Admiralty, Shipping and Aviation Law

• Citation: (2008) 9 SAL Ann Rev 54
• Published date: 01 December 2008
• Date: 01 December 2008
• Author: TOH Kian Sing SC LLB (Hons) (National University of Singapore), BCL (Oxford); Advocate and Solicitor (Singapore). CHAN Leng Sun LLB (Malaya), LLM (Cambridge); Advocate and Solicitor (Malaya), Advocate and Solicitor (Singapore), Solicitor (England and Wales). Jack TEO Cheng Chuah LLB, LLM (National University of Singapore); PGDipTHE (National Institute of Education, Nanyang Technological University); Advocate and Solicitor (Singapore); Senior Lecturer, School of Business and Accountancy, Ngee Ann Polytechnic.

Introduction

2.1 In numerical terms, 2008, like 2007, was not a fruitful year: only two decisions of an admiralty nature were handed down by Singapore courts. However, in terms of the development of admiralty practice and law in Singapore, the significance of one of these decisions cannot be over-stated, as will be elaborated below.

The Vasiliy Golovnin [2008] 4 SLR 994

2.2 So far as this contributor is aware, the judgment of the Court of Appeal in The Vasiliy Golovnin[2008] 4 SLR 994 is the longest decision handed down by our apex court on the area of admiralty law. It offers rich pickings on a variety of issues, ranging from duty of disclosure in ex parte applications (with implications beyond the narrow confines for applying for a warrant of arrest), wrongful arrest of vessels, sustainability of a cause of action as a pre-requisite to arrest and the use of the remedy of arrest to seek security for arbitration awards. It is a decision that will without doubt shape admiralty practice in Singapore for years to come as well as its attractiveness as a forum for maritime disputes.

The factual matrix

2.3 As is perhaps illustrative of the borderless character of maritime disputes, the material events had nothing to do with Singapore, taking place as they did in China, Togo and (to a lesser extent), London, even though they culminated in the arrest (found by the Court of Appeal to be wrongful) of a sister vessel, the Vasiliy Golovnin, in Singapore.

2.4 The defendant, Far Eastern Shipping Co PLC, was at the material time owner of the vessel, the Chelyabinsk, which it chartered to Sea Transport Contractors Ltd (‘STC’), which in turn sub-chartered the vessel to Rustal SA (‘Rustal’). Two banks, Credit Agricole (Suisse) SA (‘Credit Agricole’) and Banque Cantonale De Geneve SA had provided

financing to Rustal for the purchase of the cargo of rice and in consideration thereof, became the holders of the bills of lading. The appeal to the Court of Appeal was brought only by Credit Agricole. (The cross-appeal on the point of wrongful arrest was brought against both banks by the defendant.) Two of the three subject bills of lading held by the bank named Lome in Togo as the port of discharge, the remaining named ‘any African port’ as the port of discharge.

2.5 STC, on Rustal”s instructions, requested the defendant to switch the bills of lading with Rustal to alter the port of discharge from Lome to Douala but the switch never materialised. Subsequently, because of an apparent dispute between STC and Rustal with respect to the payment of hire, STC instructed the defendant not to switch the bills of lading unless further ordered by it to do so, and instructed the vessel to continue to proceed to Lome to discharge the cargo (instead of Douala).

2.6 The two banks instructed the defendant to discharge the cargo at Douala instead of Lome (the discharge port named in the bills of lading). The defendant did not comply with the instructions and proceeded instead to Lome, where various court orders were obtained by STC, Rustal and the two banks in relation to the cargo carried on board. STC wanted a court order to discharge and detain the cargo for unpaid hire; Rustal, an order to prevent its discharge, as did the two banks. After various interlocutory skirmishes, the Lome court eventually ordered the cargo to be discharged in Lome. The court also found that STC was entitled to retain the cargo as security. The defendant in compliance with these orders, accordingly, commenced and completed discharge in Lome in mid-February 2006.

2.7 The banks then arrested the Chelyabinsk in Lome on or about 18 February 2006 in respect of the same claims as the subsequent action in Singapore. On 24 February 2006, the defendant successfully set aside the arrest after full arguments before the Lome court. The vessel left Lome on 25 February 2006. The time allowed for an appeal against the Lome Release Order expired on 17 March 2006, without, significantly, any appeal being filed in Lome.

2.8 On 18 March 2006, the banks arrested the Vasiliy Golovnin, a sister vessel of the Chelyabinsk, in Singapore. The arrest was set aside by the learned assistant registrar who also struck out the writ but did not award damages for wrongful arrest. That decision was substantially upheld by Tan Lee Meng J (except for a cargo damage claim, which his Honour did not strike out).

