The ‘Bunga Melati 5’

• Court: Court of Appeal (Singapore)
• Judgment Date: 21 August 2012
• Docket Number: Civil Appeal No193 of 2010
• Date: 21 August 2012

The ‘Bunga Melati 5’

[2012] SGCA 46

Chan Sek Keong CJ, Andrew Phang Boon Leong JA and VK Rajah JA

Civil Appeal No193 of 2010

Court of Appeal

Admiralty and Shipping—Admiralty jurisdiction and arrest—Action in rem—Standard of proof—Bunker supplier commencing action in remagainst shipowner's vessel under s4 (4) (b) (ii) High Court (Admiralty Jurisdiction) Act (Cap123, 2001Rev Ed) in respect of unpaid bunkers—Whether any jurisdiction to bring action in rem in High Court—Whether s4 (4) satisfied—Whether shipowner ‘person who would be liable on the claim in an action in personam’ within meaning of s4 (4) (b)—Whether necessary to show ‘good arguable case’ that shipowner ‘would be liable on the claim in an action in personam’ within meaning of s4 (4) (b) in order to invoke admiralty jurisdiction—Whether any jurisdictional merits test independent of High Court (Admiralty Jurisdiction) Act—Section4 (4) High Court (Admiralty Jurisdiction) Act (Cap123, 2001Rev Ed)—Admiralty and Shipping—Practice and procedure of action in rem—Shipowner applying to strike out bunker supplier's action in rem under O18 r19 Rules of Court (Cap322, R5, 2006Rev Ed) or court's inherent jurisdiction—Shipowner applying to set aside bunker supplier's writ in rem under O12 r7—Whether proper for applications under O18 r19 and O12 r7 to be based on same arguments—Order 12 r7 and O18 r19 Rules of Court (Cap322, R5, 2006Rev Ed)—Civil Procedure—Striking out—Shipowner applying to strike out bunker supplier's action on basis that its contractual claim based on agency by estoppel was plainly or obviously unsustainable—Whether bunker supplier's contractual claim based on agency by estoppel was plainly or obviously unsustainable—Order18 r19 Rules of Court (Cap322, R5, 2006Rev Ed)—Conflict of Laws—Foreign proceedings—Issue estoppel—Shipowner applying to strike out bunker supplier's action on basis that foreign proceedings instituted by bunker supplier operated as issue estoppel—Whether foreign proceedings resulted in judgment which was final and conclusive on merits—Whether foreign proceedings operated as issue estoppel—Words and Phrases—Shipowner applying to strike out bunker supplier's writ in rem under O18 r19 Rules of Court (Cap322, R5, 2006Rev Ed) or court's inherent jurisdiction—Meaning of ‘plainly or obviously unsustainable’—Order 18 r19 (1) (b) Rules of Court (Cap322, R5, 2006Rev Ed)

The appellant was a company in the business of supplying bunkers, while the respondent was a shipping company and owner of a number of vessels, including the Bunga Kasturi Lima and the Bunga Melati 5.

The appellant alleged that it had entered into a contractual relationship with the respondent, under which the appellant would supply bunkers to a number of the respondent's vessels. The appellant claimed that the relevant contracts were brokered through the agency of Market Asia Link Sdn Bhd (‘MAL’), the alleged buying agent of the respondent. According to the appellant, an employee from the respondent's bunker unit had represented to one Mr Middleton (director of the appellant's bunker broker, Compass Marine) that MAL was the respondent's bunker broker, a representation which Compass Marine relied on to conclude contracts with MAL on the belief that MAL acted exclusively for the respondent.

When the appellant did not receive full payment in respect of the bunkers supplied, it commenced attachment proceedings in the United States (‘the US proceedings’) against the Bunga Kasturi Lima, but the attachment order was vacated by courts in the United States, and the appellant subsequently withdrew its action in the US proceedings. The appellant then commenced the present action in rem against the Bunga Melati 5 under s4 (4) (b) (ii) of the High Court (Admiralty Jurisdiction) Act (Cap123, 2001Rev Ed) (‘the HCAJA’) in respect of the unpaid bunkers, on the basis that the respondent was liable to it in contract and in unjust enrichment.

