The plaintiff through a contract dated 4 March 1994 agreed to sell 56 containers of plywood to Hebei Metal & Minerals Import & Export Corp, a Chinese company. The plaintiff entered into a contract of carriage for the cargo with the defendant. The defendant issued the bill of lading as 'shipped on board' on 30 April 1994 on the Tuo He V103 at Port Klang, Malaysia, for discharge at Xingang Port, China. Relying on the representations in the bill of loading, the plaintiff submitted the bill of lading to the negotiating bank for due payment pursuant to a letter of credit. However, the buyer obtained an injunction to stop the Bank of China, Changsha, from releasing funds pursuant to the letter of credit on the ground that the bill of lading was fraudulent. It was subsequently discovered that the cargo was not shipped on board on 30 April 1994 as represented by the bill of lading, and that the cargo was in fact discharged at Hong Kong before being transhipped on another vessel to Xingang Port, China.

In the arbitration between the buyer and the plaintiff before the China International Economic and Trade Arbitration Commission, Beijing (CIETAC) in relation to the dispute concerning the contract of sale, CIETAC granted an award dated 2 September 1996 in favour of the buyer. Pursuant to the award, the plaintiff made payments to the buyer and incurred loss and expense totaling USD 276,230.

The plaintiff sought compensation from the defendant for USD 1,446,469.58 together with interest and costs, being the loss of the cargo (USD 1,170,239.58) and the payments made in connection to the award (USD 276,230) in relying on the representations made by the defendant.

The defendants raised the following two issues for consideration:

• Whether the defendants have fraudulently misrepresented to the plaintiff the date on the bill of lading; and
• Whether the plaintiff's suit is time-barred under the applicable law.

Held: Judgment for the plaintiff.

The Court is satisfied that the plaintiff has established beyond reasonable doubt that the defendant is liable to the plaintiff for the tort of deceit in making fraudulent misrepresentations in the bill of lading. Not only that, the defendant has admitted to issuing the fraudulent bill of lading. The Court further finds that the defendant has failed to discharge the onus of proving fraud on the part of the plaintiff and in fact, has merely as an afterthought raised the allegation that it was the plaintiff who had instructed the defendant to make the representation in the bill of lading. The defendants' defence of ex turpi causa non oritur actio fails.

The defendant has raised the issue of limitation. The plaintiff submits that the plaintiff's claim against the defendant falls under the Limitation Act 1953 (time bar after six years) whilst the defendant submits that the plaintiff's claim against the defendants falls under Carriage of Goods by Sea Act 1950 (COGSA) (time bar after one year). The plaintiff's suit against the defendants was filed after three years from the date of delivery of the cargo.

The defendant raised this same issue in its applications to strike out the plaintiff's writ and statement of claim on the ground of limitation period. In fact, the Court of Appeal on 3 December 2007 dismissed the defendant's application to strike out and directed that the matter be remitted to the High Court for trial. The defendants have not lodged any appeal to the Federal Court on the decision of the Court of Appeal.

In effect, the defendants are estopped from raising this same issue of limitation again.

The principles behind issue estoppel are well-established and are set out in the cases below:

(a) Hartecon JV Sdn Bhd v Hartela Contractors Ltd [1996] 2 MLJ 57 where the Court of Appeal decided as follows:

Once a judge makes a ruling, substantive or procedural, final or interlocutory, it must be adhered to and may not be reopened. Although the first decision was made on an interlocutory matter which was purely procedural in nature, it was nevertheless binding on the court and on all parties to the lis until its reversal on appeal.

(b) Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 where the Supreme Court decided as follows:

There are two kinds of estoppels per rem judicatum ie cause of action estoppels and issue estoppels. The cause of action estoppels prevents reassertion of a cause of action which has been determined in a final judgment by the same parties. On the other hand, the issue estoppels prevents contradiction of the correctness of a final judgment by the same parties in a subsequent proceeding. Further, the parties are also prevented from asserting a cause of action or issue which should have been brought forward in the earlier action, but was not, whether deliberately or inadvertently.

The Court is of the view that the defendant cannot be allowed to raise the issue of limitation again at this stage of the proceedings as the matter has already been decided upon and the Court of Appeal in dismissing the defendant's application and has directed that this matter proceed to full trial.

[For the successful appeal to the Court of Appeal, see Cosco Container Lines Co Ltd v Trengganu Forest Products Sdn Bhd (CMI905).]