Tai Hing Cotton Mill Ltd v. Kamsing Knitting Factory (A Firm)
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CACV000016/1975 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO.16 OF 1975 (On appeal from O.J. 3627 of 1973) -----------------
----------------- Coram: Huggins, McMullin & Cons, JJ. Date of Judgment: 19th September, 1975. ----------------- JUDGMENT ----------------- Huggins, J.: But for the authorities I would not have entertained the slightest doubts about this case. Having had the advantage of reading the judgment just delivered by McMullin, J. I have found it some consolation that he, too, thinks the substantial intention of the Legislature is really beyond doubt. The statute appears to me as clear as any statute could hope to be. The general principle for assessing damages for breach by the seller is stated in s.53(2):
The provisions which follow must have been intended to be read in the light of that principle. Section 53(3) applies the general principle to particular circumstances:
The first thing to notice about that provision is the words "prima facie". They were intended to show that in these particular types of case the general principle was not abrogated: where to apply sub-s. (3) would result in obvious conflict with the general principle, the sub-section will not be applied. Next there are two things to be said about the phrase "was fixed"/ First, it is clear that the words "by the contract" are to be implied. A date of delivery "to be fixed" is not a date which "was fixed" even though it "has been fixed" by the date action is brought. In this s.53(3) is to be compared with s.31(2), where the draftsman referred to a fixing of the time for "sending" the goods "under" the contract. Secondly, it must be observed that the draftsman was careful not to use the word "certain" but chose instead the word "fixed". Because of the desire of the courts in the past to save from invalidity leases of land which might otherwise not have been for terms certain, they came to apply the rule which is commonly expressed in the Latin "id certum est guod certum redde potest". No comparable rule applies to the word "fixed". The date may be fixed although it is not expressed by the reference to the calendar, e.g. seven days after the arrival of a vessel in port. The date may not be immediately ascertainable and may depend upon the happening of a future event, but it must not depend upon the intervention of another will at some future time. Thus "such date as may be named by the purchaser" is clearly not a "fixed" date, while "the date which has been fixed by X" undoubtedly is . Then it should be noted that s.53(3) of our Ordinance contains two words which do not appear in s.51(3) of the English Sale of Goods Act 1893, namely "neglect or", The significance of this is that, whatever may be the correct position in England, in Hong Kong it would seem that the draftsman used the word "neglect" to show a failure to deliver and the word "refusal" to show an indication of an intention not to deliver, the date for delivery not yet having arrived. The second part of the sub-section is, of course, concerned with cases where no date "has been fixed", and if that had been intended to mean where no date is "certain" the word "neglect" would make nonsense, for until the seller knows, or ought to know, when to deliver he cannot "neglect" to deliver, although he may "refuse" to deliver. Our statute was passed some time after the enactment of the English legislation and we must assume that the draftsman inserted the additional words deliberately and endeavour to give them some meaning.It is only here that I part company with McMullin, J. He takes the view that the words "neglect or" are surplusage. I am reluctant so to hold if I can find an alternative interpretation of the sub-section which gives them some effect. Of course, if "fixed" means "certain" then a case where, on my in terpretation, the date was unfixed but certain would fall within the first part of the sub-section and not within the second, so that the two words added in the second part would indeed be surplusage. But that is one of the reasons why I am forced to the conclusion that "fixed" does not mean "certain". Once that conclusion is accepted then, if the words "neglect or" are omitted, the case where the date is unfixed but certain is not covered by either part of the sub-section: not by the first because, there being "no time ... fixed for delivery", it is implicitly excluded from that part and yet not by the second because that would then include only a "refusal" to deliver. I believe it was because the draftsman of our Ordinance thought that without the additional words there would be this casus omissus that he inserted them. I confess that use of the word "refusal" seems to me of itself necessarily to indicate an anticipatory breach and I do not see how any other meaning can fairly be given to the English sub-section. Be that as it may, not only is there nothing in our statute to suggest an intention that the latter part of sub-s. (3) should never apply to a case of anticipatory breach, but there is positive evidence that it was intended to apply - provided that the result was to an obvious confilict with the general principle laid down in sub-s. (2). There are two classes of case to be considered. The first is where, although the time for delivery was not "fixed" within the meaning of the statute, that time has been ascertained at the date of the refusal to deliver: the second is where not only was the time for delivery not "fixed" but also the time has not been ascertained at the date of the refusal to deliver, as in a case where delivery was to be "on demand" and no demand has been made or, perhaps, where delivery was to be "within a reasonable time" and the purchaser has not already sued for non-delivery. In the former case there is likely to be a conflict with the general principle, because unless there is no fluctuation in the market price between the date of the refusal and the time when the goods ought to have been delivered the buyer would be bound to get less or more than his ctual loss if the damages were ascertained by reference to the difference between the contract and market prices at those two dates. However, in the second of the two cases under consideration I see no reason why the damages should not be assessed by reference to the market price at the date of the refusal to deliver. I believe the Legislature was endeavourting to introduce a degree of certainty into the assessment of damages. If the date for delivery could, by reason of the refusal to deliver, never become precisely ascertained (and that includes a case where delivery was to be "within a reasonable time") it would be reasonable in seeking to achieve certainty to have regard to the market price on the date of the refusal. 2. Applying these principles to the present case we find that the contract was one which did not "fix" the time for delivery, for delivery was to be made, as the judge found, over an indefinite period, the Plaintiff company (the buyers) having a right to call for delivery as and when the goods were needed. It necessarily followed that the damages fell to be assessed under the second part of s.53(3) unless that would produce manifest injustice. In so far as the buyers did make demands which were not met they could have treated the case as partly falling within the class of case where the dates for delivery are unfixed but certain, but they chose to continue as though there had been no breach and on the pleadings it is not open to the sellers to contend that any of the goods should have been delivered before 31st July 1973. They never suggested, until they sought leave to amend in this Court, that they had broken the contract before that day by their failures to deliver goods which had been demanded by the Plaintiffs. Therefore this is a case where damages must be based on the assumption that the date or dates for delivery of all the goods were unascertained. That would leave us with no alternative but to apply the rule in the sub-section and to assess the damages by reference to the difference between the contract price and the market or current price of the goods at the time of the refusal to deliver, i.e. 31st July 1973. For my part I cannot see that that would produce injustice. On the other hand it is common ground that in the present case the method of assessment adopted in the court below was wrong and it is clear on figures which have been mentioned to us that it produced a figure far less than the amount of any estimate of the loss sustained which might be made in the alternative ways suggested. 3. The trial judge took the difference between the contract price and the market price on 30th May 1973. He appears to have done that with two things in mind. First he had regard to the evidence (which presumably he believed) that the sellers failed to meet various demands for deliveries made by the Plaintiff during the latter half of 1972 and early in 1973. As he pointed out, he was not told of the dates of those failures, but that was because on the pleadings they were irrelevant. The second matter which he appears to have had in mind was the duty of the Plaintiff to mitigate his damage, but, once again, on the pleadings there was no question of a breach of contract until 31st July 1975 and no plaintiff can be required to take steps to mitigate his damage from a breach of contract which has not yet occurred. 