Darwish MKF Al Gobaishi v House of Hung Pte Ltd

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 31 March 1995
• Neutral Citation: [1995] SGHC 90
• Date: 31 March 1995
• Subject Matter: s 14(2), (6) Sale of Goods Act 1979,Plaintiff induced by misrepresentations into purchasing large quantity of gemstones from defendants,Purchase of beryls by plaintiff from defendants for resale,Whether breach of implied terms,Fitness for purpose,Whether representations that beryls 'genuine, natural, without flaw and not treated in any way' constituted terms of collateral contract or series of collateral contracts pursuant to which plaintiff agreed to enter into sale contracts,Breach of contract,Sale of goods,Power of court to order rescission or award damages where seller in breach of contract,Contractual terms,Discovery of beryls as Maxixe-type by plaintiff after sale,Contract,Sale of services,Commercial Transactions,Sale by description,s 13(1), (3) Sale of Goods Act 1979,Purpose for which goods commonly bought,Plaintiff's assertion that defendants claimed beryls 'genuine, natural, without flaw and not treated in any way',Whether purchaser entitled to rescission and damages,Maxixe-type beryls not commonly sold in gem trade and of very low value,Whether plaintiff to be precluded from founding his case on tort,Misrepresentation,Breach of implied terms,Whether beryls corresponded with description in invoices-cash memos,Whether defendants in breach of implied condition of conformity with description,Whether stones of merchantabe quality,Purchase of gemstones including 39 beryls,Whether beryls fit for intended purpose,Beryls sold as 'gemstones',Tort,s 14(3) Sale of Goods Act 1979,Negligent misrepresentation,Purchase of beryls,Reasonable inference that goods in such large quantity purchased for resale,Whether plaintiff precluded from remedy because of clause on invoices stating goods sold not returnable,Whether beryls of merchantable quality,Plaintiff relied on misrepresentations to base both tort and contract actions against defendants,Whether stones fit for resale,Highly improbable that defendants had said nothing about description of stones,Whether Maxixe-type beryls considered 'gemstones' acceptable in gemstone trade,Purchase of beryls by plaintiff from defendants,Whether plaintiff's purchase of beryls from defendants constituted sale by description,Whether sale made in course of business,Merchantability
• Docket Number: Suit No 1723 of 1989
• Published date: 19 September 2003
• Defendant Counsel: KS Chung and Doris Chia (Harry Elias & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: G Raman and Syed Yahya (John Tay Syed & Partners)

Judgment:

1.GP SELVAM

The sale

Cur Adv Vult

The plaintiff, an engineer by training, runs a supermarket business in the United Arab Emirates known as Al-Aharam Supermarkets.

2.In 1981, 1982 and 1983 he went to Brazil as a tourist to watch the carnival at Rio De Janerio. During his visits to Brazil he saw some precious stones in the shops. Other than this, he claimed, he had no understanding of precious stones.

3.In September 1986 he visited Singapore. While walking along Orchard Road a display in the defendants` jewellery shop offering 70% discount caught his eye. He went into the shop. During his stay in Singapore he patronised the shop on a few occasions. From 10 to 14 September 1988 he made purchases evidenced by 12 invoices/cash memos. The total value of the purchases exceeded a million Singapore dollars. A substantial part of the purchases comprised amethysts, aquamarines, topaz, tourmalines and beryls. There were also small jewellery items. His purchases of 39 beryls were evidenced by five of the twelve invoices. The beryls were of three types: natural beryls (Maxixe), natural greenish yellow beryls and natural brownish beryls. At the bottom of each invoice was printed this sentence: `Goods sold are not returnable`.

4.Each beryl purchased was accompanied by a certificate of gem identification issued by a Singapore company called International Gemological Laboratory (S) Pte Ltd (the IGL certificate). International Gemological Laboratory had its place of business very close to the defendants. The IGL certificates on their reverse side carried the following printed clauses:

Important Limitations

The laboratory reports is not a guarantee valuation or appraisals and (IGL) has made no warranty or representation regarding this laboratory report or the colored stone described herein. This laboratory report contains a description of the characteristics of the colored stone based upon the application of the identification techniques used by IGL at the time of its examination.

By accepting this laboratory report, the client agrees (1) to release IGL, its officers, directors and employees from all liability for any loss, expense or damages of every kind and description and (2) IGL, its officers, directors and employees shall not be liable for any loss, damage or expense for any error in or omission from this laboratory report or for its issuance or use, even if caused by or resulting from the negligence or other fault of IGL or any of its employees.

The client agrees that this laboratory report is for his/her exclusive use. Neither IGL nor any of its employees shall be responsible for any action that may be taken based upon this laboratory report.

The client also agrees that in the event of any dispute arising out of this laboratory report the liability of IGL will be limited up to the fee paid for this report and in such a case IGL shall refund the fee to the client and shall be released from all liabilities and/or claim of whatsoever nature.

This laboratory report, the name and trademark of IGL may not be reproduced in whole or in part for purposes of advertising, publicity or promotion without express prior written authorisation from IGL.

5. The claim

The purchases were sent to Switzerland by the plaintiff as air cargo consigned to his bankers. In Switzerland some of the gemstones were tested by a gemmological laboratory known as Gubelin. Gubelin reported that some of the beryls had been treated in that their colour weakened under action of strong illumination. The plaintiff brought the findings of Gubelin to the notice of the defendants and asked how the defendants wished to resolve the problem.

