China Steel Corporation v Pan Asia Shipyard & Engineering Co (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Punch Coomaraswamy J
• Judgment Date: 13 May 1988
• Neutral Citation: [1988] SGCA 3
• Docket Number: Civil Appeal No 12 of 1984
• Date: 13 May 1988
• Year: 1988
• Published date: 19 September 2003
• Plaintiff Counsel: Joseph Hoo (Joseph Hoo Morris & Kumar)
• Citation: [1988] SGCA 3
• Defendant Counsel: Arul Chandran (C Arul & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Appeal,Sale of goods,Whether appellate cout can disturb trial court's findings of fact,Apportionment of damage,Shipment of damaged steelplates,Courts and Jurisdiction,Damaged goods,Appeals,Commercial Transactions,Trial court's finding of 50% liability on seller,Dispute only on facts,Whether clean bill of lading constitutes evidence of the quality of goods between seller and buyer

Cur Adv Vult

(delivering the judgment of the court): China Steel Corporation, a Taiwan company, entered into a cif contract of sale of steelplates with Pan Asia Shipyard and Engineering Co (Pte) Ltd, a Singapore company carrying on business as shipbuilders and repairers. Payment was to be by confirmed irrevocable sight letter of credit, a term of which was that shipment was to be effected not later than 15 December 1979.

China Steel Corporation (the appellants), the plaintiffs in the action, failed to effect the shipment in time, the steelplates having been shipped on 9 January 1980 and accordingly could not draw on the letter of credit.

The steelplates arrived in Singapore on 18 January 1980 and were discharged into the godown of the Port of Singapore Authority from 21 to 23 January 1980. The purchasers (the respondents) alleged that the steelplates were in a `damaged condition` - the exact nature, time and extent of the damage being in dispute. Despite the condition in which the respondents found the plates on discharge, they took delivery on or about 24 January 1980 as the plates were urgently needed for the construction of certain vessels. The plates were stored (where they normally were) in the respondents` premises in the open yard. The respondents were not prepared to pay the full purchase price due to the alleged damaged condition of the steelplates. Negotiations followed, resulting in the respondents paying, under protest, the price of the goods less US$16,000 which was withheld by the respondents to meet the costs of treating the damaged steelplates and which was the sum claimed by the appellants in the action. In the action, the respondents counterclaimed for the loss and damage allegedly suffered by the respondents as a result of the damaged condition of the plates. Before the trial, consent judgment was entered in favour of the appellants for their claim in the action. T Kulasekaram J, before whom the counterclaim was tried, gave judgment for the respondents for $20,106.98.

In their counterclaim, the respondents alleged (1) that it was an implied term of the contract of sale that the goods be of merchantable quality and that they be reasonably fit for the purpose for which they were bought; (2) that in breach of these terms, the steelplates were shipped and delivered to the respondents in a damaged condition in that they were corroded and unfit for use as ship plates; and (3) that they had put the steel-plates into a fit condition by treating the plates and suffered loss and damage, which were particularized in the counterclaim.

In the defence to the counterclaim, the appellants did not deny that there were such implied terms as pleaded by the respondents. They denied, however, that the plates were shipped and delivered in a damaged condition but admitted `that some of the plates were found to be damaged upon discharge from the carrier`.

The appellants now appeal against the whole of the judgment and the respondents in their cross-appeal seek to vary the judgment.

No difficulty arises with regard to the interpretation of the contract of sale. It is not in dispute that the relevant contract of sale was a true cif contract. The nature of, and the incidence of risk contemplated by such a form of contract, are clearly stated in 41 Halsbury`s Laws of England para 909, as follows:

Under a cif contract, the duty of the seller, so far as physical handing over of the goods themselves is concerned, is accomplished when the goods are put on board the ship or other specified place or vehicle for the purpose of the transit. In addition, he is under an obligation to make a contract of carriage with the carrier under which the goods will be taken to their contractual destination and there delivered, to effect an insurance available for the buyer and to forward the bill of lading, policy of insurance and invoice to the buyer. Against tender of these documents the buyer`s liability to pay the price arises. The contract is thus, in a commercial sense, an agreement for the sale of goods to be performed by delivery of documents, the seller having obligations in law in relation to both the goods and the documents covering them.

Under a cif contract the property in the goods will commonly pass when the documents which represent the goods are handed over in exchange for the price. But, in accordance with general principle, property may, if the contract shows such an intention, pass at some different stage, as upon shipment or upon consignment of the documents to the buyer. Risk will pass on or as from shipment.

This view follows from the commercial risks taken by the parties to such a contract. The risk that the goods may not be of the right quality is one that the buyer takes, to the extent of being bound to assert remedies in respect of defects by action against the seller.

The law not being in dispute, 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.

After a trial which occupied some seven days in all, the judge immediately announced his decision in which he found that the condition of the plates was due to `defects in the plates (and to) salt falling on discharge (together with) exposure in the yard (at the respondents` premises) with salt (on them) from 20 January 1980 to 23 February 1980`. In the result, he found the appellants liable for 50% of the defects and gave judgment for the respondents in the sum of $20,106.98 with interest from 14 November 1984.

In his written grounds, he considered that the issue he had to determine was `what caused the corrosion on the plates and the defective condition when the (respondents) received them`. That depended essentially on whether he accepted the evidence of the appellants` prime witness, one Wu Yu-chun, the only witness who saw the plates at the time of the loading at Kaohsiung Harbour, Kaohsiung, Taiwan, or the evidence of the respondents as to the condition of the plates on arrival and the proper inferences to be drawn therefrom. The evidence of Mr Wu and his loading survey report were decisively rejected by the judge. In the light of the evidence by one Ng Cheng Siong, the managing director of Applied Research Corporation, and Dr SK Roy`s report, which was admitted in evidence as part of the agreed bundle, the judge considered that the `unusual presence of mill scales` on some areas of the plates and the condition of the plates on 23 January 1980 were such that the plates were `of an irregular and weathered stock`. He went on, however, to find that the plates also suffered from corrosion due to exposure to weather, with salt on them, in the open yard at the respondents` premises, the salt having fallen on the plates during the discharge from the vessel from tom bags of a cargo of salt in the same shipment.

On the basis of these findings, the judge apportioned the blame equally to both these factors and accordingly, halved the expenses incurred by the respondents as a result of the damaged condition of the plates.

Before considering the various matters relied on by the appellants and respondents in...