RELIANCE INDUSTRIAL CORPORATION v. STANDARD ELECTRIC WIRE AND CABLE MANUFACTURING COMPANY LIMITED

                                                                                   Action No. 3267 of 1984

IN THE HIGH COURT OF JUSTICE

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JUDGMENT

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1. This is an appeal from a decision of Master Perrier given on 23rd July 1984 in which, pursuant to an application under O.14 r.3, he gave judgment for the plaintiff against the defendant with damages to be assessed and costs. The application arose out of two contracts made, on 6th August 1983 and 11th August 1983, between the plaintiff and the defendant by which the plaintiff agreed to sell and the defendant to buy quantities of annealed copper wire which were to be shipped from Japan to Hong Kong in the one case at the beginning and in the other at the end of November. It was a term of each contract that the defendant would open letters of credit in favour of the plaintiff by a specified date. That they failed to do. They were allowed additional time in which to comply with the contract. That they failed to do also and in the end, by a letter dated 26th January 1984, they were given one further opportunity to fulfil their obligation under the contract by 10th February 1984 whereafter the plaintiff by its letter made it plain that in the event of their failing to comply, they would regard the contract as being at an end. The defendant. did not comply.

2. By reason of the defendant's breach, the plaintiff has suffered loss in that they have become liable in turn to their suppliers; and it was in relation to that liability or loss that they made their claim and it was in relation to that loss that judgment was recovered as I have indicated before the Master.

3. By affidavit filed in support of this appeal, the defendant really takes two points. The first point was that there was no breach because the allowance of additional time, it is said, amounted to a waiver. That point was not pursued before me by Mr. Morrow. There was no merit in it. The second point turns upon the true construction of clause 4 of the general terms of contract. The paragraph of the clause to which my attention has been invited reads as follows:

"If Buyers fail to fulfil in due time the terms of payment agreed upon in the contract, Sellers should have the option of reselling the contracted goods, in whole or in part, for Buyers' account at Sellers' discretion, without any notice or other procedure, holding such goods for Buyers' account and risk and/or cancelling the contract. In these cases, Seller shall be held irresponsible for any delay of shipment and Buyers are to remain responsible for any loss which Seller might suffer."

Mr. Morrow has argued that that term of the contract places a limit on the liability of the defendant. It gives, he says, the seller, that is the plaintiff, an option in the event if the buyer being in breach, as he concedes that the defendant was in this case, in not opening letters of credit in due time. He says it does not leave open to the plaintiff the right to seek to recover damages for any loss other than that contemplated by the clause. I do not agree. I think the meaning of that clause or part of it is perfectly clear. It does give the plaintiff the option either to try to sell the goods for the buyer's account leaving open to them the right to pursue the buyer for any shortfall or the option which they exercised in this case of treating the contract has being at an end. In other words, by accepting the repudiation by the defendant as the plaintiff did, the buyer was to remain responsible for any loss which the seller might suffer. Mr. Morrow argues that that in no way detracts from his submission that the clause is one limiting the plaintiff's liability. Well, it does limit the plaintiff's liability to the extent that they can only recover the loss which they have suffered but not otherwise. Mr. Morrow next submits that such a provision amounts to a penalty. I do not agree. I think the construction of this clause is perfectly plain. It preserves to the plaintiff a right of action for loss arising from the defendant's breach in the event of the contract being brought to an end in the way envisaged by the clause. In my opinion, the learned Master was perfectly correct in giving judgment. There is no defence available here to the defendant. So, the appeal is dismissed on the merits.

4. Now, Mr. Morrcw addresses me on the question of cots before the Master. He says that since, in the event, it was ordered that damages should be assessed, it could be said that the defendant was partly successful in resisting the application. I am not entirely sure that on the notice of appeal before me, the question of costs is open but it has been agreed by Miss Li and I should consider it to be so. It is frequently the case, of course, that plaintiffs fail to recover everything they claim but I think the Master has exercised his discretion perfectly correctly. I reject the argument. Another point taken was that the Master should not have certified the matter as being fit for counsel. That is a matter with which, I think, a judge should be reluctant to interfere. Appeal dismissed with costs.