The "Maritime Prudence"

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 26 October 1995
• Neutral Citation: [1995] SGHC 247
• Docket Number: Admiralty in Rem No 535 of 1993
• Date: 26 October 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: MP Rai (Robert WH Wang & Woo)
• Citation: [1995] SGHC 247
• Defendant Counsel: Goh Kok Leong (Ang & Pnrs)
• Court: High Court (Singapore)
• Subject Matter: s 272(1)(d) Merchant Shipping Act (Cap 179),Admiralty and Shipping,Whether act committed in the 'management of ship',ss 271 & 272(1)(d) Merchant Shipping Act (Cap 179),Limitation of liability,Whether falling within the scope of Merchant Shipping Act s 272,Words and Phrases,Carriage of goods by sea,'Management of ship',Non-delivery of goods due to fraud of shipping agents

The question before the court and facts

Cur Adv Vult

I have before me a question of law relating to limitation of shipowner`s liability under s 272 of the Merchant Shipping Act (Cap 179) (the MSA).

The material facts are as follows. The plaintiffs` claim is for non-delivery of palm oil cargo shipped on board the defendants` ship called the Maritime Prudence. A total cargo of approximately 2000 metric tons was shipped at Pasir Gudang, Malaysia for delivery at Karachi, Pakistan, under four bills of lading each dated 29 April 1993. The plaintiffs claim as owners of the cargo. They say that they are the holders of the bills of lading.

The claim is founded on breach of contract, breach of duty and negligence. The plaintiffs say that the bills of lading were presented and delivery demanded at Karachi but that the defendants failed to honour them. The above facts and the fact of non-delivery are admitted by the defendants.

The events leading up to the non-delivery are as follows. The defendants chartered the Maritime Prudence under a voyage charter to a Malaysian company called Devon Industries Sdn Bhd (Devon Industries) to carry a total quantity of approximately 10,000 metric tons of palm oil from Indonesian and Malaysian ports to Karachi. 6,982 metric tons of palm oil were loaded at Pasir Gudang, Malaysia and the balance at Belawan, Indonesia. Ten bills of lading (the authentic bills of lading) were issued in respect of the cargo loaded at Pasir Gudang. All were dated 15 April 1993 bearing details as follows:

Shippers B/L Nos Quantity

Soctek PG/KAR-01 1,492.213

Felda PG/KAR-02 500.00

Felda PG/KAR-03 500.00

Felda PG/KAR-04 500.00

Felda PG/KAR-05 497.22

Felda PG/KAR-06 500.00

Yee Lee PG/KAR-07 500.00

KL Kepong PG/KAR-08 499.398

KL Kepong PG/KAR-09 501.115

Pan Century PG/KAR-26 1,492.52

6,982.466

This claim is in respect of bills of lading Nos 2, 3, 4 and 6 and for the sum of US$820,500.

While the plaintiffs and the other shippers held their bills of lading, the defendants` shipping agents issued a second set of nine bills of lading each dated 30 April 1993 in respect of the same cargo loaded at Pasir Gudang. In these bills of lading, Devon Industries was named the shippers of the various quantities of palm oil set forth therein. The bills were made out to the order of Pakistani banks. These bills of lading carried particulars of letters of credit including notations of their respective numbers. The defendants say that these fraudulent bills of lading had been issued by their Singapore agents without their knowledge.

Devon Industries negotiated these fraudulent bills of lading under the letters of credit established by their buyers in Pakistan and enriched themselves by the proceeds. Even so the plaintiffs and other shippers from whom the cargo had been purchased were not paid. The fraudulent bills of lading were received by buyers who had established letters of credit in favour of Devon Industries. Thereupon the Pakistani buyers became holders for value of the fraudulent bills of lading.

The cargo arrived at the discharge port of Karachi on or about 9 May 1993 and was discharged into bonded storage tanks on or about 19 May 1993. As the cargo fell into the possession of the holders of the fraudulent bills of lading, the defendants were unable to make delivery of the cargo to the holders of the authentic bills of lading.

Proceedings were commenced in various jurisdictions by various parties holding the authentic bills of lading and claiming to be owners of cargo described therein. Actions are pending in Singapore, Malaysia and Pakistan. The issue to be determined in the actions in Pakistan is the true ownership of the cargo. There are two actions at Kuala Lumpur in which the defendants have raised the issue of limitation of liability under Malaysian law.

