Berkon Shipping N V v The Owners of the Ship or Vessel "Berkut"

JurisdictionSingapore
JudgeChoo Han Teck JC
Judgment Date26 November 1999
Neutral Citation[1999] SGHC 308
CourtHigh Court (Singapore)
Published date08 March 2013
Year1999
Plaintiff CounselGina Lee-Wan and Corina Song [Allen & Gledhill]
Defendant CounselClares De Cruz [Haridass Ho & Partners]
Citation[1999] SGHC 308

JUDGMENT:

1. This is an application by the defendant ship-owners for the release of their vessel the "Berkut" upon the posting of adequate security. The plaintiffs were the charterers of the Berkut and had arrested the vessel under an action in rem. The plaintiffs’ claim is based on a breach of the charterparty terms and is in excess of US$4.8m. The claim itself is being pursued in arbitration as required under the charterparty. The vessel was arrested on 22 February 1999. An order for sale was made on 20 August 1999 by Justice Goh. The defendants appealed but their appeal was dismissed. On 1 October the Sheriff advertised the sale pursuant to the order of court of 20 August 1999. Bids for the vessel were to be closed on 15 October 1999.

2. In the meantime, the defendants engaged the plaintiffs in negotiation for the release of the vessel before the bids close. On 9 October 1999 the defendants, having failed to obtain an agreement with the plaintiffs, took out this application for the release of the vessel. The application was fixed for hearing on 13 October 1999 and re-fixed on a special date. Miss De Cruz, counsel for the defendants submitted on 13 October 1999 that the plaintiffs have only served a new valuation on them only that morning.

3. The nub of the dispute is this. The plaintiffs initially obtained a valuation from Seawise Maritime Services (Pte) Ltd whose report dated 23 June 1999 stated the value of the vessel to be US$391,000. It is not in dispute that this is equivalent to roughly S$665,000. The defendants also had the vessel appraised by their own valuers who valued it at S$700,000. The defendants now want the vessel released upon the posting of security at US$391,000, but the plaintiffs say that the market value of the vessel is US$2.3m as appraised by a company called Towco Marine Services, and set out in their report dated 12 October 1999.

4. The contest before me revolved around two issues. First, whether the security to be offered ought to reflect the market value or the forced sale value. Secondly, whether an order ought to be made for the release of the vessel upon the posting of the security as may be determined. Miss Lee-Wan argued on the plaintiffs’ behalf that the reference point must be the market value and not the forced sale value. She relied on the "Arcadia Spirit" [1988] SLR 244 in support of this proposition. In that case the court, faced with two valuations, preferred the valuation made on the basis of market value over that made on the basis of a forced sale value, but no reasons were stated for the preference. Miss De Cruz was left to distinguish the Arcadia...

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