Pacific Carriers Ltd -v- Banque Nationale de Paris [2001] NSWSC 900

Pacific Carriers Ltd -v- Banque Nationale de Paris [2001] NSWSC 900 | Case summary | Zoe

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Pacific Carriers Ltd: A Street SC, G Nell, E Cox COUNSEL : Banque Nationale de Paris: B Rayment QC, P King, I Davidson, M Pesman New England Agricultural Traders: M McHugh Swiss Singapore Overseas Enterprises: F Douglas QC, G Rich Pacific Carriers Ltd: Norton White SOLICITORS : Banque Nationale de Paris: Corrs Chambers Westgarth New England Agricultural Traders: Withnell Hetherington Swiss Singapore Overseas Enterprises: Phillips Fox CATCHWORDS : Admiralty - C & F contracts for sale of legumes - contractual provision for letters of credit to be opened by third party - legumes shipped from Australian ports to Calcutta under voyage charter to seller by time charterer - bills of lading issued with seller as shipper and third party the notify party - three letters of credit, opened on application of third party - bills of lading 'switched' substituting third party as shipper and buyer as notify party - documents discrepant under the terms of letters of credit - acceptance of discrepant documents under two letters of credit - letters of indemnity given by seller to time charterer against delivery to buyer of cargo the subject of accepted documents without presentation of bills of lading - instruction to Master by time charterer with authority of owner to deliver cargo to buyer without presentation of bills of lading - implied indemnity by time charterer to owner - seller's letters of indemnity signed by seller's bank - effect of bank's signing of letters of indemnity - effect of switching bills on liability under indemnity - third party holder of bills of lading and pledgee of cargo the subject of accepted documents - direction by third party to time charterer to deliver cargo to buyer against banker's guarantee - nature and effect of direction - action by third party against owner for conversion of cargo delivered to buyer - liability of owner to third party - liability of time charterer to owner - liability of seller's bank to time charterer - proper law of actions in contract and tort - principles of liability in negligence causing economic loss - settlement of third party's action against owner - reasonableness of settlement - whether directions to deliver cargo to buyer interfered with contractual relations - principles of wrongful interference with contractual relations - measure of damages in conversion. Trade Practices Act 1974 (Cth) Export Control Act 1982 (Cth) Carriage of Goods by Sea Act 1992 (UK) LEGISLATION CITED : Contracts (Applicable Law) Act 1990 (UK) Private International Law (Miscellaneous Provisions) Act 1995 (UK) Carriage of Goods by Sea Act 1992 (Cth) Sea-Carriage Documents Act 1997 (W.A) Sea-Carriage Documents Act 1996 (QLD) R v Toohey: Ex Parte The Attorney-General for the Northern Territory (1980) 145 CLR 374 R v Portus; Ex parte Federated Clerks Union of Australia (1949) 79 CLR 428 CASES CITED : Banco de Portugal v Waterlaw [1932] AC 452 Segenhoe Ltd v Akins (1990) 29 NSWLR 569 Chabbra Corporation Pte Ltd v Jag Shakti (The Jag "Shakti") [1986] AC 337 Butler v The Egg and Egg Pulp Marketing Board (1996) 114 CLR 185 DECISION : In the proceedings: judgment for the plaintiff against the first defendant in negligence in the amount as found in the reasons for judgment. Determination of currency in which judgment is to be given, the rate of conversion from other currencies, rate of interest, and time from which interest is to run on judgment, the costs of the proceedings and of cross claims be deferred pending further submissions. Otherwise summons be dismissed. All cross claims be dismissed.

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REASONS FOR JUDGMENT Background 1 These proceedings arise out of the sale of a cargo of legumes, comprising chick peas and dun peas, by an Australian grain trader, New England Agricultural Traders Pty Ltd (NEAT), to Royal Trading Company (Royal), an Indian grain trader operating out of Calcutta. 2 The most significant aspect of these proceedings so far as they concern Royal is that (a) it is not a party to the proceedings; (b) unquestionably, it engaged in dishonest conduct which has left NEAT destitute. Royal continues to trade. The Contracts for Sale of Legumes 3 There were several C & F contracts for the sale of legumes by NEAT to Royal, negotiated through G C Goil Commodity Corporation (Goil), as brokers. Two were expressed to be "effected 7th July 1998". They were numbered respectively 070798A and 070798B. Contract 070798A (the first chick pea contract) related to 6,000 metric tonnes (MT) of chick peas at a price of US$275 per MT. Payment was by irrevocable 90 days letter of credit to be opened and payable in Sydney with Banque Nationale de Paris, now known as BNP Paribas (BNP), "payable against shipping documents". The letter of credit was "to be opened latest 15 days prior to first date of shipment period … through first class prime bank in Singapore or through nationalised India bank acceptable [to BNP]" . The shipment period was stated to be "15 November 1998 - 15 December 1998", with an agreement by Royal to extend that time, if required by NEAT, due to a delay in harvest. The loading port was from any Australian port and the discharge port was Calcutta. Laytime was agreed to commence 24 hours after presentation of Notice of Readiness. The other terms were noted as "per charter party". The manner of discharge was stipulated as follows: "NORMAL DISCHARGE BY LIGHTERS AT DIAMOND HARBOUR WHERE 7M DRAFT OBTAINABLE. LIGHTERAGE COSTS FOR BUYERS ACCOUNT. IF VESSEL OVER 7M OR PORTS DRAFTS FOR ENTERING CALCUTTA, LIGHTERAGE COSTS AT SAGAR /HALDIA SHIPPER'S ACCOUNT… ANY ADDITIONAL MOVEMENT BETWEEN BERTHS OF VESSEL FOR BUYERS ACCOUNT AT THE DISCHARGE PORT. STATEMENT OF FACTS AT DISCHARGE PORT SIGNED BY THE MASTER SHALL BE FINAL FOR CALCULATION OF LAYTIME PURPOSES. BUYERS GUARANTEE THAT MINIMUM DRAFT AT 7M WILL BE AVAILABLE TO THE VESSEL ON ARRIVAL…"

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4 As seen later in these reasons, Royal cynically utilised this draft limitation to its advantage when the legumes arrived at Sagor Roads. Throughout the material in evidence "Sagor" is frequently referred to as "Saugor". Except in quotations I have adopted "Sagor" in conformity with the Admiralty chart of the area. 5 Special conditions included provision for the acceptability of charter party bills of lading with the "costs associated with separate/ multiple bills of lading/ shipping documents" being to buyer's account. NEAT was required to send one complete set of non-negotiable copy documents to Goil. The shipping documents were prescribed as follows: "SHIPPING DOCUMENTS: -FULL SET 3/3 CLEAN ON BOARD CHARTER PARTY BILLS OF LADING. -CERTIFICATE OF ORIGIN ISSUED BY A COMPETENT AUTHORITY. -CERTIFICATE OF WEIGHT AND QUALITY ISSUED BY SGS AUSTRALIA. -PHYTOSANITARY CERTICATE ISSUED BY GOVERNMENT BODY. -COMMERCIAL INVOICE. -PACKING LIST. -FUMIGATATION CERTIFICATE ISSUED BY COMPETENT AUTHORITY." 6 The contract bears a stamp date of 9 July 1998 and attached to the contract is a contract amendment which has a stamp date 19 October 1998. That amendment was in the following terms: "LC SHALL BE ALLOWED TO BE OPENED BY M/S. SWISS SINGAPORE OVERSEAS ENTERPRISES PTE" [SSOE]. 7 SSOE was an international commodity trading company operating out of Singapore. 8 Contract 070798B (the first dun pea contract) was for the sale of 6,000 MT of dun peas at a price of US$210 per MT on terms the same as the first chick pea contract, save for the shipment period being expressed to be "for the period 1 December - 31 December 1998". The first dun pea contract also was subject to a contract amendment which bore a date stamp 19 October 1998 to the same effect as the amendment to the first chick pea contract. 9 There were two further contracts between these parties each stated to be effected 6 August 1998. The first of those was contract number 60898A (the second chick pea contract) for the sale of 4,000 MT of chick peas at US$278 per MT. Its terms were also to the same effect as the terms of the first chick pea contract and contained a contract amendment, the same as the amendment to the first chick pea contract. 10 The remaining contract, number 060898B (the second dun pea contract), was for the sale of 4,000 MT of dun peas at US$193 per MT. It was on the same terms as the first dun pea contract and contained the same contract amendment as applied to the other contracts. The Buyer's Financial Arrangements

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Commercial invoices certifying that the goods shipped were as per contract number 60898A; 2. The full set of bills of lading " made out to order blank marked free freight pre paid and notify applicant ". 19 On 28 October 1998, on the application of SSOE, Bangkok Bank issued a second documentary letter of credit, number LCUA800983 in respect of the first chick pea contract in the sum of $1,650,000 (the second letter of credit). As with the first letter of credit it was a 90 day letter of credit which erroneously referred to the goods shipped by reference to the second chick pea contract. That error was corrected by amendment to the documentary credit of 27 November 1998. The terms and conditions of the letter of credit were in accordance with the first chick pea contract and followed the first letter of credit. 20 It was necessary to extend the date under the dun pea contracts by which the letter of credit was to be opened. That was effected in mid-November by extending the date to 30 November 1998. In conformity with that extension, Bangkok Bank opened a letter of credit, number LCUA801120 (the third letter of credit), in the amount of US$2,032,000 to cover the two dun pea contracts. It was in terms which corresponded with the first and second letters of credit. Shipping Arrangements 21 The cargo was carried on board the MV Nelson in respect of which Pacific Carriers Limited (Pacific) had entered into a time charter (time charter) with Bolton Navigation (Bolton) on 9 December 1998 for "one time charter trip via St Port (S) Australia to St Port (S) Calcutta …" After entering into the time charter, Pacific appointed Multimode Maritime Pvt Ltd (Multimode) to represent it at Calcutta "to look after our VSL 'MV Nelson'… due Calcutta 2nd half Jan 99…" The following further extract from that facsimile of appointment of 14 December 1998 has some bearing on events that occurred at the time of discharge of the cargo at Calcutta, namely: "AS DISCUSSED LAST FRIDAY NIGHT, WE WISH FOR YOU TO REPRESENT US + NEGOTIATE WITH RECEIVERS TO TAKE DELIVERY OF GOODS EX-HOOK AT SAUGOR ROADS. VSL WILL NEED TO OFF-LOAD SOME 7000MTS PEAS BEFORE SHE CAN SAFELY APPROACH THE DIAMOND HARBOUR ANCHORAGE. FOR THE RECEIVERS AGREEING TO TAKE DELIVERY AT SAUGOR ROADS, PCL IS PREPARED AGREED (sic) TO RECOMPENSE THEM FOR THE ADDITIONAL COSTINGS."

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22 Diamond Harbour is well upstream from Sagor Roads which lies, roughly, at the entrance to the Hugli River. The necessity to "off-load" some of the cargo at Sagor Roads related to the need to reduce the MV Nelson's draft to seven metres in order to safely enter Diamond Harbour. 23 For the purposes of the contracts NEAT, through brokers, Anderson Hughes, negotiated a voyage charter with Pacific in the form of the Australian Wheat Charter 1990 dated 8 December 1998 (the voyage charter), the addendum to which, dated 9 December 1998, identified the MV Nelson as the vessel to perform the voyage. Loading of MV Nelson 24 Following upon the nomination of the MV Nelson, it sailed from Jakarta on 9 December 1998 and arrived at Fremantle on 16 December 1998. Loading of the vessel with dun peas commenced on 23 December 1998, 5,722 MT being loaded into hold number 2 and 40.58 MT into hold number 4. Loading was completed on 24 December 1998 at Fremantle and a Master's bill of lading dated 24 December 1998 (B/L-1) issued in relation to the cargo of 5,762.58 tonnes. (There was some discussion during the case as to the true nature of the bills of lading, whether they were charter bills or Master's bills. I do not understand that to be a live issue). It was executed by Beaufort Shipping Agency Company (Beaufort) as agent for the Master. It was expressed to be consigned "to order". NEAT was the shipper and SSOE was identified as the notify party. 25 The vessel recommenced loading at Esperance on 27 December 1998 taking on board 4,706.65 MT of dun peas which was loaded into hold number 4. Two bills of lading issued in respect of the cargo loaded at Esperance each dated 27 December 1998 one in respect of 537.42 MT (B/L-2) and the other in respect of 4,169.23 MT (B/L-3). Both were in terms similar to B/L-1 and executed in like manner. The loading of the chick peas took place at Brisbane on 4 January 1999 when 9,273.96 MT of chick peas were loaded in holds 1 and 5. In respect of that cargo of chick peas some ten bills of lading issued, each dated 4 January 1999, all in similar form to B/L -1. 26 Each of eight bills of lading issued in respect of 1,000 MT of chick peas and were identified, respectively, as bill of lading 4A (B/L- 4A), 4B (B/L-4B), 4C (B/L-4C), 5A (B/L-5A), 5B (B/L-5B), 5C (B/L-5C), 5D (B/L-5D), and bill of lading 5E (B/L-5E). 27 One bill of lading, marked 4D, issued in respect of 800 MT of chick peas (B/L-4D) and one marked 5F, issued in respect of 473.96 MT of chick peas (B/L-5F). 28 I refer to this first tranche of bills relating to dun peas and chick peas as 'initial' bills of lading.

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36 As earlier noted in these reasons, NEAT had agreed to a contract amendment under which the terms of payment were amended to provide for the opening of letters of credit by SSOE. It is also worth noting that in that amendment it was confirmed that Royal would "remain" as buyer and as the "notify party". This is in keeping with the very clear rejection by NEAT of the original approach to substitute SSOE for Royal under the subject contracts. The matter is of importance in view of a position taken in these proceedings on behalf of SSOE on the basis that it was the buyer of the legumes from NEAT. 37 Under the terms of the letters of credit opened by Bangkok Bank it was necessary to submit "signed commercial invoice in 1 original + 3 copies certifying that the goods shipped as per beneficiaries contract". Another term upon which the letters of credit were opened required production of clean on-board ocean bills of lading made out to order blank endorse marked "freight prepaid" and "notify applicant", which was SSOE. 38 Sniekers agreed in cross examination that he understood the words "notify applicant" as a reference to the notify party under the initial bills of lading and that it was intended to refer to SSOE: further that the requirement that the bills were "to order" meant that they were negotiable. Consistent with that understanding he completed on behalf of NEAT a "Notice of Intention to Export Prescribed Goods" in conformity with the Export Control Act 1982 (Cth). In the provision marked for 'Name and Address of Consignee' Sniekers completed the application to read "To Order Notify Swiss Singapore". 39 For the purpose of acceptance of documents under the letters of credit opened on SSOE's application, on or about 27 December 1998, NEAT raised commercial invoices to SSOE identifying the subject matter by reference to the Royal dun peas contract numbers. On 4 January 1999 NEAT issued similar commercial invoices to SSOE for the chick peas: again, identifying the subject matter by reference to the Royal chick pea contract numbers. The form of the invoices mirrored the terms of the contracts between NEAT and Royal. Under the heading "Commercial Invoice" appeared: "To: Swiss Singapore Overseas Enterprises Pte Ltd". The invoice number also bore the same identification number as the relevant Royal contract number. 40 I think some significance lies in the fact that NEAT's invoices to SSOE were not submitted directly to SSOE. Rather they were provided through the banking system for the purpose of acceptance under the letters of credit opened by Bangkok Bank on SSOE's application, pursuant to the express terms of the NEAT/Royal contracts. 41 The issuing of invoices to SSOE in relation to the Royal contracts did little to clarify the legal relationships amongst the parties to these proceedings. 42 In these proceedings, SSOE has been variously described as the buyer and on-seller of the cargo to Royal, as financier of Royal's purchase of the cargo, as pledgee of the cargo, or as a party entitled to possession of the bills of lading once discrepant documents had been accepted under the letters of credit. 43 When Sniekers was cross examined on the invoices to SSOE, he gave the following evidence:

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Q. Because probably Royal did not have the finance to pay for the cargo direct? A. In that case that's why they used a financier." (T845:46-T845:49…T845:55-T846:54) Terms of arrangement between SSOE and Royal 44 For reasons given later, I am satisfied that SSOE was not a purchaser of the cargo from NEAT. However, as though it was a purchaser for on-sale to Royal, SSOE raised two forms of sales contract for the sale to Royal of the chick peas and the dun peas, respectively dated 2 October 1998 and 20 November 1998. The significant aspects of those contracts are that the prices follow the sales price to Royal, with what has been described as "a margin" of $5, in the case of the chick peas, and $7, in the case of the dun peas, added to the Royal contract prices. Payment terms were described as follows: "By irrevocable L/C at sight or D/P sight Workable L/C as per our format can be received by us by 10.12.98 In case of D/P sight 10% advanced to be received by us latest by 10.12.98." 45 Other terms and conditions conferred a right of cancellation in the event that the contract was not confirmed in writing by 23 October 1998, in the case of the dun peas, and by 12 October 1998, in the case of the chick peas. A further right of cancellation was conferred on SSOE if the requisite letter of credit was not opened in accordance with the format submitted by SSOE. Of some moment was the following condition of the "sales contract": "..the seller will make every endeavour to negotiate and/or send the documents at the earliest but in any case if the same is not available before the arrival of the vessel then the buyer has to arrange the discharge of cargo immediately against letter of indemnity duly signed by their bankers". 46 These contracts were never executed by Royal. It did not pay for the cargo, other than that the subject of B/L-2, nor did it pay the 10% deposit. SSOE did not avail itself of its entitlement to cancel the contracts and took no action in respect of Royal's failure to pay the deposit. It took no action to recover any payment by Royal under either contract, notwithstanding delivery of a substantial portion of the cargo to Royal without payment to SSOE. 47 In conformity with the arrangement involving the establishment of the letters of credit by SSOE, SSOE was the notify party in the initial bills of lading. While NEAT responded favourably to Royal's request to split the bills of lading, what happened in relation to the switched bills is not fairly described as a split of the initial bills of lading. It is common ground that NEAT consented to the substitution of the initial bills. The evidence disclosed that this was effected in Singapore where the vessel was planned to bunker en route to Calcutta. Switching of bills

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53 It is apparent by 12 January 1999 that SSOE was proposing more than a mere splitting of the bills of lading by the proposed substitution. Under the draft proposed by SSOE, it was shown as the shipper in place of NEAT and Royal was the designated notify party. I think Goil in his facsimile to Royal of 12 January 1999 was close to correct in his analysis of the implications proposed by SSOE. His facsimile was in the following terms: " I have sent you three faxes today. As per your instructions I have talked to Mr. P.K. Jain yesterday and have also discussed with him today. It seems that one Mr. Balodi of M/s. Swiss Singapore is creating some new problems as he is asking the seller M/s. New England to authorise the shipping company to amend the B/L itself showing M/s. Swiss Singapore as shippers instead of M/s. New England. Gopal, it is highly impossible and nowhere in the world it is being done. How can you change the name of the seller without paying the B/L and other documents? I think something is very fishy about the whole thing as you have repeatedly informed and the representative of M/s. New England Mr. Murali that you are doing the needful in the matter. Please note the vessel is due to arrive Calcutta on 20th and the matter is becoming very very serious. Unless and until M/s. Swiss Singapore gives clear instructions as promised by you yesterday through their bank to BNP Sydney to accept the documents with discrepancy as sellers are unable to negotiate the documents under ICC500. Please note if the vessel arrives before arrivals of the documents, she will go under demurrage as the shipping company will not be able to register the vessel with Calcutta Port authorities. Please note the matter is very very serious and it requires your urgent attention. We regret, in future we shall not be in a position to deal with M/s. Swiss Singapore for opening of any of your L/Cs which please take note as we have unnecessarily suffered a lot, sale has been the case with M/s. Comstar and now with M/s New England." 54 Amendments to the bills of lading relating to the dun peas were stamped by Beaufort at BNP's office on 12 January 1999. The amendments are of no significance to the events that have given rise to these proceedings.

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61 NEAT's position, however, was more precarious than it realised, or had any reason to realise. The commercial relationship between Royal and SSOE was far from acceptable to SSOE. On 15 January 1999, SSOE sent the following facsimile to Royal: "FURTHER TO OUR FAX OF 05.01.99 WHEREIN WE HAD SENT YOU STATEMENT OF OUR PENDING BILLS POSITION AMOUNTING USD 8,685,518.00 (COPY ENCLOSED) AND VARIOUS TELECON THE UNDERSIGNED HAD WITH YOU REGARDING PAYMENT OF OUR BILLS. WE REGRET TO INFORM THAT DESPITE YOUR REPEATED CONFIRMATION WE HAVE NOT RECEIVED THE PAYMENT AS PER YOUR PROMISES NOTED BELOW: 1. YOU PROMISED TO PAY US THE AMOUNT OF SHIPMENT PER MV. KALIMANTHAN BY 31.12.98 WHICH IS NOT PAID TILL DATE AS PER YOUR PROMISE. 2. YOU PROMISED TO PAY OUR BILL NO. SSOE/463/98-99 FOR USD 370,875.00 AND BILL NO. SSOE/505/98-99 FOR USD 217,688.00 BY 05.01.99 WHICH ARE STILL UNPAID. 3. YOU PROMISED TO PAY OUR BILL NO. SSOE/594/98-99 FOR USD 800,000.000 AND BILL NO. SSOE/587/98-99 FOR USD 395,000.00 BY 09.01.99 WHICH ARE STILL UNPAID. 4. YOU PROMISED TO PAY THE BALANCE BILLS IMMEDIATELY UPON PRESENTATION WHICH ARE NOT PAID TILL DATE. NON FULFILLING YOUR COMMITMENTS AND NON-RECEIPT OF PAYMENT AS PROMISED BY YOU IS DISTURBING US. AS INFORMED TO YOU WE WILL HAVE DIFFICULTIES IN ACCEPTING DOCUMENTS OF SHIPMENTS MADE BY AGROCARE (MYANMAR) LTD AND NEW ENGLAND AGRICULTURAL TRADERS IN CASE WE DO NOT RECEIVE THE PAYMENT OF OUTSTANDING BILLS AS PER YOUR PROMISE. PLEASE FAX US SCHEDULE FOR THE PAYMENT OF BALANCE BILLS YOUR IMMEDIATE ATTENTION ON THE SUBJECT IS REQUESTED THANKS & REGARDS [SIGNED] P K JAIN" "ROYAL TRADING CO BILL PENDING POSITION AS ON 05.01.99 B/L DATE INV NO AMOUNT (USD) DOCUMENT DATE BL-27/10/98 463 370,875 05-Nov-98 BL-30/10/98 505 217,688 12-Nov-98 BL-07/12/98 594 800,000 23-Dec-98 BL-30/11/98 587 395,000 23-Dec-98 BL-06/12/98 613 827,723 AGRO CARE BL-24.12.98 666, 586, 662, 661, 660 317,282 24-Dec-99 BL-24.12.98 668,669 & 670 2,242,638 DUN PEAS BL-04.01.99 2,607,803 CHICK PEAS

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(Ex CX 17) 62 It is not without irony that NEAT chose the same day to forward the following facsimile to SSOE: "Dear Balodi, Please ref above our banker's BNP - Sydney negotiated documents for Chick Peas today as Mr G.C. Bhura of Royal Trading Co's advise to Bankok (sic)Bank - Singapore by DHL No: 1604758470 dtd 15/01/99. We requested them to deliver documents to Bankok (sic) Bank - Singapore on Saturday, though DHL got no deliveris (sic) on Saturday as per our request DHL obliged to give delivery as a special case with reference no 000880 to be quoted by you or Bankok (sic) Bank to deliver documents urgently to Bankok (sic) Bank, Singapore. Upon request they delivery documents on Saturday, hope Bankok (sic) Bank at Singapore must be working on Saturday. There is an urgency for documents for your negotiation's (sic) as well as changing b/lading at Singapore. Also for your information Mr G.C. Bhura spoke Mr P.K.Jain to accept documents with discrepancy. As you are aware of it, we got very little time for you to renegotiate the documents at Singapore and it should reach before vessel reaches to Calcutta. Dun Peas documents are at Bankok (sic) Bank - Singapore since 14/01/99. Regards/ K.N. Murali Copy: Mr G.C. Bhura - Royal Trading Co - Calcutta Mr Krishna Goil - G.C Goil Community Corporation -Bombay" (Exh M) 63 The commercial relationship between SSOE and Royal may be contrasted with the contents of NEAT's (Murali's) facsimile to Royal of 18 January 1999 as follows: "Please ref our telecon discussions of the date. As explained to you our problem about our credit limits with BNP - Sydney, also your assurance accepting documents with discrepancies. May I kindly request you to send a message to Bankok (sic) Bank, Singapore accepting documents and authorise for payment at due dates urgently. Though it is 90 days bills but we can make use of our credit limits. I am sure vessel must have reached at Calcutta with out (sic) documents, to avoid dummerage (sic) and other problem's (sic) your kind cooperation & help very much appreciated. We once again request you to do the needful urgently for our long term business relationship with company like A.V. Birla. Our humble request to you to authorise payment to Bankok (sic) Bank - Singapore, so that we can use our credit limits, there is an urgency for us to pay to lots money to the farmer's (sic) for purchase of wheat. As a person of your stature & sitting in a respectable chair to understand our problems and do the needful urgently." Need for Letter of Indemnity

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PLEASE REVERT IMMEDIATELY TO ENABLE US TO RESPOND BOTH THE PARTIES CORRECTLY." 68 The effect of Royal's commercial unreliability was evidenced in SSOE's response to NEAT's (Murali's) facsimile to it of 25 January 1999. NEAT's facsimile to SSOE was as follows: "Please ref our telecon discussions of the date. As explained to you our problem about our credit limits with BNP - Sydney, also your assurance accepting documents with discrepancies . May I kindly request you to send a message to Bankok (sic) Bank, Singapore accepting documents and authorise for payment at due dates urgently. Though it is 90 days bills but we can make use of our credit limits. I am sure vessel must have reached at Calcutta with out (sic) documents, to avoid dummerage (sic) and other problem's (sic) your kind cooperation & help very much appreciated. We once again request you to do the needful urgently for our long term business relationship with company like A.V. Birla. Our humble request to you to authorise payment to Bankok (sic) Bank - Singapore, so that we can use our credit limits, there is an urgency for us to pay to lots money to the farmer's (sic) for purchase of wheat. As a person of your stature & sitting in a respectable chair to understand our problems and do the needful urgently." (Ex CX 19) ( Emphasis added) 69 Jain's note to Balodi on that facsimile was brief, namely "accept when 800,000 paid by Bhura". Although Jain was examined closely about these bill pending positions, I am unable to say that his evidence on the subject was clear. What, I think, was clear: SSOE was made well aware of the likely arrival of the MV Nelson in Calcutta waters. Further, it made no denial of having given an assurance to accept discrepant documents. 70 What did emerge in relation to the 'Agro Care' bill was that the cargo had been delivered to Royal without a letter of indemnity, or bank guarantee which had resulted in SSOE taking action against the owners of the vessel in Calcutta. SSOE had authorised delivery of the Agro Care cargo to Royal in terms similar to SSOE's facsimile to Pacific of 13 January 1999. Another point of similarity was that the Agro Care transaction involved switched bills. A further point of discomforting similarity to this case is that SSOE took no action against Royal.

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73 The true nature of the bills of lading which were substituted for the initial bills distinguished them from mere splits of the initial bills of lading into smaller parcels of cargo. In relation to B/L-1, six bills of lading issued, five for 1,000 MT of dun peas each, the sixth being in respect of 760.58 MT. Those bills of lading are referred to in these reasons, respectively, as switched bills: B/L-1A, 1B, 1C, 1D, 1E and 1F. The date and place of issue of the initial B/L-1 was stated to be "Fremantle, 24th December 1998." The switched B/Ls-1A to 1F designated place and date of issue as "SINGAPORE AS AT FREMANTLE BDT. 24.12.98". NEAT was no longer shown as the shipper, being replaced by SSOE and the notify party became Royal. 74 B/L-2 was replaced by a bill of lading which remained unchanged as to the cargo to which it related but otherwise contained changes to the identity of the shipper and notify party as was the case with switched B/Ls-1A to 1F. Its place and date of issue was described as "SINGAPORE AS AT ESPERANCE AUSTRALIA BDT. 27.12.98". This bill of lading is referred to as switched B/L-2. The only justification for this change was to remove NEAT from the face of the bill and to pass rights as shipper to SSOE. 75 B/L-3 was substituted for by five bills of lading, numbered 3A to 3E. Each of bills 3A to D issued in respect of 1,000 MT of dun peas, while 3E issued in respect of 169.23 MT. Each of those bills of lading are referred to respectively as switched B/Ls-3A, 3B, 3C, 3D, and 3E. They were altered in the same way as switched B/L-2. 76 In the case of initial BL-4 there was no justification for its substitution, based on the concept of splitting. Each of the substituting bills of lading was issued in respect of the identical quantity of grain represented by the bill of lading which it replaced. Those substituting bills of lading are referred to as switched B/Ls-4A, 4B, 4C and 4D respectively. The only justification for the substitution was to effect the changes to the shipper and the notify party as occurred with the other switched bills. In the case of switched B/Ls-4A to 4D the date and place of issue was identified as "SINGAPORE AS AT BRISBANE, AUSTRALIA BDT 4.1.99". 77 It appears that the BLs-5A to 5F were not altered in that fashion, prior to the cargo being sold to a third party several months later.

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84 The owner's pro forma wording for the required LOI was as follows: "STANDARD FORM LETTER OF INDEMNITY TO BE GIVEN IN RETURN FOR DELIVERING CARGO WITHOUT PRODUCTION OF THE ORIGINAL BILL OF LADING To: [Insert name of Owners] the Owners of the [insert name of ship] Dear Sirs Ship: [Insert name of ship] Voyage: [Insert load/discharge port, as stated in the Bill of Lading] Cargo: [Insert description of cargo] Bill(s) of Lading: [Insert identification number, date, place of issue] The above cargo was shipped on the above vessel by [Insert name of shipper] and consigned to [Insert name of consignee or to whose order the Bill of Lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the Bill of Lading] but the Bills of Lading have not arrived and we, [Insert name of party requesting delivery], hereby request you to give delivery of the said cargo to [insert name of party to whom delivery is to be made] without production of the original Bills(s) of Lading. In consideration of your complying with our above request, we hereby agree as follows: 1. To indemnify you, you servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expenses of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request. 2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid to provide you or them on demand with sufficient funds to defend the same. 3. If, in connection with the delivery of the cargo as aforesaid, the ship or any other ship or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of the said ship or property and to indemnify you in respect of any liability, loss, damage or expenses caused by such arrest or detention or threatened arrest or detention whether or not such arrest or detention or threatened arrest or detention may be justified. 4. As soon as all original Bills of Lading for the above cargo shall have come into our possession to deliver the same to you, whereupon our liability hereunder shall cease. 5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is a party to or liable under this indemnity. 6. The liability of each and every person under this indemnity shall in no circumstances exceed 200% of the CIF value of the above cargo. 7. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of the Justice of England. Yours faithfully

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Banker's signature:…………………………." 88 On 22 January 1999 Pacific sent a facsimile to Anderson Hughes in the following form: "NELSON - LOI FOR NON PRESENTATION OF ORIG BL AT DISCHARGE PLS INFORM OWNERS, CARGO RECEIVERS WILL SURRENDER LOI (AS PER OWS PRO FORMA) WITH BANK COUNTERSIGNATURE TO AGENTS MULTIMODE. COPY OF LOI WILL BE MADE AVAILABLE TO OWS AND CHTRS OFFICE. PLS ADVISE IF [THIS] ARRANGEMENT MEETS WITH OWS SATISFACTION. UNDERSTAND ALL CARGOES LOADED WILL BE BONDED INTO CUSTOM HOUSES + ORIG BL WILL NEED TO BE PRESENTED BEFORE CARGO IS RELEASED. LOI IS TO FACILITATE THE DISCHARGE INTO THE BONDED CUSTOM HOUSE." 89 This facsimile is referred to in BNP's submissions as being dated 21 January 1999. However it is clear from the affidavit of Chua Say Ong (Chua) sworn 14 April 1999 (Exhibit B) that it was sent on 22 January 1999. Chua was Pacific's Australian representative. 90 It appeared from Pacific's facsimile that Pacific was anticipating the provision of a Royal LOI to facilitate discharge without presentation of the bills of lading, as distinct from providing its own LOI as proposed by Albamar in its facsimile of 19 January 1999. 91 In any event, Bolton's position was made clear by the facsimile from Anderson Hughes to Pacific of 23 January 1999 as follows: "TKS CHS FAX OF JAN 21ST ADIVSING (sic) US THAT RECEIVERS ARRANGING LOI WITH BANK GUARANTEE WHICH WILL BE GIVEN TO AGENTS AT CALCUTTA. PER TCP CLAUSE 63 THE LOI TO THE OWNER SHOULD BE ISSUED/ SIGNED BY T/CHS, THEREFORE OWNERS CAN NOT ACCEPT RECEIVERS LOI. IN VIEW OF ABOVE PLS PREPARE THE LOI AS PER SPECIMEN FAXED TO YOU PREVIOUSLY AND FAX SAME DIRECTLY TO THIS OFFICE WHICH WILL BE OPEN TOMORROW FOR THIS PURPOSE (FAX NO. 30-1-4293113) SO WE MAY INSTRUCT VSL WHICH IS ARRIVING TOMORROW NIGHT TO ALLOW COMMENCEMENT OF DISCHARGE." 92 Pacific's response was by facsimile to BBT of 23 January 1999 in the following terms: "RE: NELSON - LOI LOI WILL BE FAXED TO YOU OUR OPENING 24/1/99. PLEASE DO NOT DELAY DISCHARGE. PLEASE ALLOW DISCHARGE TO COMMENCE. REGARDS/ CHUA PLS NOTE: LOI FROM RCVRS WILL BE PRESENTED TO MASTER/ AGENTS." (emphasis added) 93 The emphasised passages reflect something of the commercial pressure being experienced by Pacific with its charterered vessel a day's sailing from Sagor Roads and no sign of bills of lading at Calcutta. 94 BBT I understand to be an agent of Bolton. 95 The requirement by Bolton of Pacific was passed on by Chua in his email to Anderson Hughes of 23 January in the following terms: "NELSON - LOI FOR NON PRESENTATION OF ORIG BL _ _ _ _

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96 As undertaken in its facsimile of 23 January 1999, on the following day, Pacific forwarded its LOI to Bolton in the following form: "The above cargo was shipped on the above vessel by New England Agricultural Traders Pty Ltd, NSW and consigned to order for delivery at the port of Calcutta, India but the Bills of Lading have not arrived and we, Pacific Carriers Limited, hereby request you to give delivery of the said cargo to Swiss Singapore Overseas Enterprises Pte Ltd, Singapore without production of the original Bill of Lading. In consideration of your complying with our above request, we hereby agree as follows: 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expenses of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request. 2. In the event of any proceeding being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid to provide you or them on demand with sufficient funds to defend the same. 3. If, in connection with delivery of the cargo as aforesaid, the ship or any other ship ..[or] property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property and to indemnity (sic) you in respect of any liability, loss, damage or expenses caused by such arrest or detention or threatened arrest or detention whether or not such arrest or detentions or threatened arrest or detention may be justified. 4. As soon as all original Bills of Lading for the above cargo shall have come into our possession to deliver the same to you, whereupon our liability hereunder shall cease. 5. The liability of each and every person under this Indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party …[to] liable under this indemnity. 6. The liability of each and every person under this indemnity shall in no circumstances exceed 200% of the CIF value of the above cargo. 7. This indemnity shall be governed by and …[construed] in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England."

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102 At this stage, the problems facing the Master and Pacific at Calcutta and the behaviour of Royal are captured in the following events as recorded in facsimiles passing between those caught up in the saga. 103 Notice of a barge shortage for lighterage was given by Pacific to the Master by facsimile of 25 January 1999 in terms which so far as are relevant were as follows: "RE - LETTER OF INDEMNITY FOR NON-PRESENTATION OF ORIG B/L 26TH IS A PUBLC HOLIDAY INDIA'S REPUBIC (sic) DAY. THERE IS A SHORTAGE OF BARGES AND BELIEVE THAT THERE WILL BE A FEW DAYS OF DELAY". 104 Royal's contribution was caught in Multimode's "TOP URGENT" and facsimile of 25 January 1999 to Pacific as follows: "REGRET TO ADVISE THAT POSITION HS BN REVERSED RIGHT NOW RECIVER ROYAL TRADING CO NOW DEMAND FULL COST OF LIGHTERAGE MUST BE SELLER'S ACCOUNT AS PER GOVERNING C/P DESPITE EARLIER CONCURRENCE TO OUR UNDERSTANDING WITH HIM TO REIMBURSE DIFFERENCE OF COST @ US $1.50/MT VIDE OUR FAX DTD 05/01/99 BUT TODAY RECEIVER JUST BACKED OUT WHICH WE RECKON DUE TO FALLING MARKET PRICE AND RECEIVER'S HUGE FINANCIAL COMMITMENT FOR 45000 MTON PEAS &30,000 MTON WHEAT, WITHIN JAN-FEB. FURTHERMORE PRIVATE BARGES ARE ALL ENGAGE AND HV TO DEPEND ONLY ON GOVT BARGES ALL THESE REASON PROMPTED RECEIVER TO BACK OUT FM EARLIER AGREEMENT WITH US MOREOVER RCVRS ALSO UNAWARE OF C/P TERMS IN DETAILS PRESUMED NORMAL DISCH CONDITION (FYI ONE VSL OF JKI 14000 MT PEAS UNDER OUR AGENCY & ANOTHER VSL OF 30,000 MT WHEAT DISCHD OR DISCHG AT SAUGOR AT RECEIVERS COST). NEW ENGLAND'S LOCAL BROKER G.C GOIL ALSO SUPPORTING RCVR NOT TO ACCEPT LIGHTED CARGO AT SAUGOR TH4 AT THIS STAGE WE ONLY AWAIT TO YR INSTRUCTION. RECEIVER MTIME RECD COPIES OF Bs/L FR 10470 MTON DUN PEAS AND G.C.GOIL/ RCVR BOTH CLAIM BALANCE 9274 MT CHICK PEAS BEING SOLD TO OTHER PORT MUST BE RETAINED ON BOARD ACCDGLY RCVR PREPARING L.O.I FR 10470 MTON ONLY FR SUBMISSION TO US 27/01 BUT MASTER INFMD THRU OWNER THAT CHICK PEAS FM H/1 & 5 ESSENTIALLY TO BE LIGHTENED AT SAUGOR (OWNERS REPLY FAXED H/WITH). APPEARS MATTER GETTING MORE COMPLICATED THAN EXPECTED SUGGEST YR TAKING UP WITH SELLER FR SOME SORT OF SETTLEMENT HWVR NEVENT OF LIGHTENING FULL COST GOES TO SELLER/CARRIER ACCOUNT WE NEGOTIATED MINIMUM COST AS FOLLOWS: 1. GOVT. BARGE HIRE FR RECEIVING EX HOOKS & DELIVERY ONTO RCVR'S TRUCKS AT CALCUTTA INCL LABOUR ON BARGES US$. 8.75/ MTON. 2. CUSTOM FEE AND ADDLS US$.0.25/ MTON. TOTAL US$.9.00/ MTON. LESS FUND SANCTIONED US$.1.50/ MTON . I.E. ADDL FUND INVOLVED US$60,000 FOR 8000 MTON. RECEIVER MUST TAKE DELIVERY WITHIN 3 DAYS AFTER PLACEMENT OF BARGES AT CALCUTTA WAREHOUSE FAILING OVERTIME BARGE DETENTION CHGS AT THE RATE OF BARGE OWNER TO BE PAID BY RCVR. SINCE C/P DISCH TERM FREE-OUT WE SHALL MAKE RCVR AGREED TO ABSORB STEVEDORAGE ABT US$.1.75/MT OF LIGHTED CARGO. AWAIT YR URGENT ADVICE. TKS & RGDS. [signed] B. RAY."

