Chwee Kin Keong and Others v Pte Ltd

Judgment Date13 January 2005
Date13 January 2005
Docket NumberCivil Appeal No 30 of 2004
CourtCourt of Appeal (Singapore)
Chwee Kin Keong and others
and Pte Ltd

[2005] SGCA 2

Yong Pung How CJ


Chao Hick Tin JA


Kan Ting Chiu J

Civil Appeal No 30 of 2004

Court of Appeal

Civil Procedure–Costs–Principles–Respondent failing in every aspect of defence except on issue of unilateral mistake–Trial judge awarding full costs to respondent–Whether respondent entitled to full costs–Civil Procedure–Pleadings–Amendment–Whether trial judge wrong in allowing respondent to amend pleadings at conclusion of trial–Order 20 r 5 (1) Rules of Court (Cap 322, R 5, 2004 Rev Ed)–Contract–Mistake–Mistake of fact–Whether contract void at common law because of unilateral mistake–Whether constructive knowledge of mistake sufficient to void contract at law–Contract–Mistake–Mistake of fact–Whether equitable jurisdiction to set aside contract for unilateral mistake existing–Requirements to invoke equitable jurisdiction to set aside contract for unilateral mistake–Whether constructive knowledge of mistake sufficient to set aside contract in equity

The respondent, a Singapore company selling IT products, had established its own website to offer various products over the Internet. It also operated another website owned by Hewlett Packard (“HP”) for a similar purpose. One of the products offered on both websites was a HP laser printer (“the printer”). The printer was priced at $3,854 on both websites.

An error committed by an employee of the respondent's related company, Digiland International Ltd, caused the price of the printer to be altered to just $66 on both websites.

The appellants came to know of the printer's extraordinarily low price and placed orders through the Internet for a substantial number of printers.

The mistake was subsequently discovered and the respondent informed the appellants that it would not honour the orders placed for the printer. The appellants then commenced an action against the respondent, claiming damages for breach of contract.

The trial judge found that the appellants had actual or constructive knowledge of the mistake in the pricing of the printer. He held that the appellants' constructive knowledge was sufficient to render the contracts void under common law. The trial judge also expressed the view that there was no equitable jurisdiction to rescind contracts on the ground of unilateral mistake.

On appeal, the appellants did not dispute the trial judge's statement of the law. They, with the exception of the first appellant, merely appealed against the trial judge's finding that they had the requisite knowledge of the respondent's mistake. The court-appointed amicus curiae, however, submitted that a contract was void under the common law only where there was actual knowledge, not just constructive knowledge, of the mistake.

The appellants also contended that the trial judge had erred in granting the respondent leave to amend its Defence at the close of proceedings. They further submitted that the judge was wrong in awarding the respondent full costs and, in addition, that the costs awarded to the appellants on account of the respondent's amendments to its Defence was too low.

Held, appeal dismissed except in relation to the order for costs of the trial:

(1) As a general rule, a party to a contract was bound even though he may have made a mistake in entering into the contract. However, a party who was aware of the error made by the other party could not claim that there was consensus ad idem: at [30] and [31].

(2) It did not follow that every mistake would vitiate a contract. It had to be a sufficiently important or fundamental mistake as to a term: at [34].

(3) The state of a person's mind had to be proven like any other fact. In the absence of an admission or incontrovertible evidence, the fact of knowledge would invariably have to be inferred from all the surrounding circumstances. Phrases such as “must have known” and “could not have reasonably have supposed” were really evidential factors or reasoning processes used by the court in finding that the non-mistaken party did, in fact, know of the error made by the mistaken party: at [35], [40]and [41].

(4) The court was equally entitled to find actual knowledge where the non-mistaken party was guilty of wilful blindness. In determining the circumstances under which a party should have made an inquiry, the court had to be satisfied that the non-mistaken party was, in fact, privy to a “real reason” that warranted the making of an inquiry: at [42] and [43].

(5) A contract void under common law was voidab initio and no third parties could acquire rights under it. Where a contract was voidable under equity, the court, in determining whether to grant relief, would have regard to rights acquired bona fide by third parties: at [46].

(6) It was only where the court found that there was actual knowledge by the non-mistaken party of the mistaken party's error, that the case came within the ambit of the common law doctrine of unilateral mistake: at [53].

(7) Equity has intervened in many aspects of human dealings in contractual settings. There was no logic in denying the existence of an equitable jurisdiction in the area of unilateral mistake: at [74].

(8) Constructive notice was a doctrine of equity. Whether constructive notice by a non-mistaken party of the mistaken party's error should lead the courts to intervene and set aside a contract in equity depended on the presence of other factors which could invoke the conscience of the court, such as “sharp practices” or “unconscionable conduct”. In other words, there had to be an additional element of impropriety. The conduct of deliberately not bringing the suspicion of a possible mistake to the attention of the mistaken party, as in the present case, could constitute such impropriety: at [77] and [80].

