Marsland Industries Ltd. v. Genexy Co. Ltd.

1998, No. 81
(Civil)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an appeal from Mr. E. Lin (sitting as a deputy judge of the District Court) who, on 27 January 1998, found in favour of the plaintiff, Marsland Industries Limited ("Marsland") in its claim for damages (to be assessed) for breach of contract against the defendant, Genexy Company Limited ("Genexy"); the contract relied on by Marsland was a contract for the transfer of "quota" by Marsland to Genexy. (A transfer of "quota" is a familiar transaction in the textile industry, which is regulated under international agreements which provide for limitations on the export of textiles. In this connection, there has developed a market in Hong Kong in which "quota" may be bought and sold by way of transfer from a transferor to a transferee, subject to the relevant provisions of the Import and Export Ordinance, Cap. 60.)

2. Genexy now appeals against the judge's order.

The issues

3. The first issue in the present case is whether Marsland is to be regarded as the transferor of "quota" under a contract entered into by Genexy as the transferee, or whether the "quota" was acquired by Genexy from someone else. Marsland claims to be the transferor and accordingly entitled to the benefit of the contract with Genexy, but Genexy denies this. Genexy says it entered into no contractual arrangements with Marsland. Accordingly, it says, Marsland is not entitled to institute this action against Genexy for damages for breach of contract. (I should mention briefly the nature of the breach. If the transferee of "quota" does not use the "quota" within a certain time, the benefit of the "quota" is not only lost to the transferee. The failure also has adverse effects on the rights of the transferor in relation to the issue to him of "quota" in the future, and because that happened here, that is to say, because Genexy failed to use the "quota" the benefit of which had been transferred to it, Marsland lost the right which it might otherwise have had to the benefit of a similar allocation of "quota" in the future. This is the subject of its claim for damages.)

4. Genexy also says that Marsland gave no consideration for the contract: this is the second issue.

Genexy's case

5. Genexy says, correctly, that there was no direct contact between Marsland and Genexy. So it says that therefore there is no evidence to support Marsland's claim that it did enter into a contract with Genexy.

The judgment below

6. The transaction was fully documented. The judge reviewed the facts (which I need not rehearse here) and found that a contract between Marsland and Genexy had indeed been constituted, with the assistance of intermediaries in the trade of the buying and selling of "quota", on the one hand Longstyle Limited, and on the other Sunny Chung's Industrial Company Limited.

7. The judge accepted the evidence led by Marsland as to how the contract had been concluded through intermediaries. For my part, I see no reason to disturb his findings. Genexy's case, that it only agreed to obtain the "quota" from Sunny Chung's Industrial Company Limited, was rightly rejected by the judge.

Conclusion

8. I am satisfied that, as the documents demonstrate, a contract was constituted here, between Marsland as transferor and Genexy as transferee, of the "quota" which Genexy as transferee agreed to accept. The promises made and obligations entered into by Marsland as transferor and Genexy as transferee respectively are perfectly good consideration one for the other. The fact that it was not possible, during the negotiations for the acquisition of the "quota" on the part of Genexy, for Genexy to identify Marsland as the transferor, is in my judgment nothing to the point. It is perfectly possible for contracts to be effected through intermediaries in this way. There are many markets, of which the market in "quota" is only one example, in which the law recognises this, not (as was urged on us) by reason of custom, but simply because that is the correct legal analysis of what transpires where a transferor of something of value (whether it be of "quota", or pork belly futures, or anything else) puts his asset on the market and that asset is, in due course, purchased by some purchaser in the market who wishes to acquire it.

9. For my part, I would dismiss this appeal.

Rogers, J.A. :

10. I agree.

11. I consider that this is a clear case of a contract which was effected between the plaintiff and the defendant through brokers and I see no substance in the points raised on the appeal.

Mortimer, V.-P.

12. I agree that this appeal must be dismissed and there is nothing I can usefully add.