Cooperatieve Rabobank U.A (Singapore Branch) v 1. ) Misc Berhad (WA-27NCC-26-03/2017)

MISC BERHAD (Company No.: 8178-H)

AET PRODUCT TANKERS SDN BHD (Company No.: 1177989-V) … DEFENDANTS JUDGMENT [1] This in an application by the Plaintiff pursuant to O. 24 rules 3, 5, 7, 8, 9, 11, 12 and/or 16 of the Rules of Court 2012 (“ROC 2012”) and/or the inherent jurisdiction of the court seeking for specific discovery of documents relating to the delivery the Plaintiff’s cargo to a party in Kandla, India. [2] Upon hearing this application this court allowed the Plaintiff’s application only in respect of documents described in Category C of Schedule A to the Notice of Application and did not allow discovery of the documents described in Category A, B, D, E, F and G of Schedule A. The Plaintiff appealed only against the court’s decision in not allowing discovery of the documents described in Category G. Nevertheless, these grounds will address all the categories for completeness. Brief Facts [3] The 1st Defendant, MISC Berhad, issued bills of lading (“Bills of Lading”), numbered consecutively from SIN-LDU/IXY201 to SIN-LDU/IXY-220 all dated 9.3.2016, in respect of a total quantity of 4999,692 MT of Crude Palm Oil in bulk (“Cargo”) shipped on board the Vessel, “Bunga Aster” (IMO Number: 9399351) (“the Vessel”). The named shipper under the Bills of Lading is AAA Oils and Fats Pte Ltd (“AAA”) and the Bills of Lading were issued 'To Order'. The Bills of Lading are all endorsed in blank on the reverse side by AAA and the named notify party is Ruchi Soya Industries Limited (“Ruchi”). The Cargo was shipped on board the Vessel at Lahad Datu, Malaysia, bound for Kandla, India. The 2nd Defendant, AET Product Tankers Sdn Bhd, is the Vessel’s current registered owners. The 2nd Defendant is a subsidiary company of the 1st Defendant and the Vessel is owned beneficially by the Plaintiff. [4] On 29.3.2016, the Plaintiff, the Singapore branch of a bank incorporated in the Netherlands, received the blank-endorsed Bills of Lading from Raffeisen Bank International (“RBI”), who were acting on behalf of AAA. RBI presented the Bills of Lading to the Plaintiff to collect payment from Aavanti Industries Pte Ltd (“Aavanti”), a Singapore company, to whom AAA had sold the Cargo at a price of USD3,049,812.12. The Plaintiff and Aavanti earlier entered into a trade finance arrangement (“the Trade Finance Facility”) where pursuant to the terms of the Trade Finance Facility, the Plaintiff gave Aavanti a loan of a USD2,897,000 loan (“the Loan”). As a continuing security for the Loan, the Bills of Lading and the Cargo (among other things) were pledged by Aavanti to the Plaintiff. [5] According to the Plaintiff, on 30.3.2016, at the request of Aavanti, the Plaintiff settled AAA's request for payment by remittance of USD3,049,812.12 to RBI, and took up the Bills of Lading. The sum of USD3,049,812.12 comprised the Loan, the balance of USD54,950 and charges to be debited from Aavanti's accounts with the Plaintiff. [6] The Loan was not repaid to the Plaintiff. The Plaintiff, treating itself as the pledgee and the holder of the Bills of Lading, then wrote on 5.7.2016 to the 1st Defendant enquiring about the current location of the Cargo and demanded immediate delivery-up for the Cargo. In response, AET UK Limited (“AET UK”) wrote on 26.7.2016 to deny that the 1st Defendant had any contractual relationship with or any knowledge about Aavanti in relation to the shipments under the Bills of Lading. [7] On 10.10.2016, the Plaintiff through its solicitors, Shaikh David Raj, wrote to AET UK and the 1st Defendant demanding for the immediate delivery of the Cargo to the Plaintiff, AET UK replied on 16.11.2016 to confirm that the Cargo had been delivered to Ruchi at the port of Kandla between 8.4.2016 and 9.4.2016, without the production of or in exchange for the original Bills of Lading which were at all material times in the possession of the Plaintiff. The Plaintiff took the position that the 1st Defendant or the 2nd Defendant breached its obligations under the Bills of Lading by delivering the Cargo to Ruchi without production of the original Bills of Lading. [8] According to the Defendants, the delivery of the cargo to Ruchi was pursuant to instructions from Aavanti and was done pursuant to the issuance of back-to-back letters of undertaking from the Vessel's charterer Nova Carriers Pte Ltd (“Nova Carriers”) and Aavanti respectively. [9] The Plaintiff then filed this action on 8.3.2017, claiming against the Defendant amongst others for losses and damages in the amount of USD2,897,000 or in the alternative, delivery-up of the Cargo or payment of its market value. The Plaintiff’s pleaded case [10] The Plaintiff’s claim against the 1st Defendant and/or 2nd Defendant is primarily grounded as follows: a) The 1st Defendant and/or 2nd Defendant had wrongfully and in breach of its obligation delivered the Cargo to Ruchi without production of the original Bills of Lading; b) The 1st Defendant and/or 2nd Defendant are in breach of the contract of carriage evidence in the Bills of Lading to which the Plaintiff is a party by reason of being the lawful holder of Bills of Lading; c) The 1st Defendant and/or 2nd Defendant are in breach of its duty of care owed to the Plaintiff as the lawful holder of the Bills of Lading and the party entitled to immediate possession of the Cargo; d) The 1st Defendant and/or 2nd Defendant have by their wrongful action in delivering the Cargo without production of the original Bills of Lading, amongst others, interfered with and/or denied the Plaintiff’s rights or title over the Cargo and thereby committing conversion, and/or breach of bailment; and e) The 1st Defendant and/or 2nd Defendant have by their wrongful action in refusing to deliver-up the Cargo upon Plaintiff’s demand to do so denied the Plaintiff’s rights or title over the Cargo and thereby committing conversion, and/or detinue, and/or breach of bailment. The Defendants’ pleaded case [11] The Defendants’ pleaded defence can be summarised as follows: a) Delivery of the Cargo was made pursuant to Aavanti’s instructions, and delivery was made against the issuance of back-to-back letters of indemnity from the vessel’s charterers, Nova Carriers and Aavanti, which was expressly authorised/permitted