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107 As to that notice, I think considerable doubt attaches to the proposition that the vessel was ready for discharge, given its inability to enter Diamond Harbour until lightening to barges had taken place to reduce the draft to seven metres. 108 Pacific's position was reflected in its facsimile to Multimode of 26 January: "RE: NELSON Confirming our earlier telcon. Certainly it is very disappointing that Receivers have gone back on their agreement. This leaves us with no choice but to engage our own lightening operations. 1. Firstly, you have our authority to engage as many barges as possible to ensure the fastest discharge possible at Saugor. 2. Please negotiate the best lightening cost possible ie. max. $US 9.00 pmt. Also check closely with master + also to obtain dispensation for more draft to proceed to Diamond Harbour earliest (i.e least lightening fee) 3. Please ensure all barges proceed to Diamond Harbour to discharge shud receivers choose to divert bars elsewhere, then, we must insist that they pay for the lightening. 4. Receivers are oblige to take delivery of all cargo be it dun or chick peas. Please keep us posted on this issue shud receivers decide to be difficult. To sum up, make pleas expedite discharge at anchorage to enable vsl to proceed to Diamond Harbour shud Receivers decides to take delivery at the anchorage, they will have to pay for the lightening (t.. (indecipherable)…PCL) Biplap we are relying on you to protect our interests here. Given the let down by the receivers, we look forward to some good news. Best regards, Chua [signed]" 109 The position did not improve in relation to the availability of barges, as appears from Pacific's facsimile to Multimode of 28 January. The seriousness of the situation is reflected in the following terms: "RE: NELSON So far, we do not seem to have any good news from you. It is rather distressing to hear that there is no barge available for lightening when this aspect was discussed with you a month or two ago, that all arrangements are in place. We cannot allow vsl to sit there indefinately. Suggest you look at all options including chartering a small vsl for the lightening operations. Surely, the port must allow the barges to be shared equally among the ship owners. Biblap, you have to assist us somehow. What you have informed us is no comfort to us. What about hiring the small barges or even boats etc ? I will call you your opening. By the way, how was the meeting with the receivers?? You must keep us informed closely as the receiver's intention. Are they still refusing to take delivery of the chick peas? Have receivers presented the orig B/L?. I am thinking seriously of chartering the "Kuan Yin" for lightening if you cannot give us some serious options. Regds, [signed Chua]"

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114 As at 25 January, as earlier noted, SSOE was withholding acceptance of discrepant documents until it had sorted out its differences with Royal over outstanding bills. On that date, Sniekers had a telephone conversation with Era Dhiri (Dhiri), the manager of BNP's Documentary Credits Department who had overseen the documentation for the opening of the letters of credit by the Bangkok Bank. 115 NEAT had in place an automatic recording system of telephone conversations involving use of designated connections in its Armidale office. The tapes of those conversations went into evidence together with a transcript of portions of those tapes considered o be relevant to these proceedings. Counsel for BNP wavered in his position as to their admissibility. However, in the end they went in by consent without admission as to their completeness nor as to their accuracy. The telephone conversation between Sniekers and Dhiri was recorded and the transcript of it was as follows: "E: So they say they have accepted it today have they? P: Well they,… I've heard that… Peter How.. the broker… (E: all right).. GC Goil told Peter Howard just then (E: Okay).. and we've been pushing pushing all day because we also have to get an LOI in place by the looks of it…'cause the.. the vessel ..(inaudible).. our account. … P: Okay… that would give us at least 50% comfort… E: All right… P: And um…we also tried to get the receivers to put an LOI in place with the shipowners. E: Mm... P: ... to start discharging the documents …um the vessel without the Bills of Lading… E: Mm... P: The shipowners won't accept the receiver's LOI, so they are demanding one from us… E: Yeh oh that's good. P: So I've asked for one from Royal trading(sic) to us, and then I guess we need to open a back to back LOI (E: yeh) with the shipowner… E: Mm... P: …so, um I'll keep you informed on what happens but… I guess we won't be able to do anything probably until Wednesday morning… E: Yes.. I mean, the thing is that um, once they accept the documents they have got the original Bill of Lading, and if they want to get it cut, it means they can give it to the agent there… they can probably do a lot more than they can do without the B/L…do you know what I mean ? P: Yep E: So let me ring them up and I'll call you back…." (Ex L2) (Emphasis added) 116 The reference in that conversation to SSOE's acceptance of documents related to the third letter of credit in respect of the dun peas only. The passage emphasised has a bearing on Dhiri's understanding that the initial bills would be switched: a matter in issue. 117 Pacific and NEAT place significance on that communication in terms of Dhiri's knowledge of events relating to the switching of the initial bills of lading. 118 On 27 January, with no formal confirmation of acceptance of discrepant documents by SSOE, the following telephone conversation took place between Sniekers and Balodi as follows:

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"1. Transcript of Telephone Conversation between P Sniekers ("PS") and Mr Balodi ("B") of Swiss Singapore 27 January 1999 at 17.53pm Telephone Operator ("TO") TO: Swiss Singapore PS: Yes, Good Afternoon, may I speak to Mr Balodi please? TO: A moment please… B: Hello PS: Hello Mr Balodi B: Yeah PS: My names' (sic) Peter Sniekers from New England Agricultural Traders, in Australia. How are you? B: Yeah, Fine. Thank you. You are asking about your dun peas acceptance? Am I right? PS: Yeah. That's right. B: Your dun peas acceptance is …is… getting ah, this thing …today. PS: How soon? Because what… B: Today, today, ah…if….you…ah…I think if you wait for another 1 or 2 hours, you'll need not to call. It will be in your bank. PS: OK B: OK. I'm arranging… I'm ahead…already this thing…I was just on line with my Bank only, about this only, OK PS: What, what our problem is, is that the vessel has arrived at Calcutta… B: Never mind. I'm just faxing ... I have already just faxed it to my bank and original, acceptance, my, my another colleague is on the way to bank. PS: Right B: So my bank will get this result acceptance within the next 20 minutes or so. PS: And you… you have got draft bill to recut have you, you've you cut draft bills of lading because you wanted to reissue the bills. B: I'm sorry PS: You wanted to reissue the Bills of Lading in another name ah… B: Yes, yes, yes PS: You've got that all ready to go as well? B: No. This one, this one I haven't I have only draft BL's but the result… when I get the original bills from my bank… PS: Yeah B: Then only I'll be able to reissue the …. PS: Oh yah, yah… And what about the chick peas aswell … B: Chick peas ah…chick peas… ah… I have to speak to my boss . I'm not aware of the situation. PS: Right, we need to, we need to… ah ... I mean ah… I know there is talk about redirecting the chick peas elsewhere. We have to get paid for the gods (sic) first before we can negotiate with the shipping company. OK? We need that done urgently because the vessel is going to start racking up demurrage against the ah…the receivers. B: No… this on…ah the dunpeas acceptance you (sic) bank will get today. PS: Right, OK. B: OK. Thankyou PS: Can you fax us anything, anything that you've got that you've actually that you get back from your bank because our bank is quite concerned…. B: After, after, after, half an hour, your bank is constantly chasing my bank if after half an hour you call again… my bank will confirm they have this thing…. PS: OK B: Thankyou. PS: Righteo B: Bye bye PS. Bye." (Ex CX4) (emphasis added) 119 The conversation is significant as further evidence of SSOE's knowledge of the Nelson's arrival 'at Calcutta'; of the commercial pressure on NEAT of SSOE's withholding of acceptance of the chick peas documents and as evidence of SSOE's lack of frankness in dealing with NEAT. 120 The Royal LOI appears to have been forwarded by Goil to NEAT by facsimile of 28 January 1999. 121 Royal's LOI, dated 27 January 1999, related to switched BL-1A to 1F, 2 and 3A to 3E and was in the form as presented to Goil by NEAT. However, the provision for execution by the bank was left blank and the following endorsement appeared: "Without any liability on the part of the Bank or its signing officer we confirm that the signature of Gopal Chand Bhura agrees with (indecipherable) FOR BANK OF AMERICA NT & SA". 122 Below that appeared a signature of an "Authorised Signatory". It was this LOI that was discussed in a telephone conversation between Howard and Dhiri of 29 January 1999. 123 On 28 January 1999 Pacific communicated with Multimode and the Master by email which included the following: "TKS YR VERY PROMPT WORKING WITN OWNRS. AND CFMTN LOI OKAY. YR TEXT IS CORRECT. PLS ENSURE AGENT GIVE YOU L.O.I FROM RECEIVERS PRIOR DISCH] (X) 26TH IS A PUBLIC HOLIDAY - INDIA'S REPUBLIC DAY. THERE IS A SHORTAGE OF BARGES AND BELIEVE THAT THERE WILL BE A FEW DAYS OF DELAY…." (Ex B) (emphasis added) 124 On the face of that instruction to the Master, discharge to Royal was on Bolton/Pacific's instruction upon delivery of Royal's LOI. There is a note on that email by the chartering manager of Pacific in the following terms: "1. - Re (X) above. TCH denies that in the event receivers are giving L.O.I duly endorsed by the Bank, it should be from a reputed bank. Until this is done master should not commence disch. 2. - As there is no provision for L.O.I in C/P, You may like to inform charterers receivers reg 1. above." (Ex B) 125 On the afternoon of 28 January 1999 NEAT sent the following by facsimile to Dhiri: "Dear Era As discussed this morning please find attached LOI to cover discharge of field peas at Calcutta. Could you please peruse and advise. We need to get LOI in place at Calcutta to allow vessel to commence lightening pending documents acceptance for the chickpeas . I will be travelling but Murali and Peter Howard have their collective fingers on the pulse. If possible would like to get LOI fax signed and returned to shipowners agents by this afternoon/tomorrow morning . Thanks and regards Peter Sniekers AS SOON AS YOU GET FORMAL O.K ON FIELD PEA DOCS, COULD WE PLEASE PUT THIS LOI IN PLACE . MANY THANKS." (emphasis added)

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The above goods were shipped on the above vessel by Mssrs NEW ENGLAND AGRICULTURAL TRADERS PTY LTD (and consigned to order) for delivery at the port of CALCUTTA, INDIA, but the Bills of Lading have not yet arrived and we, NEW ENGLAND AGRICULTURAL TRADERS PTY LTD hereby request you to give delivery of the said cargo to: RECEIVERS AS DIRECTED BY M/S ROYAL TRADING COMPANY NO. 2, CLIVE GHAT STREET 5TH FLOOR, ROOM NO.8 CALCUTTA 700 001 (W.B) without production of the original Bills of Lading. In consideration of your complying with our above request we hereby agree as follows: 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability loss or damage of whatsoever nature which you may sustain by reason of delivering the goods to RECEIVERS AS DIRECTED BY M/S ROYAL TRADING COMPANY NO.2, CLIVE GHAT STREET 5TH FLOOR, ROOM NO.8 CALCUTTA 700 001 (W.B) in accordance with our request. 2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the goods as aforesaid to provide you or them from time to time with sufficient funds to defend the same. 3. If, in connection with the delivery of the cargo as aforesaid, the ship or any other vessel or property belonging to/chartered by you should be arrested or detained or if the arrest or detention thereof should be threatened, to provide on demand such bail or other security as may be required to prevent such arrest of detention or to secure the release of such vessel or property and to indemnify you in respect of any liability, loss, damage or expenses caused by such arrest or detention of threatened arrest or detention whether or not such arrest or detention or threatened arrest or detention may be justified. 4. As soon as all original bills of lading for the above goods shall have come into our possession, to produce and deliver the same to you whereupon our liability hereunder shall cease. 5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity. 6. The liability of each and every person under this indemnity shall in no circumstances exceed 200% of the CIF value of the above cargo. 7. This indemnity shall be construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. Yours Faithfully, [signed Peter Sniekers and P M Howard] For and on behalf of NEW ENGLAND AGRICULTURAL TRADERS PTY LTD PO BOX 770 ARMIDALE NSW 2350 TEL: 61 2 67 725588 FAX: 61 2 67 728004 Name: Peter P Sniekers Peter M Howard Designation(s): Director Director For an on behalf of… BANQUE NATIONALE DE PARIS 12 CASTLEREAGH ST SYDNEY NSW 2000 AUSTRALIA (insert name of bank)

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138 A number of recorded telephone conversations between Howard and Dhiri took place on 29 January 1999. 139 At 9.19am, Howard informed Dhiri of the receipt of the Royal Trading LOI and requested her to inform him when the discrepant documents had been accepted for the dun peas. At 9.38am he made a further inquiry from BNP concerning those documents, to be told that no confirmation had been received at that time. 140 At 11.13am there was another telephone conversation between Howard and Dhiri in which he was informed that written confirmation had been received of acceptance of dun pea documentation. The conversation is set out below in some detail as I think it evidenced something of the nature of the relationship between NEAT and BNP and of the latter's involvement in the day to day aspects of the subject transactions. "[HOWARD] P: All the …. [DHIRI] E: The Dun peas…The Bangkok Bank Singapore one… P: So you've got a written confirmation… E: Yes I do… P: We've also got the LOI has come from Royal Trading which I can fax to you so I assume we can send off our LOI … E: Yeh,… I think Peter Sniekers did that last night for me, um, (P: Yeah) for the dun peas LOI, um, they've accepted the documents…. they want the goods its theirs isn't it …. P: Mmm now what do you think… even though they haven't accepted the Chickpea documents or we haven't got written acceptance yet are we smart…. E: I think hold onto them… but again…I only look at the statistical transaction I don't look at the long term… .um implications it might have… P: I would have thought it smarter not to allow any discharge 'til they bloody accept the other documents… E: Why aren't they accepting those ones?… P: Well they haven't said they haven't accepted them, they're just delaying it... E: Why? P: Why, we don't know…. E: I mean…Okay.. Let me put it this way Peter … these Bills are not sight Bills .. okay…which means that they don't have to pay straightaway.. P: That's right… E: These Bills are 90 days from Bill of Lading.. not even from the acceptance, do you understand, (P:Yep) if it was from acceptance so the date works from the day you take up the documents (P:Yep)…so..it sort of puzzles me if that's the payment terms what's the delay? And I think that's what someone should convey to the company… P: Yeah we should say that .. "you can discharge…. E: …you know "it's just causing a bit of a heartache for us you having not accepted…your bank has found some discrepancies…it might be a routine thing"…and our bank is saying that there are discrepancies in the document… P: They've already told us they're going to accept it… E: Yeah, but you know, I say… what's the delay? … it's not going to affect that they have to pay out to us straightaway… P: But from your experience if we up-anchored now having accepted.. got a written acceptance of the dun pea documents… E: You can't be too direct about it Peter…because you've got another two million sitting out there…(P:Mmm).. you can't be too direct.. you can do that… but you can't tell him "You give me these"..he'll say "okay I'm not going to give you"… I don't know... P: Why should we start…allow discharge of the dun peas without them accepting the chick peas … E: Yeah ... you start... I mean... you could.. I mean what you could do… you could play the same game .. okay...play the same game..say "our bankers are saying"… they're going on the same vessel aren't they? They're all on the same vessel? P: Yeah… E: "…our bankers are saying … because you have to get this thing signed by the bankers … our bankers are saying that how come the other ones are not accepted"..you…allowing the discharge… you blame it on me… P: Mmm mmm… E: ..but, but you don't say you're not gonna do it until those are accepted, but you say you know like, um, "Why aren't, you know, like those are not accepted and we ask the bank.. P: Could you just hold on one second…(PH aside with an interruption from K Murali) (Era Dhiri requests file from Vlas Janeski) P: Sorry about that …. E: Peter I'm just looking at the file just to make sure that the payment term is what I can give, you know what I mean… P: Mmmmm, Well you have a look at it and maybe come back…if you can see… E: I have the file here it will only take me a sec… P: Mmm mm E: Um, it's going to be, yes, on maturity… yes it's maturity 90 days… P: So when you pay us you discount if from the period from when the Bill of Lading…. E: Yes that's right, that's the terms… P: So you only work out the interest differential between now and when the Bill of Lading is in the 90 days… E: Yah.. P: So we actually get a slightly bit more which pays for the.. some of the interest we've had to pay on our loan… E: Yes…I mean obviously you have to pay on the loan… P: Yeah but we discount it a bit less because of the time's been counting since the Bills of Lading time… E: Yeah that's right, yes… P: Okay. Well if there's anything you can think of to…squeeze these guys… E: You could say to them that… obviously Peter wants me to sign this thing…. right, he said.. on behalf of BNP (inaudible ) you just say you sent it to your bankers they are saying they are all on the same boat …. P: Yeah..our bankers want acceptance of the other documents … E: Yeah, I mean they are saying… why do they want to discharge one and not, you know...um… P: …The other… E: So, they… will probably be accepting it in a couple of days, say they're term Bills …. P: We can put them on notice… we should have given them notice that will hold them responsible for all demurrage (E:Mmmm) accruing from their late acceptance of the documents because … why should we allow them to unload the duns… E: Yeah they're all on the same vessel… P: They're on the same vessel they should accept all documents at once… E: Yes… P: I'll try and work something out… E: Yeah, you can just blame it on me…just say the bank… says its on the same vessel and why… um you know these aren't accepted…. P: Yeah… E: … and it doesn't affect ... with that … we could understand if it were a site ... and the client is saying OK I want to get this discharge and then get that leeway of payment of a day or two, you know what I mean... the dun peas they have been accepted they start getting discharged, by the time they get discharged you've got another... it'll take a day or two days to discharge, then we accept these ones and save interest… but tell them it's only acceptance Bills.. you know it's a term Bill.. P: Yep… E: You're not paying out… P: No… E: And irrespective whether you accept today or tomorrow the date of the actual payment is still going to be the same date… P: Bill of Lading, yeah.. E: Just say that is what your bankers explained, (P: Uh uh) um, could you get Bangkok (Bank) to send a message just…. P: About acceptance of the documents.. E: Yep, don't blame me too much or I'll have a bad reputation … P: Okay.. all set… also we are being told that the um, the rapeseed is to be paid I'm just reading a fax now.. so I'm just working it out now… E: Rapeseed… the Bangladeshi stuff? P: Yep… E: Okay…good news.. P: So we're working that one…Okay E: See you… P: Bye…" (Exh CX4)(emphasis added) 141 I think the conversation reflected the lack of understanding of both Howard and Dhiri of the effect of acceptance of the dun pea documentation by SSOE. 142 In the emphasised passages, Howard and Dhiri equated acceptance of the discrepant documents in relation to both dun peas and chick peas as justification for giving a letter of indemnity, permitting discharge of the cargo to Royal without presentation of bills of lading. While SSOE's acceptance may have ensured payment to NEAT, it did not necessarily protect NEAT from liability in providing such an LOI: particularly as long as SSOE remained in possession of the subject bills of lading. 143 The conversation is particularly significant, in so far as, I think, it revealed the extent to which Dhiri understood that execution of the LOI by "the bankers" was something important and necessary for its acceptance by the carrier. That may be compared with the terms of Dhiri's notes on the NEAT facsimiles of 28 January 1999 and 18 February, referred to earlier in these reasons. 144 There was a further significant telephone conversation between Howard and Dhiri at 12.36pm on 29 January 1999 which included the following exchanges: " Mr Howard : I finally got through to our Indian broker early in the morning. He says that he's already got it in writing - we've got it in writing that the buyer at Royal will accept discrepancies for the chick peas. Obviously he still hasn't instructed his bank to instruct you because he's playing a game. He's got 60,000 tonnes of commodity in total coming in wheat and other things, all at the same time and basically there isn't enough - because our vessel's 24,000 tonnes, there isn't enough barges to start lightering, so he's trying to put the demurrage back on the owners because he doesn't think the owners will be able to get lighterage so it won't be his account, it will be the owners account so the bottom line is that should send the LOI immediately so that we can't be held responsible for demurrage . We don't have documents to allow discharge, doesn't allow the owners to go out and try and get the barges, so ultimately we could be held responsible for the demurrage while it's sitting there. So our conclusion is, yes, we should send that LOI regardless of the fact that --- Mrs Dhiri: Do I have to sign on that LOI ? Mr Howard : I don't know. Mrs Dhiri : I don't think I have to sign on it . Mr Howard: No, well he sent it to you, I thought for some reason that BNP signed it . Mrs Dhiri : No, I think …. like that. Mr Howard : He does, he's Dutch, he's very particular. Mrs Dhiri : I think they'll send it without us signing it because if I sign it I would need to justify . Mr Howard: Just send it but as long as it comes from you to them, I assume that's fine . Mrs Dhiri : So it's from me to them . Mr Howard : I assume that when Peter sends it to you that he intended it for you to send it to Bangkok Bank . Mrs Dhiri : No, no, no, it's not for me to send it to Bangkok Bank . Mr Howard : For us to send it? Mrs Dhiri : It's for you guys - you don't even send it to Bangkok Bank, you send it to whoever is asking you . Mr Howard : Okay, so we should send it to the owners . Mrs Dhiri : Yes, you sent it to the owners, signed by them . Mr Howard : Okay, we have an LOI from his as well as to us. Mrs Dhiri : It is not signed by the bank then is it? Mr Howard : Yes, it is. The Bank of NT and SA as well signed by the Bank. Mrs Dhiri: Bangkok Bank? Mr Howard : Bank of - I can't even read it. I can fax it to you. Mrs Dhiri : Okay, fax it to me. Mr Howard : What fax number have you got? Mrs Dhiri: It's 9223 7361. Mr Howard: Do you want me to put any header or just fax it. Mrs Dhiri : No, just fax it. Mr Howard : If you go to that machine I'll do it immediately. Mrs Dhiri : I'll have a look and if I have to sign it I'll talk to … If we have to sign it, we have to sign it. We've got payment in the ….. it means we've got acceptance under those - so - and I'll explain the situation which you've just told me. If I envisage any problem I'll call you. Mr Howard : I'll send it immediately." (Ex L1) (emphasis added) 145 Much the same observations as I have made in relation to the telephone conversation at 11.13am apply to this conversation. It is not the language of a banker contemplating the execution of an LOI merely to verify signatures. 146 These telephone conversations are examined later in these reasons in evaluating the evidence of Dhiri that the NEAT LOIs were executed by BNP merely as verification of NEAT's signatories to the NEAT LOIs: that she was not informed of any plan to switch the initial bills and that NEAT had passed off SSOE as the same entity as Royal. 147 It was the evidence of Howard that he forwarded the Royal LOI to Dhiri as arranged during the course of the telephone conversation last quoted. Dhiri disputed that. However, I think NEAT's records corroborate the fact that the Royal LOI was faxed to BNP immediately after that telephone conversation. 148 I do not understand there to be any dispute that Dhiri was not prepared to execute the NEAT LOI until informed of formal acceptance of the discrepant documents under the third letter of credit relating to the dun peas. 149 It was in those circumstances that BNP executed the first NEAT LOI, it having already been executed on behalf of NEAT. The following is a copy of the last page of the LOI: "7. This indemnity shall be construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. Your (sic) Faithfully, [Signed] P Sniekers and P M Howard For an on behalf of NEW ENGLAND AGRICULTURAL TRADERS PTY LTD PO BOX 770 ARMIDALE NSW 2350 TEL: 61 2 67 725588 FAX: 61 2 67 728004 Name (s): Peter P Sniekers Peter M Howard Designation(s): Director Director Sig verified X For and on Behalf of…. BANQUE NATIONALE DE PARIS 12 CASTLEREAGH ST SYDNEY NSW 2000 AUSTRALIA (insert name of bank) Banker's signature: [signed] Era Dhiri [stamp of BNP] Confirming Signatures Verified Without any Liability Put this in future " (Ex T) (emphasis added) 150 The emphasised portion is in handwriting and was added by Dhiri after the events giving rise to claims against BNP. As earlier noted, on the back of the last page of the LOI the following words have been written by Dhiri: "Okay by I.K to co sign as verify sigs." 151 BNP forwarded the executed LOI to NEAT shortly after 2.30pm. From there it went by facsimile to Anderson Hughes who passed it on, again by facsimile, to Pacific at approximately 2.40pm on 29 January 1999. 152 The facsimile of 29 January 1999, under which Anderson Hughes forwarded the executed copy of the first NEAT LOI to Pacific was as follows : " RE NELSON/ NEAT CP 08/12/98 - LOI PLEASE FIND FOLLOWING COPY OF LOI ISSUED BY CHRS AND COUNTER-SIGNED BY THEIR BANK COVERING THE SHIPMENT OF DUN PEAS ON THIS VESSEL. CHRS ARE WAITING ON THE CHICK PEA LOI AND WILL REVERT SOONEST."

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160 As at 3 February 1999, notwithstanding provision of NEAT's LOI, Pacific was no closer to commencement of lighterage. This may be seen from Pacific's facsimile to Anderson Hughes, as follows: "VSL HAVE SINCE ARRIVED CALCUTTA 24 JAN 99, SO FAR DISCHARGING HV NOT COMMENCED, AGENTS ADVISED PROSPECTS ARE UNCERTAIN WHICH IS GIVING PCL ALOT OF CONCERNS. FIRSTLY THERE WAS THE PROBLEM ON (SIC) NON PRESENTATION OF ORIG. CHTRS EVENTUALLY PROVIDED LOI FOR PEAS ON THE 29 JAN 99. LOI COVERING CHICKPEAS IS STILL OUTSTANDING. VSL NEED TO LIGHTEN CARGO FROM THE FOLWG HATCHES: NO1 HOLD 1424 MTS CHICK 2 1814 MTS DUN 4 2104 MTS DUN 5 2486 MTS CHICK FURTHER, SITUATION IS EXACERBATED BY THE LACK OR NON-AVAILABILITY OF LIGHTENING BARGES. RECEIVERS' BARGES ARE ALL TIED WITH A WHEAT VSL AND THE BALANCE ARE WITH JKI'S VSL MV "KUAN YIN" OBVIOUSLY, NOTHING ABOVE IS ASSISTING PCL TO GETTING VSL DISCHARGED. WE WUD APPRECIATE IF CHTRS CUD INTERVENE, PERHAPS PERSUADING RECVERS TO DIVERT VSL ELSEWHERE TO DISCHARGE, WE CUD DISCH CHICK AT ANOTHER PORT AND RETURN TO DISCH DUN AT CALCUTTA?? ANY SUGGESTIONS ARE MOST WELCOME. PRESENTLY, THERE ARE NO PLANS FOR VSL'S DISCHARGE. RECVRS SEEMS UNINTERESTED IN THE MATTER BUT YOU CAN UNDERSTAND, WE CANT (sic) ALLOW VSL TO SIT THERE FOREVER. JOHN, WE NEED CHTRS HELP. TKS/RGDS/" 161 At the same time Pacific communicated with its agent Multimode in the following terms: "I REFER TO OUR TELCON YSDSY WHICH YOU PROMISED TO KEEP US POSTED ON THE COMMENCEMENT OF LIGHTENING ON THE MV 'NELSON'. HOWEVER, WE DO NOT SEEM TO RECEIVE ANY CORRS FROM YOURSELVES. PLS UPDATE SITUATION SOONEST. WE NEED INFORMATION/CONFIRMATION FROM YOU EARLIEST: 1. WHAT IS THE NAME OF THE WHEAT VSL CURRENTLY LIGHTENING AT SAUGOR ? 2. HOW MUCH WHEAT WILL THE WHEAT VSL BE LIGHTENING 3. HAVE YOU SPOKEN TO THE GOVT BARGE OPERATORS THAT WE NEED BARGES FOR THE NESLON (sic)? 4. HAVE THE 'KUAN YIN' SAILED?? 5. CAN WE OBTAIN BARGES FROM THE 'KUAN YIN?' 6. CAN YOU SECURE/HIRE BARGES FOR 'NELSON'? 7. HAVE YOU SPOKEN TO MESSRS BHURA RE BARGES WHCIH (SIC) HE PROMISED TO MAKE AVAILABLE BY THE 31ST JAN??? 8. WHAT IS HAPPENING TO THE JKI'S BARGES FILLED WITH PEAS? PLS LET US HV THE INFOR SOONEST. MEANTIME, KEEP PRESSURE ON THE RECVRS FOR BARGES. RGDS/CHUA"

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Authority of Master to deliver to Royal 163 I think the evidence established that Pacific was not prepared to move the cargo until it had NEAT's LOI in hand. However, there are two records in evidence which do little to clarify the position. 164 The first is Multimode's facsimile to Pacific of 5 February 1999 as follows: "MANY THANKS FOR APPROVAL TO ENGAGE BARGES & COMMENCE LIGHTENING ALL BY OURSELF. WE HAVE ACCGDLY ENGAGED PRIVATE BARGES FOR 5000 MT CAPACITY FOR COMMENCEMENT OF DISCHARGE FM 08/02. MADE AN ADVANCE OF IRS. 5,00,000/- TO S.K. BOATING FOR IMMDT DESPATCH OF BARGES. HOPEFULLY CAN FINALISE WITH CTWTC FOR BALANCE 3000 MT CAPACITY BARGES WITH BEST TARGET TO COMPLETE LIGHTENING ON 16/02 DAYBRK AND COME TO D/HBR SAME AFTNOON. TRYING TO CONTROL COST AS MUCH AS PSSIBLE (sic) & SHALL KEEP YOU ADVISED DEVELOPMENTS. FYI, 08/02 GENERAL STIKE DECLARED HERE TH4 TAKING NO CHANCE AND SENDING LABOUR ON BOARD 07/02 ITSELF NORDER TO START BAGGING INSIDE HATCHS TH4 PLS INSTRUCT MASTER TO OPEN HATCHES SOON AS LABOUR ON BOARD & ALLOW DISCHARGE FM 08/02 WE SHALL KEEP CONSIGNEES L.O.I IN DEPOSIT WITH MASTER WHO DEMANDS IT MUST BE WITH HIM . TKS & RGDS, [signed] B.RAY" (Emphasis added) 165 It is difficult to reconcile the emphasised passage with a document which has an indecipherable facsimile imprint and other imprints bearing dates 4 and 5 May 1999. The document itself is dated 6 February 1999 and is in the form of a communication from Multimode to Royal. It was in the following terms: " Attn: Mr. Gopal Bhura Dear Sirs, RE: NELSON DELIVERY ORDERS Enclosed please find two sets of Corporated Letter of Guarantee executed by you for delivery of cargo from above vessel. Please note that these guarantees are not acceptable to our Principal since not countersigned by your banker or joint guarantor, hence, the letters of guarantee are returned herewith. Since the Owner PCL have already received letter of indemnity for 10,469.23 MT Dun Peas from the charter and instructed the Master to allow lighten the cargo at Saugor as arranged by us you may if necessary collect the delivery orders from our office at your convenient time. Thanking you, For MULTIMODE MARITIME PVT. LIMITED. [signed] BIPLAB RAY. DIRECTOR Encl: 2 (two) letters of guarantee dated 27.01.99 & 04.02.99." 166 As far as I am aware that inconsistency in the Master's retention of Royal's LOI was not explained. 167 However, I think the following direction of 6 February by Pacific to Multimode authorising the issuing of delivery orders to Royal, is consistent with Pacific's receipt of NEAT's LOI, namely: "As PCL is in possession of a letter indemnity (sic) covering the release of B/L No 1, 2, 3 dated 24/12/98 / 27/1/98 / 27/12/98 respectively, totalling 10,459.23 mts dun peas without the presentation of the original B/L. You have our authority to issue a local delivery order (format as attached to Royal Trading Company) The delivery order is only in relation to the dun peas repeat dun peas. Should you have any queries, please call us for confirmation." 168 That direction accords with Pacific's email to the Master of 9 February 1999 as follows: "GOOD DAY CAPT.. FURTHER TO OUR TELECON. KINDLY NOTE THAT PCL MELB HV ALREADY RECVD THE LOI FOR THE DUNN PEAS CARGO. THEREFORE VSL CAN COMMENCE DISCHG/LIGHTENING OF THE DUNN PEAS. PLS CHECK SAME WITH AGENT. BEST RGDS CAPT TONY LEE"

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Conduct of SSOE in relation to discharge 179 Throughout the period from the last week in January to mid-February, SSOE kept in the background, it seems. The vessel had been in Calcutta waters since 24 January and it is asking too much to accept that SSOE, with Jain's superior, P M Lodha stationed in Calcutta, was not generally aware of that: particularly following NEAT's facsimile to SSOE of 25 January 1999 and Balodi's telephone conversation with Sniekers of 27 January. (Lodha was variously described as Jain's "boss" and as SSOE's "consultant"). Moreover, apart from an insignificant payment by Royal for the dun peas, the subject of switched B/L-2, Royal had not performed its obligations to SSOE under the bills that had been the subject of the switch on 2 February 1999. 180 Any doubt about SSOE's awareness of difficulties confronting NEAT over the non-acceptance of chick peas documents was removed by its receipt of a copy of NEAT's facsimile to Goil of 17 February as follows: "To avoid any further costly delays in discharging, please ensure that Bangkok Bank advises on Thursday immediately upon their opening their acceptance of all chickpea documents directly to BNP Sydney , as per your previous advice and as per Swiss Singapore's signed fax to Bangkok Bank. We can only then put in place LOI to cover further lightering/ discharge of vessel. Please Mr Goil do your utmost so we can move on to more trades to our mutual benefit. [signed P Sniekers for] Peter M Howard Peter P Sniekers Director Director (C.C. SWISS SINGAPORE : MR P.K. Jain) URGENT BANGKOK BANK MUST ADVISE BNP IMMEDIATELY UPON THEIR OPENING SO VESSEL DISCHARGE CAN RECOMMENCE IMMEDIATELY. REGARDS [signed Peter Sniekers]" 181 It is apparent from this facsimile that the vessel had discharged cargo and that further discharge would occur only upon acceptance of the discrepant chick pea documents. Although the facsimile refers to the discharge in the form of "further lightering/ discharge of vessel" the proposal to 'put in place' NEAT's LOI must surely have indicated that discharge was being treated as discharge to Royal as the notify party under the switched bills. 182 There was a further facsimile from NEAT to SSOE of 18 February 1999 which was marked "URGENT URGENT URGENT ********." It repeated the matter which had been forwarded to Goil on 17 February. Provision of 2nd NEAT LOI and Involvement of BNP

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Thanks and regards Peter Sniekers Director c.c. D Kilby." (emphasis added) 186 This facsimile further evidenced the fact that Dhiri was made well aware of the purpose for which NEAT required BNP's execution of the second NEAT LOI and that it would be forwarded directly to the "owners" once signed by the bank "so discharging" could commence. After numerous telephone communications of 19 February 1999, Dhiri executed the second NEAT LOI in the same way as the first LOI had been executed by her. It also bore the stamp of Banque Nationale de Paris. 187 On 18 February Sniekers followed up NEAT's facsimile to SSOE of that date by a telephone conversation with Jain in the following terms: "PS: Very well thanks. Just ringing with regards to acceptance of the documents on the chickpeas… PKJ: Uh uh … PS: … It's been delayed because of the Chinese New Year. PJK: Oh yes… PS: Just ringing to make sure you have our faxes and that Bangkok Bank… PKJ: Yes, on 4000 tonnes I have already sent… this to my bank. It will be sent out very shortly. The moment it goes out I will fax you a copy. PS: Could you.. could you ask Bangkok Bank to contact BNP Sydney immediately to advise, because we're…, its holding up the continuing discharge of the vessel of dun peas as well … … PS: … In Calcutta … … PS: Because we are being pressured… the only way we.. you see the vessel owners would not accept the LOI from Royal Trading … PKJ: Yes… PS:.. They need an LOI from us , and our bank won't countersign the letter of indemnity to allow the discharge to commence… PKJ: Yes… PS: … Until we get acceptance of the documents … PKJ: Uh uh … PS: … The vessel is lightering… so we are coming under a hell of a lot of pressure… PKJ: Uh uh… PS: So could you do that straight away and come straight back to me please? PKJ: Okay. PS: Okay Thank you very much Mr Jain. PKJ: Thank you, bye bye. PS: Bye bye." (Ex CX4) ( Emphasis added) 188 There was no reference in this telephone conversation to the SSOE facsimile of 13 January 1999, instructing discharge of the cargo to Royal "against bankers guarantee", nor did Jain take up the implications of the non acceptance of the Royal LOI, nor of the provision by NEAT of its LOI to be countersigned by NEAT's bank on acceptance of the discrepant chick pea documents, nor did he query the fact of "continuing discharge", nor to whom the discharge was being made. Those matters raise serious questions about SSOE's bona fides in its dealings with NEAT. 189 Quite clearly, NEAT was being allowed to provide its LOI in circumstances where Bolton would have no part of any LOI from Royal. There is no suggestion in that telephone conversation of the presence or absence of a bank guarantee to support Royal's LOI. I have difficulty in reaching any other conclusion than that it suited SSOE not to interfere in the process of discharge. If the matter was left there, I would have no difficulty in concluding that there had been a deliberate decision by SSOE to let sleeping dogs lie and, further, that that course was pursued in the knowledge that there was no effective LOI in place from Royal, as contemplated in SSOE's facsimile of 13 January 1999. 190 On one view of the commercial mess enmeshing the NEAT contracts, it was not in SSOE's interest to exercise any rights it may have had as holders of the initial or switched bills. Jain expressed the disadvantage to SSOE in so acting, in response to questions during cross examination, as follows: "HIS HONOUR: Q. Mr Jain, it is my impression that the market had deteriorated about that time, is that your understanding? A. Yes, market was down.

