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  • Lonpac Insurance Bhd v American Home Assurance Co
    annual policy therefore does suggest that it covers the risk of injury being sustained by all employees of the various companies within the Group in whatever capacity they may be employed including employment for a specific project such as that undertaken for UT There is nothing on the face of the annual policy to suggest that it excludes the risk of injury to employees engaged in specific projects Indeed Lonpac recognises this in its submissions where it argues that the cover provided by the two policies were not intended to overlap although a plain reading of the said two policies without any explanation may suggest so 14 Nevertheless this is not automatically fatal to Lonpac s position Although there is a presumption that words in an insurance policy as with any other contract should be construed in their ordinary sense MacGillivray on Insurance Law 11 th ed Sweet Maxwell 2008 MacGillivray at 11 006 this presumption may be rebutted if it can be shown that the context in which they appear indicates that the parties to the contract cannot have intended them to be read in their usual sense MacGillivray at 11 017 15 Lonpac s case is that the term all other employees did not mean precisely that because the figures under Estimated Annual Wages Salaries and Other Earnings did not reflect all the earnings of all employees who could conceivably be covered by the term and that this was deliberately arranged by REL which had or was taking out specific insurance to cover its project employees It argues the term all other employees should therefore be read as only referring to those employees whose estimated earnings comprised the 7 574 805 reflected in the column next to the term 16 Before the Assistant Commissioner Lonpac seems to have presented its case on the basis that the project policy covered the Risk more specifically than the annual policy did Differing levels of specificity are however irrelevant to the question of whether there is double insurance it is perfectly possible for a more general policy and a more specific policy to both cover the same risk if the risk falls within the more specific policy as it does here What is crucial is not different levels of specificity of the policies but whether the classes of employees covered under the two policies are mutually exclusive In this case that means that the annual policy and the project policy must cover different categories of employees Lonpac s submissions on appeal come closer to this it argues that the annual policy covers the general employees of the company whereas the project policy covers employees involved in the Project works Nothing in the annual policy however indicates this scope apart from the quantum of estimated earnings In order to show the full context of the annual policy therefore Lonpac would have to rely on extrinsic evidence 17 Lonpac seeks to adduce evidence to prove inter alia that a It was the practice of the Group to take up an Annual Work Injury Compensation Policy of which the annual policy here was one for the general business of the whole group but as and when members of the Group secure specific projects the particular member company would take up a separate and more specific Work Injury Compensation Policy in respect of that specific project like the project policy here b The annual policy was therefore intended to indemnify against claims from the general employees of the company whereas the project policy was intended to indemnify against claims by the employees employed in the Project Works c The premium paid for the annual policy was calculated based on the actual annual salary disbursed by the respective members of the Group to their general employees for that particular year It did not include the salaries paid by any of the members for project employees d The management of REL did not declare the wages of those employees who were employed in the project when the Group purchased annual workmen s compensation policies for the years 2006 2007 and 2008 This was because REL had obtained and paid for the project policy and did not want to take out double insurance or pay double premiums The premium paid for the project policy was based on the estimated wages of all employees working on the project for UT 18 Lonpac seeks to adduce this evidence in the form of affidavits from employees of the Group and its insurance broker 19 The Assistant Commissioner found that such extrinsic evidence was inadmissible because the terms of the annual policy were complete and unambiguous on their face and there was no need to risk rendering unclear that which was unclear at 30 of the Decision AHA has made similar submissions in this appeal Lonpac on the other hand argues that the parol evidence rule is only relevant as between the contracting parties since the Group agrees with its position AHA as a third party cannot rely on the parol evidence rule to exclude evidence that would support an interpretation of the annual policy as agreed upon by the contracting parties Analysis 20 The admission of extrinsic evidence to vary contradict or add to the terms of a contract is governed by the Evidence Act Cap 97 Rev Ed 1997 the Act The relevant provisions are ss 93 and 94 which read as follows Evidence of terms of contracts grants and other dispositions of property reduced to form of document 93 When the terms of a contract or of a grant or of any other disposition of property have been reduced by or by consent of the parties to the form of a document and in all cases in which any matter is required by law to be reduced to the form of a document no evidence shall be given in proof of the terms of such contract grant or other disposition of property or of such matter except the document itself

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/high-court-judgments/14733-lonpac-insurance-bhd-v-american-home-assurance-co-2011-sghc-257 (2016-01-30)
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  • SHC Capital Ltd v NTUC Income Insurance Co-operative Ltd
    s own name 15 However an insurer may seek to exclude its liability by way of indemnity to its insured or by way of contribution to another insurer who has insured the same insured person in respect of the same risk One method of achieving this end is to provide that an insurer is not liable if the policy holder has been insured for the same risk under another policy Such an exclusion clause has been construed in Bankers Traders Insurance Co Ltd v National Insurance Co Ltd 1985 1 WLR 734 where a car owner allowed a friend to drive his car and in the course of doing so the friend injured a third party The car owner had an insurance policy insuring against any liability to third parties caused by any driver driving his car with the owner s consent In the car owner s policy there was a clause which provided that the car driver would be indemnified for third party risks provided that he i e the car driver was not entitled to indemnity under any other policy On the facts of that case the friend who was then driving the car also had a policy of insurance which insured him against liability to third parties caused while driving a private car not belonging to him The third parties brought an action against both insurers claiming payment The Privy Council on appeal from the Federal Court of Malaysia held that by virtue of the exclusion clause in the car owner s policy the policy containing an exclusion clause was not on risk at the time of the accident Therefore the full burden of the indemnity must be borne by the driver s insurers 16 Similarly in Nanyang Insurance Co Ltd v Commercial Union Assurance Plc 1996 1 SLR R 441 two insurers had insured the same assured against the risk of accidents in the course of work In Commercial Union Assurance Plc s insurance policy it excluded its liability to indemnify the assured if it had any other policy of indemnity or insurance in respect of the same risk unless the loss suffered by the assured was higher than the amount which would be payable under such other indemnity or insurance had this policy not been effected The loss sustained by the assured was 63 023 28 which was lower than the upper limit of policy issued by Nanyang Insurance Co Ltd The court held that the Commercial Union Assurance Plc s exclusion clause had rendered it not liable There was no double insurance and Nanyang Insurance was legally obliged to indemnify the assured for 100 of his loss Thus although Nanyang Insurance had already limited its liability to no more than its rateable proportion i e 50 50 in the event of double insurance its rateable proportion clause did not operate 17 However when both insurers exclude liability in their respective contracts with the insured person in the event of double insurance then the exclusion clauses cancel each other out with the net effect that both insurers share liability equally as amongst themselves In Weddell v Road Transport General Insurance Co Ltd 1932 2 KB 563 Rowlatt J said the following while construing two third party motor insurance contracts containing exclusion of liability clauses at 567 568 In my judgment it is unreasonable to suppose that it was intended that clauses such as these should cancel each other by neglecting in each case the proviso in the other policy with the result that on the ground in each case that the loss is covered elsewhere it is covered nowhere On the contrary the reasonable construction is to exclude from the category of co existing cover any cover which is expressed to be itself cancelled by such co existence and to hold in such cases that both companies are liable subject of course in both cases to any rateable contribution proportion clause which there may be The declarations sought 18 In these proceedings SHC is seeking the following declarations 1 A declaration that NTUC s Workmen s Compensation Policy extends to cover EIN and Simei 2 That SHC shall be indemnified by NTUC for i the contribution to damages paid for and on behalf of EIN and Simei and ii the legal costs and disbursement expended for and on behalf of EIN and Simei amounting to 317 664 70 paid in connection to the claims of the workman Omar against EIN and Simei 3 Alternatively a declaration that SHC shall be indemnified by NTUC for i the contribution to damages paid for and on behalf of EIN and Simei and ii the legal costs and disbursement expended for and on behalf of EIN and Simei amounting to 158 853 35 paid in connection to the claims of the workman Omar against EIN and Simei The parties arguments 19 Before the court SHC argues that since the Name of Insured clause in the NTUC policy includes all tiers of sub contractors and the effect of the Cross Liability Clause is such that a separate policy has been issued to each insured person viz Simei and EIN Simei and EIN have been insured by NTUC As Simei and EIN have also been insured by SHC they have been insured by two different insurers in respect of the same risk Since SHC has excluded its liability to indemnify Simei or EIN in the event of double insurance in its Non contributory Clause SHC could claim a 100 contribution of the 317 664 70 which it has paid out to Omar on behalf of Simei and EIN 20 NTUC on the other hand submits that SHC ought not to be indemnified because the Contingent Liability Clause in the NTUC Policy prevented the NTUC Policy from being on risk in the first place While NTUC did not dispute that Simei and EIN were the insured and Hock Swee was a second tier sub contractor of Simei within the meaning of the Contingent Liability Clause it submits that provisos a and b see 6 above were condition precedents to NTUC s liability to indemnify Simei and EIN Since Simei and EIN have been double insured NTUC argues that its NTUC Policy was not on risk by virtue of proviso a 21 SHC s reply is that the Contingent Liability Clause is simply irrelevant to the present case for the following reasons First the main provision in the Contingent Liability Clause served the purpose of enlarging the risk insured Thus the effect of the Contingent Liability Clause was that the NTUC Policy was extended to cover insured persons against the Insured s legal liability in respect of acts of employees of their sub contractors for which they may be responsible Secondly the Insured mentioned in the main provision of the Contingent Liability Clause must cover only Pan United because the Contingent Liability Clause is meant to indemnify it against vicarious liability or occupier s liability for its sub contractors breaches of duty Thus the Contingent Liability Clause is irrelevant to the present proceedings because the dispute is over the identity of the party which was legally obligated to indemnify Simei and EIN for their liabilities to Omar Thirdly since the main provision is irrelevant the provisos are therefore inapplicable to exclude NTUC s liability The legal issues 22 The present application raises three issues The first issue is whether Simei and or EIN have both been double insured The second issue is whether NTUC has properly excluded its liability to indemnify Simei and or EIN by its provisos to the Contingent Liability Clause in its policy The last issue is whether if NTUC is liable to indemnify Simei and or EIN under the terms of the NTUC Policy SHC s right to seek a contribution or reimbursement has been precluded by its voluntary payment to Simei and or EIN The proper construction of the operative clauses 23 I begin first by noting that the operative clauses in the NTUC Policy and the SHC Policies provide similar coverage in respect of workmen s compensation The operative clauses setting out the coverage in the SHC Policies read SHC Operative Clause NOW THIS POLICY WITNESSETH that if any workman in the Insured s employment shall sustain personal injury by accident or disease caused during the Period of Insurance and arising out of and in the course of his employment by the Insured EIN or Simei in the Business the Company will subject to the terms exceptions conditions and warranties and any memorandum if applicable contained herein or endorsed hereon all of which are hereinafter collective referred to as the Terms of the Policy indemnify the Insured against all sums for which the Insured shall be liable to pay compensation either under the Legislation or at Common Law and will in addition pay all costs and expenses incurred by the Insured with the written consent of the Company emphasis added The operative clause in the NTUC policy setting out the coverage reads NTUC Operative Clause NOW THIS POLICY WITNESSETH that if any workman in the Insured s employment shall sustain personal injury by accident or disease caused during the Period of Insurance and arising out of and in the course of his employment by the Insured Pan United and subsidiaries subsequently extended to all tiers of sub contractors which includes EIN and Simei in the Business the Society will subject to the terms exceptions conditions and warranties and any memorandum if applicable contained herein or endorsed hereon all of which are hereinafter collective referred to as the Terms of the Policy indemnify the Insured against all sums for which the Insured shall be liable to pay compensation either under the Legislation or at Common Law up to 10 000 000 any one claim or series of claims arising out of any one event and will in addition pay all costs and expenses incurred by the Insured with the written consent of the Society emphasis added Thus it is apparent that the words in the operative clauses of the NTUC and SHC policies cover the same type of risk i e the risk of a claim by the insured s own employee arising from personal injuries sustained in the course of his employment by the insured Since the NTUC Policy applies to Simei and EIN by virtue of the expansion of coverage to all tiers of sub contractors and the Cross Liability Clause and it is not disputed that Simei and EIN are also insured under the SHC Policies it is clear that they have been double insured in respect of liability for injuries of their employees Since the parties have confirmed that Omar is EIN s employee and not Simei s employee both the NTUC Policy and the SHC Policy issued to EIN were on risk insofar as EIN s liability to Omar was concerned EIN was therefore double insured However as far as Simei s liability was concerned neither the NTUC nor the SHC operative clauses applied to render the NTUC policy or the SHC policy issued to Simei on risk because Omar was not a workman in the employment of Simei unless the insurance coverage to Simei has been separately extended by other clauses in the policy to claims by even non employees Unlike the NTUC policy there is no such extension of coverage to Simei under the SHC policy for claims by a non employee such as Omar Unfortunately this crucial distinction between Simei s and EIN s liability to Omar was not drawn in the course of arguments by counsel for both parties The proper construction of the Contingent Liability Clause in the NTUC Policy 24 In the light of the above NTUC s argument that its policy is not on risk given that proviso a see 6 above was a condition precedent to the triggering of the coverage in the entire policy including the NTUC Operative Clause need only be considered insofar as EIN s liability is concerned I am of the view that in order for proviso a to the Contingent Liability Clause to have any bite the main provision in the Contingent Liability Clause must apply to the present case This is because the words of the proviso limit NTUC s liability which is set out by the main provision In this regard I first deal with SHC s argument that the Contingent Liability Clause only insures Pan United and not Simei or EIN I am unable to see why the word insured in the context of this clause should be so confined when SHC readily accepts that insured in the context of the rest of the policy refers to Pan United and all tiers of sub contractors Words ought to be interpreted as having the same meaning as they have been used elsewhere in the policy McMeel The Construction of Contracts Interpretation Implication and Rectification Oxford University Press 2007 at para 4 16 Thus I reject this submission 25 I am also of the view that the Contingent Liability Clause must be read to provide for an extension of coverage over and above the coverage already provided by the NTUC Operative Clause since it expressly provides that NTUC s liability is extended to cover the Insured s liability for the acts of the employees of their sub contractors In its submissions counsel for SHC referred the court to another clause which provides for an extension of the scope of coverage provided by the NTUC Policy To and from work meal breaks including personal public transport including ferry within Singapore but excluding motorcycle risk It is hereby noted that this Policy is extended to include an event happening to a workman in pursuance of or arising out of and or in the course of his employment by the Insured Such event shall be deemed to be arising out of and in the course of his employment when occurring Whilst the workman on any working day including Sundays and any Public Holidays i is travelling including the workman s own transport between his place of residence the place for meal breaks and place of employment and or other place for the purpose of his employment ii is travelling including the workman s own transport between his place of employment and place of residence meal breaks Provided that any such event giving rise to a claim under this Policy is not incurred during or after any substantial interruption or deviation from the journey made for a reason or purpose unconnected with his employment which would ordinarily have materially added to the risk of injury emphasis added The words is extended to in this context convey the meaning that the coverage provided by the NTUC Operative Clause is extended beyond injuries to employees in the course of work to cover employer s liability for injuries to employees while commuting to and from the work place and during meal breaks Similarly in the context of the Contingent Liability Clause the words is extended to must convey the meaning that the scope of coverage provided by the NTUC Operative Clause has been expanded beyond the employer s liability for injury to employees in the course of work 26 Thus the Contingent Liability Clause which insures insured persons against the acts of employees of their sub contractors for which they may be responsible covers a different scope of liability from that which is covered by the NTUC Operative Clause While the word they is ambiguous in the sense that it is not immediately apparent whether they refers to sub contractors or the Insured I am of the view that they refers to the Insured I find that the purpose of the Contingent Liability Clause is to expand the coverage afforded to Pan United or any other Insured person e g EIN and Simei against liability for breaches of duties by its sub contractors It would be absurd for the NTUC Policy to insure an insured person against the acts of their sub contractors employees for which the sub contractor and not the insured was responsible 27 Further I am also of the view that the main provision in the Contingent Liability Clause should be read as extending NTUC s cover to an insured person against the risk of its sub contractor injuring any person who is not the insured s own employee This is because the NTUC Operative Clause would already have covered the insured s liability to its own employees for injury sustained in the course of work This must