CHAPMAN INTERNATIONAL TRADING LTD v. GRAND TREASURE APPAREL LTD

HCA933/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.933 OF 2003

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J U D G M E N T

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Introduction

1. This action arose out of a sale of goods contract.

2. The plaintiff is a garment manufacturer.  The defendant is an exporter of garments.

3. By an agreement dated 26 March 2002, the plaintiff agreed to manufacture and sell 12,870 sets of jackets and pants (Style No.AL310G and AL311G respectively) (“the Goods”).  The unit price of each jacket and pant were US$5.2 and US$6.1 respectively.  The total price was US$145,431.  The Goods were to be delivered on 30 May 2002.  Production samples were to be sent for approval before shipment.  The parties subsequently agreed to postpone the delivery date to 18 June 2002.  On 17 June 2002, the plaintiff delivered the Goods to the defendant.  The plaintiff then issued 6 invoices for the total sum of US$140,333.78.  (There is a slight difference between the contract price and the total price in the invoices.  But nothing turns on that.)  The defendant failed to settle any of the six invoices despite repeated demands.  In March 2003, the plaintiff commenced the present action and claimed for the said sum of US$140,333.78.

4. The defendant’s only defence is that the Goods were defective and did not conform with its US buyer’s specifications.  The alleged defects, as pleaded, were :

(1)     front rib between zippers on two sides not aligned;

(2)     slanted logo, which logo should have followed the sample and the buyer’s specification;

(3)     side pocket visible if one were to pay a little attention to it;

(4)     zipper puckering;

(5)     excessive fabric inside the zipper seam.

5. The defendant further pleaded that it only accepted delivery subject to a letter of guarantee signed by the plaintiff.  The US buyer rejected the Goods because of fitting problems : the sleeves of the jackets were inconsistent and longer than the specifications and the pants were too long with discrepancies of waistband and hip measurement.  Since the plaintiff had not conceded to the defendant’s requests for making good the defects, it was not entitled to ask for payment.  The defendant further counterclaims for the loss allegedly suffered as a result of rejection of the Goods by the US buyer.

Evidence

6. The plaintiff has called Mr Michael Lam Wing Chiu, its financial controller, to give evidence in support of its claim.  I accept his evidence in full.  In particular, I accept his evidence that out of the some 25,000 pieces of garments delivered to the defendant, only 99 pieces were returned for measurement by the plaintiff.  And the subsequent measurement report showed that there were slight deviations from the specifications but they were well all within commercially acceptable limit.

7. The burden rests squarely on the defendant to prove the alleged defects but it has failed to do so, given the fact that it is absent today.  The documentary evidence disclosed by the defendant does not advance its case.  There is no contemporaneous and independent documentary evidence on the alleged defects, such as inspection report or loss adjuster’s report.  For the defendant had simply not caused any report to be made on the Goods.  The various emails sent by the defendant at the time were at best self-serving and in the absence of the defendant today, I am not going to attach any weight to them.  I note in particular that the plaintiff did ask for proof of the alleged defects by an email dated 10 July 2002 but the defendant had failed to come up with any proof.  The documents relating to the proceedings between its associated company and its US Buyer commenced in November 2002, upon closer analysis, do not support the defendant’s case at all.  The US buyer’s claim related to some other subject matter.  The cross-claim of conversion made by the defendant’s associated company, if were to be taken at its face value and read together with the two invoices dated 23 July 2002 issued to the US Buyer, seemed to suggest that the defendant had indeed sold the Goods to the US buyer at a profit without any complaint of defects.

8. The defendant’s case is not assisted by the plaintiff’s documentary evidence.  First, there is an inspection report dated 7 June 2002 showing that the defendant’s agent had conducted measurement on the samples according to the size specifications before shipment.  The comments recorded in the report were the same particulars of the alleged defects pleaded in the Defence and Counterclaim.  Others were all in connection with minor defects.  But there is no evidence that the Goods delivered subsequently did contain the alleged defects.  Second, the Guarantee signed by the plaintiff dated 18 June 2002 made no reference to the alleged measurement problems at all.

Conclusion

9. For these reasons, I reject the defendant’s defence.

10. I find that the plaintiff had duly delivered the Goods to the defendant and the defendant had, wrongfully in breach of contract, failed to pay the price.  I will therefore enter judgment against the defendant for US$140,333.78 with interest at judgment rate from date of writ until payment; dismiss the counterclaim and order that the defendant do pay the plaintiff’s costs of the action, to be taxed if not agreed.