Sintra Merchants Pte Ltd v Brown Noel Trading Pte Ltd (Donald & Mcarthy Pte Ltd, Third Party)

• Jurisdiction: Singapore
• Judge: MPH Rubin J
• Judgment Date: 10 April 1996
• Neutral Citation: [1996] SGHC 71
• Docket Number: Suit No 653 of 1993
• Date: 10 April 1996
• Published date: 19 September 2003
• Year: 1996
• Plaintiff Counsel: Plaintiff unrepresented and absent
• Citation: [1996] SGHC 71
• Defendant Counsel: Chiang Wen-Shan and Jerry Loo (Wee Ramayah & Pnrs),Jimmy Yim and Lau Kok Keng (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: s 32(c) Evidence Act (Cap 97, 1990 Ed),Measure of damages,Remedies,Sale of goods,Damages,Payment,Effect,Conditions governing admissibility,Commercial Transactions,Contract,Exception,Whether failure to conform could amount to material breach,Non-delivery of goods,Whether breach amounted to repudiation,Purchaser's obligation to provide a letter of credit conforming to the credit agreed in the contract of sale,Hearsay,Award in foreign currency,Evidence,Breach,Statement by person unable to testify in court,Whether interest on award adequate compensation for such loss,Whether amounting to waiver of the breach,Additional claim for currency exchange loss,Proper measure where seller did not know of terms of the purchaser's sub-sale of same goods,Letter of credit,Failure of innocent party to accept repudiation,Admissibility of evidence

Cur Adv Vult

In this action the contest is essentially between Brown Noel Trading Pte Ltd, the defendants, and Donald & Mcarthy Pte Ltd, the third party, over the latter`s alleged failure to supply 10,000 metric tons of steel reinforcing bars under the terms of a written contract (the Donald Mcarthy contract) between them dated 21 October 1992. Sintra Merchants Pte Ltd, the plaintiffs in this action who commenced the proceedings in this matter against the defendants on account of the defendants` inability to fulfil their obligations under a contract entered into between the plaintiffs and the defendants also dated 21 October 1992 (the Sintra contract) for the supply of the same goods, did not appear at the trial since their claim had apparently been met by the defendants by a payment of US$150,000. The defendants` claim on the other hand against the third party is for: (a) US$55,000 being loss of profits; (b) currency exchange loss arising therefrom; and (c) a sum of S$235,715 being the equivalent of US$150,000 which had been paid by the defendants to the plaintiffs. A claim for a sum of S$12,807.05 under para 14(ii) of the defendants` claim was abandoned upon the defendants` counsel conceding that the said claim is subsumed in the claim for US$55,000.

In the main the dispute centres around the terms of the written contract between the parties and a letter of credit opened by the defendants in favour of the third party pursuant to the Donald Mcarthy contract. As is not uncommon in proceedings such as the one at hand, there was much variance between the versions narrated by the respective witnesses at the trial. It is therefore necessary to set forth the facts in some detail as could be gathered from viva voce evidence as well as documents referred to in the course of these proceedings.

Sometime in the course of September 1992, a related company of the defendants known as Global Exim Pte Ltd (Global) where the defendants` Mr Mac Yim Wan Yip (Mr Mac Yim) was the principal figure, began negotiations with the third party for the supply of a quantity of prime deformed steel reinforcing bars (the goods). Global`s representatives Mr Mac Yim and his colleague Mr Ringo Fok Kar Seng (Mr Ringo Fok) were then dealing with the third party through one Aaron Chen, a former executive of the third party. Global at that stage were acting as commission agents for the third party expecting to earn US$2.50 per metric ton from the third party. Right up to 20 October 1992 (ie one day before the said two contracts were signed) the expectation was that the potential purchaser would open the relevant letter of credit in favour of the third party and the third party would pay Global the agreed commission. Global at that stage did not reveal the identity of the potential purchaser to the third party for fear that the third party might undercut the defendants and deal direct with the purchaser, a situation the defendants wanted to avoid to safeguard their interests.

On 21 October 1992, once the prospects became firm the defendants decided to substitute themselves as the contracting parties in the transaction. Consequently on 21 October 1992 the defendants signed the said two contracts - one with the plaintiffs and the other with the third party for the sale and purchase of 10,000 metric tons of the goods. Insofar as material, the relevant parts of the Donald Mcarthy contract provide as follows:

Contract No: 92/Steel/10/09 Date: 21 October 1992

This is to confirm that Brown Noel Trading Pte Ltd of 32/33 Duxton Road, Singapore 0208 has bought the following goods under the terms and conditions stipulated below from Donald & Mcarthy Pte Ltd of 87 Beach Road, #05-01, Chye Sing Building, Singapore 0718.

Material: Prime deformed steel reinforcing bars

...

Quantity: 10,000 mt (+/- 10% at seller`s option)

Size Menu: ...

Length: ...

Chemical: ...

Composition: ...

...

Shipment: Latest December 1st 1992, subject force majeure.

