Admiralty and Shipping Law

Citation(2002) 3 SAL Ann Rev 8
Publication Date01 December 2002
Date01 December 2002
AuthorKENNETH MICHAEL TAN WEE KHENG, SC LLB (NUS), Advocate & Solicitor (Singapore) TOH KIAN SING LLB (NUS), BCL (Oxon), Advocate & Solicitor (Singapore)
ADMIRALTY LAW
In personam liability and material non-disclosure

2.1 The decision of The Rainbow Spring[2003] 2 SLR 117 is significant for two reasons. It clarifies (to a certain extent) a long-standing problem which has troubled admiralty practitioners in Singapore for a while. This relates to the duty of full and frank disclosure on the part of the arresting party when applying for a warrant of arrest. Secondly, it continues the welcome judicial trend of setting aside an arrest if it is clear on the evidence that there is no in personam liability for the purposes of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Ed).

2.2 The facts of The Rainbow Spring fall within a narrow compass. The defendant shipowners named a Liberian company, Oriental Shipway, as the owners under a time charterparty which was entered into with the plaintiffs. This was confirmed by way of an exchange of correspondence between parties on 8 and 9 January 1998 in which the plaintiffs, who were the time charterers, confirmed that the charterparty was “clean fixed” and noted that the owners for the purposes of the charterparty was the Liberian entity. Subsequently, parties through their agents, P&I Club and foreign lawyers corresponded on various issues which arose in the course of the charterparty. In the correspondence, the plaintiffs” agents, P&I Club and foreign lawyers took the view that the charterparty was entered into with Oriental Shipway. Conversely, the P&I Club of the defendants was alleged to have acted on the premise that the charterparty was entered into with the defendants, rather than Oriental Shipway.

2.3 Two further facts were raised. Although the exchange of correspondence between parties confirmed the nomination of Oriental Shipway as the owners for the purposes of the charterparty, out of inadvertence, the formal charterparty was executed by the defendants. Furthermore, the defendants had in fact entered into two back-to-back charterparties, one demise and the other, time, in which Oriental Shipway featured as the time sub-charterer and in that capacity, had contracted with

the plaintiffs. In other words, the plaintiffs” charterparty was to be a time subsub-charter according to the chartering structure that had been put in place. The plaintiffs, on the other hand, argued that since the charterparty was signed by the defendants, they had direct contractual privity with the defendants and could therefore arrest the defendants” vessel for a charterparty claim.

2.4 At the hearing below, the assistant registrar found for the defendants and set aside the arrest on the ground of material non-disclosure. It should be noted that when the warrant of arrest was applied for, neither the affidavit supporting the warrant of arrest nor the plaintiffs” counsel who appeared to obtain the warrant of arrest drew the court”s attention to a number of documents and correspondence, including the correspondence exchanged on 8 and 9 January 1998, which would have made it clear that the defendants were not in fact the owners for the purposes of the charterparty and therefore, could not be the party who would be liable in personam under s 4(4) of the High Court (Admiralty Jurisdiction) Act. The assistant registrar, however, did not rest her decision on the absence of in personam liability.

2.5 On appeal, Belinda Ang JC (as she then was) upheld the decision below, but on the ground of lack of in personam liability rather than material non-disclosure. Her Honour reasoned that the charterparty was clean fixed and therefore concluded into by an exchange of correspondence on 8 and 9 January 1998, and whatever negotiations which preceded and correspondence which followed after that exchange of correspondence could not change the fact that the charterparty had already been entered into with Oriental Shipway named as the owners. Her Honour concluded that the plaintiffs” case was plainly unarguable and upheld the decision below to set aside the warrant of arrest.

2.6 However, her Honour held that there was sufficient disclosure by the plaintiffs when they applied for the warrant of arrest even though they did not include the correspondence, including that exchanged on 8 and 9 January 1998, which would have pointed to Oriental Shipway as being the contracting party. Her Honour appeared to reason that because the correspondence subsequent to the entry of the charterparty did not uniformly point to Oriental Shipway as being the contracting owners under the charterparty, the plaintiffs were entitled to take the view that they contracted with the defendants rather than with Oriental Shipway pursuant to the executed charterparty. This would especially be so as they were legally advised to that effect. The court also held that in these circumstances, there was no wrongful arrest.

