"[The warehouse-keeper] would act upon instructions of the order party, but only release the metal upon presentation of the duly endorsed original warehouse receipt ."
" Mr Wong and I conducted some business from around 2014, including transactions other than those involving MCM. "
" Q. And did he ever describe that to you as the "same paper in, same paper out" principle? A. Yes, the receipt that he gives us, which is endorsed, if they was to buy that back, they'd want the same piece of paper obviously endorsed by the parties whose hands it's gone through because I think what I say there in the documentation, "
" Mr Kao was speaking for quite a length of time about it and writing these notes or whatever you want to call them on this board. As I say, I still come out of it, didn't fully understand, and my immediate thought [when] coming out that meeting was that it could be a money laundering scam… Q. Isn't it a problem that you're only getting detail of this after you've advanced all the money rather than before you've done so, especially if it raises a money laundering concern? A. No, this is when it raised a money laundering concern here. This was the first time that the thought of money laundering came into my head was at this meeting. Q. That's because you'd never previously asked for any such explanation. Presumably if you'd asked six months earlier and been given the same explanation, it would have raised the same concern. A. We don't ask clients generally why they're doing business, why somebody's hedging metal, why they're buying metal. It's not normal practice to ask a client why they are doing such-and-such a business ."
"Mr Riley was an honest broker. Overall, he tried to assist the Court where possible and thus was candid in relation to the catalogue of errors MCM made in its dealings with Come Harvest and Mega Wealth, save in relation to onboarding of clients, where he (a) unconvincingly disclaimed any understanding of balance sheets, and (b) went from not knowing what checks 'compliance' did to knowing moments later that "
" Although said in relation to commercial litigation, I consider that the observations of Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd[2013] EWHC 3560 (Comm) , paras 15-22 have much to commend them. In particular, his statement at para 22 appears to me to be especially apt: "… the best approach for a judge to adopt … is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth."
"[Straits'] employees are allowed to use personal mobile phones, tablets and other handheld devices to access the company emails. However, the documents accessed or held in this way will be the same as stored on the email and/or archiving servers discussed above . [Straits'] employees do not use messaging systems for the purposes of any commercial discussions which could relate to issues 6, 9, 11, 15, 16 and/or 17 ."
" Our client's employees do have personal WeChat accounts, but these were not the established mode of communication used by our clients for commercial discussions, and the WeChat contents may have been lost with the passage of time . Any commercial discussions with, and/or instructions from D1/D2/D3, would have been recorded by way of email. Therefore, our client reasonably believes that any personal WeChat accounts used by its employees will not contain any relevant information for the purposes of the issues identified by the parties for disclosure …"
" Q. And so you were telling them that you did not use WeChat or any similar messaging service for any commercial discussions with Mr Kao; is that correct? A. I do not mean to say they did not use, but WeChat was a personal mode of communication. We could link that to have casual conversations with customers but anything that is formal would then go on to an email to be confirmed there. Q. Well, that's rather misleading, isn't it, Ms He, this answer? It is saying that you don't -- you did not use WeChat or similar for any commercial discussions between yourselves and Come Harvest, Mega Wealth and Mr Kao. And we know for a fact that you did use WeChat and other similar modes of communication with Mr Kao, didn't you, for commercial discussions? A. Those were informal chats we had, but anything that is commercial and will therefore go on to an email. So I regard the email as the formal communication mode between us and Mr Kao. Q. So although there would be communications by way of WeChat or similar, you took the view that you would only disclose emails; is that right? A. Yes. "
" Q. […] this is the9 July 2015 . Just a very short point, Ms He. This is an email from you to Steven Kao; correct? A. Yes. Q. And you say: "
"Q. So you are conducting, it would seem, with Mr Kao commercial discussions on WeChat, correct? A. Yes, WeChat could be in the form of a call. Q. It could be a call or it could be in a document, correct? But you're using WeChat with Mr Kao, yes? A. Yes. Q. For commercial discussions, correct? A. Yes, yes."
" No steps had been taken by [Straits] to harvest the data from Ms He's mobile telephone before February 2020. As explained, the mobile device in question is Ms He's personal phone and [Straits] does not expect it to contain data relevant to any issue in these proceedings that are not otherwise captured by its email servers. We are instructed that Ms He nonetheless undertook a review of her WeChat messages after [Straits] became involved in the dispute and ascertained, as expected, that her WeChat account did not include any relevant messages . "
"[Straits] does not expect any relevant documents to be irretrievable and expects to disclose and produce all disclosable documents, which are not covered by an appropriate exception (e.g. privilege )."
" However, we note that S2DRD confirms that some of Mr Kao's WeChat records from the relevant period have been deleted because "[his] practice is to delete WeChat conversations to the extent that the matters to which they relate have been resolved" {A2/11/36}. We further note that there are only very limited examples of messages between Mr Kao and Ms He (other than those exchanged on wider group chats including other custodians) in the parties' overall disclosure. Those limited examples further appear to have resulted from disclosure of Mr Kao's chats with other individuals (i.e. not Ms He), which involved Ms Kao pasting extracts of his exchanges with Ms He. This suggests that either: (i) Mr Kao deleted nearly all of his direct messages with Ms He before his phone was imaged; or (ii) upon reviewing those messages as part of their disclosure exercise Gibson Dunn & Crutcher (who represented D3-D8 at the relevant time) took the view that they did not respond to the disclosure issues, and hence were not disclosed."
"The issues are whether the rules have been transgressed, if so whether a fair trial is achievable and if not what to do about it. See Logicrose Ltd v Southend United Football Club Ltd (The Times5th March 1988 ) and Arrow Nominees Inc v Blackledge[2001] BCC 591 para 54 where Chadwick LJ, with whom Roch LJ agreed, said: "
" …[A] litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial is [not] to be taken to have forfeited his right to a fair trial in every case. …[if] the litigant's conduct ha[s] put the fairness of the trial in jeopardy … the court's power to strike out the proceedings was not a penalty for disobedience with the rules."
" it would be a very rare case in which, at the end of a trial, it would be appropriate for a judge to strike out a case rather than dismiss it in a judgment on the merits in the usual way "
"28… in this jurisdiction as in Australia, there is no duty to preserve documents prior to the commencement of proceedings: British American Tobacco Australia Services Limited v. Cowel l [2002] V.S.C.A. 197, a decision approved in this country by Morritt V.C. in Douglas v. Hello[2003] EWHC 55 at [86]… 29. After the commencement of proceedings the situation is radically different. In Woods v. Martins Bank Ltd [1959] 1 Q.B. 55 at 60, Salmon J. said "
"The appellants, who are a public corporation, elected to call no witnesses, thus depriving the court of any positive evidence as to whether the condition of the fence and the adjacent terrain had been noticed by any particular servant of theirs or as to what he or any other of their servants either thought or did about it. This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold." "
" Flow as follows : Straits will sign a sales and purchase contract concurrently with your buyer and seller [which included the provision for payment " upon receipt of cargo title at sight of the following documents: (…) Original warehouse receipt/warrant" ] On [the transaction date] Straits will submit a coloured copy of warehouse receipt, signed and endorsed to you . Your bank will call the warehouse keeper to confirm there is indeed this cargo in the warehouse. Straits will hold onto the original warehouse receipt and only cancel upon receiving confirmation from you. On [the transaction date plus 2 days] Straits will receive TT payment for the cargo. "
" As a trial trade we are agreeable to accept just payment of the spread . However should we move forward on this model, we will like the assignment of proceeds to be in place, with funds representing total contract value flowing through both the buy and sell leg as otherwise the legitimacy of the trade may be questioned by the auditors ."
" We requested for an assignment of proceeds on the deals because we need the actual fund flow to prove the legitimacy of the deals and pass audit checks . The assignment of proceeds to us actually meant sight of funds in our account …"
" Mr Davies: The contracts that you were entering into with Mr Kao's companies were simply contracts for the supply of colour scanned copies for Mr Kao's companies to use, that is correct, isn't it? Answer: Yes."
"we now do business with Clients who are doing [interest rate] arbitrage business, where they first pledge full cash with the bank before issuance of [the letter of credit] to earn the arb[itrage] spread. We typically do not take clients that are doing repo for the purposes of seeking financing as we will be concerned if the funds are used for other purposes and not repaid to the bank at the end of the LC tenor… majority of the clients will be met up by Jeremy or Steven Gong (from our China office) first to ascertain the company's business and soundness before we enter into the first transaction. Jeremy [Ang] is familiar with most of these customers and will make it a point to meet up with the newer ones when he visits China if he has never met them before ."
" Whilst we may be protected by the confirmed L/C, the party we deal with is still important as we do not want to be involved in facilitating any transactions/parties [which are] questionable ."
" I am not aware of other market participants conducting Type 5 trades and then conducting a commercial activity with CSCs without owning the underlying metal… in my experience market participants, banks etc. would expect their counterparty or client to be the owner of the metal when they were using CSCs. "
" There is also concern from risk management team about using just scanned copy WHRs especially those not under our names as there could be elements of double financing (for eg. the original WHR is being used for another deal and the copy is used for our deal at the same time). "
" We just need CSC only and for 6 days we would pay 30bps and each additional day we would pay 5bps. We are testing a new structure as discussed with Jeremy in Chicago. Pls confirm rate acceptable to you ."
" All fee per discussed, 30bps to be deducted when we TT [telegraphic transfer] the funds to you and 5bps per calendar day till we advise WHR is good to [be] cancelled. "
" This form of trading is targeted at Chinese companies. In China companies able to make a market neutral interest arbitrage profit, as Renminbi ("
" Brother Wang, the warehouse receipts have been issued. Please process as soon as possible. "
" Please cancel the above noted WHR – 354.282 MT "
" Finally we have completed the first deal! Thanks for the support! We will need to charge another 28 days of 5bps/day from -31 Dec. That will total up to 140bps x USD 4,986,563 = USD 69,811.88. If this is ok, Hui Ying [Ms Tan] will prepare the invoice for this payment. She will also update the accrual on the spreadsheet and send across ."
" SERVICE AGREEMENT This is a contract entered into by Straits (Singapore) Pte Ltd (hereinafter referred to as "
" As per instructions you received from BTG Pactual Commodities (US) LLC, we hereby authorize you to release the following material to the order of Steven Springer on behalf of COMHARVEST (…) Please be informed that the warehouse receipt duly endorsed has been sent to Steven Springer by special courier… "
" Dear Mr. Springer, Steven [35] Pacorini has just sent us an email below with the attached from ING. As per your instructions, the warehouse receipt was cancelled by us on31 Dec 2014 . Pls advise urgenty [sic] on how you wish for us to respond to Pacorini. Meanwhile, I have asked them to not act on ING's request. "
" For this instance, it will be a CSC release from ING because the trade was squared that's why ING is releasing title back to us. Just have Pacorini respond, "noted "."
