World Ford Development Ltd. v. Ip Ming Wai and Another

CACV000187/1992

Headnote

Sale and Purchase Agreement of domestic flat - Time of the essence - completion at or before 5 p.m. on a weekday - Purchaser tendered cheque at 5.24 p.m. - Vendor rescinded - Trial judge granted purchaser an order for specific performance, applying the maxim "de minimis non curat lex" and following G & Y Co. Ltd. v. Kwok Kim Leung HCA 3586/89 (Liu J, 2 July 91, unreported).

Held (Court of Appeal): Upon a proper construction of the contract, the "de minimis" rule has no application in the circumstances of this case - The trial judge failed to give effect to the parties' agreement - Appeal allowed - G. & Y. Co. Ltd. v. Kwok Kim Leung over-ruled.

IN THE COURT OF APPEAL

1992, No. 187
(Civil)

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Coram: Hon. Litton, Bokhary, JJ.A. and Sears, J.

Date of hearing: 24 March 1993

Date of handing down judgment: 2 April 1993

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J U D G M E N T

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Litton, J.A.:

Introduction

1. This case concerns a sale and purchase agreement dated 20 July 1991 whereby the plaintiffs (purchasers) agreed to purchase Flat B. Fifth Floor, Block 18, Wonderland Villas, Kwai Chung, from the defendant (vendor) for the total price of $3,380,000. Deposits totaling $338,000 were paid on the signing of the agreement and the balance of the purchase price amounting to $3,042,000 was to be paid on completion. Clause 3 of the agreement provided that the purchase would be completed at the office of Messrs Jesse H.Y. Kwok & Co., the vendor's solicitors, at or before 5 p.m. on 12 August 1991 when the vendor "and all other necessary parties (if any)" would execute a proper assurance in favour of the purchasers of the property free from all encumbrances.

2. Time was made of the essence of the agreement in every respect.

3. Clause 8 provided that if the purchasers should "fail to observe or comply with any of the conditions.... the deposit shall be absolutely forfeited to the vendor who may .... rescind the sale and resell the property...."

4. By clause 17 of the agreement the purchasers acknowledged that they were aware of the fact that the property was, at the date of the agreement, subject to a mortgage in favour of Wing Hang Bank and the vendor undertook "prior to or at completion" at his sole expense to procure the discharge of the mortgage and to pay all legal costs and registration fees involved in such discharge.

5. In essence, what happened on the day fixed for completion, 12 August 1991, was that the purchasers tendered performance late: at 5.24 p.m. That was the time when the messenger employed by the purchasers' solicitors, Messrs Joseph Chu & Co., arrived with the settlement cheques and the deed of assignment executed by the purchasers at the vendor's solicitors' offices at Tsimshatsui. This was not accepted by the vendor who forfeited the deposits and rescinded the sale on account of the purchasers' failure to complete in accordance with the agreement.

Purchasers' Claim

6. The purchasers commenced legal proceedings on 21 August 1991, seeking an order for specific performance.

7. The purchasers' pleaded case was in essence as follows:

(1) Arising from telephone conversations between Mr. Leung, clerk at Messrs Joseph Chu & Co.'s office at Tsuen Wan, and Miss Lam, clerk at the vendor's solicitors' office at Tsimshatsui, an agreement was reached to vary the time limit for completion: the parties, arising from these telephone conversations, had agreed to complete the sale upon receipt of the deed of assignment and the cheques that day, 12 August 1991, even if these arrived at the vendor's solicitors' office after 5 p.m.

(2) Alternatively, because Miss Lam had "raised no objection" to the possibility of the documents arriving after 5 p.m., as mentioned by Mr. Leung on the telephone as a possibility, this operated as a representation and induced the purchasers' solicitors to "double check all the papers" before arranging for their delivery: hence the vendors either waived the strict time limit, or were estopped from insisting upon the strict time limit.

(3) In any case, the "de minimis rule" applied and the vendor was as a matter of law not entitled to rely on the fact that the documents arrived 24 minutes late to rescind the agreement.