be the construction of the Contingent Liability Clause because reasonable commercial men would not have seen the need to extend the ambit of coverage via an endorsement in order to cover substantially the same risk already covered by the NTUC Operative Clause In this context I interpret the word sub contractors in the Contingent Liability Clause widely to include all tiers of sub contractors I am of this view because it would make no commercial sense for the Insured to be insured only against liability for the acts of its immediate sub contractor One can imagine a case for instance where Pan United the insured is held liable as occupiers of the premises for injuries to third parties caused by a sub contractor three tiers below in the hierarchy of contractual relationships such as Hock Swee In such a circumstance the Contingent Liability Clause must have been intended to apply to provide Pan United with coverage 28 The present case is thus distinguishable from Awang bin Dollah v Shung Shing Construction Engineering Co Ltd 1997 2 SLR R 746 where the word sub contractors was held to refer only to an immediate sub contractor That case concerned a workmen s compensation policy which insured a contractor against injuries to its employees in the course of employment similar to that in the SHC Operative Clauses and the NTUC Operative Clause It was extended by an endorsement to cover 3 General Labourers Sub Contractors Workers These three workers were not identified The Court of Appeal held at 55 that Assuming that it was usual and convenient for the main contractor to take out a single policy covering all contractors including subcontractors and sub subcontractors it seems to us extremely odd that in such a major contract as this only three General Labourers Sub Contractors workers were covered by the policy The Court of Appeal also held that since there was nothing in the context of the policy which indicates that a broad construction of the word sub contractors should be adopted to include all tiers of sub contractors below a narrower construction should be adopted In the present case given that the NTUC Policy has been extended to cover all tiers of sub contractors it would be incongruent to read the Contingent Liability Clause narrowly I find that given the internal context and the clear and unambiguous external context sub contractors in NTUC s Contingent Liability Clause ought to be read widely to include all tiers of sub contractors 29 While it appears at first blush strange to construe a workmen s policy to extend beyond the mere provision of coverage for the insured s liability for injury to its own employees attempts to enlarge the insured risk covered by workmen s compensation policies are not uncommon Workmen s compensation insurance policies are frequently extended in an attempt whether successful or otherwise to provide comprehensive coverage to all contractors working on a worksite to include claims against them not only from their own employees but from other workmen at the worksite arising from injuries caused by acts of employees of their sub contractors or their sub sub contractors for which the insured contractors may be held responsible 30 Having construed the Contingent Liability Clause in this manner it becomes clear that it is inapplicable to EIN Thus the provisos cannot possibly apply to exclude NTUC s liability This is because EIN simply did not have a sub contractor whose employee had injured Omar so as to trigger the operation of the main provision in NTUC s Contingent Liability Clause in the first place In fact Omar was injured by an employee of Hock Swee a sub sub contractor of Simei and not of EIN Now that the Contingent Liability Clause is not applicable for the NTUC policy pertaining to EIN as the insured EIN is therefore double insured by both NTUC and SHC with respect to Omar s injuries Thus given that SHC s policy contained a Non contributory Clause SHC s policy is not on risk insofar as EIN s liability to its employee Omar is concerned Since the NTUC Policy did not also have an exclusion clause in the event of double insurance NTUC is 100 liable to provide an indemnity to EIN 31 As far as Simei is concerned although the NTUC Operative Clause and SHC Operative Clause do not extend any insurance coverage for Simei s liability in relation to personal injuries sustained by a non employee of Simei such as Omar the Contingent Liability Clause in the NTUC policy has however extended coverage to Simei for its liability to claims made by a non employee Thus although Hock Swee is factually Simei s sub sub contractor the main provision in NTUC s Contingent Liability Clause should apply if Simei is found liable to Omar for Hock Swee s employees acts In the present case because consent judgment was entered against Simei for the acts of Ng Kia Soong an employee of Hock Swee it is clear that Simei is held legally responsible by way of the consent judgment for the acts of Ng Kia Soong It is therefore necessary to consider the applicability of the provisos to the Contingent Liability Clause to Simei The applicability of provisos in the Contingent Liability Clause to Simei 32 Provisos a and b see 6 above are exclusion clauses which limit NTUC s liability to indemnify the insured person under the Contingent Liability Clause Proviso a provides that an indemnity is given on the condition that the liability has not been covered by an insurance of the sub contractors In the present context proviso a would apply if the sub contractor Hock Swee has been insured against the risk of its employee Ng Kia Soong injuring a third party like Omar Since no evidence was adduced before the court indicating that Hock Swee had taken out any such policy to that effect I am of the view that proviso a to the Contingent Liability Clause has not been triggered 33 Since proviso a is inapplicable a fortiori proviso b is inapplicable Proviso b provides that where the insured s sub contractor has been covered by more specific insurance NTUC s liability to indemnify the insured for accidents caused by employees of the insured s subcontractors is limited only to the any excess beyond the limit insured under the subcontractor s more specific insurance policy There is no evidence that Hock Swee is covered by more specific insurance Therefore both provisos to the Contingent Liability Clause are inapplicable on the facts 34 Since the Contingent Liability Clause covers Simei and the provisos do not operate the NTUC Policy was on risk and NTUC was therefore liable to indemnify Simei against its liability for the personal injuries sustained by Omar Whether SHC may maintain a claim for reimbursement from NTUC although it has paid out despite being under no legal obligation to do so 35 Having decided that NTUC is legally obliged to provide both EIN and Simei a full indemnity in respect of their liabilities to Omar the next issue is whether SHC who paid out to Simei and EIN when it was under no legal obligation to do so may claim a contribution or reimbursement from NTUC 36 The right of contribution exists as between co insurers who have insured the same assured against the same risk in respect of the same subject matter MacGillivray on Insurance Law Relating to All Risks Other Than Marine Sweet Maxwell 11 th ed 2008 at para 23 001 MacGillivray Thus when two insurers are liable for the same loss the insurer called upon to make payment may have the right to seek payment from the other insurer MacGillivray at para 23 032 The concept of contribution is similar to another concept known as reimbursement save for a slight difference In the case of contribution it is essential that both the plaintiff and defendant are jointly and or severally liable to the same third party in respect of the same debt see Moule v Garrett 1871 1872 LR 7 Ex 101 at 104 Bonner v Tottenham and Edmonton Permanent Investment Building Society 1899 1 QB 161 Bonner at 178 and Mitchell The Law of Contribution and Reimbursement Oxford 2003 Mitchell at para 1 06 In the case of reimbursement the plaintiff and defendant do not need to be jointly and or severally liable to the third party in respect of the same debt It would suffice if the plaintiff is compellable or compelled under the law or by necessity to discharge the defendant s debt and was not acting officiously in so doing Halsbury s Laws of England 4 th edition Reissue vol 40 1 at para 63 Halsbury s Law of England vol 40 1 cf Goff and Jones The Law of Restitution Sweet Maxwell 7 th ed 2007 Goff and Jones at para 15 001 which states that the plaintiff must have been compelled by law to make a payment in order to obtain reimbursement An example of a claim in reimbursement is where a surety who was called upon to pay a sum of money on the default of the principal debtor or some other person who is principally liable makes a claim against the principal for a full indemnity Halsbury s Laws of England vol 40 1 at para 65 Another example may be found in Exall v Partridge 1799 8 TR 308 where the claimants goods which were on land leased to the defendants were seized by the landlords in distress of rent The claimant having paid rent to obtain the release of goods successfully obtained recoupment another word for reimbursement from the defendants 37 Apart from that distinction in substance the two concepts are similar In Mitchell the author stated that at para 1 03 Broadly speaking English law divides claims of this sort into two types claims for contribution and claims for reimbursement Claims for reimbursement lie when the liabilities owed by the claimant and the defendant to the third party are such that the claimant is entitled to shift the whole burden of paying the third party onto the defendant Claims for contribution lie where the claimant and the defendant must share the burden of paying the third party with the result that the claimant can shift only part of this burden onto the defendant However there is no substantial difference in principle between contribution claims and reimbursement claims as the basic components of each type of claim are the same and it is only the quantum of the claimant s entitlement which distinguishes them Consistently with this the courts have a discretion to make 100 per cent contribution awards which are essentially identical with reimbursement awards Later at para 1 20 the author said the following It should be reiterated here that although English lawyers are accustomed to think of contribution and reimbursement as distinct remedies whose award is governed by separate sets of rules in reality the principles which underlie contribution and reimbursement awards are the same The only practical difference between contribution and reimbursement claims is that a claimant bringing an action for reimbursement invariably seeks to recover the whole of his payment from the defendant while a claimant bringing a contribution action may seek to recover some smaller proportion of his payment But there is no reason in principle why a claimant should not recover the whole of his payment in a contribution action To put this in another way the courts are quite able to make 100 per cent contribution awards if they think this appropriate 38 The remedies of contribution or reimbursement are restitutionary in nature and are aimed at preventing unjust enrichment of a defendant who has been conferred a benefit by the plaintiff s payment Grupos Torras SA v Al Sabah No 5 2001 Lloyd s Rep Bank 36 at 64 Thus the remedy of contribution or reimbursement would prevent unjust enrichment to a defendant whose liability has been extinguished pro tanto by the claimant s payment to a creditor 39 I pause to make the observation that it appears that the law may countenance a claim for contribution even where the plaintiff and defendant were under no common liability to be sued In Bonner cited with approval in FBI Foods Ltd Aliments FBI Ltee v Glassner 86 BCLR 3d 136 FBI Foods Friend v Brooker 2009 HCA 21 at 44 Whitham v Bullock 1939 2 KB 81 Vaugham Williams LJ remarked at 174 that there is a common law principle of liability and also a principle of liability in equity and these two principles differ The common law principle requires a common liability to be sued for that which the plaintiff had to pay and an interest of the defendant in the payment in the sense that he gets the benefit of the payment either entirely as in the case of the assignee of a lease or pro tanto as in the case of a surety who has paid and has his action for contribution against his co surety The principle in equity seems wide enough to include cases in which there is community of interest in the subject matter to which the burden is attached which has been enforced against the plaintiff alone coupled with benefit to the defendant even though there is no common liability to be sued In such a case it seems to me a plaintiff may recover in equity although there is no common liability to be sued emphasis added Thus in FBI Foods Dillon J remarked that The equitable principle requires that the burden borne by one for the benefit of others associated with him in interest whether borne because of election by a plaintiff of choice of parties or by requirement of law as to parties to actions be shared equally In Whitham v Bullock the English Court of Appeal referred to the above passage in Bonner in a case where the lessee of land had assigned the lease as to part of the land to X and part to Y The result was that the lessor could distrain against either X or Y for the whole of the rent but could sue to recover from each only the proportionate part of the rent Because Y failed to pay its proportion under threat of distraint by the lessor X paid the whole of the rent and then sought a contribution from Y Clauson LJ held that X had an equity to recover contribution from Y because although X was not liable to be sued directly for all of the rent the equity of X arose from payment under stress of legal process Also X had paid out in order not to lose its chattels which were on the premises Clauson J held that there was sufficient community of interest in the two plots of the leased land Thus X s claim against Y for a contribution succeeded 40 In the present case SHC is seeking a declaration that it is entitled to a reimbursement and in the alternative contribution I have concluded above that SHC s policy is not on risk insofar as EIN s and Simei s liabilities to Omar were concerned SHC is therefore precluded from pursuing a claim for contribution from NTUC for making payment to EIN and Simei when SHC s own policy was never at risk It is not necessary for the present application to consider whether SHC and NTUC share sufficient community of interest because the parties did not proceed on that point As stated in Friedmann Double Insurance and Payment of Another s Debt 1993 103 LQR 51 at p 53 Where a number of persons are potentially liable to the plaintiff some of them may have a strong interest in settling the claim There is also a public interest in facilitating settlement However a serious difficulty arises if it transpires that the party who satisfied the plaintiffs claim was not actually liable to him In such a case the rules as to adjustment i e contribution among multiple debtors are inapplicable since the payor was not a debtor The issue is then channelled to the general problem of payment of another s debt and the reasonable solution is to allow the payor to recover from the real debtors English law is not however very benevolent to a party who without being requested confers a benefit upon another and since the payor did not act under legal compulsion he may well be branded as volunteer 41 The resolution of this application for reimbursement therefore turns on the issue of whether SHC indemnified Simei and EIN under legal compulsion or factual necessity The general rule is that since equity does not assist a volunteer no right of contribution or reimbursement exists at law if a claimant has paid out to a creditor in excess of its legal liability voluntarily i e in the absence of compulsion by law which discharged the defendant s legal liability see Legal General Assurance Society v Drake Insurance Co Ltd 1992 1 All ER 283 Legal General Assurance Moule v Garrett 1872 LR 7 Ex 101 at 104 and Goff and Jones at para 15 001 In Legal General Assurance two motor insurers insured a vehicle owner against injuries caused to third parties by persons driving his car with his consent Both insurance policies contained a clause limiting liability to its rateable proportion The assured made a claim against one insurer The insurer having ascertained that its policy covered the same loss as that covered by the other insurer paid out in full anyway and subsequently sought to recover a 50 contribution The English Court of Appeal held that in paying in excess of its legal obligation the paying insurer was acting as a volunteer The English Court of Appeal also held that although under s 151 of the Road Traffic Act 1988 c 52 UK an insurer was not allowed to plead any policy defence to a claim by the third party victim s 151 7 of the same Act provided the paying insurer recourse against the assured in respect of any sum paid in excess of its liability under its policy Since the paying insurer failed to exercise its right of recourse against the assured the English Court of Appeal held that he was a volunteer 42 Legal and General Assurance has been subject to much criticism on the ground that it is unclear why a theoretical right of recourse against the assured which may prove to be worthless as a matter of fact ought to prevent the paying insurer from exercising its right of recourse Colinvaux at p 421 422 Indeed I would go so far as to say that there is much to be said for encouraging insurers to pay out expeditiously leaving disputes on liability between different insurers to be resolved at a later date without the paying insurer s right of recourse being removed on the ground that he had acted as a volunteer see Friedmann Double Insurance and Payment of Another s Debt 1993 103 LQR 51 However in Legal General Assurance at p 897 Lloyd LJ said the following Counsel argued that the plaintiffs were acting very properly in not seeking to recover the excess over 50

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/high-court-judgments/14245-shc-capital-ltd-v-ntuc-income-insurance-co-operative-ltd-2010-sghc-224 (2016-01-30)
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  • Lim Lina v Estate of Quick Cheng Gee, deceased
    Estate Account However Mdm Lu refused to approve the release of the proceeds 7 Accordingly the plaintiff made the present application for a declaration that she was entitled to the proceeds of the AIA Insurance Policies that have been paid into the DBS Estate Account and that the same should be released to the plaintiff solely The Plaintiff s argument in support of her application was that the monies paid under the AIA Insurance Policies did not form part of the Estate and instead belonged solely to her The law 8 Section 73 1 of the Conveyancing and Law of Property Act Cap 61 1994 Rev Ed CLPA sets out that monies payable under certain policies of assurance do not form part of the estate of the insured in the following terms Moneys payable under policy of assurance not to form part of the estate of the insured 73 1 A policy of assurance effected by any man on his own life and expressed before the date of commencement of section 10 of the Insurance Amendment Act 2009 to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed before the date of commencement of section 10 of the Insurance Amendment Act 2009 to be for the benefit of her husband or of her children or of her husband and children or any of them shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts emphasis added 9 Section 73 of the CLPA had its predecessor in s 11 of the Married Women s Property Act 1882 UK see CH v CI 2004 SGDC 131 CH v CI at 14 The rationale for the English provision was to allow an insured person to set up a separate fund exclusively for his immediate family on which creditors could not possibly lay their hands thus protecting the immediate family members from the policyholder s creditors see Yeo Hwee Ying Life Policies under a Statutory Trust 1996 SJLS 342 at 342 and Debbie Ong Siew Ling Section 73 CLPA Assurance for the Spouse and Children 1997 9 SAcLJ 82 at 83 As explained by Deane J in Re Yeo Hock Hoe s Policy 1938 MLJ 33 at 34 in the context of the then equivalent of s 73 of the CLPA In other words the legislature viewing with sympathy any effort by a man to provide for his wife and family after his death has provided that a man may insure his life at any time for their benefit and any monies payable under the policy shall not go to pay his debts but shall be held in trust for his family 10 I pause

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  • Ch.25 Shipping Law
