Marco Polo Shipping Company Pte Ltd v Fairmacs Shipping&Transport Services Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 21 August 2015
• Date: 21 August 2015
• Docket Number: Civil Appeal No 129 of 2014
• Court: Court of Appeal (Singapore)

Marco Polo Shipping Co Pte Ltd

Plaintiff

and

Fairmacs Shipping&Transport Services Pte Ltd

Defendant

[2015] SGCA 44

Andrew Phang Boon Leong JA

and

Steven Chong J

Civil Appeal No 129 of 2014

Court of Appeal

Damages—Measure of damages—Tort—Shipping company converted cargo of river sand—Whether proper measure of damages for conversion was market value of or cost of replacing cargo

This was an appeal by Marco Polo Shipping Company Pte Ltd (‘the Appellant’) against the assessment of damages by the High Court judge (‘the Judge’). The case concerned a shipment of 4,300 mt of river sand that never made its way to the intended buyer, Fairmacs Shipping & Transport Services Pte Ltd (‘the Respondent’).

The matter first went before the assistant registrar (‘the AR’) who assessed damages at US$62,950 with interest at 5.33% from the date of the writ of summons. US$62,950 was the amount the Respondent had actually paid for the river sand.

The Respondent appealed to the High Court. It argued it should have been awarded US$201,455 which was reflective of the market value of the river sand at the relevant time (ie, US$46.85 per metric tonne x 4,300 mt). To adduce evidence of this market value, it disclosed sales figures from a related company, Fairmacs Trading Company Pte Ltd (‘FTPL’). The Judge generally agreed with the Respondent's alleged market value. However, she assessed damages at US$141,226 (with the same order as to interest). She arrived at this figure by subtracting from US$201,455 certain amounts that went to freight, customs and landing costs. These were costs that the Respondent would have incurred had the cargo reached it.

Held, allowing the appeal:

(1) Although market value should be the first port of call in assessing damages, the market value in question had to pertain to a relevant market, that is, a market in which the claimant was in fact selling or intending to sell the goods. A claimant should never be allowed to rely simply on ‘some other market out there’ wherein goods were traded at a vastly more expensive rate: at [27] and [32] .

(2) There was a market if there was a willing seller and buyer after negotiations. This ruled out command economies or monopolies in which there were no negotiations to speak of. However, that did not mean that only completely free markets were relevant. Market imperfections might be tolerated so long as the core factors - willingness (of both buyer and seller) and the ability to negotiate - were present: at [31] .

(3) The Judge erred in finding there was a market for the converted river sand for two reasons. First, it was difficult to conclude from the figures from FTPL that there was any market at the relevant time. Second, even if the figures sufficed, the market evinced was an irrelevant market. The Respondent could never have sold the 4,300 mt of river sand converted at a price of US$46.85 per metric tonne. To have compensated it on that basis would have been to accord it a windfall: at [34] - [42] .

(4) As the Respondent had failed to prove the existence of a market on a balance of probabilities, the replacement cost method was a viable method to assess damages instead. It was undisputed that US$62,950 was the amount the Respondent had actually paid for the river sand. The AR's award was therefore restored: at [43] .

Chartered Electronics Industries Pte Ltd v Comtech IT Pte Ltd [1998] 2 SLR (R) 1010; [1998] 3 SLR 502 (refd)

Fairmacs Shipping & Transport Services Pte Ltd v Harikutai Engineering Pte Ltd [2015] 1 SLR 904 (refd)

Furness v Adrium Industries Pty Ltd [1996] 1 VR 668 (refd)

Jag Shakti, The [1985-1986] SLR (R) 448 (refd)

M&J Marine Engineering Services Co Ltd v Shipshore Ltd [2009] EWHC 2031 (Comm) (refd)

Pioneer Glory, The [2002] 1 SLR (R) 232; [2002] 1 SLR 265 (refd)

Mathiew Christophe Rajoo, Cai Jianye Edwin and Viknesh Jeg Pillay (Dennis Mathiew) for the appellant

Tan Wee Kong and Poh Ying Ying Joanna (Legal Solutions LLC) for the respondent.

Andrew Phang Boon Leong JA

(delivering the grounds of decision of thecourt):

Introduction

1 This was an appeal against the decision of the High Court judge (‘the Judge’) reported as Fairmacs Shipping&Transport Services Pte Ltdv Harikutai Engineering Pte Ltd[2015] 1 SLR 904 (‘the GD’). The case concerned a shipment of river sand that never made its way to the intended buyer, Fairmacs Shipping & Transport Services Pte Ltd (‘the Respondent’). The matter first went before the assistant registrar (‘the AR’) who assessed damages at US$62,950 with interest at 5.33% from the date of the writ of summons. The Respondent appealed. After hearing parties, the Judge allowed the appeal, assessing damages at US$141,226 (with the same order as to interest). Marco Polo Shipping Company Pte Ltd (‘the Appellant’), the second defendant at the time, appealed to this court.

