Civil Action1995

WING HING PROVISION, WINE & SPIRITS TRADING CO. LTD. v. HANJIN SHIPPING CO. LTD.

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59741-EN-1999-07-05

WING HING PROVISION, WINE & SPIRITS TRADING CO LTD v. HANJIN SHIPPING CO LTD

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HCA 9510 of 1995

IN THE HIGH COURT OF THE HONG KONG SAR

COURT OF FIRST INSTANCE

______________________

BETWEEN

	WING HING PROVISION, WINE & SPIRITS TRADING COMPANY LIMITED	Plaintiff
	and
	HANJIN SHIPPING CO. LTD.	Defendant

______________________

Coram: The Hon. Mr. Justice Waung in Chambers

Date of Hearing: 20th, 21st April and 6th May 1999

Date of Handing Down of Judgment: 5th July 1999

______________________

JUDGMENT

______________________

1. By my Judgment dated 24th December 1998 I gave Judgment in favour of the Plaintiff company in the sum of $585,144 together with interests thereon and I also awarded costs of the Action and costs of the Counterclaim to the Plaintiff. At the request of both parties, I also ordered that the costs so awarded was to be assessed by me by way of gross sum assessment under Order 62 rule 9(4)(b). This judgment is my decision on the amount of costs to be awarded to the Plaintiff upon the gross sum assessment.

2. The claim of the Plaintiff for costs can be conveniently divided into two periods, the first was from the beginning of the case until about mid 1998 ("1st Period"), during which the Plaintiff was represented by the solicitors firm of Herbert Smith and Counsel. The second period was from mid 1998 onwards ("2nd Period") when the Plaintiff was without formal legal representation and was being represented by Mr. Steven Yip Chun Nam (" Steven") pursuant to an Order of the Court dated 3rd July 1998 giving leave for Steven to represent the Plaintiff in this Action.

3. The make-up of the claim of the Plaintiff for costs .. can be seen in the Affirmation

of Yip Chun Nam filed on the 5th of February 1999. The claim can be reduced into 8 heads of claims as follows:-

(1) Costs of Plaintiff incurred by employement of Herbert Smith, the former solicitors of the Plaintiff in the sum of $590,054.47. (para. 3 & 4)

(2) The costs of witness Yip Chun Tung in the sum of $5,871. (para. 5)

(3) The costs of obtaining documents and tapes in the sum of $5,064.00. (para. 6 & 7)

(4) The costs of travelling expenses to and from court in the sum of $9,120.00. (para. 8)

(5) The costs of rental of premises in the sum of $153,600. (para. 9)

(6) The costs of remuneration of employees and directors of the company in the total sum of $930,000. (para. 10)

(7) The costs of Adrian Yip's attendance in the sum of $10,762.50. (para. 11)

(8) The costs of 51 working meals in the sum of $39,792.00. (para. 12)

It will be seen that Claim (1) relates to the 1st Period and Claims (2) to (8) relate to the 2nd Period.

4. The Defendant disputes each and every one of the 8 Claims, even down to the smallest one. This is not surprising as the Defendant, no stranger to litigation worldwide, is a hard-headed Korean company which has not given a single inch in this piece of litigation but has subjected the Plaintiff company to the highest and worst kind of exposure. It is therefore my unpleasant task to consider the objections of the Defendant to the claim of the Plaintiff for costs and in the light of the objections, make my determination on the gross sum assessment. But before I proceed to consider the details of the objections, I should first set out my general approach.

5. This is gross sum assessment and not a detailed taxation. The advantage of the Trial Judge doing the gross sum assessment of the whole case is that he has lived with the case for some time and has intimate knowledge of what steps had been taken and what ought to be regarded as reasonable costs which should be paid by the losing party. I have seen all the Yips in my court over a period of many days and on many different occasions and I have formed, as I said in my Judgment, a most favourable opinion of each and every one of the Yips, whom and whose company the Plaintiff had been hard done by the actions of the Defendant. So long as there is a reasonable basis for the claim and not forbidden by the law. I will look favourable and fairly on the claim and allow it in so far as it is permissible for me to do so. This is my first general approach.

6. My second general approach is to ask myself what would have been a reasonable set of costs with proper representation, in respect of the 2nd Period when the Plaintiff was not legally represented but was being represented by Steven and the conduct of the Action was under his able management and supervision. This hypothetical set of costs would provide the guidance to the court, firstly of what ought to be the ceiling for the costs of the 2nd Period but secondly of whether the amount now claiming by the Plaintiff is excessive by reference to such reasonable costs with legal representation. If the costs of the 2nd Period claimed by the Plaintiff (without legal representation) is substantially lower than what would have been the costs with legal representation, then it seems to me that the paying party the Defendant is already benefiting from the fact that the Plaintiff was acting without representation and with Steven in charge and the court ought to be cautious in not further substantially reducing the reasonable claim for costs of the 2nd Period thereby in effect giving a further large undeserved windfall to the Defendant. But if the costs of the 2nd Period or any part thereof is particularly high and much higher than the costs of the Plaintiff with legal representation then close scrutiny must be given to the claim of the Plaintiff for the 2nd Period or specific part thereof to ensure that the Defendant is not worse off by the Plaintiff being not legally represented.