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(T 1250:38 - T 1251:16) 191 Jain admitted as much in his terse exchanges with Howard in the course of his long telephone conversation of 4 March 1999. In that conversation the following exchange took place as to SSOE's role as pledgee : " Mr Howard : Our understanding is Royal have probably pledge the goods to you until such a time as they pay them as means of security for opening the L/C to NEAT. Mr Jain : No, no, no, no, no, no, nothing like that. Mr Howard : Nothing like that? Mr Jain : Nothing like that. … Mr Jain : No, but really, when if you - I will take a pledge of the goods, and the goods doesn't agree with the market value to me, then I lose heavily. Taking the possession of the goods, and I won't be able to… if he says quality problem, then definitely they will offer that to me. If I go and start selling it on the market - - -" (Ex L1) 192 It appears that the only action that prompted any activity from SSOE took the form of NEAT's facsimiles of 17 and 18 February 1999 and the telephone conversation between Sniekers and Jain on the afternoon of 18 February 1999. 193 On 18 February, the first of many telephone conversations between representatives of NEAT and Dhiri took place a few minutes after midday when Sniekers reported to Dhiri on the result of his discussion with Jain on acceptance of chick pea documents. 194 At 1pm and 2.15pm Murali was on the telephone to Balodi chasing up SSOE's acceptance of documents, making it clear that the provision of an LOI through BNP depended upon acceptance of discrepant documents. 195 I think this appears from the following extract from those conversations: "[Murali]: Why I'm telling is.. why I'm telling is… because, um, now it is um, 2:30 here.. if you, if the message… if the swift message if the swift message metered fax… if they can do it.. you tell them…. BNP has to speak to particular person…([Balodi].. :yah) ..regarding confirmation of pay…BNP will speak to them …so that what happens is they can put this LOI immediately… ([Balodi]…: Mmm)…because today what is happening is today is Friday…." (Ex CX4) 196 At 3pm Sniekers had the following telephone conversation with Dhiri: " Mrs Dhiri : Hi, Peter, how are you? Mr Sniekers : Not too bad. Mrs Dhiri : Got your fax. How do you know that they're waiting for a transfer of funds? Mr Sniekers : Murali spoke to a guy called, not PK Jain, someone from Singapore, this is what Bangkok Bank are telling me. Royal Trading paid some fees to Swiss Singapore but they paid it in the wrong bank so Swiss Singapore are transferring it from some bank to Bangkok Ban k. Mrs Dhiri : You know once these things are accepted I'm going to get Bangkok Bank on this. We've sent everything, for Christ's sake, it's not to do anything but a closed arrangement. They shouldn't open the LC unless they had … Mr Sniekers : Exactly. Mrs Dhiri : I don't want to do anything yet because it's only going to jeopardise the acceptance, so I have to wait for my acceptance to come through and I don't think it is acceptable behaviour for a bank. Mr Sniekers: No, totally. Mrs Dhiri : I mean what happens if they didn't pay, what are we going to do - reject the documents for us? Mr Sniekers : I know, well they've been advised to accept the documents and that was promised last night or something and now we get this. Mrs Dhiri : Anyway, I'm not happy with it, it's got nothing to do with you but I'm just talking about the ethics of Bangkok Bank, I'm not happy with that at all. Mr Sniekers: Yes, and we're told today that yes, Swiss Singapore accepted the documents on Monday and the bank's saying "We didn't receive it until we came back from the Chinese New Year" so they don't check their - they just let it sit on the machine and didn't act upon it until Thursday whereas Swiss Singapore say they sent it on Monday. It's a joke. Mrs Dhiri: Anyway, I mean, as far as yourself are concerned and us are concerned, there is no delay from our side, it is a delay from them not accepting the documents - - - Mr Sniekers: You've seen all the faxes that we send and we've made I don't know how many phone calls we've made in the last few days trying to get everything in place so it's all ready to go as soon as - - - Mrs Dhiri: What happened with the last one, are they going to go round to the same thing? Mr Sniekers : I don't know, I tell you what, I won't use that bank again. I won't allow anyone to open a bank through Bangkok Bank. Mrs Dhiri: Anyway, I'll let you know as soon as I hear from them, okay. Mr Sniekers : We'll still be calling, we'll be calling in an hour. Mrs Dhiri : You keep on pestering them and I'll call them before I go home tonight anyway. I don't want to lose my call (sic), I'll probably play diplomatic about the whole thing, but I would - after it's all accepted I'm going to send them a message. Mr Sniekers : Don't you think they're acting unprofessionally? Are they responding - - - Mrs Dhiri : Very unethical. Why do they open an LC, once it's accepted they should have securities in place at that time, I've been looking at who was the account manager. And I'm going to - I don't want to do anything at this stage because I haven't got the acceptance I still rely on them, okay and my documents have discrepancy, I don't want lock the board (sic), so I'll keep quiet about it I but after that I'm going to be sending them a message saying to them that we spoke to you, we knew the client had accepted the goods, accepted discrepancies and you still failed to advise us and our client has encouraged demurrage and actually ….. if I had my way I would send them a message today but I don't want to send it, it might jeopardise the acceptance so we'll just keep quiet and get the acceptance. Mr Sniekers : Yes, because we're pushing them from our end and - - - Mrs Dhiri : Yes, you just keep on pushing from your end. Mr Sniekers: And the message came back from Bangkok Bank saying "Don't push it, don't push it" but they're - - - Mrs Dhiri : You tell them my bank it doesn't take long. I asked them to send cheques - the set of documents and send them off, they do it in two hours. What's the problem here? I thought Singapore was more efficient than Australia. Anyway. I'll let you know. Mr Sniekers : Thank you, bye." (emphasis added) 197 The evidence, I think, showed the nature of Dhiri's involvement in the acceptance of documents under the subject letters of credit and recorded information concerning dealings between Royal and SSOE inconsistent with Dhiri's evidence that she had been informed by NEAT (and understood) that SSOE and Royal were the same entity: a matter that NEAT denied. 198 At 6.41pm and 6.45pm Murali was again on the phone to Balodi and at 6.48pm passed on to Dhiri the latest information on formal acceptance of documents. Dhiri offered to contact Bangkok Bank and refer back to Murali. 199 At 4.50pm Murali was again pressing Balodi for progress on shipping documents. This was followed by another telephone conversation with Dhiri at 7.04pm in which the following exchange occurred: " Mrs Dhiri : The lady was on the phone, and he said one of them is accepted. Mr Murali : … Mrs Dhiri : He didn't have any details. Mr Murali : Details were actually with Jeanette, maybe if you can talk to him --- Mrs Dhiri : Now, what do you want me to do, Murali ? Mr Murali : … Mrs Dhiri : You have a copy of that LOI? Mr Murali: I heard it was there with you already . Mrs Dhiri : I have packed all my stuff, Murali. We're packing, we're moving the floor, okay. Mr Murali : What I have to do now? Mrs Dhiri : You'll have to fax me that again . Mr Murali: Okay, Peter Sniekers is not here, anyway I'll talk to him and I'll - you want me to fax to the same number, 9223736? Mrs Dhiri: That's right and I don't even have a file - how many tonnes is that one? Mr Murali: Which one? Mrs Dhiri : What are you asking me to sign? How many tonnes ? Mr Murali: That is 4000 tonne. Mrs Dhiri : And how many tonnes are remaining? Mr Murali : 6000 tonnes. Mrs Dhiri : So you've got two sets of documents? Mr Murali : Yes, it is two sets of documents for 4000 and 6000. Mrs Dhiri : Okay. … Mr Murali : Okay, I'll call Peter Sniekers and I'll come back to you. Mrs Dhiri : Yes, I won't be - tell Peter Sniekers I haven't got anything from the Bank because ….said yes I have, I'll go and speak to Jeanette, and it's up to Peter to take that, it's not up to me and I don't even have a file how many tonnes I have to sign off . … "

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(Ex L1) (emphasis added) 200 This record does not depict BNP in the role of advising NEAT against executing LOIs nor does it indicate any reluctance on the part of Dhiri to sign the LOI, nor does it indicate any limitation on the role of BNP in executing the LOI, particularly where Dhiri speaks of 'signing off' so many tonnes of peas. All of those matters are in strong contrast with Dhiri's evidence. Clearly, the focus was on obtaining formal notification of acceptance of discrepant documents under the subject letters of credit: acting under the erroneous assumption that once payment was so assured, there was no obstacle to providing the carrier with the second NEAT LOI, signed on behalf of BNP. 201 Approximately ten minutes later there was a further telephone conversation between Murali and Dhiri as follows: " Mr Murali: Yes, m'am I just actually - Swiss Singapore has brought me that Bangkok Bank Singapore conference, that man has confirmed that he said yes, it has been accepted documents and we kept it in ship and it is coming and in the mean time I told him if you can fax the papers to Era Dhiri, BNP Sydney, he's grateful and he's going to do that and I am faxing an LOI for 3800 tonnes in fact Peter Sniekers has said it will already be there with you . Mrs Dhiri : I know , it is, but --- Mr Murali: I told him the same thing, she has been shifting so mark them down here that she has immediately … I'm just faxing to your fax machine , …. and fax it directly to the shipping company directly so that will suffice and they can take the delivery of the cargo toda y itself and you will be getting immediately faxed also from Bangkok Bank or Singapore now for the 4000 tonnes which we accepted the documents. I have taken to the conference here, I have recorded also a message that says, "What the hell, I accepted the documents" and things like that. It will be there in my recording. Mrs Dhiri : And the bank said that ? Mr Murali : Yes, the bank said that. Mrs Dhiri : Okay, good. Mr Murali : Singapore brought me and brought the bank also because the head of the department of the bank, some Chinese man, he said, "I will just fax that one, we are accepting that we have already accepted the documents and the …. have already been forwarded and the same shift I requested "Can you fax to the old fax number 9223 7361", he said, "Yes I will do that". So in the mean time I faxed the LOI, can just sign it and send it directly to him . Mrs Dhiri : Oka y. Mr Murali : Thanks, bye." (Ex L1) (emphasis added) 202 That conversation does not support Dhiri's evidence of the repeated advice tendered to NEAT that BNP's execution of NEAT's LOIs was for verification of signatures, nor does it reflect her evidence that she firmly refused to fax the executed LOI "directly to the shipping company". 203 Approximately ten minutes later there was another telephone conversation between Murali and Dhiri as follows: " Mr Murali : Hello. Hello. Ms Dhiri : Murali? Mr Murali : Yes, ma'am Ms Dhiri : Listen, you want me - I signed this LOI. Now, you want me to fax it back to you? Mr Murali : No, but if you can fax it to them, to Derek Kilby and others. Ms Dhiri : Okay . Mr Murali : And another thing, if you want to retake it again --- Ms Dhiri : Sorry? Mr Murali : If you want to retake again --- Ms Dhiri : Retake what? Mr Murali : Andrew Leung you spoke to him for the confirmation of documents. Ms Dhiri : Right. Mr Murali : He's the man regarding that he's the top of the Bangkok Bank Singapore. His name is Mr Lack, L-a-c-k. Ms Dhiri : Do you have the Peter's home number? Mr Murali : Yes, I have. Ms Dhiri : Okay. Give me Peter's home number? I'll just talk to him quickly. Mr Murali : 02 6772 - - - Ms Dhiri : 6772. Mr Murali : - - - 5630. Ms Dhiri : 5630. Mr Murali : Another thing, that's not P.K. Jain, but Singapore president spoke to me. They are going to take - they have taken already really serious action about that lady … Andrew Leung. Lack is main man. He's the chief of - at the Bangkok Bank Singapore. He spoke to Lack in fact. He said that he had acceptance of documents have been made, we are sending the swift message, but also Peter - PK Jain told that in case they want …confirmation she can again speak to Lack, she's a very intelligent woman, he will give her immediate reply. But the same number you can go double 2184 double zero - - - Ms Dhiri : You - okay, you can …. Murali. Mr Murali : Double 2 - - - Ms Dhiri : No, no, Murali, I'm not going to ring anyone any more. It's 7, 8 o'clock nearly - - - Mr Murali : Right. Ms Dhiri : I'm sick and tied (sic), I want to go home. Okay? Mr Murali : Okay. And regarding this I am sending you a fax message also and I told you have to - this is BNP Sydney I think should … Ms Dhiri : I haven't got any fax from them yet. Mr Murali : I think you may be getting it shortly. If you want -just in case if you want we can phone again, but Lack is the person with the - - - Ms Dhiri : I'm not ringing anyone any more, okay. I've said that to you. I will just speak to Peter Sniekers, all right. Mr Murali : Today. Okay. Ms Dhiri : Thank you." (Ex L1) (emphasis added) 204 Those exchanges between NEAT and BNP fit uncomfortably beside BNP's case that the execution of NEAT's LOIs by BNP was expressly made known to NEAT as being for verification of signatures. They also evidenced that the use to be made of the LOIs, once signed on behalf of BNP, was made clear to Dhiri. 205 With the second NEAT LOI in place, lightening recommenced with discharging of both dun peas and chick peas on 19 February 1999. That did not occur until Pacific informed the Master of the vessel that it had accepted NEAT's LOI. 206 On 19 February 1999 NEAT was advised by facsimile from Anderson Hughes in the terms that follow: "NELSON - FLWING FROM OWS 'WE UNDERSTAND FROM THE MASTER THAT HE HAS RCVD THE LOI ADDRESSED TO MULTIMODE MARITIME SINED (sic) BY ROYAL TRADING CORP. AND COUNTERSIGNED BY BANK OF AMERICA FOR CHICK PEAS FOR BS/L NOS 4A-4B-4C-5A-5B-5C-5D-5E-5F MASTER IS WAITING YOUR INSTRUCTIONS IF HE SHLD RESUME LIGHTENING FYG MASTER HAS ADVISED US THAT THERE ARE NO STEVEDORES ON BOARD OR ANY LIGHTERS ALONGSIDE." (Ex CX3) 207 Sniekers forwarded the second NEAT LOI by facsimile or courier to Kilby, Anderson Hughes and Pacific. At 7.35pm on 19 February, Pacific advised the Master that it was "STILL AWAITING VERY PATIENTLY FOR V/CHARTRS LOI TO LIGHTEN/ DISCH THE CHICK PEAS". 208 With that facsimile Pacific gave the following instructions: "MTIME, USTAND FM AGTS THAT BARGES/STEVEDORES WILLBE (sic) O/B PM TODAY FOR BAGGING THE CHICK PEAS - PLS ALLOW SAME TOBE (sic) CARRIED OUT O/B BUT DONOT (sic) ALLOW ANY DISCH TILL FURTHER INSTRNS RECD FM THIS OFFICE OR PCL AUSTRALIA. PLS CFM USTANDING."

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Line No….SIXTEEN….from BRISBANE, AUSTRALIA…after transhipment at CALCUTTA." (Ex F) Switching of BL-4 212 At the same time the initial B/L-4A to 4D were switched as evidenced by Kamis as follows: "5. On either 22 or 23 February 1999 I received at my office in Singapore original Bills of Lading number 4A-4D and 4 sets of switched Bills of Lading from Swiss Singapore numbered 4A-4D. In accordance with my usual practice I required Swiss Singapore to produce all three originals of each set of the original Bills of Lading numbered 4A-4D for surrender to me as agent for Beaufort Australia before I would release the switched Bills of lading to Swiss Singapore. In accordance with my usual practice, had all three originals of each set of the original Bills of Lading numbered 4A-4D not been surrendered by Swiss Singapore I would not have released the switched Bills of lading. 6. On either 22 or 23 February 1999 I endorsed and signed the switched Bills of Lading and returned them to Swiss Singapore. I subsequently sent the original Bills of Lading numbered 4A-4D to PCL in Singapore. Annexed hereto and marked with the letter "C" is a copy of the Austen Receipt Voucher dated 23 February 1999 confirming receipt, from Swiss Singapore, of S$120.00 being Austen's fee for endorsing and signing the 4 switched Bills of Lading together with a copy of the Standard Chartered Account Deposit form for that amount." (Ex S) 213 It is apparent from that evidence that at no point were there two sets of bills of lading relating to the same cargo, the initial bills having been surrendered prior to the endorsement of the switched bills. BNP relied on a defence of illegality in relation to the switching of the bills. This defence was abandoned during the course of final submissions. 214 It is also apparent from Kamis' evidence that there was never any real prospect of the switched bills of lading being available at the time of anticipated discharge of the MV Nelson at Calcutta. Continual discharge by lightening : Achieving 7 metre draft

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221 Findings in relation to SSOE's conduct during this period, I think, are crucial to questions of quantum and issues of liability in relation to cross claims examined later in these reasons. 222 With some justification, the conduct of SSOE underwent some close scrutiny in these proceedings, particularly as to its knowledge of the arrival of the MV Nelson at Calcutta on 24 January 1999 and as to its knowledge of the commencement and continuation of discharge from 10 February 1999. 223 There is no dispute that SSOE was aware by mid February 1999 that discharge had commenced. If one adds to that the fact that SSOE was the shipper under the switched bills and had a presence in Calcutta, in the form of Jain's superior Lodha, it had every reason to follow the vessel's movement and, apparently, had facilities at hand to enable it to do so. An added ingredient is that SSOE had unsatisfactory commercial dealings with Royal to a point where commercial pressure was required to extract payment of the latter's debts to SSOE. 224 However any critical determination of SSOE's conduct should be approached in the context of Jain's telephone conversation with Murali of 19 February. That telephone conversation was as follows: "KM: Ah… we actually …um Balodi got him onto the line ..conference J: Ah huh… KM: And he said yes, my… one set these documents have been accepted (J: Ah huh…).. We have keep ... kept in the swift also (J: Ah huh). We have requested immediately if can fax the copy of that… (J: Uh huh) .. on to BNP Sydney on such and such fax number is grateful ..(J: Uh huh) .. he said he'll be doing that also (J: Okay). In the meantime we have already advise them to issue LOI (J: Uh huh) because she also spoke to someone I think ahmm, Andrew Leong or someone (J:Uh huh). He said, one of those two documents have been accepted because he did not give the total details … (J: Uh huh) so that is what she also told verbally we got it (J: Uh huh) but we haven't got anything in writing (J:Uh huh). But anyway if they can put us in fax by whatever swift message… J: Okay once it has come I will fax it to you. KM: Please sir. J: Okay, now… now what is the discharging process ah… up till now how much discharging has been… KM: I think so far it is been done 4000 tonnes… J: 4000 tonnes ah…. KM: Right J:… delivery has been given or it has gone in barges? KM: I think it has gone into barges. I think delivery has been given also, because it was long time, …because it was more than week… because Monday, Friday from Friday…. J: ..how the delivery had been given, under the LOI or how ? KM: I think it's on LOI onl y. J: It's on LOI ? (KM: Ah) You have also given LOI you also given LOI . KM: Yah J: Huh KM: Yah J: Is it bank endorsed LOI ? KM: Yah bank endorsed LOI . J: Mmmm KM: Yah, all bank endorsed LOI, because he gave his LOI, then we gave his LOI to the bank then bank is giving our LOI directly to the shipping company because…. J: Can you fax me the copy of the LOI? KM: Right now I don't have because it's already 7.30 here…. J: Never mind, tomorrow morning you fax me. KM: I will ah …. J: Tomorrow you're open? KM: Tomorrow we're not open but I'll request Peter Sniekers, I'll check up and I'll ask him him (sic) to fax it to you… J: Right right… KM: No problem? Any problem is there ? J: No, no problem… my bankers are worried about all this.. I said I'll get you the bankers guarantee tomorrow and I was giving them the a story that you see the demurrages are incurred you do this you do that…. KM: Right right…. J: So that is how I…. KM: No he has given I think if I'm corrected, Bank of America…. J: Bank of…. KM: America…. J: America… one? Bank of America's guarantee … KM: Yah, Bank of America guarantee. I have seen some time back. But anyway what I'll do is, I will check up with Peter Sniekers and I will fax it to you. J: Okay, okay… KM: Okay sir? J: Okay, okay… How is the market now ? KM: I heard market is raising in India, back mudpa and (inaudible).. again it is going up? J: Small increase ah… no material. KM: Ah.. but I heard it is going to go up because you know ah.. budget they are going to propose some taxes and things like that… J: Correct correct correct… KM: … because of that, it is 100% per cent is going to go up only, that's what he was telling… J: Ah ah… KM: Because there is the uncertainty of Indian crop also at the end (J: Uh huh) … so that is what again people are predicting it slack (inaudible) … moment you can't say anything bloody in this commodity… it might go up also. J: That is right…. KM: Right sir, I'll get him to … I'll tell Mr Peter Sniekers after discussing with him, I'll fax it to you…"

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(Ex CX 4)(emphasis added) 225 There was no Bank of America guarantee and Murali failed to forward the Royal LOI to SSOE. 226 Between mid February and 5 March 1999 there is little documentary evidence of any serious intervention by SSOE in the release of the cargo to Royal. Jain, in part, attributed its conduct to SSOE's role simply as a financier. In my view, that is not a sustainable position for SSOE to adopt, particularly having regard to the substitution of SSOE for NEAT as shipper under the switched bills. 227 SSOE's evidence was that on numerous occasions from mid February its efforts to obtain information from Royal or Pacific were unproductive. 228 The evidence in chief of Jain was as follows: "22. In light of my experience in transactions of this type, the earliest I would have expected to receive Royal's payment for the dun peas, the goods the subject of switch bills of lading numbered 1A - 1F, 2 and 3A -3E, was around 18 or 19 February 1999. During the first two or so weeks of February 1999, I understood that the original documents were with the Bank of Baroda awaiting Royal's payment. In that period I did not make any enquiries of any party regarding whether the goods were being discharged from the "Nelson", whether those goods were being delivered to Royal and, if so, the basis upon which that was being done as, I assumed during that period that delivery would not be made without either presentation of the relevant original bills of lading by Royal (and I did not think Royal would have obtained those documents during that period) or presentation of a bankers guarantee by Royal, in accordance with SSOE's facsimile to Pacific Carriers Limited ("PCL") dated 13 January 1999. 24. On or about 19 February 1999, I instructed Mr Balodi Basba Nand, an employee of SSOE, to make enquiries of Royal to obtain a copy of the bank guarantee from Royal relating to the discharge of the dun peas… 25. Further, on about 19 February 1999, I commenced making enquiries about the whereabouts of the original bills of lading for the dun peas, whether those goods were being discharged from the "Nelson", whether delivery of the goods was being made to Royal, and, if so, on what basis. In this regard I had a number of telephone conversations with Mr Bhura of Royal in which I said words to the effect of: "When are you going to pay us for the dun peas on the "Nelson"? "Please send me a copy of your banker's guarantee." In each of these conversations Mr Bhura said words to the effect of:

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231 Balodi gave evidence of his involvement in matters concerning the circumstances of the discharge of the cargo. His evidence in chief on this subject was a follows: "35. Following that conversation, I made a number of telephone calls to Mr Bhura, seeking to obtain a copy of the bank guarantee which (I believed) Royal had given. Each time, Mr Bhura gave me a reason or excuse for not yet providing a copy of the bank guarantee and said words to the effect : "I will send it to you." He never told me that, in fact, a bank guarantee had not been given by Royal. Despite my requests, Mr Bhura did not send SSOE a copy of a Banker's Guarantee. Annexed at pages 53 through 54 of " BNB1" are true copies of facsimiles that I sent to Mr Bhura on 19 and 22 February 1999. 36. Also from 19 February 1999, on Mr Jain's instructions, I made numerous telephone calls to Captain Liang of PCL. I do not now recall the specific dates and times of those conversations or precisely what was said. I do recall that the purpose of my calls was to attempt to ascertain whether the Cargo, or some of it, was being discharged and, if it was being discharged against a Banker's Guarantee, to obtain a copy of it. Captain Liang also gave me excuses and reasons for not providing me with a copy of the Bank Guarantee. I recall saying to him words to the effect of: "We are the holders of the bills of lading. We are entitled to this information." Captain Liang did not send me a copy of any bank guarantee. Captain Liang never told me that, in fact, Royal had not given a bank guarantee or that discharge was taking place against an LOI from NEAT. 37. Given that the requested information had not been forthcoming from Mr Bhura or Captain Liang, on 3 March 1999, on Mr Jain's instructions, I sent a fax to Mr David Rozer of Beaufort Shipping Agency. Copies of that fax and Mr Rozer's fax in response of the same date are annexed at pages 55 through 56 of "BNB1" . 38. On 3 March 1999, on Mr Jain's instructions, I also sent a fax to Captain Liang of PCL. A copy of that fax is annexed at page 57 of "BNB1". I spoke to Captain Liang again after sending this fax. He did not answer my queries, but gave me the telephone number of Mr Chua (in Australia). I then rang Mr Chua. He refused to give me any information and said words to the effect: "I have no obligation to provide you with any information. You should look to NEAT for any answers." (Ex CX 19) 232 Jain explained his relationship with Lodha as follows: "KING: Q. Mr Jain, what is Mr Lodha's position in Swiss Singapore, do you know? A. He is adviser to Swiss Singapore.

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239 On 4 March there were lengthy telephone conversations between representatives of SSOE and Howard. 240 It is clear from the telephone conversation of 4 March 1999 between Howard and Balodi that SSOE was insistent on being provided with a copy of Royal's LOI, as was reflected in the following: " Mr Balodi : That LOI letter, I haven't received that yet. Have you sent it? Mr Howard: Yes, well we will send it, but I spoke to Mr Murali and he said at the lessor's (sic) request you should accept the chick pea documents in response for receiving the LOI, but what I was wondering, PK Jain isn't there at the moment? Mr Balodi: No. He is at the moment he's not in. Mr Howard : What's the latest for Royal Trading? Mr Balodi : You see, this - yesterday he was trying to contact to Royal Trading but he could not get the Mr Gopal Bhura and then I don't know -I'm not having idea that they might be in the late hours yesterday that he could not reach to him or not and he has then come to offices here, so - but his one, you see that the LOI copy is - this one is…. that we have to get the LOI copy. So that LOI copy, we --- Mr Howard : Well, what will you do for us, then? What are you doing to do for us in return? Mr Balodi : No, no, we just want to know that the LOI given by the Royal Trading are in order or not, and whether it is properly banking notes or not properly, that it is authenticated or not." (Ex LI) 241 The stance adopted by Howard and Balodi in the following exchange I think is not without interest, insofar as it revealed SSOE adopting the role as financier and eschewing any other role: " Mr Howard : Yes. What it says, it says the bank confirms that the signature held on record is that of Mr Gopal Bhura. It doesn't say anything else. It's stamped by the bank, but I don't know if it is an - so I don't know if that means any more than that. But for what - to explain the transaction, one thing that we put to PK Jain yesterday is that we had from you faxed amendments that we being made to the Bangkok Bank, and it was our understanding that the amendment was to the shipping period, otherwise we would have been able to encash the documents for the L/C that you owed. The only reason, unfortunately, was because we shipped the goods slightly later and it was agreed to ship that later. Royal agreed to ship it later, and it was agreed, certainly, the … to Swiss Singapore. Mr Balodi : Mr Peter, as Mr Jain yesterday explained you, we are having only financing role in this and we - just we are - each… we are taking the success of Mr Gopal Bhura only because we have just no role other than the financing in this , so the thing is that any matter in this has to be resolved by Mr Gopal Bhura only. Mr Howard : Yes, but why did you send the amendment to ---- Mr Balodi : We have not sent to you again yesterday, as I told you, that we - Mr Gopal Bhura told us you can apply the amendment and can you please send us the amendment copy. We told them, no, we cannot apply the amendment, and he told them, if I tell you so much, so much, so much, can you please send us - we have sent to them a conditional amendment. We have a certain - Mr Gopal Bhura, he have - how it went to you to say who - the same, what Gopal Bhura has ordered to you, we are not aware of this. We have sent to him, along with a covering letter that, "This amendment will be applied on receipt of your so much, so much, so much money". This money we have not received, so this amendment was never applied. So this amendment was never applied in the bank. We have not done anything and we have not done anything with his - you see, this - we are committed to you, but we have - and we have never confirmed that it is already in the bank. We have given to Mr Gopal Bhura with the condition that this amendment will be applied only upon receipt of your funds." (Ex LI)(emphasis added) 242 Presumably, as financier, SSOE considered itself as being under no obligation to NEAT to accept outstanding discrepant documents. That was reflected in the following further exchange: " Mr Howard : But Mr Murali supposedly spoke to you --- Mr Balodi : No . Mr Howard : --- and you told him that the amendments had been made and we got the confirmation of the amendment with the application. Mr Balodi : No, no, no . I have - we - as far as I'm concerned, we have never entertained Mr Murali. We have all the correspondence. Anything we have talked, we have been just saying that please contact to Mr Gopal Bhura, because since we entered in this thing as we - as Mr Jain already informed you yesterday, that we have no more - no role other than we are - the thing of financing this deal . So the financing deal is - all this thing is all back to back, business. What about --- Mr Howard : After this, a representation was made to NEAT through Singapore, for which we have copies of the application to amend documentary credit. We resolved that it would be amended, and it was agreed with Royal that the shipment period was extended, so we grant cash, our L/C, because the amendment wasn't made. However, Royal said they would accept discrepancies. Even though they said they would accept discrepancies, they haven't accepted them, so either way, it's a fairly serious position for Swiss Singapore because Swiss Singapore is another party to the document. Swiss Singapore opened the L/C to NEAT. We have written advice that the amendment has been applied for. We have been told it was done, but it never happened. Now, we can hold you responsible for that. We can hold you responsible for cost losses and it's a fairly serious position, but what we suggested to Mr PK Jain yesterday is that we're prepared to assign the chick peas to you if you accept the documents, because the bills have been re-cut in your name, supposedly. Mr Balodi : When the - Mr Peter, my position here, I'm in charge for the documentation and all this. As far as these terms of this are concerned and compensations are concerned, you should contact only to Mr PK Jain. I am not able to comment over all this. Yes." (Ex L1) (emphasis added) 243 In accordance with the arrangement made in that telephone conversation, there was a further telephone conversation two hours later between Howard and Jain. In that conversation Jain informed Howard that he had spoken to Bhura on 3 March and that Bhura had raised "some quality problem". That was vigorously rejected by Howard, and I think, with some considerable justification. What I think has some point in relation to the issues raised in these proceedings, is Jain's response to Howard's contention that "Swiss Singapore [had] a legal obligation to meet" as follows: " Mr Jain : Now, you see, I want - would like to discuss the legalities of the terms, that my lawyers will discuss. I will, in my view, - if you want to send a legal notice, you send it and forward it to the lawyers. I would like you, because you see, I am - I tell you what is my lawyer said, I have no contractual obligations with you . Mr Howard: Yes. What we understand is that Royal have pledged back to you --- Mr Jain : Pardon? Mr Howard : Our understanding is Royal have probably pledge the goods to you until such time as they pay them as means of security for opening the L/C to NEAT . Mr Jain: No, no, no, no, no, no, nothing like that ." (Ex L1) (emphasis added) 244 That is a far cry from one aspect of the stand taken by SSOE in these proceedings. It was reasonably clear from the following discussion between Howard and Jain that SSOE was not going to accept any further responsibility in relation to the chick peas: " Mr Howard: Peter Sniekers suggested to you yesterday that if you accept the documents, we would assign the goods to you and you can do whatever you like with Royal, but what we have been told consistently --- Mr Jain : No, but really, when if you - I will take a pledge of the goods, and the goods doesn't agree with the market value to me, then I lose heavily. Taking the possession of the goods, and I won't be able to …. if he says quality problem, then definitely they will offer that to me. If I go start selling it in the market ---- Mr Howard : But who says there is a quality problem? Mr Jain : Pardon? Mr Howard : Who says there is a quality problem? Mr Jain : Yes, this is what exactly he was telling me yesterda y. Mr Howard : Yes, but it's nothing more than an allegation. He's got nothing in writing, nothing written, no certificates, no nothing. The goods met specification as per contract at loading. There's been no change in the goods. It's just a nonsense. I mean, we were told categorically, time after time, that the goods - that these L/Cs that were discrepant would be accepted. The only reason they were discrepant is because we agreed to - and he agreed to extend the shipment period. We were told that that would be amended for the L/C. It didn't happen. I mean, I don't see legally or any other way that he's got a way out of it, but to suddenly raise the question of quality now at the final minute, is ridiculous and we've had people there. We have had our protecting agent look at it. We have had SGS look at it on the vessel. We totally repudiate any question of quality. This is not true. Where to go from here? I mean, are you saying that you won't accept the chick pea document? Mr Jain : You see, I have no reason to accept the document. I am working on his advice only .

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(Ex L1) (Emphasis added) 247 It is difficult to reconcile the emphasised passage with Lodha's presence in Calcutta. Also in light of SSOE's difficulties in obtaining payment from Royal, the statements by Jain in this conversation concerning the financial reliability of Royal required some explanation. The relevant passage is as follows: " Mr Howard : What substance, though, is Royal? Is Royal a company of substance? Does it have any money? Mr Jain : I think they are a sound person? Mr Howard : They are a sound company. They are a good company. Mr Howard : It is a sound company? Mr Jain : Yes. Mr Howard : Well, why would he be not accepting the documents as promised? I mean, he made us promise after promise. It's in writing. Mr Jain: He must also be getting the similar claim from his boss to whom he has sold his cargoes, and it is maybe his boss must be feeling the pinch of the market sentiment, so then the bad pressure is coming on him and in turn he is putting a bad pressure on you, because nobody who does this trade, they come out like this. Never you really - you see, Indian - I say enough." (Ex L1) 248 Towards the end of that telephone conversation Jain informed Howard that he intended going to India that following day, which was Friday 5 March 1999. The final word on the Royal LOI in that conversation was as follows: " Mr Howard : Well, do you want the LOI that we - that they sent us? Mr Jain : Yes, yes, definitely I want to see that I'm fully protected because he had already removed quite a valuable cargo. I want to make sure that everything is as straight the other side. Mr Howard : Okay. " (Ex L1) 249 There was a further telephone conversation between Howard and Jain on 5 March 1999 in which Howard was left in little doubt as to where NEAT stood in the eyes of SSOE. Howard informed Jain of the effect of a communication of 3 March from Multimode to Pacific that the Calcutta Port Authority required a guarantee of continual discharge if berth arrangements were given to the vessel in Diamond Harbour. Jain was informed by Howard that such a guarantee could not be given while there was a failure to accept the discrepant chick pea documents. The then current situation was discussed in the following terms: "[ Mr Howard ]: … I mean, it's quite possible for the - and PCL have got the rights to warehouse Royals goods and put them in a warehouse and put a lien over them. There's no question about that, because the charterparty has got full right to take a lien on the cargo. So that's the next thing they'll be doing, so we're --- Mr Jain : Well, the cargo which is being released is going under whose possession? Mr Howard : The cargo that's been released to date has gone straight to Royal. Mr Jain : So it's going to the Royal and our loan is personal indemnity? Mr Howard : I beg your pardon? Mr Jain : On a personal indemnity . Mr Howard : I'm not saying that because we have had acceptance by you of the dun pea documents and one set of chick pea documents . Mr Jain : No, your acceptance doesn't mean there is no reason ….. Mr Howard : Yes well, it's still going against an indemnity by NEAT back to the owners as well. Obviously we accept his personal guarantee but it's not worth much. I mean, we've also provided an LOI based on Swiss Singapore's acceptance of the first lot of the documents. Mr Jain : No, you cannot give on - based on my acceptance it does not mean - you see, my documents have been accepted by Royal . If he doesn't pay me I'm the legal owner of the goods. How can you allow to release the goods to the Royal? Mr Howard : So, you're saying we shouldn't be releasing goods to Royal? Mr Jain: You should n ot. You ask them to produce the …. bank guarantee. You see the person got it, doesn't make any sense. Mr Howard : Well, where do you suggest we go from here? Mr Jain : Pardon? Mr Howard : Where do we go from here? Mr Jain : No, how can you say the goods have been released on your authority? Why should your authority be given any guarantee . The receiver should give a bank guarantee . Mr Howard : Well, we have been paid - we've received money. We've received money for the - - - Mr Jain : You receive money, so you are comfortable . You should not worry about that. But you see the owner should be worried about the - without having a bank guarantee he will …. I am having the original BL in my hands . I will run after the after the (sic) ship, I will arrest every ship, I'll ask for the cargo . Mr Howard : Well, we're quite happy to make the goods available to you and not to Royal. That would be fine but we want acceptance of the final documents for the chick peas. Mr Jain : No, no, you are worried of 6000 tons, I am worried of 14,000 tons which they accepted and I'll be running after the ship owners in case you see if there will be any problems and there is no problem situation for the owners because you see they have to pay me because I am original (sic) entitled I have the original BLs in my hands and I'll not allow them to release the goods without the (sic) having original BL. Mr Howard : So you're saying that you're unaware the cargo was being discharged ? Mr Jain : Naturally. Nobody has asked me whether they should release the cargo or n ot. Mr Howard : Well, that contract is with Royal, not with you. They had to receive this. Mr Jain : Contract does not mean - you see BL is in name of Swiss Singapore . Mr Howard : Well - - - Mr Jain : I'm holding the [- -] whoever is holding the original BL he is the legal owner of the goods. Mr Howard : Well, that's not our understanding, so we had better sort it out very fast. Why are you uncomfortable with Royal ? What's Royal done? Mr Jain : Well you see he hasn't paid me my bills . Mr Howard : Nothing? Mr Jain : Nothing and further, I have an understanding that he is living on bank guarantee there I was comfortable but only personal guarantee I am absolutely not comfortable . It has to be bank guarantee, cannot be personal guarantee. Mr Howard: Well, what's the solution? Mr Jain : Well, he must give a bank guarantee immediately or I will run after the ship owners and take the lien over the rest of the cargo. Mr Howard : Well, in that case we'll hold you responsible because you never accepted the documents as promised. Mr Jain : No, you see, I have no contractual obligation to accept the documents with you . So far as the documents are written. You cannot force me to accept the documents. Mr Howard : But you said you'd accept them with discrepancies . Mr Jain : Never mind. You see, that doesn't make that acceptance has been done. Only once I commit to my bankers that I will accept the documents my commitment is on. But in case, you see, ship owner after giving me a BL and doesn't give me the cargo is a serious offence. Mr Howard : Well, do you think the ship is going to sit there month after month not discharging? Mr Jain : Well, that's in another matter. You see, I told you my position is financial in between. Contractual relations were between you and Bhura ". (Ex L1)(emphasis added) 250 That last assertion is not in keeping with the stand taken in these proceedings on behalf of SSOE that it was the buyer of the subject cargo. Where that left NEAT in the eyes of Jain was described as follows: "Mr Jain : That's right, so then you will be coming into the picture. I will not come directly against you but I will go against the ship owners because I'm holding the BL and he is releasing the cargo. Mr Howard : So you've got the BLs for the lot? Mr Jain : Pardon? Mr Howard : You have the BLs for all the cargo? Mr Jain: That's right. Mr Howard : Well, I would prefer if you put something in writing to us regarding --- Mr Jain : I already put - you see the ship owner in writing about how he is releasing this cargo. I'm holding the BLs." (Ex L1) 251 While Jain did not deny having given an assurance in relation to the discrepant documents, in the context of that conversation I would not be prepared to draw an inference of admission against SSOE. 252 The conversations further emphasise the erroneous assumption made by NEAT (and shared by Dhiri) that its position was secure once payment under the subject letters of credit was assured by SSOE's acceptance of discrepant documents. 253 I was invited to offer some criticism of NEAT's conduct in the course of these communications. However, I did not gain the impression of NEAT deliberately withholding information from SSOE at this or earlier times. 254 As a consequence of those communications, the Royal LOI was forwarded to SSOE which, in turn, sent the following facsimile to Pacific on 5 March 1999: " SUB: B/L NO: 1A, 1B, 1C, 1D, 1E & 1F FOR 5762.58 MT B/L NO: 2 FOR 537.42 MT B/L NO: 3A, 3B, 3C 3D & 3E 4,169.23 MT B/L NO. 4A, 4B, 4C & 4D 3800 MT AUSTRALIAN FIELD DUN PEAS & AUSTRALIAN FEILD (sic) CHICK PEAS SHIPMENT PER M V NELSON CONSIGNEE : ROYAL TRADING CO FURTHER TO OUR FAX DATED 03.03.99 WITH REFERENCE TO THE SUBJECT CARGO, PLEASE BE INFORMED THAT WE ARE HOLDING THE ORIGINAL BILLS OF LADING WITH US AND WE ARE THE RIGHTFUL OWNER OF THE CARGO. WE UNDERSTAND THAT THE CARGO IS BEING RELEASED TO THE NOTIFY PARTY WITHOUT PRODUCING ORIGINAL BILLS OF LADING. PLEASE INFORM US HOW THE CARGO IS BEING RELEASED BY YOU WITHOUT ORIGINAL Bs/L. WE WILL HOLD YOU RESPONSIBLE FOR THE CARGO AND ALL OTHER COST AND CONSEQUENCES OUT OF THIS ACT. PLEASE REVERT IMMEDIATELY. THANKS & REGARDS [signed] P.K. JAIN" 255 The reaction of Pacific was reflected in its facsimile to Anderson Hughes of 5 March 1999 as follows: "Re: Nelson Further corrs from the Swiss mob in Spore. They have claimed to be in possession of the orig B/L. John, hope the orig LOIs is with you/ Derek Kilby? Looks a real mess. Can Neat help to defray problem? Rgds, Chua" Stoppage of Discharge

