PT Independent Research & Advisory Indonesia v Asia MLine Pte Ltd
| Judge | Loo Ngan Chor |
| Judgment Date | 01 February 2010 |
| Neutral Citation | [2010] SGDC 40 |
| Citation | [2010] SGDC 40 |
| Published date | 04 March 2010 |
| Court | District Court (Singapore) |
| Plaintiff Counsel | Matthew Christophe Rajoo |
| Defendant Counsel | Chandran |
| 1 February 2010 |
|
District Judge Loo Ngan Chor:
Background:
1. The plaintiffs are an Indonesian financial consultancy. The defendants are in the business of moving goods internationally.
2. The plaintiffs engaged the defendants to ship their goods “consisting of furniture, carpets and household goods (ie bed, paintings, toys and clothes) from Singapore to their office in Jakarta.[note: i]
3. The plaintiffs prepared[note: ii] an agreement in writing (“the contract”) for the engagement, which the parties signed on 5th June 2008. The plaintiffs were to pay an all-inclusive lump sum price of $13,800. 60% of the price, ie, $8280, was payable on the signing and 40% on arrival of the goods at the plaintiffs’ premises. The goods were to arrive by 22nd June 2008 or within 30 days, there being two clauses[note: iii] stipulating for these two deadlines. Clause 8 of the contract provides that:
Delay or non-performance:
The mover has an obligation to deliver all of the items specified in the packing list to the destination at the latest of 30 (thirty) days after this contract has been signed by both the parties.
In the event the mover does not fulfill its obligations under the terms and conditions of this contract, the [plaintiffs have] a right to get 85% of the money back, whereas the money is the cost incurred due to the movement process.
4. As all the goods could not fit into one container as the parties envisaged, and an additional container was required, the parties agreed on an additional price of $3450 payable in two instalments, ie, $2450 on being invoiced and the balance on final delivery. The plaintiffs duly paid the defendants the sums totaling $10,730.[note: iv] It was not, albeit tacitly or implicitly, the plaintiffs’ case that these two containers were the subject of two agreements. The contract was apt to cover both containers, as part of one shipment of the plaintiffs’ goods, even though the payment terms were different.
5. By a series of mishaps, the defendants never did deliver the plaintiffs’ goods owing to a failure to clear Indonesian customs in Jakarta. It seems that after the plaintiff’s goods failed to clear Indonesian customs a first time in June 2008, they were shipped back to Singapore by the defendants who then made yet another unsuccessful attempt in August 2008 to ship the plaintiffs’ goods back to Jakarta and clear Indonesian customs. By the plaintiffs’ own exertions, after having obtained shipping documents from the defendants on 11th November 2008[note: v], the plaintiffs had their goods shipped, first, back to Singapore, and then to Jakarta, where the plaintiffs’ goods arrived at their office in Jakarta on 27th March 2009.[note: vi]
6. By then, the plaintiffs had sued. The pleadings closed in this action sometime in December 2008[note: vii]. The plaintiffs’ claim in damages total $141,970 and comprises: (a) contract price already paid, $10,730.00; (b) value of goods, $38,013.00; (c) travel and accommodation costs, $4581.00; (d) additional rental on the plaintiffs’ premises incurred by the plaintiffs due to the delay in the delivery of the plaintiffs’ goods, $40,942.10; (e) increase in interior designers/contractors’ fees due to delays in the delivery of the plaintiffs’ goods, $29,703.90; (f) costs of engaging another moving company to relocate identical goods from Singapore to Jakarta, $18,000.[note: viii]
7. The Defence[note: ix] was that the plaintiffs had wrongly declared, in shipping documents, the goods to be of a commercial nature whereas they were in fact a mix of commercial and personal chattels, that personal effects could not be imported into Indonesia unless there was a customs permit. This was in my view a non-defence in that, on the one hand, the plaintiffs must surely have relied on the defendants to advise them on the things to be done, and, on the other hand, the defendants were fully aware what the plaintiffs’ goods were they having collected them. In the defendants’ director, Mr Ng Lay Hui’s, affidavit of evidence in chief, Mr Ng went on to allege that the plaintiffs were trying (a) to defraud the Indonesian authorities and (b) did not forewarn the defendants of the customs restrictions and compliance procedures. I had no difficulty in disregarding the allegation of fraud as it was a material fact that should have been pleaded. The defence at (b), as just mentioned, is a non-starter.