by the terms of the charterparty between the 1st Defendant and Nova Carriers; b) It is an accepted practice, a custom of trade and a notorious fact in the palm oil industry that bills of lading would not be used as instruments for the release of cargo in shipments between Malaysia/Indonesia to India; c) Delivery of cargo against letters of indemnity is not a breach of the contract of carriage contained in or evidenced by the Bills of Lading itself; d) The Plaintiff was well aware of this practice, by way of course of conduct to which they were privy to; e) The Plaintiff was never a pledgee of the Bills of Lading and thus is not entitled to immediate possession of the Cargo upon demand; f) The Plaintiff has acquired no right in contract under s. 1 of the Bills of Lading Act 1855, applied in Malaysia vide s. 3 of the Civil Law Act 1956; g) The Plaintiff’s possession and holding of the Bills of Lading amounts to nothing more than a lien for payment; h) The Plaintiff, as a long-time trade financier to Aavanti, was always aware that the Cargo had been discharged against letters of indemnity, and was further aware that Aavanti had parted with possession of the Cargo to Ruchi; i) The Plaintiff has accordingly acquiesced to Ruchi taking possession of the Cargo and thus the Bills of Lading were no longer operative as instruments of title nor did the possession of the Bills of Lading confer the right to sue for delivery of the cargo or a right to possession to the cargo; j) The Bills of Lading have been exhausted as a document of title, with the knowledge and concurrence of the Plaintiff; k) The Plaintiff, having never acquired property in the Cargo has no title to sue for the Cargo under the Bills of Lading; and l) The Plaintiff has by conduct waived its right to demand for immediate possession of the Cargo. The Plaintiff’s discovery application [12] The Plaintiff filed this application in encl. 13 seeking discovery of the documents and/or classes of documents as follows: a) Category A Documents All documents relating to the change of registered ownership of the Vessel on 1.4.2016 from the 1st Defendant to the 2nd Defendant as alleged at para. of the Amended Defence dated 8.1.2021, including but not limited to: i) documents relating to the transfer of title to the Vessel; ii) documents relating to the deletion, removal, or de-registration of the 1st Defendant as the registered owner of the Vessel; iii) documents relating to the registration of the 2nd Defendant as the registered owner of the Vessel; iv) the employment contract for the Master of the Vessel prior to 1.4.2016; and v) the employment contract for the Master of the Vessel post-1.4.2016. b) Category B Documents All documents and correspondence relating to the instructions, received by the Defendants from Aavanti or given by Aavanti, for the Defendants to deliver the Cargo covered under the Bills of Lading to Ruchi at Kandla, India. c) Category C Documents All correspondence between the Defendants and Ruchi (or its agents) relating to the instructions for the Defendants to deliver the Cargo to Ruchi at Kandla, India. d) Category D Documents All correspondence between the Defendants and Nova Carriers (or its agents) relating to the instructions for the Defendants to deliver the Cargo to Ruchi at Kandla, India. e) Category E Documents All correspondence between the Plaintiff and the Defendants whereby the Plaintiff informed and/or represented to the Defendants that the Defendants could release or deliver the Cargo to Ruchi at Kandla, India. f) Category F Documents All documents relating to the delivery of the cargo to Ruchi at Kandla, India, including but not limited to: i) The Statement of Facts for the Vessel’s call at Kandla, India; and ii) Correspondence between the Master of the Vessel and the receivers and/or shore agents. g) Category G Documents In relation to all palm oil cargoes carried and delivered by the Defendants to Kandla, India, in the period from 1.1.2006 to 30.4.2016: i) Requests made by the Defendants to collect the Bills of Lading issued for the carriage of the said palm oil cargoes. ii) Bills of lading that have been collected by the Defendants upon or following delivery of the said palm oil cargoes to their receivers. h) Category H Documents All correspondence between the Defendants and Nova Carriers in the period between 10.10.2016 to 1.4.2018, relating to the Plaintiff’s demands for immediate delivery-up of the Cargo and/or the current proceedings in this action. Law on discovery [13] From the affidavits and submissions of the Defendants, it was apparent that the specific rules that the application relate to are r. 7 and r. 8 relating to specific discovery of documents. [14] In the exercise of this Court’s powers to order the productions of documents this Court is guided by the legal principles succinctly stated by his lordship Tan Sri Datuk Edgar Joseph Jr in the case of Yekambaran Marimuthu v. Malayawata Steel Berhad [1994] 2 CLJ 581 in the following manner: “The essential elements for an order for discovery are threefold; namely, first there must be a “document”, secondly, the document must be “relevant” and thirdly, the document must be or have been in the “possession, custody or power” of the party against whom the order for discovery is sought................” [15] Equally applicable in such applications is O. 24 r. 13 which states: “Production to be ordered only if necessary (O. 24, r. 13)

