QCR Summer 2019: Proprietary interest in cargo not required to bring a claim in negligence for pure economic loss
Wilmar Trading Pte Ltd v Heroic Warrior Inc.  SGHC 143
The Plaintiff, as buyer on FOB terms, nominated the “Bum Chin” (the “Vessel”) as the carrying vessel for the shipment of a consignment of palm oil products. The Defendant is the registered owner of the Vessel.
There were three charterparties involved in the carriage of the aforesaid cargo; a head time charterparty between the Defendant and STX Pan Ocean, a sub-time charterparty between STX Pan Ocean and NHL, and a voyage charterparty between NHL and Raffles Shipping International (nominating the Plaintiff as charterer). None of the three charterparties were between the Plaintiff and the Defendant. No bills of lading were ever issued for the cargo as the voyage was never carried out. An incident onboard occurred while the vessel was still at the loading Terminal.
The Plaintiff brought an action against the Defendant in relation to the loss and damage to cargo due to the incident on board the Vessel.
While the Singapore High Court found that there was no breach of contract given that a contract did not exist between the Plaintiff and the Defendant, it held the Defendant liable in negligence.
The Court disagreed with the Plaintiff’s assertion that the Defendant, as contracting carrier, had failed in its duty to ensure that the Vessel was seaworthy and thus acted contrary to the Hague-Visby Rules.
No express contract
There was no express contract of carriage between the parties. The three charterparties involved in the carriage of the cargo are not between the Plaintiff and the Defendant.
No implied contract
There was no implied contract between the parties as well because the intention was to issue charterer’s bills of lading, not owner’s bills of lading. The Court considered the following factors:
- In an email from the brokers who had arranged the fixture to Raffles Ship Chartering Pte Ltd (the operational arm of Raffles Shipping International), it stated “OWNER’S NAME TO BE ON B/L: NHL DEVELOPMENT CO., LTD” and confirmed that the agent for signing and releasing original bills of lading would be Sea Ocean Shipping Agency Pte Ltd (Singapore) as agent for and on behalf of NHL.
- Witness evidence suggested that the Plaintiff was expecting bills of lading to be issued by NHL, not the Defendant. Further, the Defendant was not asked to issue any original bills of lading for the consignment.
- The standard pro forma bill of lading sample provides that the terms of the NHL Charter are incorporated in the bills of lading covering the cargo, suggesting that any bills of lading would not be with the Defendant as there is no provision for the terms of the head charter to be incorporated into the bill of lading.
Title to sue
The Court held that the Plaintiff need not prove a proprietary interest in the cargo to have title to sue in negligence. As such, the Plaintiff’s inability to establish that property passed when the goods were put on board does not prevent its claim in negligence against the Defendant.
Elements of negligence
To succeed in its claim in negligence, the Plaintiff has to establish that the Defendant had breached its duty of care, and that the breach caused or contributed to the incident that led to the Plaintiff’s loss.
The Court found that the Defendant owed the Plaintiff a duty of care.
- Factual foreseeability: Defendant as performing carrier would have reasonably foreseen that its negligence would cause economic loss to a buyer of cargo who bore the risk of damage to or loss of the cargo, which in this case, was the Plaintiff.
- Sufficient legal proximity: While the Defendant has no contractual relationship with the Plaintiff, the relationship between the Plaintiff and the Defendant was sufficiently proximate.
- No policy considerations that militate against finding a duty of care: Indeterminacy would not arise as the Plaintiff is the only party who bore the risk of loss or damage to the cargo and is within an identifiable class of persons who would suffer loss as a result of the Defendant’s negligence, if any.
After considering the evidence, the Court held that the Defendant had breached its duty of care, and that the losses claimed by the Plaintiff were reasonably foreseeable and flow directly from the negligent acts or omissions of the Defendant.
This case demonstrates the various causes of action that may be available in cases involving cargo loss and/or damage, including contract, tort and bailment (bailment was not explored in this case as the Plaintiff had not pursued the same.) It also serves as a useful reminder that under Singapore law, a plaintiff need not prove proprietary interest to bring a claim in negligence for pure economic loss.
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IG Letters of Indemnity
Members are often asked to accept letters of indemnity (LOIs) from their shippers or charterers in return for the delivery of cargo without presentation of original bills of lading, the delivery of cargo at a port other than that named in the bill of lading (or both) and in various other circumstances.
The UK Club Correspondent, GAC Shipping Ltd, would like to remind Members of the commencement of bulk crew changes of international seafarers from 22nd December 2020, through the Offshore Crew Transit Hub (OCTH) operated by a Public-Private-Partnership (PPP).