The "Andres Bonifacio"

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 22 September 1993
• Neutral Citation: [1993] SGCA 70
• Docket Number: Civil Appeals Nos 66, 67 and
• Date: 22 September 1993
• Published date: 19 September 2003
• Year: 1993
• Plaintiff Counsel: Anthony Clarke QC (as he then was) and Kuek Chong Yeow Richard (Gurbani & Co)
• Citation: [1993] SGCA 70
• Defendant Counsel: Michael Thomas QC, Pathmanaban Selvadurai and Govindarajalu Asokan (Rodyk & Davidson)
• Court: Court of Appeal (Singapore)
• Subject Matter: Lifting the corporate veil,Invocation of admiralty jurisdiction,Conflict of Laws,Arrest of vessel,Admiralty and Shipping,Determination of the connecting factor by the lex fori,Lex fori being Singapore law,s 4(4) High Court (Admiralty Jurisdiction) Act (Cap 123),'Beneficial ownership',Admiralty jurisdiction of High Court,Words and Phrases,Beneficial ownership of vessel,In rem,Admiralty jurisdiction and arrest,Action in rem,Jurisdiction

Cur Adv Vult

These appeals are from orders in each of the Admiralty in Rem Suit Nos 254, 255 and 256 of 1989 by which Karthigesu J set aside the writs and all subsequent proceedings including the warrant of arrest in Admiralty in Rem Suit No 254/89 and the bail bonds in each action.

The vessel `Andres Bonifacio` was arrested in Admiralty in Rem Suit No 254/89 on 17 October 1989 and released on 20 October 1989 upon the defendants providing bail bonds in all three actions. In each suit, the claim was for sums due under a charterparty and/or damages for breach of a charterparty. In the first two suits, Far East Oil Tanker SA, the owners of the `Feoso Ambassador 2`, sued the respondents as charterers of `Feoso Ambassador 2`. In the third suit, Feoso Ambassador SA, as owners of the `Feoso Ambassador`, sued the respondents as charterers of the `Feoso Ambassador`.

On 2 November 1989, the respondents filed a summons-in-chambers in each of the three in rem suits, claiming, inter alia, that the writ of summons issued in Admiralty in Rem Suit No 256/89 and all subsequent steps taken by the appellants be set aside on the basis that the respondents as the beneficial owners of the `Andres Bonifacio` were not the persons liable in personam to the appellants in respect of the appellants` claims either when the causes of action arose or on the dates the actions were brought by the appellants for the purposes of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123) (`the Act`). These summonses-in-chambers were heard together with a motion in the Admiralty in Rem Suit No 254/1989 claiming wrongful arrest in view of a praecipe for caveat against arrest. The motion is not relevant to this appeal.

Throughout the proceedings, it was common ground that (i) the appellants` claims were within the High Court`s admiralty jurisdiction; (ii) the ships in connection with which the claims arose in the Admiralty in Rem Suit Nos 254 and 255 of 1989 were the `Feoso Ambassador 2`, and in the Admiralty in Rem Suit No 256/1989, the `Feoso Ambassador`; (iii) PNOC were the `charterers` under s 4(4) of the Act and (iv) the `action was brought` when the writ was issued, ie 3 June 1989. Hence, the only question that arose was whether PNOC was, on the date on which the writs were issued, the beneficial owner of all the shares in the `Andres Bonifacio`, thereby entitling the appellants to invoke the in rem jurisdiction of the court under s 4(4) of the Act. The learned judge held that it was not. [See [1991] 2 MLJ 371 .]

The initial question that arose before the learned judge concerned the burden and standard of proof. Counsel for the appellants suggested that, at this stage of the proceedings, all that was required was a good arguable case on a balance of probabilities that PNOC were the beneficial owners of the vessel. The learned judge decided otherwise, holding that the question of jurisdiction had to be decided now: see the dicta of Goff J in `The I Congreso del Partido` ; Playa Larga (Cargo Owners) v I Congreso del Partido (Owners) , at p 558. This part of his judgment is not called into question by the appellants in the present appeal. However, the learned judge went on to approve Slynn J`s dicta in `The Aventicum` , (as approved in `The Maritime Trader`; Unitramp v Maritime Trader , and `The Saudi Prince` ,):

I have come to the conclusion that on this motion the onus is upon the plaintiffs to show that the person against whom it is sought to invoke the admiralty jurisdiction is the person who beneficially owns all shares and that he is the same person who was the owner at the time the cause of action arose.

Applying the test of beneficial ownership as set out in `The Pangkalan Susu/Permina 3001` , at p 130 and `The I Congresso` , the learned judge found that the appellants had failed to prove that PNOC were the beneficial owners of the vessel. Indeed, he was satisfied on a balance of probabilities that POCI were the beneficial owners of the vessel from 1980 onwards. His conclusion was based on the following factors.

