what the specific financial arrangements between the plaintiff and HLT were”. [emphasis added] S/N RwDegz9gKUazYtkvvJr0Ig [120] Further, AZS also disputed that the breach of contract was the cause of SG’s loss. SG pleads in Paragraph 18(a) of the Statement of Claim under “Particulars of Loss” that, “(a) The balance outstanding principal owing by the Defendant in respect of the Import Loan Financing is US$8,953,884.24” [121] AZS submitted that by its own pleading, the alleged breach of contract by HLT for failing to deliver the Cargo was not the cause of SG’s loss. It was HLT’s breach of the Import Loan Financing and or Inventory Financing Facility. [122] In Unicredit Bank AG v Euronav NV [2023] EWCA Civ 471, the English Court of Appeal found that the breach of contract did not cause the Bank (Unicredit Bank AG)’s loss. Had the shipowner initially refused to discharge without production of the bill of lading, the shipowner would have consulted with the Bank about what to do. It was held (based on witness testimony of the Master and the Bank employees) that the Bank would have permitted the discharge to take place without production of the original B/L in keeping with well-established commercial practice in the commodity finance world of discharging against an LOI. The appeal was accordingly dismissed. [123] In a similar vein, in the current situation, AZS contended that when HLT failed to deliver the Cargo, it merely provides SG with a basis to enforce a claim against HLT for breaching the RM60M Financing agreement. The alleged mis-delivery, which AZS denied, cannot be S/N RwDegz9gKUazYtkvvJr0Ig considered the immediate reason for SG's financial loss. The fundamental issue here is HLT's breach of the Import Loan Financing Agreement, if there is any valid cause of action at all. [124] Accordingly, AZS pleads in its Proposed Defence, inter alia, as follows. a) SG has no legal or equitable interests over the Cargo under an invalid or unauthorised bill of lading and or title and or the legal capacity to bring this claim. b) SG is put to strict proof that there was a quantity of 163,208 MT of LSFO cargo on board the Vessel at the material time when the B/L 671 was issued and pledged to SG as security for the Import Loan Financing. c) SG has not asserted or demonstrated its entitlement to enforce its pledge over the B/L 671, including but not limited to the following: i. when did HLT default under the alleged Inventory Financing Facility and or Import Loan Financing? ii. when, and under what terms did SG become entitled to exercise its purported pledge created over the cargo under the B/L 671and or demand delivery of the Cargo under the terms of the Inventory Financing Facility and or Import Loan Financing and Pledge? S/N RwDegz9gKUazYtkvvJr0Ig iii. why would SG provide HLT with an Import Loan Financing when the value of the Cargo was only US 37,338,641.59 ? d) SG is not entitled to demand delivery of the Cargo upon presentation of the B/L 671, which is potentially not authorised and or valid and or is fabricated, and HLT is not entitled or obliged to deliver the Cargo upon presentation of the B/L 671 which is not authorised and or valid and or is fabricated. e) Even if SG is so entitled, SG has not made any valid demand for delivery of the Cargo. The emails to HLT and OTPL dated 9.4.2020 and 21.4.2020 are not a demand for delivery of the Cargo upon presentation of the original B/L 671. f) Additionally, the said emails, were not, or could not have been intended by SG to be a demand for delivery of the Cargo because SG knew when it issued the emails that the B/L 671 was not intended to operate as a document of title or a contract of carriage upon presentation of which it could take delivery of the Cargo. SG also knew that the B/L 671 was not authorised and or valid and or fabricated. g) There is no contract of carriage contained in or evidenced by the B/L 671 to deliver the Cargo to SG. h) There was no mis-delivery because the quantity of Cargo on board the Vessel at the material time the B/L 671 was S/N RwDegz9gKUazYtkvvJr0Ig purportedly issued was much less than the quantity stated therein. i) In view of the foregoing, SG is estopped from asserting the right to demand delivery of the cargo. j) There is no loss suffered by SG caused by the alleged mis-delivery of the Cargo. The loss SG claims (in Paragraph 18(a) Statement of Claim) is caused by HLT’s default on the alleged Inventory Financing Facility and not the alleged mis-delivery of the Cargo. SG is not entitled to take delivery of the Cargo upon the presentation of the B/L 671, which has no contractual force or effect as a contract of carriage and or is not a document of title and or not intended and or could not have been intended by SG to be the instrument upon presentation of which delivery of the Cargo was to be