Seatrium v HJ Shipbuilding: Breach of Shipbuilding Sub-Contract over Welding Defects
Seatrium New Energy Ltd (formerly Keppel FELS Ltd) sued HJ Shipbuilding & Construction Co, Ltd in the General Division of the High Court of the Republic of Singapore, alleging breach of contract and negligence related to welding defects in the 'Floatel Endurance' vessel. Seatrium claimed damages for inspection and repair costs. HJ Shipbuilding denied liability, citing a variation in the contract (the Side Letter) that limited their obligations to warranty claims, which had expired. The court, presided over by Justice S Mohan, dismissed Seatrium's claim, finding that the Side Letter precluded Seatrium's claim beyond the expired warranty obligations.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Claim Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Seatrium (formerly Keppel FELS) sued HJ Shipbuilding for breach of contract due to welding defects in a vessel. The court dismissed Seatrium's claim, finding it was precluded by a prior agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Seatrium New Energy Ltd (formerly known as Keppel FELS Ltd) | Plaintiff | Corporation | Claim Dismissed | Lost | Wong Soon Peng Adrian, Sara Sim Hui Li, Wayne Yeo (Yang Weien), Sia Bao Huei |
| HJ Shipbuilding & Construction Co, Ltd (formerly known as Hanjin Heavy Industries and Construction Co Ltd) | Defendant | Corporation | Judgment for Defendant | Won | Tan Wee Kheng Kenneth Michael SC, Daryll Richard Ng, Ang Kaili, Shannon Yeo Feng Ting |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Wong Soon Peng Adrian | Rajah & Tann Singapore LLP |
| Sara Sim Hui Li | Rajah & Tann Singapore LLP |
| Wayne Yeo (Yang Weien) | Rajah & Tann Singapore LLP |
| Sia Bao Huei | Rajah & Tann Singapore LLP |
| Tan Wee Kheng Kenneth Michael SC | Kenneth Tan Partnership |
| Daryll Richard Ng | Virtus Law LLP |
| Ang Kaili | Virtus Law LLP |
| Shannon Yeo Feng Ting | Virtus Law LLP |
4. Facts
- Keppel contracted with Floatel to build a semi-submersible accommodation unit.
- Keppel subcontracted part of the work to Hanjin for the pontoons and lower columns.
- Welding defects were discovered in the pontoons after the vessel was delivered.
- Keppel undertook inspections and repairs at multiple shipyards.
- A 'Side Letter' agreement was made between Keppel and Hanjin regarding outstanding works.
- Keppel claimed Hanjin breached its contractual and tortious duties.
- Hanjin argued the Side Letter limited their liability to warranty obligations, which had expired.
5. Formal Citations
- Seatrium New Energy Ltd (formerly known as Keppel FELS Ltd) v HJ Shipbuilding & Construction Co, Ltd (formerly known as Hanjin Heavy Industries and Construction Co Ltd), Suit No 1074 of 2019, [2023] SGHC 264
6. Timeline
| Date | Event |
|---|---|
| Keppel agreed with Floatel International Ltd to design, engineer, construct, build, launch, test, sell and deliver a DSS20-NS-DP3 semi-submersible accommodation unit. | |
| Keppel appointed Hanjin as a sub-contractor for the project. | |
| Original deadline for Hanjin to complete the Works. | |
| Protocol of Delivery and Acceptance (Side Letter) agreed upon. | |
| Floatel accepted delivery of the Vessel. | |
| Floatel notified Keppel of welding defects in the pontoons of the Vessel. | |
| Keppel notified Hanjin of the defects. | |
| Vessel berthed and dry docked at Damen Verolme Rotterdam Shipyard for a second round of inspections and repairs. | |
| Vessel departed DVR shipyard for her next charter program in or around the North Sea. | |
| All repairs to the Vessel were completed and deemed satisfactory. | |
| Suit filed. | |
| Trial began. | |
| Judgment reserved. | |
| Judgment issued. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the defendant breached its contractual duties but the plaintiff's claim was precluded by the Side Letter.
- Category: Substantive
- Sub-Issues:
- Failure to meet contractual standards
- Defective workmanship
- Negligence
- Outcome: The court rejected the plaintiff's claim that the defendant owed a separate duty of care in tort.
- Category: Substantive
- Sub-Issues:
- Duty of care
- Standard of care
- Causation
- Contractual Interpretation
- Outcome: The court interpreted the Side Letter as precluding the plaintiff's claim beyond the warranty obligations.
- Category: Substantive
- Sub-Issues:
- Interpretation of Side Letter
- Effect of variation clauses
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Commercial Litigation
- Construction Disputes
11. Industries
- Construction
- Maritime
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| JSI Shipping (S) Pte Ltd v Teofoongwonglcloong (a firm) | High Court | Yes | [2007] 4 SLR(R) 460 | Singapore | Cited regarding the standard of reasonable care and avoiding the 'scapegoat effect' when assessing negligence. |
| Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency | Court of Appeal | Yes | [2007] 4 SLR(R) 100 | Singapore | Cited for the Spandeck test for establishing a duty of care in negligence. |
| MCST Plan No 1166 v Chubb Singapore Pte Ltd | High Court | Yes | [1999] 2 SLR(R) 1035 | Singapore | Cited regarding the principle that a party cannot avoid contractual limitations by founding a cause of action in tort. |
| The Jian He | Court of Appeal | Yes | [1999] 3 SLR(R) 432 | Singapore | Cited and distinguished regarding evading an exclusive jurisdiction clause by making a claim in tort. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | Court of Appeal | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the contextual approach to contractual interpretation. |
| CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal | Court of Appeal | Yes | [2018] 1 SLR 170 | Singapore | Cited for the contextual approach to contractual interpretation. |
| Xia Zhengyan v Geng Changqing | High Court | Yes | [2015] 3 SLR 732 | Singapore | Cited regarding the context in which a contractual document was made. |
| Oriental Investments (SH) Pte Ltd v Catalla Investments Pte Ltd | High Court | Yes | [2013] 1 SLR 1182 | Singapore | Cited regarding the elements to establish promissory estoppel. |
| Raymond Construction Pte Ltd v Low Yang Tong and Another | High Court | Yes | [1997] SGHC 262 | Singapore | Cited for the proposition that a defects liability clause does not preclude other remedies in the absence of clear words. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Welding defects
- Sub-Contract Works
- Side Letter
- Warranty obligations
- Condition of Class
- Pontoons
- Outstanding Items
15.2 Keywords
- breach of contract
- welding defects
- shipbuilding
- sub-contract
- side letter
- warranty
- negligence
16. Subjects
- Contract Dispute
- Construction Dispute
- Shipbuilding
17. Areas of Law
- Contract Law
- Construction Law
- Tort Law
- Shipbuilding Law