AS Nordlandsbanken and Another v Nederkoorn

CourtHigh Court (Singapore)
JudgeG P Selvam J
Judgment Date14 December 2000
Neutral Citation[2000] SGHC 272
Citation[2000] SGHC 272
Defendant CounselThomas Tan (Haridass Ho & Partners)
Plaintiff CounselMichael Hwang SC and Christine M Chan (Allen & Gledhill)
Published date19 September 2003
Docket NumberSuit No 2040 of 1994
Date14 December 2000
Subject MatterSale of ships,Credit and Security,Guarantees and indemnities,Recital of guarantee stating limitation,Applicable principles,Refusal to take delivery under time charter,Owners incurring losses,Admiralty and Shipping,Time limitation of guarantor's liability,Operating ships on spot market,Time charterparties,Carriage of goods by sea,Assessment of damages,Applicable principals on binding effect of recitals

: The opening

The genesis of this case are two time-charters for the charter of two tankers: The Sangstad (The `Tamar Song`) and The Sommerstad (The `Tamar Summer`).
The names in the brackets were assigned to the tankers by the charterers, Tamar Shipping (Bermuda) Ltd. The tankers were vegetable oil and chemical carriers.

The mind that moved Tamar Shipping (Bermuda) Limited was a Singapore citizen: Mr Robin Hoddle Nederkoorn.
He is the defendant in this case.

The owners of `The Tamar Song` and `The Tamar Summer` were two single purpose Norwegian limited partnerships.
The partners were professionals with little or no experience in shipping. They ventured into shipping as investment opportunities. Not having been initiated in the esoteric business of shipping they entrusted the operation and management of the tankers to those with expertise and experience in the field: AF Klaveness & Co of Norway.

In each case, the charter was for three years with an option for a fourth year plus/minus 30 days in charterers` option.
The rate of hire of each vessel was $11,500 per day for the initial three years. [All amounts here and hereafter are in United States Dollars.]

The charters were signed on 25 October 1991.
Both vessels were mortgaged to the present plaintiffs.

The defendant agreed to guarantee the due performance of the charters for a period of 24 months from the date of the delivery of the vessel.
On 11 December 1991 he executed a guarantee in respect of each vessel. The guarantees provided that `If the charterers failed to execute the charterparty or commit any breach of their obligations under it the Guarantor will indemnify the Owners and their personal representatives against all losses, damages, costs and expenses which may be incurred by them by reason of any default on the part of the Charterers in performing and observing the agreements, obligations and provisions on their part contained in the Charterparty.` The present action is based on the guarantees.

The assignments

The owners of each vessel on 16 December 1991 by a document called `Assignment of Guarantee` transferred and assigned to the plaintiffs in this action all benefits of `The Robin Nederkoorn Guarantee`. The assignment of guarantee stated that `by a Floating Loan Facility Agreement dated 6 December 1989 and as Addendum No 1 dated 16 December 1991 made between the Borrower (ie the Owner of the tanker), a syndicate of banks (ie the lenders) and the Agent (ie the Assignee) the Banks have agreed to make available to the Borrower a loan in the amount of USD6,100,000`. Notice of the assignment was given to the defendant on 16 December 1996.

The repudiation

Even as the defendant, Robin Nederkoorn, signed the guarantees, things had gone wrong for him. He was the alter ego and principal shareholder of a Singapore company called Nederkoorn Pte Ltd. This company had entered into a joint venture with Canadian Pacific (Bermuda) Limited. The joint venture first floundered and eventually foundered. In connection with that both the defendant and his company, Nederkoorn Pte Ltd, were sued in Singapore by Canadian Pacific (Bermuda) Limited. On 17 June 1991 a Mareva injunction was issued against them both. That is another story. It is to be found in:

1 Canadian Pacific (Bermuda) Ltd v Nederkoorn Pte Ltd & Anor [1992] 1 SLR 659

2 Canadian Pacific (Bermuda) Ltd v Nederkoorn Pte Ltd & Anor [1998] 3 SLR 309

3 Canadian Pacific (Bermuda) Ltd v Nederkoorn Pte Ltd & Anor [1999] 2 SLR 18

As a result of the foundering of the joint venture the defendant and Tamar Shipping found themselves in deep trouble.
In the result, Tamar Shipping failed to take delivery of the The `Tamar Song`. The owners took this as repudiation of the charter. Tamar Shipping took delivery of the The `Tamar Summer` on 7 January 1992 but threw it up on 10 April 1992. Once again the owners took the Tamar Shipping`s act as a wrongful repudiation of the charter.

Repossession of the vessels

Following the repudiation the owners were in possession of the vessels. Next the owners found themselves in rough waters. They expected the charters to be `lie on the beach` contracts yielding regular revenue. Now they had to find employment for them. They did not find new charters for them. For some eight months they operated the vessels on the spot market by appointing managers. They did this because their advisers convinced them that they could earn more than $12,000 per day if they operated the vessels in the direct freight market instead of chartering them out on time charters. Once again things did not go the way they planned. Consequently there was no repayment of the bank loans. In the event the mortgagees took possession of both vessels and sold them on 22 December 1992. Each vessel yielded $4.25m. The proceeds were insufficient to off-set the bank loans. So the banks decided to enforce the personal guarantees of the defendant to recover from him damages for breach of contract by Tamar Shipping. Hence this action.

The action

The action was filed by the plaintiffs, AS Nordlandsbanken and Skandinaviska Enskilda Banken (London Branch) on 22 December 1994. A defence was filed on 14 February 1995 and liability was denied. He made a counterclaim. It came up for trial before me on 30 June 1997. There was no trial, however. The defendant consented to interlocutory judgment being entered against him. The counterclaim fell to the ground. Damages were directed to be assessed. I conducted the assessment proceedings. This judgment is in respect of the assessment of damages.

