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Tai Hing Cotton Mill Ltd v Kamsing Knitting Factory (A Firm)

Judgment Cited authorities 10 Cited in Precedent Map Related
Vincent
Judgment Date19 September 1975
Year1975
Judgement NumberCACV16/1975
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV000016/1975 TAI HING COTTON MILL LTD v. KAMSING KNITTING FACTORY (A FIRM)

CACV000016/1975

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO.16 OF 1975

(On appeal from O.J. 3627 of 1973)

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BETWEEN
TAI HING COTTON MILL LIMITED Appellant
(Defendant)
and
KAMSING KNITTING FACTORY (a firm) Respondent
(Plaintiff)

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Coram: Huggins, McMullin & Cons, JJ.

Date of Judgment: 19th September, 1975.

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JUDGMENT

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Huggins, J.:

But for the authorities I would not have entertained the slightest doubts about this case. Having had the advantage of reading the judgment just delivered by McMullin, J. I have found it some consolation that he, too, thinks the substantial intention of the Legislature is really beyond doubt. The statute appears to me as clear as any statute could hope to be. The general principle for assessing damages for breach by the seller is stated in s.53(2):

"The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract".

The provisions which follow must have been intended to be read in the light of that principle. Section 53(3) applies the general principle to particular circumstances:

"Where there is an available market for the goods in question, the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed for delivery, then at the time of the neglect or refusal to deliver".

The first thing to notice about that provision is the words "prima facie". They were intended to show that in these particular types of case the general principle was not abrogated: where to apply sub-s. (3) would result in obvious conflict with the general principle, the sub-section will not be applied. Next there are two things to be said about the phrase "was fixed"/ First, it is clear that the words "by the contract" are to be implied. A date of delivery "to be fixed" is not a date which "was fixed" even though it "has been fixed" by the date action is brought. In this s.53(3) is to be compared with s.31(2), where the draftsman referred to a fixing of the time for "sending" the goods "under" the contract. Secondly, it must be observed that the draftsman was careful not to use the word "certain" but chose instead the word "fixed". Because of the desire of the courts in the past to save from invalidity leases of land which might otherwise not have been for terms certain, they came to apply the rule which is commonly expressed in the Latin "id certum est guod certum redde potest". No comparable rule applies to the word "fixed". The date may be fixed although it is not expressed by the reference to the calendar, e.g. seven days after the arrival of a vessel in port. The date may not be immediately ascertainable and may depend upon the happening of a future event, but it must not depend upon the intervention of another will at some future time. Thus "such date as may be named by the purchaser" is clearly not a "fixed" date, while "the date which has been fixed by X" undoubtedly is . Then it should be noted that s.53(3) of our Ordinance contains two words which do not appear in s.51(3) of the English Sale of Goods Act 1893, namely "neglect or", The significance of this is that, whatever may be the correct position in England, in Hong Kong it would seem that the draftsman used the word "neglect" to show a failure to deliver and the word "refusal" to show an indication of an intention not to deliver, the date for delivery not yet having arrived. The second part of the sub-section is, of course, concerned with cases where no date "has been fixed", and if that had been intended to mean where no date is "certain" the word "neglect" would make nonsense, for until the seller knows, or ought to know, when to deliver he cannot "neglect" to deliver, although he may "refuse" to deliver. Our statute was passed some time after the enactment of the English legislation and we must assume that the draftsman inserted the additional words deliberately and endeavour to give them some meaning.It is only here that I part company with McMullin, J. He takes the view that the words "neglect or" are surplusage. I am reluctant so to hold if I can find an alternative interpretation of the sub-section which gives them some effect. Of course, if "fixed" means "certain" then a case where, on my in terpretation, the date was unfixed but certain would fall within the first part of the sub-section and not within the second, so that the two words added in the second part would indeed be surplusage. But that is one of the reasons why I am forced to the conclusion that "fixed" does not mean "certain". Once that conclusion is accepted then, if the words "neglect or" are omitted, the case where the date is unfixed but certain is not covered by either part of the sub-section: not by the first because, there being "no time ... fixed for delivery", it is implicitly excluded from that part and yet not by the second because that would then include only a "refusal" to deliver. I believe it was because the draftsman of our Ordinance thought that without the additional words there would be this casus omissus that he inserted them. I confess that use of the word "refusal" seems to me of itself necessarily to indicate an anticipatory breach and I do not see how any other meaning can fairly be given to the English sub-section. Be that as it may, not only is there nothing in our statute to suggest an intention that the latter part of sub-s. (3) should never apply to a case of anticipatory breach, but there is positive evidence that it was intended to apply - provided that the result was to an obvious confilict with the general principle laid down in sub-s. (2). There are two classes of case to be considered. The first is where, although the time for delivery was not "fixed" within the meaning of the statute, that time has been ascertained at the date of the refusal to deliver: the second is where not only was the time for delivery not "fixed" but also the time has not been ascertained at the date of the refusal to deliver, as in a case where delivery was to be "on demand" and no demand has been made or, perhaps, where delivery was to be "within a reasonable time" and the purchaser has not already sued for non-delivery. In the former case there is likely to be a conflict with the general principle, because unless there is no fluctuation in the market price between the date of the refusal and the time when the goods ought to have been delivered the buyer would be bound to get less or more than his ctual loss if the damages were ascertained by reference to the difference between the contract and market prices at those two dates. However, in the second of the two cases under consideration I see no reason why the damages should not be assessed by reference to the market price at the date of the refusal to deliver. I believe the Legislature was endeavourting to introduce a degree of certainty into the assessment of damages. If the date for delivery could, by reason of the refusal to deliver, never become precisely ascertained (and that includes a case where delivery was to be "within a reasonable time") it would be reasonable in seeking to achieve certainty to have regard to the market price on the date of the refusal.

2. Applying these principles to the present case we find that the contract was one which did not "fix" the time for delivery, for delivery was to be made, as the judge found, over an indefinite period, the Plaintiff company (the buyers) having a right to call for delivery as and when the goods were needed. It necessarily followed that the damages fell to be assessed under the second part of s.53(3) unless that would produce manifest injustice. In so far as the buyers did make demands which were not met they could have treated the case as partly falling within the class of case where the dates for delivery are unfixed but certain, but they chose to continue as though there had been no breach and on the pleadings it is not open to the sellers to contend that any of the goods should have been delivered before 31st July 1973. They never suggested, until they sought leave to amend in this Court, that they had broken the contract before that day by their failures to deliver goods which had been demanded by the Plaintiffs. Therefore this is a case where damages must be based on the assumption that the date or dates for delivery of all the goods were unascertained. That would leave us with no alternative but to apply the rule in the sub-section and to assess the damages by reference to the difference between the contract price and the market or current price of the goods at the time of the refusal to deliver, i.e. 31st July 1973. For my part I cannot see that that would produce injustice. On the other hand it is common ground that in the present case the method of assessment adopted in the court below was wrong and it is clear on figures which have been mentioned to us that it produced a figure far less than the amount of any estimate of the loss sustained which might be made in the alternative ways suggested.

3. The trial judge took the difference between the contract price and the market price on 30th May 1973. He appears to have done that with two things in mind. First he had regard to the evidence (which presumably he believed) that the sellers failed to meet various demands for deliveries made by the Plaintiff during the latter half of 1972 and early in 1973. As he pointed out, he was not told of the dates of those failures, but that...

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