Stork Technology Services Asia Pte Ltd (formerly known as Eastburn Stork Pte Ltd) v First Capital Insurance Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 03 July 2006
• Neutral Citation: [2006] SGHC 101
• Date: 03 July 2006
• Subject Matter: Conditions,Contract,Waiver,Applicable principles when determining whether defendant-insurer waiving need for plaintiff-insured's compliance with notice provision in insurance policy,Whether defendant entitled to require strict compliance of notice provision by plaintiff-insured and repudiate liability for plaintiff's failure to do so,Contractual terms,Interpretation of phrase as used in notice provision of insurance policy,"May give rise to a claim","Immediately",When "term" amounting to "condition precedent",Interpretation of word as used in notice provision of insurance policy,Whether notice provision in insurance policy amounting to condition precedent to liability attaching on defendant-insurer under such policy,Whether insured or insurer to decide whether circumstances such that notice should be given,Words and Phrases
• Docket Number: Originating Summons No 1720 of
• Published date: 10 July 2006
• Defendant Counsel: Anthony Wee and Elaine Tay (Rajah & Tann)
• Court: High Court (Singapore)
• Plaintiff Counsel: Devadason Letchamanan (Steven Lee Dason & Khoo)

3 July 2006 Judgment reserved.

Lai Siu Chiu J:

1 The plaintiff, Stork Technology Services Asia Pte Ltd, applied for the following orders in the originating summons herein (“the OS”) against the defendant, First Capital Insurance Limited:

(a) a declaration that the plaintiff had discharged its responsibilities under the insurance policy as an insured of the defendant in relation to claims, and/or had complied with its obligations as to the notice/notification of claims and/or transmission of documents under Condition 3 of the public liability insurance policy no ZPU00016127 (“the Policy”);

(b) alternatively, a declaration that the defendant had by its conduct waived any and/or all breaches (if any) as to the notice requirement and/or transmission of documents under Condition 3 of the Policy;

(c) a declaration that the defendant is liable to indemnify the plaintiff under the Policy for all damages or sums paid or payable (less the applicable policy deductible) in relation to Suit No 1523 of 2002 (“the Suit”) and appeals therefrom and all legal fees and disbursements incurred or to be incurred by the plaintiff in respect of the same, together with interest, from such time as the court may grant; and

(d) that the defendant pay the plaintiff all damages and/or all sums payable under the Policy (less the applicable policy deductible) in relation to the Suit and appeals therefrom and all legal fees and disbursements paid or payable by the plaintiff in respect of the same, together with interest, from such time as the court may grant.

The background

2 The plaintiff was the second defendant in the Suit that had been instituted by Jet Holding Ltd (“Jet Holding”) and three other parties against Cooper Cameron (Singapore) Pte Ltd (“Cameron”) which was the first defendant. Jet Holding had chartered a drill ship called Energy Searcher (“the vessel”) to Jet Shipping Ltd (“JSL”), the second plaintiff in the Suit. The vessel’s manager was Jet Drilling (S) Pte Ltd (“JDL”) who was the third plaintiff in the Suit while the fourth plaintiff in the Suit was Maurel Et Prom (“MEL”) who claimed as assignee of the rights, title and interest of Jet Holding, JSL and JDL.

3 The Suit arose from the fracture of a slip joint on board the vessel on or about 16 March 2001, while the vessel was in the Bay of Bengal, off Chennai, India, working on a project that JDL had secured from Cairn Energy India Pty Limited, an oil exploration company.

4 The slip joint together with another slip joint (collectively “the slip joints”) of the vessel had originally been found to be unfit for use. JDL then contracted with Cameron on behalf of JSL to refurbish and repair them. Cameron subcontracted the repair work to Van Der Horst Engineering Services Pte Ltd (“VDH”). Using selected components from both slip joints, VDH re-assembled a single operational joint. This refurbished joint was used as the primary slip joint on board the vessel. Cameron then subcontracted refurbishment of the unused parts of the slip joints to the plaintiff. The plaintiff was told to create a new slip joint (“the standby slip joint”). VDH sent the discarded parts to the plaintiff, which then used the parts to fabricate the standby slip joint.

5 When Cameron was sued, it instituted third party proceedings against the plaintiff for an indemnity against the claims of Jet Holding and the other three parties. The plaintiff in turn sought a counter-indemnity from Cameron for any damages that may be awarded against it. This counterclaim was not pursued eventually.

6 After a lengthy trial of 20 odd days, Belinda Ang Saw Ean J held, inter alia, (see Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2005] 4 SLR 417, hereinafter referred to as “the main judgment”) that Jet Holding and JSL had title to sue but not JDL or MEL, whose claims she dismissed. She found that Cameron had been negligent and had breached its contract to use reasonable care and skill to repair the standby slip joint, which was the one that was in use on the vessel on 16 March 2001 when it failed.

7 Ang J further held that Cameron and the plaintiff owed a duty of care in tort to Jet Holding and JSL. She awarded Jet Holding and JSL judgment against Cameron in the sum of US$1m for the loss of a crucial component from the vessel’s drilling unit called a blow out preventor (“BOP”) and nominal damages of S$10 in respect of the other pleaded claims for damages. She declared that Cameron was entitled to be indemnified by the plaintiff to the extent of 50% of the damages awarded.

