JUDGMENT

Wong Kian Kheong JCA

A. Background

[1] We shall refer to parties as they were in the High Court .

[2] The Plaintiff company (Plaintiff) is in the business of selling scrap metal.

[3] The Plaintiff entered into an agreement dated 1 January 2015 with Southern Steel Bhd (SSB) wherein the plaintiff sold scrap metal to SSB [Sale Agreement (Plaintiff-SSB)].

[4] The 1st Defendant company (1st Defendant) owns-

(1) a dumb barge, "Budget 21" (Barge); and

(2) a tugboat, "Budget 11" (Tugboat).

This Judgment shall refer to the Barge and Tugboat collectively as the "2 Vessels".

[5] The 2 Vessels are managed and operated by the 3rd Defendant company (3rd Defendant).

[6] The 2nd Defendant company (2nd Defendant) was the former owner of the 2 Vessels and was named as the carrier of the cargo in the two bills of lading issued in this case (2 Bills of Lading). The contents of the 2 Bills of Lading are similar. Three clauses of the 2 Bills of Lading are relevant in this case, namely:

(1) cl 5(2) [cl 5(2) (2 Bills of Lading)] provided as follows, among others-

"The Merchant [Plaintiff] undertakes that no claim or allegation shall be made against any person or Vessel whatsoever, other than the carrier [2nd Defendant], including but not limited to, the carriers, servants or agents... whether directly or indirectly,... and if any claim or allegation should nevertheless to be made to defend, indemnify and hold harmless the Carrier against all consequences thereof. Without prejudice to the foregoing, every such person and Vessel shall have the benefit of all the provisions herein benefiting the Carrier... "

[Emphasis added]; and

(2) cl 6(1)(A) incorporated the "Hague Rules" in the 2 Bills of Lading [ cl 6(1)(A) (2 Bills of Lading)].

[Emphasis added].

[7] The 1st, 2nd and 3rd Defendants (referred collectively in this judgment as the "Defendants") are related companies within the same group of companies.

[8] On or about 9 October 2027, SSB issued a Purchase Order to the plaintiff (SSB's PO) for the supply of 4,000 metric tonnes (MT) of scrap metal (Cargo). To fulfil SSB's PO-

(1) the plaintiff provided its own scrap metal from its stockyard in Sandakan [Scrap Metal (Sandakan)]; and

(2) the plaintiff purchased scrap metal from Sanaja Sdn Bhd (Sanaja) in Kota Kinabalu [Scrap Metal (Kota Kinabalu)].

[9] To fulfil the PO, the plaintiff entered into a contract with the 3rd Defendant by way of a "Fixture Note" dated 13 November 2017 (FN). The FN provided for, among others, as follows:

(1) the 2 Vessels were chartered by the plaintiff;

(2) scrap iron (Cargo) was to be loaded in Sandakan and Kota Kinabalu respectively;

(3) the Cargo was to be transported and discharged in Penang Port; and

(4) according to cls 7(h) and 10-

"7. Shipment terms: FJOST Terms

...

(h) It is the shipper's responsibility (sic) to ensure shipment is fully covered (sic) by marine insurance against all risk coverage at their own cost.

...

10. Shipment terms:

The owner of the vessel [defined in the FN as the 3rd Defendant] is fully responsible and must comply with the voyage recommendations as specified by the towage surveyor Kasi Malaysia S/B or other surveyor in the towage survey certificate."

[Emphasis added]

[10] The Plaintiff had appointed KM Marine Technical & Inspection Sdn Bhd (KM) to carry out-

(1) draught surveys (to ascertain the weight of the Cargo) when the Cargo was loaded onto the Barge in Sandakan and Kota Kinabalu on 3 December 2017 and 10 December 2017 respectively (Draught Surveys). According to the Draught Surveys, there was a total of 4,399.971 MT of Cargo consisting of-

(a) 2,194.448 MT of Cargo (loaded in Sandakan); and

(b) 2,205.523 MT of Cargo (loaded in Kota Kinabalu); and

(2) towage surveys of the Tugboat in Sandakan and Kota Kinabalu (Towage Surveys).

[11] The Draught Surveys and Towage Surveys were conducted by KM in the presence of the Master of the Tugboat, Mr Darius Dose (Master), and Crew of the Tugboat (Crew). KM issued a "Towage Survey Certificate" which stated as follows, among other