Kuo Fen Ching and Another v Dauphin Offshore Engineering & Trading Pte Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 02 July 1999
• Neutral Citation: [1999] SGCA 95
• Docket Number: Civil Appeal No 273 of 1998
• Date: 02 July 1999
• Published date: 29 June 2006
• Year: 1999
• Plaintiff Counsel: Lim Tean and AJ Ramachandran (Rajah & Tann)
• Citation: [1999] SGCA 95
• Defendant Counsel: Goon Hoong Seng and Joseph Chellappan (Low Yeap Toh & Goon)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether judgment in rem can be entered despite vessel owner's dissolution,Admiralty jurisdiction and arrest,Action in rem,After writ issued and served on vessel,Admiralty and Shipping,Judgment in rem,Practice and procedure of action in rem,Whether action in rem survives change in ownership

Introduction

1. This appeal arose from the decision of Rajendran J who granted the respondents judgment in rem for the sum of S$184,779.80 with interest for their claim against the owners of the vessel “Capricon”. The respondents’ claim was in respect of materials supplied and works and services performed by them on the said vessel. The owner of the vessel at the time of the issue of the writ in November 1993 was a company known as Valour Offshore Marine Services NV (‘Valour NV’) which was incorporated in the Netherlands Antilles. This company entered an appearance to the action taken out against them by the respondents and filed its defence through its then solicitors, Messrs Ang & Partners. The vessel was released after its arrest when the appropriate security was provided via a Letter of Guarantee provided by Citibank.

Background Facts

2. The main fact in this appeal was the dissolution of Valour NV on 20 September 1995 in the Netherlands Antilles after the writ had been issued by the respondents and Valour NV’s defence filed. Subsequently on 29 May 1996, Messrs Haridass Ho & Partners took over the conduct of the case for Valour NV. The first part of the in rem action was heard in March 1998 and on 4 April 1998, Messrs Rajah & Tann replaced them as the solicitors representing Valour NV.

3. This turn of events was of significance as Messrs Rajah & Tann allegedly only found out that Valour NV had been dissolved in May 1998 and therefore informed the Registrar of the Supreme Court of this fact. They then applied to discharge themselves as the solicitors on record on the ground that Valour NV, as the defendant to the respondents’ claim for payment of ship repairs, no longer existed. As evidence of this, a declaration from the Curacao Commercial Registry that the defendants were dissolved and liquidated was presented to Rajendran J who granted the discharge on 22 July 1998.

4. Subsequently, Mr Lim Tean of Messrs Rajah & Tann submitted that as the vessel had been released on a guarantee provided to the respondents by Citibank, Citibank should be informed of these proceedings and invited to intervene due to the present circumstances. Time was given to counsel to enquire of Citibank whether it wanted to do so and it was determined that the bank did not wish to intervene. For the subsequent duration of the hearing, Mr Lim Tean addressed the court as amicus curiae and submitted that as the defendant company no longer existed, judgment could not be entered against it. The learned judge however gave judgment for the respondents in rem as claimed. The appellants, having provided counter-security in the form of a time deposit at Citibank in return for which Citibank had issued the Letter of Guarantee for the vessels’ release, intervened in the action and filed the notice of appeal.

The decision below

5. The learned judge was of the opinion that despite the defendant company having been dissolved, judgment in rem could still be given to satisfy the respondents’ claim. In coming to his decision, the judge examined the nature of an in rem action and what happened to this sort of action after the owner of the arrested vessel entered an appearance to defend the claim.

6. While accepting the submission of appellants’ counsel that when the owner of a vessel enters appearance in an admiralty action in rem, the owner is effectively the defendant in respect of the action in rem as well as the action in personam, Rajendran J noted that the two proceedings remain separate. Entry of appearance does not result in the fusion of the two. The authorities cited by appellants’ counsel such as The “Kusu Island” [1989] 3 MLJ 257 and The “Indian Grace” [1998] 1 LLR 1 were in fact in support of the proposition that when an owner of the vessel entered an appearance and thereby assumed personal liability, the owner became the defendant and thus subject to personal liability in the event that he was not successful in defending the action. On the other hand, where the owner did not enter an appearance, the plaintiff in the action could only satisfy his claim against the vessel and would not be able to establish personal liability against the owner. Rajendran J based this opinion on the dictum of Fletcher Moulton LJ in The Burns [1901] P 137 and the comment by Wee Chong Jin CJ in The “Kusu Island” that 'once the defendant to an action in rem has entered an unconditional appearance he submits to the jurisdiction of the court and from then onwards the action continues as an action in rem and in personam.' [Emphasis added.]

