Beihai Zingong Property Development Company and Another v Ng Choon Meng

• Jurisdiction: Singapore
• Judgment Date: 25 February 1999
• Date: 25 February 1999
• Docket Number: Civil Appeal No 218 of 1998
• Court: Court of Appeal (Singapore)

Beihai Zingong Property Development Co and another

Plaintiff

and

Ng Choon Meng

Defendant

[1999] SGCA 13

Yong Pung How CJ

,

M Karthigesu JA

and

Lai Kew Chai J

Civil Appeal No 218 of 1998

Court of Appeal

Civil Procedure–Pleadings–Vendor sued on agreed-damages clause failing to plead defence of penalty–Whether vendor precluded from raising defence–Contract–Remedies–Agreed-damages clause–Whether clause genuine pre-estimate of loss or penalty

The first appellant, Beihai Zingong Property Development Co (“Beihai”), contracted to purchase goods worth US$5,750,000 from Gim Yang Rubber Mill (“GY Rubber”). One of the terms of the contract was that the respondent, Ng Choon Meng (“Ng”), a shipping broker who was party to the contract, would pay Beihai “agreed damages” which was twice the deposit received by Ng if the goods were not delivered. Beihai paid Ng $200,000 as deposit. The second appellant, Beihai's employee Xu Qi, received from Ng and one Kwok cheques for $210,000 and HK$1,160,000.

GY Rubber failed to perform the contract and the cheques were dishonoured. Beihai claimed first, the refund of deposit or alternatively $210,000 on the cheque and second, $400,000 as agreed damages. The trial judge allowed Beihai's claim for $200,000 being money had and received by Ng but held that the agreed-damages clause was a penalty and unenforceable. Beihai appealed.

Held, allowing the appeal:

(1) The clause was a genuine pre-estimate of the damages. Ng, who was a seasoned businessman, failed to show that the agreed damages representing 4.6% of the contract was extravagant or that the amount was not within the range of profits in such transactions: at [16].

(2) Ng's failure to plead the defence of penalty clause precluded him from raising it: at [17].

Banner Investments Pte Ltd v Hoe Seng Metal Fabrication & Engineers (S) Pte Ltd [1996] 3 SLR (R) 244; [1997] 1 SLR 461 (folld)

Dunlop Pneumatic Tyre Company, Limited v New Garage and Motor Company, Limited [1915] AC 79 (folld)

Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 57 r 18 (2)

Simon Yuen (Chong Yeo & Partners) for the appellants

Respondent absent.

Lai Kew Chai J

(delivering the grounds of judgment of the court):

Introduction

1 This appeal involved the issue whether the contractual clause specifying the amount of damages payable was unenforceable because it was a penalty clause and the pleading issue whether the court below was entitled to find that the clause was a penalty clause although this defence was not pleaded. At the conclusion of the hearing we allowed the appeal with costs and we entered judgment in favour of the first appellant in the sum and interest as claimed. We now set out the facts and the grounds of our decision.

The facts

2 The first appellant, Beihai Zingong Property Development Co, contracted with Gim Yang Rubber Mill (“GYRM”) to buy from them 5,000 tonnes of smoked rubber at US$1,150 per metric tonne. The rubber was to be delivered in two batches at Beihai Port, China. The first batch of 1,500 tonnes was to be delivered before 25 June 1996 and the remainder by the end of July 1996. The contract was made in Singapore and written in Chinese. Clause 7.1 translated into English reads:

The buyers shall pay the seller a sum of HK$1,110,000.00 or the equivalent in Singapore currency as deposit after the signing of the contract. At the same time, the seller shall produce to...