PT Adidaya Energy Mandiri v MS First Capital Insurance: Marine Insurance Claim for Constructive Total Loss

In PT Adidaya Energy Mandiri v MS First Capital Insurance Ltd, before the Singapore International Commercial Court, the plaintiff, PT Adidaya Energy Mandiri, claimed US$4,700,000 from the defendant, MS First Capital Insurance Ltd, for the constructive total loss of a Single Point Mooring Buoy, and US$2,165,528.71 for Sue and Labour charges. The defendant denied liability, alleging breaches of warranty and failure to comply with the claims notification clause. The court, presided over by Jeremy Lionel Cooke IJ, ruled in favor of the defendant, finding that the plaintiff had breached policy warranties and failed to comply with the claims notification clause, thus negating the defendant's liability. The court also found that the SPM was not a constructive total loss.

1. Case Overview

1.1 Court

Singapore International Commercial Court

1.2 Outcome

Judgment for Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

PT Adidaya Energy Mandiri sues MS First Capital Insurance for a constructive total loss claim. The court ruled against the plaintiff due to breaches of warranty and failure to comply with claims notification clause.

1.7 Decision Date

30 August 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
PT Adidaya Energy Mandiri	Plaintiff	Corporation	Claim Dismissed	Lost	Bazul Ashhab bin Abdul Kader of Oon & Bazul LLP Prakaash s/o Paniar Silvam of Oon & Bazul LLP Nurulhuda Atiqah Binte Sawal of Oon & Bazul LLP
MS First Capital Insurance Ltd	Defendant	Corporation	Judgment for Defendant	Won	Kristin Ng Wei Ting of Rajah & Tann Singapore LLP Bhandari Jainil of Rajah & Tann Singapore LLP Aleksandar Anatoliev Georgiev of Rajah & Tann Singapore LLP Nathaniel Loh of Rajah & Tann Singapore LLP

3. Judges

Judge Name	Title	Delivered Judgment
Jeremy Lionel Cooke	International Judge	Yes

4. Counsels

Counsel Name	Organization
Bazul Ashhab bin Abdul Kader	Oon & Bazul LLP
Prakaash s/o Paniar Silvam	Oon & Bazul LLP
Nurulhuda Atiqah Binte Sawal	Oon & Bazul LLP
Kristin Ng Wei Ting	Rajah & Tann Singapore LLP
Bhandari Jainil	Rajah & Tann Singapore LLP
Aleksandar Anatoliev Georgiev	Rajah & Tann Singapore LLP
Nathaniel Loh	Rajah & Tann Singapore LLP

4. Facts

The plaintiff claimed from its insurer, the defendant, the sum of US$4,700,000 as the insured value of a Single Point Mooring Buoy.
The SPM was damaged in collisions with the storage vessel attached to it.
The plaintiff also claimed US$2,165,528.71 as Sue and Labour charges.
The defendant denied liability on several grounds, including breaches of express warranties.
The SPM was at risk of sinking due to side shell fractures and flooding.
The plaintiff tendered a Notice of Abandonment on 22 May 2019, which was rejected by the defendant.
The plaintiff sold the SPM to a related company for US$400,000, considered a considerable undervalue.

5. Formal Citations

PT Adidaya Energy Mandiri v MS First Capital Insurance Ltd, Suit No 6 of 2021, [2022] SGHC(I) 14

6. Timeline

Date	Event
2018-04-26	SPM successfully commissioned and installed at the Yetagun Gas Field.
2018-07-01	Collision between the SPM and the Bratasena occurred.
2018-07-11	Collision between the SPM and the Bratasena occurred.
2018-07-13	Collision between the SPM and the Bratasena occurred.
2018-07-14	Port hawser was seen to be stuck at the SPM housing bollard.
2018-07-08	SPM showed signs of tilting.
2018-07-10	Draft of the SPM at Compartment No 5 was 4.5m instead of the normal 2.8m.
2018-07-17	Water was found in the Compartments.
2018-08-21	SPM seen to be listing approximately 34 degrees.
2018-08-29	Emergency repairs were effected.
2018-09-05	Plaintiff notified the defendant of a potential claim under the Policy.
2018-09-24	Emergency repairs were effected.
2018-10-10	Survey on the SPM and the FSO was carried out.
2018-10-11	Survey on the SPM and the FSO was carried out.
2018-10-16	Job Card No 37 was issued for review.
2018-10-31	Underwater survey took place.
2018-11-16	Underwater survey took place.
2018-12-01	Procedure for the permanent repair of the Compartments was approved for construction.
2018-12-17	Work Pack document for the SPM Repair Works was created.
2018-12-29	Emergency repairs were effected.
2019-01-02	Repairs were complete.
2019-03-18	ABS informed the plaintiff that the December 2018 repairs could not be accepted as permanent.
2019-03-20	Plaintiff’s personnel discussed the need to redo the permanent repair.
2019-04-04	Drawings for the installation of the larger box plating in the Compartments were issued for approval.
2019-04-15	Meeting took place in which a repair plan dated 14 April 2019 was discussed with ABS.
2019-05-17	Drawings for the installation of the larger steel boxes in the Compartments may have been approved.
2019-05-21	Larger steel boxes had been fabricated and tack welded in place on the SPM.
2019-05-22	Plaintiff tendered the NOA to the defendant.
2019-05-28	Drawings of the modified SPM without skirts had been approved by ABS.
2019-05-31	Defendant rejected the NOA.
2019-06-07	Larger box or Compartment No 4 had been fully welded into place.
2019-06-11	Plaintiff informed the defendant of its intention to sell the SPM to SPMT.
2019-06-25	Plaintiff sold the SPM to SPMT.
2019-11-24	Repairs for both Compartments were accepted by ABS.
2020-03-01	SPM was classified.
2022-05-18	Trial concluded.
2022-08-31	Judgment reserved.

