Splosna Plovba International Shipping and Chartering d o o v Adria Orient Line Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 31 August 1998
• Neutral Citation: [1998] SGHC 289
• Court: High Court (Singapore)
• Year: 1998
• Published date: 26 February 2013
• Plaintiff Counsel: Corina Song & Gina Wan (Allen & Gledhill)
• Defendant Counsel: Julian Kwek (Gabriel Peter & Partners),A Rajandran (A Rajandran, Joseph & Nayar)
• Citation: [1998] SGHC 289

Judgment :

GROUNDS OF DECISION

The background

1. These grounds of decisions concern two other applications besides the one under appeal for the reason that the three applications are somewhat intertwined. The plaintiffs applied for summary judgment of their claim under summons in chambers entered no. 7464 of 1997 (the O 14 application) and under (ex-parte) summons in chambers entered no. 2289 of 1998 (the joinder application) to add a company called SEP Logistics Pte Ltd (SEP Logistics) as the second defendant to the action. The defendants on their part applied under summons in chambers entered no. 8548 of 1997 (the stay application) for a stay of the plaintiffs’ action.

2. The stay application was granted by the learned deputy registrar on 17 February 1998 on terms that the defendants furnish a banker’s guarantee in the sum of US$458,000 within 21 days. He adjourned the O 14 application but gave the defendants liberty to restore the same. The defendants appealed against the decision of the learned deputy registrar and after hearing the appeal, I allowed it to the following extent on 17 March 1998:

a. the order below was varied, the defendants to furnish security in the sum of US$50,000 within 10 days of the order;

b. both parties to appoint their respective arbitrators for arbitration in London pursuant to clause 17 of the charter party dated 14 February 1997 between the parties;

c. once arbitration had commenced, the security of US$50,000 shall be refunded forthwith to the defendants;

d. if arbitration proceedings are not instituted in London within 6 weeks viz by 28 April 1998, due to neglect or default or any other act of the defendants, the stay shall be lifted and the plaintiffs are at liberty to continue with these proceedings;

e. costs of appeal to be costs in the arbitration or, if necessary, costs in the cause.

3. After the appeal, counsel for the plaintiffs wrote in for further arguments; I acceded to the request. At the further hearing, I was informed by counsel for the defendants that his authority to submit the claim for arbitration on behalf of the defendants had been revoked, which revocation however he challenged. Apparently, the majority shareholder of the defendants Wong Seng Kiong (the deceased) had passed away on 21 March 1998. His solicitors, in order to save costs had, on the instructions of the personal representatives of the deceased, written to counsel to advise that no further steps should be taken to defend these proceedings; the mandate of Jurgen Schlotzer (Schlotzer) who is the minority shareholder, director and managing director of the defendants, was said to have been limited by the deceased, prior to his death.

4. Counsel for the defendants challenged the capacity of the personal representatives to instruct the lawyers acting for the deceased, pointing out that under the articles of association of the defendants, the revocation of Schlotzer’s authority as managing director, including the authority to instruct the defendants’ solicitors, is not valid until a shareholders’ meeting is convened and a resolution passed to that effect. He asserted that Gabrijel Kobal (Kobal) the managing director of Genshipping Pacific Line Pte Ltd (Genshipping) must be the personal representative of the deceased as, the letter to his firm from the deceased’s solicitors revoking his authority, was carbon-copied to Kobal who had previously filed a number of affidavits on the plaintiffs’ behalf. Kobal had, in one affidavit deposed that he instructed the solicitors of the deceased. Until the shares of the deceased in the defendants were transferred to his personal representatives (and that can only be done after the grant of probate was extracted), the latter were in no position to speak for the defendants, not being members of the company.

5. I ordered that the defendants file an affidavit by the following Friday to challenge revocation of their authority to pursue arbitration proceedings in London. Otherwise, no stay of proceedings would be granted, the order of court I made earlier would be rescinded and the previous order of the deputy registrar would be restored. If the defendants did file their affidavit (with liberty to the plaintiffs to file a reply), I granted leave to restore for hearing, the application for further arguments.

