Yuchai Dongte Special Purpose Automobile Company Ltd v Suisse Credit Capital (2009) Ltd
| Jurisdiction | England & Wales |
| Judge | Christopher Hancock |
| Judgment Date | 09 October 2018 |
| Neutral Citation | [2018] EWHC 2580 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000044 |
| Date | 09 October 2018 |
[2018] EWHC 2580 (Comm)
Christopher Hancock QC SITTING AS A DEPUTY HIGH COURT JUDGE
Case No: CL-2017-000044
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Edward Brown (instructed by Covington and Burling LLP) for the Claimant
Andew Ayres QC and Benjamin Tankel (instructed by C J Jones Solicitors LLP) for the Defendant
Hearing dates: 21st–23rd May
Christopher Hancock QC:
Introduction:
In this trial, the Claimant claims payment pursuant to a letter of credit which they allege was issued by the Defendant on 10 March 2014. A copy of the relevant letter of credit is annexed to this judgment as Annex 1. The Defendant denies that it issued the letter of credit; and contends, in the alternative, that even if it did, the terms of the credit made clear that it was not responsible for payment of the credit. Finally, the Defendant asserts that the Claimant is estopped by convention from claiming that the Defendant issued the letter of credit.
The relevant factual background.
The Claimant is a large manufacturing company based in China. The Defendant is a company which provides financial services in support of trade, investment and development. It is not a bank and does not take deposits or undertake investment management; but it is a member of the SWIFT network.
The “Suisse Bank Group” was a group of companies which, I was told, was, initially at least, owned and operated by a gentleman known as Mr Wolfgang Zulauf. The Group included Suisse Bank PLC (SB PLC), which was the entity involved in the first letter of credit transaction which was said to be relevant to these proceedings (“LC1”), and Suisse Bank Offshore Limited (SBOL), which was the entity involved in the letter of credit with which I am concerned, which I refer to as “LC2”. SBOL also apparently had branches in the Comoros and in London. Despite the superficial similarity of their names, I was told that the Defendant had and has no connection with any member organisation of the “Suisse Bank Group” or with Mr Zulauf other than the specific paid and third party contractual arrangements pursuant to which they (SB PLC and SBOL) instructed the Defendant to send certain SWIFT messages, to which I make reference below.
Various Chinese Banks were also involved, namely The Bank of China (Hubei), and the Rural Commercial Bank of Zhangjiagang. These only ever acted as correspondent/advising, non-confirming, banks – for the Claimant.
I turn to the chronology of events, which I have taken mainly from the Defendant's helpful skeleton.
(1) On 23 September 2013, Ms Simone Preusser of the Suisse Bank Group, sent to the Defendant a draft letter of credit in the sum of US$7 million (LC1) for payment for the goods in question. A copy of this letter of credit is annexed to this judgment as Annex 2. The draft included, at field 72 (sender to receiver information), the disclaimer “no our responsibility for payment”. In this judgment, this statement, along with the “quote/unquote” format utilised in certain later messages is referred to as “the Disclaimers”. Ms Preusser asked the Defendant to “issue” the draft. Suisse Bank PLC was duly invoiced 9,500 Euros for “advising” LC1 “as received from Suisse Bank PLC”. It is said by the Defendant that the size of that commission was not commensurate to that which would typically be charged for issuing (in the true sense) a LC in the sum of US$7 million. The amount, however, does seem to be consonant with the scale of charges indicated by the Defendant to its customers for services, other than issuing letters of credit, although there is no suggestion that the scale of charge made to SB PLC was made known to the Claimant.
(2) The Defendant sent LC1 to a correspondent bank in China known as the Bank of Ruifeng. The Defendant sent it by way of MT700 at Mr Zulauf's express request. I deal below with the nature of a SWIFT MT700 message.
(3) On 25 September 2013, Bank of Ruifeng forwarded LC1 to the Claimant. On the covering form, it specified that the “issuer” was the Defendant, but also wrote “If you find any…error(s), it is suggest that You Contact applicant directly for necessary amendment(s) so as to avoid any difficulties which may arise when documents are presented.” The applicant was the buyer, whilst the applicant bank was said to be SB PLC.
(4) On 23 January 2014, the Claimant apparently presented documents under LC1 via Bank of China (Hubei Branch) to SB PLC, which was described in the documentary remittance covering the presentation as “reimbursing bank/drawee bank”. The documentary remittance again described LC1 as having been “issued” by the Defendant. The Claimant included in the presentation charter party bills of lading naming SB PLC as consignee. By charter party bills of lading I mean bills of lading incorporating the terms of a charter party.
