Fairmacs Shipping & Transport Services Pte Ltd v Harikutai Engineering Pte Ltd and another

• Judge: Belinda Ang Saw Ean J
• Judgment Date: 12 December 2014
• Neutral Citation: [2014] SGHC 262
• Citation: [2014] SGHC 262
• Date: 12 December 2014
• Published date: 26 August 2015
• Hearing Date: 22 July 2014,05 March 2014,06 November 2013,01 April 2014
• Plaintiff Counsel: Joseph Tan and Joanna Poh (Legal Solutions LLC)
• Docket Number: Admiralty in Personam No 324 of 2011 (Registrar’s Appeal No 290 of 2013)
• Defendant Counsel: Mathiew Christophe Rajoo and Andrew Tow (M/s DennisMathiew)
• Court: High Court (Singapore)
• Subject Matter: Damages,Assessment,Conversion,Tort

Belinda Ang Saw Ean J: Introduction

This Registrar’s Appeal No 290 of 2013 (“RA 290”), which was brought by the plaintiff, Fairmacs Shipping & Transport Services Pte Ltd (“FSPL”), arose from the decision of the Assistant Registrar (“AR”) on the quantum of damages awarded on conversion of a consignment of river sand by the second defendant, Marco Polo Shipping Company Pte Ltd (“D2”). The main ground of appeal in RA 290 related to the method of assessment of damages consequent on the conversion of the consignment of river sand and the essential principles that govern this area of the law.

The first defendant, Harikutai Engineering Pte Ltd (“D1”), did not appear at the assessment of damages before the AR. RA 290 did not concern D1.

At the conclusion of the hearing on 22 July 2014, I allowed FSPL’s appeal and awarded the sum of US$141,226 as the quantum of damages payable by D2 with interest thereon computed at the rate of 5.33% per annum from the date of the Writ of Summons to the date of payment. I also ordered costs of the appeal to be taxed if not agreed.

D2 has appealed against my decision in RA 290. I now give my grounds of decision.

Background facts leading to the conversion of the river sand shipped on board the Bina Marine 36

By a contract of sale dated 18 August 2011 (“the S&P contract”), FSPL agreed to purchase river sand from one Marine Alliance Group (Singapore) Pte Ltd (“Marine Alliance”) on CNF terms. The S&P contract provided for three shipments of 4000 metric tonnes (“mt”) (+/- 5%) of river sand from Myeik, Myanmar to Port Blair, India.

This action concerned the second shipment of river sand under the S&P contract. The second shipment was for a consignment of 4,300 mt of river sand of Myeik origin (“the cargo”) that was loaded on board D2’s unmanned barge Bina Marine 36 at Myeik for carriage to and discharge at Port Blair. Bill of lading no HKE-0712 dated 12 September 2011 (“the bill of lading”), which was on the Congenbill 2007 form, was issued by D1 as the contracting carrier. The bill of lading named Marine Alliance as the shipper of the cargo. FSPL was the owner of the cargo, and the bill of lading named FSPL as the consignee. At all material times, D2, as the performing carrier, was sub-bailee of the cargo.

At all material times, the Bina Marine 36 was paired with the tugboat Bina Marine 35. The tug-barge combination (hereafter referred to as “the tow”) was expected to discharge the cargo at Port Blair on 1 October 2011, but the tow did not turn up at Port Blair on 1 October 2011 or at any time thereafter. When FSPL made inquiries about the whereabouts of the cargo on or about 3 October 2011, it was told by one Mr Danads Wong, an employee of D2, that the tow was on the “last leg of the voyage proceeding very slowly to Port Blair due to weather conditions”.¹

On 18 October 2011, FSPL’s solicitors wrote to both defendants demanding delivery up of the cargo. The present action was commenced on 15 December 2011 following the defendants’ failure to deliver up the cargo. FSPL’s principal claim against D2 was for the delivery up of the cargo by D2. At that time, FSPL was not aware that the cargo had been sold.

FSPL filed for summary judgment on 20 February 2012. Both defendants opposed FSPL’s application for summary judgment.

Earlier, D2 applied for security for costs on 28 December 2011. It was at that point that FSPL learnt for the first time that the cargo had been sold. Mr Azhari Bin Mohd Jadi (“Mr Azhari”), the Operations Manager of D2, deposed in his first affidavit that D2 withdrew the tow and, in the process, sold the cargo on account of D1’s default in the payment of charter hire owed to D2. Mr Azhari’s second affidavit filed on 13 January 2012 stated that the cargo was sold by its wholly owned subsidiary, MP Shipping Pte Ltd (“MP Shipping”). There was no other information on how much the cargo was sold for.

FSPL succeeded in obtaining interlocutory judgment with damages to be assessed against the defendants on 15 June 2012. The defendants were found to be severally liable to FSPL for the loss of the cargo. D2 appealed against the decision on liability, but the appeal was dismissed on 3 August 2012.