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256 During this scene of contractual confusion the MV Nelson arrived at Diamond Harbour on 5 March 2001 and recommenced discharging dun peas and continued discharging in the following days, until 10 March 1999 when NEAT requested its agents in Calcutta to advise owners to stop discharging "as a matter of utmost urgency". Multimode warned that the stopping of discharge would result in Royal immediately moving the court to arrest the vessel "ON CHARGE OF CHEATING AGAINT SHPR FOR SHPMT OF UNSPECIFIED /UNGRADED QUALITY OF PEAS". However, NEAT's instructions were confirmed to Pacific on 10 March 1999 and that instruction was relayed to the Master who stopped discharging all cargo. 257 The consequence of the stoppage was conveyed to Pacific by Multimode's facsimile of 11 March 1999, as follows: "… IT IS QUITE SURPRISING TO US THAT YOU HAVE NOT ADVISED US YOUR COURSE OF ACTION AND REASON OF STOPPAGE AND WE HAD NO ANSWER TO PORT WHEN ASKED THIS MORNING. SINCE VSL REMAINS IDLE FOR INDEFINITE PERIOD PORT ORDERING TO SHIFT VSL TO NS DOCK BOUYS (sic) MAR 12 OR 13 TO ACCOMODATE (SIC) INCOMING SUGAR VSL AT SAUGOR. WHAT EVER THE CASE MAY BE AND FUTURE OF VESSEL STANDS UNCERTAIN WE ARE LODGING OUR CLAIM WITH YOUR GOOD OFFICE FOR THE BALANCE DUES TOWARDS PORT DISBURSEMENTS UPTO (SIC) 12/03/99 AND REIMBURSEMENT OF LIGHTENING EXPENSES INCURRED BY US FOR YOUR TELEREMITTING BY MAR 12,1999 WITHOUT FAIL TO ENABLE KEEP PORT CLEARANCE READY NCASE VSL SAILS OUT AT SHORT NOTICE: PERIOD 25 JAN TO MAR 12 (UP TO 1500 HRS) = 50 DAYS ACCOUNT HEADS US $ 1. PILOTAGE 8890 2. PORT DUES INCL D/H JETTY CHGS 2350 3. SAUGOR ANCHORAGE CHGS FOR 40 DAYS FM 25/01 TO 05/03 (25% OF BERTH HIRE) 6850 4. LIGHT DUES FOR 2 MONTHS 3110 5. CUSTOM FEE 11800 6. CUSTOMS ADDL ( MEALS/ TRANSPORT/ INCENTIVE ETC) 1100 7. PILOT ADDL ( DO ) 550 8. DRAFT/ CONDITION / DISCH SURVEY FEE 700 9. MOTOR BOATS HIRE 8275 10. DAILY CONVEYANCE 1180 11. TELECOM/ POSTAGE/ COURIER CHGS 800 12. CONTINGENCY (POLICE/ IMMGR/PORT HEALTH CLEARANCE) 350 13. FRESH WATER SUPPLIED TO VSL 1600 14. CREW SIGN ON/ OFF 280 15. AGENCY FEE (FOR 50 DAYS) PLUS 5% GOVT TAX (US$2350 +5%) 2465 50300 PLUS LIGHTERING EXPS FOR 7650 MT @ US$ 10.20 PER MTON 78030 TOTAL 128330 LESS FUND RECEIVED 39991 BALANCE FUND DUE TO PAY US$ 8339

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260 On the basis of those figures some 3,800 tones of chick peas and approximately 9,072 tonnes had been discharged at the time of the arrest of the vessel. 261 The vessel remained in Calcutta under arrest until 29 June 1999 when orders were made by the High Court of Calcutta releasing the vessel. On 11 May 1999 the High Court of Calcutta ordered that the cargo remaining on the vessel and that barged be delivered to court appointed receivers. Discharge took place between 30 May and 26 June 1999. 262 The High Court of Calcutta ordered on 23 June 1999, as "modified" on 28 June 1999 (as I interpret that order) that 3,000 tonnes of chick peas under BL-5A, 5B and 5C be released to the holders of the bills of lading; that 2,473.96 MT of chick peas, the subject of BLs-5D to 5F, be released to the holders of the bills of lading; that 1,499 MT of dun peas, referred to in the order as 1,500 tonnes, be released to SSOE, and that the 763.761 MT of dun and chick peas on the barges, referred to in the order as 700 tonnes, be sold by the receivers and the proceeds held in trust to pay outstanding accounts of the barge owners, with the remainder being held awaiting the resolution of disputes among the parties. 263 Of the 5,473.96 tones of chick peas, 3,000 tonnes were sold through Goil at a discount of US$200,000 under a fresh contract in favour of Royal's nominee BHP (India) Pvt Ltd, said to have been "effected 6th March 1999". 264 Of the balance of the 2,473.96 tonnes, those were sold by NEAT under an agreement reached on 2 July 1999, as confirmed by facsimile of 3 July 1999, for US$275 per tonne to R. Piyrallel Import & Export Ltd. At the instance of Pacific, the proceeds of that sale have been frozen by the High Court at Calcutta by order dated 19 July 1999. Those proceeds are still held by the court appointed receivers, Pacific having applied for reimbursement from that fund of its discharging expenses associated with the MV Nelson. 265 SSOE made a claim in conversion against Bolton for the cargo delivered to Royal, other than that the subject of BL-2. 266 Bolton responded to the arrest of its vessel by obtaining an order in the High Court of South Africa at Durban for the arrest of "an associated" vessel of Pacific, the MV Ikan Selangat, on 22 April 1999. To effect the release of the Ikan Selangat, Pacific obtained a letter of undertaking in favour of Bolton from SKULD dated 24 April 1999 in the following terms: " MV NELSON - TIME CHARTERPARTY DATED 9TH DECEMBER 1998 BETWEEN BOLTON NAVIGATION SA OF MONROVIA AND PACIFIC CARRIERS LIMITED OF SINGAPORE In consideration of your agreeing to the release of the MV IVAN SELANGAT from her current arrest at Durban, the details of which are set out in the attached Court order, we hereby irrevocably and unconditionally undertake to pay you or your representatives on your/ their first faxed demand/ demands any sum or sums (a) which may be awarded or adjudged by a competent Court or arbitration Tribunal (or on final appeal from such Court or Tribunal) to be due to you or (b) which may be agreed to be due to you in respect of the matters below: 1. Claims for an indemnity or damages, plus interest and costs, arising from or connected with the discharge of cargo by MV Nelson at the port of Calcutta during January - March 1999, in the sums of: (a) USD 3,219, 725.00 (Three million, two hundred and nineteen thousand, seven hundred and twenty-five United States Dollars) in respect of principal claims; and (b) USD 2,317,680.00 (Two million, three hundred and seventeen thousand, six hundred and eighty United States Dollars) in respect of interest thereon; and (c) USD 50,000 (Fifty Thousand United States Dollars) in respect of costs. 2. Claims for payment of charterhire due up to and including 22nd April 1999 pursuant to the captioned charterparty of MV Nelson, in the sums of (a) USD 141,050.00 (One hundred and forty one thousand and fifty United States Dollars) in respect of charterhire; and (b) USD 30,128.00 (Thirty thousand, one hundred and twenty eight United States Dollars) in respect of interest thereon. 3. Claims for your costs in London arbitration proceeding of pursuing the claims referred to in paragraphs 1 and/or 2 above, in the sum of GBP50,000 (Fifty thousand pounds Sterling). 4. Claims in respect of your costs in English High Court Proceedings of pursing the claims referred to in paragraph 1 in the sum of GBP50,000 (Fifty thousand pounds Sterling). 5. We acknowledge and agree that you are entitled to pursue claims both in the English High Court and in London arbitration proceedings in respect of the claim for an indemnity or damages set out in paragraph 1 above and in London arbitration proceedings in respect of paragraph 2 above. 6. This undertaking is furnished without prejudice to the rights of Bolton Navigation SA and Owners of "IKAN SELANGAT" and/or Pacific Carriers Limited to proceed in terms of Section 5(2)(d) of the South African Admiralty Jurisdiction Regulation Act 105 of 1983 (as amended) to obtain an order of the South African Court (exercising its admiralty jurisdiction) that, in the case of Bolton Navigation SA, in addition to the property already arrested, further property of Pacific Carriers Limited be arrested or attached, whether on a direct or associated basis, and also to obtain an order that any security given be increased subject to such conditions as to the Court appears just, and in the case of Owners of "IKAN SELANGAT" and/or Pacific Carriers Limited, that the security be reduced or discharged. 7. This guarantee is furnished without admission of liability and without prejudice to the rights and contentions of the Owners of the vessel and/or Pacific Carriers Limited to reduce the quantum of this guarantee. Nothing contained in this undertaking shall be construed or held to deprive the owners of the vessel or Pacific Carriers Limited of the right to claim limitation, provided by any contract, statute, convention or otherwise specifically the right to apply to court to set aside the arrest and/or the right to apply to court for a stay or dismissal of any proceedings instituted or to contend that the concerns to which this undertaking had been addressed, have no title to sue or have not properly authorised their lawyers to institute the said proceedings or for any other reason whatsoever. 8. This undertaking shall be governed and construed in accordance with English law and any disputes or questions arising from it shall be referred to the exclusive jurisdiction of the English High Court of Justice, to which we irrevocably agree to submit for the purpose of any process of its enforcement. We confirm that our registered or principal office is situated at Roald Amundsens gate 6, Oslo, Norway. 9. This undertaking shall continue to have effect after the coming in force of the Civil Procedures Rules 1998 applicable to proceedings in the English High Court of Justice and any references to procedural steps in this undertaking shall be replaced by the equivalent terms or steps appearing in the said Rules to the extent necessary to give meaning to the provisions of this undertaking…." (Ex O)

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Costs to be reserved." (Ex O) 268 On about 25 May 1999 Pacific entered into an agreement with SSOE as follows: " AGREEMENT Pacific Carriers Limited (hereinafter referred to as "PCL") and Swiss Singapore Overseas Enterprises Pte Ltd (hereinafter referred to as "Swiss Singapore") now agree :- 1. PCL will secure Swiss Singapore's claims against the owners, Bolton Navigation SA and accordingly immediately provide to Swiss Singapore a bank guarantee issued by a first class Singapore bank on behalf of the owners of the mv "Nelson" as per attached specimen for the sum of US$3.2million inclusive of interest and costs; 2. PCL to provide a side letter from the owners of mv "NELSON" submitting to Jurisdiction for the London Arbitration and to confirm that their vessel was not demise chartered at all times. 3. Swiss Singapore will upon receipt of the Letter of Guarantee and side letter stated in paragraph 2 hereof, agree to a stay of the action in Calcutta Admiralty Suit No. 4 of 1999 on the application of PCL as time charter and disponent owners. 4. Swiss Singapore will upon receiving the said bank guarantee and the said side letter within 3 working days release the mv "Nelson" from arrest in Calcutta and will not re-arrest the mv "Nelson" or any other vessel or assets in the same ownership or associated ownership for the purposes of securing Swiss Singapore's claims and/or enforcing any judgement or award on those claims; 5. Actual legal costs incurred in Calcutta to be reserved to the tribunal in the London arbitration; PCL on behalf of owner agree with Swiss Singapore that they will both refer all issues, claims and disputes and actual legal costs incurred arising out of or in connection with the action in Calcutta admiralty suit no. 4 of 1999 to the Tribunal, for determination by the Tribunal and the Tribunal is empowered to make an Award thereon. 6. Except to the full extent of the foregoing terms, this agreement is without prejudice to PCL's, Bolton Navigation SA's and Swiss Singapore's legal rights. For an on Behalf of PCL For and on behalf of Swiss Singapore [signed Richards Butler] [signed] …………………………… ………………….. . ADDENDUM This Agreement and the terms herein is to be governed by Singapore Law. Any breach or dispute arising from the said Agreement or its terms is to be resolved by arbitration in Singapore. For and on Behalf of PCL For and on behalf of Swiss Singapore [signed Richards Butler] [signed]" (Ex O) 269 In accordance with that agreement, on 2 June 1999, Pacific caused a bankers guarantee to be issued by DBS bank in favour of SSOE as follows: "OUR BANKER'S GUARANTEE NO: 0016LE0088799 FOR USD3,200,00-00 RE: Claim arising out of or in connection with delivery of cargo without production of BILLS OF LADING- MV "NELSON" BILLS OF LADING NOS. 1A, 1B, 1C, 1D, 1E, 1F, 3A, 3B, 3C, 3D, 3E, 4A, 4B, 4C, 4D - claims in the action in Calcutta Admiralty Suit No. 4 of 1999. IN CONSIDERATION of you at our request, releasing from arrest the MV "Nelson" and refraining from re-arresting or otherwise detaining the MV "Nelson" or any other vessel or assets in the same ownership or associated ownership for the purposes of securing your above-captioned claims and/or enforcing any judgement or award in respect of those claims We, THE DEVELOPMENT BANK OF SINGAPORE LTD of 6 SHENTON WAY DBS BUILDING SINGAPORE 068809 do hereby irrevocably and unconditionally guarantee to pay to you or your order any sum adjudged to you or found to be due to you by an arbitration tribunal in London duly constituted in accordance with the above-captioned bills of lading ("the arbitration tribunal"), against the owners of the vessel MV "NELSON", Bolton Navigation SA, for damages, interest and costs in respect of your above-captioned claims PROVIDED ALWAYS that our entire liability under this Guarantee shall not exceed UNITED STATES DOLLARS THREE MILLION TWO HUNDRED THOUSAND ONLY (USD$3,200,000-00) in total inclusive of interest and costs. … We the guarantors hereby further consent and agree that the Guarantee herein shall equally apply to any compromise or settlement between yourselves and the owners of the MV "NELSON", Bolton Navigation SA, in the aforementioned arbitration or to any admission of liability therein in the said arbitration proceedings or appeal therefrom, as if they had been adjudged by the arbitration tribunal. We further agree that this Guarantee shall be a continuing Guarantee until the final disposal of your above-captioned claims and the granting of any time of other indulgence to Bolton Navigation SA in the aforesaid proceedings by you, your servants or agents shall not in anyway avoid or prejudice your rights herein. Any disputes arising from this Guarantee shall be governed by Singapore Law and be subject to the exclusive jurisdiction of the High Court of Singapore. This Guarantee is non-assignable…" (Ex O) 270 To complete arrangements involving SSOE, Bolton and Pacific, on 24 June 1999, Pacific entered into an agreement with Bolton and the London solicitors Richards Butler, in the following terms: "AGREEMENT This agreement dated 24th June 1999 is entered into between Pacific Carriers Limited of Singapore ("PCL"), Bolton Navigation Inc of Monrovia, Liberia ("Bolton") and Richards Butler of London ("RB"). WHEREAS: 1 PCL chartered the vessel mv "Nelson" (the vessel) from Bolton pursuant to a time charter-party dated 9th December 1998 in an amended NYPE form; 2 PCL provided a letter of indemnity dated on or about 24th January 1999 (the "LOI") to Bolton to deliver at Calcutta a cargo of Australian Field Dun-Peas Farmer Dressed Packing in Bulk and Australian Chick-Peas Farmer Dressed Desi Type New Crop Packing in Bulk ("the cargo") lately laden onboard the vessel at Calcutta without presentation of original bills of lading. 3 The alleged holders and/or owners of the cargo ("Swiss Singapore") arrested the vessel in Calcutta on or about 31st March 1999. 4 Swiss Singapore have commenced arbitration in London against Bolton pursuant to the bills of lading numbers 1A, 1B, 1C, 1D, 1E, 1F, 3A, 3B, 3C, 3D, 3E, 4A, 4B, 4C and 4D (collectively called "the original switch bills of lading") for delivery of cargo without production of the original switch bills of lading ("the Swiss Singapore arbitration") and have also agreed to a stay of any legal action in Calcutta; 5 PCL have provided security to Swiss Singapore on behalf of Bolton to release the vessel from arrest in Calcutta. 6 Bolton have commenced arbitration against PCL pursuant to clause 76 of the charter-party ("the Bolton arbitration"); and 7 PCL have asked Bolton to appoint Richards Butler as Bolton's lawyers in the Swiss Singapore arbitration. IT IS HEREBY AGREED between Bolton and PCL as follows: 8 PCL confirms that the LOI extends to and includes delivery of the cargo to Royal Trading Co Ltd or their order, and that the LOI is hereby amended to add the words "and/or Royal Trading Co Ltd or their order" after "Singapore" on the last line of the first page of the LOI. 9 PCL will pay to Bolton the sum of US$50,000 within 7 days of the date of this agreement by way of partial reimbursement of the legal costs and expenses that have been incurred by Bolton as a result of or in connection with the arrest of the Vessel in Calcutta ("the Calcutta costs"). The Calcutta costs comprise of invoices raised by various parties, including: (a) Pandi Correspondents (Bolton's agents in Calcutta)

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(b) claims by Swiss Singapore for misdelivery or conversion in the Swiss Singapore arbitration and any other claims brought by Swiss Singapore in that arbitration for loss, damage, deterioration, or delayed delivery or cargo insofar as such claims arise solely as a direct result of the Vessel's stay in Calcutta on or about 24th January 1999 up to the completion of discharge and not as result of the Vessel's unseaworthiness. 11 Bolton hereby appoints Richards Butler, London to act on their behalf in the Swiss Singapore arbitration. That appointment shall only apply in relation to the claims of Swiss Singapore against Bolton described in recital 4 of this agreement and unless the parties agree otherwise shall not extend to any other claims made by Swiss Singapore against Bolton in the Swiss Singapore arbitration. 12 (a) RB will promptly advise Bolton of all significant developments in the Swiss Singapore arbitration and will provide Bolton with copies of all pleadings, orders/rulings made by the arbitration tribunal and other significant documents. This information and documents will be forwarded by Richards Butler to Bolton, via Albamar Shipping Co of Pireaus. (b) PCL will make all decisions on behalf of Bolton in relation to the day to day conduct of the Swiss Singapore arbitration. (c) RB will keep Bolton informed of any and all settlement negotiations with Swiss Singapore. It is expressly agreed, however, that Bolton will not enter into any settlement agreement with Swiss Singapore without PCL's consent. 13 PCL will pay all Richard Butler's fees and expenses incurred in the Swiss Singapore arbitration on an indemnity basis. Bolton will have no responsibility whatsoever to pay any such fees and expenses. 14 Bolton will use their best endeavours to provide full co-operation to Richards Butler and PCL in the Swiss Singapore arbitration. This includes but is not limited to providing all relevant documents and using reasonable endeavours to ensure that all necessary witnesses from Bolton (including but not limited to the Master and crew of the Vessel") attend any hearing in the Swiss Singapore arbitration. PCL will advance upfront to Bolton any reasonable sums for the costs and expenses which Bolton need to spend or incur as a result of such co-operation. 15 In the event that any costs whatsoever are awarded to Bolton in the Swiss Singapore arbitration, Bolton agrees that these costs shall be paid directly to PCL and that the arbitration tribunal in the Swiss Singapore arbitration should make an order to that effect. Conversely, if any costs whatsoever are awarded against Bolton in favour of Swiss Singapore, PCL agrees that they shall pay these costs directly to Swiss Singapore. 16 Any award, ruling or finding of fact made by the arbitration tribunal in the Swiss Singapore arbitration shall have no effect on the position of Bolton in the Bolton arbitration or under the LOI or the charterparty. Bolton will not be bound by any award, ruling or finding of fact made by the arbitration tribunal in the Swiss Singapore arbitration that is contrary to Bolton's interests, nor will such award, ruling or finding of fact constitute res judicata or issue estoppel against Bolton or be admissible as evidence or disclosed to the arbitration tribunal in the Bolton arbitration. 17 The LOI shall continue as a binding contractual agreement between Bolton and PCL. Save as expressly provided herein, nothing in this agreement shall effect or vary the rights of the parties under the LOI. 18 Bolton confirms that they have no objection for the arbitration tribunal in the Swiss Singapore and/or the Bolton arbitration to be notified of the terms of this agreement. 19 This agreement is governed by English law and all disputes arising hereunder or connected with this agreement are to be referred to the tribunal in the Bolton arbitration…"

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Particulars See particulars under paragraph 24 above." 279 It is contended that Pacific relied upon those representations in permitting delivery of the cargo of the MV Nelson to Royal without surrender of the bills of lading. 280 Alternatively, Pacific relied upon a case in negligence in the circumstances in which BNP released the facsimiles of NEAT's first and second LOI. 281 The negligence case was framed in the following way: "39. Further or in the alternative, the plaintiff says that in and prior to 19 February 1999, the first defendant in the course of its banking business was required to execute or sign agreements in its documentary credit department that would be provided to and relied on by customers of the first defendant and by parties identified in the agreements as being an execution or signature that would be authorised by and bind the first defendant. 40. The first defendant knew that the class of persons, being the customers of the first defendant or parties to the agreements, would be likely to suffer economic loss if the first defendant failed to exercise reasonable care in executing or signing such agreements. 41. On or about 28 January 1999 and again on or about 19 February 1999, the first defendant in its documentary credit department was requested by its customer, the second defendant, to execute or sign an agreement being an agreement to which the plaintiff was a party, 42. The plaintiff was vulnerable to suffering economic loss, if the first defendant failed to exercise reasonable care in executing or signing agreements in its documentary credit department, by permitting delivery or continued delivery of cargo without surrender of original bills of lading. 43. The first defendant knew or ought to have known that the plaintiff would be provided with agreements executed or signed by the first defendant and that the plaintiff would be likely to suffer economic loss if the first defendant failed to exercise reasonable care in executing or signing the agreements. 44. In the premises the first defendant owed the plaintiff a duty of care in executing or signing the agreements dated on or about 28 January 1999 and 19 February 1999. 45. In breach of the said duty of care, the first defendant was negligent. Particulars of negligence The first defendant by itself, its servants and agents was negligent by: (a) failing to provide any or any proper instructions for the execution or signing of agreements in its documentary credit department;

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In what is perhaps its least specific use, "on behalf of" may be applied to someone who does no more than express support for persons or for a cause, as with one who speaks on behalf of the poor or on behalf of tolerance. It may be used when speaking of an agency relationship, but also of some quite ephemeral relationships, such as that which exists between a party to litigation and the witness he calls, a witness "on behalf of" the defence. Again, it may, as the Northern Territory here contends, be used where the relationship is that of trustee and cestui que trust. It was of such a use that Lord Cairns L.C. spoke when he said, in Gillespie v City of Glasgow Bank (1879) 4 App. Cas. 632, at p 640, that the phrase could describe a relationship of trustee and cestui que trust "if the circumstances of the case are consistent with that interpretation". Context will always determine to which of the many possible relationships the phrase "on behalf of" is in a particular case being applied; "the context and subject matter" (per Dixon J in the Federated Clerks' Case (1949) 79 C.L.R., at p 438) will be determinative. (at 386) 286 In R v Portus; Ex parte Federated Clerks Union of Australia (1949) 79 CLR 428 the court was concerned with the use of the words "on behalf of" in a sense wider than that denoting the relationship of principal and agent. Dixon J expressed that wider sense of the phrase as follows: "…It means for the purposes of, as an instrument of, or for the benefit and in the interest of…" (at 438) 287 In my view, there is no warrant in giving the phrase anything other than its ordinary meaning of conveying that the signatory, Dhiri, beside the words "Bankers signature" is the signatory as agent for, or the instrument of, BNP in executing the document: that BNP has executed the document by its agent, or instrument. 288 However, that provides little aid in understanding the effect of that execution of the document. It must be intended to convey something to the recipient, in this case Pacific, as "owners" of the vessel. 289 It has been submitted on behalf of BNP that the execution of the document merely conveys some form of authentication of the execution by NEAT. I have significant difficulty with that proposition as a matter of construction of the document. If it was a matter merely of authentication one would expect to find words so designating the effect of Dhiri's signing the document on behalf of BNP. In my view, in so executing the document, BNP must be taken as being involved in some fashion in the operation of the document. 290 The conclusion I have reached is that it is neither an indemnification of Pacific in terms of the document, nor is it merely signifying some form of authentication of execution of the document by NEAT. I am satisfied that it carries an assurance that NEAT's undertaking and indemnification comes from an entity that can make good that undertaking and indemnity. 291 Construed in that way, BNP could not be held liable as indemnifier, nor as guarantor, as distinct from any liability that might arise from any negligent or misleading conduct in providing that form of assurance to Pacific. 292 So much for the document as a matter of construction of its terms and manner of execution. For the reasons that follow, the evidence is clear that Dhiri had no authority to commit BNP to a liability as a party to the LOI. Further, there was no commercial arrangement between NEAT and BNP for the bank to provide such a facility. 293 To the extent that there is any room for the operation of the contra proferentem rule, the evidence established that the standard form letter of indemnity which was forwarded to Sniekers on 21 January 199 as "THE LOI REQUESTED BY OWNERS" was one which originally emanated from Bolton. Sniekers adapted it from similar documents in NEAT's files, in preparing the NEAT LOIs submitted to Dhiri for signing by BNP. 294 As a matter of construction, the form of that standard letter of indemnity carries with it the same difficulties which, in my view, face Pacific in construing NEAT's LOIs as ones given jointly by NEAT and BNP. In fact, the pro forma document more clearly distinguishes between the party giving the indemnity, referred to as the "Requestor", and the bank. That distinction is made clear by so much of the document which identifies the party agreeing to indemnify the ship owners with the party "requesting delivery". That dichotomy is preserved in the manner of execution which provides for execution "For and on behalf of [Insert name of Requestor]" separately from the execution "For and on behalf of [Insert name of Bank]": leaving the unanswered question - what, precisely, is the function of the bank in executing such a document? It was in a form issued by "PCL's P & I C", referring to SKULD, the mutual insurance entity comprised of shipowners. The tonnage represented by the membership was in the order of 60,000,000 gross tonnes. The evidence did not establish any usage or practice in relation to the standard form which would provide any aid to the construction of the NEAT LOIs. 295 The execution of the NEAT LOIs by Dhiri, purportedly, on behalf of BNP was not an isolated occurrence. Some sixteen months previously Dhiri and another officer of BNP had executed a NEAT letter of indemnity in comparable circumstances to those the subject of the NEAT LOIs, although, as noted later in these reasons, one of Pacific's directors was a committee member of SKULD with extensive experience in the shipping industry. 296 That document was in the following form: "S.S/M.V ALAM TANGKAS Goods: 12,600 METRIC TONNES AUSTRALIAN FIELD PEAS B/L No: No.s 1 - 13 Description: IN BULK Marks: N/A Loading Port (S): WALLAROO, SOUTH AUSTRALIA, AUSTRALIA Discharged Port (S): CALCUTTA, INDIA The above goods were shipped on the above vessel by Messrs NEW ENGLAND AGRICULTURAL TRADERS PTY LTD (and consigned to order) but the relevant Bills of Lading have not yet arrived. We hereby request you to deliver such goods to: RECEIVERS AS DIRECTED BY AGENCIES AT RECEIVING PORT: PURBA BHARATI SHIPPING AGENCY PVT. LTD. without production of the Bills of Lading. In consideration of your complying with our above request we hereby agree as follows: 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability loss or damage of whatsoever nature which you may sustain by reason of delivering the goods to RECEIVERS AS DIRECTED BY AGENCIES AT RECEIVING PORT: PURBA BHARATI SHIPPING AGENCY PVT. LTD. in accordance with our request. 2. In the event of the proceedings being commenced against you or any of your servants or agents in connection with the delivery of the goods as aforesaid to provide you or them from time to time with sufficient funds to defend the same. 3. If vessel or any other vessel or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened, to provide such bail or other security as may be required to prevent such arrest or detention or to secure the release of such vessel or property and to indemnify you in respect of any loss, damages or expenses caused by such arrest or detention whether or not the same may be justified. 4. As soon as all original bills of lading for the above goods shall have arrived and/or come into our possession, to produce and deliver the same to you whereupon our liability hereunder shall cease. 5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity. 6. This indemnity shall be construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. Your (sic) Faithfully, For and on Behalf of NEW ENGLAND AGRICULTURAL TRADERS PTY LTD

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[signed] [signed] Name: PETER P SNIEKERS PETER M HOWARD Designation: DIRECTOR DIRECTOR NEW ENGLAND AGRICULTURAL TRADERS PTY LTD PO BOX 770 ARMIDALE NSW 2350 PH: (067) 725588 ACN 003 271 841 For and on Behalf of BANQUE NATIONALE DE PARIS, SYDNEY Bankers : [BNP bank stamp] [signature] [signature indecipherable] ERA DHIRI" 297 It will be noted that this LOI followed more closely the actual form of the Bolton P & I document in that it does not provide a place for execution immediately below the words "Your faithfully", as Sniekers, in adapting the P & I form to the NEAT LOIs, unnecessarily made provision for. BNP has sought to make some point of distinction about that different manner of execution. I think it is an empty proposition, and that, in those respects, the 1997 LOI is indistinguishable in any significant way from the NEAT LOIs. 298 The form of the 1997 LOI, however, is distinguishable from the NEAT LOIs in that the terms of the 1997 LOI do not clearly identify the party, or parties requesting delivery of goods without production of the bills of lading, as distinct from the NEAT LOIs. The consequence is that the terms of the 1997 LOI are capable of embracing requests by both NEAT and BNP in addition to encompassing an agreement by each of them to indemnify the owners of the subject vessel. I would construe the 1997 LOI as an indemnity by both NEAT and BNP, leaving aside questions of authority of the signatories for the bank. 299 Chua had been involved in the shipment in 1997 involving the Alam Tangkas and in the obtaining of the 1997 letter of indemnity. He described it as a bank letter of indemnity, which, on the face of it, I think bears that description. 300 Chua was acting in a similar capacity at the time of the chartering of the MV Nelson by NEAT and he, on behalf of Pacific, was instrumental in obtaining the NEAT LOIs. 301 I do not understand there to be any dispute that the issuing of indemnities and guarantees by BNP was the function of the guarantee/loan department of BNP. 302 Dhiri was a manager of the department in BNP known as Documentary Credits and her duties involved the supervision and the handling of import/export letters of credit. I am satisfied that her department was not authorised to issue bank guarantees or indemnities and that Dhiri was well aware of this. 303 The evidence of Paul Ryan (Ryan), state manager of BNP, in my view, left no doubt that Dhiri did not have the authority of BNP to give guarantees or letters of indemnity on behalf of BNP. 304 As between NEAT and BNP, it is difficult to accept that NEAT understood BNP to be giving an indemnity in terms of the NEAT LOIs by Dhiri's execution of the facsimiles. It is clear from the evidence of Kavanagh that the facilities provided by BNP to NEAT included a Multi-Option Facility" which itself included a "Trading Contingency Guarantee". Of that facility, the "maximum utilisation" was not to exceed $500,000 and BNP's "standard letter of indemnity [was] to be provided … for each guarantee issued under this option". 305 It is not in issue that the subject of the NEAT LOIs exceeded the facility limit for trading contingency guarantees under the BNP facilities. There was no discussion between NEAT and BNP seeking any such special facility for the NEAT LOI transactions. In my view, Dhiri and the representatives of NEAT failed to turn their minds, clearly, to what were the consequences of Dhiri's signing of the LOIs on behalf of BNP. 306 The evidence which I have outlined earlier in these reasons is strongly indicative of a state of confusion, if not, near panic created by Royal's dishonesty in failing to meet its obligations of payment under the NEAT/Royal contracts, combined with SSOE's frustrating conduct in delaying acceptance of discrepant documents, due to unsatisfactory business relations with Royal. I think the reasoning of both NEAT and Dhiri, shortly stated, was that, once payment under the subject letters of credit was assured by acceptance of discrepant documents, the provision of an LOI was an expedient, risk free exercise. 307 In reality, with SSOE as the notify party under the initial bills, as shipper under the switched bills and as the party nominated in the NEAT/Royal contracts to open the requisite letters of credit, the risk was great in providing the LOIs where, in each instance, the bills of lading would be in the possession of SSOE under the letters of credit arrangements and where the passage of the bills into the hands of Royal depended upon the terms of the financial arrangements between SSOE and Royal: the precise terms of which were unknown to NEAT. 308 The evidence of Dhiri is that in executing the LOIs she repeatedly informed NEAT that execution by BNP was only for verification of the signatures. Those conversations are denied by NEAT. I have had great difficulty in deciding where the truth lies in that area. 309 In the case of Sniekers, during interlocutory proceedings in this Court, his evidence was that he could not recollect Dhiri informing him that BNP's role was simply that of verification of NEAT's signatories to the LOI. That was within a matter of months after the event. In the case of Howard, on 16 March 1999 he forwarded the second NEAT LOI to SSOE with the note beside BNP's purported execution of it as follows: "Signatures confirmed by BNP". 310 Howard explained that note as one reflecting, not his view, but the position asserted at that time by BNP. I accepted Howard's evidence that it was not until the crisis arose in March, with SSOE's intervention, that he was made aware by BNP that its role in executing the NEAT LOI's was limited in that way. 311 I formed a favourable opinion of both Howard and Sniekers. Howard was open with his responses which were given promptly without any apparent indication of 'tailoring' his answers. He was convincing in his denial of awareness of the suggested limited role of BNP. Sniekers appeared to give his answers carefully and directly. He showed a clear awareness of the issues but not to a point of unacceptable advocacy. If I was forced into a criticism of the evidence of Dhiri it would be that it was very self serving, not totally responsive, nor convincing. 312 However, the repercussions of the events the subject of these proceedings must have been considerable in terms of her responsibilities within BNP. 313 As earlier noted, there are internal records which, on Dhiri's evidence, were made by her during the course of her dealings with Sniekers. In relation to the first NEAT LOI Dhiri noted on the facsimile from NEAT of 28 January 1999, which attached the LOI, as executed by NEAT, as follows: "Advised Peter that we are only verifying sigs and we will fax to you not to shipping co as we have no arrangement with them". 314 That note is initialled. On the facsimile from NEAT of 18 February 1999 seeking urgent execution of the second NEAT LOI her note read as follows: "Peter advised that we are not party to it we are merely verifying sigs. Fax will be sent to New Eng only we have no arrangements with ship co." 315 On the back of the first NEAT LOI she has noted: "Okay I.K to co sign as verifying sigs."

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The reference to I.K is a reference to Kavanagh. 316 However, I have considerable reservations about the reliability of the accuracy of those notes. It is almost inexplicable why some endorsement would not have accompanied her execution of the two NEAT LOIs, given the clear understanding that immediately upon her signing the documents they were to be sent, via NEAT, to Pacific in order to enable discharge of the peas to commence, or to continue. 317 Moreover, in the extensive record, albeit incomplete, record of telephone communications between her and NEAT there is no indication of any communication by her of the limited role of BNP in executing the two NEAT LOIs. 318 There are numerous occasions, evidenced in the transcripts of those conversations, when the opportunity was afforded to her to emphasise the limited function that BNP was called upon to play in relation to the two LOIs. That opportunity was never availed of and the whole tenor of those conversations is contrary to Dhiri's evidence of repeated insistence on the limited function of BNP in her execution of the NEAT LOIs. 319 Further, the evidence established that Dhiri refused to execute the LOIs until the discrepant documents in relation to the subject letters of credit had been accepted. On the face of it, such acceptance would have been irrelevant to her involvement in simply verifying the signatures of NEAT's execution of the two LOIs. Dhiri explained her conduct on the basis that she was acting in the interest of NEAT. I did not find that the most convincing explanation. 320 Kavanagh corroborated Dhiri's evidence of receiving his instructions to sign the first NEAT LOI only as verification of NEAT's execution of the documents. His evidence of his communications with Dhiri on the 28 and 29 January I found quite confusing. However, I have no reason to think that that was the result of anything other than a difficulty in recalling the precise sequence of events that occurred on those days in relation to the first NEAT LOI. 321 Illustrative of the difficulty I have experience in accepting Dhiri as a reliable witness is the following evidence in cross examination by Howard (at the time NEAT had no legal representation): "[HOWARD] Q. I put it to you the key elements that were put to you prior to signing the LOI was that there was a threat of demurrage, that Royal Trading had opened its own LOI and BNP's condition on signing the LOI, it would not sign it until documents had been accepted by Swiss Singapore, would you agree with that? A. We didn't want to sign the LOI, not because we didn't want to sign, not that NEAT should issue - not us that we wouldn't be signing it. It would be more that you shouldn't be issuing any LOIs until you get acceptance of documents. That was the main issue here and that was what I explained; no, we don't want you to issue it unless you get acceptance. If you want us to sign it to verify the signatures we won't be doing it unless there is acceptance of documents which NEAT accepted.

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(vi) " Mrs Dhiri : Now, what do you want me to do, Murali? Mr Murali : … Mrs Dhiri : You have a copy of that LOI? Mr Murali: I heard it was there with you already. Mrs Dhiri : I have packed all my stuff, Murali. We're packing, we're moving the floor, okay. Mr Murali : What I have to do now? Mrs Dhiri : You'll have to fax me that again. Mr Murali: Okay, Peter Sniekers is not here, anyway I'll talk to him and I'll - you want me to fax to the same number, 9223736? Mrs Dhiri: That's right and I don't even have a file - how many tonnes is that one? Mr Murali: Which one? Mrs Dhiri : What are you asking me to sign? How many tonnes? Mr Murali: That is 4000 tonne. Mrs Dhiri : And how many tonnes are remaining? Mr Murali : 6000 tonnes. Mrs Dhiri : So you've got two sets of documents? Mr Murali : Yes, it is two sets of documents for 4000 and 6000. Mrs Dhiri : Okay. … Mr Murali : Okay, I'll call Peter Sniekers and I'll come back to you. Mrs Dhiri : Yes, I won't be - tell Peter Sniekers I haven't got anything from the Bank because ….said yes I have, I'll go and speak to Jeanette, and it's up to Peter to take that, it's not up to me and I don't even have a file how many tonnes I have to sign off. … " (vii) " Mr Murali: Yes, m'am I just actually - Swiss Singapore has brought me that Bangkok Bank Singapore conference, that man has confirmed that he said yes, it has been accepted documents and we kept it in ship and it is coming and in the mean time I told him if you can fax the papers to Era Dhiri, BNP Sydney, he's grateful and he's going to do that and I am faxing an LOI for 3800 tonnes in fact Peter Sniekers has said it will already be there for you. Mrs Dhiri : I know, it is, but --- Mr Murali: I told him the same thing, she has been shifting so mark them down here that she immediately … I'm just faxing to your fax machine, …. And fax it directly to the shipping company directly so that will suffice and they can take the delivery of the cargo today itself and you will be getting immediately faxed also from Bangkok Bank or Singapore now for the 4000 tonnes which we accepted the documents. I have taken to the conference here, I have recorded also a message that says, "What the hell, I accepted the documents" and things like that. It will be there in my recording. Mrs Dhiri : And the bank said that ? Mr Murali : Yes, the bank said that. Mrs Dhiri : Okay, good. Mr Murali : Singapore brought me and brought the bank also because the head of the department of the bank, some Chinese man, he said, "I will just fax that one, "I will just fax that one, we are accepting that we have already accepted the documents and the …. have already been forwarded and the same shift I requested "Can you fax to the old fax number 9223 7361", he said, "Yes I will do that". So in the mean time I faxed the LOI, can just sign it and send it directly to him. Mrs Dhiri : Okay." (viii) "Ms Dhiri : Listen, you want me - I signed this LOI. Now, you want me to fax it back to you? Mr Murali : No, but if you can fax it to them, to Derek Kilby and others. Ms Dhiri : Okay ."

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330 On 14 January 1999 NEAT forwarded to BNP Royal's facsimile which noted that "all documents with discrepancy [would] be accepted by [Royal]". Clearly, Royal and SSOE were known to be different entities and treated as such. 331 I have to accept that something must have been said by Dhiri at one time or another to a NEAT representative that, in her mind, conveyed the message that she was signing the NEAT LOIs merely for verification of signatures. I am unable to accept that it was said in circumstances or in terms that effectively communicated the limitation to either Sniekers or Howard, or any other representative of NEAT. 332 Dhiri's evidence, repeated for ease of reference, tends to bear out the correctness of that finding: "I qualified in a sense saying I am countersigning to verify your signatures, proof of it, not in that many words." 333 As earlier indicated, the evidence of BNP's witnesses is incontrovertible. Dhiri did not have authority to grant an indemnity or execute a guarantee on behalf of BNP. 334 In view of my construction of the NEAT LOIs and my findings in Pacific's case in negligence, it is unnecessary to consider the question of ostensible authority raised on behalf of Pacific. 335 For the foregoing reasons, in my view, Pacific's case in contract must fail. Pacific's Negligence case 336 In considering Pacific's case in negligence against BNP, the nature of Dhiri's authority does not raise a difficult question and is one in respect of which the evidence of Ryan and Kavanagh is conclusive. It will be sufficient to quote the following evidence of Ryan: "HIS HONOUR: Q. Could I ask, would you have signed it on behalf of the bank? A. No, I would have first of all sought a lot more clarification from my client as to why it was required since they are looking to indemnify a shipping company for discharge of a cargo where the sale, the title documents relative to that cargo had, as I understand, been paid for and taken up by another party. So that I would question why my client was indemnifying a shipping company for a cargo in which they effectively had no longer had an interest. If that makes sense.

