PANACHAND & CO. PTE. LTD. v. POON LEE MENG t/a HIAP HENG CO. (a firm)

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J U D G M E N T

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Fuad V.-P:

1. This is an appeal by Mr. Poon Lee Meng who trades as Hiap Heng Co. ("the Appellant") from the judgment of Barnes, J. dated 9 December 1988 whereby he was ordered to pay S$88,620 damages, with interest and costs, to Panachand & Company Pte. Ltd. ("the Respondent") for the non-delivery of certain quantities of pepper under three contracts entered into between the parties during the month of September 1984. The Respondent recovered this sum for loss of profits on the intended re-sale of the pepper.

2. The judge awarded the Appellant nominal damages of costs, $10, with costs, on his counterclaim in respect of a fourth contract between the parties relating to the sale and purchase of some cassia. We are no longer concerned with that contract for there is no appeal and no cross-appeal on the counterclaim.

3. It was common ground that the Appellant failed to make delivery of pepper ordered by the Respondent, all of "Chinese Hainan origin"-

(a) 50 metric tons of whole white pepper;

(b) 250 metric tons of whole white pepper; and

(c) 30 metric tons of black pepper,

the Appellant's defence being that these were contracts for the sale of future goods subject to a written condition in each contract document that the seller would be freed from all responsibility if he were unable to acquire the pepper.

4. The Appellant also pleaded that as a result of previous dealings between the parties (a contract for the sale of ginger dated 21 June 1984) the Respondent knew that he would never have agreed to enter into any contracts for the sale of goods had a condition on the lines of those contained in the three contracts sued upon not been included. He pleaded that his supplier had failed to supply the pepper and thus he was not liable to the Respondent.

5. The only witnesses to give evidence before the judge were Mr. Dilip Doshi, the Respondent's managing director, and Mr. Poon Lee Heng himelf. On that evidence, which he reviewed in detail in his judgment, the judge came to the conclusion that the agreements between the parties had been arrived at by way of oral discussions and the exchange of telexes. The evidence of the agreements was to be found in those communications which included all the essential terms - the names of the parties; the subject matter; the price; the method of payment, and the mode and date of performance. In other words complete agreement had been reached and the parties had not stipulated for the execution of some further formal document.

6. As regards the contract documents which were later exchanged, the judge accepted the evidence of Mr. Doshi that he asked for them so that he could show his bank compact written records of the agreements in connection with his applications for the appropriate letters of credit and to provide a readily accessible record for his own files of the terms of the agreements.

7. The judge held that each time Mr. Doshi asked Mr. Poon to send his "contract", the relevant agreement was by then complete and could not be affected by any subsequent proposals unless they were agreed upon by both parties as a variation of the agreement already concluded. He added: "The subsequent siging of the Defendant's Sale Contract forms was merely an incident in the performance of their contractual obligations and was not meant by them to be the 'closing handshake', as it were, the clinching of their agreement."

8. The Appellant relied on the three Sales Contract forms because condition No .12 of 19 conditions on the reverse of each of the forms was in these terms:

"12. The basis of this contract is that the sellers shall be able to obtain the goods from the actual suppliers, and if for any reasons the suppliers cannot or do not supply the goods, then and in such an event the sellers shall be freed from all responsibility under this contract."

9. The Sales Contracts produced showed that in each case "Mr. Doshi had deleted the word '"overleaf from the end of the opening words of the document before he returned it to Mr. Poon. The opening words were as follows:".....whereby the sellers agree to sell and the buyers agree to purchase the undermentioned goods subject to the terms and conditions specified below and overleaf".

10. On the Sale Contract to No.3794, dated 7 September 1984, Mr. Doshi initialled the deletion of the word "overleaf" and added the words ("As Principals") against "Hiap Heng Co." at the very top of the form. On Sale Contract No.9184, dated 17 September 1984, and on Sale Contract No. 9204, dated 20 September 1984, Mr. Doshi had simply deleted the word "overleaf".

