Penguin Engineering & Construction Pte Ltd v Titan Logistics (S) Pte Ltd (Pioneer Offshore Enterprises Pte Ltd, Third Party)

• Jurisdiction: Singapore
• Judge: S Rajendran J
• Judgment Date: 25 October 1996
• Neutral Citation: [1996] SGHC 244
• Citation: [1996] SGHC 244
• Defendant Counsel: Leonard Chia (JC Ho & Kang),Nigel Bogaars and Savliwala Din (Harry Elias & Pnrs)
• Published date: 19 September 2003
• Plaintiff Counsel: Liew Teck Huat (Niru & Co)
• Date: 25 October 1996
• Docket Number: Suit No 1123 of 1994
• Court: High Court (Singapore)
• Subject Matter: Definition,Contract to lift and transport goods,Conditions,Contractual terms,Goods damaged during lifting operations,Uncertainty,Rectification,Whether clause intended by both parties to be a contract term,Contract,Whether clause vague and ambiguous,Whether an exemption clause,Insurance clause,Change in equipment used,Plaintiffs' failure to adhere to clause,Fundamental breach,Exemption clause,Whether defendants waived clause,Whether equipment used a fundamental term of contract,Whether insurance clause a fundamental term of contract,Deletion of insurance clause,Whether clause a contract term breached by plaintiffs,Failure to take out insurance

Esso Singapore Pte Ltd (Esso) had a contract with Sembawang Engineering (Pte) Ltd (Sembawang) to fabricate a pentane tank known as TK-2216. Sembawang was to deliver TK-2216 by barge to the jetty at Pulau Ayer Chawan (PAC) and Esso was to off-load and take delivery of TK-2216 thereat.

The plaintiffs, Penguin Engineering & Construction Pte Ltd, were the contractors employed by Esso to off-load TK-2216 at PAC, transport it to a worksite at PAC and install it thereat. It was a term of the contract between the plaintiffs and Esso that lifting procedures in respect of TK-2216 were to be reviewed and approved by Esso (ESY-1, p 17).

Sembawang had engaged the defendants, Titan Logistics (S) Pte Ltd (Titan), to transport TK-2216 from its yard to PAC. Sembawang introduced Karamjeet Singh (Singh), the managing director of Titan, to Eng Swee Yeng (Eng), the managing director, and Tan Ngerng Heng (Tan), a director of the plaintiffs. From what Singh told the plaintiffs and from the contents of the brochure on Titan supplied to the plaintiffs, the plaintiffs accepted that Titan were experts in the lifting of equipment. Eng testified that as the plaintiffs had no experience in this area, the plaintiffs decided to use the services of Titan for the lifting and transportation of TK-2216 to the worksite when the barge carrying TK-2216 reached the jetty at PAC. The plaintiffs accordingly invited Titan to quote for off-loading TK-2216 from the barge and transporting it to the worksite. On 26 May 1992, Singh met the plaintiffs` representatives and, after surveying the site, submitted a quotation. The quotation contained the following clause:

Insurance:To be arranged against all risks in joint name with Titan Logistics with `waiver of subrogation` clause to include Titan Logistics, their subcontractors and/or subassigns.

Singh testified that it was his practice to include such a requirement in his quotations and that such clauses were common in the trade. The quotation also specified that a 300-ton hydraulic crane would be used to lift the vessel (1 x 60T) off the barge.

There was delay in the fabrication of TK-2216. The plaintiffs therefore did not respond to Titan`s quotation. On 10 August 1992, there was another meeting with Singh at the plaintiffs` office where the proposed contract was again discussed. The same day Titan submitted another quotation. This quotation again specified that Titan would use a 300-ton hydraulic crane to lift the 60-ton vessel off the barge. It contained the same insurance clause as that specified in the quotation of 26 May 1992.

By fax dated 13 August 1992 the plaintiffs confirmed acceptance of the quotation and asked Titan to produce the relevant lifting certificate for the equipment involved in the job. These were provided by Titan. By fax dated 7 September 1992 Singh informed the plaintiffs that as the weight of TK-2216 was 72 metric tons and not 60 metric tons as previously indicated, Titan would have to adjust their price upwards to $53,000 `all other terms and conditions remaining in force`. The plaintiffs by letter dated 15 September 1992 accepted this revised quotation and informed Titan that the operation was scheduled for 20 September 1992.

Titan had arranged with Tiong Woon Crane & Transport Pte Ltd (Tiong Woon) to hire a 300-ton hydraulic crane for the lifting operations at Sembawang and at PAC. On 19 September 1992 after TK-2216 had been loaded on to a barge at Sembawang and whilst Tiong Woon were in the process of transporting the 300-ton hydraulic crane to PAC for the off-loading operation, the crane caught fire and was rendered unusable. Singh immediately notified Tan about what had happened and informed Tan that until Titan secured an alternative crane for the job, the lifting operation at PAC would have to be postponed. Tan agreed but wanted the job to be completed as soon as possible.

