Elinoil-Hellenic Petroleum Co SA v Wee Ramayah & Partners

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 31 March 1999
• Neutral Citation: [1999] SGHC 75
• Docket Number: Suit No 2072 of 1997
• Date: 31 March 1999
• Published date: 19 September 2003
• Year: 1999
• Plaintiff Counsel: Randhir Ram Chandra and Vincent Yong (Haridass Ho & Partners)
• Citation: [1999] SGHC 75
• Defendant Counsel: Govindaraju Asokan and Henry Heng (Rodyk & Davidson)
• Court: High Court (Singapore)
• Subject Matter: Whether sale by owner of vessel while vessel under arrest and subject to order for sale valid,Negligence,Admiralty and Shipping,Instruction to secure claim against owner of vessel -Whether solicitor negligent,Whether lodging caveat without filing writ in rem sufficient to secure claim,Admiralty and shipping claim,Tort,Sale in contempt of court,Admiralty jurisdiction and arrest,Advocate and solicitor

: This is an action for professional negligence. The plaintiffs are a company incorporated in Greece and are in the business of supplying petrol, oil and lubricant. The defendants (`WRP`) are a firm of advocates and solicitors in Singapore.

Background

The circumstances giving rise to this action are as follows. In the ordinary course of their business, in July and September 1996, Elinoil supplied bunkers, through their sub-contractors, to a vessel named Mariner LT (the vessel) to a total value of US$155,543.69. The Registry of the vessel is at Cypress. While Elinoil had paid their own sub-contractors for the bunkers so supplied to the vessel, the owners of the vessel, Fordel Shipping Co Ltd, have failed to pay Elinoil for the same.

In January 1997 Elinoil instructed their Greek solicitors, Scorinis Law Officers (`SLO`), to institute legal proceedings against the vessel to recover the debt. SLO, by Mr George Papadopoulos (PW1), in turn instructed WRP. In a fax of 10 January 1997 SLO wrote to WRP:

The above vessel now is lying at the port of Singapore ... clients instructed us to proceed (with) the arrest of the vessel. Please advise us whether you are free to act immediately for the arrest of the vessel, in case you ascertain that the vessel is actually lying at Singapore ... In case you ascertain that the vessel is in Singapore please act immediately for the arrest within this weekend.

There was a hand-written postscript to that fax: `Please act immediately for the arrest within this weekend.`

Upon receipt of this fax, WRP instructed marine surveyors to establish if the vessel was in port. WRP also asked SLO for the `official number and registered office` of Elinoil. There was no response to this request until much later on 11 April 1997 when SLO informed WRP that `there was no official index numbers for Greek companies` but Elinoil`s VAT number is 94004190.

On 11 January 1997, WRP informed SLO that the vessel was outside port limits and that it might be avoiding the Singapore port. WRP also advised SLO that they heard that one other interested party was also seeking to arrest her. On 13 January 1997 Elinoil enquired from WRP if it was possible to ascertain whether that other party who was interested to arrest the vessel was a bank or a private company and the amount of their claim. WRP was also asked to ascertain the next port of call of the vessel and what operations the vessel intended to carry out there in order to determine if the vessel was loaded.

On 5 February 1997, WRP learnt that the vessel was arrested by the mortgagee-bank of the vessel in Adm in Rem 70/97. They informed SLO immediately and asked `Do you want to lodge a caveat against release?` At the time, there were two other in rem actions against the vessel, namely, Adm in Rem 669/96 and Adm in Rem 57/97. In reply SLO posed these queries:

(a) Who are the mortgagees and which (sic) is the amount of their claim, ie which (sic) is the amount for which they arrested the vessel?

(b) Did the mortgagees started (sic) proceedings for the auction of the vessel?

(c) In case that the auction shall take place in the future which rank will our clients claim to take among other claims according to the law of Singapore. Kindly give us your estimations as to whether clients claim has any chances to be satisfied from the sale proceeds of an auction.

(d) The amount of your fees and expenses to lodge a caveat against the release of the vessel.

(e) Whether the courts of Singapore ask a counter security from the claimant seeking the above caveat.

Before WRP could give a reply, SLO despatched a second fax on the same day asking WRP to

lodge immediately a caveat against the release of the vessel in case you check and or ascertain that mortgagees proceed to a free sale of the vessel to third parties instead of auction of her.

SLO also sought further advice whether in the event that the mortgagee should sell the vessel to a third party the buyer was `obliged to deposit a guarantee (amounting our clients` claim) with the court in order to release the vessel from clients` caveat.`

On 6 February 1997 WRP gave these answers to the queries of SLO:

However, the vessel is sold, whilst under arrest, the proceeds of sale are lodged in court for determination of priorities.

