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

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 26 August 2014
• Neutral Citation: [2014] SGHC 165
• Court: High Court (Singapore)
• Docket Number: Suit No 855 of 2012
• Year: 2014
• Published date: 16 October 2015
• Hearing Date: 19 February 2014,12 February 2014,06 November 2013,05 November 2013
• Plaintiff Counsel: K Muralitherapany and Koh Seng Tee Edward (Joseph Tan Jude Benny LLP)
• Defendant Counsel: Navinder Singh and Amirul Hairi (Navin & Co LLP)
• Subject Matter: Admiralty and Shipping,Carriage of Goods by Sea,Voyage Charterparties,Contract,Discharge,Anticipatory Breach,Formation,Acceptance
• Citation: [2014] SGHC 165

Judith Prakash J: Introduction

The plaintiff and the defendant are Singapore companies in the business of providing transport services for the import and export of cargo by sea. Neither company is a ship owner or operator. Each of them deals with third party providers of vessels either directly or through another middleman.

This action arises out of arrangements made between the plaintiff and the defendant for the transport of machinery (“the cargo”) from the port of Nanwei in China to Singapore. The exact contractual arrangements are a matter of dispute: the plaintiff’s position is that there were two charter contracts (the “first fixture” and the “second fixture” respectively) between the plaintiff and the defendant by which the plaintiff agreed to supply a vessel to transport the cargo, the second fixture being concluded after the first fixture was cancelled by the defendant. The defendant’s position is that the first fixture was the only contract between the parties and that because the plaintiff breached the terms of the first fixture, the defendant had to ship the cargo by a vessel supplied by a third party.

The plaintiff has sued the defendant for loss of freight and demurrage and the defendant has made a counterclaim for damages for breach of contract and also loss of business arising from a letter written by the plaintiff to the defendant’s customer.

The following main issues arise from the pleadings, evidence and submissions: What happened to the first fixture: was the plaintiff in breach? Was the second fixture concluded between the plaintiff and the defendant? Was the Notice of Readiness (“NOR”) tendered by the vessel under the second fixture valid? What remedies are recoverable by either party in relation to the first or second fixtures? Is the plaintiff liable to the defendant for the tort of wrongful interference with trade?

Background

All events referred to in this summary of what occurred took place in 2012.

The first fixture

In July 2012, the defendant entered into a contract with a company called Herrenknecht Asia Headquarters Pte Ltd (“Herrenknecht”) to transport the cargo from China to Singapore and deliver it to Herrenknecht. At about the same time, the defendant’s general manager and director, Marcus Stephen Tan (“Mr Tan”) and its operations manager, Yesica Winata (“Ms Winata”), had discussions with the plaintiff’s director, Madeline Ong Kah Liang (“Ms Ong”), regarding the provision of a vessel to carry the cargo from the port of Nanwei, China, to Singapore.

On 26 July, the plaintiff and the defendant entered into the first fixture by which the plaintiff agreed to provide the vessel “MV Dahua” (the “Dahua”) to carry the cargo to Singapore for a lump sum freight of US$161,000. The plaintiff had in its turn chartered the Dahua for this purpose from FLS (Thailand) Co., Ltd (“FLS”) on the basis that it would pay FLS a lump sum freight of US$155,000 for the carriage of the cargo.

The charter contract between the plaintiff and the defendant was a voyage charter and a written document entitled “Fixture Note” was signed by both parties. It contained the following important terms:

02) Loading port: 1SBP Owners Berth Nanwei Port, Guangdong, PR China;

03) Discharging port: 1SBP Owners Berth Singapore;

04) Laycan: 10th – 20th Aug, 2012;

19) Others as per Gencon C/P 1994.

Clause 4 above is crucial. It provided that the “laycan”, meaning the period during which the Dahua had to arrive in Nanwei and be ready to load the cargo, was between 10 and 20 August. If the Dahua did not meet this laycan, then the defendant would be entitled to cancel the fixture. The term “laycan” or “lay/can” is commonly used in charter contracts as a short form to indicate the dates when the vessel is to be ready to load and the cancelling date.

Clause 19 of the Fixture Note incorporated, as part of the first fixture, the terms of the standard form contract devised by The Baltic and International Maritime Council and codenamed “Gencon”. The plaintiff relied on cl 9 of Gencon (“cl 9”) to support its stand. Clause 9 provides: 9. Cancelling Clause (a) Should the Vessel not be ready to load (whether in berth or not) on the cancelling date indicated in Box 21, the Charterers shall have the option of cancelling this Charter Party. b) Should the Owners anticipate that, despite the exercise of due diligence, the Vessel will not be ready to load by the cancelling date, they shall notify the Charterers thereof without delay stating the expected date of the Vessel’s readiness to load and asking whether the Charterers will exercise their option of cancelling the Charter Party, or agree to a new cancelling date.

