Cascade Shipping Inc v Eka Jaya Agencies (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 23 May 1991
• Neutral Citation: [1991] SGHC 69
• Docket Number: Suit No 2084 of 1990
• Date: 23 May 1991
• Published date: 19 September 2003
• Year: 1991
• Plaintiff Counsel: Steven Chong (Drew & Napier)
• Citation: [1991] SGHC 69
• Defendant Counsel: Lai Siu Chiu (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Charterparty,Demise clause,Effect of lien,Requirement of notice to exercise lien,Bills of lading,Entitlement to freight collected before notice,No dispute as to facts,Civil Procedure,Admiralty and Shipping,Implied authority of charterer's agent to deal with freight,Agency,Incorporation of charterparty terms,Summary judgment,Right of set-off,Shipowners' lien over freight for outstanding hire,Authority of agent,Clear-cut issue of law,Court to proceed to hear full arguments

Cur Adv Vult

This is an appeal against a summary judgment granted by the learned assistant registrar ordering the defendants to pay the plaintiffs a sum of $287,315.46 together with $2,928.26 being interest thereon.

The plaintiffs were and are at all material times the owners of the vessel Grace Liberty II. At the relevant time the vessel was on time-charter to an Indonesian company, PT Samudera Internusa (`Samudera`). The defendants were appointed by Samudera as the latter`s agents in Singapore. This appointment was by way of a written agreement. As agents the defendants had collected freight in respect of the cargoes loaded onto the vessel here.

Some of the relevant provisions of the charterparty are these:

9 Master

... The master to be under the orders of the charterers as regards employment, agency, or other arrangements. The charterers to indemnify the owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents or otherwise complying with such orders, as well as from any irregularity in the vessel`s papers or for overcarrying goods. ...

(18) Lien

The owners to have a lien upon all cargoes and subfreight belonging to the time-charterers 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.

(43) Vessel to use charterers B/L or B/L approved by charterers and/or sub-charterers which includes New Both to Blame Collision Clause, New Jason Clause, Clause Paramount and Chamber of Shipping War Risk Clause 1 and 2 during the period of this charterparty. Owners/master authorize charterers or their appointed agent to sign B/L on behalf of the master as per mate`s and/or tally clerk`s receipt without prejudice to the charterparty.

(54) Charterers port agent to do normal agency work for vessel, as usually included in agency work, without payment.

The bills of lading, in respect of which freight had been collected by the defendants, were issued by the defendants as agents of Samudera. This was entirely in line with cl 43 of the charterparty as quoted above.

For the purposes of the present action, the relevant provision in the bills of lading is contained in cl 4:

Agency clause.

If the vessel is not owned by or chartered by demise to PT Samudera Internusa by whom this bill of lading is issued (as may be the case notwithstanding anything that appears to the contrary) this bill of lading shall take effect only as a contract with the owner or demise charterer as the case may be as principal made through the agency of the said PT Samudera Internusa who act solely as agents and shall be under no personal liability whatsoever in respect thereof.

It is not in dispute that in the present case the vessel was not demise chartered to Samudera. Neither was it owned by Samudera.

Because of certain outstanding hire charges due from Samudera, the time-charterers, the plaintiffs on 21 September 1990, through its managers, Norse Management (UK) Ltd, gave notice to the defendants under cl 18 of the charterparty that they were exercising the lien and required the defendants to pay over to the plaintiffs all freight moneys which the defendants were holding or were due to collect on behalf of the charterers. This notice appears to have been received by the defendants on or about 25 September 1990.

On 20 October 1990, the defendants` solicitors informed the plaintiffs` solicitors that as on 25 September 1990 the defendants had collected freight amounting to $287,315.46, which sum was utilized to set off a debt of $341,092.10 due and owing by Samudera to the defendants on that date. The defendants agreed that freight collected on and after 26 September 1990 would be paid over to the plaintiffs.

On 31 October 1990, the plaintiffs were sent a copy of Samudera`s bill of lading. It was only then that the plantiffs noted for the first time the provisions of cl 4 therein. Consequently, on 2 November 1990, the plaintiffs` solicitors wrote to the defendants` solicitors demanding payment of the freight collected as on 25 September 1990 amounting to $287,315.46. They contended that under the terms of the bill of lading the contract of carriage as evidenced by the bill of lading was between the cargo owners and the plaintiffs, the shipowners. Therefore, all freight collected under such bills of lading were due to the plaintiffs and not to the charterers and consequently the defendants had no right to set off the freight against debts owing by Samudera to the defendants. The defendants disputed that. This action is accordingly instituted by the plaintiffs to recover the sum of $287,315.46.

As I see it, the first question which I must address is, with whom had the shippers entered into a contract of carriage. Was it with the time-charterers or the shipowners? Crucial for this purpose is cl 4 of the bill of lading. The effect of a provision like cl 4 has been decided in a number of English cases. This provision is known as the demise clause. In `The Berkshire` [1974] 1 Lloyd`s Rep 185 at p 188, Brandon J (as he then was) in interpreting the demise clause held that:

Despite arguments to the contrary put forward for the shipowners, I see no reason not to give effect to the demise clause in accordance with its terms. The company or line by whom the bill of lading was issued, within the meaning of that clause, is clearly in this case Ocean Wide. It is not in dispute that the ship was not owned or chartered by demise to that company, but was on the contrary owned by the shipowners. It follows that the bill of lading is, by its express terms, intended to take effect as a contract between the shippers and the shipowners made on behalf of the shipowners by Ocean Wide as agents only. The circumstance that Ayers signed the bill of lading as sub-agents for Ocean Wide does not affect the position, which is the same as if Ocean Wide had signed it themselves.

On the first point, therefore, I hold that the contract contained in or evidenced by the bill of lading purports to be a contract between the shippers and the shipowners and not one between the shippers and the charterers.

This view was followed by Webster J in `The Henrik Sif` [1982] 1 Lloyd`s Rep 457 where he said that the bills of lading were `owners` bills as opposed to time characters` bills, evidencing a contract of carriage in the first instance between the owners of the cargo on the one hand and the shipowners, not the time charterers or any other kind of charterers except a demised charterer on the other`. `The Berkshire` [1974] 1 Lloyd`s Rep 185 was also cited with approval by the Court of Appeal in `The Vikfrost` [1980] 1 Lloyd`s Rep 560

It is true that in the above three cases what was basically in issue was the question of liability between the shippers and the shipowners; they did not touch on the question of who was entitled to the freight collected by an agent where the bill of lading contained the demise clause. But it seems to me that the true construction of such a clause cannot vary according to who are the parties to the dispute; it obviously cannot have one meaning in a dispute between a shipper and the shipowners and another meaning in a dispute between the charterers and the shipowners.

This very point was also decided much earlier in the case Wehner v Dene Steam Shipping Co [1905] 2 KB 92 In Wehne r [1905] 2 KB 92 the defendants were the owners of a vessel called Ferndene, which was...