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  • The Cherry[2003] 1 SLR 471; [2002] SGCA 49
    authority Otherwise acting on instructions received whether from a third party such as a shipping agent on shore or from a person with whom the carrier had a contract such as a time charterer would not release the carrier from liability 29 In this case the appellants difficulty is that they had no direct contact with the respondents in relation to discharge On discharge the respondents dealt directly with Metro because they had voyage chartered the vessels from Metro and had rights vis à vis Metro to give instructions in relation to the cargo which they did not have vis à vis the vessels themselves as they were not then in possession of the bills of lading However the appellants would be able to rely on such instructions as a defence if the instructions supported their case The respondents instructions to Metro were not passed on to the vessels and the only discharge instructions the vessels received were from Metro itself 30 In relation to Cherry these instructions were given on two occasions On 24 November 1997 Metro instructed the Cherry that if Fujairah will be declared as the final discharge port cargo will be discharged according to instructions of Metro storage coordinator On 6 December 1997 Metro further directed Cherry that y ou are kindly requested to follow local instructions from Metro storage coordinator In the cases of the Addax and the Epic the voyage instructions from Metro to the vessels were even clearer in that they read in part c argo will be discharged according to instructions of Metro storage coordinator Reading these instructions it appears to us that even Metro had told the vessels that what was required was a physical discharge of the cargo at Fujairah This impression is fortified by Metro s telexes to the appellants invoking the respective LOI clauses which telexes stated that owners were requested to discharge cargo as below without production of original B L followed by a description of the cargo involved and giving its quantity as the full quantity shipped on board 31 The respondents own instructions to Metro were specifically described as their discharge instructions and in the case of the Cherry were given on 4 December 1997 They read as follows Please find below our discharge instructions after completion of loading please forward full loaded details and instruct vessel to proceed to off Fujairah where she will discharge into MT Metrotank and or any other vessel and or shoretanks as instructed by Metro local representative Receivers Glencore International AG Inspectors We understand that you will ullage vessel on her arrival at Fujairah and that provided there is not a significant difference between arrival quantity and B L quantity vessel will discharge without inspector being present and B L quantity will be applied to inventory Obviously should you note a significant difference between vessels arrival quantity and B L then we request that you appoint Caleb Brett to attend for outturn quantity prior to vessel commencing discharge ETA notices to be sent to following on a daily basis and then 12 6 hrs 1 The respondents London Tlx 21223 attn D Hawkins Please also keep the above informed of vessel tendering NOR ie Notice of Readiness and throughout discharge emphasis added The judge found that on the face of these instructions the carrier was to discharge all the oil into the facilities and anything short of that would not constitute delivery according to the respondents instructions 32 The appellants took a different view of the respondents instructions They submitted that it was clear from the same that a the respondents were effectively instructing that delivery of the cargoes was to be made to Metro and b the appellants were entitled to follow the instructions of the local representative of Metro as to the quantities to be discharged and the quantities to be retained on board 33 The judge rejected the argument that the concluding words in the respondents discharge instructions ie to discharge into MT Metrotank and or any other vessel and or shoretank as instructed by Metro local representative were evidence that Metro were the respondents agents for the receipt of the cargo He found that those words simply meant that the Cherry was to work with the Metro representative to carry out the discharging operation since Metro operated the storage facilities at Fujairah and the vessel could not discharge oil into the same without liaising with the Metro representative on an operational level 34 Before us the appellants sought to argue that there were no words in the quoted instructions to restrict Metro s authority to merely coordinating storage Instead these instructions suggested that Metro had authority to issue instructions relating to discharge including discharge into other vessels emphasis added by the appellants The only qualification to the respondents instructions was that the discharge must be as instructed by Metro local representative This language precluded any interpretation that Metro s authority was only restricted to coordinating storage 35 We cannot agree with the interpretation given to the instructions by the appellants It was because the storage facility consisted not only of the Metrotank but also of other vessels that the Metro representative had to give instructions on which ships tanks the cargo had to be discharged into This was a storage coordination function since where the cargo went would have depended on the available capacity of the various tanks comprising the storage facility 36 We agree with the judge that the respondents instructions required full discharge of the cargo from the ship into the storage facilities It was clear from the repeated use of the word discharge in relation to various aspects of what would happen on arrival at Fujairah that the respondents wanted all the cargo to leave the ship and be pumped into the storage facilities These were the primary instructions The direction that the vessel was to act in accordance with the instructions of the local Metro representative was only an operational instruction Metro s storage facilities were made up of the Metrotank and other storage vessels and the reference to them could only have been intended as a description of the tanks into which the cargo was to be discharged That the full quantity had to be discharged was also made clear from the instructions as to the ullaging of the vessel which was to confirm that there was no discrepancy between the bill of lading and the arrival quantities This was because the bill of lading quantities were to be applied to the inventory of cargo in storage maintained by Metro for the respondents The bill of lading quantity was essentially the full loaded quantity of the cargo and the respondents were therefore asking for and expecting the full loaded quantity to be discharged As far as the respondents were concerned Metro had no authority to direct the ship to retain any part of the cargo on board Was delivery to Metro delivery to the respondents 37 The appellants however argued that the cargoes were delivered to the respondents when they were placed at the immediate disposal and under the control of Metro at Fujairah because Metro was and or must have been the respondents agent to take delivery of the cargo The appellants as the parties who were asserting that placing the cargo at the disposal of Metro meant delivery to the respondents had to prove that Metro had actual authority from the respondents either express or implied to take delivery of the respondents cargo at Fujairah without discharge and to deal with it as if the same belonged to Metro 38 As far as express authority goes we are of the view that on the evidence the appellants have not been able to establish this First a storage agreement existed between Metro and the respondents which provided that all oil bought by the respondents from Metro would be stored at Fujairah and then be dealt with in accordance with the respondents further instructions Secondly the written instructions given to Metro by the respondents when the vessels were en route to Fujairah were as discussed in 36 that all cargo was to be taken off the ship and put into the storage facility Thirdly the appellants did not adduce any evidence whether oral or written to show that the respondents had changed their instructions to Metro in relation to the discharge of the cargo 39 The appellants evidence was that oral instructions had been given by Metro at Fujairah for the partial discharge of the Cherry and the Epic They did not call any evidence on how such instructions had been given in relation to the Addax There was no evidence at all that these oral instructions from Metro actually emanated from the respondents 40 Further the relationship between Metro and the respondents in relation to the various parcels of cargo purchased by the respondents from Metro and thereafter stored at Fujairah was explored in legal proceedings between these parties in the High Court in England to which the appellants were also parties This case Glencore International AG v Metro International Trading Inc No 2 2001 EWHC 490 and commonly referred to as the UK Phase II proceedings was heard before Moore Bick J together with other cases against Metro by other companies which had entered into agreements with Metro for the storage of oil products belonging to them at Metro s storage facility in Fujairah Among the complex questions dealt with in his judgment delivered on 1 August 2001 was the question whether Metro was entitled to dispose of the oil as soon as it reached Fujairah In answer to this question Moore Bick J said at para 173 I am unable to accept either that Mr Kilakos Metro asked Mr Heuze Glencore to give him the freedom to dispose of oil as soon as it reached Fujairah and to account for it in arrears or that if he had done so Mr Heuze would have agreed to such a request Whatever may have been Glencore s perception of the arrangements in place under JV1 I am quite sure that Mr Heuze would not have agreed to release oil to Metro without qualification from the very moment of its arrival at Fujairah since such an agreement would quite clearly have deprived Glencore of the benefit of any security 41 In answer to arguments that Metro had the authority to use the oil once it arrived at Fujairah Moore Bick J said at para 245 For the reasons I have already given I am unable to accept that it was agreed between them that Metro should be entitled to dispose of oil before any ITT contract had been issued in respect of it I do not consider that there was any ambiguity about the agreement in this respect or that Mr Kilakos believed that the new arrangements involved a fundamental change in the parties relationship of that kind 42 As parties to the UK Phase II proceedings the appellants would be bound by the decision therein We also note that in fact the appellants had pleaded in their defences herein certain findings of Moore Bick J in those proceedings and had alleged that the respondents were also bound by the same and that it would be res judicata to raise the issues decided in the UK Phase II proceedings in Singapore 43 Accordingly the judgment of the English court has confirmed that Metro had no actual authority and was not entitled to use the oil as though it were Metro s own from the moment of its arrival at Fujairah and this finding must also bind the appellants in these proceedings 44 The fact that Metro had no actual authority from the respondents to instruct the appellants to retain and divert cargo to the Far East is as the respondents submitted further supported by the elaborate trail of false documentation which purported to show that the cargoes had been fully discharged at Fujairah Two categories of false documents adduced in evidence are relevant here a false discharge telexes from Metro and Rima the brokers showing that the cargoes had been discharged in full when they had not and b ships documents and telexes also showing that the cargoes had been discharged in full when they had not 45 The appellants witnesses when asked in cross examination why it was necessary to falsify the documents took the position that the false documents were necessary to protect the shipowners from claims and also to deceive the end receivers of the cargoes At the same time however they attempted to say that the documents were commercially true The production of such documents which would indicate that the vessels had totally discharged at Fujairah all cargoes carried from Kuwait appears to us to justify the inference that the appellants knew that Metro did not have authority to order the vessels not to discharge nor to deal with the cargoes as though they belonged to Metro 46 In their Case the appellants attempted to explain why the false documents had been produced They asserted that these documents were consistent with their position that the cargo had been delivered to Metro At Fujairah Metro had ordered only part discharge of the cargo in the case of Epic and Cherry and no discharge in the case of Addax After other cargoes were loaded onto the three vessels at Fujairah Metro issued new bills of lading for the voyages from Fujairah to the Far East All these new bills described the port of loading as Fujairah It was therefore necessary for the appellants to prepare documentation to signify that the previous voyage had ended and the new one had commenced It was necessary for these documents to evidence that all the cargoes had been delivered to Metro at Fujairah in the event that Metro should claim for short delivery of oil at Fujairah The documents which reflected full delivery were the Dry Tank Certificates OBQ report and the Tank Inspection Certificate These arguments are not convincing To protect themselves against claims from Metro all that the appellants would have had to do would have been to obtain written instructions on how much cargo was to be discharged and how much was to be retained and on completion of partial discharge a receipt from the Metro representative confirming the amount of cargo received in the storage facility and the amount of cargo retained on board The documents evidencing that the ships tanks were empty could only have been intended to deceive other parties who might make a claim if it turned out that the ships tanks had not been emptied prior to loading of the cargo for carriage from Fujairah to the Far East 47 One basis of the agency relationship between Metro and the respondents as posited by the appellants was that since delivery is a physical act there had to be someone to take delivery of the cargo at Fujairah on behalf of the respondents The only person who came forward to take delivery at Fujairah was Metro and the respondents had not suggested that someone other than Metro was their representative In fact the respondents had issued discharge instructions to Metro even though they could have issued such instructions directly to the appellants Whilst the respondents refused to describe Metro as their agent Metro was the only party on the ground able to give instructions as regards the delivery discharge of the cargo 48 The appellants assertion that there had to be a representative from the respondents at Fujairah to take delivery was a peculiar argument for them to make since at all material times they knew that they would not be making delivery to a representative of the bill of lading holder This is because the time charterer Metro had already invoked the LOI clause and requested discharge and delivery without production of the bill The appellants therefore knew that they would be acting on the instructions of Metro as time charterer and would not have expected a representative of the cargo owners to be present at discharge Neither would they have been expecting anyone but Metro to be giving them instructions in relation to the discharge since they had secured an indemnity from Metro against any consequences that might arise from following those instructions and implementing discharge and delivery at Fujairah without presentation of the bills 49 Accordingly the reason why Metro was the only party that came forward in relation to the cargo at Fujairah would have been self evident to the appellants and such an action could not have constituted them the respondents agents let alone the respondents agents for taking delivery of the cargo It is also significant that the appellants witnesses said that they were acting on the instructions of Metro as time charterers The master of the Cherry for example when asked whom he was obliged to deliver the cargo to under the terms of the bill replied that he would have to deliver in accordance with his time charterers instructions and that was to the time charterers Further the appellants were aware that the storage facility was run by Metro and it was only Metro s representative who could give directions on the mechanics of discharge and storage 50 The appellants also attempted to rely on implied actual authority They cited the case of Pole v Leask 1860 54 ER 481 for the proposition that when an authority given to an agent is in general terms it would be construed liberally and according to the usual course of dealing Further an agent always has the actual implied authority to do whatever is necessary for or ordinarily incidental to the effective execution of his express authority 51 The principles relating to implied actual authority are not of much assistance to the appellants however in view of the holding above that the extent of Metro s actual authority as evidenced by the respondents instructions to them was to arrange for the cargoes to be discharged at Fujairah and stored there The authority was specific not general The only implied actual authority that would follow from it would be such implied authority as was necessary to do whatever was ordinarily required for the task of discharge and storage Metro did not need to have authority to decide on discharge quantities in order to execute effectively its express authority to arrange discharge for the purpose of storage Coordinating storage only involves telling the carrier which storage vessel to discharge into and cannot extend to instructing the carrier to retain the cargo and take it to a different port altogether 52 In an attempt to derive authority from a course of dealing the appellants pointed to previous voyages when oil carried from Kuwait to Fujairah had been retained on board at Fujairah and then carried on to the Far East They named five previous shipments involving the vessels Shoko Alex Tasman Spirit Cherry and Orient and said that in these cases the retention of part of the cargo on board had had no consequence to the carrier The significance of the respondents failure in those cases to sue the vessels for keeping cargo on board was that their inaction demonstrated a course of dealing by the respondents and Metro in relation to retention of cargo on board The appellants thus had no reason not to follow Metro s instructions on retention 53 The evidence was however that in the cases of Shoko Alex and Tasman Spirit the respondents had specifically authorised Metro not to discharge the cargo so that Metro on those specific occasions had express actual authority to give the instructions they had given to the shipowners Those three cases therefore are not evidence for the existence of a general authority given to Metro to retain cargoes on board Further in seeking to rely on previous shipments the appellants were not in fact relying