IN PERSONAM LIABILITY, BENEFICIAL OWNERSHIP AND THE ACTION IN REM
|DAVID CHONG GEK SIAN
|01 December 1994
|01 December 1994
This article examines the right of maritime claimants to arrest ships to obtain security for their claims under section 4(4) of the High Court (Admiralty Jurisdiction) Act. In particular, the article examines the twin requirements of in personam liability and beneficial ownership as stipulated in section 4(4).
THE ability to effect an arrest of a ship is that which gives to the maritime claimant the opportunity to obtain security for his claim. The right of the maritime claimant to invoke the admiralty jurisdiction of the Singapore High Court by an action in rem is regulated by the High Court (Admiralty Jurisdiction) Act1 (hereinafter referred to as “the HCAJA”). Under the HCAJA, the maritime claimant’s ability to effect an arrest of a ship is dependent on the fulfillment of two conditions. First, the claim sought to be enforced via the action in rem must be one that falls within the lettered sub-paragraphs of section 3(1) of the High Court (Admiralty Jurisdiction) Act.2 Secondly, the maritime claimant must bring his claim within section 4(2) or (3) or (4) of the HCAJA for these are the provisions which prescribe the mode of exercise of admiralty jurisdiction.3
The object of this paper is to examine the right of arrest as prescribed by section 4(4) of the HCAJA. In particular, this paper examines the twin requirements of in personam liability and beneficial ownership stipulated in the said section 4(4).
At this juncture, it is appropriate to state that section 4(4)4 of the HCAJA permits the arrest of ships where the plaintiff’s claim falls within section 3(1)(d) to (q) of the HCAJA. Some of the claims falling within the said
section 3(1)(d) to (q) give rise to maritime liens while others merely give rise to statutory rights of action in rem. A statutory right of action in rem is the expression used to describe a claim (which does not give rise to a maritime lien) in respect of which statute permits enforcement by way of the action in rem.5 Under section 4(4), a ship beneficially owned by the person who would be liable on the claim in an action in personam may be arrested as security for the plaintiff’s claim.
The expression “person who would be liable on the claim in an action in personam” as used in section 4(4) of the HCAJA seeks to identify the person who would — and not is — liable on the claim in an action in personam. The case in point is “6 where Willmer J. held that the expression “the person who would be liable on the claim in an action in personam” in the context of the English provision equivalent to section 4(4) of the HCAJA merely identifies the person or persons whose ships may be arrested on the assumption that the action succeeds. This is an assumption of all the facts and evidence pertaining to the plaintiff’s cause of action as alleged by the plaintiff against the person alleged to be liable on the claim.7 As Lord Brandon of Oakbrook put it in “ ”,8“it is necessary to assume, without deciding, that the [plaintiffs] have an arguable case in law in respect of their claim.”9”
Thus, section 4(4) of the HCAJA does not require the plaintiff to prove on a balance of probabilities that the person alleged to be the person liable on the claim is liable on the claim at the stage of issuance of the writ in rem and the service of the warrant of arrest. It may well be that on examination of the rival contentions at the trial of the action, the in personam liability of the person alleged to be liable is not made out. The person alleged by the plaintiff to be liable for the claim may contend that there are impregnable defences to the plaintiff’s claim but at that early stage of the proceedings, these defences do not arise for examination or scrutiny.10 A local authority for this proposition is “ ”,11 an unreported decision of the Singapore Court of Appeal which affirmed the first instance decision of Chua J.12
In “13 the court was to assume the facts as alleged by the plaintiffs in their affidavit filed in support of their claim. Being dissatisfied with the decision of Chua J., the shipowners appealed to the Court of Appeal. Thean J., who delivered the judgment of the Court of Appeal,14 stated that Chua J. was plainly correct to have proceeded on the assumption that the facts as alleged by the plaintiffs to have given rise to their claim against the shipowners were true. Thean J. added that:”, the defendants shipowners applied to set aside the writ in rem and warrant of arrest as they contended that the supply of goods and materials to the ship had not been authorised by them and that the contract for the supply of goods and materials had been entered into between the plaintiffs and one P.T. EMKL Fajar Kemenangan of Jakarta. Hence, according to the shipowners, they were not personally liable in respect of the plaintiffs’ claim arising from the supply of the goods and materials. At first instance, Chua J. accepted that the plaintiffs could arrest the ‘Wigwam’ without needing to prove that they had a cause of action substantial in law and as there was no challenge mounted by the shipowners that the proceedings were frivolous or vexatious,
“On the material before us the [shipowners] are the person who would be liable to the [plaintiffs] on the claim in an action in personam on the assumption that the action succeeds. It may well be that the [plaintiffs] might not succeed in their claim but that would be determined after a full hearing of the case.”15
In other words, the court in “” was satisfied on the facts alleged by the plaintiffs, that the defendants were identified as the person who would be liable on the claim in an action in personam.
