Torvan Shipping Ltd v. Gilman & Company Ltd

CACV000027/1977

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Coram: Huggins, J.A., Trainor and Yang, JJ.

Date of Judgment: 16th August 1977.

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JUDGMENT

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Huggins, J.A.:

1. The Respondent brought against the Appellant three actions in the District Court for the price of goods agreed to be sold over a period of three years. The actions were heard together and it is common ground that the substantial defence in all three actions was whether the Appellant had withdrawn its implied authority to the Respondent to appropriate goods to the contract by a letter dated 17th October 1975.

2. The contract took the form of an order form signed by both parties. It was dated 2nd August 1975 and not 2nd "July" 1975 as stated in the judgment. The material portions of the contract for present purposes are:

Paper price guaranteed with no change for 12 months from the date of this order and thereafter subject to written notice (s) to Buyer of variation (s) in price such notice (s) to take effect with the monthly delivery following issuance of any such written notice and any such variation if rejected by Buyer will entitle Supplier to cease all further deliveries.

The first delivery was made on or about 1st October 1975 and those goods were paid for. The Appellant then sent the letter of 17th October 1975, the text of which was as follows:

Thereafter twelve further instalments under the contract were tendered but delivery was refused. The only other material document was reply, dated 27th October 1975, to the Appellant's letter:

3. The two issues which have been argued before us are (1) whether it was open to the Appellant to withdraw its implied assent to the appropriation of goods to the contract, and (2) whether the letter of 17th October 1975 constituted a withdrawal of such authority. It has not been contended in this court that the Appellant had a right to terminate the contract and it is conceded that the Appellant was in breach of the contract. The foundation of its case is that the Respondent has not claimed damages but has sued for the price of the goods.

4. It is agreed that the contract was for the sale of future and unascertained goods and that the property in the goods could not pass until the goods had been ascertained. It is further agreed that the Respondent was by implication given authority to appropriate goods to the contract each month. The Respondent maintains that such authority, once given, could not be withdrawn and relies upon a decision of this court in a previous case to which the respondent was a party and upon the decision of the House of Lords in White and Carter (Councils) Ltd. v McGregor 1962 A.C. 413. In my judgment those cases are distinguishable. In Gilman & Co. Ltd. v Yokohama Musen Industrial Co. Ltd. Civil Appeal 1976 No. 35 there was a similar contract for the sale of paper over a period of months. Each month the seller tendered delivery but the goods were not accepted. It was held that the buyer had given its implied assent to the monthly appropriation of goods by the seller and that the refusal of the buyer to accept delivery was "a refusal of the acceptance of delivery and not a revocation of its implied assent to the appropriation which they had already given at the signing of the contract". With respect that was clearly right: by the time the buyer refused to accept the goods the goods had already been appropriated to the contract with the assent of the buyer and the property in them passed to the buyer: s.20 r.5 of the Sale of Goods Ordinance. Accordingly the seller was entitled to the price. In the case at bar the Respondent also appropriated goods to the contract but the question is whether it did that with the assent of the Appellant. I find nothing in the only two judgments of this court of which copies have been put before us to support the contention that an implied assent once given cannot be withdrawn before an appropriation is made, and if there had been dicta to that effect they would have been obiter.

5. The White and Carter Case equally appears to me to be of no assistance in deciding the present appeal. That was not an action concerning the sale of goods. What was in issue was not the power to revoke an authority to appropriate goods to the contract but the right of a person who had contracted to pay for the display of advertisements over a period of years to cancel the contract without paying the full contract price. The majority decision is one which has received severe criticism as well as support and, more importantly, judges in later cases have suggested that it must be confined to substantially similar facts. I am satisfied that the decision of the House of Lords in no way weakens the authority of the cases which I now come to consider. Mr. Allman-Brown does, however, seek support for his argument in a passage from the dissenting judgment of Lord Keith of Avonholm at p.437:

"A much closer parallel with the present case is a contract to sell future, or unascertained goods. In this case there can be no appropriation of, and therefore passing of, property in the goods without the assent of both buyer and seller. If therefore the buyer repudiates the contract before appropriation, or refuses his assent to appropriation, there can be no passing of property. The seller is then confined to an action of damages for breach of contract. This, of course, is a rule of statute."

