Subiaco (S) Pte Ltd v Baker Hughes Singapore Pte

• Jurisdiction: Singapore
• Judgment Date: 02 September 2010
• Date: 02 September 2010
• Docket Number: Suit No 42 of 2009
• Court: High Court (Singapore)

Subiaco (S) Pte Ltd

Plaintiff

and

Baker Hughes Singapore Pte (trading as Baker Hughes Inteq)

Defendant

[2010] SGHC 265

Belinda Ang Saw Ean J

Suit No 42 of 2009

High Court

Admiralty and Shipping–Carriage of goods by sea–Defendant booking space on shipowner's vessel to ship cargo of barite–Booking note containing term free in stowed l/s/d/liner out hook –Whether term on its own clear enough to transfer risk of loading operations from shipowner to defendant–Whether term could be given extended meaning based on facts and circumstances of case

Admiralty and Shipping–Carriage of goods by sea–FOB seller appointing and/or arranging for stevedoring company to load cargo of barite–Whether it was implied term of contract of carriage that defendant would appoint and/or nominate reasonably competent stevedores to carry out cargo operations through FOB seller

The Aberdeen office of Baker Hughes Drilling Fluids, an operating division in the Baker Hughes group, purchased a consignment of barite on FOB Incoterms from VMC ( the FOB seller ). The defendant was to arrange for the shipment and carriage of cargo of barite from Vietnam to two discharge ports in Australia. The defendant did so by booking space on board the shipowner's vessel. The negotiations for the booking of space on the vessel were carried out by the defendant and Mocean Shipping Pte Ltd ( Mocean ), who was acting on behalf of the shipowner. The defendant later received a signed copy of the Booking Note containing the terms and conditions of the booking. Box 10 of the Booking Note was the freight clause and it contained the term on which the freight was booked, viz, free in stowed l/s/d/liner out hook ( f.i.s. l/s/d term ). Box 12 named the FOB seller as the defendant's representative at the loading port. The Booking Note was also subject to the Hague or Hague-Visby Rules.

Subsequently, the vessel and one of its cranes sustained damage during the loading of the cargo of barite by the Vietnamese stevedores. The shipowner claimed damages against the defendant as the contractual charterer for breach of the contractual clause (ie, the Booking Note) in respect of the damage sustained by the vessel and the crane on 1 February 2008 in Vietnam.

The shipowner's case was that the damage to the vessel and crane was due to the act or neglect of the stevedore and that the defendant was liable for the damage because the loading operations were expressly agreed to be at the defendant's own risk and expense. In support of its contention, the shipowner relied on the Booking Note and, in particular, the f.i.s. l/s/d term in Box 10. Read in the context of the factual matrix described below, the shipowner submitted that the f.i.s. l/s/d term was to be understood to,inter alia, mean that the defendant at its own risk and expense would (whether by itself, or its representatives at the load port) load, stow, secure, lash and dunnage the cargo of barite at load port, and/or engage/appoint stevedores necessary for the cargo operations as described.

Furthermore, it was contended that the agreement to load the cargo of barite at the defendant's own risk and expense was also based on:

1. (a) the conduct of the defendant, whereby the defendant appointed the FOB seller as its agents and/or representatives at the load port to carry out the cargo operations, and those operations were carried out by stevedores appointed by the FOB seller; and/or

2. (b) an established course of dealings between the parties since around June 2007, whereby the shipowner had previously shipped bagged barites for the defendant on the same route on free in, stowed terms, and the usual and/or customary procedure adopted by the parties was for the defendant to carry out the cargo operations through stevedores appointed by its agents or representatives at the load port.

The shipowner also contended that the defendant, being responsible for cargo operations, was obliged to carry them out properly and/or carefully through the stevedoring company appointed by the FOB seller as agents for and on behalf of the defendant.

Alternatively, if the shipowner was responsible for loading the cargo of barite, the shipowner's fallback argument was that it was an implied term of the contract of carriage that the defendant (through its representatives) would appoint and/or nominate reasonably competent stevedores to carry out the cargo operations. The defendant had breached this duty because the stevedore who operated the crane in this case was incompetent.

The defendant rejected the shipowner's contentions. While the loading operations were free of cost to the shipowner, the defendant did not agree, whether by Box 10 of the Booking Note, by conduct or through a previous course of dealings, to carry out the loading operations at its risk and expense. The defendant maintained that: (a) it did not appoint the stevedoring company; and (b) it was not required and/or did not ask the FOB seller to appoint stevedores on its behalf. The FOB seller appointed the stevedoring company for itself as FOB seller of the cargo of barite and/or as agents for the shipowner.

