The "Asia Star"

• Jurisdiction: Singapore
• Judge: Chew Chin Yee AR
• Judgment Date: 05 June 2008
• Neutral Citation: [2008] SGHC 92
• Court: High Court (Singapore)
• Year: 2008
• Published date: 18 August 2008
• Plaintiff Counsel: J Govintharasah s/o Ramanathan (Gurbani & Co)
• Defendant Counsel: Thio Ying Ying and Alan Loh (Kelvin Chia Partnership)
• Subject Matter: Admiralty and Shipping,Contract
• Citation: [2008] SGHC 92

5 June 2008

Chew Chin Yee, Assistant Registrar:

Background

1 The plaintiff, Pacific Inter-Link Sdn Bhd (“PIL”), a Malaysian company that trades in refined palm oil products, chartered a vessel, the Asia Star from the defendant (“OAS”), the owners of the vessel, to carry 21,500mt of refined palm oil from Belawan, Indonesia, and from Pasir Gudang, Malaysia, to Turkey.

2 The Asia Star was found to be unfit for loading the cargo, upon inspection by PIL’s representatives on 19 January 2004. PIL then rejected the vessel. Mr Jason Wang Jian Jun (“Jason Wang”), the assistant business manager of CSC Oil Transportation (S) Pte Ltd, the managers and operators of the Asia Star, subsequently cancelled the charterparty, on 19 January 2004. OAS made a further attempt to deliver the vessel for boarding, after cleaning of her tanks, and invited PIL to re-inspect the tanks, on 20 January 2004. As there was no reply, OAS subsequently cancelled the charter party, on 21 January 2004. OAS were found liable for damages for breach of the charterparty, which assessment was heard before me.

PIL’s claim

3 PIL claimed for the following items of loss:

Loss incurred on account of cancellation of sale contracts for the Cargo by PIL’s suppliers PT Pacific Indomas (“Indomas”):	US$ 698,889.88
Claim by Plaintiff’s buyers Agrima Ic Ve Dis Ticaret Pazarlama Ltd (“Agrima”)due to failure of delivery:	US$ 823,800.00
Penalty charges imposed by suppliers PT Pacific Medan Industri (“Pamin”) and Pacific Oil and Fats Industries Sdn Bhd (“Pacoil”) for delay in loading/failure to present vessel for loading and for charges such as interest and storage, reprocessing, transportation and hearing charges:	US$ 357,000.00
Total	US$ 1,879,689.88

Plaintiff’s case

4 PIL is, by its own declaration, one of the largest traders of palm oil products in Malaysia and Indonesia. PIL had entered into contracts for delivery of the following products to Agrima, who was their trading partner in Turkey. Agrima is itself a trader in palm oil products.

Products and Quantities to be delivered to Agrima

(a) 10100 MT (“Metric Tonnes”) of Palm Oil

(b) 3500 MT Palm Stearin

(c) 5750 MT Palm Olein

(d) 1650 MT Palm Kernel Oil

(e) 500 MT CCNO

5 The total quantity to be delivered was 21,500 MT of products.

6 PIL purchased the products from three suppliers – Indomas, Pamin and Pacoil. 12000 MT was purchased from Indomas, while 57500 MT and 3750 MT were purchased from Pamin and Pacoil respectively.

7 The Plaintiff’s case is that the products were all supposed to have been shipped on the Asia Star and delivered to Turkey in satisfaction of their contracts with Agrima. The cargoes to Agrima were intended to be shipped between 15 December 2003 to 15 January 2004.

8 The Asia Star was initially fixed for charter with a laycan between 27 December 2003 to 4 January 2004. PIL nominated the Asia Star as its vessel in its Shipping Instructions (“SI”) to the three suppliers. However, the vessel was delayed and berthed only on 19 January 2004.

9 PIL contends that loading of the cargo from the three suppliers, based on the initial laycan of Asia Star, was supposed to have been from 5 January 2004 onwards. However, due to the delay, they had to obtain extensions from the suppliers.

10 After the charterparty was terminated by Jason Wang, Indomas repudiated its contract with PIL on 22 January 2004, on the basis of their breach of contract in failing to load the cargoes purchased. In addition, Agrima cancelled the majority of its purchase contracts with PIL on 23 and 26 January 2004, after they learnt of the cancellation of Asia Star. Agrima then claimed against PIL for the losses incurred, as well as the costs of replacement products.

11 PIL negotiated with Pamin and Pacoil for a substitute vessel, the Chembulk Barcelona, to load the goods purchased. The loading was done in February 2004. Pamin and Pacoil agreed, subject to penalty charges for the delay, which included storage, reprocessing and heating costs. Agrima also agreed to a delayed delivery of 5750 MT of the goods on the Chembulk Barcelona.