" Q. And how does Mr Kao's two-line message there fit with your explanation to his Lordship of what you understood the position to be in 2015 with these requests? A. I understood, as Mr Kao was also trading CSCs with these parties, and that that's why the CSC was returned to Mr Kao and that is -- Mr Springer, and all these trades were also closed on our end, some time during the same time period or very shortly after. "
" We have already released the WHR to Mr Springer after it was issued . As it was released to them via endorsement on the back of the WHR by Straits, no action was required by Pacorini. This fax does not seem to require any response, but if required, you can simply reply them 'Noted'. Pls do not send them the cancelled WHR for we definitely do not want to divulge our counterparty names to their banks ."
" Dear Mr Springer, Steven, I have spoken to Pacorini with regards to the Clause: "
"[Name of Buyer] [address] Dear Sirs/ Mdm, WAREHOUSE RECEIPT NO. [ ] We hereby confirm that, upon receiving the original warehouse receipt duly endorsed, signed and dated by the order party, and subject to payment of our warehousing fees, we will release the goods to the endorsee without further written instructions from the order party. We hereby disclaim and shall not be responsible for any liability, losses, damages, costs or expenses that you or any third party may incur arising from the release of the goods to the endorsee without further written instructions from the order party."
" Hi Sherraine – Is Pacorini willing to give this letter to any name that you instruct? So if you told them they would write the letter to JPMorganChase on your behalf ?"
" I need them to specify in the letter a specific whr receipt no. "
" It look like we are going to need this [i.e. a PMA Letter] on an ongoing basis. "
"While I understand that it is important for VAM to have clear title, to have Pacorini issue a letter to confirm title is transferred to VAM may have repercussions with regards to the trade with my counterparty ."
" we are happy to give [VAM] an unencumbered collateral which is the original warehouse receipt blank endorsed to them. However, if they insist on letting Pacorini know that they are the holder of the receipt, it may jeopardise the deal with my client… I… will be willing to proceed … as long as they can agree not to reveal to Pacorini that they are holding the original warehouse receipt unless Straits default on the repayment ."
"1) Straits uses the borrowed funds to purchase LME registered nickel from LME broker in the form of warehouse receipt. 2) i) Straits enters into sale contract with Client A and purchase contract with Client B concurrently to make a spread. ii) Straits provides scanned copy of the warehouse receipt to Client A for them to do the necessary processing with their bank. Once the bank is done with processing, they will discount the funds and pay to Straits after verifying with warehouse keeper that the cargo is indeed there. [39] 3) Client A will sell the warehouse receipt to Client B. 4) Client B will sell the warehouse receipt to Straits, for which Straits will pay to Client B . 5) i) Tenor of each deal varies from 30- 90 days. ii) At the end of the tenor, Straits will sell the warehouse receipt back to LME, and pays the cash back to the Lender. On the step in red, Client's bank may send an email to Pacorini to have Pacorini check with Straits to confirm warehouse receipt is being passed to Client A. The concern is that given VAM wants title to the cargo, there is this risk that Pacorini may respond to the bank that the title of the warehouse receipt has been transferred to VAM. Therefore, what I would like VAM to consider is whether it is ok to safekeep the warehouse receipt as it is (see attached) + the letter from Pacorini which does not effect a transfer of title but rather states that the holder of the original warehouse receipt duly endorsed could claim title. This would safeguard your interest because in the event of a default, you could be able to sell of the underlying cargo and claim back on the funds. We could discuss on suitable haircut to safeguard your interest in this aspect. My point is that I would like to keep Pacorini unaware of any title change between VAM & Straits only until such point If Straits default and do not pay back the loan on due date."
" I am still not clear as to why we cannot disclose to Pacorini that the receipt has an endorsement on it? Why does the client care if the ownership has transferred as long as they will be in a position to buy it back? The client will still be purchasing the warehouse receipt from Straits. "
" Trade Structure A collateralised loan structure, where the funding will be used for Steven Kao's (SK) transactions. SK needs only the scanned copy WHR issued to the order of Straits for a period of approx 90 days, and they will pay us 3.5bps on a daily basis for holding the original WHR. Therefore, we are able to pledge the warehouse receipt to a financier for his transaction. Structure as follow: 1) Straits will send across to VAM the original WHRs issued to the order of Straits and blank endorsed. 2) Upon receipt of the WHRs, VAM will execute a purchase agreement to buy the cargo, execute a 90 days short hedge on their book and pay Straits for the cargo 3) After 90 days, upon instruction of Straits, VAM will tender the nickel into LME against the short hedge. 4) The proceeds from the sale will be used to offset the loan from VAM. "
"This is what I decipher: 1. SK identifies good assets in China and finance the asset owner on the asset, which will then be collateralized to the bank. 2. Based on this collateralized asset, SK China entity issues LC to SK Genesis in USA via Chinese bank. 3. SK Genesis purchases WHR from Straits and submits the WHR as part of LC docs to Chinese bank. 4. When Chinese bank receives WHR, it sends acceptance to US advising bank. WHR is held with the Chinese bank as collateral, and at the same time, bank funds SK Chinese entity who in turn funds the owner of the asset. 5. After 30/60/90 days when borrower repays the loan to SK who in turn returns to the Chinese bank, the WHR is released and SK Genesis then discount the LC and pays off to Straits."
"[ f ] or interest arbitrage transactions, deferred payment L/C's would be used, i.e. the L/C was not payable when the documents were presented but 30, 60, 90, 180 or 360 days later. This allowed for a longer discount period and hence a larger profit when the future payment under the L/C was discounted. The longer the deferred payment period, the more attractive the interest arbitrage ."
" logically the WHR can be cancelled after acceptance, even prior discounting "
" I can see that the release instruction could have caused me or Straits some concern if we had considered it closely. The release gives the impression that [the party issuing it] believed it was in a position to give release instructions as a result of holding original warehouse receipts. (…) if the release had been shown to me at the time I believe I would have checked whether the original warehouse receipts had been delivered to our customer and if they had not I would have asked for the situation to be clarified with Access World, because [the party issuing it] should not have been giving release instructions if the original receipts were with Straits or its banks. "
" if we could reply to Pacorini as per previously: "
" We confirm that the 5 warehouse receipts as mentioned in the attached have been endorsed by Straits (Singapore) Pte. Ltd and sent to Mr Steve Springer ."
" Hi Beng, Lol. You're right. Springer appeared. But fret not, this should be vermillion deal. There's a folder on my desk labeled as VAM (all pledged WRs are there), pull out the mentioned WR then pass to Sherraine/or you can drop an email to VAM to advise them on the closeout. As for the fees chargeable, no worries. I can settle with jessie on monday since they are only paying us the spread. Thanks! HY "
" it is possible that what I meant was a copy of the colour scan endorsed warehouse receipt, not the original…, was sent to Mr Springer "
" Dear Steven, Mr. Springer, Apparently, VAM has asked for an independent surveyor to check on the physical inventory of the below WHRs in Pasir Gudang. They are claiming cargo belongs to them , but in Pacorini's records, these cargoes are under Straits (or our banks) so they can't show it to VAM. Were you aware of this inspection? Now Pacorini wants us to clarify why is VAM claiming cargoes are theirs. We need to have an explanation. Pls call me if you need to discuss ."
" my concern is what to tell Pacorini given that the WHRs that VAM are inspecting does not belong to them. They are either held on my books, or pledged to my banks. Pacorini wants me to revert on the status of the WHRs so they can answer to VAM's surveyors, so should I just say tell them those do not belong to them ?"
" Hi Steven, Mr Springer, Can't seem to reach the both of you. I need to respond to Pacorini on the list of WHRs below today . Could I say that these WHRs are not under VAM's title? If I say that, they would respond to the surveyor accordingly. Not sure would that have any implications on your end ?"
" The below WHRs are held to Straits' order, not Vermillion. However, would it be ok to show them these cargoes (if they want a site inspection), or inform that these WHRs are indeed valid and sitting in the warehouse, as they are potential buyers who would like to confirm cargoes are indeed present in Pacorini's warehouse ."
" Q. Now, that was just an outright lie, wasn't it? A. No, I believe that was what Mr Kao would have told me. Q. You believe it may be what he told you, but that wasn't true, was it, because they were not potential buyers, were they? A. I don't -- why can't they be potential buyers? Q. Well, they are asserting ownership in the cargo, so they are not potential buyers, are they? In their mind, they are the buyers. A. Yeah, so there is obviously a misunderstanding and a confusion. Q. And they could not be potential buyers either because you were never giving the original warehouse receipt to Mr Kao's company Genesis, were you? A. Potential means they have notified, right? So, I mean, if Mr Kao paid us in full Mr Kao would receive the warehouse receipt and would pass it on to Vermillion. Q. Let's just pause there, Ms He, because this would be under a type 4 transaction, and the position, as I understand it, under the type 4 transaction, which you have accepted in evidence yesterday, is that payment is made by Mr Kao's side of the purchase price and almost at the same time you repay that amount, less your fee for the first five or seven days. That's correct, isn't it? A. Yes. Q. So under the type 4 transaction, there was never any scope for Mr Kao just paying you the full price and you handing over the original warehouse receipt because that was never part of the transaction, was it? A. It was never discussed , but, I mean, in essence if because the essence of the transaction is that we were holding on this on his behalf, on his asset pack requirement, so no matter how, you know, the trade was structured, right? If he wanted the underlying he could always ask from us and pay for it. "
" Are u saying that these Straits' WRs will potentially be sold Vermillion? Vermillion wish to inspect these materials before deciding whether to buy or not ."
" Vermillion will likely be funding our customer to purchase this cargo and will like to inspect these materials first."
"I was told by my buyer that Vermillion has the intent to buy the cargo from my buyer. So, they are aware of this arrangement. If they are confused, pls ask them to sort it out with their counterparty directly ."
" Dear Steven, Mr Springer, We have clarified with Pacorini, and they would be speaking to VAM to let them know that the cargo exists. As the original WHRs have not been returned to Pacorini, their records state that cargoes still belong to Straits , and with Straits' permission, they are allowed to inspect the cargo if required. Hopefully this will close the case with VAM. Pls update us if you do hear from them, thanks ."
" Straits … (hereinafter called "
"Straits … (hereinafter called "
" Can you advise precisely how [Kao] use the WHR at the China end. I am assessing if the same lot of cargo is used to secure multiple financing. Thanks. "
" From Straits' perspective, our sale of WHR to SK allows for him to drawdown the bank's credit line for trade purposes …"
"As we only have the purchase and sales contracts, so nowhere will it state that the WHR is pledged. Based on my understanding, there is no pledge, but just an arrangement where we hold the WHR for them and charge 3.5bps/day. A pledge would suggest that the goods belong to SK and place with us as collateral, but this is not the case as the goods still belong to [Straits]."
" We're looking to have Alex Stewart (Assayers) visit your Pacorini Johor warehouse to verify the Nickel and Copper inventory we currently own . Lily and Annie (copied on this email) will be reaching out to you to schedule a time for a visit. Please use this email as consent for Alex Stewart to check the inventory on our behalf. "
" Q: And you knew at this time that Carlyle would not finance or provide finance to Mr. Kao in respect of the cargo without receipt of what it understood to be an original warehouse receipt didn't you? A. Yes. "
" It seems that all the inventory corresponding to the warehouse receipts referred in the PMA letters belong to Carlyle as well. However the confirmation (stock report) we received from you did not include the attached may you please send a revised stock report as of31 December 2015 which includes the above ."
