Wah Tat Bank Ltd and Others v Chan Cheng Kum and Others

• Judge: Chua F A J
• Judgment Date: 07 July 1967
• Neutral Citation: [1967] SGFC 16
• Citation: [1967] SGFC 16
• Defendant Counsel: RA MAcCrindle QC and CH Smith (Laycock & Ong)
• Court: Federal Court (Singapore)
• Plaintiff Counsel: RE Kerr QC and M Karthigesu (Allen & Gledhill)
• Published date: 19 September 2003

The appellants in this appeal are two banks, one in Sarawak and the other in Singapore. The Singapore bank, The Oversea-Chinese Banking Corp Ltd are the second appellants, and were at all material times the Singapore agents of the Sarawak bank, Wah Tat Bank Ltd the first appellants. The first respondent, Chan Cheng Kum was at all material times the owner of two motor vessels `Hua Heng` and `Hua Li` plying between Singapore and Sarawak ports. The second respondents, Hua Siang Shipping Co Ltd were alleged to be at all material times the charterers of the `Hua Heng` and the `Hua Li` or alternatively persons who had booked space therein.

The appellants sued the respondents in the High Court of Singapore for damages for wrongful conversion of rubber carried on the vessels `Hua Heng` and `Hua Li` on four voyages between May and June 1961 from Sibu, a port in Sarawak to Singapore. The material facts relating to these four shipments of rubber and which facts were never in dispute are briefly these.

The shippers of all the four consignments of rubber were a company, Tiang Seng Chan (Singapore) Ltd which had its head office in Singapore and a branch office in Sibu. This company had over a substantial period of years bought produce in Sibu for export to Singapore. At the material times there were three regular shipping lines operating between Sarawak ports and Singapore and vice versa, of which the second respondents were one, the other two being Sarawak Steamship Co Ltd and the Singapore Red Funnel Lines. The bulk of Tian Seng Chan (Singapore) Ltd`s exports from Sibu to Singapore were carried on vessels operated by the respondents.

The four consignments of rubber in question, of the estimated value of $600,000 were delivered by Tiang Seng Chan (Singapore) Ltd to the second respondents at Sibu for carriage on board the vessels `Hua Li` and `Hua Heng` to Singapore. Twenty receipts entitled `mate`s receipt`, which acknowledged receipt of these four consignments in apparent good order and condition for shipment to Singapore and named the second appellants as consignees, were issued to Tiang Seng Chan (Singapore) Ltd by or on behalf of the second respondents. These receipts were signed by the chief officer of one or other of the two vessels. No bills of lading were issued in respect of these four consignments.

Tiang Seng Chan (Singapore) Ltd`s principal bankers at Sibu were the first appellants with whom they had overdraft facilities and over the years, by means of such overdraft facilities, the first appellants financed shipments of the goods of Tiang Seng Chan (Singapore) Ltd for carriage to Singapore against the latter`s bills of exchange and/or notes in favour of the second appellants and against `mate`s receipts` on condition that the goods os carried were consigned to the second appellants as agents for the first appellants and with the intention that such goods would be pledged or treated as having been pledged to the first appellants as security for the said financing by the first appellants of such shipments.

The four consignments in question were so financed by the first appellants and the twenty `mate`s receipts` were duly delivered by Tiang Seng Chan (Singapore) Ltd to the first appellants who sent them on to their Singapore agents, the second appellants, together with bills of exchange or notes drawn on Tiang Seng Chan (Singapore) Ltd and payable to the order of the second appellants.

While these twenty mate`s receipts were held by the second appellants, all the goods covered by these mate`s receipts were released by the second respondents to Tiang Seng Chan (Singapore) Ltd shortly after the arrival of the vessels at Singapore without production of and surrender of the relevant mate`s receipts and only against indemnities signed by Tiang Seng Chan (Singapore) Ltd and three of its directors. These indemnities were not bank guarantees in the sense that they were not countersigned by a bank.

Unfortunately Tiang Seng Chan (Singapore) Ltd were unable to meet their obligations and as a consequence the appellants commenced this action against the respondents, who joined as third parties Tiang Seng Chan (Singapore) Ltd and its three directors who signed the indemnities.

