IMSML Website Article 34/2025: Titimas Shipping & Trading Sdn Bhd v Eustacia Solutions & Ors [2024] MLJU 1670 - Allegations of a Failure to Comply with a Contract of Carriage for 12 Voyages and Fixture Note, Despite an Extended Laycan Date During the COVID-19 Pandemic

On 20 April 2021, the Plaintiff and Defendants entered into a contract of carriage for 12 voyages. These shipments were to be performed over a period of 12 months, to carry cargo of 50,000 mt ’more or less in owner’s option or up to the vessel capacity of river sand in bulk’. Under the terms of the contract of carriage, the laycan (ie ‘Laydays Commence and Cancelling date) was set for 27 April 2021 to 15 May 2021, the specifically agreed period of time when the vessel is contracted to arrive at the load port, see Paragraph [4].

On 22 April 2021, the First Defendant (D1) issued an invoice. On 4 May 2021 and 6 May 2021, the Plaintiff (P) paid ocean freight amounting to USD153,750 (ie the equivalent of RM631,343.62) as ‘the initial payment’ via two banking transactions, see Paragraph [5].

On 4 May 2021, a Fixture Note was signed under the contract of carriage. The Defendants named the ‘MV Oriental Angel’ as the vessel designated under the contractual terms to perform the first (of twelve) voyage, see Paragraph [6]. On 6 May 2021, the Plaintiff transferred a further sum of USD138,750 (ie equivalent to RM582,740.00) to D1 as the Fixture Note deposit payment, see Paragraph [6].

How did the Dispute between the P and Defendants Arise?

On 18 May 2025, the shipowner employed by the Defendants, one Lai Kuan Enterprise Sdn Bhd (LKE), sent a letter to the P. The letter stipulated that LKE would not be sending a vessel to Malaysia. The reason given for this was COVID-19 and the global lockdown, see Paragraph [7]. The reason given by the Defendants and LKE was not accepted by P. The P pointed out that the Movement Control Order (MCO) and COVID-19 lockdown was not affected as it was part of ‘essential services’, see Paragraph [8]. The P subsequently treated the Contract of Carriage as no longer valid and requested a refund of the initial payment made to D1, see Paragraph [8].

What was Happened with the Extended Laycan?

On 24 May 2025, the P informed the Defendants that they would not be complying with the shipowner’s request for full payment. The P took the position that time is of the essence. However, the P also gave an extended revised laycan of 20 to 25 May 2021, see Paragraph [9]. Note, that the earlier laycan period ended on 15 May 2025. Despite being given an extended laycan, D1 failed to honor the terms of the contract of carriage and the Fixture Note, see Paragraph [10].

What was the Defendants’ Objection to P’s Application for Summary Judgment?

The Defendants put forward several triable issues in order to deny the P’s application for summary judgment, see Paragraph [11]:

[1] The P itself had not adhered to the principle of time is of the essence. The invoice was issued on 22 April 2025, but the P only made payment much later on 4 May 2021 and 6 May 2021 respectively;

[2] Upon fixing of the laycan, the P did not provide certain important documents to the Defendant, eg Cargo Declaration Certificate, TML Certificate (ie confirmation of the transportable moisture limit in the cargo), and MSDS sheet (ie material safety data sheet);

[3] Clause 14 of the contract of the carriage stipulates that freight deposits are not refundable, especially if the P postponed or cancelled the shipment;

[4] The subject-matter of the carriage was river sand in bulk, a non-essential item used in the construction industry;

[5] All construction projects in China and Hong Kong also came to a halt during the pandemic;

[6] English law applied to any dispute arising which should be referred to arbitration.

When could Order 14, Rule 1 of the Rules of Court be Invoked for Summary Judgment?

It is trite law from cases such as Esso Standard Malaysia v Southern Cross Airways (M) Bhd [1972] CLJU 31 and National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 1 CLJ Rep 283, that summary judgment should only be invoked ‘if the court thinks it is a plain case and ought not to go to trial’, see Paragraph [12]. A Defendant can avoid a P’s application for summary judgment need to only show there is a ‘triable issue’ (eg Bank Negara Malaysia v Mohd Ismail and Ors [1992] 1 CLJ 627) as a complete defence is not required (eg Alloy Automotive Sdn Bhd v Perusahaan Ironfield Sdn Bhd [1986] CLJ Rep 45, see Paragraph [13]. The Federal Court in Voo Min En and Ors v Leong Chung Fatt [1982] CLJU 47 explained that the pertinent principle being one where it is not enough for the defendant ‘to raise an issue or any issue’, see Paragraph [14].