(1) An order for the production of any documents for inspection or to the Court shall not be made under any of the foregoing rules unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.” [16] The burden is on the party seeking discovery to satisfy the Court that the production of the documents is necessary to dispose of the suit fairly or to save costs In Nguang Chan aka Nugang Chan Liquor Trader & Ors v. Hai-O Enterprise Bhd & Ors [2009] 5 MLJ 40, Court of Appeal held as follows: “Under O. 24 r. 13 (1) of the RHC, an order for the production of documents for inspection is not to be made unless the court is of the opinion that such order is necessary either for disposing fairly of the case or matter or for saving costs. It is for the party seeking production to satisfy the court that such production is necessary for the purpose specified in r. 13(1). The court would dismiss a plaintiff’s application for discovery if the plaintiff is merely fishing for evidence to prop up his case and to allow him discovery would be unduly oppressive to the party giving discovery.” Analysis and findings of the court Category A Documents [17] Documents sought by the Plaintiff under Category A are those documents relating to the change of registered ownership of the Vessel on 1.4.2016, from the 1st Defendant to the 2nd Defendant, as alleged at para. 3 of the Amended Defence dated 8.1.2021. [18] The Plaintiff submitted that as the Plaintiff’s claim revolves around the breach of contract and the torts of conversion or detinue, to hold the actual tortfeasor or the actual party who breached the contract to account, the identification of the owner of the Vessel and the party who was in actual control of the Vessel at the material time is crucial. Thus, the documents under Category A are relevant and necessary to prove the ownership and/or possession and/or control and/or registration of the ownership of the Vessel during the material time. Further, the Plaintiff submitted: a) The specific date when the Vessel was transferred is crucial as it enables this to identify which party is accountable to the misdelivery, to what extent and in what capacity. b) Given the special relationship between the 1st and 2nd Defendants, specifics of the ownership and control of the Vessel must be obtained to decipher clearly which party owns the Vessel, who is in actual control of the Vessel and whether there is any de facto control of the Vessel by one party or another. [19] The Defendants submitted that documents relating to the change of ownership of the Vessel are unnecessary and irrelevant when measured against the pleadings as there is no dispute before the Court as to the ownership of the Vessel as the Defendants do not in fact deny the change of ownership. The Defendants also have not set up a cut-throat defence alleging that the other is liable for the claim and both Defendants are proceeding on a common defence without any allegation of them not being liable in personam. Further, the Defendants have in fact given a date for transfer of the vessel which is 1.4.2016. [20] I ordered no discovery for Category A Documents as documents which relate to the change of ownership of the Vessel from the 1st Defendant to the 2nd Defendant are unnecessary and irrelevant when measured against the pleadings as the Defendants have not set up a cut-throat defence alleging that the other is liable for the claim. In any event, the Plaintiffs contend that the change of registered ownership of the Vessel from the 1st Defendant to the 2nd Defendant occurred sometime between 25.3.2016 and 1.4.2016, a period before the discharge of the Cargo on 8.4.2016 and 9.4.2016. Category B Documents [21] Documents sought in Category B are all documents and correspondence relating to the instructions, received by the Defendants from Aavanti or given by Aavanti for the Defendants to deliver the Cargo covered under Bills of Lading to Ruchi at Kandla, India. [22] The Plaintiff submitted that the Defendants have and/or had possession of the documents sought under Category B as they could not have made the assertion in para. 7 of the Amended Defence that the delivery of the cargo to Ruchi was pursuant to instructions from Aavanti without relevant supporting documents. In para. 7 of the Amended Defence, the Defendants pleaded: “The Defendants will contend and prove at the trial of this action that the delivery of the cargo to Ruchi Soya was pursuant to instructions from the Plaintiff’s own customer, Aavanti and was done pursuant to the issuance of back to back letters of undertaking from the vessel’s charterer Nova Carriers Pte Ltd and Aavanti respectively and was authorised by Clause 16 the terms of the charterparty between the 1st Defendant and Nova Carriers as evidenced by the Fixture Recap dated 9th February 2016 and/or pursuant to accepted custom of the trade “ [23] The Plaintiff submitted that the Category B Documents supporting would the defence in para. 7 of the Amended Defence and are thus are relevant, crucial and necessary for the Plaintiff to test and identify whether the Defendants’ version of defence to the Plaintiff’s claim that the Defendants had misdelivered the Cargo to Ruchi without the presentation of the original Bill of Lading is veracious and/or meritorious. [24] The Plaintiff further submitted that the documents sought would also allow the Plaintiff to embark on a series of inquiry resulting in its obtaining of information which may support its own case by refuting the Defendants’ pleading in the para. 7 of the Amended Defence. [25] The Plaintiff argued that if the documents are made available to the Plaintiff, it is likely that the Plaintiff could dispense with calling particular witnesses for the trial which would save the Court and parties’ time and cost in disposing of the action. [26] The Defendants submitted as follows: a) The Defendants have averred, in para. 11 of its affidavits in reply that there is no correspondence between Aavanti and the Defendants to the effect of what has been sought in Category B thus no discovery can be granted for documents that do not exist. b) It is not pleaded in para. 7 of the Amended Defence that the Defendants are in possession of the documents requested under Category B. c) As the Vessel was chartered by Nova Carriers at the material time, Nova Carriers was the party instructing the Defendants, not Aavanti or Ruchi. [27] In response, the Plaintiff submitted that if the documents sought are not in the Defendants’ possession, custody and control under O. 24 r. 7 ROC, the Defendants are only required to “state” this if this Court grants an Order requiring the Defendants to make an affidavit to this effect and at this stage the focus is on the relevance and necessity of the documents sought. [28] The Plaintiff further argues that Defendants cannot blow hot and cold by alleging that there have been certain communications between Aavanti and the Defendants where instructions were conveyed from Aavanti and passed down the chain of “intermediaries” to the Defendants for the delivery of the Cargo to Ruchi without presenting the original Bill of Lading and on the other hand, submit