    Pte Ltd v Voss Peer 2002 2 SLR R 1119 The Rafaela S 2005 2 AC 423 2 The bill of lading entitles its holder to the delivery of goods against presentation of the bill 25 4 10 As a document of title the bill of lading entitles its holder to delivery of the goods against presentation of such a bill Accordingly a delivery to the holder of the bill of lading even where he has not paid for the goods discharges the shipowner from any liability provided that such delivery was made in good faith and without notice of the holder s defect in title or competing claims for the goods A shipowner is liable for breach of contract of carriage and or conversion of the cargo if the goods were delivered to a person without production of the bill of lading A carrier who delivers cargo without surrender of the bill of lading or against the production of a forged bill of lading does so at his peril The Cherry 2003 1 SLR R 471 The Jian He 1999 3 SLR R 432 The Arktis Sky 1999 3 SLR R 177 A seller who holds onto the bill of lading although having received partial payment from his buyer is not estopped from suing the carrier who delivers the cargo without production of the bill of lading The Pacific Vigorous 2006 3 SLR R 374 3 Switching of bills of lading is a dangerous practice for the shipowner but is not untoward if meant to conceal the identity of the shipper or to split bulk cargo 25 4 11 Switching of bills of lading is a relatively common practice but is one fraught with danger to the shipowner especially if the switching is imperfectly carried out and two sets of bills of lading are left in circulation BNP Paribas v Bandung Shipping Pte Ltd 2003 3 SLR R 611 There is however nothing untoward if the switch is solely to conceal the identity of the original shipper from the receiver of the goods or to split up a bulk cargo into smaller quantities Samsung Corp v Devon Industries Sdn Bhd 1995 3 SLR R 603 D Rights of Suit under Bills of Lading 1 The Bills of Lading Act transfers all rights of suit for a contract of carriage not including charterparties to any person who lawfully becomes the holder of a bill of lading 25 4 12 Rights of suit under a bill of lading were previously governed by the 1855 Bills of Lading Act and depended on the passing of property in the goods shipped under the bill of lading by reason of the indorsement or consignment of the bill of lading The 1855 Bills of Lading Act has been abolished and replaced in Singapore by the current Bills of Lading Act hereinafter BLA which is in pari material with the UK Carriage of Goods by Sea Act 1992 25 4 13 The BLA removes the link between contractual rights and the passing of property and allows the assertions of rights of suit against the carrier irrespective of the passing of property in the goods shipped As such a person who becomes a lawful holder of the bill of lading as defined by the BLA has by virtue of becoming the holder of the bill transferred to and vested in him all rights of suit as if he had been a party to the bill of lading see s 2 1 of the BLA For the purpose of the Act the holder of the bill of lading can be in either physical or constructive possession through an agent for instance of the bill of lading The Cherry 2002 1 SLR R 643 2 A person who has the right of suit may exercise that right for another person who has an interest in relation to the goods to which bill of lading relates and sustains loss in consequence of a breach of contract 25 4 14 Where a person with any interest or right in relation to goods to which a bill of lading relates sustains loss or damage in consequence of a breach of the contract of carriage but rights of suit in respect of the breach are vested in another person that other person is entitled to exercise those rights for the benefit of the person who sustained the loss or damage to the same extent as they could have been exercised if they had been vested in the person for whose benefit they are exercised see s 2 4 of the BLA 3 A bill of lading is not transferrable where the goods are specified to be delivered to a named person 25 4 15 A bill of lading is not transferable where it requires the goods specified in it to be delivered to a named person omitting any language of transferability Such a bill is described as a straight consigned bill of lading For the purposes of the BLA a straight consigned bill is treated as a waybill 4 Where a bill of lading is indorsed by a special indorsement the bill of lading ceases to be transferable until it is indorsed by the named indorsee 25 4 16 The indorsement of a bill of lading may be by a special indorsement i e it may name the transferee to whom delivery is to be made If no transferee is named the indorsement is called an indorsement in blank and the goods specified in the bill of lading are deliverable to the bearer without indorsement However the bearer or holder of the bill of lading may at any time convert the indorsement in blank to a special indorsement by inserting in it the name of the person to whom delivery is to be made In such circumstances the bill of lading ceases to be transferable by mere delivery and requires indorsement by the indorsee named in the special indorsement before it is capable of being further transferred Bandung Shipping Pte Ltd v Keppel TatLee Bank Ltd 2003 1 SLR R 295 Where an order bill of lading names a consignee there is no requirement for the bill of lading to be indorsed by the shipper or any intermediate party before the named consignee becomes holder of the bill of lading UCO Bank v Golden Shore Transportation Pte Ltd 2006 1 SLR R 1 5 A person who becomes the lawful holder of a bill of lading and demands delivery or makes a claim under the contract of carriage is also subject to the liabilities under that contract 25 4 17 Where a person becomes the lawful holder of a bill of lading under the BLA and takes or demands delivery from the carrier of any of the goods to which the bill of lading relates or makes a claim under the contract of carriage against the carrier in respect of any of those goods that person will become subject to the same liabilities under that contract as if he had been a party to that contract see s 3 of the BLA E Singapore Carriage of Goods by Sea Act and the Hague Visby Rules 1 Scope of the Hague Visby Rules 25 4 18 Under the Carriage of Goods by Sea Act of Singapore the Hague Visby Rules hereinafter HVR have the force of law in Singapore The Epar 1983 1984 SLR R 545 Pacific Electric Wire Cable Co Ltd v Neptune Orient Lines Ltd 1993 2 SLR R 102 The HVR apply to every bill of lading relating to the carriage of goods between ports in two different states if the bill of lading is issued in a contracting state of the HVR or the carriage is from a port in a contracting state or the contract contained in or evidenced by the bill of lading provides that the rules or legislation of any state giving effect to the HVR are to govern the carriage see Art X of the HVR 2 The HVR apply only to contracts of carriage covered by a bill of lading or any similar document of title 25 4 19 The HVR apply only to contracts of carriage covered by a bill of lading including a straight consigned bill of lading see The Rafaela S 2003 3 All ER 369 or any similar document of title insofar as such a document relates to the carriage of goods by sea The HVR apply to the period from the time when the goods are loaded on board the ship to the time they are discharged from the ship 3 The carrier is bound to exercise due diligence to make the vessel seaworthy before and at beginning of the voyage 25 4 20 A carrier is bound to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage see Art III rule 1 of the HVR The obligation under the HVR to exercise due diligence to make the ship seaworthy replaces the absolute obligation at common law to provide a seaworthy ship Subject to the provisions conferring protection on the carrier in certain circumstances the carrier is obliged under Art III rule 2 of the HVR to properly and carefully load handle stow carry keep care and discharge the goods carried 4 The carrier enjoys package and weight limitations in addition to the exclusions under Art IV rule 2 of the HVR 25 4 21 A carrier enjoys package and weight limitations of 10 000 gold francs S 1 563 65 per package and 30 gold francs S 4 69 per kilogramme under the HVR There is also a list of exclusions under Art IV rule 2 of the HVR which a carrier may avail himself of provided he satisfies the obligation of exercising due diligence to provide a seaworthy vessel 5 The carrier is discharged from all liability in respect of goods carried unless a suit is brought within 1 year of the delivery date but this period may be extended if parties agree 25 4 22 The carrier is discharged from all liability whatsoever in respect of the goods unless a suit is brought within 1 year of the date of delivery or of the date when the goods should have been delivered The 1 year period may however be extended if the parties so agree after the cause of action has arisen 6 The limits specified in the HVR may not be reduced further for the carrier s benefit 25 4 23 The exclusions time limits and limitation of liability prescribed by the HVR may not be reduced further for the carrier s benefit Art III rule 8 of the HVR see also The Epar 1983 1984 SLR R 545 F Jurisdiction or Arbitration Agreements in Contracts of Carriage 1 A jurisdiction or arbitration clause may be incorporated into a contract of carriage 25 4 24 A jurisdiction or arbitration clause may be incorporated into the contract of carriage whereby the parties agree to a specific forum for the adjudication of disputes arising out of the contract Nonetheless parties may be tempted to breach such jurisdiction or arbitration clauses so as to take advantage of certain time bar defences or higher limits of liability that may be available in forums other than those agreed in the contract Where such breaches happen the defendant can apply for a stay of the proceedings 2 The court will prima facie give effect to a foreign jurisdiction clause but may refuse an application for stay where the facts and circumstances are exceptional 25 4 25 Where the contract contains a foreign jurisdiction clause the court will prima facie give effect to it but it has the discretion to refuse an application for a stay if the facts and circumstances are so exceptional as to amount to a strong cause to warrant such a refusal Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1977 1978 SLR R 112 The Jian He 1999 3 SLR R 432 The Singapore court will normally refuse a stay application if the underlying claim is one for delivery of cargo without presentation of bills of lading for which there is usually no defence see for example The Jian He 1999 3 SLR R 432 The Hung Vuong 2 2000 2 SLR R 11 Golden Shore Transportation Pte Ltd v UCO Bank 2004 1 SLR R 6 If a claim is essentially indefensible a court may look upon a stay application as a tactical or procedural ploy and decide to retain jurisdiction instead The Jian He 1999 3 SLR R 432 The Hyundai Fortune 2004 2 SLR R 548 3 The court retains discretion to stay proceedings in favour of domestic arbitration but must grant stay in favour of international arbitration 25 4 26 Where there is an arbitration clause the court will generally give effect to it In cases governed by the Arbitration Act generally domestic arbitrations the power to stay is discretionary a stay might be refused if for instance the claim is clearly indisputable However under the International Arbitration Act of Singapore which generally governs international arbitrations a stay of claims failing within the arbitration clause is mandatory the court has no discretion to refuse to stay the action Once the court is satisfied that there is an arbitration agreement between the parties and that the proceedings instituted in court are in respect of a matter that would be subject to that agreement the court will order a stay Tjong Very Sumito v Antig Investments Pte Ltd 2009 4 SLR R 732 A court is entitled to order retention of any vessel under arrest or any security furnished to facilitate release of a vessel or provision of equivalent security for the satisfaction of any award under s 7 of the International Arbitration Act if the action is stayed under s 6 Return to the top SECTION 5 ADMIRALTY LAW A Nature of an Admiralty Action in rem 25 5 1 An admiralty action in rem is an action against the res thing which is usually a ship but could also include other kinds of maritime properties like cargo and freight A ship includes her apparel tackle and stores The action in rem is characterised by service on and arrest of the res Although the defendant to an action in rem is the owner of the res the owner of the res will only be liable personally if he has entered an appearance in the action Kuo Fen Ching v Dauphin Offshore Engineering 1999 2 SLR R 793 The Engedi 2010 3 SLR 409 Unless released the res will in due course be judicially sold free of all encumbrances The proceeds of the judicial sale of the res are then used to satisfy the plaintiff s claim and the claims of other parties if any according to an established order of priorities 25 5 2 However frequently this procedure does not culminate in the judicial sale of the res as the owner of the res will furnish security for the claim after which the res is normally released When the owner elects to defend the action the action thereafter continues as a hybrid action i e as both an in rem and in personam action The Damavand 1993 2 SLR R The Fierbinti 1993 SGHC 319 The August 8 1983 2 AC 450 25 5 3 The subject matter of the Singapore High Court s admiralty jurisdiction is set out in limbs a to r of s 3 1 of the High Court Admiralty Jurisdiction Act hereinafter HC AJ A which is largely similar to s 20 2 a s of the UK Senior Courts Act 1981 B Invocation of Admiralty Jurisdiction 1 The res can only be arrested within territorial waters and port limits 25 5 4 In Singapore a res can only be arrested if it comes within the territorial waters as well as port limits of Singapore in adherence with the terms and conditions stipulated in the letter of authorisation granted by the Registrar for the arrest The Trade Resolve 1999 2 SLR R 107 2 The court s admiralty jurisdiction can be invoked in 3 situations when vessel is either arrested or served with the writ in rem 25 5 5 As far as the invocation of admiralty jurisdiction is concerned s 4 of the HC AJ A permits an action in rem to be brought in 3 situations an action in rem being brought against the ship or other property in respect of claims that come within s 3 1 a c and r of the HC AJ A an action in rem being brought against ship aircraft or other property encumbered with a maritime lien or other charge and an action in rem for claims that come within s 3 1 d q of the HC AJ A which permits an action to be brought against the ship in connection with which the claim arises provided that at the time the cause of action arose the person who would be liable in an action in personam the relevant person owned chartered or was in possession or in control of that ship and is at the time of commencement of the action i e issuance of the admiralty writ in rem the beneficial owner or demise charterer of that ship an action may also be brought against any ship beneficially owned but not chartered by demise by the relevant person Sister ship arrest is therefore permissible under s 4 4 of the HC AJ A Admiralty jurisdiction is invoked when the vessel is either arrested or served with the writ in rem whichever occurred first The Fierbinti 1994 3 SLR R 574 C Principle of One Claim One Ship Plaintiff cannot proceed against other ships named in writ for same claim after invoking admiralty jurisdiction against one ship 25 5 6 Given

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  • Ch.25 Shipping Law
    negotiable but it must nevertheless be presented before the carrier can deliver the goods shipped thereunder APL Co Pte Ltd v Voss Peer 2002 2 SLR R 1119 The Rafaela S 2005 2 AC 423 2 The bill of lading entitles its holder to the delivery of goods against presentation of the bill 25 4 10 As a document of title the bill of lading entitles its holder to delivery of the goods against presentation of such a bill Accordingly a delivery to the holder of the bill of lading even where he has not paid for the goods discharges the shipowner from any liability provided that such delivery was made in good faith and without notice of the holder s defect in title or competing claims for the goods A shipowner is liable for breach of contract of carriage and or conversion of the cargo if the goods were delivered to a person without production of the bill of lading A carrier who delivers cargo without surrender of the bill of lading or against the production of a forged bill of lading does so at his peril The Cherry 2003 1 SLR R 471 The Jian He 1999 3 SLR R 432 The Arktis Sky 1999 3 SLR R 177 A seller who holds onto the bill of lading although having received partial payment from his buyer is not estopped from suing the carrier who delivers the cargo without production of the bill of lading The Pacific Vigorous 2006 3 SLR R 374 3 Switching of bills of lading is a dangerous practice for the shipowner but is not untoward if meant to conceal the identity of the shipper or to split bulk cargo 25 4 11 Switching of bills of lading is a relatively common practice but is one fraught with danger to the shipowner especially if the switching is imperfectly carried out and two sets of bills of lading are left in circulation BNP Paribas v Bandung Shipping Pte Ltd 2003 3 SLR R 611 There is however nothing untoward if the switch is solely to conceal the identity of the original shipper from the receiver of the goods or to split up a bulk cargo into smaller quantities Samsung Corp v Devon Industries Sdn Bhd 1995 3 SLR R 603 D Rights of Suit under Bills of Lading 1 The Bills of Lading Act transfers all rights of suit for a contract of carriage not including charterparties to any person who lawfully becomes the holder of a bill of lading 25 4 12 Rights of suit under a bill of lading were previously governed by the 1855 Bills of Lading Act and depended on the passing of property in the goods shipped under the bill of lading by reason of the indorsement or consignment of the bill of lading The 1855 Bills of Lading Act has been abolished and replaced in Singapore by the current Bills of Lading Act hereinafter BLA which is in pari material with the UK Carriage of Goods by Sea Act 1992 25 4 13 The BLA removes the link between contractual rights and the passing of property and allows the assertions of rights of suit against the carrier irrespective of the passing of property in the goods shipped As such a person who becomes a lawful holder of the bill of lading as defined by the BLA has by virtue of becoming the holder of the bill transferred to and vested in him all rights of suit as if he had been a party to the bill of lading see s 2 1 of the BLA For the purpose of the Act the holder of the bill of lading can be in either physical or constructive possession through an agent for instance of the bill of lading The Cherry 2002 1 SLR R 643 2 A person who has the right of suit may exercise that right for another person who has an interest in relation to the goods to which bill of lading relates and sustains loss in consequence of a breach of contract 25 4 14 Where a person with any interest or right in relation to goods to which a bill of lading relates sustains loss or damage in consequence of a breach of the contract of carriage but rights of suit in respect of the breach are vested in another person that other person is entitled to exercise those rights for the benefit of the person who sustained the loss or damage to the same extent as they could have been exercised if they had been vested in the person for whose benefit they are exercised see s 2 4 of the BLA 3 A bill of lading is not transferrable where the goods are specified to be delivered to a named person 25 4 15 A bill of lading is not transferable where it requires the goods specified in it to be delivered to a named person omitting any language of transferability Such a bill is described as a straight consigned bill of lading For the purposes of the BLA a straight consigned bill is treated as a waybill 4 Where a bill of lading is indorsed by a special indorsement the bill of lading ceases to be transferable until it is indorsed by the named indorsee 25 4 16 The indorsement of a bill of lading may be by a special indorsement i e it may name the transferee to whom delivery is to be made If no transferee is named the indorsement is called an indorsement in blank and the goods specified in the bill of lading are deliverable to the bearer without indorsement However the bearer or holder of the bill of lading may at any time convert the indorsement in blank to a special indorsement by inserting in it the name of the person to whom delivery is to be made In such circumstances the bill of lading ceases to be transferable by mere delivery and requires indorsement by the indorsee named in the special indorsement before it is capable of being further transferred Bandung Shipping Pte Ltd v Keppel TatLee Bank Ltd 2003 1 SLR R 295 Where an order bill of lading names a consignee there is no requirement for the bill of lading to be indorsed by the shipper or any intermediate party before the named consignee becomes holder of the bill of lading UCO Bank v Golden Shore Transportation Pte Ltd 2006 1 SLR R 1 5 A person who becomes the lawful holder of a bill of lading and demands delivery or makes a claim under the contract of carriage is also subject to the liabilities under that contract 25 4 17 Where a person becomes the lawful holder of a bill of lading under the BLA and takes or demands delivery from the carrier of any of the goods to which the bill of lading relates or makes a claim under the contract of carriage against the carrier in respect of any of those goods that person will become subject to the same liabilities under that contract as if he had been a party to that contract see s 3 of the BLA E Singapore Carriage of Goods by Sea Act and the Hague Visby Rules 1 Scope of the Hague Visby Rules 25 4 18 Under the Carriage of Goods by Sea Act of Singapore the Hague Visby Rules hereinafter HVR have the force of law in Singapore The Epar 1983 1984 SLR R 545 Pacific Electric Wire Cable Co Ltd v Neptune Orient