1ST PERIOD - Claim (1) for $590,054.47 for Herbert Smith Fees

7. Mr. Shieh says that this first head of claim for the fees of Herbert Smith is too high, and that it ought to be much reduced as it would have been taxed down in ordinary taxation and that even if some element of the fees might attract costs on an indemnity basis, all of the action should not be awarded costs on an indemnity basis and that therefore this court ought not to assess the Herbert Smith costs in the full sum claimed. I reject all the arguments of the Defendant. In the particular circumstances of the case, I would have exercised my discretion that the whole of the Action should be given costs on an indemnity basis if taxation is ordered. The fact that this is now gross sum assessment instead of taxation does not thereby put the Plaintiff into a less advantageous position. But in any event, even if the costs were to be taxed on a party and party basis and not on an indemnity basis, having studied the bills and what they cover in the Action, I have no doubt that the costs so claimed by Herbert Smith, even on an ordinary basis of taxation are reasonable. This is a heavy commercial litigation and a very large amount of difficult work have to be done and had been well done. The amount of costs sought by Herbert Smith is very reasonable as can be seen by the fact that the Plaintiff had not challenged the bills in any way. The whole of Claim (1) in the sum of $590,054.47 is allowed but I do not award any additional sum for interests which Herbert Smith said it would be claiming. I am not awarding any interest, in the hope that Herbert Smith, unlike the Defendant, would behave with decency and commercial sensibility and that in the circumstances, it will agree not to insist on interests or will be very moderate in its insistence on interest.

2ND PERIOD - APPLICABLE PRINCIPLE

8. The most important question which has to be asked in relation to the tx1 Period is whether the Plaintiff is a litigant in person, because if it is then the generous provisions of Order 62 rule 28A applies, and substantial recovery for costs could be made by the Plaintiff. The Defendant through Mr. Shieh submits to me that the Plaintiff being a limited company and therefore a persona ficta, is not in law a litigant in person and Mr. Shieh places reliance on the authority of Jonathan Alexander Ltd. v Proctor [1996] 1 W.L.R. 518; Australian Telephone Distributoros Property Ltd. v Golden Always Ltd. [1996] 3 HKC 401 and In Re Minotaur Data Systems Ltd. [1999] 1 W.L.R. 449. Although I have considerable reservation that the law can be in such a state as to have three groups of litigants, those represented, those unrepresented but litigants in person (being able to rely on Order 62 rule 28A) and those unrepresented but not litigants in person such as companies or Official Receiver (unable to rely on Order 62 rule 28A), for present purposes, I will assume that the Plaintiff is not a litigant in person. The effect of this is enable the Defendant to object to a number of the substantial claims of the Plaintiff. Is the law so helpless in the face of such hard stand and what should-be the applicable principle for the recovery of costs if the Plaintiff is not a litigant in person.

9. It seems to me that on the basis of the Plaintiff being not a litigant in person then the authorities on what a litigant in person can claim or cannot claim gives no or very little guidance. One must look for general principle starting with the words of the statute of what is covered by costs. Order 62 which is the governing statute for costs, defines costs to "include fees, charges, disbursements, expenses and remuneration." The relevant question to ask in relation to the costs claimed by the Plaintiff for the 2nd Period is that in relation to each head of Claim, whether such Claim could be said to be fees, charges, disbursements, expenses and remuneration. It seems to me further that in order that any particular Claim may come within the scope of recoverable costs, there must be a linkage between the Claim and the Plaintiff company, so that it is not enough if a particular amount is held to be expenses but the expenses must be that of the Plaintiff company and not some personal expenses of a director of the company. I appreciate of course that in the Jonathan Alexander case, the English Court of Appeal decided the case against the company but the Court looked at the matter not from the point of view of construction of our statutory words. I believe that there is no binding authority against the approach of mine stated above.

2nd Period Costs if Plaintiff Represented

10. Before I proceed to consider each of the 7 Claims under the 2nd Period, it seems to me, to put matters in proper proportions, that I should determine what I would consider to be reasonable costs of the Plaintiff if Herbert Smith had continued to act for the Plaintiff for the 2nd Period. As a generalisation, costs of the trial of an action is normally at least 50% of the costs of the action Very often lawyers go by the rule of thumb of 20% for the period from start to pleadings, another 30% from pleadings to pre Trial and 50% for Trial. In my view, a fair and reasonable costs of the Plaintiff for the 2nd Period up to Judgment, if the Plaintiff had continued to be represented by say Herbert Smith and Clifford Smith of Counsel would be at least $600,000. A simple calculation will show that in relation to Counsel alone, a Brief Fee of $150,000 and a Refresher of $50,000 for the Trial for this case would bring the total of reasonable Counsel's fees for the 6 day Trial alone to $400,000. From Judgment to the final day of the hearing on costs on 6th May 1999, there would have been incurred easily another $150,000. The total costs if the Plaintiff had been represented from July 1998 to May 1999 would have been no less than $750.000. The question which will have to be examined later is to what extent the Claims now made by the Plaintiff for the 200 Period is unreasonable having regard to what the Plaintiff (with representation) would have incurred (certainly recoverable) in the minimum sum of $750,000.

Claim (2) for $5,871.00 for Attendance of Witness Yip Chun Tung

11. Yip Chun Tung was a witness in the Action and he came to Hong Kong from Bangkok where he lived and worked to give evidence. The claim under this head consists of $2,400 for round trip air ticket from Bangkok to Hong Kong of Yip Chun Tung and $3,471.00 for compensating Mr. Yip for his attendance. The question to ask in relation to this head of Claim is whether the two sums under this Claim (2) could be said to be expense of the Plaintiff, disbursement of the Plaintiff or remuneration liability incurred by the Plaintiff. The critical factor is not whether that amount had actually been paid by the Plaintiff but whether the liability for such an amount had been genuinely incurred by the Plaintiff. Take for example the air ticket from Bangkok to Hong Kong return which might have been paid by Mr. Yip. Chun Tung but for which he would expect reimbursement by the Plaintiff company as this was an expenditure for the benefit and at the request of the Plaintiff, in order that Mr. Yip could attend as a witness for the Plaintiff at the Trial. The fact that Mr. Yip is a son of the Yip family or a brother of Steven who was conducting the case for the Plaintiff as directed by the Court does not diminish the liability of the Plaintiff to reimburse Mr. Yip for that ticket or the right of the Plaintiff to seek the recovery of the price of the ticket from the Defendant. The same principle also applies to the sum of $3,471.00 as compensation or remuneration to Mr. Yip for his attendance in Hong Kong. It is at the request of the Plaintiff and for the benefit of the Plaintiff that Mr. Yip can to Hong Kong and stayed the necessary number of days to attend court to give evidence and I see that claim of $3.471 for Mr. Yip's attendance as perfectly proper and legitimate. I would therefore allow this Claim for $5,871.00 in full.

