Contract | Equity | Shipping and Navigation

Panwell Pte Ltd & Anor v Indian Bank (No 2) [2002] 4 SLR 963

High Court — Suit No 422 of 2001
Tan Lee Meng J
27 August–3 September, 17 September, 17 October 2001

Formation — Offer and acceptance — Expiry date of offer passed — Whether parties accepted and proceeded on basis of offer that had purportedly lapsed

Sushil Sukumaran Nair and Yarni Loi (Drew & Napier LLC) for the plaintiffs.
Tan Teng Muan and Wong Khai Leng (Mallal & Namazie) for the defendants.

For a commission, the first plaintiffs (‘Panwell’) offered trade finance facilities from Indian Bank (‘the bank’) to a third party for its businesses in Nigeria. Following the Nigerian government’s imposition of foreign exchange controls, the Central Bank of Nigeria issued United States Dollar Promissory Notes (‘CBN Notes’) to the third party. One tranche of CBN Notes with a face value of US$7m was assigned to the bank. A second tranche of CBN Notes with a face value of US$6,761,398 (‘Panwell tranche’) was assigned to the bank as security for Panwell’s liabilities.

In late 1988, Panwell entered into negotiations with the bank to reduce its liabilities. This bore fruit on 14 June 1990 when the bank offered Panwell an arrangement to restructure its liabilities, subject to acceptance of the arrangement within 30 days of the offer being made (‘1990 offer’). This 1990 offer was not accepted within the time stated. After the deadline passed, the bank repeatedly reminded Panwell to accept the offer. In May 1998, Panwell wrote to the bank to accept the 1990 offer. Thereafter, the bank worked with Panwell’s accountant to update Panwell’s accounts on the basis of the terms of the 1990 offer. These accounts were finalised and sent to Panwell one year later.

On 2 November 1999, Panwell requested that its Singapore Dollar Term Loan Account be converted into US currency and transferred to a second US Dollar Term Loan Account (‘USDTL Account’). Calculating on the basis of the terms of the 1990 offer, the bank confirmed that after the conversion, the amount outstanding in this second USDTL Account as at 30 September 1999 was US$485,737.96. Panwell then instructed the bank to sell CBN Notes with a face value of US$1,761,398 from the Panwell tranche. The bank complied and utilised the sale proceeds to partially settle Panwell’s liabilities.

In September 2000, Panwell instructed the bank to sell CBN Notes with a face value of US$4m from the Panwell tranche and to use the sale proceeds to settle its remaining liabilities in its first USDTL Account. Working from the terms of the 1990 offer, Panwell calculated that its liabilities would be extinguished after these sale proceeds were received by the bank and a final balance of approximately US$122,000 would stand in its favour. Panwell asked the bank for a refund of this sum and for the remaining CBN Notes in the Panwell tranche to be transferred to the second plaintiff, Deogratias. Without disagreeing, the bank again complied.

Subsequently, the bank was requested to transfer the first tranche of CBN Notes with a face value of US$7m to Deogratias.

In early 2001, the bank asserted that as Panwell had not accepted the 1990 offer within the 30-day period, its terms did not govern their relationship. As such, the bank claimed that Panwell still owed it a large sum of money. In March 1998, the bank had sold the said CBN Notes with a face value of US$7m in the first tranche and kept the sale proceeds. Deogratias claimed that the bank wrongfully sold the CBN Notes and that they were entitled to this tranche of CBN Notes.

Held, allowing the plaintiffs’ claim:

It is clear from the bank’s conduct and other overwhelming evidence that the bank accepted that the terms of the 1990 offer governed its relationship with Panwell after May 1998.

Both the bank and Panwell had acted upon the agreed assumption that the terms of the 1990 offer were in force. As a result of this common assumption, Panwell had altered its position. It was now too late and inequitable for the bank to resile from the accepted position.

Having been duly authorised to transfer CBN Notes with a face value of US$7m, the bank should not have sold these notes and retained the sale proceeds.

