501 Public service vehicle -- Minibus used as public service vehicle contrary to licence granted and condition attached

11 [501] ROAD TRAFFIC Public service vehicle – Minibus used as public service vehicle contrary to licence granted and condition attached – No written public service vehicle licence – Road Traffic Act (Cap 92, 1970 Ed), s 53 – Road traffic – Minibus used as public service vehicle contrary to licence granted and conditions attached – Conviction and forfeiture – No written public service vehicle licence – Road Traffic Act (Cap 92, 1970 Ed), s 53.

Summary :

This was an appeal against a conviction under s 53 of the Road Traffic Act (Cap 92, 1970 Ed) for using a motor vehicle (a minibus) as a public service vehicle otherwise than in accordance with the licence granted in respect of that vehicle and the conditions attached thereto. An order of forfeiture was also made in respect of that vehicle. The appellant appealed against the conviction and the conviction and the order of forfeiture. The main ground of appeal was that the prosecution had failed to prove that the Registrar of Vehicles had issued a written public service vehicle licence under the Road Traffic Act in respect of the appellant's vehicle.

Holding :

Held, dismissing the appeal: (1) on the facts, there could be no doubt that the appellant's minibus had been duly granted a licence authorizing its use as a private car (school transport) and the appellant had used his minibus otherwise than in accordance with such licence; (2) where a person is charged with having contravened s 53(1) by reason of his use of a motor vehicle as a public service vehicle otherwise than in accordance with the licence granted in respect of that vehicle there is no necessity for the prosecution to prove the existence of a written licence issued by the Registrar of Vehicles for the use of that vehicle as a public service vehicle.

Digest :

Tan Teck Wa v Public Prosecutor [1973] 1 MLJ 229 High Court, Singapore (Wee Chong Jin CJ).

502 Public service vehicle -- Motor car used as public service vehicle without licence

11 [502] ROAD TRAFFIC Public service vehicle – Motor car used as public service vehicle without licence – Vehicle subject to hire purchase – Discretion to order forfeiture – Road Traffic Ordinance 1958 (Ord 49/1958), s 92(4) – Road traffic – Motor car used as public service vehicle – Unlicensed – Vehicle subject to hire-purchase agreement – Hirer convicted – Discretion to order forfeiture – Road Traffic Ordinance 1958, s 92(1) & (4).

Digest :

Sing Hoe Motor Co Ltd v Public Prosecutor [1968] 2 MLJ 54 High Court, Kuala Lumpur (Raja Azlan Shah J).

See ROAD TRAFFIC, Vol 11, para 108.

503 Public service vehicle -- Motor cycle used for carriage of goods without carriers

11 [503] ROAD TRAFFIC Public service vehicle – Motor cycle used for carriage of goods without carriers – Whether motor cycle is a 'goods vehicle' – Definition of 'goods' and 'goods vehicle' under – Road Traffic Ordinance 1958 (Ord 49/1955), ss 2 & 98 – Road Traffic Ordinance 1958, ss 2 & 98 – Motor cycle used for carriage of goods without carrier's licence – Whether motor cycle is a 'goods vehicle' – Meaning of 'goods' – 'Goods vehicle'.

Summary :

Held: on a charge under s 98(1) of the Road Traffic Ordinance 1958 the onus on the prosecution is to establish that the respondent was carrying on his 'motor vehicle', 'goods' within the meaning of s 2 of the ordinance. Whether the 'goods' were carried for the respondent's trade or business is a matter of inference to be made from the circumstances of the case such as the nature of the respondent's business and the kind of goods carried.

Digest :

Public Prosecutor v Bong Swee Kong [1962] MLJ 203 High Court, Malacca (Ismail Khan J).

504 Public service vehicle -- Motor vehicle insured for private use

11 [504] ROAD TRAFFIC Public service vehicle – Motor vehicle insured for private use – Used as public service vehicle – Whether insurance covers user – Road traffic – Driving motor vehicle without proper insurance cover – Motor vehicle insured for private use – Used as public service vehicle – Whether insurance covers user – Road Traffic Ordinance 1958, ss 74, 75, 79 & 144.

Digest :

Velusamy & Anor v Public Prosecutor [1974] 1 MLJ 15 High Court, Raub (Suffian FJ).

See ROAD TRAFFIC, Vol 11, para 168.

505 Public service vehicle -- Pirate taxi

11 [505] ROAD TRAFFIC Public service vehicle – Pirate taxi – Failure to call one of the passengers as witness – Presumption – Road Traffic Ordinance 1958 (Ord 49/1958), s 144(b) – Criminal law and procedure – Application for certificate for appeal to Federal Court on ground that principle of law is involved – Onus on accused – Whether defence under duty to call witnesses offered to it by prosecution – Whether failure to call any witness justifies adverse inference against defence – Presumption under Road Traffic Ordinance 1958, s 144(b) – Road traffic – Pirate taxi – Passengers – Failure to call one of, as witness – Presumption.

Summary :

The appellant was convicted of the offence of carrying passengers in a motor vehicle for hire or reward. At the trial, all the passengers found in the car when it was detained were offered by the prosecution to the defence as witnesses. The defence call all but one of these passengers. The passengers who were called by the defence all testified that they had not paid nor had intended to pay any fare. On appeal against the conviction, the appeal was dismissed. An application thereupon was made for a certificate to enable a further appeal to be made to the Federal Court and it was alleged in support of the application that several points of law arose in the appeal, viz: (a) whether the defence is under a duty to call all the witnesses offered to it by the prosecution; (b) whether, if the defence omits to call one of the witnesses offered to it by the prosecution, it is legitimate and permissible and whether the court ought to draw an inference unfavourable to the defence from such failure; (c) whether the failure on the part of the defence to call any witness at all offered by the prosecution to it justifies any adverse inference being drawn against the defence; and (d) whether, having regard to the grounds of judgment of the learned magistrate which was upheld on appeal, the learned magistrate had not introduced into the law a test which was unwarranted by the authorities,

Holding :

Held: (1) the defence under normal circumstances and when no presumption arises is under no duty to call all or even any of the witnesses offered to it by the prosecution, as all the defence had to do is to raise a reasonable doubt on the truth of the prosecution evidence and if that has been done, it is entitled to an acquittal; (2) the court cannot draw any inference unfavourable to the defence for failure to call any witnesses; (3) the answers to the points of law posed in this case are so straightforward and simple that there can be no useful purpose in referring them for the decision of the Federal Court; (4) in this case, a presumption arose under s 144(b) of the Road Traffic Ordinance 1958 (Ord 49/1958) that all passengers in a motor vehicle were being carried in consideration of separate payments made by them and as the accused had not rebutted this presumption in respect of one of his passengers, he was rightly convicted of the offence.

Digest :

Liew Siew & Anor v Public Prosecutor [1969] 2 MLJ 232 High Court, Perak (Chang Min Tat J).

506 Public service vehicle -- Pirate taxi

11 [506] ROAD TRAFFIC Public service vehicle – Pirate taxi – Use of vehicle as public service vehicle without licence – Road traffic – Pirate taxi – Use of vehicle as public service vehicle without licence – Sentence – Forfeiture of vehicle – Discretion of magistrate – Magistrate unjustified in ordering release of vehicle – Duty of magistrate – Road Traffic Ordinance 1958, s 92(1).

Digest :

Public Prosecutor v Peh Choo Key [1970] 1 MLJ 136 High Court, Penang (Ong Hock Sim J).

See ROAD TRAFFIC, Vol 11, para 106.

507 Public service vehicle -- Pirate taxi

11 [507] ROAD TRAFFIC Public service vehicle – Pirate taxi – Whether evidence of past observations relevant – Road Traffic Ordinance 1958 (Ord 49/1958), ss 74(2), 92(1) & 144(c) – Road traffic – Pirate taxi – Evidence of past observations – Whether relevant – Road Traffic Ordinance 1958, ss 74(2), 92(1) & 144(c).

Summary :

The respondents in these appeals were each charged under s 92(1) of the Road Traffic Ordinance 1958 (Ord 49/1958) for using a motor vehicle as a public service vehicle without a valid licence under Pt V of the ordinance and under s 74(2), for using the same vehicle without the necessary policy of insurance in respect of third party risks. The facts in both cases were similar. In the first case the prosecution relied on the evidence of two police officers and the enforcement officer of the Road Transport Department. Their evidence revealed that during a period of observation from 11 March 1968 until 2 April 1968, the respondent had on 39 occasions conveyed a total of 133 different passengers in car NA 9731. On 2 April 1968 the said vehicle was stopped by the police officers and they found four passengers in it, with the respondent as driver. At the end of the prosecution case, both respondents were acquitted and discharged. Both appeals raised the same question of law, and were heard together.

Holding :

Held: (1) evidence of past observations are relevant and therefore admissible under s 15 of the Evidence Ordinance, not only to supply the necessary groundwork to raise the presumption under s 144(a) of the Road Traffic Ordinance, but also to anticipate any possible defence which would otherwise be open to the accused. Such evidence is not to be substituted as proof of the alleged facts which constitute the offence; (2) charges under ss 92(1) and 74(2) and of the Road Traffic Ordinance should be heard together unless, in the exceptional case, the accused is likely to be prejudiced by the joinder of the charges. In these cases, the joinder could not have prejudiced the accused in any way.

Digest :

Public Prosecutor v Ang An An and another appeal [1970] 1 MLJ 217 High Court, Kuala Lumpur (Raja Azlan Shah J).

508 Public service vehicle -- Pirate taxi

11 [508] ROAD TRAFFIC Public service vehicle – Pirate taxi – Whether observation of user must be continuous – Presumption – Evidence Ordinance 1950, s 144 – Road traffic – Charge of using vehicle as pirate taxi – Whether observation of user must be continuous – Presumption under s 144, Evidence Ordinance 1950.

Summary :

The Public Prosecutor appealed against the acquittal of the respondent at the close of the case for the prosecution on a charge of using a vehicle as a private taxi and using it without the necessary licence and insurance policy. The learned magistrate in his grounds of judgment stated that the observation of the use of the car for 28 days before the arrest was not continuous and by reason of this lack of continuity in the groundwork observation by the police the presumption under s 144 of the Evidence Ordinance 1950 did not arise and since there was no direct evidence of payment or offer of payment from the passengers then in the car, he held that the prosecution had not made out a prima facie case against the respondent.

Holding :

Held: in view of the innumerable permutations in the user of the car, the observation need not be continuous to raise the presumptions under s 144 of the Evidence Ordinance. There is nothing in s 144 which refers to groundwork observation.

Digest :

Public Prosecutor v Ooi Seng Huat [1968] 2 MLJ 168 High Court, Ipoh (Chang Min Tat J).

509 Public service vehicle -- Renting of private hire cars

11 [509] ROAD TRAFFIC Public service vehicle – Renting of private hire cars – Whether such vehicles are public service vehicles

Summary :

The appellant was tried in the subordinate courts on three charges under s 101(2) of the Road Traffic Act ('the Act'). Each charge alleged that she had caused a vehicle registered for private use to be used as a public service vehicle without there being in force a public service licence in respect of the vehicle. She was found guilty and fined S$1,500 in respect of each charge. She appealed on the grounds that the vehicles in question were public service vehicles. The appellant ran a car hire business. When her 'SZ' cars were not available, the appellant had rented out private cars to members of the public. It was in respect of three of these hirings that the instant charges had been brought.

Holding :

Held, allowing the appeal: (1) in order to qualify as a 'public service vehicle' under s 2 of the Act, a vehicle had to be used or intended to be used for the carriage of persons other than the driver of the vehicle himself, remuneration of some sort being payable for such carriage. This definition was plainly meant to be exhaustive; (2) it followed that in order for a vehicle to fall within the description of 'private hire car', it still had to possess the features of a public service vehicle as defined in s 2, that is, it had to be used or kept for use for the carriage of passengers in return for some form of remuneration. Where the vehicle in question had been driven by the hirer himself and where no passengers had been carried for hire or reward, that vehicle fell out of the scope of s 100(1)(e) of the Act.

Digest :

Teng Lang Khin v Public Prosecutor [1995] 1 SLR 732 High Court, Singapore (Yong Pung How CJ).

510 Public service vehicle -- Seizure of unlicensed public service vehicle

11 [510] ROAD TRAFFIC Public service vehicle – Seizure of unlicensed public service vehicle – Whether forfeiture mandatory – Road Traffic Ordinance 1958 (Ord 49/1958), s 92(1), (2) & (4) – Road traffic – Unlicensed public service vehicle – Seizure of – Whether forfeiture mandatory – Road Traffic Ordinance 1958, s 92(1), (2) & (4).

Summary :

These two appeals involved one common issue, to wit, whether an order for forfeiture of a vehicle which had been seized under the provisions of s 92(2) of the Road Traffic Ordinance 1958 (Ord 49/1958) ('the Ordinance') for an offence under sub-s (1) was mandatory under sub-s (4), following a conviction. Another ground common also to both cases was the failure of the magistrate to order a disqualification for offences under s 74(2) of the Ordinance. In the first case, the trial magistrate at the close of the case for the prosecution held that there was a case to answer on all the charges. As the defendant elected to say nothing the court convicted her. In mitigation she prayed for leniency saying she was the sole breadwinner of the family, her husband was paralyzed and she had four children, three of whom were schooling. She prayed that the 'court will not order disqualification because it is from driving cars that I earn my living for myself and my family'. Purporting to exercise the discretion vested in him under s 92(4) of the Ordinance, the magistrate made an order for the return of the car to the defendant because he felt that forfeiture of the car would cause grievous hardship and irreparable damage to the defendant. On the question of disqualification, while admitting that on decided authority 'it is clear that a defendant is dependent on his car for a livelihood is not a special reason' the trial magistrate felt that 'where in addition to the defendant being dependent on her car for her livelihood her entire family ... was dependent ... was different'. In the second case, the defendant claimed that the passengers were his friends but there was sufficient ground for the trial magistrate to doubt the credibility of the witnesses called. The car in question was released to the owner under bond, prior to the trial. After conviction, the magistrate said: 'I did not make an order of confiscation of the car under s 92(4) as I felt that under the section, I had a discretion either to make an order of forfeiture or to release the car to the owner. I exercised my discretion and released the car to the owner.' He did not disqualify because 'the special reason advanced by the accused was that his car had now been licensed to carry schoolchildren'.

Holding :

Held: (1) following a conviction for an offence under s 92(4), a magistrate has no discretion but to make an order of forfeiture of the vehicle in question; (2) in both cases there were no special reasons in law not to order disqualification.

Digest :

Public Prosecutor v Teoh Gaik Beng and another appeal [1967] 2 MLJ 110 High Court, Penang (Ong Hock Sim J).

511 Public service vehicle -- Using car as public service carriage without valid licence

11 [511] ROAD TRAFFIC Public service vehicle – Using car as public service carriage without valid licence – Presumption – Meaning and interpretation of – Road Traffic Ordinance 1958 (Ord 49/1958), s 144(a) – Road Traffic Ordinance 1958, ss 22(2), 74(1), (2) & 92(1) – Using private car as public service carriage without licence – Presumption under s 144(a) of the ordinance – Meaning and interpretation of.

Summary :

The respondent was charged under ss 22(2), 74(2) and 92(1) of the Road Traffic Ordinance 1958 (Ord 49/1958). The learned magistrate acquitted the respondent on all three charges without calling on the defence after referring to the judgment of Ong J in Gan Chye Huat v Public Prosecutor [1962] MLJ 27 where the learned judge had said 'there must at all times be adequate groundwork before applying the presumption, otherwise every private vehicle owner will be presumptively guilty of an offence under s 92(1) every time he carries in his car any passenger not related to him'. The Public Prosecutor appealed.

Holding :

Held: (1) as there was evidence in this case that the vehicle licensed for private use only was carrying passengers the presumption in s 244 applies and the magistrate should have called upon the respondent to make his defence on the first charge. Public Prosecutor v Mohd Yunus (Kuala Lumpur Criminal Appeal No 65 of 1960) followed; (2) the presumption in s 144 only applies to offences under Part V of the ordinance and would not apply to the second and third charges as they refer to offences in other parts of the ordinance. Gan Chye Huat v Public Prosecutor not followed.

Digest :

Public Prosecutor v Ong Hock Thuan [1963] MLJ 10 High Court, Penang (Azmi J).

512 Public service vehicle -- Using car as public service vehicle

11 [512] ROAD TRAFFIC Public service vehicle – Using car as public service vehicle – No insurance cover for such user – Road Traffic Ordinance 1958 (Ord 49/1958), ss 74(2), 92(1) & 144 – Road traffic – Using car as public service vehicle – No insurance cover for such user – Road Traffic Ordinance 1958, ss 74(2), 92(1) & 144.

Digest :

Public Prosecutor v Leong Kow Chai [1968] 2 MLJ 29 High Court, Ipoh (Chang Min Tat J).

See ROAD TRAFFIC, Vol 11, para 16.

513 Public service vehicle -- Using car as public service vehicle without valid licence

11 [513] ROAD TRAFFIC Public service vehicle – Using car as public service vehicle without valid licence – Admissibility of police observations over motor vehicle suspected of being used contrary to s 92(1) of the Road Traffic Ordinance 1958 – Presumption under s 144 of the Road Traffic Ordinance – Road Traffice Ordinance 1958 (Ord 49/1958), ss 92(1) & 144 – Road traffic – Using car as public service vehicle without valid licence – Using car without there being in force a policy of insurance in respect of third party risk – Road Traffic Ordinance 1958, ss 74(1), 92(1) & 144.

Summary :

The appellants were convicted by a magistrate at Parit Buntar, Perak, of offences under ss 92(1) and 74(1) of the Road Traffic Ordinance 1958. The first appellant was charged as the person who used a motor vehicle and the second appellant, who was the registered owner of the said vehicle, for permitting its use as a public service vehicle without a valid licence and using the said vehicle without there being force a policy of insurance in respect of third party risks in contravention of the aforesaid provisions of law. At the trial, two police constables testified that they had kept watch over the said vehicle almost daily from 26 June to 10 July 1966 and during that period had seen and recorded particulars of their observations. The first appellant was observed by police to have been using the same car in all 60 trips for conveyance of passengers of different racial origins. On 22 July 1966, the date of the commission of the alleged offence, the first appellant was stopped by the police and found to be carrying five passengers consisting of two men, a Chinese and a Malay, and three women, two of whom were Malays and one Indian. The defence was called. The first appellant denied carrying the passengers concerned on 22 July for hire or reward, but averred that he has intended to give them a free lift. The second appellant's defence was a general denial of the charge. He denied giving any authority to the first appellant to convey passengers for hire or reward.

Holding :

Held: in view of the statutory presumption under s 144, the question of whether or not on the material date the conveyance of passengers was for hire or reward does not arise in a prosecution under s 92(1) of the Road Traffic Ordinance. It was to be presumed. It was for the defence to show that the passengers were not carried for hire or reward. The obvious way, besides a bare denial, of proving a negative proposition such as this, was for the accused to call evidence to show that the incident in respect of which he is charged was an isolated one and that all the passengers happened to be in the car through circumstances which are fortuitous and not intentional. Ali bin Hassan v Public Prosecutor [1967] 2 MLJ 76 dissented from. Observations on the evidence of watch kept by the police.

Digest :

Maidin Pitchay & Anor v Public Prosecutor [1968] 1 MLJ 82 High Court, Ipoh (MacIntyre J).

514 Public service vehicle -- Using car as public service vehicle without valid licence

11 [514] ROAD TRAFFIC Public service vehicle – Using car as public service vehicle without valid licence – Road Traffic Ordinance 1958 (Ord 49/1958), s 22(2) – Road traffic – Driving motor vehicle without proper insurance cover – Motor vehicle insured for private use – Used as public service vehicle – Whether insurance covers user – Road Traffic Ordinance 1958, ss 74, 75, 79 & 144.

Digest :

Velusamy & Anor v Public Prosecutor [1974] 1 MLJ 15 High Court, Raub (Suffian FJ).

See ROAD TRAFFIC, Vol 11, para 168.

515 Public service vehicle -- Using car as public service vehicle without valid licence

11 [515] ROAD TRAFFIC Public service vehicle – Using car as public service vehicle without valid licence – Road Traffic Ordinance 1958 (Ord 49/1958), s 92(1) – Road traffic – Using car as public service vehicle without valid licence – Using car without there being in force a policy of insurance in respect of third party risks – Road Traffic Ordinance 1958, ss 74(1) & 92(1).

Summary :

The appellant was convicted on charges alleging: (1) he had used motor car SK 8626 as a public service vehicle without a valid licence contrary to the provisions of s 92(1) of the Road Traffic Ordinance 1958 (Ord 49/1958) ('the Ordinance'); and (2) he used the said car without there being in force a policy of insurance in respect of third party risks, an offence under s 74(1) of the same Ordinance. He was fined and disqualified from holding or obtaining a licence for a period of 12 months and the car was confiscated. At the trial, the prosecution led evidence to establish that on not less than 30 occasions from 1418 December 1965, the appellant was observed by police to have been using the same car for the conveyance of passengers of different racial origins. On 19 December, he was stopped by the police at a road block and in the car beside him were three other passengers. The allegation in the first charge was concerned only with what occurred on 19 December.

Holding :

Held: (1) the repeated acts of conveying passengers on various occasions prior to the date material to the charge were irrelevant and inadmissible. Abdul Hamid v Public Prosecutor [1962] MLJ 44 and Darus v Public Prosecutor [1964] MLJ 146 not followed; (2) on the facts, in this case there was sufficient foundation for invoking the appropriate presumption under s 144 of the Road Traffic Ordinance; (3) in cases where the evidence available renders it unnecessary to rely on the presumption there can be no objection to having both charges tried together at the same trial. In such an event, the conviction for an offence under s 92(1) of the Road Traffic Ordinance would automatically lead to the conviction on a charge under s 74(1). Where it became necessary because of insufficient evidence to rely on the presumption it would be improper to have the charge under s 74(1) tried at the same trial. Observations on requirement for a separate charge and a separate trial.

Digest :

Ali bin Hassan v Public Prosecutor [1967] 2 MLJ 76 High Court, Johore Bahru (Ali J).

516 Public service vehicle -- Using private car as a 'goods vehicle'

11 [516] ROAD TRAFFIC Public service vehicle – Using private car as a 'goods vehicle' – Road Traffic Enactment 1937, s 12(3) – Using a private car as a 'goods vehicle'.

Summary :

The accused in this case was charged at the Magistrate's Court, Sepang, on 28 December 1939 with using a private car to carry goods, to wit toddy, thereby committing a breach of the condtion of his licence, an offence under s 12(3) of the Road Traffic Enactment 1937. He pleaded guilty to the charge and was convicted and fined RM5 and costs. On reference by the Public Prosecutor to the Chief Justice,

Holding :

Held: in view of the definition of 'goods vehicle' in s 2 of the Road Traffic Enactment 1937 and in the Motor Vehicles (Registration and Licensing) Rules 1937, the car in question was not adapted for use as a goods vehicle, and therefore no offence had been committed.

Digest :

Public Prosecutor v Mukayan [1940] MLJ 138 High Court, Federated Malay States (Poyser CJ).

517 Public service vehicle -- Using vehicle as public service vehicle

11 [517] ROAD TRAFFIC Public service vehicle – Using vehicle as public service vehicle – Evidence of observations by police contradicted in material particulars and evidence of defence throwing doubts on prosecution evidence – Road Traffic Ordinance 1958 (Ord 49/1958), ss 74(1), 92(1) & 144 – Criminal law and procedure – Charge of using a motor vehicle as a private service vehicle without licence – Penal provision – To be strictly construed – Evidence of observations by police – Contradiction in material particulars – Evidence of defence throwing doubts on prosecution evidence – Road Traffic Ordinance 1958, ss 74(1), 92(1) & 144.

Digest :

Ismail bin Awang v Public Prosecutor [1975] 1 MLJ 162 High Court, Kuala Trengganu (Abdul Razak J).

See ROAD TRAFFIC, Vol 11, para 198.

518 Public service vehicle -- Using vehicle as public service vehicle

11 [518] ROAD TRAFFIC Public service vehicle – Using vehicle as public service vehicle – Forfeiture – Need for strict proof of seizure – Road Traffic Ordinance 1961, s 50 – Road traffic – Use of vehicle as public service vehicle without being licensed as such – Forfeiture – Need for strict proof of seizure – Road Traffic Ordinance 1961, s 50 – Road Traffic (Amendment) Act 1966.

Summary :

There are three prerequisites that must be satisifed before an order of forfeiture can be made under s 50 of the Road Traffic Ordinance 1961, namely (a) the vehicle had been used in the commission of an offence under s 50(1); (b) the said vehicle had been seized under s 50(4); and (c) the Public Prosecutor had made a written application for forfeiture. Where Parliament has given powers of seizure to the executive to be followed by forfeiture on the written application of the Attorney General (and even an innocent third party who may own the car has no remedy and the courts are deprived of any power to exercise any discretion in the matter of forfeiture) the three prerequisites to such an order should be strictly proved and if the court is left in doubt as to what took place no such order should be made. In this case, the charge followed the following lines: 'That you, at or about ... on ... at ... used motor car ... as a public service vehicle when it (sic) was not in force in respect of such vehicle a public service vehicle licence and thereby committed an offence under s 50(1) punishable under s 59(2) of the Road Traffic (Amendment) Act 1966.'

Holding :

Held: the ingredients of the particular offence required to be proved under s 50 of the Road Traffic Ordinance 1961 have been clearly set out and any mistake in referring to s 50 of the Road Traffic Ordinance 1961 as s 50 of the Road Traffic (Amendment) Act 1966 was not so defective as to vitiate a conviction under that section on that ground alone because it was a mistake as to a matter of form only.

Digest :

Lee Chiang Seng & Ors v Public Prosecutor [1967] 2 MLJ 32 High Court, Singapore (Winslow J).

519 Public service vehicle -- Using vehicle as public service vehicle

11 [519] ROAD TRAFFIC Public service vehicle – Using vehicle as public service vehicle – Proof required for a conviction – Road traffic – Driving – Using vehicle as public service vehicle – No licence and insurance policy covering third party risks – Fine and disqualification – Appeal – Onus of proof – 'Not higher than on a party to civil suit' – 'To create a doubt in the prosecution case' – Evidence Act 1950 (Act 56), s 3 – Road Traffic Ordinance 1958, ss 74(1), (2), 92(1) & 144(b).

Summary :

The appellant was charged for using a vehicle as a public service vehicle without a valid licence, an offence punishable under s 92(1) of the Road Traffic Ordinance 1958 (Ord 49/1958), and without having a policy of insurance covering third party risks under s 74(1), an offence punishable under s 74(2). He was fined RM300 in default three months' imprisonment on the first charge and RM80 in default two weeks' imprisonment on the second charge, and disqualified from driving vehicles under Class D for one year. He appealed against the learned magistrate's decision. The appellant denied taking any fares from his passengers and claimed that they were his friends. Of the four passengers in his car, he called only two as defence witnesses. The court had to decide whether the learned magistrate had misdirected himself in fact and in law in holding that the appellant had failed to rebut the presumption under s 144(b) of the Road Traffic Ordinance.

Holding :

Held, setting aside the conviction and sentence: (1) the proof required for a conviction was that the vehicle was used as a public service vehicle on that particular date and not whether any passenger was carried for hire and reward. The appellant was therefore at liberty to discharge this proof by any means at his disposal and, if he succeeded, to create a doubt in the prosecution case and this he might do by 'disproving' a material fact on which the prosecution relied or by proving facts from which it might be inferred that a material fact on which the prosecution relied was not so probable that a prudent man ought to act upon the supposition that that fact existed; (2) in criminal matters when the burden of proving an issue was on the accused, ie when the law presumped some matter against the accused 'unless the contrary is proved' the burden was not higher than on a party to a civil suit. To require every witness to testify as in this case, would mean to require the appellant to prove the case beyond any reasonable doubt and not merely a balance of probabilities.

Digest :

Loo Hwee Hong v Public Prosecutor [1978] 2 MLJ 164 High Court, Kota Bahru (Mohamed Zahir J).

520 Public service vehicle -- Using vehicle for purpose other than it was licensed

11 [520] ROAD TRAFFIC Public service vehicle – Using vehicle for purpose other than it was licensed – Road Traffic Ordinance 1958 (Ord 49/1958), ss 22(2) & 74 – Road traffic – Licensing – Using vehicle for purpose other than it was licensed – Third party insurance – Road Traffic Ordinance 1958, ss 22(2) & 74.

Summary :

The appellant appealed from his conviction by the learned magistrate for using his motor car contrary to ss 22(2) and 74 of the Road Traffic Ordinance 1958 (Ord 49/1958). The main ground of appeal was that the magistrate erred in law in holding that the licensing of a privately owned vehicle was limited to the carrying of passengers only and that he misdirected himself in holding that a vehicle licensed for a private purpose had become a goods vehicle for commercial purposes by reason of the fact that the appellant was carrying in that vehicle his own goods for sale by himself and not for sale or reward to any other person.

Holding :

Held: (1) the appellant used his private vehicle for the carriage of goods within the meaning of the ordinance and as such he was saving himself from the substantially heavier tax that he would have to pay if the vehicle that he had been using had been licensed as a private carrier's vehicle; (2) (obiter) '... the object of these particular sections of the ordinance ... is two-fold: to increase the revenue of the country by making it incumbent upon persons who wish to use their vehicles for the carriage of goods to pay a higher licensing fee for such a purpose and ... to protect from unfair competition the legitimate interests of bona fide carriers of goods for reward or hire who have paid the higher licensing fees required for such a purpose'.

Digest :

Chua Lai Seng v Public Prosecutor [1961] MLJ 144 High Court, Penang (Rigby J).

521 Public service vehicle -- Using vehicle for purpose other than it was licensed

11 [521] ROAD TRAFFIC Public service vehicle – Using vehicle for purpose other than it was licensed – Third party insurance – Road Traffic Ordinance 1958 (Ord 49/1958), ss 22(2) & 74 – Road traffic – Licensing – Using vehicle for purposes other than it was licensed – Third party insurance – Road Traffic Ordinance 1958, ss 22(2) & 74.

Digest :

Mah Wah Yeow v Public Prosecutor [1961] MLJ 146 High Court, Penang (Rigby J).

See ROAD TRAFFIC, Vol 11, para 214.

522 Public service vehicle -- Whether conveyance of passengers for hire or reward

11 [522] ROAD TRAFFIC Public service vehicle – Whether conveyance of passengers for hire or reward – Whether vehicle was used as a public service vehicle – Road Traffic Ordinance 1958 (Ord 49/1958), ss 74(2), 92(1) & 144(a) – Road traffic – Private vehicle – Conveyance of passengers – Whether for hire or reward – Whether vehicle was used as a public service vehicle – Road Traffic Ordinance 1958, ss 74(2), 92(1) & 144(a).

Summary :

The appellants were convicted on charges under ss 92(1) and 74(2) of the Road Traffic Ordinance 1958 (Ord 49/1958). In convicting the appellants, the learned magistrate held that on 30 January 1966, the second appellant, with the permission of the first appellant, used the car in question as a public service vehicle for the conveyance of passengers for hire or reward. The facts were as follows: On the morning of 30 January 1966, the second appellant parked the car at the Ipoh Aerodrome opposite the police barracks. He was asked by a police constable and his wife for assistance to take their sick child to see a doctor at Ipoh. He agreed and invited the couple to get into a car. Following the couple were two others whom the second appellant saw coming out of the guardroom of the police camp whom he knew to be police constables. He asked them whether they were going to Ipoh. Both agreed in the affirmative and got into the car. While proceeding to Ipoh, the car was stopped by the police and the car and passengers were taken to the police station. At the trial, the policeman and his wife who were said to be taking their child to a doctor were not called to give evidence, nor were they offered as witnesses to be called by the defence. The two constables who were called to give evidence said that when they got into the car, they were under the impression that they were getting a free lift, although they would have paid a fare at the end of the journey if asked to do so.

Holding :

Held: all the circumstances of the case coupled with the second appellant's evidence were of sufficient weight to rebut the presumption that the passengers were carried for hire or reward. The conviction and sentence should be set aside and the car released to the first appellant.

Digest :

Leong Sow Lin & Anor v Public Prosecutor [1967] 2 MLJ 164 High Court, Ipoh (MacIntyre J).

523 Public service vehicle -- Whether there is distinction between a taxi cab and a public hire car

11 [523] ROAD TRAFFIC Public service vehicle – Whether there is distinction between a taxi cab and a public hire car – Road Traffic Ordinance 1958 (Ord 49/1958), s 93(2) – Insurance – Damages award – Repudiation by insurers – Road traffic – Public service vehicle – Whether there is distinction between a taxi cab and a public hire car – Road Traffic Ordinance 1958, s 93(2).

Summary :

As a result of a fatal accident, the plaintiffs obtained judgment against one Tay and Bu in the sum of RM30,000 and costs. The deceased was travelling in a motor taxi driven by Tay and owned by Bu. The vehicle was at the relevant date insured by the Safety Insurance Co Sdn Bhd. The plaintiffs claimed against the insurers to be indemnified in the sum due. The insurers repudiated liability contending Tay was not a person in the employ of Bu. They also contended that in this case the vehicle was used as a taxi cab and not as a public hire car as limited by the policy.

Holding :

Held: (1) on the evidence, Tay drove the vehicle not only for the owner's purposes but also with his consent or permission. Therefore, he was a driver in the insured's employ and was driving with the insured's permission; (2) in so far as the statutory requirement of compulsory insurance cover for a public service vehicle is concerned it is immaterial whether the public service vehicle is a hire car or a taxi cab.

Digest :

Fatimah & Ors v Safety Insurance Co Sdn Bhd [1973] 1 MLJ 75 High Court, Kuala Lumpur (Abdul Hamid J).

524 Rash driving -- Causing death by rash act

11 [524] ROAD TRAFFIC Rash driving – Causing death by rash act – Sentence – Criminal Procedure Code, ss 305 & 307 – Conviction on a plea of guilty – Inadequacy of sentence – Whether appeal by public prosecutor lies as to.

Summary :

The respondent was convicted on a charge of causing death by a rash act not amounting to culpable homicide, on his own plea of guilty, and fined RM500 and disqualified from holding a licence for three years. The Public Prosecutor appealed on the ground that the sentence was inadequate. On behalf of the respondent, it was contended that in view of s 305 of the Criminal Procedure Code ('the Code'), an appeal could not lie as s 305 gives the accused person only the right of appeal as to sentence.

Holding :

Held: 'Public Prosecutor' comes under the description of 'any person' in s 307 of the Code without being specifically mentioned; 'there shall be no appeal' means 'there shall be no appeal by any person'; and accordingly s 305 admits of an appeal by the Public Prosecutor when the accused has pleaded guilty.

Digest :

Public Prosecutor v Rudguard [1939] MLJ 56 High Court, Federated Malay States (Terrell Ag CJ).

525 Rash driving -- Causing death by rash act

11 [525] ROAD TRAFFIC Rash driving – Causing death by rash act – Sentence – Penal Code, s 304A – Causing death by a rash act – Sentence.

Summary :

This was an appeal by the Public Prosecutor against the sentence imposed by the learned magistrate on a charge under s 304A of the Penal Code. The respondent had pleaded guilty to the charge and was fined RM1,500 or three months' rigorous imprisonment in default.

Holding :

Held: (1) once the degree of rashness or negligence required to sustain the charge under s 304A of the Penal Code has been proved, there cannot be many cases in which a sentence of fine would be an adequate punishment; (2) in the present case, the sentence of fine was inadequate and should therefore be altered to one of five months' rigorous imprisonment.

Digest :

R v Downey [1954] MLJ 148 High Court, Penang (Spenser-Wilkinson J).

526 Rash driving -- Rash and negligent act by omnibus driver

11 [526] ROAD TRAFFIC Rash driving – Rash and negligent act by omnibus driver – Sentence – Penal Code, s 304A – Rash and negligent act by omnibus driver – Setnence of fine – Appeal – Misdirection on weight to be attached to evidence of expert witness – 'Causa causans' of accident – Inadequacy of sentence of fine – Criminal procedure – Sentence – Appeal – Inadequacy of sentence of fine in cases under Penal Code, s 304A – Criminal evidence – Expert witness – Misdirection on weight to be attached to evidence of.

Summary :

The appellant, an omnibus driver, was charged and convicted by the district court under s 304A of the Penal Code and sentenced to a fine of S$1,500 or nine months' imprisonment in default and he was disqualified from driving for three years. The appellant appealed. It was, inter alia, contended for the appellant: (a) that the learned district judge erred in rejecting the evidence of the expert; and (b) that the district judge misdirected himself in holding that the collision took place in the centre of the road and that the causa causans of the accident was the negligent act of the appellant.

Holding :

Held: (1) in the circumstances of the case, there was little light the expert could throw on the cause of this accident; (2) it did not in this case matter whether the collision took place at the centre or on the wrong side of the road. The act of the appellant was the causa causans of the collision and he was solely responsible; (3) the imposition of a fine, in the circumstances, was manifestly inadequate.

Digest :

Ong Chan Tow v R [1963] MLJ 160 High Court, Singapore (Winslow J).

527 Reckless driving -- Charge for driving recklessly or in a manner dangerous to public

11 [527] ROAD TRAFFIC Reckless driving – Charge for driving recklessly or in a manner dangerous to public – Two distinct offences – Road Traffic Ordinance 1960 (Sarawak) (repealed), ss 28(1) & 29(1) – Road traffic – Driving recklessly or in a manner dangerous to the public – Two distinct offences – Charge bad for duplicity – Whether there was a failure of justice – Road Traffic Ordinance 1960 (Sarawak) (repealed), ss 28(1) & 29(1) – Road Traffic Ordinance 1958 (Federal), s 34A.

Summary :

The accused was convicted of an offence under s 29(1) of the Road Traffic Ordinance 1960 (Sarawak) (repealed) ('the 1980 Ordinance') and sentenced to a fine of RM500. His driving licence for all classes except for Class 1 was cancelled for one year and he was disqualified from applying for a new driving licence for two years. The charge read as follows: 'That you, on the 14th day of June 1980, at about 8am at Oya Road, Mukah (near the Three Rivers Secondary School) being the driver of a vehicle, to wit, a JKR truck bearing plate number SG 5030, did drive the said truck recklessly or in a manner which was dangerous to the public having regard to all the circumstances of the case including the nature, condition and use of the road and as a result of such driving conduct, caused the death of a pedestrian Zaiton bte Boll (f) and you thereby committed an offence punishable under s 29(1) of the Road Traffic Ordinance 1960.' The accused appealed against his conviction on several grounds. The main contention dealt with by the court was whether the charge was bad for duplicity so that there was a failure of justice.

Holding :

Held, allowing the appeal: (1) s 29(1) of the 1960 Ordinance refers to the conduct of driving described in s 28(1). The alternative provisions of s 28(1) create separate and distinct offences and a summons or charge alleging several offences in the alternative is bad for duplicity. In this case, the alternative offences charged were based on one and the same transaction; (2) even if the duplicity was one of form and irregularity curable under s 422 of the Criminal Procedure Code, a failure of justice had been occasioned. The appellant had been prejudiced and embarrassed by the duplicity of the charge in his defence; (3) the conviction was quashed and disqualifications were set aside. The appellant should be retried before another magistrate.

Digest :

Wee Hui Hoo v Public Prosecutor [1987] 1 MLJ 498 High Court, Sibu (Chong Siew Fah J).

528 Reckless driving -- Onus of proof

11 [528] ROAD TRAFFIC Reckless driving – Onus of proof – Road traffic – Dangerous, reckless or careless driving – Onus of proof – Whether the doctrine of res ipsa loquitur applies in a criminal trial – Road Traffic Ordinance 1958, ss 34A, 35 & 36.

Digest :

Lai Kuit Seong v Public Prosecutor [1969] 1 MLJ 182 Federal Court, Ipoh (Ong Hock Thye CJ (Malaya).

See ROAD TRAFFIC, Vol 11, para 522.

529 Reckless driving -- Onus of proof

11 [529] ROAD TRAFFIC Reckless driving – Onus of proof – Whether doctrine of res ipsa loquitur applies in a criminal trial – Road Traffic Ordinance 1958 (Ord 49/1958), ss 34A, 35 & 36

Digest :

Lai Kuit Seong v Public Prosecutor [1969] 1 MLJ 182 Federal Court, Ipoh (Ong Hock Thye CJ (Malaya).

See ROAD TRAFFIC, Vol 11, para 522.

530 Reckless driving -- Sentence

11 [530] ROAD TRAFFIC Reckless driving – Sentence – Road Traffic Ordinance 1958 (Ord 49/1958), s 34A – Road traffic – Reckless driving – Sentence – Disqualification – Special grounds – Road Traffic Ordinance 1958, s 34A.

Summary :

This was an appeal against the conviction of the appellant on a charge of causing death by reckless driving under s 34A of the Road Traffic Ordinance 1958 (Ord 49/1958). The appellant was sentenced to six months' imprisonment and also disqualified from holding or obtaining a driving licence for five years. It was submitted on appeal that there was no evidence of reckless driving by the appellant.

Holding :

Held, dismissing the appeal: (1) to bring home a charge under s 34A of the Road Traffic Ordinance in respect of driving recklessly, it must be shown that the driving was such as to amount to rash driving and the driver of the vehicle must be heedless of the state of affairs on the road at the time in question; (2) on the facts, the learned President in this case was right in convicting the appellant; and as there was nothing to show that the sentence imposed was excessive, the appeal would be dismissed.

Digest :

Liow Siow Long v Public Prosecutor [1970] 1 MLJ 40 High Court, Kuala Lumpur (Raja Azlan Shah J).

531 Reckless driving -- Sentence

11 [531] ROAD TRAFFIC Reckless driving – Sentence – Unavoidable accident – Road traffic – Reckless and dangerous driving – Sentence – Unavoidable accident.

Digest :

Lee Ah Moi v Public Prosecutor [1973] 2 MLJ 132 High Court, Kuala Lumpur (Ong CJ).

See ROAD TRAFFIC, Vol 11, para 27.

532 Registration -- Application for rectification order

11 [532] ROAD TRAFFIC Registration – Application for rectification order – Whether such order may be granted – Road Traffic Act (Cap 276)

Summary :

A was the owner of motor vehicle EZ 8954 Z. He agreed to sell it to one X who was also to assist him in the purchase of a new vehicle. X paid A a deposit at the time of agreement. The agreement was for A to deliver his car to X when the new car arrived and the balance of the purchase price for the car would be set off against the purchase price for the new car. X was also to obtain a scrap car for A. A later handed X a cheque for the scrap car as well as the logbook for his car in order that X could arrange for the renewal of the road tax on A's car. The logbook was never returned to A who had agreed that X could keep possession of it pending completion of the sale. X also borrowed A's identity card and this was subsequently returned. Shortly after meeting with A, X entered into an agreement with B for the sale of a car. B was shown a car bearing the same registration number as A's car. B agreed to buy this car and X arranged for B to purchase the car on hire purchase through a finance company. At some point, X forged A's signature on a motor vehicle transfer form and effected a transfer in the Registry of Vehicles from A's name into B's name. X then absconded. A then brought this action against B for the following reliefs: (a) a declaration that the transfer of A's car was null and void; (b) an order that the Registry of Vehicles be directed to rectify its records to reflect that A was the registered owner of the car. B counterclaimed for possession of the car. The finance company intervened but filed no documents in court stating the nature of its interest. At the trial, the court was informed that the parties had agreed to dispose of the car and to pay the proceeds of sale to the solicitors for the finance company to be held by them as stakeholders pending the outcome of the action. The basis for the agreement for the sale of the car was not made known to the court. However, no amendment was made to the statement of claim. The court below found that B had purchased from X the car which he had seen and that this car was not A's car. It was also found that when X entered into his agreement with A to purchase A's car, he had become its owner. Further, X had A's authority to sell the car but there was no estoppel even though A had handed over the logbook and his identity card to X because B had never asked for and was not shown the logbook and identity card. The court below granted the declaration sought for by A and ordered that the proceeds of sale of the car be paid by the stakeholders to A. The court, however, made no order as to interest on the proceeds of sale. B's counterclaim was dismissed and B was ordered to pay the costs of the action. On appeal, it was contended that the district court had no jurisdiction to grant a bare declaration. It was also contended that as the court had found that the property in the car had passed to X, it should not have granted the declaration asked for because A was no longer the owner of the car but only had a lien for the unpaid purchase price. B further contended that he was entitled to the proceeds of sale because he had entered into a contract with X to purchase not the car that was shown to him but a car bearing the number EZ 8954 Z, ie A's car.

Holding :

Held, allowing the appeal in part: (1) the evidence of B did not show that he placed any importance on the registration number of the car as such. On the facts, it was clear that he was buying the car which he had seen, which was not shown to him as a sample but as the actual car he was to purchase. Accordingly, the court rejected B's appeal on his entitlement to the proceeds of sale; (2) the civil jurisdiction of the district courts requires a two-fold test, namely, that a case must fall not only within s 19(2) of the Subordinate Courts Act (Cap 321) ('the Act'), but also within another section in Pt IV of the Act conferring jurisdiction, namely, one of the primary or additional jurisdiction sections (the primary jurisdiction sections are ss 20, 21, 25, 28, 29, 30 and 31 of the Act which set out the monetary limits for specific classes of actions and the additional jurisdiction sections are ss 22, 23, 24(3), 26 and 27(3) of the Act which allow district courts to hear cases not otherwise falling within the primary jurisdiction sections); (3) the same interpretation is given to s 32 of the Act as has been given to s 74 of the English County Courts Act 1959, namely, that there can be no claim for a bare declaration unless it is ancillary to some other claim falling properly within the jurisdiction of the district courts; (4) although it is not disputed that the requirements of s 19(2) have been met in this case, since the plaintiff claimed no relief which would otherwise have come within a section in Pt IV conferring jurisdiction (other than s 32), the declaration should not have been granted; (5) the claim for an order for rectification of the register in the Registry of Vehicles could not be sustained as there was no provision for such an order in the Road Traffic Act (Cap 276); (6) even if the district judge had the power to grant a bare declaration, he should not have granted the particular declaration in the form he did: the declaration was of no legal or practical use to anyone (being quite immaterial to the real issue at stake at the trial, which was the entitlement to the proceeds of sale) and more importantly, the court had no power to make any order in relation to the proceeds of sale since they were not the subject matter of any claim arising from the pleadings.

Digest :

Lim Kim Cheong v Lee Johnson [1993] 1 SLR 313 High Court, Singapore (Michael Hwang JC).

533 Registration -- Charge of possession of false car registration card

11 [533] ROAD TRAFFIC Registration – Charge of possession of false car registration card – Road Traffic Ordinance 1958 (Ord 49/1958), s 137(3) – Road traffic – Registration card – Possession of false registration card – Charge – Omission of words 'intent to deceive' in charge – Whether fatal – Road Traffic Ordinance 1958, s 137(3).

Summary :

This was an appeal against the conviction of the appellant on a charge for an offence under s 137 of the Road Traffic Ordinance 1958 (Ord 49/1958). The charge on which he was convicted was as follows: 'That you on the 6th day of December 1968 at about 11.15am at Jalan Lunas, in the District of Bukit Mertajam, in the State of Penang, did have in your possession a document, to wit a Motor Vehicle registration card purporting to be pertaining to car number PG 9565, so closely resembling the original registration card of the above mentioned car as to be calculated to deceive and that you have thereby committed an offence under s 137(3)(b) of the Road Traffic Ordinance No 48 of 1958 and punishable under s 137(3) of the said ordinance.' The appellant was found guilty and sentenced to pay a fine of RM250 in default three months' imprisonment. The main ground of appeal was that the words 'with intent to deceive' were omitted from the charge.

Holding :

Held, dismissing the appeal: (1) the omission of the words 'with intent to deceive' did not cause any failure of justice and therefore the conviction would be upheld; (2) the sentence imposed in this case was inadequate and should be increased to a term of imprisonment for six months.

Digest :

Kho Ah Soon v Public Prosecutor [1970] 1 MLJ 42 High Court, Penang (Ong Hock Sim J).

534 Registration -- Failure to register transfer of ownership

11 [534] ROAD TRAFFIC Registration – Failure to register transfer of ownership – Whether onus on buyer or seller – Motor Vehicles (Registration and Licensing) Rules 1972, r 20 – Road Traffic Act (Cap 276, 1985 Ed), s 131

Summary :

The accused purchased a motor pick-up from the St Douxs Home on 11 January 1989. The accused was given the vehicle log book and the transfer form. Three days later, the accused sold the said motor pick-up to one Lee Chin Chai. The vehicle was never registered in Lee's name nor was the road tax on the pick-up renewed. The accused was charged with failing to register the transfer of the vehicle from the St Douxs Home to him and with failing to renew the road tax.

Holding :

Held, acquitting the accused on both charges; (1) the accused would only have committed an offence under r 20 of the Motor Vehicles (Registration and Licensing) Rules 1972 if he was still in possession of the pick-up after seven days without registering the transfer. As the accused had handed over the pick-up to Lee in less than seven days, no offence was committed; (2) as regards the second charge, the accused was not the registered owner of the pick-up and therefore the presumption under s 16 of the Road Traffic Act ('the Act') could not be invoked; (3) the prosecution had to prove that the accused did keep the motor pick-up for which a vehicle licence was not in force; (4) there was no statutory definition of the word 'keep' in the Act. The dictionary meaning 'to manage or to hold in custody' found favour with the court; (5) the accused clearly did not keep the pick-up for the period set out in the charge.

Digest :

Public Prosecutor v Ting Mei Fa [1991] 3 MLJ lxxvii Magistrate's Court, Singapore (Tham Tong Kong (Magistrate).

535 Registration -- Legal owner of motor car applied to register his name as absolute owner but failed to ensure registration

11 [535] ROAD TRAFFIC Registration – Legal owner of motor car applied to register his name as absolute owner but failed to ensure registration – Whether his title affected – Road Traffic Regulations, reg 47(1) – Hire-purchase – Motorcar – Legal owner of motor car applied to register his name as absolute owner but failed to ensure registration – Whether his title affected – Road Traffic Regulations, reg 47(1).

Summary :

This was an appeal from the decision of the High Court (see [1986] 2 MLJ 481). Judgment was given in favour of the plaintiff, which based its claim in detinue and conversion against the defendant. The appellant/defendant, a finance company, had agreed to finance the purchase of a new motor car from Performance Company Ltd by one Martin Loh ('the hire-purchaser'). The question raised by this appeal was whether reg 47(1) of the Road Traffic Regulations affected the title of a legal owner of a motor car who had applied to register his name as absolute owner but had not ensured that registration had been effected pursuant to that application. The paragraph reads as follows: 'Where the person entitled to the possession of a motor vehicle or trailer is not the absolute owner thereof, but is registered as the owner thereof, any person claiming to be the absolute owner thereof (hereinafter called Òthe claimantÓ) may apply to the licensing officer of the district in which the vehicle or trailer is registered to enter his name in the register as the absolute owner in addition to the name of the registered owner.' The learned trial judge held that the legal owner of a motor vehicle had a duty to take adequate steps to ensure that his claim of ownership was entered in the register within a reasonable time of the creation of his claim.

Holding :

Held, allowing the appeal: an absolute owner has been given a privilege of having his name entered in the register for the purpose of acquiring the protection which such entry will give him, but he is under no such obligation to exercise that privilege.

Digest :

Industrial Resources Bhd v United National Finance Ltd [1987] 1 MLJ 513 Court of Appeal, Bandar Seri Begawan (Sir Geoffrey Briggs P, Sir Alan Huggins VP and Hopper J (Judicial Commissioners).

536 Registration -- Ownership claim

11 [536] ROAD TRAFFIC Registration – Ownership claim – Non-registration with RIMV – Non-endorsement of claim on registration card of vehicle – Effect of – Road Traffic Ordinance 1958 (Ord 49/1958), s 10

Digest :

Syarikat Batu Sinar Sdn Bhd & Ors v UMBC Finance Bhd & Ors [1990] 3 MLJ 468 High Court, Ipoh (Peh Swee Chin J).

See SALE OF GOODS, Vol 11, para 752.

537 Registration -- Right to possession

11 [537] ROAD TRAFFIC Registration – Right to possession – Ownership – Road Traffic Ordinance 1958 (Ord 49/1958), s 6(1) – Practice and procedure – Execution – Seizure of goods – Estoppel – Evidence Ordinance 1950, s 115 – Goods in possession of judgment debtor upon deposit – Execution – Bankruptcy Ordinance 1959, s 48 – Road traffic legislation – Registration – Right to possession – Ownership – Road Traffic Ordinance 1958, s 6(1).

Summary :

Held: (per Neal J) having regard to the provisions of the Road Traffic Legislation 1958 and 1959, the insertion of the name of another person in the registration book of the motor vehicle or the owner's consent thereto does not of itself necessarily estop the true owner from denying that he is the owner of the car.

Digest :

Chan Kong Choy v Inder Singh [1961] MLJ 1 Court of Appeal, Ipoh (Thomson CJ, Rigby and Neal JJ).

538 Registry of Vehicles -- Rectification of records

11 [538] ROAD TRAFFIC Registry of Vehicles – Rectification of records – Whether court can order rectification

Summary :

The respondent wished to sell his Mitsubishi Lancer EZ 8954 Z and to buy a new Toyota Corona. He approached a Billy Tan who offered to buy the Lancer for S$28,500 and agreed to help the respondent to buy a new Toyota for S$29,500 as well as to get the respondent a scrap car. The arrangement was that the Lancer would be delivered to Billy Tan when the new Toyota arrived and the balance of the price of the Lancer would be set off against the purchase for the Toyota. At that time, the understanding was that Billy Tan would pay the purchase price for the Toyota to the car dealer, a cheque for S$14,500 was also given to him for the scrap car. Billy Tan also offered to renew the road tax for the Lancer and the log book was given to him together with a cheque for the road tax. The log book was never returned, as the respondent was content to allow Billy Tan to retain it pending completion of the sale. Billy Tan also borrowed the respondent's identity card on some pretext, but this was returned. The Lancer never left the respondent's possession. Shortly after this, Billy Tan entered into an agreement with the appellant to sell him a Lancer for S$26,500. The appellant was shown the Mitsubishi Lancer EZ 8954 Z. The appellant agreed to buy this car and paid Billy Tan S$5,500 as an initial payment. Billy Tan was able to arrange for the buyer to purchase the car on hire purchase through Sime Diamond Leasing ('the finance company'). The appellant paid one instalment to Billy Tan but the car was never delivered to him. It subsequently transpired that Billy Tan, on the day that he borrowed the respondent's identity card, forged the respondent's signature on a motor vehicle transfer form. He used the log book of the Lancer to effect a transfer in the Registry of Vehicles from the respondent to the appellant. Billy Tan then absconded. The log book was deposited with the finance company upon the execution of the hire-purchase agreement. The respondent then sued the appellant for: (a) a declaration that the transfer of the respondent's Lancer to the appellant by the respondent was null and void; and (b) an order that the Registry of Vehicles be directed to rectify its records to reflect the respondent as the registered owner of the Lancer. The appellant resisted the claim and counterclaimed for the possession of the Lancer. After the action was commenced, the parties agreed that the Lancer should be sold, and the finance company's solicitors held the proceeds as stakeholder. No amendments were made to the pleadings to reflect that the action was no longer about the Lancer but about the proceeds of sale. After trial, the district judge (a) granted the declaration sought by the respondent that the transfer of the Lancer was null and void; (b) ordered that the proceeds of sale of the Lancer be paid to the respondent; (c) dismissed the counterclaim; and (d) awarded costs to the respondent. The appellant appealed. One of the grounds of appeal was that the district judge had no power to grant a declaration.

Holding :

Held, allowing the appeal: (1) an objection to jurisdiction can be taken at any time during the case; (2) the civil jurisdiction of the district court requires a two-fold test, namely, that a case must fall not only within s 19(2) of the Subordinate Courts Act (Cap 321) ('the Act') but also within another section in Pt IV of the Act conferring jurisdiction. The case must meet both the geographical connection and the financial limits before a district court can have jurisdiction; (3) there can be no claim for a bare declaration unless it is ancillary to some monetary or other claim falling within the jurisdiction of the district court; (4) since the respondent claimed no relief which would otherwise have come within a section in Pt IV conferring jurisdiction, the declaration could not have been granted; (5) the respondent's position was not improved by the second claim for an order for rectification of the register in the Registry of Vehicles. This order could not in any event have been granted, since there is no provision for such an order in the Road Traffic Act (Cap 276); (6) the difference between an unconditional contract of sale in relation to specific goods in a deliverable state and an agreement for sale, is that in the case of the former, the prima facie presumption was that the property passed at the time of the contract unless there was evidence that the parties had expressly or impliedly agreed otherwise. The overall flavour of the evidence adduced before the district judge suggested that the respondent intended that the property in the Lancer would pass when the deal with Billy Tan was struck but that the respondent would retain possession until the price was paid. The true issue therefore was whether the respondent was still the owner of the car or otherwise entitled to possession of it as against the appellant but that was not the relief asked for by the respondent; (7) the learned district judge also made an order in respect of a matter which was not before him on the pleadings, namely, the proceeds of sale held by the stakeholder.

Digest :

Lim Kim Cheong v Lee Johnson [1993] 1 SLR 313 High Court, Singapore (Michael Hwang JC).

539 Res ipsa loquitur -- Dangerous, reckless or careless driving

11 [539] ROAD TRAFFIC Res ipsa loquitur – Dangerous, reckless or careless driving – Whether doctrine of res ipsa loquitur applies in criminal trial – Road traffic – Dangerous, reckless or careless driving – Onus of proof – Whether the doctrine of res ipsa loquitur applies in a criminal trial – Road Traffic Ordinance 1958, ss 34A, 35 & 36.

Summary :

The questions raised in this reference was whether the doctrine of res ipsa loquitur is available to the prosecution to enable it to discharge the onus of proof resting upon it in cases involving charges under ss 34A or 35 or 36 of the Road Traffic Ordinance 1958, if in the circumstances of the case the trial magistrate cannot properly find or infer from the evidence adduced the facts sustaining the relevant charges.

Holding :

Held: (1) the maxim res ipsa loquitur has no application in criminal case; (2) (obiter) the doctrine of res ipsa loquitur arises only in connection with the tort of negligence and does not apply in where the cause of the accident is known. Secondly, the res speaks because, and only because, where the accident stands unexplained, the known facts and circumstances, however meagre, may be such that want of reasonable care is safely attributable to the person but for whose negligence the accident could not have happened. In other words, the circumstances are eloquent testimony per se of negligence. Thirdly, and conversely, res ipsa loquitur cannot be relied on where the res is ambivalent. Fourthly, in criminal proceedings, where the heavier onus of proof rests on the prosecution and the facts proved must be sufficient to support the charge beyond reasonable doubt, the occasion can never arise where the facts require to be bolstered up by invocation of the doctrine.

Digest :

Lai Kuit Seong v Public Prosecutor [1969] 1 MLJ 182 Federal Court, Ipoh (Ong Hock Thye CJ (Malaya).

540 Res ipsa loquitur -- Negligence

11 [540] ROAD TRAFFIC Res ipsa loquitur – Negligence – Negligent driving – Motor Vehicles (Driving Offences) Proclamation, s 4(2) – Criminal law and procedure – Recall of witness for further evidence – Evidence Ordinance 1950, s 165 – Criminal Procedure Code (Cap 21), s 451 – Powers of magistrate under – Discretion of court to recall witness after close of defence case – Provisions of s 182(f), Criminal Procedure Code – Negligent driving – Res ipsa loquitur doctrine.

Summary :

Held: it is wrong to apply the doctrine of res ipsa loquitur in criminal cases in which negligence must be positively proved.

Digest :

Ramasamy v R [1955] MLJ 95 High Court, Penang (Spenser-Wilkinson J).

541 Road -- Definition of

11 [541] ROAD TRAFFIC Road – Definition of – Charge of disorderly driving on road – Incident occurring in car park – Whether a car park is a road – Road Traffic Rules 1981, r 27(B)

Summary :

On 12 November 1988 at the Golden Shoe carpark, the accused reversed his motor car into a stationary motor car parked alongside a row of parked cars. The accused was charged under r 27B of the Road Traffic Rules 1981 with having driven on a road in otherwise than an orderly manner and with due regard for the safety of others. At the trial, the prosecution called only the evidence of the owner of the stationary motor car who had witnessed the incident.

Holding :

Held, acquitting the accused without calling for his defence: (1) the burden was on the prosecution to show that the Golden Shoe carpark was a road. This was a question of fact; (2) to hold that a car park is a road would stretch too thinly the ordinary meaning of the word road. There must be some evidence to show that in addition to being a car park, the place is used, inter alia, as a thoroughfare or shortcut for vehicles between two points outside of it. The prosecution had not adduced any such evidence at all; (3) the prosecution had therefore not shown that the act complained of was performed on a road and the accused was acquitted without having been called upon to enter his defence.

Digest :

Public Prosecutor v Ng Khiok Ngee [1990] 2 MLJ xix Magistrate's Court, Singapore (Tham Tong Kong (Magistrate).

542 Road -- Public thoroughfare

11 [542] ROAD TRAFFIC Road – Public thoroughfare – Meaning of – Traction Engines and Motor Cars Ordinance (Cap 214), s 10(1) – Driving a motor car negligently on public thoroughfare – Meaning of public thoroughfare.

Summary :

The respondent was charged with driving a motor car on a public thoroughfare negligently, an offence under s 10(1) of the Traction Engines and Motor Cars Ordinance (Cap 214). The road in question was the property of the Air Ministry. There were native shops on the road open to the public. The road itself was open to the public except that for 24 hours every year it was closed to the public at the Seletar Road entrance for preserving its private nature. On all other days of the year the public had access to the road. It was not, however, a public road.

Holding :

Held: on those days, it was a public thoroughfare within the meaning of the section.

Digest :

R v LW Burgess [1941] MLJ 123 High Court, Straits Settlements (McElwaine CJ).

543 Road -- Whether road within school ground is 'road'

11 [543] ROAD TRAFFIC Road – Whether road within school ground is 'road' – Road Traffic Ordinance 1958 (Ord 49/1958), ss 2 & 36(1) – Road traffic – 'Road' – Definition of – Whether road within school ground is 'road' – Road Traffic Ordinance 1958, ss 2 & 36(1).

Summary :

The appellant had been convicted on a charge of driving without due care and attention under s 36(1) of the Road Traffic Ordinance 1958 (Ord 49/1958). The only question for decision was whether the road within the school grounds was a 'road' within the meaning of s 2 of the Road Traffic Ordinance 1958.

Holding :

Held, dismissing the appeal: the learned magistrate was fully justified, upon the evidence before him, in concluding that the road within the school grounds was a 'road' within the meaning of s 2 of the Road Traffic Ordinance 1958 and so properly convicted the appellant.

Digest :

Othman bin Taib v Public Prosecutor [1972] 1 MLJ 261 High Court, Penang (Ong Hock Sim J).

544 Road tax -- Failure to make payment

11 [544] ROAD TRAFFIC Road tax – Failure to make payment – Whether accused could be said to 'keep' a motor vehicle – Road Traffic Act (Cap 276, 1985 Ed), s 15

Digest :

Public Prosecutor v Ting Mei Fa [1991] 3 MLJ lxxvii Magistrate's Court, Singapore (Tham Tong Kong (Magistrate).

See ROAD TRAFFIC, Vol 11, para 517.

545 Seizure of vehicle -- Power of registrar to seize vehicles

11 [545] ROAD TRAFFIC Seizure of vehicle – Power of registrar to seize vehicles – Road Traffic Act (Cap 276), s 95

Summary :

The appellant agreed to purchase a Mercedes Benz 450 SLC from one Lee Tian Meng ('Lee'). Both he and Lee then approached the respondents to seek the necessary financing. In consequence, on 25 February 1985, the appellant entered into a hire-purchase agreement ('the agreement') with the respondents whereby the respondents agreed to purchase the vehicle from Lee and let it to the appellant on hire on the terms and conditions contained in the agreement. The agreement provided that upon full payment of all the hire instalments, the appellant would be entitled to exercise the option to become the owner of the vehicle. By cl 4(m) of the agreement, the appellant undertook to comply with all proper obligations relating to the vehicle or its possession or use and not do or suffer to be done anything with regard to the vehicle which would in any way prejudice the respondents' rights. Under cl 4(n) of the agreement, it was the appellant's obligation to obtain delivery of the vehicle. After the agreement was signed, Lee was permitted to attend to the registration of the transfer of the vehicle to the appellant with the Registry of Vehicles ('ROV'). Unbeknown to the parties, Lee forged the registration of the transfer to the appellant. On 23 March 1985, two days before the first instalment of hire was due under the agreement, the registrar of vehicles ('the registrar') seized the vehicle for failure to pay the necessary registration fees and arrears of road tax for the period from January to June 1985. The person responsible for paying these outstanding sums was Lee, but he had not paid them before selling the vehicle to the respondents. Subsequently, the appellant paid to the ROV the outstanding charges totalling S$44,280 and the vehicle was released to the appellant and eventually registered in his name. The respondent took out a writ against the appellant and claimed, inter alia, all the arrears of instalments of hire that had fallen due and further arrears as would be falling due plus interest. In his defence, the appellant claimed a right to set off the sum of S$44,280 against part of the respondents' claim. The trial judge rejected the appellant's defence, holding that the registrar's seizure of the vehicle was an unlawful act since he had no power to seize the vehicle under s 30(1) of the Road Traffic Act (Cap 276) ('the Act'). He held that there was thus no breach of the respondents' implied warranty of quiet possession entitling the appellant to claim a set-off. The appellant appealed.

Holding :

Held, allowing the appeal in part: (1) s 95 of the Act gives to the registrar the power to seize the vehicle if it was used in contravention of the Act. The use of the vehicle by the appellant at the material time without payment of the outstanding registration fees and road tax was clearly in contravention of ss 15 and 17 of the Act. (2) the seizure of the vehicle by the registrar was therefore not an unlawful act. The Hire-Purchase Act (Cap 125) does not apply to the transaction made between the parties. At common law, until he exercised the option to purchase, the appellant was only the hirer of the vehicle. In these circumstances, unless the agreement provided otherwise, he had no responsibility for paying the outstanding registration fees and road tax; (3) the tax 'chargeable' in respect of a vehicle under s 11 of the Act is effectively in the nature of a charge or encumbrance on the vehicle. Until such tax is paid or discharged, it continues to be attached to the vehicle. It followed that in this case the respondents, having purchased the vehicle without having the 'encumbrance' thereon discharged by the previous owner, became liable to pay the tax then outstanding and unpaid, and that liability remained with them when they hired out the vehicle to the appellant under the agreement; (4) furthermore, arising from the agreement, there was an implied warranty that the appellant as the hirer would have quiet possession of the vehicle during the currency of the agreement. In view of this implied warranty, the respondents were under an obligation to ensure that the outstanding registration fees and road tax were duly paid by Lee (who was the owner at the material time) and in default of payment by him they themselves would have to pay the same; (5) cl 4(n) of the agreement only imposed on the appellant the obligation 'to obtain delivery' of the vehicle. But the payment of outstanding registration fees and road tax of the vehicle was not a necessary incidence of obtaining delivery of the vehicle and clearly did not fall within the ambit of this provision. The obligation under this clause did not give rise to an implied warranty that it was the appellant's duty to effect registration of the transfer of the vehicle so that he could lawfully use the vehicle. Even if there was such an implied warranty, it did not extend to assuming an obligation to pay all outstanding registration fees and road tax then payable. At most, it extended to cover expenses, if any, incurred in obtaining delivery of the vehicle; (6) the words of cl 4(m) of the agreement covered payment of any fees or taxes payable for the maintenance and use of the vehicle from the commencement of the hiring. They did not cover the registration fees and road tax accrued and payable prior to the commencement as before that date, the appellant did not have possession and use of the vehicle. This clause, therefore, did not shift to the appellant the obligation to pay the outstanding registration fees and road tax; (7) since the hiring commenced on 25 February 1985, the appellant was liable under cl 4(m) to pay the road tax as from that date and hence, a proportionate portion of the road tax would be payable by him and this proportionate amount was S$756.10. This amount should be deducted from S$44,280 resulting in a net amount of S$43,523.90 which was payable by the respondents. As this amount had been paid by the appellant, he was entitled to set off this sum against part of the claim of the respondents.

Digest :

Lim Check Meng v Orchard Credit Pte Ltd [1994] 1 SLR 1 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

546 Special reasons -- 'Reasons special to the offender' and 'reasons special to the offence' explained

11 [546] ROAD TRAFFIC Special reasons – 'Reasons special to the offender' and 'reasons special to the offence' explained – Road Traffic Ordinance1958 (Ord 49/1958), ss 25 & 74 – Road traffic – Permitting unlicensed person to drive motor cycle while insurance policy not in force – Magistrate imposing fines – No disqualification of driving licence – Whether 'special reasons' exist – Road Traffic Ordinance 1958, ss 25 & 74.

Summary :

The respondent was convicted on his plea of guilty on a charge of permitting an unlicensed person to drive his motor cycle and of allowing his motor cycle to be used while an insurance policy was not in force in contravention of ss 25(2) and 74 of the Road Traffic Ordinance 1958 (Ord 49/1958) ('the Ordinance'). He was fined RM10 on the first charge and RM20 on the second charge. The magistrate refrained from making an order relating to his driving licence the grounds that the respondent required the use of his motor cycle to get to his place of work; that he had many dependants to support and that he was a sick man. The Public Prosecutor appealed against the sentences on the ground that they were inadequate.

Holding :

Held: (1) the fines were inadequate; (2) the special reasons mentioned in s 74 of the Ordinance are not special reasons connected with the offender but special reasons connected with the commission of the offence. In this case, as the special reasons mentioned by the learned magistrate were special reasons connection with the offender, the disqualification mentioned in the section must be imposed. Where an order for disqualification is made, except in serious cases of being drunk in charge or dangerous driving, the quantum of the monetary penalty is of minor importance. 'Reasons special to the offender' and 'reasons special to the offence' explained.

Digest :

Public Prosecutor v Mohd Isa [1963] MLJ 135 High Court, Kuala Lumpur (Thomson CJ).

547 Special reasons -- Dependent on use of car for livelihood

11 [547] ROAD TRAFFIC Special reasons – Dependent on use of car for livelihood – Whether special reason – Road traffic – Motor Vehicles (Driving Offences) Proclamation, s 3(1) – Motor Vehicles Third Party Risks Regulations, reg 3(1) – Disqualification – Special grounds.

Summary :

The accused was charged with employing a person who was not a holder of a driving licence to drive a motor car, and of permitting the vehicle to be driven without there being in force in relation to the use of the said vehicle a policy of insurance. The accused pleaded guilty and was convicted and fined RM40 on the first charge and RM75 on the second charge. No period of disqualification was imposed as it appeared that the accused was dependent on the use of his car for his livelihood.

Holding :

Held: the fact that the accused was dependent on his car for his livelihood is not a special circumstance entitling the magistrate to dispense with the disqualification.

Digest :

Re Antharanik Simon [1954] MLJ 166 High Court, Penang (Spenser-Wilkinson J).

548 Special reasons -- Disqualification

11 [548] ROAD TRAFFIC Special reasons – Disqualification – Endorsement on licence – Test to be applied

Digest :

Re Kanapathipillai & Ors [1960] MLJ 243 High Court, Kuala Lumpur (Adams J).

See ROAD TRAFFIC, Vol 11, para 55.

549 Special reasons -- Disqualification

11 [549] ROAD TRAFFIC Special reasons – Disqualification – Road Traffic Ordinance 1958 (Ord 49/1958), s 74(2)

Digest :

Public Prosecutor v Hiew Chin Fong [1988] 1 MLJ 467 High Court, Sibu (Chong Siew Fai J).

See ROAD TRAFFIC, Vol 11, para 52.

550 Special reasons -- Disqualification

11 [550] ROAD TRAFFIC Special reasons – Disqualification – Road Traffic Ordinance 1958 (Ord 49/1958), s 74(2) – Road traffic – Unlicensed public service vehicle – Seizure of – Whether forfeiture mandatory – Road Traffic Ordinance 1958, ss 74(2) & 92(1), (2) & (4) – Disqualification – Special reasons.

Digest :

Public Prosecutor v Teoh Gaik Beng and another appeal [1967] 2 MLJ 110 High Court, Penang (Ong Hock Sim J).

See ROAD TRAFFIC, Vol 11, para 493.

551 Special reasons -- Disqualification

11 [551] ROAD TRAFFIC Special reasons – Disqualification – Whether special reasons shown for exemption from statutory minimum of 12 months' disqualification

Digest :

Public Prosecutor v Teo Kok Keng [1989] 1 MLJ 198 High Court, Sibu (Chong Siew Fai J).

See ROAD TRAFFIC, Vol 11, para 20.

552 Special reasons -- Hardship

11 [552] ROAD TRAFFIC Special reasons – Hardship – Whether special reason – Motor Vehicles Third Party Risks Regulations, reg 3(1) & (2) – Driving without third party insurance – Disqualification – Special reasons.

Summary :

The accused had been convicted for driving without third party insurance. The learned magistrate did not disqualify the accused from holding a driving licence and it was not clear why he did not do so. The Public Prosecutor appealed against the inadequacy of the sentence as provided in reg 3(2) of the Motor Vehicles Third Party Risks Regulations which makes it obligatory to disqualify the accused unless for 'special reasons' the court thinks fit to order otherwise.

Holding :

Held: (1) the fact that hardship will result if the licence of the particular driver is suspended is not a special reason. 'Special reasons' must pertain to the offence itself and not to the offender; (2) the facts relied upon as special reasons must, unless admitted, be proved by evidence, and also that the special reasons must be fully and clearly stated by the court in deciding not to disqualify; (3) as regards the fine imposed, it is open to the magistrate to consider the hardship caused by the disqualification when he assesses the amount of the fine.

Digest :

Public Prosecutor v Mohamed Jee [1953] MLJ 54 High Court, Kuala Lumpur (Briggs J).

553 Special reasons -- Influence of drink

11 [553] ROAD TRAFFIC Special reasons – Influence of drink – Burden of proof – Mixture of alcoholic drinks

Summary :

R pleaded guilty to a charge of drunk driving. In mitigation, R said that he had only two glasses of beer and one double-peck of whisky. Unknown to him, one of his friends had spiked his whisky with brandy. The sentencing magistrate found special reasons and did not disqualify R from driving. The prosecution appealed.

Holding :

Held, allowing the appeal: (1) R in discharging the onus of proving special reasons was required on a balance of probabilities to prove that it was the additional alcohol of which he was unconscious that put him over the limit; (2) it was essential that evidence of all relevant facts and the surrounding circumstances in respect of the adding of additional alcohol to R's drink be placed before the court; (3) where the special reason was one of laced drinks, the court must also consider whether R should have realized that he was not fit to drive due to the alcohol in his body; (4) a person already drinking a high alcoholic content drink like whisky cannot be heard to say that unbeknown to him, more whisky had been added to his drink which accounted for the excess over the permitted limit or even that another spirit of equal alcoholic content like brandy had been added to whisky unbeknown to him which accounted for the excess without calling some medical or scientific evidence to prove, especially in the latter case, that the mixture of whisky and brandy significantly increased its potency; (5) the extenuating and pressing circumstances, to be a special reason, must relate to the offence itself and not to the offender. In cases where spiked drinks being such an extenuating circumstance and thus a special reason, there had always been an element of intervention by a third party or a misleading of the motorist by a third party; (6) the learned magistrate's findings that it was the brandy which accounted for the excessive blood-alcohol level, that the beer and whisky alone would not have caused R's blood alcohol to exceed the legal limit, and that the effect of alcohol increases drastically when alcoholic drinks are mixed, were assumptions which had no scientific basis; (7) R had failed to discharge the burden to prove on a balance of probabilities that he had been induced to take a stronger drink than what he was consuming by the intervention of a third party without his knowledge to account for the near three-fold increase of his blood-alcohol above the permitted limit; (8) R had admitted taking two glasses of beer and a double whisky. The learned magistrate failed to address his mind to whether R realized that he was not fit to drive due to the alcohol in his body, therefore the exercise of his discretion not to disqualify the respondent was a wrong exercise of his discretion in law.

Digest :

Public Prosecutor v J Balasubramaniam [1992] 1 SLR 822 High Court, Singapore (Karthigesu J).

554 Special reasons -- Influence of drink

11 [554] ROAD TRAFFIC Special reasons – Influence of drink – Motor Vehicles (Driving Offences) Proclamation, s 6 – Driving under influence of drink – Disqualification – Special reasons.

Summary :

The accused had been convicted and fined RM100 on his plea of guilty for driving while under the influence of drink under s 6 of the Motor Vehicles (Driving Offences) Proclamation. Subsection (2) of s 6 provides that a person convicted under the section shall be disqualified for a period not less than 12 months unless special reasons are shown. The learned magistrate did not suspend the accused's licence for the reason that the accused did not know of any way of earning his livelihood other than driving a motor car.

Holding :

Held: (1) this was not a special reason sufficient to excuse the accused from disqualification. A 'special reason' is one which is special to the facts which constitute the offence. A circumstance peculiar to the offender as distinguished from the offence is not a 'special reason' within the exception; (2) the circumstance peculiar to the offender might have been taken into consideration in imposing fine or imprisonment according to the discretion of the magistrate, having in mind also the circumstance which the accused will be in consequent on the disqualification; (3) where the court refuses to disqualify it should state the facts which are found to constitute special reasons.

Digest :

Public Prosecutor v Karthiah [1953] MLJ 52 High Court, Kuala Lumpur (Spenser-Wilkinson J).

555 Special reasons -- Motor mechanic

11 [555] ROAD TRAFFIC Special reasons – Motor mechanic – Required to test vehicles and motor cycles – Whether special reason – Road traffic – Motor Vehicles (Driving Offences) Proclamation, s 3(1) – Motor Vehicles Third Party Risks Regulations, reg 3(1) – Disqualification – Special reasons.

Summary :

The accused had been convicted on a charge of permitting a motor cycle to be ridden without an insurance policy contrary to reg 3(1) of the Motor Vehicles Third Party Risks Regulations. The learned magistrate held that the licence of the accused should not be confiscated as he was a motor mechanic and required to test vehicles and motor cycles.

Holding :

Held: (1) magistrates do not have an unfettered discretion in imposing the penalty of disqualification and must prima facie impose it in all cases to which the penalty applies unless the court for special reasons thinks fit to order otherwise; (2) there were no special reasons in this case and, therefore, the learned magistrate should have imposed a period of disqualification.

Digest :

Re Muniandy [1954] MLJ 168 High Court, Penang (Spenser-Wilkinson J).

556 Special reasons -- Reason must be special to offence

11 [556] ROAD TRAFFIC Special reasons – Reason must be special to offence – Road Traffic Ordinance 1958 (Ord 49/1958), s 36(1) – Road traffic – Driving licence – Endorsement – 'Special reason' – Road Traffic Ordinance 1958, s 36(1).

Summary :

Held{eb] when a person is convicted under s 36(1) of the Road Traffic Ordinance 1958 (Ord 49/1958), it is mandatory to order endorsement, but the court has a discretion to order otherwise if there is a special reason as opposed to a reason of general character. The reason must be special to the offence, that is, special to the facts which constitute the offence and not special to the offender.

Digest :

Public Prosecutor v Muhammad Situl bin Sahri and another appeal [1981] 2 MLJ 292 High Court, Kuala Lumpur (Mohamed Azmi J).

557 Traffic signs -- 'No Parking'

11 [557] ROAD TRAFFIC Traffic signs – 'No Parking' – Waiting at 'No Parking' area

Summary :

A taxi driver stopped his vehicle outside a market in a No Parking area for 'a few minutes' and again in a No Parking area for a period of time which was not stated in evidence.

Holding :

Held: no offence had been committed against rr 4 and 5 of the Kuching Municipal Parking Rules 1958.

Digest :

Goh Hong Foo v R [1959] SCR 89 Supreme Court, Sarawak, North Borneo and Brunei (Briggs J).

558 Traffic signs -- 'No Parking'

11 [558] ROAD TRAFFIC Traffic signs – 'No Parking' – Waiting at 'No Parking' area – Road traffic – Traffic sign – 'No Parking' – Waiting at 'No Parking'.

Summary :

The appellant in this case had arranged by telephone to pick up his friend in his motor car and driven to Batu Road where he stopped his car by a 'No Parking' sign and requested a watchman to go indoors and inform his friend that he was there, whilst he remained in the driver's seat waiting for his friend. A policeman told the appellant to drive on, but he did not do so, saying that he wanted to wait for his friend. He was charged and convicted for the offence of failing to conform to the indication given by a traffic sign, to wit 'No Parking' under the Motor Vehicles Traffic Signs Regulations, reg 33(b).

Holding :

Held: waiting before a house in a public street while the driver of the car remained at the wheel did not constitute 'parking'. A distinction could be drawn between 'waiting' and 'parking' in a public street. If a person remained in his stationary car in Batu Road, he would be 'waiting' there, but if he went out and got into a shop leaving his car there he would be 'parking'Êhis car. A parked car is always a waiting car, but a waiting car in a public street is a parked car only when the driver is absent from the vehicle.

