Pan-United Shipyard Pte Ltd v The Owners of the Ship or Vessel "Alpha 601" and Another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 31 August 1998
• Neutral Citation: [1998] SGHC 293
• Published date: 26 February 2013
• Court: High Court (Singapore)
• Plaintiff Counsel: Jude Benny, Hussainar Aziz & Navinder Singh (Joseph Tan Jude Benny & Scott)
• Defendant Counsel: Vivian Ang & Ruth Chan (Allen & Gledhill)

Judgment :

GROUNDS OF DECISION

The background

1. Pan-United Shipyard Pte Ltd (the plaintiffs) are a company incorporated in Singapore and are in the business of ship-repairing which they carry on at a yard at No. 33 Tuas Crescent, Tuas Basin (the yard). Alpha 601 Inc. (the defendants) a company incorporated in the Republic of Panama with a place of business at No 45 Shipyard Road, Unit 9A, Jurong Marine Base, Singapore, were at the material time the owners of the ship or vessel known as Alpha 601 (the vessel) which was registered under the Panama flag.

2. The Chase Manhattan Bank (the interveners) are a banking association incorporated under the laws of the United States of America and have a place of business in Singapore which at the material time, was at No 50 Raffles Place, Shell Tower. By a deed described as a first preferred naval mortgage dated 14 March 1990 (the mortgage) and made between the defendants and the interveners, the latter agreed to advance to another company (Swift Liner Inc.) at the request of the defendants, a sum of US$5.5m secured by a mortgage on the vessel.

3. On or about 30 September 1993, the vessel arrived in the yard for repairs and other services. The plaintiffs were not paid for the services which they rendered to the vessel (save for two (2) part payments totalling $96,000) despite repeated demands and an agreement dated 13 December 1995 made with the defendants whereby the plaintiffs’ claim of $702,885 was reduced to $480,000 (the reduced sum), on condition that the defendants paid the reduced sum by ten (10) equal monthly instalments with effect from 1 May 1996.

4. On 18 July 1996 the plaintiffs commenced these proceedings. Exactly eight (8) months later on 18 March 1997, the plaintiffs arrested the vessel at Tuas and a day later, served the writ of summons on her. The writ of summons merely contained an endorsement of claim as follows:

The plaintiffs’ claim against the defendants is for monies 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

5. Pursuant to their application made by way of Notice of Motion No 126 of 1997, the plaintiffs obtained inter alia, the following orders on 23 May 1997 (the sale order):

a. that the vessel and her bunkers be sold pendente lite by the Sheriff either by public auction or by public treaty, free and clean of all liens, encumbrances and claims;

b. the proceeds of sale of the vessel and her bunkers be paid into court to the credit of these proceedings;

c. priority of claims against the proceeds of sale of the vessel not to be determined until after the expiration of 30 days from the date such proceeds are paid into court;

d. liberty to apply.

6. Thereafter, on 26 May 1997 the plaintiffs filed their praecipe for commission for appraisement and sale. On 27 May 1997 the Sheriff instructed appraisers who, on 30 May and on 2 June 1997 respectively, boarded and inspected the vessel for purposes of appraisement and sale. The plaintiffs’ contention (para 33 of their submissions) that as at 27 June 1997, the Sheriff had not appraised the vessel is therefore incorrect.

7. On 31 May 1997, the interveners’ solicitors had filed caveat no. 125 of 1997 against release and payment. They then applied (ex-parte) for and were granted, leave to intervene in these proceedings, on 13 June 1997. On 16 June 1997, the interveners entered an appearance to the action. As at the date they applied to intervene in the proceedings, the interveners’ claim as mortgagees of the vessel, totalled US$2,741,091.10 for principal, interest, expenses, fees and other expenses.

The application

8. On 27 June 1997, the plaintiffs applied by way of Notice of Motion No 186 of 1997 (the application) 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 plaintiffs’ possessory lien. The plaintiffs then filed summons-in- chambers entered no. 5077 of 1997 (the second application) on 7 July 1997 for an order that the sale of the vessel be stayed until the final disposal of the application. Apparently they wanted to stop the Sheriff from advertising the sale, which advertisement had been scheduled to appear on 8 July 1997.

9. The second application came up for hearing on 8 July 1997 but no order was granted as, by consent of the plaintiffs and the interveners, the sale of the vessel was ordered to proceed without prejudice to the determination of the application. The vessel was then advertised for sale on 11 July 1997 and sold by the Sheriff on 12 August 1997 (by private treaty) for $508,000; less the Sheriff’s commission and expenses incidental to the arrest and sale of the vessel, the net sale proceeds approximated $480,000.