(5) On 5 February 2014, on Mr Zulauf's instructions, the Defendant sent a SWIFT message to Bank of China refusing payment under LC1 because the documents presented were discrepant. The message contained the following headers and footers:
“WE RELAY THIS MESSAGE ONLY AS RECEIVED FROM SUISSE BANK PLC 53 DAVIES STREET, LONDON W1K 5JH, UK
QUOTE
[Quoted message from SB PLC rejecting documents]
UNQUOTE
YR CHRGS ARE FOR BENF ACCOUNT.
NO OUR (SBLTGB2L) RESPONSIBILITY FOR PAYMENT.
BEST REGARDS, SBLTGB2L”
The message therefore included the Disclaimers.
(6) On 14 February 2014, SB PLC wrote to Bank of China via the Defendant stating “we have been informed that the applicant and beneficiary have agreed for a payment of docs presented … to be made outside the LC. Please confirm the consent from beneficiary by return SWIFT message”. The Defendant again included the Disclaimers in the message. Mr Zulauf was invoiced on the same day for this message.
(7) At this point it appears that Mr Zulauf and Mr Black, of the Claimant, decided between them to open a second LC.
(a) This started, apparently, with an agreement dated 17 February 2014 between Laheq and SB PLC, stated to relate to LC1, that the new payment terms would be for a sum of $3m, with payment to be made in accordance with an agreed schedule, including two cheques which would be returned once payment had been received. In more detail, the arrangements for reimbursement as between “Suisse Bank Group” and the applicant were as follows:
“Dear Sirs,
With reference to the payments under [LC1] we agree to the following payment terms:
The new invoice amount will be 3 Mio USD + interest and banking charges (for example issuing of Letter & Credit Charges).
Therefore, the remaining 3 Mio USD has to be paid as follow [sic]:
A) 260 000 EUR already paid
B) 110 000 to be paid on next Wednesday 19.02.2014
C) First check of 1.5 Mio USD due date within the next 60 days
D) Second check of 1.5 Mio USD due date within the next 120 days.
Please be informed that both checks are only for security reason and if the amount of 1,5 Mio USD of each is paid before the due date, we will return the checks…”
(b) The document contains signatures and stamps on behalf of both Mr Zulauf and Laheq.
(c) On that same day, an email exchange commenced between Mr Zulauf and Mr Black. It is not easy to determine where others of the documents disclosed fit into the chronology visible from this email, but I set out in the paragraphs which follow the apparent trail.
(d) On 17 February, at 0441, Mr Zulauf emailed Mr Black with instructions as to how to download the SWIFT. That was clearly a SWIFT to Bank of China and I would infer that it was the message of 14 February to which I have made reference above.
(e) At 1026, Mr Black asked Mr Zulauf “to make sure you will open the new lc, and to please write a letter to our company”. Mr Zulauf responded that this would be no problem and that the letter would be sent later that day. At 1100 Mr Black thanked Mr Zulauf, said that they wanted to finish this as soon as possible and asked when the new letter of credit would be opened. He also asked Mr Zulauf, reflecting perhaps a conversation between them, whether he was sure he only wished a new invoice. I have not seen a document in which Mr Zulauf stated this.
(f) After various chasing messages, which became increasingly urgent, Mr Black asked for confirmation that a letter would be sent, with SB PLC's signature and stamp, and Mr Zulauf stated that the letter would come within 30 minutes. By now it was about 1600 on 17 February 2014.
(g) At about this stage, Ms Dolibic, the executive assistant to Mr Zulauf and an employee or agent of the “Suisse Bank Group” sent an email to Mr Black containing three attachments:
(i) First, a letter from SB PLC to the Claimant, on headed notepaper and signed by Mr Zulauf, stating that “we will issue” a new LC within 48 hours of receiving a positive response to the 14 February 2014 SWIFT message (asking the beneficiary to confirm that payment had been agreed outside of LC1) and upon receipt of an application from its client for an LC in the sum of US$3 million payable at sight;
(ii) The SWIFT message dated 14 February 2014, referred to above;
(iii) A further attachment, which I am not sure that I have seen.
(h) Mr Black responded (still on 17 February 2014, and back in the email chain), asking that Mr Zulauf should retain the documents that had been presented, “in your bank”. He said “this is very important to us … so we can get the new lc at sight, and when we send you a new invoice, we will get our payment”. He went on to say that once a letter was received from Mr Zulauf then the Claimant's CFO would “confirm the SWIFT”, get the new letter of credit at sight and get their payment on presentation of the new invoice. The Defendant pointed out...
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