made. In any event, the B/L 671 is not authorised and or valid and or fabricated. Hence, SG has not suffered any loss arising from an alleged mis-delivery of the Cargo. k) that there is no proof that the value of that quantity of Cargo was US 37,338,641.59. [125] All in all, AZS contended that SG has no reasonable cause of action against HLT in contract. SG has no basis in law or fact to seek the in rem relief and or any of the other reliefs in this claim and that SG’s claim is an abuse of process. S/N RwDegz9gKUazYtkvvJr0Ig [126] AZS relied heavily on the Court of Appeal decision in the HSBC Appeals, contending that this Court is bound by the decision by reason of the identical issues of validity of the bill of lading, entitlement of the holder to demand delivery on an unlawful, unauthorised and fabricated bill and the obligation of a carrier to deliver which were raised in the HSBC Appeals. Having analysed the facts, the Court of Appeal concluded that: [23] In view of our decision to reinstate Paragraph 3 of the Appellant’s Ex Parte Order dated 26.11.2020, it is permissible for the Appellant to raise issues of fraud with regards to the Bill of Lading and that the Bill of Lading was issued for a quantity of cargo that did not exist on the Vessel at the relevant time of issuance. [24] Under Order 70 r 20 (7) ROC 2012, the plaintiff has to prove a well-founded in rem claim before any judgment may be entered, based on the issues of fraud raised by the Appellant, we find that it is only fair that the Appellant be given the opportunity to defend the plaintiff’s claim on the merits. The JID is hereby set aside and the case is remitted back to the High Court to be heard on its merits (see The Ruby Star). [emphasis added] [See: An Zhong Shipping Pte Ltd v The Hong Kong and Shanghai Banking Corporation Limited (Civil Appeal No. W-02(IM)(ADM)- 1202-06/2021 & W-02(IM)(ADM)-1203-06/2021] S/N RwDegz9gKUazYtkvvJr0Ig [127] In The “Ruby Star”, [2014] HKCU 205, the Hong Kong Court recognized that, as an intervener, the registered owners, Asset Wonder’s position, qua defence, is the same as the defendant demise charterers. For reasons good, bad or indifferent, a defendant may choose not to defend the action – it may even choose to admit the claim as the demise charterers, Stellar Shipping did in that case. So, if the registered owner proposes to demonstrate to the court that the plaintiff’s claim, or part of it, is not well-founded, it should be allowed to do so. Accordingly, the Court allowed the registered owner to defend the plaintiff’s judgment in default application on the merits. [128] In these circumstances, the Hong Kong Court opined that Asset Wonder should be given an opportunity to defend the claim on the merits and put forward defences, if any, which Stellar Shipping can, but has chosen not to, set up. The Hong Kong Court therefore declined to enter default judgment at that stage. Instead, the Hong Kong Court had adjourned Stellar Ocean’s application for default judgment for substantive argument and give leave to the parties to file evidence. [129] Therefore, AZS submitted that based on the defence on the merits demonstrated, SG has not proved a well-founded case on its claim and as a matter of law, AZS had proven a good defence on the merits to set aside the SG Suit 114 Default Judgment. S/N RwDegz9gKUazYtkvvJr0Ig [130] Notwithstanding the many issues raised by AZS, I am not persuaded that AZS has shown that it has a good defence on the merits to SG’s claims. [131] To my mind, the analysis of AZS’s contentions must be considered while keeping in mind the role and conduct of the Lim Family in relation to the bills of lading and the relationship between HLT, OTPL and AZS. Fraudulent bills of lading HLT estopped from asserting B/L is fraudulent [132] AZS made heavy weather of the claim that the bills of lading that were issued by HLT to the various bank lenders are “potentially” invalid and or void as they could be fabricated or fraudulent bills of lading. However what AZS chose to omit is the fact that these very bills of lading were forwarded by HLT’s directors to the bank lenders, holding them out as genuine and validly issued bills of lading with the view to induce the bank lenders to rely on the same in consideration for the bank lenders to provide the Inventory Financing to HLT. [133] By OK Lim’s own account, the bills of ladings that were issued to the various bank lenders to secure the Inventory Financing were expressly instructed by him. In fact, the bills of lading were issued with the knowledge and authority of the entire Lim Family. With the Lim Family owning the entire shareholdings in HLT and AZS, and the board of directors of HLT and AZS at the material time S/N RwDegz9gKUazYtkvvJr0Ig comprising entirely of the Lim Family, applying the Duomatic principle, it must