on the principles of implied actual authority What they were actually seeking to do was invoke the principles of apparent authority In the present case apparent authority does not avail them because first they did not plead it and secondly they did not adduce evidence to show that at the material time they had consciously inferred from the previous voyages that Metro had the authority to order the retention of cargo and that in good faith they had relied upon the appearance of such authority 54 In the appellants Case it is stated that at all material times the appellants believed that Metro was the owner of the cargo because a the instructions to load cargo at Kuwait were given by Metro b these instructions were for loading on account of Metro c the instructions relating to discharge of the cargo required them to discharge strictly in accordance with Metro s directions and d it was Metro who issued the letter of indemnity which stated that the cargo had been consigned to Metro Without necessarily agreeing that in a situation where Metro was the time charterer of the vessel and where the commercial realities were that ownership of the cargo could change hands several times in the course of the voyage the appellants had good reason to believe that Metro owned the cargo we would observe that such a belief completely undercuts the credibility of any assertion that relies on a belief that Metro was an agent with apparent authority from the cargo owners to deal with the cargo as it deemed fit Were the respondents bound by the acts of Metro in instructing the vessels to retain cargo on board 55 In this respect the appellants contention was that where Metro had implied actual authority to issue discharge instructions including instructions to retain cargo on board it must follow that the appellants cannot be liable to the respondents for following Metro s instructions This is so even if Metro had acted fraudulently by misappropriating the cargo and in this connection the appellants relied on the Lloyd v Grace Smith Co decision As we agree with the trial judge s holding that there was no actual or implied actual authority given to Metro to do what it did it must follow that as the judge held the appellants cannot avail themselves of the protection offered by Lloyd v Grace Smith Co The principal is not liable merely because by appointing the agent he gives him the opportunity to behave fraudulently Farquharson Bros Co v King Co 1902 AC 325 Morris v CW Martin Sons Ltd 1966 1 QB 716 In the present case the respondents cannot be liable merely because they did not appoint their own representatives at Fujairah to prevent Metro from giving false discharge instructions The Hyperion appeal 56 The respondents claim for the loss of the cargo carried from Iran to Fujairah on board the Hyperion and then discharged into the Cherry sounded only in conversion as there was no contract between the owners of the Cherry and the respondents in respect of this cargo It is relevant to note the manner in which the respondents have pleaded this cause of action At paras 11 to 13 of their Statement of Claim in the Cherry action they state 11 On or about 7 December 1997 the Defendants unlawfully and without the consent of the Plaintiffs misappropriated and removed from the vessel HYPERION approximately 32 635 720 mt of 180 CST Cargo and loaded the same on board the Vessel 12 The Defendants carried approximately 32 635 720 mt of the 180 CST Cargo on board the Vessel from Fujairah UAE to Port Dickson Malaysia pursuant to a bill of lading dated 8 December 1997 13 In the premises the Defendants have converted approximately 32 635 720 mt of the 180 CST Cargo to their own use Therefore the act of conversion complained of is alleged to have taken place on or about 7 December 1997 57 The appellants contended that the trial judge was wrong to find them liable in conversion to the respondents because the respondents were not entitled to immediate possession of the Hyperion cargo on 7 December 1997 as they were not holders nor indorsees of the bill of lading issued by the owners of the Hyperion for that cargo 58 The appellants relied on the well established legal principle that a person has the right to sue for conversion if and only if he had at the time of the conversion either actual possession of or the immediate right to possess the goods converted Being the owner of the goods allegedly converted is not always sufficient to entitle that person to immediate possession See Clerk Lindsell on Torts 17th Ed 1995 paras 13 51 13 52 and 13 77 In the court below the judge accepted this principle but went on to hold that the rule was not inflexible and that the right to sue in conversion may be transferred to the plaintiff from a preceding holder of that right In coming to this conclusion the judge relied on Bristol and West of England Bank v Midland Railway Company 1891 2 QB 653 59 In the Bristol Bank case cargo shipped under a bill of lading was subsequently transferred into the custody of Midland Railway The shipping documents were first held by Toronto Bank then City Bank and last by Bristol Bank Before Bristol Bank received the documents Midland Railway had already delivered the goods to a man named Clark who was acting dishonestly and thus were unable to make delivery to Bristol Bank when the latter subsequently presented the bill Bristol Bank then sued Midland Railway for conversion and the action succeeded despite the fact that the mis delivery of the goods took place when City Bank was the holder of the bill of lading The judge commented that the defence raised by Midland Railway was that Bristol Bank s action could not be maintained because the goods were released to the consignee before Bristol Bank acquired any title to them but that that defence was rejected on the basis that City Bank had had property rights to the goods as pledgees and those rights had been transferred to Bristol Bank which then acquired the right to sue although it became the pledgee after the goods were released to the consignee The judge was further of the view that the case dealt with Bristol Bank s title to the goods and not to its immediate rights of possession but that that was not an immediate and material difference as the issue was that of the right to sue and the reasoning would be the same whether it was a right to sue by having title in the goods or having the immediate right of possession With respect we are unable to agree Conversion as a cause of action can only be invoked by the person having the immediate right to possession 60 Other authorities have not adopted the judge s view of the Bristol Bank case Instead Bristol Bank has been construed as a case where the plaintiffs succeeded because the act of conversion sued on was the inability of Midland Railway to produce the goods when Bristol Bank presented the bill and demanded delivery At that stage Bristol Bank was the pledgee of the goods and had the right to possess them Bristol Bank was relying on its own right of possession and not on the antecedent right invested in City Bank at the time the goods were delivered to Mr Clark 61 In Margarine Union GmbH v Cambay Prince Steamship Co Ltd 1969 1 QB 219 Roskill J dealt at length with the Bristol Bank case In the course of his judgment he stated at 246 to 250 Mr Lloyd developed an interesting argument founded on the decision of the Court of Appeal in Bristol and West of England Bank v Midland Railway Co Mr Lloyd argued that the cause of action upon which they succeeded was the original cause of action in respect of the conversion of the goods when they were wrongly handed to Clark Thus he argued they were able to recover in respect of an antecedent tort committed by the defendants before the plaintiffs acquired title Mr Mustill on the other hand argued that the successful cause of action of the Bristol Bank was not the original conversion but the conversion following the inability and therefore the refusal of the defendants to deliver the goods to the Bristol Bank when the Bristol Bank claimed them under the bills of lading after the Bristol Bank had got title thereunder If one had to determine the matter merely from reading the report itself I would conclude that the cause of action upon which the Bristol Bank succeeded was a cause of action resulting from the inability of the defendants to deliver the goods to the Bristol Bank after the Bristol Bank had become the pledgees of the goods I have dealt with the submissions on either side in relation to the Bristol Bank case at considerable length because much of the argument before me was devoted to an analysis of the decision in that case Clearly it is a case of importance for the decision of the present case for if the plaintiffs submission upon it be right it is a case where a plaintiff who acquired title by accepting shipping documents none the less succeeded in recovering in respect of an antecedent tort committed at the time when that plaintiff is not the owner But in my judgment that is not what that case decided This analysis of Bristol Bank was accepted by the English Court of Appeal in The Future Express 1993 2 Lloyd s Rep 542 at 548 549 62 On the proper interpretation of the case therefore it is clear that Bristol Bank did not obliterate the requirement that a plaintiff suing in conversion had to have had the immediate right to possession at the time of the alleged conversion in order to maintain such an action Moreover the case did not allow the right of possession to be transferred retrospectively to the date when the act of conversion occurred In the present case therefore in order to succeed in conversion the respondents had to show that on 7 December 1997 they had the immediate right to possession of the Hyperion cargo 63 The evidence showed that as of that date the respondents did not hold the bill of lading issued by the owners of the Hyperion This bill was made out to the order of the shipper National Iranian Oil Company NIOC and was given to the shipper upon completion of loading in Iran The respondents did not dispute this Their position was that they were the owners of the cargo at all material times and thereby entitled to possess it because the contract of sale with NIOC provided that title to the cargo would pass at the loading port to the buyer Metro as the product passed the flanges of the ship and their own back to back contract with Metro had identical provisions Thus on loading title to the oil passed to them 64 Having title to the goods however does not mean having the immediate right to possession When goods are shipped on board a vessel and a bill of lading is issued in respect of the carriage it is the carrier s presumed intention and legal obligation to deliver to the holder of the bill of lading In addition s 19 2 of the Sale of Goods Act Cap 393 states that where goods are shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent the seller is prima facie to be taken to reserve the right of disposal Hence the presumption would be that the immediate right to possession would lie with the seller NIOC until it endorsed the bill of lading over to the buyer or its bank and completed the endorsement by delivery of the bill As per the usual arrangement that bank was BTC Such endorsement and delivery could have not occurred until 19 December 1997 at the earliest as that was the date on which payment was made Although there was no evidence as to when the bill was actually sent to BTC a telex message sent on 15 December 1997 makes it clear that as of that date the document had still to be submitted Thus on 7 December 1997 NIOC still had the bill of lading and on presentation of the bill to Hyperion would have been entitled to delivery up of the cargo On that day the respondents were not the persons entitled to possess the cargo 65 The respondents relied on the case of The Filiatra Legacy 1991 2 Lloyd s Rep 337 as support for the proposition that as owners of the Hyperion cargo they were entitled to sue for conversion That case however is distinguishable from the present one It was a shortage claim and the plaintiff buyer of cargo founded its suit on the torts of negligence and conversion in the alternative At 339 Mustill LJ considered that since the buyers were suing in tort they have to establish that they were the owners of the oil at the time of discharge Leigh Sillavan Ltd v Aliakmon Shipping Co Ltd 1986 1 AC 785 Aliakmon Shipping was a negligence case In it Lord Brandon stated at 809 that in order to enable a person to claim in negligence for loss of or damage to property he must have had either the legal ownership or a possessory title to the property concerned at the time of the loss or damage and it was not enough for him to have had only contractual rights in relation to the property at that time This meant that to sue in negligence either legal ownership or possessory rights would suffice In The Filiatra Legacy neither the issue of immediate right to possession nor any other possessory right was raised The requirements for maintaining an action for conversion were not considered Accordingly The Filiatra Legacy is of no assistance to the respondents 66 In the event we are satisfied that the respondents were not entitled to make a claim for conversion of the Hyperion cargo on 7 December 1997 and that accordingly the appeal of the owners of the Cherry in respect of this parcel of cargo must be allowed Causation 67 On the issue of causation the judge held that the onus was on the respondents to prove that the oil was lost and that the appellants had caused the loss The respondents did not have to establish as contended by the appellants that they would not have suffered loss through other causes The appellants had the burden of proving their assertion that the oil would have been lost in any event notwithstanding their own wrongdoing The judge found that the respondents had discharged their burden and that the appellants had been unable to establish that the oil would have been lost anyway even if it had been discharged in full at Fujairah in accordance with the respondents instructions 68 As Kan J held in The Feng Hang 2002 2 SLR 205 a claimant can recover damages for a breach of contract or in tort where that breach or wrong was the effective or dominant cause of the loss The courts adopt a common sense approach in interpreting the facts of each case to determine whether the breach was the cause of the loss or merely gave the opportunity for the loss to be sustained Though different terms have been used dominant and effective cause in contractual cases like Galoo Ltd v Bright Grahame Murray 1994 1 WLR 1360 as opposed to what is termed the but for test often

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  • The "Jian He"[2000] 1 SLR 8; [1999] SGCA 71
    so in a commercial relationship Though it is possible as matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships including that of banker and customer either as a matter of contract law when the question will be what if any terms are to be implied or as a matter of tort law when the task will be to identify a duty arising from the proximity and character of the relationship between the parties their Lordships believe it to be correct in principle and necessary for the avoidance of confusion in the law to adhere to the contractual analysis on principle because it is a relationship in which the parties have subject to a few exceptions the right to determine their obligations to each other and for the avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort eg in the limitation of action 26 Equally pertinent is the following observation of Oliver J in Midland Bank Trust Co Ltd v Hett Stubbs and Camp 1979 Ch 384 which observation was approved by the House of Lords in Henderson v Merrett Syndicates Ltd 1994 3 WLR 761 A concurrent or alternative liability in tort will not be admitted if its effect would be to permit the plaintiff to circumvent or escape a contractual exclusion or limitation of liability for the act or omission that would constitute the tort Subject to this qualification where concurrent liability in tort and contract exists the plaintiff has the right to assert the cause of action that appears to be the most advantageous to him in respect of any particular legal consequence 27 In a case such as the present to allow a claim in tort to proceed in a different forum on the ground that such a claim is outside the jurisdiction clause would only give rise to a forensic nightmare see per Steyn LJ in Continental Bank v Aeakos Compania 1994 1 Lloyd s Rep 505 at p 508 Strong cause 28 It is trite law that when a party seeks to bring an action in our courts in breach of an exclusive jurisdiction clause he must show strong cause The El Amria 1981 2 Lloyd s Rep 119 why the court should exercise its discretion in his favour and assist him in breaching his promise to bring the action in the contractual forum What is strong cause and what are the circumstances the courts would take into account were addressed by this court in Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1975 77 SLR 258 at p 260 citing from a passage of Brandon LJ in The El Amria supra at pp 123 124 as follows The court in exercising its discretion should grant the stay and give effect to the agreement between the parties unless strong cause is shown by the plaintiff for not doing so To put it in other words the plaintiff must show exceptional circumstances amounting to strong cause for him to succeed in resisting an application for a stay by the defendant In exercising its discretion the court should take into account all the circumstances of the particular case In particular the court may have regard to the following matters where they arise a In what country the evidence on the issues of fact is situated or more readily available and the effect of that on the relative convenience and expense of trial as between the Singapore and foreign courts b Whether the law of the foreign court applies and if so whether it differs from Singapore law in any material respects c With what country either party is connected and if so how closely d Whether the defendants genuinely desire trial in the foreign country or are only seeking procedural advantages e Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would i be deprived of security for their claim ii be unable to enforce any judgment obtained iii be faced with a time bar not applicable here or iv for political racial religious or other reasons be unlikely to get a fair trial 29 With regard to factor a listed above the circumstances in the present case favour neither Singapore nor China as the evidence touching on the main issue of breach of duty is to be found in South Africa Of course questions touching on ownership and shipment would be found in Singapore Factor b prima facie favours China because the jurisdictional clause provides that Chinese law shall apply to the bill of lading Factor c is neutral in relation to the parties because the plaintiffs are a Singapore company and the defendants a Chinese company It seems to be in relation to factors d and e iii that the learned judge below felt that exceptional circumstances had been shown 30 There is a limitation period of one year under Chinese law which may not be extended by mutual consent of the parties It would be too late for the plaintiffs to commence any action in China While these circumstances may on first impression seem quite compelling we must point out an even stronger contrary argument In Citi March v Neptune 1997 1 Lloyd s Rep 72 at p 75 Colman J stated the