8. Clause 8 of the contract (set out at [3] above) is clearly a clause that purports to limit the defendants’ liability in the event of a breach by the defendants. Its terms are clear. But the legal effect of clause 8 has arisen in a most surprising way. It was the plaintiffs who pleaded clause 8 in their Statement of Claim (Amendment No. 1)[note: x] - to support the proposition that the defendants had a duty to deliver the plaintiffs’ goods within 30 days. The defendants’ pleaded position is that “clause 8 of the Contract is a penalty in law and is therefore unenforceable.”[note: xi] In their Reply, the plaintiffs’ position is that clause 8 of the contract “cannot be construed as a penalty as it is, among other reasons, lower than the Contract price and a form of compensation to the plaintiffs in the event the Defendants breach their obligation to deliver the Goods.”[note: xii] Remarkably, as just shown, the shoes went on the wrong feet. It is in this way that this issue of interpreting clause 8, qua a limitation of liability clause, is a live issue before me.
9. Both parties tried to back-pedal from their pleaded positions. The defendant has, as an alternative to their principal submission that the defendants are not liable at all, now say that clause 8 is a limitation of liability clause.[note: xiii] The plaintiffs say that clause 8 is unclear. Relying on the case of MCST No. 1933 V Liang Huat Aluminium Ltd
Clause 8:
10. Limitation of liability clauses are interpreted less stringently than a total exclusion of liability clause: see Emjay Enterprises Pte Ltdv Skylift Consolidator (Pte) Ltd (Direct Services (HK) Ltd, third party) [2006] 2 SLR(R) 268, per Andrew Phang J, as his Honour then was, at [8] of the judgment. The Emjay case went on to point out that such a clause was an issue of liability and should be pleaded.
11. In my view, clause 8 clearly is a clause in the contract, which the plaintiffs themselves drafted, limiting the defendants’ liability in the event of their failure to deliver as contracted to 85% “of the money back, whereas the money is the cost incurred due to the movement process.”
12. The words “money” and “movement process” are not used elsewhere in the contract. In regard to the original consideration of $13,800, clause 4 uses the word “price”. The word “cost” is used in clause 6 in reference to the balance 40% of the consideration due to the defendants upon final delivery to the plaintiffs. Viewed against the contract as a whole, the limited liability clause which clause 8 clearly is, is capable of several possible (although not equally plausible) interpretations in relation to the yardsticks against which 85% is to be measured – it could be 85% of (a) the amount already paid, ie, $10,730 (see [4] above), (b) the entire consideration of $17,250 (see [3] and [4] above) or (c) all additional damages suffered by the plaintiffs in securing due delivery of the plaintiffs’ goods. On its terms, clause 8 could bear either meaning (a) or (b). Meaning (c) would strain its plain meaning and have me, in effect, re-write the contract. As I am obliged to do given this ancillary lack of clarity, I would view clause 8 contra proferentum against the plaintiffs as the drafter of the contract, to refer to meaning (a).
A limitation of liability clause necessarily dilutes common law rights:
13. In regard to the plaintiffs’ submission that clause 8 does not clearly displace the plaintiffs’ right to claim damages at law, I must say, with respect, that they have misapprehended the Liang Huat case. The Liang Huat case involved a triad of clauses in a building contract. This triad provided that where building defects surfaced, the contractor had to put it right to the employer’s satisfaction, next that where the employer was still dissatisfied the contractor had to perform additional works to satisfy the employer and finally, that where the contractor failed to act accordingly, the employer had the right to effect the necessary rectification and seek reimbursement from the contractor. In Liang Huat, the employer sought damages from the contractor without themselves first rectifying the defects. The question that arose for the Court of Appeal was whether the employer could do so. The majority decision of the court of appeal decided that a breach of the first two clauses just outlined clearly gave rise to a claim in damages by the employer and that the last clause outlined did not clearly revoke the employer’s right to damages at common law. The issue there was neatly captured by part of an excerpt from Hudson’s Building and Engineering Contracts (11th edition) at paragraph 5-053 cited at [22] of the Liang Huat judgment – “It is always a question of construction whether the rights under the maintenance clause are intended to supplant the right to damages at common law altogether…”
14. In the very nature of a valid limitation or exclusion of liability clause, common law obligations are diluted or displaced, as the may be, by the contract of the parties. As Lord Diplock said in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, cited in Emjay at [13]:
[My] Lords, an exclusion clause is one which excludes or modifies an obligation, whether primary, general secondary or...
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