Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 30 January 1995
• Neutral Citation: [1995] SGHC 25
• Docket Number: Suit No 4523 of 1986
• Date: 30 January 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: P Selvadurai and Govindarajulu Asokan (Rodyk & Davidson)
• Citation: [1995] SGHC 25
• Defendant Counsel: Deborah Parker and Grace Ooi (Khattar Wong & Pnrs)
• Court: High Court (Singapore)
• Subject Matter: Concurrent liability in tort and contract,Whether claim for damages could be based on both breach of contract and misrepresentation,Whether contractual rate of interest stipulated for amounts due under contract amounted to a penalty,'Complete contract' clause,Remedies,Remoteness of damage,Contractual terms,Contract,Whether effective to exclude any consideration of implied terms or collateral warranty or misrepresentation,Whether damage reasonably foreseeable at time of contract,Damages,Whether party in breach liable,Breach of contract resulting in innocent party having to pay third party damages,Liquidated damages

Cur Adv Vult

In 1986, some distance off Bombay, Oil and Natural Gas Commission (ONGC), an undertaking of the Government of India, was carrying out oil exploration at a location called Bombay High.

The defendants in this case entered into a contract with ONGC for the construction and delivery of two temporary helidecks and accessories for use at Bombay High.

The defendants had agreed with ONGC to complete the installation of the helidecks at Bombay High by 15 May 1986, that is before the onset of the south west monsoon. The defendants further had agreed to pay ONGC liquidated damages if they failed to complete the installation by the stipulated date. Additionally the defendants had agreed with ONGC that if they failed to complete by the stipulated date the defendants would be responsible for the cost of transporting and storing the helidecks during the monsoon season and for other incidental consequences. The defendants also assumed the responsibility of transporting and reinstalling the helidecks after the monsoon season and agreed to bear the consequential costs.

At that time the defendants did not have their own ocean transport vessel to convey the helidecks from Singapore to Bombay High. The plaintiffs, who carried on the business of ocean transport, made a contract with the defendants to transport the helidecks from Singapore to Bombay High (the contract). The contract was called `marine transport contract` and dated 25 April 1986.

Contract price

The contract stipulated S$210,000 as the agreed lump sum freight payable in two instalments - one-half within 15 days of the commencement of loading and the other half within 15 days of the arrival of the helidecks at the discharging location.

Demurrage

Clause 6(c) of the contract provided as follows:

Upon contractors` tender of notice of readiness to load/discharge shippers shall be allowed a total laytime of eight (8) days to load and discharge the cargo beyond which time demurrage shall be payable by shippers to contractors. The laytime shall be inclusive of but not limited to:

(i) all days of the week, even if such day(s) be declared public holiday(s);

(ii) all working conditions at the ports of loading and/or discharging;

(iii) all weather conditions;

(iv) steaming time between discharge points (platforms) at Bombay High.

The rate of demurrage was S$3,850 per day or pro-rated for part of a day.

The actual installation of the helidecks was to be performed by an American corporation called McDermott International, Inc which had the necessary expertise. Under the arrangement between the defendants and McDermott, the installation work was to commence on 7 May 1986.

Under these circumstances it was of vital importance to the defendants that the helidecks arrived in time for the defendants to complete the installation without upsetting the arrangements they had made with McDermott. So they extracted from the plaintiffs a term limiting the duration of the voyage. Clause 25 of the contract provided as follows:

Contractors will exercise due diligence to ensure duration of voyage Singapore/Offshore Bombay High not to exceed 101/2 days, except where delays in transit are a result of mechanical failure of the vessel, which will constitute `force majeure` and always weather permitting.

The voyage

The plaintiffs assigned the vessel `Progress Carrier I` for the conveyance of the helidecks from Singapore to Bombay High. The vessel arrived at the loading berth on 24 April 1986. Prior to her arrival the Progress Carrier had been idling in Singapore waters and growing barnacles on her bottom. The loading of the helidecks was completed and the vessel sailed from Singapore on 27 April 1986 at 0600 hours. According to the contract stipulation the Progress Carrier should have arrived at Bombay High at the latest by 7 May 1986, that is 101/2 days after sailing. She did in fact arrive there only on 12 May 1986. There was a delay of five days. When the vessel arrived McDermott was not there. As the vessel was delayed the defendants ordered McDermott to take on other work and save the stand-by charges. One of the helidecks (NR-1) was off-loaded within the next 4 days. The weather then turned unfavourable and the other helideck (WI-9) was not off-loaded until 28 May 1986. WI-9 was not discharged at Bombay High but on the mainland and stored there until May 1987.

The plaintiffs` claims

The plaintiffs made these claims: (i) for the second half of the contract sum that is S$105,000; (ii) a claim for demurrage in the sum of S$42,215.25; and (iii) contractual interest at the rate of 11/2% per month on the outstanding amounts.

