The "Yue You 902" and another matter

• Jurisdiction: Singapore
• Judge: Pang Khang Chau JC
• Judgment Date: 24 April 2019
• Neutral Citation: [2019] SGHC 106
• Court: High Court (Singapore)
• 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 261 of 2017 and Summons No 336 of 2018)
• Published date: 17 October 2019
• Year: 2019
• Hearing Date: 05 March 2018,29 January 2018
• Plaintiff Counsel: Toh Kian Sing SC and Chen Zhida (Rajah & Tann Singapore LLP)
• Defendant Counsel: Bazul Ashhab Bin Abdul Kader, Prakasash Silvam, and Ang Kaili (Oon & Bazul LLP)
• Citation: [2019] SGHC 106

Pang Khang Chau JC: Introduction

The plaintiff is Overseas-Chinese Banking Corporation Ltd (“OCBC”). The defendant is Jiang Xin Shipping Co Ltd, the owner of the vessel Yue You 902 (“the Defendant”). OCBC claims against the Defendant for its failure to deliver to OCBC a cargo of palm oil to which 14 bills of lading in OCBC’s possession relate. OCBC had extended a loan to the buyer of the cargo, Aavanti Industries Pte Ltd (“Aavanti”), for the purchase price of the cargo and took the bills of lading as security for the loan. OCBC’s loan to Aavanti was governed by a facility agreement made several years before. After Aavanti requested the loan but before OCBC granted it, the Defendant had discharged the cargo at the request of, and against a letter of indemnity (“LOI”) provided by, FGV Trading Sdn Bhd (“FGV”). FGV was the seller of the cargo as well as the voyage charterer of Yue You 902. OCBC sought delivery of the cargo from the Defendant after Aavanti defaulted on the loan.

Among other things, this case raises the issue of whether the bills of lading were spent before OCBC became their holder, thereby making s 2(2) of the Bills of Lading Act (Cap 384, 1994 Rev Ed) applicable. It also raises the issues of what constitutes relevant prior “contractual or other arrangements” for the purpose of s 2(2)(a) of the Bills of Lading Act and what constitutes “good faith” for the purpose of s 5(2) of the Bills of Lading Act.

Background facts

On 11 March 2016, FGV entered into a voyage charterparty with the Defendant to charter Yue You 902 for two voyages.¹ The laycan for the first voyage was 10–15 April 2016 while that for the second voyage was 22–29 April 2016.

On 4 April 2016, Aavanti contracted with Ruchi Soya Industries Ltd (“Ruchi”) to sell 10,000 metric tons of refined, bleached, and deodorised palm olein (“the palm oil”) to Ruchi.² On 5 April 2016, Aavanti contracted with FGV to purchase 10,000 metric tons of the palm oil from FGV, on “Incoterms CNF Mangalore, India”.³ The payment term for the contract between FGV and Aavanti was cash against documents.

On 5 April 2016, the Defendant received instructions for Yue You 902 to transport 10,000 metric tonnes of the palm oil from Lubuk Gaung, Indonesia to Chittagong, Bangladesh.⁴ On 12 April 2016, the Defendant received revised instructions for the palm oil to be transported to New Mangalore, India instead.⁵ On 15 April 2016, Yue You 902 took on 9,999.964 metric tonnes of the palm oil from Lubuk Gaung, Indonesia. 14 bills of lading, LBG/NWM-01 – LBG/NWM-14, were issued on behalf of the Defendant for the palm oil.⁶ The bills of lading identified the shipper as PT Intibenua Perkasatama and the consignee as “To Order”. They also named New Mangolore, India as the port of delivery and Ruchi as the notify party. The bills of lading were released to FGV on 19 April 2016 following payment of freight to the Defendant.⁷

Clause 11 of the voyage charterparty between FGV and the Defendant provided that:⁸

If original bills of lading are not available for presentation at discharging port(s) prior to [vessel’s] arrival, [vessel] to discharge the [charterer’s] entire cargo to receivers against [charterer’s] LOI (with text according to owner’s P[&]I club format) without any supporting bank guarantee.

Clause 6 of the sale contract between FGV and Aavanti similarly provided that:⁹

At discharge port, in the absence of original B/L, buyer/receiver to receive cargo by providing letter of indemnity (wording as per vessel owner’s P and I club format) with first class bank guarantee.

On 22 April 2016, FGV issued an LOI to the Defendant, requesting the Defendant to deliver the cargo to Ruchi without production of the original bills of lading.¹⁰ On the same day, Aavanti issued a back-to-back LOI to FGV requesting FGV to deliver the cargo to Ruchi without production of the original bills of lading.¹¹ Ruchi had, on 19 April 2016, also issued a back-to-back LOI to Aavanti requesting Aavanti to deliver the cargo to Ruchi without production of the original bills of lading.¹² Thus, there was a chain of back-to-back LOIs from the ultimate buyer, Ruchi, to the sub-seller, Aavanti, and then to the ultimate seller, FGV, and finally to the Defendant shipowner.

