XCHRX FOSTER ELECTRIC CO. (HONG KONG) LTD. v. TEXIND INDUSTRIES LTD.

HCA 8486/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8486 OF 2000

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ASSESSMENT OF DAMAGES

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1. This assessment of damages arises out of the plaintiff's claim for damages for goods that the plaintiff manufactured to the defendant's order, but then the defendant failed to take delivery of or pay for. Judgment for damages to be assessed was given on 6 November 2000.

2. At the assessment hearing on 22 November 2001 the defendant was absent. Evidence was put before me to establish that there had been due service of (a) notice on the defendant of the assessment hearing and (b) all of the documentary evidence relied upon by the plaintiff for the hearing. Evidently, the defendant chose not to contest the assessment.

3. The plaintiff was represented. The papers relied on by the plaintiff at the hearing were the pleadings, the judgment, various orders and its evidence for the purpose of the assessment. The evidence on paper took the form of an affirmation made by Lee Woon Ying made on 16 July 2001 with its exhibits, and witness statements made by Li Kwa Ngai (dated 7 September 2001), Kohama Masatoshi (dated 12 September 2001) and Izumi Yuji (dated 12 September 2001). The three witness statements did not have exhibits. At the assessment hearing each of the four witnesses I have referred to above gave evidence, through a duly sworn interpreter, confirming the truth of the contents of their written evidence. I accept the evidence of all four of them. There were no inconsistencies between their evidence.

4. The evidence demonstrated that:-

(i) The price of the goods which the defendant did not accept delivery of and did not pay for was HK$ 2,309,368.00.

(ii) In the absence of the defendant accepting delivery of the goods and paying for them, or proposing any alternative arrangements, it was not reasonably possible, due to the goods' specialist nature, for the plaintiff to sell them to any other person. The goods had been manufactured according to unique specifications provided by the defendant. Nor was it practicable (given the cost and other difficulties involved) for the components of the goods to be disassembled and re-used by the plaintiff.

(iii) The only practical course of action was for the plaintiff to sell the goods at scrap. The plaintiff did so and obtained a reasonable price for the scrap in all of the circumstances, namely HK$ 28,012.00. In fact, the plaintiff, anticipating that the defendant would fail to take delivery and pay for the goods, sold them as scrap in April 2000.

(iv) The defendant became liable in damages to the plaintiff for failure to pay for the goods and take delivery of them as a result of its failure to comply by noon on 22 July 2000.

(v) The amount of the defendant's liability as of after noon on 22 July 2000 was HK$ 2,309,368.00 less HK$ 28,012.00, i.e. HK$ 2,281,356.00.

5. For the purpose of the assessment of damages nothing turns on the fact that the goods were sold as scrap before the time and date by which the defendant was required to take delivery of them. Any interest which might have accrued on the sum of HK$ 28,012.00 between when the goods were sold and 22 July 2000 is de minimis. In any event, it is more than offset by other heads of damage that were not actively pursued at the assessment hearing. These heads of damage include, for example, the cost of storage of the goods incurred by the plaintiff from the date when the defendant should originally have taken delivery of the goods until April 2000.

6. It is seemingly the case that the defendant may be in financial difficulty. A winding up petition has been presented against it, and is due to be heard in early 2002. Counsel for the plaintiff informed me at the assessment hearing that the plaintiff was not aware of any stay of these proceedings having been sought or made by the defendant under Section 181 of the Companies Ordinance, Cap. 182, and there is no evidence that the defendant has formally gone into either compulsory or voluntary liquidation.

7. I assess the damages at HK$ 2,281,356.00 together with (i) interest thereon from 23 July 2000 to 5 November 2000 (inclusive) at a rate of PRIME plus 1% and (ii) interest thereon from 6 November 2000 to 22 November 2001 at the judgment rate in the amount of HK$ 277,144.01. The costs of the assessment, to be taxed if not agreed, are to be paid by the defendant to the plaintiff. I give a certificate for counsel.