Digest :

N Ramachandran v Public Prosecutor [1959] MLJ 71 High Court, Kuala Lumpur (Smith J).

559 Traffic signs -- Failing to conform with indication on a traffic sign

11 [559] ROAD TRAFFIC Traffic signs – Failing to conform with indication on a traffic sign – Presumption that sign was lawfully placed on road – Road Traffic Enactment 1937 (17 of 1937), s 71 – Evidence Enactment (Cap 10), s 114(e) – Failing to conform with indication of a traffic sign – Presumption that sign was lawfully placed on road.

Summary :

The respondent was charged with having failed to conform with the indication given by a Stop-Look-Go sign contrary to s 71(b) of the Road Traffic Enactment 1937. Although there was evidence that he had deliberately driven past the sign he was acquitted, without being called on for his defence, on the ground that it was necessary for the prosecution to prove affirmatively that the sign was lawfully placed at the road junction in question, and also that it was in accordance with the requirements of the Traffic Signs Rules 1938.

Holding :

Held, on appeal, reversing the decision of the magistrate: the prosecution was not bound to prove as part of its case that the sign had been lawfully placed on the road and was of the prescribed type. The presumption under s 114(e) of the Evidence Enactment (Cap 10) should apply in favour of the prosecution in the case of official acts provided by law.

Digest :

Public Prosecutor v Kothandaraman [1946] MLJ 56 High Court, Federated Malay States (Horne J).

560 Traffic signs -- Police road barrier

11 [560] ROAD TRAFFIC Traffic signs – Police road barrier – Whether motorist under obligation to stop – Traffic Signs (Size, Colour and Type) Rules 1959, r 3 & Schedule – Road traffic – Driving licence – Production of, for police examination – Whether driver arrested or detained – Road Traffic Ordinance 1958, ss 36(1), 48(1) & 56 – Traffic Signs (Size, Colour and Type) Rules 1959, r 3 and Schedule.

Summary :

Held: (per Hashim J) 'I am of the opinion that the barrier put up by the police (with the words 'Berhenti Pemeriksaan Polis') is not a traffic sign under the Traffic Signs Rules 1959 and therefore the rules do not apply. The police have power to erect a road barrier under s 38(1) of the Police Ordinance 1952 but in my opinion a motorist is not obliged to stop at the road barrier unless and until he is signalled to do so by the police under s 38(2) of the Police Ordinance.'

Digest :

Bishan Singh v Public Prosecutor [1964] MLJ 275 High Court, Raub (Hashim J).

561 Traffic signs -- Robot lights and traffic warden's directions

11 [561] ROAD TRAFFIC Traffic signs – Robot lights and traffic warden's directions – Which prevail – Traffic Signs (Size, Colour and Type) Rules 1959, rr 16 & 17 – Road traffic – Robot lights and traffic warden's directions – Which prevail – Traffic Signs (Size, Colour and Type) Rules 1959, rr 16 & 17 – Highway Code, para 17.

Digest :

Muniandy & Anor v Mohamed bin Abdul Ghani [1986] 1 MLJ 341 High Court, Kuala Lumpur (Eusoff Chin J).

See ROAD TRAFFIC, Vol 11, para 125.

562 Ultra vires rules -- No power to impose excess charge/surcharge

11 [562] ROAD TRAFFIC Ultra vires rules – No power to impose excess charge/surcharge – Whether Road Traffic (Attendant Parking Places) (Ipoh Municipal Council) Order 1969 valid – Road Traffic Ordinance 1958 (Ord 49/1958), ss 58, 62 & 63 – Criminal law and procedure – Road traffic – Parking – Excess charge and surcharge – No power to impose excess charge/surcharge – Whether Municipality of Ipoh is appropriate authority – Road Traffic (Attendant Parking Places) (Ipoh Municipal Council) Order 1969 – Whether order valid – Interpretation and General Clauses Ordinance 1948, s 23 – Road Traffic Ordinance 1958, ss 58, 62 & 63.

Summary :

In this case, the defendant was convicted on a charge of failure to pay the excess charge/surcharge incurred in respect of the parking of a motor vehicle, which was alleged to be an offence under para 13A(2) of the Road Traffic (Attendant Parking Places) (Ipoh Municipal Council) Order 1969 and punishable under para 27 of the said order. The order was made by the Municipality of Ipoh in purported exercise of power under s 62 of the Road Traffic Ordinance 1958 (Ord 49/1958). The matter was called up for revision.

Holding :

Held: (1) as the Municipality of Ipoh has not been declared an authority for the purposes of s 62 of the Road Traffic Ordinance 1958, it had no power to make the order; (2) the appropriate authority has no power to provide for punishment or to impose penalties for any contravention of an order made under s 62 of the Road Traffic Ordinance 1958, nor has it power to create offences. Contravention of the order is punishable under s 62(7) of the Road Traffic Ordinance. Therefore, paras 13(A) and 27 of the order which purport to provide for punishment in excess of that provided in s 62(7) of the ordinance are ultra vires and void; (3) paras 13(A)(3) and 24 of the order are also ultra vires as they purport to alter the law in seeking to create certain presumptions not to be found in the existing law.

Digest :

Public Prosecutor v Rajamah [1980] 1 MLJ 241 High Court, Perak (Chan JC).

563 Ultra vires rules -- Parking places

11 [563] ROAD TRAFFIC Ultra vires rules – Parking places – Excess charge and surcharge – Whether Ipoh Municipality an appropriate authority – Road Traffic Ordinance 1958 (Ord 49/1958), s 62

Summary :

In this case, the respondent had been convicted on her plea of guilty on a charge of failure to pay the excess charge and surcharge incurred in respect of the parking of a motor vehicle, alleged to be an offence under para 13(A)(2) of the Road Traffic (Attendant Parking Places) (Ipoh Municipal Council) Order 1969 and punishable under para 27 of the order. She was fined RM50 and ordered to pay the charge and surcharge. Acting in revision, Chan JC quashed the conviction as he held that the Municipality of Ipoh had not been declared an authority for the purposes of s 62 of the Road Traffic Ordinance 1958 (Ord 49/1958) and therefore had no power to make the order. He also held that the appropriate authority had no power to create offences and provide for their punishment or to create presumptions. (See [1980] 1 MLJ 241.) The Public Prosecutor applied under s 66(1) of the Courts of Judicature Act 1964 (Act 91) for the reference of certain questions of law for the decision of the Federal Court but this application was refused. The Public Prosecutor then applied by way of reference under s 66 of the Courts of Judicature Act and this was heard by the Federal Court.

Holding :

Held: (1) the Municipal Council of the Municipality of Ipoh is clearly by virtue of Gazette Notification PU No 212/1966 an appropriate authority for the purpose of s 62 of the Road Traffic Ordinance 1958; (2) it therefore has power to provide for the imposition and collection of the excess charge and surcharge and to provide for the presumption in the Road Traffic (Attendant Parking Places) (Ipoh Municipal Council) Order 1969; (3) offences against any of the provisions of the order are punishable under s 62(7) of the Road Traffic Ordinance 1958.

Digest :

Public Prosecutor v Rajamah [1980] 2 MLJ 280 Federal Court, Kuala Lumpur (Suffian LP, Raja Azlan Shah CJ (Malaya).

564 Ultra vires rules -- Powers of Commissioner of Road Transport

11 [564] ROAD TRAFFIC Ultra vires rules – Powers of Commissioner of Road Transport – Whether regulations are ultra vires powers of Commissioner of Road Transport – Road Transport Proclamation (No 17 of 1945), s 5 – Motor Vehicles (Construction and Use) Regulations 1948 – Motor Vehicles (Construction and Use) Regulations 1948 – Whether these regulations are ultra vires the powers of the Commissioner of Road Transport – Road Transport Proclamation (No 17 of 1945).

Summary :

The respondent in this case was charged with 'being the owner of motor lorry No S 2852 did use the said vehicle on a public road ...' contrary to reg 98 of the Motor Vehicles (Construction and Use) Regulations 1948. The respondent was the registered owner of the vehicle concerned but at the time of the alleged offence the lorry was being driven by and was in the charge of his servant, the driver, and respondent was not present at the time. At the trial, the respondent was found not guilty and was acquitted. The Public Prosecutor appealed against this acquittal. At the hearing of the appeal and in reply to the Deputy Public Prosecutor, Mr Sault submitted firstly that the whole of the Motor Vehicles (Construction and Use) Regulations 1948 were ultra vires the powers of the Commissioners of Road Transport and secondly, that if his first submission failed, then reg 98 of the Motor Vehicles (Construction and Use) Regulations 1948 was ultra vires the powers of the Commissioner of Road Transport. By agreement of counsel, these two submissions were treated as preliminary objections.

Holding :

Held: (1) the Commissioner of Road Transport had power to make the regulations under s 5 of the Road Transport Proclamation No 17 of 1945; (2) reg 98 of the Motor Vehicles (Construction and Use) Regulations 1948 was not ultra vires the regulation-making powers of the Commissioner of Road Transport.

Digest :

Public Prosecutor v Chua Yeoh Pan [1950] MLJ 163 High Court, Malacca (Pretheroe J).

565 Ultra vires rules -- Powers of Governor-in-Council to make rules

11 [565] ROAD TRAFFIC Ultra vires rules – Powers of Governor-in-Council to make rules – Bullock cart licensed under Municipal Ordinance – Validity of rule prohibiting bullock carts 'on a public road or street' – Road Traffic Ordinance 1941, ss 65 & 87 – Powers of Governor-in-Council to make rules – Road Traffic Rules 1950, r 36 – Bullock cart licensed under Municipal Ordinance (Cap 133) – Prohibition of bullock carts 'on a public road or street'Êwithin Municipal limits – Validity of rule – Sentence on contravention of rule.

Summary :

The appellant in this case was charged with driving a bullock cart on a public road which was within the city limits, an offence under r 36 of the Road Traffic Rules 1950 and was convicted on that charge and fined S$10. The question of law which arose in this appeal was that portion of r 36 of the Road Traffic Rules 1950 which counsel for the appellant contended was ultra vires and void. The relevant portion of r 36 is as follows: 'No person shall lead drive or ride a buffalo or bullock cart on a public road or street within the Municipal limits.' By s 82(1) of the Municipal Ordinance (Cap 133), a tax is imposed on all carts kept or habitually used within the municipality at rates not exceeding those prescribed by the Governor-in-Council. The appellant had paid the prescribed tax for his bullock cart together with a registration fee.

Holding :

Held: (1) s 78(1) of the Road Traffic Ordinance 1941 can properly be used with s 65 of that ordinance to impose a valid rule, in this case, r 36 of the Road Traffic Rules 1950; (2) the Governor-in-Council had power to prohibit the use of specified roads by vehicles of any specified class or description either generally or during particular hours; (3) roads are sufficiently 'specified' by reference to 'public roads or streets within the Municipal limits'; (4) in the circumstances of the case, it would have been proper for the learned magistrate although finding that the charge had been proved, without proceeding to conviction, to have dismissed the charge against the appellant after administering such caution as he thought fit.

Digest :

Ram Kishun Rai v R [1955] MLJ 71 High Court, Singapore (Buttrose Ag J).

566 Ultra vires rules -- Powers of Governor-in-Council to make rules

11 [566] ROAD TRAFFIC Ultra vires rules – Powers of Governor-in-Council to make rules – Traction Engines and Motor Cars Rules – Traction Engines and Motor Cars Ordinance (Cap 214), s 16 – Traction Engines and Motor Cars rules made by the Governor-in-Council – Ultra vires.

Summary :

Held: r 30(2) of the rules made by the Governor-in-Council under the Traction Engines and Motor Cars Ordinance (Cap 214) contained in Gazette Notification 2606 dated 28 December 1928 is ultra vires in so far as it directs the renewal of a licence to be antedated to the date of expiry of the old licence contrary to s 5(4) of the Traction Engines and Motor Cars Ordinance.

Digest :

R v Mundell [1938] MLJ 235 High Court, Straits Settlements (McElwaine CJ).

567 Ultra vires rules -- Powers of minister to make rules to prohibit use of road

11 [567] ROAD TRAFFIC Ultra vires rules – Powers of minister to make rules to prohibit use of road – Payment of fees in 'restricted zone' – Motor Vehicles (Restricted Zone and Area Licences) Rules 1975, rr 3 & 8 – Road Traffic Act (Cap 92, 1970 Ed), ss 70 & 90(1) – Road traffic – Restricted zone and licensing – Motor Vehicles (Restricted Zone and Area Licences) Rules 1975, rr 3 & 8 – Whether ultra vires – Road Traffic Act (Cap 92, 1970 Ed), ss 70 & 90(1).

Summary :

Under r 3 of the Motor Vehicles (Restricted Zone and Area Licences) Rules 1975, 'No person shall drive a motor vehicle into the restricted zone as described in the First Schedule during restricted hours unless there is in force in respect of such vehicle an area licence issued under these Rules'. The restricted hours at the relevant time of this case were from 7.30am to 10.15am. The respondent, on 11 December 1975 at about 8.40am drove his car into the 'restricted zone' without first obtaining an 'area licence' by paying the then prescribed fee of S$3. He was charged for having contravened r 3. At the trial, counsel on his behalf before any evidence was led, raised a preliminary objection to the charge. It was contended on behalf of the accused that the rules were ultra vires in that s 90(1) of the Road Traffic Act (Cap 92, 1970 Ed) did not confer any power on the minister to make rules to prohibit, except upon payment of a fee, motor vehicles from using any road. The magistrate accepted this contention and acquitted the respondent. The Public Prosecutor appealed and the sole question for determination was whether or not s 90(1) of the said Act gave power to the minister to make the rules.

Holding :

Held: (1) prima facie the purpose of the rules is not to collect fees but to reduce the number of motor vehicles entering the 'restricted zone' in order to ease traffic congestion on the roads within the 'restricted zone' during the 'restricted hours' and the imposition of a fee for entering the 'restricted zone' during the 'restricted hours' is the means adopted to achieve the desired purpose and is merely incidental thereto. The rules were therefore validly made; (2) the rules do not prohibit traffic on the road within the 'restricted zone' and on their true construction they are rules which regulate traffic into and within the 'restricted zone'.

Digest :

Public Prosecutor v MM Pillay [1977] 1 MLJ 228 High Court, Singapore (Wee Chong Jin CJ).

568 Ultra vires rules -- Powers of Registrar of Vehicles

11 [568] ROAD TRAFFIC Ultra vires rules – Powers of Registrar of Vehicles – Whether Registrar of Vehicles has power to assess or determine the laden weight of heavy motor car under the Motor Vehicles (Construction and Use) Rules 1948 – Whether ultra vires powers of Minister for Communication and Works – Road Traffic Ordinance (Cap 227, 1955 Ed), s 44(1)(d) – Road traffic – Heavy motor car – Laden weight – Determination of – Whether Registrar of Vehicles has power to assess or determine – Motor Vehicles (Construction and Use) Rules 1948, rr 89 & 93A – Whether ultra vires powers of Minister of Communication and Works – Road Traffic Ordinance (Cap 227, 1955 Ed), s 44(1)(d).

Digest :

Chua Bak Heng v R [1957] MLJ 247 High Court, Singapore (Chua J).

See ROAD TRAFFIC, Vol 11, para 565.

569 Ultra vires rules -- Powers to impose condition to licence

11 [569] ROAD TRAFFIC Ultra vires rules – Powers to impose condition to licence – Ministerial directive to Licensing Board to impose condition to licences that only driver of Malay race may drive – Breach of condition – Road Traffic Ordinance 1958 (Ord 49/1958), ss 107, 118, 119 & 120(2) – Road traffic – Ministerial directive to Licensing Board to impose condition to licences – Condition that only driver of Malay race may drive – Breach of condition – Road Traffic Ordinance 1958, ss 107, 118, 119 & 120(2) – Legislation – Rule-making power – Validity of delegated legislation – Court can canvass.

Summary :

In exercise of powers conferred under s 107 of the Road Traffic Ordinance 1958 (Ord 49/1958), the Minister of Transport published a general directive in which he stated, inter alia, 'that in exercise of its powers under ss 118 and 119 a Licensing Board shall attach to any licence issued under Pt V to a Malay ... in respect of a taxi or hire car a condition requiring that only a Malay driver shall be employed to drive such vehicle É'. Section 119 provides that subject to Part V of the ordinance, the Licensing Board may attach such condition as it may think fit with respect to matters to which it is required to have regard under s 118. The material provision of s 118, namely sub-s (5) states: 'Subject to the provisions of sub-ss (2), (3) and (4) of this section, the Licensing Board in exercising its discretion under this section shall give preference to an application from a Malay or a company a preponderant part or if there is no such company suitable a substantial part of whose capital is owned by Malays over any other application.' The appellant was charged with breach of the condition attached to his licence which prohibited his taxi to be driven by a person other than a Malay and was convicted and fined. He appealed on two grounds, one of which was that the Licensing Board in imposing the condition was acting ultra vires.

Holding :

Held: (1) the powers of the Licensing Board to attach conditions to licences being those in s 119 were confined to matters referred to in s 118(5). These powers entitled the board to give preference to a Malay when issuing a licence. This done, the powers were exhausted. The board was therefore acting ultra vires in imposing a further condition that only a Malay driver could be employed on the vehicle; (2) the ministerial directive under s 107 did not supply additional powers to the Licensing Board to validate the condition. The authority of the Minister of Transport to give general directives is, by reason of s 107(3), limited to directives on policy to be followed in determining applications and does not extend to matters arising thereafter.

Digest :

Ghazali v Public Prosecutor [1964] MLJ 156 High Court, Ipoh (Ong J).

570 Ultra vires rules -- Speed limit

11 [570] ROAD TRAFFIC Ultra vires rules – Speed limit – Constitution of built-up areas – Road Traffic Ordinance – Speed limit – Constitution of built-up areas.

Summary :

There were two appeals against conviction for exceeding the speed limit in a built-up area in the Rural Board area. Power to impose a speed limit on certain roads or portions of roads was conferred on the Governor-in-Council by s 87(1) of the Road Traffic Ordinance. The Governor-in-Council made rules imposing the speed limit in built-up areas which were defined in the areas as: '(b) such road within the boundaries of the Rural Board area which the appropriate authority shall by notification in the Gazette direct to be a built-up area.' The Rural Board subsequently issued a notification in the following terms: 'In exercise of the powers conferred by Rules 2(1), etc the Rural Board as the appropriate authority makes the following notification ...'. The schedule to this notification gave the length of roads which were to be deemed to be in a built-up area.

Holding :

Held: the power conferred on the Governor-in-Council did not authorize a delegation of the powers and therefore the notification made by the Rural Board on the assumption that powers were conferred upon it could not have any legal effect.

Digest :

Ismail v R [1951] MLJ 69 High Court, Singapore (Murray-Aynsley CJ).

571 Ultra vires rules -- Statutory rules made thereunder

11 [571] ROAD TRAFFIC Ultra vires rules – Statutory rules made thereunder – Ordinance No 129 (Traction Engines and Motor Cars), s 16 – Statutory rules made thereunder.

Digest :

R v Leong Ah Chan & Ors [1936] MLJ 38 High Court, Straits Settlements (Gordon-Smith J).

See STATUTORY INTERPRETATION, Vol 11, para 1632.

572 Unauthorized use -- No licence to use motor vehicle as stage carriage

11 [572] ROAD TRAFFIC Unauthorized use – No licence to use motor vehicle as stage carriage – Driver not liable as such – Road Traffic Enactment (No 17 of 1937), s 80(i) – No licence to use motor vehicle as stage carriage – Liability of driver.

Summary :

Held: s 80(1) of the Road Traffic Enactment (No 17 of 1937) has no application to the driver of a motor vehicle as such, but is confined in its application to the person who holds or should hold a licence for the motor vehicle.

Digest :

Public Prosecutor v Musa [1948] MLJ 106 High Court, Federated Malay States (Cussen J).

573 Unauthorized use -- Permit to operate from place stated

11 [573] ROAD TRAFFIC Unauthorized use – Permit to operate from place stated – Whether picking up non-paying passenger at another place on request of hirer amounted to breach of permit – Road traffic – Hired car – Permit to operate from place stated – Whether picking up non-paying passenger at another place on request of hirer amounted to breach of permit.

Summary :

The appellant was convicted on a charge of using his taxi in breach of the conditions attached to his permit which authorized him to take passengers from Scudai to Johore Bahru by taking three passengers from Gelang Patah to Johore Bahru. The appellant gave evidence on affirmation, stating that he had been hired at his base as fixed in his permit by a passenger to drive from the base at Scudai to Gelang Patah and back, that at Gelang Patah the hirer had brought two additional passengers into the taxi and arrangements had been made between the original hirer and the appellant to take all three of them to Johore Bahru. His evidence was corroborated by the person with whom he had the hiring.

Holding :

Held: it was not a breach of the permit for the operator of the vehicle, at the request of the hirer, to take an additional non-paying passenger.

Digest :

Tuong Soon Hin v Public Prosecutor [1960] MLJ 160 High Court, Johore Bahru (Neal J).

574 Unauthorized use -- Plying vehicle for hire or reward

11 [574] ROAD TRAFFIC Unauthorized use – Plying vehicle for hire or reward – Rebuttal of presumption – Road Traffic Ordinance 1958 (Ord 49/1958), ss 92(1) & 144(a) – Road traffic – Plying vehicle for hire or reward – 'Hire or reward' – Meaning of – Road Traffic Ordinance 1958, ss 92(1) & 144(a) – Presumption under s 144(a) – Rebuttal of.

Summary :

Held;{eb] whether a vehicle is being used for conveying passengers for hire or reward in breach of s 92(1) of the Road Traffic Ordinance 1958 (Ord 49/1958) is a question of fact and must be determined upon all the circumstances of the case, including the length of time over which this course of conduct has gone on, the nature of the payments made and the exact amount of payment. The test is whether the accused intended to accept from the passengers a payment which he expected to be tendered and which they intended to tender when he had given them their ride.

Digest :

Din v Public Prosecutor [1963] MLJ 37 High Court, Alor Star (Suffian J).

575 Unauthorized use -- Using private car as public service carriage without licence

11 [575] ROAD TRAFFIC Unauthorized use – Using private car as public service carriage without licence – Evidence of prior user of vehicle in manner alleged as well as user on day of offence charged – Presumption – Road Traffic Enactment 1937, s 113(2) – Road Traffic Enactment No 17 of 1937, ss 80(1), 113(2) & 118(1)(a) – Using private car as public service carriage without licence – Evidence of prior user of vehicle in manner alleged as well as user on day of offence charged – Presumption under s 113(2) – Duty of magistrate.

Summary :

The respondent was charged under s 80(1) of the Road Traffic Enactment (No 17 of 1937) ('the Enactment') of using a private car as a stage carriage without licence an offence punishable under s 118(1)(a) of the Enactment. Evidence was given of the prior user of the vehicle in the manner alleged as well as user on the day of the offence charged. The magistrate found that the evidence amounted to 'great suspicion' only and acquitted the accused.

Holding :

Held: (1) the magistrate's verdict was against the weight of the evidence; (2) the magistrate had disregarded s 113(2) of the Enactment and therefore his verdict was wrong.

Digest :

Public Prosecutor v Long bin Abdullah [1941] MLJ 54 High Court, Federated Malay States (Horne J).

576 Unauthorized use -- Using private car as stage carriage without licence

11 [576] ROAD TRAFFIC Unauthorized use – Using private car as stage carriage without licence – Evidence of carriage of passengers – Presumption – Road Traffic Enactment 1937, s 113(2) – Road Traffic Enactment No 17 of 1937, ss 80(1), 113(2)(b) & 118(1)(a) – Using private car as stage carriage without licence – Evidence of carriage of passengers – Presumption – Acquittal of accused without calling on defence – Duty of magistrate to call on defence.

Summary :

Upon a charge under s 80(1) of the Road Traffic Enactment (No 17 of 1937) ('the Enactment') of using a private car as a stage carriage without a licence, an offence punishable under s 118(1)(a) of the enactment, the evidence of the prosecution established that there were four passengers in the car but the magistrate acquitted the accused without calling upon him to enter upon his defence.

Holding :

Held: once it had been established by uncontroverted evidence that there were passengers in the car a presumption arose under s 113(2) of the Enactment and the magistrate, inasmuch as there was evidence against the accused to be considered, should have called on the defence.

Digest :

Public Prosecutor v Dris [1939] MLJ 288 High Court, Federated Malay States (Murray-Aynsley J).

577 Unauthorized use -- Using private car as stage carriage without licence

11 [577] ROAD TRAFFIC Unauthorized use – Using private car as stage carriage without licence – Evidence of carriage of passengers – Presumption can be rebutted by evidence – Road Traffic Enactment 1937, s 113 – Road Traffic Enactment 1937, ss 80 & 113 – Using private car as stage carriage without licence – Evidence of carriage of passengers – Presumption under s 113 can be rebutted by evidence – Road Traffic Enactment (1937), ss 12(3) & 51(1).

Summary :

The appellant was charged under s 80 of the Road Traffic Enactment 1937 for carrying passengers in the car he was driving. He admitted this but said that they were all coolies of his employer and that he was instructed to carry them.

Holding :

Held: (1) the presumption under s 113 which arose when it was established that there were passengers in the car can be rebutted by evidence that the passengers were not conveyed for reward or hire; (2) a conviction under s 80 only showed that in the opinion of the court, the insurer was entitled to avoid the policy of insurance, and so did not automatically necessitate a conviction under s 51(1) of the Road Traffic Enactment, as the policy remained in force until the insurer actually avoided it.

Digest :

Low Ah Seng v Public Prosecutor [1946] MLJ 48 High Court, Federated Malay States (Horne J).

578 Using a motor vehicle -- Meaning of word 'use'

11 [578] ROAD TRAFFIC Using a motor vehicle – Meaning of word 'use' – Motor Vehicles (Construction and Use) Rules 1948, rr 99 and 102 – Meaning of word 'use'.

Summary :

Held: that is forbidden under both rr 99 and 102 of the Motor Vehicles (Construction and Use) Rules 1948 is use, and too restricted a meaning should not be placed on the word.

Digest :

R v Chua Teng Hoe [1950] MLJ 306 High Court, Singapore (Murray-Aynsley J).

579 Using a motor vehicle -- Payment of fares for transport

11 [579] ROAD TRAFFIC Using a motor vehicle – Payment of fares for transport – Whether paid driver can be said to use the vehicle in contravention of provisions of ss 12, 51 or 80 of the Road Traffic Enactment – Whether paid driver can in any circumstances abet the commission of offences against these sections – Road Traffic Enactment 1937, ss 12, 51 & 80 – Road Traffic Enactment (17 of 1937), ss 12, 51, 80 & 113 – 'Using' a motor vehicle – Whether paid driver can be said to use the vehicle in contravention of the provisions of ss 12, 51 or 80 – Whether paid driver can in any circumstances abet the commission of offences against these sections – Effect of presumption established by s 113 – Rebuttal of such presumption.

Summary :

The appellant was the driver, on three occasions, of a motor vehicle which was licensed and insured only as a private vehicle but which was carrying passengers who, the magistrate found as a fact, had paid fares for their transport. The appellant was charged, in respect of each of these occasions, with having committed three separate offences of 'using' the vehicle, contrary to the provisions of ss 12, 15 and 80 of the Road Traffic Enactment 1937 respectively. The appellant was the son of the owner of the vehicle but was employed and paid by him to drive the car.

Holding :

Held: (a) the hired driver of a motor vehicle cannot be convicted of 'causing the vehicle to be used' contrary to the provisions of s 80(1); (b) a hired driver cannot be convicted of abetting the owner to 'cause' the vehicle to be used contrary to the provisions of s 80; and (c) a hired driver cannot be convicted of abetting the owner to commit an offence against s 12 unless there is a finding that the owner himself caused or permitted the vehicle to be used contrary to the provisions of that section.

Digest :

Lee Lai Fong v Public Prosecutor [1946] MLJ 101 High Court, Federated Malay States (Horne J).

580 Using a motor vehicle -- Whether driver as distinct from owner of vehicle can be guilty of offence

11 [580] ROAD TRAFFIC Using a motor vehicle – Whether driver as distinct from owner of vehicle can be guilty of offence – Road Traffic Enactment 1937, s 80(1) – Road Traffic Enactment 1937, s 80(1) – Whether driver can be guilty of offence under – 'Using a vehicle' – Criminal Procedure Code (Cap 6), s 422 – Statement made during police investigation – Conditions of admissibility in evidence – Irregularity.

Summary :

Held: the driver of a vehicle as distinct from the owner can be guilty of an offence under s 80(1) of the Road Traffic Enactment 1937. The admission of a statement made by a witness during a police investigation, a copy of which is not furnished to the accused and which is not proved in any way, is an irregularity which cannot be cured under s 422 of the Criminal Procedure Code (Cap 6).

Digest :

Dris v Public Prosecutor [1940] MLJ 45 High Court, Federated Malay States (Murray-Aynsley J).

581 Vehicle under tow -- Whether person at wheel of towed vehicle a 'driver'

11 [581] ROAD TRAFFIC Vehicle under tow – Whether person at wheel of towed vehicle a 'driver' – Meaning of 'to drive' – Road Traffic Ordinance 1958 (Ord 49/1958), ss 36(1) & 146(1)(a) – Road traffic – Vehicle under tow – Whether person at wheel of towed vehicle a 'driver' – 'To drive' – Meaning of – Road Traffic Ordinance 1958, ss 36(1) & 146(1)(a) – Criminal Procedure Code (Cap 6), s 321.

Summary :

A bullock carter was driving his bullock cart along a road with the left hand wheel on the grass verge and the right hand wheel on the metal road when he was struck by a motor vehicle under tow steered by the appellant. The appellant stated in his evidence that at the time of the accident, the front vehicle overtook the bullock cart, that he could not see the bullock cart and that he knocked against it because there was not enough space. The appellant was charged and convicted for driving without reasonable consideration for other persons using the road under s 146(1)(a) of the Road Traffic Ordinance 1958 (Ord 49/1958).

Holding :

Held: (1) the appellant was a 'driver' within the meaning of s 36(1) of the Road Traffic Ordinance; (2) on the evidence, the appellant has failed to satisfy the court that the decision was wrong in law or against the weight of evidence as required by s 321 of the Criminal Procedure Code (Cap 6); (3) the words 'to drive' are capable of a wide number of meanings dependent upon the context in which they are used and at its lowest could mean no more than steering a moving vehicle and that the actual meaning to be accorded to the word 'driving' will vary in accordance with the actual provision of the law upon which the charge in any particular case is based.

Digest :

Andrew v Public Prosecutor [1962] MLJ 1 High Court, Ipoh (Neal J).

582 Weighbridge -- Determination of laden weight

11 [582] ROAD TRAFFIC Weighbridge – Determination of laden weight – Whether Registrar of Vehicles has power to assess or determine – Road traffic – Heavy motor car – Laden weight – Determination of – Whether Registrar of Vehicles has power to assess or determine – Motor Vehicles (Construction and Use) Rules 1948, rr 89 & 93A – Whether ultra vires powers of Minister for Communications and Works – Road Traffic Ordinance (Cap 227, 1955 Ed), s 44(1)(d).

Summary :

This was an appeal by the accused against his conviction on a charge of using a motor lorry so laden with bales of rubber that the weight thereof including the load exceeded the maximum laden weight painted on the side of the lorry in pursuance of r 89 of the Motor Vehicles (Construction and Use) Rules 1948. It was contended on behalf of the appellant that the Registrar of Vehicles had no power to regulate, assess or to determine the maximum laden weight of heavy motor cars and motor cars which were constructed or adapted for use for the carriage of goods or trailers and that the determination of the maximum laden weight of such vehicles was ultra vires the powers of the Registrar of Vehicles. It was further contended that as the Registrar of Vehicles had no authority to determine the maximum laden weight of such vehicles, r 93A of the Motor Vehicles (Construction and Use) Rules 1948 was also ultra vires.

Holding :

Held: (1) by s 44(1)(d) of the Road Traffic Ordinance (Cap 227, 1955 Ed) the power to regulate the maximum laden weight of motor vehicles was exclusively reserved to the Minister for Communications and Works; (2) the Registrar of Vehicles had no authority to fix the maximum laden weight laid down in rr 94 or 95 or 96 of the Motor Vehicles (Construction and Use) Rules 1948; (3) the determination of the maximum laden weight of a heavy motor car or a motor car which was constructed or adapted for use for the carriage of goods or a trailer, and such weight fixed by him on the licence was in conflict with the maximum laden weight of heavy motor cars constructed or adapted for use for the carriage of goods or trailer was ultra vires the powers of the Registrar of Vehicles; (4) r 93A of the Motor Vehicles (Construction and Use) Rules 1948 was therefore ultra vires the powers of the Minister for Communications and Works.

Digest :

Chua Bak Heng v R [1957] MLJ 247 High Court, Singapore (Chua J).

583 Weighbridge -- Person stopping vehicle not precluded from weighing the vehicle if he is officer in charge of weighbridge

11 [583] ROAD TRAFFIC Weighbridge – Person stopping vehicle not precluded from weighing the vehicle if he is officer in charge of weighbridge – Road Traffic Ordinance 1958 (Ord 49/1958), ss 53 & 143 – Road traffic – Weighbridge – Person stopping vehicle not precluded from weighing the vehicle, if he is officer in charge of weighbridge – Road Traffic Ordinance 1958, ss 53 & 143.

Digest :

Public Prosecutor v Tan Tong Phien & Anor [1974] 1 MLJ 94 High Court, Malacca (Pawan Ahmad J).

See ROAD TRAFFIC, Vol 11, para 464.

584 Weighbridge -- Presumption of accuracy of weight recorded

11 [584] ROAD TRAFFIC Weighbridge – Presumption of accuracy of weight recorded – Certificate of accuracy – Road Traffic Ordinance 1958 (Ord 49/1958), ss 120(2) & 143(7) – Road traffic – Licence – Non-compliance with conditions – Weight – Presumption – Certificate of accuracy – Road Traffic Ordinance 1958, ss 120(2) & 143(7).

Digest :

Ramoo & Anor v Public Prosecutor [1972] 1 MLJ 222 High Court, Ipoh (Sharma J).

See ROAD TRAFFIC, Vol 11, para 460.

585 Weighbridge -- Proof of correctness of weighing

11 [585] ROAD TRAFFIC Weighbridge – Proof of correctness of weighing – Road traffic – Traffic (Restrictions on Use of Roads) Order 1953, reg 3(c)(ii) – Charge of using vehicle with three or more axle weights which weight exceeds 5 1/2 tons – Proof of correctness of weighing.

Summary :

In this case, the appellant was convicted on a charge under reg 3(c)(ii) of the Traffic (Restrictions on Use of Roads) Order 1953 for using a motor vehicle with three axles the central axle weight of which weight exceeded five and a half tons. Evidence was given by the Inspector of Weights and Measures, Johore, who said that he examined the weighbridge used to ascertain the axle weight of the vehicle in question, and found it to be correct. On appeal, it was argued that the weighbridge was only meant to weigh vehicles of two axles and not of three axles as in this case and that therefore the method of weighing and the unevenness of ground could not give a correct weight. It was further submitted that the onus of showing the correct weight was on the prosecution and as they had not done so, the learned magistrate was wrong in calling upon the appellant for his defence.

Holding :

Held: (1) the evidence adduced in this case as to the weighbridge was rightly accepted by the learned magistrate as prima facie evidence of the correctness of any weight recorded by it; (2) bearing in mind that reg 3(c)(ii) of the Traffic (Restrictions on Use of Roads) Order creates an absolute prohibition, the prosecution had made out a prima facie case which entitled the magistrate to call on the accused for his defence.

Digest :

Tan Boon Seng v Public Prosecutor [1954] MLJ 173 High Court, Johore Bahru (Storr J).

586 Weighbridge -- Testing accuracy of weighing machine

11 [586] ROAD TRAFFIC Weighbridge – Testing accuracy of weighing machine – Road traffic – Motor Vehicles (Construction and Use) Rules 1948, r 95 – Testing and accuracy of weighing machine.

Summary :

Held: it is essential that weighbridge of weighing machines which are to be used for the purpose of testing laden weight of heavy motor cars should be regularly tested, and there must be some evidence from which their accuracy can be either proved or presumed. When persons are charged with offences relating to overweight or underweight there must be some evidence to prove that the machine, which records the weight alleged by the prosecution, is accurate, or some evidence from which its accuracy can be presumed.

Digest :

Tan Bok Kee v R [1953] MLJ 238 High Court, Singapore (Brown Ag CJ).

587 Weighbridge -- Weight in excess of that permitted under condition of permit

11 [587] ROAD TRAFFIC Weighbridge – Weight in excess of that permitted under condition of permit – Offence brought to light by weighing of vehicle independently of authorization – Road Traffic Ordinance 1958 (Ord 49/1958), ss 53 & 120(2) – Road traffic – Weighing of vehicle – Weight in excess of that permitted under condition of permit – Offence brought to light by weighing of vehicle independently of authorization – Road Traffic Ordinance 1958, ss 53 & 120(2).

Summary :

The fact that a vehicle is weighed on an accurate weighbridge and that its laden weight is found to be in excess of that permitted under the conditions of the permit is sufficient to constitute the offence under s 120(2) of the Road Traffic Ordinance 1958 (Ord 49/1958). Whether or not the enforcement officer in question was the holder of any valid authority in writing from the Commissioner of Road Transport and whether or not he had required the offender to proceed to the weighbridge for the purpose of being weighed were wholly irrelevant to the facts of the case.

Digest :

Re Tan Lam Sun [1960] MLJ 194 High Court, Penang (Rigby J).

588 Weighbridge -- Weight of lorry and load to be certified by officer in charge of weighbridge

11 [588] ROAD TRAFFIC Weighbridge – Weight of lorry and load to be certified by officer in charge of weighbridge – Certification of examination of weighbridge – Road Traffic Ordinance 1958 (Ord 49/1958), ss 53, 120, 139 & 143 – Road traffic – Carrying on lorry load in excess of permitted weight – Weighbridge – Weight of lorry and load to be certified by officer in charge of weighbridge – Certification of examination of weighbridge – Road Traffic Ordinance 1958, ss 53, 120, 139 & 143.

Digest :

Maasah bin Deraman v Public Prosecutor [1973] 2 MLJ 180 High Court, Malacca (Pawan Ahmad J).

See ROAD TRAFFIC, Vol 11, para 453.

589 Weighbridge -- Whether weight of load to be determined by weighbridge or by volume of logs carried

11 [589] ROAD TRAFFIC Weighbridge – Whether weight of load to be determined by weighbridge or by volume of logs carried – Road traffic – Carrier's licence – Non-compliance of conditions attached thereto – Whether compliance with maximum permissible load to be determined by weighbridge or by volume of logs carried – Road Traffic Ordinance 1958, ss 53 & 143(7A).

Digest :

Public Prosecutor v Fong Hong & Anor [1972] 2 MLJ 107 High Court, Kuala Lumpur (Suffian FJ).

See ROAD TRAFFIC, Vol 11, para 461.

Rubber

590 'Person', meaning of -- Claim against government

11 [590] RUBBER 'Person', meaning of – Claim against government – Export of Rubber (Restriction) Enactment 1922, s 6

Summary :

Held: in a claim against the government of the FMS or a state government the real defendant is the government. The chief secretary, the government of the FMS, and the government of a state are each 'persons' within the meaning and protection of s 6 of the Export of Rubber (Restriction) Enactment 1922.

Digest :

Anglo-French Trading Co v Chief Secretary [1925] 5 FMSLR 166 High Court, Federated Malay States (Sproule CJ).

591 Dealer's licence -- Cancellation of

11 [591] RUBBER Dealer's licence – Cancellation of – Licensing Board exercising power improperly – Issue of mandamus – Rubber Supervision Enactment 1937, ss 7 and 9 – Specific Relief (Malay States) Ordinance 1950 – Mandamus to a Licensing Board.

Summary :

Held: the Rubber Supervision Licensing Board are bound to hear a licensee before they cancel his licence and if they fail to do so an order of mandamus will issue to enforce the licensee's rights. Provisions of the Rubber Supervision Enactment 1937 construed and explained.

Digest :

Tan Eng Seong v The Rubber Supervision Licensing for the District of Bentong, Pahang [1950] MLJ 226 High Court, Raub (Taylor J).

592 Dealer's licence -- Cancellation of

11 [592] RUBBER Dealer's licence – Cancellation of – Whether Controller's reasons for cancelling licence justifiable

Summary :

On 28 May 1940, the Controller of Rubber ('the Controller') purported to cancel a rubber dealer's licence to the appellant. The Controller justified his action on the grounds, firstly, that contrary to s 17(i) of Order No R-9 (Rubber Regulation) 1937 ('the Order'), the appellant was carrying on business at No 10, Main Bazaar, an address in respect of which he was not licensed, and, secondly, that contrary to s 24(v), the appellant had stored rubber at an address which was not indorsed on his licence as a place of storage.

Holding :

Held: (1) the appellant was not carrying on business at No 10 Main Bazaar; (2) under s 24(v) of the Order, the onus lay on the Controller to ensure that storage places were indorsed on dealers' licences; (3) the action of the Controller in purporting to cancel the licence was ultra vires and, therefore, the licence must be restored to the appellant.

Digest :

Goh Yaw Tee v The Controller of Rubber [1928-41] SCR 88 Supreme Court, Sarawak

593 Dealer's licence -- Dealing in rubber without a licence

11 [593] RUBBER Dealer's licence – Dealing in rubber without a licence – Abetment – Whether convictions sustainable

Summary :

The appellant, Kueh Bu Jang, was convicted in the Police Court, Simanggang, of abetting one Ang Su Gu who was convicted on 28 May 1934, under Order No XXI of 1924, of dealing in rubber without a licence, the conviction being upheld on appeal by the Resident's Court, Second Division. Kueh Bu Jang was a licensed rubber dealer, but traded as a hawker. On 1 June, Ang Su Gu lent $500 to Kueh Bu Jang who began to trade in the name of Chop Jan Hak opening for the purpose a shophouse in Lingga belonging to Ang Su Gu. Ang Su Gu's wife who was a sister of Kueh Bu Jang, and her son became partners with him in the new firm.

Holding :

Held: even if it were proved that Ang Su Gu had bought a partnership in Chop Jan Hak that fact was not in itself sufficient to warrant a conviction against him for dealing in rubber without a licence and that both convictions must therefore be quashed.

Digest :

Rajah of Sarawak v Kueh Bu Jang & Anor [1928-41] SCR 41 Supreme Court, Sarawak (Macaskie J and Blagg Ag J).

594 Dealer's licence -- Licence in one partner's name

11 [594] RUBBER Dealer's licence – Licence in one partner's name – Sale of rubber to partnership – Whether licence covers partnership – Consideration of object of enactment – Rubber Supervision Enactment 1937 (FMS), s 5 – Rubber Supervision Enactment 1937 (FMS), ss 5(i) and 17(i) – Principal object of the enactment – Interpretation – Revenue law – Breach of.

Summary :

This was an appeal from a decision of Smith J, reported in [1959] MLJ 83. The basic facts of the case were not in dispute. Before the war, one Yap was carrying on business as a rubber dealer under the name of Tong Seng Rubber Company. After the war, he resumed business and at all material times had held a licence to purchase rubber under s 5 of the Rubber Supervision Enactment 1937 (FMS) for himself alone trading under the name of Tong Seng Rubber Company. On 14 January 1946, he took in eight other partners, who according to the terms of the partnership agreement were sleeping partners. Accordingly, when it became necessary to apply for renewal of the rubber dealer's licence the first defendant applied in his own name indicating that he was trading as the Rubber Company, but did not disclose the fact that he had eight sleeping partners. This state of affairs continued down to 1951. The respondent/plaintiff was aware that Yap had a rubber dealer's licence but he did not know and took no steps to ascertain whether any of his partners' names was included in the licence but he presumed that Yap represented all the partners. The respondent also said that the appellant (second defendant in the case) did not tell him that he was retiring from the partnership. The respondent brought an action claiming against the alleged partners of a rubber dealer's business for the sum of RM5,697.42 due on account for rubber sold and delivered to the alleged firm. Under s 5 of the Rubber Supervision Enactment, all persons purchasing rubber must be licensed, and s 17(i) of the same enactment provides that when two or more persons are in partnership it is not necessary for each of them to have a separate licence but that the name of each partner shall be included in the licence. In the court below, it was held that since all the partners were not named in the licence, the partnership was not properly licensed under the enactment. However, that breach should be regarded in the same way as breach of a revenue statute and that the plaintiff should not be regarded as particeps criminis and was therefore entitled to recover against all members of the partnership. On appeal,

Holding :

Held: (1) when rubber was sold it was sold to and bought by Yap as a partner and as agent of the other partners, with a resulting joint obligation on the part of them all to pay for it. When the rubber was delivered to Yap it became the joint property of the partners; (2) on the question of illegality, s 5 of the enactment read 'no person shall purchase ... rubber ... unless ... duly licensed'. This statute is completely silent on questions as to how a purchaser of rubber obtains his capital. Since the actual purchaser is licensed, the object of the statute is therefore not defeated. On this view, the fact that the purchaser is an agent or has entered into an agreement of partnership with other persons providing for the sharing with them of profits is wholly irrelevant; (3) the object of s 17 of the enactment is to mitigate and provide that where two persons are carrying on business in partnership, one licence is sufficient and enables each of the partners named in it to purchase rubber. In the present case, however, there was no question of two or more persons purchasing rubber. If rubber had been purchased by any other partner then unless he held a licence of his own or was included in a joint licence issued under s 17, the transaction might well have been prohibited by law and been illegal.

Digest :

Chia Sau Yin v Liew Kwee Sam [1960] MLJ 122 Court of Appeal, Kuala Lumpur (Thomson CJ, Syed Sheh Barakbah and Neal JJ).

Annotation :

[Annotation: Reversed on appeal. See [1962] MLJ 152.]

595 Dealer's licence -- Licence in one partner's name

11 [595] RUBBER Dealer's licence – Licence in one partner's name – Sale of rubber to partnership – Whether licence covers partnership – Licence personal and not assignable – Rubber industry – Rubber Supervision Enactment 1937, ss 5(i), 16(ii) & (iii), and 17(i) – Object of enactment – Licence under enactment in personal name trading under name of partnership – Whether licence includes other partners – Whether licence assignable.

Summary :

The respondent Liew who was a rubber grower had been selling rubber to a partnership of which the appellant Chai was a member. Only one member of the partnership, Yap, held a licence to purchase rubber as required by s 5(i) of the Rubber Supervision Enactment 1937 ('the Enactment'), and none of the other partners' names was inserted in the licence as prescribed in the form scheduled to the rules made under the enactment. On a claim by Liew for the balance of the price of rubber sold, two of the partners, including Yap, the licence holder, submitted to judgment, so that the action was tried throughout as between Liew and the appellant. The appellant contended that by s 16(ii) and (iii) of the Enactment the licence was personal to Yap and not assignable and did not cover the partnership, and that any purchase by him (the appellant) was prohibited by the Enactment and, therefore, illegal and unenforceable. The learned trial judge gave judgment for Liew for RM5,097.42 (see [1959] MLJ 83 and his decision was upheld by the Court of Appeal [1960] MLJ 122). On appeal to the Privy Council,

Holding :

Held: (1) a licence under the Rubber Supervision Enactment is personal and not assignable and the actual licensee must be identified. A partnership cannot be licensed whoever the partners may be because changes in the partnership are likely to occur and cannot be controlled unless the partners are individually named in the licence; (2) the purposes of the Enactment are wider than those which have been called mere revenue enactments and are intended to ensure the carrying on of an industry on which the prosperity of the country is to some extent dependent. As the purchase of rubber in this case was made by the partnership, and, the partnership not having been licensed as required by the Enactment, the purchase was prohibited by law and, therefore, the appellant was entitled to rely on his own illegality. Decision of the Court of Appeal [1960] MLJ 122 reversed. Appeal allowed.

Digest :

Chai San Yin v Liew Kwee Sam [1962] MLJ 152 Privy Council Appeal from Malaysia (Lord Radcliffe, Lord Hodson and Lord Devlin).

596 Dealer's licence -- Sale of rubber to unlicensed purchaser

11 [596] RUBBER Dealer's licence – Sale of rubber to unlicensed purchaser – Purchaser not in possession of licence when delivery due – Whether contract illegal and unenforceable – Contract – Sale of rubber to unlicensed dealer – Delivery at future date – Purchaser not in possession of licence required by Rubber Dealers Ordinance, SS (Cap 212) at the time when delivery due.

Summary :

The plaintiff claimed specific performance of a contract made during the Japanese occupation for the delivery of 50 piculs of rubber within four months after the declaration of peace in Malaysia. By the same contract, the defendant agreed that in default of tapping and delivering the said rubber he should either purchase the same in the open market or pay to the plaintiff the full market price of 50 piculs of rubber on the expiration of four months from the declaration of peace in Malaya. The defendant refused to deliver the rubber as agreed on the ground that the contract was invalid in law. The defendant contended that the plaintiff at all material times was not a licensed rubber dealer and, therefore, the contract was illegal in that the plaintiff could not enter into such contract for the purchase of rubber without a licence. The plaintiff contended that the defendant refused to deliver the rubber without ascertaining whether the plaintiff would obtain a licence before delivery and that therefore the second part of the contract note the payment of the full market price of the rubber was enforceable.

Holding :

Held: the court will not order the enforcement of a contract where the enforcement would contravene the criminal law, nor will the court make an order for payment of damages as this would be damnifying the defendant for not lending himself to the commission of a criminal offence. Action dismissed with costs.

Digest :

Ng Kean Tek v Kam Hock Lye [1950] MLJ 279 High Court, Penang (Jobling J).

597 Dealer's licence -- Sale of rubber to unlicensed purchaser

11 [597] RUBBER Dealer's licence – Sale of rubber to unlicensed purchaser – Whether contract illegal – Forward or executory contract – Licence needed only when purchaser takes delivery – Contract – FOB – Contract executors – Breach – Action for damages – Whether contract for delivery of rubber illegal – Whether licence under Rubber Dealers Ordinance necessary – Rubber Dealers Ordinance (Cap 199, 1955 Ed), ss 2, 3 & 18 – Rubber Dealers (Forms) Rules 1940 – 'Purchase rubber' – Meaning of – Rubber Dealers (Amendment) Ordinance 1962.

Summary :

The plaintiffs by a contract dated 4 July 1960 agreed to sell and the defendants agreed to buy 50 tons of No RSS Rubber (July 1960) at S$1.09 [1/2] per lb. The plaintiffs alleged that the defendants wrongfully neglected or refused to accept or give shipping instructions or pay for the goods whereby the plaintiffs suffered damage. The market or current price at the time when the goods ought to have been accepted was S$0.98 [1/2] per pound and the difference between the contract price and the market price in respect of the 50 tons of rubber was S$12, 460 and this was agreed by the defendants. The defendants admitted the contract and that they bought the rubber but they refused to take delivery as they maintained that the contract was illegal because they were not licensed under the Rubber Dealers Ordinance to purchase rubber.

Holding :

Held: the contract was an FOB contract executory in its terms which did not involve delivery at the time it was made and accordingly the contract was not illegal because of the defendants' failure to have a licence under s 3 of the Rubber Dealers Ordinance (Cap 199, 1955 Ed). It is only when the purchaser seeks to take delivery of specific rubber by way of completion of a contract that he is bound to have a licence to take the delivery and a licensed store into which the goods may be delivered.

Digest :

Anglo-American Corp Ltd v Singapore Produce Co [1962] MLJ 399 High Court, Singapore (Buttrose J).

598 False information in a return -- Meaning of 'tappable rubber'

11 [598] RUBBER False information in a return – Meaning of 'tappable rubber' – Rubber regulation – Construction – Meaning of 'tappable' – False information in a return – Rubber Regulation Enactment, ss 19(i)(c) and 21(i)(c).

Summary :

The expression 'tappable rubber' in a form furnished by the Controller of Rubber under the Rubber Regulation Enactment ('the Enactment') to owners of medium holdings for the purposes of assessment of standard production means 'rubber plants mature for tapping'. In a charge under s 21(i)(c) of the Enactment for wilfully funishing false information, an offence is committed if the false information is wilfully furnished and it is immaterial whether that information is or is not wilfully false.

Digest :

MDA Goonatilake v Public Prosecutor [1936] MLJ 38 High Court, Johore Bahru (Mills J).

599 Forward contracts -- Gaming or wagering contracts

11 [599] RUBBER Forward contracts – Gaming or wagering contracts – Dealer's licence – Whether required – Contract – Gaming and wagering contract – Rubber Dealers Ordinance (Cap 199, 1955 Ed), s 3 – Forward contracts – Civil Law Ordinance (Cap 24, 1955 Ed), s 6.

Summary :

The plaintiffs in this case were rubber brokers and members of the Singapore Chamber of Commerce Rubber Association in the class of brokers. They claimed damages for breach of several contracts in writing for purchase and sale of rubber or in the alternative the balance of expenses incurred by them and agreed, alternatively reasonable remuneration earned by them in respect of services rendered as the defendants's brokers. All the contracts in this case subject to a few exceptions were forward FOB contracts involving delivery at the time they were made. A number of defences were raised on the pleading but the only real issue in substance which emerged at the trial was that of illegality. This defence was based on two grounds: (a) that the contracts were illegal and void because the defendant was not licensed under the Rubber Dealers Ordinance (Cap 199, 1955 Ed) to purchase rubber and that neither the plaintiffs nor the defendant complied with the requirements or s 13 or 14 of the ordinance in respect of them; (b) that the contracts were void as gaming and wagering contracts within the meaning of s 6 of the Civil Law Ordinance (Cap 24, 1955 Ed).

Holding :

Held: (1) the words 'purchase rubber' as used in s 3 of the Rubber Dealers Ordinance refer to present purchases of the commodity and not to forward or executory contracts to purchase which do not involve delivery at the time they were made and, therefore, the defendant not being a holder of the licence under the ordinance did not render the contracts illegal; (2) it is the essence of a wagering contract that one party under it is to win and the other to lose, upon a future event which at the time of the contract, is of an uncertain nature. If either of the parties may win but cannot lose or may lose but cannot win, it is not a wagering contract; (3) where a dealer is prepared to deliver or take delivery, as the case may be, and he has not entered into a secret understanding that he will in no case do so, the contract is no wager.

Digest :

Stanton Nelson & Co Ltd v SE Mizrahie [1958] MLJ 45 High Court, Singapore (Buttrose J).

Annotation :

[Annotation: Reversed on appeal. See [1958] MLJ 97.]

600 Forward contracts -- Gaming or wagering contracts

11 [600] RUBBER Forward contracts – Gaming or wagering contracts – Dealer's licence required – Whether required – Meaning of 'purchase rubber' in Rubber Dealers Ordinance

Summary :

Certain forward contracts for the sale and purchase of rubber were entered into by the plaintiffs and defendants. They contained clauses entitling the plaintiffs, who were the vendors, to call for margin in the following terms: 'if at any time your position shows a loss, then we reserve the right to call for margin, failing which we are authorized to close the contract immediately.' It was alleged by the defendants that the contracts were gaming and wagering contracts within s 6 of the Civil Law Ordinance.

Holding :

Held: (1) a dealer who, in terms of the clause quoted, seeks to protect himself from the consequence of his customer's failure to perform his contract when the time for completion arrives does not thereby show that he is merely wagering with his customer; (2) following Universal Stock Exchange v Strachan [1896] AC 166, where a dealer is prepared to deliver or take delivery, as the case may be, and he has not entered into a secret understanding that he will in no case do so, the contract is no wager; (3) the fact that the plaintiffs were not the holders of a licence to purchase rubber under s 3 of Ordinance No 122 (Rubber Dealers) did not render the contracts illegal as the words 'purchase rubber' in s 3 do not refer to a forward contract. A licence under the section does not become necessary until delivery is taken. Where a contract is executory, the circumstance that one party is bound to fulfill a certain condition before he can legally perform the contract, and has not yet done so, does not render the contract itself illegal.

Digest :

Syn Thong & Co v Tong Joo (Hoo) & Co [1929] SSLR 39 High Court, Straits Settlements (Stevens J).

601 Forward contracts -- Gaming or wagering contracts

11 [601] RUBBER Forward contracts – Gaming or wagering contracts – Illegal and void – Contract – Gaming and wagering contract – Rubber Dealers Ordinance (Cap 199, 1955 Ed), s 3 – Forward contracts – Civil Law Ordinance (Cap 24, 1955 Ed), s 6.

Summary :

The respondents who were plaintiffs in the court of the first instance were rubber brokers and members of the Singapore Chamber of Commerce Rubber Association in the class of brokers. They claimed damages from the appellant for breach of several contracts in writing for purchase and sale of rubber or in the alternative the balance of expenses incurred by them and agreed, alternatively reasonable remuneration earned by them in respect of services rendered as the defendant's brokers. All the contracts in this case, subject to a few exceptions, were FOB contracts involving delivery at the time they were made. The appellant raised the defence of illegality which was based on two grounds: (a) that the appellant was not licensed under the Rubber Dealers Ordinance (Cap 199, 1955 Ed) to purchase rubber; and (b) that the contracts were void as gaming and wagering contracts under s 6 of the Civil Law Ordinance (Cap 24, 1955 Ed). The court of first instance held that the words 'purchase rubber' as used in s 3 of the Rubber Dealers Ordinance refer to present purchases and not to forward or executory contracts and that therefore the defendant not being a holder of a licence under the ordinance did not render the contracts illegal. It was also held that the contract was not a wagering contract. On appeal, the Court of Appeal reversing the decision reported in [1958] MLJ 45,

Holding :

Held: the contracts were not real contracts for the sale of rubber, but were merely colourable transactions to enable the appellant to gamble in differences, and were void.

Digest :

SE Mizrahie v Stanton Nelson & Co Ltd [1958] MLJ 97 Court of Appeal, Singapore (Whyatt CJ, Tan Ah Tah and Wee Chong Jin JJ).

Annotation :

[Annotation: This case no longer represents the law in view of s 6(4) of the Civil Law Act (Cap 43, 1988 Ed). By virtue of s 6(4), transactions dealing with any commodity, whether for immediate or future delivery, are not illegal or null and void by way of gaming or wagering.]

602 Forward contracts -- Gaming or wagering contracts

11 [602] RUBBER Forward contracts – Gaming or wagering contracts – Whether gaming contract – Contract – Forward dealings in rubber – Whether gaming contract – Stranger to contract – Release – Novation.

Summary :

These claims arose out of forward dealings in rubber in which one Pinto made contracts with the respondents in the name of the appellants. The appellants repudiated the contracts on the ground that Pinto had entered into them without authority. The parties agreed on certain issues to be tried separately from the other issues raised in the pleadings. The first issue which was not the subject of appeal was whether the transactions were gaming transactions and the learned trial judge held that they were not gaming unless both sides agreed that they will only pay and receive differences. As long as one or the other genuinely intends that physical rubber shall be shipped, the agreement is a contract. The other issues raised turned on a letter dated 3 October 1952 which the respondents' managing director wrote to the appellants in the following terms: '... we wish to inform you that Mr Pinto has since come to an agreement with us. He undertakes to pay off the entire debt due by monthly instalments. He has since paid us an initial amount and undertakes to pay all the balance himself as arranged. In consideration of his undertakings to pay, we now relieve you of all liabilities and will not look to you for payment.' This letter raised two issues, one of which was based on the first part of para 9 of the defence, namely, whether the letter constitutes a full release and discharge of all liability.

Holding :

Held: (1) a release not by deed and without consideration could not discharge a debt. The other issue was raised by the second part of para 9 of the defence, namely, whether the said letter constituted a novation whereby the respondents accepted Pinto as a contracting party in place of the appellants; (2) the word 'novation' is a technical term of civil law. If it is used in its more usual meaning there must be a tripartite agreement between the original parties and the substituted party. This was not the case before. A stranger cannot acquire rights under a contract but it is inequitable for a person having been paid by a stranger part or whole of the debt to recover the debt again. On equitable principles, the respondents were not required to give credit for more than what they have actually received from Pinto.

Digest :

Ramchand v Lam Soon Cannery [1954] MLJ 239 Court of Appeal, Singapore (Murray-Aynsley CJ, Matthew CJ (FM).

603 Forwarding agent -- Estate labourers conveying rubber to owner

11 [603] RUBBER Forwarding agent – Estate labourers conveying rubber to owner – Whether conviction sustainable – Meaning of 'forwarding agent' – Rubber Dealers Enactment, No 65 Johore, s 13(ii) – Rubber estate labourers and rubber tappers – Charge of being a 'forwarding agent'.

Summary :

The appellants, who were estate labourers or rubber tappers, were carrying rubber sheet and scrap out of an estate on their bicycles when they were stopped by the police. Each of them was subsequently charged of 'being a forwarding agent did receive x sheets of rubber weighing v katies without a written authority from the consignor for the despatch thereof as required under s 13(ii) of the Rubber Dealers Enactment No 65 ('the Enactment') Johore and thereby committed an offence punishable under s 18 of the said Enactment'. They were each sentenced to a fine of S$100, or one month's imprisonment.

Holding :

Held: 'to forward' means 'to send on' and a 'forwarding agent' is a person who receives rubber from a consignor for sale or consignment. In conveying the rubber from the estate to the estate owner, the appellants were acting merely as servants, carrying out the orders of their employer, and the latter, when issuing his orders to them did so as their employer and not as a consignor of goods. 'Forwarding agent' must be read in its context with 'consignor' and there cannot be one without the other.

Digest :

Soh Kwan Hong v Public Prosecutor [1962] MLJ 127 High Court, Johore Bahru (Ong J).

604 Grant of right to collect rubber -- Misuse of rubber coupons by grantor

11 [604] RUBBER Grant of right to collect rubber – Misuse of rubber coupons by grantor – Non-derogation of grant

Summary :

Held: when a landowner grants the right to collect rubber from his land but deprives the lessee or licensee of the power to export the rubber by using the coupons himself, damages for loss of profit will be awarded on the principle that a grantor shall not derogate from his grant, but an order for delivery of the coupons will not be made.

Digest :

Sheik Abdullah bin Ratas v Yang bte Lang & Anor [1925] 5 FMSLR 252 High Court, Federated Malay States (Brown J).

605 Import of rubber -- Excess rubber not authorized by permit

11 [605] RUBBER Import of rubber – Excess rubber not authorized by permit – Not necessary to prove mens rea – Rubber regulation – Import of rubber – Excess unauthorized by permit – Mens rea – Rubber Regulation Ordinance 1934, s 14

Summary :

Held: where rubber imported into Singapore is found to be in excess of the quantity authorized by the import permit issued under the Rubber Regulation Ordinance (Straits Settlements) 1934 ('the Ordinance'), the importer is liable to be convicted under s 14(1) of the Ordinance. As the wording of the section indicates an absolute prohibition, it is unnecessary for the prosecution to prove mens rea in order to secure a conviction under the section.

Digest :

Ong Aik Phow v R [1937] MLJ 73 High Court, Straits Settlements (Whitley Ag CJ).

606 Injury to deceased by fall of rubber tree -- Liability of occupier of land

11 [606] RUBBER Injury to deceased by fall of rubber tree – Liability of occupier of land – Negligence and nuisance – Negligence – Nuisance – Tree – Rubber tree adjoining highway – Fall on passing lorry causing injury to deceased – Fall due to disease – Liability of occupier of land – Civil Law Ordinance 1956, s 7(8).

Summary :

The defendants were a company, and they had employed a person competent and experienced in the management of rubber estates as their manager. A diseased rubber tree which stood on the defendants' estate immediately adjoining the highway, fell on the lorry in which the plaintiff's husband was travelling and caused injuries from which he died. In this action, the plaintiff claimed damages on behalf of herself and five infant children of the marriage, on the ground of the defendants' negligence, and alternatively, nuisance. The tree was old, about 50ft in height, excluding the crown, and it stood 33 feet from the nearest edge of the highway, so that persons on the highway were liable to suffer injury if the tree fell across it. The tree suffered from the disease called ustulina zonata. On the evidence, it was found as a fact that it was the disease affecting the laterals that was the cause of the tree falling and that, but for such disease, the tree would not have fallen. The defendants contended that their manager in fact did all that was reasonably required of a reasonable and prudent land owner; that he kept the tree under frequent regular observation and thereby satisfied himself that the tree was in no danger of falling; that this opinion was shared by the three experts whose evidence was before the court; that the condition of the foliage sufficiently showed the tree to be healthy; and lastly, that in law the defendants were not in the position of insurers.

Holding :

Held: (1) and therefore, the plaintiff was entitled to judgment; (2) the plaintiff was also entitled to judgment on the alternative ground of nuisance because the defendants omitted to remedy the nuisance constituted by the state of their property when it arose within a reasonable time after they did or ought to have become aware of it; (3) on the facts, the estate manager had failed to take even the most elementary precautions to prevent danger to persons on the highway in case the tree should fall; this failure, in view of the obviously diseased condition of the tree, amounted to taking an unjustifiable risk. The danger of the tree in that condition falling was reasonably foreseeable and the damage to persons on the highway such that it was, or should reasonably have been, within the contemplation of every prudent land owner. A case of negligence had been established;(per curiam) 'Established standard practice (in estate management) may well be the practice of reasonable and prudent estate owners. It may, on the other hand, fall below or even surpass, the standard required by law of a reasonable and prudent owner, which is the test that the law requires to be applied. Evidence of standard practice cannot, however, be substituted for the judgment of the court or relieve it of the duty of deciding on the evidence whether the defendants' manager has properly discharged the duty of care that he owes to passersby on the highway.'

Digest :

Thean Chew v The Seaport (Selangor) Rubber Estate Ltd [1960] MLJ 166 High Court, Kuala Lumpur (Ong J).

607 Licence holder -- Licensee to keep book of account

11 [607] RUBBER Licence holder – Licensee to keep book of account – 'Day by day' entry of particulars of purchase of rubber – Meaning of 'day by day' – Rubber Dealers Enactment (Johore Enactment No 65), s 12 – 'Day by day' entry of particulars of purchase of rubber – Meaning of 'day by day'

Summary :

Section 12(i)(a) of the Rubber Dealers Enactment Johore Enactment No 65 reads: 'Every licensee ... shall keep books of account in which shall be entered, day by day, in English or romanized Malay, the following particulars concerning all purchases, deliveries, sales, shipments and other consignments of rubber: (a) the date of purchase, delivery sale or consignment; ...' In this case the respondent was charged with failing to comply with the provisions of that section, in that he failed to enter day by day particulars of purchase of rubber in his account book. The facts were that on 29 October 1958, the respondent purchased 11,200lbs of rubber, a temporary receipt in respect of which was received at his shop at about 5.45 pm on that date. On the following morning at 5.30am, a police inspector visiting the respondent's shop found that there had been no entry made in his account book of this purchase.

Holding :

Held: the particulars specified in s 12(i)(a) give the clue as to the meaning intended by the Legislature when they used the phrase 'day by day'. As para (a) of that section requires, amongst other things, the date of the purchase to be stated, the date of any purchase will appear in the account book even if the entry is made next day or a week later. If it was the intention that entries of purchase could be made at any time and not necessarily on the day upon which a particular purchase took place, then the words 'day by day' are superfluous and redundant because the date of every purchase will always appear by virtue of the requirements of para (a). If however, the words 'day by day' are read as meaning that the particulars of a purchase must be entered on the date upon which the purchase takes place, which they can be read as meaning without doing any violence to the phrase, then the words are not redundant as, read with para (a), they mean that the particulars of the purchase must be entered on the date upon which the purchase takes place and those particulars must contain amongst other things the date of the purchase.

Digest :

Public Prosecutor v Tan Cheng Leng [1959] MLJ 227 High Court, Muar (Hepworth J).

608 Licence holder -- Statutory offence

11 [608] RUBBER Licence holder – Statutory offence – Proof that accused is holder of licence required – Rubber Dealers Enactment (Johore Laws, Enactment No 65) – Licence holder charged with purchasing rubber without any written authority being delivered to him by the vendor for sale of rubber – Duty of prosecution to prove that accused was licensed rubber dealer.

Summary :

Held: where the charge alleges that the appellant being a licensed rubber dealer had purchased rubber without any written authority being delivered to him by the vendor for the sale thereof, the prosecution must prove, inter alia, that the appellant was a licensed rubber dealer. R v Khoo Guan Teik [1957] MLJ 128 followed.

Digest :

Tan Koh Keng v Public Prosecutor [1962] MLJ 193 High Court, Johore Bahru (Adams J).

609 Licence holder -- Statutory offence

11 [609] RUBBER Licence holder – Statutory offence – Proof that accused is holder of licence required – Rubber Supervision Enactment 1937, ss 11 & 21 – Licence holder charged with failure to keep books in prescribed form – Duty of prosecution – Chain of evidence.

Summary :

Held: where a person is charged with a statutory offence which is imposed upon the holder of a licence, it is imperative for the prosecution to prove positively he was at the material time the holder of that licence. It is of crucial importance that the police custom officers investigating and/or prosecuting cases should appreciate the necessity of ensuring an unbroken chain of evidence as to the retention and custody of an exhibit from the moment it is first seized to the time it is produced in court.

Digest :

R v Khoo Guan Teik [1957] MLJ 128 High Court, Penang (Rigby J).

610 Machinery -- Operation of rubber sheeting machine

11 [610] RUBBER Machinery – Operation of rubber sheeting machine – No certificate of fitness – Strict liability – Machinery – Operation of rubber sheeting machine – No certificate of fitness – Machinery Ordinance 1953, s 6(1) and (2) – Notice under s 6(2) – Mens rea.

Summary :

In this case, a weeder who was feeding rubber into the rollers of a rubber sheeting machinery sustained injuries on his fingers. There was no certificate of fitness issued in respect of the said machinery as required by s 6(1) of the Machinery Ordinance 1953 ('the Ordinance'). The respondent, the manager of the rubber estate, was charged with contravening s 6(1), an offence punishable under s 35 of the said Ordinance.

Holding :

Held: (1) to attract the operation of s 6(1) it is not necessary that a notice should have been issued under s 6(2) of the said Ordinance; (2) the prohibition contemplated by s 6(1) of the Ordinance is an absolute one and there is no obligation on the prosecution to prove mens rea.

Digest :

Public Prosecutor v Ross [1962] MLJ 5 High Court, Seremban (Ismail Khan J).

611 Offence under Rubber Supervision Enactment 1937 -- Prosecution conducted by police officer

11 [611] RUBBER Offence under Rubber Supervision Enactment 1937 – Prosecution conducted by police officer – Whether trial a nullity – Rubber Supervision Enactment 1937, s 38(ii) – Prosecution under the enactment may be conducted by police officer – Criminal Procedure Code (Cap 6), s 380(ii).

Summary :

This was a reference under s 34 of the Courts Ordinance 1948 for determination by the Court of Appeal: Whether when a prosecution for an offence under the Rubber Supervision Enactment 1937 ('the Enactment') is conducted by an officer other than one of those mentioned in s 38(ii) of the said Enactment the trial is a nullity.

Holding :

Held: s 38(ii) of the Rubber Supervision Enactment 1937 is supplementary to s 380 of the Criminal Procedure Code (Cap 6), and permits of offences under the enactment being prosecuted by the officers mentioned in s 38(ii) in addition to, inter alia, police officers who are given the necessary power to prosecute under s 380 of the Criminal Procedure Code.

Digest :

Ang Toon Huan v Public Prosecutor [1956] MLJ 206 Court of Appeal, Kuala Lumpur (Mathew CJ (FM).

612 Offence under Rubber Supervision Enactment 1937 -- Prosecution conducted by police officer

11 [612] RUBBER Offence under Rubber Supervision Enactment 1937 – Prosecution conducted by police officer – Whether trial a nullity – Rubber Supervision Enactment No 10 of 1937, s 38 – Prosecutions under this enactment must be conducted by the Supervisor of Rubber or Deputy Supervisor or an officer appointed under the enactment and specially authorized to do so.

Summary :

In this case, the appellant was convicted on a charge of purchasing 21 katties of scrap rubber without a licence contrary to the Rubber Supervision Enactment No 10 of 1937. The prosecution was conducted by a police inspector.

Holding :

Held: (1) all prosecutions under the Rubber Supervision Enactment must be conducted by the supervisor or deputy supervisor or by any officer appointed under the enactment and specially authorized to prosecute in writing by the supervisor or a deputy supervisor; (2) there was no evidence in this case that the police inspector had any authority to prosecute and, therefore, the trial was a nullity.

Digest :

Selamat bin Darmo v Public Prosecutor [1955] MLJ 241 High Court, Kuala Lumpur (Wilson J).

613 Planting -- Planting of rubber trees on 'any acre'

11 [613] RUBBER Planting – Planting of rubber trees on 'any acre' – Rubber Regulation Enactment No 37 of 1937, s 19 – Rubber Regulation Enactment No 37 of 1936, s 19 – Planting of rubber trees on 'any acre'.

Summary :

Held: it is not permissible for any owner of a holding to plant on any acre of the holding which had rubber plants growing thereon whether before or after 1 June 1934, which has not been planted in contravention of the Rubber Regulation Enactment No 37 of 1936, more than 30 trees for each acre of the holding. This is so even though the owner does not plant more trees than the acreage of his holding multiplied by 30.

Digest :

Khor Peng Yam v Public Prosecutor [1939] MLJ 55 High Court, Federated Malay States (Hastings J).

614 Planting -- Prohibition of planting

11 [614] RUBBER Planting – Prohibition of planting – Replacement and supply – Meaning of '30 rubber plants on any acre' – Rubber Regulation Enactment 1937 (amended by Enactments 18 and 28 of 1938) – Section 23 – Prohibition of planting – Exception – Replacement and supply – Meaning of '30 rubber plants on any acre' (formerly s 23(i), now s 23(ii)(c)).

Summary :

Held: there is nothing in s 23(i) of the Rubber Regulation Enactment 1937 ('the Enactment') (amended by Enactments 18 and 28 of 1938) to indicate how a portion of land described as 'any one acre' is to be ascertained or to deprive an owner of the right to select the areas on which he replaces 30 trees. The Controller cannot select any area of any shape containing one acre on any part of a holding, such area having more than 30 replacements, for the purpose of charging an offence under the Enactment.

Digest :

Public Prosecutor v Gan Lian Kee [1939] MLJ 31 Court of Appeal, Johore Bahru (McElwaine CJ (SS).

615 Possession of excess rubber -- Possession not covered by coupons

11 [615] RUBBER Possession of excess rubber – Possession not covered by coupons – Seizure and confiscation by Controller – Rubber Regulation Enactment, No 37 of 1936, s 18(iii) – Possession of rubber not covered by coupons – Seizure and confiscation.

Summary :

The appellant, a licensed rubber dealer, was charged with and convicted of having in his possession rubber in excess of the quantity authorized by s 18(iii) of the Rubber Regulation Enactment No 37 of 1936 ('the Enactment'). The excess rubber was ordered to be confiscated and destroyed by the Customs Department. It was admitted or proved that when the Rubber Regulation Inspector visited the appellant's premises, he found 10,157lbs of rubber for which there were no coupons and which on reference to the Controller, was found not to be covered by any credit in the rubber export ledger. The appellant, however, stated that the estate owners sent rubber to his premises by lorry with a view to negotiating a sale later the same day and that it was only when a price had been agreed upon that rubber coupons would be handed over. On these allegations, the appellant based his arguments: (a) that the rubber in question was not in his possession prior to the sale; and, alternatively (b) that the rubber was in fact covered by coupons in the hands of the owner of the rubber.

Holding :

Held: (1) the appellant received the rubber for storage and not for sale, that in the absence of a written authority as provided by s 25(iii)(a) and (b) of the Enactment, the rubber must be treated as being in the appellant's possession for the purpose of s 18(iii), and that as he had no coupons, an offence had been committed. An amount of rubber less than that found to be in excess was seized by the Controller nearly four weeks after the offence was committed; (2) the rubber which might be seized was the particular rubber which was in excess on the date of inspection and that the magistrate's order for confiscation could not be supported and must be set aside.

Digest :

Lee Woo v Public Prosecutor [1939] MLJ 23 High Court, Federated Malay States (Terrell Ag CJ).

616 Replanting scheme -- Claim against RISDA

11 [616] RUBBER Replanting scheme – Claim against RISDA – RISDA agent for smallholders – No proof of breach of statutory duty or negligence

Summary :

In this case, the plaintiffs who were smallholders of rubber land grouped themselves to take advantage of a replanting scheme introduced by RISDA, the defendant. The plaintiffs transferred all their rights and obligations of their grants to the defendant. The defendant entered into agreements with contractors to develop the land but the contractors were unsuccessful as they were hampered by goats and buffaloes who came to the area and destroyed the young rubber trees and also by failure of co-operation on the part of the plaintiffs. Subsequently, the defendant took the task of doing rehabilation work but this also failed. The plaintiffs thereupon brought an action for damages against the defendant for failing in their obligations to replant their smallholdings with high yielding rubber trees.

Holding :

Held: (1) in this case, the defendant was acting as the agent for the plaintiffs and on the evidence the defendant had not been negligent in carrying out its duties; (2) the evidence did not support the contentions of the plaintiffs that the defendant has committed a breach of its statutory duties or was guilty of negligence.

Digest :

Denah bte Daim & Ors v Rubber Industry Smallholders Development Authority [1985] 2 MLJ 411 High Court, Kuala Lumpur (Siti Norma Yaakob J).

617 Rubber coupon -- Theft of coupons

11 [617] RUBBER Rubber coupon – Theft of coupons – Title to coupons – Whether coupons negotiable instruments

Summary :

The appellant bought some rubber coupons from one X and in the ordinary course of business used the coupons to cover an export of rubber. It was then found that the coupons had been stolen from the respondent by one Kuan Fah, who was convicted of the theft.

Holding :

Held: a rubber coupon was not a negotiable instrument and that the appellant did not therefore acquire a good title to the coupons he had bought.

Digest :

Then Eng Fook v Jong Kee [1928-41] SCR 75 Supreme Court, Sarawak

618 Rubber exporters' licence -- Termination of licence

11 [618] RUBBER Rubber exporters' licence – Termination of licence – Power of licensing officer to refuse to issue new licence

Summary :

The appellant had been licensed as a rubber exporter in Kuching but on the expiration of his licence renewal thereof was refused. The appellant contended that this refusal was improper on the grounds that the Controller of Rubber had based his decision on the failure of the appellant to store rubber in a place not authorized by him.

Holding :

Held: under s 29(iv) of the Rubber Regulation Rules 1937, the licensing officer had full discretion with respect to the issue of rubber exporters' licences, and the court would not interfere with that discretion so long as it was not exercised unreasonably, improperly or dishonestly.

Digest :

Song Thian Ho v The Controller of Rubber [1928-41] SCR 91 Supreme Court, Sarawak

619 Unlawful possession of rubber -- Proof of possession

11 [619] RUBBER Unlawful possession of rubber – Proof of possession – Emergency (Rubber Control) Regulations 1949, reg 5(2) – Prosecutions for an offence under the regulation – Proof of possession

Summary :

Held: in a prosecution for an offence under the Emergency (Rubber Control) Regulations 1949, it is not necessary to prove that the accused person had actual possession of the rubber. It is sufficient to prove that he had potential physical control of the rubber.

Digest :

Public Prosecutor v Gan Loh [1952] MLJ 136 High Court, Selangor (Wilson J).

620 Unlawful possession of scrap rubber -- Onus of proof

11 [620] RUBBER Unlawful possession of scrap rubber – Onus of proof – Evidence to substantiate charge – Duty of prosecution – Emergency (Rubber Control) Regulations 1949 – Charge of being found in unlawful possession of scrap rubber – Quantum of evidence to substantiate charge – Reasonable suspicion – Admissibility of documentary evidence – Evidence Ordinance 1950, ss 60, 159 and 160 – Duty of prosecution to call witness.

Summary :

Held: in charges of being in unlawful possession under reg 4(1) of the Emergency (Rubber Control) Regulations 1949, it is not the duty of the prosecution to prove the guilt of the accused beyond reasonable doubt: it is sufficient if circumstances are proved which gave rise to a reasonable suspicion that the rubber is stolen or unlawfully obtained. The burden is not so heavy as the burden on the prosecution in proving the guilt of the accused beyond reasonable doubt.

Digest :

Daniel v Public Prosecutor [1956] MLJ 186 High Court, Kuala Lumpur (Buhagiar J).

621 Unlawful possession of scrap rubber -- Onus of proof

11 [621] RUBBER Unlawful possession of scrap rubber – Onus of proof – Necessity of proving that scrap rubber is marketable – Emergency (Rubber Control) Regulations 1949, reg 4(1) – Unlawful possession of scrap rubber – Necessity of proving that the scrap rubber is marketable.

Summary :

Held: on a charge of unlawful possession of scrap rubber, it is necessary for the prosecution to prove affirmatively that the scrap rubber is marketable.

