paginator.

book Page 458 Sunday, September 20, 2009 1:56 AM

458 SINGAPORE LAW REPORTS (REISSUE) [1995] 2 SLR(R)

The “Indriani”

[1995] SGHC 139

High Court — Admiralty in Rem No 567 of 1993 (Registrar’s Appeal No 214 of

1994)
G P Selvam J
22 February; 31 May 1995

Admiralty and Shipping — Admiralty jurisdiction and arrest — Action in rem —

Charterer claiming against shipowner for making false allegations to another
regarding condition of goods when shipped — Whether claim for malicious or
injurious falsehood one “arising out of any agreement relating to the carriage of goods
in a ship or to the use or hire of a ship” under s 3(1)(h) High Court (Admiralty
Jurisdiction) Act (Cap 123, 1985 Rev Ed) — Whether claim within admiralty
jurisdiction of High Court — Whether sufficient connection between claim and
charterparty such that claim arising out of charterparty

Words and Phrases — “Arising out of” — Section 3(1)(h) High Court (Admiralty
Jurisdiction) Act (Cap 123, 1985 Rev Ed)

Facts
In this appeal, the main question was whether the plaintiff charterer’s claim
against the defendant shipowner was one “arising out of any agreement relating
to the carriage of goods in a ship or to the use or hire of a ship” as provided in
s 3(1)(h) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Rev Ed)
(“the Act”). The plaintiff entered into a charterparty with the defendant for the
plaintiff’s goods to be transported to a buyer. The plaintiff had obtained from the
defendant a bill of lading that described the goods to have been shipped in
apparent good order and condition. Upon discharge of the goods, they were
found in a bad condition. The defendant subsequently wrote a letter to the buyer
alleging that the cargo was not in good condition at the time of loading, which
implied that the plaintiff had made a false representation to the buyer that the
goods were in good condition when they were not. The buyer refused to pay the
plaintiff, who then sued the defendant for the loss “for breach of a charterparty
[and/or] misrepresentation, deceit and or fraud in and about the condition of
[the goods]” and later added a claim in tort for malicious or injurious falsehood.
The defendant applied to stay all further proceedings on the ground that the
parties had agreed under the charterparty to submit disputes to arbitration. The
assistant registrar dismissed the application on the basis that the claim, being
“connected with” the charterparty, came within s 3(1)(h) of the Act.

Held, dismissing the defendant’s appeal:

The words “arising out of any agreement” in s 3(1)(h) of the Act meant
“connected with the agreement” rather than the narrower “arising under the
agreement”, and the real issue in the claim being the propriety of the plaintiff’s
obtaining and later tendering the clean bill of lading, the claim was very closely
“connected with” the bill of lading and an essential part of the plaintiff’s case
paginator.book Page 459 Sunday, September 20, 2009 1:56 AM

[1995] 2 SLR(R) The “Indriani” 459

against the defendant. It was not so connected only in a general sense and did
not merely form part of the background facts: at [20] and [23].

Case(s) referred to
Antonis P Lemos, The [1985] AC 711; [1985] 1 All ER 695 (folld)
Saint Anna, The [1983] 1 WLR 895; [1983] 2 All ER 691 (folld)
Sennar, The [1983] 1 Lloyd’s Rep 295 (folld)
St Elefterio, The [1957] P 179; [1957] 2 All ER 374 (folld)

Legislation referred to
High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Rev Ed) s 3(1)(h)
(consd)
Administration of Justice Act 1956 (c 46) (UK) s 1(1)(h)
Supreme Court Act 1981 (c 54) (UK) s 20(2)(h)

Jainil Bhandari (Khattar Wong & Partners) for the plaintiff;

Belinda Ang (Ang & Partners) for the defendant.

[Editorial note: The appeal to this decision in Civil Appeal No 25 of 1995 was
dismissed by the Court of Appeal (Yong Pung How CJ, L P Thean JA and
M Karthigesu JA) on 12 January 1996. See [1996] 1 SLR(R) 5.]

