Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: K S Rajah JC
• Judgment Date: 17 October 1992
• Neutral Citation: [1992] SGHC 270
• Docket Number: Suit No 1626 of 1986
• Date: 17 October 1992
• Year: 1992
• Published date: 19 September 2003
• Plaintiff Counsel: KS Chung (Harry Elias v Partners)
• Citation: [1992] SGHC 270
• Defendant Counsel: Tan Jing Quee (Jing Quee Chin Joo & Teck Hui)
• Court: High Court (Singapore)
• Subject Matter: Court not bound by pleadings,Parties,Breach of contract,Contract,Fact established not pleaded,Court must proceed on basis of evidence it finds most accurate and trustworthy,Judgment to be entered in foreign currency or its equivalent in Singapore dollars at time of payment or execution,Civil Procedure,Whether binding on court,Damages,Implied authority of agent,Claim in foreign currency,Objections,Whether relationship of agency exists,FOB contract,Whether plaintiffs/disclosed principal had rights against defendants under FOB contracts,Remedies,Breach,Custom or ordinary course of business,Agency,Repudiation accepted,Locus standi,Failure to nominate vessel and take delivery of goods,Pleadings,Claim for damages for breach of contract

Cur Adv Vult

The plaintiffs` claim is for damages suffered under three of four FOB contracts for the sale of Thai kenaf. The plaintiffs` claim is based on the defendants` failure to take delivery of the kenaf at Bangkok under the three contracts. The nominal sellers under the contracts were Asia Industry Co Ltd (`Asia Industry`). In respect of contract Nos 1 and 2 dated 21 January 1984, the defendants were the direct buyers. In respect of contract Nos 3 and 4 dated 24 January 1984, PT Bank Arta Pusara (`Bank Arta`) were the nominal buyers. The defendants applied for and established letters of credit in respect of these contracts. The plaintiffs say that the benefit of all four contracts were assigned to them by a letter dated 9 February 1984. The plaintiffs further allege that notice of assignment had been duly given and that as from 9 February 1984 Asia Industry acted as agents of the plaintiffs.

In respect of contract No 1, the delivery was taken and payment made under letter of credit and accordingly there is no claim in respect of it. In respect of the remaining three contracts, United Overseas Bank Ltd (`UOB`) opened transferable and irrevocable letters of credit in favour of Asia Industry. The letters of credit required the defendants to nominate vessels to receive the cargo.

The defendants concede that the plaintiffs are the beneficiaries under the three letters of credit and that they applied for and opened the letters of credit in favour of Asia Industry. The defendants, however, say that the plaintiffs are not a party to the contracts of sale in respect of contracts entered into between Asia Industry and the defendants. The defendants deny the assignment of the four contracts to the plaintiffs. The defendants have asked the court to find that Asia Industry was the party to all the four contracts in its own right under a fundamental agreement entered into between the plaintiffs and Asia Industry on 1 December 1983. The defendants` case in respect of contracts entered into between Asia Industry and Bank Arta is that the defendants are the agents of Bank Arta.

The plaintiffs are a company incorporated in Thailand. The defendants are a company incorporated in Singapore. On 1 December 1983 Mr Prachai Kongwaree (`Prachai`), managing director of Asia Industry, a company incorporated in Thailand and Mr Boon Thamachakkul (`Boon`), managing director of the plaintiffs` company, entered into an agreement in the name of the companies called the fundamental agreement (`the agreement`). Mr Boon and Mr Prachai agreed to enter into the agreement to develop business for the shipment of jute to Indonesia. It was agreed that Asia Industry and the plaintiffs would both participate in the buying and selling of jute (kenaf) locally and abroad on an equal basis. The letters of credit established in favour of Asia Industry in respect of the business transactions would be made transferable to permit shipments suitable to the party concerned and the parties would jointly bear the responsibility for capital investment, bank interest, insurance, profit and loss, and the like. The agreement further provided that the two companies would manage and control the buying/selling, shipments and the accounts in accordance with its terms. The agreement was to remain in force until one of the parties terminated it by giving three months` written notice to be served on the other party. There is a dispute over the agreement and its contents.

On 13 December 1983 Prachai wrote a letter to the plaintiffs. In the letter Prachai said that his banker had rejected his application for additional credit facilities to enable Asia Industry to proceed with the agreement undertaken on 1 December 1983. In view of the financial problems, Asia Industry withdrew from the partnership outlined in the agreement with effect from 13 December 1983 to avoid problems and misunderstandings that might arise. The three months` written notice was not given, nor was it demanded. Prachai does not challenge his signature at the end of the letter which carries the `Asia Industry` letterhead. Prachai`s evidence is that he left about 20 pieces of blank paper carrying `Asia Industry` letterhead with the plaintiffs after he had signed the blank pieces of paper. The signature was his, but not the contents. It was meant to facilitate things.

