Cai Trading LLC v Kiowa Rice Ltd and Republic Grains Investment Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | Mr. Justice V. Kokaram |
| Judgment Date | 31 October 2018 |
| Neutral Citation | TT 2018 HC 218 |
| Docket Number | Claim No. CV2017-02150 |
| Court | High Court (Trinidad and Tobago) |
| Date | 31 October 2018 |
IN THE HIGH COURT OF JUSTICE
Before the Honourable Mr. Justice V. Kokaram
Claim No. CV2017-02150
Claim No. CV2017-02151
Mr. Stephen Singh instructed by Ms. Tracey Rojas Attorneys at Law for the Claimant
Mr. Ronald Simon Attorney at law for the Second Defendant
Contract Law - Breach of contract — Whether Mr. Benie had the ostensible or actual authority to bind the defendant to the terms of the guarantees/promissory notes — Whether the contracts of guarantees/promissory notes made between the parties were evidenced by the documents in the possession of the claimant which exhibited all signatures of the contracting parties or the documents which were amended by Mr. Benie which he said were sent to the Claimant — Whether there had been a breach of the terms of the guarantee/promissory notes.
In these two separate actions 1 the Claimant, Cai Trading LLC (Cai) seeks to recover the sums of US$847,885.89 and US$351,107.95 together with interest due to it under two guarantees/promissory notes dated 30 th and 31 st July 2013 from the Second Defendant, Republic Grains Investment Limited (Republic). Those guarantees/promissory notes were signed by Mr. Jai Benie, the director of Republic. Among the issues raised in this trial is the one significant question to be determined: Whether Mr. Benie had the ostensible or actual authority to bind Republic to the terms of those guarantees/promissory notes. A secondary but equally important question for determination is a simple factual dispute: Whether the contracts of guarantees/promissory notes made between the parties are evidenced by (a) the documents in the possession of Cai which exhibit all signatures of the contracting parties (the Cai documents) or (b) the documents which were amended by Mr. Benie (the amended documents) which he said were sent to Cai. There is no contest that Mr. Benie's signature appears in both the Cai documents and the amended documents. Republic's main contention is that Mr. Benie at all times acted in his personal capacity and could not sensibly have been acting for Republic.
In these actions the Court must give full effect to the bargain struck by the parties whether there were personal guarantees or guarantees made on behalf of Republic. To unravel such an issue involves an examination of the contractual documents, the contractual history, the commercial relationship of the parties and the credibility of the parties' respective versions of the execution of the relevant documents.
Three witnesses provided their testimony: Mr. Julien Jung for Cai as its Financial Planning and Analysis Lead; Mr. Jai Benie for Republic as its Commercial and Trade Manager and Director and Ms. Sherry Phagu for Republic as its Director and Accountant. An agreed bundle of documents was tendered into evidence in both matters 2 and Attorneys made both written and oral submissions. In my view, upon a proper assessment of all the evidence, the
The two guarantees/promissory notes were issued during the course of a commercial arrangement between three parties Cai, Kiowa Rice Limited (Kiowa) and Republic. Cai is a supplier of grains 3 on the international market and pursuant to a contract dated 11 th August 2007 periodically shipped meal and grain to Kiowa in Trinidad and Tobago. Kiowa and Republic have their own commercial relationships with one another for the storage and re-sale of the grains. Kiowa is the main user supplying grain to Republic which simply controls storage facilities at Point Lisas. Kiowa then repurchases the grains from Republic for export. In 2013 Mr. Benie and Ms. Sherry Phagu were both directors of Kiowa and Republic. Mr. Benie is also the Commercial and Trade Manager of Republic and its Secretary 4 and Ms. Phagu its accountant. Mr. Benie was one of the persons negotiating contracts with Cai on behalf of the local companies.