31 May 1995
G P Selvam J:
1 This is an appeal from the decision of Assistant Registrar Mr Ronald
Choo. The question relates to the admiralty jurisdiction of the High Court.
2 The amended indorsement of claim in the writ reads as follows:
The plaintiffs’ claim is for the sum of US$567,389.57 or damages
arising from a breach of a charterparty dated 27 March 1993 made
between the plaintiffs and defendants in respect of the defendants’
vessel ‘Indriani’ and or misrepresentation, deceit, fraud and or for
negligence/carelessness, conspiracy to defraud/injure, malicious
falsehood and or unlawful interference in and about the condition of
about 3,356.68 metric tons of Chinese Sesame Seed Expeller prior to
loading on board the said vessel.
3 The defendants say that the claim does not come within the admiralty
jurisdiction of the High Court. The plaintiffs on the other hand assert that it
falls under s 3(1)(h) of the High Court (Admiralty Jurisdiction) Act
(Cap 123) (“the Act”). The section reads as follows:
The admiralty jurisdiction of the High Court shall be as follows, that is
to say, jurisdiction to hear and determine any of the following
questions or claims:
…
paginator.book Page 460 Sunday, September 20, 2009 1:56 AM

460 SINGAPORE LAW REPORTS (REISSUE) [1995] 2 SLR(R)

(h) any claim arising out of any agreement relating to the carriage of
goods in a ship or to the use or hire of a ship.

Background facts
4 The allegations of facts which give rise to the action are as follows.
5 The plaintiffs, a Singapore company, on 22 February 1993 contracted
to sell a certain quantity of Chinese sesame seed expeller (“the cargo”) to an
Indonesian company called PT Metro Inti Sejahtera Indonesia (“Metro”).
The sales contract provided for payment by letter of credit. One of the
documents called for by the credit was a “clean on board bill of lading”.
This requirement imposed an obligation on the plaintiffs to ship the cargo
in good conditions. It also said that stale and charterparty bills of lading
were acceptable. The price was US$465 per mt “CNFFO”, that is cost and
freight free out.
6 As the obligation for arranging transport rested with the plaintiffs,
they entered into a charterparty on 27 March 1993 with the defendant
shipowners for the carriage of the cargo from Lianyungang in China to
Indonesia for delivery to Metro. On or about 20 April 1993, the cargo was
shipped from Lianyungang and a clean bill of lading was issued by the
defendants. The cargo was discharged at Jakarta between 30 April 1993 and
2 May 1993. Upon discharge it was found that the cargo was in a bad
condition. On 10 June 1993, the defendants wrote a letter to Metro alleging
that the cargo was wet, warm and malodorous at the time of loading at
Lianyungang and that the cargo was rejected by the ship’s agents. If that
allegation is true the plaintiffs were not only in breach of the sales contract
in not shipping cargo in good condition but also by knowingly tendering a
false bill of lading under the credit and thereby making a false
representation to Metro that the cargo was in good condition when in fact it
was not. The plaintiffs allege that as a result of this letter, Metro refused to
pay the plaintiffs for the cargo.
7 On 24 August 1993, the plaintiffs commenced this admiralty action in
rem against the defendants’ vessel Indriani. Their original indorsement of
claim, read as follows:
The plaintiffs’ claim is for the sum of US$567,389.57 or damages
arising from a breach of a charterparty dated 27 March 1993 made
between the plaintiffs and defendants in respect of the defendants’
vessel ‘Indriani’ and or misrepresentation, deceit and or fraud in and
about the condition of about 3,356.68 metric tons of Chinese Sesame
Seed Expeller prior to loading on board the said vessel.
The defendants were at all material times the owners and or charterers
and or in possession or in control of the ‘Indriani’, and were at the time
of issue of the writ herein, the owners of the ‘Alas’, ‘Banowati’, ‘Embo’,
‘Gayatri’ and ‘Hanjani’.
paginator.book Page 461 Sunday, September 20, 2009 1:56 AM