7. Legal Issues

Breach of Contractual Warranties
- Outcome: The court found that the plaintiff had breached clauses 1 and 8 of the policy warranties, excusing the defendant from liability.
- Category: Substantive
- Sub-Issues:
  - Failure to ensure operation by suitably trained personnel
  - Failure to adopt suitable precautions and preservation measures
Compliance with Claims Notification Clause
- Outcome: The court found that the plaintiff failed to comply with the claims notification clause, a condition precedent to the defendant's liability.
- Category: Procedural
- Sub-Issues:
  - Timeliness of notification
  - Awareness of incident giving rise to a claim
Constructive Total Loss
- Outcome: The court found that the SPM was not a constructive total loss, as a prudent uninsured would not have incurred the costs necessary to repair/replace the skirting.
- Category: Substantive
- Sub-Issues:
  - Reasonable cost of repairs exceeding insured value
  - Prudent uninsured owner's perspective
Admissibility of Hearsay Evidence
- Outcome: The court admitted the Chronology as a statement made in the ordinary course of business, but cautioned its use due to its hearsay nature.
- Category: Procedural
- Sub-Issues:
  - Statements made in the ordinary course of business
  - Interests of justice
- Related Cases:
  - [2015] 2 SLR 686
Waiver of Right to Abandon
- Outcome: The court found that the plaintiff waived its right to abandon the SPM by acting inconsistently with an intention to abandon, including selling the SPM at an undervalue.
- Category: Substantive
- Sub-Issues:
  - Actions inconsistent with intention to abandon
  - Sale at undervalue

8. Remedies Sought

Monetary Damages
Indemnification

9. Cause of Actions

Breach of Contract
Claim for Constructive Total Loss
Claim for Sue and Labour Charges

10. Practice Areas

Insurance Litigation
Commercial Litigation

11. Industries

Oil and Gas
Insurance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Blu-Sky Solution Ltd v Be Caring Ltd	High Court of Justice	Yes	[2021] EWHC 2619	England and Wales	Cited regarding the admissibility of extrinsic evidence to contradict a written contract.
Gimpex Ltd v Unity Holdings Business Ltd and others and another appeal	Court of Appeal	Yes	[2015] 2 SLR 686	Singapore	Cited for its interpretation of Section 32(1)(b)(iv) of the Evidence Act regarding the admissibility of hearsay evidence.
The “Yero Carras”	N/A	Yes	[1935] 52 Lloyd’s Rep 34	N/A	Cited for the principle of restoring the insured to be of the same classification and as nearly as possible the same thing as that which was valued.
Royal Boskalis v Mountain	N/A	Yes	[1997] LRLR 523	N/A	Cited regarding the test for determining whether expenses were reasonably incurred for the purpose of averting or minimizing a loss.
The Brillante Virtuoso	N/A	Yes	[2015] 1 Lloyd’s Rep 651	N/A	Cited regarding the principle that an assured who has given a notice of abandonment which has been declined may lose the right to claim for a total loss by acting inconsistently with a continuing intention to abandon the insured property to the insurer.
The WD Fairway	N/A	Yes	[2009] 2 AER (Comm) 399	N/A	Cited regarding the principle that preservation of the right to treat the constructive total loss as if it were an actual total loss is dependent upon the assured continuing to be prepared to abandon the subject matter insured to the insurer.
ICS v British Traders	N/A	Yes	[1981] 2 Lloyd’s Rep 460	N/A	Cited regarding the principle that the assured should be able to recover all extraordinary expenses reasonably incurred by him where he can demonstrate that a prudent assured person, mindful of an obligation to prevent a loss, would incur expense of an unusual kind.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Marine Insurance Act 1906	United Kingdom
Insurance Act 2015	United Kingdom
Evidence Act 1893	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Single Point Mooring Buoy
Constructive Total Loss
Sue and Labour Charges
Marine Insurance
Breach of Warranty
Claims Notification Clause
Notice of Abandonment
Operational Activities
Static Tow
Weathervaning

15.2 Keywords

Marine Insurance
Constructive Total Loss
Breach of Warranty
Claims Notification
Singapore International Commercial Court

17. Areas of Law

Area Name	Relevance Score
Marine Insurance	85
Insurance	75
Contract Law	65
Contractual terms	60
Evidence	50
Admissibility of evidence	45
Shipping Law	40
Admiralty and Maritime Law	30

16. Subjects

Marine Insurance
Contract Law
Commercial Dispute Resolution