The Judge's Approach

8. The trial judge Jones J. made no findings on (1) and (2) above. This is not surprising in light of the evidence adduced at the trial. As regards (1) it is well to recall the much-quoted speech of Lord Moulton in Heilbut, Symons & Co. v. Buckleton [1913] AC 30 at 47 to the effect that the courts view with suspicion alleged oral agreements to vary or add to the principal contract: this was referred to recently in the judgment of the Privy Council in an appeal from Hong Kong : Universal Dockyard v. Trinity General Insurance [1989]2 HKLR 160 at 164-I.

9. As regards (2) above, the judge found in effect that Miss Lam did no more than to treat "Mr. Leung's request in a reasonable and responsible manner by raising no objection to the lateness in arrival of the documents for completion" (p. 7). He said at page 8:

"The request by Mr Leung was not so much for an extension of time in the strict sense, but for an indulgence on the basis that the messenger might be a few minutes late".

10. It is unclear what this finding meant: but, plainly, Miss Lam's response, whatever it was, to Mr. Leung's "request" could not have amounted to the "representation" pleaded in (2) above.

11. Moreover, at the trial, the alleged reliance on Miss Lam's "representation", to double check all the papers before arranging for their delivery, was never proved. In fact, as the judge found, the documents were ready for dispatch by messenger by 4 p.m. but, for reasons unexplained, they were not delivered till 5.24 p.m. The sole foundation for Jones J.'s judgment, as counsel for the purchasers Mr. Wong, QC accepted at the hearing before us, was the application of the "de minimis" rule, on which the judge found in the purchasers' favour, hence the vendor's appeal.

Sequence Of Events

12. What took place was as follows:

(i) On 12 August 1991, at about 10.40 a.m., the purchasers' solicitors sent by fax a draft of the deed of assignment (which had earlier been signed by the purchasers) to the vendor's solicitors for approval. The fax asked how the cheques for the balance of the purchase price should be split for the purposes of completion.

(ii) At 3.33 p.m. the draft deed of assignment duly approved without amendment was received by fax at Joseph Chu & Co.'s office. The accompanying letter from the vendor's solicitors asked for a cheque for the balance ($3,042,000) to be made in favour of the mortgagee bank Wing Hang Bank Limited.

(iii) The purchasers' solicitors thought they might not be able to arrange to have the sale completed by 5 p.m. so Mr. Leung informed Miss Lam by telephone that "completion could not take place until either 5 p.m. or shortly after that time". Miss Lam "raised no objection".

(iv) In fact, everything was ready at Messrs Joseph Chu & Co.'s office by 4 p.m. The letter enclosing the cheques in favour of the Wing Hang Bank, totaling $3,042,000, and the deed of assignment executed by the purchasers, were placed in Mr. Leung's out-tray for delivery by messenger. The letter was date-stamped in Joseph Chu & Co's office "12/8/91" and the time "4 p.m." The messenger did not give evidence at the trial and no explanation was offered as to why the documents, ready at Tsuen Wan at 4 p.m., were not delivered to the vendor's office at Tsimshatsui until 5.24 p.m.

(v) The vendor's directors were waiting at their solicitors' office from 4.15 p.m. in order to execute the assignment. When the documents had not arrived at their solicitors' office by 5 p.m., they decided to rescind. They communicated that decision to Mr. Tse, a solicitor employed in that office, some time between 5 p.m. and 5.10 p.m. This was communicated by telephone to Joseph Chu & Co. at 5.30 p.m. A fax to the effect that the agreement was rescinded and the deposits forfeited was received by Joseph Chu & Co. at 5.54 p.m.

Proper Construction Of The Agreement

13. The general rule is that a party to a contract must perform exactly what he undertook to do: Chitty on Contracts: 26 ed. Vol 1 para. 1991. It is not open to the courts to revise the words used by the parties, or to put upon them a meaning other than that which they ordinarily bear, in order to bring them in line with what the courts think the parties ought to have intended : ibid. para. 827. Here, on the face of the agreement, the purchasers undertook to complete the purchase by paying the residue of the purchase money "on or before 5 p.m. on 12 August 1991".

