Pan United Shipping Pte Ltd v Cendrawasih Shipping Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 23 February 2004
• Neutral Citation: [2004] SGHC 32
• Court: High Court (Singapore)
• Published date: 02 March 2004
• Year: 2004
• Plaintiff Counsel: Gan Seng Chee and Goh Wee Ling (Ang and Partners)
• Defendant Counsel: Brij Raj Rai and Ramesh Appoo (Just Law LLC)
• Subject Matter: Admiralty and Shipping,Carriage of goods by sea,Cargo carried on board vessel lost,Cargo owners commenced action against shipowners,Whether shipowners were proper parties to be sued,Whether the vessels were demise chartered to third parties
• Citation: [2004] SGHC 32

23 February 2004

Tan Lee Meng J:

1 The defendants, Cendrawasih Shipping Pte Ltd (“Cendrawasih”), who were sued by the plaintiffs, Pan United Shipping Pte Ltd (“Pan United”), for damages for failing to deliver a cargo of steaming coal that was shipped on board their vessel, the ASP-1, a dumb barge that was towed by their tug, the Samudra Perkasa II, contended that they were not liable for a number of reasons, one of which was that the wrong party had been sued. They contended that as they had demised the ASP-1 and the Samudra Perkasa II to PT Armada Arung Samudra (“PT Armada”), Pan United ought to have sued PT Armada instead. At the end of the preliminary hearing on whether or not the two ships had been demised, I ruled that they had not been demised for reasons stated below.

Background

2 Pan United claimed that they are the lawful holders and indorsees of a bill of lading for a cargo of 7,681.5mt of steaming coal that was shipped from Bengkulu, Indonesia, to Kantang, Thailand, in October 2000 on board Cendrawasih’s dumb barge, the ASP-1, which, as has been mentioned, was towed by the shipowner’s tugboat, the Samudra Perkasa II.

3 After the ASP-1 and the Samudra Perkasa II sailed from Bengkulu for Kantang, they encountered bad weather and ran aground on a coral reef and in shallow waters in the vicinity of Aroih Raja Channel in Indonesia. As a result of the grounding, the cargo was washed overboard and lost. Pan United, which claimed to have suffered a loss amounting to US$246,729.78, instituted the present action to recover this sum, or alternatively, damages. They asserted that Cendrawasih breached Art III of the Hague Rules, which had been incorporated into the contract of carriage, by sending the vessels to sea in an unseaworthy state. They also alleged that the cargo had been stowed on deck without their consent.

4 For more than two years after the loss of the cargo in question, Cendrawasih did not inform Pan United that the ASP-1 and the Samudra Perkasa II had been demise chartered to PT Armada. It was only on 18 October 2002, some three months after they filed their defence in July 2002, that Cendrawasih claimed for the first time that they were not the proper defendants because the ASP-1 and the Perkasa Samudra II had been demised to PT Armada on 19 July 2000. By then, Pan United could no longer sue PT Armada for the loss of the cargo of coal because their claim, if any, against the latter had become time barred.

5 This turn of events took Pan United by surprise. Pan United alleged that the demise charterparty of 19 July 2000 was a sham and had been fabricated so that neither Cendrawasih nor PT Armada, the alleged demise charterer, would be liable to them for the loss of the cargo of coal. They added that even if there had been a demise charterparty, it is clear from Pacol Ltd v Trade Lines Ltd (The Henrik Sif) [1982] 1 Lloyd’s Rep 456 and The Stolt Loyalty [1995] 1 Lloyd’s Rep 598 that it was unconscionable for Cendrawasih to rely on the demise charterparty to avoid liability as they never informed Pan United of the alleged charterparty before the latter’s claim against PT Armada had become time barred and had misled Pan United by granting them an extension of time for instituting legal proceedings for the loss of the cargo.

6 Pursuant to an order of court dated 19 November 2003, the following preliminary issues were to be determined before the trial:

(a) whether the tug Samudra Perkasa II and the barge ASP-1 were demise chartered by the defendants to PT Armada at the material time of the incident leading to the loss and/or damage to the plaintiffs’ cargo in or about October 2000 pursuant to the Bare Boat Carrier Contract dated 19 July 2000 as alleged; and

(b) if the said vessels were on demise charter by the defendants to PT Armada at the material time as alleged, whether the defendants are estopped from denying that they were parties to the bill of lading no 017/ASP-X/00 and/or relying on the said Bare Boat Carrier Contract to deny liability to the plaintiffs.

Whether the ships were demised

7 Cendrawasih claimed that the ASP-1 and the Samudra Perkasa II were demised to PT Armada for obvious reasons. A demise charterer is pro hac vice, and for the duration for the charter, the “owner” of the vessel. One important consequence of such a charterparty is that a bill of lading signed by the master is, without more, binding on the demise charterer and not the shipowner.

8 Whether a ship has been demised depends on whether or not the shipowner has “parted with the whole possession and control of the ship, and to this extent, that he has given to the charterer a power and right independent of him and without reference to him to do what he pleases...