point in this manner The feature of the time bar consideration which differentiates it from all the others is that its existence arises from the omission of the plaintiff to take the steps necessary to preserve time in the Courts of the contractual jurisdiction Therefore when having failed to take such steps he invites the English Court to refuse a stay on the grounds that he would be prejudiced by the claim then being time barred in the contractual forum what he is really doing is praying in aid of the jurisdiction of an uncontractual forum his own failure to pursue his claim in the contractual forum in sufficient time In essence his prejudice is self induced emphasis added 31 In the later case The MC Pearl 1997 1 Lloyd s Rep 566 at p 570 Rix J expressed a view in similar vein as follows In the absence of any authority I would have regarded the failure of a plaintiff to commence proceedings in time within the contractual jurisdiction as prima facie a factor assisting the defendant in enforcing the parties jurisdictional bargain After all those who contract for an exclusive jurisdiction must be taken to be aware of the limitation law of that jurisdiction a fortiori if the time limit is a contractual one If therefore a plaintiff fails to bring proceedings in the contractual jurisdiction within time the defendant has an accrued right of limitation which prima facie ought to protect him The idea that one could escape the limitation period applicable in the contractual jurisdiction by commencing proceedings is another ex hypothesi uncontractual jurisdiction seems strange and contrary to principle The further idea that the existence of a time bar in the contractual jurisdiction which does not apply in England should actually assist the plaintiff to preserve his action in England seems even stranger 32 The rationale for such a judicial approach was elaborated in an earlier case The KH Enterprise 1994 1 Lloyd s Rep 593 where Lord Goff quoted with approval at p 606 the following passage taken from the judgment of the Hong Kong Court of Appeal If you find yourself bound to litigate in a forum which is more expensive than the one you would prefer deliberately to choose the latter rather than the former seems to me although the judge thought otherwise to be forum shopping in one of its purest and most undesirable forms And if in pursuance of your deliberate decision to litigate here instead you let time run out in the jurisdiction in which you are bound to litigate without taking the trouble because of the expense even to issue a protective writ there you are not as I think acting reasonably at all you are gambling on the chance of a stay on being refused here and you cannot complain if you then lose that gamble That may seem to you at the time a justifiable commercial risk to take But that in the context of the litigation does not make your decision a reasonable one 33 Thus the mere fact that the action would be time barred in China is not of itself a sufficient ground for the court to exercise its discretion in favour of a plaintiff It is really a neutral point as refusing a stay would deprive the defendants of their accrued rights and granting a stay would defeat the plaintiffs claim altogether The plaintiffs must justify their conduct in allowing limitation to arise in the contractual forum They must show that they did not act unreasonably in failing to commence proceedings within time in the contractual forum such as by issuing a protective writ see also Spiliada Maritime Corp v Cansulex Ltd 1987 AC 460 and The El Amria 1981 2 Lloyds Rep 119 They must explain fully and fairly to the court why they allowed time to lapse in the contractual forum The Bergen 1997 2 Lloyd s Rep 710 Therefore the factor of time bar in the contractual forum is a two edged sword depending very much on the reasons given No explanation for non issue of protective writ in contractual forum 34 We must point out that the plaintiffs have not filed any affidavit explaining their failure to file a protective writ in China However their counsel submitted here and below that they had not filed any protective writ in China because the appellants misled them into thinking that the appellants would not contest the jurisdiction of the Singapore courts The learned judge accepted that argument as she stated in her grounds of decision It was obvious that the defendants repeated requests for one document after another were completely irrelevant to the issues of their liability and the plaintiffs entitlement to sue they were ruses to delay the matter until the time bar in China had lapsed 35 There is a need to look at this ground It is true that the defendants did request for documents including those pertaining to the details of the plaintiff s set up correspondence between the plaintiffs and the consignee and the equipment exchange receipts EIR issued by the Port of Singapore Authority The court below accepted the plaintiffs evidence that an EIR is issued when a container enters a port and will not normally be provided to the shipper by his forwarder The court below agreed with the plaintiffs that there was no rationale behind the defendants request for the EIR as there was no dispute that the goods were indeed shipped on the vessel and discharged at Johannesburg Accordingly the learned judge concluded that the repeated requests for the documents were ruses to delay the matter until the time bar in China had lapsed 36 In our view this may be reading too much into the requests for documents In considering a claim of this nature it is logical for a shipowner to request for all documents which are deemed relevant not just on the question of liability but also on the claimant s entitlement to sue The requests for documents were on a without prejudice basis Nothing in the correspondence indicated that the defendants would not be enforcing the jurisdiction clause 37 When the plaintiffs filed their writ here the limitation period had not expired in China It is true that the defendants could have made an application for a stay between the time when the writ was served on them on 16 June 1997 and 24 July 1997 when the time bar in China would arise which was a period of over five weeks Such an application might then have prompted the plaintiffs to commence proceedings in China But in our view such a failure on the defendants part could not in itself provide the plaintiffs with any good reason for failing to protect their position in China In The Biskra 1983 2 Lloyd s Rep 59 at p 62 Sheen J opined There is no obligation on a person who may become a defendant in proceedings to tell the plaintiff where to issue those proceedings or to spur the plaintiff into commencing proceedings 38 In The Zhi Jiang Kou supra the bill of lading contained a limitation period within which the parties were to bring their action in the contractual forum Prior to the lapse of the limitation period there had been some correspondence between the parties concerning the settlement of the plaintiffs claim By the time limitation set in the plaintiffs had yet to commence any action in the contractual forum The plaintiffs pleaded that the correspondence estopped the defendants from relying on the time bar The learned judge at first instance agreed This was reversed on appeal Kirby P held at p 514 LHC But did conscience nonetheless require that the solicitors for the defendants should have alerted his opponent s solicitor about an advancing time bar Ordinarily there would be no such duty Indeed in some cases to do so would be in breach of the duty to the solicitor s own client 39 Even the plaintiffs have to concede before us and we think rightly that the defendants had no duty to warn them of the impending time bar So there can be no question of the plaintiffs being misled But even looking at the circumstances as a whole the conduct of the defendants was also consistent with the fact that they themselves could also have overlooked the limitation point in the contractual forum If the defendants were really waiting for limitation to set in before they applied for a stay surely they would have done it much earlier well before the O 14 application of the plaintiffs They would not have waited for more than a year 40 Accordingly we hold that although limitation has set in in the contractual forum that per se is really a neutral factor Delay 41 The learned judge below also noted that the defendants made the stay application inordinately late and that was a factor the court could take into account in deciding whether to grant a stay 42 The defendants argued that there was no delay on their part and relied upon O 12 r 7 which provides Dispute as to jurisdiction O 12 r 7 7 1 A defendant who wishes to dispute the jurisdiction of the Court in the proceedings by reason of any such irregularity as is mentioned in Rule 6 or on any other ground shall enter an appearance and within the time limited for serving a defence emphasis added apply to the Court for g a declaration that in the circumstances of the case the Court has no jurisdiction over the defendant in respect of the subject matter of the claim or the relief or remedy sought in the action or h such other relief as may be appropriate 43 They said that while the writ was first served on them on 16 June 1996 the statement of claim was only filed and served on 24 October 1998 Under O 18 r 2 1 the defendants would only be required to serve their defence within 14 days of that date that is by 7 November 1998 As the application for stay was filed on 4 November 1998 it was well within the time period prescribed under O 12 r 7 Accordingly there was no delay by the defendants 44 In our opinion this argument is misconceived O 12 r 7 only applies where the jurisdiction of the court is being challenged A stay application on the ground of a foreign jurisdiction clause does not challenge the jurisdiction of the court It is asking the court to exercise its discretion not to assume jurisdiction over the case but to let the case be heard in another more appropriate forum in this instance a contractual forum In The Sydney Express 1988 Lloyd s Rep 257 at p 262 Sheen J said Lord Fraser pointed out in the case of Williams Glyn s Bank v Astro Dinamico 1984 1 Lloyd s Rep 453 that Order 12 r 8 1 h ie the equivalent of our O 12 r 7 1 h although wide in its terms must be read in its context and is not appropriate to include an order to stay O 12 r 8 deals with the case in which a defendant wishes to dispute the jurisdiction of the court An application for a stay is the appropriate procedure for enforcing an agreement to litigate in some other jurisdiction when a writ has been issued and served without irregularity other than a breach between the parties 45 In Dicey and Morris on The Conflict of Laws 12th ed at p 289 the learned authors stated that an application to stay proceedings is not a challenge to the jurisdiction of the court 46 In this regard we would observe that in the section in The Supreme Court Practice 1999 dealing with stay on the ground of an exclusive jurisdiction clause no mention of the English equivalent of our O 12 r 7 was made It seems to us clear that the power of the court to grant a stay is pursuant to the provisions of para 9 of the First Schedule to the Singapore Court of Judicature Act which read Power to dismiss or stay proceedings where the matter in question is res judicata between the parties or where by reason of multiplicity of proceedings in any court or courts or by reason of a court in Singapore not being the appropriate forum the proceedings ought not to be continued 47 However while a defendant should if he

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  • The "Arktis Sky"[2000] 1 SLR 57; [1999] SGHC 197
    on appeal to a judge in chambers and the defence of time bar was ordered to be struck out from the defence this was done subsequently by the defendants 24 The defendants had issued third party proceedings against the charterers and against Maldives Transport Services Pte Ltd the second third party in December 1996 They claimed an indemnity or contribution against the plaintiffs claim from the second third party which is a Singapore company alleging that the second third party caused to be issued a second set of the bills of lading and or conspired with the plaintiffs to issue the second set which set was used to fraudulently obtain delivery and possession of the goods Service of the third party notice was never effected on the charterers On 10 November 1998 the defendants discontinued their proceedings against the second third party and at the commencement of trial I was informed by counsel for the parties that the defendants had settled their claim amicably with the second third party On their part the plaintiffs sued in Suits Nos 352 95 and 353 95 respectively the insurers of the goods namely India International Insurance Pte Ltd and Federal Insurance Co but the actions were subsequently discontinued without the plaintiffs receiving any payment for their loss The evidence The plaintiffs case 25 The plaintiffs called two witnesses to support their claim namely Darshan and an expert forensic scientist chemist Siow Kwen Sia Siow I turn first to Siow s evidence Siow was instructed by counsel for the plaintiffs to determine the authenticity of Darshan s signatures endorsed on the reverse of the second set of the bills of lading presented by Murex for the release of the goods 26 Siow s affidavit of evidence in chief exhibited SKS 5 a report of his findings In his report Siow stated that he was handed 13 of the original bills of lading which Darshan had retrieved from UCO as well as 13 photocopies of the forged second set of the bills of lading Apparently despite the efforts of counsel as well as the attempts made by the plaintiffs previous solicitors neither the plaintiffs nor the defendants received any originals of the second set of the bills of lading from either MPA or Male customs Indeed my own request to counsel to inform the solicitors for the second third party of the need to borrow one original of the second set of the bills of lading for purposes of this trial was also not acceded to by the Maldivian authorities Hence no originals of the second set of the bills of lading were made available for Siow s scrutiny or were produced in court 27 Besides the aforementioned documents Siow stated that he was also handed the plaintiffs invoices containing Darshan s specimen signatures but without overlapping text unlike the originals and the second set of the bills of lading Siow used microscopes to magnify the various signatures which he later photographed for his analysis He did a detailed comparison of the signatures on all three documents and concluded that the signatures on the 13 photocopied second set bills of lading were of a different authorship from the specimen signatures on the 13 originals 28 The defendants did not call any comparable expert to rebut Siow s testimony Rather their counsel questioned the conclusiveness of his findings since Siow did not have the benefit of looking at any originals of the second set of the bills of lading Counsel s cross examination elicited the following evidence from Siow a Siow could not tell whether the photocopied signatures had been traced by drawing over an original signature and b Siow could not tell from the photocopies whether there were any indentations pen pressures pen stops or pen lifts which suggested that the signatory was forging another person s signature But Siow pointed out that obvious pen stops could be determined from photocopied documents if the signature was a crude forgery done in haste In this case Siow said he could not detect any instances of crude forgeries Siow agreed that a person can deliberately modify his own signature so as to make it look like another person s signature however he pointed out that when a signatory deliberately disguises his signature by modifying it there would still be similarities of features in the details He opined that in this case there were an overwhelming number 23 of different features in detail in the signatures It was not possible to link the author of the specimen signatures on the original bills of lading to the signatures in the photocopied bills of lading he was certain that the signatories were not one and the same person 29 I refer next to Darshan s testimony In essence his evidence in chief has already been set out in the facts outlined in paras 3 to 16 above I therefore turn to the more salient aspects of his evidence adduced under cross examination 30 Counsel drew Darshan s attention to the fact that although the plaintiff s claim was premised on the goods having been sold to Murex the invoices for the goods were also addressed to individuals and other companies such as Skerry Maldives Pte Ltd Skerry Zakariyaa Jameel Mohamed Abdul Rahman Abdul Rasheed Moosa Moosa Maniku Modern Traders and Redstar Darshan explained that the sales were all made to Murex but because of a Maldivian government regulation that all transactions above USD15 000 had to be done by way of letters of credit L Cs Murex requested the plaintiffs to circumvent that requirement by issuing invoices below that amount to various parties persons named by Murex It was up to the plaintiffs to decide which name and what amount should be inserted in each invoice Murex remained responsible for payment of the goods In the course of his investigations Darshan ascertained that the companies whose names were given to him by Murex did exist In support of his testimony Darshan referred to a letter from Murex to the Bank dated 11 August 1991 carbon copied to the plaintiffs wherein Murex advised the Bank that they accepted all D P bills from the plaintiffs for goods which bore the markings of Skerry and the other names listed above He testified that the USD15 000 requirement was in effect for 11 2 years and was discontinued thereafter Darshan denied that in assisting Murex to avoid the requirement of issuing L Cs he had helped them to evade payment of import duty for the goods as Murex had alleged import duty remained payable regardless of the amount stated in an invoice He pointed out that the plaintiffs other customers at that time also requested the plaintiffs to use the same practice of invoicing them for lesser amounts than USD15 000 to date those customers did not issue L Cs for their purchases from the plaintiffs The forgery in this case was a one off incident and he had never encountered similar problems with the plaintiffs other customers in the Maldives 31 Darshan agreed that the customers had 14 days from the shipment dates in which to make payment to the plaintiffs provided they received the original bills of lading from the Bank On his part he would either post or hand deliver through individuals going to Male a second set of the bills of lading to Murex There was normally a delay in the customers receipt of the original set of the bills of lading because of the time taken to send the same from UCO Bank to the Bank s main branch at Male which would then forward the documents to its Bazaar branch where Murex maintained an account For that reason it was common practice for consignees to clear their goods by presenting bank guarantees issued by the Bank to the carrier they would inform the plaintiffs they were doing so Darshan saw no necessity to obtain copies of the guarantees as the plaintiffs felt that the bank furnishing the guarantee had taken over the responsibility of payment This was to avoid demurrage and other charges imposed by the carrier for late submission of bills