Ningxia Yinchuan Rubber Factory Import And Export Corp and Others v AJ Brendon Shipping Pte Ltd And Others and another action

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 13 April 1998
• Neutral Citation: [1998] SGHC 105
• Docket Number: Suit Nos 2077 of 1994 and 420 of 1995
• Date: 13 April 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: S Mohan and Perry Lim (Gurbani & Co)
• Citation: [1998] SGHC 105
• Defendant Counsel: Thomas Tan and Yung Shing Jit (Haridass Ho & Partners),Leong Kah Wah and Navinder Singh (instructed by Esvaran & Tan)
• Court: High Court (Singapore)
• Subject Matter: Whether any emergency threatening loss or destruction of cargo necessitating its disposal by defendants,Carriage of goods,Whether defendants could rely on defence of abandonment of cargo,Whether abandonment by plaintiffs could be inferred from circumstances of case,Tort,Whether defendants could rely on doctrine of agency of necessity as defence,Cargo sold by owner of vessel and shipping agent without authorisation,Conversion,Whether defendants entitled to dispose of cargo as agents of necessity,Cargo sold by owner of vessel and owner's agent without authorisation,Whether plaintiffs decided or intended to abandon cargo,Whether impossible to communicate with plaintiffs for instructions to sell or otherwise dispose of cargo prior to defendants' sale,Admiralty and Shipping,Plaintiffs' claim for conversion of cargo as owners or consignees of cargo

Judgment:

LIM TEONG QWEE JC

The plaintiffs in both actions claim as owners or as persons entitled to the immediate possession or as consignees of the cargo shipped on board the vessel `Jambo` at ports in Thailand for carriage to and discharge at ports in China. The first defendant in Suit No 2077/94 (Brendon Shipping) was the owner of the vessel at the time of shipment and the second defendant (Paciro Shipping) was its agent. The third defendant (Wee) was the managing director of Brendon Shipping and held 50% of its issued capital. He was also the managing director of Paciro Shipping and held 90% of its issued capital. The plaintiffs allege that the defendants wrongfully sold the cargo to the defendants in Suit No 420/95 or one or more of them. They claim damages for conversion of the cargo against the defendants in both actions.

2.The two actions were consolidated but shortly after the first defendant in Suit No 420/95 had given evidence that action was settled. In Suit No 2077/94 there was an alternative claim against Brendon Shipping for damages for breach of duty as bailee for reward and breach of contract of carriage but that claim was not proceeded with as the action only proceeded as against Paciro Shipping and Wee. At the conclusion of the trial I gave judgment for the plaintiffs against Paciro Shipping and Wee. These are my grounds.

3.It was not disputed that the cargo was shipped on board the Jambo as alleged and that the plaintiffs were the holders of the bills of lading in respect of the cargo. In fact other goods were also shipped on board the vessel for the same voyage and the plaintiffs were not entitled to the entire cargo but for convenience I shall refer to the plaintiffs` goods as their cargo as they have been so referred to by the parties in these proceedings. The Jambo sailed from the Thai port of Songkhla on 15 June 1993 but returned to port shortly after and did not complete the contemplated voyage. It was admitted by Wee that the cargo was sold to the second defendant in Suit No 420/95 under two contracts both dated 13 December 1993. The seller in each contract was Brendon Shipping. Each was signed for the seller by Wee over the name `AJ Brendon Shipping Pte Ltd`. The defendants` case in Suit No 2077/94 is that the plaintiffs had abandoned their cargo and the defendants were entitled to sell it. The alternative case is that the defendants were agents of necessity of the plaintiffs for the purpose of disposing of their cargo.

4. Abandonment

Mr Leong`s submission is that the plaintiffs knew of the casualty and that they knew of the claims of MN Offshore Services (salvors) and of Chaophaya Terminal International Co Ltd (CTIC) the port operator at Songkhla. Brendon Shipping signed an agreement with the salvors on 18 June 1993 for the salvage of the Jambo and its cargo `that on the 15 June 1993 called for assistance, after starting to list 10 degrees to the starboard side` according to what is stated in the agreement. Paciro Shipping signed an agreement with CTIC on 29 June 1993 for port and warehousing services at Songkhla after the Jambo had returned to port. It is said that the plaintiffs also knew of the deterioration of the cargo and the freight costs to reship to Chinese ports. The plaintiffs were themselves `sourcing the market for buyers`. The inference so the argument goes is that the plaintiffs had made a commercial decision that it was not economically viable to reship the cargo to the original destination. It was also submitted that the plaintiffs` delay or failure in providing general average security was a further indication of their intention to abandon the cargo.

