Gebrueder Buehler AG v Chi Man Kwong Peter and Others

• Jurisdiction: Singapore
• Judge: Chua F A J
• Judgment Date: 09 March 1988
• Neutral Citation: [1988] SGCA 2
• Docket Number: Civil Appeal No 70 of 1986
• Date: 09 March 1988
• Published date: 19 September 2003
• Year: 1988
• Plaintiff Counsel: Leolin Price QC and AJ Thambaiyah (Cooma Lau & Loh & M Karthigesu)
• Citation: [1988] SGCA 2
• Defendant Counsel: Jonathan Parker QC and Goh Heng Leong (Allen & Gledhill)
• Court: Court of Appeal (Singapore)
• Subject Matter: Chattels,Protection of interests,Sale of equipment,Whether company in whose premises machinery attached can sell equipment,Whether company in whose premises machinery was attached can sell equipment,Whether chattels part of fixtures,Title,Personal Property,Retention of title clauses

Cur Adv Vult

(delivering the judgment of the court): This is an appeal by the appellants against the judgment of the High Court dated 13 August 1986 dismissing the appellants` claim that they retained all their rights, title and interest in certain items of machinery and spare parts (the equipment) delivered by them to Allied Cocoa Industries Pte Ltd, Singapore (the company) and installed by the company at its factory.

The appellants are a Swiss engineering company which manufactures machinery and equipment, and which also provides for their erection and installation for the manufacture of cocoa and chocolate. The respondents are the receivers and managers of the company (the receivers), and were appointed on 27 February 1984 by Bank of America National Trust and Savings Association (the bank) pursuant to two deeds of debenture dated 9 April 1980 and 2 September 1981.

The company was a Singapore registered company engaged in the business of making cocoa butter and cocoa powder. They erected their factory-premises at 342, Jalan Boon Lay, Singapore - a piece of land leased from Jurong Town Corporation for a term of 30 years commencing from 1 January 1980. The company was, however, let into possession of the land only on or before 13 June 1980 and the formal agreement was not executed until 16 September 1983. Nothing, however, turns on this. The company clearly had had an agreement for a lease, and, since 13 June 1980, an equitable leasehold interest in the land.

On 9 April 1980, the company executed a deed of debenture in favour of the bank to secure the payment of all moneys and liabilities agreed to be paid under the deed of debenture, charging:

Firstly - All the freehold and leasehold property of the company both present and future and the fixed plant machinery and fixtures (including trade fixtures) from time to time thereon.

Secondly - ...

Thirdly - The undertaking and all other property and assets of the company both present and future.

The charge hereby created shall as regards the premises first described be a first fixed charge and as to the premises secondly and thirdly described shall be a floating charge.

It is also relevant to recite the provisions of cll 3 and 10(k) relating to express covenants by the company not to create any charge or lien on the property charged by the debenture, or to remove any fixtures:

3 Pari Passu Charges

The company shall not without the consent in writing of the bank create any mortgage debenture or charge upon and so that no lien shall in any case or in any manner arise on or affect any part of the undertaking and property charged hereunder ranking either in priority to or pari passu with or ranking after the charges hereby created.

10 Covenants

The company hereby covenants with the bank that until the full and final payment of all its indebtedness to the bank, the company will -

(k) not dismantle pull down or remove any part of the buildings fixtures plant machinery and equipment, except in cases where such dismantling pulling down or removal shall in the opinion of the company be rendered necessary by reason of the same being worn out or damaged, in which case the company shall give sufficient written notice to the bank and will replace such property by property of similar nature and value;

On 2 September 1981, a second deed of debenture was executed by the company with the bank for additional credit facilities. The terms of this debenture are, for all practical purposes, identical to the first and need not therefore be set out here. Clause 14 of each of those deeds, insofar as material, provides as follows:

14 Powers of Receiver

A receiver so appointed shall be the agent of the company and the company shall be solely responsible for his acts and defaults and remuneration. Such receiver shall have power:

(a) to enter into and take possession or control of any land or premises of the company or any part thereof or collect and get in any property and assets comprised in this security and for that purpose to take any proceedings in the name of the company or otherwise as may seem expedient;

(b) ...

(c) ...

