Profindo Pte Ltd v Abani Trading Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 14 January 2013
• Date: 14 January 2013
• Docket Number: District Court Appeal No 5 of 2012
• Court: High Court (Singapore)

Profindo Pte Ltd

Plaintiff

and

Abani Trading Pte Ltd

Defendant

[2013] SGHC 10

Judith Prakash J

District Court Appeal No 5 of 2012

High Court

Commercial Transactions—Sale of goods—CFR sale contract—Seller claimed demurrage from buyer on basis that laytime continued to run when vessel was unexpectedly required to leave berth part way through discharge—Buyer counterclaimed for shortfall of goods delivered based on amount discharged from vessel—Whether laytime continued to run as between seller and buyer of CFR sale contract during unexpected disruption in discharging operation—Whether seller of CFR sale contract responsible to buyer for shortfall of goods discharged from vessel

On 19 May 2009, Profindo Pte Ltd (‘the appellant’), agreed to sell 2,750mt of cement to Abani Trading Pte Ltd (‘the respondent’). The terms of the sale were contained in a pro forma invoice (‘the Agreement’). Pursuant to the Agreement, the parties agreed to contract on a CFR (ie, cost and freight) basis and that on arrival of the carrying vessel at the discharge port, the respondent would discharge the goods within the allowable laytime of 2.75 days. The appellant chartered a vessel and the loaded vessel arrived at the discharge port on 28 June 2009. The vessel berthed on 29 June 2009 at 7.00am and the respondent commenced discharge at 8.05pm the same day. Discharge continued on 30 June 2009. However, on 1 July 2009, the port authorities unexpectedly required the vessel to leave the berth and move to the anchorage to give priority to a tanker. As a result, no discharge took place on 1 and 2 July 2009. The vessel only returned to berth on 3 July 2009 and the respondent completed the discharge of the goods on the same day.

Subsequently, the shipowners imposed demurrage of US$8,200 on the appellant and the latter claimed against the respondent for the same amount. The appellant alleged that pursuant to the Agreement, the respondent was responsible for the delay since laytime continued to run whether the vessel was berthed or not. The appellant also claimed for: (a)loss of earnings of US$57,500 (which allegedly resulted from its inability to charter any vessel from the shipowners to fulfil its agreement with another customer because of the late payment of demurrage) and (b)reimbursement of excess disbursements payable at the port (‘excess Port DA charges’) as the vessel was at the port for a longer time. On the other hand, the respondent counterclaimed for: (a)the unsatisfactory quality of the cement delivered and (b)a shortfall of 4mt of cement as the total amount discharged from the vessel was 2,746mt instead of the 2,750mt indicated in the Agreement.

The district judge (‘the DJ’) dismissed the appellant's claim for demurrage (on the basis that laytime was suspended when the vessel was not berthed) and also for loss of earnings (on the basis that the alleged loss was too remote and could have been mitigated by the appellant). However, the DJ allowed the appellant's claim for excess Port DA charges. On the respondent's counterclaim, the DJ agreed with the respondent that the appellant had supplied 4mt less cement than the contractually-agreed amount and thus allowed the respondent's counterclaim of US$404; but held that the respondent had not made out its case that the goods supplied were not of a satisfactory quality. The DJ then fixed costs of S$10,000 in favour of the respondent on the basis that the majority of court time was spent on the issues relating to demurrage and loss of earnings, which the appellant had not succeeded on.

Held, allowing the appeal in part:

(1) The Agreement merely indicated that the respondent had a laytime of 2.75 days to discharge the goods. Given that the respondent took more than 2.75 days to do so, the respondent bore the burden of showing that the Agreement allowed for the suspension of laytime when the vessel had to leave the berth part way through discharge, notwithstanding the lack of an express provision to that effect in the Agreement: at [17] .

