The "Bunga Melati 5"

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 29 March 2016
• Neutral Citation: [2016] SGCA 20
• Plaintiff Counsel: Lee Eng Beng SC, Koh See Bin and Seow Wai Peng Amy (Rajah & Tann Singapore LLP)
• Docket Number: Civil Appeal No 163 of 2015
• Date: 29 March 2016
• Hearing Date: 09 March 2016
• Subject Matter: Agency by estoppel,Agency
• Published date: 31 March 2016
• Citation: [2016] SGCA 20
• Defendant Counsel: Ang Cheng Hock SC, Tan Xeauwei, Ramesh Kumar and Edmund Tham (Allen & Gledhill LLP)
• Court: Court of Appeal (Singapore)
• Year: 2016

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

This appeal arises out of a claim in the sum of US$21,703,059.39 together with contractual interest. The claim was brought by the appellant, Equatorial Marine Fuel Management Services Pte Ltd (“EMF”), for non-payment of bunker fuel that had been delivered to vessels owned or operated by the respondent, MISC Berhad (“MISC”), under three bunker contracts (“the Disputed Contracts”). EMF had concluded the Disputed Contracts with Market Asia Link Sdn Bhd (“MAL”).

EMF’s case is that MISC is in fact the counterparty to the Disputed Contracts and that MAL at all times was acting as MISC’s agent. On the other hand, MISC’s case is that it was never party to the Disputed Contracts and that EMF must look to MAL for payment. MISC contends that it purchased the bunkers from MAL and paid MAL in full. At the trial, EMF argued that MAL had actual and/or apparent authority from MISC to act as its agent. It also argued that MISC was estopped from denying MAL’s authority to transact on its behalf as its agent. The High Court judge (“the Judge”) rejected all of EMF’s arguments and consequently dismissed EMF’s claim. The Judge’s decision may be found at The “Bunga Melati 5” [2015] SGHC 190 (“the Judgment”).

EMF has appealed against the Judgment but only pursues a single point, which is the Judge’s finding that MISC is not estopped from denying that MAL was its agent. This raises questions of both law and fact. Specifically, we must consider the circumstances under which a party will be estopped from denying that another was its agent; and whether those circumstances are made out in the present case. We heard the parties on 9 March 2016 and reserved judgment for a short time to review some of the materials. Having considered the matter, we now give our decision in respect of the appeal. In short, we dismiss EMF’s appeal. We preface the reasons for our decision with a brief summary of the facts relevant to the appeal.

The facts

EMF is a Singapore incorporated company whose business is to sell and supply bunkers to ocean-going vessels. MISC is a publicly listed company incorporated in Malaysia which owns and operates commercial vessels. It is known to be one of the largest shipowners in the world. The putative agent, MAL, is a company incorporated in Malaysia. Initially, its business was to sell spare parts for ships, including those of MISC. In March 2005, MAL was approved by MISC as a registered bunker vendor. Thereafter, until the end of 2008, MISC purchased significant amounts of bunker fuel from MAL pursuant to fixed price contracts as well as spot contracts.

To satisfy the bunker demands of MISC, MAL would approach bunker brokers to source for bunker suppliers. EMF was one such bunker supplier. Bunker brokers essentially connect buyers and sellers of bunkers without taking on the credit or supply risk of either. The bunker brokers MAL dealt with who are material to this appeal are Compass Marine Fuel Ltd (“Compass”) and OceanConnect UK Ltd (“Ocean”), both of which are companies based in London.

Between June 2006 and September 2008, EMF delivered approximately 198,000mt of bunkers to MISC’s vessels pursuant to bunker supply contracts brokered through Compass and Ocean. This included the Disputed Contracts which involved a total quantity of approximately 71,100mt of bunkers. Unbeknown to EMF, the party that Compass and Ocean were dealing with in relation to these bunker supply contracts was MAL rather than MISC directly.

The present appeal concerns two fixed price contracts and a spot contract (ie, the Disputed Contracts) that were entered into by EMF with MAL through EMF’s brokers, Compass and Ocean, to deliver bunkers to MISC’s vessels. EMF contends that MISC is estopped from denying that MAL was acting as its agent with respect to the Disputed Contracts. It contends that this is so because MISC knew that MAL was conducting all its transactions with all its bunker suppliers on the basis that it was MISC’s agent, yet it stood idly by and did not correct EMF’s mistaken belief that MISC was the true contracting party to the Disputed Contracts. In fact, EMF suggests that MISC went further than that – EMF contends that MISC encouraged and assisted MAL in its misrepresentations to its bunker suppliers that it was MISC’s agent. In these circumstances, EMF contends that equity will intervene to prevent MISC from denying that MAL was its agent.

