Sea-Shore Transportation Pte Ltd v Technik-Soil (Asia) Pte Ltd

• Jurisdiction: Singapore
• Judge: Audrey Lim JC
• Judgment Date: 24 October 2018
• Neutral Citation: [2018] SGHC 231
• Court: High Court (Singapore)
• Docket Number: Suit No 415 of 2015
• Year: 2018
• Published date: 29 August 2019
• Hearing Date: 26 September 2018,26 June 2018,28 June 2018,10 July 2018,29 June 2018,27 June 2018,03 July 2018
• Plaintiff Counsel: Mohamed Nawaz Kamil and Wong Joon Wee (Providence Law Asia LLC)
• Defendant Counsel: S Magintharan, Vineetha Gunasekaran and Tan Xiyun Benedict (Essex LLC)
• Subject Matter: Tort,Conversion,Damages,Measure of damages,Identity of goods in issue
• Citation: [2018] SGHC 231

Audrey Lim JC: Introduction

The plaintiff (“Sea-Shore”), is in the business of providing storage and handling services for machinery and equipment. The defendant (“Technik-Soil”), is in the business of general construction work and wholesale trade. On 28 October 2010, Sea-Shore and Technik-Soil entered into an agreement (“the Service Agreement”) for Technik-Soil to rent approximately 10,000 sq ft of storage space at Sea-Shore’s premises to store Technik-Soil’s equipment for a monthly rent of $7,490. The parties do not dispute that the terms of the Service Agreement governed the relationship between them, and that Technik-Soil owed Sea-Shore arrears of rent totalling $266,110 (as of 30 September 2014) (“the Debt”).¹

In November 2014, after the parties had exchanged various correspondence regarding the repayment of the Debt, including several letters of demand by Sea-Shore, Sea-Shore proceeded to dispose of the equipment which Technik-Soil had stored at Sea-Shore’s premises for a net sum of $40,000, and applied this $40,000 towards the partial discharge of the Debt.

In January 2015, Sea-Shore commenced this suit against Technik-Soil to claim the remaining unpaid rent of $226,110 for Technik-Soil’s rental of Sea-Shore’s premises to store its goods. In turn, Technik-Soil counterclaimed in tort for conversion, detinue and negligence, as well as for breach of contract, alleging that Sea-Shore had sold or removed the goods it had stored at Sea-Shore’s premises without its consent.

Sea-Shore subsequently applied for judgment on admission. When this application was heard, Technik-Soil did not dispute that it owed the Debt. As such, on 11 May 2018, I entered judgment for Sea-Shore in the sum of $226,110 (after deducting the $40,000 which Sea-Shore had obtained from selling Technik-Soil’s equipment).

The trial thus proceeded only on Technik-Soil’s counterclaim. Technik-Soil claimed that it had stored a vast number of equipment on Sea-Shore’s premises, far in excess (in quantity and value) of the equipment that Sea-Shore had disposed of. At the conclusion of the trial, I found Sea-Shore liable in tort for conversion as it had no right to sell Technik-Soil’s equipment to discharge the outstanding Debt. However, I found that Technik-Soil failed to prove its allegations about the quantity and value of the equipment that was the subject of the conversion, and awarded Technik-Soil $60,000 in total as damages. Technik-Soil has since appealed against my decision, and I now give the full grounds of my decision.

Sea-Shore’s case Balan’s testimony

Balan Vijayarahavan Pillai (“Balan”), the Chief Operating Officer (“COO”) of Sea-Shore, testified on its behalf. Until 2014, when Balan joined Sea-Shore as its COO, one Sharafdeen (“Deen”), a director of Sea-Shore, had been the primary person managing its affairs. At the time of the trial, Balan was managing Sea-Shore’s operations, including its storage business. Sea-Shore’s premises located at No 14 Pioneer Sector 2 (“the Premises”) comprised of one building surrounded by a large fenced-up open yard.

The Service Agreement was signed by Deen on Sea-Shore’s behalf and by Shin Young Kyun (“Shin”) for Technik-Soil. It was undisputed that Technik-Soil ceased to pay the monthly rent from July 2011 onwards.² Deen told Balan that he had spoken to Shin on numerous occasions to chase Technik-Soil to pay the rent arrears but Shin requested more time to make payment because Technik-Soil was facing cash flow issues.

Deen informed Balan that, sometime in April 2013, he had told Shin to pay the outstanding rent and vacate the Premises. In a letter to Sea-Shore dated 26 April 2013 (“2013 Letter”), Shin asked Deen for more time to make payment, explaining that Technik-Soil was facing financial difficulties. In this letter, Technik-Soil requested that it be given until 31 May 2013 to relocate its equipment, failing which Sea-Shore could “scrap sale off [Technik-Soil’s] equipment”.³ Yet, by 31 May 2013, Technik-Soil was still in default on the rent arrears and had not removed its equipment from the Premises. Nonetheless, Deen did not immediately scrap sell Technik-Soil’s equipment because Technik-Soil subsequently made partial repayment of the outstanding rent in June and July 2013.⁴

When Balan became COO in 2014, he discovered Technik-Soil’s rent arrears to be around $286,000 and found that Technik-Soil had not replied to the numerous invoices and statements of accounts issued by Sea-Shore. Hence, on 8 October 2014, Sea-Shore’s lawyers issued a letter of demand for the rent arrears to be paid within seven days, failing which it would issue legal proceedings to claim the outstanding sum (“the 1st Demand Letter”).⁵ Technik-Soil did not respond to the 1st Demand Letter.