Load Port: Any Black Sea port

Price: US$285.50 PMT C&F FO CQD Fangcheng or Shekou, China.

...

Payment Terms: Irrevocable L/C negotiable and payable 100% value at the counters of negotiating bank in Singapore and allowing TT reimbursement.

Penalty Clause: Should the buyer fail to open L/C favouring seller later than 31st October 1992, the seller shall have the option to either cancel the contract or grant a grace period of 1 to 3 days prior to cancellation. In the event of failure to open L/C as per contract and time stipulated, seller has the right to claim up to 1.0% of the contract value.

Late Shipment: ...

...

Dated 21 October 1992.

Confirmation:

(signed) (signed)

Brown Noel Trading Pte Ltd Donald & Mcarthy Pte Ltd

The terms contained in the Donald Mcarthy contract are almost identical to those in the Sintra contract, save that the agreed price in the Sintra contract is US$291 per metric ton, higher by US$5.50. In other words, the defendants by simultaneously entering into these two contracts, stood to gain US$55,000 (US$5.50 x 10,000 metric tons) upon completion of the purchase and sale. The other difference observed from the perusal of the two contracts was that in the Sintra contract, the pattern of the steel bars was specified as `fish-bone shape` whereas such a description was missing in the Donald Mcarthy contract.

In so far as material to the proceedings at hand, the letter of credit in favour of the third party was not opened by the stipulated date, ie 31 October 1992. The reason the defendants attributed to this delay was that their buyers, ie the plaintiffs did not fulfil their obligation in opening their letter of credit on time.

Mr Mac Yim in his affidavit of evidence-in-chief said that as he envisaged the possibility of the defendants being unable to open their letter of credit in favour of the third party by 31 October 1992, he spoke to Aaron Chen of the third party on 28 October 1992 requesting an extension of time of five days from 31 October 1992. According to Mr Mac Yim, Aaron Chen readily agreed to the five-day extension.

The rest of the evidence of Mr Mac Yim as regards the circumstances and events culminating in their opening a letter of credit in favour of the third party and their subsequent differences is best stated in his own words. Paragraphs 12 to 17 of his affidavit read as follows:

... The plaintiffs opened their letter of credit in favour of the defendants on 29 October 1992. The defendants received the letter of credit the following day on 30 October 1992. Upon receipt, the defendants arranged for a back-to-back letter of credit to be opened in favour of the third party. On 2 November 1992, the defendants` bank, Credit Lyonnais, issued a letter of credit in favour of the third party. ...

... The defendants` letter of credit was received and accepted by the third party. The defendants then awaited shipment of the goods by the third party.

... About a week later, Aaron Chen informed me that the third party were having problems supplying the defendants with the goods. He explained that the third party`s Russian supplier could not produce goods to the specifications stipulated in the agreement, and offered to supply us with goods of alternative specifications. This was followed by a fax dated 10 November 1992 from Chemet Handel Trading (S) Pte Ltd to Global Exim Pte Ltd confirming the same. Chemet Handel Trading (S) Pte Ltd is a company owned by the same shareholders as the third party, namely, Vinod Kumar Didwania and Mrs Nidhi Vinod Didwania. ... On the same day, I enquired from the plaintiffs if they were prepared to accept the alternative goods, but they replied that they were unable to do so. I then communicated this to Aaron Chen by way of a fax dated 10 November 1992, ... I also agreed to try to continue to persuade the plaintiffs to accept the alternative goods.

... Between 11 November 1992 and the middle of January 1993, the defendants kept pressing the third party to come up with the goods contracted for, while at the same time, were trying their best to persuade the plaintiffs to accept goods of alternative specifications. All this while, no mention was made by the third party of their rejection of the defendants` order of the goods on the grounds that the letter of credit was only opened on 2 November 1992. There was nothing in the conduct of the third party to suggest that the third party`s continued efforts to obtain the goods were pursuant to a fresh contract with the defendants. It would be preposterous to even suggest that. After all, the third party was so apologetic about not being able to supply the goods to the defendants. Aaron Chen had agreed to the extension of the dateline for the opening of the defendants` letter of credit. If there was indeed a fresh contract, there would have been no need for an extension of the deadline. There would also have been the need to open a fresh letter of credit on fresh terms. The existing letter of credit which had been sent to the third party would have been returned to the defendants for cancellation. It never was, to this day. ...

... On 20 January 1993, the plaintiffs decided that they had waited long enough for the goods, and put the defendants on notice of their [plaintiffs`] claim against the defendants for breach of contract. On the same day, the defendants in turn put the third party on notice of their claim against the third party for breach of its agreement to supply the goods to the defendants. ...

... On 21 January 1993, the defendants heard for the first time from the third party that the third party`s agreement to supply the goods to the defendants had long been `cancelled` on the grounds of the defendants` failure to open a letter of credit by 31 October 1993. On the same day, Ringo Fok of the defendants replied and reminded the third party [of] the verbal agreement between Aaron Chen (who had by now left...