Malayan Miners Company (M) Ltd v Lian Hock & Company

• Jurisdiction: Singapore
• Judgment Date: 17 June 1966
• Date: 17 June 1966
• Docket Number: Suit No 695 of 1964
• Court: High Court (Singapore)

Malayan Miners Co (M) Ltd

Plaintiff

and

Lian Hock & Co

Defendant

[1966] SGHC 14

A V Winslow J

Suit No 695 of 1964

High Court

Contract–Misrepresentation–Rescission–Sale by auction–Whether innocent misrepresentation that goods were in good condition–Contract–Misrepresentation–Sale by auction–When property passed–Whether fraudulent misrepresentation that goods were in good condition–Sections 18 and 58 Sale of Goods Act 1893 (c 71) (UK)

An auction sale was conducted at the plaintiff's mine by licensed auctioneers. The defendant made a successful bid at $30,000 for one of the lots of machinery described in the auctioneers' list as “Lot No 7 - One unit Tournadozer powered by 186 HP GM Engine (MMS/P 8) (Good Condition)”. A deposit of $3,000, representing 10% of the purchase price, was made by the defendant.

Condition five of the written conditions of sale provided that “the lots are sold 'as they lie' with all faults and errors of description. The purchaser is deemed to have inspected and approved of the lots he buys and if he buys without previous inspection he shall be deemed to have done so at his own risk”.

The defendant refused to take delivery of the tournadozer, after having made its deposit, on the ground that it was not in good condition. The tournadozer was subsequently sold by the plaintiff by public auction for $24,000. The plaintiff claimed the sum of $3,905.50 being the difference between $30,000 and the price recovered on re-sale less the amount of deposit, ie $3,000 plus the sum of $905.50 for expenses and charges incurred in respect of the second auction.

The defendant pleaded that there was innocent misrepresentation by the auctioneers on behalf of the plaintiff that the tournadozer was in good condition which induced the defendant to bid for it. Alternatively the defendant alleged that there was a fraudulent misrepresentation by the auctioneers on behalf of the plaintiff by virtue of their either knowing that it was false or recklessly and not caring whether it was true or false

Held, allowing the claim and dismissing the counterclaim:

(1) The defendant had inspected the goods thoroughly before the auction and was satisfied, from that personal inspection, that it was what it wanted. At the sale by auction, the plaintiff's mine manager acted with the utmost candour in all respects and never committed any fraud or deceit within the rule in Derry v Peek (1889) 14 App Cas 337 and, therefore, the defence of fraudulent representation failed: at [22] and [24].

(2) Applying s 18 of the Sale of Goods Act 1893 (c 71) (UK), property in the tournadozer passed to the defendants at the fall of the hammer. The passing of property also passed the risk to the defendant. At the very most, there was a breach of warranty as to the fitness of the tournadozer but there was no breach of any condition precedent or fundamental obligation sufficient to invalidate the contract which was made: at [28].

(3) In view of condition five of the conditions of sale, the plaintiff did not give any warranty as to the freedom of the tournadozer from any particular fault. Moreover, the defendant inspected the tournadozer and was satisfied with it and never asked for the machine to be started. The fact that it was unable to start, although efforts were made over a period of two hours to induce some response from the machine, is a matter on which the defendant might have had a chance of success if a claim for damages for breach of warranty had been made: at [20] and [31].

(4) The price at which the tournadozer would probably have been sold at the second auction (if representation had been made regarding its condition) is in the region of $27,000 rather than $24,000 which was the actual price it was sold for. The plaintiff was therefore able to retain the sum of $3,000 which it received as a deposit from the defendant. The plaintiff was also awarded the sum of $905.50, being the amount of the expenses incurred in respect of the second auction: at [34].

Derry v Peek (1889) 14 App Cas 337 (folld)

Leaf v International Galleries [1950] 2 KB 90 (refd)

Mesnard v Aldridge (1801) 3 Esp 271; 170 ER 612 (folld)

Schneider v Heath (1813) 3 Camp 506; 170 ER 1462 (refd)

Ward v Hobbs (1878) 4 App Cas 20 (refd)

Sale of Goods Act 1893 (c 71) (UK) ss 18, 58 (consd); s 11 (1) (e)

C S Wu (Donaldson & Burkinshaw) for the plaintiff

K S Chung (Chung & Co) for the defendant.

A V Winslow J

1 At an auction sale conducted by M/s Kiong Chai Woon & Co Ltd (licensed auctioneers) on 6 January 1964 at the plaintiff's mine at Sri Medan in the State of Johore, Mr Ho Hon Hong (DW1), sole proprietor of the defendant firm (hereinafter referred to as “the defendants”), made a successful bid at $30,000 for one of the lots of machinery described in the auctioneers' list as “Lot No 7 - One unit Tournadozer powered by 186 HP GM Engine (MMS/P 8) (Good Condition)”. A deposit of $3,000, representing 10% of the purchase price, was made by the defendants.

2 It is claimed that, by virtue of the provisions of ss 18 and 58 of the Sale of Goods Act, the property in the said tournadozer accordingly passed to the defendants at the fall of the hammer.

3 The written conditions of sale, inter alia,provide that the highest bidder shall be the buyer, that the buyer shall, if required, pay a deposit of 10% of the purchase price immediately after the sale and that the balance shall be paid before the removal of any lots. They also provide that the whole amount due shall be paid within 24 hours after the day of sale failing which the deposit will be forfeited and the vendor will be at liberty to re-sell the property without giving previous notice to the buyer and that any deficiency therefrom, and all expenses attending the sale shall be made good by the buyer and will be recoverable from him by the vendor.

4 Condition five of the written conditions of sale provides as...