14. On the facts found by the judge, the purchasers had clearly failed to comply with the requirements of clause 3; this would then, on a plain construction of the agreement, have given rise to the vendor's right under clause 8 to rescind the sale and forfeit the deposits. By what principles of law, then, were the vendors deprived of their contractual rights?

15. The judge found that the delay in tendering performance by the purchasers was "so trivial" that "the principle of de minimis" applied. The judge also found:

"If the facts had revealed that the defendant [vendor] had suffered some detriment or liability, as often happens when there are a series of transactions from one sub-purchaser to another, a plea of de minimis would probably be defeated".

16. This calls into question the foundation and nature of the "de minimis" rule. It is, of course, an abbreviation of Latin maxim "de minimis non curat lex": a maxim which, as Lord Denning MR said in Chery1 Investments v. Saldanha [1978]1 WLR 1329 at 1337C, must not be too easily invoked.

"De minimis" Rule

17. The first and fundamental rule is that the courts have no dispensing powers. When the parties are under no disability and have, with their eyes open, entered into a contract, the duty of the court is to give effect to it. When the parties have said that acts are to be performed "at or before 5 p.m.", this does not mean " at about 5 p.m.". Parties can of course contract for mutual tolerance, for example by agreeing that time is not of the essence of the contract. The latitude which the parties import into their own contract, by the words they themselves use, should not be confused with the "de minimis" rule: see Louis Dreyfus v. Parnaso (1960)2 QB 49 where the Court of Appeal held that the use of the word "approximative" in relation to a cargo of 10,400 tons of wheat gave the parties more tolerance than under "de minimis" rule: the judge (Diplock J) in the lower court having erred in concluding that the word "approximative" should be construed as "referring to those limits of tolerance which the de minimis rule imports into contracts of this kind": see (1959)1 QB 498 at 512. There, the shortfall of 3.18 % came within the tolerance of "about 10,400 tons" - but was held by the Court of Appeal as not de minimis.

18. Jones J., in the court below, concluded that the period of 24 minutes in this case was "trifling and was of a negligible nature". He took this formulation of the de minimis rule from the judgment of Sellers and Pearson LLJ in Margaronis Navigation Agency Ltd. v. Henry W. Peabody [1965]2 QB 430 where the contractual obligation was to load 12,600 tons of maize in bulk at Cape Town. The plant available there for loading maize onto a ship consisted of a silo which measured the quantity loaded with accuracy and recorded them. At the relevant time 12,588 tons 4 cwts had been loaded. There was therefore a shortage of 11 tons 16 cwts. The question was whether 12,588 tons 4 cwts was a full and complete cargo of 12,600 tons. The shipowners argued that the difference was "de minimis" and ought to be disregarded; in a practical sense, they said, the vessel was "fully loaded" in accordance with the requirements of the charter-party. This argument was rejected. It is clear from all three judgments in the Court of Appeal (Sellers, Pearson and Diplock LLJJ) that the only issue was the proper construction of the contract, the parties having implicitly entered into the contract "on the basis that any negligible variation from the 12,600 tons ..... would be subject to the de minimis rule": Sellers LJ at 445D. The matter then boiled down to one of fact whether there were limits of accuracy which were not commercially significant. Obviously, that depended upon the accuracy of the machinery at Cape Town for measuring the maize loaded onto the vessel. As Diplock LJ stated at 448C:

"..... the law has always regarded a contract to deliver or load a specified quantity of goods as satisfied if that quantity has been delivered within the margin of error which it is not commercially practicable to avoid;" (Emphasis added).

