City Securities Pte Ltd ((in Liquidation)) v Associated Management Services Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 11 March 1996
• Date: 11 March 1996
• Docket Number: Civil Appeal No 99 of 1995
• Court: Court of Appeal (Singapore)

City Securities Pte Ltd (in liquidation)

Plaintiff

and

Associated Management Services Pte Ltd

Defendant

[1996] SGCA 10

Yong Pung How CJ

,

M Karthigesu JA

and

L P Thean JA

Civil Appeal No 99 of 1995

Court of Appeal

Contract–Breach–Damages–Causation–Stockbroking company entering into contract to purchase shares from third party–Stockbroking company subsequently buying shares by order and for account of client–Client failing to pay for shares–Stockbroking company failing to pay third party for shares–Third party claiming damages against stockbroking company–Stockbroking company claiming damages against client for breach of contract–Whether client's breach caused stockbroking company's breach of contract with third party–Whether amount of damages correctly assessed–Financial and Securities Markets–Securities–Trading–Stockbroking company buying shares by order and for account of client on ready basis–Client failing to pay for shares–Whether obligations to pay for and deliver shares concurrent–Measure of damages to be awarded

On 24 January 1986, the appellant stockbroker bought 880,000 shares in Malayan Tin Printing (“MTP”) “by order and for account” of the respondent at $3.75 per share. Under the contract, the due date for the fulfilment was 31 January 1986 (“the second contract”). On that day, the respondent failed to pay the total sum due. The price of MTP shares on the open market at that time was $2.60 per share. About six months earlier, the appellant entered into a contract with Prima to purchase from the latter one million MTP shares at the price of $3.60 per share (“the Prima Contract”). As the appellant was unable to pay and take delivery of the shares from Prima, Prima commenced an action for damages against the appellant.

On 14 July 1988, the appellant commenced the present action against the respondent for breach of contract. It obtained interlocutory judgment. The assistant registrar assessed damages at S$2,453,094.90 but, on appeal, the High Court judge held that damages should be assessed at nil. The appellant appealed on the grounds that the judge had erred in reopening the issue of liability and that the amount of damages should not have been reduced to nil.

Held, allowing the appeal:

(1) The judge did not reopen the question of liability. The judge found that there was no nexus between the two transactions and no sustainable claim for the basis of assessment adopted by the assistant registrar, and that no damages should be awarded on that basis. Hence, the judge held that the damages should have been assessed as nil: at [13].

(2) The appellant's breach of the Prima Contract could not be attributed to and was not occasioned by the breach of the second contract on the part of the respondent. The Prima Contract was made well before the second contract was made and the appellant did not enter into the Prima Contract to fulfil its obligations under the second contract: at [14].

(3) The appellant acted as principal and not as agent and the respondent knew that the appellant had acted as such. The respondent's failure to pay on 31 January 1986 sounded in damages on that date. It was immaterial whether the appellant intended to apply part of the MTP shares which it had purchased from Prima or to buy from the open market to fulfil its obligation to deliver the shares: at [16] and [17].

(4) In a contract for the sale of shares, the measure of damages upon a breach by the purchaser was the difference between the contract price and the market price at the date of the breach, with an obligation on the part of the seller to mitigate the damages by getting the best price he could upon that date. The damages awarded should thus be the difference between the contract price ($3.75 per share) and the market price on 31 January 1986 ($2.60 per share), amounting in total to $1,012,000 for 880,000 MTP shares with interest: at [18].

A K A S Jamal v Moolla Dawood, Sons & Co [1916] 1 AC 175 (folld)

Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 (folld)

Scott Thillagaratnam and Navinder Singh (Joseph Tan Jude Benny & Scott)for the appellant

Ng Wing Cheong (Ng & Ng) for the respondent.

L P Thean JA

(delivering the grounds of judgment of the court):

1 This is an appeal against the decision of the judge in chambers allowing the appeal of the respondents against the decision of the assistant registrar in which the latter assessed damages for breach of contract in the sum of S$2,453,094.90 to be paid by the respondents. The learned judge held that damages should have been assessed as nil. At the conclusion of the hearing of the appeal, we allowed it and gave judgment to the appellants in the sum of $1,012,000...