Caterpillar Far East Ltd v CEL Tractors Pte Ltd

• Jurisdiction: Singapore
• Judge: Yong Pung How CJ
• Judgment Date: 30 June 1994
• Neutral Citation: [1994] SGHC 177
• Date: 30 June 1994
• Subject Matter: Evidence of open and established market in Singapore in spare parts,Conversion,Whether principles underlying rule of market overt applicable in Singapore,Market overt,Whether defence of market overt operates in Singapore,Personal Property,Defendants paid normal market prices for stolen spare parts,Tort,Whether defendants purchased parts in good faith without notice of plaintiffs' title
• Docket Number: Suit No 4393 of 1986
• Published date: 19 September 2003
• Defendant Counsel: Nathan Isaac (Nathan Isaac & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: P Selvadurai (Rodyk & Davidson)

Cur Adv Vult

This is a claim by the plaintiffs in respect of the alleged conversion by the defendants of Caterpillar spare parts belonging to them. The material facts of the case are as follows.

In 1983, Mohammad Taz Khan (`PW3`) and Ramachandra s/o Ahinoo (`PW4`) were employed by the plaintiffs as security guards at the plaintiffs` warehouse at 14 Tractor Road. PW3 conceived a plan to steal some of the Caterpillar spare parts stored in the warehouse and to profitably dispose of these parts to third parties. He obtained PW4`s agreement to his plan and also enlisted the help of one Doris Liauw Pow Min (`PW5`), then employed by him in a company of which he was the proprietor. PW5 was asked to find someone who could help PW3 find a buyer for the spare parts to be stolen from the plaintiffs` warehouse (though it appears that PW5 was at that point unaware that the goods would be stolen goods). She proceeded to introduce her then husband, Ng Kin Sai (`PW8`), to PW3 as someone with experience in the sale and disposal of spare parts.

The precise details of the thefts are not important. Essentially, it was agreed that the Caterpillar spare parts would be stolen on the nights on which PW3 and PW4 were both on the same night shift. The following morning, PW8 would come in a rented vehicle to the plaintiffs` warehouse in Tractor Road to collect the stolen goods at about 5am. In the meantime, PW8 had been looking for a buyer for these stolen spare parts. He found the defendants listed in the Yellow Pages and approached the defendants` sales director, Jimmy Lim Chee Teck (`DW1`), in an effort to solicit business. PW8 represented himself to DW1 as the director of Unibone Enterprises. He informed DW1 that he had Caterpillar spare parts for sale at competitive prices. There appears to have been one visit by PW8 to the defendants` office at 4 Horne Road as well as several telephone calls by PW8 to DW1 before DW1 agreed to place a trial order with PW8. DW1 testified that, for the first trial order, PW8 gave him a list of the Caterpillar spare parts in his possession. DW1 chose an item from this list which PW8 subsequently produced. After some negotiation, the two of them agreed on the prices the defendants were to pay for these spare parts. The defendants were given an initial 30% discount off the Caterpillar consumer list price, which they ascertained from a copy of the Caterpillar price list book. Both PW8 and DW1 testified that this 30% discount was normal in the trade. On top of this 30% discount, a further discount of 55% was given to the defendants, this reduction being agreed on after some bargaining between the two of them. During the trial it was agreed by both parties that the price paid by the defendants for the Caterpillar spare parts after the discounts given amounted to 31% of the then consumer list price of such parts.

In brief, the manner in which subsequent sales transactions took place between PW8 and DW1 was as follows. DW1 would write down on foolscap paper a list of the part numbers of the Caterpillar spare parts he was interested in buying and hand PW8 a copy of the list while retaining another copy for himself. PW8 would give the list to PW3 who, together with PW4, would then steal as many of the parts as were available from the plaintiffs` warehouse. The stolen parts were collected by PW8 the following morning. PW8 claimed that he then delivered these parts to the defendants` office in Horne Road and presented them to DW1. DW1 would pay PW8 in cash which he took from the defendants` petty cash account or by means of a cash cheque. An invoice in respect of the sale in question would be issued by PW8. At the trial, a total of ten such invoices were produced: they all purported to be invoices of Unibone Enterprises. These invoices were made out `to cash` instead of stating the name of the defendants. On several occasions, PW8 produced items which had not been requested by DW1 but which DW1 was persuaded to buy after PW8 gave him yet another 50% reduction on the price, in addition to the 30% and 55% discounts already granted.

On 31 October 1983, the plaintiffs` store operations manager, David Tan Im Cheng (`PW7`), made a police report at Jurong Police Station stating that as between January 1983 and September 1983, an assortment of Caterpillar spare parts valued at about $500,000 had been discovered missing from the plaintiffs` warehouse at 14 Tractor Road. On 10 November 1983, PW8 was arrested by the police and his accomplices too were arrested later. PW3, PW4, PW5 and PW8 were duly charged in court with the theft of Caterpillar spare parts valued at $500,000. They pleaded guilty to the charges. They were duly sentenced and have served their prison sentences.

The plaintiffs now bring this action against the defendants, claiming that all the Caterpillar spare parts which the defendants bought from Unibone Enterprises (as represented by PW8) were parts that had been stolen from the plaintiffs` warehouse by PW3, PW4, PW5 and PW8 acting in concert; that the entire circumstances surrounding the transactions between the defendants (who were the largest spare parts dealers in Singapore) and Unibone were such that the defendants should have shown prudence and adopted strict precautions to ascertain that they were obtaining a good title, consequently, that the defendants committed conversion in respect of the said goods in dealing with them without the plaintiffs` consent and in a manner inconsistent with the plaintiffs` rights of ownership in these goods. In support of the plaintiffs` claim, counsel referred the court to the following authorities: Hargreave v Spink

;1 Reid v Commissioner of Police of the Metropolis ; National Employers` Mutual General Insurance Association Ltd v Jones ; and Commercial & Savings Bank of Somalia v Joo Seng Co .

Prima facie, the plaintiffs would appear to have proven that PW3 and PW4 committed conversion in...