The "Shravan"

CourtHigh Court (Singapore)
JudgeChao Hick Tin J
Judgment Date29 June 1999
Neutral Citation[1999] SGHC 169
Citation[1999] SGHC 169
Published date19 September 2003
Date29 June 1999
Plaintiff CounselAndrew Ong and John Seow (Rajah & Tann)
Defendant CounselPrem Gurbani and Tan Sue-Ann (Gurbani & Co)
Docket NumberAdmiralty in Rem No 407 of 1996
Subject MatterBills of lading,Civil Procedure,Pleadings,Remedies,Cargo contaminated at discharge,Sub-sale of cargo by indorsees,Contract,Re-blending of contaminated cargo to produce acceptable cargo exists,Whether shipowners discharged burden of proof to explain how contamination occurred -Whether shipowners responsible for loss,Indorsees purchases cargo of fuel oil under CFR contract,Remoteness of damage,Whether indorsees entitled to mitigate damage by re-blending contaminated cargo,Damages,Whether market for contaminated cargo,Whether alternative method of calculating loss of revenue a claim in special damages,Loss of revenue,Mitigation of damage,Whether indorsee may bring action in tort,s 2(1) Bills of Lading Act (Cap 384 1994 Ed),Indorsees not in possession of original bill of lading at commencement of suit,Indorsees,Whether indorsees can claim loss of revenue,Contaminated cargo not acceptable to sub-purchases,Whether expense incurred in chartering vessel to deliver substitute cargo too remote,Failure to prove spot market price of cargo has fallen,Locus standi,Bills of Lading Act (Cap 384, 1994 Ed),Whether defendants given enough time to prepare case on alternative basis of computation,Whether subsequent receipt of bill of lading serves to feed prior defective title -Whether indorsees the person to whom delivery of goods to be made,Admiralty and Shipping,Burden of proof,Carriage of goods by sea

: This is an action for losses suffered by the plaintiffs (Hin Leong) on account of a shipment of fuel oil (380CST) which was taken on board MV Shravan at Fujairah, UAE, and, on delivery in Singapore, was found to have been contaminated with excess water. The defendants are the owners of the Shravan. The main issue which this court is required to determine is: did the contamination occur before or after loading on board the Shravan? The secondary issue which requires my determination is, if it is shown that the contamination occurred post-loading, the losses which Hin Leong are entitled to claim.


Sometime towards the end of June 1996, Hin Leong entered into negotiations with Metro Bunkering & Trading Co (Metro) to buy a consignment of about 50,028 metric tons of 380CST fuel oil (the cargo). The cargo was delivered afloat from MV Cherry to MV Shravan on 30 June 1996 at Fujairah, UAE and was received into tanks 3C, 6C and 9C. A clean bill of lading was issued by the defendants, namely, the cargo was described to be `in apparent good order and condition.` Obviously, this could not take into account defects which could not be detected by a careful visual inspection: Vaynar Suppiah & Sons v KMA Abdul Rahim SLR 239 [1974] 2 MLJ 183 . Thus, the need for taking samples, which were done in this case.

The purchase contract between Hin Leong and Metro was confirmed on 3 July 1996. It was a CFR contract. The specifications of the cargo were stated to be, inter alia: `Water volume pct 1.00 Max ASTM D95.` What this meant was that the water content of the cargo was not to exceed 1% of the total volume to be determined in accordance with the standards of the American Society of Testing and Materials (ASTM).

Under the terms of the contract, Hin Leong were required to open a standby letter of credit (LC) facility in favour of Metro and payment was to be made by Hin Leong to Metro within 30 days of the date of the bill of lading (B/L). Under the standby LC, Metro was not required to tender the B/L to call on the LC, only a statement that the B/L had been endorsed over to Hin Leong.

The Shravan arrived outside port limit (OPL), Singapore, on 13 July 1996 and was instructed by Hin Leong to discharge the cargo at the Caltex Terminal. I ought to state that on board the vessel there was also another parcel of cargo, A960. Prior to coming into Singapore port, the vessel had first off-loaded a part of its A960 cargo at OPL onto the vessel Ocean Enterprise. It then proceeded to the Caltex terminal. The Shravan arrived at the Caltex Terminal on 15 July 1996.

Prior to the discharge of the subject cargo at the Terminal, Caleb Brett Singapore (CBS) were appointed by Hin Leong and Caltex Singapore Pte Ltd (to whom Hin Leong had on-sold the cargo) to carry out a quality/quantity survey of the cargo. UML (upper, middle, lower) samples were taken and the test results showed that the water contents of the cargo in the three tanks of the Shravan were as follows:

Tank Method Reading Volume
3C ASTM D95 1.80% 17,255.636 m/t
6C ASTM D95 0.15% 15,695.575 m/t
9C ASTM D95 1.60% 17,172.036 m/t

These figures show that the cargo in tanks 3C and 9C contained water exceeding the specification of 1%. The volumetric average of the water content of the entire cargo was 1.2%. The water was saltish in nature, namely, sea-water.

Following discussions, Hin Leong and Caltex agreed to do a joint test on 16 July 1996 at the Caltex laboratory, which was witnessed by CBS. The results were:

Tank 3C 1.80%
Tank 6C 0.25%
Tank 9C 1.80%
Composite 1.35%

Further, in order to avoid delaying the vessel, Hin Leong and Caltex agreed to discharge the cargo into segregated tanks of Caltex so as to prevent contamination.

Samples were also obtained from the Caltex shore-tanks into which the cargo in tanks 3C and 9C was discharged. The test results of these samples confirmed that the cargo in tanks 3C and 9C was off-specification.

From the evidence it cannot be disputed that the cargo in tanks 3C and 9C was contaminated with excess water. The defendants do not dispute that the water content of the cargo (as a whole) at discharge port at Singapore was 1.2%. However, to succeed in this action Hin Leong must prove on a balance of probabilities that the cargo, as originally shipped, was within specification.

Preliminary issues of law

In the statement of claim, Hin Leong sue as owners of the cargo and/or were entitled to possession thereof. In the alternative, Hin Leong sue as the `lawful holders of the bill of lading, and/or were the persons to whom delivery of the cargo was made.` In the further alternative, Hin Leong sue as `holders and/or indorsee of the bill of lading to whom property, in the cargo passed upon and by reason of the indorsement.` It is an action in contract as well as in tort. The defendants challenge Hin Leong`s locus to sue on either basis.

Original Copies
Bills of Lading 3/3 4

This action was instituted on 16 July 1996. It is not in dispute that Hin Leong are the indorsees of the B/L. The defendants submitted that as of the date of the action Hin Leong were not the holders of the original B/L and under s 2(1) of the Bills of Lading Act (Cap 384) (the Act) possession of the B/L is essential to enable Hin Leong to sue in contract. As stated, the payment of the cargo was secured by way of a standby letter of credit. Hin Leong said that the B/L was couriered to them, and they would normally receive it five-seven days from the date of issue of the B/L. The original B/L was produced at the trial. However, Hin Leong was not able to say when they received it. Moreover, in the plaintiffs` bundle of documents is a letter dated 18 July 1996 allegedly from Metro`s Singapore agents, Petromar Energy Resources Pte Ltd, addressed to Hin Leong which suggested that as of the date of the writ Hin Leong could not have been in possession of the B/L:

Re 50,028.079 Mt HSFO 380CST Ex `Shravan` Bill of Lading dated 30 June 1996.

Enclosed herewith the following document in respect of the above.

It would appear that this letter was not referred to in any of the witnesses` affidavits of evidence-in-chief. But the fact that it was in Hin Leong`s possession and they produced it in their bundle, must suggest that it was received by Hin Leong together with all the enclosures mentioned therein. On balance, therefore, I am not satisfied that Hin Leong have shown they were in possession of the B/L at the commencement of the writ.

Another basis upon which Hin Leong sought to argue that they may sue in contract is this: that upon the actual receipt of the original B/L this would `serve to feed any prior defective title which the plaintiffs may have had`. Reliance was placed on Butterworth v Kingsway Motors Ltd [1954] 2 All ER 694; [1954] 1WLR 1286. In that case a certain R sold a car she did not have title to. The original purchaser later sold it. There were further subsequent sales. The action was brought by the last purchaser against the person from whom he bought asking for the return of the purchase price on the ground that the seller had no title to the car. R later acquired a good title and it was held that `the title so acquired went to feed the previously defective titles of the subsequent buyers and enured to their benefit.` It seems to me that this principle must be confined to the fact-situation in the case and I do not think it can be of general application. An important consideration which the court bore in mind when adopting that principle was that there would otherwise be prejudice caused to third parties who made the purchases in good faith. Here we are dealing with a statutory provision which provides that the person must be in possession of the B/L before he has a locus to sue in contract. I am afraid to apply the `feeding the title` principle in the present case might have the unintended effect of amending the law.

A third basis advanced by Hin Leong to argue that they may sue in contract is that they became `the person to whom delivery of the goods to which a ship`s delivery order relates is to be made in accordance with the undertaking contained in the order` - s 2(1)(c) of the Act. Section 1(4) of the Act provides that a ship`s delivery order is a document which is neither a B/L nor a seaway bill but contains an undertaking which:

(a) is given under or for the purposes of a contract for the carriage by sea of the goods to which the document relates, or of goods which include those goods; and

(b) is an undertaking by the carrier to a person identified in the document to deliver the goods to which the document relates to that person.

There appears to be no authority which further elucidates this definition. However, my attention was drawn to the Law Commission Report (Law Commission No 196), upon which the English 1992 Carriage of Goods by Sea Act was based and the Singapore Act was enacted following the English Act. In the Report, the Commission stated that ship`s delivery orders are either:

(a) documents issued by or on behalf of shipowners while the goods are in their possession or under their control and which contain some form of undertaking that they will be delivered to the holder or to the order of a named person; or

(b) documents addressed to a shipowner requiring him to deliver to the order of a named person, the shipowner subsequently attorning to that person.

Where the order is issued to the ship and authorizes, directs or orders the carrier to deliver to a certain person, it confers no rights against the carrier until the carrier attorns to the person to whom delivery is due.

There is documentary evidence showing instructions from Hin Leong to Sanko (through whom Hin Leong bought the cargo) requiring the Master of Shravan to deliver the cargo to Caltex Terminal and to notify Hin Leong. On 15 July 1996...

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