mr. Ng Sheung Wai in support of the Defendant's application to set Judgment aside.
11. The Plaintiff takes the attitude that it has rescinded the contract and rejected the goods which are now the property of the Defendant. There does not appear to have been any response from the Defendant to that nor was it argued otherwise before me.
12. The Defendant's attitude since the whole thing went wrong is to wash its hands of it. This of course it cannot do as it was in breach in not providing the valid export quota which was a vital term of the contract with the Plaintiff and in not putting matters right when the forged document came to light.
13. I assess therefore the Plaintiff's damages on the basis that the goods are the property of the Defendant. I will go through with items of special damages as it appears on the 4th page of the Plaintiff's Statement of Claim.
(a) Part price paid to the Defendant $102,782.71 - there is no doubt that this amount was paid. The cheque and receipt are exhibited as items 1 and 2 of the Plaintiff's bundle. This amount is allowed.
(b) Loss of profit of $85, 658,75. This is the loss suffered by Merry Mary as a result of the goods not being delivered and charged to the Plaintiff as shown in item 3 of the Plaintiff's bundle.
Whether this was loss of anticipated profit by Merry Mary or extra cost incurred in getting the same garments manufactured in the U.S. is not clear. At any rate the evidence on this item I find to be wholly unsatisfactory and inadequate. I disallow this item of damage,
(c) Penalty to the U.S. customs $18,844.80. This amount had to be paid as a penalty so the goods could be released to the forwarding agents. I allow this item.
(d) Airfreight to U.S. $103,602.72. This is allowed.
(e) Sea freight to Hong Kong $13, 829,91. The goods could not remain in the United States and the Plaintiff paid for their return to Hong Kong. This item is also allowed,
(f) The storage charges in Hong Kong are also allowed amounting to $2,139.54.
(g) The costs of the fabric supplied to the Defendant by the Plaintiff of $124, 855.93 is also allowed.
14. Accordingly there will be Judgment for the Plaintiff in the sum of $366, 055.61 together with costs and interest from date of writ to today at 8% or thereafter at the Judgment rate.
(M.D. Hill)
Acting Master, Supreme Court
Representation:
Mr. Wong instructed by Messrs. Helen A. Lo & Co. for Plaintiff.
Mr. Wang instructed by Poon & Dissanayake for Defendant.