Winson Oil Trading Pte. Ltd. v United Overseas Bank Limited

Winson Oil Trading Pte Ltd voyage-chartered the vessel MAERSK PRINCESS, owned by Maersk Tankers Singapore Pte Ltd, to carry gasoil from Taiwan to Singapore, and sold the cargo to Hin Leong Trading (Pte) Ltd on delivery ex ship terms. Two parcels, the cargo in issue, were financed by United Overseas Bank Limited (UOB). At Winson's request, and against Winson's letter of indemnity, Maersk discharged the cargo to Hin Leong on 28 to 29 February 2020 without presentation of the original bills of lading.

Hin Leong applied to UOB for a letter of credit on 3 March 2020, after discharge. UOB issued it the next day. The letter of credit required the bills of lading to be issued or indorsed to UOB's order but allowed payment against Winson's invoice and a payment letter of indemnity if they were unavailable, and UOB paid. After Hin Leong announced its insolvency on 14 April 2020, UOB pressed Winson for the bills, received them indorsed on 15 July 2020, demanded the cargo from Maersk and sued in rem.

The High Court rejected all defences and awarded UOB US$39,372,300 for misdelivery. Winson (Civil Appeal No 69 of 2024) and Maersk (Civil Appeal No 70 of 2024) appealed, abandoning most of their defences and arguing that UOB never regarded the bills as security and so acquired no rights under them.

1. Whether UOB acquired rights to the cargo as the indorsee of the bills of lading, given how it structured its financing.
2. Whether the market value of the cargo should be assessed using spot prices on the misdelivery dates or a spread of pricing dates.
3. Whether damages should be reduced by sums UOB recovered from Hin Leong.

The court held that, by abandoning the endorsement, good faith and consent defences and disavowing any claim that the bills were shams, the appellants had to accept that the bills were valid, validly indorsed and delivered to UOB, and held by it in good faith. Under the UK Carriage of Goods by Sea Act 1992, which governed, and the equivalent Singapore statute, a lawful holder acquires all rights of suit as if a party to the contract of carriage, by operation of law. Why UOB acquired the bills was therefore irrelevant; the inquiry is objective. The counterfactual consent argument was rightly dropped because UOB was not involved when the cargo was misdelivered.

In any case, UOB did look to the bills as security. The letter of credit expressly required them to be indorsed to UOB, and the payment letter of indemnity was only a stopgap that obliged Winson to provide them. It would have been commercially unreal for UOB to give up that entitlement. The arguments about blending, export receivables, delivery terms and internal records had been rejected below, and those findings were not plainly wrong. Trafigura Beheer BV v Kookmin Bank Co was distinguishable because the bank there never held valid bills, and the payment letter was plainly meant to benefit UOB.

On quantum, whether one takes a buyer's or seller's view matters little in an available market. The court preferred spot prices to a spread of pricing dates because UOB's loss crystallised on the misdelivery dates and a spot approach gives certainty about risk and method. As 29 February 2020 was a Saturday, the Platts price for 2 March was used with that of 28 February, as the Judge had done. Sums recovered from Hin Leong, most of them unrelated to this transaction, were res inter alios acta and not deducted.

The Court of Appeal (Steven Chong JCA delivering the judgment, with Sundaresh Menon CJ and Ang Cheng Hock J) dismissed both appeals, upholding Maersk's liability for breach of the contracts of carriage and the damages of US$39,372,300. UOB was awarded costs of S$200,000 all-in, payable by the appellants jointly and severally.