Trans-World (Aluminium) Ltd v Cornelder China (Singapore)

JudgeBelinda Ang Saw Ean J
Judgment Date17 March 2003
Neutral Citation[2003] SGHC 56
Docket NumberOriginating Summons No 1749 of
Date17 March 2003
Published date07 October 2003
Plaintiff CounselVivian Ang, Leona Wong, Mark Ortega and Yap Yin Soon (Allen & Gledhill)
Citation[2003] SGHC 56
Defendant CounselLim Tean and Chin Li Yuen (Rajah & Tann)
CourtHigh Court (Singapore)
Subject MatterTort,Fraud and deceit,Whether Court can nevertheless consider the claim,Foreign judgment,Whether there can be misrepresentation by silence,What amounts to deceit,Misrepresentation Act,Evidence,Pleadings,Whether plaintiff can rely upon facts stated in judgment as evidence in another trial,Misrepresentation,Civil Procedure,Pure economic loss,Negligent misrepresentation,Innocent misrepresentation,Failure to plead alternative claim in quantum meruit,Admissibility of evidence,Effect of absence of contract


1 The Plaintiffs, Trans-World (Aluminum) Ltd (“TWA”), entered into a contract of sale with Marco International (HK) Ltd (“Marco”) on 12 October 1999 for the purchase of 20,890.50mt of sandy metallurgical grade calcined alumina in bags (“ the cargo”) at a price of US$260 per mt. On 15 October 1999, TWA paid US$5,431,530 to Marco for the cargo that was lying in storage at Qingdao, China. TWA learned on 19 October 1999 from the Defendants, Cornelder China (Singapore) Pte Ltd (“Cornelder China”), that a third party, Run Sheng Xiang Trade Co (“RSX”), had caused an injunction to be placed on the cargo in respect of its claims against Grand Empire Holding Ltd (“Grand Empire”), a company incorporated in Hong Kong. The injunction was allegedly granted and served on the Qingdao Port Authority on or about 8 October 1999.

2 From the outset, the complaint of RSX was against Grand Empire. Before the Qingdao Sifang People’s Court, RSC claimed ownership of the cargo. RSX had pledged the cargo to Grand Empire as security for a loan, which Grand Empire had not disbursed. Consequently, RSX sought the assistance of the Qingdao Sifang People’s Court for a declaration of ownership of the cargo and for the return of four warehouse receipts nos. WRC 1999040002 - 5 covering the cargo. As between Grand Empire and Marco, the latter had purportedly purchased the cargo from Grand Empire.

3 On 9 November 1999, TWA as owners of the cargo intervened in the Chinese proceedings in order to set aside the injunction. The Intermediate People’s Court of Qingdao City, Shandong Province, upheld the injunction. On 9 May 2000, before the Shandong People’s Court, TWA succeeded in lifting the injunction. On appeal, the Supreme People’s Court ruled in favour of RSX and, in so doing, recognised RSX’s purchase pursuant to two sale contracts between RSX and Grand Empire and RSX’s payment to Grand Empire for the cargo. The decision of the Supreme People’s Court was handed down on 12 June 2002 after the conclusion of this trial. The upshot of the decision is that Grand Empire could not and did not pass good title to Marco. Neither did Marco have the capacity to transfer good title to TWA.

The proceedings

4 At the forefront of the Plaintiffs’ case is the complaint that Adam Slater (“Slater”) on behalf of the Defendants misrepresented through all his words and conduct that the cargo carried no risk- whether actual or potential with title and with taking delivery- if purchased by TWA. It is said that not only did the misrepresentations contributed to the making of the contract of sale between Marco and TWA, the misrepresentations continued to be a cause in TWA paying the purchase price on 15 October 1999. Therefore, according to TWA, the damage suffered was causally connected to the misrepresentations. As the ownership dispute in China dragged on, TWA said they incurred consequential losses.

5 The Plaintiffs’ primary case is that the misrepresentations were made knowingly. In the event they were innocent, the Plaintiffs rely on the provisions of the Misrepresentation Act (Cap. 390). Alternatively, it is the Plaintiffs’ case that the Defendants are liable for negligent statements causing loss.

6 Apart from the primary claim in misrepresentation, there is a direct claim for shortage and a claim for fees incurred in connection with bonding of the cargo. The two claims are based on breach of duty as bailees and/or under the storage contract evidenced by warehouse receipts.

7 The Defendants have a counterclaim for management fees in respect of the cargo. The Plaintiffs say there is no legal basis for this claim and have refused to make payment.

Background facts

8 It is necessary to deal briefly with the background to the claims made and the context in which the loss is said to have occurred. The cargo was part of a consignment of 25,886 mt of alumina shipped from India on board the “ADIMON” to Qingdao. The vessel arrived in Qingdao on 30 March 1999 and the shipment was allegedly discharged by RSX. On 7 April 1999, the Defendants were appointed by Standard Bank London Limited (“Standard Bank”) to receive on its behalf and for the account of its customer, Grand Empire, the cargo that had already landed at Qindao.