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Q. Well, is there any difference that you can identify? A. Yes, there is. A banker's guarantee is a banker's guarantee and letter of indemnity signed by the bank is totally different documents. Q. Can you explain what you say is the significance of the difference between the two? A. You see, the banker's guarantee is written by the bank himself, that they guarantee that this much they will pay if any problem will come, and letter of indemnity is usually given by the receiver and which the banker endorse that we are also the party to this banker's guarantee - not banker's guarantee, the letter of indemnity. Q. So the only significant difference in your mind is that there are two parties to a letter of indemnity where it has been countersigned by a bank whereas a banker's guarantee is only given by one party? A. Right. Second, the banker's guarantee is given by the bank to pay and letter of indemnity is indemnifying your risk in case if any losses happen, you are to prove those losses, then you will be able to cash it. Bank guarantee you will be able to cash it immediately. Q. So far as you were concerned in 1999, from a practical point of view, leaving aside any legal distinction, you were prepared to treat a letter of indemnity countersigned by a bank as, in essence, the same as a banker's guarantee for the purpose of delivery of cargo without production of bills of lading, correct? A. Yes". (T1056:40-T1057:23) 342 In any event, recourse to dictionary definitions of 'countersigning' as acts of confirmation or authentication are of little assistance, in my view, in understanding, on the face of the documents, the nature of BNP's execution of the NEAT LOIs in the circumstances of this case. 343 As earlier stated, BNP is not an indemnifier under the NEAT LOIs, nor would I equate BNP's execution of the LOIs with a bank guarantee. 344 BNP's execution was, in my view, NEAT's banker's assurance that its customer was good for the subject indemnity. That is the only way I have been able to read the unqualified form of BNP's execution of the NEAT LOIs. 345 When those LOIs, so executed, are examined in the circumstances in which they were required by Pacific and in the form in which they were required, I think the conclusion is inescapable that the 'bank' was required to execute the LOI as giving such a banker's assurance. 346 The conclusion is compelling that Dhiri exercised her authority to execute the documents on behalf of BNP negligently in the form in which the LOIs were executed by her. 347 It was not in issue that NEAT was not in a financial position to make good such an indemnity to Pacific. It was not suggested by BNP that Dhiri had any justifiable ground for concluding otherwise. What is plain on the evidence is that both NEAT and Dhiri erroneously proceeded on the basis that there was no measurable risk of the indemnity being called upon, once payment was assured upon acceptance of discrepant documents under the subject letters of credit. 348 I think little utility lies in examining Pacific's case in negligence concerning the system in place within BNP for the execution of documents. In this case Dhiri had express authority to execute the documents on behalf of BNP for the purpose of verifying the signatories to the NEAT LOIs. It was her negligent performance of those responsibilities for which BNP may be held liable. 349 One does not have to have recourse to any deficiencies in the system of banking as conducted by BNP to reach that conclusion. 350 The central question, then, is whether BNP owed a duty of care to Pacific to avoid any economic loss to it that may be caused by BNP's negligence. In my view, in the particular circumstances of this case, there is only one acceptable conclusion. BNP did owe such a duty of care to Pacific. 351 I have had the benefit of extensive research by counsel of the principles of negligence and the existence of a duty of care in relation to economic loss. 352 Much of what has been submitted on behalf of BNP turns on policy considerations dictating restraint on the imposition of a duty of care by a banking institution to third parties, other than their customers. In my view, policy considerations do not arise in this case, or if they do, they do not govern the situation. It is not simply a case of a bank's negligent act in a customer-client relationship which may be seen to have caused damage to a third party that calls for consideration. 353 In this case, Dhiri was aware that the requirement for the bank to execute the documents emanated from "the owners". Further, that the document, once executed, was to be provided to Pacific for the purpose of indemnifying Pacific against delivery of valuable cargo without presentation of bills of lading: on the face of it a very significant commercial risk, particularly to a manager of the documentary section of BNP. 354 In support of its case in negligence Pacific relies upon Perre v Apand [1999] 164 ALR 606 at 611, and Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 555. 355 Both parties have relied upon Perre. Perre was the case of the potato farmers whose business was adversely affected by the supply of infected seed to the neighbour's property which had the effect of precluding the neighbouring farmers from exporting their product. Gleeson CJ had the following observations to make about the current state of the law concerning liability for economic loss: "In Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529 all the members of the court, except Murphy J, accepted that there is no general rule that one person owes to another a duty to take care not to cause reasonably foreseeable financial harm. The consequences of such a rule would be intolerable. However, as the decision in that case showed, and as had previously been shown in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, there are circumstances in which the law recognises a duty of care such as will permit recovery of pure economic loss. There are at least three considerations which have been, and will remain, influential in restraining acceptance of such a duty of care in particular cases, or categories of case. First, bearing in mind the expansive application which has been given to the concept of reasonable foreseeability in relation to physical injury to person or property, a duty to avoid any reasonably foreseeable financial harm needs to be constrained by "some intelligible limits to keep the law of negligence within the bounds of common sense and practicality". Secondly, to permit recovery of foreseeable economic loss, which may or may not occur in a commercial setting, for any negligent conduct, may interfere with freedoms, controls and limitations established both by common law and statute in many legal contexts. Thirdly, in those cases where the loss occurs in a commercial setting, a third party, C, may suffer financial harm as a result of conduct which is regulated by a contract between A and B. It may be that the consequences of such conduct, as between A and B, are governed and limited by the contract. This is a problem which commonly occurs in relation to maritime claims, and may help to explain the strictness with which an exclusionary rule has been applied in shipping cases. Another matter of concern is the lack of precision in the concept of financial or economic loss. Physical injury to person or property is usually readily identifiable, even if it may take time to manifest itself. However, the concept of financial or economic loss or harm is wide enough to comprehend a variety of circumstances or contingencies, some of which may be indirect and difficult to identify or measure. Suppose, for example, that a child's parents are killed as a result of the negligent conduct of another. In many jurisdictions there are statutory provisions which govern entitlement to compensation. However, if the matter were at large, how would a court set about identifying, and estimating, the kinds of financial loss which might sound in damages? What kinds of detriment, harm, or disadvantage, would be treated as "financial loss"? The law of tort is a blunt instrument for providing a remedy for many kinds of harm which may be suffered as a consequence of someone else's carelessness, and which are capable of being described as financial. If there once was a bright line rule which absolutely prevented recognition of a duty of care in any case where the negligent conduct of one person caused financial loss to another, not associated with injury to the other's person or property, and which assigned claims to recover such loss to the field of contract rather than tort, the line gave way in an area where there is a clear potential for carelessness to cause financial harm: negligent misstatements made to a person who, to the knowledge of the maker of the statement, relies upon the advice or information provided. However, there is no convincing reason why conveying advice or information should be treated as the solitary exception to an otherwise absolute exclusionary rule. Once the exclusionary rule ceased to be a bright line rule, it lost one of its principal justifications. Nevertheless, the considerations underlying the rule remain cogent, even if they are no longer seen as absolutely compelling. Courts have found difficulty in proposing an alternative general rule which makes better sense and which, at the same time, pays due regard to the problems earlier mentioned. The solution does not lie in what is sometimes described as the three-stage "test" said to have been formulated by Lord Bridge of Harwich in Caparo Industries Plc v Dickman [1990] 2 AC 605. Lord Bridge never said it did. He said it did not. In the much quoted passage in his Lordship's speech where he referred to the necessary ingredients of foreseeability, proximity, and a situation in which the court considers it fair, just and reasonable that the law should impose a duty, he immediately went on to say that "the concepts of proximity and fairness … are not susceptible of any such precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope". He also quoted with approval an observation of Brennan J concerning incremental development of the law. In the same case, Lord Oliver of Aylmerton, whose speech has been equally influential in later cases, said that "to search for any single formula which will serve as a general test of liability is to pursue a will-o'-the wisp". In Caparo, Lord Oliver emphasised that, in this field of discourse, the mere foreseeability of possible damage, without some further control (which he summarised as "proximity", after explaining what he meant by that term), would not be useful as the test of liability. At the same time, however, his Lordship made it clear that "in some cases the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced". In relation to the giving of advice or information, questions of reliance and actual foresight of the possibility of harm (or, what is the same thing, the foresight that a reasonable person would have) are closely related. Moreover, knowledge (actual, or that which a reasonable person would have) of an individual, or an ascertainable class of persons, who is or are reliant, and therefore vulnerable, is a significant factor in establishing a duty of care. Vulnerability can arise from circumstances other than reliance. In Caltex, the obvious vulnerability of a specific plaintiff was influential in a number of the judgments. This was not merely an arbitrary method of solving the problem of potentially indeterminate liability. It was an application of what Lord Oliver later discussed as the idea that in a given case, the degree (and nature) of foreseeability may have an important bearing on whether there is a duty of care." (at 609-611) 356 None of the three "influential" constraints referred to by Gleeson CJ has any application to the circumstances of this case, nor does the concept of financial or economic loss in this case suffer from lack of precision. Further, the disappearance of the clear "bright line" occurred to encompass cases such as this, where a banker is called upon to provide a financial assurance to be relied upon by a third party. 357 As will be seen later in these reasons, the evidence of reliance by Pacific upon the bank's execution of the NEAT LOIs is considerable. There can be no doubting, in my view, Pacific's "vulnerability" in the sense considered by Gleeson CJ. 358 If one accepts the evidence of Tan Chin Hee (Tan), a director of Pacific, and Chua, as I think I should, the evidence of reliance is strong, particularly if one takes into account Tan's experience and his evidence of his understanding that NEAT was not a financially strong institution. Tan had extensive experience in the shipping industry and was a committee member of SKULD. It is common ground that Dhiri was aware of Pacific's requirement of NEAT's LOI, signed by NEAT's banker, before releasing the MV Nelson's cargo without presentation of a bill of lading. 359 Gleeson CJ agreed with the reasons given by Gummow J in Perre "for concluding that, in the present case, the respondent owed the appellants a duty of care." Gummow J's approach, I think, may be reduced to a 'particular' fact analysis, rather than one which treated the case as being resolved by the application of some general principle. I think that is illustrated by the following passages: "The question in the present case is whether the salient features of the matter gave rise to a duty of care owed by Apand. In determining whether the relationship is so close that the duty of care arises, attention is to be paid to the particular connections between the parties. Hence what McHugh J has called the "inherent indeterminacy" of the law of negligence in relation to the recovery of damages for purely economic loss. There is no simple formula which can mask the necessity for examination of the particular facts. That this is so is not a problem to be solved; rather, as Priestley JA put it in Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 at 8, "it is a situation to be recognised. …

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I prefer the approach taken by Stephen J in Caltex Oil. His Honour isolated a number of "salient features" which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss. In Hill v Van Erp (1997) 188 CLR 159 at 233-4 and Pyrenees Shire Council v Day (1998) 192 CLR 330 at 389, I favoured a similar approach, with allowance for the operation of appropriate "control mechanisms". In those two cases, the result was to sustain the existence of a duty of care." (at 659- 660) 360 In this case the 'salient features', I think, are so strong as to demand the recognition of a duty of care owed by BNP to Pacific, the intended recipient of NEAT's LOIs. In my view, BNP gained no strong foothold in its defence by labelling its alleged conduct as an omission, citing what was said by Gleeson CJ in Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 176 ALR 411 to the effect that the common law does not ordinarily impose liability for omissions. 361 In any event, that observation should be put into the context of Modbury which arose out of proceedings for damages for personal injury caused by an assault in a car park occupied by the defendant. The complained of negligence against the defendant was that it failed to have the car park area properly illuminated. The context of the Chief Justice's observation is best illustrated by the following passage from his Honour's judgment: "Leaving aside contractual obligations, there are circumstances where the relationship between two parties may mean that one has a duty to take reasonable care to protect the other from the criminal behaviour of third parties, random and unpredictable as such behaviour may be. Such relationships may include those between employer and employee, school and pupil, or bailor and bailee. But the general rule that there is no duty to prevent a third party from harming another is based in part upon a more fundamental principle, which is that the common law does not ordinarily impose liability for omissions. This was explained by Lord Goff of Chieveley in Smith v Littlewoods Ltd [1987] AC 241 at 270. His Lordship said, with reference to a general duty of an occupier to take reasonable care for the safety of neighbouring premises: Now if this proposition is understood as relating to a general duty to take reasonable care not to cause damage to premises in the neighbourhood … then it is unexceptionable. But it must not be overlooked that a problem arises when the pursuer is seeking to hold the defender responsible for having failed to prevent a third party from causing damage to the pursuer or his property by the third party's own deliberate wrongdoing. In such a case, it is not possible to invoke a general duty of care; for it is well recognised that there is no general duty of care to prevent third parties from causing such damage. [emphasis in original]" (at 417) 362 In my view, the essential act of negligence in this case is not one of omission. Rather, it better fits the clothing of commission in the form of BNP's execution of the NEAT LOIs. However, in my view, nothing flows from that distinction. 363 It was submitted on behalf of BNP that "a duty of care to avoid economic loss is still the exception rather than the rule", taking up an observation of Gyles J in Dovuro Pty Ltd v Wilkins [2000] FCA (unreported - par 184). It was further submitted that, in that case, Branson J listed "among the 'limited circumstances' where it has been accepted that pure economic loss may be recoverable", none which applied to the circumstances of this case. The passage referred to in Dovuro does not define exclusive categories of circumstances in which pure economic loss may be recovered. That may be gleaned from an examination of the passage relied upon, namely: "The starting point is England Cattle v Stockton Waterworks Co (1875) LR 10 QB 453 and Simpson & Co v Thompson (1877) 3 App Cas 279 are said to have established the principle that financial loss not consequent upon property damage or personal injury (that is pure economic loss) is not recoverable in a suit in negligence. It is doubtful whether these early cases in fact established the principle for which they are now cited. The cases were concerned with a plaintiff who claimed interference with his contractual rights as a result of damage to property of a third party and it was held that the plaintiff could not have sued for the interference with his contractual rights. Be that as it may, since at least the time of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964]AC 465 it has been accepted that pure economic loss is recoverable in limited circumstances. Those circumstances now include : when there is a loss flowing from negligent words (Hedley Byrne); when there has been negligent damage to the property of a third party and economic damage to the particular plaintiff is foreseeable (Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529); when there has been the negligent performance of a service (Hill v van Erp (1997) 188 CLR 159); when there has been the negligent introduction of a diseased crop (Perre v Apand); when there has been a wrongful failure by a statutory authority to protect the plaintiff against economic loss (Sutherland Shire Council v Heyman); when loss has been caused by the purchase of a defective building (Bryan v Maloney (1995) 182 CLR 609). (emphasis added) 364 To illustrate the point that Her Honour could not be taken as stating an exhaustive list of circumstances, one need only refer to Hawkins v Clayton (1988) 164 CLR 539, as a case illustrating liability for pure economic loss not falling within the circumstances referred to by Branson J. 365 It was further submitted that this Court should adopt "a cautious and incremental approach", said to be favoured by McHugh J in Perre, before moving to "impose a duty of care on a defendant not to cause economic loss in a situation not falling within a clearly established category". It was submitted that it was an approach clearly supported by the House of Lords in Caparo Industries PLC v Dickman (1990) 2 AC 605 at 618, 628 and 633, and the decision in Murphy v Brentwood District Council (1991) 1 AC 398. 366 Counsel for BNP sought to gain greater acceptance of the approach under English law by reason of the fact that the NEAT LOIs were called to be construed in accordance with English law. I have not been persuaded by the logic of that proposition, nor by the related argument that English law should be favoured as the proper law as "the contractual background can be very relevant to a claim in negligence and the terms of a contract can be a powerful reason not to expand the claimed duty of care in tort". 367 No argument has been advanced to me as to the manner in which the express terms of the NEAT LOI in some way govern the nature and existence of any duty of care that may have been owed by BNP to Pacific, nor has it been satisfactorily explained to me how English law should be treated as the proper law of a tort committed, clearly, in Australia. 368 I think the strongest group of arguments advanced on behalf of BNP is to be found in those which place the circumstances of this case in a special category, namely, of maritime law. 369 It was argued that the following factors gave rise to policy considerations which would have weighed against the Court accepting a duty of care in the circumstances of this case, namely:

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(f) liability in the competitive environment of international trade, in which parties look to their own commercial interests, should be governed by agreements entered into by properly advised parties and not by an expansion of the concept of a duty of care. In this instance Pacific neither sought nor received any advice from BNP in relation to the LOIs. 370 Perhaps, the best advocates for the approach pressed on behalf of BNP may be extracted from the judgment of Gummow J in Perre, during the course of his Honour's analysis of the development of the law of liability in tort for pure economic loss. I refer to the following: "This attitude of the critics identified in San Sebastian and also of Posner J in Miller may reflect concerns that, unless there is denial of recovery for purely economic loss occasioned by the negligence of the defendant, there will be facilitated mass litigation, limitless liability and liability out of proportion to the fault of the particular defendant. A multiplicity of claims would be both vexatious to the courts (particularly in those jurisdictions where juries are still widely used in civil actions and there is limited scope for appellate or other review) and unfair to the defendant whose careless slip may be completely out of proportion to the wide extent of the economic consequences. Enterprise may be discouraged and competition stifled. Further, many of the leading authorities in Britain and the United States involved admiralty and maritime law. In Canadian National Railway Co v Norsk Pacific Steamship Co, La Forest J pointed out that in large measure maritime law encompasses a global system and continued: The bright line exclusionary rule against recovery has for nearly a century been in effect in that system, and continues to be followed by the major trading nations, in particular Great Britain and the United States. In making arrangements for allocating risks in essentially maritime matters, those engaged in navigating and shipping should, as much as possible, be governed by a uniform rule, so that they can plan their affairs ahead of time, whether by contract or insurance against possible contingencies." (at 650) 371 Similarly, in considering a proposition that the Classification Society owed a tortious duty of care in favour of cargo owners to avoid the consequences of breach by ship owners of their non-delegable duty in relation to the sea worthiness of a vessel, Saville LJ in Marc Rich & Co A G v Bishop Rock Marine Co Ltd (The "Nicholas H") (1994) 1 Lloyds Rep 492 at 498 made the following observations: "I am not persuaded by such a proposition. The Hague Rules (and their successor the Hague-Visby Rules) form an internationally recognized code adjusting the rights and duties existing between shipowners and those shipping goods under bills of lading. As Sir John Donaldson, M.R., said in The Aliakmon, [1985]1 Lloyd's Rep. 199 at p.206; 1 Q.B. 350 at p.368, the rules create an intricate blend of responsibilities and liabilities, rights and immunities, limitations on the amount of damages recoverable, time bars, evidential provisions, indemnities and liberties, all in relation to the carriage of goods under bills of lading. The proposition advanced by Mr. Gross would add an identical or virtually identical duty owed by the classification society to that owed by the shipowners, but without any of these balancing factors, which are internationally recognised and accepted. I do not regard that as a just, fair or reasonable proposition. Of course such a duty would give the cargo-owners another defendant, which could be very useful if the compensation recoverable from the shipowners was insufficient through lack of funds or if their insurers were not obliged to pay, but as the Vice-Chancellor pointed out in Gran Gelato Ltd v Richcliff Ltd. [1992] Ch. 560 at 571, that those with whom one deals may become insolvent is an ordinary risk of everyday life." (at 498) 372 However, while economic rationality and the interests of those engaged in international maritime trade lie in contractual or convention based certainty and where they will be expected to safeguard their own commercial interests, such policy considerations do not dictate the exclusion of liability for pure economic loss where the "salient features" of the subject circumstances call for some remedial relief against negligent conduct. For the reasons earlier stated, I think this is such a case. 373 I do not regard it as one involving any advance upon the known and accepted application of the principles of negligence, nor do I regard it as any intrusion into the settled state of maritime law. Unquestionably, the circumstances of the case are unusual, measured by the extraordinary conduct of BNP in executing the NEAT LOIs in the form chosen by Dhiri and for which the bank is vicariously responsible. 374 Senior counsel for BNP sought to gain some analogous support in the law of banking and the need for "clear rules of general application" in bank customer relationships. I have not found that to be of any particular assistance. 375 It was submitted on behalf of BNP that the Court should be "hostile to any claim of vulnerability by [Pacific] in the commercial background to this case", adverting, particularly, to the highly competitive environment of international trade, the nature of the entities involved, the availability of advice in the conduct of their commercial affairs and the absence of any direct relationship between Pacific and BNP in an advisory role. 376 I have difficulty in disagreeing with the proposition that the circumstances will be comparatively rare and unusual where the conduct of the documentary credits department of a bank will render it liable in negligence to third parties in the manner in which it sees fit to conduct its own affairs and in its dealings with its customers. However, that is not a proposition that is offended, in my view, by finding BNP liable to Pacific in the circumstances of this case. 377 It was submitted on behalf of BNP that Pacific "contributed to any ambiguity …. by providing to NEAT a draft form of LOI which did not make it clear whether or not the LOI was to be provided from NEAT (with verification of signatures from NEAT's bankers) or from NEAT and BNP" and further took no steps to clarify any ambiguity after receipt of the NEAT LOIs. I think the difficulty with that proposition was that Pacific did not share any understanding of that suggested ambiguity. 378 It was submitted, I think somewhat faintly, that the alleged negligence of BNP was committed in Singapore. I think that cannot be so having regard to the fact that the NEAT LOIs were executed in Sydney, sent by facsimile by BNP to NEAT in Armidale, and in turn forwarded by facsimile to Pacific in Melbourne, and later sent to Pacific in Singapore. It was said that in "those circumstances, there is a real argument that any statements allegedly emanating from the LOIs were in substance made in Singapore". 379 Counsel for both BNP and Pacific presented authorities of the Singaporean Court of Appeal unsupported by any expert evidence of Singaporean law. I have not had regard to those authorities. 380 In summarising its position that there was no relevant duty of care owed by BNP to Pacific, counsel for BNP listed the following:

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(k) the absence of "control" by BNP over the circumstances relating to the LOI indicates the absence of a duty of care (I think that contention is contrary to the evidence). 381 Other factors advanced on behalf of BNP as indicative of the absence of a duty of care are matters dealt with later in these reasons as more pertinent to the question of loss. 382 It was contended on behalf of BNP that, if there was a duty of care as alleged, there was no breach. In this context it was conceded that BNP's system which permitted the issuing of the countersigning of the LOIs did not conform with "the best banking practice" and it is not seriously disputed that the execution of the LOI should have carried an endorsement as to the nature of the execution. (See, in particular, the evidence of Ryan quoted earlier in these reasons). 383 However, it is contended that BNP "did not represent anything [in executing the LOIs] and the only effect of complaints made are that they omitted to make explicit that it was not a contracting party to the LOI when signing the LOI." The difficulty with this approach by BNP is that Dhiri knew that the execution of the LOI by BNP was required by Pacific and that Pacific was reliant upon receipt of an LOI so executed. 384 It could not be suggested that the execution of the LOI and its provision to Pacific through NEAT was in a casual or trivial context. It involved a very important commercial transaction and envisaged departure from the more conventional terms of delivery of shipping cargo. Otherwise, I have dealt with those contentions earlier in these reasons. 385 BNP has levelled criticism at the form of the pleading in tort, I think, with some little justification. Earlier in these reasons I have set out the relevant paragraphs in the plaintiff's contention. The findings of fact which I have made, I think, fall within par 43(f) of the contentions. I think it would have been preferable to plead the specific events or circumstances made known to BNP for the purpose of obtaining BNP's execution of the LOIs, and of the execution of the LOIs in those circumstances, without express disclaimer, for use by a known nominated third party. 386 However, the findings of negligence that I have made do not call for an amendment of the further amended summons. 387 As earlier noted the evidence of Pacific's reliance upon BNP's execution of the NEAT LOIs is strong. 388 Pacific's Reliance upon BNP 389 The evidence of Chua is unequivocal to the effect that he regarded NEAT's LOIs as carrying an indemnity from BNP by reason of its execution of the instrument. He regarded the note of Pacific's charterer's manager on Pacific's facsimile of 28 January 1999, as recording an instruction from Tan, that he could accept on behalf of Pacific "a letter of indemnity duly endorsed by a reputable bank in order to permit delivery of the cargo without original bills of lading". 390 It was Chua who was responsible for Pacific's decision to accept the letters of indemnity provided by NEAT. He gave evidence of his understanding of the effect of the bank endorsement as follows: "8… I understood at the time of receipt of this instruction that the consequence of being duly endorsed by a bank meant that the bank was a party to the letter of indemnity and as such liable under the letter of indemnity. I understood endorsement by a bank of a letter of indemnity to require signature on behalf of the bank without any qualification as to acceptance of liability." (Ex D) 391 As to the suggested role of BNP in executing the LOI as limited to verification of signatures, he gave the further evidence as follows: "9. …. There was no reason why I would have wanted BNP or any other bank to verify the identity or position of Mr Howard or Mr Sniekers in signing the letter of indemnity. The reason why endorsement by a bank was necessary was to make that bank a party to the letter of indemnity, and liable under the letter of indemnity, so as to provide proper security for PCL to release cargo to Royal Trading Company without presenting original bills of lading, given that NEAT was not a large company. If the signature by BNP on the letters of indemnity had been qualified as being for verification or as being without any acceptance of liability, I would not have issued any permission for delivery of cargo to Royal Trading Company without original bills of lading.

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I crave leave to refer to the execution of the letters of indemnity, subject of these proceedings, by BNP. I did look at the letters of indemnity as received from Anderson Hughes on behalf of NEAT with the purported execution by BNP and I was entirely satisfied that this was an endorsement of the letter of indemnity by BNP. The document as signed and stamped by BNP following similar wording "for and on behalf of" as signed by NEAT meant to me that BNP was a party to the letter of indemnity and liable under the letter of indemnity. If the words "for and on behalf of" had been deleted I would not have accepted the document as being duly endorsed by the Bank and I would have refused to issue any permission for delivery of cargo without original bills of lading and I would have required further clarification from the Bank in writing that it accepted liability under the letter of indemnity. If no signature had appeared beside the words "banker's signature", I would not have accepted the document as being duly endorsed by the Bank and I would not have permitted delivery of cargo to Royal Trading Company without original bills of lading and I would have required in writing a properly endorsed letter of indemnity with the signature of a person on behalf of the Bank. Further, if the stamp of BNP had not been used as party of the endorsement, again I would have refused to permit the delivery of cargo to Royal Trading Company without original bills of lading and would have required further confirmation in writing that the Bank accepted liability under the letter of indemnity and that the person whose signature appeared on the document was authorised to sign the document on behalf of the Bank. I was aware prior to the first letter of indemnity that NEAT was trying to obtain endorsement of the letter of indemnity from BNP. I believed at that time that only a person with authority to sign the letter of indemnity on behalf of the Bank would have had access to and used this type of stamp on this document. I believed that the person whose signature appeared on the line beside "Banker's signature" was authorised to sign the letter of indemnity on behalf of BNP. If any qualification had been added to suggest that the person signing was not so authorised on behalf of BNP I would not have given permission to deliver the cargo to Royal Trading Company without original bills of lading. 11. I also would not have accepted the letter of indemnity as being duly endorsed by the Bank if the same Banque Nationale de Paris had been deleted. Again, I would not have given permission for delivery of cargo to Royal Trading Company without original bills of lading and I would have required written confirmation from the Bank duly endorsed that it accepted liability under the letter of indemnity before giving permission to release of the cargo to Royal Trading Company without original bills of lading."

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406 The nature of the case based on those particulars was summarised in counsel's submissions on behalf of BNP as follows: "436. Particular (a), PCL providing the pro-forma contributed to the damage because that pro-forma did not make it clear whether or not the bank signing was signing as a party. Particular (b) is important because, if PCL had required originals of the bills of lading before permitting discharge, or had bothered to confirm that Swiss consented to the discharge to Royal when PCL knew that Bolton had rejected the any Royal LOI to Multimode [ insert references] (see paragraph 121 above), there would not have been any discharge of cargo leading to any claim by Swiss against Bolton and by Bolton against PCL. Particular (c) is important because of Ms Dhiri's evidence that she would not have signed and returned the LOIs to NEAT if she had been informed of the switch (Ex 10 at para 65; Ex 12 at para 6; Ex 13 at para 6 to 8) ." 407 In my view there is little substance in the defence. As to particulars (a) and (b): I have examined those issues in the foregoing reasons. 408 As to (c): it is Dhiri's evidence that she would not have executed the NEAT LOIs if she had known that the initial bills of lading had been switched and that she would have advised NEAT against providing the NEAT LOIs as the switch entailed the loss of title to the goods. I have been unable to accept that evidence as being other than the product of hindsight, mixed with reconstruction of the events. 409 Although the record of the content of telephone conversations between NEAT and BNP is incomplete, I think it is reasonably clear that both NEAT and Dhiri regarded the risk in providing the LOIs as minimal, once the discrepant documents had been accepted and payment under the letters of credit opened by Bangkok Bank was assured. 410 I think the transcript of those conversations also evidenced Dhiri's concern over NEAT's ability to clear its borrowing over the Royal transactions if acceptance of discrepant documents was not forthcoming. 411 In any event, on balance, I think Sniekers did disclose to Dhiri that the initial bills of lading were to be "cut" or switched. That was his evidence and support for it is found in the telephone conversation between Sniekers and Dhiri of 25 January 1999. For convenience of reference the relevant exchange was as follows: "[Sniekers] P: So I've asked for one from Royal trading to us, and then I guess we need to open a back to back LOI ([Dhiri] E: yeh) with the shipowner… E: Mm.. P: …so, um I'll keep you informed on what happens but… I guess we won't be able to do anything probably until Wednesday morning… E: Yes.. I mean, the thing is that um, once they accept the documents they have got the original Bill of Lading, and if they want to get it cut, it means they can give it to the agent there… they can probably do a lot more than they can do without the B/L…do you know what I mean ? P: Yep."

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412 Dhiri could not explain that statement. It was her evidence that the word "cut" was not a word used by her in the context of bills of lading. 413 Par 7 of BNP's defence raised a case of misrepresentation in the following terms: "7. In further answer to the whole of the Summons the First Defendant contends that if, which is denied, it is a party to the first and second agreements alleged by the Plaintiff in its Contentions, then it was induced to enter into the agreements by misrepresentation made to it and or its customer, the Second Defendant, with a view to them being joint parties to the first and second agreements prior to the time Ms Era Dhiri countersigned the documents alleged to comprise the agreements. Particulars of Misrepresentation (a) that the Plaintiff was the owner of the vessel carrying the goods the subject of the said agreements, which representation was false in that at no material time did the Plaintiff own the MV Nelson, nor employ the master or crew, nor have possession of the goods: the representation is contained in each of the documents comprising the alleged agreements at page one; (b) that the original bills of lading issued by the carrier to the Second Defendant the First Defendant's customer had not arrived at the discharge port whereby it was necessary to put in place a temporary arrangement with the carrier to permit orderly discharge under the said agreements pending their arrival which bills would eventually be presented, which representation was false in that the Plaintiff or Bolton Navigation SA at the Plaintiff's request had switched the bills of lading or had agreed on 13 January 1999 to do so making the issue of a letter of indemnity commercially unnecessary and placing at risk any party to the agreements and any party to, in possession of, or indorsee of, any original bill of lading: the representation is contained in or to be implied from the terms of the said agreements at pages one and two, and from a conversation between Peter Sniekers on behalf of the Plaintiff and Ms Era Dhiri on behalf of the First Defendant on or about 28 January 1999 and on or about 18 February 1999; (c) that the original bills of lading presented to the First Defendant for negotiation under the letter of credit issued by the Bangkok Bank Singapore Branch in January of the Second Defendant and accepted by the First Defendant for payment were the only bills of lading that were valid and capable of accomplishment, which representation was false in that a second set of bills of lading had been issued in respect of the consignments: the representation is contained in or to be implied from the terms of the said agreements at pages one and two from the conversations referred to in (b); (d) that the Second Defendant had requested the carrier to deliver the goods under the said original bills of lading which representation was false in that the Second Defendant had made no request to the Plaintiff or Bolton Navigation SA for delivery of the goods pursuant to the initial bills of lading; (e) that the Second Defendant had the only direct contractual relationship as shipper with the carrier of the goods which representation was false in that after the bills of lading were switched or fresh bills were issued Swiss Singapore had the direct contractual relationship with the carrier in addition to or in substitution for the Second Defendant : the representation is contained in the said agreement at page one"

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(e) NEAT was the shipper, whereas under the switched bills SSOE was substituted as the shipper. 415 In my view, there is no substance in that defence in that there was no representation of the kind alleged made either to NEAT or to BNP by Pacific. The circumstances in which the LOIs were provided and executed by NEAT and by BNP have been outlined in these reasons and in my view there is no room for the representations relied upon. 416 As an alternative basis for relying upon similar allegations, BNP raised a defence based upon alleged implied terms of NEAT's LOIs to the effect that the initial bills of lading were the only bills issued by Pacific or Bolton: that Pacific was taking all reasonable steps to ensure that the original bills of lading were available for presentation at Calcutta. In my view, there is no basis for raising those implications and I do not understand that defence to have been pressed in final submissions. It follows that a 'misrepresentation' defence, in my view, should be dismissed. 417 A defence that the orders sought do not fall within the Admiralty jurisdiction of the court was not pressed in final submissions. I do not understand that matter to be relied upon. 418 An amendment to the defence was in the following terms: "13A Further or alternatively if, which is denied, the First Defendant is a party to the first and second agreements alleged by the Plaintiff, then all obligations of the First Defendant under each of the agreements were discharged upon and/or as a consequence of the Plaintiff and Second Defendant switching, and/or facilitating the switching of, the original bills of lading without the consent or knowledge or the First Defendant." 419 A related defence relied upon delivery up of the initial bills for cancellation as bringing to an end any further liability under the subject indemnity. It depended upon a construction of cl 4 of the NEAT LOIs which was in the following terms: "As soon as all original bills of lading for the above good shall have come into our possession, to produce and deliver the same to you whereupon our liability hereunder shall cease." 420 In my view, delivery up of the initial bills in terms of cl 4 contemplated a delivery for the purpose of discharge of the cargo into the possession of the holder. It has no application where the initial bills were given to Bolton's agent for cancellation in the process of switching the bills of lading. 421 For the same reason a similar argument fails which was to the effect that, upon cancellation of the initial bills, "once those bills of lading ceased to circulate the request that [was] made by the letter of indemnity could never be acted upon" (T1534:55). 422 Given the knowledge of Pacific and of NEAT, as at the execution of the NEAT LOIs, that the initial bills would be cancelled and switched bills issued, that construction of the NEAT LOIs would lead to an absurdity. 423 An argument with more substance may be found in BNP's contention that there was a substantial alteration in the risk under the indemnity by reason of the switching of the initial bills which involved the substitution of SSOE for NEAT as shipper. 424 The position of an indemnifier where there has been an alteration in the circumstances to which the indemnity relates was examined in the joint judgment of Mason ACJ, Wilson, Brennan and Dawson JJ in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1986-1987) 162 CLR 549 at 558-560, as follows: "Then it has been said that any departure by the creditor from the suretyship contract "which is not obviously and without inquiry quite unsubstantial, will discharge the surety from liability, whether it injures him or not, for it constitutes an alteration in the surety's obligations": Halsbury's Laws of England, 4th ed., vol. 20, par. 259. The final clause in the passage quoted from Halsbury indicates that this proposition is founded not so much on cases dealing with a breach of a term in the suretyship contract, as on cases in which conduct on the part of the creditor materially altered the surety's obligations. Such an alteration takes place when the creditor agrees to a variation of the principal contract or to an extension of time within which the debtor may comply with that contract. The creditor's agreement with the debtor thereby alters the nature of the surety's obligations without the surety's consent. Two of the authorities cited in support of the proposition stated in Halsbury make the point. In Holme v Brunskill (1877) 3 Q.B.D 495, the surety's defence to an action on the guarantee was that he was discharged by a material variation of the contract between creditor and debtor. At first instance Denman J. said (1877) 3 Q.B.D., at p 498: "There must, I think, be many cases in which the judge would have to take the opinion of the jury upon the question, whether the alteration was of such a character as to affect the surety in any way by substantially or materially altering the risk." On appeal, Cotton LJ (1871) 3 Q.B.D at pp 505-506 expressed a similar view in different terms, saying: "The true rule in my opinion is, that if there is any agreement between the principals with reference to the contract guaranteed, the surety ought to be consulted, and that if he has not consented to the alteration, although in cases where it is without inquiry evident that the alteration is unsubstantial, or that it cannot be otherwise than beneficial to the surety, the surety may not be discharged; yet, that if it is not self-evident that the alteration is unsubstantial, or one which cannot be prejudicial to the surety, the Court, will not, in an action against the surety, go into an inquiry as to the effect of the alteration, or allow the question, whether the surety is discharged or not, to be determined by the finding of a jury as to the materiality of the alteration or on the question whether it is to the prejudice of the surety, but will hold that in such a case the surety himself must be the sole judge whether or not he will consent to remain liable notwithstanding the alteration, and that if he has not so consented he will be discharged. This is in accordance with what is stated to be the law by Amphlett, L.J., in the Croydon Gas Co v Dickinson (1876) 2 CPD 46, at p 51."

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(T693:11 - T693:23 …T693:31 - T693:44… T 694:10 -T694:29 …T694:51-T695:38 … T697: 11 - T 697:27…T697:40 - T698:20… T694:23-T694:31) 427 In the light of that evidence it is difficult to see how Arndell's evidence in chief could stand, or that any alteration of the risk to NEAT under the NEAT LOIs was "not obviously and without inquiry quite unsubstantial" by reason of the switching of the initial bills of lading. Once it was agreed under the NEAT/Royal contracts that the letters of credit were to be opened on the application of SSOE, so that it would be the recipient and have possession of the bills of lading, be they initial bills or switched bills, the risk under the NEAT LOI's was unaltered by the switching of the initial bills. 428 The control that SSOE possessed over the bills of lading, both initial and switched bills, represented the risk undertaken by NEAT in providing its LOI. 429 There was an issue as to NEAT's description of SSOE's role as given to BNP. 430 Kavanagh's evidence was that NEAT described SSOE as Royal's agent. I do not accept Dhiri's evidence that Royal and SSOE were described as being one and the same. 431 Whether SSOE was described as an agent or a financier of Royal is, in my view, of little significance, having regard to findings later in these reasons as to SSOE's role and title to the cargo. I think it is correct to describe its role as both agent and financier: payment under the subject letters of credit being payment on behalf of Royal with the effect that property passed to Royal under its C & F contracts with NEAT. 432 BNP has not pursued a submission that NEAT's LOIs were in favour of the "owners" and accordingly not given in favour of Pacific. This submission was abandoned in the course of proceedings in chambers on 17 April 2001 in which orders were made in accordance with short minutes of order dated 3 April 2001 in the following terms: " BY CONSENT BETWEEN THE PLAINTIFF AND THE FIRST DEFENDANT THE COURT ORDERS THAT : 1. Grant leave to the First Defendant to file the Further Further Amended Defence to Further Amended Summons and First Cross Claim; and 2. All questions of costs in relation to the amendment are reserved. THE COURT NOTES THAT : 1. Paragraph 344 of the First Defendant's Written Submissions dated 28 February 2001 is withdrawn."