Claim (3) for $5,064.00 for Copy Documents and Tape

12. This small claim was also disputed by the Defendant. $2.964 was paid to Messrs Sinclair Roche for documents required for the hearing as Herbert Smith had exercised a lien on the documents. I see the case as being no different from the Plaintiff having to pay for reconstituted documents as result of a fire. The amount was genuinely paid and I see no basis for rejecting that claim.

13. As for paying for the tapes, this amount was paid to the Court for the tapes to assist Steven to prepare for final submissions. Being a non-lawyer, Steven was already very handicapped when he was facing Mr. Shieh of Counsel who had the able assistance of sometimes two solicitors sitting in court to take notes and give instructions. Steven had to do most things himself. Mr. Shieh argued that this item of payment for the tapes is not recoverable and referred me to Order 68 rule 2(3). Order 68 rule 2 relates to a situation where the judges takes the view that his notes of evidence is sufficient for the appeal and there is no need to transcribe the shorthand note of the evidence, but if one party still insists on a transcript of the evidence being prepared, then the charge for such transcripts shall be borne by that party in any event. That situation is totally different from our case, where in order to assist the Court in his final submission, the Plaintiff sought and obtained the tapes with the permission of the Court. This objection of the Defendant has no substance and serves to illustrate the extent to which the Defendant will stoop to object with every conceivable point against the Plaintiff. I allow this Claim for $5,064.00 in full.

Claim (4) for $9,120.00 for Travel to and from Court

14. Unlike the Defendant's Solicitors based in Central, Steven is based in Kowloon from where he had to take a taxi to come to Court with bundles of documents in the course of the proceedings. The claim represents travel to and back from Court 38 times and does not include in fact the numerous times of travel after Judgment was given when Steven had to attend court in relation to assessment of costs. I allow this Claim for $9,120 in full.

Claim (5) for $153,600 for Rental of Premises

15. I am not satisfied with the quality of the evidence for this Claim and I therefore disallow this Claim.

Claim (6) for $930,000 for Remuneration of Directors/Employees of the Plaintiff

16. This is the most controversial of the Claims made by the Plaintiff. The total amount of $930,000 is made up of remuneration of 4 persons, namely Steven, his father, his brother and his sister. The total sum of $930.000 is obviously very large having regard to what I regard as a proper and recovery sum of $750,000 for the 2nd Period if Herbert Smith had continued to represent the Plaintiff.

17. In my judgment, the only person who has a legitimate claim to being remunerated is Steven because he was appointed by the Court to represent the Plaintiff in the Action and because he actually did all the work and appeared in my Court day after day including this present hearing in relation to costs stretching from February 1999 to March 1999 when directions were given and the hearing proper itself from April to May 1999 when the hearing concluded. Even thereafter. Steven continued to perform valuable work by furnishing further submissions to the Court subsequent to the last hearing on the 6th of May. The question therefore under this Claim is whether in respect of all the work done by Steven Yip in this Action starting from when Herbert Smith ceased to act, does the Plaintiff company have a liability to Steven for remuneration and if so what is the reasonable amount of such remuneration.

18. The first matter which has to be borne in mind is that the Plaintiff company ceased its business due to its poor financial position caused by the Defendant's action and that from mid 1998 when it ceased its representation by Herben Smith and also ceased its business, Steven although a director was not an employee receiving any kind of wages. It is in that context one would have to consider whether there ought to be reasonable remuneration by Plaintiff to Steven. There is no doubt in my mind that having been exposed to this case for a long time and in particular to the considerable ability of Steven that I can say Steven had done valuable work for the Plaintiff in this Action and that what he did was beyond the call of duties of a director of the company. I am certain that a self-respecting company will find it is obliged to remunerate properly someone like Steven for such valuable services, although there might have been nothing said between the parties at the relevant time on remuneration. I therefore conclude that the services of Steven is remuneration which is properly payable to Steven by the Plaintiff and is within the scope of costs under Order 62. What should be the quantum is the difficulty. What ought to be the right figure, specially when paragraph 10(2) of the Affidavit does not even include the work done by Steven for the period of time after 24^th December 1998, namely after Judgment when costs became the focus. For a period of another 5 months, Steven was also the only person as far as I could see, involved with costs and did the work in relation to the Plaintiffs claim for costs. Doing the best I can in the circumstances, in my view the proper quantum as remuneration by the Plaintiff for the work of Steven should be in the sum of $250,000 which represents one third of the amount of $750,000 which the Plaintiff would have to incur if Herbert Smith had continue to represent the Plaintiff.

Claim (7) for $10,762.50 for Remuneration of Attendance of Adrian Yip Chun To

19. Adrian Yip was a key witness in the Action and I singled him out in my Judgment as the most impressive of all the Plaintiffs witnesses. His remuneration should be awarded on the same principle as that of his brother Yip Chun Tong but the quantum is different because Adrian has a higher earning capacity. I allow this Claim of $10,762.50 in full.

Claim (8) for $39,792 for Working Meals

20. The basis of this Claim is that to prepare for the Trial of this Action, the Plaintiff company and in particular Steven had to attend and pay for some 51 Meals either amongst the special working Group itself or with various professionals and non professionals. Very little particulars were given. I regard 51 meals as somewhat excessive in the absence of full particularisation. I would regard 2 meals per month during the period from July 1998 to May 1999 as being reasonable and on that basis I would allow 20 meals at $750 per meal totally $15,000.