It is interesting to note that the Hong Kong Court of Appeal has also adopted the position taken by Willmer J. in “16 and 17, the Hong Kong Court of Appeal declined the invitation to examine the contentious affidavits filed by the opposing parties for the purpose of trying on the merits the matter of in personam liability. Indeed in , the Hong Kong Court of Appeal led by Kempster J.A. took the view that the approach taken by Willmer J. in “ ” is also applicable to the matter of the existence of the nature of the claim”. In both
advanced by the plaintiff against the defendant. In other words, where the plaintiff advances a claim which ostensibly falls within, say, section 3(1)(h) of the HCAJA, the court will assume, at the stage of issuance of the writ in rem and service of the warrant of arrest, the correctness and veracity of such facts and evidence alleged by the plaintiff as founding the agreement for hire or use of the ship and the breach of such an agreement. In the words of Kempster J.A., “The fact that a claim is made resulting from an alleged breach of an alleged agreement of the nature required suffices.…“18” approach covers the agreement as well as the breach, the establishment of the cause of action and damages.”
Thus, it is clear from “19 the question whether the court has jurisdiction to entertain the plaintiff’s claim in rem:”, “ ” and “ ” that the expression “the person who would be liable on the claim in an action in personam” in section 4(4) of the HCAJA does not require the plaintiff to prove at the outset (i.e., at a point in time prior to the actual trial of the action) that he has a cause of action sustainable in law against the relevant person. There is no requirement, on a motion to set aside the writ in rem on the ground of lack of jurisdiction, for the plaintiff to demonstrate that he has a good arguable case on the facts against the relevant person — the relevant person being the person identified by the plaintiff as the person liable on the claim in an action in personam — for the court is to assume that the facts as alleged by the plaintiff are correct. In the words of Brandon J. (as he then was) in “ ”,
“must … be answered by reference to the nature of the plaintiff’s claim as put forward, without reference to the further point whether it is likely to succeed or not.”20
On the assumption that the facts alleged by the plaintiff as founding his claim are correct, the facts are to identify the person alleged to be personally liable on the claim. The rationale for the assumption is that unless the assumption is made, the court would be conducting a mini-trial on the affidavit evidence to see whether the plaintiff really has a cause of action. And to so conduct a mini-trial on the contentious affidavits filed by the
opposing parties would be to usurp the function of the trial judge, and to produce a trial in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. It is at the trial of the action that the court decides whether or not the plaintiff’s claim is indeed established based on the facts and evidence adduced at the trial. Since the High Court is invested with the jurisdiction to hear and determine claims falling within the lettered sub-paragraphs of section 3(1) of the HCAJA, the court must permit the plaintiff’s claim to go to trial. For unless the court permits the plaintiffs’ claim to go to trial, the court would be denying to itself the opportunity to hear and determine the plaintiff’s claim.21
Hence, on a motion to set aside the writ in rem and warrant of arrest on the ground of lack of jurisdiction, the court does not halt the action in limine where the defendants merely contend that they are not personally liable on the plaintiff’s claim.
However, where the facts relied on by the plaintiff as founding his claim do not disclose or identify the beneficial owner22...
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