Profindo Pte Ltd v Abani Trading Pte Ltd

JurisdictionSingapore
JudgeJudith Prakash J
Judgment Date14 January 2013
Neutral Citation[2013] SGHC 10
Plaintiff CounselGopalan Raman (G R Law Corporation)
Docket NumberDistrict Court Appeal No 5 of 2012
Date2013
Hearing Date01 November 2012
Subject MatterCommercial Transactions,Sale of Goods
Published date23 January 2013
Citation[2013] SGHC 10
Defendant CounselJohn Wang and Chong Li Lian (RHTLaw Taylor Wessing LLP)
CourtHigh Court (Singapore)
Year2013
Judith Prakash J: Introduction

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

The parties are both trading companies incorporated in Singapore. On 19 May 2009, the appellant, Profindo Pte Ltd, agreed to sell 2,750 metric tons of cement to the respondent, Abani Trading Pte Ltd. The cargo was to be loaded in China and delivered to a port in Madagascar. The terms of the sale are contained in a proforma invoice (“the Agreement”).

The relevant clauses of the Agreement are as follows: Product: Ordinary Portland Cement 42.5 R Conforming to China Standard GB 175-2007 Quantity: 2750 MT (+/- 5% at [the appellant’s] option) Unit Price: USD 101/MT CFR … Total Price: USD 277,750.00 CFR …

Discharge rate: 1000MT per WWD SHEXC UU Demurrage/Dispatch: USD 5500 per day or prorate/no dispatch Port DA: Port DA at disport of maximum USD5000 is under [the appellant’s] account. If [Port DA] exceeds USD5000, [the respondent is] to top up the difference and pay [the appellant] Under the Agreement, it was the appellant’s responsibility to procure a ship to carry the cargo.

Pursuant to cl 15 of the Agreement, the parties agreed 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 (calculated on the basis that 2,750 metric tons of cargo would be discharged at the rate of 1,000 metric tons per day). Clauses 3 and 4 of the Agreement also made it clear that the parties contracted on a CFR (ie, cost and freight) basis. It is not disputed by the parties that a CFR contract is but a variation of a “cost, insurance and freight” (“CIF”) sale contract, and that the differences between the two types of contract are not material for the purposes of this appeal.

The appellant chartered the MV Athens and having loaded the cargo, the vessel arrived at the discharge port of Diego Suarez, Madagascar on 28 June 2009. The vessel berthed on 29 June 2009 at 0700 hours and the respondent commenced discharge at 0805 hours 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 July 2009 and 2 July 2009. On 2 July 2009 at about 3pm, Mr Jeremy Wong (“Mr Wong”) of the appellant called Mr Jayes Damodar (“Mr Damodar”), director of the respondent, to inform the latter that the vessel had been anchored outside the port since 1 July 2009. Mr Wong offered Mr Damodar the option of allowing limited discharge to take place on 2 July 2009 as the vessel could return to berth that day.

However, as it was too late in the day for significant discharge to occur, Mr Damodar instructed Mr Wong to wait until the next day (ie, 3 July 2009) to berth the vessel. Mr Wong followed up with an email dated 2 July 2009 stating:

As spoken, we will advise vessel to berth tomorrow instead of today as per your decision. Kindly note that time is to count whether vessel is berthed or not, and once demurrage, always in demurrage.

In his reply email on the same day, Mr Damodar simply replied:

Let the [vessel] discharge then for 2 hours, if it does not make any difference.

Despite Mr Damodar’s email, the vessel only returned to berth on 3 July 2009 and the respondent completed the discharge of the goods on the same day.

The parties’ claims

Subsequently, the owners of the vessel (“the shipowners”) imposed demurrage on the appellant who managed to negotiate a reduced charge of US$8,200 but wanted the respondent to pay the amount. The appellant alleged that pursuant to cll 2 and 15 of the Agreement, the respondent was responsible for the delay since laytime continued to run whether the vessel was berthed or not. The respondent disagreed, contending that laytime was suspended when the vessel left the berth and that it was not responsible for demurrage because it had completed the discharge within the allowable laytime of 2.75 days when the vessel was berthed.

