Pan-United Shipyard Pte Ltd v Chase Manhattan Bank (National Association)

• Jurisdiction: Singapore
• Judgment Date: 12 March 1999
• Date: 12 March 1999
• Docket Number: Civil Appeal No 237 of 1998
• Court: Court of Appeal (Singapore)

Pan-United Shipyard Pte Ltd

Plaintiff

and

The Chase Manhattan Bank (National Association)

Defendant

[1999] SGCA 93

M Karthigesu JA

,

Lai Kew Chai J

and

Goh Joon Seng J

Civil Appeal No 237 of 1998

Court of Appeal

Admiralty and Shipping–Admiralty jurisdiction and arrest–Possessory liens–Essence of possessory lien–Vessel not within repairer's premises–Whether repairer still having control over vessel–Whether repairer having immediate right to possession–Whether repairer could prevent unauthorised removal–Admiralty and Shipping–Admiralty jurisdiction and arrest–Possessory liens–Order for appraisement and sale of vessel–Nature of sheriff's rights to custody–No actual transfer to sheriff for sale–Whether repairer still retaining possessory lien–Whether repairer could apply for declaration to preserve possessory lien before actual sale effected

The respondent, Chase Manhattan Bank (“the Bank”) was the mortgagee of the vessel on which the appellant, Pan-United Shipyard Pte Ltd (“the Shipyard”) carried out major repairs and works. The Shipyard agreed with the vessel's owners that the cost of repair works be paid in instalments. The owners defaulted in payment and, the Shipyard arrested the vessel and claimed a debt for repair works. It did not claim for a possessory lien over the repair charges. It later successfully applied for the vessel to be sold “free and clean of all liens, encumbrances and claims” and an appraisement of the vessel was completed. The Bank then filed a caveat against release and payment out. On 27 June 1997, the sheriff had not sold the vessel and the Shipyard applied for an order that the sale be effected without prejudice to its possessory lien. The High Court granted its application. The Bank applied for further arguments. It argued that: (a) the vessel was not in the Shipyard's yard and therefore it had no possessory lien; (b) by applying for the sale of the vessel pendente lite it had lost its possessory lien. The High Court agreed with the Bank and dismissed the Shipyard's 27 June 1997 application. The Shipyard appealed.

Held, allowing the appeal:

(1) Central to the assertion of a possessory lien was the ability to establish possession over the subject matter of the lien. Whether a repairer had established possession over a chattel to enable the assertion of a possessory lien was a question of fact and degree. On the facts, the fact that the vessel was moored at an adjoining waterfront outside its premises was not conclusive evidence that possession was lost. The vessel continued to remain within the Shipyard's control by first, its having an immediate right to possession of the vessel and second, its ability to prevent the vessel from any unauthorised removal. Thus the Shipyard still retained its possessory lien. Its omission to mention the possessory lien in the statement of claim could be cured by the delivery of a proper statement of claim: at [15], [16], [22], [23], [25], [27] and [29].

(2) The sheriff's custody over an arrested vessel was in law a lesser right and had to be distinguished from a ship repairer's exclusive and actual possession of the vessel in his yard. The order for appraisement and sale did not have the effect of dispossessing the possessory lienee. In this case, the sheriff's rights were rights of custody of ship, not possession. Until the sheriff took over physical possession of the vessel from the Shipyard in order to transfer possession to the purchaser upon completion, the Shipyard was perfectly entitled to make a fresh application for the sale and appraisement to be effected without prejudice to its lien: at [34] and [40].

Acacia, The (1880) 4 Asp MLC 254 (refd)

Acrux, The [1962] 1 Lloyd's Rep 405 (folld)

Arantzazu Mendi, The [1939] AC 256 (refd)

Barr and Shearer v William Edward Cooper (1875) 2 Court of Sessions (4th Series) 14 (folld)

Century Dawn, The [1997] 2 SLR (R) 876; [1998] 1 SLR 775 (refd)

Dwima 1, The [1996] 1 SLR (R) 927; [1996] 2 SLR 670 (distd)

Hill v Luton Corporation [1951] 2 KB 387; [1951] 1 All ER 1028 (folld)

Humber Shiprepairers v Norport Project Developments Ltd (1990) (Court of Appeal, UK) (folld)

Jacobs v Latour [1824-1834] All ER Rep 96 (distd)

Joseph Fisher v William Digby Smith (1878) 4 App Cas 1 (refd)

Ladd v Marshall [1954] 1 WLR 1489 (folld)

Narada, The [1977] I Lloyds Rep 256 (folld)

Pontin v Wood [1962] 1 QB 594; [1962] 1 All ER 294 (folld)

Tergeste, The [1903] P 26 (folld)

Tubantia, The [1924] P 78 (folld)

Wilson v Lombank Ltd [1963] 1 WLR 1294; [1963] 1 All ER 740 (folld)

Jude P Benny and Navinder Singh (Joseph Tan Jude Benny) for the appellant

Vivian Ang (Allen & Gledhill) for the respondent.