Lines Ltd 1993 2 SLR R 102 The HVR apply to every bill of lading relating to the carriage of goods between ports in two different states if the bill of lading is issued in a contracting state of the HVR or the carriage is from a port in a contracting state or the contract contained in or evidenced by the bill of lading provides that the rules or legislation of any state giving effect to the HVR are to govern the carriage see Art X of the HVR 2 The HVR apply only to contracts of carriage covered by a bill of lading or any similar document of title 25 4 19 The HVR apply only to contracts of carriage covered by a bill of lading including a straight consigned bill of lading see The Rafaela S 2003 3 All ER 369 or any similar document of title insofar as such a document relates to the carriage of goods by sea The HVR apply to the period from the time when the goods are loaded on board the ship to the time they are discharged from the ship 3 The carrier is bound to exercise due diligence to make the vessel seaworthy before and at beginning of the voyage 25 4 20 A carrier is bound to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage see Art III rule 1 of the HVR The obligation under the HVR to exercise due diligence to make the ship seaworthy replaces the absolute obligation at common law to provide a seaworthy ship Subject to the provisions conferring protection on the carrier in certain circumstances the carrier is obliged under Art III rule 2 of the HVR to properly and carefully load handle stow carry keep care and discharge the goods carried 4 The carrier enjoys package and weight limitations in addition to the exclusions under Art IV rule 2 of the HVR 25 4 21 A carrier enjoys package and weight limitations of 10 000 gold francs S 1 563 65 per package and 30 gold francs S 4 69 per kilogramme under the HVR There is also a list of exclusions under Art IV rule 2 of the HVR which a carrier may avail himself of provided he satisfies the obligation of exercising due diligence to provide a seaworthy vessel 5 The carrier is discharged from all liability in respect of goods carried unless a suit is brought within 1 year of the delivery date but this period may be extended if parties agree 25 4 22 The carrier is discharged from all liability whatsoever in respect of the goods unless a suit is brought within 1 year of the date of delivery or of the date when the goods should have been delivered The 1 year period may however be extended if the parties so agree after the cause of action has arisen 6 The limits specified in the HVR may not be reduced further for the carrier s benefit 25 4 23 The exclusions time limits and limitation of liability prescribed by the HVR may not be reduced further for the carrier s benefit Art III rule 8 of the HVR see also The Epar 1983 1984 SLR R 545 F Jurisdiction or Arbitration Agreements in Contracts of Carriage 1 A jurisdiction or arbitration clause may be incorporated into a contract of carriage 25 4 24 A jurisdiction or arbitration clause may be incorporated into the contract of carriage whereby the parties agree to a specific forum for the adjudication of disputes arising out of the contract Nonetheless parties may be tempted to breach such jurisdiction or arbitration clauses so as to take advantage of certain time bar defences or higher limits of liability that may be available in forums other than those agreed in the contract Where such breaches happen the defendant can apply for a stay of the proceedings 2 The court will prima facie give effect to a foreign jurisdiction clause but may refuse an application for stay where the facts and circumstances are exceptional 25 4 25 Where the contract contains a foreign jurisdiction clause the court will prima facie give effect to it but it has the discretion to refuse an application for a stay if the facts and circumstances are so exceptional as to amount to a strong cause to warrant such a refusal Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd 1977 1978 SLR R 112 The Jian He 1999 3 SLR R 432 The Singapore court will normally refuse a stay application if the underlying claim is one for delivery of cargo without presentation of bills of lading for which there is usually no defence see for example The Jian He 1999 3 SLR R 432 The Hung Vuong 2 2000 2 SLR R 11 Golden Shore Transportation Pte Ltd v UCO Bank 2004 1 SLR R 6 If a claim is essentially indefensible a court may look upon a stay application as a tactical or procedural ploy and decide to retain jurisdiction instead The Jian He 1999 3 SLR R 432 The Hyundai Fortune 2004 2 SLR R 548 3 The court retains discretion to stay proceedings in favour of domestic arbitration but must grant stay in favour of international arbitration 25 4 26 Where there is an arbitration clause the court will generally give effect to it In cases governed by the Arbitration Act generally domestic arbitrations the power to stay is discretionary a stay might be refused if for instance the claim is clearly indisputable However under the International Arbitration Act of Singapore which generally governs international arbitrations a stay of claims failing within the arbitration clause is mandatory the court has no discretion to refuse to stay the action Once the court is satisfied that there is an arbitration agreement between the parties and that the proceedings instituted in court are in respect of a matter that would be subject to that agreement the court will order a stay Tjong Very Sumito v Antig Investments Pte Ltd 2009 4 SLR R 732 A court is entitled to order retention of any vessel under arrest or any security furnished to facilitate release of a vessel or provision of equivalent security for the satisfaction of any award under s 7 of the International Arbitration Act if the action is stayed under s 6 Return to the top SECTION 5 ADMIRALTY LAW A Nature of an Admiralty Action in rem 25 5 1 An admiralty action in rem is an action against the res thing which is usually a ship but could also include other kinds of maritime properties like cargo and freight A ship includes her apparel tackle and stores The action in rem is characterised by service on and arrest of the res Although the defendant to an action in rem is the owner of the res the owner of the res will only be liable personally if he has entered an appearance in the action Kuo Fen Ching v Dauphin Offshore Engineering 1999 2 SLR R 793 The Engedi 2010 3 SLR 409 Unless released the res will in due course be judicially sold free of all encumbrances The proceeds of the judicial sale of the res are then used to satisfy the plaintiff s claim and the claims of other parties if any according to an established order of priorities 25 5 2 However frequently this procedure does not culminate in the judicial sale of the res as the owner of the res will furnish security for the claim after which the res is normally released When the owner elects to defend the action the action thereafter continues as a hybrid action i e as both an in rem and in personam action The Damavand 1993 2 SLR R The Fierbinti 1993 SGHC 319 The August 8 1983 2 AC 450 25 5 3 The subject matter of the Singapore High Court s admiralty jurisdiction is set out in limbs a to r of s 3 1 of the High Court Admiralty Jurisdiction Act hereinafter HC AJ A which is largely similar to s 20 2 a s of the UK Senior Courts Act 1981 B Invocation of Admiralty Jurisdiction 1 The res can only be arrested within territorial waters and port limits 25 5 4 In Singapore a res can only be arrested if it comes within the territorial waters as well as port limits of Singapore in adherence with the terms and conditions stipulated in the letter of authorisation granted by the Registrar for the arrest The Trade Resolve 1999 2 SLR R 107 2 The court s admiralty jurisdiction can be invoked in 3 situations when vessel is either arrested or served with the writ in rem 25 5 5 As far as the invocation of admiralty jurisdiction is concerned s 4 of the HC AJ A permits an action in rem to be brought in 3 situations an action in rem being brought against the ship or other property in respect of claims that come within s 3 1 a c and r of the HC AJ A an action in rem being brought against ship aircraft or other property encumbered with a maritime lien or other charge and an action in rem for claims that come within s 3 1 d q of the HC AJ A which permits an action to be brought against the ship in connection with which the claim arises provided that at the time the cause of action arose the person who would be liable in an action in personam the relevant person owned chartered or was in possession or in control of that ship and is at the time of commencement of the action i e issuance of the admiralty writ in rem the beneficial owner or demise charterer of that ship an action may also be brought against any ship beneficially owned but not chartered by demise by the relevant person Sister ship arrest is therefore permissible under s 4 4 of the HC AJ A Admiralty jurisdiction is invoked when the vessel is either arrested or served with the writ in rem whichever occurred first The Fierbinti 1994 3 SLR R 574 C Principle of One Claim One Ship Plaintiff cannot proceed against other

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  • The "An Ji Jiang"[2003] 4 SLR 348; [2003] SGHC 224
    on the answers to the above questions whether the plaintiffs or as the case may be the defendants are entitled to the damages claimed First issue Were the Asbatankvoy terms incorporated in the charter contract 28 The plaintiffs submitted that the documentary evidence supported their contention that there was never any proposal to incorporate any of the terms of the Asbatankvoy form in the contract They started by referring to the facsimile which Billion Gain sent to LOP on 25 June setting out the main terms of the proposed charter including the inspection clause and the Asbatankvoy clause LOP had sent these terms on to the plaintiffs and had asked the plaintiffs to confirm by 6 00pm the same day that the charter was clean fixed In this correspondence the Asbatankvoy clause still contained the words to be agreed 29 The plaintiffs had sent out their acceptance of these terms the next day 26 June On receipt of this reply LOP had informed Billion Gain that the plaintiffs confirmed that all the main terms were in good order except that the quantity was to be amended to read 4000MT 10 PCT MOLCO BULK ASPHALT IN ONE GRADE CHTRS AGREE MAX LOADABLE QTY IS 4200MT and that the sub stem was to be lifted by 12 00pm on 27 June LOP asked Billion Gain to confirm the amended terms and to send over the Asbatankvoy terms in their reply Billion Gain replied the same day and informed LOP that the defendants had confirmed that all the main terms were in order This meant that the new wording of the term on quantity was agreed to but that otherwise the terms and conditions remained as set out in Billion Gain s facsimile of 25 June 30 At about 9 58am on 27 June LOP sent a facsimile to the plaintiffs requesting them to confirm that all sub terms are lifted and clean fixed by today 1100 hours The plaintiffs replied at 11 32am on the same day and stipulated we confirm sub terms lifted and clean fixed LOP accordingly sent a message to Billion Gain at 11 55am notifying them that the charterer had confirmed that sub stem are lifted and asking Billion Gain to fax us soon the Asbatankvoy charter party for both charterers owners to agree Billion Gain then sent an e mail at 12 38pm that day to the defendants and advised them that the plaintiffs had confirmed the lifting of the sub stem Billion Gain also asked the defendants whether they had any comments on the Asbatankvoy form 31 On the basis of the documents referred to in the preceding three paragraphs the plaintiffs submitted that the evidence was very clear that when they confirmed that sub terms lifted and clean fixed at 11 32am on 27 June there was no agreement to incorporate the Asbatankvoy terms They submitted that it was equally clear that if at all Mr Xu Lei the defendants employee who was handling the chartering arrangements on their behalf had called Ms Liu to ask for the incorporation of the Asbatankvoy terms it would have been after 12 38pm on 27 June after all the terms of the charter had been concluded 32 I do not think that the matter is as easily disposed of as the plaintiffs have submitted it should be Whilst this issue has not been explicitly raised since the defendants contention is that some time that day the plaintiffs accepted the Asbatankvoy terms there is a serious question as to whether a contract could have been concluded on 27 June at 11 32am if one of the terms of that purported contract was others as per Asbatankvoy charterparty to be mutually agreed The Asbatankvoy form is a long and detailed document containing many terms which would help the smooth performance of the charter and more specifically delineate the parties rights and responsibilities under it Leaving the status of the form hanging in the air would therefore have been to leave the charter in an uncertain situation and such uncertainty has on many occasions been held to constitute a complete barrier to the court finding that a contract exists 33 In any case even if what was agreed to by the plaintiffs at 11 32am and conveyed to the defendants at 12 38pm was certain enough to constitute a contract it included a clause offering the parties a way to incorporate additional terms to the contract by subsequent agreement By stating that the other terms of the charter were to be in accordance with the Asbatankvoy form as mutually agreed the parties were providing a method of incorporating some or all of the Asbatankvoy terms into the contract Thus after the plaintiffs confirmation that morning the situation was either that there was still no contract because important terms had not been agreed or that there was a contract which admitted the possibility of additional clauses being subsequently incorporated It is therefore important to consider what happened thereafter 34 In this regard the defendants submitted that there had been an explicit agreement on the part of the plaintiffs to incorporate the Asbatankvoy terms as part of the contract They relied in the main on the evidence of Jackki Yim and also on the plaintiffs subsequent conduct 35 Ms Yim s Evidence in Chief was that she received a copy of the Asbatankvoy form from Ms Liu of Billion Gain between 11 22am and 11 26am on 27 June After seeing it she realised that it was a standard form charterparty for the chartering of tankers She checked to see if the defendants had made any amendments to the standard form No amendments had been made She then called Desmond Tan to ask whether he agreed to incorporate all the terms of the Asbatankvoy in the contract Mr Tan asked Ms Yim for her opinion and she told him that these were standard charterparty terms to be used with the main terms with the fixture note He then confirmed that he agreed to the incorporation of all the terms Ms Yim then asked Desmond Tan to send her a confirmation that all sub terms had been lifted and that the charterparty was clean fixed She received this confirmation at about 11 32am and forwarded it to Ms Liu immediately Later on the same day she told Ms Liu over the telephone that the plaintiffs had agreed to incorporate all the Asbatankvoy terms It should be noted that while she was being cross examined Ms Yim informed me that her conversation with Desmond Tan on the Asbatankvoy form had taken place after 11 32am and not before she received the plaintiffs confirmation that the sub terms had been lifted She also said that her telephone conversation with Ms Liu with regard to the acceptance of the Asbatankvoy form had been very much later on the same day She maintained however that Desmond Tan had confirmed the plaintiffs acceptance of the form 36 Desmond Tan was a manager of the plaintiffs and he was the one who signed various documents on their behalf during the negotiations for the charter He also signed the fixture note His elder brother Tan Peng Seng was away from Singapore between 22 June and 13 July 2001 and Mr Tan gave evidence that while he was overseas he handled the negotiations on the charter through Desmond Tan who kept him informed of what was happening It would therefore appear that Desmond Tan was authorised to speak and or deal on behalf of the plaintiffs and Tan Peng Seng himself Even if Desmond Tan did not have actual authority to bind the plaintiffs in relation to the charter he had apparent authority to do so He therefore also had actual and or apparent authority to agree to the incorporation of the Asbatankvoy terms on behalf of the plaintiffs 37 Although the plaintiffs denied that there had been any agreement to incorporate the Asbatankvoy terms they did not call Desmond Tan to give evidence on the negotiations and his dealings with Ms Yim Under s 116 g of the Evidence Act Cap 97 I am entitled to presume that evidence which could be and is not produced would if produced be unfavourable to the person who withholds it The plaintiffs did not explain why Desmond Tan was not giving evidence and I therefore presume that the evidence that he would have given on his conversation with Ms Yim would not have supported the plaintiffs stand that the plaintiffs had not agreed to the Asbatankvoy terms 38 Ms Yim s story of Desmond Tan having consented to the terms was corroborated by the fact that she informed Ms Liu of that consent the very same day and Ms Liu herself testified to this Further as the defendants submitted Ms Yim had absolutely no reason to inform the defendants or Billion Gain that the plaintiffs had agreed to incorporate the terms unless she had first obtained the plaintiffs agreement Otherwise she would have been exposing herself and her company to liability for misrepresenting the position 39 The Asbatankvoy terms were not new to the plaintiffs In four previous charterparties with another shipping company the plaintiffs had agreed to the incorporation of the Asbatankvoy terms In cross examination Tan Peng Seng claimed on the one hand that he did not agree to the Asbatankvoy terms because the defendants did not show him these clauses but on the other he conceded that the other shipping company had not shown him the terms either Mr Tan could not give any satisfactory explanation for taking such an inconsistent position It was also of some significance that Mr Tan stated later in his cross examination that he had cancelled the charterparty on 19 July 2001 the day after he received notice from the defendants of the contents of cl 5 of the Asbatankvoy terms because he was advised that this clause stipulated that notice of cancellation had to be given within 24 hours It would appear that at that time Mr Tan did not dispute that the Asbatankvoy terms were part of his contract 40 Having considered the evidence I find that on 27 June 2001 a contract was concluded between the plaintiffs and the defendants and that charter included the term that incorporated all the Asbatankvoy terms This term was specifically agreed to by the plaintiffs through Mr Desmond Tan on that day The fixture note that was signed by the parties to evidence the terms agreed on 27 June 2001 did not reflect the agreement on the Asbatankvoy terms It stated erroneously that the other terms were to be as per the Asbatankvoy charter party to be mutually agreed The defendants seek the rectification of the fixture note by the deletion of the words to be mutually agreed from that clause 41 In Frederick E Rose London Ltd v William H Pim Jnr Co Ltd 1953 2 QB 450 Denning LJ observed at 461 that in order to get rectification it is necessary to show that the parties were in complete agreement on the terms of their contract but by an error wrote them down wrongly This observation was quoted by the Court of Appeal in Kok Lee Kuen v Choon Fook Realty 1997 1 SLR 182 which noted that whilst Denning LJ seemed to think that for rectification there must be a concluded antecedent contract there had been other cases suggesting that all that need be shown is that there was an intention common to both parties at the time of contract to include in their bargain a term which by mutual mistake was omitted The Court of Appeal also held that the degree of probability required to establish that the contract had been written down wrongly was that of convincing proof 42 In the present case how did the contract come to be written wrongly when the defendants had all along wanted the Asbatankvoy form to be part of the contract Ms Liu their broker gave evidence that it was her mistake She testified that she had received a phone call from Ms Yim on 27 June confirming the plaintiffs acceptance of the Asbatankvoy terms She said that the fixture note was prepared by her thereafter and she had erroneously used the terms recapitulated to the defendants in her e mail of 26 June without amendment The fixture note was sent out by her on 29 June to LOP for signature by the plaintiffs Thereafter it was sent to the defendants for their signature It was Ms Liu s evidence that while both parties signed a fixture note which stated that the Asbatankvoy terms were still to be mutually agreed she had no doubt that both knew that in fact the terms had been incorporated 43 I am satisfied that there is convincing proof that by reason of a common mistake the fixture note as signed did not reflect the parties agreement to the inclusion of the Asbatankvoy terms Accordingly I grant the rectification order prayed for by the defendants Second issue What is the true meaning and effect of the inspection clause 44 In the fixture note the inspection clause reads as follows SUBJ TO REFINERY