(d) forthwith and without restriction to sell or agree in selling (obtaining only when and where necessary the leave of the court) any of the company`s property and assets comprised in this security or any part thereof (and for this purpose, to sever, if necessary, plant machinery and other fixture from the land) by public auction or by private contract on such terms and conditions as he may think fit, with power to vary any contract for sale and to resell without being answerable for any loss occasioned thereby; any such sale may be for cash, shares or stocks, debenture stock or other valuable consideration to be paid or satisfied at such time or times as the receiver shall think fit.

Particulars of the debentures were duly registered pursuant to the Companies Act.

From the beginning of 1981 and at various times thereafter up to 18 January 1982, the company ordered the equipment from the appellants under six separate contracts of sale for its installation in the factory premises. From November 1981 or thereabout, it was assembled and installed - together with machinery and equipment purchased elsewhere - to make up one entire processing and manufacturing plant for the manufacture of cocoa butter and cocoa powder. Each of those contracts of sale made between the appellants and the company contained the following provision:

4 Preservation of Rights of Property:

Buehler Brothers Ltd shall remain proprietors of all their deliveries (machines spare parts and accessories) until payment of the full purchase price as well as any costs of erection which are to be charged to the customer and interest on arrears etc has been completed. The buyer authorizes Buehler Brothers Ltd to have registered the reservation of ownership at the buyer`s expense on public registers or records under observation in the form and within the terms and limitations set forth by the laws of the respective countries and the buyer is obliged to give promptly any signatures requested from him for this purpose. (`Retention of title` clause)

In October 1982, the company started production but it felt into financial difficulties and defaulted in payment to the bank of monies secured by the debentures. On 27 February 1984, the respondents were appointed receivers and managers of the company by the bank pursuant to the two debentures. They took possession of the factory and all the properties and assets of the company, including the equipment, and carried on the business of the company. At this juncture, it has to be observed - as this is a point strongly relied upon by the appellants in argument before us - that the bank which appointed them had never at any time been in the position of a mortgagee in possession.

By a purchase and sale agreement dated 14 May 1984, the receivers purported to sell to the purchaser a company known as WR Grace & Co, with effect from the `completion date` (defined in cl 5(a) as `the date on which the completion of the purchase and sale shall occur`), the following properties and assets:

(a) all that right, title and interest of the company in the property described in the First Schedule hereto, and held by the company under an agreement to lease with the Jurong Town Corporation ... dated 16 September 1983 ... together with all buildings erected therein and fixtures comprised therein (hereinafter referred to as `the property`);

(b) those assets listed in the Second, Third and Fourth Schedules hereto and all other physical assets ... of the company, including but not limited to all plant and machinery together with available spare parts, electrical and air-conditioning installations, furniture and fixtures, office, factory and laboratory equipment, tools, implements, utensils, all motor and other vehicles, all documents of title relating thereto, and ail other available books and records relating thereto, ... together with the benefit of all such suppliers` and manufacturers` warranties and guarantees in respect thereof as are in force on the completion date and are assignable (hereinafter together referred to as the assets`);

(c) ...

By cl 2(a) of this agreement, the purchase price, stated to be $31,300,000 for the property and assets, was apportioned as follows:

(i) for the property (viz the leasehold interest in the land with the factory) the sum of $13,200,000;

(ii) for the assets (viz all the machinery and equipment, including the equipment) the sum of $18,099,999; and

(iii) for the benefits referred to in cl 1(c) hereof (viz the purchase orders listed therein) the sum of $1.

It is also to be observed that the Sixth Schedule thereof gave notice of the retention of the title clause as follows:

The conditions of sale of the suppliers of the equipment supplied under the following contract numbers contain or may contain provisions for retention of title to the supplier until the full purchase price is paid ...

By a deed of assignment dated 28 June 1984, made between the receivers, the bank and the assignee, De Zann Far East (a subsidiary of WR Grace & Co), and expressed to be in consideration for the sum of $13,200,000, the bank:

(1) ... Assigns unto the assignee all the right title and interest under the agreement for lease in respect of the said land and premises described in the Schedule hereto ...

The Schedule refers, in technical language, to the piece of land on which the factory premises were situated `together with the buildings erected thereon and fixtures comprised therein`.

On 19 November 1984, the appellants, not having been paid the full purchase price of the equipment under the various contracts of sale, filed an originating summons seeking the determination of the...