[1995] 2 SLR(R) The “Indriani” 461

8 An appearance was entered by the defendants on 21 January 1994 and

on 30 March 1994 the defendants applied for an order to stay all further
proceedings on the ground that the parties to the action had agreed under
the charterparty to submit their dispute to arbitration in Singapore. The
plaintiffs contended that they were not claiming under the charterparty.
They said in essence that their claim was in the nature of the tort of the
misrepresentation and relied on the letter of 10 June 1993. The defendants
replied by saying that the facts as alleged by the plaintiffs did not disclose a
cause of action because the plaintiffs did not rely on the misrepresentation
to their detriment. Assistant Registrar Mr Ronald Choo agreed with the
defendants on this point as the element of reliance was necessary to found a
cause of action in tort. The plaintiffs did not rely on the alleged
misrepresentation contained in the letter of 10 June 1993 to their detriment.
The assistant registrar, however, went on to suggest to the plaintiffs that the
law recognises a tort where A makes a false statement to B and B relies on
that statement to act in a manner which is detrimental to C. In such cases it
may be possible for C to sue A, the maker of the false statement, for the
damage caused to C under the tort of “injurious falsehood” or “malicious
falsehood”. The application was adjourned to enable the plaintiffs to amend
their indorsement to include the cause of action suggested by the assistant
registrar. The writ was duly amended. The defendants then raised the
jurisdictional issue.
9 The assistant registrar considered the question whether the plaintiffs’
claim for injurious falsehood was “connected with” either the bill of lading
or the charterparty in the light of the decision of the House of Lords in The
Antonis P Lemos; Samick Lines Co Ltd v Owners of the Antonis P Lemos
[1985] AC 711; [1985] 1 All ER 695, in which it was held that the words
“arising out of” in s 3(1)(h) meant the wider meaning of “connected with”.
He came to the conclusion that the plaintiffs’ claim was “connected with”
the charterparty and bill of lading. Accordingly the plaintiffs fell under
s 3(1)(h) of the Act. The defendants’ application, accordingly, was
dismissed.
10 Dissatisfied with the decision of the assistant registrar the defendants
appealed to a judge in chambers. I heard and dismissed the appeal. The
defendants have lodged an appeal against my decision. I shall, therefore,
state the grounds of my decision.

The nature of the plaintiffs’ claim

11 The first observation that must be made about the plaintiffs’ claim is
that it is not for loss or damage to the cargo that was carried in the
defendants’ ship. A claim for damaged cargo either in contract or tort can
only be brought by the receivers of the cargo, that is Metro. They acquired
the right by reason of the acceptance of the bill of lading in question. Under
the law of Singapore they had a reasonably good case against the defendants
paginator.book Page 462 Sunday, September 20, 2009 1:56 AM