"Pls find below email from VAM's auditor to Pacorini. They would like Paco to provide the stocklist to them. Problem is that a portion of our cargoes are financed with banks, hence under Pacorini's stocklist, there would be a column indicating the bank description i.e CIMB. I attached the enclosed "sample stock list" for your review. We are concerned that the auditor will pick this up and post more questions. From their email below, they want to confirm the inventory corresponding to the warehouse receipts referred in the PMA letters belong to Carlyle, and that could be a challenge since originals are not held with Carlyle. How do you want us to go about responding to this?"
" Slow down Sherraine ... Pacorini can only confirm to the holder of the originals that all since in theory you don't have the original whoever the holder of the original will be the owner at [the] time... You don't know who we sold it to after you repo it with us. "
" Our argument is that Pacorini cannot confirm who is cargo owner as they do not know who holds the original WHR. After this we just have to wait and see. Will keep you posted ."
" Q. Well, the reason [for this argument] Ms He is that you want to ensure that VAM's auditor will not find out that you or your bank own these warehouse receipts, that's correct isn't it? A. Yes. "
"The attached stock report now shows the customer name as "
" If I had believed that VAM was under the impression it was holding original warehouse receipts when we had only supplied copies, I would have been extremely concerned and I would have urgently taken action with Access World to verify the position and to protect Straits' interest. I would have done that because it would have meant a third party was claiming title to our metal or metal belonging to or secured by our banks, which would have been an immediate cause for concern. I likewise had no reason to suspect that Mr Kao had given false documents to VAM. "
" Dear Steven, Mr Springer, Pls see email from the auditor to Pacorini below. Apparently, they are writing directly to Alfred, head of Metals in Pacorini telling them what is required. We can't get Pacorini to get them to retag to the below, as original WHRs are not held with Carlyle. Would it be alright if Pacorini respond to say: "
"You can let [Ernst & Young] know that as a matter of fact, Pacorini has not received the original WHRs, hence you cannot retag these WHRs as per below until the original WHRs are returned, duly endorsed by order party."
" You can respond to them that the stock report is tagged as per Pacorini's records. Unless Carlyle intends to take over the warehouse rent, Straits would not give instruction to tag the cargo to them. This arrangement is agreed with our repo counterparty, hence any further issue, pls take it up with them directly ."
" Have asked Pacorini to respond based on the below. Pls try to get Carlyle not to pester Pacorini further, and best to be able to just have Pacorini confirm the WHRs are valid and cargoes are indeed in the WH. If this escalates further, Pacorini may think that we are in some dubious business and may stop allowing us to issue PMA letter for future business. "
"Hi Sherraine, Per tel-con, on behalf of CH we have confirmed$5 mm WHR for Nickel to be provided this Friday. Straits' Repo counterpart will be CH round trip, meaning sell and buy back from same entity, CH. All else remain the same . We anticipate to trade up to$50 mm in the next 45 days "
" Hello Dear! Contacting you in relation to the contract and settlement 1. We will charge fees from tomorrow for the receipt sent yesterday, and the mode of the contract has also been changed according to STEVEN's idea. Previously it was a tripartite contract. Then it was changed to the REPO mode, signed by both parties (CH and SSPL). With this new model, we don't have to route the funds anymore. There are still some funds not routed yet and we'll talk to MR SPRINGER. 2. Whenever we issue the warehouse receipt, we will also prepare the contract and the invoice. The 0.3% fee for the first seven days will be specified. I also need you to prepare the invoice for me. 3. For the 0.035% charge per each subsequent day, we will continue to deal with it at the end of the month according to the original practice. 4. All other charges of #2 and #3 will be settled at the end of the month. "
"Q. if Ms He had told you these contracts are options to purchase, you would have recorded it, presumably, in your email to Ms Li? "
"I do not think I 'm going to rush because (inaudible) required immediately. "
" MR JUSTICE CALVER: I'm just trying to understand. That's how you interpreted your agreement, was it, but you didn't actually discuss with him whether he had an option to purchase? You didn't have a discussion with him about that. Is that right or is that wrong? Answer: We explain as to say, look, I need you to basically hold these metals for us. If we need it, you have to have it for us. That was the agreement we had with Mr Kao -- or Come Harvest. MR JUSTICE CALVER: So you say you personally had that discussion with him, do you? Answer: I had discussion in terms of this. I'm not sure -- I can't remember whether it was Kao. How it started and what it is, but technically, a structure that I say was always discussed but I can't remember who it was with. MR JUSTICE CALVER: I'm just trying to be clear whether you actually had that discussion with him or whether that was what you understood, because in answer to a question earlier from Mr Davies, you said. He said: "
"I understood from Sherraine at that time that we would provide Come Harvest and Mega Wealth with the option to purchase the metal."
" WAREHOUSE RECEIPT NO. PMSG/MY/0021184 We hereby confirm that, upon receiving the original warehouse receipt duly endorsed, signed and dated by the order party, and subject to payment of our warehousing fees, we will release the goods to the endorsee without further written instructions from the order party. We hereby disclaim and shall not be responsible for any liability, losses, damages, costs or expenses that you or any third party may incur arising from the release of the goods to the endorsee without further written instructions from the order party. "
"I have always understood inspections of Straits' metal by third parties were to validate that the cargo was present. The warehouse will not allow inspections unless the party that owns the metal according to its records gives permission. We would normally give our permission for inspection. My understanding was always that parties wishing to inspect our metal were potential financiers of the metal or else were intending to buy it from our customers ."
" You say the potential financiers"
" No. I meant people like MCM, ANZ ."
" A. So, what I understand from the Chinese asset pack transaction is that an underlying warehouse receipt which is supposed to be held there at all times during this period, right, so when Mr Kao said that these parties could be potential financiers, first these parties, the MCM, the ANZ, these are international voice. MCM is, you know, someone that is like one of the title re LME members, so I would believe that -- genuinely believe that these guys are in business and they will be even more familiar than Straits in dealing with such business . So there wasn't anything that surprises me, and because I do know that the trade cycle of Mr Kao's business could stretch up to 180 days because we were holding cargoes, I mean the warehouse receipt for such a long tenure, it wouldn't also surprise me that he may want to switch it to someone like MCM or ANZ to hold the cargo instead of Straits , right? Because they could be offering more competitive rates. They could be, you know, having more exalted structures with these parties. "
" ANZCT and MCM were known to us as financiers and buyers in the market and so it made sense they might be buying from Come Harvest or Mega Wealth, for example if the options to uptake were exercised, but we did not know what their relationship with Mr Kao was in fact ."
" We, Genesis… undertake to make USD 8,000,000.00… to you, E D & F Man Capital Markets Limited… on behalf of Come Harvest Holdings Limited… to fulfil its margin call obligations"
" Thanks Nick. Just out of interest - do you know what is driving your client to use endorsed warehouse receipts? Usually for Cat B deals, the original warehouse receipt would be kept by the collateral manager, with parties notifying that collateral manager when they sell goods to another party. The collateral manager would then issue a release confirmation that is sent to both buyer and seller, acknowledging the buyer's ownership. The same would then be done in reverse upon repurchase. Most banks are happy to rely on scanned copies of these release confirmations given they are sent directly by the collateral manager. May be something to consider with your client if you are looking to build up volume as it would dramatically cut down the time taken to fund each deal given there would be no international shipping involved! "
"As discussed I had this back from one of my financing banks: "
" We are certainly interested in your proposal and would have the following comments. Before paying out against a warehouse receipt we would need confirmation from the warehouse that they hold the exact metal referenced to our irrevocable order. Typically we would surrender the warehouse receipt to the warehouse and get either an irrevocable release from them or have them issue a new receipt in our name, and on resale we would either issue a release instruction or endorse and deliver the receipt. In the event that your customer wants the original receipt back we would still present the receipt to the WH for verification and only pay once had that. "
" As a principle we won't pay out against a document that has not been independently confirmed as being genuine, hence our usual practice of surrendering a warehouse receipt and having a new one issued when we buy metal. We have spoken to Pacorini and they have told us that they do not generally confirm the authenticity of a document but would be prepared to on an exceptional basis. Given that you mentioned that this business was likely to be ongoing I assume that this would not be an ideal long-term solution. "
" Basically will need you to clarify the following with SK again before the call since he is there with you at the LME dinner: 1) The below structure you have shared with Lynda is still the same, especially since he has changed his financier to ANZ. 2) What is the reason he is changing the contract structure from 2 counterparties to 1 counterparty now? 3) Which of his entity is the one who has the financing lines with the banks/hedge funds (ANZ / Carlyle group)? Is it the entity that signs the contracts with us? 4) Does his financing party needs to see our contracts with him, is that why we need to engage into a sales and purchase contract with him? Lynda is asking why we can't structure the contract into a service contract/invoice, instead of a true sales and purchase. I guess the biggest concern is if SK is using our WHR to double finance, whereby we are already pledging the original WHR to CIMB/ANZ/MCQ, but SK is using the same copy to finance again with his financier "
" Our arrangement with SK started as sale to party A and buyback from party B for the first 7 days, and the subsequent charging are based on repo with the same party (as advised by SK). Those repo can be structured as service agreement if we wanted it so, but I recalled back then we discussed with finance and decided that a repo (back to back with our banks) may be a better approach and hence we went with that. For the new tranche for SK that started in end apr 2016, he informed there is a change of structure on his end, hence the first 7 days will also be structured as a repo, with the same party. He did not inform me of the details of his structure change, but I have just dropped him a note to ask. In the past, top line was not something that we were concerned with as it was always clocked on our book on a net basis, and hence whether we structure a repo or triangular trade we thought would not be material. "
" Hope you're well. Our Credit colleagues have requested we do a follow up site visit to the Access World warehouses in Johor Port. Do you think it would be possible to organise such a visit for early next week? Also, all the stock we are currently financing is with original warehouse receipts along with the letters issued by yourselves. Will you be able to allow us to view this metal based on the letters issued to ANZ? "
" If I understand correctly, u would like arrange for stock inspection but the original Warehouse receipts are still with ANZ? The letter does not represent or prove the final owner of the materials. Can I have the WR reference number? "
" Yes, the receipts are with our London office [44] . There are quite a few of them, but we were hoping we would be able to arrange to view a small sample of what we are holding based on the photocopies. I can provide these in advance of the visit. Would this be okay? "
" Jessie 10:55:08 AM Hui Ying, about ANZ's inspection of goods you told me last week, VJ [45] contacted the warehouse and confirmed already Jessie 10:56:46 AM Separately, Steven asked you to tell Sherraine that this inspection of goods by ANZ should largely be the same as the Clayer [sic] before, i.e. it's OK as long as it prevents them from knowing that your goods have already been pledged to the bank "
" Jessie 11:00:17 AM Hm. Okay. There should not be any major problems Jessie 11:00:30 AM After all, they just go and have a look at the goods Jessie 11:00:40 AM It should be the same as the previous company Hui Ying 11:01:37 AM Hm. ANZ should only go and have a look Jessie 11:01:59 AM Okay Hui Ying 11:02:37 AM Let me also tell SHERRAINE "
" Jessie 10:38:03 AM Hui Ying, is everything OK after ANZ's staff went to the warehouse for inspection yesterday? Hui Ying 10:39:06 AM The warehouse did not say much about it Hui Ying 10:39:07 AM Hor hor Hui Ying 10:39:17 AM It should be fine Jessie 10:39:37 AM Ohh. Okay. Hahaha Hui Ying 10:40:02 AM Haha, let me update you again if there is news Jessie 10:41:34 AM Thank you Jessie 10:41:38 AM Hope that it is fine "
" At this moment, are the original warehouse receipts still in the hands of Straits? Who will be the final owner that the original warehouse receipts be transferred to?"