be the case that the holding out of the bills of lading, including the B/L 671 as genuine and validly issued bills of lading was duly authorised by HLT at all times. The Duomatic principle essentially allows the shareholders of a company to bypass the formality of passing a resolution and states that in the case of unanimous consent rendered by all the shareholders of the company, such consent would bind the company. The principle has been extended to the decisions of directors and also to ostensible authority [See: Ciban Management Corporation v Citco (BVI) [2020] UKPC 21]. [134] OK Lim and CH Lim have both expressly admitted that these bills of ladings were issued and delivered to the bank lenders to secure the Inventory Financing. It is a well-recognized principle that a party who, by his admissions has induced a third party to act in a particular manner, is not permitted to deny the truth of his admissions, if the consequences would be to work injury to such third party. [135] In Ho Shee Jan v Stephens Properties Sdn Bhd [1986] 2 MLJ 43 (OCJ), the company did not raise any objection about the way in which the transfer of shares in question was lodged with the company, and in fact considered the transfer at their meetings as it if had been lodged properly with the company. The company could not thereafter say that the transfer was not lodged at the registered address when the board had led the person who lodged the transfer to believe that the lodgement was valid. The Court held that the S/N RwDegz9gKUazYtkvvJr0Ig company cannot blow hot and cold as it suits it and that applying the principle of estoppel, it would be unfair and unjust to allow the company to say that the lodgement was not valid. [136] Thus, it is my judgment that in the present case, HLT having held out to the bank lenders, including SG in the present case that the bills of lading including the B/L 671 were genuine and valid bills of lading and expecting that they would be acted upon by bank lenders who, in good faith, did in fact rely on the same and make advances to HLT at its request, is now estopped from asserting that these bills of lading including B/L 671 as not binding and void on the ground that they may potentially be fraudulent or fabricated bills of lading after such bills of lading, in the present case the B/L 671, had accomplished the very purpose for which it was designed by the Lim Family to SG’s detriment. [137] The aforesaid means that it does not lie in HLT’s mouth to claim that these bills of ladings, including the B/L 671 were fraudulent bills of lading in that the same were issued when the cargo that were represented on board the vessels were in fact either not on board or were of lesser quantities than stated. SG is entitled to hold HLT as carrier bound by all representations stated in the B/L 671. [138] In fact, HLT must be answerable for OK Lim’s action as the same was committed in the course of his position as a director of HLT and for HLT’s benefit. [See: Barwick v English Joint Stock Bank (16 L. T Rep 461, L. Rep. 2 Ex 259; Ruben v. Great Fingall Ltd (1906) UKHL 616]. S/N RwDegz9gKUazYtkvvJr0Ig [139] Indeed, it is my judgment that HLT is also estopped under the doctrine of judicial estoppel. This judicial estoppel doctrine applies to estop a party who has successfully and unequivocally asserted a position in a prior proceeding from asserting an inconsistent position in a subsequent proceeding. [140] In Leisure Farm Corp Sdn Bhd v Kabushiki Kaisha Ngu (formerly known as Dai-Ichi Shokai) & Ors [2017] 5 MLJ 63 (CA), the appellant had unequivocally assumed a position in its committal application that the transfer of the entire issued and paid-up shares of the second respondent to the third-party new shareholders defeats, overcomes and renders illusory and nugatory this very appeal. The Court held that the appellant could not then, at the appeal hearing, change its stance in this appeal adopting a completely different position that specific performance should be ordered in their favour in respect of the subject matter that had ceased to exist. [141] The Court, in applying the doctrine of judicial estoppel, held that: “[16] …..It is clear to this court that the object of judicial estoppel is to prevent a party who assumes a particular position in litigation to take an inconsistent position in later litigation. Christopher Clarke J explained the law on judicial estoppel in OJSC Oil Co Yugraneft (in liquidation) v Abramovich and others [2008] EWHC 2613 (Comm) and we now quote the relevant excerpts: S/N RwDegz9gKUazYtkvvJr0Ig The Court of Appeals for the Sixth Circuit explained the position in Edwards v Aetna Life and Casualty 690 F 2s 595 (1982): The policies supporting judicial estoppel are different from those that support the more common doctrines of issue preclusion, equitable