Digest :

Koi Huay Ker v Public Prosecutor [1956] MLJ 250 High Court, Malacca (Smith J).

622 Warranty of authority -- Broker buying without authority

11 [622] RUBBER Warranty of authority – Broker buying without authority – Whether liable on implied warranty – Custom of trade

Summary :

The byelaws of the Singapore Chamber of Commerce Rubber Association provide by r 4(a) that all transactions between members inter se (other than sales and purchases at auction) shall be evidenced by written contracts between the buyer and seller. A firm of non-guarantee brokers believing that they had authority from buyers, purported to close a contract with sellers on the buyers' behalf. The brokers forwarded a letter confirming the transaction to the sellers and the sellers acknowledged it. It afterwards appeared that brokers had no authority to contract on behalf of the buyers.

Holding :

Held: (1) byelaw 4(a) does not require a direct exchange of contracts between principals where the transaction is carried out through brokers and that brokers were liable to the sellers on an implied warranty of authority; (2) that an alleged custom in the rubber trade in Singapore that in non-guarantee business, principals must deal directly with each other and disregard the broker, once he has brought them together by telephone or interview, was not proved.

Digest :

Lam Choon & Co v Green & Collier [1928] SSLR 195 High Court, Straits Settlements (Sproule J).

Sale of Goods

623 Outright sale -- Sale of computer system

11 [623] SALE OF GOODS Outright sale – Sale of computer system – Whether there was right to reject – Whether right to reject was lost – Whether there was any obligation to return goods

See contract law, para VII [37].

Digest :

Computer Supermarkets (S) Pte Ltd v Goh Chin Soon Ricky & Ors [1997] 2 SLR 283 High Court, Singapore (Lai Siu Chiu J).

624 Appropriation of goods -- Contract to supply timber

11 [624] SALE OF GOODS Appropriation of goods – Contract to supply timber – Whether grading amounts to unconditional appropriation – Sale of goods – Grading of timber by grader with shipping marks – Whether unconditional appropriation – Sale of Goods Act 1893, s 18 r 5(1) and s 20.

Summary :

By a contract dated 28 April 1960, the defendant agreed to supply to the plaintiffs 400 tons of light red meranti timber at S$220 per ton, FOB Singapore at the rate of 100 tons per month during June to August 1960 and 100 tons between 1 and 20 September 1960. It was one of the terms of the contract that grading of the timber was to be done in accordance with the Malayan Grading Rules for Sawn Hardwood Timber under the supervision of the Department of Forestry. In June 1960, the defendant tendered a parcel of 50 tons of timber. Ten tons of this parcel were graded by the plaintiffs' grader and marked with the plaintiffs' shipping marks. The parcel was found by the Department of Forestry to include dark red meranti. The plaintiffs made several requests to the defendant to produce light red meranti; but the defendant failed to do so. On 29 September 1960, the plaintiffs gave the defendant written notice of cancellation of the contract. The plaintiffs claimed damages for breach of contract and the return of their deposit. The defendant counterclaimed for loss alleged to have been suffered as a result of breaches of contract committed by the plaintiffs. The main questions for the consideration of the court were: (a) whether the parcel of 50 tons tendered by the defendant in June 1960 was entirely light red meranti or whether it included any dark meranti; (b) whether the parcel was rejected by the plaintiffs; (c) whether the marking of 10 tons with shipping marks by the plaintiffs' grader constituted unconditional appropriation within the meaning of r 5(1) in s 18 of the Sale of Goods Act 1893; (d) whether the plaintiffs committed a breach of contract by failing to send a grader to grade the timber; (e) whether the plaintiffs committed a breach of contract by failing to send a request to the Forest Department for check-grading; (f) whether the plaintiffs committed a breach of contract by failing to nominate a ship.

Holding :

Held: (1) the parcel of 50 tons tendered in June 1960 included dark red meranti and was not entirely light red meranti; (2) as there was no hope of persuading the Forest Department to pass the timber as light red meranti the plaintiffs, in fact, wanted the defendant to produce actual light red meranti and rejected the 50 tons tendered in June 1960; (3) the marking of the 10 tons with shipping marks merely constituted preparation for shipment and not appropriation under r 5(1) in s 18 of the Sale of Goods Act; (4) the plaintiffs did not commit a breach of contract by failing to send a grader to grade the timber; (5) the plaintiffs did not commit a breach of contract by failing to get check-grading done by the Forest Department; (6) the plaintiffs did not commit a breach of contract by failing to nominate a ship.

Digest :

Yap Chin Hock & Anor v Cheng Wang Loong [1964] MLJ 276 High Court, Singapore (Ambrose J).

625 Appropriation of goods -- Passing of property

11 [625] SALE OF GOODS Appropriation of goods – Passing of property

Summary :

Held: in deciding whether there has been an appropriation of goods, so as to pass the property therein, the acts relied on must be not only clear, unequivocal and conclusive but the test is, whether they amount to an actual and final election of the particular goods for that particular purpose.

Digest :

Ashton v Batter [1866] 1 Ky 164 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Maxwell R).

626 Appropriation of goods -- Passing of property

11 [626] SALE OF GOODS Appropriation of goods – Passing of property

Summary :

Held: where, under a contract for sale of unascertained or future goods, goods in a delivered state are appropriated to the contract by the seller, the property in the goods does not pass to the buyer until the buyer assents. An affirmative assent, express or implied, is required and a refusal to assent though for an inadequate reason, does not comply with s 18, r 5 of the Sale of Goods Act 1893.

Digest :

Lohmann & Co Ltd v Mong Huat & Co [1931] SSLR 129 High Court, Straits Settlements (Thorne J).

627 Assignment of contract for sale of opium -- Custom

11 [627] SALE OF GOODS Assignment of contract for sale of opium – Custom

Summary :

Held: the custom that contracts for the sale of opium are not assignable is bad.

Digest :

Wee Soon Chew v Nathan [1895] 4 SSLR 8 High Court, Straits Settlements (Cox CJ).

628 Auction sale -- Sale to highest bidder

11 [628] SALE OF GOODS Auction sale – Sale to highest bidder – Mistake – Contract

Summary :

Where an auctioneer, under a misapprehension of the real facts attending the sale, knocked down an article to a person whom he supposed to be the highest bidder, but after so doing he was made aware of the true state of things, whereupon he declined to enter the name of such supposed purchaser into his book as the purchaser, or to give delivery of the goods to him,

Holding :

Held: although the hammer was down, he was not the agent of the supposed purchaser so as to be liable for not making a binding contract for him nor was he liable for not giving delivery of the goods.

Digest :

Hin Lee & Co v Cohen [1882] 1 Ky 542 High Court, Straits Settlements (Wood J).

629 Breach of contract -- Contract for supply of goods

11 [629] SALE OF GOODS Breach of contract – Contract for supply of goods – Non-delivery of final instalment of goods – Whether defendants entitled to terminate contract – Whether fundamental breach – Applicability of s 31(2) of the Sale of Goods Act 1979 – Sale of Goods Act 1979, ss 10, 29(3) & 31(2)

Summary :

The plaintiffs contracted to deliver 20,000 pieces of printed circuit boards in four equal instalments. The plaintiffs adhered to the first and second delivery dates. On the third delivery date, they delivered 3,640 pieces instead of 5,000. The fourth instalment was not delivered at all. The defendants then cancelled the undelivered balance of 6,360 pieces. The plaintiffs claimed for the value of the work in progress for the balance of the purchase order and alternatively, for the loss of bargain. The defendants counterclaimed for damages for non-delivery. The plaintiffs applied for summary judgment and were successful save that execution of the said judgment was stayed pending the resolution of the defendants' counterclaim. Both parties appealed against the deputy registrar's decision. Initially, both appeals were dismissed. The defendants applied for further arguments to be heard which the court allowed. The issue was whether the defendants were entitled to determine the contract. The plaintiffs argued that this depended on whether the breach by them went to the root of the contract or not, which in turn depended on whether time was of the essence in the contract of sale. The defendants argued that this test was applicable only in cases where there were further obligations to be performed by them.

Holding :

Held, allowing the defendants' appeal and dismissing the plaintiffs' cross-appeal: (1) the defendants were entitled to rescind the contract as they had no unperformed obligations after the last delivery date; (2) there was no conduct by the defendants to lead the plaintiffs to believe that a new agreement could be implied allowing for an extended time for delivery. There was nothing on the facts to support the plaintiffs' contention that the defendants had acquiesced to the lateness in delivery; (3) s 31(2) of the Sale of Goods Act 1979 has no application in this case as the dispute relates not to defective deliveries but to non-delivery of the final instalment; (4) (per curiam) when the court hears further arguments under s 34(2) of the Supreme Court of Judicature Act (Cap 322), it does so on the facts and evidence already adduced at the original hearing of the appeal.

Digest :

Additive Circuits (S) Pte Ltd v Wearnes Automation Pte Ltd [1992] 2 SLR 23 High Court, Singapore (Lai Siu Chiu JC).

630 Breach of contract -- Failure to deliver

11 [630] SALE OF GOODS Breach of contract – Failure to deliver – Buyer entering into sub-sale – Damages – Duty to mitigate

Summary :

The plaintiff was a merchant carrying on business under the name and style of Fazlur Rahman & Co at Narayangaj and Chittagong, Bangladesh. The defendants were a company carrying on, among other things, the business of trading in commodities in Singapore. By a series of exchange of telexes in early February 1985, the defendants contracted to sell to the plaintiff 1,000 metric tons of palm olein at US$640 per metric ton C & F Chittagong to be shipped in February/March 1985. Payment was to be by letter of credit. On 16 February 1985, the plaintiff had opened the letter of credit. Thereafter, the defendants met with difficulties in shipping the palm olein. On 20 March 1985, the defendants requested an extension of the validity of the letter of credit for 15 days. The letter of credit was in fact extended to 15 April 1985 but the defendants were still unable to deliver. On 18 April 1985, the plaintiff, through his solicitors, demanded delivery of the palm olein within 48 hours. The defendants responded the following day acknowledging the existence of the contract but alleged that by reason of the belated opening of the letter of credit by the plaintiff, the contract was cancelled on 18 February 1985. On 7 June 1985, the plaintiff instituted the present claim for damages for breach of contract. The plaintiff alleged that he had resold the palm olein to his customers Islamic Hardware Store and AK Mohamed Awlad Hossain, and by reason of the breach of contract by the defendants the plaintiff had defaulted in the resale and became liable to his customers for damages and had to pay his customers damages in the sum of US$215,000. The plaintiff also claimed loss of profit on the sub-sale in the amount of US$220,000. In their defence, the defendants claimed that they were unaware of the sub-contract between the plaintiff and AK Mohamed Awlad Hossain. The defendants also counterclaimed the sum of S$10,000 being the balance of a loan made to the plaintiff in December 1983.

Holding :

Held, allowing the plaintiff's claim and the defendants' counterclaim: (1) in ascertaining the measure of damages, the rule generally applicable is that where there was an available market for the goods in question, the measure of damages was prima facie the difference between the contract price and the market price at the relevant time. In the instant case, there was ample evidence that there was at all material times an available market for palm olein and hence, the measure of damages was to be ascertained by the difference between the contract price and the market price at the relevant time. The defendants by their telex of 18 April 1985 refused to deliver the goods. They maintained they were under no obligation to ship the goods. Hence, for the purpose of assessing damages, the market price of the palm olein should be that prevailing as of 19 April 1985 or as near thereto as possible; (2) the price of olein at the material time was very volatile and fluctuated considerably. The court ascertained the price of palm olein as at 19 April 1985 to be US$50 per metric ton. The court therefore entered judgment for the plaintiff in the sum of US$50,000 as damages for breach of contract; (3) at the time of the contract between the plaintiff and the defendants, the defendants were unaware of the contract between the plaintiff and the sub-purchaser. It is clear that the right of the buyer to recover such damages from the seller was based on the knowledge which the seller had at the time when the contract was made; (4) the court accepted the defendants' evidence that initially there was a loan of S$15,000 to the plaintiff and subsequently there was a commission of S$5,000 payable to the plaintiff arising from certain transactions as a result of which only S$10,000 was owing from the plaintiff and which had not been paid.

Digest :

Fazlur Rahman v The Bombay Trading Co (Pte) Ltd [1993] 1 SLR 440 High Court, Singapore (LP Thean J).

631 Breach of contract -- Goods sold under distributorship agreement

11 [631] SALE OF GOODS Breach of contract – Goods sold under distributorship agreement – Whether full purchase price for returned goods should be credited back to distributor – Whether credit notes should be deducted from amount owing – Manufacturer in breach of contract for refusal to supply goods under terms of contract

Summary :

The plaintiffs were manufacturers, importers and exporters of semi-conductor components. They entered into a distributorship agreement with the first defendant company of which the second defendant was its managing director. The plaintiffs' claim against the first defendant was for the sum of US$395,459.74 and US$469,049.26, being the balance due on the price of goods sold and delivered by the plaintiffs to the first defendant. This balance was arrived at after setting-off a stock adjustment rebate and cash rebates due to the first defendant. The plaintiffs' claim against the second defendant was to indemnify them under the guarantee for the amount of the claim, which guarantee was given by the second defendant to the plaintiffs. The first defendant contended that there were more moneys due to them from the plaintiffs which should be set off against the plaintiffs' claims than the amounts credited to them by the plaintiffs. The first defendant had also returned the plaintiffs some goods purchased from them, for which the plaintiffs credited the first defendant for the purchase price of these goods less 20%. The defendants submitted that they should have been credited with the full purchase price. The defendants also argued that the credit notes issued in respect of the goods returned by the first defendant to the plaintiffs should not be deducted because the true nature of the transaction was in effect a resale of these goods by the first defendant to the plaintiffs rather than a return of goods sold by the plaintiffs to the first defendant. The first defendant counterclaimed for damages for the plaintiffs' breach of contract in refusing to sell the first defendant's goods on 60-day payment terms.

Holding :

Held, allowing the plaintiffs' claim and the first defendant's counterclaim: (1) the court did not accept the first defendant's claim that the plaintiffs had forced them to return the goods at only 80% of the purchase price value. As the plaintiffs pressed them to bring their below 60 days outstandings within the US$1m credit line and to pay all outstandings of 60 days, and the first defendant did not have the means to do so unless the plaintiffs were prepared to take back some goods and set-off the value thereof against the first defendant's outstanding, with the plaintiffs being prepared to do so only at a 20% discount on the purchase price, the first defendant agreed to do so. The plaintiffs were entitled to credit the first defendant for only 80% of the purchase price of the returned goods; (2) the plaintiffs were in breach of contract in refusing to supply the first defendant with goods on the usual 60-day payment terms even the first defendant had brought their outstandings to below the US$1m mark. This breach continued until the distributorship agreement was duly terminated by the plaintiffs; (3) the primary purpose of the rebate and incentive schemes was to encourage the first defendant to increase their purchase of goods from the defendants. Their purpose would not be served if the price of returned goods was not deducted from the price of goods sold when computing the figure on which to base these incentive payments. The plaintiffs' claim had to therefore be reduced by this amount.

Digest :

SGS-Thomson Microelectronics Pte Ltd v Regional (Far East) Electronics Pte Ltd & Anor Suit No 39 of 1995—High Court, Singapore (CR Rajah J).

632 Breach of contract -- Sale of beans as pig fodder

11 [632] SALE OF GOODS Breach of contract – Sale of beans as pig fodder – Whether seller liable for death of animals – Quantum of damages – Sale of goods – Breach of contract – Quantum of damages.

Summary :

In this case, the plaintiffs/respondents bought from the defendants/appellants 500 bags of mixed Java beans for RM9,900.84. The plaintiffs/respondents said that at the time of the sale, they made known to the defendants/appellants that the beans were bought for the purpose of being sold by them as pig fodder. The plaintiffs/respondents in fact resold the 500 bags of beans for RM12,486.62 to Chop Lean Hin of Penang, who in turn resold, part of the consignment to retail fodder dealers and the beans were eventually resold to pig dealers. Twenty-one of the pigs who ate part of the beans died. The plaintiffs/respondents having paid to the defendants/appellants the sum of RM9,900.84 claimed as damages RM12,486.62 which Chop Lean Hin had agreed to pay for their beans. At the trial, the only point argued was whether or not the defendants/appellants were liable. No argument was addressed on the quantum of damages, assuming that they were liable. In the Court of Appeal, liability was admitted and the appeal was confined to the question of the amount of damages which could be claimed. It was argued, that the plaintiffs/respondents took no steps to mitigate the damages.

Holding :

Held: there was nothing in this case to show that the trial judge acted upon any wrong principle of law or that the amount awarded was so extremely high as to make it an entirely erroneous estimate of the damage to which the plaintiffs/respondents were entitled and, therefore, the appeal must be dismissed.

Digest :

Chop Chin Liong v Ban Hoe Hin [1957] MLJ 13 Court of Appeal, Penang (Mathew CJ, Wilson and Abbott JJ).

Annotation :

[Annotation: The ratio given in the head notes is misleading because the trial judge did not make any award of damages. The only point argued before the trial judge was whether the defendants were liable. Perhaps the head notes should read: Held:[eb] the measure of damages is that laid down in s 53(3) of the Sale of Goods Act 1893, ie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty. It is not clear from the judgment what amount was awarded as damages. One can infer that it must be the amount of RM12,486.62 as asked for by the plaintiffs/respondents because Wilson J raised no objection to it. Moreover, he held that the beans, at the time they were delivered to the plaintiffs/respondents had no value. Therefore, the full purchase price could be recovered in addition to any amount which the plaintiffs/respondents were liable to pay to their sub-purchaser.]

633 Caveat emptor -- Damaged goods

11 [633] SALE OF GOODS Caveat emptor – Damaged goods

Summary :

Held: (per Hackett J) on a sale of damaged goods the maxim caveat emptor applies since by the terms of the bargain the purchaser has notice of the defect and has an allowance made to him for it, and it is his own fault if he did not sufficiently protect himself against the risks incidental to such a purchase.

Digest :

Lorrain v Neo Leang [1869] SLR Leic 271 Supreme Court, Straits Settlements

634 Caveat emptor -- Implied warranty as to quality

11 [634] SALE OF GOODS Caveat emptor – Implied warranty as to quality – Commission agents

Summary :

Held: where A bought goods from a foreign firm through a commission agent and the goods were shipped in the name and on account of the commission agent who paid for them it was held that the maxim caveat emptor did not apply and that there was an implied warranty to A that the goods ordered for him should be saleable or merchantable.

Digest :

Behr & Co v Lee Swee Tin [1895] 3 SSLR 48 High Court, Straits Settlements (Leach J).

635 Caveat emptor -- Sale at auction

11 [635] SALE OF GOODS Caveat emptor – Sale at auction – Whether wordings in notice amount to a warranty

Summary :

The following notice was circulated with reference to the sale at auction of certain coffee salved from a fire, viz: 'these goods are from K's godown after the fire, have been slightly damaged by the water but still nothing to prevent them being made use of.'

Holding :

Held: these words did not amount to a warranty and the maxim caveat emptor applied.

Digest :

Tan Cheng v Murray [1893] 2 SSLR 35 High Court, Straits Settlements (Logan J).

636 Caveat emptor -- Sale not by sample and without warranty

11 [636] SALE OF GOODS Caveat emptor – Sale not by sample and without warranty – Goods not up to quality – Refusal to accept goods – Sale of goods – Sale not by sample, warranty or adequate description – Contract – Goods not up to quality – Fair average quality – Refusal to accept goods – Damages – Caveat emptor.

Summary :

By a contract in writing, the defendants agreed to purchase from the plaintiffs 20 tons of 'White Melon Seeds Fair Average Quality'. The seeds were to be shipped from Port Sudan and delivery was to be effected at the defendants' store in Singapore. Delivery of the goods at the defendants' store was duly tendered but the defendants refused to accept the goods on the ground that they were of inferior quality. The sale was not by sample and without warranty.

Holding :

Held: although the seeds in question were slightly inferior to what the trade knew as 'White Melon Seeds-Fair Average Quality' their degree of inferiority was not sufficient to entitle the defendants to reject them on the grounds that something other than what they had contracted to buy had in fact been supplied. They were in fact 'White Melon Seeds-Fair Average Quality' and were reasonably described as such.

Digest :

Desai & Co v Chop Seng Teck [1953] MLJ 192 High Court, Singapore (Knight J).

637 Caveat emptor -- Sale of particular article

11 [637] SALE OF GOODS Caveat emptor – Sale of particular article – Recovery of purchase price

Summary :

The maxim caveat emptor has no application to a case where the vendor professes to sell a particular article, which turns out subsequently to be, not that article, but some other article altogether; and the purchaser is entitled to recover back as money had and received, the purchase money he paid for such particular article, as there was a total failure of the consideration for which it was paid.

Digest :

Wee Kow v Chartered Bank [1867] 1 Ky 167 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Maxwell R).

638 Caveat emptor -- Specific goods

11 [638] SALE OF GOODS Caveat emptor – Specific goods – Implied warranty

Summary :

Held: the maxim caveat emptor admits of no exception by implied warranty, in cases of the sale of specific goods which are in existence and of which the purchaser had inspection before concluding his purchase.

Digest :

Markwald & Co v McAlister & Co [1884] 1 Ky 667 High Court, Straits Settlements (Ford Ag CJ).

639 CIF/FOB contract -- Duties of buyers and sellers

11 [639] SALE OF GOODS CIF/FOB contract – Duties of buyers and sellers – Opening letters of credit – Nomination of ships – Sale of goods – Contracts for sale of logs – FOB – CIF – Duties of buyers and sellers – Opening letters of credit – Nomination of ships.

Summary :

The plaintiff claimed against the defendants damages for breach of two contracts of sale of logs, one made in 1976 and the other in 1977 and supplemental agreements thereto. He claimed a sum of S$95,994.20 being the aggregate differences between the contracted prices and the prices of the logs which the plaintiff had resold to third parties. The High Court found as a fact that the plaintiff had sufficient logs for delivery in both transactions. The plaintiff contended: (a) by failing to provide the vessel to take delivery under an FOB contract, the defendants were in breach of the first contract; (b) by failing to open L/C or amend the L/C for the balance of goods under the CIF contract, the defendants were in breach of the second contract.

Holding :

Held: (1) the defendants under the 1976 agreement were obliged to nominate and send a vessel to load the logs; (2) it was the duty of the defendants under the 1977 agreement to open the second letter of credit. The judgment of Lai Kew Chai J in this case was affirmed by the Court of Appeal (Wee Chong Jin CJ, Kulasekaram and Rajah JJ) in Civil Appeal No 61 of 1982, on 18 April 1983. The Honourable Chief Justice in an oral judgment Held: (1) under an FOB contract, as the buyer had failed to procure or nominate a vessel, he was not entitled to raise the question whether the seller had the goods for delivery and he was in breach of the contract in law; (2) under a CIF contract, as the buyer had failed to open or establish a letter of credit before the stipulated date, he was not entitled to question whether the seller had goods for delivery, and he was in breach of contract in law; (3) that the seller might not have the goods to deliver in the circumstances is not a good defence for the plaintiff's claim.

Digest :

Gan Kee Cheow t/a Moh Seng Co v Peter & William Co (Pte) Ltd [1983] 2 MLJ 28 High Court, Singapore (Lai Kew Chai J).

640 Commodity trading -- Payment by transferable irrevocable sight letter of credit

11 [640] SALE OF GOODS Commodity trading – Payment by transferable irrevocable sight letter of credit – Refusal of bank to effect transfer

Summary :

This was an appeal from the Court of Appeal (see [1986] 1 MLJ 287) reversing the decision of the High Court (see [1985] 2 MLJ 81). On appeal to the Privy Council, the appellants contended that: (a) on the true construction of art 46 UCP, they did not contemplate and were not concerned with the transfer of a credit by the issuing bank; they were only concerned with the transfer of a credit by other banks such as the advising bank. Therefore, the respondents were not entitled to require the appellants to transfer the credit at all; (b) even if the first contention was wrong, the appellants were under no obligation to effect a transfer except to the extent and in the manner expressly consented to by it. In this case, the appellants had not expressly consented to either the extent or manner of the particular transfer requested by the respondents.

Holding :

Held: (1) the appellants' first contention may be supported by art 46(b) and (f) and it is arguable that a transfer by the issuing bank is not contemplated. However, their Lordships consider it unsafe to form a conclusive opinion without the assistance of expert evidence; (2) their Lordships depart from the Court of Appeal's construction of art 46(a) and (b) in that the consent contemplated by art 46(b) is a consent to effect the transfer to the particular extent and manner requested. Such a consent cannot be given in blanket form in advance, so as to apply to any request for transfer which may subsequently be made whatever its extent or manner may be. It has to be an express consent made after the request and it has to cover both the extent and the manner of the transfer requested.

Digest :

Bank Negara Indonesia 1946 v Lariza (S) Pte Ltd [1988] 1 MLJ 205 Privy Council Appeal from Singapore (Lord Brandon of Oakbrook, Lord Ackner, Lord Oliver of Aylmerton, Sir John Stephenson and Sir Edward Eveleigh).

641 Commodity trading -- Payment by transferable irrevocable sight letter of credit

11 [641] SALE OF GOODS Commodity trading – Payment by transferable irrevocable sight letter of credit – Refusal of bank to effect transfer – Banking law – Letter of credit – Transferable and irrevocable sight letter of credit – Whether issuing bank under contractual obligation to effect transfer – Claim against issuing bank for indemnity – Breach of contract – Negligence.

Summary :

In this case, the plaintiffs were commodities traders and the defendants were bankers. The plaintiffs agreed to sell palm oil to their buyers and agreed to buy from their suppliers similar quantities of palm oil at lower prices. It was agreed between the plaintiffs and their buyers that payment for the palm oil was to be effected by a transferable and irrevocable sight letter of credit the opening of which was to be advised by the Bank of Canton. The defendants eventually issued the required transferable letter of credit in favour of the plaintiffs. The Bank of Canton refused to transfer the letter of credit. The defendants also refused the plaintiffs' request to transfer the letter of credit to their suppliers, who sued the plaintiffs for damages for breach of contract as the plaintiffs did not take delivery of the palm oil. The suppliers obtained judgment against the plaintiffs. The plaintiffs then sought a declaration that they were entitled to be indemnified by the defendants against the claims of the suppliers.

Holding :

Held: (1) the plaintiffs had no cause of action against the defendants as the issuing bankers of the letter of credit; (2) an issuing bank of the letter of credit has no obligation whatsoever to enter into a new contract with an intended transferee. The defendants as the issuing bank only had the obligation to pay against conforming documents which were never tendered; (3) the claim in negligence must also fail. The plaintiffs' claim should be dismissed with costs.

Digest :

Lariza (Singapore) Pte Ltd v Bank Negara Indonesia 1946 [1985] 2 MLJ 81 High Court, Singapore (Lai Kew Chai J).

Annotation :

[Annotation: The decision of the High Court was reversed by the Court of Appeal ([1986] 1 MLJ 287) but subsequently restored by the Privy Council ([1988] 1 MLJ 205).]

642 Commodity trading -- Payment by transferable irrevocable sight letter of credit

11 [642] SALE OF GOODS Commodity trading – Payment by transferable irrevocable sight letter of credit – Refusal of bank to effect transfer – Commodity trading – Contract – Agreement to pay by means of transferable irrevocable sight letter of credit – Refusal of bank to effect transfer.

Summary :

The appellants were dealers in commodities and had agreed to sell certain quantities of palm oil to their buyers and agreed to buy from their suppliers similar quantities at lower prices. It was agreed that the payment for the palm oil was to be made by means of a transferable irrevocable sight letter of credit to be opened in favour of the appellants, the opening of which was to be advised through the Bank of Canton. The respondents eventually issued the required letter of credit in favour of the appellants. The appellants requested the respondents to transfer in part the letter of credit to their suppliers, but the respondents suggested that transfer be effected by the Bank of Canton. The Bank of Canton declined to effect the transfer on the ground, inter alia, that they were merely the advising bank without any engagement on their part. Subsequently, the respondents persisted in their refusal to effect the transfer and, as a result, the appellants failed to perform their obligations to their suppliers, and were sued for damages for breach of contract and judgment was entered against them. The appellants then sought a declaration that they were entitled to be indemnified by the respondents against the claims of their suppliers. The High Court dismissed their claim, holding that the appellants had no cause of action against the respondents, and the latter had no obligation to effect the transfer as requested (see [1985] 2 MLJ 81). On appeal,

Holding :

Held, allowing the appeal: the respondents by issuing the irrevocable letter of credit designated as transferable must be taken to have consented to a transfer in accordance with the terms thereof. They were under an obligation to effect the transfer as requested by the appellants and should have done so.

Digest :

Lariza (Singapore) Pte Ltd v Bank Negara Indonesia 1946 [1986] 1 MLJ 287 Court of Appeal, Singapore (Wee Chong Jin CJ,LP Thean and Chua JJ).

643 Conditions and warranties -- Breach of condition

11 [643] SALE OF GOODS Conditions and warranties – Breach of condition – Goods not to specification – Waiver – Damages – Sale of Goods – Breach of condition – Waiver – Election to treat as breach of warranty – Sale of Goods (Malay States) Ordinance 1957, ss 13(1) and 59(1)(b) – Damages – Sale of goods – Breach of warranty – Quantum.

Summary :

The defendant/appellant had agreed to sell a metal melting furnance to the plaintiff/respondent and had given an undertaking that the melting furnace would have a temperature of not lower than 2,600¡F. This specification was not satisfied. The respondent brought an action alleging breach of an express condition of the contract and claimed the total sum of RM29,301.38 as damages. The learned trial judge held that the failure on the part of the appellant to supply a furnace according to specifications constituted a breach of the condition of the contract entitling the respondent to treat it as a breach of warranty, and awarded a total sum of RM7,501.38 as damages for loss of profits. The defendant appealed.

Holding :

Held, dismissing the appeal: (1) the learned trial judge was correct in finding that there was a breach of a condition of the contract which entitled the respondent/plaintiff to waive it and to elect to treat the breach as a breach of warranty within the meaning of s 13(1) of the Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957); (2) this case fell within the provision of s 74(1) of the Contracts (Malay States) Ordinance 1950, ie when the damages arising are such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

Digest :

Tham Cheow Toh v Associated Metal Smelters Ltd [1972] 1 MLJ 171 Federal Court, Kuala Lumpur (Azmi LP, Suffian and Ali FJJ).

644 Conditions and warranties -- Breach of contract

11 [644] SALE OF GOODS Conditions and warranties – Breach of contract – Goods not according to specification – Goods not merchantable and not fit for the purpose for which they were purchased – Damages

Summary :

The plaintiffs and the defendants were trading companies that, inter alia, deal with precision tools. The defendants through Alpha Tan contracted with the plaintiffs' Edan Chan Kean Fatt ('Edan Chan') to purchase 'combi countersunk and drills' ('the goods'). Alpha Tan placed the order orally after he had received the drawings from the end user, Polymicro. The drawings set out the specifications and the tolerance levels that were acceptable to Polymicro. The products were custom-made and not common user products and therefore, required stricter compliance with the specifications given in the drawings. Alpha Tan's evidence was that he gave a more open tolerance level. The dimensions in Polymicro's drawings, which he faxed to the plaintiffs, were left intact. He merely covered Polymicro's logo, name and address and the tolerance levels, and replaced them with the defendants' name and address but left out the tolerance levels so as to appear as if the drawings were the defendants' drawings. It is accepted by both parties that where tolerance was given, strict compliance with it was required. The position where there was open tolerance, however, was not agreed. Alpha Tan faxed the drawings sent to him by Polymicro. In the process of replacing Polymicro's name with the defendants' name in the drawings, he failed to transmit to the plaintiffs the tolerance levels specified in Polymicro's drawings. On receiving the orders from Alpha Tan, the plaintiffs placed orders with a Swiss company for the manufacture of the goods with the specifications sent to them by Alpha Tan. The tolerance to the angle and the tolerance range that was to apply where tolerance was not specified in Polymicro's drawings were not sent. The plaintiffs' manufacturers manufactured the goods and delivered them to the plaintiffs. The plaintiffs delivered the goods to the defendants under two invoices, No 0670 dated 15 January 1991 for S$108,915.80 and No 0704 dated 1 March 1991 for S$83,300.14, totalling S$192,215.94. The defendants in turn delivered them to Polymicro. The goods in invoice No 0704 were delivered to the end user without inspection. On 1 July 1991, Polymicro returned the goods to the defendants saying that the goods were not in accordance with specifications. The defendants paid the plaintiffs S$36,000 on 10 May 1991 and S$78,107.97 on 26 May 1991, leaving a balance of S$78,107.97 which was the subject of this action. The defence was that the oral contract required the plaintiffs to supply goods with the specifications stated in the invoices and that it was a term of the contract that the goods supplied should correspond with the description in the invoices; be of merchantable quantity; and be fit for the purpose for which the goods were bought. The defendants did not test the goods when they were delivered to the defendants but delivered them to Polymicro in circumstances where the plaintiffs well knew that the defendants, being a trading company, would deliver the precision tools to the end user without inspection. The defendants now say that there had been total failure of consideration and that accordingly, the plaintiffs should pay the defendants S$114,107.97 that was paid to them. Besides in-house tests, the defendants sent samples of the goods to the Singapore Institute of Standard and Industrial Research ('SISIR').

Holding :

Held, dismissing the claim and the counterclaim: (1) the goods were precision drills. The range of tolerance was given by Polymicro to the defendants in more ways than one. The defendants' then manager, Alpha Tan, chose to take advantage of Polymicro's drawings and in the process failed to convey to the plaintiffs the tolerance range that was acceptable to Polymicro. The defendants must take the blame for specifications in Polymicro's drawings that were not specified to the plaintiffs; (2) the court accepted the findings of SISIR and find as a fact that the goods delivered to the defendants under invoice No 0704 were not merchantable and could not be used for the purpose for which they were purchased since the plaintiffs were expressly informed by Alpha Tan of the particular purpose for which the goods were being bought, ie for drilling holes for the manufacture of disk drives in the computer industry and the holes were required for tapping purposes. The plaintiffs' Edan Chan would have been aware that they were precision goods for use in the computer industry and that strict compliance with specifications and dimensions was important; (3) at common law, payments made under a contract which is subsequently frustrated cannot be recovered if there is only a partial failure of consideration but the buyer can recover the amount attributed to the goods which are not merchantable or not fit for the purpose for which the goods were bought. The reason for this is that the risk in respect of those goods was on the seller and the same principle applies if the buyer has not paid the price in advance so that the buyer should only be liable for the proportionate part of the price of the goods. This was a case where the buyer had not paid the price in advance and the defendants were liable for the proportionate part of the price; (4) in this case, the plaintiffs had to deliver goods that conformed to description and the implied conditions. There was a right to reject the goods when they were delivered. That was not done because there was no inspection. All the parties, however, were aware that there was a delivery schedule and that the goods were to be resold and used by an end user; (5) the defendants' right to reject the goods after inspection upon delivery was different from their right to claim damages for breach of conditions. On the question of damages, buyers of custom-made precision tools cannot be treated as if they could go out into the market and buy those goods when they had supposed that they had already taken up goods which were in accordance with the contract and they had no notion, and could have had no notion, that they had any rights with regard to the contract but the remedy does not lie in asking for the price paid. Damages would be calculated on the basis of the difference between the contract price of S$83,300.14 in invoice No 0704 less the price for which the goods were sold.

Digest :

Idealnet Trading Pte Ltd v GTS German Tooling Systems (Singapore) Pte Ltd Suit No 1641 of 1991 High Court, Singapore (KS Rajah JC).

645 Conditions and warranties -- Breach of implied conditions

11 [645] SALE OF GOODS Conditions and warranties – Breach of implied conditions – Acceptance of goods by buyer – Contract – Sale of goods – Breach of implied conditions – Acceptance of goods by buyer – Sale of Goods Act 1893, ss 14 and 35.

Summary :

In this case, the respondent had bought a second-hand car from the appellants. The car was tested by the respondent's wife before the respondent agreed to buy it. The respondent gave the appellants a post-dated cheque in full payment. Subsequently, the car was found to be defective and the appellants were informed. The respondent stopped payment on his cheque. The appellants eventually sued for the price of the car. The respondent pleaded the car was not in a roadworthy condition in breach of an express or implied term of the sale. The learned district judge who tried the case gave judgment for the appellants, on the ground that the respondent had on the evidence failed to discharge the burden that lay on him. On appeal to the High Court, this judgment was reversed. It was held that there was ample evidence to show that the car was not roadworthy and that the respondent had rejected the goods within a reasonable time.

Holding :

Held: (1) the appellate court erred in disturbing the conclusion of the trial judge that the respondent had failed to prove that the car was unroadworthy. There was ample evidence for the finding of the trial judge and the appellate judge ought not to have disturbed his findings; (2) even on the assumption that the appellants were in breach of the implied conditions under s 14(1) and (2) of the Sale of Goods Act 1893, the respondent had not rejected the car within a reasonable time and must therefore be deemed to have accepted the car.

Digest :

Eastern Supply Co v Kerr [1974] 1 MLJ 10 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekeram JJ).

646 Conditions and warranties -- Buyer's order containing condition that no guarantee or warranty given by seller

11 [646] SALE OF GOODS Conditions and warranties – Buyer's order containing condition that no guarantee or warranty given by seller – Oral representation – Motor car supplied not complying with regulations – Claim for damages – Contract – Sale of goods – Collateral warranty – Purchase of motor car – Buyer's order containing condition that no guarantee or warranty given by the seller – Oral representation that motor car would conform to Australian Design Regulations – Motor car supplied not complying with regulations – Claim for damages for breach of warranty – General and special damages – Special damages not pleaded – Application to amend pleading – Costs.

Summary :

In this case, the respondent was a squadron leader in the Royal Australian Air Force. He wanted to buy a car and get the benefit of exemption from duty in Malaysia and Australia. He would have obtained the exemption if the motor car was taken out of Malaysia and if it complied with the Australian Design Regulations. He agreed to buy a car from the appellants and signed a buyer's order which contained a condition that no guarantee or warranty of any kind whatsoever was given by the company. However, the respondent only bought the car on the representations of the appellant's salesman that the car conformed to the Australian Design Regulations. The car supplied did not comply with the regulations and the respondent had to sell the car for RM6,500 thereby incurring a loss of RM11,219.54 (RM17,719.54RM6,500). The respondent also lost the fiscal advantage of importing the car to Australia duty free. The respondent claimed damages for breach of warranty. The learned trial judge found that there had been a warranty and this was breached by the appellants. He awarded general damages of RM10,500 with interest at 8% from the date of the writ to the date of payment and costs of the suit at the Subordinate Court's scale. No special damages were awarded as these were not pleaded and an application for amendment of the pleadings, was refused. The appellants appealed to the Federal Court contending that they were not liable or that the damages were too high while the respondents cross-appealed on the ground that the damages were too low and that he was entitled to interest from the date of accrual of the cost of action and to costs of the suit at the High Court scale and to special damages. At the hearing of the appeal, counsel for the appellants accepted the findings of facts by the learned trial judge. The appeal was therefore confined to legal issues on liability and quantum only.

Holding :

Held: (1) there can be no doubt that it was the representations by the salesman expressed by words and conduct that led the respondent to enter into the agreement to purchase the car. There was abundance of evidence showing that the representations were not innocent and on the contrary could even be considered to be deceitful or plain lies; (2) there was clear evidence that had it not been for the promise of the salesman to deliver him a car complying with the Australian Design Regulations, the respondent would not have signed the buyer's order; (3) the representations made by the salesman was binding on the appellants. It would lead to great mischief in the law and certainly would not be in the interest of business efficacy if representations made by a salesman in the course of his employment could not be relied upon by an intending purchaser whom he was dealing with; (4) the prohibition against admissibility of evidence under s 92 only applies where all as opposed to some only of the terms of the contract are written into the agreement. Thus, where some terms are given orally and some in writing oral evidence can be given to prove the terms agreed to orally; (5) where the oral representations as in this case are in conflict with the printed condition in the written contract, the representations must be given an overriding effect and the printed condition must therefore be rejected; (6) it made no difference in this case whether the English Sale of Goods Act 1893 or the English Sale of Goods Act 1979 applies in Penang. It was not necessary or relevant to decide the question as to which of the two English Sale of Goods Act is applicable; (7) the amount of damages which should be awarded in this case should be the financial loss directly suffered by the respondent as a result of the dealing with the appellants, ie RM11,219.54; (8) it was just and proper in this case that the learned trial judge should allow the amendment of the pleading to enable special damages to be awarded. On the basis of the evidence, special damages of RM2,341.35 should be awarded; (9) the costs in this case should be fixed at High Court scales as the case involved difficult questions of law, especially on the question of warrranty and measure of damages; (10) interest is a matter of discretion and on the facts of the case the learned trial judge was not in error to order interest to run from the date of the writ.

Digest :

Tan Chong & Sons Motor Co (Sdn) Bhd v McKnight [1983] 1 MLJ 220 Federal Court, Ipoh (Wan Suleiman, Salleh Abas and Abdul Hamid FJJ).

647 Conditions and warranties -- Condition precedent

11 [647] SALE OF GOODS Conditions and warranties – Condition precedent – Fulfilment – Breach

Summary :

The defendants contracted to sell the plaintiff a certain number of Pillar or Carolus dollars and the contract was reduced to writing as follows: 'Sold to Lim Sim Kay 12,000 Carolus, 110%, if sent by bank, at the earliest steamer's arrival. Chopped dollars not to be included. Signed pp Fraser and Co, AM Watson.' The defendants then, with the plaintiff's knowledge and consent, despatched a telegram to the bank in question as follows: 'Carolus dollars agreed 110%, 12,000, if without chops, ship per first steamer'. The bank replied same day, by telegraph, 'cannot now sell Carolus under 12. No picking or refusing allowed. Price here 12 firm. Reply'.

Holding :

Held: (1) and the condition precedent had not been fulfilled; (2) the sending by the bank of the dollars was a condition precedent to the defendants' liability to the plaintiff; that the reply of the bank refusing to allow 'picking or refusing' was a refusal to send the dollars asked for;the sending thereafter by the bank to the defendants of same amount of Carolus dollars, partly chopped and partly unchopped for a third party was also not a fulfilment of the condition precedent.

Digest :

Lim Sim Kay v Fraser & Co [1874] 1 Ky 380 High Court, Straits Settlements (Ford J).

648 Conditions and warranties -- Delivery of goods of a different brand from those ordered

11 [648] SALE OF GOODS Conditions and warranties – Delivery of goods of a different brand from those ordered – Breach of warranty – Sale of goods – Breach of warranty – Damages – Assessment of.

Summary :

This was an action for breach of warranty of a contract under which the defendants were to supply shovels to the plaintiffs bearing the brand 'Spatenmann'. The shovels actually supplied were of another brand. The learned magistrate holding that there was a breach of warranty assessed damages for the plaintiffs on the basis of the difference between the market value of the goods supplied and the market value of the goods ordered, both values being those as on the date of delivery of the goods. This decision was reversed in the High Court on the finding that the evidence disclosed no breach of warranty. On appeal,

Holding :

Held: there was a breach of warranty and that the damages were correctly assessed by the learned magistrate.

Digest :

Lee Heng & Co v C Melchers & Co [1963] MLJ 47 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill and Good JJA).

649 Conditions and warranties -- Evidence of contract

11 [649] SALE OF GOODS Conditions and warranties – Evidence of contract – Breach of warranty – Counterclaim

Summary :

The plaintiffs' claim was for S$107,094.53 being the balance due for goods sold and delivered, in particular for goods sold and delivered between 6 November 1984 and 26 June 1985. The defendants denied liability and counterclaim against the plaintiff for breach of warranty in delivering sub-standard goods.

Holding :

Held, dismissing the plaintiffs' claim and allowing the counterclaim: (1) it was the plaintiffs' duty to deliver the goods in accordance with the contract. The place of delivery in this case was to be at the project site and the plaintiff ought to have known that delivery would be acknowledged by the defendant; (2) a warranty is an agreement with reference to goods which are the subject of a contract of sale but collateral to the main purpose of that contract, and a breach of warranty gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. Where the buyer has accepted all of the goods, the breach of any condition to be fulfilled by the seller can prima facie be treated only as a breach of warranty, and where the buyer elects or is forced in such circumstances to treat a breach of condition as a breach of warranty, the buyer cannot reject the goods but may set up the breach of warranty in diminution or extinction of the price or may sue for damages; (3) the measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty; (4) the plaintiffs supplied poor quality goods in breach of warranty by them to the defendants.

Digest :

Siem Seng Hing & Co (Pte) Ltd v Loe Marn Hong t/a Cliffton Construction Co Suit No 9743 of 1985 High Court, Singapore (KS Rajah JC).

650 Conditions and warranties -- Goods not according to specification

11 [650] SALE OF GOODS Conditions and warranties – Goods not according to specification – Breach of – Damages – Sale of goods – Goods not according to specification – Whether breach of condition or warranty – Sale of Goods Ordinance 1957, ss 12, 13.

Summary :

In this case, the plaintiffs claimed damages for breach of warranty of a metal melting furnace. The defendants had agreed to sell the furnace to the plaintiff and had given an undertaking that the melting furnance will have a temperature of not lower than 2,600¡F. The furnace supplied by the defendants in fact did not meet the required temperature.

Holding :

Held: the failure on the part of the defendant to supply a furnace which would meet the required temperature constituted a breach of the condition of the contract entitling the plaintiffs to treat such breach as a breach of warranty.

Digest :

Associated Metal Smelters Ltd v Tham Cheow Toh [1971] 1 MLJ 271 High Court, Kuala Lumpur (Abdul Hamid J).

Annotation :

[Annotation: The decision of the High Court was affirmed by the Federal Court on appeal. See [1972] 1 MLJ 171.]

651 Conditions and warranties -- Merchantable quality

11 [651] SALE OF GOODS Conditions and warranties – Merchantable quality

Summary :

Held: the words 'all the tin that goes out of my shop is good' amount to a warranty that such tin is pure and merchantable.

Digest :

Kho Chin Jan v Lim Tow [1836] 1 Ky 22 High Court, Straits Settlements (Norris J).

652 Conditions and warranties -- Merchantable quality

11 [652] SALE OF GOODS Conditions and warranties – Merchantable quality – Onus of proving unmerchantability

Digest :

Everjoy Enterprises Pte Ltd v Combi (Singapore) Pte Ltd District Court Appeal No 46 of 1994 High Court, Singapore (Judith Prakash JC).

See SALE OF GOODS, Vol 11, para 688.

653 Conditions and warranties -- Payment by letter of credit

11 [653] SALE OF GOODS Conditions and warranties – Payment by letter of credit – Condition precedent to seller's obligation to deliver goods – Where letter of credit not opened – Performance guarantee – When demand can be made

Summary :

The plaintiffs contracted to sell to the defendants a pumping system and a cargo valve control system for S$1m. Delivery of the equipment was to be in instalments. Under the agreement, the defendants were required to make part payment equivalent to 30% of the purchase price and the plaintiffs were required to deliver to the defendants a banker's performance guarantee for an equivalent amount, which they did. The defendants were further required to make payment of the balance of the purchase price by way of an irrevocable letter of credit issued by a Singapore bank. The defendants failed to do this. By letters dated 13 and 27 October 1992, the plaintiffs informed the defendants that in the event the letter of credit was not issued before 1 November 1992, they would treat the defendants as having repudiated the contract. The defendants continued to fail in their obligation but instead called on the performance guarantee. To forestall receipt of any payment under the performance guarantee, the plaintiffs applied for and obtained an ex parte injunction restraining the bank from making any payment. The matter was then heard inter partes.

Holding :

Held, allowing the injunction: (1) when a contract for the sale of goods stipulates for payment for the goods by a letter of credit, it must be established by the agreed date or a reasonable time before shipment date to enable the seller to prepare the goods. The letter of credit is a condition precedent to the seller's obligation to ship or deliver the goods and the time for establishing the credit is of the essence of the contract of sale; (2) the opening of the letter of credit is not merely a matter of mode of security which enables the seller to obtain payment before the goods are delivered. If the buyer fails to establish the credit, the seller at his option may treat the contract as discharged and recover damages for breach of contract from the buyer unless the seller has waived the requirement for the credit. Where the seller waives the original time for the opening of the credit, the credit must be established within the extended time; (3) the principle that except in cases of established fraud known to the issuer of the performance guarantee, he cannot be restrained from making payment on the ground that the party to the underlying contract disputes liability is not an immutable principle of universal application; (4) a demand under the performance guarantee can be made only when 'the seller has failed or refused to fulfil his obligation under the contract'. The seller's failure or refusal is a condition precedent to the buyer making a demand.

Digest :

Kvaener Singapore Pte Ltd v UDL Shipbuilding (Singapore) Pte Ltd [1993] 3 SLR 350 High Court, Singapore (GP Selvam JC).

654 Conditions and warranties -- Sale of tallow of inferior quality

11 [654] SALE OF GOODS Conditions and warranties – Sale of tallow of inferior quality – Notice by buyer – Seller knew purpose for use of tallow – Breach of condition – Sale of Goods (Malay States) Ordinance 1957, s 16(1)(a) – Sale of tallow – Tallow supplied of inferior quality – Notice by buyer – Seller knowing purpose for which tallow required by buyer – Reliance on skill and judgment – Implied condition or warranty – Repudiation – Damages.

Summary :

The plaintiffs claimed RM2,956.50 being the cost of 219 tins of tallow supplied to the defendant company at RM13.50 per tin at their request on 14 February 1961. The defendants denied the claim stating that firstly they only ordered 100 tins of tallow and secondly that the tallow supplied was of inferior quality and not fit for the purposes for which it was supplied, although the plaintiff had by a verbal agreement on 10 February 1961 expressly warranted that the tallow would be of a quality fit for the manufacture of biscuits and free from faults and defects. The defendants used 15 of the tins supplied to manufacture 242 tins of biscuits and found the biscuits wholly unsaleable. The plaintiff was informed of the unsuitability of the tallow and asked to remove the balance of 85 tins together with the 119 tins supplied in excess which the plaintiff failed or neglected to do. The defendants further counterclaimed damages for loss of 242 tins of biscuits at RM2.20 per tin less the value of 15 tins used in the manufacture of biscuits leaving a balance of RM329.90.

Holding :

Held: (1) there was an implied condition (within the meaning of s 16(1)(a) of the Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957) in the contract between the parties that the tallow supplied would be reasonably fit for the manufacture of biscuits; (2) there was a breach of condition and there was no bar to the defendants repudiating the contract.

Digest :

Khong Seng v Ng Teong Kiat Biscuit Factory Ltd [1963] MLJ 388 High Court, Kuala Lumpur (Gill J).

655 Conditions and warranties -- Shortage of supply

11 [655] SALE OF GOODS Conditions and warranties – Shortage of supply – Non-delivery of goods – Exception clause – Contract – Sale of goods – Shortage of supply – Non-delivery of goods – Whether valid excuse – Exceptions clause – 'Subject to force majeure and shipment' – Construction – Liability of sellers – Measure of damages.

Summary :

The appellants entered into a contract with the respondents for the sale of 50 tons of Zanzibar cloves, of which the respondents were importers and stockists. Due to shortage of supply as a result of insufficient quantity of cloves being shipped by the Zanzibar suppliers, the respondents could not carry out all their commitments and wrote to the appellants terminating their contract. The appellants had, however, in the meantime made two contracts for the resale of the cloves. Since the appellants did not receive any cloves from the respondents, they were unable to fulfil their contracts of resale. They agreed, however, to pay compensation totalling S$43,000. In an action for damages for breach of contract brought by the appellants against the respondents, the trial judge held that the respondents were protected from liability by the exception clause, and that the quantity of cloves in fact shipped by the respondents were in fulfilment of definite contracts which had been entered into by the respondents and which were subject to no condition as to shipment. He accordingly held that the respondents were under no obligation to supply the cloves to the appellants. The Court of Appeal, by a majority, affirmed the decision of the learned trial judge. On further appeal to the Privy Council,

Holding :

Held: the exceptions clause 'subject to force majeure and shipment' must be construed as meaning that the contract was: (a) conditional upon the sellers not being prevented by circumstances amounting to force majeure from carrying it out; and (b) conditional upon the sellers being able to procure the shipment of cloves to the quantity and of the description referred to in the contract. The words 'subject to shipment' in this contract could not be construed as making the contract conditional on the respondents choosing to ship the cloves and thinking fit to allocate them to this particular contract; nor could they be construed as enabling the respondents to excuse their failure to deliver by reference to their other commitments.

Digest :

Hong Guan & Co Ltd v R Jumabhoy & Sons Ltd [1960] MLJ 141 Privy Council Appeal from Singapore (Lord Tucker, Lord Jenkins and Lord Morris of Borth-y-Gest).

656 Conditions and warranties -- Specific condition overriding general condition

11 [656] SALE OF GOODS Conditions and warranties – Specific condition overriding general condition – Payment upon presentation of documents – General condition overridden by specific term of payment

Summary :

On 5 October 1989, the defendants agreed to sell the plaintiffs 250 metric tons of Polypropylene, for shipment from USA to Singapore by 31 October 1989. The mode of payment as stipulated in the sales order, which was signed by both parties, was 'By TT to our account upon presentation of Bill of Lading or Delivery Order'. On 6 November 1989, the defendants informed the plaintiffs of the shipment of the goods from Houston and requested payment. On 15 June 1989, the plaintiffs again requested payment, failing which they would dispose of the cargo due to non-performance. The plaintiffs replied that they were ready to pay on presentation of the bills of lading. The defendants disposed of the goods. The plaintiffs sued for damages for breach of contract. The damages were for loss of profit on the sub-sale. They applied for summary judgment. The defendants contended that the sale was subject to general condition 4 of the sales order that the sellers 'shall have the right to demand cash before delivery notwithstanding any agreement to the contrary'. The defendants were given unconditional leave to defend. The plaintiffs appealed.

Holding :

Held, allowing the appeal: (1) the terms of the contract were clear, payment upon presentation of the bills of lading or delivery order. The defendants must present the documents called for before the plaintiffs were liable to pay; (2) general condition 4 relied upon was overridden by the specific term of payment; (3) there was no defence to the action. There would be interlocutory judgment for the plaintiffs for damages to be assessed.

Digest :

Hemet Handel Trading (S) Pte Ltd v VM Valibhoy Trading Pte Ltd Suit No 2248 of 1989 High Court, Singapore (Chan Sek Keong J).

657 Conditions and warranties -- Unascertained goods

11 [657] SALE OF GOODS Conditions and warranties – Unascertained goods

Summary :

A contract for the sale of gramophone records which was to be operative during a fixed term, provided minimum prices for the resale of the records by the buyer either during or after the end of the term. The sellers, who described themselves as the sole agents in the Straits Settlements and Federated Malay States for the sale of the records in question, represented, by a recital in the contract, that they had undertaken towards their suppliers that they would control the selling prices of sub-agents and would enforce, among their sub-agents, the minimum selling prices, and that they would cancel the agreements of sub-agents who failed to observe the obligation. The sellers failed to prevent sales, below minimum prices, by their sub-agents.

Holding :

Held: the representation by the sellers, contained in the recital, was a basis of the contract, and the breach of it discharged the buyers from liability to perform their part of the contract.

Digest :

Lohmann & Co Ltd v Mong Huat & Co [1931] SSLR 129 High Court, Straits Settlements (Thorne J).

658 Construction of contract

11 [658] SALE OF GOODS Construction of contract

Summary :

The plaintiff and defendants entered into a contract by which the plaintiff 'engaged to deliver to the defendants, all sugar manufactured on his estate from 1 October 1857 to 30 June 1858, both inclusive'.

Holding :

Held: these words meant that the sugar was to be manufactured, and not the delivery given, between those dates.

Digest :

Chasseriau v Mathisu & Co [1858] 1 Ky 117 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Maxwell R).

659 Conversion and detinue -- Nemo dat rule

11 [659] SALE OF GOODS Conversion and detinue – Nemo dat rule – Conflict between pledgees of goods and purchaser in good faith – Exceptions to nemo dat rule – Sale of Goods Act 1979, ss 21(1), 21(2) & 22 – Factors Act 1889, s 2(1)

Summary :

P, a bank in Somalia, were pledgees of a cargo of rice on board the MV Lynna. When the Lynna arrived in Singapore, the rice was brought into Singapore without the permission of P or the buyers of the rice. Part of the rice was bought by D at a price per bag equal to about half that paid by the original buyers. P sued D for conversion and detinue in respect of the rice that the latter had bought. D claimed that they bought and acquired good title to the rice without any notice of P's title. In consideration of D releasing the goods to P, P had furnished a bank guarantee in favour of D. P sought the discharge of the guarantee.

Holding :

Held, granting P's claim: (1) the general rule under the Sale of Goods Act 1979, s 21(1), was that where goods are sold by a person who is not the owner and who does not sell them with the consent of the owner or his authority, the buyer acquires no better title to the goods than the seller had; (2) the three relevant exceptions to the general rule are sales in the market overt, sales by mercantile agents (as provided under the Sale of Goods Act, s 21(1) and the Factors Act, s 2(1)), and where the owner was estopped from denying the owner's authority to sell; (3) D were getting the rice on the cheap and the circumstances of purchase were highly suspicious. P had therefore shown that D were not acting in good faith and without notice that the sale to them was made without authority; (4) the sellers of the rice, who were charterers of the MV Lynna, were carriers and were not mercantile agents when they sold the rice; (5) the third exception did not apply because there was no evidence that the owners of the rice had done anything that would raise an estoppel under the Sale of Goods Act; (6) as D had not established any of the exceptions to the nemo dat rule, P as pledgees or holders for value of the bills of lading were entitled to the rice. P were therefore entitled to the damages claimed which were not disputed and interest at 12%pa and costs. The guarantee in favour of D was also discharged.

Digest :

Commercial & Savings Bank of Somalia v Joo Seng Co [1989] 2 MLJ 200 High Court, Singapore (Lai Kew Chai J).

660 Credit card payment -- Whether conditional or absolute

11 [660] SALE OF GOODS Credit card payment – Whether conditional or absolute – Nature of relationship between vendor, cardholder and card-issuing company – Obligation of card-issuing company towards vendors – Cardholder's obligation to pay – Contract – Implied terms – Court seeking to infer from conduct and circumstances what term was fair to imply into contract

Summary :

CCS Ltd ('the company') operated a scheme under which it issued charge cards to cardholders who used them for the purchase of petrol from various garages. The system was similar to other credit card purchases, the cardholder signing a slip which would eventually be presented by the vendor to the company for payment. The company financed its business by factoring its debts to C Ltd. In January 1985, the company went into creditors' voluntary liquidation. Many of the vendors had not yet been paid. The liquidator collected money from cardholders. The present action was brought to determine whether the money should be paid to C Ltd (the factoring company) or to the unpaid vendors. It was argued by the vendors that payment by card was only conditional payment and that if the company failed to pay, the cardholders were obliged to do so. On this basis, the vendors claimed the benefit of the money collected from the cardholders. The High Court held that the money should be paid to C Ltd. An appeal was brought to the Court of Appeal.

Holding :

Held, dismissing the appeal: (1) whether payment by credit card amounted to absolute or conditional payment by the cardholder to the vendor depended upon the terms of the contract between both those parties; (2) this contract was at best oral. The sale contract was made by putting fuel into the tank before the parties had met. The tender of the card and signing of the voucher were often conducted in complete silence. In these circumstances, the correct approach was that the court should seek to infer from the parties' conduct and the surrounding circumstances what was a fair term to imply; (3) in this case, the vendor knew that he would be paid by the company. He did not know who the purchaser was nor could he trace him. These factors pointed to the conclusion that the vendor had agreed to accept payment by card as a substitute for cash, and that the purchaser's obligation to the vendor ceased upon the acceptance of payment by card; (4) the cardholder's obligation to pay the company arose irrespective of whether the company had paid the vendors. If the vendors' argument was correct, this would result in the possibility that the cardholder would have to pay twice, once to the company and in the event that the vendor was not paid by the company, again to the vendor. It was not contemplated in the cardholder agreement that the cardholder would be called upon to pay the vendor in the event that the company failed to do so; (5) the Court of Appeal agreed with the trial judge that the cardholder's obligations to the vendors were absolutely, not conditionally, discharged by the vendor accepting the voucher signed by the cardholder. The appeal was accordingly dismissed.

Digest :

Re Charge Card Services Ltd [1988] 3 All ER 702 Court of Appeal, England (Sir Nicholas Browne-Wilkinson VC, Nourse and Stuart-Smith LJJ).

661 Damages -- Assessment of

11 [661] SALE OF GOODS Damages – Assessment of – Breach of warranty – Sale of goods – Breach of warranty – Damages – Assessment of.

Summary :

Held: (per Thomson CJ) 'There is no corresponding subsection in s 59 of our Sale of Goods Ordinance (to s 53(3) of the Sale of Goods Act 1893, on the measure of damages in such cases). The law on the subject in this country is the general law relating to compensation for loss caused by breach of contract. This is set out in s 74 of the Contracts (Malay States) Ordinance which is the same as s 73 of the Indian Contract Act which was held by the Privy Council in Jamal v Dawood 43 IA 6 to be merely declaratory of the English common law relating to damages.'

Digest :

Lee Heng & Co v Melchers & Co [1963] MLJ 47 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill and Good JJA).

662 Damages -- Claim for damages for loss of use of machine

11 [662] SALE OF GOODS Damages – Claim for damages for loss of use of machine – Whether agent liable – Whether s 16(1)(b) of the Sale of Goods Act applied – Sale of Goods Act, s 16(1)(b) – Contract – Contract between agent and plaintiff – Claim for damages for loss of use of machine – Whether agent liable – Terms of contract – Contracts Act 1950 (Act 136), s 183(a).

Summary :

The plaintiff, the defendant and Credit Leasing Bhd agreed to an agreement whereby Credit Leasing Bhd should lease to the plaintiff a Charmilles Eleroda 10 Spark Erosion Machine and that the defendant should sell to Credit Leasing Bhd the machine to enable Credit Leasing Bhd to lease it to the plaintiff. Pursuant to this arrangement, the defendant sold the machine to Credit Leasing Sdn Bhd by contract dated 28 June 1977 and Credit Leasing Bhd, entered into an agreement dated 22 February 1978 with the plaintiff for the lease of the machine to the plaintiff (P2). Pursuant to the arrangement, a contract dated 5 July 1977 (P1) was executed between the plaintiff and the defendant for the supply of the machine by the defendant. The plaintiff claimed damages for loss of use of the said machine. The President of the Sessions Court gave judgment for the plaintiff in the sum of RM12,000 and costs. The defendant appealed against the decision of the President.

Holding :

Held, allowing the defendant's appeal: (1) it was not correct for the President to consider the contract between the plaintiff and the defendant as one of sale and purchase. Since the contract P1 was not one of sale and purchase, there was no condition of merchantable quality implied in it under s 16(1)(b) of the Sales of Goods Act. Since the contract P1 was not a hire-purchase contract there was no condition of merchantable quality implied under s 6(3) of the Hire Purchase Act 1967 (Act 212); (2) it was clear from the documents and other evidence that the defendant sold the machine on behalf of the Switzerland company and that the defendant entered into the contract P1 also as agent for the Switzerland company; (3) under s 183(a) of the Contracts Act 1950 (Act 136), the defendant as agent for Ateliers des Charmiles SA of Switzerland was bound not only by the contract of the sale of the machine to Credit Leasing Bhd but also by the contract P1 entered into by the defendant with the plaintiffs; (4) the 'break-down' from May to August 1978 was allegedly the result of mistake of the mechanic in fixing the microfin. The alleged mistakes of the mechanic was not pleaded in the statement of claim. Moreover, P1 which was dated 5 July 1977 had nothing to do with the microfin which was bought by the defendant under contract P3A of 12 January 1978. It was therefore not correct for the President to find that the defendant was liable for damages under P1 in respect of the failure of the machine to produce the product as expected by the plaintiff from May to August 1978.

Digest :

C Melchers & Co v Kejuruteraan Faun Yee Sdn Bhd [1984] 2 MLJ 337 High Court, Kuala Lumpur (Wan Hamzah J).

663 Damages -- Contract to sell and deliver urea

11 [663] SALE OF GOODS Damages – Contract to sell and deliver urea – Breach of – Measure of damages – Sale of goods – Contract to sell and deliver urea – Breach of – Measure of damages – Penalty clause.

Summary :

The plaintiff's claim against the defendant was for damages suffered by the plaintiff by the failure of the defendant to observe the terms and conditions of a written contract dated 12 March 1968, entered into between the plaintiff and the defendant. The following facts were not in dispute. It was agreed between the plaintiff and the defendant that the plaintiff should sell and deliver to the defendant, and the defendant should buy and accept from the plaintiff, 50,000 metric tons of urea at US$69.00 per metric ton. It was a condition of the contract that payment should be made by way of letters of credit opened in favour of the plaintiff on various specified dates. The defendant failed to open the letters of credit on the due dates. The defendant admitted entering into the contract but contended that it was not entering into it as principal but as broker or agent, of which it was alleged the plaintiff knew, and that therefore the action did not lie against the defendant because it was merely acting as a broker or agent for a known principal. Counsel for the plaintiff submitted that the defendant had entered into the contract as principal and that no extrinsic evidence could be adduced by the defendant to show that it was acting as agent. In order to fulfil the contract with the defendant, the plaintiff entered into a contract dated 10 March 1968, to purchase 50,000 metric tons of urea at US$66 per metric ton from Chimimport of Bulgaria. When the plaintiff failed to establish the necessary letter of credit, Chimimport claimed damages for non-fulfilment of the contract and finally settled for agreed damages of US$33,000, being 1% of the amount of the contract. Under the penalty clause, the plaintiff had to pay 2% of the total amount of the contract to Chimimport. The damages claimed by the plaintiff were for the sum of Singapore $549,000 based on the loss of profit (US$150,000) plus damages (US$33,000) which it had to pay to the supplier. However, the defendant contended that damages in this case were limited to the amount set out in the penalty clause. Thus one issue, inter alia, to be determined was the measure of damages to be awarded in this case.

Holding :

Held: (1) the defendant appeared, on the face of the contract, to have been personally a contracting party and it must therefore be held to have entered into the contract as principal and it could not adduce evidence to show that it was acting as agent, by virtue of s 92 of the Evidence Act (Cap 5, 1970 Ed); (2) the general rule in the case of breach of contract is that the plaintiff, by way of damages, is entitled to be put in the same position as he would have been in if the contract had been completed. In this case, there was no available market for the urea. Therefore, the plaintiff was entitled to the loss of profit as well as to recover from the defendant the damages which the plaintiff had to pay to Chimimport; (3) where the stipulated sum does not compensate for the actual loss suffered, the plaintiff has an election of either suing on the penalty clause in which case he cannot recover more than the stipulated sum or he may sue for breach of contract and recover damages in full.

Digest :

Bulsing Ltd v Joon Seng & Co [1972] 2 MLJ 43 High Court, Singapore (Chua J).

664 Damages -- Delivery of wrong goods

11 [664] SALE OF GOODS Damages – Delivery of wrong goods – Claim for loss of further business – Whether damages allowed – Whether principles of Hadley v Baxendale applied – Contract – Sale of goods – Delivery of wrong goods – Claim for loss of further business – Whether damages allowed – Whether principles of Hadley v Baxendale applied.

Summary :

By a contract evidenced by an invoice dated 22 June 1984, the plaintiffs in this case sold and delivered to the defendants a quantity of grout for S$42,750 of which a balance of S$27,799.60 was unpaid by the defendants. Thereafter, by another contract as evidenced by an invoice dated 20 July 1984 (the second contract), the plaintiffs agreed to supply to the defendants a further quantity of grout. Unfortunately, the wrong goods were delivered to the defendants for shipment to their sub-purchaser in Indonesia. Upon discovering this, the plaintiffs immediately requested the defendants to return those goods, agreed to reimburse all expenses incurred and offered to despatch the grout as contracted. The defendants, however, rejected that offer and cancelled the order for the grout. On 23 February 1985, the plaintiffs instituted the present action against the defendants claiming for the balance sum of S$27,799.60 due under the first contract. The defendants counterclaimed for damages for breach of the second contract by the plaintiffs. Both applications for summary judgments were heard before the senior assistant registrar. Judgment for the defendants was assessed at S$49,313.73. One of the items of loss which was asked for in the assessment of damages was the loss of further business with an Indonesian purchaser of the defendants. On this item, the assistant registrar awarded a sum of S$30,000. The plaintiffs appealed against this assessment. The defendants claimed that the loss of this order by the defendants was one ordinarily and naturally within the contemplation of the parties as a consequence of the breach of the second contract by the plaintiffs: Hadley v Baxendale (1854) 9 Exch 341.

Holding :

Held, allowing the appeal: (1) the defendants had not discharged the burden of proving that the loss amounted to S$30,000, and on that ground alone, the award could not be supported; (2) on the facts, the loss of the defendants could not have been within the contemplation of the parties at the time of the contract.

Digest :

Australian Master Builders Co Proprietary Ltd v Pal-Asian Services [1987] 2 MLJ 573 High Court, Singapore (LP Thean J).

665 Damages -- Goods not according to specification

11 [665] SALE OF GOODS Damages – Goods not according to specification – Quantum – Damages – Sale of goods – Breach of warranty – Quantum

Digest :

Associated Metal Smelters Ltd v Tham Cheow Toh [1971] 1 MLJ 271 High Court, Kuala Lumpur (Abdul Hamid J).

See SALE OF GOODS, Vol 11, para 631.

666 Damages -- Goods of unmerchantable quality

11 [666] SALE OF GOODS Damages – Goods of unmerchantable quality – Quantum of damages – Market price or contract price

Summary :

This was an appeal by the defendants against the judgment for the sum of £20,792.74 entered for the plaintiffs as costs of repairs for the loss and damage suffered by reason of the unmerchantable quality of four trucks sold and delivered to them by the defendants. The plaintiffs were a company incorporated under the laws of the United Kingdom and had its place of business in the United Kingdom and were specialist forklift truck dealers. The company was set up by Gwent Mechanical Handling, the main distributors for Wales for Steel Materials Handling Ltd to import machinery into the United Kingdom for sale. The defendants were a private limited company incorporated in Singapore and its principal activities were in machinery and equipment. The plaintiffs agreed to purchase and the defendants agreed to sell four reconditioned trucks. The plaintiffs' claim was that by reason of the trucks being unmerchantable when the four secondhand trucks were sold and delivered, the plaintiffs had to repair the four trucks and had suffered loss and damage and claimed for £22,080.19. The defendants through their solicitors wrote to the plaintiffs' solicitors admitting liability. The only dispute was over the quantum of the plaintiffs' claim.

Holding :

Held, assessing the plaintiffs' claim: (1) the quantum of damages must be the cost of remedying the defects of the four trucks to the value warranted by the defendants. The buyers repaired the goods to bring the goods up to the contractual standard; (2) the defendants were aware that the plaintiffs were purchasing the four forklifts with a view to resale. The value of the goods could be fixed at the normal resale price. The claim, however, was for the cost of repairs; (3) under s 53(2) of the UK Sale of Goods Act 1979, the buyer can recover the difference between the value of the goods conforming to the contract and the value of those delivered, both values being ascertained at the contractual date of delivery. The contract price of the goods is not taken as a comparison but can be used as evidence of the market value of conforming goods. The value of conforming goods can be ascertained by reference to the market value where there is an available market but where there is no available market, as in this case, the price at which they would have been resold must be the value. The claim for repairs placed the forklifts at a price at which the trucks could have been resold; (4) the parties had agreed on what reconditioned trucks meant. The assessment of damages on the basis of the cost of repairs in the United Kingdom on the facts of this case could not be challenged. The trucks had arrived in an unmerchantable condition and the defendants had agreed that the plaintiffs could not sell them without the vehicles being repaired in the United Kingdom.

Digest :

MC Trading Co Ltd v Chin Chi Hau Pte Ltd Suit No 2058 of 1990 High Court, Singapore (KS Rajah JC).

667 Damages -- Loss of profit

11 [667] SALE OF GOODS Damages – Loss of profit – Failure to deliver goods which were unique and not available in market – Reasonable award of damages

See contract, para VIII [50].

Digest :

Bee Wah Plastic Factory Sdn Bhd v Francis Soh Kai Shuen (b/s Shatin Marketing & General Agencies) [1997] 4 MLJ 545 High Court, Penang (Jeffrey Tan JC).

668 Damages -- Loss of profit

11 [668] SALE OF GOODS Damages – Loss of profit – Available market – Sale of goods – Breach of contract – Question of damages – 'Available market' – Sale of Goods Ordinance 1957, s 56 – Contracts (Malay States) Ordinance 1950, s 74.

Summary :

The defendant had ordered a car from the plaintiff but defaulted in taking delivery. The plaintiff sued the defendant for breach of contract and claimed the sum of RM1,312.31 being the difference between the agreed retail price of RM6,390 and RM4,477.69 which was the price at which the car was eventually sold. The plaintiff contended that the particular make of car was not readily saleable and there was in fact no available market.

Holding :

Held: the plaintiff was entitled to be compensated for the loss of the profit based on the actual resale value of the car, and judgment should therefore be given for RM1,312.31.

Digest :

East Asiatic Co Ltd v Othman [1966] 2 MLJ 38 High Court, Kuala Lumpur (Abdul Azia J).

669 Damages -- Remoteness of

11 [669] SALE OF GOODS Damages – Remoteness of – Seller's duty to purchaser under a contract of sale – Defect in title of goods sold – Whether loss suffered by purchaser was foreseeable

See contract, para V [40].

Digest :

Champion Motors (1975) Sdn Bhd v Tina Travel & Agencies Sdn Bhd [1997] 2 MLJ 160 High Court, Kuala Lumpur (Abdul Kadir Sulaiman J).

670 Deed of arrangement -- Goods sold and delivered

11 [670] SALE OF GOODS Deed of arrangement – Goods sold and delivered – Consideration for – Whether necessary to support promise by way of deed of arrangement – Contract – Deed of arrangement – Consideration for – Whether necessary to support promise by way of a deed of arrangement.

Summary :

The issue before the High Court was purely a question of fact, that is, whether there was any consideration for the deed of arrangement to support the respondent's promise. The same issue fell to be determined by the Federal Court.

Holding :

Held, allowing the appeal: (1) the material facts were wholly overlooked. The estates were never the appellants' customers but were the respondent's own, and they settled accounts at all times with him. They never held the respondent out as their agent; (2) whereas the respondent paid for the goods, of which he had taken delivery with his own personal cheques, there was no evidence at all that he did so otherwise than as the appellants' customer. The appellants could not have sued any of the estates for any quantity of the goods sold and delivered because there was no proof of delivery to anybody but the respondent. Thus, once the evidence established that the respondent was a customer of the appellants, there was no need to explore the law as to consideration for a contract. Therefore, judgment must be entered for the appellants in the amount claimed, with interest and costs.

Digest :

Guthrie Waugh Bhd v Malaiappan Muthuchumaru [1972] 2 MLJ 62 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

671 Delivery -- CIF contract

11 [671] SALE OF GOODS Delivery – CIF contract – Whether seller may tender goods instead of documents – Contract – CIF contract – Construction – Whether CIF contract the seller may tender goods instead of documents.

Summary :

The plaintiff claimed for the price of goods bargained and sold, to wit fountain pens. The defence was that the contract in question was a CIF contract and that the plaintiff having failed to deliver to the defendants the proper shipping documents was not entitled to recover.

Holding :

Held: under a CIF contract, a tender of the proper documents is essential and the seller is not at liberty to tender the goods instead of the documents.

Digest :

Chew Kow Hin v Wee Trading & Co [1957] MLJ 34 High Court, Penang (Spenser-Wilkinson J).

672 Delivery -- Delivery of wrong goods

11 [672] SALE OF GOODS Delivery – Delivery of wrong goods – Whether buyer accepted goods – Signing of delivery order not acceptance – Buyer retaining goods after lapse of reasonable time – Whether buyer intimated rejection of goods to seller – What amounts to lapse of reasonable time – Onus of proving acceptance on seller – Sale of Goods Act 1957, s 42

Summary :

This was an application by the plaintiff for summary judgment against the defendant in respect of its action against the defendant for payment for goods sold and delivered to the defendant. The plaintiff's application was allowed in chambers, and the defendant applied for further arguments. The plaintiff had claimed RM108,015.10 against the defendant as the amount still outstanding in respect of a planner moulder machine ('the machinery') that it had sold and delivered to the defendant. The defendant rejected the plaintiff's claim on the ground that the plaintiff had delivered the wrong machinery to it which it had not accepted. The defendant also counterclaimed against the plaintiff for losses allegedly suffered as a result of the wrong delivery. The plaintiff did not dispute that it had delivered the wrong machinery to the defendant but submitted that the defendant had accepted the machinery without conditions and with no express reservations. The central issue before the court was whether the defendant had accepted the machinery within the meaning of s 42 of the Sale of Goods Act 1957 ('the SOGA').

Holding :

Held, dismissing the plaintiff's application for summary judgment and setting aside the order for summary judgment made in chambers: (1) under s 42 of the SOGA, a buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after a lapse of reasonable time, he retains the goods without intimating to the seller that he has rejected them; (2) what amounts to a lapse of reasonable time depends on the facts of each case and the surrounding circumstances including custom and usage; (3) the onus is on the seller to satisfy the court that the buyer has accepted the goods delivered; (4) the defendant's signing of the delivery order for the machinery could not be regarded as an act of acceptance in view of s 41(1) of the SOGA. There was no evidence that the defendant had previously examined the machinery. The signing of the delivery order was only an acknowledgement by the defendant that the machinery as stated in the delivery order had been delivered to it; (5) although the defendant still retained the machinery after a lapse of reasonable time, it was clear and undisputed by the plaintiff that the defendant had written three letters to the plaintiff expressing its dissatisfaction with the machinery. It was also manifest that the defendant had had a series of discussions and meetings with the plaintiff during which it had intimated the issue of the wrong delivery to the plaintiff, and that the said discussions and meetings finally culminated in the formal rejection of the machinery by the defendant. It was also not in dissension that the plaintiff had formally accepted the defendant's intimations in respect of the wrong delivery; (6) consequently, there was merit in the defendant's submission that there was no acceptance of the machinery on its part. The defendant's counterclaim that it had suffered losses in excess of the amount claimed by the plaintiff as a result of the wrong delivery had also raised a triable issue.

Digest :

Wadkin Robinson (M) Sdn Bhd v Rimber Industries Sdn Bhd Civil Suit No 22-441-1992 High Court, Shah Alam (Mohd Hishamudin JC).

673 Delivery -- Place of delivery

11 [673] SALE OF GOODS Delivery – Place of delivery

Summary :

The seller's agreement, which was for the supply of 70 tons of timber of certain dimensions per month for six months, provided that it was to be 'delivered in Singapore', and contained a clause whereby three days were to be allowed for discharging lighters, after which $9 per day was to be charged.

Holding :

Held: as the delivery was to be within a certain area, the exact spot not being mentioned, the buyer had the right to select any place within the area subject to the place selected being a reasonable one.

Digest :

Leach v Sin Moh & Co [1902] 7 SSLR 38 High Court, Straits Settlements (Leach J).

674 Delivery -- Short delivery in supply of goods

11 [674] SALE OF GOODS Delivery – Short delivery in supply of goods – Right of buyer to reject – Delay in rejection – Whether there was implied acceptance – Sale of goods – Short shipment in supply of goods – Right of buyer to reject – Delay in rejection – Whether there was implied acceptance – Custom of trade – When relevant – Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957), ss 37(1) & 42.

Summary :

This was an application to set aside an arbitrator's award. The parties had entered into a contract for the purchase of 500 metric tons of palm oil and it was agreed that any dispute arising out of and in connection with the contract shall be submitted to arbitration. The respondents shipped 481.410 metric tons of palm oil on 29 March 1984. The appellants rejected the shipment on 13 April 1984. The dispute was referred to arbitration and the arbitrator made an award in favour of the respondents on the ground that the appellants had accepted the goods by acquiescence. The appellant applied to set aside the arbitrator's award. The learned judge dismissed the application holding that there was no error on the face of the award. He stated that the arbitrator had relied on custom of the trade that acceptance or rejection must be immediate. The appellants appealed.

Holding :

Held: (1) in the absence of any proof expressly or by implication as to the particular custom being a part of the agreement, the learned judge was wrong in concluding that the arbitrator had based his finding on custom of the trade; (2) the arbitrator had applied s 37(1) of the Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957) and read it with s 42 of the ordinance; (3) the learned judge did not err in holding that there was no error on the face of the arbitration award.

Digest :

Ganda Edible Oils Sdn Bhd v Transgrain BV [1988] 1 MLJ 428 Supreme Court, Kuala Lumpur (Wan Suleiman, Mohamed Azmi and Syed Agil Barakbah SCJJ).

675 Delivery -- Short delivery of equipment

11 [675] SALE OF GOODS Delivery – Short delivery of equipment – Order for attachment before judgment – Setting aside of order – Civil procedure – Order for attachment before judgment – Setting aside of order – Power of registrar – Merits of application – RHC 1980, O 32 r 9.