19. The principle derived from this case is easy to state: In determining whether a party to a contract has satisfied his contractual obligation in terms of quantity, the court must have regard to the means available for its ascertainment. If, in Margaronis Navigation v. Henry W. Peabody, the means available for measuring the maize were crude and it was physically impossible to measure quantities smaller than, say, 16 tons, the owner's performance under the charter-party might well have come within the de minimis rule. The alleged shortfall would have been "trifling and negligible" because, in the context of that contract, the alleged deviation would have been almost, in a practical sense, incapable of ascertainment.

20. What had to be measured in Margaronis Navigation v. Henry W. Peabody was a quantity of maize. In this case, we are concerned with the measurement of time. Obviously, the intention to be imputed to the parties, as reasonable contracting parties, is that by the use of the expression "at or before 5 p.m." they did not mean to measure time by micro-seconds. It was plainly not within the contemplation of the contract that the vendors should be standing at the entrance of their solicitors' office at Tsimshatsui on 12 August 1991 stopwatch in hand, to see whether the documents came before the second-hand swept past the hour of five. Who was to say that the stop-watch used was accurate? By whose calibration? If a dispute should arise within such a context, a court would, obviously, find it a "triviality", a matter of "little moment" and of a "trifling and negligible nature": per Sellers LJ in Margaronis Navigation Agency at 444, quoted by Jones J in the court below.

21. By applying the "de minimis" rule in this way, the court is simply giving effect to the contract of the parties, upon its proper construction, and brushing aside those trivialities that they would as reasonable contracting parties have disregarded themselves.

22. In the court below, Jones J. did not construe the parties' contract at all. He imposed a consequence upon them which he felt was "just". He said that the defendant had "no other commitment to fulfil following completion by way of any financial obligations as a result of the 24 minutes delay.... the only inconvenience that would be caused would have been for Mr. and Mrs. Garcia [the directors and beneficial owners of the company] to return to the offices of Messrs Jesse H.Y. Kwok & Co. to sign the assignment". If the judge had approached the matter as one of the proper construction of the agreement, he would have seen immediately that this approach was wrong. The contractual rights and liabilities of the vendor cannot depend on how he himself chose to act.

23. If, within the contractual context, a delay of 24 minutes by the purchasers was "trifling", and to be disregarded, it must be "disregarded" for both parties. It logically follows that the contractual time limit would to that extent have been enlarged; but to what time? To such time as the purchasers happen to have the documents delivered? If time for performance is deemed to have been extended, then it follows that the vendor would not have been entitled to re-sell the property to a third party, within that extended time for completion. And yet, that was not how Jones J. approached the matter. He considered that if the vendors had been "inconvenienced" or had incurred "financial obligations" within the 24 minutes then perhaps the de minimis rule would not have applied. Contrast this approach with Lord Denning MR's in Chery1 Investments (supra) where at p.1337 he said: "A man cannot excuse himself from a breach of contract by saying it did no damage. Nor is it permissible for a man sued in tort to say: It was only a little wrong".

24. In reaching his conclusion, Jones J. followed a decision of Liu J. in G & Y Company Limited v. Kwok Kim Leung and Cheung Wai Ying Eva (unreported) 1989 No. A3586, 2 July 1991, which was another case concerning the sale and purchase of property. Time was of the essence of the contract. The time fixed for completion, after a number of extensions, was at or before 6 p.m. on 16 June 1989. The vendor did not arrive at the solicitors' office until 6.35 p.m. The purchaser treated the contract as having been wrongfully repudiated and sought a return of the deposit and damages. Liu J. held that the de minimis rule applied and, following the formulation of the "rule" in Margaronis Navigation Agency v. Henry W. Peabody, concluded that the deviation was of a trifling nature. The judge appears to have taken into account the "background" to the agreement, including the fact that completion had previously been postponed several times in order to accommodate the purchaser and that, in the provisional sale and purchase agreement, time for the signing of the formal agreement was not made expressly of the essence. The judge found that the reason why the vendors were late was because they were held up in traffic and the purchasers were aware of that fact. He therefore concluded that when the purchasers refused to complete, treating the vendors as being in breach after the contractual 6 p.m. deadline had passed, they were in breach and the vendors were entitled to rescind the agreement, forfeit the deposit and resell the property. Liu J. did not say when the deadline had been extended to : but by implication it must have been sometime after 6.35 p.m. This was a result imposed on the purchasers by the court.

