Cases

Tort

The ‘Sunrise Crane’

[2004] 4 SLR 715

Court of Appeal — Civil Appeal No 141 of 2003

Yong Pung How CJ, Chao Hick Tin JA and Judith Prakash J

28 July; 13 September 2004

Tort — Negligence — Duty of care — Dangerous goods — Whether owner of vessel owes duty of care to inform receiving vessel of dangerous nature of cargo immediately prior to discharge — Whether more care necessary where highly dangerous substances involved

Tort — Negligence — Duty of care — Owner of vessel discharging dangerous cargo engaging contractor to discharge cargo — Contractor informed of dangerous nature of cargo — Whether owner of discharging vessel under separate duty of care to inform receiving vessel of dangerous nature of cargo to be discharged

Tort — Negligence — Duty of care — Whether foreseeable that independent contractor might fail to inform receiving vessel of dangerous nature of cargo — Whether relationship between discharging and receiving vessels sufficiently proximate — Whether just and reasonable to impose duty of care on owner of discharging vessel under circumstances

Tort — Negligence — Remedies — Contract with third party — Whether remedies in tort automatically unavailable where plaintiff having remedy in contract against another party

Admiralty and Shipping — Limitation of liabilities — Onus of proof on shipowner to rely on limitation of liability — Whether appellant shipowner entitled to limit liability under circumstances — Section 136 Merchant Shipping Act (Cap 179, 1996 Rev Ed)

Lim Tean and John Seow (Rajah & Tann) for the appellant;

Thomas Tan and Daryll Richard Ng (Haridass Ho & Partners) for the respondent.

This was an appeal against the decision of Belinda Ang Saw Ean J allowing the respondent’s claim in tort arising from the loss of a small steel tanker belonging to the respondent (reported at [2004] 1 SLR 300). The appellant’s defence of limitation of liability under s 136 of the Merchant Shipping Act (Cap 179, 1996 Rev Ed) was also rejected. The main substantive question that arose for consideration at the appeal was whether, in the given circumstances, a duty of care was owed by the appellant to the respondent.

The Sunrise Crane was a chemical tanker owned by the appellant. On 4 March 2001, the Sunrise Crane arrived in Singapore to discharge a cargo of nitric acid. Of the cargo of nitric acid some 34mt of the nitric acid in one of the tanks was found to be contaminated by hydraulic oil requiring the contaminated cargo to be disposed of. Nitric acid is a highly corrosive substance. Due to the extreme corrosive nature of the substance, the substance could only be transferred into stainless steel tanks for disposal. The appellant requested the vessel’s P&I Club to assist. The club appointed a surveyor (one Capt Gill) to find a suitable licensed contractor to carry out the remove the contaminated cargo. The club’s surveyor engaged Pink Energy Enterprises (‘Pink Energy’) to carry out disposal. Pink Energy in turn engaged Pristine Maritime Pte Ltd (‘Pristine Maritime’) to remove the contaminated cargo from Sunrise Crane. Pristine Maritime had the Pristine on charter from the respondent who owned the Pristine. It was agreed that the contaminated cargo would be transferred onto the Pristine outside port limits. It was established during trial that Capt Gill had informed Pink Energy of the extremely dangerous nature of the substance to be disposed. The Pristine was constituted of mild steel and was used as a slop carrier.

In the early hours of 8 March 2001 the Sunrise Crane moored alongside the Pristine and transferred the contaminated nitric acid into the Pristine. A short while later, smoke was seen coming out of the Pristine which also listed a little to port. The crew from the Pristine evacuated to the Sunrise Crane and some of the crew of the Sunrise Crane had to put on protective equipment and breathing apparatus before boarding the Pristine to close its valves and openings. Eventually, the Pristine capsized.

It was common ground that prior to the transfer, no one on board the Sunrise Crane informed the crew of the Pristine that the substance to be transferred was contaminated nitric acid. The respondent, as owners of the Pristine, brought an action against the appellant in tort for failing to inform the Pristine of the nature of the cargo immediately prior to the transfer. The appellant responded that it had engaged Pink Energy as its independent contractor and that Pink Energy had been well informed of the nature of the cargo to be disposed. Alternatively, the appellant pleaded that it had was entitled to limit its liability under the Merchant Shipping Act (Cap 179, 1996 Rev Ed).

The trial judge found in favour of the respondent. She held that the appellant owed a duty of care to the respondent and that the appellant was not entitled to limit its liability. In the course of her judgment on duty of care, the trial judge made reference to two guides from the International Chamber of Shipping (‘ICS’), namely the Tanker Safety Guide (‘TS Guide’) and the Ship to Ship Transfer Guide (‘STS Guide’), as well as a document called the material safety data sheet (‘MSDS’). The appellant appealed against the entire decision. In particular, the appellant argued that the trial judge was wrong to have relied on the ICS Guides and the MSDS.