that there are no documents that record the correspondence between Aavanti and themselves to that extent. [29] I ordered no discovery for Category B Documents as I accept the Defendants’ contention that there is no correspondence between Aavanti and the Defendants relating to the instructions, received by the Defendants from Aavanti or given by Aavanti to deliver the Cargo to Ruchi at Kandla, India, described as Category B Documents. There is no further purpose in ordering discovery of the Category B Documents which do not exist. Category C Documents [30] Documents sought by the Plaintiff under Category C are all correspondence between the Defendants and Ruchi (or its agents) relating to the instructions for the Defendants to deliver the Cargo to Ruchi at Kandla, India (cargo survey reports, cargo sampling reports, cargo documentation between the Master and Ruchi, communications to the Master in relation to voyage and cargo instructions). [31] The Plaintiff submitted as follows: a) In the Defendants’ affidavit in reply the Defendants did not dispute that there were exchange of correspondences between the Defendants and Ruchi and the correspondences are or were in existence. b) On the Letter of Indemnity on the Nova Carriers letterhead is signed “For and On behalf of Ruchi Soya Industries Limited” which does not indicate that instructions were only issued by Nova in circumstances where appears that Nova Carriers were acting as Ruchi agents. c) The Category C Documents are relevant and necessary for the fair disposal of the Plaintiff’s claim as these enable the examination of the Defendants’ pleaded defence in their Amended Defence and would save the Court’s and parties’ time and costs in disposing the action. d) Although the Defendants have admitted that the Cargo had been delivered to Ruchi, the court needs to determine whether the delivery was a misdelivery. Mere delivery on the presentation of the Letter of Indemnity and not the original Bill of Lading does not equate to good delivery. e) The wording of Clause 16 of the charterparty between Nova Carriers and the 1st Defendant provides that a letter of indemnity may only be used “[i]n the event if the original Bills of Lading are not available”. The relevant letters of indemnity state that “[t]he above cargo was shipped... but the bill of lading has not arrived”. As there is a pre-condition for the use of letters of indemnity is that the Bills of Lading have not arrived at the discharge port, what the Defendants were therefore told about the location of the Bills of Lading and what inquiries they made are relevant issues on the Defendants’ own reliance on the received Letters of Indemnity. f) Seeking discovery of Category C Documents is not a “fishing expedition” for evidence by the Plaintiff as the documents might contain information that are capable of answering the central issues to be tried which have been identified. [32] The Defendants submitted as follows: a) All instructions for the discharge of the cargo to Ruchi were received from Nova. b) The documents are not relevant as the Defendants do not dispute that the cargo was delivered to Ruchi it is common ground that the discharge was pursuant to a Letter of Indemnity and not the Bills of Lading. c) The letters of indemnity exhibited by the Defendants do not contain any statement that the Bills of Lading are required but a letter of indemnity would be accepted in lieu so as to provide comfort against liability, thus there is no possibility that the delivery/discharge instructions mention the same, as alleged by the Plaintiff. d) The Defendants cannot be required to turn out the contents of their filing system on the off chance that something might show up from the Plaintiff’s weak inference that the Bills of Lading are required but a letter of indemnity would be accepted in lieu. e) There is no explanation by the Plaintiff on how ullage reports, master’s statement of facts or any of the documents issued in the course of discharge would go towards refuting what has been pleaded in the Amended Defence. [33] I ordered discovery for Category C Documents as in the letters of indemnity it was stated that “[t]he above cargo was shipped... but the bill of lading has not arrived”. I accept the Plaintiff’s argument that there is a pre-condition for the use of letters of indemnity that the Bills of Lading have not arrived at the discharge port. Therefore, what the Defendants were told about the location of the Bills of Lading and what inquiries they made are relevant issues on the Defendants’ reliance on the received letters of indemnity. The letters of indemnity not mentioning that the Bills of Lading are required does not resolve the issues in dispute. Category D Documents [34] Documents sought under Category D are all correspondence between the Defendants and Nova Carriers (or its agents) relating to the instructions for the Defendants to deliver the Cargo to Ruchi at Kandla, India. [35] The Defendants submitted that they have averred, in para. 32 of its affidavits in reply that there is no correspondence between Nova Carriers and the Defendants to the effect of what has been sought in Category D, thus no discovery can be granted for documents that do not exist. [36] The Plaintiff submitted that this is not the correct forum for the Defendants to state their position whether the documents sought exist or are/were in their custody. [37] The Plaintiff argue that the Defendants have earlier pleaded that the delivery of the cargo to Ruchi pursuant to instructions from Aavanti pursuant to the issuance of back-to-back letters of undertaking from Nova, thus they cannot now say that there are no documents that record the correspondence between Nova relating to the instructions to deliver the Cargo to Ruchi. [38] I ordered no discovery for Category D Documents as I also accept the Defendants’ contention that there is no correspondence between Nova Carriers and the Defendants relating to the instructions, received by the Defendants from Nova Carriers or given by Nova Carriers to deliver the Cargo to Ruchi at Kandla, India. Category E Documents [39] Documents sought under Category E are all correspondence between the Plaintiff and the Defendants whereby the Plaintiff informed and/or represented to the Defendants that the Defendants