MeesPierson NV v Bay Pacific (S) Pte Ltd and Others

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeS Rajendran J
Judgment Date14 August 2000
Neutral Citation[2000] SGHC 168
Citation[2000] SGHC 168
Plaintiff CounselMuthu Arusu and Ang Wee Tiong (Allen & Gledhill)
Defendant CounselL Devadason and Mahtani Bhagwandas (Mahtani & Co)
Date14 August 2000
Published date19 September 2003
Docket NumberSuit No 1675 of 1999

: The plaintiffs herein (`MP Bank`) are a bank incorporated in the Netherlands. MP Bank has a branch in Singapore. The first defendants are a trading company in Singapore. The second and third defendants are the two directors of the first defendants. The second defendant (`Mrs Rehman`) is the managing director of the first defendants.

On 28 November 1995, the Industrial & Commercial Bank of Vietnam (`Vietincombank`) issued an irrevocable letter of credit (`the Vietnam credit`) in favour of the first defendants for US$497,420 to cover the sale by the first defendants of 1,870 metric tons of Indian wheat flour to Bin Thuan Production Trade Import Export Co in Vietnam. The first defendants were advised of the Vietnam credit by Standard Chartered Bank in Singapore. The first defendants approached MP Bank, their regular banker, to add its confirmation to the Vietnam credit. MP Bank on 23 January 1996 informed the first defendants that at the request of Vietincombank and of the first defendants they had added their confirmation to the Vietnam credit.

The Vietnam credit was subject to the Uniform Customs and Practice for Documentary Credits (`UCP 500`) and contained, inter alia, the following terms:

: 41D / Available With ... By ... :Confirming Bank By Acceptance

...

: 42C / Drafts at ... :180 Days After B/L Date For100 Percents Of Invoice Value

...

: 44A / Load/Dispatch/In Charge:Any Port In India

: 44B / For transportation to:Ho Chi Minh City Port, Vietnam

...

: 46A / Documents required:

...

02 3/3 Set of Clean on Board Ocean Bill of Lading Made Out to Order Vietincombank, Binhthuan Branch, Marked `Freight Prepaid` and Notify Applicant.

...

07 Certificate of Food Sanitation issued by Government Health Organisation must be presented for acceptance.



By amendments made to the letter of credit, the expiry date of the letter of credit was extended to 13 February 1996 and the latest shipment date was extended to 22 January 1996. An amendment on 23 December 1995 also provided:

79 / Narrative:

1 / The clause: available with confirming bank by acceptance. Now to read as: Available with confirming bank by negotiation.

...

4 / The clause: Certification of Food Sanitation issued by Government Health Organization must be presented for acceptance. Now amended to read as: Certificate of Health must be presented for negotiation.



Vietincombank notified the first defendants of all these amendments through MP Bank.

The first defendants sourced the goods stipulated under the credit from a supplier in Mumbai called Navcom Oil Products Ltd (`Navcom`). To pay Navcom, the first defendants requested MP Bank to issue an irrevocable letter of credit (`the Mumbai credit`) to Navcom on a back-to-back basis with the Vietnam credit. The Mumbai credit was advised to Navcom through the State Bank of India on 3 January 1996 and was available for negotiation with any bank. The documents required under the Mumbai credit (save for the bills of lading and the beneficaries draft), mirrored the requirements of the Vietnam credit.

Amongst the documents required for the negotiation of the Mumbai credit were a full set of original clean on board bills of lading (to be made out to the order of MP Bank), photo-copies of health and various other certificates (the originals of which were required under the Vietnam credit) and a courier receipt evidencing the despatch by Navcom of the said originals to the first defendants. The bills of lading that were produced to negotiate the Mumbai credit were dated 22 January 1996, the last date allowed for the shipment under the Mumbai credit. The Health Certificate that was produced was addressed to Navcom. The negotiation bank was required, under the Mumbai credit, to despatch all documents received under the Mumbai credit to MP Bank in one lot by courier. No problems were encountered in the negotiation of the Mumbai credit.

On 12 February 1996, under cover of an application dated 22 January 1996 signed by Mrs Rehman, the first defendants applied to MP Bank to negotiate the Vietnam credit. Amongst the documents attached were switched bills of lading (to comply with the terms of the Vietnam credit under which the bills of lading were to be made out to the order of Vietincombank), the original of the Health Certificate addressed to Navcom referred to above, and a bill of exchange drawn by the first defendants upon Vietincombank for US$547,162 payable 180 days after the bill of lading date to the order of MP Bank.