Held, dismissing the appeal (Judith Prakash J dissenting):

The law expected a person who carried a pound of dynamite to exercise more care than if he was only carried a pound of butter, or putting it in another way, to exercise more care with a bottle of poison than a bottle of lemonade. What was adequate for one set of circumstances might not be so in relation to a different set of circumstances. More care had to be exercised where a highly dangerous substance was involved. In relation to ordinary or less dangerous chemicals, an advice to the main contractor could perhaps suffice. It stands to reason that more care must be exercised where a highly dangerous substance is involved and as such, Sunrise Crane should have exercised more care.

While it was true that the law of tort offered an avenue of redress for losses suffered by a person where such losses would otherwise be without a remedy, it did not conversely mean that remedies in tort became automatically unavailable simply because the plaintiff had a remedy in contract against another party. To conflate the two would be to ignore the fundamental difference between contract and tort. Tortious duties were primarily fixed by law while contractual duties were based on the consent of 
the parties

It was clear that the law did differentiate between a claim in pure economic loss and that for personal injuries or physical damage. In respect of the former, the law was more restrictive in imposing a duty of care. In this case, Sunrise Crane had directly transferred its highly dangerous cargo to the Pristine and it had been envisaged by the appellant right from the very beginning that there would be such a direct transfer onto a barge which would be coming to collect the highly hazardous contaminated cargo. Under the circumstances, it is not unfair or unjust to impose a higher standard of care. The appellant was aware of the fact that it would not be Pink Energy that would be removing the substance and that it was not likely that Pristine would have known that the cargo was contaminated nitric acid. Indeed, Pristine’s request for a sample of the cargo had been turned down.

Turning to the use of the ICS Guides, the appellant alleged that the judge was wrong to have relied on them because none of the witnesses were questioned as to their applicability. Furthermore, the appellant submitted that if the ICS Guides could properly apply, then its provisions should apply to both vessels.

However, it was pointed out that it was the appellant who first introduced the TS Guide into the proceedings in its closing submission at the trial to substantiate what it alleged to be the meaning of ‘slops’. As the appellant produced only a part of this Guide, which was helpful to the point it was trying to make, the respondent then placed the entire document before the court. As the appellant had relied on a part of the ICS Guides to substantiate its case, it should have no reason to object to another part of the ICS Guides being relied upon by the opponent to show global industry practices or standards. The ICS was the international trade association for merchant ship operators and its membership comprised national shipowners’ associations representing over half of the world’s merchant fleet. Taking the recommendations in the ICS Guides into account, which required the appellant to inform the Pristine of the nature of the cargo when the transfer was about to begin, all the more the acts of the appellant fell short of the standard of care required of it.

The court found that the position of the appellant’s vessel and the respondent’s tanker was as proximate as could conceivably be. The situation in the present case could hardly be any different from the case where there was a collision between two vessels, causing physical damage to either or both vessels. It was beyond argument that the act of transferring the contaminated cargo from the Sunrise Crane to the Pristine was an act which directly affected the respondent.

The majority of the court, who had sight of the draft of Judith Prakash J’s dissenting opinion, agreed with what she had stated on the issue of the limitation of liability.

[Per Judith Prakash J (dissenting): In order for a shipowner to rely on the limitation of liability provided by s 136 Merchant Shipping Act, he had the onus of proving that the loss or damage caused by the negligent navigation or management of his ship took place without his ‘actual fault or privity’. The threshold for a defendant to cross before a defendant could avail himself of the limitation defence was very high. In order to establish that its own fault did not contribute to the loss, the appellant had to show that it had an efficient system of management of the vessel that ensured that, at the least, the standard industry practices for dealing with dangerous cargoes were implemented. The appellant did not give any evidence as to the management system which it had adopted to ensure that the vessel had implemented and followed industry standards of practice in relation to the handling of chemical cargo.

Over the years, the courts had whittled down the protection available to a shipowner from the International Convention Relating to the Limitation of Liability of Owners of Seagoing Ships 1957 and s 136 of the Merchant Shipping Act and the protection it offered to shipowners was, largely, illusory. It was time to consider ratifying the Convention on Limitation of Liability for Maritime Claims 1976 and amending s 136 of the Merchant Shipping Act accordingly.]

Summarised by: Vimala Chandrarajan

Legislation

Merchant Shipping (Amendment) Act (A56/2004)

Pursuant to the Merchant Shipping (Amendment) Act (Commencement) Notification 2005 (S45/2005) (the ‘Commencement Notification’), the Merchant Shipping (Amendment) Act 2004 (A56/2004) (the ‘Amendment Act’), which was passed by Parliament on 16 November 2004, and gazetted on 25 January 2005, will come into force in two stages:

•    on 25 January 2005: the whole of the Amendment Act except sections 3, 4 and 5; and

•    on 1 May 2005:  sections 3, 4 and 5.

