On 4 February 2002, the Red Gold collided with an offshore oil platform (D35-QA) owned by Sarawak Shell Bhd (Shell). The Red Gold was owned by South Sumatra Richfield Marine (S) Pte Ltd (the owner) and was managed and operated by Pacific Richfield Marine (S) Pte Ltd (PRM). At the time of the collision, the Red Gold was chartered to Petrokapal Sdn Bhd (Petrokapal), who had then entered into a spot charter with Shell.

On 17 January 2002, the Red Gold had been off hire for repairs to the main engine shaft and bow thruster. The repairs were completed by 2 February 2002 and the charter resumed at 11 am that day. On 4 February 2002, while discharging supplies at D35-QA, the Red Gold began to drift. The master attempted to correct the drift but failed because there was a problem with the control of the bow thruster which was stuck at 30 degrees. The Red Gold collided with the platform. It was later found by the chief engineer that the power card in respect of the pitching of the bow thruster in the power card box was out of its slot.

Shell commenced an in rem action seeking compensation for the damage to the platform. The owner, PRM and Petrokapal commenced an in personam action (the hire action) against Shell for the withholding of charter hire due to them. In the hire action, the owner, PRM and Petrokapal claimed that the outstanding hire had been wrongfully detained by Shell. Accordingly, the sum of USD 186,990.26 together with interest was due to them. The owner and PRM also claimed in tort against Shell for inducing a breach of Petrokapal’s contract with PRM, or for wrongful interference with the contract causing loss.

The following issues were considered by the Court in detail: first, whether the collision was caused by the negligence of the owner; secondly, whether the collision was an inevitable accident; thirdly, whether there was any contributory negligence on the part of Shell in respect of the collision; and fourthly, whether the owner was entitled to limit its liability under s 360 of the Merchant Shipping Ordinance 1952 (equivalent to art 1 of the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships​ 1957 (LLMC 1957)) due to the absence of actual fault or privity on its part.

Held: The owner was liable for causing the collision negligently. There was no contributory negligence on the part of Shell. The owner was not entitled to limit its liability for damage.

Regarding the first and second issues, Shell pleaded the doctrine of res ipsa loquitur. The Court found that the principle of res ipsa loquitur was applicable in this case because the collision occurred in broad daylight between the Red Gold and a stationary object. Even if this doctrine could not be applied, Shell had established negligence and/or breach of duty on the part of the owner in relation to the collision. Therefore, the onus shifted to the owner to rebut the charge of negligence by establishing that the cause of the collision was not attributable to it. The owner also needed to prove that the cause of the collision was an inevitable accident which the owner could not avoid. The Court found that the power card in the electrical box of the bow thruster unit failed when it was displaced or dislodged from its seating, which was one of the key reasons for the collision. In addition, the problem with the power card arose in the test run three days before the incident. Therefore, this problem was foreseeable and could have been avoided. It was not an unavoidable accident. Thus, the defence of inevitable accident failed.

Regarding the third issue, the Court held that although Shell did not provide mooring ropes at the point of discharge at the platform, there was no contributory negligence on the part of Shell. The owner knew the lack of such facilities from the charterparty agreement and there was at no time any complaint or request for the same.

Regarding the fourth issue, s 360 of the Merchant Shipping Ordinance 1952 (which gives effect to the LLMC 1957) provides that where a ship has in the discharge of its cargo caused damage to any property, the owner of the ship is entitled to limit its liability for such damage (art 1.1.b) based on the tonnage of the ship (art 3) so long as such loss or damage took place without the owner’s actual fault or privity (art 1.1). Therefore, if the owner could establish that the collision was not caused by its actual fault or privity, it would be entitled to limit its liability under the LLMC 1957. The burden lies on the owner. The Court held that 'without the actual fault of the owners' means without any actual fault by the owners personally, and the fault of an inefficient manager appointed by the owner would be imputed to the owner as a matter of law in a sense of being his actual fault or a fault committed with his privity. In addition, 'without his privity' means without his knowledge of, and without concurrence in, the faults of others, but not necessarily amounting to wilful misconduct. The Court found that there was no system of checking the secure placement or fixing of the power card, which comprised an integral part of the electrical component of the bow thruster system. The owner or its managers also failed to implement any system to check the electrical component of the bow thruster system, neither was there any proposal to do so. Therefore, the owner was deprived of its statutory right to limit liability.