[1934] 2 K.B. 394
[DIVISIONAL COURT]
L'ESTRANGE v. F. GRAUCOB, LIMITED.
1934 Feb. 16, 19, 20.
SCRUTTON, and MAUGHAM L.JJ.
Sale of Goods - Contract in writing signed by Parties for sale of Automatic Slot
Machine - Clause in small print excluding "any express or implied condition,
statement, or warranty, statutory or otherwise" - No misrepresentation by Seller as
to terms of Contract - Machine out of order - Action by Buyer against Seller for
Breach of Implied Warranty of Fitness - Competence of Action.
The buyer of an automatic slot machine signed and handed to the sellers an order
form containing in ordinary print and writing the essential terms of the contract,
and in small print certain special terms one of which was "any express or implied
condition, statement, or warranty, statutory or otherwise not stated herein is
hereby excluded." The sellers thereupon signed and handed to the buyer a printed
order confirmation assenting to the terms in the order form. The machine was
delivered by the sellers to the buyer, who paid to the sellers an instalment of the
price. The machine did not work satisfactorily, and the buyer brought an action
against the sellers in the county court claiming (inter alia) damages for breach of
an implied warranty that
[1934] 2 K.B. 394 Page 395
the machine was fit for the purpose for which it was sold. The sellers pleaded (inter
alia) that the contract expressly provided for the exclusion of all implied warranties.
The buyer replied that at the time when she signed the order form she had not read
it and knew nothing of its contents, and that the clause excluding warranties could
not easily be read owing to the smallness of the print. There was no evidence of
any misrepresentation by the sellers to the buyer as to the terms of the contract:Held, by the Divisional Court (Scrutton and Maugham L.JJ.), reversing on this point
the judgment of the county court judge, that as the buyer had signed the written
contract, and had not been induced to do so by any misrepresentation, she was
bound by the terms of the contract, and it was wholly immaterial that she had not
read it and did not know its contents; and that the action failed and the sellers were
entitled to judgment.
Parker v. South Eastern Ry. Co. (1877) 2 C. P. D. 416, 421, observations approved
and applied.
Wallis, Son & Wells v. Pratt & Haynes [1911] A. C. 394 and Andrews Brothers
(Bournemouth), Ld. v. Singer & Co.[1934] 1 K. B. 17 referred to.
Richardson, Spence & Co. v. Rowntree [1894] A. C. 217, and the other railway
ticket cases, distinguished.
APPEAL from the Carnarvonshire County Court held at Llandudno.
The plaintiff, Miss Harriet Mary L'Estrange, was the owner of premises in
Great Ormes Road, Llandudno, where she resided and carried on the
business of a caf‚. The defendants, Messrs. F. Graucob, Ld., of City Road,
London, E.C., were manufacturers and sellers of automatic slot machines.
On February 7, 1933, two of the defendants' representatives, a Mr. Page,
their sales supervisor, and a Mr. Berse, one of their travellers, called upon
the plaintiff and asked her to buy an automatic slot machine for cigarettes.
A meeting was arranged at the house of the plaintiff's stepmother between
these representatives of the defendants on the one part, and the plaintiff,
her stepmother, and a Mr. Pratt who assisted the plaintiff in her business on
the other part. The plaintiff decided to buy from the defendants an
automatic cigarette machine of the description mentioned below. Mr. Page
then produced a form printed on brown paper, headed "Sales Agreement,"
in which there were blanks for the particulars of any given transaction. The
[1934] 2 K.B. 394 Page 396
blanks on the form were then filled up with the particulars of the plaintiff's
purchase and the form was signed by the plaintiff.
The document when completed was, so far as material, in the following
terms: "Sales Agreement. Date Feb. 7, 1933. To
F. Graucob, Ltd., .... Please forward me as soon as possible: One Six
Column Junior Ilam Automatic Machine .... which I agree to purchase from
you on the terms stated below .... and to pay for the same in the following
manner: Instalments 8l. 15s. 0d. down. 18 payments of 3l. 19s. 11d." Then
after some other formal matter came certain clauses in small print which, so
far as material, were as follows: "I agree to take delivery of the machine
upon receiving notice that it is ready for delivery, and to make the first
monthly payment 30 days after the date following that of the posting of
such notice and all subsequent payments on the corresponding date of each
succeeding month. .... If any payment shall not have been received by you
within a fortnight after it has become due, all the remaining payments shall
fall due for immediate payment, and I agree to pay interest on these
remaining payments at the rate of ten per cent. per annum as from the date
of their so falling due. In consideration of your undertaking to put in hand at
once work on this machine I agree not to countermand this order. .... This
agreement contains all the terms and conditions under which I agree to
purchase the machine specified above, and any express or implied
condition, statement, or warranty, statutory or otherwise not stated herein
is hereby excluded..... (sgd.) H. M. L'Estrange." Then followed printed
questions relating to the purchaser and her business and premises with
blank spaces for the answers which were filled in in manuscript
appropriately to this case.
On the same date the plaintiff handed to Mr. Page her cheque for 4l. on
account of the price of the machine.
On February 9, 1933, the defendants, having received the above mentioned
document, sent to the plaintiff an "order confirmation" of that date signed
by them; a "guarantee"
[1934] 2 K.B. 394 Page 397
for eighteen months for the free fixing, maintenance, and insurance of the
machine; and an invoice.
On March 28, 1933, the machine was delivered at the plaintiff's premises,
and on March 29 a mechanic of the defendants came and installed it there,
the plaintiff handing to him on behalf of the defendants a further sum of
4l. 15s. in respect of the price, and 6s. for packing, making together 5l. 1s.
The machine did not work satisfactorily, and after a few days it became
jammed and unworkable. On April 7, 1933, the plaintiff wrote to the
defendants that it had failed and was still out of order, and a mechanic was
sent to put it right. On April 27, she again wrote that it was far from
reliable; and on April 28 a mechanic again attended to it, and the plaintiff
then signed a form that it was working to her satisfaction. On May 4, she
wrote that the machine had been of no use for a month, and asked for
another month in which to pay her first instalment, but added that since the
last overhaul the machine had worked satisfactorily. On May 8, her patience
being exhausted, she wrote that she had decided to forfeit her deposit, and
requested the defendants to remove the machine; and on May 11 she
ceased to make use of the machine. The defendants, however, declined to
terminate the transaction.
On May 25, 1933, the plaintiff brought the present action against the
defendants in the county court, her claim being for 9l. 1s., made up of the
above sums of 4l. and 5l. 1s., as money received by the defendants to the
use of the plaintiff, having been paid by the plaintiff to the defendants as
part of the consideration for the delivery of the machine pursuant to a
contract in the terms of the above documents, which consideration wholly
failed by reason that the machine was unfit for the purpose for which it was
intended to be used.
On June 9, 1933, the defendants delivered their defence by which they
denied that the machine was delivered in a condition unfit for the purpose
for which it was intended; and further denied that the sum claimed by the
plaintiff
[1934] 2 K.B. 394 Page 398
was payable to her: and by way of counterclaim the defendants sought to
recover from the plaintiff 71l.18s. 6d. as the balance of the price of the
machine.
On June 19, 1933, the plaintiff delivered an amended claim which added a
count for breach of an implied warranty on the sale of the machine that it
was reasonably fit for the purpose for which it was sold; but which still
claimed only 9l. 1s.
When the action came on for trial the plaintiff applied for and obtained leave
to put her claim for 9l. 1s. in three alternative ways: (1.) repayment as on a
total failure of consideration; (2.) return of money for breach of implied
conditions going to the root of the contract that the machine was reasonably
fit for the purposes for which it was required; and (3.) damages for breach
of an implied warranty that the machine was reasonably fit for those
purposes.
To these alternative claims the defendants at the trial set up the following
respective defences: (1.) no total failure of consideration; (2.) no implied
conditions, as the property in the machine had passed to the plaintiff, the
defendants relying, as to this point, upon the Sale of Goods Act, 1893 (56 &
57 Vict. c. 71), s. 11 (c); (3.) no action on implied warranty, as the
agreement signed by the plaintiff expressly provided for the exclusion of all
implied warranties.
In reply to the last of these defences the plaintiff contended: (1.) that she
was induced to sign the document under the impression that it was an order
form; and (2.) that at the time when she signed it she knew nothing of the
conditions on which the defendants relied.
Evidence was given on behalf of the plaintiff by herself and by Mr. Pratt. The
plaintiff said that she did not read the brown document and that the
defendants did not read it to her or tell her to read it, that she never read
the words in small type and did not remember that the agents had ever
called her attention to them, that she signed the document and did so
intentionally, that though she signed the document she had no clear idea of
what she was signing, that she thought that the document was an order
form or
[1934] 2 K.B. 394 Page 399
a form by which she was giving her consent to the purchase of a machine,
that two days after the arrival of the machine it ceased to work and that it
could not afterwards be made to work continuously, and that on May 11 she
ceased to use the machine and decided to ask the defendants to take it back
and to forfeit her deposit. Mr. Pratt gave evidence corroborating that of the
plaintiff.
Evidence was given on behalf of the defendants by Mr. Page and Mr. Berse.
Mr. Page said that the interview on February 7, 1933, lasted for over two
hours, that he sat near the plaintiff and read to her the whole of the brown
paper document including the small print, that the plaintiff asked no
question about the small print, that he pointed out to her that the total price
was not stated in figures in the document, that the plaintiff signed the
document at a desk while he was sitting by her, and that he also read to her
the guarantee. Mr. Berse gave evidence substantially to the same effect,
and stated further that the blanks in the brown document were filled up in
accordance with the answers given by the plaintiff.
On August 17, 1933, the county court judge gave judgment. After stating
the pleas and contentions of the parties and the substance of the evidence
on both sides he went on to say that he found as a fact that when the
defendants' two canvassers left the plaintiff after the interview of February
7, 1933, she had no knowledge of the contents of the document which she
had signed except the amount of the purchase price and the monthly
instalment and the arrangement about putting up the machine. He also
found as a fact that there must have been some defect in the mechanism of
the machine which rendered it so frequently unworkable that it was not
reasonably fit for the purpose for which it was required. In his view there
was an implied warranty that the machine should be reasonably fit for that
purpose, and he found as a fact that that warranty was broken. On behalf of
the defendants it was contended that that warranty was excluded by the
conditions printed in small type in the conditions of sale, and reliance was
placed upon the rule
[1934] 2 K.B. 394 Page 400
laid down in Parker v. South Eastern Ry. Co. (1) That rule, however, was
subject to certain exceptions, and the question was whether this case came
within it. The conditions here were printed in very small type, and when the
issue was whether the person signing the document knew of the conditions
it became material to ask whether the type was of a reasonable size. In all
such cases three questions must be answered according to the directions of
Lord Herschell L.C. in Richardson, Spence & Co. v. Rowntree (2) - namely:
(1.) Did the plaintiff know that there was writing or printing on the
document? (2.) Did she know that the writing or printing contained
conditions relating to the terms of the contract? (3.) Did the defendants do
what was reasonably sufficient to give the plaintiff notice of the conditions?
In the present case he (the judge) found as facts that the answer to the first
of these questions was in the affirmative, and the answers to the second
and third of them in the negative. On these grounds, therefore, he held that
the defendants were not entitled to rely upon the clause which excluded
implied warranties from the contract. He estimated the damages to which
the plaintiff was entitled for breach of the implied warranty at 70l. He gave
judgment for the plaintiff on the claim for 70l.; and for the defendants on
the counterclaim for 71l. 18s. 6d., the balance of the price.
The defendants gave notice of appeal dated September 14, 1933, from so
much of the judgment of the county court judge as adjudged that the
plaintiff should recover from the defendants the sum of 70l.damages.
A. T. Denning and D. E. Evans for the defendants, appellants.
Gordon Alchin for the plaintiff, respondent.
SCRUTTON L.J. In this case the plaintiff commenced proceedings against the
defendants in the county court,
(1)
2 C. P. D. 416, 421.
(2)
[1894] A. C. 217, 219.
[1934] 2 K.B. 394 Page 401
her claim being for 9l. 1s. as money received by the defendants to the use of the
plaintiff as part of the consideration for the delivery of an automatic slot machine
pursuant to a contract in writing dated February 7, 1933, which consideration was
alleged to have wholly failed by reason of the fact that the machine was delivered
in a condition unfit for the purpose for which it was intended. The only document
which corresponds to the contract there mentioned is a long document on brown
paper headed "Sales Agreement." By their defence the defendants denied that the
machine was delivered in a condition unfit, for the purpose intended, and denied
that the sum claimed was payable to the plaintiff; and they counterclaimed for the
balance of the price of the machine. Just before the trial the plaintiff amended her
claim by adding a count for breach of an implied warranty that the machine was
reasonably fit for the purpose for which it was sold; though she still claimed only
9l. 1s.There the pleadings stopped. At the trial, as the judge has stated in his
judgment, the plaintiff's claim was put in three different ways: total failure of
consideration; breach of implied conditions going to the root of the contract; and
breach of warranty. The defendants pleaded: no total failure of consideration; no
implied conditions: and that no action would lie for breach of implied warranty, as
the agreement expressly provided for the exclusion of all implied warranties. To this
last defence the plaintiff contended that she was induced to sign the contract by the
misrepresentation that it was an order form, and that at the time when she signed
she knew nothing of the conditions.
The county court judge has given judgment for the plaintiff for 70l., though there is
no claim by the plaintiff for that sum; and he has given judgment for the
defendants on the counterclaim for 71l. 18s. 6d., the balance of the price.
As to the defence that no action would lie for breach of implied warranty, the
defendants relied upon the following clause in the contract: "This agreement
contains all the terms and conditions under which I agree to purchase the machine
specified above and any express or implied condition,
[1934] 2 K.B. 394 Page 402
statement, or warranty, statutory or otherwise not stated herein is hereby
excluded." A clause of that sort has been before the Courts for some time. The first
reported case in which it made its appearance seems to be Wallis, Son & Wells v.
Pratt & Haynes (1), where the exclusion clause mentioned only "warranty" and it
was held that it did not exclude conditions. In the more recent case of Andrews
Brothers (Bournemouth), Ld. v. Singer & Co. (2), where the draftsman had put into
the contract of sale a clause which excluded only implied conditions, warranties and
liabilities, it was held that the clause did not apply to an express term describing
the article, and did not exempt the seller from liability where he delivered an article
of a different description. The clause here in question would seem to have been
intended to go further than any of the previous clauses and to include all terms
denoting collateral stipulations, in order to avoid the result of these decisions.
The main question raised in the present case is whether that clause formed part of
the contract. If it did, it clearly excluded any condition or warranty.
In the course of the argument in the county court reference was made to the
railway passenger and cloak-room ticket cases, such as Richardson, Spence & Co.
v. Rowntree. (3) In that case Lord Herschell L.C. laid down the law applicable to
these cases and stated the three questions which should there be left to the jury. In
the present case the learned judge asked himself the three questions appropriate to
these cases, and in answering them has found as facts: (i.) that the plaintiff knew
that there was printed material on the document which she signed, (ii.) that she did
not know that the document contained conditions relating to the contract, and (iii.)
that the defendants did not do what was reasonably sufficient to bring these
conditions to the notice of the plaintiff.
The present case is not a ticket case, and it is distinguishable from the ticket cases.
In Parker v. South Eastern Ry. Co. (4) Mellish L.J. laid down in a few sentences the
law which is
(1)
[1911] A. C. 394.
(2)
[1934] 1 K. B. 17.
(3)
[1894] A. C. 217.
(4)
2 C. P. D. 416.
[1934] 2 K.B. 394 Page 403
applicable to this case. He there said (1): "In an ordinary case, where an action is
brought on a written agreement which is signed by the defendant, the agreement is
proved by proving his signature, and, in the absence of fraud, it is wholly
immaterial that he has not read the agreement and does not know its contents."
Having said that, he goes on to deal with the ticket cases, where there is no
signature to the contractual document, the document being simply handed by the
one party to the other (1): "The parties may, however, reduce their agreement into
writing, so that the writing constitutes the sole evidence of the agreement, without
signing it; but in that case there must be evidence independently of the agreement
itself to prove that the defendant has assented to it. In that case, also, if it is
proved that the defendant has assented to the writing constituting the agreement
between the parties, it is, in the absence of fraud, immaterial that the defendant
had not read the agreement and did not know its contents." In cases in which the
contract is contained in a railway ticket or other unsigned document, it is necessary
to prove that an alleged party was aware, or ought to have been aware, of its
terms and conditions. These cases have no application when the document has
been signed. When a document containing contractual terms is signed, then, in the
absence of fraud, or, I will add, misrepresentation, the party signing it is bound,
and it is wholly immaterial whether he has read the document or not.
The plaintiff contended at the trial that she was induced by misrepresentation to
sign the contract without knowing its terms, and that on that ground they are not
binding upon her. The learned judge in his judgment makes no mention of that
contention of the plaintiff, and he pronounces no finding as to the alleged
misrepresentation. There is a further difficulty. Fraud is not mentioned in the
pleadings, and I strongly object to deal with allegations of fraud where fraud is not
expressly pleaded. I have read the evidence with care, and it contains no material
upon which fraud
(1)
2 C. P. D. 421.
[1934] 2 K.B. 394 Page 404
could be found. The plaintiff no doubt alleged that the defendants' agent
represented to her that the document which was given her to be signed was an
order form, but according to the defendants' evidence no such statement was made
to her by the agent. Moreover, whether the plaintiff was or was not told that the
document was an order form, it was in fact an order form, and an order form is a
contractual document. It may be either an acceptance or a proposal which may be
accepted, but it always contains some contractual terms. There is no evidence that
the plaintiff was induced to sign the contract by misrepresentation.
In this case the plaintiff has signed a document headed "Sales Agreement," which
she admits had to do with an intended purchase, and which contained a clause
excluding all conditions and warranties. That being so, the plaintiff, having put her
signature to the document and not having been induced to do so by any fraud or
misrepresentation, cannot be heard to say that she is not bound by the terms of
the document because she has not read them.
The county court judge has given judgment for the defendants on the counterclaim
for the balance of the price, 71l. 18s. 6d. I do not see how he could have clone that
unless he found that the contract included the clause in small print providing that, if
any instalment of the price should not be duly paid, all the remaining instalments
should fall due for immediate payment. That judgment on the counterclaim must
stand. As to the claim, judgment was given for the plaintiff for 70l. for breach of an
implied warranty, though only 9l. 1s. was claimed. Such a judgment could not have
been given even in the High Court without an amendment of the claim. But even if
there had been an amendment, the further difficulty would have remained that the
signed document contained a clause excluding any implied condition or warranty. If
the view which I have expressed as to the effect of a signed document is correct,
the plaintiff has no ground of claim, and the judgment in her favour cannot stand.
In my opinion, the judgment for
[1934] 2 K.B. 394 Page 405
the plaintiff on the claim should be set aside and judgment entered for the
defendants on the claim; and the judgment for the defendants on the counterclaim
should stand.
MAUGHAM L.J. I regret the decision to which I have come, but I am bound by legal
rules and cannot decide the case on other considerations.
The material question is whether or not there was a contract in writing between the
plaintiff and the defendants in the terms contained in the brown paper document.
In the case of a formal contract between seller and buyer, such as a deed, there is
a presumption which puts it beyond doubt that the parties intended that the
document should contain the terms of their contract. The brown paper document is
not a formal instrument of that character, yet, in my opinion, having been signed it
may well constitute a contract in writing. A reference to any of the text-books
dealing with the law of contract will provide many cases of the verbal acceptance of
a written offer, in which the Courts have held that the written offer and the
acceptance, even though only verbal, together constituted a contract in writing,
which could not be altered by extraneous evidence. The rule may not operate
equitably in all cases, but it is unquestionably binding in law.
In the present case on February 7, 1933, an order form, for such I consider the
brown paper document to be, was signed by the plaintiff. It was an elaborate form
containing a number of clauses, and among them certain terms and conditions in
regrettably small print but quite legible. The plaintiff having signed that document
gave it to a canvasser of the defendants, who took it away. It had been filled up in
ink by the canvasser before she signed it. Another document called an order
confirmation dated February 9, 1933, was sent to her by the defendants. In my
opinion the contract was concluded not when the brown order form was signed by
the plaintiff but when the order confirmation was signed by the defendants. If the
document signed by the plaintiff was a part of a contract in writing, it is impossible
[1934] 2 K.B. 394 Page 406
to pick out certain clauses from it and ignore them as not binding on the plaintiff.
In a case of this nature it is possible that the document signed by a contracting
party may not be the contract, but merely a memorandum in writing of a preceding
verbal contract between the parties, and if in this case it appeared that the
document in question was only a memorandum of a previous contract which had
not contained the clause excluding all conditions and warranties, the plaintiff might
have relied upon the case of Roe v. Naylor (No. 2) (1) and contended successfully
that, as the clause was not a part of the contract, she was not bound by it. In my
judgment, however, such a view as that is excluded here, because on the facts
there was no preceding verbal agreement between the parties.
I deal with this case on the footing that when the order confirmation was signed by
the defendants confirming the order form which had been signed by the plaintiff,
there was then a signed contract in writing between the parties. If that is so, then,
subject to certain contingencies, there is no doubt that it was wholly immaterial
whether the plaintiff read the small print or not. There can be no dispute as to the
soundness in law of the statement of Mellish L.J. in Parker v. South Eastern Ry. Co.
(2), which has been read by my learned brother, to the effect that where a party
has signed a written agreement it is immaterial to the question of his liability under
it that he has not read it and does not know its contents. That is true in any case in
which the agreement is held to be an agreement in writing.
There are, however, two possibilities to be kept in view. The first is that it might be
proved that the document, though signed by the plaintiff, was signed in
circumstances which made it not her act. That is known as the case of Non est
factum. I do not think it is necessary to add anything to what Scrutton L.J. has
already said about that, The written document admittedly related to the purchase of
the machine by the plaintiff. Even if she was told that
(1)
(1919) 87 L. J. (K. B.) 958.
(2)
2 C. P. D. 416, 421.
[1934] 2 K.B. 394 Page 407
it was an order form, she could not be heard to say that it did not affect her
because she did not know its contents.
Another possibility is that the plaintiff might have been induced to sign the
document by misrepresentation. She contended that she was so induced to sign the
document inasmuch as (i.) she was assured that it was an order form, (ii.) that at
the time when she signed it she knew nothing of the conditions which it contained.
The second of these contentions is unavailing by reason of the fact that the
document was in writing signed by the plaintiff. As to the first contention it is true
that the document was an order form. But further, if the statement that it was an
order form could be treated as a representation that it contained no clause
expressly excluding all conditions and warranties. the answer would be that there is
no evidence to prove that that statement was made by or on behalf of the
defendants.
In this case it is, in my view, an irrelevant circumstance that the plaintiff did not
read, or hear of, the parts of the sales document which are in small print, and that
document should have effect according to its terms. I may add, however, that I
could wish that the contract had been in a simpler and more usual form. It is
unfortunate that the important clause excluding conditions and warranties is in such
small print. I also think that the order confirmation form should have contained an
express statement to the effect that it was exclusive of all conditions and
warranties.
I agree that the appeal should be allowed.
Appeal allowed. Judgment entered for defendants on claim as well as on
counterclaim.
BAILMENT - BAILMENT FOR VALUABLE CONSIDERATION - HIRE OF WORK AND LABOUR - NATURE OF
THE CONTRACT; OWNER’S OBLIGATIONS - IN GENERAL - SPECIAL CONTRACT — WITH DYER AND
CLEANER — MISREPRESENTATION
When plaintiff took a white satin dress to defendants’ shop to be cleaned she was given a paper headed ‘Receipt’
and was asked by a shop assistant to sign it. Plaintiff inquired why her signature was required and the assistant
replied, in effect, that defendants would not accept liability for certain specific risks, including the risk of damage
by or to the beads and sequins with which the dress was trimmed. In fact the ‘receipt’ contained a condition that
the cleaners accepted no liability for any damage however arising. When the dress was returned to plaintiff it was
found to be stained, and she was awarded damages by the county court judge, who held that defendants had been
guilty of negligence and were not protected by their exemption clause by reason of misrepresentation as to its
character. On appeal by defendants: Held defendants could not rely on the exemption clause because their
assistant by an innocent misrepresentation had created a false impression in the mind of plaintiff as to the extent
of the exemption and thereby induced her to sign the receipt.
Per Denning, LJ: any behaviour, by word or conduct, was sufficient to be a misrepresentation if such as to mislead
the other party about the existence or extent of the exemption. If it conveyed a false impression that was enough.
Such an impression might even be conveyed by simply handing the document to the customer as if it were a
receipt, or by asking her to sign it without drawing attention to the condition.
ROAD TRAFFIC - PUBLIC SERVICE VEHICLES - CONTROL BY LICENSING - ROAD SERVICE LICENCES OFFENCES IN RESPECT OF ROAD SERVICE LICENCES - SIGNIFICANT OMISSION MAY RENDER TRUE
STATEMENT FALSE
Any behaviour, by word or conduct, was sufficient to be a misrepresentation if such as to mislead the other party
about the existence or extent of the exemption. If it conveyed a false impression that was enough. Such an
impression might even be conveyed by simply handing the document to the customer as if it were a receipt, or by
asking her to sign it without drawing attention to the condition.
2 pages
[1982] 1 MLJ 344
HENG YEOW HUA v TAN YEW LAI & SONS SDN BHD
ACJ KUALA LUMPUR
HASHIM YEOP A SANI J
CIVIL APPEAL NO 60 OF 1980
16 October 1981
Contract — Sale and purchase agreement relating to land — Dispute over interest
overdue — Claim by appellant for vacant possession — Relief granted by President
of Sessions Court — Whether order amounted to rescission
Jurisdiction — Sessions Court — Immovable property — Whether Sessions Court
can hear suit for recovery of immovable property
The plaintiff claimed against the defendant for vacant possession and mesne profits
as from the date of the purported termination of the agreement. The plaintiff was a
housing developer and the agreement between the parties was admittedly a sale
agreement in respect of a house and described as such in the agreement itself. The
said agreement was entered into in February 1975. Purchase price of the house was
$39,500. It was completed in March 1976 and possession was given to the
appellant also in March 1976. The sessions court found that 35 instalments were
made for the period between May 29, 1976 to September 22, 1978. There was
protracted correspondence between the parties over the disputed interest overdue.
When finally no payment was made on the sums overdue, the plaintiff sent a letter
terminating the agreement to the defendant, giving him notice to quit on or before
February 28, 1979.
The defendant appealed against the learned President's decision. The Memorandum
of Appeal raised the following questions of law for the appellate court: —

(1)
Did the Order of the learned President amount to a rescission order?

(2)
Was the respondent duplicating his claims in that having elected to charge
interest for late payments according to the agreement and having received
and taken interest over the years could he then ask for an alternative
remedy contradictory to his election?

(3)
Was there an infringement of any provisions of the National Land Code and
the Moneylenders' Ordinance 1951?

(4)
Did the Sessions Court have jurisdiction to hear the suit as the appellant
alleged that an issue of title was involved?
Held, dismissing the appeal:

(1)
as regards question (1), the relief granted by the President was the main
relief asked for in the Statement of Claim. It was not an order for rescission
and could not be construed as such;

(2)
as regards question (2) the principle that a party may not approbate and
reprobate has no application on the facts of the case;

(3)
as regards question (3) nowhere was this argument raised during the hearing
before the learned President nor was it stated anywhere in the pleadings; the
court would therefore not consider this point at all;

(4)
as regards question (4), a Sessions Court can hear and determine any action
or suit for recovery of immovable property so long as the title to the property
is not in issue;

(5)
there was no reason to interfere with the order of the learned President;
Cases referred to
Hiew Kim Swee v GC Gomez [1955] MLJ 170 172
Ali Mat bin Khamis v Jamaliah binti Kassim [1974] 1 MLJ 18
CIVIL APPEAL
JG Bernatt for the applicant.
Jennifer Chong (Miss) for the respondent.
HASHIM YEOP A SANI J
(delivering oral judgment): The plaintiff (respondent now) was claiming for vacant
possession and mesne profits as from the date of the purported termination of the
agreement (P1). The plaintiff was a housing developer and the agreement between
the parties was admittedly a sale agreement in respect of a house and described as
such in the agreement itself. The learned President saw it clearly as an agreement
for the sale of house No. 297, Taman Dato Tan Yew Lai, Kuala Lumpur. In fact from
their pleadings the parties themselves throughout treated the agreement as such
and the terms and conditions of sale of the house was as agreed upon by the
plaintiff and the defendant.
The agreement was entered into in February 1975. Purchase price agreed to was
$39,500. The house was completed in March 1976 and possession given to
appellant presumably also in March 1976. Apparently payments were made for
about 2 years but not as
1982 1 MLJ 344 at 345
regularly as stipulated in the agreement. The last payment was made in July 1978.
Since then no payments were made. Notice (P4) was sent to the appellant to
deliver vacant possession on or before February 28, 1979.
Clause 4.02 of P1 deals with the mode of progress payments amounting to $17,500
of the purchase price. It says that each payment would be due upon furnishing the
requisite notice and architect's certificate stating that so much of the construction
had been completed. The learned President dealt satisfactorily with the issue of the
requisite notices and the certificates raised by the defendant. The balance of
$22,000 of the purchase price was to be paid by regular instalments for 120
months. The learned President found that in all 35 instalments had been made for
the period May 29, 1976 to September 22, 1978. From the facts of the case the
learned President found that the defendant had acquiesced to the non-compliance
of certain requirements of P1.
It would appear from the evidence as well as the grounds of judgment that there
was a protracted and heated correspondence between the parties over the disputed
interest overdue — see P14, P15 and D20. When finally no payment was made on
the sums overdue the letter terminating the agreement was sent to the defendant
and giving him notice to quit on or before February 28, 1979.
The Memorandum of Appeal raises some minor issues of fact but the main
questions of law are:—

(1)
Does the Order of the learned President amount to a rescission order?