CONCLUSION

21. The final calculation is that I allow the following sums:

For 1st Period: Claim (1) -	$590,054.47
For 2nd Period: Claim (2) -	$5,871.00; Claim (3) - $5,064.00; Claim (4) - $9,120.00;
Claim (6) -	$250,000.00; Claim (7) - $10,762.50; Claim (8) - $15,000.00.

Claims (2), (3), (4), (6), (7) and (8) add up therefore to $295,817,50, which is very much less than the notional costs of $750,000 of Herbert Smith if they had continue to act for the Plaintiff for the 2nd Period.

22. The total figure for Claim (1) under the 1st Period and for the other Claims under the 2nd Period is therefore $885,871.97 and this total figure which is inclusive of the Plaintiffs costs incurred in relation to its claim for costs and for the gross sum assessment of costs, is therefore my final determination of the amount of costs under the gross sum assessment. The Defendant is to pay this gross sum assessment figure of $885,871.97 immediately.

William Waung
Judge of the Court of First Instance, High Court

Mr. Steven Yip Chun Nam, Director of the Plaintiff representing the Plaintiff

Mr. Paul Shieh instructed by Messrs. Sinclair Roche & Temperley for the Defendant

33941-EN-1998-12-24

WING HING PROVISION, WINE & SPIRITS TRADING CO. LTD. v. HANJIN SHIPPING CO. LTD.

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HCA009510/1995

HCA 9510 of 1995

IN THE HIGH COURT OF THE HONG KONG SAR

COURT OF FIRST INSTANCE

_________________________________

BETWEEN
	WING HING PROVISION, WINE & SPIRITS TRADING COMPANY LIMITED	Plaintiff

	AND

	HANJIN SHIPPING CO. LTD.	Defendant

_________________________________

Coram: The Hon. Mr. Justice Waung in Court

Date of Hearing: 12, 13, 14, 15, 16 and 23 October 1998

Date of Handing Down of Judgment: 24 December 1998

_____________________

J U D G M E N T

_____________________

1. The Plaintiff was a Hong Kong trader in wine, spirits and beer and regularly imported these goods into Hong Kong for resale. One of the sources of the Plaintiff's purchase was beer from Pabst in USA, Pabst being a well known producer of beer. The Defendant was one of the sea carriers engaged by Plaintiff to carry Pabst beer from USA to Hong Kong. Between mid 1995 and September 1995, the Defendant a Korean shipowner with office in Hong Kong and USA, carried some 7 shipments of Pabst beer for the Plaintiff from USA to Hong Kong. The 7 shipments, at the Trial known by the last 3 digits of the relevant bills of lading are the following with the relevant particulars:-

Shipment-BL No.	Date	Quantity	Charges Stated on BL
1st shipment-BL800	12/7	45 containers x 40"	US$1025/cont. + Nil extra
2nd shipment-BL704	17/7	5 containers x 40"	US$1025/cont. + Nil extra
3rd shipment-BL601	24/7	22 containers x 40"	US$1025/cont. + HK$2,250 for THC
4th shipment-BL802	1/8	20 containers x 20"	US$897/cont. + HK$1,690 for THC
5th shipment-BL506	1/8	36 containers x 40"	US$1025/cont. + HK$2,250 for THC
6th shipment-BL501	8/8	50 containers x 40"	US$1025/cont.+ HK$2,250 for THC
7th shipment-BL903	15/8	2 containers x 40"	US$1025/cont.+ Nil extra

Although there were problems in relation to the first 5 shipments, these problems were resolved by the parties at the time. Serious dispute however arose over the 6th and 7th shipment and the dispute was whether the Defendant was entitled to insist on payment from the Plaintiff for the Terminal Handling Charges ("THC"). The Defendant said yes, notwithstanding that these THC were not charged in respect of the five previous shipments whereas the Plaintiff said no, because there was an oral agreement made as early as late June/early July 1995 between the parties whereby it was agreed that the specific rate agreed to be paid by the Plaintiff to the Defendant for the carriage of each container was an all inclusive rate, namely inclusive of all terminal charges. The dispute resulted in the Defendant refusing to release the 52 containers under the 6th and 7th shipment, thereby causing the Plaintiff to lose its resale contract and to incur a great deal of extra truck costs, which formed the second part of the claim of the Plaintiff. In response to the claim of the Plaintiff, the Defendant counter-claimed for the disputed THC and instead of merely limiting the counterclaim to the two disputed shipments, the Defendant for good measure also included in the Counter-claim the THC in respect of each of the previous 5 shipments.

2. In this Action, the Plaintiff was originally represented by Solicitor and Counsel but with the long attrition of a complex expensive commercial dispute, the Plaintiff found itself unable to afford the heavy costs of legal representation and the Trial before me was conducted in person by Mr. Steven Yip Chun Nam, a director of the Plaintiff speaking for the Plaintiff. In the circumstances, the Plaintiff and the Court were both handicapped by the lack of proper representation of the Plaintiff's interest. Mr. Shieh for the Defendant gave his very fair assistance to the Court but that was no substitute for a party's usual full representation which is essential in a commercial case of this nature. It seems to me in these unusual circumstances that I ought to set out in this judgment a full history of the matter before proceeding to consider the legal effect of what happened.

HISTORY

3. The servicing of the active trade between North America and the Far East by container ships carrying cargo from North America to the Far and vice versa, generated healthy but intense competition amongst the Pacific carriers. One of these active and competitive carriers was the Defendant, which as indicated by its name, is a Korean carrier with operation in Hong Kong and Seattle, USA. The Defendant provided a westbound container service and it competed for the carriage business with a number of other carriers. This case is the story of a competition which went wrong.

