The "Lotus M"

JudgeKarthigesu JA
Judgment Date13 October 1997
Neutral Citation[1997] SGCA 44
Date13 October 1997
Subject MatterClaim by employer against shipowner for indemnity for compensation paid to employees,Employer's entitlement to indemnity,Whether employer entitled to rely on shipowner's assurances of ship's gas free state,Safety at work,Whether employer entitled to indemnity if not liable for accident,s 18(b)Workmen's Compensation Act (Cap 354),s 18(b) Workmen's Compensation Act (Cap 354),Whether employer contributorily negligent,Workmen's compensation,Words and Phrases,Employment Law,Damages,"Person who paid the compensation",Compensation and damages
Docket NumberCivil Appeal No 203 of 1996
Published date19 September 2003
Defendant CounselNK Pillai and Chua Hwee Ping (Niru & Co)
CourtCourt of Appeal (Singapore)
Plaintiff CounselB Ganesh (Ganesha & Partners)

Cur Adv Vult

This appeal arose out of an explosion that occurred on board the `Lotus M` now named `Pretty` (Lotus M) on 16 February 1992. At the time of the tragedy, the respondents` (Sunray Marine`s) workmen were on board the Lotus M doing repair works. As a result of the explosion, five workmen were found dead, five missing and presumed dead and many were injured. Consequently, Sunray Marine as the employer of the workmen paid compensation under the Workmen`s Compensation Act (Cap 354) (the Act) to those who proceeded under the Act amounting to $348,946.62 (the compensation). Three of the injured however chose to proceed at common law against Sunray Marine for damages and loss sustained by them as a result of the explosion.

Sunray Marine having paid the compensation brought an action claiming:

(a) an indemnity under s 18(b) of the Act from the appellants (the shipowner) for the amount paid; and

(b) a declaration that they are entitled to be indemnified by the shipowner in respect of the three common law claims.

The trial judge awarded Sunray Marine the indemnity under s 18(b) of the Act but refused to grant them the declaration (see [1997] 2 SLR 570).
The present appeal relates to the trial judge`s decision to grant the indemnity to Sunray Marine. The refusal of the trial judge to grant the declaration, relating to the common law claims is the subject of another connected appeal (CA No 202/96).

The Lotus M is a motor tanker of 16,793 gross tons.
Her port of registry is Panama and her owners at the material time were Easy Shipping Corporation of Liberia. Her operators were Navix Line Ltd of Japan whose local representative was Navship (Singapore) Pte Ltd (Navship). The Lotus M was generally deployed to transport petroleum products including naphtha. Her forward section is divided into fifteen cargo tanks, five each on port, centre and starboard, and two slop tanks. The proceedings involve the No 5 centre tank.

Sunray Marine is a company specialising in ship repairs.
On 7 February 1992, Sunray Marine had been contacted by one Nagase (Nagase), the superintendent in the employment of Navship, the agents for the owners of Lotus M. Nagase informed Sunray Marine that he wished to engage their services to conduct repair works on board the Lotus M.

On 10 or 11 February 1992, a representative of Sunray Marine, a foreman with the company, one Chu Yeng Choon (Chu) and Nagase went on board the Lotus M to conduct an inspection of the vessel.
Chu then met the Master, Captain Yasunosuke Kato (the Master), the Chief Officer, Toru Sato (the Chief Officer) and the Chief Engineer. After some discussion as to the scope of the work Sunray Marine was going to carry out, a list of repairs was drawn up.

Some of the repairs involved cutting and welding, basically `hot work`.
Chu therefore informed the Master, the Chief Officer, the Chief Engineer and Nagase that the tanks must be gas free. They therefore assured him that the tanks would be gas freed prior to Sunray Marine`s commencement of work.

The Lotus M then continued her services deploying cargo.
The last consignment of naphtha before the commencement of the repairs was discharged at 0620 hours on 14 February 1992 at the Van Ommeren Terminal after which at about 1215 hours Lotus M left for the South China Seas to gas free her tanks. The next voyage of Lotus M was to Kerteh, Trengganu, Malaysia with an expected time of arrival there at 11am on 18 February 1992.

The whole gas freeing operation was conducted by the Chief Officer.
Gas freeing can be done either by the use of inert gas fans to pump in inert gas or by water driven fans to blow fresh air into the tanks. The use of inert gas is considered to be the safer method. Both methods were used on board the Lotus M. However, for the No 5 centre tank, gas freeing was done by the blowing of fresh air with portable water driven fans placed on deck. This was followed by ventilation of the tank for three to four hours.

The anchored position of the Lotus M, when Sunray Marine`s workmen boarded her for the repair works, was approximately one nautical mile outside the boundary of the port limits as defined by s 3(1) of the Port of Singapore Authority Act (Cap 236).
This location although outside port limits was within Singapore territorial waters.

Sixty-one workmen from Sunray Marine were mobilised for the repair works.
The boats they were in arrived alongside Lotus M at about 1130 hours on 15 February 1992. Nagase was in one of the boats with them. They were transferred onto the Lotus M along with fabricated parts and equipment needed for the repairs. Work commenced at 1600 hours but Nagase instructed Chu that no `hot work` was permitted pending completion of desloping whereby the slop was discharged into a barge.

The desloping works were completed at 1630 hours on 15 February 1992.
Chu then sought permission from Nagase to commence `hot work` but was told that no `hot work` could be carried out before all the tank`s openings had been closed or covered. The Chief Officer checked the gas readings of all tanks and found them to be less than 2% of the lower explosive limit (LEL). Gas freeing was intended to reduce the concentration of hydro-carbon vapours to bring it to less than 10% of the LEL. However, he had only taken one sample from each tank. They were taken from a depth of about 12m from the main deck. After the Chief Officer was satisfied with the gas readings taken by him, he had all the hatches closed.

Chu was then instructed to commence `hot work`.
Work proceeded uneventfully and stopped at 0200 hours on 16 February 1992 when the workmen retired for the night during which they slept on board. Work resumed at 0800 hours on the same day. At 0935 hours a violent explosion took place at the deck above the No 5 centre tank.

We will only deal with the portion of the trial judge`s decision which is relevant to the present appeal.
The trial judge relied on Cory & Son Ltd v France, Fenwick & Co Ltd [1911] 1 KB 114 which was followed by the High Court of Australia in Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd [1975] 6 ALR 271. These cases have been followed in Singapore in Chen Hsin Hsiong v Guardian Royal Exchange Assurance plc [1994] 2 SLR 92 . We will deal with the cases later in our judgment. The basic position in law garnered from these authorities is that Sunray Marine would only be entitled to an indemnity under s 18(b) of the Act if it was not under any liability to its workmen who died or were injured in the explosion other than the liability to pay compensation under the Act. Therefore, this turned on whether Sunray Marine was guilty of any wrongdoing that caused or contributed to the explosion.

As the Lotus M was outside port limits at the material time, the Port of Singapore Authority (Dangerous Goods, Petroleum and Explosives) Regulations regulating the doing of `hot work` on board any vessel did not apply.
Instead there is a manual prepared by the International Chamber of Shipping, Oil Companies, International Marine Forum and the International Association of Ports and Harbours for the use of ship`s personnel and terminal operators. It is called the International Safety Guide for Oil Tankers and Terminals (ISGOTT). This manual is internationally accepted in the maritime and oil industry as the safety manual for tankers and terminal operators. The trial judge found that the Chief Officer had not followed the procedures laid down in ISGOTT and this had resulted in there being inadequate gas freeing.

The learned trial judge therefore found that the shipowner was solely to blame for the explosion.
The shipowner had contended that notwithstanding the verbal assurances given by Nagase on behalf of the shipowner, the Master and the Chief Officer that it was safe to commence `hot work`, Sunray Marine should still have insisted that the Master issue a `hot work` certificate and should have satisfied itself beyond reasonable doubt that the Lotus M was gas free before commencement of `hot work`.

There is a format of the `hot work` permit in App F of ISGOTT which comprised a check list.
The trial judge found that as only the Master or the Chief Officer of the ship would be in a position to issue the `hot work` permit, by answering the check list, the permit would have added nothing to the verbal assurances given by Nagase, the Master and Chief Officer that the Lotus M had been gas freed and the workmen could commence `hot work` after the covers for all the manholes and hatches had been closed. Therefore the trial judge felt that Sunray Marine`s foreman was entitled to rely on the assurances and begin `hot work` on the deck particularly when its engagement stipulated that the Lotus M had to be gas free for its workmen to carry out the repairs. Applying the position garnered from the authorities, the trial judge found that Sunray Marine did not cause or contribute to the explosion, and so he allowed Sunray Marine`s claim to be indemnified under s 18(b).

There are two main issues arising from this appeal.
They are:

(a) whether s 18(b) of the Act requires the insurers who in fact paid the compensation, and not Sunray Marine to have commenced the action to claim the right of indemnity; and

(b) whether the trial judge was right in finding that Sunray Marine had not caused or contributed to the explosion.

Section 18 of the Act states:

Where any injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof -

(a) the workman may take proceedings against that person to recover damages and may claim against any person liable to pay compensation under this Act, but he shall not be entitled to recover both damages and compensation; and

(b) if the workman has recovered compensation under this Act, the person by whom the compensation was paid , and any person who has been...

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2 cases
  • The "Lotus M (No 2)"
    • Singapore
    • Court of Appeal (Singapore)
    • 6 February 1998
    ...the granting of the indemnity under s 18 (b) in Civil Appeal No 203 of 1996 and that appeal was dismissed and the judgment reported at [1997] 3 SLR (R) 175. The present appeal related to the trial judge's refusal to grant the declaration to Sunray Marine. The issue was whether an innocent p......
  • Cosmic Insurance Corp Ltd v United Oil Company Pte Ltd
    • Singapore
    • District Court (Singapore)
    • 3 October 2005
    ...negligent.’ 21 Chen Hsin Hsiong v Guardian Royal Exchange Assurance PLC was subsequently affirmed by the Court of Appeal in The Lotus M [1998] 1 SLR 1; [1997] SGCA 44 (at paragraphs 39 and ‘38 More recently, these two cases have been referred to with approval by Judith Prakash JC (as she th......

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