The "Asia Star"

• Judge: Judith Prakash J
• Judgment Date: 17 April 2009
• Neutral Citation: [2009] SGHC 91
• Citation: [2009] SGHC 91
• Defendant Counsel: Thio Ying Ying and Alan Loh (Kelvin Chia Partnership)
• Published date: 20 April 2009
• Date: 2009
• Subject Matter: Damages
• Court: High Court (Singapore)
• Plaintiff Counsel: Prem Gurbani and R Govin (Gurbani & Co)

17 April 2009 Judgment reserved.

Judith Prakash J:

Introduction

1 In November 2003, the plaintiff, Pacific Inter-Link Sdn Bhd, entered into a voyage charterparty with the defendant, the owner of the vessel Asia Star, by which it was agreed that the vessel would load a minimum cargo of 21,500mt of refined palm oil for carriage to and delivery at ports in the Middle East/Turkey/ Black Sea. On 19 January 2004, the vessel’s tanks were found to be unsuitable to receive the cargo and the plaintiff sent the defendant a message the same day holding the defendant responsible for its breach of the charterparty in failing to provide a vessel with suitable tanks. No cargo was ever loaded on to the vessel.

2 On 13 February 2004, the plaintiff commenced this action against the defendant claiming damages for the breach of the charterparty. The defendant resisted the action vigorously and the question of liability duly went to trial. The trial judge found that the defendant was in breach of the contract. The defendant’s appeal against this decision was dismissed. The matter then went for assessment of damages. The plaintiff claimed the following as its loss and damage:

(a) Losses incurred on account of cancellation of sale; contracts for the cargo by the plaintiff’s supplier; PT Pacific Indomas(“Indomas”)	US$698,889.88
(b) Claim by the plaintiff’s buyer Agrima Ic Ve Dis Ticaret; Pazarlama Ltd (“Agrima”) as a result of the plaintiff’s; failure to deliver contracted cargo	US$823,800.00
(c) Penalty charges imposed by the plaintiff’s supplier; PT Pacific Medan Industri (“Pamin”) for delay; in loading	US$209,990.83
(d) Various charges such as interest and storage,; reprocessing, transportation and heating charges; imposed by another supplier, Pacific Oil and Fats; Industries Sdn Bhd (“Pacoil”).	MYR558,467.31

3 The hearing of the assessment took place over several days before the Assistant Registrar. In his judgment, delivered in June 2008, the Assistant Registrar held that the plaintiff had failed to act reasonably to mitigate its loss and that it should have chartered an alternative vessel, the Puma, to carry its cargo to the discharge ports. As a result, the Assistant Registrar disallowed all the items of the plaintiff’s claim. Instead, he held that the proper measure of damages to be awarded to the plaintiff would be the total amount of freight that it would have paid for the charter of the Puma less the amount of freight which the plaintiff had contracted to pay the defendant for the Asia Star. He calculated that amount as being US$302,000 and awarded this sum to the plaintiff as its damages. Subsequently, the Assistant Registrar ordered that the defendant was to bear ten percent of the plaintiff’s costs of the assessment of damages.

4 Both parties were dissatisfied with the award and have appealed. The plaintiff contends that the Assistant Registrar erred in his holding that it had failed to mitigate and that it should be awarded its damages as originally claimed. It also contends that in any event, the calculation of the freight differential between the Asia Star and the Puma was wrong, that the correct figure should be US$399,500, and that, additionally, it should be entitled to recover the sums that it had to pay to Pamin and Pacoil as expenses incurred for the delay in shipping the consignments it had bought from them and had intended to ship on the Asia Star. The defendant’s stand is that the plaintiff did not suffer any damages at all and that its claim for damages should be dismissed. Alternatively, the plaintiff is entitled to nominal damages only. In addition, the defendant wants the costs of the assessment hearing before the Assistant Registrar to be awarded to it.

Summary of relevant facts

5 By various contracts made in November 2003, the plaintiff agreed to sell the following Malaysian and Indonesian edible oil products to Agrima, a trader in palm oil products in Turkey:

(a) 10,100mt of palm oil;

(b) 3,500mt of palm stearin;

(c) 5,750mt of palm olein;

(d) 1,650mt of palm kernel oil; and

(e) 500mt of crude coconut oil.

The total quantity to be delivered to Agrima was, therefore, 21,500mt. Under the contracts, the plaintiff had to ship the products between 15 December 2003 and 15 January 2004.

