The "Bunga Melati 5"

• Court: Court of Three Judges (Singapore)
• Judge: Chan Sek Keong CJ
• Judgment Date: 21 August 2012
• Neutral Citation: [2012] SGCA 46
• Citation: [2012] SGCA 46
• Docket Number: Civil Appeal No 193 of 2010
• Published date: 29 August 2012
• Hearing Date: 03 February 2012,18 January 2012
• Plaintiff Counsel: Leong Kah Wah, Teo Ke-Wei Ian and Koh See Bin (Rajah & Tann LLP)
• Defendant Counsel: Prem Gurbani and Tan Hui Tsing (Gurbani & Co)
• Subject Matter: Civil Procedure,Striking out,Jurisdiction,Issue estoppel,Admiralty and Shipping,Admiralty jurisdiction and arrest,Practice and procedure of action in rem

V K Rajah JA (delivering the grounds of decision of the court): Introduction

In this matter, the appellant claimed that there was a contractual relationship between itself and the respondent (established through the agency of a third party) over bunker supplies for a sum costing more than US$21million. On the respondent’s application, an Assistant Registrar (the “AR”) struck out the appellant’s action under O 18 r 19 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (the “ROC”) or the inherent jurisdiction of the court on the ground that the appellant’s action was plainly unsustainable and ought not to be allowed to proceed to a full trial. This decision was subsequently affirmed by a High Court judge (the “Judge”) in The “Bunga Melati 5” [2011] SGHC 195 (the “GD”).

After considering the parties’ submissions, we allowed the appeal and restored the appellant’s action. The detailed reasons for our decision are now set out.

The facts

The appellant, Equatorial Marine Fuel Management Services Pte Ltd, is a Singapore company in the business of supplying bunkers. The respondent, MISC Berhad, is a Malaysian shipping company that owns and operates a number of vessels, including the Bunga Melati 5.

The appellant’s case

According to the appellant, it had, on or about 3 July 2008, entered into two fixed price contracts with the respondent, under which the appellant agreed to supply 35,000 metric tonnes of bunkers to vessels owned or operated by the respondent in August and September 2008 at the price of US$744 and US$750 per metric tonne respectively (the “Fixed Price Contracts”). The appellant also alleged that it had, on or about 18 September 2008, entered into a separate contract with the respondent for the supply of 1,100 metric tonnes of bunkers, on a “spot” basis, to the respondent’s vessel The MT Navig8 Faith (the “Navig8 Faith Contract”). Both contracts will be collectively referred to as “the Bunker Contracts”.

According to the appellant, a Malaysian company, Market Asia Link Sdn Bhd (“MAL”), a company engaged in bunker trading, had at all material times acted as the broker or buying agent of the respondent in respect of the Bunker Contracts.

In the case of the Fixed Price Contracts, a firm of bunker brokers, Compass Marine Fuels Ltd (“Compass Marine”) acted on behalf of the appellant; whereas in the case of the Navig8 Faith Contract, another firm of bunker brokers, OceanConnect UK Ltd (“OceanConnect”) acted on behalf of the appellant.

The appellant received bunker confirmations from Compass Marine and OceanConnect plainly identifying the respondent (and not MAL) as “buyers” and the appellant as “sellers”. The appellant also received two letters from MAL identifying the respondent as “Buyers c/o MAL”. In short, all the correspondence/contracting documents between the appellant and MAL, Compass Marine or OceanConnect consistently referred to the respondent as the “Buyers”.¹

The respondent’s case

The respondent’s position, however, was that it only had a contractual relationship with MAL. Pursuant to a six-month Bunker Fixed Price Agreement (“BFPA”) concluded in March 2008, MAL had agreed to supply 138,000 tonnes of bunkers at a fixed price of US$475 per metric tonne, from 24 March 2008 to 23 September 2008, to vessels owned or operated by the respondent.

According to the respondent, the BFPA was the subject-matter of a tender and MAL was amongst eight companies that received bid documents. Six companies submitted bids to the respondent, and eventually MAL was successful in the tender and was awarded the BFPA on 14 March 2008. Notably, in the BFPA, the respondent was referred to as the “Buyer” and MAL as the “Seller” – with no indication whatsoever that MAL was the respondent’s buying agent.² In addition to the BFPA, there were also nine spot contracts (the “Market Price Contracts”)³ for the supply of bunkers to vessels owned or operated by the respondent at the prevailing market rates for bunkers.

