ABN AMRO Bank v CWT Commodities: Collateral Management Agreement & Warehouseman's Duty

In ABN AMRO Bank NV, Singapore Branch v CWT Commodities (SEA) Pte Ltd, the Singapore High Court addressed a claim by ABN AMRO Bank against CWT Commodities, a warehouseman, concerning a fraud perpetrated by Singapore Tin Industries (STI) on the bank. The bank alleged CWT breached its contractual obligations and made misrepresentations regarding tin dross collateral. The court dismissed both the bank's claim and CWT's counterclaim, finding that while CWT breached its duty to inform the bank about the non-movement of goods, this did not cause the bank's losses, and the bank failed to prove the CQs were false or misleading. The court also found that the bank had not established the quantum of its loss. The case involved a breach of contract claim and a counterclaim for outstanding management fees.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Claim and counterclaim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case involving ABN AMRO Bank's claim against CWT Commodities for breach of contract and misrepresentation in a collateral management agreement.

1.7 Decision Date

16 January 2011

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
ABN AMRO Bank NV, Singapore Branch	Plaintiff	Corporation	Claim Dismissed	Lost	Joseph Lee of Rodyk & Davidson LLP Herman Jeremiah of Rodyk & Davidson LLP Ross Tan of Rodyk & Davidson LLP Zhulkarnian Abdul Rahim of Rodyk & Davidson LLP
CWT Commodities (SEA) Pte Ltd	Defendant	Corporation	Counterclaim Dismissed	Lost	Kenneth Tan of Kenneth Tan Partnership Soh Wei Chi of Kenneth Tan Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Woo Bih Li	Judge	Yes

4. Counsels

Counsel Name	Organization
Joseph Lee	Rodyk & Davidson LLP
Herman Jeremiah	Rodyk & Davidson LLP
Ross Tan	Rodyk & Davidson LLP
Zhulkarnian Abdul Rahim	Rodyk & Davidson LLP
Kenneth Tan	Kenneth Tan Partnership
Soh Wei Chi	Kenneth Tan Partnership

4. Facts

ABN AMRO provided trade financing to Singapore Tin Industries (STI).
The financing was secured by tin products, including tin dross.
CWT Commodities managed the collateral under a Collateral Management Agreement (CMA).
CWT issued warehouse receipts (WRs) and certificates of quality (CQs) to the Bank.
STI perpetrated a fraud by round-tripping tin dross inventory.
Released tin dross was not physically removed from the warehouse.
The Bank advanced money based on false representations of tin dross purchases.

5. Formal Citations

ABN AMRO Bank NV, Singapore Branch v CWT Commodities (SEA) Pte Ltd, Suit No 275 of 2009, [2011] SGHC 13

6. Timeline

Date	Event
2007-08-24	Collateral Management Agreement signed
2007-08-27	Facilities Agreement dated
2007-09-07	Loan of US$2,443,230.18 advanced to STI
2007-09-10	Warehouse receipt WRC20070901363 issued
2007-11-29	Release instructions given for WRC20070901363
2007-12-06	Warehouse receipt WRC20071202088 issued
2007-12-10	Loan of US$1,572,625.50 advanced to STI
2007-12-31	Loan of US$846,798.34 advanced to STI
2008-01-14	Release instructions given for WRC20071202088
2008-01-15	Release instructions given for WRC20071202088
2008-01-18	Warehouse receipt WRC20080100126 issued
2008-01-21	Loan of US$3,047,702.98 advanced to STI
2008-02-18	Release instructions given for WRC20080100126
2008-02-19	Release instructions given for WRC20080100126
2008-02-21	Warehouse receipt WRC20080200442 issued
2008-02-26	Loan of US$3,538,287.22 advanced to STI
2008-03-25	Release instructions given for WRC20080200442
2008-03-28	Warehouse receipt WRC20080300882 issued
2008-04-02	Loan of US$2,291,036.08 advanced to STI
2008-04-04	Loan of US$2,336,439.60 advanced to STI
2008-06-06	Release instructions given for WRC20080300882
2008-06-10	Warehouse receipt WRC20080601868 issued
2008-06-11	Warehouse receipt WRC20080601881 issued
2008-06-17	Loan of US$4,850,256.04 advanced to STI
2008-06-18	Loan of US$1,124,352.28 advanced to STI
2008-07-01	STI defaulted on its loans
2008-10-17	Inspectorate took samples of tin dross for analysis
2008-10-20	Timothy Reid appointed receiver and manager
2008-11-14	Email from Creighton regarding commingling
2008-11-17	Email to Bank's officers regarding commingling status
2008-11-28	Inspectorate took samples of tin dross for second analysis
2009-04-16	Arbitration proceedings commenced against Yunnan Tin
2009-06-15	CWT filed its Defence and Counterclaim
2009-07-17	Winding-up order obtained against KJP International (S) Pte Ltd
2009-08-06	ECO Special Waste Management Pte Ltd appointed to dispose of tin dross
2009-01-01	Bank brought action against CWT
2009-12-18	STI wound up
2010-06-09	CWT filed its Defence and Counterclaim (Amendment No 3)
2011-01-17	Judgment reserved