Summary :

The plaintiffs agreed with the defendants for the purchase of certain equipment from the defendants. The plaintiffs made certain payments in accordance with the agreement. However, the plaintiffs were able to take delivery of only about half of the equipment and they were prevented from taking delivery of the rest of the equipment. They sued the defendants and prayed, inter alia, for an order for attachment before judgment of the remaining equipment. The application was made under O 74 r 5. The learned senior assistant registrar heard the application and granted the order. The defendants applied to set aside the order but failed. They appealed. The defendants raised three grounds, namely: (a) they objected to the senior assistant registrar making the order on the ground that she had no power to do so; (b) the affidavit of the plaintiffs in support of his application for attachment before judgment was not valid on the ground that it was dated earlier than the issue of the writ; and (c) the proceedings were misconceived.

Holding :

Held, dismissing the defendants' appeal: (1) in view of the provisions of the law and in the light of the decision in Hwang Ju-in v Huang Han Chao [1977] 2 MLJ 229, the court cannot agree with the defendants that the senior assistant registrar had no power to grant the order; (2) as for the second ground, the difference was only one day and that did not affect the validity of the affidavit; (3) as for the third ground, the plaintiffs are at liberty to choose any form of redress.

Digest :

Lau Yeok Lin & Ors v Hip Soon Engineering & Construction Sdn Bhd [1988] 2 MLJ 308 High Court, Kuantan (Lamin Mohamed Yunus J).

676 Delivery -- Time of delivery

11 [676] SALE OF GOODS Delivery – Time of delivery – Sale of urea – Sellers unable to ship urea by latest contract shipment date – Exchange of correspondence between sellers and buyers – Whether parties agreed to a new shipment date.

Summary :

By a contract in writing dated 12 October 1991, the sellers (respondents) agreed to sell to the buyers (appellants) 50,000 metric tonnes of `prilled urea of USSR origin' (the urea) c & f China for discharge at Huangfu or Shekou ports, to be designated by the buyers at a later stage. The port of loading was stated in the contract as `to be advised by the seller after receipt of L/C'. Subsequently, the parties agreed that shipment was to be from `USSR or Eastern European Ports'. The first shipment of 25,000 metric tonnes was to be effected by the sellers within 30 days of receipt of a workable L/C. The latest date for the first shipment was stated to be 30 November 1991. The sellers had to provide an inter-bank performance bond for an amount equivalent to approximately 2% of the L/C value on receipt of the workable L/C that would cover the due delivery of the goods. The amount of the performance bond was US$95,150. The contract stipulated that the seller would not be responsible for non-performance of the contract in the case of force majeure, and that if the events constituting force majeure continued for more than 120 consecutive days, `the buyer and seller shall discuss through friendly negotiation as soon as possible, their obligation to continue to perform under the terms and conditions of the contract'. There was also an arbitration clause in the contract that provided for the resolution of disputes `by friendly negotiations', failing which the parties would submit the dispute to arbitration. The buyers accordingly opened a L/C in favour of the sellers on 21 October 1991. The L/C provided that shipment was from `USSR or Eastern European Ports' and was to be effected `not later than 30 Nov 91'. The parties subsequently agreed to have the latest shipment date extended to 14 December 1991, and the L/C was amended to reflect this extension. The validity of the L/C was also extended from 26 December 1991 to 9 January 1992. The sellers furnished the required performance bond in favour of the buyers on 30 October 1991. This performance bond was valid until 26 December 1991. It was common ground between the parties that the USSR was in the process of political disintegration at the relevant time, and that it formally ceased to exist as a political entity on 9 December 1991. On 11 December 1991, the sellers informed the buyers by fax that the first shipment of 25,000 metric tonnes would commence on 17 December 1991 at the port of Novorossisk, three days after the latest agreed shipment date. On 13 December 1991, the sellers informed the buyers by fax that, due to the immense political upheaval in the USSR, all shipping and transportation arrangements for the urea had been stopped or delayed. The sellers then gave notice of their intention to rely on the force majeure exception in the contract, and further added that they expected to ship the urea on or before 3 January 1992. The buyers replied by way of a telex on 23 December 1991 where they referred to the sellers' fax message of 13 December 1991 and said that they agreed to shipment on 3 January 1992, but reserved their rights to sue for damages and loss. On the same day, the buyers called on the performance bond. Their stated reason to the bank was that the sellers failed to ship the urea `on or before the last shipment date stipulated in the related documentary credit'. Discussions between the parties ensued and the buyers revealed that their real reason for calling on the performance bond was because it was due to expire on 26 December 1991 and they wanted to ensure that the sellers would extend the validity of the performance bond. As a result of the discussions, the buyers agreed to withdraw their call on the performance bond and the sellers agreed to extend the validity of the bond to 8 March 1992. On 31 December 1991, the sellers asked the buyers to extend the validity of the L/C from 9 January 1992 to 8 March 1992. The buyers flatly refused. The sellers did not manage to ship any urea on 3 January 1992. In the meantime, the sellers tried to obtain a certificate of force majeure from the former USSR. On 13 January 1992, the sellers forwarded to the buyer a letter of the same date, obtained from the USSR Embassy in Singapore, which referred to the political situation in the former USSR and explained the serious problems that had arisen with the re-issue of licences and permits for the movement of goods within the former USSR. On 14 January 1992, the buyers called on the performance bond for the reason that the sellers had failed to deliver the urea on 3 January 1992 in accordance with the terms and conditions of the contract. The sellers protested this action, but, by a letter dated 16 January 1992, the buyers confirmed that they had called on the performance bond because, first, the sellers had failed to deliver the urea by the last shipment date of 3 January 1992 and, second, the letter dated 13 January 1992 from the USSR Embassy in Singapore was not a certificate from a competent government authority in the place where the force majeure occurred, as required by the force majeure clause in the contract. By a letter dated 31 January 1992, the sellers wrote to the buyers stating that the buyers were in repudiatory breach of contract which the sellers duly accepted. The sellers then commenced these proceedings against the buyers claiming damages for breach of contract. The trial judge found that 3 January 1992 was the last agreed date of shipment. By failing to ship the urea on 3 January 1992, the sellers were prima facie in breach of contract, and the buyers would be entitled to call on the performance bond, unless the sellers could establish that performance of the contract was suspended by reason of force majeure. On this point, the trial judge found that the sellers had properly invoked the force majeure clause in the contract and, accordingly, the buyers had to wait for 120 days as specified in the clause before entering into friendly negotiations as to how the contract could be carried out. Thus, by calling on the performance bond on 14 January 1992, the buyers were in repudiatory breach of contract and were liable to the sellers for damages: see the High Court judgment at [1996] 3 SLR 62. The buyers appealed.

Holding :

Held, dismissing the appeal: (1) the trial judge's finding that a new shipping date of 3 January 1992 had been agreed by the parties was not supported by the documentary evidence. The sellers' fax of 13 December 1991, in which they stated that they expected to ship on or before 3 January 1992, was not an offer to ship the urea by 3 January 1992, but a statement of their expectations having regard to the force majeure event they had declared in their fax. This fax had to be seen in its own context and in the context of all preceding faxes and telexes and also in the context of the prevailing conditions in the USSR; (2) while the sellers were in breach of contract when they failed to ship the urea by 14 December 1991, the buyers had clearly waived this breach when they withdrew their call on the performance bond, made on 23 December 1991, and agreed to its validity being extended to 8 March 1992. There being no agreed shipping date, the sellers' obligation was to ship the urea within a reasonable time having regard to all the circumstances. It would be unreasonable to find, having regard to the prevailing situation in the USSR and the documentary evidence, that the sellers had committed themselves by their fax of 13 December 1991 to ship the urea on or before 3 January 1992; (3) once the shipment date of 14 December 1991 had passed and no other shipment date had been agreed between the parties, the buyers' call on the performance bond on 14 January 1992, for the reason that the sellers had failed to ship the urea on 3 January 1992, was a repudiation of the contract which the sellers were entitled to and did accept on 31 January 1992; (4) the trial judge's findings that the requirements for the operation of the force majeure clause were met and, consequently, the performance of the contract was suspended were entirely correct; (5) the expert evidence led by the sellers showed clearly that the force majeure event relied on had affected the Ukraine, the place where the urea was to be obtained, and the port of Novorossisk, from which the urea was to be shipped; (6) the expert evidence led by the sellers was sufficient to establish that the sellers were prevented from shipping the urea because of the chaos in the USSR. The court had to take a practical approach having regard to all the circumstances of the case. It would have been unrealistic for the court to have insisted on direct evidence from witnesses from the factory in the Ukraine and the port of Novorossisk; (7) the fact that the sellers made no attempt to obtain urea and ship it from an Eastern European port was irrelevant. If it was not possible because of the transportation problems to get the urea from the factory in the Ukraine to Novorossisk, it would have been equally impossible to get the urea to an Eastern European port. The sellers had no obligation to purchase `urea of USSR origin' from Eastern European markets for shipment to buyers because their contract with the buyers was c & f and it would be too great a risk to ship 25,000 metric tonnes of urea without insurance and, furthermore, it would have been too much to expect the sellers to take out the insurance themselves; (8) the very reason that prevented the sellers from shipping the urea also prevented them from getting the certificate of a competent government authority at the place where the force majeure occurred within 30 days of the declaration of force majeure. In these circumstances, the sellers had done the next best thing by obtaining a certificate from the embassy of the USSR in Singapore. This certificate was sufficient to satisfy the purpose or principle of the provision in question, which was to back up the contention of the party declaring a force majeure event; (9) the terms of the contract provided the means for the parties to resolve their dispute as to whether or not a force majeure event had occurred which suspended the performance of the contract. There was no justification for the buyers peremptorily to call on the performance bond in the way they did. Such an act was as clear a repudiation of the contract as there could have been and the sellers had rightly accepted the repudiation.

Digest :

China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd [1997] 2 SLR 707 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

677 Delivery -- Time essence of contract

11 [677] SALE OF GOODS Delivery – Time essence of contract – Lack of evidence of waiver – Mercantile or trade usage – Sale of Goods – Delivery – Time – Essence of contract – Waiver – Lack of evidence of – Sale of Goods Act 1893, s 10(1).

Summary :

The plaintiff/respondent claimed damages against the defendant firm/the appellant for breach of contract. The plaintiff had agreed to sell and the defendant firm to purchase 10 tons of Indian black cardamon at the price of S$3.60 per picul. The contract provided for 'shipment during June/July 1966' and for 'delivery to buyer's store.' The plaintiff delivered 2[1/2] tons in circumstances which resulted in a dispute between the parties. Eventually, through their respective solicitors, the defendant firm agreed to accept delivery of the balance of 7[1/2] tons 'within three days of the arrival at Singapore of the vessel ss Manoloeverette.' The ship arrived on 8 November 1966 but the plaintiff did not attempt to deliver the balance to the defendant firm until 21 November 1966 when he brought the goods to the defendant firm's shop. The defendant firm refused to accept delivery, Subsequently, the plaintiff sued the defendant firm for breach of contract. The defence, inter alia, was that it was an essential term of the contract that delivery be made within three days of the arrival of the ship at Singapore, and in this respect time was of the essence of the contract. At the trial, the plaintiff called a witness to prove, inter alia, a mercantile or trade usage among Indian merchants in Singapore relating to delivery of goods imported by sea into Singapore 'that in any contract for the sale of goods where there is a term in the contract requiring delivery within a specified time, that does not make time the essence of the contract in the absence of specific term that the time for delivery stated in the contract shall be of the essence of the contract. All that that term means is that delivery must be made within a reasonable time'. The learned trial judge found: (a) time of delivery was not of the essence of the contract; (b) even if time was of the essence of the contract, 'the conduct of the parties ... and particularly that of the defendant had waived his rights regarding this stipulation of time'; (c) accepting there was a mercantile or trade usage of some kind binding on the parties, that 'if the defendant wanted to repudiate this contract for non-delivery then he should have given the plaintiff at least 24 hours notice of his intention to do so, so that the plaintiff could have had an opportunity to fulfil the contract'. The defendant firm appealed.

Holding :

Held, allowing the appeal: (1) in most mercantile transactions, as regards stipulations other than those relating to time of payment, time is of the essence of the contract. The contract sued on in this case was an ordinary commercial contract for the sale of goods. On the evidence, the plaintiff had failed to prove that as regards the 7[1/2] tons of cardamons the stipulated time of delivery 'within three days after the arrival of the ship' was not of the essence of the contract; (2) as regards the question of mercantile or trade usage, there was no evidence that the stipulation as to time for delivery was the normal stipulation in this kind of trade; (3) there was no evidence to support the finding of the learned trial judge that the subsequent conduct of the defendant amounted to a waiver.

Digest :

Himatsing & Co v PR Joitaram [1970] 2 MLJ 246 Court of Appeal, Singapore (Wee Chong Jin CJ, Tan Ah Tah and Chua JJ).

678 Delivery -- Time for delivery

11 [678] SALE OF GOODS Delivery – Time for delivery

Summary :

Held: time for taking delivery runs from the time that the goods are at the buyer's disposal.

Digest :

Tan Tang Niah v Campbell & Co [1904] 8 SSLR 109 High Court, Straits Settlements (Cox CJ).

679 Duties of confirming house -- Order for textiles from foreign firm through their agents in Singapore

11 [679] SALE OF GOODS Duties of confirming house – Order for textiles from foreign firm through their agents in Singapore – Payment to be made through London Confirming House – Sale of goods – Foreign bill of exchange – Confirming House – Order for textiles from foreign firm through their agents in Singapore – Payment to be made through London Confirming House – Responsibility of Confirming House.

Summary :

Held: a confirming house has only a limited responsibility and its role is purely a financial one. Its purpose is to finance contracts of sale of goods where delay between delivery on board and at port of destination is likely to be substantial. Its responsibility is to ensure that all shipping documents submitted to it by the exporter are in accordance with the order received from its oversea client. Provided the documents are in order it accepts them and draws on its oversea client. A confirming house is not concerned with the contract of sale and is not responsible for the quantity or quality of the goods shipped.

Digest :

African Commercial Corp Ltd v Hussainali & Co [1959] MLJ 124 High Court, Singapore (Buttrose J).

680 FOB contract -- Breach of

11 [680] SALE OF GOODS FOB contract – Breach of – Nomination of vessel – Vessel unable to load whole cargo – Whether buyer in breach of contract – Seller tendering lesser amount in performance of contract – Buyer's obligation to pay contracted price if goods accepted

Summary :

By an agreement, the plaintiffs agreed to sell to the defendants a consignment of rice FOB and stowed Bangkok and Kohshichang, payment by irrevocable letter of credit payable at sight. The letter of credit was backed by a master letter of credit issued by an Iranian bank. When the plaintiffs appropriated rice to the contract, it was discovered that the vessel nominated by the defendants was not able to receive the entire consignment. The plaintiffs made a partial shipment on board the nominated ship instead. However, when the shipping documents were presented, they were not accepted by the bank on the grounds of discrepancies. The plaintiffs commenced the present action against the defendants for the price of the goods, damages for breach of contract and, alternatively quantum valebat. They then applied for summary judgment. The assistant registrar gave judgment for the plaintiffs. From this, the defendants appealed. The plaintiffs alleged, inter alia, that the defendants had waived the discrepancy.

Holding :

Held, dismissing the defendants' appeal: (1) in an FOB contract, the buyer has a duty to provide a vessel at the appointed time and place to enable the seller to bring the goods alongside for loading. The ship must be ready, willing and able to load the contracted goods; (2) the defendants were in breach of contract in failing to nominate a vessel which could load the contracted goods; (3) the plaintiffs could have refused to ship the entire cargo. They decided to ship what was already loaded on the ship and to regularize the discrepancy in the shipment by asking for the master letter of credit to be amended; (4) if the defendants did not accept this shipment as due performance, they themselves would be in breach. If they accepted the partial shipment, they were liable to pay the full commercial value; (5) in view of the defendant's breach, the plaintiffs could have refused to ship the rice. They chose instead the commercially more convenient course of shipping a lesser quantity and requesting the defendants to amend the terms of their letter of credit; (6) the defendants thereupon had the choice of accepting the goods or continuing to be in breach of the contract. If the defendants accepted the goods, they were obliged to pay the contracted price for them. If the defendants did not accept the goods, they would have been in breach of the contract and liable to pay damages to the plaintiffs. In either event, the plaintiffs' claim against the defendants would succeed; (7) as regards the second issue as to whether the defendants had waived the tender of documents out of time, it was an issue of fact which cannot be determined in these proceedings.

Digest :

Soon Hua Seng Co Ltd & Ors v Bombay Trading Co Pte Ltd [1990] 3 MLJ 81 High Court, Singapore (Chan Sek Keong J).

681 FOB contract -- Breach of

11 [681] SALE OF GOODS FOB contract – Breach of – Property does not pass to purchaser at time of contract – Sale of goods – FOB contract – Property does not pass to purchaser at time of contract.

Summary :

The respondents had applied for a writ of attachment against the appellants. It was alleged that the appellants had interfered with the respondent's use and enjoyment of certain factory premises and that they had removed from the factory premises various cartons of prawns and that both actions were in contravention of an order of the High Court. The learned trial judge gave judgment in favour of the respondents and the appellants appealed.

Holding :

Held: (1) the order of court in this case was unambiguous and was not rendered ambiguous by the undertaking given by the appellants to operate the factory; (2) the appellants were in breach in disposing of the prawns. The contract relating to the prawns was an FOB contract and property in the prawns had not passed to the purchaser, as alleged by the appellants; (3) in refusing to open the factory gate to allow the respondents to enter the premises, the appellants were wilfully disobeying the order; (4) the learned trial judge had rightly held that the respondents had proved their charges beyond reasonable doubt.

Digest :

Chai Tze Foh & Anor v Asia Fishing Industry Pte Ltd [1977] 2 MLJ 195 Federal Court, Kuching (Lee Hun Hoe CJ (Borneo).

682 FOB contract -- Loss of goods

11 [682] SALE OF GOODS FOB contract – Loss of goods – Whether carrier liable – No value declared in appropriate box – Sale of goods – Carriage by air – Loss of goods – Whether carrier liable – No value declared in appropriate box – Effect of – English Carriage by Air Act 1961, art 22(2)(a) of Schedule.

Summary :

On 13 October 1980, the first plaintiffs, a firm in Hong Kong dealing in clocks and watches, delivered to the defendants' agents at Hong Kong Airport, one wooden case of watches with an invoice value of FOB Hong Kong of HK$98,440 for carriage by air to Singapore and for delivery to the second plaintiffs as the consignees. The defendants carried the goods to Singapore where it was found that watches to the value of HK$89,740 were stolen. The plaintiffs claimed the sum of HK$89,740, interest and costs against the defendants. The defendants sought to limit their liability by relying on art 22(2)(a) of the Schedule to the English Carriage by Air Act 1961, applicable by virtue of s 5(1) of the Civil Law Act (Cap 30, 1970 Ed). It was agreed that if the defendants were entitled to invoke the said article, the defendants would only be liable to pay S$253.74. The court was to decide: (a) whether the first plaintiffs, as the consignors, had made 'a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires' within the meaning of art 22(2)(a) of the Schedule to the English Carriage by Air Act 1961; (b) whether the defendants on the facts had become an agent of the plaintiffs in the matter of making out the Air Waybill in question and whether the defendants as such agents were negligent.

Holding :

Held: (1) the first plaintiffs had elected to ship at the ordinary freightrate and had not chosen to pay the additional freightrate for valuable cargo, in which case the defendants as the carrier would have been automatically covered for insurance to the full value of the cargo. The first plaintiffs and those taking title from them must bear the consequences of losses together with the benefit of shipping at a lower rate; (2) in this case, a blank declaration in the appropriate box, notwithstanding the value stated in an invoice in a sealed envelope which was not seen by any employee of the defendants, cannot possibly amount to 'a special declaration of interest in delivery at destination'; (3) as a fact the supplementary sum was not paid or offered to be paid in this case; (4) there was no relationship of a principal and agent in this case; (5) the plaintiffs should pay the defendants the costs of the proceedings calculated for work done and the defendants may be reminbursed for expenses incurred. The defendants will be paid out of S$253.74 by way of set-off against the costs due to them.

Digest :

Wai Wah Enterprises & Eastern Watch Co Pte Ltd v China Airlines Ltd [1986] 2 MLJ 269 High Court, Singapore (Lai Kew Chai J).

683 FOB contract -- Nomination of vessel

11 [683] SALE OF GOODS FOB contract – Nomination of vessel – Time of shipment – Whether reasonable notice given

Summary :

On 26 April 1988, the appellants, who were buyers, entered into a FOB contract with the respondents, who were the sellers, for the purchase of centrifuged Malaysian latex. On 3 May 1988, the appellants sent a telex to Ng, the respondents' trading clerk, stating that they had booked space on a vessel called 'Majapahit' of Pacific International Lines ('PIL') 'eta 13 June 1988' for loading from 10 to 15 June 1988 and that in the event of any revision, the appellants would inform the respondents. On 25 May 1988, the appellants delivered by hand to the respondents a letter purporting to nominate 'Majapahit' as the vessel to carry the contractual cargo. On the same day, however, the appellants sent the respondents a telex stating that if there was any inconvenience, they should inform the appellants in advance. They also indicated to the respondents that there would be another vessel 'Gowa' scheduled to arrive in Singapore on or about 27 June 1988. There was no reply from the respondents. On 28 May 1988, by another telex, the appellants confirmed their nomination of the 'Majapahit' as 'final' and 'firm'. About ten days later, at about 5.05pm on 7 June 1988, the appellants sent a telex to the respondents requiring them to 'confirm by 12pm, 8 June 1988' that they had sent the cargo to PIL. On the same evening, the appellants informed PIL that their reservation on the 'Majapahit' would be held until 5pm, 8 June 1988 and that otherwise, the cargo would be loaded on the 'Gowa'. The next day, at 5.55pm, the appellants informed the respondents that as there was no response from the latter, they had cancelled the reservation on the 'Majapahit'. They also alleged that the respondents had breached the contract by failing to supply the goods. On 9 June 1988, the appellants sent to the respondents a telex stating that, while reserving their rights for damages, they were willing to nominate a fresh vessel 'Gowa', eta 27 June 1988. Not having heard from the respondents, the appellants, on 11 June 1988, despatched another telex to the former alleging that the contract had been repudiated by the respondents and informing the latter that the appellants accepted the repudiation. On 13 June 1988, the respondents replied by telex denying repudiation of the contract and stating that they would supply the appellants with the goods as soon as possible. On 14 June 1988, the appellants' solicitors demanded the return of their clients' letter of credit. On 15 June 1988, the respondents' solicitors returned to the appellants the letter of credit as requested. The appellants then commenced proceedings against the respondents. The action as dismissed by the High Court. The appellants appealed.

Holding :

Held, dismissing the appeal: (1) as a general rule, in a FOB contract, in the absence of any express provision to the contrary, the buyer has the right to determine the exact time within the shipping period at which the goods are to be shipped. In the present case, therefore, the appellants were entitled to determine the time for shipment of the cargo within the month of June 1988. The telex of 28 May 1988 made it abundantly clear that the appellants had nominated the 'Majapahit' to carry the cargo. There was therefore a valid nomination on 28 May 1988; (2) as the nomination was made on 28 May 1988 and the time of shipment was scheduled for 13 June 1988 or thereabout, the appellants had clearly given reasonable notice of their nomination to the respondents. However, the telex of 7 June requiring the respondents to deliver the cargo to PIL for shipment by noon on the following day was unreasonable in the circumstances. The 'Majapahit' not having arrived, it was clearly premature to require the respondents to deliver the cargo to PIL for shipment; (3) with effect from 9 June, the respondents' obligation was to have the cargo ready for shipment on the 'Gowa' on 27 June or thereabout, as the booking of the 'Majapahit' had been cancelled. The appellants' telex of 11 June which purported to accept the respondents' alleged repudiation was in itself repudiation of the contract on the appellants' part as there was no prolonged silence on the part of the respondents as would give rise to an inference that they would not be able to perform the contract when the time of performance came. The respondents accepted that repudiation by returning the letter of credit to the appellants on 15 June as requested.

Digest :

Dong Yuan Hang Trading Pte Ltd v Sunko (Singapore) Co Pte Ltd [1994] 3 SLR 603 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

684 Formalities of contract -- Acceptance of goods

11 [684] SALE OF GOODS Formalities of contract – Acceptance of goods – When buyer is deemed to have accepted goods from seller – Sale of Goods Act 1979 [UK], s 35(1)

Summary :

The plaintiffs were manufacturers of fruit juices, soft drinks and other beverages and the first defendants were customers of the plaintiffs. The second defendant was a director of the first defendants. In July 1989, a contract was entered into between the plaintiffs and the first defendants for the plaintiffs to produce and supply a kiwi fruit drink in cans to the first defendants' customer in Taiwan. The contract provided that the plaintiffs would produce the fruit juice from kiwi fruit juice concentrate supplied by the first defendants in accordance with certain agreed procedures and specifications supplied by the first defendants. The first defendants had paid the plaintiffs an initial part payment and for the balance of moneys due and owing, issued a DBS cheque for the sum of S$54,500 in favour of the plaintiffs. The plaintiffs produced 10,500 cartons of fruit juice drinks and supplied the same to the first defendants' customer in Taiwan on 29 July 1989. Upon presentation of the cheque at the DBS Bank, the cheque was dishonoured and the plaintiffs were requested by the bank to 'refer to drawer'. The plaintiffs therefore claimed against the first defendants for the proceeds of the cheque. The plaintiffs' claim against the second defendant was based on a contract of guarantee dated 17 July 1989 made between the plaintiffs and the second defendant pursuant to which the second defendant guaranteed that the DBS cheque issued by the first defendants would be honoured. On 4 January 1991, the assistant registrar dismissed an application by the first defendants to set aside a judgment entered against them in default of appearance with costs. On 10 January 1991, the assistant registrar ordered that: (a) the second defendant's application for a part of an affidavit filed in support of the plaintiffs' application for summary judgment against the second defendant to be expunged from the records in the proceedings be dismissed; (b) part of the said affidavit be expunged in so far as proceedings against the first defendants were concerned; and (c) the second defendant pay the plaintiffs' costs fixed at S$600. It was against these two decisions of the assistant registrar that the present appeals were brought. A third appeal was also brought against a decision of the assistant registrar who granted summary judgment on 1 October 1990 against the second defendant for the sum of S$54,500 to the plaintiffs with interest and costs. Counsel for both defendants contended that the expunged parts of the affidavit should apply to proceedings against both defendants and be expunged with respect to the plaintiffs' case against the second defendant as well on the ground that as long as there is an order to expunge certain parts of the said affidavit, those expunged parts cannot be used against any party to the proceedings. As regards their appeal against the decision to dismiss their earlier application to set aside the judgment entered against them in default of appearance, the first defendants claimed that there was a triable issue in this case in that, first, there was a total failure of consideration for the cheque issued by them in favour of the plaintiffs (in that they had written to the plaintiffs to complain about a few leaking cans delivered by the plaintiffs to the first defendants' customer in Taiwan); and secondly, they had a counterclaim against the plaintiffs for at least S$196,244.84 (based on their allegation that the goods sold and delivered by the plaintiffs to the first defendants' customer in Taiwan were unmerchantable and not fit for the purpose). The plaintiffs refuted these allegations.

Holding :

Held, dismissing all the appeals and awarding the plaintiffs' costs of the first and third appeals: (1) the second defendant could only succeed in her application if she could show that she was entitled to claim the privilege. As the second defendant took no part in the 'without prejudice' negotiations either personally or through an agent, she could not claim the privilege; (2) in spite of several reminders, they had failed to file notice of change of registered address with the Registry of Companies and hence, service of the plaintiffs' writ of summons on the first defendants at their last registered office on record was good; (3) (b) the counterclaim raised by them did not relate to the plaintiffs' claim but was a separate action altogether and therefore the facts alleged by the first defendants were wholly irrelevant to the issue before the court. Even if the first defendants could succeed in their counterclaim, in an application for summary judgment against a defendant on the proceeds of a dishonoured cheque, the defendant will not be allowed to set up by way of a set-off a counterclaim for damages for breach of the underlying contract and the plaintiffs were entitled to judgment for the amount of their claim without a stay of execution. A cross-claim relating to the transaction in which the action on a bill of exchange arose is not a defence to the action on the bill of exchange; (4) the first defendants did not have a reasonable explanation for not entering an appearance;for the purpose of setting aside a default judgment, the first defendants need only have disclosed an arguable or triable issue which they have failed to do as: (a) they had not rejected the goods within a reasonable time and was thus, pursuant to s 35(1) of the Sale of Goods Act 1979, deemed to have accepted the goods;under the terms of the contract of 17 July 1989 between the plaintiffs and the second defendant, the second defendant promised that she would pay the plaintiffs the sum of S$54,500 if the cheque issued by the first defendants was not honoured. As there was no rejection of the goods by the first defendants prior to the dishonour of the cheque, the second defendant must honour the promise she gave under the contract of 17 July 1989.

Digest :

Yeo Hiap Seng v Australian Food Corp Pte Ltd & Anor [1991] 3 MLJ 144 High Court, Singapore (Goh Phai Cheng JC).

685 Formalities of contract -- Bought and sold note

11 [685] SALE OF GOODS Formalities of contract – Bought and sold note

Summary :

Held: a bought and sold note, which runs as follows '20 or 30 piculs white pepper within 80 days or longer at option of purchasers', signed by buyer and seller respectively, is a good note, so as to satisfy s 4 of the Statute of Frauds.

Digest :

Lorrain Gillispie & Co v Khoo Heng Team & Anor [1871] SLR Leic 280 High Court, Straits Settlements (Hackett J).

686 Formalities of contract -- Chop or seal

11 [686] SALE OF GOODS Formalities of contract – Chop or seal – Sale of Goods Act 1893, s 4

Summary :

Held: a chop or seal is a signature by the party to be charged within the meaning of s 4 of the Sale of Goods Act 1893.

Digest :

Saiboo Tamby v Chop Kim Chin Bee [1898] 5 SSLR 54 High Court, Straits Settlements (Leach J).

687 Formalities of contract -- Indent forms

11 [687] SALE OF GOODS Formalities of contract – Indent forms – Supply of goods less than that of alleged oral agreement – Acceptance of order – Contract – Sale of goods – Indent for supply less than that of alleged oral agreement – Acceptance of order – Evidence Ordinance 1950, ss 91 and 92 – Sale of Goods Act 1893, s 4.

Summary :

This was a claim by the plaintiffs for breach of a contract for the sale of goods by the defendants. The plaintiffs' case was that the defendants through their agents orally agreed to sell and the plaintiffs through their agents orally agreed to purchase textile goods to the value of RM500,000 subject to certain terms. A few days after the alleged agreement, the plaintiffs ordered goods from the defendants to the value of approximately RM177,500 and both parties signed indent forms in respect of the goods ordered.

Holding :

Held: (1) presuming that there was a good oral contract for the sale of RM500,000 worth of goods then the signed indent form would not have been a reduction of the contract into writing and ss 91 and 92 of the Evidence Ordinance 1950 would not apply; (2) as the plaintiffs could not bring themselves within one of the exceptions mentioned in s 4 of the Sale of Goods Act 1893, the verbal agreement as alleged was unenforceable; (3) indent forms are the normal and recognized form of written contract for sale of this type of goods; (4) acceptance of part of an order is sufficient to obviate the necessity of a written memorandum, where it indicates the existence of a contract and gives support to evidence otherwise purely verbal. The indents signed by both parties in this case did not indicate the existence of a contract for a larger quantity or any other contract.

Digest :

Ban Bee & Co Ltd v Henry Waugh & Co Ltd [1955] MLJ 98 High Court, Penang (Spenser-Wilkinson J).

688 Formalities of contract -- Statute of Frauds

11 [688] SALE OF GOODS Formalities of contract – Statute of Frauds

Summary :

Held: contracts made in Penang, for goods not in esse at time of such contracts, are within s 17 of the Statute of Frauds, by Statute 9 Geo IV c 14.

Digest :

Penang Foundry Co v Cheah Tek Soon [1882] 1 Ky 559 High Court, Straits Settlements (Wood J).

689 Formalities of contract -- Statute of Frauds

11 [689] SALE OF GOODS Formalities of contract – Statute of Frauds – Requirements of – Solicitor not an agent for signing a contract

Summary :

Held: a memorandum for goods sold, to the value of £10 or upwards, in order to satisfy the Statute of Frauds, must contain the names of the vendor and purchaser, the terms of the sale, prices of the goods, and must be signed by the person to be charged (vendor or purchaser as the case may be); otherwise no action can be maintained thereon. A solicitor who signs and sends a notice on behalf of his client, demanding delivery of goods sold, is not an agent for signing a contract of sale, so as to bind his client and make the notice (which otherwise may contain all the requirements of the Statute) a memorandum within the Statute.

Digest :

Hooglandt & Co v Mohamed Isup [1868] 1 Ky 184 High Court, Straits Settlements (Maxwell CJ).

690 Formalities of contract -- Statute of Frauds

11 [690] SALE OF GOODS Formalities of contract – Statute of Frauds – What is acceptance and receipt of the goods within s 17 of the statute – Statute of Frauds, s 17

Summary :

Held: the Statute of Frauds 29 Car II c 3 is law in the Straits Settlements. Where goods are agreed to be sold, but no memorandum of sale is had, or part payment of money is made, the mere fact that the goods, (not weighed or measured) are left by the defendant with the plaintiff simply for his (the defendant's) own convenience, and on the bills for their value being presented the plaintiffs promised to pay them in a few days É do not constitute 'an acceptance and receipt of goods or part thereof', within s 17 of the statute.

Digest :

Revely & Co v Kam Kong Gay [1840] 1 Ky 32 Court of Judicature of Prince of Wales' Island, Singapore and Malacca (Norris R).

691 Goods sold and delivered -- Action for

11 [691] SALE OF GOODS Goods sold and delivered – Action for – Delivery of wrong goods – Whether buyer accepted goods – Merit in defence of non-acceptance – Counterclaim raising triable issue – Application for summary judgment dismissed – Sale of Goods Act 1957, s 42

Digest :

Wadkin Robinson (M) Sdn Bhd v Rimber Industries Sdn Bhd Civil Suit No 22-441-1992 High Court, Shah Alam (Mohd Hishamudin JC).

See sale of goods, Vol 11, par 651.

692 Goods sold and delivered -- Action for

11 [692] SALE OF GOODS Goods sold and delivered – Action for – Limitation

Summary :

Held: the limitation to an action for goods sold and delivered, where there is no writing, other than a receipt for the goods, is three years under sub-s 9, cl 1 of Act XIV of 1859, as the non-payment of the price is merely a breach of contract.

Digest :

Tungku Muda Malim v Khoo Tean Tek [1878] 1 Ky 453 High Court, Straits Settlements (Wood J).

693 Goods sold and delivered -- Claim for price of goods supplied to defendant

11 [693] SALE OF GOODS Goods sold and delivered – Claim for price of goods supplied to defendant – Late delivery – Issue of open-ended guarantee by defendant to customer – Right of set-off – Indemnity

Summary :

The plaintiffs were manufacturers of fabrics and textiles ('the said goods'). They agreed to supply and supplied the said goods to the defendants who manufactured and exported garments. The plaintiffs claimed the sum of US$529,895.55 being the price for the said goods sold and delivered to the defendants. The plaintiffs had earlier applied for summary judgment. The defendants opposed the plaintiffs' claim for summary judgment on the grounds that there were a number of triable issues in fact and in law and they had a right of set-off and counterclaim. The issue of law was whether the defendants could raise and claim a set-off/counterclaim in respect of a contingent exposure under unilateral open-ended guarantees which they had issued to their customer. The defendants had issued these open-ended guarantees to their customer under which they were potentially liable in respect of the quality of the said goods bought from the plaintiffs and resold as manufactured goods to their customer. The defendant were given unconditional leave to defend the whole of the plaintiffs' claim by the assistant registrar. The plaintiffs appealed.

Holding :

Held, allowing the appeal: (1) having regard to the circumstances of this case, the plaintiffs were entitled to claim the sum of US$359,898.55 from the defendants. The defendants would be given unconditional leave to defend the balance of the plaintiffs' claim amounting to US$170,000; (2) in the instant case, there had been late delivery of the fabrics to the defendants of about one month and the defendants had reasonable grounds for setting up a defence in respect of their set-off/counterclaim; (3) in the court's opinion, there could be no set-off as the open-ended guarantees issued by the defendants to their customer had not been called upon. In that context, a counterclaim for an indemnity was also not a set-off and defence. A mere exposure of the defendants to a claim from their customer/end buyers was insufficient to enable them to claim the relief for an indemnity from the plaintiffs.

Digest :

Fashion Textiles Industries (S) Pte Ltd v Chin Heng Garments Factory Pte Ltd Suit No 2540 of 1991 High Court, Singapore (Amarjeet JC).

694 Goods sold and delivered -- Fitness for purpose

11 [694] SALE OF GOODS Goods sold and delivered – Fitness for purpose – Collateral contract – Whether breach entitled buyer to repudiate main contract – Anticipatory breach – Acceptance of repudiation – Damages – Depreciation loss – Transport and possession charges

Summary :

Under a contract of sale entered into between the plaintiff and the defendant, two new hydraulic excavators were sold and delivered to the defendant by the plaintiff. The defendant subsequently alleged that the said excavators were not suited to the purpose for which he had purchased them and that he was entitled under an oral collateral warranty allegedly given by the plaintiff, to return the said excavators, which he did, to the plaintiff without incurring any financial obligations, in the event that he found the said excavators to be unsuitable. The plaintiff repossessed the said excavators and sued for breach of the contract of sale, claiming for the loss of the depreciated value of the said excavators and also for the recovery of rentals for two other units of excavators which he alleged were rented out to the defendant pending the delivery of the new excavators which the defendant had purchased. The issues before the court were: (a) whether the existence of the alleged oral collateral warranty had been established by the defendant; (b) if such a collateral warranty was in existence, was the defendant justified in returning the said excavators and in refusing to pay the purchase price; (c) if no such collateral warranty existed, was the defendant's refusal to pay the purchase price tantamount to a repudiation of the said contract; (d) whether the plaintiff was entitled to receive rentals for the two other old excavators; and (e) the quantum of damages to which the plaintiff would be entitled if there was a breach of the said contract by the defendant.

Holding :

Held, allowing the plaintiff's claim in part: (1) the term 'collateral warranty' as used by the defendant was improper since he was not suing for damages based on the oral statement allegedly made by the plaintiff but was seeking the right to terminate the said contract. Therefore, the oral statement allegedly made by the plaintiff could not be interpreted to mean a 'collateral warranty' but should properly be taken to mean a 'collateral contract' which may exist side by side with the main contract but is separate from it; (2) the onus of establishing the existence of a collateral contract is upon the party asserting it. The defendant had not adduced sufficient evidence to satisfy the court as to the existence of the alleged collateral contract. The only evidence was the mere assertion by the defendant's sole witness that it existed and that witness was not even called to testify. Hence, no collateral contract was established to be in existence; (3) even if the existence of the alleged collateral contract could be established, the proposition that the defendant would have the right, by virtue of that alleged collateral contract, to terminate the main contract was misconceived. If that alleged collateral contract entitled the defendant to return the said excavators without any financial obligation, the main contract would become meaningless as the defendant was no longer under any obligation to buy the said excavators under the main contract. Any representation made by a party to a contract which has the effect of destroying the main contract, cannot become a collateral contract, as a collateral contract normally relates to a warranty and not to a fundamental term of the main contract; (4) in any case, the breach of a collateral contract only entitles the aggrieved party to a right to sue for damages for misrepresentation, or breach of condition or warranty under that collateral contract, and not to a right to repudiate the main contract; (5) the action of the defendant in requesting the plaintiff to repossess the said excavators was one which clearly went to the root of the main contract of sale and which amounted to a repudiation of the said contract as it evinced an intention not to proceed with the said contract of sale anymore. And it did not matter that at that particular point in time when the defendant returned the said excavators to the plaintiff, payment of the purchase price was not yet due. The plaintiff could rightfully treat the defendant's said action as an anticipatory breach of the said contract; (6) although the plaintiff succeeded in proving a breach of the contract of sale on the part of the defendant, only nominal damages were granted to him as he was unable to adduce any evidence to prove his claim that the said excavators had depreciated in value by the time they were recovered from the defendant; (7) the plaintiff's claims for transport and repossession charges, as well as for the cost of repairing and servicing the said excavators whilst they were in the possession of the defendant, were allowed.

Digest :

Industrial & Agricultural Distribution Sdn Bhd v Golden Sands Construction Sdn Bhd [1993] 3 MLJ 433 High Court, Kuala Lumpur (Visu Sinnadurai J).

695 Goods sold and delivered -- No agreed price

11 [695] SALE OF GOODS Goods sold and delivered – No agreed price – Whether s 8(2) of Sale of Goods Act 1893 applied – Sale of Goods Act 1893, s 8(2) – Contract – Price of goods sold and delivered – No agreed price – Whether s 8(2) of Sale of Goods Act 1893 applied.

Summary :

This was an action for the price of goods sold and delivered by the plaintiffs to the defendants at the defendants' request. The claim was for S$9,273.53 but the defendants admitted liability of S$4,847.35 for which the plaintiffs signed judgment and obtained payment after levying execution. The defendants denied liability of the remaining amount and stated in the pleadings that no prices were agreed but it was an implied term of the verbal contract that the goods were to be at reasonable prices or alternatively at fair market value and a quantity of them were not. At the trial, the defendants stated that it was an express term of the contract that the plaintiffs would supply the goods at fair market prices and that the plaintiffs had agreed to give the defendants a credit note for the amount alleged to be overpaid. It was also argued by the defendants that as no price was fixed they were only liable to pay a reasonable price by virtue of s 8(2) of the Sale of Goods Act 1893.

Holding :

Held, inter alia: it was not an express term of the contract that the goods should be supplied at fair market prices or that the plaintiffs had agreed to give a credit note. The price of the goods was determined by the dealing between the parties and, consequently, the defendants were precluded from having recourse to s 8(2) of the Sale of Goods Act 1893.

Digest :

Hock Hin & Co v Allwie & Co Ltd [1961] MLJ 232 High Court, Singapore (Buttrose J).

696 Goods sold and delivered -- Place of payment

11 [696] SALE OF GOODS Goods sold and delivered – Place of payment – Contract was silent on place of payment – Whether buyer has duty to apply to seller to appoint place of payment – Whether place of payment was place where seller issued letter of demand against buyer – Contracts Act 1950, s 50

Summary :

D was a company with its registered office at Batu Pahat, Johore. D had a branch at Seremban, Negeri Sembilan where it sold and delivered goods to A from time to time. A carried on business at Seremban. Subsequently, D closed its branch at Seremban. D sent a letter of demand from Batu Pahat demanding payment of an amount due from A for goods sold and delivered. Since A did not pay, D issued a summons against A in the Batu Pahat magistrate's court. The summons was served by substituted service through newspaper advertisement because D had difficulty serving the summons on A. D obtained judgment against A who did not appear in court on 5 October 1987. D also issued a bankruptcy notice against A which was served by way of substituted service through newspaper advertisement. In May 1989, A applied to set aside D's default judgment on two grounds. A firstly argued that since A ordered and collected the goods at Seremban, the cause of action arose or the facts on which the proceedings were based occurred at Seremban. A therefore argued that the Batu Pahat magistrate's court had no jurisdiction to try the case. A then argued that there were triable issues. A confessed issuing five postdated cheques to D but he stopped payment on all these cheques. A also admitted that he owed a lesser sum to D. The learned magistrate dismissed A's application and A appealed to the High Court.

Holding :

Held, dismissing the appeal: (1) the parties had not contracted, either expressly or by implication, from the terms of the contract and the surrounding circumstances, for the payment of the goods at a fixed place. Accordingly, A had the duty under s 50 of the Contracts Act 1950 to apply to D to appoint a reasonable place for payment and to make payment at that place. Since D had issued a letter of demand from Batu Pahat, A was bound to make payment there. The cause or matter thus arose within the local limits of the jurisdiction of the Batu Pahat magistrate's court and that court had jurisdiction to hear the case pursuant to s 76(2) of the Subordinate Courts Act 1948; (2) A was guilty of delay and did not satisfactorily explain why he delayed in answering D's claim; (3) A did not explain or give particulars regarding his alleged payment to D. A also did not show merits for not paying the balance due to D.

Digest :

Liew Chai v Zin Fatt Trading (Seremban) Sdn Bhd Civil Appeal No 11-22 of 1989 High Court, Muar (Richard Talalla J).

697 Illegality -- Breach of contract

11 [697] SALE OF GOODS Illegality – Breach of contract – Whether it vitiates a subsequent contract between the parties – Merchandise Marks Ordinance – Contract – Sale of goods – Illegality of contract – Whether it vitiates a subsequent contract between the parties.

Summary :

The parties had entered into a contract for the sale of articles described as 'Platinum Fountain Pens'. This contract could have been avoided for illegality for the reason that it contravened the Merchandise Marks Ordinance. The defendants (appellants in the appeal) were in default on this contract and the plaintiff issued a writ against the defendants. Subsequently, the plaintiff agreed not to proceed with the suit on the understanding that the defendants entered into and complied with the terms of a contract for the purchase of 'Lamalad' pens. Subsequently, the defendants repudiated this contract and the plaintiff took action against them. At the trial, the learned judge held that the illegality of the first contract attached itself to and vitiated the second contract. He therefore dismissed the claim for damages and also a counterclaim for return of the deposit. The defendants appealed in respect of their counterclaim and the plaintiff gave notice of a cross-appeal.

Holding :

Held: the second contract was a perfectly lawful one and in no sense furthered the unlawful purpose of the first one and, therefore, the appellants/defendants were liable for breach of contract.

Digest :

Sin Hwa Chinese Goods Co v Wadhumal Dalamal [1955] MLJ 29 Court of Appeal, Singapore (Murray-Aynsley CJ, Mathew CJ (FM).

698 Implied conditions -- Breach of

11 [698] SALE OF GOODS Implied conditions – Breach of – Acceptance of goods by buyer – Contract – Sale of goods – Breach of implied conditions – Acceptance of goods by buyer – Sale of Goods Act 1893, ss 14 and 35.

Digest :

Eastern Supply Co v Kerr [1974] 1 MLJ 10 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekeram JJ).

See sale of goods, Vol 11, par 626.

699 Implied conditions -- Breach of

11 [699] SALE OF GOODS Implied conditions – Breach of – Contract of sale – Whether subsequent entry into hire purchase with third party supercedes contract of sale – Warranty of quiet possession and freedom from encumbrance – Sale of Goods Act 1979 [UK]

Summary :

The defendant sold a van to the first plaintiff ('the customer') in 1983. The customer paid a deposit but being unable to settle the balance on his own, entered into a hire-purchase agreement with the second plaintiff ('the finance company') to obtain the necessary finances. Full settlement of the rent and the term charges under the hire-purchase agreement was made in January 1985 and the registration card of the van was returned to the customer. In May 1985, the van and its registration card were seized by the Customs and Excise Department, Kuching as material evidence in an investigation regarding its import. The customer and the finance company jointly brought an action against the dealer for an alleged breach of the implied condition of the dealer's right to sell and to give possession, and sole and exclusive use and benefit of the van, reliance being placed on the implied terms in the Sale of Goods Act 1893 though the Act was not specifically pleaded as such. The trial magistrate dismissed the claim of the finance company on the ground that it had suffered no loss or damage as it had been fully paid by the customer. As for the customer, she found that there had been a sale of the van by the defendant to the customer and this was not wiped out by the subsequent hire-purchase agreement between the customer and the finance company. She then held that there was a breach of the implied warranty of quiet possession of the goods by reason of the seizure of the van as well as the breach of the implied warranty of freedom from any charge or encumbrance in favour of any third party by reason of the customer having to pay to the Customs and Excise Department a sum of RM500 to buy back the van under s 115(1)(b) of the Customs Act 1967, both warranties implied by s 14 of the Sale of Goods Act 1957 (West Malaysia) on which she relied. She awarded damages and costs to the customer. The defendant appealed.

Holding :

Held, dismissing the appeal: (1) this case was unlike the normal situation where the finance company bought goods by paying the dealer the purchase price and then letting it to the hirer on hire purchase. The evidence showed that there had been a sale of the van by the defendant to the customer prior to the entry of the hire-purchase agreement between the customer and the finance company and thus the magistrate was justified in concluding as such; (2) it was obvious that there had been a breach of the implied warranty of quiet possession of the van due to the lawful seizure of the van by the Customs and Excise Department. If the buyer's full possession of the goods is disturbed by a third party acting within his or its rights, the buyer is entitled to hold the seller liable and to be indemnified by the seller. The passage of time after the purchase, in itself, is no bar to the buyer's right of protection since time does not begin to run until the buyer's possession is disturbed. The correct law applicable in Sarawak in this case by virtue of s 5(2) of the Civil Law Act 1956 was the Sale of Goods Act 1979 (UK) ('the 1979 Act') but the error at the trial due to the fact that counsel had relied on the Sale of Goods Act 1893 (UK) whereas the trial magistrate had relied on the Sale of Goods Act 1957 (West Malaysia) would not have affected the conclusion of the trial magistrate as the result on the issue would be the same if the said the 1979 Act had been applied; (3) the damages awarded by the magistrate to the customer would stand as the amounts paid by the customer in repurchasing the van and repairing it was not challenged by the defendant. The sum awarded for the loss of use of the van was just and reasonable, considering that the customer was deprived of its use for five years.

Digest :

Heng Long Motor Trading Co v Osman bin Abdullah [1994] 2 MLJ 456 High Court, Kuching (Chong Siew Fai J).

700 Implied conditions -- Fitness for purpose

11 [700] SALE OF GOODS Implied conditions – Fitness for purpose – Whether machine sold under patent or trade name so that there was no implied condition as to fitness – Whether buyer had relied on seller's skill – Sale of Goods Act 1957, s 16(1)(a)

Summary :

The appellants ('the plaintiffs') had sued the respondents ('the defendants') for damages in respect of an Alpla hs 40/2000 blow moulding machine ('the Alpla') and a Boe-Therm temperature controller ('the Boe-Therm'), from the defendants as agent for their foreign principals ('the manufacturers'). It was alleged that the Alpla failed to meet specifications, was not merchantable and was not fit for the purpose for which it was bought, while the Boe-Therm was not fit for the purpose for which it was bought. The machines were required by the plaintiffs for the manufacture of plastic medicine bottles. The defendants denied liability on the grounds, inter alia, that they were only agents for the vendor and that both machines met their specifications, were merchantable and fit for their purposes and that the contract for the sale of each of the machines was for a specified article under its patent or trade name and accordingly the proviso to s 16(1)(a) of the Sale of Goods Act 1957 ('the SOGA') applied, or in any event, the plaintiffs had not relied on their skill and judgment, and therefore, there was no implied condition of fitness for purpose. The defendants further contended that any faults with the Alpla were caused by defects in the fabrication of certain moulds needed to commission the machinery which was the responsibility of the plaintiffs and which were fabricated locally at the instance of the plaintiffs. The plaintiffs replied that the designs drawings of the moulds provided by the manufacturers were faulty. Abdul Razak J found in favour of the plaintiffs but on appeal a retrial was ordered. This was conducted before Shaik Daud J who dismissed the claim on the ground that the defendants were not liable as they were only agents for their principal and had themselves not entered into any contract with the plaintiffs. On appeal to the Supreme Court, the court held that the defendants were liable as agents for a merchant resident abroad and were by s 183(a) of the Contracts Act 1950, presumed to have contracted to be bound by the contract entered into by their principals. The case was remitted to Shaik Daud J for him to adjudicate on the rest of the issues raised in the trial. His Lordship dismissed the plaintiffs' claim with costs on the grounds, inter alia, that there was no implied condition of fitness under s 16(1)(a) of the SOGA as the machines were purchased under their patent names and the defects were caused by the moulds fabricated by the mould makers commissioned by the plaintiffs. His Lordship also rejected the plaintiffs' claim for special damages and loss of profits. The plaintiffs have appealed.

Holding :

Held, dismissing the appeal: (1) clearly the plaintiffs had relied on the defendants' skill resulting in there being an implied condition that the machines would be reasonably fit for the purposes for which they were required. The situation here was a far cry from the purchase of a common article sold under a popular brand name which is picked off the shelf, which is the sort of situation where the proviso under s 16(1)(a) of the SOGA could be invoked. The judge was therefore wrong in applying the proviso to s 16(1)(a) on the facts of the instant case; (2) on the totality of the evidence, it was for the appellants to have had the moulds fabricated. Each set of the components required had to be fabricated together with the relevant mould, which the plaintiffs caused to be effected by using a local mould maker. There was no evidence to show that the manufacturers' design drawings were faulty and furthermore, the plaintiffs' mould maker had testified that he had not followed those designs completely at the request of the plaintiffs' managing director; (3) clearly neither the defendants nor the manufacturers could be blamed for the delay in having the machines commissioned. Apart from several minor problems, all the problems encountered appeared to have been due to either faulty electrical supply and/or the faulty fabrication of the component parts of the moulds, neither of which the respondents and/or the manufacturers could be held to be responsible for; (4) the judge was correct in holding that the plaintiffs had failed to prove either the manufacturers' or defendants' liability and the special damages claimed. Furthermore, the plaintiffs' claim for loss of profits was based on projections made before the purchase of the machines and there was no evidence of any contracts for the supply of bottles having been entered into. Therefore, the judge's decision that the claim should be dismissed with costs was upheld.

Digest :

Medicon Plastic Industries Sdn Bhd v Syarikat Cosa Sdn Bhd [1995] 2 MLJ 257 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, VC George and Abu Mansor JJCA).

701 Implied conditions -- Implied conditions as to quality or fitness

11 [701] SALE OF GOODS Implied conditions – Implied conditions as to quality or fitness

Summary :

Held: where the defendants sold to the plaintiffs 100 cases of Red Bird brand condensed milk and the contract contained a clause to the effect that the buyers must examine the goods before delivery and the sellers were not answerable for any dispute arising after delivery had been effected it was held that it was of the essence of the contract that the milk should be fit for human consumption and the clause in the contract referred to above afforded no defence.

Digest :

Lim Khiam Soon v The Straits Lumber Co [1926] 1 QN 4 Supreme Court, Straits Settlements

702 Implied conditions -- Sale of rubber

11 [702] SALE OF GOODS Implied conditions – Sale of rubber – FOB Singapore – 'Quality guaranteed at destination'

Summary :

A contract for the sale of rubber FOB Singapore, contained the clause 'quality guaranteed at destination'.

Holding :

Held: the seller's duty under the contract was to deliver to a ship selected by the buyer and that from that time he ceased to have control. Under the circumstances, the operation of the words quoted was limited to defects due to a faulty condition of the goods when loaded.

Digest :

Brinkmann & Co v Hoe Seng Hin & Co [1930] SSLR 225 High Court, Straits Settlements (Stevens J).

703 Impossibility of performance -- Claim for damages

11 [703] SALE OF GOODS Impossibility of performance – Claim for damages

Summary :

In an action brought in Singapore in August 1917, the defendants counterclaimed damages for failure by the plaintiff to deliver sugar sold by him to be shipped and delivered at Bombay. The shipment of the sugar had been prevented by the requisitioning of ships by the British Government. The Civil Law Ordinance, s 5(1), provides that in all questions which arise for decision in Singapore 'with respect to mercantile law generally, the law to be administered shall be the same as would be administered in England in the like case, at the corresponding period, unless in any case other provision is, or shall be made by statute'.

Holding :

Held: the ordinance made the Defence of Realm (Amendment No 2) Act 1915, and the Courts (Emergency Powers) Act 1917, applicable to the case, and that the latter Act gave a good defence to the counterclaim whether the requisitioning was under the Defence of the Realm Act 1914, or under the prerogative power. Judgment of the Court of Appeal reversed.

Digest :

Seng Djit Hin v Nagurdas Purshotumdas & Co [1923] AC 444 Privy Council Appeal from the Straits Settlements (Viscount Haldane, Lord Dunedin, Lord Atkinson and Lord Wrenbury).

Annotation :

[Annotation: The decision of the trial judge and the Court of Appeal are reported in 14 SSLR 181.]

704 Impossibility of performance -- Sellers unable to ship goods because of force majeure events

11 [704] SALE OF GOODS Impossibility of performance – Sellers unable to ship goods because of force majeure events – Performance bond securing due delivery of goods – Whether buyers entitled to call on performance bond

See sale of goods, para V [90].

Digest :

China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd [1997] 2 SLR 707 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu And LP Thean JJA).

705 Mercantile agent -- Liability

11 [705] SALE OF GOODS Mercantile agent – Liability – Purchaser issued trust receipts to bank to finance sale of goods – Purchaser sold goods to third party – Whether purchaser acted as bank's mercantile agent in selling to third party – Whether third party obtained title to goods upon completion of sale by purchaser

Summary :

In 1982, P1 Sdn Bhd executed a debenture over its assets in favour of P2 as consideration for the granting of overdraft facilities by the latter to the former. The debenture provided, inter alia, that P1 Sdn Bhd irrevocably undertook to assign the benefit of future contracts to be executed by P1 Sdn Bhd in favour of P2. In 1984, P1 Sdn Bhd executed a second debenture in P2's favour. Both the debentures were registered under the Companies Act 1965. D2-D3 as main contractors for erecting a building appointed P1 Sdn Bhd to supply and install glass materials for the building ('the sub-contract'). P1 Sdn Bhd in turn contracted with X for the supply of the glass materials. D1 financed X's purchase of the glass by firstly requiring X to issue trust receipts in D1's favour. As further security P1 Sdn Bhd executed an agreement whereby P1 Sdn Bhd purported to assign absolutely all benefits under 'the sub-contract' to D1 ('the assignment'). D2-D3 also undertook to pay the proceeds of 'the sub-contract' directly into P1 Sdn Bhd's account with D1. The glass materials were eventually purchased and installed. Subsequently, P2 appointed receivers and managers for P1 Sdn Bhd pursuant to the debentures. P1-P2 applied to the High Court for, inter alia, a declaration that D1's interest in 'the assignment' was subject to P2's interest in the debentures.

Holding :

Held, granting the declarations: (1) D1 had title to the glass by virtue of the trust receipts and X held them on trust for D1. Thereupon, X assumed the role of D1's mercantile agent and in that capacity X completed the sale and delivery of the glass to P1 Sdn Bhd whereupon P1 Sdn Bhd obtained good title to the glass. Any proceeds of the sale of the glass receivable by X had to be held on trust for D1; (2) X, however, was never paid for the glass. Accordingly, there was nothing in X's hands to hold on trust for D1; (3) D1's argument that it was entitled to invoke the doctrine of following trust money or that into which it had been converted did not apply because firstly since no payment was received for X's sale, there was nothing held in trust and in any event the doctrine only applied where there was a fiduciary relationship between the parties. In this case, there was no such relationship between P1 Sdn Bhd and D1; (4) in the face of the debentures, P1 Sdn Bhd could not properly assign its interest in 'the sub-contract' without P2's written consent. Since the debentures were duly registered, D1 was deemed to have notice of them and of their terms and conditions. Accordingly, D1 had to get behind P2 in the queue.

Digest :

Aluminex (M) Sdn Bhd & Anor v United Malayan Banking Corp Bhd & Ors [1992] 1 MLJ 435 High Court, Kuala Lumpur (VC George J).

Annotation :

[Annotation: Reversed on appeal. See [1993] 3 MLJ 587.]

706 Merchantable quality -- Faulty design

11 [706] SALE OF GOODS Merchantable quality – Faulty design – Bottle-making machine not sold with moulds – Design of moulds supplied by manufacturer – Whether unmerchantability due to manufacturer's faulty design or defective manufacturing by buyer's mould maker

Digest :

Medicon Plastic Industries Sdn Bhd v Syarikat Cosa Sdn Bhd [1995] 2 MLJ 257 Court of Appeal, Kuala Lumpur (Gopal Sri Ram, VC George and Abu Mansor JJCA).

See SALE OF GOODS, Vol 11, para 678.

707 Merchantable quality -- Fitness for purpose

11 [707] SALE OF GOODS Merchantable quality – Fitness for purpose – Claim by plaintiff who bought automatic pellet-making machine – Whether there was breach of warranty – Whether machine was merchantable good – No rejection by plaintiff despite complaints of non-functionality – Sale of Goods Act 1957, s 16

Summary :

The plaintiff, who was a wholesaler in medicated drinks and medical pellets, bought an automatic pellet-making machine from the defendant. The plaintiff claimed that the machine was not operative and functional when it was delivered to him and despite repeated demands and notice to the defendant and its manufacturer in Taiwan, the defendant had failed to rectify the defects. As a result, the plaintiff suffered loss and damages. The proprietor of the defendant denied the plaintiff's claims and counterclaimed for the purchase price.

Holding :

Held, dismissing the plaintiff's claim and allowing the defendant's counterclaim: (1) it was clear from the plaintiff's statement of claim that the sale was brought about on the basis that the plaintiff knew what he was buying and that he was not relying on any warranty expressed or implied that the machine was fit for the purpose for which the plaintiff required it for, or that the machine was of merchantable quality; (2) a party could not depart from his pleading. As the pleading stood, the law to be applied was therefore caveator emptor. On this ground alone, the plaintiff's claim had to fail as the sale had been completed on the delivery of the machine by the defendant, there being no condition or warranty that it should be fit for the purpose for which it was required or that it should be of merchantable quality; (3) a machine that was of `merchantable quality' was one that was `reasonably capable of performing the work for which it was designed'. The court accepted the evidence of the proprietor of the defendant as being more probable. His evidence was supported by T who stated that the machine was fully capable of producing the pellets when he installed it; (4) the court found it more probable than not that the machine supplied to the plaintiff by the defendant was merchantable, ie reasonably capable of producing the work described in the brochure, and the failure of the plaintiff to achieve the result he expected was due to his inability to prepare the right mixture and to make the necessary adjustment to the machine; (5) in spite of his complaint that the machine was not functional, the plaintiff had not rejected it. Unless he had rejected the machine, the plaintiff could not claim for the return of the sums that he had paid for to the defendant although he may be able to claim for the loss and damages arising from its non-functionability provided this was proved.

Digest :

Mun Keong Medical Hall v Astraco Industrial Supplies & Trading Co Guaman Sivil No 2009 of 1984—High Court, Ipoh (Kang Hwee Gee J).

708 Merchantable quality -- Fitness for purpose

11 [708] SALE OF GOODS Merchantable quality – Fitness for purpose – Equipment for engine of ship

Summary :

P were the manufacturers and suppliers of Deutz marine engines and spare parts. Their claim against D was for the price of a spare part of an injector pump supplied by P to be used on the main engine of D's ship. D maintained that the spare part was defective in that it had four oversized springs. The main engine of the ship was extensively damaged and the vessel was crippled and placed in a position of peril. The vessel had to be towed into the port for temporary repairs. Permanent repairs were then effected. D were put to considerable loss and expenses, and they claimed damages against P. At the outset of the trial, the parties agreed to have the issue of liability in the counterclaim of D tried first. The main issue was whether the consequential loss suffered by D could be attributed to the supply of oversized springs in the spare part.

Holding :

Held, giving judgment for D on their counterclaim: (1) after considering all the evidence, the court accepted the evidence of D and found that the long thicker helical springs and the shorter retaining nuts installed in the spare part were the cause of the engine breaking down; (2) the spare part supplied by P was meant to be installed as delivered without D having to open it up and examine the springs; (3) even if D had opened up the spare part on delivery, the chief engineer would not have known that it was a wrong combination. D relied entirely on P to supply a spare part, which could be used with the engine on the ship; (4) ss 14(2) and 14(3) of the Sale of Goods Act 1979 [UK] imply into contracts of sale by way of trade a condition that the goods are merchantable and reasonably fit for the purpose. If there has been a breach of contract, it is immaterial whether or not the seller has been negligent. He is equally liable for latent defects in the articles which he sells as for defects discoverable on reasonable examination; (5) as P in this case were both the sellers and manufacturers of the spare part supplied to D, they were liable to D both in contract and in tort for negligence in the manufacture of the spare part; (6) independently of any warranty, a person who manufactures and sells an article owes a duty to take reasonable care in its design and manufacture. The duty is not to cause injury to the consumer's person or property; (7) the duty of care arises where the manufacturer sells the article in such a form as to show that he intends it to reach the user in the form in which it left him without any reasonable likelihood of such intermediate examination as would have revealed the danger and the article is put to the use for which it is intended.

Digest :

Deutz Far East (Pte) Ltd v Pacific Navigation Co Pte Ltd [1990] 1 MLJ 65 High Court, Singapore (Chua J).

709 Merchantable quality -- Meaning of

11 [709] SALE OF GOODS Merchantable quality – Meaning of – Implied condition in contract – Exception – Whether gemstones of merchantable quality – Sale of Goods Act 1979, s 14(2) & (6)

Summary :

The plaintiff purchased a number of precious stones from the defendants' shop in Singapore between 10 to 14 September 1986, the total value of the purchases being in excess of S$1m. Some 39 beryls were purchased, evidenced by five of the 12 invoices which stated that the goods sold were not returnable. Each stone was accompanied by a gem identification certificate from a Singapore company, International Gemological Laboritory ('IGL'), which contained a number of limitations as to the appraisal of the stones. The purchases were then sent to Switzerland where they were tested by Gubelin, a gemological laboratory which reported that some of the stones had been treated in that their colour faded under strong illumination. The plaintiff advised the defendants about the report and was advised that the stones would be replaced by other stones. However, the plaintiff rejected this, stating that the IGL certificates were not compatible with the Gubelin testing and proposed to return the stones for a full refund plus the interest charges. The defendants refused stating, inter alia, that the goods sold were not returnable; the stones were accepted as they were; the stones were purchased without any coercion and that most coloured stones are treated in some way. The plaintiff then brought an action for the return of the amount in the five invoices or in the alternative, damages.

Holding :

Held, finding for the plaintiff and ordering the defendants to refund the value of the 39 stones in exchange for their return plus interest on the amount refunded: (1) s 14(2) of the Sale of Goods Act 1979 provides that when goods are sold in the course of business there is an implied condition that the goods are of merchantable quality except where the defect was brought to the buyer's attention before the contract was made or where the buyer examined the goods before purchase and the defect ought to have been apparent. A sale is done in the course of business if selling that merchandise is the declared vocation of the seller. The sale was done in the course of business as the defendants were dealers of gemstones and held themselves out as being one of the biggest dealers; (2) 'merchantable quality' is defined in s 14(6) of the Sale of Goods Act to mean fit for the purpose for which goods of that kind are commonly bought for. 'Merchantable quality' comprises elements of prescription, purpose, condition and price, the significance of which will vary with the goods in question. The evidence pointed to the stones not being of merchantable quality; (3) there was no evidence that the defects in the stones were brought to the buyers' attention before the contract was made. The defects were not discoverable upon examination as it was the task of a scientist and not a layman; (4) where the goods are sold in the course of business and the buyer makes it known to the seller, expressly or impliedly, the purpose for which they are bought, there is implied in that sale a condition that the goods are reasonably for that purpose unless the buyer did not rely or it was unreasonable for him to rely on the seller's skill or judgment. The seller bears the burden of showing that the buyer did not rely on his skill and judgment or that it would have been unreasonable for him to so rely. The purpose of the sale here was for resale, established by the plaintiff's evidence and the defendants' admissions. Additionally, the inference of resale would reasonably be drawn in the circumstances of such a large quantity being purchased. It is settled law that a resale can be a sale of any goods; (5) the breach of a condition in the contract entitled the plaintiff to the remedy of recission as of right. It was not a matter of discretion. The clause in the invoice that goods sold were not returnable did not preclude this as the efficacy of the clause was confined to instances where a buyer changed his mind without any fault or breach on the part of the seller. It did not nullify the court's power to order rescission of the contract or award damages. Further, the disclaimer in the IGL certificate did not preclude the plaintiff from the remedy as the IGL terms did not form part of the contract between the plaintiff and the defendants as the plaintiff did not contract on the basis of the IGL certificates. The conditions must be strictly construed to apply only between IGL and its customer, in this case, the defendants.

Digest :

Gobaishi v House of Hung Pte Ltd Suit No 1723 of 198 High Court, Singapore (GP Selvam J).

710 Merchantable quality -- Natural goods

11 [710] SALE OF GOODS Merchantable quality – Natural goods – Whether s 14(2) of the Sale of Goods Act 1979 applicable to sale of natural goods – Sale of Goods Act 1979, s 14(2)

Summary :

The plaintiffs' claim was for the balance sum of S$16,041.05 for goods supplied and work done. The defendant did not dispute this but alleged that they had a counterclaim of S$60,236 with a right of set-off of the plaintiffs' claim and judgment for the difference. The counterclaim was based on the damages allegedly suffered by the defendant as a direct and natural result of the plaintiffs' breach of an implied condition to supply goods (unpolished Perlato Fiorito marble) that were of merchantable quality and reasonably fit for its purpose under s 14(2) of the Sale of Goods Act 1979 ('the Act'). About a month after the laying of the marble floors at the defendant's premises, it appeared patchy and powdery.

Holding :

Held, allowing the plaintiffs' claim and dismissing the defendant's counterclaim: (1) the question of whether or not s 14(2) of the Act applies to a natural product such as marble must depend on whether or not the seller was required to work on the natural product before the sale was effected. When a buyer buys unpolished marble, he is buying the natural product but when a buyer buys polished marble, he is buying a product on which the seller has worked on, and by that very reason it is rendered a product of a different description and of a different price from unpolished marble. This analysis fits in well with what is meant by 'merchantable quality' in the Act; (2) considering the evidence on a balance of probabilities, no express or implied warranty had been given by the plaintiffs that unpolished marble could be made to shine as the marble displayed without any blemishes such as powdery patches.

Digest :

Hua Tong (Pte) Ltd v Stephen Law Wing Kit Suit No 2531 of 1988 High Court, Singapore (Karthigesu J).

711 Merchantable quality -- Proof of

11 [711] SALE OF GOODS Merchantable quality – Proof of – Onus of proving unmerchantability lies on buyer – Missing serial numbers on television sets – Insufficient evidence adduced – No particulars in pleading as to how defects rendered goods unmerchantable

Summary :

Pursuant to a contract for the sale of 320 units of TV sets, the appellants delivered the goods to the respondents. The respondents rejected the goods on the ground that the serial numbers on the sets had been removed which rendered the goods unmerchantable. The appellant then commenced an action in the magistrate's courts for difference between the contractual price and the resale price of the rejected goods to a new purchaser. The lower court dismissed the appellants' claim. The appellants appealed.

Holding :

Held, allowing the appeal: (1) there is implied in every contract for the sale of goods that the goods supplied will be of merchantable quality. Further, if the buyer has made known to the seller any particular purpose for which the goods are being bought, there is also implied a condition that the goods would be reasonably fit for such purpose; (2) the onus of proving that any particular goods are unmerchantable was upon the respondents. In their defence, having specified the missing serial numbers on the TV sets, the respondents (defendants) stated only that by reason thereof, they had become entitled to repudiate the goods. They gave no particulars in the pleading of how those defects rendered the goods unmerchantable and no additional particulars were given by their witnesses. There was therefore insufficient evidence to support the contention that the goods were not of merchantable quality.

Digest :

Everjoy Enterprises Pte Ltd v Combi (Singapore) Pte Ltd District Court Appeal No 46 of 1994 High Court, Singapore (Judith Prakash JC).

712 Merchantable quality -- Proof of

11 [712] SALE OF GOODS Merchantable quality – Proof of – Sale of goods – Merchantable quality – Proof of – Sale of Goods Act 1893, ss 14(1) & (2).

Summary :

This was an appeal against the decision of the High Court which had awarded the plaintiffs the sum of S$2,369.90 as damages for breach of contract in respect of the sale by the defendants to the plaintiffs of tapioca flour. On appeal it was argued that the plaintiffs had not, on the facts discharged the onus of proving that the goods were of unmerchantable quality. The evidence showed that a portion of the flour had been discoloured. The sacks in which the tapioca was kept had been painted with Chinese letters in red ink and this red ink had penetrated the jute cover with the result that some of the tapioca flour was discoloured. As a result, the flour (which was to be delivered to a German firm) was declared under the German regulations to be unfit for human consumption. There was no evidence that the part of the flour which was said to be contaminated by the red colour was insanitary or contained any deleterious ingredient.

Holding :

Held, allowing the appeal: (1) in order to show that the goods were not of a merchantable quality it had to be shown that the goods were of no use for any purpose for which such goods would normally be used and were therefore not saleable under that description; (2) nor had it been satisfactorily found that it was unfit for human consumption under the law of Singapore; (3) in this case, the plaintiffs had failed to show that the tapioca flour was of unmerchantable quality under English law, as although the flour may not have been in perfect condition it was on the evidence at least unsaleable as starch;the learned trial judge had erred in law in deciding that the tapioca flour was not of a merchantable quality.

Digest :

Seng Hin v Arathoon Sons Ltd [1968] 2 MLJ 123 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Winslow J).

713 Merchantable quality -- Sale by description

11 [713] SALE OF GOODS Merchantable quality – Sale by description – Forged painting – Whether painting merchantable if found not to be by artist to whom it is attributed – Whether sale of painting was a sale by description – Description not relied on by buyer

Summary :

P bought a picture purportedly painted by Munter from D. It transpired that the painting was forged. Both P and D were art dealers. P sued D for the return of the purchase price on the ground that there was a sale by description and the goods did not correspond with the description. Alternatively, P's claim was grounded on the allegation that the painting was not merchantable. P's claim was dismissed and they appealed to the Court of Appeal.

Holding :

Held, dismissing the appeal: (1) a sale is not one by description unless the description is influential in the sale, not necessarily alone, but so as to become an essential term of the contract. Without such influence, a description cannot be said to be one by which the contract for the sale of the goods is made; (2) there cannot be a contract for sale of goods by description where it was not in the contemplation of the parties that the buyer is relying on the description. On the facts of the instant case, the description of the painting as a Munter was not relied on by P. The sale was therefore not a sale by description; (3) the fact that the picture was not by Munter did not make it unmerchantable. It could still be appreciated as a work of art. It could still be resold, albeit at a lower price. Accordingly, P's claim that the painting was unmerchantable also failed.

Digest :

Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1990] 1 All ER 737 Court of Appeal, England (Slade, Nourse and Stuart-Smith LJJ).

714 Merchantable quality -- Shipment of damaged steel plates

11 [714] SALE OF GOODS Merchantable quality – Shipment of damaged steel plates – Whether bill of lading constituted evidence of quality of goods – Apportionment of damage – Sale of goods – Shipment of damaged steelplates – Clean bill of lading – Whether bill constituted evidence of the quality of the goods between seller and buyer – Trial court's finding of 50% liability on seller – Apportionment of damage – Appeal on – Dispute only on facts, not law.

Summary :

The appellants entered into a contract of sale of steel plates with the respondents. The respondents alleged that the steel plates were in a damaged condition when they arrived. The respondents withheld payment of a portion of the purchase price so as to meet the costs of treating the damaged steel plates. The appellants sued the respondents for this sum and the respondents counterclaimed for the loss and damage allegedly suffered by them as a result of the damaged condition of the steel plates. Before the trial, consent judgment was entered in favour of the appellants for their claim in the action. At the trial on the counterclaim, counsel for both sides did not dispute on the law and the case turned entirely on facts and depended for its determination on two primary issues. The first was whether, at the time of shipment, the plates were of merchantable quality and fit for the purpose for which they were bought. The second was whether the respondents were entitled to the damages claimed by them. The trial court found that the condition of the plates was due to defects in the plates, the spillage of salt on to the plates during the discharge of the cargo and the exposure to weather in the respondents' open yard. In the result, the court found the appellants liable for 50% of the defects and awarded the respondents only 50% of the damages on the counterclaim. The appellants appealed against the trial court's decision and the respondents, in their cross-appeal, sought to vary the judgment. The appellants denied that the steel plates were damaged when shipped and relied, inter alia, upon the fact that a clean bill of lading had been issued.

Holding :

Held, dismissing the appeal and cross-appeal: (1) a bill of lading may be clean 'on its face', but may fail to disclose such qualitative defects in the goods as such defects would not normally be disclosed in a bill of lading. Moreover, it is doubtful whether the seller is able to rely on the bill of lading as evidence of the quality of the goods as against the buyer. Statements on a bill of lading, at most, constitute some evidence (though not conclusive) of the stated condition of the goods between the shipper and the carrier; (2) the court is not justified in interfering with the trial judge's findings of fact on the basis of the arguments advanced by the appellants and the respondents; (3) the apportionment of damage followed inevitably from the judge's finding that part of the damage was clearly within the respondents' risk. It has not been demonstrated that any error of law underlay the apportionment arrived at by the trial court. The trial court was clearly entitled to have the damages claimed.

Digest :

China Steel Corp v Pan Asia Shipyard & Engineering Co (Pte) Ltd [1988] 2 MLJ 475 Court of Appeal, Singapore (Wee Chong Jin CJ, LP Thean and Coomaraswamy JJ).

715 Misrepresentation -- Goods tendered not as specified

11 [715] SALE OF GOODS Misrepresentation – Goods tendered not as specified – Gross misrepresentation bordering on fraud – Injunction restraining issuing bank of letter of credit from paying out – Contract – Sale and purchase of low speed diesel oil – Goods tendered not as specified – Gross misrepresentation bordering on fraud – Injunction restraining issuing bank of letter of credit from paying out.

Summary :

By a contract, the plaintiffs agreed to buy and the first defendants agreed to sell certain quantity of 'Low speed diesel oil (Gas Oil)' with the flash point C at guaranteed 98 minimum, at a fixed price per barrel CIF Bangkok. Payment was to be made by the plaintiffs causing a letter of credit to be opened in favour of the first defendants. As requested by the plaintiffs, the second defendants, Banque Paribas, opened a letter of credit for US$928,000 in favour of the first defendants. When the shipment was tendered for delivery in Bangkok it was found, as the plaintiffs claimed on evidence, that the oil tendered was certainly not low speed oil but oil which could be classified as fuel oil or a blend of fuel oil and crude oil. Concluding that there was 'gross misrepresentation bordering on fraud,' the plaintiffs contended that the first defendants were not entitled to payment. The plaintiffs obtained an interim injunction restraining Banque Paribas from paying out under the letter of credit until after the hearing of the plaintiffs' motion to continue the injunction or until further order. The first defendants applied for the discharge of the injunction or, under prayer 3, for the plaintiffs to put up security to the satisfaction of the court to fortify their undertaking as to damages. Banque Paribas took a neutral stand in the matter.

Holding :

Held: (1) the state of evidence on the nature of the goods tendered in Bangkok and the circumstances were such as to bring this within the exception of fraud as an exception under which an issuing bank may be restrained from paying under a letter of credit as discussed in United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168; (2) order granted in terms of the plaintiffs' motion to continue with the injunction on their usual undertaking as to damages; (3) the first defendants' application dismissed, except prayer 3.

Digest :

Andoll Ltd v Korea Industry Co Ltd & Ors [1987] 2 MLJ 425 High Court, Singapore (Lai Kew Chai J).

716 Misrepresentation -- Innocent misrepresentation that goods in good condition

11 [716] SALE OF GOODS Misrepresentation – Innocent misrepresentation that goods in good condition – Breach of warranty – Damages – Contract – Sale by auction – When property passes – Fraudulent misrepresentation – Innocent misrepresentation that goods are in good condition – Whether contract can be rescinded for innocent misrepresentation – Sale of Goods Act 1893, ss 18 and 58.

Summary :

In this case, the defendants had made a successful bid for a tournadozer which was described in the auctioneer's list as being in good condition. The written contract of sale contained a condition that the lots were sold as they lie with all faults and errors of description. After the sale, the defendants alleged that the tournadozer was not in good condition. It was subsequently resold and the plaintiffs thereupon claimed the sum of S$3,905.50 being the difference on the resale and costs. The defendants pleaded that there was innocent misrepresentation on behalf of the plaintiff that the tournadozer was in good condition or alternatively that there had been fraudulent misrepresentation by the auctioneers on behalf of the plaintiff.

Holding :

Held: (1) on the facts there was no fraudulent misrepresentation on the part of the plaintiff or his agents; (2) even if there had been innocent misrepresentation, the remedy for it was damages for breach of warranty and not rescission and as no claim for damages was made in this case by the defendant, the court could not come to any finding on it; (3) the plaintiff was therefore entitled to damages for breach of contract.

Digest :

Malayan Miners Co (M) Ltd v Lian Hock & Co [1966] 2 MLJ 273 High Court, Singapore (Winslow J).

717 Misrepresentation -- Innocent misrepresentation that goods in good condition

11 [717] SALE OF GOODS Misrepresentation – Innocent misrepresentation that goods in good condition – Whether contract can be rescinded for innocent misrepresentation – Contract – Sale by auction – When property passes – Fraudulent misrepresentation – Innocent misrepresentation that goods are in good condition – Whether contract can be rescinded for innocent misrepresentation – Sale of Goods Act 1893, ss 18 and 58.