S INSPECTION PRIOR TO ACCEPTANCE N BERTHING N OR INSPECTION EXP TBF OWNRS ACCT 45 In their closing submission the plaintiffs state that they have pleaded that the fixture note provided that the vessel was subject to the refinery s inspection prior to its acceptance and berthing and that they have further pleaded that the defendants breached the fixture note in that they failed to obtain the approval of SRC for the loading of the first shipment I gather from this that it is the plaintiffs position that the inspection clause required the defendants to subject the vessel to inspection by the refinery and to obtain the approval of the refinery for the loading of the vessel This would mean that if such approval was not obtained the defendants would be in breach of the charter 46 The defendants have pleaded that the inspection clause did not impose an obligation on them to ensure that the vessel was approved by the refinery in this case SRC for berthing and loading of cargo They say that the effect of the clause was to notify the defendants that the refinery where the vessel was to call would require it to be inspected prior to accepting the vessel for berthing and that the expenses incurred for such inspection would be for the defendants account In their closing submission the defendants state that the clause was a condition subsequent and not an obligation and the effect of non compliance with the condition subsequent was that both parties would be released from the charter which would come to an end The defendants say that the clause should be read as having two parts as follows 1 Subject to refinery s inspection prior to acceptance and 2 And berthing and or inspection expenses to be for owners account They say that the plaintiffs interpretation which implies that the first part of the clause is subject to refinery s inspection prior to acceptance and berthing is not correct 47 In interpreting a contractual provision it is important to be aware of the commercial context in which the contract was entered into As Lord Wilberforce observed 30 years ago in Reardon Smith Line Ltd v Yngvar Hansentangen 1976 1 WLR 989 at 995 No contracts are made in vacuum there is always a setting in which they have to be placed The nature of what is legitimate to have regard to is usually described as the surrounding circumstances but this phrase is imprecise it can be illustrated but hardly defined In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction the background the context the market in which the parties are operating The principles implied in this passage have been well elaborated recently by Lord Hoffmann in his judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society 1998 1 All ER 98 Of the five principles enunciated there the following are the most relevant to my task today 1 Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract 2 The background was famously referred to by Lord Wilberforce as the matrix of fact but this phrase is if anything an understated description of what the background may include Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man 3 4 The meaning which a document or any other utterance would convey to a reasonable man is not the same thing as the meaning of its words The meaning of words is a matter of dictionaries and grammars the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even as occasionally happens in ordinary life to conclude that the parties must for whatever reason have used the wrong words or syntax see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd 1997 3 All ER 352 1997 2 WLR 945 48 It is therefore important that I set out the evidence on how the inspection clause came to be included in the contract and as to the situation in the carriage of bitumen by sea that it was intended to deal with 49 The evidence on how the inspection clause came to be in this contract was given by Ms Yim She stated that she had been the one to advise the plaintiffs to include the inspection clause It must be remembered that Ms Yim had a great deal of experience in the shipment of bitumen arising from LOP s employment as an agent for Shell and ExxonMobil sourcing vessels for the shipment of petroleum products Further the vessel had just completed its conversion into a bitumen tanker and this was its first voyage to Singapore to load bitumen whether at the SRC refinery or at any other refinery on the island Accordingly neither the defendants nor the plaintiffs knew initially whether the vessel would meet the requirements of any of these refineries Ms Yim stated i In Singapore large volume of bitumen cargo is only available from one of the three refineries Shell ExxonMobil and SRC ii These refineries all require vessels berthing with them to be inspected first to determine if the vessels comply with their operational and safety requirements before allowing the vessels to berth This is the case whether the bitumen is in drum or in bulk iii If the vessel is not accepted by the refinery then the Plaintiffs should not be bound to continue with the charterparty Otherwise they would still have to load the Vessel and pay charterparty freight iv I therefore inserted the Inspection Clause so that the Plaintiffs can get out of the charterparty if the Vessel is not accepted by the refinery 50 Ms Liu echoed the rationale for the inspection clause given by Ms Yim when in her Affidavit of Examination in Chief she said that it was required because 23 Oil refineries commonly require vessels calling at their terminals and berths to be inspected and approved according to their safety and operational requirements From the point of view of charterers such as the Plaintiffs if the Vessel cannot meet the requirements of the refinery she would not be able to load the Plaintiffs cargo The Plaintiffs would then not want to continue with the charter 24 From the view of the shipowners such as the Defendants they cannot promise that the Vessel would be able to meet the refinery s requirement or to berth because approval is at the discretion of the refinery whose requirements were not known to the Defendants 25 The Inspection Clause therefore reflected these competing interests by providing for the Defendants to incur the costs and expenses of sailing the Vessel to Singapore and of undergoing the required inspection If the Vessel is approved the charter party continues and the Defendants can earn the freight for the 4 shipments If the Vessel is not approved the charter party comes to an end The Defendants would have wasted the expenses of sailing the Vessel to Singapore and of the inspection and lost the opportunity to earn freight The Plaintiffs would have to look for another vessel to carry their cargo 51 Ms Yim s assertion that she had suggested the incorporation of the inspection clause was contradicted by Mr Tan Peng Seng He claimed in cross examination that it was he who supplied the wording of the inspection clause to Ms Yim He agreed that he had nothing in writing to substantiate this allegation but said that he had obtained the wording of the clause from contracts that he had signed with other shipowners such as China Shipping He was however not able to point to any such clauses in any of the charterparties between the plaintiffs and China Shipping which were disclosed in court by the plaintiffs His evidence on the point was self serving and not believable On the other hand Ms Yim s version of events was backed up by the correspondence On 22 June LOP had sent the plaintiffs the terms of the charterparty offered by the defendants These terms do not contain any inspection clause Ms Yim however had added the following comment at page 2 of her facsimile In addition we must include that the vessel is subject to refinery s inspection prior acceptance and berthing and all inspection charges to be borne by Owner If such an inspection clause had been an express requirement of the plaintiffs from the beginning there would have been no need for Ms Yim to propose such a clause Thereafter Ms Yim relayed the inspection clause together with other comments to Ms Liu and Ms Liu then set out the revised charterparty terms in a facsimile dated 25 June to LOP The inspection clause first appeared as part of the terms of the charter in this facsimile 52 Having considered the evidence I accept that the inspection clause was suggested by Ms Yim for the protection of the plaintiffs as charterers It was intended to help the plaintiffs get out of the charterparty if the vessel were to prove unacceptable to the refinery nominated by the plaintiffs It was not however intended at least by Ms Yim to impose an obligation on the shipowners that the vessel would meet the refinery s requirements She explained in cross examination that the requirements of the refinery would be decided by it and could not be decided by the shipowner or the charterer In that situation it was fair to oblige the shipowner to have the vessel inspected but it was not the responsibility of the shipowner to have the vessel pass the inspection since the shipowner had no control over the same There was also evidence from SRC that it does not inform shipowners beforehand exactly what its requirements are Mr Tan conceded during cross examination that the different inspection criteria and terminal requirements of all three refineries in Singapore are not disclosed to shipowners 53 I accept the evidence of Ms Yim and Ms Liu as to the background of the carriage of bitumen from refineries in Singapore and elsewhere Their testimony was not undermined either by cross examination or by other evidence adduced by the plaintiffs Looking at the inspection clause in the light of that background the defendants interpretation is the only reasonable one that gives effect to the objective intention of the words used 54 First there is nothing in the clause which provides for or implies a promise or undertaking by the defendants that SRC s approval of the ship would definitely be obtained In particular the employment of the words subject to does not import any positive obligation or undertaking on the part of the defendants The entire clause makes only one specific reference to the defendants which is that they are to bear the expenses of inspection and or berthing The clause is not even as strong in this connection as a BP approval clause which appeared in three charterparties between the plaintiffs and China Shipping That clause provided owner shall make efforts to get SRC approval for loading at her terminal The owners there had a positive obligation to use efforts to obtain approval from the refinery whereas in this case the charterparty is simply made subject to the refinery s inspection which meant that the owners simply had to allow the vessel to be inspected but did not need to do anything to obtain a satisfactory outcome from such inspection 55 Secondly as the defendants submit the inspection clause can be divided into two parts a performance of the charterparty is subject to ie contingent upon the vessel being inspected and accepted by the refinery and b all berthing and inspection expenses are to be borne by the defendants The abbreviation N for the word and marks the place in the inspection clause which divides it into these two parts The effect of the first part is to make the continuance of the charterparty conditional upon the vessel being inspected and accepted by the refinery prior to berthing In other words the inspection clause has the effect of a condition subsequent in that it provides that if the vessel is not accepted by SRC the charterparty is to come to an end 56 Thirdly the plaintiffs appear to be reading the words acceptance N berthing together as though they are the twin obligations which the defendants had to perform under this clause Such a construction however is irreconcilable with the abbreviation N OR for and or which follows immediately after the word berthing The proper way to construe the second part of the clause is therefore that it reads berthing and or inspection exp tbf owrs acct which is an abbreviated manner of stating berthing and or inspection expenses to be for Owners account Acceptance on the other hand belongs to and is the tail piece of the first part of the clause 57 The above interpretation of the inspection clause is consistent with the way in which bitumen cargo is shipped and the insistence of each refinery on a pre berthing inspection of vessels which have not previously berthed at that refinery It also is fair to both the owners and the charterers of vessels which have not had previous experience at the refinery concerned It allows a concluded charter to go forward until the point where the vessel is found to be unsuitable for berthing and at that stage both parties will be released from further performance of the charter Both will no doubt suffer some loss by reason of this situation but that is not unfair because the non performance of the charterparty has been brought about by the act of a third party over which neither contracting party has any control Owners charterers who are averse to running the risk of loss in such situations have a simple remedy they should refrain from entering into charterparties which require the vessel concerned to load at a berth for which it has not yet been approved 58 I therefore hold that there was no obligation on the part of the defendants to ensure that the vessel was approved by SRC for loading of the plaintiffs bitumen cargo Third issue Did the plaintiffs have a right to terminate the charter on 19 July 59 The plaintiffs pleaded the fixture note provided that the vessel was to be ready for loading in Singapore between 12 and 15 July 2001 for the first shipment In this regard they were relying on the clause of the fixture note that read LYCN 12 15 JUL as first shipment 60 There is no dispute that although the vessel was in Singapore on 15 July it was not ready for loading at that time as it was under arrest It was not released from arrest until the afternoon of 16 July and the plaintiffs were only notified of the release the following day The first sub issue here therefore is whether the defendants were in breach of contract because the vessel was not ready to load by the end of the period 12 to 15 July 61 Mr Xu Lei testified that in the clause LYCN 12 15 July as first shipment the word LYCN was actually laycan an abbreviation for lay date and cancellation date The plaintiffs did not bring evidence to dispute that interpretation According to common texts in the marine industry the term laycan is an abbreviation for lay days cancelling Having stated that Eric Sullivan s Marine Encyclopaedic Dictionary 6th Ed 1999 gives the following definition of laydays Laydays 1 The dates within which a ship is to present for loading If she is too late to meet the last date the cancelling date she may be cancelled 2 The range of days between calendar dates during which a chartered vessel should be available for loading and or discharge The last date is the Cancelling Date after which the charterer may cancel the charter if the ship has not been presented Hence the term Laydays cancelling or Laycan A cancelling clause in the charterparty may require the charterer to declare within a stated interval whether or not he will reject the charter if the vessel is late 62 A cancellation clause gives the charterer a right to cancel the charterparty if the vessel is not ready by the cancelling date It is not a promise by the owner that the vessel will be ready by the stipulated date This was established by the case of Smith v Dart Son 1884 14 QBD 105 In the case of Fercometal SARL v Mediterranean Shipping Co SA 1989 1 AC 788 Box 19 in the charterparty which was headed Cancelling date Cl 10 contained the words LAYCAN 3 9 July 1982 Clause 10 provided Should the vessel not be ready to load whether in berth or not on or before the date indicated in Box 19 charterers have the option of cancelling this contract such option to be declared if demanded at least 48 hours before vessel s expected arrival at port of loading At 795 of the report Lord Ackner commented that T he charterers right to cancel given by clause 10 was an independent option only exercisable if the vessel was not ready to load on or before 9 July 1982 Clause 10 did not impose any contractual obligation upon the owners to commence loading by the cancellation date 63 Thus the meaning of the laycan clause in this charter was that the vessel would have to be presented for loading by 15 July and that if it was not the plaintiffs would have a right to cancel the charter It should be noted here that commensurate with the character of the clause ie the fact that it is not a promise to arrive on a certain date the right of cancellation does not carry with it a right to claim damages for loss which may be suffered by reason of the delay in the arrival of the vessel See Carriage of Goods by Sea 3rd Ed 1998 by John F Wilson at p 66 and Contracts for the Carriage of Goods 2000 Ed by David Yates at para 1 1 4 3 10 64 The charterer s right to cancel for non compliance with the laycan period may however be restricted by other clauses of the charterparty an example of this can be seen in cl 10 of the charter in the Fercometal case In this case the defendants are relying on cl 5 of the Asbatankvoy terms which they say required the plaintiffs to exercise their option of cancelling the charter within 24 hours failing which the charterparty was to continue with no further option for termination Clause 5 reads 5 LAYDAYS Laytime shall not commence before the date stipulated in Part I except with the Charterer s sanction Should the Vessel not be ready to load by 4 00 o clock P M local time on the cancelling date stipulated in Part I the Charterer shall have the option of cancelling this Charter by giving the Owner notice of such cancellation within twenty four 24 hours after such cancellation date otherwise this Charter to remain in full force and effect 65 Clause 5 accordingly required that the plaintiffs exercised their option of cancelling the charterparty by 4 00pm on 16 July 2001 ie 24 hours after 4 00pm on the cancelling date of 15 July 2001 failing which they would have lost their right to cancel the charterparty and the charter would remain in full force and effect The plaintiffs did not cancel the charter before 4 00pm on 16 July 2001 they waited till 19 July to give notice of cancellation The defendants therefore submit that the purported notice of cancellation was wrongful and was a repudiatory breach of contract 66 The plaintiffs submit that even if the Asbatankvoy terms apply they were not obliged to cancel by 4 00pm on 16 July because delivery of the vessel had not been tendered to them on 15 July To support this contention they rely on the following passage from Voyage Charters by Julian Cooke and others which appears under the general heading American Law on p 525 Generally if there is an agreed cancelling date and the vessel has not arrived at the load port by that date the charterer is under no obligation to declare whether or not it intends to exercise the option to cancel until delivery of the vessel is actually tendered Once given an option is a one way affair Even if the shipowner knows that the vessel cannot reach the loadport by the cancelling date therefore it remains obligated to continue the vessel s passage in order to give the charterer the opportunity to either use the ship or exercise its cancelling option After all the charterer would be perfectly justified in accepting the vessel even though late and this often occurs 67 This argument is not persuasive First it was not pleaded that American law applied to this charter Secondly no expert on American law was called to give evidence on this point Thirdly even if American law did apply which seems unlikely given the provision in the fixture note reading Arbitration if any in Singapore and English law to apply and the lack of factors connecting this contract with American law the passage cited is only as it states itself a general statement of the law The passage does not deal with the situation where the charterparty in question contains a specific clause dealing with the exercise of the right of cancellation As a specific expression of the parties intention cl 5 of the Asbatankvoy terms must override any general understanding to the contrary 68 Prima facie therefore the plaintiffs were bound to exercise their right of cancellation by 4 00pm on 16 July since the vessel was not ready for loading at 4 00pm on 15 July the cancelling date The plaintiffs unfortunately let

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  • Cascade Shipping Inc v Eka Jaya Agencies (Pte) Ltd[1993] 1 SLR 980; [1993] SGCA 7