Duty of disclosure in ex parte applications (including applications for warrant of arrest)

2.9 On the subject of disclosure, V K Rajah JA, who delivered the judgment of the Court of Appeal, took the opportunity to reiterate the relevant principles, enunciated in various recent Singapore admiralty decisions, such as The Fierbinti[1994] 3 SLR 864; The AAV[2001] 1 SLR 207 and The Rainbow Spring[2003] 3 SLR 362.

2.10 These principles may be summarised as follows. It is trite law that a party making an ex parte application, including a plaintiff who applies for a warrant of arrest, is under a duty to disclose to the court hearing the application all material matters including, as V K Rajah JA observes, matters (as opposed to merely facts, a point elaborated on below) prejudicial to his claim. As pointed out by the Court of Appeal in The Rainbow Spring[2003] 3 SLR 362, the proper discharge of this duty is an important bulwark against any abuse of the process of arrest and, if breached, can be an independent ground for setting aside an arrest. In his Honour”s words, full and frank disclosure would ensure that the court is ‘appropriately sensitised to the real merits of the application and the potentially hazardous ramifications of the remedy’ (The Vasiliy Golovnin[2008] 4 SLR 994 at [85]) and, therefore, put the court in a position to properly exercise its discretion as to whether the warrant of arrest should be granted.

2.11 The test of materiality as enunciated by L P Thean JA in The Damavand[1993] 2 SLR 717 at 731, which was re-affirmed in The Rainbow Spring[2003] 3 SLR 362 and The Vasiliy Golovnin[2008] 4 SLR 994, is as follows:

… whether the fact is relevant to the making of the decision whether or not to issue the warrant of arrest, that is, a fact which should properly be taken into consideration when weighing all the circumstances of the case, though it need not have the effect of leading to a different decision being made.

2.12 It is clear that the test of materiality is an objective one and is based on relevance. A fact may be material even if it does not have the effect of leading to a different decision being made on the application for a warrant of arrest.

2.13 In what appears to be an extension of the established principles, the Court of Appeal in The Vasiliy Golovnin[2008] 4 SLR 994 observes that the duty of disclosure covers defences that are plausible and not merely conceivable or theoretical. This extension is illustrated by the facts of The Vasiliy Golovnin itself. There was, as one would recall, an unsuccessful arrest before the Lome courts of the Chelyabinsk prior to the arrest of the Vasiliy Golovnin. Although this arrest was referred to in

the affidavit filed in support of the application, there was, in the view of the Court of Appeal and of Tan Lee Meng J at first instance, inadequate disclosure of this fact. This is elaborated below. In particular, the attention of the learned assistant registrar was not specifically drawn to this matter. Another undisclosed fact in The Vasiliy Golovnin was the proposed switching of bills of lading to reflect the change of the discharge port from the Togolese port of Lome to the Cameroonian port of Douala. Credit Agricole”s claim was that the shipowners breached the bill of lading contract by carrying the cargo to Lome (which was the port named in the bills of lading). If the fact of the proposed switch of discharge port had been disclosed, it would have sensitised the court to the fact that the claim was without merits. This is so because, if the shipowners had a contractual duty to divert the cargo away from Lome, there would have been no need for Credit Agricole to switch the discharge port in the bill of lading. By requesting for such a switch of discharge port from Lome to Douala, Credit Agricole clearly acknowledged it had no basis for saying that the cargo should not be discharged at Lome: The Vasiliy Golovnin[2008] 4 SLR 994 at [102]. Credit Agricole was held by the Court of Appeal to have failed to disclose the switching and the objective behind it altogether.

2.14 V K Rajah JA warned that mere disclosure of material facts without more or devoid of the proper context does not amount to a discharge of the duty. The manner of disclosure is also important in the sense that the material facts must be presented to the court in a clear, transparent and complete manner. Thus, the applicant”s counsel must draw the court”s attention to the relevant matters and documents rather than merely exhibiting the latter (which was what was done in this instance). Not only must the court”s attention be drawn to the relevant materials, as well as critical points for and against the applicant”s case, the facts must be presented fairly. On the facts of this case, the supporting affidavit, consisting of 11 ‘miserly’ pages of narrative in a ‘tome’ of 400 pages, was found to be gravely wanting in at least two aspects.

2.15 Credit Agricole was held by the Court of Appeal to have insufficiently disclosed the existence of the previous proceedings in Lome in that its counsel did not directly draw the court”s attention to this particular fact (especially so, given that they related essentially to the same claim as the Singapore proceedings). The Court of Appeal dismissed the...