Blue Nile Co Ltd v Emery Customs Brokers (S) Pte Ltd

• Judge: Karthigesu J
• Judgment Date: 27 December 1991
• Neutral Citation: [1991] SGHC 186
• Citation: [1991] SGHC 186
• Defendant Counsel: Steven Chong (Drew & Napier)
• Published date: 19 September 2003
• Plaintiff Counsel: William Jansen (Jansen Menon & Partners)
• Date: 27 December 1991
• Docket Number: Suit No 76 of 1989
• Court: High Court (Singapore)
• Subject Matter: Admiralty and Shipping,Indicia of carrier's bill of lading,Bill of lading issued by freight forwarders,Agency,Third party and principal’s relations,Vicarious liability,Bills of lading,Bills of lading as contract of carriage,Liability of employer for fraud by employee,Whether it constituted a carrier's bill of lading

Cur Adv Vult

This is an appeal by the defendants against the decision of the senior assistant registrar ordering certain portions of the defence to be struck out and that judgment be entered for the plaintiffs in the sum of US$135,370.25, interest on the sum of US$36,605.60 at 10% from 20 November 1987 to 2 August 1990 (the date of judgment) and costs.

The plaintiffs commenced this action on 12 January 1989. Their claim was that they opened a confirmed irrevocable letter of credit on or about 25 July 1987 through their bankers, Blue Nile Bank, for US$500,000 in favour of Africom Trading Pte Ltd (`Africom`) as payment towards the purchase of 45,455 cartons of black tea to be shipped from Singapore to Port Sudan; that the letter of credit allowed partial shipment and required, inter alia, a full set of `clean on board` bills of lading to the order of Blue Nile Bank and naming the plaintiffs as the party to be notified; that in November and December 1987, the defendants issued three sets of bills of lading purportedly evidencing three shipments of 8,960, 2,800 and 7,280 cartons of black tea respectively from Singapore to Port Sudan consigned to the order of Blue Nile Bank and naming the plaintiffs as the party to be notified as required by the letter of credit; that the said bills of lading named Africom as the shippers, named the carrying vessels, were marked `freight prepaid` and purported to be `shipped on board` bills of lading; that Africom then negotiated the said bills of lading under the letter of credit with a Singapore bank for a total of US$209,249.60; that in fact no tea had been shipped on the named vessels and the named vessels never arrived at Port Sudan but the plaintiffs did receive a parcel of 6,720 cartons of black tea from another vessel in March 1988 valued at US$73,897.60. Accordingly the plaintiffs claimed from the defendants the sum of US$135,370.25 as the loss and damages suffered by them.

By their statement of claim the plaintiffs made the following averments:

5 By issuing the said first, second and third bills of lading, the defendants and/or servants or agents made the following representations:

(a) under the first bill of lading, that 8,960 cartons of black tea were loaded and shipped on board the vessel Kota Mulia;

(b) under the second bill of lading, that 2,800 cartons of black tea were loaded and shipped on board the vessel Kota Agung;

(c) under the third bill of lading, that 7,280 cartons of black tea were loaded and shipped on board the vessel Kota Mulia;

(d) under the first, second and third bills of lading that the vessels stated therein would be proceeding to Port Sudan from Singapore for discharge.

6 Each of the said representation in the first, second and third bills of lading were false and untrue.

Particulars

The plaintiffs will rely on the fact that the said cargo was never loaded or shipped on board the vessels Kota Mulia and Kota Agung as alleged or at all.

The plaintiffs will also rely on the fact that the vessels Kota Mulia and Kota Agung were not in Singapore on the date when the defendants purportedly issued the first, second and third bills of lading.

7 The defendants at the time when they issued the first, second and third bills of lading knew and/or ought to have known that the said representations contained therein were untrue and/or were made recklessly not caring whether they were true or false.

(11) Further and/or alternatively, at the time when the said representations were made, the defendants well knew or ought to have known that the plaintiffs would rely on the said representations and would be induced thereby to accept the said first, second and third bills of lading under the said letter of credit.

(12) In the premises, the defendants were under a duty to take care in making the representations.

(15) In breach of the said duty, the defendants were negligent in making the representations.

The defendants filed a defence on 23 February 1989 denying that the said bills of lading were issued by them; denying that they made any of the representations alleged by the plaintiffs in paras 5 and 6 of the statement of claim; denying that they knew or ought to have known that the said representations alleged by the plaintiffs in paras 5 and 6 of the statement of claim were untrue and/or were made recklessly not caring whether they were true or false; and denying that they were under a duty of care to the plaintiffs in the making of the representations alleged by the plaintiffs in paras 5 and 6 of the statement of claim and accordingly denying any negligence on their part. However, they pleaded that the three bills of lading in question were fraudulently issued by one Alfred Tay, their employee, without their consent or authority. They further pleaded that the issuing bank acted negligently in accepting the three bills of lading in question which were `freight forwarders` "house" bills of lading rather than carrier`s bills` contrary to art 26(c)(iv) of the Uniform Customs and Practice for Documentary Credits 1983.