Client`s claim would have the lowest priority and unless the sale proceeds are larger than the mortgage and any other prior claims, clients would obtain nothing. Client`s claim is a necessaries claim and does not confer a maritime lien.

We charge S$600 per caveat which must be renewed every six months. If the mortgagee wishes to release the vessel then, as a caveat against release would prevent the release, we would be provided notice to take over the arrest. In such a case, we provide an undertaking to the Sheriff to indemnify him for all expenses etc.

From noon today till 11 February 1997 is a public holiday. It is difficult to ascertain whether the mortgagee would go by private sale. They can do that simply by releasing the arrest and selling pursuant to their powers under the mortgage deeds. If they go for a judicially approved sale, unless we are an intervening party, no notices of their action would be served on us.

Do you still want us to lodge a caveat. It is unlikely that the vessel could be sold by judicial sale so quickly. Without courts leave, a private sale is impossible whilst the vessel is under arrest. [Emphasis added.]

On the same day, SLO raised further queries with WRP and it can be seen from this communication that SLO were quite unclear, or even confused, as to the state of affairs:

Please clarify on the following:

1 Whether the vessel has been sold at Singapore.

2 Who is the seller and who is the buyer.

3 Whether the vessel had been arrested by the mortgagees and after her above sale she released from the arrest, by lodging the proceeds of sale in favour of the mortgagees and other claimants who has priorities on the above sales.

4 Whether the vessel is still lying at Singapore.

In case that your answers is (sic) positive on the above please advise on the following:

1 Is it possible for the mortgagees to proceed to a private and or a judicial sale of the vessel since she was sold and released from the arrest by lodging the sales proceeds, as you described in your above fax.

In view of the above and since client`s claim have the lowest priority as you stated in your above fax, please advise us whether the lodging of a caveat should have any favourable effect and or chances of it for the clients.

On 13 February 1997, WRP informed SLO that the vessel was arrested by the mortgagee-bank, Det Norkse (UK), who had a claim of US$7m. The mortgagee`s solicitors mentioned that the value of the vessel was estimated to be US$5m but this might be unrealiable. Furthermore, there was one other necessaries claimant whose amount of claim was not known. WRP also advised that the lodgment of a caveat would enable Elinoil to monitor whether there would be anything left over from the proceeds of sale, if there was a sale. Furthermore, Elinoil would be informed if the vessel were to be released so as to enable Elinoil to take over the arrest. On the same day SLO instructed WRP to `proceed immediately by lodging a caveat against the release of the vessel.` This instruction was carried out by WRP the following day.

Then on 7 March 1997 SLO obtained information that the vessel was arrested by a company called UNITOR and they requested WRP to verify that information and, if it were true, to lodge a new caveat in case the caveat lodged on 14 February 1997 in Adm in Rem 70/97 was ineffective. The fax ended with this instruction: `in any case please proceed immediately to take all necessary legal measures to secure our clients` claim.`

On 10 March 1997, WRP told SLO that the crew of the vessel had filed a claim (which was a maritime lien) amounting to US$460,460.42.

I should add that on 24 March 1997 WRP informed SLO (attention Mr Pavlis - another member in SLO) that the caveats filed in relation to the claims of two other claimants against the vessel (different claimants from the plaintiffs in the present action and who subsequently issued Suit 2071/97 against WRP also for professional negligence) `merely protects clients from any payment out/release of vessel without prior notice to us.` WRP also added:

If clients intend to progress their claim, they would have to file a writ, a statement of claim and proceed to judgment. However, as clients have a low priority it would be best to wait and see rather than escalate legal costs by proceeding further.

This fax was written in reply to a fax from Mr Pavlis in relation to the claims of those two claimants. The parties in Suit 2071/97 have agreed that they would abide by the decision herein.

On 25 March 1997 the mortgagee-bank in Adm in Rem 70/97, who had the vessel arrested, filed a notice of motion for an order that the vessel be appraised and sold by the Sheriff, by either public auction or private treaty. The motion was scheduled to be heard on 4 April 1997. On 2 April 1997, WRP informed SLO of the same. On 4 April 1997 an order for sale was granted by the court.

In a surprise turn of events on 10 April 1997, the solicitors for the arresting mortgagee-bank in Adm in Rem 70/97 informed all caveators` solicitors of the following:

Our clients have been paid in full by the defendants. The mortgage has since been discharged, as such our clients no longer have an interest nor right to continue to arrest the vessel. We shall be filing an urgent application today for hearing tomorrow for the order of court dated 4 April 1997 to be discharged and that the vessel be released.

The motion was duly filed and was scheduled to be heard the next day.

WRP in turn notified SLO. However, on the same day, WRP learned with...