4. The Plaintiff was a family company headed by the father Yip Shu Lam, who was ably assisted in the running of the family company by his three sons, Yip Chun Tung, Steven Yip Chun Nam ("Steven") and Adrian Yip Chung To ("Adrian"). Steven is the most commercial minded of the three brothers and he therefore played a central commercial role in the Plaintiff company. Adrian was so to speak assisting Steven.

5. In June 1995, a Mr. Weipz of Pabst ("Weipz") informed Steven that the Defendant in Seattle was offering carriage from Seattle to Hong Kong at US$1,025 for 40 footer and US$897 for 20 footer inclusive of THC and Bunker Adjustment Factor ("BAF") and that the Plaintiff should talk directly to the Defendant in Hong Kong on this. Steven instructed Adrian to talk to the Defendant about these offered rates and around the end of June 1995, Adrian spoke with Jeffrey Lui ("Jeffrey") of the Defendant. Jeffrey was in the sales department of the Defendant in Hong Kong and it was his responsibility to solicit potential customers and to generate business. Jeffrey was known to Adrian as there were previous dealings between the Plaintiff and the Defendant. Jeffrey was not able to confirm the $1025/$897 all inclusive rates in the first telephone conversation but in the second telephone conversation a few days later, he confirmed these rates and attempted to convince Adrian to accept these rates because they were good rates being "all in", namely inclusive of THC and BAF. It would seem that the competitors' rates at the time were just slightly less. In the same second telephone conversation, it was also suggested that each side must give 3 months notice if this freight rate was to be changed. Adrian consulted Steven and telephoned Jeffrey the same day of the second call and on behalf of the Plaintiff accepted the Defendant's offer. For the Plaintiff at least, it regarded itself as having a binding agreement with the Defendant (hereinafter referred to as the "Oral Agreement") that:-

(1) the freight rate the Plaintiff was to be charged by the Defendant for the Seattle/Hong Kong carriage was $1,025 for 40 feet container being an all inclusive rate including THC;
(2) the freight rate the Plaintiff was to be charged by the Defendant for the Seattle/Hong Kong carriage was $897 for a 20 feet container being an all inclusive rate including THC;
(3) the aforesaid rates were only to be changed after 3 months advance notice is given by one side to the other side.

Later the same day of the 2nd and 3rd telephone calls, the Plaintiff instructed Pabst that the Defendant should be used for the carriage of the 1st Shipment.

6. In due course, the 1st Shipment of 45 containers (BL800) arrived in Hong Kong. BL800 showed the freight payable being $46,125 or $1,025 per 40 feet container and this freight was paid by the Plaintiff. Nothing was payable for THC. The same freight of $1,025 per 40 feet container was also shown in the BL704 in respect of the 2nd Shipment of 5 containers and the Plaintiff paid that freight. Again nothing was payable for THC.

7. The BL601 in respect of the 3rd Shipment of 22 containers however stated in the Bill in addition to the freight of $1,025, a THC of HK$2,250 (about US$290) for each container. When the Plaintiff received that BL601 on 14th August 1995, it took the view that there must have been a mistake as $1,025 was supposed to be an all inclusive freight, including therefore the THC. Adrian telephoned Jeffrey and asked the mistake to be corrected and Jeffrey immediately admitted that it was an internal Hanjin mistake but suggested that to avoid any delay in the release of the 22 containers, the Plaintiff should issue to Hanjin a cheque post-dated by one month, of $49,500 (the extra THC charges) which post-dated cheque would not be presented and would be returned immediately to the Plaintiff upon the documents in respect of the mistake being corrected. Adrian agreed to this course to assist Hanjin and to enable the 3rd Shipment to be released immediately. Accordingly the Plaintiff gave to Hanjin not only the bank draft for the freight but also a separate post dated cheque in the sum of HK$49,500. The day after the sending over of that post-dated cheque, the accounts department of Hanjin telephoned to inform the Plaintiff that the mistake had been rectified and that the Plaintiff could collect the post-dated cheque which was done.

8. The same problem arose over the 4th Shipment under BL802 in respect of 20 containers (20 feet) and the 5th Shipment under BL506 in respect of 36 containers (the normal 40 feet) as both Bills of Lading showed in addition to the agreed freight for the 20 feet container and for the 40 feet container, the additional THC payable in the sum of HK$1,690 for 20 feet container and HK$2.250 for 40 feet container. Adrian thought the same mistake was being made as with the 3rd Shipment and telephoned Jeffrey to require the mistake be corrected immediately. According to Adrian he also required a meeting to be held so that the Plaintiff would have a signed written document evidencing the Oral Agreement. Jeffrey agreed to come to come to the meeting and informed Adrian that he and Woody Lau, the sales manager of Hanjin would attend.

9. In anticipation of the meeting, Steven prepared a draft memorandum ("Draft Memo") setting out the agreed all inclusive charge of US$897 for the 20 feet container and US$1025 for the 40 feet container and the three months notice to change the rates, intending that Jeffrey or Woody Lau ("Woody") would sign the document. The meeting in the office of the Plaintiff started at about 1.40 p.m. on the 17th August 1995. Jeffrey and Woody acknowledged that the same mistake had been made in the documentation of the BL charging THC and agreed that Hanjin would correct the mistake. In order to enable Hanjin to immediately release the containers under the 4th and 5th Shipments, they asked that the same arrangement to be made as with the 3rd Shipment, namely the handing over of a post-dated cheque in respect of the THC charges in respect of both Shipments which cheque would be returned immediately upon the mistake being rectified. What then happened was that a post-dated cheque of Steven's sister was given in respect of the THC amount for both Shipments. It would seem that the containers of the 4th and 5th Shipment were released immediately and on the 18th August 1995 (the day after the meeting and the handing over of the post-dated cheque), the accounts department of Hanjin telephoned the Plaintiff to collect the post-dated cheque. This was done.

