Chai Cher Watt v SDL Technologies Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 17 October 2011
• Date: 17 October 2011
• Docket Number: Civil Appeals Nos 233 of 2010 and 10 of 2011
• Court: Court of Appeal (Singapore)

Chai Cher Watt (trading as Chuang Aik Engineering Works)

Plaintiff

and

SDL Technologies Pte Ltd and another appeal

Defendant

[2011] SGCA 54

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

VK Rajah JA

Civil Appeals Nos 233 of 2010 and 10 of 2011

Court of Appeal

Civil Procedure—Raising alleged new points on appeal—Whether s 13 Sale of Goods Act (Cap 393, 1999 Rev Ed) in issue at trial

Commercial Transactions—Sale of goods by description—Innominate term approach not applicable—Whether breach of implied condition was waived—Section 13 Sale of Goods Act (Cap 393, 1999 Rev Ed)

Contract—Waiver—Nature of knowledge relevant for waiver

The appellant and respondent entered into a contract (‘the Drill Contract’) to sell and purchase a drilling and boring machine (‘the Drilling Machine’) as well as a contract (‘the Lathe Machine Contract’) to sell and purchase a lathe machine. In the court below, the appellant (who was the purchaser under both the aforementioned contracts) brought claims against the respondent for alleged breaches of these contracts. These claims were dismissed by the judge (‘the Judge’) and the appellant brought the present appeal.

In particular, the Drill Contract included, inter alia, the specification that the Drilling Machine would be 11 m in length. On 19 August 2008, the Drilling Machine was delivered to the appellant who acknowledged receipt by signing the delivery order. However, unbeknownst to the appellant, the Drilling Machine that was delivered was 13.5 m in length due to the mistake of a third party Chinese manufacturer (‘the Manufacturer’) whom the respondent had contracted with to supply said machine.

On 23 August 2007, on suspicions that the Drilling Machine was old, the appellant engaged the services of SGS Testing & Control Services Pte Ltd (‘SGS’) to carry out an inspection thereof. It was then that the appellant discovered the discrepancy in length of the Drilling Machine. SGS also reported the Drilling Machine to be ‘in refurbished condition’.

According to the respondent's evidence, it was aware of the discrepancy in length and orally communicated this to the appellant through a representative. The respondent's representative had met with the appellant on several occasions to pass to him and discuss a schematic drawing of the Drilling Machine used to facilitate preparatory installation work of the Drilling Machine before its delivery. The appellant vehemently denied this.

In its statement of claim, the appellant alleged, inter alia, that it was either an express or implied term of the Drill Contract that the Drilling Machine was to be ‘newly manufactured’, and therefore, the Respondent was in breach for delivering a refurbished machine. Alternatively, the Appellant claimed that the Respondent was in breach for failing to deliver a Drilling Machine that conformed to the specifications set out in the Drill Contract.

Held, allowing the appeal in part:

(1) Having regard to all the relevant evidence, the reasoning and decision of the Judge in relation to the alleged breaches of the Lathe Machine Contract were correct. Hence, this part of the appeal failed: at [3].

(2) In so far as the claim pursuant to the Drill Contract was concerned, the fact that s 13 of the Sale of Goods Act (Cap 393, 1999 Rev Ed) (‘s 13’) was the operative governing provision in the proceedings below was clear from the Judge's decision. Even assuming (taking the Respondent's case at its highest) that there was no literal reference to s 13 in the court below, it was clear that the parties had proceeded on the basis that the case concerned the sale of goods by description within the meaning of s 13: at [16] and [17].

(3) It was an objective and undisputed fact that the Drill Contract referred to the length of the Drilling Machine as 11 m, whereas the Drilling Machine that was in fact supplied was 13.5 m in length. Hence there was prima facie a breach by the respondent of a condition under s 13. The de minimis principle did not apply: at [24]and [26].

(4) The respondent's argument that the discrepancy in length made no difference to the appellant might have had more traction under the Hongkong Fir approach (set out in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd[1962] 2 QB 26 at [66]). However, it was legally irrelevant in the context of the present appeal. The contractual term specifying the length of the Drilling Machine was a condition and any breach of it, regardless of the consequences, entitled the appellant to elect to treat the Drill Contract as discharged: at [25].

(5) The fact that the factory floor space was sufficient to accommodate the Drilling Machine and the mere acceptance of delivery of the Drilling Machineper se were both not relevant to the issue of waiver which requires knowledge by the appellant coupled with acceptance of the Drilling Machine of increased length. Furthermore, the testimony the respondent relied on in support of its argument that its representative communicated directly to the appellant the discrepancy in length was ambiguous at best: at [30] to [32].