" A. I would just have understood it as we just need to be prompt in our response. … Q. Well, that's not -- where it says we have to be careful, that's not saying we've got to be quick about this, is it? A. No, I think, because there is some translation, (inaudible) as well. So I do not really know what was the actual text, but I do not think that it was what counsel has said. To me, it's just being (inaudible) request comes in, so we have to be prompt in our response. "
" Q. Well, why weren't you just open about this at this time, and say: firstly, Straits does have an interest in the materials, and why have original warehouse receipts been couriered to Marex? A. Yes, I -- I consider in the first part, I should have addressed that. But the sentence I replied, I think I was just trying to reply to what they were asking. "
" NOTICE OF FRAUDULENT WAREHOUSE RECEIPTS ISSUED TO ORDER OF STRAITS (SINGAPORE) PTE LTD ("
" We provided you with the scanned copies so that you could show them to your Chinese bankers to establish the business's trade flows and make money off the Chinese asset pack; nobody in the market would have assumed that such a fraud would be committed in this way by the mere provision of CSCs. "
"Q. What concern would you have, Ms Tan? A. Because looking at the date, it's December 2016, am I right, the email? So at a point in time we were (inaudible) with Come Harvest and Mega Wealth, and, as you can see, we only send them a copy of the warehouse receipt , and the original will either be with Straits or with our bankers, and if I look at it , how could it be possible that they can actually endorse on it. They need to say that someone is clearly passing off something that is not original. So that would be a concern ."
" U only give client a copy cos they want to show bank for purchase later"
" Wah this is damn panicking!! I better inform jeremy."
" Pls quickly let me know how much is the total Marex cargo value [and] no of lots [and] where it is being financed now. If Macquarie we try to liquidate all first so that if Marex try to sue us all the cargoes already sold won't be frozen or what ."
" the original receipt is kept with the bank while a scanned copy of the receipt is sent to potential clients"
" But just dunno whether bonus payout will be implicated as a result of this ."
" I guarantee you it will be… unless we clear the cargo ."
"If we don't do any SK deals, our revenues will only be USD52k for the month of Mar[ch]. This means we will be very very far off from budget numbers."
" Afternoon uncle Steven… just to let you know that we will be remitting out USD 2.9 Million + USD10,000 from Transcendent to EDF today"
" IN HK, MR WONG OWNS COME HARVEST & MEGA WEALTH. " ii) Second, a response dated9 January 2017 from Mr Siu (the operations manager of MW) to an email enquiry from Mr Riley of the same date. Mr Riley said: "
" The shareholders of MW are relatives of Mr Wong. Since Mr Wong is a HK citizen, he is facing many constraints and disadvantages to hold the parent companies of MW. " iii) Third, an email dated16 January 2017 to Mr Riley from a Mr Ben Ho (apparently Mr Wong's agent) which states: "
" On the Effective Date of a Purchase Contract, Counterparty represents and warrants to MCM that: (i) it has good title to Metal and the full and unqualified right to sell and deliver the Metal to MCM; (ii) Metal is free of any mortgage, charge, lien, encumbrance or adverse claim of or by any third party; and (iii) Metal complies in all respects with the specification, weight and shape criteria as specified in the Purchase Contract and in case where Metal is not located in an Exchange Warehouse, Metal meets all applicable Exchange requirements to be delivered immediately into the relevant Exchange Warehouse if required by MCM. "
" 32. In sending or causing to be sent the Purported Receipts, Soft Copy Receipts and PMA Letters to MCM and entering into (or causing Come Harvest / Mega Wealth to enter into) the Purchase Contracts with MCM, Come Harvest and Mega Wealth and those acting on their behalf (namely Mr Wong, Ms Ko, Mr Siu, Genesis and Mr Kao) impliedly represented: 32.1. that they believed that the Warehouse Receipts provided or to be provided by Come Harvest / Mega Wealth pursuant to the Purchase Contracts were or would be genuine; and/or 32.2. that they had not forged, did not intend to forge and were not involved in or responsible for forgery of the Warehouse Receipts provided or to be provided by Come Harvest / Mega Wealth pursuant to the Purchase Contracts; and/or 32.3. that they had no reason to suspect that the Warehouse Receipts provided or to be provided by Come Harvest / Mega Wealth pursuant to the Purchase Contracts were or would be forged; and/or 32.4. that they believed that Come Harvest / Mega Wealth had title to the Metal which Come Harvest / Mega Wealth proposed to sell to MCM ."
" Further or alternatively, Mr Kao and/or Genesis are liable to MCM for inducing or procuring breach of contract by Come Harvest / Mega Wealth, since: 77A.1 MCM entered into the Purchase Contracts with Come Harvest / Mega Wealth. The terms of the Purchase Contracts (paragraphs 16-22 above) required Come Harvest / Mega Wealth to transfer original warehouse receipts and title to nickel to MCM. 77A.2 Mr Kao and Genesis knew that MCM had entered into the Purchase Contracts. 77A.3 Mr Kao and Genesis intended that MCM should not receive original warehouse receipts, but should instead receive forged warehouse receipts derived from the colour scanned copies provided to Come Harvest / Mega Wealth by Straits. 77A.4 Mr Kao and Genesis acted as alleged at paragraph 71.4 above so as to cause the fraud on MCM to take place and Come Harvest / Mega Wealth to breach the Purchase Contracts. 77A.5 MCM has suffered loss as a result, as claimed at paragraphs 65-69 above. "
"71.4. Mr Kao and Genesis were involved in each of the component commercial elements which enabled the fraud to be perpetrated on MCM, namely: (1) Introduction of Straits to Come Harvest and Mega Wealth; (2) Negotiation and execution or purported execution of the Straits Contracts; (3) Introduction of Come Harvest and Mega Wealth to MCM; (4) Negotiation and execution of the Purchase Contracts; (5) Dispersal of funds away from Come Harvest and Mega Wealth."
" The elements of the cause of action are as follows: i) A combination, arrangement or understanding between two or more people. It is not necessary for the conspirators all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of: Kuwait Oil Tanker at [111]. ii) An intention to injure another individual or separate legal entity, albeit with no need for that to be the sole or predominant intention: Kuwait Oil Tanker at [108]. Moreover: a) The necessary intent can be inferred, and often will need to be inferred, from the primary facts – see Kuwait Oil Tanker at [120-121], citing Bourgoin SA v Minister of Agriculture [1986] 1 QB: "[i]f an act is done deliberately and with knowledge of the consequences, I do not think that the actor can say that he did not 'intend' the consequences or that the act was not 'aimed' at the person who, it is known, will suffer them". b) Where conspirators intentionally injure the claimant and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests: Lonrho Plc v Fayed[1992] 1 AC 448 , 465-466, [1991] B.C.C. 641; see also OBG v Allan[2008] 1 AC 1 at [164-165]. c) Foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention: OBG at [166]. iii) In some cases, there may be no specific intent but intention to injure results from the inevitability of loss: see Lord Nicholls at [167] in OBG v Allan, referring to cases where: "
" The next question is what counts as an intention to procure a breach of contract. It is necessary for this purpose to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach. Mr Gye would very likely have preferred to be able to obtain Miss Wagner's services without her having to break her contract. But that did not matter. Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice. It is usually to achieve the further end of securing an economic advantage to themselves. As I said earlier, the Dunlop employees who took off the tyres in GWK Ltd v Dunlop Rubber Co Ltd(1926) 42 TLR 376 intended to advance the interests of the Dunlop company ."
"I turn next, and more shortly, to the other key ingredient of this tort: the defendant's intention to harm the claimant. A defendant may intend to harm the claimant's business either as an end in itself or as a means to an end. A defendant may intend to harm the claimant as an end in itself where, for instance, he has a grudge against the claimant. More usually a defendant intentionally inflicts harm on a claimant's business as a means to an end. He inflicts damage as the means whereby to protect or promote his own economic interests. Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort. This is so even if the defendant does not wish to harm the claimant, in the sense that he would prefer that the claimant were not standing in his way. Lesser states of mind do not suffice. A high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant. The defendant's conduct in relation to the loss must be deliberate. In particular, a defendant's foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant's conduct, in the words of Cooke J in Van Camp Chocolates Ltd v Aulsebrooks Ltd[1984] 1 NZLR 354 , 360."
" I would suggest that a conspiracy to do an unlawful act – when there is no intent to injure the plaintiff and it is not aimed or directed at him – is not actionable, even though he is damaged thereby. But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives."
"is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended. That, I think, is what judges and writers mean when they say that the claimant must have been "targeted" or "aimed at". "
"I do not think that the width of the concept of 'unlawful means' can be counteracted by insisting upon a highly specific intention, which 'targets' the plaintiff. That, as it seems to me, places too much of a strain on the concept of intention. In cases in which there is obviously no reason why a claimant should be entitled to rely on the infringement of a third party's rights, courts are driven to refusing relief on the basis of an artificially narrow meaning of intention which causes trouble in later cases in which the defendant really has used unlawful means."
