The "Nordic Freedom"

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 01 October 1999
• Neutral Citation: [1999] SGHC 256
• Docket Number: Admiralty in Rem No 728 of 1996
• Date: 01 October 1999
• Year: 1999
• Published date: 19 September 2003
• Plaintiff Counsel: Kenneth Tan SC and Kevin Kwek (Kenneth Tan, Kong & Tan)
• Citation: [1999] SGHC 256
• Defendant Counsel: P Jeya Putra (Joseph Tan Jude Benny),Steven Chong SC and Philip Tay (Rajah & Tann),Prem Gurbani and Mabel Mak (Gurbani & Co)
• Court: High Court (Singapore)
• Subject Matter: Reliance on letter of indemnity,Cargo discharged without bill of lading,Admiralty and Shipping,Bills of lading,Whether liable despite discharge to party entitled to,Delivery of cargo against presentation of bills of lading

: The plaintiffs are Hyundai Oil Refinery Co Ltd (`Hyundai Korea`) a Korean company. They were the sellers/shippers of a cargo comprising of 26,877.156 mt of gas oil (`the cargo`) pursuant to a contract, dated 29 December 1995, between them and a company called Philma Petroleum Ltd (`Philma`), a Hong Kong company. The bill of lading in three original sets numbered SAMIL 960521-01, dated 21 May 1996, was issued by the master of the vessel Nordic Freedom. The consignee was stated as `To the order of Philma Petroleum Ltd`. The notify-party was stated as `International Oil Tanking Co Ltd` (`IOT`), a company registered in Bangkok, Thailand. Another bill of lading was issued in respect of a second cargo of gas oil to the order of Sunkyong Trading (HK) Ltd. This cargo is not involved in the current litigation. The owners of the Nordic Freedom was at all material times Nordic American Shipping A/S (`owners`). By a time charterparty, dated 20 November 1991, the owners chartered the Nordic Freedom for eight years to Coscol Marine Corporation (`Coscol`), a company registered in Houston, Texas. By a voyage charter party dated 14 May 1996 IOT chartered the Nordic Freedom from Coscol.

The vessel arrived at the port of Daesan, Korea on 18 May 1996 and began loading the cargo. The cargo was loaded by 21 May 1996 and the vessel sailed for Sriracha, Thailand. On 25 May 1996 IOT`s brokers in Singapore, Raffles Shipbrokers (S) Pte Ltd (`Raffles`) sent a telex to Coscol requesting them to discharge the cargo to the order of Marubeni International Petroleum (S) Ltd at Sriracha, Thailand without the bill of lading. Coscol relayed the request to the owners by telex. On 29 May 1996 Raffles sent another telex to Coscol requesting them to discharge 21,000 mt of the cargo at the Thai Public Port Terminal. The Nordic Freedom arrived at Sriracha on 30 May 1996 and the master gave notice of readiness to discharge, and on 21 May it discharged 21,128.834 mt of the cargo at the Thai Public Port Terminal. The remainder of the cargo (5,877.156 mt) was discharged on 1 June 1996.

In this action in Adm 728/96 the plaintiffs are suing the owners as carriers for breach of contract of carriage in wrongfully delivering the cargo to a party without production of the bill of lading. They have also sued in the tort of conversion as an alternative claim. The owners demurred that the cargo was not wrongfully delivered. They say that the cargo was delivered into the custody of the Thai authorities. Further, and in the alternative, they say that there is no liability because the cargo went into the possession of the party entitled to possession.