On 15 October 2014, Sea-Shore’s lawyers sent another letter (“the 2nd Demand Letter”) to demand that Technik-Soil settle its outstanding debt, failing which Sea-Shore would dispose of Technik-Soil’s equipment and apply the sale proceeds towards payment of the outstanding debt.⁶ Technik-Soil replied on 17 October 2014 to ask for more time to make payment and undertook to pay all rent arrears by July 2015.⁷ On 20 October 2014, Sea-Shore replied to state that it was willing to consider an extension of time for repayment provided that certain conditions were met, asserting that it would be at liberty to enter judgment for the entire rent in arrears if those conditions were breached (“the 3rd Demand Letter”).⁸ Sea-Shore also informed Technik-Soil to respond with its agreement to the conditions by 21 October 2014. Technik-Soil did not reply to the 3rd Demand Letter or pay any part of the rent arrears.⁹

Hence, in November 2014, as Sea-Shore was itself experiencing cash flow issues, Balan decided to dispose of the equipment which Technik-Soil had stored at the Premises. He did not inform Technik-Soil of this disposal at that time, as he was of the view that it had been given adequate notice by way of Sea-Shore’s 3rd Demand Letter and that Technik-Soil itself had acknowledged Sea-Shore’s right to scrap sell the equipment in Technik-Soil’s 2013 Letter. On 15 November 2014, Sea-Shore sold all of Technik-Soil’s equipment to Metal Recycle Pte Ltd (“Metal Recycle”) for a net total of $40,000. A total of 20 units of equipment was sold to Metal Recycle, as reflected in Metal Recycle’s Purchase Order (“the PO”).¹⁰ At that time, Balan did not know how much the equipment was worth but he claimed that they were old and corroded. Balan had invited a few potential buyers to the Premises to view the equipment and Metal Recycle had made the highest bid.¹¹

Balan explained that he had identified the equipment for sale on the basis that all equipment found within the area of the Premises demarcated for Technik-Soil belonged to it. Sea-Shore sold all the equipment found within that area to Metal Recycle.¹² Sea-Shore did not keep an inventory of the equipment stored at the Premises and did not restrict Technik-Soil’s movement of its equipment in and out of the Premises as, under the agreement between them, Technik-Soil was responsible for monitoring and keeping track of its own equipment at the Premises.¹³ Balan stated that, contrary to Technik-Soil’s claim, there was no other equipment belonging to Technik-Soil on the Premises apart from what Sea-Shore had sold to Metal Recycle.

Verlachamy’s testimony

Verlachamy was Sea-Shore’s yard manager and was present daily at the Premises to supervise the movement of goods and people in and out of the Premises. Verlachamy stated that the agreement between the parties was that Sea-Shore would not exercise oversight over Technik-Soil’s equipment stored at the Premises as Technik-Soil wanted flexibility in moving its equipment in and out of the Premises. Hence he allowed Technik-Soil’s staff to enter and exit the Premises and to deposit or remove items without having to inform Sea-Shore.¹⁴

Technik-Soil’s case

Technik-Soil’s case was narrated by Shin, its general manager and the main person running its business. Shin was also one of Technik-Soil’s three shareholders.¹⁵ Technik-Soil undertook construction projects and imported and rented equipment for that purpose. As part of its business operations, it required storage space for its equipment when not deployed for use, and hence it entered into the Service Agreement with Sea-Shore.

After entering into the Service Agreement, Technik-Soil proceeded to relocate a total of 198 units of various equipment from its previous storage location at Jalan Papan to the Premises between 29 October and 2 November 2010 (“the Relocated Equipment”). Shin claimed that the Relocated Equipment was missing from the Premises between November 2014 and January 2015.¹⁶ According to Shin, Technik-Soil never removed the Relocated Equipment from the Premises, save for a few items which it deployed at construction sites and subsequently returned to the Premises for storage.¹⁷

In 2012, Technik-Soil was facing severe financial problems and fell into arrears on the rental charges due to Sea-Shore. Nevertheless, Deen allowed Technik-Soil to continue storing its equipment at the Premises and to pay the rent later. In 2013, in the midst of negotiations on the outstanding rent, Technik-Soil agreed to Sea-Shore’s request that it relocate its equipment. Technik-Soil notified Sea-Shore of its agreement by way of the 2013 Letter, requesting at the same time for more time to arrange for the relocation. As Technik-Soil could not find an alternative storage location in time, Shin claimed that Deen subsequently agreed to allow Technik-Soil to continue storing its equipment on the Premises on the condition that Technik-Soil made partial payment of the outstanding rent. It was not disputed that Technik-Soil made three payments totalling $20,000 in June and July 2013 as partial repayment of its rent arrears¹⁸ and that Sea-Shore continued to allow Technik-Soil to...