TAT SENG MACHINE MOVERS PTE LTD V ORIX LEASING SINGAPORE LTD

[2009] SGCA 42, Court of Appeal, Singapore, Andrew Phang Boon Leong JA, Chao Hick Tin JA, V K Rajah JA, 11 Sept 2009

Liability of transport companies - Transport company delivering goods to fraudster - Whether liable for conversion - Liability of a carrier or bailee transporting or handling goods belonging to a third party - Bailment - Tort of conversion - Civil Procedure - Evidence

The respondent, Orix Leasing, was a provider of hire-purchase services for heavy equipment. It had notably leased a "Heidelberg 4C" printing machine weighing 10 tons to RGPL. When RGPL moved business premises, K were hired to shift the equipment but subcontracted the shifting of the Heidelberg 4C to the appellants Tat Seng, who were specialist movers of heavy equipment. They were contracted to load and transport the dismantled machine to a warehouse. When the lorries arrived, they were turned away as there was insufficient space at the warehouse. Tat Seng were instructed by RGPL to make other storage arrangements for about a week and managed to find storage at their own yard. At the time of the move, Crispian, a director and shareholder of RGPL, dishonestly acted to sell the Heidelberg 4C to a third party. The disappearance of the machine took place by collection by that third party from Tat Seng's yard, per instruction from Crispian. The judge at first instance had held Tat Seng liable in the tort of conversion.The Court of Appeal allowed Tat Seng's appeal. Although Orix had title to the goods, in order to sue for the tort of conversion they also needed to have either actual possession or the immediate right to possess the goods. On a correct interpretation, the Hire-Purchase Agreement had been terminated and they thus had an immediate right to possession as bailors since the bailee RGPL had behaved wrongfully. Tat Seng's involvement was essentially receiving goods from the person in actual possession, storing them and delivering them to the designated person. The acts did not amount to conversion. First, Tat Seng had made no attempt to cover its role in the transportation of the Heidelberg 4C. The loading, transportation and redelivery all took place during the day. Tat Seng used vehicles which bore its name in the transportation and their vehicle numbers were recorded at the security guard post. Secondly, apart from generally inferring that Tat Seng had acted "dishonestly", the judge had made no finding on the extent of Tat Seng's alleged knowledge of Crispian's scheme to convert Orix's property. Thirdly, the terms and conditions on Tat Seng's delivery orders suggest that it was not in its ordinary course of business to verify the ownership of the goods transported. It was highly unlikely that others in the same business would have made any enquiries in similar circumstances. Tat Seng's practice and conduct were reasonable in the present circumstances as there was nothing to indicate that competing interests were involved. Fourthly, as the Heidelberg 4C was returned to Crispian's possession, no act of conversion had taken place. Finally, findings of dishonesty had been made against Tat Seng in the face of inadequate pleadings and inconclusive facts. The Court of Appeal differed from those findings and held that Tat Seng was not liable for redelivering the Heidelberg 4C to Crispian.