Winson Oil v OCBC & SCB: Letter of Credit Fraud Exception & Forged Bills of Lading
Winson Oil Trading Pte Ltd sued Oversea-Chinese Banking Corporation Ltd and Standard Chartered Bank (Singapore) Ltd in the General Division of the High Court of Singapore, Suits Nos 463 and 474 of 2020, for non-payment under letters of credit issued to pay for gasoil sold to Hin Leong Trading (Pte) Ltd. The banks resisted payment, asserting the Fraud Exception, contending Winson fraudulently made false statements in its presentations for payment under the LCs. The court, presided over by Andre Maniam J, found that Winson made false representations in its letters of indemnity and acted fraudulently. The court dismissed Winson's claim.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Claim Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Winson Oil sues OCBC & SCB for non-payment under letters of credit. The court found Winson made fraudulent representations, dismissing the claim.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Oversea-Chinese Banking Corporation Limited | Defendant | Corporation | Judgment for Defendant | Won | |
| Winson Oil Trading Pte Ltd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| Standard Chartered Bank (Singapore) Limited | Defendant | Corporation | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andre Maniam | Judge of the High Court | Yes |
4. Counsels
4. Facts
- Winson sued OCBC and SCB for non-payment under letters of credit for gasoil sold to Hin Leong.
- The sales were the final legs of circular trades involving Hin Leong, Trafigura, and Winson.
- The banks contend no cargo was shipped and the bills of lading were forgeries.
- Winson relied on copy non-negotiable bills of lading in preparing letters of indemnity.
- The banks rely on the Fraud Exception, asserting Winson made false statements.
- Hin Leong's IJMs found 'null and void' original bills of lading signed by a Hin Leong staff.
- The IJMs stated the cargo was sold to multiple buyers, including Unipec, before Trafigura.
- Winson never received original bills of lading or loading documents.
- OCBC rejected Winson's first presentation, stating no physical cargo was shipped.
- Winson made second presentations after OCBC's rejection, switching the vessels around.
5. Formal Citations
- Winson Oil Trading Pte Ltd v Oversea-Chinese Banking Corporation Limited, Suit No 463 of 2020, [2023] SGHC 220
- Winson Oil Trading Pte Ltd v Standard Chartered Bank (Singapore) Limited, Suit No 474 of 2020, [2023] SGHC 220
6. Timeline
| Date | Event |
|---|---|
| Subject Transactions took place | |
| Hin Leong sold gasoil to Trafigura | |
| Trafigura sold gasoil to Winson | |
| Winson sold gasoil back to Hin Leong | |
| Trafigura nominated vessel Hua San for Trafigura-Winson sale | |
| Loading date on Ocean Voyager copy bill of lading | |
| Hin Leong nominated Ocean Voyager and Ocean Taipan for Hin Leong-Trafigura sale | |
| Trafigura nominated Ocean Voyager and Ocean Taipan for Trafigura-Winson sale | |
| Hin Leong counter-proposed Ocean Voyager and Ocean Taipan | |
| Loading date on Ocean Taipan copy bill of lading | |
| Winson sought clearance for nomination of Ocean Voyager and Ocean Taipan | |
| Winson asked Hin Leong for copy bills of lading for both shipments | |
| Winson asked Hin Leong for loading documents for both vessels | |
| Hin Leong provided Winson with copy bills of lading and shipment details | |
| Winson made first presentation to OCBC | |
| Winson emailed Trafigura stating both vessels are ok for subject deal | |
| Trafigura emailed Hin Leong accepting nomination of Ocean Voyager and Ocean Taipan | |
| Trafigura emailed Winson shipment details for both Ocean Voyager and Ocean Taipan | |
| Trafigura emailed Winson to resend corrected figures for shipments | |
| Hin Leong emailed Winson corrected quantity figures for Ocean Taipan | |
| Winson made first presentation to SCB | |
| OCBC reached out to Winson to find alternative buyer for Ocean Voyager cargo | |
| Winson emailed lenders stating no exposure to Hin Leong | |
| OCBC participated in all-lenders’ call concerning Hin Leong | |
| Hin Leong informed OCBC about multiple financing and fraudulent bills of lading | |
| OCBC rejected Winson’s first presentation | |
| Winson received internal email with shipment details and copy bills of lading | |
| Winson made second presentation to OCBC for Ocean Taipan | |
| Winson asked Trafigura for loading documents | |
| Winson emailed OCBC explaining second presentation | |
| Winson’s second presentation to SCB for Ocean Voyager was received | |
| Hin Leong's Interim Judicial Managers issued a letter | |
| Trafigura replied to Winson's request for loading documents | |
| Hin Leong's Interim Judicial Managers issued a letter | |
| Winson emailed Natixis regarding Trafigura's letter of indemnity | |
| Winson emailed Natixis regarding Trafigura's letter of indemnity | |
| Winson wrote to Mashreqbank regarding Trafigura's letter of indemnity | |
| Trafigura wrote to Winson regarding title to cargo | |
| Winson responded to Trafigura regarding title to cargo | |
| Trial began | |
| Judgment reserved |
7. Legal Issues
- Fraud Exception
- Outcome: The court found that Winson made false representations in its letters of indemnity and acted fraudulently, thus establishing the Fraud Exception.
- Category: Substantive
- Sub-Issues:
- False representation of material fact
- Knowledge of untruth
- Lack of belief in truth
- Reckless indifference to truth
- Related Cases:
- [1983] 1 AC 168
- [1992] 3 SLR(R) 146
- (1889) 14 App Cas 337
- [2016] 3 SLR 557
- Validity of Bills of Lading
- Outcome: The court found that the copy non-negotiable bills of lading that Winson relied on were forgeries, signed by a staff of Hin Leong, not by the master or agent of the vessels.