25. In my judgment, Liu J. was in error and G & Y Company Limited v. Kwok Kim Leung should be overruled. The matter can be approached very simply. If 6 p.m. was not the contractual deadline which the parties had agreed, and made of the essence of the contract, when was the new deadline? Was it such time as the vendors happened to turn up at their solicitors' office? Assuming they were "held up" in traffic until 8 p.m., would the result have been any different? And if so, why? Further, it is difficult to see how the past conduct of the parties could have affected the meaning of the contractual provision which Liu J. was ultimately called upon to construe. If, by their past conduct, the parties are to be taken to have agreed a flexible time, and 6 p.m. in truth meant "about 6 p.m.", then there would have been no question of applying the "de minimis" rule at all. The court would simply have been construing the contract, and holding as a matter of law that the tender of performance by the vendors at 6.35 p.m. was sufficient to discharge their obligation under the agreement.

26. Liu J., in the course of his judgment (p.18) referred to a judgment of Penlington J.A. in this court in Grandwide Limited v. Bonaventure Textile Ltd. CA 27/90, 17 July 1990 (unreported) where, in relation to another sale and purchase of property case, Penlington J.A. said:

"These matters have to be looked at with common sense and a delay of perhaps a few minutes might not entitle a party to repudiate a contract".

This, of course, is a very wide statement and cannot be regarded as one of general application. Assume, for example, that a vendor and purchaser had sat down together at the vendor's solicitors' office, within the time fixed for completion, intending to exchange the completion cheque against the executed deed of assignment. Assume, further, that as the vendor was about to sign the deed on the last stroke of five o'clock, his pen had run dry and this needed refilling. The arrangements to refill the pen, to enable the vendor to sign, took a few minutes. Could the purchaser have turned round and said that the vendor had failed to "execute a proper assurance of the property" in his favour before the deadline expired, and thus entitle him not to complete and claim his deposit back? I apprehend that, in those circumstances, a court would indeed say that "a delay of perhaps a few minutes" would not entitle the party to treat the contract as repudiated. The de minimis rule might well apply, for this reason : Who is to say that the last stroke of five o'clock, in that office, recorded the correct time? How is a trial judge, at a hearing many months later, to ascertain a question of fact like that? This would plainly be a case of a "microscopic deviation", of such a trifling and negligible nature that the court, in the conduct of practical business, would brush it aside as a mere triviality. But if, factually, it is beyond all dispute that one or other of the parties was in truth a few minutes late, I cannot see how the court can relieve him of the rigour of his own contractual obligation. Any other approach means in effect that the court would simply be re-writing the contract for the parties - after the event, with the innocent party having no means of ascertaining what the new time limit might be until he comes to court and the court pronounced upon it. In Grandwide v. Bonaventure (supra), in a passage not cited by Liu J. in his judgment, Penlington JA said:

"Bonaventure do not dispute the general proposition that de minimis does not apply to time .....".

It is as well to recall the dictum of Lord Salmon in The Laconia [1977] AC 850 at 878: "Certainty is of primary importance in all commercial transactions". This was cited in Lord Bridge's speech in The Chikuma [1981]1 WLR 314 at 321G (one of the cases referred to us by counsel), and Lord Bridge then went on to say :"The ideal at which the courts should aim.... is to produce a result such that in a given situation both parties seeking legal advice as to their rights, and obligations can expect the same clear and confident answers from their advisers...."

27. In the same vein Robert Goff LJ said in Scandinavian Trading v. Flota [1983]1 QB 529 at 540E:

"It is of the utmost importance in commercial transactions that, if any particular event occurs which may affect the parties' respective rights under a commercial contract, they should know where they stand .....".

