FULFILLING THE DUTY OF FULL AND FRANK DISCLOSURE IN ARREST OF SHIPS

• Author: Eugene CHENG Jiankai LLB (National University of Singapore); Advocate and Solicitor (Singapore).
• Date: 01 December 2017
• Published date: 01 December 2017

Identifying, Consolidating and Presenting Material Facts

The development of Singapore's admiralty jurisprudence has given birth to a duty of full and frank disclosure in the application for a warrant of arrest against a ship. This duty of disclosure obliges an arresting party to identify and present material facts to the court, failing which, the arrest may be set aside and a finding of wrongful damages may be made against the arresting party. The identification, consolidation and presentation of material facts are therefore integral aspects to a successful arrest. This article seeks to provide an exposition on the above aspects, which are integral to the fulfilment of the duty of full and frank disclosure.

I. Introduction

1 The law regarding the arrest of ships in Singapore is autochthonous and distinct from our English counterparts. The most significant schism lies in the Court of Appeal decisions of The Vasiliy Golovnin1 and The Rainbow Spring,2 which have cemented the requirement for a full and frank disclosure of material facts in the affidavit leading the warrant of arrest (“arrest affidavit”). Concomitantly, the considerations involved in carrying out an arrest locally would also differ from the conduct of an arrest in England. The primary difference would be the need to ensure that the duty of full and frank disclosure is fulfilled.

2 In doing so, it is submitted that the foremost component of fulfilling the duty of disclosure is the proper identification of material facts. In this regard, although there have been a slew of local authorities which have defined and shed light on the test of materiality, it is submitted that the factual matrices of disputes leading to an arrest are invariably limitless and it would take a large volume of case law to

properly explain and illustrate examples of material facts in all circumstances. Armed with limited case law, arresting parties who have documents at their disposal have to constantly question which are the material documents and facts that have to be included in the arrest affidavit. Failure to do so may result in the arrest being set aside and a finding of wrongful damages against the arresting party. The considerations and aspects involved in the identification of material facts are therefore key to ensuring that the duty of full and frank disclosure is met.

3 Apart from the proper identification of material facts, the consolidation and presentation of such facts are also crucial components of the duty of full and frank disclosure. The consolidation and presentation of material facts not only encompass the way in which the material facts are drafted and presented in the arrest affidavit, but also the manner in which the material facts are delivered at the hearing before the court. It is only when the material facts are conveyed to the court's attention that the duty of disclosure is truly fulfilled. However, as most arrests are conducted on an urgent basis, the arresting party may be pressured to cut corners or to omit certain facts when drafting the arrest affidavit. The processes of identifying and consolidating the material facts may therefore be affected if the arresting party is pressed for time. As such, to ensure that the duty of full and frank disclosure is met, an arresting party must not only make the effort to ensure that the material facts are properly consolidated and presented to the court but he must also be cognisant of the amount of time available to prepare for an arrest.

4 This article therefore serves to explore and shed light on the aspects pertaining to the identification, consolidation and presentation of material facts. In relation to the identification of material facts, the article shall endeavour to provide categories of facts which have been deemed to be material by the courts. It is humbly submitted that the development of such categories may assist an arresting party in identifying and sorting material facts. As for the consolidation and presentation of material facts, the article shall address the process of drafting the arrest affidavit and presenting the material facts at the ex parte hearing. Alongside this point, the article shall also discuss the challenges faced by arresting parties in fulfilling their duty of disclosure due to the scarcity of time.

II. Identification of material facts

5 In Singapore, the test of materiality in an application for a warrant of arrest is similar to the test of materiality in an application for an ex parte interlocutory injunction3 or any other application where a duty of full and frank disclosure exists.4 The failure to disclose material facts in the arrest affidavit may result in the arrest being set aside and a finding of wrongful damages made against the arresting party. A high threshold of disclosure is therefore imposed on prospective arresting parties. The duty falls upon the arresting party to identify and disclose material facts in order to obtain a warrant of arrest. However, the identification of material facts may not be that straightforward as the test of what is material is not prescribed by the Rules of Court5 (“RoC”) or any legislation.

6 The test of whether a fact is material or not was first laid down by the Singapore courts in The Damavand6 and subsequently endorsed by the Singapore Court of Appeal in The Rainbow Spring7 and The Vasiliy Golovnin.8 According to these cases, a material fact 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. The apex court in The Vasiliy Golovnin9 went on to expound on the test of materiality as follows:

[T]he duty imposed on the applicant requires him to ask what might be relevant to the court in its assessment of whether or not the remedy should be granted, and not what the applicant alone might think is relevant. This inevitably embraces matters, both factual and legal, which may be prejudicial or disadvantageous to the successful outcome of the applicant's application. It extends to all material facts

that could be reasonably ascertained and defences that might be reasonably raised by the defendant …

7 Whilst the purpose of this article is not to provide a critique on the test of materiality, it is humbly submitted that the above test casts an extensive net which labels a wide range of facts as material. First, an arresting party is required to place himself in the objective position of the court to assess whether a particular fact is material. Second, the test is couched in very broad terms which include “relevant” facts and facts which would be “prejudicial or disadvantageous” to the arresting party's case. Third, reasonable defences are deemed material and have to be disclosed as well. Fourth, the test is encumbered by an expansive qualification that a material fact need not result in a different decision being made.

8 Although it is no surprise that the Singapore courts would hold that the test of materiality is general and broad,10 it is humbly submitted that such a broad test would amplify the pressure faced by an arresting party as he, in preparing for an arrest, would have to consider an eclectic mix of facts to ensure that the threshold of materiality is made. Indeed, The Vasiliy Golovnin has ushered in a “pro-owner” era in Singapore11 where solicitors representing arresting parties tend to tread carefully whilst preparing their arrest papers.

9 Although what is material will depend on the facts and circumstances prevailing in each case,12 it is submitted that material facts relating to an arrest can be broadly grouped into several non-exhaustive categories. It is humbly submitted that such broad categorisations may provide assistance to an arresting party in sieving out and identifying the material facts in relation to his case. Based on a review of the local cases where the courts made a finding of material non-disclosure, it is submitted that categories of material facts include facts: (a) relating to the invocation of admiralty jurisdiction; (b) which give rise to plausible defences; and (c) the omission of which would mislead the court or misrepresent the circumstances surrounding the arresting party's claim.

A. Facts relating to invocation of admiralty jurisdiction

10 Before we delve into a discussion of what facts may be material for the purposes of the invocation of admiralty jurisdiction, it is useful to note that the standard of proof for an arresting party to invoke admiralty jurisdiction in Singapore as set out in The Bunga Melati 513 is not particularly onerous:14

[A] plaintiff has to, when challenged

(a) prove, on the balance of probabilities, that the jurisdictional facts under the limb it is relying on in s 3(1)(d) to 3(1)(q) exist; and show an arguable case that its claim is of the type or nature required by the relevant statutory provision (‘step 1’);

(b) prove, on the balance of probabilities, that the claim arises in connection with a ship (‘step 2’);

(c) identify, without having to show in argument, the person who would be liable on the claim in an action in personam (‘step 3’);

(d) prove on the balance of probabilities, that the relevant person was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship (‘step 4’); and

(e) prove on the balance of probabilities, that the relevant person was, at the time when the action was brought: (i) the beneficial owner of the offending ship as respects all the shares in it or the charterer of that ship under a demise charter; or (ii) the beneficial owner of the sister ship as respects all the shares in it (‘step 5’).

[emphasis in original]

11 Notwithstanding the modest standard of proof and the fact that an arresting party need not show a good arguable case on the merits of its claim to establish admiralty jurisdiction, the Court of...