11. On each form, on its front, there followed a description of the goods; the quantity; the quality; the unit price; the total amount's a shipment amount's shippent packing; payment and "remarks".

12. In relation to all this, Mr. Poon accepted that nothing had been said in the oral discussion or in the telexes exchanged between the parties about a condition on the lines of condition 12 and told the Court that he had not noticed the deletion of the word "overleaf" on each form, or the addition of the words "As Principals" on one of them, when Mr. Doshi had returned the forms, duly signed, to him. The judge remarked that Mr. Doshi's alterations on the forms were inconsistent with his having agreed to the printed conditions on their reverse.

13. The Appellant's, grounds of appeal in his Notice of Appeal are as follows:

"(1)    The learned Judge erred in finding that the agreements between the parties were arrived at by way of oral discussions and exchange of telexes and that the subsequent signing of the Defendant's Sale Contracts was merely their contractual obligations and was not meant by them to signify the clinching of their agreement.

(2)    Further or in the alternative, the learned Judge erred in finding that the Respondent (Plaintiff) is not bound by condition 12 which appeared in the written contracts, i.e. [The condition is set out].

(3)    Further or in the alternative the learned Judge has erred as mentioned in Ground (1) above, he should find that the Appellant (Defendants) has not agreed to any deletion of the conditions contained the written contracts, especially condition 12."

14. It was for the Appellant to establish that the three contracts for the sale of pepper were contracts for the sale of future goods. This was question of the proper construction of the contracts entered into. With very great respect to the learned judge, in my judgment, his decision that the contracts were complete and binding before the Sales Contracts were signed by the parties cannot, on the evidence before him, be upheld. Moreover that was not the way the Respondent's claim was pleaded.

15. The issue that the judge had to decide was a very simple one and in my view it was properly and adequately raised in the pleadings. I have already summarized what the substantive defence was - that is a reliance on condition 12, and we see in the Amended Reply and Defence to the Counterclaim paragraphs which indicate that issue was joined on the presence or absence of the condition 12 in the contracts. Paragraphs 2 and 3 of the Amended Reply read:

"2.    In further answer to paragraph 3 of the Defence, the Plaintiff says that none of the conditions printed on the reverse of the contracts numbered 3194, 9184 and 9204 dated 7th September, 1984, 17th September 1984 and 20th September, 1984 respectively were incorporated into any of the said contracts since the word 'overleaf' on each contracts was deleted by the Plaintiff before the same was signed by it and returned to the Defendant.

3. The Defendant has never objected to such deletion nor made any complaint in respect thereof to the Plaintiff."

16. It seems to me that when the parties subscribed their names to each Sales Contract, which evidenced their agreement, the position was that so far as Mr. Doshi was concerned he was not agreeing to any of the conditions (about which no mention had earlier been made) on the reverse of the form which included, of course, condition 12. There can be no doubt about this because each time he crossed out the word "overleaf" and there is no challenge to this fact although Mr. Poon said he did not Mr. notice it. It was open to Mr. Poon to go back to Mr. Doshi and point out that the conditions were part of the contract and that he would not, as he told the Court, agree to any contract for the sale of goods from China unless be had the protection of a clause on the lines of condition 12. But he did not so, and by his conduct it seems to me that he accepted the correction that Mr. Doshi had made to the written document in each case and the obligations under it

17. I think that it is instructive to refer to certain telexes which were exchanged between the parties. On 22 November 1984 Mr. Doshi who had been pressing for delivery of the pepper, sent a telex to Mr. Poon saying that if he did not hear from him during the course of that week, "we have no choice but to hold you in default and send you our debit note for losses/expenses for immediate settlement". Mr. Poon replied on 27 November saying: "The pepper. For dealing with China business, late shipment is always occur. We request you to extend L/C to end December. If by that period still we don't ship to you then we have no excuse and will compensate you...".

