Court of Appeal, Singapore

Chan Sek Keong CJ, Andrew Phang Boon Leong JA, Belinda Ang Saw Ean J

21 November 2006; 27 March 2007

KEYWORDS

Charterparty – Seaworthiness – Cargoworthiness – Exemption Clause for Cargoworthiness – Express, Pertinent and Apposite words required for Exemption Clause – Obligation arising from Contractual Description of ship distinct from obligation for Seaworthiness, Cargoworthiness – Magnitude of Failure taken into account in deciding if Ship failed to answer Contractual Description – Contractual Description Exemption Clause not covering Contractual Description obligation

FACTS AND DECISION

Parties entered into a charterparty of a product tanker to carry palm. The terms of the charterparty were contained in fixture recap and Vegoilvoy Tanker Voyage Charterparty 1950 form. The ship’s identity in the fixture form included a description ‘epoxy coated’. The fixture also gave the option of substituting the ship. Clause 1(a) of the form provided the standard clause that the shipowner ‘shall before and at the commencement of the voyage, exercise due diligence to make the Vessel seaworthy and to make the tanks in which cargo is carried fit and safe for its carriage and preservation.’ Clause 1(b) of the form gave an option to the shipowners to cancel the charter if the tanks upon testing proved to be defective and repairs could not be effected within 24 hours.

Upon arrival at the loading port, it was found out that the epoxy coating in the tanks had gone by 40%. The charterers did not accept the ship and asked the shipowners to provide a substitute ship. The shipowners refused and cancelled the charterparty, claimed to be entitled to do so under the clause 1(b). As a result, the charter was unable to perform its contracts with its suppliers and customers. The charterers sued the shipowners for damages.

The court held that the failure of coating was of such a magnitude that the ship was considered not epoxy quoted, contrary to the description in the fixture. The description constituted a separate and independent obligation from the clause 1(a) obligation to exercise due diligence to provide a seaworthy ship. Clause 1(b) right to cancel did not save the shipowner from the consequences of breach of the independent obligation to provide a ship answering the description in the fixture. More so, as the general rule was that typewritten clauses would prevail over printed clauses, whilst in this case the  description was specifically typewritten and the clause 1(b) was part of the standard printed form.

Coming to clause 1(a) court, the court acknowledged that seaworthiness-obligation was a fundamental one and can only be exempted by ‘express, pertinent and apposite’ words. However, in this case, the court opined that clause 1(b) and its invocation were sufficient to exempt the seaworthiness obligation. However, the court did not find the need to answer this question, as the charterers were entitled to the relief for reason of breach by the shipowners of the fixture description.

Overview by ARUN KASI