of lading This method of clearing goods was also practised by the plaintiffs for their own imports into Singapore Another reason for the delay in payment by the plaintiffs customers some times three to four months was because the Maldives lacked foreign currency each company could only purchase USD500 from the country s monetary authority and the customers had to scout for additional supplies of foreign usually American currency from such sources as hotels and resorts Consequently as the orders from Murex increased in value from initial amounts of USD12 000 15 000 the payments slowed down correspondingly but they continued until November 1991 hence the plaintiffs had no reason to suspect anything was untoward at the material time 32 Even so Darshan said he instructed UCO Bank to chase the Bank when he did not receive payment from Murex by end March 1992 This was evidenced by correspondence commencing from 1 April 1992 Murex s excuse for not paying was that they did not have enough foreign currency to do so the local currency Rufiya of the Maldives being useless outside the country 33 Counsel for the defendants drew Darshan s attention to a letter dated 21 December 1993 from Murex to the plaintiffs see DB181 signed by Ahmed In that letter Ahmed alleged that Latheef and a person called Seedhi had been forced to resign from Murex as they were instrumental in the bankruptcy of the company The letter further alleged that the plaintiffs had previously consigned goods care of Hussein Jameel s business and under invoiced together with system of issue of double original bill of lading which modus operandi was no longer acceptable and would not be continued for future dealings between the plaintiffs and the defendants Darshan denied receipt of the letter he testified that he saw it for the first time after the plaintiffs had arrested the vessel and investigators for the defendants visited the Maldives It was then that Ahmed produced and showed the letter to the investigators The defendants case 34 I now turn to the testimony of the defendants five witnesses I begin with the evidence adduced from the managing director of Elite Far East Pte Ltd Elite who are the defendants Singapore representative Mogens Andersen Andersen confirmed the vessel s time charter to MNSL and that the vessel traded between Male and Singapore on liner service under the orders of MNSL who were responsible for cargo operation expenses at both loading and discharging ports the master was obliged to and did sign bills of lading presented by MNSL In this case however the bills of lading were not presented to the defendants the master for signature they were signed by Seaward who had no authority to sign for the defendants There was therefore no privity of contract between the plaintiffs and the defendants 35 According to Andersen DW1 at both Singapore and Male the containers on board the vessel were discharged into the care custody and control of MNSL He said the defendants did not deny shipping the plaintiffs goods in containers but they had no knowledge of the contents therein Even so the goods were discharged in the same good order and condition as shipped into the possession and custody of MNSL according to the vessel s deck logbook entries which relevant extracts were produced in court but not the maker Therefore the defendants were not liable or responsible for the alleged delivery of the goods without production of the original bills of lading once delivery was made to MNSL in the alternative Andersen relied on cl 4 of the bill of lading He alleged that according to another witness Nicholas Mallard investigations in the Maldives revealed that there was a system in practice whereby consignees would be allowed to take delivery of their cargo without first making payment to the plaintiffs as the original documents of title would be with a bank in Male 36 Hassan Maniku Maniku the assistant manager of MNSL confirmed Andersen s testimony that i the defendants were not involved with the vessel s cargo operations and were not privy to any of the plaintiffs shipments ii Seaward were agents not of the defendants but of MNSL iii Seaward were authorised by MNSL to sign bills of lading prepared in accordance with mates receipts for which purpose MNSL provided a rubber stamp to Seaward for use on bills of lading iv the plaintiffs shipments were booked with MNSL through Seaward who issued the 28 bills of lading in sets of three in question to the plaintiffs v MNSL did not itself make any endorsement on the bills of lading 37 Maniku DW2 testified that once the vessel arrived in Male and its cargo was discharged into the custody of the MPA the responsibility of MNSL ceased At the material time the custom and practice of the port was that the consignee receiver will make an import declaration to Male customs and produce the original bills of lading to Male customs and or MPA Once both authorities are satisfied with the documents produced the cargo will be delivered to the consignee receiver The system of delivery did not involve either the defendants or MNSL As far as Maniku was aware from the investigations conducted by his company and according to letters dated 26 and 29 November 1992 from Male customs and MPA respectively Murex took delivery of the plaintiffs goods by submitting the relevant import declaration and producing 28 sets of the original bills of lading MNSL was not privy to the delivery Maniku also relied on the Statement and Further Statement given by Darshan to Male customs which copies had been extended to him to say the authorities were not aware that the bills of lading presented for delivery of the goods were actually forged It was only some time in 1992 that he became aware of this fact from communication with Darshan His company commenced investigations after receiving the plaintiffs letter dated 22 April 1992 see AB180 inquiring how and when their goods had been cleared 38 Cross examined Maniku clarified that he had personally experienced taking delivery of cargo from the MPA in 1992 on behalf of friends and relatives For the past three years however the system had been changed and MPA now required delivery orders to be issued to consignees in exchange for bills of lading He confirmed that no bank guarantee was presented for clearance of the plaintiffs goods If a bank guarantee was to be given in lieu of original bills of lading for release of the goods Maniku said the sum guaranteed would be twice the value of the goods 39 The testimony of another witness can be disposed of fairly quickly that of Rahim Dastager Rahim the shipping manager of Seaward Rahim confirmed that his company was the Singapore agent of MNSL that he signed 23 of the bills of lading issued to the plaintiffs with the remaining five being signed by Yogendran the accounts manager of Seaward at the material time and that no draft bills of lading were forwarded to the plaintiffs Rahim DW3 said that the plaintiffs were handed the originals of the 28 bills of lading when they surrendered the original mates receipts issued for the shipment 40 Cross examined on the copies of the bills of lading exhibited in the agreed bundle Rahim explained that where corrections amendments were made on the bills of lading his company would endorse its stamp against the correction amendment Rahim clarified that the shipping details in the bills of lading were prepared by the plaintiffs Seaward filled in the particulars relating to bill of lading numbers and freight charges He could not positively identify the signatures in the bills of lading when his attention was drawn to the copies incorporated in the agreed bundle All he could say was Looks like mine when questioned whether the signatures in those copies were his but he was unable to estimate in percentage terms the likelihood of the signatures being his However when counsel informed him those copies were from the supposedly forged bills of lading Rahim immediately said the signatures were not his Rahim confirmed that his company carried out investigations as to whether any person in the company had assisted in the issuance of the forged bills of lading by checking with all the staff However no police report was lodged by his company in that regard 41 The defendants also called the director of the International Chamber of Commerce International Maritime Bureau the Bureau one Pottengel Mukundan Mukudan to testify Mukundan DW4 said the Bureau was instructed by the solicitors of India International Insurance Pte Ltd one of the plaintiffs two cargo underwriters in September 1996 to investigate the circumstances in which the goods under the 28 bills of lading were delivered to the consignees He personally carried out the investigations for which purpose he visited the Maldives from 4 to 10 January 1997 and prepared a report the Report dated 20 January 1997 thereafter see exhibit PM1 in his affidavit filed 18 November 1998 42 In the Report Mukundan set out the events and documents as told or given to him by people he spoke to in the Maldives these people were Ali Arif whom he did not meet but spoke to on the telephone Nasir one of the owners of Lily Store Munnawar the Attorney General Shakur the deputy Chief of Police Ali Ahmed from MPA and B Ratnam from the Bank 43 Based on his investigations Mukundan concluded that the goods were not stolen as the plaintiffs had claimed The following paragraphs appeared in the conclusions section of the Report 3 1 There were different receivers to the twenty three bills of lading the subject of this investigation The cargoes referred to in all the bills of lading were in fact imported by Murex who undertook to pay for the cargo on D P basis through the Bank of Maldives Male 3 2 We were advised that Murex was effectively run by Mr Ahmed Arif who ran their relationship with JKT the plaintiffs 3 3 A signed statement and letters written by Mr Arif confirm that JKT supplied Murex with a second set of bills of lading enabling them to collect the cargoes from the vessel s Male agents without paying for the documents lying at the Bank of Maldives JKT therefore accepted that the cargoes would be collected by Murex without retiring the documents lying with the Bank of Maldives JKT s acceptance of this arrangement is evidenced by the fact that the documents sent to Bank of Maldives were retired many months after arrival of the documents there Normally JKT would have expected the documents to be retired within fifteen days ie before the discharge of the cargo in Male This arrangement had been running successfully from 1988 to 1992 and ran into problems only when Murex ran into financial difficulty and was not able to repay the Bank of Maldives The dates of the Report and of his arrival in Male confirmed that Mukundan received the above information some four to five years after the events in question had transpired 44 The last witness for the defendants was Nicholas Henry Mallard Mallard the Hong Kong based solicitor who visited the Maldives in May 1996 and January 1977 to carry out investigations on their behalf Like Mukundan with whom he spoke Mallard prepared a report after his investigations see exhibit NM1 Similarly Mallard s report was based on ex post facto information he received from various parties including Ahmed Ali the Attorney General Hussain Jameel proprietor of HJ Traders Ismail Saadiq director of Dharuma Services Co Pte Ltd and representatives of the Bank 45 Cross examined Mallard testified he saw Ahmed on two occasions at Lily Stores sitting down and using a typewriter there this fact however was not stated in his affidavit evidence in chief Mallard had attached to his report an affirmation by Ahmed of how Murex traded with the plaintiffs That affirmation however was not signed before a notary public and or legalised by the Singapore High Commission in the Maldives if there is one Neither was Ahmed nor his partners present in court to enable counsel for the plaintiffs the opportunity to cross examine him on the allegations Ahmed and his partners had made to Mallard regarding the plaintiffs and or Darshan Accordingly similar to all the other hearsay evidence information gathered by Mallard and admitted as much by him under cross examination Ahmed s allegations have little if any probative value Yet under para i of his report Mallard was able to and did conclude from information and documents he had gathered from a variety of sources that they provide corroborative evidence to the initial affirmation of Mr Ahmed Arif and indicate the participation of JK Trading in fraud The documents indicate that JK Trading participated in fraud upon the banks and fraud upon the Maldives Customs The findings 46 A preliminary observation I would make is that apart from Darshan s testimony none of the defendants witnesses gave direct evidence of events which transpired at the material time I had in the preceding two paragraphs already pointed out the almost totally hearsay nature of the testimony of Mukundan and Mallard Consequently the defendants were not in a position either to rebut or to contradict Darshan s version of events as he saw or experienced them The testimony adduced from the defendants aforesaid two witnesses offend ss 61 and 62 of the Evidence Act Cap 97 1997 Ed which state 61 All facts except the contents of documents may be proved by oral evidence 62 1 Oral evidence must in all cases whatever be direct a if it refers to a fact which could be seen it must be the evidence of a witness who says he saw that fact b if it refers to a fact which could be heard it must be the evidence of a witness who says he heard that fact c if it refers to a fact which could be perceived by any other senses or in any other manner it must be the evidence of a witness who says he perceived that fact by that sense or in that manner d if it refers to an opinion or to grounds on which that opinion is held it must be the evidence of the person who holds that opinion on those grounds 47 On the meaning of hearsay or second hand evidence the learned authors of Ratanlal and Dhirajlal s The Law of Evidence 18th ed 1992 has this to say at p 186 The term hearsay is used with reference to what is done or written as well as what is spoken and in its legal sense it denotes that kind of evidence which does not derive its value solely from the credit given to the witness himself but which rests also in part on the veracity and competence of some other person That this species of evidence is not given upon oath that it cannot be tested by cross examination and that in many cases it supposes some better testimony which might be adduced in the particular case are not the sole grounds for its exclusion Its tendency to protract legal investigations to an embarrassing and dangerous length its intrinsic weakness its incompetency to satisfy the mind of the existence of the fact and the frauds which may be practised with impunity under its cover combine to support the rule that hearsay evidence is inadmissible The word hearsay is used in various senses Sometimes it means whatever a person is heard to say sometimes it means whatever a person declares on information given by some one else sometimes it is treated as nearly synonymous with irrelevant Consequently as was stated by counsel for the plaintiffs in his closing submissions all the information and documents received by Mukundan and Mallard in their trips to the Maldives is inadmissible as evidence and their reports based on those sources cannot be accepted their reports were also not contemporaneous As counsel for the defendants did not address me on the exceptions to the hearsay rule found in s 32 of the Evidence Act I need not consider them The issues 48 Apart from the above deficiency the testimony of the defendants other two witnesses namely Maniku and Rahim was not helpful in determining the main issue which is was the contract of carriage as evidenced by the bill of lading between the defendants and the plaintiffs If not the plaintiffs claim ends there and the other issues arising from delivery of the plaintiffs goods to Murex without presentation of the original bills of lading held by the Bank become academic If there was privity of contract between the parties the next issue which arises for determination is whether the defendants are nevertheless discharged from responsibility for the alleged misdelivery of the goods by reason of cl 4 of the bill of lading in that connection cl 17 of the bill of lading also has to be considered The decision 49 In order to determine the main issue it is necessary to look at one of the bills of lading see exhibit P1 issued by Seaward at the material time The bill of lading was headed Liner Bill of Lading and was stamped with the chop of MNSL As stated earlier Seaward signed the same As Agent only under their own rubber stamp There was no indication of the status or capacity of MNSL on the bill of lading However a reasonable and logical interpretation by anyone looking at the bill of lading is that Seaward must be the agent of MNSL although MNSL s own status is not apparent How then would MNSL be regarded by anyone who holds or is an endorsee of the bill of lading It would be natural for the holder endorsee to look at the printed conditions on the reverse of the bill of lading for some guidance 50 We start with cl 17 of the bill of lading which states Identity of carrier The Contract evidenced by this bill of lading is between the Merchant and the Owner of the vessel named herein or substitute and it is therefore agreed that said Shipowner only shall be liable for any damage or loss due to any breach or non performance of any obligation arising out of the contract of carriage whether or not relating to the vessel s seaworthiness If despite the foregoing it is adjudged that any other is the carrier and or bailee of the goods shipped hereunder all limitations of and exonerations from liability provided for by law or by this Bill of Lading shall be available to such other It is further understood and agreed that as the Line Company or Agents who has executed this Bill of Lading for and on behalf of the Master is not a principal in the transaction said Line Company or Agents shall not be under any liability arising out of the contract of carriage nor as Carrier nor as bailee of the goods Under the definition section in the bill of lading the word Merchant was deemed to include the shipper the receiver the consignee the holder of the bill of lading and the owner of the cargo 51 Before proceeding further I wish to first revert to the particulars of the defendants allegation set out in para 21 above In para 7 of the re re amended defence the defendants alleged that it was the modus operandi between the plaintiffs and Murex that the former would cause a second set of original bills of lading to be issued to the latter although the first set had already been handed to the Bank The second set would then be tendered to the carriers by Murex for delivery of the goods By doing so Murex was allowed to take delivery without having to make prior payment to the Bank for the first set of the bills of lading The D P terms of payment were never enforced by the plaintiffs who as a norm allowed Murex time up to six months to effect payment Further in order to avoid any suspicion Murex also instructed the plaintiffs in various transactions to address the invoices and bills of lading to other parties namely Moosa Maniku Skerry Maldives Pte Ltd Zakariya Jameel Ibrahim Rasheed and Mohamed Abdul Rahman The defendants alleged that for this particular shipment Murex took delivery of the goods without