Court of Appeal, Singapore
Chao Hick Tin JA, Judith Prakash J
11 September 2002; 30 October 2002
KEYWORDS
Bill of Lading – Bill originally issued to order. Bill then indorsed in blank, making it bearer bill. Bill then indorsed specifically by buyer’s bank to sub-buyer’s bank, converting it back as order bill – Bill returned by sub-buyer’s bank to buyer’s bank without indorsement back – Buyer’s bank cancelled all indorsements and claimed cargo from shipowner – shipowner already misdelivered cargo without presentation of bill – court struck out buyer’s bank’s claim as buyer’s bank was not the lawful holder because the bills were not indorsed back to it.
FACTS AND DECISION
In this case, crude palm oil was carried. The bills of lading were issued by the shipowner to the order of the shipper. The shipper-seller indorsed them in blank and delivered the same to the buyer. The buyer sold the cargo to a sub-buyer and delivered the bills to the buyer’s bank, without any indorsement. The buyer’s bank indorsed them to the sub-buyer’s bank and forwarded the same to the latter. The sub-buyer did not pay and collect the bills. Hence, the sub-buyer’s bank returned the bills to the buyer’s bank, however without any indorsement. The buyer’s bank then cancelled all the indorsements, namely the shipper’s indorsement in blank and its own indorsement to the sub-buyer’s bank, just by stamping “Cancelled” on the indorsements.
In the meantime, the shipowner misdelivered the goods without presentation of the bills. The buyer’s bank, holding the bills, sued the shipowner for the loss. The shipowner applied to strike out the claim.
The court held that the bills, which were originally order bills became bear bills when they there indorsed in blank and delivered to the buyer. They then again became order bills when they were specifically indorsed by the buyer’s bank to the sub-buyer’s bank and delivered to the latter. Accordingly, when the sub-buyer’s bank returned the bills, it should have indorsed them to the buyer’s bank. As this was not done, the buyer’s bank did not become the lawful holder of the bill. It was no open to any party to cancel an indorsement once made, hence the cancellation of the indorsements by the bank was of no effect. Accordingly, the court struck out the claim.
Overview by ARUN KASI