FOTOMAX (F.E.) LIMITED v. ALSCO ENTERPRISES LIMITED

1987 No.A6400

IM THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. I have, on 26th April 1988, assessed and certified damages in favour of the Plaintiff, pursuant to the interlocutory judgment entered on 2nd December 1987, in the total sum of $322,372.90 with interest thereon at the judgment rate under a .49(1)(b) of the Supreme Court Ordinance (Cap. 4) from 2nd December 1987 until full payment. I have also awarded costs of the assessment to the Plaintiff with certificate for counsel.

2. Despite the indication by counsel for both parties at the assessment that no detail written reasons for the decision would be required by either party in view of the outline of such reasons orally delivered that day, the Defendant's solicitors have by letter dated 27th April 1988 requested for written reasons. I shall, in the premises, give now the detail reasons as requested.

3. The Plaintiff operates a chain of outlets in Hong Kong providing photo-finishing and video club services. The Plaintiff was desirous of promoting its business by launching a compaign jointly with Kodak during Faster of 1987 offering for sale a premium item to its patrons at a low price. As a consequence the Plaintiff entered into a written agreement dated 19th March 1987 with the Defendant for the purchase of 18,000 pieces of foldable stools (printed with the logo of the Plaintiff and Kodak) at a unit price of 517.00 to be delivered to the Plaintiff's outlets by stapes. The Defendant failed to make any delivery in time for the promotion and the campaign had to be aborted. Interlocutory judgment for damages to be assessed and costs was entered by consent after service of the defence.

4. At the assessment the Defendant conceded the Plaintiff's "claims for the refund of the deposit in the sum of $91,800.00; design and production costs for hanging mobiles, shop posters and stickers on films in the total sum of $34,155.90; and the design costs of the packaging and logo imprint in the sum of $1,092.25. The only claim left in dispute relates to the production and forfeited airtime costs for aborted television spots on TVB in the total sum of $195,324.75. The quantum of the said claim is not disputed. The Defendant also confirmed that no issue would be taken on, the duty to mitigate loss and/or the Plaintiff shouldering the whole loss to the exclusion of its partner (Kodak) in the campaign. The only issue to be decided is the remoteness of the claim.

5. In support of its claim the Plaintiff adduced oral evidence, through Frederick Sin (P.W.1), of a meeting between Mr. Sin and one Danny Chan (D.W.1) on 11th March 1987 at the Riverside Hotel at Shatin during which Mr. Sin mentioned to Mr. Chan that , the reason for requiring early samples of the premium item was for shooting television commercials. This meeting ocurred prior to the signing of the contract in question. The occurrence of the meeting was not disputed by D.W.1 though he denied that television commercial was mentioned. P.W.1 was cross-examined at length and his evidence was unshakened. D.W.1 impressed me as an evasive and hesitant witness. He agreed be would expect some sort of promotion to be launched by the Plaintiff in respect of the premium item. He accepted that television would he the most effective means of promotion. He said he had not heard of the Plaintiff using television promotion prior, to the contract because, he usually gathers information about advertisements from newspapers and magazines rather than television as "we cannot record down what television had shown". I prefer the evidence of P.W.1 and reject that of D.W.1 whenever conflict arises. I find as a fact that the use of television as a means of promotion of the campaign involving the premium item was known to Mr. Chan prior to the conclusion of the contract. Mr. Tong for the Defendant rightly conceded that if the Defendant had actual knowledge of the intended use of television as a means of promotion, there could be no question of the Plaintiff's claim being too remote. The Plaintiff's said claim is thus recoverable.

6. However, I would also hold that the Plaintiff's claim would be recoverable even in the absence of such actual knowledge. On the evidence of D.W.1, the use of some form of promotion campaign was expected. It is inconceivable that the Defendant, which is admittedly one of the top five suppliers of premium products in the advertising industry, could not have contemplated the use of mass media e.g. newspapers, radio, television; in the promotion campaign of its customers involving the premium products. The specific type of mass media involved need not be known to the Defendant as long as the use of mass media was within its contemplation. The principle in Parsons (Liverstock) v. Uttley Longham & Co. [1978] 0. B. 791 (C.A.) (though oh the facts is a case concerning physical damage) governs the present case on this issue (see in particular the judgment of Lord Scarman) However, I am also satisfied that, in applying the test as laid down in Victoria-Laundry v. Newman [1949] 2KB. 528 (C.A.) and Czarnikow v. Koufos [1969] 1A.C. 350 (H.C.) it ought to. have been within the contemplation of the Defendant that television promotion is a "serious possibility" or a "real danger". I refuse to accept D.W.1's evidence that despite being one of the leading suppliers of premium products, he was not awared of the Plaintiff's prior use of television promotions between 1985 and 1987 when he entered into the contract. I am satisfied that the Defendant ought to be aware of that fact.

7. In the premises, I hold that the use of television as a means of promotion in the Easter campaign of the Plaintiff relating to the premium item was within the contemplation of the Defendant at the time of signing the written agreement dated 19th March 1987; and the consequential damages resulting therefrom is recoverable. Total damages were thus certified in the sum of $322,372.90 with interest as aforesaid.