    application for summary judgment was heard by the assistant registrar on 21 January 1991 who gave judgment for Cascade or when the appeal was heard by Chao Hick Tin J on 2 April 1991 who allowed Eka Jaya s appeal and dismissed Cascade s action see 1992 1 SLR 197 However at the hearing before us Eka Jaya sought to adduce evidence that the freight collected by them was in fact setoff on the dates they were collected from the shippers against the amounts due to Eka Jaya from Samudera under the agency agreement Further that the bills of lading in question were freight pre paid bills of lading and that the freight was in fact pre paid We dismissed Eka Jaya s application with costs as this evidence could easily have been produced at the hearing before the assistant registrar had it been material In any event the case had been argued before the assistant registrar and Chao Hick Tin J on the basis that the set off was effected on 25 September 1990 If it was material to Eka Jaya s case that the set off was made before 25 September 1990 or that the set off was made as and when the freight was received on dates before 25 September 1990 or even if the set off was made on 25 September 1990 it was made before the receipt of Cascade s manager s letter dated 21 September 1990 on that day then that evidence was always available to Eka Jaya However there was no question of Cascade going back on the fact that Eka Jaya had made a set off and that the set off was made on 25 September 1990 In applications of this kind we would require strict compliance with the conditions laid down in Ladd v Marshall 1 before we would even begin to consider it unless there are other considerations which take the application out of the Ladd v Marshall test 14 There is another preliminary matter of which we must make mention Although the matter before the learned judge was whether Cascade was entitled to a summary judgment or whether Eka Jaya ought to have leave to defend the action under the O 14 procedure he decided that he would hear full arguments on the points of law in issue and decide the action one way or another Before doing so he obtained the agreement of both counsel As no issue was made of this procedural question we propose to say no more except to point out that the procedure followed is not supported by European Asian Bank AG v Punjab Sind Bank No 2 and Jaya Kumar v Subramaniam Mohana Krishnan Anor These two cases only illustrate the court s power to grant summary judgment where the sole issue is a point of law which is clearly against the defendants 15 Having got these preliminary matters out of the way we turn to the appeal itself 16 Cascade relied most heavily on Wehner Ors v Dene Steam Shipping Co Ors and it is with this case we commence our deliberations on the legal issues canvassed at the hearing before us Dene Steam Shipping Co Dene the owners of a vessel called the Ferndene had chartered her on a time charter for a period of 12 months to an American company Brauer The charterparty permitted sub letting of the Ferndene during the period of the time charter and it further provided inter alia that the master although appointed by the owners would be under the order and direction of the charterers Brauer as regards employment agency or other arrangements who would indemnify the owners from all consequences or liabilities that may arise from the master signing bills of lading or otherwise complying with the same The charterparty also provided that the owners shall have a lien upon all cargoes and all sub freights for any amounts due under this charter and the charterers to have a lien on the ship for all moneys paid in advance and not earned During the period of the time charter Brauer sub chartered the Ferndene to Wehner for one transatlantic trip The subcharterparty contained clauses similar to those contained in the charterparty The Ferndene then loaded a cargo of phosphate at New York for delivery at Hamburg under the terms of the sub charterparty A bill of lading signed by the master of the Ferndene was handed to Wehner who indorsed it to the consignee of the phosphate at Hamburg who took delivery of the phosphate upon the terms of the bill of lading in Hamburg Upon arrival of the Ferndene at Hamburg Wehner appointed one Vogemann as the ship s agents to collect the freight payable by the consignee under the bill of lading The consignee paid the amount of the freight due under the bill of lading to Vogemann At the date the consignee paid the freight due under the bill of lading to Vogemann there was due and owing by Brauer to Dene hire under the charterparty which had become due before the Ferndene arrived at Hamburg On a date after the Ferndene was ready to discharge the cargo of phosphate but before the discharge had been completed Dene gave notice to Vogemann that they claimed to exercise their lien for hire then due or to accrue due during the discharge under their charterparty upon the whole freight collected from the consignee which Vogemann had not at that time remitted to Wehner and had not pledged himself in account to do so Dene subsequently claimed to detain so much of the cargo of phosphate as had not been discharged which became the subject of litigation in the German courts Brauer was practically insolvent Dene had previously commenced an action in the Hamburg courts against Vogemann claiming 800 being part of the freight in his hands in which action Dene had subsequently obtained judgment Wehner then claimed the 800 as money had and received by Dene to Wehner s use 17 On these facts Channell J decided that Dene were accountable to Wehner for the 800 but Dene were entitled to retain therefrom such sums of money as were due to them from Brauer under the charterparty His reasoning as stated in his judgment at pp 98 to 100 is as follows In ordinary cases where the charterparty does not amount to a demise of the ship and where possession of the ship is not given up to the charterer the rule is that the contract contained in the bill of lading is made not with the charterer but with the owner and that will I think explain away and accounts for all the difficulties which would otherwise arise as to the existence of the shipowner s lien When there is a subcharterparty there is no direct contract between the sub charterer and the owner and if the contract in the bill of lading were made not with the owner but with the subcharterer how is the shipowner s lien to be accounted for as against the holder of the bill of lading It would be very difficult to deal with the question upon any logical or intelligible footing unless one starts with the proposition that the bill of lading contract is made as it appears upon its face to be made with the shipowner In support of that view there is the high authority of Willes J in Gilkison v Middleton 2CB NS 134 and the opinion of the learned author of a work on this subject Carver on Carriage by Sea 4th Ed s 155 That being in my opinion the legal position with regard to the contract in the bill of lading I have next to consider the effect of the clause in the charterparty which provides that the captain though appointed by the owner shall be under the orders and direction of the charterer as regards employment and agency and shall sign bills of lading at any rate of freight that he may be directed by the charterer Now although the owner has the right to demand the bill of lading freight from the holder of the bill of lading because the contract is the owner s contract yet the owner has also of course contracted by the charterparty that for the use of his ship he will be satisfied with a different sum which will also in the great majority of cases be less than the total amount of the bills of lading freights and therefore if the owner were himself to demand and receive the bills of lading freight as he might do if he chose he would still have to account to the charterer or the sub charterer as the case might be for the surplus remaining in his hands after deducting the amount due for hire of the ship under the charterparty Of course in practice an agent is usually appointed to receive the bill of lading freight though not necessarily because the captain may receive it himself and under this charterparty the captain has to appoint as agent any person whom the charterers may select which is a very reasonable arrangement because if the business goes smoothly and the charterparty hire is duly paid the charterers are the persons really interested in receiving the bill of lading freight But if I am right as to the bill of lading contract being with the owner then it seems to me to follow that the agent appointed to receive the bill of lading freight becomes by the very act of appointment the agent of the shipowner to receive the freight for him and the agent s receipt binds the shipowner With regard to the defendants Dene s claim to the freight in the hands of the ship s agents Vogemann s that claim was put forward before the agents had in fact remitted the money to the plaintiffs Wehner in New York or had in any way given them credit for it in account and in my opinion the defendants had the prior right to receive that freight from the agents subject to this that after satisfying the amount of their lien for any sum due for hire or otherwise under the charterparty with Brauer Co they would have to account to the plaintiffs for the balance if any 18 We must next consider Molthes Rederi Aktieselskabet v Ellerman s Wilson Line Limited The steamship Sproit owned by Molthes was chartered for a period of 12 months by Maurice Elliff Co The charterparty was not a demise of the ship and Molthes throughout remained in possession and control of her Sub letting of the Sproit was permitted The charterparty provided inter alia as follows 9 That the captain shall prosecute his voyages with the utmost dispatch and shall render all customary assistance with ship s crew Although appointed by the owners the captain shall be under the orders and direction of the charterers as regards employment agency or other arrangements and the charterers hereby agree to indemnify the owners from all consequences or liabilities that may arise from the captain or officers personally or by agents signing bills of lading or other documents or otherwise complying with such orders as well as from any irregularity in the steamer s papers or for over carrying goods Owners shall not be responsible for shortage mixture marks nor for number of pieces or packages nor for damage to or claims for cargo caused by bad stowage or otherwise the stevedore being employed by the charterers 21 That the owners have a lien upon all cargoes and all sub freights for hire and general average contribution and for all expenses and damages due under or for breach of this charter and charterers to have a lien on the steamer for all moneys paid in advance and not earned 19 During the period of the charter the Sproit was sub chartered on a voyage charter to carry a cargo of wood from Riga to Hull This charter provided that bills of lading were to be prepared in the form indorsed on the charter and signed by the master and that the master or owners Molthes were to have an absolute lien upon the cargo for all freight dead freight and demurrage Bills of lading in this form were issued to the shippers at Riga The freight on a considerable part of the cargo was payable and was paid in advance to the time charterers Maurice Elliff Co s agents at Riga but the freight on part of the cargo consisting of pit props was not due in advance but was to be paid in Hull on right delivery thereof The defendants Ellerman s had been appointed by Maurice Elliff Co who were already in arrears of a considerable amount of hire money as their agents to attend to the discharge of the vessel and collect the freight 20 While the vessel was discharging but before any freights had been paid in respect of the pit props Molthes solicitors telephoned Ellerman s saying that they had been instructed to collect the freights payable at Hull and if necessary to have a lien placed on the cargo to secure payment and asked for an assurance that Ellerman s would collect the freights on Molthes account Ellerman s were not prepared to give that assurance Further discussions followed and eventually Ellerman s agreed to collect the freights on Molthes account by which time the greater part of the goods on which freight was payable had been discharged from the vessel The day after Ellerman s had so agreed the freight was paid and upon receiving the freight Ellerman s wrote immediately to Molthes in which they said that the freight would be absorbed by their disbursements and refused to discharge the balance of the cargo pending definite instructions from Molthes to discharge at their expense These instructions were later given 21 Greer J held that Molthes were entitled to the freight collected by Ellerman s less the expenses they had incurred in discharging the balance of the cargo after they had agreed to collect the freight on Molthes account because first notice of claim was received by the agent Ellerman s before collection of the freight secondly the agents agreed to collect for the owner Molthes and thirdly here there was a bill of lading contract which vested the legal right to the bill of lading freight in the owner See the judgment at p 718 22 It seems clear that both Wehner and Molthes are authority for the proposition that a time charterer s bill of lading which the time charterer is authorized to issue by the terms of the charterparty not being a demise charter with the shipowner is a contract between the shipowner and the shipper vesting the legal right to the bill of lading freight in the shipowner but that right which is derogated to the charterer by the terms of the charterparty can only be divested by notice from the shipowner if and only if that notice intercepts the receipt of the bill of lading freight by the charterer or his agent 23 But Wehner goes further than this and decided that the shipowner could claim the bill of lading freight as of right notice or no notice from the holder of the bill of lading or the charterer s agent and even in the hands of the charterer s agent provided that the freight had not yet been remitted to the charterer or in any way given credit for in account with the charterer subject only to accounting to the charterer for the surplus remaining in his hands after deducting the amount due for hire of the ship under the charterparty Greer J in Molthes doubted the correctness of this part of the judgment in Wehner He addressed the question as follows at p 715 But it seems desirable also to consider and answer the question whether notice from the shipowners to the agents was or was not of itself sufficient to entitle the owners to the money received for freight after receipt of the notice If the decision in Wehner v Dene Steam Shipping Co is correct it follows that in every case where bill of lading freight is received by the agent nominated by the charterers the shipowner can intervene and claim the freight in the hands of the agents as his money That he can intervene successfully before receipt of the freight by the agent seems to me to be the necessary consequence of holding as Channell J did in the case cited that the bill of lading contract is a contract between the shipowner and the shipper and not a contract between the charterers and the shipper If this be so the legal right to the freight is in the owner and not in the charterer and the former can intervene at any time before the agent has received the freight and say to him I am no longer content that the charterer should collect the freight If you collect it at all you must collect it for me If the agent then collects the freight it follows that the shipowner can sue for it as money had and received The judgment in Wehner v Dene Steam Shipping Co goes beyond this in that it decides that the agent must account for bill of lading freight received by him before notice of the owner s demand that it should be paid to the owner In so far as the case so decided it seems difficult to reconcile the decision with that of the Court of Appeal in Tagart Beaton Co v Fisher Sons 1903 1KB 391 24 Chao Hick Tin J also expressed doubts as to the correctness of this part of the judgment in Wehner We are in general agreement with him on the observations he made He said 1992 1 SLR 197 at 203 in the normal course there is no reason for the shipowners to be concerned with the freights to be collected on such bills of lading The shipowners are only entitled to the hire charges as provided in the charterparty They will only be concerned when there are outstanding hire charges in which event they will be entitled to intervene and demand payment from the shippers In my judgment this entire arrangement is more consistent with there being an implied understanding that notwithstanding the existence of cl 4 in the bill of lading the freight due under such a bill of lading belongs to the charterers unless the shipowners intervene and demand that payment be made to them or demand that the charterers agents receive the payment on their behalf To say that all freights collected by the charterers agents are automatically collected on behalf of the shipowners even before any notice is given or demand made by the shipowners does not appear to be in consonant with the factual position The circumstances of this case do not warrant the suggestion that the defendants Eka Jaya had collected the freights on behalf of the plaintiffs Cascade as shipowners Without Wehner I would have less hesitation in holding that the freights already collected by the defendants were collected on behalf of the charterers Samudera It seems to me that the court in Wehner held that the shipowners were entitled to the freight collected by the agents of the sub charterers because it also held that the agents were also agents of the shipowner and the only reason for the latter determination was that the court felt that as the bill of lading was a contract of carriage between the shipowners and shipper the agents of the sub charterers were automatically the agents of the shipowners Granted that by the very nature of a time charter it is understood between the shipowners and the charterers that the charterers could issue a bill of lading with the demise clause It is also understood that the charterers agents could pay over the freights they have collected to the charterers Surely it must also be understood between the parties to the time charter that the freight due under such a bill of lading would go to the charterers and the shipowners would have no direct interest in it until and unless the shipowners wish to exercise their rights and give notice Therefore must it necessarily follow that the agents of the charterers are ipso facto also the agents of the shipowners to collect freights I entertain considerable doubts whether I should follow this part of the decision in Wehner However for the reasons set out in the next two paragraphs I do not think I need make a definite ruling on this point in order to dispose of this action 25 In the event the learned judge dismissed Cascade s claim on the ground that Eka Jaya were entitled to and did set off the freights collected by them before the receipt of Cascade s notice of claim against the amounts due to them from Samudera 26 Now the rule that the contract contained in a bill of lading issued by the charterer under the authority contained in a charterparty which does not amount to a demise of the ship and where possession of the ship is not given up to the charterer is a contract between the shipowner and the shipper is a well established rule The rule was already established before Wehner was decided in 1905 and before what we now know as the demise clause became a common feature of a time charterer s bill of lading It will be noted that there is no reference to a demise clause in the bills of lading either in Wehner or in Molthes If there was such a clause it is inconceivable that no mention was made of it in the reports of Wehner However that may be the introduction of a demise clause simply confirms the existence of the rule Brandon J dealing with the effect of a demise clause in all respects similar to cl 4 in The Berkshire said at p 188 All the demise clause does is to spell out in unequivocal terms that the bill of lading is intended to be a shipowners bill of lading The charterparty entitles the charterers to present to the master for signature by him on the shipowners behalf or to sign themselves on the same behalf bills of lading of that kind How then can it be said that the demise clause is within the meaning of the principle set out above an extraordinary clause In my view so far from being an extraordinary clause it is an entirely clear and ordinary clause 27 The judgment of Brandon J in The Berkshire was confirmed by the Court of Appeal in The Vikfrost 28 The Berkshire and The Vikfrost did not deal with the question of the shipowners prior right to receive the bills of lading freight They dealt with the shipowners obligations of carriage under the contract evidenced by the bills of lading of the kind as the bills of lading in this case 29 Counsel for Cascade apart from relying heavily on Wehner also relied on the demise clause in the bill of lading in support of his argument that because a bill of lading issued in the circumstances of this case was a contract between the shipowner and the shipper the shipowner had the legal right to the bill of lading freight without the necessity of giving notice to the shipper to pay the freight to the shipowner and also to claim the freight in the hands of the charterer s agent if the shipper had already paid the freight provided that the charterer s agent had not yet appropriated the freight to the charterer or to the charterer s account It will be remembered that Cascade who had originally founded their claim on the lien clause in the charterparty cl 18 later shifted their ground to the demise clause in the bill of lading In our judgment this argument whether based on the authority of Wehner or on the demise clause in the bill of lading or on a combination of both is misplaced 30 We return again to the judgment of Greer J in Molthes At pp 716 and 717 he said Though Channell J bases his judgment in Wehner v Dene Steam Shipping Co on the fact that the bill of lading contract is with the owner and therefore the owner in claiming the freight was only claiming what was legally his he still speaks of the owner s rights as arising out of his lien It is difficult to understand how a shipowner can be said