10. The much more important event which took place at the meeting of the 17th August 1995 however was the matter of signing of the Draft Memo. The Draft Memo sets out the three matters agreed to by the parties under the Oral Agreement, namely:-

(1) $1,025 all in rate for a 40 footer;
(2) $897 all in rate for a 20 footer;
(3) 3 months mutual advance notice to change the agreed rates.

At the meeting the Draft Memo was handed to Woody but it was not signed because Woody said that as the mistake in relation to 20 footer was only made the first time, he wished to clarify the position before giving a written confirmation but there was no problem of confirming in writing the other two items, namely the 40 footer all in rate and 3 months mutual advance notice to change the rate. At the meeting Stephen therefore prepared a new Memorandum setting out the Oral Agreement in relation to all in rate for the 40 footer and the 3 months advance note and this document ("17th August Memorandum") was then signed by Woody and Steven.

11. A few days after that meeting on the 17th August, Woody telephoned Adrian to solicit for more business and Adrian indicated that the Plaintiff wanted to have a cooling off of orders to Hajin since there had been mistakes and the Plaintiff wanted to see whether things would progress well after the 17th August Memorandum.

12. The fateful 6th Shipment with 50 containers (BL501) arrived around the 24th August 1995, one week after the important meeting of the 17th August 1995. The Bill of Lading showed in addition to the agreed freight, another HK$2,250 per container payable for THC. In other words, there was the same problem which occurred with the 3rd, 4th and 5th Shipments. This time however the matter became complicated. Although Woody on the telephone immediately admitted the mistake to Adrian and said the Defendant would be rectifying it immediately, there was no request for post-dated cheque as previously. Adrian spent several days chasing Woody for the release of the goods and every time Woody said they would be released very soon. Eventually on the 29th of August 1995 a letter of complaint was written by Steven to Hanjin and thereafter Steven took over this matter from Adrian and dealt directly with Woody. On the 30th of August in the morning, there was an oral agreement between Steven and Woody by which in return for the Plaintiff sending over immediately not only the draft for the freight but also a post-dated cheque for the THC, Hanjin agreed that the containers would be immediately released. Later that afternoon the elder Yip brother, Yip Chun Tung went personally to the office of Hanjin and he said he personally gave the draft, the cheque and the letter dated 30th August 1995 ("30th August Memo") to Woody. This is an important Memo and there was at the trial a serious dispute by Woody that he was not given that Memo on 30th August by Yip Chun Tung and that he did not see that Memo until much later. But what was not disputed is that in exchange for the draft and the cheque in the sum of HK$112,500 ($2,250 times 50 containers), Hanjin on the 30th August did give to the Yip Chun Tung the Release Order. With that Release Order, the Plaintiff then proceeded to move the 50 trucks to the Terminal in order to collect the containers. However, the goods were still not released notwithstanding that the Plaintiff had in their hands the Release Order issued by Hanjin. The 50 trucks were sent away and told by the terminal people to go back on 1st September. Woody also told Steven on 30th August to go back for the containers on the 1st September. Stevens was not told to go back the 31st August because there was a coming typhoon and nothing would be happening on 31st. On 1st of September when the trucks went back to the Terminal they waited and waited and still there was no release of the containers and when Steven was told, he instructed the drivers to report this to the police which was done. Apparently even though on the 1st September 1995 the trucks were not given delivery of the trucks, Woody still kept up the hopes of Steven by informing him to wait with the trucks as Woody was expecting any minute to be able to have the goods released. The fact that there was a daily charge payable for container storage seemed to have propelled both Woody and Steven to have the trucks waiting for what Woody called any minute release of the containers. The case of the Plaintiff is that Woody said to Steven have the trucks wait as the goods would be ready any time and that is why Steven kept the trucks waiting. At no time did Woody say to Steven why did you send trucks to the Terminal when it was wholly unnecessary. It would seem that Solicitors for the Plaintiff became involved sometime on the 1st of September but that as 2nd and 3rd were the weekend, it was only on Monday, the 4th of September that Herbert Smith managed to arrange with Woody that the appropriate THC amount of HK$117,00 for 52 containers (the 2 containers of the 7th Shipment under BL903 showing no THC payable on the face of the BL arrived on 31st August 1997 but there was the same problem about release as with the 6th Shipment of 50 containers) would be sent by the Plaintiff to Herbert Smith to be held by Herbert Smith pending the resolution of the dispute. The agreement made by Herbert Smith with Hanjin was that upon receipt of the money by Herbert Smith from the Plaintiff, Hanjin would immediately release the goods. It would seem that pursuant to this agreement with Herbert Smith, the 52 trucks were sent to the Terminal on the 4th September (having not been sent the previous day Sunday the 3rd). However there were further complications. Despite an agreement made that the goods would be released upon the said sum of $117,000 of the Plaintiff being held jointly by Solicitors for the Plaintiff and Solicitors for the Defendant, the goods were still not released by Hanjin on 4th September. Trucks were sent again on the 5th September but only 6 containers were released and eventually on the 6th of September, the Plaintiff managed to secure the release of the remaining 46 containers. In the meantime the customer of the Plaintiff, Sunshine had called off the contract of sale by the Plaintiff to Sunshine and as I understand it when the goods were finally all released by Hanjin, the Plaintiff had to dispose of the goods in some other way.

13. This Action was commenced on the 19th of September 1995 by the Plaintiff against the Defendant Hanjin whereby the Plaintiff claimed against Hanjin for:-

1. Release of the $117,000 held jointly by the Solicitors of the Plaintiff and of the Defendant;
2. Damages in the sum of $585,144 as wasted truck charges for the 30th August, 1st , 2nd 4th and 5th September 1995;
3. Damages of $2,244,582.40 being the agreed compensation which the Plaintiff was liable to pay to Sunshine under its contract of sale with Sunshine.

