Sitra Wood Products Pte Ltd v Royal and Sun Alliance Insurance (S) Pte Ltd

CourtHigh Court (Singapore)
JudgeS Rajendran J
Judgment Date30 July 2001
Neutral Citation[2001] SGHC 204
Citation[2001] SGHC 204
Defendant CounselR Govintharasah (Gurbani & Co)
Plaintiff CounselGovin Asokan and Henry Heng (Rodyk & Davidson)
Published date19 September 2003
Docket NumberSuit No 233 of 2000
Date30 July 2001
Subject MatterInsurance as a contract of indemnity,Contract for sale of goods on fob and credit terms,Whether buyer's payment of invoiced value of goods a gift/windfall,Whether payment ought to be taken into account in diminishing seller's loss,Pecuniary loss insurance,When presumption can be rebutted,Whether seller has insurable interest,Seller's in action prejudicial to insurers,art III r 6 Hague-Visby Rules,Whether seller can claim against insurers despite receiving full payment,Presumption as to passing of property in overseas sales,Total loss of goods at sea,Insurance


Cur Adv Vult

1. In a series of (five) separate contracts the plaintiffs, Sitra Wood Products Pte Ltd ("Sitra Wood"), sold timber and plywood products ("cargo") on FOB terms to SAS Ravate Distribution ("Ravate"), a buyer in the Reunion Islands. The contracts of sale incorporated Sitra Wood's General Terms and Conditions of Sale, the relevant provision of which were:

Clause 3 "The Seller shall arrange for and on behalf of the Buyer the shipment of the Goods and the Seller shall not be liable to the Buyer for all loss and damage in respect of or in connection with such arrangement or the shipment of the Goods from the date of arrangement to final destination. The Buyer accept transhipment and part shipment of the Goods."

Clause 5 "The shipment of the Goods is at the risks of the Buyer and for all intents and purposes the risk in the Goods passes to the Buyer upon confirmation of this Sales Contract by the Buyer. If the Goods are sold to the Buyer on FOB basis or C&F basis, the Buyer is to insured the Goods up to 110% of the price of the Goods."

Clause 8 "If payment is by Letter of Credits, the Seller is not obliged to ship if the Letter of Credits is not issued in favour of the Seller or the terms and conditions of such Letter of Credits are not to the satisfaction of the Seller. If payment is on D/P basis (documents against payment), the Buyer is to pay the Seller immediately on presentation of documents and the Buyer is not entitled to take delivery of the Goods if such payment is not made and the Seller is entitled to claim against the Buyer for all loss and damage suffered by the Seller by reason of the Buyer's failure or refusal to pay the Seller on presentation of the documents for payment."

Clause 9 "The Seller is not liable to the Buyer if the goods are not shipped/delivered late "

Clause 10 The property in the Goods shall only pass from the Seller to the Buyer after receipt of full payment by the Seller from the Buyer.

Clause 11 "If there is any dispute between the Seller and the Buyer in respect of the Goods or this Sales Contract, the Buyer is not entitled to reject the Goods or to refuse to take delivery of the Goods and/or refuse to make payment of the Goods to the Seller and the Buyer is to make payment or to take delivery as provided herein without prejudice to the right of the Buyer to refer the dispute, controversy or claim (if any) for arbitration as provided in Clause 14 herein."

It was not disputed that the risk on the cargo was to pass to Ravate upon loading and that Ravate was obliged to and did insure the cargo.

2. On 25 June 1999, Sitra Wood also sought to insure the cargo. In making this application, Sitra Wood did not disclose to their insurers, Royal & Sun Alliance Insurance (S) Pte Ltd ("Royal & Sun") the details of the contracts for sale or that the sale was on FOB terms. Copies of the five invoices were faxed to Royal & Sun but all references therein to the sale being on FOB terms were blacked out or cancelled. However, the sentence "marine insurance and war risk covered by buyer" was not blacked out in some of the invoices.

3. Mrs Lim Guek Ching ("Mrs Lim"), the employee of Royal & Sun in charge of the matter, said that although Royal & Sun had not been specifically informed by Sitra Wood that the sales were on FOB terms, she assumed that - as was common in international trade - the sellers were taking out the insurance covers on behalf of the buyers. The evidence of Mrs Lim that that was a common practice in international trade was not challenged by Sitra Wood. Nothing very material, however, hinged on the circumstances under which the policies were issued as Royal & Sun did not, in their pleadings, raise any question of non-disclosure or fraud or dispute that the sales were all on FOB terms.

4. The total insured value of the cargo in the policies provided by Royal & Sun was US$642,803.14 - a sum in excess of the total invoice value - as Sitra Wood had asked for a 10% uplift in the sale price. Mrs Lim testified that such an uplift in the insured value would usually be made in order to cover miscellaneous charges and loss of profits at destination by the consignees where the policies were to be assigned or indorsed over to the consignees.

