A sugar trader is claiming it lost hundreds of thousands of bags of sugar being stored in a Ghanaian warehouse
RSA is facing a lawsuit for up to $12.5m over its alleged failure to pay out in full on lost sugar.
ED&F Man Sugar wants RSA to pay out on their $19m claim, after hundreds of thousands of bags of sugar they owned were lost in storing at a Ghanaian warehouse.
Court papers show RSA had paid out $6.5m to ED&F for the loss, but the sugar trader is looking for between $10.5m and $12.5m more from the insurer.
RSA claims that the indemnity should amount to $8.3m, and has offered to pay ED&F the remaining $1.8m.
In its response to ED&F’s claim, RSA denies several points made by the sugar trader, including the total amount of bags lost by the firm.
The details behind the claim were available in documents submitted to the High Court.
The story begins when commodity trader ED&F agreed to sell 160,000 metric tonnes of sugar to Hippo Limited, one of the largest importers of sugar in Ghana, in August 2014.
The sale contract included in it an agreement for Hippo to store shipments of sugar at their Hippo warehouse in Ghana before making payment on it.
ED&F’s claim relates to two particular shipments carrying a combined total of over 600,000 bags of sugar (33,000 metric tonnes).
Hippo allegedly failed to make payment on these shipments by the due date, according to court papers submitted by ED&F. This prompted ED&F to commission an inspection of the warehouse in June 2016.
It found that around 230,000 bags of sugar from the two shipments were missing, the ED&F court papers show.
The papers state the sugar was “wrongfully removed from the Hippo warehouse, without ED&F Man’s consent or authority, and were totally lost.”
ED&F claimed on its RSA policy against this loss.
But the ED&F court papers go on that Hippo refused to allow the release of what sugar remained in the warehouse from the two shipments.
It claims that it was subsequently forced into selling this remaining sugar, as it was approaching it’s expiry date. The papers say it was sold to get what limited value they could get out of the remaining sugar.
However, ED&F was hit with another problem. When it eventually sold the near-to-expiry date sugar, the buyer of that sugar complained the sugar product had suffered water damage. This meant ED&F had to refund the buyer $3.6m.
ED&F claim this water damage was as a result of being stored in the Hippo warehouse.
This claim is also included in the court proceedings against RSA.
In defence documents, RSA states it “does not know and is unable to admit or deny whether the claimant has been irretrievably deprived” of the second sugar shipment claimed against, amounting to 546.85 metric tonnes.
Furthermore, of the first shipment, which made up the majority of the loss, RSA states there was initially around 17,000 metric tonnes of sugar in the warehouse. ED&F claims there were 20,000 metric tonnes of sugar from the first shipment in the warehouse.
RSA further denies ED&F’s claim that it was forced into selling the sugar, and that there is any evidence that water damage was sustained in the Hippo warehouse.
RSA was contacted for a comment, but said it is unable to comment on ongoing cases.
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