Since the plaintiffs` application was to strike out virtually the whole of the defence, it is necessary to set out the defence, as pleaded, in full.

Defence

1 Save that it is denied that any purported indorsement of the said bills of lading was of any legal effect, no admissions are made as to para 1 of the statement of claim. [Paragraph 1 of the statement of claim states that the plaintiffs were at all material times the indorsees of the three bills of lading in question.]

2 Paragraph 2 of the statement of claim is admitted. [Paragraph 2 of the statement of claim states that the defendants are a non-exempt private company limited by shares incorporated in Singapore.]

3 Paragraph 3 of the statement of claim is admitted. The said letter of credit further provided that it was `subject to Uniform Customs and Practice for Documentary Credits 1983` (`the UCPDC`). The UCPDC provides, inter alia, as follows:

`Article 26

If a credit calling for a transport document stipulates as such document a marine bill of lading:

...

(c) unless otherwise stipulated in the credit, banks will reject a document which:

...

(iv) is issued by a freight forwarder, unless it is issued by such freight forwarder acting as a carrier, or as the agent of a named carrier.`

[Paragraph 3 of the statement of claim pleads the opening of the confirmed irrevocable letter of credit and the terms thereof.]

4 As to para 4 of the statement of claim:

(i) It is denied that the said bills of lading were issued by the defendants. The said bills of lading were issued by one Alfred Tay, an employee of the defendants, acting fraudulently for his own rather than the defendants` benefit and without the knowledge, consent, instructions or authority of the defendants. In so doing, he was acting outside the scope of his employment. In the premises, the defendants are not responsible or otherwise liable for any representations made by the issue of the said bills of lading.

(ii) It is denied that the bills of lading were negotiable documents of title. The said bills were freight forwarders` `house` bills of lading rather than carrier`s bills.

(iii) Save as aforesaid, para 4 is not admitted. [Paragraph 4 of the statement of claim pleads the issue of the three bills of lading in question by the defendants purportedly evidencing three shipments of black tea consigned to Blue Nile Bank and naming the plaintiffs as the party to be notified.]

5 As to paras 5 and 6 of the statement of claim, it is denied that the defendants made any representations by the said bills of lading. The defendants repeat para 4(i) above. Save as aforesaid, no admissions are made as to paras 5 and 6. [Paragraphs 5 and 6 of the statement of claim have been set out in full above.]

6 Paragraph 7 of the statement of claim is denied. [Paragraph 7 of the statement of claim has been set out in full above.]

7 As to para 8 of the statement of claim, if, which is not admitted, the shipper used the said bills of lading to negotiate and obtain payment under the letter of credit, the bank acted in breach of contract and negligently in paying out under the letter of credit against presentation of the said bills of lading. The defendants repeat para 4(ii) above and rely, inter alia, on art 26(c)(iv) of the UCPDC. Save as aforesaid, para 8 is not admitted. [Paragraph 8 of the statement of claim pleads Africom`s negotiations of the bills of lading in question under the letter of credit.]

8 Paragraph 9 of the statement of claim is not admitted. [Paragraph 9 of the statement of claim pleads that the carrying vessels named in the three bills of lading in question never arrived at Port Sudan but that the plaintiffs received a parcel of 6,720 cartons of black tea from another vessel in March 1988.]

9 Paragraph 10 of the statement of claim is denied. If, which is denied, any representation was made by or on behalf of the defendants, the effective cause of the plaintiffs` alleged loss was the breach of contract and/or negligence of the bank as set out in para 7 above. [Paragraph 10 of the statement of claim pleads that the plaintiffs have suffered loss and damages as a consequence of the matters pleaded.]

(10) As to paras 11 to 16, the defendants repeat paras 5, 7 and 9 mutatis mutandis. Save as aforesaid, paras 11 to 16 are denied. [Paragraphs 11, 12 and 15 of the statement of claim have been set out in full above. Paragraphs 13 and 14 of the statement of claim plead that the plaintiffs were induced to accept the three bills of lading in question acting on the faith of the representations made therein which in truth and in fact were false and untrue and para 16 of the statement of claim pleads again the loss and damages suffered by the plaintiffs.]

(11) Save as aforesaid, each and every allegation made in the statement of claim is...