On 14 February 1996, MP Bank notified the first defendants that the Health Certificate was discrepant in that it was addressed to Navcom. There was a note in MP Bank`s records that the Health Certificate was taken back on 15 February 1996 and returned the same day. The Health Certificate when re-submitted had the reference to Navcom blancoed out. MP Bank found the re-submitted Health Certificate satisfactory and accepted the documents. It then discounted the bill of exchange (without recourse) and the discounted proceeds of US$525,164.52 were credited into the first defendants` account with them. From those proceeds MP Bank debited a sum of US$422,889.14 in settlement of the amount due from the first defendants to MP Bank under the Mumbai credit and a further sum of US$87,941.27 in repayment of a freight loan that MP Bank had extended to the first defendants for the shipment. MP Bank couriered the relevant documents to Vietincombank and sought confirmation that it would be reimbursed on maturity of the draft.

The documents were received by Vietincombank on 17 February 1996. On 4 March 1996, the Bin Thuan branch of Vietincombank replied that as two items (not related to the Health Certificate or the date of the bill of lading) were discrepant they could not accept the documents. MP Bank disputed the claim of discrepancies and maintained that Vietincombank was, in any event, precluded from claiming the alleged discrepancies as they had failed to give notice of the rejection timeously under arts 13 and 14 of UCP 500. In the correspondence thereafter MP Bank in a letter dated 28 May 1996 pointed out that it (MP Bank) had added its confirmation to the credit at the request of Vietincombank. Vietincombank did not, at that stage, dispute this assertion; it was on 2 July 1996, some four months after having first refused the documents on the grounds of discrepancies, that Vietincombank took the position that the Vietnam credit was not available for negotiation/acceptance by MP Bank and that the only bank in Singapore authorised to deal with the credit was the Standard Chartered Bank.

The reason for Vietincombank`s reluctance to honour the Vietnam credit probably stemmed, inter alia, from the fact that the vessel on which the wheat flour was loaded never reached Ho Chi Minh City. MP Bank, in March 1997, sent two of its officers to Ho Chi Minh City to meet with officers of Vietincombank to discuss the matter. Mrs Rehman, at the invitation of MP Bank, attended the meeting. Representatives of the buyer and representatives of the insurers of the cargo were also at the meeting. Mrs Rehman told the court that at that meeting allegations were made by the Vietnamese buyer that the cargo had not been loaded on the ship at all. It was also alleged that the bills of lading had been antedated. Mrs Rehman said that this was the first time that she had heard these allegations. She did not, however, pay much heed to these allegations as no evidence was produced to substantiate what was said.

As Vietincombank would not honour the credit, MP Bank commenced legal action in Singapore (Suit 2074/96) against Vietincombank. However, in August 1998, in the course of the hearing before Chao Hick Tin J (as he then was), MP Bank applied for and obtained leave to discontinue the action. No evidence was led before me to explain why the suit was discontinued. The absence of an explanation does not affect the merits of MP Bank`s claims against the defendants herein, but an explanation, if offered, could have gone some way towards meeting the defendants` submission that MP Bank, in not pursuing their claim against Vietincombank, were the authors of their own misfortune.

The claims of fraud/forgery

In the course of the proceedings against Vietincombank and as a result of their own investigations, MP Bank discovered that:

(a) the Health Certificate which purported to emanate from the Municipal Corporation of Greater Bombay was in fact not issued by that Corporation; and

(b) the bill of lading was dated 22 January 1996 when, in truth, the loading of the cargo commenced only on 4 February 1996 and was not completed till 11 February 1996.

It was MP Bank`s case in the present proceedings that the first defendants knew, at the time they presented the documents to MP Bank, that the two documents listed above contained material misrepresentations of fact. The claim against the second and third defendants was on the basis that they were joint tortfeasors with the first defendants in the alleged misrepresentation.

In the alternative, MP Bank claimed that it was an implied term of the contract between the first defendants and MP Bank that the documents would not, to the first defendants` knowledge, contain any material representations of fact which were false. Further, or in the alternative, MP Bank claimed that the sum of US$525,164.52 was paid by them and received by the first defendants under a mistake of fact, namely:

(a) that the cargo was shipped under the bill of lading on 22 January 1996; and

(b) that the Health Certificate was issued by the Municipal Corporation of Greater Bombay.

and in the premises the first defendants received and held the said sums to the use of MP Bank.

In their defence, the defendants had denied that the bill of lading had been antedated and that the Health Certificate was a forgery. In court...

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