Held, dismissing the claim:

(1) The common law rule stated that in the absence of express agreement, it was the shipowner's responsibility to load and stow the goods, at least as soon as the goods are on board the vessel. The Booking Note was also subject to the Hague or Hague-Visby Rules ( the Rules ), and Art III r 2 of the Rules provided that the carrier (shipowner) was to properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. The authorities and textbooks on this topic were unequivocal on the point that any departure from the shipowner's duty to load and stow was founded on express terms and did not arise by implication of law or by implication from the charterparty or, in this case, the Booking Note. The f.i.s. l/s/d term on its ownwas not clear enough to transfer the risk of loading operations (not expense alone) from the shipowner to the defendant. Moreover, there was also no appropriate term in the Booking Note to effectively transfer the risk of loading operations when read together with the f.i.s. l/s/d term. In fact, cll 4, 8 and 18 of the Booking Note supported the finding that the responsibility and risk for loading operations remained with the shipowner: at [18] to [20], [27] to [30] and [34].

(2) The cases of Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (The Jordan II) [2003] 2 Lloyd's Rep 87 and Canadian Transport Company Limited v Court Line Limited [1940] 1 AC 934 did not support the shipper's argument that the f.i.s. l/s/d term could be given an extended meaning based on the facts and circumstances of the case. Both cases involved clear words which transferred the responsibility for the cargo operations from the shipowner to the defendant. Moreover, the shipowner had not shown any words from which a transfer of responsibility to perform the loading operations from the shipowner to the defendant could be inferred: at [39] to [43].

(3) The shipowner could not rely on the conduct of the defendant to justify an extension of the meaning of the f.i.s. l/s/d term so that the defendant was obliged to carry out the cargo operations at its own risk and expense, and be held liable for the alleged negligence of the stevedore. The authorities relied upon by the shipowner all involved facts whereby there were clear words which transferred the obligation to carry out the cargo operations to the charterers or shippers. These authorities were clearly inconsistent with the factual matrix of the present action, where such clear words were not present: at [44] and [51].

(4) There was no established course of dealings between the parties to justify the extension of the meaning of the f.i.s. l/s/d term as imposing on the defendant the obligation to carry out the cargo operations at its own risk and expense so as to be made liable to the shipowner for the alleged negligence of the stevedore. The three previous shipments were on terms which were different to the f.i.s. l/s/d term in the present action. It was Mocean, not the shipowner, which time chartered the vessel Territory Trader and the counterparty for the TT 703 and TT 705 shipments was Mocean and not the shipowner. It was also unclear, evidentially, whether the defendant contracted with Mocean, and the shipowner in the case of AC 701 shipment in its own right. Hence, there was no consistency in the course of dealings between the shipowner and the defendant to give rise to an established practice: at [56]and [57].

(5) The shipowner's alternative case could not succeed. It was premised on the defendant's appointment of the stevedoring company. However, on the facts, it was the FOB shipper who appointed and/or arranged for the stevedores to carry out the cargo operations for itself in discharge of its own obligations under the sale on FOB terms. Therefore, it followed that there could be no implied term that the defendant would appoint and/or nominate reasonably competent stevedores to carry out the cargo operations: at [58] and [59].

Apostolis (No 2) , The [2000] 2 Lloyd's Rep 337 (distd)

Brys & Glysen, Ltd v J & J Drysdale & Co (1920) 4 Ll L Rep 24 (distd)

Canadian Transport Co Ltd v Court Line Ltd [1940] 1 AC 934 (distd)

Flintermar, The [2005] 1 Lloyd's Rep 409 (distd)

G H Renton & Co Ltd v Palmyra Trading Corp of Panama [1957] AC 149 (refd)

Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (The Jordan II) [2003] 2 Lloyd's Rep 87 (folld)

Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR (R) 537; [2007] 3 SLR 537 (refd)

Olbert Metal Sales Ltd v Cerescropt Inc (T D) [1997] 1 FC 899 (distd)

Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 (refd)

Jainil Bhandari and Francis Cheah (Rajah & Tann LLP) for the plaintiff

K Muralitherapany (Joseph Tan Jude Benny LLP) for...