Stahltec Metallhandels GmbH v Chuan Ann Metals Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 02 March 2005
• Neutral Citation: [2005] SGHC 46
• Plaintiff Counsel: Lim Tong Chuan (Loo and Partners)
• Published date: 03 March 2005
• Court: High Court (Singapore)
• Defendant Counsel: Lee Eng Beng and Meah Tze Hua (Rajah and Tann)
• Subject Matter: Companies,Receiver and manager,Duty of receiver and manager,Contract,Contractual terms,German law governing contract,Whether retention of title clause validly incorporated -Whether retention of title clause transparent, clear and comprehensible,Whether English translation of retention of title clause constituted valid notice,Tort,Conversion,Plaintiff's contract with first defendant containing retention of title clause,First defendant not paying bills,First defendant put into receivership,Whether receivers and managers committing conversion by selling goods in custody to third party,Whether receivers and managers liable for storage costs of goods in plaintiff's possession pending outcome of trial

2 March 2005

Choo Han Teck J:

1 The plaintiff is a company incorporated and having its registered office in Germany. It was at all material times the manufacturers of rolled steel which it sold and supplied to its customers, one of whom was the first defendant. The first defendant was subsequently placed under receivership by one of its creditors, the Oversea-Chinese Banking Corporation (“OCBC Bank”). The second and third defendants were the receivers and managers appointed by OCBC Bank. The plaintiff obtained judgment against the first defendant for breach of contract on account of unpaid bills.

2 The claim against the second and third defendants (“the other defendants”) was for damages for the tort of conversion. The plaintiff’s claim was based on a retention of title clause in the contract between it and the first defendant. By 26 January 2003, the other defendants had sold all the goods in their custody to a third party, but prior to that had released a portion to the plaintiff. This portion represented the goods identified in a joint inspection by the plaintiff and the other defendants (“the disputed goods”). The plaintiff claimed that apart from the disputed goods, the total goods converted were valued at €255,000 as at 26 November 2003, but prices for steel had since risen and the value claimed was now €331,000. The plaintiff was also claiming storage costs of the disputed goods, on the ground that it was unable to sell the goods because of the other defendants’ objections. The storage charges claimed amounted to $200,287.62, being $22,254.18 a month for nine months. The plaintiff was also claiming a sum of $5,037.23 for some other steel sold by the other defendants in November 2003.

3 The other defendants denied that the retention of title clause was a valid clause in the contract. Their defence was two-fold. Firstly, they argued that the clause was not validly incorporated into the sale contracts. Secondly, they argued that even if the said clause had been incorporated, it was not applicable because the clause was not “transparent, clear and comprehensible”. In the first case, Mr Lee Eng Beng, counsel for the defendants, submitted that the contract was a standard-form contract, and had not been validly notified to the first defendant in a commonly understood language, as required under German law. He submitted that the English version that the plaintiff produced as proof of notification, was, in fact, lifted from another contract to which the first defendant was not a party. Moreover, it was plagiarised from another German supplier’s standard form.

4 The contract in question between the plaintiff and the first defendant was in the German language and signed on 16 August 1999. The relevant part of the retention of title clause in the English version purportedly given to the first defendant reads as follows:

1. All goods delivered shall remain our property (goods in which title is retained) until all accounts receivable from Purchaser are settled. This shall also apply to future and conditional claims, eg from acceptor’s bills of exchange.

2. Machining and processing of the goods in which title is retained shall take place on our behalf as our being the manufacturer in the meaning of Art 950 BGB (Civil Code), without any obligation on our part deriving therefrom. The machined and processed goods shall be deemed to be goods in which title is retained in the meaning of para 1.

3. If the goods in which title is retained are processed, combined and mixed with other goods by Purchaser, we shall have joint title to the resultant merchandise, proportionally in the amount of the invoiced value of the goods in which title is retained. If by such combining, mixing or processing our title ceased to exist, Purchaser shall hereby assign to us the proprietary/prospective rights to which Purchaser is entitled in the new products, proportionally in the amount of the invoiced value of the goods. In such case Purchaser shall keep the new products in custody for us free of costs. In proportion to our co-ownership rights the new products shall be deemed to be goods in which title is retained as defined under para 1.

5 According to the plaintiff’s Mr Holzapfel, the English version was only given in or about December 2001. There was no dispute that German law governed the contract and both sides called expert evidence in respect of that law. The plaintiff relied on Dr Christof Siefarth, and the defendants on Miss Birgitta von Dresky. The two German lawyers agreed that the contract in question was a standard-term contract and it was further agreed that in such contracts, the party who produced the standard terms was obliged to give the other party a reasonable opportunity to note the contents of the terms. The evidence of German law that was not in dispute is that the “text of standard form conditions has to be presented in the language of negotiations or in a world language by the presenter only if the opposing party explicitly requested to do so”. This is itself a translation of the Court of Appeals of Naumburg’s decision of 19 June 2003 (File No 2 O 68/02, published: NJOZ 2004, vol 01, p 14).

6 However, Dr Siefarth stated that the right to notification applied only before the parties had concluded the contract. Mr Lee Eng Beng, counsel for the defendant, accepted that this was so, but his argument was that the disputed goods were not sold in a single contract, but a series of contracts. Each sale was thus a separate contract. In this regard, he did not accept Dr Siefarth’s opinion that the contract document in question provided a “framework agreement” under which all the sales were carried out. Miss von Dresky also disagreed with Dr Siefarth. Her opinion was that the contract in question was a standard-form contract and not a “framework agreement”.

7 The proper English version of the relevant clauses, according to Miss von Dresky,[1] should be as follows:

1. All goods delivered shall...