During the course of the parties' commercial relationship, Republic periodically executed guarantees/promissory notes to secure the payment for the shipments of grain made to Kiowa by Cai. It was a commercial arrangement which benefitted both Kiowa and Republic until sometime in 2013 when, as Ms. Phagu and Mr. Benie describes 5, Kiowa was unable to settle it debts in a timely manner on a shipment made to it in October 2012 by Cai. This jeopardised Republic's credit rating. According to Ms. Phagu, she advised Mr. Benie that Republic was not to continue to act in the capacity as guarantor for Kiowa's shipments from Cai unless an alternate arrangement was put in place and Republic removed itself from the business transaction. There is no evidence however, that this change in position was
The present dispute arose out of a shipment of grain made by Cai in July 2013 to Kiowa by C&F method with Republic as the notifying agent as detailed in a Bill of Lading dated 13 th July 2013. This shipment was subject to three separate sales agreement and guarantees/promissory notes, two of which are the subject of these proceedings.
The first was Kiowa's sales agreement CTS 18413–1 to purchase from Cai 2,199.764MT US Soyabean Meal (Soyabean Meal) at a cost of US$1,365,129.54. Cai also prepared a Notice of Appropriation and issued Invoice no 00024695 to Kiowa dated 16 th July 2013. This shipment was subject to a promissory note/guarantee effective 30 th July 2013 and made to mature on 9 th January 2014 where Republic guaranteed the payment of the said US$1,365,129.53 by Kiowa in consideration of Cai entering the said agreement for the Soyabean meal. This sales agreement and guarantee/promissory note is the subject of CV2017–02150.
The second was Kiowa's sale agreement CTS19881–1 for the purchase of 775.985MT of US Northern/Dark Northern Spring Wheat (Spring Wheat) from Cai for the price of USD$351,107.96. Cai prepared a Notice of Appropriation Invoice No 00024709 to Kiowa dated 16 th July 2013. This shipment was subject to a guarantee/promissory note effective 31 st July 2013 and made to mature on 9 th January 2014 where Republic guaranteed the payment of USD$351,107.95 by Kiowa for the Spring Wheat. This sales agreement and guarantee/promissory note is the subject of CV2017–02151.
Mr. Benie claims that he first learnt about this shipment when it was being discharged at the port of Point Lisas. Mr. Benie executed the guarantees/promissory notes pursuant to the instructions of Cai. He contended that he did so in his personal capacity and not on behalf of Republic. As evidence of this, he explained that when he reviewed the documents, while he was in Guyana, he realised that the guarantees/promissory notes referred to Republic as the “Guarantor”. In keeping with his own arrangement with Ms. Phagu, he deleted and amended all references in those documents to Republic, signed the documents and sent them via express mail (Jet Pack) to Ms. Phagu for onward transmission to Cai. Cai claims that it never received those amended documents and the only documents which bears the signatures of Cai together with Mr. Benie are the “unamended” documents which refer to Cai, Kiowa and Republic as the contracting parties.
The said sums were not paid by Kiowa. Cai issued demand letters and pre-action protocol letters to both Kiowa and Republic for the payment of the said sums. The entire debt was not liquidated. Only four payments were made during the period 2015–2016 which were applied to Kiowa's account pursuant to the sale agreement CTS 18413–1 for the Soyabean meal. However, no payments were made under sale agreement CTS19881–1 for the Spring Wheat. Default Judgment has already been entered against Kiowa in both actions in default of defence. 6
The Defence of Republic sets out the following material pleas (a) it denies that it made or entered into any agreement of guarantee with Cai (b) it alleges that Mr. Benie entered into negotiations with Cai in his personal capacity and without the authority of Republic (c) it contends that Mr. Benie in his personal capacity received the draft guarantees/promissory notes from Cai's representative, Mr. Philip Archer for execution (d) upon receipt of the documents, Mr. Benie in his personal capacity and without the ostensible authority of Republic amended the documents, returned it to Cai and the transaction was confirmed between him and Cai via a series of email correspondence between Ms. Sherry Phagu and Mr. Phillip Archer (d) that the documents were executed contrary to the bye laws of Republic which requires the signatures of two directors.
In its Reply 7, Cai contends that at all times Mr. Benie represented himself to be the director and duly authorised representative of the said companies. Cai had no knowledge that Mr. Benie was negotiating or even executing the guarantees/promissory notes in his personal capacity or that he was doing so without the knowledge and authority of Republic.
Against this brief backdrop the following main issues arise for...
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