Panwah Steel Pte Ltd v Burwill Trading Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 18 September 2006
• Date: 18 September 2006
• Docket Number: Civil Appeal No 7 of 2006
• Court: Court of Appeal (Singapore)

Panwah Steel Pte Ltd

Plaintiff

and

Burwill Trading Pte Ltd

Defendant

[2006] SGCA 34

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

Tan Lee Meng J

Civil Appeal No 7 of 2006

Court of Appeal

Commercial Transactions–Sale of goods–Breach of contract–Damages for breach of contract–Appropriate measure of damages for breach of contract by non-delivery of goods–Contract–Contractual terms–Conditions–Appellant buying rebars from respondent and selling to third party for use in construction project–Condition of agreement for sale of rebars from respondent to appellant that supply of rebars “shall be as per the progress requirement of the project”–Whether respondent entitled to cease supplying rebars to appellant due to appellant's non-compliance with condition–Words and Phrases–“Available market”–Section 51 (3) Sale of Goods Act (Cap 393, 1999 Rev Ed)

The respondent agreed to supply steel reinforcing bars (“rebars”) to the appellant under six contracts. The respondent had commenced an action against the appellant for moneys in respect of unpaid rebars supplied by the respondent to the appellant under three of the contracts. The appellant counterclaimed against the respondent for damages in respect of the respondent's short deliveries under four of the contracts. The appellant's counterclaim was dismissed by the trial judge and it appealed to the Court of Appeal against the trial judge's decision in respect of three of the contracts (“the First Burmese Agreement”, “the Second Burmese Agreement” and “the Changi Agreement”).

Under the Changi Agreement, the appellant purchased rebars from the respondent so that it could sell the rebars, under a contract with a third party (“the KB Agreement”), for use in a construction project. The Changi Agreement was subsequently extended on the condition that the supply of rebars “shall be as per the progress requirement of the project” (“the Condition”). The respondent maintained that the Condition had not been satisfied by the mere issuance, by the appellant, of its purchase orders upon receipt of the third party's purchase orders. The respondent also alleged that the appellant had exceeded its contractual credit limit under the Changi Agreement and it was therefore entitled to cease supplying rebars to the appellant.

As for the Burmese Agreements, the trial judge had held that but for cl 14.7 of the Standard Terms and Conditions of Sale (“Standard Terms”), the respondent would have been liable to the appellant. The judge had further held that in any event, no damages would have been due under the Second Burmese Agreement and that US$7,052.90 in damages would have been due under the First Burmese Agreement based on the “available market price” of the rebars.

There were three main issues before the Court of Appeal. First, was the respondent entitled to cease the supply of rebars under the Changi Agreement due to the appellant's alleged non-compliance with the Condition? Second, had the appellant exceeded its contractual credit limit under the Changi Agreement, thus entitling the respondent to cease the supply of rebars to it? Third, what was the appropriate quantum of damages that ought to be awarded to the appellant with respect to the Burmese Agreements?

Held, allowing the appeal in part:

(1) The Changi and KB Agreements were part of a back-to-back arrangement in that the provisions of supply were meant to mirror each other. The six-month extension of the Changi Agreement was only to make the duration of that agreement the same as that of the KB Agreement. The Condition only reiterated the original purpose of the Changi Agreement and did not change the existing obligations under it. The appellant had not breached the Condition: at [21].

(2) The appellant had exceeded the credit limits provided to it by the respondent under various other supply agreements. There had also been an oral agreement which effected a lower credit limit, which the appellant also breached. This entitled the respondent to cease supply to the appellant: at [25] and [26].

(3) Since the respondent conceded that cl 14.7 of the Standard Terms was not pleaded, it would appear that the respondent would be liable to the appellant with regard to the First and Second Burmese Agreements: at [29].

(4) What constituted an “available market” was very much a factual inquiry. While precedents could be cited to draw general principles, difficulties arose when precedents were cited in order to persuade the court to adopt the precise figures therein. The facts of the precedent would need to be virtually on “all fours” with the case at hand before such a precedent could be applied: at [34].

(5) The proper price to be used as the “available market price” for the Burmese Agreements was the monthly average price provided by International Enterprise Singapore's published lists rather than the contract price of the Second Burmese Agreement. The average price derived from many contracts provided more of a market price than the price of a single transaction: at [35] to [38].

Charrington & Co, Limited v Wooder [1914] AC 71 (refd)

Panwah Steel Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd [2006] 1 SLR (R) 788; [2006] 1 SLR 788, HC (refd)

Panwah Steel Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd [2006] 4 SLR (R) 571; [2006] 4 SLR 571, CA (refd)

Sale of Goods Act (Cap 393, 1999 Rev Ed) s 51 (3) (consd)

Unfair Contract Terms Act (Cap 396, 1994 Rev Ed)

Alvin Yeo Khirn Hai SC and Chua Sui Tong (Wong Partnership) and Chong Siew Nyuk Josephine and Aqbal Singh A/L Kuldip Singh (UniLegal LLC) for the appellant

Gurbani Prem Kumar and Yee Weng Wai Bernard (Gurbani & Co) for the respondent.

Judgment reserved.

Andrew Phang Boon Leong JA

(delivering the judgment of the court):

Introduction

1 The respondent, Burwill Trading Pte Ltd (“Burwill”), is a supplier of steel reinforcing bars (“rebars”) and is part of the Natsteel group of companies. The appellant, Panwah Steel Pte Ltd (“Panwah”), is a stockist, trader and exporter of rebars. It purchases rebars from suppliers like Burwill and then resells the rebars to contractors for various construction projects and export markets. Burwill supplied rebars to Panwah under the following contracts:

(a) the Changi Agreement C020483 (3) dated 23 May 2002;

(b) the First Term Contract C030107 dated 11 March 2003;

(c) the Second Term Contract C030626 dated 4 December 2003;

(d) the Yung Sheng Agreement C030520 dated 10 October 2003;

(e) the First Burmese Agreement C040283 dated 18 June 2004; and

(f) the Second Burmese Agreement C040329 dated 2 July 2004.

2 Burwill had sued Panwah for moneys in respect of unpaid rebars supplied by Burwill to Panwah under the Changi Agreement, and the First and Second Term Contracts. Panwah admitted Burwill's claim for the sum of $1,394,953.65. On the other hand, Panwah counterclaimed against Burwill for damages in respect of Burwill's short deliveries under the Changi Agreement, the Yung Sheng Agreement, and the First and Second Burmese Agreements. The trial judge (“the judge”) dismissed...