Seatrium New Energy v HJ Shipbuilding: Contractual Terms, Warranties & Estoppel

Seatrium New Energy Ltd (formerly known as Keppel FELS Ltd) appealed against the decision of the High Court of Singapore dismissing its claim against HJ Shipbuilding & Construction Co, Ltd (formerly known as Hanjin Heavy Industries and Construction Co Ltd) for defective work carried out by Hanjin pursuant to a subcontract between them in relation to a vessel. The Appellate Division of the High Court dismissed the appeal, holding that Seatrium's claim was precluded by the 5th paragraph of a Letter Agreement and that the warranty period had expired before the defects were discovered. The court also found that Hanjin was not estopped from denying liability and did not owe Seatrium a separate tortious duty of care.

1. Case Overview

1.1 Court

Appellate Division of the High Court of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Ex tempore judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal dismissed. The court held that Seatrium's claim was precluded by a contractual term and the warranty period had expired.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Seatrium New Energy Ltd (formerly known as Keppel FELS Ltd)AppellantCorporationAppeal DismissedLost
HJ Shipbuilding & Construction Co, Ltd (formerly known as Hanjin Heavy Industries and Construction Co Ltd)RespondentCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Kannan RameshJudge of the Appellate DivisionYes
See Kee OonJudge of the Appellate DivisionNo
Philip JeyaretnamJudge of the High CourtNo

4. Counsels

Counsel NameOrganization
Mark Tang Yu ZhongRajah & Tann Singapore LLP
Wong Soon Peng AdrianRajah & Tann Singapore LLP
Sara Sim Hui LiRajah & Tann Singapore LLP
Wayne Yeo (Yang Weien)Rajah & Tann Singapore LLP
Sia Bao HueiRajah & Tann Singapore LLP
Tan Wee Kheng Kenneth MichaelKenneth Tan Partnership
Daryll Richard NgVirtus Law LLP
Ang KailiVirtus Law LLP
Shannon Yeo Feng TingVirtus Law LLP

4. Facts

  1. Seatrium contracted with Floatel to build and deliver an accommodation support vessel.
  2. Seatrium subcontracted the fabrication, assembly, and erection of the vessel's pontoons and lower columns to Hanjin.
  3. Hanjin did not meet the original deadline to complete the works.
  4. Seatrium and Hanjin entered into a Side Letter, effectively a variation of the Sub-Contract.
  5. Seatrium completed the outstanding works and delivered the Vessel to Floatel on 16 April 2015.
  6. Floatel notified Seatrium of defects in the Vessel in mid-August 2016.
  7. Seatrium put Hanjin on notice of the defects on 24 August 2016.
  8. Hanjin asserted that Seatrium’s claim was subject to the warranty period which had since expired.

5. Formal Citations

  1. 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), Civil Appeal No 131 of 2023, [2024] SGHC(A) 26

6. Timeline

DateEvent
Agreement between Seatrium and Floatel International Ltd to build and deliver an accommodation support vessel.
Seatrium subcontracted the fabrication, assembly and erection of the pontoons and lower columns of the Vessel to HJ Shipbuilding & Construction Co, Ltd.
Original deadline for Hanjin to complete the Works.
Parties entered into a Side Letter, effectively a variation of the Sub-Contract.
Seatrium completed the outstanding works and delivered the Vessel to Floatel.
Floatel notified Seatrium of defects in the Vessel around mid-August 2016.
Seatrium put Hanjin on notice of the defects.
Hanjin replied that Seatrium’s claim was subject to the expired warranty period.
Vessel berthed for inspection in Rotterdam.
Inspection of Vessel completed in Rotterdam.
Seatrium attempted to discuss defects and repairs with Hanjin.
Seatrium attempted to discuss defects and repairs with Hanjin.
Seatrium sent a letter to Hanjin stating its position that Hanjin had breached its contractual and tortious duties.
Seatrium resolved further defects after another round of inspection and repairs.
Judge’s decision reported at 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) [2023] SGHC 264.
Civil Appeal No 131 of 2023 filed.
Judgment delivered.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that Seatrium's claim for breach of contract was precluded by the 5th paragraph of the Letter Agreement, save for a warranty claim under the Sub-Contract.
    • Category: Substantive
    • Sub-Issues:
      • Defective Work
      • Failure to Complete Works
  2. Warranty Obligations
    • Outcome: The court held that Hanjin was not liable under its warranty obligations as the warranty had expired before the defects were discovered.
    • Category: Substantive
    • Sub-Issues:
      • Latent Defects
      • Warranty Period
  3. Promissory Estoppel
    • Outcome: The court held that Hanjin was not estopped from denying liability for breach of the Sub-Contract.
    • Category: Substantive
  4. Duty of Care in Tort
    • Outcome: The court held that Hanjin did not owe Seatrium a separate tortious duty of care that was co-terminous with its contractual duties.
    • Category: Substantive

8. Remedies Sought

  1. 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 NameCourtAffirmedCitationJurisdictionSignificance
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)High CourtYes[2023] SGHC 264SingaporeThe current appeal is against the decision in this case.
GTMS Construction Pte Ltd v Ser Kim Koi (Chan Sau Yan (formerly trading as Chan Sau Yan Associates) and another, third parties)High CourtYes[2021] SGHC 9SingaporeCited for the principle that the warrantee may activate or enforce the warranty by calling upon the warrantor to make the necessary repairs or rectifications.
Management Corporation Strata Title Plan No 3556 (suing on behalf of itself and all subsidiary proprietors of Northstar @ AMK) v Orion-One Development Pte Ltd (in liquidation) and anotherHigh CourtYes[2020] 3 SLR 373SingaporeCited for the principle that if defects go unrectified, then the warrantor would be in breach of the warranty, and the warrantee is entitled to seek compensation for the loss caused by the breach.
Management Corporation Strata Title No 964 v Gordon Industrial Land Pte Ltd and anotherHigh CourtYes[1998] SGHC 365SingaporeCited for the principle that if defects go unrectified, then the warrantor would be in breach of the warranty, and the warrantee is entitled to seek compensation for the loss caused by the breach.
Gorski v General Motors of Canada LtdBritish Columbia Supreme CourtYes[1998] BCJ No 3106CanadaCited for the principle that a warranty does not cover latent defects that are brought to the defendant’s attention after the expiration of the warranty period.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Sub-Contract Works
  • Warranty Period
  • Letter Agreement
  • Side Letter
  • Outstanding Items
  • Latent Defects
  • Warranty Obligations

15.2 Keywords

  • Contractual Terms
  • Warranties
  • Promissory Estoppel
  • Duty of Care
  • Defective Work
  • Construction Dispute

17. Areas of Law

Area NameRelevance Score
Contractual terms95
Breach of Contract90
Contracts90
Equitable Estoppel80
Torts70
Negligence70
Misrepresentation60
Commercial Disputes50
Damages Assessment40
Personal Injury30

16. Subjects

  • Contract Law
  • Construction Law
  • Warranty
  • Estoppel
  • Tort