Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd

• Jurisdiction: Singapore
• Judgment Date: 11 September 2009
• Date: 11 September 2009
• Docket Number: Civil Appeal No 203 of 2008
• Court: Court of Appeal (Singapore)

Tat Seng Machine Movers Pte Ltd

Plaintiff

and

Orix Leasing Singapore Ltd

Defendant

[2009] SGCA 42

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 203 of 2008

Court of Appeal

Bailment–Bailors–Rights of–Whether bailor had immediate right to possession if bailee behaved repugnant to terms of bailment–Whether contractual rights restricted bailor's rights under common law–Civil Procedure–Pleadings–Whether defendant should plead facts showing it acted in ordinary course of business–Whether plaintiff should plead facts to show that defendant had actual notice of impropriety or was not acting in ordinary course of business–Evidence–Proof of evidence–Burden of proof–Evidence required to show transaction in ordinary course of business–Proof of impropriety–Evidence required to displace presumption of good faith–Tort–Conversion–Whether act of removing machine from premises and delivering as instructed amounted to conversion of machine–Whether act of storing machine at warehouse amounted to conversion of machine–Whether act of redelivering machine to purported owner amounted to conversion of machine

Orix Leasing Singapore Ltd (“Orix”) leased a Heidelberg 4C machine (“the Machine”) to Rav Graphics Pte Ltd (“RGPL”) under a Hire-Purchase Agreement (“the Agreement”). Under cl 9 of the Agreement, if RGPL failed to observe any terms or condition of the Agreement, “it shall be lawful for [Orix] … by notice in writing to [RGPL] forthwith determine this Agreement …”. Crispian Tan (“Crispian”) was a director and shareholder of RGPL. The machine was stored at RGPL's premises at Toh Guan Road (“the Toh Guan premises”). RGPL hired Kenzone Logistics Pte Ltd (“Kenzone”) to transport its equipment as it needed to move out of the Toh Guan premises. Heng Khim Soon (“Mr Heng”) and Mark Yap Leng Huat (“Mark Yap”) were the operational director and operational manager of Kenzone, respectively.

Crispian asked Mr Heng if Kenzone was able to move the Machine and a smaller folding machine (“the Two Machines”). Mr Heng asked Mark Yap to handle the move of the Two Machines. As Kenzone did not have the requisite moving equipment, Mark Yap contacted Siew Shu Ping (“Ms Siew”) of Tat Seng Machine Movers Pte Ltd (“Tat Seng”) to enquire if Tat Seng was interested in securing the job. Ms Siew, together with Siew Kian Nam (the managing director of Tat Seng) (together, “the Siews”), went down to the Toh Guan premises to inspect the Two Machines and were told to shift them to a warehouse (“the Hock Cheong warehouse”) belonging to Hock Cheong Transport Co (Singapore) Pte Ltd (“Hock Cheong”) on or by 31 August 2006. Colin Lim was a director of Hock Cheong. Tat Seng provided a verbal quote of $3,500 (in cash payment) to move the Two Machines, which Crispian agreed to.

On 31 August 2006, Tat Seng sent three lorries to load the Two Machines at the Toh Guan premises. The lorries left the Toh Guan premises and reached the Hock Cheong warehouse. Colin Lim rejected the Two Machines as there was insufficient space at his premises. Eventually, it was agreed that Tat Seng would provide temporary storage space for the Two Machines. However, there was space to store the Machine only at an open yard in Tat Seng's Kallang Distripark premises. Ms Siew agreed to Mark Yap's request for the Machine to be wrapped with canvas and stored on pallets to protect it from rainwater and groundwater. Mark Yap, after obtaining Crispian's clearance on this matter, instructed Tat Seng to proceed with the new storage arrangements.

On 3 September 2006, Crispian contacted Mark Yap to request that the Machine be returned to him and promised to make payment to Tat Seng after it was returned. Mark Yap informed Ms Siew of the same. On 4 September 2006 at 5.00pm, Mark Yap met Crispian at Kallang Distripark. After inspecting the Machine, Crispian handed Mark Yap $3,500 in cash to pay Tat Seng. Malaysian-registered trailers arrived at about 6.00 pm to pick up the Machine. Mark Yap and the Siews were not personally present during the loading process. Mark Yap left for Tat Seng's office and paid Mr Siew the agreed fee in cash. As Mark Yap was unable to stamp the delivery orders at Tat Seng's office, he told Ms Siew that he would send or fax the delivery orders back to Tat Seng once they were stamped. The delivery orders were eventually faxed over on 20 October 2006, the day that Orix's private investigator had arranged to interview Mr Siew.

Orix later commenced an action against (inter alia) Kenzone and Tat Seng (together, the “Defendants”) for conversion of the Machine. The High Court Judge (“Judge”) held that the Defendants had acted dishonestly and could not have believed that RGPL was entitled to deal with the Machine in the way that it did, relying on: (a) the lack of credibility of Crispian's evidence; (b) the fact that Colin Lim did not wish to be involved as he suspected that something was wrong when he saw the Machine; (c) the lack of and inadequacies in Tat Seng's documentary evidence; (d) the absence of payment for the additional services provided for by Tat Seng; and (e) the manner in which the Machine was taken back by Crispian on 4 September 2006. The Judge therefore found the Defendants liable to Orix in conversion. Tat Seng appealed against the Judge's findings.

Held, allowing the appeal:

(1) Under the common law, the right of possession revested in the bailor if the bailee behaved in a manner that was repugnant to the terms of the bailment. The requirement for notice under cl 9 of the Agreement was not absolute and did not restrict Orix's rights under the common law. Therefore, Orix had the immediate right to possession of the Machine when it was removed from the Toh Guan premises: at [52] and [54].

(2) Tat Seng's conduct in removing the Machine from the Toh Guan premises and delivering it to Hock Cheong's warehouse for storage was purely ministerial and did not amount to conversion of the Machine. Tat Seng had merely changed the location of the Machine entrusted to it and did not assist in the sale of the Machine or take any step that amounted to the transfer or interference of ownership. Further, it was not pleaded that Tat Seng was part of a wider conspiracy to profit from the sale of the Machine, and, in any case, there was no evidence of this: at [68].

(3) Tat Seng's act of storing the Machine at its warehouse did not amount to an act of conversion. The Machine was stored in an open yard and Mark Yap had requested that the Machine be protected from the elements. As such, it could not be inferred that Tat Seng, by wrapping and placing pellets under the Machine, knew that the Machine had not been removed bona fide, especially since there was no evidence that the wrapping was costly or time-consuming. There was plausible evidence that Tat Seng had a practice of not charging its customers for short-term storage and that this was not the first time it had provided such a gratuitous service. Given that Tat Seng was dealing with both Kenzone and Crispian for the first time, it was quite probable that Tat Seng had provided these additional services to build up goodwill: at [71].

(4) Orix should not have been allowed to allege at trial that Tat Seng had acted in bad faith. Adequate notice of an allegation that a party had not acted in good faith had to be given to the party allegedly implicated. Orix did not even file a reply when it should have particularised how Tat Seng had notice of the competing claims vis-à-vis the lack of or inadequacies in the documentation or in the manner the Machine was redelivered: at [76].

(5) Even if the pleading deficit was not fatal to Orix's case, since Tat Seng had acted according to Crispian's instructions, it was necessary to establish that Tat Seng had notice of the existence of competing claims to the Machine at the material time in order for Tat Seng to be found liable. It was not suggested or pleaded as to how Tat Seng stood to benefit from being involved in Crispian's scheme. Tat Seng had no prior dealings with Crispian or RGPL and had little reason to suspect the move was not in the ordinary course of business. The administrative lapses did not suggest that Tat Seng was aware, at the material time, of any competing claims to the Machine, and were not probative of any lack of good faith on Tat Seng's part. Further, the additional services that Tat Seng provided without payment were not out of the ordinary, especially since it had no previous relationship with RGPL or Crispian. There was nothing unusual in the way the Machine was redelivered which would have indicated to Tat Seng that the Machine did not belong to RGPL or that competing interests were involved. Tat Seng did not attempt to cover its role in the transportation of the Machine. The Judge had made no finding on the extent of Tat Seng's alleged knowledge of Crispian's scheme to convert Orix's property. Tat Seng's involvement was ministerial. The Machine was returned to Crispian's possession. As such, Tat Seng was not liable for redelivering the Machine to Crispian: at [77] to [84].

[Observation: When an allegation of conversion was made against a carrier (including a bailee such as a warehouse operator), the carrier that intended to absolve itself from a finding of actual notice by showing that it had reasonably acted in the ordinary course of business had to plead, in its defence, the relevant facts it intended to rely on to show that it had done so. To discharge this burden of proof, the defendant-carrier would need to adduce a modest amount of facts to show that the transaction was of the type usually undertaken by it in the course of its ordinary business. Once the defendant-carrier has adduced credible evidence that it had acted in the ordinary course of business, the evidential burden of proof to establish conversion would be transferred back to the claimant. The claimant then had to show that the...