In para 2 of the letter, Prachai of Asia Industry offered to act as the commission agents for any business transactions `materialized through our medium (Asia Industry) with the jute mills/purchasers in Singapore and Indonesia`. The letter further stated that Asia Industry was contacting Keck Seng and Keck Seng`s associates, Bank Arta. Keck Seng and Bank Arta were inter-related and belonged to the same group and all letters of credit would be opened by the defendants. Asia Industry`s commission would be 2% against the net invoice value and any price differential against the offered prices is to be retained and refunded to Asia Industry, payable on completion of shipment and bills duly negotiated.

All prices and terms of payment offered by Asia Industry were subject to the plaintiffs` prior approval and all letters of credit would be made transferable even if the contracts were entered in the name of Asia Industry with the buyers directly. Asia Industry made it clear that the plaintiffs` name would be given to the buyers as being its principal and that as soon as the letters of credit were received they would be transferred to the plaintiffs. I now turn to two contracts, one of which was performed and the other the subject of this case.

Contract Nos 1 and 2 (Asia Industry and defendants)

On 21 January 1984 Asia Industry and the defendants entered into a contract for sale of Thai Kenaf. This was contract No 1/84. The contract was as follows:

Contract No 1/1984

21 January 1984

Messrs Keck Seng (S) Pte Ltd

28th Floor, Peninsular Building

111 North Bridge Road

Singapore 0617

Dear Sirs

We wish to confirm having sold to you the undermentioned goods as per terms and conditions as stated below:

Commodity : Thai long Kenaf Grade A

Quantity : 2,000 (two thousand) metric tons

Price : at US$300 per metric ton, FOB Bangkok

Total amount : US$600,000 (US dollars: six hundred thousand only), FOB Bangkok

Shipment : During March/April 1984

Destination : Singapore port

Payment : By transferable/irrevocable letter of credit at sight for 100% of the invoice value to be opened in our favour before 6 February 1984

Inspection : Inspection of quality and weight certificate to be carried out and issued by either:

SGS Far East Ltd

or Universal Surveying Co Ltd (USCO)

Special : Partial shipment to be allowed

condition

Please kindly confirm your acceptance of the above by returning the duplicate of this contract duly signed.

Yours faithfully,

Asia Industry Co Ltd

Signed

Prachai Kongwaree

Managing Director

We hereby confirm;

Messrs Keck Seng (S) Pte Ltd

Signed

There is nothing in this contract or any of the contracts against assignment. The covering letter to the defendants from Asia Industry made reference to the sale contract Nos 1/84 and 2/84 dated 21 January 1984. The defendants were asked to sign the contract Nos 1/84 and No 2/84 and return the duplicates to Asia Industry. The defendants were asked to open two letters of credit in favour of Asia Industry in respect of the two contracts for US$600,000 (contract No 1) and US$560,000 (contract No 2) permitting partial shipment. The defendants were requested to open the two letters of credit for the full actual value of the goods to reach Asia Industry by 31 January 1984, so that Asia Industry could make the necessary arrangements for shipment of the defendants` orders at an early date. The defendants were asked to make payment by transferable irrevocable letter of credit to be opened in favour of Asia Industry. The date was later extended to 6 February 1984. Inspection in respect of contract No 1 was to be either by SGS Far East Ltd (`SGS`) or Universal Surveying Co Ltd (`USCO`). The defendants confirmed contract Nos 1 and 2 and sent the duplicates to Asia Industry. The destination in respect of contract Nos 1 and 2 was Singapore.

Contract Nos 3 and 4 (Asia Industry and Bank Arta)

On 24 January 1984 Asia Industry were the nominal sellers to Bank Arta of the jute set out in contract Nos 3 and 4. Contract Nos 3 and 4 are in the same format as contract Nos 1 and 2. Contract No 3 was for Thai grade A jute and contract No 4 was for grade B jute with differences in price and amounts. The contracts have been summarized later in this judgment.

The assignment

On 9 February 1984 Asia Industry sent a letter to the plaintiffs. It reads:

9 February 1984

Messrs Thai Kenaf Co Ltd,

Union Building,

462/1-5 Siphya Road,

Bangkok.

Dear Sirs,

Re: Contract No 1/1984 dated 21 January 1984 for 2,000 m/tons Thai Long Kenaf Grade A,

Contract No 2/1984 dated 21 January 1984 for 2,000 m/tons Thai Long Kenaf Grade B,

Contract No 3/1984 dated 24 January 1984 for 1,000 m/tons Thai Long Kenaf Grade A,

Contract No 4/1984 dated 24 January 1984 for 1,000 m/tons Thai Long Kenaf Grade B.

We hereby fully transfer all of our right to you the above-mentioned contracts for account of Messrs Keck Seng (S) Pte Ltd, and we will instruct our banker to irrevocably transfer the letter of credits established by Messrs Keck Seng (S) Pte Ltd, Singapore to you immediately after we received them including sole rights relating to any amendments, whether now existing or hereafter made.

We enclose herewith our duplicate contracts duly signed by us and by our buyers for account of Messrs Keck Seng (S) Pte Ltd, 28th Floor, Peninsular Plaza,...