payment as per past practice but Murex ran into financial difficulties and failed to make payment eventually Accordingly the defendants denied that the plaintiffs loss was caused by any act of the defendants their servants or agents 52 I had in para 46 pointed out the inherent weakness in the defendants evidence They did not or could not call direct testimony on the modus operandi of the dealings between the plaintiffs and Murex Consequently their allegation in para 7 of the defence which was disputed by the plaintiffs in their rejoinder was not substantiated I go further to add that it was also effectively rebutted by the testimony of Darshan who I believe was a truthful witness 53 I turn now to the crucial question who did the plaintiffs contract with Before that question can be answered some of the authorities cited by the parties have to be looked at I start with the most recent case namely The Flecha Fetim BV v Oceanspeed Shipping Ltd 1999 1 Lloyd s Rep 612 which report was drawn to my attention by counsel for the plaintiffs after the parties had concluded their final submissions 54 In that case the bills of lading for a cargo of forest products shipped from Far Eastern ports to Rotterdam were issued by the charterers Continental Pacific Shipping Ltd PSL who had time chartered The Flecha the vessel from the shipowners the defendants for a trip from Indonesia to the United Kingdom and the Continent Damage was caused to some parcels of the cargo during the voyage and the cargo owners commenced proceedings in England against the vessel and effected service on the defendants solicitors They then applied for and was granted leave to serve a concurrent writ out of the jurisdiction on the defendants in Cyprus and Greece The defendants applied to set aside the order for service outside the jurisdiction The issue for determination was whether as a matter of construction the bills of lading were owners or charterers bills of lading The three forms of signatures in the bills of lading which were all in the same terms are as follows i Multiport Sdn Bhd as agents for Continental Pacific Shipping as carriers ii PT Pakarti Tata as agents for the carrier Continental Pacific Shipping iii Likas Shipping Sdn Bhd as agent for the carrier Continental Pacific Shipping 55 The following clauses in the bills of lading were considered of particular importance by Moore Bick J Identity of carrier 33 The contract evidenced in this bill of lading is between the merchant and the owner of the vessel named therein and it is therefore agreed that the said shipowner only shall be liable for any damage or loss due to any breach or non performance of any obligations arising out of the contract of carriage whether or not relating to the vessel s seaworthiness If despite the foregoing it is adjudged that any other is the carrier or the bailee of the goods shipped hereunder all limitations of and exonerations from liability provided for by law or by this bill of lading will be available to such other It is further understood and agreed that the line company or agent who has executed this bill of lading for and on behalf of the master is not a principal in the transaction Said line or company or agent shall not be under any liability arising out of the contract of carriage not as carrier or bailee of the goods 35 If the ocean vessel is not owned by or chartered by demise to the company or line by whom this bill of lading is issued as may be the case notwithstanding anything that appears to the contrary this bill of lading shall take effect only as a contract of carriage with owners or demise charterers as the case may be as principal made through the agency of the said company or line who act solely as agents and shall be under no personal liability whatsoever in respect thereof 56 Moore Bick J held that for purposes of service outside jurisdiction within the provisions of O 11 r 1 1 d of the Rules of the Supreme Court the plaintiffs had established a good arguable case for the following reasons 1 the bill of lading was on the form of Continental Pacific Shipping it plainly contemplated that the contract would be a contract between the owner of the goods and the owner of the vessel the forms of signature taken by themselves might well suggest that the time charterers were contracting as carriers but if the contract was looked at as a whole and in its wider context it was plain that this was a case in which the contract as set out in the printed form was intended to be a contract between the owners of the vessel and the owners of the goods 2 the charter party gave the charterers the right to determine the form of the bills of lading and if necessary to sign them on behalf of the owners it contemplated that the time charterers would bring into existence bills of lading contracts which bound the owners of the vessel and that was reflected in turn in the terms of the bills of lading and the attestation clause contemplated that the Master would sign on behalf of his owners 3 cl 33 stated that the contract evidenced by the bills of lading was between the merchant and the owner of the vessel and further stated that the company who had executed the bill for and on behalf of the master was not a principal in the transaction cl 35 reinforced that and in the circumstances it was plain that the terms of the bills of lading as a whole contemplated a contract of carriage between the owners of the vessel and the owners of the goods 4 if it were the intention of the shipping line to undertake personal liability for the carriage of the goods in contradiction to what was stated in the bills of lading terms something far clearer would be required in order to bring that about the forms of signature while they raised questions of describing Continental Pacific as carriers did not go far enough to make it clear that the parties intended that Continental Pacific were contracting in place of the owners contrary to all the terms of the bills of lading 5 on the true construction of these bills of lading they contained or evidenced contracts between the plaintiffs the owners of the goods and the defendants the owners of the vessel and the application to set aside the order giving leave to serve out of the jurisdiction failed The court in The Flecha had referred to another case cited by counsel for the plaintiffs in these proceedings and I turn to that case The Ines 1995 2 Lloyd s Rep 144 now 57 The vessel The Ines owned by the first defendants had been time chartered out to the second defendants Containers of telephones shipped from Hong Kong by the plaintiffs to Antwerp and from there

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  • The "Pacific Vigorous"[2006] 3 SLR 374; [2006] SGHC 103
    defendant s breach of the contract of carriage Agritrade was able to and did produce the original bills at the hearing before the assistant registrar As lawful holders of the bills of lading Agritrade has a right to possession of the cargo against the defendant even after the cargo had been wrongly delivered to Bhatia see 5 above Moving on to the causation point Agritrade had stated in its affidavit that it was suing the defendant in contract That position was reaffirmed by its counsel Mr Loo Dip Seng at the hearing before me In the event counsel for the defendant Mr Leong Kah Wah rightly accepted that as the ordinary principles of remoteness of damage and causation would apply to Agritrade s damages claim for breach of contract the issue of causation as presented was a point to be taken and argued at the assessment of damages 7 The third triable issue raised by the defendant was that the plaintiff consented to the delivery of the cargo to Bhatia without production of the relevant bills of lading I was persuaded by Mr Loo that there was nothing to this point and this assertion was easily disposed of The cargo was discharged and delivered to Bhatia by 8 March 2005 against letters of indemnity see 2 above and not on the basis of any prior consent by Agritrade Significantly the allegation that Agritrade consented to delivery was never a defence pleaded in the defence filed on 9 June 2005 It was raised as a triable issue in the affidavit of Pin Ying Kwan dated 22 July 2005 and subsequently addressed in reply by Agritrade Bhatia as f o b buyer arranged the shipment and that would explain the absence of any communication relating to the shipment between Agritrade and the defendant The defendant resorted to the exchanges of correspondence between Agritrade and Bhatia to cull for itself a defence that was based on ex post facto reasoning Those communications from 10 March 2005 onwards did not bear out the defendant s assertion that the plaintiff as a fact knew and consented to the discharge of the cargo into the possession of Bhatia against letters of indemnity Bhatia s letter dated 18 March 2005 was written after the cargo was delivered into the possession of Bhatia and was sent in reply to Agritrade s query on how the vessel could have delivered the cargo without its approval Bhatia wrote This is the first time that such a frivolous contention is being taken by you particularly when the material had been discharged at the disport with your knowledge and concurrence and the same has not been objected to till date in all your correspondences after the material has been discharged at the disport Nothing in that paragraph offered a foundation for the defendant s assertion that Agritrade had prior to the discharge consented to delivery without presentation of the relevant bills of lading Bhatia s remark that there was no objection from Agritrade during the earlier exchanges on the off specification cargo did not support the defendant s stance 8 The general picture that emerged from the affidavits and documents is this Agritrade found itself in a situation where the cargo was in the hands of Bhatia following the defendant s defective performance as it were of the contract of carriage The cargo had been taken and what remained was Agritrade s right to claim damages for breach of contract see 9 below As for the sale contact it was Bhatia who elected to accept the non contractual cargo by electing not to reject the cargo for breach of condition but to limit its right to claim damages for breach of warranty s 11 2 of the Sale of Goods Act Cap 393 1999 Rev Ed Having accepted the non conforming cargo Bhatia proceeded to unilaterally deduct what it believed was reasonable as damages for the breach of contract and thereafter credited the plaintiff s account for the value of the non conforming cargo Since Agritrade was in this situation it treated the payment by Bhatia as partial payment of the cargo under the sale contract and separately commenced proceedings against the defendant for breach of the contract of carriage 9 Simply put was there anything in these circumstances to conclude that Agritrade s conduct after the breach which could be explained on the basis of estoppel or some other legal principles implicitly represented unequivocally that it would not make a claim for damages that depended on an assertion of misdelivery Would acceptance of part of the sale proceeds bar Agritrade from suing the defendant for misdelivery under the respective bills of lading At the court s direction the acceptance of partial payment see 3 above was discussed in this connection by counsel The defendant did not raise estoppel but relied on election as a basis for contending that Agritrade s acceptance of part payment precluded it from recovering from the defendant damages under the relevant bills of lading for misdelivery of the cargo It seemed to me that whether Agritrade s conduct might amount to an election as alleged must be determined by reference to facts objectively viewed 10 I foreshadow the difficulties ahead for the defendant with these observations An election of the sort alleged must surely involve an abandonment of an accrued right to claim damages for breach of contract and that is not something to be facilely inferred In a commercial context and human nature being what it is the probabilities are against the gratuitous or voluntary sacrifice of an accrued right to claim damages from the defendant s breach of contract Dr Aleka Mandaraka Sheppard expressed the same sentiments in her article Demystifying the Right of Election in Contract Law 2006 18 SAcLJ 60 at para 78 when discussing total waiver in the sense of an abandonment of rights which arises by virtue of a party making an election under a contract after a breach and she rhetorically asked What person in his right mind would give up all his rights after a breach Dr Sheppard observed that once a right after breach has accrued a release or discharge of that right is either by deed or upon consideration She also noted that for a finding of an effectual total abandonment of rights one should be looking at whether or not the elements of equitable or promissory estoppel exist As stated the defendant did not raise estoppel and there was good reason for that The defendant would not have been in a position to raise common law estoppel or a promissory estoppel In both cases there would have to be some sort of acting on the representation The representee must have acted on the representation to his detriment In this present case the breach had already occurred Not only was there no representation made by Agrtirade to the defendant I could not see in what way the defendant had relied on Agritrade s alleged conduct to its detriment 11 Mr Leong argued that Agritrade s conduct leading up to and including the acceptance of payment from Bhatia amounted to an election by Agritrade to treat the earlier defective performance as good delivery under the contract of carriage to Bhatia as the person entitled to delivery under the sale contract In so doing Agritrade was precluded from pursuing its misdelivery claim against the defendant for that right was alternative to and inconsistent with Agritrade s right against Bhatia under the contract of sale Mr Leong cited the decision of Verschures Creameries Limited v Hull and Netherlands Steamship Company Limited 1921 2 KB 608 Verschures Creameries in support of the defendant s contentions 12 Mr Loo submitted that Verschures Creameries would not assist the defendant here In that case a firm of carriers being authorised by the claimants to carry goods to A delivered them to B The claimant invoiced the goods to B sued him for the price recovered judgment and took bankruptcy proceedings against him The claimant afterwards sued the carriers for misdelivery Clarke J in The Ines pointed to Verschures Creameries as one of the plainest cases of ratification of an act done by the carriers purporting to deliver on behalf of the claimant and as such there could be no complaint against the carriers for breach of authority Mr Loo also referred to Cote A Cote Ltd v Mondial Forwarding Ltd 26 October 1999 1999 WL 982440 where the defendant Mondial relied on the decision in Verschures Creameries to contend that by demanding payment from Karoma International Ltd KIL the plaintiff Cote A Cote had elected to proceed on the basis that the delivery had been valid and had thereby been ratified The decision in Verschures Creameries was again distinguished The position in that case was clarified by Lord Atkin in United Australia Limited v Barclays Bank Limited 1941 AC 1 United Australia The delivery in Verschures Creameries had been ratified because the carriers were the seller s agents That was not the position in Mondial The court had found that Mondial was not acting as the plaintiff s agent and was in clear breach of its obligations Moreover at no time had the plaintiff indicated to Mondial that by commencing proceedings against KIL it was waiving its rights to proceed against Mondial In that case the plaintiff Cote A Cote was an exporter of fashion goods KILwas an importer and wholesaler in Greece By a contract made in August 1996 the plaintiff agreed to sell goods to KIL payment to be made by way of promissory note 45 days after shipment was confirmed by the plaintiff s bank The plaintiff released the goods to the defendant Mondial which had been nominated by KIL as carrier On arrival of the goods in Greece KIL pressed Mondial for delivery Mondial released the goods to KIL The plaintiff pressed KIL for payment and at the same time put Mondial on notice that if unsuccessful it would look to Mondial for payment Proceedings were commenced against KIL for the price of goods sold and delivered and later against Mondial for damages for breach of an express term of the bailment Both actions were consolidated The court found that Mondial had not been acting as agent of the plaintiff and made the orders against Mondial and KIL 13 On the question of election the defendant referred to the doctrine of election enunciated by Lord Blackburn in Benjamin Scarf v Alfred George Jardine 1882 7 App Cas 345 at 360 361 The principle I take it running through all the cases as to what is an election is this that where a party in his own mind has thought that he would choose one of two remedies even though he has written it down on a memorandum or has indicated it in some other way that alone will not bind him but so soon as he has not only determined to follow one of his remedies but has communicated it to the other side in such a way as to lead the opposite party to believe that he has made that choice he has completed his election and can go no further and whether he intended it or not if he has done an unequivocal act I mean an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way the fact of his having done that unequivocal act to the knowledge of the persons concerned is an election Lord Atkin in United Australia 12 supra at 30 said that reference to remedies in this statement meant rights English cases have made a distinction between rights and remedies for the purpose of determining the time at which an election must be made see Robert Walker LJ in Oliver Ashworth Holdings Ltd v Ballard Kent Ltd 2000 Ch 12 at 28 As for remedies the English courts had in mind alternative remedies and cumulative remedies see 19 below 14 Mr Loo submitted that neither the common law nor equitable doctrines of election apply in the present case He again referred to The Ines 5 supra as a case in point for Agritrade I will come to this decision later on 15 Election at common law occurs where a person has two inconsistent rights or courses of action and only one of which can be exercised In such a case his choice by overt act communicated to the other party that he is relying on one such right precludes him from later claiming the benefit of another A prerequisite of this election is that the party making the choice must be aware of the facts which have given rise to the existence of his new right as to which see Lord Goff of Chieveley in Motor Oil Hellas Corinth Refineries SA v Shipping Corporation of India The Kanchenjunga 1990 1 Lloyd s Rep 391 The Kanchenjunga at 398 In a contractual context the two inconsistent rights can arise either before or after a breach of contract A common example of the application of the principle of election is the case of a repudiation of a contract The innocent party has the right to continue with the contract or to accept the conduct of the other party as terminating the contract and sue for damages If with knowledge of the facts giving rise to the repudiation the other party to the contract acts in a manner consistent only with treating that contract as still alive he is taken in law to have exercised his election to affirm the contract 16 Election in equity