and collateral estoppel. Courts apply equitable estoppel to prevent a party from contradicting a position taken in a prior judicial proceeding … Equitable estoppel enables a party to avoid litigating, in the second proceeding, claims which are plainly inconsistent with those litigated in the first proceeding. Because the doctrine is intended to ensure fair dealing between the parties, the courts will apply the doctrine only if the party asserting the estoppel was a party in the prior proceeding and if that party has detrimentally relied upon his opponent’s prior position. See Id at 689-90. Collateral estoppel prevents relitigation of factual matters that were fully considered and decided in a prior proceeding. Thus, collateral estoppel operates to prevent repetitive litigation. … The doctrine of judicial estoppel applies to a party who has successfully and unequivocally asserted a position in a prior proceeding; he is estopped from asserting an inconsistent position in a subsequent proceeding…. Unlike equitable estoppel, judicial estoppel may be applied even if detrimental reliance or privity does not exist. … This distinction reflects the difference in the policies served by the two rules. Equitable estoppel protects litigants from less than scrupulous opponents. Judicial estoppel, however, is intended to protect the integrity of the judicial process. … Scarano v Central R Co, 203 F 2d 510, 512-13 (3rd Cir 1953) (‘such use of inconsistent positions would most flagrantly exemplify that playing ‘fast and loose with the courts’ which has been S/N RwDegz9gKUazYtkvvJr0Ig emphasized as an evil the court should not tolerate’). The essential function of judicial estoppel is to prevent intentional inconsistency; the object of the rule is to protect the judiciary, as an institution, from the perversion of judicial machinery. … Collateral estoppel is essentially a finality rule, which serves to conserve judicial resources by precluding the litigation of issues previously decided. Judicial estoppel addresses the incongruity of allowing a party to assert a position in one tribunal and the opposite in another tribunal. If the second tribunal adopted the party’s inconsistent position, then at least one court has probably been misled…” [emphasis added] [142] In the present case, in Originating Summons HC/OS No. 405/2020 in the Singapore High Court (“Suit 405"), on behalf of HLT, OK Lim had affirmed an affidavit on 17.4.2020 to support HLT’s application for 6-month moratorium relief under section 211B of the Singapore Companies Act. In the said affidavit in Suit 405, OK Lim admitted that: a) he had given instructions for HLT’s raising of financing against bills of lading; b) the bills of lading that OK Lim instructed to be issued included the B/L 671 which sets out that SG is a creditor of HLT for the sums therein stated which includes the sum which is the subject of this suit; and c) paragraph 50 at page 48 and the index to exhibit “OKL-1” and Tab 8 (at pages 57 and 58 of Exhibit CKKS-1), clearly show S/N RwDegz9gKUazYtkvvJr0Ig that the said inventory financing for 163,207.630 MT of LSFO and the B/L 671 were issued for the Inventory Financing Facility. [143] The above clearly means that HLT is asserting that it obtained inventory financing for the amounts of LSFO set out in the B/L 671 and that the B/L 671 is in order, which in turn means, among other things, that it was duly and properly signed and issued, and the B/L 671 evidences the amount of LSFO onboard. [144] HLT would not be able to change, and would be estopped from changing its stance to adopt a completely different position that the B/L 671 was not properly issued based on an allegation that it was not duly signed by the Master or person who signs bills of lading in the usual course of business or that there was insufficient quantity of LSFO onboard the Vessel to secure the SG’s Inventory Financing Facility. [145] Further, there is no reason for this Court to lend its hand to assist a party who is in pari delicto with HLT in perpetrating a fraud on the bank lenders. The Lim Family were at the material times, the directors and shareholders in both HLT and AZS. It is the Lim Family that were responsible in HLT to “fabricate” or “authorise” the bills of lading, including the B/L 671 to be handed over to the bank lenders. Yet, the same Lim Family is now coming to this Court affirming affidavits to set aside the SG Suit 114 Default Judgment (which has been made possible only because HLT had chosen not to appear and defend the action), seeking instead through AZS to rely on their S/N RwDegz9gKUazYtkvvJr0Ig very own illegal actions to justify the setting aside of the said judgment. [146] In fact, AZS’s main defence rests on (1) the interim reports by the interim JMs of HLT and OTPL and (2) the Statement of Claim in the