to have a lien on that which ex hypothesi is his own property and which he is entitled to because it is his own A lien is a claim by a person in possession of the property of another who has the right to keep possession until the owner pays the debt in respect of which the possessor is entitled to the lien It seems a misuse of words to say that a shipowner has a lien on the debt due to him under the contract made with him by the bill of lading The lien clause in the charterparty is needed to give the owner a lien in those cases where the sub freight is due to the charterer and not to the owner as where goods are carried on a sub charter without any bill of lading In such a case the owner could only become entitled to the sub freight by virtue of the lien clause and it would be too late to exercise this lien after the debt had been paid to and received by the charterer personally or through his agent The actual decision in Tagart Beaton Co v Fisher Sons goes no further than this It only governs a case where the shipowner is bound to rely on a lien and does not affect the case where he can claim the freight as due to him on his bill of lading contract Whether the owner in the latter event can claim the freight in the hands of an agent of the charterer after it has been received by such agent without notice of claim by the owner is a question which it is unnecessary to decide in the present case 31 The very point which we are asked to decide in this appeal was left open by Greer J in Molthes Counsel has not referred us to any case in which this question has been directly decided and we know of none However in The Nanfri although that case dealt with freight pre paid bills of lading there were certain pronouncements of principle made both in the Court of Appeal and in the House of Lords which albeit obiter dicta nevertheless carry much judicial weight and are highly persuasive and considerably assist us in deciding the question which Greer J left open in Molthes We will refer to them 32 The facts in The Nanfri were as follows The Nanfri and two other vessels Benfri and Lorfri were time chartered not being a demise charter in the usual Baltime form The charterparties contained an employment and indemnity clause similar to to cl 9 and a lien clause in terms identical to cl 18 also 9 and 18 in the charterparties The bills of lading were signed by the charterers on behalf of the masters They were marked freight pre paid and the freight was collected by the charterers or their agents Under the charterparties the charterers were required to pay the charterhire in advance without discount However the charterers in making the charterhire payments continually made deductions setting off amounts allegedly due to them under the charterparties The owners desired to receive the charterhire in full without deductions The charterers refused to oblige The owners then gave instructions to the masters to withdraw from the charterers all authority to issue or sign bills of lading on their behalf to themselves ie the masters to refuse to sign any bills of lading marked freight pre paid and to insist that all bills of lading be claused to confer on the owners the lien under cl 18 Consequently the charterers terminated the charterparties and the owners sued the charterers for breach of contract 33 In the Court of Appeal Lord Denning MR said at p 136 of the1978 CA report The lien clause The charterparty contained this clause in favour of the owners It is cl 18 The owners to have a lien upon all cargoes and sub freights belonging to the timecharterers and any bill of lading freight for all claims under this charter and the charterers to have a lien on the vessel for all moneys paid in advance and not earned The owners placed much reliance on that lien clause It gave them a lien on any subfreights and any bill of lading freights It is obvious that if such freights were pre paid there would be nothing on which the lien could operate So in this trade where freight was always pre paid the clause was not much use to the owners The only way in which they could take advantage of the lien was like this If hire was unpaid the owners had to intervene before the freight was paid to the charterers see Tagart v Fisher 1903 1 KB 391 They could give notice to the sub charterer or the shipper telling them of the lien clause and requiring the freight to be paid to them the owners up to the amount of the unpaid hire but the sub charterer or shipper would not pay on that notice except with the agreement of the charterers If the charterers did not agree the sub charterer or shipper would interplead and place the freight in escrow So the lien clause itself was of no use to the shipowners 34 And Goff LJ at p 149 said Secondly they were not exercising or threatening to exercise any lien That they could do only if there were freight payable which they could intercept which there was not and then only by notice given to the party liable to pay that freight which was not given or at that stage threatened to be given All that the owners can urge and they did present this argument very forcibly is that they were entitled to give and if necessary act upon the instructions they did in fact give to the masters in order to secure that any freight becoming payable would be amenable to their lien That however could only be so if at all if they were entitled notwithstanding cl 9 of the charterparty to refuse to issue freight paid and unclaused bills of lading which is what they assert But in my judgment that is not the true construction of the clause Under cl 9 the master was bound to sign bills of lading laid before him in any proper form and the trading for which this vessel was intended clearly required freight paid bills of lading and unclaused bills of lading to be issued by the owners 35 In the House of Lords Lord Wilberforce said at pp 205 206 of the 1979 report There can be no exception taken to a general proposition that a charterparty as any other contract must be taken as a whole the obligations and rights created by one clause must be read in the light of the fact that it forms part of a complex of contractual provisions It is important in this connection to have in mind that the present charters are time charters the nature and purpose of which is to enable the charterers to use the vessels during the period of the charters for trading in whatever manner they think fit Furthermore cl 9 as is usual in time charters contains an indemnity clause against all consequences or liabilities arising from the master signing bills of lading This underlines the power of the charterers in the course of exploiting the vessel to decide what bills of lading are appropriate for their trade and to instruct the masters to issue such bills the owners being protected by the indemnity clause But the appellants contend that at any rate the charterers have no right to require the master to issue bills of lading which would defeat the owners right of lien this under cl 18 extends to all cargoes and sub freights belonging to the time charterers and any bill of lading freight A freight pre paid bill of lading might prejudice this lien since if the freight had been paid before the lien was sought to be exercised there would be nothing on which it could operate In my opinion this argument attributes too much force to the lien clause This clause just as much as cl 9 must be read in the context of the whole contract and must be related to the commercial situation which exists under time charters The lien clause must be read as giving the owners a lien upon such freights or sub freights as in the event come to be payable and which in fact are payable under any sub charter or bill of lading but it cannot be read as interfering with the time charterers primary right to use the ship and to direct the master as to its use 36 And Lord Russell of Killowen said at pp 210 211 The fact that cl 18 refers expressly to bill of lading freights appears to me to add nothing to the lien conferred by that clause on sub freights belonging to the charterer and serves only to distract the mind from the true scope of the lien The lien operates as an equitable charge upon what is due from the shipper to the charterer and in order to be effective requires an ability to intercept the sub freight by notice of claim before it is paid by shipper to charterer The simple question is whether the marking of bills of lading freight pre paid interferes with that ability to intercept It cannot If freight is in fact pre paid before issue of the bill of lading cadit quaestio If not how does the marking freight pre paid interfere with such ability to intercept as may be available to the other For these reasons I say that the justification suggested by the owner for its actions is fallacious For the owner the only answer put forward was that it would be strange that if the master for the owner signed a bill of lading freight pre paid the owner should demand of the shipper that freight not paid should be paid to the owner I see nothing impossible in this The shipper would if necessary interplead He could not not having paid the freight assert that he had paid nor could he assert an estoppel against the owner he would be simply faced with rival claims not caring which was right and knowing only that he owed someone the sub freight 37 The demise clause is really no more than a confirmation of the common law rule that the bill of lading issued pursuant to a time charterparty is intended to be a shipowner s bill of lading See The Berkshire and The Vikfrost Be that so the demise clause becomes operable only in the context of a time charterparty for only then does the question arise whether the shipowner who has agreed to hire his ship to the time charterer for his use in consideration of the charterhire he has agreed to receive from the time charterer can

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  • The "Asia Star"[2007] 3 SLR 1; [2007] SGCA 17
    cl 1 a of the Vegoilvoy form 18 In considering the interplay between cl 1 a and cl 1 b of the Vegoilvoy form the judge construed both clauses and concluded that cl 1 a conferred an overriding obligation on the Owners to exercise due diligence to provide a cargoworthy vessel in the sense of its fitness to receive and carry the stipulated cargo and the overriding obligation could only be modified or restricted by clear words to that effect In support of that proposition the judge relied on Sleigh v Tyser 1900 2 QB 333 a decision of the English court that was approved and followed by this court in Sunlight Mercantile Pte Ltd v Ever Luck Shipping Co Ltd 2004 1 SLR 171 The judge ruled that the language of cl 1 b was not express pertinent and apposite enough to modify or restrict the overriding obligation in cl 1 a In the result the judge held that the Owners could not cancel the fixture under cl 1 b 19 Turning to cl 15 of the Vegoilvoy form the judge held that the Owners could not rely on that clause to cancel the fixture on the ground of unclean tanks Clause 5 being a special provision on tank cleanliness and the printed term cl 15 were inconsistent with each other and to that extent could not be reconciled Applying The Brabant 1965 2 Lloyd s Rep 546 to the present case the judge read cl 5 as prevailing over the standard printed provision of cl 15 Besides the judge reasoned that given the state of the coating breakdown no amount of cleaning would rectify the fundamental defect as so much of its epoxy coating has been worn out The appeal 20 Before the judge the Owners challenged the deterioration of the epoxy coatings as recorded in the Notice of Reserve by Zulkiflee There was much debate as to the accuracy of the inspection and the nature and degree of the coating breakdown The same arguments were raised in the Appellant s Case The Owners main argument was that the findings of Zulkiflee and BMI were untrue Their attempt to denounce the results of the visual examination of their own P I Club appointed surveyor as a plain copying of Zulkiflee s inspection results was rejected by the judge who nonetheless formed the view that Zulkiflee did a fairly thorough job in his visual examination of the cargo tanks and that his assessment of the poor condition of the epoxy coatings was borne out by BMI s inspection However at the hearing of the appeal we note that counsel for the Owners Mrs Thio Ying Ying departed from the Appellant s Case and she conceded that coating failure as reported by Zulkiflee had occurred With that concession she abandoned the arguments set out in the Appellant s Case that questioned the substratum on which the assessment of the unsuitability of the tanks for loading was founded In addition Mrs Thio confirmed that the Owners were no longer relying on cl 15 of the Vegoilvoy form as one of the grounds for cancelling the fixture 21 In the light of the Owners concessions the two main grounds of appeal are as follows The first relates to the issue of breach of the fixture There are two distinct breaches which are a the failure to provide a vessel with epoxy coated tanks on account of the breakdown of the coatings as reported on 19 January 2004 contrary to the express term of the fixture that the vessel s tanks were epoxy coated ie the vessel s description epoxy coated and b the vessel s cargoworthiness and the Owners duty to exercise due diligence before and at the commencement of the voyage to make the tanks in which cargo is carried fit and safe for its carriage and preservation under cl 1 a of the Vegoilvoy form The second ground of appeal is on the Owners contention that even if either breach is proved they have the contractual right to cancel the Asia Star without incurring any liability to the Charterers The Owners arguments 22 In the first ground of appeal Mrs Thio s main contention is that there was no credible evidence that cargo contamination would result from the breakdown of the epoxy coatings as reported The Charterers had failed to establish that the state of the cargo tanks warranted any concern that the vessel was unfit to load the stipulated cargo of RBD palm oil In having not established the possibility of cargo contamination by the condition of the epoxy coatings it could not be said that the tanks were not coated contrary to the express term relating to the vessel s description epoxy coated For the same reason neither could the Owners be in breach of the warranty of seaworthiness under cl 1 a of the Vegoilvoy form to provide a vessel fit to carry the stipulated cargo These submissions in our judgment are not well founded for the reasons discussed later 23 Mrs Thio seeks to denounce the probative value of the evidence relied upon by the judge to conclude that the poor coating condition would damage the cargo First the judge had erroneously taken into consideration the regulations promulgated by FOSFA FOSFA Regulations which were not incorporated into the fixture in arriving at the decision that the Owners had breached the express term in the fixture requiring epoxy coated tanks Second Zulkiflee was not competent to comment on whether or not the designated cargo of RBD palm oil would be damaged as a result of the state of the cargo tanks Third BMI s preliminary report was inadmissible as hearsay Fourth GPH s evidence was unreliable as his expert opinion was premised on a study primarily on the importance of tank coatings in the carriage and storage of crude palm oil which was totally irrelevant and hence inapplicable to refined palm oil which has a lower free fatty acid FFA content Mrs Thio has explained that the FFA content of crude palm oil 3 5 is higher than refined palm oil 0 1 and that the FFA content is a major factor in determining the absorption of iron from mild steel tanks and the attendant contamination of the oil In the circumstances Mrs Thio argues that there was no scientific basis for GPH s testimony that the shipment of the designated cargo oil in mild steel tanks would result in iron contamination The judge was wrong to have accepted the evidence of GPH that a one of the major sources contributing to quality deterioration of palm oil products during shipping was the carriage of palm oil products in mild steel tanks or coated tanks with a significant area of mild steel exposure b iron from the mild steel would be absorbed in the palm oil during the whole transport process from origin to destination resulting in iron contamination and the longer the voyage the higher the risk of contamination and c the presence of free rust and loose scale would severely aggravate the contamination 24 Mrs Thio lastly submits that as it was not established that the tanks were unfit to load the stipulated cargo it was unnecessary to posit any failure of due diligence in the providing a cargoworthy vessel Nonetheless the Owners boldly claimed that they had discharged the burden of proving due diligence in the face of their earlier and subsequent experience alluded to in an earlier paragraph in which the vessel carried the same type of cargo in the same tanks with no resulting trace of cargo contamination 25 The second ground of appeal is based on an alternative tack It is said that even if the Owners had been in breach on account of the poor state of the tanks coating and the vessel was therefore not cargoworthy or was unfit for the loading and carriage of the designated cargo the Owners were nonetheless entitled under cl 1 b of the Vegoilvoy form to cancel the fixture which they did on 19 January 2004 No further facts were relied upon under this alternative head beyond those said to justify the cancellation of the fixture 26 The Owners case is that the Charterers claim for damages for breach of the fixture must fail on a true construction of cl 1 b as the cancellation of the fixture was without any liability on the part of the Owners Clause 1 a was an express warranty of seaworthiness and the judge mistakenly applied the principle of interpretation applicable to implied warranty of seaworthiness which was that an exemption clause would have no effect on the implied obligation to provide a seaworthy vessel in the absence of express clear and apposite language If the judge was right in his interpretation of cl 1 a as imposing an overriding obligation Mrs Thio argues that the option of cancelling in cl 1 b would never be capable of being exercised in situations like the present one where repairs to the tanks could not be done within 24 hours and at reasonable expense The Charterers arguments 27 Counsel for the Charterers Mr R Govintharasah submits that the divergence in the treatment of breaches of an express and implied obligation was no different from the approach taken by the courts in construing limitation and exclusion clauses As cl 1 b was an exclusion clause the judge was correct in concluding that cl 1 b was to be read subject to cl 1 a If the Owners construction of cl 1 b was upheld it would mean that the Owners could tender a vessel with her tanks coating substantially deteriorated and yet be able to cancel the fixture by walking away free of any liability or consequences Such a result as Mr Govintharasah points out would rob the contract of any commercial efficacy 28 Mr Govintharasah went on to explain the purpose of contracting for epoxy coated tanks Epoxy coating was required to prevent damage to RBD palm oil by contact with the mild steel surface of the cargo tanks As it turned out the tanks were not epoxy coated as contracted for and the judge was correct to read epoxy coated as requiring the epoxy coating to be in a sound condition for such an interpretation gave effect to the plain and ordinary meaning of the words in the context of the carriage of refined palm oil which was susceptible to contamination and damage from carriage of the palm oil in mild steel tanks As the tanks coating had broken down by as much as 40 the Owners were correctly held to be ipso facto in breach of the term relating to the vessel s description epoxy coated 29 In addition the Charterers assert that the condition of the epoxy coating as reported affected the vessel s cargoworthiness By presenting a vessel that was unfit to load the designated cargo of RBD palm oil from Belawan to Turkey the Owners failed to exercise due diligence to comply with their express obligation of cargoworthiness which is an aspect of seaworthiness under cl 1 a of the Vegoilvoy form 30 As for the expert witnesses Mr Govintharasah in highlighting the professional standing of the experts maintains that the judge rightly accepted the evidence of GPH who was a qualified and trained chemist with the requisite knowledge and working experience in dealing with shipments of refined palm oil in epoxy coated cargo tanks and the effect of shipping refined palm oil in mild steel tanks In contrast the Owners expert Ong Ngai Gee Ong was not a chemist but it was conceded that he had a working knowledge of the transportation of refined palm oil having dealt with contamination claims in the past GPH s testimony should be preferred as it was based on studies on the carriage of both crude and refined palm oil and the studies did not draw any distinction between the two types of oil products in terms of the conditions in which they should be stored or carried Notably the Owners expert Ong did not make any distinction of a similar nature between the two types of oil products Neither did he adduce evidence that carriage of refined palm oil in mild steel tanks would have little or no effect on refined palm oil as compared to crude palm oil In fact Ong in cross examination admitted to the contrary that if the coatings had broken down by as much as 40 the cargo tanks would have been unfit