(2)
Is respondent duplicating his claims in that having elected to charge interest
for late payments according to the agreement and having received and taken
interest over the years can he now ask for an alternative remedy
contradictory to his election?

(3)
Was there an infringement of any provisions of the National Land Code 1965
and the Moneylenders' Ordinance 1951?

(4)
Did the Sessions Court have jurisdiction to hear the suit as the appellant
alleged that an issue of title was involved?
As regards question (1) it is to be observed that the claim of the respondent
(plaintiff before the learned President) was simply for vacant possession and mesne
profits. It is a remedy provided by the agreement executed between the parties.
Although it does seem odd that the respondent, who admittedly was a housing
developer at the material time and the agreement was executed as a sale
agreement, the agreement also purports to be a loan agreement. No objection on
the nature of the agreement was however raised on behalf of the appellant at any
stage of the proceeding. The relief granted by the President was in any case the
main relief asked for in the statement of claim. It is not an order for rescission and
cannot be construed as such. In any case at the conclusion of hearing of the appeal
counsel for appellant stated that he was waiving this ground.
As regards question (2) the law on election as to the proper remedy by a plaintiff is
settled. The principle that a person may not "approbate and reprobate" is according
to Halsbury'sa type of estoppel intermediate between "estoppel by record" and
"estoppel in pais". The principle is that a party may not "approbrate and reprobate"
and this expresses two propositions namely (1) the person having a choice between
two courses of conduct is to be treated as having made an election from which he
cannot resile and (2) the person will not be regarded, in general at any rate, as
having so elected unless he has taken a benefit under or arising out of the choice of
the course of conduct which he has first pursued and with which his subsequent
conduct is inconsistent. Thus a plaintiff having two inconsistent claims who elects to
abandon one and pursue the other may not, in general, afterwards choose to return
to the former claim and sue on it, but this rule of election does not apply where the
two claims are not inconsistent and the circumstances do not show an intention to
abandon one of them.
Where a plaintiff merely claims alternative reliefs, the general rule is that he can
elect at the trial but where relief is asked on footings which are inconsistent (for
example damages on the basis of a contract having been repudiated and a
declaration on the basis that the contract is subsisting) the plaintiff should be put to
his election at the trial. This principle has no application on the facts of this case.
As regards question (3) it is observed that no where was this argument raised
during the hearing before the learned President nor was it stated anywhere in the
pleadings. The statement of defence merely denies any default (without good
cause) by the appellant. What was disputed was the effectiveness of notices P2 etc.
on the grounds that the proviso to clause 4.02 of P1 had not been complied with.
This was another ground which counsel for appellant stated he was waiving at the
conclusion of the hearing of the appeal. For these reasons I do not wish to consider
this point at all.
The appellant during argument here also raises the question of jurisdiction as it was
contended that there was an issue of title. The rule for the courts to follow on the
question where there is bona fide issue of title involved is well set out in Hiew Kim
Swee v GC Gomez [1955] MLJ 170 172where Thomson J. (as he then was) said: —
"On the other hand, where proceedings were taken for possession under section 122 of the 1846 Act (or
the later corresponding sections) it was held, again from the very commencement, that where a defence
was raised which on the face of it would raise a question of title it was the duty of the judge to inquire into
the facts upon which such a defence was based. That was decided in 1848 in the case of In re Fearon v
Nowall (1848) 17 LJQB 161."
In Ali Mat bin Khamis v Jamaliah binti Kassim [1974] 1 MLJ 18 the question of
ownership of property was raised in the defence thereby bringing out the question
of title which took the matter outside the jurisdiction of the Subordinate Court. This
is not the case here. A Sessions Court can hear and determine any action or suit for
recovery of immovable property so long as the title to the property is not in issue.
1982 1 MLJ 344 at 346
Thus my answers to all the four questions raised are against the appellant. As
regards questions of fact I find nothing to justify interference as the findings of fact
were clearly made by the trial court.
There appears at the end of the judgment of the learned President that counsel for
the plaintiff "undertook to refund to defendant any sum outstanding after judgment
had been satisfied." The respondent sought during argument to remove that part of
the learned President's order on the grounds simply that the relief was never asked
for in the statement of claim.
One of the underlying objectives in rules of procedure is to avoid unnecessary
duplication of suits and/or proceedings. Therefore courts in every cause or matter
pending before them should grant all such remedies as appear to be necessary and
to which the party would appear entitled in respect of any legal or equitable claim
so that the objective is achieved by having the controversy between the parties
completely and finally determined.
True I find some of the provisions of the agreement peculiar. Although it is a sale
agreement the title of the property remained throughout with the developer. Under
clause 6.02 of P1 the plaintiff (respondent now) would not transfer the title to the
appellant until after all payments have been made. Provisions under the
miscellaneous part of P1 deal with late payments, interest charges, defaults and
vacant possession and forfeiture of all moneys paid. But it is settled law that when
a document containing contractual terms is signed, then in the absence of fraud or
misrepresentation, the party signing it is bound by the terms. In this case the
defendant had signed the agreement knowing fully well that it is a contract for
purchase of the house and provisions of the agreement dealt substantially with the
modes of payment. It is always implied that the court has the discretion to add to
the reliefs prayed for any relief which in its opinion is fair and just and warranted by
the circumstances of the case. It is also clear from the notes as well as from the
grounds of decision of the learned President that there was an undertaking by
counsel for the plaintiff then. I do not think I should interfere with an order
consequent upon an undertaking made before another court the terms of which I
am not fully familiar with. Furthermore, there is also no cross appeal against this
part of the order of the learned President.
The appeal is therefore dismissed with costs and the order of the learned President
is affirmed.
Appeal dismissed.
5 pages
[1989] 1 MLJ 278
PETER RALPH GROSSEY v THE CHARTERED BANK
Also Reported in: [1988] SLR 973
HIGH COURT (SINGAPORE)
RAJAH J
SUIT NO 3141 OF 1984
18 November 1988
Banking — Current account — Overdraft against marketable securities — Bearer
securities — Notice of redemption — Whether part of banking business — Wang
bonds — Difference in converted value and face value — Claim by plaintiff
The plaintiff was at all material times a customer of the defendant bank ('the bank')
with which it maintained a current account on which it had advanced to him various
sums of money from time to time by way of overdraft against marketable securities
lodged with it by the plaintiff. The plaintiff said that he discussed with Northrop, an
officer of the bank, in April 1982 the possibility of offering convertible bearer bonds
as security for credit facilities by the bank. At that time as indeed of now, in respect
of Eurobonds, which are internationally traded securities, the major part of
Eurobond clearing and settlement was and is conducted through two centralized
clearing systems, namely, Euro-clear in Brussels and CEDEL in Luxembourg. Each
of the two systems provided an efficient, risk-free settlement system for
internationally traded securities, avoiding the costs and delays caused by physical
delivery of certificates. Participants in both systems had to be institutions. The
plaintiff's evidence is that as a result of the discussions, agreement between the
bank and himself was reached, culminating in a letter dated 12 April 1982 from the
bank to himself (AB4) which, inter alia, reads:
'(1) Further to our recent discussions we are pleased to advise that our London merchant bank,
Standard Chartered Merchant Bank Ltd … are members of the Euro-clear System and can act as
custodian for the various loan stocks to be held as security for your facilities in Singapore …
(3) Please arrange for the securities to be delivered free of payment to Standard Chartered
Merchant Bank Ltd, London … It will be necessary for us to furnish our associates with your full
name and residence status and your interest payment instructions. You should also let us know
by whom the various securities will be delivered. Please advise accordingly.'
The plaintiff's evidence is that on the Saturday following AB4 of 12 April 1982 or the
Saturday after that Northrop asked him to cancel the arrangements as had been set
out in para 3 of AB4, that is to say, to deliver the bond securities to the Standard
Chartered Merchant Bank in London, and told him to have the said bearer bonds
physically transferred to the bank in Singapore. As a result of this the plaintiff
countermanded the order to his agent in England to have the bearer bonds placed
with the Standard Chartered Merchant Bank in London and instead asked his agent
to have the convertible bearer bonds sent on to the bank in Singapore. In the event
some of the bonds came to him, which he handed over to the bank as and when
they arrived, while others went direct to the bank. The plaintiff's view of the bank's
change of mind is that it seemed to him that the bank would and should know what
it was doing and that perhaps Northrop had found out more from London of how
the bank could deal from Singapore with the situation. On this issue the bank's
evidence as deposed to by Northrop (DW1) and supported by Chee Kok Kee (DW2),
the officer in charge of the securities department of the bank, was to the effect that
at no time did Northrop countermand para 3 of AB4 and that it was the plaintiff who
of his own volition had decided that the
1989 1 MLJ 278 at 279
services of the Standard Chartered Merchant Bank in London was not to be used,
perhaps because of income tax reasons.
The question is whether the learned judge should accept the evidence of the
plaintiff or that of Northrop as supported by Chee. The bank submitted that it is not
part of 'banking business' as defined in s 2 of the Banking Act (Cap 19, 1985 Ed) to
inform a customer of the notice of redemption of bearer securities held by them and
consequently its failure to inform the plaintiff of the notice of redemption of the
Wang bonds was not part of banking business. The bank also relied on the following
exemption clause: '… nor is the bank responsible for any loss that may be incurred
by bonds or coupons not being duly presented when drawn or due; all requisite
notices in this connection and in connection with rights, bonuses or entitlements to
convert in respect of any bonds or shares should be given to the bank by customers
…'.
The plaintiff says that had he redeemed the Wang bonds on 27 May 1983, the date
of redemption, by converting them to shares he would have received the sum of
US$84,650 being the value of the converted shares. As it was, he only received
US$56,445, the face value of the convertible Wang bonds. The plaintiff is now
claiming US$28,205 being the difference in value of the converted shares and the
face value of the Wang bonds.
Held, allowing the claim with costs:

(1)
Taking into account the circumstances in which these Wang convertible
bonds were accepted by the bank as collateral for the overdraft account, it
lies ill in the mouth of the bank for it now to say that it is not part of its
business to inform the plaintiff, a customer, of the notice of redemption of
the Wang bonds held by it as security. The bank should not be heard to say
that the relaying of such information to its customers is not part of its
banking business.

(2)
The condition relied upon by the bank as exempting it from liability is
ineffective and unenforceable against the plaintiff by the bank.

(3)
The bank did not exercise due care (a) in not taking the necessary steps to
place itself in a position to ascertain when the notice of redemption was
given by the Wang company, and (b) thus disenabling itself from informing
the plaintiff of such notice which would have made it possible for him to
convert the bearer bonds to registrable shares in the Wang company. The
bank was thus in breach of its duty of care in respect of the deposited Wang
convertible bearer bonds to its customer the plaintiff.