2 Parties appeared before us on 8 July 2015. After hearing their submissions, we allowed the appeal and restored the AR's award, issuing the following brief grounds (which are elaborated upon in this judgment):

Whilst we agree that it is not an essential requirement to have a market index in order to determine the market value of the cargo in question, the respondent has not adduced sufficient evidence of a relevant market for river sand in Port Blair during the first week of October 2011.

In the circumstances, we allow the appeal and restore the assistant registrar's award of USD 62,950, which reflects the sum that the respondent has paid in respect of the cargo.

Facts

Parties to the dispute

3 The Respondent was a company incorporated in India purportedly in the business of trading, importing and exporting construction materials. By a contract of sale dated 18 August 2011, the Respondent agreed to purchase river sand from Marine Alliance Group (Singapore) Pte Ltd (‘Marine Alliance’). The sand was to be shipped from Myeik, Myanmar, to Port Blair, India, in three shipments. The shipment in question - the second shipment - involved 4,300 metric tonnes (‘MT’) of river sand.

4 The Appellant was the owner of the vessels that were used to transport the river sand. Harikutai Engineering Pte Ltd (‘Harikutai’), a party to the proceedings below, but not before this court, was the contracting carrier.

Background to the dispute

5 The second shipment of 4,300 MT of river sand was expected to reach Port Blair on 1 October 2011. It never did. On 3 October 2011, the commercial manager of the Respondent, Mr Sreenath Rajendhranath (‘Mr Rajendhranath’), telephoned Mr Danads Wong (‘Mr Wong’), a representative of the Appellant. In that conversation, Mr Wong informed Mr Rajendhranath that the vessels were on the last leg of their voyage and that the delay was caused by unfavourable weather conditions. Mr Rajendhranath thereafter wrote an e-mail to Mr Wong to document their conversation.

6 On 18 October 2011, with no cargo in sight, the Respondent's solicitors from Legal Solutions LLC, who continued to represent them in proceedings before the court, wrote to the Appellant and Harikutai demanding: (a) information on the location of the vessels; and (b) delivery up of the second shipment.

7 On 15 December 2011, the Respondent filed its writ of summons. Its case was against both the Appellant (in the tort of conversion) and Harikutai (for breach of the contract of carriage). From the Appellant, the Respondent sought delivery up of the cargo or, alternatively, US$201,455 in damages. This figure was derived by multiplying 4,300 MT with the alleged market price of the cargo at Port Blair at the relevant time, US$46.85 per MT.

8 On 28 December 2011, the Appellant applied for security for costs. In its affidavit in support of its application, which was filed that same day (ie, 28 December 2011) by Mr Azhari bin Mohd Jadi (‘Mr Azhari’), the operating manager of the Appellant, the Appellant explained for the first time what had happened to the cargo (see also the GD ( [1] supra) at [10]). Harikutai had defaulted on the payment of the charterhire. In response, the Appellant had withdrawn the vessels and sold the cargo on board, including the second shipment of river sand, to mitigate its losses. Mr Azhari did not state the price at which the river sand was sold save as to note ‘the Cargo is not valuable and is easily replaceable’. In his subsequent affidavit dated 13 January 2012, Mr Azhari clarified that it was not the Appellant that had sold the cargo but, possibly, MP Shipping Pte Ltd, a wholly-owned subsidiary of the Appellant (see also the GD at [10]).

9 On 20 February 2012, the Respondent applied for summary judgment against both Harikutai and the Appellant. During the hearing before the AR on 15 June 2012, all three parties were present. Harikutai was represented by Haridass Ho&Partners. The AR granted interlocutory judgment against both the Appellant and Harikutai with damages to be assessed, with interest at the rate of 5.33% from the date of the writ of summons (ie, 15 December 2011) to the date of payment. The Appellant appealed, but its appeal was dismissed by the Judge on 3 August 2012.

10 At the assessment of damages hearing, the Respondent sought US$201,455 which, it argued, was reflective of the market value of 4,300 MT of river sand at Port Blair in the first week of October 2011 (the expected date of delivery was 3 October 2011). Harikutai was absent from this hearing. From the onset, the amount of river sand converted was not in dispute. Neither was the point of law that market value was the first port of call in determining the value of the river sand converted. As such, the Respondent's main challenge (in making good its US$201,455 claim) was to prove that the relevant market value (ie, the market value of river sand at Port Blair in the first week of October 2011) was indeed US$46.85 per MT. It sought to do so by relying on the evidence of Mr Babuvenkatesh Loganathan (‘Mr...