BETTER WIRE FACTORY CO. LTD. v. MO CHOR CHU, SONIA t/a SHUN FAT ELECTRICAL & METAL CO.

DCCJ 5993/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5993 OF 2002

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JUDGMENT

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1. In this action the Plaintiff sues the Defendant for price of goods sold. The Plaintiff now applies for summary judgment.

2. The Plaintiff relied on two Affirmation filed on 18 October 2002 and 20 December 2002. The Defendant filed an Affirmation on 18 November 2002 to resist this application.

3. The business dealings between the parties since March 2001 involved the supply of PVC compound to the Defendant for manufacturing wires.

4. The Plaintiff's claim is for $464,457.05 for goods delivered recorded in twenty-one invoices issued to the Defendant between 4 May 2001 and 27 August 2001. It was common ground that 76,700kg or 76,704kg of PVC compound (a minor difference with no significance) were delivered and has not been paid for.

5. The Defendant alleges that 20,000kg of PVC compound was defective and its value was $122,000 (20,000kg x $6.10).

6. The Defendant did not put forward any defence in relation to 56,700kg or 56,704 kg (76,700kg or 76,704kg - 20,000kg) of the goods supplied. It is clear that there should be judgment for the value of this undisputed lot of goods, which is $342,457.05 ($464,457.05 - $122,000). Not surprisingly, solicitor for the Defendant found it difficult to argue otherwise.

7. The matter for determination is that whether the Defendant has a credible or a triable defence to the 20,000kg of the goods.

8. The Defendant has filed a hand-written Defence which is undated and unverified. The Defendant says in her Affirmation that the PVC compound was defective in the following respects:

(a) 4,000kg of the transparent red PVC compound faded and turned dirty brown and black after being used to wrap copper wire for loudspeakers;

(b) 8,000kg of the brown PVC compound, after being used to manufacturer one of the tri-coloured wires, faded and the brown colour materials leaked to the outer white colour layer of coating wrapping the tri-coloured wires;

(c) 8,000kg of the PVC compound were too transparent, not white enough, and had to be mixed with better quality PVC compound from other suppliers to manufacture copper wires;

9. The Defendant further says that upon discovery of the defects two to three months after copper wires had been manufactured she made repeated complaints, and that the Plaintiff, after visiting her factory a few times through representatives, agreed to replace the goods.

10. The Defendant counterclaims for $240,000 for wasted copper wire and loss of profits of $146,400 arising from the sale of the finished products.

11. The Plaintiff says in her second Affirmation that discolouring of the PVC compound is not uncommon unless they are made from non-migration materials which are about 30% more expensive than normal PVC compound. Solicitor for the Defendant argued that this piece of evidence amounted to an admission of the defects in the PVC compound. I do not agree. What the Plaintiff appears to be saying is that the Defendant bought cheaper goods and had to accept their characteristics.

12. A total of 5,917.5kg of transparent red PVC compound, a total 31,875kg of white PVC compound and a total of 3614.5kg of brown PVC compound were delivered to the Defendant as recorded in the invoices. The Defendant has not identified which parts of the total transparent red and white PVC compound were defective, and which parts were not. The assertion that 8,000kg of brown PVC compound was defective is contradicted by the invoices No.L-01070260, L-01070410 and L-01080726 which recorded only a total of 3614.5kg of brown PVC compound was delivered.

13. Goods were supplied between May 2001 and August 2001 as evidenced by the twenty-one invoices. The Defendant says the defects were "only discovered about two to three months after the PVC compound were melted and used to wrap the copper wire". The Defendant's Affirmation contains no particulars of when the finished products were delivered to and returned from the buyers, their quantities, the identity of the buyers, whether the defects were discovered before or after deliveries of the finished products to the buyers and the circumstances of the rejections.

14. No documentary evidence was produced by the Defendant to show the defects, the amount of the wasted copper wires and their value, the deliveries of the finished products to the buyers and rejections, contracts of sale, loss of profits, complaints of defects.

15. While the absence of documentary evidence, which is not explained, is not necessarily fatal, but it is a relevant matter to be considered here. One would have expected a manufacturer of electric wires, like the Defendant, to keep business records, at least for tax purposes.

16. The principles for considering the grant of summary judgment are set out in paragraphs 14/4/9 and 14/4/10 of Hong Kong Civil Procedure 2002.

17. I regard the Defendant's allegations bare assertions not being substantiated by essential particulars and/or documentary evidence. I am not satisfied what the Defendant says is credible or believable or she has a "real or bona fide defence". I also find no other reason for a trial

18. Accordingly, I give judgment for the sum of $464,457.05 with interest thereon at half judgment rate from 19 August 2002 until date of judgment. Plaintiff is to have costs of this action including this application and the hearing on 18 November 2002. There will be a certificate for counsel for this application.

19. Solicitor for the Defendant applied for a stay of judgment pending trial of counterclaim. It is clear that the basis of the counterclaim is the alleged 20,000kg of defective goods. There is no draft Counterclaim exhibited in the Defendant's Affirmation. Since I am unable to find any credible or real or bona fide defence in respect of the alleged defective goods I see no reason for a stay. The application is refused.