Abdul Salam Asanaru Pillai (trading as South Kerala Cashew Exporters) v Nomanbhoy & Sons Pte Ltd

• Judge: Sundaresh Menon JC
• Judgment Date: 30 March 2007
• Neutral Citation: [2007] SGHC 42
• Citation: [2007] SGHC 42
• Defendant Counsel: Lawrence Teh, Mar Seow Hwei, Ajinderpal Singh and Derek Kang (Rodyk & Davidson)
• Published date: 02 April 2007
• Plaintiff Counsel: Tan Teng Muan, Alia Mattar and Loh Li Qin (Mallal & Namazie)
• Date: 30 March 2007
• Docket Number: Suit No 97 of 2006 (Registrar's
• Court: High Court (Singapore)
• Subject Matter: Whether facts sufficing to give rise to such a degree of proximity as to warrant raising of equitable set-off by one party against claims of the other,Civil Procedure,Court requiring some demonstration of commitment to claimed defence on part of defendant,Summary judgment,Leave to defend claim,Whether appropriate to impose condition

30 March 2007

Sundaresh Menon JC

1 The plaintiff, Abdul Salam Asanaru Pillai trading as South Kerala Cashew Exporters is based in India and engaged in the business, among other things, of trading in raw cashew nuts. In 2005, the plaintiff had a number of dealings with the defendant, a company incorporated in Singapore and known as Nomanbhoy & Sons Pte Ltd. Disputes arose out of those dealings and in February 2006, the plaintiff filed proceedings in Singapore seeking recovery of various amounts.

2 The defendant responded to the commencement of proceedings in various ways. One of the steps it took was to apply for security for costs. The defendant succeeded before the learned assistant registrar in obtaining an order for security to be provided below. The plaintiff appealed against this. At the same time, the plaintiff applied for summary judgment of its claims and submitted that its application for summary judgment and the appeal against the order for security should be heard together and the matter proceeded in this way before me.

3 Following arguments, I made certain orders on 2 August 2006 in respect of the application for summary judgment. As to the order for security to be furnished, I allowed the appeal and set aside the order below.

4 Both sides requested an opportunity to present further arguments which I acceded to. Following the further arguments, I modified my earlier orders made in relation to the summary judgment application but not the order I made on the question of security for costs.

5 The defendant appealed against the orders I made on the summary judgment application. However, after I had prepared a draft of this judgment setting out the grounds for the decision I had earlier made, I was informed that the defendant had decided for “pragmatic” reasons not to pursue the appeal. Nonetheless, I thought it might be useful for me to set out the principal reasons for my decision in relation to the plaintiff’s application for summary judgment.

Factual background

6 The plaintiff’s claims arose out of three sets of dealings between the parties although the defendant was at pains to emphasise that these dealings were to be seen in the context of a relationship of some length. The dealings in question were:

(a) a series of 4 contracts between the parties;

(b) a contract that was referred to in the arguments as the “KSCDC contract” and which is so referred to here; and

(c) a transaction that was referred to in the arguments as the “Abbas contract” and which is so referred to here.

7 All of these transactions related to the sale of raw cashew nuts. Although there is a suggestion by the plaintiff in the documents that there was a settlement of accounts between the parties in relation to these transactions, it was made clear in the course of arguments by Mr Tan Teng Muan who appeared for the plaintiff that he was not basing his application for summary judgment on any allegedly agreed settlement of the accounts.

8 The argument therefore turned on the contentions advanced in relation to the various transactions I have referred to above. As to this, the defendant’s primary contention (as noted above) was that these transactions were to be seen in the context of a longstanding commercial relationship with dealings between the parties and the 2^nd defendant by counterclaim, a person named Vallinayagam Dheenathayalavel (referred to in the arguments and here as “Mr Dayal”) over a period of some years. It was submitted that this reached back 10 years or more and that during that time a relationship of trust and confidence had arisen. It was further submitted that this relationship had been taken advantage of by the plaintiff in the context of the June/July 2005 season for the sale of raw cashew nuts and this caused the defendant considerable problems, loss and damage. It was therefore contended that this was not a case suitable for summary judgment.

9 The plaintiff’s claim begins with a series of four contracts which it alleges it entered into with the defendant for the purchase by the plaintiff of raw cashew nuts. According to the plaintiff, three of these contracts for a total of 1800MT of raw cashew nuts were later evidenced in a contract no. NS-0628/06/2005 dated 14 June 2005 (“Contract 628”). Although the defendant accepted that the parties had entered into Contract 628, it disputed the plaintiff’s account of the circumstances under which it came into being.