2.7 It is significant to note that Belinda Ang JC affirmed once and for all that there is a duty to disclose all material facts on the part of the arresting party and in the process, put to rest an issue as to whether such a duty exists under the laws of Singapore. It will be recalled that Judith Prakash J in The AA V[2001] 1 SLR 207 affirmed such a duty as well, although it was not brought to her Honour”s attention that the position in England is that no such duty exists and that an arresting party is entitled to a warrant of arrest as of right. Belinda Ang JC concluded that the English position does not apply in Singapore because the relevant provisions of the Rules of Court (Cap 322, R 5, 1997 Rev Ed) are differently worded as compared with the English provisions.

2.8 It is perhaps unfortunate that having come to the conclusion that the duty exists, her Honour substantially reduces the effect of such a duty by observing in obiter that the duty should seldom lead to an arrest being set aside if there is no independent challenge to the admiralty jurisdiction of the court based, presumably, on the requirements of s 4(4) of the Act. This obiter is, it is respectfully submitted, not supported by decisions in England (see The Vasso[1984] 1 QB 477), Malaysia (see The Dong Nai[1996] 4 MLJ 454 at 465), Singapore (see The Evmar[1989] SLR 474) and Hong Kong (see The J Faster[2000] 1 HKC 652). Indeed, the learned judicial commissioner did not refer to any authority to support her qualification to the duty of material non-disclosure. This significant qualification to the duty of disclosure can, in extreme cases, lead to the process of arrest being abused by claimants who may selectively omit to put forward unfavourable documents without fear of jeopardising their arrest.

Post-arrest crew wages

2.9 The question of whether post-arrest crew wages can be treated as Sheriff”s expenses was recently considered by the High Court in The Aquarius III[2002] 4 SLR 202.

2.10 The vessel arrived in Singapore in early May 2001. Gulf Agency (“Gulf”), the vessel”s Singapore agents, supplied bunkers and other provisions to both the vessel and its crew, and was also responsible for port dues. However, they were not paid for their services, and neither were the crew paid their wages. Months later, in September 2001, when it became apparent that the owners had abandoned the vessel, Gulf arrested the vessel in an attempt to recoup its losses and to stop incurring further expenses as agents of the vessel. Gulf provided the usual undertaking to the Sheriff when applying for the warrant of arrest.

2.11 By the time of the arrest, the vessel had already been laid-up at anchorage. After the arrest, Gulf continued to supply the vessel, this time as

the Sheriff”s agents. The skeletal crew of the vessel remained on board, and carried on with their shipboard duties as before. The vessel was eventually sold by order of court for $140,000. By then, the proceeds of sale were insufficient to even pay for the port dues and guard charges incurred.

2.12 The crew stood to gain nothing from the sale, even though they had a maritime lien in respect of their claim for wages and disbursements, as the Sheriff”s expenses had priority over their claim. Shortly after the sale of the vessel, the crew applied for, inter alia, an order that their wages and disbursements from the date of arrest till repatriation (approximately USD60,000) be treated as Sheriff”s expenses. Gulf challenged the application, as it was apparent that should the application succeed, the crew would be paid not from the proceeds of sale, but by Gulf (in their capacity as arresting parties) pursuant to their undertaking to the Sheriff to indemnify him for his expenses.

2.13 The application came before Woo Bih Li JC (as he then was), who allowed the crew”s application. Central to his Honour”s decision was the fact that the Maritime and Port Authority of Singapore required all vessels at anchor to maintain a skeletal crew. Another factor in his decision was Gulf”s acceptance of the fact that had the crew been repatriated earlier, the arresting party would have had to engage a replacement crew and the expenses of the replacement crew would have to be treated as part of the Sheriff”s expenses. Woo JC reasoned that the post-arrest wages were in substance Sheriff”s expenses as the crew had effectively been adopted by Gulf, the Sheriff”s agents, to meet the minimum manning requirement. He considered it immaterial that there was no prior order allowing the crew”s expenses to be treated as Sheriff”s expenses, or the fact that the crew had not been engaged by the Sheriff.

2.14 Woo JC was further of the view that the “equities of the case” laid with the crew in any event. This particular phrase was first coined in The Eastern Lotus[1980—1981] SLR 92 and clarified by the Court of Appeal in The Atlas Pride[1994] 1 SLR 346 as a guiding principle to determine whether the category of Sheriff”s expenses could be enlarged to encompass a particular expense. Woo JC considered that it was in the interest of all parties that the crew remained...

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