could release or deliver the Cargo to Ruchi at Kandla, India. [40] The Plaintiff submitted that as the Defendants had pleaded that the Plaintiff is estopped from asserting that the delivery of palm oil cargo was always meant to be only against production of the Bills of Lading and waived any right to demand possession of the goods against the Bills of Lading, the Plaintiff is entitled to the Category E Documents. This was because the basis of the estoppel and waiver as pleaded in para. 8 of the Amended Defence was that Aavanti delivered the Cargo to Ruchi against letters of indemnity with the actual or constructive knowledge of the Plaintiff and thus the Defendants must have and/or had some documentary evidence in that respect to back its averment in the pleadings. [41] The Plaintiff also submitted that the Plaintiff must be allowed the opportunity to inspect the Category E Documents to identify whether the Defendants’ averment is meritorious and whether the Plaintiff’s claim is rendered untenable as result of the pleaded estoppel which is denied by the Plaintiff. According to the Plaintiff, if those documents underlie the Defendants’ defence this could put an end to the Plaintiff’s claim if the plea of estoppel is shown to be true. [42] The Defendants contended that it has no such document described in Category E and discovery cannot be granted for documents not within the possession, custody or control of the Defendants. [43] The Defendants submitted that as the Plaintiff confirmed in its affidavit in reply that it has never communicated with the Defendants it cannot seek communications between itself and the Defendants, when it maintains again that it never did. Therefore, there could not have been such documents when both the Plaintiff and Defendants agree that no such communications exist. [44] I ordered no discovery for Category E Documents as I accept the Defendants’ contention that correspondence between the Plaintiff and the Defendants in which the Plaintiff informed and/or represented to the Defendants that the Defendants could release or deliver the Cargo to Ruchi at Kandla, India is not in the possession, custody or control of the Defendant. If such documents exist these would be with the Plaintiff already. If the Plaintiff says that it has never communicated with the Defendants then the documents do not exist. I view the Plaintiff’s application for the discovery of the documents as only a means to calling out the Defendants’ supposed bluff. But that is not a reason to order discovery. Category F Documents [45] Documents sought under Category F are those documents relating to the delivery of the Cargo to Ruchi at Kandla, India, including but not limited to: a) The Statement of Facts for the Vessel’s call at Kandla, India; b) Correspondence between the Master of the Vessel and the receivers and/or shore agents. [46] The Plaintiff submitted that the Category F Documents can identify the exact time and date that misdelivery of the Cargo took place and will reveal whether the Bills of Lading were requested by the receivers and/or shore agents upon arrival and/or release of the Cargo at Kandla, India. [47] The Plaintiff further submitted that if the correspondence reveal that the Bills of Lading were in fact requested, this will disprove and/or undermine the Defendants’ argument that there is an “agreed practice” and “custom of trade” in the industry whereas palm oil cargoes delivered between Malaysia/Indonesia and India ought to be released without the presence of Bills of Lading. [48] The Defendants submitted that as it is an agreed fact between parties that the cargo was delivered to Ruchi at Kandla and the Defendants have not set up a cut-throat defence alleging that the other is liable for the claim it is not necessary to identify which of the 2 defendants is responsible. [49] The Defendants maintained that documents would not reveal whether the Bills of Lading were requested by the receivers and/or shore agents upon arrival and/or release of the Cargo at Kandla, India as the ‘notify party’ under the Bills of Lading was Ruchi and their agents would be truckers and logistics companies who would not be concerned with whether the Bills of Lading have been received. [50] I ordered no discovery for Category F Documents as the documents relating to the delivery of the cargo to Ruchi in India are not relevant and necessary. There is no need to identify the exact time and date that misdelivery took place as parties agree that the cargo was delivered to Ruchi at Kandla and the delivery without production of bills of lading is not in dispute. The Defendants have not set up a cut-throat defence alleging that the other is liable for the claim, thus pinpointing who actually committed the misdelivery is not relevant. [51] I also accept the Defendants’ submission that the receivers and/or shore agents of Ruchi are not concerned with whether the Bills of Lading have been received as the ‘notify party’ under the bill of lading is Ruchi. The Cargo was discharged by the Master to Ruchi pursuant to Aavanti’s instructions and the letters of undertaking from the vessel's charterer Nova Carriers Ltd and Aavanti. Category G Documents [52] Documents sought under Category G are those correspondence in relation to all palm oil cargoes carried and delivered by the Defendants to Kandla, India, in the period from 1.1.2006 to 30.4.2016, particularly: a) Requests made by the Defendants to collect the bills of lading issued for the carriage of the said palm oil cargoes. b) Bills of lading that have been collected by the Defendants upon or following delivery of the said palm oil cargoes to their receivers. [53] The Plaintiff submitted that if the Defendants’ pleaded defence of “custom of trade” is true, the Defendants would be able to justify through ‘negative evidence’ that they do not have any of the Category G Documents. However, on the contrary, if the Defendants have in their possession and can produce those documents, that will sufficiently prove that the “custom of trade” is not true and the Defendants’ pleaded defence cannot hold water. Thus, the documents are relevant to the issues to be tried in the Plaintiff’s claim as they have significant bearing upon the parties’ pleaded case, depending on its outcome. [54] In opposing the