The respondent alleged that the only invoices it received were MAL’s invoices on MAL’s letterhead (ie, it had never received any of the appellant’s invoices).⁴ According to the respondent, it did not have or seek control over how MAL secured its supplies,⁵ and none of the documents adduced by the appellant to prove that MAL was the respondent’s agent had ever been revealed to the respondent.⁶ Pursuant to the contracts between MAL and the respondent, the respondent claimed to have paid MAL in full a sum of US$17,336,660.69 for the supplies which formed the subject matter of the action by the appellant.⁷

The appellant’s efforts to recover its dues The proceedings in California, USA

The appellant initially commenced proceedings against the respondent in the United States District Court for the Central District of California (the “California District Court”) in late November 2008 when it did not receive full payment in respect of the bunkers it had supplied to/via MAL. Prior to this, when the appellant demanded payment from the respondent on 5 November 2008, its demand was forwarded to MAL which stated that it would take “full responsibility”.⁸ The appellant also filed a “Verified Complaint” to obtain an attachment order under Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the “Rule B attachment order”).⁹ The Rule B attachment order was executed against one of the respondent’s vessel, the Bunga Kasturi Lima, at Long Beach, California.

An offer to provide a corporate guarantee to secure the appellant’s claim against MAL was made to the appellant by the respondent (on condition that the appellant withdrew all suits against the respondent in the United States and ceased commencing any further actions in rem against the respondent’s vessels) a day after the Rule B attachment order was executed against the Bunga Kasturi Lima. The appellant, however, did not accept this offer.

The respondent then on 15 December 2008 filed a motion to vacate the Rule B attachment order and to dismiss the Verified Complaint.¹⁰ The California District Court after consideration vacated the Rule B attachment order on 18 December 2008,¹¹ a decision which was later upheld by the United States Court of Appeals for the Ninth Circuit.¹² Prior to the motion to dismiss the Verified Complaint being heard, the appellant withdrew its action in California.

The proceedings in Singapore

Subsequently, the appellant commenced in rem proceedings in the Singapore High Court on 5 February 2010 for the sum of US$21,703,059.39 before contractual interest¹³ and served the writ in rem on the respondent’s vessel – the Bunga Melati 5.

The appellant’s case was essentially that the respondent was a party to the Bunker Contracts via the agency of the respondent’s alleged agent, MAL, and that the respondent was, therefore, contractually liable to the appellant for the bunkers supplied. In the present appeal, the appellant decided to hinge its contractual claim solely on the doctrine of agency by estoppel – that it had relied on representations made by the respondent that MAL was clothed with ostensible authority to conclude the Bunker Contracts on the respondent’s behalf. In the alternative, the appellant also submitted that the respondent was liable to it in unjust enrichment for enjoying the use of the appellant’s bunkers without paying for them.

With regards to the agency claim, the relevant portion of the appellant’s Statement of Claim¹⁴ is reproduced here: Agency by Estoppel 19. … 20. The [appellant] avers that at all material times, the [respondent] knew or ought to have known that the [appellant], Compass Marine and [OceanConnect] believed that MAL was acting as the [respondent’s] exclusive buying agent or buying agent. Particulars (a) To the best of the [appellant’s] knowledge, from as early as June 2006, the [respondent] had routinely directed bunker traders, bunker suppliers and/or bunker brokers (including Compass Marine and OceanConnect) to contact MAL to discuss the [respondent’s] bunker requirements. By doing so, the [respondent] had led bunker traders, bunker suppliers and/or bunker brokers to believe that MAL was the [respondent]’s exclusive buying agent or buying agent. (b) At all material times, the [respondent] knew or ought to have known that MAL represented itself to bunker traders, bunker suppliers and/or bunker brokers (including Compass Marine and OceanConnect) as the [respondent’s] exclusive buying agent or buying agent.

In support of its claim that an express representation had been made to the appellant, the appellant primarily relied on the affidavit of one Mr Darren Middleton (“Mr Middleton”), director of Compass Marine. Mr Middleton had deposed in his affidavit that on or about 22 May 2006, an employee from the respondent’s bunker unit (whose name Mr Middleton could not recall) told him that MAL was the respondent’s bunker broker, and directed him to contact MAL to discuss the respondent’s bunker requirement. According to Mr Middleton, he did so and on or about 25 May 2006,¹⁵ Compass Marine and MAL successfully negotiated a bunker supply contract. As a result of other such transactions concluded between MAL and Compass Marine, Compass Marine formed the belief that MAL “acted exclusively for” the respondent.¹⁶

The respondent’s application

On 2 March 2010, the respondent applied to set aside and/or strike out the appellant’s writ. On 17 June 2010, the respondent successfully obtained the following orders from the AR:¹⁷ that the appellant’s writ and statement of claim be struck out pursuant to O 18 r 19 of the ROC and/or the inherent jurisdiction of the Court; and alternatively, that the appellant’s writ be struck out and/or set aside on the basis that the admiralty jurisdiction in rem of the Court under the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”)...