Digest :

Malayan Miners Co (M) Ltd v Lian Hock & Co [1966] 2 MLJ 273 High Court, Singapore (Winslow J).

See SALE OF GOODS, Vol 11, para 692.

718 Motor car -- Claim against car dealer

11 [718] SALE OF GOODS Motor car – Claim against car dealer – Relationship of car dealer and finance company – Implied condition that owner has right to sell goods – Hire purchase – Claim against car dealer – Relationship of car dealer and finance company – Implied condition that owner has right to sell the goods – Motor car detained by police and subsequently released – Whether breach of condition – Hire Purchase Act 1967 (Act 212), 6(1)(b).

Summary :

This was an appeal against the decision of the President, Sessions Court, dismissing the plaintiff's claim against the first defendant or in the alternative against the second defendant for the sum of RM3,195 interest, general damages and costs. The first defendant was a second-hand motor vehicle dealer and the second defendant was a finance company. The plaintiff bought a motor car and entered into a hire-purchase agreement with the second defendant, under which the second defendant was referred to as the owner and the plaintiff as the hirer. The car was subsequently detained by the police on suspicion that it was a stolen vehicle but it was subequently released. The learned President dismissed the plaintiff's claim against the defendants. On appeal, it was argued: (a) that the learned President erred in law in holding that there was a sale of the car by the first defendant to the second defendant and that there was no contract of sale between the plaintiff and the car dealer; (b) even if there was a sale of the car by the car dealer to the finance company, the latter had committed a breach of the implied condition of the hire-purchase agreement.

Holding :

Held: (1) the learned President was correct in holding that there had been a sale of the car from the first defendant to the second defendant and in dismissing the plaintiff's claim against the first defendant; (2) in the circumstances, there was indisputable evidence that the car was not in fact a stolen vehicle and as such there could be no question that the title could not pass to the plaintiff under s 6(1)(b) of the Hire Purchase Act 1967 (Act 212) or under s 14(a) of the Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957) at the time when the property was to pass.

Digest :

Ahmad Ismail v Malayan Motor Co & Anor [1973] 1 MLJ 117 High Court, Kuala Lumpur (Mohamad Azmi J).

719 Motor car -- Claim against employee

11 [719] SALE OF GOODS Motor car – Claim against employee – Motor car purchased by employer but registered in name of employee – Employee refusing to return motor car – Whether ownership remained with employee

Summary :

The defendant was an employee of the plaintiffs. As a term of his employment, he was entitled to a motor car. The plaintiffs purchased a motor car and registered it in the name of the defendant who signed a declaration of trust in favour of the plaintiffs. On 2 October 1990, the defendant was dismissed from the employ of the plaintiffs. When asked to return the motor car, he refused. The plaintiffs took out an action for a declaration that they were the beneficial owners of the motor car and for an order that the defendant deliver up the said motor car.

Holding :

Held, allowing the application: (1) although the plaintiffs had claimed a declaration of trust, it was not a trust which gave them a right to possession of the said car. The said trust, in terms, did not oblige the defendant to deliver up possession of the said motor car to the plaintiffs. It only obliged him to effect the transfer of the said car. The defendant did not own the car and the registration in his name did not make him the owner at law; (2) the legal title to the said car passed to the plaintiffs when they bought it. They had given possession of the said car to the defendant and registered it in his name for a specific purpose, with no intention whatever of transferring legal or beneficial ownership thereof to the defendant. As owners, the plaintiffs were entitled to immediate possession of the said car upon the defendant ceasing employment with them.

Digest :

Hilti Far East Pte Ltd v Tan Hup Guan [1991] 3 MLJ 237 High Court, Singapore (Chan Sek Keong J).

720 Motor car -- Claim against insurance company

11 [720] SALE OF GOODS Motor car – Claim against insurance company – Car in possession of hire-purchaser – Whether original owner has insurable interest – Insurance – Motor insurance – Action to recover damages from insurers of motor car – Motor car transferred under agreement for sale to be followed by hire purchase – Insurance in name of original owner but car in possession of intended hire-purchaser – Whether original owner has insurable interest – Road Traffic Ordinance 1958, ss 75 and 80.

Summary :

In this case, the facts were that one Lau Teck Siew, a partner in a firm which dealt in second-hand cars became the registered owner of a motor car bought by the partnership. The insurance policy of the car which was insured with the defendant company was transferred to and vested in Lau Teck Siew. Subsequently on 9 February 1961, an agreement was entered into with one Karim under which Karim obtained possession of the car on payment of a deposit of RM1,000 and a promise to pay the balance of RM2,400. The agreement provided that in the event of failure to pay the balance, the 'vendor' was to have the right to seize the car and forfeit the deposit. It was intended that there would be a hire-purchase agreement relating to the car and this was signed on 17 March 1961, when ownership of the car was transferred to a finance company. On 8 March 1961, the car driven by Karim was involved in an accident as a result of which the first plaintiff sustained injuries. The plaintiffs obtained judgment against Karim in the sum of RM2,228 and costs and they sought to enforce this judgment against the defendants, the insurance company. The defendants denied liability on the ground that Lau Teck Siew had sold the car to Karim and, therefore, the accident was not covered by their policy of insurance.

Holding :

Held: (1) the agreement in this case was a conditional contract of sale and Lau Teck Siew was the owner of the car at the time of the accident and he had an insurable interest in it; (2) at the time of the accident, the car was being driven by Karim on the implied order or with the implied consent and permission of Lau Teck Siew and, therefore, the defendants were liable under their policy of insurance.

Digest :

Salbiah & Anor v Nanyang Insurance Co Ltd [1966] 2 MLJ 16 High Court, Malacca (Gill J).

721 Motor car -- Misrepresentation of year of manufacture

11 [721] SALE OF GOODS Motor car – Misrepresentation of year of manufacture – Whether representation fraudulent – Contract – Sale of car – Misrepresentation of year of manufacture – Entries in registration book that should have put defendants on inquiry – Whether defendants' representation of year of manufacture amounted to fraudulent misrepresentation – Damages.

Summary :

The plaintiff who had purchased a second-hand 1956 Fiat from the defendants approached them with a view to effecting an exchange as the Fiat gave considerable trouble. He was shown a list of second-hand cars by the defendants. Among the cars were two Humber Hawks. The defendants' salesman pointed to one of the Humber Hawks and said that he recommended that car and that it was a much better and newer car than the Fiat. After a trial run, the plaintiff on request was shown the registration book of the car. At the top of the card appeared the words 'Late T 5364' which would indicate to anyone in the motor trade but not the plaintiff that the car was not a 1958 model and had previously been registered in the Federation of Malaya. The plaintiff then agreed to buy the car for S$2,400 and signed a formal confirmation of purchase incompletely filled in and not signed by the defendants. Subsequently on 31 December 1960, a hire-purchase agreement in respect of the car was executed describing 'the goods' as a 1958 Humber Hawk Saloon. Some time later on discovering that the car was a 1953 model, he brought an action against the defendants for damages for breach of contract or alternatively damages for fraudulent misrepresentation.

Holding :

Held: (1) as the agreement was for the supply of a 1958 model and the car supplied was a 1953 model, there was an express breach of the term of the contract; (2) the representation made by the defendants was fraudulent because it was made without belief in its truth, recklessly, careless whether it be true or false; (3) the plaintiff was entitled to the difference between the price actually paid by him, namely, S$2,400 and the price which he would have paid for a 1953 model, namely S$1,200.

Digest :

Baker v Asia Motor Co Ltd [1962] MLJ 425 High Court, Singapore (Buttrose J).

722 Motor car -- Ownership of chattel under hire-purchase agreement

11 [722] SALE OF GOODS Motor car – Ownership of chattel under hire-purchase agreement – Transfer by hirer – Hire purchase – Ownership of chattel under hire-purchase agreement – Transfer by hirer – Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957), ss 29 and 30(2) – Contracts (Malay States) Ordinance 1950, s 19 – Hire Purchase Act 1967 (Act 212), ss 4 & 13.

Summary :

The plaintiffs purchased a car and entered into a hire-purchase agreement with a hirer. The car was registered in the name of the hirer with the plaintiffs' claim for ownership indorsed on the register and the registration card. The first defendant purchased the car from a third party and entered into a hire-purchase agreement with the second defendant. After terminating the hire, the plaintiffs repossessed the car. The plaintiffs thereupon sought a declaration that they were the owners of the car. The defendants counterclaimed for trespass, conversion and wrongful detention and damages.

Holding :

Held: (1) upon the true construction of the plaintiffs' agreement which was of a type to which the Hire Purchase Act 1967 (Act 212) applied, until the hirer had exercised his option to purchase the car by paying the total rentals and fulfilling all his obligations under the agreement, no property in the car passed to the hirer; (2) even though the hirer was the registered owner of the car he was only in law the person who had possession and use of the car and this fact did not necessarily make him the legal owner of the car; (3) in the circumstances, the plaintiffs' claim must succeed and an order made declaring that the car was the property of the plaintiffs.

Digest :

Credit Corp (M) Bhd v The Malaysia Industrial Finance Corp & Anor [1976] 1 MLJ 83 High Court, Kuala Lumpur (Abdul Hamid J).

723 Motor car -- Registration book and signed transfer form

11 [723] SALE OF GOODS Motor car – Registration book and signed transfer form – Whether document of title – Sale of goods – Motor car – Registration book and signed transfer form – Whether document of title.

Summary :

The plaintiff was induced by the fraud of one C (who represented himself as the duly authorized agent of the defendant) to purchase a car in the belief that the car belonged to the defendant, when in fact, the owners of the car were a hire-purchase finance company. The plaintiff now claim the sum of RM4,850 and general damages for loss sustained as a result of fraudulent misrepresentation made by C; in the alternative for breach of contract in that the sale implied a warranty of the defendant's title to the vehicle in question. It was contended for the plaintiff: (a) the defendant had held out C as his duly authorized agent because he had allowed C to have possession of the car, its registration card and a blank transfer form with the defendant's signature thereon; and (b) the defendant should be precluded from denying that the purported sale was within the apparent scope of C's authority.

Holding :

Held: (1) the mere fact of the defendant leaving the car, its registration book and or signed notice of exchange of possession of a motor vehicle in C's possession did not amount to a representation that defendant was the owner; (2) no representation by an agent as to the extent of his authority can amount to an holding out by the principal; (3) as the plaintiff paid C without attempting to satisfy himself whether C had authority to receive payments and had set off a debt owing by C to him from the purchase price, he must be held bound by his own act in dealing with C otherwise than as the defendant's agent.

Digest :

Lee Beng Choon v Tan Ngiap Kee [1962] MLJ 315 High Court, Kuala Lumpur (Ong J).

724 Motor car -- Sale of car to plaintiff by registered owner but no handing over of registration card

11 [724] SALE OF GOODS Motor car – Sale of car to plaintiff by registered owner but no handing over of registration card – Car subsequently sold by registered owner to first defendant – Whether plaintiff had acquired ownership before second sale – Sale of goods – Better title to car purchased from registered owner – Dispute on – Sale of car to plaintiff by registered owner but no handing over of registration card – Car subsequently sold by registered owner to first defendant – Whether plaintiff had acquired ownership before second sale – Plaintiff allowing possession of car and registration card by registered owner after sale – Whether first defendant can plead estoppel by negligence against plaintiff – First defendant a bona fide purchaser for value without notice – Whether relevant – Sale of Goods Act 1957, s 27.

Summary :

The plaintiff bought a car from the second defendant. To effect the transfer of ownership of the car into the plaintiff's name, the second defendant had to pay off MUI Finance which had originally financed the second defendant's purchase of the car under a hire-purchase agreement executed by the second defendant with MUI Finance. For this purpose, the second defendant retained possession of the registration card. However, after settling the balance due to MUI Finance and obtaining the endorsement of MUI's ownership in the registration card cancelled, the second defendant did not return the registration card to the plaintiff but instead sold the car to B. B's purchase was financed by the first defendant. As such, an endorsement was inserted in the registration card that ownership was claimed by the first defendant. The plaintiff applied to the court, via originating summons, for a determination as to whether he or the first defendant had a better title over the car as both had purchased it from the registered owner, the second defendant. The first defendant had pleaded estoppel by negligence against the plaintiff by alleging that the plaintiff had been negligent in allowing the second defendant to retain possession of both the car and the registration card thereby clothing the second defendant with the ostensible authority of ownership and by his own conduct the plaintiff is precluded from denying the second defendant's authority to sell the car to the plaintiff. Also, the first defendant contended that it is a bona fide purchaser for value without notice of the plaintiff's prior interest and that the plaintiff is estopped from denying the first defendant's title to the car.

Holding :

Held, allowing the application: (1) after full payment was made by the second defendant to MUI Finance and MUI Finance had relinquished all rights of ownership over the car, the plaintiff had acquired ownership of the car and the second defendant's further dealings on the car with the first defendant are therefore illegal. To that end, the first defendant acquired no title or interest over the car when they purchased it and their only remedy, if any, is against the second defendant personally for the return of the purchase price but as against the plaintiff they cannot claim any right of ownership over the car; (2) the failure of the second defendant to return the registration card to the plaintiff should not be taken against the plaintiff as the plaintiff had made every effort to get it back from the second defendant. When all his efforts failed, he even lodged a police report. Thus by his own conduct, the plaintiff had not shown that he had been in any way negligent in allowing the second defendant to retain possession of the registration card after he had purchased the car; (3) the first defendant have only themselves to blame for the loss suffered when they parted with the purchase price and that being purchasers for value without notice is of no relevance to the facts of this case.

Digest :

Ng Ngat Siang v Arab-Malaysian Finance Bhd & Anor [1988] 3 MLJ 319 High Court, Kuala Lumpur (Siti Norma Yaakob J).

725 Non-delivery of goods -- Knowledge

11 [725] SALE OF GOODS Non-delivery of goods – Knowledge – Damages – Remoteness

Summary :

In cases of breach of contract by the non-delivery of goods, knowledge on the part of the party committing the breach, is only of importance (in a question of measure of damages) if it forms part of the contract, and is acted on. Knowledge must be brought home to such party, under such circumstances, that he must have known that the person he contracts with, reasonably believed that he (the defaulting party) accepted the contract with the special condition attached to it. Where therefore the plaintiff entered into a contract with the defendant for the sale of certain quantities of cutch leaf, and thereafter, but before any breach, knew that the defendants were purchasing it in order to send on same to Europe for sale to certain persons there, with whom they had such contract, and the plaintiff subsequently committed a breach of his contract by which the defendants were unable to fulfil theirs, and had to pay damages to their sub-contractors.

Holding :

Held: the damages so paid by the defendants to their sub-contractors were too remote, and could not be recovered (on counterclaim) from the plaintiff as damages for his breach of contract.

Digest :

Yeo Leng Tow & Co v Rautenberg Schmidt & Co [1880] 1 Ky 491 High Court, Straits Settlements (Sidgreaves CJ).

726 Non-delivery of goods -- Specific performance

11 [726] SALE OF GOODS Non-delivery of goods – Specific performance – Measure of damages – Contract – Breach – Non-delivery – Specific performance – Damages – Measure of.

Summary :

Held, inter alia: the measure of the respondent's damages is not the profit he would have made if he had obtained delivery of the scrap iron at the agreed price and sold it for the current market price in Singapore. It is the difference if any, between that profit and the profit which he would have made if he had had to buy other scrap iron at a higher price. If there was no such available market, the measure of damages would have been the difference, if any, between the contract price and the estimated cost of obtaining substituted goods. Had there been no possibility of obtaining substituted goods the measure of damages would have been a full estimated loss of profit resulting from the appellant's repudiation of the contract.

Digest :

Lee Sau Kong v Leow Cheng Chiang [1961] MLJ 17 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill and Good JJA).

727 Non-delivery of materials -- Construction materials

11 [727] SALE OF GOODS Non-delivery of materials – Construction materials – Supply of – Construction site in Singapore – Materials produced in Australia – Progress payments for materials delivered on site – Allegation of non-payment for containers of materials – Mandatory injunction for delivery – Whether subcontract terminated

Summary :

The plaintiffs were the main contractors for the construction of several blocks of apartments at Maplewoods Condominium. They had awarded the defendants, an Australian company, the sub-contract for the design and installation of glass fibre reinforced cement (GFRC) works for the condominiums. Under the contract, the defendants would manufacture the GFRC panels in their factory in Adelaide and then ship them to Singapore in containers. Strictly, under the subcontract, the defendants were entitled to progress payments for materials delivered on site and work carried out on site. However, in practice, the plaintiffs paid the defendants in advance for materials produced and manufactured in Adelaide. The plaintiffs alleged that although six containers had arrived in Singapore, the defendants had refused to deliver the said containers to the plaintiffs. They contended that their work on the condominiums in respect of the materials to be supplied by the defendants were at a standstill and they were exposing themselves to liquidated damages of up to S$80,000 per day if the works were not completed on time. The plaintiffs thus applied for, inter alia, a mandatory injunction against the defendants that they do deliver the containers to the plaintiffs' worksite. In their defence, the defendants alleged that the reason for the non-delivery was that the plaintiffs had not paid for these containers and that since the plaintiffs had terminated the subcontract, via the plaintiffs' notice on taking over the installation works of the subcontract, the defendants had accepted the repudiation. The plaintiffs denied the repudiation, contending that since the defendants had still not obtained work permits for its workers even by the eighth month of the contract and thereby exposing the plaintiffs to prosecution, the plaintiffs accordingly removed the installation part of the works from the defendants' subcontract. Hence, the supply part of the subcontract still subsisted.

Holding :

Held, allowing the application: (1) progress payments for the containers had been paid by the plaintiffs. The defendants were liable to deliver them immediately; (2) the plaintiffs had only taken over the works of the subcontract and the defendants were liable to carrying out their bargain in respect of manufacturing the GFRC and CFC and delivering them to the plaintiffs upon payment under the terms of the subcontract. The plaintiffs had not given a notice of determination under s 28(1) of the subcontract but only a notice `in lieu' to take the works-related part of the contract out of the hands of the subcontract as provided for by cl 28.4 of the subcontract.

Digest :

Kajima Overseas Asia Pte Ltd v Glenn Industries Pty Ltd Originating Summons No 1037 of 1996—High Court, Singapore (Amarjeet JC).

728 Notice -- Stipulations as to time

11 [728] SALE OF GOODS Notice – Stipulations as to time – Test of reasonableness

Summary :

Held: a notice making time the essence of a contract need not be in writing but must be reasonable and the only test of reasonableness is that the time should be sufficient for doing all that remains to be done.

Digest :

Seng Heng Guan v Chew Joo Chiat [1904] 8 SSLR 22 High Court, Straits Settlements (Hyndman-Jones J).

729 Passing of property -- Agreement to sell

11 [729] SALE OF GOODS Passing of property – Agreement to sell – Property does not pass to buyer – Only a right in personam is created – Sale of goods – Sale and agreement to sell – Property does not pass to the buyer in an agreement to sell – Only a right in personam is created.

Summary :

In this case, the plaintiffs obtained judgment against Kean Toh Amang Factory Sdn Bhd (the first defendant) in the sum of RM46,000 which with interest stood at RM48,507 unpaid. The plaintiff caused a writ of seizure and sale to issue and the bailiff seized a number of movable goods at Amang factory. Later on, one Lee Kwee Hong (the claimant) filed an O 17 r 2 notice claiming all the goods seized as his own. He relied on a written sale and purchase agreement of an earlier date. According to their agreement, the defendant had agreed to sell the land and factory with movables for RM280,000 to the claimant. The land could not be sold without the consent of Mentri Besar. The agreement provided in case the consent is not forthcoming, the agreement would be treated as null and void. The judgment creditor contended that on the date of seizure the Mentri Besar's consent had not been obtained, therefore property in the movables was still with the judgment debtor. He also contended that the sale was not bona fide as the two shareholders of the defendant company were the sister and sister's daughter of the claimant. The claimant told the court that he was not aware of any judgment debt against the defendants.

Holding :

Held: (1) property in the movables did not pass to the purchaser on 19 December when they were seized by the bailiff; (2) the agreement was a conditional agreement subject to the consent of Mentri Besar and the consent had not been given on the date of seizure of movables.

Digest :

Harper Gilfillan (1980) Sdn Bhd v Kean Toh Amang Factory Sdn Bhd & Lee Kwee Hong (Claimant) [1986] 1 MLJ 249 High Court, Kuala Lumpur (George J).

730 Passing of property -- Appropriation to contract

11 [730] SALE OF GOODS Passing of property – Appropriation to contract – Whether property affixed to land – Degree of annexation – Whether chattels had become part of land

Summary :

The appellants were the developers of Chinatown Centrepoint. As part of the project, the appellants had called for tenders for the installation of lifts and escalators. The respondents' tender was accepted and by a letter dated 13 January 1983, it was agreed that payment of the respondents' claims would be made directly by the appellants upon the expiry of a period of 12 months from the date of the claim, irrespective of the date of certification. The main contractors for the project were Sandpete Builders (S) Pte Ltd ('Sandpete'). When the main contract was signed, the respondents entered into a sub-contract with Sandpete. On 23 April 1986, a winding-up petition was presented against the appellants. By July 1986, the respondents had delivered six lifts and 17 escalators to the project. The escalators were specially made for the building and the design of the building was such that there was no necessity for the escalators to be affixed by bolts, screws or otherwise. On 29 August 1986, a winding-up order was made against the appellants. Shortly thereafter, Sandpete terminated their contract with the appellants, which automatically determined the sub-contract between the respondents and Sandpete. The respondents took out an originating summons, seeking a declaration that ten sets of escalators which had been installed but not commissioned belonged to them. The High Court granted the declaration. The appellants appealed.

Holding :

Held, allowing the appeal: (1) materials provided by a builder although intended to be used in the execution of the contract, cannot be regarded as appropriated to the contract or as sold unless they have been affixed to or, in a reasonable sense, made part of the corpus; (2) the function of the escalators was to provide the link between various floors in the building for the flow of people using the building. The escalators were moving staircases intended to remain permanently as a means of more effectually enjoying the use of the premises. When they were hoisted into place, the escalators were meant to become integral and permanent features of the building. The circumstances showed that the escalators, when hoisted into place, were intended to be part of the building. The escalators had, in a reasonable sense, been made part of the corpus; (3) on the evidence, it was clear that the ten escalators had been fixed to the building in such a way as to become a permanent feature of the building. The fact that the escalators had not yet been commissioned could not alter the fact that the escalators had been so fixed.

Digest :

People's Park Chinatown Development Pte Ltd (in liquidation) v Schindler Lifts (S) Pte Ltd [1993] 1 SLR 591 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Rajendran JJ).

731 Passing of property -- Contract of sale

11 [731] SALE OF GOODS Passing of property – Contract of sale – Unconditional contract – Distinction from agreement for sale

Digest :

Lim Kim Cheong v Lee Johnson [1993] 1 SLR 313 High Court, Singapore (Michael Hwang JC).

See ROAD TRAFFIC, Vol 11, para 521.

732 Passing of property -- Failure to pay instalments

11 [732] SALE OF GOODS Passing of property – Failure to pay instalments – Vehicle repossessed by owner – Whether transaction sale or hire purchase – Claim for damages – Hire purchase – Failure to pay instalments – Vehicle repossessed by owner – Whether transaction sale or hire purchase – Claim for damages – Sale of Goods (Malay States) Ordinance 1957, s 19 – Hire Purchase Act 1967 (Act 212), ss 4 and 15.

Summary :

This was an appeal from the decision of Abdul Hamid J reported at [1978] 2 MLJ 113. In this case, the parties had entered into an agreement relating to a second-hand caterpillar tractor. The agreement was in form a hire-purchase agreement in which the appellant agreed to let and the respondent agreed to hire the motor vehicle subject to the terms and conditions in the agreement and the Hire Purchase Act 1967 (Act 212). The respondent paid the deposit but later defaulted in the instalments. The appellant thereupon repossessed the vehicle but subsequently, the respondent paid all the arrears and expenses and the hire-purchase agreement was revised. The respondents again fell into arrears and the appellants claimed the balance due on the agreement, damages and costs. The matter was settled and on the respondent paying to the appellant the payments outstanding on the purchase of the vehicle, the appellant transferred the ownership of the vehicle to the respondent. Subsequently, the respondent commenced an action for damages against the appellant contending that the purchase of the vehicle was an outright purchase, the property in the vehicle passed immediately on the payment of the deposit, that thereafter the appellant had only a claim for the balance due and no right of repossession; and, therefore, the exercise of repossession was wrong giving the respondent a claim for damages. The appellant applied in the High Court to strike out the claim of the respondent as disclosing no cause of action on the pleadings. The application was refused and the appellant appealed to the Federal Court.

Holding :

Held, allowing the appeal: (1) on a proper and correct construction of the agreement between the parties, it was beyond argument that the intention between them was that the property in the vehicle was not to pass to the respondent until full payment had been made. It was therefore a hire-purchase agreement and until full payment had been made the appellant had the right to repossess the vehicle on breach of its terms by the respondent. The repossession was therefore not wrongful; (2) the case was therefore on the undisputed facts and as a matter of the proper construction of the agreement and the application of the proper law, an eminently fit one for proceedings in lieu of demurrer under O 25 of the Rules of the Supreme Court 1957.

Digest :

Tractors Malaysia Bhd v Kumpulan Pembinaan Malaysia Sdn Bhd [1979] 1 MLJ 129 Federal Court, Kuala Lumpur (Raja Azlan Shah, Wan Suleiman and Chang Min Tat FJJ).

733 Passing of property -- Goods on consignment

11 [733] SALE OF GOODS Passing of property – Goods on consignment – Bankruptcy of agents for sale – Whether principal can recover goods – Sale of goods – Consignment – Agents for sale – Bankruptcy of agents – Attachment of goods belonging to principal – Whether principal can recover goods – Reputed owner – Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957), s 24(b).

Summary :

The respondents had an agreement with a firm called Moghals for the supply of shirts to the latter on consignment for sale at certain premises in the occupation of Moghals. Under the agreement, Moghals were to be paid a commission of 10% on all shirts sold and the respondents were at liberty to take back all unsold shirts at their absolute discretion. Sometime in January 1967, the United Commercial Bank Ltd (hereinafter called the bank) sued Moghals for a considerable sum of money and obtained an order of attachment before judgment against Moghals. In March 1967, the bank obtained a receiving and adjudication orders against the partners of Moghals. The goods at the premises occupied by Moghals were seized by the sheriff in consequence of the order for attachment. In May 1967, the respondents applied for the return of the shirts which they had supplied to Moghals under the agreement and which were among the articles seized by the sheriff.

Holding :

Held, allowing the appeal: (1) the shirts in the present case were handed to Moghals for the purposes of sale to other people. It was never intended that Moghals should buy the shirts themselves and, therefore Moghals were simply agents for sale; (2) as the act of bankruptcy preceded the seizure of the goods by the sheriff and was committed within six months of the receiving order being made, the goods were in the possession, order or disposition of the bankrupt (who had left the state before the attachment of the goods) with the consent and permission of the true owners under such circumstances that he was the reputed owner of the goods.

Digest :

Official Assignee, States of Malaya v Tat Fatt Shirts Manufacturers [1969] 1 MLJ 1 Federal Court, Kuala Lumpur (Azmi CJ (Malaya).

734 Passing of property -- Goods on consignment

11 [734] SALE OF GOODS Passing of property – Goods on consignment – Consignment of jewellery not paid for nor returned to consignor – Consigned jewellery allegedly purchased by bona fide purchaser without notice of owner's rights – Jewellery seized from defendant's premises – Issue of conversion – Whether defences under s 9 of the Factors Act and s 25(1) of the Sale of Goods Act apply – Whether defendants were constructive trustees

Summary :

In these proceedings, two suits were consolidated. Both plaintiffs' claims were for declarations that they were the true owners of certain Esmerian jewellery and Rima earrings which were consigned to the first defendant, who in turn allegedly sold them to the third defendant, in Singapore. The plaintiffs also sought an order for the delivery to them of similarly consigned jewellery recovered from the police raid and in the execution of an Anton Piller order on the retail premises of the second defendant (the seized jewellery). On the Esmerian jewellery not recovered (the missing Esmerian jewellery), the plaintiffs also claimed for an order that the second and third defendants account for them as constructive trustees. On the seized jewellery, the two defendants deny the plaintiffs' title, contending that under Swiss law (which was the law stated to apply in the consignment memorandum), property in the jewellery handed to the first defendant pursuant to the memorandum passed to the first defendant and that the third defendant was the bona fide purchaser for value without notice of the plaintiffs' rights. The issues that had to be determined by the court were: (1) whether the second and third defendants had converted the seized jewellery to their own use; (2) whether the third defendant was the purchaser for value in good faith of the seized jewellery, and, if so whether he can avail himself of any of the defences under the Factors Act 1889 [UK] or the Sale of Goods Act 1979 [UK]; (3) whether Swiss law was applicable; (4) whether the property in the Esmerian jewellery and the Rima earrings had passed to the first defendant according to Swiss law; and (5) whether the second and third defendants had received any of the missing Esmerian jewellery as constructive trustees.

Holding :

Held, allowing the plaintiffs' claims in part: (1) in displaying the seized jewellery in the shop window for sale as owners, the two defendants were denying or asserting a right inconsistent with the plaintiffs' rights. This is conversion; (2) the purported sale by the first defendant to the third defendant of the seized jewellery was wrongful and constituted conversion, as the first defendant had taken the jewellery entrusted to him out of the geographical area of UAE in breach of the consignment terms. The purported sale was also in breach of the first defendant's undertaking to return the jewellery by the stipulated date; (3) s 9 of the Factors Act 1889 and s 25(1) of the Sale of Goods Act clearly do not apply in these proceedings because the first defendant had not bought or agreed to buy the jewellery. He received them on consigment for 15 days only and he was to have returned them latest by 19 December 1989. He became a bailee in wrongful possession of the jewellery thereafter; (4) the evidence of the third defendant on the payment for the seized jewellery all of which were paid for allegedly in cash was rather unsatisfactory. The purported purchases were also at gross undervalue and purchases at under value are suggestive of fraudulent knowledge; (5) it is customary in the jewellery trade that upon sale of items of such value the original laboratory certificate is handed over. In the purported purchases of the seized jewellery and the sapphire ring, none of the items was handed over accompanied by the laboratory certificate. This would have put any buyer in the trade on notice; (6) taking into account the above factors, the court was satisfied that the two defendants had not acted in good faith and had notice that the sale by the first defendant of the seized jewellery and the sapphire ring was without the authority of the owners. The defence under s 2(1) of the Factors Act fails; (7) the first defendant acquired no title to the jewellery under Swiss law and in turn could confer no title on the two defendants in Singapore under the law of Singapore. There is no defence to the plaintiffs' claim for the return of the seized jewellery; (8) the description of the precious stones handed to one R by the third defendant is not adequate to identify them to the court's satisfaction as part of the missing Esmerian jewellery. This part of the plaintiffs' claim therefore fails.

Digest :

R Emerian Inc v Ganesan Fakhreddin and another action & Ors Suit Nos 279 of 1991 and 1704 of 1992 High Court, Singapore (Goh Joon Seng J).

735 Passing of property -- Hire-purchase agreement

11 [735] SALE OF GOODS Passing of property – Hire-purchase agreement – Buyer having taken physical possession – Buyer later satisfied condition to acquire title – Whether further act of physical delivery necessary to pass property

Summary :

In November 1984, Suntan was granted certain banking facilities by the plaintiffs on foreign letters of credit. The defendants were suppliers of machinery and on 9 November 1983, one Suntan and the defendants entered into a hire-purchase agreement whereby the defendants let and Suntan hired a winch. Under the hire-purchase agreement, the hire-purchase price of the winch was S$400,000. The agreement also provided that upon paying the instalments in exercising the option, Suntan would become the absolute owner of the winch. Pursuant to the agreement, the winch was delivered to Suntan on 12 November 1983. On 10 July 1985, the sum of S$200,000 was still to be paid and in order to pay this sum, Suntan applied to the plaintiffs for a letter of credit in favour of the defendants. The letter was established on the basis that a delivery order be issued. In order to obtain payment of the balance moneys due under the hire-purchase agreement and pass title of the winch to Suntan, the defendants on 12 July 1985 prepared a delivery order for the winch and obtained Suntan's authorized signatory's signature thereon and negotiated the letter of credit. The delivery order was dated 12 July 1985 and was for S$200,000. The plaintiffs paid the defendants the sum due on the letter of credit. On 12 August 1985, Suntan signed a trust receipt in respect of the winch in favour of the plaintiffs. On 5 September 1985, Four Seas Communications Bank Ltd appointed receivers and managers over Suntan. The plaintiffs informed the receivers and managers that by reason of the trust receipt, they had a lien over the goods until their indebtedness was paid in full. On 23 December 1985, the receivers wrote to the defendants stating that their investigations revealed that although Suntan had paid the S$200,000 under the letter of credit, the winch had not been delivered and required the plaintiffs to deliver the winch to the receivers. The plaintiffs replied that the winch had been delivered and then commenced an action against the defendants for damages on the basis that the representations contained in the delivery order were false and untrue as no winch was delivered on the date of the delivery order to Suntan. The claim was for fraudulent misrepresentation.

Holding :

Held, dismissing the plaintiffs' claim: (1) the plaintiffs alleged fraud against the defendants. The more serious the allegation, the higher the degree of probability required to prove a plaintiff's case; (2) when goods are already in the physical possession of the buyer and a further act needs to be done by the buyer to acquire title in the goods, ie making payment or arranging for irrevocable payment, then by doing that act there is constructive delivery of the goods from the seller to the buyer. A further act of physical delivery is unnecessary; (3) in any event, there was also sufficient constructive delivery of the winch when payment was made under the letter of credit of the balance moneys due under the hire-purchase agreement and which enabled title in the goods to pass to Suntan; (4) irrevocable payment arrangements made under the hire-purchase agreement were made and Suntan exercised the option to purchase the winch. The defendants gave good consideration for the payment under the letter of credit by transferring title in the winch to Suntan; (5) the defendants did not have any fraudulent or dishonest intention when they tendered the delivery order to negotiate the letter of credit. The defendants honestly believed that the physical delivery in November 1983 under the hire-purchase agreement was sufficient to satisfy the letter of credit requirements and that was the delivery they had in mind when they prepared and negotiated the letter of credit.

Digest :

Bank of East Asia Ltd v General Diesel Supplies (S) Pte Ltd Suit No 168 of 1987 High Court, Singapore (Coomaraswamy J).

736 Passing of property -- Implied terms of contract

11 [736] SALE OF GOODS Passing of property – Implied terms of contract – Intention of parties – When property passes

Summary :

By a contract of sale, the appellants agreed to sell 102 bags of pepper at $99.25 a picul. The pepper was unloaded from the appellant's ship and put into the godown of X. By a government regulation, it is illegal to export pepper from Sarawak if it contains more than a certain amount of moisture, and before it is exported it is the practice to have it inspected by a Government Inspector who gives a certificate that it fulfils the condition. This inspection had not taken place nor had the pepper been weighed nor the price paid, when the appellant discovered that X was insolvent and he claimed the return of the pepper, of which the Official Assignee had taken possession. The court found that the contract of sale between the parties was subject to the implied condition that the sale was on the 'usual' terms and that the usual terms are that after the parties have agreed the price per picul the pepper is taken out of the ship and put into the buyer's godown. The seller then applied to the proper authority for a Government Inspector to inspect the pepper. When it has been inspected and passed by the Inspector it is then weighed by the seller in the buyer's godown on the buyer's scales, and the price is then paid. The price is not payable until the pepper has been passed by the Inspector and if it is not so passed the seller takes the pepper.

Holding :

Held: (1) on these facts under s 18 of the Sale of Goods Act 1893, the property in the pepper had not passed from the seller to the buyer; (2) even if the case is not within s 18, the intention of the parties was that the property in the pepper should not pass until the pepper had been inspected and passed.

Digest :

Re Chop Why Joo; Hak Lee v Official Assignee [1928-41] SCR 1 Supreme Court, Sarawak

737 Passing of property -- Intention of parties

11 [737] SALE OF GOODS Passing of property – Intention of parties – Contract to make up materials and fix them in building – Plaintiff unpaid – Whether property in goods passed to defendant – Quasi-contract – Money had and received – Wrongful sale of plaintiff's goods

Summary :

P was a nominated sub-contractor to supply and install lifts and escalators in a building being developed by D. P supplied 17 escalators, of which ten were installed but not in operation when D went into liquidation. The liquidators of D sold the escalators and declined to accept P's contention that the escalators still belonged to them. P accordingly sued for the proceeds of sale of the escalators.

Holding :

Held, allowing the claim: (1) there was no specific provision in the main contract or the sub-contract governing the passing of title in the escalators. However, it was the clear intention of the parties that property in the goods should not pass to D except upon payment; (2) this was not a contract for purchase of goods but for the making up and fixing of materials, and under such a contract property in the goods would not pass until they have been fixed; (3) as property had not passed to D, P were entitled to claim the proceeds of sale of the escalators as money had and received.

Digest :

Schindler Lifts (Singapore) Pte Ltd v People's Park Chinatown Development Pte Ltd [1990] 3 MLJ 406 High Court, Singapore (Lai Kew Chai J).

738 Passing of property -- Intention of parties

11 [738] SALE OF GOODS Passing of property – Intention of parties – Whether property intended to pass at time of contract – Whether transfer of ownership of goods obtained by fraud

Summary :

D had purchased two vehicles from E Sdn Bhd and had hired them to Z Sdn Bhd. P were the sole agents and distributors of the vehicles. P refused to release the vehicles to D, claiming that they had not been paid and therefore had an unpaid seller's lien over the vehicles. D commenced an action against P, claiming for the two vehicles. P denied that E Sdn Bhd was acting as their agents and contended that any transfer of ownership in respect of the vehicles was effected unlawfully and was made fraudulently by D or E Sdn Bhd. The learned judge gave judgment in favour of D and P appealed to the Supreme Court.

Holding :

Held, dismissing the appeal: (1) in the instant case, the learned judge had before him only the evidence adduced on behalf of D and the documents which speak for themselves. P had not called any of their officers involved in the transactions to give evidence. Further, no evidence was adduced by P to show that the documents tendered were forgeries; (2) the surrounding circumstances of the case clearly indicated that the property in the vehicles was intended to pass at the time of the contract between D and Z Sdn Bhd. As the learned judge was right in coming to his decision in the circumstances, P's appeal was dismissed by the Supreme Court.

Digest :

Guthrie Sdn v Trans-Malaysian Leasing Corp Sdn Bhd [1991] 1 MLJ 33 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

739 Passing of property -- Purchase of goods with stolen cheque

11 [739] SALE OF GOODS Passing of property – Purchase of goods with stolen cheque – Cheque dishonoured on presentation – When property in goods passed – Whether property passed upon payment by cheque

Summary :

P was insured by D under a policy which covered loss from theft. P advertised a gold Rolex watch and diamond ring for sale. He received a call from X, a person whose identity he did not know. X agreed to purchase the items from P. Payment was made by means of a building society cheque, ie a cheque drawn by a building society in favour of P. When P paid the cheque into his account, he was told that it was stolen and worthless. P claimed on his policy. D declined to pay, on the ground that the loss was not caused by theft. The Theft Act 1968 provides that 'a person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it'. D argued that at the time of the appropriation, property in the items had already passed to X so that they were not 'property belonging to another'. The county court recorder held that the loss was caused by theft. D appealed.

Holding :

Held, dismissing the appeal: (1) having regard to the terms of the contract, the conduct of the parties and the circumstances of the case, property was not intended to pass in this case on contract but only in exchange for a valid building society cheque; (2) this being so, the requirements of the Theft Act 1968 had been satisfied and the loss was caused by theft. D's appeal was dismissed.

Digest :

Dobson v General Accident Fire & Life Assurance Corp plc [1989] 3 All ER 927 Court of Appeal, England (Parker and Bingham LJJ).

740 Passing of property -- Reservation of right of disposal

11 [740] SALE OF GOODS Passing of property – Reservation of right of disposal – Bills of lading deliverable to seller's order – Prima facie presumption that seller reserves right of disposal – Property does not pass until buyer fulfils condition imposed by seller

Summary :

P2 operated a fleet of fishing trawlers in the Caribbean to catch prawns. P2 had an arrangement with V, a Colombian company, under which the prawns were sold to V which processed and packaged them. After processing and packaging, the goods were shipped by V to Japan and re-sold to P2, which would then sell them to P1, their parent company. Payment of 80% of the purchase price was made before shipment. In the instant case, on discharge in Japan, the prawns shipped by V were found to be damaged. Pl and P2 sued D as shipowners of the ships on which the goods were carried, claiming that the damage to the prawns was their fault. The trial judge gave judgment for the plaintiffs. On D's appeal, the issue was whether P had title to sue.

Holding :

Held, allowing the appeal: (1) a person who is the owner of the goods at the time when the damage occurred can sue the shipowner in tort. As Pl only became the owners of the goods on discharge in Japan, they had no title to sue in tort for damage caused; (2) here, the bills of lading were deliverable to the order of the sellers. The prima facie presumption was that they reserved the right of disposal. Unless the presumption could be displaced, the result would be that the property in the prawns would not pass to P2 until the condition imposed by V was fulfilled, viz the payment of the balance of the purchase price; (3) the presumption in s 19 of the Sale of Goods Act 1979 (ie that where a seller reserves the right of disposal, property in goods does not pass until the conditions imposed by the seller are fulfilled) was not displaced in the instant case. V took the bills of lading to their own order and therefore they retained property in the goods until the balance of the price was paid. It had not been proven that this occurred before the goods were damaged. P2 accordingly also had no title to sue and the action failed.

Digest :

Mitsui & Co Ltd v Flota Mercante Grancolombiana SA [1989] 1 All ER 951 Court of Appeal, England (Purchas and Staughton LJJ, Sir George Waller).

741 Passing of property -- Reservation of title clause

11 [741] SALE OF GOODS Passing of property – Reservation of title clause – Contractor agreed to sell goods to company in consideration of company completing construction of houses – Whether property in goods had passed to company – Whether property could only pass to company when company had performed all obligations under agreement

Summary :

Aidigi Sdn Bhd ('Aidigi') agreed to construct for Emar Sdn Bhd ('Emar') a housing project on a piece of land. The land which belonged to Emar had earlier been charged to Perwira Habib Bank Bhd ('Perwira') as security for Perwira's loan to Emar. Upon Emar's default in paying Aidigi for work already done, Emar entered into two agreements with Aidigi on 20 October 1986 ('the first and the second settlement agreements'). The first settlement agreement provided for, inter alia, Emar to pay certain sums of money to Aidigi and its creditors and to transfer completed houses to Aidigi's contractors in lieu of cash in the aggregate value of RM2.75m. Under the second settlement agreement, Emar agreed to transfer to Aidigi or its nominees, 20 completed houses ('the 20 houses'). The second settlement agreement also deemed Aidigi to have sold all its specified materials, plants and chattels ('the chattels') to Emar in consideration for Emar's promise to complete work on the 20 houses within a stipulated date. Upon Emar's failure to complete work on the 20 houses, the second settlement agreement provided for Emar to pay to Aidigi liquidated damages. The 20 houses were subsequently the subject matter of sale and purchase agreements executed between Emar and Aidigi's nominees pursuant to the second settlement agreement. Emar then created a debenture over its assets in Perwira's favour on 27 November 1986 ('the first debenture'). Two other debentures in Perwira's favour were also subsequently created by Emar. Perwira by a notice dated 13 June 1987 ('the notice') demanded Emar's repayment of a certain sum within 24 hours from the date of the notice. The notice was only served on Emar on 16 June 1987 but earlier on 15 June 1987, Perwira appointed receivers and managers ('the receivers') for Emar pursuant to powers conferred by the first debenture. The receivers with money advanced by Perwira completed the housing project. The receivers had made some payments from Emar's funds to Perwira. Perwira also imposed interest, inter alia, on the redemption sum in respect of the 20 houses. Aidigi brought an action in the High Court against Emar and Perwira. The judge ordered against Emar, inter alia, the following: (a) the 20 houses to be transferred by Emar to Aidigi under the second settlement agreement; (b) Emar to redeem the 20 houses under the charge by paying Perwira; and (c) Emar to pay Aidigi damages for delay in the delivery of the 20 houses. The judge also ordered against Perwira, inter alia, the following: (a) a declaration that the three debentures were void on three grounds, namely, Emar's resolution authorizing the execution of the first debenture was not properly passed, Emar's directors did not know the nature, terms, conditions and effect of the first debenture and they were forced to sign the first debenture as a result of economic duress; (b) a declaration that the appointment of the receivers under the three debentures was invalid; (c) Perwira was not entitled to impose any interest in respect of the 20 houses after 14 June 1987; (d) Perwira to pay Aidigi interest on the sum of RM2.75m; and (e) Perwira to pay Aidigi damages for delay in the delivery of the houses. The judge also held that even if the three debentures were valid, the appointment of the receivers was bad in law because the notice did not comply with the requirement of the first debenture. This was because by the time the notice was served on Emar, the receivers had already been appointed and Emar was therefore not given the stipulated 24 hours to pay the sum demanded by Perwira. After the judge had made the orders dated 6 September 1991, the judge made additional orders against the receivers personally in his grounds of judgment dated 19 November 1991. The orders against the receivers who had not been sued in their personal capacity were, inter alia, the following: (a) all the money paid by the receivers from Emar's account must be restored immediately to Emar's account; and (b) where money had been paid by the receivers to any party and had not been refunded by such party, the receivers had to be personally liable. Emar appealed against the judge's orders to the Supreme Court ('the first appeal') and so did Perwira ('the second appeal').

Holding :

Held, allowing the first appeal in part and allowing the second appeal: (1) upon the facts, there was nothing to indicate that the receivers had adopted the second settlement agreement especially so since by the time the receivers were appointed, property in the chattels had passed to Emar; (2) the fact that the consideration stipulated in the second settlement agreement had not been paid did not prevent the passing of ownership in the chattels save and except where recourse is made to the 'reservation of title' clause. There was, however, nothing in the second settlement agreement to indicate that ownership in the chattels would only be transferred to Emar when it had met all its obligations under the second settlement agreement; (3) the order for the transfer of the 20 houses to Aidigi was in substance and effect an order for specific performance. Specific performance, however, will not be ordered against a company in receivership if performance of the contract by the company will involve expenditure for which the receivers may be personally liable. The financial position of Emar was therefore a valid objection to the order for transfer of the 20 houses; (4) in the event the order for the transfer of the 20 houses were to stand, Emar would run the risk of being liable a second time to the purchasers who had entered into sale and purchase agreements pursuant to the second settlement agreement. This was because since the purchasers were not parties to this suit, they would not be bound by the orders made in this case. This constituted an impediment to the making of an order for transfer of the 20 houses; (5) in consequence of setting aside the order for the transfer of the 20 houses, the order for damages for delay in delivery of the houses must also be set aside; (6) each of the three grounds which were relied on by the judge would have rendered the first debenture not void but voidable at the instance of Emar and not Aidigi which was not a party to the first debenture. At no time did Emar ever seek to impugn the first debenture and the stance adopted by Emar assumed that the first debenture was valid; (7) Aidigi had no locus standi to maintain the suit against Perwira and on this ground alone, Aidigi's suit against Perwira ought to have been dismissed; (8) even if Emar had been given a letter of demand stipulating a period for payment of sufficient length and had been promptly served, on the facts in this case, Emar was in no position to have complied with such a letter; (9) Aidigi was an unsecured creditor with no specific right in Emar's property. Accordingly, the judge fell into error in ordering Perwira to refund to Emar, all money received by Perwira after the appointment of the receivers. In reality, Emar had not suffered any loss by reason of payment received by Perwira after the appointment of the receivers but had in fact benefited thereby; (10) Perwira's right to interest on the redemption sum in respect of the 20 houses was based on a valid charge under the National Land Code 1965 which was executed before the execution of the debentures. The judge had therefore no jurisdiction to rewrite the rights and obligations of the parties to the charge; (11) the order made by the judge against Perwira for the payment of interest to Aidigi was wrong because Perwira was not a party to the settlement agreements. Similarly, the order made by the judge against Perwira for the payment of damages for delay in the delivery of the houses was unsustainable because such a claim would only arise if and when an action is brought by the purchasers under the sale and purchase agreements executed pursuant to the settlement agreements; (12) the rules of natural justice demanded that if Aidigi were to be entitled to remedies against the receivers personally, its pleadings had to be properlonally and thereby affording them the opportunity of being heard in their defence. Moreover it was only after the court was functus officio that the judge had decreed by his grounds of judgment, that the receivers were personally liable. Accordingly the orders made against the receivers personally were fundamentally bad and must be set aside.

Digest :

Emar Sdn Bhd (under receivership) v Aidigi Sdn Bhd and another appeal [1992] 2 MLJ 734 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Edgar Joseph Jr SCJJ).

742 Passing of property -- Sale by auction

11 [742] SALE OF GOODS Passing of property – Sale by auction – When property passes – Contract – Sale by auction – When property passes – Fraudulent misrepresentation – Innocent misrepresentation that goods are in good condition – Whether contract can be rescinded for innocent misrepresentation – Sale of Goods Act 1893, ss 18 and 58.

Summary :

Held: in a sale by auction, property passes to the buyer at the fall of the hammer.

Digest :

Malayan Miners Co (M) Ltd v Lian Hock & Co [1966] 2 MLJ 273 High Court, Singapore (Winslow J).

743 Passing of property -- Specific or ascertained goods

11 [743] SALE OF GOODS Passing of property – Specific or ascertained goods – Whether agreement was for rental or sale – Whether property in goods had passed to purchaser

Summary :

The plaintiff and the defendants entered into an agreement (`the agreement') on 20 September 1974 for the hire of a 1969 model Caterpillar D8H tractor (`the tractor') for three months at a rental of RM36,000 per month. As the plaintiff had failed to make some of the payments, the defendants repossessed the tractor. The plaintiff said that the agreement, though signed as a rental, should have been a sale and purchase agreement. He said that he had bought the tractor from the defendants for RM144,000 to be paid in four monthly instalments of RM36,000 each and was asked to sign the agreement in respect of it. The defendants argued that they had signed a rental agreement. It was argued that whether the agreement was a rental or sale, the property in the tractor did not pass to the plaintiff with the result that the defendants were authorized to repossess the tractor. Thus the legality of the repossession depended upon whether the property in the tractor had passed to the plaintiff pursuant to the agreement entered into between them.

Holding :

Held, dismissing the claim: (1) the invoice issued by the defendants to the plaintiff described the tractor as being `sold to' indicating that the transaction was a sale. The letters produced as exh B also described the transaction as a sale. The fact that the claim by the defendants was only for the balance due under the agreement as originally agreed even though the use of the tractor by the plaintiff had gone beyond the specified period, without any additional claim for rent, militated against the arrangement being termed as a rental agreement; (2) the Sale of Goods Act 1957 (`the SOGA 1957') was not applicable to Malacca and Penang until it was extended to the two States by the Sale of Goods (Amendment and Extension) Act 1990 with effect from 23 February 1990. As the agreement in this case was entered into in Malacca before that date, the SOGA 1957 would have been inapplicable. With regard to the two states, the applicable law prior to 23 February 1990 should be the relevant English law pursuant to s 5(2) of the Civil Law Act 1956. As the agreement in this case was entered into in 1974, the relevant English Law was the UK Sale of Goods Act 1893 (`the SOGA 1893') and not its 1979 successor; (3) according to s 17 of the SOGA 1893, property in specific or ascertained goods was transferred to the buyer at such time as the parties intended. The question as to when the parties intended the property in the goods to be transferred was essentially one of fact subject only to the rules of presumption for the ascertainment of intention as indicated in, inter alia, s 18 of the SOGA 1893. It was open to the parties to fix the time when the property in the goods was to pass to the buyer. When there was no specific provision in the contract about the passing of the property from the seller to the buyer, an inference had to be drawn from the conduct of the parties; (4) under the agreement, the defendants retained ownership of the tractor after having parted with possession of it and a right to take possession of it if there was any default in payment of any of the sums due. The amount payable as rental was in respect of the full purchase price. The correspondence exchanged between the parties also showed that the defendants intended to sell the tractor to the plaintiff. As the transfer of the tractor would have only taken place in future when all payments had been made, the contract was only an agreement to sell and would only become a sale when the condition was fulfilled. In the light of the default by the plaintiff to settle the balance sum of RM25,000, the condition remained unfulfilled and the property in the tractor did not pass to the plaintiff even though it was delivered to him; (5) even if it could be argued that the agreement was a rental transaction, the repossession by the defendants was lawful as it was done as authorized by the agreement and the ownership of the transfer was still with the defendants; (6) even if the repossession of the tractor was unlawful, the plaintiff had not adduced sufficient evidence to support his claim for damages. There was no evidence on the actual loss suffered by the plaintiff and it was therefore impossible to assess the damages.

Digest :

Au Yong Kun Min v Tractors Malaysia Bhd [1997] 5 MLJ 168 High Court, Melaka (Augustine Paul JC).

744 Payment -- Goods sold to sole proprietorship

11 [744] SALE OF GOODS Payment – Goods sold to sole proprietorship – Whether sellers knew dealing with sole proprietor – Change of proprietorship – Whether running account with first proprietor ended – Whether new arrangements implemented with new proprietor

Summary :

LYH was registered as a business and was a sole proprietorship. From 1 January 1965 to 1 November 1982, the sole proprietor and person responsible for the management of the business was LSL. P's company carried on the business of importers and exporters of general items. P kept a running account, opened in 1973, in respect of purchases made by LYH. Sums not paid were carried forward from year to year. A credit facility of S$50,000 was initially given to LYH. D was the son of LSL and was formally employed by LSL in 1978. In 1982, when his father fell ill, D took over the business. On 30 October 1982, D applied to register the change in business particulars and on 1 November 1982, D became the sole proprietor of LYH. P claimed D had represented to P that he was the sole proprietor and/or partner in LYH and that P always dealt with D in respect of the sale and purchase of goods. In May 1983, when D's cheque for payment of goods were dishonoured, P discovered after an ROC search that the sole proprietor of LYH was LSL and that D may not be liable on the running account. P claimed for the sum of S$75,958.15 and interest and costs for goods sold and delivered to LYH. Alternatively, P claimed the sum of S$3,318.90 for purchases made by LYH on or after 1 November 1982.

Holding :

Held: (1) and (b) D's premises was a short distance away from P's premises; (2) and (b) the November transactions and payments received for 1 November 1982 and 2 November 1982 speak of a new arrangement. Cheques issued by D were drawn on a different bank from that issued by LYH when LSL was the sole proprietor; (3) P knew of the existence of LSL because: (a) P had given credit facilities of up to S$50,000 to LYH when LSL was the sole proprietor;the running account which P had with LSL had come to an end and new arrangements were made with D because: (a) in 1982 when D told the managing director of P, one L, that he was thinking of transferring his father's business to his name, no line of credit was given to D. All goods thereafter purchased by D was paid in cash or cheque;P's claim was allowed only to the extent of S$3,318.90 being the difference owed to P on the transactions that took place between 1 November 1982 and 7 May 1983.

Digest :

Aik Huat (I & E) Pte Ltd v Lim Ah Soon Suit No 4863 of 1985 High Court, Singapore (KS Rajah JC).

745 Payment -- Letter of credit

11 [745] SALE OF GOODS Payment – Letter of credit – Purchaser's obligation to provide a letter of credit conforming to the credit agreed in the contract of sale – Whether failure to conform could amount to material breach

Digest :

Sintra Merchants Pte Ltd v Brown Noel Trading Pte Ltd (Donald & Mcarthy Pte Ltd, third party) [1996] 2 SLR 444 High Court, Singapore (Rubin J).

See CONTRACT, para 543.

746 Quantity of goods -- Ambiguity

11 [746] SALE OF GOODS Quantity of goods – Ambiguity – Option with seller

Summary :

Where a contract stated that it was for '25,000/30,000 cases Kerosine oil' and it being shown by evidence that that expression meant from 25,000 to 30,000 cases,

Holding :

Held: the option is with the seller as to whether he would deliver the 25,000 cases or the larger number of 30,000.

Digest :

Brandt & Co v Goh Guan Lu [1889] 4 Ky 481 High Court, Straits Settlements (Wood CJ).

747 Return of goods though salesman -- Authority of salesman

11 [747] SALE OF GOODS Return of goods though salesman – Authority of salesman – Whether expressed or implied, or as servant or agent – Master and servant – Sale of goods – Return of goods through salesman – Authority of salesman – Whether expressed or implied, or as servant or agent.

Summary :

The appellant claimed the sum of RM1,245.20 being the balance of the price for four calculating machines sold and delivered to the respondent. The respondent admitted the sale but averred that no sum was due and payable to the appellant by reason of the fact that four other machines to the value of RM1,245.20 which were also bought from the appellant and already paid for had been returned to the appellant through its salesman, one Tony Lim, and as such the respondent was entitled to set off the said sum of RM1,245.20 due to it from the appellant against the appellant's claim. On the evidence before him, the learned magistrate came to the conclusion that Tony Lim had the authority to accept the return of the four machines, and since their value which gave rise to the set off was equivalent to the sum claimed by the appellant, he dismissed the claim with costs. On appeal,

Holding :

Held, dismissing the appeal: having regard to the wide powers given by the appellant to Tony Lim in all the dealings with the respondent, the appellant had impliedly held him out as having such authority. Having regard to the nature of the contract, the circumstances of Tony Lim's employment and the business of the appellant, the learned magistrate was right in holding that Tony Lim had authority, expressed or implied, to collect the four machines as servant or agent for or on behalf of the appellant.

Digest :

Kee Huat Radio Co Ltd v King Yong Trading [1972] 2 MLJ 148 High Court, Kuala Lumpur (Mohamed Azmi J).

748 Sale by description -- Alteration in brand

11 [748] SALE OF GOODS Sale by description – Alteration in brand – Effect of alteration upon goods intended for sale in local market

Summary :

The defendants contracted to sell to the plaintiffs flour known as 'Golden Dragon' brand wheat flour. Such flour had been the subject of previous sales by the defendants to the plaintiffs and had acquired a reputation in the Chinese market at Singapore and had in all previous cases been put up in bags bearing a distinctive device or mark which consisted in part of the representation of a dragon. The defendants tendered to the plaintiffs under the said contract, flour contained in bags professing to be of the required mark but bearing a distinctive device or mark which, although it consisted in part of the representation of a dragon, differed from the former mark in many particulars. It was not contended in the course of the proceedings that the flour contained in the bags tendered was not identical in quality with the flour previously sold under the description of 'Golden Dragon' brand wheat flour, and it was admitted that it was flour shipped by the same shippers in Australia and that both the new and old marks were the mark of such shippers.

Holding :

Held: (1) the tender of flour by the defendants was not a sufficient tender under the terms of the contract; (2) the goods did not correspond with the description; (3) having been purchased to the knowledge of the seller for the purpose of resale in the local market, they were not reasonably fit for such purpose, and were unmerchantable.

Digest :

Nagurdas Purshotumdas & Co v Mitsui Bussan Kaisha Ltd [1911] 12 SSLR 67 High Court, Straits Settlements (Fisher J).

749 Sale by description -- Breach of contract

11 [749] SALE OF GOODS Sale by description – Breach of contract – Product not in conformity with sample shown – Effect of clause stating goods were not guaranteed to conform with description – Not a sale on 'as is' basis

Summary :

This claim arose from a contract for the sale of PVC from the defendants to the plaintiffs. The plaintiffs claimed that the sale was by sample as well as description and that the product the defendant delivered was not in conformity with the sample shown to them before conclusion of the contract. They claimed damages for the amount spent in modifying the product to make it suitable for their use. The defendants claimed the sale was not by sample but on the basis of the technical information data provided by the defendants' principals or on an 'as is' basis. Further, the technical data information carried the qualifying words 'the information was only true ... to the best of their knowledge but not guaranteed'. The defendants also denied liability on the grounds that the plaintiffs had modified the product without their consent and that they had never attempted to mitigate their losses.

Holding :

Held, allowing the plaintiffs' claims: (1) the sale was not on an 'as is' basis as there was no term to that effect. An 'as is' sale only applied to a product that was in existence so that the product was bought and sold in the condition in which it existed and not what it would be in the future. The condition and specifications of the product were therefore fixed and could not be varied. If an 'as is' sale applied to future foods, the seller could supply inferior goods if he so chose. This the law could not allow; (2) this was clearly a sale by description in that there was at least the common ground that the material had to be conductive within a specified range. The effect of the qualifying clause in the technical information was not to nullify the values given but to qualify them. It meant that the values were not precise but within an accepted range of conductive material; (3) the sale was also one by sample. This was implied because a sample was promised and had been sent before the contract was concluded; (4) on the evidence, there was proof of breach of the implied term that the sale must correspond with the sample in quality as well as the description with respect to two out of the three containers of goods supplied by the defendants, and damages were awarded accordingly.

Digest :

Sunshine Engineering Service Pte Ltd v Chemco Pte Ltd Suit No 525 of 1991 High Court, Singapore (GP Selvam J).

750 Sale by description -- Breach of contract

11 [750] SALE OF GOODS Sale by description – Breach of contract – Refusal to accept delivery – Counterclaim for loss of profit

Summary :

In this case, the court

Holding :

Held: (1) it was a sale by description and as the goods were not merchantable, the defendant was entitled to reject; (2) the defendant had in fact suffered no loss of profit.

Digest :

Ngu Chu Choo v Hii Sii Choo [1958] SCR 91 Supreme Court, Sarawak, North Borneo and Brunei

751 Sale by description -- Breach of contract

11 [751] SALE OF GOODS Sale by description – Breach of contract – Rights of buyer and seller in event of breach by seller – Effect of failure by buyer to state grounds for rejection within reasonable time – Whether buyer could still reject goods

Summary :

This was a claim for damages for breach of contract for the sale of goods. The goods in question were steel pipes manufactured in Germany. The plaintiffs were stockists, who resold steel pipes locally and to overseas buyers. The defendants' main business was galvanizing steel products. As a subsidiary business, they also imported steel pipes in bulk to sell wholesale in Singapore. The contract of sale between the defendants as sellers and the plaintiffs as buyers dated 22 June 1988 was evidenced by a 'sale confirmation letter' from the defendants to the plaintiffs. The material contents of that letter included the specifications of the pipes required and price. Six different kinds of pipes were ordered. Partial delivery was permitted in that shipment was to be effected between June and August 1988 subject to availability of shipping space. The letter also promised that 'mill certificates will be provided.' At the time the sale confirmation letter was signed, the fourth and fifth lots were on the way to Singapore or were already in Singapore. On 25 June 1988, the last two lots were delivered by the defendants. No mill certificate accompanied the delivery. The delivered pipes did not conform to the specifications with regard to length in that some of the pipes exceeded the stipulated length. Those pipes were sent to the defendants for shortening to conform to the required length. The plaintiffs took the excessive lengths with them and paid the defendants for the cutting and galvanizing services. The invoice together with the mill certificate was delivered about two weeks after the delivery of the pipes. The plaintiffs paid the full price of the invoice. Disputes arose out of the delivery of the first four lots of smaller diameter and thickness. The plaintiffs in their pleadings asserted that the first and second lots were longer than the permitted specification and that they were pitted. As regards the third and fourth lots, the plaintiffs having examined them after their arrival in Singapore accepted them as being within the specification. Later, the plaintiffs rejected them and refused to take delivery. Their pleaded case was that there was no mill certificate accompanying those two lots. The defendants admitted the over-length but denied liability as the only ground for rejection which the plaintiffs gave at the time of the delivery of the first two lots was that the pipes were pitted; there had been no mention of over-length or the absence of the mill certificate. The defendants asserted that the plaintiffs had agreed to appoint a surveyor to inspect the first two lots but had delayed in doing so. Eventually, when a survey did take place, the surveyor had found no pitting; it was then that the over-length was noticed. The defendants contended, further, that neither over-length nor nondelivery of the mill certificate entitled the plaintiffs to reject the goods, relying on the previous acceptance of two lots even though there had been over-length and mill certificates had not accompanied them.

Holding :

Held, dismissing the plaintiffs' claim: (1) where there was a contract for the sale of goods by description, there was an implied condition that the goods should correspond with the description. A buyer was entitled to a reasonable opportunity of examining the goods before deciding whether to accept or reject them. On the facts, the plaintiffs had been given a reasonable opportunity to examine the goods. Such examination, if performed, would have revealed that there was over-length. The over-length was in disconformity with the description and it gave the plaintiffs a right to reject the pipes; (2) where a buyer rejected goods on the grounds of non-conformity with the terms of contract, the seller was entitled to make another delivery of goods answering the terms of the contract provided the second delivery was within the contractual time for delivery. The plaintiffs, however, had initially not stated that over-length or failure to deliver the mill certificate were grounds for rejection. If these grounds had been raised, the defendants could have cut off the over-length and galvanized the ends of the pipes when they took them back, and taken action to procure the mill certificates; (3) where a buyer rejected goods by giving no reason or by giving a wrong reason, he could still subsequently justify his rejection on a fresh ground provided such ground did in fact exist at the time of rejection. This principle did not apply if the seller within the contractual time of delivery could have rectified the non-conformity and made another delivery within the contractual time. Although the two other grounds for rejection had been open to the plaintiffs in August, they could not raise these grounds subsequently: the plaintiffs' failure to raise the grounds in August denied the defendants the opportunity to correct the non-conformity before the survey and to offer a second delivery. Since there was no express time limit for delivery, the goods only had to be delivered within a reasonable time. The conduct of the plaintiffs showed that December had not been too late for the defendants to make a redelivery as they were prepared to take delivery after inspection in December. Thus, the plaintiffs were precluded from raising the grounds in January 1989 as it precluded the defendants from making a second delivery. Alternatively, such a ground had been waived and could not be revived after the protracted delay; (4) further, with regard to the mill certificate, the term which called for it was not a condition in the sense that a breach of it could allow the innocent party to treat the contract as repudiated, and to reject the goods concerned. A condition was a term 'so essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all.' It was the delivery of the goods which constituted substantial performance of the contract, not delivery of the mill certificate, which was only of secondary importance; (5) in any case, it was not an implied term of contract that the mill certificate must be provided simultaneously with the delivery of the goods. The court, when asked to imply terms into a contract, would first ask whether the implication alleged was necessary. On the evidence before the court, including the failure of the plaintiffs to insist on the mill certificates from the beginning and the previous acceptance of goods without mill certificates, the court could not hold that such an implication was necessary.

Digest :

Chuan Hiap Seng (1979) Pte Ltd v Progress Manufacturing Pte Ltd [1995] 2 SLR 641 High Court, Singapore (GP Selvam J).

752 Sale by description -- Defective goods

11 [752] SALE OF GOODS Sale by description – Defective goods – Goods which did not fit description in contract – Variations in thickness of wood supplied – Whether goods were mechantable – Right of rejection of goods – When applicable – Compromise agreement – Effect of subsequent disagreements after compromise agreement is made – Plaintiffs should have mitigated loss when defendants had repudiated goods – Sale of Goods Act (UK), ss 13, 14

Summary :

The plaintiffs and the defendants were traders in plywood and other timber related products. In 1993, by three written contracts, the plaintiffs bought Indian blockboard and Indian and Myanmar plywood from the defendants. The plaintiffs claimed that the Indian goods supplied were defective and that the defendants reneged on a settlement agreement where they would take the goods back. The also alleged that there was a partial delivery of the Myanmar goods. In their defence, the defendants alleged that the Indian goods were perfectly acceptable for Indian origin blockboard and plywood and it was the plaintiffs who breached the contracts by not paying for the goods in full. The defendants had also put forward a counterclaim.

Holding :

Held, allowing the plaintiffs' claim and dismissing the defendants' counterclaim: (1) the parties accepted that two of the contracts were for the sale of goods by description. Accordingly under s 13(1) of the English Sale of Goods Act 1979 which was then applicable, each of the contracts contained an implied condition that the goods supplied would correspond with their description. The court was satisfied from the evidence that the blockboard which the defendants delivered had variations in thickness which exceeded the acceptable trade margin. The blockboard delivered did not correspond with the description of the blockboard contracted for; (2) as regards the defects themselves, the court accepted the evidence of the plaintiffs. There was independent evidence on the variation in thickness, the `unsquareness' exceeding the tolerance, the presence of wood-boring insects and the waviness of the surface of the sheets; (3) as to whether the goods were unmerchantable, the evidence established that the plaintiffs were unable to sell the Indian plywood as `DBBCC' quality. The plaintiffs' evidence that persons in the trade would not buy plywood with painted edges if they needed `DBBCC' plywood was also accepted. There was sufficient evidence to justify a finding that the Indian goods did not comply with their description as being of `DBBCC' quality and that they were not fit for the purposes for which the plywood and blockboard of that quality are generally purchased; (4) it was not disputed that a buyer who wished to exercise his right to reject goods which were not in accordance with the contract must exercise such right within a reasonable time after receipt. The plaintiffs did not unequivocally reject the goods since at the time of the joint inspection they asked whether the defendants would give him a lower price so that he could sell them as lower grade plywood and blockboard. The plaintiffs were still willing to buy the Indian goods but they did not want to pay `DBBCC' quality prices. The plaintiffs had lost their right of rejection; (5) in the interests of certainty, once the right of rejection was lost, it could not be revived by incidental statements from the party who would otherwise be expected to take the goods back and can only be revived by an express agreement to that effect or by circumstances giving rise to an estoppel against denying the loss of the right of rejection. Neither of exceptions apply in the present case; (6) as to the additional goods offered for sale to the plaintiffs, the court accepted the plaintiffs' evidence that they did not agree to buy the additional goods but were simply providing storage for them as a favour to the defendants. If the defendants had considered themselves entitled to payment for the additional goods, they would surely have added that sum to the balance due for the contracted goods; (7) as a result of a compromise agreement, the defendants had agreed to take back the Indian goods on payment of US$10 per m and had also agreed to pay the plaintiffs certain miscellaneous charges. The subsequent disagreements could not change the fact that the compromise agreement had been concluded and the defendants were therefore obliged to take back all the Indian goods and refund the payment made by the plaintiffs less the agreed compensation; (8) the court did not accept the defendants' submission that the terms of the compromise were uncertain. The main terms were agreed and although there were later difficulties regarding the mechanics of refund and collection of the goods, these could not detract from the certainty of the original agreement'. The defendants were in breach of the compromise agreement in that they failed to take back the Indian plywood as they were obliged to and to pay the miscellaneous charges agreed on and refund the amount paid in respect of the Indian goods less the compensation; (9) with regard to the Myanmar plywood, the plaintiffs were in breach of contract in not paying for and collecting the goods upon their arrival and, after the settlement agreement, in not agreeing to set-off their price against the moneys in the plaintiffs' hand until a later date. During this period, the defendants incurred transport and storage charges for the Myanmar plywood. The plaintiffs had to bear these costs to the extent proved; (10) the plaintiffs were entitled to set-off the actual sale prices they received for the Indian plywood rather than notional prices based on their first sale as it could not reasonably be expected that they would be able to sell all the Indian plywood at the same time and at the same price; (11) in respect of the Myanmar plywood, the plaintiffs ought to have mitigated their loss by selling the goods after it became clear that the defendants had totally repudiated them. They should not kept the goods in their store room on an indefinite basis; (12) the defendants' counterclaim had no substance except in respect of the storage and transportation charges that they incurred for the Myanmar plywood between September and November 1993.

Digest :

Chin Ming Trading Pte Ltd v Alkemal Singapore Pte Ltd Suit No 233 of 1994—High Court, Singapore (Judith Prakash J).

753 Sale by description -- Description not trade term but understood by parties

11 [753] SALE OF GOODS Sale by description – Description not trade term but understood by parties – Goods delivered not corresponding to description – Question of acceptance – Sale of goods – Contract for delivery cif – Sale by description – Description not trade term, but understood by parties – Goods delivered not corresponding to description – Question of acceptance – Damages.

Summary :

This litigation arose out of a sale cif of some Indian tiles. It was a sale of description BYMH Brand First Class Roofing Tiles and Ridges (Feroke Size). It appeared from the evidence that 'Feroke Size' was not a usual trade description, but did in certain circles bear a particular size and it was understood by the parties to the contract to mean a particular size. The goods shipped by the appellants did not correspond with the description. When the goods arrived the respondents wrote a grumbling letter. Meanwhile the goods were taken from the ship in a lighter; some were landed in Butterworth, the rest were taken to Alor Star where they arrived early in May, for delivery to a sub-purchaser from the respondents.

Holding :

Held: (1) the respondents' dealing with the consignment constituted an acceptance and, therefore, they had lost their right to reject and were confined to their remedy in damages; (2) the question of damages should be referred to the registrar for asssessment after due inquiry, the measure of damages being the difference between the value of the consignment actually received and the value which the consignment would have had if it had been delivered in accordance with the correct description.

Digest :

Sheth & Ors v Lam Thye Co Ltd [1954] MLJ 230 Court of Appeal, Penang (Mathew CJ, Murray-Aynsley CJ (S).

754 Sale by description -- Evidence necessary

11 [754] SALE OF GOODS Sale by description – Evidence necessary – Preconditions under s 16 of the Sale of Goods Act 1957 – Purpose for requiring goods may be implied – 'Reliance' may be inferred – Goods sold had trade name and described as such – Type of evidence admissible to show breach – Responsibility on user – Sale of Goods Act 1957, ss 15 & 16(1) – Factories and Machinery Act 1967, s 19 – Factories and Machinery (Notification, Certificate of Fitness and Inspection) Regulations 1970, reg 10

Summary :

The plaintiff sold one set of a machine to the defendant. The machine was used to transport two workmen to the 21st storey of a building under construction when it failed to stop at the intended height and subsequently crashed to the ground. As a result, one workman died while the other workman was hospitalized. The plaintiff then claimed against the defendant for, inter alia, the balance sum due to the plaintiff under the sale contract for the sale of the machine. The defendant counterclaimed for, inter alia, loss and damage suffered as a result of the plaintiff's breach of the conditions on fitness for the purpose and merchantabilty under ss 15 and 16(1) of the Sale of Goods Act 1957 ('the Act'). The evidence relied on by the defendant to suggest the breach was: (a) a coroner's report on an accident in Hong Kong; (b) the fact that accidents involving similar machines occurred in other places; and (c) the few instances when the machine stopped at various levels of the building under construction.

Holding :

Held, allowing the plaintiff's claim: (1) there was no evidence that the machine did not correspond with the description in the sales contract and the brochure under s 15 of the Act; (2) and (d) if the goods are specific, they must not be sold under their patent or trade name; (3) applying s 16(1)(a) of the Act, the particular purpose for which the goods were required may be implied. Here, the machine was for the only purpose of vertical transportation of men and materials at a worksite. 'Reliance' may be inferred and it is assumed whenever the seller knows the particular purpose (Hardwick Game Farm v SAPP). The mere fact that the machine sold had a trade name and was described in the contract by its trade name would not exclude the operation of the implied condition of its fitness for any particular purpose; (4) with regards to the evidence relied on by the defendant to suggest the breach, the coroner's report was not admissible. The fact that accidents involving similar machines occurred in Hong Kong and other places did not prove that the machine in Kuala Lumpur was not fit for its purpose. Besides, it was not possible to determine the cause of the accident in Hong Kong from the evidence. Although the British standard in relation to the machine, whether in draft or in completed form, served only as a guide and was not enforceable, at the material time, it was in draft form and the machine complied with it. There was, therefore, no evidence to show that the machine was not fit for its purpose; (5) s 16(1)(a) of the Act sets out four pre-conditions: (a) the buyer must make known to the seller the particular purpose for which the goods are required; (b) this must show reliance by the buyer on the seller's skill and judgment and there must have been actual reliance; (c) the goods must be of a description which is in the course of the seller's business to supply;the machinery inspector reported the cause of the accident as being the direct result of a lack of routine maintenance which should have been carried out by the defendant. However, it could also be caused by an improper installation of the machine from the height of 30m, which the plaintiff installed it up to, to 55m where the accident occurred. However, it was unclear who actually installed the machine up to 55m. It was, however, not disputed that the defendant did not report the use and operation of the machine to the Factories and Machinery Department and no certificate of fitness had been issued. This was the defendant's responsibility which they failed to carry out.

Digest :

Union Alloy (M) Sdn Bhd v Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd [1993] 3 MLJ 167 High Court, Kuala Lumpur (Zakaria Yatim J).

755 Sale by description -- Sale of forged painting

11 [755] SALE OF GOODS Sale by description – Sale of forged painting – Whether sale of painting was a sale by description – Description not relied on by buyer – Transaction between professional art dealers

Digest :

Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1990] 1 All ER 737 Court of Appeal, England (Slade, Nourse and Stuart-Smith LJJ).

See SALE OF GOODS, Vol 11, para 689.

756 Sale by description -- Sale of future goods by description

11 [756] SALE OF GOODS Sale by description – Sale of future goods by description

Summary :

This is a case where the contract therein was held to be a sale of future goods by description.

Digest :

Van Santen v Lim Je Ging [1904] 8 SSLR 1 High Court, Straits Settlements (Hyndman-Jones J).

757 Sale by description -- Sale of Papua nutmegs

11 [757] SALE OF GOODS Sale by description – Sale of Papua nutmegs – Purchasers' refusal to take unless nutmegs of 'international quality' – Surveyor's refusal to issue certificate to that effect – Sellers' claim for damages – Sale of goods – Sale of Papua nutmegs – Purchasers' refusal to take unless nutmegs of 'international quality' _ Surveyor's refusal to issue certificate to that effect – Sellers' claim for damages.

Summary :

The defendants agreed to purchase from the plaintiffs 10 metric tons of Singapore nutmegs BWP by contract AB1 and 40 metric tons of Papua nutmegs BWP and 10 metric tons of Papua nutmegs ABCD by contract AB2. Before the contract AB1 was signed a sample of the Singapore nutmegs BWP was shown to the defendants. Contract AB2 was not a sale by sample, but it was agreed by the parties that the 'buyers shall nominate their own representative to supervise the quality and weight at seller's store before taking delivery ...' Subsequently, the defendants refused to take the nutmegs under AB1 on the ground that they were not of quality and they complained that the nutmegs under contract AB2 were not up to 'international quality'. A surveyor was appointed to survey Papua nutmegs ABCD and he found that the nutmegs were Papua nutmegs ABCD. The surveyor was, however, not prepared to issue a 'Certificate of international quality' as required by the defendants as he had never heard of such a certificate. The defendants refused to take delivery of the nutmegs in the two contracts unless a 'Certificate of international quality' was issued. The plaintiffs claimed damages for breach of contract. During the course of the trial, no evidence was adduced by the defendants as to what 'a certificate of international quality' was.

Holding :

Held, in favour of the plaintiffs: (1) it was clear from the contract AB2 that the defendants agreed to buy Papua nutmegs ABCD and not nutmegs of 'international quality'; (2) the defendants' allegations that the nutmegs in the two contracts were not up to quality were not true.

Digest :

Lian Huat & Co (Pte) Ltd v Megah Commercial Co [1978] 2 MLJ 51 High Court, Singapore (Chua J).

758 Sale by description -- Strict compliance

11 [758] SALE OF GOODS Sale by description – Strict compliance – Condition and warranty – Right to reject where condition not complied with

Summary :

The plaintiffs purchased 93 pieces of valves from the defendants at the price of S$330,000 pursuant to an agreement in writing. They required the valves for installation on a vessel which was then under their construction, Hull No NB-089 ('the vessel') which was being built to carry jet/aviation fuel. The vessel was built for Ocean Tankers Pte Ltd ('the owners'). Delivery was to be at the plaintiffs' yard and defendants were to aim for delivery on or about 30 October 1991. After installation, the valves were found to be seriously defective. In this action, the plaintiffs claimed damages for breach of the condition of the sale contract in relation to the specification. It was specified that the paint coating shall be 300um (or micro m) dry film thickness ('DFT'). It was the plaintiffs' main complaint that there was excessive coating of the paint on the valves which had exceeded the manufacturer's permissible thickness specifications. In the alternative, the plaintiffs claimed damages for breach of the condition as to merchantability. At the hearing, the attack was concentrated on the breach of the DFT specifications which were in writing. The damages, as claimed, were principally the expenses of dismantling, rectifying and reinstalling the vessel's cargo valves; those expenses were claimed to be in excess of S$400,000. The alleged damages additionally included the interest which was incurred by reason of the delay caused by the defective valves, plaintiffs' liabilities to the owners for liquidated damages and additional berthing fees and shipyard overheads. In May 1993, the plaintiffs applied for an order that they may be at liberty to enter interlocutory judgment against the defendants for loss and damages to be assessed, interest and costs. In July 1993, the assistant registrar who heard the plaintiffs' application granted the defendants unconditional leave to defend. The plaintiffs appealed.

