Italmatic Tyre & Retreading Equipment (Asia) Pte Ltd v CIMB Bank Bhd

• Jurisdiction: Singapore
• Judge: Steven Chong JCA
• Judgment Date: 20 May 2021
• Neutral Citation: [2021] SGCA 56
• Published date: 25 May 2021
• Docket Number: Civil Appeal No 144 of 2020
• Year: 2021
• Hearing Date: 20 May 2021
• Plaintiff Counsel: Lim Chee San (TanLim Partnership)
• Citation: [2021] SGCA 56
• Defendant Counsel: Chan Kia Pheng and Walter Yong (LVM Law Chambers LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Assignment,Contract

Steven Chong JCA (delivering the judgment of the court ex tempore): Introduction

This is an appeal against the decision of the High Court judge (“the Judge”) in CIMB Bank Bhd v Italmatic Tyre & Retreading Equipment (Asia) Pte Ltd [2020] SGHC 160.

Facts

The brief facts of the case are as follows. The respondent bank, CIMB Bank Bhd (“CIMB”) extended trade financing facilities to Panoil Petroleum Pte Ltd (“Panoil”) by way of an all-monies debenture which provided for the respondent’s security interest in Panoil’s book debts. In July and August 2017, Panoil entered into contracts to sell marine fuel (“the Contracts”) to the appellant, Italmatic Tyre and Retreading Equipment (Asia) Pte Ltd (“Italmatic”), pursuant to which it issued seven invoices. The sale confirmations issued in respect of the Contracts incorporated Panoil’s standard terms and conditions (“Panoil T&C”). Clause 8.2 of the Panoil T&C obliged Panoil’s customers to pay Panoil “without deduction, set-off or counterclaim”.

A set-off agreement was entered into between Italmatic and Panoil dated 1 July 2015 (“the 2015 set-off agreement”), which allowed either party to set-off any “undisputed” debts owed to the other. When Panoil went into financial difficulties, CIMB issued a notice of assignment dated 29 August 2017 to Italmatic in respect of the debts owed by Italmatic to Panoil under the seven invoices, requiring Italmatic to make payment to CIMB instead of Panoil, and brought suit against Italmatic to enforce that debt. Italmatic contended that the debt it owed Panoil under the seven invoices had been entirely set-off or alternatively cancelled.

As regards the set-off defence, Italmatic’s pleaded case was that on 13 August 2017 (prior to CIMB’s notice of assignment), Panoil and Italmatic re-affirmed the 2015 set-off agreement and agreed to set-off the amounts “owing by each other against the amounts owing to each other”. In support, Italmatic relied on an exchange of letters on 13 August 2017 (“the 13 August 2017 Letters”). In these letters, Italmatic proposed a set-off of the amounts it owed to Panoil in the terms contained in a net statement of accounts attached to its letter, which it described as a “contra statement”. This showed a net amount of $2,100 owed by Panoil to Italmatic. Panoil responded by accepting the set-off.

As regards the cancellation defence, Italmatic pleaded that on 17 August 2017, Eastern Pacific Tankers Sdn Bhd (“Eastern Pacific”), to whom it resold the marine fuel which it had purchased from Panoil under the Contracts, sent a letter to Panoil, copying Italmatic, to notify Panoil to bill Eastern Pacific directly. On 18 August 2017, Panoil accepted Eastern Pacific’s request by letter. We shall refer to these letters as “the August 2017 Cancellation Letters”. On the same day, Italmatic purportedly cancelled the seven invoices on 18 August 2017 and notified Panoil accordingly by an email.

CIMB disputed the authenticity of the 2015 set-off agreement, the 13 August 2017 Letters and the August 2017 Cancellation Letters and put Italmatic to strict proof. A Notice of Non-Admission was also served by CIMB to dispute the authenticity of these documents.

The Judge found that while the 2015 set-off agreement was authentic, it was inconsistent with cl 8.2 of the Panoil T&C which had been incorporated into the Contracts. Clause 8.2 precluded Italmatic from exercising its right of set-off under the 2015 set-off agreement by the 13 August 2017 Letters. In any case, Italmatic did not exercise such a right as the 13 August 2017 Letters were, in the Judge’s view, fabrications. The set-off defence therefore failed. Similarly, the Judge held that the cancellation defence failed as he found that the August 2017 Cancellation Letters were also fabrications on the evidence before him. Accordingly, the Judge held that CIMB succeeded in its claim against Italmatic for the debt outstanding under the seven invoices.

The appeal therefore turns on whether the Judge had erred in rejecting both the set-off defence and the cancellation defence.

Our decision

As regards the set-off defence, Italmatic contended that the recent decision of this court in CIMB Bank Bhd v World Fuel Services (Singapore) Pte Ltd and another appeal [2021] SGCA 19 (“World Fuel Services”) was indistinguishable from the present case and that its appeal should therefore succeed. It argued that the Judge had erred in finding that the 13 August 2017 Letters were fabrications, pointing to a Credit Advice issued by a bank on 22 August 2017 which showed that Panoil had remitted US$2,400.12 to Italmatic on that date. According to Italmatic, this remittance was made to settle the net debt of US$2,100 owed to it by Panoil purportedly due under the “contra statement” referred to in [4] above. Accordingly, Italmatic contends that it had validly exercised its right to set-off under the 2015 set-off agreement by way of the 13 August 2017 Letters. The problem with this submission is that Italmatic failed to produce the Credit Advice at trial; it sought to introduce the Credit Advice on appeal in Summons No 137 of 2020. This application was heard on paper and dismissed on 22 February 2021 on the basis that the requirements set out in Ladd v Marshall [1954] 1 WLR 1489 (...