10 The fourth contract in this series was contract no. NS-0616/06/2005 dated 9 May 2005 (“Contract 616”) for the purchase by the plaintiff of 500MT of raw cashew nuts. These raw cashew nuts were all shipped on the vessel, The Dellagrazia, which set sail from the port of Bissau, Guinea-Bissau to Tuticorin, India on or about 14 June 2005.

11 In relation to the shipments on The Dellagrazia relating to Contracts 628 and 616, the plaintiff alleged that there were deficiencies of quality as well as a shortfall in the quantity. These aspects of the plaintiff’s claims are referred to as the “quality claim” and the “shortfall claim” respectively. The defendant did not deny the shortfall in quantity but disputed any alleged deficiency as to quality.

12 Also shipped on that vessel were raw cashew nuts sold under two further contracts, NS-0591/04/2005 and NS-0608/05/2005 dated 21 April 2005 and 3 May 2005 respectively (hereinafter referred to as “Contract 591” and “Contract 608” respectively). These were each for the sale of 3000MT of raw cashew nuts and were later overtaken by a proposal from the plaintiff that the shipment be delivered to the Kerala State Cashew Development Corporation Ltd (“KSCDC”) instead of to the plaintiff, on terms that the KSCDC would pay a sum higher than that contemplated under the original contract. The defendant was to remit the surplus amount to the plaintiff. There was some suggestion that the transaction was structured in this way to enable the plaintiff to recover some money it was owed by the KSCDC.

13 According to the defendant, it agreed to enter into the KSCDC contract because it trusted the plaintiff and because the plaintiff guaranteed that the KSCDC would pay the amounts due. It was therefore doing the plaintiff a favour in entering into the KSCDC contract.

14 As it turned out, The Dellagrazia arrived at Tuticorin on 21 July 2005 but for a variety of reasons, the KSCDC did not make timely payment. There was no dispute that the defendant eventually received the money that was due from the KSCDC but approximately 60% of the total amount was paid on 11 August 2005, some 21 days after the vessel arrived in India and the balance was paid on 10 October 2005 some 81 days after the vessel had arrived. The defendant maintained that it suffered considerable damage as a result of the failure of the KSCDC to make timely payment. It was submitted that by reason of this delay, the defendant encountered serious cash-flow problems and had to take urgent steps to avert further losses at considerable cost to itself.

15 The final aspect of the claims brought by the plaintiff related to a contract that the defendant had entered into with an entity known as Abbas Cashew Company (“Abbas”) for the sale of 2500MT of raw cashew nuts under three contracts at prices falling in a range between US$968 per MT and US$1,040 per MT. The cashew nuts under these contracts were delivered to Tuticorin by a number of different vessels in June and July 2005. Abbas however defaulted on payment under these contracts. The defendant maintained that it was concerned over the prospect of damage to the cargo as well as mounting charges. Accordingly, it instructed Mr Dayal to find alternative purchasers.

16 In the meantime, the market price for raw cashew nuts was falling.

17 The parties had quite divergent positions on the Abbas contract. It was not disputed that the plaintiff in fact paid the defendant the sum of US$1,976,055.58 being the face value of the raw cashew nuts under the invoices issued in respect of the various sales to Abbas save for one invoice with a face value of US$546,989.04. In short, the plaintiff paid the entire sum that was to have been paid by Abbas less this sum of US$546,989.04 but it took delivery of the entire shipment of raw cashew nuts. It was also not disputed that the plaintiff eventually sold all the raw cashew nuts in question to various third party purchasers at various prices for a total recovery of US$1,326,149.50. It was thus not disputed that the plaintiff had sustained a loss of around US$650,000 as a result of its involvement in this transaction. From the defendant’s perspective, if it was to be responsible for this, the loss would be in excess of US$1 million.

18 The plaintiff’s case was that he had undertaken to dispose of the raw cashew nuts under the Abbas contract on certain terms. The essential point was that he would be reimbursed for any loss or expense that might be incurred after he had sold the raw cashew nuts to third parties at the best available prices.

19 The defendant’s case was much more complicated and I had the impression that it evolved as the case progressed. It was contended that:

(a) the plaintiff undertook to help in the resolution of this issue;

(b) the plaintiff had secured the agreement of Abbas to pay US$200,000 as compensation to the defendant presumably as a contribution towards making good the losses sustained due to its failure to take delivery of the raw cashew nuts;

(c) the plaintiff had also secured the agreement of a number of other buyers of raw cashew nuts shipped on The Dellagrazia who had defaulted and they had agreed to pay compensation amounting to between US$50 and US$475 per MT;

(d) the plaintiff guaranteed that these compensatory payments at (b) and (c) above amounting in total to around US$316,000 would be paid within 3 months;

(e) the plaintiff would take over the raw cashew nuts under the Abbas contract...