Comtech IT Pte Ltd v Chartered Electronics Industries Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 29 October 1997
• Neutral Citation: [1997] SGHC 277
• Court: High Court (Singapore)
• Year: 1997
• Published date: 18 February 2013
• Plaintiff Counsel: See Tow Soo Ling with Gan Theng Chong (Patrick Wee & Co)
• Defendant Counsel: Alvin Yeo and Nishith Shetty (Wong Partnership)
• Citation: [1997] SGHC 277

Judgment:

Cur Adv Vult

1. At the time the events giving rise to this dispute took place, both the plaintiffs and the defendants were manufacturers of computers and computer peripherals including inkjet printers. The plaintiff company became dormant some time in 1995.

2. The plaintiffs and the defendants had a business relationship during the years 1992 to 1994. The relationship ended unhappily for both parties and as a result, in this suit, each has claims against the other. The plaintiffs are claiming the price of goods sold and delivered to the defendants, damages for breach of a contract to assemble printers and damages for conversion of the plaintiffs' material and equipment. The defendants claim damages from the plaintiffs for breach of the same contract in respect of the assembly of printers and, secondly, damages for the breach of an alleged contract whereby the defendants were to supply the plaintiffs with 24,000 printer circuit board assemblies (PCBs). I will take the claims in turn.

1. Plaintiffs' claim for goods sold and delivered to the defendants

3. In paragraph 1 of the statement of claim, the plaintiffs plead that the defendants owe them the sum of US$45,632.95 under nine invoices for goods sold and delivered to the defendants between 8 July 1993 and 16 August 1994. Against this sum which, using the exchange rate of US$1 = S$1.51, amounts to S$68,905.75, the plaintiffs agree that the defendants are entitled to set off an amount of S$18,632.95. The balance which the plaintiffs claim is S$50,272.80.

4. The defendants admit that there are sums payable to the plaintiffs under the invoices listed in the statement of claim except for the following:

(1) invoice no. EX2030 dated 19 July 1994 for the sum of US$759.50 which the defendants say should not be charged because it was for items consigned to the defendants as replacements under warranty obligations;

(2) invoice no. 2835 dated 8 July 1993 for US$192; and

(3) invoice no. EX2034 dated 16 July 1993 which the defendants say ought properly to be for the sum US$11,278.50 instead of US$15,038 as the quantity actually ordered was 150 pieces as opposed to the 200 pieces billed for because 50 of the later were warranty replacements.

5. The defendants' case in respect of invoices EX2034 and EX2030 was only raised during the trial. The allegation that the parts delivered were in respect of replacements made under warranty obligations and therefore not billable was not pleaded nor was it included in the defence. Paragraph 1 of the defence simply said that paragraph 1 of the statement of claim was not admitted apart from the fact that the defendants agreed that the plaintiffs owed them S$18,632.95. The defendants did not put forward any positive case as to why they were not liable for the invoices. Once therefore the plaintiffs proved that they had delivered the goods in the invoices to the defendants, the defendants were precluded by their pleading from giving any factual reasons excusing them from payment. In the circumstances, the plaintiffs are entitled to judgment in respect of those invoices, subject to my finding in respect of the defendants' counterclaim.

6. The only substantive issue which the defendants have raised in relation to this claim is that the plaintiffs' use of the exchange rate of S$1.51 = US$1 is not accurate and that the sum which the plaintiffs claimed ought to be converted into Singapore dollars only at the time of execution. They rely on Tatung Electronics (S) Pte Ltd v Binatone International Ltd [1991] 3 MLJ 212 and Miliangos v George Frank (Textiles) Ltd [1976] AC 443 for the proposition that where the relevant currency of the contract is a foreign currency, the court may award judgment in the foreign currency which will only be converted to the local currency at the date when the plaintiffs are given leave to execute on the judgment. Those two cases permit the court to make a judgment in a foreign currency. They do not mandate that the court does so. The following passage from The Supreme Court Practice 1997 Vol 1 under item 42/1/5 is pertinent:

'... the Court retains a residual discretion to determine whether the judgment should be expressed in sterling or in a foreign currency and ... it will exercise this discretion having regard to all the circumstances including the position of the parties and the fluctuations in the rates of exchange between the currency of the contract and sterling during the period between the date when the cause of action whether in contract or tort arose and the date of judgment. There may well be cases in which although the plaintiff may elect that the judgment should be expressed in sterling, yet the defendant may wish, or it might otherwise be just, that the judgment should be expressed in the foreign currency of the contract and vice versa.'