Defendant’s case

12 OAS mounted three main arguments. First, they contended that PIL had failed to prove that the damage suffered was a result of their breach. Secondly, they argued that PIL had failed to mitigate its loss. Lastly, they took issue with the quantification of damages submitted by PIL, on the basis of the calculation, as well as the fact that some of the damages claimed were too remote.

Decision

13 I considered the matter in the same sequence as the arguments advanced by OAS.

Whether PIL had proven its loss

14 The logical first step would be to examine if the evidence presented by PIL sufficiently proved its loss, on a balance of probabilities. If not, the issues of mitigation and quantification of damages would be irrelevant.

15 The evidence in support presented by PIL were mainly the SIs and purchase orders with Agrima. These corresponded in time, quantities and types of goods ordered. In addition, the Asia Star was stated on the SIs as the nominated vessel for loading. The representative of PIL, Mr Ravi Kumar Nagar (“Ravi”), also testified at the hearing that the Asia Star was the only vessel in the relevant period (January 2004) which was chartered by PIL to carry goods to Turkey.

16 The thrust of the Defendants’ attack was basically that PIL had not actually decided at the relevant point in time (19 January 2004) to ship the cargos from the three suppliers to Agrima on the Asia Star. They further contend that PIL had effectively colluded with Pamin, Pacoil, Indomas and Agrima to present a “sham” case to the court.

17 In support of their submissions, the OAS pointed to numerous cargo nomination instructions, which had been sent to the OAS via email. These emails, sent between 13 to 17 January 2004, showed that PIL requested various permutations in terms of the quantities of cargoes to be loaded on Asia Star, and was asking for stowage plans to be prepared for these permutations. The quantities stated in these requests did not match those in the SIs.

18 OAS also point to the close relationship between the parties. PIL, Pamin, Indomas and Pacoil all belonged to the same group of companies, with common directors. Agrima was also closely linked to PIL, having been appointed as PIL’s sole agent in Turkey in 2004.

19 Based on the evidence before me, I found that PIL had proven its loss on the contracts, on a balance of probabilities. Ravi had testified that the various cargo nominations were requested as PIL was exploring possible alternative shipping destinations at that point in time. He explained that this was common practice in the industry. Ravi confirmed that the initial position was for the Asia Star to ship cargo for the satisfaction of the Agrima contracts. While PIL was exploring other possible alternatives, they had not made any firm decision on this. This evidence was supported by the testimony of Sheik Abdul Malik Mohamed Kassim (“Malik”), the Head of Chartering/Operations for PIL.

20 The first cargo nomination corresponded to the quantities ordered by Agrima from PIL. This showed that PIL had chartered Asia Star for delivery of Agrima’s contracts. The evidence did not show that they had decided affirmatively to deviate from this position. PIL was at the relevant time ready, willing and able to ship the cargo from the three suppliers to Agrima in satisfaction of their obligations. The SIs and purchase orders from Agrima are contemporaneous proof of this. The Asia Star, being the only ship chartered by them in the relevant time period for shipment to Turkey, was an integral part of the arrangement. Any losses occasioned by PIL’s failure to load the cargo and deliver it to Agrima within the material time flowed directly from the Defendant’s breach of the charterparty. The fact that they may have eventually used the Asia Star for other purposes does not detract from this position.

21 Even if PIL was considering alternative arrangements, these had not concretised at the time of the breach. I do not think that PIL’s actions in exploring ways of maximising their business should preclude them from claiming for loss of a pre-arranged transaction, which the Defendant’s breach had unwound.

22 I also noted that OAS had alleged fraud on the part of PIL in presenting this claim. This was not specifically pleaded. Fraud has to be specifically pleaded, due to the very serious nature of the allegation. While OAS has sought to couch this submission in the form of attacks on the credibility of the evidence presented, it was in substance an allegation of collusion on the part of PIL and its associated companies to present a false case to this court. A substantial amount of the hearing was directed towards cross-examination of the various witnesses on their complicity in the “sham” presented by PIL.

23 I found these allegations to be entirely unmeritorious. The case of PIL is based largely on the contemporaneous SIs and purchase orders with Agrima, which were concluded well before PIL’s travails with the Asia Star. The payments of money by PIL to the various parties are also documented. It was highly unlikely, to say the least, that PIL would pay out huge sums of money in settlement of the claims even before litigation had commenced, in the expectation that they would be able to claim back the same as damages. While parties are entitled to raise defences and/or causes of actions as they deem fit, where these are plainly unmeritorious, not properly pleaded and consumes a large part of the time taken in the proceedings, adverse consequences may well be attracted in terms of costs.

Whether PIL had failed to reasonably mitigate its loss

24 It is trite law that a plaintiff in suing for damages in breach of contract has the duty of taking all reasonable steps to mitigate the loss consequent on the breach. It may also be usefully understood as a break in the...