The "An Ji Jiang"

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 29 September 2003
• Neutral Citation: [2003] SGHC 224
• Docket Number: Admiralty in Rem No 600300 of 2001
• Date: 29 September 2003
• Year: 2003
• Published date: 21 October 2003
• Plaintiff Counsel: Scott Thillagaratnam (Ramdas & Wong)
• Citation: [2003] SGHC 224
• Defendant Counsel: Toh Kian Sing with Chia Song Yeow (Rajah & Tann)
• Court: High Court (Singapore)
• Subject Matter: Whether inspection clause in charterparty gave rise to obligation on defendants' part to ensure vessel would be approved by nominated refinery,Contract,Measure of damages,Whether vessel ready to load,Admiralty and Shipping,Damages,Whether terms of Asbatankvoy charterparty incorporated into parties' charterparty by agreement,Terms of charterparty,Measure of loss for wrongful termination of voyage charterparty,Whether plaintiffs entitled to cancel charter,Voyage charterparties,Carriage of goods by sea

1 This action arises out of the charter by the plaintiffs, Sin Heng Long Metal Pte Ltd, of the defendants’ vessel An Ji Jiang (‘the vessel’) to carry four shipments of bulk asphalt or bitumen from Singapore to the port of Haikou, China. The plaintiffs, asserting that the defendants were in breach of the charter, cancelled the contract before the first parcel of cargo was even loaded. They are now claiming from the defendants the losses they incurred by reason of the cancellation. The defendants deny they were in breach. They say the cancellation was wrongful and they are the ones entitled to damages.

Background

2 The plaintiffs trade in bitumen. In 1998, BP Singapore Pte Ltd (‘BP Singapore’) appointed them as a bitumen distributor for the People’s Republic of China. Over the years, the plaintiffs effected several shipments of bitumen from Singapore to China. Their business was principally carried on by their general manager and director, Mr Tan Peng Seng. He was assisted by his younger brother, Mr Desmond Tan.

3 On 23 June 2001, the plaintiffs concluded two contracts with a company called China Construction International Corporation (S) Pte Ltd (‘China Construction’). By the first the plaintiffs agreed to sell China Construction 6,500 metric tons of bitumen to be shipped in two parcels in July 2001 and, by the second, a further 7,500 metric tons of bitumen was to be shipped in two shipments in August 2001. Around the same time the plaintiffs entered into a contract to buy 6,500 metric tons of bitumen from BP Singapore and the same was to be delivered to the plaintiffs at the refinery of Singapore Refining Co Pte Ltd (‘SRC’) at Pulau Merlimau between 20 and 25 July 2001.

4 The defendants are a Chinese shipping company. In early 2001, they procured the conversion of their vessel An Ji Jiang from a dry bulk cargo vessel into a bitumen tanker. The conversion process was completed in April 2001. Whilst the vessel was being converted, the defendants asked Billion Gain Enterprise Pte Ltd (‘Billion Gain’) a shipbroking business based in Singapore to help market the vessel as a bitumen carrier and to look for charterers for it. At all material times, the defendants dealt with one Ms Peggy Liu Wei Peng of Billion Gain. In March 2001, Ms Liu contacted Ms Jackki Yim of another Singapore shipbroking firm, Land Ocean Pacific Pte Ltd (‘LOP’), to enquire whether she had any business for the vessel. LOP was then one of a group of brokers through whom Shell and ExxonMobil would charter vessels for the carriage of petroleum products including bitumen.

Negotiation of the charterparty

5 In early June 2001, Mr Tan was on the lookout for a vessel to deliver the cargo to China Construction. He was approached by Ms Yim. She had previously fixed a charter for the plaintiffs and in June she was looking around, at Ms Liu’s request, for business for the An Ji Jiang. According to Ms Yim, she thought that if the plaintiffs had cargo for the vessel, she could act as their broker to negotiate a charter with the defendants.

6 Following a conversation between Mr Tan and Ms Yim during which he informed her that the plaintiffs had a cargo of bitumen to ship in July and August 2001 and that he would be interested in chartering a vessel from the defendants if they could offer him a competitive rate, Ms Yim called Ms Liu and asked if the vessel would be available in July and August 2001. On 22 June, Billion Gain sent LOP an offer from the defendants for the charter of the vessel for two shipments in July and August. Billion Gain’s letter set out the main terms of the proposed charter which included a freight rate of US$26 per metric ton for the first shipment and US$28 per metric ton for the second shipment. Ms Yim sent this offer on to the plaintiffs but quoted freight of US$27 for the first shipment and US$29 for the second. Secondly, Ms Yim suggested that a clause should be included in the charter stating that the vessel was ‘subject to the refinery’s inspection prior acceptance and berthing and all inspection charges to be borne by Owner’.

