This was an application to set aside the default order. The dispute arose in connection with the wreck removal agreement. The contractor (the claimant) claimed against the hiring party (the defendant) for recovering the debt under the contract concluded in the BIMCO Wreckstage 2010 form.

The tanker Kmax Pro caught fire and grounded. A substantial portion of the cargo was damaged. The vessel became a wreck since it could not continue the contemplated voyage.

According to the claimant’s position, the defendant failed to pay the sum, which was due at the date of the claim, including part of the Advance payment, the Second stage instalment payable after the cargo is discharged from holds 1 and 2, payments under variation of machinery orders, standby of a tug nearby the wrecked vessel, and the indemnity of any liability may arise before the Malaysian port authority in connection with the wreck removal. It was argued that part of these losses occurred due to the defendant’s failure to appoint a Schedule Waste company to dispose of the damaged cargo.

The defendant did not appear and did not submit any intention to join the proceedings within 21 days, the term stipulated by Singaporean law. Thus, the default judgment in favour of the claimant was rendered. After approximately three months, the defendant applied to set the default judgment aside.

Default judgment is an institution known to common law. It is issued when the defendant fails to appear before the court, although it was notified appropriately. In the present case, the process was serviced to the receptionist at the defendant’s registered address in Hong Kong.

To set the default judgment aside, the defendant must show that it has a prima facie defence against the claim. This is a threshold requirement. After that, the court balances the defence with the other circumstances of the failure of the defendant to appear before the court, such as length of delay, reasons for delay, and any prejudice to the claimant if the judgment is set aside.

So, it is essential that in the relevant case, the Assistant Registrar (AR) did not consider all the arguments thoroughly as it would be done in ordinary proceedings but assessed whether there was a prima facie defence. This is much less standard.

The defendant submitted that it has a prima facie defence regarding all the claims. They argued that the Advance Payment was payable only after the claimant successfully discharged the cargo holds 3, 4, and 5; the claimant was not entitled to the Second Stage Instalment since it did not discharge hold 1; the parties did not agree to pay any variation orders or for the standby of machinery; the standby charges for the tug were included in the lump sum payable under the contract; there was no basis to seek the indemnity against the Malaysian authorities since there was no risk of oil pollution.

Anand AR mentioned that there are different forms of wreck removal agreements, with different distributions of obligations and risks between the parties. BIMCO Wreckhire 2010 favours the contractor by providing for the daily hire without guaranteeing the result. BIMCO Wreckfixed 2010 favours the hiring party by giving the strict lump sum payable upon the full completion of the services. BIMCO Wreckstage 2010 is a middle way that provides for the lump sum but allows for dividing it into different instalments. The relations between the parties in these sorts of disputes should be considered based on the interpretation of the form chosen, taking into account the parties’ amendments to the particular contract.

In the present case, Anand AR found that the defendant demonstrated a prima facie defence with

* Case review of The Kmax Pro; Quadra v. XL Insurance; Star Axe v. Royal Alliance; Kuvera Resources Pte Ltd. v. JPMorgan Chase Bank NA; Deutsche Bank AG v. Ruschemalliance LLC prepared by Bulat Karimov, LLM, Research Associate at the Centre for Maritime Law, National University of Singapore.

regard to all the claims except the one for the Advance Payment since it was stipulated that this sum is payable without regard to the start or completion of any services.

The case discussed deals with several important issues. First, it reconfirms the threshold that needs to be met to set the default judgment aside. Second, it determines the key features of the wreck removal contracts that the courts should consider. Third, it emphasises the key role of contract forms in shipping. All this helps to understand how Singaporean law, in particular, and common law, in general, looks at wreck removal contracts and their interpretation. ■