Bumi Jaya Salvage & Engineering Sdn Bhd v Brave Worth Shipping Co., Limited

Facts

Bumi Jaya Salvage & Engineering Sdn Bhd, a Malaysian salvage company, was engaged by Brave Worth Shipping Co Ltd, owner of the vessel KMAX PRO, after the vessel caught fire and grounded at Penang Port on 27 October 2022 while carrying medium density fibreboard. After a first contract on the BIMCO Wreckfixed 2010 form, the parties signed a second contract on 13 January 2023 on the BIMCO Wreckstage 2010 form to lighten the vessel by discharging cargo in a set sequence. It fixed a lump sum of US$1,650,000 payable in three instalments, the first being an advance payment of US$825,000 due before noon on 16 January 2023, and made the owner responsible for appointing a contractor to remove scheduled waste.

The owner paid only part of the advance payment and did not confirm appointing a waste contractor. The salvor stopped work in February 2023. It sued in HC/OC 258/2023 and, when the owner did not file a notice of intention to contest or not contest, obtained default judgment on 7 June 2023 for unpaid invoices, tug standby charges to be assessed, an indemnity, contractual interest and costs. The owner, which said it had not received the papers left at its registered address in Hong Kong, applied in HC/SUM 3046/2023 to set the judgment aside. It accepted the judgment was regularly entered.

Issues

1. Whether the owner showed a prima facie defence to the claim for the unpaid balance of the advance payment
2. Whether there were triable issues on the second stage instalment, the variation orders, the tug standby charges and the pollution indemnity
3. Whether the court should exercise its discretion to set aside or vary the default judgment given the delay and its reasons

Holding

The Assistant Registrar allowed the owner's application in part, describing it as substantially allowed. The default judgment was set aside except for US$275,000 under the advance payment invoice and contractual interest on it. Judgment was varied to that sum plus US$12,375 in contractual interest, continuing at US$4,125 per month until payment, with the claimant's costs of the default judgment reserved. The owner was directed to file its notice of intention to contest or not contest by 4.00 pm on 3 January 2024, and costs of the application were left for written submissions.

Reasoning

The court first explained that the choice of standard form allocates risk in a wreck removal contract, and the Wreckstage form sits between a daily-hire form and a fixed-price form by splitting the lump sum into instalments payable at stages. Under the contract terms, the advance payment was due and irrevocably earned at noon on 16 January 2023 and was not tied to any stage of the work, so the owner's argument that it was earned only after certain holds were emptied failed. No other defence was raised to the unpaid US$275,000.

The second stage instalment was different. It was tied to completing discharge of dry cargo from holds 1 and 2, and it was common ground hold 1 was not fully discharged. The salvor pointed to no term allowing payment for partial discharge, and the owner's evidence that work could have continued raised triable issues. The variation order claim was not pleaded as resting on any separate agreement, and no documents supported one. The tug was the work boat to be provided within the lump sum, and the pollution indemnity clause relied on for the tug charges and the indemnity covered only consequences of pollution escaping from the vessel, of which there was no evidence.

On discretion, a delay of around three months was not an extended period, and failing to receive the papers at a registered address that was not its place of business did not show a deliberate litigation strategy. Prejudice could be met by costs. Because the advance payment claim faced a different defence from the others, it was severable and could stand alone.

From the judgment