Singapore Suit 805 filed by HLT’s interim JMs against CM Lim (the deponent of AZS’s affidavits filed herein), OK Lim, and HC Lim. [147] It must be pointed out that the Singapore Suit 805 is an on-going action by the Liquidators of HLT (who took over from the JMs) against the Lim Family to hold them personally liable for HLT’s losses to, inter alia, the bank lenders for pledging cargo that HLT did not own or overstating the quantity of cargo it did own or pledging cargo that had already been encumbered through the issuance of fraudulent bills of lading. It is not HLT’s case in the Singapore Suit 805 that these bills of lading that were issued to the bank lenders were not authorised and binding on HLT at all. In fact, the Singapore Suit 805 is premised on HLT being liable to the bank lenders under the inventory financing and the bills of ladings. Accordingly, it is my judgment that the Singapore Suit 805 does not assist AZS at all in the case before this Court. [148] As regards the interim reports, as the names suggest, they are just that, namely interim, provisional and hence preliminary in nature. In fact, the word “ongoing” was used to describe the review in the report. Indeed, the reports of the interim JMs expressly state that the matters therein are based on limited review and are not independently corroborated, checked or verified: S/N RwDegz9gKUazYtkvvJr0Ig “The matters, findings, conclusions and inferences contained or drawn in this report are based on a limited review of documents, information drawn from the books and records of OTPL, discussions with management and information provided by creditors. These documents and information have, in many cases, not been independently corroborated, checked or verified by the IJMs. As such, this report is by necessity subject to the limitations imposed by the available information. … In view of the ongoing nature of the IJMs’ review, the IJMs reserve the right to amend and / or rectify any of the contents of the report as and when necessary.” [149] Not a single piece of primary evidence such as signed statements of persons purportedly spoken with or any documentary proof of any of the allegations have been produced to this Court. Indeed, AZS did not even produce the entire interim reports, and has only exhibited some pages of each of the reports. There is clearly absent any or adequate materials to support the contention of fraud. Even at its highest, AZS’s claims are premised on the B/L 671 being ‘potentially’ fraudulent and or fabricated and or invalid. [150] In any case, as I have alluded to above, the contents of these interim reports on the fraudulent nature of the bills of lading do not in fact relieve HLT from its obligation to deliver the Cargo under the B/L 671. S/N RwDegz9gKUazYtkvvJr0Ig Application of Turquand’s Rule [151] Learned counsel for SG further submitted that HLT is not permitted to assert as against SG that the B/L 671 is a fraudulent or fabricated bill of lading based on the Turquand’s Rule. This is the “indoor management rule” which was laid down in the case of Royal British Bank v Turquand [1843-60] All ER Rep 435 to facilitate business dealings which states that a person dealing with a company is entitled to assume, in the absence of facts putting him on inquiry, that there has been due compliance with all matters of internal management and procedure required by the corporate constitution. This rule has been accepted by our Federal Court in Pekan Nenas Industries Ssn Bhd v Chang Ching Chuen & Ors [1998] 1 MLJ 465 and Kang Hai Holdings Sdn Bhd & Anor v. Lee Lai Ban (trading s the sole proprietor under the name and style of ‘Sang Excavating Services’) [2018] 2 MLJ 574. [152] In this regard, as alluded to above, AZS has failed to sufficient particularise and put materials before the Court to substantiate its allegation that the Bill of Lading is fraudulent. Significantly, AZS’s allegation is not that there is a “forgery” of the Master’s signature but rather that the Bill of Lading was not signed by a person who signs the bills of lading in the usual course of business (whether it is the Master or some other person who signs bills of lading in the usual course of business) and that the quantity of LSFO stated in the Bill of Lading was allegedly incorrect. S/N RwDegz9gKUazYtkvvJr0Ig [153] The signature section of the Bill of Lading states “SIGNED, AS AGENT, AND FOR AND ON BEHALF, OF MASTER LIU CHUN YU”, meaning that the Bill of Lading is stated to be signed on behalf of the Master. This means that the question is not one of “forgery” but rather whether the signatory of the Bill of Lading was someone who signs it in the usual course of business. [154] I agree with learned counsel for SG that Turquand’s Rule applies. The Rule provides that a person dealing with a company in good faith is entitled to make certain assumptions against the regularity of the company’s internal affairs. In the instant case, it applies to enable SG to assume that the B/L 671 was signed by those who are internally authorised to sign it. SG did not have to check whether the internal procedures of HLT had been complied with. [155] Relying on the operation of Turquand’s Rule, SG is entitled to presume that HLT had fully complied with its internal procedures when HLT pledged the B/L 671 as security for the financing granted by SG. [156] Accordingly, the question as to whether Turquand Rule can apply in the case of forgery does not arise. B/L 671 authorised by HLT [157] It is trite that a bill of lading operates as a receipt, having evidential value that the goods stated in the bill of lading have been loaded on the vessel as described in the bill, in the quantity identified and that S/N RwDegz9gKUazYtkvvJr0Ig the goods were loaded in apparent good order and condition. In The Starsin [2000] 1 Lloyd’s Rep 85 (QBD) the Court said: “… if an innocent shipper, indorsee or consignee could not rely on statements on the face of a bill of lading as to such matters as the date of shipment and the absence of clausing and was obliged to verify the accuracy of the date and the apparent good order and condition of the goods each time he took a bill of lading, that would represent a most serious impediment to international trade which depends so heavily on the accuracy of bills of lading as negotiable instruments”. [158] The aforesaid legal position holds true for all bill of ladings that are issued by the carrier’s authorised agent, including fraudulent representations. This has been established long ago even before the controversial decision in Grant v Norway (1851) 10 CB 665. [159] Grant v. Norway held that the principal was not liable for a fraudulent bill of lading issued for the benefit of the agent and the argument of the Court was that the agent is authorized to do what is usual in his agency and it is not usual to issue fraudulent bills of lading. This decision has been subject to much criticism. The question whether an agent of a common carrier, when he signs a bill of lading for goods not in fact shipped, acts within the scope of his authority. If he does, the act is the act of the carrier, and the carrier will be liable for the reasonable consequences of that act. If he does not, the carrier is not liable. Currently, one class of decisions holds that he does not act within the scope of his authority, while the other holds that he does. The consequence under the first class is that so far S/N RwDegz9gKUazYtkvvJr0Ig as the carrier is concerned the false bills of lading are absolutely void, while the second class concludes that they are the representations of the carrier which estop it from denying the same to those who have in good faith relied upon them to their detriment. [160] However, there is no need in the present case to opine on the correctness of otherwise of that decision because in the situation here, the fact that the B/L 671 was in fact issued with the authority of HLT cannot be denied. OK Lim had in his affidavit affirmed in support of HLT’s application for judicial management in Singapore confirmed that these bills of lading issued to the bank lenders including SG, were instructed by him and with the consent of all the shareholders of HLT. [161] Accordingly, it is not a defence that is available to HLT as answer to the SG claim that the B/L 671 was a fraudulent bill of lading because at the time of the issuance of the B/L 671, the Cargo were either not on board the Vessel or that the quantity on board was not what was in fact stated in the B/L 671. As carrier, HLT is bound by what are stated in the B/L 671. Whether B/L 671is a contract of carriage or document of title [162] Apart from contending that the B/L 671 is void for being fraudulent, AZS has also contended that SG did not look to the B/L 671 as security for the payment, satisfaction or discharge of HLT’s liabilities under the Inventory Financing Facility and or Import Loan Financing. The inspiration for this contention is derived from a S/N RwDegz9gKUazYtkvvJr0Ig series of reported cases in Singapore where bank lenders, in reliance on the bills of lading in their possession, had unsuccessfully applied for summary judgment for mis-delivery against HLT. [163] However, those cases are decided based on their own peculiar facts and circumstances which are different from the case before this Court. More specifically, the Singapore Court in those cases found that the bills of lading were not contracts of carriage and that they were not intended and or could not have been intended by bank lenders to be instrument upon presentation of which delivery of the cargo were to be made. [164] The 4 cases cited by AZS are clearly distinguishable: