Caterpillar Far East Ltd v Cel Tractors Pte Ltd

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 27 March 1995
• Neutral Citation: [1995] SGCA 34
• Docket Number: Civil Appeal No 120 of 1994
• Date: 27 March 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: P Selvadurai and Lok Vi Ming (Rodyk & Davidson)
• Citation: [1995] SGCA 34
• Defendant Counsel: Nathan Issac (Nathan Isaac & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Conversion,Tort,Civil Procedure,Whether defence of market overt operates in Singapore,ss 5(1) & (3) Civil Law Act (Cap 43, 1988 Ed),Determination of applicability with reference to the Civil Law Act,Respondents bought stolen spare parts belonging to appellants,Whether acts constituted inconsistent dealings with the goods,Market overt,Pleadings,Whether claim of conversion sufficiently pleaded,Some of the spare parts resold to third parties,Whether claim of conversion proved,Whether principles underlying rule of market overt applicable in Singapore,Whether defence of market overt sufficiently pleaded,Remaining spare parts mixed with the defendants' own stocks and stored in warehouse

Cur Adv Vult

This is an appeal against the decision of the High Court dismissing the appellants` claim for conversion by the respondents of certain Caterpillar spare parts belonging to the appellants. The facts that gave rise to the appeal are briefly set out below.

The facts

In 1983, two security guards employed by the appellants at their warehouse namely, Mohammad Taz Khan (`Mohammad`) and Ramachandra s/o Ahinoo (`Ramachandran`), conspired to steal some Caterpillar spare parts from the warehouse. To dispose of the spare parts to third parties at a profit, they sought the help of one Doris Liauw (`Doris`) to find potential buyers. She introduced her then husband one Ng Kin Sai (`Ng`) to Mohammad and Ramachandran as someone with experience in the sale and disposal of spare parts. The trio, Mohammad, Ramachandran and Ng then devised the plan. On the nights when both Mohammad and Ramachandran were on duty, they would steal the spare parts from the warehouse and in the mornings, Ng using a rented vehicle would collect the stolen parts at a point just outside the warehouse. Having collected the parts, it was Ng`s responsibility to find a suitable buyer for the stolen goods. In the meantime, Ng had been looking for a buyer for these spare parts. He found the respondents in the Yellow Pages of the telephone directory and contacted the respondents` sales director, Jimmy Lim Chee Teck (`Lim`). Representing himself to be the director of a company called Unibone Enterprises (`Unibone`), Ng said that he had Caterpillar spare parts for sale at competitive prices. This was followed by a visit to the respondents` office and some telephone conversations between them. Finally, Lim was persuaded to place an order by choosing an item from a list produced by Ng. The item was first offered to Lim at a discount of 30%. After some negotiation, a further reduction of 55% was given to the respondents. The result was that the respondents paid 31% of the then consumer list price of the part concerned.

Subsequently, the respondents bought more stolen Caterpillar spare parts from Ng at similarly reduced prices. The transactions were conducted thus. Each time, Lim would write down on foolscap paper a list of spare parts he wished to purchase, hand a copy of the list to Ng and retain one for his own reference. Mohammad and Ramachandran would steal as many of the parts contained in the list as were available from the warehouse. In the early hours of the morning, Ng would arrive at the warehouse as arranged and collect them. These were then usually delivered to Lim between 7.30am to 8am the same morning. On receiving the goods, Lim would pay Ng by means of a cash cheque or by cash. In return, an official invoice from Unibone would be issued to Lim. There were ten separate transactions evidenced by invoices and payment vouchers. According to the documents, Lim paid to Ng a total of $181,000.

In October 1983, the appellants discovered the pilferage and reported the matter to the police. This led to the arrests and convictions of Mohammad, Ramachandran, Ng and Doris for theft of the Caterpillar spare parts. On 31 July 1986, the appellants commenced an action against the respondents for conversion of the stolen goods which the appellants valued at $500,000. The action was heard before the learned Chief Justice in the High Court. There was really no dispute that the spare parts acquired by the respondents from Ng were goods stolen from the warehouse of the appellants and prima facie the respondents had not acquired any title to the goods: nemo dat quod non habet . However, the respondents in resisting the claim raised the defence that they purchased the goods in market overt in good faith and without any notice of any defect in the title of the goods. This defence featured in the arguments of counsel before the learned Chief Justice, although it was not raised in their pleadings.

