Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC

• Jurisdiction: Singapore
• Court: International Commercial Court (Singapore)
• Judge: Sir Henry Bernard Eder IJ
• Judgment Date: 04 April 2017
• Neutral Citation: [2017] SGHC(I) 4
• Citation: [2017] SGHC(I) 4
• Published date: 08 April 2017
• Plaintiff Counsel: Peter Doraisamy and Andrew Lee (Peter Doraisamy LLC)
• Defendant Counsel: Timothy Ross Lord (instructed) and Rajkumar Mannar (Peter Low LLC)
• Date: 20 March 2018
• Hearing Date: 16 February 2017,13 February 2017,14 February 2017,15 February 2017,20 March 2017
• Docket Number: Suit No 1 of 2016
• Subject Matter: Contractual terms,Scope of work,Breach,Contract,Non-payment

Sir Henry Bernard Eder IJ: Introduction

The Plaintiff (“TO”) is a company incorporated in Singapore. It is a wholly-owned subsidiary of Ezion Holdings Limited (“Ezion”). The Defendant (“TCT”) is a company incorporated in Delaware, United States of America and based in Gig Harbour, Washington. Ezion holds a minority indirect interest (some 19%) in TCT and to that extent TO and TCT are related companies. However, for present purposes at least, they operated at arm’s length. TO provides marine logistics and support services to the offshore oil and gas industry worldwide as did TCT at least until recently.

The present proceedings concern disputes between TO and TCT in relation to work and services provided by TO in relation to the construction of three liquefied natural gas (“LNG”) plants on Curtis Island (which is a small island with a landmass of approximately 15 square kilometres off the coast of Queensland, Australia) namely the Queensland Curtis LNG Project (“QCLNG Project”), the Australia Pacific LNG Project (“APLNG Project”) and the Gladstone LNG Project (“GLNG Project”) – collectively the “LNG Projects”.

The main contractors for the LNG Projects were Bechtel International Inc and Bechtel Oil Gas and Chemicals, Inc. For convenience only, I shall refer to these companies without distinction as “Bechtel”.

Each LNG Project was confined to its own specific area on Curtis Island with its own berthing area for loading and unloading. By three separate contracts between Bechtel and TCT as described more fully below, TCT agreed to provide tugs and barges, administrative, technical and professional services in the performance of the marine transportation operations in respect of the LNG Projects (the “Main Contracts”). This work was then sub-contracted by TCT to TO on back-to-back terms under three separate “parallel” sub-contracts (the “Sub-Contracts”). In very broad terms, the Main Contracts required TCT and, in turn, the Sub-Contracts required TO to provide tugs and barges and related services to transport modules (for the purpose of building the gas plants) to Curtis Island from Batam (Indonesia), Lamchabang (Thailand) and Batangas (the Philippines). The modules weighed between 180 tonnes to 3,800 tonnes and measured about 12 storeys high. Pursuant to the contractual arrangements referred to below, the modules were loaded on to the barges from the ports referred to above. One tug was generally required to tow a barge to the loading port at all times. Upon arrival, two tugs were required to tow the barge to be berthed at the loading port. For barges transporting modules from Batam, bunkering had to be carried out in Singapore due to the voyage distance – a single voyage could take as long as 30 days to reach Curtis Island. The unloading of the modules at Curtis Island had to be timed to be carried out during slack tide when the current was not strong. Ballasting operations were carried out to ensure that the barge remained level during unloading.

Over the course of the performance of these contracts, TO carried out approximately 87 voyages transporting 92 modules to Curtis Island for the LNG Projects. There were no reported losses or damages to any of the modules delivered to Curtis Island and all modules were delivered on time.

In summary, TO claims in debt, and alternatively by way of damages, (i) reimbursement of a total sum of US$3.5 million originally advanced by TO to TCT in or about 2012 (the “Advance Payments”); and (ii) further sums referred to as “back-charges” totalling US$24,500,178.99 and (as originally pleaded) A$984,815.59 as referred to below in respect of work done and services provided by TO in relation to the LNG Projects. The latter claims (which were also advanced in the alternative by way of a quantum meruit) were detailed in the form of a Scott Schedule together with references to a mass of underlying invoices and other documents where appropriate. In total, that Scott Schedule identifies no less than 70 separately-headed items, many of which include numerous sub-items. Some of those claims are very small in value amounting to only a few hundred dollars. Others are significantly bigger. Pursuant to an order I made at a case management conference at an early stage of the proceedings, TCT provided its responses as appropriate to the individual claims; and TO provided its own further replies thereto.

In summary, all of TO’s claims were denied by TCT on various grounds set out in TCT’s responses to the Scott Schedule as well as a defence of set-off; and TCT advanced its own substantial counterclaim for various sums totalling approximately US$14 million also in relation to the LNG Projects.

