Court of Appeal, Singapore

Yong Pung How CJ, Karthigesu JA, LP Thean JA

3 May 1994

KEYWORDS

Bill of Lading – Freight Forwarder’s Bill – Freight Forwarder’s position vis-a-vis Shipper and Shipowner – Interim Order for Release of Cargo – Shipowner’s Lien under Bill of Lading (contractual lien) – Shipowner’s Lien otherwise than under Bill of Lading (non-contractual lien) – Shipowner’s entitlement to Quantum Meruit Freight

FACTS AND DECISION

The Court of Appeal dealt with a situation where competing bills were issued by the freight forwarder and the disponent shipowner for the same shipment to the same shipper. In this case, the buyers contracted with a freight forwarder to ship the buyer’s cargo from Houston (USA) to Damai (Malaysia). In turn the freight forwarders contracted with a disponent shipowner for the carriage. The buyers paid the freight to the freight forwarder. The freight forwarder returned a clean bill of lading issued to the buyer’s bank, noting ‘freight prepaid’, issued by someone other than the disponent shipowner. Subsequently, the disponent shipowner issued another bill also to the buyer’s bank. This bill was claused and noted freight was not paid. This bill, as usual, also conferred on it the right of lien on cargo for the freight. The buyer did not come forward to pay the freight once again. The disponent shipowner discharged the cargo in Singapore without completing the voyage and claimed its right of lien under its bill of lading. In turn, the respondent claimed damages for breach of contract based on the bill given by the freight forwarder. The freight forwarder has gone into liquidation.

The court made an interim order for release of the cargo to the respondents subject to the respondent furnishing a banker’s guarantee for any lien claim. Thereafter, upon final hearing, the court found the freight forwarder was the principal contracting party vis-a-vis the buyer and the disponent owner. One contract of carriage between the buyer and the freight forwarder, and another between the freight forwarder and the disponent shipowner. Thus, the court held that the disponent shipowner would not be able to rely on the lien clause in its bill of lading (i.e. Contract between the disponent shipowner and the freight forwarder) against the buyer. Although a private carrier who carries a cargo of an owner to the destination intended by him will be entitled to a lien even without any direct contract between them, but that did not help the disponent shipowner here because it did not complete the voyage to Damai. The disponent shipowner was also not entitled to any quantum meruit claim as there was no agreement, express or implied, by the buyer to pay freight to the disponent shipowner.

Overview by ARUN KASI