Mr. Allman-Brown's submission is that a repudiation by the buyer, whether accepted by the seller or not, constitutes a withdrawal of any implied authority to appropriate.

6. Direct authority on the present issue is to be found in Sells v Thomson (1914) 17 D.L.R. 737. The defendant, a company of book-sellers, ordered from the plaintiff, a publishing company, twenty-five volumes of a book. Macdonald, C.J.A. said at p.738:

As in the case before us the claim was for the price of the goods and there was no alternative claim for damages for breach of the executory agreement of bargain and sale, or at least no evidence to establish what damage (if any) the plaintiff had suffered: see p.742. On the appeal the action was dismissed. I do not accept that the decision rested upon any consideration that the books were of inferior quality: the only one of the four Justices of Appeal to mention the quality of the books was McPhillips, J.A. but it is clear from his judgment that that was merely the alleged cause of the cancellation of the order and the learned judge concurred with the other members of the court that the action was not properly founded. He, like Irving, J.A., expressly referred to Ginner v King (1890) 7 T.L.R. 140, which Mr. Eddis submits was no longer good authority as it preceded the Sale of Goods Act. In my view the authority of Lord Esher's judgment is no less today than it was in1890 for there was nothing in the statute at variance with this established principle of the common law. The learned Master of the Rolls said at p.142:

"Then came the order of the 30th of September to appropriate the bags of sugar, when they arrived, to different persons named. That, however, was an authority which the defendant might have cancelled before it was acted upon. That was a plain, simple question of fact which might early have been decided at the trial, but it had not even been pleaded and was not put before the Judge while the case was being tried by the jury. Still, this Court was bound to express to their opinion as to the letter, and it appeared to them that it had been intended and understood to cancel the authority. He believed that letter was received by the plaintiffs before they had sent off the sugar. The appropriation, therefore, was cancelled, and the defendant had repudiated the contract, so that the action was properly for not accepting the goods, and the damages would be the difference between the price contracted for and the price which could have been realized at the time for delivery, which was only £7 10s."

An implied authority is as capable of cancellation as is an express authority.

7. Did the letter of 17th October constitute a withdrawal of the implied authority given by the Appellant? The learned judge held that it did not. He gave this reason: he thought that the courteous terms in which it was written tended to indicate a tentative suggestion rather than a definite notice of termination and in particular he said:

"Nowhere does the defendant say 'we terminate' or indeed 'in accordance with the terms of the contract'."

With respect I think he may here have overlooked that one of the arguments on behalf of the appellant Buyer had been that what was alleged to be terminated by the letter was not the contract but the implied assent to appropriate. He correctly appreciated what is implicit in Ginner v King, namely that one must consider both what was the intention of the buyer and what was the understanding of the seller, and he concluded that the reply of 27th October 1975 was a clear indication that the parties were not ad idem. He added:

"If the Defendant's Managing Director thought he had the right to terminate he would have replied 'If misleading, I would make it clear that I am terminating'. However, he said nothing".

Again there may have been a failure to distinguish between the termination of the contract and the termination of the authority to appropriate. Be that as it may, I take a different view of the two letters. That of 17th October 1975 was not a request to agree to terminate the order but a request to terminate the order "with immediate effect" because the paper would no longer be required. The Appellant would be unlikely to apologize for "all the inconvenience caused" if it was merely inviting the Respondent to discuss the terms on which it would agree to rescission of the contract. Read as a whole the letter indicates that the Appellant would refuse to accept future deliveries and it was clearly implicit that the Appellant was no longer assenting to future appropriations of goods to the contract. The Respondent's reply, on the other hand, was consistent with an invitation to discuss the situation brought about by the fact that the Appellant was in breach of the executory contract.

8. I would allow the appeal and, there being no claim for damages, enter judgment for the appellant Defendant with costs here and below.

16th August 1977.

9. Leave to appeal refused.

Representation:

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Coram: Huggins, J.A., Trainor & Yang, JJ.

Date of Judgment: 16th August, 1977.

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JUDGMENT

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Trainor, J.:

10. I have been afforded the opportunity of reading the judgment of the learned President with which I agree. I have nothing to add.

Representation:

Mr. Allman-Brown (Wilkinson & Grist) for the appellant.

Mr. F. Eddis (Deacons) for the respondent.