(6) As to what knowledge was relevant for waiver, it would appear that the party waiving his right should at least have knowledge of the facts giving rise to those rights. Accordingly, the burden was on the respondent to furnish clear and objective evidence to demonstrate that the appellant had knowledge that the Drilling Machine was 13.5 m instead of 11 m: at [34].

(7) In this regard, whilst the respondent's version of events was by no means untenable, the appellant's (contrary) version of events was at least equally probable. In the circumstances, the respondent was not able to discharge its burden of proving that the appellant had waived its rights in respect of the respondent's failure to deliver a Drilling Machine of 11 m in length: at [40].

Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179 (refd)

Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 (refd)

Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd's Rep 391 (refd)

Peyman v Lanjani [1985] Ch 457 (refd)

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR (R) 413; [2007] 4 SLR 413 (refd)

Sargent v ASL Developments Ltd (1974) 131 CLR 634 (refd)

Sale of Goods Act (Cap 393,1999 Rev Ed) ss 11 (1) , 13, 15 A (consd) ; ss 11 (2) ,13 (1) ,61 (1)

Hee Theng Fong and Leong Kai Yuan (RHT Law LLP) for the appellant

Kenny Chooi Yue Wai, David Kong Tai Wai and Kelvin Fong Kai Tong (Yeo-Leong & Peh LLC) for the respondent.

Judgment reserved.

Andrew Phang Boon Leong JA

(delivering the judgment of the court):

Introduction

1 This is an appeal against the decision of the trial judge (‘the Judge’) in Chai Cher Watt (trading as Chuang Aik Engineering Works) v SDL Technologies Pte Ltd[2010] SGHC 348 (‘the Judgment’).

2 The proceedings below involved claims by Chai Cher Watt (trading as Chuang Aik Engineering Works) (‘the Appellant’) against SDL Technologies Pte Ltd (‘the Respondent’) for breaches by the latter in respect of two separate contracts to supply the former a drilling and boring machine (‘the Drilling Machine’) and a lathe machine (‘the Lathe Machine’) (hereafter referred to as ‘the Drill Contract’ and ‘the Lathe Machine Contract’, respectively).

3 We would like to note at the outset, that, after considering all the relevant evidence, we agree with the Judge's reasoning and decision with regard to the Lathe Machine (see the Judgment at [20]- [21]). Indeed, counsel for the Appellant, Mr Hee Theng Fong (‘Mr Hee’), himself candidly admitted - correctly, in our view - that the Appellant's arguments with regard to its claim for breaches of the Lathe Machine Contract were weak. Hence, this part of the appeal fails. As for the Appellant's claim for alleged breaches of the Drill Contract, this will be dealt with subsequently in greater detail.

Facts

4 The salient facts of this appeal are as follows. In August 2007, the Appellant approached the Respondent's sales representative indicating his interest in purchasing a boring and drilling machine with a boring depth of 4 m. Parties then entered into the Drill Contract on 21 August 2007, on, inter alia, the following terms:

Payment terms:	30% Deposit upon confirmation.
	50% Subsequent payment by Cheque or T/T to SDL Technologies after machine inspection at manufacturer plant and before shipping to Singapore.
	20% Balance payment upon delivery and commissioning.

The Drill Contract also provided a list of specifications of the Drilling Machine, including the fact that it would be 11 m in length. As required under the Drill Contract, the Appellant then paid 30% of the purchase price as a deposit on 22 August 2007.

5 In March 2008, the Respondent's technical and service manager, He Jian Qin (‘Xiao He’), approached the Appellant with a drawing of the Drilling Machine (‘the First Drawing’), which showed the Appellant where to dig a cavity in the floor for the purposes of installing an L-shaped oil tank for the Drilling Machine, and its dimensions thereof. This First Drawing was a schematic drawing, consisting of line markings, numbers, mandarin notations and a table at the bottom right hand corner.

6 After comparing the First Drawing with floor plans of the factory in which the Appellant intended to store the Drilling Machine (‘the Factory’), the Appellant came to realise that a cavity could not be dug in the proposed location due to the presence of a beam in the ground. Hence, further discussions with Xiao He were conducted and at the Appellant's suggestion, parties finally decided to (a)substitute the L-shaped oil tank with a customised square one and (b)move the oil tank from adjacent to the Drilling Machine to in front of it. The square oil tank was eventually installed on or about 14 July 2008.

7 On 19 August 2008, the...