6.The defendants` immediate reaction was short and to the effect that they were willing to exchange the blue beryls (Maxixe type) for amethysts. This was not acceptable to the plaintiff. He asserted that the certificates from Gubelin and IGL were not compatible. The Gubelin certificate, he said, revealed important information concerning the stones whereas the IGL certificates did not `indicate the usual technical information pertaining to the authenticity of the stones`. He declined to accept the intense blue beryls and the greenish yellow beryls and proposed to return them against refund of the moneys he had paid for them and the interest charges.

7.The defendants had a change of heart and refused to accede to the plaintiff`s request for refund on the Maxixe blue beryls, and indeed any beryls he had purchased. Their reasons and response were as follows:

Received your fax dated 28 January 1989. Please note that we cannot accede to your request of refund on the Maxixe blue beryls nor all the beryls you purchased. The reasons are as follows:

(1) We have made it clear to you that `Goods sold are not returnable.` You have countersigned on each individual receipt. Please look at receipts faxed to you.

(2) You have accepted the beryls as they are. The certification of the gems indicated on the certificates by IGL clearly shows that they are `Certificates of Gem Identification.` In fact during the course of purchase, you mentioned that you do not recognised the IGL certificates. To quote you: `They are just pieces of papers. I purchase what I like.`

(3) The beryls were displayed in the shop and were purchased by you on your own accord without coercion. You agreed and paid the price. In view of the large purchase made by you we offered you several gift items. A list of the gift is enclosed.

(4) Most colour stones in the market are either heat treated or enhanced in colour through irradiation. According to Guberlin`s report, the 126.65cts brownish yellow colour is stable even after five hours of strong illumination under ultra violet exposure. Sapphires and rubies are also enhanced in colour and are stable.

(5) You mentioned that you wanted to purchase kunzite as well. According to the gem profile by David Federman, I quote: `Hot lights can, and do, turn this stone a whiter shade of pale, although colour loss is usually very gradual. Maxixe beryl are also in this category.

(6) As for the blue beryl, the certification by IGL clearly indicates that they are of Maxixe type. All gemologists know what Maxixe means and we did not give you a false report. Unless you are still aware of what Maxixe type means. I quote a report from GIA:

The following is a direct quote from the Gemological Institute of America`s Assignment 29 of the 1980 copywrite edition on beryl, p 8:

`C Maxixe type beryl

In 1917, beryl of deep intense blue color was discovered in Minas Gerais, Brazil. The color sometimes likened to a cobalt blue, is unlike the color of Aquamarine. Sadly, it was found to fade drastically when exposed to light or heat. Because of this fading characteristic, the mine was closed soon after its discovery. Thus, any material with this distinctive color now on the market is probably artificially colored by gamma ray or short wave ultraviolet treatment.`

(7) You are making a comparison of the two reports by Guberlin, the other IGL. Gubelin gave you a more detailed representation of beryls but that does not imply that we have misrepresented you without, I quote you `indicate the usual technical information pertaining to the authenticity of the stones.`

(8) Please do not re-negotiate after making purchases as the cost of the gems are negotiated through a package deal of aquamarines, amethysts, beryls and gifts. All prices were agreed by you throughout. The beryls were displayed in the counters. You took photos of them and negotiated the prices and selected the gifts.

8.With that letter the defendants sent a list of 21 gift items they said they gave to the plaintiff. The plaintiff then decided to take legal action against the defendants. In the event he brought this action against the defendants for the return of the entire amount he paid under the five invoices. In the alternative, he claimed damages.

9. The plaintiff`s case: tort, contract and collateral contract

The bases of his claim as set out in the statement of claim and the particulars furnished are as follows: . First, the plaintiff said that during his visits to the defendants` shop, the defendants represented to the plaintiff that:

(1). the defendants were one of the biggest dealers in coloured gemstones in Singapore;

(2). the defendants had a good reputation and could not afford to deal in inferior quality gemstones;

(3). Mr Wong (the manager) and Mr Hung (the managing director) had considerable experience in coloured gemstones;

(4). all the gemstones the plaintiff agreed to purchase were genuine, natural, without flaws and not treated in any way;

(5). to support the representation made in (4) above, the IGL certificates identifying the coloured gemstones were produced to the plaintiff, showing that the gemstones were genuine and perfect;

(6). if the plaintiff should in any way be dissatisfied with any of the gemstones after receiving an analysis from an independent gemological laboratory the defendant would accept such gemstone back and refund its full value;

(7). the gemstones which the plaintiff agreed to purchase came from Brazil with which country the defendants had excellent connections.

10.It was alleged that Mr Wong made several of the representations and Mr Hung made all the representations. All the representations were oral representations.

11.The plaintiff added that he relied on the representations and was induced to purchase between 10 and 14 September 1988, a substantial number of gemstones as set out in the invoices. The gemstones purchased and reflected in invoices 54818, 54830, 54834, 54836 and 54841 subsequently proved to be defective in that they had been treated. The representations made by the defendants were untrue and/or were made negligently in that the defendant failed to exercise any or proper care to ascertain whether the gemstones were defective. The defendants failed to exercise any or proper care to ascertain whether the...