The demurrage claim was based on the following assertions: Notice of readiness to discharge the cargo was given on 12 May 1986 at 1230 hours at Bombay High Oilfield Development Area. It was accepted by the defendants` representative on 15 May 1986. The representative dated it 12 May 1986 as requested by the Master of the vessel.

The defence

The essence of the defendants` pleadings are as follows: On the freight claim the defendants said that the contract could not be properly described as a `lump sum contract`. The defendants` arrangements with ONGC was made known to the plaintiffs. Further by cl 25 of the contract, the plaintiffs were required to exercise due diligence to ensure that the duration of the voyage from Singapore to Bombay High would not exceed 101/2 days. The voyage exceeded this time stipulation because the plaintiffs failed to exercise due diligence as required by cl 25.

The defendants further relied on fraudulent and negligent misrepresentation. The alleged misrepresentation was that the vessel was capable of making 11 knots and would make 9.5 to 10.5 knots. The vessel failed to make good this claim as she in fact she maintained only 6.5 to 8.5 knots.

They further said that the vessel arrived at Bombay High between 1300 hours and 1800 hours on 12 May 1986 and not at 1230 hours on that day. Notice of readiness was not given on 12 May 1986 but on 13 May 1986 and accepted on 15 May 1986.

In the event, one helideck was discharged and installed but because of adverse weather the other helideck could not be discharged at Bombay High. This meant that the defendants were in breach of their deadline with ONGC with the result that the second helideck which could not be installed had to be discharged and stored on land near Bombay. It was in fact installed in May 1987, just before the onset of next monsoon.

The defendants made a counterclaim for damages and loss and quantified them as to S$693,063.05. The particulars of the alleged loss and damage are as follows:

Foreign Currency Singapore ($)

(1) Weather stand-by paid to McDermott US$ 79,375.00 S$173,434.40

(2) Sums paid to subcontractors for mobilization and demobilization to carry out work at Nhava Yard RS 20,000.00 S$ 3,500.00

(3) Cost of unloading one helideck US$ 5,500.00 S$ 12,017.50

(4) Cost of transporting one helideck to Nhava Yard RS 33,500.00 S$ 5,862.50

(5) Off-loading survey at Nhava Yard US$ 500.00 S$ 1,092.50

(6) Liquidated damages payable ONGC US$ 83,405.60 S$182,241.20

(7) Cost of storage of one helideck atNhava Yard until May 1987 US$ 10,000.00(est) S$ 21,850.00

(8) Storage insurance for months of May 1986 to May 1987 inclusive US$ 1,084.23 S$ 2,369.00 S$ 2,014.00 S$ 4,383.00

(9) Expenditure at Bombay of our clients`personnel in 1986 and 1987 (inclusiveof telephone charges) S$ 15,000.00(est)

(10) Cost of reinstallation of helideckafter monsoon season S$233,663.05(est)

(12) Financial loss under contract with ONGC(US$302,200.00 withheld for 12 months calculated at 5.5% of US$302,200 for 12 months) US$ 16,621.00 S$ 36,316.90

(13) Charges for extension of bank guarantees S$ 1,200.00(est)

(14) Condition survey of Progress Carrier I S$ 2,502.00

S$693,063.05

Item 10 was particularized as follows:

Foreign Currency Singapore ($)

(1) Cost of reloading at Nhava Yard US$ 5,500.00 S$ 12,017.50

(2) Transport for Nhava to WI-7 US$68,500.00 S$149,672.50

(3) Reloading and marine cargo insurancecovering transportation from Nhava to installation site US$ 423.00 S$ 924.30

(4) Reloading survey RS 6,450.00 S$ l,128.75

(5) Reinstallation transition piece at WI-7 US$30,000.00 S$ 65,550.00

(6) Sea-fastening materials US$ 2,000.00 S$ 4,370.00

S$233,633.05

Decision on the plaintiffs` claim

The plaintiffs` claim for the balance of freight was not in dispute. Although the demurrage claim appeared to be disputed in the defendants pleading - see para 22 of the re-reamended defence and counterclaim, the defendants in their submission did not address this point and present any arguments to challenge the claim in principle or on quantum. Indisputably discharging operations did not commence on 12 May 1986 and the vessel was delayed until the helideck WI-9 was discharged. I therefore allow the claim in full.

The contract provided that interest was payable on all unpaid moneys at the rate of 11/2% per month from their due date and it was payable upon invoicing. The invoice for the outstanding freight was issued on 14 May 1986. The invoice for $42,215.25 in respect of the demurrage was issued on 26 June 1986. There is therefore certainty of time from which the interest accrued. The defendants said that this was in the nature of penalty and accordingly they were not liable to pay it. I am of the clear view that the contractual interest in this case is a pre-estimate of damages so that the plaintiffs need not prove what damages they did suffer or would have suffered. This is not a case of the usual kind of damages which arise on a breach of contract. It is an estimate of what revenue they lost as a result of being kept out of the use of money. The loss, of course, depended on the exigencies of the situation during the time the money was held back. It would not be an easy matter to show the exact use the money would have...