The “Yue You 902”

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Pang Khang Chau JC
• Judgment Date: 24 April 2019
• Date: 24 April 2019
• Docket Number: Admiralty in Rem No 105 of 2016 (Registrar's Appeal No 258 of 2017, Registrar's Appeal No 259 of 2017 and Summons No 334 of 2018) and Admiralty in Rem No 115 of 2016 (Registrar's Appeal No 260 of 2017, Registrar's Appeal No 261of 2017 and Summons No 336 of 2018)

[2019] SGHC 106

High Court

Pang Khang Chau JC

Admiralty in Rem No 105 of 2016 (Registrar's Appeal No 258 of 2017, Registrar's Appeal No 259 of 2017 and Summons No 334 of 2018) and Admiralty in Rem No 115 of 2016 (Registrar's Appeal No 260 of 2017, Registrar's Appeal No 261of 2017 and Summons No 336 of 2018)

The “Yue You 902” and another matter

Toh Kian Sing SC and Chen Zhida (Rajah & Tann Singapore LLP) for the plaintiff;

Bazul Ashhab bin Abdul Kader, Prakasash Silvam, andAng Kaili (Oon & Bazul LLP) for the defendant.

Case(s) referred to

Aegean Sea, The [1998] 2 Lloyd's Rep 39 (folld)

Bandung Shipping Pte Ltd v Keppel TatLee Bank Ltd [2003] 1 SLR(R) 295; [2003] 1 SLR 295 (folld)

Bank Negara Malaysia v Mohd Ismail [1992] 1 MLJ 400 (refd)

Barber v Meyerstein (1870) LR 4 HL 317 (folld)

Berge Sisar, The [2002] 2 AC 205 (refd)

BNP Paribas v Bandung Shipping Pte Ltd [2003] 3 SLR(R) 611; [2003] 3 SLR 611 (folld)

Calvin Klein, Inc v HS International Pte Ltd [2016] 5 SLR 1183 (refd)

Concentrate Engineering Pte Ltd v United Malayan Banking Corp Bhd [1990] 1 SLR(R) 465; [1990] SLR 514 (distd)

David Agmashenebeli, The [2003] 1 Lloyd's Rep 92 (not folld)

Delfini, The [1990] 1 Lloyd's Rep 252 (folld)

East West Corp v DKBS 1912 [2002] 2 Lloyd's Rep 182, HC (Eng) (folld)

East West Corp v DKBS AF 1912 A/S [2003] QB 1509, CA (Eng) (folld)

Erin Schulte, The [2013] 2 Lloyd's Rep 338, HC (Eng) (not folld)

Erin Schulte, The [2015] 1 Lloyd's Rep 97, CA (Eng) (folld)

Future Express, The [1992] 2 Lloyd's Rep 79 (refd)

Glyn Mills Currie & Co v The East and West India Dock Co (1882) LR 7 App Cas 591 (refd)

Goh Chok Tong v Chee Soon Juan [2003] 3 SLR(R) 32; [2003] 3 SLR 32 (refd)

He-Ro Chemicals Ltd v Jeuro Container Transport (HK) Ltd [1993] 2 HKC 368 (folld)

JP Choon Pte Ltd v Lal Offshore Marine Pte Ltd [2016] SGHC 115 (refd)

Lee Hsien Loong v Singapore Democratic Party [2007] 1 SLR(R) 675; [2007] 1 SLR 675 (refd)

Kai Min Fashion (HK) Ltd v Fond Express Logistics Ltd [2012] HKCU 1982 (refd)

M2B World Asia Pacific Pte Ltd v Matsumura Akihiko [2015] 1 SLR 325 (refd)

Nasaka Industries (S) Pte Ltd v Aspac Aircargo Services Pte Ltd [1999] 2 SLR(R) 817; [1999] 4 SLR 626 (folld)

Nederlandsche Handel-Maatschappij v Strathlorne Steamship Co (1931) 39 Lloyd's Rep 171 (folld)

Pace, The [2010] 1 Lloyd's Rep 183 (refd)

Pacific Vigorous, The [2006] 3 SLR(R) 374; [2006] 3 SLR 374 (folld)

Ritzland Investment Pte Ltd v Grace Management & Consultancy Services Pte Ltd [2014] 2 SLR 1342 (refd)

Sim Kim Seng v New West Coast Shipyard Pte Ltd [2016] SGHCR 2 (refd)

Star Line Traders Limited v Transpac Container System Ltd [2009] HKCU 1355 (refd)

Stone Gemini, The [1999] 2 Lloyd's Rep 255 (refd)

Synehon (Xiamen) Trading Co Ltd v American Logistics Ltd [2009] HKCU 1000 (refd)

Travista Development Pte Ltd v Tan Kim Swee Augustine [2008] 2 SLR(R) 474; [2008] 2 SLR 474 (folld)

UCO Bank v Golden Shore Transportation Pte Ltd [2006] 1 SLR(R) 1; [2006] 1 SLR 1 (folld)

Wee Cheng Swee Henry v Jo Baby Kartika Polim [2015] 4 SLR 250 (refd)

Ythan, The [2006] 1 Lloyd's Rep 457 (not folld)

Legislation referred to

Application of English Law Act (Cap 7A, 1994 Rev Ed) s 4(1)(a)

Bills of Lading Act (Cap 384, 1994 Rev Ed)ss 2(2), 2(2)(a), 5(2) (consd); ss 5(2)(a), 5(2)(b), 5(2)(c)

Companies Act (Cap 50, 2006 Rev Ed) s 210

Rules of Court (Cap 322, R 5, 2014 Rev Ed)O 14 r 3(1) (consd); O 20 r 12

Sale of Goods Act (Cap 393, 1993 Rev Ed)s 47(2) (consd)