The Assistant Registrar’s assessment of damages

FSPL asked for damages to be assessed at US$201,455. Mr Joseph Tan (“Mr Tan”), counsel for FSPL, submitted that the value of the cargo based on the market price of comparable river sand at Port Blair in the first week of October 2011 was US$46.85 per metric tonne (“pmt”). For this, he relied on invoices from FSPL’s sister company, Fairmacs Trading Company Pte Ltd (“Fairmacs Trading”), that supported comparable sales of river sand to third parties at Port Blair from 3 October 2011 to 7 October 2011 to arrive at an average price of US$46.85 pmt.² He thus quantified FSPL’s claims against both defendants severally at US$201,455 (US$46.85 pmt x 4,300 mt of the cargo quantity shipped on board the Bina Marine 36).

Counsel for D2, Mr Mathiew Christophe Rajoo (“Mr Rajoo”), disagreed with FSPL’s method of assessment of damages. He submitted that there was no readily available market for river sand at Port Blair in the first week of October 2011. As such, there was no ascertainable market value to fix the value of the cargo.

The AR rejected FSPL’s valuation and held that damages should be assessed at US$62,950. That figure reflected: (a) the cost incurred by FSPL in obtaining the cargo; and (b) the loss actually sustained by FSPL. The AR’s reasoning was as follows:³ There was no market index for river sand at Port Blair in the first week of October 2011; The market value of US$46.85 pmt was arrived at without any specific breakdown as to the cost of the river sand, the freight charges, and other relevant expenses in respect of the shipments such that the actual profits of Fairmacs Trading, which constitute part of the US$46.85 pmt rate, could not be ascertained — this was especially pertinent given that the cost price of the cargo under the S&P contract was US$22.30 pmt, a rate substantially lower than US$46.85 pmt; and The market value of US$46.85 pmt was arrived at by comparing low-volume sales of river sand at no more than 7 mt per sale and it was therefore unlikely for the same rate of US$46.85 pmt to apply to the cargo of 4,300 mt.

Given his finding that there was no ascertainable market value for river sand at Port Blair in the first week of October 2011, the AR opined that the proper basis of assessment in this case was the cost of replacing the cargo. He relied on the S&P contract between FSPL and Marine Alliance where FSPL bought the cargo for US$95,890 (ie, US$22.30 pmt x 4,300 mt). Having noted that FSPL had in fact only paid US$62,950 for its purchase of the cargo (see [14] above), the AR proceeded to assess damages to be paid by D2 for its wrongful conversion of the cargo at US$62,950.

FSPL pressed for an award of damages against D1 despite D1’s absence at the hearing of the assessment. The AR’s award of damages against D1 was the consequence of the summary judgment against D1 as contractual carrier, and in principle each conversion amounted to a separate wrong causing its own separate damage. The AR held D1 to be severally liable for the same amount of damages that D2 was liable for.

Outline of the parties’ arguments in RA 290

As stated earlier, the main ground of appeal related to the method of assessment of damages consequent on the conversion of the cargo and the essential principles that govern this area of the law. Hence, the argument between the parties focussed on the monetary liability of D2 to FSPL as a consequence of D2’s conversion of the cargo by the wrongful sale.

Mr Tan submitted that the normal measure of damages in a conversion case was the market value of the goods converted at the place and date of conversion plus any consequential losses that were not too remote in law. Mr Tan confirmed at the hearing of RA 290 that FSPL was not claiming for consequential losses.

For RA 290, FSPL resorted to the same evidence it had relied on at the hearing before the AR. That is to say, the evidence of Mr Babuvenkatesh Loganathan (“Mr Loganathan”), the General Manager of Fairmacs Trading, and the invoices provided by Fairmacs Shipping (see [12] above). It was submitted that FSPL’s evidence was adequate proof that US$46.85 pmt was the market value of the cargo at the relevant time and place, and that this was the valuation the court should adopt in determining the value of the cargo.

For D2, Mr Rajoo contended that Mr Tan’s approach was incorrect as there was no readily available market at Port Blair in the first week of October 2011, and, hence, there was no ascertainable market value. To Mr Rajoo, the cargo was converted at sea and subsequently sold, and as such, a different basis from the market value of the goods converted applied. The proper valuation to adopt vis-à-vis the value of the cargo would be to use the cost price of the goods and the freight paid as was the case in Ewbank v Nutting (1849) 7CB 797 (“Ewbank”). He submitted that the Ewbank approach should be used, but subject always to FSPL’s actual loss.⁴ He accepted that the Ewbank approach and the AR’s methodology, based on the cost incurred by FSPL in purchasing the cargo from Marine Alliance under the S&P contract, would lead to the same conclusion and result.

Mr Rajoo accepted that the AR was right in assessing damages payable by D2 for the tort of conversion at US$62,950, which quantum of damages took into consideration the actual cost incurred by FSPL.

Issues for decision

On the basis of these arguments (at [17]–[21] above), the main issue for decision was the proper measure of damages for conversion of the cargo by D2 on the facts of this case. In other words, did the facts of this case require the application of a different basis of valuation instead of the market value...