The respondent applied to strike out the appellant's action in rem pursuant to O18 r19 of the Rules of Court (Cap322, R5, 2006Rev Ed) (‘the ROC’) or the court's inherent jurisdiction, on the basis that it had not been in a contractual relationship with the appellant. The respondent alleged that it only had a contractual relationship with MAL, and MAL had in turn contracted (as principal, not agent of the respondent) with the appellant. As such, the respondent was not liable to the appellant in contract or in unjust enrichment, and the appellant's claim was therefore plainly unsustainable and had to be struck out. The respondent also argued that the US proceedings operated as an issue estoppel, and the appellant's action in rem ought therefore to be struck out on that ground as well. The respondent additionally applied to set aside the appellant's writ in rem under O12 r7 of the ROC, on the basis that, since it was not liable to the appellant in contract or in unjust enrichment, it was not ‘the person who would be liable on the claim in an action in personam’ (‘the relevant person’) under s4 (4) (b) of the HCAJA, and the appellant had therefore wrongly invoked the admiralty jurisdiction in rem of the High Court.

The High Court judge (‘the Judge’) affirmed the assistant registrar's (‘the AR’) decision to strike out the appellant's action under O18 r19 of the ROC or the inherent jurisdiction of the court. The Judge held that the appellant's contractual claim - which was based on the doctrine of agency by estoppel - was fraught with insurmountable evidential difficulties; and the legal requirements to establish agency by estoppel were also not satisfied. The appellant's claim in unjust enrichment was also held to be completely unsustainable. Having concluded that the appellant's action should be struck out, the Judge also agreed with the AR that the US proceedings were not final and conclusive on the merits and therefore did not give rise to an issue estoppel in the respondent's favour.

The Judge then disagreed with the AR's view that the appellant had to show a good arguable case on the merits of its claim in order to invoke admiralty jurisdiction. The Judge held that any challenge by the respondent to the identity of the ‘relevant person’ was not a jurisdictional matter to be dealt with under O12 r7 of the ROC, but was properly a dispute pertaining to the respondent's liability on the merits of the claim, and only in a striking out application under O18 r19 of the ROC would it be appropriate to investigate whether the appellant had an ‘arguable case’ on the merits.

Held, allowing the appeal:

(1) The test of whether a party's claim should be struck out under O18 r19 (1) (b) of the ROC or the inherent jurisdiction of court depended on whether the party's action was ‘plainly or obviously unsustainable’: at [32] and [33].

(2) A ‘plainly or obviously unsustainable’ action should be analytically understood as an action which was either legally or factually unsustainable. An action could be said to be ‘legally unsustainable’ if it was clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offered to prove, he would not be entitled to the remedy sought. An action could be said to be ‘factually unsustainable’ if it was possible to say with confidence before trial that the factual basis for the claim was fanciful because it was entirely without substance: at [39].

(3) The appellant's claim could not be said to be factually unsustainable as a court should not in a striking out application choose between conflicting accounts of crucial facts. Although Mr Middleton could not recall the name of the employee who allegedly made the representation that MAL was the respondent's agent, there were certain facts in the case which suggested to the court that the appellant's claim was not entirely without substance: at [45] and [47] to [51].

(4) The appellant's claim could not be said to be legally unsustainable as well. Firstly, there was insufficient evidence at the interlocutory stage for the court to determine whether the alleged representation emanated from an employee with the requisite authority. Secondly, it was also not legally or factually clear whether the alleged representation remained operative to bind the respondent for the relevant bunker contracts in dispute. Finally, it was also premature for an interlocutory court to determine whether the appellant could be said to have been induced by the alleged representation. It was therefore not ‘clear beyond question’ that these legal elements of the appellant's claims couldnot be satisfied should the matter proceed to trial: at [57], [61], [63], [67], [75] and [76].

(5) The US proceedings did not result in a judgment which was final and conclusive on the merits. In determining whether a judgment was ‘final and conclusive’ for the purposes of establishing issue estoppel, the focus should be on what the foreign court said about the nature of its own judgment. As the United States courts which presided over the US proceedings made it clear that the vacation of the attachment order was merely an interim order prior to the actual motion to dismiss the appellant's action, the US proceedings were not final and conclusive and therefore could not give rise to an issue estoppel in favour of the respondent: at [86] to [89].

(6) The Court of Appeal in The Vasiliy Golovnin[2008] 4 SLR (R) 994 (‘The Vasiliy Golovnin (CA)’) did not introduce a new merits requirement for the invoking of admiralty jurisdiction. The correct interpretation of The Vasiliy Golovnin (CA) was that when a plaintiff's invoking of admiralty jurisdiction or its arrest of the defendant's vessel was subsequently challenged, the plaintiff would need to show (on top of the requirements of ss3 and 4 of the HCAJA being satisfied) a good arguable case on the merits of its claim as well, in order to avoid having its claim struck out as being plainly or obviously...