Owners` claim before the action

It would be edifying to state now the evolution of the claims. The owners` P & I Club, that is the insurers of the owners, put forward a claim in a letter dated 29 April 1992. It is the function of the P & I Club to give advisory and financial support to the owners in respect of litigation. They evaluated the market rate for a three year charter at $8,750 per day. It was the mean of two rates given by brokers. Their formulation appears in the ensuing paragraph.

Owners` claims in abortive actions

Long before the present action an action was instituted in the name of the owner of each vessel against the present defendant in Singapore. They were Suit 1722/92 by K/S Sangstad and Suit 1723/92 by K/S Sommerstad. Both actions were filed on 27 August 1992. This was when they were operating the vessels for their own account with the expectation of at least $12,000 per day.

The amended statement of claim in respect of the `Tamar Song` repeated the claim formulated by the P & I Club as follows:

Charter-hire per day at USD11,500 Less 1.25% commission USD 11,365.25
Less market evaluation (USD 9,000+ USD 8,500) 2 USD 8,750.00
Loss per day to Owners USD 2,606.25 x 730 days USD 2,606.25
Calculated on 2 year times charter USD 1,902,562.00
Discounted to Net Present Value at 12% USD 1,722,710.00

The claim in respect of the `Tamar Summer` was stated in the amended statement of claim as follows:

Remaining period 1st year 271 days
365 days less 94 days 365 days
Remaining 2nd year 636 days
Charter-hire per day at USD 11,500 less 1.25% commission USD 11,365.25
Less market evaluation(USD 9,000 +USD 8,5000) 2 USD 8,750.00
Loss per day to Owners USD 2,606.25
USD 2,606.25 x 636 USD 1,657,575.00
Discounted to Net PresentValue at 12% USD 1,500,822.00
Loss from 7/1-111/4 1992 USD 660,299.00
USD 2,161,121.00

These two actions did not proceed to judgment because it was brought in the name of the owners and not the assignees.
The owners having divested the claim by assigning their rights and benefits to the present plaintiffs they had no claim to assert against the charterers or the defendant.

The original claims of the plaintiffs

In the present action the original claims set out in the statement of claim were as follows:

The `Tamar Song` : $3,209,125.07
The `Tamar Summer` : $3,092,015.66

The present claims of the plaintiffs

Then the claims were amended. The final claims set out in the amended statement of claim and asked for a total of $7,249,492.84 for both charters. This was particularised as follows:

`Tamar Song` : $3,540,105.66
`Tamar Summer` : $3,749,387.18

The total claim put forward by the owners was $3,883,831.
Now it ballooned into $7,289,492.84. This was a increase of 87%. If the plaintiffs get judgment for the amount they have claimed that would be a lottery for them. The amount due to them from the owners is far below the claims. The owners do not exist any longer. The plaintiffs assert that they have an absolute assignment and are entitled to the entire amount. How did the claims escalate? I shall explain.

The first explanation lies in the fact that the owners` claim against the defendant was asserted on the defendant`s obligation under the guarantees for two years.
The plaintiffs asserted an obligation for three years. The new assertion was a `lawyer`s point`. Counsel for the plaintiffs said that it was his conception.

The next explanation lies in the numbers that were used to arrive at the nett loss.
The owners used $2,605.25 as the loss per day ($11,365.25 - $8,750). The plaintiffs asserted a loss of about $7,000 per day. According to them the revenue had fallen to approximately $4,500 per day. It is a fall of approximately 60% as opposed to the estimate of about 20% by the P & I Club.

The defendant took the basic position that the owners should not be awarded any damages.
This was on the basis that the owners could have operated the vessels without any loss. He further said that there should be no claim after the sale of the vessels. He had a fallback position in case his basic position was rejected by the court. Under this stance, he said that the...

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    ...The Plaintiff would not be allowed to collect royalties for that period: at [86]. A S Nordlandsbanken v Nederkoorn Robin Hoddle [2000] 3 SLR (R) 918; [2001] 1 SLR 466 (refd) Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337 (folld) Alteco Chemical Pte Ltd v Chong Yean Wah [1999] 2 SLR (R) 915......
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    ...based on the principle of proportionality (see [169] below), further rely on A S Nordlandsbanken and another v Nederkoorn Robin Hoddle [2000] 3 SLR(R) 918 (“A S Nordlandsbanken”), AOD (a minor suing by his litigation representative) v AOE [2016] 1 SLR 217 (“AOD v AOE”) and Ting Kang Chung J......
  • Fong Wai Lyn Carolyn v Kao Chai-Chau Linda
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    • 23 May 2017 the trustee as regards the disposal of the trust shares: at [73], [74] and [76]. A S Nordlandsbanken v Nederkoorn Robin Hoddle [2000] 3 SLR(R) 918; [2001] 1 SLR 466 (refd) Airtrust (Singapore) Pte Ltd v Kao Chai-Chau Linda [2014] 2 SLR 673, HC (refd) Airtrust (Singapore) Pte Ltd v Ka......
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    ...See Poh Chu Chai, Banking Law (LexisNexis, 2011, 2nd Ed.), at page 39. 45 In A S Nordlandsbanken and another v Nederkoorn Robin Hoddle [2000] 3 SLR(R) 918 at [47], the High Court considered ‘the rule of least benefit to the plaintiff’ and stated that “It is also called the rule of minimum l......
1 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2001, December 2001
    • 1 December 2001
    ...were taken as the date no question of mitigation would arise either”. 9.87 In the High Court decision of AS Nordlandsbanken v Nederkoorn[2001] 1 SLR 466, G P Selvam J considered “the rule of least benefit to the plaintiff” (see at 479), as follows (at 480—481): “It is also called the rule o......

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