" 95. […] the risk of a wide range of claimants clearly exists. An important reason why that is so is that the House of Lords in OBG rejected a narrow and specific test of intention which requires targeting of the claimant. Instead, it laid down a test of intention which includes intending harm as a means to an end, such as enrichment. Consequences that are the necessary means by which the defendant's aim is achieved are taken to be intended. In the economic context of the unlawful means tort this may operate very broadly. Competition is the essence of trade and it involves gain at the expense of others. Keeping the law as stated in OBG but dispensing with the dealing requirement would mean losing an important counterbalancing factor to the broader test of intention adopted in that case. Adopting the appellants' first alternative would involve undermining the coherence of the majority decision in OBG and the careful and considered policy choices which were made. 96. The appellants' second alternative involves adopting in whole or in part the alternative formulation of the unlawful means tort proposed by Lord Sales and Professor Davies in their 2018 LQR article. In brief summary, they advocate that unlawful means should not be limited by actionability but should extend to any criminal, statutory or civil wrong. They also consider that the tort should be extended beyond economic interests and that there should be no dealing requirement. They recognise the need for a control mechanism but consider that this can be provided by adopting a narrow test of intention. They acknowledge that the test of intention in OBG, which they refer to as the Sorrell v Smith view of intention (Sorrell v Smith[1925] AC 700 ), may operate too broadly in some areas. As they explain as at p 77: "… in many contexts the Sorrell v Smith view of intention to harm seems to come adrift from a view of intention to harm in the sense of specifically targeting the use of unlawful means against a particular person … For instance, a defendant might be broadly aware of competing against others in a limited market but have only a hazy idea who those others are or which of them might actually be harmed by that defendant's own actions: would that create a sufficient nexus between the defendant and the (unknown) claimant competitor to give rise to liability? We suggest not. A more specific intention to use unlawful means to harm a particular person should be required, using those means as the club to hit them …" 97. We have not been addressed on whether it would be appropriate to revisit the OBG test of intention. That is no doubt because the only intention which the appellants are able to plead is Sorrell v Smith intention. Their case is that the elevated prices sought by the respondents were achieved "at the expense" of the appellants and that expense was "a means to an end, that end being elevated prices" (para 75 of the Particulars of Claim). This is not therefore an appropriate case to consider the possibility of adopting the Sales/Davies reformulation of the tort and it would not avail the appellants if the court was to do so. In so far as the appellants are suggesting that we should adopt part of the Sales/Davies proposal, abandon the dealing requirement, but ignore the rest, that is incoherent and unsustainable. If such a reformulation ever falls to be considered, it would be necessary to consider it in its entirety, not on a pick and choose basis. 98. It should also be noted that Lord Hoffmann specifically considered a similar proposal made in an earlier article written by Lord Sales - Sales and Stilitz, "
" The question of intention to injure was not in issue in Total Network but I do not detect anything in that decision which supports the idea that the test for intention to injure should be different from the test in OBG. Total Network does make it clear that the two torts being considered are different torts and the concept of "unlawful means" is different for the two torts. But that is no warrant for deliberately changing the other ingredients of the two torts so that the test for intention will also be different for the two torts. In Meretz Investments NV v ACP Ltd[2008] Ch 244 , the Court of Appeal applied the statements in OBG, as to the test of intention, to the tort of conspiracy to injure by unlawful means. So too did Briggs J in Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayive Pazarlama AS[2009] EWHC 1276 (Ch) ."
"The parties disagree about what intent to injure relevantly involves. IMI group submit that there must be an agreement to cause harm by unlawful means with intent to injure Newson group. Newson group rely on the "obverse side of the coin" argument. They contend that intent to injure is satisfied by the findings in the Decision that IMI group intended to cause higher prices and obtain higher margins than would otherwise occur through free competition. Newson group argue that it matters not if IMI group were simply indifferent whether the victims were the direct or the indirect purchasers of tubes. On their submission it is sufficient that IMI group intended to make a profit at the expense of a class of persons to whom the wrongful acts were targeted ."
"It is not known whether anyone from the alleged class (whether that be the shippers or the shippers and freight forwarders together) will in fact suffer at all. BA is not seeking to gain at their expense, even if it is foreseeable that this is in fact what may happen. Even if one expands the class to anyone in the chain down to the ultimate consumers (which is not in fact how the case is put), this opens up an unknown and unknowable range of potential claimants. It cannot be said that there is, to use Lord Nicholls' emphasised words, an intent to injure the particular claimant. Moreover, to fix liability in these circumstances is in our view directly at odds with the binding decision in Newson."
" Mr Louanjli knew that there was a strong case that Mr Nobre was laundering money which he had obtained dishonestly. It is obvious that such conduct was intended to harm the true owner of the money. Although, in such a case, it was probably not necessary for Mr Louanjli to know who the true owner was, in fact he did know that the money had come from Group Seven to AIC and from it to Larn ."
"13. The emphasis in the authorities on cases in which the predominant purpose was to injure the claimant has diverted attention from the fact that both lawful means and unlawful means conspiracies are torts of intent. But the nature of the intent required differs as between the two. This is because a conspiracy may be directed against the claimant notwithstanding that its predominant purpose is not to injure him but to further some commercial objective of the defendant. This point had been made, some years earlier, by the Supreme Court of Canada in Canada Cement LaFarge… "
" Whereas the law of tort does not permit an action against an Individual defendant who has caused injury to the plaintiff, the law of torts does recognise a claim against them in combination as the tort of conspiracy if: (1) whether the means used by the defendant are lawful or unlawful, the predominant purpose of the defendants conduct is to cause injury to the plaintiff; or (2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendant should know in the circumstances that injury to the plaintiff is likely to and does result. In situation (2) it is not necessary that the pre-dominant purpose of the defendants' conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff."
" Consistent with the requirements as to intention, nothing short of actual knowledge as to […] harm to the claimant will suffice, albeit actual knowledge may be approximated by Nelsonian (or 'blind eye') knowledge if (and only if) the defendant believed that the perpetrator was up to no good (i.e. had a suspicion firmly grounded and targeted on specific facts) and refrained from making enquiries which would confirm that belief; failure to inquire due to gross negligence cannot be the basis of a finding of Nelsonian knowledge. "
"The phrase "unlawful means" has two elements. The first is a requirement that the acts involved are "unlawful"
" The unlawful acts must be the instrument by which the loss is inflicted. The unlawful acts will not be the instrument in this sense if the unlawful acts are incidental to, or collateral to, the loss ". [91] ii) JSC BTA Bank v Khrapunov[2018] 2 WLR 1125 at [11] per Lords Sumption and Lloyd-Jones: "
"Each of the words in the phrase "unlawful means" encapsulates a separate concept. The first concerns the unlawfulness of the act (or means) and requires consideration of which types of unlawful act are, as a matter of law, capable of founding liability. The second concept concerns the question of whether an unlawful act is, in fact, the "means" by which injury is inflicted on the claimant pursuant to the conspiracy."
"In my opinion your Lordships should clarify the law by holding that criminal conduct (at common law or by statute) can constitute unlawful means, provided that it is indeed the means (what Lord Nicholls of Birkenhead in OBG at para 159 called "instrumentality") of intentionally inflicting harm. In Lonrho v Shell the sanctions order against Southern Rhodesia was part of the story, but it was not the instrument for the intentional infliction of harm. With great respect to Lord Hoffmann (in OBG at para 57) it is in my view what Shell and BP did not intend, rather than what Parliament did not intend, that is most relevant to that decision." ii) JSC BTA Bank v Khrapunov[2018] UKSC 19 ,[2020] AC 727 at [14] per Lord Sumption and Lord Lloyd-Jones: "
"unlawful means, both in the intentional harm tort and in the tort of conspiracy, include both crimes and torts (whether or not they include conduct lower on the scale of blameworthiness) provided that they are indeed the means by which harm is intentionally inflicted on the claimant (rather than being merely incidental to it)…"
"… From these and other authorities I derive a general assumption, too obvious to need discussion, that criminal conduct engaged in by conspirators as a means of inflicting harm on the claimant is actionable as the tort of conspiracy, whether or not that conduct, on the part of a single individual, would be actionable as some other tort … In my opinion your Lordships should clarify the law by holding that criminal conduct (at common law or by statute) can constitute unlawful means, provided that it is indeed the means (what Lord Nicholls of Birkenhead in OBG Ltd v Allen[2008] AC 1 , para 159 called 'instrumentality') of intentionally inflicting harm."
"a conspiracy is tortious if an intention of the conspirators was to harm the claimant by using unlawful means to persuade him to act to his own detriment, even if those means were not in themselves tortious." iii) Grant & Mumford , §2-085, where it is suggested that: "
" It seems to me that discussions of instrumentality in the case law tend to conflate two different questions. The first, concerns the defendant's intention […] it is now well established in unlawful means conspiracy that the defendant must intend to injure the claimant, although that need not be the defendant's predominant intention and it is sufficient that the defendant intends to advance their economic interests at the expense of the claimant's. To that extent, the defendant's intention must be directed at the claimant. The second question is one of causation. The unlawful means must have caused loss to the claimant, rather than merely being the occasion of such loss being sustained."
"As the Appellants recognise and assert, the instrumentality requirement is a causation requirement: the damage to the claimant must be caused in fact through the instrumentality of the third party."
" The concerted action referred to at paragraphs 70 and 74 above involved the use of unlawful means, namely: 75.1. Deceit, as alleged at paragraphs 32, 38 and 65 to 69 above; 75.2. Forgery and the use of false instruments, as alleged at paragraphs 28 to 29 above, contrary to Sections 1-4 of theForgery and Counterfeiting Act 1981 and/or comparable legislation in the place where the forgery was committed ."
"In my judgment the following principles apply in assessing the damages payable where the plaintiff has been induced by a fraudulent misrepresentation to buy property: a) The defendant is bound to make reparation for all the damage directly flowing from the transaction; b) Although such damage need not have been foreseeable, it must have been directly caused by the transaction; c) In assessing such damage, the plaintiff is entitled to recover by way of damages the full price paid by him, but he must give credit for any benefits which he has received as a result of the transaction ; d) As a general rule, the benefits received by him include the market value of the property acquired as at the date of acquisition ; but such general rule is not to be inflexibly applied where to do so would prevent him obtaining full compensation for the wrong suffered; e) Although the circumstances in which the general rule should not apply cannot be comprehensively stated, it will normally not apply where either (a) the misrepresentation has continued to operate after the date of the acquisition of the asset so as to induce the plaintiff to retain the asset or (b) the circumstances of the case are such that the plaintiff is, by reason of the fraud, locked into the property. f) In addition, the plaintiff is entitled to recover consequential losses caused by the transaction; g) The plaintiff must take all reasonable steps to mitigate his loss once he has discovered the fraud."