Had these twenty mate`s receipts been bills of lading the transactions we are concerned with here would have been similar to thousands of other transactions daily carried on all over the world and this case would have been no different from the cases that have so often been dealt with by the courts. But it is urged upon us by the appellants that the result should be the same for the mate`s receipts we are concerned with are in every respect, except the heading, bills of lading. It is said the Sarawak-Singapore trade uses the mate`s receipts in exactly the same way as international trade uses the bills of lading and that this has been so for forty years.

They thus put their case at the trial in this way, namely, that by the custom (usage) of the trade relating to the shipment of goods by sea between Sarawak and Singapore and Singapore and Sarawak, mate`s receipts (such as those to which the action relates) are treated as documents of title to the goods thereby covered, in the same way as bills of lading.

In the alternative, they say that by reason of the usage and practice of the trade relating to the shipment of goods by sea between Sarawak and Singapore (and vice versa), the respondents, by issuing these mate`s receipts which consign the goods to the order of the second appellants, represent to the second appellants that they hold the goods to their order and are estopped from denying their right to the possession of the goods.

In the further alternative, they say that once the respondents had issued mate`s receipts in the form in which they were issued and once the shippers Tiang Seng Chan (Singapore) Ltd had unconditionally appropriated the goods referred to in these mate`s receipts to a contract of intended pledge between the shippers and the first appellants, the shippers lost any right to give to the respondents instructions to deliver the goods to themselves or to any one else, so that the delivery of the goods to the shippers in these circumstances constituted a wrongful conversion both by the shippers and the respondents.

There was a further issue at the trial as the shipowners had denied liability on the ground that both vessels were the subject matter of an oral bareboat charterparty at all material times. The appellants disputed the existence of the alleged bareboat charterparty and also claimed that in any event the first respondent was liable as he was personally concerned with the release of the goods to Tiang Seng Chan (Singapore) Ltd on the indemnities. The further issue therefore was, if the appellants are entitled to damages for wrongful conversion, which of the respondents are liable, or are both liable.

As was to be expected on the issues raised, the trial was a long and protracted one occupying 34 hearing days spread over a few months and a great deal of evidence was given on the issues relating to custom, estoppel and on whom the liability, if so found, would fall. At the conclusion of the hearing the trial judge reserved judgment and some months later delivered judgment dismissing the action.

On the first issue, the issue of custom, the trial judge held that a document of title could only come into existence as a result of a universal custom or by legislation and that as the appellants case was merely that a local trade custom had grown up which was applicable to everyone engaged in the trade relating to the shipment of goods by sea between Sarawak and Singapore and Singapore and Sarawak to the effect that mate`s receipts (such as those to which the action relates) are treated as documents of title to the goods thereby covered, in the same way as bills of lading, the appellants` case on custom must necessarily fail.

The trial judge made no findings of fact on this issue though a considerable number of witnesses were called to prove the existence or non-existence of the alleged custom or usage of the trade.

On the second issue, the issue of estoppel, the trial judge found that the respondents had in no way attorney to the appellants so as to make the respondents liable. He held that in order to constitute an attornment by the respondents in favour of one or other of the appellants, `there must be a clear understanding between the defendants (respondents) and the first and second plaintiffs (appellants) or either of them that the defendants would be holding the goods for them`. He did find however that `all the parties in this action knew what was going on` but in his opinion `as far as this case is concerned it does not matter what the defendants (respondents) knew`. The trial judge would appear therefore to have considered the appellants` case on estoppel not made out because they had failed to made out their case on custom.

The trial judge did not deal with the third issue at all and on the fourth issue he held it was unnecessary to decide it.

The questions to be decided in this appeal are, first, whether or not there was at all material times a custom (usage) of the trade relating to the shipment of goods by sea between Sarawak and Singapore and Singapore and Sarawak and effective in law that mate`s receipts are treated as documents of title to the goods thereby covered, in the same way as bills of lading; secondly, whether or not the respondents are estopped by reason of the usage and practice of the trade from denying the appellants` right to the possession of the goods; thirdly, whether or not the delivery of the goods to the shippers by the respondents amounted to a wrongful conversion once the respondents had issued mate`s receipts covering these goods in the form in which they were issued and once the shippers had unconditionally appropriated these goods to a contract of intended pledge between them and the first appellants. Both the...