(9) Where the case fell within the common law doctrine of unilateral mistake, there was, in effect, no contract. There would be no room for equity to intervene: at [80].

(10) Negligence per seshould not be sufficient to invoke equity. Parties to a contract did not owe a duty of care to each other: at [77].

(11) While carelessness on the part of the mistaken party did not per se disentitle that party to relief, it would be a factor which the court should take into account to determine where equity lay: at [79].

(12) Each of the appellants had actual knowledge of the respondent's mistake. Even if there was no finding of actual knowledge, equity ought to intervene to set aside the purchases as what transpired clearly constituted “sharp practices”: at [92], [93], [95] to [97].

(13) The trial judge was correct to allow the amendments made to the respondent's pleadings as they did not raise new issues and were, in fact, foreshadowed in the parties' opening statements. There was no “element of surprise or prejudice”: at [102] and [103].

(14) While the respondent had ultimately succeeded in defending the action, the court was unable to see why costs which had been incurred on issues that the respondent had unsuccessfully raised should be borne by the appellants: at [105].

(15) The quantification of costs was a matter of the court's discretion. In the absence of specific reasons to the contrary, there was no merit in the appellants' contention that the amount of costs awarded by the trial judge to them on account of the respondent's amendments to its Defence was too low: at [106].

256593 BC Ltd v 456795 BC Ltd (1999) 171 DLR (4th) 470 (refd)

Associated Japanese Bank (International) Ltd v Crédit du Nord SA [1989] 1 WLR 255 (folld)

Bell v Lever Brothers, Limited [1932] AC 161 (refd)

Can-Dive Services v Pacific Coast Energy Corp (2000) 74 BCLR (3d) 30 (folld)

Cooper v Phibbs (1867) LR 2 HL 149 (refd)

Craig Estate v Higgins (1993) 86 BCLR (2d) 64 (refd)

English and Scottish Mercantile Investment Company, Limited, The v Brunton [1892] 2 QB 700 (folld)

First City Capital Ltd v British Columbia Building Corp (1989) 43 BLR 29 (refd)

Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679 (distd)

Grist v Bailey [1967] Ch 532 (refd)

Harrison v Halliwell Landau [2004] EWHC 1316 (refd)

Hartog v Colin & Shields [1939] 3 All ER 566 (refd)

Ho Seng Lee Construction Pte Ltd v Nian Chuan Construction Pte Ltd [2001] 3 SLR (R) 184; [2001] 4 SLR 407 (refd)

Huyton SA v Distribuidora Internacional de Productos Agricolas SA de CV [2003] 2 Lloyd's Rep 780 (refd)

Ketteman v Hansel Properties Ltd [1987] AC 189 (refd)

Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128 (refd)

Magee v Pennine Insurance Co Ltd [1969] 2 QB 507 (refd)

McMaster University v Wilchar Construction Ltd (1971) 22 DLR (3d) 9 (refd)

OT Africa Line Ltd v Vickers Plc [1996] 1 Lloyd's Rep 700 (folld)

Redbridge London Borough Council v Robinson Rentals Ltd (1969) 211 EG 1125 (refd)

Redgrave v Hurd (1881) 20 Ch D 1 (refd)

Riverlate Properties Ltd v Paul [1975] Ch 133 (folld)

Shogun Finance Ltd v Hudson [2004] 1 AC 919 (refd)

Smith v Hughes (1871) LR 6 QB 597 (folld)

Solle v Butcher [1950] 1 KB 671 (not folld)

Taylor v Johnson (1983) 151 CLR 422 (distd)

Tutt v Doyle (1997) 42 NSWLR 10 (folld)

Vallance v The Queen (1961) 108 CLR 56 (folld)

William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016 (refd)

Wright Norman v Oversea-Chinese Banking Corp Ltd [1993] 3 SLR (R) 640; [1994] 1 SLR 513 (folld)

Rules of Court (Cap 322, R 5, 2004Rev Ed)O 20r 5 (1) (consd);O 59r 6A

Malcolm Tan (Tan SL & Partners) for the appellants

Philip Fong, Doris Chia and Navin Lobo (Harry Elias Partnership) for the respondent

Daniel Seng as amicus curiae.

Judgment reserved.

Chao Hick Tin JA

(delivering the judgment of the court):

1 This is an appeal against a decision of the High Court, reported at [2004] 2 SLR (R) 594, where V K Rajah JC (as he then was) held that various orders for the purchase of a model of Hewlett...

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