Holding :

Held, allowing the appeal: (1) in law, the defendants as sellers had to supply the valves which strictly conformed with the description as spelt out in the written specifications. The contractual specifications under consideration amounted to a condition and was not merely a warranty. Such conditions in the law of the sale of goods have to be performed or the buyers shall have the right to reject the goods which do not strictly conform with the description or claim damages instead; (2) what may be ignored are 'microscopic deviations' but they must be those which a reasonably determined purchaser will undoubtedly ignore. Even here, the context in which such deviations are considered has to be carefully examined. Sometimes, a slight deviation is a miss by a mile, so to speak; (3) under s 13(1) of the Sale of Goods Act 1893, as amended as to its numbering, it is provided that where there is a sale of goods by description, 'there is an implied condition that the goods shall correspond with the description ...'; (4) with respect to the issues which the defendant claimed were triable: (a) the defendants claimed that they had, to the knowledge of the plaintiffs, entered into the contract as agents of Aikawa. This contention was quite unsustainable and it was quite properly abandoned; (b) the defendants next claimed that the coating process was entirely without any fault, as Mr Miyazaki's, the owners' representative, contemporaneous documents recording the work on each valve would be capable of proving. This contention was not accepted as the subsequent tests and the successful rectifications subsequently carried out quite conclusively proved that his records were plainly wrong and wholly unreliable; (c) it was then contended that it was an arguable issue of construction whether or not the parties had in fact agreed to a tolerance of the DFT up to 500um, as the defendants contended, although the same was not spelt out. This submission was not at all viable because such a margin of tolerance was not supported by any evidence that this was the custom or usage in the industry or trade. The defendants as the sellers could have stipulated the tolerance level if they had wanted to; (d) finally, it was strongly argued that the paint work failure was due to the paint (ie Sigma Shinto paint) chosen and prescribed by the plaintiffs. The defendants produced a report prepared by Shiga Prefecture Institute for Machine and Metal Industry which supported the abovementioned proposition. The Shiga report did not assist the defendants; (e) what in the circumstances exerted conclusive influence was the significant fact that the valves were all fully and satisfactorily rectified by stripping the Sigma Shinto paint and repainting it again with the same Sigma Shinto paint. As the rectifications were satisfactory, the irresistible conclusion of fact was that there was faulty application of the paint the first time round. This was therefore not a case of two conflicting opinions over an identical issue which were firmly held by two opposing camps of experts.

Digest :

President Marine (Pte) Ltd v Kojima Singapore (Pte) Ltd Suit No 804 of 1993 High Court, Singapore (Lai Kew Chai J).

759 Sale by non-owner

11 [759] SALE OF GOODS Sale by non-owner

Summary :

Held: where a pawnbroker makes his advance and takes a pledge of goods bona fide but the pawner had committed criminal breach of trust in pawning the goods, the transaction is protected under s 1 of the Factors Act 1889, if the true owner had entrusted the goods to the pawner for the purpose of sale by him.

Digest :

R v Meda [1882] 2 Ky Cr 106 High Court, Straits Settlements (Sidgreaves CJ).

760 Sale by non-owner -- Agent in possession of article as mercantile agent

11 [760] SALE OF GOODS Sale by non-owner – Agent in possession of article as mercantile agent – Whether agent can either sell or pledge the article

Summary :

Held: when a magistrate is proceeding under s 28 of the Pawnbrokers Ordinance to determine the rights of parties to the pawned property, he should only do so in the presence of the parties. When an owner puts an agent in possession of an article as a mercantile agent, he can either sell or pledge the article and a pawnbroker dealing with such agent in good faith is not liable to have his security defeated.

Digest :

R v Talib bin Saiman [1935] MLJ 275 High Court, Straits Settlements (Terrell J).

761 Sale by non-owner -- Bailee disposing off goods to third party

11 [761] SALE OF GOODS Sale by non-owner – Bailee disposing off goods to third party – Whether bailee can give good title – Sale of goods – Bailee disposing off goods to third party – Whether bailee can give good title – Sale of Goods (Malay States) Ordinance 1957 (Ord 1/1957), s 27.

Summary :

One T the chairman of the respondent company's board of directors entered into an agreement some time in January 1961 with a contractor named A who had secured contracts from the Petaling Jaya Authority for construction of culverts under which the respondents were to provide A with all materials for his culverts and also the finance needed to carry out his contracts. The respondents then bought the materials for the project and delivered them to the construction site. About the middle of June 1961, the respondents came to know that the Petaling Jaya Authority, after having some trouble with A, had cancelled his contract. The respondents then informed the Petaling Jaya Authority that the materials on the site belonged to them and also made attempts to sell them. In September 1961, the respondents discovered that the materials had been sold by A to the appellant for RM14,000 of which A had received RM7,000 in part payment. The respondents then commenced this action for conversion. The trial judge gave judgment for the respondents for the sum of RM25,080.52 and costs. On appeal by the appellants, it was contended that: (a) as the respondents caused the chattels to be delivered to A, he became the owner of the chattels and as such could pass a title in respect of the chattels to the appellant; and (b) the chattels were the property of a partnership between the respondents and A and as such A had power to dispose off the goods under s 28 of the Sale of Goods Ordinance 1957.

Holding :

Held: (1) as he had no title to the chattels or authority to sell them he could not give the appellant any title; (2) A was merely the bailee and not the owner of the chattels at the time he sold them to the appellant;as the second contention was never mentioned in the pleadings or at the trial it should not be raised on appeal; further there was no evidence that A was a partner of the respondents.

Digest :

Lim Chui Lai v Zeno Ltd [1964] MLJ 314 Federal Court, Kuala Lumpur (Thomson LP, Barakbah CJ (Malaya).

762 Sale by non-owner -- Chattels requisitioned by the Japanese

11 [762] SALE OF GOODS Sale by non-owner – Chattels requisitioned by the Japanese – Intervention by Custodian of Property – Conversion and detinue

Summary :

The plaintiff was the owner of a motor car which was requisitioned by the Japanese in May 1942, and some months later he received a nominal sum in compensation. On 8 September 1945, the defendant entered into a transaction which purported to be a purchase of the car from a Japanese for RM1,500 in Japanese currency. The plaintiff re-acquired possession, but the Custodian ordered him to return it to the defendant or to the Public Works Department. In or about January 1946, the defendant purported to sell the car to the co-defendant for RM1,600 in Sarawak currency. Both the defendant and co-defendant had executed repairs to the car.

Holding :

Held: (1) the Japanese acquired no title to the car and ownership remained vested in the plaintiff; (2) the Custodian had no power to determine questions of ownership as between individuals; (3) in the special circumstances, the defendant was not a trespasser and there was a quasi-contractual obligation on the plaintiff to pay for repairs executed by the defendant; (4) the co-defendant's possession was wrongful although he acted in good faith and the plaintiff was not liable in respect of the repairs executed by the co-defendant.

Digest :

Ho Hong Soon v Haji Sahari bin Haji Su'ut & Anor [1946] SCR 4 Supreme Court, Sarawak (Hedges CJ).

763 Sale by non-owner -- Delivery of property unlawfully pawned

11 [763] SALE OF GOODS Sale by non-owner – Delivery of property unlawfully pawned

Summary :

A firm of jewellers, IB Ltd employed K as a salesman and they handed to him certain articles of jewellery to be sold by him on their behalf at certain prices stipulating that the property in the said goods was to remain in the company until the said prices were paid to the company. The salesman K thereafter handed some of the articles to one Y, whom he had previously employed as a broker for purposes of sale and he took from Y receipts in which the articles were stated as having been received from IB Ltd, each receipt being marked 'for approval'. Y, while ostensibly agreeing to the trust which he secretly intended to disregard took the articles and at once pawned them with various pawnbrokers.

Holding :

Held: Y was a mercantile agent and that he was acting in the ordinary course of business of a mercantile agent and accordingly he had power to sell the jewellery. That an agent who had been entrusted with the power of sale had also got the lesser power to pledge the articles and that therefore the pawnbrokers had good titles and that the jewellery should only be delivered to IB Ltd on payment by them to the pawnbrokers of the amounts paid by the pawnbrokers to the pledger in each case.

Digest :

R v Yoon Choon Pawnshop & Ors [1939] MLJ 125 High Court, Straits Settlements (Howes J).

764 Sale by non-owner -- Document not on the face of it a bill of sale

11 [764] SALE OF GOODS Sale by non-owner – Document not on the face of it a bill of sale – Court can go behind document to ascertain exact nature of document – Document which is not on the face of it a bill of sale – Court can go behind document to ascertain exact nature of document – Sale of Goods Act, s 21 – Application of, where buyer has no better title than seller has – Moneylenders Ordinance 1951, ss 15 & 16.

Summary :

The subject matter of this case concerned two houses which were of a type considered by custom of this country to be movable property. The plaintiff, who was the owner of the two houses, executed a document dated 26 May 1952 purporting to sell them in consideration of RM1,000 free from encumbrances to the first defendant. The first defendant in turn by a similar document dated 5 January 1953 purported to transfer the same houses in consideration of RM1,350 free from all encumbrances to the second defendant. The plaintiff contended that although the document he executed was in form an out and out sale of property, the actual bargain between the parties was a loan transaction. The plaintiff further contended that the second document was void under s 5(2) of the Bills of Sale Ordinance because at the time it was made the grantor (first defendant) was not the true owner of the property. Finally the plaintiff contended that the first defendant was a moneylender and, therefore, the contract between him and the first defendant was unenforceable because the first defendant was unlicensed.

Holding :

Held: (1) the first document was an actual loan transaction and, therefore, the second document was void. In so far as the second defendant was concerned, s 21 of the Sale of Goods Act applied; (2) the first document was also unenforceable under the Moneylenders Ordinance 1951 and, therefore, repayment of the amount due in respect of the loan was not a condition which would be imposed upon the plaintiff in obtaining the return of his security.

Digest :

T Chelliah v Laxman Singh & Anor [1954] MLJ 210 High Court, Penang (Spenser-Wilkinson J).

765 Sale by non-owner -- Hire-purchase agreement

11 [765] SALE OF GOODS Sale by non-owner – Hire-purchase agreement – Car let out on hire by plaintiff to another – Car subsequently registered in name of defendant as owner – Plaintiff seeking declaration that it has better title to car – Whether defendant a purchaser in good faith without notice of defect in seller's title to car

Summary :

P had earlier let out on hire a car to X. The car was registered in the name of X but with the ownership claimed by P. As X did not pay the instalments due under the terms of the hire-purchase agreement, P terminated the agreement and sought to repossess the car. The car was, however, repossessed from KSC Sdn Bhd. P discovered that D had granted hire-purchase finance to KSC Sdn Bhd in respect of the same car and that the indorsement of ownership claim in P's name had been cancelled and replaced by the name of D. The car in question had been sold by one Z, who was registered as the owner, to D in order to enable KSC Sdn Bhd to obtain hire-purchase finance for the car. P commenced proceedings in court for a declaration that the car was their property and for damages and consequential orders and costs. The issue before the court was whether P or D had a better title to the car.

Holding :

Held, dismissing P's action: (1) on the face of all available documents, in particular the vehicle registration card, D, being the registered owner of the car, prima facie, became the legal owner and therefore had a better title. The onus was on P to show that D had acquired title of the car illegally or without proper inquiry or that D was not a purchaser in good faith; (2) in the instant case, the learned judge was satisfied, having regard to the evidence, that D was a purchaser in good faith of the car from Z and that D had granted hire-purchase finance to KSC Sdn Bhd without notice of any defect in the seller's title to the car. Furthermore, D had made adequate inquiries in the ordinary course of business to determine that the car was free from any defect as to its title; (3) as P had failed, on a balance of probabilities, to adduce any evidence to show that they had a better title, the learned judge dismissed their action with costs.

Digest :

Soon Teck Finance (M) Bhd v Public Finance Bhd Civil Suit No 517 of 1978 High Court, Penang (Mohamed Dzaiddin J).

766 Sale by non-owner -- Hire-purchase agreement

11 [766] SALE OF GOODS Sale by non-owner – Hire-purchase agreement – Estoppel by conduct – Whether first purchaser negligent in allowing hirer to retain possession of registration card of car after purchase – Hirer effecting subsequent sale of car to bona fide third party purchaser – Whether registration card a document of title giving hirer apparent authority to sell car – Whether first purchaser estopped from claiming ownership of car – Sale of Goods (Malay States) Ordinance 1957, s 27

Summary :

In this originating summons, both P and D1 claimed ownership over a car. Both maintained that they had obtained a good title to the car as they had purchased it from the hirer of the car, D2, who was registered as the owner. MUI Finance had financed the purchase of the car which D2 bought under a hire-purchase agreement. D2 had earlier sold the car to P who paid the price in full. P was given possession of the car pending its registration in his name. D2 undertook to return the registration card of the car to P upon effecting the transfer of ownership of the car into P's name. Subsequent to this, a car dealer approached D1 and requested them to finance the purchase of the car from D2 for one K. Having satisfied themselves that there was no prior claim to the car, D1 executed a hire-purchase agreement with K and purchased the car for the specified sum, payment for which was made directly to the dealer. A change in the name of the registered owner was effected on the registration card with K's name inserted as the new registered owner and an endorsement that ownership was claimed by D1. To determine who had a better title to the car, the court was faced with the following issues: (a) when P paid D2 the full purchase price, did he obtain any title to the car; (b) when the amounts due from D2 to MUI Finance were settled in full, did P obtain the legal title to the car; and (c) when D1 paid the dealer in full, did they also obtain good title to the car.

Holding :

Held: (1) P did not obtain any title to the car when he paid the full purchase price for it to D2 as at that point of time such title was vested with MUI Finance with whom D2 had executed a hire-purchase agreement. As a hirer, D2 had no title to the car and he could not therefore pass any better title to P than what he had at that point of time as was recognized by s 27 of the Sale of Goods (Malay States) Ordinance 1957; (2) however, when D2 subsequently paid the balance due under the hire-purchase agreement to MUI Finance and the endorsement of ownership claim by MUI Finance had been cancelled from the registration card, D2 acquired a good title to the car and the title so acquired enured to the benefit of P as the purchaser of the car. As such, D2's further dealings on the car with the dealer and D1 were illegal with the result that D1 acquired no title or interest over the car when they paid the price for the car. D1's only remedy, if any, was against D2 personally for the return of the purchase price but as against P they could not claim any right of ownership over the car; (3) by his own conduct, P had not shown that he had been in any way negligent in allowing D2 to retain possession of the registration card after he had purchased the car. Moreover, the mere possession alone of the registration card did not give D2 the apparent authority to sell the car, as a registration card itself is not a document of title and it could not be assumed that a person in possession of it is the legal owner of the car. Furthermore, all registration cards of vehicles registered under the Road Traffic Act 1958 carry an endorsement of like effect. For the above reasons, D1's plea of estoppel by negligence against P could not be sustained; (4) on the facts of the case, D1 had only themselves to blame for the loss suffered when they parted with the purchase price for the car without inspecting it. The fact that they were purchasers for value without notice was of no relevance to the case; (5) as D1 failed to call the dealer to testify that he had produced the car to be inspected by them, the learned judge invoked s 114(g) of the Evidence Act 1950 and held that there arose an inference that the evidence given by the dealer would be adverse to the case of D1; (6) the learned judge accordingly declared P to be the rightful owner of the car and directed, inter alia, that the endorsement of ownership claim by D1 on the registration card as well as the name of K as the registered owner be cancelled and that the name of P be substituted in its place as the absolute owner of the vehicle.

Digest :

Ng Ngat Siang v Arab-Malaysian Finance Bhd & Anor [1988] 3 MLJ 319 High Court, Kuala Lumpur (Siti Norma Yaakob J).

767 Sale by non-owner -- Possession of goods obtained by fraud

11 [767] SALE OF GOODS Sale by non-owner – Possession of goods obtained by fraud – Buyer was bona fide purchaser – Estoppel in pais – Nemo dat quod non habet – Sale of Goods (Malay States) Ordinance 1957, s 27

Summary :

In 1970, the appellant, a seamstress started a tailoring shop at No 5A Jalan Alor. She was a tenant of the shop at a rent of RM270 per month. She ran the business in the name of Fully Dress Maker but did not register it under the Registration of Businesses Ordinance. On 4 January 1971, the appellant was admitted to the University Hospital. While she was in hospital, her business was managed by her relative, Wong. The appellant remained in hospital for a month and thereafter, she visited the premises about once a month. On 25 May 1972, the appellant went to the premises as she had learned from her husband that Wong wanted to sell away her business. The appellant removed a sewing machine and an electric cooker from the shop. Unknown to her, Wong had, by a written agreement dated 24 May 1972 described herself as the owner of a tailoring business and had sold and transferred to the respondent as the purchaser all rights, claims and titles to the business including the furniture, fittings, sewing machines, etc for the sum of RM3,000. Upon the transfer, Wong gave the respondent the electricity, telephone and water bills as well as the receipts from the Singer Sewing Machine Co. The electricity and water bills were in the name of the landlord of the premises, the telephone bills were in the name of the appellant and the sewing machine receipts were in the name of Messrs Fully Dress Maker. The learned magistrate found that the appellant did not transfer or intend to transfer the business premises to Wong and that the respondent, a bona fide purchaser bought the said business and chattels from a person who was not the true owner. The learned magistrate also held that the appellant's conduct led to the inference that there was a holding out of Wong by the appellant to the respondent and it followed that the respondent did get a good title to the business. The appellant appealed against the said decision.

Holding :

Held, allowing the appeal: (1) the mere fact that an owner allows his goods to go into the possession of another does not by itself constitute such conduct as to amount to a representation that the possessor of the goods is the true owner or has the owner's authority to sell; (2) the appellant never authorized Wong to register the business in her own name nor did she authorize her to transfer the tenancy of the premises to any person or to sell the business and chattel. The mere handing over of the chattel was insufficient by itself to conclude that the appellant held out Wong as the tenant of the premises or as the owner of the business and the chattels or as having any authority of the true owner to sell; (3) the registration of the business by Wong in her own name was in fraud of the appellant as were her purported transfer of the tenancy and the sale of the business and chattels to the respondent; (4) it is a general principle of law that a person cannot sell anything unless he is the owner thereof and in this case, the appellant was not precluded under s 27 of the Sale of Goods (Malay States) Ordinance 1957, from denying Wong's authority to sell the business and the chattels and to transfer the tenancy.

Digest :

Pang Peck Yoon v Soong Lai Leng [1974] 4 MC 248 High Court, Kuala Lumpur (Ajaib Singh J).

768 Sale by non-owner -- Possession of goods obtained by fraud

11 [768] SALE OF GOODS Sale by non-owner – Possession of goods obtained by fraud – Subsequent sale – Title of innocent purchasers – Possession of goods obtained by fraud – Factors Act 1889, ss 9, 2(1) – Subsequent sale – Title of innocent purchasers – Retaking of goods by original sellers – Trespass – Conversion.

Summary :

The sole proprietor of Seng Hong Trading Co agreed to buy 200 cases of plate glass from the defendants and to pay cash on delivery. When the goods were delivered, Seng Hong Trading Co tendered a cheque, which was accepted on the understanding that the property in the goods was not to pass until the cheque had been honoured. The plaintiffs bought the goods from Seng Hong Trading Co in good faith and without notice of any right of the defendants in respect of the goods. The cheque was dishonoured and the property in the goods did not pass to Seng Hong Trading Co. The defendants, on discovering the whereabouts of the goods, entered into the plaintiffs' store without their permission and removed some of the goods, and later caused the police to remove the remaining goods. The plaintiffs brought this action to recover damges for: (a) trespass to land; (b) trespass to goods; and (c) conversion.

Holding :

Held: (1) although the defendants' consent to Seng Hong Trading Co obtaining possession of the goods was induced by fraud, the fraud did not nullify the consent as no fundamental mistake was induced by the fraud, and Seng Hong Trading Co obtained possession of the goods 'with the consent of the seller' within the meaning of s 9 of the Factors Act 1889; (2) accordingly, Seng Hong Trading Co gave the plaintiffs a good title to the goods in question; (3) the defendants had no right to enter the plaintiffs' premises and committed trespass to the plaintiffs' land; (4) the defendants committed trespass to the goods as they wrongly interfered with the plaintiffs' possession of them by removing them from the plaintiffs' store; (5) under s 9 of the Act, the sale by Seng Hong Trading Co to the plaintiffs had the same effect as if Seng Hong Trading Co were mercantile agents in possession of the goods with the consent of the owners; and under s 2(1) of the Act the sale was, therefore, as valid as if Seng Hong Trading Co had been expressly authorized by the defendants to make the sale;as the plaintiffs had the right of possession and a right of property in the goods at the time they were removed by the defendants, the defendants clearly committed conversion of the goods, and the plaintiffs were entitled to sue the defendants for it.

Digest :

Sin Gee Seng v Wai Wah Trading Co [1962] MLJ 189 High Court, Singapore (Ambrose J).

769 Sale by non-owner -- Public auction

11 [769] SALE OF GOODS Sale by non-owner – Public auction – Implied condition that seller has right to sell – Application of the Sale of Goods Act 1957, ss 14 & 27 – Whether the sections are applicable to sale by public auction – Whether purchaser in public auction acquires better rights to goods than the seller had

Summary :

The plaintiff/judgment creditor appealed against the decision of the senior assistant registrar in allowing the claimant's application to exempt one unit of collating machine (the machine) under an interpleader summons. The plaintiff had through a lease agreement (the agreement) leased the machine from the first defendant. Upon the default of the first defendant in honouring his obligation under the agreement, the plaintiff obtained judgment against the defendants and subsequently had obtained a writ of seizure and sale against the first defendant. Before the movable properties were sold by way of public auction, the claimant filed an interpleader summons on the machine. The claimant gave evidence that the machine was sold by way of public auction (the first auction) by Orix Leasing (Orix), one of the judgment creditor of the first defendant and was sold to one Lim (Lim). Subsequently, the claimant bought the machine from Lim. The claimant alleged that the plaintiff could not seize the machine as it belonged to them and was not the property of the first defendant. The issue was what was the status of ownership of the machine when it was sold during the first auction. The plaintiff submitted that when Orix seized the machine and sold it to Lim and subsequently, Lim sold the machine to the claimant, the ownership of the machine remained with the plaintiff. The plaintiff relied on the Sale of Goods Act 1957 (the Act), s 27(1) (which provides that where goods were sold by a person who is not the owner thereof, the buyer acquires no better title to the goods than the seller had) and s 14 (which provides that there is an implied condition on the part of the seller that he has a right to sell the goods). The claimant submitted that: (i) s 27 of the Act was not applicable because the plaintiff was not a claimant at the first auction; (ii) referring to s 21(3) of the Sale of Goods Act 1893 [UK], there was an exception and such exception includes sale by the court; (iii) the guarantee was only on the description of the goods; and (iv) whether the claimant knew of the ownership of Orix because he did not buy from the court but from Lim was an issue.

Holding :

Held, allowing the appeal: (1) the words 'unless the circumstances of the contract are such as to show a different intention' in s 14 of the Act showed that the section was not applicable to sale in a public auction. This was because the terms of a sale in the first auction expressly stated that, 'No guarantee is given to the buyer by the bailiff in all matters of the notice of sale'; (2) the claimant did not have any right on the machine as at all times, the ownership of the machine was with the plaintiff. Even if it was true that the machine was sold by Orix at the first auction, Lim did not obtain rights on the machine based on the principles in ss 14(1) and 27. The implied condition provided in s 14 was not applicable in a sale by a public auction. Therefore, Orix or the auctioneer did not have any implied right on the machine and thus, Lim did not obtain any right as a buyer based on s 27. The same principle applied in the sale and purchase by Lim and the claimant; (3) the issue that the plaintiff was not a claimant at the first auction and that the claimant did not buy from the court but from Lim did not jeopardize the position of the plaintiff in law as the owner of the machine. The submission that the guarantee was only on the description of the goods had no merit.

Digest :

Affin Credit (1991) Sdn Bhd (dahulu dikenali sebagai PHB Credit Bhd) v Perusahaan Pingat Sdn Bhd & Ors Execution Application No 37-102-93 High Court, Kuala Lumpur (Syed Ahmad Idid J).

770 Sale by non-owner -- Purchaser taking possession subject to trust receipt

11 [770] SALE OF GOODS Sale by non-owner – Purchaser taking possession subject to trust receipt – Subsequent fraudulent sale – Onus of proving good faith – Sale of goods – Purchaser taking possession subject to trust receipt – Subsequent fraudulent sale – Good faith – Notice of warranty of authority – Onus of proving – Factors Act 1889, ss 2(1), 9.

Summary :

The plaintiffs agreed to sell to the first defendants 540 cases of vegetable fat and drew on them three several bills of exchange to cover the price thereof. They discounted the bills with the Hongkong & Shanghai Bank (Singapore Branch) and delivered two bills of lading as security for due acceptance and payment of the bills of exchange. The bank was not to part with possession of the goods except to the first defendants who were to hold the goods on trust under a trust receipt. The first defendants accepted the bills of exchange and signed a trust receipt. The bills of lading were then handed to the first defendants who afterwards took possession of the goods. They delivered 535 cases of the vegetable fat to the second defendants at an agreed price. The first defendants, however, did not make any payments to the bank. Their bank later assigned the bills of exchange together with the appurtenant rights to the plaintiffs. In an action by the plaintiffs against the defendants for the return of the cases of vegetable fat on their value and damages for their conversion,

Holding :

Held: on the evidence, the second defendants had not discharged the onus on them of proving good faith and absence of notice of warranty of authority; the plaintiffs in the circumstances should succeed in the action.

Digest :

Rahamin Penhas v Kishnan Chand & Sons [1933] MLJ 126 High Court, Straits Settlements (Prichard J).

771 Sale by non-owner -- Rival claimants to car

11 [771] SALE OF GOODS Sale by non-owner – Rival claimants to car – Bona fide purchaser for value without notice – Mercantile agent – Possession – Right to – Rival claimants to car which is subject matter of cheating case – Bona fide purchaser for value without notice – 'Mercantile agent' – Factors Act 1889, ss 1(1), 2(1) – Sale of Goods Act 1893, ss 23, 24.

Summary :

This was an appeal from a decision of the learned magistrate arising out of an inquiry held by him under s 441 of the Criminal Procedure Code (SS Cap 21), as to the right of possession of two rival claimants, the appellant and a finance company, in respect of a motor car which one Loo Lean How had fraudulently transferred to the company and who had been convicted of cheating.

Holding :

Held: (1) the company was a purchaser in good faith and without notice of any defect in the seller's title to the car; (2) at the time Loo Lean How sold the car, he was acting as a 'mercantile agent' within the meaning of s 1 of the Factors Act 1889, that he was in possession of the car and all the documents of title to the car with the consent of the owner, that the company acted in good faith in acquiring the car, and that the sale or disposition to the company was, therefore, as valid as if Loo Lean How had been acting with the express authority of the owner; (3) the words 'in the manner hereinafter mentioned' contained in s 436 of the Criminal Procedure Code, must necessarily refer to s 441 and the procedure therein specified; (4) there was a sale of the car by Loo Lean How to the company and that Loo Lean How entered into a hire-purchase agreement in respect of the car. The transaction was therefore not a moneylending transaction.

Digest :

Cheah Swee Hock v Public Prosecutor [1961] MLJ 183 High Court, Penang (Rigby J).

772 Sale by sample -- Construction of contract

11 [772] SALE OF GOODS Sale by sample – Construction of contract – Whether inclusion of the words 'as per sample' meant agreement was an express sale by sample – Whether term was implied in the agreement – Sale of Goods Act 1979 [UK], s 15(1) & (2)

Summary :

The plaintiffs agreed to sell a quantity of bricks to the defendants, the main building contractors in a condominium project. The agreement was evidenced in a letter from the plaintiffs to the defendants which was signed by both parties and contained a reference to the description of goods as being 'common bricks, SISIR standards, SS103:1974, as per sample'. Prior to the delivery of this letter, the plaintiffs had delivered some sample bricks to the defendants for their inspection. When the first consignment of bricks was delivered to them, the defendants purported to reject them, alleging that they were substantially different from the samples delivered earlier. The plaintiffs responded by delivering a further quotation for the same quantity of bricks, with the description 'common bricks, locally produced, SISIR standards, SS103:1974' and quoted a higher price. The quotation also contained a reference to a shortage of bricks in the market and stated that the defendants should confirm the order as soon as possible. The defendants were subsequently notified that if they wanted bricks of the same quality as the sample delivered, they would have to pay this higher price. In consequence, the defendants refused to make any further orders from the plaintiffs and purchased the bricks they required from the market, at a price higher than that contracted with the plaintiffs. The plaintiffs commenced an action for the price of the bricks delivered to the defendants and for the loss of profits in respect of the remaining quantity which the defendants refused to accept. The defendants had used part of the bricks and admitted liability for the price of these but not for those rejected. The defendants counterclaimed against the plaintiffs for a failure on their part to supply bricks of contractual quality and for repudiatory breach of contract. The defendants claimed the additional cost incurred in purchasing the bricks from other sources and sought to set off the amount payable for the bricks used against the damages which they were claiming.

Holding :

Held, dismissing the plaintiffs' claim and allowing the defendants' counterclaim: (1) the words 'as per sample' indicated that the agreement was an express sale by sample; (2) even without these words, the evidence was clear that there was an implied term to the effect that there was a sale by sample. The plaintiffs had wanted to purchase bricks of a certain quality which had to be approved by the architects of the project. The sample bricks delivered were in fact submitted to and approved by the architect; (3) the defendants failed to make out their case that the bricks supplied and offered by the plaintiffs were not merchantable. Evidence that there would be some difficulty in laying the bricks and that there might be water seepage problems did not render the bricks 'unfit for the purpose for which goods of that kind are commonly bought for' (under s 14(6) of the Sales of Goods Act (Cap 393, 1994 Ed). However, this did not affect the defendants' case on 'sale by sample', which had been made out; (4) the plaintiffs had repudiated the agreement by supplying and insisting on supplying inferior quality bricks which did not conform with the samples and by delivering the fresh quotation. The plaintiffs were trying to renege from the contract because, after the conclusion of the contract and when the time for supply came, they were unhappy with the price as the contractual quality bricks could have been sold for a much higher price in the then prevailing market; (5) the defendants were justified in purchasing bricks from other sources and the plaintiffs were ordered to pay to them the amount equivalent to the increased price paid by the defendants, less the price for the first consignment of bricks.

Digest :

Ceramic Brickworks (S) Pte Ltd v Asia-Tech Construction & Engineering Pte Ltd [1996] 1 SLR 200 High Court, Singapore (GP Selvam J).

773 Sale by sample -- Product not in conformity with sample shown

11 [773] SALE OF GOODS Sale by sample – Product not in conformity with sample shown – Implied where sample is promised and sent before conclusion of contract

Digest :

Sunshine Engineering Service Pte Ltd v Chemco Pte Ltd Suit No 525 of 1991 High Court, Singapore (GP Selvam J).

See SALE OF GOODS, para 1482.

774 Sale by sample -- Remedy for breach

11 [774] SALE OF GOODS Sale by sample – Remedy for breach – Failure to deliver goods which corresponded with sample – Whether conduct of seller repudiatory – Whether buyer entitled to claim for increased price paid for purchase of the same goods from other sources

Digest :

Ceramic Brickworks (S) Pte Ltd v Asia-Tech Construction & Engineering Pte Ltd [1996] 1 SLR 200 High Court, Singapore (GP Selvam J).

See SALE OF GOODS, para 1484.

775 Sale by sample -- Samples not representative of peanut kernels shipped

11 [775] SALE OF GOODS Sale by sample – Samples not representative of peanut kernels shipped – Aflatoxin in excess of permissible limit – Breach of implied undertaking – Sale of goods – Sale by description – Sale by sample – Sale of peanut kernels – Samples not representative of peanut kernels shipped – Aflatoxin in excess of permissible limit – Breach of implied undertaking – Liquidated claim or damages alternatively – Sale of Goods Act 1979, s 15.

Summary :

By two written contracts contained in telexes in 1980 entered into between the plaintiffs and the defendants, the defendants agreed to sell to the plaintiffs a maximum of 314 metric tons of peanut kernels of 60/70 pieces per ounces TBS (ie Thai Brown Skin) to be packed in new jute bags at the price of US$1,447 per metric ton C & F Auckland, New Zealand. The peanut kernels were to be from the '1980 Thailand Crop' and payment was to be effected by a confirmed irrevocable letter of credit available if the draft and bill of lading were accompanied by: (a) a Singapore Government issued Aflatoxin Free Certificate; (b) a Certificate of Crop 1980; and (c) a Certificate that the goods were packed in sound clean bags not previously used for any purpose. After shipment of the goods, the defendants presented to the advising bank the relevant bill of lading evidencing the shipment, the draft drawn on the plaintiffs, the Fumigation Certificate of the Port of Singapore Authority, their Certificate of 1980 Thailand Crop, the Aflatoxin Free Certificate of the Department of Scientific Services, Singapore, accompanied by a firm of surveyors' certificate that they (the surveyors) had drawn at random a sample for the Department's analysis, the Surveyors' Certificate of Weight and Quality and their Certificate of Inspection. They were duly paid for the consignments. The present dispute arose when the goods arrived in Auckland by separate shipments. The plaintiffs rejected the goods and alleged that the goods did not correspond with the samples and were of seriously inferior quality. They also alleged that the goods were not from the 1980 Thailand Crop as described but were from an older crop in respect of a large proportion, some 20%, of the peanut kernels. They further alleged that the goods were 'unfit for human consumption and were by reason of the mould aflatoxin age and degree of infestation by insects of unmerchantable quality'. The defendants disputed these allegations and refused to reimburse the plaintiffs. The plaintiffs obtained an order apppointing a Special Examiner for the purpose of taking the evidence of their witnesses in Auckland, bearing on, inter alia, the condition of the peanut kernels on arrival, the degree of insect infestation, the level of aflatoxin, and the quality of the peanuts compared with that of the samples. The evidence shows that all the three shipments of peanut kernels contained a high level of aflatoxin, far in excess of the permissible limit of 15 parts per billion. The cause of the problem was the condition of the peanut kernels and the presence of insects before shipment. The plaintiffs claimed the sum of US$535,244.08, or, alternatively, damages, interest and costs.

Holding :

Held, allowing the claim: (1) the court was not satisfied that the samples delivered to the Department of Scientific Services were representative of the peanut kernels shipped to the plaintiffs; (2) the defendants were in breach of s 15 of the Sale of Goods Act 1979. The sale was a sale by sample, a fact not in dispute and what was tendered to the plaintiffs consisted some 20% shrivelled peanut kernels and worse, they were not aflatoxin free. All three shipments contained aflatoxin far in excess of the permissible limit of 15 parts per billion; (3) the defendants were also in breach of the implied undertaking laid down by Diplock J in Mash & Murrell Ltd v Jospeh I Emanuel Ltd [1961] 1 WLR 862, 865; (4) judgment will be entered for the plaintiffs in the sum of US$535,244.08 together with interest thereon at 8%pa calculated from 1 January 1982, to date of judgment, with costs to the plaintiffs.

Digest :

Harrisons & Crosfield (NZ) Ltd v Lian Aik Hang (sued as a firm) [1987] 2 MLJ 286 High Court, Singapore (Lai Kew Chai J).

776 Sale of logs for export -- Meaning of 'fair average quality'

11 [776] SALE OF GOODS Sale of logs for export – Meaning of 'fair average quality' – Whether international standard as applied in country importing the logs applicable to contract for sale in Sarawak – Whether price on resale relevant

Summary :

The appellants contracted to sell logs of fair average quality to the respondent company for export. Upon delivery of the raft of logs at the ship's side, the respondent's manager, who happened to be on the ship, examined some of the logs, rejected some and commented adversely on some which had been loaded. On arrival at Hamburg, the logs were found to be 30% below fair average quality as estimated by persons with knowledge of the timber trade in Hamburg according to standards which apparently had some international acceptance. No other evidence as to the meaning in Sarawak of fair average quality was before the court. Damages were estimated on the difference between the value of the logs actually delivered and the value, if they had been of fair average quality. On appeal, it was contended that the price at which the logs had been resold should have been taken into account.

Holding :

Held: (1) even if this was properly a case to consider the issue of delivery after inspection or a reasonable opportunity for inspection, there had been no such inspection or opportunity in the circumstances under which the logs had been delivered; (2) the evidence of the Hamburg witnesses being the only acceptable evidence before the court as to the meaning of fair average quality, and the timber trade being an international trade, it was reasonable to accept this evidence as to the meaning of the expression in the contract before the court; (3) the proper measure of damages was the difference between the value when delivered at the ship's side in Sarawak and the value of a similar quantity of logs of fair average quality so delivered. The amount realized by the respondent company upon resale was not relevant.

Digest :

Sin Hua Sawmill Co v Borneo Sumatra Trading Co Ltd [1960-63] SCR 205 Supreme Court, Sarawak, North Borneo and Brunei (Sir John Ainley CJ, Simpson and Harley JJ).

777 Sale of lorry -- Registration book not delivered

11 [777] SALE OF GOODS Sale of lorry – Registration book not delivered – Whether document of title – Sale of goods – Unconditional contract for sale of specific goods – Sale of lorry – Registration book not delivered – Sale of Goods (Malay States) Ordinance 1957, ss 20 and 21.

Summary :

The parties had agreed on the sale of a motor lorry and it appeared that a motor vehicle repairer had taken delivery of the lorry for repair on behalf of the plaintiff, who was the purchaser. The registration book of the lorry was however not handed to the plaintiff. The trial judge held that the lorry had not been delivered to the plaintiff and awarded damages against the defendant.

Holding :

Held: the sale of a lorry can be complete and effective even though the registration book, which is not a document of title, is not made available to the buyer and the trial judge should have held in this case that the lorry was duly delivered to the plaintiff.

Digest :

Mohamed Mydin v Ramiah [1965] 1 MLJ 33 Federal Court, Kuala Lumpur (Thomson LP, Barakbah CJ (Malaya).

778 Sale of specified goods -- Specific performance

11 [778] SALE OF GOODS Sale of specified goods – Specific performance – Seller in breach of contract – Application by buyer for specific performance – Whether goods of unique value to buyer – Whether damages adequate remedy – Sale of Goods (Malay States) Ordinance 1957, s 58

Summary :

P sued D for specific performance of a contract concluded between the parties by which D agreed to sell used heavy construction machines to P. P contended that D had breached its obligations under the contract for failing to accept the purchase price when tendered. The learned judge ruled that D had breached the contract and the question before the learned judge was whether P would be allowed to succeed in its claim to have the contract specifically enforced or whether damages was an equally adequate remedy for D's breach.

Holding :

Held, dismissing P's claim for specific performance: (1) in the instant case, the contract concluded between the parties was for the sale of specific or ascertained goods and under s 58 of the Sale of Goods (Malay States) Ordinance 1957, the court has the discretion if it considers fit to decree specific performance of the contract; (2) in deciding whether or not to make an order for specific performance, the court is entitled to look to all the surrounding circumstances of the case including the conduct of both the buyer and the seller, and to consider the hardship which an order would inflict on the seller; (3) in the instant case, P (the buyer) was not able to show that the machines were not easily available in the market and that they were of a unique interest and value to it. Since such goods were easily available in the market and were not of unique interest or value to P, the learned judge held that damages was an equally adequate remedy for D's breach.

Digest :

Mensa Mercantile (Far East) Pte Ltd v Eikobina (M) Sdn Bhd [1989] 2 MLJ 170 High Court, Kuala Lumpur (Siti Norma Yaakob J).

Annotation :

[Annotation: Reversed on appeal. See [1994] 1 MLJ 553.]

779 Sale of specified goods -- Subject matter of contract not in existence

11 [779] SALE OF GOODS Sale of specified goods – Subject matter of contract not in existence – Impossibility of performance – Contract – Sale of specified goods – Subject matter of contract not in existence – Impossibility of performance.

Summary :

In this case, the plaintiffs claimed the refund of S$6,000 being a deposit paid by them on account of the purchase price of 50 bales of gunny bags. The parties had entered into a written contract for the supply of 50 bales of gunny bags to be delivered per SS Mausang due in Singapore on or before a specified date. When the SS Mausang, which in fact sailed from Calcutta the day after the contract was signed, arrived in Singapore, the 50 bales of gunny bags were not on board. Neither party to the contract was aware of this fact at the time the contract was entered into.

Holding :

Held: the contract in this case was for the sale of specified goods on a specified ship arriving at Singapore on or about a specified date and as the goods were not on board the ship, the contract was impossible of performance and was therefore void.

Digest :

Chop Ngoh Seng v Esmail & Ahmad Bros [1948-49] MLJ Supp 93 High Court, Singapore (Gordon-Smith Ag CJ).

780 Secondhand goods -- Goldsmith buying gold to melt down

11 [780] SALE OF GOODS Secondhand goods – Goldsmith buying gold to melt down – Minor Offences Enactment 1920, s 32

Summary :

Held: a goldsmith who buys secondhand jewellery to melt down and sell in other form deals in second-hand goods within the meaning of s 32 of the Minor Offences Enactment 1920.

Digest :

Tan Weng Chee & Anor v Public Prosecutor [1925] 5 FMSLR 125 High Court, Federated Malay States (Farrer-Manby JC).

781 Secondhand goods -- Licence under s 6 of the Second-Hand Dealers Enactment (Cap 86)

11 [781] SALE OF GOODS Secondhand goods – Licence under s 6 of the Second-Hand Dealers Enactment (Cap 86) – Scope of licence – Licence invalid out of state where obtained – Second-hand Dealers Enactment (Cap 86) – Licence under s 6 in the form in Third Schedule – Scope of licence – Licence invalid out of State where obtained.

Summary :

S was granted at Ipoh a licence under s 6 of the Second-Hand Dealers Enactment (Cap 86) in the form in the Third Schedule. The enactment is a Federal Enactment. Purporting to act under that licence he purchased secondhand goods in Kuala Selangor.

Holding :

Held: the licence is limited to each individual state.

Digest :

Public Prosecutor v BM Sundram [1939] MLJ 83 High Court, Federated Malay States (Thomas CJ).

782 Secondhand goods -- Meaning of 'deal in'

11 [782] SALE OF GOODS Secondhand goods – Meaning of 'deal in' – No licence

Summary :

Toh Lim Poh carried on the trade of a goldsmith in Kuala Lumpur; he had no licence to deal in secondhand goods. On 25 March 1925, between 11am and noon, his firm bought a pair of secondhand gold bangles, apparently for the purpose of being melted down and manufactured into other articles for sale. When his shop was subsequently searched by the police, other gold articles were found in a drawer, five of which were admittedly secondhand. He was charged with dealing in secondhand goods without licence and convicted. Toh Lim Poh appealed and the appeal was reserved under s 57 of the Courts Enactment 1918, for the decision of the Court of Appeal.

Holding :

Held: that 'to deal in' can mean 'to buy', and that a goldsmith who buys secondhand jewellery can be convicted under this section and that it does not matter in what form the articles are sold.

Digest :

Toh Lim Poh v Public Prosecutor [1925] 6 FMSLR 10 Court of Appeal, Federated Malay States (Woodward CJ, Farrer-Manby and Watson JJ).

783 Secondhand goods -- Possession of goods in unusual quantity and apparently exposed for sale

11 [783] SALE OF GOODS Secondhand goods – Possession of goods in unusual quantity and apparently exposed for sale – Presumed to be dealer in secondhand goods – Second-Hand Dealers Enactment (Cap 86), ss 2(ii), 6 and 9 – Person in possession of second-hand goods in unusual quantity and apparently exposed for sale presumed to be a dealer in second-hand goods.

Summary :

The respondent was found in possession of secondhand goods in an unusual quantity and these goods were apparently exposed for sale. There was no evidence that he had actually sold any of these goods.

Holding :

Held: having regard to the presumption in s 2(ii) of the Second-Hand Dealers Enactment (Cap 86) there was ample uncontradicted evidence to show that the respondent was a dealer within the meaning of the enactment and that he was guilty of the offence charged, namely dealing in secondhand goods without having a licence.

Digest :

Public Prosecutor v Chuan Hoo [1946] MLJ 83 High Court, Federated Malay States (Poyser CJ).

784 Time -- Contract for supply of crystal chandeliers

11 [784] SALE OF GOODS Time – Contract for supply of crystal chandeliers – Time not essence of contract – Damages – Contract – Contract for supply of crystal chandeliers – Whether time of the essence of the contract – Breach of contract – Damages.

Summary :

In this case, the respondents had agreed to supply a substantial quantity of electrical equipment including four crystal chandeliers. Under the agreement, the date of delivery of the chandeliers was one month from the date of agreement which was on 2 December 1974. The appellants issued irrevocable letters of credit to the respondents and the shipment date was stated to be 20 January 1975. On 13 January 1975, the respondents wrote to the appellants that there would be a delay in the supply of the chandeliers. On 23 January 1975, the appellants purported to cancel the contract for the chandeliers on the ground that they were urgently required. On 27 January 1975, the respondents sent a telegram stating that the goods were ready for shipment and they were prepared to send it by air-freight. The appellants did not accept the offer and purported to cancel the contract. The respondents thereupon instituted proceedings claiming specific performance, alternatively damages. The learned trial judge held that on the facts time was not of the essence of the contract and he gave judgment for the respondents. The claim for specific performance was abandoned at the trial and the learned judge awarded damages reflecting the full contract price of the chandeliers. The appellants appealed.

Holding :

Held: (1) the learned trial judge in this case was wholly right in coming to the conclusion that time was in no way of the essence of the contract; (2) the respondents were under an obligation to mitigate their damages and as no evidence had been produced to show that efforts had been made by them in this respect, there must be a retrial on the issue of damages.

Digest :

Pacific Electrical Co Ltd v Seng Hup Electrical Co (S) Pte Ltd [1978] 1 MLJ 162 Court of Appeal, Brunei (Rigby (President).

785 Title -- Retention of title clause

11 [785] SALE OF GOODS Title – Retention of title clause – Effectiveness of – Proper retention of title clause does not create security interest

Summary :

A were a German company. They sold steel strip to C, a Scottish company, for use in their business. The contract of sale was on A's general terms and conditions, which provided that all goods delivered to C remained the property of A until all debts owed to A were settled. C were placed in receivership and R were appointed as receivers. R claimed that the steel strip had become the property of C. A sued. Their claim was dismissed by the trial judge on the ground that by Scottish law the retention of title clause was an ineffective attempt to create a right of security over the steel strip without transfer of possession. The Court of Session dismissed A's appeal. A appealed to the House of Lords.

Holding :

Held, allowing the appeal: (1) in the present case, the parties in the contract of sale clearly expressed their intention that the property in the steel strip should not pass to C until all debts due by them to A had been paid. There were no grounds for refusing to give effect to that intention; (2) in all cases where a right of security is conferred, the debtor retains an ultimate right over the subject matter in question. Where, however, the seller of goods retains title until some condition has been satisfied, the seller retains the ultimate right to the goods. It follows therefore that where title has been validly retained, no right of security has been created in the goods. The appeal was therefore allowed.

Digest :

Armour v Thyssen Edelstahlwerke AG [1990] 3 All ER 481 House of Lords, England (Lord Keith, Lord Griffiths, Lord Oliver, Lord Goff and Lord Jauncey).

786 Title -- Transfer

11 [786] SALE OF GOODS Title – Transfer – Exception to nemo dat rule – Estoppel by conduct – First purchaser failing to register ownership claim and endorsing claim on registration card of vehicle – Whether first purchaser estopped from denying vendor's authority to sell goods a second time – Sale of Goods (Malay States) Ordinance 1957, s 27

Summary :

A leasing company, the second plaintiff, had bought a tractor from a tractor dealer, the third defendant, and then leased it to the first plaintiff, a finance company. In the registration card, the dealer was stated to be the registered first owner, the leasing company was the second owner and the third owner was the finance company. The card carried an endorsement to the effect that the right of ownership was claimed by the leasing company. Unknown to the plaintiffs, the dealer had earlier (in February 1984) sold the tractor to another finance company who then hired it to the second defendant pursuant to a hire-purchase agreement. The finance company purported to repossess the tractor following default by the second defendant in making the payments due under the agreement. At the time that the finance company bought the tractor from the dealer, there was no registration card for the tractor. An application was made through the dealer for the issue of the registration card by the Registrar and Inspector of Motor Vehicles. The finance company also made a claim to ownership in the form of a letter sent to the dealer for registration with the registrar. The registration card was left with the dealer. Possession of the tractor too was left with the dealer. The plaintiffs sued the defendants, seeking, inter alia, a declaration that all the defendants were 'not entitled' to the tractor.

Holding :

Held, allowing the plaintiff's application: (1) the failure to carry out the practice of registering an ownership claim on the registration card would create the necessary expectation in the mind of a subsequent unknowing buyer of the vehicle or the necessary representation to him with regard to the status of the vehicle. Such consequence could not be lost on any finance company acquiring a vehicle to have it let on hire to any hirer. It was inconceivable that it could not be reasonably foreseen; (2) all buyers of secondhand cars in West Malaysia have always depended on the absence of any registered endorsement of claim to ownership in the registration card as a 'green light' to deal with sellers whose names are registered as owners on the registration cards or their mercantile agents; (3) the practice in West Malaysia combined with local statutory provisions in regard to the registration of ownership claims would constitute such a distinctive local circumstance of the inhabitants of West Malaysia that the decisions in English cases on the point of failure to have an ownership claim registered should not be followed.

Digest :

Syarikat Batu Sinar Sdn Bhd & Ors v UMBC Finance Bhd & Ors [1990] 3 MLJ 468 High Court, Ipoh (Peh Swee Chin J).

787 Trade descriptions -- False trade on school exercise books

11 [787] SALE OF GOODS Trade descriptions – False trade on school exercise books – Trade descriptions – False trade descriptions on school exercise books – Appeal against conviction – Trade Descriptions Act 1972 (Act 87), ss 3(1)(a), 4(1)(a), 4(3) & 5(1) to (3) – Evidence Act 1950 (Act 56), s 33.

Summary :

There are two appeals in this case. In appeal No 70, a company, Syarikat Chip Seng Trading Sdn Bhd was convicted; and in Appeal No 71, its manager. They were convicted of applying false trade descriptions to school exercise books, (the number of pages indicated on the cover of the book did not represent the actual and correct number of pages of the book) in the course of a trade or business. They appealed. The issue before the court is whether the learned magistrate was right in finding that the accused had in the course of a trade or business applied false trade descriptions to the exercise books.

Holding :

Held: the learned magistrate was right in finding that the man in the street would conclude that the figures on the outside covers of these books were likely to be taken for an indication of their pages and that they were misleading.

Digest :

Syarikat Chip Seng Trading Sdn Bhd & Anor v Public Prosecutor [1979] 2 MLJ 82 High Court, Kuala Lumpur (Suffian LP).

788 Trust -- Trust receipt

11 [788] SALE OF GOODS Trust – Trust receipt – Purchaser issued trust receipts to bank to finance sale of goods – Whether bank had title to goods – Whether purchaser held goods on trust for bank – Whether purchaser held proceeds of sale on trust for bank

Digest :

Aluminex (M) Sdn Bhd & Anor v United Malayan Banking Corp Bhd & Ors [1992] 1 MLJ 435 High Court, Kuala Lumpur (VC George J).

See SALE OF GOODS, Vol 11, para 682.

789 Unpaid seller -- Buyer in arrears of monthly instalments

11 [789] SALE OF GOODS Unpaid seller – Buyer in arrears of monthly instalments – Counterclaim – No clear evidence of counterclaim – Dismissal of counterclaim – Contract – Sale of goods – Buyer in arrears of monthly instalments – Counterclaim – No clear evidence of counterclaim – Dismissal of counterclaim.

Summary :

In this case, the plaintiff claimed RM137,376.44 for goods sold and delivered to the defendants. Payment was to be made in specified monthly instalments to the end that the whole amount would have been settled by December 1981. However, none of the instalments were paid. The writ and the statement of claim were served on the defendants on 12 June 1982. When a statement of defence was not filed and delivered within the 14 days after appearance had been entered the plaintiffs entered judgment in default of defence on 12 August 1982. On 1 September 1982, a summons was taken out by M/s Hisham, Sobri and Kadir who had on that day filed a notice of their appointment as solicitors for the defendants. By that summons the defendants sought to have the default judgment set aside and asked for leave to properly enter an appearance to the writ and for leave to file a defence. They also asked for a stay of execution of the default judgment. The summons was heard and disposed of in chambers on 10 November 1983 and dismissed with costs. On 9 December 1983, a firm of solicitors called M/s Chooi & Ong filed a notice of change of solicitors giving notice that they had taken over the conduct of the matter for the defendants. On 3 January 1984, they filed an application seeking an extension of time so that the defendants could pursue with an appeal to have the default judgment set aside.

Holding :

Held, dismissing the appeal: the application failed because the defendant company had not disclosed a bona fide reasonable defence.

Digest :

East Asiatic Co (M) Bhd v Kamanis Sdn Bhd [1985] 2 MLJ 227 High Court, Kuala Lumpur (George J).

790 Unpaid seller -- Claim for goods sold and delivered

11 [790] SALE OF GOODS Unpaid seller – Claim for goods sold and delivered – Claim for interest – No reasons given – Sale of goods – Claim for goods sold and delivered – Interest – Claim for – No reasons given.

Summary :

The plaintiff filed an action in the sessions court claiming RM7,232.64 for goods sold and delivered to the defendant. No defence was filed and the defendant did not appear at the hearing on 25 February 1972. Judgment was entered for the plaintiff as prayed. The plaintiff claimed and was awarded interest at the rate of 6%pa from 22 August 1970, to the date of payment of the judgment debt. However, the statement of claim did not state why interest was claimed from 22 August 1970, or as to when the cause of action arose.

Holding :

Held: the order of the learned President was to be varied in so far as payment of interest was concerned. Since the action was filed on 22 January 1972, the plaintiff was consequently entitled to interest at the rate of 6%pa from 22 January 1972 and not from 22 August 1970.

Digest :

Sun Hing & Co v Sun Cheong Tin Mines [1972] 1 MLJ 273 High Court, Ipoh (Sharma J).

791 Unpaid seller -- Claim for price of goods

11 [791] SALE OF GOODS Unpaid seller – Claim for price of goods – Books of account regularly kept in the course of business – Whether admissible – Contract – Sale of goods – Claim for price of goods – Evidence of account book regularly kept in the course of business – Evidence Act 1950 (Act 56), s 34.

Summary :

In this case, the respondent claimed the sum of RM5,283.25 for goods sold and delivered to the appellants. To support its case, the respondent produced its books of accounts kept by it to record its transactions with several customers including the appellants. Evidence was given that the goods were ordered and delivered to the appellant's premises and that the entries in the account books were entered from the invoices. The learned trial judge gave judgment for the respondents and the appellants appealed.

Holding :

Held, dismissing the appeal: (1) the books of account were regularly kept in the course of business and referred to a matter into which the court had to inquire and were therefore admissible under s 34 of the Evidence Act 1950 (Act 56); (2) corroboration of the entries in the book of account were to be found in the book of account itself, in the admission by the appellants which tallied with the first four entries relating to them and in the oral evidence relating to the order and the supply of the goods.

Digest :

Sim Siok Eng & Anor v Poh Hua Transport and Contractor Sdn Bhd [1980] 2 MLJ 72 Federal Court, Kuching (Chang Min Tat FJ, Salleh Abas FJ and Charles Ho J).

792 Unpaid seller -- Defence that goods purchased by buyer's predecessor-in-title

11 [792] SALE OF GOODS Unpaid seller – Defence that goods purchased by buyer's predecessor-in-title – Conditional leave to defend – No merits in defence – Practice and procedure – Conditional leave to defend – Amended statement of claim – No merits in defence – RSC 1957, O 14.

Summary :

In this case, the plaintiffs sued the defendants for goods sold and delivered. The goods were sold by the Hup Fatt Tin Mining Kongsi, which was later purchased by the plaintiffs, Han Pit Loh Sdn Bhd who became the successors to Hup Fatt Tin Mining Kongsi. The defence was a bare denial and denied any knowledge of the plaintiffs presumably on the ground that they had not purchased the goods from the plaintiffs but their predecessors in title. On an application for summary judgment, the assistant registrar granted conditional leave to defend to the defendants upon the defendants depositing the amount claimed within three weeks from the date of the order. The defendants appealed against the order of the assistant registrar.

Holding :

Held: a study of the numerous defendants' affidavits in reply cannot but lead to the conclusion that the defence was not bona fide but merely an attempt to delay the process of the court and delay the delivery of judgment. Under the circumstance, even final leave to enter judgment may have been the proper order to be given and the appeal must therefore be dismissed.

Digest :

Han Pit Loh Sdn Bhd v Chun Heng Tin Mine [1976] 2 MLJ 20 High Court, Ipoh (Arulanandom J).

793 Unpaid seller -- Forgeries committed by servant

11 [793] SALE OF GOODS Unpaid seller – Forgeries committed by servant – Scope of employment – No actual or ostensible authority – Master and servant – Liability of master – Forgery committed by servant – Scope of employment – No actual or ostensible authority.

Summary :

The plaintiffs, without knowledge that local orders presented to them by the office messenger employed by the defendants were forgeries, sold and delivered certain goods to the defendants through the office messenger. The orders were forged by the office messenger and the defendants never received the goods. The forged orders were on the official forms of the defendants and were duly signed and stamped. The plaintiffs brought a claim for goods sold and delivered against the defendants on the principle of ostensible authority. It was proved that the defendants themselves were not at fault, that they had had no previous dealings with the plaintiffs and that it was not the duty of the office messenger to issue local orders.

Holding :

Held: the office messenger did not have authority to guarantee the genuineness of the local orders which were forgeries. As the defendants did not hold him out to the plaintiffs as having authority to issue local orders as it was not part of his duties to issue them, the defendants were not vicariously liable to the plaintiffs for the forgeries committed by the office messenger.

Digest :

Negara Traders Ltd v Pesuroh Jaya Ibu Kota, Kuala Lumpur [1969] 1 MLJ 123 High Court, Kuala Lumpur (Raja Azlan Shah J).

794 Unpaid seller -- Goods not delivered to alleged buyer but to another address at direction of salesman

11 [794] SALE OF GOODS Unpaid seller – Goods not delivered to alleged buyer but to another address at direction of salesman – Whether salesman agent of buyer – Contract – Sale of goods – Claim for goods sold and delivered – Goods not delivered to alleged buyer but to another address at direction of salesman – Whether salesman agent of buyer – Whether goods delivered to salesman as agent for the buyer – Contracts Act 1950 (Act 136), s 71.

Summary :

In this case, the respondent was a wholesaler dealing in steel saws, tools and other hardware products and the appellant was one of his customers. The respondent sued the appellant for goods sold and delivered but when it appeared in evidence that the goods were not delivered to the appellant but were delivered on the direction of the salesman to another address, the respondent amended the statement of claim to read as follows: (a) the plaintiff's claim against the defendant is for the recovery of RM140,036.13 for goods sold and delivered as evidenced by invoices Nos C2038, C1950, C1226, C1057, C1271, C2198 and C2947 by the plaintiff to Tan Boon Soon as agent for the defendant; (b) further or alternatively, the plaintiff delivered the said goods to the said Tan Boon Soon as agent for the defendant not intending to do so gratuitously and the defendant enjoyed the benefit thereof. Accordingly, by virtue of s 71 of the Contract Act 1950 (Act 136), the defendant is liable to pay for the same. The learned trial judge gave judgment for the respondent as claimed but when the appeal was lodged, no written grounds of decision were given.

Holding :

Held: (1) in this case, the respondent had completely failed to establish that the delivery was due for the appellant and that the appellant enjoyed the benefit of the delivery. The claim under s 71 of the Contract Act 1950 has therefore not been made out; (2) the onus of proving that the salesman had made the fullest disclosure and had obtained the informed consent of both the respondent and the appellant rested with the respondent. On the evidence adduced at the trial, the respondent had failed to discharge the burden; (3) the evidence showed that the respondent or its principal officer had no knowledge of the wrongdoings of the salesman until the end of November or early December 1948. The appellant denied all knowledge of the relevant transactions and no inference of informed consent could validly be drawn without proof of knowledge by clear and cogent evidence. A fortiori to draw such an inference against the appellant in business matters would be most dangerous.

Digest :

Goh Soon Ann v Sandvik Malaysia Sdn Bhd [1984] 1 MLJ 121 Federal Court, Kuala Lumpur (Salleh Abas CJ (Malaya).

795 Unpaid seller -- Goods sold and delivered

11 [795] SALE OF GOODS Unpaid seller – Goods sold and delivered – Balance of price – Amount due on running account – Limitation of action – Sale of goods – Goods sold and delivered – Balance of price of – Counterclaim – Amount due on running account – Limitation of action – Part payments on account – Transfer of liabilities.

Summary :

This appeal arose out of an action in which the plaintiffs claimed S$1,336.35, being the balance of the price of goods sold and delivered to the defendants. The appeal was brought by the plaintiffs and concerned the defendants' counterclaim for S$690,377.66 on a running account. The defence to the counterclaim was that the defendants owed to the plaintiffs S$11,846 on the running account. On 24 April 1967, the plaintiffs amended their defence to the counterclaim by pleading limitation. The trial judge held that a claim on a running account was a cause of action known to the law, and ordered that the registrar take an account of all transactions on the running account between the defendants and the plaintiffs from 14 May 1951 to 31 November 1962, and kept in the books of Gian Singh & Co and Gian Singh & Co Ltd. The plaintiffs appealed against the decision of the trial judge on four grounds: (a) the learned trial judge erred in permitting the defendants to put forward a counterclaim for the amount due on a running account which was not a cause of action known to the common law; (b) the learned trial judge erred in finding that the plaintiffs' defence of limitation failed by reason of part payments made by the plaintiffs to the defendants on account generally. Such part payments were not pleaded by the defendants in their reply to the defence to counterclaim; (c) the learned trial judge was wrong in holding that the debts of Bajaj Textiles were transferred to the plaintiffs and became the liability of the plaintiffs; (d) the trial judge erred in permitting the defendants to give evidence of transactions of which no or insufficient particulars had been filed pursuant to several orders for particulars with which the defendants have failed to comply.

Holding :

Held, dismissing the appeal: (1) the amount due on a running account is a cause of action known to the common law; (2) the learned trial judge was perfectly right in applying the case of Re Footman Bower & Co Ltd [1961] 2 All ER 161 and deciding against the plaintiffs on the issue of limitation; (3) the balance sheets produced at the trial clearly supported the view that plaintiffs took over the liabilities of Bajaj Textiles and, therefore, there was no substance in the third ground of appeal; (4) it was incorrect to state that the defendants had not complied with several orders for particulars. The fourth ground of appeal was accordingly devoid of substance.

Digest :

Bajaj Textiles Ltd v Gian Singh & Co Ltd [1968] 1 MLJ 279 Federal Court, Singapore (Wee Chong Jin CJ, Tan Ah Tah FJ and Ambrose J).

Annotation :

[Annotation: The decision of the Federal Court was affirmed by the Privy Council on appeal. See [1971] 2 MLJ 133.]

796 Unpaid seller -- Goods sold and delivered

11 [796] SALE OF GOODS Unpaid seller – Goods sold and delivered – Claim on balance of price – Sale of goods – Goods sold and delivered – Claim on balance of price of.

Summary :

This was an appeal from the decision of the Federal Court. (See [1968] 1 MLJ 279.) In 1951 and 1952, the appellants had taken over the rights and liabilities of the firm Bajaj Textiles, and the respondents had taken over the rights and liabilities of the firm Gian Singh and Company. The appellants were the plaintiffs in the action which they commenced against the defendants (respondents) on 19 July 1963, claiming the sum of S$1,336.35 as the balance of price of goods sold and delivered after giving credit for certain items. The defendants (respondents) alleged a set-off and counterclaim for the sum of S$690,377.66 as the balance in their favour on a running account. The learned trial judge decided in favour of the defendants and made an order that the registrar take an account of all transactions between the parties on the running account. The plaintiffs appealed to the Federal Court and their appeal was dismissed but they were granted leave to appeal to the Privy Council on 7 June 1968 and lodged their appeal asking for judgments of the trial judge and the Federal Court to be set aside and for a new trial to be ordered. The respondents did not oppose the appeal nor were they represented. In the appeal before their Lordships of the Privy Council, it was contended that there was no such claim known to the law as a claim on a running account. Another contention of the plaintiffs/appellants was that the defendants' counterclaim was wholly or mainly barred by limitation under the Limitation Ordinance 1959. Their Lordships had no doubt that there ought to have been in the defendants'/respondents' reply an express allegation of part payments in respect of the outstanding balance. The question was whether this defect of the pleading was a sufficient ground for setting aside the judgment and ordering a new trial.

Holding :

Held, dismissing the appeal: (1) a claim on a running account would be insufficient as a matter of pleading unless particulars were given either of an account stated or of the mutual transactions from which the outstanding balance arose. In the present case, there was no evidence of an account stated, but extensive particulars were given of the mutual transactions from which the outstanding balance was alleged to have arisen. It was correct to counterclaim the outstanding balance on the running account because that was the amount of the debt owing, the amount of the plaintiffs' nett liability, the proper amount to be claimed and recovered. There could be no doubt as to the basis and nature of the counterclaim, and the respondents' pleading was in substance sufficient; (2) there were mutual dealings between the parties and payments from time to time on account of the outstanding balance. Such payments were within the meaning of s 26(2) of the Limitation Ordinance part payments 'in respect' of the outstanding balance, and so time started to run afresh on the occasion of each payment; (3) it appeared that both the learned judge and the Federal Court had in mind the state of the pleadings, and the Federal Court had specifically in mind the lack of an express allegation by the respondents/defendants of part payments on account of the outstanding balance. In proceeding to decide on the facts of the case, notwithstanding the defect in the respondents' pleadings, that the plea of limitation was defeated by such part payments, they were exercising a discretion. In all the circumstances, their exercise of the discretion seemed reasonable. Their Lordships were not persuaded that the discretion was not judicially exercised or that there was any miscarriage of justice.

Digest :

Bajaj Textiles Ltd v Gian Singh & Co Ltd [1971] 2 MLJ 133 Privy Council Appeal from Singapore (Lord Donovan, Viscount Dilhorne and Lord Pearson).

797 Unpaid seller -- Offer by buyer to pay by instalment 'to avoid litigation'

11 [797] SALE OF GOODS Unpaid seller – Offer by buyer to pay by instalment 'to avoid litigation' – Whether admission of liability – Practice and procedure – Application under RSC 1957, O 14 for summary judgment – Defendant offering to pay by instalments – Whether admission of liability – Whether triable issue raised.

Summary :

The defendant was sued in his own behalf and on behalf of the Cosmopolitan Club for goods supplied to the club. The defendant denied that he ordered or received the goods, but had offered to pay the amount due by instalments in order to 'avoid litigation'. The plaintiff applied for leave to sign judgment under O 14 of the Rules of the Supreme Court 1957 but this application was dismissed by the assistant registrar who held that on offer made by the defendant to pay by instalments in order to avoid litigation does not amount to an admission of liability. On appeal,

Holding :

Held: the letter offering payment by instalments could be interpreted as an admission of liability or an independent offer to protect the reputation of the club in respect of misfeasance on the part of the staff of the club and as this raised a triable issue, the registrar was correct in refusing leave to sign final judgment.

Digest :

Luen Heng & Co v Oakes [1966] 1 MLJ 14 High Court, Kuala Lumpur (Abdul Aziz J).

798 Unpaid seller -- Refusal of further sales by wholesaler

11 [798] SALE OF GOODS Unpaid seller – Refusal of further sales by wholesaler – Holding out by agent – Principal denying agent's authority – Contract – Agency – Onus of proof – Holding out by agent – Sale of goods – Non-payment by buyer – Refusal of further sales by wholesaler.

Summary :

This was an appeal against the dismissal by Abdul Aziz J ([1969] 2 MLJ 223) of the appellants' counterclaim which alleged that the respondent by unilaterally terminating their appointment as sole distributors of respondent's products without cause was in breach of a contract for which he was liable in damages. On appeal there were two main issues: (a) the agreement they relied upon, and (b) breach of contract.

Holding :

Held, dismissing the appeal: (1) the onus is on the person to prove the agreement he was relying upon. In this case on the facts, the appointment was made, not by the wholesaler, but by his agent who was a salesman, whose authority to do so was denied by his employer. What such agent represented as to the nature and extent of his authority was not binding on his principal; (2) where there is no firm agreement which binds the vendor in definite terms to supply goods to a purchaser at a price certain over a stipulated period, the vendor is entitled to refuse to deal with the purchaser who has been in breach of his obligation to pay for goods already sold and delivered; (3) in this case as the customer having been given notice that he would not be supplied any more goods on credit unless overdue bills were first settled, and he refusing to pay, it was he, and not the vendor who was in breach of contract.

Digest :

International Trading Co v Chan Chow Kian [1970] 1 MLJ 192 Federal Court, Kuala Lumpur (Ong CJ (Malaya).

799 Unpaid seller -- Sales invoice and delivery note showed goods ordered by respondents

11 [799] SALE OF GOODS Unpaid seller – Sales invoice and delivery note showed goods ordered by respondents – Defence that goods ordered for third party – Oral evidence to contradict documents – Contract – Sale of goods – Sales invoice and delivery note showing goods ordered by and delivered to respondents – Defence that goods ordered for third party – Oral evidence to contradict documents.

Summary :

In this case, the appellants sued the respondents for the balance of the price of goods sold and delivered to the respondents. In their defence, the respondents denied liability and sought to show that the goods were ordered for a third party. The appellants applied for leave to sign final judgment but their application was dismissed by the senior assistant registrar and on appeal against the registrar's decision, the learned judge dismissed the appellants' appeal. The appellants then appealed to the Federal Court.

Holding :

Held, allowing the appeal: (1) it was quite clear from the sales invoice and the delivery note that the goods were ordered by the respondents; (2) the respondents should not be allowed to bring oral evidence to contradict the terms of the contract and to show that the goods were ordered for a third party; (3) in this case, the sales invoice and the delivery note showed that even if the respondents were agents for a third party, Syahazam, in respect of the sale and delivery of the goods they were contracting in such form as to make them personally responsible.

Digest :

Pernas Trading Sdn Bhd v Persatuan Peladang Bakti Melaka [1979] 2 MLJ 124 Federal Court, Johore Bahru (Raja Azlan Ag CJ (Malaya).

Securities

800 Dealer's representative -- Licence

11 [800] SECURITIES Dealer's representative – Licence – Cancellation – Grounds – Cancellation of dealer's representative's licence – Issue of false contract notes – Securities Industry Act 1973, ss 2, 10, 15, 17 and 23.

Summary :

In this case, the appellant appealed from the decision of the Deputy Registrar of Companies ordering the cancellation of the dealer's representative's licence held by him and ordering that the appellant be permanently disqualified from holding such a licence. It was admitted by the appellant that he had issued two contract notes which were false in stating that shares were sold and purchased on 6 August 1971 when in fact the sale and purchase took place in December 1971. In his defence, the appellant stated that he acted on the instructions of Pinder, who was then a director of Sime Darby Ltd and that he had no reason then to doubt the truth of the information.

Holding :

Held: (1) the clear inference is that the appellant must have known that the sale and purchase of the shares took place in December 1971 and not on 6 August 1971, as stated in the contract notes; (2) on the facts before him the deputy registrar's decision to cancel the appellant's licence was correct; (3) although the contract notes were issued before the coming into force of the Securities Industry Act 1973, s 23 of the Act does not limit the deputy registrar to have regard only to facts which fall within the 'relevant period' specified in s 17(1); (4) there appeared to be no element of dishonesty or criminality in the acts of the appellant to merit the extreme penalty of permanent disqualification and the order of permanent disqualification should therefore be set aside.

Digest :

PB Chapman v Deputy Registrar of Companies [1977] 2 MLJ 5 High Court, Singapore (Wee Chong Jin CJ).

801 Debit note -- Failure to object to transaction on receipt of debit note

11 [801] SECURITIES Debit note – Failure to object to transaction on receipt of debit note – Client estopped from alleging that transaction unauthorized

Digest :

Ong & Co Pte Ltd v Foo Sae Heng [1990] 2 MLJ 85 High Court, Singapore (Chao Hick Tin JC).

See SECURITIES, Vol 11, para 774.

802 Fraud -- Forged scrip

11 [802] SECURITIES Fraud – Forged scrip – Remisier's liability to indemnify stockbroking company – Forged scrip delivered by client

Digest :

Lee Kam Wah v Associated Asian Securities (Pte) Ltd [1991] 3 MLJ 286 High Court, Singapore (Karthigesu J).

See SECURITIES, Vol 11, para 777.

803 Insider trading -- Specific confidential information

11 [803] SECURITIES Insider trading – Specific confidential information – 'Facing a financial crisis' – Insider trading – Questions reserved for court – Scope of s 132A(1) – 'facing a financial crisis' – 'Specific confidential information' – Meaning of – Companies Act (Cap 185, 1970 Ed), s 132A – Securities Industry Act 1970, s 75A.

Summary :

The respondent, chairman and chief executive of Ben & Co Ltd, a public trading company claimed trial on six charges under s 132A(8) of the Companies Act (Cap 185, 1970 Ed). He was convicted and sentenced to nine months' imprisonment on each charge, the sentences to run concurrently. On appeal to the High Court (see [1980] 2 MLJ 231), Rajah J held six charges as framed were invalid. He allowed the appeal and quashed the convictions. On application by the prosecution, two questions were reserved for the decision of the Court of Criminal Appeal: (a) whether in alleging that the accused had been dealing in the securities of Ben & Co Ltd by himself by disposing of 360,000 shares in a number of transactions on 13 January 1976, 23 January 1976, 29 January 1976, 30 January 1976 and 3 February 1976 and making use of confidential information that the company was facing a financial crisis, he could be described as having acted upon 'specific confidential information' thereby committing a breach of provisions of s 132A(1) of the Companies Act; and (b) whether in law the charges Nos 1 to 6 (DAC Nos 286, 512-516 of 1978) disclosed offences under s 132A of the Companies Act and punishable under s 132A(8) of the said Act.

Holding :

Held, answering both questions in the affirmative: (1) it was a question of fact in each case to be resolved on the evidence adduced at the hearing of the case as to what is 'specific confidential information'; (2) 'information', as used in the section, meant knowledge of a particular event or situation such as advice, communication, intelligence, news, notification and the like; (3) the knowledge which the respondent had of the then financial situation of the company was specific information within the meaning of s 132A of the Companies Act. It was the kind of specific information anyone familiar with the market knows that could markedly affect the prices of the particular shares and could result in the suspension of the trading of the shares on the stock market; (4) in the view that it was one of the kinds of confidential information that an insider might not use for his own benefit and to the detriment of the investing public, the Legislature had enacted s 132A; (5) the learned district judge was therefore right when he held knowledge of a financial crisis in a company was specific information as it was capable of being pointed to, identified and unequivocally expressed; (6) a defective or imperfect charge was one that did not have sufficient particulars to give notice to the accused of the manner in which he was alleged to have committed the offence: s 159 of Criminal Procedure Code; (7) in this case, the phrase 'facing a financial crisis' had no reference to the manner in which the respondent was alleged to have committed the offences as knowledge was no actus reus of the offence; the allegation was not essential to constitute the offence and the phrase could have been omitted by the prosecution without affecting the charge.

Digest :

Public Prosecutor v G Choudhury [1981] 1 MLJ 76 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and TS Sinnathuray JJ).

804 Insider trading -- Trading by tippee

11 [804] SECURITIES Insider trading – Trading by tippee – Information regarding lifting of company's suspension – Whether amounts to price – Sensitive information – Meaning of 'arrangement'

Summary :

A was a prominent businessman. He was approached by officers of SCMBA, a merchant bank, with a view to acquiring a stake in SLH, a public company whose shares were suspended from trading at the material time. A was informed by SCMBA that the suspension would be lifted soon. He purchased one million SLH shares from FL, a stockbroker. A was charged with insider trading as a tippee. Midway through the trial and after the prosecution had closed its case, A changed his plea to guilty.

Holding :

Held, convicting A on his admission of guilt: (1) the senior district judge rejected the argument made by counsel for A that s 103(3) of the Securities Industry Act (Cap 289) applied only if there was an 'arrangement' between natural persons to communicate price-sensitive information with a view to dealing in securities. It was held that the section applied equally to corporations as to natural persons; (2) on the facts, there was an arrangement between the officers of SCMBA and A to communicate price-sensitive information to A for the purpose of dealing in securities. Such an arrangement need not amount to a conspiracy nor did it have to be for an improper purpose; (3) the information relating to the re-listing of the SLH shares was 'price-sensitive' in that it was likely to materially affect the price of the company's securities if generally known. The test is an objective one; (4) the fact that A had incurred considerable expense in defending himself and in paying prosecution costs of S$1.5m was not a mitigating factor, as A had brought this upon himself in not pleading guilty from the outset. The only redeeming feature was that A had voluntarily agreed to pay S$50,000 into court as part of the profits that he would have received had the shares in question been realized; (5) A was sentenced to 12 months' imprisonment.

Digest :

Public Prosecutor v Ng Poh Meng Allan [1990] 1 MLJ v District Court, Singapore (EC Foenander (Senior District Judge).

805 Insider trading -- Validity of charge

11 [805] SECURITIES Insider trading – Validity of charge – Director charged under ss 132A(2), (8), 135(9) and 364A of the Companies Act – Validity of charge under s 132A(8) in issue – Securities Industry Act 1970, s 75A – Companies Act (Cap 185), ss 132A(2), (8), 135(9) & 364A

Summary :

The appellant in this case was tried on 112 charges under the Companies Act (Cap 185) in the lower court between 19 June 1978 and 25 July 1978. He pleaded guilty to all charges except the first eight charges. The trial proceeded on the said eight charges. At the conclusion of the hearing on 2 August 1978, the accused was acquitted on charge No 8 but convicted and sentenced on the first seven charges. The accused appealed against them. The first six charges were framed under s 132A, that he, on or about 13 January 1976, in Singapore, being the Chairman of the Board of Directors of Ben & Co Ltd in relation to dealings in the shares of the said company by himself, to wit, the sale, of 125,000 shares, made use to gain an advantage for himself of specific confidential information that Ben & Co Ltd was facing a financial crisis, which information he acquired by virtue of his position as an officer of Ben & Co Ltd and which information if generally known might reasonably be expected to affect materially the prices of the shares he was selling on the stock exchange, and he had thereby committed an offence punishable under s 132A(8) of the Companies Act (Cap 185). Counsel for the appellant contended that the phrase 'facing a financial crisis' was not 'specific information' within the meaning of s 132A.

Holding :

Held, allowing the appeal on the first six charges: (1) whether a company is facing a financial crisis is a matter of opinion which one deduces after having looked at matters relating to the finances of a company, its management and the support it receives from its bankers. The phrase 'facing a financial crisis' is a subjective statement and not an objective one, precisely or unequivocally expressed; (2) 'specific information' to which the section refers must have an existence of its own quite apart from the operation of any process of deduction. The 'specific information' must be capable of being pointed to and identified, and must be capable of being expressed unequivocally; (3) dismissing the appeal against conviction on the seventh charge. The sentence of six months' imprisonment was set aside and a fine of S$4,000 was imposed instead.

Digest :

G Choudhury v Public Prosecutor [1980] 2 MLJ 231 High Court, Singapore (Rajah J).

806 Licence -- Dealer's representative

11 [806] SECURITIES Licence – Dealer's representative – Cancellation – Grounds – Securities – Cancellation of dealer's representative's licence – Issue of false contract notes – Securities Industry Act 1973, ss 2, 10, 15, 17 and 23.

Digest :

PB Chapman v Deputy Registrar of Companies [1977] 2 MLJ 5 High Court, Singapore (Wee Chong Jin CJ).

See SECURITIES, Vol 11, para 766.

807 Loan agreement -- Deed of assignment

11 [807] SECURITIES Loan agreement – Deed of assignment – Whether deed of assignment a security relating to land or a security relating to a chose in action – Companies and Corporations – Absolute assignment – No registration required – Companies Act 1965 (Act 125), s 108.

Summary :

The plaintiff, a licensed bank, entered into an agreement ('the loan agreement') with the defendant, an incorporated company, whereby the plaintiff granted a loan ('the loan') to the defendant, repayable with interest. By way of security for the loan, the defendant executed a deed of assignment ('the assignment') whereby it assigned absolutely to the plaintiff all its rights, title and interest in certain immovable property ('the property') and in the sale and purchase agreement. It was further provided in the loan agreement that the defendant would remain in possession of the property only as contractual licensee of the plaintiff and that within seven days after its licence to occupy the property has been terminated, it would have to give immdediate vacant possession thereof to the plaintiff, and thereafter the plaintiff would have the right to enter upon the property and to deal with all its rights, title and interest in the property. The defendant defaulted in making payments due under the loan agreement, in consequence whereof the plaintiff, after notification to the defendant, commenced the proceedings herein by way of originating summons praying for, inter alia, an order for sale of the property.

