Freight Connect (S) Pte Ltd v Paragon Shipping Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 31 July 2015
• Neutral Citation: [2015] SGCA 37
• Plaintiff Counsel: Navinder Singh (Navin & Co LLP)
• Docket Number: Civil Appeal No 157 of 2014
• Date: 31 July 2015
• Hearing Date: 10 February 2015,09 April 2015,26 March 2015
• Subject Matter: Carriage of Goods by Sea,Remedies,Contract,Admiralty and Shipping
• Year: 2015
• Citation: [2015] SGCA 37
• Defendant Counsel: K Muralitherapany and Koh Seng Tee Edward (Joseph Tan Jude Benny LLP)
• Court: Court of Appeal (Singapore)
• Published date: 15 August 2015

Chan Sek Keong SJ (delivering the judgment of the court): Introduction

This is an appeal from the decision of the High Court judge (“the Judge”) in Paragon Shipping Pte Ltd v Freight Connect (S) Pte Ltd [2014] 4 SLR 574 (“the Judgment”), where the respondent, Paragon Shipping Pte Ltd (“the Respondent”), was awarded the total sum of US$81,000, interest and costs. The appellant, Freight Connect (S) Pte Ltd (“the Appellant”), was also ordered to indemnify the Respondent against any sum that the Respondent might be found liable to pay to FLS (Thailand) Co, Ltd (“FLS”), the party it had entered into a charterparty with in order to fulfil its contractual obligations to the Appellant. At the trial below, the Appellant also brought a counterclaim for damages for breach of contract and the tort of wrongful interference with trade. Both counterclaims were dismissed by the Judge. The Appellant has not appealed against the dismissal of its counterclaims. The appeal before us is confined to the Judge’s decision to allow the Respondent’s claims in part.

The facts The parties

The Appellant and the Respondent are Singapore companies in the business of providing transport services for the shipping of cargo by sea. The Appellant had entered into a contract with Herrenknecht Asia Headquarters Pte Ltd to transport machinery (“the Cargo”) from Nanwei, Nansha, China to Singapore. The Cargo was to be used for various tunnelling projects in Singapore.

The first fixture

In or around July 2012, the Appellant’s general manager and director, Marcus Stephen Tan (“Mr Tan”), and the operations manager, Yesica Winata (“Ms Winata”), entered into negotiations with the Respondent’s director, Madeline Ong (“Ms Ong”), for the provision of a vessel to transport the Cargo from Nanwei to Singapore. On 26 July 2012, the parties entered into an agreement (“the first fixture”), pursuant to which the Respondent agreed to provide the “MV Dahua” (“the Dahua”) for the purpose of shipping the Cargo to Singapore. The lump sum freight was US$161,000, and the material terms of the first fixture are reproduced as follows:

02) LOADING PORT: 1SBP OWNERS BERTH NANWEI PORT, GUANGDONG, PR CHINA.

...

04) LAYCAN: 10TH - 20TH, AUG, 2012

Clause 19 of the first fixture incorporated the terms of a standard form contract codenamed “Gencon”.

The Respondent in turn entered into an agreement with FLS for the charter of the Dahua to fulfil its contractual obligations under the first fixture with the Appellant. Subsequently, Mr Tan and Ms Ong exchanged emails in August 2012 regarding the status of the Dahua and whether it would be able to arrive at Nanwei within the laycan of the first fixture (ie, between 10 August and 20 August 2012). It soon transpired that the Dahua would be delayed and would not be able to do so. Thereupon the Appellant took the view that the Respondent was already in default of the first fixture. In an email sent to Ms Ong on 13 August 2012, Ms Winata wrote:

Looking at the situation, its already default the contract of the Fixture Note.

Vessel sailing need 15-18 days to reach Guangzhou [ie, from the vicinity of North Korea where the vessel allegedly was, but which was denied by the Respondent] and even this vessel is not even hit at the Typhoon territory.

Kindly get the replacement vessel asap by today before noon hrs.

This was followed by a further exchange of emails between the parties. The Respondent sought an extension of the laycan in the first fixture to 30 August 2012 but this was rejected by the Appellant. Multiple options were also mooted by the Respondent, such as the provision of other vessels to carry the Cargo, but nothing came out of these discussions until 17 August 2012, when the “MV AAL Dampier” (“the AAL Dampier”) was first brought up by the Respondent as an alternative vessel.

The second fixture

On 17 August 2012 at 1.12pm, Ms Ong sent an email to Mr Tan and Ms Winata informing them that the Respondent had found a “passing by vessel”, the AAL Dampier, to load the Cargo on the morning of 20 August 2012. Ms Ong also informed them that the AAL Dampier’s detention charge was US$25,000 per day and that an urgent response (within 15 minutes) was required or “the vessel [ie, the AAL Dampier] will diversify [sic] elsewhere”. Ms Winata replied at 1.51pm, seeking further clarification on the AAL Dampier’s specifications. She also emphasised that the Cargo had to be loaded no later than 20 August and that it had to arrive in Singapore no later than 25 August due to “LC requirement”.