28. Sadly, the result achieved in the court below is far from this ideal.

Case For The Purchasers

29. At the hearing before us, Mr. Wong QC, counsel for the purchasers, addressed no arguments towards sustaining Jones J. in the way he applied the "de minimis" rule. In essence, the argument which he puts forward is this:

(i) In applying the de minimis rule, the court must have regarded to the substance of the transaction;

(ii) if the parties had, in truth, agreed upon physical completion, that is, adhering strictly to the procedure for completion as set out in clause 3 (which required the vendor and the mortgagee to attend at the office of Messrs Jesse H.Y. Kwok & Co. to execute a proper assurance of the property in favour of the purchaser free from all encumbrances) then the vendor might well be correct in arguing that the deadline for completion was 5 pm. on 12 August 1991;

(iii) but the parties had, by the exchange of correspondence between the solicitors, agreed upon completion by way of undertakings in accordance with the Law Society's circular to members: this gave the vendor's solicitors 21 days from the date of receipt of the purchasers' cheques to clear the encumbrance and execute an assignment in favour of the purchasers. The purchasers' cheques tendered at 5 p.m. could not possibly have been cleared to enable the mortgagee to discharge the mortgage, to enable the vendor to assign the property free from encumbrances to the purchaser by 5 p.m.

(iv) By implication, the deadline of 5 p.m. was relaxed.

30. This was, in effect, an entirely new case for the purchasers which was neither pleaded in the statement of claim nor considered by the judge. Although presented as "the substance of the transaction" against which the application of the de minimis rule should be viewed, this was in effect an argument for a variation of the contractual time limit by subsequent agreement. If the case had been pleaded, factual issues involving the bank mortgagee's role could well have been explored. Might the bank mortgagee have been prepared to release the charge upon the vendor's solicitors' undertaking, after the purchasers' cheques were received? Was the vendor's solicitors' undertaking to return the assignment duly executed within 21 days relevant to the act to be performed by the vendor himself, namely, to execute the assignment by 5 p.m. on 12 August 1991? In what way was the exchange of correspondence concerning the machinery for completion a variation (or "relaxation") of the contract term?

31. In my judgment, the point raised by Mr. Wong QC on behalf of the purchasers came far too late in the day for proper adjudication. On the basis of the imperfect material before us, I am by no means convinced that if the point had been raised it would have assisted the purchasers.

32. Mr. Wong's submissions were, in effect, a tacit acceptance of the judge's error in this case.

Conclusion

33. Jones J. in the court below failed to ask himself the basic question : What did the parties agree? By so failing, he never gave effect to their agreement. When the parties appoint a specific time by which acts are to be performed, they have said by implication that those acts cannot be performed beyond that time, in accordance with the contract. Generally speaking, there is no elasticity in punctuality : see Lord Shaw of Dunfermline in Maclaine v. Gatty (1921)1 AC 376 at 393. When the parties say that completion must take place by 5 p.m., they do not mean it might take place at 5.24 p.m. or some time after 5.24 p.m. A court does not construe a contract by way of contradicting it.

34. It is as well to recall the words of Lord Atkin in Arcos v. Ronaasen (1933) AC 470 at 479:

"If the written contract specifies conditions of weight, measurement and the like, those conditions must be complied with. A ton does not mean about a ton, or a yard about a yard..... If the seller wants a margin he must and in my experience does stipulate for it".

The same principle must apply to the question of time, particularly when time has been made of the essence of the contract.

35. In Arcos v. Ronaasen the court was concerned with a quantity of staves of Russian timber where the dimensions were clearly specified. Some variation in the lengths and in the depths of the staves was allowed for in the contract, but none in the thickness. Immediately following the passage cited above, Lord Atkin went on to say:

"No doubt there may be microscopic deviations which businessmen and therefore lawyers will ignore" (emphasis added).