4. Unfortunately it now becomes necessary for me to consider the authorities, which raise considerable difficulties. The report of Tyers v. Rosedale & Ferryhill Iron Co., Ltd. (1875) 10 Exch. 195 is not concerned directly with the assessment of damages but it is material to the present discussion because it was relied upon by McCardie, J. in a later case. The contract was for delivery of 2,000 tons of iron in equal monthly quantities over 1871 "or sooner if required". The defendants made short delivery in January. In February and in several later months they again made short deliveries but at the request of the plaintiffs. In December the plaintiffs demanded delivery of the whole outstanding balance in that month. The defendants thereupon refused to deliver any more iron. All that was decided by the Exchequer Chamber was that the plaintiffs' request to the defendants not to deliver in accordance with the contract did not put an end to the contract: the defendants remained liable to fulfil their obligation to supply 2,000 tons. The court left open the question whether the damages ought to be assessed as at December (on the basis that the defendants' obligation was to deliver the whole balance when demanded in that month) or by reference to the dates of the instalments by which that balance ought to have been delivered. The judge of first instance had assessed damages on the former basis but he gave leave to the defendants to apply to vary the assessment and it had in fact been varied by the Divisional Court, the final order being that the damages ought to be calculated at the monthly prices of each month's deficiencies. As it would have favoured the defendants rather than the plaintiff appellants to take the price in December, the court found it unnecessary to decide the point. 5. The case in which McCardie, J. relied upon Tyers' Case was Hartley v. Hymans 1920 3 K.B. 475. Those cases were dissimilar in that in Hartley v. Hymans the plaintiff was the seller and not the buyer, but the judge suggested that they were similar in that in each of them the defendant absolutely refused further to perform the contract at any time so that, whatever the position might have been had there been a refusal to take or to make further deliveries (as the case might be) unless they were made within some reasonable time which was designated, the damages ought to be assessed as at the date of the repudiation. I am not sure that McCardie, J. did think Tyers' Case in the Court of Appeal was direct authority on the question of damages - and clearly it was not. As I read his judgment he was saying only that the cases were similar to the extent I have indicated and that in his view the proper measure of damages in such cases would have reference to the date of repudiation even though there might have been an agreement to be performed on various dates thereafter. He made no mention of s.51 of the Sale of Goods Act 1893, but it may well be the case was fought solely on the issue as to the right of the defendants to cancel the contract on the date of repudiation and everyone may have assumed that if there was no such right the section required that the damages be assessed in accordance with what I have suggested was the manifest intention of the Legislature. 6. We then come to Millett v. Van Heek 1921 2 K.B. 369. In passing it may be observed that the Court of Appeal in that case expressly reserved the question whether Bray, J. and Sankey, J. in the Divisional Court had been right to follow the decision of Bailhache, J. in Melachrino v. Nickoll 1920 1 K.B. 696 to the effect that a contract for delivery within a reasonable time was not one where the time for delivery was "fixed". Atkin, L.J., seeking to suggest a way of avoiding the possibility that a consequence of holding that a contract for delivery at times which could be determined by a jury was not a contract for delivery at fixed times would be to make nonsense of the second part of sub-s.(3), said that the words of that part might be read as referring to "a contract such as to deliver goods on demand or to deliver goods as required by the purchaser". That, of course, is the very case we have here. However, what the Lords Justices decided was that the latter part of sub-s.(3) of s.51 did not apply to a case where the breach of contract was an anticipatory breach. I think our case may be distinguished on the ground that the wording of our sub-section is different and, as I have said, makes a clear differentiation between (to use the words of Bankes, L.J. at 1921 2 K.B. 375) "a case of what is strictly speaking non-performance of a contract" (i.e. "neglect") and "anticipatory breach arising from repudiation of a contract" (i.e. "refusal"). 7. Even if our statute were indistinguishable from the English Act I would, with all respect and diffidence, have questioned the conclusion of the Court of Appeal in Millett v. Van Heek although I might have felt that I ought to follow it for reasons of certainty and comity, particularly as it has stood without serious attack for nearly a quarter of a century. Atkin, L.J. appears to have appreciated that the language used was at least capable of the interpretation which I would wish to adopt, but thought "that .... would introduce an snomaly entirely without any kind of principle to justify it". He therefore concluded
None of the other judges, either in the Court of Appeal or in the Divisional Court, gave any reason why "this rule cannot apply to this case". For my part I do not see why it should be assumed that the Legislature did not mean what it said simply because that would result in a change of the law. The principle which would have justified a change in the law was the desirability of introducing a degree of certainty where certainty was formerly lacking. There is good reason for not applying the prima facie rule apparently laid down by the sub-section where the date for delivery, though unfixed, is certain: no difficulty arises in calculating the damages by reference to the difference between the contract price and the market or current price on a certain date, or certain dates, and there might be an obvious injustice if the rule were to be applied in such a case. In cases where the date for delivery is uncertain it might, without this rule, be necessary (as is probably implicit in the judgment of Atkin, L.J. at 1921 2 K.B. 378) in every case to go to a court to ascertain how the damages ought to be assessed in order to arrive at "the loss directly and naturally resulting, in the ordinary course of events". That, I believe, was the very thing which the Legislature sought to avoid and which, at least in Hong Kong, in my view it has successfully avoided. If the court seeks to assess the loss by reference to some notional date of delivery in a case where, ex hypothesi, the date of delivery is unfixed and uncertain (e.g. where delivery is to be "on demand") it can only be in the nature of guess work. Moreover, as Cons, J. has pointed out, by suggesting that the second part of sub-s.(3) might apply to a case where delivery was to be on demand Atkin, L.J. implicitly conceded that it might apply to a case of anticipatory breach. Although Melachrino v. Nickoll was referred to by the Court of Appeal in relation to the question whether the time for delivery was "fixed", no mention was made of it in relation to the application of s.51(3) to cases of anticipatory breach, although Bailhache, J. had held that the first part of the sub-section did apply to such cases. Nevertheless Atkin, L.J. accepted that where the time for delivery was fixed and repudiation of the contract was accepted damages would have to be assessed with reference to the fixed time - which is what the first part of the sub-section says. For my part I do not see why if the first part of the sub-section applies to an anticipatory breach the second part should not likewise apply. 8. The only other matter argued was whether the fact that the Plaintiffs purchased goods elsewhere when the defendants failed to deliver all the goods demanded prior to 31st July 1973 ought to be taken into account in mitigation of damages. Mr. Bernacchi suggested that in some way these purchases discharged the contract in part". He relied upon R. Pagnan & Fratelli v. Corbisa Industrial Agropacuaria Limitada 1971 1 W.L.R. 1306 as laying down a general principle that the court will always look into other contracts made by the innocent party, whether made before or after the breach of contract in respect of which damages are to be assessed. I do not think the case is authority for any such proposition. The contract which was there taken into account was entered into by the parties, after the breach of contract had occurred, for the sale and purchase of the contract goods at a price which was intended to take into account the previous dealings between the parties. I do not think it can fairly be said in the present case that the plaintiff buyers mitigated their loss by making purchases before the breach of contract occurred in respect of which they claimed. 9. For these reasons I would allow the cross-appeal and enter judgment for the Plaintiffs in the sum of $833,553. However, I agree that if the view of s.53(3) which has found favour with Cons, J. is right the proper order would be one dismissing the appeal and directing that the assessment of the trial judge stand, even though the Respondents concede that that assessment was wrong. 19th September 1975. Representation: IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 16 OF 1975 (ON APPEAL FROM O.J. 3627/73) -----------------