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(b) If Swiss Singapore are pledgees or agents only, would they have title to sue Bolton for delivery of the cargo? Were they in any event entitled to possession of the cargo, and thus to sue for damages? 3 Are Swiss Singapore, in sending the fax of 13th January 1999 to PCL, estopped from claiming that Bolton should deliver to them instead of to Royal? (a) There was increasing pressure from NEAT to commence discharge as demurrage was accruing. Swiss Singapore admit that they have previously allowed cargo to be discharged without production of original B/Ls for "commercial reasons". They seem to acknowledge that they knew cargo was being discharged to Royal without the original B/Ls even though Royal had not paid Swiss Singapore for the cargo. See evidence of Mr Sniekers of NEAT and the transcripts of the telephone conversations. The only misapprehension Swiss Singapore had seems to be that they thought the cargo was being discharged against a bank guarantee obtained by Royal and not a (sic) LOI from NEAT countersigned by BNP. Assuming that the Tribunal finds as a question of fact, that Swiss Singapore were at all material times aware that the cargo was being discharged without production of original B/Ls but against a NEAT LOI, is this sufficient in law combined with the fax of 13th January 1999, to constitute a clear and unequivocal representation by Swiss Singapore that the cargo could be delivered to Royal without production of the original BLs? (b) Even if there was a clear and unequivocal representation by Swiss Singapore, Instructing Solicitors are concerned about whom the representation was made to and whether there was any reliance on that representation. Firstly, the fax of 13th January 1999 was communicated to PCL only and not to Bolton. Bolton were never aware that such a fax had been sent. As far as they were concerned, the only reason why they allowed the discharge is because PCL provided them with an LOI. Secondly, PCL themselves did not seem to have relied on the fax of 13th January. There does not seem to be any further communication after that date between Swiss Singapore and PCL regarding this issue until the 5th March. PCL themselves seemed to have been primarily concerned that NEAT provided an LOI endorsed by bank before they allowed cargo to the discharged without original B/Ls. There was no further reference by PCL to the 13th January 1999 fax. Instructing Solicitors would be grateful for Counsel's comments generally on this point. 4 Swiss Singapore have also said that their fax of 13th January 1999 required a bank guarantee and the LOIs from NEAT endorsed by BNP does not constitute a bank guarantee. If PCL does not succeed in the Australian action and it is found that BNP are not liable to PCL under the LOI, is there any merit in Swiss Singapore's argument that there has been no compliance with their fax of 13th January in that there is no "bank guarantee"?…" (Ex W) 441 As to question 2, Teare QC advised as follows: "9 … It is accepted that the substituted bills were issued on behalf of Bolton…. These bills identify the shipper as Swiss Singapore. It therefore seems to me that Bolton have accepted that Swiss Singapore are an original party to the contract of carriage contained in or evidenced by the substituted bills of lading. 10. On this basis Swiss Singapore would appear to have title to sue by reason of being an original party to the contract of carriage contained in or evidenced by the substitute bills of lading." (Ex W) 442 As to SSOE's title to the cargo his advice was as follows: "13…Swiss Singapore was therefore able to sue for damages in the event that the goods were delivered otherwise than upon presentation of the bills." (Ex W) 443 As to question 3 his advice was as follows: "16. I have considered this argument but have reached the clear conclusion that it is misconceived and ought to fail. There can be no doubt that Swiss Singapore were aware that the delay in arrival of the bills of lading in Calcutta would delay discharge and that, although they were the persons entitled to possession of the goods, they were willing for the goods to be delivered to Royal. However, such delivery had to be made "against bankers guaranteee". It seems to me that Swiss Singapore obviously contemplated that the provision to the shipowner of such a guarantee would ensure that if they, Swiss Singapore, were not reimbursed by Royal and they, Swiss Singapore, then sued the shipowner for failing to discharge against production of the bills of lading in order to realise their security the shipowner would be able to satisfy any judgment awarded against him. In those circumstances it does not seem to me at all realistic to suggest that Swiss Singapore authorised the delivery of cargo to Royal in the sense that they renounced the right to say that such delivery was a violation of Swiss Singapore's rights as the person entitled to immediate possession of the cargo from the shipowner. It is true that they authorised the discharge of the cargo to Royal but that authorisation was on terms that the discharge was "against bankers guarantee". That is only consistent with Swiss Singapore having retained the right to sue the shipowners; it is inconsistent with the suggestion that they had given up such a right…." (Ex W) 444 Upon that basis Teare QC further advised that there: "… was no clear and unequivocal representation by Swiss Singapore that the cargo could be delivered to Royal without production of the bills of lading in the sense that such delivery could take place free of any risk that Swiss Singapore would seek to enforce their rights as holder of the bills of lading". 445 As to question 1 Teare QC advised that "Bolton's defence to the claim of Swiss Singapore in the London arbitration [had] no merit and ought to fail". 446 As to question 4 Teare QC's advice was as follows: "21. The fax of 13 January required discharge "against bankers guarantee". That was a reference to the shipowner having the benefit of a bankers' guarantee. However, the shipowners have never had the direct benefit of a bankers' guarantee. Bolton had the benefit of a guarantee from PCL which was not a banker's guarantee. Thus, even if PCL wins its action against BNP in Australia, it can with justification be said that there was no bankers' guarantee which was available to Bolton." (Ex W) 447 In examining the general question of SSOE's title to sue, Teare QC examined the issue in contract and in bailment. In concluding that it had title to sue in contract he relied upon the provisions of s 5(2) of the Carriage of Goods by Sea Act 1992 (UK) identifying the relevant question as being: "whether Swiss Singapore has title to sue by reason of being an original party to the contract of carriage contained in or evidenced by the bills of lading or by reason of being the transferee of those rights of suit pursuant to the Carriage of Goods by Sea Act 1992". 448 Teare QC's opinion that SSOE had title to sue was not dependent upon the switching of the bills. He regarded SSOE as having title to sue under the initial bills of lading and, upon their substitution, under the switched bills. 449 Teare QC's opinion that SSOE had sufficient title to the goods to sue in bailment was based upon the view that SSOE held the bills of lading, as between itself and Royal, "as security for reimbursement". 450 In submissions on behalf of BNP, it was put that no distinction was drawn by Teare QC between the position of Pacific and Bolton. It think, more accurately, Teare QC's opinion was addressed expressly to the liability of Bolton in the London Arbitration. He was not requested to advise on Pacific's liability to Bolton. 451 Accordingly, it is necessary to examine Pacific's position, qua Bolton, in order to examine what liability NEAT assumed in indemnifying Pacific in respect of any liability Pacific "may sustain by reason of [its] delivering the goods to …. Royal [without] production of the original Bills of Lading". 452 Senior counsel for BNP examined the "Four Main Potential Sources of Obligation" of Pacific, namely the time charter party: Pacific's LOI to Bolton; the P & I Club guarantee and the 24 June 1999 agreement between Pacific and Bolton. 453 Andrew John Popplewell QC (Popplewell QC) gave evidence on these issues in BNP's case. He was retained following the London Arbitration settlement of 8 February 2001. Popplewell QC is a highly qualified member of the London bar specialising in admiralty and commercial matters. The question upon which he was asked to advise was stated by him, as follows: "3. I have been asked to advise whether I agree with the written opinion of Mr. Teare QC, and in particular its conclusion at paragraph 18 that "Bolton's defence to the claim of Swiss Singapore in the London arbitration, has, in my opinion, no merit and ought to fail."" (Ex 32) 454 As to title to sue, he expressed agreement with Teare QC's analysis of the issues if English law was the applicable law and, on that hypothesis, he further agreed that SSOE would have succeeded in the London Arbitration in showing that it had title to sue in contract and, in tort, for substantial damages. 455 However, it was Popplewell QC's view that the London Arbitration would have been determined by reference to Australian law "applying the relevant English conflicts of law principles" for the following reasons: (a) In contract, SSOE's title to sue would be governed by the proper law of the bills of lading which was Australian law as the bills of lading expressly incorporated the Hague Rules " as enacted by the Australian Sea Carriage of Goods Act 1925 … and because the shipments were from ports in Western Australia and Brisbane ." (b) In tort for conversion, as any entitlement to possession was based upon possession of the bills of lading, SSOE's interest in the goods fell to be determined by reference to the proper law of the bills of lading as documents of title. 456 In relation to the effect of SSOE's 13 January 1999 facsimile, Popplewell QC disagreed with the opinion expressed by Teare QC that it was a conditional instruction to deliver the cargo to Royal. Popplewell QC advanced a number of reasons for that disagreement, mainly: (a) Had a banker's guarantee been provided and the cargo discharged to Royal, SSOE could not have any cause of action against Bolton or Pacific either in contract or in tort. Yet on Teare QC's analysis, the bank guarantee only becomes operative where SSOE had a cause of action against the carrier for "misdelivering" the cargo to Royal. It followed, Popplewell QC opined, that the facsimile did not mean and could not be intended to mean that the carrier "could only discharge the cargo to Royal if [the carrier] had received a guarantee from a bank". (b) In a related observation, Popplewell QC expressed the view that it would be contrary to the language of the facsimile and " commercial common sense to argue that if a bank guarantee were provided, the [carrier] would be liable to [SSOE] for doing precisely that which it was being instructed to do, namely delivering the cargo to Royal ." (c) It occurred to him to be " commercially far fetched " to expect the carrier to construe the facts as enabling it to draw on a bank guarantee should it be sued by SSOE for delivery of the cargo to Royal as authorised by SSOE. (d) A related proposition was that, if the fax was construed as a conditional authority, " one would expect the condition which would attach to that instruction to be a condition as to the provision of some security from Royal in favour of …[SSOE]." (e) A bank guarantee in favour of the carrier would be " of limited and of remote value " to SSOE in a claim by it for misdelivery of the cargo. The basis for that argument was that a guarantee in favour of the carrier would be of no benefit if the carrier was solvent and, if it was insolvent, the bank guarantee could only have an indirect benefit as the source of contribution to the general assets of the carrier available to its creditors. 457 There is considerable attraction in the reasoning of Popplewell QC. However, the alternative construction offered by him I find unattractive, namely: that the reference to the bank guarantee in the facsimile was not a condition inserted for the benefit of SSOE "but is merely language which reflects the assumption that the [carrier] will wish to be secured for delivery otherwise than against bills of lading, and is in effect a short hand or alternative expression for otherwise than against production of the original bills of lading". 458 Popplewell QC concluded with the following opinion: "…had this issue been fought out in the arbitration, in my opinion, the arguments of Bolton would have been distinctly more likely to succeed than those of .. [SSOE], resulting in a complete defeat of ..[SSOE's] claim." 459 While favouring Teare QC's construction that the 15 January instruction of SSOE was conditional, I think Popplewell QC's expectation that the condition would "be a condition as to the provision of some security from Royal in favour of [SSOE]" is the correct analysis. 460 In his evidence in chief Teare QC referred to the The "Sormovskiy 3068" (1994) 2 Lloyd's Rep 266. The charter party under consideration in The "Sormovskiy 3068" contained the following provision: "In the event that original Bill of Lading are not at discharge port in time for vessel's discharge, then Owners to agree to discharge of the cargo against production of a Bank Guarantee." (at 268) 461 Of such a provision at pg 274, Clarke J made the following observations: "… It makes commercial sense to have a simple rule that in the absence of an express term of the contract the master must only deliver the cargo to the holder of the bill of lading who presents it to him. In that way both the shipowners and the persons in truth entitled to possession of the cargo are protected by the terms of the contract. Where the master or shipowner delivers the cargo in breach of contract otherwise than in return for an original bill of lading the person entitled to possession will of course only be entitled to recover substantial damages if he proves that he has suffered loss and damage as a result. So for example if the cargo is delivered to the person entitled to possession he will not ordinarily be able to show that he has suffered a loss. In trades where it is difficult or impossible for the bills of lading to arrive at the discharge port in time the problem is met by including a contractual term requiring the master to deliver the cargo against a letter of indemnity or bank guarantee. That is commonplace and indeed there was a provision to that effect here. The simple rule to which I have referred does require some exceptions because the bill of lading might have been lost or stolen. In order to cater for that problem it is no doubt necessary to imply a term that the master must deliver cargo without production of an original bill of lading in circumstances where it is proved to his reasonable satisfaction both that the person seeking delivery of the goods is entitled to possession and what has become of the bills of lading. The precise nature of the exception will no doubt require further consideration in the future…" (at 274) 462 However, I think the practice referred to in that passage has little in common with the circumstances in which SSOE's direction was given, namely, where SSOE was intended to become and became the holder of the subject bills as pledgee/shipper. 463 While I have reached the conclusion that the 13 January 1999 facsimile took the form of a conditional direction by SSOE to deliver the cargo to Royal, that does not involve the proposition that the condition was free of ambiguity. It does not spell out the content of the required guarantee, nor does it specify to whom the guarantee is required to be given, nor does it identify the guaranteeing bank. 464 Had I been of the view that BNP's execution of the NEAT LOI was the act of a party to the NEAT LOI, it would have raised an interesting question as to whether that liability of BNP arose under a bank guarantee as contemplated by the 13 January 1999 facsimile. 465 If one assumed that it did, I have some considerable difficulty in Pacific's position, espoused by Teare QC, that delivery of the cargo to Royal pursuant to that authority without presentation of the bills of lading would still constitute a conversion of the cargo and expose Bolton to an action in conversion by SSOE, leaving Bolton to seek recourse, presumably, under the bank guarantee. 466 I think the considerable difficulty in that contention lies in the circuity of such an action by SSOE against Bolton. 467 As noted later in these reasons, the line of authority is long and well established which would give rise, in those circumstances, to an implied indemnity by SSOE in favour of Bolton against the consequences of Bolton acting on SSOE's instructions. Any action by SSOE in conversion against Bolton surely would be met by a defence of circuity based upon Bolton's entitlement to be indemnified against that very loss. 468 If it had been necessary to do so, I would have interpreted the direction contained in the 13 January 1999 facsimile as requiring a bank guarantee in favour of SSOE so that in the event that Royal failed to satisfy its indebtedness to SSOE the latter would have the benefit of that guarantee. Further, that if a third party became holder of the bills of lading, for example, by endorsement, then Bolton would be protected in respect of a claim in conversion by the third party for the delivery of the cargo to Royal without presentation of bills of lading, by the implied indemnity arising out of SSOE's instruction to deliver the cargo to Royal. 469 I think that view of the nature of SSOE's instruction of 13 January 1999 is consistent with Jain's evidence in cross examination as follows: "KING: Q. Would you have a look, please, at page 755 in the volume 2 of the bundle in front of you. Do you recall receiving this document on or about 25 January? A. Yes.

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474 It was submitted that it was not a provision "apt to oblige the owners to agree to discharge the cargo to a third party". 475 It is not clear to me that Pacific exercised any right they may have had under cl 63. The evidence showed that Pacific proposed to proceed on the basis of Royal's LOI. This was unacceptable to Bolton who required an LOI from Pacific, if the cargo was to be discharged without presentation of bills of lading. So that, rather than Bolton being required "to agree to discharge the cargo at a safe facility", it was a case of Bolton requiring an LOI from Pacific. Moreover, the submission pays no heed, in my view, to the law relating to the implication of an indemnity where the owner complies with the charterer's orders or directions. 476 In this case, it is common ground that, on receipt of Pacific's LOI, Bolton authorised the Master to deliver the cargo without presentation of bills of lading, subject to Pacific's directions in the matter. In my view, whether cl 63 of the time charter party applied to the Pacific LOI is immaterial, as is the operation of cl 63. On the facts, the subject of these proceedings, cl 63 would not operate to exclude the operation of an implied indemnity where the Master was directed by Pacific, with the authority of Bolton, to deliver the cargo to Royal without presentation of the bills of lading. 477 Senior counsel for Pacific sought support for its position based upon an implied indemnity arising out of the operation of cl 8 of the time charter party . That clause was in the following terms: "8. That the Captain shall prosecute his voyages with the utmost dispatch, and shall render all customary assistance with ships' crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency: and Charterers are to load, stow, cargo at their expense under the supervision of the captain, who is to sign bills of lading for cargo as presented, in conformity with Mates' or Tally Clerks' receipts." 478 I doubt if that clause has any operation in relation to a direction by the charterer to deliver cargo without presentation of bills of lading. It was observed by Mustill J in The Athanasia Comninos (1990) 1 Lloyd's Rep 277 at 290 in relation to such a clause: "It has long been established that a provision in this form impliedly requires the charterer to indemnify the shipowner against the consequences of complying with an order as to the employment of the ship." 479 In my view, discharge of the cargo, at the direction of Pacific, without presentation of the bills of lading is not concerned with employment of the vessel. 480 The general principle as to the creation of an implied indemnity was expressed by Mustill LJ in The Nogar Marin (1988) 1 Lloyd's Rep 412: "First, there are the authorities which concern the right of indemnity arising from an act done by one person at the request of another. These extend back at least as far as Toplis v. Grane (1839) 5 Bing. N.C. 636 and Collins v. Evans (1844) 5 Q.B. 804 and include Dugdale v. Lovering, (1875) L.R. 10 C.P.196, Birmingham and District Land Co. v London and North Western Railway Co., (1886) 34 Ch. D. 261 and Sheffield Corporation v. Barclay, [1905] A.C. 392 and culminated in Yung v. Hong Kong and Shanghai Banking Corporation, [1981] A.C. 787 which contains in the opinion of the Board a statement of the law which is the starting point for any discussion of the current law on the topic. We take the law to be as follows: 1. The general principle is that - …. when an act is done by one person at the request of another which act is not manifestly tortious to the knowledge of the person doing it, and such act turns out to be injurious to the rights of a third party, the person doing it is entitled to an indemnity from him who requested that it should be done. 2. This is, however, a general principle, not a conclusion of law, which is always to be drawn. As Mr. Justice Grove was careful to point out in Dugdale v Lovering, whether there is an obligation to indemnify must greatly depend on the circumstances of each individual case. Notes of caution to a similar effect may be found elsewhere in the authorities." (at 416) 481 To like effect was the judgment of the Court of Appeal in Strathlorne Steamship Co Ltd v Andrew Weir & Co (1934) 49 Lloyd's Rep 185 as follows: "Now, as my Lord has said, the principles which we have here to consider are conveniently stated in the case of Toplis v. Grave, sup., by Chief Justice Tindal, as quoted in Dugdale v. Lovering, L.R. 10 C.P. 196, at p.200, thus:- When an act has been done by the plaintiff under the express directions of the defendant which occasions an injury to the rights of third persons, yet if such an act is not apparently illegal in itself, but is done honestly and bona fide in compliance with the defendant's directions, he shall be bound to indemnify the plaintiff against the consequences thereof." (at 193-194)

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See also Wilford, Time Charters , 4th ed., 293 et seq. 482 I am satisfied that Pacific's directions to the Master to deliver the cargo to Royal gave rise to an implied indemnity, in accordance with those authorities. That view is reinforced by the reasons that follow in relation to the proper construction of the Pacific LOI. 483 As to the Pacific LOI: it was submitted that the LOI was entered into between Pacific and Bolton in relation to the original bills of lading and had no application to the switched bill. For the reasons earlier given in relation to the NEAT LOIs, I have not found favour with that construction. Similarly, I reject the contention on behalf of BNP that, by reason of cl 4 of the Pacific LOI, Pacific's liability under the LOI came to an end upon delivery of the initial bills of lading to Bolton for cancellation. 484 However, there is a critical aspect of the Pacific LOI which distinguishes it from the NEAT LOIs. Pacific's LOI was given in consideration for the request to discharge the cargo to SSOE without presentation of bills of lading. No such discharge occurred. In my view, the liability of Pacific to Bolton arose out of its implied indemnity attaching to its instructions to the Master to discharge the cargo to Royal. 485 As to the P & I Club guarantee: I do not understand Pacific to place reliance on the terms of that guarantee for the recovery of damages beyond the scope of its LOI or the implied indemnity. 486 As to the agreement between Pacific and Bolton of 24 June 1999: similarly, I do not understand Pacific to claim any damages in these proceedings pursuant to that agreement beyond Pacific's liability to Bolton under the Pacific LOI or the implied indemnity. 487 Senior counsel for BNP submitted that Pacific's reliance, for the reasonableness of its settlement of the London Arbitration, upon Teare QC's opinion was of no avail as Teare QC's opinion was flawed: the true position being that Bolton had no liability to SSOE. Teare QC's opinion was attacked, in part, upon the basis of his application of the incorrect proper law. Teare QC applied English law, whereas it was submitted on behalf of BNP that Australian law applied. As earlier stated, in this, BNP was supported by the evidence of Popplewell QC. The different paths by which the two experts reached those conclusions may be traced briefly as follows. 488 Teare QC relied upon the provision in the bills of lading which provided that "all the terms, conditions, clauses and exceptions including cl 33 (Arbitration) in [the voyage] charter party are herewith incorporated." 489 Cl 33 of the voyage charter party provided, so far as is relevant, that any dispute under it in relation to events which occurred in Australia was to be settled by arbitration in Australia whereas any dispute relating to events occurring outside of Australia be referred to arbitration in London. Cl 47 provided that the voyage charter party was to be governed by English law with arbitration in London. 490 In Teare QC's opinion, by reason of the provisions of the Contracts (Applicable Law) Act 1990 (UK), Article 3 of the Rome Convention applied to SSOE's claim in contract. S 2 of the Contracts (Applicable Law) Act provided, so far as is relevant, that the Rome Convention was to have the force of law in the United Kingdom. Article 3 of the Rome Convention provided as follows: "A contract shall be governed by the law chosen by the parties. The choice must be express or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract." (Ex AO) 491 On that basis, Teare QC relied upon the provisions of the Carriage of Goods by Sea Act 1992 (UK) in finding that SSOE had title to sue as holder of the bills of lading. 492 In so far as SSOE's claim lay in conversion Teare QC relied upon the provisions of the Private International Law (Miscellaneous Provisions) Act 1995 (UK). 493 S 11, so far as is relevant, provided as follows: " 11 Choice of applicable law : the general rule (1) The general rule is that the applicable law is the law of the country in which the events constituting the tort or delict in question occur. (2) Where elements of those events occur in different countries, the applicable law under the general rule is taken as being - …

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(b) the significance of any factors connecting the tort or delict with another country, that it is substantially more appropriate for the applicable law for determining the issues arising in the case, or any of those issues, to be the law of the other country, the general rule is displaced and the applicable law for determining those issues or that issue (as the case may be) is the law of that other country. (2) The factors that may be taken in account as connecting a tort or delict with a country for the purposes of this section include, in particular, factors relating to the parties, to any of the events which constitute the tort or delict in question or to any of the circumstances or consequences of those events." (Ex AO) 495 Accordingly, it was Teare QC's opinion that the operation of those provisions, to the action in conversion, required that Indian law would be the applicable law. 496 Popplewell QC's opinion turned on the effect to be given to so much of the bill of lading as provided as follows: "This Bill of Lading is to have effect subject to the provisions of the Rules contained in the Schedule to the Australian Sea-Carriage of Goods Act, 1924 , as applied by that Act, and any subsequent amendment thereto. The Shippers are to be entitled to the benefit of the privileges, rights and immunities conferred upon the Shipper, and the Shipowners are to be entitled to the benefit of the privileges, rights and immunities conferred upon the Carrier, by such Act, and the Schedule thereto, as if the same were herein specifically set out…" (Ex 1) 497 It was accepted that the provision must be taken to refer to the Carriage of Goods by Sea Act 1991 (Cth) by which the 1924 Act was repealed. Popplewell QC construed that provision as having the effect of incorporating s 11 of that Act, which provided, so far as is relevant, that all parties to a bill of lading relating to the carriage of goods from any place in Australia to any place outside Australia "are taken to have intended to contract according to the laws in force at the place of shipment." 498 On that basis it was agreed that the Sea-Carriage Documents Act 1997 (WA) or the Sea-Carriage Documents Act 1996 (QLD) were the provisions by which SSOE's entitlement to sue would be determined in contract. 499 Teare QC disagreed, although, not professing to be an expert on Australian law. The basis of his rejection of this construction of the bill of lading was that the provision of the bill incorporating the schedule to the Carriage of Goods by Sea Act (Cth) was to be distinguished from incorporation of the provisions of the Act itself: the schedule containing the Amended Hague Rules, a schedule of Modifications of the Amended Hague Rules and the Hamburg Rules. 500 As to so much of the provision in the bill of lading which incorporated the Carriage of Goods by Sea Act (Cth), Teare QC expressed the opinion that that incorporation was only to the extent that it conferred "a benefit of the privileges, rights and immunities" provided for in the Act: accordingly it did not incorporate a deemed choice of law provision set out in s 11. In support of BNP's construction of the bills of lading, reliance was placed on Vita Food Products Incorporated v Unus Shipping Company Ltd [1939] AC 277. I was unable to draw any assistance for BNP's case from that authority. 501 In my view, the proper construction of the bills of lading involves incorporation of the voyage charter party and, in particular, the choice of law provisions in relation to the London Arbitration. Further, the reference in the bills of lading provision to the Commonwealth Act does not result in the incorporation of s 11. 502 No argument was addressed on behalf of BNP that the incorporation of the voyage charter party provision in the bills of lading was not specific enough to pick up the arbitration and choice of law provisions. Indeed, the incorporating provisions of the bills of lading specifically referred to cl 33 of the voyage charter (as to which, see Scrutton on Charter Parties, 20th ed. Article 40, and cf Ocean Steamship Company Ltd v Queensland State Wheat Board [1941] 1 KB 402 at 410 et seq.) 503 As to SSOE's action in conversion, it seems to me that nothing turns on the determination of the question whether English, Australian or Indian law is the proper law. No evidence was adduced as to the law of India. 504 On this subject Popplewell QC gave the following opinion evidence as to the operation of ss 11 and 12 of the Private International Law Miscellaneous Provisions) Act: "Q. Would you agree with me that the principles to be applied in determining the law governing the tort are those set out in sections 11 and 12 of that Act? A. I agree. Although there are some other principles which are also relevant.

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(T1453:4 - T1453:47) 505 As I understand that evidence Popplewell QC would agree with the opinion of Teare QC, if one went against the construction of the bills of lading which had the effect of incorporating the Australian Carriage of Goods by Sea Act, at least, s 11 of that Act. 506 Teare QC's analysis as to SSOE's title to sue in the London Arbitration as holder of the switched bills of lading, based upon the provisions of the Carriage of Goods by Sea Act (UK), made it unnecessary for him to express an opinion as to SSOE's entitlement to maintain an action in bailment. 507 On the evidence before me, I think it is clear, if not common ground, that the contract for sale of the peas was by C & F contract between NEAT and Royal: that an attempt by SSOE to novate the contract in its favour was pointedly rejected by NEAT and was not thereafter pursued by SSOE. 508 NEAT accepted by amendment to the C & F contracts, that SSOE would be the applicant to open letters of credit in relation to the Royal contracts. For that purpose, NEAT provided documents to SSOE's bank, Bangkok Bank, which included invoices to SSOE from NEAT, identifying in each case, by number and other details, the respective Royal contracts. 509 It was submitted on behalf of SSOE that it was, in fact, the buyer once it had negotiated payment under the letters of credit opened on its application and acquired possession of the subject bills of lading. I reject that construction. In my view, upon payment under the letters of credit, the NEAT/Royal contracts being C & F, the property passed to Royal. 510 In Teare QC's written advice, he offered the following observations in relation to SSOE's position: "12. The sellers of the goods were NEAT. They agreed to sell them to Royal by a series of contracts dated from 7 July until 6 August 1998. The sale was c and f free out Calcutta with payment by an irrevocable 90 days letter of credit opened and payable in Sydney at Banque National (sic) de Paris (BNP) by a first class international bank acceptable to BNP. By amendments dated October 1998 it was agreed that the letter of credit could be opened by Swiss Singapore but it was also agreed that Royal remained the buyer and notify party. Thus, when NEAT presented the documents against the letter of credit, property or title in the goods passed to Royal." 13. In October 1998 a document came into existence which purported to be a sale agreement between Swiss Singapore, as sellers, and Royal, as buyers. It is signed by Swiss Singapore but not Royal. It seems clear that Swiss Singapore wished to be the seller to Royal as part of the arrangement by which it financed the purchase of the goods by Royal. Presumably Swiss Singapore considered that it gave them greater security than an arrangement by which the goods were stated to have been pledged to Swiss Singapore as security. But whatever the explanation property did not pass from NEAT to Singapore because NEAT did not intend that it should. Property passed from NEAT to Royal. However, as security for reimbursement by Royal of the price paid by Swiss Singapore, Royal allowed Swiss Singapore to have control of the goods by means of the bills of lading. It may be that as between themselves it was agreed that ownership of the goods lay with Swiss Singapore until Royal reimbursed them. At any rate Swiss Singapore had the right to possession of the goods covered by the substitute bills of lading from Bolton. Swiss Singapore was therefore able to sue for damages in the event that the goods were delivered otherwise than upon presentation of the bills." (Ex W) 511 I regard the evidence before me as falling well short of any agreement "that ownership of the goods lay with Swiss Singapore until Royal reimbursed them". In my view, the property in the goods passed to Royal. However, the financial arrangement between Royal and SSOE permitted SSOE to retain possession of the switched bills until payment was effected by Royal under the purported on-sales from SSOE to Royal. 512 Although SSOE purported to raise sales contracts with Royal, there was no factual foundation for such a relationship as between Royal and SSOE. In my view, SSOE accepted the discrepant documents under the letters of credit which had been opened, on its application, on behalf of Royal. As earlier noted in these reasons, the evidence of the relationship between Royal and SSOE was that of Jain to the effect that SSOE charged Royal with "margins" for providing financial facilities to Royal under the purported contracts of sale between SSOE and Royal. 513 The nature of the margins imposed by SSOE was explained by Jain in cross examination as follows: "Q. And you would agree with me, wouldn't you, that Swiss Singapore in opening a letter of credit in favour of NEAT was doing so as a buyer of the cargo from NEAT, correct?

[402]

Q. Mr Jain, when you say as a financier, it is not ordinarily the role of a financier, is it, to actually participate in purchasing the cargo itself and then itself selling at a different price that same cargo, is it? A. The margins which we have added is for the financing of this transaction. Q. When you say "the margins which we have added", you are referring to the fact, aren't you, that Swiss Singapore entered into a contract of sale of goods between Swiss Singapore and Royal Trading at a different price to the intended contract of sale between NEAT and Royal Trading, correct? A. Correct." (T 1062:06 - T1062:08…T1062:14-T1062:27) 514 However, I think it can be drawn from the evidence of that arrangement between SSOE and Royal, particularly relating to terms of payment, that, after the switching of the bills by SSOE, those bills would go into the banking system and would not be delivered to Royal until payment. Without payment SSOE retained the right to possession of the switched bills and of the subject cargo: an interest in the nature of a pledgee. 515 In written submissions, counsel for BNP relied upon the Ships' delivery orders as giving Royal title to the cargo pursuant to the Sea-Carriage Documents Acts of Queensland and Western Australia. Those submissions were watered down in oral submissions to a submission that, in the circumstances of this case, the delivery orders had the effect of giving Royal and not SSOE the title to sue, on the basis that the facsimile of 13 January 1999 carried SSOE's authority to deliver the cargo to Royal. As a consequence all "rights under the contract of carriage [were] transferred to … the person to whom delivery of the goods [was] made in accordance with the [delivery] order": that being the terminology of s 8 of the Sea-Carriage Documents Act 1997 (WA), and the like provision as found in the Queensland Act. 516 For the reasons given as to the proper law of the contract, and my views as to the effect of the 13 January 1999 facsimile, this argument must fail, as must the case under par 25 of the defence.

[408]

The cargo, such as was delivered to Royal, was delivered against SSOE's facsimile of 13 January 1999: that SSOE's conduct in switching the bills amounted to a conversion of " the goods or the original documents of title relating thereto": that SSOE had knowingly interfered in the contractual relationships between NEAT and BNP: between the "issuing bank", Bangkok Bank and BNP; between Pacific and NEAT "and/or" BNP and NEAT. It was claimed that, if it is held that BNP is liable to Pacific, then Pacific is entitled to an indemnity by reason of SSOE's conduct in " requesting or arranging for the issue of the switched bills of lading and /or in requesting the Master of the vessel to deliver the Cargo to Royal ." 521 So far as the cross claim was founded upon the delivery of the cargo to Royal upon SSOE's instructions, the evidence established beyond doubt that the delivery to Royal was divorced from any instruction by SSOE. The facsimile of SSOE to Pacific of 13 January 1999 was neither the subject of a confirmation nor an acknowledgement by Pacific. 522 BNP has relied on the position taken by Pacific, supported by NEAT, against SSOE in the Singapore proceedings in which reliance was placed upon the 13 January 1999 facsimile as authority for Pacific's delivery of the cargo to Royal: contrasting that stand with the position adopted by Pacific and NEAT in these proceedings. Clearly, the two are not consistent. However, the sequence of events which led to the delivery of the cargo to Royal, as outlined in these reasons, established that the cargo was delivered on the authority of Bolton in accordance with Pacific's instructions: neither acting upon any communication from SSOE. Nothing turns upon the inconsistent stance adopted by those parties in the Singapore proceedings. 523 In relation to the switching of bills of lading by SSOE and its "commercial tactic" of using "the switch to assert pressure on Royal to pay its outstanding accounts", it was submitted on behalf of BNP that when this commercial tactic did not work to SSOE's satisfaction, SSOE instructed Bangkok Bank not to accept the discrepant documents under the first chick pea contract. It was further submitted that this conduct of SSOE was an intentional interference with the relationship between NEAT and BNP and further constituted a "knowing involvement in a breach of sec 52 of the Trade Practices Act". The consequence of that conduct was said to have caused NEAT "to lose the financial benefits of payment pursuant to the L/C" for the first chick pea contract and caused NEAT to incur substantial expenses and losses in relation to that contract. 524 Of those submissions it is a matter of irrelevance that any loss may have been suffered by NEAT as a consequence of SSOE's conduct in any claim by BNP: at least, no attempt has been made to demonstrate the relevance of it in terms of any claimed entitlement of BNP. 525 Moreover, there was no claim under the Trade Practices Act in BNP's cross claim against SSOE, nor was it demonstrated why the switching of the bills of lading and the "commercial tactic" of SSOE constituted any interference in the customer bank relationship between NEAT and BNP, nor was it demonstrated why the commercial tactic employed by SSOE, which undoubtedly, it did employ, was one which SSOE was not entitled to employ. 526 Later in these reasons I examine a body of evidence which BNP relied upon as evidencing binding assurances by SSOE to NEAT that it would accept all discrepant documents. It will be seen that the evidence fell well short of establishing that contention. So far as BNP's submissions rely upon the switching of the initial bills of lading, it was said that, by engaging in the switching of the bills of lading, SSOE would have been aware that "from mid January … the delay in [SSOE] accepting the discrepant documents pursuant to its commercial tactic prevented the original bills of lading [or for that matter the switched bills of lading] being available in Calcutta", and, therefore, would have been aware of the likely creation of an LOI. It was further submitted that SSOE "needed a switch to apply its commercial tactic" to extract outstanding money in relation to other transactions from Royal. None of those propositions have any validity. 527 There was no delay in the process beyond, possibly, a day in effecting the switching of the initial bills of lading once discrepant documents had been accepted. Further, it did not follow that the switching of the bills was necessary for the exercise of SSOE's "commercial tactic". That tactic was available to SSOE as long as it held the relevant bills of lading, be they the initial bills or the switched bills, at least while SSOE remained in the position of pledgee. It did not follow that the switching of the initial bills would result in reliance upon a letter of indemnity. The crux of the dilemma that confronted the parties from mid January lay in Royal's dishonest commercial conduct and SSOE's hard-headed commercial behaviour. 528 In short, the switching of the initial bills was known to NEAT, probably made known to BNP, and did not of itself, or as a consequence, interfere in any of the contractual relations identified in BNP's cross claim, which should be dismissed. BNP's Cross Claim against NEAT

[409]

529 In the fourth cross claim, BNP sought against NEAT an order avoiding the NEAT LOIs and an indemnity in respect of any claim by Pacific against BNP, or in respect of any amount paid by BNP to Pacific in respect of NEAT's LOIs, and damages. The bases of the claim were expressed in terms of contracts between BNP and NEAT "for the negotiation of the [subject] Letters of Credit and, more generally, a Banker-Customer contract." 530 BNP asserted that there was an implied term in those contracts that NEAT would not cause the initial bills of lading to be switched or do anything to "undermine or reduce the value of the security referred to in the Letters of Credit": further, that NEAT would disclose to BNP any "circumstance which adversely affected the value of the security proffered by NEAT pursuant to the Letters of Credit". Breach of those contracts was alleged in terms of NEAT's failure to inform BNP of the agreement to issue the switched bills. 531 In my view, no such implications could be extracted from the contractual relationship between NEAT and BNP as evidenced in these proceedings. In that respect, I note in the written submissions on behalf of BNP that it did not "press its claim in relation to the undermining of the security referred to in the letters of credit". However, counsel for BNP addressed a case based on the implication that NEAT "would not participate in the switching of the bills of lading without first informing BNP". I am satisfied that no such term was required to give business efficacy to the arrangements between NEAT and BNP. In any event, I have found that, on the probabilities, the fact of the proposed switch was contemplated in discussion between NEAT and BNP. 532 It was further alleged that it was a condition of the execution of the NEAT LOIs by BNP, made known to NEAT, that the signing thereof by BNP was for the purpose of authenticating signatures and that, in those circumstances, NEAT "represented by its conduct or silence to BNP that the countersignature was for the Limited Purpose only". It was further alleged that, by the provision of the NEAT LOIs to Pacific without informing Pacific of the limited form of BNP's execution of the NEAT LOIs, NEAT misrepresented to Pacific the basis upon which the bank signed those LOIs. It was contended that that conduct of NEAT involved it in a contravention of s 52 of the Trade Practices Act. 533 A further cause of action based upon the Trade Practices Act alleged a contravention of s 52 arising out of NEAT's involvement in the switching of the initial bills of lading. 534 As earlier noted in these reason, I am satisfied that Dhiri was authorised to execute the NEAT LOIs on behalf of BNP as the bank verifying the signatures of NEAT's execution of the LOIs and that she performed that task negligently. However, I am not satisfied that Dhiri effectively communicated to NEAT the limited function of the bank's participation. As earlier stated, I am satisfied that the representatives of NEAT and Dhiri viewed the execution of the NEAT LOIs as involving no, or little, risk once the discrepant documents had been accepted in relation to the subject letters of credit. 535 It is difficult then, to see how NEAT's conduct should be regarded as a contravention of s 52 when it did no more than obtain execution of the NEAT LOIs by BNP as required by Pacific: an exercise in which Dhiri participated with knowledge of the relevant circumstances, as found earlier in these reasons. 536 For the reasons earlier given concerning the effect of the switching of the initial bills and my acceptance of evidence that the switching of the initial bills was a matter of discussion between NEAT and Dhiri, so much of the cross claim as depends upon the switching of the initial bills of lading must fail: as must BNP's representation case. I am also of the view that NEAT is under no liability to SSOE in negligence. No question of contribution between tortfeasors arises. The fourth cross claim should be dismissed.