The Defendant on the other hand counterclaimed against the Plaintiff for THC charges in respect of all 7 Shipments, alleging that there was no oral agreement and that if there was such oral agreement it was illegal as contrary to American law on registered tariff and further that in relation to the 1st, 2nd, 3rd, 4th and 5th Shipments it was due to internal mistakes that THC were not charged. The Defendant therefore counterclaimed in the sum of $393,800.

Issues

The issues which have to be decided by the Court at the trial are:-

1. Was there an oral agreement between Adrian of the Plaintiff and Jeffrey of the Defendant in late June whereby Hanjin agreed to charge an all inclusive rate for the carriage and the agreed rate can only be changed after 3 months notice.
2. If there was such an oral agreement, was it enforceable or effective agreement by itself or was it only part of the carriage contract.
3. If it was part of the carriage contract, what is the proper law of that contract.
4. If Hong Kong law is the proper law of the carriage contract, is it enforceable in the light of the American law on registered tariff.
5. If USA law is the proper law of the carriage contract, is it enforceable in the light of the American law on registered tariff.

6. Was there an enforceable oral agreement made on the 30th of August 1995 between Steven of the Plaintiff and Woody of the Defendant whereby the Defendant agreed to immediately release the goods upon receipt of the THC cheque.
7. If the Defendant is liable to the Plaintiff either under the oral agreement standing on its own or as part of the carriage contract or under the oral agreement of 30th of August 1995, is the Defendant liable to the Plaintiff for the wasted costs of the trucks in the sum of $585,144.
8. If the Defendant is liable to the Plaintiff either under the oral agreement standing on its own or as part of the carriage contract or under the oral agreement of 30th of August 1995, is the Defendant liable to the Plaintiff for the compensation sum of $2,244,582.40 which the Plaintiff has to pay Sunshine.
9. Is the Defendant entitled to charge the Plaintiff for the THC for all 7 Shipments or only for some of the Shipments.

14. It can be readily seen from the above Issues that the first issue of whether there was an oral agreement in late June 1995 between Adrian and Jeffrey is the central issue of the whole Trial. Before I turn to consider that issue and the other issues, I will first say something about the credibility of the various witnesses as so much of this case turns on the credibility of the witnesses.

CREDIBILITY OF WITNESSES

15. Let me say immediately at the outset that I have no doubt that the witnesses of the Plaintiff are reliable and witnesses for the Defendant are not. So far as individual witnesses are concerned, I find Adrian to be the most impressive witness of all. He was quietly spoken without given to any exaggeration but he was firm when it was necessary. For me he was undoubtedly a responsible person and completely honest. I totally accept his evidence about the making of the oral agreement with Jeffrey and the subsequent events including in particular the events up to and including the 17th August meeting. Whenever there is any conflict between his evidence and that of Jeffrey or Woody, without hesitation I prefer Adrian's evidence.

16. Steven is of course the more senior of the Yip brothers in the company and he struck me as being very able and dedicated and knew his business. He gave his evidence well but of course with the considerable tension of having the conduct the case on behalf of the Plaintiff, he was sometimes nervous and edgy. He was however for me a man of integrity and reliability and I accept his evidence and would prefer his evidence over the evidence of Jeffrey and Woody.

17. The evidence of Yip Chun Tung, the eldest brother was within a narrow scope basically on the event of 30th August. The contest is between his evidence and that of Woody. There is for me no contest as Yip Chun Tung is a solid witness who I assess to be someone who might not be very clever but who is totally straight. By contract Woody is clever but bent.

18. Woody for me is a thoroughly bad witness. He tells audacious lies. Without battling an eyelet, he could tell the court that although trucks were sent to the Terminal, he did not know, not even when the drivers of the trucks were so angry with waiting day after day that they reported to the Police. His saying the 17th August Memorandum as merely a quotation rather than a binding agreement is merely another of his indifference to truth. Time and again he gave outrageous evidence with a straight face. I reject in total his evidence. There is for me hardly any aspect of his relevant evidence that I can accept.

19. Jeffrey his subordinate for me is not much better as a witness. He is less bright but equally unreliable. As a witness he is more evasive but that did not help him as having seen him in the witness box I have no confidence that he was telling the truth or even capable of telling the truth. Both he and Woody are the worst examples of dishonest salesmen. I find both of them to be very unpleasant people.

ISSUE 1-ORAL AGREEMENT

20. Whether there was the oral agreement in late June between Adrian and Jeffrey is largely a matter of credibility of the two witnesses and I have said earlier I have no doubt whose evidence I prefer. In addition to however the reliable oral evidence of Adrian and the wholly unreliable evidence of Jeffrey, there is also the inherent probability of there having been an agreement reached before the Plaintiff started using the Defendant which went on continuously for 7 Shipments. By the time the 17th August Memorandum was signed, it should be noted that the 7th Shipment was already on its way. For me the commercial reality is that Hanjin was competing for business and the deal which the slick salesman Jeffrey wanted to offer was the oral agreement. It must be remembered also that it was not such a super deal as the rate offered by Jeffrey was not lower than the competitors and according to Adrian was in fact slightly higher than the competitors but the Plaintiff chose the Defendant because of the more punctual sailing record.

21. The other feature which is also significant is the creation of the draft Memo and the 17th August Memorandum. The draft Memo suggests to me that there was already in existence an oral agreement with agreed rates long before the 17th August. In fact it simply does not make sense for the Plaintiff to use the Defendant again and again without an agreed rate. And once it could be seen that from the 1st Shipment of 12th July onwards there was an agreed rate, then it is only another step to the agreed rate being inclusive of THC, namely the existence of the late June oral agreement between Adrian and Jeffrey. I have no doubt that all the evidence point to the existence of the oral agreement.

