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DMC/SandT/07/13
The "Pacific Vigorous"
Singapore High Court: Belinda Ang Saw Ean J: 9 June 2006; [2006] 3 SLR 374;
[2006] SGHC 103
Ang & Partners for the Claimant, Agritrade International Pte. Ltd.
Rajah & Tann for the "Pacific Vigorous"
CARRIAGE OF GOODS BY SEA: DELIVERY WITHOUT BILLS OF LADING: UNILATERAL PART
PAYMENT BY BUYER: WHETHER SELLER’S ACCEPTANCE OF PART PAYMENT AMOUNTED TO
ELECTION NOT TO SUE SHIPOWNER
Summary
Where a shipowner delivered cargo without production of the bills of lading
against letters of indemnity, the fact that the seller of the cargo had accepted
part payment of the purchase price from the buyer did not amount to an election
on its part not to pursue a claim against the ship for misdelivery. The
principles of election, at common law and in equity, clarified.
DMC Rating Category: Confirmed
This Case Note was contributed by Ang &
Partners, the
Website’s International Contributors for Singapore
Facts
The Claimant, "Agritrade", sold a cargo of coal to Bhatia
International Limited ("Bhatia"), who were sub-charterers of the ship
"Pacific Vigorous" from the head charterers Eitzen Bulk A/S –
("Eitzen"). The cargo was loaded in Muara Satui, Indonesia in February
2005 and carried to the Port of Pipavav in India, where it was delivered without
production of the bills of lading, against letters of indemnity provided by
Bhatia to Eitzen. Eitzen in turn gave back-to-back letters of indemnity to the
shipowner. Bhatia disputed the quality of the goods, but instead of rejecting
them, delivered them to its end buyers and paid a unilaterally reduced price to
Agritrade. Agritrade remained the holder of the bills of lading. It accepted the
reduced price as part payment, then commenced an admiralty action against the
owners of "Pacific Vigorous" for the misdelivery to Bhatia. The
shipowner argued that delivery to Bhatia was with Agritrade’s consent and,
alternatively, that Agritrade’s acceptance of part payment amounted to an
election that precluded it from recovering damages from the shipowner.
Agritrade applied for summary judgment (an expedited process on
the basis that there is no defence which needs to go to a full trial) against
the shipowner. The Assistant Registrar granted the shipowner leave to defend the
action at trial. Agritrade appealed to the High Court.
Judgment
(1) The defence that the cargo was released to Bhatia with
the consent of the claimant was unsustainable. The release was against letters
of indemnity, not on the basis of any prior consent by Agritrade.
(2) Election at common law occurs where a person has two
inconsistent rights or courses of action, only one of which can be exercised. In
such a case, his choice by overt act communicated to the other party that he is
relying on one such right precludes him from later claiming the benefit of
another.
(3) Election in equity means that a party cannot both accept (approbate) an
instrument or judgment and reject (reprobate) it.
(4) In this case, there was no common law election because
Agritrade was not exercising two inconsistent rights. It had separate and
independent causes of action against two persons, against the shipowner for
conversion and against Bhatia for the balance of the sale price. These were
cumulative, and not alternative, remedies
(5) Even if there were alternative and inconsistent remedies,
the common law doctrine of election takes effect only where a stage is reached
where some choice has finally to be made. In this case, Agritrade had not
commenced proceedings against Bhatia for the price. Furthermore, acceptance of
part payment was not an unequivocal act which outwardly signified an election
under either common law or equity.
(6) One element common to both doctrines – namely election
at common law and election in equity - is that a party will not be held to have
made an election if he did not know that he had a right to elect. In the present
case, the shipowner did not show that the claimant had the requisite knowledge
of the existence of choice.
In consequence, Agritrade’s appeal succeeded and judgment was
entered in its favour.
Comment
The shipowner’s appeal to the Court of Appeal was withdrawn.
The High Court judgment is a useful exposition on the principles of election,
which differ from the doctrine of estoppel.
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