[410]

537 In the fifth cross claim, SSOE claimed against NEAT, in contract, alleging that NEAT contracted to sell the subject legumes to SSOE in December 1998 and January 1999. As stated earlier in these reasons, in my view, there is no substance in a case based upon a contract of sale between NEAT and SSOE. 538 A second basis of claim relied upon an alleged interference in SSOE's contractual relations with Royal. 539 The contractual relations relied upon were the purported contracts of sales between SSOE as seller and Royal as buyer of the legumes. As earlier stated in these reasons, I am of the view that SSOE had not acquired property in the cargo to support on-sale to Royal. 540 Moreover, there was no evidence that NEAT knew of such purported sales. 541 However, the evidence disclosed that NEAT knew of SSOE's role as financier for Royal and as shipper under the switched bills which recorded Royal as the 'notify party'. I am prepared to treat SSOE's case of contractual interference on the basis of NEAT's awareness of those broad terms of a contractual relationship between SSOE and Royal: sufficient to satisfy the condition of knowledge in such a cause of action (see Emerald Construction Co Ltd v Lowthian [1996] 1 WLR 691). 542 No party has developed submissions as to the precise basis in law upon which I should approach the various allegations of interference in contractual relations. 543 In particular, there has been no submission put to me in relation to the point left open by Lord Reid in J.T. Stratford & Son Ltd v Lindley [1965] AC 269 at 324, namely "… whether or how far the principle of Lumley v Gye covers deliberate and direct interference with the execution of a contract without that causing any breach" (at 324). Nor has it been suggested that the case is one acknowledged by the High Court in Northern Territory of Australia v Mengel [1996] 185 CLR 307 at 345, as one falling within a class of cases where there may be "… liability for harm caused by unlawful acts directed against a plaintiff or the lawful activities in which he or she is engaged..." 544 The element of intention in actions for wrongful interference in contractual relations was examined in Mengel as follows: "… the recent trend of legal development, here and in other common law countries, has been to the effect that liability in tort depends on either the intentional or the negligent infliction of harm. That is not a statement of law but a description of the general trend, the most recent example of which in this country is to be seen in Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520. In that case it was held that, subject to one qualification, the special rule in Rylands v Fletcher imposing strict liability for the escape of dangerous substances involved in the non-natural use of the land had been absorbed in the general rule of negligence. The qualification was that there might be cases in which "it is preferable to see a defendant's liability in a Rylands v Fletcher situation as lying in nuisance (or even trespass) and not in negligence". Moreover, developments involving the so-called "economic torts"(which the cause of action described in Beaudesert is sometimes said to be) have largely proceeded on the basis that liability depends on the intentional infliction of harm. However, the "economic torts" emerged only in the second half of the last century and, even now, the law in that regard is far from settled. The first development of significance was the recognition, in Lumley v Gye, of the tort of intentional interference with contractual rights. Subsequent developments in the United Kingdom have, to some extent, impinged upon the intentional element of that tort. Liability does not depend on whether there is a predominant intention to injure and it has been held that constructive knowledge of the terms of a contract is sufficient, so that a defendant may be liable if he or she recklessly disregards the means of ascertaining those terms. But it is still accurate to describe the tort as one that depends on an intention to harm for that is necessarily involved if a person knowingly interferes with the enjoyment by another of a positive legal right, whether such knowledge is actual or constructive." (at 341 - 342) 545 The nature of the requisite intention was also considered in Allstate Life Insurance Co v Australian and New Zealand Banking Group (1995) 58 FCR 26 at 42 by the Full Court of the Federal Court in the following terms, in the judgment of Lindgren J with whom Lockhart and Tamberlin JJ agreed: "From the modern progenitor of the tort, Lumley v Gye to date, the alleged tortfeasor's state of mind with respect to breach has been central to this particular form of tortious liability. In early cases what was required was referred to as "malice" (Lumley v Gye at 228; 754 (Crompton J), 233; 756 (Erle J), 238; 757 (Wightman J); Bowen v Hall at 338). This has yielded to references, in numerous cases, to "intention" or "knowledge" that a breach of contract or at least an interference with another's contractual rights will result. The cases include Allen v Flood at 107 (here the actual word used was "wilfully"); Quinn v Leathem at 510; Read v Friendly Society of Operative Stonemasons of England, Ireland and Wales at 738; South Wales Miners' Federation v Glamorgan Coal Co Ltd; White v Riley at 26; Ware and De Freville Ltd v Motor Trade Association at 91 (Atkin LJ - "To induce a person to break his contract is not unlawful unless done knowingly and intentionally"); D C Thomson & Co Ltd v Deakin [1952] Ch 646 at 694; Greig v Insole [1978] 1 WLR 302 at 332F, 336G-338H, 343G-344G; Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 at 293-294; Hawkins v Clayton (1988) 164 CLR 539 at 594; Northern Territory v Mengel (1995) 69 ALJR 527 at 537-538. In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have "sufficient knowledge of the contract" is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights. Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the "actual" or "subjective" state of mind of the alleged tortfeasor. I take the words "well knew" in proposed pars 159F(1) and 155C(1) to refer to a conscious awareness of the prohibition in the Indenture without any relevant misunderstanding of its effect. I do so because, to my mind, that is what the expression, without words of qualification, naturally signifies. Although an alleged tortfeasor must have "a fairly good idea" that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known: D C Thomson & Co Ltd v Deakin at 687; Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691; [1966] 1 All ER 1013 at 700-701; 1016-1017 (Lord Denning MR), 704; 1019-1020 (Diplock LJ); Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762 at 780-781 (Lord Denning MR), 784 (Davies LJ); Woolley v Dunford (1972) 3 SASR 243 at 282; Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 625-626." (at 42-43) 546 The element of intention was further considered by Bray CJ in the decision of the Full Court of the Supreme Court of South Australia in Davies v Nyland (1975) 10 SASR 76 at 98 as follows: "In Woolley v Dunford (1972) 3 SASR 243, Wells J. after referring to English authorities (p. 266) laid down as I have said, certain legal propositions (pp.266 - 268). It seems to me that there are no relevant English authorities later than those which he cited and it would serve no useful purpose for me to cite them all again. As I have said, those propositions were not disputed. The ones which seem to me to be relevant for the purpose of this appeal are: 1. A knowing and intentional interference by the defendant with the plaintiff's contractual rights without justification is an actionable tort. 2. Such an interference may be, inter alia, the procuring of a breach of a legally binding contract not yet fully performed between the plaintiff and the third party or preventing the performance of such a contract. 3. The interference in question must be unlawful but "where it is direct, the persuasion, procurement, inducement, or other form of interference is regarded by the law as wrongful in itself; where it is indirect, the means by which the interference is effected must be, or include, an unlawful act, that is, an act which the defendant is not in law at liberty to commit" (p.267). 4. The defendant must have knowledge of the existence of the contractual relations interfered with. (The extent of the necessary knowledge is not a matter which arises here: it is not disputed that the appellants possessed sufficient knowledge for this purpose). 5. The interference must be intentional." (at 98) 547 The High Court revisited the principles relating to the tort of interference with contractual relations in Sanders v Snell [1998] 196 CLR 329 as follows: "The tort of inducing breach of contract [20] As was said in Northern Territory v Mengel (1995) 185 CLR 307 at 342, per Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ, the law in regard to what have become known as the "economic torts" is far from settled. In particular, developments in the United Kingdom suggest the emergence there of a tort of interference with trade or business interests Hadmor Productions Ltd v Hamilton [1983] 1 AC 191; Merkur Island Shipping Corporation v Laughton [1983] 2 AC 570; Lonrho Plc v Fayed [1990] 2 QB 479, and on appeal Lonrho Plc v Fayed [1992] 1 AC 448. It will be necessary to return to consider some aspects of those developments. For the moment we deal with the tort of inducing breach of contract. … Interference with economic interests [28] This branch of the respondent's argument assumed that the appellant did not commit the tort of inducing breach of contract. It sought to say that there is a tort of wrongfully interfering with trade or business interests (in this case the respondent's contractual relations) and that the appellant committed that tort. It was said that, knowing of the existence of the contract of employment, the appellant, intending to prevent its due performance, acted by unlawful means to prevent that performance by giving the second direction: J T Stratford & Son Ltd v Lindley [1965] AC 269 at 324, per Lord Reid; at 328, per Viscount Radcliffe; Merkur Island Shipping Corporation v Laughton [1983] 2 AC 570 at 609-610, per Lord Diplock; Lonrho Plc v Fayed [1990] 2 QB 479 at 487-488, per Dillon LJ; at 491-492, per Ralph Gibson LJ; at 493, per Woolf LJ; Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354 at 358-359; see also International Brotherhood of Teamsters v Therien [1960] SCR 265 at 280, per Taschereau and Locke JJ. … [30] We do not think it is necessary to decide in this case whether a tort of interference with trade or business interests by an unlawful act should be recognised in Australia. For present purposes, it is enough to consider one element of that tort: the element of unlawful act. [31] The tort that is emerging, or has emerged in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. Otherwise, conduct of the most unremarkable kind would be tortious. Any person engaged in trade or commerce will daily act deliberately to further that trader's economic interests by obtaining business that otherwise would go to a trade rival. The whole focus of the business of many, if not all, traders is to compete with trade rivals and by advancing their own economic interests, inevitably harm the economic interests of their rivals. In many cases the trader's conduct will be directed specifically at a particular rival. But, if the means of competition employed are lawful, and those means cause no breach of obligation, there is no warrant for holding the trader liable to the rival for the economic consequences of that competitive conduct. The fact that the conduct is engaged in deliberately or is directed specifically at the person who suffers economic detriment is not enough to make the conduct tortious. … [35] In Mengel the Court overruled Beaudesert Shire Council v Smith (1966) 120 CLR 145. It thus rejected the proposition for which Beaudesert stood: that "a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other": Beaudesert (1966) 120 CLR 145 at 156. And it did so having first noted that the preferable view of Beaudesert (and the view favoured in later cases that had considered it eg, Kitano v The Commonwealth (1974) 129 CLR 151 at 174-175, per Mason J; Dunlop v Woollahra Municipal Council [1982] AC 158 at 170-171; Copyright Agency Ltd v Haines [1982] 1 NSWLR 182 at 195, per McLelland J.) was that an "unlawful act" was intended to refer to an act forbidden by law rather than an unauthorised act in the sense of an act that is ultra vires and void: Northern Territory v Mengel (1995) 185 CLR 307 at 336-337, per Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ. The majority judgment in Mengel noted that it seemed that the "embryonic or emerging tort" of interference with trade or business interests by an unlawful act does not extend to all unlawful acts and "at least in that regard, it is in need of further definition" Mengel (1995) 185 CLR 307 at 343, per Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ. Their rejection of Beaudesert is, however, consistent with confining what is an unlawful act for the purposes of this tort (if, that is, the tort is to be recognised in this country)." (at 338 -344) 548 In my view, the evidence outlined in these reasons did not establish any interference, intentional or unintentional, by NEAT with the contractual relationship between Royal and SSOE: nor did the evidence establish any intention by NEAT to harm the economic interests of SSOE: nor did it evidence any unlawful act by NEAT. 549 If any interference occurred it was the consequence of Pacific's direction to the Master of the vessel, with the authority of Bolton, to deliver the cargo to Royal. The request by NEAT to Pacific under the NEAT LOIs accorded with NEAT's contractual obligations to Royal once the bills of exchange were negotiated under the subject letters of credit. At the time of making such a request NEAT was the shipper under the related bills of lading. 550 As shipper and as voyage charterer, NEAT had lawful interests to protect in providing the NEAT LOIs to Pacific as "back-to-back" LOIs to the Pacific LOI, both Pacific and NEAT acting to avoid costly delays in the discharge of the cargo to Royal, the purchaser of the legumes and the notify party under the switched bills. There was no evidence of any relevant intention by NEAT to interfere with SSOE's contractual relationship with Royal, nor one to cause economic harm to SSOE. 551 For those reasons, a case based upon interference with SSOE's contractual relationships should be dismissed. 552 A third basis of claim was in conversion. The cornerstone of that cause of action was an alleged delivery of the cargo to Royal without production of the original bills of lading pursuant to NEAT's LOIs. It was alleged that by "entering into [those] LOIs NEAT converted the goods the subject of the [legume] Contracts … to its own use or the use of Royal." 553 The nature of conversion, was examined by Tamberlin J in The "Stone Gemini" (1999) 2 Lloyd's LR 255. Those principles are not in issue in these proceedings. They were expressed in the following way: "Claim in conversion 27. Conversion has been described as an intentional exercise of control over goods which so seriously interferes with the right of another to control those goods that the person so acting may be required to pay its full value: see Fleming, The Law of Torts, 9th ed., 1998 at pp.60 ff. The test requires an intention to deal with the goods and to exercise dominion over them on behalf of someone other than the owner. It is not necessary that the person who converts the goods should be aware that there is interference with the rights of another. The emphasis is rather on an intentional act which has the effect of interfering with the rights of others. In order to succeed in conversion the plaintiff must be able to show an entitlement to possession or delivery of the goods as at the time of conversion." (at 262)

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554 The case is also of interest for its treatment of the entitlement, as pledgee, of the unpaid negotiating bank and holder of the subject bills of lading as follows: "36…. The entitlement to delivery conferred by the possession of the bills of lading operated to secure Westpac against the contingency that BOC or its customers might not pay. The position is usefully summarized in The Law of Bankers' Commercial Credits, Gutteridge & Megrah, 1984 at p.210 where the authors say: As regards the issuing bank such right [of resort to the documents of title for reimbursement of sums of moneys paid against them] is usually given by the agreement between it and its customer identified in the application for the credit. The intermediary bank has an implied pledge when it pays or negotiates documents tendered to it by the seller.( Emphasis added) 37. Further authority in support of this proposition can be found in Guaranty Trust Co. of New York v. Hannay & Co., [1915] K.B. 536, Ross T Smyth & Co. Ltd. v. T.D Bailey Son & Co. [1940] 3 All E.R. 60 at p.68, and Pagets Law of Banking, 11th ed., 1996, at p.694. Having regard to these authorities, in my view, at all material times during the discharge of the cargo between July 10 through July 14, 1995 Westpac, as the entity to call for delivery of the cargo, had a sufficient right to the cargo to make it a pledgee and to support its claim in conversion against the vessel for wrongful delivery." (at 263) 555 The giving of an indemnity to Pacific with a request to deliver the cargo to Royal did not, in my view, represent "an intentional exercise of control" over the cargo. If there was any exercise of control, it was in the instruction by Bolton to the Master to deliver in accordance with Pacific's instructions, having obtained Pacific's LOI, and in Pacific's direction to deliver the cargo to Royal, albeit after receipt of NEAT's LOI. 556 Both this cause of action and that based on interference with SSOE's contractual relations should be viewed in the context of SSOE's knowledge, as at 18 February 1999, that discharge of cargo had taken place: of NEAT's provision of a letter of indemnity upon SSOE's acceptance of discrepant documents and of the carrier's rejection of Royal's LOI. That much is evident from the NEAT facsimile of 17 February to Goil, copied to SSOE; the facsimile of NEAT to SSOE and the telephone conversation between Sniekers and Jain, both of 18 February and the telephone conversation between Murali and Jain of 19 February 2001. 557 It has not been argued before me that SSOE's release of Bolton and Pacific, under the settlement of the London Arbitration had the effect of releasing NEAT in tort: presumably on the basis that, in the absence of evidence of English or Indian Law, Australian law applied (see Thompson v Australian Capital Television Pty Ltd [1996] 186 CLR 574 and Baxter v Obacelo Pty Ltd [2000] NSWCA 69). 558 A fourth claim was founded on the Trade Practices Act in which it was alleged that NEAT:

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563 NEAT's estoppel case has difficulties. However, it contains ingredients which, in my view, shore up the correctness of findings that NEAT's LOIs should not be treated as acts of interference in SSOE's contractual relations, nor as acts of conversion. From mid February, SSOE must be taken as having acquiesced in NEAT's provision of LOIs. 564 Whatever case SSOE may have had against Pacific, Bolton, or NEAT in conversion, in the case of NEAT, in my view, it must be taken to have acquiesced in the giving of an LOI by NEAT. 565 Otherwise, I think, NEAT's estoppel case flounders on Murali's representation to SSOE that Royal had provided a banker's guarantee in association with the discharge of the legumes to it and upon the evidence that neither Pacific nor Bolton acted upon SSOE's facsimile of 13 January 1999. In the face of that evidence and SSOE's fruitless endeavours to confirm the existence of the Royal banker's guarantee. NEAT's estoppel case may not be sustained as asserted in par 15 of its defence to the fifth cross claim. 566 In any event, for the reasons given, I am of the view that the fifth cross claim should be dismissed. 567 NEAT's Cross Claim against SSOE 568 Under the sixth cross claim, NEAT raised several causes of action against SSOE: 569 In contract, NEAT relied upon an alleged agreement made on 12 January 1999 between it and SSOE that, in consideration of SSOE and Royal facilitating the discharge of the cargo at Calcutta, NEAT authorised Pacific to issue the switched bills. It was said to be an implied term of the agreement that SSOE would not claim to be entitled to the cargo, or delivery of it, or would authorise Pacific to deliver the goods to Royal and indemnify NEAT against any loss that might be suffered as a result of that delivery. 570 In my view, that cause of action is groundless. The implication of such terms are inconsistent with SSOE being the party by whom letters of credit were to be opened under the NEAT/Royal contracts: the notify party under the initial bills of lading and the shipper under the switched bills. In such circumstances, SSOE would become the holder of the initial bills of lading and upon cancellation of those bills, the holder of the switched bills. While it remained the holder of the bills it was entitled to possession of the cargo. 571 An associated cause of action was that SSOE represented to NEAT that it did not claim to be entitled to delivery of the cargo and induced NEAT to assume that Royal was entitled to delivery: further that NEAT relied upon that representation in providing the NEAT LOIs. 572 For much the same reasons as the case in contract must fail, so I think there is no foundation for the alleged representations. Moreover, the evidence does not establish the reliance as alleged. While I am satisfied that NEAT did assume that Royal was entitled to delivery and assumed that SSOE did not claim to be so entitled, that was an erroneous assumption and not drawn from any representations by SSOE. Both NEAT and BNP, in my view, assumed that, once discrepant documents were accepted in relation to the letters of credit which had been opened on the application of SSOE, there would be no impediment to payment, nor to delivery of the cargo to Royal. 573 Once it is accepted that (a) NEAT acquiesced in the opening of the letters of credit by SSOE; (b) that it recognised SSOE as a financier in the transactions; (c) that in the ordinary course, SSOE would become the holder of the initial bills of lading and, in turn, the switched bills, and (d) that NEAT knew that, under the switched bills, SSOE was noted as the shipper, there is no room for the alleged representations nor for the contention of reliance. 574 NEAT made further claims in contract and upon the Trade Practices Act, relying upon a contention that SSOE "by itself or as agent for Royal … agreed with NEAT that SSOE would accept discrepant documents" under the second letter of credit, or alternatively, made representations to that effect. 575 BNP in its cross claim against SSOE made a similar submission to the effect that "between 7 January 1999 and 3 March 1999 Swiss gave NEAT various assurances that it would accept discrepant documents under the L/Cs [and that] NEAT passed on those assurances to BNP" to the knowledge of SSOE. In support of that submission BNP relied on extensive material in the evidence which is convenient to examine in association with NEAT's case. 576 NEAT relied upon the following as evidencing SSOE's assurance of acceptance of discrepant documents:

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(g) exhibit M, vol 2, page 628: a facsimile of 15 January 1999 from NEAT to SSOE confirming negotiation of documents for chickpeas with instructions to deliver them " urgently to Bangkok Bank " and noting that there was " an urgency for documents for your negotiations' (sic) as well as changing b/lading at Singapore ." It further stated: "Also for your information Mr G. C. Bhura spoke to Mr P K Jain to accept documents with discrepancy. As you are aware of it, we got very little time for you to renegotiate the documents at Singapore and it should reach before vessel reaches to Calcutta." 585 By that facsimile, NEAT clearly anticipated acceptance of discrepant documents. While there was no response from SSOE, foreshadowing any difficulty with acceptance of discrepant documents, the facsimile fell short of evidencing the alleged assurance. 586 (h) exhibit M, vol 2, page 645: a facsimile from Murali to Bhura of 18 January 1999 confirming "that documents will be accepted with discrepancies, also confirmed that Mr P.K. Jain of Swiss Singapore advised to accept documents with discrepancies today who was on the other telephone line". Murali's statement to Royal is not evidence of the alleged assurance. 587 (i) exhibit M, vol 2, page 649-653: banking documents dated 19 January 1999 between BNP and Bangkok Bank relating to the subject letters of credit. They provided no evidence of the assurance relied upon. 588 (j) exhibit M, vol 2, pages 693-694: banking documents dated 22 January 1999 between BNP and Bangkok Bank. These are in the same category as the last group of documents. 589 (k) exhibit M, vol 2, page 702: part of banking documents dated 22 January 1999 between BNP and Bangkok Bank. These are in the same category as the last group. 590 (l) exhibit M, vol 2, page 708: part of banking documents between BNP and Bangkok Bank dated 22 January 1999. These are in the same category as the last group. 591 (m) exhibit M, vol 2, pages 762-765: a facsimile dated 27 January 1999 from NEAT to BNP forwarding the "originals received from India ref L/C openers (sic) as acceptance of documents" and requesting BNP to "urgently chase up with Bangkok Bank … ". That was not evidence of the alleged assurance. 592 (n) exhibit 10, pars 11 and 12: affidavit of Dhiri sworn 20 April 1996 evidencing receipt of facsimiles from NEAT to BNP on 25 and 27 January 1999, concerning the banking documents from Bangkok Bank. That was not evidence of the assurance relied upon by BNP. 593 (o) exhibit M, vol 2, page 755: facsimile from NEAT to SSOE of 25 January 1999 which contained the following: "Please ref our telecon discussions of the date. As explained to you our problem about our credit limits with BNP-Sydney also your assurance accepting documents with discrepancies. May I kindly request you to send a message to Bankok (sic) bank, Singapore accepting documents and authorise for payment at due dates urgently. Though it is 90 days bills but we can make use of our credit limits. I am sure the vessel must have reached at Calcutta with out (sic) documents, to avoid dumurrage (sic) and other problem's (sic) your kind cooperation & help very much appreciated." 594 That was the facsimile that has Jain's note as follows: " Balodi Accept when 800,000 paid by Bhura."

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605 On the face of that facsimile, one would infer that the assurances were coming from Goil and Bhura. 606 Exhibit M, vol 2, page 947: a facsimile dated 16 February 1999 from NEAT to BNP concerning acceptance of discrepant documents. That was not evidence of the assurance relied upon. 607 Exhibit 11, pages 109 -110: Bangkok Bank documents dated 21 January 1999 notifying discrepancies. They were not evidentiary of the assurance relied upon. 608 Exhibit M, vol 2, page 956: a facsimile dated 17 February 1999 from NEAT to Goil, copied to SSOE, marked urgent, requiring immediate "acceptance of all chick pea documents" so that there could be "put in place LOI to cover further lightering discharge of vessel", including the further statement that the advice was immediately required "so vessel discharge can recommence immediately". That provided no evidence of the alleged assurance. 609 Exhibit M, vol 2, page 964: a facsimile dated 18 February 1999 from NEAT to Jain confirming "advice that you have faxed your acceptance of documents to Bangkok Bank on Monday 15/2/99". On the evidence that referred to the first letter of credit. 610 Exhibit 11 at pages 150-153: banking documents dated variously 12 February, 22 February, 25 February and 2 March 1999. They provided no evidentiary support for the assurance said to be given by SSOE. 611 Exhibit CX 3-PS1, tabs 53-54 and 63-67: tab 53 is a facsimile from NEAT to SSOE of 5 March 1999 in the following terms: "Dear Mr Ladda (sic) and Mr Jain On the 30/12/98 NEAT was faxed copies of amendments to documentary credits (LCUA800983 and LCUA800970) made by Swiss Singapore to Bangkok Bank dated 22/12/98. Further to these faxes, NEAT was given verbal assurances by Mr Jain and Mr Balodi that amendments to NEAT L/C's had been carried out. BNP Sydney never received written confirmation from Bangkok Bank that amendments agreed to between NEAT and Royal Trading had been effected. On the 5/1/99, Mr KN Murali spoke to Mr Jain and Mr Balodi, advising him that BNP had not received amendments to the above mentioned L/C's. Both Mr Jain and Mr Balodi told Mr Murali on the 5/1/99 that Swiss Singapore would accept documents with discrepancies. Further to the verbal assurances given by Swiss Singapore to NEAT regarding the acceptance of chick pea documents with discrepancies, Royal Trading sent a fax to NEAT dated 14/1/99 re the shipment of dun peas and chick peas on the M/V Nelson, stating, "please note all documents with discrepancy shall be accepted by us." NEAT relied on the assurances given to it by Mr Jain and Mr Balodi that Swiss Singapore would accept chick pea documents with discrepancies but it was not until late on the afternoon of the 19/2/99 that BNP Sydney finally received written confirmation from Bangkok bank that L/C No. LCUA800970 had been accepted with discrepancies. No acceptance was ever received by BNP for L/C No. LCUA800983. NEAT has sought legal advice on this matter and we have been advised to put you on notice that NEAT will hold Swiss Singapore responsible for all costs / losses associated with Swiss Singapore's late acceptance of L/C No. LCUA800970 and no acceptance to date of L/C No. LCUA800983. At the very least, Swiss Singapore owed NEAT a duty of care in making representation to NEAT that chick pea documents would be accepted with discrepancies. Under Australian law, it would also be considered to be misleading and deceptive conduct for Swiss Singapore to give assurances regarding the acceptance of discrepant documents but not to carry out those assurances. The matter is now very serious with the M/V Nelson now on detention being unable to discharge further tonnage because of the non acceptance of L/C No. LCUA800983. The vessel cannot proceed to berth unless continuous discharge can be guaranteed for the remaining cargo. PCL cannot guarantee port authority of continuous discharge because of non acceptance of L/C No. LCUA800983 by Swiss Singapore. PCL are now threatening to dump cargo of dun peas in the water as the vessel is almost out of bunker fuel. Mr Jain promised yesterday that he would make a proposal to NEAT by latest Monday 8/3/99 regarding the conditions under which Swiss Singapore would accept L/C No. LCUA800983. We suggest Swiss Singapore immediately reconsiders its position given the magnitude of losses faced by both Swiss Singapore and Royal Trading unless some immediate action is taken to resolve this problem. We wait your urgent advice and acceptance of discrepant documents for L/C No. LCUA800983 as previously promised by Swiss Singapore. Yours faithfully Peter M Howard"

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613 It may be noted that Lodha's facsimile had a head note address at Calcutta. In view of that denial, an inference could not be drawn from NEAT's facsimile of 5 March 1999 that, in fact, the alleged assurances attributed to SSOE had been given. 614 Tab 63 was a facsimile dated 18 March 1999 from NEAT to SSOE in reply to SSOE's facsimile to NEAT of 17 March. The latter was in the following terms: "Reference your various telephones when I was not available. I am to inform you that I have not received any instructions from Royal Trading to accept any discrepant LC. Meanwhile, we find a new development. In earlier consignment of Dun Peas and Chick Peas, we are holding the original Bill of Lading and they are supposed to pay us and collect the same from us. It appears Royal Trading has collected the consignment under Letter of Indemnity issued by you to Shipping Co. without any referenc (sic) to us. Under the circumstances, we are reluctant even if Royal Trading advises us to accept discrepant LC to accept the same. We are now lodging our claim on the Shipping Co. for delivery of material against original Bill of Lading in our favour which is in our possession. We regret, we will not accept any documents unless this aspect is also settled and you advise us valid reasons for your issuing Letter of Indemnity wihtout (sic) concurrence from us. Thanks and Regards [signed] P.K Jain President" 615 NEAT's facsimile of 18 March described the assertions in SSOE's facsimile as "blatant misrepresentations of the facts". There is some justification for that charge in my view of the undisputed evidence that NEAT informed SSOE in mid-February of the provision, or intended provision, of its LOI to enable re-commencement of discharge of the subject cargo. 616 Tab 64 was a facsimile of 19 March from SSOE to NEAT in reply to NEAT's facsimile of 18 March. It was in the following terms: " RE: M V NELSON This has reference to your fax message ref. 3703 dated 18 March '99. The letter makes a strange reading. At no stage, we had confirmed that we will accept the documents. The documents were discrepant and have been rejected. We also clarify that if we had accepted some of the discrepant L/C this does not commit us to accept all discrepant L/Cs. We hold no responsibility about demurrage you might have incurred for any reason. We do not agree with your contention that issuance of Letter of Indemnity to Shipping Co. for delivery of goods, was as per your obligation. You had endorsed the Bill of Lading in our favour and we became the owner of the goods by holding title of the goods. Therefore, you had no business to issue Letter of Indemnity and get the goods delivered to Royal Trading. Your contention that you informed us about issue of Indemnity is figment of lies. You never informed us anytime about Letter of Indemnity. We came to know about it when your third L/C problem arose. You know we are holding Bill of Lading and if we wanted goods to be delivered to Royal Trading Co., we would have given them Bill of Lading itself. It will be relevant to mention that once you have endorsed documents to us and thereafter you are giving advise(sic) to Shipping Company to deliver the material to some else amounts to cheating in this country. Thanks and Regards, [signed] P.K. Jain President"

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617 In the face of those assertions I am unable to draw an inference from that exchange that SSOE gave the alleged assurance to NEAT: notwithstanding the false assertion that SSOE had not been informed of NEAT's provision of its LOI. It clearly had been so informed. 618 Tabs 65-67 were further communications between SSOE and NEAT over the period 24 March 1999 and 6 April 1999, forming part of the earlier exchanges in March. Included in the material was a demand upon neat by SSOE's solicitors. For the above reasons, I am unable to draw any inference that SSOE gave the alleged assurance to NEAT. 619 Exhibit 29: There was nothing in that material to evidence the alleged assurance. 620 The documents relied upon by BNP in support of the alleged assurance included the documents relied upon by NEAT in its sixth cross claim, with the exception of the applications by SSOE to amend the first and second letters of credit dated 22 December 1998 so as to extend the expiry date to 15 January 1999 and the shipment date to 31 December 1998. I am unable to draw an inference from those applications that SSOE gave the alleged assurance, as distinct from giving rise to an expectation that acceptance would be forthcoming: acknowledging Jain's acceptance that the applications were consistent with NEAT's unwillingness to effect shipment with discrepant documents under the letters of credit opened on SSOE's application (T1257-1258). 621 To the extent that NEAT relied upon telephone communications between SSOE and NEAT, for the reasons earlier given, the record of those telephone conversations do not justify a finding that SSOE gave an assurance to accept all discrepant documents. 622 Such an allegation was made by Howard in his telephone conversation with Jain on 5 March 1999. "…We've gone through our records and there's no question that Swiss Singapore gave assurances to us that the documents would be accepted with discrepancies. I mean, we have the Bhura letter, we have your assurances. It's not a good situation. I've just drawn up a fax to you which I'm going to send, setting out our position…." (Ex L1) 623 That assertion went unresponded to. However, it was part of a lengthy series of assertions by Howard and the absence of an immediate response is not particularly probative of the fact asserted by Howard. Further, Jain is shown not to be particularly forthcoming during the conversation. For example, as to his knowledge of the discharge of the cargo, the following exchange took place:

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635 With the facsimile of 28 January 1999 there was added Snieker's handwritten request in the following terms: "AS SOON AS YOU GET FORMAL O.K. ON FIELD PEA DOCS, COULD WE PLEASE PUT THIS LOI IN PLACE. MANY THANKS." 636 That is not the language of a trader seeking advice on its legal liabilities under the proposed LOI. Moreover, the communications between NEAT and BNP during January and February 1999, which I have covered in some detail in these reasons, are not reflective of a trader seeking advice on its liabilities under the NEAT LOIs. Rather they took the form of an exchange of views about NEAT's invidious position. 637 I think there was significant pressure put on BNP by NEAT to obtain, as a matter of urgency, BNP's execution of the NEAT LOIs: NEAT being driven by its concern over its exposure to demurrage. As earlier stated in these reasons, I think the evidence established that NEAT regarded its position as secure once the discrepant documents had been accepted under the letters of credit issued by Bangkok Bank. Dhiri shared that view. While it would have been open to Dhiri to alert NEAT to the possibility of there being conflicting interests between Royal, as buyer, and SSOE as pledgee/ holder of the bills of lading, it does not follow that BNP was under any duty so to advise NEAT, nor that BNP undertook to do so. 638 I take that view notwithstanding the evidence of Ryan, quoted earlier in these reasons, as to what would have been his response to NEAT's facsimile to BNP of 28 January 1999, namely: "HIS HONOUR: Q. Could I ask, would you have signed it on behalf of the bank? A. No, I would have first of all sought a lot more clarification from my client as to why it was required since they are looking to indemnify a shipping company for discharge of a cargo where the sale, the title documents relative to that cargo had, as I understand, been paid for and taken up by another party. So that I would question why my client was indemnifying a shipping company for a cargo in which they effectively had no longer had an interest. If that makes sense."

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(T730:03 - T730:06) 640 For much the same reasons, there is no substance in the representation case sought to be made by NEAT. There were no representations made by BNP as to the authority of Dhiri. NEAT executed the LOIs as requested by Pacific and forwarded to Dhiri for signing which she did after considerable discussion with NEAT's representatives. 641 Issues as to her authority to sign did not arise in those discussions. 642 Given NEAT's execution of the NEAT LOIs prior to their being submitted to BNP, one wonders what reliance could be asserted by NEAT upon any alleged representations by BNP. 643 For those reasons, the seventh cross claim should be dismissed. Quantum 644 In the London Arbitration no issue had been raised by Bolton that SSOE's loss had been occasioned by its own failure to prevent discharge of the cargo to Royal. That issue was raised in these proceedings under the heading of a failure to mitigate. Popplewell QC approached the issue in that way. Pacific contended that the approach of BNP was misconceived. In this it was supported by Teare QC. In short, Pacific's case was that SSOE's loss occurred at time of conversion. Thereafter, it was idle to contend that SSOE had failed to mitigate its loss by standing by. The damage had been done. 645 I think the correct view is that, if it be shown that SSOE deliberately or unjustifiably stood by and allowed discharge of the cargo to Royal, at a time when SSOE had reason to believe that payment for the cargo by Royal had not been made to it, or that Royal had not provided a bank guarantee, the failure to act by SSOE to prevent discharge should be treated as a novus actus. 646 As traced earlier in these reasons, the position taken by SSOE in relation to its interest in the cargo has not been consistent. Jain's evidence in chief, as to SSOE's understanding of the situation prevailing at time of arrival of the vessel at Calcutta, was as follows: "22. In light of my experience in transactions of this type, the earliest I would have expected to receive Royal's payment for the dun peas, the goods the subject of switch bills of lading numbered 1A-1F, 2 and 3A-3E, was around 18 or 19 February 1999. During the first two or so weeks of February 1999, I understand that the original documents were with the Bank of Baroda awaiting Royal's payment. In that period I did not make any enquiries of any party regarding whether the goods were being discharged from the "Nelson", whether those goods were being delivered to Royal, and, if so, the basis upon which that was being done as, I assumed during that period that delivery would not be made without either presentation of the relevant original bills of lading by Royal (and I did not think Royal would have obtained those documents during that period) or presentation of a bankers guarantee by Royal, in accordance with SSOE's facsimile to Pacific Carriers Limited ("PCL") dated 13 January 1999." (CX 15) 647 That evidence, reflecting a position of some commercial comfort, did not reflect a concern relating to "very long outstanding … Bills negotiated … on DP Sight basis" which was the tenor of SSOE's communications with Royal in January 1999. 648 In cross examination by senior counsel for Pacific upon SSOE's practice of monitoring arrival of a vessel in which it has cargo interests, Jain offered the following evidence: "[Street] Q. And may I take it that it was apparent to you by, say, 12 January, that the original bills of lading were not going to be available when the vessel arrived in Calcutta, correct? A. In fact, I was not very much aware of that, when the vessel had released and what had happened. 13 January, around, I was informed that vessel is expected very shortly so prepare all negotiable documents and ask owners to release the goods in case there will be a delay in the original BL. Ask the owners to release the goods in terms of the banker's guarantee.

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Q. Mr Jain, what I am putting to you is it is part of your practice, isn't it, when business is involved in relation to a cargo that is being shipped from one country to another country, to monitor the movements of the vessel from the time of shipment up until delivery, correct? A. No, I couldn't follow you. Q. Would you agree with me that where Swiss Singapore is involved either as a financier or purchaser of cargo in an international shipment, Swiss Singapore monitors the movement of the vessel from the port of shipment to the port of discharge, correct? A. I repeat my answer. We monitor only when we charter our vessel. If we buy C&F or we sell C&F or we come as a position of a financier, then we don't monitor the shipment. It is interlocking arrangement. Buyer has to take care his side and the seller has to take care his side. The contracts are well-explained and the ship owner has the responsibility to see that they take the original BL or the other documents whatsoever we mutually agreed so we need not go and run after every ship whatsoever that we are trading with. It is only when we charter the vessel, then we take care." (T 1065:57- T 1066:4 8 ) 649 It is difficult to reconcile this evidence with instances in Jain's cross examination where he asserted the significance of SSOE's position as shipper in providing it with security over the cargo, and with the instances in which he likened SSOE's position as buyer of the cargo once the bills had been negotiated under the letters of credit opened on its application. A general reading of the evidence of Jain shows him alternating between describing SSOE as shipper, buyer and financier and I think little is to be gained from a detailed examination of that aspect of his evidence. 650 I think it is clear, however, that SSOE was the financier. It imposed a 'margin' on NEAT's selling price for the financial facility provided to Royal in the form of letters of credit opened by Bangkok Bank on its application. It exercised security in the form of the bills of lading once they had come into SSOE's position upon acceptance of the discrepant documents under the letters of credit. It retained that security as holder of the switched bills and by raising terms of payment with Royal which ensured that release of the switched bills of lading to Royal would only occur in accordance with the terms of the purported contracts of sale submitted by SSOE to Royal. In that role SSOE was the pledgee/holder of the switched bills. 651 I think the further evidence of Jain in cross examination exposed knowledge of conditions affecting discharge which did not appear to have emanated from Pacific or NEAT, namely: " Q. The ship had arrived almost a month earlier. You would have expected the goods to have been discharged? A. No, around end of January when I was giving the acceptance of the first document I was made to understand that the ship is likely to arrive shortly and discharge is going to take time because of the barges' availability and the condition of the port. I was expecting that the discharge would commence somewhere around middle of February.

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652 In any event, given the evidence of Jain referred to above, it should be inferred that SSOE had, at least, a grasp of the situation that the vessel was in, or nearing Sagor Roads about the time of its 13 January 1999 facsimile. 653 It is also in evidence that on 27 January 1999 Balodi was informed by Sniekers in a telephone conversation that the MV Nelson had "arrived at Calcutta". Sniekers only had to introduce himself by name for Balodi to respond "You are asking about your dun peas acceptance? Am I right?" It is evident from that conversation that there had been significant contact over the documents in the banking system with Balodi volunteering to Sniekers that "Your bank is constantly chasing my bank". 654 The urgency of the situation could not have been lost on Balodi in light of Snieker's stipulation for acceptance of discrepant documents in relation to the chick peas cargo. In that context Balodi was told by Sniekers: "We need that done urgently because the vessel is going to start racking up demurrage against … the receivers." 655 There was no mention in that conversation of SSOE's facsimile of 13 January 1999, of which NEAT was unaware: nor was there any reference to the fact that acceptance of discrepant documents was being withheld by Balodi, on the instructions of Jain of 25 January 1999, in order to force payment by Royal of US$800,000 owing under transactions unrelated to the NEAT/Royal contracts. 656 I have some difficulty in disassociating SSOE's apparent inactivity in relation to the cargo prior to mid-February 1999 from SSOE's knowledge that the legume market had fallen and from the fact of its exposure to loss associated with any exercise of its right to possession of the cargo under the initial bills of lading, or the switched bills. It is difficult to accept that SSOE was operating under any impression that its facsimile of 13 January 1999 was being acted upon, when it had received no acknowledgement of the facsimile, let alone a confirmation from Pacific as sought by SSOE in the facsimile. 657 The conclusion which I have reached is that SSOE acted within its legitimate commercial rights prior to mid-February in standing apart from the near chaos surrounding the attempts of Pacific to achieve a seven metre draft for the MV Nelson, attempts to obtain barges to effect lighterage in the face of Bhura's obstinacy in refusing to accept discharge of chick peas and SSOE's deliberate dilatoriness in accepting discrepant documents. While it may have been legitimate commercial behaviour it does not follow that SSOE was not callous and lacking in frankness in its dealings with NEAT: referring to Jain's evidence which is repeated for ease of reference: "Q. Mr Jain, did you ever inform NEAT that you were withholding acceptance of documents until Royal satisfied obligations to Swiss Singapore in relation to unrelated transactions?

