The Owners of the Ship or Vessel "Pioneer Glory" and Another v P.T. GE Astra Finance

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 15 February 2002
• Neutral Citation: [2002] SGCA 8
• Date: 15 February 2002
• Subject Matter: Principle of restitutio in integrum,Damages,Fall in value of equipment during detention,Damages payable in tort,Tort,Whether fall in value claimable,Whether interest incurred on loan taken on equipment claimable,Measure of damages,Detention wrongful
• Docket Number: Civil Appeal No 600038 of
• Published date: 19 September 2003
• Defendant Counsel: Yap Yin Soon and Chan Lin Wai Ruth (Allen & Gledhill)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Lim Soo Peng (Lim Soo Peng & Co) and Chia Chee Hyong Leonard (JC Ho & Kang)

Judgment

GROUNDS OF DECISION

1. This appeal relates to a question of the proper quantum of damages which the appellants should pay to the respondents for the wrongful detention of fourteen pieces of "Komatsu" brand of equipment, namely, three bulldozers, one wheel loader, two excavators and eight dump trucks ("the equipment")

Background

2. The facts giving rise to these proceedings may be briefly stated as follows. The plaintiff-respondents ("Astra") are an Indonesian finance company. The defendant-appellants are the owners of a barge "POE 2410" and a tug "Pioneer Glory" ("the barge and/or tug").

3. The equipment was sold to Astra by another Indonesian company called PT United Tractors (UT). At the time of the sale, UT also entered into two repurchase agreements with Astra for the former to repurchase the equipment from the latter at agreed prices in accordance with a formula. To finance the purchase from UT, Astra obtained a loan from a related party. The bona fides of this loan are not in question. Astra then leased out the equipment to a third Indonesian company, PT DML Resources (DML) to work at a mining project in Kalimantan, pursuant to a written agreement dated 17 March 1995 ("the lease agreement"). DML was owned by a fourth Indonesian company, PT Tanito Harum (Tanito).

4. Upon completion of the project, Astra arranged for the equipment to be exported out of Indonesia. Astra hoped to find buyers in Singapore who would pay a better price for the equipment than what UT agreed to pay under the repurchase agreements. Each of the fourteen pieces of equipment was shipped under a separate bill of lading on board the barge, which was towed by the tug.

5. The equipment arrived in Singapore on 3 December 1997. But neither Astra, nor their agents, could obtain delivery of the equipment because the appellants claimed to have a lien on the equipment on the ground that the charterers of the barge and tug (Nakhoda Bestari Sdn Bhd) owed them charter freight of $177,597.

6. On 31 January 1998, as all attempts to seek delivery of the equipment failed, the present two admiralty actions were instituted by Astra. On 18 March 1998, the High Court made an interim order releasing the equipment to Astra. However, the discussions between the parties to arrange for the discharge took some time before actual discharge could take place.

7. The substantive question as to the alleged wrongful detention of the equipment came up before Warren Khoo J on 9 April 1998 whereupon he ordered that the two actions be consolidated. After hearing arguments, he also declared that the detention was wrongful and the owners of the barge and tug (the owners) were ordered to pay damages to Astra to be assessed ("9 April 1998 order"). Costs of the action were awarded to Astra. Khoo J was of the view that the equipment should have been discharged on 26 December 1997. It was only after the 9 April 1998 order was made that the parties managed to finalise arrangements for the discharge of the equipment. So actual discharge only commenced on 20 April 1998 and it was completed on 22 April 1998.

8. The assessment of damages was carried out before the Assistant Registrar, where the following items of claim were made by Astra.

(a)	cancellation fees (for permit to discharge)	S$ 600.00
(b)	extension of insurance policy for period of detention	US$4,724.68
(c)	insurance for discharge	S$ 750.00
(d)	survey fees (of Insight Marine Services Pte Ltd)	S$4,124.00
(e)	transportation costs (air-fair of Lewerissa)	US$ 278.66
(f)	accommodation costs (of Lewerissa)	S$ 212.00
(g)	damages (fall in value of equipment)	US$476,250.00
(h)	or, fall in repurchase price	US$617,150.00
(i)	additional interest paid on loan	US$187,360.38
(j)	interest on judgment sum
(k)	costs pursuant to Order of Court dated 9 April 1998

9. At the close of the assessment proceedings, only three items remained in controversy, namely, (g), (h) and (i). Of course, items (g) and (h) were in the alternative. The Assistant Registrar awarded only US$158,750 in respect of item (g), with pre-judgment interest at 3% from 31 Jan 1998 to the date of assessment. She also awarded the sum of US$187,360.38 in respect of item (i) and here too she granted interest at 3% on the sum from 19 February 1999 to the date of assessment.

10. Astra appealed to the High Court against the award of the Assistant Registrar in two areas: (i) in respect of item (g), Astra contended that the full sum claimed should have been given; (ii) in respect of the rate of pre-judgment interest awarded, Astra said it should have been 6% instead of 3%.

11. On the other hand, the owners of the barge and tug appealed against the awards given in respect of items (g) and (i).

12. The appeal came before Lai Siu Chiu J who dismissed the owners’ appeal and allowed Astra’s appeal by enhancing the award for item (g) to US$381,000. She also increased the rate for pre-judgment interest to 6% but deferred the commencement date for calculating that interest by 4 months.

13. The appellants filed a notice of appeal against the decision of Lai J in respect of items (g) and (i), as well as the rate for pre-judgment interest. However, in the appellants’ Case, they withdrew their appeal on the issue of pre-judgment interest. Therefore, there are only two issues which are now before this Court:-

(i) whether Astra are entitled to damages for the fall in value of the equipment which was assessed to be US$381,000;

(ii) whether Astra are entitled to damages for the additional interest it incurred on account of the loan by reason of the wrongful detention of the equipment.

14. In the meantime, on 13 May 1998, seeing that the equipment could not be successfully sold off to third parties, Astra exercised its option under the repurchase agreements requiring UT to repurchase the equipment. Based on the formula set out in the repurchase agreements, Astra had originally asked that UT pay US$3,317,150. UT, however, relying on the ground, inter alia, that the condition of the equipment had deteriorated during the period of detention, demanded that the price be revised downwards and it was agreed at US$2.9 million. UT made three instalment payments totalling US$1.2 million before they made known to Astra that they could not pay further because of their debt position. They asked that the price be further revised to US$2.7 million and indicated that they would pay the balance in one sum. Astra eventually agreed and UT paid in full on or about 19 February 1999.

Fall in value

15. In view of the wrongful detention of the equipment, there can be no doubt that the appellants are liable to pay for all reasonable losses proven to have been suffered by Astra on account thereof. We shall now examine the two issues in turn. First is the question of the fall in value, which is the main issue.

16. At the outset, it would be useful to note the state of the equipment at the time of their discharge. This was an aspect of the evidence greatly emphasised by the owners to contend that the detention did not cause any significant damage, which was their main plank of defence. Their valuers, Victor Morris, who inspected the equipment on 15 April 1998, stated that the overall physical condition of the equipment was "good and satisfactory", with the exception of a few tyre deflations in two dump trucks, which were subsequently rectified by the owners.

17. The owners’ surveyors, Marine Management Surveyors and Services Pte Ltd had also inspected the equipment, immediately before their discharge from the barge on 20-22 April 1998, and found some ‘old marks’ on them which they considered to be ‘pre-shipment damage/defect’. However, with respect to one excavator, one bulldozer, and one dump truck, they were damaged during discharge due to "the driver’s negligence and inadvertent accident."

18. Even Astra’s surveyors, Insight Marine Services Pte Ltd, who inspected the equipment on 20-22 April 1998, only found the following items were possibly affected by the long delay in discharging the cargo and/or by their exposure to the elements during the period of delay:

(i) Two batteries on the dump truck s/n 4337 and Bulldozer s/n 10376 were flat;

(ii) some rust on the dumper of the dump trucks due to water collected on the dumpers over a period of time;

(iii) One dump truck (s/n 4347) rear brakes were faulty and the system had to be purged of air;

(iv) Windscreen of wheel loader s/n 10107 was cracked (not certain at which phase this damage occurred).

19. But that was not the basis of Astra’s claim for their loss due to the fall in value of the equipment. There was evidence that, at the time of the discharge of the equipment, a potential buyer made an offer of US$3.8 million. But apparently upon sight of the equipment the buyer lost interest. Furthermore, during the period of detention, there were also other potential buyers. They came to view the equipment but as they could not test-drive them, their interest fizzled out.

20. Therefore, on 13 May 1998, Astra gave notice to UT to repurchase the equipment. It was only on 2 July 1998 that UT replied stating that it would not repurchase because the lessee in Indonesia, DML, had failed to properly maintain the equipment and the equipment had deteriorated further due to their exposure to a corrosive environment during the period of detention.

21. We may add here that some ten days later, UT inspected the equipment and found that only minimal or insignificant damage of a visual nature was caused to the equipment by the owners’ detention.

22. Some five months after the discharge, Astra engaged Henry Butcher Plant & Machinery Sdn Bhd ("Henry Butcher"), international plant and machinery consultants, to produce a valuation report. Henry Butcher inspected the equipment on 22 October 1998 and their valuation report was available only on 26 February 1999. Henry...