(4)
There will therefore be interlocutory judgment for the plaintiff on his claim
with costs, the question of the assessment of damages suffered by the
plaintiff being referred to the registrar. Damages suffered by the plaintiff
shall be the difference in the value of the converted shares and the face
value of the Wang convertible bonds.
Cases referred to
Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805
Mendelssohn v Normand Ltd [1970] 1 QB 177
HE Cashin for the plaintiff.
Dennis Singham for the defendant.
RAJAH J
The defendant is a company incorporated in England with limited liability under a
Royal Charter of 1853 with a registered branch office in Singapore carrying on,
inter alia, a banking business and related financial services under licence issued by
the competent authorities of Singapore. It was and is a member of the Standard
Chartered Bank Group of which the Standard Chartered Merchant Bank Ltd, London
('SCMB') was also a member and it has been carrying on banking business and
other related financial services in Singapore for well over a century. Section 2 of the
Banking Act (Cap 19, 1985 Ed) defines 'banking business' as 'the business of
receiving money on account or deposit account, paying and collecting cheques
drawn by or paid in by customers, the making of advances to customers, and
includes such other business as the Authority may prescribe for the purposes of this
Act'.
The plaintiff, a citizen of the UK, was at all material times a customer of the
defendant ('the bank') at its main office in Singapore since 1966, when he arrived
in Singapore and where he has been resident since and is now a permanent
resident.
The plaintiff is a businessman of standing in Singapore being involved in the affairs
of a number of foreign international companies, of which he was and is a director.
The plaintiff maintained with the bank a current account on which it has advanced
the plaintiff various sums of money from time to time by way of overdraft against
marketable securities lodged with it by the plaintiff.
On 5 February 1979 the bank wrote to the plaintiff as follows (AB1):
Banking arrangements
We advise that the total value of all your shares held by us to secure your guarantee and overdraft line
amounts to S$591,425. Under the terms of the banking facilities extended to you, our commitments under
both lines of credit should not exceed 65% and 50% respectively of the current market value of the
shares.
Your account is currently overdrawn to the extent of S$65,281.27 and there is thus an overall shortfall in
our security.
Under the circumstances, we shall be pleased if you will arrange to lodge further shares with us, or
alternatively, reduce your overdraft to within the limit of S$40,000.
We await your advice on the matter.
On 6 April 1979 the manager of the defendant wrote to the plaintiff as follows
(AB2):
Banking arrangements
We have reviewed the banking arrangements currently made available to you and are pleased to advise
that we have extended the credit line for a further period on the following terms and conditions, with a
reduction in the level of the overdraft facility to conform with our normal margin requirements.
1989 1 MLJ 278 at 280
£75,000
S$7,700
S$30,000 (reduced from
S$40,000)
For the issue of a guarantee favouring Lloyds. Counter indemnity to be held.
For the issue of a guarantee to M/s Hock Seng Enterprises Pte Ltd. Counter
indemnity to be held.
Overdraft facilities in current account. Interest will be levied at 1ࡩ% above our
prime lending rate which is currently 8% pa. Changes in prime rate are notified to the
press and featured on our counters and in current account statement.
Security
We hold marketable securities supported by blank transfers and a letter of lien. Our commitment under
the guarantee lines should not at any time exceed 65% of the current market value of the shares
deposited and 50% on the overdraft facility.
Subject to review on 30 April 1980.
We trust that the foregoing arrangements are satisfactory to you.
These arrangements, it would appear, continued until late November 1981 when Mr
Northrop, the advances manager of the bank, wrote to the plaintiff on 23 November
1981 to the effect that it was time to review the banking arrangements as the
quantum of his overdraft had increased and the cover for his facilities had eroded.
To this the plaintiff responded on 7 December 1981 as follows:
Dear Mr Northrop,
Many thanks for your letter B467 of 23 November. I was aware that the cover for my facilities had eroded
somewhat, and in fact am in the process of rearranging my assets to provide adequate cover. One of my
difficulties is to determine which shares/bonds etc will be relatively immobile as it is, of course, awkward
for both parties if the collateral is frequently changed. If you can bear with me a little longer I shall
develop a plan which we can then discuss and agree - may I contact you again shortly on this? (AB3)
It is the plaintiff's evidence that in the course of a number of discussions with
Northrop, he discussed with him sometime in April 1982 or thereabouts the
possibility of offering convertible bearer bonds as security for credit facilities by the
bank. The difficulty for the bank here it would appear was two-fold, (1) that as a
holder of convertible bearer bonds the plaintiff's name would not appear in the
register of the issuing company, and (2) that the bank as then organized would not
be able to keep track of the notices of conversion as and when given by the various
issuing companies.
At that time as indeed of now, in respect of Eurobonds, which are internationally
traded securities, the major part of Eurobond clearing and settlement was and is
conducted through two centralized clearing systems, namely, Euro-clear in Brussels
and CEDEL in Luxembourg. Each of the two systems provided an efficient, risk-free
settlement system for internationally traded securities, avoiding the costs and
delays caused by physical delivery of certificates. Participants in both systems had
to be institutions. Euro-clear was established in 1968 and at the end of 1986, Euroclear had over 2,050 participants. (See p 590 of International Finance and
Investment edited by Brian Terry (1987).)
The plaintiff's agent in the UK in respect of his Eurobond holdings was a firm of
stockbrokers by the name of Charlton Seal Dimmock & Co operating in Manchester,
England ('agent'). Member banks of the Euro-clear System would hold the
convertible bearer bonds on behalf of his agent. Interest coupons would be
attached to these bonds and the institution holding the bonds would present these
interest coupons to the Euro-clear System which would then collect the interest on
the coupons and remit it to his agent on whose behalf the member institution would
be holding the bonds. These interest payments collected on behalf of the plaintiff
had always been remitted by his agent to Hongkong where the plaintiff had a bank
account. As and when the companies issuing the convertible bearer bonds gave
notices of redemption the issuing companies would inform the Euro-clear System
who would then inform the custodian institution of such notices. The custodian
institution in turn would inform the agent who would in turn inform the plaintiff of
such notices. The plaintiff would finally instruct his agent as to what was to be done
with the bearer convertible bonds.
It was against this background that the feasibility of placing these convertible
bearer bonds with the bank by way of security for the plaintiff's banking
arrangements with it was discussed. What was discussed and finally agreed upon
by the bank and plaintiff are crucial to this case.
The plaintiff's evidence is that as a result of the discussions, agreement between
the bank and himself was reached culminating in a letter dated 12 April 1982 from
the bank to himself (AB4) which reads:
Banking facilities
(1) Further to our recent discussions we are pleased to advise that our London merchant bank,
Standard Chartered Merchant Bank Ltd, 33–36, Gracechurch Street, London EC3V OAX are
members of the Euro-clear System and can act as custodian for the various loan stocks to be
held as security for your facilities in Singapore. Current charges are: For free delivery within
Euro-clear System - US$1.00 per security
Annual custodian charges
Up to US$500,000
= 0.5 per mile
Next US$1,000,000 = 0.25 per mile
Next US$23,500,000 = 0.2 per mile
Next US$25,000,000 = 0.175 per mile
Above US$50,000,000 = 0.15 per mile
(2) Fees are payable quarterly based on aggregate month end balances unless the amount
involved warrants
1989 1 MLJ 278 at 281
annual billing only. Your current account will be debited with these charges automatically under
advice.
(3) Please arrange for the securities to be delivered free of payment to Standard Chartered
Merchant Bank Ltd, London, clients accounts no 94632, attn: Mr Richard Southward. It will be
necessary for us to furnish our associates with your full name and residence status and your
interest payment instructions. You should also let us know by whom the various securities will be
delivered. Please advise accordingly.
(4) We attach a letter of lien in respect of these securities and would be pleased if you would sign
where indicated.
Up till the writing of this letter the bank's evidence and that of the plaintiff run on
parallel lines but after the last-mentioned letter their evidence diverge and become
conflicting.
The plaintiff's evidence is that on the Saturday following AB4 of 12 April 1982 or the
Saturday after that Northrop asked him to cancel the arrangements as had been set
out in para 3 of AB4, that is to say, to deliver the bond securities to SCMB in
London, and told him to have the said bearer bonds physically transferred to the
bank in Singapore. As a result of this the plaintiff countermanded the order to his
agent in England to have the bearer bonds placed with the Standard Chartered
Merchant Bank in London and instead asked his agent to have the convertible
bearer bonds sent on to the bank in Singapore. In the event some of the bonds
came to him, which he handed over to the bank as and when they arrived, and
others went direct to the bank. The plaintiff's view on the bank's change of mind is
that it seemed to him that the bank would and should know what it was doing and
that perhaps Northrop had found out more from London of how the bank could deal
from Singapore with the situation. On this issue the bank's evidence as deposed to
by Northrop (DW1) and supported by Chee Kok Kee (DW2), the officer in charge of
the securities department of the bank, was to the effect that at no time did
Northrop countermand para 3 of his letter of 12 April 1982 (AB4) and that it was
the plaintiff who of his own volition had decided that the services of SCMB in
London were not to be used, perhaps because of income tax reasons. On the tax
question the factual position was that the plaintiff's agent had been previously
remitting to Hongkong the interest derived from the bearer bonds and the plaintiff
had always been paying Singapore income tax as a Singapore resident.
The question for me here is do I accept the evidence of the plaintiff or that of
Northrop as supported by Chee Kok Kee. It is clear to me that the plaintiff had kept
his convertible bearer bonds in the UK for the simple reason that he wanted these
kept under conditions where he would come to know when these convertible bearer
bonds would have to be converted to registered shares in the issuing companies.
The point of an investment in convertible bearer bonds is the investor's hope and
expectation that at the notified date of conversion he would be in a situation
whereby by converting to registered shares in the issuing company he would make
a profit on his investment in the convertible bonds. The discussions between the
bank and the plaintiff must have centred round the problem of how the then
existing safe position of the plaintiff in regard to the conversion of the convertible
bearer bonds could be accommodated to the bank's desire to have adequate
physical control over its security. The bank's letter of 12 April 1982 (AB4) to my
mind ideally solved the problem; the plaintiff would maintain his safe position
regarding notification of conversion of the convertible bearer bonds and the bank
for its part would maintain sufficient control and ability to liquidate the convertible
bearer bonds should the need arise. In these circumstances it seems to me that it
would have been sheer madness on the plaintiff's part for him of his own volition to
cancel the agreed safe arrangements for him and have the convertible bearer bonds
transferred to Singapore particularly in the light of the bank's continued assertion
throughout the trial that it was organizationally not geared to meeting the notice of
conversion requirement. I accept the plaintiff's statement that the reason for his
going along with the bank's change of mind was his belief that the bank would have
come to some arrangement with SCMB whereby the bank would have solved the
difficulty of the notice of redemption. On reflection it was not such an intractable
problem as to defeat the ingenuity of a respectable old established banking
institution with connections in the city of London such as the defendants. All it had
to do in my view was to identify the convertible bearer bonds to SCMB in London
and the latter as members of the Euro-clear System could then have easily notified
the bank of any notice of redemption affecting any of the bonds deposited with the
bank by way of security whereupon the bank could have notified the plaintiff who
could then have acted as suited him best. I have a feeling that the bank was fully
alive to this possibility and that it was why it called for the physical transfer of the
bearer convertible bonds to be placed with them in Singapore. This would have
been a perfectly safe position for both parties had someone in the bank
remembered to send SCMB in London the identifying information on the convertible
bonds and had instructed them to notify the bank of any notice of conversion. This
it would appear the bank failed to do thus enabling the situation, of which the
plaintiff is now complaining, to arise. Yet again we know from the evidence before
the court that one of the three newspapers which carried notices of redemption by
arrangement with the Euro-clear System was and is The Financial Timesof London
of which the bank is an acknowledged subscriber. The bank had here yet another
last opportunity of preventing loss on the conversion of the bonds. A daily perusal
of The Financial Times would
1989 1 MLJ 278 at 282
have revealed the notice of redemption on Wang convertible bonds and thus led to
appropriate action being taken thereafter both by the bank and the plaintiff. For
these reasons I prefer the evidence of the plaintiff to that of Northrop and Chee Kok
Kee and find that it was Northrop who countermanded para 3 of the bank's letter of
12 April 1982 (AB4) and asked the plaintiff to have the convertible bearer bonds
sent on to the bank in Singapore, where they were to be used by the bank as
security for the plaintiff's banking facilities which had already been made available
to him by the bank.
Arising out of the banking arrangements made on 12 May 1982 (AB9) a number of
securities reached the bank from time to time and on 20 August 1982 the bank
gave the plaintiff an acknowledgement receipt (AB12 & AB13) worded as follows:
Securities
We acknowledge receipt of the undermentioned enclosures which we are retaining under lien as per list
attached:
US$25,000
US$50,000
US$50,000
US$50,000
US$50,000
Moran Energy International NV 8% convertible subordinated debenture due 1995 (nos M13–M22, M215–M229)
Reading & Bates Energy Corporation NV 8% convertible subordinated debenture due 1995 (nos M1728, M2296–
M2329, M53374–M53388)
Wang Laboratories (NA) NY 9¼% convertible subordinated guaranteed debenture due 1996 (nos 39728–39777)
Swiss Bank Corporation (Overseas) SA 6¼% convertible bonds due 31 December 1990 (nos 020006, 023824,
028539/541)
TNT Overseas Finance NV 8ࡩ% convertible guaranteed subordinated bonds 1990 (nos 02595–02644)
together with interest coupons which we shall send for collection when they are due.
Conditions
The bank, while receiving articles for the convenience of customers, does not take responsibility for their
loss or damage by thieves, fire, explosion, war, riot or otherwise nor is the bank responsible for any loss
that may be incurred by bonds or coupons not being presented when drawn or due, all requisite notices in
this connection and in connection with rights, bonuses or entitlements to convert in respect of any bonds
or shares should be given to the bank by customers. Notice of intention to withdraw items must be lodged
with the bank during business hours on the day preceding that on which delivery is required.
With regard to this acknowledgement receipt the plaintiff deposed as follows:
AB12 (20.8.82) Condition - AB12 posted to me. Checked the list. Found one missing and wrote to them
about it. I did not notice it. This is the standard form for ordinary shares. I would not have accepted the
condition because there could have been a major danger. No one in the bank had drawn my attention to it
specifically. I only read it when the bank drew my attention to it later after the dispute had arisen.
The defendant submitted that it is not part of 'banking business' as defined in s 2 of
the Banking Act (Cap 19, 1985 Ed) to inform a customer of the notice of
redemption of bearer securities held by them and consequently its failure to inform
the plaintiff of the notice of redemption of the Wang bonds was not part of banking
business. I do not see how the bank, having accepted bearer convertible securities
as collateral for securing the plaintiff's overdraft account with it, can now say that
informing customers of such notices is not part of its banking business. If the
lending of money to customers is banking business then surely the acceptance of
security for such lending must also be part of banking business and if the bank
accepts convertible bearer bonds as security for such lending then surely it is the
bank's business to assist its customers in carrying out the terms of the convertible
bonds and thus safeguard the customers' best interests. Taking into account the
circumstances in which these Wang convertible bonds were accepted by the bank
as collateral for the overdraft account, it lies ill in the mouth of the bank for it now
to say that it is not part of its business to inform the plaintiff, a customer, of the
notice of redemption of the Wang bonds held by it as security. If the giving of such
notice is not to be deemed part of its banking business then the bank should never
have accepted these bonds as security. In the circumstances I do not think that the
bank should now be heard to say that the relaying of such information to its
customers is not part of its banking business.
By para 6 of the defence the defendant pleads that further and in the alternative
the defendant will rely on the clause in the acknowledgment receipt given to the
plaintiff on the deposit of the Wang Bonds dated 20 August 1982 which contains a
clause the material words of which are:
… nor is the bank responsible for any loss that may be incurred by bonds or coupons not being duly
presented when drawn or due; all requisite notices in this connection and in connection with rights,
bonuses or entitlements to convert in respect of any bonds or shares should be given to the bank by
customers …
On this plea of the defendant the plaintiff contends (i) that the condition, if at all
valid, was formulated on 20 August 1982 and can therefore form no part of the
contract dated 12 May 1982 relating to the banking arrangements as set out in
AB9, (ii) that the plaintiff only read the condition after the bank drew his attention
to it later after the dispute had arisen; (iii) that the condition is not expressed
clearly and without ambiguity, (iv) that the condition as pleaded denies the whole
purpose of the contract of 12 May 1982 and would have defeated the purpose of
depositing the convertible bearer bonds in the manner arranged.
1989 1 MLJ 278 at 283
The law on exemption clauses is succintly stated in Chitty on Contracts (25th Ed)
Vol 1 at pp 875–876 as follows:
Exemption clauses must be expressed clearly and without ambiguity or they will be ineffective. Mere
general words in an exemption clause do not ordinarily absolve the party seeking to rely on the exemption
from liability for his own negligence or that of his employees. The clause must clearly express what its
intention is. (p 875)
… if a person was under a legal liability and wished to get rid of it he could only do so by using clear
words. (p 876)
On the issue of when the plaintiff first had knowledge of the condition, I accept the
plaintiff's evidence that he only read it later when the bank drew his attention to it
after the dispute had arisen. On the plea of the bank that the exemption clause
frees it of liability it is to be noticed that it relies on only a part of the clause and
that part reads:
… nor is the bank responsible for any loss that may be incurred by bonds or coupons not being duly
presented when drawn or due; all requisite notices in this connection and in connection with rights,
bonuses or entitlements to convert in respect of any bonds or shares should be given to the bank by
customers …
In my view the exemption clause we are concerned with must be read in its entirety
and not in part as has been done by the bank. Reading it in its entirety one could
come to the conclusion that this clause only applies to those instances 'while
receiving articles for the convenience of customers', that is, in cases where the
bank is a bailee pure and simple for their customers. Further the last paragraph of
the acknowledgement receipt which reads:
Notice of intention to withdraw items must be lodged with the bank during business hours on the day
preceding that on which delivery is required
fortifies my view that the condition was not intended to apply to securities
deposited with the bank by way of collateral but to items left by customers for
safekeeping. In the instant case the bearer bonds were deposited by the plaintiff
with the bank by way of collateral in respect of his overdraft account with the bank
and not merely for safekeeping but subject also to withdrawal from time to time on
proper notice. On a reading of the condition as a whole I do not think that the
condition as framed is applicable to the instant case nor is it enforceable against the
plaintiff for the reason that it is not expressed clearly or without ambiguity.
For these reasons I hold that the condition relied upon by the bank as exempting it
from liability is ineffective and unenforceable against the plaintiff by the bank
(see Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805 andMendelssohn v
Normand Ltd [1970] 1 QB 177). In any event I accept the defendant's submission
that the condition, if at all valid, was formulated on 20 August 1982 (AB12) and can
therefore form no part of the contract dated 12 May 1982 relating to the banking
arrangements as set out in AB9.
In the circumstances of this case I hold that the bank accepted the Wang
convertible bearer bonds as security for the plaintiff's overdraft account knowing
that such bonds were convertible bonds and that when so accepting the bonds the
bank knew of the requirements for the timely and proper conversion of such bonds.
The bank cannot therefore now be heard to say that its conduct in this case is in
keeping with its usual course of business. In the circumstances the bank did not
exercise due care (1) in not taking the necessary steps to place itself in a position
to ascertain when the notice of redemption was given by the Wang company and
(2) thus disenabling itself from informing the plaintiff of such notice which would
have made it possible for him to convert the bearer bonds to registrable shares in
the Wang company. The bank was thus in breach of its duty of care in respect of
the deposited Wang convertible bearer bonds to its customer the plaintiff.
The plaintiff says that had he redeemed the Wang bonds on 27 May 1983, the date
of redemption, by converting them to shares he would have received the sum of
US$84,650 being the value of the converted shares. As it was on 14 September
1983 he only received US$56,445, the face value of the convertible Wang bonds.
The plaintiff is now claiming US$28,205 being the difference in value of the
converted shares and the face value of the Wang bonds.
On the question of damages the plaintiff has not produced evidence of the damages
he now claims to have suffered, particularly as to what the value of the converted
shares were at the relevant time. There will therefore be interlocutory judgment for
the plaintiff on his claim with costs, the question of the assessment of the damages
suffered by the plaintiff is referred to the registrar. I direct that the damages
suffered by the plaintiff shall be the difference of the value of the converted shares
and the face value of the Wang convertible bonds.
Claim allowed.
COUCHMAN v. HILL.
1946 Dec. 10, 11, 18.
Scott, Tucker and Bucknill L.JJ.
Sale of goods - Sale by auction - Conditions of sale excluding liability for
misdescription - Article not complying with description in sale catalogue - Oral
confirmation of description by vendor and auctioneer - Liability of vendor for breach
of warranty.
The plaintiff purchased at an auction sale a heifer belonging to the defendant which
was described in the sale catalogue as "unserved." The catalogue stated that the
sale would be subject to the auctioneers' usual conditions and that all lots must be
taken subject to all faults or errors of description; and the conditions of sale, which
were exhibited at the auction, stated that the lots were sold "with all faults,
imperfections and errors of description." At the sale the plaintiff asked both the
defendant and the auctioneer whether they could confirm that the heifer in question
was unserved and received from both the answer "Yes." Later the heifer was found
to be in calf and died as a result of carrying a calf at too young an age. In an action
in the county court for damages for breach of warranty the county court judge held
that the value of the confirmation by the defendant and the auctioneer that the
heifer was unserved was destroyed by the conditions of sale and gave judgment for
the defendant. On appeal:Held, that in the circumstances the answers of the defendant and the auctioneer to
the plaintiff's question amounted to an offer of a warranty overriding the conditions
of sale; that such offer was accepted by the plaintiff's bid for the heifer; and that
the description amounted to a condition on the breach of which the plaintiff was
entitled to treat it as a warranty and recover damages.
Per Scott L.J. Every item is a description which constitutes a substantial ingredient
in the identity of the thing sold is a condition.
APPEAL from Wincanton county court.
On December 15, 1945, the plaintiff, a farmer, purchased at an auction sale
a heifer, the property of the defendant, for 29l. The heifer was described in
the sale catalogue as a red and white Stirk heifer, "unserved." In the same
document it was stated: "Note. The sale will be subject to the auctioneers'
usual conditions, copies of which will be exhibited. The auctioneers will not
be responsible for any error or misstatement in this catalogue, or in the
dates of calving of any cattle. The information contained herein is supplied
by the vendor and is believed to be correct, but its accuracy is not
guaranteed, and all lots must be taken subject to all faults or errors of
description (if any), and no compensation will be paid for the same." The
conditions of sale, which were
[1947] K.B. 554 Page 555
exhibited at the auction, contained the following condition: "The lots are
sold with all faults, imperfections and errors of description, the auctioneers
not being responsible for the correct description, genuineness, or
authenticity of, or any fault or defect in any lot, and giving no warranty
whatever." The plaintiff gave evidence that he required an unserved heifer
for service by his own bull, and that at the sale he asked both the defendant
and the auctioneer whether they could confirm that the heifer in question
was unserved and received from both the answer "Yes." He thereupon bid
for the heifer and it was knocked down to him. Later the heifer was found to
be in calf and on February 26, 1946, she died as a result of the strain of
carrying a calf at too young an age.
The plaintiff brought an action against the defendant in the county court
claiming damages for breach of warranty. There was no suggestion that
either the auctioneer or the vendor did not honestly believe that the heifer
was unserved. The county court judge accepted the plaintiff's evidence as to
the confirmation by the defendant and the auctioneer of the description of
the heifer as unserved, but he held that the value of such confirmation was
destroyed by the conditions of sale and gave judgment for the defendant.
The plaintiff appealed.
Dare for the plaintiff. The statements of the vendor and the auctioneer confirming
that the heifer was unserved amounted to an express oral warranty which prevent
the qualifying stipulations in the catalogue and in the conditions of sale from
applying to this sale. The county court judge held that notwithstanding such
warranty the plaintiff could not recover because of Ward v. Hobbs (1). But that case
is distinguishable. The principle applicable to the present case is stated
in Bannerman v. White (2), where it was held that on a sale of hops a
representation that no sulphur had been used in their cultivation amounted to a
condition and that the buyer was entitled to repudiate the contract. Harrison v.
Knowles & Foster (3), where a statement as to the dead weight of two ships was
held not to be part of the contract, does not apply. In the present case the
qualifying stipulation in the catalogue only applies to what was to be found in the
catalogue. Moreover, it does not do more than protect the auctioneer and does not
(1)
(1878) 4 App. Cas. 13.
(2)
(1861) 10 C. B. (N. S.) 844.
(3)
[1918] 1 K. B. 608.
[1947] K.B. 554 Page 556
exempt the vendor from liability. The warranty given here amounts to a condition
(see per Channell J. in Varley v. Whipp (1) and Wallis Sons & Wells v. Pratt &
Haynes (2) and the terms of the catalogue and of the conditions of sale only govern
warranties and do not apply to conditions. For those reasons the county court judge
was wrong in holding that the plaintiff could not recover damages for breach of
warranty.
Fay for the respondent. The statement that the heifer was unserved must be
treated as either a condition or a warranty or a mere representation of fact not
being a term of the contract. In Heilbut, Symons & Co. v. Buckleton (3) Lord
Moulton said that an innocent misrepresentation would not be held to amount to a
warranty unless intended by the parties to be so at the time of sale. Here there is
no evidence that it was intended to be a warranty. Even if it was, then it was a
warranty and not a condition. In Harrison v. Knowles Bailhache J. said (4): "where
the subject-matter of a contract of sale is a specific existing chattel a statement as
to some quality possessed by or attaching to such chattel is a warranty, and not a
condition, unless the absence of such quality or the possession of it to a smaller
extent makes the thing sold different in kind from the thing as described in the
contract." In the present case the heifer was different in degree, but not different in
kind. This was not a sale by description, but a sale of a specific animal which could
be inspected. Warranties were expressly excluded by the printed conditions of sale.
In any case, there was an error of description within the meaning of those
conditions. [He referred to Taylor v. Bullen (5).] The oral confirmation was a mere
repetition of the vendor's honest belief not intended to form part of the contract.
There is no evidence that the parties agreed to dispense with the stipulation in the
catalogue. This appeal ought therefore to be dismissed.
Dare in reply.
Cur. adv. vult.
Dec. 18. SCOTT L.J. read the following judgment. It is a striking feature of county
court appeals that they so often present features of great interest, whether of law
or of practical importance to the community, and also raise quite difficult
(1)
[1900] 1 Q. B. 513, 515.
(2)
[1911] A. C. 394.
(3)
[1913] A. C. 30, 49.
(4)
[1917] 2 K. B. 606, 610.
(5)
(1850) 5 Exch. 779.
[1947] K.B. 554 Page 557
problems for solution by the court. The present appeal presents all three features.
There can be no question on the facts found by the county court judge but that, in
the absence of some special agreement to the contrary, when the hammer fell the
resulting contract was subject to the printed conditions of sale exhibited at the
auction and to the stipulations contained in the sale catalogue. So far it is in my
opinion clear that the plaintiff, by reason of those conditions and stipulations, would
have no remedy by way of damages for breach of contract or warranty against the
defendant unless the plaintiff is right in his contention that the language of these
documents is effective only to protect the auctioneer from personal liability and
affords no defence to the vendor in respect of any misstatements in the catalogue
for which he would otherwise be liable. It is no doubt true that some of the printed
conditions of sale deal only with the position of the auctioneer, and that the first
part of the note in the catalogue is to the same effect, but it is in my view
impossible to say that the words "the lots are sold with all faults, imperfections and
errors of description" and the words "and all lots must be taken subject to all faults
or errors of description (if any) and no compensation will be paid for the same" are
not to be incorporated as terms of the contract as between the vendor and
purchaser when the hammer falls. Whether the word "unserved" amounts to a
warranty or a condition is immaterial because it is, I think, clear that it was in any
event an error of description and as such expressly protected by the words to which
I have referred. For these reasons it appears to me that in so far as the plaintiff
relied on the statement in the catalogue to support his claim for damages for
breach of warranty, he necessarily failed.
The plaintiff, however, also claimed by further particulars as follows: "The said
warranty was also confirmed verbally both by the auctioneer (Mr. Richards) and by
the defendant upon inquiry by the plaintiff prior to the sale." As to this the county
court judge has accepted the plaintiff's evidence, which was to the effect that at the
sale, and when the heifers were in the ring, he asked both the defendant and the
auctioneer: "Can you confirm heifers unserved?" and received from both the answer
"Yes." There was no contract at that moment. There was an announcement of an
auction of specific chattels. It was to the effect, first, that the auctioneer was about
to make auction offers of the things and animals in the catalogue on
[1947] K.B. 554 Page 558
behalf of the vendor to the public attending the auction on the terms of sale
contained in the two documents, viz.: the catalogue and the printed advertisement
of the terms of sale hung up at the auction; secondly, that the vendor had given
authority to the auctioneer to sell the chattels by auction in those terms. There was
no contract in existence until the hammer fell: the offer was defined, the
auctioneer's authority was defined, but it was in law open to any would-be
purchaser to intimate in advance before bidding for any particular heifer offered
from the rostrum that he was not willing to bid for the lot, unless the vendor
modified the terms of sale contained in the two documents in some way specified
by him. There is no doubt that the plaintiff did make some attempt of the kind in
order to protect himself from the risk of buying an animal that was not of the kind
described. The real question is, what did the parties understand by the question
addressed to and the answer received from both vendor and auctioneer. It is
contended by the defendant that the question meant: "having regard to the
onerous stipulations which I know I shall have to put up with if I bid and the lot is
knocked down to me, can you give me your honourable assurance that the heifers
have in fact not been served? If so, I will risk the penalties of the catalogue." The
alternative meaning is: "I am frightened of contracting on your published terms,
but I will bid if you will tell me by word of mouth that you accept full responsibility
for the statement in the catalogue that the heifers have not been served, or, in
other words, give me a clean warranty. That is the only condition on which I will
bid." If that was the meaning there was clearly an oral offer of a warranty which
overrode the stultifying condition in the printed terms: that offer was accepted by
the plaintiff when he bid, and the contract was made on that basis when the lot was
knocked down to him. In some circumstances I concede that such a question might,
on its face, be somewhat ambiguous, but I think in the present case the only
inference that could properly be drawn by the judge or jury charged with the duty
of finding the facts - and this is a question of fact as to the intention of the parties is that the question was asked and answered with the alternative meaning indicated
above. That this is so follows, I think, conclusively from the plaintiff's evidence
which was accepted by the judge, taken in conjunction with the admissions of both
defendants that the words if used - which they denied - would have bound them. It
is obvious
[1947] K.B. 554 Page 559
that it was the stipulations that prompted the question. The plaintiff was not a
lawyer, but he knew what he wanted, and he got it: so did the vendor, and he gave
it. What the plaintiff wanted was to know where he stood before he made an offer
which the fall of the hammer would turn into a contract.
The county court judge in a careful reserved judgment has found that this oral
statement was made, and he refers to it as a warranty but holds that its value was
destroyed by the qualifying stipulations. He has not in terms put the question to
himself: "Did the parties by this question and answer intend to exclude the
stipulations from the contract that resulted on the fall of the hammer?" I have
accordingly felt some doubt whether or not the proper course was to order a new
trial. On reading his judgment as a whole I have, however, arrived at the
conclusion that there is in it an implicit finding that it was not the intention of the
parties to exclude the stipulation. Being of opinion that on the facts found by him
he could not properly arrive at this conclusion, I think we are not compelled to put
the parties to the expense of a further trial.
There was a good deal of discussion as to whether the description "unserved"
constituted a warranty or a condition. I have, in what I have said so far,
deliberately refrained from expressing a view thereon, but as a matter of law, I
think every item in a description which constitutes a substantial ingredient in the
"identity" of the thing sold is a condition, although every such condition can be
waived by the purchaser, who thereupon becomes entitled to treat it as a warranty
and recover damages. I think there was here an unqualified oral condition, the
breach of which the plaintiff was entitled to treat as a breach of warranty and
recover the damages claimed.
One final word. The printed condition that the vendor will take no responsibility for
errors of description of things or animals specifically offered for sale on inspection is
reasonable for visible defects, but for qualities or attributes which are invisible it is
not reasonable. It may well become a mere trap for the unwary. The point deserves
consideration by the auctioneers associations. The appeal should, therefore, in my
opinion, be allowed.
TUCKER L.J. I have had the advantage of reading the
[1947] K.B. 554 Page 560
judgment of Scott L.J. before it was delivered, and I agree that the appeal succeeds
for the reasons he has stated.
BUCKNILL L.J. I agree.
Appeal allowed(1).
3 pages
[1949] supp MLJ 28
AWANG BIN OMAR v HAJI OMAR BIN ISMAIL ANOTHER
ORIG CIVIL JURIS JOHORE
LAVILLE, J
CIVIL SUIT NO 5 OF 1947
13 January 1949
Contract — Defence of non est factum — False representation
In this case the plaintiff sued the defendants for damages for breach of contract. It
appeared that the first defendant, who did not know English, was induced by the
second defendant, his brother, to sign the document containing the contract, on the
understanding that it was a matter of witnessing his brother's signature.
Held, that on the facts the defence of non est factum was open to the first
defendant and the first defendant could not be held liable on the Contract.
Cases referred to
Foster v Mackinnon (1869) LR 4 CP 704
Thoroughgood's Case (1582) 2 Co Rep 9a
Lewis v Clay (1898) 67 LJQB 224
CIVIL SUIT
MB Brash for the plaintiff.
Defendants in person.
LAVILLE, J
The facts and arguments appear sufficiently from the judgment.
1949 SUPP MLJ 28 at 29
On 23rd July, 1947, Awang bin Omar of Mersing sued one Haji Omar bin Ismail of
Kemaman Trengganu for damages for breach of a contract made between himself
and Muda bin Ismail, the brother of Omar, the performance of which had been
guaranteed by the said Haji Omar.
The contract was dated 19th June, 1946, and by it Muda agreed to hire Awang's
motor boat from that date at $1,000 per month till 31st December, 1946; the value
of the boat was fixed at $10,000 and it was agreed that Muda was to hand it back in
good order at the expiry of the agreement. Apart from section 18 the other clauses of
the contract are not in dispute.
