Mauri Garments Trading and Marketing Ltd v The Mauritius Commercial Bank Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance |
| Judgment Date | 24 March 2015 |
| Neutral Citation | [2015] UKPC 14 |
| Date | 24 March 2015 |
| Docket Number | Appeal No 0053 of 2014 |
| Court | Privy Council |
[2015] UKPC 14
Privy Council
From the Court of Appeal of Mauritius
Lord Mance
Lord Clarke
Lord Sumption
Lord Carnwath
Lord Toulson
Appeal No 0053 of 2014
Appellant
Rex Stephen Ike Ehiribe
(Instructed by Astor Law International)
Respondent
Gilbert Ithier SC
(Instructed by Blake Morgan LLP)
Heard on 25 February 2015
The appellant, Mauri Garments Trading and Marketing Ltd ("T&M"), appeals against the dismissal of its claim against Mauritius Commercial Bank Ltd ("MCB") by Devat J by judgment dated 26 September 2012, which was upheld by the Court of Appeal by judgment dated 1 October 2013.
By sale and purchase contract dated 25 November 1992, T&M contracted to buy shirts from Mauri Garments Co Ltd ("Mauri Garments"). The contract provided for the issue of a bank guarantee up to FF5m, and for this, when issued, to evidence the binding nature of the sale and purchase contract. A letter of indemnity No 685 was accordingly issued by Banque S G Warburg Soditic SA of Zurich ("Warburgs") in favour of MCB for any amount up to FF5m. Its terms were no doubt agreed between T&M and Mauri Garments, and they have in any event clearly been accepted as complying with the sale contract, which was thereafter performed.
Under the letter of indemnity (as extended in validity until 30 June 1994), MCB made a demand on 30 June 1994 for FF5m, on the basis that "We have not received payments for goods supplied" to T&M by Mauri Garments totalling FF6,734,152.17. Warburgs made the payment. It is not suggested that MCB's demand did not satisfy the terms of letter of indemnity or that Warburgs could have refused to make the payment.
What is suggested is that Mauri Garments has a claim in tort against MCB, for having claimed more than was actually due from T&M to Mauri Garments. It is alleged that T&M only owed Mauri Garments FF2,536,386 (the equivalent of Rs7,989,617). Further, MCB had caused a receiver to be appointed over Mauri Garments on 1 April 1994, and the receiver in a statement of affairs dated 6 May 1994 had identified that sum as outstanding. With that knowledge, it is said, MCB had no basis for demanding more.
The sale agreement provided:
"Re: Contract for the supply of garments between MAURI GARMENTS CO LTD and MAURIGARMENT TRADING AND MARKETING HK.
This contract is entered into on the 25th November 1992 between MAURI GARMENTS CO LTD and MAURIGARMENT TRADING AND MARKETING HK under the following terms:
(a) TRADING guarantees the quantity 110,000 pieces of shirts per month or 1,320,000 pieces of shirts per year. MAURI agrees to supply the said quantity to TRADING.
(b) During the term of this contract. TRADING will despatch its technician(s) to MAURI for the technical assistance to MAURI. All fees relating to the technician(s) will be borne by MAURI.
(c) Pricing will be calculated on a CIF basis.
For a long sleeved shirt, fabric consumption will be based on 2. 25 m2 and for a short sleeved shirt 1. 28 m2 plus FRF13.50 which represent the CMT charges as well as freight charges and profits.
Pricing for old stock/shirts? will be based on a FRF6 per meter.
(d) Payment will be 150 days from Bill of Lading date/AWB date.
(e) A bank guarantee up to FRF5,000,000 will have to be set up.
(f) The bank guarantee once issued would be the evidence of the contract binding both parties."
The letter of indemnity provided:
"Your customer Mauri Garments concluded a contract with Mauri Garments Trading and Marketing on 25.11.1992 for the supply of garments. As security for the payment of the merchandise, an indemnity by a bank shall be furnished.
At the request of Mauri Garments Trading and Marketing we, BANK S G WARBURG SODITIC AG, Zurich/Switzerland, hereby irrevocably undertake to pay you on first demand, irrespective of the validity and the effects of the above mentioned contract and waiving all rights of objection and defence arising from said contract, any amount up to FF5,000,000 — (French Francs five million 00/00)
Upon receipt of your written and duly signed request for payment and your written confirmation that you have not received payment at maturity for the sum claimed under this letter of indemnity.
The total amount of this indemnity will be reduced by any payment effected by us hereunder.
For the purpose of identification, your request for payment and your confirmation hereunder have to be presented through the intermediary of a first rate bank confirming that the signatures thereon are binding for your firm.
Our undertaking is valid until June 30, 1993 (nine-three), and expires in full and automatically if your written request for payment and your written confirmation, together with a first rate bank's verification of your signatures, are not in our possession on or before that date.
This indemnity is governed by Swiss law, place of jurisdiction is Zurich."
The case has been conducted on the basis that the law of Mauritius applies to T&M's claim against MCB.
The judge, after hearing evidence, found that MCB had discounted the full value of export bills of exchange presented to it by Mauri Garments totalling as at 30 June 1994 FF6.7m (or, more precisely no doubt, FF6,734,152.17) in respect of goods shipped to T&M under the sale contract. The difference between this total and the FF2,536,386 shown in the receiver's statement was due primarily to (a) the offsetting of sums due from Mauri Garments to T&M in respect of raw materials paid for by T&M, but in part also due to (b) the deduction of certain invoices which T&M denied receiving or in respect of which T&M denied receiving any goods. The total of the invoices in (b) was only FF1,133,109, so that, even deducting them in full from the FF6,734,152.17, the balance was well in excess of the FF5m which MCB claimed and received under the letter of indemnity.
The critical difference was and is therefore the offset claimed by T&M in respect of the price of raw materials supplied to Mauri Garments. The judge recorded that there was agreement between counsel at the close of both parties' case that the only issue for the court was therefore whether the price due for the purchase of the raw materials ought to have been deducted from the amount claimed by...
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