Sigma Cable Company (Pte) Ltd v NEI Parsons Ltd

• Judgment Date: 21 July 1992
• Date: 21 July 1992
• Docket Number: Suit No 2394 of 1987
• Court: High Court (Singapore)

Sigma Cable Co (Pte) Ltd

Plaintiff

and

NEI Parsons Ltd

Defendant

[1992] SGHC 196

F A Chua J

Suit No 2394 of 1987

High Court

Agency–Agency by estoppel–Apparent or ostensible authority of agent–Whether principal's conduct constituted a representation that employee was agent with authority to contract–Whether external indication of authority of any legal significance–Commercial Transactions–Sale of goods–Rights of unpaid seller–Claim for goods sold and delivered–Whether employee was agent for employer in ordering cables

The main issue in this case was whether an employee had authority to purchase cables for and on behalf of the defendant company. The plaintiff company claimed that between 19 May 1987 and 16 June 1987, the defendant company, through its employee, purchased and collected from it nine lots of electric cables required for construction of an electric power station. The employee had appeared at the plaintiff's premises where the plaintiff's employees saw him wearing the defendant's company badge. He had also used the defendant company's purchase order forms and rubber stamp. The plaintiff sent statements of account dated 31 May 1987 and 30 June 1987 to the defendant, which denied placing any orders for the said cables. The plaintiff commenced this action against the defendant for $350,832.08 for electric cables sold and delivered to it, alleging that the defendant's conduct as a whole amounted to a representation that the employee had the necessary implied or apparent authority to purchase the nine lots of cable for and on its behalf, and that by not objecting to or denying the employee's authority after it received the plaintiff's statements of account, constituted such representation. In its defence, the plaintiff argued that the employee was employed as an engineer and as such, had not been given any responsibility to purchase any materials for and on its behalf.

Held, dismissing the plaintiffs' claim:

(1) The duties normally associated with an engineer did not include the purchase of materials or goods although an engineer might advise on the type of materials required: at [34].

(2) In determining whether a principal had represented that his agent had authority to enter into a particular transaction, the court had to consider the totality of the principal's conduct, and not just what the usual authority of the particular type of agent in question was. Even if the principal had represented to a third party that a person was its engineer, the third party had to establish that the purchases were within the scope of authority of an engineer, and could not establish such authority by relying on its employees' evidence that engineers were known to them to make similar purchases. A statement by a principal's employees that a person was in charge of purchase orders was not a statement that that person had authority to make purchases. The fact that a person made use of a company's purchase order forms and rubber stamp could not be a representation unless the principal knew and allowed the person to use them, and the third party had to prove thus. Even if a company's purchase order forms and rubber stamp were kept by a person, that would not amount to a representation that such a person had authority to use them and bind the company: at [28], [31], [33], [35], [40] and [41],and [45].

(3) The third party could not rely on the representation of an employee as to his actual authority vis-à-vis his principal. External indication of affiliation with a company on a person could not conceivably be understood as a representation that a person has authority to conclude contracts on behalf of a company: at [30] and [39].

(4) A third party could not assume from the absence of any response on the part of the principal that the principal's employee had authority to purchase for the principal, and the principal was estopped from denying such authority only if the third party proved: (a) that the principal or the principal's senior officers had knowledge of facts which they were legally obliged to inform the third party; (b) that the principal had failed to inform or warn the third party; and (c) that the third party had acted to its detriment as a consequence of such failure to inform or warn: at [38] and [46].

[Observation: The fact that a company might have allowed its employee to retain possession of documents that would enable the employee to perpetrate a fraud on a third party did not entitle the third party to claim against the company. The law did not impose a general duty on a company to take precautions, in the general course of carrying on its business, not to conduct its business in a manner which could facilitate fraud by any of its employees: at [42] and [56].]

Ebeed v Soplex Wholesale Supplies Ltd [1985] BCLC 404 (folld)

Farquharson Brothers & Co v C King & Co [1902] AC 325 (refd)

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 (folld)

Kepitigalla Rubber Estates Ltd v National Bank of India Ltd [1909] 2 KB 1010 (refd)

Kreditbank Cassel GmbH v Schenkers Ltd [1927] 1 KB 826 (refd)

Mayor, Constables and Company of Merchants of the Staple of England v Governor and Company of the Bank of England (1888) 21 QBD 160 (refd)

Negara Traders Ltd v Pesuroh Jaya Ibu Kota, Kuala Lumpur [1969] 1 MLJ 123 (refd)

Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80; [1985] 2 All ER 947 (refd)

Tham Seow Hing v Chop Kwong Fatt Cheong [1937] MLJ 210 (refd)

Lee Han Tiong and Attlee Hue (Lee & Lee) for the plaintiffs

Ronnie Quek and Teo Lip Hua (Allen & Gledhill) for the defendants.