In this action the defendants raised several defences including limitation of liability under s 272 of the MSA. At the trial, however, the defendants dropped all the substantive defences leaving limitation of liability as the only issue to be decided. Such an admission of liability or a judgment on liability against the defendants is a prerequisite to the court deciding the issue of limitation of liability.

The statutory provisions

The material parts of ss 271 and 272 of the MSA read as follows:

271 The owner of a British ship, or any share therein, shall not be liable to make good to any extent whatever any loss or damage happening without his actual fault or privity in the following cases:

(a) where any goods, merchandise or other thing whatsoever taken in or put on board his ship are lost or damaged by reason of fire on board the ship; or

(b) where any gold, silver, diamonds, watches, jewels or precious stones taken in or put on board his ship, the true nature and value of which have not at the time of shipment been declared by the owner or shipper thereof to the owner or master of the ship in the bills of lading or otherwise in writing, are lost or damaged by reason of any robbery, embezzlement, making away with or secreting thereof.

272(1) The owners of a ship shall not, where all or any of the following occurrences take place without their actual fault or privity:

(b) where any damage or loss is caused to any goods, merchandise or other things whatsoever on board the ship;

...

(d) where any loss or damage is caused to any property (other than any property mentioned in paragraph (b)) or any rights are infringed through the act or omission of any person (whether on board the ship or not) in the navigation or management of the ship or in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers, or through any other act or omission of any person on board the ship,

be liable to damages beyond the following amounts:

(ii) in respect of such loss, damage or infringement as is mentioned in paragraphs (b) and (d), whether there is additional loss of life or personal injury or not, an aggregate amount not exceeding in the currency of Singapore the equivalent of 1,000 gold francs for each ton of their ship`s tonnage.

Although the marginal notes to the two sections described both as dealing with limitation of liability, they in fact give expression to two different concepts. Section 271 affords an entire exclusion of liability, whereas s 272 only provides partial protection. There is a more important difference, namely, the types of events which come within the purview of each section.

The above provisions have a long history. It is unnecessary to chart their complete genealogy. It would, however, be beneficial to look at the immediate predecessor of s 272. Before 1959, the material part read as follows:

340(1) The owners of a ship, British or foreign shall not where all or any of the following occurrences take place without their actual fault or privity:

...

(d) where any loss or damage is caused to any other vessel, or to any goods, merchandise or other things whatsoever on board any other vessel by reason of the improper navigation of the ship; or

(e) where any loss or damage is caused to property or rights of any kind, whether on land or on water or whether fixed or movable, by reason of the improper navigation or management of the ship.

be liable to damages beyond the following amounts:

(ii) in respect of loss of or damage to vessels, goods, merchandise or other things, whether there is in addition loss of life or personal injury or not, an aggregate amount not exceeding in the currency of the Colony the equivalent of eight pounds sterling for each ton of their ships tonnage.

The above section was a re-enactment of s 503 of the English Merchant Shipping Act, 1894. In 1957, England introduced new provisions and also provided for a substantial increase of the limitation fund. The limitation provisions which now obtain in Singapore are a re-enactment of the English provisions introduced in 1957. The law in Singapore was brought in line with English law in 1959.

The important change for the purpose of this case is that the old provision of `any loss or damage caused to property or rights of any kind by reason of the improper navigation or management of the ship` was substituted by `where any loss or damage is caused to any property (other than any property mentioned in paragraph (b) of this subsection) or any rights are infringed through the act or omission of any person (whether on board or not) in the navigation or management of the ship`. The words `by reason of` in the predecessor section were not included in the present law.

The defendants` case

The defendants do not rely on s 272(1)(b), which applies to any loss or damage to cargo. In this case the cargo was not lost and it was not damaged either. The claim is for non-delivery of cargo against production of valid bills of lading, that is, an infringement of the plaintiffs` right to receive their cargo.

The defendants rely on the words `where ... any rights are infringed through the act or omission of any person (whether on board the ship or not) in the management of the ship.` They admit that the plaintiffs` right to receive their cargo was infringed which, the plaintiffs accept, is also the basis of their claim. The real question for decision by this court is the true meaning of the words `infringed through the act of any person - in the management of the ship.`

The law

Temperley`s Merchant Shipping Acts (7th Ed), in para 432, gives the following salutary comment:

If the injury arose from improper navigation or management, the original s 503 applied even though the act or omission complained of was also a breach of contract, but, if the act or omission complained of was a mere breach of contract, and did not amount to improper navigation or management, the section did not apply: Wahlberg v Young (1876) 45 LJCP 783; 24 WR 847; The Vigilant [1921] P 312. Thus, failure by a hired

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