The decision of the High Court

In a reserved judgment, reported in [1994] 2 SLR 702 , the learned Chief Justice dismissed the claim of the appellants. He considered the common law rule of sale in market overt, which is now encapsulated in s 22(1) of the English Sale of Goods Act 1979. He held that this rule in the form as developed in England was inapplicable in the Singapore context, but the principles underlying the rule were germane to the circumstances of the case before him and were applicable. Reverting to the facts before him, he found first, that in Singapore there existed a regular and open market in Caterpillar spare parts, and secondly, that the respondents acted in good faith and without notice of the defect in title in the goods when they purchased them. On that basis, he held that the respondents had obtained good title to the Caterpillar spare parts, and therefore the appellants were unable to maintain the action for conversion. The appellants` claim therefore failed.

The appeal

Before us, the appellants raised three grounds of appeal. First, they argued that the defence of market overt was not specifically pleaded by the respondents and hence it was not open to them to raise this defence and it was wrong for the court to decide this issue. Secondly, the appellants contended that the rule of sale in market overt is not applicable to the present case or to Singapore on the ground that there is no such thing as a market overt in Singapore similar to markets dedicated as such in England. Thirdly, the appellants challenged the learned Chief Justice`s finding that the respondents acted in good faith when they purchased the stolen spare parts from Ng.

On the first ground, we think it is too late in the day for the appellants to argue that the defence of market overt has not been pleaded and it was not open to the respondents to raise it and therefore the court below should not have decided it. The defence was raised and was fully argued below by counsel for both sides. It was on the basis of their arguments that the learned Chief Justice gave his decision. We are not disposed to decide this appeal purely on the procedural point that this defence was not specifically pleaded.

Section 5 of the Civil Law Act

We now turn to the second contention mounted on behalf of the appellants, namely, that the rule of sale in market overt has no application in Singapore. It is common ground that by virtue of s 5 of the Civil Law Act (Cap 43, 1988 Ed), the provisions of the Sale of Goods Act 1979 of the United Kingdom apply in this case. Section 5 has been repealed by the Application of English Law Act (Cap 7A, 1994 Ed) which came into effect on 12 November 1993. However, s 6(2) of the later Act provides:

In respect of any proceedings instituted or any cause of action accruing before 12th November 1993, section 5 of the Civil Law Act shall continue to apply as if it had not been repealed by this Act.

As the cause of action in this case accrued and the proceedings were instituted before 12 November 1993, s 5 of the Civil Law Act continues to apply in the determination of the issue before us. It would be helpful at this stage to set out the well known provision of s 5 of the Civil Law Act, so far as material, which is as follows:

(1) Subject to this section, in all questions or issues which arise or which have to be decided in Singapore ... with respect to mercantile law generally, the law with respect to those matters to be administered shall be the same as would be administered in England in the like case, at the corresponding period, if such question or issue had arisen or had to be decided in England ...

...

(3) For the purposes of this section -

(a) the law of England which is to be administered by virtue of subsection (1) shall be subject to such modifications and adaptations as the circumstances of Singapore may require; ...

In terms of s 5, the issue before us is clearly with respect to mercantile law generally and the law as would be administered in England in the like case at this date is undoubtedly the Sale of Goods Act 1979 and, in particular, ss 21(1) and 22(1) thereof. This position was accepted by both parties. Both these provisions embody rules or principles of common law. Section 21(1) provides:

Subject to this Act, where goods are sold by a person who is not their owner and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller`s authority to sell.

This, in essence, is the principle of nemo dat quod non habet . Section 22(1), on the other hand, is an exception to that principle: it is the rule of sale in market overt. It provides:

Where goods are sold in market overt, according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of any defect or want of title on the part of the seller.

In applying the law `as would be administered in England in the like case`, regard must be had to s 5(3) of the Civil Law Act and such law will have to be `subject to such modifications and adaptations as the circumstances of Singapore may require`. As we have said, s 21(1) of the Sale of Goods Act embodies the common law principle of nemo dat quod non habet , and, as far as we can see its application in Singapore does not call for or...