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2021 MarsdenLR 146
HIGH COURT MALAYA KUALA LUMPUR
UNION DE BANQUES ARABES ET FRANCAISES SINGAPORE BRANCH – Appellant
Versus
PRODIMEX RESOURCES SDN BHD (ENCL 10) – Respondent
[Suit No: WA-22NCC-192-05/2020]
Acceptance of Bills of Exchange creates unconditional liability, separable from claims of fraud against other parties; the holder in due course is not bound to verify the genuineness of the accompanying documentation.
Headnote:(A) Bills of Exchange Act 1882 – Fraud allegations and documentary acceptance – The court found that the Defendant accepted Bills of Exchange (BOE 1 and BOE 2) unconditionally, and thus was liable for payment, irrespective of allegations of fraud regarding shipping documents. The Plaintiff was also deemed a bona fide holder for value. (Paras 18-28, 40-44, 75-78).
Facts of the case: The Plaintiff is a bank in Singapore claiming payment for accepted Bills of Exchange against the Defendant, a Malaysian company, who alleged fraud concerning shipping documents. (Paras 1-14).
Findings of Court: The Defendant’s acceptance of the documents bound them to pay, independent of claims against Agritrade, the seller. (Paras 39-42, 54-56).
Issues: Whether the acceptance of the Bills of Exchange was valid amid fraud allegations and jurisdiction of the court. (Paras 29-35, 65-70).
Ratio Decidendi: Acceptance made under the Bills of Exchange Act creates unconditional liability, separable from any claims against third parties. (Paras 54-57).
Result: Summary judgment in favor of the Plaintiff allowed.
JUDGMENT
Introduction
[1] The Plaintiff's action against the Defendant herein is premised on the Defendant's failure to pay Bills of Exchange APL-1974E dated 11 December 2019 for a total of USD 2,669,972.70 ("BOE 1") and APL-2004B dated 13 December 2019 for a sum of USD 2,606,000.00 ("BOE 2") to the Plaintiff.
[2] Enclosure 10 is the Plaintiff's application for summary judgment to be entered against the Defendant pursuant to O 14 of the Rules of 2012. After hearing parties, this Court allowed encl 10 with costs. Dissatisfied with the decision, the Defendant appealed.
[3] These are the full reasons of this Court's decision.
Background Facts
Parties
[4] The Plaintiff is at all material times a bank incorporated in France and licensed to operate in Singapore.
[5] The Defendant is at all material times a company incorporated in Malaysia which carries on a business of export and import of a variety of goods.
[6] Agritrade International Pte Ltd ("Agritrade") is at all material times, a company incorporated in Singapore with its principal activity in wholesale trade of a variety of goods without a dominant product. Agritrade is a banking customer of the Plaintiff.
Transactions Leading To The Claim
[7] By two commercial invoices respectively dated 11 December 2019 and 13 December 2019 ("Invoices") between Agritrade as the seller/exporter and the Defendant as the buyer/importer, the Defendant bought/imported Refined, Bleached & Deodorised Palm Oil RSPO (Mass Balance) in Bulk and RBD Palm Oil in Bulk from Agritrade to be shipped to various destinations.
[8] Pursuant to the Invoices, Agritrade drew BOE 1 and BOE 2, the maturity date of each being 24 March 2020 and 9 April 2020 respectively.
[9] As the presenting bank, the Plaintiff submitted shipping documents ("DOC 1" and "DOC 2") to the Defendant's collecting bank, RHB Bank Berhad ("RHB") for payment pursuant to the ICC Uniform Rules for Collection ("URC522"). Doc 1 and Doc 2 consists of:
Doc 1
(i) BOE 1 (2 sets), Invoice 1 (3 sets);
(ii) Original Bill of Lading (2 sets);
(iii) Non-negotiable Bill of Lading (3 x 2 sets).
Doc 2
(i) BOE 2 (2 sets). Invoice 2 (3 sets);
(ii) Original Bill of Lading (1 set);
(iii) Non-negotiable Bill of Lading (3 x 1 set).
[10] Upon due presentation of DOC 1 and DOC 2 (hereinafter collectively referred to as the "Documents") by the Plaintiff, RHB presented the Documents to the Defendant. The Defendant accepted the Documents, including the BOEs, by placing the Defendant's company seal and signature on each of the BOEs.
[11] However, by a letter dated 12 February 2020 from the Defendant to the Plaintiff, the Defendant alleged that they are not liable to make payment to the Plaintiff or Agritrade on the ground that the bill of lading was fraudulent. The Defendant instructed RHB to return the Documents to the Plaintiff which RHB did.
[12] Despite the Plaintiff's repeated demands, the Defendant still failed, refused and neglected to make payment under the BOEs.
[13] By way of letter dated 13 May 2020, the Plaintiff sent a notice of dishonor to the Defendant due to the non-payment of the BOEs after the maturity period lapsed on 24 March 2020 and 9 April 2020.
[14] Thus, the Plaintiff filed the present Suit and subsequently a summary judgment application against the Defendant as documented in encl 10.
Parties' Contention
[15] The Plaintiff submitted that the Defendant has accepted the BOEs unconditionally and unequivocally. The Defendant is therefore liable to pay them and is estopped from denying its liability after having accepted the same.
[16] Further, it was argued that there are no triable issues in this case and is a clear cut case for summary judgment.
[17] The Defendant on the other hand argued that it has meritorious defence. It was submitted that there are various issues to be tried which involve three (3) parties; the Plaintiff, Agritrade and the Defendant concerning inter alia cause of action, non-joinder of parties, assignment, jurisdiction, forum of