discovery of the Category G Documents, the Defendants submitted as follows: a) There is already evidence before the court in an affidavit by an independent person who has experience in the palm oil trade - Mr P R Thakore, the Chairman of the Contracts Committee, Palm Oil Refiners Association of Malaysia (PORAM) and a former Chairman of the Commercial and Technical Committee of PORAM who in encl. 40 (the Defendants’ affidavit in reply filed in opposition of the Plaintiff’s application to strike out the Defendants’ Defence in encl. 37), who stated that a common practice has developed, whereby shipowners and consignees/ receivers agree in their contracts for cargo to be released to consignee/receivers against a letter of indemnity pending the arrival of the bills of lading which is common knowledge amongst the fmanciers and traders of palm oil shipments. b) The documents will not point to a custom of the trade in the palm oil market involving shipments between Indonesia/Malaysia and India to prove the practice of a LOI (Letter of Indemnity) based discharge. Instead, the documents, would only establish that the Defendants practise LOI based discharge if requested by the bill of lading holder or charterer. c) It is bad faith on the part of the Plaintiff when the Plaintiff seeks discovery of all cargo delivered to Ruchi by the Defendants, not just Aavanti financed cargo, for a period of ten years which would force the Defendants to rifle through their entire filing system to pull up a number of past cargo deliveries. d) Since it is the Defendants who are alleging custom of trade, it is the Defendants’ burden to prove and that it is provable by expert evidence as it must be a notorious fact. [55] In response to the Defendants’ submisions the Plaintiff submitted as follows: a) The Defendants cannot use the term “LOI based discharge” without clearly defining what it means as for the term to have any legal effect, it must actually mean that there is a custom or practice whereby any contractual term providing for the presentation or surrender of bills of lading in order to obtain delivery of the cargo is to be ignored and invalid. According to the Plaintiff the focus should rather be on the question of whether the express delivery clause should be given effect. b) For “custom of trade” to be proven, the court has to examine the Category G Documents to determine whether the purported “custom” has any notoriety, citing Ganda Edible Oils Sdn Bhd v. Transgrain BV [1988] 1 MLJ 428 (Supreme Court), and therefore, whether the Defendants’ pleaded claim could be sustained to undermine the Plaintiff’s claim. c) The Plaintiff further provided authorities to show that certain facts can be proven by “negative evidence”: R (on the application of Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs [2008] 4 All ER 1055 (House of Lords); Suhaimi Bin Ibrahim v. United Malaya Insurance Co Ltd [1966] 1 MLJ

In respect of this, the Plaintiff argues that it was not bad faith on the part of the Plaintiff to seek discovery of all cargo delivered to Kandla, India by the Defendants from 1.1.2006 to 30.4.2016 as it is the Defendants’ own pleaded defence that there is a “custom of trade” that is so notorious even a financial institution which does not operate in the shipping industry ought to have known. To examine whether the Defendants’ plea is veracious the Plaintiff ought to be allowed go back in time to examine whether this “custom” was common practice that the Defendants have practiced all the while. d) The statement in Mr. Thakore’s affidavit cannot be accepted by the court as it was not filed in and for the purpose of this instant application a Notice of Intention to use this affidavit was also not filed. Further, Mr. Thakore’s views cannot withstand scrutiny if faced with evidence that participants in the industry such as the Defendants have been giving credence to bills of lading, contrary to Mr. Thakore’s views. e) The averment of Mr. R Thakore in his affidavit is insufficient as evidence to assist the parties to prove or disprove the instant claim as he was neither an employee of the Plaintiff or of the Defendants, he does not state under oath that the Plaintiff was aware of or had acquiesced to the alleged practice of LOI based discharge and merely explains why some shipowners release the cargo without the production of the original Bills of Lading. f) The Plaintiff actually has the burden to disprove a pleaded defence, relying on Rajadurai v. Singh & Anor [1995] 4 MLJ 593, Weinberger v. Inglis [1919] AC 606 626 and Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Alameloo Achi alias Sona Lena Alamelo Acho, deceased) & Anor v. Secure Plantation Sdn Bhd [2017] 4 MLJ 697. Thus, the Category G Documents are necessary for the Plaintiff to disprove the Defendants’ defence. g) The documents could adversely affect the Defendants’ case thus the Plaintiff is entitled to discovery pursuant to O. 24 r. 3 (4)(b)(ii) ROC 2012. Thus, the Defendants’ argument that the Plaintiff need not acquire those documents to do harm to the Defendants’ defence because the burden to prove the defence lies on the Defendant demonstrates that those documents are capable of generating adverse effect to the Defendants’ pleaded defence. [56] I ordered no discovery for the Category G Documents on the grounds below. [57] The documents being sought by the Plaintiff will not point to the custom of trade in the palm oil market involving shipments between Indonesia/Malaysia and India. It focuses merely on the cargoes carried and delivered by the Defendants to Kandla, not of other shipments by other participants of the industry. Thus, the documents would establish whether or not the Defendants practise LOI based discharge if requested by the bill of lading holder or charterer, which is not in issue here. [58] Correspondence in relation to all palm oil cargoes carried and delivered by the Defendants to Kandla, India, in the period from 1.1.2006 to 30.4.2016 would only show the Defendants’ own practice but not the “agreed practice” and “custom of trade” that palm oil cargoes delivered between Malaysia/Indonesia and India are released without the presentation of the Bills of Lading. [59] If the documents sought by the Plaintiff show that the Defendants had never delivered palm oil