9 It is common ground that Shanghai Cornelder Warehousing Co Ltd (“Shanghai Cornelder”) appointed Sinotrans to assist in the storage of the cargo at Qingdao. Slater’s evidence is that Sinotrans were appointed agents of Shanghai Cornelder to manage and deal with the “ADIMON” shipment including bonding of the cargo. The entire shipment was stored at the premises of Beigang Company, a company owned by the Port Authority of Qingdao. Warehouse receipts nos. WRC1990400001 – 5 dated 12 April 1999 in relation to the “ADIMON” shipment were issued by Cornelder China to the order of Standard Bank for the account of Grand Empire. Grand Empire was to pay the storage and other expenses relating to the cargo. Subsequently, out of the 25,866 mt of alumina, Grand Empire sold one parcel of about 5000 mt to China Metallurgical Import and Export Corporation and the balance 20,890.50 mt went to Marco for which new warehouse receipts were issued.

10 On 22 June 1999, the Defendants were instructed by Standard Bank to release the 20,890.50 mt of alumina to Mees Pierson NV London (“Mees Pierson”) and to issue new warehouse receipts naming Mees Pierson as the order party for the account of its customer, Marco. The Defendants accordingly issued warehouse receipts nos. WRC 1990800001 - 4 dated 3 August 1999 to the order of Mees Pierson for the account of Marco. Following the sale of the cargo to TWA on 12 October 1999, the Defendants, as in the normal course of events, received instructions from Mees Pierson on 15 October 1999 to release the cargo to the order of KBC Bank NV (“KBC Bank”) for the account of the Plaintiffs. On 18 October 1999, the Defendants wrote to KBC Bank to confirm release of the cargo to them. KBC Bank was also informed that the cargo was stored/handled in accordance with the Defendants’ standard warehousing conditions. On 5 November 1999, KBC Bank informed the Defendants that the warehouse receipts nos. WRC 19990800001 - 4 for 20,890.50mt of alumina have been given to TWA as owners of the cargo and the party entitled to take delivery of the cargo. It is common ground that TWA never presented to the Defendants the original warehouse receipts nos. WRC 19990800001 – 4 for delivery up of the cargo.

11 It is common ground that the Defendants at all material times, were and are in the business of providing storage, management, forwarding and warehouse services in China. At all material times, the Defendants as warehousemen were collateral managers of the cargo, which was at one time financed by Standard Bank and pledged to the latter as security for the trade finance. The Defendants’ role in the trade financing of commodities provided by a bank to its customer is that the Defendants would confirm through the warehouse receipts the existence of the commodity financed and the quantity of commodity received. The collateral management arrangement would normally be between the bank, its customer and Defendants. The warehouse receipts would indicate that the cargo was received under the Defendants’ standard warehousing terms and conditions. Under the management arrangement, the Defendants would control the security i.e. the commodity in the sense that as agreed beforehand with the customer, the commodity would be released only upon the instructions of the bank. The Defendants would maintain an inventory of the quantity released and the quantity remaining, if any. In the present case, Shanghai Cornelder was responsible for the management of cargo in China on behalf of Cornelder China who had issued the warehouse receipts for the cargo financed by foreign financial institutions.

12 As stated, TWA contracted with Marco for the purchase of the cargo on 12 October 1999. TWA learned about Marco’s interest in selling it as early as August 1999. Jeremy North (“North”) of the Plaintiffs was interested in buying the cargo. Supply of alumina was then short due to a drop in production from the United States as a major production plant there had exploded. Prices of alumina had risen as a result and North had expected prices to increase further. On that occasion in August 1999, North’s interest in the cargo cooled as it had by then landed in Qingdao. In late September 1999, he renewed his interest in the Marco cargo after he could not secure alumina from other sources.

13 On 4 October 1999, North and Alan Kestenbaum (“Kestenbaum”) of Marco discussed a possible purchase of the cargo on an “in warehouse” basis as North’s intention was for TWA to take care of bagging and shipment of the cargo by rail to the Russian border at Manzhouli. Following their discussions, North requested a price indication from Marco. Marco duly sent a fax dated 4 October 1999. Besides indicating a price of US$262 per mt on an “in warehouse Qingdao” basis, Kestenbaum also wrote:

“There are certain logistical/procedural matters that need to be taken care of in order to ship this cargo. As the material is under warehouse receipts of Cornelder would recommend that you contact Adam Slater to discuss these steps with him.”

14 North spoke to Kestenbaum after he received the fax to inquire about transporting the cargo by railcars. He was told to discuss the logistics with Slater.

15 Coincidentally, around the same time, Slater had planned a visit to London to participate in activities organised by the London Metal Exchange. It is common ground that Slater’s visit to the Plaintiffs’ London office was pre-arranged to promote Shanghai Cornelder’s services. During that visit, North took the opportunity to talk to Slater about the cargo. It was at that meeting that the alleged representations were made.

The evidence

16 The trial lasted 29 days. The documentation before the court was voluminous...

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