The "Asia Star": Mitigation of Damages in Voyage Charterparty Dispute

The Court of Appeal of Singapore heard an appeal in the case of The "Asia Star" [2010] SGCA 12, involving a dispute between the owner of the Asia Star (appellant) and a Malaysian company (respondent) concerning a voyage charterparty. The respondent claimed damages for the appellant's failure to deliver the vessel. The assistant registrar initially awarded US$302,000, but the High Court increased this amount. The Court of Appeal allowed the appeal, finding that the respondent failed to reasonably mitigate its loss by not hiring an available alternative vessel, the Puma, and restored the assistant registrar's decision with an arithmetical correction, awarding US$399,500 in damages.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Admiralty

1.4 Judgment Type

Written Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal concerning mitigation of damages after failure to deliver a vessel under a voyage charterparty. The court allowed the appeal, restoring the assistant registrar's decision.

1.7 Decision Date

18 March 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
The "Asia Star"	Appellant	Other	Appeal Allowed	Won	Thio Ying Ying, Loh Yong Kah Alan
Respondent (Malaysian Company)	Respondent	Corporation	Damages Awarded	Lost	Vinodh Coomaraswamy, David Chan, Tan Hui Ru Louisa

3. Judges

Judge Name	Title	Delivered Judgment
Chan Sek Keong	Chief Justice	Yes
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes
V K Rajah	Justice of the Court of Appeal	Yes

4. Counsels

Counsel Name	Organization
Thio Ying Ying	Kelvin Chia Partnership
Loh Yong Kah Alan	Kelvin Chia Partnership
Vinodh Coomaraswamy	Shook Lin & Bok LLP
David Chan	Shook Lin & Bok LLP
Tan Hui Ru Louisa	Shook Lin & Bok LLP

4. Facts

The respondent chartered the Asia Star to transport palm oil.
The Asia Star was delayed due to bad weather and a ban on beef tallow.
The vessel's cargo tanks were found unfit for receiving cargo.
The respondent attempted to secure an alternative vessel, the Puma.
Negotiations with the Puma's owners broke down over freight rate.
The respondent did not inform suppliers and Agrima of the Asia Star's rejection.
Indomas and Agrima cancelled contracts due to delays.

5. Formal Citations

The “Asia Star”, Civil Appeal No 63 of 2009, [2010] SGCA 12
The “Asia Star”, , [2009] SGHC 91

6. Timeline

Date	Event
2003-11-01	Respondent entered into the Charterparty with the appellant.
2003-09-01	Respondent entered into a series of contracts with Agrima.
2003-12-01	Respondent entered into a series of contracts with Agrima.
2003-12-30	Respondent chartered Chembulk Barcelona.
2003-12-27	Original loading period for the Asia Star began.
2004-01-04	Original loading period for the Asia Star ended.
2004-01-05	Appellant notified respondent of further delay.
2004-01-15	Loading to commence.
2004-01-19	Asia Star berthed at Belawan; respondent sent solicitor's notice asserting breach.
2004-01-20	Appellant informed respondent it had made efforts to improve the condition of Asia Star’s cargo tanks.
2004-01-21	Asia Star left Belawan; respondent instructed shipbroker to look for replacement vessel.
2004-01-22	Indomas cancelled all contracts with the respondent.
2004-01-23	Agrima cancelled the bulk of the Agrima contracts.
2004-02-01	Loading to begin on Chembulk Barcelona.
2004-02-13	Respondent commenced Admiralty in Rem No 30 of 2004 against the appellant.
2010-03-19	Judgment reserved.