The appellant eventually paid the shipowners. However, the appellant alleged that it was blacklisted by the shipowners for late payment of the demurrage. As a result, the appellant allegedly suffered a loss of earnings of US$57,500 because it was unable to charter any vessel from the shipowners to fulfil its agreement with another customer for cement to be shipped. The appellant claimed this sum of loss of earnings from the respondent.

The appellant also claimed reimbursement of disbursements payable at the port, ie the Port DA charges, of US$4,965.03. As the vessel was at the port for a longer time, the Port DA charges amounted to US$9,965.03. According to cl 17 of the Agreement, the respondent had agreed to pay the appellant for any excess above US$5,000 in respect of Port DA charges. However, the respondent refused to pay - alleging that the delay in discharge, for which it was not responsible, caused an unnecessary rise in these charges.

The respondent also filed a counterclaim against the appellant on two separate grounds relating to the cement delivered. First, the respondent claimed that the cement supplied was not of satisfactory quality. As a result, the respondent had had to compensate a subsequent buyer of the cement by paying it a sum of US$10,000. The respondent therefore sought to recover this sum from the appellant.

Second, the respondent claimed that there was a shortfall of four metric tons of cement as the total amount discharged from the vessel was 2,746 metric tons instead of the 2,750 metric tons as agreed in cl 2 of the Agreement. Relying on cl 3 of the Agreement, the respondent sought to recover US$404 (ie, US$101 x 4) from the appellant on the basis that it should not have to pay for the shortfall in the cement.

Decision below

The DJ held as follows: Laytime was suspended when the vessel was not berthed so the respondent was not liable for the appellant’s claim for demurrage. The DJ came to her decision on the basis that that there was no express or implied term between the parties that the respondent would be liable for demurrage whether or not the vessel was berthed (see the GD at [16]). Even if laytime was not suspended, the appellant had not proven its claim for loss of earnings of US$57,500 because this was a loss which the appellant could not have reasonably foreseen. It was also a loss which the appellant could have taken reasonable steps to avoid. The claim for loss of earnings was thus not allowed. The appellant had supplied four metric tons less cement than the contractually agreed amount and the respondent was therefore entitled to its counterclaim of US$404. The respondent was liable to the appellant for any Port DA charge in excess of US$5,000, and therefore had to pay US$4,965.03 to the appellant. The respondent had not made out its case that the goods supplied were not of a satisfactory quality. Its counterclaim for US$10,000 was thus dismissed.

Finally, the DJ fixed costs of $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 did not succeed on.

The appellant appealed against the findings in paras 13(a), (b) and (c). It also appealed against the costs award.

Issues

The issues which arise for my consideration in this appeal are as follows: Did the DJ err in holding that the respondent was not liable for the appellant’s claim for demurrage because laytime was suspended when the vessel was not berthed (“Issue 1”)? Did the DJ err in holding that even if laytime was not suspended, the respondent could not be responsible for the loss of earnings amounting to US$57,500 allegedly suffered by the appellant (“Issue 2”)? Did the DJ err in holding that the appellant was liable for the respondent’s counterclaim for shortfall of cement (“Issue 3”)? Did the DJ err in fixing costs at $10,000 to be paid by the appellant to the respondent (“Issue 4”)?

My decision Issue 1

In determining the issue of whether laytime was suspended in favour of the respondent, the DJ appeared to have shifted the burden of persuasion on to the appellant to show that laytime was not suspended when the vessel was not berthed. This could very well have been the result of the appellant’s choice of arguments before the DJ on this issue – the appellant first argued that there was a separate agreement based on the email correspondence between Mr Damodar and Mr Wong that laytime would continue to run whether or not the vessel was berthed; and then it argued that there was an implied term in the CFR contract that the respondent would pay demurrage in such a case. As a matter of principle, however, the burden of persuasion should have been borne by the respondent. The Agreement merely stipulates, based on cll 2 and 15, that the respondent had a laytime of 2.75 days to discharge the goods (see above at [3] and [4]). Given that the respondent took more than 2.75 days to do so, it is the respondent who 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.

In their submissions before me, both parties were unable to identify any case authority which specifically addresses the issue of whether...

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1 cases
  • Profindo Pte Ltd v Abani Trading Pte Ltd
    • Singapore
    • High Court (Singapore)
    • 14 January 2013
    ...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......

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