Teck Guan Sdn Bhd v Beow Guan Enterprises Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 10 September 2003
• Neutral Citation: [2003] SGHC 203
• Docket Number: Suit No 331 of 2003 (Registrar's
• Date: 10 September 2003
• Published date: 03 October 2003
• Year: 2003
• Plaintiff Counsel: Yong Kai Chang (Drew & Napier LLC)
• Citation: [2003] SGHC 203
• Defendant Counsel: Edwin Mah Chwee Bock (Phang & Co)
• Court: High Court (Singapore)
• Subject Matter: Incorporation,Arbitration,Defendant relying on contractual clause referring to rules of Cocoa Merchants' Association of America,Agreement,Whether arbitration clause incorporated by reference

1. The appellants, Beow Guan Enterprises Pte Ltd (“BG”), who were sued by the respondents, Teck Guan Sdn Bhd (“TG”), for non-delivery of a consignment of Sulawesi cocoa beans, sought an order that the action against them be stayed on the ground that their contract required the dispute to be resolved through arbitration. Their application for a stay of proceedings was dismissed by the assistant registrar. I dismissed BG’s appeal against the assistant registrar’s ruling and now set out the reasons for my decision.

Background

2. In June 2000, TG purchased 1,000 metric tonnes of Sulawesi cocoa beans from BG. The FOB contract provided for the cocoa beans to be loaded in Indonesia and shipped to Malaysia. It was agreed that 500 metric tonnes of the cargo would be delivered to TG in September 2000 and the balance of the agreed cargo would be delivered to TG in November 2000. The first shipment of 500 metric tonnes of cocoa beans was duly delivered to TG.

3. The second shipment of cocoa beans was delayed. The determination of the causes and effect of the delay will no doubt shed light on which party breached the contract. What is relevant for present purposes is that on 8 December 2000, TG nominated Palu, a port in Sulawesi, as the port of loading. On 3 February 2001, TG nominated a vessel to load the second shipment at Palu and informed BG that the estimated arrival date of the vessel was 5th or 6th February 2001. The nominated vessel could carry 1,500 metric tonnes of cargo and TG paid the freight charges for 500 metric tonnes of cocoa beans. However, BG loaded only 250 metric tonnes of cocoa beans.

4. According to TG, BG represented that they would deliver the balance of the cocoa beans to them at a future date and notice would be given to them when the said beans were available for loading. In the meantime, the price of cocoa beans went up. In May, the price of cocoa beans was USD 1,000 per metric tonne in May 2001. This was much higher than the contract price of USD 644 per metric tonne. When BG did not deliver the remainder of the agreed cargo, TG purchased from the available market 250 metric tonnes of cocoa beans of the quality and description in their contract with BG. The difference between the contract price and the price paid by TG for the 250 metric tonnes in question amounted to RM824,162.41.

5. TG expected BG to compensate them for the loss incurred as a result of the latter’s failure to supply the agreed quantity of cocoa beans. However, BG contended that they were not in breach. They asserted that they were ready to deliver the second batch of 500 metric tonnes of cocoa beans to BG at the material time and that TG were themselves in breach by failing to provide a vessel to load the cargo by the end of November 2000. They pointed out that it was not until early February 2001 that the vessel nominated by TG to load the cocoa beans arrived at Palu. BG asserted they were compelled to sell a part of the cargo intended for TG because cocoa beans are perishable products. After fruitless attempts to resolve their dispute regarding the non-delivery of the 250 metric tonnes of cocoa beans, TG commenced an action in April 2003 to recover damages from BG.

6. BG filed a memorandum of appearance but contended that...