Yue You 902 arrived at New Mangalore on 24 April 2016, and began discharging the cargo on 27 April 2016 at 5:05pm local time. The cargo was completely discharged on 29 April 2016 at 8:55am local time (11:25am Singapore time).¹³

In the meantime, OCBC received the 14 bills of lading from FGV through Maybank on 26 April 2016 under cover of a documents against payment collection schedule.¹⁴ The bills of lading were blank endorsed by FGV. On the same day, OCBC informed Aavanti of the arrival of the documents and requested payment instructions from Aavanti.¹⁵ Aavanti replied requesting financing for the entire purchase price of USD 7,454,973.16 by way of a trust receipt loan.¹⁶ On 29 April 2016, OCBC granted the loan for the sum requested with a tenor of 21 days.¹⁷ Payment of the purchase price was effected by OCBC to Maybank at 8:32pm on the same day.¹⁸ In other words, the cargo had been completely discharged from Yue You 902 before OCBC remitted the purchase price to Maybank.

It is not clear when Aavanti made the request for the trust receipt loan, although it is indisputable that it must have been made between 26 and 29 April 2016. As Aavanti’s request for the trust receipt loan contains a fax header with the timestamp “26-Apr-2016-13:18”, the Defendant suggested that the request was made on 26 April 2016.¹⁹ This is incorrect. Aavanti’s request for the loan was made by way of a handwritten annotation on OCBC’s request to Aavanti for payment instructions. The fax header with the 26 April 2016 timestamp states that it is from “OCBC TFD” and to “65382183” (which is Aavanti’s fax number – see the letterhead on Aavanti’s LOI referred to at [7] above). Thus the timestamp indicates the time of OCBC’s request for payment instructions, and not the time of Aavanti’s reply requesting the loan.

At the end of the 21-day tenor, Aavanti obtained an extension of time from OCBC till 3 June 2016 but nevertheless failed to repay the loan.²⁰ After Aavanti defaulted on the loan, OCBC proceeded on 14 June 2016 to enforce its security over the bills of lading by demanding delivery of the cargo from the Defendant, which the Defendant failed to do.²¹ OCBC then initiated proceedings against the Defendant pursuant to the 14 bills of lading for breach of contract of carriage, breach of contract of bailment, conversion and detinue.

Procedural history

OCBC split its claim in respect of the 14 bills of lading across two admiralty in rem actions - Admiralty in rem No 105 of 2016 (“ADM 105”) in respect of the first five sets of bills of lading and Admiralty in rem No 115 of 2016 (“ADM 115”) in respect of the remaining nine sets. Yue You 902 was arrested pursuant to ADM 105 while sister ship arrest was effected against GNG Concord 1 pursuant to ADM 115. Both ships were released with the Defendant furnishing security of USD 7.8 million.²²

After OCBC applied for summary judgment in ADM 105 and ADM 115 on 8 December 2016, the Defendant: amended its Defence on 30 December 2016 pursuant to O 20 r 12 of the Rules of Court (Cap 332, R 5, 2014 Rev Ed) (without need for leave of court); applied on 23 February 2017 for specific discovery against OCBC, which application was dismissed on 31 March 2017; appealed on 13 April 2017 against the dismissal of its discovery application, which appeal was dismissed on 26 May 2017; applied for leave on 9 May 2017 to further amend its defence and obtained leave to do so on 20 June 2017; applied for leave on 29 August 2017 to file a further affidavit containing a further expert opinion from Mr Tagore Pradip Kumar and obtained leave to do so on 7 September 2017.

On 11 September 2017, OCBC obtained summary judgment against the Defendant for US$3,727,500 and US$3,727,473.16 with interest of 5.33% per annum.

Following summary judgment: the Defendant filed Registrar’s Appeals 259 and 261 of 2017 (“RAs 259 & 261”) against the learned Assistant Registrar’s (“the AR”) decision granting summary judgment; OCBC filed Registrar’s Appeals 258 and 260 of 2017 (“RAs 258 & 260”) against the AR’s decision, at [13(e)] above, allowing the further affidavit to be filed; and the Defendant took out Summonses 334 and 336 of 2018 (SUMs 334 & 336) to further amend its Defence.

RAs 259 & 261, RAs 258 & 260 and SUMs 334 & 336 were all heard before me on 29 January 2018. At the said hearing, OCBC’s counsel suggested that, to avoid repetition and unnecessarily prolonging the hearing: parties should launch straight into substantive arguments on RAs 259 & 261 (the appeals against summary judgment) instead of dealing first with RAs 258 & 260 and SUMs 334 & 336 as preliminary issues; I could therefore proceed to hear substantive arguments in RAs 259 & 261 on the assumption that the further affidavit which form the subject matter of RAs 258 & 260 and the proposed amendments to the Defence which form the subject matter of SUMs 334 & 336 were already before me; and depending on my eventual decision in RAs 259 & 261, I could then decide on how RAs 258 & 260 and SUMs 334 & 336 should be disposed of. As there were no objections from the Defendant’s counsel, I decided to proceed in the manner suggested by OCBC’s counsel.

After hearing submissions and reserving judgment, I dismissed RAs 259 & 261, and confirmed the AR’s decision to grant summary judgment in ADM 105 and ADM 115. As a consequence of that decision, I made no orders on RAs 258 & 260 and SUMs 334 & 336.

The Defendant has appealed against my decision in RAs 259 & 261.

The law concerning summary judgment

In an application for summary judgment, the plaintiff bears the burden of showing that he has a prima facie case for summary...