Ocean Projects Inc v Ultratech Pte Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 03 May 1994
• Neutral Citation: [1994] SGCA 64
• Docket Number: Civil Appeal No 62 of 1993
• Date: 03 May 1994
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: Abbas Ali (Joseph Tan Jude Benny & Co)
• Citation: [1994] SGCA 64
• Defendant Counsel: Tongel Yeo (Chong Yeo & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Liens,Goods off-loaded before intended destination,Claim for breach of contract of carriage of goods,Whether carrier entitled to freight on a pro rata basis,Admiralty and Shipping,Whether freight forwarder acting as agent for either owner of goods or charterer,Whether privity of contract exists between the owner of goods and charterer,Carriage of goods by sea,Voyage charterparties,Whether carrier entitled to lien in absence of contract of carriage

Cur Adv Vult

This is an appeal from the decision of the High Court on a dispute arising out of the carriage of 3,237.52 mt/2,722 cbm of gravel pack/drill sand (`the cargo`) from Houston, Texas to Dumai, Indonesia. The High Court awarded to the plaintiffs, the respondents in this appeal, damages in the sum of $108,637.92 being the costs of transhipment of the cargo from Singapore to Dumai and also a sum of US$1,230 being commission on the banker`s guarantee for the release of the cargo and awarded to the defendants, the appellants in this appeal, the sum of US$14,650.65 on their counterclaim for freight and damages for misdescription of the cargo. Against the decision of the High Court the appellants have appealed, and the respondents have also filed a respondent`s notice against the award made against them.

The facts

The material facts are not in dispute and are as follows. The appellants, an American company, were at the material time voyage charterers and disponent owners of the vessel mv Zephunter (`the vessel`). The charterparty commenced on 24 September 1990 and was for one voyage from Houston, Texas to South East Asia as they had cargoes booked for carriage to Pusan (South Korea), Singapore and Dumai. The respondents are a Singapore company and are associated with a Californian company called Waskita Inc (`Waskita`) in that Waskita`s president, Khing S Ong (`Ong`), is a director and shareholder of the respondents. Waskita would source and buy American materials required by the respondents and the respondents would finance the purchase of those materials. Ong at all material times acted on behalf of the respondents.

Sometime in April 1990, Waskita was awarded the tender for the supply of gravel pack/drill sand to PT Caltex Pacific, Indonesia on a c & f basis. Ong arranged through a freight forwarder in Illinois, US Carriage International (`USC`), to ship the goods from Houston to Dumai. That was the first time the respondents employed the services of USC; Ong had heard of them before from one of the suppliers who had previously used USC for land and sea transportation. The land portion of the carriage of the cargo to Houston was to be carried out by another company called Texas Mining Company, while USC would handle the loading, stevedoring and shipping of the cargo for carriage to Dumai. Payment to USC in the sum of US$335,966 was to be made by way of a letter of credit. Accordingly, a letter of credit (`the letter of credit`) was opened by the respondents` bank, NMB Postbank Groep NV, Singapore (`NMB Bank`) in favour of USC (named therein as the beneficiary) with NBD Bank in Elk Grove Village, Illinois, as the advising bank. It was understood that the proceeds of the letter of credit were to be apportioned by USC between them and the Texas Mining Company. One of the documents required to be presented under the letter of credit was a `clean on board ocean bill of lading` issued to the order of NMB Bank and marked `freight prepaid`.

In September 1990, Ong was informed by Texas Mining Company that the cargo was at a warehouse in Houston ready for inspection and shipment. Surveyors were appointed by Ong and inspection was carried out. Thereafter, Ong received from USC a copy of a bill of lading issued by Trident Marine dated 20 September 1990 and signed by one Cindy Zimay (an employee of USC) `as agent for the Master` which stated, inter alia, that the cargo was loaded on board the vessel on 20 September 1990. That bill of lading (`Trident B/L`) bore two material markings, namely, `clean on board` and `freight prepaid`, and on the face of it was in compliance with the terms of the letter of credit. Ong understood from USC that the Trident B/L was a house bill of lading issued by a non-vessel operated carrier. The vessel sailed from Houston on 28 September 1990.

All appeared to be well until about a month later. On 22 October 1990, Ong received a telephone call for the first time from one Dave Keller, president of Project Carriers Inc (`PCI`), who informed him that PCI were the agents of the appellants who were the carrier for the cargo; that the appellants had not been paid the freight by USC, and that there was a discrepancy in the description of the volume of the cargo. On the same day, Keller despatched a fax to Ong which stated, among other things, the following:

... We respectfully ask your assistance to solve this matter, as your freight forwarder apparently does not intend to pay us charges due.

