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

• Judgment Date: 26 August 2014
• Date: 26 August 2014
• Docket Number: Suit No 855 of 2012
• Court: High Court (Singapore)

Paragon Shipping Pte Ltd

Plaintiff

and

Freight Connect (S) Pte Ltd

Defendant

[2014] SGHC 165

Judith Prakash J

Suit No 855 of 2012

High Court

Admiralty and Shipping—Carriage of goods by sea—Voyage charterparties—Cancellation clause in standard form contract codenamed ‘Gencon’—Whether disponent owner of vessel had exercised due diligence to ensure vessel met agreed-upon laycan—Whether notice of vessel's delay met requirements specified in cancellation clause

Admiralty and Shipping—Carriage of goods by sea—Voyage charterparties—Difference between berth charter and port charter—Preconditions to be satisfied before valid notice of readiness (‘NOR’) could be given—Whether NOR issued by vessel when it arrived at port but before it berthed was valid

Admiralty and Shipping—Carriage of goods by sea—Voyage charterparties—Shipper's failure to provide cargo—Whether disponent owner of vessel entitled to full contractual freight charges or damages for breach of contract

The plaintiff and the defendant were Singapore companies in the business of providing transport services for the import and export of cargo by sea. In July 2012, the defendant contracted with Herrenknecht Asia Headquarters Pte Ltd (‘Herrenknecht’) to transport cargo from China to Singapore. The plaintiff and the defendant entered into the first fixture by which the plaintiff agreed to provide the vessel ‘MV Dahua’ (‘Dahua’) to carry the cargo to Singapore. The plaintiff in turn chartered the Dahua for this purpose from FLS (Thailand) Co, Ltd (‘FLS’). A written document entitled ‘Fixture Note’ was signed by both parties. Clause 4 of the Fixture Note provided that the ‘laycan’ was between 10 and 20 August. Clause 19 of the Fixture Note incorporated the terms of a standard form contract codenamed ‘Gencon’.

Clause 9 (b) of Gencon (‘clause 9 (b) ’) entitled the defendant to cancel the first fixture upon receiving notice from the plaintiff that the vessel would not be ready to load by the cancelling date (ie,20 August). Clause 9 (b) entitled the plaintiff to give such notice when it anticipated that it would not meet the laycan despite the exercise of due diligence on its part. Clause 9 (b) required the plaintiff to state, in its notice to the defendant, the expected date of the vessel's readiness to load and enquire whether the defendant would cancel the charterparty or agree to a new cancelling date.

FLS caused the Dahua to make unscheduled calls at Tianjin and Qingdao. On 16 August, the plaintiff informed the defendant that the Dahua was only expected to arrive at Nanwei around 30 August and asked if it was willing to wait, otherwise the Dahua would not call at Nanwei. On 17 August at 1.12 pm, the plaintiff sent the defendant an e-mail asking if it would accept a new vessel, namely the ‘MV AAL Dampier’ (‘AAL Dampier’), which could arrive at Nanwei on 20 August. According to the plaintiff, the defendant agreed orally and the terms of the agreement were summarised in an e-mail sent at 2.06 pm on 17 August by the plaintiff to the defendant. The e-mail specified, among other things, the following: the freight as US$161,000 lump sum and the detention charge as ‘US$25,000 per day pro rata’. By a further e-mail sent at 6.19 pm that evening, the defendant responded to the plaintiff's earlier e-mail confirming, among other things, that the shipper would load the cargo on board the AAL Dampier.The plaintiff secured the AAL Dampier by entering into a charter with FLS as the disponent owners of this vessel. The freight was US$155,000 lump sum.

The AAL Dampier arrived at Nanwei on 20 August. It tendered its notice of readiness (‘NOR’) at 1915 hours that evening. The AAL Dampier was scheduled to berth on 23 August but it lost its berth booking because the defendant did not supply certain shipping/customs documents in relation to the cargo that were required by the Nanwei port authorities. On 23 August, the defendant loaded the cargo on board a different vessel, the ‘MV Sea Castle’ (‘Sea Castle’), which thereafter transported it to Singapore.

The plaintiff claimed full contractual freight or, in the alternative, damages for breach of contract. It also claimed detention charges. Further, the plaintiff asked for an order that the defendant indemnify it against any sum that it might be liable to pay the head charterer (ie,FLS). The plaintiff's position with respect to the fixture in respect of the Dahua was that it was cancelled by the defendant on or about 16 August pursuant to cl 9 (b). The defendant resisted the plaintiff's claim on the basis that the plaintiff had been in breach of the fixture in respect of the Dahua and that there had never been a confirmed fixture for the AAL Dampier. The defendant maintained a counterclaim against the plaintiff for wrongful interference with the defendant's business relationship with Herrenknecht.

