ICI SWIRE PAINTS LTD. v. TECHI MOTOR ENGINEERING & TRADING CO.

ICI SWIRE PAINTS LTD. v. TECHI MOTOR ENGINEERING & TRADING CO.

Having accepted liability on the counterclaim, the court applied expectation damages and estimated lost purchases for June–December 1994 at HK$20,000,000 using a modified proportional projection based on contemporaneous 1994 monthly figures (excluding February and May), accepted the RMB invoices as reflecting true sales and applied a 10.79% mark-up, deducted agreed operating expenses and mainland taxes/agency fees, refused a bad-debt allowance, allowed a 1% payment discount, and awarded Techi Paints limited wasted rental and one month's salaries for failure to mitigate, resulting in total damages of HK$2,938,743.04.

Citation
ICI SWIRE PAINTS LTD. v. TECHI MOTOR ENGINEERING & TRADING CO.
Parties
Plaintiff (original Action); Defendant (counterclaim): ICI Swire Paints Limited; Defendant (original Action); Plaintiff (counterclaim): Cheung Kin Man trading as Techi Motor Engineering & Trading Company and Techi Paints & Auto Accessories Specialties
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
29 January 2003
Case Number
HCA7251/1995
Procedural Posture
Contract Dispute — Wrongful Termination and Assessment of Damages on Counterclaim / Assessment Hearing and Judgment on Quantum of Damages (liability Previously Determined)
Outcome
Counterclaim allowed in part; damages assessed and awarded to Mr Cheung (trading as Techi Motor and Techi Paints)
Legal Topics
Wrongful Termination, Assessment of Future Loss of Profits, Rebates and Payment Discounts, Mitigation, Weight of Expert Evidence, Use of Contemporaneous Commercial Documents
Source Language
EN
Contract Commercial Law Damages Evidence Wrongful Termination Assessment of Future Loss of Profits Rebates and Payment Discounts Mitigation +2 more

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Parties

ICI Swire Paints Limited

Plaintiff (original Action); Defendant (counterclaim)

Cheung Kin Man trading as Techi Motor Engineering & Trading Company and Techi Paints & Auto Accessories Specialties

Defendant (original Action); Plaintiff (counterclaim)

Procedural Posture

Contract Dispute — Wrongful Termination and Assessment of Damages on Counterclaim / Assessment Hearing and Judgment on Quantum of Damages (liability Previously Determined)

Legal Issues

  1. 1 Whether TM and TP Agreements were wrongfully terminated (liability already determined)
  2. 2 Quantum of damages for Techi Motor: projected purchases, profit mark-up, rebates, payment discounts, allowance for expenses and bad debts
  3. 3 Whether RMB invoices or HK$ invoices should be used to calculate mark-up

Ratio Decidendi

Having accepted liability on the counterclaim, the court applied expectation damages and estimated lost purchases for June–December 1994 at HK$20,000,000 using a modified proportional projection based on contemporaneous 1994 monthly figures (excluding February and May), accepted the RMB invoices as reflecting true sales and applied a 10.79% mark-up, deducted agreed operating expenses and mainland taxes/agency fees, refused a bad-debt allowance, allowed a 1% payment discount, and awarded Techi Paints limited wasted rental and one month's salaries for failure to mitigate, resulting in total damages of HK$2,938,743.04.

Court Disposition

Counterclaim allowed in part; damages assessed and awarded to Mr Cheung (trading as Techi Motor and Techi Paints)

Orders

  • Damages awarded to Mr Cheung trading as Techi Motor: HK$444,375.91 (4% annual rebate on purchases Jan–May 1994)
  • Damages awarded to Mr Cheung trading as Techi Motor: HK$116,043.13 (1-for-15 free tins allowance)