" The provisions of contracts of sale and purchase to which the goods owner is a party are, in the absence of special circumstances, res inter alios acta, which are not to be taken into account in assessing damages to be paid to the owner ". [109] "
"Mr Thomas QC [for the defendant] advanced as a proposition of English law that a bill of lading holder suing on the bill of lading in contract may recover full damages despite an earlier recovery from an intermediate seller . To be clear, the reference to earlier recovery is to a recovery prior to the date on which damages are awarded. […] Going back to [the claimant's] skeleton argument, then, the claimant's response on the substance of [this] [q]uestion […] was to submit that: (i) R&W Paul is doubtful authority at best because it was based upon a contractual title to sue under theBills of Lading Act 1855 rather than COGSA 1992. (ii) There have been developments in the law of res inter alios acta since 1937. Swynson Ltd v Lowick Rose LLP (in liquidation)[2017] UKSC 32 ,[2017] 2 WLR 1161 was cited, but that gnomic observation was not otherwise explained or elaborated. Thus, it was not said that R&W Paul was not authority for the proposition contended for by the defendants, only that (i) it was not authority for that proposition under COGSA 1992 and (ii) (but very enigmatically) it might somehow not now survive as good law after Swynson Ltd. As to (i), there is no difference between COGSA 1992 and the old Bills of Lading Act that might be material to the decision in R&W Paul. As to (ii), there is nothing in Swynson Ltd to cast doubt on that decision . […] In my judgment, [the defendant's] proposition, founded upon R&W Paul, is sound for bill of lading holders who receive cargo in damaged condition from the ship and who then own, or later come to own, the damaged cargo pursuant to sale arrangements to which the carrier is not party. How much more widely the proposition applies I do not need to decide. […] "
"38. … the basic measure of damages is the price paid less the benefits received as a result of the transaction which will, in a case where property is acquired, be or include its value at the date of acquisition -- which, for present purpose was, by agreement, taken as the bill of lading date. 39. In my view there is, in this case, no sufficient reason to take a different date and good reason not to do so. The purpose of the flexibility of approach about the valuation date to which Lord Browne-Wilkinson referred was to ensure that the person duped should not suffer an injustice by failing to recover full compensation in the type of circumstances to which he referred. There is no need to adopt such an approach in order to relieve the fraudster from the general rule as to damages, especially if to do so means that the person defrauded ends up paying more than the cargo was worth at the time that he bought it. This is particularly so in the light of the observations of Lord Blackburn in Livingstone v Rawyards Coal Co(1880) 5 App Cas 25 at page 39 that when damage is done maliciously or with full knowledge that the person doing it was doing wrong "you would say that everything would be taken into view that would go most against the wilful wrongdoer . 40. The crude oil the subject of these proceedings was a commodity bought in the oil trading market. That does not mean that there was a regular market for the sale of the 32 different bespoke blends […] On the contrary these cargoes were unique and had to be valued by a calculation of the total CIF value of the component crudes discounted on account of the risks and uncertainties involved in buying these odd cargoes which were a mixture of crude oils, condensates and fuel oil. The amount by which the price paid exceeded a price calculated on that basis constitutes the measure of the buyer's loss, representing, as it does, the amount that he has overpaid on account of the seller's deceit. That loss arose when on account of the deceit he acquired the property, for which he had to overpay. The fact, if such it be, that, afterwards, none of the risks to which the discount related materialised cannot alter the fact that the buyer was induced to pay too much when he did so . … 45. If the present case were brought in contract I would be inclined to agree with the judge that any sub-contract would be res inter alios acta for the reasons identified by Scrutton LJ in Slater v Hoyle & Smith[1920] 2 KB 11 , as cited in [196] of Flaux J's judgment, especially because Rafirom was not the refiner nor was there evidence as to (a) the basis and terms upon which Rafirom supplied crude oil to the refineries; (b) that it was ever obliged to supply crude oil under any particular contract with Glencore to any particular refinery as opposed to selling it for profit; or (c) that it had any liability to the refineries if the crude oil supplied was not what it appeared to be or shared in any profit from the refining of it. The decision of this court in Bence Graphics v Fasson[1998] QB 87 may render that debatable; but the consistency between the latter and the former case is, itself, in doubt, especially given the reliance by Auld LJ in Bence on the Privy Council decision in Wertheim v Chicoutimi Pulp Co[1911] AC 301 which Scrutton LJ thought was erroneous. 46. This is a controversy which I do not propose to resolve. For the purposes of a claim in deceit, I would not regard it as right to discard an assessment of the difference between the price and the lesser value at the date of acquisition of the property in favour of an assessment dependent in part on whether anything untoward transpired in the course of refining . … 60. The market value of a cargo will depend on the terms on which it is sold and the information which the buyer has about it. The critical questions are (a) what is the date by reference to which the value/ price is to be determined; and (b) what information is the putative buyer to be taken to have had? The latter is relevant because the price that a purchaser will pay on any given day depends, inter alia, on the information that is then available to him, as well as the terms upon which he is to purchase. 61. As to (a), in a case of fraud the answer is, generally, the date of purchase – here the date of the bill of lading . Whatever may be the position in relation to contractual claims there is no good reason for departing from that measure in a case of fraud or at any rate in this one. On the contrary I would, in this case, regard the fact that refining led to no problems as something which should enure to the benefit of Rafirom."
" The claimant must take all reasonable steps to mitigate their loss consequent upon the defendant's wrong and cannot recover damages for any such loss which they failed, through unreasonable action or inaction, to avoid. Put shortly, the claimant cannot recover for reasonably avoidable loss ." ii) Rule 2: "
" in some cases of mitigation, the court is concerned with additional benefits which a claimant has gained from the mitigation action which it has taken. In such a case, it is for the defendant to show that the benefits should be set off against the prima facie claim of loss. [...] Such cases raise delicate questions as to whether a benefit is sufficiently causally connected with the breach of contract or (in tort) the wrong or whether the benefit was the result of an independent commercial decision by the claimant ."
" The relevant link is causation. The benefit to be brought into account must have been caused either by the breach of the charterparty or by a successful act of mitigation ". iii) Indeed, Fulton Shipping was cited in Sainsbury's where the Court interpreted it as follows at [213]: "
"can Straits incur two separate heads of liability for committing the same tort twice (unlawful means conspiracy) against two separate parties (ANZ and MCM)."
"It might be queried whether this trust, arising upon equitable rescission, is a resulting, a constructive or another type of trust. It has been described by a broad variety of labels, including "constructive trust", "old-fashioned institutional resulting trust", "
" The essence of a liability to account on the footing of knowing receipt is that the defendant has accepted trust assets knowing that they were transferred to him in breach of trust and that he had no right to receive them. His possession is therefore at all times wrongful and adverse to the rights of both the true trustees and the beneficiaries. No trust has been reposed in him. He does not have the powers or duties of a trustee, for example with regard to investment or management. His sole obligation of any practical significance is to restore the assets immediately ."
" It may well be that if the representee elects to avoid the contract and set aside a transfer of property made pursuant to it the beneficial interest in the property will be treated as having remained vested in him throughout, at least to the extent necessary to support any tracing claim ."
" The present claim is not concerned with an alleged misappropriation by the defendant of an asset previously belonging to Lonrho. (…) The present claim… is concerned with a different class of case, in which the plaintiff's claim is to an asset acquired from other sources which should have been acquired for the plaintiff… "
" [had] held the shareholding in trust from Lonrho from the start; and as a constructive trustee it was subject to all the fiduciary obligations and disabilities of an express trustee. In particular, it was bound to abstain from placing itself in a position where its interest conflicted with its duty. Given that it held the shareholding in trust for Lonrho, it was bound to refrain from using the trust shareholding in order to mount a bid on its own account for the remaining shares… "
" It is not alleged that the defendant deliberately concealed the arrangements which the purchasers had made with their bank from the society or that he consciously intended to mislead it. Nothing in this judgment is intended to apply to such a case. "
" The society's instructions were not revoked before the defendant acted on them, and in my judgment there was no ground upon which the judge could properly conclude that his authority to apply the money in completing the transaction had determined. "
" The defendant knew that he was a trustee of the money for the society; but he did not realise that he had misled the society and could not know that his authority to complete had determined (if indeed it had). He could not be bound to repay the money to the society so long as he was ignorant of the facts which brought his authority to an end, for those are the facts which are alleged to affect his conscience and subject him to an obligation to return the money to the society. " iii) Byers & Ors v Samba Financial Group[2021] EWHC 60 Ch A claim was brought by joint official liquidators of a Cayman Islands registered company which was the beneficiary of Cayman Islands trusts. The claim was to recover from a Saudi Arabian bank the value of shares in five Saudi Arabian companies that were transferred to the Defendant in breach of trust. There is an important distinction between the facts in Byers and the present case. In Byers , the claimant brought a personal restitutionary claim for knowing receipt of the value of the shareholding. Fancourt J held that a claim for knowing receipt will fail if, at the moment of receipt of property, the beneficiary's equitable proprietary interest is destroyed or overridden so that the recipient holds the property as beneficial owner. Fancourt J found that pursuant to Saudi Arabian law (as the law applicable to the transfer), the claimants' proprietary interest in the shares was extinguished at the point of transfer to the defendant. The defendant had, from the outset, therefore held the property absolutely free of any beneficial interest of the claimants, and any knowledge prior to the receipt was irrelevant. The distinction between Byers and the present case is that in Byers the "proprietary base" necessary for a knowing receipt claim had been extinguished whereas on the facts of this case the question is whether the relevant equitable interest has come into existence at all. Nonetheless, Straits drew my attention to the following observations of Fancourt J: " 110. The knowing recipient's liability depends on his knowledge that the property he receives is trust property and is to be dealt with in this way. His receipt is not wrongful in the sense that he has acted dishonestly or culpably (unless he has also dishonestly assisted in the breach of trust), but his liability to deal with the property as if he were a trustee arises at the moment of receipt because of his knowledge that the property is trust property. If the transferee then deals with the property otherwise than as a trustee should […] he is at gault and will be liable for the consequences . 111. The claimant must be able to assert that the Ds received his property and were obliged to deal with it as if he were trustee of it […] if the recipient was at the outset entitled to seal with the property as his own, the claim cannot succeed ."
" There is so far no authority as to whether a third party who receives property transferred under a voidable transaction may be liable as a knowing recipient. There is likewise limited guidance as to whether a third party can be liable for dishonestly assisting in a breach of trust for assisting in the abstraction of assets under a voidable transaction . It has been said that neither form of liability can be imposed retrospectively. If available, claims of this kind can therefore only be maintained if the injured party is empowered to regain equitable title by electing to rescind, and in respect of receipt or assistance that occurs after that election has been made ." ii) Grant & Mumford, Civil Fraud: Law, Practice, Procedure (2018) [22-063]: "
" It is not possible to use the doctrine of rescission so as retrospectively to subject parties to obligations or duties of a fiduciary nature. […] Whether or not there is a retrospective vesting for tracing purposes it is clear that on rescission the equitable title does not revest retrospectively so as to cause an application of trust money which was properly authorised when made to be afterwards treated as a breach of trust. " iv) Zogg, Proprietary Consequences in Defective Transfers of Ownership (2020), p. 183: "
" The defendant receives property from a third party into which the claimant can trace an interest. Since the property is in law, the equivalent of the claimant's property, the defendant is therefore treated as if he had received the claimant's property ."
"The bank must make enquiries if there is a serious possibility of a third party having such a right or, put in another way, if the facts known to the bank would give a reasonable banker in the position of a particular banker serious cause to question the proprietary of the transaction. " [172] (Lord Clarke) "
" The test […] may be formulated in this way. [A party] must make inquiries if there is a serious possibility of a third party having such a right or, put in another way, if the facts known to the bank would give a reasonable banker in the position of the particular banker serious cause to question the propriety of the transaction. "
"We are in the realm of property rights and are not concerned with an actionable duty to investigate. The hypothesis is that the claimant has established a proprietary interest in the asset, and the question is whether the defendant has established such absence of notice as entitles him to assume that there are no adverse interests. The mere possibility that such interests exist cannot be enough to warrant inquiries. There must be something which the defendant actually knows (or would actually know if he had a reasonable appreciation of the meaning of the information in his hands) which calls for inquiry."