18. Later on 27 November, Mr. Poon telexed to Mr. Doshi saying that after negotiations with Hainan, they had finally agreed to ship all the pepper before the end of December and asking for an extension of time for deliveery until 10 January 1985. Mr. Doshi replied on 29 November informing Mr. Poon that his buyers were demanding a cash settlement or a reduction in the price of US$200 per metric ton. Mr. Doshi asked for a bank guarantee that the pepper would indeed be shipped in December 1904. Mr. Poon replied on the same day: "Your buyer's demand too much. Unacceptable."

19. On 30 November Mr. Doshi responded in turn by sending a telex indicating that he was holding, Mr. Poon in default and that he would be sending a debit note for immediate settlement for his losses amounting to approximately US$40,000 and expressing the hope that legal steps would not be necessary. On 10 December, Mr. Poon sent the following telex: "The pepper claim. We accept to compensate you US$10,000 subject to open L/C [in connection with another contract.] On 27 December, Mr. Doshi informed Mr. Poon that he was arranging to recover his losses through his lawyers.

20. These telexes certainly suggest that until the action was instituted Mr. Poon was not asserting that the three agreements were conditional contracts.

21. I may say that I express considerable doubt whether, as worded, condition 12, had it been part of the contracts, would have beep effective to relieve the Appellant from the obligations he assumed. However that may be, on the issues properly pleaded and on the evidence that was fully explored, the Appellant failed to discharge the burden of establishing, on the balance of probabilities, that condition 12 formed part of any of the three contracts sued upon for the sale of the pepper, or that such a condition should be implied from course of previous dealings between the parties.

22. In these circumstances, although adopting a different approach from that of the judge regarding the formation of the contracts, on the facts, about which there was little dispute, I would dismiss the appeal.

Silke, V.-P.:

23. I agree. I, too, would dismiss the appeal. Being aware of the certain matters to which my brother Hunter wishes to make reference, I would add that I am also in agreement with that which he is about to say.

Hunter, J.A.:

24. I agree that this appeal fails for the reasons given by my Lord. A party's contractual intentions have to be judged objectively. When parties sign documents in the terms my Lord has described and then come to Court on the pleadings to which he has referred, two things to my mind inevitably follow. First, one cannot support the judge's conclusions as to the method by which these contracts were concluded; and secondly, it makes it quite impossible for the seller to argue that his special conditions, and particularly condition 12, were incorporated in any of the material contracts.

25. The additional matter to which I wish to refer is as plainly and as roundly as possible to condemn the practice of coming to trial with plaintiff's and defendant's bundles of documents. It adds enormously to the difficulties of trial judges; it forces them to grasshop from one bundle to another; it leads to endless duplication; and prevents the parties from understanding the issues themselves clearly, which necessarily follows from the simple expedient of putting together one bundle of documents in chronological order. The problem, I believe, starts from parties' failure to appreciate the full significance of O.27 r.4, the effect of which is that where lists of documents are exchanged the parties are deemed to admit the authenticity of all documents in those lists unless particular objection is taken to them.

26. It follows that unless there is objection to any particular document, all of the documents in the parties' respective lists of documents are accepted as genuine documents. This leads to the second conclusion which is that it is exceedingly easy to put together one agreed bundle of documents, which are agreed as to authenticity only, and that is what the Court needs in any civil trial.

27. The third stage follows from that, and is that all the agreed documents must be put together in chronological order in one bundle. I must emphasise that that is the obligation primarily of the plaintiff's solicitors but if that firm does not do the job properly the defendant's solicitors must intervene. The bundle of documents which were put before us in this case, which comprised separate plaintiff's and defendant's bundles, were a nightmare. It must have made the trial judge's task infinitely more difficult. I sincerely hope that trial judges in future will insist upon having one single bundle and will make appropriate orders for costs as against solicitors personally if they are not produced.