Our decision

We begin with the applicable principles of law. At the outset, we note that the difference between agency by estoppel and apparent authority is not, as it were, that apparent. The distinction appears to have been recognised by the learned authors of Peter Watts & F M B Reynolds, Bowstead and Reynolds on Agency (Sweet & Maxwell, 20th Ed, 2014) (“Bowstead”), where they express the view that in certain circumstances, a person may be held liable as principal in respect of a transaction entered into by some other party even where it cannot be said that the putative principal has made a representation as to, or in some other way manifested, the authority of that other party to act on its behalf to the third party. Such a representation would be required in order to establish liability on the basis of apparent authority. Despite the absence of any such representation, it is said that the principal may nonetheless be affected in an agency context by the operation of the doctrine of agency by estoppel provided the relevant circumstances are shown to exist (see para 2-099 of Bowstead). However, what constitutes such circumstances remains uncertain. Two decisions are cited in Bowstead as illustrations of the principle of agency by estoppel: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 251 (“Pacific Carriers”) and Spiro v Lintern [1973] 1 WLR 1002 (“Spiro”). However, in our judgment, these do not go very far in shedding light on the difference between the two doctrines and whether indeed the doctrine of agency by estoppel stands as an altogether separate basis for holding the principal liable.

A careful reading of Pacific Carriers suggests that that decision of the High Court of Australia can equally be explained on the basis of the doctrine of apparent authority. In Pacific Carriers, the Documentary Credit manager of the defendant-bank had actual authority to sign letters of credit but not letters of indemnity against delivery of goods without a bill of lading. The manager nonetheless signed such letters of indemnity which were subsequently relied on by the plaintiff-charterer to its detriment. The High Court of Australia, applying the general principles concerning the apparent authority of an officer of a company dealing with a third party as enunciated in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480) (“Freeman & Lockyer”), held that a representation may be found to have been made where the putative principal, in this context a company, equips one of its officers with a certain title, status and facilities (at [36]–[38]). The court found, among other things, that the manager had been provided with a bank stamp and copies of the letters of indemnity and was thus placed “in a position which equipped her to deal with the letters of indemnity as requested by the [plaintiff-charterer]” (at [44]). The court held that this induced the assumption made by the plaintiff-charterer that the letters of indemnity were authentic and it would be unjust in the circumstances to permit the defendant-bank to act contrary to this (at [44]). In our judgment, the case may be understood as having been decided on the basis that the conduct of the defendant-bank, in placing the manager in the position that she was in, amounted to a representation by the defendant-bank that the manager had the authority to sign letters of indemnity. It is not controversial that a representation may be inferred from conduct and this would have sufficed to afford a basis for finding that the manager was thereby cloaked with apparent authority.

As for Spiro, that involved a very unusual situation. In Spiro, the owner of a house, Mr Lintern, had asked his wife, Mrs Lintern, to put the house in the hands of estate agents, which she did. However, he gave her no authority to sell the house. The estate agents received an offer from one Mr Spiro and informed Mrs Lintern of the same. She instructed the agents to accept the offer. Thereafter, in the interactions between the Linterns and Mr Spiro, Mr Lintern conducted himself as if he had authorised the transaction. What was of particular significance is that all the parties, namely Mr and Mrs Lintern and Mr Spiro, were privy to the following facts: that the property in question belonged to Mr Lintern; that Mrs Lintern was dealing with Mr Spiro on the terms of the intended sale; and that each of the parties knew that the other parties were aware of the foregoing two facts.

In those circumstances, there was no difficulty in finding that Mr Lintern had a duty to correct Mr Spiro’s mistaken belief that Mrs Lintern had authority to negotiate the sale of the property on Mr Lintern’s behalf and his failure to do so amounted to a representation that Mrs Lintern did have such authority (at 1011A–D). Viewed in this way, in our judgment, Spiro could very well have been analysed under the traditional doctrine of apparent authority.

This having been said, we do not think it is in fact necessary for us to decide in the present case whether there is a real difference between the two doctrines. In our judgment, it is uncontroversial that unconscionability underlies equity’s intervention to make a putative principal liable even in the absence of actual authority. The doctrine of apparent authority has itself been analysed as an instance of estoppel: see Freeman & Lockyer at 503; and see also Guy Neale and others v Ku De Ta SG Pte Ltd [2015] 4 SLR...