DMC/SandT/05/0

DMC Category Rating: Confirmed

The Facts
Shippers in France and Holland sold frozen meat to two companies in the Republic of Congo controlled by Mr Khalil, the fourth defendant. Six containers containing the meat were duly put on board a vessel in the Claimants’ liner service and carried to Pointe-Noire. Mr Khalil obtained delivery of the containers against presentation of bills of lading to the Claimants’ Congolese agents. It subsequently transpired that these bills of lading were forgeries. The Shippers claimed against the Claimants for misdelivery of their cargo and the Claimants settled the claims for a sum in the region of £115,000. The Claimants claimed this amount, together with costs in excess of £43,450, from Mr Khalil in the tort of deceit.

Mr Khalil filed a defence to the claim in which he admitted presenting the bills to the Claimants’ agent but denied knowing they were forgeries, if indeed they were. Mr Khalil did not appear and was not represented at trial. The Claimants chose to proceed with a trial on the merits rather than to enter judgment in default, in order to avoid any difficulty with enforcement of the judgment against the security they had already obtained.

Judgment
The judge held that it was an appropriate case to proceed with a trial on the merits. Mr Khalil had had notice of the trial date. The Claimants had the burden of establishing – on the balance of probabilities - that the bills of lading were forged, that they were presented by Mr Khalil and that he knew they were forged. Fraud was a serious allegation and therefore the cogency of the evidence required to discharge the burden of proof had to reflect the seriousness of the charge.

On the evidence, the bills presented were clearly forged and it was Mr Khalil who presented them. His companies were named as consignees in the forged bills. Expert evidence identified the signature on the reverse of the bills as that of Mr Khalil. In the absence of a satisfactory explanation as to why he presented the bills, the court inferred that he had knowledge that the bills were forged when he presented them. By presenting the bills in return for the delivery of the containers Mr Khalil impliedly represented that the bills were genuine. That representation was made dishonestly and induced the claimants into delivering the containers. The Claimants’ agents in the Congo were not able to discover that the bills differed from the originals since they lacked the ability to compare the bills as tendered with the Claimants’ electronic record of the original bills. Mr Khalil thereby committed the tort of deceit.

As a result of this deceit, the Claimants had suffered loss and damage, in particular the liability they had incurred to the shippers, being the parties entitled to delivery of the containers. The judge held that the Claimants were entitled to recover the payments made in this regard, together with the legal fees they had incurred in investigating the shippers’ claims. The judge said that he was quite certain that these costs had been incurred by reason of Mr Khalil’s deceit. In addition, the Claimants were awarded interest and costs.