DBS Bank v Carrier Singapore: Deceit in Letter of Credit Transaction

DBS Bank Ltd sued Carrier Singapore (Pte) Ltd in the High Court of Singapore, alleging deceit and negligent misrepresentation related to a letter of credit transaction. DBS claimed Carrier made a false representation in a delivery order (DO50191). The court, presided over by Andrew Ang J, found Carrier liable for deceit, determining that Carrier fraudulently misrepresented the delivery date of goods, causing DBS to suffer financial loss. The judgment was reserved on 9 April 2008.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

DBS Bank sues Carrier Singapore for deceit regarding a delivery order in a letter of credit transaction. The court found Carrier liable for fraudulent misrepresentation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
DBS Bank LtdPlaintiffCorporationJudgment for PlaintiffWon
Carrier Singapore (Pte) LtdDefendantCorporationLiable in damages for fraudulent misrepresentationLost

3. Judges

Judge NameTitleDelivered Judgment
Andrew AngJudgeYes

4. Counsels

Counsel NameOrganization
Lee Eng BengRajah & Tann LLP
Poon Kin Mun KelvinRajah & Tann LLP
Loke Pei-ShanRajah & Tann LLP
Khoo Boo Teck RandolphDrew & Napier LLC
Keow Mei-YenDrew & Napier LLC
Loo Teck Lee JohnsonDrew & Napier LLC

4. Facts

  1. DBS issued a letter of credit (LC) for Carrier Singapore as beneficiary, secured against export letters of credit.
  2. Carrier presented Delivery Order No 50191 (DO50191) to DBS, stating goods were delivered on 30 June 2006.
  3. DO50191 stated that 3,936 sets of Toshiba air-conditioners were delivered in "1 lot" on 30 June 2006.
  4. Only US$424,292.40 worth of goods were delivered on 30 June 2006; Carrier claimed past deliveries covered the remaining amount.
  5. Carrier's credit control manager admitted DO50191 was designed to conform to the LC terms.
  6. DBS paid out US$1,395,748.02 based on the documents presented by Carrier.
  7. Lee Meng became insolvent, and DBS discovered the goods were not delivered as represented in DO50191.

5. Formal Citations

  1. DBS Bank Ltd v Carrier Singapore (Pte) Ltd, Suit 660/2006, [2008] SGHC 53

6. Timeline

DateEvent
Carrier experienced credit issues with Lee Meng.
Carrier experienced credit issues with Lee Meng.
Carrier experienced credit issues with Lee Meng.
Lee Meng submitted the LC application form to DBS.
DBS issued the letter of credit.
Carrier stated the delivery date of the goods in DO50191.
HSBC presented DO50191 to DBS for acceptance under the LC.
DBS accepted the bill of exchange.
DBS placed Lee Meng under receivership.
DBS paid out US$1,395,748.02.
The receiver informed DBS that the goods could not have been delivered all in one lot on 30 June 2006.
Judgment reserved.

7. Legal Issues

  1. Deceit
    • Outcome: The court found that Carrier made a false representation knowingly, intending DBS to rely on it, and causing DBS to suffer loss.
    • Category: Substantive
    • Sub-Issues:
      • False representation
      • Fraudulent intent
      • Reliance on representation
      • Causation of loss
    • Related Cases:
      • [2001] 3 SLR 405
      • (1789) 3 Term Rep 51
      • (1889) 14 App Cas 337
  2. Negligent Misrepresentation
    • Outcome: The court held that DBS did not have a valid cause of action in negligent misrepresentation against Carrier.
    • Category: Substantive
    • Sub-Issues:
      • Duty of care
      • Breach of duty
      • Causation of loss
    • Related Cases:
      • [1964] AC 465
      • [1995] 2 AC 145
  3. Causation
    • Outcome: The court found a clear causal connection between Carrier's misrepresentation and DBS's loss.
    • Category: Substantive
    • Sub-Issues:
      • Intervening cause
      • Remoteness of damage
    • Related Cases:
      • [1997] AC 254
  4. Measure of Damages
    • Outcome: The court determined that DBS was entitled to recover the sum it was induced to pay under the LC, less any benefits received.
    • Category: Substantive
    • Sub-Issues:
      • Direct loss
      • Mitigation of loss
      • Credit for benefits received
    • Related Cases:
      • [1969] 2 QB 158

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Deceit
  • Negligent Misrepresentation