The Amendment Act introduces a new limitation liability regime by repealing and re-enacting Part VIII of the Merchant Shipping Act (Cap 179) to give effect to the Convention on Limitation of Liability for Maritime Claims 1976.

Building and Construction Industry Security of Payment Act 2004 (A57/2004)

Pursuant to the Building and Construction Industry Security of Payment Act (Commencement) Notification 2005 (S1/2005), the Building and Construction Industry Security of Payment Act 2004 will come into operation in stages on two separate dates:

•    effective from 3 January 2005: sections 1, 28 and 40; and

•    effective from 1 April 2005: sections 2, 3, 4, 29 to 39, 41 and 42 and Parts II to V.

Limited Liability Partnerships Act 2005 (A5/2005)

The Limited Liability Partnerships Act 2005 (A5/2005) (‘LLP Act’) has been gazetted on 14 February 2005. The LLP Act will come into force on a date to be appointed.

The LLP Act introduces a new investment vehicle – the LLP, into Singapore. As an investment vehicle, LLPs accord investors with limited liability, privacy (as the accounts are not publicly filed) and tax transparency (as the partnership is not treated as a distinct tax entity from the partners).

Telecommunications (Amendment) Act 2005 (A10/2005)

The Telecommunications (Amendment) Act (A10/2005) (‘Amendment Act’) has been gazetted on 16 February 2005. The Amendment Act comes into force with effect from 16 February 2005, save for sections 10 and 11.

Essentially, the Amendment Act is intended to update the Telecommunications Act (Cap 323) to take into account new market conditions and realities faced by an increasingly competitive telecommunications market. Some of the main changes which the Amendment Act introduces deal with the following issues:

•    control of telecommunications licensees;

•    sharing of telecommunication infrastructure for broadcasting services;

•    provision of space for sharing of telecommunication equipment;

•    enhanced penalty framework; and

•    additional option in reconsideration and appeal process.

The Telecommunications (Amendment) Act 2005 also makes a related amendment to the Broadcasting Act (Cap 28) to give powers to the Media Development Authority of Singapore (‘MDA’) to give directions to a broadcasting licensee to ensure co-ordination and co-operation with a telecommunication licensee in the use or sharing of any installation, plant or system, owned or used by the telecommunication licensee

Trust Companies Bill 2005 (B1/2005)

The Trust Companies Bill 2005 was tabled for first reading in Parliament on 25 January 2005.

The Monetary Authority of Singapore (‘MAS’) has issued an Explanatory Brief wherein it is stated that the Bill will be read for a second time and discussed at the next available Parliamentary sitting.

The MAS had earlier conducted a public consultation on the proposals for the new regulatory framework for trust companies and a draft of the Bill.

Under the current TCA, registration of trust companies is voluntary. Under the new regulatory framework, licensing will be mandatory. Higher standards of regulation and supervision will also be established for trust companies. There will be limited exemptions from licensing and lighter regulation for certain entities set out in the Bill and Regulations.

Building and Construction Industry Security of Payment Regulations 2005 (S2/2005)

Pursuant to s 41 of the Building and Construction Industry Security of Payment Act 2004, the Minister for National Development issues the Building and Construction Industry Security of Payment Regulations 2005, which will be operative with effect from 1 April 2005.

The Building and Construction Industry Security of Payment Regulations 2005 deals mainly with the forms to be used and the information or documents to be furnished in relation to payment claim, payment response, adjudication applications, adjudication responses and adjudication determinations. It also provides for adjudication review applications and the eligibility criteria for adjudicators.

Business Trusts Regulations 2005 (S11/2005)

On 6 January 2005, the following regulations were issued under the Business Trusts Act (‘BTA’) (A30/2004) and the Securities and Futures Act (‘SFA’) (Cap 289) to provide for the details of the constitution, registration and offering of business trusts (‘BTs’):

•    Business Trusts Regulations 2005 (S11/2005);

•    Business Trusts (Summary Financial Statement) Regulations 2005 (S10/2005);

•    Business Trusts (Appeals) Regulations 2005 (S9/2005); and

•    Securities and Futures (Offers of Investments) (Business Trusts) Regulations 2005 (S7/2005).

All of the above regulations are in operation from 6 January 2005.

By way of background, the BTA and the Securities and Futures (Amendment) Act 2004 came into force from 12 October 2004. The BTA regulates the governance of business trusts. The Securities and Futures (Amendment) Act 2004 amends the SFA to provide for the regulation of offers of units and derivatives of units in BTs and take-over proceedings in relation to BTs, and to deal with the treatment of property trusts.

The MAS had previously announced that they would only be accepting applications for the registration of BTs when the regulations under the BTA and the SFA (that provide for the offerings of BTs) have been issued.

Elizabeth Wong

Allen & Gledhill