- Category: Substantive
- Sub-Issues:
- Forgery
- Authenticity of documents
- Compliance with documentary requirements
- Nullity Exception
- Outcome: The court did not make a finding on whether the banks could rely on the Nullity Exception.
- Category: Substantive
- Sub-Issues:
- Forged documents
- Material misrepresentation
- Notice requirements
- Related Cases:
- [2003] 1 SLR(R) 597
- Non-compliance with UCP 600
- Outcome: The court agreed with Winson that SCB could not rely on any alleged non-compliance of the operative presentation, to resist payment.
- Category: Procedural
- Sub-Issues:
- Rejection notice
- Time limit for objections
- Compliance with documentary requirements
- Unconscionability
- Outcome: The court did not make a finding on whether unconscionability should be recognised as a ground for resisting payment under an LC.
- Category: Substantive
- Sub-Issues:
- Unfairness
- Abuse of power
- Good faith
- Suffering of Loss
- Outcome: The court agreed with Winson that SCB's contention that Winson's claim fails because it suffered no loss fails.
- Category: Substantive
- Sub-Issues:
- Cause of action
- Contractual payment obligations
- Damages
8. Remedies Sought
- Payment under letters of credit
- Interest
9. Cause of Actions
- Breach of Contract
- Enforcement of contractual payment obligations under letters of credit
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- Letter of Credit Disputes
11. Industries
- Oil and Gas
- Finance
- Commodities Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| United City Merchants (Investments) Ltd v Royal Bank of Canada | House of Lords | Yes | [1983] 1 AC 168 | England and Wales | Articulates the Fraud Exception in letter of credit transactions, establishing the principle that banks must honor credits unless the seller presents fraudulent documents. |
| Brody, White and Co Inc v Chemet Handel Trading (S) Pte Ltd | Court of Appeal | Yes | [1992] 3 SLR(R) 146 | Singapore | Accepted the Fraud Exception as the law in Singapore, citing United City Merchants and emphasizing that the fraud must be in the presentation of documents to the bank. |
| Credit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another suit | Singapore International Commercial Court | No | [2022] 4 SLR 1 | Singapore | Addressed whether a beneficiary would be fraudulent if he made a false representation recklessly, without caring whether it be true or false. The SICC held that in that instance, the beneficiary would not have acted fraudulently, a point the current judgement declines to follow. |
| Derry v Peek | House of Lords | Yes | (1889) 14 App Cas 337 | England and Wales | Defined fraud in the tort of deceit, stating that fraud is proved when a false representation has been made knowingly, without belief in its truth, or recklessly, careless whether it be true or false. |
| Panatron Pte Ltd and another v Lee Cheow Lee and another | Court of Appeal | Yes | [2001] 2 SLR(R) 435 | Singapore | Supported the view that the second category in Derry v Peek encompasses the third category, meaning that recklessness is included in the definition of fraud. |
| Arab Banking Corp (B.S.C.) v Boustead Singapore Ltd | Court of Appeal | Yes | [2016] 3 SLR 557 | Singapore | Accepted that in cases concerning calls on “on demand” performance guarantees/bonds, the Fraud Exception would include cases in the third category of Derry v Peek. |
| DBS Bank Ltd v Carrier Singapore (Pte) Ltd | High Court | No | [2008] 3 SLR(R) 261 | Singapore | Observed that negligence on the part of the beneficiary had not been accepted as a justification for a bank to refuse payment on an LC. |
| Angus v Clifford | Court of Appeal | Yes | [1891] 2 Ch 449 | England and Wales | Explained recklessness in the context of fraud, stating that it means indifference to the truth, the moral obliquity which consists in a wilful disregard of the importance of truth. |
| Gimpex Ltd v Unity Holdings Business Ltd and others and another appeal | Court of Appeal | Yes | [2015] 2 SLR 686 | Singapore | The IJMs’ statements/reports, which include Mr Freddy Tan’s statements, are also admissible under s 32(1)(b) of the Evidence Act as statements made by a person in the ordinary course of a trade, business, profession, or other occupation. |
| Beam Technology (Mfg) Pte ltd v Standard Chartered Bank | Court of Appeal | No | [2003] 1 SLR(R) 597 | Singapore | Addressed the Nullity Exception, stating that the negotiating/confirming bank is not obliged to pay if it has established within the seven-day period that a material document required under the credit is forged and null and void and notice of it is given within that period. |
| Mahonia Ltd v JP Morgan Chase Bank and another | High Court | Yes | [2003] 2 Lloyd’s Rep 911 | England and Wales | Accepted that if a bank acquired clear evidence of fraud, after demand, but before the hearing of an application for judgment, it could use that evidence in its defence. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Evidence Act 1893 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Letter of credit
- Bills of lading
- Fraud Exception
- Circular trades
- Letters of indemnity
- Non-compliance
- Nullity Exception
- Gasoil
- Beneficiary
- Issuing bank
- Complying presentation
- Unconscionability
15.2 Keywords
- Letter of credit
- Fraud
- Bills of lading
- Winson Oil
- OCBC
- SCB
- Hin Leong
- Singapore
- Commercial Law
- Banking Law
17. Areas of Law
16. Subjects
- Letter of Credit
- Fraud
- Documentary Credit
- International Trade
- Banking