means that a party cannot both accept an instrument or judgment and reject it It is referable to the principle that a person is not permitted both to approbate and to reprobate an instrument or judgment Where facts exist which call for the application of the equitable doctrine the person concerned is required to choose whether he will take under or against the instrument or judgment He cannot take a benefit under the instrument or judgment without taking the burden See O Connor v S P Bray Limited 1936 36 SR NSW 248 at 263 and Evans v Bartlam 1937 AC 473 Treasure Valley Group Ltd v Saputra Teddy 2006 1 SLR 358 is a case where the equitable doctrine was applied on the facts 17 With these principles in mind I went on to consider whether the defendant had made out as a triable issue the defence of an election under either doctrine In the end I concluded that in the first place this was not really a case of common law election at all Second there was no unequivocal conduct which outwardly signified an election under common law election or equitable election Third the necessary ingredient common to both doctrines which is knowledge on the part of Agritrade that there is a choice to be made was not demonstrated I shall discuss in detail the three points in turn 18 No election arose in the sense that the defendant was wrong in contending that Agritrade had two inconsistent rights The case for the defendant did not involve the pursuit of two alternative and inconsistent rights argued for by Mr Leong The inconsistent rights as formulated by Mr Leong were a the right to treat the delivery of the cargo as wrongful and to pursue the defendant and Bhatia for conversion of the cargo and b the right to treat the delivery of the cargo as lawful and to pursue Bhatia for the price of the cargo The claims here fell under two contracts giving rise to separate and independent causes of action and they were against two different persons The rule against double recovery imposed a limitation on a plaintiff like Agritrade s ability in such a situation to recover in the aggregate from one or more defendants an amount in excess of its loss The fact that there were no inconsistent rights was sufficient to dispose of the doctrine of common law election 19 Agritrade s remedies as between Bhatia on the one hand and the defendant on the other are cumulative not alternative remedies so much so that Agritrade was not required to choose between remedies Cumulative remedy is defined in Black s Law Dictionary Bryan A Garner ed West Group 7th Ed 1999 as A remedy available to a party in addition to another remedy that still remains in force Lord Nicholls of Birkenhead in Personal Representatives of Tang Man Sit v Capacious Investments Ltd 1996 AC 514 Tang Man Sit at 521 and 522 discussed alternative remedies and cumulative remedies and at 523 reconciled the apparent inconsistencies between the various speeches in United Australia 12 supra in the light of different considerations applicable to alternative remedies and cumulative remedies He explained that as against the third party MFG Trust Ltd United Australia had a choice of one of two alternative and inconsistent remedies It could claim redress either in the form of compensation that is damages as for a tort or in the form of restitution of money to which it was entitled but which MFG had wrongfully received His lordship then pointed out and clarified that United Australia s remedies against MFG on the one hand and Barclays Bank damages for conversion and negligence on the other hand were cumulative not alternative Hence the earlier proceedings against MFG were not a bar to United Australia suing Barclays Bank unless as a result United Australia had received full satisfaction for its loss 20 Even if the present case concerned alternative and inconsistent remedies the common law doctrine of election takes effect only where a stage is reached where some choice has finally to be made at least until judgment and satisfaction Not unlike the present case The Ines was also a case on delivery of goods without production of bills of lading

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  • BNP Paribas v Bandung Shipping Pte Ltd (Shweta International Pte Ltd and Another, Third Parties)[2003] 3 SLR 611; [2003] SGHC 111
    so far as the initial bills are concerned A matter for consideration is the nature and extent of the bank s right to require delivery of the cargo to it when it was discharged in the period between May and June 2000 Although pleaded counsel for BNP did not advance the bank s case either in negligence or bailment in BNP s Opening Statement and Closing Submissions I therefore need only deal with the issue of title to sue in the context of BNP s claim against Bandung in contract and or for conversion Contract 24 It is settled law that an order bill entitles the holder to call for delivery of the goods Where the goods are surrendered to a person other than the holder of the bill of lading the shipowner so delivering is exposed to risk of liability to the holder Sze Hai Tong Bank v Rambler Cycle Co Ltd 1959 AC 576 at 586 Leggatt LJ in The Houda 1994 2 Lloyd s Rep 541 stated at 553 Under a bill of lading contract a shipowner is obliged to deliver goods upon production of the original bill of lading Delivery without production of the bill of lading constitutes a breach of contract even when made to the person entitled to possession 25 Leggatt LJ explained that the shipowner in agreeing to issue a to order bill of lading that made the goods deliverable to order had by so doing accepted the obligation to deliver to the holder upon production of the bill of lading 26 The material bills of lading each contained the standard clause on the front In witness whereof the master has signed three bills of lading of this tenor and date one of which being accomplished the other is void This clause obliges Bandung to deliver cargo to the holder of the bill of lading Clarke J in The Sormovskiy 3068 1994 2 Lloyd s Rep 266 considered a similar clause and said at 272 S ubject to the terms of the particular contract and save in exceptional circumstances a shipowner must not deliver the goods otherwise than against presentation of an original bill of lading That seems to me to be implicit in the express provision that any one of the bills of lading being accomplished the others to stand void In my judgment it is implicit in that provision that save perhaps in exceptional circumstances one would expect one of the bills of lading to be accomplished by being presented to the master or shipowner 27 BNP says that the bills of lading entitled it to call for delivery of the cargo and that this entitlement was lost because the cargo was discharged by the master without authority on the basis of letters of indemnity of which BNP was not aware had been provided by Lanyard BNP submits that as a consequence of being furnished with the shipping documents upon making payment to Shweta s suppliers it acquired a special property as pledgee in the cargo sufficient to entitle it to sue in conversion Furthermore it is entitled to sue in contract as it is the lawful holder of bills of lading that had been indorsed in blank and delivered to it The deposit of a generally indorsed bill of lading with the intention of creating a pledge over the cargo operates to render the pledgee the holder of the bill under the Bills of Lading Act Cap 384 As a consequence contractual rights of suit against the carrier are transferred to the pledgee s 2 1 Section 5 2 b refers to the completion of any other transfer of the bill A transfer by way of pledge would fall within those words 28 In response Bandung submits that the bank never acquired any right with respect to the cargo It was not a pledgee of the Batam bills and switch bills because there was no specific undertaking by Shweta that the cargo represented by those bills were to be pledged Further the bank was only the remitting bank for the shipping documents and in that capacity no implied pledge over the cargo arose 29 In my view on the evidence and I so find that the cargo was in each case pledged to the bank by the deposit of generally indorsed bills of lading The bank as pledgee became the holder of the bills of lading both switch and Batam bills by virtue of s 5 2 b of the Bills of Lading Act As lawful holder the bank is entitled to delivery of the cargo and Bandung is under a duty to deliver the cargo to the bank on presentation of the bills of lading A holder of the bill of lading is entitled to sue in contract in respect of any breach of contract committed even prior to the time at which the claimant became holder of the bill A lawful holder is defined by the Act as a person in possession of the bill who is either the consignee or the indorsee to whom the bill has been transferred in good faith There is nothing to suggest that BNP did not become a holder in good faith 30 I also find that the cargo was delivered between the months of May and June 2000 to persons who were not entitled to possession so much so that BNP is not a holder of spent bills of lading both switch and Batam bills The contract of carriage generally continues and the bill of lading remains effective until the goods are delivered to the person entitled under the bill of lading see The Future Express 1992 2 Lloyd s Rep 79 In that case the bill of lading was not spent or exhausted as delivery was not to the person who had a right to demand delivery or was entitled to them The goods were delivered against an indemnity to a person who did not have a right to delivery under the bill of lading The decision was affirmed on grounds that made it unnecessary for the Court of Appeal to decide on the issue of whether the bill of lading was spent 31 Even if a contrary view is taken that once the carrier has parted with possession of the cargo the bill of lading cannot transfer constructive possession of the cargo BNP would be a holder who would come within the provisions of s 2 2 of the Bills of Lading Act and the extended definition of holder in s 5 2 A holder of a bill which is indorsed after delivery has taken place could still sue the carrier in contract s 2 2 The holder must have become a holder by virtue of some prior transaction ie facility agreement as in this case before the bill of lading became spent s 5 2 c 32 I shall now elaborate on my findings and decision 33 In the case of the switch bills Bandung s contention is that there was no pledge over these bills The argument is that switch bills are different from the original bills that were pledged 34 It is common ground that the switch bills were handed over in exchange for the original set the new bills containing some altered details In my view even with the details altered the switch bills were for the very same cargo financed by BNP At any one time only one set would be in circulation The switch bills replaced the original set as was the fact It has not been denied by Bandung that each switch bill is evidence of a contract of carriage once the charterer had indorsed and parted with it 35 I now turn to Bandung s second argument which is that the switch bills were only released to BNP as the remitting bank for onward transmission to India for payment BNP therefore took possession of the switch bills as agent for Shweta to present the switch bills as remitting bank for payment by Lanyard see arts 3 and 5 of International Chamber of Commerce Uniform Rules for Collections URC 522 I am not persuaded by counsel s submissions which he says accord with the financial arrangement as well as the documentary evidence 36 Bandung has placed reliance on Low s testimony specifically where she said that the switch bills were physically not the same bills pledged to the bank Her testimony has been taken literally and in isolation It is incongruous when considered with the rest of her testimony where she consistently said that the bank s security is in the documents of title representing the underlying cargo In any case whether and at what stage the bank became a pledgee of the cargo is a question of mixed fact and law for the court to decide Counsel s submissions ignored the bank s two fold relationship with Shweta There was both a lender borrower relationship and banker customer relationship The one did not end with the other Both relationships existed concurrently and in tandem It is necessary to look at the factual matrix to see how this two fold relationship operated 37 It is common for banks to take security over a bill of lading to secure the advance made to finance the transaction itself It is no different in the present case In addition to the security over the material bills of lading BNP also had other separate security such as personal guarantees and cash deposit of USD1m 38 Under the terms of the Facility Agreement the facility could be utilised for opening letters of credit or execution of trust receipt with maximum tenor of 30 days Each time Shweta utilised the USD10m facility there must be lodged with the bank Shweta s confirmed sale contract with Lanyard 39 It is common ground that the original bills before switching were pledged to BNP With BNP s approval of Shweta s application to draw on the USD10m credit facility BNP undertook a contractual commitment to pay the suppliers The contractual commitment and payment by BNP in good faith to Shweta s suppliers had the effect of conferring on it a right to possession of the cargo by way of security BNP became a pledgee of the cargo as from the time it received the original bills indorsed in blank 40 The release of the original bills of lading to Shweta under the various trust receipts did not put to an end the pledge See North Western Bank Limited v John Poynter Son Macdonalds 1895 AC 56 In re David Allester Limited 1922 2 Ch 211 Lord Wright in Official Assignee of Madras v Mercantile Bank of India Limited 1935 AC 53 explained at 63 It was contended that the respondents had parted with their pledge on these goods by giving back possession of the railway receipts to the insolvents In their Lordships judgment this contention is based on a misuse of the word possession The respondents did not part with the possession of the goods or receipts in the juridical sense of that word they merely parted with the custody by entrusting the receipts to the insolvents as their agents for the special purpose of convenient dealing with the goods by collecting them and putting them into the warehouse on behalf of the respondents Such action does not involve a parting with possession and accordingly it does not in any way affect rights of pledge the redelivery by the pledgee to the pledgor for a limited purpose without the pledgee thereby losing his right is illustrated by North Western Bank Ld v Poynter and the more recent case In re David Allester Ld In both these cases the limited purpose was in order that the goods should be realized by the pledgors as experts in that class of business In this case the limited purpose was that the goods should be handled not by the respondents who were bankers but by those whose business it was to do so Such procedure is in the usual course of business and is obviously either necessary or at least convenient for the conduct of the business in question 41 The trust receipt with a maximum tenor of 30 days states that it is executed in consideration of the bank delivering to Shweta the bill of lading relating to the cargo which was immediately prior to the execution of the trust receipt pledged to the bank as security Under cl 1 Shweta is to hold the documents and goods as trustee for the bank for the purposes only of landing storing and to thereafter sell the goods and apply the proceeds in satisfaction of the amount owing by it to the bank Under cl 6 prior to any sale Shweta undertook to return the cargo and documents on demand Under cl 11 the bank has the liberty to exercise its rights as pledgee of the cargo From the last two clauses there is acknowledgment that the bank s right as pledgee did not cease to exist or extinguish with the release 42 Under the Facility Agreement the financing would be for cargo to be on sold to Lanyard on documents against payment or D P basis It follows that the authorisation under the trust receipt to sell the cargo would be on the same limited footing The trust created by each trust receipt would take effect when the sale proceeds are paid Trust as a concept need not be relied upon so long as the cargo is not paid for and the bank can rely on its special interest as pledgee which continues to exist Trust law would come into the picture after sale when Shweta no longer has title to the cargo and the bank has no special right in the cargo Consistent with cl 1 of the trust receipt Shweta had specially instructed BNP in the export bill form to offset the export proceeds ie sale proceeds against the related trust receipt 43 In these circumstances when the original bills were surrendered for cancellation and in exchange for the switch bills Shweta held the switch bills albeit for a very short time on trust for the bank and on the same terms The switch bills were indorsed and transferred to BNP within the same day the original bills were released to Shweta The rationale for an implied pledge which is the furnishing of the original bills of lading indorsed in blank to the bank as security for payment to suppliers by the bank would apply equally to the switch bills Even though in this case the cargo was discharged into bonded shore tanks leased by Lanyard the general property in the cargo still remained with Shweta until the documents are paid for and with it the bank s special interest as pledgee see Carver on Bills of Lading 1st Ed 2001 paras 6 032 and 6 033 44 In my judgment the delivery of the switch bills to BNP was not solely to enable it to collect payment from Lanyard s banks in India but entitled it to have the cargo delivered to it if its debt was not satisfied To elaborate the switch bills of lading indorsed and delivered to BNP served two purposes First the bank received the switch bills to remit to the Indian banks for collection of payment against documents It is received as a part of the process and means of on selling the cargo to Lanyard when it remits the documents for collection on D P basis The bank s role is as agent to present the documents for collection This is where the banker customer relationship is evident Secondly the bills of lading also served as a means of securing the bank s advance It is security in respect of the cargo which is subject of the bills of lading in the event that payment is not made BNP is entitled to have the documents back if the documents are not taken up 45 If Lanyard pays against the documents the general property passes from Shweta to Lanyard and the special property from the bank to Lanyard The bank as is previously instructed would utilise the sale proceeds to set off what it is owed under the related trust receipt Shweta s Special Instructions to BNP in the Export Bill form read a Export proceeds to be offset against the related trust receipt b Partial payment allowed and documents are to be released only upon full payment of the bill amount 46 In my view and I so find that the bank never had any intention implied or otherwise to surrender its security over the switch bills of lading before payment by Lanyard The bank had not lost any right or interest under the switch bills of lading when it forwarded them to the Indian banks for payment by Lanyard on D P basis This position accords with the commercial reality of the situation where the switch bills were to provide security to the bank until payment against the documents by Lanyard The documents in my view were remitted on the basis that until payment they were to retain their character as security for the money paid out by BNP As it turned out the documents sent to Indian banks were never taken up and paid for 47 Turning now to the Batam bills Bandung s contention is that BNP had a pledge only over the Vincita bill of lading and consistently acted on the basis that its pledge was over that bill alone There was no pledge over the Batam bills under which BNP claims in this action Alternatively any pledge of the Batam bills gave rise to no right of suit in contract because at the time of discharge Shweta was the holder of the Batam bills of lading and was the party entitled to possession of the cargo 48 BNP s contention is