In support of its various claims, TO served affidavits of evidence-in-chief (“AEICs”) from seven witnesses, all of whom were called to give evidence and were cross-examined on behalf of TCT, as follows: Chew Thiam Keng. He is a Director of TO and also Chief Executive Officer (“CEO”) and Executive Director of Ezion. Cheah Boon Pin. He is the Chief Financial Officer of Ezion and a Director of TO. Lee Kon Meng. He is also referred to as Peter Lee. He is the CEO of TO and also the Chief Operating Officer (“COO”) of Ezion. At all material times until December 2014, he was the Deputy COO of TO reporting to Captain Larry Glenn Johnson, the then-COO of Ezion and TO. Michael David Gibson. He is the Operations Manager of TO. He joined TO in about mid-2012 as an independent contractor to assist with the operations and bunkering of the various vessels involved in the LNG Projects. In or around September 2013, he became a permanent employee of TO and oversaw the running of the day to day operations of the LNG Projects. In performing that role, he worked closely with Mr Eric Radford, TO’s fleet manager. Ho Koon Chyuan. He holds the position of Project Manager for TO. When the LNG Projects commenced, he was involved as TO’s Operations Manager. He assisted in coordinating TO’s marine operations and reported back to Peter Lee on the progress of the projects. His role also included liaising with TCT’s representative, Mr Wayne Charles Hamilton. Ang Siew Leng. She is employed by TO as an Accounts Executive and has been in that position since 2010. She was not involved in any of the negotiations and discussions in relation to the LNG Projects. Rather her involvement extended to preparing the accounts for the LNG Projects as well as preparing the relevant invoices to be issued to TCT throughout the course of the LNG Projects. Png Chan Chan. She joined TO sometime in 2009 and worked in the Operations Department and is now an Operations Superintendent. Her role is to provide administrative support in relation to the operations of the various projects. She first got involved with the LNG Projects around mid-2012. Initially, her main role was to procure quotations for bunkers. However, that stopped sometime in 2013. Thereafter, her role was primarily focussed on providing administrative support to Mr Radford who was then TO’s Operations Manager in charge of the LNG Projects. In particular, she assisted Mr Radford amongst other things by liaising with TO’s Finance Department to verify the invoices generated for works carried out by TO; and was tasked to go through the amounts and the description of the charges stated in the various invoices and reviewing the supporting documentation. Mr Radford would then do a final check before the invoices were sent out to TCT.

In advance of the trial, TCT served three AEICs from the following individuals: Sonny Joe Sanders. He describes himself as the Director and Shareholder of TCT. Wayne Hamilton. He describes himself as the Vice President of Projects of TCT. Anita L. Ray. She describes herself as the Vice President and General Manager of TCT responsible for monitoring, tracking, and submission of invoices submitted by Bechtel to TCT and received by TCTA from TO. Exhibited to Ms Ray’s AEIC were a number of spreadsheets which she had apparently compiled and over 2,000 documents.

It is noteworthy that all three AEICs were very short. Of itself, that is not necessarily a criticism. But the AEICs of Mr Hamilton and Ms Ray consisted largely of bare assertions using formulaic language which lacked any proper detail or explanation. In my view, this was most unsatisfactory.

These three witnesses were all originally scheduled to be called by TCT to give evidence at the trial – Mr Hamilton, in person; and Mr Sanders and Ms Ray by video conference. However, the position of TCT changed dramatically in the course of the trial. After TO had called its witnesses and at the close of its case, TCT elected not to call any of its three scheduled witnesses. Notwithstanding their absence, TCT then sought to put in evidence the documents exhibited to Mr Sanders’ affidavit and over 2,000 documents originally exhibited to the affidavit of Ms Ray (i.e. ALR-1, ALR-2, ALR-3, ALR-4 and ALR-5) pursuant to s 32(1)(b)(iv) of the Evidence Act (Cap 97, 1997 Rev Ed) (the “Evidence Act”). This course was opposed by TO. After hearing full argument and for reasons set out in a separate ruling which I do not propose to repeat, I concluded that it would be contrary to the “interests of justice” to allow TCT to adopt such course and that I should exercise my discretion pursuant to s 32(3) of the Evidence Act in effect to exclude such documents as evidence in the trial. Following such ruling, TCT admitted the sums claimed totalling US$3.5 million and withdrew its set-off and counterclaim. TO’s other claims remain in dispute although the issues in relation to such claims narrowed considerably in the course of the rest of the trial.

The result of the above is that, in any event, TO is entitled to judgment in the total sum of US$3.5 million, as TCT conceded, plus interest (which I deal with at the end of this Judgment); and that TCT’s counterclaim should be dismissed. The issues...