By the contract Haji Omar was made a party and designated as guarantor, but
section 18 of the contract which reads as follows:—
The guarantor binds himself equally with all liabilities of the Hirer
made it clear that Haji Omar was not a mere guarantor but a joint contractor with
Muda.
Haji Omar failed to file a statement of defence in time and, on an application by
plaintiff to enter final judgment, applied for extension of time to file a defence. This
application was granted and a defence was filed on 4th December, 1947, and
application made to join Muda bin Ismail as defendant. This application also was
allowed and an amended plaint was filed by plaintiff Awang and served on defendant
Haji Omar. Service of the plaint was effected on 2nd defendant also, but he entered
no defence.
A statement of defence to amended plaint was filed by Haji Omar on 14th April,
1948. This defence was to the effect that Haji Omar did not sign the agreement as a
guarantor.
The case came on for hearing on 28th and 30th December, 1948. The 2nd defendant
Muda, though he had filed no defence, contested the claim in person as also did Haji
Omar. The plaintiff briefed Messrs Alien & Gledhill, but defendants were not
represented by counsel.
The evidence for the plaintiff was the contract itself. He gave evidence that it was
signed by himself, Muda and Haji Omar in each other's presence and also in the
presence of Abdul Hamid bin Abbas, who witnessed his signature and that of Muda,
and in the presence of Ahmad bin Ninam Shah who witnessed the signature of Haji
Omar. The contract was drawn by a petition writer, Ghulam Gelani, and read out by
him to the parties before they signed it. Ahmad bin Ninam Shah acknowledges his
signature on the contract and supports Awang's story that all 3 parties signed
together after having the document read to them in Malay. In cross-examination he
denied Haji Omar's allegation that he, Haji Omar, was not present at all at the
signing, but actually signed it in a bus. He admitted that he then was an employee of
the plaintiff and went with Muda, 2nd defendant, to Trengganu in the boat after the
deal was concluded.
Abdul Hamid bin Abbas acknowledges his signature as a witness to the signatures of
both plaintiff and 2nd defendant and says all the parties to the agreement, including
1st defendant, signed in each other's and his presence at the petition writer's. He
makes no mention of Ahmad being present there as a witness to 1st defendant's
signature.
The defence evidence was given as follows:—
Haji Omar, 1st defendant, agrees he signed the document A, but says his brother,
defendant No. 2, brought it to him to sign in a bus and, on being told by Haji Omar
that he did not understand English, assured Haji Omar that there was nothing in it
and he was only to sign as a witness. Omar asked Muda, defendant No. 2, to sign
and then asked where he was to put his signature and was shown the place by
defendant No. 2 and attached his signature there. It then bore no other signatures.
He explains his allegation of compulsion on him by plaintiff and defendant No. 2 in his
original affidavit of defence as being compulsion by fraud and misrepresentation.
Muda, defendant No. 2, agreed that he was liable under the contract A. He denies he
sent for his brother on 19th June, 1946, to come to Kuantan but met him there by
chance, though he agrees that the typed contract contained the word "signed sealed
and delivered by the said Omar" before he met Omar. He agrees that when he
presented Omar with Ex. A. it bore no one's signature at all and he signed first and
then Omar and agrees that he asked Omar to sign as a witness. He says he then took
the contract back to petition writer Ghulam Gelani and showed him the signatures
and the latter said they were in order but the document was not yet completed. He
denies that plaintiff and the two witnesses signed in his presence at all, but says he
got the contract back from plaintiff duly signed and witnessed and he agrees that
when contract was drawn up Hamid was present.
1st defendant called as his witness Ghulam Gelani, the petition writer who drew up
the contract A. He agrees with 2nd defendant that 1st defendant was not present
when the contract was drawn up. He also agrees that 2nd defendant brought him
back the contract signed only by himself (2nd defendant) and
1949 SUPP MLJ 28 at 30
his brother Omar. He says plaintiff wanted a guarantor and 2nd defendant suggested
is brother Omar and said Omar would be equally liable with himself, and plaintiff
accepted the suggestion of name and liability.
It is clear that there is a conflict of evidence as to the facts attending the signature of
1st defendant on contract A. Plaintiff's 2 witnesses say they saw Omar sign, and
Ahmad says he witnessed Omar's signature. It is to be observed that Omar's
signature is witnessed by Ahmad and not by Abdul Hamid. There seems to be no
reason why the same man should not have witnessed all three signatures if they
were made together, and it is difficult to accept plaintiff's explanation. Ghulam Gelani
was not cross-examined on this point and further his evidence is that he offered to
witness the signatures of all the parties after drawing up the contract, but plaintiff
and 2nd defendant refused as 1st defendant was, not there and 2nd defendant took
away the contract.
In my opinion the most reliable witness as to the drawing up and signing of the
contract is Ghulam Gelani, the petition writer who drew it up. He gave his evidence
convincingly and, as far as I could see, without bias. He was attacked by plaintiff
because, though he had been advising defendant No. 1 in this case from November,
1947, he wrote in August, 1948, to plaintiff's solicitors and offered to give evidence
for the plaintiff, but if his letter, Ex. 3, is examined it will be seem that he made no
such offer but says if he is required to give evidence as the drafter of the contract he
would like to be informed for reasons personal to himself when the case was coming
on. In my opinion there is no reason to think that he was selling his evidence, but
was enquiring from plaintiff, with whom the conduct of the case lay, how long he
might have to delay his departure.
The evidence of Ghulam Gelani supports the story of defendant No. 1 that he, the
latter, was not present when the terms of the agreement were discussed between
plaintiff and 2nd defendant, and also that 1st defendants signature was not witnessed
by Ahmad when it was made.
I reject the evidence of plaintiff and his two witnesses as to the signing of the
contract by the parties. In my opinion the evidence of Ghulam Gelani, a completely
disinterested person, is the touchstone by which the evidence of the interested
parties must be measured. The evidence of 1st and 2nd defendants is supported by
this evidence as regards the issue as to whether 1st defendant was present when the
terms were discussed between plaintiff and 2nd defendant and as to whether all
parties signed in each other's presence or separately, and as to whether the
witnesses to the signatures were present when they were made.
On the basis of this evidence and that of 1st and 2nd defendants, it is clear that there
was at no time any privity of contract between plaintiff and 1st defendant, and that
2nd defendant misrepresented to his brother, the 1st defendant, who knew no
English what the nature of the document he was signing was and the capacity in
which he, 1st defendant, was to sign it and so obtained his signature by false
pretences; it would appear that having so done he thus enticed the plaintiff into
putting his signature thereto, knowing well that plaintiff would not do so unless he
was assured that defendant No. 1 had signed as a party.
The 2nd defendant was acting in this matter as an agent for plaintiff to, obtain his
(2nd defendant's) brother's consent to be equally liable with himself on the contract
and get him to sign it for that purpose. To effect this he deceived his brother as to
the nature of the document he was to sign, and, in so far as he was acting as an
agent for plaintiff, plaintiff is liable for his acts and cannot evade the responsibility for
them.
That being so, I am of opinion that the defence of non est factum as defenced
in Chitty on Contracts 20th Edition Appendix is open to the 1st defendant in this case.
It was held in Foster v Mackinnon (1869) LR 4 CP 704 by Byles, J., on the basis of
Thoroughgood's Case (1582) 2 Co Rep 9a that where a signatory to a document signs
it under a genuine mistake as to its nature he is not bound by the terms of it because
his mind has not gone with his action, and a fortiori the same reasoning applies when
he is deceived into signing it by a false representation as to its nature.
The case of Lewis v Clay (1898) 67 LJQB 224 was decided on the same principle and
it was there held that misplaced confidence in the person who obtains the signature
by false pretences does not amount to such negligence as would negative the
defence of non est factum.
The facts in this case are very similar. Owing to a misplaced but natural confidence in
his brother's allegation as to the nature of the document he was to sign, and the fact
that he could not read English, 1st defendant was induced to sign this contract
thinking it was a matter of witnessing his brother's signature. In his mind therefore
he was assuming no liability and making no bargain with plaintiff at all. He cannot
therefore be held liable by the plaintiff on the contract
1949 SUPP MLJ 28 at 31
which he was so induced to sign, and the claim against him must fail.
The 2nd defendant does not dispute liability for breach of the contract he has signed,
and it simply remains to assess what reparation is due by him to plaintiff.
He admits failure to pay all save one instalment of the monthly hire and is therefore
liable on that account for balance of rent up to expiry of contract amounting to
$5,366. The motor boat is now and has been since March 1947 out of the jurisdiction
of the Court of the Federation in Siam and is in pledge there and must therefore be
considered a total loss, and plaintiff is entitled to its full agreed value of $10,000. The
2nd defendant admits that he had the use of this boat in Siam and lived in it till some
time in March, 1947, and plaintiff is therefore entitled to hire for that period, i.e. 3
months of 1947, at $1,000 p.m., i.e. $3.000/-.
Judgment will be entered for defendant No. 1 with his costs to be taxed by the
Registrar as far as the claim against him goes.
As to the claim against the 2nd defendant, there will the judgment for the plaintiff for
$18,366 and costs as incurred in regard to the plaintiff's case against him.
Claim against 1st defendant dismissed.; Judgment for plaintiff against 2nd
defendant.
[1940] 1 K.B. 532
[COURT OF APPEAL]
CHAPELTON v. BARRY URBAN DISTRICT COUNCIL.
1940 Jan. 30.
SLESSER, MACKINNON and GODDARD L.JJ.
Contract - Hire of deck chair - Notice containing no limitation of liability - Ticket Condition on ticket purporting to limit liability of owners of chair - Hirer of chair
ignorant of condition - Terms upon which chair hired - Defective chair - Liability of
owners of chair for accident to hirer.
The plaintiff, who wished to hire a deck chair on a beach went to a pile of deck
chairs belonging to the defendant council near to which was displayed a notice in
the following terms: "Barry Urban District Council. Cold Knap. Hire of chairs 2d. per
session of 3 hours." The notice went on to state that the public were requested to
obtain tickets for their chairs from the chair attendants and that those tickets
should be retained for inspection. There was nothing on the notice relieving the
defendant council from liability for any accident or damage arising out of the hire of
a chair. The plaintiff obtained two chairs from the attendant for which he paid
4d. and received two tickets therefor. The plaintiff glanced at the tickets and
slipped them into his pocket and had no idea that they contained any conditions.
On one side of the tickets were the words: "Barry Urban District Council. Cold Knap.
Chair Ticket 2d. Not transferable," with half hours printed on the side of the tickets.
On the other side of the tickets were the words: "Available for three hours. Time
expires where indicated by cut-off and should be retained and shown on request.
The council will not be liable for any accident or damage arising from the hire of the
chair." The plaintiff put the chairs up in the ordinary way on a flat part of the beach,
and then sat down on a chair which gave way, the canvas having come away from
the top of the chair. In an action against the defendants the county court judge
found that the accident was due to the negligence of the defendants, but that the
defendants were exempted from liability as the plaintiff had sufficient notice of the
special contract printed on the ticket. On appeal:Held, that the ticket was a mere voucher or receipt for the money paid for the hire
of the chair, and that the conditions upon which the local authority offered to hire
out the chairs were those contained in the notice put up near the pile of chairs, and
that as that notice contained no limitation of liability for any accident or damage
arising from the hire of the chairs, the local authority were liable to the plaintiff.
APPEAL from a decision of the judge of the Cardiff and Barry County Court.
The facts are fully set out in the judgment of Slesser L.J.
In an action by the plaintiff against the Barry Urban District
[1940] 1 K.B. 532 Page 533
Council the county court judge found as a fact that the accident to the
plaintiff was due to negligence on the part of the defendants, but he held,
relying on Thompson v. London, Midland and Scottish Ry. Co. (1), that the
defendants were exempted from liability by reason of the fact that the
plaintiff had sufficient notice of the special contract printed on the ticket.
The plaintiff appealed.
Carey Evans for the appellant. The county court judge was wrong in holding that
the plaintiff had sufficient notice of the conditions printed on the ticket and was
therefore bound by the same. Henderson v. Stevenson (2) is directly in point in the
present case.
The defendants in the county court relied upon the decision of the Court of Appeal
in Thompson v. London, Midland and Scottish Ry. Co. (3), especially the judgment
of Sankey L.J. In that case it was held, followingWatkins v. Rymill (4), that the
plaintiff was bound by the special contract made on the excursion ticket on the
acceptance of that ticket. That case is distinguishable from the present case
because here there was nothing on the face of the ticket to call attention to the fact
that there were conditions printed on the back of the ticket. The remarks of Mellish
L.J. in Parker v. South Eastern Ry. Co. (5) apply directly to the present case. The
ticket in the present case was like a receipt for a toll paid at a toll gate. [Nunan v.
Southern Ry. Co. (6) was also referred to.]
Ryder Richardson (for Griffith Williams on war service) for the respondents. It
was a question of fact for the county court judge to say whether there was a
written contract concluded between the parties, and whether it contained terms
which were brought to the notice of the plaintiff, and he has held that the terms
were brought to the notice of the plaintiff. That finding is binding on the plaintiff. A
(1)
[1930] 1 K. B. 41.
(2)
(1875) L. R. 2 H. L. (Sc.) 470.
(3)
[1930] 1 K. B. 41, 54.
(4)
(1883) 10 Q. B. D. 178.
(5)
(1877) 2 C. P. D. 416, 422.
(6)
[1923] 2 K. B. 703; [1924] 1 K. B. 223.
[1940] 1 K.B. 532 Page 534
person is not entitled to the use of a chair without first obtaining a chair ticket from
the attendant. The notice that was exhibited was no more than an offer by the
defendants to treat. The ticket that was issued to the plaintiff constituted a contract
between the parties the terms of which were binding on the plaintiff; it was not
merely a receipt for the 2d. paid for the hire of the chair. It was said by Stephen J.
in Watkins v. Rymill (1) that the facts in Henderson v. Stevenson (2) were so
peculiar that that case could hardly form a precedent for any other. This case falls
within the observations of Sankey L.J. in Thompson v. London, Midland and Scottish
Ry. Co. (3) The county court judge has held, and he was entitled so to hold, that
the defendants had taken reasonable steps to bring the conditions on which the
chair tickets were issued to the notice of the plaintiff who is accordingly bound by
the same.
SLESSER L.J. This appeal arises out of an action brought by Mr. David Chapelton
against the Barry Urban District Council, and it raises a question of some
importance to the very large number of people who are in the habit of using deck
chairs to sit by the seaside at holiday resorts.
On June 3, 1939, Mr. Chapelton went on to the beach at a place called Cold Knap,
which is within the area of the Barry Urban District Council, and wished to sit down
in a deck chair. On the beach, by the side of a cafe, was a pile of deck chairs
belonging to the defendants, and by the side of the deck chairs there was a notice
put up in these terms: "Barry Urban District Council. Cold Knap. Hire of chairs,
2d. per session of 3 hours." Then followed words which said that the public were
respectfully requested to obtain tickets for their chairs from the chair attendants,
and that those tickets must be retained for inspection.
Mr. Chapelton, having taken two chairs from the attendant, one for himself and one
for a Miss Andrews, who was with him, received two tickets from the attendant,
glanced at them,
(1)
10 Q. B. D. 182.
(2)
L. R. 2 H. L. (Sc.) 470.
(3)
[1930] 1 K. B. 41, 56.
[1940] 1 K.B. 532 Page 535
and slipped them into his pocket. He said in the court below that he had no idea
that there were any conditions on those tickets and that he did not know anything
about what was on the back of them. He took the chairs to the beach and put them
up in the ordinary way, setting them up firmly on a flat part of the beach, but when
he sat down he had the misfortune to go through the canvas, and, unfortunately,
had a bad jar, the result of which was that he suffered injury and had to see a
doctor, and in respect of that he brought his action.
The learned county court judge has found that if he had been satisfied that the
plaintiff had had a valid legal claim, he would have awarded him the sum of 50l. in
addition to the special damages claimed.
The learned county court judge also found that the accident to the plaintiff was due
to the negligence on the part of the defendants in providing a chair for him which
was unfit for its use which gave way in the manner which I have stated. But he
nevertheless found in favour of the defendants by reason of the fact that on the
ticket which was handed to Mr. Chapelton when he took the chair appeared these
words: "Available for 3 hours. Time expires where indicated by cut-off and should
be retained and shown on request. The Council will not be liable for any accident or
damage arising from hire of chair."
As I read the learned county court judge's judgment (and we have had the
advantage of a note taken by Mr. Carey Evans in addition to the summary reasons
which the learned county court judge gives for his decision), he said that the
plaintiff had sufficient notice of the special contract printed on the ticket and was,
accordingly, bound thereby - that is to say, as I understand it, that the learned
county court judge has treated this case as a case similar to the many cases which
have been tried in reference to conditions printed on tickets, and more particularly,
on railway tickets - and he came to the conclusion that the local authority made an
offer to hire out this chair to Mr. Chapelton only on certain conditions, which appear
on the ticket, namely, that they,
[1940] 1 K.B. 532 Page 536
the council, would not be responsible for any accident which arose from the use of
the chair, and they say that Mr. Chapelton hired the chair on the basis that that
was one of the terms of the contract between him and themselves, the local
authority.
Questions of this sort are always questions of difficulty and are very often largely
questions of fact. In the class of case where it is said that there is a term in the
contract freeing railway companies, or other providers of facilities, from liabilities
which they would otherwise incur at common law, it is a question as to how far that
condition has been made a term of the contract and whether it has been sufficiently
brought to the notice of the person entering into the contract with the railway
company, or other body, and there is a large number of authorities on that point. In
my view, however, the present case does not come within that category at all. I
think that the contract here, as appears from a consideration of all the
circumstances, was this: The local authority offered to hire chairs to persons to sit
upon on the beach, and there was a pile of chairs there standing ready for use by
any one who wished to use them, and the conditions on which they offered persons
the use of those chairs were stated in the notice which was put up by the pile of
chairs, namely, that the sum charged for the hire of a chair was 2d. per session of
three hours. I think that was the whole of the offer which the local authority made
in this case. They said, in effect: "We offer to provide you with a chair, and if you
accept that offer and sit in the chair, you will have to pay for that privilege 2d. per
session of three hours."
I think that Mr. Chapelton, in common with other persons who used these chairs,
when he took the chair from the pile (which happened to be handed to him by an
attendant, but which, I suppose, he might have taken from the pile of chairs
himself if the attendant had been going on his rounds collecting money, or was
otherwise away) simply thought that he was liable to pay 2d. for the use of the
chair. No suggestion of any restriction of the council's liability appeared in the
[1940] 1 K.B. 532 Page 537
notice which was near the pile of chairs. That, I think, is the proper view to take of
the nature of the contract in this case. Then the notice contained these further
words: "The public are respectfully requested to obtain tickets properly issued from
the automatic punch in their presence from the Chair Attendants." The very
language of that "respectful request" shows clearly, to my mind, that for the
convenience of the local authority the public were asked to obtain from the chair
attendants tickets, which were mere vouchers or receipts showing how long a
person hiring a chair is entitled to use that chair. It is wrong, I think, to look at the
circumstance that the plaintiff obtained his receipt at the same time as he took his
chair as being in any way a modification of the contract which I have indicated. This
was a general offer to the general public, and I think it is right to say that one must
take into account here that there was no reason why anybody taking one of these
chairs should necessarily obtain a receipt at the moment he took his chair - and,
indeed, the notice is inconsistent with that, because it "respectfully requests" the
public to obtain receipts for their money. It may be that somebody might sit in one
of these chairs for one hour, or two hours, or, if the holiday resort was a very
popular one, for a longer time, before the attendant came round for his money, or
it may be that the attendant would not come to him at all for payment for the chair,
in which case I take it there would be an obligation upon the person who used the
chair to search out the attendant, like a debtor searching for his creditor, in order
to pay him the sum of 2d. for the use of the chair and to obtain a receipt for the
2d. paid.
I think the learned county court judge has misunderstood the nature of this
agreement. I do not think that the notice excluding liability was a term of the
contract at all, and I find it unnecessary to refer to the different authorities which
were cited to us, save that I would mention a passage in the judgment of Mellish
L.J. in Parker v. South Eastern Ry. Co. (1), where he points out that it may be
(1)
2 C. P. D. 416, 422.
[1940] 1 K.B. 532 Page 538
that a receipt or ticket may not contain terms of the contract at all, but may be a
mere voucher, where he says: "For instance, if a person driving through a turnpikegate received a ticket upon paying the toll, he might reasonably assume that the
object of the ticket was that by producing it he might be free from paying toll at
some other turnpike-gate, and might put it in his pocket unread." I think the object
of the giving and the taking of this ticket was that the person taking it might have
evidence at hand by which he could show that the obligation he was under to pay
2d. for the use of the chair for three hours had been duly discharged, and I think it
is altogether inconsistent, in the absence of any qualification of liability in the notice
put up near the pile of chairs, to attempt to read into it the qualification contended
for. In my opinion, this ticket is no more than a receipt, and is quite different from
a railway ticket which contains upon it the terms upon which a railway company
agrees to carry the passenger. This, therefore, is not, I think, as Mr. Ryder
Richardson has argued, a question of fact for the learned county court judge. I
think the learned county court judge as a matter of law has misconstrued this
contract, and looking at all the circumstances of the case, has assumed that this
condition on the ticket, or the terms upon which the ticket was issued, has
disentitled the plaintiff to recover. The class of case which Sankey L.J. dealt with
in Thompson v. London, Midland and Scottish Ry. Co. (1), which seems to have
influenced the learned county court judge in his decision, is entirely different from
that which we have to consider in the present appeal.
This appeal should be allowed.
MACKINNON L.J. I agree that this appeal should be allowed. The learned county
court judge decided this case relying upon a dictum of Sankey L.J. when he was
speaking of a transaction which was totally different to this one. If a man does an
act which constitutes the making of a contract, such as taking a railway ticket, or
depositing his bag in a cloak-room, he will be
(1)
[1930] 1 K. B. 41, 53.
[1940] 1 K.B. 532 Page 539
bound by the terms of the document handed to him by the servant of the carriers
or bailees; but if he merely pays money for something and receives a receipt for it,
or does something which clearly only amounts to that, he cannot be deemed to
have entered into a contract in the terms of the words that his creditor has chosen
to print on the back of the receipt, unless, of course, the creditor has taken
reasonable steps to bring the terms of the proposed contract to the mind of the
man. In this case there was no evidence upon which the learned county court judge
could find that the defendants had taken any steps to bring the terms of their
proposed contract to the mind of the plaintiff. In those circumstances, I am
satisfied that the defendants could not rely upon the words on the back of the ticket
issued to the plaintiff, and, having admittedly been negligent in regard to the
condition of the chair, they had no defence to the plaintiff's cause of action.
GODDARD L.J. I agree. In my view the cases which deal with railway tickets, cloakroom tickets, or documents issued by bailees when they take charge of goods, have
no analogy to this case. In this case the appellant paid 2d. in order to have the
right to sit on a chair on the beach, and he was asked to take a ticket in the form of
a receipt for that purpose, and was given a document which shows nothing on the
face of it, except that the man had the right to sit in the chair until 7.30 P.M. on the
day when the accident occurred and the fact that the ticket was not transferable. I
cannot imagine that anybody paying 2d. under those circumstances for the
privilege of sitting in a chair on the beach would think for one moment that some
conditions were being imposed upon him which would limit his ordinary rights, or
that the document he received when paying his 2d. was a contractual document in
any shape or form. I think the ticket he received was nothing but a receipt for his
2d. - a receipt which showed him how long he might use the chair. I think the
learned judge below was wrong in thinking that the case of Thompson v. London,
Midland and Scottish Ry. Co. (1), upon which he
(1)
[1930] 1 K. B. 41.
[1940] 1 K.B. 532 Page 540
seems to have relied, had any bearing on the present case. One must have regard
to the facts of the case and the general circumstances of the case. In my
opinion, Thompson v. London, Midland and Scottish Ry. Co. (1) has no bearing at
all on this case.
I agree that there was no evidence upon which the learned judge below could find
that the plaintiff was bound by this condition on the ticket, and, therefore, this
appeal must succeed.
Appeal allowed.
[1964] 1 All ER 430
McCutcheon v David MacBrayne Ltd
HOUSE OF LORDS
LORD REID, LORD HODSON, LORD GUEST, LORD DEVLINa AND LORD
PEARCE
2, 3 DECEMBER 1963, 21 JANUARY 1964
Carriers – Contract – Carriage of goods – Conditions – Oral contract – No
contractual document – No express term in contract absolving carriers from liability
for negligence or applying carriers' conditions – Usual practice of carriers to request
consignors to sign risk note – No request on this occasion to sign risk note –
Previous transactions between same parties – Carriers' conditions exhibited in their
office – Consignor had never read conditions – Whether conditions implied in
contract of carriage – Ticket cases not applicable.
At the appellant's request M, his brother-in-law, a farmer in Islay, arranged for the
appellant's car to be shipped to the mainland. M took the car to the respondents'
office in Islay, where the purser of the “Lochiel” quoted to him the freight. M paid,
and was given a receipted invoice, which he did not read. He delivered the car,
which was shipped on the “Lochiel”. On the voyage the ship sank owing to the
respondents' negligent navigation, and the car was lost. In an action for damages
for negligence the respondents relied on a clause contained in their conditions,
which clause, if incorporated in the contract of carriage, would exclude liability. The
conditions were exhibited in the respondents' office and on board the “Lochiel”, and
on the invoice on which the receipt was written there was a statement that goods
were carried subject to the conditions specified on the respondents' sailing bills and
notices. The usual practice of the respondents was to ask a consignor to sign a risk
note, by which a consignor agreed to be bound by the respondents' conditions
which were printed on it. In this instance a risk note was made out before delivery
of the car, but, owing to an oversight, M was not asked to and did not sign it. M
had shipped goods in a similar manner on previous occasions including, on one
occasion, his own car. He had sometimes signed risk notes, but had never read
them nor had he ever read the conditions displayed in the respondents' office or on
the “Lochiel”. The appellant also had consigned goods through the respondents on
previous occasions, and he too had never read the displayed conditions or any risk
notes which he had signed, although he knew that conditions of some kind existed.
The respondents contended that, by reason of the previous dealings, the conditions
were imported into the contract of carriage.
a
Lord Devlin retired on 10 January 1964
Held – The contract of carriage was an oral contract, not incorporating the
respondents' conditions, and, in the absence of any contractual document, the
principle of the “ticket cases” had no application; moreover the respondents had
not discharged the burden of showing knowledge on the part of the appellant of the
terms of the conditions, and accordingly liability of the respondents in negligence
was not excluded (see p 432, letter f, p 433, letter i, p 435, letter b, p 438, letter f,
p 439, letter f, and p 440, letter d, post).
Parker v South Eastern Ry Co ((1877), 2 CPD 416) distinguished.
Per Lord Devlin: previous dealings are relevant only if they prove knowledge of the
terms, actual and not constructive, and assent to them (see p 437, letter b, post).
Appeal allowed.
Notes
As to the incorporation of conditions in contracts of carriage, see 4 Halsbury's
Laws (3rd Edn) 185, 186, para 464, and for cases on the subject, see
8 Digest (Repl) 138–140, 890–901.
Cases referred to in opinions
Freeman v Cooke (1848), 2 Exch 654, 18 LJEx 114, 12 LTOS 66, 154 ER 652,
12 Digest (Repl) 74, 414.
[1964] 1 All ER 430 at 431
Harris v Great Western Ry Co (1876), 1 QBD 515, 45 LJQB 729, 34 LT 647, 40
JP 628, 3 Digest (Repl) 91, 216.
Hood v Anchor Line (Henderson Brothers) Ltd [1918–19] All ER Rep 98, [1918]
AC 837, [1918] SC (HL) 143, 87 LJPC 156, 119 LT 684, 8 Digest (Repl)
115, 743.
L'Estrange v Graucob (F) Ltd [1934] All ER Rep 16, [1934] 2 KB 394, 103 LJKB
730, 152 LT 164, 12 Digest(Repl) 69, 395.
Parker v South Eastern Ry Co (1877), 2 CPD 416, 46 LJQB 768, 36 LT 540, 41
JP 644, 8 Digest (Repl) 141,909.
Appeal
This was an appeal by Alexander McCutcheon from an interlocutor of the
Second Division of the Court of Session (The Lord Justice-Clerk (Lord
Grant), Lord Mackintosh and Lord Strachan), dated 7 November 1962,
recalling an interlocutor of the Lord Ordinary (Lord Walker), dated 23 March
1962, decreeing in favour of the present appellant for the sum of £480
against the respondents, David MacBrayne Ltd, being the value of a motor
car which was lost through the admitted negligence of the respondents
when it was being shipped in the respondents' vessel “Lochiel” from the Isle
of Islay to the mainland. The facts appear in the opinion of Lord Reid.
I M Robertson QC and J G Milligan (both of the Scottish Bar) for the appellant.
R H McDonald QC and W I Stewart (both of the Scottish Bar) for the respondents.
Their Lordships took time for consideration.
21 January. The following opinions were delivered.
21 January 1964. The following opinions were delivered.
LORD REID.
My Lords, the appellant is a farm grieve in Islay. While on the mainland in October,
1960, he asked his brother-in-law, Mr McSporran, a farmer in Islay, to have his car
sent by the respondents to West Loch Tarbert. Mr McSporran took the car to Port
Askaig. He found in the respondents' office there the purser of their vessel
“Lochiel”, who quoted the freight for a return journey for the car. He paid the
money, obtained a receipt and delivered the car to the respondents. It was shipped
on the “Lochiel” but the vessel never reached West Loch Tarbert. She sank owing to
negligent navigation by the respondents' servants, and the car was a total loss. The
appellants sues for its value, agreed at £480.
The question is, what was the contract between the parties? The contract was an
oral one. No document was signed or changed hands until the contract was
completed. I agree with the unanimous view of the learned judges of the Court of
Sessionb that the terms of the receipt which was made out by the purser and
handed to Mr McSporran after he paid the freight cannot be regarded as terms of
the contract. So the case is not one of the familiar ticket cases where the question
is whether conditions endorsed on or referred to in a ticket or other document
handed to the consignor in making the contract are binding on the consignor. If
conditions, not mentioned when this contract was made, are to be added to or
regarded as part of this contract it must be for some reason different from those
principles which are now well settled in ticket cases. If this oral contract stands
unqualified there can be no doubt that the respondents are liable for the damage
caused by the negligence of their servants.
(1) 1962 SC 506. The freight invoice contained a printed statement, or heading, “Passengers, Passengers'
luggage, Goods and Live Stock, are carried subject to the conditions specified on the company's sailing bills,
notices and announcements”. By signing a “risk note” a consignor undertook to be bound by the respondents'
conditions, which were printed on it
b
The respondents' case is that their elaborate printed conditions form part of this
contract. If they do, then admittedly they exclude liability in this case. I think that I
can fairly summarise the evidence on this matter. The respondents
[1964] 1 All ER 430 at 432
exhibit copies of these conditions in their office, but neither the appellant nor his
agent Mr McSporran had read these notices, and I agree that they can play no part
in the decision of this case. The respondents' practice was to require consignors to
sign risk notes, which included these conditions, before accepting any goods for
carriage, but on this occasion no risk note was signed. The respondents' clerkess,
knowing that Mr McSporran was bringing the car for shipment, made out a risk note
for his signature, but when he arrived she was not there and he dealt with the
purser of the “Lochiel”, who was in the office. He asked for a return passage for the
car. The purser quoted a charge of some £6. He paid that sum and then the purser
made out and gave him a receipt which he put in his pocket without looking at it.
He then delivered the car. The purser forgot to ask him to sign the risk note. The
Lord Ordinary believed the evidence of Mr McSporran and the appellant. Mr
McSporran had consigned goods of various kinds on a number of previous
occasions. He said that sometimes he had signed a note, sometimes he had not. On
one occasion he had sent his own car. A risk note for that consignment was
produced signed by him. He had never read the risk notes signed by him. He says—
“I sort of just signed it at the time as a matter of form”. He admitted that he knew
that he was signing in connexion with some conditions, but he did not know what
they were. In particular, he did not know that he was agreeing to send the goods at
owner's risk. The appellant had consigned goods on four previous occasions. On
three of them he was acting on behalf of his employer. On the other occasion he
had sent his own car. Each time he had signed a risk note. He also admitted that he
knew that there were conditions, but said that he did not know what they were.
The respondents contend that, by reason of the knowledge thus gained by the
appellant and his agent in these previous transactions, the appellant is bound by
their conditions. But this case differs essentially from the ticket cases. There, the
carrier in making the contract hands over a document containing or referring to
conditions which he intends to be part of the contract. So if the consignor or
passenger, when accepting the document, knows or ought as a reasonable man to
know that that is the carrier's intention, he can hardly deny that the conditions are
part of the contract, or claim, in the absence of special circumstances, to be in a
better position than he would be if he had read the document. But here, in making
the contract neither party referred to, or indeed had in mind, any additional terms,
and the contract was complete and fully effective without any additional terms. If it
could be said that when making the contract Mr McSporran knew that the
respondents always required a risk note to be signed and knew that the purser was
simply forgetting to put it before him for signature, then it might be said that
neither he nor his principal could take advantage of the error of the other party of
which he was aware. But counsel frankly admitted that he could not put his case as
high as that. The only other ground on which it would seem possible to import
these conditions is that based on a course of dealing. If two parties have made a
series of similar contracts each containing certain conditions, and then they make
another without expressly referring to those conditions it may be that those
conditions ought to be implied. If the officious bystander had asked them whether
they had intended to leave out the conditions this time, both must, as honest men,
have said “of course not”. But again the facts here will not support that ground.
According to Mr McSporran, there had been no consistent course of dealing;
sometimes he was asked to sign and sometimes not. And, moreover, he did not
know what the conditions were. This time he was offered an oral contract without
any reference to conditions, and he accepted the offer in good faith.
The respondents also rely on the appellant's previous knowledge. I doubt whether it
is possible to spell out a course of dealing in his case. In all but one of the previous
cases he had been acting on behalf of his employer in sending a different kind of
goods and he did not know that the respondents always sought to insist on
excluding liability for their own negligence. So it cannot be said
[1964] 1 All ER 430 at 433
that, when he asked his agent to make a contract for him, he knew that this or,
indeed, any other special term would be included in it. He left his agent a free hand
to contract, and I see nothing to prevent him from taking advantage of the contract
which his agent in fact made.
“The judicial task is not to discover the actual intentions of each party: it is to decide what each was
reasonably entitled to conclude from the attitude of the other.“ c.
In this case I do not think that either party was reasonably bound or entitled to
conclude from the attitude of the other as known to him that these conditions were
intended by the other party to be part of this contract. I would therefore allow the
appeal and restore the interlocutor of the Lord Ordinary.
c
(2) Law of Contract by William M Gloag at p 7
LORD HODSON.
My Lords, the decision of the Second Division of the Inner House in favour of the
respondents seems to me to involve an extension of the application of the doctrine
of “course of dealing” which is not warranted by the facts of this case. Assuming in
