Banque de Commerce et de Placements SA, DIFC Branch and another v China Aviation Oil (Singapore) Corp Ltd (Shandong Energy International (Singapore) Pte Ltd, third party; Golden Base Energy Pte Ltd, fourth party) [2024] SGHC 145
Background
In January 2020, BCP agreed to finance Zenrock's purchase of 260,000 barrels of gasoil from CAO, intending to sell it to PetroChina. On 23 January, BCP Geneva issued an LC for $20.5 million, confirmed by UBS. The cargo, shipped between 24-26 January, under an FOB Melaka contract, was purchased by CAO from SEIS to bridge a credit term gap for Zenrock.
The LC required various documents, including CAO's commercial invoice and original bills of lading (BLs). CAO's operator oversaw the cargo loading onto the vessel "Petrolimex 18," completed on 27 January. Despite SEIS not providing all original BLs, CAO prepared its invoice and LOI, presenting them to UBS on 14 February. BCP Geneva paid CAO $19,051,378.28 on 12 March 2020.
In April 2020, PetroChina informed BCP of the contract's cancellation with Zenrock, citing a Tripartite Agreement that absolved it of payment liability. By May, Zenrock was in liquidation, revealing potential fraud in the transaction. BCP discovered the CAO-Zenrock contract might have been a sham with no valid BLs, leading to legal action against CAO on 30 December 2020 and subsequent claims against SEIS and GBE.
Expert witness evidence
CAO submits that the CAO- Zenrock contract was a genuine sale and purchase transaction and not a sham or fraudulent transaction. One of CAO's arguments is that despite BCP's expert, Mr DG, taking issue with certain aspects of CAO's conduct, those are not indicia of a sham or fraudulent transaction. In any event, the evidence from CAO's expert, Mr RS, should be preferred to that of Mr DG's.
The court ruled that Mr RS' evidence is generally preferable to that of Mr DG's, based on the following reasons:
- Mr DG made a number of unsubstantiated and speculative remarks without foundation that cast doubt on his independence as an expert witness, as he appeared to have attempted to be an advocate of BCP's cause. On the other hand, Mr RS was found to have tendered considered views based on firm foundations and willingly retreated from his opinion when confronted with countervailing points that he accepted.[73]
- During cross-examination, Mr DG effectively admitted that he had not prepared the report fully by himself. He said that his report was based on a template prepared for an earlier case in which he had acted as an expert witness. He admitted that Valere Capital, which had engaged him as an independent consultant, assisted with the drafting of his report by polishing up the report, toning down his views where appropriate and making adjustments to his language. Thus, Mr DG's report did not comply with Order 40A of the Rules of Court 2014.[74]
- The court found gaps in Mr DG's experience which call into
doubt his suitability to comment on the relevant issues in the
case. While acknowledging during cross-examination that he had no
experience in concluding prompt deals, he had opined that because
the CAO- Zenrock contract was a prompt deal, CAO had to take
additional due diligence steps. The court said that if Mr DG does
not have the relevant experience, then it is difficult to see how
he could have advanced such an opinion convincingly.[75]
Still, Mr DG's evidence was not entirely disregarded.[76] Ultimately, however, the court did not find that Mr DG's evidence disproves CAO's intention to enter into genuine contracts. [112]
Key Takeaways:
- An expert's unsubstantiated and speculative remarks cast doubt on their independence. The court would prefer experts who considered views and are open to revising their opinions when presented with counterarguments.
- Lawyers' interference in preparing expert reports (i.e., assist in drafting, toning down expert's views and adjusting language) lead to non-compliance with Order 40A of the Rules of Court 2014.
- An expert's lack of significant experience calls into question their suitability to comment on aspects of the case, undermining their credibility.
Read the full decision here.
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