Holding :

Held, applying contractual principles to determine the rights and obligations of the parties: (1) the defendant's right to possession of the property vis-a-vis the developer is an incident of his rights and benefits under the sale and purchase agreement (under which the defendant was the purchaser and the developer the vendor), which right had been assigned to the plaintiff under the assignment; (2) the defendant's rights to possession subsequent to the execution of the assignment depended entirely upon the contractual licence granted to him by the plaintiff; (3) the plaintiff had lawfully exercised its right to terminate the licence and was entitled to enter upon the property and to deal with all the rights, title and interest in the property; (4) if the security constituted by the documents concerned is a security relating to land, it is still a valid security. The requirements of the National Land Code 1965 (Act 56/1965), which concern the creation of a security in respect of land held under registered title, are without application in the present case, as the property is not as yet held under a registered title; (5) the security concerned, being a security relating to a chose in action, that is to say, an assignment of the defendant's rights, benefits and interest in and under the sale agreement of the property, to wit, a parcel of a sub-divided building, in respect of which strata title has yet to be issued, this court has jurisdiction under s 41 of the Specific Relief Act 1950 (Act 137) and/or it has inherent jurisdiction to grant the declaration prayed for by the plaintiff and an order for sale of the property; (6) if the security herein is not a security relating to a chose in action, but a security relating to land, then the court would hold that it has jurisdiction under O 31 r 1(1) of the Rules of High Court 1980 to make an order for sale of the property.

Digest :

Chung Khiaw Bank Ltd v Hipparion (M) Sdn Bhd [1988] 2 MLJ 62 High Court, Penang (Edgar Joseph Jr J).

808 Margin account -- Securities deposited to secure

11 [808] SECURITIES Margin account – Securities deposited to secure – Obligation of stockbroker to sell securities if client exceeds permitted margin – Allegation that shares purchased without instructions – Client received debit notes without protest – Client estopped from alleging lack of instructions

Summary :

D deposited securities with P, a stockbroking company, to secure a margin account of up to S$1m granted by P to D. In the memorandum of deposit, it was stipulated that if D were to default on a margin call or paying the amount owed on demand, P could sell the deposited securities and apply the proceeds towards discharging D's indebtedness to them. P brought an action against D claiming the amount due to them from D. Summary judgment was granted by the assistant registrar. D appealed, inter alia, on the ground that P were in breach of their duty to act diligently when they failed to liquidate the securities upon D's margin account exceeding the limit of S$1m. D also alleged that P had been negligent in failing to obtain the best possible price in liquidating the securities and that P had bought certain shares without D's instructions.

Holding :

Held, dismissing the appeal: (1) P had no obligation to liquidate the securities when D's indebtedness exceeded S$1m. The memorandum of deposit gave P a discretion to do so. It lay ill in the mouth of D to complain that P had given him time to pay up; (2) There was no evidence that D's securities had been liquidated at less than the prevailing market price. No objection was ever raised by D when contract notes of the sales in question were received by him; (3) as for D's allegation that shares had been bought without his instructions, D had not denied that he received the debit notes in respect of the relevant transactions. If in fact the purchases were contrary to instructions, one would have expected an immediate protest from him. There was none. By not objecting, he had effectively affirmed that the transactions were properly carried out. He was estopped from denying the same.

Digest :

Ong & Co Pte Ltd v Foo Sae Heng [1990] 2 MLJ 85 High Court, Singapore (Chao Hick Tin JC).

809 Remisier -- Duties of

11 [809] SECURITIES Remisier – Duties of – 'Know your client rule' – Permitting use of fictitious names in trading – Whether knowledge necessary – Whether condition of dealer's representative licence breached – Securities Industry Act (Cap 289), s 33(3)

Summary :

The appellant was charged with two counts of intentionally giving false evidence to officers from the Commercial Affairs Department (CAD) while being legally bound by an express provision of law to state the truth. In the statements, the subject matter of the two charges, the appellant told the officers that he had met certain clients and had verified their particulars. The prosecution alleged that he had not in fact met those clients nor verified their particulars. The appellant was also charged with permitting one Tan Lee Gek (Tan) to use at least 23 fictitious names to trade as the appellant's client, thereby failing to comply with a condition of his dealer's representative licence. During the trial, it was alleged that the statements given to the CAD officers were not given voluntarily but were made as a result of threats and inducements. A voir dire was held, at the end of which the district judge held that the statements were voluntarily made. The statements were admitted. Also admitted were taped interviews conducted by inspectors from the Stock Exchange of Singapore (SES) with the appellant. During the first two interviews, the appellant stated that he did not meet the abovementioned clients and did not verify their particulars. During the third interview with the SES inspectors, the appellant said that he did in fact meet those clients. At the trial, the appellant's defence was that Tan introduced those clients to him in Tan's office. The appellant also argued that he relied on the particulars in the Central Depository (CDP) accounts. At the end of the trial, the district judge held that the appellant's credit had been impeached and convicted the appellant of all three offences. The appellant appealed.

Holding :

Held, dismissing the appeal: (1) the statements made to the CAD officers were not evidence for the purpose of proving the charges of giving false evidence. They were an essential ingredient of the offence under s 193 of the Penal Code and were facts in issue. They could not be excluded even if they were made as a result of threats, inducements or promises. If that was indeed the case, the proper course was to rely on one of the general defences, if any were available, in the Penal Code; (2) so far as the charge of failing to comply with the dealer's representative licence was concerned, the statements given to the CAD officers were not confessions. They were wholly exculpatory in nature. Therefore s 24 of the Evidence Act (Cap 97, 1990 Ed) did not apply; (3) in any event, the district judge was entitled to come to the decision that the statements were given voluntarily; (4) on the evidence, the district judge was entitled to come to the conclusion that the appellant's credit was impeached, and that Tan was a truthful witness. The alleged reliance on the CDP accounts had nothing to do with whether the appellant had met the clients. Having found that the version given by the appellant to the SES inspectors during the first two interviews was the true one, the inevitable conclusion was that the appellant did not meet those clients. The appellant was therefore guilty of intentionally giving false evidence; (5) the evidence showed that even if the appellant did not know that fictitious names were being used by Tan, he had shut his eyes to the obvious. The appellant was therefore also guilty of failing to comply with the conditions of his dealer's representative licence by permitting the use of fictitious names by Tan to trade as the appellant's clients; (6) (per curiam) the 'know your client' rule was well established. In Singapore it was even embodied in the SES's byelaws. The court could and did take judicial notice of it.

Digest :

Choo Pit Hong Peter v Public Prosecutor [1995] 2 SLR 255 High Court, Singapore (Yong Pung How CJ).

810 Remisier -- Negligence

11 [810] SECURITIES Remisier – Negligence – Remiser engaged by stockbrokers – Stockbrokers suffering loss in transactions involving missing or stolen share certificates – Agreement that remisier to indemnify stockbrokers against loss whatsoever and howsoever arising in respect of forged or stolen share certificates – Whether remiser liable for loss

Summary :

The plaintiff was engaged as a remiser by the defendant stockbrokers pursuant to a written agreement by which the plaintiff had agreed, inter alia, to indemnify and keep indemnified the defendant against all claims, losses and liabilities 'whatsoever and howsoever arising' in respect of any forged or stolen scrips and/or transfers delivered by the plaintiff's client or clients following any transaction concluded by the plaintiff. The defendant agreed, inter alia, to do all things reasonably necessary to enable the plaintiff to earn his commission. The plaintiff had acted for a client in the sale of certain shares quoted on the Kuala Lumpur Stock Exchange ('KSLE'). It was later discovered that a large number of the share certificates concerned had been reported stolen or missing. The client was paid for the shares on the very day that he had delivered the share certificates and transfer forms to the defendant, in contravention of the rules of the KSLE which provided, inter alia, that payment was to be made on the sixth market day following the date of contract and after delivery of the securities. The defendant was required to buy other shares to replace some of the stolen shares and to deliver them to the buyers. The plaintiff was suspended from trading by the defendant who gave reasons for its decision (although the agreement provided that no reason need be given for suspension) but on appeal, he was allowed to continue trading under certain conditions. The plaintiff sought a declaration that the suspension was null and void and for an order for reinstatement with full facilities as before his suspension. He also sought a declaration that he was under no liability to the defendant for the amount of the accumulated potential loss incurred. He also sought damages for wrongful suspension and/or loss of income. The KLSE had issued circulars to its members regarding the missing or stolen share certificates on 14 August 1990. The client was paid on 16 August 1990, the date of delivery of the scrips, when he should have been paid only on 22 August 1990, which was the sixth market day. The plaintiff contended that it was the gross negligence on the part of the defendant which caused the latter to suffer the losses. The defendant contended that the plaintiff had agreed to indemnify it whether or not it had been guilty of negligence.

Holding :

Held: allowing the plaintiff's application: (1) the plaintiff had agreed to indemnify the defendant under cl 5(ix) of the agreement but that sub-clause must be read with cl 5(v) which imposes a duty on the defendant to exercise all reasonable diligence to ensure that what needs to be done was done to enable the plaintiff to earn his commission. Reading cl 5(v) and (ix) together, the court was of the view that the indemnity should cover all losses suffered by the defendant in respect of forged or stolen share scrips in cases only where there was no negligence on the part of the defendant; (2) the defendant had not exercised reasonable diligence in the performance of its duty to enable the plaintiff to earn his commission as agreed to in cl 5(v) of the agreement and to that extent had committed a breach of the agreement. The defendant had also flouted the KLSE rules and had not taken reasonable precautions to prevent the receipt of stolen share scrips from the client. The losses were suffered by the defendant through its own negligence and it should not be allowed to rely on cl 5(ix) of the agreement for indemnity from the plaintiff; (3) there was no evidence that the plaintiff was negligent in the performance of his duties to the defendant; (4) although the defendant had the right under the agreement to suspend the plaintiff without giving any reason whatsoever, it had intentionally or voluntarily abandoned that right when it gave its reasons for suspending the plaintiff. The court is then entitled to examine the reasons given to decide whether the defendant's action was justified under the circumstances. Having found that the defendant had suffered the losses through its own negligence, it was not justified for the defendant to put the blame on the plaintiff and suspend the latter from trading nor was it just to recover its losses by deducting the amount from the plaintiff's security deposit; (5) the plaintiff was an agent and not an employee of the defendant. It would not be proper for the court to order the defendant to re-employ the plaintiff as its remisier on the principle that a man will not be compelled to employ another against his will. The plaintiff's remedy lay in damages.

Digest :

Mohamed Selan v PB Securities Sdn Bhd [1992] 1 MLJ 762 High Court, Kuala Lumpur (Eusoff Chin J).

811 Remisier -- Relationship with stockbroking company

11 [811] SECURITIES Remisier – Relationship with stockbroking company – Liability to indemnify stockbroking company

Summary :

P was a remisier with D, a stockbroking company that had gone into liquidation in 1987. P claimed for moneys due to him and D counterclaimed for an indemnity arising from losses suffered by them as a result of transactions put through by P. The transactions in question concerned one TYK, who delivered forged scrip in satisfaction of an order to sell shares. D was obliged to purchase other shares on the market to fulfil their contracts. TYK was a client of P's. D contended that the terms under which P worked as a remisier with them expressly provided that P would indemnify D for 'any losses or damages that may arise on all contracts written by [P]'.

Holding :

Held, dismissing the counterclaim: (1) the court concluded that the indemnity clause was intended only to cover losses arising from genuine and bona fide transactions, and that it had no application to a case of fraud by a client of P's; (2) there was no implied warranty on the part of P that share scrip delivered by his clients to D would be genuine.

Digest :

Lee Kam Wah v Associated Asian Securities (Pte) Ltd [1991] 3 MLJ 286 High Court, Singapore (Karthigesu J).

812 Remisier -- Status and authority of remisier

11 [812] SECURITIES Remisier – Status and authority of remisier – Liability of stockbroker for fraud by remisier

Summary :

The second defendant, a remisier with the first defendant stockbroking company, was an agent of the first defendant and was expressly authorized to carry on the business of the sale and purchase of stocks, shares and other marketable securities in the name of the first defendant. The plaintiff was serviced by the second defendant and became a client of the first defendant through the recommendation of the second defendant. In maintaining his account with the first defendant, the plaintiff had deposited certain shares with the defendants in respect of which the second defendant had committed fraud as follows: (a) shares that were placed as security on the margin account with the first defendant were released to the second defendant purportedly for transmission to the plaintiff. The shares were sold under the second defendant's account and the proceeds paid by the first defendant to the second defendant; (b) shares that were placed as security on the margin account with the first defendant were released to the second defendant purportedly for transmission to the plaintiff. The shares were later relodged under the accounts of other clients of the second defendant. The shares were sold and the proceeds set off against moneys owing to the first defendant by these other clients; (c) Shares bought by the plaintiff and given to the second defendant to place on the plaintiff's account or for registration in the plaintiff's name were subsequently sold by the second defendant and the proceeds paid to the second defendant or to the account of other clients. The plaintiff now claims for the return of the certificates amounting to 90,000 shares handed over to the defendants or, in the alternative, damages for the loss thereof.

Holding :

Held, allowing the plaintiff's claim: (1) implied in the remisier's agreement was the authority to collect from and deliver to clients on behalf of the first defendant certificates in respect of shares bought or sold or kept as security for any account. Alternatively, the first defendant had held the second defendant out as having such authority; (2) it was plain that where a master permitted a servant to represent himself as having authority and, with the knowledge that the servant was doing so, accepted the benefit of what the servant had done, then the holding out of himself by the servant as having authority was a holding out for which the master was responsible. It is not necessary that the master make direct representations before there is holding out; (3) the first defendant was therefore liable for the fraud committed by the second defendant.

Digest :

Chien Chung Ming v Kay Hian & Co Pte Ltd & Anor [1992] 1 SLR 242 High Court, Singapore (Goh Joon Seng J).

813 Remisier -- Unregistered remisier

11 [813] SECURITIES Remisier – Unregistered remisier – Legality of contracts made – Remisier – Not registered – Agreement – Effect of.

Summary :

This was an appeal from the decision of Wan Hamzah J who held that the appellant was liable to pay the respondents a sum of RM35,330.25 being the amount due under a series of share dealings between the plaintiffs and the defendants. The learned trial judge held that the appellant acted as remisier for the respondents, although she was not registered with the stock exchange as such. He nevertheless held that although there was a violation of the rules of the stock exchange the contract was valid and not illegal as being contrary to public policy. On appeal, it was argued that the learned trial judge should have held that the contract was illegal and void and/or alternatively that the court would not assist a plaintiff in enforcing a contract which contravened the rules of the stock exchange.

Holding :

Held, dismissing the appeal: the contract did not fit into any of the traditional pigeon holes of contracts contrary to public policy and, therefore, the learned trial judge was correct in holding that the contract was not illegal.

Digest :

Chong Theresa v Kin Khoon & Co [1976] 2 MLJ 253 Federal Court, Ipoh (Gill CJ (Malaya).

814 Rubber export coupons -- Valuable security

11 [814] SECURITIES Rubber export coupons – Valuable security – Penal Code, s 467

Summary :

Held: a rubber export coupon is a document falling within those described in s 467 of the Penal Code both because it is a valuable security and because it purports to give authority to some person to deliver movable property.

Digest :

Public Prosecutor v Yap Chai Kee [1923] 4 FMSLR 75 Court of Appeal, Federated Malay States (Farrer-Manby, Watson and Reay JJC).

815 Shares -- Bought and sold notes

11 [815] SECURITIES Shares – Bought and sold notes – Deposit as security – Right to recover shares upon payment of sum due – Shares – Scrip – Blank transfers – Bought and sold notes – Deposit as security – Right to recover.

Summary :

The plaintiff delivered to a firm of brokers the scrip for a number of shares of which he was the registered owner. The scrip was accompanied by the usual blank transfers. A cheque for an amount representing about 70% of the market value of the shares was handed to the plaintiff who also received bought and sold notes relating to the shares. The brokers had opened an account with the defendants under an arrangement whereby the brokers deposited shares with the defendants. The defendants advanced money to the brokers on the security of such shares. The brokers in turn used these moneys to finance carrying transactions with their clients. The scrip the subject of dispute in this action was delivered by the brokers to the defendants in pursuance of the arrangement between them. The plaintiff applied to the defendants for the return of the shares and tendered to them the amount advanced to them but the defendants refused to deliver them except on payment of their full market value. On behalf of the defence, it was urged, inter alia, that the effect of the contracts between the plaintiff and the brokers was that the shares were sold outright and that the plaintiff acquired the right to repurchase the shares at any time within three months.

Holding :

Held: (1) though there was nothing on the face the Bought and Sold Notes to indicate that the brokers by virtue of the Notes became the owners of the shares there was ample evidence that the real intention of the parties was that the shares should be a security for repayment of the loan made to the plaintiff; (2) the defendants had no title to the shares against the plaintiff except to the extent of what was due from the plaintiff to the brokers and that on the payment of the sum due on the account between the plaintiff and the brokers, the plaintiff was entitled to recover the shares or their value from the defendants.

Digest :

Seah Eng Lim v The P & O Banking Corp Ltd [1933] MLJ 140 High Court, Straits Settlements (Whitley J).

816 Shares -- Causing misleading appearance of market

11 [816] SECURITIES Shares – Causing misleading appearance of market – Sale and purchase of shares – Purchaser had option to resell shares to vendor at fixed price without regard to market value – Whether transaction would cause misleading appearance with respect to market for such shares – Securities Industry Act 1983, s 84(1)

Summary :

A, a statutory body, entered into an agreement with D1 whereby A purchased shares in F Bhd from D1. The agreement dated 26 September 1985 also provided that after the first anniversary date of the agreement, A was given the option of giving notice to D1 to repurchase the shares at a fixed or an adjusted price and to pay interest. D2-D3 executed a guarantee to perform the agreement upon D1's default. By a letter dated 13 August 1986, A claimed to exercise the option requiring D1 to repurchase the shares at a certain price and to pay interest. Upon D1's default, A claimed for the price of the shares and the interest under the agreement. A applied for summary judgment against D1-D3 but the senior assistant registrar dismissed the application. A appealed to the High Court. D firstly argued that A could only exercise the option after 26 September 1986 and not before. D thus alleged that A's letter could not be the one for A to exercise the option. A replied that since D had negotiated with A based on A's letter, D had conceded that the option had in fact been exercised. D secondly contended that apart from this case, three other similar transactions regarding F Bhd's shares involving government agencies and D1 had also taken place. As such, D alleged that these transactions violated s 84(1) of the Securities Industry Act 1983 ('the 1983 Act') because the price of the shares had been fixed without regard to their market value. D further alleged that this caused a misleading appearance with respect to the market for F Bhd's shares. A replied that this was not an open market sale but a private sale which did not violate s 84(1) of the 1983 Act. D lastly alleged that since the agreement provided for D1 to pay interest, it was a moneylending transaction which had violated the Moneylenders Act 1951.

Holding :

Held, dismissing the appeal: (1) there was a triable issue as to whether A had in fact exercised the option according to the agreement; (2) the phrase 'such securities' in the second limb of s 84(1) of the 1983 Act is not confined to securities in the stock exchange only but also covers misleading appearance with respect to market for shares which is not a stock market. There was thus a triable issue as to whether the transaction had violated s 84(1) of the 1983 Act. In this respect, the court has to examine this and other similar transactions as alleged by D; (3) the last triable issue was whether the transaction was an investment or a moneylending transaction clothed as an investment.

Digest :

Pertubuhan Keselamatan Sosial v Chin Chee Kuang & Ors [1991] 3 CLJ 2183 High Court, Kuala Lumpur (Shaik Daud J).

817 Shares -- Deposit of shares

11 [817] SECURITIES Shares – Deposit of shares – Share certificates with blank transfer forms deposited with stockbroker – Whether amounts to representation by depositor that stockbroker was authorized to deal with shares

Summary :

On two occasions in 1984 and 1985, the plaintiffs deposited a total of 6.3m shares in a public listed company, ACMA Electrical Industries Ltd, with the ninth defendants, a firm of stockbrokers. Subsequently, the ninth defendants ('AAS') mortgaged or otherwise charged the 6.3m shares to the first to eighth defendants, who are all financial institutions, to secure the ninth defendants' facilities from them. The plaintiffs later went into liquidation and the liquidators brought this originating summons against the defendants claiming that the 6.3m shares were beneficially owned by the plaintiffs. The action proceeded as if brought by writ. By the end of the trial, all the defendants save the third and the sixth defendants had settled the plaintiffs' claims. The defendants contended that the plaintiffs had delivered and pledged the shares to AAS as securities for share transactions of Pan El with AAS who had in turn charged the shares to the defendants with the knowledge and consent of Pan El, to secure banking facilities to AAS. The defendants further contended that at the time the shares were charged to them, they had no notice of the plaintiffs' interest in the shares.

Holding :

Held, dismissing the action: (1) on the basis of the limited evidence before the court, the plaintiffs had failed to prove that they were beneficial owners of the 6.3m shares held by AAS in 1984 and 1985. Accordingly, the action failed; (2) (obiter) assuming that the shares continued to be beneficially owned by the plaintiffs when they were placed with AAS, there was no evidence to prove the purpose for which the plaintiffs placed them with AAS. Accordingly, the third and sixth defendants failed to discharge the burden of proving that AAS were authorized to sell or pledge the 6.3m shares; (3) (obiter) for the defendants to succeed in their claim that they were entitled to the ACMA shares in priority to the rights of Pan El, they must show that Pan El were estopped from denying that AAS had either express or implied authority to charge the shares to the banks. The defendants had not produced evidence of any express authority; (4) (obiter) although it was a matter of practice that share certificates registered in the names of third parties, with blank transfers, are commonly passed from hand to hand, that does not render such a document a negotiable instrument. The mere leaving of a share certificate with a blank transfer with a broker does not give rise to an estoppel. There must be something more in the owner's conduct where it is shown that the owner has entrusted his shares to the broker for disposal to a third party, whether by way of sale or by way of pledge. In this way, he makes the broker his agent and clothes him with actual and apparent authority to dispose of the shares. If the broker should act outside his actual authority but within the scope of his apparent authority, a transferee who acquires the shares without notice of the agent's lack of authority takes priority over the owner. In this case, the defendants have failed to show that estoppel arose and that they had any rights in priority to those of Pan El.

Digest :

Pan-Electric Industries Ltd v Sim Lim Finance Ltd & Ors [1993] 2 SLR 242 High Court, Singapore (Chao Hick Tin J).

818 Shares -- Failure of client to make payment for shares

11 [818] SECURITIES Shares – Failure of client to make payment for shares – Rights of stockbroker against client – Right of stockbroker to force-sell shares – Damages recoverable – Byelaws of the Stock Exchange of Singapore, byelaw II cll 4.7(a) & 5.2(a)

Summary :

The defendant, Liam, was a client of the plaintiff, Lum Chang Securities, a stockbroking company. On 18 and 19 September 1990, the defendant bought 11,000 shares of QAF ('the shares'). The purchases were subject to the Rules and Byelaws of the Stock Exchange of Singapore ('SES'). The shares were in due course delivered and paid for by the plaintiff. However, the defendant failed to pay for the shares on the due date. The plaintiff decided to sell the shares and issued a force-sell order. The plaintiff claimed for the difference between the price at which it force-sold the shares and the price at which it bought them at the defendant's request. Alternatively, the plaintiff claimed for the price of the securities purchased by it at the defendant's request.

Holding :

Held, allowing the claim in part: (1) the plaintiff had bought the shares as the defendant's buying broker had paid for them and was entitled to be indemnified; (2) byelaw cl 5.2(a) requires that the buying client make payment for shares to his stockbroker promptly on the market day following the due date but he need not pay before 3pm; (3) byelaw II cl 4.7(a) provides that if the buyer defaults in payment it is not necessary for the member company selling to tender the securities and it may after the stipulated time resell the securities. 'Resell' is a word appropriate only where the member company has already sold the same securities. If the member company has bought for a buying client, it will not be appropriate to say it can 'resell'. Upon a true construction of the clause, it did not apply to the case at hand as the plaintiff bought the shares for the account of the defendant and was not selling any securities to him; (4) the plaintiff had a general lien on the documents representing the shares for the defendant's indebtedness to it not only in respect of the shares but also in respect of other transactions on the stock exchange carried out for him by the plaintiff; (5) judgment was given to the plaintiff for the price of the shares without any interest and upon payment of such sum, the plaintiff was to deliver 11,000 QAF shares to the defendant; (6) (obiter) if there is partial delivery of the shares bought by the client, the client must still pay the full amount due as shown in the contract note and leave it to his broker to enforce the buying in provisions of the byelaws against the selling broker

Digest :

Lum Chang Securities Pte Ltd v Liam Beng Hian [1993] 3 SLR 187 High Court, Singapore (Lim Teong Qwee JC).

819 Shares -- Offer of shares to public

11 [819] SECURITIES Shares – Offer of shares to public – Restrictions – Whether offence under s 363(3) of the Companies Act 1965 has been committed – Companies Act 1965 (Act 125), s 363(3) – Companies – Shares – Offer to public – Restrictions – Companies Act 1965 (Act 125), s 363(3).

Summary :

In this case, the respondents had brought an action for specific performance of an agreement for the sales by the first five appellants (the vendors) of 10,200 shares of RM100 each issued and fully paid up or at least 51% of all such shares issued in the Oriental Bank of Malaya Bhd (the sixth appellant) at the price of RM160 a share. They also ask for an injunction restraining the vendors from parting with or disposing of the said shares. At the same time, the respondents applied ex parte for an injunction restraining the vendors from parting with or disposing of any of the shares and also an injunction restraining the bank from registering the transfers of any such shares to persons other than the respondents, Gill J (as he then was) who heard the application granted an interim injunction. Subsequently, the appellant applied to the court of an order that the order made ex parte before Gill J be discharged. Raja Azlan Shah J (see [1969[ 2 MLJ 110) rejected the application on the ground that the appellants had not satisfied him that the facts upon which the injunction was granted no longer existed. On appeal, it was alleged: (a) even on the facts and pleadings disclosed by the respondents no legal contract had been disclosed by the respondents; (b) if such contract had been concluded it could not be specifically enforced under the provisions of the Specific Relief (Malay States) Ordinance 1950 (Act 137); and (c) the contract was illegal as an offence under s 363(3) of the Companies Act 1965 (Act 125), had been committed as there had been an offer of shares to the public.

Holding :

Held, dismissing the appeal: (1) the facts disclosed that there was a probability of an agreement having been concluded between the parties; (2) a temporary injunction under s 50 of the Specific Relief (Malay States) Ordinance 1950, like an interlocutory injunction in England, may be granted where the court is satisfied that there is a substantial question to be tried and until the case is tried, a case has been made out for the preservation of the property in the meantime in status quo; (3) it was not obvious on the facts disclosed than an offence under s 363(3) of the Companies Act 1965 (Act 125), had been committed in that there had been an offer to the public.

Digest :

Nicholas & Ors v Gan Realty Sdn Bhd & Ors [1970] 2 MLJ 89 Federal Court, Kuala Lumpur (Azmi LP, Ali FJ and Syed Othman JJ).

820 Shares -- Regulation

11 [820] SECURITIES Shares – Regulation – Position similar to that in England – Rules and usage of stock exchange apply unless there is special agreement between parties

Summary :

The plaintiff was at all material times a business adviser to a major bank in Malaysia. The defendants were a stockbroking firm operating in Penang. On 7 February 1987, the plaintiff sued the defendants claiming damages for breach of contract. The plaintiff claimed that the defendants had failed to sell 830,000 Sri Hartamas shares ('the shares') as instructed by him and this had caused him loss. The plaintiff gave evidence that on 5 November 1985, he had instructed the defendants' managing director, Hwang, to issue four contract notes in respect of the shares. On each of the contract notes, the defendants had made two endorsements. The first of which was printed to read 'This contract is subject to the Rules of the Kuala Lumpur Stock Exchange' and the other typed in capital letters to read 'LAST DATE FOR DELIVERY 14/11/85'. The plaintiff had wanted to sell the shares to settle moneys he owed the Standard Chartered Bank in Singapore. He gave evidence that on or about 6 November 1985, Hwang had informed the plaintiff that he had found a buyer for the shares at the price of RM2.90 per share. The plaintiff sent 100,000 of the shares to the defendants. In respect of the remaining 730,000 shares, which were pledged to the Standard Chartered Bank in Singapore, the plaintiff gave evidence that he had on 8 November 1985, telephoned the manager of the bank and told her to send the shares to the defendants in Penang. The bank were unable to deliver the shares, neither did they receive payment. The shares were never sold by the defendants and on or about March 1987, the Singapore bank sold the shares at about RM1 per share. Hwang denied that the plaintiff had asked him for buyers for the shares. His testimony was that one David Chua had telephoned him on 5 November 1985 to inform him that a Mdm Tan had arranged with the plaintiff for the sale of the shares through the defendants (so that Mdm Tan could make use of her margin facility with the defendants) for the price of RM2.90 per share.

Holding :

Held, dismissing the claim: (1) on the evidence, there was no earthly reason why the plaintiff in Kuala Lumpur would seek out the defendants in Penang to find a buyer for his shares. His credibility was more than suspect and the court was satisfied that the plaintiff was not telling the truth when he testified that he had commissioned the defendants to find a buyer for the shares. The court found as a fact that the transaction had been a married or pre-arranged deal between the plaintiff and Mdm Tan; (2) with respect to contracts for the sale of shares, time was of the essence of the contract both at law and in equity; (3) the position in Malaysia in respect of share transactions was, as it was in England, that it was as regulated by the rules and regulations and usage of the stock exchange unless there was a special agreement between the parties to the contrary. The rules and usages of the stock exchange were admissible and relevant to be used in determining the terms and incidents of the contractual relationship existing in a share transaction as came into existence between the plaintiff and the defendants; (4) it was clear that it was deemed that the contract notes gave notice to anyone reading the notes that the defendants were holding themselves out as being involved in the transaction as brokers and not as principals. The terms of the contract between the plaintiff and the defendants as evidenced by the contract notes was that the delivery had to be effected not later than 14 November 1985 and that time was of the essence. Delivery had to be effected by delivery to the stockbroker of the shares together with the relevant registrable memoranda of transfer. Rule 11(2)(b) of the Rules of the Stock Exchange made it clear that payment for the shares need only be made before 11am on the second market day following a valid delivery and not against delivery. There was not even a proper tender of the shares; (5) the burden of proving delivery was on the plaintiff. This, he had not proved.

Digest :

Huang Chang Hsun Francis v Hwang & Yusoff Securities Sdn Bhd [1992] 2 MLJ 305 High Court, Kuala Lumpur (VC George J).

821 Shares -- Sale and delivery of shares

11 [821] SECURITIES Shares – Sale and delivery of shares – Time of the essence – Regulation of share transaction – Where there was valid delivery of shares

Summary :

The plaintiff was at all material times a business adviser to a major bank in Malaysia. The defendants were a stockbroking firm operating in Penang. On 7 February 1987, the plaintiff sued the defendants claiming damages for breach of contract. The plaintiff claimed that the defendants had failed to sell 830,000 Sri Hartamas shares ('the shares') as instructed by him and this had caused him loss. The plaintiff gave evidence that on 5 November 1985, he had instructed the defendants' managing director, Hwang, to issue four contract notes in respect of the shares. On each of the contract notes, the defendants had made two endorsements. The first was printed to read 'This contract is subject to the Rules of the Kuala Lumpur Stock Exchange' and the other typed in capital letters to read 'LAST DATE FOR DELIVERY 14 November 1985'. The plaintiff had wanted to sell the shares to settle moneys he owed the Standard Chartered Bank in Singapore. He gave evidence that on or about 6 November 1985, Hwang had informed the plaintiff that he had found a buyer for the shares for the price of RM2.90 per share. The plaintiff sent 100,000 of the shares to the defendants. In respect of the remaining 730,000 shares, which were pledged to the Standard Chartered Bank in Singapore, the plaintiff gave evidence that he had on 8 November 1985, telephoned the manager of the bank and told her to send the shares to the defendants in Penang. The bank was unable to deliver the shares; neither did they receive payment. The shares were never sold by the defendants and on or about March 1987, the Singapore bank sold the shares at about RM1 per share. Hwang denied that the plaintiff had asked him to find buyers for the shares. His testimony was that one David Chua had telephoned him on 5 November 1985 to inform him that a Mdm Tan had arranged with the plaintiff for the sale of the shares through the defendants (so that Mdm Tan could make use of her margin facility with the defendants) for the price of RM2.90 per share.

Holding :

Held, dismissing the claim: (1) on the evidence, there was no reason why the plaintiff in Kuala Lumpur would seek out the defendants in Penang to find a buyer for his shares. His credibility was more than suspect and the court was satisfied that the plaintiff was not telling the truth when he testified that he had commissioned the defendants to find a buyer for the shares. The court found as a fact that the transaction had been a married or pre-arranged deal between the plaintiff and Mdm Tan; (2) with respect to contracts for the sale of shares, time was of the essence of the contract, both at law and equity; (3) the position in Malaysia in respect of share transactions was as it was in England, that it was regulated by the rules and regulations and usage of the stock exchange unless there was a special agreement between the parties to the contrary. The rules and usage of the stock exchange were admissible and relevant to be used in determining the terms and incidence of the contractual relationship existing in a share transaction as came into existence between the plaintiff and the defendants; (4) it was clear that it was deemed that the contract notes gave notice to anyone reading the notes that the defendants were holding themselves out as being involved in the transaction as brokers and not as principals. The terms of the contract between the plaintiff and the defendants as evidenced by the contract notes was that the delivery had to be effected not later than 14 November 1985 and that time was of the essence. Delivery had to be effected by delivery to the stockbroker of the shares together with the relevant registrable memoranda of transfer. Rule 11(2)(b) of the Rules of the Stock Exchange made it clear that payment for the shares need only be made before 11am on the second market day following a valid delivery and not against delivery. There was not even a proper tender of the shares; (5) the burden of proving delivery was on the plaintiff. This, he had not proved.

Digest :

Huang Chang Hsun Francis v Hwang & Yusoff Securities Sdn Bhd [1992] 2 MLJ 305 High Court, Kuala Lumpur (VC George J).

822 Shares -- Sale and purchase

11 [822] SECURITIES Shares – Sale and purchase – Delivery of shares – Time of the essence

Summary :

The plaintiffs were stockbrokers and members of the Stock Exchange of Singapore ('SES'). The defendants were their clients. The plaintiffs' claim was for S$590,237.52 and interest thereon, being the loss resulting from the selling-out of certain shares in Dayapi Industries (M) Bhd ('Dayapi shares') which they bought on the defendants' instructions and which the defendants failed to take delivery of and pay for. The defendants deny liability and counterclaimed against the plaintiffs for breach of duty as stockbrokers. The plaintiffs' evidence showed that they bought the Dayapi shares through CLOB International and from Zalik Securities Sdn Bhd through the Kuala Lumpur Stock Exchange ('the KLSE'). The plaintiffs had failed to deliver all the Dayapi shares under the purchase contracts on their due dates (ie 23 and 24 January 1990) and as no buying-in of the undelivered Dayapi shares was initiated by the Securities Clearing & Computer Services Pte Ltd ('SCCS'), the defendants rescinded the contracts on 30 January 1990. On 1 February 1990, the plaintiffs informed the defendants that the Dayapi shares bought were ready for collection and selling-out was effected between 2 and 9 February 1990. The plaintiffs applied for summary judgment but the defendants were given unconditional leave to defend. The plaintiffs appealed.

Holding :

Held, dismissing the appeal: (1) the time for delivery of shares is of the essence in a contract for the sale and purchase of shares. The issue of rescission should be decided when all the facts are disclosed to the court; (2) the plaintiffs were entitled to an indemnity only if they had acted within their authority or performed their duties properly. The defendants were obliged to accept delivery of the Dayapi shares so long as the plaintiffs were obliged to accept delivery from the selling members; (3) in view of the novelty of the legal issues and the uncertainty of the factual issues that had become apparent, the defendants had raised sufficient triable issues by way of defence and counterclaim, and were entitled to unconditional leave to defend.

Digest :

Lim & Tan Securities Pte Ltd v Sunbird Pte Ltd [1992] 1 SLR 258 High Court, Singapore (Chan Sek Keong J).

823 Shares -- Sale and purchase

11 [823] SECURITIES Shares – Sale and purchase – Whether shares were bought on behalf of defendants – Whether court should aid plaintiffs if contract was entered into to circumvent Code of Takeovers

Summary :

The plaintiffs claimed damages for allegedly having bought 880,000 shares in Malayan Tin Printing Co Ltd ('MTP') for the defendants, who had failed to pay for the shares and take delivery. The assistant registrar, pursuant to an application for summary judgment taken out by the plaintiffs, awarded them S$2,254,265.36, the amount attributed to the 880,000 MTP shares, with interest, plus a further sum representing loss of profit, also with interest. The evidence indicated that the plaintiffs had contracted to purchase 1,000,000 MTP shares from a third party on 19 July 1985, to be delivered on 18 January 1986. The defendants' contract with the plaintiffs, however, was dated 24 January 1986, with delivery to be taken one week later. The defendants denied that the plaintiffs had bought the shares on behalf of the defendants. As such, the plaintiffs had not sustained any loss and damages should be assessed as nil. The assistant registrar found that the defendants had known that the plaintiffs had contracted to buy the shares from the third party to fulfil their obligation towards the defendants and hypothesized that the parties had probably been acting together to circumvent the Code on Takeovers by using the plaintiffs to buy the shares with the intention of later transferring them to the defendants. The sum of S$2,254,265.36 was consequently found to be a direct and foreseeable consequence of the defendants' breach of their contract with the plaintiffs.

Holding :

Held, allowing the defendants' appeal: (1) the plaintiffs had failed to discharge the evidential burden which lay on them of showing how their loss could be charged to the defendants; (2) the assistant registrar's hypothesis was no substitute for evidence on a question of fact. Furthermore, if the hypothesis were correct, the further question would have arisen as to whether the court should assist the plaintiffs in their claim, since the transaction could have been tainted with illegality; (3) a seller's profit, if any, would normally be included in the price he contracted to sell his goods. Where the buyer failed to pay for the goods and take delivery, and where there was an available market, the normal measure of damages was the difference between the contract price and the market or current price at the time when the goods ought to have been accepted. The seller could not claim loss of profit in addition to the damages ascertained according to this normal measure of damages or there would be double counting. The assistant registrar had therefore erred in awarding the further sum in addition to the normal measure of damages.

Digest :

City Securities Pte (in liquidation) v Associated Management Services Pte Ltd [1995] 3 SLR 495 High Court, Singapore (Warren LH Khoo J).

824 Shares -- Sale of shares

11 [824] SECURITIES Shares – Sale of shares – Sale on 'ready' basis – Order of performance – Whether obligations to pay and deliver were current – Failure by purchaser to pay for shares on due date – Measure of damages

Summary :

On 24 January 1986, the appellants bought 880,000 shares in Malayan Tin Printing Co Ltd (MTP) 'by order and for account' of the respondents on a ready basis at $3.75 per share (the second contract). The second contract was subject to the bye-laws of the Stock Exchange of Singapore Ltd (the bye-laws). On 31 January 1986, being the due date for the fulfilment of the second contract, the respondents failed to pay up. The price on the open market for MTP shares was $2.60 per share. Six months before the second contract was entered into, the appellants entered into a contract with Prima Ltd (Prima) to buy from Prima one million MTP shares at the price of $3.60 per share (the Prima contract). Notwithstanding an extension of time to 21 April 1986 given by Prima for the payment and delivery of the shares, the appellants could not pay and take delivery of the shares. Prima claimed damages based on the difference between the contractual price of $3.60 per share and the then prevailing market price of $1.09 per share with interest, amounting to a total of $2,561,665.18. This amount was proved in the liquidation of the appellants. Subsequently, the appellants commenced these proceedings against the respondents for damages based on the respondents' breach of the second contract. The appellants obtained interlocutory judgment with damages to be assessed. The assistant registrar found that the appellants acted as principals and not as agents in entering into the second contract with the respondents and that the respondents knew that the appellants were acting as such. He also found that the respondents knew of the Prima contract. He held that the amount which the appellants had to pay to Prima was a direct and foreseeable consequence of the breach by the respondents of the second contract. He allowed the appellants the sum of $2,254,265.36, being the amount of the loss attributed to 880,000 MTP shares out of the one million MTP shares which the appellants had purchased under the Prima contract. He also allowed the difference between the total price due under the second contract and the sum representing the proportionate amount agreed to be paid by the appellants to Prima for 880,000 of the MTP shares as the appellants' loss of profits. On appeal, the judge found that there was no nexus between the sale of 880,000 MTP shares by the appellants to the respondents and the sale of the one million MTP shares by Prima to the appellants. The appellants had failed to show how the appellants' loss arising out of the breach of the Prima contract could be charged to the respondents. He assessed the damages as nil and awarded costs to the respondents. (See [1995] 3 SLR 495.) On appeal, it was contended that the judge erred in reopening the question of liability. Secondly, the amount of damages should not have been reduced to nil.

Holding :

Held, allowing the appeal: (1) the judge did not agree with the assistant registrar's basis for awarding damages. He did not reopen the question of liability; (2) on the evidence, the appellants' breach of the Prima contract could not be attributed to and was not occasioned by the breach of the second contract on the part of the respondents. The basis of assessment of damages adopted by the assistant registrar was in error; (3) however, under the bye-laws, in a sale transaction of shares on a ready basis, the obligation to pay for shares arises before the obligation to deliver the shares. The respondents' failure to pay on the due date of 31 January 1996 for the 880,000 MTP shares sounded in damages as of that date. It was immaterial whether the appellants intended to apply part of the MTP shares which they had purchased from Prima or to buy from the open market to fulfil their obligation to deliver the shares; (4) in a contract for the sale of shares, the measure of damages upon a breach by the purchaser was the difference between the contract price and the market price at the date of the breach, with an obligation on the part of the seller to mitigate the damages by getting the best price he could upon that date. At the date of breach on 31 January 1986, the market price of an MTP share was $2.60. Damages were awarded on the basis of the difference between the contractual price of $3.75 per share and the prevailing price on the market of $2.60, amounting to $1,012,000 for 880,000 MTP shares with interest. Costs were also awarded to the appellants.

Digest :

City Securities Pte Ltd (in liquidation) v Associated Management Services Pte Ltd [1996] 1 SLR 727 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

825 Shares -- Transfer

11 [825] SECURITIES Shares – Transfer – Application to set aside – Whether transfer made with intention to defraud creditor or pursuant to conspiracy to injure

Digest :

Ong & Co Pte Ltd v Quah Kay Tee [1996] 2 SLR 553 High Court, Singapore (Amarjeet JC).

See TORT, para 1526.

826 Speculation -- Legality

11 [826] SECURITIES Speculation – Legality – Gaming or wagering contract – Speculative dealing in shares – Whether gaming or wagering.

Summary :

In this action, the plaintiff company, a firm of sharebrokers sued the defendant for the sum of RM49,286.76 for the net loss incurred by them in discharge of the defendant's obligation to deliver the scrips of the shares he had agreed to sell through them. The defence was gaming or wagering. The defendant claimed that he was a speculator and that the plaintiff company had agreed to grant him time within which to sell or purchase stocks and that such sale or purchase could be effected by him at such time as he felt was opportune.

Holding :

Held: the evidence to the defendant must be rejected but even on the strength of what he said, the defence of wagering must fail, as it takes two parties to make a bet. In the arrangement as recited by the defendant, there was only one party, the defendant to the alleged bet, the plaintiff company was always the losing party. In the circumstances, there could not be a bet and the defence of wagering must fail.

Digest :

Macphail & Co (Ipoh) Ltd v Oam Parkash [1969] 2 MLJ 19 High Court, Ipoh (Chang Min Tat J).

827 Stockbroker -- Negligence

11 [827] SECURITIES Stockbroker – Negligence – Estoppel by negligence – Transfer of title to shares – Detinue and conversion – Shares obtained by fraud.

Summary :

The plaintiffs were at all material time stock and share brokers and a member of the Stock Exchange of Singapore Ltd ('the SES'). The plaintiffs claimed from the second defendant, Sim Kok Wah, the return of delivery of share certificate No 89407 and the transfer attached thereto for 1,000 Pan Malaysia Cement Works Bhd shares and damages. This certificate was bought by the second defendant from one Khoo Chee Keong who obtained the certificate fraudulently from the plaintiffs. The second defendant contended that: (a) the plaintiff as stock and share brokers have negligently allowed Khoo to obtain possession of the share certificate; (b) the second defendant was a bona fide purchaser for value of the said shares and had no notice that Khoo had obtained the share certificate fraudulently. The second defendant submitted that in the premises the plaintiffs are estopped by their own negligence from demanding the return of the share certificate. He also contended that as for damages, the plaintiffs are only entitled to the loss of the value of the shares between March 1981 and May 1986.

Holding :

Held: (1) in the present case, the second defendant was not a bona fide purchaser for value without notice; (2) the necessary elements of negligence are (a) a duty of care owed to the party seeking to rely on the estoppel and (b) the negligent conduct must be the proximate or real cause of the loss; (3) mere negligence in dealing with one's own property does not give rise to an estoppel; (4) the plaintiffs owed the defendant no duty of care; (5) the only loss suffered by the plaintiffs was the loss of the value of the shares and the plaintiffs are entitled to damages for S$10,000. The second defendant must deliver to the plaintiffs the share certificate No 89407 together with the relative transfer forms. The plaintiffs were entitled to the bonus issues and the dividends declared; (6) the plaintiffs were entitled to the share certificate No 89407 and the transfer forms attached.

Digest :

EG Tan & Co (Pte) v Lim & Tan (Pte) & Anor [1987] 2 MLJ 149 High Court, Singapore (Chua J).

828 Stockbroker -- Position of broker

11 [828] SECURITIES Stockbroker – Position of broker – Agency – Revocation of authority – Stock Exchange – Purchase of shares – Role of stockbroker – Obligations of purchasers – Mitigation.

Summary :

Held: a sharebroker is by his designation not a contracting party but is an agent who arranges for the 'marriage' of an order to buy with an order to sell. Once a broker has received an order from his client, his authority to complete it and so rid himself of the personal liability undertaken by him within the rules of the stock exchange cannot be revoked. The authority could only be revoked before it had been acted upon. A broker who had bought shares for his client is under no obligation to resell them.

Digest :

Syarikat Soon Theam Sdn Bhd v H'ng Chye Jin [1975] 1 MLJ 259 High Court, Penang (Chang Min Tat J).

829 Takeover -- Approval of Capital Issues Committee

11 [829] SECURITIES Takeover – Approval of Capital Issues Committee – Company takeover – Notice – Approval of CIC – Securities Industry Act 1983, s 6.

Summary :

In this case, the respondents had received from the Arab-Malaysian Merchant Bank Bhd on behalf of the appellants a notice of a takeover scheme under s 179 of the Companies Act 1965 (Act 125). The respondents contended that the notice was bad in law on the ground that the appellants had not obtained the approval of the Capital Issues Committee ('CIC') as required by s 6 of the Securities Industry Act 1983 (Act 280). The respondent therefore contending that they had a duty to protect the interests of the company and its shareholders against an unlawful act, brought an action against the appellants for a declaration that a public company which intended to make a takeover offer within the meaning of s 179 should first obtain the approval of the CIC before issuing a notice of takeover to the offeree company. It also sought, inter alia, for an injunction that the appellants refrain from taking any further steps in the takeover scheme as required by s 179 of the of the Companies Act and in particular from despatching to Emtex shareholders the offer documents. VC George J held that the respondents had locus standi to initiate the suit and that CIC approval of the proposal for the takeover scheme was a condition precedent to any step being taken under s 179 of the Companies Act 1965. He granted the interlocutory injunction as prayed. The appellant appealed.

Holding :

Held, by a majority (Seah SCJ dissenting): (1) in addition to the requirements of s 179 of the Companies Act, for any takeover scheme, s 6 of the Securities Industry Act 1983 makes it mandatory for a Malaysian incorporated company to submit to the CIC a proposal, that is, the proposed takeover scheme, for approval. The existence of an approved takeover scheme must precede the making of a takeover offer by the offeror corporation; (2) there is no substance in the argument that the offeree corporation could have no interest in the matter merely because the takeover scheme was only intended for the shareholders. When the proposed offer was bad in law it must surely affect the interest of EMTEX directors in ensuring that the company would not be taken over illegally. They had therefore a sufficient or real interest in the suit.

Digest :

MBf Holdings Bhd v Emtex Corp Bhd [1986] 1 MLJ 477 Supreme Court, Kuala Lumpur (Wan Suleiman, Seah and Mohamed Azmi SCJJ).

Shipping and Navigation

830 Action in personam -- Beneficial ownership of vessel

11 [830] SHIPPING AND NAVIGATION Action in personam – Beneficial ownership of vessel – Whether there was genuine transfer of ownership before writ of summons – Supreme Court Act 1981 [UK], ss 20(1) & 21(4)

Summary :

The plaintiff chartered the defendant's vessel for a period of 12 months. Subsequently, the defendant withdrew the vessel from the plaintiff to carry out repairs and carry their own cargo. The vessel was never re-delivered to the plaintiff. The plaintiff terminated the charterparty and claimed against the defendant for damages, interest and costs. A few months before the writ of summons was issued, there was a prima facie change of ownership from the defendant to S. The plaintiff contended that the defendant was liable in personam as owner of the vessel at the time the cause of action arose and the vessel was beneficially owned by the defendant in personam in respect of all the shares as in s 21(4)(i) of the Supreme Court Act 1981. The defendant applied to set aside the warrant of arrest of the vessel. The only issue for the court to decide was whether there was a genuine transfer change or transfer of ownership.

Holding :

Held, dismissing the defendant's application: (1) from the evidence adduced, the plaintiff had successfully discharged the burden of proof that the defendant was the beneficial owner of the vessel. The transfer was a sham; (2) the defendant had not posted guarantee to release the vessel nor maintained the vessel. The defendant had not shown any interest or contributed to maintain the ship and crew. This constituted a wasting asset; (3) it would be unreasonable to keep the ship under arrest at great expense for seven months or more until the action came on for trial.

Digest :

Kingstar Shipping Ltd v Owners of the Ship or Vessel 'Sino Glory' (Ex `Glory Singapura') Admiralty Action in Rem No 27-06-96(II)—High Court, Kuching (Muhammad Kamil bin Awang J).

831 Action in personam -- Claim for breach of contract of carriage

11 [831] SHIPPING AND NAVIGATION Action in personam – Claim for breach of contract of carriage – Application to set aside writ – No statement of claim – Non-compliance with O 20 r 3 of the Rules of the Supreme Court 1957 – Rules of the Supreme Court 1957, O 20 r 3

Summary :

The plaintiffs in this case were shippers who filed the writ with an indorsement of claim against the defendants as follows: 'The plaintiffs claim damages for breach of contract evidenced by or contained in nine (9) Bills of Lading issued by or on behalf of the defendants in respect of the carriage of sawn timber from Singapore and delivery at Dammam. The plaintiffs are the shippers of the goods and owners of the said sawn timber.' The defendants entered appearance under protest. They applied to set aside the writ on the grounds that the plaintiffs have no cause of action.

Holding :

Held, setting aside the writ: (1) the court should not usurp the functions of the trial court and go into the merits of the case and decide whether the plaintiffs will or will not succeed at the trial. The court's duty is to decide whether or not on the pleadings the plaintiffs have a cause of action or not; (2) the writ of summons, did not have a statement of claim and therefore is not a pleading and neither was the indorsement on the pleading; (3) having only the writ of summons and its indorsement to look at with no statement of claim although the Rules of the Supreme Court requires a statement of claim to be filed, the court is in no position to say that the plaintiffs have a cause of action.

Digest :

The 'Beauty Orchid II'; Pacific Corp Traders v The 'Beauty Orchid II' Owners & Ors [1977] 2 MLJ 83 High Court, Penang (Arulanandom J).

832 Action in personam -- Claim for breach of contract of carriage

11 [832] SHIPPING AND NAVIGATION Action in personam – Claim for breach of contract of carriage – Whether freight forwarder acting as agent for either owner of goods or charterer – Whether there was any privity of contract between owner of goods and charterer

Digest :

Ocean Projects Inc v Ultratech Pte Ltd [1994] 2 SLR 369 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

See SHIPPING AND NAVIGATION, Vol 11, para 1197.

833 Action in personam -- Stay of proceedings

11 [833] SHIPPING AND NAVIGATION Action in personam – Stay of proceedings – Agreement to refer disputes to another forum – Discretion of court to stay proceedings

Summary :

The barge 'L2600' carrying a cargo of Ramin logs and towed by the tug 'Jeddy X' was grounded in Indonesian waters. The cargo was found to be damaged by sea water. The plaintiffs/respondents as the owners or the persons entitled to the delivery of the said cargo comprised in the two bills of lading commenced an admiralty action in rem No 305 of 1975 against the owners of the barge 'L2600' as first defendants and against the owners of vessels 'Jeddy IV', 'Jeddy VII', 'Jeddy X', 'Jeddy XI' and 'Jeddy XII' as second defendants and the present appellants in personam, as third defendants as the persons who issued the two bills of lading for damages and loss suffered by them. Only the third defendants/appellants have so far been served. They entered a conditional appearance and applied to have the writ set aside or alternatively for a stay of action on the ground that the two bills of lading had provided that 'all actions under this contract shall be brought before the court at Djakarta.' The application was first heard by the deputy registrar who dismissed the application with costs. The appellants' appeal against the said decision was dismissed by the learned judge. The appellants appealed against the said order.

Holding :

Held, dismissing the appeal: (1) where a plaintiff sues in Singapore in breach of an agreement to submit their disputes to a foreign court, and the defendant applies for a stay, the Singapore court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. The plaintiff must show exceptional circumstances amounting to strong cause for him to succeed in resisting an application for a stay by the defendant; (2) in this case as all the evidence on the issues in the action is in Singapore or readily available here while little or no material evidence is situated in Indonesia the respondents have shown strong cause to refuse a stay of proceedings.

Digest :

Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd [1977] 2 MLJ 187 Court of Appeal, Singapore (Wee Chong Jin CJ, Kualsekaram and Choor Singh JJ).

834 Action in rem -- Admiralty jurisdiction

11 [834] SHIPPING AND NAVIGATION Action in rem – Admiralty jurisdiction – Supply of bunker and marine fuels – Whether supply was ordered at the owner's request – Defendant must be the person who would be liable in personam – High Court (Admiralty Jurisdiction) Act (Cap 123), 4(4)

Summary :

The plaintiffs supplied bunkers and marine fuels to a vessel called the 'Lok Maheshwari'. An invoice was issued to the defendants who were at all material times the owners of the vessel. The defendants did not pay so the plaintiffs sued and arrested the vessel in an action in rem. The vessel was subsequently released upon the defendants providing security. The defendants then applied to strike out the writ of summons and proceedings in this action on the ground that the court had no jurisdiction over the defendants because the plaintiffs' case did not fall within s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123). At the material time the vessel had been on a time charter and had been sub-chartered to Transmar Shipping. The assistant registrar struck out the writ and the plaintiffs appealed.

Holding :

Held, dismissing the appeal: (1) to found an action in rem, the plaintiffs must show that the person who would be liable in personam was the defendant. In The 'Elefterio' [1957] 1 Lloyd's Rep 283, the words 'the person who would be liable on the claim in an action in personam' were construed as 'the person who would be liable on the assumption that the action succeeds'. However, the judgment of Wilmer J does not invariably open a door which cannot be shut until the matter has been ventilated in full at trial. Although the courts will not deny access to any party who is able to formulate a cause of action against a party identified as the person who would be liable in personam on that cause of action (whether the party suing succeeds or not is a matter for the trial judge), nonetheless, if it is clear that the evidence relied upon by the plaintiff is obviously tenuous the courts will strike out the action. In other words, if the action appears to the court to be frivolous then it would not be permitted to proceed. The facts of The 'Elefterio' and The 'Wigwam' [1983] 1 MLJ 148 were materially different from the present case. In The 'Elefterio' there was adequate evidence that the defendants would be the persons liable if the plaintiffs there succeeded. In The 'Wigwam', there was conflicting evidence in the plaintiffs' and defendants' affidavits which could only be resolved after a full hearing. There was no conflicting evidence of relevance in the present case. Here, the request for the supply for bunker fuel was made by a party called Portserv Ltd, which on documents in the plaintiffs' possession, shared the same address as Transmar, the sub-charterers of the vessel. On a telex from the master of the vessel to the plaintiffs, the plaintiffs must have realized that the vessel was under charter. Section 4(4) does not confer an unquestionable right to take a party to court just because he is the owner of the vessel against which the action in rem was instituted. The failure to ascertain from Portserv or Transmar as to whether they admitted liability constituted a fatal flaw in the plaintiffs' action. Nothing in the allegations of the plaintiffs supports their argument that the defendants had represented that the supplies were ordered at their request or on their behalf. There was no express representation by anyone that the supplies were ordered by or on behalf of the owners. The owners had no knowledge of the contract and were not privy to it. The arguments by counsel for the plaintiffs that the plaintiffs were 'misled' into believing that the contract was made by Portserv on behalf of the owners were untenable. The fact that the defendants' local agents provided the location of the vessel alone had no bearing, explicitly or implicitly, as to who ordered the supplies. It was clear that the party whom the plaintiffs intended to contract with was the party who requested the bunkers, and that was undisputedly Transmar, the sub-charterers. Therefore, the claim against the owners was misconceived and, in the circumstances, frivolous; (2) the fact that the defendants did not submit that the plaintiffs' claim was frivolous or vexatious was not fatal to their application to strike out if, on the affidavit evidence before the court, it was plain that the action was unsustainable on the ground that it was frivolous. The court was entitled to strike out the writ. Therefore, the writ was properly struck out.

Digest :

Sunly Petroleum Co Ltd v Owners of the Ship or Vessel 'Lok Maheshwari' Admiralty in Rem No 238 of 1996 High Court, Singapore (Choo Han Teck JC).

835 Action in rem -- Amendment of defence

11 [835] SHIPPING AND NAVIGATION Action in rem – Amendment of defence – Inclusion of counterclaim out of time – Limitation – Maritime Conventions Act 1911, s 8

Summary :

On 7 July 1988, there was a collision between the plaintiffs' vessel and the 'El Arish'. On 6 July 1990, just one day short of two years after the collision, the writ in this action was issued and the defendants entered appearance on 17 June 1991. The statement of claim was filed on 12 January 1993 and, in due course, served. The defence was filed on 8 March 1993 and served. A summons for directions under O 25 was taken out by the plaintiffs on 11 May 1993. On 27 July 1993, the defendants applied for leave pursuant to s 8 of the Maritime Conventions Act 1911 ('the Act') to amend the defence by adding a defence of limitation of liability and by including a counterclaim for the damage suffered by them as a result of the collision, contending that the counterclaim could be heard on the material already before the court and with the same witnesses at no extra expense. The assistant registrar allowed the application. The plaintiffs appealed.

Holding :

Held, allowing the plaintiffs' appeal: that the counterclaim could be heard on the same material and with the same witnesses at no extra expense is a factor that has to be taken into account but it has to be seen in the context of all the other relevant circumstances and is not, by itself, a sufficient reason for extension of time. It was not an injustice to the defen-dants that they should be unable to maintain a counterclaim by reason, solely, of the expiry of time as that was the consequence of a time limit.

Digest :

The 'El Arish' et al; Owners of the Vessel 'Pelopidas V' v Owners of Vessels 'El Arish', 'Edco' and 'El Tor' [1994] 1 SLR 419 High Court, Singapore (Lim Teong Qwee JC).

836 Action in rem -- Amendment of writ

11 [836] SHIPPING AND NAVIGATION Action in rem – Amendment of writ – Addition of names of sister ships – Amendment made after expiry of limitation period – Whether amendment should be allowed – Unconditional appearance by defendant – Effect of unconditional appearance in action in rem – Whether owner of ship or res is party to action – Renewal of writ after expiry of contractual limitation period – Effect of limitation period

Summary :

A, the defendants in the action, were the owners of three ships, Brani Island, Senang Island and Kusu Island. R, the plaintiffs, were the owners of cargo shipped on board the Brani Island under two bills of lading. Each of the bills provided that the law of Singapore was to be the governing law. In addition, there was the usual clause incorporating the one-year limitation period for claims in respect of loss or damage to the goods. The contract of carriage was also made 'subject to the provisions of the [Hague] Rules as applied by the Singapore Carriage of Goods by Sea Ordinance'. When the 'Brani Island' arrived in Singapore, the cargo belonging to R was found to be damaged. R started an admiralty action in rem against 'The Owners of the Ship or Vessel 'Brani Island'' claiming damages for breach of contract and/or negligence. Approximately six months later, R amended the writ, substituting the following: 'The Owners of the Ships or Vessels 'Brani Island', 'Senang Island', 'Kusu Island''. Leave of the court was not obtained for this amendment. R later was granted a renewal of the writ for a further twelve months and subsequently managed to serve it on the 'Kusu Island' which was in port. A entered a conditional appearance and applied to strike out the amendment to the writ made by R and to set aside the service, or in the alternative, to set aside the renewal of the writ. The assistant registrar struck out the amendment and set aside the renewal of the writ. R appealed to the High Court against the striking out of the amendment to the writ. (See [1985] 1 MLJ 342.) The appeal was allowed. A appealed to the Court of Appeal.

Holding :

Held, allowing the appeal: (1) the amendment made by R was not a correction of the name of A. What they did was to insert the names of two sister ships. There was nothing in the affidavit filed on behalf of R to suggest that the omission to insert the names of the two sister ships at the time of the commencement of the action was due or attributable to a mistake. No explanation was given for this omission nor was there any statement by anyone on R's behalf to explain when and how they came to know that 'Senang Island' and 'Kusu Island' were sister ships of 'Brani Island'. The amendment thus did not fall within the Rules of the Supreme Court O 20 r 5(3); (2) where a defendant enters an unconditional appearance in an admiralty action in rem, he submits to the jurisdiction of the court personally and from then onwards, the action continues as an action in rem and in personam. Judgment may be entered and enforced against him to the full extent of damages awarded to the plaintiff and is not limited to the value of the res or the bail which represents the res. A defendant in an action in rem is as much impleaded as by an action in personam, and the actual defendant is not the res but the owner of or the party interested in the res. The amendment of the writ therefore did not add a new defendant; (3) if no appearance is entered by the defendant to such an action, judgment when entered is enforceable only against the res and no more, and the defendant in such an action will not suffer any personal liability; (4) this was not a case where the remedy was barred while leaving the claim intact as here the claim was extinguished; (5) where, as here, an action in rem against a proposed ship can be defeated by a plea of limitation, the plaintiff cannot escape the consequences of limitation by seeking to add the proposed ship as the res in a pre-existing action in rem; (6) in the instant case, although the writ was taken out before the expiry of the limitation period, the amendment to include two other ships in the writ was made approximately six months after the expiry of the period of limitation. The effect of such a provision as art III r 6 of the Hague Rules (which was incorporated into the contract of carriage) was that a time-bar of a special kind was created;there is no statutory discretion for the granting of an extension of time. Having regard to the nature of an action in rem and the lapse of the contractual period of limitation, leave for the amendment ought to be refused and accordingly the amendment ought to be struck out. The appeal was therefore allowed.

Digest :

The 'Kusu Island'; Owners of the Ship or Vessel 'Kusu Island' v Owners of cargo lately laden on board the Ship or Vessel 'Brani Island' [1989] 3 MLJ 257 Court of Appeal, Singapore (Wee Chong Jin CJ, TS Sinnathuray and LP Thean JJ).

837 Action in rem -- Amendment of writ

11 [837] SHIPPING AND NAVIGATION Action in rem – Amendment of writ – Proper plaintiffs – Rules of the Supreme Court 1970, O 20 r 5(2) & (3)

Digest :

The 'Kota Pahlawan'; 'Kota Pahlawan' (Owners of) v 'Kota Pahlawan' (Owners of cargo) [1982] 2 MLJ 8 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Chua JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 799.

838 Action in rem -- Amendment of writ

11 [838] SHIPPING AND NAVIGATION Action in rem – Amendment of writ – Proper plaintiffs – Rules of the Supreme Court 1970, O 6 r 4 – Shipping law – Action in rem – Indorsement of plaintiffs' address – Whether amendment could be allowed.

Summary :

This was an appeal by the defendants against the decision of the assistant registrar giving the plaintiffs leave to amend the indorsement of the address of the plaintiffs in the Writ of Summons. The defendants contended that by amending the indorsement of address, a new party had been substituted and that this would deprive the defendants of the defence of limitation that had been available to them under art III r 6 of the schedule to the Carriage of Goods by Sea Act 1972.

Holding :

Held, dismissing the appeal: (1) Form 155 in Appendix A of the Rules of the Supreme Court provides and confirms the practice that when the parties in an action in rem are owners of a ship or owners of cargo, they need not be identified by name, but can be described generally, as in the present case; (2) in an admiralty action, the paramount interest is the rem, be it ship or cargo or other things and not the owners of the rem; (3) in an admiralty action in rem where the plaintiffs are represented by solicitors, the indorsement as to the address of the plaintiffs is hardly of any consequence. Hence, in the present case, a mistake in the indorsement is an irregularity which a court, in the exercise of its powers to regulate its own process, would put right; (4) the defendants were in no way prejudiced by the address of the consignors in the indorsement instead of that of the consignees. It is for the reason that from the time of the issue of the writ the consignees were a party as plaintiffs in this action; (5) the defence of limitation was never available to the defendants in this action.

Digest :

The 'Kota Pahlawan'; 'Kota Pahlawan' (Owners of cargo) v 'Kota Pahlawan' (Owners of) [1982] 1 MLJ 13 High Court, Singapore (TS Sinnathuray J).

Annotation :

[Annotation: See the Court of Appeal decision in [1982] 2 MLJ 8.]

839 Action in rem -- Arrest and sale of vessel

11 [839] SHIPPING AND NAVIGATION Action in rem – Arrest and sale of vessel – Non-payment of repair charges – Possessory lien – Meaning of 'beneficial owner' – Two-step test – High Court (Admiralty Jurisdiction) Act (Cap 123), s 4

Summary :

These were applications to set aside the writ and the warrant of arrest and secondly, an application for the sale pendente lite of the 'Kuchino' ('the ship') subject to a possessory lien which the plaintiffs claimed. The main question called for the determination of the meaning and content of the expression 'beneficial owner' in s 4(4) of the High Court (Admiralty Jurisdiction) Act ('the Act'). The ship was on the Russian register of ships under the ownership of L. In July 1991, L entered into a joint venture with E, a Singapore company and O, an Australian company. E placed the ship at the plaintiffs' shipyard to effect repairs and improvements. The plaintiffs claimed that they were not paid and asserted a possessory lien over the ships. The plaintiffs alleged that E was liable to the plaintiffs in an action in personam and that E were the owners of the ship when the cause of action arose. They also alleged that E were the beneficial owners of all the shares in the ship. L obtained an order to intervene in the action and the ground relied on by L to set aside the writs was that L were the registered owners and that they remained as such on the Russian register of ships.

Holding :

Held, ordering the sale of the ship: (1) registration and papers issued pursuant to it affords prima facie but not conclusive evidence of the true ownership and nationality of the ship; (2) and (b) the in rem test; (3) in applying the in personam test, the claimant must show that the defendant was at the time the claim arose, the owner of or in possession or control of the ship in connection with which the claim arose. The word 'owner' means the legal or registered owner but not necessarily the beneficial owner; (4) to satisfy the in rem test, the claimant must show that the ship was at the time the writ was filed, beneficially owned by the in personam defendant with respect to all shares in it; (5) and (d) principles of estoppel; (6) on the evidence, L was estopped from contending that E were not the legal owners of the ship at the time the claim arose. At the time the claim was instituted, E were the beneficial owners as regards all the shares in the ship; (7) further, it was an incontrovertible fact that E had the authority to place the ship with the plaintiffs for repairs. The writs therefore were rightly issued; (8) a claimant invoking the admiralty jurisdiction of the High Court against a ship must first establish that he has a maritime claim under s 3 of the Act and that it arose in connection with a ship. Then, if the maritime claim does not carry a maritime lien, he must satisfy a two-step test: (a) the in personam test;the principles that can be applied to determine beneficial ownership are, inter alia: (a) principles of equity and trust; (b) principles relating to avoiding fraudulent conveyances to delay or defeat creditors and principles relating to piercing the veil of incorporation; (c) principles of law relating to transfer of title to goods;the inferior power conferred by O 70 r 12(4) of the Rules of Supreme Court 1970 can never be used to release a ship if the release would defeat the legitimate rights of a litigant for that action would negate the superior rights of the plaintiffs.

Digest :

Atlantis Engineering & Construction Pte Ltd v Owners of the Ship or Vessel 'Opal 3' ex 'Kuchino'; Fishing Collective Farm Leninets (Interveners) [1992] 2 SLR 585 High Court, Singapore (GP Selvam JC).

840 Action in rem -- Arrest and sale of vessel

11 [840] SHIPPING AND NAVIGATION Action in rem – Arrest and sale of vessel – Port dues – Sheriff's charges and expenses – Priorities – Practice in Singapore – Action in rem by PSA – Procedural impropriety

Summary :

Two motions were filed, one at the instance of the Port of Singapore Authority ('the PSA') and one by P1. The PSA motion was for payment of S$196,560 from the proceeds of sale of the vessel 'Felicie' to them as sheriff's charges and expenses in respect of port dues incurred by the 'Felicie' during the time she was under arrest. The motion by P1 was for the determination of priorities, which concerned sheriff's expenses incurred in the arrest and sale of the 'Felicie', P1's claims against D for which judgment had been entered and the PSA's claim for port dues, garbage dues and pilotage dues. Both motions were heard together. The PSA had obtained leave to intervene in the proceedings and had also commenced proceedings themselves to recover their dues by an admiralty action in rem against the proceeds of sale of the 'Felicie'.

Holding :

Held: (1) there has been a long-standing and established practice that port dues form part of the sheriff's expenses and are recoverable as such in priority to all other claims from the proceeds of sale of the vessel arrested; (2) P1 were well aware of this practice; (3) the PSA were entitled to be paid port dues as a paramount first priority out of the procceds of sale of the 'Felicie'. The balance sum shall be paid to P1 towards the remainder of the sheriff's expenses and P1's judgment in the proceedings; (4) technically, the application by the PSA should have been made by the sheriff in his name with an indemnity from the PSA for all costs and expenses.

Digest :

Bombay Trading Co (Pte) Ltd & Ors v Owners of the Vessel 'Felicie'; Marmaestra Compania SA (Interveners) [1992] 1 SLR 175 High Court, Singapore (Karthigesu J).

841 Action in rem -- Arrest of cargo

11 [841] SHIPPING AND NAVIGATION Action in rem – Arrest of cargo – Enforcement of shipowner's claim for freight – Whether claim for freight gives rise to maritime lien – Meaning of 'or other charge on ... other property' – High Court (Admiralty Jurisdiction) Act, ss 3(1)(h) & 4(3)

Summary :

The plaintiffs were owners of the vessel which had carried a cargo of wood pulp from a port in the United States to the Persian Gulf and thence to Singapore. The defendants were owners of a cargo of wood pulp carried under bills of lading on board the plaintiffs' vessel. At the time when the cargo of wood pulp was loaded on board the plaintiffs' vessel, the vessel was time chartered to Meridien Shipping Incorporated. The cargo of wood pulp was to be delivered to the defendants at the Iraqi port of Um Qaser or Basrah. After the time charterer ran into financial difficulties and repudiated the charterparty, the plaintiffs took over the running of the vessel including the contracts of carriage entered into by the vessel during the currency of the charterparty. As the vessel was about to proceed to discharge the defendants' cargo at Um Qaser/Basrah, Iraq invaded Kuwait. Imposition of economic sanctions against Iraq made it difficult for the plaintiffs' vessel to proceed to any Iraqi port. After making inquiries in 14 countries as to the possible discharge of the cargo of wood pulp in those countries, the plaintiffs carried the cargo to Singapore. At Singapore, the cargo was discharged into a warehouse and thereafter, the plaintiffs commenced an action in rem to enforce their claim for freight, extra expenses and return freight arising from the carriage and on-carriage of the cargo of wood pulp to Singapore. The plaintiffs caused the cargo of wood pulp to be arrested in the action. Thereafter, the plaintiffs obtained an order for the appraisal and sale of the cargo pendente lite and also obtained judgment in default of appearance in the admiralty action in rem. The defendants applied by summons-in-chambers to set aside the judgment in default of appearance and all other proceedings connected with the plaintiffs' action in rem against the cargo including the writ in rem and the warrant of arrest. The defendants contended that the court had no jurisdiction to arrest cargo to enforce a shipowner's claim for freight. Additionally, the defendants contended that the judgment in default of appearance obtained by the plaintiffs was to be set aside as there had been non-compliance with the Rules of the Supreme Court 1970, in particular O 41 r 5(1) and (2) read with O 70 r 20(3).

Holding :

Held, granting the defendants' application: (1) the plaintiffs may invoke the admiralty jurisdiction of the High Court if the claim falls within s 3(1) and s 4 of the High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Ed); (2) the plaintiffs do not have to prove at this stage of the proceedings that their claim for freight against the defendants was sustainable in law; (3) on the assumption that the plaintiffs' claim fell within s 3(1)(h) of the High Court (Admiralty Jurisdiction) Act, the plaintiffs' claim for freight against the defendants was not frivolous or vexatious; (4) the plaintiffs' claim for freight does not give rise to a maritime lien; (5) in order to invoke the admiralty jurisdiction of the High Court by an action in rem against the cargo of wood pulp, the plaintiffs had to bring their case under the words 'or other charge on É other property' in s 4(3) of the High Court (Admiralty Jurisdiction) Act; (6) the words 'other charge' as used in the context of s 4(3) of the High Court (Admiralty Jurisdiction) Act do not have the wide meaning as 'any claim' or 'other claim'; (7) the words 'other charge' as used in the context of s 4(3) of the High Court (Admiralty Jurisdiction) Act do not include a possessory lien. And as the plaintiffs' claim for freight merely gives rise to a possessory lien, the plaintiffs could not rely on s 4(3) of the High Court (Admiralty Jurisdiction) Act to arrest the cargo of wood pulp; (8) the provisions in Pt VII of the Merchant Shipping Act (Cap 179, 1985 Ed), in particular ss 263, 264, 266 and 267, do not create a charge over the cargo discharged from a ship and placed in the custody of a warehouseman or wharfinger. Section 263 of the Merchant Shipping Act preserves the shipowner's possessory lien for freight due on the cargo discharged from the ship; (9) historically, the High Court never had jurisdiction to proceed in rem against cargo to enforce the shipowner's claim for freight; (10) given the conduct of the plaintiffs, the court would not grant any equitable relief to the plaintiffs; (11) as the court has no jurisdiction to arrest cargo to enforce the plaintiffs' claim for freight, the writ, warrant of arrest, the order for sale of the cargo of wood pulp and the judgment in default of appearance obtained by the plaintiffs in the action in rem was to be set aside; (12) the rules of court must be strictly observed. The plaintiffs have failed to comply with O 41 r 5(1) of the Rules of the Supreme Court 1970 ('the RSC'); (13) a judgment in default of appearance in an admiralty action made under O 70 r 20(3) of the RSC is a final judgment; (14) on the alternative ground that the plaintiffs had not proved their case as required by O 70 r 20(3) of the RSC and having regard to all the circumstances of the case including the fact that the defendants have shown in their affidavit that they had a good arguable case, the court would exercise its discretion to set aside the judgment in default of appearance obtained by the plaintiffs in the action in rem.

Digest :

The 'Ocean Jade'; Owners of the Ship or Vessel 'Ocean Jade' v Owners of cargo lately laden on board the Ship or Vessel 'Ocean Jade' [1991] 2 MLJ 385 High Court, Singapore (Karthigesu J).

842 Action in rem -- Arrest of ship

11 [842] SHIPPING AND NAVIGATION Action in rem – Arrest of ship – Arbitration clause – Stay of proceedings

Summary :

Where the plaintiff as second charterer of a ship proceeded against the ship and the first charterers not being party to the suit applied for a stay of proceedings on the ground that they and the plaintiff had by a written submission agreed that all disputes and differences regarding the charter should be settled by arbitration at Saigon,

Holding :

Held: (1) the first charterers had a right to have their liabilities, if any, determined by arbitration in accordance with the submission unless they had divested themselves of that right by taking any other step in the action; (2) the plaintiff not having discharged the burden cast upon him of showing cause why the agreement to submit should not be given effect to, the proceedings must be stayed without prejudice to his rights to proceed further in rem in the event of failure by the defendants to pay any sum which may be awarded on arbitration.

Digest :

Drouth v The Ship 'GG Paul Doumer' [1934] MLJ 72 High Court, Straits Settlements (Gerahty J).

843 Action in rem -- Arrest of ship

11 [843] SHIPPING AND NAVIGATION Action in rem – Arrest of ship – Judicial sale of ship – Order of priorities in payment out from proceeds of sale – Shipwright's possessory lien for repairs to ship

Digest :

Master, officers and crew of SS 'Hong Ho' v SS 'Hong Ho' [1929] SSLR 22 High Court, Straits Settlements (Sproule Ag CJ).

See SHIPPING AND NAVIGATION, Vol 11, para 1365.

844 Action in rem -- Arrest of vessel

11 [844] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 123), s 4(4)

Digest :

The 'OHM Mariana'; Pacific Navigation Co Pte Ltd v Owners and All Other Persons Interested in the Ship or Vessel 'OHM Mariana' ex 'Peony' [1993] 2 SLR 698 Court of Appeal, Singapore (LP Thean, Rajendran and Warren LH Khoo JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 818.

845 Action in rem -- Arrest of vessel

11 [845] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Accessions

Digest :

The 'Safe Neptunia'; The 'Straits Hope' (Owners of) v The 'Safe Neptunia' (Owners of); Skandinaviska Enskilda Banker (South East Asia) Ltd & Anor (Interveners) [1988] 3 MLJ 78 High Court, Singapore (LP Thean J).

See SHIPPING AND NAVIGATION, Vol 11, para 905.

846 Action in rem -- Arrest of vessel

11 [846] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Addition of claim in personam – Discretion of court

Summary :

In this case, the plaintiffs, owners of a cargo of wheat shipped in bulk on board the vessel 'Ta Tung'Êcommenced an action in rem against the vessel, the owners and all parties interested for damage sustained by reason of the contamination of the cargo by fuel oil, which they alleged took place during the voyage or alternatively during discharge. The owners appeared and in their defence alleged negligence on the part of the stevedores. The plaintiffs applied to join the stevedores as defendants on the ground of convenience.

Holding :

Held: (1) O 16 r 11 should be liberally interpreted and in this case the application to add the stevedores should be allowed; (2) the court has an unfettered discretion to allow a claim in personam to be engrafted upon a claim in rem provided no injustice or inconvenience is caused when the case comes up for trial and in the circumstances of this case no difficulty will arise from the joinder of the stevedores and it was just and convenient that they be joined as defendants.

Digest :

Federal Flour Mills Ltd v Owners of The Vessel 'Ta Tung' & Anor [1970] 2 MLJ 147 High Court, Kuala Lumpur (Raja Azlan Shah J).

847 Action in rem -- Arrest of vessel

11 [847] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Amendment of writ – Shipping – Admiralty action in rem – Claim for beneficial ownership – Statement of claim – Part of – Striking out of – Application for – Whether there was compliance with O 18 r 15 of Rules of Supreme Court 1970 – Writ can be amended – Application held over.

Summary :

The plaintiffs agreed to purchase a vessel from certain Japanese owners. They regarded the Japanese owners as the beneficial owners of the vessel. They filed an admiralty action in rem to, inter alia, enforce the agreement. Thereafter, the plaintiffs filed their statement of claim claiming, inter alia, that they are the beneficial owners of the vessel. Meanwhile a company called TJT claimed that they were the beneficial owners of the vessel. They made an application, as defendants, to strike out certain paragraphs and certain reliefs claimed in the statement of claim. They contended, inter alia, that the statement of claim did not comply with O 18 r 15(2) of the Rules of the Supreme Court 1970.

Holding :

Held: (1) there was no doubt that the statement of claim does not comply with O 18 r 15(2). However, it does not necessarily follow from this that the offending claims must be struck out. A breach of O 18 r 15(2) is only an irregularity and if it can be remedied by an amendment to the writ there is no reason why the relevant paragraphs in the statement of claim should be struck out. To strike them out at this stage when the defect can be remedied will only lead to further delay in the resolution of this dispute. TJT could never be liable to the plaintiffs in respect of the said in personam actions whatever the position might be as regards the ownership of the vessel. These claims will fail against TJT irrespective of whether TJT have become the owners of the vessel. Therefore TJT had no interest whatever in these claims and no locus standi to object to the inclusion of these claims in the statement of claim; (2) in the circumstances, this application should be held over to enable the plaintiffs to apply to amend the writ.

Digest :

The 'Eishin Maru'; Brighton Navigation Co Ltd v 'Eishin Maru' (Owners of) [1988] 1 MLJ 482 High Court, Singapore (Chan Sek Keong JC).

