Ringler Pte Ltd v United Commercial Bank

• Jurisdiction: Singapore
• Judgment Date: 02 March 1995
• Date: 02 March 1995
• Docket Number: Civil Appeal No 90 of 1994
• Court: Court of Appeal (Singapore)

UCO Bank (formerly known as United Commercial Bank)

Plaintiff

and

Ringler Pte Ltd

Defendant

[1995] SGCA 23

M Karthigesu JA

,

L P Thean JA

and

Goh Joon Seng J

Civil Appeal No 90 of 1994

Court of Appeal

Tort–Conversion–Contract for sale of goods–Seller shipped goods to buyer in India–Bank guarantee obtained by buyer issued in favour of carrier's agent–Carrier released goods without payment–Whether bank liable in conversion

The respondent entered into a contract with Jagetia Paper Mills (Pte) Ltd (“Jagetia”) for the sale of some waste paper, the payment of which was to be by way of an irrevocable letter of credit (“LC”). The appellant, an Indian bank, issued the LC through its Jaipur branch. Certain documents, such as a copy of the cable confirmation to Jagetia evidencing shipment and despatch particulars, and evidence that the shipment had been made through a conference line, were required under the LC.

The respondent shipped the goods and provided the documents to its banker, DG bank, for negotiation on its behalf. When DG bank presented the documents to the appellant's Singapore branch for negotiation, some discrepancies were noted in the documents. At the respondent's request, the documents were despatched to the appellant's Jaipur branch.

Meanwhile, the appellant at Jagetia's request issued a banker's guarantee in favour of the carrier's agents, agreeing to hold the carrier indemnified against any claim against it for delivering the goods to Jagetia without production of the bills of lading. The carrier's agent subsequently issued the delivery orders for the goods to Jagetia.

However, the documents provided by the respondent had further discrepancies and were not accepted. The appellant informed the carrier's agent that the banker's guarantee was to be treated as withdrawn. Subsequently, the goods were released to Jagetia against the delivery orders issued by the carrier's agent. Jagetia, having taken delivery of the goods, refused to make payment to the respondent.

The respondent made claims in contract, negligence and in tort for conversion. On conversion, the respondent alleged that the appellant was guilty of conversion by wrongfully assisting the carrier in the unlawful transfer of the goods to Jagetia. The trial judge dismissed the claims in contract and negligence. However, trial judge allowed the claim in conversion, holding that, in issuing the guarantee to the carriers, the appellant acknowledged that it was converting the goods of the owners or a party entitled to possession.

Held, allowing the appeal:

(1) The three forms of conversion were as follows: (a) where there was a positive wrongful act of dealing with the goods in a manner inconsistent with the owner's rights, and an intention in so doing to deny the owner's rights or to assert a right inconsistent with them; (b) where goods were wrongfully detained by the defendant; and (c) where a bailee has allowed the loss or destruction of goods to happen in breach of his duty to his bailor: at [18].

(2) The only issue was whether the first form of conversion applied in this case. In such a case, physical possession of the goods by the defendant was not a necessary element, nor was physical handling of the goods. However, the defendant's act must have deprived the plaintiff of his right to possession or amounted to a substantial interference with that right: at [19].

(3) The carrier itself delivered the goods to Jagetia without the production of the bills of lading by the appellant. The carrier was thus liable to the respondent for breach of contract as evidenced by the bills of lading or guilty of conversion. This liability to the respondent remained with or without the banker's guarantee. The issuing of the banker's guarantee by itself did not operate as delivery of the goods to Jagetia. The banker's guarantee only entitled the carrier to indemnity against any claim by the respondent. Thus, the appellant had not dealt with the goods in a manner which was inconsistent with the respondent's rights either as owner or party entitled to possession and no action thus lay against the appellant for conversion: at [22] and [24].

Hiort v Bott (1874) LR 9 Exch 86 (folld)

Kitano v The Commonwealth of Australia (1974) 129 CLR 151 (folld)

Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] MLJ 200; [1959] AC 576; [1959] 3 All ER 182 (refd)

Companies Act (Cap 50,1994 Rev Ed)s 368 (1)

Eric Low (Khattar Wong & Partners) for the appellant

Prabhakaran Nair and Patrick Chong (Ong, Tan, Nair & Quek) for the respondent.

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