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  • Samsung Corp v Devon Industries Sdn Bhd[1996] 1 SLR 469; [1995] SGHC 246
    in the contract but by the true intention of the parties ascertained from the terms of the contract in the context of the commercial realities of the sale and purchase The following words of Roskill LJ in Albacruz Cargo Owners v Albazero Owners 1977 AC 774 at p 809 provide a valuable pathway It is a trite observation that what is sometimes called a true fob or a true cif contract is a comparative commercial rarity Contracts vary infinitely according to the wishes of the parties to them Though a contract may include the letters fob or cif amongst its terms it may well be that other terms of the contract clearly show that the use of those letters is intended to do no more than show where the incidence of liability for freight or insurance will lie as between buyer and seller but is not to denote the mode of performance of the seller s obligations to the buyer or of the buyer s obligations to the seller In other cases though the letters cif are used other terms of the contract may show that the property is intended to pass on shipment and not upon tender of and payment against the documents so tendered or though the letters fob are used other terms may show that the property was not intended to pass on shipment but upon tender and payment the seller by the form in which he took the bill of lading intending to reserve his right of disposal of the property until he was paid against the shipping documents 14 Mitsui Co Ltd v Flota Mercante Grancolombiana SA 1988 1 WLR 1145 1988 2 Lloyd s Rep 208 is authority for the proposition that The expression fob determines how the goods shall be delivered how much of the expense shall be borne by the sellers and when the risk of loss or damage shall pass to the buyers It does not necessarily decide when the property is to pass 15 The modern law on the question is succinctly summarized in The Sale of Goods by Atiyah 9th Ed 1995 at p 372 In modern times any general presumption that property passes with risk on shipment in an fob contract has probably largely disappeared Although this may still sometimes be the case if the contract contains no contrary provision the practice of treating the shipping documents as security for the payment of the price is now so well established in international sales that contractual terms requiring payment against ie in exchange for the shipping documents is probably the norm in fob contracts these days just as much as in cif contracts where this practice may have first originated Where payment is only to be made against documents the seller will normally have himself named as the consignee in the bill of lading that is the goods will be deliverable under the bill of lading to or to the order of the seller so that s 19 1 and 2 become relevant Section 19 1 has already been set out above Section 19 2 provides Where goods are shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent the seller is prima facie to be taken to reserve the right of disposal This reservation of the right of disposal makes the appropriation conditional under s 19 1 so that property does not pass until the condition is satisfied It is clear that today there is nothing contrary to the nature of the fob contract in the seller doing this and indeed as already said it is nowadays very common The result is that the shipment is treated under s 19 as only amounting to a conditional appropriation the condition being that the seller must be paid before property passes 16 The defendants relied on Panda OHG v Circle Products Ltd 1970 1 Lloyd s Rep 171 as authority for the proposition that in an fob contract providing for cash against documents the property in the goods passed upon shipment In that case Sir Frederic Sellers said at p 504 The essence of an fob contract is that the goods are to be shipped free on board a ship ie at the seller s expense and consigned to the buyer or his agent On shipment the goods are appropriated to the contract and the seller cannot thereafter rightfully withdraw or otherwise dispose of the goods The property in them passes to the buyer who is responsible for the freight and the goods are at the buyer s risk 17 The bald assertion made by the defendants and the statement made by Sir Frederic Sellers should be read in the context of the law I have stated 18 Whether property was intended to pass upon shipment must be discerned from all relevant terms of the contract and surrounding circumstances An essential element of a true fob contract is that the goods must be consigned to the buyer or his agent This position was recognised both by the Bills of Lading Act 1855 and the English Carriage of Goods By Sea Act 1992 Singapore Bill of Lading Act Cap 384 1994 Ed 19 In the Panda case the contract as a matter of construction was held to be on true fob terms In the present case I hold that as a matter of construction there was no fob contract in the traditional sense of the term The principal reason is that the cargo was not consigned to the defendants but made to order The contract expressly required the plaintiffs to provide full set of clean on board charterparty bills of lading made out to order and blank endorsed marked freight collect Given that property was intended to pass upon blank indorsement and delivery to the defendants provided the defendants made payment in exchange The purpose of fob was to define the obligations of the plaintiffs for the price that had been

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  • The "Cherry" and others[2002] 3 SLR 431; [2002] SGHC 68
    closed by the 1992 Carriage of Goods by Sea Act But the question can now arise whether it is the agent or his principal the buyer who is the holder of the bill for the purposes of the 1992 Act Where the person who receives the bill acts in a purely ministerial capacity there can be little doubt that possession of the bill will be regarded as having been transferred to the buyer this would be so in the common case in which possession is acquired on behalf of a corporate buyer by a member of its staff It is less clear who is the holder of a bill which is transferred to an agent who has been engaged as an independent contractor by the buyer for the purpose of taking delivery of the goods from the ship This was for example the position in The Aramis 1989 1 Lloyd s Rep 213 where the bills were indorsed by the shippers and by forwarding agents appointed by the buyers to obtain delivery of the goods and in the case of one consignment to arrange for their onward carriage The purpose of the second of these indorsements i e of that by the agents is far from clear since the bills were not transferred to any further parties by the agents but were simply presented by the agents to the ship s agents to claim delivery It does not appear that the bills were ever in the possession of the buyers themselves Even where a bill of lading is transferred to a buyer that buyer may take delivery of the goods as agent for the seller This was the position in The Aliakmon 1986 A C 785 where a c f seller sent to the buyer a bill of lading which named the buyer as consignee and which had unnecessarily it seems also been indorsed to the buyer and the buyer being unable to pay in accordance with the originally agreed terms agreed to take delivery of the goods as agent of the seller The actual decision was that the buyer had no cause of action against the carrier either in contract or in tort in respect of damage done to the goods by the carrier s breach of the contract of carriage even though the resulting loss fell on the buyer the risk having passed to him on shipment In a later case White v Jones 1995 2 A C 207 at 265 Lord Goff has said that such a situation would now be covered by the 1992 Act and this seems to mean that the buyer could now sue the carrier in contract as lawful holder of the bill even if he held it as agent of the seller It would seem to follow that on facts such as those in The Aramis the forwarding agents could likewise now acquire contractual rights against the carriers and that under section 2 4 of the Act they could exercise these rights for the benefit of their principals the buyers But it is submitted that this does not exclude the possibility of such rights being acquired also by the principal The Act does not define possession which is a sufficiently flexible concept to allow for the possibility of actual possession being held by one person and constructive possession being held at least for some purposes by another Emphasis is added 21 There is no justification to confine possession to physical possession in this case The rights of the holder cannot be diminished because it had arranged for the bill to be kept by its agent which has no separate interest in it 22 Counsel for the defendants went further and argued that e ven if the court is of the view that an agent may hold a bill of lading on behalf of his principal under the Act for the purpose of suit it is our submission that Glencore UK were not agents of the plaintiffs for such purpose This suggestion that the agent must not only be an agent but be an agent for the purpose of the suit was wholly without authority and the argument was not developed beyond the sentence set out There is no justification for this additional requirement that I can see 23 Another line of argument taken was that Glencore UK cannot be the plaintiffs agents because the agreement between the companies specified that it shall not be construed to establish a partnership association or joint venture between the parties or constitute Marc Rich Co Ltd an employee of Marc Rich Co AG and the former was to retain its capacity as an independent contractor This does not follow because there is nothing to prevent an independent contractor from being an agent The agreement clearly established Glencore UK as the plaintiffs agent for the purposes stated 24 I found that Glencore UK was holding the bill of lading simply as the agent of the plaintiffs for the transmission of documents with bankers financiers and charterparties and the plaintiffs were the holder of the bill for the purposes of the Act This finding also addressed the defendants complaint that agency was not pleaded by the plaintiffs Since a holder of a bill of lading can be holding it while it is in the physical possession of its agent that is a matter of evidence that need not be pleaded The plaintiffs had made clear in their evidence that the bill was in the physical possession of Glencore UK pursuant to the agreement 25 Counsel for the defendants also referred to the joint report of the Law Commission and Scottish Law Commission entitled Rights of Suit in respect of Carriage of Goods by Sea which contributed to the enactment of the Carriage of Goods by Sea Act 1992 Counsel noted that the Commission proposed that agents should be entitled to sue as holders of bills of lading even if they did not suffer any loss He went on to submit that where the holder of a bill of lading is the agent the principal has no title to sue since these rights vest in the agent The first proposition that an agent is entitled to sue presented no difficulty but the second proposition that the principal should not be entitled does not follow The principal has the right to sue already The law was changed to empower the agent who hitherto cannot sue to sue The change did not confer the right to sue on the agent in substitution for the principal s right The agent s new right runs with the principal s not in its place Title to sue in conversion 26 It is generally accepted that for a person to sue in conversion he must have actual possession or the immediate right of possession of the goods alleged to be converted at the time of conversion see Clerk Lindsell on Torts 18th Ed paras 14 46 and 14 48 The defendants argument was that the plaintiffs did not have either of that when the Cherry was in Fujairah in December 1997 27 The rule is not inflexible and the title to sue may be transferred from a preceding party In Bristol and West of England Bank v Midland Rly Co 1891 2 QB 653 cheese was sold and shipped from Canada to England under bills of lading which provided that the goods were to be delivered to the order of the consignor or his assigns The consignor drew bills of exchange on the consignee and sold the bills of exchange with the bills of lading indorsed in blank annexed to the Toronto Bank in Canada The Toronto Bank then sent the bills of exchange and bills of lading to the City Bank their agents in London On arrival in England the cheese was delivered to the defendants to the order of the shipowners who were induced by the consignee to deliver the cheese to him without producing a delivery order from the shipowners When the bills of exchange became due the consignee requested the plaintiff bank to advance him the money to take up the bills The plaintiff bank advanced the money and received the bills of exchange and bills of lading from City Bank and then they obtained the delivery order from the shipowner in exchange for the bills of lading When they presented the delivery order to the defendants they could not collect the cheese which had already been taken by the consignee The plaintiff bank sued the defendants for conversion The defence raised was that the plaintiffs action could not be maintained because the cheese was released to the consignee before the plaintiffs acquired any title to them The defence was rejected by the Court of Appeal Fry LJ held that Toronto Bank s right of property on the goods as pledgees was transferred to City Bank and then to the plaintiff bank which then had the right to sue although it became the pledgee after the goods were released to the consignee 28 The case dealt with the plaintiff bank s title to the goods and not to its immediate right of possession but that is not a material difference The issue was the title to sue and the reasoning would be the same whether it is title to sue by having title in the goods or having the immediate right of possession In December 1997 Banque Trad Credit Lyonnais held the bills of lading and had the immediate right of possession When they indorsed it to Credit Lyonnais which then indorsed and delivered them to the plaintiffs agent Glencore UK that right was passed to the plaintiffs and like the plaintiffs in the case discussed the title to sue in conversion was transferred Delivery to Metro 29 The defendants contended that they had fulfilled their obligation to deliver the oil by complying with the instructions of Metro They drew a distinction between the term discharge used in the instructions and the term deliver used in the bill of lading and contended that delivery occurs not upon discharge of the cargo but when the cargo is placed in the control of the cargo receiver 30 They referred to a discourse on the duty to deliver under a bill of lading at p 42 of Voyage Charters by Julian Cooke and others D elivery of the cargo is the final obligation of the shipowner under the charterparty It brings about the termination of the bailment and therefore generally speaking it makes the point of time at which the carrier s responsibility for safe custody of the goods comes to an end However the general rule may be varied by special terms of the contract of affreightment frequently found in bills of lading which provide that the carrier s responsibility shall cease as soon as the goods are discharged from the ship and before they are delivered to the consignee What constitutes delivery It has been said that delivery occurs when the goods are so completely under the control of the consignee that he may do what he likes with them British Shipowners v Grimon 1876 3 Rett 968 972 or when they are placed under the absolute dominion and control of the consignees Chartered Bank v British India S N Co 1909 A C 369 375 In practice upon the discharge of the goods from the ship they are frequently in the custody of agents or contractors rather than the shipowner or consignee themselves and in those circumstances delivery will occur when the goods are placed in the hands of an agent of the consignee Thus in British Shipowners v Grimond and in Knight v Fleming 1898 25 Rett 1070 it was held that delivery occurred and the shipowner s responsibility for the goods therefore ceased when they had been passed over the ship s raid into the hands of harbour porters employed by the consignee The same contractor may initially take possession of the goods as agent of the shipowner and later when the shipowner s obligations as regards discharge had been fulfilled remain in possession thereafter as agent of the consignee The effect of the requirement that delivery involves the placing of the goods under the complete control of the consignee is that even when the shipowner s obligations regarding discharge are complete and the goods are in the hands of an independent warehouse delivery will not be regarded as complete so long as the shipowner is maintaining any lien or right of disposition over the goods and the bill of lading remains in force as a document of title until all the shipowner s rights of disposition have ceased to exist 31 Reliance was also placed on Lord Hobhouse s judgment in The Berge Sisar 2001 1 Lloyd s Rep 663 where he said in 36 Taking delivery in paras a and c of s 3 1 Carriage of Goods by Sea Act 1992 means as I have said the voluntary transfer of possession from one person to another This is more than just co operating in the discharge of the cargo from the vessel Discharge and delivery are distinct aspects of the international carriage of goods Although the normal time for delivering cargo to the receiver may be at the time of its discharge from the vessel that is not necessarily so There may be a through contract of carriage The goods may need to be unpacked from a container The vessel may need to discharge its cargo without delay into a terminal The delivery to which s 3 is referring is that which involves a full transfer of the possession of the relevant goods by the carrier to the holder of the bill of lading The surrender of the relevant endorsed bill of lading to the carrier or his agent before or at the time of delivery will ordinarily be an incident of such delivery 32 It is clear that delivery of a cargo does not necessarily include its discharge from the vessel although that may often be the case If the carrier is instructed to retain the cargo on board at the discharge port so that it can be on carried to another destination the carrier would have delivered the cargo by keeping the cargo on board so that it can proceed on the next voyage The instructions received by the carrier must be considered to determine