----------------- Coram: Full Court (Huggins, McMullin & Cons, JJ.) Date of Judgment: 19th September, 1975. ----------------- JUDGMENT ----------------- McMullin, J.: This is an appeal upon damages. There was a written contract between the plaintiff and the defendant whereby the defendant was to supply to the plaintiff 1,500 bales of cotton yarn, the period of delivery being stated as April 1971 to December 1971. It is common ground upon the hearing of the appeal that in most material particulars this written document had become a dead letter save insofar as the nature of the merchandise, its quantity and price were concerned. The learned trial judge found that there had been substituted, for the original terms relating to quantities and deliveries, an agreement to supply the yarn at the contract price over an indefinite period the plaintiff company having a right to call for delivery as and when needed. 2. There has been no quarrel with this part of the judge's findings nor with his finding that the deliveries under the new implied contractual terms continued for a long time under the contract, the amounts requested by the plaintiff varying considerably from month to month. He also held, and it is not now disputed, that the defendant did not supply the plaintiff with the full quantities requested on these occasions over a considerable period commencing from the latter half of 1972 onward. It was in fact an important part in Mr. Bernacchi's argument on behalf of the defendant company that the failure to supply the stipulated amounts had commenced even in 1971. There had been correspondence between the parties, concerning the defendant company's performance, which culminated with a letter dated 31st of July 1973 from the defendant company to the plaintiff company in which the defendant company announced its intention not to supply any further yarn whatsoever giving as its ground for doing so the fact that the plaintiff company had failed to take up the full quantity of the yarn within the original period stated in the written contract. By the same letter the plaintiff company was informed that the defendant company considered the contract between them to be cancelled. There was at that date an outstanding balance of 424.20 bales still undelivered. 3. The plaintiff claimed $844,158 by way of damages basing its claim upon the difference in the market price of cotton yarn at the date of the formal repudiation of contract by the defendant and the price for the same yarn stated in the contract. The defendant denied that it was in breach of contract and on the contrary alleged that the plaintiff had been in breach and it further denied that the plaintiff was entitled to any damages whatsoever. The learned trial judge awarded the plaintiff damages in the sum of $451,773. This figure was calculated on the difference between the contract and the market price in May of 1973. He did so on the basis that by May 1973 the plaintiff company, although not yet formally notified of the repudiation by the defendant company, was aware that it was unlikely that the defendant company was going to fulfil its bargain and he gave as his reason for that finding the plaintiff company's duty to mitigate its loss. 4. Both parties now appeal against this award but the plaintiff's appeal stands in sorry plight following upon our refusal to permit Mr. Bernacchi to amend the defence for the purpose of introducing, at this late hour, an issue which had never been pleaded at all and which had arisen only incidentally at the hearing and was then dealt with somewhat obliquely in the course of argument. What he had sought to do in effect was to turn his own pleadings upon their head and to claim that if the learned trial judge was right in finding his client in breach of its contractual obligations at all he should have done so on the basis that it had been in breach at a much earlier date than the 31st of July and had in fact been in breach upon every occasion from the commencement of the contract upon which, in delivering goods pursuant to a request by the plaintiff company, it had delivered less than the stipulated quantity requested. The point of that argument was that since the plaintiff company had, as it was alleged, on each such occasion fulfilled its requirements by going into the market and buying outside the contract the contract was, as to quantum of goods, discharged pro tanto by the amount so purchased on each occasion leaving only to the plaintiff company a right to claim the difference between the market and the contract price at the date of each such short delivery. Although we have not the benefit of the actual figures involved in each such replenishment there is no doubt that something of the sort did occur and it would have made a very considerable difference to the actual quantity of goods outstanding and undelivered under the contract at the 31st of July 1973. Notwithstanding the refusal of permission to amend however Mr. Bernacchi struggled valiantly to persuade us that we should nevertheless look to these earlier replenishments in the light of what he deemed to be the more modern approach to the assessment of damages in such a situation as this. For this approach he relied upon the decision in the case of R. Pagnan & Fratelli v. Corbisa Industrial Agropacuaria Limitada(1). That case does not assist him for it concerns a quite different and very special set of circumstances. The sellers in that case were in breach of a fundamental term of a contract to deliver a quantity of maize having failed to deliver it within the stipulated time. Instead of rejecting the cargo the buyers, by an oral arrangement with the sellers, agreed that the contract should remain alive but that the buyers were to be at liberty upon the arrival in port of the cargo to reject the maize if they were not satisfied with its condition. On the 19th of October 1955 they did reject the cargo, as they were entitled to do, but they then negotiated with the sellers to purchase the whole cargo at a reduced price and this new contract, which they entered into on November the 13th, was among the matters considered when the whole situation was subsequently submitted to arbitration. The tribunal found, inter alia, that the buyers' profit over the whole course of these proceedings had extinguished their alleged loss from the original breach of contract. The Court of Appeal upheld the findings of the tribunal and ruled that the buyers having suffered no loss were not entitled to any damages. 5. As I understand him Mr. Bernacchi seeks to apply this decision in a rather loose and analogical way pursuant to what he regards as the modern tendency, in the assessment of damages, to disregard technical rules and to fix upon the actual as distinct from the theoretical reality of the situation. He sought in this way to overcome the difficulty that he had been debarred from presenting the issue of earlier breaches. For my own part I do not think that he can do so for that would be to admit by the back door those very elements of mitigation from which the ruling of the court shut him out in denying him the right to urge the existence of any earlier breach. Accordingly I can only repeat what was said to Mr. Swaine when, at the opening of his address, he asked whether the effect of the court's ruling was to reject the appeal and to say, as we then said, that that is so and that no reason has been shown for diminishing the award of damages to the appellant at least upon the ground that there had been breaches of contract before the 31st of July. 6. More difficult considerations arise upon the respondent's appeal. The respondent argues that the proper damages should have been the figure originally claimed i.e. $833,553 being the difference between the market price of $3,300 per bale upon the 31st July 1973 i.e. the date of the plaintiff's repudiation of the contract and the contract price of $1,335 per bale in respect of the undelivered quantity of 424.20 bales. The learned trial judge's award was calculated upon a figure of $2,400 per bale which was the market price of the cotton on the 30th of May 1973. The reason he gave was the necessity for the plaintiff to mitigate its damages. I think it may be said that it was common ground between counsel upon the hearing of the appeal that this in any event was incorrect. The true issue upon the cross-appeal is whether the 31st of July was in truth the proper date for the purpose of estimating damages. As to that Mr. Bernacchi says that if that also was not the proper date then, irrespective of what the proper date should have been, the cross-appeal must fail. 7. Mr. Swaine for the respondent relies upon the decision in Hartley v. Hymans(2), a case which is upon its facts undoubtedly very simlar to the case at bar save that the repudiating party was the buyer not the seller. In that case the plaintiff agreed to sell to the defendant cotton yarn worth £11,000 delivery to begin in September 1918 and to be at the rate of £1,100 worth of yarn per week. Deliveries were in fact late and irregular and for lesser amounts than those mentioned in the contract. The defendant complained but did not seek to treat the contract as at an end. On March the 13th in the following year, some three months after the whole quantity of the yarn should have been delivered, the defendant, without previous notice requiring delivery within a reasonable time, wrote to the plaintiff cancelling the order and refused thereafter to take any further deliveries of yarn. A great part of the judgment of McCardie J. is concerned with the question of breach and he had to deal with a variety of arguments bearing upon points of waiver, extension of time, new agreement etc. He found that the defendant had been at fault in not giving notice to the plaintiff requiring delivery within a reasonable period after the end of the original contract period had come. He found an implied agreement extending the contract, the defendant having continued up to March 1919 to call upon the plaintiff for further deliveries, and he found that the defendant was in breach of contract in writing upon the 13th of March to inform the plaintiff that he regarded the contract as at an end without then giving him a reasonable time to deliver the balance of the goods. Turning finally to the question of damages he said (page 496):