10. The application first came up for hearing before me in September 1997. After hearing arguments, I ordered that the sale of the vessel by the Sheriff be subject to any possessory lien the plaintiffs may be able to later establish as having been in effect as at the date of the sale order (23 May 1997). I set deadlines for the plaintiffs to file and serve their statement of claim and directed that the ancillary issue (if they had such a lien as at 23 May 1997) whether the plaintiffs lost their possessory lien by the sale order, be restored for hearing after the plaintiffs’ claim against the defendants had been adjudicated.

11. On 29 May 1998, the plaintiffs obtained judgment in default of appearance against the defendants in the sums of $671,325 less $96,000 (for repairs) and $166,992 (for wharfage, mooring and unmooring charges). They did not succeed in their earlier attempt at summary judgment under O 14 of the Rules of the Supreme Court. In the statement of claim filed on 18 September 1997, the plaintiffs alleged they had a possessory lien over the vessel; in para 6 they pleaded:

The plaintiffs had as security for their claim kept possession of the vessel in their yard and/or control from the time the defendants delivered the vessel to the plaintiffs on (sic) September 1993. In the premises, the plaintiffs are maintaining a possessory lien over the vessel in respect of their claim herein.

12. I should add that the first time the plaintiffs alleged they had a possessory lien over the vessel was on 27 June 1997, in an affidavit filed by their counsel Hussainar Aziz (Aziz) in support of the application. I refer to the following paragraphs of his affidavit:

6. The vessel has since the time of the repairs up to the day of its arrest and to date been lying at the plaintiffs’ shipyard. The plaintiffs are consequently exercising a possessory lien over the vessel for the amount outstanding in respect of their above mentioned claim.

8. The plaintiffs have continued to exercise a possessory lien over the vessel even after the arrest of the same. The Sheriff though having custody of the vessel by virtue of the Warrant of Arrest issued on 18 March 1997, does not until the sale is effected, have possession of the same.

9. The plaintiffs are further instructed that the Sheriff has to date not advertised the sale of the vessel. The vessel although in the custody of the Sheriff has continued to be in the possession of the plaintiffs herein. The plaintiffs also verily believe that the plaintiffs’ possession of the vessel will only be "lost" to the Sheriff the instant the Sheriff effects the sale of vessel ie. when the Bill of Sale is signed and/or effected. Until such time the Sheriff takes possession of the vessel to effect the sale of the same, the plaintiffs continue to exercise possession and therefore a lien over the vessel.

Subsequent events proved the above statements to be incorrect.

13. On their part the interveners commenced proceedings against the defendants in Adm in Rem No. 365 of 1997 and obtained judgment in default of appearance on 31 October 1997 in the principal sum of US$2,358,143.94, interest and costs.

14. The outstanding issues (2) from the September 1997 hearing were accordingly restored for hearing before me in August 1998.

The affidavits

15. Before I refer to the submissions presented by counsel for the parties, I need to refer to some of the affidavits filed by their clients, touching on the exact location of the vessel and whether the plaintiffs did in fact have her actual possession.

16. According to an affidavit filed by Captain Peter Bird (Bird) who had been instructed by the interveners to conduct a physical inspection of the vessel, he telephoned the plaintiffs on 19 July 1997 to make an appointment to survey the vessel. He was informed by the plaintiffs’ assistant general manager (Lim Hwee Seng) that the vessel was not in the plaintiffs’ yard but due to space constraints, was lying at the adjoining waterfront of Du Pont Singapore Pte Ltd (Du Pont) in Tuas Basin. Bird was told he could not view the vessel that particular weekend as he wanted; Bird was advised to contact the plaintiffs’ finance manager Johnny Yeo (Yeo) the following Monday 21 July 1997.

17. Bird did contact Yeo on 21 July 1997 and made arrangements to board the vessel. Arriving that afternoon at the yard, Bird deposed he was taken by the plaintiffs’ boatman to the vessel, which was moored at Du Pont’s waterfront at No 39. Tuas Crescent. The boatman informed Bird that the vessel had been moored there for about 6-8 months. This information was to be contrasted with information from the Port of Singapore Authority (PSA) Portnet search which showed that the vessel was lying at the plaintiffs’ yard, which was not correct.

18. Lim Hwee Seng (Lim) filed an affidavit in reply to Bird’s. He complained that Bird gained access to the vessel by falsely claiming to act for some potential...