to receive and carry the cargo in question 31 Turning to cl 1 b of Vegoilvoy form the Charterers maintain that the judge had rightly construed cl 1 a as imposing an overriding obligation on the Owners since there was no clear and apposite language in cl 1 b to exempt the Owners from liability arising from their failure to exercise due diligence to make the cargo tanks cargoworthy Mr Govintharasah argues that to hold otherwise would be to contradict cl 17 a of the Vegoilvoy form that provides that the Owners shall not be liable for inter alia any failure in performance of the charter arising or resulting from uncargoworthiness of the vessel whether existing at the beginning of the voyage or developing during the voyage where there was no want of due diligence on the part of the shipowner to make the vessel seaworthy In addition the commercial efficacy of the contract would be lost if the Owners construction of cl 1 b was upheld Discussion and decision Was there a breach of the term relating to the vessel s description epoxy coated 32 In this appeal the Charterers are not asserting that term relating to the vessel s description epoxy coated was a condition of the fixture which entitled them to reject the fixture Repudiation of the fixture by the Charterers was never an issue as it was the Owners who had cancelled the fixture under cl 1 b of the Vegoilvoy form and had raised cl 1 b as a defence to the Charterers claim for damages for breach of the fixture The Owners who had initially filed a counterclaim against the Charterers for refusing to load eventually dropped their counterclaim at the hearing below Although divergent positions were taken in the pleadings both parties accepted in the end that the provision relating to the vessel s description epoxy coated was an intermediate term entitling a claim for damages for any loss suffered as a result of the misdescription Jason Wang confirmed this in his written testimony where he said The term Epoxy coated coiled in the email fixture recap of 15 November 2003 is a general description of the type of coating of the Vessel s tanks and that the tanks would be equipped with a heating coil i e in the present case the Vessel s tanks were to be epoxy coated and coiled 33 As stated at 3 above the notice of readiness of 14 January 2004 was not accepted and loading was refused by the Charterers as the vessel s cargo tanks were not epoxy coated and hence did not accord with the description epoxy coated Mr Govintharasah s argument that the Charterers refusal to load was due to the condition of the tanks coating is the same point put in a different way In this regard the question is not whether the Charterers were justified or not in refusing to load the contracted cargo but rather whether the evidence establishes a breach of the term relating to vessel s description epoxy coated which generally de minimis discrepancies aside has to be correct at the time the charter was entered into The misdescription was as is usual discovered by the Charterers upon inspection of the cargo tanks after tender of the notice of readiness of the vessel to load 34 In the present case we fully agree with the judge that the fixture was for epoxy coated cargo tanks The fixture was of a named vessel the Asia Star Added to the description of the named vessel were words of description in reference to her cargo capacity and epoxy coated tanks All these particulars formed part of the contractual description of the vessel at the time of the fixture Significantly the vessel s description was not accompanied by words of estimation such as about or approximately In contrast and by way of illustration the fixture of the Asia Star to Raffles Shipping and Investments Pte Ltd dated 24 March 2004 on Shelltime 4 form stated that the cargo tanks were fully coated in that about 85 95 coatings remain in each tank These are qualifying words and in this way the Owners were not giving any warranty as to the state of the coating If authority is needed we refer to The Lipa 2001 2 Lloyd s Rep 17 In that case the vessel s description was a typed clause setting out particulars of the vessel including her name flag and identity of the disponent owners as well as the details of her engines and her cargo capacity including her speed consumption in various weather conditions The final paragraph of that clause provided as follows All details about all details given in good faith but without guarantee The question for determination in that case was whether the charterparty properly interpreted contained a warranty about fuel consumption of the vessel The charterers had complained that the consumption of excessive quantities of fuel constituted a breach of the warranty It was argued that the qualifying words applied to the fuel consumption provision which was given in good faith but without guarantee The words without guarantee prevented the shipowners from being held to an absolute warranty Andrew Smith J held that if and in so far as a provision in the charter was qualified by the words without guarantee such a provision was not a warranty 35 Reverting to this appeal of relevance to the issue before us is the contextual meaning of the contractual language epoxy coated As stated the Owners contention that the words epoxy coated had no real meaning was roundly rejected by the judge There is no difficulty with the word epoxy The coating is an epoxy paint The vexed question is the meaning to be given to the term coated What did coated mean in the context of the fixture In particular could it be said that the cargo tanks were coated in the face of an admitted deterioration of the coatings as reported by Zulkiflee 36 In construing a commercial contract such as this fixture regard must be had to the commercial purpose of the contract and the factual background against which it was made The court would take into consideration the language of the fixture and the words used must be construed in the context of the fixture as a whole and set against its factual matrix As Lord Steyn reasoned in Sirius International Insurance Co Publ v FAI General Insurance Ltd 2004 1 WLR 3251 at 18 The aim of the inquiry is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language The inquiry is objective the question is what a reasonable person circumstanced as the actual parties were would have understood the parties to have meant by the use of specific language The answer to that question is to be gathered from the text under consideration and its relevant contextual scene 37 The Asia Star is an old vessel that was built 21 years ago at the time of the fixture The cargo tanks were made of mild steel and the Charterers contracted for epoxy coated tanks for the carriage of RBD palm oil from South East Asia for delivery at a range of optional discharge ports Conventional wisdom demanded the use of epoxy coated tanks to ship RBD palm oil to prevent or minimise cargo contamination by contact with the mild steel surface of the cargo tanks in the course of a relatively long voyage In addition the Charterers undertook to load a full cargo subject to a stipulated minimum quantity of 21 500mt and maximum of 22 000mt By this provision the Charterers were obliged and entitled to load either a full cargo as the vessel could safely carry or the stated maximum whichever was the less with the Owners giving a corresponding warranty that the vessel could carry the minimum quantity see Julian Cooke et al Voyage Charters LLP 2nd Ed 2001 at para 6 16 In the context of this mutual obligation and the underlying requirement for coated tanks it would have been reasonable for the Charterers to expect that the tanks coating would support rather than thwart the purpose of the fixture namely to make available to the Charterers a vessel with epoxy coated cargo tanks for the carriage of the cargo in question 38 In our judgment the real issue is that of the adequacy of the coatings for the fixture and the voyage in question In our view the adequacy test will not be satisfied if coating failure is of such a magnitude that it undermines the contract for coated tanks or affects the vessel s cargoworthiness In this connection we find the dissenting decision of the New York arbitral tribunal in The Ficus SMA 2473 25 April 1988 persuasive and of assistance In that case the vessel s tank coatings had deteriorated by 30 On the coatings of the tanks it was contractually stipulated in Part 1 of the Asbatankvoy charterparty under the heading Description and Position of Vessel that the tanks were coated The majority held that the coating breakdown of 30 was not itself a ground to reject the vessel because reasonable wear and tear was expected As such the tanks were coated for the carriage of unleaded naphtha from Algeria to a range of discharging ports The dissenting view which is redolent of the adequacy test was that whilst some degree of reasonable wear and tear to the tank coatings were to be expected at some point obviously the wear and tear will cause the coatings to deteriorate to such a point that they will affect the vessel s cargoworthiness and frustrate the charterer s purpose in seeking coated tanks The dissenting arbitrator decided that damage to the coatings resulting in the exposure of almost one third of rusted tank walls was a fundamental breach of the charter in question He was of the view that the charterer had fixed the Ficus on the basis of the vessel having a history of two prior unleaded cargoes and coated tanks 39 In this case it is an indisputable fact that the negotiations for the fixture continued following the answers provided by the Owners to the Standard Tanker Voyage Chartering Questionnaire 1988 the Questionnaire In particular part of the relevant context in construing the contract is the fact which was known to each party that the Owners had informed the Charterers in answer to the Questionnaire as follows CARGO TANKS FULLY COATED TYPE OF COATING YES EPOXY emphasis added The Charterers thereafter proceeded to contract for epoxy coated cargo tanks As it turned out there is no recognisable distinction between fully coated as stated in the answer to the Questionnaire and coated cargo tanks in the fixture In submissions the Charterers accepted that they did not expect the word coated in the contract description to mean that the vessel s tanks had to be 100 coated In short some coating breakdown was expected and accepted The experts on both sides talked in terms of minimal breakdown In this regard even Ong agreed that a coating breakdown of 40 was not minimal The notion of minimal breakdown came from a FOSFA requirement that m ild steel exposure in coated tanks to be minimal with no loose scale In a FOSFA circular dated 1 January 2002 the notion of minimal breakdown was seen to be applicable to even new coatings The circular pointed out that there could be minor scratches or abrasions on new coatings and such minor infractions were allowable 40 As stated in 15 above the judge accepted Wong s method of classification and held that the epoxy coating was not sound as coating breakdown of 40 with loose scales and blistering of the coatings would render the tanks unfit for use under the fixture since contamination was a likely result from that poor condition While some reasonable wear and tear to the tanks coating was to be expected for the reasons discussed the judge found that deterioration of the coatings by as much as 40 affected the cargoworthiness of the vessel and the fitness of the cargo tanks to receive the cargo in question Corrosion was apparent from the presence of rust on the exposed mild steel surface and remedial action would have to be taken The judge rightly rejected the evidence of the chief officer Ji GuoLiang and the master Cheng XianKun who contended that the breakdown was no more than 10 and was between 1 and 5 respectively None of them produced documentary evidence of their observations which if true would have been recorded somewhere as a matter of shipboard procedure In the circumstances the judge was right not to give any weight to their evidence on coating breakdown 41 In the premises it is clear to us that the Owners in presenting the vessel with epoxy coating broken down by as much as 40 did not give what the Charterers had contracted for at the time of the fixture We agree with the judge that the express term of the fixture that the vessel s cargo tanks were epoxy coated had been breached In our view had the Charterers known at the time of the fixture that the tanks coatings had failed by as much as 40 the fixture would not have been made Would cl 1 b protect the Owners from the consequences of a breach of the term relating to the vessel s description epoxy coated 42 We now come to a related issue arising from the inaccurate description of the tanks coating The issue is whether the Owners had sufficiently protected themselves against any action for breach of the term relating to the vessel s description epoxy coated This brings into consideration cl 1 b of the Vegoilvoy form Simply put does cl 1 b in effect qualify any obligation in respect of the vessel s description epoxy coated in the fixture In our discussion it is necessary to look at the Owners obligations under cl 1 a of the Vegoilvoy form as both clauses have to be read in conjunction 43 In our judgment the Owners obligation under the vessel s description epoxy coated is a separate and independent term of the fixture It is not a contractual obligation which hinges upon or derives from the exercise of due diligence to provide a seaworthy ship and to properly carry and discharge cargo under cl 1 a of the Vegoilvoy form The first sentence of cl 1 b is specifically aimed at the due diligence obligation in cl 1 a which is directed at a period of time before loading see 60 and 61 below Clause 1 b is thus not apt to apply to the situation where at the time of the fixture the Owners had separately and expressly contracted to provide epoxy coated cargo tanks and as it turned out the cargo tanks were not epoxy coated 44 Moreover the term relating to the vessel s description epoxy coated would be denied contractual effect if cl 1 b was otherwise applicable The same concern was echoed in the English decision of The TFL Prosperity 1984 1 Lloyd s Rep 123 which is by analogy of assistance The case there was concerned with the effect of cl 13 of a Baltime charterparty which provided that the shipowners were responsible for delay and loss and damage to goods only if caused by want of due diligence on the part of the shipowners or their managers or by their personal act omission or default The issue before the court was whether the effect of cl 13 would serve to qualify obligations in respect of a detailed description of the vessel set out in cl 26 of the charterparty including a provision of Main Deck 1 10m under the heading Free Height Lord Roskill with whose speech the other members of the House of Lords agreed said this at 130 In truth if cl 13 were to be construed so as to allow a breach of the warranties as to description in cl 26 to be committed or a failure to deliver the vessel at all to take place without financial redress to the charterers the charter virtually ceases to be a contract for the letting of the vessel and the performance of services by the owners their master officers and crew in consideration of the payment of time charter hire and becomes no more than a statement of intent by the owners in return for which the charterers are obliged to pay large sums by way of hire though if the owners fail to carry out their promises as to description or delivery are entitled to nothing in lieu I find it difficult to believe that this can accord with the true common intention of the parties and I do not think that this conclusion can accord with the true construction of the charter in which the parties in the present case are supposed to have expressed that true common intention in writing emphasis added 45 There is further reason why cl 1 b is inapplicable Mr Govintharasah referred us to the New York arbitral decision of The Maaskant SMA 2688 31 July 1990 The dispute in The Maaskant arose out of a Vegoilvoy charterparty The charterer sold soybean oil to the State Trading Corporation of India STC and the Maaskant was chartered to carry the refined soybean oil from New Orleans to India A special provision of the charter cl 6 provided for the Cargo to be stowed in epoxy coated tanks On arrival in New Orleans her tanks were found to be extensively deteriorated of epoxy coatings in more than 50 of the cargo tanks The charterer cancelled the Maaskant and chartered another vessel the Pattaya which was delayed and loading did not take place until two days after the deadline required by the STC contract In the result STC agreed to accept the cargo at a reduced price The charterer sought to recover inter alia the reduction in the price of the cargo In coming to its decision the tribunal reasoned that cl 6 contained a warranty that the tanks were in fact epoxy coated and could not be derogated from notwithstanding the vessel owner s exercise of due diligence to make the tanks fit to load the cargo As the surveyors found the epoxy coatings flaking and peeling the vessel owner was in breach of cl 6 On the question whether cl 1 b of the Vegoilvoy charterparty would exonerate the vessel owner for a breach of cl 6 the tribunal correctly applied the common law principle that the terms of typewritten clause should govern and override the printed clause in the event of a conflict Clause 1 b could not be reconciled with cl 6 and the latter provision being a typewritten clause prevailed over cl 1 b In that context the tribunal said that the charter could not be construed to contain a warranty which if breached gave the party in default the right the cancel the charter Likewise we agree with Mr Govintharasah that the same common law principle applies to the present dispute with equal force and result 46 For the reasons stated cl 1 b does not qualify the contractual obligation in respect of the vessel s description epoxy coated in the fixture to the extent of enabling the Owners to cancel the fixture without incurring any liability The Owners are therefore liable for the breach A dismissal of this appeal on this ground must therefore follow Was there a breach of the Owners obligation under cl 1 a of the Vegoilvoy form 47 Having decided that the vessel did not have coated tanks contrary to the requirements of the fixture it is strictly not necessary to deal with the question of whether there was a breach of the Owners obligation under cl 1 a of the Vegoilvoy form We are nevertheless obliged to consider the second ground of appeal see 21 above since our views with respect differ from the judge on the construction of cl 1 a and cl 1 b of the Vegoilvoy form We begin by first considering whether the admitted deterioration of the tanks coating as reported by Zulkiflee affected the vessel s cargoworthiness in the context of cl 1 a 48 The wording of cl 1 a of the Vegoilvoy form has a well recognised meaning which encompasses different stages of seaworthiness involving the Owners obligation to maintain a seaworthy ship and to properly carry and discharge the cargo Clause 1 a is an express warranty of seaworthiness in the sense of fitness to carry the stipulated cargo The Owners must exercise due diligence to make the vessel cargoworthy for the loading process The focus here is on the coating condition in the context of cargoworthiness and due diligence It is common ground that the Charterers have to prove that the vessel was not cargoworthy Once that is done the burden is on the Owners to establish due diligence by themselves servants and agents as well as their independent advisers 49 Although the loss suffered is the same it bears repeating that a breach of cl 1 a of the Vegoilvoy form is distinct from the breach of the express term relating to the vessel s description epoxy coated which is due to the inaccurate description existing at the time of the contract It therefore follows that even if cl 1 b is applicable to a breach of cl 1 a as argued for by the Owners a breach of the express term of the fixture leaves the way open for a claim for damages which are not too remote We have explained that cl 1 b is no protection for the earlier breach for the reasons stated see 42 to 46 above 50 As noted earlier Mrs Thio argues that the Charterers had not discharged the burden of proof that the vessel was uncargoworthy at the time the vessel was presented for loading Essentially her point is that there was no evidence that cargo contamination was a likely result from the carriage of RBD palm oil in tanks with the coating condition as reported on 19 January 2004 in the Notice of Reserve We disagree with counsel as the facts in evidence do not support her assertions 51 Contrary to the Owners suggestion GPH s evidence was not premised on the FOFSA Regulations as shown in the transcripts of evidence The Charterers accept that the articles relied upon by GPH in his expert report were not solely on refined palm oil However there was no reason to suggest that the articles augmented by GPH s comments would not equally apply to refined palm oil Above all there was no countervailing evidence challenging GPH s testimony in cross examination In particular his answers to a series of questions on this area were clear on this point Q I ve read this article and I believe this article deals solely with crude palm oil Do you agree with me A Yes Q Does this article have any bearing on RBD palm oil A I think so Q Given the difference in levels and the significant

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