848 Action in rem -- Arrest of vessel

11 [848] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Application to set aside writ – Claim entitling plaintiff to invoke the admiralty in rem jurisdiction of court – Whether writ discloses reasonable cause of action

Digest :

Sea Breeze Navigation Co SA v Owners of Ship 'Hsing An' [1974] 1 MLJ 45 High Court, Singapore (Chua J).

See SHIPPING AND NAVIGATION, Vol 11, para 855.

849 Action in rem -- Arrest of vessel

11 [849] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Application to set aside writ – Sovereign immunity – Registered ownership – Custodian of Property (Vesting) Ordinance 1947, s 3

Digest :

Singapore Harbour Board v Owners and Other Persons Interested in the Vessel 'Gyoshin Maru' [1949] MLJ Supp 18 High Court, Singapore (Gordon-Smith J).

See SHIPPING AND NAVIGATION, Vol 11, para 963.

850 Action in rem -- Arrest of vessel

11 [850] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Application to set aside writ and warrant of arrest – Frivolous and vexatious – Indorsement alleging cause of action against more than one vessel – Arrest of more than one vessel – Single ship arrest rule

Summary :

The appellants, the National Iranian Tanker Co, were the owners of the ship 'Damavand'. They also owned other ships, including the 'Minab 4', 'Alamoot', 'Khark 2', 'Shir Khooh', 'Taftan' and 'Bisoton'. The respondents, on 26 January 1989, entered into a contract with the appellants for the supply of marine paint products to the latter's fleet. The goods and materials were supplied or sold both before and after the conclusion of the contract, namely, during the period from 1988 to 1989, and were supplied to the 'Alamoot', 'Khark 2', 'Shir Khooh', 'Taftan' and 'Bisoton' at various ports, including Singapore. The appellants failed to pay the respondents for the goods and materials supplied. Accordingly, on 24 October 1989, the respondents commenced an admiralty in rem action against the 'Minab 4' and the claim as indorsed on the writ was for goods and materials supplied to the ships or vessels 'Alamoot', 'Bisoton', 'Khark 2', 'Shir Kooh' and 'Taftan'. The 'Minab 4' was arrested and the writ was served on her on the same day. On 25 October 1989, the respondents amended the writ in the 'Minab 4' action by striking out the reference to the 'Bisoton' in the indorsement and immediately thereafter, on the same day, commenced a separate admiralty action in rem against the 'Damavand' and the claim indorsed on the writ was for goods and materials supplied to the ship or vessel, 'Bisoton'. On the same day, the 'Damavand' was arrested and the writ served on her. On 1 November 1989, the 'Damavand' was released after the appellants paid a sum of £353,737.29, which was the sum stated in the respondents' statement of account of 10 July 1989. On 14 November, the appellants took out an application to set aside the writ and warrant of arrest in the 'Damavand' action on the grounds that the court lacked jurisdiction and that the action and/or arrest was frivolous and vexatious and was an abuse of process. The application was dismissed by the registrar. The appeal to the judge-in-chambers was also dismissed. The appellants appealed to the Court of Appeal.

Holding :

Held, dismissing the appeal: (1) it is established law that the admiralty jurisdiction in rem may be invoked against either the offending ship or against any other ship in the same ownership, but not against both. This is commonly known as the 'single ship arrest rule'; (2) on the day immediately following the service of the writ on the 'Minab 4', the 'Bisoton' claim was deleted from the writ, and thenceforth the 'Minab 4' action ceased to be an action in rem for that claim. At that point in time, there was nothing to prevent the respondents from invoking the admiralty jurisdiction by an action in rem against the sister ship for the 'Bisoton' claim. That they did. Such an action did not violate or infringe the 'single ship arrest rule'; (3) it is technically correct that where a plaintiff has multiple causes of action, he can take out multiple writs in rem against multiple ships of the defendant. But such actions, if taken, may well amount to an abuse of process and would probably not be allowed; (4) it is settled law that the action in rem only operates against the res and if a defendant, namely, the owner or party interested in the res does not enter an appearance, a judgment obtained in such an action is limited to the value of the res or the bail which represents the res. Once the defendant enters an appearance, he submits to the jurisdiction of the court and from then onwards, the action continues as an action in rem and in personam, and judgment may be entered and enforced against the defendant to the full extent of the amount awarded to the plaintiff and is not limited to the value of the res or the bail which represents the res; (5) a plaintiff in an action in rem is at liberty to amend his claim by adding thereto or subtracting therefrom at the time and in the manner as allowed by the rules of the court. Depending on the circumstances, he may amend his claim even after the time limited for entering appearance had expired. However, the exercise of such right is always subject to control by the court. Where the exercise of such right amounts to an abuse of the process of the court, it would not be allowed. If in an action in rem, and following the arrest of a vessel, the owner has put up bail to the value of the claim, it would be unfair for the plaintiff to amend his claim subsequently. The plaintiff in accepting the bail had in effect crystallized his claim for the purpose of the remedy in rem. Such a course, if taken by the plaintiff, would probably amount to an abuse of process.

Digest :

The 'Damavand'; Owners of the Ship or Vessel 'Damavand' v International Paint Ltd [1993] 2 SLR 717 Court of Appeal, Singapore (LP Thean, Rajendran and Warren LH Khoo JJ).

851 Action in rem -- Arrest of vessel

11 [851] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Application to set aside writ and warrant of arrest – Whether arrest wrongfully effected – Whether warrant of arrest issued dependent on existence of writ in rem – Plaintiff claiming to be owner of goods on board ship – Whether plaintiff had cause of action against owners of ship – Rules of the High Court 1980, O 70 r 4(1)

Summary :

P had earlier filed a writ of summons in rem against D1 for damages for breach of contract and for negligence. P claimed that he was the owner of certain goods which were shipped on board D1's vessel 'Indera Pertama' for carriage from Sandakan/Weston to Calcutta but the cargo did not arrive in Calcutta. P also claimed that he was the holder and/or indorsee of four bills of lading under which the cargo was shipped. Subsequently, on the application of P, a warrant for the arrest of the vessel was issued by the senior assistant registrar. The vessel was duly arrested by the sheriff at Pasir Gudang, Johore. In the present application made under O 12 r 7(1) of the Rules of the High Court 1980, D1 applied for an order that P's writ of summons be set aside and that the warrant of arrest issued in respect of the vessel be discharged or set aside. D1 also sought damages from P in respect of loss suffered by them as a result of the wrongful arrest. D1 contended that P was neither a consignee in respect of the bills of lading nor indorsee nor holder for value and accordingly P had no title to institute the present proceeding.

Holding :

Held, allowing D1's application: (1) in the instant case, P had failed to pay for the goods mentioned in the four bills of lading according to the terms of the four bills of exchange. Although the bills of lading were endorsed in the instant case, the property in the goods did not pass to P merely by indorsement of the bills of lading where there is no consideration for the indorsement. Since no payment was made, the property in the goods did not pass to P; (2) since P had no title to the goods mentioned in the four bills of lading on the date the writ of summons was filed, P had therefore no locus standi to maintain the present action at the material time. P's action was clearly an abuse of the process of the court as P not only had no locus standi to maintain the action but also had no cause of action at the material time. P's writ was accordingly set aside pursuant to O 12 r 7 of the Rules of the High Court 1980; (3) having regard to O 70 r 4(1), the warrant of arrest issued in the instant case depended on the existence of a writ in rem. The right to arrest the res in an admiralty action in rem goes hand in hand with the right to proceed in rem. Since the writ in rem in the instant case had been set aside, it followed that there was no legal basis for the warrant of arrest to remain in force. The warrant of arrest issued was accordingly set aside.

Digest :

Shanti Kant Jinghan v Owners of the Vessel 'Indera Pertama' & Anor (No 1) [1989] 3 MLJ 58 High Court, Kuala Lumpur (Zakaria Yatim J).

852 Action in rem -- Arrest of vessel

11 [852] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Application to set aside writ of summons and warrant of arrest – Whether there was evidence to show that the claims were justified – Whether there were non-disclosure of facts by the plaintiffs – Effect of the non-disclosure of facts – Whether arrest was wrongful and made with malice – Whether defendants were entitled to damages

Digest :

Ocean Gain Shipping Pte Ltd v Owner and/or Charterer of Demise of Vessel Dong Nai Registered at Haiphong Port, Vietnam (The Dong Nai) [1996] 4 MLJ 454 High Court, Johor Bahru (Abdul Malik Ishak J).

See CIVIL PROCEDURE, para 106.

853 Action in rem -- Arrest of vessel

11 [853] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Arbitration clause – Stay of proceedings – Shipping – Arrest of vessel – Application to set aside – Unconditional appearance – Agreement to refer disputes to arbitration – Stay of proceedings – Order for release of vessel – Arbitration Act 1952, s 6.

Summary :

In this case, the defendants had let the ship to the plaintiffs and the plaintiffs claimed that the defendants were indebted to them for hire advances, supply of guards, services and disbursements in respect of the ship. The plaintiffs caused the ship to be arrested in Penang. The defendants applied for orders that the writ of summons be set aside or stayed and that the vessel be released. They claimed that they were not indebted as claimed to the plaintiffs and that there was an arbitration clause in the time charterparty. The plaintiffs resisted the application on a preliminary objection that unconditional appearance had been entered.

Holding :

Held: (1) the fact that the defendants had entered an unconditional appearance did not preclude the court's right to entertain the application and make such order as it thinks fit; (2) it was not disputed that it had been agreed between the parties that all disputes should be referred to arbitration and in the circumstances stay of proceedings should be granted to the defendants; (3) as stay of proceedings had been granted the ship should be released.

Digest :

The 'Dong Moon'; Trans Asia Shipping Co Ltd v 'Dong Moon' (Owners & Ors) [1979] 1 MLJ 152 High Court, Penang (Arulanandom J).

854 Action in rem -- Arrest of vessel

11 [854] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Arbitration clause – Stay of proceedings – Shipping law – Bill of lading – Document of title – Claim by indorsees of bill of lading for non-delivery of goods.

Summary :

The plaintiffs in this case, indorsees of a bill of lading for oil shipped on board the defendants' vessel, Fuji Hoshi Maru, for carriage from Butterworth to Penang issued a writ against the defendants for non-delivery of their oil palm cargo. The plaintiffs claimed that the oil palm worth RM980,832.14 was wrongfully delivered to a person not in possession of the bill of lading. At the instance of the plaintiff, the said vessel was arrested at Port Klang. The defendants sought for a stay of the proceedings. They claimed that the charterparty provided for reference of a dispute to arbitration in London, and questioned the locus standi of the plaintiffs to bring the action. The defendants also sought for the setting aside of the warrant of arrest executed in respect of their vessel.

Holding :

Held: (1) the general provision in the bill of lading stipulating that the shipment was carried under and pursuant to the terms of the charterparty did not incorporate the arbitration clause of the charterparty; (2) the Courts of Judicature Act 1964 (Act 91), s 24(b) confers jurisdiction on the High Court to entertain the present suit; (3) so long as the contract for the carriage of goods by sea is not discharged, the bill of lading 'remains a document of title by indorsement and delivery of which the rights of property in the goods can be transferred' and a ship-owner who delivers without production of the bill of lading does so at his peril; (4) the bill of lading was delivered to the plaintiffs in proper set thus giving them 'property sufficient to enable them to maintain the action'; (5) the provision regarding arbitration could only apply to a dispute arising out of the charterparty and could not be extended to a dispute arising out of the bill of lading;the application must be dismissed as no case had been made out for the suit to be struck out.

Digest :

The 'Fuji Hoshi Maru'; United Asian Bank Bhd v MV 'Fuji Hoshi Maru' (Owners & Ors Interested) [1981] 2 MLJ 333 High Court, Kuala Lumpur (Vohrah J).

855 Action in rem -- Arrest of vessel

11 [855] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Caveat against release of vessel – Withdrawal of caveat – Rules of the Supreme Court 1970, O 70 rr 12 & 13 – Admiralty – Vessel under arrest – Caveat against release of vessel filed – Warrant of arrest set aside – Effect of setting aside of warrant of arrest on caveat – Whether withdrawal of caveat constitutes consideration – Rules of the Supreme Court 1970, O 70 rr 12 & 13.

Summary :

The appellants who were the plaintiffs in a district court summons entered a caveat against the release of the ship 'Golden Elephant' which was under arrest in admiralty in rem proceedings under warrant of arrest which was subsequently set aside. The respondents in the admiralty proceedings applied for the release of the ship and the appellants were informed of this. The 'Golden Elephant' was not however released. The respondents entered into discussions with the appellants' solicitors. They agreed to pay the court charges in connection with the arrest and requested the appellants to release the 'Golden Elephant'. In purported pursuance of the agreement, the appellants withdrew the caveat and the 'Golden Elephant' was released. The respondents then refused to pay the court charges as agreed. The appellants commenced proceedings in the district court against the respondents to recover the court charges and obtained judgment. On appeal against the decision of the district court, the High Court held that upon the warrant of arrest being set aside, the caveat had no legal effect and accordingly the agreement was unenforceable. The appellants appealed against the decision of the High Court.

Holding :

Held: (1) the caveat which the appellants had filed against the release of the ship was in force though the warrant of arrest had been set aside; (2) the respondents obtained the release of the vessel by the appellants withdrawing their caveat on the undertaking given by the respondents to pay the court charges. Accordingly there was a binding agreement between the appellants and the respondents. The judgment of the district court in favour of the appellants was therefore right.

Digest :

Hong Lee v Golden Dragon Shipping (Singapore) Pte Ltd [1976] 1 MLJ 159 Court of Appeal, Singapore (Wee Chong Jin CJ, Winslow and Kulasekaram JJ).

856 Action in rem -- Arrest of vessel

11 [856] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for damage to goods carried on vessel – Intervener's claim to ownership of vessel – Shipping law – Admiralty action in rem – Breach of contract of carriage – Arrest of ships – Damages – Intervener claiming interest – Ex parte orders in favour of intervener – Serious question to be tried – Real prospect of success at trial – Interest in cargo – Whether ex parte orders shall be vacated – Rules of the High Court 1980, O 41 r 12.

Summary :

In this case, the plaintiffs as owners of the cargo laden on board the ship 'Yih Shen' sued the owners of the ship, the defendants, claiming damages for breach of a contract of carriage. The ship was arrested on application of the plaintiffs. On 1 February 1984, the charterers of the ship entered a caveat. The defendants put the plaintiffs to strict proof that they were the owners of the cargo, claiming that the plaintiffs were in breach of the contract because of default of certain payment. At this point of time, the intervener applied for leave to intervene as beneficial owner of the ship 'Yih Shen'. In a separate ex parte application, the intervener applied for a stay of the orders of court dated 13 February 1984 which enabled the plaintiffs to transfer the cargo on the 'Yih Shen' to the ship 'Vitya Komenco' and for an interim injunction restraining the plaintiffs from doing so. In the event, the injunction and consequential orders ('the Ex Parte Orders') were granted in favour of the intervener. The plaintiffs then made the present application to set aside the Ex Parte Orders.

Holding :

Held: (1) the intervener has not demonstrated that there is a serious question to be tried or that he has a real prospect of success at the trial of establishing his claim to the ownership of the ship 'Yih Shen'; (2) the Ex Parte Orders and the order granting leave to intervene were vacated, as the intervener had not established a sufficient interest in the cargo; (3) the intervener must pay the costs of the plaintiffs and the defendants, and the usual inquiry as to damages was ordered.

Digest :

The 'Yih Shen'; MV 'Yih Shen' (Owners of cargo) v MV 'Yih Shen' (Owners of) [1985] 2 MLJ 154 High Court, Penang (Edgar Joseph Jr J).

857 Action in rem -- Arrest of vessel

11 [857] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for disbursements – Whether claim fell within s 3(1) of the High Court (Admiralty Jurisdiction) Act – Whether claims were disbursements made on account of a ship – Whether claimants were agents managing the vessel – High Court (Admiralty Jurisdiction) Act (Cap 123), s 3(1)

Summary :

The appellants were a company incorporated in Singapore. The respondents were Ohm Pacific Sdn Bhd, a company incorporated in Malaysia. On 18 May 1984, the respondents agreed to purchase a vessel for US$720,000, of which 10% was paid to the vendor as a deposit and completion was scheduled to take place at the end of June 1984. As there were problems with obtaining the necessary finance, the appellants completed the sale and registered the vessel in their own name. It was intended that the appellants should hold the vessel as security for the loan and other moneys owing to them from the respondents; the beneficial ownership of the vessel remained with the respondents. On 19 October 1984, the vessel was placed on the Malaysian flag under a provisional registration in the respondents' name and was renamed 'OHM Mariana' ('the vessel'). In February 1985, the operation of the vessel changed hands from the appellants to the respondents. Differences arose between the parties and on 19 September 1985, the appellants instituted an action in rem against the vessel, claiming a sum exceeding S$300,000 in respect of disbursements made by them as agents for and on behalf of the respondents on account of the vessel, and also claiming agency and other fees and commission, interest and costs. A warrant of arrest was issued and the vessel on calling at Singapore was arrested. While the suit was pending, the vessel was sold for S$1,550,000 and the bunkers for S$56,936 under an order made pendente lite and the sale proceeds were paid into court. Subsequently, claims were made against the proceeds of sale by various claimants including the bank and these were paid out of the proceeds of sale. At the time of the hearing of the action, only the sum of S$36,417.23 remained in court.

Holding :

Held, allowing the appeal: (1) the statement of claim subsequently filed by the appellants clearly showed that the claim was made by the appellants for various disbursements made by the appellants as managing agents of the respondents on account of the vessel and short particulars were given. The respondents in their defence admitted that the appellants as managing agents had 'expended sums of money and made advances of disbursements on account of the vessel'. Purely on this basis of the pleadings, there was no question that the claim came squarely within para (o) of s 3(1) of the High Court (Admiralty Jurisdiction) Act (Cap 123) ('the Act') and so the High Court has jurisdiction to hear and determine it; (2) the word 'owner' in s 4(4) of the Act does not mean the registered owner. Firstly, registration of a ship does not determine and is not conclusive as to the true ownership of the ship. It is prima facie evidence that the registered owner is the owner of the ship. Secondly, although the word 'owner' in s 4(4) can be contrasted with the words 'beneficially owned' in paras (a) and (b), there is nothing to suggest that the word 'owner' should be restricted only to 'registered owner'. It can be validly read and construed more widely than 'registered owner'. Thirdly, it is significant to note that the person who would be liable in personam and against whose ship an action in rem may be brought is not confined merely to the owner of the ship in question but extends to other categories of person, namely, the charterer or the person in possession of the ship. Each of these categories has a substantive and not merely a formal or nominal role in relation to the ship in question. In the context of these words, the word 'owner' cannot be construed to mean only the registered owner; (3) in the context of s 4(4) of the Act, the construction that the term 'owner' means a person who is vested with such ownership as to have the right to sell, dispose of or alienate the ship is adopted. Such an owner may or may not be the registered or legal owner depending on the circumstances of the case. A beneficial owner clearly comes within the meaning; (4) the defendants entered appearance unconditionally and in so doing, submitted to the jurisdiction of the court and from then onwards, the action continued as an action in personam; (5) at the time the action came before the judicial commissioner, it was an action in personam as well as an action in rem. Assuming that the action in rem was wrongly instituted, the action in personam was clearly maintainable on the point of jurisdiction. There was no impediment to the plaintiffs bringing an action in personam against the defendants making the same claim as was made in this action; (6) in finding that the appellants had fabricated the management agreement in order to sustain the arrest, the learned judicial commissioner had decided an issue not raised in the pleadings. Under O 18 r 12(1) of the Rules of the Supreme Court, particulars of fraud and malice relied upon by a party are required to be specifically pleaded.

Digest :

The 'OHM Mariana'; Pacific Navigation Co Pte Ltd v Owners and All Other Persons Interested in the Ship or Vessel 'OHM Mariana' ex 'Peony' [1993] 2 SLR 698 Court of Appeal, Singapore (LP Thean, Rajendran and Warren LH Khoo JJ).

858 Action in rem -- Arrest of vessel

11 [858] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for loss or damage to goods carried on vessel – Renewal of writ in rem – Principle applicable to renewal where limitation period had expired – Shipping law – Admiralty practice – Failure to serve writ within one year – Renewal of writ – Whether warranted by exceptional circumstances.

Summary :

The plaintiff on 30 December 1980 took out a writ of summons in rem against the defendants and claimed damages for breach of contract and/or breach of duty and/or negligence on the part of the defendants, their servants or agents resulting in loss or damage to the plaintiff's goods and/or short delivery of the said goods which were shipped on board the defendant's vessel 'Union Hodeidah' ('the vessel') for carriage from Singapore to Jeddah. At the time of the issue of the writ, the vessel was not in port. The writ was not served within one year from the date of its issue; but prior to its expiry, the plaintiff applied for and obtained a renewal of the writ. On or about 16 April 1982, the vessel was at the port of Singapore and service of the renewed writ was effected and the Vessel was arrested. The defendants entered a conditional appearance on 29 April 1982 and on 10 May 1982 applied by notice of motion to set aside the writ, service thereof, and the warrant of arrest. The question before the court was whether the court should have exercised its discretion to renew the writ, as it did, as a result of which the defendants were deprived of a good defence to the claim.

Holding :

Held, allowing the motion: the plaintiff had not established any exceptional circumstances warranting a renewal of the writ.

Digest :

The 'Union Hodeidah'; Ahmed Abdul Qawi Bamaodah v The 'Union Hodeidah' (Owners of) [1987] 2 MLJ 561 High Court, Singapore (LP Thean J).

859 Action in rem -- Arrest of vessel

11 [859] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for pilot's remuneration – Claim against proceeds of sale of vessel

Digest :

The 'Washi', ex p John Watt [1883] 2 Ky Ad 49 High Court, Straits Settlements (Wood J).

See SHIPPING AND NAVIGATION, , Vol 11.

860 Action in rem -- Arrest of vessel

11 [860] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for repairs to vessel – Order for sale of vessel – Intervener's competing claims to payment out of proceeds of sale – Priority of interveners' competing claims – Possessory lien of ship repairers – Mortgagees' claim for outstanding moneys under mortgage

Digest :

The 'Honey I' ex 'Cassio'; Singapore Slipway & Engineering Co (Pte) Ltd v The 'Honey I' ex 'Cassio' (Owners of); Robina Credit Ltd & Ors (Interveners) [1987] 2 MLJ 427 High Court, Singapore (Lai Kew Chai J).

See SHIPPING AND NAVIGATION, Vol 11, para 959.

861 Action in rem -- Arrest of vessel

11 [861] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for supply of necessaries – Master's authority to pledge shipowner's credit – Limitation of master's authority

Digest :

'Thermopyloe', The, Solomon & Anor v Guthrie & Co [1890] 4 Ky 679 High Court, Straits Settlements (O'Malley CJ).

See SHIPPING AND NAVIGATION, Vol 11, para 1344.

862 Action in rem -- Arrest of vessel

11 [862] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim for wages – Vessel under charter – Liability of charterer to indemnify shipowner

Digest :

E Peterson v SS 'Ban Ho Liong'; Tan Lark Sye & Ong Wai Soey (Third Parties) [1940] MLJ 259 High Court, Straits Settlements (McElwaine CJ).

See SHIPPING AND NAVIGATION, Vol 11, para 1343.

863 Action in rem -- Arrest of vessel

11 [863] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Claim to ownership of the vessel – Stay of proceedings – Agreement to refer disputes to arbitration – Shipping – Mortgage of vessel – Vessel arrested – Charter party cancelled – Claim by plaintiffs/mortgagees for sale of vessel – Claim resisted by defendants/owners – Arbitration clause – Whether arbitration enforceable – Test applied by court.

Summary :

By an agreement dated 17 December 1982 made between the plaintiffs and the defendants, the plaintiffs agreed to buy the rebuilt vessel 'Sungei Bulan', paying for it by instalments, which instalments were used by the defendants to fund works done on the vessel. In order to secure their position, the plaintiffs obtained a mortgage over the said vessel. An integral part of the said agreement was a charterparty dated 30 November 1982 made between the defendants and Spie Offshore SA (the charterers). The vessel was arrested on 25 April 1983. In the events which happened, the charterers gave notice to the defendants that it was cancelling the charter. The plaintiffs contended that, one way or another, the defendants were in breach of the agreement and/or the plaintiffs were entitled to treat the agreement as terminated under its express provisions. The plaintiffs also contended that an event of default had occurred under cl 10 of the said mortgage. On 23 May 1983, the Chartered Bank Singapore obtained leave to intervene as debenture holders of the 'Sungei Bulan'. The plaintiffs claimed the sum of US$6.8m together with interest against the vessel and sought for an order for the appraisement and sale of the vessel. The defendants sought for a stay of proceedings on the ground that the dispute herein should be referred to arbitration.

Holding :

Held: the test in such cases has been said to be whether the contract is determined by something outside itself, in which case the arbitration is determined with it, or be something arising out of the contract, in which case arbitration clause remains effective and can be enforced. The present action should therefore be stayed for a month during which the defendants were to commence arbitration proceedings in London.

Digest :

The 'Sungei Bulan'; Arden Shipping Ltd v 'Sungei Bulan' (Owners of); The Chartered Bank (Interveners) [1983] 2 MLJ 377 High Court, Singapore (Rajah J).

864 Action in rem -- Arrest of vessel

11 [864] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Compliance with Admiralty Procedure Rules 1895 – Rules of the Supreme Court 1934, O 63 – Practice and procedure – Action in rem – Admiralty procedure rules – Writ addressed to the owner of the ship instead of to owner of the ship and parties interested in ship – Whether omission irregularity or nullity – Whether Rules of the Supreme Court, O 63 applicable.

Summary :

This was an application by an intervener to set aside a writ in rem issued by the plaintiffs against the defendant on the ground that it was a nullity because it was addressed to 'The Owner of LST ÒO SambaurÓ ' instead of to 'The Owner of the LST ÒO SambaurÓ and parties interested in the ship'.

Holding :

Held: the writ was properly issued against the owner of the LST 'O Sambaur' as defendant but it was improperly addressed owing to the omission from the citation of the words 'parties interested in the ship', but this omission was an irregularity and not a nullity and accordingly O LXIII of the Rules of the Supreme Court applied and an amendment might be allowed. Amendment allowed. Motion dismissed.

Digest :

The 'O Sambaur' (No 1) [1958] MLJ 85 High Court, Singapore (Whyatt CJ).

865 Action in rem -- Arrest of vessel

11 [865] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Conditional appearance to action – Stay of proceedings – Forum non conveniens

Digest :

The 'Carl Offersen'; Weaving Supplies Corp & Ors v The 'Carl Offersen' (Owners of) [1979] 2 MLJ 55 High Court, Singapore (Chua J).

See SHIPPING AND NAVIGATION, Vol 11, para 1216.

866 Action in rem -- Arrest of vessel

11 [866] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Disbursements paid by master

Digest :

The 'August 8'; Costas Bachas v The 'August 8' (Owners of) [1980] 2 MLJ 179 High Court, Singapore (Choor Singh J).

See SHIPPING AND NAVIGATION, Vol 11, para 939.

867 Action in rem -- Arrest of vessel

11 [867] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Discharge of warrant of arrest – Breach of contract of carriage on owner's part by releasing cargo without bill of lading – Failure of negotiations with purchasers for payment – Whether proper defendant was purchaser of goods or owner of ship – Whether negotiations had to be disclosed when applying for warrant of arrest – Rules of the High Court 1980, O 70 r 4

Summary :

The plaintiffs sold 15,741 metric tons of coke ('the cargo') to Thyssen-Agipcoal GmbH of Germany ('Thyssen'). The cargo was loaded on the 'Santorini I' ('the ship') at Xingang, China under a bill of lading. Payment was to be made by a letter of credit opened by Thyssen with its bank at Dusseldorf. The owners of the ship ('the defendant') had chartered the ship to Thyssen. Upon the ship's arrival in Holland, RTE, a third party to whom Thyssen had sold the cargo, persuaded the master of the ship to release the goods without a bill of lading. Thereafter, it purported to reject the cargo. Negotiations between the plaintiffs and RTE or Thyssen broke down and the plaintiffs' efforts to locate the cargo failed. The plaintiffs brought an action in rem against the defendant and obtained a warrant for the ship's arrest under O 70 r 4 of the Rules of the High Court 1980. The defendant contended that the plaintiffs' claim against it was misconceived as its claim was in personam against RTE and/or Thyssen and the warrant of arrest should be set aside on the ground, inter alia, that the plaintiff had failed to disclose certain material facts, eg the negotiations with RTE or Thyssen, which entitled the defendant to set aside the warrant.

Holding :

Held, dismissing the defendant's application: (1) the fact that the plaintiffs had negotiated with RTE and/or Thyssen for payment did not per se extinguish the plaintiffs' rights in rem against the defendant. Delivery of the cargo without the bill of lading was a breach of the contract of carriage between the plaintiffs and defendant and the attempt to mitigate the loss did not act as a waiver of rights. The contract of carriage between the plaintiffs and the defendant, as owners of the ship, was separate and distinct from the sale contract with Thyssen; (2) O 70 r 4 specifies what has to be disclosed to the court in support of the praecipe for a warrant of arrest of a ship. However, the non-disclosure of the fact that there were negotiations and attempts to mitigate the damage were not material to the issue of a warrant of arrest; (3) (obiter) if the defendant succeeds in showing that the cargo was released to the true owner, no damages would be recoverable.

Digest :

The 'Santorini I'; Owners of Cargo carried in the Ship 'Santorini I' v Owners of the Ship and Other Persons Interested in the Ship 'Santorini I' [1994] 3 MLJ 709 High Court, Kuala Lumpur (VC George J).

868 Action in rem -- Arrest of vessel

11 [868] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Disclosure of material facts – Test for material non-disclosure

Digest :

The 'Damavand'; International Paint Ltd v Owners of the Ship or Vessel 'Damavand' [1992] 2 SLR 1058 High Court, Singapore (Karthigesu J).

See SHIPPING AND NAVIGATION, Vol 11, para 984.

869 Action in rem -- Arrest of vessel

11 [869] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Enforcement of claim for breach of charterparty – Whether ship arrested 'beneficially owned' by charterer – High Court (Admiralty Jurisdiction) Act, s 4(4)

Summary :

The plaintiffs were the owners of the 'Feoso Ambassador 2' which had been chartered to the defendants on two separate occasions. The plaintiffs commenced Admiralty in Rem Nos 254 and 255 of 1989 against the defendants' vessel, the 'Andres Bonifacio', to enforce their claims in respect of two voyages involving the 'Feoso Ambassador 2'. Feoso Ambassador SA commenced Admiralty in Rem No 256 of 1989 against the 'Andres Bonifacio' to enforce their claim arising from the charter of the vessel, 'Feoso Ambassador'. On 17 October 1989, the plaintiffs arrested the 'Andres Bonifacio' in Admiralty in Rem No 254 of 1989. No arrests were made in Admiralty in Rem Nos 255 and 256 of 1989. Three days after the arrest of the 'Andres Bonifacio', the defendants, PNOC Oil Carrier Inc ('the POCI'), obtained the release of the vessel by providing bail bonds in respect of the claims made in the three in rem suits. The defendants entered conditional appearance in all the three in rem suits. Subsequently, on 2 November 1989, the defendants applied by way of summons-in-chambers in all three in rem suits to set aside the service of the writ in rem and all proceedings in the three in rem suits. The defendants also applied for the cancellation of the bail bonds which had been given in the three in rem suits. Alternatively, the defendants sought for a reduction of the amount of the bail bonds which had been given in the three in rem suits. The defendants also filed a motion in Admiralty in Rem Suit No 254 of 1989 on 2 November 1989 to set aside the warrant of arrest and all subsequent proceedings in that suit on the ground that in view of the praecipe for caveat against arrest filed on 11 September 1989, the arrest of the 'Andres Bonifacio' was wrongful and an abuse of the process of the court. The defendants sought to set aside service and all proceedings in the three in rem suits on the ground that the admiralty jurisdiction of the court had been improperly invoked against the 'Andres Bonifacio' as the defendants were not the persons liable on the various claims in an action in personam. In addition, the defendants contended that the service of the writ in Admiralty in Rem No 254 of 1989 including the execution/service of the warrant of arrest in that suit was bad in law in view of the praecipe for caveat against arrest filed on 11 September 1989. It was disputed that the charterers of the 'Feoso Ambassador 2' and the 'Feoso Ambassador' under the relevant voyage charterparties in question were the Philippine National Oil Company ('the PNOC'). The plaintiffs proceeded to arrest the 'Andres Bonifacio' on the basis that PNOC were the beneficial owners of the 'Andres Bonifacio' at the time when the three admiralty in rem suits were brought, namely, 3 October 1989. In the plaintiffs' affidavit leading to the arrest of the vessel, the plaintiffs' counsel had exhibited a copy of a certification of the Philippine Coast Guard which certified that the 'Andres Bonifacio' was, as at 30 June 1989, owned by PNOC. The Philippine Coast Guard is the registration authority for merchant vessels in the Philippines. Counsel for both the plaintiffs and the defendants agreed and the court directed that all affidavits be filed in Admiralty in Rem No 254 of 1989 and that the three summonses-in-chambers and the defendants' motion be heard together in open court.

Holding :

Held, allowing the defendants' application to set aside the writ, warrant of arrest and all proceedings in the three admiralty in rem suits: (1) the main issue before the court was whether at the time the action in rem against the 'Andres Bonifacio' was brought, the vessel was beneficially owned by PNOC. The words 'beneficially owned' in s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Ed) refer only to such ownership of a ship as is vested in a person who has the right to sell, dispose of or alienate all the shares in that ship; (2) it was not sufficient for the plaintiffs to show that they had a good arguable case that PNOC and not POCI were the beneficial owners of the 'Andres Bonifacio' at the time that the action in rem was brought. Since the issue of beneficial ownership of the arrested vessel was one that goes towards establishing the jurisdiction of the court, the issue must be determined at this stage of the proceedings; (3) the onus of showing that the 'Andres Bonifacio' was beneficially owned by PNOC (who were the persons liable in personam) lay on the plaintiffs; (4) the information found in Lloyd's Register of Shipping which shows that the 'Andres Bonifacio' was owned from 1984 to 1989 by POCI was clearly inconsistent with the certificate of ownership issued by the Philippine Coast Guard. Additionally, before the 'Andres Bonifacio' was arrested, the plaintiffs and their solicitors had been put on notice by PNOC that they did not own the vessel; (5) from the documentary evidence including financial statements of POCI exhibited by the defendants, the court was satisfied that PNOC transferred or assigned for value the 'Andres Bonifacio' to POCI in late October 1980. Since then, POCI have been the beneficial owners of the 'Andres Bonifacio'. POCI were registered as owners of the 'Andres Bonifacio' with the Philippine Coast Guard on 9 August 1989; (6) the question of beneficial ownership of a vessel for the purpose of invocation of the admiralty jurisdiction of the court is to be determined by the concepts of Singapore law; (7) although POCI was a wholly-owned subsidiary of PNOC, under Philippine law and Singapore law, POCI and PNOC were two separate and distinct legal entities. The fact that all the shares in POCI were held by PNOC would not make PNOC the beneficial owners of the 'Andres Bonifacio'; (8) after a consideration of all the evidence and affidavits filed by both the plaintiffs and the defendants, the court was satisfied, on the balance of probabilities, that POCI were the beneficial owners of all the shares in the 'Andres Bonifacio' from 1980 through to the date when the plaintiffs brought the action in rem against the 'Andres Bonifacio'; (9) accordingly, the in rem jurisdiction of the court had been wrongly invoked by the plaintiffs under s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Ed). Consequently, all three admiralty in rem suits, the writs and all subsequent proceedings in the three in rem suits were set aside including the warrant of arrest served in Admiralty in Rem No 254 of 1989.

Digest :

The 'Andres Bonifacio'; Far East Oil Tanker SA v Owners of the Ship or Vessel 'Andres Bonifacio' [1991] 2 MLJ 371 High Court, Singapore (Karthigesu J).

Annotation :

[Annotation: Affirmed on appeal. See [1993] 3 SLR 521.]

870 Action in rem -- Arrest of vessel

11 [870] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Engineer's employment – Indemnity under charterparty – Action in rem – Owner's right to indemnity by charterers for engineer's salary – Parol evidence rule – Evidence Ordinance, s 92.

Digest :

E Peterson v SS 'Ban Ho Liong'; Tan Lark Sye & Ong Wai Soey (Third Parties) [1940] MLJ 259 High Court, Straits Settlements (McElwaine CJ).

See SHIPPING AND NAVIGATION, Vol 11, para 1343.

871 Action in rem -- Arrest of vessel

11 [871] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Interveners – Judicial sale of vessel

Digest :

The 'Eastern Lotus' ex 'Spring Flower'; Urzad Morski W Szczecinie v Moscow Narodny Bank Ltd [1980] 1 MLJ 137 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Rajah JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 882.

872 Action in rem -- Arrest of vessel

11 [872] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Interveners – Rules of the Supreme Court 1970, O 70 r 12

Digest :

The 'San 003'; East Asia Supply Co Pte Ltd v The 'San 003' & Ors [1979] 2 MLJ 8 High Court, Singapore (Sinnathuray J).

See SHIPPING AND NAVIGATION, Vol 11, para 835.

873 Action in rem -- Arrest of vessel

11 [873] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4)

Digest :

The 'Sri Melati'; Palka Utama Shipping Co Ltd v 'Sri Melati' (Owners & Parties Interested) [1976] 1 MLJ 283 High Court, Penang (Arulanandom J).

See SHIPPING AND NAVIGATION, Vol 11, para 853.

874 Action in rem -- Arrest of vessel

11 [874] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4)

Digest :

The MV 'Yamato Maru'; MV 'Yamato Maru' (Owners of) v SPIE Sri Suria Sdn Bhd [1977] 2 MLJ 41 High Court, Penang (Arulanandom J).

See SHIPPING AND NAVIGATION, Vol 11, para 854.

875 Action in rem -- Arrest of vessel

11 [875] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4) – Shipping law – Claim by agents for disbursements – Arrest of ship – Meaning of 'beneficially owned as respects all shares therein' – Whethere there was jurisdiction to arrest ship – Courts of Judicature Act 1964, s 24(b) – UK Administration of Justice Act 1956, s 3(4).

Summary :

The plaintiffs in this case filed a writ of summons on 27 November 1978 for the sum of RM258,128.01 in respect of disbursements made by them as agents of the defendants. On the same day, the plaintiffs applied for a warrant of arrest of the ship 'Loon Sheng'Êwhich was lying in the Port of Penang. The plaintiffs claimed that the defendants were at the time when the cause of action arose, the owners of the said ship and were also at the date of the issue of the writ in this action, the beneficial owners of the ship in respect of all the shares therein. The defendants sought to set aside the writ for want of jurisdiction in rem under s 3(4) of the Administration of Justice Act 1956 of England. The said Act was applicable in Malaysia by virtue of s 24(b) of the Courts of Judicature Act 1964 (Act 91).

Holding :

Held: (1) the court could pierce the corporate veil and look behind the registered owner to determine the true beneficial ownership of the ship; (2) the expression 'beneficially owned as respects all the shares therein' indicates title, legal or equitable, and cannot by any means cover cases of possession and control, however full and complete without ownership; (3) for the ship to be liable to arrest it must be the ship in connection with which the claim made in the action arose, if at the time when the action was brought it was the property of the defendant to the action, the defendant being the person who would be liable on the claim in an action in personam and who was either the owner or charterer of or in possession or control of the ship at the time when the cause of action arose; (4) the plaintiffs were not entitled to invoke the admiralty jurisdiction of the High Court against the ship which was not beneficially owned at the date of the issue of the writ by Lord Steamship Co SA who were liable in personam on this claim; (5) in the absence of proof of mala fides or malicious negligence, the court would not give damages against the parties arresting the ship.

Digest :

The 'Loon Sheng'; Eng Hong Trading Co Sdn Bhd v The 'Loon Sheng' (Owners & Ors) [1979] 2 MLJ 179 High Court, Penang (Gunn Chit Tuan J).

876 Action in rem -- Arrest of vessel

11 [876] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – Courts of Judicature Act 1964 (Act 91) – UK Administration of Justice Act 1956, s 3(4) – Shipping law – Bareboat lease agreement – Beneficial ownership of ship – Monetary claim in respect of necessaries supplied to ship – Action in rem against ship – Whether maintainable.

Summary :

In this case, the respondents issued a writ for a monetary claim in respect of the appellant's ship 'Loon Chong' and her sister ship 'Loon Hsing' for goods in the nature of necessaries supplied on account of the two ships. The owners of the 'Loon Chong' were Melbourne Plaza Navigation (Panama) SA and the owners of the 'Loon Hsing' were Keras (Panama) SA. The ships were sold to the owners by Lord Steamship Co SA Panama under bills of sale but immediately afterwards the owners entered into bareboat lease agreement with Lord Steamship Co SA (Panama) in respect of the two ships. The 'Loon Chong' was, as a result of the claim by the respondents, arrested but later released on bail. The appellants applied for an order to set aside the writ on the ground that the action in rem was not maintainable against the appellants as the owners of the 'Loon Chong'. Arulanandom J held that the bareboat lease agreement was not a lease but a mortgage under a guise of a lease and he accordingly dismissed the application. The appellants appealed.

Holding :

Held: the ship in this case was leased to Lord Steamship Co SA (Panama) under the bareboat lease agreement and as the agreement did not confer beneficial ownership in respect of the shares in the ship within the meaning of s 3(4) of the United Kingdom Administration of Justice Act 1956, Lord Steamship Co SA (Panama) did not have legal or equitable ownership of the ship but only possession and control. The action in rem was therefore not maintainable against the ship.

Digest :

The 'Loon Chong'; The 'Loon Chong' (Owners & Ors) v Eng Hong Trading Co Sdn Bhd [1982] 1 MLJ 212 Federal Court, Penang (Raja Azlan Shah CJ (Malaya).

877 Action in rem -- Arrest of vessel

11 [877] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)

Digest :

The 'Asean Promoter'; Unitrade Ltd v MV 'Asean Promoter', 'Asean Progress', 'Asean Prosperity' & 'Asean Venture' (Owners & Ors Interested) [1982] 2 MLJ 108 High Court, Singapore (Abdul Wahab Ghows J).

See SHIPPING AND NAVIGATION, Vol 11, para 857.

878 Action in rem -- Arrest of vessel

11 [878] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping – Admiralty suit in rem – Claim against defendants for non-payment of charter hire – Whether defendants are 'beneficial owners' and liable – Meaning of 'beneficial owners' – Rules of the Supreme Court 1970, O 70 r 4(7) – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4).

Summary :

On 9 May 1974, a purchase contract for the construction and purchase of a tanker was entered into between Greenock, a corporation registered under the laws of the Republic of Liberia, the seller and Pertamina, the buyer (defendants). The vessel was to be delivered on or before 31 March 1976. The first payment was to be made on delivery date and the balance of the payments was to be made in 71 consecutive instalments and upon full payment the title to the vessel was to be transferred to the defendants without any further payments. On 1 November 1975, Greenock assigned all of its rights under the said purchase contract to Ozark and on 29 March 1976, the vessel was duly delivered under the contract to the defendants. Since then the defendants had been in possession and control of the vessel. However, she was registered in the Republic of Panama on July 1976 in the name of Ozark carrying the name of 'Pangkalan Susu/Permina 3001'. On 20 September 1976, the plaintiffs commenced an admiralty in rem action against the defendants for the sum of US$3,929,090.24 for non-payment of instalments of charter hire due for the months of February to August 1976 and bunkers under the charter-party in respect of the vessel 'Bruce Ruthi II'. The said vessel 'Permina 3001' was accordingly arrested on 23 September 1976. The plaintiffs contended that even though Ozark was the registered owner of the vessel the said vessel nevertheless, for purposes of s 4(4) of the High Court (Admiralty Jurisdiction) Act was 'beneficially owned as respects all the shares therein' by the defendants for she was in the possession and control of the defendants. The defendants on the other hand argued, inter alia, that the ordinary use of the words 'beneficial owner' meant a person with a proprietary interest in the vessel either legal or equitable which the defendants were not. They further contended that words 'as respects all the shares therein' suggested that a proprietorial interest was meant since shares in a ship were the means by which a ship was owned, title passing with the shares. The issue before the court was whether the vessel being in possession and control of the defendants by virtue of a contract to purchase it by instalments, such instalments not having been fully paid, could be said to be beneficially owned as respects all the shares therein by the defendants.

Holding :

Held, setting aside the writ: (1) the words 'beneficial ownership as regards all the shares therein' must be given their full and accepted meaning in our laws when the Singapore Act was put on the statute book in 1962, and must not be construed in the light of the Brussels Convention as Singapore is neither a signatory to nor has it acceded to the International Convention Relating to the Arrest of Seagoing Ships 1952; (2) the vessel was, at the date when the action was brought, not 'beneficially owned as respects all the shares therein' (the legal and equitable owner being Ozark) by the defendants within the meaning of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed); (3) as all the requirements of s 4(4) of the said Act had not been fulfilled, the court had no jurisdiction to entertain proceedings in rem against the vessel in respect of the claim.

Digest :

The 'Pangkalan Susu/Permina 3001'; Rasu Maritima SA v 'Pangkalan Susu/Permina 3001' (Owners & Persons Interested) [1977] 1 MLJ 141 High Court, Singapore (Rajah J).

879 Action in rem -- Arrest of vessel

11 [879] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping – Admiralty suit in rem – Claim for non-payment of charter hire – Seizure of ship – Whether defendants 'beneficially owned the ship' and therefore were liable – Meaning of 'beneficially owned' – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), ss 3(1)(h) & 4(4).

Summary :

The plaintiffs' claim was for non-payment of instalments under a time-charter/hire purchase agreement dated 23 August 1973 in respect of the ship 'Noga'. Pertamina were the hirers of the Noga. The charter was not a demise charter since the plaintiffs retained possession. Pertamina were the demise charterers with an option to purchase the 'Permina 1017' and had the possession and control of the ship. However, Pertamina were not related to one ACTFSSI the owners of 'Permina 1017'. The plaintiffs claimed that Pertamina were the beneficial owners of 'Permina 1017' and had the ship seized. The crux of the dispute was the meaning of the words 'any ... ship which ... is beneficially owned as respects all the shares therein by that person (Pertamina).' The defendants moved to set aside the writ for want of jurisdiction.

Holding :

Held, allowing the defendants' application: (1) the words 'beneficially owned as respects all the shares therein' clearly indicate equitable ownership and cannot by any means cover cases of possession and control without ownership; (2) as Pertamina were not the equitable owners of the 'Permina 1017', the plaintiffs had no right to seize it for non-payment of instalments by Pertamina under the said time charter/hire purchase in respect of 'Noga'.

Digest :

The 'Permina 1017' [1977] 2 MLJ 185 High Court, Singapore (Choor Singh J).

880 Action in rem -- Arrest of vessel

11 [880] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping law – Action in rem against ship – Arrest of ship – Non-payment of charter hire under charterparty in respect of another ship – Motion to set aside action in rem and warrant of arrest – Admiralty jurisdiction of High Court – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), ss 3 & 4.

Summary :

In this case, the respondents had a claim for non-payment of the charter hire due under a charter party in respect of a vessel 'Ibnu' which was owned by the respondents. The respondents brought proceedings in rem against the 'Permina 108' which belonged to the appellants and the ship was seized under a warrant of arrest. The appellants applied to the High Court to set aside the writ in rem and the warrant of arrest against the ship but this application was dismissed by Choor Singh J. The appellants appealed to the Court of Appeal. It was argued that the respondents were not entitled to bring proceedings in rem against the 'Permina 108' because the claim asserted in relation to the charter of the 'Ibnu' has no connection with the 'Permina 108', even if owned by the appellants.

Holding :

Held, dismissing the appeal: (1) or (b) any other ship which at the time when the action is brought, is the property of the person liable in possession and who at the time when the cause of action arose, was either the owner or charterer of, or in possession of or in control of the ship with which the claim arose; (2) in this case, the respondents were entitled to invoke the admiralty jurisdiction of the High Court against the 'Permina 108' which on the undisputed facts was beneficially owned at the date of the issue of the writ by the respondents, who were the charterers of the 'Ibnu' the ship in connection with which the appellants' claim arose and who also were the persons liable in respect of the claim; (3) on the true construction of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), a ship to be liable to arrest must be (a) the ship in connection with which the claim made in the action arose, if at the time when the action is brought it is the property of the defendant to the action, the defendant being the person who would be liable on the claim in an action in personam and who was either the owner or charterer of or in possession or control of the ship at the time when the cause of action arose;the learned trial judge was therefore correct in dismissing the appellant's motion to set aside the writ and the warrant of arrest of 'Permina 108'.

Digest :

The 'Permina 108'; Owners of 'Permina 108' v Martropico Compania Naviera SA [1977] 1 MLJ 49 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

881 Action in rem -- Arrest of vessel

11 [881] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping law – Admiralty suit in rem – Charter of vessel to first respondents – Claim for arrears, of charter hire – Arrest of ship – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Meaning and scope of 'beneficially owned' – Whether the first respondents were the beneficial owners of 'Permina 3001' – High Court (Admiralty Jurisdiction) Act, s 4(4).

Summary :

The appellants chartered the ship 'Bruce Ruthi II' to the first respondents who fell into arrears amounting to US$3,929,090.24 for charter hire. The appellants arrested the ship 'Permina 3001' on 20 September 1976. The 'Permina 3001' at the date when the writ was issued was owned by the second respondents but was under the full control and possession of the first respondents under a previous agreement between one Greenock and the first respondents, the benefit of which had been assigned by Greenock to the second respondents on 1 November 1975. The first and second respondents sought to set aside the writ and all subsequent proceedings for want of jurisdiction. The first respondents contended that on true construction of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed) (the Act), the 'Permina 3001' was not beneficially owned as respects all the shares therein by the first respondents. The appellants contended that the words were wide enough to include the interest of a person who had only full control and possession of the ship arrested. The learned judge (see [1977] 1 MLJ 141) held that at the date when the action was brought the 'Permina 3001' was not beneficially owned as respects all the shares therein by the first respondents within the meaning of s 4(4) of the Act. The appellants appealed against the said judgment. They contended that in equity the first respondents as purchasers were the owners of 'Permina 3001' and were entitled to all equitable ownership of the ship. The issue before the court evolved around the meaning of 'beneficially owned as respects all the shares therein' in the context of the Act.

Holding :

Held, dismissing the appeal: (1) although a person with only full possession and control of a ship, such as a demise charterer, has the beneficial use of her, he does not have the beneficial ownership as respects all the shares in the ship and the ship is not 'beneficially owned as respects all the shares therein' by him within the meaning of s 4(4) of the Act; (2) the words 'ownership' connotes title, legal or equitable whereas the expression 'possession and control', however full and complete, is not related to title.

Digest :

The 'Pangkalan Susu/Permina 3001'; Rasu Maritima SA v PN Pertambangan Minyak dan Gas Bumi Negara & Anor [1977] 2 MLJ 129 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

882 Action in rem -- Arrest of vessel

11 [882] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Beneficially owned', meaning of – Sham sale – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping law – Arrest of ship – Dispute as to ownership – Sale of vessel to another was a sham – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)(1)(a).

Summary :

On 15 May 1980, the respondents arrested MV 'Enfield' of Panama as security for their claim of disbursement which they had incurred as owner's agents in Madras in February, March and April 1980. The appellants sought to set aside the said writ and contended that the ownership of the vessel had been transferred to Barbury (Panama) SA (Barbury). The appellants therefore claimed that the requirements of s 4(4)(1)(a) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed) had not been complied with. The learned judge dismissed the appellants' application and the appellants appealed.

Holding :

Held, dismissing the appeal: (1) the purported sale of the vessel by Enfield Shipping Corp SA to Barbury was a device and a sham designed to defraud claimants such as the respondents so that the vessel as a security was put out of their reach; (2) the court is entitled to look at the transactions and determine the true beneficial ownership of the vessel; (3) the evidence amply confirmed that Barbury did not carry the true face of a corporate bona fide purchaser and that the Enfield Shipping Corp SA (the second appellants) were at all material times the beneficial owners of the vessel.

Digest :

The 'Enfield'; Barbury (Panama) SA & Anor v Crossoceanic Navigational Services Pte Ltd [1982] 2 MLJ 106 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Lai Kew Chai JJ).

Annotation :

[Annotation: The Court of Appeal affirmed D Cotta J at first instance.]

883 Action in rem -- Arrest of vessel

11 [883] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Sister ship' arrest – Courts of Judicature Act 1964 (Act 91) – UK Administration of Justice Act 1956, s 3(4) – Shipping law – Arrest of sister ship – Whether wrongful – Question of jurisdiction – Reliance on cl 17 of Bill of Lading – Meaning of 'claims' therein – UK Administration of Justice Act 1956, s 3(2) & (4) – Courts of Judicature Act 1964 (Act 91), s 24(b).

Summary :

The defendants, owners of the vessel 'Sinar Jaya' sought to set aside the writ in rem and warrant of arrest lodged against the said vessel by the plaintiffs. The defendants also claimed damages. The defendants were sued for RM66,840.49 for breach of contract and/or negligence in respect of damage to and short delivery of the plaintiffs' goods carried by the defendants' vessel 'Sinar Mas' whilst on a voyage from Penang to Kuching vide Bill of Lading No PK-2 of 24 October 1978. 'Sinar Jaya' was the sister ship of 'Sinar Mas' and the former was detained under warrant of arrest on 17 August 1979 while lying at Port Klang. The question for determination was whether the arrest of 'Sinar Jaya' was wrongful. The defendants argued that the arrest was wrongful as the admiralty suit had been wrongly filed in Kuala Lumpur High Court instead of Kuching High Court as required by cl 17 of the bill of lading. They contended that the admiralty action in rem was wrongly instituted under s 3(4) of UK Administration of Justice Act 1956.

Holding :

Held, dismissing the defendants' application: (1) a 'claim' in the context of cl 17 does not amount to a litigation. There is a distinction between 'claims' and 'disputes'. Clause 17 does not envisage any dispute on litigation. It is confined to 'claims' pure and simple; (2) cl 17 is not a jurisdiction clause or even a forum clause. The court should not import extra words into cl 17 so as to give it a new meaning with regard to the intention of the contracting parties. As such the plaintiffs were entitled to file the writ in Kuala Lumpur High Court; (3) even if cl 17 could be construed as a jurisdiction on forum clause, it could not be invoked in the present case; (4) the High Courts in Borneo and States of Malaya have similar jurisdiction and adopt the same admiralty practice. A jurisdiction or forum clause does not apply to a litigation commenced in another court of similar jurisdiction and situated in the same country as the court envisaged by the parties to the contract; (5) the plaintiffs' case does come within the ambit of s 3(4) of UK Administration of Justice Act 1956.

Digest :

The 'Sinar Mas'; Fraser & Neave (Malaysia) Sdn Bhd v 'Sinar Mas' & Ors (Owners of) [1982] 1 MLJ 279 High Court, Kuala Lumpur (Mohamed Azmi J).

884 Action in rem -- Arrest of vessel

11 [884] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Sister ship' arrest – High Court (Admiralty Jurisdiction) Act, (Cap 6, 1970 Ed) s 4(4)(b)

Digest :

The 'Permina Samudra XIV' v Martropico Compania Naviera SA v Owners of 'Permina Samudra XIV' [1977] 1 MLJ 47 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 850.

885 Action in rem -- Arrest of vessel

11 [885] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Sister ship' arrest – High Court (Admiralty Jurisdiction) Act, (Cap 6, 1970 Ed) s 4(4)

Digest :

The 'Permina 108'; Owners of 'Permina 108' v Martropico Compania Naviera SA [1977] 1 MLJ 49 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 842.

886 Action in rem -- Arrest of vessel

11 [886] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'Sister ship' arrest – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)b – Shipping law – Time charterparty – Claim for non-payment of time charter hire against owners of vessels – Two writs issued in respect of same claim – Warrants of arrest against two vessels – Interpretation of s 4(4) of High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed) – The Administration of Justice Act 1956 (UK), s 3(4) – The International Convention Relating to the Arrest of Seagoing Ships, art 3.

Summary :

By a time charterparty dated 1 September 1970, the plaintiffs chartered their vessel 'Ibnu' to the defendants for ten years. On 24 July 1976 the plaintiffs issued two writs in two separate actions against the defendants. The plaintiffs' claim was for non-payment of the said charter hire. In both, the affidavits in support of the applications for a warrant of arrest to detain the ships 'Permina 108' and 'Permina Samudra XIV' respectively the plaintiffs claimed that the defendants were the owners of the ships. Consequently, warrants of arrest were issued against both vessels. The defendants entered conditional appearance in both actions and filed Notices of Motion for an order that the writ of Summons and all subsequent proceedings be set aside for non-compliance with s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed). The defendants contended that the plaintiffs were not entitled to bring proceedings in rem against both vessels because the claims asserted in relation to the charter of 'Ibnu' have no connection with those ships, even if owned by the defendants. They further argued that the ships arrested were not beneficially owned by them. The plaintiffs on the other hand submitted that they were entitled to arrest both vessels under cl (b) of s 4(4) as these ships were owned by the defendants who were liable in personam on the plaintiffs' claim for non-payment of the said charter hire.

Holding :

Held: (1) it is not a requirement of cl (b) of s 4(4) of the High Court (Admiralty Jurisdiction) Act that the ship to be arrested under cl (b) should be in the same ownership as the ship of which the claim relates; (2) in order to proceed in rem against a 'sister' ship, all that is necessary is to show that its owners at the time when the action was brought were the charterers of the ship in respect of which the claim arose at the time when the cause of action arose; (3) the defendants were therefore liable to have their ships arrested for sums due under the 'Ibnu' charterparty even though it was a time charter; (4) the plaintiffs have only one maritime claim in respect of the non-payment of the said charter hire and they are not entitled to proceed in rem against both ships for the same maritime claim. The plaintiffs having first arrested the 'Permina 108', the subsequent arrest of the 'Permina Samudra XIV' must be set aside and the ship be released.

Digest :

The 'Permina 108'; Martropico Compania Naviera SA v 'Permina 108' (Owners & Persons Interested) and another action [1977] 1 MLJ 43 High Court, Singapore (Choor Singh J).

Annotation :

[Annotation: See the Court of Appeal decision [1977] 1 MLJ 47 reversing Choor Singh J.]

887 Action in rem -- Arrest of vessel

11 [887] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – 'When action is brought', meaning of – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)

Digest :

The 'Permina 108'; Owners of 'Permina 108' v Martropico Compania Naviera SA [1977] 1 MLJ 49 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 842.

888 Action in rem -- Arrest of vessel

11 [888] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Abuse of process

Digest :

Dok-En Werf-Maatschappij Wilton-Fijenoord NV v Owners of the Motor Vessel 'Sauvereal' [1972] 2 MLJ 1 High Court, Singapore (Chua J).

See SHIPPING AND NAVIGATION, Vol 11, para 950.

889 Action in rem -- Arrest of vessel

11 [889] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Abuse of process – Shipping law – Arrest of ship – Application to set aside.

Summary :

In this case, the plaintiffs had taken out a writ of summons against the defendants. On an interlocutory application, an order of court had been made that the remaining barges which were being built by the defendants be released to the interveners on the provision of a bank guarantee. Subsequently the plaintiffs took steps to have one of the barges arrested. The interveners thereupon applied (a) that the writ of summons be set aside and (b) that the warrant of arrest be set aside.

Holding :

Held: (1) O 70 r 12 of the Rules of the Supreme Court 1970 implicitly provides that so far as an intervener is concerned, the best he can have is to apply to the court for the release of the vessel. Nothing in the rules provides for an intervener to set aside the writ of summons itself; (2) in this case, the arrest of the vessel was an abuse of the process of the court and the warrant of arrest should be discharged, but the writ of summons against the second defendants should be proceeded with.

Digest :

The 'San 003'; East Asia Supply Co Pte Ltd v The 'San 003' & Ors [1979] 2 MLJ 8 High Court, Singapore (TS Sinnathuray J).

890 Action in rem -- Arrest of vessel

11 [890] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Abuse of process – Shipping law – Repairs done to ship in Singapore – Claim against owners for payment – Sister ship attached as a result of action in Japan – Release on bail – Arrest of ship in Singapore – Whether action was vexatious and abuse of process of court.

Summary :

The plaintiffs/respondents in this case were ship repairers. They claimed against the defendants/appellants, Universal Seaways Pte Ltd who were the owners of the ship 'Blue Fruit' for the sum of S$116,567.63 for materials supplied and repairs done to the ship at Singapore in February 1976. The 'Blue Fruit' sailed away from Singapore after completion of repairs but Universal Seaways Pte Ltd which had an office in Singapore failed to meet the plaintiffs' claim. In October 1976, the plaintiffs commenced an action in Manila where they had the ship 'Blue Fruit' arrested. The Philippines Court, however, refused to entertain jurisdiction in respect thereof. In June 1977, the plaintiffs commenced an action against Universal Seaways Pte Ltd in Japan where they caused a sister ship 'Universal Princess' owned by Universal Seways Pte Ltd to be arrested. The said sister ship was released after security was deposited in court by Universal Seaways Pte Ltd. In the lower court, the defendants claimed that after the repairs in question had been completed on the said vessel and prior to the issue of writ of summons, the said vessel had been sold by the previous owners, Universal Seaways Pte Ltd to Chunglien Navigation Co SA and therefore the action in rem was not well-founded. Choor Singh J held that as there was a serious dispute of fact on this issue of where the ownership of the said vessel lay at the material time it could only be satisfactorily resolved at the trial of the action and the defendants' motion was premature and should be refused. The defendants appealed. They contended that the arrest of the said vessel in Singapore by the plaintiffs after what they had done in Yokohama was an abuse of the process of the court.

Holding :

Held, dismissing the appeal: (1) even though an action is well-founded within the jurisdiction of the court there is always an inherent discretion vested in the court whether to entertain such an action or not; (2) the finding of the lower court ought not to be disturbed as there were no circumstances which made it an abuse of the process of the court to bring the present proceedings.

Digest :

The 'Blue Fruit'; 'Blue Fruit' now known as 'Bright Fruit', Owners & Ors v Keppel Shipyard Ltd [1979] 2 MLJ 279 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and D'Cotta JJ).

891 Action in rem -- Arrest of vessel

11 [891] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Abuse of process of court – Shipping law – Action in rem – Cargo lost in sea – Claim against owners of tug and owners of barge – Both tug and barge owned by same company – Arrest of tug – Whether plaintiffs may arrest sister ship – Plaintiffs not allowed to circumvent 'single arrest rule'.

Summary :

Under a bill of lading dated 10 May 1981, the plaintiffs shipped 398 pieces of coal tar enamel coated pipes on board the ship 'Brunei 602' towed by the tug 'Hai Hin 28' at the Port of Singapore for carriage and delivery in Indonesia. The plaintiffs were the owners of the said cargo and both the dumb barge and the tug were at all material times owned by Seng Leong Seong Shipping Enterprises (Pte) Ltd of Singapore. On 29 May 1981, the said cargo fell into the sea off the coast of Kalimantan and were totally lost. The plaintiffs subsequently issued a writ against the first defendant as the owners of the tug 'Hai Hin 28' and the second defendants as the owners of the barge 'Brunei 602'. The tug was arrested on 3 February 1983. The first and second defendants entered conditional appearance to the writ on 11 February 1983. On 18 February 1983, they filed an application for an order that the proceedings against the second defendants be set aside. The learned deputy registrar allowed the application. The plaintiffs' appeal against the said order was dismissed by Abdul Wahab Ghows J. The plaintiffs appealed against the decision of Abdul Wahab Ghows J.

Holding :

Held, dismissing the plaintiffs' appeal: (1) in the present case, the action pursued against the owners of the tug and the barge is one in rem and the vital question herein is therefore one of determining jurisdiction under the High Court (Admiralty Jurisdiction) Act and not of determining liability on a contract of affreightment in the construing of which the object must be to arrive at the real intention of the parties to the contract; (2) in the present case, it is clearly an abuse of the process of the court to allow the plaintiffs to circumvent the single arrest rule under s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed) by naming a sister ship as different defendants in the same writ, so as to be in a position to arrest both the offending and sister ship; (3) the plaintiffs should have issued their writ in rem against the owners of the tug or vessel 'Hai Hin 28' and the barge or vessel 'Brunei 602'Êas the defendants. They could then arrest the tug or the barge as either the offending ship or the sister ship and delete the unarrested ship from the writ. If the plaintiffs eventually succeeded in proving liability against one of the two ships or both, they could execute the judgment against any of the property of the defendants including the unarrested and other ships then belonging to the defendants.

Digest :

The 'Brunei 602' (Owners of cargo aboard) v MV 'Hai Hin 28' (Owners of) & Anor [1984] 1 MLJ 227 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Rajah JJ).

892 Action in rem -- Arrest of vessel

11 [892] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Foreign jurisdiction clause

Digest :

Azimullah v Master of SS 'Hallador' & Ors [1965] 1 MLJ 248 High Court, Singapore (Choor Singh J).

See SHIPPING AND NAVIGATION, Vol 11, para 916.

893 Action in rem -- Arrest of vessel

11 [893] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Issue of warrant of arrest against second vessel – Single cause of action – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)

Digest :

The 'Permina 108'; Martropico Compania Naviera SA v 'Permina 108' (Owners & Persons Interested) and another action [1977] 1 MLJ 43 High Court, Singapore (Choor Singh J).

See SHIPPING AND NAVIGATION, Vol 11, para 866.

894 Action in rem -- Arrest of vessel

11 [894] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Issue of warrant of arrest against second vessel – Two causes of action – High Court (Admiralty Jurisdiction) Act (Cap 6 1970 Ed), s 4(4) – Shipping – Claim in respect of unpaid charterparty in respect of ship – Warrant of arrest issued and executed in respect of ship belonging to defendants – Whether warrant of arrest can be executed against second ship belonging to defendants – Charterparty payments payable at different times by instalments – Two writs taken out each naming only one ship – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4).

Summary :

In this case, the appellants had a claim for the sum of US$7,230,711.48 by way of unpaid charterparty 'hire' in respect of the 'Ibnu' against the respondents. On 24 July 1976 a warrant of arrest was issued and executed against the 'Permina 108', a vessel owned by the respondents and the ship was detained. On the same day, the appellants also obtained a warrant of arrest against another ship, the 'Permina Samudra XIV' owned by the respondents. The respondents applied to the High Court to set aside the writ in rem and warrant of arrest against the 'Permina Samudra XIV'. Before the conclusion of the hearing of the motion, the appellants filed their statements of claim, one in respect of the 'Permina 108' for instalments amounting to US$3,418,521.41 and one in respect of the 'Permina Samudra XIV' for instalments amounting to US$3,812,190.07. Choor Singh J allowed the motion. The learned judge held that the appellants having brought proceedings in rem against the respondents' ship 'Permina 108' which they were entitled to do, cannot subsequently invoke by an action in rem the admiralty jurisdiction of the High Court against other ships of the respondents in respect of the same maritime claim. He found that there was one maritime claim in this case even though the charterparty provided for the payment of the charterparty at different times by instalments. He also held that where a number of instalments are due they merge and become a single debt in respect of which only one action can be brought. The appellants appealed to the Court of Appeal.

Holding :

Held, allowing the appeal: although where there is a claim based on a single cause of action, the jurisdiction in rem cannot be invoked by a single writ addressed to and served upon more than one vessel, in this case two separate writs had been issued based on separate and distinct causes of action and each writ named only one ship and had been served on only one ship, the ship named in the writ and therefore the appellants were entitled to arrest the 'Permina Samudra XIV'.

Digest :

The 'Permina Samudra XIV'; Martropico Compania Naviera SA v Owners of 'Permina Samudra XIV' [1977] 1 MLJ 47 Court of Appeal, Singapore (Wee Chong Jin CJ, Chua and Kulasekaram JJ).

895 Action in rem -- Arrest of vessel

11 [895] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Issue of writ – Naming two vessels – Single cause of action – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4)

Digest :

The 'Brunei 602'; (Owners of cargo aboard) v MV 'Hai Hin 28' (Owners of) & Anor [1984] 1 MLJ 227 Court of Appeal, Singapore (Wee Chong Jin CJ, Kulasekaram and Rajah JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 837.

896 Action in rem -- Arrest of vessel

11 [896] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4)

Digest :

The 'Loon Sheng'; Eng Hong Trading Co Sdn Bhd v The 'Loon Sheng' (Owners & Ors) [1979] 2 MLJ 179 High Court, Penang (Gunn Chit Tuan J).

See SHIPPING AND NAVIGATION, Vol 11, para 840.

897 Action in rem -- Arrest of vessel

11 [897] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4) – Shipping – Admiralty suit in rem – Ship chartered under bareboat charter party to charterers – Claim against charterers for goods supplied and services rendered – Owners terminating Bareboat Charter – Whether action in rem can be brought against vessel – Courts of Judicature Act 1964 (Act 91), s 24(b).

Summary :

In this case, the plaintiffs (respondents) had brought an action against the owners and all persons interested in the 'Yamato Maru' for goods supplied and services rendered at the ports of Singapore and Malaysia. On the vessel's arrival at Penang it was arrested but the owners/applicants made payment into court and the vessel was released. The ship had been chartered to the charterers, Sino Yamato Shipping Pte Ltd on a bareboat charter party. The owners had terminated the charter soon after the release of the ship from seizure. The owners/applicants then applied to court to set aside the writ of summons and all subsequent proceedings and for the release of the vessel and for damages.

Holding :

Held: (1) in this case, there was no charter by demise nor was there any evidence to show that the charterers beneficially owned the vessel. This was a mere bareboat charter party agreement and therefore it could not be held that the ship was beneficially owned by the charterers; (2) in view of the terms of the bareboat charter party agreement it could not be held, unless the owners bound themselves specifically with the agents, that they would be liable for the claim the plaintiffs have against the charterers; (3) the writ and all subsequent proceedings should therefore be set aside.

Digest :

The MV 'Yamato Maru'; MV 'Yamato Maru' (Owners of) v SPIE Sri Suria Sdn Bhd [1977] 2 MLJ 41 High Court, Penang (Arulanandom J).

898 Action in rem -- Arrest of vessel

11 [898] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – Courts of Judicature Act 1964 (Act 91), s 24(b) – UK Administration of Justice Act 1956, s 3(4) – Shipping – Admiralty suit in rem – Writ issued against defendants for payment of goods and services rendered – Ship arrested on issuance of warrant of arrest – Defendants sought to set aside writ – Claim that defendants not liable in personam and therefore, action in rem not maintainable – Whether arrest was wrongful – Courts of Judicature Act 1964 (Act 91), s 24(b) – Rules of the Supreme Court 1957, O 5 r 16.

Summary :

On 13 February 1975, the plaintiffs issued a writ against the defendants claiming payment for goods supplied and services rendered to the defendants, and at the latter's request in connection with the defendant's vessels including 'Sri Melati'. A warrant of arrest was issued on 7 April 1975 and the ship was arrested. The defendants entered a conditional appearance and applied by motion for the writ to be set aside. They claimed that they were the registered owners of the said vessel which had been chartered to one Inter Indo Enterprises Company of Singapore and that it was this company that had entered into a written agreement with the plaintiffs. The defendants therefore claimed that they were not privy in any way to the plaintiffs and as they were not liable in personam, an action in rem was not maintainable against them. The defendants further contended that the arrest was wrongful and the affidavit supporting the warrant of arrest was defective.

Holding :

Held: (1) at this stage of the proceedings there was no conclusive evidence to satisfy the court that the defendants could not be liable in personam; (2) an action in rem would lie against a vessel which was in complete possession and control of persons (who need not own all the shares in the vessel) other than the registered owners viz charterers by demise: The 'Andrea Ursula' [1971] 1 Lloyd's Rep 145; (3) the absence of a specific statement that the claim remained unsatisfied was not a fundamental error but a mere irregularity which did not render the affidavit invalid; (4) the defendants' contention that the affidavit was signed before the writ was issued, and was therefore inadmissible could not avail: H Stacey v Diamond Metal Products Co Ltd & Anor [1935] MLJ 249 distinguished; (5) O 5 r 16(a) of the Rules of the Supreme Court has been complied with, the warrant of arrest was properly issued and no injustice has or could have been caused to any party; (6) the motion to set aside the writ should therefore be dismissed with costs.

Digest :

The 'Sri Melati'; Palka Utama Shipping Co Ltd v 'Sri Melati' (Owners & Parties Interested) [1976] 1 MLJ 283 High Court, Penang (Arulanandom J).

899 Action in rem -- Arrest of vessel

11 [899] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 3(1)(a) – Shipping – Claim within s 3(1) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed).

Summary :

In this case, the plaintiffs of Panama City, Panama, had issued a writ of summons in rem against the defendants claiming a declaration that they were the owners of the vessel, to have possession of legal title to the vessel transferred to them and damages for breach of agreement. The vessel was arrested at Singapore at the instance of the plaintiffs. The owners of the vessel, Tai Ah Steamship Co Ltd of Taipeh, Taiwan entered conditional appearance and subsequently applied to the High Court that: (a) the writ of summons and all subsequent proceedings be set aside on the ground that the plaintiff's claim disclosed no reasonable cause of action of claim to ownership of the vessel or any other claim entitling the plaintiffs to invoke the admiralty jurisdiction of the court in rem against the vessel; (b) all proceedings be stayed on the ground that the same was vexatious and oppressive and an abuse of the process of the court.

Holding :

Held: (1) the writ of summons in this case disclosed an application for relief which was clearly and squarely a claim within s 3(1)(a) of the High Court (Admiralty Jurisdiction) Act and therefore the court had jurisdiction in rem to entertain the claim; (2) the task of the court was to ask itself on the pleadings so far as they have gone, without reading any affidavit whatsoever whether there was a triable issue falling within the list of s 3(1) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed) and in this case it was quite impossible for the court to say that the writ of summons disclosed no reasonable cause of action; (3) the defendants had not satisfied the court that the action was vexatious or oppressive or an abuse of the process of the court; (4) the application of the defendants must therefore be dismissed.

Digest :

Sea Breeze Navigation Co SA v Owners of Ship 'Hsing An' [1974] 1 MLJ 45 High Court, Singapore (Chua J).

900 Action in rem -- Arrest of vessel

11 [900] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping law – Arrest of ship – Wrongful arrest – Ship arrested not property of person liable 'in personam' in plaintiffs' claim against another ship – Meaning of 'beneficially owned'.

Summary :

The plaintiffs claimed as owners of a cargo of fresh ginger which was shipped on the vessel 'Asean Promoter' for damages for loss of or damage to the cargo during its storage in Singapore for transshipment to Karachi. On 27 March 1980 the plaintiffs requested for a warrant of arrest against the ship 'Asean Progress'. The defendants, the Straits Maritime Leasing Pte Ltd which at the date the ship was arrested were the owners of the 'Asean Progress', obtained the release of the ship from the arrest on 29 March 1980 by delivering to the plaintiffs a Banker's Guarantee. On 16 April 1980 the defendants applied for the removal of the writ of summons against the 'Asean Progress' and for the return of the Banker's Guarantee. The court allowed the defendants' application.

Holding :

Held: the 'Asean Progress' was not liable to arrest as there was no evidence that it was the property of the person liable 'in personam' on the plaintiffs' claim arising in connection with the ship 'Asean Promoter'.

Digest :

The 'Asean Promoter'; Unitrade Ltd v MV 'Asean Promoter', 'Asean Progress', 'Asean Prosperity' & 'Asean Venture' (Owners & Ors Interested) [1982] 2 MLJ 108 High Court, Singapore (Abdul Wahab Ghows J).

901 Action in rem -- Arrest of vessel

11 [901] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4) – Shipping law – Bareboat charter – Contract for repair – Whether owners liable – Action in personam – Admiralty jurisdiction – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 4(4).

Summary :

This was an appeal against the order of the High Court made on 8 July 1983 upon hearing of a motion brought by the appellants to set aside the Writ of Summons and Warrant of Arrest, the judgment and the said order. The principal issue was whether the appellants, Abaris Carriers Ltd (owners of the vessel 'Thorlina'), were a party to a contract for the repair of the vessel carried out by the respondents. The appellants had chartered the vessel to Denimar Shipping NV of Willemstad, Curacao, Netherlands Antilles ('Denimar'). The High Court held the appellants liable. On appeal,

Holding :

Held, allowing the appeal: (1) the contract for the repair of the vessel was made between the respondents and Denimar. The appellants were not a party thereto and would not be liable to the respondents on the claim in an action in personam; (2) the admiralty jurisdiction could not be invoked by the respondents against the appellants under s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed).

Digest :

The 'Thorlina'; The 'Thorlina' (Owners & Ors) v Keppel Shipyard Ltd [1986] 2 MLJ 7 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

902 Action in rem -- Arrest of vessel

11 [902] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Liability in personam – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), ss 3(1) & 4(4) – Shipping law – Arrest of ship – Motion to set aside – Motion denied – Scope of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 3(1)(l) & (m).

Summary :

The plaintiffs took out a writ against the owners of MV Wigwam for S$1,513,671.72 being for goods and materials supplied to the defendants' vessels 'Wigwam' and 'Wabasha' during the period between 17 May 1980 and 30 June 1981. The 'Wigwam' was arrested on the application of the plaintiffs and on 14 July 1981, the owners of 'Wigwam' entered conditional appearance. They sought to set aside the writ in rem and the warrant of arrest directed against their vessel.

Holding :

Held, dismissing the defendants' motion: (1) the plaintiffs claimed under s 3(1)(l) and (m) of the High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed). Before a plaintiff can proceed in rem in respect of a claim under the said s 3(1)(l) or (m), he need not prove at the outset that he has a cause of action substantial in law; (2) there were numerous conflicting evidence and a number of difficult points in this case. The conflicting evidence could only be resolved after a full hearing of the case. The plaintiffs were therefore entitled to bring the action and to have it tried and that, whether or not their claim turns out to be a good one, they were entitled to assert that claim by proceeding in rem.

Digest :

The 'Wigwam'; Inter Maritime Shipping (Pte) Ltd v MV 'Wigwam' (Owners of) [1983] 1 MLJ 148 High Court, Singapore (Chua J).

903 Action in rem -- Arrest of vessel

11 [903] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Lifting the corporate veil

Digest :

The 'Loon Sheng'; Eng Hong Trading Co Sdn Bhd v The 'Loon Sheng' (Owners & Ors) [1979] 2 MLJ 179 High Court, Penang (Gunn Chit Tuan J).

See SHIPPING AND NAVIGATION, Vol 11, para 840.

904 Action in rem -- Arrest of vessel

11 [904] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Lis alibi pendens

Digest :

Dok-en Werf-Maatschappij Wilton-Fijenoord NV v Owners of the Motor Vessel 'Sauvereal' [1972] 2 MLJ 1 High Court, Singapore (Chua J).

See SHIPPING AND NAVIGATION, Vol 11, para 950.

905 Action in rem -- Arrest of vessel

11 [905] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Locus standi of Crown to apply for release

Summary :

Held: unless the Crown has a tangible interest in a proceeding in the Admiralty Court against a foreign ship, the court cannot recognize it as having a locus standi to apply for the release, though it may be desirable. The mere fact that the Crown is desirous of avoiding complications with the foreign power to which such ship belongs does not give it such a tangible interest.

Digest :

The 'Washi', ex p Ivey & Morten [1882] 2 Ky Ad 47 High Court, Straits Settlements (Wood J).

906 Action in rem -- Arrest of vessel

11 [906] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Master and crew claims for wages

Digest :

Sime Darby & Co Ltd v The 'Svale' [1929] SSLR 32 Court of Appeal, Straits Settlements (Murison CJ, Deane and Stevens JJ).

See SHIPPING AND NAVIGATION, Vol 11, para 863.

907 Action in rem -- Arrest of vessel

11 [907] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Master and crew claims for wages – Mortgagee's claim – Judicial sale of vessel – Order of priorities

Summary :

The plaintiff company sued the motor ship Svale in rem under the admiralty jurisdiction of the court for necessaries alleged to have been supplied. The 'Owners and Master and other persons interested (other than the charterers)' of the vessel applied by summons-in-chambers that the writ and service thereof should be set aside on the ground that the claim was not against the owners and others interested in the vessel but against the charterers and that there was no jurisdiction to entertain the claim by proceedings in rem.

Holding :

Held, reversing the decision of Prichard J: there was jurisdiction to entertain the claim under the provision of s 5 of the Admiralty Court Act 1861, and that the objection that the claim was against the charterers was not a matter going to the jurisdiction but one which should be determined at the trial.

Digest :

Sime Darby & Co Ltd v The 'Svale' [1929] SSLR 32 Court of Appeal, Straits Settlements (Murison CJ, Deane and Stevens JJ).

908 Action in rem -- Arrest of vessel

11 [908] SHIPPING AND NAVIGATION Action in rem – Arrest of vessel – Invocation of admiralty jurisdiction – Mortgage of vessel – Registration, requirement for – High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed), s 3(1)(c)

Digest :

The 'American Oklahoma'; Bank of America National Trust & Savings Association v 'American Oklahoma' (Owners of); United State