At the trial, Mr Tan testified that sometime at this juncture, he had a telephone conversation with Ms Ong during which he agreed to the Respondent’s proposal of shipping the Cargo on board the AAL Dampier, subject to the following conditions: that the Cargo was able to load; and that there was no issue with the documentation.

This was followed by an email sent by Ms Ong to Ms Winata at 2.06pm on the same day, the material parts of this email are as follows:

Thank you for your confirmation. As discussed we have confirmed fixing the shipment on:

VESSEL:

- AAL tonnage or sub ( intention AAL DAMPIER)

...

PORTS OF LOADING & DISCHARGE:

- POL: Nanwei Port

- POD: Singapore

TIME OF SHIPMENT:

- 19 - 20.08.2012

FREIGHT & TERMS:

- USD 161,000.00 Lumpsum

- Freight based on Hook / Hook

- Detention USD 25,000.00 per day pro rata

GENERAL CONDITIONS:

- Carrier’s Berth and Agents at all ends

...

- Freight to be fully prepaid on completion of loading

- Freight is deemed earned as cargo is being loaded discountless non returnable vessel and/or cargo is lost or not lost

...

- Cargo to be delivered/received as fast as vessel can load/discharge otherwise detention to apply.

Time lost due to swell and/or weather and/or waiting for loading and/or discharging berth on ships arrival at or off port or so near thereto vessel may be permitted to approach, will be charged as time for which detention is due

There was a further exchange of emails between Ms Winata and Ms Ong regarding the stowage plan and the port berthing details. At 6.07pm on the same day, Ms Ong sent an email to Ms Winata, seeking confirmation on three matters. Ms Winata replied at 6.19pm to the three matters with her answers in capital letters next to the questions. Ms Ong’s original email, together with Ms Winata’s responses read as follows:

(AA) Please confirm that the shipper has no problem with the customs clearance at port of Loading to have the cargoes load on board MV “ AAL Dampier”. If so, we will proceed to bring the vessel to Nanwei Port as per schedule. Kindly advise urgently. – SHIPPER CONFIRM ON THIS ISSUE.

(BB) Please inform that shipper only contact our new agent, AAL, for the loading the cargoes onboard Mv “AAL Dampier” . Please inform them that Bruce is no longer involve with the shipment. – ALREADY INFORMED.

(CC) Please ensure that the shipper will only be loading the cargoes onboard MV “AAL Dampier” instead any other vessel. – NOTED, ALREADY INFORMED

There is no dispute between the parties that the Respondent had entered into a separate agreement with FLS for the charter of the AAL Dampier on terms which were similar to those agreed between the Appellant and the Respondent for the second fixture, except that the freight was US$155,000 and the detention charge was US$20,000 per day pro rata. The Respondent’s margin of profit on these two back-to-back charters was US$6,000 on the freight and US$5,000 per day pro rata for detention.

The arrival of the AAL Dampier at Nanwei on 20 August 2012

It is common ground that the AAL Dampier arrived at Nanwei on 20 August 2012 and tendered its notice of readiness (“NOR”) at 7.15pm on the day of its arrival. FLS informed the Appellant on 22 August 2012 that a berth had been booked for the AAL Dampier, but there was a delay due to congestion at Nanwei Port. Nevertheless, at that point in time, the AAL Dampier was still scheduled to berth on 23 August 2012.

Unfortunately, the AAL Dampier lost its berth booking for 23 August 2012 due to the Appellant’s failure to provide certain shipping and customs documents to the Nanwei Port authorities. The Chinese shipper had handed over these documents to one Mr Gong of ASB Group Co, Ltd (“ASB”), who was the ship’s agent for the first fixture. It appears that sometime after the termination of the first fixture on 16 August 2012, the Appellant had approached Mr Gong for assistance in arranging for an alternative vessel to ship the Cargo to Singapore. Mr Gong then approached one Mr Louis of Uptrans/Jade Shipping (“Jade Shipping”), who eventually secured another vessel known as the “MV Sea Castle” (“the Sea Castle”). It would seem that Mr Gong had passed on the shipping and customs documents to Mr Louis pursuant to the arrangement for the Cargo to be loaded on board the Sea Castle. The Appellant subsequently tried to obtain these documents from ASB or Jade Shipping for the purpose of enabling the AAL Dampier to apply for a berth, but was denied the documents. As a result, the AAL Dampier lost its berth application for 23 August 2012. The vessel was then scheduled to berth on 27 or 28 August 2012 instead, subject to the relevant documents being made available to the port authorities.

The shipping of the Cargo on the Sea Castle

On 23 August 2012, the Appellant informed the Respondent that it would be loading the Cargo on board the Sea Castle. The Appellant stated that it was unable to load the Cargo on board the AAL Dampier as the previous agent, ASB, had retained the documents that were required by the port authorities for the AAL Dampier’s berth application. The Cargo was loaded on board the Sea Castle and shipped to Singapore.

Subsequently, the Respondent informed the Appellant that FLS had demanded for dead freight and detention charges for the waiting time incurred by the AAL Dampier. The Respondent forwarded FLS’s emails to the...