Such option must be declared by the Charterers within 48 running hours after the receipt of the Owners’ notice. If the Charterers do not excise their option of cancelling, then this Charter Party shall be deemed to be amended such that the seventh day after the new readiness date stated in the Owners’ notification to the Charterers shall be the new cancelling date.

The provisions of sub-clause (b) of this Clause shall operate only once, and in case of the Vessel’s further delay, the Charterers shall have the option of cancelling the Charter Party as per sub-clause (a) of this Clause.

On 30 July, FLS informed the plaintiff that the ship’s agent for the Dahua at Nanwei would be Bruce Gong (“Mr Gong”), of ASB Group Co., Ltd of Guangdong (“ASB”). This information was passed on to the defendant. Subsequently there was contact directly between Mr Gong and the defendant regarding the loading of the cargo and the cargo documents were duly passed to ASB.

The defendant was anxious to ship the cargo as early as possible. On 7 August, and again the next day, the defendant wrote to the plaintiff asking for the status of the Dahua. On 8 August, the plaintiff replied that the vessel was at Yingkou anchorage due to bad weather and, according to its schedule, the Dahua would be at Shanghai between 10 and 12 August; at Nanwei between 15 and 17 August; and in Singapore between 22 and 25 August. A second e-mail was sent out by the plaintiff later the same day which stated that the vessel would be in Nanwei on 15 August and since there was a very big typhoon in China all plans had been delayed.

The defendant did some investigation of its own and, allegedly, Mr Tan was advised that the Dahua was in the vicinity of North Korea on 10 August and nowhere near the vicinity of the bad weather. On 13 August, the defendant informed the plaintiff that the vessel was near North Korean waters. The e-mail alleged that the vessel was already in default of the fixture note as it would need 15 to 18 days to reach Guangzhou. The e-mail ended with the following demand:

Kindly get the replacement vessel asap by today before noon hrs.

The plaintiff denied that the vessel was anywhere near North Korea. On the afternoon of 13 August, it informed the defendant that the vessel had berthed in Tianjin. On 14 August, FLS informed the plaintiff that due to continuing poor weather conditions and delays at the various ports in the region, the Dahua would only be able to arrive at Nanwei between 20 and 25 August. Accordingly, on 15 August, Ms Ong informed Mr Tan that she had been pushing for a confirmed schedule but so far the best estimate the plaintiff had received regarding the Dahua’s arrival was “ETA 20 – 25th August”. Ms Ong asked whether the laycan could be extended to 30 August. Her evidence was that Mr Tan rejected this suggestion.

Events leading to the disputed second fixture

By 16 August, the plaintiff was able to put forward some “options” (as Ms Ong called them) to the defendant regarding the shipment. In her e-mail sent at 1.35pm that day, Ms Ong told the defendant that the Dahua was expected to arrive at Nanwei around 30 August and if the defendant was willing to wait, the ship owner wanted it to sign an extension of the fixture note. If the defendant was not interested, then the Dahua would not call at Nanwei. She then advised that: (i) an alternative vessel under consideration, the “Limco Asia”, was not suitable because not all the cargo could be stowed under-deck; and (ii) another possible alternative vessel could load on 24 August at Gaolan port which apparently was close to Nanwei. Ms Ong asked the defendant to check with the shipper of the cargo whether loading at Gaolan would be acceptable. Ms Ong concluded by saying that the plaintiff was still looking for alternatives but these were the three “options” presently available. She wanted Mr Tan’s urgent response on them. However, the defendant did not reply to this e-mail. At 6.37pm on 16 August, Mg Ong informed the defendant that if it did not agree to an extension of the Dahua’s laycan, the fixture note would be void on 20 August as the vessel would not be going to Nanwei to pick up the cargo.

Mr Tan was upset by that e-mail. In his response, he indicated that if the Dahua could not meet the terms of the first fixture, the defendant might take legal action. Ms Ong replied on 17 August that the plaintiff had given the defendant three options and the defendant should indicate its choice as otherwise the plaintiff could not proceed. She also complained that Mr Tan had refused to answer her calls. A few hours later at 1.12pm, she sent the defendant an e-mail announcing that the plaintiff had found a “passing by vessel” to load the cargo in Nanwei on 20 August. She asked the defendant to confirm its acceptance of this new vessel and that the cargo was ready for loading as otherwise the vessel’s detention charge would be US$25,000 per day. Ms Ong stressed that she needed an immediate acceptance in order to secure this vessel. The vessel that this e-mail referred to was the “MV AAL Dampier” (“AAL Dampier”).

It is from this point onwards that the parties’ accounts of what occurred diverge.

According to...