462 SINGAPORE LAW REPORTS (REISSUE) [1995] 2 SLR(R)

to do so because under the bill of lading the goods were stated to have been
“shipped in apparent good order and condition”. The defendants would be
estopped from saying the cargo was not in such condition as stated in the
bill of lading. The defendants’ letter, however, stated that the cargo was not
in apparent good order and condition because the letter from the
defendants to Metro said it was “wet, warm and ill smelling”. Thereby the
defendants exposed the plaintiffs to a claim from Metro.
12 The plaintiffs’ case is that the letter made a false allegation against the
plaintiff in that the plaintiffs were aware of the alleged bad quality of the
cargo but nevertheless insisted on shipping the goods. Thus, they said, they
had a claim for injurious falsehood against the defendants. The real
question is whether the claim arose out of an agreement for the carriage of
goods in a ship. The bill of lading is an agreement, and the only agreement
between the defendants and Metro, for the carriage of goods in a ship.
13 In The St Elefterio; Schwarz & Co (Grain), Ltd v St Elefterio ex Arion
(Owners) [1957] P 179; [1957] 2 All ER 374, the plaintiffs, one-time holders
of bills of lading, issued an admiralty writ in rem by which they made a
claim for damages against the defendant shipowners in respect of the
carriage of cattle from Montevideo to Liverpool. Bills of lading were issued
to shippers of the cargo who were also the charterers of the ship. The
shippers indorsed the bills of lading in blank and handed them to the
plaintiffs who in turn passed them over to the ultimate purchasers of the
cargo. The purchasers rejected the shipping documents on the ground that
the bills of lading were dated 31 January 1957, whereas the goods were
shipped in February. The action was brought under statutory provisions
similar to our High Court (Admiralty Jurisdiction) Act. The defendants
applied to set aside the writ on the ground that the court had no
jurisdiction. The plaintiff said that the claim “arose out of an agreement
relating to the carriage of goods in a ship”, namely, the bills of lading.
Willmer J held that the words of s 1(1)(h) of the Act of 1956 are wide
enough to cover claims whether in contract or in tort arising out of any
agreement relating to the carriage of goods in a ship. Thus a claim in tort
relating to the contents of a bill of lading was permitted to be brought under
the provision in question. The contents of the bills of lading, that is the
wrong dating, led to rejection of the bills of lading under the sales contract
between the plaintiffs and their buyer.
14 Sheen J in The Sennar [1983] 1 Lloyd’s Rep 295 took the same view in
relation to a claim relating to a wrong date in the bill of lading. “It seems to
me” said Sheen J (at 302), “that giving the words of par. (h) their ordinary
meaning the claim does arise out of an agreement relating to the carriage of
goods in a ship”.
15 In The Saint Anna [1983] 1 WLR 895; [1983] 2 All ER 691 the
plaintiffs issued an admiralty action in rem to enforce an arbitration award
made pursuant to an arbitration agreement in a charterparty. Sheen J held
paginator.book Page 463 Sunday, September 20, 2009 1:56 AM

[1995] 2 SLR(R) The “Indriani” 463

that the claim arose out of an agreement relating to the carriage of goods in
a ship. The reasoning was that the arbitration agreement and the award
were both essential elements of the plaintiffs’ cause of action. It followed,
therefore, that an indirect connection of the claim with an agreement
relating to the carriage of goods in a ship or for use or hire of a ship was
sufficient to bring the claim within the provisions.
16 These cases show that if the agreement is relevant to establish the
plaintiffs’ claim then their claim is within the provision. The statutory
words have been construed widely in favour of the claimant against the
shipowner.
17 In all those cases the plaintiff and the defendants were parties to the
agreement in question. In Antonis P Lemos ([9] supra) it was held that both
parties must be connected to the agreement. In that case the plaintiffs
subchartered the defendants’ ship under a time charter, with liberty to
sublet. They then entered into a voyage charterparty to carry grain from the
United States of America to Egypt and guaranteed the ship’s arrival draught
would not exceed 32 ft in salt water. On arrival at Alexandria the draught of
the ship exceeded 32 ft and she was unable to berth until she had reduced
her draught by discharging some of her cargo into lighters. That operation
caused delay and involved the plaintiffs in additional expense. The plaintiffs
brought an action in rem claiming damages against the defendants for their
negligence in allowing the ship to be loaded to such an extent that her
draught on arrival was excessive. The defendants sought to set aside the writ
and warrant of arrest granted to the plaintiffs on the ground that the High
Court had no admiralty jurisdiction in respect of the plaintiffs’ claim since
it did not fall within the words as provided by s 20(2)(h) (at 716): “any claim
arising out of any agreement relating to … the use or hire of a ship”. Sheen J
made the order sought setting aside the writ and warrant of arrest. On
appeal by the plaintiffs, the Court of Appeal allowed the appeal.
18 On further appeal by the defendants, the House of Lords held that the
words “any claims arising out of any agreement relating to … the use or
hire of a ship” were wide enough to cover claims whether in contract or in
tort arising out of any agreement relating to the carriage of goods in a
vessel. For such an agreement to come within the provision it was not
necessary that the claim in question be directly connected with some
agreement of the kinds referred to in it or that the agreement be one made
between the two parties to the action themselves.
19 Lord Brandon of Oakbrook giving the judgment of the House said at
727:
I would readily accept that in certain contexts the expression ‘arising
out of’ may, on the ordinary and natural meaning of the words used, be
the equivalent of the expression ‘arising under’, and not that of the
wider expression ‘connected with’. In my view, however, the
paginator.book Page 464 Sunday, September 20, 2009 1:56 AM