favour of the respondents that the experience of the appellant and his brother-inlaw, who acted as his agent, would establish that on previous occasions the
respondents' “risk note” embodying conditions absolving them from the
consequences of negligence had been regularly signed, this does not establish that
the legal situation was the same on 8 October 1960, when the appellant's car was
shipped by his brother-in-law on his behalf without the risk note being signed. No
question of fraud or mistake arises, and the only question is whether in some way
the respondents can establish their immunity by incorporating in the contract of
carriage the conditions which were present on earlier transactions but absent on the
relevant occasion. The course of dealing on earlier occasions is often relevant in
determining contractual relations, but does not assist when, as here, there was on
the part of the respondents a departure from an earlier course in that they omitted
to ask the appellant's agent to sign the document by which they would have
obtained protection.
If the only question had been whether the appellant or his agent had notice of the
conditions sought to be imposed, the observations of Baggallay LJ in Parker v South
Eastern Ry Cod would be material. That case, affirmed in Hood v Anchor Line
(Henderson Brothers) Ltd, established that the appropriate questions for the jury in
a ticket case were: (1) Did the passenger know that there was printing on the
railway ticket? (2) Did he know that the ticket contained or referred to conditions?
and (3) Did the railway company do what was reasonable in the way of notifying
prospective passengers of the existence of conditions and where their terms might
be considered? It was in this connexion that Baggallay LJ after stating the liability
of the company in the conduct of their cloakroom business as bailees for reward in
the absence of a special contract constituted by the delivery and acceptance of a
ticket or otherwise, proceeded to say:
d
(1877), 2 CPD 416 at p 425
“The question then remains whether the plaintiffs were respectively aware, or ought to be treated as
aware, of the intention of the company thus to modify the effect of the ordinary contract. Now as regards
each of the plaintiffs, if at the time when he accepted the ticket, he, either by actual examination of it, or
by reason of previous experience, or from any other cause, was aware of the terms of purport or effect of
the endorsed conditions, it can hardly be doubted that he became bound by them.”
These observations do not assist the respondents. No effort was made to get the
risk note signed, or otherwise to make the conditions therein contained a term of
the contract of carriage. In short, the respondents did not seek to impose any
conditions. This is a vital distinction between this case and Parker's case,
[1964] 1 All ER 430 at 434
and a decision in favour of the respondents would involve an extension and
expansion of what was said by Baggallay LJe which seems to me to be unsupported
by authority and undesirable on principle.
e
(1877), 2 CPD at p 425
The law as it stands appears hard on the holders of tickets who, unless they are
exceptional persons, will not take pains to make an examination of a ticket offered
to them to see if any conditions are imposed. It would be scarcely tolerable to take
the further step of treating a contracting party as if he had signed and so bound
himself by the terms of a document with conditions embodied in it, when, as here,
he has done no such thing but may be supposed, having regard to his previous
experience, to have been willing to sign what was put before him if he had been
asked. The respondents seek to have the interlocutor appealed against affirmed on
two other grounds both of which were rejected in the Scottish courts. First, they
claim that the freight invoice, on which the receipt was placed acknowledging the
payment of £6 5s, was a contract document containing a sufficient reference to the
conditions and was accepted by the appellant's agent on his behalf and the
appellant was therefore bound by them. In the second place, they claim that, by
posting four copies of the conditions on the Port Askaig Pier and three copies on
board their vessel “Lochiel”, they took sufficient steps to give notice of the
conditions so as to bind the appellant. The receipt was handed over, as the Lord
Justice-Clerk pointed outf, after the contract was completed and cannot be treated
as an offer. It played no part in the formation of the contract and there was no
reason to suppose that it referred to conditions. On both these grounds I agree with
the learned judges in the Scottish courts that the respondents failed to show that
they did what was reasonably sufficient to bring to the notice of the appellant or his
agent the conditions on which they found.
(8) 1962 SC at p 514. The Lord Justice-Clerk (Lord Grant) went on to say that, having regard to the nature of
the document, it was not a document which the plaintiff's agent could reasonably have been expected to scan in
order to ascertain what conditions, if any, applied to the contract,
f
I would allow the appeal.
LORD GUEST.
My Lords, this appeal raises a novel point in regard to the exemptions which can be
claimed from a carrier's liability, namely: Whether in the absence of any contractual
document a consignor of goods can by a course of previous dealing be bound by
conditions of which he is generally aware but the specific terms of which he has no
knowledge? The judgment of the Second Division (1962 SC at pp 511–517) appears
to be based on this statement of the law by the Lord Justice-Clerk (1962 SC at p
512):
It is, I think, well settled that, if A contracts with B for the carriage by B of A's goods, in the knowledge,
gained through previous experience of similar transactions, that B carries goods subject to conditions, A is
bound by these conditions under this later contract, if it is of a similar nature to those which have gone
before, in the absence of agreement or information to the contrary. This applies even if A, knowing that
there are conditions, does not take the trouble to ascertain precisely what these conditions are. If,
however, the later transaction is carried out in different circumstances, and because of that difference A
believes that the conditions attached to the earlier transactions are not intended to apply, then the
conditions will not be held to be binding on him merely because of his previous knowledge. In each case
the question of the extent of A's knowledge is a question of fact.”
Although the Lord Justice-Clerk quotes no authority for these propositions it is, I
think, apparent from the observations of Lord Mackintosh (1962 SC at p 516) to the
same effect, which are said to result from the judgment of Baggallay LJ
[1964] 1 All ER 430 at 435
in Parker v South Eastern Ry Co, that the Lord Justice-Clerk was relying
on Parker's case. In my view Parker'scase which has been accepted as the standard
authority on what are known as “ticket condition” cases, (seeHood v Anchor Line
(Henderson Bros.) Ltd) was a different case. The observations of Baggallay LJ
((1877), 2 CPD at p 425) relied on were made with reference to the ticket cases. In
a ticket case the offer is made by the company to carry the passenger or goods on
the conditions referred to on the ticket and the passenger or consignor by
purchasing the ticket accepts the offer with the conditions thereon incorporated.
The ticket thus becomes a contractual document containing the conditions, and the
passenger is bound by the conditions. It is, in my view, not legitimate to apply the
tests of incorporation of conditions in such cases to a case like the present where
there is no contractual document. In the present case it is incorrect to assume that
the offer of carriage is made by the respondents on what are described as
“Standard Conditions”. The verbal contract is made by the consignor tendering the
goods and by the carrier accepting them. A simple contract of carriage is thereby
created. In this situation the respondents, on whom lies the onus to escape liability,
would have to show that exempting conditions have been incorporated into the
contract. They cannot do this merely by evidence of a previous course of conduct.
All that the previous dealings in the present case can show is that the appellant and
his agent knew that the previous practice of the respondents was to impose special
conditions. But knowledge on their part did not and could not by itself import
acceptance by them of these conditions, the exact terms of which they were
unaware, into a contract which was different in character from those in the previous
course of dealing. The practice of the respondents was to insist on a written
contract incorporated in the Risk Note. On the occasion in question a verbal
contract was made without reference to the conditions.
No case was referred to by the respondents in which it has been held that a carrier
in circumstances such as the present was entitled to avoid liability, and their
counsel was constrained to admit that the decision of the Second Division would be
a novel departure. It would, in my view, be undesirable to extend the doctrine of
the applicability of conditions any further than at present. I agree with the Lord
Ordinary that it is impossible to hold that Mr McSporran as agent for the appellant
agreed to any conditions. I would allow the appeal.
LORD DEVLIN.
My Lords, when a person in the Isle of Islay wishes to send goods to the mainland
he goes into the office of MacBrayne (the respondents) in Port Askaig which is
conveniently combined with the local Post Office. There he is presented with a
document headed “Conditions” containing three or four thousand words of small
print divided into twenty-seven paragraphs. Beneath them there is a space for the
sender's signature which he puts below his statement in quite legible print that he
thereby agrees to ship on the conditions stated above. The appellant, Mr
McCutcheon, described the negotiations which preceded the making of this
formidable contract in the following terms:
“Q.—Tell us about that document; how did you come to sign it? A.—You just walk in the office and the
document is filled up ready and all you have to do is to sign your name and go out. Q.—Did you ever read
the conditions? A—No. Q—Did you know what was in them? A—No.”
There are many other passages in which the appellant and his brother-in-law, Mr
McSporran, endeavour more or less successfully to appease the forensic
astonishment aroused by this statement. People shipping calves, the appellant said,
(he was dealing with an occasion when he had shipped thirty-six calves) had not
much time to give to the reading. Asked to deal with another occasion when he was
unhampered by livestock, he said that people generally just tried
[1964] 1 All ER 430 at 436
to be in time for the boat's sailing; it would, he thought, take half a day to read and
understand the conditions and then he would miss the boat. In another part of his
evidence he went so far as to say that if everybody took time to read the
document, “MacBrayne's office would be parked out the door”. Mr McSporran
evidently thought the whole matter rather academic because, as he pointed out,
there was no other way to send a car.
There came a day, 8 October 1960, when one of the respondents' vessels was
negligently sailed into a rock and sank. She had on board a car belonging to the
appellant, which he had got Mr McSporran to ship for him, and the car was a total
loss. It would be a strangely generous set of conditions in which the persistent
reader, after wading through the verbiage, could not find something to protect the
carrier against “any loss … wheresoever or whensoever occurring”; and condition 19
by itself is enough to absolve the respondents several times over for all their
negligence. It is conceded that if the form had been signed as usual, the appellant
would have had no case. But by a stroke of ill luck for the respondents it was on
this day of all days that they omitted to get Mr McSporran to sign the conditions.
What difference does that make? If it were possible for your lordships to escape
from the world of make-believe, which the law has created, into the real world in
which transactions of this sort are actually done, the answer would be short and
simple. It should make no difference whatever. This sort of document is not meant
to be read, still less to be understood. Its signature is in truth about as significant
as a handshake that marks the formal conclusion of a bargain.
Your lordships were referred to the dictum of Blackburn J in Harris v Great Western
Ry Co ((1876), 1 QBD 515 at p 530). The passage is as follows:
“And it is clear law that where there is a writing, into which the terms of any agreement are reduced, the
terms are to be regulated by that writing. And though one of the parties may not have read the writing,
yet, in general, he is bound to the other by those terms; and that, I apprehend, is on the ground that, by
assenting to the contract thus reduced to writing, he represents to the other side that he has made
himself acquainted with the contents of that writing and assents to them, and so induces the other side to
act upon that representation by entering into the contract with him, and is consequently precluded from
denying that he did make himself acquainted with those terms. But then the preclusion only exists when
the case is brought within the rule so carefully and accurately laid down by Parke, B, in delivering the
judgment of the Exchequer in Freeman v. Cooke that is, if he 'means his representation to be acted upon,
and it is acted upon accordingly: or if, whatever a man's real intentions may be, he so conduct himself
that a reasonable man would take the representation to be true, and believe that it was meant that he
should act upon it, and did act upon it as true'.”
If the ordinary law of estoppel was applicable to this case, it might well be argued
that the circumstances leave no room for any representation by the sender on
which the carrier acted. I believe that any other member of the public in the
appellant's place,—and this goes for lawyers as well as for laymen,—would have
found himself compelled to give the same sort of answers as the appellant gave;
and I doubt if any carrier who serves out documents of this type could honestly say
that he acted in the belief that the recipient had “made himself acquainted with the
contents”. But Blackburn J ((1876), 1 QBD at p 530) was dealing with an unsigned
document, a cloakroom ticket. Unless your Lordships are to disapprove the decision
of the Court of Appeal in L'Estrange v F Graucob, Ltd—and there has been no
suggestion in this case that you should,—the law is clear, without any recourse to
the doctrine of estoppel, that a signature to a contract is conclusive.
[1964] 1 All ER 430 at 437
This is a matter that is relevant to the way in which the respondents put their case.
They say that the previous dealings between themselves and the appellant, being
always on the terms of their “risk note”, as they call their written conditions, the
contract between themselves and the appellant must be deemed to import the
same conditions. In my opinion, the bare fact that there have been previous
dealings between the parties does not assist the respondents at all. The fact that a
man has made a contract in the same form ninety-nine times (let alone three or
four times which are here alleged) will not of itself affect the hundredth contract, in
which the form is not used. Previous dealings are relevant only if they prove
knowledge of the terms, actual and not constructive, and assent to them. If a term
is not expressed in a contract, there is only one other way in which it can come into
it and that is by implication. No implication can be made against a party of a term
which was unknown to him. If previous dealings show that a man knew of and
agreed to a term on ninety-nine occasions, there is a basis for saying that it can be
imported into the hundredth contract without an express statement. It may or may
not be sufficient to justify the importation,—that depends on the circumstances; but
at least by proving knowledge the essential beginning is made. Without knowledge
there is nothing.
It is for the purpose of proving knowledge that the respondents rely on the dictum
of Blackburn J ((1876), 1 QBD at p 530) which I have cited. My lords, in spite of the
great authority of Blackburn J I think that this is a dictum which some day your
lordships may have to examine more closely. It seems to me that when a party
assents to a document forming the whole or a part of his contract, he is bound by
the terms of the document, read or unread, signed or unsigned, simply because
they are in the contract; and it is unnecessary, and possibly misleading, to say that
he is bound by them because he represents to the other party that he has made
himself acquainted with them. But if there be an estoppel of this sort, its effect is in
my opinion limited to the contract in relation to which the representation is made;
and it cannot (unless of course there be something else on which the estoppel is
founded besides the mere receipt of the document) assist the other party in relation
to other transactions. The respondents in the present case have quite failed to
prove that the appellant made himself acquainted with the conditions that they had
introduced into previous dealings. He is not estopped from saying that for good
reasons or bad he signed the previous contracts without the slightest idea of what
was in them. If that is so, previous dealings are no evidence of knowledge, and so
are of little or no use to the respondents in this case. I say “of little or no use”
because the appellant did admit that he knew that there were some conditions,
though he did not know what they were. He certainly did not know that they were
conditions which exempted the respondents from liability for their own negligence,
though, I suppose, if he had thought about them at all, he would have known that
they probably exempted the respondents from the strict liability of a carrier. Most
people know that carriers exact some conditions and it does not matter in this case
whether the appellant's knowledge was general knowledge of this sort or was
derived from previous dealings. Your lordships can therefore leave previous
dealings out of it and ask yourselves simply what is the position of a man who, with
that amount of general knowledge, apparently makes a contract into which no
conditions are expressly inserted? The answer must surely be that either he does
not make a contract at all because the parties are not ad idem or he makes the
contract without the conditions. You cannot have a contract subject to
uncommunicated conditions the terms of which are known only to one side.
It is at this point, I think, that their lordships in the Second Division fell into error.
The Lord Justice-Clerk said (1962 SC at p 512):
“It is, I think, well settled that, if A contracts with B for the carriage by B of A's goods, in the knowledge,
gained through previous experience of
[1964] 1 All ER 430 at 438
similar transactions, that B carries goods subject to conditions, A is bound by these conditions under this
later contract, if it is of a similar nature to those which have gone before, in the absence of agreement or
information to the contrary. This applies even if A, knowing that there are conditions, does not take the
trouble to ascertain precisely what these conditions are.”
Similarly Lord Mackintosh said (1962 SC at p 516):
“In these circumstances, I am of the opinion, following what I understand to be the law as laid down
in Parker v. South Eastern Ry. Co., and particularly by BAGGALLAY, L.J. ((1877), 2 C. P. D at p 425), that
the [appellant], being aware by reason of his own previous experience, and of that of the agent who
happened to be acting for him in the present transaction, that goods were carried on the [respondents']
vessels subject to certain conditions, and having been given no reason to think that these conditions were
not still operative on Oct. 8, 1960, was bound by the conditions, although, as was proved to have been
the case, he had never at any time acquainted himself with their purport.”
My lords, I think, with great respect, that this is to introduce a new and
fundamentally erroneous principle into the law of contract. There can be no
conditions in any contract unless they are brought into it by expression,
incorporation or implication. They are not brought into it simply because one party
has inserted them into similar transactions in the past and has not given the other
party any reason to think that he will not want to insert them again. The error is
based, I think, on a misunderstanding of what are commonly called the ticket case;
I say this because the single authority cited for the proposition is one of the leading
ticket cases, Parker v South Eastern Ry Co. The question in these cases is whether
or not the passenger has accepted the ticket as a contractual document. If he
knows that it contains conditions of some sort, he must know that it is meant to be
contractual. If he accepts it as a contractual document, then prima facie (I am not
dealing with questions of reasonable notice) he is bound by the conditions that are
printed on it or incorporated in it by sufficient reference to some other document,
whether he had inquired about them or not. That is all that Baggallay LJ is saying
inParker v South Eastern Ry Co. In the present case there is no contractual
document at all. There is not so much as a peg on which to hang any terms that
are not expressed in the contract nor a phrase which is capable of expansion. It is
as if the appellant had been accepted as a passenger without being given a ticket at
all. There is then no special contract and the contract is the ordinary one which the
law imposes on carriers. As Baggallay LJ said ((1877), 2 CPD at p 424), “This
clearly would be the nature of the contract if no ticket were delivered, as
occasionally happens”.
If a man is given a blank ticket without conditions or any reference to them, even if
he knows in detail what the conditions usually exacted are, he is not, in the
absence of any allegation of fraud or of that sort of mistake for which the law gives
relief, bound by such conditions. It may seem a narrow and artificial line that
divides a ticket that is blank on the back from one that says “For conditions see
time-tables”, or something of that sort, that has been held to be enough notice. I
agree that it is an artificial line and one that has little relevance to every day
conditions. It may be beyond your lordships' power to make the artificial line more
natural: but at least you can see that it is drawn fairly for both sides, and that there
is not one law for individuals and another for organisations that can issue printed
documents. If the respondents had remembered to issue a risk note in this case,
they would have invited your lordships to give a curt answer to any complaint by
the appellant. He might say that the terms were unfair and unreasonable, that he
had never voluntarily agreed to them, that it was impossible to read or understand
them and that anyway, if he had tried to negotiate any change, the respondents
would not have listened to him. The respondents would
[1964] 1 All ER 430 at 439
expect him to be told that he had made his contract and must abide by it. Now the
boot is on the other foot. It is just as legitimate, but also just as vain, for the
respondents to say that it was only a slip on their part, that it is unfair and
unreasonable of the appellant to take advantage of it and that he knew perfectly
well that they never carried goods except on conditions. The law must give the
same answer: they must abide by the contract which they made. What is sauce for
the goose is sauce for the gander. It will remain unpalatable sauce for both animals
until the legislature, if the courts cannot do it, intervenes to secure that when
contracts are made in circumstances in which there is no scope for free negotiation
of the terms, they are made on terms that are clear, fair and reasonable and
settled independently as such. That is what Parliament has done in the case of
carriage of goods by rail and on the high seas.
I have now given my opinion on the main point in the case and the one on which
the respondents succeeded below. On the other points on which the respondents
failed below and which they put forward again as grounds for dismissing the claim,
I have nothing to add to what your lordships have already said. In my opinion the
appeal should be allowed.
LORD PEARCE.
My Lords, at common law the respondents had a duty of care to the appellant and a
liability for negligence, unless by some special contract they have excluded that
duty or liability. Usually such a special contract is achieved by the carrier producing
a written contract which the customer signs, or by the carrier printing and
displaying regulations to which reference is made on the ticket which the customer
buys. In such a case the customer is bound by the conditions embodied in the
written contract, or in the printed conditions to which the ticket refers, even if he
does not read them and does not know their import, always provided that the
carrier shows that he has taken reasonable steps to bring the conditions to the
customer's notice (Parker v South Eastern Ry Co; Hood v Anchor Line (Henderson
Bros) Ltd, per Lord Dunedin ([1918–19] All ER Rep at p 103; [1918] AC at p 847)).
In the present case, however, there was no written contract or ticket. Therefore,
the foundation on which the ticket cases rests is absent.
A special contract may also be made orally in express terms which set out the
exclusion of liability or incorporate by reference conditions that do so. But no such
express oral contract is suggested here. It follows that the respondents must seek
to rely on some implied special contract. In this they are hampered by the fact that
the common law already implies a contract between carrier and customer (in
default of other agreement) to the effect that a carrier will be entitled to a
reasonable reward and that he must carry the goods with care and will be liable for
negligence. No special contract can be inferred from the basic facts that the
appellant's agent handed over the car for carriage and paid to the respondents a
sum for the freight. For the normal inference is that an ordinary common law
contract for carriage of goods was intended. What other facts, then, can the
respondents adduce which will show that the normal inference is erroneous and
that in truth a special contract should be implied?
The respondents rely on the course of dealing. But they are seeking to establish an
oral contract by a course of dealing which always insisted on a written contract. It
is the consistency of a course of conduct which gives rise to the implication that in
similar circumstances a similar contractual result will follow. When the conduct
is notconsistent, there is no reason why it should still produce an invariable
contractual result. The respondents having previously offered a written contract, on
this occasion offered an oral one. The appellant's agent duly paid the freight for
which he was asked and accepted the oral contract thus offered. This raises no
implication that the conditions of the oral contract must be the
[1964] 1 All ER 430 at 440
same as the conditions of the written contract would have been had the
respondents proferred one. Recourse is then sought to knowledge and intention.
This is not a case where there was any bad faith on the part of the appellant or his
agent. Had the appellant's agent snatched at an offer that he knew was not
intended, or deliberately taken advantage of the respondents' omission to proffer
their usual printed form for his signature, the situation would be different and other
considerations would apply. But neither the appellant nor his agent gave any
thought to conditions. Nor had they any knowledge that cl 11 would contain,
wrapped in thirty lines of small print and in language intelligible only to a lawyer or
a person of education and perspicacity, a total exclusion of liability for almost every
conceivable act of the respondents that might damage the appellant's goods.
The respondents never intended to offer or make any oral contract on the terms of
the printed conditions. They intended to offer a written contract and by mistake
they offered an oral one. The appellant was unaware of the mistake. He accepted
an oral contract but he never intended to accept an oral contract on the printed
conditions. He knew that he usually had to sign a form which he supposed
contained some conditions. When he was offered an oral contract without
conditions he accepted with no thought about its terms. Why should such intentions
or knowledge on the part of the contracting parties lead the court to create a
contract which neither intended? The furthest to which this argument of the
respondents could lead is to the conclusion that the parties were never ad idem; in
which case there was no special contract and the common law contract prevails.
Some reliance was placed on the fact that the appellant and his agent were in no
wise misled nor suffered from the absence of the written form, since they would not
have read it or paid any attention to it in any event. This argument has a cynical
flavour. It really amounts to saying that because the appellant would have been
bound by a harsh condition, of which he did not know, if the respondents had taken
the proper legal steps, he should be likewise bound when they neglected to take
those steps. The law inflicts some hardship on ignorant or careless plaintiffs, who
accept a ticket or sign a printed form, in that it holds them bound by printed
conditions which they have not read and of which they know nothing. The reasons
for this are given in Parker v South Eastern Ry Co. If the respondents are to have
the benefit of the reasoning in Parker's case they must take the necessary steps. To
decide in the respondents' favour on the facts of this case would be a further
extension of the protection afforded to defendants by the ticket cases. Such an
extension seems to me very undesirable.
With all respects to the contrary view of the Inner House, I agree with the
reasoning and conclusions of the learned Lord Ordinary. I would therefore allow the
appeal.
Appeal allowed.
[HOUSE OF LORDS.]
RICHARDSON, SPENCE & CO. AND THE "LORD GOUGH" STEAMSHIP
COMPANY, LIMITED APPELLANTS; AND MINNIE ROWNTREE RESPONDENT.
1894 March 2.
LORD HERSCHELL L.C., LORD WATSON, LORD ASHBOURNE, LORD MORRIS
Carrier - Contract to Carry Passenger - Passenger - Ticket - Conditions on Ticket not read by
Passenger - Liability of Carrier - Evidence for Jury.
The respondent paid the appellants passage money for a voyage on their steamer, and received a
ticket folded up so that no writing was visible unless she opened it. Upon the ticket were the
words: "It is mutually agreed for the consideration aforesaid that this ticket is issued and
accepted upon the following conditions." One of the conditions was: "The company is not under
any circumstances liable to an amount exceeding 100 dollars for loss of or injury to the
passenger or his luggage." The respondent having brought an action against the appellants to
recover damages exceeding 100 dollars for personal injuries, and the above facts having been
proved, the jury found that she knew there was writing or printing on the ticket, but did not know
that the writing or printing
[1894] A.C. 217 Page 218
contained conditions relating to the terms of the contract of carriage, and that the appellants did
not do what was reasonably sufficient to give her notice of the conditions, and they found a
verdict for her for £100:Held, affirming the judgment of the Court of Appeal, that there was evidence upon which the
jury could properly find as they did, and that Judgment was properly entered for the plaintiff
upon those findings.
APPEAL from an order of the Court of Appeal (Lord Esher M.R., Lindley and Lopes
L.JJ.(1) dismissing an application by the appellants to set aside a verdict and judgment
for the respondent for £100 in an action brought by the respondent against the appellants
and tried before Bruce J. and a special jury. The application was made on the ground
that there was no evidence in support of the findings of the jury, and that as well upon
the facts proved as upon the findings of the jury the judge ought to have directed a
verdict and judgment for the defendants. The facts are stated in the judgment of Lord
Herschell L.C.
Pickford Q.C. (Bigham Q.C. with him) for the appellants:The conditions on the ticket formed part of the contract. The case is covered by Burke v. South
Eastern Railway(2), where the plaintiff was held bound by the conditions in a book of coupons
forming a railway ticket. The respondent relies on Parker v. South Eastern Railway (3), where
the action was for damages for loss of articles deposited in a cloak-room. In the Court of Appeal
Mellish and Baggallay L.JJ. thought there was no obligation to read the conditions on the ticket,
whilst Bramwell L.J. held that there was. Bruce J. here left it to the jury, as inParker's Case (3).
[LORD WATSON referred to Henderson v. Stevenson (4).]
That case was different inasmuch as the conditions were on the back, whereas in this instance
they were on the face of the ticket and must have been seen. But even in Parker v. South Eastern
Railway (3) Mellish L.J. points out on p. 422 that there are transactions in which a person would
be bound by the conditions inscribed on a paper constituting a contract, even
(1)
Not reported.
(2)
5 C. P. D. 1.
(3)
1 C. P. D. 618; 2 C. P. D. 416.
(4)
Law Rep. 2 H. L., Sc. 470.
[1894] A.C. 217 Page 219
though he should not have read them. Watkins v. Rymill (1) is strongly in the appellants' favour,
and decided that a plaintiff who delivered a wagonette for sale by the defendant was bound by
the conditions on the receipt whether he read them or not. Burke v. South Eastern Railway (2)
was carefully examined by the Court (Hawkins, Stephen and Watkin Williams, JJ.)
Joseph Walton Q.C. and Collingwood Hope for the respondent were not heard.
LORD HERSCHELL L.C. :My Lords, the only question that arose on the trial of this action was whether the plaintiff was
bound by certain conditions limiting the liability of the defendants, who had engaged to carry her
on their steamer from Philadelphia to Liverpool. The plaintiff paid her passage-money and
received a ticket from the defendants. On that ticket undoubtedly there were a great number of
conditions detailed. The ticket began by stating that each passenger would be required to provide
bedding and eating utensils, and then it continued: "It is mutually agreed for the consideration
aforesaid that this ticket is issued and accepted upon the following conditions." Then follow a
number of conditions, beginning under the letter (a) and going down to the letter (i); the
condition in question was one under letter (d): "The company is not under any circumstances
liable to an amount exceeding $100 for loss of or injury to the passenger or his luggage."
My Lords, three questions were left to the jury: "(1.) Did the plaintiff know that there was
writing or printing on the ticket?" That question they answered in the affirmative. "(2.) Did she
know that the writing or printing on the ticket contained conditions relating to the terms of the
contract of carriage" That they answered in the negative. "(3.) Did the defendants do what was
reasonably sufficient to give the plaintiff notice of the conditions?" That they answered in the
negative also.
Now, those are questions which the majority of the Court of
(1)
10 Q. B. D. 178.
(2)
5 C. P. D. 1.
[1894] A.C. 217 Page 220
Appeal, in the case of Parker v. South Eastern Railway Company (1), pointed out, by their
judgment, ought to be left to the jury. That was a case, in its broad features, very similar to this,
inasmuch as the plaintiff there had deposited some luggage at the luggage office of one of the
railway companies, and received in return for the deposit of the luggage a ticket on which there
was printed "See back," and on the back were certain conditions by which it was sought to limit
the liability of the company. The majority of the Court of Appeal held that they could not say, as
matter of law, that by reason of taking that ticket in exchange for the goods the plaintiff was
bound by the conditions; that there were questions to be determined by the jury, and that upon
their determination would depend the liability of the defendants.
My Lords, the only question that now comes before this House is whether there was any
evidence to go the jury upon which they could properly find the answer that they did to the last
two questions. Now, what are the facts, and the only facts, bearing upon this question which
were proved before the jury? That the plaintiff paid the money for her passage for the voyage in
question, and that she received this ticket handed to her folded up by the ticket clerk, so that no
writing was visible unless she opened and read it. There are no facts beyond those. Nothing was
said to draw her attention to the fact that this ticket contained any conditions; and the argument
of the appellants is, and must be, this, that where there are no facts beyond those which I have
stated the defendants are entitled, as a matter of law, to say that the plaintiff is bound by those
conditions. That, my Lords, seems to me to be absolutely in the teeth of the judgment of the
Court of Appeal in the case of Parker v.South Eastern Railway Company (1), with which I
entirely agree; nor does it seem to me consistent with the case of Henderson v. Stevenson (2) in
your Lordships' House when that case is carefully considered.
I therefore move your Lordships that this appeal be dismissed with costs.
(1)
1 C. P. D. 618; 2 C. P. D. 416.
(2)
Law Rep. 2 H. L., Sc. 470.
[1894] A.C. 217 Page 221
LORD WATSON :My Lords, I concur. It appears to me that there was ample material for a finding by the jury on
all these three issues, and I am at present inclined to think that they found rightly upon them all.
LORD ASHBOURNE :My Lords, I also quite concur. The ticket in question in this case was for a steerage passenger - a
class of people of the humblest description, many of whom have little education and some of
them none. I think, having regard to the facts here, the smallness of the type in which the alleged
conditions were printed, the absence of any calling of attention to the alleged conditions, and the
stamping in red ink across them, there was quite sufficient evidence to justify the learned judge
in letting the case go to the jury.
LORD MORRIS :My Lords, I concur.
Order appealed from affirmed and appeal dismissed with costs.
4 pages
[1986] 1 MLJ 330
MALAYSIAN AIRLINE SYSTEM BHD v MALINI NATHAN & ANOR
ACJ KUALA LUMPUR
WAN HAMZAH SCJ
CIVIL APPEAL NO 43 OF 1982
5 April 1985
Contract — Flight ticket booked for 1st plaintiff — No seat for 1st plaintiff on
scheduled flight — Claim for damages — Whether carrier liable — Condition 9 of
Conditions of Contract
Tort — Negligence — Booking in name of "Malini Nathan" — Ticket in name of
"Nathan Malini" — Rejection of name Nathan Malini by defendant's computer — No
seat on scheduled flight — Claim of damages — Whether defendant liable —
Carriage by Air Act 1974 — Warsaw Convention, arts. 3(2) & 19
Carriers — Air Carriage — Conditions of contract — Carriage by Air Act, 1974 —
Warsaw Convention, arts. 3(2) & 19
The 1st respondent in 1976, then a 14-year-old pupil in England, was booked to
return to Kuala Lumpur for a return ticket for her to depart from London Heathrow
Airport by the defendant's flight No. MH 893 on March 26, to arrive at Kuala
Lumpur on the 27th. At the London Airport, the plaintiff was told by the defendant's
representative that there was no seat for her on MH 893. She was offered
accommodation in a London hotel and the defendant eventually arranged for her to
fly by BA930 on the 27th and she arrived at Kuala Lumpur on the 28th. The
solicitors for the 2nd plaintiff wrote to the defendant to complain about the incident
and threatened to sue for damages for negligence. The defendant denied liability
and hence the plaintiff brought this action, alleging breach of contract and
negligence in that, inter alia, the defendant fed the wrong information "Nathan
Malini" into the computer and failed to make out that "Malini Nathan" and "Nathan
Malini" was the same person, i.e. the 1st plaintiff. The plaintiffs claimed they had
suffered loss and damage and the 2nd plaintiff suffered nervous shock and required
medical treatment. The plaintiffs relied on Article 19 of the Warsaw Convention as
amended at the Hague, 1955 (applicable to Malaysia from December 19, 1974 by
the Carriage by Air Act 1974) reading as follows: "The carrier is liable for damage
occasioned by delay in the carriage by air of passengers, baggage or cargo." The
defendant denied liability. The Sessions Court gave judgment in the sum of $1,500
for the 1st plaintiff and $500 for the 2nd plaintiff, with an interest at 6% p.a. and
costs.
The defendant appealed to the High Court. The principal issues were whether the
defendant had breached the contract of carriage and whether it was negligent as
alleged. The defendant relied on Condition No. 9 under the Conditions of Contract
printed on page 2 of the ticket reading as follows:
"Carrier undertakes to use its best efforts to carry the passenger and baggage with reasonable dispatch.
Times shown in timetables or elsewhere are not guaranteed and form no part of this contract. Carrier may
without notice substitute alternate carriers or aircraft, and may alter or omit stopping places shown on the
ticket in case of necessity.
1986 1 MLJ 330 at 331
Schedules are subject to change without notice. Carrier assumes no responsibility for making
connections."
Held, allowing the appeal:

(1)
the defendant's decision not to carry the 1st plaintiff on flight MH893 on
March 26 was fully covered by condition No. 9. Therefore there was no
breach of contract by the defendant. Confirmation or representation by it was
made subject to condition No. 9 and it cannot be said that such confirmation
or representation was made falsely or recklessly;

(2)
the booking was made in Kuala Lumpur in the name of "Malini Nathan" and
the ticket was issued at request made in London in the name of "Nathan
Malini", which the defendant's computer rejected. Even if it was true that the
1st plaintiff gave her name as Malini Nathan at the checking-in counter and
the representative of the defendant failed to manipulate the computer
accordingly, the defendant would still be absolved from liability for
negligence in view of condition No. 9;

(3)
article 19 of the Warsaw Convention should be read subject to article 3(2).
One of the conditions stated therein was Condition No. 9. The appealed is
allowed with costs here and below.
CIVIL APPEAL
Chin Yew Meng (Yahya bin Abdul Rahman with him) for the appellant.
Joginder Singh for the respondents.
WAN HAMZAH SCJ
This is an appeal against the decision of the President of the Sessions Court in
Kuala Lumpur Special Sessions Court Civil Action No. 2552/1977. In 1976 the first
plaintiff in that action was attending school at Cheltenham in England. Her parents
were living in Kuala Lumpur. She was then 14 years old. In that year she was going
to have school holidays beginning in March and she was to come back to Kuala
Lumpur to spend the holidays with her parents. Her mother (the second plaintiff)
booked at Kuala Lumpur for a return ticket for her to depart from Heathrow Airport
London for Kuala Lumpur by Malaysian Airline System flight No. MH 893 on March
26, and to arrive in Kuala Lumpur on the 27th. On 26th the first plaintiff went to
Heathrow Airport London to check in at the appointed time. At the Airport she was
told by the M.A.S. representative that there was no seat for her on flight No. MH
893. The plane departed and she was left behind. She was off-loaded together with
three other children. M.A.S. representative offered to her accommodation at
Sheraton Hotel, London, while arrangement was made for her departure to Kuala
Lumpur by the next available carrier. But she preferred to go and stay with one Dr.
Syed Mahmood and his wife who were then at the Airport to send off their children.
At Dr. Syed Mahmood's house the first plaintiff spoke on the phone to her parents
in Kuala Lumpur and informed them of what had happened. Her parents agreed
that she should take the next available British Airways flight the next day.
Eventually by arrangement made by M.A.S. the first plaintiff left London on the
27th by British Airways flight No. BA 930 and arrived in Kuala Lumpur on the 28th.
On April 10, 1976 solicitors for the second plaintiff wrote to the General Manager of
the Malaysian Airline System Berhad (the defendant) in Kuala Lumpur to complain
about the incident in London, and to inform about what happened to the second
plaintiff at Kuala Lumpur as a result of the incident as follows:
"While all this transpired in London, our client and his wife were not kept informed by MAS of the change
in flight. It was only after several hours of distress and anxiety that they were informed by a direct phone
call from their daughter on her own initiative. This phone call was received at about midnight on 26/3/76
informing her parents of the delay. Mrs. Nathan was terribly upset and worried for the safety of her
daughter in the care of person or persons unknown to her and she did not sleep the whole night. It upset
her so badly that she did not eat for the whole of the following day that is March 27.
Then at about 8 p.m. on March 27 Mrs. Nathan was found missing from home. Dr. Nathan contacted all
his friends to locate her whereabouts but in vain. At about midnight he rang up the hospitals and hotels in
town. At 3 a.m. on the 28th he rang up the police station at Jalan Travers and at 3.30 a.m. he went to the
police station and met Inspector Del Akbar. The mobile police was alerted but till morning they still drew a
blank as to her whereabouts.
At about 7 a.m. that morning, when Dr. Nathan was walking around his area in search for his wife, a boy
approached him to say that there was a lady sleeping in an unoccupied house in the vicinity. The lady
turned out to be Mrs. Nathan who appeared to be suffering from amnesia and shock. Dr. Nathan then sent
her to a doctor for treatment and care as he was himself bordering on a physical and nervous breakdown
after the traumatic events which took place.
You will no doubt appreciate that both parents and child suffered much distress and anguish as a result of
your neglect."
The solicitors stated further that they had been instructed to sue for damages for
the defendant's negligence, and enquired whether the defendant wished to give an
explanation and whether the defendant was prepared to offer any reasonable
compensation. The defendant Company sent a reply to the solicitors dated June 11,
1976, denying liability. Hence the plaintiffs brought the action contending as
follows:
(1) the defendant had confirmed that the first plaintiff had
1986 1 MLJ 330 at 332
a definite and certain booking of a seat on the MAS flight No. MH 893 but the defendant in breach
of the warranty and/or contractual obligation failed and/or refused to carry the first plaintiff on
the said flight;
(2) in the alternative, the representation by the defendant that the first plaintiff had a definite
and certain booking of a seat on the said flight was made fraudulently, in that the defendant
knew that it was false, or was made recklessly not caring whether it was true or false;
(3) in the further alternative, the defendant's statement confirming a definite and certain booking
of a seat on the said flight for the first plaintiff was false and was made recklessly by the
defendant either well knowing that it would not be honoured or without caring whether or not it
would be honoured;
(4) in the further alternative the failure and/or refusal of the defendant to carry the first plaintiff
on the said flight was due to the defendant's negligence, particulars of which were stated as
follows:
(a) not checking their passenger list well in advance of March 26, 1976 to ensure that
the first plaintiff would have a definite seat on the said flight;
(b) confirming that the first plaintiff had a definite and certain booking of a seat on the
said flight when there was none available;
(c) overbooking passengers on the said flight;
(d) refusing to carry the first plaintiff in preference to other adult passengers;
(e) feeding wrong information – "Nathan Malini" into the computer;
(f) failed to make out that "Malini Nathan" and "Nathan Malini" was the same person,
namely the first plaintiff.
It was further contended in the Statement of Claim that by reason of the matters
complained therein the plaintiffs had suffered loss and damage, and that on hearing
of the first plaintiff's plight over the telephone the second plaintiff suffered nervous
shock and required medical treatment and thereby suffered loss and damage.
Particulars of the nervous shock were stated.
The defendant denied liability. With reference to the various particulars of the
alleged negligence the defendant pleaded as follows:
Parriculars
(a): This was denied.
(b): This was denied.
Particulars
(c): It was a normal practice of airlines to overbook during peak periods.
(d): This was caused by or contributed to by the first plaintiff's negligence in that she had
mislaid her ticket.
The confusion was caused by the plaintiffs' agent, MPPM Travel Secretarial London,
who had requested the defendant to issue the ticket in the name of "Nathan Malini"
instead of "Malini Nathan" as she was booked in Kuala Lumpur, and the
reservations card being reflected in the name of "Malini Nathan" the computer kept
rejecting the name "Nathan Malini". This would not have arisen if the defendant were
not misled by the plaintiffs' said agent.
(e) and (f):
The defendant also pleaded as follows:
(i) even if it was true that the defendant had confirmed a definite and certain booking of a seat
on the said flight for the first plaintiff (which was denied), no contract of carriage could be made
until the first plaintiff presented her ticket at the London Airport for the purpose of being allotted
a seat on the said flight; and
(ii) even if the defendant has warranted that the first plaintiff had a definite and certain booking
of a seat on the said flight (which was denied), the defendant contended that at the London
Airport the first plaintiff was informed by the defendant that she would not be carried on the said
flight and the refusal to carry the first plaintiff had prevented the making of a contract of
carriage;
(iii) if a contract of carriage was made (which was denied), the conditions of contract on page 2
of the ticket and the important notices on pages 3, 5 and 6 would apply and the defendant relied
on all the conditions of contract. The defendant also relied on the General Conditions of Carriage;
(iv) the first plaintiff had no remedy at law as she was provided with alternative transportation by
the defendant, and her acceptance and use of rerouted ticket provided by the defendant
constituted liquidated damages and she was barred from seeking further damages;
(v) the loss and damage alleged to have been suffered by the second plaintiff (which was denied)
were too remote.
The President of the Sessions Court gave judgment in the sums of $1,500 for the
first plaintiff and $500 for the second plaintiff, with interest at 6% per annum and
costs. The defendant appeals against the judgment.
I would like to deal first with the defendant's contention (iii) above. Condition No. 9
under the Conditions of Contract printed on page 2 of the ticket is in the following
terms:
"Carrier undertakes to use its best efforts to carry the passenger and baggage with reasonable dispatch.
Times shown in timetables or elsewhere are not guaranteed and form no part of this contract. Carrier may
without notice substitute alternate carriers or aircraft, and may alter or omit stopping places shown on the
ticket in case of necessity. Schedules are subject to change without notice. Carrier assumes no
responsibility for making connections."
In my judgment the defendant's decision not to carry the first plaintiff on flight No.
MH 893 on
1986 1 MLJ 330 at 333
March 26, was fully covered by condition No. 9. What the defendant did or omitted
to do was in accordance with condition No. 9, and therefore there was no breach of
contract on the part of the defendant. The plaintiffs ought to have known condition
No. 9 and they were presumed to have known it as it was printed on the ticket.
Even if it was true that the defendant had confirmed or represented to the plaintiffs
that the first plaintiff had a definite and certain booking of a seat on that flight, it
must be understood that such confirmation or representation was made subject to
condition No. 9. Because it was made subject to condition No. 9 it cannot be said
that such confirmation or representation was made falsely or recklessly.
I have disposed of the plaintiffs' contentions (1), (2) and (3). I shall now consider
their contention (4). As regards the particulars of negligence in contention (4) –
(a) there was no evidence to show that the defendant did not check the passenger list in
advance;
(b) as already stated, if there was confirmation that the first plaintiff had a definite and certain
booking of seat such confirmation was made subject to condition No. 9;
(c) in view of condition No. 9 and the fact that all intending passengers were presumed to have
notice of condition No. 9, it would not be an act of negligence on the part of the defendant to
allow overbooking;
(d) in view of condition No. 9, it would not be an act of negligence on the part of the defendant to
carry other passengers in reference to the first plaintiff.
As regards the particulars of negligence (e) and (f), reference has already been
made to the defendant's allegation in the Statement of Defence that when booking
was made in Kuala Lumpur it was made in the name of "Malini Nathan". There
was no Reply filed by the plaintiffs to deny this allegation. Therefore it must be
taken as an undisputed fact that the booking was made in Kuala Lumpur in the
name of "Malini Nathan". The letter dated March 17, 1976 (at page 12 in the
Agreed Bundle of Documents) was a request from MPPM Travel Secretarial, London,
to MAS for the issue of tickets for eight students, one of whom was "Miss Nathan,
Malini". In the absence of other evidence to the contrary it should be accepted that
pursuant to the request a ticket was issued in the name of Miss Nathan, Malini. As
already stated, the defendant alleged in the Statement of Defence that the
computer kept rejecting the name Nathan Malini. If the ticket was produced at the
checking-in counter, naturally the name on the ticket, i.e. Nathan Malini, would be
fed into the computer; and in view of the name Malini Nathan being recorded in
the Kuala Lumpur reservation, the computer would naturally reject. But when
giving evidence the first plaintiff stated that she gave her name as Malini
Nathan, at the checking-in counter, implying that the name Malini Nathan should
have been fed into the computer by the MAS representative and that if this was
done the computer would confirm that there was a seat reserved for the first
plaintiff on the flight. But the President in his Judgment did not state whether he
accepted the first plaintiff's allegation that she gave the nameMalini Nathan at the
checking-in counter. In fact the President did not deal at all with the issue raised by
the plaintiffs in particulars of negligence (e) and (f) and did not make any specific
finding on that issue. Unless there is a specific finding by the President that he
accepted that allegation I do not think that there can be a proper finding of
negligence under particulars (e) and (f). Moreover, even if it was true that the first
plaintiff gave her name as Malini Nathan at the checking-in counter and the MAS
representative failed to manipulate the computer accordingly, the defendant would
still be absolved from liability for negligence in view of the condition No. 9.
The President of the Sessions Court found that there was a contract between the
parties and that the defendant had breached the contract by failing to carry the first
plaintiff on flight No. MH 893. In his judgment he stated: "To my mind, to confirm a
seat on flight is a definite statement of fact whatever is stated in the ticket". In my
view the confirmation of a seat must be understood to be subject to the said
condition No. 9. No claim can succeed on the basis of confirmation of a seat,
especially in the present case where evidence shows that all confirmations were
made before the issue of the ticket. According to the evidence of the second
plaintiff the last confirmation was made two weeks before the scheduled flight on
March 26, whereas the letter dated March 17 at page 12 of the Agreed Bundle of
Documents shows that the ticket must have been issued less than ten days before
the scheduled flight. The ticket with the condition No. 9 printed on it must be taken
to have varied all confirmations made before it was issued.
In his judgment the President did not consider or make a finding on the issue
whether at Heathrow Airport the first plaintiff produced her ticket to the MAS
representative. When giving evidence the first plaintiff did not say categorically that
her ticket was produced. She stated:
1986 1 MLJ 330 at 334
"My ticket was brought by one of Dr. Mahmood's children by mistake. Dr. Mahmood's children got seats in
the plane. In Kuala Lumpur M.A.S. made out a new return ticket for me… I have got my ticket back at
London Airport."
The Warsaw Convention as amended at The Hague, 1955 has been made applicable
to Malaysia as from December 19, 1974 by the Carriage by Air Act 1974 of
Malaysia. The plaintiff purported to rely on Article 19 of the Convention which is in
the following terms:
"The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or
cargo."
In my judgment Article 19 applies in a case where under the contract of carriage
the time for the carriage is fixed. I have already shown that in the present case
time for the carriage was not fixed in view of Condition No. 9 printed on the ticket,
which provides, inter alia, "Times shown in timetables or elsewhere are not
guaranteed and form no part of this contract." Article 19 should be read subject to
Article 3(2) which provides –
"The passenger ticket shall constitute prima facie evidence of the conclusion and conditions of the contract
of carriage."
I emphasize the word "conditions" in order to lay stress on the point that the
carriage is subject to the conditions stated in the ticket. In the present case one of
those conditions was Condition No. 9.
The appeal is allowed and the President's judgment is set aside. The plaintiff's
claims are dismissed. Costs to the appellant (the defendant) here and in the court
below.
Appeal allowed.
16 pages
[1993] MLJU 130
GHEE SENG MOTOR v LING SIE TING
HIGH COURT (KUCHING)
ABDUL KADIR SULAIMAN J
CIVIL APPEAL NO KG–14 OF 1992(II)
28 July 1993
Peter Yip (Yip & Co Advocates) for the appellant/plaintiff.
John Shek (John Shek & Co Advocates) for the respondent/defendant.
JUDGMENT
1. This is an appeal against the whole of the decision of the learned Magistrate
given on the 19th day of February 1992 dismissing the claim of the Appellant for
damages for breach of contract and negligence. Altogether eight grounds were put
up by the Appellant. During the hearing the fifth ground was abandoned leaving
only seven grounds. From the seven grounds, five were on the issue that the
decision of the learned Magistrate is against the weight of the evidence, one on the
failure to invoke the doctrine of res ipsa loquitor and the other on the holding that
the contract between the Appellant and the Respondent has been frustrated due to
an inevitable accident.
[1993] MLJU 130 at 2
2. In her grounds of judgment the learned Magistrate gave the following reasons
for dismissing the claim of the Plaintiff:

(a)
the Defendant had exercised due care and due diligence and therefore, there
was no negligence on the part of the Defendant;

(b)
the contract between the Plaintiff and the Defendant has been frustrated as it
became incapable of being performed that arise without the fault of the
Defendant. It is an inevitable accident as the Defendant has proved
something happened over which he had no control and it could not have
been avoided by the exercise of care in the circumstances.
3. The decision of the learned Magistrate was essentially on the finding of facts
based on the evidence presented to her at the hearing. It is settled law that on the
issue of facts an appellate court is slow in disturbing the finding. This is so because
the advantages available to the lower courts in assessing the value of the testimony
of witnesses, their demeanour and the impression made by them upon the trial
Magistrates are denied to the appellate court. However the appellate court is
entitled to reverse such finding if it is convinced that the finding of such facts by the
lower court is wrong or against the weight of the evidence adduced. Abdul Hamid FJ
(as he then was) in Siti Aisha binti Ibrahim v. Goh Cheng Hwi (1982) 2 MLJ 124
[1993] MLJU 130 at 3
FC said at page 126:
"..... an appellate court may be justified in coming to a different conclusion if there is valid reason to think
that the trial Judge had not taken proper advantage of his having seen and heard the witnesses".
In Tan Sri Khoo Teck Puat v. Plenitude Holdings Sdn. Bhd. (1993) 1 MLJ 113 SC at
page 117 Gun Chit Tuan CJ (Malaya) has this to say:
"As regards the principles on which an appellate court may interfere with a lower court's findings of fact
we would refer to the following passage in the judgment of Lord Guest in Tay Kheng Hong v. Heap Moh
Steamship Co. Ltd. in which his Lordship stated as follows:
'There is a heavy onus on a party who seeks to displace the conclusion formed by the trial judge
on questions of fact. The principles upon which an appellate court should act in reviewing the
decision of a judge of first instance were stated by Lord Thankerton in Watt or Thomas v. Thomas
(1947) 1 All ER 582 at p 587:
i. Where a question of fact has been tried by a judge without a jury, and there is no question of
misdirection of himself by the judge, an appellate court which is disposed to come to a different
conclusion on the printed evidence, should not do so unless it is satisfied that any advantage
enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be
sufficient to explain or justify the trial judge's conclusion.
ii.The appellate court may take the view that, without having seen or heard the witnesses, it is
not in a position to come to any satisfactory conclusion on the printed evidence.
iii. The appellate court, either because the reasons given by the trial judge are not satisfactory,
or because it mistakably so appears from the evidence, may be
[1993] MLJU 130 at 4
satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and
the matter will then become at large for the appellate court.
Later his Lordship quoted with approval a passage from the speech of Lord Shaw in Clarke v. Edinburgh &
District Tramways Co Ltd (1919) SC (HL) 35 at p 37:
'In my opinion, the duty of an appellate court in those circumstances is for each judge of it to put
to himself, as I now do in this case, the question, Am I – who sit here without those advantages,
sometimes broad and sometimes subtle, which are the privilege of the judge who heard and tried
the case – in a position, not having those privileges, to come to a clear conclusion that the judge
who had them was plainly wrong? If I cannot be satisfied in my own mind that the judge with
those privileges was plainly wrong, then it appears to me to be my duty to defer to his
judgment.'"
Applying the above principles to the present appeal, will the Plaintiff succeed in
urging upon me to upset the finding of the learned Magistrate in the Court below
who enjoyed the advantage of having seen and heard the witnesses, with that of
my own based on the printed evidence?
4. The background facts leading to this action by the Plaintiff are these. The
Defendant is a common carrier. On the 29th day of September 1988 the Plaintiff
through his servant handed over a Toyota motor car to the servant of the
Defendant for shipment to the consignee, Lian Soon Motor in Limbang, Sarawak.
The Defendant's vessel M.V. Tung Hin carrying the Plaintiff's motor car among its
cargo left Kuching enroute to Limbang on the 30th day of September 1988. When
the vessel reached Tg. Sirik the master of the vessel noticed that the vessel was
tilting 10
[1993] MLJU 130 at 5
degrees to port. Faced with the danger that the vessel might capsize, the master
diverted the vessel to Sibu, Sarawak instead of proceeding to Limbang. The vessel
arrived at Sibu Wharf also known as Burung Apu Wharf or Pulau Babi Wharf on the
2nd day of October 1988 at about 3.30 a.m. At about 5.30 a.m. that morning the
vessel sank together with the Plaintiff's motor car and was never recovered. By a
Summons dated the 21st day of March 1989 and the Statement of Claim
subsequently amended on the 5th day of April 1990, the Plaintiff claims against the
Defendant for breach of duty under the contract and alternatively for negligence in
the carriage, care and charge of the motor car by reason whereof the same was
sunk with the vessel at Sibu Wharf. The Plaintiff, inter alia, relies upon the doctrine
of res ipsa loquitor. The claim of the Plaintiff is for a sum of $19,500.00 being the
cost of motor car, interest at 8% p.a., court fee of $50.00 and advocate fee of
$500.00.
5. In the amended defence, the Respondent admitted that he was a common
carrier for reward, and he had a contract with Plaintiff to deliver the motor car to
the consignee in Limbang. However, the performance of the said contract became
(without any fault on his part) impossible to perform. Hence the contract was
frustrated. The reason for the frustration of the contract is given in the particulars
of the defence that since the vessel sunk at Sibu Wharf it became impossible for the
Defendant to ship the said motor car to the consignee in Limbang in order to
perform the contract with the Plaintiff. The sinking arose
[1993] MLJU 130 at 6
from inevitable accident and notwithstanding the exercise of all reasonable care and
skill on his part he was unable to avoid the same.
6. On the issue of negligence, he puts the Plaintiff to strict proof of it. In the
alternative the defence of the Defendant is that the Plaintiff voluntarily consented to
accept the risk and to waive any claim in respect of the loss suffered by the Plaintiff
as he had requested the Plaintiff to obtain an insurance cover for the motor car but
the Plaintiff refused. He relied on the Freight Advice Bill which indicates that the
Defendant would not be liable for any loss or damage in the event of any accident.
7. In the reply by the Plaintiff, he denies frustration of the contract when the vessel
sank at Sibu Wharf. He also denies knowledge of the Freight Advice Bill and consent
to accept the risk and to waiver and in the alternative, the Defendant is not
excluded from liabilities for such loss.
8. Thus the issue before the Court is whether:

(a)
the contract has been frustrated;

(b)
the Defendant is negligent;

(c)
the doctrine of res ipsa loquitor applies; and

(d)
the Defendant is protected by the exemption clause.
9. I will now deal first with the issue of frustration. Frustration of contract occurs
whenever the law recognises without fault of either party a contractual
[1993] MLJU 130 at 7
obligation has become incapable of being performed because the circumstances in
which performance is called for would render it a thing radically different from that
which was undertaken by the contract: Davis Contractor Ltd v. Fareham UDC
(1956) 2 All ER 145. In the instant case, the Defendant alleges that the contract
has been frustrated. His contention is that the sinking of the vessel with the motor
car of the Plaintiff was due to inevitable accident. Therefore, the burden is on him
to establish that it was so. In Zainun bte Abdul Ghani & Anor v. Chong Ah Seng &
Anor (1975) 1 MLJ 33 it is stated that there is no inevitable accident unless the
Defendant can prove that something happened over which he had no control and
the effect of which could not have been avoided by the exercise of care and skill. In
other words the accident must have happened without the negligence of the part of
the Defendant. According to the evidence of DW3, Ling Tai Kwong the captain of
the vessel, he did not know the reason for the sinking of the vessel at 5.30 a.m. on
the 2nd day of October 1988. After the vessel sank he wrote a letter to Marine
Officer, Sibu. This letter is exhibit P2(a) dated the 3rd day of October 1988, one
day after the sinking of the vessel. According to the letter, on the 1st day of
October 1988 at 12.00 noon the vessel passed through Tg. Sirik and the sea was
very rough. He realised that the vessel was not balance, i.e. it is tilting.For that
reason he returned to the nearest port i.e. Sibu. At that moment he asked the
engineer to pump out the water from the vessel. This goes to show that at that
time there was water in the vessel. After an hour he was told there was
[1993] MLJU 130 at 8
no more water in it. The vessel reached Sibu Wharf around 3.30 a.m. So, the
journey from Tg. Sirik to Sibu Wharf took about 13-1/2 hours. There is no evidence
that anything else than the pumping out of water was done to the tilting vessel. At
Sibu Wharf the engineer was again told to pump out the water which he did for an
hour after which he was told there was no more water and they went to sleep.
Nothing was done to check as to why the boat tilted. At about 5.30 a.m. the same
day a crew on duty told him the ship had tilted to one side and so he asked all the
crews to abandon the vessel. At about 6.30 a.m. he went to the police station to
report the incident. When he came back he could not find the engineer. In his
further testimony in Court DW3 testified that the Marine Officer also recorded a
statement from him. The statement was tendered by the Plaintiff and marked as
exhibit P2(b). In the statement he stated that at about 12.30 p.m. on the 1st day
of October 1988 while at Tg. Sirik he noticed that the vessel was not balance and
listed to port approximately 10 degrees. He found water in the bilge and took one
hour to pump out the water. It was at this point when the vessel was tilting the he
decided to divert to Sibu. The question to ask here is why must the vessel tilt and
why was water in the bilge? The vessel was then no longer in stable condition with
the likelihood of water accumulating in the bilge that would cause the boat to sink.
Though the weather was fine, the wave was 6 to 7 feet high. What was the prudent
step to take in the circumstances?The vessel should have been steered to the
nearest coast or jetty. But instead the vessel spent 13-1/2 hours travelling to the
[1993] MLJU 130 at 9
inland port of Sibu with the crew doing nothing but hoping to reach the destination.
To reach Sibu the vessel has to travel along the Sarawak River wherein all the way
it is served by jetties and the two river banks. But no action taken to have the
vessel berthed and check the condition of the vessel. When the vessel went
alongside Sibu Wharf on the 2nd day of October 1988 at 3.30 a.m. it was dark and
raining heavily and the loadline mark could not be seen. When they reached the
wharf, all but one crew went to sleep. According to the learned counsel for the
Defendant, being in such an hour the crew could do nothing as there was no crane
of sort to help do the work. The question is why the crew had to wait that long
before something is done to save the vessel from sinking? Leaving the vessel in
that condition, at about 5.25 a.m. on the fateful morning it was discovered that the
boat listed to port approximately 25 to 30 degrees wherein all the crew were
ordered to abandon the vessel. The witness suspected that the uneven placement
of the cargo on the vessel could have caused the boat to tilt but alas he decided to
check only during daylight of the 2nd day of October 1988. Why wasn't this done
during the daylight of the 1st day of October 1988 when listing was first
discovered? On these hard facts the learned Magistrate in her judgment held that
the accident was inevitable as the sinking was without the fault of the Defendant. I
am convinced that the finding of such facts by the lower court is wrong or against
the weight of the evidence adduced. In the circumstances I am of the opinion that
the Defendant has failed to establish that the loss to Plaintiff's goods was on
account of
[1993] MLJU 130 at 10
inevitable accident. In the circumstances the defence of frustration of the contract
must fail. I differ from the findings of the learned Magistrate because she has not
taken proper advantage of her having seen and heard the witnesses.
10. Next I will deal with the issues of negligence and the doctrine of res ipsa
loquitor together. On the issue of negligence, when the goods of the Plaintiff is in
the charge of the Defendant as a common carrier under the contract of carriage
with the Plaintiff is lost there is a presumption that the event is caused by the
negligence on the part of the Defendant and the Plaintiff will succeed unless the
Defendant can rebut this presumption. This is what is called res ipsa loquitor. The
general rule is a party which asserts must establish the assertion and not for the
opposite party to prove the negative. The burden is said to be on the party
asserting. This is equally true in negligence cases. However, with the application of
the doctrine or res ipsa loquitor this evidential burden is shifted for it is within the
knowledge of the opposite party of the circumstances which lead to the inference
that such circumstance would not have happened without the negligence of the
opposite party. In such a situation, the burden of satisfying the Court on the
balance of probability that the opposing party is not negligent is on him. In this
case, by a contract entered into between the Plaintiff and the Defendant, the
Plaintiff's motor car was handed to the charge of the Defendant, a common carrier,
for delivery in the course of business to the consignee in
[1993] MLJU 130 at 11
Limbang. The said motor car never reached the destination. The Plaintiff alleges
negligence against the Defendant. So, if the Defendant disputes the allegation, it is
for him to satisfy the Court so on the balance of probability. It is no rebuttal for the
Defendant to say that the goods were lost because the vessel which carried it sank
since the sinking of the vessel per se is a neutral event consistent with negligence
and equally consistent with due diligence on the part of the Defendant. So, in order
to rebut the presumption the Defendant must go further and prove (or it must
emerge from the evidence as a whole) either:

(a)
that the sinking of the vessel itself was duee to specific cause which does not
connote negligence on his part but points to its absence as more probable; or

(b)
if he can point to no such specific cause that he used all reasonable care in
and about the management of the vessel. See Barkway v. South Wales
Transport Co. Ltd. (1948) 2 All ER 460.
In this case, going through the evidence I am of the view that the Defendant has
failed to rebut the presumption. The learned Magistrate in her judgment stated that
negligence in failing to take any or any adequate step or precaution to prevent the
Plaintiff's car from sinking with the vessel cannot be established by the Plaintiff. On
the circumstances of this case, she has erred for requiring the
[1993] MLJU 130 at 12
Plaintiff to establish the facts well known to the Defendant. She went on to say that
in her opinion the Defendant had exercised due care and due diligence and the
allegation of negligence from the Plaintiff would not stand. She based her finding
partly on the evidence of PW2, Capt. Goh Chin Guan, Senior Marine Officer,
Sarawak who in his evidence stated that no action by the Department was taken
against the owner of the vessel for any negligence or foul play. If there is any
negligence or foul play he would instantly take action. For whatever it is worth in
that part of the evidence of PW2, he also stated in his evidence that proper
investigation was not conducted and no preliminary inquiries were done in this
case.He was given no instruction to investigate the matter. For that reason he said
he was not sure whether there was any negligence act or foul play. So how could
the learned Magistrate conclude that no negligence by the Defendant has been
established? In any event the establishment of negligence conduct of any party is
to be determined by a court of law by established principles. It is not for someone
to give a bare statement of fact that someone else is negligent without more. The
learned Magistrate also based her conclusion on the evidence of PW3, a retired
Marine Officer, Sibu whom she said cannot establish any negligence on the part of
the Defendant or his servant or agents. By this the learned Magistrate wants the
Plaintiff to establish the facts of negligence which according to the circumstances of
this case, the burden of establishing that he is not negligent is on the Defendant. I
am of the view that the learned Magistrate is
[1993] MLJU 130 at 13
wrong on her findings of facts to disentitle the appellate court from disturbing her
findings.I therefore, hold that for failing to rebut the presumption the Plaintiff
succeeds in his claim against the Defendant.
11. Lastly I will deal with the issue of exemption clause contained in the Freight
Advice Bill No. 08753 dated the 29th day of September 1988 exhibited as D1(a).
The clause states:
"All goods shipped on our vessels must be accompanied by cover note or insurance policy. No liability is
accepted for loss, damage, breakage, or leakage by any cause whatsoever.
In the event of any shortage or missing involved at the time of taking delivery, please obtain official
documents from vessel's representative or give notice to our Head Office WITHIN 21 DAYS of delivery, to
enable the investigation to be conducted. Notice given after the said period will be ignored and no claim
will be entertained."
There is a serious dispute in relation to the existence of this exhibit D1(a). In her
judgment the learned Magistrate did not touch at all on this issue of exemption
clause relied on by the Defendant. I think the reason is because she had made the
findings that the contract has been frustrated and that the Defendant was not
negligent, and therefore no longer necessary for her to dwell on the issue of
exemption clause. In the court below, the learned counsel for the Plaintiff submitted
at length on the issue. However, at the hearing of this appeal, the learned counsel
did not submit anything on the issue because the Appellant's appeal does not
include an appeal on the matter. The learned counsel for the Plaintiff in the court
[1993] MLJU 130 at 14
below challenges the existence of this exhibit which purportedly contained the
exemption clause. According to the evidence of PW1, a partner of the Plaintiff firm,
on the 29th day of September 1988 he delivered the car to a person in charge of
loading into the vessel of the Defendant whose name he did not enquire. When
exhibit D1(a) was shown to him, he said that he was not given the exhibit by the
Defendant or anyone else. No one advised him to take insurance for the car and no
one told him that he was sending the car to the consignee at his own risk. No one
told him that if he did not take the insurance, any damage caused to the car will
not be paid by the owner of the vessel. If the facts were known to him he would not
agree to transport the vehicle through the Defendant but would use other vessels
instead for he was not in a hurry to have the vehicle transported and delivered to
the consignee. Prior to this date he had never shipped any goods through the
Defendant. In his experience when transporting goods with other vessels he was
never given any Freight Advice Bill. In answer to cross-examination, he said that he
seldom shipped any vehicle outstation for most of the vehicles were sold locally. For
transporting outstation he never bought any insurance. On this occasion that he
handed over the motor car to the Defendant, he did not ask for the cost of
transporting to Limbang as the cost would be paid by the consignee. In reexamination he said that there is no necessity for the Defendant to issue the
Freight Advice Bill to him as the Plaintiff is not paying for the cost of transport. For
the Defendant, DW2, Lau Meng Chua gave the following evidence. On the day in
[1993] MLJU 130 at 15
question he received the Plaintiff's motor car on behalf of the Defendant from a
person whose name he did not know but in Court he identified PW1 as the person.
He was the only person in charge of the receipt of the goods to be transported by
the Defendant at the material time. He said that he told the witness to buy
insurance but was told that it was not necessary. He then asked PW1 to follow a
clerk Ling Leong Kong to the Defendant's office to collect a receipt. It is to be noted
that this clerk is not called as a witness in this case. On the question of payment of
the costs of the transport he admitted that in respect of goods to be sent
outstation, payment would not be made in Kuching but be paid by the consignee
outstation.
12. The exemption clause if at all an exception clause is contained in the disputed
exhibit D1(a) tendered by the Defendant. So it is for the Defendant to satisfy the
Court that it was in fact given to the Plaintiff. There was a mention of a receipt
issued by the clerk Ling Leong Kong. Since this clerk has not come forward to
testify, we do not know what is that receipt all about or whether it is the Freight
Advice Bill. In any event why should the Bill be given to the Plaintiff when payment
for the transport cost was to be borne by the consignee in Limbang? I would,
therefore, agree with the submission of the learned counsel for the Plaintiff in the
court below that the Plaintiff should not be liable for exemption, if any. Talking
about the requirement of an insurance for the car, which is disputed by the Plaintiff,
it is so general a nature. Of course every car to be used in public requires an
insurance
[1993] MLJU 130 at 16
in respect of third party risks. If the Defendant meant the requirement for
insurance for other purpose such as to indemnify the Defendant against risks in the
transport of the vehicle it should be expressed in a clearer form. In the
circumstances I am of the view that the Defendant in this particular case cannot
hide himself behind the printed exemption clause contained in a Freight Advice Bill
issued. The learned counsel on the other hand in his submission in the court below
says that the provisions of the exemption clause was brought to the notice of the
Plaintiff by relying on exhibits D2 and D3. To me they are irrelevant as they relate
to other persons and other vehicles. The mere fact that those persons insured their
vehicles does not necessarily means that the Plaintiff was aware of the exemption
clause. Each case depends on the fact and circumstances of the case and in this
case I am satisfied that the provisions of the exemption clause were never brought
to the attention of the Plaintiff and the Plaintiff was not aware of the existence of
the clause.
13. So, in all the circumstances, I hold that the learned Magistrate was wrong in
arriving at the conclusion as she did by not having taken proper advantage of her
having seen and heard the witnesses. I therefore, allow the appeal by the Plaintiff.
The decision of the learned Magistrate is reversed. Judgment for the
Plaintiff/Appellant. Respondent is ordered to pay the claim of the Plaintiff/Appellant
and costs of this appeal and the lower court to be paid by the
Defendant/Respondent
[1993] MLJU 130 at 17
to the Plaintiff/Appellant. Appeal allowed.
2 pages
[1987] 2 MLJ 566
KUA LEE NGOH v JAGINDAR SINGH T/A SPEEDWAY STATION
Also Reported in: [1987] SLR 239
OCJ SINGAPORE
RAJAH J
CIVIL SUIT NO 1745 OF 1982
17 March 1987
Bailment — Negligence — Car in defendant's custody stolen — Display of exemption
notices — Whether defendants liable to pay damages for loss
Contract — Bailment for reward — Car in defendant's custody stolen — Damages
On May 8, 1981, the plaintiff's husband entrusted to the defendant a car belonging
to the plaintiff for servicing. He had been sending the car for servicing to the
defendant for about a year. He left the car in the open yard in front of the workshop
building and there handed over the motor vehicle to the chief mechanic. As was his
practice he left the key in the car and left for work. He was to collect the motor
vehicle the same evening. He returned at 7 p.m. to collect the car. He saw the car
and it had already been serviced. However, he was told that the chief mechanic had
gone home and that he was to come back the next day to collect the car.
The plaintiff's husband returned on the following morning to collect the car but the
car was not there. He was told that the car had been stolen. The car was eventually
recovered in a damaged condition by the police and returned to the plaintiff.
The plaintiff's claim was for the loss of her car.
It was conceded by the defendant that this was a case of bailment for reward and
that the onus was on him to show that the loss did not happen in consequence of
his neglect to use appropriate care and diligence.
The defendant averred that he had taken all reasonable precautions in safeguarding
the vehicle. In the alternative the defendant claimed that he had provided
reasonably sufficient notice of the terms and conditions upon which the plaintiff's
vehicle was being accepted on the defendant's premises for service by virtue of two
exemption notices which had been placed in prominent and visible portions of the
defendant's premises.
Held, allowing the plaintiff's claim:

(1)
on the exemption notices, the court would accept the evidence of the
plaintiff's husband that he had not seen them nor had his attention been
drawn to them by the defendant or his agents;

(2)
against the background of car thefts in Singapore the defendant had not
taken appropriate measures to immobilise the car and so make it difficult for
the thieves to take it away. This could have been easily done by the
defendant by the removal of the distributor arm and thus make it as
immobile as one could possibly make a motor vehicle to be;

(3)
judgment would be given for the plaintiff in the sum of $8998.75 and costs.
Cases referred to
Cowan v Blackwill Motor Caravan Conversions Ltd [1978] RTR 421
Chua Choon Kiat v Tan Chong & Sons Motor Co S Pte Ltd [1972] 1 MLJ 5
CIVIL SUIT
Shriniwas Rai for the plaintiff
Raymond Chan for the defendant.
RAJAH J
On May 8, 1981, the plaintiff's husband entrusted to the defendant motor vehicle
bearing registration No. EF5700 P (hereinafter called the "motor vehicle") for
servicing. He had been sending the motor vehicle for servicing to the defendant for
about a year. He left the car in the open yard in front of the workshop building and
there handed over the motor vehicle to the chief mechanic. As was his practice he
left the key in the car and left for work. He was to collect the motor vehicle the
same evening. He returned at 7.00 pm to collect the motor vehicle but the chief
mechanic was not in the service station. A male Indian at the petrol kiosk told him
that the chief mechanic had gone home and that he was to come back on the
following day to collect the motor vehicle. At the time when the plaintiff's husband
went to collect his car on the same day he saw the car
1987 2 MLJ 566 at 567
there and it had already been serviced. He returned as requested on the following
morning at about 8.45 am to collect the car but the car was not there. He was told
that the car had been stolen. A police report was made with reference to the loss.
Eventually the motor vehicle was recovered in a damaged condition by the police
and returned to the plaintiff.
In this case the plaintiff's claim is for the loss of her car. The motor vehicle had
been left by her husband in the custody of the defendant and was stolen whilst in
his custody.
It is conceded by the defendant that this is a case of bailment for reward and that
the onus is on him to show that the loss did not happen in consequence of his
neglect to use appropriate care and diligence. The question therefore is: has the
defendant discharged this onus? On the evidence before me and in the particular
circumstances of this case I am of the view that he has not.
In his defence, the defendant avers that he had taken all reasonable precautions in
safe-guarding the vehicle in that he, his servants and/or agents had:—

a)
ascertained that all the doors of the plaintiff's motor vehicle were locked;

b)
ensured that the key or set of keys to the plaintiff's motor vehicle were kept
safely in the locked office premises of the defendant.
Further or in the alternative the defendant says he is not liable for the alleged loss
and damage to the plaintiff's vehicle (which is not admitted) as the defendant had
provided reasonably sufficient notice of the terms and conditions upon which the
plaintiff's vehicle was being accepted on the defendant's premises for service
and/or repair by virtue of two exemption notices which had been placed in
prominent and visible portions of the defendant's premises. The said exemption
notices read as follows:

a)
"We accept no responsibility for loss or damage arising from any cause
whatsoever to any motor vehicle (inclusive of any fittings and contents)
entering upon or remaining for any purpose on our premises" and

b)
"The Management accepts no liability for loss or damage in respect of any
motor vehicles left on these premises."
On the exemption notices I accept the evidence of the plaintiff's husband that he
had not seen them or any of them nor had his attention been drawn to them by the
defendant or his agents or servants.
On the question of the loss of the car I am of the view that against the background
of car thefts in Singapore the defendant had not taken appropriate measures to
immobilise the motor vehicle and so make it difficult for the thieves to take it away.
This could have been easily done by the defendant, his servants and/or agents by
the removal of the distributor arm and thus make it as immobile as one could
possibly make a motor vehicle to be. See the Court of Appeal case of Cowan v
Blackwill Motor Caravan Conversions Ltd [1978] RTR 421. and Chua Choon Kiat v
Tan Chong & Sons Motor Co (S) Pte Ltd [1972] 1 MLJ 5.
The plaintiff claimed damages in the sum of $11,758.79 under four Heads:
a)
b)
c)
d)
Costs of repair to the motor vehicle
Survey fee
Loss of personal belongings in vehicle
Loss of use for 30 days at $30 per day
$8,006.79
52.00
2,800.00
900.00
$11,758.79
The defendant does not dispute Heads (a)and (b) but challenges Heads (c) and (d).
The claim under Head (c) is particularised are follows:
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
Umbrella
Eight Cassettes
Jogging shoes
Carpark coupons
Spare tyre
Instrument set
Teddy bear
Cassette radio
Air conditioner
Bundle of books
Three rubber mats
Safety pack
Road directory
$ 22.00
160.00
60.00
18.00
180.00
300.00
85.00
350.00
650.00
850.00
30.00
90.00
5.00
$2,800.00
I disallow Items 3, 6, 9 and 10. Item 9 is disallowed on the basis that this item has
been included
1987 2 MLJ 566 at 568
in the Repair Bill (AB3). The evidence on Item 10 (bundle of books) was not
satisfactory and is therefore rejected. Similarly with Item 6. Item 3 (jogging shoes)
is rejected on the basis that it is not the property of the plaintiff but that of her
husband.
Head (d) of the damages claim is rejected because it was her husband perhaps and
not the plaintiff who could have suffered the loss.
There will therefore be judgment for the plaintiff in the sum of $8998.79 and costs
on the High Court scale and interest at 8% from the date of the service of Writ until
judgment.
Order accordingly.
[1941] 1 All ER 172
Sugar v London, Midland & Scottish Ry Co
KING'S BENCH DIVISION
VISCOUNT CALDECOTE LCJ
5, 6, 11 DECEMBER 1940
Carriers – Carriage of passengers – Passenger ticket – Conditions – Notice to
passenger – Notice obliterated by date stamp.
On 28 December 1939, the plaintiff and her husband took tickets to Westcliff from
the defendant railway company, and, on arrival at Westcliff, the plaintiff, preceding
her husband along an ill-lit passage towards the exit of the station, fell into a hole
made by workmen executing repairs, and thereby sustained injury. The tickets
which had been purchased for this journey had the date stamped on them in such a
way as to obliterate the words “For conditions see back”:—
Held – by reason of the obliteration of the words on the ticket “For conditions see
back,” there was no proper notice of the conditions governing the carriage of
passengers.
Notes
The line of cases dealing with tickets bearing the words “For conditions see back”
had not, until the decision herein, included a case where those words had been
accidentally obliterated by the stamping of the date upon the ticket. What is
necessary in such a case is that the railway company shall do what is reasonably
necessary to bring the conditions to the notice of the passenger. It is well-settled
that, by the mere printing of the notice, they have done all that is in law required of
them, but it is here held that the accidental obliteration prevents the printing of the
words from being a sufficient notice to the passenger of the conditions.
As to Conditions on Tickets, see Halsbury (Hailsham Edn), Vol 4, pp 72, 73, para
109; and for Cases, see Digest, Vol 8, pp 103–105, Nos 687–697.
Cases referred to
Parker v South Eastern Ry Co, Gabell v South Eastern Ry Co (1877) 2 CPD 416;
8 Digest 129, 866, 46 LJQB 768, 36 LT 540.
Henderson v Stevenson (1875) LR 2Sc & Div 470; 8 Digest 127, 855, 32 LT
709.
Nunan v Southern Ry Co [1924] 1 KB 223; 36 Digest 135, 896, 93 LJKB 140,
130 LT 131, affg [1923] 2 KB 703.
Penton v Southern Ry [1931] 2 KB 103; Digest Supp, 100 LJKB 228, 144 LT
614.
Hood v Anchor Line (Henderson Brothers) [1918] AC 837; 8 Digest 104, 695, 87
LJPC 156, 119 LT 684.
Action
Action for damages for personal injuries sustained by the plaintiff by reason
of the defendants' alleged negligence in leaving unguarded a hole in a
passage of a railway station, so that the plaintiff fell into the hole while she
was leaving the station. It was found as a fact that the passage was badly
lighted and that no proper notice of the danger was given. The question
then arose whether sufficient notice was given of the conditions subject to
which the ticket was issued. The ticket bore on its face the words, “For
conditions see back,” but these words had been obscured in placing the date
upon the ticket.
Cecil R Havers KC and H J Astell Burt for the plaintiff.
Patrick A Devlin for the defendants.
11 December 1940. The following judgment was delivered.
VISCOUNT CALDECOTE LCJ.
The question here is whether or not the plaintiff can recover, having regard to the
conditions which are on the back of the railway ticket referring passengers to
conditions con[1941] 1 All ER 172 at 173
tained in the railway time-tables and bills and protecting the defendants against
claims for damages for negligence. The specimen ticket which I have, contains
these words on the front of it: “For conditions see back. Day Excursion.” On the
ticket which was issued to the plaintiff's husband, the words “For conditions see
back” were blotted out by the date stamp, which is put on the face of the ticket
lengthwise.
The question then arises as to whether, in those circumstances, to take the
question which was said in Parker v South Eastern Ry Co to be the right question
for the jury, the company did that which was reasonably sufficient to give the
plaintiff notice of the conditions. If the words had been left clear, I should have
come to the conclusion, on a good deal of authority—the authorities are beyond
dispute—that the plaintiff was bound by the conditions even though she and her
husband could not read, which I am told is the fact. Counsel for the defendant says
that it makes no difference if the words “For conditions see back” are not on the
face of the ticket, or if they are obscured or blotted out. I have been referred to a
few of the very numerous cases on this subject. The earliest of them, I think,
is Henderson v Stevenson, but all these cases proceeded upon the view which is
now quite clearly established, and has not been disputed by counsel for the
plaintiff, that a contract of a rather artificial nature between a railway company and
a passenger can be made in this rather artificial manner by giving notice on the
ticket and calling the passenger's attention in a reasonable way to the conditions on
the ticket and in the time-tables of the company. Henderson v Stevenson was
decided many years ago, and, as has been pointed out in cases to which I have
been referred, it was a case decided on its special facts. Let me say here that each
case must depend upon its facts. I have to decide this question on the facts in this
case, and I have come to the conclusion that, on the facts in this case, the railway
company did not do that which was reasonably sufficient to give the plaintiff notice
of the conditions.
In Parker v South Eastern Ry Co, decided as long ago as 1877, Mellish LJ, in giving
the judgment of the court, said, at p 423:
'The railway company must, however, take mankind as they find them, and if what they do is sufficient to
inform people in general that the ticket contains conditions, I think that a particular plaintiff ought not to
be in a better position than other persons on account of his exceptional ignorance or stupidity or
carelessness.'
As I have suggested, the atmosphere in which these cases are decided is rather
unreal, but, nevertheless, the legal position is perfectly plain.
Now I was referred to two cases in which Swift J gave judgment. One was Nunan v
Southern Ry Co, in which Swift J said, at p 707:
'… if there be an issue as to whether the document does contain the real intention of both the parties the
person relying upon it must show either that the other party knew that there was writing which contained
conditions or that the party delivering the form had done what was reasonably sufficient to give the other
party notice of the conditions, and that the person delivering the ticket was constructing on the term of
those conditions.'
[1941] 1 All ER 172 at 174
Thus I come back to the question in Parker v South Eastern Ry Co—namely, has the
railway company done that which was reasonably sufficient to bring the conditions
to the notice of the intending passenger? The whole question turns upon the
importance in this case of the one fact which takes it out of the line of cases
decided in favour of the railway companies—namely, the fact that there was
nothing on the face of the ticket to indicate to the passenger that he must look on
the back, or must look in the company's time-tables, to see the special conditions
which attached to his journey.
The second case which Swift J decided was Penton v Southern Ry, in which Swift J
said, at p 109:
'Then the question arises, have the railway company taken all reasonable steps to bring [the conditions]
to his notice? In truth, what had happened was that the railway company had given him a ticket. The
most obvious matter upon the front of the ticket was the statement that for the conditions one must see
the back. The words, “For conditions see back,” are certainly plainly visible upon the front of the ticket.
They are as clear to my eye as are the names of the places between which the ticket is issued, and more
clear than anything else …'
I cannot read that passage without inferring that Swift J thought that it was the
presence of those words clearly printed on the front of the ticket which justified a
conclusion that the railway company had done that which was reasonably sufficient
to bring the conditions to the notice of the railway passenger. In this present case,
those words were not there. They were obliterated, and I think that, on the facts of
this case, the right conclusion is that the railway company did not take reasonable
steps to bring the conditions to the notice of the passenger, for the obvious reason
that it is no use printing words in much clearer type than anything else printed on
the ticket if the next thing they do is to blot those words out. The words were there
for a purpose, and I think that they were there for the reason that it was necessary
for the railway company to call the passenger's attention to the fact that there were
special conditions. It is not necessary for me to say for a moment that the plaintiff
or her husband would have done anything different from what they did if the words
had not been blotted out. In fact, the railway company did not take what I think
were reasonably sufficient steps, and, therefore, there was no term in the contract
between the plaintiff and the railway company which prevents the plaintiff from
recovering in this action.
The passage in Hood v Anchor Line (Henderson Brothers), to which I called
attention in the course of the argument, seems to be authority for the opinion I
have formed on the facts of this case, that, if there were no words, as there were
not in Henderson v Stevenson, on the front of the ticket, then reasonably sufficient
steps were not taken to bring the conditions to the notice of the railway passenger.
For these reasons, I have come to the conclusion that the plaintiff is not debarred
by the conditions which are contained in the railway company's time-tables, under
which they would not be liable. She is entitled to damages. The special damages
have been conveniently agreed at the sum of £37 10s.
[1941] 1 All ER 172 at 175
The accident took place just a year ago, but the plaintiff is still suffering from some
lameness, and I think that, taking everything into consideration, she should receive
a sum of £200 as fair compensation for the pain she has suffered and the injury
inflicted upon her by reason of this unfortunate accident. Therefore, there will be
judgment for the plaintiff for £200 with costs.
Judgment for the plaintiff for £200 and costs.
[1971] 2 Q.B. 163
[COURT OF APPEAL]
THORNTON v. SHOE LANE PARKING LTD. [1967 T. No. 1206]
1970 Dec. 17, 18
Lord Denning M.R.; Megaw L.J. and Sir Gordon Willmer
Contract - Exceptions clause - Car parking - Automatic ticket machine - Garage not
accepting liability for injury - Reference to conditions in small print on ticket Conditions displayed on premises - Injury to customer - Whether exemption clause
operative
The plaintiff drove his car into a new automatic car park. He had not been there
before. A notice on the outside gave the charges and stated that all cars were
"parked at owner's risk." A traffic light on the entrance lane showed red and a
machine produced a ticket when the car had drawn up beside it. The plaintiff took
the ticket and, the light having turned green, he drove on into the garage where his
car was parked by mechanical means. On the plaintiff's return to collect the car
there was an accident and he was severely injured. The plaintiff claimed damages
from the defendant garage. The defendants contended, inter alia, that the ticket
incorporated a condition exempting them from liability.
The ticket stated the car's time of arrival and that it was to be presented when the
car was claimed. In the bottom left hand corner in small print it was said to be
"issued subject to conditions … displayed on the premises." On a pillar opposite the
ticket machine a set of eight printed "conditions" was displayed in a panel. In the
second condition it was stated that the garage would not be liable for any injury to
the customer occurring when his car was on the premises. Mocatta J. held that the
defendants were half to blame for the plaintiff's accident and awarded him £3,637
damages.
On appeal by the defendants:Held, dismissing the appeal, that since the plaintiff did not know of the exemption
condition and the defendants had not done what was reasonably sufficient to bring
it to his notice it did not exempt them from liability.
[1971] 2 Q.B. 163 Page 164
Dicta of Mellish L.J. in Parker v. South Eastern Railway Co. (1877) 2 C.P.D. 416,
423, 424, C.A. applied.
Per curiam. The nature of the intended exemption condition is a factor to be taken
into account in deciding as to the reasonableness of what has been done to bring it
to the notice of the other party (post, pp. 170A-D, 172F - 173B, 174E).
Per Lord Denning M.R. The offer was contained in the notice at the entrance and
was accepted when the plaintiff drove into the garage. The concluded contract
could not be altered by anything printed on the ticket (post, p.169G). Decision of
Mocatta J. affirmed.
The following cases are referred to in the judgments:
Chapelton v. Barry Urban District Council [1940] 1 K.B. 532; [1940] 1 All E.R.
356, C.A.
Hood v. Anchor Line (Henderson Brothers) Ltd. [1918] A.C. 837, H.L.(E.).
McCutcheon v. David MacBrayne Ltd. [1964] 1 W.L.R. 125; [1964] 1 All E.R.
430, H.L.(Sc.).
Mendelssohn v. Normand Ltd. [1970] 1 Q.B. 177; [1969] 3 W.L.R. 139; [1969]
2 All E.R. 1215, C.A.
Olley v. Marlborough Court Ltd. [1949] 1 K.B. 532; [1949] 1 All E.R. 127, C.A.
Parker v. South Eastern Railway Co. (1877) 2 C.P.D. 416, C.A.
Richardson, Spence & Co. v. Rowntree [1894] A.C. 217, H.L.(E.).
Spurling (J.) Ltd. v. Bradshaw [1956] 1 W.L.R. 461; [1956] 2 All E.R. 121, C.A.
Thompson v. London, Midland and Scottish Railway Co. [1930] 1 K.B. 41, C.A.
Watkins v. Rymill (1883) 10 Q.B.D. 178, D.C.
The following additional cases were referred to in argument:
Ashby v. Tolhurst [1937] 2 K.B. 242; [1937] 2 All E.R. 837, C.A.
Harris v. Great Western Railway Co. (1876) 1 Q.B.D. 515.
Henson v. London and North Eastern Railway Co. [1946] 1 All E.R. 653, C.A.
Sugar v. London, Midland and Scottish Railway Co. [1941] 1 All E.R. 172.
Taylor v. Glasgow Corpn., 1952 S.C. 440; 1952 S.L.T. 399.
[1949] 1 K.B. 532
[COURT OF APPEAL]
OLLEY v. MARLBOROUGH COURT LIMITED.
1948 Dec. 2, 3.
Bucknill, Singleton and Denning L.JJ.
Negligence - Residential hotel and boarding-house not constituting "an inn" - Notice
under Innkeepers' Liability Act, 1863 conspicuous in hall - Notice in bedroom:
"Proprietors will not hold themselves responsible for articles lost or stolen, unless
handed to manageress for safe custody" - No exemption from liability for
negligence of
[1949] 1 K.B. 532 Page 533
hotel servants - Contract of guest for indeterminate period, before guest sees
notice - Notice not part of contract - Guest hangs bedroom key on key-board in
reception office - Key stolen from hey-board - Goods stolen from guest's bedroom Lack of reasonable care by hotel servants - Onus of proof.
A notice in the bedroom of a private residential hotel stated: "The proprietors will
not hold themselves responsible for articles lost or stolen, unless handed to the
manageress for safe custody. Valuables should be deposited for safe custody in a
sealed package and a receipt obtained." A notice pursuant to s. 3 of the Innkeepers'
Liability Act, 1863, was conspicuously displayed in the hall of the hotel. It was
found that the house was not an inn at common law.
A man and his wife, on arrival at the hotel as guests, in accordance with the custom
of the hotel paid for a week's board and residence in advance. They then went
upstairs to the bedroom allotted to them, where the first-mentioned notice was
displayed.
Held, by SINGLETON and DENNING L.JJ., that the terms of the notice in the
bedroom formed no part of the contract made between the guests and the
proprietors of the hotel. The contract had been made before the guests could see
the notice. It was for an indeterminate period, to which an end could be put by
notice on either side, and the terms of the notice in the bedroom could form no part
of the contract until that contract had been so terminated.
Per DENNING L.J.: Persons who rely on a contract to exempt themselves from their
common law liability must prove that contract strictly. The best way of proving such
a contract was by a written document signed by the party to be bound. Another
way was by handing to him before or at the time of the contract a written notice,
specifying its terms, and making it clear to him that the contract was on those
terms. A prominent public notice which was plain for him to see when he made the
contract or an express oral stipulation would, no doubt, have the same effect. But
nothing short of one or other of these three ways would suffice.
On the issue of construction of the notice in the bedroom Held by BUCKNILL L.J.,
that a person reading the two notices, (that in the bedroom and that in the hall)
would not think that the notice in the bedroom was intended to exempt the
proprietors of the hotel in respect of loss or theft due to the negligence of their
servants; and by SINGLETON and DENNING L.JJ. that, on the assumption that the
house was not a common inn, the notice in the bedroom did not exempt the
proprietors of the hotel in respect of loss or theft due to the negligence of their
servants.
A resident guest at this hotel closed the self-locking door of the bedroom, went
downstairs and hung the Yale key of her bedroom door on the hook marked with
the number of her room on the key-board provided for that purpose in the
reception office. She then left the hotel. On her return she found the key missing
from the key-board and certain furs and other property of hers
[1949] 1 K.B. 532 Page 534
missing from her bedroom. It was found that the property had been stolen by a
stranger through the negligence of the hotel proprietors' servants.
Per DENNING I..J.: As to the negligence of the hotel company and the onus of proof
- When the plaintiff put the key of her room on the hook in the reception office, she
put it in charge of the hotel company. It gave access to her room, and it was their
duty to take reasonable care to see that it was not taken by any unauthorized
person. It was so taken, and consequences followed which might reasonably have
been foreseen, viz., the thief used it to get into the bedroom and steal. At common
law the hotel proprietors were liable for the loss, unless they discharged the burden
of proving that they took reasonable care of the key.
1 page
[1990] 2 MLJ 421
GOH GOK HOON v EUSUFF BROS SDN BHD & ORS
HIGH COURT (MALACCA)
WAN YAHYA J
CIVIL APPEAL NO 12 OF 1982
20 June 1989
Landlord and Tenant — Rent-controlled premises — Claim for possession —
Subletting — Statutory breach — Control of Rent Act 1966, ss 16(1)(b), 17 & 20
Contract — Terms of contract — Oral contract — Prohibition against subletting —
Whether part of oral contract
The appellant, a registered proprietor of a rent-controlled premises, let the
premises out to the first respondent on 1 October 1959. There was no written
agreement between the parties and the only documentary evidence produced by
the appellant are a letter and a copy of the receipts issued to the first respondent.
The receipts bore an endorsement prohibiting the first respondent from subletting
the premises. Sometime in June 1971, the second and third respondents took over
the whole premises from the first respondent. However, the rents were continually
paid by the first respondent and the receipts continued to be issued by the
appellant in the name of the first respondent. The appellant's application in the
present suit for vacant possession is based on the first respondent's breach under s
16(1)(b) and (1)(i) of the Control of Rent Act 1966. The application was dismissed
by the learned President and in this appeal, the appellant argued that there is an
error of law in the President's decision.
Held, dismissing the appeal:

(1)
The restriction on subletting was conveyed to the first respondent only after
the tenancy agreement had been concluded and therefore the first
respondent had no notice of it at the time when he wrote the letter of
acceptance. Hence, the prohibition against subletting did not form a term of
the oral contract and consequently the first respondent was not bound by
such a restriction.

(2)
Failure by the first respondent to supply the appellant with the particulars of
the subletting in accordance with s 20 of the Control of Rent Act 1966
constituted an offence for which the first respondent could be punished in
accordance with s 20(6). Failure of the first respondent to comply with the
section therefore must lead to a breach of the obligation envisaged under s
16(1)(b). This would give rise to the appellant's right to a judgment for
repossession.

