Gilman & Co Ltd v. Yokohama Musen Industrial Co
Read the full judgment text of CACV 35/1976 on BabelCite. This Court of Appeal judgment was delivered on 30 September 1976.
1. This is an appeal from a decision of the District Court in which judgment was given for the defendant company.
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CACV000035/1976
Coram: Briggs, C.J., McMullin & Leonard, JJ. Date of Judgment: 30 September 1976 ----------------- JUDGMENT ----------------- 1. This is an appeal from a decision of the District Court in which judgment was given for the defendant company. 2. By written contract dated the 26th July, 1973, the plaintiff company agreed to sell to the defendant company two boxes of paper each month for a period of 24 months from September 1973 to August 1975 inclusive, at a fixed and stated price. Various deliveries were made under this contract but the plaintiff company complained that on eight separate occasions the defendant company refused to accept delivery. The plaintiff company therefore claims $792. It was not contested that the plaintiff company's claim was not for damages but it was a claim for the purchase price of the goods which were not accepted. 3. The learned trial judge found that the claim of the plaintiff company could not be sustained because the appropriation of the goods had not been assented to by the purchaser, the defendant company. Each time the delivery of paper was due under the contract the plaintiff company would deliver the proper amount of paper to the defendant company. This would be accompanied by a document headed "Gilman and Company Limited. Partial Delivery Sale Slip (Client's Copy)." This was addressed to the defendant and stated the nature of the goods being delivered and the price which was owed to the plaintiff company by the defendant company therefor. On at least two occasions, this document contained the following two statements:-
In all the other partial delivery sale slips, those two statements are either blacked out or omitted, except on each occasion the words "The following goods represent a partial delivery of an order for the above client." remain. 4. It was urged by the defendant company in the court below and again before this court that the two statements referred to above meant that unconditional appropriation of the goods had not been assented to by the buyer. I will deal with that point later in this judgment. 5. The plaintiff company relied on the provisions of rule 5(1) and (2) of section 20 of the Sale of Goods Ordinance (Cap.26). This rule reads as follows:-
6. It is the contention of the plaintiff company that the meaning of the contract is that upon each delivery of the goods to the defendant company there is an unconditional appropriation of the goods to the contract. We think that that contention is the correct one but that does not end the matter. With respect to the two deliveries which were accompanied by the partial delivery sale slips containing the two statements referred to above, the defendant company contends that the true meaning of those statements is that the seller has reserved "the right of disposal" and therefore rule 5(2) does not apply. We do not agree with this and we do not think that those words can be read so as to amount to the reservation of the right of the disposal of the goods. 7. Mr. Kwok, for the defendant company, also drew our attention to section 21(1) of the Ordinance. The relevant portion of this reads as follows:-
8. We do not think those statements can be read as a condition imposed by the plaintiff company on the defendant company which is obviously what is referred to in section 21(1) of the Ordinance. In our view, at the time of the signing of the contract on the 26th July, 1973, the defendant company gave its implied assent to the monthly appropriation by the seller of the goods from the warehouse of the seller. The refusal by the defendant company 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. See Benjamin on Sale, para. 360 etc. 9. It is true that in the court below the plaintiff company made certain concessions as to the two deliveries which were accompanied by the partial delivery sale slips which contain the two statements. But this was a concession which we think should not have been accepted by the judge and, of course, it is a concession on a point of law. 10. In event, therefore, this appeal must succeed and there will be judgment for the plaintiff for the amount claimed in the court below, namely $792. The plaintiff company is to have its costs of the proceedings in the court below and of this appeal.
Representation: Francis Eddis (Deacons) for Appellant. Kenneth Kwok (Wilkinson & Grist) for Respondent.