10. Practice Areas

  • Commercial Litigation
  • Banking Law
  • Trade Finance

11. Industries

  • Banking
  • Manufacturing
  • Trade

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Panatron Pte Ltd v Lee Cheow LeeCourt of AppealYes[2001] 3 SLR 405SingaporeCited for the elements of fraudulent representation and the tort of deceit.
Pasley v FreemanN/AYes(1789) 3 Term Rep 51N/ACited as the settled case for the tort of deceit.
Derry v PeekN/AYes(1889) 14 App Cas 337N/ACited for the development of the tort of deceit, requiring proof of actual fraud.
Akerhielm v De MareN/AYes[1959] AC 789N/ACited for the principle that the key question is what the representor honestly believed the representation to mean.
Niru Battery Manufacturing Co v Milestone Trading LtdN/AYes[2004] 1 Lloyd’s Rep 344N/ACited to shed light on how the statement in Clerk & Lindsell ought properly to be understood.
Smith New Court Securities Ltd v Citibank NAN/AYes[1997] AC 254N/ACited for the principle that the causative influence of fraud is not significantly attenuated by other causative factors and for the measure of damages in deceit.
Standard Chartered Bank v Pakistan National Shipping CorpN/AYes[2003] 1 AC 959N/ACited for the principle that a claimant need not take steps to recover compensation from other liable parties and that contributory negligence has no place in the tort of deceit.
United City Merchants (Investments) Ltd v Royal Bank of CanadaN/AYes[1983] 1 AC 168N/ACited for the principle that nothing but the fraud of the beneficiary will relieve an issuing or confirming bank of its absolute duty.
Harbottle (Mercantile) Ltd v National Westminster BankN/AYes[1978] QB 146N/ACited for the principle that documentary credits must be honoured free from interference from the courts.
Hedley Byrne & Co Ltd v Heller & Partners LtdN/AYes[1964] AC 465N/ACited for the principle of assumption of responsibility.
Henderson v Merrett Syndicates LtdN/AYes[1995] 2 AC 145N/ACited for the principle of assumption of responsibility.
Montrod Ltd v Grundkötter Fleischvertriebs GmbHN/AYes[2002] 1 WLR 1975N/ACited for the principle that the beneficiary under the letter of credit did not owe a duty of care to the applicant in presenting documents under the letter of credit.
Doyle v Olby (Ironmongers) LtdN/AYes[1969] 2 QB 158N/ACited for the principle that the defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement.
Vita Health Laboratories Pte Ltd v Pang Seng MengN/AYes[2004] 4 SLR 162N/ACited for the principle that where fraud or deceit is exposed, the law attempts to remedy the wrong by restoration of the status quo.
Raiffeisen Zentralbank Osterreich AG v Archer Daniels Midland CoN/AYes[2007] 1 SLR 196N/ACited for the principle that the measure of damages in deceit cases is generally the difference between the contract price and the true market value.
Alliance & Leicester Building Society v Edgestop LtdN/AYes[1993] 1 WLR 1462N/ACited for the conclusion that there is no common law defence of contributory negligence in the case of fraudulent misrepresentation.
The Liverpool (No 2)N/AYes[1963] P 64N/ACited for the principle that a claimant need not take steps to recover compensation for his loss from parties who, in addition to the defendant, are liable to him.
Twycross v GrantN/AYes(1877) 2 CPD 469N/ACited as an illustration of damages in deceit.
Komercni Banka AS v Stone and Rolls LtdN/AYes[2003] 1 Lloyd’s Rep 383N/ACited for the principle of whether the receipt of the benefit was intrinsic to the venture or transaction.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Letter of credit
  • Delivery order
  • Fraudulent misrepresentation
  • Tort of deceit
  • Negligent misrepresentation
  • Beneficiary
  • Issuing bank
  • Export letters of credit
  • Bill of exchange
  • Consolidated lot
  • Deemed delivery

15.2 Keywords

  • letter of credit
  • deceit
  • fraud
  • DBS
  • Carrier
  • Singapore
  • banking
  • trade finance

17. Areas of Law

Area NameRelevance Score
Fraud and Deceit95
Documentary Credits90
Misrepresentation80
Contract Law70
Damages60
Banking and Finance60
Commercial Law50
Estoppel40

16. Subjects

  • Banking
  • Finance
  • International Trade
  • Commercial Law