The "Rainbow Star"

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 17 February 2011
• Neutral Citation: [2011] SGHC 35
• Citation: [2011] SGHC 35
• Plaintiff Counsel: Thomas Tan (Haridass Ho & Partners)
• Hearing Date: 12 November 2010
• Subject Matter: Damages
• Docket Number: Admiralty in Rem No 151 of 2008
• Date: 17 February 2011
• Defendant Counsel: K Muralitherapany (Joseph Tan Jude Benny LLP)
• Court: High Court (Singapore)
• Published date: 22 February 2011

Judith Prakash J: Introduction

This matter came before me as an appeal from an assessment of damages carried out by the Assistant Registrar Ms Crystal Tan (“the AR”). The assessment exercise was conducted in respect of claims made by both the plaintiff and the defendant, and various sums were awarded to each of them. The plaintiff, however, was not satisfied either with the award in its favour or with the award in favour of the defendant and has appealed against various components of both awards.

The plaintiff, Kreuz Shipbuilding & Engineering Pte Ltd, whom I shall hereafter refer to as “the shipyard”, carries on the business of providing ship docking and ship repair services in Singapore. The defendant, whom I shall hereafter refer to as “the owner”, was the owner of a vessel called Rainbow Star (“the vessel”) which was an oilfield supply/towing vessel. In March 2008, the owner sent the vessel to the shipyard for certain repair work to be effected. On 8 June 2008, whilst the shipyard was carrying out work on the vessel, an explosion occurred and this was followed by a fire. As a result, the vessel became a constructive total loss.

In September 2008, the shipyard commenced this action in which it claimed the costs of the repair works that it had carried out on the vessel prior to the fire. The owner, alleging that the explosion and fire were caused by the negligence of the shipyard and its employees, put in a counterclaim for the loss and damage caused to it thereby. In October 2009, by consent, interlocutory judgment for damages to be assessed was entered in respect of the claim and the counterclaim.

The proceedings below

The claim by the shipyard was for payment of three invoices which it had issued to the owner between May and August 2008. These were as follows:

(a)	Invoice number 5551 dated 28 May 2008	$128,253
(b)	Invoice number 5593 dated 16 July 2008	$476,929
(c)	Invoice number 5630 dated 28 August 2008	$22,596
		________
	Total	$627,778

The amount claimed was, however, only $570,612.90 as the shipyard deducted an advance payment made by the owner and also a sum which it had overcharged in respect of certain pipes it had supplied.

The AR’s decision in respect of this claim was as follows: (a) in respect of invoice 5551 which the owner did not dispute, the AR awarded the full sum of $128,253; (b) in respect of invoice 5593, the AR found that the following amounts were due in respect of various works included in the invoice: (1) for pipes of normal length, $13,132; (2) for pipes of in between sizes, $4,506.66; (3) for steel work, $80,657.80; (4) for subcontractors’ invoices in respect of standard items, $16,869; (5) for subcontractors’ invoices in respect of non-standard items, $13,642.96; (6) in respect of lump sum items, nominal damages of $100; and (7) in respect of items of work admitted by the owner, $23,163; (c) in respect of invoice 5630, no amount was awarded at all.

The AR then went on to consider the owner’s counterclaim. Both parties had agreed that the vessel be regarded and assessed as a constructive total loss. On this basis, the owner’s counterclaim comprised the following items: (a) costs, expenses and third party liabilities incurred by the owner - $85,938.68 and Rp48,697,500; (b) loss of profit under an aborted charterparty - $1,741,811.58 (c) value of the vessel as at 8 June 2008 – US$1,750,000 The AR allowed the claims under items (a) and (b) in full. As regards item (c), the AR assessed the value of the vessel as being US$1.6m and awarded that amount to the owner. The AR also awarded the owner interest at the statutory rate on the value of the vessel from the date of the explosion (8 June 2008) up to the date of payment.

The shipyard’s appeal on its own claim

In its notice of appeal filed on 8 September 2010, the shipyard indicated that it was dissatisfied with the following portions of the AR’s decision: (a) the award in respect of invoice 5593 which it wanted increased to $469,763.90 (ie, the original sum claimed for after deduction of the amount that had been overcharged for the pipes); (b) the AR’s decision to make no award in respect of invoice 5630; (c) the AR’s decision to award the owner $21,000 as agency fees (being part of the costs and expenses claimed by the owner); and (d) the award of loss of profit in respect of the charterparty which reflected one year’s loss of income less operational expenses; and (e) the award of interest from the date of the explosion.

In the course of the hearing before me, counsel for the shipyard indicated that it was not proceeding with its appeal in respect of invoice 5630 ([7(b)] above). I will deal with each of the other grounds of appeal in turn.

Invoice 5593 The decision below

It was common ground below that the work items covered by invoice 5593 had actually been carried out by the shipyard. The owner had, however, disputed various items set out in the invoice on the basis that it had not agreed to the prices charged by the shipyard. The owner had only admitted that work items amounting to $23,163 had been priced on the basis of agreed rates set out in the first and second quotations (dated 12 February 2008 and 22 April 2008 respectively) which had been issued by the shipyard to the owner and had subsequently been accepted by the owner. The AR found, on the evidence, that: (a) nine subsequent quotations dated between 23 April 2008 and 6 June 2008 which the shipyard claimed to have sent to the owner, had not been received or confirmed by the owner; (b) the owner had never been made aware of the methods of charging by the shipyard and the prices set out in invoice 5593 had never been agreed; and (c) the shipyard had not managed to establish that the prices set out in invoice 5593 were reasonable. The AR then went on to consider each of the disputed items and to fix the rates payable by the owner for the same. I will give the basis of the prices so fixed in more detail later in this judgment if necessary.

The shipyard’s arguments on the appeal

On the appeal, the shipyard took the position that it was entitled to the amounts claimed on the basis that they had been agreed to, either specifically on this occasion or by reference to past practice; alternatively, that since the work had been done, the owner had to pay a reasonable amount for the same and the amounts that it charged were reasonable. The owner’s response was that the amounts charged had not been agreed to, and although it accepted that the shipyard was entitled to a reasonable price for the work done, the onus lay on the shipyard to establish that its prices were reasonable and this it had failed to do.

Contractual basis

In relation to its contention that the amounts claimed in invoice 5593 had been agreed to, the shipyard put forward three main points. First, it argued that the invoice had been accepted by the owner and therefore could no longer be challenged. The shipyard pointed out that there were various “ticks” against the prices on the invoice and that similar ticks had appeared on an earlier invoice, viz, invoice 5551, which the owner had accepted. Counsel contended that no one would mark an item with a tick without giving due consideration to them. He argued that Mr Juffri, the owner’s business and development manager, who had dealt with the invoices on the owner’s behalf, had not been able to explain the “ticks” or who made them.

Secondly, the shipyard relied on past practice. It noted that the quotations had been addressed to Permata Sari Services (“PSS”), the former manager of the vessel, who had only been replaced as manager by the owner itself in April 2008. From 2006 up till 2008, the shipyard had dealt with PSS and had charged for its work on the vessel based on yard tariffs and past practices. In fact, the first quotation had been addressed to PSS and this was a quotation that had been passed to the owner and which the owner had specifically confirmed and accepted.

Thirdly, the shipyard relied on the fact that the actual work had in many cases been done before a quotation was issued. The owner had not given full details of the work-scope. Therefore, upon completion of the work, the repair manager of the shipyard would do a write-up and follow that up with a quotation. If the owner had wanted a quotation to be issued and accepted for a particular job before actual work was carried out, it could easily have instructed the master and its superintendent not to allow the shipyard to carry out such work until the relevant quotation had been issued and accepted. As the owner allowed the shipyard to carry out work before there was an accepted quotation, the shipyard was entitled to charge for the work based on existing yard tariffs and past practice. The items that were charged by reference to yard tariffs were, according to the evidence, items such as staging works, engine room cleaning, tyre fender works, tank valves, spindle works and tank cleaning.

Taking the first point relating to the “ticks” on the invoice and the argument that these indicated acceptance of the prices charged, the owner’s response was that there was no evidence before the court as to the purpose or meaning of the “ticks”. They had not been made by Mr Juffri so it was not surprising he could not explain them. In any event, there was documentary evidence that showed that he had queried the charges very soon after invoice 5593 was rendered. Thus, there was no basis on which to contend that this invoice had been accepted. I agree with the owner that the “ticks” in themselves did not prove that the prices were accepted. Their presence was equivocal and could not lead to any inference of acceptance. They might equally have meant that the person making the “ticks” wanted to query the marked items.

When...