DMC Category Rating: Confirmed

This case note is contributed by Ang & Partners, the International Contributor to the website for Singapore

Facts
The "Energy Searcher" was a drill ship and was owned since 1999 by Jet Holding Limited ("JHL"), the first Plaintiff in this action. On 16 March 2001, its slip joint, which is a piece of oil-drilling equipment, broke due to tensile overload during normal operational conditions. The second Plaintiff, Jet Shipping Limited ("JSL") was the previous registered owner of the "Energy Searcher". The third Plaintiff, Jet Drilling (S) Pte Ltd ("JDL") was at all material times the manager of the "Energy Searcher". The fourth Plaintiff, Maurel Et Prom ("MEP") claimed as assignee of the respective rights, title and interest of the first three Plaintiffs.

The first Defendant, Cooper Cameron (Singapore) Pte Ltd ("Cameron") was the Original Equipment Manufacturer ("OEM") of the slip joint. The second Defendant was Stork Technology Services Asia Pte Ltd ("Stork"). Cameron had sub-contracted the refurbishment of the subject slip joint to Stork. The Plaintiffs sued Cameron for its losses and Cameron sued Stork for an indemnity.

The Plaintiffs’ case was that Stork had machined the fractured slip joint (thereby seriously reducing wall thickness) at the location where the failure occurred. Stork denied that it had machined anywhere near the location of the fracture. The Plaintiffs then contended that Stork should have at least detected the inadequate wall thickness. As against Cameron, the Plaintiffs’ principal contention was that Cameron failed properly to inspect the slip joint and to supervise Stork in the refurbishment of the fractured slip joint.

In a 55-page judgment, Justice Belinda Ang allowed the Plaintiffs’ claim and also allowed Cameron to claim for an indemnity against Stork.

Judgment
Title to sue Cameron and Stork
1. Under contract, the Judge found that the party with title to sue was JSL, the previous registered owners. The Judge found that JDL, as manager of the Energy Searcher, had entered into the contract of refurbishment in 1998 as agent for JSL and as principal. At that time, JSL were still the registered owners of the Energy Searcher.

2. The parties with title to sue Cameron in negligence and negligent misstatement (see 7. below) were JSL and JHL, the current registered owners. As a matter of law, only a person with either legal ownership of or possessory title to the property at the time when the loss or damage occurred could sue in negligence for damages. JHL could sue as the registered owners of the ship. As for JSL, the evidence was that after the ship was sold by JSL to JHL, JSL bareboat chartered the ship from JHL. JSL could therefore sue as disponent owners and bailee in possession. Even though JSL had a contract with Cameron, a separate duty of care in tort could still arise.

3. As against Stork, for the same reasons, the Judge found that the persons with title to sue Stork in negligence and for negligent misstatement were JSL and JHL.

4. As for MEP’s right to sue as an assignee, the Judge found that the deeds of assignment were not admitted as evidence. The assignment to MEP was therefore not proved and MEP had no standing to bring this action.

Implied terms in contract with Cameron
5. The Judge held that, as against Cameron, there were implied into the contract terms that Cameron would exercise appropriate skill and care in the refurbishment of the slip joint.

Cameron’s responsibility for the loss
6. The Judge found it indisputable on the evidence that Cameron was negligent. The pre-inspection was deficient and the inadequate wall thickness remained undiscovered throughout the refurbishment process. Cameron failed to provide Stork with the proper drawings necessary for the refurbishment. Cameron could not escape contractual liability simply because it had delegated performance to Stork.

7. The Plaintiffs’ alternative case for negligent misstatement failed on the evidence. The warranty or representation was allegedly from the statements in the Certificate of Compliance issued by Cameron after completion of the refurbishment works. As it appeared that the Certificate was issued gratuitously, it could not be treated as a warranty breached by Cameron. Furthermore, there was no proven reliance on the Certificate.

8. Cameron argued that JSL and JHL, through the conduct of their servants or agents, caused or contributed to the loss and damage. Essentially, Cameron complained that JSL and JHL did not properly maintain the slip joint, which was left amongst a pile of risers for 28 months before JSL decided to use it. Cameron also complained that JSL was negligent in failing to properly inspect the slip joint prior to using it. The Judge dismissed both complaints as she found that the alleged intervening causes were not of so powerful a nature that they had caused or contributed to the loss.

Stork’s liability for the loss
9. Stork denied owing any duty of care to the Plaintiffs and argued that JSL having contracted with Cameron was barred from suing Stork in tort. The Judge rejected Stork’s argument. The parties were in a relationship of close proximity. They both shared premises and JDL knew and approved of Stork being Cameron’s authorised contractor. The damage arose, not only because Cameron failed to provide drawings, but also from Stork’s deliberate choice to proceed using wrong and insufficient drawings. The Judge thus found that there was thus no necessity to rule on whether Stork had machined at the areas that failed.

10. On the Plaintiffs’ complaint about negligent certification, the Judge agreed with Stork that their finished works report was not issued to JSL and thus there was no evidence of reliance – essential for this cause of action.

Damages
11. The Plaintiffs’ claims for general damages were estimated at US$21 million. Amongst other things, the Plaintiffs claimed for the replacement cost of equipment lost or damaged beyond repair, repairs to damaged equipment and hiring of a substitute Blow Out Preventor ("BOP"). The Judge awarded the Plaintiffs US$1 million for the lost BOP. The Judge however awarded the Plaintiffs only nominal damages of S$10 for the other claims as the Plaintiffs had failed to prove the admissibility of any document tendered in support of these claims.

12. The Judge further found that both Cameron and Stock were equally to blame for the incident.Stork had to indemnify Cameron for 50% of Cameron’s liability to JSL and JHL.

Comment
This case is a useful illustration of the relationship between contractual and tortious duties. It also serves as a powerful reminder to solicitors on the care they need to exercise in ensuring that documents are properly admitted as evidence in court.