Accordingly, Deogratias is entitled to damages for the wrongful conversion of the CBN Notes and to the instalment paid to the bank under the CBN Notes in January 2001.

Panwell Pte Ltd & Anor v Indian Bank (No 2) [2002] 4 SLR 963

High Court — Suit No 422 of 2001
Tan Lee Meng J
27 August–3 September, 17 September, 17 October 2001

Estoppel — Estoppel by convention — Party altered its position as a result of common assumption — Whether terms of expired contract governed relationship between parties

See CONTRACT.

The Ivanovo [2002] 4 SLR 978

High Court — Admiralty in Rem No 334 of 1999 (Registrar’s Appeal No 371 of 1999)
Kan Ting Chiu J
17 September, 9 November, 2 December 1999, 15 February 2000

Arrest — Whether High Court had jurisdiction over vessel under s 4(4) of High Court (Admiralty Jurisdiction) Act (Cap 123) — Whether action was ultra vires — Whether vessel should be released

Ownership of vessel — Identity of beneficial owners of vessel — Whether vessel’s certificate offers prima facie evidence of ownership — Whether that could be rebutted

C Arul and Ooi Oon Tat (C Arul & Partners) for the plaintiffs.
Oon Thian Seng and Juliana Yap (Joseph Tan Jude Benny) for the defendants.

The plaintiffs, charterers of the Ivanovo, sought damages against Azov Shipping Co of Mariupol, Ukraine (‘Azov’) for breach of charterparty and applied for a writ to be issued under the High Court (Admiralty Jurisdiction) Act (Cap 123) (‘the Act’). Azov was named in two charterparties as the shipowner. Ivanovo was arrested on 26 May 1999 under a warrant of arrest issued pursuant to the writ. The State of the Ukraine (‘the interveners’) applied to set aside the writ and to release the Ivanovo, intervening on the ground that it was the legal and beneficial owner of the Ivanono and that Azov was only operating the vessel under a leasing contract.

The State of Ukraine contended that the High Court of Singapore had no jurisdiction over the vessel under s 4(4) of the Act. It was common ground that the plaintiffs’ action came within s 4(4) if Azov was the owner of the Ivanovo but was ultra vires if the interveners were the owners. The interveners’ application came on for hearing before the senior assistant registrar, who ruled against them on the jurisdiction issue. They appealed against his decision.

Held, allowing the appeal:

Beneficial ownership was not defined in the Act but case law defined it as the right to sell, dispose of or alienate all the shares in that ship. It is not full possession and control; The Pangkalan Susu/Permina 3001 [1975–1977] SLR 252 followed.

A ship’s certificate offers prima facie evidence of its ownership; The Opal 3 ex Kuchino [1992] 2 SLR 585 followed.

However, any conclusion to be drawn from a ship’s certificate must be drawn from the whole certificate.

A certificate which stated that Azov was the owner while the right of property in the vessel belonged to the Ukrainian State should be read to take in both statements without preferring one over the other. On this basis, the certificate would be evidence that while Azov was the registered owner of the vessel, the state also had an interest in it.

Although it is true that a ship’s certificate is prima facie evidence of its ownership, this may be contradicted. In this case, Azov and the interveners had adduced clear evidence that Azov were not the beneficial owners of the Ivanovo, and there was no evidence adduced by the plaintiffs to contradict that.

Although the registered owner and the state could not deny that the certificate is prima facie evidence, they were not estopped from seeking to contradict the evidence. They could be estopped if they held the certificate out as conclusive evidence of ownership or did something else that could give rise to an estoppel. They had not done so by just issuing or holding the certificate.

There was no evidence that the State of Ukraine was seeking to deceive other parties about its vessels. It was stated in the certificate of registration its interest in the vessel. There was no suggestion that its full interest would not have been disclosed had proper inquiries been made.

There was no evidence that Azov was acting as the state’s agent in its dealings with the Ivanovo. All the evidence pointed to the contrary.

As the interveners were the beneficial owners of the Ivanovo, the action was ultra vires. The writ was set aside and it was ordered that the Ivanovo be released.