Although the expression "de minimis" was not actually used in Lord Atkin's judgment, this was what he clearly had in mind. The point to note is this. Lord Atkin was not imposing the consequences of "microscopic deviations" on the parties by the exercise of some form of judicial prerogative; he inferred this as the intention of the parties: something which "businessmen..... will ignore".

36. In my judgment, the de minimis rule has no application in the circumstances of this case. The appeal must be allowed, Jones J.'s judgment of 2 November 1992 set aside and judgment should be entered in favour of the vendor, for a declaration that the vendor had lawfully rescinded the agreement and forfeited the deposit. There should also be an order nisi for costs in favour of the defendant (vendor), both before us and in the court below.

Bokhary, J.A.:

37. I agree with everything which my Lord has said. However, because we are reversing Jones J.'s judgment in this case and overruling Liu J.'s decision in G & Y Company Limited v. Kwok Kim Leung and Cheung Wai Ying Eva (unreported) 1989, No. A3586, July 2, 1991, I will - in deference to those learned judges and in recognition of the importance of the point of law involved - add something of my own on the issue of "de minimis".

38. Deadlines for the completion of agreements for the sale and purchase of land making time of the essence are standard. They must be respected if people are to know where they stand.

39. My Lord has reminded us of what Lord Bridge identified in The Chikuma [1981] 1 WLR 314 at p. 322 as the ideal at which the Courts should aim in approaching common form clauses, namely, a situation in which "both parties seeking legal advice as to their rights and obligations can expect the same clear and confident answer from their advisers and neither will be tempted to embark on long and expensive litigation in the belief that victory depends on winning the sympathy of the court." Having said that, Lord Bridge did of course acknowledge that such ideal "may never be fully attainable". But, as he pointed out, "we shall certainly never even approximate to it unless we strive to follow clear and consistent principles and steadfastly refuse to be blown off course by the supposed merits of individual cases."

40. In truth, the doctrine that the law does not concern itself with trifles or, if you prefer, the maxim "de minimis non curat lex" helps to attain that ideal. And yet the application which it was given in the case under appeal and in the first instance decision which it followed has militated against such attainment. Why? Because sight was lost of the principle.

41. So there is another reminder which we can usefully give ourselves. And it is that, as Lord Atkin said in Banco de Portugal v. Waterlow & Sons Ltd [1932] AC 452 at pp. 486-487, "rules of law have to be tested in these days, and must survive the application of first principles."

42. It is unnecessary to examine in all its aspects the rationale behind the law's refusal to concern itself with trifles. We are here concerned with a contract. So the first thing to do is to uphold the parties' bargain if that can be done. And the one thing which that does not call for is a re-writing of their contract. Of course, nobody would ever be so bold as to make an overt attempt at that. What has to be guarded against are covert, or perhaps subliminal, attempts. "I know of no method of construction of a contract by way of contradiction of it" are the words used by Lord Shaw of Dunfermline in the course of repelling such an attempt in Maclaine v. Gatty [1921] 1 AC 376 at p. 393.

43. In the present case, the deadline was 5:00 p.m. But it was held that something which happened at 5:24 p.m. was within that deadline. And (not surprisingly perhaps) nobody felt able to say where it all ended if it did not end at 5:00 p.m. as provided in the contract.

44. Plainly, such a state of affairs is conducive neither to the upholding of bargains nor to the promotion of certainty. And, of course, it is no part of the "de minimis" rule's function to destroy bargains or create uncertainty.

45. Counsel for the respondent did not suggest that the rule modifies contractual stipulations as to time (or anything else) by implying that they were approximate only. He was right not to have done so. Had he done so, it would have been necessary to invite his submissions on the decision of the Court of Appeal in England in Louis Dreyfus & Cie v. Parnaso Cia Naviera S.A. [1960] 2 QB 49 where (at p. 59) Harman L.J. contrasted the greater leeway conferred by the use of terms such as "approximate" or "about" with the "trifling differences" tolerated under the "de minimis" rule.