When could an application for Summary Judgment be Struck Out under Order 18 Rule 19 of the Rules of Court?

It is trite law (eg Sivarasa Rasiah and Ors v Che Hamzah Che Ismail and Ors [2012] 1 CLJ 75) that if there is an issue of law that requires lengthy argument and mature consideration, a striking out order should not be made, see Paragraph [16]. Hence under this procedural rule, the primary task of the Court is to determine whether the issues arising from the facts canvased fall within the ambit of that rule, see Paragraph [17].

Was the Plaintiff’s Application for Summary Judgment Allowed by the Court?

Yes. Judicial Commissioner Noor Hayati Haji Mat did not find any merits in the Defendant’s application to strike out the P’s claim. Her Ladyship held that this was a plain case of the Defendant’s failure to honor its obligation to name a Vessel to perform its shipment obligation under the contract of carriage. Thus, there was a total failure of consideration which entitled the Plaintiff to treat the contract as null and void, therefore giving the Plaintiff the right to a return of the deposit paid. In conclusion, there was no necessity for the matter to proceed to trial in order to determine the issues raised, see Paragraph [37].

What was the Legal Effect of the Defendant’s Failure to Perform its Obligation under the Contract of Carriage?

The laycan date was set, deposits paid, and the shipping industry would not be affected by the pandemic. It was therefore unreasonable for the Defendants to simply accept the excuse given by the owner of the Vessel at the expense of the Plaintiff’s commercial detriment, see Paragraph [23]. There was a total failure of consideration by the Defendants when they failed to name a Vessel to take delivery of the cargo, despite a considerable sum of money being paid, see Paragraph [24]. The Plaintiff was entitled to terminate the Contract of Carriage and Fixture Note, as the Defendants failed to sho readiness to perform their part of the contractual obligations, see Paragraph [25].

The Defendants could not argue that under the contract of carriage, the deposits paid were not refundable. That would be the case if the Plaintiff postponed or cancelled the shipment. By contrast, in this case it was the Defendants who had failed to provide a Vessel for pick up of the cargo of sand in bulk at the load port within the laycan period, see Paragraph [29].

What Arguments of the Defendants did the Court Reject?

There are two submissions which did not find favour with the Court:

[1] The Plaintiff had paid the Defendants two weeks later after the invoice was issued. Judicial Commissioner Noor Hayati Haji Mat said that the defendants had received not a pittance but an enormous amount with no service being rendered to the Plaintiff. The allegation of delay was made with the intention to find fault with the Plaintiff, see Paragraph [32];

[2] Several documents were not tendered by the Plaintiff to the Defendants for the shipment. Her Ladyship held that this was merely an afterthought by the Defendants. This issue was never raised at all material times. As the Vessel was not named for the voyage, no document can or need to the produced, see Paragraph [33].

Should the Matter be Referred to Arbitration in the Light of the Arbitration Clause?

No. The Defendant had taken steps in these proceedings in Court which precluded them from relying on the arbitration clause. The Defendants are deemed to have submitted to the jurisdiction of the High Court (eg Sanwell Corp v Trans Resources Corp Sdn Bhd [2002] 2 MLJ 625), plus no stay application was made under the Arbitration Act 2005, Section 10, see Paragraph [30]. The arbitration clause does not entitle the Defendants to strike out the Plaintiff’s claim (eg CLLS Power System Sdn Bhd v Sara Timur Sdn Bhd [2015] 11 MLJ 485), see Paragraph [30].

Thank you for reading IMSML Website Article 34/2025

Stay tuned for the next IMSML Website Article 35/2025: Asia Capital Commodities Trade Sdn Bhd v The Owner of the Ship ‘Oriental Dragon’ [2024] MLJU - More Drama’ from The ‘Oriental Dragon’ Case

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

Tuesday, 26 August 2025

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my