cargoes between Malaysia/Indonesia and India on the presentation of the Bills of Lading, this does not disprove the Defendants’ case if it is successful in showing through other evidence, for example through expert evidence, that the “agreed practice” and “custom of trade” is that palm oil cargoes delivered between Malaysia/Indonesia and India are released without the presentation of the Bills of Lading. [60] I do accept the Plaintiff’s argument that Mr Thakore’s affidavit evidence should not be accepted to establish that it is a custom of trade that palm oil cargoes delivered between Malaysia/Indonesia and India are released without the presentation of the Bills of Lading because Mr Thakore’s affidavit was not filed for the purpose of this application and is not sufficient to establish this custom of trade, However, the Defendants have demonstrated that they intend to do prove this custom of trade through expert evidence at the trial to satisfy their burden of proof. [61] In this respect, the judgment in The Sormovskiy 3068 [1994] 2 Ll LR 266, a decision of the English Admiralty Court in the Queen’s Bench Division, referred to the court by the Defendants, has been instructive. In The Sormovskiy, the Plaintiff sold 3000 tonnes of sugar to Forfar Investments Ltd. The bill of lading stated the notify address as Firma BMH in Moscow. Petersburg was the port of discharge of the cargo but subsequently this was changed to Vyborg. BMH entered into a contract with the Commercial Sea Port at Vyborg (CSP) under which the CSP agreed to discharge the goods from the vessels at Vyborg. When the vessel arrived, the master gave notice of readiness to the CSP and CSP stevedores began discharge without the knowledge or consent of the plaintiff without the original bills of lading was presented to the master before discharge began and such discharge was performed by stevedores employed by the CSP. The plaintiff sued the vessel owners (the defendants) for breach of contract and conversion. The defendants submitted that they complied with their obligations to deliver to the plaintiffs because they delivered in accordance with the practice and custom and law of the port of Vyborg. On the evidence, the court found that there was no custom in the strict sense that cargo was always delivered without production of an original bill of lading, thus the defendants did not comply with their obligation to deliver to the parties entitled to possession under the bill of lading and they did not deliver in accordance with the practice and custom and law of the port of Vyborg. [62] What is relevant for the court’s consideration here is that it was the defendants in The Sormovskiy who produced experts on Russian law to prove the custom of trade, to satisfy their burden of proof. Similarly in this case, the Defendants’ defence will stand or fall on expert evidence, and not on the Category G Documents which, in my opinion will only narrowly show the Defendants’ business practice, not the custom of trade. The burden to prove this is on the Defendants, not the Plaintiff as it is the Defendants who are alleging custom of trade. [63] Further, requiring the Defendants to search through their entire filing system to pull up a number of past cargo deliveries for a period of ten years is oppressive. In MK Cooling Services & Anor v. Chong Kek Fong [2020] MLJU 2178 it was decided that expecting a party to produce documents 7 years back, where they are expected to be numerous as they are ordinarily used in course of business, would be oppressive and unreasonable unless it is critical to the issue in dispute. Category H Documents [64] Documents sought under Category H of Encl.113 are all those correspondence between the Defendants and Nova Carriers in the period between 10.10.2016 to 1.4.2018, relating to the Plaintiff’s demands for immediate delivery-up of the Cargo and/or the current proceedings in this action. The period in question here is a period of 17 months after the Plaintiff’s solicitors, wrote to AET UK and the 1st Defendant demanding for the immediate delivery of the Cargo to the Plaintiff on 10.10.2016. [65] The Plaintiff submitted as follows: a) The Category H Documents are relevant to the Plaintiff’s claim as they are capable of throwing light on the strength of the Defendants’ pleaded defence that no wrong had been committed by their delivery of the Cargo against a letter of indemnity. In para. 8(a) of the Amended Defence it was pleaded that it custom of the trade known to banks that in the palm oil industry for shipments between Malaysia/Indonesia to India that the Bills of Lading would not be used as instruments for the release of the cargoes and delivery of the cargo against Letters of Indemnity is not a breach of the contract of carriage. b) By inspecting into the correspondence between the Defendants and Nova Carrier after the Plaintiff demanded the immediate delivery up of the Cargo, it could enable the Plaintiff to embark on a series of inquiry which may result in the Plaintiff acquiring knowledge or information as to whether Nova Carrier did represent to the Defendants that the delivery to Ruchi without presenting the original Bill of Lading was adequate, sufficient and/or acceptable. c) The documents sought would also identify whether the Defendants had engaged in any communication with Nova Carrier, after the demand for immediate delivery up was made, which discloses the actual arrangement for the Defendants in delivering the Cargo to Ruchi. d) The documents do not infringe s. 73A(3) Evidence Act 1950 as the applicability of the section does not arise at the discovery stage but only at the stage when the issue of admissibility of a documentary evidence arises. The Plaintiff submitted that the only consideration is whether the documents sought are relevant and/or necessary and certainly not whether they are admissible. [66] The Defendants submitted as follows: a) The Category H Documents were prepared and exchanged after the fact. Not being contemporaneous to the discharge of the Cargo at Kandla, they have no bearing nor relevance to the actual discharge of cargo that forms the substratum of this suit. Thus, seeking these documents is an abuse of process. b) The documents are rendered inadmissible by virtue of s. 73A (3) of the Evidence Act 