It is here that the complications in the present case arise. Unfortunately it is far from clear that the decision in Tyers' case(3) does decide the point but there is this much cover for the opinion of McCardie J., quoted above, that in Tyers v. Rosedale & Ferryhill Iron Co.(3), upon the hearing of a rule nisi granted by the judge of first instance, Martin, B., in a dissenting judgment upon facts of a character closely similar to those with which we are here concerned, and to those which concerned McCardie J., found that the trial judge had computed damages upon the correct principle i.e. upon the market price of the iron, which was the subject matter of the contract, at the date of the refusal to deliver any more. The question does not appear to have been canvassed whether, deliveries of the iron having been delayed on several occasions at the request of the buyer, and the instalment amounts, which were also fixed by the contract, having been reduced likewise at his request, he was under an obligation, when the date for completion stated in the contract had arrived, to give to the seller an opportunity of fulfilling the contract by making delivery by subsequent instalments, either as provided within the contract or comparable with those already received, rather than demand, as he did, delivery, in one consignment, of the full quantity outstanding within the original contract period. The case having gone upon appeal to the Exchequer Chamber Cockburn, C.J. took the view that the plaintiff had no right to call upon the defendant to deliver all the remaining iron at one time but was only entitled to call upon him to deliver in such quantities per month as had originally been provided for. He took the view that were it not for the fact that the market price at the date of the defendant's refusal favoured the defendant it would have been necessary to determine the market rate at the date of each monthly instalment throughout the period during which the defendant ought to have delivered the balance of the iron still outstanding at the date of repudiation. 8. Blackburn, J. the only other judge to deliver a considered judgment left open the question whether the relevant date for estimation of the damages was the market rate at the date of repudiation or at the several subseauent dates upon which instalments ought to have been delivered. 9. Brett, J. said:
The latter case was decided in 1873 some two years before Tyers v. Rosedale & Ferryhill Iron Co.(3). The plaintiff in Roper v. Johnson(4) had a contract for 3,000 tons of coal at a certain price to be taken during the months of May, June, July and August. No coal was delivered in the month of May and the defendant wrote on the 31st of May desiring the plaintiff to regard the contract as cancelled. The plaintiff did not assent to that and on the 11th of June the defendant definitively refused to deliver any coal. On the 3rd of July, i.e. before the date for completion of the original contract had arrived, the defendant brought an action for this repudiation of contract and the case was concluded in the middle of August a date still prior to the original date for completion of the contract. It was held that the true measure of damages was the sum of the differences between the contract price and the market price at the several periods for delivery notwithstanding that the last period had not elapsed when the action was brought or when the case was tried. 10. Thus far the preponderance of authority would certainly seem to favour the view that in the case of a contract for delivery of goods by fixed instalments the primary rule as to computation of damages is the difference between the contract price and the market price at the several dates at which deliveries would have taken place had the contract been performed notwithstanding acceptance of repudiation within the stated contract period. As Cockburn, C.J. said in Frost v. Knight(5) (at page 114):
He was there approving the principles stated in Hochster v. Da La Tour(6) a case also relied upon by the several judges in Roper v. Johnson(4). These were all decisions concerning contracts in which, either within the express terms of the contract itself or else within those terms as extended by necessary implication, as interpreted by the courts, goods were to be delivered by fixed instalments. In the present case there were no fixed dates for delivery but goods were to be delivered as and when requested by the buyer. Mr. Swaine, therefore, pointing out that Tyers v. Rosedale & Ferryhill Iron Co.(3) was decided before the passing of the Sale of Goods Act 1893 asked us to infer from the very language used by Martin, B. in the Court of Exchequer in that case that the latter part of Subsection 3 of Section 51 of the Act seems expressly designed to cover just such cases. Subsection 3 is in the following terms:
The present case, he says is a case in which no time was fixed for delivery and the difference between the market price and the contract price must therefore be fixed in relation to the date of refusal to deliver i.e. the 31st of July 1973. Section 51 of the English act corresponds exactly with Section 53 of the Sale of Goods Ordinance with one difference to which I will later refer. I confess when I look at the language of Subsection 3 that contention seems so obviously correct that were it not for the other authorities to which I must now refer I would have had little hesitation in accepting his proposition. One might well think that McCardie J. had something of the same sort in mind when he gave his decision in Hartley v. Hymans(2). But it is an undoubted and perhaps somewhat curious fact that although he expressly relied upon Tyers v. Rosedale & Ferryhill Iron Co.(3) and although in the course of his judgment he deals with Section 4 of the Sale of Goods Act he makes no express reference to Section 51 whatsoever. 11. By contrast the several judges of the Court of Appeal in Millett v. Van Heek & Co.(7), a case decided at first instance in the month following the decision in Hartley v. Hymans(2) but dealt with by the Appellate Court early in the following year, all made explicit reference to Section 51(3) in upholding the decision of the court of first instance. The decision in Hartley v. Hymans(2) is not referred to in Millett's case(7). In that case an English firm entered into six contracts between the 10th of January and the 23rd of August 1916 with a firm in Holland for the sale and delivery to Holland of a quantity of cotton waste. It was implicit in the arrangements between the parties that the merchandise could not be delivered all at once and that there would therefore be deliveries from time to time under the several contracts. When a certain quantity of cotton had been delivered under the contracts the British Government, in January 1917, imposed an embargo upon the export of such cotton waste. A correspondence ensued between the parties which was later interpreted by the court as meaning that the parties had thereafter entered into a new and binding agreement that the deliveries on the six contracts should be suspended until the removal of the embargo. On the 8th of January 1919 the plaintiff took proceedings for a declaration that the contracts insofar as they were still unperformed had been dissolved by reason of the embargo. A week later the embargo was removed but the action proceeded. In the action the declaration sought was refused but the Dutch firm was given a declaration to the effect that they were entitled to recover damages for the plaintiff's repudiation of his contract. The official referee, to whom the case was referred for the estimation of damages on the basis that a reasonable time for delivery following upon the removal of the embargo must be allowed for, held that the proper way to assess damages was to take the market price of the goods from March 1919 onwards and to ascertain from time to time what was the difference between the contract price and the market price at the time when the goods would in the ordinary course of business have been delivered. On appeal to the Divisional Court it was held by Bray and Sankey JJ. that when a contract provided for delivery within a reasonable time, or within a reasonable time after a future date, it was not a contract for delivery at a fixed time within the meaning of Section 51 subsection 3 of the Sale of Goods Act 1893. They also held that the rule, in subsection 3, that if no time for the delivery was fixed, the measure of damages was to be ascertained by the difference between the contract price and the market or current price of the goods at the time of the refusal to deliver, did not apply to a case where the breach was an anticipatory breach. The latter part of the principle enunicated by the judges of the Divisional Court was approved unanimously by the judges in the Court of Appeal all of whom however reserved the question whether a contract to deliver goods within a reasonable time is, for the purposes of section 51, subsection 3, of the Sale of Goods Act a contract to deliver goods at a fixed time. That is a high authority and there is no suggestion of hesitancy in the conclusion to which the Court of Appeal came on the question of section 51(3) and anticipatory breach. Counsel for the respondent was not even called upon to reply to the argument that the final words of the subsection must apply in a case in which no fixed date of delivery had been established by the contract. 12. I confess that I do not find that decision easy to understand and I venture to suggest that it may be the source of what appears to me to be a shadow of uncertainty hanging above this area of the law of contract which may be found reflected in some of the latest commentaries where the topic of non-delivery is being discussed in relation to anticipatory breach. Thus the latest editions of Chitty on the Law of Contracts and of Mayne and McGregor on Damages cited Millett v. Van Heek & Co.(7) as the sufficient (and indeed the sole) authority for the proposition that the subsection does not apply to cases of anticipatory breach. The authors of the current edition of Chalmers on the Sale of Goods quoting the same authority are content with the observation:
We are at that point referred to a footnote which cites the case against the comment:
It may not be too much to suggest that the root of the confusion can be discerned in the words just quoted. The question posed is whether a contract which the court has interpreted as being a contract for delivery within a reasonable time can ever have applied to it the rule for estimating damages which is stated in the concluding words of subsection 3. The phrase itself seems to derive from the decision at first instance in Millett v. Van Heek & Co.(7) where Bray J. expressing the opinion of the court added that in such cases the principle set forth in Section 51(2) would apply. This is scarcely helpful since subsection 2 states only the most general and familiar principle and the learned judge moreover adds that it is to be read with the light thrown upon it by subsection 3. No reason is given for this opinion nor is it said what principle, revealed by the light of subsection 3, excludes such cases from the final words of the subsection. The trouble is that if the final words of subsection 3 do not apply to such cases it is difficult to see to what cases they can apply. On the face of it there seems to be no better reason why only the earlier words in the subsection should govern cases of anticipatory breach, as clearly they do. A seller of goods which, upon the understanding of both parties, are to be delivered within a reasonable time may be found as guilty of what one might term pre-emptive non-delivery as may a seller who prior to the fixed delivery dates announces his intention not to deliver. The case before the judges in Millett v. Van Heek & Co.(7) was one involving anticipatory breach and had Bray J. and Sankey J. found that the contract was one within the description of those earlier words no difficulty would have arisen and the decision of Bailhache J. in Melachrino v. Nickoll(8) would have been directly in point. In that case, also involving anticipatory breach, the judge held the contract to be one with a fixed date for delivery calculable by reference to the happening of a certain event and, expressly relying upon the provisions of subsection 3 of section 51 of the Sale of Goods Act 1893 he found the measure of damages in the difference between the contract price and the market or current price at the time when the goods ought to have been delivered. That is to say, the earlier and not the final words of the subsection applied to it. But all the courts involved in Millett's case(7) found that the contract there was not such a contract and although the language of subsection 3 seems patently designed to exhaust the whole field of contract by dividing it into contracts with fixed dates for delivery and those without, the judges at first instance appear, if I may put it so, to have evaded the logic of their own conclusion by making a further sub-division of the latter category of contracts into those which fall within and those which do not fall within the final words. One must say, with respect, that this wears a distinctly arbitrary air. Nevertheless of the three judges of appeal only Atkin L.J. sought to put the matter any further. Bankes L.J. and Warrington L.J. adopted, without reservation, the view of the judges in the court below on the point now under consideration. Atkin L.J. thought that the Act could not have been intended to introduce a new principle in relation to contracts where no fixed time of delivery had been included in the express terms of the contract itself. He doubted whether the judges in the court below had been right to regard the contract as other than one with a fixed time for delivery and he suggested, but without deciding the point, that any contract in respect of which the date for delivery could be established by the findings of a jury might reasonably be regarded as a contract with a fixed time for delivery. Both he and Bankes L.J. noted with respect the opinion of Bailhache J. who, in Melachrino v. Nickoll(8) (page 696) that a contract to be performed within a reasonable time was a contract for which no time was fixed for delivery within the meaning of the subsection but both of those eminent judges were evidently reluctant to follow that opinion. Since they were upholding the decision of the court below it may have seemed desirable in order to avoid emptying the final words of subsection 3 of all content, to suggest an area for their operation. At page 378 Lord Atkin said this:
13. The point is a teasing one and out of deference to the opinion of a very eminent judge I wish I could say with confidence that it had been resolved. With all respect, however, I cannot see that this answer does more than to raise the same difficulty in a different dress. For a contract to supply goods on demand is as much a contract with executory obligations as is one with a fixed date for delivery, at least until the demand is made. But when the demand has been made then it must be a demand either for delivery now or for delivery at some future date. If for delivery now, and this is answered by a refusal, there is no question of anticipatory breach save in a wholly nominal sense - the date of refusal and the date for delivery being for practical purposes one. If for delivery at a future date or dates, the contract then becomes one with a fixed date or dates for delivery and it falls subject ot the possibility of anticipatory breach. Where the final words of subsection 3 refer to contracts where "no time was fixed for delivery" I understand that to mean "fixed by or in accordance with the terms of the contract". A contract for goods to be delivered on demand seems to me to fall within the latter description. As such it is governed not by the final words of subsection 3 but the preceding words of that subsection. In cither case i.e. whether the demand be "deliver now" or "deliver at a future date" the final words are not applicable and we are still to seek a set of circumstances which would give them use. If the words of Atkin L.J. in the passage quoted above are construed as meaning that the final clause of subsection 3 might apply to a contract which provided for delivery on demand or as required by the buyer in a case where the refusal to deliver was announced before the demand for delivery has been made then the principle that the final words do not cover cases of anticipatory breach must be abandoned for that is clearly a case of anticipatory breach. I do not think it has ever been said that there can be no anticipatory breach unless a date for delivery has been ascertained prior to the date of the refusal and certainly none of the judges in Millett v. Van Heek & Co.(7) said anything of the kind. If the appellate judges in Millett's case(7) were prepared to entertain the possibility that a contract to be performed within a reasonable time might nevertheless be considered to be one with a fixed date upon the grand that such a date could be assigned by a jury long after the refusal to deliver one would think that a contract which actually had acquired a delivery date by agreement of the parties prior to the refusal must, a fortiori, be looked on as one with a fixed date yet it is the latter kind and not the former which are suggested to be the possible object of the final words of the subsection. Lord Atkin did not favour the suggestion that the Act had intended to introduce a novelty. He regarded the law on the matter as settled at least since the decision of Cockburn C.J. in Frost v. Knight(5) and he held that damages, even where no date or dates of delivery were fixed by the contract, must be calculated by reference to the time for performance of the contract subject to questions of mitigation. 14. Perhaps it is not too much to suggest that the Legislature did intend to introduce a novelty. Clearly, at any rate, the Act was intended to codify and to clarify the situation generally, and there is some reason to doubt that the attitude of the courts whether to cases of anticipatory breach or to cases of unaccepted anticipatory repudiation has been unvaryingly consistent prior to the passing of the Act or even thereafter. Thus in Roper v. Johnson(4), a case of anticipatory breach of a contract with fixed dates of delivery, it was held that the true measure of damages was the sum of the differences between the contract price and the market price at the several periods for delivery notwithstanding that the last period had not elapsed when the action was brought or when the cause was tried. Yet in the same year, in Tyers v. Rosedale & Ferryhill Iron Co.(3), we have the dissenting judgment of Martin, B. to which reference has been made already. Upon the granting of a rule nisi by the Court of Exchequer that case went upon appeal to the Exchequer Chamber. The judges of appeal (who appear to have included the judge of first instance Blackburn J.) upheld the opinion of Baron Martin on the question of the breach but reserved the question of the proper date for estimation of damages finding it unnecessary to decide whether the date of refusal was the correct date for estimating the market price because that price was in any event advantageous to the defendant and not to the plaintiff. 15. In Brown v. Muller(9) which was even not a case of anticipatory breach because, although the sellers, who had undertaken to deliver a quantity of iron in equal proportions over three months, gave notice prior to the date for the first of those deliveries that they did not intend to deliver, the plaintiffs did not accept the repudiation and did not bring an action until the date had passed upon which deliveries should have been made, Baron Martin nevertheless expressed some doubt about the true rule. The other members of the Court of Appeal were satisfied that in such circumstances the damages should be based on an estimation of the market prices at the several dates of delivery notwithstanding the attempted repudiation by the sellers. Martin B. said (page 323):
Those cases were also cases in which there were fixed dates for delivery not involving anticipatory breach. In Philpotts v. Evans(10) a case tried long before the passing of the Sale of Goods Act and before the notion of anticipatory breach had developed Baron Parke, dealing with a contract which may be regarded as having been one for the delivery of wheat within a reasonable time and in which the buyer, after the despatch of the goods but before delivery, announced that he would not accept them, upheld the trial judge in finding that the damages should be computed on the condition of the market on the last day when the contract could have been performed i.e. the date upon which the wheat was tendered for acceptance. Having considered the contrary argument which had been put forward for the defendant he said (page 477):
On the other hand in Tredegar Iron & Coal Co. Ltd. v. Hawthorn Brothers & Co.(11) which was decided about 10 years after the passing of the Sale of Goods Act the buyers of a shipment of coal, to be delivered within a specified month, while the goods were in transit informed the sellers that they would not accept them upon delivery. The sellers held them to their contract and refused to sell the cargo prior to the due delivery date, which they could have done at a better price than that contained in the contract, but instead sold, after the delivery date had passed, at a price lower than the contract price and claimed the difference by way of damages. The judge at first instance awarded them only nominal damages. Allowing the appeal the Master of the Rolls said:
And Lord Justice Mathew in a concurring judgment said:
This does not seem to accord well with the rule of Roper v. Johnson(4) viz.: that even in the case of accepted repudiation damages are still calculated at the time fixed by the contract for delivery. The passages just quoted from Tredegar's case(11) are indeed made the subject of a critical footnote at page 386 of Mayne and McGregor on Damages (the 12th edition) where a similar criticism is made of the decision in Sudan Import Co. v. Societe Generale de Compensation(12). 16. Thus before and since the passing of the Act three distinct views have been expressed by courts in relation to the assessment of damages (following upon peremptory refusal to perform) and the relevant date for inspecting the condition of the market. This has been said or suggested to be: (a) the actual date of purported repudiation; (b), the date of acceptance of that repudiation; (c), the date or dates for delivery under the terms of the contract. The latter is no doubt the true primary rule as it has evolved and I only mention the other dicta to suggest that for over a century the true rule does not seem to have been invariably discerned or observed. We come back thus to a consideration of Section 51 itself where, if anywhere, one might expect to find the resolution of these perplexities insofar as they bear upon the present case. It appears to me that the section makes two distinctions which are of the first importance but that it then proceeds to deal with them in a way which is not wholly easy to understand. The first subsection touches two situations between which there is a world of difference. The first of these situations is where the seller merely neglects to deliver the goods and the second is where he positively refuses to deliver them. In either case an action may be maintaned for non-delivery. One might well think that the distinction to which I have alluded in subsection 1 was one specifically designed to clear up all doubts concerning anticipatory breach because the distinction made in Subsection 3 between the two modes of measuring damages would seem to correspond naturally with the two forms of non-delivery mentioned in Subsection 1. Thus where non-delivery results in an action for non-performance after through mere failure to deliver the appropriate rule would seem to be the primary rule whereby the contract rate and the market rate are compared at the date of non-performance; whereas, if a novelty was to be introduced by the legislation one would expect it to be, along the lines indicated by Baron Parke in Philpotts v. Evans(10), by conferring upon the disappointed buyer a more peremptory right in relation to the assessment of his damages in cases of wilful refusal as distinct from failure to perform through want of competence. The symmetry of that proposition is, however, somewhat impaired by the fact that this novelty, if it be such, is specifically restricted to the case of contracts with no fixed time for delivery. Yet the plain fact is that anticipatory breach may as readily occur in cases of fixed date contracts as of those to be performed within a reasonable time. There may be some difficulty in the way of explaining why an accepted repudiation in the first case should leave the buyer in any different position from that of a buyer who has accepted repudiation in a case of the second sort. The reason for applying the primary rule is clear enough in contracts when the fixed delivery dates are all elapsed by the time of action, for then the end of "restitutio in integrum" may be easily achieved; but where, as might happen in instalment cases, the appointed dates leave the court to feel its way as best it can towards market values which may lie substantially ahead, that rule obviously becomes less attractive. What remains clear however is the distinction drawn by the subsection between the two relevant dates of computation. There can be no question of the words "time of the refusal to deliver" being merely synonymous with the words "time or times when they ought to have been delivered". The former words cannot be merely redundant. In the end, therefore, I can only say that notwithstanding the decision of the Court of Appeal in Millett v. Van Heek & Co.(7) I am unable to find any good reason for supposing that the final words of Subsection 3 do not apply in cases of anticipatory breach. Although McCardie J. in Hartley v. Hymans(2) arrived at his conclusion with expressed misgivings I would prefer to follow that opinion as being clearly in accord with the language of the subsection. 17. It may be that there is a good reason for making a distinction, in this matter of anticipatory breach, between cases where the parties themselves have fixed a definite term and interim periods of delivery and cases where all questions as to delivery and term are left at large or at the will of the buyer in expressing his requirements from time to time. In contracts of the first kind, even where, at the trial, the fixed dates lie in the future, the parties have looked ahead and have established the precise intervals at which ascertained quantities of the whole bulk of the goods the subject of the contract are to be delivered. In such cases it is perhaps reasonable to expect that the disappointed buyer upon repudiation by the seller should, even though accepting the repudiation, be held, in measuring his claim against the seller, to the market prices prevailing at precisely those dates to which from the outset he was looking to the seller for the satisfaction of his needs in those precise amounts whether those dates favour him or not. Where on the other hand the contract is at large in respect of such detail and only the price and the whole quantity of the goods is ascertained it does not seem unreasonable that the buyer, upon repudiation, should be at liberty to demand at once the whole balance of the undelivered goods, at all events where, as in the present case, previous instalments had been of very unequal amounts and at unequal intervals. Also, it could well be, in part, the intention of the Legislature that in such cases the courts are to be relieved of at least the more extreme anxieties of prophetic utterance where future damages are concerned and that the parties are to be bound to one specific date for the accrual of rights and obligations following upon the decisive act of one of them acceded to by the other. To my mind the final words of Section 51(3) of the Act are clear and ought to be followed and I cannot say otherwise of the provisions of S.53(3) of the Ordinance. Prima facie a contract with a fixed date of delivery must be either one which states the date or dates of delivery in the contract itself or else one which, as in Melachrino's case(8), has an ascertainable date for delivery fixed by reference to the happening of a given event. But where the contract itself provides for delivery on demand then, although it is not on the face of it one with a fixed delivery date I do not see why it should not be regarded as a contract for which a "time was fixed for delivery" upon the buyer exercising his right to appoint a date and the seller agreeing to the date so appointed. Where no such certitude exists and where, at the date of the request, the date or dates of delivery are wholly indefinite and are, ascertainable only by having regard to the whole nature of the relations of the parties and the previous course of their conduct, then I think the contract must be regarded as one to be performed within a reasonable time. As such I would say that it cannot be described as having a fixed or certain time for performance. I find support for this view in the language of section 31(2) of the Act which, almost in terms, equates a contract with no certain date to one to be performed within a reasonable time. To all such contracts I believe the final words of subsection 3 must always apply. 