Bills of Lading Act 1855 (c 111) (UK) s 1 (consd)

Carriage of Goods by Sea Act 1992 (c 50) (UK) ss 2(1), 2(2), 2(2)(a), 5(2)(c) (consd); s 2(2)(b)

Admiralty and Shipping — Bills of lading — Bills of Lading Act — Defendant ship owner delivering cargo against letter of indemnity without being presented bills of lading — Plaintiff bank granting loan after defendant delivered cargo — Whether bills of lading had become spent — Whether there were “prior contractual or other arrangements” — Section 2(2) Bills of Lading Act (Cap 384, 1994 Rev Ed)

Admiralty and Shipping — Bills of lading — Measure of damages for misdelivery — Carriage freight having being paid — Sale contracts providing indications of value — Defendant submitting that expert evidence nevertheless required to determine market value of cargo — Whether measure of damages would simply be market value of goods

Admiralty and Shipping — Bills of lading — Plaintiff bank receiving bills of lading before cargo was delivered but granting loan after delivery of cargo — Whether plaintiff bank consented to delivery of cargo without presentation of bills of lading — Whether plaintiff bank became holder of bills of lading in “good faith” — Section 5(2) Bills of Lading Act (Cap 384, 1994 Rev Ed)

Facts

The plaintiff, Oversea-Chinese Banking Corporation Ltd (“OCBC”) had extended a loan to the buyer of a cargo of palm oil, Aavanti Industries Pte Ltd (“Aavanti”). The bills of lading were taken as security for the loan, which was governed by a facility agreement made several years before. The defendant was owner of the vessel, the Yue You 902, which had been voyage-chartered by the seller of the cargo, FGV Trading Sdn Bhd (“FGV”). The bills of lading were signed on behalf of the master of the Yue You 902 and blank endorsed by FGV.

After Aavanti requested a trust receipt loan from OCBC, but before OCBC granted it, the defendant discharged the cargo to Aavanti's sub-buyer, Ruchi Soya Industries Ltd (“Ruchi”), against a letter of indemnity provided by FGV. Aavanti defaulted on the loan, and OCBC sought delivery of the cargo from the defendant against the bills of lading. The defendant failed to do so and OCBC brought claim for misdelivery of the cargo.

The defendant advanced two principal arguments. First, it submitted that the bills of lading had become spent before OCBC acquired them. This also raised the question of what constituted the relevant prior “contractual or other arrangements” under s 2(2)(a) of the Bills of Lading Act (Cap 384, 1994 Rev Ed). Second, the defendant alleged that OCBC was not a holder of the bills in “good faith” under s 5(2) of the Bills of Lading Act. The defendant also raised several other defences, which included the defences of consent and estoppel. The assistant registrar granted summary judgment in favour of OCBC. The defendant appealed.

Held, granting summary judgment in favour of OCBC:

Whether the bills of ladings had become spent

(1) Section 2(2) of the Bills of Lading Act referred to “possession of the bill no longer gives a right (as against the carrier) to possession of the goods to which the bill relates”. Despite disagreements among the leading textbooks on whether the phrase referred to the contractual right to possession of the goods or to the transfer of constructive possession of the goods, the phrase should be read as referring to the document of title function of a bill in transferring constructive possession of the goods. In any event, irrespective of whether the phrase was understood as referring to the transfer of contractual right to possession or to the transfer of constructive possession, the phrase did not create new categories of spent bills not previously known to law, and ought to be interpreted as covering the situation where a bill would at common law be regarded as spent: at [47], [48], [50], [54], [55], [57] and [74(a)].

(2) The position that delivery by a carrier to a person not entitled under the bill did not cause a bill to be spent was well established. In addition, the point that delivery to the buyer against a seller's letter of indemnity did not have the effect of bringing the matter within s 2(2) was uncontroversial: at [58], [65] and [74(b)].

(3) The defendant's submission that FGV was the person entitled to delivery under the bills was rejected. FGV had blank endorsed the bills and delivered them to the buyer through banking channels. Under the relevant contractual arrangements, it would not make sense for a seller in FGV's position to retain the ability to demand delivery as the lawful holder of the bills while the bills were physically with OCBC awaiting the buyer's acceptance: at [77].

(4) Just because neither OCBC nor Aavanti had become entitled to delivery, it did not mean that FGV would remain entitled to delivery under the bills. On first principles, a seller who had endorsed a bill and parted possession with it to obtain payment was not in a position to demand delivery under the bill as he could no longer present it. Under such circumstances, discharge of the cargo did not cause the bill to become spent. FGV was not in possession of the bills and therefore was not in a position to present the bills in exchange for delivery. FGV and Ruchi (to whom FGV requested the cargo be discharged to) were therefore not persons entitled to delivery under the bills: at [78], [79], [82] and [83].

Section 2(2)(a) of the Bills of Lading Act

(5) Even assuming the bills had become spent, OCBC had become a holder under s (2)(2)(a) “by virtue of a transaction effected in pursuance of any contractual or other arrangements” as the request and grant of the trust receipt loan was undeniably made pursuant to a facility agreement between OCBC and Aavanti entered into before Aavanti sought the loan. OCBC's grant of the trust receipt loan before Aavanti could obtain the bills was to allow Aavanti to take delivery of the bills subject to OCBC's security interest. This served a legitimate commercial purpose flowing from the sale contract between Aavanti and FGV. It was therefore not a situation of trafficking in bills of lading: at [87], [94], [96] and [97].

(6) The “transaction” in s 2(2)(a) referred to the physical process by which the bill was transferred, while “contractual or other arrangements” referred to the reason or cause for the transfer. The phrase “in pursuance of” should be read as...