8 In her supplemental judgment ([2006] SGHC 20) dated 2 February 2006 (“the supplemental judgment”), Ang J awarded 30% of their costs and disbursements to Jet Holding and JSL, on the basis that they had succeeded only on a relatively small part of their claim for US$21m. JDL and MEL were ordered to pay the costs of Cameron and the plaintiff. As between Cameron and the plaintiff, Ang J awarded Cameron its costs on the third party proceedings and declared that the plaintiff should indemnify Cameron to the extent of 50% of the costs (including disbursements) payable to Jet Holding and JSL.

9 Six appeals arose out of the two judgments of Ang J. Jet Holding, JSL, JDL and MEL appealed against her decision in Civil Appeals Nos 96 and 122 of 2005 (“the main appeals”). Cameron appealed in Civil Appeals Nos 97 and 129 of 2005 (collectively “Cameron’s appeals”), while the plaintiff appealed in Civil Appeals Nos 98 and 128 of 2005 (“the plaintiff’s appeals”). Civil Appeals Nos 96, 97 and 98 of 2005 were appeals against the main judgment while the remaining three appeals were against the supplemental judgment.

10 In a reserved judgment ([2006] SGCA 20) delivered on 29 June 2006, the Court of Appeal dismissed the main appeals with costs to Cameron and the plaintiff. Cameron failed in its appeal in Civil Appeal No 97 of 2005 on the issue of liability to Jet Holding and JSL and on the damages awarded. However, as between itself and the plaintiff, Cameron partly succeeded on its appeal on the indemnity issue. It was Cameron’s case that it was entitled to a full indemnity and not only 50% from the plaintiff, for the damages payable to Jet Holding and JSL.

11 The Court of Appeal held that vis-à-vis Cameron and the plaintiff under the third party proceedings, Cameron was not entitled to 100% contribution of the damages payable to Jet Holding and JSL. The appellate court held that Cameron was only entitled to a 50% contribution with the result that the plaintiff, in addition to paying US$500,000 of the US$1m damages awarded to Jet Holding and JSL, would pay half of Cameron’s share of the damages or US$250,000. In other words, the plaintiff would pay a global sum of US$750,000 to Jet Holding and to JSL.

12 The Court of Appeal ordered Cameron to bear 25%, with the plaintiff bearing the remaining 75%, of the costs of Jet Holding and JSL in Cameron’s appeals and in the plaintiff’s appeals. As between themselves, the court ordered Cameron and the plaintiff to bear their own costs in Cameron’s appeals and in the plaintiff’s appeals.

13 Before the Court of Appeal heard the six appeals, the plaintiff had given notice to and informed the defendant of the judgments of Ang J. Now that the Court of Appeal has delivered judgment, the plaintiff would quite naturally look to the Policy and to the defendant to pay or reimburse the judgment sums due or paid to Jet Holding, JSL and to Cameron, including costs. The defendant, however, has already repudiated liability.

The facts

14 I turn now to the facts of the OS. The salient facts were undisputed and are essentially extracted from the affidavits filed by the parties’ representatives, viz Ramaswamy Subramanian (“Subramanian”), the plaintiff’s financial controller, on the plaintiff’s behalf and by Elizabeth Lee Eng Khim (“Lee”), a claims executive, on the defendant’s behalf. What the parties disagreed on was the interpretation of the relevant terms and conditions of the Policy.

15 According to Subramanian’s first affidavit (filed on 13 January 2006), the defendant acquired the business of Winterthur Insurance (Far East) Pte Ltd (“Winterthur”) with effect from 27 January 2003 and with it, the liabilities under the Policy. The Policy was first issued to the plaintiff under its former name Eastburn Stork Pte Ltd on 26 August 1999 and covered public liability including product liability claims, pursuant to a special condition endorsed on the Policy. It was renewed every year and at the material time, the Policy covered the period 1 July 2000 to 30 June 2001.

16 The plaintiff is a specialist service engineering company established in Singapore in 1978. Until April 2001, it was a subsidiary of an international multi-industry Dutch group known as Stork NV. The plaintiff’s business is to service, repair and recondition equipment used in the oil and gas industry including high pressure drill floor equipment such as manifolds, spools, valves, BOPs and mud pump modules.

17 Prior to the commencement of the Suit in December 2002, the plaintiff’s managing director received from the Singapore office of English solicitors, M/s Stephenson Harwood, a letter dated 18 July 2002 (“Stephenson Harwood’s letter”), representing the owners, charterers and managers of the vessel, giving notice of the “catastrophic failure” of the standby slip joint (described as “the Telescoping Joint” by the solicitors) on 16 March 2001.

18 Stephenson Harwood’s letter went on to say:

The Telescoping Joint was overhauled by Cooper Cameron (S) Pte Ltd and Stork Technology Services Asia Pte Ltd (formerly known as Eastburn Stork Pte Ltd) … in or about July 1998 to December 1998.

We have been instructed to investigate the cause of the failure of the Telescoping Joint and the extent of your liability, if any. In order to assist our investigation into the failure of the Telescoping Joint, we should be grateful if you would provide the following documents.

19 The...