7. Legal Issues

Breach of Contract
- Outcome: The court found that CWT breached the CMA by failing to inform the Bank that tin dross was not physically leaving and entering the Warehouse, but this breach did not cause the Bank's losses.
- Category: Substantive
- Sub-Issues:
  - Failure to inform of non-movement of goods
  - Issuance of false or misleading certificates of quality
Estoppel by Convention
- Outcome: The court held that CWT was estopped from contending that tin dross did not fall under the CMA because both parties had acted on that assumption.
- Category: Substantive
Causation
- Outcome: The court found that CWT's breach of contract did not cause the Bank's losses, as the Bank failed to prove it would have terminated the financing agreement had it known of the non-movement of tin dross.
- Category: Substantive
Remoteness of Damage
- Outcome: The court held that the Bank's loss in financing tin dross was not too remote, but the costs incurred in treating and disposing of the contaminated tin dross were too remote.
- Category: Substantive
Duty of Care
- Outcome: The court did not make a specific ruling on the duty of care, but addressed the contractual obligations of CWT.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Negligence
Fraudulent Misrepresentation

10. Practice Areas

Commercial Litigation
Banking Litigation

11. Industries

Banking
Commodities
Warehousing

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Travista Development Pte Ltd v Tan Kim Swee Augustine	Court of Appeal	Yes	[2008] 2 SLR(R) 474	Singapore	Cited for the elements necessary to establish estoppel by convention.
Singapore Telecommunications Ltd v Starhub Cable Vision Ltd	Unknown	Yes	[2006] 2 SLR(R) 195	Singapore	Cited for the principle that estoppel by convention operates to preclude a party from denying the truth of an assumed state of affairs.
Burkinshaw v Nicolls	Unknown	Yes	(1878) 3 App Cas 1004	England	Cited for the principle that parties' rights are regulated by the conventional state of facts they agree to make the basis of their action.
Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd	Unknown	Yes	[2006] 1 SLR(R) 927	Singapore	Cited for the law governing the implication of terms into a contract, specifically the 'business efficacy' and 'officious bystander' tests.
Reigate v Union Manufacturing Company (Ramsbottom), Limited and Elton Copdyeing Company, Limited	Unknown	Yes	[1918] 1 KB 592	England	Cited for the test of implying a term into a contract, requiring necessity in a business sense.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric	Court of Appeal	Yes	[2007] 3 SLR(R) 782	Singapore	Cited for the application of the 'but for' test in contract cases to determine causation and the 'loss of a chance' analysis.
Thomas & Betts (S.E. Asia) Pte Ltd v Ou Tin Joon	High Court	Yes	[1998] SGHC 57	Singapore	Cited for the rule of pleading that every pleading must contain the necessary particulars of any claim.
MFM Restaurants Pte Ltd v Fish & Co Restaurant Pte Ltd	Court of Appeal	Yes	[2010] SGCA 36	Singapore	Cited for the law on remoteness of damage in Singapore contract law, affirming the principles in Hadley v Baxendale.
Hadley v Baxendale	Unknown	Yes	(1854) 9 Exch 341	England	Cited for the principles on remoteness of damage in contract law.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd	Unknown	Yes	[2008] 2 SLR(R) 623	Singapore	Cited for elaborating on the principles laid down in Hadley v Baxendale regarding remoteness of damage.
Transfield Shipping Inc v Mercator Shipping Inc, The Achilleas	Unknown	Yes	[2009] 1 AC 61	England	Cited as expressly rejected regarding the additional legal criterion of assumption of responsibility introduced by Lord Hoffmann.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Collateral Management Agreement
Warehouse Receipt
Certificate of Quality
Tin Dross
Trade Finance
Round-Tripping
Facilities Agreement
Eligible Inventory
Borrowing Base
LME price

15.2 Keywords

Collateral Management Agreement
Warehouse Receipt
Certificate of Quality
Tin Dross
Trade Finance
Breach of Contract
Negligence
Fraudulent Misrepresentation
Singapore

17. Areas of Law

Area Name	Relevance Score
Collateral Management	85
Commercial Fraud	80
Banking and Finance	75
Warehouseman Liability	70
Trade Financing	65
Contract Law	60
Commercial Law	55
Fraud and Deceit	50
Misrepresentation	40
Guarantee	30
Agency Law	25
Warranties	20
Guarantees and indemnities	20
Best Efforts Clause	10

16. Subjects

Contract Law
Banking
Commodities Trading
Fraud
Agency