Lim Kim Cheong v Lee Johnson

• Judge: Michael Hwang JC
• Judgment Date: 31 August 1992
• Neutral Citation: [1992] SGHC 232
• Citation: [1992] SGHC 232
• Defendant Counsel: Bryan Ghows (Khattar Wong & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Tan Siah Yong (Piah Tan & Partners)
• Date: 31 August 1992
• Docket Number: District Court Appeal No 35 of 1991
• Court: High Court (Singapore)
• Subject Matter: Declaration not to be granted on hypothetical issues or issues of no practical consequence,Courts and Jurisdiction,District court,ss 19(2) & Pt IV Subordinate Courts Act (Cap 321),Jurisdiction,Declaration sought for immaterial to real issue,Jurisdiction to make bare declaration,Whether court should grant declaration in the circumstances,Application of two-fold test,ss 19(2), 32 & Pt IV Subordinate Courts Act (Cap 321)

Cur Adv Vult

Can a district court grant a bare declaration? This is a question on which there is apparently no reported authority and, as there are conflicting views on this issue, I have to deal with it as fully as possible.

But first, the facts of this appeal. This is a story of a fraudster who has cheated several innocent parties resulting in financial losses of varying degrees. The burden on me, however, is not so much to apportion the losses between the innocent parties, but to deal with a situation where the issues between the parties to this case have changed, from the time when the suit was first commenced to the time that the matter was heard in the district court, and again before me on appeal, raising at this stage a fundamental question as to the source of the jurisdiction of the district courts.

The respondent (whom I will call `the seller`) wished to sell his Mitsubishi Lancer No EZ 8954 Z and to buy a new Toyota Corona for his wife. Billy Tan, a fraudster, was introduced to the seller and his wife as a person who could handle both these transactions. Billy Tan met the couple at the Colombo Court taxi stand where he inspected the Lancer. He offered to buy it for $28,500 and agreed to help the couple to buy a new Toyota Corona for $29,500 as well as to get them a scrap car. Billy Tan paid the seller $1,000 as a deposit for the Lancer. The arrangement was that delivery of the Lancer would be given to him when the new Toyota arrived, and the balance of the price of the Lancer would be set off against the purchase price for the Toyota. At some point, as the understanding was apparently that he would pay the purchase price for the Toyota to the car dealers, a cheque for $14,500 was also given to him for the scrap car.

Billy Tan offered to assist the couple with the renewal of the road tax for the Lancer, and the logbook was given to him together with a cheque for the road tax. The logbook was never returned, as the seller was content to allow Billy Tan to retain it pending completion of the sale. Billy Tan also borrowed the seller`s identity card on some pretext, but this was returned. The Lancer never left the seller`s possession.

Shortly after the meeting with the seller and his wife, Billy Tan entered into an agreement with the appellant (whom I will call `the buyer`) to sell him a car for $26,500. Billy Tan showed him a Mitsubishi Lancer bearing the number plate EZ 8954 Z (the same registration number as the seller`s Lancer). The buyer agreed to purchase the car and paid him $5,500 as an initial payment. Billy Tan was able to arrange for the buyer to purchase the car on hire purchase through Sime Diamond Leasing (S) Pte Ltd (whom I will call `the finance company`). The buyer paid one instalment to Billy Tan (purportedly under the hire purchase agreement), but the car was never delivered to him. It subsequently transpired that Billy Tan, on the day that he borrowed the seller`s identity card, forged the seller`s signature on a motor vehicle transfer form. As the logbook of the Lancer was in his possession, he was able to effect a transfer in the Registry of Vehicles from the seller`s name into the name of the buyer.

Billy Tan then absconded, leaving the parties in the following situation:

(1) The seller still retained possession of the Lancer, but had not been paid the balance of the purchase price, nor had he received the new Toyota. He also did not have the scrap car for which he had paid Billy Tan.

(2) The finance company had nominally purchased the car bearing the particulars of the seller`s Lancer, and had entered into a hire-purchase agreement with the buyer in respect of this car. It also held the logbook of the seller`s Lancer.

(3) The buyer had paid an initial down payment and one instalment under the hire-purchase agreement, but had no car.

When the truth of the matter emerged, the seller sued the buyer for the following reliefs:

(a) a declaration that the transfer of the seller`s Lancer to the buyer by the seller was null and void; and

(b) an order that the Registry of Vehicles be directed to rectify its records to reflect the seller as the registered owner of the seller`s Lancer.

The buyer resisted the claim and counterclaimed for possession of the car. The finance company obtained an order of court allowing it to be added to this action as an intervener, but filed no document in court stating the nature of its interest.

After the action was commenced, and before the trial, the three parties entered into `without prejudice` discussions with a view to disposing of the car. The terms upon which the parties eventually reached agreement for the sale do not appear in the record of appeal, and it is therefore unclear on what legal basis the parties agreed that the car should be sold. Although copies of the correspondence between the three parties were shown to me, I am reluctant to make any finding on the basis of the correspondence, as counsel for the buyer (who was not acting at the material time) did not know the background to these letters and the solicitors for the finance company were not present at the hearing of the appeal before me. However, all three parties had to be involved in order to sell the vehicle, and it is not in dispute that the car was in fact sold and the proceeds of the sale held by the solicitors for the finance company as stakeholders pending the outcome of the action. It is also not clear what exactly the trial judge was told about the sale. The notes of evidence only record that, half way through the proceedings, the seller`s counsel informed the court that the car was sold and that the solicitors for the finance company were holding the money as stakeholders.

At the trial, the seller`s statement of claim was amended. The seller`s position at the trial was that title to the car never passed from the seller to Billy Tan, who accordingly could not give title to the buyer. The buyer`s defence was that the seller had sold the car to Billy Tan and/or authorized Billy Tan to sell the car on his behalf. The buyer also pleaded estoppel. No amendments were, however, made to the pleadings to reflect that the action was no longer about the car but about the proceeds of sale. I will return to the significance of this later.

The learned district judge found as a fact that the buyer bought from Billy Tan what he had seen. Although the car that the buyer saw bore the same number as the seller`s car, the learned district judge found that it was not in fact the seller`s car that he had seen, since it was of a different colour from the seller`s car and the seller`s evidence was that he had never parted with possession of his car. Accordingly, the buyer had not purchased the seller`s car.

The district judge went on to consider the buyer`s reliance on s 21 of the English Sale of Goods Act 1979. In that context, the learned district judge made the following findings:

(1) When Billy Tan entered into his agreement with the seller to purchase the seller`s car, he became its owner.

(2) Billy Tan had the seller`s authority or consent to sell the car.

(3) There was no estoppel even though the seller had handed over the logbook and his identity card to Billy Tan because the buyer had never asked for, and was not shown, the logbook and the identity card.

The learned district judge then granted the following reliefs:

(a) he granted the declaration sought by the seller that the transfer of motor car EZ 8954 Z from the buyer to the plaintiff was null and void;

(b) he ordered that the proceeds of sale of the car be paid by the stakeholders to the seller;

(c) he made no order as to interest on the proceeds of sale;

(d) he dismissed the counterclaim; and

(e) he awarded costs in favour of the seller.

The buyer now appeals against these orders. Although various grounds were advanced in the petition of appeal, the buyer`s counsel who appeared before me (who was not counsel in the court below) based his appeal only on three grounds:

(1) The learned district judge had no jurisdiction to grant a bare declaration.

(2) Since the learned district judge had found that the property in the car had passed to Billy Tan, he should not have granted the declaration asked for in any event because the seller was no longer the owner but only had a lien for the unpaid purchase price.

(3) The buyer and Billy Tan had made a contract for the sale of the seller`s car; whether the seller had parted with possession of the car was inconsequential. Accordingly the buyer should be entitled to the proceeds of sale.

I will deal with the last point first because it is the simplest. The buyer`s counsel sought to argue that it was a proper inference from the evidence that what the buyer had agreed to purchase was not the car that was shown to him but a car bearing the number EZ 8954 Z, namely, the seller`s car. This was the only way in which counsel could establish the buyer`s rights to the proceeds of sale, since he conceded that he did not seek to challenge the finding of the learned district judge that the buyer never saw the seller`s car, nor did he rely on the ground of estoppel.

I have no difficulty in rejecting this ground of appeal, as the evidence of the buyer did not show that he placed any importance on the registration number of the car as such. On the facts, it is clear that he was buying the car which he had seen, which was not shown to him as a sample but as the actual car he was to purchase.

After I had indicated to counsel for the buyer in the course of argument that I did not accept this submission, he then submitted that his alternative claim for relief in this appeal was that the learned district judge was wrong in granting the declaration and should have dismissed both the claim as well as the counterclaim for the reasons set out in his first two grounds of appeal, to which I now turn.

The power of the...