Judgment reserved.

F A Chua J

1 The plaintiffs claim against the defendants the sum of $350,832.08 for electric cables sold and delivered to the defendants.

2 The defendants are a company incorporated in the United Kingdom and carried on business at No 96 Somerset Road, #11-03/04 UOL Building, Singapore (“the city office”).

Plaintiff's case

3 In June 1986 the defendants were constructing an electric power station for the Public Utilities Board on Pulau Seraya and had a site office there. On 19 May 1987, one Richard Kwan Chuan Seah (“Richard Kwan”) telephoned Miss Jackie Tan Mui Hiang (“Jackie Tan”), the sales co-ordinator of the plaintiffs. Richard Kwan told Jackie Tan that he was calling from Pulau Seraya and that he was an engineer employed by the defendants and needed 150 MM2 and 10 MM2 cables and asked her to send the quotations by fax to the Pulau Seraya site office of the defendants, which she did. On 26 May Jackie Tan received a telephone call from Richard Kwan who said that he was calling from Pulau Seraya and that he needed 70 MM2 cable ex stock and asked her to fax the quotation to the defendants' site office at Pulau Seraya, which she did. On 27 May Richard Kwan telephoned again to Jackie Tan and asked for 240 MM2 cable ex stock and asked her to fax the quotation to him, which she did. Then Richard Kwan telephoned her the same day. He asked for another size of cable: 300m of 630 MM2. He was told that the plaintiffs did not have the whole length of 300m but had in stock lengths of 94m, 148m, 163m, 182m and 186m. Richard Kwan asked for a quotation. Jackie then prepared a pro forma invoice dated 27 May 1987 addressed to the defendants at the city office “attention Mr Kwan” for 300m 630 MM2 cable for $8,772 signed by Mr Chin of the marketing department and it was sent by post. Richard Kwan telephoned again the same day and said he might need three lengths: 148m, 163m and 182m and asked for a quotation. An amended pro forma invoice signed by Shirley Tan of the marketing department for $14,415.32 was sent to the defendants' city office by post.

4 On 28 May Richard Kwan telephoned Jackie Tan and said he wanted to confirm those quantities which Jackie Tan had faxed him. He said he was coming to collect the cables that afternoon. Jackie Tan asked for the purchase order and was told that the purchase order number was 380215. Jackie Tan then prepared the delivery order which was signed by Shirley Tan. The total price of the order was $32,665.32. That afternoon Richard Kwan came in a vehicle and saw Jackie Tan. That was the first time Jackie Tan had met Richard Kwan. He was wearing the NEI badge on his shirt. Jackie Tan introduced Richard Kwan to Low Lean Siew, the plaintiffs' sales engineer. Low Lean Siew had met Richard Kwan once before at the Pulau Seraya site in 1987. Jackie Tan handed the delivery order to Richard Kwan who then went to the plaintiffs' store and collected the cables and took them away in the vehicle.

5 On 30 May Richard Kwan telephoned Jackie Tan and asked for cables for the Pulau Seraya project and asked for a quotation. Later that day Richard Kwan telephoned Jackie Tan and confirmed the order and said he was collecting the cables that afternoon. Jackie Tan asked for the purchase order number and was given the number “380218”. The amount of the second order was $19,079.11. Jackie Tan prepared the delivery order and the invoice addressed to the defendants at the city office. Richard Kwan collected the cables from the plaintiffs' store that day.

6 On 1 June Richard Kwan telephoned Jackie Tan and asked for cables. Jackie Tan gave a quotation. Richard Kwan asked her to fax the quotation which she did. On 3 June Richard Kwan telephoned Jackie Tan and confirmed the order for two items. Richard Kwan gave the purchase order number as “380222” and said he was coming to collect the two items. Jackie Tan prepared two delivery orders. She also prepared two invoices addressed...