22. Mr. Shieh points to various factors against the existence of the oral agreement, such as the alleged fax of 6th July 1995 (I do not accept that it was sent) or the points arising out the 17th August meeting (which I reject) or the internal telexes (the contents of which I do not accept to be the truth even though the authenticity of these copy documents [originals were not available although expressly sought by the Court]) are deemed to be admitted by the Plaintiff). I do not accept the explanations of mistakes offered by the Defendant. I have read all the Affidavits, the Statements and documents put forward on behalf of the Defendant but in the circumstances (specially having regard to the fact that no one I could believe from the Defendant side had come forward to give reliable evidence) I do not accept that the contents of these documents are true. Notwithstanding the deceptively attractive arguments presented to me by Mr. Shieh, I am wholly unpersuaded by the Defendant's contentions and I am confident and I find as a fact that there was an oral agreement as told to me by Adrian. I have therefore no hesitation in finding for the Plaintiff on this main issue.

ISSUE 2-WAS ORAL AGREEMENT ENFORCEABLE BY ITSELF

23. The argument of Mr. Shieh is that the Oral Agreement cannot be enforceable on its own because there is no consideration for the Oral Agreement. The argument can be disposed of shortly. It was suggested that because there was no commitment on the part of the Plaintiff to at least ship all the cargo of the Plaintiff with Hanjin or to ship a certain number of containers for a certain period therefore there is no detriment on the part of the Plaintiff as to amount to consideration. But Mr. Shieh overlooked the agreement of the Plaintiff that there can be no alteration to the agreed rates unless 3 months prior notice is given. This is a detriment to the Plaintiff. As I see it, the Oral Agreement is perfectly valid and is not void for lack of consideration. Furthermore, the Oral Agreement was performed again and again by the Plaintiff and the Defendant and reliance was placed by the Plaintiff on the Oral Agreement and the Plaintiff acted on it instead as it could have easily done gone to one of competitors payable a comparable rate. I do not see how the Defendant could renege on it. Having reached this conclusion, it is therefore not necessary for me to consider Issue 3 on the proper law of carriage contract which incorporated the oral agreement or whether such carriage contract is enforceable if it is Hong Kong law (Issue 4) or if it US law (Issue 5). Once it is held that the Oral Agreement is enforceable and has legal effect, it follows that the Defendant was not entitled in Hong Kong to insist upon the payment of THC or to withhold delivery of the containers and therefore the Defendant must be liable for all consequences arising from their breach of the Oral Agreement.

ISSUE 6-ORAL AGRREMENT OF 30TH AUGUST 1995

24. The Plaintiff however also seeks to rely on the 30th August Agreement, namely the oral agreement of 30th August 1995 made between Steven and Woody whereby Woody agreed that in consideration of the Plaintiff giving that day a post-dated cheque in the amount of the disputed THC (which cheque was to be returned as previously), the Defendant would immediately that day release the containers to the Plaintiff. That 30th Agreement was evidenced by the 30th August Memo which was given to the Woody according to Yip Chun Tung and which Woody denied having received. Woody's evidence, as I said earlier I reject and I find as a fact that there was the 30th August Agreement and that in breach of that 30th Agreement, the Defendant did not release the containers as it should have done.

ISSUE 7-DAMAGES FOR WASTED TRUCKS

25. The evidence of the Plaintiff on this issue is clear, namely that Woody kept saying yes to the Plaintiff thereby causing the Plaintiff to send the trucks and have them on standby on the 30th August, 1st, 2nd, 4th and 5th September and incurring the heavy costs of these trucks which costs were wholly wasted as the goods were not released until the 5th of September when only 6 containers were released. The documents in respect of the costs of the trucks for the five days are clear and I have no doubt that the evidence of Steven is correct and that he did what was reasonable in the circumstances. In this connection I find the evidence of Woody to be truly astonishing. There was someone chasing him everyday for the goods and sending trucks to the Terminal and even reporting to the Police for the non delivery of the goods and Woody could claim that he had no knowledge of trucks being sent or police being called and that he did not keep misleading Steven again and again. For me the choice of the where the truth lies is simple and clear. Woody is the sort of person who should not work for a decent company. Under this Issue, I find that the Plaintiff is entitled to damages in the sum of $585,144 as claimed in the Statement of Claim.

ISSUE 8-LOST CONTRACT COMPENSATION

26. The Plaintiff also claimed damages in the form of compensation which it will have to pay to Sunshine. This is an area where it was agreed at the trial that the Court should defer the trial of this question to a later date after the issue of liability had been determined. The Plaintiff having succeeded, I therefore order that this question of damages suffered by the Plaintiff as result of the breach of the Oral Agreement by the Defendant be heard at a date to be fixed.

ISSUE 9-COUNTERCLAIM FOR THC

27. It follows from my decision earlier that the Counterclaim for THC on all 7 Shipments must fail and therefore should be dismissed.

CONCLUSION

28. The result is that judgment is to be entered in favour of the Plaintiff in the sum of $585,144 together with interests thereon at 3% above prime from the date of the Writ until Judgment. The other damages which the Plaintiff has suffered will be assessed at a later date to be fixed. The Counterclaim is dismissed. The Plaintiff is to have the costs of the Action and costs of the Counterclaim. The sum of $117,000 in the Joint Account of Herbert Smith and Sinclair Roche & Temperley together with any accrued interest theron is to be released immediately to the Plaintiff. I also make an order nisi that the costs awarded to the Plaintiff is to be on an indemnity basis which costs will be assessed by me by way of a gross sum assessment under Order 62 rule 9(4)(b) at a date to be fixed.

	William Waung
	Judge of the Court of First Instance, High Court

Representation:

Mr. Stephen Yip Chun Nam (Director of the Plaintiff) for the Plaintiff acting in person

Mr. Paul Shieh instructed by Messrs Sinclair Roche & Temperley for the Defendant