(2) Given that the CIF or CFR seller (ie, the appellant) was not even under any duty to ensure the actual physical delivery of the goods at the port of discharge, the risk of delay in unloading the goods at the port of discharge after laytime had commenced should also not be borne by the appellant given the presence of a demurrage clause. It was more logical and more in line with commercial realities to hold that such risks, unless they had been expressly allocated to the seller by a specific term in the contract, were to be borne by the CIF or CFR buyer (ie,therespondent) instead: at [25] .

(3) At the material time (ie, in early July 2009), the director of the respondent did not categorically deny liability to pay demurrage when the appellant so demanded. The respondent's submission that ‘laytime is suspended when the vessel is not berthed’ was thus likely an afterthought, rather than a reflection of a clear and undisputed legal or commercial understanding that existed between the parties. The appellant's appeal in respect of its claim against the respondent for demurrage of US$8,200 was therefore allowed: at [29] and [30] .

(4) The appellant's appeal for its alleged loss of earnings of US$57,500 was, however, dismissed because: (a)there was no evidence that the respondent knew or ought reasonably have known that blacklisting would take place if demurrage was not paid in time to the shipowners; and (b)the alleged loss of earnings was one which the appellant could have easily mitigated by paying off the shipowners first: at [33] and [34] .

(5) As for the respondent's counterclaim for the shortfall of cement, the appellant's delivery obligation as a CFR seller was discharged at the port of loading, rather than at the port of discharge. Given that the documentary evidence clearly suggested that at least 2,750mt of cement was in fact loaded and shipped at the port of loading, the respondent was not able to prove its case of short delivery since what it relied on was short discharge at the discharge port rather than evidence showing a shortfall in cargo delivered to the vessel. The appellant's appeal against the DJ's holding that the respondent was entitled to its counterclaim of US$404 for the shortfall of cement was thus allowed: at [39] to [41] .

(6) Even if the appellant's appeal had not succeeded, the imposition of S$10,000 of costs in favour of the respondent by the DJ was incorrect given that, before the DJ, both parties were generally unsuccessful on the bulk of their claims. The amount of time spent per se on a particular issue should not be the sole determinant of the amount of costs a party should receive. In the circumstances, the DJ should have awarded some costs to the appellant on the basis that costs generally follow the event and the victor should only be deprived of costs if it has raised issues unreasonably or unduly prolonged the proceedings: at [42] .

[Observation: Had the appellant consistently claimed the full sum of US$10,637 (ie, the demurrage amount payable based on the Agreement between the appellant and the respondent), it might very well have succeeded notwithstanding its own reduced obligation to pay the shipowners US$8,200. This was because, as a matter of law, it could have been argued in the appellant's favour that the demurrage clause in the CFR sale contract between the parties was a free-standing provision of an independent contract unconnected with the contractual arrangements between the appellant and the shipowners: at [31] .]

Asia Star, The [2010] 2 SLR 1154 (folld)

Etablissements Soules et Cie v Intertradex SA [1991] 1 Lloyd's Rep 378 (refd)

Fal Oil Co Ltd v Petronas Trading Corp Sdn Bhd [2004] EWCA Civ 822 (refd)

Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 (folld)

Triton Navigation Ltd v Vitol SA [2003] EWCA Civ 1715 (refd)

Gopalan Raman (G R Law Corporation) for the appellant

John Wang and Chong Li Lian (RHTLaw Taylor Wessing LLP) for the respondent.

Judgment reserved.

Judith Prakash J

Introduction

1 This is an appeal against the decision of the district judge (‘the DJ’) in Profindo Pte Ltd v Abani Trading Pte Ltd [2012] SGDC 176 (‘the GD’). The primary issue on appeal is how demurrage is to be calculated as between a seller and a buyer in a ‘cost and freight’ (‘CFR’) sale contract - ie,whether or not the calculation of laytime against the buyer is to be suspended when the vessel carrying the goods is forced to leave its berth halfway through the unloading process.

Facts

Background

2 The parties are both trading companies incorporated in Singapore. On 19 May 2009, the appellant, Profindo Pte Ltd, agreed to sell 2,750mt of cement to the respondent, Abani Trading Pte Ltd. The cargo was to be loaded in China and delivered to a...