IN THE DISTRICT COURT OF HONG KONG
HOLDEN AT VICTORIA
ACTION NO.577 OF 1970
|CHAN YUK LEUNG trading as TUNG WAH SHING WEAVING FACTORY
|LO'S MEE KWONG GARMENT FACTORY LIMITED
Coram: N.B. Hooper, D.J. in Court.
Date of Judgment: 18 July 1970
1. The plaintiff in this action carries on business as weavers of cloths trading under the name of Tung Wah Shing Weaving Factory. The defendant company Lo's Mee Kwong Garment Factory Ltd. is a manufacturer and exporter of garments.
2. It would appear from the evidence of Mr. Lo Man Bun (D.W.1) that roundabout the middle of October in 1967 he entered into negotiations with a company in Britain Messrs. Interglobal Trading Co. Ltd. for the defendant Company to manufacture and export to them 400 doz. Madras checked shirts. As a result of this he ordered from the plaintiff (through Mr. Lo Toe Ming (D.W.2) 10,000 yards of cloth.
3. This transaction forms the basis of the first contract Ex.D1 dated 28th October 1967.
4. However because of additional orders from Messrs. Interglobal a further 3,090 yards was added to this contract and the delivery dates were changed. The price for the cloth in respect of this contract was $1.42 per yard. Although the plaintiff does not admit these amendments to the first contract, the fact that the Letter of Credit opened up on 25th January 1968 for the sum of $18,587.80 was in respect of the goods to be supplied under the first contract cannot be doubted since it is the exact price of 13,090 yards at $1.42 per yard the contractual unit price on the first contract and the plaintiff accepted the payment on 15th March 1968. Furthermore the fact that the plaintiff agreed is confirmed by D.W.2 the plaintiff's agent at that time.
5. So far as the first contract is concerned therefore there can be no doubt that the plaintiff has been paid in full.
6. Because of two further orders from Interglobal roundabout the end of December 1967 the defendant company placed two further orders with the plaintiff for 6,600 yards and 9,400 yards the subject of the two contracts Exh.D2 and D3. However these two contracts were only signed on 11th February, 1968.
7. Several days after signing these two contracts the defendant were forced to cancel the third contract because an order for 250 dozen shirts by Interglobal had been cancelled. This led to 2,650 yards being added to the 2nd contract, Exh.D2. The variation of the second contract is admitted by the plaintiff and his endorsement appears on the face of the contract to this effect. He also admits cancellation of the third contract.
8. So far as this second contract is concerned therefore the plaintiff was obliged to deliver to the defendant company 9,250 yards. The delivery date is shown on the contract as middle of March, 1968.
9. The dates of deliveries under the first contract as amended and endorsed on the contract was 4,890 yards at beginning of January; 3,000 yards mid-February; 5,200 yards Mid-March. The date of delivery under second contract was Mid-March 1968.
10. It is common ground that the following deliveries were made: 8,206 yards on 6th March, 1968; 6,257 1/2 yards on 13th March, 1968; total 14,463 1/2 yards. After delivery of the second lot the defendant company acknowledged to its bankers due delivery and the plaintiff drew $18,587.80, i.e. the full amount of the Letter of Credit in respect of the first contract. However, as the first contract was for only 13,090 yards and the defendant company had received 14,463 1/2 yards, this meant that at that time the defendant company was in receipt of 1,373 1/2 yards for which they had paid nothing. This is common ground.
11. After payment on the first contract the defendant company claims that several days later complaints came from the workmen in the defendant company's manufacturing department to the effect that the cloth was rotten and tore easily.
12. Mr. Lo Man Bun (D.W.1) of defendant company telephoned Lo Toe Ming (D.W.2) the plaintiff's agent rightaway asking what should be done and a meeting was arranged.
13. On 25th March, 1968 Lo Toe Ming and the plaintiff came to defendant company and saw Mr. Lo Man Bun.
14. At this meeting the plaintiff readily agreed that the cloth was of poor quality and explained the reason why. He requested the defendant company to help by shipping the goods and said that he would accept responsibility and told Mr. Lo Man Bun that the defendant company could retain $4,000 as security. He intimated that he would guarantee that the quality of the third lot would not be the same as the first and second.
15. At the time Lo Man Bun had no intention of accepting the third lot (which it appears was almost ready because there was a delivery on 26th March 1968 i.e. the next day) but in view of plaintiff's promise he agreed to do what the plaintiff requested. That this meeting took place is denied by the plaintiff and there is no record of the agreement.
16. On 26th March 1968 it is common ground that the plaintiff delivered 7452 yards which, together with the 1,373 1/2 yards brought forward from first contract made a total of 8,825 1/2 yards, delivered to defendant company for which they had not paid.
17. It cannot be doubted that on 27th March 1968 (see Exh.D6) a Letter of Credit was opened for sum of $12,870 being the price of 9,000 yards at $1.43 per yard the contractual unit price in respect of the second contract.
(The yardage contracted to be delivered under the second contract was 9,250 but Lo Man Bun says he opened Letter of Credit for lesser amount because the cloth was defective reserving compensation.)
18. It cannot be doubted that on 2nd April 1968 the defendant company in a letter to the bank confirmed the receipt of 6,000 yards (although at that time they had received 8,825 1/2 yards) thereby consenting to the release to the plaintiff of $8,580 as payment on the second contract.
19. The Defence say that the fact that the plaintiff accepted payment for a lesser amount is strong evidence to support the evidence of the meeting on 25th October when the plaintiff was supposed to have agreed to the retention of $4,000 as security.
20. They point out that of the 8,825 1/2 yards delivered, only 6,000 had been paid for and that the balance of 2,825 1/2 yards unpaid for represents in terms of money approximately the amount of $4,000 agreed to be kept as security.
21. It is to be noted that the price of 2,825 1/2 yards at $1.43 per yard (the contractual unit price on second contract) is $4,040.46.
22. It is to be noted also that the plaintiff has claimed the price of 2,825 yards (i.e. half a yard less) as the first item in his claim, but he pleaded and testified in Court in support of his pleading that delivery of this was on 23rd March, 1968. No mention is made of this delivery by the defendant company and in fact it would appear to be the only delivery upon which both parties disagree.
23. It is to be appreciated that if the plaintiff's version is correct this amount of 2,825 yards which is unpaid for has been (but for half a yard) duplicated.
24. The plaintiff has agreed with the deliveries referred to by the defendants in respect of second contract, i.e. 7,452 yards on 26th March, 1968.
25. He has agreed the deliveries on the first contract, which leaves an amount of 1,373 1/2 unpaid for making a total of 8,825 1/2 yards. He has agreed having been paid only for 6,000 yards, leaving 2,825 1/2 unpaid for, but in addition to all this, he claims that there was another delivery of 2,825 on 23rd March, 1968.
26. It is indeed remarkable that if his claim is for the payment for the delivery on 23rd March 1968 he has made no claim in respect of 2,825 1/2 yards still unpaid for and referred to above.
27. The defence say that despite the fact he was only paid for 6,000 yards in respect of the second contract the plaintiff raised no objction. (evidence of Lo Man Bun).
28. The first lot of shirts was sent off to Interglobal on 6th or 7th April.
29. In the middle of April the defendant company being short of material for 100 doz. shirts ordered a further 1,000 yards...