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661 NEAT's experience in having an unsatisfied award against Royal would appear to substantiate Jain's experience. 662 In those circumstances it would not be fairly concluded that SSOE has acted unreasonably in eschewing proceedings against Royal, as to which see Banco de Portugal v Waterlaw [1932] AC 452 at 506 and Segenhoe Ltd v Akins (1990) 29 NSWLR 569 at 582. 663 Pacific's claim for reimbursement of expenses associated with the arrest and release of the MV Nelson was based upon a period of arrest of ninety two days. BNP contended that the actual period was eighty one days and further, that a reasonable period should have been three days. Certainly, the period from 31 March to 30 June seemed inordinately long, particularly when compared with the time it took Pacific to gain release of the vessel "Ikan Selangat" in Durban. Bolton caused that vessel to be arrested on 22 April 1999 in retaliation for Pacific's failure to provide security for the release of the Nelson. 664 On 24 April Pacific obtained a SKULD letter of indemnity to pay any entitlement of Bolton relating to the arrest of the Nelson and charterhire relating to the vessel. Upon the provision of that undertaking it appears that the Ikan Selangat was released from arrest and sailed from Durban on Saturday 24 April 1999, or shortly thereafter. 665 Pacific called upon Albamar by facsimile of 26 April to "immediately… arrange release of arrest of [the] MV Nelson". Not unreasonably, Albamar responded by distinguishing the position in Calcutta under Pacific's indemnity to Bolton and noting that the "security in Durban [did] not put owners in funds to provide bail in Calcutta to release the Nelson". 666 As appears from the following reasons, the Durban position was significantly different from the circumstances prevailing in Calcutta. 667 In a facsimile from BBT to Pacific of 5 April 1999, Bolton called upon Pacific to "provide security to secure the release of the ship" under Pacific's indemnity. By facsimile of 6 April 1999 Pacific looked to BNP as the party under NEAT's "Bank Endorsed LOI". BNP lost no time in rejecting that contention in its facsimile to Pacific of 7 April. An exchange of facsimiles of 7 April left things with Pacific's solicitor making a demand upon BNP under the "2 letters of indemnity" and with BNP suggesting to Pacific that it "contact New England directly." 668 On 7 April Bolton (Albamar) called upon Pacific "to immediately provide bankable security" to secure release of the Nelson. 669 In the proceedings instituted by SSOE in the High Court at Calcutta on 31 March 1999, an interlocutory application by Pacific was made on 30 April 1999 and was referred to Barin Ghosh J on 4 May. 670 Interim orders were made in that application which provided, inter alia that, in the event that security was provided in the form of "an indemnity by PNI Club" in the sum of "Ro 12 crores", the vessel could be released. The original security ordered had been as Ro 13.68 crores "in the form of Bank Guarantee by an Indian Nationalised Bank or any Schedule Bank." 671 On 11 May 1999 the Civil Appellate Division of the court set aside the interim order of Barin Ghosh J. The Appellate Division's orders are referred to later in these reasons as the "court orders of 11 May". 672 There followed the series of arrangements involving Pacific, Bolton and SSOE outlined earlier in these reasons, which resulted in an application by "Swiss Singapore… for release of the vessel on 7th June, 1999". 673 That matter and related matters came before the High Court of Calcutta on 23 June 1999 when several orders were made relating to the release of the cargo on conditions, upon the fulfilment of which, the vessel could be released. On 29 June 1999 the vessel was released from arrest. 674 In written submissions on behalf of BNP it was conceded that the three day period needed "to be adjusted to take account of the time required to discharge the balance of the cargo", for which a period of seven days was advanced on behalf of BNP. The parties continued to refer to the extended period as the "three day period" and I have adopted that usage in these reasons. 675 BNP adduced evidence in support of the 'three day period' of arrest through Steven Anthony Godinho (Godinho), a "Senior Manager in the Strategic team of Arthur Andersen Business Consulting". He held formal qualifications in management and economics. He had shipping experience as deputy manager in the shipping and clearing department of a Calcutta based steel producer. He put himself forward as having an "in-depth understanding of the operational characteristics of the port of Calcutta both from the point of view of regulatory requirements and … of customs and port practices." 676 I did not gain that impression from his evidence: particularly, in relation to that part of Pacific's claim that sought reimbursement for light dues. He treated that claim as relating to expenses of lighterage. 'Light dues' is a well known technical expression which has nothing to do with lighterage. They are port dues relating to lighthouses maintained by a port authority. 677 He was invited in evidence in chief to express an opinion in relation to a three day arrest period as follows: " Q. Do you see the table summary includes a first column on the right-hand side "Three-day arrest period". Are you able to inform the court, having regard to your experience, as to what is a reasonable period for a vessel in port when arrested to obtain a letter of undertaking or a bank bond so that it can be released from arrest? …

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Q. And may I take it it was no part of your role to participate in the giving of instructions to solicitors relating to the arrest of the vessel; correct? A. No." (T1388:15-1388:58) 679 I treated the last answer as accepting the proposition there put to him. 680 Given the rejection in the court orders of 11 May of a P & I Club letter of undertaking as sufficient security for the release of the Nelson, there was nothing useful to be gained from that evidence. 681 There is no basis on the evidence for concluding that the vessel should have been released from arrest within the three day period. 682 Similarly, in my view, there is no logical basis for the eighty one day period of actual arrest calculated by BNP. It involved calculating the period of arrest from the time of Pacific's demand upon BNP and concluding at the time of completion of discharge. 683 Brendan Patrick Halligan (Halligan), a "Chartered Accountant and Partner in the Complex Financial Analysis practice of Arthur Andersen'", prepared a joint report, with Godinho, on quantum. On instructions from BNP they adopted the three day period and the eighty one day period of arrest as alternative bases of quantification of Pacific's claim. In my view, neither basis was justified. 684 The evidence outlined in these reasons established that a SKULD letter of undertaking was not acceptable to SSOE, nor on appeal to the High Court at Calcutta. The legal process which established that situation took several weeks. No evidence was adduced from which findings could be made in respect of the difficulties of satisfying the High Court's order for security, nor as to the usual time within which such security could be put in place. 685 I am left with evidence of the actual time taken to dispose of the various court applications and to implement in the High Court the settlement reached amongst the interested parties. 686 While the time taken to obtain the release from arrest of the Nelson, on the face of it, appears inordinate, I have no yardstick by which I could reasonably conclude that the period of arrest was unreasonable. For those reasons, I think the ninety two day period of arrest should be accepted as reasonable. 687 Pacific retained a chartered accountant, Terrence Michael Potter (Potter), a "Partner, Forensic Accounting Division" of Ferrier Hodgson. Pursuant to directions given by the Court, he and Halligan prepared a joint report on quantum, dated 29 November 2000 (the first joint report). The first joint report was the product of the following process, as directed by the Court: "The First Defendant served its responses to the Plaintiff's Scott Schedule on 21 August 2000 and the Plaintiff served its answers to those responses on 2 November 2000. The First Defendant also served an expert report dated 3 November 2000 on the issues of quantum and causation in connection with the Plaintiff's claim (being an opinion on the issues of quantum and causation in relation to the Plaintiff's claims referred to in the Plaintiff's Summary on Damages and the Scott Schedule as supported by the Plaintiff's statements of Mr Chua, dated 18 June 2000, and Mr Lam dated 26 January 2000, on quantum). The Plaintiff's Expert has not prepared a report in this matter. The Plaintiff's Expert and the First Defendant's Experts have been informed by their respective instructing solicitors that the Plaintiff may produce further evidence: "arising out of the issues joined in the Scott Schedule", and, accordingly, each expert reserves the right to amend this Joint Report after consideration of any such further evidence. In particular, the Plaintiff's Expert has been instructed by solicitors for the Plaintiff to assume that further evidence of the following nature will be provided: (a) Evidence that the claimed amounts in these proceedings were caused by delays and the arrest of the MV Nelson and evidence that if the delays and arrest of the MV Nelson had not occurred the unloading of the MV Nelson's cargo would have been completed by the end of February 1999 or early March 1999. As a consequence, the extended mooring of the MV Nelson in Diamond Harbour and the berthing of the MV Nelson at the Calcutta Port docks up to 1 July 1999 to unload remaining cargo, together with associated costs, was incurred.

[504]

x. affidavit of Robert Reginald Wilson sworn 15 December 2000. f. On 14 December 2000, the Plaintiff's Expert issued a report on the issues of quantum and causation in connection with the Plaintiff's claim. g. On 29 January 2001, the First Defendant's Experts issued their second report on the issues of quantum and causation in connection with the Plaintiff's claim. The opinions of the Plaintiff's Expert on the issues of quantum and causation in respect of the Plaintiff's claim are expressed in his report dated 14 December 2000, and the opinions expressed by the Plaintiff's Expert in this Second Joint Report are subject to the contents of the report of 14 December 2000. The opinions of the First Defendant's Experts on the issues of quantum and causation in respect of the Plaintiff's claim are expressed in their reports dated 3 November 2000 and 29 January 2001, and the opinions expressed by the First Defendant's Experts in this Second Joint Report are subject to the contents of the reports dated 3 November 2000 and 29 January 2001. In particular, the opinions of the First Defendant's Experts are based on the assumption that there is a proper legal basis for each of the Plaintiff's claims against the First Defendant. Other assumptions are dealt with in Section 3. To comprehend adequately the opinions expressed by the First Defendant's Experts, their reports dated 3 November 2000 and 29 January 2001 should be read in date order in respect of each paragraph of the Plaintiff's claim." (Ex AA) 689 The different approaches to quantification adopted by the experts was described in the second joint report as follows: " 3. Reasons for difference In this section, the reasons for the differing opinions of the experts are summarised. The opinions of the Plaintiff's Expert are more fully explained in his report of 14 December 2000 while the opinions of the First Defendant's Experts' are more fully explained in their reports of 3 November 2000 and 29 January 2001. Further, the factual assumptions explaining the differences in the columns headed "Difference" in the schedule in Section 2, are explained in the Plaintiff's Expert's report of 14 December 2000 and the First Defendant's Experts' reports of 3 November 2000 and 29 January 2001. The Plaintiff's Expert says that his approach has been to form an opinion as to the Defendants liability, and the quantum of that liability as a consequence of delivery of the cargo to Royal Trading Company pursuant to the Letters of Indemnity. This has been achieved by comparing: a. The costs that would have been incurred by the Plaintiff had the cargo been delivered upon surrender of original bills of lading in the usual course of business as contemplated by the Voyage Charter party.

[511]

f. The First Defendant's Experts make an alternative calculation of the Plaintiff's alleged loss based on an 81-day Arrest Period, being the period of time between the date the First Defendant was asked by the Plaintiff to provide security for the release of the MV Nelson (7 April 1999) and the date the MV Nelson was released from arrest in Calcutta (26 June 1999). In the Plaintiff's Expert's opinion assessment of loss by reference to date of demand is not a relevant consideration and, accordingly, the Plaintiff's Expert does not make an alternative calculation based on an 81-day Arrest Period." (Ex AA) 690 Neither of the approaches adopted by the respective experts of the parties is free from deficiencies. The difficulties which they faced was largely the creation of Pacific and BNP. It is not unfair to say that, when the hearing of these proceedings commenced neither Pacific nor BNP was in a position to address the quantum issue sensibly. I entertained a vain hope that co-operation between the parties would overcome the major obstacles created by the state of the evidence at that stage. In the end it was necessary to accede to BNP's application to adjourn the proceedings to enable evidence on the quantum issues to be put in order. 691 My reasons of judgment of 26 July 2000, I think amply reveal my views about the circumstances which caused that adjournment. Part of the regime put in place, in an attempt to cure the vacuum in the quantum evidence, called for the provision of a Scott's Schedule and the experts' joint reports. 692 While that procedure has assisted in identifying issues, the resolution of the issues has been unassisted by the approach to evidence on quantum adopted by the parties. In particular, while Pacific has collected documentary evidence of costs relating to the arrest of the MV Nelson and evidencing costs incurred after the arrest in discharging the remaining cargo and obtaining release of the vessel, there appears to have been no attempt by Pacific to dissect from those costs, expenses which would have been incurred regardless of the arrest. BNP did not assert the resolution of that problem by failing to direct cross examination to any relevant witness which may have permitted a rational evaluation of the subject expenses to take place. 693 The matter was further complicated by the court orders of 11 May which cast upon Pacific the obligation, at first instance, to pay for discharge and storage charges and the like, with liberty to apply to the court at Calcutta to obtain relief in respect of such expenses from those with ultimate liability for them. Pacific has included those expenses in its claim, notwithstanding that they may be reimbursed out of the considerable funds held by the court-appointed receivers. 694 Given the evidence of Jain that recovery in an Indian court may take ten to twenty years, one is left in a quandary as to the fair way in which such expenses should be treated. 695 The task of addressing the issues raised by the experts, unassisted by evidence dissecting the expenses in a way which, I consider, the case called for, was not limited to a task of identifying time related costs (which could be readily allocated to arrest and non-arrest related costs) and non-time related costs (which would give rise to questions of causation). 696 In the case of non-time related costs, in an ideal world it would be necessary to determine whether they were expenses that would have been incurred, regardless of the arrest and release of the vessel. The exercise doesn't end there as Potter has demonstrated, for example, in relation to agent fees, in respect of which costs, pre-arrest, were running at approximately one third the post-arrest costs on a $ per tonne basis. Multimode's costs pre-10 March 1999 worked out at US$4.73 MT compared with Parehk's costs post-arrest, of US$13.09 MT: indicating that cost related conditions of operation after the arrest were noticeably different from those affecting cost prior to the arrest. Add to that the effect of the court orders of 11 May which imposed liability, at first instance, upon Pacific in relation to charges that would, in the ordinary course, have been borne by others, it is fair to say that some imperfect rule of thumb approach should be adopted to the evaluation of Pacific's quantum claim. The alternative of rejecting claims on an 'onus' basis, I think, would lead to injustice. 697 The conclusion that I have reached, is that the Potter approach, in general, represents that imperfect rule of thumb. 698 The second joint report included a schedule of items of claim which is attached to these reasons as schedule 1, by reference to which the following reasons address Pacific's quantum claim. 699 As to item 38(c) London Arbitration: this item was the subject of the February 2001 settlement and was not addressed by authors of the second joint report. 700 Pacific relied upon the settlement of the London Arbitration as evidencing a reasonable quantification of the claims made by SSOE against Bolton in the London Arbitration. The settlement sum was US$2,900,000, together with interest at the rate of 7.75% from 31 March 1999 to the date of payment of the settlement sum. 701 The operative provisions of the settlement agreement were as follows: "1. In consideration of the payment of US$2,900,00.00 together with interest on the terms set out in clause 2 below in full and final settlement of the London Arbitration ("the settlement amount") by PCL for and on behalf of Bolton, within 14 days of the execution of this Agreement paid in accordance with Clause 5, SSOE hereby releases and forever discharges PCL and Bolton against all or any claims, actions, proceedings, demands, costs and expenses which SSOE has or, but for the execution of this Agreement, could have had against PCL and Bolton arising in any way whatsoever out of the events which have given rise to the London Arbitration, and for the purposes of this clause and clauses 2, 3 and 4 PCL acts as the agent and/or trustee of Bolton and the Vessel in entering into this Agreement. 2. Interest on the sum of US$2,900,000.00 referred to in clause 1 is payable by PCL for and on behalf of Bolton to SSOE at the rate of 7.75% p.a from 31 March 1999 to the date the sum of US$2,900,000.00 is paid to SSOE, such sum to be paid in accordance with Clause 5 within 14 days of a verdict at first instance in proceedings No. 8 of 1999 in the Supreme Court of New South Wales between PCL and Banque Nationale de Paris & Anor or settlement of those proceedings. 3. The settlement amount referred to in clause 1 is inclusive of any liability PCL and Bolton may have to SSOE in respect of: a) Interest and costs in the London Arbitration;

[520]

(iii) the incorrect calculation of damages in conversion other than at the market value at the place and date of conversion; (iv) the unjustified inclusion in the London Arbitration of a claim for reimbursement of SSOE's costs of the proceedings in this Court estimated to be $233,635.52. 703 As to the effect of Popplewell QC's conclusion on liability, as earlier noted in these reasons, I have reached a different conclusion. 704 I place little moment on the complaint of disclosure to SSOE of Teare QC's opinion in these proceedings. Undoubtedly, it would not have assisted Bolton's capacity to negotiate a settlement. However, where the issues raised in the London Arbitration overlap with the issues in these proceedings, I have the benefit of examining the reasonableness of the settlement sum in the context of the findings in these proceedings. 705 The claim by SSOE in the London Arbitration may be summarised as follows: (a) a claim in conversion for US$3,159,725.86 less US$194,974.32, that being the allowance made by SSOE in respect of the net proceeds of sale of dun peas delivered to it : (b) reimbursement of SSOE's legal costs in Calcutta estimated to be US$40,250, SSOE's legal costs in Sydney and SSOE's costs in the Singapore proceedings, leaving aside interest thereon. 706 As to the claim for SSOE's legal costs in these proceedings, the amount of $233,625.32 was supported by memoranda of fees evidenced in the affidavit of Robert Reginald Wilson sworn 15 December 2000. It is difficult to see how those costs could be properly included in the London Arbitration, given that the costs were not incurred by reason of any action taken by SSOE to enforce its rights as holder/pledgee, save for its cross claim against NEAT in which it has failed. 707 The reason for the presence of SSOE in these proceedings is the consequence of cross claims being brought against it by both BNP and NEAT. Those costs are costs that will be addressed in these proceedings as costs of SSOE in the role of cross claimant or cross defendant. Accordingly, I regard the amount quantified in relation to those costs in the London Arbitration should be disregarded in considering the reasonableness of the settlement sum. 708 As to SSOE's legal costs in Singapore those proceedings were taken by Pacific, I think ill-advisedly, in the face of legal advice that Pacific was unlikely to succeed. 709 Lindsay Thomas East (East), an English solicitor, a partner in Richards Butler, the English firm which acted for Pacific in the London Arbitration gave evidence as follows: "DAVIDSON: Q. Is it correct, Mr East, that the Singapore proceedings commenced by PCL against Swiss were commenced against the advice of Richards Butler to PCL? A. It is correct to say that we thought the proceedings were ill-judged, yes. We did say that we did not think that they would be successful.

[527]

"(a) In January 1999, US $300.00 CNFFO Calcutta. In February and March 1999, substantially less." (Ex AC) 718 For dun peas his opinion of market prices was as follows: "(b) In January 1999, US$200.00 CNFFO Calcutta. In February and March 1999, substantially less." 719 His accompanying report described the international market for pulses as being "the most volatile of all world grain markets", for the following reasons: "... The reason for such volatility is twofold. Firstly, the sub-continent, being the world's largest consumer and producer of pulses, is a totally speculative market, which, by inference, suggests that contract integrity is not well respected. Secondly and most importantly, as a commodity group, pulses have no hedge mechanism, where price risk can be protected or laid-off. As such, the risks (and rewards) in trading these commodities, are extreme." (Ex AC) 720 Of the effect of market conditions on chick peas he offered the following evidence: "Indian values rose initially on the hysteria created in Australia, but just as quickly collapsed as it became apparent that internal Indian supplies were better than expected. Indian market values are not yet to hand, but the Australian market was a good barometer at the time. Once the short covering in the domestic market was concluded Australian values by February 10th 1999 had collapsed to A$335 track (US$224/ .62 FOB or US$225/258 CNFFO Indian port). Hence RTC by this time would have been looking at a market loss of at least US$30 per tonne, which is a prima facie case for a default under Indian trading practices." (Ex AC) 721 As to dun peas, his opinion was as follows: "The dun pea market reacted in a similar fashion to the chick pea market, but not to the same extreme. A large amount of the discounting process had already taken place as reflected by the drop in values in the second contract negotiated by NEAT viz US $210 CNF to US$193 CNF." (Ex AC) 722 His evidence of market variations in dun peas in February 1999 suffered from a lack of detail. His report of 7 December 2000 contained the further evidence of the market: " REPORT TO NORTON WHITE

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(Ex AD) 723 In understanding Foote's report the reference to "track" prices is a trade reference to prices of the subject legume at specified Australian ports and which are thought to reflect, in part, international prices. 724 Given the volatility and apparent lack of full market data, I think it is preferable to regard Foote's evidence as indicative of the market. Even so there was a dramatic slump in the chick peas market, over the relevant period, up to US$30 per MT. 725 In the case of dun peas there appears to have been a significant drop in February 1999 but not so great as the market fall in chick peas when compared with NEAT's C & F prices of US$193 and US$210 per MT. Even so, the conversion claim of US$3,159,725.86 would appear to require a significant adjustment if market price was to govern SSOE's entitlement to damages. 726 Counsel for BNP made an estimate of approximately US$250,000 as representing the required adjustment. I would accept a figure of between US$200,000 and US$250,000 allowing for the volatility referred to by Foote. 727 In addition, it was contended that the "margins" which SSOE charged Royal for financing the project should come off SSOE's claim. However, in the case of cargo converted, BNP's calculation, based on suggested market prices, came to a total of US$2,916,220. On my approach it may have been more, by, say, US$50,000. If that is the true measure of loss, then the "margins" do not come into the calculation. 728 Where margins may have some relevance lies in the calculation of the credit of US$194,974.32, allowed by SSOE in its claim as representing the net proceeds of sale of the 1498.7095 MT of dun peas of which it took delivery from the court appointed receivers of the cargo in July 1999. However, if the market value was the true measure of calculating that benefit, then, apart from an argument on the appropriateness of deducting costs of sale, I fail to see how the margins come into the calculation. 729 In his affidavit sworn 30 January 2001, Jain provided the net quantification of the credit of US$194,974.32 together with some seventy two pages of supporting data, frequently expressed in Rs and rarely further clarified. It appears that by a contract dated 20 July 1999 SSOE sold 1169.23 MT of dun peas at US$190 MT "Ex CNC Warehouse, Calcutta". That contract was amended by addendum dated 30 September 1999 by adding a further 329.77 MT at the same price, bringing the total to 1499.00 MT. 730 A cover sheet was provided with these documents which summarised the expenses applied to the gross proceeds of sale. Mostly they are expressed in Rs from which, presumably, in time, a conversion could be made at the suggested exchange rates of 43.53, 43.58 or 43.65, or to use Foote's flat rate, namely 42.50 Rs per US$1.00. I have not attempted that. 731 The schedule identified deductions as including moneys paid to the receivers of Rs $2,445,212.50, bank charges, exchange rate movements, Rs 777,754.81 to the clearing agent, commission of Rs 1,034,109.56 and interest. Of those figures the only basis upon which those expenses should not be taken into account, in my view, would be on the reasoning that they were expenses unrelated to the arrest of the vessel and would have been, in the ordinary course, to the buyer's account. Clearly, the amount paid to the receivers, was related to the arrest as well might have been clearing agent fees, at least in part. In view of the lengthy delay in obtaining possession of those dun peas I think the costs incurred on sale should be treated as peculiar to the arrest of the Nelson and to allow the credit as calculated by SSOE. 732 I have approached the question as ascertaining the "real damage" to Pacific in accordance with accepted principles of causation. Ascertaining the real damage entails some examination of the circumstances of the conversion and the consequences to SSOE had no conversion taken place. Had Bhura acted honestly and recognised that he had no entitlement to possession of the cargo as between Royal and SSOE without honouring his contractual objections to SSOE by payment on documents at sight, then SSOE would have received the price of the cargo as between NEAT and Royal in addition to its margin. 733 Had, as was most likely, Bhura exploited the situation at Sagor Roads and declined to accept delivery, SSOE would have been forced to take possession of the cargo, which had been the subject of the second and third letters of credit, go into the market place, take its losses (as it did eventually with the 1499 MT of dun peas) and be left with recourse against Royal. But look at Jain's evidence of the value of that entitlement, repeated for ease of reference: "Q. Have you got exhibit L there? Go to page 96 which is the second conversation you had with Mr Howard. Look at the top of the page and you'll see Mr Howard is asking you a number of questions about whether Royal was a man of substance, a business of substance, is he a company with money. And you answered:

[537]

Q. For 10 or 20 years? A. Yes, easy." (T1293:53- T1294:25) 734 I think one should approach SSOE's rights against Royal as theoretical rather than real. On that basis one is thrown back on the market based method of valuation of damages, which leaves the conversion damages in the order of, say, US$3,000,000. From that there is to be deducted the net proceeds of sale of the 1499 MT of dun peas of US$194,974.32 which would bring the damages down to approximately US$2,800,000. There may be some expenses taken out of the gross proceeds of sale of the 1499 MT of dun peas, such as commission, which should be to SSOE's account but I have not attempted to further dissect expenses associated with recovery of the dun peas from the receivers and the subsequent sale, other than as earlier examined. 735 On that assessment the settlement sum of US$2,900,000, plus interest is right at the top of the scale. However, one should, in my view, bear in mind that there is an arguable case that the real loss of SSOE lies in damages, calculated by reference to the price payable to it under its facility arrangement with Royal and, also, take into account that the settlement included SSOE's costs of the London Arbitration and of the Calcutta proceedings: excluding the costs of the Singapore proceedings for the reasons previously given. 736 Further, it is reasonable to take into account the fact that, had the London Arbitration not been settled, significant further costs would have been incurred. For those reasons, in my view, the February 2001 settlement should be regarded as high, but a reasonable price to pay in satisfaction of SSOE's claims relating to the arrest of the MV Nelson. 737 Accordingly in relation to item 38(c) that should be calculated on the basis of the settlement sum. I will defer the question of interest until the parties have been given the opportunity of addressing Pacific's interest entitlements generally. 738 As to item 38(d): hire of MV Nelson during the period of arrest (claim US$440,450). The second Joint Report reduced this amount to US$434,700 in respect of the ninety two day period. For the reasons earlier given, the hearing should be based on a ninety two day period of arrest. 739 BNP's position is that by virtue of the provisions of cl 47 of the time charter, Pacific had no liability to Bolton for this hire charge during arrest. Alternatively, if Pacific was liable the costs should be assessed on the basis of a three day period of arrest. 740 Cl 47 of the time charter is in the following terms: "Should the vessel be arrested during the currency of this Charter Party at the suit of any person having or purporting to have a claim against or any interest in the vessel, hire under this Charter Party shall not be payable in respect of any period whilst the vessel remains unemployed as the result of such arrest, and the Owners shall reimburse to the Charterers any expenditure which they may incur under this Charter Party in respect of any period during which by virtue of the operation of the Clause no hire is payable. This clause shall be inoperative should the arrest be caused through any omission or personal act of the Charterers."

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(d) Item 38(i) watchmen: (claim Rs 3,74,000) calculated by the experts in the sum of Rs 2,80,600. Accordingly, they should each be allowed as calculated by the experts. 746 As to part item 38(g): port deposit (claim Rs 88,217), pilotage (claim Rs 82,272), berth hire (claim Rs 10,88,005). BNP does not dispute that these amounts were incurred and paid by Pacific. It was submitted as follows: "However funds are available in Calcutta to meet these costs and they do not properly form part of [Pacific's] loss." 747 This submission, apparently, is an elliptical reference to the fact that these charges may be recoverable from the funds held by the court appointed receivers in India consistently with the terms of the court orders of 11 May. 748 I note that the affidavit of Lam Wing Hong (Lam) sworn 26 January 2000 (Lam's affidavit) identified as costs incurred "while the vessel was under arrest" numerous items of expense which included "Port dues" and "Berth hire". In Chua's affidavit, affirmed 18 June 2000 (Chua's affidavit), he evidenced the payment of Rs 27,54,000 which is the total amount claimed in respect of expenses making up item 38(g). Potter, in accordance with par 25 of Chua's affidavit, excluded items of expense identified as "Fresh Water" and "OT Fresh Water" reducing the item 38(g) claim to Rs 25,00,941. 749 The evidence of Chua was that the above expenses of port deposit, pilotage and berth hire represented the "proportion of those expenses which were incurred during the period the vessel was under arrest…". On that basis Potter has included them in his assessment of claim item 38(g) and in accordance with his approach to assessment of costs described earlier in these reasons. 750 I note that, in the report of Halligan and Godinho of 29 January 2001, they accepted the cost of pilotage "if that cost would not otherwise have been incurred" but for the arrest. However, they said that it was "not apparent from the documents provided by [Pacific]... that the cost would have been any different if the MV Nelson had not sailed to Calcutta dock" after it was forced to leave Diamond Harbour when NEAT ordered cessation of discharge on 10 March 1999. I do not have that difficulty. 751 In relation to berth hire, it was observed in the January 2001 report of Hallingan and Godinho that they do not dispute that the costs were associated with the arrest (sec H par 58) but observe the following provision in the court orders of 11 May: "... Costs, and charges of the said Warehouse and off-loading of the goods will be borne by the claimants according to the share of their claims in the goods. However, the same will be paid by the appellant at the first instance and will be realisable from other claimants as and when their proportion of the claims is to be fixed by the learned Single Judge on application to be made. In the event any of the claimants does not make payment for delivery of the portion payable by such claimant, it will be open to the appellant to apply before the learned Single Judge for appropriate direction." (Ex 26)

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752 In relation to berth hire, I note that the matter upon which Halligan and Godinho relied was not put to any witness for Pacific. Presumably, I am asked to speculate upon the matter. 753 Although the evidence of Chua is expressed in general terms, I am of the view that these 38(g) expenses should be allowed as calculated by Potter. The total of the item 38(g) expenses so calculated is Rs 25,00,941 after allowing for the expense "5% surcharge", as to which no issue was raised other than the amount upon which it was calculated. 754 As earlier noted, it is not disputed that Pacific has afoot an application seeking reimbursement of charges, including, presumably, expenses of this nature which have been paid out initially by Pacific in conformity with the court orders of 11 May. Pacific will not be entitled to double-dip by obtaining such re-imbursement in respect of charges recovered in these proceedings. As noted later in these reasons, on that principle, Pacific dropped certain claims during the course of senior counsel's final submissions. 755 As to item 38(j): Multimode's legal costs (claim Rs 15,000). This item is conceded by BNP in the amount claimed. 756 As to item 38(h): customs charges and expenses (claim Rs 52,328) calculated by Potter at Rs 40,908 and by Halligan and Godinho at Rs 5,158. The amount in dispute is not great. If some grasp of practicalities had been taken in these proceedings, claims such as this need not have been left to the Court to resolve. Potter reduced the claim by excluding costs which occurred prior to 31 March 1999. 757 The principal area of dispute in the first and second joint reports lay in the view of Halligan and Godinho that the evidence did not establish that it was an expense that would have been incurred, had there been no arrest. 758 Lam's affidavit identified two items falling within this category as expenses incurred whilst the vessel was under arrest and Chua's affidavit (par 31) evidenced the documents supporting the claim - some forty four pages of records. It is not possible to dissect from that material expenses which may have been incurred regardless of the arrest. Records such as those of the agent, Parekh Marine Agencies, which succeeded Multimode, suggest there is an overlap between arrest expenses and those which would have been incurred in the ordinary course. 759 There was no cross examination which may have assisted a dissection of the records. The best I am able to do is to adopt Potter's calculation, as a conservative base and exclude expenses incurred prior to 31 March 1999 (erroneously referred to as "12 March 1999" in the first joint report under this item of claim (p8).) One assumes that they were paid for by Pacific in accordance with the court orders of 11 May. The amount of Rs 40,908 should be allowed. 760 As to item 38(l): costs of discharging the cargo (claim Rs 37,59,918) Potter allowed the full amount while Halligan and Godinho allowed nothing. This item was abandoned during the course of submissions on 26 March 2001 (T1469). 761 As to item 38(m): survey fees (claim Rs 52,841). Potter allowed Rs 34,231 (incorrectly shown in the second joint report as Rs 34,321) while Halligan and Godinho allowed nil. This item was abandoned in final submissions. 762 As to item 38(n): wharfage (claim Rs 4,77,600). Potter has allowed the full amount; Halligan and Godinho, nil. This item was abandoned during the course of final addresses. 763 As to item 38(o): fumigation of the cargo (claim Rs 79,624) Potter allowed the full amount; Halligan and Godinho, nil. This item was abandoned during final addresses. 764 765 As to item 38(p): port cargo rent (claim Rs 6,61,511) Potter allowed the full amount and Godinho, nil. Chua's affidavit (par 37) evidenced the documents. This item was abandoned during final addresses. 766 As to item 38(q): cargo storage charges (claim Rs 5,21,208) Potter allowed the full amount claimed, Halligan/Godinho, nil. This item was abandoned during final addresses. 767 768 As to item 38(r): expenses of port agents (claim Rs 7,65,715) Potter allowed Rs 4,31,711 while Halligan/Godinho allowed Rs 2,66,145. Chua's affidavit (par 38) evidenced these expenses and the documents exhibited to that affidavit. Potter rejected Rs 3,34,004 as having been incurred prior to 31 March 1999 or as being the subject of duplication. Potter and Halligan/Godinho are in agreement that there appears to have duplication of expenses in this claim. Moreover, Halligan/Godinho in a detailed analysis of the document supporting this claim, concluded that there was no evidence in respect of Rs 2,52,253 of the claim. 769 Counsel for BNP and Pacific have not attempted to reconcile the differences between Potter and Halligan/Godinho, either by evidence or submissions. In particular, I have been unable to ascertain from the evidence adduced through Chua whether the duplication referred to by the respective experts or the absence of supporting documentation overlap Potter's exclusion of pre-31 March 1999 expenses. 770 In view of the contents of the second joint report, in particular, Potter's assessment of this claim in the amount of Rs 4,31,711, I infer that he has taken into account the duplication and absence of documentation in calculating post 31 March 1999 expenses. Accordingly the amount of Rs 4,31,711 should be allowed. 771 As to item 38(s); barge demurrage (claim Rs 4,02,571). The evidence established that this was a pre-arrest expense and I am left to wonder why the claim was not dropped. 772 As to item 38(t): Captain Liang expenses, this item is conceded in the amount of Rs 59,188. 773 As to item 38(u): Calcutta legal costs (claim US$51,701 and Rs 8,39,535). Potter and Halligan/Godinho calculated the costs as claimed. However, as to Rs 8,39,535 there was no evidence of the subject account having been paid. In my view, that is no sufficient basis for rejection of the account which was not otherwise disputed. The full amount of the claim, namely, US$51,701 and Rs 8,39,535 should be allowed. 774 As to item 38(v) Legal costs (claim US$50,000). There is no dispute as to payment of Bolton's costs of the Calcutta legal proceedings. The amount is clearly within the implied indemnity of Pacific to Bolton as a cost caused by the arrest of the Nelson and as such, in my view, falls within the damages recoverable from BNP. It has not been submitted that any of the items of expense are too remote to be recoverable as damages caused by BNP's negligence. The amount of US$50,000 should be allowed. 775 As to item 38(w): this item of claim has been withdrawn. 776 As to item 38(x): cost of maintaining the DBS guarantee (claim US$83,204.94). This item is conceded in the amount of US$83,205. 777 As to item 38(y): legal costs incurred by Pacific in Singapore proceedings (claim US$112,349). This amount should be disallowed. As earlier stated in these reasons, the proceedings were ill-advised. 778 779 As to item 39(z): legal costs incurred in the London Arbitration (claim US$161,619 in addition to future legal expenses). The substance of the evidence supporting this claim is to be found in that of East and Richard Peter O'Malley (O'Malley), head of the Costs Department of Richards Butler. 780 In East's affidavit sworn 29 November 2000, he evidenced fees in acting for Pacific from 16 April 1999 to 30 August 2000 which amounted to 213,826. Those fees were rendered in relation to the following categories: " 5.1 advice in relation to the arbitration in London commenced by Bolton Navigation S.A ("Bolton") against PCL for claims for non-payment of hire and non-production of a guarantee to release the vessel from arrest in Calcutta; 5.2 work done in relation to the arbitration in London being brought against Bolton by Swiss Singapore Overseas Enterprises Pte Limited ("Swiss Singapore"), including dealing with Bolton's representative, Ince & Co. This is the arbitration which PCL is conducting in London on behalf of Bolton. 5.3 advice in relation to the arbitration in London started by PCL against NEAT;

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5.4 general advice to PCL in relation to events in Calcutta both in relation to the ship and the cargo; 5.5 general advice to PCL in relation to the proceedings in Sydney; and 5.6 advising PCL generally on the issues throughout." (Ex V) 781 In relation to categories 5.5 and 5.6, East amplified on the work performed by Richards Butler as follows: " 12.5 General advice in relation to the proceedings in Sydney My firm had been heavily involved in assisting Norton White, on behalf of PCL, in their conduct of the claim in the Supreme Court of New South Wales following the initial application by PCL for injunctive relief. PCL instructed us to act as the overall co-ordinator for the various proceedings. We have received regular, sometimes daily, reports from Norton White on the proceedings in Sydney. We have had to consider all the correspondence that has been exchanged between Norton White, ourselves and PCL and followed all the exchanges of correspondence in the Australian proceedings. We have been involved in considering the evidence that has been prepared both by Norton White and other parties to the case, and in assisting with the collection of evidence. Richards Butler's work has also included considering all the exchanges of pleadings that have taken place in Sydney, considering the various cross claims that have been brought by the various parties and considering the defences to all those claims and, generally, following the pleadings through. In June this year I travelled to Sydney to assist Norton White with the final stages of preparation for the hearing that commenced on 19th June 2000. I remained in Sydney until the hearing was adjourned and then after a discussion with Counsel I returned to Singapore to discuss the matter with PCL before returning to London. Since I returned to London, Richards Butler have been involved in assisting Norton White in the preparation for the resumed hearing on 11th December 2000. 12.6 Advising PCL generally on the issues throughout. In addition to the matters addressed in paragraphs 12.1 to 12.5 above, Richards Butler has also spent time generally advising PCL in relation to other aspects of this case which I cannot neatly categorise above. This includes time spent advising PCL in relation to the original application for injunctive relief made to the Supreme Court in Sydney in April 1999, and time spent advising PCL in relation to the Court action brought in Singapore by PCL against Swiss Singapore which was handled by their Singapore solicitors, Joseph Tan Jude Benny. This general advice has included meetings both in London and in Singapore as well as very considerable correspondence." (Ex V) 782 In his affidavit sworn 29 November 2000, O'Malley apportioned the costs amongst the categories identified by East as follows:

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Category 5.1: ----- Category 5.2: 5,005.00 Category 5.3: ----- Category 5.4: ----- Category 5.5: 33,735.00 Category 5.6: 385.00 784 On that basis the fees attributable to this item of claim in category 5.2 total 96,471.77. In addition to those fees, East estimated, in the most general of terms, that future costs in the London Arbitration would be in the order of 60,000. There was no attempt to break up that estimate in any way and, in view of the settlement of those proceedings, that estimate of future costs should be excluded. 785 Halligan/Godinho have extracted an apparent discrepancy in comparing these fees with the documentary evidence adduced through the affidavits of Lam and Chua. No cross examination was directed to any witness in relation to that matter and I am unable to draw any inference from that discrepancy. In my view, the fees as evidenced by East and O'Malley should be allowed in the sum of 96,472. 786 As to item 38(aa): legal costs of Drew &Napier (claim US$67,906.57). Chua's affidavit (par 48) evidenced a memorandum of fees from Singapore solicitors Drew & Napier, dated 24 August 1999, in the amount of US$93,656.57 which was reduced by US$25,750 by memorandum of the same date. The fees were stated to be rendered as follows: "In the Matter of: Agreement For Delivery of Consignment of Peas at Saugor Anchorage Calcutta, India" 787 The fees were described simply as: "Professional charges". 788 No evidence was adduced through a member of that firm in the circumstances evidenced in the affidavit of Hayden Samuel Martin sworn 15 December 2000. In view of the paucity of description of the professional services said to have been rendered by Drew & Napier, these fees the subject of this claim should be disallowed. 789 As to item 38 (ab): Pacific's liability to indemnify Bolton in respect of legal costs of the Indian proceedings. This claim has not been quantified and declaratory relief is sought. I decline to grant such relief in the absence of any evidence as to the incidence of such costs beyond the costs, the subject of item of claim 38(v), and the passage of time since any such costs may have been incurred. 790 As to item 38 (ac): Pacific's liability to indemnify Bolton against any award of costs obtained by SSOE in the Indian proceedings: Pacific accepted that this item of claim has "been subsumed by the…[February 2001] settlement". 791 As to item 38 (ad) and (ac): these are noted as withdrawn. 792 As to item 38 (af): Pacific accepted that this item of claim has also been "subsumed" by the February 2001 settlement. 793 As to item 38(ag): Pacific's legal costs in the London proceedings against NEAT. The evidence of East and O'Malley, earlier referred to in these reasons, established that Pacific has incurred legal costs in the amount of 11,558.00. However I am not disposed to allow recovery of those costs in these proceedings as costs caused by the arrest of the MV Nelson. In my view, the cost associated with those London proceedings will follow the event, presumably, in those proceedings. 794 As to item 38(ah): that item is noted as withdrawn. 795 Accordingly, Pacific is entitled to judgment in the sum calculated in accordance with these findings. 796 In order to facilitate delivery of final judgment in these proceedings, at a directions hearing on 27 September 2001, I directed the parties to present written submissions as to costs and as to the appropriate method of converting currencies to express a judgment in favour of Pacific in United States dollars, on the basis that BNP was liable to Pacific in negligence and that all cross claims be dismissed. 797 The parties have responded with the provision of written submissions, namely:

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