Judgment reserved.

Lai Kew Chai J

(delivering the judgment of the court):

1 This appeal arose out of a decision of the High Court delivered on 31 August 1998 which dismissed the appellant's application by way of NM 186/1997, filed on 27 June 1997, for, inter alia, the order that the appraisement and sale of the vessel ALPHA 601 (“the vessel”) pursuant to an order of court made on 23 May 1997 be effected by the Sheriff without prejudice to the appellant's possessory lien.

The facts

2 The appellants in the appeal, Pan-United Shipyard Pte Ltd, were the plaintiffs in Admiralty in Rem 424/1996 (“the action”). They were at all material times in the business of ship repairing which they carried on at a yard at Tuas Crescent, Tuas Basin, Singapore. The defendants in the action were the owners and mortgagors of the vessel. The respondents, The Chase Manhattan Bank (National Association), were the interveners in the action and were at all material times the mortgagees of the vessel under a first-preferred naval mortgage dated 14 March 1990 made between the defendants and the respondents, whereby the respondents agreed to advance to another company, Swift Liner Inc, at the request of the defendants, a sum of US$5.5m secured by, inter alia, a mortgage on the vessel.

3 The vessel arrived at the appellants' shipyard on or about 30 September 1993. Thereafter, from 4 October 1993 to 21 June 1994, the appellants carried out various major repairs and works on the vessel. These were evidenced by the appellants' work orders which were signed and accepted by the defendants, the vessel's owners.

4 As at 13 December 1995, the total amount owing by the defendants to the appellants in respect of the repair works was S$702,885.00. By an agreement reached between the appellants and the defendants, it was agreed that the appellants would accept the discounted sum of S$480,000.00 payable in ten equal monthly instalments commencing on 1 May 1996, provided that in the event of default, the whole of the original debt of S$702,885 would become immediately payable by the defendants. The defendants subsequently defaulted in payment and on 18 July 1996, the appellants commenced the action, Admiralty in Rem 424/1996, claiming a debt for the repair works. On 19 March 1997, the appellants arrested the vessel and served the writ of summons on her. The writ of summons then served merely contained an indorsement of claim in the following terms:

The plaintiffs' claim against the defendants is for moneys due for repairs carried out and for the supply of ship's equipment made at the request of or to the order of the defendants, their servants or agents, at the port of Singapore during the months of September 1993 to February 1995 to the defendants' ship or vessel “Alpha 601” for her operation and maintenance.

There was no mention of any claim for a possessory lien in respect of the repair charges. The claim was simply for a debt.

5 Two months later, on 17 May 1997, the appellants applied by way of NM 126/1997 for, inter alia, the vessel and her bunkers to be:

… appraised and sold pendente lite by the Sheriff either by public auction or by public treaty, free and clean of all liens, encumbrances and claims, and for the proceeds of sale of the vessel and her bunkers to be paid into court to the credit of these proceedings'. [emphasis added]

There was similarly no mention in either the application or in the affidavit in support of any claim for a possessory lien. Consequently, Goh Joon Seng J who heard and granted the application on 23 May 1997 ordered the vessel to be sold “free and clean of all liens, encumbrances and claims”. Thereafter, on 26 May 1997, the appellants filed their praecipe for commission for appraisement and sale. On 27 May 1997, the Sheriff instructed appraisers who, on 30 May 1997 and 2 June 1997 respectively, boarded and inspected the vessel for the purposes of appraisement and sale. On 31 May 1997, the respondents came into the picture when they filed a caveat against release and payment out. They then applied on 13 June 1997 for leave to intervene in the proceedings. The respondents' claim at that stage totalled US$2,741,091.10. The respondents then entered an appearance in the action on 16 June 1997.

6 On 27 June 1997, after the interveners had intervened and entered an appearance in the action, the appellants applied by way of NM 186/1997 (in respect of which this appeal arises) for an order:

… that the appraisement and sale of the vessel pursuant to the order of court made herein on 23 May 1997 be effected without prejudice to the appellants' possessory lien. [emphasis added]

It was the first time that the appellants asserted that they had a possessory lien over the vessel. At the time of the filing of NM 186/1997 on 27 June 1997, the vessel had not yet been sold by the sheriff. However, appraisement of the vessel pursuant to the order of 23 May 19897 had already been completed. The appellants then filed SIC 5077/97 (“the stay application”) on 7 July 1997 for an order that the sale of the vessel be stayed until the final disposition of the application (viz NM 186/1997). The stay application came up for hearing on 8 July 1997 before Choo Han Teck JC who...