Held, allowing the claim:

(1) In order to invoke cl 9 (b), the plaintiff had to show that the inability of the Dahua to meet the laycan was not due to lack of due diligence on its part. The evidence showed a lack of due diligence on the part of the plaintiff as the disponent owner of the Dahua.The vessel was unable to meet the laycan because the owner caused it to make unscheduled stops at Tianjin and Qingdao. Apart from actively checking on the position of the Dahua,the plaintiff did nothing to try and compel the vessel to meet the laycan. It concentrated on trying to find a substitute vessel for the defendant. This did not establish due diligence on its part: at [29] to [32] .

(2) Unilateral notices served pursuant to contractual rights had to be interpreted objectively and purposively. The question to be decided was how a reasonable recipient of such a notice, circumstanced as the actual recipient was, would understand the notice. The purpose for which a notice was given had to be taken into account when determining the validity of the notice. In the present case, the plaintiff's e-mail sent on 16 August advised the defendant that the estimated time of arrival of the Dahua at Nanwei was 30 August 2012. The plaintiff also asked whether the defendant was prepared to wait and extend the laycan. This e-mail met the notice requirements of cl 9 (b): at [36] and [38] .

(3) On 16 August 2012 there existed a situation of anticipatory breach of the first fixture on the part of the plaintiff. The defendant elected to terminate the first fixture. The defendant had a theoretical right to damages by reason of the plaintiff's breach. However, the damages it said it incurred were not the result of the breach. They arose out of its own inability to load the cargo on board the AAL Dampier and its subsequent repudiation of the second fixture: at [42] , [43] , [47] and [76] .

(4) Looking at the whole course of negotiations between both parties, the second fixture was concluded latest by 6.19 pm on 17 August when the defendant responded to the plaintiff's e-mail confirming, among other things, that the shipper would load the cargo on board the AAL Dampier:at [49] and [55] .

(5) On its true construction, the second fixture was a port charter. Therefore, under the second fixture, the AAL Dampier was an ‘arrived vessel’ as of 20 August 2012 when it arrived at Nanwei port. It was entitled to tender its NOR on that date. From then liability for delay in loading the vessel shifted to the defendant. Hence, the time that the vessel spent waiting to berth, up to the time when the defendant repudiated the second fixture on 23 August, counted as detention for which the defendant had to pay: at [65] .

(6) The defendant would have been responsible for detention charges even if the second fixture was a berth charter. It was an implied term of charterparties that charterers would act with reasonable despatch and in accordance with the ordinary practice of the port of loading in carrying out acts which had to be done by them to enable the vessel to become an ‘arrived vessel’. In the event of breach of this implied term, the commencement of laytime could be antedated to the date it would have begun but for the breach. The defendant breached this obligation by failing to secure the shipping/customs documents for the cargo which would have enabled the AAL Dampier to obtain a berth: at [69] .

(7) According to the terms of the second fixture, since the cargo was never loaded, the full freight was never earned and hence the plaintiff was not entitled to claim the full contractual freight charges of US$161,000. The plaintiff was entitled to recover damages. The loss it suffered was US$6,000, being the difference between what the defendant would have paid the plaintiff and what the plaintiff in turn would have paid FLS. Thus, it could only recover US$6,000 as damages for non-shipment. The plaintiff was also entitled to a declaration that the defendant had to indemnify it against any sum that it might be liable to pay the head charterer (ie, FLS) arising out of the defendant's failure to ship the cargo on the AAL Dampier: at [80] and [81] .

(8) To establish a claim of wrongful interference with trade, the claimant had to show that (a) the defendant had committed an unlawful act affecting a third party; (b) the defendant acted with an intention to injure the claimant; and (c) the defendant's conduct in fact resulted in damage to the claimant. In the present case, the defendant failed on all three counts: at [83] .

Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd's Rep 224 (distd)

Christie & Vesey Ltd v Maatschappij Tot Explotatie van Schepen En Andere Zaken, Helvetia NV [1960] 1 Lloyd's Rep 540 (distd)

ELOldendorff & Co Gmbh v Tradax Export SA [1974] AC 479 (refd)

Gay Choon Ing v Loh Sze Ti Terence Peter [2009] 2 SLR (R) 332; [2009] 2 SLR 332 (refd)

Kurt A Becher Gmb H & Co KG v Roplak Enterprises SA (The World Navigator) [1991] 2 Lloyd's Rep 23 (refd)

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