BNP Paribas v Bandung Shipping Pte Ltd (Shweta International Pte Ltd and Another, Third Parties)

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 12 May 2003
• Neutral Citation: [2003] SGHC 111
• Date: 12 May 2003
• Subject Matter: Whether plaintiff had consented to delivery without presentation,Whether plaintiff had any title to sue in contract,Whether plaintiff was holder of bills of lading,Admiralty and Shipping,Bills of lading,Conditions of charterparty,Provision for discharge against letters of indemnity,Delivery of cargo without presentation of bills of lading,Whether provision acted as a defence to wrongful discharge of cargo against letters of indemnity
• Docket Number: Suit No 476 of 2001
• Published date: 02 October 2003
• Defendant Counsel: Kenneth Tan S.C. (Kenneth Tan Partnership),Wang Wei Chi (Kenneth Tan Partnership)
• Court: High Court (Singapore)
• Plaintiff Counsel: Peter Gabriel (Gabriel Peter & Partners),Murali Pany (Gabriel Peter & Partners)

1 The present action is between a bank, BNP Paribas (“BNP”), that had financed several purchases of crude palm oil and RBD palm oelin for its customer, Shweta International Pte Ltd (“Shweta”), and a shipowner, Bandung Shipping Pte Ltd (“Bandung”). BNP’s complaint against Bandung is that the latter as shipowner wrongfully delivered various consignments of edible palm oil and RBD palm oelin (hereafter individually and collectively referred to as “the cargo”) at Kandla, India, without the production of the relevant bills of lading to which BNP was the lawful holder and/or person entitled to immediate right to possession of the cargo. The cargo was released against letters of indemnity provided by Lanyard Foods Limited (“Lanyard”). Lanyard did not pay for the cargo and Shweta in turn defaulted on its credit line from BNP in the principal sum of US$3,174,046.61.

2 BNP’s claim, arising from the alleged wrongful discharge of the cargo, is brought in contract pursuant to the bills of lading, in tort and in bailment. Bandung has raised as an issue the bank’s title to sue. The second issue is that the delivery without production of bills of lading but letters of indemnity was with the consent or authority of BNP. At this trial, I am asked by the parties to deal with the issue of liability alone.

3 I should mention that Bandung commenced third party proceedings against Shweta as 1^st Third Party and Lanyard as the 2^nd Third Party to whom Shweta had on-sold the cargo. Lanyard was at all material times an importer of edible oils in India and the parent company of Shweta. The 1^st and 2^nd Third Party did not participate at the trial. After the conclusion of the trial of the main action, Bandung on 1 November 2002 entered default judgment against the 1^st and 2^nd Third Party.

The Witnesses

4 BNP called three witnesses. The first is Catherine Low Peck Cheng (“Low”) who, at the material time, was the Relationship Manager of BNP in charge of the customer, Shweta. Her evidence related to BNP’s dealings with Shweta. The next witness is Frederic Amoudru, the Head of BNP’s Asset Restructuring and Recovery Department since 2000 and finally, S Venkiteswaran, a lawyer practising in India. The latter’s evidence related to Indian Customs law and the procedure for discharge of edible oils, a dutiable cargo, at Indian ports.

5 Bandung had the same number of witnesses. Yong Por Kwong is the Insurance/Claims manager of Samta Shipmanagement Pte Ltd, managers of the vessel “Victoria Cob” and Prashant S Pratap, a lawyer practising in India. The latter is Bandung’s expert on Indian Customs law. The last witness is Raju V Pappachan, an executive for Tanker Operations in JM Baxi & Company. His evidence related to the procedure for discharge of edible oils in Indian ports and storage of dutiable cargo in bonded shore tanks.

6 No one from Shweta or Lanyard testified at the trial.

Background Facts

7 Shweta is a company incorporated in Singapore on 18 January 1999 with an authorised and paid up capital of S$3 million and S$2.3 million respectively.

8 On 28 July 1999, BNP granted a US$ 10 million credit line to Shweta for the purchase of edible oils from suppliers in Malaysia and Indonesia. Shweta was the sourcing arm of Lanyard for edible oils and utilised the credit line to purchase edible oils. All of Shweta’s sales were intended for Lanyard, as was the fact. For the transactions in question, Shweta voyage chartered the vessel “Victoria Cob” in February 2000 and again in April 2000. The two voyages were undertaken between April and June 2000.

9 The present action is concerned with 38 bills of lading issued by Bandung for carriage to and delivery at Kandla of Shweta’s purchases that were loaded on board “Victoria Cob”. The bills of lading were owner’s bills. They were made out to order. Lanyard was named as “Notify Party”. Except for two bills of lading, Shweta was named as shipper on 36 bills of lading. All the 38 bills of lading were indorsed in blank and delivered to BNP. In all 38 bills of lading, the presumption in s19(2) Sales of Goods Act (Cap 393) that the respective shipper intended to retain property where the bill of lading is taken to its own order has not been rebutted. The bills of lading in question are:

a) PGG/IND-01 dated 6 April 2000 where Pan Century Edible Oil Sdn

Bhd was named as shipper;

b) SIN(BEL)/KNL nos. 9 to 12, 19, 20, 27 to 28 all dated 13 April 2000;

c) PGG/IND-04 dated 15 May 2000 where Kulai Edible Oil Sdn Bhd

was named as shipper;

d) SIN(BTM)/KAN nos. 1 to 26, 29 to 30 all dated 25 May 2000

10 The 38 bills of lading may be classified under three categories:

(i) Initial bills (2 in number)

11 Bandung accepts that BNP is pledgee and lawful holder of bills of lading nos. PGG/IND-01 dated 6 April 2000 and PGG/IND-04 dated 15 May 2000. BNP became pledgee and lawful holder of bill of lading nos. PGG/IND-01 and PGG/IND-04 on 9 May 2000 and 23 June 2000 respectively. They are the dates when BNP approved the use of the credit facility and paid Shweta’s suppliers for the cargo.