7. The learned judge was also not completely satisfied that Valour NV had in fact ceased to exist as the only evidence before him was a faxed copy of the declaration from the Curacao Commercial Register stating this fact. As such, Rajendran J stated that in the absence of clear evidence that Valour NV had been dissolved, the effect of counsel discharging himself from further acting and of Valour NV no longer participating in the proceedings was really no different from a situation where a defendant failed to appear at the hearing. In such a situation, the hearing can proceed and judgment entered against that defendant even though the defendant is not present in court.

8. However, the judge decided to proceed as if Valour NV had indeed been dissolved on 20 September 1995. As the law of the Netherland Antilles was not pleaded before him, Rajendran J assumed that the foreign law was the same as the local law relating to the position of proceedings against a company in the process of being wound up or which had been wound up. The learned judge found as a fact that in the present case, the respondents, as repairers, had a possessory lien over the vessel for their unpaid charges. In addition, the arrest of the vessel which was done before Valour NV was wound up, created a statutory lien in favour of the respondents on the vessel. This meant that the respondents could assert against all the world that the vessel was a security for their claim. As such, this was a case which was suitable for leave for the proceedings to continue under s 262(3) of the Companies Act (Cap 50) to be granted.

9. In coming to his decision, Rajendran J relied largely on Lim Bock Lai v Selco (Singapore) Pte Ltd [1987] 2 MLJ 688. Lai Kew Chai J granted the plaintiffs in this case the requisite leave to continue proceedings under s 262(3) of the Companies Act. He said that the issue of a writ in rem in exercise of the statutory right of action had crucial consequences which enured to the benefit of the plaintiffs and made them secured creditors. This was a substantial factor influencing him to exercise his discretion to allow them to proceed with their claim against the defendants. Similar comments in The Hull 308 [1991] 3 MLJ 393 and Re Aro Co Ltd [1980] 1 Ch 196 also led the judge to reach his decision to allow the continuation of the present proceedings.

10. The judge was of the view that Lazard Brothers & Co v Midland Bank Ltd [1933] AC 289 was not applicable to the facts of the present case as it did not concern an admiralty action in rem. Furthermore, it was a case where at the time the writ was issued, the defendant was already non-existent. In this case, Valour NV was in existence at the time of issue of the writ. As such, the judge granted the respondents their claim for the amount due for the repairs done on the vessel.

The appeal

11. The appellants submitted that the learned judge erred in allowing judgment in rem to be entered for the respondents’ claim for four reasons. Their main ground of appeal was that the judge had erred in concluding that judgments in rem could be entered notwithstanding the fact that the defendant company had been dissolved. This was based on the authorities of Lazard Brothers & Co v Midland Bank Ltd. The appellants argued that once a company is dissolved, no judgment can be entered against it and the dissolution must be first set aside in order for proceedings to continue.

12. The appellants further submitted that the judge had no jurisdiction to exercise his discretion under s 262(3) of the Companies Act as the defendant company was a company incorporated in the Netherlands Antilles and was dissolved there. As such, the Singapore court has no jurisdiction under Part X of the Companies Act [in which s 262(3) is found] in respect of it as the corporation was not wound up under Part X.

13. Finally, the appellants argued that the judge was not correct in holding that there was insufficient evidence that Valour NV had been dissolved in the Netherlands Antilles in spite of the declaration from the Curacao Commercial Registry.

Preliminary issue

14. Before discussing the main crux of the appeal, the appellants’ contentions regarding the judge’s finding that there was insufficient evidence to suggest that the defendants had been dissolved must be dealt with. This contention was easily rejected by the fact that the judge, while making the above comment, did not actually base his decision on it. In fact, he proceeded on the basis that Valour NV had indeed been dissolved. In this event, the notice of motion filed by the appellants to adduce as fresh evidence, an affidavit purporting to prove that Valour NV had indeed been wound up, was dismissed as this fact had not affected the judge’s decision in any way.

The nature of an admiralty action in rem

15. We now turn to the appellants’ main ground of appeal. They asserted that in in rem proceedings, the defendants are the shipowners, whether an appearance is entered by them or not. As such where no appearance is entered, the enforcement of the judgment would be restricted to the res only. However, the...