6 Between October and December 2003, the plaintiff purchased a total of 24,500mt of palm oil and derivatives and crude coconut oil from three suppliers, Indomas, Pamin and Pacoil: 15,000mt were purchased from Indomas, 5,750mt were purchased from Pamin and 3,750mt were purchased from Pacoil. The plaintiff’s case was that it had decided to ship all the oil from Pamin and Pacoil and 12,000mt of the quantity purchased from Indomas to Agrima to fulfil its contracts with the latter. The plaintiff further contended that it had arranged for these cargoes to be carried on the Asia Star. The agreed loading period in the charterparty was between 27 December 2003 and 4 January 2004 with the vessel to present itself at the plaintiff’s nominated load ports in Indonesia/ Malaysia during that period. The plaintiff subsequently nominated Belawan port in Indonesia and Pasir Gudang in Malaysia with the vessel to call at Belawan first.

7 On 1 December 2003, the plaintiff sent Indomas a shipping instruction telling it to load a total of 12,000mt of various palm oil products on board the Asia Star at Belawan. A similar instruction was given to Pamin on 12 December 2003 telling it to load 5,750mt of cargo on the vessel at the same port. On the same day, the plaintiff instructed Pacoil to load its cargo of 3,750mt on the Asia Star at Pasir Gudang. In each of these shipping instructions, the “laycan” of the vessel (ie the period during which it was expected to be at the relevant port for loading) was said to be between 27 December 2003 and 4 January 2004.

8 The Asia Star did not arrive at Belawan during the originally agreed laycan. The defendant then asked for the time for commencement of loading to be extended to 15 January 2004 and the plaintiff agreed to this request.

9 On 5 January 2004, Indomas informed the plaintiff that up till that date the Asia Star had not arrived for loading. It asked for the correct estimated date of arrival of the vessel or, alternatively, the name of a substitute vessel on which the cargo could be loaded. The plaintiff replied immediately to inform Indomas that Asia Star had been delayed and would be arriving at Belawan very soon. The plaintiff asked for an extension of the shipment date up to 15 January 2004. Indomas accepted this request but asked that the vessel be presented for loading by 15 January 2004 as it had storage constraints in respect of the cargo purchased by the plaintiff. On 16 January 2004, a further letter from Indomas stated that Asia Star had still not arrived and that it had no option but to put the plaintiff on notice that it was holding the plaintiff to be in default of contract. The plaintiff then asked for a further extension of another week. In response, Indomas agreed “as a special case” to grant the plaintiff up to 21 January 2004 to lift the cargo and said that if this deadline was not met, it would hold the plaintiff to be in default and would cancel all its contracts for sale of the 12,000mt of cargo. It should be noted that the price of palm oil products had increased since the contracts had been made with the plaintiff and that the market was still rising at this time.

10 In relation to Pamin, upon receipt of the plaintiff’s shipping instruction, it informed the plaintiff that it would not be held responsible and would charge the plaintiff if the Asia Star arrived in January 2004 rather than in December 2003. When the vessel did not arrive by 5 January 2004, Pamin wrote a further letter to the plaintiff stating that it would be charging the plaintiff a penalty for the delay in shipment in accordance with the contract between them. The plaintiff asked Pamin to waive the penalty but Pamin did not agree to do so.

11 The third supplier, Pacoil, also complained about the failure of the vessel to call at the load port within the nominated laycan period. In its letter of 9 January 2004, it informed the plaintiff that it would not be responsible for any deterioration in the quality of the oil. Subsequently, Pacoil wrote again to reserve its rights to charge the plaintiff for heating, storage, interest and other costs that might arise due to the delay.

12 There was also communication between the plaintiff and Agrima in relation to the delay in the arrival of the Asia Star. When it was clear that the vessel would not be able to load its cargo by the contractual shipment deadline of 15 January 2004, the plaintiff asked Agrima for an extension of the shipment deadline. It was granted an extension up to 21 January 2004.

13 In the meantime, the plaintiff had been communicating with the defendant on the cargo that it intended to load onto the Asia Star. On 12 January 2004, it sent out a cargo nomination setting out the breakdown of the intended cargo and asked for the defendant’s confirmation as to whether the vessel could stow the cargo in accordance with this nomination. The master of the vessel responded by sending a revised stowage plan for the cargo nomination. Between 13 January 2004 and 19 January 2004, there were many e-mail exchanges because the plaintiff made changes to its cargo nominations and in response the vessel changed the loading and stowage plans. On 18 January 2004, the plaintiff advised the master of the Asia Star that its representative, one Mr Sharul, would board the vessel to discuss stowage plans.

14 The vessel berthed at Belawan on 19 January 2004. At about 9am that morning, the plaintiff’s appointed surveyors reported that the vessel’s tanks were not fit to load the cargo. Through its brokers, the plaintiff immediately gave notice to the defendant that it was unable to use the Asia Star for carriage of its cargo due to the...