1950 as these are documents after the discharge between the Defendants and Nova Carriers which have been prepared in anticipation of these proceedings. Section 73A(3) renders inadmissible as evidence any statement made by a person interested at a time when proceedings were pending or anticipated. Both Defendants’ and Nova Carriers are interested persons within the meaning of the phrase. Further, it is that any correspondence between the Defendants and Nova Carriers would contain information in respect of the Defendants’ legal strategy in response to this litigation. c) The Defendants the documents have not been shown to be relevant to any question of issue to be decided on the pleadings as the Plaintiff has failed to tender any credible, cogent or plausible evidence by way of affidavit evidence to substantiate its application for discovery of these documents, relying on ABX Logistics (Malaysia) Sdn Bhd v. Overseas Bechdel (Malaysia) Sdn Bhd [2003] 7 CLJ 357. [67] In response, the Plaintiff submitted as follows: a) The issue of admissibility will not bar an application for specific discovery and the Plaintiff cannot be shut out from those documents by the Defendants’ claim that the documents, if disclosed, will be inadmissible at trial. b) Order 24 ROC 2012 did not stipulate that a discovery application can only be allowed for documents which are admissible as evidence. The documents sought can also meet the threshold for discovery even when it is only capable of allowing the applicant to embark on a train of enquiry, and not be admissible as evidence. [68] In support of these submission the Plaintiff referred the court to the following authorities: a) In Reading Entertainment Australia Pty Ltd v. Birch Carroll & Coyle Ltd [2002] FCAFC 109, BC200202274 the Australian Federal Court held that so long as the documents sought for discovery are likely to throw light on the case, the documents “relate to a matter in question”, whether or not admissible in evidence. b) In Murphy v. J Donohoe Ltd [1996] 1 IR 123, the Irish Supreme Court held that documents relate to matters in question in the action whether they are capable of being given in evidence or not, so long as they are likely to throw light on the case. [69] The Plaintiff submitted that it had substantiated the application for discovery of those documents under category H through the affidavit evidence deposed by the Plaintiff’s representative, Mr Kooi Tiong Seah in the Plaintiff’s Affidavit in Support and the Plaintiff’s Affidavit in Reply. [70] The Plaintiff submitted that ABX Logistics (Malaysia) Sdn Bhd v. Overseas Bechdel (Malaysia) Sdn Bhd [supra] is not applicable in the instant case as while in ABX, the defendant (applicant) had applied for discovery when it had not made out a prima facie case in counterclaim against the Plaintiff (respondent), the Plaintiff in the instant case had established a prima facie case. [71] I ordered no discovery for Category H Documents. While I accept that the issue of admissibility in relation to s. 73A of the Evidence Act 1950 is not a consideration of the court at the discovery stage, the Plaintiff has not substantiated its application for discovery of documents to show in its affidavits the relevance, materiality or necessity of the documents. This is especially so when the documents sought for discovery are not contemporaneous to the discharge of the cargo at Kandla and that these are documents prepared and exchanged after the fact. [72] The case of ABX Logistics (Malaysia) Sdn Bhd v. Overseas Bechdel (Malaysia) Sdn Bhd [supra] is applied: the party seeking discovery must substantiate its application for discovery of documents by way of credible, cogent or plausible evidence. In ABX Logistics the defendant who sought discovery was required to establish a prima facie case in its counterclaim (in this case that the plaintiff overcharged the defendant) against the plaintiff before filing an application for discovery and having failed to do so, the application for discovery against the plaintiff was rejected for lack of substantiation. In the present application, the Plaintiff must also establish through evidence to show why the documents sought would point towards Nova Carrier representing to the Defendants that the delivery to Ruchi without presenting the original Bills of Lading was adequate, sufficient and/or acceptable. Here the Plaintiff merely speculates that the documents would enable the Plaintiff to embark on a series of inquiry on that issue, without evidentiary basis. Conclusion [73] Given the above reasons, I ordered that: a) The Defendants do, within one month from the date of this order, make and file an affidavit stating the following: i) Whether any of the original and/or copies of the documents and/or classes of documents described in Category C to Schedule “A” herein, in an unredacted form, are or had been in the possession, custody and/or power of the Defendants, and if so, the details of such documents; ii) If the event, any of the original and/or copies of the documents and/or classes of documents described in Category C to Schedule “A” herein in an unredacted form are not in the possession, custody or power of the Defendants, the Defendants shall specify the following: iii) When the Defendants parted with such document; iv) What has become of the documents; and v) The person currently having possession, custody and/or power of such document and/or class of document. b) That the Defendants do forthwith and in any event no later than 21 days from the date of this order produce for inspection the original and/or copies of the documents and/or classes of documents described in Category C to Schedule “A” in an unredacted form and provide copies to the Plaintiff and/or its solicitors; c) That the Defendants’ Amended Defence herein be dismissed / struck out with costs and judgment be entered against the Defendants in the event the Defendants fail to comply with order (a) and/or (b) above; d) That the costs of this application shall be in the cause. 17 January 2022 ATAN MUSTAFFA YUSSOF AHMAD Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Nik Azila Shuhada Binti Nik Abdullah, Tan Hui Ling and Tong Wei Hang (PDK) (Messrs. Shearne Delamore & Co.) For the Defendants: Arun Krishnalingam (Messrs Sativale Mathew Arun)