First, although it appeared from the port of registry`s certificate of ownership and certificate of Philippine Register issued on 29 March 1984 that the vessel was owned by PNOC as at the date of certification to 30 June 1989, Lloyd`s Register of Shipping showed that the vessel`s owners were PNOC for 1982 and 1983 and POCI from 1984 to 1989. Upon discovery, this discrepancy ought to have been investigated in order to ascertain the true beneficial ownership. Nevertheless, despite being told by the respondents of the discrepancy, the appellants chose to rely solely on the certificate of the Philippine Coast Guard without further investigation.

Secondly, the evidence showed that in 1980, PNOC, a Philippine government-owned corporation which had been responsible for the country`s shipping and oil exploration activities, set up a number of wholly-owned subsidiaries in accordance with its policy of diversification. On 23 October 1980, it resolved that all contracts, assets and liabilities pertaining to its shipping operations would be assigned to PNOC Petroleum Tanker Inc (`PPTI`) and POCI respectively, effective upon their incorporation and covering transactions as of April 1980 in the case of POCI.

Just before that, PNOC purchased the `Andres Bonifacio` which arrived in Philippine waters on 14 April 1980. From the time POCI`s incorporation formalities were completed on 9 September 1980, POCI operated the vessel, incurred its expenses and assumed the liabilities for her acquisition. This was evidenced by the financial statements ( whose authenticity could not be doubted in view of the fact that they were audited by independent auditors) of POCI for the years 1980 to 1989.

Thirdly, the financial statements suggested that consideration had been given for the vessel in the form of the paying off by POCI of that proportion of PNOC`s syndicated Japanese yen loan (`the loan`) which represented the liabilities which POCI accepted from PNOC in respect of the vessel. All these suggested that the vessel was transferred or assigned to POCI by PNOC for value upon POCI`s incorporation on 9 September 1980, pursuant to PNOC`s resolution passed on 23 October 1980.

The learned judge found unhelpful the appellants` argument that the `Gregario Del Pilar`, purchased by PNOC on 24 April 1981, was sold by PNOC, her registered owner, despite being shown on POCI`s balance sheet as one of its assets that had been sold. The only conclusion that could be drawn from the entry into POCI`s accounts of a `gain on sale of Gregario del Pilar` was that the vessel, although registered in PNOC`s name, was beneficially owned by POCI. The same conclusion was drawn about the attempted sale of the `Andres Bonifacio`. In September 1988, PNOC tried to sell the vessel through a sealed bid. Following the receipt of one such bid, PNOC entered into a memorandum of agreement with the buyer. However, the Philippine Commission on Audit nullified the sale on the ground that there was a failure of bidding since there was only one bidder. Both in its communications with the Commission and with the buyer, PNOC held itself out as the owner. All this, according to Mr Diaz, a Filipino lawyer, meant that PNOC were both the registered and beneficial owners of the vessel. He further argued that the concept of the beneficial owner was not known or recognized in Philippine law. However, the learned judge felt that the above matters merely confirmed that the registered title of the vessel was in PNOC and that they were putting her up for sale as the registered title holder. Once again, the financial statements helped to clarify the matter. In n 7 to the statement for the year ended 31 December 1988, it was stated that POCI`s major asset, the `Andres Bonifacio`, was offered for sale through public bidding in September 1988 but that the bid accepted was not approved by the Commission on Audit.

Steps were eventually taken to formalize the assignment of the vessel from PNOC to POCI and a deed of assignment was executed on 20 July 1989. This deed recited the resolution of PNOC of 23 October 1980, the purchase of the vessel, the incorporation of POCI and the assignment, transfer and conveyance of the vessel to POCI on 2 April 1980. On 9 August 1989, POCI were entered as the registered owners of the vessel with the Philippine Coast Guard.

After considering all the evidence, the learned judge agreed with the respondents` expert on Philippine law, Valeriano R Del Rosario, that:

(i) POCI manifested its acceptance of the assignment by taking delivery and operating the vessel;

(ii) the object of the assignment was the `Andres Bonifacio`;

(iii) there was consideration for the assignment in that POCI assumed the liabilities for the ship which included a substantial long term debt.

Declining to take up the veiled suggestions of appellants` counsel that the defendants` case was a massive deception, the learned judge noted that there was nothing underhand in the dealings between PNOC and POCI in 1980 and the subsequent registration of POCI as owner in 1989. Furthermore, even though POCI was a wholly owned subsidiary of PNOC, that was not a reason for holding that PNOC were the owners of the vessel. The companies were two distinct legal entities and the shareholders were not owners of the assets of the company: see The `Evpo Agnic` at p 413. Accordingly, the learned judge concluded that on a balance of probabilities, POCI were the beneficial owners at the material time.

We now turn to the arguments canvassed before us. Counsel for the appellants split the issue of who was the beneficial owner of the vessel into the following sub-issues:

(1) What is meant by the expression `beneficially owned`?

(2) Who was the beneficial owner of the `Andres Bonifacio`?

Counsel submitted that the issues had to be determined by Singapore law. However, that did not mean...