Dear all,
You may be interested in
The Dolphina [2011] SGHC 273, a case decided by the Singapore High Court (though I understand that an appeal to the Court of Appeal is pending) which decides, amongst other things, that an omission can found liability in unlawful means conspiracy.
The facts are somewhat complicated and this was compounded by the fact that material evidence was not initially forthcoming before the trial, but to summarise:
- The defendant shipowner (Universal) of the vessel "Dolphina" was connected by way of common directorships and shareholdings to a number of other companies, including KOSB.
- Pursuant to a sale contract, KOSB sold a parcel of palm oil to a company called Zhongguang, with shipment to be effected in March 2008. Under the terms of the KOSB-Zhongguang sale contract, payment was to be made by way of letter of credit, with the bills of lading to be endorsed in blank.
- KOSB chartered the Dolphina from Universal to transport the palm oil, and Universal issued bills of lading to the shipper. The palm oil was shipped, and KOSB issued a letter of indemnity to Universal so that the latter could discharge the palm oil without production of the original bills of lading. Under the terms of the indemnity, KOSB was to return the bills of lading to Universal as soon as they came into KOSB's possession.
- In June 2008, the plaintiff bank (BOC) received Zhongguang's application for a letter of credit to be opened in KOSB's favour, and in support of this application the KOSB-Zhongguang sale contract was furnished. However, it was doctored to make it appear that shipment would take place in June 2008.
- BOC approved the letter of credit, which it subsequently honoured upon being presented the required documents, among them the bills of lading carrying KOSB's endorsement in blank.
- However, Zhongguang refused to pay BOC, and once BOC discovered that the palm oil had in reality been shipped in March 2008 rather than June 2008, it commenced proceedings against Universal, initially for breach of contract as lawful holder of the bills of lading for Universal's wrongful discharge of the palm oil, but this was subsequently amended to include a claim in conspiracy.
The High Court dismissed the breach of contract claim, but upheld the conspiracy claim. Lawful means conspiracy was rejected because fraud had been involved, but liability in unlawful means conspiracy was made out because there was a combination between Zhongguang, KOSB and Universal for KOSB to fraudulently obtain payment from BOC. The Court made use of the fact that Universal and KOSB had one key director in common, and that his knowledge could be attributed to both companies, and that as a result Universal knew (1) that the palm oil had been discharged in March 2008 against KOSB's letter of indemnity; (2) that KOSB was supposed to return the bills of lading to Universal forthwith; (3) that the bills of lading were in KOSB's possession; and (4) that the bill of lading was falsely being used to comply with the terms of the letter of credit. Given the state of Universal's knowledge, the fact that it stood by and did nothing to demand the return of the bills of lading led to an inference that it was party to the conspiracy to use unlawful means to injure BOC.
There is also a fairly detailed discussion in the case of what it means to be a "holder" of a bill of lading for the purposes of the Carriage of Goods by Sea Act 1992, as well as of the law of attribution under Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 and subsequent cases.
Kind regards,
Colin