The "Star Quest" and others

• Jurisdiction: Singapore
• Judge: Steven Chong J
• Judgment Date: 20 May 2016
• Neutral Citation: [2016] SGHC 100
• Plaintiff Counsel: Toh Kian Sing, SC and Vellayappan Balasubramaniyam (Rajah & Tann Singapore LLP)
• Docket Number: Admiralty in Rem Nos 228—232; 235 of 2014 (Registrar’s Appeals Nos 53—58 of 2016)
• Date: 20 May 2016
• Hearing Date: 24 March 2016
• Subject Matter: Bills of lading,Bills of lading as document of title,Admiralty and shipping
• Year: 2016
• Citation: [2016] SGHC 100
• Defendant Counsel: Seah Lee Guan Collin and Lim Wei Ming, Keith (Quahe Woo & Palmer LLC),Bazul Ashhab bin Abdul Kader and Prakaash Silvam (Oon & Bazul LLP)
• Court: High Court (Singapore)
• Published date: 02 June 2016

Steven Chong J: Introduction

When is a bill of lading not a bill of lading? This is the key question posed in this consolidated application for summary judgment. It has arisen from another series of actions following the wake of the insolvency of O.W. Bunker A/S and its subsidiaries (“OW Bunker”), including O.W. Bunker Far East (Singapore) Pte Ltd (“OW Far East”) and Dynamic Oil Trading (Singapore) Pte Ltd (“Dynamic Oil”). As OW Bunker was one of the world’s largest bunker suppliers, the impact of its insolvency was massive and far reaching. This “imbroglio”, as described by Lloyd’s List, has generated numerous legal proceedings all over the world including the US, the UK, Canada, Denmark and Netherlands, in addition to Singapore.¹ Many physical suppliers who traded with OW Bunker had no viable choice but to look to other non-contracting parties in their quest to recover their losses in full. For instance, I recently had to consider several innovative claims brought by physical suppliers against non-contracting parties in the context of a consolidated interpleader proceedings – Precious Shipping Public Co Ltd and others v OW Bunker Far East (Singapore) Pte Ltd and others and other matters [2015] 4 SLR 1229. Those claims were premised, inter alia, on retention of title clauses, breach of bailment, conversion, unjust enrichment, collateral contract and maritime liens, all of which I found to be unarguable on the facts of that case.

The search by the physical suppliers for alternative avenues of recovery continues, and has led to the institution of the present proceedings before me for an aggregate claim of about US$7m against the six respondents. The appellant, as a physical supplier, sold several parcels of marine fuel oil (“the bunkers”) to OW Far East and Dynamic Oil (collectively “the Buyers”). The bunkers were shipped onboard the respondents’ vessels (“the Vessels”) for which various bills of lading (“the Vopak bills of lading” or simply “the Vopak bills”) were issued naming the appellant as the shipper. It is important to bear in mind that the bunkers were loaded not for the Vessels’ own use but as cargoes for onward delivery to other vessels for their own consumption as bunkers. The bunkers were subsequently delivered onwards, but crucially these deliveries were without production of the Vopak bills of lading.

Following the announcement of the insolvency of OW Bunker and consequently OW Far East and Dynamic Oil, the appellant which retained possession of the original Vopak bills demanded delivery of the bunkers to its order. However, by then, the bunkers had already been delivered, or misdelivered according to the appellant. The appellant claims that the delivery of the bunkers to the other vessels without production of the Vopak bills of lading constituted breaches of contracts, breaches of bailment and conversion.

Ordinarily, such claims are quite straightforward as the law in this area is well settled. A carrier who delivers cargoes without production of the original bill of lading does so at its own risk and is typically liable for any consequent losses suffered by the holder of the bill of lading: Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576 (“Sze Hai Tong Bank”) at 586.

However, the Vopak bills of lading have several unusual features which merit closer scrutiny. For example, there is no express port of discharge stated therein. Instead the bills state that the goods are “bound for BUNKERS FOR OCEAN GOING VESSELS”² ostensibly as the destination for the bunkers. Each Vopak bill of lading also contemplates delivery to multiple “OCEAN GOING VESSELS”. How would such delivery to multiple vessels in respect of the same loaded parcel be possible against a single set of bills of lading? To add to this complexity, the Vopak bills of lading also contain some of the usual clauses found in regular bills of lading including the notation “one of which being accomplished, the others to stand void” which is typically associated with the requirement for delivery against production of the original bill of lading. Given these seemingly inconsistent features, how should the Vopak bills be construed? This question engendered the respondents to advance several interesting and somewhat novel arguments including the proposition that the Vopak bills of lading were not, in fact and in law, bills of lading qua documents of title or contractual documents, but were merely acknowledgments of the receipt of the bunkers. In other words, they were never intended to operate as security either as against the respondents as carriers or against the Buyers for payment under the underlying sale contracts.

Despite the vast gulf between the parties as to the legal purport and effect of the Vopak bills of lading, there is at least common ground that the unusual features of the Vopak bills of lading as well as the underlying sale contracts clearly contemplate delivery of the bunkers without production of these bills of lading. The pivotal divide between the parties is whether this common understanding meant that the Vopak bills of lading were merely acknowledgements of receipt of the bunkers, and it was therefore permissible to deliver the bunkers without their production, or whether the risks attendant to such deliveries were to be addressed by way of suitable indemnities to be arranged directly between the respondents as carriers and the parties which gave the instructions to deliver in this manner.

Facts

The appellant, Phillips 66 International Trading Pte Ltd, is a multinational company engaged, inter alia, in the sale of bunkers.³ It stores its bunker fuel at the Pulau Sebarok terminal of Vopak Terminals Singapore Pte Ltd (“the Vopak Terminal”) from which its buyers take delivery of the bunkers.⁴ The Buyers were subsidiaries of OW Bunker, which was one of the world’s largest bunker suppliers before its insolvency as I noted above.

The respondents were the owners and/or demise charterers of the Vessels. Each of the Vessels was licenced by the Maritime and Port Authority of Singapore (“MPA”) to operate as a bunker barge,⁵ save for The Arowana Milan which had a similar license from the Malaysian Domestic Shipping Licencing Board.⁶ As bunker barges, the Vessels were permitted to supply bunkers to other vessels within Singapore port limits. At the material time, the Vessels were acting under the instructions of their time charterers or other third parties. These instructing parties had commercial arrangements with the Buyers for the sale, purchase and supply of bunkers.

The appellant and the Buyers, in line with their previous course of dealings, entered into three contracts for the sale of bunkers dated 10 September 2014, 22 September 2014 and 13 October 2014.⁷ The material terms of the sale contracts are largely identical, and will be further examined below. Pursuant to the sale contracts, the Buyers nominated the Vessels for loading of the bunkers at the Vopak Terminal, as follows:

Suit	Vessel	Sale contract	Quantity of bunkers loaded as stated in the Vopak bills of lading (MT)	Loading date	Price as reflected in seller’s invoice (US$)
Admiralty in Rem No 228 of 2014 (“ADM 228”)	The Star Quest 8	Dynamic Oil contract dated 22 September 2014	998.881	10 October 2014	534,308.35 (invoice dated 5 November 2014)
Admiralty in Rem No 229 of 2014 (“ADM 229”)	The Nepamora 9	OW Far East contract dated 10 September 2014	2,000.000	12 October 2014	1,086,660.00 (invoice dated 4 November 2014)
Admiralty in Rem No 230 of 2014 (“ADM 230”)	The Petro Asia 10	Dynamic Oil contract dated 22 September 2014	3,999.138	11 October 2014	2,139,166.55 (invoice dated 5 November 2014)
Admiralty in Rem No 231 of 2014 (“ADM 231”)	The Luna 11	OW Far East contract dated 13 October 2014	2,002.175	22 October 2014	1,008,095.11 (invoice dated 31 October 2014)
Admiralty in Rem No 232 of 2014 (“ADM 232”)	The Zmaga 12	OW Far East contract dated 10 September 2014	2,497.913	29 October 2014	1,222,853.31 (invoice dated 4 November 2014)
Admiralty in Rem No 235 of 2014 (“ADM 235”)	The Arowana Milan 13	OW Far East contract dated 10 September 2014	2,000.000	18 October 2014	990,660.00 (invoice dated 4 November 2014)

It is undisputed that, after the bunkers were loaded, Vopak bills of lading were prepared and furnished by the Vopak Terminal naming the appellant as the shipper, and to its order.¹⁴ These documents were signed on behalf of each respondent and subsequently sent to the appellant by the Vopak Terminal.¹⁵ After receiving them, the appellant proceeded to invoice the Buyers for the amounts stated in the table above; but as the dates of these invoices indicate, this was only done later.

By that point, the Vessels, being bunker barges, had already supplied the cargoes to other vessels, which had expended them for their own consumption.¹⁶ Crucially, these onward deliveries had been performed without the production of the original Vopak bills of lading. These were still in the appellant’s possession. Thus, shortly after finding out about the collapse of OW Bunker, on or about 6 November 2014, and failing to receive payment from the Buyers, the appellant demanded delivery of the cargoes from the respondents on the basis that it was the holder of the Vopak bills of lading.¹⁷ This, of course, was not possible as the respondents no longer had possession of the cargoes.

Parties’ respective cases and decision below

The appellant’s case is simple and straightforward. The Vopak bills of lading should be given their full force and effect as documents of title, and contractual documents. They contain or evidence the contracts of carriage formed between itself as the shipper and the respondents as carriers. Accordingly, the deliveries...