6. On 15 May 1998, parties appeared before me again, after the defendants had filed their affidavit; the plaintiffs chose not to file an affidavit in reply. At this further hearing, counsel for the defendants referred to Suit No. 1635 of 1997 in which the deceased had filed a claim against Schlotzer and SEP Logistics. He said the outcome of that suit may well affect the shareholding ratio and determine whether the deceased still remains the major shareholder of the defendants. Counsel highlighted the fact that Kobal had also filed numerous affidavits on behalf of the deceased in Suit No. 1635 of 1997 and had even confessed to assisting the deceased throughout as a personal adviser; clearly Kobal was on the side of the plaintiffs and his good faith was questionable. Counsel complained that there was a concerted blood hunt against Schlotzer who was acting in good faith by insisting on the contractual rights of the defendants in going to arbitration.

7. After hearing the parties’ further submissions, I made inter alia, the following orders, which are now the subject of the defendants’ appeal in Civil Appeal No 162 of 1998:-

a. Schlotzer to furnish security equivalent to US$50,000 in any event and will bear the costs of instructing the defendants’ solicitors for the London arbitration;

b. a bank guarantee in terms acceptable to the plaintiffs’ solicitors to be furnished by 1 June 1998;

c. costs in the cause.

8. When Schlotzer failed to furnish the security of US$50,000 which I had ordered and did not apply for a stay of my order pending appeal, the plaintiffs applied to restore for hearing before me, their O 14 and their joinder applications which I granted.

The affidavits

9. Some of the affidavits filed pertained to all three (3) applications; consequently there was overlapping of their contents in some instances. I start by referring to the first affidavit (filed on 11 November 1997) of Schlotzer which was to support the stay application, he deposed:

a. the plaintiffs are a company with a place of business in its country of incorporation Slovenia whereas, the defendants have their place of business in its country of incorporation which is Singapore;

b. the plaintiffs’ claim is based on an alleged breach of a charter-party dated 14 February 1997 (the charter-party) made between the parties whereby the plaintiffs chartered the vessel "Velenje" to the defendants for six (6) months 15 days more or less, with an option to the defendants of a further six (6) months’ extension. Their claim comprised of unpaid charter-hire (US$204,819.98), port charges (US$135,878.11) and bunker disbursements (US$90,029.15);

c. the charter-hire rate was disputed – the plaintiffs based their claim on a daily hire of US$4,750 whereas the defendants contended that the hire should be US$4,700. The defendants had paid charter-hire based on US$4,750 and therefore had a counterclaim against the plaintiffs for overpayment;

d. the claim for port charges was also disputed. Under cl 8 of the charter-party, the Master of the vessel was obliged to take instructions from the defendants although he was employed by the plaintiffs. The defendants had given the Master sailing instructions and which agents to use at ports of call. In breach thereof, the Master followed the plaintiffs’ instructions and engaged the plaintiffs’ agents at various ports of call; the plaintiffs cannot rely on their own breach to found an action;

e. as for the claim for bunkers supplied by A/S Dan Bunkering (A/S Dan) it was an implied term of the charter-party that all acknowledgement of receipts for bunkers for the vessel were to be claused with the remarks "for charterer’s account" and acknowledged with the defendants’ company stamp. In breach thereof, the plaintiffs’ Master failed to clause bunker receipts. Accordingly, the defendants dispute liability for a claim for which the plaintiffs assumed liability to third parties. The plaintiffs had settled the claim of A/S Dan when the vessel was arrested in Italy merely because under Italian law, the supply of bunkers could possibly be held to be a maritime lien. The defendants did not order bunkers from Passage Shipping & Trading (Passage) of Piraeus, Greece and therefore deny liability for bunkers ordered on the plaintiffs’ account;

f. under cl 17 of the charter-party:

Should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons in London, one to be appointed by each of the parties hereto, and the third party by the two so chosen; their decision, or that of any two of them, shall be final and for the purpose of enforcing any award this agreement may be made a rule of the Court. The arbitrators shall be commercial men conversant with shipping matters engaged in the shipping industry. This Charter Party shall be governed by and construed in accordance with English law.

As there was clearly a dispute on the plaintiffs’ claims both on liability and quantum, Schlotzer deposed there should be a stay of the action pursuant to the International Arbitration Act Cap 143A (the Act).

10. In addition to the grounds set out in para 9 above,...