18. The present contract was one to be completed over an indefinite period by instalments upon demand. Had there been a point at which the plaintiff had demanded delivery of the balance of the goods according to a fixed schedule of dates and amounts and this had been accepted by the defendant then, upon the defendant's refusal to make any further deliveries, the plaintiff might have been bound to those dates in asking the court to determine the damages for then the delivery dates though appointed by the buyer would not have been "fixed" by the parties. But that is not what happened. Instead, after many demands and many deliveries at irregular intervals and of amounts which often varied from those stipulated, the defendant company suddenly announced that there would be no more deliveries at all although a substantial balance of goods remained at that date undelivered. The court found it at fault in so doing. In those circumstances I think that for the purpose of assessing damages the contract can only be regarded as one for delivery of goods in reasonable quantities at reasonable intervals i.e. a contract to be performed within a reasonable time. One might well think that there is little practical difference between a contract of that kind and a contract for delivery upon demand by the buyer which has been aborted by the seller's refusal before demand has been made, which would perhaps be an alternative way of describing the circumstances here. But if there is a valid distinction to be drawn, and this would seem to be implicit in what Atkin L.J. said in Millett v. Van Heek & Co.(7), then I would think that, in the alternative, the contract in the present case might be regarded as one for delivery of goods upon demand or as required by the buyers which had been frustrated by the seller's refusal before any demand concerning the outstanding balance of undelivered goods had been made. Under that prescription the decision in Millett v. Van Heek & Co.(7) would, in the present circumstances, augment the authority of McCardie J. in Hartley v. Hymans(2) and once again the result is that the proper date for looking to the market for the purpose of estimating damages is the 31st of July 1973 the date of the positive and final refusal by the seller to deliver any more goods. 19. I have had the advantage of reading the judgment of my Lord the learned president and have considered the primary solution which he proposes to a problem which we both wish to answer one way. If I do not follow him in that opinion it is not only with diffidence but with regret, for there is an obvious attraction to an answer, founded on the special wording of the local legislation, which would make it unnecessary to depart grom the authority of a decision of the English appellate court which, although it does not seem to have been expressly followed in any later case, has nevertheless not hitherto been questioned and has repeatedly been invoked by the academic writers. In these circumstances I think it is desirable to record as briefly as I can the reason why I am unable to find in the additional words "neglect or" which appear in our subsection the substantial determinant of the present case. I confess that the difference in the wording of the local statute was one which I had overlooked throughout the hearing of the appeal. It was not referred to by counsel and I rather suspect that Mr. Swaine, who was no doubt aware of it, must have assumed that the difference was immaterial. The additional words have been in the Ordinance from its first enactment and research has not yielded any extra-contextual clue to the draftsman's intention. In the end I have been unable to form any opinion save that these words are surplusage. I say this because I am regretfully unable to follow the learned president in the use which he makes of the distinction between contracts which have fixed delivery dates and contracts which have no such dates but which at the time of refusal have ascertained dates of delivery consequent upon the buyer's demand. This is I think the only point at which we are not in accord and I should say at once that I concede that a distinction can be made between an "ascertained" date of delivery and a "fixed" date of delivery where, upon the buyer appointing his date, the seller at once refuses to deliver for then there is no agreed date. But that, of course, does not help to show that there is a class of contracts providing for delivery on demand under which there could occur either a neglect or a refusal to deliver. For those alternatives to be open demand must initially have resulted in agreement as to the declared date. Where there is no such agreement and demand is met by refusal the term "neglect" in the final clause is of no relevance. I appreciate that where such a demand is made and is not met by refusal the contract may suffer non-performance either through neglect or else through subsequent refusal and that, in that sense the word "neglect" has a function; it can, grammatically, be given a meaning in the final clause. For the reasons I have already given, however, I prefer to regard any contract in which the delivery date has been ascertained in the sense that it was agreed, prior to refusal, as a contract with a fixed date and therefore subject to the penultimate clause. That, however, does not mean that contracts without fixed dates are governed exclusively by the final words. The time of neglect (or failure ) to deliver goods under a contract in which no time of delivery has been fixed can only mean the time when delivery ought to have been made in all the circumstances. That consideration will only arise when the parties are in disagreement as to when delivery ought to have been made; when disagreement does arise the date of that "ought" is something which only a court can ascertain and in doing so the court can only be guided by referring to what would be, or would have been, reasonable in all the circumstances. 20. When one is dealing with a contract having no fixed delivery dates there is a radical difference between the notion "time of neglect to deliver" and the notion "time of refusal to deliver". The latter has a fixed unalterable date consequent on the act of one of the parties long before action is commenced; the former is verbum equivocum, a term of no content, until the court has pronounced upon it. Therefore, as it seems to me, the English Legislature rightly omitted the words "neglect or" from the final clause of subsection three because they have no relevance there. Although the penultimate and the ultimate provisions of the subsection are set over against each other in the apparent mode of antithesis - the earlier covering fixed date contracts and the latter contracts without fixed dates - yet the words of the prior clause do not explicitly exclude the latter class and are clearly apt to cover not only the special case of refusal to deliver where there are fixed dates but also all cases of neglect or failure to deliver, irrespective of whether the contract itself provides a date for delivery or whether it does not. If the words "or refusal" be omitted from the final clause in subsection three of the Ordinance that clause would then amount to no more than a needless repetition of the earlier formula: "at the time or times when they ought to have been delivered". That is to say, the final clause would be otiose. I conclude therefore that in our legislation as in the English legislation the final words do express a different and additional intention from that expressed in the preceding clause and that that intention is centred precisely and exclusively in the word "refusal". It is here, if anywhere, that something new is added for if subsection three ended with the words "... ought to have been delivered", then, in any case of anticipatory breach the court would perhaps apply the rule discerned by Atkin L.J. in the cases commencing with Frost v. Knight(5) and fix damages by reference to the date or dates on which delivery ought to have been made. We are, I think, agreed that the final words of the English section make it clear that such a rule does not apply where a date has not been fixed and there has been refusal to deliver. As I read it, the wording of the local legislation does not make that conclusion any more certain. 21. On one point both parties have agreed and that is that the date 31st of May 1973 chosen by the learned trial judge as the correct date for estimating the market could not in any event be the proper date. That was neither the date of refusal nor the date of breach. If, however, the proper date for looking to the market was the date of breach and not the date of the refusal it would appear on what is before us that that did not occur until action was brought by a writ issued in November of 1973. If the true date for assessment is not the 31st of July then I would agree with Mr. Bernacchi that since there was not before the court sufficient material to calculate an alternative figure, and since in any event the respondent does not suggest any such alternative, the cross-appeal would have to be dismissed. For the reasons given however I would allow the cross-appeal and substitute for the figure proposed by the learned trial judge the figure of $833,553 as set forth in paragraph (a) of the respondent's notice. Representation: Bernacchi, Q.C. & Martin Lee (C.Y. Kwan) for Appellant/Defendant. John Swaine, Q.C. (C.P. Liu & Co.) for Respondent/Plaintiff. (1) (1971) Weekly Law Reports 1306. (2) (1920) 3 K.B. 475. (3) (1875) L.R. 10 Ex. 195. (4) (1873) L.R. 8 C.P. 167. (5) 7 Exchequer Cases 111. (6) (22 L.J.) Q.B. 455. (7) (1921) 2 K.B. 369. (8) (1920) 1 K.B. 693. (9) Law Reports 7 Exchequer Cases 319. (10) 5 Meeson's & Welsby's Reports 475. (11) 18 Times Law Reports 716. (12) (1957) 2 Lloyd's Reports 528. IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 16 OF 1975 (On appeal from O.J. 3627 of 1973) -----------------