7. In the present case, I have no evidence on why the plaintiffs converted US dollars to Singapore dollars at the rate they chose. The writ was issued in April 1995 and there is nothing before me to show that the rate chosen was the applicable rate either at that time or when payment fell due. Whilst it was sensible to convert the amount claimed to Singapore dollars in order to give the defendants' credit for what the plaintiffs owed them, since US dollars was the currency of the account of the contract and since I do not know why the particular rate was chosen, or the fluctuations in the exchange rates between the respective dates on which the various invoices were issued and the date of the writ, I think that judgment should be entered for the plaintiffs in US dollars for the full amount of US$45,824.95 and the conversion should take place at the time of judgment at which date the S$18,632.95 can be set off. Since this is what the defendants have asked for, they cannot complain that since April 1995, the rates have moved decisively in favour of the plaintiffs.

2. Claim and counterclaim arising out of the contract for the assembly of inkjet printers

8. In October 1993, the parties agreed that the defendants would assemble inkjet printers for the plaintiffs from material kits supplied by the plaintiffs. The assembly was to take place at the defendants' factory in Batam, Indonesia. The contract is contained in or evidenced by two documents: the defendants' written quotation dated 29 September 1993 and the plaintiffs' purchase order dated 6 October 1993 accepting the quotation. Among the express terms of the contract were the following:

(1) the printers assembled were to pass four tests as specified in the quotation;

(2) the plaintiffs were to provide all dedicated presses, jigs/fixtures, testing equipment and accessories required for efficient production for a volume of 20,000 units per month eventually;

(3) the plaintiffs would be responsible for arranging the shipment of kit materials to the defendants' Indonesian company and also for the quality of the parts so consigned;

(4) the plaintiffs were to pay for the goods 30 days after delivery.

Further, by the said purchase order the plaintiffs ordered an initial quantity of 2,500 completed printers for delivery in November 1993. It was accepted by both parties that the agreement contemplated mass assembly although the defendants allege that mass assembly was implicit from the very beginning whereas the plaintiffs imply that the kits should only be suitable for mass assembly at the time when the defendants were to deliver 20,000 units per month.

9. Thereafter, between October and December 1993 the plaintiffs did send to the defendants most of the materials necessary to assemble the printers although some remaining materials were never sent and it would have been difficult to complete all 2,500 units. The defendants in fact did not complete even 15 printers successfully. In May 1994, the defendants informed the plaintiffs that the printers could not be assembled from the materials that were supplied to them. The plaintiffs now claim damages for breach of the contract of supply and the defendants in turn say that because the kits supplied were unsuitable for mass assembly, they were unable to comply with the contract and earn the profits they would otherwise have earned. They too claim damages.

Summary of the facts

10. Mr Ben Ang Siew Hock, who is employed by the defendants as their Head of Offshore Operations, was the person who provided the quotation for the assembly of the printers and who took charge of the project on behalf of the defendants. He dealt, on technical issues, with Mr Jerry Seow Kim Chuan, the plaintiffs' project manager at that time.

11. According to Mr Ang, in mid December 1993, he attended a project status review meeting with Mr Seow. He was told that the plaintiffs were facing assembly problems in relation to the kit in their assembly house in China. In the light of the problems faced, the plaintiffs had concluded that a mandatory design change was necessary for the printers and therefore they had decided to postpone the start of the mass assembly of the printers to April 1994 so that their third party contractors could re-design and re-manufacture the defective parts. At that meeting, Mr Seow handed to Mr Ang a list of the defects that the plaintiffs had found in their printers assembled in China.

12. The plaintiffs have denied that the meeting took place and further deny that they asked that the date for mass assembly be postponed. In court, Mr Seow professed to have no memory of the meeting. However, it should be noted that on or about 21 December 1993 Mr Ang wrote an internal memorandum to the defendants' personnel setting out some of the principal problems raised by the plaintiffs during the meeting. This contemporaneous memorandum supports Mr Ang's account of what happened at the meeting. It also sets out his proposal that since by that time the defendants were holding a large quantity of the plaintiffs' materials, they should proceed to do a pilot run of...