whether delivery is made 33 The plaintiffs instructions to Metro were specific to discharge into M T Metrotank and or any other vessel and or shoretanks as instructed by Metro local representative 34 These discharge instructions to Metro did not reach the Cherry Metro issued separate voyage instructions of their own to the vessel On 24 November 1997 before the receipt of the plaintiffs discharge instructions Metro instructed the Cherry that If Fujairah will be declared as final dischport discharge port cargo will be discharged according to instructions of Metro storage coordinator emphasis is added and on 6 December after Fujairah was confirmed to be the discharge port they issued further instructions that You are kindly requested to follow local instructions from Metro storage coordinator emphasis is added 35 While delivery need not involve discharge in every case in this case it clearly did The defendants claimed that they had received and acted in compliance with the discharge instructions The plaintiffs disputed that and maintained that their instructions were to discharge the fuel oil into the storage facilities at Fujairah On the face of the plaintiffs instructions the carrier was to discharge all the oil into the facilities and anything short of that would not constitute full delivery according to their instructions 36 The defence relied on the concluding words in the discharge instructions to discharge into M T Metrotank and or any other vessel and or shoretank as instructed by Metro local representative as evidence that Metro were the plaintiffs agents for the receipt of the cargo The argument was that the defendants had acted on the instructions of Metro representatives at Fujairah when they unloaded part of the Cherry cargo took on more oil and carried on with her voyage from Fujairah 37 The master of the Cherry knew that Metro operated the storage facilities at Fujairah The vessel must liaise with the Metro representatives on an operational level to discharge oil into the facilities The master has to be told of the place time rate etc of discharge When the plaintiffs issued the instructions for the defendants to comply with Metro s instructions they were not constituting the Metro representatives their agents for issuing or changing discharge instructions They were directing the Cherry to work with those representatives to carry out their discharge instructions 38 The instructions received by the master of the Cherry from Metro were to comply with the local instructions of the Metro storage co ordinator That would be instructions in connection with the storage of the oil at the facilities because the storage co ordinator has control over the facilities It cannot be his role to determine for the vessel or the cargo owners whether to discharge or to decide how much to discharge when a vessel had arrived at Fujairah When instructions were received from the discharge co ordinator to discharge only a part of the cargo the defendants should be aware that if they accepted them without question they may be blamed for failing to discharge In such a situation they should seek confirmation whether the obligation to discharge was varied or to give notice that compliance is not possible because of the storage co ordinator s instructions 39 Instead of doing that the defendants became parties to reports and documents put up to represent that full discharge had actually taken place These include a Dry Tank Certificate a OBQ On Board Quantity Report Tank Inspection Certificate which the chief officer signed with the knowledge that they were untrue and

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  • UCO Bank v Golden Shore Transportation Pte Ltd[2006] 1 SLR 1; [2005] SGCA 42
    L is determined as at the date of issue Its nature does not change by subsequent events Accordingly we were of the opinion that s 1 2 a could have no relevance to the very issue of this appeal 19 In arriving at her conclusion the judge seemed to have found support in two cases namely East West Corporation v DKBS 1912 2002 2 Lloyd s Rep 182 East West Corporation and The Aegean Sea 1998 2 Lloyd s Rep 39 Both of these cases were decided by Thomas J 20 In East West Corporation goods were shipped by the claimants in Hong Kong on board two vessels owned by the defendants for delivery in Chile The goods were consigned to the order of named Chilean banks with Gold Crown as the notifying party The B Ls were indorsed by the claimants to the Chilean banks and they were eventually conveyed through an intermediary Hong Kong bank to the Chilean banks The Chilean banks had no interest in the goods and their function was only to collect the price due from Gold Crown to the claimants The Chilean banks were at all times acting on the direction of the claimants However the goods were delivered by the defendants to Gold Crown without the production of the B Ls Later the B Ls were returned by the Chilean banks to the claimants without any re indorsement Thus the defendants alleged that the omission of a re indorsement by the Chilean banks to the claimants was fatal to the latter s claim At first instance Thomas J 19 supra held that notwithstanding the fact that the Chilean banks had no security interest in the B Ls by virtue of the fact that the banks were the named consignees and were in fact in possession of the bills the claimants rights of suit under the B Ls were transferred to the banks when they became holders of the B Ls delivered to them by or with the authority of the claimants For the rights of suit to be re vested in the claimants there must be a re indorsement of the B Ls in favour of the claimants His decision on this issue was upheld by the English Court of Appeal see 2003 1 Lloyd s Rep 239 21 We are unable to see how the actual decision in that case could be of any real assistance in our case There it was clear that the Chilean banks had become lawful holders on two bases First they were the named consignees Second by virtue of the indorsement by the claimants they had become lawful holders of the B Ls Thus the rights of suit under the B Ls became vested in the Chilean banks To re vest the rights of suit in the claimants the Chilean banks had to re indorse the B Ls back to the claimants There was nothing there to suggest that in the context of our present case because of the interposition of HSBC as the negotiating bank the appellant although named as the consignee and having actual possession of the B Ls would not have acquired the rights of suit Admittedly the Hong Kong bank there did not negotiate the B Ls indeed it could not because no LC was involved Nowhere did Thomas J say that if the Hong Kong bank were to act as a negotiating bank the position would be different Of course in that case besides the B Ls coming into the possession of the Chilean banks the B Ls were also indorsed to them Thus the Chilean banks acquired the rights to sue under both ss 5 2 a and 5 2 b 22 In fact the following reasoning of Thomas J at 22 would appear to suggest that it did not matter whether the intermediary bank was a collecting bank or a negotiating bank as he held that one should not go behind what appears on the face of the B L He said at 22 T he Chilean banks to whom the bills of lading were sent initially were the consignees identified in the bills of lading within the ordinary meaning of those words in the 1992 Act I cannot see that it is possible to give the word consignee any other construction When they received the bills they held possession of them They therefore fulfilled the definition set out in s 5 2 a and became the lawful holders In my view it is not appropriate to go behind the facts as they would appear from the face of the bill of lading As the Law Commission pointed out in their joint report with the Scottish Law Commission which led to the passing of the 1992 Act Rights of Suit in respect of Carriage of Goods by Sea under the law as it then stood a carrier was bound to make delivery against presentation of the bill of lading without enquiry as to the way in which he had acquired the property in the goods the object of the change was to simplify the law The construction advanced by the claimants would return a substantial degree of complexity For example if the claimants were correct there would need to be an enquiry into the question as to whether the consignee named on the face of the bill of lading had as between the shipper and the person named as consignee an entitlement to delivery It would in another guise re open the enquiry into the contractual arrangements that the reform brought about by the 1992 Act sought to remove 23 We now turn to The Aegean Sea 19 supra There the owners of the vessel Aegean Sea chartered the vessel to the second defendant Repsol Oil International Ltd ROIL for the carriage of a cargo of crude oil from Sullom Voe to one or two safe port s EUROPEAN MEDITERRANEAN The vessel was directed by ROIL to discharge the cargo at La Coruna The vessel while attempting to berth at La Coruna ran aground and broke into two and exploded giving rise to a total loss of the vessel and the cargo Another consequence of the casualty was large scale pollution of the environment which caused damage to third party interests 24 There two B Ls were issued for the cargo with two named shippers Mobil North and Sun Oil The cargo covered by the Sun Oil B L was sold to Louis Dreyfus Energy Ltd Dreyfus which in turn sold it to ROIL ROIL then sold the cargo under the B L to Repsol the first defendant the holding company of ROIL The Sun Oil B L was indorsed to Dreyfus which in turn indorsed it directly to Repsol instead of to ROIL The mistake was discovered by Repsol and the B L was conveyed back to Dreyfus which voided the indorsement in favour of Repsol and re indorsed the B L to ROIL 25 The owners sought to claim against both ROIL and Repsol for their losses including the value of the vessel and bunkers etc as well as for those losses suffered by third parties who had made claims against the owners The basis of the owners claim against ROIL was that ROIL directed them to berth the vessel at La Coruna an unsafe port The basis of their claim against Repsol was that the latter was the lawful holder of the Sun Oil B L under which there was an implied term as to the safety of the port nominated and an implied indemnity 26 Many issues were raised in the arbitration and the subsequent court proceedings Thomas J held that for a person to become the holder of a B L it was not enough that the B L was indorsed and was sent to him by post The person must have received and accepted the delivery before he could become a holder Emphasis was clearly placed by Thomas J on the element of acceptance of the B L He said at 60 In my view Repsol therefore never obtained possession of the bill of lading as the result of completion by delivery of the bill by endorsement There was never any delivery of the bill of lading by Louis Dreyfus to Repsol to complete the endorsement Even if Repsol had obtained possession of the bill of lading from Louis Dreyfus they never accepted delivery of it as the endorsee or transferee As soon as they saw the endorsement to them they sent it back to be endorsed to the rightful endorsee and transferee 27 We note that there is a part of the judgment which seems to suggest that for there to be delivery of the B L to Repsol there must be a direct delivery and not delivery through an independent intermediary The passage reads also at 60 Moreover the bill of lading was never delivered to Repsol by Louis Dreyfus Louis Dreyfus sent the bill to ROIL under cover of a letter addressed to ROIL It was sent to ROIL as principals it was not delivered by Louis Dreyfus to ROIL to receive as Repsol s agents as it was intended for ROIL and the covering letter was addressed to them There was therefore no delivery by Louis Dreyfus to Repsol only a delivery to ROIL When it was then sent by ROIL to Repsol it was sent by ROIL not as Louis Dreyfus agents but by ROIL as principals it seems that they sent it for Repsol to deal with it as ROIL s agents in the claim to be made against cargo underwriters 28 However we think this passage is essentially a factual description of what happened and must be viewed in the context there We would quote from another part of the judgment of Thomas J on the same page where he said Repsol knew that the bill of lading should have been endorsed to ROIL and not to them because it was ROIL and not Repsol who had purchased the cargo from Louis Dreyfus they therefore never accepted the delivery or endorsement of the bill of lading to them It would be noted that the crucial factor in the case was that although the B L was indorsed to and arrived at the premises of Repsol the latter never accepted and promptly returned it In those circumstances it was held that Repsol could not have become the holder of the B L 29 Another issue which arose in the case related to the argument that as Dreyfus had indorsed the B L to Repsol then the proper course would have been for Repsol to re indorse the B L back to Dreyfus This argument was rejected Thomas J said at 61 The owners contended that if Repsol had become the lawful holders then as there was no endorsement back to Louis Dreyfus Louis Dreyfus could not re indorse the bill of lading to ROIL It is clear that there was no endorsement back by Repsol to Louis Dreyfus but that was no doubt because Repsol never regarded themselves as entitled to endorse the bill as it had been endorsed to them in error In my view this submission made by owners reinforces the conclusion that Repsol never became the lawful holders It cannot have been intended by the draftsman of the Act that a person to whom a bill of lading is endorsed and sent in error has then to act as if he was a person entitled to endorse the bill of lading as a precondition of the person who made the mistake being enabled to rectify his error by re endorsing and delivering it to the correct party the person to whom it was sent was not the lawful holder and not therefore entitled to endorse it 30 On this latter point the decision of Thomas J that it was unnecessary for Repsol to re indorse the B L back to Dreyfus was clearly based on the premise that the indorsement to Repsol in the first place was a mistake and Repsol never became the holder of the B L and thus Repsol had no basis on which to re indorse the B L back to Dreyfus We would observe that this situation must be differentiated from that in Bandung Shipping Pte Ltd v Keppel TatLee Bank Ltd 2003 1 SLR 295 2003 1 Lloyd s Rep 619 Keppel TatLee a decision of this court where we held that a re indorsement of the B L was necessary by the receiving party of the B L in order to re vest the rights of suit back to the forwarding party We will return to Keppel TatLee a little later 31 The present four B Ls stated that the goods were deliverable to the order of UCO Once the named consignee the appellant here came into possession of the B Ls the consignee would pursuant to s 5 2 a of the Act become the lawful holder of the B Ls even without any indorsement by the shipper Charles Debattista The Sale of Goods Carried by Sea Butterworths 2nd Ed 1998 Debattista states at para 4 29 that in such a situation no indorsement by the shipper is required No initial endorsement by the shipper is required to kick start the bill of lading into life Section 5 2 a includes within the definition of a lawful holder of a bill of lading a person with possession of the bill who by virtue of being the person identified in the bill is the consignee of the goods to which the bill relates There is here no mention of endorsement solely of possession of the bill and hence of delivery of the bill Thus while the intermediate buyer would need to endorse the bill itself if it wished to sell the goods on in transit it could not reject the bill of lading against its own seller the shipper on the basis that the latter had itself not endorsed the bill 32 The respondent sought to rely on the last sentence of the above passage from Debattista to suggest that the author has confined the application of s 5 2 a to a situation where the shipper and transferee are immediate parties While we are in agreement with the statement in that sentence we are unable to agree with the respondent s submission that it means that for a case to fall within s 5 2 a the shipper must transfer the B L directly to the named consignee In our opinion all it seems to say is that the shipper need not indorse the bill to the named consignee for the rights of suit to be transferred to the consignee and that the consignee would not be entitled to reject the bill on the ground that there is no indorsement as no indorsement is needed 33 Other than the two cases referred to above no other authority can be found to support the proposition that where a B L is received by the named consignee through a negotiating bank s 5 2 a cannot apply and that in the absence of an indorsement the named consignee would not have the rights of suit under the B L which has come into his possession As indicated earlier the two cases did not so decide Furthermore it seems to us that the following passages from Gutteridge and Megrah s Law of Bankers Commercial Credits Europa Publications 8th Ed 2001 Gutteridge Megrah at paras 8 12 and 8 13 which come under the sub heading Transport document a negotiable bill of lading made out to the order of the issuing bank are contrary to the position contended for by the respondent 8 12 In this situation upon receipt of the documents from the intermediary bank the issuing bank has security by way of pledge over the documents and the goods 8 13 The position of the intermediary bank is different Since the bill of lading is not made out to the intermediary bank s order or indorsed in its favour upon presentation of the documents to the intermediary bank it does not obtain security by way of pledge of the goods The fact that the documents come into its possession may give rise to a pledge of the documents and thus an equitable pledge of the goods It is arguable however that because it is agreed under the terms of the contract of sale and the credit that the bill of lading be made out to the order of the issuing bank an intention on the part of the buyer to authorise the seller to confer a special property by way of pledge on the intermediary bank as opposed to the issuing bank is negatived On the face of the bill of lading the intermediary bank can receive no title to the goods On the other hand the intermediary bank receives the documents as a bailee and if it has undertaken a liability to the beneficiary only releases the documents against the issuing bank s obligation to reimburse it 34 These passages in Gutteridge Megrah do not differentiate between an intermediary bank which is a collecting bank and one which is a negotiating bank Paragraph 8 12 clearly suggests that where the B L is made out to the order of the issuing bank the latter upon receipt of the B L from the intermediary bank whether collecting or negotiating bank will acquire the rights of suit notwithstanding the absence of an indorsement from the shipper to the intermediary bank and a further indorsement from the intermediary bank to the issuing bank Obviously an intermediary negotiating bank which does not have an indorsement in its favour as noted in para 8 13 of Gutteridge Megrah would not have the goods as security It would have its recourse against the issuing

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-25?id=1432 (2016-01-30)
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