----------------- Coram: Huggins, McMullin and Cons, JJ. Date of Judgment: 19th September, 1975 ----------------- JUDGMENT ----------------- Cons, J.: I have had the advantage of reading the drafts of the two judgments which now have been delivered. I am in entire agreement that the appeal should be dismissed. However, the cross appeal raises matter of much greater difficulty and I regret to say that in this respect I have come to a different conclusion. 2. Sub-section (3) of section 53 of the Sale of Goods Ordinance provides as follows:
3. In the case of Millett v. Van Heek and Company(1) the English Court of Appeal ruled that the English equivalent of the second part of the sub-section did not apply where the time for performance of the contract had not yet arrived, i.e. it did not apply to anticipatory breach or breach by repudiation and acceptance thereof. Damages in such a case fell to be assessed according to the time or times at which the contract should have been performed. The facts of that case were as follows:
It was held that the new agreement constituted a new contract to resume deliveries within a reasonable time after the lifting of the embargo and that the damages should be assessed as at that time. 4. The judges in that case did not decide, as they perhaps could have done, that in the circumstances the time at which the new contract was to be performed was in fact already fixed, although its actual ascertainment would depend upon the subsequent act of a third party. Bankes and Warrington, L.JJ., based their decisions upon a simple statement that the latter part of the sub-section did not apply to anticipatory breach as opposed to actual breach. Atkin, L.J., came to the same conclusion by extending the principle which had already been established before the Sale of Goods Act was passed and upon which presumably the Act itself was based. 5. The three Lords Justices expressed themselves as deliberately leaving open as a separate issue the question whether a contract which is to be performed within a reasonable time is a contract with a fixed time for delivery. If this question is answered in the affirmative it is difficult to see the purpose of the second half of the sub-section, for by section 31(2) contracts for which no time of delivery is expressed are to be performed within a reasonable time. Atkin, L.J., thought obiter that the words might refer to a contract to deliver goods on demand or as required by the purchaser. This view has been accepted in McGregor on Damages, 13th Ed., para. 559. But with the greatest respect this only takes one back to the first premise, for if the demand has not yet been made nor the goods required the time for performance has not yet arrived and the breach is therefore anticipatory. 6. The case of Hartley v. Hymans(2) was decided at first instance shortly before Millett v. Van Heek. In that case a purchaser wrongfully refused to accept all the balance of the instalments outstanding. Damages were assessed as at the date of that refusal even though the refusal was not accepted until sometime later. McCardie, J., was apparently influenced by the fact that the correct date of delivery should have been fixed by the purchaser and that by his absolute refusal he put it out of his power to fix such a date. 7. To my mind this decision is of doubtful authority because
8. I do not think it possible to exclude the present breach from the basic principle enumerated in Millett v. Van Heek. Subject to one comment that I shall make later, the time for delivery of the balance sued for had not yet arrived when the seller repudiated or when the purchaser accepted that repudiation by issuing his writ. The breach can only be anticipatory and within the case. 9. Nor do I think it possible to distinguish that case by reference to the inclusion in our Ordinance of the words "neglect or" before the word "refusal". These words do not appear in the English statute. For my part I cannot see that in themselves they add anything. There can be no neglect to deliver until there is a duty to deliver and once there is a duty to deliver the matter is covered by the first part of the sub-section. The word "neglect" can only be given effect to if the meaning of "fixed" is restricted to "fixed in the contract itself" and at the same time allowance be made for the time of delivery to be ascertained in some other or subsequent way. I am not persuaded that the legislature intended to create such a dual concept which would result, on a prima facie basis at least, in the application of different principles where the time for delivery is agreed in the contract itself from where it is agreed perhaps only a few days later. I can find no hint of such restriction in the authorities. Indeed even in Hartley v. Hymans a comment by McCardie, J., at 496 shows that he considered it possible for the time of delivery to be "fixed" up to the last minute. 10. In the instant case I would think that damages should be assessed according to instalments reasonably demanded after the 31st July 1973. This was the date on which the purchaser was put on notice that the seller did not intend to complete. No decision was made as to what these would have been nor was evidence led as to the appropriate market prices. In the circumstances it is impossible for this Court to decide. But to my mind that is not necessary. It is sufficient to say that the true date for assessment is not the 31st July itself. And as it is upon that particular date that the two variations asked for in the cross appeal depend, I would dismiss the cross appeal. 11. Earlier I entered a caveat as to the nature of the breach in this case because it seems to me possible that the plaintiff had already fixed times for delivery of the balance outstanding. In his letter of the 21st July he asked
It would be a matter of construction whether those polite words amounted to a definite demand for delivery or merely an offer to treat as to the amounts. However, this issue was not raised in any way at the trial and it would be improper to raise it at this stage. 12. I dissent from my brothers with the utmost diffidence, but I am not persuaded that either version of the latter part of the sub-section did effect a change in what were then well-established principles. With respect I do not read the earlier authorities as showing any inconsistency in those principles. Martin, B., was against the general run of authority but even he acknowledged that it existed: Brown v. Muller(4). Such a change would have been a radical change and one would have expected it to have been introduced more definitely, as for example by the use of words "or if the time for delivery had not yet arrived". Moreover there would seem to be little advantage in the change. I can see the convenience to a seller who is minded to default of knowing in advance with certainty his liability for damages. But I can also see the detriment to a purchaser should the seller repudiate upon a rising market. It may be said that this is a particular circumstance which would override the prima facie nature of the whole sub-section. If so it may perhaps be equally said that all anticipatory breaches are particular circumstances which override the sub-section. As Bailhache, J., commented in Melachrino v. Nickoll and Knight(5) the section "does not in terms deal with an anticipatory breach." It is said that the change may have been made with a view to avoid litigation that would otherwise be necessary in each case where the time for delivery remained unascertained. I cannot help feeling that this view overlooks the good sense of the business community and those who advise them, although there may of course be cases of difficulty which would have to be taken to court. I must confess that I have some difficulty in understanding precisely what effect these troublesome latter halves do have. I would only say that to my mind they have not so clearly effected a change in the law that we would be warranted in rejecting a decision of the English Court of Appeal which has stood for over 50 years unquestioned, so far as I am aware, in any way whatsoever. 13. For these reasons I would dismiss the cross appeal as well as the appeal itself. Representation: (1) [1921] 2 Q.B. 369 (2) [1920] 3 K.B. 475 (3) Vol.X L.R.Ex. 195 (4) [1872] Vol.VII L.R.Ex. 319 at 323 (5) [1920] 1 K.B. 693 at 696 |
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