12 Both bills were made out to the order of the shippers who were the suppliers. As the presumption in s19(2) Sales of Goods Act has not been rebutted, Pan Century Edible Oils Sdn Bhd was the person with immediate right to possession of the cargo on 1 May 2000 and Murtaza Trading Company (Singapore) Pte Ltd was the person with the right to immediate possession of the cargo on 16 June 2000.

(ii) Switch bills (12 in number)

13 The switch bills are those listed under item (b) in paragraph 9 above and SIN (BTM)/KAN nos. 25 to 26 and 29 to 30. The switch bills were issued in exchange for the original set of bills of lading nos. BEL/KNL-09 to 12 all dated Belawan 13 April 2000 and PGG/IND-05 dated Pasir Gudang 7 April 2000, PGG/IND-01 and PGG/IND/03 both dated Pasir Gudang 15 May 2000 and PGG/IND-10 dated Pasir Gudang 10 April 2000.

14 Shweta as voyage charterer had an arrangement with Bandung to issue a new set of bills of lading (the switch bills) in exchange for the original set, the new bills containing some altered details. Clause 3 which is identical in both voyage charters provides:

“ Charterers have the option to exchange local for global bs/l basis one-to-one exchange basis, at load port or port Klang or Singapore at no extra costs. Strictly no double issuance of bs/l.”

Addendum no.01 provides:

“Charterers’ option for on-board commingling (sic) with following to apply:

…

B. Owners/Agents to issue global bs/l (and manifest) for this final product as “Crude palm Oil” and/or other notations such as cargo specifications, L/C markings, b/l date basis any port of loading which vessel must physically called (sic) to load.

Such global bs/l to be issued in Singapore and be withheld by owners and/or agents until charterers exchange the bs/l as per rider clause 3…..”

15 A new set of bills of lading in the tanker bill form was issued for the same cargo but with some alteration in the details like date and load port. One purpose of issuing switch bills is the splitting up of a bulk cargo shipped under one bill of lading into smaller parcels. The altering of details may be for a number of reasons such as to conceal the origin of the goods, identity of the original shipper, date of shipment or due to on board co-mingling as envisaged by Addendum no. 01. Yong was not able to explain the reason for the alterations in this case. The provision for a new set of bills of lading is often agreed by shipowners for commercial motives, but it is, undoubtedly, an accommodation that is not without risks. Longmore J in The Atlas [1996] 1 Lloyd’s Law Rep 642 at 644 referred to it as a practice that “is fraught with danger”.

16 No switch bills of lading were presented to the master of “Victoria Cob”. The cargo was discharged against letters of indemnity from Lanyard who had agreed to indemnify Bandung against any consequent liability, loss or damage as a result of the delivery of the cargo without production of the bills of lading. Except for cargo shipped under switch bill of lading nos. SIN(BTM)KAN 25 and 26, ten other switch bills were indorsed and delivered to BNP after the discharge at Kandla. All the switch bills of lading were subsequently remitted to Lanyard’s bankers in India for collection of payment against documents.

(iii) Batam bills (24 in number)

17 Bill of lading no. 001 and dated 26 March 2000 was for 10,000mt of Crude Palm Oil in bulk, which was shipped on board the vessel “Vincita” at Rotterdam for carriage from Rotterdam to Batam. The bill of lading was issued by Pakhoed Agencies Rotterdam B.V. on owner’s behalf and it was made out to order naming Safic Alcan, a French corporation as shipper and Shweta and Lanyard as the “Notify Party”. The face of the bill of lading recorded in print that the responsibility of the owner of “Vincita” would cease at Batam.

18 “Vincita” discharged her cargo at Batam without presentation of the “Vincita” bill of lading. It came through the banking channel to BNP who financed Shweta’s purchase on 22 May 2000 and later sent the bill of lading on to the collecting bank in India. Unbeknown to the bank, part of the cargo in the total sum of 7,517.599mt was loaded on board “Victoria Cob” at Batam and Bandung issued 24 bills of lading for cargo received by the vessel. They are SIN(BTM)/KAN-01 to 24 all dated Batam as at Singapore 25 May 2000. Batam was the port of loading and Kandla was the port of delivery. Each bill of lading was for 250mt save for bill of lading no SIN(BTM)/KAN-24 which was for 269.697mt. The cargo was similarly described as crude palm oil. The shipper named on each bill of lading was Shweta. They were all order bills with Notify party as Lanyard. The relevant voyage charterparty was dated 19 April 2000 between Bandung and Shweta. The parties have referred to the 24 bills of lading as the “transhipment bills”. I deemed the terminology inappropriate and have referred to them as the “Batam bills”.

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