Singh said that he tried to get a replacement 300-ton hydraulic crane but was unable to obtain one at such short notice. On Sunday, 20 September 1992, he spoke on the phone with a `Mr Lim` of Pioneer Offshore Enterprises Pte Ltd (the third party) and Mr Lim suggested that a crane barge fitted with `Favco MK IV` pedestal crane, which the third party had available, would be suitable and recommended its use. Singh invited Mr Lim to meet him at the jetty of PAC at about 2.30pm the next day so that he could explain to Mr Lim the operational requirements in greater detail.

On 21 September 1992, a meeting was held at the site office at PAC at which Eng, Tan, Singh as well as representatives of Esso were present. The third party had faxed to Titan`s office details of the proposed crane barge including its safe working load chart and its test certificate issued by the Ministry of Labour (ESY-45 to 47). These documents were in turn faced to Esso`s office at PAC and were available at the meeting.

Eng testified that, at that meeting, Singh referred to the distance calculations for the crane barge and on the basis of these calculations advised the plaintiffs that the crane barge was suitable for the lifting of TK-2216. Eng testified that as Titan were experts in the field of lifting equipment, the plaintiffs accepted Singh`s proposal to use the crane barge and it was arranged that the lifting operation would commence the next morning. The meeting at the site office on 21 September 1992 was a lengthy one. During the course of that meeting the third party arrived and inspected the site.

At about 10.30am on 22 September 1991 the lifting operation at the jetty at PAC commenced. The crane barge was operated by an employee of the third party. Whilst the crane barge was lifting TK-2216 it got into difficulties and as a result TK-2216 dropped on to the jetty and rolled on to the sea bed.

The plaintiffs claimed that it cost them the sum of $238,569.70 to retrieve and repair TK-2216. Although the contract between the plaintiffs and Titan called for the plaintiffs to take out an all-risk cover in the joint names of the plaintiffs and Titan with a `waiver of subrogation` clause, the plaintiffs had not taken out any such insurance and in this action the plaintiffs claimed from Titan the charges they had incurred in retrieving and repairing TK-2216.

Titan denied the plaintiffs` claim that the mishap happened because of Titan`s negligence and/or Titan`s failure to carry out the contracted work with proper and sufficient equipment. The main defence of Titan, however, was that the plaintiffs, in not taking out the agreed insurance cover for the lifting operation, were in breach of their contract with Titan. Titan`s position was that if the plaintiffs had insured the operations as agreed, then, even if Titan was liable for the accident, the plaintiffs would not have been able to commence and maintain the present action.

The plaintiffs, in their reply to Titan`s defence, pleaded that subsequent to Titan`s fax of 19 August 1992, Singh agreed that Titan would assume full responsibility for the work and would not rely on the term relating to the provision of insurance. It was also the plaintiffs` case that the term relating to the provision of insurance was one which was not intended by either party to be a term of the contract and that neither party had paid any attention to that term. The plaintiffs accordingly sought an order for the rectification of the contract by the deletion of that term.

Both Eng and Tan testified that Singh had orally agreed to waive the insurance clause in Titan`s quotation. Eng`s evidence-in-chief was that at a meeting at the site held after the quotation had been accepted, he raised the issue of the insurance clause and asked Singh who would be responsible for any damage caused by the use of wrong, unsuitable or inadequate equipment. According to Eng, Singh replied that Titan would be responsible. Eng claimed that this assurance was accepted by him and that it was then expressly agreed that the insurance was superfluous and therefore unnecessary and the plaintiffs would proceed on the basis that the insurance was not required.

Under cross-examination, Eng at first stated that he first discussed the question of the insurance clause with Singh at a meeting after 13 August 1992. This was consistent with his evidence-in-chief. Subsequently, however, Eng went further. He claimed that on 13 August 1992 Singh had pressed him for confirmation of acceptance of the quotation. He told Singh that he could not accept the insurance clause but Singh told him to give confirmation of acceptance first and they could discuss the insurance terms later. Eng claimed that it was because of this assurance by Singh that the plaintiffs sent the letter of acceptance.

It would appear from the evidence-in-chief of Eng and Tan that the discussion resulting in the alleged agreement to do away with the insurance clause took place between 22 August and 7 September 1992. In cross-examination, Eng confirmed that the deletion of the insurance clause was settled prior to 7 September 1992. The plaintiffs in para 3(c) of their reply had, however, stated that when Titan proposed...