Faith Maritime Co Ltd v Feoso (Singapore) Pte Ltd and another action

• Jurisdiction: Singapore
• Judge: Woo Bih Li JC
• Judgment Date: 01 October 2002
• Neutral Citation: [2002] SGHC 229
• Date: 01 October 2002
• Subject Matter: Whether party has locus standi to sue for conversion,Admiralty and Shipping,Whether vessel an "arrived ship",Whether party not claiming any right under bill of lading can rely on s 2(1),Carriage of goods by sea,Period of demurrage claimable,Entitlement to lien,Tort,Bills of lading,Demurrage,Nature of lien,Conversion,Lien,s 2(1) Bills of Lading Act (Cap 384, 1994 Ed),Essence of conversion
• Docket Number: Admiralty in Personam No 2 of 2000 Admiralty in Rem No 21 of 2000
• Published date: 19 September 2003
• Defendant Counsel: Ajaib Haridass And Thomas Tan ( Haridass Ho & Partners )
• Court: High Court (Singapore)
• Plaintiff Counsel: Richard Kuek and R Govintharasah ( Gurbani & Co )

action to date of judgment) in Admiralty in Personam No. 32 of 2000,

(1) The cargo was not fuel oil and Feoso had always known that (see 53).

(2) Feoso had no contractual claim under B/L No. 2, 3 and 4; Feoso’s counsel had conceded that they were not binding on Faith as they had been issued without Faith’s authority (see 61).

(3) Feoso had no contractual claim under B/L No. 1 as Feoso was not claiming any right under B/L No. 1 (see 69).

(4) Faith had acted reasonably and did not convert the cargo (see 113 and 115).

(5) The lien provision in the head charter party had been incorporated into B/L No. 1 (see 131). Faith was entitled to assert a lien as it had not relinquished possession of the cargo (see 134).

Case(s) referred to

Bristol & West of England Bank v Midland Railway Co

[1891] 2 QB 653

Steelmet Pte Ltd v APL Co Pte Ltd

Suit No. 1736 of 1999

The Cherry and Others

[2002] 3 SLR 431

The Miramar

[1983] 2 Lloyds Law Rep 319

The Trade Resolve

[1999] 4 SLR 424

Wah Yuen Petroleum Marine Pte Ltd v Hai Yin Diesel Trading Pte Ltd

Suit No. 2010 of 1997

Legislation referred to

Bills of Lading Act (Cap 384) s 2(1)

Judgment Cur Adv Vult

GROUNDS OF DECISION

Introduction

1. There are two actions before me. In Admiralty In Personam No 32 of 2000, Faith Maritime Company Ltd (‘Faith’) is the plaintiff and Feoso (Singapore) Private Limited (‘Feoso’) is the defendant. Faith is a company registered in Malta. Faith was at all material times the owner of the vessel ‘Daphne L’ (‘the Vessel’). Feoso is a company incorporated in Singapore. I would add that Feoso is a renowned oil trader (NE 709) and has substantial experience in buying oil from the Middle East (Fung Tze Tat’s 3^rd affidavit, para 4).

2. In Admiralty in Rem No 21 of 2000, Feoso is the plaintiff and the owner of the vessel ‘Daphne L’ i.e Faith is the defendant.

Background facts and findings

3. In view of the numerous allegations made by and against each party, I will set out the background facts in some detail.

4. On 8 September 1999, Feoso entered into a contract with a company in Hong Kong called Ever Bright Energy Co Ltd (‘Ever Bright’). The contract was for Feoso to buy from Ever Bright a cargo described as heavy crude oil (off-specification). The detailed specifications were set out in Attachment 1 to the contract. The cargo’s country of origin was Iran and the port of discharge was Huangpu, China. The quantity was between 21,000 to 30,000 metric tonnes.

5. On the same date, Feoso entered into a contract with a company in Singapore called Titan Oil Pte Ltd (‘Titan’) to sell the same cargo to Titan. However the cargo was described in this contract as 380 CST Fuel Oil, although the detailed specifications set out in the attachment to this contract were the same as those set out in Feoso’s contract with Ever Bright.

6. On 13 October 1999, Faith entered into a Tanker Voyage Charter Party (‘the Head CP’) on the Asbatankvoy form with Persing Energy Corp of Panama (‘Persing’). The Head CP stated the load port as Kharg Island, Iran, and the discharging port was Huangpu, China. The cargo was described as ‘Crude and/or Dirty Petroleum Product’.

7. The Head CP was negotiated between the respective brokers:

(a) DLP Maritime SA (‘DLP Maritime’) for Faith

(b) Meridian Brokerage Inc (‘Meridian’) for Persing

Faith’s manager of the Vessel was Seaworld Management & Trading Inc (‘Seaworld’).

8. On the same date, Persing entered into a voyage charter party (‘the Sub CP’) with Nordic Long Term Lease Limited (‘Nordic’) of Hong Kong for the Vessel also to load cargo at Kharg Island and to discharge the cargo at Huangpu. The cargo in the Sub CP was described as crude oil slops. Unlike the Head CP, the Sub CP contained a term that new bills of lading would be issued in Singapore describing the cargo as fuel oil off-specification. Nordic is a related company of Ever Bright who sold the cargo to Feoso.

9. As many parties, including solicitors, were involved, there is attached to my judgment a list of the various parties and, where applicable, their solicitors. The reference in my judgment to ‘CB’ is to Core Bundles prepared by the parties after the trial. The Core Bundles were actually supposed to be a comprehensive set of documents in chronological order. However, as they were not comprehensive, I have also in my judgment referred to other bundles used in the trial.