(3)
Once such judgment has been obtained, s 17 of the Act would come into
effect and the order could not be enforced (except in specified
circumstances) against any subtenants holding the tenancy from the chief
tenant. By virtue of s 17(3), a subtenant who remains in possession after he
had notice of the judgment or after being served with the order will cease to
be a subtenant of the tenant and will himself become a tenant of the landlord
subject to all the existing previous covenants. Therefore, the appellant has
succeeded in establishing her claim under s 16(1)(b) and obtained
possession against the first respondent but she would be precluded from
evicting the second and third respondents by the provisions of s 17.
Editorial Note
The appellant has appealed to the Supreme Court vide Civil Appeal No 02-270-89.
Legislation referred to
Control of Rent Act 1966ss 16(1)(b), 17, 20
FH De Cruz (Andrew Goh with him) for the appellant.
GF Nelson for the second respondent.
AK Bashir for the third respondent.
WAN YAHYA J
The facts leading to the issue in this case had been sufficiently narrated in the
learned President's ground of judgment. The appellant, a registered proprietor of a
rent-controlled premises, let the premises out to the first respondent on 1 October
1959. There was no written agreement between the parties and the only
documentary evidence produced by the appellant are a letter, exh P3, and a copy of
the receipts issued to the first respondent (P5, P6, P7). The letter P3 reads as
follows:
Madam Goh Gok Hoon,
139 Heeren Street,
Malacca
Dear Madam
House No 12, Wolferstan Road, Malacca
I/We hereby agree to rent the above premises from you as from 1 October 1959 at a monthly rental of
dollars one hundred and twenty five ($125).
Trusting you have no objection.
Yours faithfully,
Eusuff Bros Limited
Sd:
(SN Syed Hamid)
Director
The receipts P5, P6 and P7 bore an endorsement to this effect:
No subtenancy or change of tenancy will be allowed or recognized without the written consent of the
landlord to that effect.
Sometime in June 1971(as disclosed in his affidavit dated 9 May 1979), the third
respondent and his son, the second respondent, took over the tenancy of the whole
premises from the first respondent. However, the rents were continually paid by the
first respondent and the receipts continued to be issued by the appellant in the
name of the first respondent.
According to the appellant, she was only aware of the second and third
respondents' presence in the premises sometime in November 1975. She initially
took out a suit and obtained an order of vacant possession of the premises from
first and second respondents. Subsequently, this order was set aside when the third
respondent intervened and was added on as the third defendant.
The appellant's claim in the present suit for vacant possession is based on the
defendant's breach under ss 16(1)(b) and (1)(i) of the Control of Rent Act 1966.
The learned President rejected the documents P5, P6 and P7 as inadmissible as
these receipts have different
1990 2 MLJ 421 at 422
words written between the three and were therefore not primary evidence within s
62 of the Evidence Act 1950. Counsel for the appellant suggested that there is an
error of law which had affected the decision of the President. I do not think so
because after that ruling the learned President went on to consider in the
alternative the outcome of the case on the assumption that the exhibits were
admissible. As a result he concluded that the restriction on subletting was conveyed
to the first respondent only after the tenancy agreement had been concluded and
therefore the first respondent had no notice of it at the time when he wrote the
letter of acceptance. The learned President had arrived at this conclusion drawn not
only from documentary evidence but also from oral testimony of witnesses whom
he had the advantage of seeing and hearing at the trial. I cannot find anything
improper in this finding of fact and neither do I see anything to suggest that the
finding was against the weight of the evidence. I therefore agree and accept the
fact as found by the learned President that prohibition against subletting did not
form a term of the oral contract and consequently the first respondent was not
bound by such a restriction. In view of this finding, I do not propose to consider the
admissibility of the receipts P3, P4 and P5. The learned President then went on to
hold that the second and third respondents became the lawful subtenants when
they rented the premises from the first respondent with the appellant continuing to
issue receipts in the name of the latter. He accordingly held that the appellant had
failed to establish her case to be within s 16(1)(b). On this finding, however, I differ
from the learned President.
Legally, the first respondent should have supplied the appellant with the particulars
of the subletting in accordance with s 20 of the Control of Rent Act 1966 which
reads:
(1) Where a tenant has sublet any part of the controlled premises, the tenant shall within
fourteen days after each subletting or in the case of a subletting effected before the date of the
coming into force of this Act within three months after that date –
(a) supply the landlord with a statement in writing of the subletting, giving particulars of
the occupancy, including the name of the subtenant and the rent charged;
In the present case, he did not do so. In my opinion, failure to comply with s
20(1)(a) constitutes an offence for which the first respondent can be punished in
accordance with s 20(6). Now, the provision of s 16(1)(b) on which the appellant's
first claim is based authorizes repossession of controlled premises in the following
instance:
where any obligation of the tenancy other than the payment of rent (whether under the contract of
tenancy or under this Act), so far as the obligation is consistent with this Act, has been broken or not
performed by the tenant and the court considers it reasonable that such order or judgment be made or
given;
The mandatory provision of s 20(1)(a) in directing the tenant to supply his landlord
with the particulars of his subletting is clearly an obligation on the tenant, arising
from and consistent with the Control of Rent Act 1966. The failure of the tenant to
comply with that section therefore must lead to a breach of the obligation
envisaged under s 16(1)(b) above.
The first respondent's default in complying with s 20(1)(a) and the consequential
breach of his statutory obligation under s 20(1)(a) will give rise to the appellant's
right to a judgment for repossession. However, once such judgment has been
obtained, s 17 of the Act would come into effect and the order could not be
enforced (except in specified circumstances) against any subtenants holding the
tenancy from the chief tenant. By virtue of sub-s (3) of s 17, a subtenant who
remains in possession after he had notice of the judgment or after being served
with the order will cease to be a subtenant of the tenant and will himself become a
tenant of the landlord subject to all the existing previous covenants.
I would therefore hold in this particular case that the appellant had succeeded in
establishing her claim under s 16(1)(b) and obtained possession against the first
respondent but she would be precluded from evicting the second and third
respondents by the provisions of s 17.
The second issue raised by the appellant in her claim of repossession is based on s
16(1)(i): that the respondent was not personally in occupation of the premises.
Although this issue has not been disputed by the first respondent, the outcome of it
would have been exactly the same as in the previous ground. Section 17 of the Act
would similarly apply and the order could not be enforced on the second and third
respondents.
For the above reasons, which although slightly different from the learned
President's ground, had nevertheless led to the same conclusion, I confirm the
order made by him and dismiss this appeal. As the first respondent's failure to meet
with his tenancy and statutory obligation had led to the institution of this suit, I
agree that he alone should be made to pay the costs of this appeal.
Appeal dismissed.
5 pages
[1989] 1 MLJ 278
PETER RALPH GROSSEY v THE CHARTERED BANK
Also Reported in: [1988] SLR 973
HIGH COURT (SINGAPORE)
RAJAH J
SUIT NO 3141 OF 1984
18 November 1988
Banking — Current account — Overdraft against marketable securities — Bearer
securities — Notice of redemption — Whether part of banking business — Wang
bonds — Difference in converted value and face value — Claim by plaintiff
The plaintiff was at all material times a customer of the defendant bank ('the bank')
with which it maintained a current account on which it had advanced to him various
sums of money from time to time by way of overdraft against marketable securities
lodged with it by the plaintiff. The plaintiff said that he discussed with Northrop, an
officer of the bank, in April 1982 the possibility of offering convertible bearer bonds
as security for credit facilities by the bank. At that time as indeed of now, in respect
of Eurobonds, which are internationally traded securities, the major part of
Eurobond clearing and settlement was and is conducted through two centralized
clearing systems, namely, Euro-clear in Brussels and CEDEL in Luxembourg. Each
of the two systems provided an efficient, risk-free settlement system for
internationally traded securities, avoiding the costs and delays caused by physical
delivery of certificates. Participants in both systems had to be institutions. The
plaintiff's evidence is that as a result of the discussions, agreement between the
bank and himself was reached, culminating in a letter dated 12 April 1982 from the
bank to himself (AB4) which, inter alia, reads:
'(1) Further to our recent discussions we are pleased to advise that our London merchant bank,
Standard Chartered Merchant Bank Ltd … are members of the Euro-clear System and can act as
custodian for the various loan stocks to be held as security for your facilities in Singapore …
(3) Please arrange for the securities to be delivered free of payment to Standard Chartered
Merchant Bank Ltd, London … It will be necessary for us to furnish our associates with your full
name and residence status and your interest payment instructions. You should also let us know
by whom the various securities will be delivered. Please advise accordingly.'
The plaintiff's evidence is that on the Saturday following AB4 of 12 April 1982 or the
Saturday after that Northrop asked him to cancel the arrangements as had been set
out in para 3 of AB4, that is to say, to deliver the bond securities to the Standard
Chartered Merchant Bank in London, and told him to have the said bearer bonds
physically transferred to the bank in Singapore. As a result of this the plaintiff
countermanded the order to his agent in England to have the bearer bonds placed
with the Standard Chartered Merchant Bank in London and instead asked his agent
to have the convertible bearer bonds sent on to the bank in Singapore. In the event
some of the bonds came to him, which he handed over to the bank as and when
they arrived, while others went direct to the bank. The plaintiff's view of the bank's
change of mind is that it seemed to him that the bank would and should know what
it was doing and that perhaps Northrop had found out more from London of how
the bank could deal from Singapore with the situation. On this issue the bank's
evidence as deposed to by Northrop (DW1) and supported by Chee Kok Kee (DW2),
the officer in charge of the securities department of the bank, was to the effect that
at no time did Northrop countermand para 3 of AB4 and that it was the plaintiff who
of his own volition had decided that the
1989 1 MLJ 278 at 279
services of the Standard Chartered Merchant Bank in London was not to be used,
perhaps because of income tax reasons.
The question is whether the learned judge should accept the evidence of the
plaintiff or that of Northrop as supported by Chee. The bank submitted that it is not
part of 'banking business' as defined in s 2 of the Banking Act (Cap 19, 1985 Ed) to
inform a customer of the notice of redemption of bearer securities held by them and
consequently its failure to inform the plaintiff of the notice of redemption of the
Wang bonds was not part of banking business. The bank also relied on the following
exemption clause: '… nor is the bank responsible for any loss that may be incurred
by bonds or coupons not being duly presented when drawn or due; all requisite
notices in this connection and in connection with rights, bonuses or entitlements to
convert in respect of any bonds or shares should be given to the bank by customers
…'.
The plaintiff says that had he redeemed the Wang bonds on 27 May 1983, the date
of redemption, by converting them to shares he would have received the sum of
US$84,650 being the value of the converted shares. As it was, he only received
US$56,445, the face value of the convertible Wang bonds. The plaintiff is now
claiming US$28,205 being the difference in value of the converted shares and the
face value of the Wang bonds.
Held, allowing the claim with costs:

(1)
Taking into account the circumstances in which these Wang convertible
bonds were accepted by the bank as collateral for the overdraft account, it
lies ill in the mouth of the bank for it now to say that it is not part of its
business to inform the plaintiff, a customer, of the notice of redemption of
the Wang bonds held by it as security. The bank should not be heard to say
that the relaying of such information to its customers is not part of its
banking business.

(2)
The condition relied upon by the bank as exempting it from liability is
ineffective and unenforceable against the plaintiff by the bank.

(3)
The bank did not exercise due care (a) in not taking the necessary steps to
place itself in a position to ascertain when the notice of redemption was
given by the Wang company, and (b) thus disenabling itself from informing
the plaintiff of such notice which would have made it possible for him to
convert the bearer bonds to registrable shares in the Wang company. The
bank was thus in breach of its duty of care in respect of the deposited Wang
convertible bearer bonds to its customer the plaintiff.

(4)
There will therefore be interlocutory judgment for the plaintiff on his claim
with costs, the question of the assessment of damages suffered by the
plaintiff being referred to the registrar. Damages suffered by the plaintiff
shall be the difference in the value of the converted shares and the face
value of the Wang convertible bonds.
Cases referred to
Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805
Mendelssohn v Normand Ltd [1970] 1 QB 177
HE Cashin for the plaintiff.
Dennis Singham for the defendant.
RAJAH J
The defendant is a company incorporated in England with limited liability under a
Royal Charter of 1853 with a registered branch office in Singapore carrying on,
inter alia, a banking business and related financial services under licence issued by
the competent authorities of Singapore. It was and is a member of the Standard
Chartered Bank Group of which the Standard Chartered Merchant Bank Ltd, London
('SCMB') was also a member and it has been carrying on banking business and
other related financial services in Singapore for well over a century. Section 2 of the
Banking Act (Cap 19, 1985 Ed) defines 'banking business' as 'the business of
receiving money on account or deposit account, paying and collecting cheques
drawn by or paid in by customers, the making of advances to customers, and
includes such other business as the Authority may prescribe for the purposes of this
Act'.
The plaintiff, a citizen of the UK, was at all material times a customer of the
defendant ('the bank') at its main office in Singapore since 1966, when he arrived
in Singapore and where he has been resident since and is now a permanent
resident.
The plaintiff is a businessman of standing in Singapore being involved in the affairs
of a number of foreign international companies, of which he was and is a director.
The plaintiff maintained with the bank a current account on which it has advanced
the plaintiff various sums of money from time to time by way of overdraft against
marketable securities lodged with it by the plaintiff.
On 5 February 1979 the bank wrote to the plaintiff as follows (AB1):
Banking arrangements
We advise that the total value of all your shares held by us to secure your guarantee and overdraft line
amounts to S$591,425. Under the terms of the banking facilities extended to you, our commitments under
both lines of credit should not exceed 65% and 50% respectively of the current market value of the
shares.
Your account is currently overdrawn to the extent of S$65,281.27 and there is thus an overall shortfall in
our security.
Under the circumstances, we shall be pleased if you will arrange to lodge further shares with us, or
alternatively, reduce your overdraft to within the limit of S$40,000.
We await your advice on the matter.
On 6 April 1979 the manager of the defendant wrote to the plaintiff as follows
(AB2):
Banking arrangements
We have reviewed the banking arrangements currently made available to you and are pleased to advise
that we have extended the credit line for a further period on the following terms and conditions, with a
reduction in the level of the overdraft facility to conform with our normal margin requirements.
1989 1 MLJ 278 at 280
£75,000
S$7,700
S$30,000 (reduced from
S$40,000)
For the issue of a guarantee favouring Lloyds. Counter indemnity to be held.
For the issue of a guarantee to M/s Hock Seng Enterprises Pte Ltd. Counter
indemnity to be held.
Overdraft facilities in current account. Interest will be levied at 1ࡩ% above our
prime lending rate which is currently 8% pa. Changes in prime rate are notified to the
press and featured on our counters and in current account statement.
Security
We hold marketable securities supported by blank transfers and a letter of lien. Our commitment under
the guarantee lines should not at any time exceed 65% of the current market value of the shares
deposited and 50% on the overdraft facility.
Subject to review on 30 April 1980.
We trust that the foregoing arrangements are satisfactory to you.
These arrangements, it would appear, continued until late November 1981 when Mr
Northrop, the advances manager of the bank, wrote to the plaintiff on 23 November
1981 to the effect that it was time to review the banking arrangements as the
quantum of his overdraft had increased and the cover for his facilities had eroded.
To this the plaintiff responded on 7 December 1981 as follows:
Dear Mr Northrop,
Many thanks for your letter B467 of 23 November. I was aware that the cover for my facilities had eroded
somewhat, and in fact am in the process of rearranging my assets to provide adequate cover. One of my
difficulties is to determine which shares/bonds etc will be relatively immobile as it is, of course, awkward
for both parties if the collateral is frequently changed. If you can bear with me a little longer I shall
develop a plan which we can then discuss and agree - may I contact you again shortly on this? (AB3)
It is the plaintiff's evidence that in the course of a number of discussions with
Northrop, he discussed with him sometime in April 1982 or thereabouts the
possibility of offering convertible bearer bonds as security for credit facilities by the
bank. The difficulty for the bank here it would appear was two-fold, (1) that as a
holder of convertible bearer bonds the plaintiff's name would not appear in the
register of the issuing company, and (2) that the bank as then organized would not
be able to keep track of the notices of conversion as and when given by the various
issuing companies.
At that time as indeed of now, in respect of Eurobonds, which are internationally
traded securities, the major part of Eurobond clearing and settlement was and is
conducted through two centralized clearing systems, namely, Euro-clear in Brussels
and CEDEL in Luxembourg. Each of the two systems provided an efficient, risk-free
settlement system for internationally traded securities, avoiding the costs and
delays caused by physical delivery of certificates. Participants in both systems had
to be institutions. Euro-clear was established in 1968 and at the end of 1986, Euroclear had over 2,050 participants. (See p 590 of International Finance and
Investment edited by Brian Terry (1987).)
The plaintiff's agent in the UK in respect of his Eurobond holdings was a firm of
stockbrokers by the name of Charlton Seal Dimmock & Co operating in Manchester,
England ('agent'). Member banks of the Euro-clear System would hold the
convertible bearer bonds on behalf of his agent. Interest coupons would be
attached to these bonds and the institution holding the bonds would present these
interest coupons to the Euro-clear System which would then collect the interest on
the coupons and remit it to his agent on whose behalf the member institution would
be holding the bonds. These interest payments collected on behalf of the plaintiff
had always been remitted by his agent to Hongkong where the plaintiff had a bank
account. As and when the companies issuing the convertible bearer bonds gave
notices of redemption the issuing companies would inform the Euro-clear System
who would then inform the custodian institution of such notices. The custodian
institution in turn would inform the agent who would in turn inform the plaintiff of
such notices. The plaintiff would finally instruct his agent as to what was to be done
with the bearer convertible bonds.
It was against this background that the feasibility of placing these convertible
bearer bonds with the bank by way of security for the plaintiff's banking
arrangements with it was discussed. What was discussed and finally agreed upon
by the bank and plaintiff are crucial to this case.
The plaintiff's evidence is that as a result of the discussions, agreement between
the bank and himself was reached culminating in a letter dated 12 April 1982 from
the bank to himself (AB4) which reads:
Banking facilities
(1) Further to our recent discussions we are pleased to advise that our London merchant bank,
Standard Chartered Merchant Bank Ltd, 33–36, Gracechurch Street, London EC3V OAX are
members of the Euro-clear System and can act as custodian for the various loan stocks to be
held as security for your facilities in Singapore. Current charges are: For free delivery within
Euro-clear System - US$1.00 per security
Annual custodian charges
Up to US$500,000
= 0.5 per mile
Next US$1,000,000 = 0.25 per mile
Next US$23,500,000 = 0.2 per mile
Next US$25,000,000 = 0.175 per mile
Above US$50,000,000 = 0.15 per mile
(2) Fees are payable quarterly based on aggregate month end balances unless the amount
involved warrants
1989 1 MLJ 278 at 281
annual billing only. Your current account will be debited with these charges automatically under
advice.
(3) Please arrange for the securities to be delivered free of payment to Standard Chartered
Merchant Bank Ltd, London, clients accounts no 94632, attn: Mr Richard Southward. It will be
necessary for us to furnish our associates with your full name and residence status and your
interest payment instructions. You should also let us know by whom the various securities will be
delivered. Please advise accordingly.
(4) We attach a letter of lien in respect of these securities and would be pleased if you would sign
where indicated.
Up till the writing of this letter the bank's evidence and that of the plaintiff run on
parallel lines but after the last-mentioned letter their evidence diverge and become
conflicting.
The plaintiff's evidence is that on the Saturday following AB4 of 12 April 1982 or the
Saturday after that Northrop asked him to cancel the arrangements as had been set
out in para 3 of AB4, that is to say, to deliver the bond securities to SCMB in
London, and told him to have the said bearer bonds physically transferred to the
bank in Singapore. As a result of this the plaintiff countermanded the order to his
agent in England to have the bearer bonds placed with the Standard Chartered
Merchant Bank in London and instead asked his agent to have the convertible
bearer bonds sent on to the bank in Singapore. In the event some of the bonds
came to him, which he handed over to the bank as and when they arrived, and
others went direct to the bank. The plaintiff's view on the bank's change of mind is
that it seemed to him that the bank would and should know what it was doing and
that perhaps Northrop had found out more from London of how the bank could deal
from Singapore with the situation. On this issue the bank's evidence as deposed to
by Northrop (DW1) and supported by Chee Kok Kee (DW2), the officer in charge of
the securities department of the bank, was to the effect that at no time did
Northrop countermand para 3 of his letter of 12 April 1982 (AB4) and that it was
the plaintiff who of his own volition had decided that the services of SCMB in
London were not to be used, perhaps because of income tax reasons. On the tax
question the factual position was that the plaintiff's agent had been previously
remitting to Hongkong the interest derived from the bearer bonds and the plaintiff
had always been paying Singapore income tax as a Singapore resident.
The question for me here is do I accept the evidence of the plaintiff or that of
Northrop as supported by Chee Kok Kee. It is clear to me that the plaintiff had kept
his convertible bearer bonds in the UK for the simple reason that he wanted these
kept under conditions where he would come to know when these convertible bearer
bonds would have to be converted to registered shares in the issuing companies.
The point of an investment in convertible bearer bonds is the investor's hope and
expectation that at the notified date of conversion he would be in a situation
whereby by converting to registered shares in the issuing company he would make
a profit on his investment in the convertible bonds. The discussions between the
bank and the plaintiff must have centred round the problem of how the then
existing safe position of the plaintiff in regard to the conversion of the convertible
bearer bonds could be accommodated to the bank's desire to have adequate
physical control over its security. The bank's letter of 12 April 1982 (AB4) to my
mind ideally solved the problem; the plaintiff would maintain his safe position
regarding notification of conversion of the convertible bearer bonds and the bank
for its part would maintain sufficient control and ability to liquidate the convertible
bearer bonds should the need arise. In these circumstances it seems to me that it
would have been sheer madness on the plaintiff's part for him of his own volition to
cancel the agreed safe arrangements for him and have the convertible bearer bonds
transferred to Singapore particularly in the light of the bank's continued assertion
throughout the trial that it was organizationally not geared to meeting the notice of
conversion requirement. I accept the plaintiff's statement that the reason for his
going along with the bank's change of mind was his belief that the bank would have
come to some arrangement with SCMB whereby the bank would have solved the
difficulty of the notice of redemption. On reflection it was not such an intractable
problem as to defeat the ingenuity of a respectable old established banking
institution with connections in the city of London such as the defendants. All it had
to do in my view was to identify the convertible bearer bonds to SCMB in London
and the latter as members of the Euro-clear System could then have easily notified
the bank of any notice of redemption affecting any of the bonds deposited with the
bank by way of security whereupon the bank could have notified the plaintiff who
could then have acted as suited him best. I have a feeling that the bank was fully
alive to this possibility and that it was why it called for the physical transfer of the
bearer convertible bonds to be placed with them in Singapore. This would have
been a perfectly safe position for both parties had someone in the bank
remembered to send SCMB in London the identifying information on the convertible
bonds and had instructed them to notify the bank of any notice of conversion. This
it would appear the bank failed to do thus enabling the situation, of which the
plaintiff is now complaining, to arise. Yet again we know from the evidence before
the court that one of the three newspapers which carried notices of redemption by
arrangement with the Euro-clear System was and is The Financial Timesof London
of which the bank is an acknowledged subscriber. The bank had here yet another
last opportunity of preventing loss on the conversion of the bonds. A daily perusal
of The Financial Times would
1989 1 MLJ 278 at 282
have revealed the notice of redemption on Wang convertible bonds and thus led to
appropriate action being taken thereafter both by the bank and the plaintiff. For
these reasons I prefer the evidence of the plaintiff to that of Northrop and Chee Kok
Kee and find that it was Northrop who countermanded para 3 of the bank's letter of
12 April 1982 (AB4) and asked the plaintiff to have the convertible bearer bonds
sent on to the bank in Singapore, where they were to be used by the bank as
security for the plaintiff's banking facilities which had already been made available
to him by the bank.
Arising out of the banking arrangements made on 12 May 1982 (AB9) a number of
securities reached the bank from time to time and on 20 August 1982 the bank
gave the plaintiff an acknowledgement receipt (AB12 & AB13) worded as follows:
Securities
We acknowledge receipt of the undermentioned enclosures which we are retaining under lien as per list
attached:
US$25,000
US$50,000
US$50,000
US$50,000
US$50,000
Moran Energy International NV 8% convertible subordinated debenture due 1995 (nos M13–M22, M215–M229)
Reading & Bates Energy Corporation NV 8% convertible subordinated debenture due 1995 (nos M1728, M2296–
M2329, M53374–M53388)
Wang Laboratories (NA) NY 9¼% convertible subordinated guaranteed debenture due 1996 (nos 39728–39777)
Swiss Bank Corporation (Overseas) SA 6¼% convertible bonds due 31 December 1990 (nos 020006, 023824,
028539/541)
TNT Overseas Finance NV 8ࡩ% convertible guaranteed subordinated bonds 1990 (nos 02595–02644)
together with interest coupons which we shall send for collection when they are due.
Conditions
The bank, while receiving articles for the convenience of customers, does not take responsibility for their
loss or damage by thieves, fire, explosion, war, riot or otherwise nor is the bank responsible for any loss
that may be incurred by bonds or coupons not being presented when drawn or due, all requisite notices in
this connection and in connection with rights, bonuses or entitlements to convert in respect of any bonds
or shares should be given to the bank by customers. Notice of intention to withdraw items must be lodged
with the bank during business hours on the day preceding that on which delivery is required.
With regard to this acknowledgement receipt the plaintiff deposed as follows:
AB12 (20.8.82) Condition - AB12 posted to me. Checked the list. Found one missing and wrote to them
about it. I did not notice it. This is the standard form for ordinary shares. I would not have accepted the
condition because there could have been a major danger. No one in the bank had drawn my attention to it
specifically. I only read it when the bank drew my attention to it later after the dispute had arisen.
The defendant submitted that it is not part of 'banking business' as defined in s 2 of
the Banking Act (Cap 19, 1985 Ed) to inform a customer of the notice of
redemption of bearer securities held by them and consequently its failure to inform
the plaintiff of the notice of redemption of the Wang bonds was not part of banking
business. I do not see how the bank, having accepted bearer convertible securities
as collateral for securing the plaintiff's overdraft account with it, can now say that
informing customers of such notices is not part of its banking business. If the
lending of money to customers is banking business then surely the acceptance of
security for such lending must also be part of banking business and if the bank
accepts convertible bearer bonds as security for such lending then surely it is the
bank's business to assist its customers in carrying out the terms of the convertible
bonds and thus safeguard the customers' best interests. Taking into account the
circumstances in which these Wang convertible bonds were accepted by the bank
as collateral for the overdraft account, it lies ill in the mouth of the bank for it now
to say that it is not part of its business to inform the plaintiff, a customer, of the
notice of redemption of the Wang bonds held by it as security. If the giving of such
notice is not to be deemed part of its banking business then the bank should never
have accepted these bonds as security. In the circumstances I do not think that the
bank should now be heard to say that the relaying of such information to its
customers is not part of its banking business.
By para 6 of the defence the defendant pleads that further and in the alternative
the defendant will rely on the clause in the acknowledgment receipt given to the
plaintiff on the deposit of the Wang Bonds dated 20 August 1982 which contains a
clause the material words of which are:
… nor is the bank responsible for any loss that may be incurred by bonds or coupons not being duly
presented when drawn or due; all requisite notices in this connection and in connection with rights,
bonuses or entitlements to convert in respect of any bonds or shares should be given to the bank by
customers …
On this plea of the defendant the plaintiff contends (i) that the condition, if at all
valid, was formulated on 20 August 1982 and can therefore form no part of the
contract dated 12 May 1982 relating to the banking arrangements as set out in
AB9, (ii) that the plaintiff only read the condition after the bank drew his attention
to it later after the dispute had arisen; (iii) that the condition is not expressed
clearly and without ambiguity, (iv) that the condition as pleaded denies the whole
purpose of the contract of 12 May 1982 and would have defeated the purpose of
depositing the convertible bearer bonds in the manner arranged.
1989 1 MLJ 278 at 283
The law on exemption clauses is succintly stated in Chitty on Contracts (25th Ed)
Vol 1 at pp 875–876 as follows:
Exemption clauses must be expressed clearly and without ambiguity or they will be ineffective. Mere
general words in an exemption clause do not ordinarily absolve the party seeking to rely on the exemption
from liability for his own negligence or that of his employees. The clause must clearly express what its
intention is. (p 875)
… if a person was under a legal liability and wished to get rid of it he could only do so by using clear
words. (p 876)
On the issue of when the plaintiff first had knowledge of the condition, I accept the
plaintiff's evidence that he only read it later when the bank drew his attention to it
after the dispute had arisen. On the plea of the bank that the exemption clause
frees it of liability it is to be noticed that it relies on only a part of the clause and
that part reads:
… nor is the bank responsible for any loss that may be incurred by bonds or coupons not being duly
presented when drawn or due; all requisite notices in this connection and in connection with rights,
bonuses or entitlements to convert in respect of any bonds or shares should be given to the bank by
customers …
In my view the exemption clause we are concerned with must be read in its entirety
and not in part as has been done by the bank. Reading it in its entirety one could
come to the conclusion that this clause only applies to those instances 'while
receiving articles for the convenience of customers', that is, in cases where the
bank is a bailee pure and simple for their customers. Further the last paragraph of
the acknowledgement receipt which reads:
Notice of intention to withdraw items must be lodged with the bank during business hours on the day
preceding that on which delivery is required
fortifies my view that the condition was not intended to apply to securities
deposited with the bank by way of collateral but to items left by customers for
safekeeping. In the instant case the bearer bonds were deposited by the plaintiff
with the bank by way of collateral in respect of his overdraft account with the bank
and not merely for safekeeping but subject also to withdrawal from time to time on
proper notice. On a reading of the condition as a whole I do not think that the
condition as framed is applicable to the instant case nor is it enforceable against the
plaintiff for the reason that it is not expressed clearly or without ambiguity.
For these reasons I hold that the condition relied upon by the bank as exempting it
from liability is ineffective and unenforceable against the plaintiff by the bank
(see Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805 andMendelssohn v
Normand Ltd [1970] 1 QB 177). In any event I accept the defendant's submission
that the condition, if at all valid, was formulated on 20 August 1982 (AB12) and can
therefore form no part of the contract dated 12 May 1982 relating to the banking
arrangements as set out in AB9.
In the circumstances of this case I hold that the bank accepted the Wang
convertible bearer bonds as security for the plaintiff's overdraft account knowing
that such bonds were convertible bonds and that when so accepting the bonds the
bank knew of the requirements for the timely and proper conversion of such bonds.
The bank cannot therefore now be heard to say that its conduct in this case is in
keeping with its usual course of business. In the circumstances the bank did not
exercise due care (1) in not taking the necessary steps to place itself in a position
to ascertain when the notice of redemption was given by the Wang company and
(2) thus disenabling itself from informing the plaintiff of such notice which would
have made it possible for him to convert the bearer bonds to registrable shares in
the Wang company. The bank was thus in breach of its duty of care in respect of
the deposited Wang convertible bearer bonds to its customer the plaintiff.
The plaintiff says that had he redeemed the Wang bonds on 27 May 1983, the date
of redemption, by converting them to shares he would have received the sum of
US$84,650 being the value of the converted shares. As it was on 14 September
1983 he only received US$56,445, the face value of the convertible Wang bonds.
The plaintiff is now claiming US$28,205 being the difference in value of the
converted shares and the face value of the Wang bonds.
On the question of damages the plaintiff has not produced evidence of the damages
he now claims to have suffered, particularly as to what the value of the converted
shares were at the relevant time. There will therefore be interlocutory judgment for
the plaintiff on his claim with costs, the question of the assessment of the damages
suffered by the plaintiff is referred to the registrar. I direct that the damages
suffered by the plaintiff shall be the difference of the value of the converted shares
and the face value of the Wang convertible bonds.
Claim allowed.