7. Legal Issues

Mitigation of Damages
- Outcome: The court held that the respondent failed to take reasonable steps to mitigate its loss by not chartering the available alternative vessel, the Puma, and was therefore limited in the amount of damages it could recover.
- Category: Substantive
- Sub-Issues:
  - Reasonableness of mitigation measures
  - Failure to mitigate loss
  - Financial capacity to mitigate
- Related Cases:
  - [1912] AC 673
  - [1968] AC 1130
  - [1999] 1 WLR 1792
  - [1984] 1 Lloyd’s Rep 614
  - (1878) 9 Ch D 20
  - [1967] 2 Lloyd’s Rep 509
  - (1906) 94 LT 492
  - [1997] 3 SLR(R) 906
  - [1996] 2 Lloyd’s Rep 171
  - [1932] AC 452
  - [2004] 3 SLR(R) 288
  - (1948) 82 Ll L Rep 202
  - (1995) 163 AR 241
  - [1907] AC 291
  - [2007] 2 SLR(R) 181
  - [2008] SGHC 230
  - (1862) 175 ER 1250; 2 F&F 709
  - (1997) 152 DLR (4th) 453
Breach of Charterparty
- Outcome: The court affirmed the earlier finding that the appellant breached the charterparty by failing to provide the vessel as agreed.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Charterparty