----------------- Coram: Briggs, C.J. McMullin, Ag. J.A., Leonard, J.) Date of Judgment: 30th September, 1976 ----------------- JUDGMENT ----------------- McMullin, Ag. J.A.: 11. The appellant and respondent companies in this case had traded with each other since 1971. The subject matter of this trade was a certain kind of paper called Ricofax paper various varieties of which had been delivered upon a monthly instalment basis by the appellant to the respondent. On the 26th of July 1973 the respondent ordered 24 boxes of a type of this paper known A4 and also 24 boxes of another type known as F4. The stated price for the first sort was $45 per box and for the second $54. The order form which contains the written record of this contract, signed by representatives of both companies, shows, at the foot of it, the words: "one box A4 and one box F4 every month for a period of 24 months from September 1973 to August 1975 inclusive." Deliveries commenced in September 1973 and the respondent company accepted the deliveries for October, November and December 1973 and also the deliveries for February, March, April, May, June and July 1974. Thereafter between August 1974 and September 1975 although the usual deliveries of paper were regularly tendered to the respondent company the respondent company refused to accept them. Thereafter the appellant company stopped deliveries and took action. 12. The appellant pleaded that it had unconditionally appropriated the requisite amounts of paper to the said contract for each of the months in which the respondent company had refused delivery and it claimed the contract price for the deliveries tendered upon those dates. The respondent company put in a defence but in the event it was not relied upon and is perhaps of interest only in that it shows that the reason for the refusal to accept delivery was that the respondent company had discovered that the paper which it was receiving from the appellant company could be had more cheaply elsewhere. 13. In the court below Mr. Kwok (who also appeared upon the appeal) rested upon a submission of no case for the respondent company basing himself upon sections 55(1), 20 and 21 of the Ordinance and in particular upon the 5th of the rule set forth in section 20. Rule 5(1) provides that where unascertained goods have been, with the assent of the seller, unconditionally appropriated to the contract the property in them passes. Rule 5(2) says that where the goods are delivered to the buyer pursuant to the contract and the seller does not reserve the right of disposal in them he is deemed to have unconditionally appropriated them to the contract. Section 21, insofar as it is material, says that the seller may by the terms of the appropriation reserve the right of disposal of the goods. The argument is that although the appellant company pleaded that the goods had been unconditionally appropriated to the contract there was no evidence to show that, these being unascertained goods, the buyer had assented to the seller unconditionally appropriating the goods to the contract simply by the act of tendering them upon delivery. The second limb of Mr. Kwok's argument relates to the initial delivery made in September 1973 under the contract and to a later delivery made in January 1974. On each of these occasions it would appear that the usual partial delivery sales slip contained, in addition to the usual entries upon it, a sentence to the following effect: "property in the goods described above shall not pass to the buyer until the delivery to the buyer of the seller's debit note has been made." These words show he says that, on these occasions at any rate, the mere delivery of the goods did not represent the seller's unconditional appropriation of the goods to the contract but denoted that the seller had reserved his right of disposal in the goods until a debit note had been delivered to the seller so that the provisions of the second paragraph of rule 5 under section 20 would not apply and the seller would not in those circumstances be deemed to have unconditionally appropriated the goods to the contract. As I understand him, he also enlisted those words on the two delivery slips as some evidence of an intention by the seller to reserve the right of disposal in the case of all the deliveries presumably because the first delivery slip of all showed those words. The purport of both his arguments was of course that if the goods had not been unconditionally appropriated to the contract with the buyer's consent (section 20, rule 5(1)) the property in the goods would remain in the seller and the action for the price of the goods as distinct from damages for breach of contract must necessarily fail. 14. For the appellant company in the court below it was argued that in view of the previous course of conduct between the parties involving regular deliveries per month and acceptances thereof by the buyer, so soon as the contract in 1973 was signed there was in it an implied authority given by the buyer to the seller to continue to appropriate the goods to the contract unconditionally by delivery in the usual way. Counsel for the appellant company however appears to have conceded that the property in the goods had not passed in respect of the deliveries of September 1973 and January 1974. He apparently accepted the argument that the words upon the delivery slip to which I have referred above had the effect that the property in the goods on those two occasions had not passed. 15. The learned trial judge accepted the propriety of that concession and he went on to find in respect of the other goods that the sole issue of fact was whether the buyer had assented to the appropriation of the goods. As to this he said:
Further on he said:
He dismissed the claim. I think however that Mr. Eddis is right when he maintains that upon the signing of the contract in July 1973 the buyer, who was familiar with the nature of the goods from long experience in dealing with the appellant, must be implied to have authorised, on that date, appropriation of the individual lots of paper to the contract in the usual way by delivery of the appropriate amounts. We do not know why the whole series of deliveries began with a refusal to accept in September 1973 followed by three acceptances in the subsequent months and five acceptances in 1973 prefixed by a refusal to accept delivery in January of that year but I do not think it can be right to say that these two refusals, interspersed with eight acceptances, can reasonably be held to denote a withdrawal of authority by the buyer from the seller of his implied right to appropriate the goods to the contract in this way. As Mr. Eddis says, such refusals can only be interpreted as refusals to accept those individual deliveries not as refusals to assent to the customary made of appropriation. A different mode of appropriation could only be established by some evidence of an agreement to vary the existing mode. If it were otherwise it would mean, as Mr. Eddis points out, that any buyer in similar circumstances, upon discovering the unfortunate nature of his bargain, could simply by refusing to accept delivery deprive the seller of his right to sue for the price of the goods as distinct from damages for breach of contract. That would be an untoward result when the latter action might be - as it is said to be in the present case - a barren remedy in view of the existence of a favourable market for goods of the same kind and the consequent impossibility of proving any appreciable damage based on the difference between the contract price and the market price at the date of the breach. It is no answer to that objection that the seller might dispose of the goods alternatively in the market. He is entitled to look to his buyer for the satisfaction of his contractual rights and not to be deprived of the advantage of his bargain. As to the two deliveries covered by the sales slips with the additional words on them, notwithstanding the concession made by counsel in the court below, I do not think those words have the effect contended for. If the facts support, as I think they do, an implied assent to appropriation by delivery from the outset that mode of appropriation can only be altered by mutual agreement. A passage from Benjamin on Sale of Goods (1974 Edition page 173 para. 360) is directly in point on this question of implied assent to appropriation by delivery:
Whether or not both of these slips were used in error for documents of a different nature the words upon them can, at their most favourable interpretation from the respondent's point of view, amount only to a unilateral attempt by the seller to retain the property in the goods by imposing a condition which had not been agreed from the outset. But in any event it seems most unlikely that the seller would have had any such intention. It was to the seller's interests that payment should be made upon delivery. The seller's right to reserve disposal of the goods conferred by section 21(1), until the fulfilment of the condition imposed by him, is not to my mind apt to cover the words used upon these delivery slips. Mr. Kwok says that the delivery of a separate debit note was a condition to be fulfilled before the goods passed on these two occasions. Until the seller sent the debit note to the buyer, he says, he was reserving "the right of disposal of the goods" (section 21) and could not therefore be deemed under paragraph 2 of rule of section 20 to have unconditionally appropriated the goods to the contract. To my mind the words in section 21(1) are clearly intended to cover the case where a condition has been imposed by the seller and has not been fulfilled by the buyer. In such circumstances it is reasonable that the property in the goods should not pass until the condition is fulfilled. But in any event the debit notes in the present case with or without the special words are themselves in the nature of a debit note it is difficult to see what basis in commonsense there could be for the refusal to pass a property in the goods until a further debit note had been delivered. In any event the implied assent to this manner of passing the property in the goods which stems from the inception of the contractual relationship cannot be unilaterally set aside in this way. For these reasons the appeal must be allowed and judgment will be entered for the plaintiff as claimed with costs here and below. Representation: Francis Eddis (deacons) for Appellant. Kenneth Kwok (Wilkinson & Grist) for Respondent. |