UCO Bank v Golden Shore Transportation Pte Ltd

• Judgment Date: 05 April 2005
• Date: 05 April 2005
• Docket Number: Suit No 1582 of 2001 (Registrar's
• Court: High Court (Singapore)

UCO Bank

Plaintiff

and

Golden Shore Transportation Pte Ltd

Defendant

[2005] SGHC 65

Belinda Ang Saw Ean J

Suit No 1582 of 2001 (Registrar's Appeal No 257 of 2004)

High Court

Admiralty and Shipping–Bills of lading–Bills of lading as contract of carriage–Plaintiff bringing action under contracts of carriage against defendant–Bills of lading not indorsed by shippers before delivery–Whether plaintiff entitled to bring actions under contracts of carriage–Whether plaintiff lawful holder of bills of lading–Section 5 (2) Bills of Lading Act (Cap 384, 1994 Rev Ed)

The claims in this action based on contract concerned four shipments of Sarawak round logs, which were carried on board the defendant's vessel on a voyage from various East Malaysian ports to Kandla, India. The defendant shipowner issued four bills of lading covering the four shipments (“the original bills”). The buyer of the logs was SOM International Pte Ltd (“SOM”). SOM was a customer of the plaintiff bank. The shippers named on the original bills were Shin Yang Trading Sdn Bhd, Millenwood Sdn Bhd, The Sarawak Company (1959) Sdn Bhd and Rapid Wealth Sdn Bhd. All original bills were made out to “the order of UCO Bank” and the notify party was named as SOM and UCO Bank

The plaintiff sued the defendant on the original bills for US$556,514.08 contending that the defendant had delivered the logs in India without production of the original bills, which had all the time been in the plaintiff's possession as consignees and/or lawful holders.

The shippers had earlier presented the relevant drafts and shipping documents to three branches of the Hongkong and Shanghai Banking Corporation (“HSBC”). On the plaintiff's own evidence, HSBC, as the negotiation-bank, duly negotiated the drafts. It was HSBC as the negotiation-bank who presented the shipping documents to the plaintiff as issuing bank. The shipping documents were not presented to the plaintiff by the shippers or on their behalf. The original bills were forwarded to the plaintiff without any indorsement, either specifically or in blank, by the shippers to HSBC as the negotiation-bank. The plaintiff duly paid HSBC as the negotiation-bank, but SOM did not reimburse the plaintiff at all.

The senior assistant registrar held that the plaintiff was not the lawful holder of the original bills of lading under s 5 (2) of the Bills of Lading Act (Cap 384,1994 Rev Ed) (“the Act”). The plaintiff appealed against her decision.

The plaintiff argued that a mere delivery of the original bills by HSBC was sufficient to pass possession to the bank. It was not necessary for the shippers to indorse the original bills before delivery. Accordingly, the plaintiff was entitled to sue the defendant in contract as lawful holder of the original bills.

The defendant argued that only actual possession following indorsement and delivery could render the plaintiff the lawful holder of the original bills. In the absence of an indorsement by the shippers, no rights of suit were transferred to and vested in the negotiation-bank, and the plaintiff, in turn, was in no better a position. The plaintiff, therefore, could not bring any action under the contracts of carriage.

Held, dismissing the appeal:

(1) Ordinarily, a bill of lading made out to the order of the consignee would be capable of transfer by its original holder (ie, the shipper or on its behalf) to the consignee without any indorsement. However, the imposition of HSBC as the negotiation-bank altered the otherwise generally-held view: at [12] and [13].

(2) The original bills in the hands of HSBC (neither as consignee nor as indorsee) would not fit within the definition of “bill of lading” in s 1 (2) of the Act although they were described as such by name. This was because they were “incapable of transfer either by indorsement or, as a bearer bill, by delivery without indorsement”. As they would not count as “bills of lading”, they could not be the means upon which rights of action could be transferred under the Act. HSBC would not have qualified as a holder so much so that when HSBC sent the documents to the plaintiff, it was not passing on anything like a “bill of lading”. The presentation of the shipping documents to the plaintiff would equally have been incompetent and hence ineffective: at [15].

(3) Title to sue derived from enquiring whether the bill of lading was lawfully held. A holder was defined in s 5 (2) of the Act. Section 2 (1) of the Act spoke of a person who “becomes” a lawful holder and “by virtue of becoming the holder of the bill” should have transferred to and vested in him all rights of suit. The language used required a consideration of how the bill was acquired. It would not be putting a gloss on the wording of s 5 (2) (a) of the Act where an inquiry as to how the bill of lading was acquired led to the conclusion that there was no delivery of the bill of lading by the shipper or on its behalf. Section 5 (2) (a) of the Act spoke of “possession of the bill” and this could be read to imply that delivery of the bill was required: at [16].

(4) An original shipper who was party to a contract contained in or evidenced by a bill of lading remained entitled to all the rights thereunder until he effected a transfer of it to a “lawful holder” of the bill of lading, whereupon he was divested of his rights. This could be read to imply that the initial delivery in the case of s 5 (2) (a) of the Act would be from the shipper or on the shipper's behalf to the named consignee. On the facts of this case, the original bills were not transferred from or delivered by the...