" My Lords, the character in the law known as the bona fide (good faith) purchaser for value without notice was the creation of equity. In order to affect a purchaser for value of a legal estate with some equity or equitable interest, equity fastened upon his conscience and the composite expression was used to epitomise the circumstances in which equity would or rather would not do so. I think that it would generally be true to say that the words " in good faith " related to the existence; of notice. Equity, in other words, required not only absence of notice, but genuine and honest absence of notice. As the law developed, this requirement became crystallised in the doctrine of constructive notice which assumed a statutory form in theConveyancing Act 1882, section 3 . But, and so far I would be willing to accompany the respondents, it would be a mistake to suppose that the requirement of good faith extended only to the matter of notice, or that when notice came to be regulated by statute, the requirement of good faith became obsolete. Equity still retained its interest in and power over the purchaser's conscience. The classic judgment of James L.J. in Pilcher v. Rawlins (1872) LR 7 Ch App 259 , 269 is clear authority that it did: good faith there is stated as a separate test which may have to be passed even though absence of notice is proved . And there are references in cases subsequent to 1882 which confirm the proposition that honesty or bona fides remained something which might be inquired into (see Berwick & Co. v. Price[1905] 1 Ch 632 , 639; Taylor v. London and County Banking Co.[1901] 2 Ch 231 , 256; Oliver v. Hinton[1899] 2 Ch 264 , 273). "
“ once the deal was agreed in principle with Steven Kao, I left it to Sherraine to sort out the details ”. [Back] Note 12 Or possibly Company A. [Back] Note 13 Ms He had said in her first witness statement that the receipt was sent back to Straits: He 1 §21: “ In every case of a Type 1 Trade, the original warehouse receipts were delivered to the relevant buyer and re-delivered back to us on the re-purchase side later ”
“ With our transactions, there are two types of document requirement on the WHR, Color Scan Copies (CSC) only or CSC with Orignals [sic] to follow… ” [Back] Note 15 Ms He to Mr Kao in the same email chain,3 March 2014 . [Back] Note 16 See the market experts’ Joint Memo §4.1. [Back] Note 17 CH & MW Defence, §4(1). [Back] Note 18 Three were provided by D1 on14 December 2016 , and 6 were provided by D2 on20 December 2016 . [Back] Note 19 He 1 §180. The metal was sold to avoid it being subject to a freezing order – see further below. [Back] Note 20 Tan Hui Ying, an executive in the Trade Services team at Straits from3 March 2014 . Senior Executive in the same team from1 January 2016 and Assistant Vice President from1 January 2018 . [Back] Note 21 Li Shuyi Lindy, an employee of Straits working in its operations team. [Back] Note 22 Wu Chong Beng, an employee of Straits working in its operational team. [Back] Note 23 Radley §24 & §149. [Back] Note 24 Radley §26 & §150. [Back] Note 25 At (5) of the Prayer for Relief in the Particulars of Claim. [Back] Note 26 Particulars of Claim, prayer to relief, paras (1) & (3). See also paras. 544-545 of the Claimant’s closing. [Back] Note 27 Particulars of Claim §§78-80 (unjust enrichment). [Back] Note 28 Particulars of Claim §§81-82 (breach of contract). [Back] Note 29 Particulars of Claim §77A. [Back] Note 30 An iron ore and steel trader at Puyang and a director and 30% shareholder of Transcendent SG. Son of Jeremy Ang. It was in issue whether Timothy Ang was the beneficial owner of the 30% shareholding in Transcendent SG (see below). [Back] Note 31 Section 2 DRD questionnaire, dated22 June 2020 . [Back] Note 32 By Rajah & Tann LLP, not Reed Smith LLP. [Back] Note 33 See Mr Springer’s email dated30 November 2014 in which he told Ms He, “ Remind that you always maintain title” ; Mr Chong’s email to Ms He dated16 December 2015 stating that “ the goods still belong to [Straits] ”; and Ms Foo’s email to Ms He dated2 March 2015 in which Ms Foo emphasised that, for cargoes financed by VAM, Straits would have to ensure that “ there is no actual title transfer to counterparty ” in order not to breach Straits’ contract with VAM. See too Ms He’s email in which she told Ms Tan, Ms Lindy Li and Mr Wu that “ the original never once leave our hands.” [Back] Note 34 As Lord Diplock explained in Snook v London & West Riding Investments[1967] 2 QB 786 at p. 802, a sham: “… means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create”
" A sham provision or agreement is simply a provision or agreement which the parties do not really intend to be effective, but have merely entered into for the purpose of leading the court or a third party to believe that it is to be effective ." [Back] Note 35 i.e. Steven Kao (D3). [Back] Note 36 Although the events of November/December 2014 discussed above do raise concerns about Ms He’s behaviour shortly before the ING episode. [Back] Note 37 He 1 §119: “ Mr Kao and Mr Springer wanted to be able to show third parties that whoever holds the original receipt will be able to take it to the warehouse keeper and take delivery of the underlying cargo. ” [Back] Note 38 Every purported sale to Carlyle (and to later Repo Transaction counterparties) was accompanied by a PMA Letter obtained by Straits from Access World, naming the relevant purchasing entity. [Back] Note 39 This paragraph is in red type in the original email [Back] Note 40 Tan 1 §50; He 1 §§161-164. [Back] Note 41 Email from Ms Tan to Wu Chong Beng cc’ing Sherraine He and Lindy Li dated24 April 2015 . [Back] Note 42 In addition to MCM’s ‘Carlyle Transaction Schedule’, see Mr Kao’s witness statement §48 and §54; D3/D4 Reamended Defence §22. [Back] Note 43 Tan 1 §21. [Back] Note 44 These were, of course, the fake WHRs. [Back] Note 45 Vincent Joutain, operations manager for Genesis. [Back] Note 46 This part of the sentence (“ Yes WHR is in the hands of Straits ”) is in red type in the original email. [Back] Note 47 This sentence (“ We would not know as the WHR could be sold to other parties from our buyer ”) is also in red type in the original email. [Back] Note 48 Being respectively (i) copies of COO and COA; (ii) confirmation that the metal can be warranted within a reasonable period of time and (iii) a copy of warehouse signature list. [Back] Note 49 This last sentence (“ Straits will no longer have any interest in the materials when we receive full payment from the Buyer ”) is in red type in the original email. [Back] Note 50 The WeChat messages exchanged between Ms He and Mr Kao on2 September 2016 show that Ms He asked Mr Kao if she could make a personal investment of US$200,000 with Kao in a venture called 13 mile “ if you will allow ”. [Back] Note 51 Indeed, Mr Ashton’s summary tables 3.1 ad 3.2 in his first report show that very substantial sums were received by Transcendent companies from MCM (which MCM seeks to trace), including Transcendent SG. [Back] Note 52 This is, contrary to Straits’ submission, consistent with the way in which MCM pleaded its case – see paragraph 71.6A of the RRRAPOC [Back] Note 53 Further examples are as follows: the email from Ms He to Mr Kao on11 December 2015 : “ I’m talking to another financing party, so just want to be sure that you still have demand for CSC as long as you can do it with VAM on your end ”; and WeChat messages between Ms He to Mr Kao on2 December 2016 : “ OK so we send 14.5mil csc first to Jessie? ”, “ We sent the csc over already! ”. [Back] Note 54 Kao §67: “ not closely associated with the terms of those trades ”; Kao §71 – “ I had no reason to believe that the Straits Contracts were anything other than genuine sale and purchase contracts that involved Straits providing original warehouse receipts to CH or MW. (…) It never occurred to me that Straits would not deliver original warehouse receipts to CH/MW. ” [Back] Note 55 He 1 §14; He 2 §§22-23. [Back] Note 56 Global Display Solutions Limited v NCR Financial Solutions Group Limited[2021] EWHC 1119 (Comm) at [105] per Jacobs J. See Vald. Nielsen Holdings and Ors v Baldorino[2019] EWHC 1926 (Comm) at [130] – [159] per Jacobs J for a more extensive review of recent authorities. [Back] Note 57 Spencer Bower & Handley, Actionable Misrepresentation (5th ed, 2014) (“ Spencer Bower ”) at [3.01]-[3.12]. [Back] Note 58 Spencer Bower at [3.05]. [Back] Note 59 MCI Worldcom International Inc v Primus Telecommunications plc [2004] 2 All ER (Comm) 833, 844 per Mance LJ (words in square brackets inserted by the editor of Spencer Bower op. cit. at [3.01]). Picken J reviewed the authorities in this context in Marme Inversiones 2007 SL v Natwest Markets Plc[2019] EWHC 366 (Comm) at [115]-[123]. [Back] Note 60 See Mr Dyke’s witness statement at paragraphs 11-19. [Back] Note 61 See MCM’s Response to RFI, responding to an RFI served by the third to eighth defendants; and see Mr Kao/Genesis’s denial of the alleged implied representations in para 50 of their Re-Amended Defence. [Back] Note 62 See Geest plc v Fyffes plc [1999] 1 All ER (Comm) 672, 683 (para (iii)(c)), considered and endorsed by the Court of Appeal in PAG v RBS[2018] 1 WLR 3529 at [128] and [132]. [Back] Note 63 Leeds City Council v Barclays Bank plc[2021] EWHC 363 (Comm) at [95] and [103], (Cockerill J) which concerned whether it was necessary to demonstrate conscious awareness of the particular alleged representation. [Back] Note 64 POC §§43-44; D1&2 §63. See too the non-admissions at D3-8 Reamended Defence §61 & D10 Re-re-re-amended Defence §21. [Back] Note 65 Burrows, Restatement of the English Law of Contract (2nd ed, 2020) at §34(5). [Back] Note 66 Aerostar Maintenance International Ltd v. Wilson[2010] EWHC 2032 (Ch) at [163] per Morgan J, quoted by Bryan J in Lakatamia Shipping at [125]. Morgan J in turn derived these propositions from OBG Ltd v Allan[2008] 1 AC 1 per Lord Hoffmann at [39]-[44] and per Lord Nicholls at [191]-[193] and [202]. [Back] Note 67 I would have found them to be proven in any event. [Back] Note 68 [2000] 2 All ER (Comm) 271 , at page 312. [Back] Note 69 Lakatamia Shipping at [85] per Bryan J {M/115/24}, citing Kuwait Oil Tanker at [111] per Nourse LJ. [Back] Note 70 ibid , citing Clerk & Lindsell on Torts (23rd ed) at [23.104]. [Back] Note 71 ibid , citing Crofter Hand Woven Harris Tweed Co Ltd v Veitch[1942] AC 435 , 479 per Lord Wright. [Back] Note 72 Kuwait Oil Tanker Co SAK v Al Bader (Moore-Bick J, unreported,17 December 1998 ); Erste Group Bank AG v JSC "
“ Subsequent cases have treated OBG v Allan as authoritative on the mental elements of an unlawful means conspiracy claim ”. [Back] Note 76 Note that in Kuwait Oil Tanker (CA, 2000) [121], Nourse LJ approved the following dictum of Oliver LJ in Bourgoin SA v. Minister of Agriculture, Fisheries and Food[1986] QB 716 at 777: “ If an act is done deliberately and with knowledge of the consequences, I do not think that the actor can sensibly say that he did not ‘intend’ the consequences or that the act was not ‘aimed’ at the person who, it is known, will suffer them .”
