PROFINDO PTE LTD V ABANI TRADING PTE LTD

[2013] SGHC 10, Singapore High Court, Judith Prakash J, 16 January 2013

Sale of goods - CFR terms - Demurrage - Carrying vessel forced to leave berth halfway through the unloading process - Suspension of demurrage - Calculation of demurrage as between a seller and a buyer in a "cost and freight" ("CFR") sale contract - Buyer claiming for shortfall upon discharge - Seller's delivery obligation fulfilled at ship's rail at port of loading

On 19 May 2009 Profindo had agreed to sell 2,750 mt of cement to Abani. The cargo was to be loaded in China and delivered to a port in Madagascar. The terms of the sale were contained in a pro forma invoice. At the discharge port, Abani would discharge the goods within the allowable laytime of 2.75 days, calculated on the basis that 2,750 mt of cargo would be discharged at the rate of 1,000 mt per day. The contract was on a CFR basis. The vessel having commenced discharge at Diego Suarez, Madagascar, the port authorities unexpectedly required her to interrupt discharge and leave the berth. The parties disagreed on whether the interruption also suspended laytime. Sellers ultimately paid the shipowners a compromise sum, but in the meantime had suffered loss of earnings as a result of being blacklisted by shipowners. In this litigation, sellers claimed for the sum paid in demurrage, loss of earnings and for reimbursement of port disbursements. Buyers counterclaimed alleging that the cement delivered was not of satisfactory quality and that there was a shortfall in the quantity delivered. This was the seller's appeal of the decision of the district judge upon the issues of suspension of demurrage, loss of earnings, shortfall of cement, and costs.

The judge allowed the appeal, except for the claim for loss of earnings.

(1) The burden of proof was on the buyer to show that laytime could be and had been suspended. Under a CFR or CIF contract, the seller was not under any duty to ensure the actual physical delivery of the goods and it was therefore logical that the risk of delay that was interruption of loading before the expiry of laytime should be borne by the buyer, especially when the contract included a demurrage clause which was designed to transfer such risk to the buyer. Further, under the sale contract, the buyer should be liable for port charges even when the vessel was not berthed, and it must therefore also be liable for demurrage for that period. The compromise sum would be awarded instead of that originally claimed because the seller had not consistently claimed the higher sum, although it could have been argued that the demurrage clause in the CFR sale contract between the parties was a free-standing provision of an independent contract unconnected with the contractual arrangements between the seller and the shipowners.

(2) As for the claims for loss of earnings, the seller had failed to satisfy the requirements of remoteness and mitigation.

(3) As for the claim for shortfall, the buyer had counterclaimed for the price of 4 mt of cement out of the delivery of 2,750, because only 2,746 mt had been discharged. This claim failed as the seller's delivery obligation had been fulfilled across the ship's rail at the port of loading, where the full quantity had been recorded in the bill of lading.