"Wreck Removal Contracts" and Their Scope : High Court Sets Out Details in its Recent Judgment

"Wreck Removal Contracts" and Their Scope : High Court Sets Out Details

In a recent judgment [citiation : Bumi Jaya Salvage & Engineering Sdn Bhd v Brave Worth Shipping Co [2023] GCtR 2119 (SGHC) ], the expanse and scope of wreck removal contracts was outlined.  The decision will have an impact on disputes and transactions in Singapore jurisdiction. 

While laying down the law in the backdrop of a vessel catching fire and then grounded off at the port, various other crucial legal issues were discussed by High Court. The case arose out of a marine casualty where the broad outlines of wreck removal contracts were explained. 

What Wreck Removal Contracts Must Cater 

It has been explained that "wreck removal contracts must cater for a far greater degree of uncertainty and risks as compared to other types of maritime contracts such as a charterparty".

It was also held that "the standard form wreck removal contract chosen by parties to govern their contractual relations has a significant bearing on how parties intend to cope with the uncertainty inherent in any wreck removal operation and allocate risks: [quoting The Law of Wreck at p 610]. Put simply, the standard form sets out an overall framework for the allocation of risk, which the parties can alter through specific amendments to meet the precise needs of the operation".

Setting Aside a Judgment in Default of Appearance

The judgment then explains the the legal principles governing the setting aside of judgments entered in default of appearance under the revoked Rules of Court (Cap 322, R 5, 2014 Rev Ed) which were said to continue to be relevant to an application under the ROC 2021 to set aside a judgment in default of the notice of intention to contest or not contest: quoting Spamhaus Technology Ltd v Reputation Administration Service Pte Ltd [2023] SGHC 294 at [24]–[26]; Management Corporation Strata Title Plan No 4572 v Kingsford Development Pte Ltd and others [2023] SGHCR 8 at [8]; Jeffrey Pinsler, Singapore Court Practice (LexisNexis, 2023) at para 6.6.8. 

It has been held that "the defendant must first meet the threshold requirement of establishing a prima facie defence, in the sense of showing that there are triable or arguable issues: quoting Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907 (“Mercurine”) at [60] & [98]; U Myo Nyunt (alias Michael Nyunt) v First Property Holdings Pte Ltd [2021] 2 SLR 816 (“U Myo Nyunt) at [61]. The assessment of whether there is a prima facie defence is an evaluative assessment on the merits of the defence based on the evidence, albeit on a preliminary basis, and is no stricter than the test to obtain permission to defend in an application for summary judgment: see U Myo Nyunt at [64]."

Prima Facie Defence

It is only after the defendant has shown a prima facie defence that the issue of the court’s discretion arises: quoting U Myo Nyunt at [64]. In exercising this discretion, the court will balance the existence of a prima facie defence against other factors such as the length of the delay, the reason(s) for the delay, and any prejudice that the claimant would suffer if the judgment were to be set aside.

Where a portion of the default judgment is severable from the rest and is devoid of any triable issues, the court can allow the default judgment to stand only for that part and set aside the rest of the judgment: quoting Powercom Yuraku Pte Ltd v Sunpower Semiconductor Ltd and others [2023] 4 SLR 867 at [16]-[28].

Conclusion 

Bumi Jaya Salvage & Engineering Sdn Bhd v Brave Worth Shipping Co [2023] GCtR 2119 (SGHC) sets out meaningful propositions on marine casualties which will go a long way to clarify existing doubts over wreck removal contracts.

Written by 

Vishal

Delhi

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