5.I will consider the question of the furnishing of security first. Paciro Shipping as agent of the ship owner Brendon Shipping appointed Richards Hogg International (RHI) as general average adjusters. On 2 July 1993 RHI wrote to cargo interests (including the plaintiffs). Part of the letter said:

The vessel loaded approximately 3,444 tons of rubber and 3,100 tons of polyester chips at Laemchbang and Songkhla, Thailand. At approximately 0730 hours on 15.6.93, the vessel departed Songkhla for her two ports of destination, Xingang and Dalien. It is noted from the master`s report that at approximately 0800 hours, the vessel touched ground and soon thereafter commenced listing towards her starboard side. The list became severe (approximately 35 to 40) and it was apparent that water had entered the vessel, at hold no 1.

A salvage contract was signed by the ship managers with a salvor in Thailand on a lump sum basis. At the time of sending this message, salvage operations continue to be performed and it is the ship managers` intention to discharge cargo at Songkhla, repair the vessel, reload the cargo, and continue with the original voyage.

As a result of the above, the ship managers have declared general average. It is therefore necessary for the consignees and their insurers to provide satisfactory general average security to us prior to delivery of the cargo at destination.

`Ship managers` was a reference to Paciro Shipping. Blank forms of average guarantee and Lloyd`s average bond were enclosed. Both were expressed to be given in consideration of delivery of the goods. Mr Chia Jiew Chein Gerry was the adjusting manager of RHI in 1993. He said that RHI did not prepare any general average adjustment for the casualty. He was referred to a letter dated 12 October 1993 written by him in which RHI said:

Kindly take note that we have ceased all work as shipowners have not paid our interim account for extensive work that has been carried out by us.

It was not disputed that by that date RHI had ceased all work for the shipowner and no other average adjuster had been appointed in their place.

6.The plaintiffs` cargo was not lost in the casualty or sacrificed whether or not for the purpose of preserving the ship or any other cargo that might have been imperilled. The defendants allege that Brendon Shipping incurred expenditure of a general average nature but no demand had at any time at all been made for payment of the correct amount payable by any of the plaintiffs. General average was never adjusted at all. In these circumstances all that Brendon Shipping had was a possessory lien on the plaintiffs` cargo for the amount if any that was properly payable. This position was well appreciated by RHI who called for satisfactory general average security to be provided prior to delivery of the cargo at destination . There was no evidence of any change in the position. There was no obligation on the part of the plaintiffs to provide any security before Brendon Shipping was ready to deliver the cargo. There was no failure or delay on the part of the plaintiffs to provide general average security. In fact all the plaintiffs other than the sixth plaintiff did provide security by way of the average guarantee.

7.I turn now to Mr Leong`s main submission. The plaintiffs were informed of the casualty and through their insurers they retained Clyde & Co a firm of solicitors in England with a South East Asia office in Singapore (Clyde (Singapore)). Clyde (Singapore) instructed CCIC (Thailand) Co Ltd (CCIC) of Bangkok to make certain inquiries. On 8 October 1993 Clyde (Singapore) wrote to CCIC:

1 Please let us know the current whereabouts of the cargo and its condition.

2 We understand from our telephone conversation that the port authority and the salvage company are claiming a fee from cargo interests. Please confirm the position and indicate the level of the fee that has been requested.

3 Please confirm whether the port authority/salvors have refused to release the cargo until such a fee is paid.

4 Please let us know the current status of the vessel and whether she is under arrest by the port authority or, alternatively, when she is due to sail.

5 We should be grateful if you would let us know whether the identity of any lawyers acting for either the port authority, the salvors, or the shipowners.

8.On 9 October 1993 CCIC passed on to Clyde (Singapore) this information received from the port director of CTIC:

A agreement was made between ship`s owner and the port concerning to port services required, port charge rates, and payment. Ship`s owner agreed that all the port charges payment would be fully paid before vessel sailing. The up-to-date outstanding debts which ship`s owner owed to the Port is amounting to 12 million bahts. According to our stands, the vessel and cargoes will not be released until the payment being fully paid to our Port.

It was said that ship`s owner also owed a amount of more than 30 millions to [the salvors] for their salvage costs.

9.In the course of the next few days there was an exchange of letters between them. On 12 October 1993 Clyde (Singapore) wrote:

We attach for your information copies of the Salvage Agreement and Certificate of Termination of Salvage, supplied by the salvors` solicitors. As far as we are aware, cargo interests were not consulted in respect of the salvage agreement and we wish to reserve our clients` right to argue that they are not bound by that agreement.

However, we consider the immediate problem is to establish the level of payments that would be required by the Port Authority and the salvors from the cargo interests in order to release the cargo. Our clients will need to know this and also the value of the cargo in its present condition so that they may consider whether it will be economically viable to attempt to re-ship the cargo to destination.

In the circumstances, we should be grateful if you would make immediate arrangements to travel to Songkhla and make the following enquiries:

1 The level of payment that will be demanded by the port authority from cargo interests in respect of this casualty and whether the port authority would accept a part payment from cargo, even if the shipowners have not agreed to pay the balance of the port dues. In other words,...