“ A conspirator need not know all the details of the plot as long as he is aware of the common objective and what his role in bringing it about involves .” [Back] Note 86 [2-125]. [Back] Note 87 [2-126]. [Back] Note 88 Straits’ Closing, para. 39. [Back] Note 89 Straits’ Closing, [46] and MCM’s Closing, [431]. [Back] Note 90 Straits’ Written Opening at [35]. [Back] Note 91 [Annex I, 71]. [Back] Note 92 [11]-[15]. [Back] Note 93 [95]. [Back] Note 94 [116] and [119] in particular. [Back] Note 95 Straits’ Closing, [44]. [Back] Note 96 There is a requirement in the first element of the tort (‘combination/agreement’) that the defendant be “ sufficiently aware of the surrounding circumstances and share the same object [with the other conspirators] for it properly to be said that they were acting in concert at the time of the acts complained of ”. [Back] Note 97[2021] Ch 233 at [154]. [Back] Note 98 Claimant’s Closing [410]. [Back] Note 99 Smith New Court Securities Ltd v Citibank NA[1997] AC 254 at 266H-267D. [Back] Note 100 MCM entered into a Commodities Sale and Purchase Master Agreement with Come Harvest on29 April 2016 , with Mega Wealth on13 June 2016 and with Genesis on13 June 2016 . [Back] Note 101 Mr Riley’s witness statement [31]. [Back] Note 102 The relationship between MCM and ANZ was governed by a Commodities Sale and Purchase Master Agreement dated8 December 2015 . The contract used for individual transactions was appended to this Master Agreement. [Back] Note 103 MCM’s right to repurchase is set out at clause 6 of the Master Commodities Purchase Agreement between ANZ Commodity Trading PTY LTD, ANZ Banking Group Limited and MCM dated8 December 2015 . [Back] Note 104 Mr Riley’s witness statement [33]. [Back] Note 105 Under the Commodities Sale and Purchase Master Agreement with ANZ, title to the metal only passed to ANZ once it had paid MCM for the metal (see clause 4.3(1) of Master Agreement between MCM and CH dated29 April 2016 ). Similarly, under the Commodities Sale and Purchase Master Agreement with Come Harvest and Mega Wealth title to the metal only passed on payment (see clause 7(a) of the same agreement): “ Once ANZ were in possession of the WHRs, I understood that they would satisfy themselves that the WHRs were in order before releasing funds to MCM via SWIFT transfer. MCM would then release the relevant funds to the bank account of the customers .” (Mr Riley witness statement [40]); “ Once ANZ were in possession of the hard copy WHRs for the transaction and a signed confirmation with MCM, ANZ would make payment to MCM. Once the funds had been received by MCM, MCM would then make payment to the bank account of CH or MW .” (Mr Dyke witness statement [19]). [Back] Note 106 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd[1912] AC 673 . [Back] Note 107 In so doing the HL strongly approved the Court of Appeal’s decision in Rodocanachi v Milburn(1886) 18 QBD 67 (CA) where the contract that was breached was not one of sale but of carriage of goods, the non-delivery resulting from the goods being lost at sea in the course of carriage. The price at which the charterer had sold the goods in advance of the breach of contract, a price lower than that at the time of due delivery, was not allowed to reduce the damages. [Back] Note 108 To like effect, see also R&W Paul v National Steamship Co (1937) 56 Lloyd’s LLR 28 at 33:1 per Goddard J. [Back] Note 109 [470 at col. 2]. [Back] Note 110 [33]. [Back] Note 111 Transcript Day 14/44/17-45/2. [Back] Note 112 In its oral closings, Straits accepted that OMV Petrom stands for the proposition that “ when assessing damages in deceit one does not look at anything after the point of breach ” [Transcript Day 16 pp. 127/3-11.]. [Back] Note 113 Transcript Day 16 p. 129/7-22. [Back] Note 114 Transcript Day 16 p. 129/7-22. [Back] Note 115 21st edition [9-004-9-006]. [Back] Note 116 The first and third rules were endorsed by the Supreme Court in Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC and others; Sainsbury’s Supermarkets Ltd v Mastercard Incorporated and others[2020] UKSC 24 at [212], [214]. The three rules as a whole were also endorsed by Leggatt J in Thai Airways International Public Co Ltd v KI Holdings Co Ltd[2015] EWHC 1250 (Comm) [33]. [Back] Note 117 21st edition, [9-111]. [Back] Note 118 Lowick Rose LLP v Swynson Limited & another[2017] UKSC 32 ,[2018] AC 313 , [13]. [Back] Note 119[2017] UKSC 32 ,[2017] 2 WLR 1161 [11]. [Back] Note 120 Transcript Day 16/130/6-141/25. [Back] Note 121 " The general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimant's loss ." [11]. [Back] Note 122 “ The critical factor is not the source of the benefit in a third party but its character. Collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus, a gift received by the C, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them ”. [11]. [Back] Note 123 The editors of McGregor (21st edn.) accurately summarise the decision as follows [9-142]: “ Charterers repudiated a charterparty. The owners accepted the repudiation but had difficulty in obtaining a new charter. So, in October 2007, they sold the ship for US$23,765,000 and claimed from the charterers in breach the loss of profits from the charter, amounting to around€7,500,000 . By the time of hearing in November 2009, the value of the ship had fallen to$7,000,000 . The charterers claimed that the owners were required to bring into account the large benefit from early sale of the ship. This would have meant that the owners reaped a large profit and suffered no loss caused by the breach. It had been found as a “clear” fact by the arbitrator that but for the breach the owners would not have sold the vessel. In other words, it was found that the profit made was caused by the breach. Nevertheless, in the decision of the Supreme Court, given by Lord Clarke, it was held that the profit on the sale did not need to be brought into account by the owners. Lord Clarke described the result in the language of “legal” causation. By this, he meant that the decision to sell the vessel was an independent commercial decision taken by the owners at their own risk. It was not a reasonably necessary response to the breach. As the Supreme Court later explained, the lost profits from the charterparty could be recovered “without having regard to the overall profitability of the claimant ”. [Back] Note 124 21st edition [9-135]. [Back] Note 125 Vale SA v Steinmetz[2021] EWCA Civ 1087 at §16 per Males LJ; Global Currency Exchange Network Ltd v Osage 1 Ltd[2019] 1 WLR 5865 ,[2019] EWHC 1375 (Comm) at §40 per Andrew Henshaw QC; National Crime Agency v Robb[2015] Ch 520 ,[2014] EWHC 4384 (Ch) at §44 per Sir Terence Etherton C; Bristol & West Building Society v Mothew[1998] Ch 1 at 22F per Millett LJ; Lewis v Averay[1972] 1 QB 198 at 207B-C per Lord Denning MR; Lewin on Trusts , 20th Ed., §8-030; McGrath , Commercial Fraud in Civil Practice, §6.235. [Back] Note 126 See Vale v Steinmetz[2020] EWHC 3501 (Comm) : “ The fact that the JVA was voidable on the ground of fraud vitiating Vale’s consent created, as the case-law has described it , an equity (a “rescission equity”) affecting the Initial Consideration payment, such that upon rescission it became impressed with a constructive trust (a rescission trust) […] the rescission equity may affect further or different assets that the asset(s) originally transferred under the voidable transaction, subject to tracing rules .” [Back] Note 127 See MCM’s skeleton at §48, and Straits’ skeleton at §168 (differently worded but to the same effect). [Back] Note 128 This passage in Williams was recently relied upon by the Court of Appeal in Byers v The Saudi National Bank[2022] EWCA Civ 43 at [51]. [Back] Note 129 MCM Closings, [467(4)]. [Back] Note 130 MCM Closings, [510]. [Back] Note 131 Claimant’s skeleton, para. 56(i). [Back] Note 132 I note, in passing, that certain commentators have queried whether this line of authority is challenged by the decision of the Privy Council in Re Goldcorps [1994] UKPC 3 but neither party sought to suggest to me that it is not good law. [Back] Note 133 MCM’s Closings, [514]. [Back] Note 134 Lonrho v Fayed No. 2[1992] 1 WLR 1 , 11F-12C per Millett J; El Ajou v Dollar Land Holdings plc[1993] 3 All ER 717 (Millett J); Bristol & West Building Society v Mothew[1998] Ch 1 , 22G-23E; Box v Barclays [1998] Lloyd’s Rep Bank 195 at [200]-[201]; Shalson v Russo[2003] EWHC 1637 (Ch) 281 at [108]-[111]; Armstrong v Winnington[2012] EWHC 10 (Ch) ,[2013] Ch 156 at [125]; National Crime Agency v Robb[2014] EWHC 4384 (Ch) ,[2015] Ch 520 at [43]-[44]; Re D&D Wines[2016] UKSC 47 ,[2016] 1 WLR 3179 at [28]; and Vale v Steinmetz[2021] EWCA Civ 1087 . [Back] Note 135 Facts: In a dispute arising out of Al-Fayed's ( AF ) acquisition of House of Fraser ( HF ), Lonhro ( L ) claimed that the contract of sale of part of the share capital in HF to AF should be rescinded. L was aggrieved by the fact that it was bound by an undertaking given to the Secretary of State for Trade and Industry not to acquire more than a 30% shareholding in HF, at the time that AF made a bid for the remaining shares in HF. L claimed had it known that AF would make such a bid, it would not have sold to AF. L alleged AF was aware of this and deliberately deceived L into believing the contrary. [Back] Note 136 Zogg advocates an original alternative approach to this dilemma at pp. 184-186 of Proprietary Consequences in Defective Transfers of Ownership (2020). [Back] Note 137 Closing submissions [544]-[545]. Cf. also paragraph (2) of the Prayer of the Re-Re-Re Amended Particulars of Claim. [Back] Note 138 When further broken down, the issues for determination which were identified by the parties are as follows: “ [T]here are 3 broad questions arising on quantum: 313.1. Should the Genesis payments to Straits, or any of them, be included? 313.2. Whether the approach in Ashton-1 or Ashton-2 is the starting point to identify the maximum traceable sum? 313.3. Whether the traceable proceeds of the payments by CH/MW should be reduced by reference to Ms Tan’s evidence?” (Straits’ Closing submissions at [313] and agreed by MCM cf. transcript, Day 15 pp. 77-78). However, MCM then correctly noted (Transcript Day 15 pp. 80-81) that 313.1 and 313.3 are essentially the same issue (whether Straits is a bona fide purchaser for value without notice) and so it makes sense to take the two questions together, as I do below (hence “Tracing Evidence Issue” below refers to question 313.2, while the “Bona Fide Purchaser Issue” refers to both questions 313.1 and 313.3). [Back] Note 139 Mr Lewis QC stated in oral argument that: “ If your Lordship decides the three issues of principle here […] then the parties will probably be able to agree the figure ” (Transcript, Day 15, p. 76). [Back] Note 140 Cf. para, 2.28 of Ashton-1: “ By way of example, where an amount is received into an account and the same, or very similar, amount is transferred out of the account on the same day or soon after, I have assumed that the transfer out was fully funded by the money received. This contrasts with the general assumption where, if there were a mix of relevant MCM monies and non-relevant monies in the account before the cited transfer in, the transfer out would be assumed to be funded from any brought forward non-relevant monies first .”