7 On 25 June, Billion Gain sent LOP the defendants’ revised offer. In this, the vessel was offered for four shipments of a maximum 4,200 metric tons per shipment on a continuous basis, the freight was US$26 pmt for the first shipment and US$28 pmt for the next three shipments. Among the other main terms stated in the letter were the following:

Lycn: 12/15 July as 1^st shpmnt

Demurrage: USD 4,000.00PDPR in any case

Others as per ASBATANKVOY Charter party to be mutually agreed

Subj to refinery’s inspection prior to acceptance n berthing n/or inspection exp TBF ownrs acct.

The reference to the Asbatankvoy charterparty was to a standard form of tanker voyage charter party issued by the Association of Ship Brokers & Agents (USA) Inc. The defendants wanted all the terms of this standard form (which I shall call ‘Asbatankvoy’) to be incorporated as part of the contract with the plaintiffs but, at that stage, Ms Yim was not willing to agree to this as she was not familiar with that form of contract. It had therefore been at her request that after the reference to the form, the words ‘to be mutually agreed’ had been inserted.

8 At that time, Mr Tan was overseas and it was Desmond Tan who was liasing directly with LOP on the proposed charter. On 26 June, he informed LOP that the plaintiffs accepted the terms offered. The same day LOP notified Billion Gain that all main terms were in good order except that the quantity was to be amended and the ‘sub stem’ was to be lifted by 27 June 1200 hours at the latest. Ms Yim also asked for a copy of the Asbatankvoy terms. ‘Sub Stem’ meant ‘subject stem’ or ‘subject to readiness of cargo’. This term therefore made the charterparty conditional upon the plaintiffs confirming the readiness of cargo by 1200 hours on 27 June 2001, in which case they would ‘lift’ or remove this condition thereby confirming the charterparty.

9 On 27 June, LOP asked the plaintiffs to confirm by 11 am that all the sub terms were lifted and that the charterparty was fixed. Ms Yim spoke with Mr Desmond Tan and the plaintiffs then sent LOP a facsimile in which Mr Desmond Tan had written ‘we confirm sub terms lifted and clean fixed’. Later on the same day, Ms Yim told Ms Liu over the telephone that the plaintiffs had agreed to incorporate all the Asbatankvoy terms as part of the charter. The plaintiffs dispute that they had agreed to this and say that Ms Yim was not acting as their broker and had no authority to make such an agreement on their behalf.

10 On 29 June, Billion Gain sent LOP a document entitled ‘Fixture Note’ which was to be signed by both the plaintiffs and the defendants. This document set out the main terms of the charter that had been agreed. It included the clause relating to the inspection of the vessel by the refinery (‘the inspection clause’) and in relation to Asbatankvoy, it stated ‘Others as per Asbatankvoy charter party to be mutually agreed’ (‘the Asbatankvoy clause’). LOP passed the fixture note on to the plaintiffs for their signature. The document was duly signed by both the plaintiffs and the defendants.

Events in July 2001

11 The vessel arrived in Singapore at about 1600 hours on Saturday, 14 July. Shortly thereafter, it was arrested by an unrelated third party in respect of claims against another vessel owned by the defendants. While the vessel was under arrest, it was inspected by an inspector appointed by SRC. On 16 July, the plaintiffs were informed by LOP that the inspection had gone smoothly and they were asked to arrange for the immediate berthing of the vessel. They were also notified that the vessel was ready to load the plaintiffs’ cargo.

12 Mr Tan then carried out investigations and informed LOP that contrary to what had been stated up till then the vessel had not received the necessary approval from SRC and that under the fixture note the vessel was subject to SRC inspection and approval before loading. He also noted that the vessel was under arrest and that this might affect approval of the vessel. The plaintiffs did not at that stage accept that the vessel was ready to load.

13 The vessel was released from arrest on the afternoon of 16 July and the next morning the plaintiffs were informed of the release by LOP. LOP requested the plaintiffs to inform them when the vessel would be able to berth. On 18 July, the defendants sent LOP a message stating that the vessel had passed the SRC inspection, that lay time had commenced in accordance with the fixture note and any delay in the berthing of the vessel would be at the risk of the plaintiffs. On the other hand, the plaintiffs had been informed by BP Singapore that the vessel had still not been approved for berthing by SRC and Mr Tan therefore could not understand why the defendants were insisting that it had passed the inspection.

14 On 18 July, there were several telephone conversations between Mr Tan and a Mr Zhou Jia Zhong, the general manager of the defendants. The defendants’ position remained that the vessel had been approved by SRC and that the plaintiffs should make arrangements for it to berth and start loading immediately. They insisted that the vessel was on demurrage. Mr Tan asked for a copy of SRC’s inspection approval since BP Singapore had informed him that there was no such approval. He also stated that he was not prepared to arrange fresh loading dates with BP Singapore until the defendants dropped their claim for demurrage. The defendants did not furnish the plaintiffs with any written evidence of SRC’s approval.

15 On 19 July, the plaintiffs sent the defendants a letter rejecting the notice of readiness issued by the defendants on 17 July. The plaintiffs gave the defendants official notice that they were cancelling the entire fixture note and rejecting the notice of readiness since the laycan between 12 and 15 July 2001 had expired. The defendants did not accept that they were at...