464 SINGAPORE LAW REPORTS (REISSUE) [1995] 2 SLR(R)

expression ‘arising out of’ is, on the ordinary and natural meaning of
the words used, capable, in other contexts, of being the equivalent of
the wider expression ‘connected with’. Whether the expression ‘arising
out of’ has the narrower or the wider meaning in any particular case
must depend on the context in which it is used.

20 Later at 731 he said:

I am not persuaded that the expression ‘arising out of’ in s 20(2)(h) of
the Act of 1981 should be given the narrow meaning of the expression
‘arising under’, rather than the wider meaning of the expression
‘connected with’. On the contrary, I am satisfied, that the expression
‘arising out of’ should be given the second and wider meaning.

21 He gave four grounds for his conclusions. They are:

The first ground is the principle, referred to earlier, that a domestic
statute designed to give effect to an international convention should, in
general, be given a broad and liberal construction. The second ground
is that, for the reasons given when discussing the Gatoil case [Gatoil
International Inc v Arkwright-Boston Manufacturers Mutual Insurance
Co] [1985] AC 255, I think that there is a clear indication in the
arrangement and wording of art 1(1) of the Convention that the
expression ‘arising out of’ is there used in the wider of the two
meanings of which it is capable. The third ground is that, on the basis
that the second ground is correct, the rearrangement and rewording of
art 1(1) of the Convention contained in s 1(1) of the Act of 1956, and
followed in s 20(2) of the Act of 1981, cannot have been intended to
substitute a narrow meaning for the expression ‘arising out of’ in those
two subsections for the wide meaning which it clearly has in art 1(1) of
the Convention. The fourth ground is that the English authorities, The
St Elefterio [1957] P 179 and The Sennar [1983] 1 Lloyds Rep 295,
support the wider meaning of the expression ‘arising out of’ in
s 1(1)(h) of the Act of 1956 and s 20(2)(h) of the Act of 1981. The St
Elefterio [1957] P 179, as I said earlier, stood unchallenged for some 26
years until the present case, and, in the interval, the legislature saw fit,
in the Act of 1981, to re-enact the provision construed in that case in
the same terms as before.

22 The House further rejected the shipowners’ contention that “arising

out of” should be given the narrower construction of “arising under”.

The decision
23 In this case the crux of the plaintiffs’ case against the defendants is
that the letter of 10 June 1993 contained statements to the effect that the
plaintiffs knowingly shipped cargo which was not in apparent good order
and condition. It said that the cargo, to the knowledge of the plaintiffs, was
wet and ill-smelling. It meant that the plaintiffs obtained a clean bill of
lading without justification and in breach of the terms of the sales contract
tendered a bill of lading containing false statements which would entitle
paginator.book Page 465 Sunday, September 20, 2009 1:56 AM

[1995] 2 SLR(R) The “Indriani” 465

buyers to refuse payment or full payment. This inevitably led to the

question between the plaintiffs and defendants of whether a clean bill of
lading was correctly issued. To make out their case of malicious falsehood
the plaintiffs must plead and prove that the clean bill of lading was correctly
obtained from the defendants and tendered to Metro. The real issue
therefore is the propriety of the plaintiffs’ obtaining and later tendering the
clean bill of lading. This claim, therefore, is very closely “connected with”
the bill of lading and an essential part of the plaintiffs’ case against the
defendants. It was not so connected only in a general sense. Nor did it
merely form part of the background facts. The claim, therefore, was clearly
envisaged by s 3(1)(h) of the High Court (Admiralty Jurisdiction) Act.

Headnoted by Arvin Lee.