WESTPEX FASHION LTD. v. LAU WING WA T/A HANG SING TRADING CO.

HCA10801/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10801 OF 1999

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ASSESSMENT OF DAMAGES

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1. This assessment of damages is pursuant to the order dated 14 September 1999 in which final and interlocutory judgment was entered against the defendant. The interlocutory judgment is damages to be assessed for the breach by the defendant of the purchase orders, numbers PNY0972/98 to PNY0976/98, and numbers PNY0980/98 to PNY0983/98, all dated 26 October 1998, and numbers PNY0987/98 to PNY0994/98, all dated 30 October 1998.

The 4 batches of orders

2. The plaintiff ran the business of trading in jeans. It received orders from the purchaser and placed the orders to the defendant, the manufacturer. It therefore obtained profit from the difference of the price it obtained from the purchaser and that it paid to the defendant for the same goods.

3. Those purchase orders were under four batches of orders placed by the plaintiff to the defendant. The first batch is in respect of the order for 9600 dozens of jeans at US34.00 per dozen, which the plaintiff received on 19 October 1998 from the purchaser, called May's Zona Libre, SA, (May's). On 26 October 1998 the plaintiff placed the order of the same amount of jeans at US26.78 per dozen with the defendant. The profit to be earned by the plaintiff if the contract is duly performed is US69,312.

4. The second batch concerns the orders received by the plaintiff on 26 October 1998 from the purchaser called Gil AL Trading Company (Gil AL) for 2,200 dozens of jeans at US34.00 per dozen. On the same day the plaintiff placed the order of the same amount of jeans with the defendant at US27.00 per dozen for the manufacturing of the jeans. The profit to be earned by the plaintiff if the contract is duly performed is US14,720.

5. The third batch concerns the purchase orders the plaintiff received from Gil AL on 30 October 1998 for 2,200 dozens of jeans at US34 per dozen. The plaintiff placed the orders of same amount of jeans with the defendant for manufacturing at the price of US27 per dozen. The profit to be earned by the plaintiff if the contract is duly performed is US16,240.

6. As to the fourth batch, the plaintiff placed the orders for 2,200 dozens of jeans at US30 per dozen with the defendant on 30 October 1998. The plaintiff had an agreement to sell those jeans at US36 per dozen to Gil Al. The profit to be earned by the plaintiff if the contract is duly performed is US13,200.

The letters of credit

7. On 6 November 1998 the plaintiff had issued two letters of credit to pay to the defendant; however, on 14 January 1999, the defendant informed the plaintiff that the defendant was not able to supply the jeans to the plaintiff and the defendant returned the two letters of credit to the plaintiff for cancellation. In this way the defendant was in repudiation of the contracts.

The assessment

8. As to the assessment of the damages, Mr Kwong, acting for the plaintiff, relies upon section 53(3) of the Sales Goods Ordinance which provides:

"Where there is an available market for the goods in question, the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time, or times, when they ought to have been delivered, or, if no time was fixed for delivery, then at the time of the neglect or refusal to deliver."

9. Mr Kwong submits that in the statement of Mr Lam, it sets out the contract price, and also the price which the plaintiff had placed the order with the defendant. He submits that the court can rely on the price the plaintiff would receive from the purchaser and the price the plaintiff placed the order with the defendant for the assessment of the damages.

10. I accept that those prices as set out in the order placed by the plaintiff on the defendant were the current price of the goods at the time when the defendant refused to deliver the goods to perform the contract.

Mitigation

11. As to the mitigation of the damages, obviously the plaintiff is under a duty to mitigate the damages. According to Mr Lam, on 22 January 2001, the plaintiff had requested Gil AL and May's for an extension of time for the delivery of the goods for the purpose of locating an alternative manufacturer. However, the request was refused by those purchasers, and they cancelled all other orders with immediate effect. I am satisfied that the plaintiff has discharged the burden of mitigation.

12. There is no evidence before me to challenge the evidence of Mr Lam. I therefore accept his evidence.

Conclusion

13. As a conclusion, I will award judgment in favour of the plaintiff for US$113,472, or its equivalent in Hong Kong currency, against the defendant, with interest at the judgment rate from 5 July 1999, that is the date of the writ, until payment.

14. I also make an order nisi that the plaintiff has the costs of the assessment to be taxed if not agreed, to be made absolute after the expiration of 14 days from the date of this judgment.

15. In passing, I note that Mr Kwong, acting for the plaintiff, has abandoned the claim for the expenses for the letters of credit, so I make no order for that.