10. The loading operations at Kharg Island stretched from 16 October 1999 to 20 November 1999. On 21 November 1999, the Master issued a Bill of Lading KHA-001 (‘B/L No 1’). The shipper’s description of goods was crude oil slops. The net weight and the gross weight of the cargo were included in B/L No 1.

11. All the other relevant documents also described the cargo as crude oil slops, for example:

(a) SGS (Iran) Ltd, Sample Report

(b) Saybolt-Van Duyn BV, Bunker Report

(c) Saybolt-Van Duyn BV, Sample Receipt

(d) National Iranian Oil Company Ship’s Ullage Report (the description of crude oil slops in this document is found in AB1 34 but not in AB1 140. Only the latter was used for the Core Bundle)

(e) the shipper’s Certificate of Origin

(f) Cargo Manifest issued by the load port agents Sea Express Company Ltd

(g) Sabolt-Iran Ullage Report.

12. The Vessel departed Kharg Island with the cargo on 30 November 1999. En route to Huangpu, there were two developments, which were inter-related. The first was the diversion of the Vessel to Singapore before it proceeded to Huangpu. This was for the purpose of samples of the cargo to be taken. The other was in respect of the issue of a second set of bills of lading which were eventually issued as No KHA 002/003/004 (‘B/L No 2, 3 and 4’).

13. The taking of samples in Singapore on the instructions of Feoso was not simply to verify the nature of the cargo loaded on the Vessel. The motive was more dubious. The purpose was to obtain a survey report from SGS in Singapore which ‘must show the name of cargo as "Fuel Oil (3.5S)" (see the fax dated 8 December 1999 from Feoso to a company in Singapore New Orient Petroleum Pte Ltd (CB 208)).

14. As regards the issuance of B/L No 2, 3 and 4, this was already anticipated as between Ever Bright and Feoso. Before the sale and purchase contract between them was entered into, Ever Bright had informed Feoso that the cargo description in their contract had to be heavy crude oil as that was the cargo description in Ever Bright’s contract with its vendor. However, Feoso wanted documents to describe the cargo as fuel oil instead. For this reason, Ever Bright had informed Feoso that it had obtained confirmation from the ship chartering company nominated by their supplier that they would provide documents describing the cargo as fuel oil off-specification to enable the cargo to be discharged in China. These facts can be ascertained from Ever Bright’s fax to Feoso dated 31 August 1999 (CB 17). This alleged confirmation was not from Faith. As will be recalled, the Sub CP included a term for new bills to be issued to describe the cargo as fuel oil off-specification but not the Head CP.

15. One reason why Feoso wanted documents showing the cargo as fuel oil off-specification was because if they had told their buyer Titan that the cargo was heavy crude oil (off-specification), Titan would not have bought the cargo. Indeed, Feoso’s Mr Fung Tze Tat, also known as William Fung, admitted this (NE 702). However, he subsequently denied the admission. Then, when Mr Ajaib Haridass, Counsel for Feoso, confirmed that evidence, Mr Fung said he wanted to change his evidence to, ‘… I don’t know as I am not an employee of Titan’ (NE 722 to 723). I should add that the sale to Titan was eventually terminated although it is not necessary for me to elaborate on the reason(s) for the termination.

16. On 15 December 1999, the Master received the following discharge instructions, which had been apparently sent by Persing or its broker to Seaworld Management who in turn sent it to the Master (see PB1A 261 to 263). The discharge instructions said, inter alia:

‘A) VSL TO PROCEED WITH MAXIMUM SAFE SPEED, NAVIGATION/WEATHER PERMITTING AND DIRECTLY TO HUANGPU, CHINA TO DISCHARGE HER ENTIRE CARGO VIA STS [meaning: ship to ship] OPERATION. SURVEY WILL BE LIKELY MADE JOINTLY BY SGS AND SAYBOLT.

PRIOR TO ARRIVAL THE STS POSITION, MASTER TO CONTACT AGENTS FOR STS INSTRUCTIONS.

B) UPON RECEIVING THIS TLX, MASTER TO ALSO SEND ETA NOTICES TO AGENTS

C) UPON ARRIVAL AT THE CUSTOMARY ANCHORAGE AND WHEN SHE IS IN ALL RESPECTS READY TO DISCHARGE HER CARGO, MASTER TO TENDER N.O.R. TO CHARTERERS VIA BROKERS, RECEIVERS VIA AGENTS AND PACIFIC ANDES HONG KONG TLX 89124 ANDPS HX.

….’

The instructions also specified the load port agents to be China Ocean Shipping Agency Guangzhou (Penavico) (see CB 221).

17. By a fax dated 15 December 1999, Nordic wrote to its broker Discovery Chartering Ltd (‘Discovery’) requesting owners to authorise Nordic to sign and issue B/L No 2, 3 and 4 and forwarded drafts thereof (Thanos’ AEIC p 321). Discovery was also requested to confirm that the Master of the Vessel would be instructed to change the cargo description in the cargo manifest to fuel oil 3.5S. The draft bills showed, inter alia, the shippers’ description of the cargo to be fuel oil 3.5S, and not even fuel oil off-specification as stipulated in the Sub CP. The drafts also had other differences when compared with B/L No 1 and these differences were raised by Faith when it responded, as I shall elaborate later.

18. There was an exchange of telexes between Discovery (Nordic’s brokers) and Meridian (Persing’s brokers) between 15 and 16 December 1999 in which Meridian stated that owners were not prepared to agree to the issue of B/L No 2, 3 and 4 unless monies owing to them were paid (see Thanos’ AEIC p 332). However, according to Mr Thanos, the reference to the owners meant Persing (see NE 23 line 7, NE 25 to 26).

19. As for Faith, it too had taken the...