10. Practice Areas

Admiralty Litigation
Commercial Litigation
Shipping Disputes

11. Industries

Shipping
Commodities Trading

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
The “Asia Star”	High Court	Yes	[2008] SGHC 92	Singapore	Refers to the Assistant Registrar’s judgment on the assessment of damages, which was later reversed by the High Court and then restored by the Court of Appeal.
The “Asia Star”	High Court	Yes	[2009] SGHC 91	Singapore	Refers to the High Court judge’s decision reversing the Assistant Registrar’s assessment of damages, which is the subject of the current appeal.
The “Asia Star”	High Court	Yes	[2009] 2 Lloyd’s Rep 387	Singapore	Cites the High Court's judgment, which is also reported in Lloyd's Law Reports, regarding the assessment of damages.
The “Asia Star”	High Court	Yes	[2006] 3 SLR(R) 612	Singapore	Refers to the High Court's decision on liability, which found that the appellant had breached the Charterparty.
The “Asia Star”	Court of Appeal	Yes	[2007] 3 SLR(R) 1	Singapore	Refers to the Court of Appeal's decision dismissing the appeal against the High Court's decision on liability.
British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, Limited	House of Lords	Yes	[1912] AC 673	United Kingdom	Cited for the principle that an aggrieved party must take reasonable steps to mitigate its loss and cannot recover damages for loss that could have been avoided.
Garnac Grain Company Incorporated v H M F Faure & Fairclough Ltd and Others	House of Lords	Yes	[1968] AC 1130	United Kingdom	Cited for the principle that the burden of proving failure to mitigate falls on the defaulting party.
Mitigation of Damages in Contract and The Meaning of Avoidable Loss	N/A	Yes	(1989) 105 LQR 398	N/A	Cited as an article by Michael G Bridge discussing the theoretical underpinnings of the principle of mitigation.
Patel and Another v Hooper & Jackson (a firm)	N/A	Yes	[1999] 1 WLR 1792	United Kingdom	Cited to illustrate that the principle of mitigation can penalize an aggrieved party for delaying entry into a falling market, even if the delay causes no literal loss.
Gebruder Metelmann GmbH & Co KG v NBR (London) Ltd	N/A	Yes	[1984] 1 Lloyd’s Rep 614	United Kingdom	Cited for the principle that an aggrieved party may recover additional loss incurred in reasonable attempts to mitigate, subject to foreseeability.
Dunkirk Colliery Company v Lever	Court of Appeal	Yes	(1878) 9 Ch D 20	United Kingdom	Cited for the principle that the reasonableness inquiry is based on what a reasonable and prudent man in the trade would have done.
Harlow & Jones, Ltd v Panex (International), Ltd	N/A	Yes	[1967] 2 Lloyd’s Rep 509	United Kingdom	Cited for the principle that the principle of mitigation does not require an aggrieved party to nurse the defaulting party’s interests at the expense of its own interests.
Smailes and Son v Hans Dessen and Co	N/A	Yes	(1906) 94 LT 492	United Kingdom	Cited for the principle that the aggrieved party must act with both the defaulting party’s interests as well as its own interests in mind.
OCBC Securities Pte Ltd v Phang Yul Cher Yeow and another action	High Court	Yes	[1997] 3 SLR(R) 906	Singapore	Cited for the principle that the standard of reasonableness required of the aggrieved party will not be too difficult to meet.
Fyffes Group Ltd and Caribbean Gold Ltd v Reefer Express Lines Pty Ltd and Reefkrit Shipping Inc (The “Kriti Rex”)	N/A	Yes	[1996] 2 Lloyd’s Rep 171	United Kingdom	Cited for the principle that if a substitute vessel is available on reasonable terms, the charterer ought to mitigate its loss by engaging that vessel.
Banco de Portugal v Waterlow and Sons, Limited	House of Lords	Yes	[1932] AC 452	United Kingdom	Cited for the principle that measures taken by a party in an emergency should not be weighed in nice scales at the instance of the party whose breach caused the difficulty.
Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd	High Court	Yes	[2004] 3 SLR(R) 288	Singapore	Cited for the principle that mitigation must be viewed through a commercial lens and measured by commercial common sense.
Lesters Leather & Skin Company, Ltd v Home & Overseas Brokers, Ltd	N/A	Yes	(1948) 82 Ll L Rep 202	United Kingdom	Cited for the principle that a prospective purchaser is not bound to go hunting all over the globe to find replacement goods.
Elizabeth Jean Costello and Mary Ann Dickhoff v The City of Calgary	Alberta Court of Queen’s Bench	Yes	(1995) 163 AR 241	Canada	Cited by the Judge in the lower court, but the Court of Appeal in this case found that it was not particularly instructive.
The Clippens Oil Company, Limited v The Edinburgh and District Water Trustees	House of Lords	Yes	[1907] AC 291	United Kingdom	Cited for the principle that the defaulting party must take the aggrieved party as it finds the latter.
Ho Soo Fong and another v Standard Chartered Bank	Court of Appeal	Yes	[2007] 2 SLR(R) 181	Singapore	Cited for the principle that an aggrieved party was not obliged to take measures which it could not afford or which were financially prohibitive and onerous.
Ho Pak Kim Realty Co Pte Ltd v Revitech Pte Ltd	High Court	Yes	[2008] SGHC 230	Singapore	Cited for the proposition that a party which seeks to rely on its financial position bears the burden of proving its own financial position.
Mitchell and Another v Kahl and Others	N/A	Yes	(1862) 175 ER 1250; 2 F&F 709	United Kingdom	Cited for the principle that where the aggrieved party has to incur substantial additional expenditure in chartering a replacement vessel, it should ordinarily notify the defaulting party.
Costello et al v City of Calgary	Alberta Court of Appeal	Yes	(1997) 152 DLR (4th) 453	Canada	Cited for the principle that hindsight should play no part in the evaluation of the plaintiffs’ conduct.
Hexter v Pearce	N/A	Yes	[1900] 1 Ch 341	United Kingdom	Cited for the remedy of specific performance of contracts relating to land.
Rudd v Lascelles	N/A	Yes	[1900] 1 Ch 815	United Kingdom	Cited for the remedy of specific performance of contracts relating to land.
Marsan v Grand Trunk Pacific Railway Co	N/A	Yes	(1912) 1 DLR 850	Canada	Cited for the principle that if other suitable premises were in fact available for the plaintiff for his purpose I think it was incumbent upon the defendant to show that these could have been secured without unreasonable expense and trouble.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Voyage Charterparty
Mitigation of Damages
Freight Rate
Dead Freight
Laycan
Cargo
Vessel
Charterer
Shipowner
Palm Oil
Agrima Contracts
Puma
Asia Star

15.2 Keywords

Charterparty
Mitigation
Damages
Shipping
Voyage
Vessel
Freight
Asia Star
Puma

16. Subjects

Admiralty
Shipping
Contract Law
Charterparty
Mitigation of Damages

17. Areas of Law

Admiralty Law
Contract Law
Charterparty Law
Shipping Law
Civil Procedure
Mitigation of Damages