The undersigned arranged a contract between USC and Ocean Projects for this shipment. US Carriage had no authority to issue bills of lading on behalf of the master, only the port agent for Ocean Projects had this authority.

We will only release this cargo against presentation of an original bill of lading (see copy attached) issued by the authorized agent.

We have been in contact today with the advising bank, NBD Bank, in Elk Grove Village Illinois. We were originally assured by Mr Marston that an assignment letter was made on behalf of Ocean Projects, and we were given a fax copy today. We found out today from Mr Robert Lane of NBD bank that no such assignment letter exists. Further Mr Lane told us that all charges under this letter of credit were paid to USC on 5 October 1990. ...

We have under these bills of lading rights to a lien on cargo for charges due to us. We are fully prepared to exercise our rights if we do not get paid this week.

Since we have finished loading the cargo on 28 September 1990, we have called Mr Marston every other day asking for payment. We have been told since 3 October 1990 that the letter of credit was `out for approval in Singapore` and that no moneys were available for us. He told me this as late as Friday 19 October 1990.

As this obviously was not the case, we ask your assistance to inform Mr Marston that we be paid immediately, as we are ready to take whatever steps necessary to protect ourselves. ...

A copy of the appellants` bill of lading was also faxed to Ong, which on the face of it differed from the Trident B/L in two material respects, namely: (i) the appellants` bill of lading stated that the date of shipment was 28 September 1990 whereas the Trident B/L stated that the cargo was shipped on board on 20 September 1990, and (ii) the appellants` bill of lading was claused `packaging insufficient` whereas the Trident B/L was marked `clean on board`; but both bills of lading were marked `freight prepaid`. That bill of lading, however, was never issued by the appellants.

Ong immediately contacted one William Marston of USC who explained that they had missed the shipping date for a vessel on the Hoegh Line upon which they had based their quotation and had chosen mv Zephunter as an alternative, and that the Trident B/L was a house bill of lading whereas the appellants` bill of lading was the shipping agent`s bill. Ong was also told that because of the dispute on the cargo discrepancy, no payment could be made until the dispute was resolved.

It transpired that the appellants on 17 July 1990 made a contract of carriage with USC for the shipment of the cargo from Houston to Dumai on the terms as set out in a document entitled `Conliner Booking` and `Liner Booking Note`. The contents of the booking note stated, among other things, that the appellants were to ship the cargo from 5-25 September 1990; that the freight was at the rate of US$74 per cbm/mt `whatever the greater to merchant`, and that the freight was to be `prepaid on signing/releasing bills of lading via wire transfer`. USC was named there as the `merchant`. The vessel`s name however, was stated to be `mv J Marie or Sub` - presumably `Sub` means substitute. The booking note was signed by Keller for the appellants and Marston for USC, and the latter had assured or informed Keller that USC would assign to PCI as agents for the appellants part of the proceeds of the letter of credit in payment of the freight under the contract.

According to Keller, on 15 October 1990, Marston informed him that USC had not received any freight from the respondents and that USC would pay the freight to the appellants once it was received. Between 15 October 1990 and 22 October 1990, Keller attempted to contact Marston without success. On 22 October 1990 Keller then contacted NBD Bank, USC`s advising bank, who then informed him that payment under the letter of credit had already been effected by NMB Bank to USC on 5 October 1990. Having been apprised of this, the appellants on 22 October 1990 or soon thereafter issued a bill of lading which was backdated 28 September 1990 (`appellants` bill of lading`). Ong then received three originals of this bill of lading which was claused, inter alia, with the words: `Cargo not to be released unless all freight charges are paid` and contained also a cargo `misdescription claim` of US$86,450.

As USC had been paid under the letter of credit, Ong pressurized them to release the freight to the appellants and USC replied that they would only do so if the misdescription on the cargo was waived or resolved. However, the dispute was not resolved and no payment of freight was made to the appellants by USC. Waskita commenced proceedings in USA to recover the payment made to USC, and in the interim, USC became insolvent.

Meanwhile the vessel arrived in Singapore and the cargo was discharged into a warehouse by HE Schurig & Co Pte Ltd (`Schurig`), the appellants` agent, after they had notified the respondents on 14 November 1990 that the cargo would be released to the respondents on presentation of the appellants` original bill of lading. The appellants claimed a lien on the cargo for the unpaid freights (including the additional freight).

On 27 December 1990, the respondents issued a writ against the appellants claiming the cargo. Subsequently, on application an interim order was made for the release of the cargo to the respondents upon their furnishing security to the appellants in the form of...