The recent Singapore High Court decision in the case of Wilmar Trading Pte Ltd v Heroic Warrior Inc. revisited the issue of charterers’ bill of lading, and the issues of proof in claiming against the owners for negligence resulting in cargo damage. The claims arose in this case as a result of a shipboard incident which resulted in both cargo as well as vessel damage.
The claim was brought by the Plaintiff cargo buyer/voyage charterer against the Defendant ship-owner, premised on two causes of action – contract and negligence.
Cause of Action in Contract
In order for the Plaintiff to bring an action in contract, the Plaintiff must first establish the contractual relationship between the Plaintiff and Defendant. Although the Plaintiff pleaded that there was either an express or implied contract between the parties, the Court held that neither were in fact made out.
An express contractual relationship can be evidenced from a charterparty between the parties. However, given that none of three charterparties was entered between the plaintiff and defendant, the Court held that an express contract of carriage could not have arisen between the parties.
A bill of lading is sufficient evidence of a direct contractual relationship between the parties, giving rise to an implied contractual relationship. The Plaintiff pleaded the same, relying on original bills of lading for the cargo that would have been issued, but for the incident.
In determining whether there was a contractual relationship between the Plaintiff and Defendant, the Court found on facts that the Defendant was not a contractual carrier since the contemplated bill of lading was to be issued by an agent of one of the charterers, and not the Defendant.
Cause of Action in Negligence
The Plaintiff’s alternative cause of action was a claim in negligence. Despite initially raising a claim under common law bailment as well as a claim in tort of negligence, The Plaintiff eventually only proceeded with the latter. Nonetheless, the Plaintiff successfully discharged the legal burden of proof on breach and causation for several of its claims.
The Court affirmed the latest Singapore position, in NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another  2 SLR 588, that proprietary interest was not necessary for the Plaintiff to gain the title to sue for substantial damages in the tort of negligence as pure economic loss is claimable in Singapore law. In the context of a claim by cargo interests against the vessel for negligence, the determinative factor is whether a duty of care is owed by the shipowner to cargo interests.
The Plaintiff successfully established that a shipowner Defendant owed the Plaintiff, as a cargo interest, a duty of care under the test established in Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency  4 SLR(R) 100. Given that no case law was cited by the court in making this finding, we believe that this is the first case in which the “Spandeck” test has been applied in Singapore to establish a duty of care between shipowner and cargo interests.
On the facts of the case, the Court found that the shipowner had breached its duty of care. Causation was also established from several factors including the seawater contamination, structural weaknesses of the tank as well as over-pressurisation of the tank. These findings pinned the liability on the Defendant.
Common Law Bailment vs Tort of Negligence
Notwithstanding that the Plaintiff only proceeded with its claim in negligence, the Court addressed the difference of the legal burden between the two claims.
The legal burden of proof falls on opposite sides. If the plaintiff had pursued a claim in common law bailment, the onus would have fallen on the Defendant to show that it had exercised reasonable care, and was thus not negligent. This is because under a bailment claim, the question of breach is easily dealt with once the cause of the incident is clear.
On the other hand, in pursuing a tort of negligence, the onus falls on the Plaintiff to satisfy the “Spandeck” test before it may succeed.
A Plaintiff cargo interest may therefore have an easier time proving its case in a claim in common law founded on bailment than in negligence. In the former, the onus is on the Defendant to prove that it had exercised reasonable care, whilst the Plaintiff cargo interest may only have to prove that the Defendant was in possession of the goods when the damage occurred.
In the latter, the Plaintiff is put to a stricter test to prove a case of negligence. The mere fact that the Defendant’s defence is not made out does not discharge the Plaintiff’s legal burden, as the Plaintiff has to establish a duty of care, breach of duty as well as causation.
1) The court holds a strict standard in the determination of a contractual right to sue, whether it is via a charterparty or bills of lading. This makes it of paramount importance to understand the parties that you have contracted with, and in general the cargo interests will find it usually more disadvantageous to hold charterers’ bills of lading.
2) It is made clear that a duty of care arises between a cargo interest and a shipowner under Spandeck test, setting a precedent that makes it easier for a cargo interest to pursue a negligence case against the shipowner in Singapore.
3) Cargo interests can alternatively pursue a claim against the shipowner for bailment, which has a lower burden of proof (for cargo interests) and in fact shifts the burden on the ship owners to prove that it had exercised reasonable care, and therefore, not negligent.
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This update is for general information only and is not intended to constitute legal advice. JTJB has made all reasonable efforts to ensure the information provided is accurate at the time of publication.