46. That case concerned an obligation under a charterparty to load a full and complete cargo. A case which was fully argued before us is a later decision of the same Court, Margaronis Navigation Agency Ltd v. Henry W. Peabody & Co. of London Ltd [1965] 2 QB 430. It concerned the same obligation. Dealing with the "de minimis" rule, Diplock L.J. said this (at p. 448):-

"I think that the application of that rule is simple, though difficulties may arise in borderline cases on particular facts. It seems to me that the law has always regarded a contract to deliver or load a specified quantity of goods as satisfied if that quantity has been delivered within the margin of error which it is not commercially practicable to avoid; and since that is treated and always has been treated by the courts as performance of the obligation, it follows, now that it is fashionable as well as logical to relate these matters back to the terms of the contract that created the obligation, that the undertaking to deliver is qualified in that way. It also follows that, in determining whether a party to a contract has satisfied this obligation or not, the circumstances in which it fell to be performed are the relevant circumstances to consider. Did he perform it within that margin of error which in those circumstances it was not commercially practicable to avoid?"

47. I pause here to note that in the 1960 case a shortfall of 3.18 per cent was held acceptable under the "approximate" test, while in the 1965 case a shortfall of something less than one-tenth of one per cent was held not to be "de minimis". Of course, the particular facts of each case varies even when they are of the same class. And it hardly needs to be said that "full and complete cargo" cases are not of the same class as "deadline" cases. Nevertheless, those figures are probably worth noting as illustrative of the narrow scope of the rule that the law does not concern itself with trifles.

48. Counsel for the appellant goes so far (although he does not have to do so in order to succeed) as to contend that the rule has no application at all to completion deadlines. That is going too far.

49. As contracting parties must be taken to know, we do not live in a world in which everybody's clocks and watches are synchronized. No doubt, the sensible course for anyone keen to complete is to do so well before the deadline fixed for completion. But there could well be instances in which it is a very near-run thing. And it may well be that the party wishing to complete is within the deadline by his own watch but not by that of the party who prefers not to complete after all. But the difference may be so slight as to be within the variance only to be expected between timepieces which are not synchronized. Such a difference must - as a matter of practicality and of the presumed intention of the parties, who can hardly to be taken to have agreed on something futile - be disregarded as trifling. It must be treated as unworthy of the law's notice since it is incapable of being resolved by the law's process.

50. That is not the situation in the present case. The respondent purchasers accept that they were 24 minutes beyond the time stipulated in an agreement making time of the essence.

51. It would be to contradict the provision for a 5 o'clock deadline to hold that even after 5 o'clock had unquestionably come and gone, nevertheless the party wishing to be free of his obligation to the party who is late must wait for some indefinite time before being free. How is a solicitor to advise such a client? Is he to be left to guess where the court's sympathies will ultimately lie - taking into account how good the price was when agreed upon, the relative wealth of the contracting parties, and so on? I need not repeat the statement which I quoted from Lord Bridge's speech in The Chikuma (supra) at the beginning of this judgment.

52. All that remains in the argument of the respondent's counsel (neither of whom appeared below) based on the Law Society's circular numbered 91 of 1982 and dated December 28, 1982, which argument they attempted to bring within the "de minimis" issue. The averments material to it are not contained in the pleadings. And the argument itself was not advanced below. Not surprisingly, the judgment is silent on it. And the point is not raised by a respondent's notice. No application to amend the pleadings has been made to us. Nor has any to file a respondent's notice out of time. These omissions are not surprising. Counsel for the respondent have not challenged counsel for the appellant's contention that the state of the evidence may well have been different if the point had been taken at the trial. That "new" point is not therefore open to the respondents. The question of its merits (if any) does not arise.

53. I, too, would allow the appeal - with the result stated by my Lord.

Sears, J.

54. I agree that the appeal must be allowed and also agree with the proposed order for costs.

Representation:

Malcolm Merry (M/S Erwin Young, Chu & Law) for Appellant

Ronny Wong, Q.C., Chan Chi Hung (M/S C.P. Cheung & Co.) for Respondent