5. Ravate chartered a vessel, the "Arktis Queen", to ferry the cargo to the Reunion Islands. The loading of the vessel was completed on 28 June 1999 and she set sail for the Reunion Islands immediately thereafter. The invoices issued in respect of the cargo and the method of payment were as follows:

Invoice No. Date Amount Payment

*(1) SWP/4652/99 28.06.99 US$248,189.53 LC

(2) SWP/4653/99 28.06.99 US$ 21,418.57 D/A 90 days

(3) SWP/4654/99 28.06.99 US$102,658.47 D/A 90 days

*(4) SWP/4655/99 28.06.99 US$153,731.92 LC

(5) SWP/4656/99 28.06.99 US$ 58,370.01 D/A 90 days US$584,368.50

The 1st and the 4th invoices were to be paid by irrevocable letters of credit ("LCs"). The remaining three were to be paid by bills of exchange drawn by Sitra Wood on Ravate.

6. The voyage to the Reunion Islands was expected to take approximately 12 to 13 days. The vessel did not, however, reach the Reunion Islands. It sank in the Indian Ocean, off the Reunion Islands, on 9 July 1999, with total loss of cargo.

7. Sitra Wood, on 15 July 1999, submitted a claim to Royal & Sun under the policies for the insured total sum of US$642,803.14 in respect of the loss of cargo. Royal & Sun appointed WK Webster (International) Pte Ltd ("Webster") to investigate the claim and asked Sitra Wood to co-operate with Webster in the investigation.

8. On 13 October 1999 Webster, on behalf of Royal & Sun, rejected the claim by Sitra Wood. In their letter to Sitra Wood, Webster pointed out that the buyers had not rejected the bills of lading and other documents and suggested that Sitra Wood should direct its claim to its buyers. It would be relevant to set this letter out in full:

"The goods were sold by you to your buyers on FOB terms. The payment term of the sale contracts is documents against acceptance (D/A) 90 days from the date of the bills of lading. The bills of lading (together with other documents, including invoices and bills of exchange) were endorsed and sent by you to your buyers and had not been rejected by your buyers.

Investigations have also revealed that your buyers and/or their cargo insurers have made claims against and demanded security from the owners and/or P&I Club of the carrying vessel in respect of their losses and damages on account of the loss of the goods.

It is clear that you have no insurable interest in the goods at the time of the casualty. Our principals, Royal & Sun Alliance Insurance (S) Ltd, are therefore under no liability whatsoever to you.

Payment for two of the sale contracts, namely (i) invoice No. SWP/4655/99 for USD153,731.92, and (ii) No. SWP/4652/99 for USD248,189.53, are drawn under irrevocable letters of credit. Your claims should be directed to your buyers and/or the L/C issuing bankers, and they would no doubt claim from their cargo insurers.

In the meantime, for your own interest, you should ensure that all your rights against third parties, including the buyers, L/C issuing bankers, carriers and bailees are properly preserved and exercised.

For the avoidance of doubts, please note that our principals reserve all their rights and defences, and all measures and steps taken by them, their servants or agents in investigating into this matter or otherwise shall not under any circumstances be considered as a waiver of any of their rights and defences or otherwise prejudice any of their rights and defences."

Sitra Wood had, on 4 October 1999, in fact received the payments from Ravate in respect of invoices 2, 3 and 5. The payments under the LCs, in respect of invoices 1 and 4, were, however, still outstanding. This was because Ravate had requested, and Sitra Wood had granted, extensions of time for these payments. The payments under the LCs were thereafter effected on 27 October 1999 and 29 November 1999. The factual position therefore was that Sitra Wood had received full payment under all five invoices and did not suffer any loss as a result of the sinking of the Arktis Queen.

9. The shipment of the cargo was, as provided in cl 5 of the General Terms and Conditions, at the risk of Ravate. Ravate was also required, under that clause, to insure the cargo up to 110% of its value. As noted earlier, Ravate had insured the cargo as required. Upon receiving news that the Arktis Queen had sunk, Ravate made a claim for the loss with its insurers. Ravate's insurers accepted liability under their policy and paid the claim in two tranches: the first on 31 August 1999 and the second on 11 October 1999. In turn, Ravate executed a document subrogating to its insurers all rights of recourse against anyone in respect of the loss of the cargo. Ravate also surrendered to its insurers the original bills of lading which had been endorsed by Sitra Wood.

10. Sitra Wood initially took the position that it could not claim reimbursement from Royal & Sun in respect of the payments that Ravate had made. This is evident from the fact that after receiving the sum of US$578,680.15 (being the full invoice value less bank charges) from Ravate, Sitra Wood, by letter dated 13 December 1999 issued a credit note to Royal & Sun in respect of the US$578,680.15 received from Ravate. In the credit note, Sitra Wood described the US$578,680.15 from Ravate as "payment received from our customer". In that letter, Sitra Wood only sought from Royal & Sun the difference between the sum received and the insured sum of US$642,803.14, namely, US$64,122.99. Royal & Sun rejected that reduced claim and Sitra Wood placed the matter in the hands of their solicitors, M/s Rodyk & Davidson.

11. Sitra Wood's case in the present proceedings is that as the cargo had perished at sea before delivery to Ravate, Ravate was not obliged to pay for the cargo and that...

To continue reading

Request your trial
1 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2001, December 2001
    • 1 de dezembro de 2001
    ...Home Assurance Co[2001] 2 SLR 421 (also referred to above) and Sitra Wood Products Pte Ltd v Royal & Sun Alliance Insurance (S) Pte Ltd[2001] 4 SLR 121 (a marine insurance decision); and on insurance cases generally, see infra, Chapter 15); shipping (see eg, The Virgo I ex Kapitan Voloshin[......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT