Jebsen and Co Ltd v. Asia Furniture

HCSA000001/1982

Small Claim Tribunal Appeal ---

"Intention of the parties" and not merely intention of the seller must be considered --- "Waiver" need not be pleaded --- the possibility of a seller waiving a condition precedent in his favour was a matter "relevant to the claim, whether or not it had been raised by a party".

IN THE HIGH COURT OF JUSTICE

__________________

Coram: Hon. Liu, J. in Court

Date: 16 April 1982

_______________

JUDGMENT

________________

1. Pursuant to leave granted on the 23rd February, 1982, the appellant/ claimant appeals to this Court from a decision of the learned adjudicator of the Small Claim Tribunal on questions of law, those of which pursued may be conveniently set out as follows:

2. This is, in the true sense of the term, a small claim of $1,984, which has been bitterly contested by as well the claimant as the defendant. The diametrical views held by both parties had become a subject of no compromise. Each was equally determined in its own approach.

3. From start to finish, this is, as I have said, a small claim for the price of sandpaper allegedly sold and delivered. The evidence before the learned adjudicator was free from complications: An agreement was entered into for the supply of sandpaper. The claimant through its salesman alleged that in addition to a telephone conversation, there was a personal visit on which the bargain was finally struck. The defendant through the father of its sole proprietress maintained that there was just one single telephone communication. Be that as it may, it was common ground that full agreement was reached for the supply of a quantity of sandpaper. It was never suggested by either party to this claim that any term was left unsettled or had yet to be negotiated for. What was being disputed by the defendant was that the father of its sole proprietress ordered from one Mr. Mok, the said, salesman of the claimant, VS or VSM sandpaper of certain specifications. No point was taken on the reference numbers for these specifications, but the core of disagreement was that the specifications delivered were not of same ordered brand name and were thus in different quality. According to Mr. Mok, the defendant firm agreed to buy the MASSA ESPECIAL sandpaper as specified in an Invoice dispatched with delivery a day or two thereafter. The upshot of all this was that before the date of delivery and the dispatch of the said Invoice, a concluded agreement had been made between the claimant and the defendant for the supply of a quantity of sandpaper.

4. The live issues ventilated before the Tribunal were:what brand of sandpaper was agreed to and whether the sandpaper eventually supplied conformed with the desired quality allegedly ordered by the defendant.

5. A day or two after the agreement, on the said Invoice accompanying the deliver delivery the following notation appeared:

"Goods mentioned in this invoice will remain our property until full payment of them has been received in cash or, by cheque, until clearance of the cheque. Cheque payments should be made payable to Jebsen & Co. Ltd. crossed to Accounts Payee only. A separate receipt will be given when this account is paid."

6. The learned adjudicator before whom this small yet not insubstantial trade dispute was brought was evidently mesmerized by this notation. No specific finding was made of precisely what the parties had agreed a day or two before or whether it was then a complete concluded agreement. There was no indication what view the learned adjudicator took of the term of payment, be it implied by usual trade practice or inferred from the material considerations relevant to the intention of the parties. Well drawn to this notation on the said Invoice delivered a day or two after the telephone conversation, the learned adjudicator held that intention was as declared by such printed notation and that consequently the intention was not to pass the property in the goods to the defendant on delivery. By reason of the well established rule against the bringing of an action for the price without any passing of property, the claimant was held not to be entitled to succeed. Passing of property has been a vexed question. In an Australian case in 1917 by the name of Martin v, Hogan,⁽¹⁾ a like question was referred to a larger bench of the Full Court. The matter under consideration was whether there had been sufficient passing of property to found a claim for the price. The case had given rise to much commercial importance, and when it came before the Full Court, it was referred to a larger bench of six judges for re-arguments. See page 253. The members of the Full Bench were equally divided, three of whom held that the buyers pleading as well as their conduct of the proceedings barred them from maintaining an allegation that property in the goods had not passed. In a joint dissenting judgment at page 261, Isaacs and Rich, JJ. held in the following terms:

"But if it be held that, though the property did not pass, yet the plaintiff is entitled to succeed, the next question is: then what is he entitled? He claims the 'price' on the ground that, failing the passing of property, payment was agreed to be made upon a day certain irrespective of delivery. This fails, because a day certain in that sense means a day ascertained - that is, fixed - at the time of the contract, and not left to be ascertained afterwards (Dunlop v. Grote; Staunton v. Wood). If entitled to anything, it is clearly damages only. Section 49 of Sale of Goods Act is not in force in New South Wales, nevertheless, it represents the common law. The common law proceeds on a just principle. If the consideration for the price passes, the price can be recovered simpliciter. But in a sale of goods the consideration does not pass unless the property passes. If, again, there has been an agreement to pay the money on the day fixed by the contract, irrespective of the consideration passing - then, again the sum can be recovered. But apart from that excepteion, the common law says, however strictly a man may have promised to pay the price on any given event, his failure to pay on that event is to be compensated for by ascertaining the amount of damage the promisee has sustained. That is fair,"

7. At page 269 another dissenting judgment of Higgins, J. reads as follows:

"......the seller is not entitled to the full price unless the buyer gets the property in the goods. Exception to this rule is found in sec. 49(2), not in sec. 55. In any event, I am of the opinion that the legal principle that the price is not payable until the property is passed is in this case riot negatived by express agreement'."

8. That leads me to a related issue, namely, waiving the passing of the property in the goods as a condition precedent to claiming for the price. Next, therefore, I turn to Napier v. Dexters Ltd.⁽²⁾ which together with Martin v, Hogan⁽¹⁾ have found their way into passages on page 228 of Chalmers' Sale of Goods 17th ed. and in paragraphs 1695 and 1736 of Benjamin's Sale of Goods, 1st ed., 3rd impression 1979. It was held in Napier v. Dexters⁽²⁾ that there was sufficient evidence to justify an arbitrator's finding of passing of the property in the goods.

9. At page 63 R .H. S., Roche, J. had this to say:

"Under a contract which at any rate gives the right to the seller to reserve the right of disposal of the goods until his conditions are fulfilled, in my judgment, where stipulation is unilateral, that is to say, for the benefit of the vendor, it is possible and lawful for the vendor upon appropriation to waive or abandon a stipulation which is his favour. "I mention by analogy a decision of a very leaned judge, Gainsford Bruce, J. in a non-reported case on circuit, where he held that sect. 19 applied, although upon the appropriation the seller added to the terms which he could impose lawfully under the contract terms which he could not impose, and that the imposition such terms although a breach of the contract was an imposition of terms by the seller which prevented the property passing to the buyer. Now, conversely, know nothing in the law to prevent the seller, who has a right to reserve the right of disposal, waiving or abandoning that right upon appropriation or afterwards. If that be so, the arbitrator, having I presume all the facts and contentions before him, has found that the property in this case passed. There is no error in law which is apparent to me in that direction of fact, and therefore I hold that the award is right in law."

10. Upon reaching the English Court of Appeal, as reported in the same Vol. at page 184, at page 185 R. H. S. Bankes L. J. made reference to the alternative remedies:

"It is admitted that the buyers on the findings of the arbitrator were in default; and the only question, and it is a very interesting question from a lawyer's point of view though not of much interest to the commercial man, is whether, the buyers being in default, the seller's remedy is in damages or is to recover the price of the goods which were in fact sent to the ship by him."

And having disposed of the appeal on another ground, the learned Lord Justice at page 187 observed:

"There is a further point which Roche, J., took. He apparently took the view that it may be that the buyer's contention is right, and that the seller reserves the jus disponendi by virtue of his contract, and this document. But assuming that to be so, in my opinion (he says) it was competent for the seller in the circumstances to waive the condition precedent in his favour; and waiving that condition precedent in his favour the acceptance of the goods was sufficient to justify the claim for the price at the contract rate. I can see no fault in law in that view of the learned judge. Therefore, whether you take the view I first indicated, that on these materials the buyers failed in proof, or whether you take the view adopted by the judge - whichever view is taken is in my opinion sufficient to justify the decision of the judge."

11. It would seem that the geneal-law may broadly be stated under three heads: First of all, under section 51(1) of the Sale of Goods Ordinance, the seller may maintain an action for the price of the goods when the property therein has passed; secondly, when time for payment has been  specified, expressly or impliedly, the seller may claim the price from the buyer irrespective of delivery or passing of the property in the goods to the buyer (Para. 1193 Benjamin on Sale of Goods 1st ed., 3rd impression, 1979 read in conjunction with section 51(2) of the Sale of Goods Ordinance) and thirdly, under section 39 the price of, the goods may be claimed by the buyer from the seller upon delivery in the absence of a contrary agreement.

12. The learned adjudicator made no specific findings as to precisely when and on what terms the parties agreed to the sale and purchase of the sandpaper; nor did he proceed to decide explicitly what the payment term was or was to be inferred from the circumstances. It was found that the intention as declared by the said notation was not to pass the property in the goods upon delivery, and it was thus held that no action for the price was maintainable.

13. It is trite law that the terms of a concluded agreement may not be subsequently varied except with consent.  The learned adjudicator embraced too readily the notation on the said Invoice delivered a day or two after the concluded agreement as the avowed intention of the claimant/seller as to the time at which the property in the goods was to pass. Apart from this unilateral declaration of intention which was not in fact sought to be relied upon by either party, it need be constantly remembered that the Tribunal was not merely concerned with the intention of the seller nor, for that matter, the intention of the buyer alone but "the intention of the parties" to the sale. There was no evidence nor any finding made as to how, if at all, the defendant reacted to the notation on the said Invoice. If, indeed, the seller/claimant had truly intended the property in the goods not to pass on delivery, it was never debated if such intention of the seller was agreeable to or accepted by the buyer, the defendant in these proceedings.

14. It was pressed upon me with great force by counsel for the appellant/claimant, and I think quite rightly, that throughout the dispute the only defendant advanced by the defendant buyer was one of brand name or brand quality. If follows, so counsel maintained, that the defendant/respondent never raised any allegation of the respondent firm not being liable for the contract price on account of the retention of the property in the goods. For these parties, possession was 9/10ths of the law, and the respondent firm had even sent a sample of the goods to China. In any event, the defendant/ respondent could not have envisaged or agreed that the passing of the legal property in the sandpaper was to be a condition precedent to payment of the price. Counsel's argument was, if I may say so, formidable.

15. As for the alternative claim in damages, it was conceded that a claim in damages, if sustainable, must be confined to actual loss, taking into account the true value, if any, of the goods to the defendant. The defendant firm had taken delivery of the goods, and even if it had lost the right to reject, the defendant would still be entitled to set up the alleged breach of condition treated as a breach of warranty in diminution or extinction of the price. After the defendant had accepted and lost its right to return the goods, for, some reason, the appellant/claimant was not able to sue for the price, it should be, in justice, permitted to seek a fair compensation in damages. See page 229 Chalmers' Sale of Goods 17th ed. and paragraph 1628 Benjamin's Sale of Goods 1st ed., 3rd impression, l979. Counsel readily admitted that the claim as put before the learned adjudicator was formulated exclusively on a claim for the price, but the Tribunal would not be relieved from inquiring into damages, if relevant, "whether or not it (had) been raised." If this case is to be revived before the learned adjudicator, such an alternative claim of damages may, if circumstances warrant it, deserve proper consideration.

16. Waiver need not be specifically pleaded in the Small Claim Tribunal, which is enjoined to "inquire into any matter which it may consider relevant to a claim, whether or not it has been raised by a party" Despite the said notation and the intention of parties, the making of a demand and a claim for the price in the circumstances of this case might have achieved the effect of waiving whatever agreed condition precedent for the sole benefit of the seller. If indeed the reservation of the passing of the property in the goods was or was deemed to have been waived or abandoned, there would be no more doctrinal obstacle to an action for the price. This aspect will have to be examined as a question of mixed "law and fact.

17. For all these reasons, I find all the criticisms summarized at the outset justified. The appellant must therefore succeed. Legal issues aside, it would seem that matters for a proper adjudication are: (1) whether the brand name and quality were in conformity with the alleged terms of the order placed by the father of the sole proprietress of the respondent firm; (2) whether the quality of the sandpaper supplied, whatever its brand name, constituted a substantial performance of the contract; (3) whether the respondent was entitled to reject after a lapse of time and a possible act of appropriation this issue seemed to have been decided in favour of the seller); (4) with any of the above issues decided against the buyer, then whether it was a matter of trade practice for such supply of sandpaper to be paid upon or soon after delivery; (5) what, in the light or absence of any known common practice in the trade, "the intention of the parties" was; (6) if the parties intention was to withhold the passing of the property in the goods on delivery, whether the parties intended the price to be paid before the passing of the property in the goods, (See in particular para. 1193 at p.p. 572 and 573 Benjamin's Sale of Goods 1st ed., 3rd impression, 1979); (7) if the parties intended the passing of the property in the goods only upon payment being made, whether such condition precedent to suing for the price had been waived by the seller; (8) the defendant's possible counterclaim on alleged incorrect delivery and finally (9) the question of damages, if relveant.

18. I order that this case be remitted to the Tribunal with the opinion expressed in the judgment delivered, and I direct a new hearing.

(Submissions on costs).

19. I order that costs of this appeal be costs in the cause of the new hearing by the Tribunal.

(1) [1917] 24 C. L. R. 234

(2) (1926) 26 Lloyd's Rep. 62

Representation:

Mr. Edward Chan instructed by Messrs. Lau & Co. for the Appellant (Claimant).

Madam Leung, sole proprietress of the Respondent firm in person.

Small Claims Appeal No. 1 of 1982

Date of Hearing : 16th April, 1982.

Date when Judgment Was Delivered : 16th April, 1982

Case Cited by Counsel for the Appellant (Claimant) but not mentioned in the Judgment:

1. Colley v. Overseas Exporters [1921] 3 K. B. P. 302

Actual Cases Cited in the Judgment:

1. Martin v. Hogan [1917] 24 C. L. R. 234

2. Napier v. Dexters Ltd. (1926) 26 Lloyd's Rep. 62