The trial of this action commenced before me on 3 May 1999. It was followed immediately by the trial, also before me, in Adm 101/97. In the latter action, Coscol sued IOT, seeking among other things (such as cost of bunkers and port expenses), a declaration that IOT indemnifies Coscol in respect of any damages which Coscol may pay to the owners. That suit is based on the letter of indemnity dated 27 May 1996 given by way of telex from Raffles on behalf of IOT to Coscol. IOT filed a defence on 6 April 1998 stating that this letter of indemnity was not valid because it was only a draft, and furthermore, the cargo was not correctly described nor was it discharged to Marubeni as described in the letter of indemnity. Coscol subsequently arrested the vessel Salina belonging to IOT. It was released upon a letter of undertaking provided by Liverpool and London Steamship Protection and Indemnity Association Ltd (`the P & I Club`) on behalf of IOT. On 27 March 1999 M/s Joseph Tan Jude Benny, the solicitors for IOT applied for leave to be discharged from further acting for IOT in Adm 101/97. By the same summons-in-chambers they applied for the P & I Club to be joined as a defendant. In the supporting affidavit of Ung Tze Yang the solicitor for IOT deposed that the `guiding mind and alter ego` of IOT had refused to swear the affidavit verifying list of documents as required. That person also refused to consent to the P & I Club taking over the proceedings on IOT`s behalf. Mr Ung concluded that IOT made it very clear that they were no longer interested in the proceedings. The application was heard before the assistant registrar Miss Lee Shen Dee on 5 April 1999. M/s Joseph Tan Jude Benny were given leave to cease acting for IOT, and the P & I Club was given leave to be joined as a defendant on the condition that it is `limited to the defences raised by [IOT] in the proceedings so far, and for the avoidance of doubt, insofar as is allowed by the rules of evidence`. The P & I Club subsequently applied on 28 April 1999 for leave to intervene in this action (Adm 728/96).

The two actions were not consolidated but by an order of court dated 14 January 1999 Adm 728/96 was to be heard from 3 May 1999 to 5 May 1999, and Adm 101/97 was to be heard on 6 and 7 May 1999 before the same judge. Leave was also given to the parties in the latter action to participate in the trial of the former action. The trials proceeded as scheduled.

The claim by Hyundai Korea in this suit (Adm 728/96) is based on conversion, breach of duty, and breach of contract as carriers or bailees by virtue of the said bills of lading. There is no dispute that the cargo in question was discharged without the production of the bills of lading which, at the time of this trial, were still in the possession of Hyundai Korea. The only substantive defence pleaded by the owners was as follows:

The [owners] say that the vessel was at the material time on charter to Coscol Marine Corporation pursuant to a time charterparty dated 20 November 1991. In accordance with instructions received by the [owners] from the said charterers on or about 29 May 1996, approximately 21,000MT of the cargo were discharged into the shore tanks of the Thai Public Port Terminal which is a bonded terminal on Koh Sichang Island, Sriracha. The balance of the cargo was in accordance with the said instructions from the Charterers discharged into lighters. The cargo being dutiable cargo in Thailand, the cargo was in effect delivered into the custody of the authorities in Thailand, to whom any application for delivery would have to be made. On their part the [owners] did not give delivery to a third party as alleged.

With respect, I think that this defence does not meet the claim. It was not pleaded or proved that the owners were compelled to deliver up the cargo to the Thai authorities in circumstances beyond their control. Whether the cargo was dutiable or otherwise, and whether the Thai terminal was a private or public institution is not relevant. The cargo cannot be discharged without production of the bills of lading. That has been the clear and consistent approach in the authorities cited to me. The English admiralty courts have long recognized that cargo may be discharged by the carrier on the strength of a letter of indemnity in lieu of the production of the bill of lading, but that was for the sake of business efficacy. As Rix J held in Motis Exports v Dampskibsselskabet AF1912 [1999] 1 Lloyd`s Rep 837, 841, `In default of production of the bill of lading an indemnity is afforded to the ship owner not on account of the lawfulness of the order to deliver but so as to protect him if he does what he is not contractually obliged to do`.

In their final submissions, Mr Gurbani and Mr Jeya seem to take the greatest liberty with what I think is a loosely and inadequately pleaded defence to mount their most strenuous argument, namely, that the owners were under no liability in contract or tort because they had discharged the cargo to the party who was entitled to possession. In support of this argument, counsel relied on a number of cases, but principally, The Future Express [1993] 2 Lloyd`s Rep 542. They could not have chosen a more difficult case for the proposition recited by Mr Jeya as `the mere transfer of a bill of lading does not give the transferee a right to sue the carrier in conversion unless the transferee also obtained property in the goods or a right to possession in them`. The passages relied upon by Mr Jeya are found at p 96 in the judgment of Judge Diamond, QC [1992] 2 Lloyd`s Rep 79, and at pp 545 and 547-548 of the Court of Appeal`s decision in that case. It is pointless to set out those passages without reciting the complicated facts, an exercise which, in my view, is unnecessary. I will only observe that in that case Lord Irvine of Lairg, QC as counsel for the plaintiff bank at first instance and on appeal, failed to persuade the Court of Appeal that the trial judge was...