The “Catur Samudra”

• Jurisdiction: Singapore
• Judgment Date: 15 January 2010
• Date: 15 January 2010
• Docket Number: Admiralty in Rem No 304 of 2009
• Court: High Court (Singapore)

The Catur Samudra

[2010] SGHC 18

Steven Chong JC

Admiralty in Rem No 304 of 2009

High Court

Admiralty and Shipping–Admiralty jurisdiction and arrest–Action in rem–Whether contract of guarantee was agreement relating to carriage of goods in ship or to use or hire of ship–Section 3 (1) (h) High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed)

Admiralty and Shipping–Admiralty jurisdiction and arrest–Action in rem–Whether s 4 (4) High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) satisfied

The plaintiff entered into an agreement with Heritage Maritime Ltd, SA ( Heritage ) to purchase the vessel Mahakam. On the same day, it entered into a bareboat charter party ( the Charterparty ) to lease the Mahakam to Heritage for 60 months.

It was a condition precedent under the bareboat charterparty for the defendant to execute a guarantee in favour of the plaintiff to secure the due performance and payment of Heritage's obligations under the Charterparty. This guarantee was executed by the defendant on the same day on which the Charterparty was signed. Heritage was a wholly-owned subsidiary of Humpuss Sea Transport Pte Ltd ( HST ), which in turn was a wholly-owned subsidiary of the defendant.

When Heritage defaulted on its payment obligations under the Charterparty, the plaintiff terminated the Charterparty and obtained possession of theMahakam. It further invoked the admiralty jurisdiction of the High Court under s 3 (1) (h) of the HCAJA to arrest the Catur Samudra, a vessel owned by the defendant.

Following the arrest, the defendant filed an application to strike out the writ of summons filed by the plaintiff, and to set aside the arrest of the Catur Samudra.

Held, allowing the application:

(1) Section 3 (1) (h) of the HCAJA only encompassed claims arising from agreements that were directly related to the carriage of goods in a ship or to the use or hire of a ship. It did not include claims based on separate agreements which were one step removed from the agreement for the use or hire of a vessel: at [33] and [35].

(2) The plaintiff's claim against the defendant was based on the guarantee signed by the defendant. Although the guarantee was a condition precedent of the Charterparty, this could not transform the guarantee into an agreement related to the use or hire of a vessel. Any other result would have the effect of altering the direct connection test under s 3 (1) (h) into a but for test, thus enlarging the admiralty jurisdiction of the High Court to cover claims which were never contemplated to have the right of arrest. Accordingly, the plaintiff's claim did not fall under s 3 (1) (h) of the HCAJA: at [37].

(3) Under s 4 (4) (b) of the HCAJA, the plaintiff could only arrest the Catur Samudra if the defendant was either the charterer or in possession or in control of the Mahakam at the time when the cause of action under the guarantee arose: at [47].

(4) The materials which the plaintiff relied on to show that the defendant was either the charterer or in possession or control of the Mahakam were relevant for the purpose of lifting the corporate veil to prove that the defendant was in truth the charterer. However, the plaintiff confirmed that they were not seeking to lift the corporate veil as the cause of action indorsed in the writ was based only on the guarantee and not on the Charterparty. In any event, the materials, either singly or collectively, would not have justified the piercing of the corporate veil: at [50] to [54].

(5) The defendant was not the entity in possession or in control of the Mahakam when the cause of action under the guarantee arose. The term in possession or in control referred to possession or control as an independent legal right and not to physical possession or control per se. Even if the defendant had control over Heritage directly or through HST, this was strictly irrelevant because it was a fundamental principle of company law that a shareholder had no property, legal or equitable, in the assets of the company: at [60] to [63].

(6) The powers of ship managers arise by reason of their appointment by the principal. If the managers should exercise any rights of control or possession over the vessel, it would be on behalf of their principal and not as an independent legal right. Hence, even if the plaintiff had succeeded in establishing that the defendant had been appointed by Heritage to manage the Mahakam, this would not be sufficient to show that the defendant was in possession or in control of the vessel. Accordingly, the defendant was not in possession or control of the Mahakam when the cause of action under the guarantee arose: at [64].

Aifanourios, The (1980) SC 346 (refd)

Alexandrea, The [2002] 1 SLR (R) 812; [2002] 3 SLR 56 (refd)

Andres Bonifacio, The [1991] 1 SLR (R) 523; [1991] SLR 694 (refd)

Antonis P Lemos, The [1985] AC 711 (refd)

Aventicum, The [1978] 1 Lloyd's Rep 184 (refd)

Bumbesti, The [2000] 1 QB 559; [1999] 2 Lloyd's Rep 481 (folld)

Eschersheim, The [1976] 1 WLR 430; [1976] 2 Lloyd's Rep 1 (refd)

Evpo Agnic, The [1988] 1 WLR 1090; [1988] 2 Lloyd's Rep 411 (refd)

Fua Kavenga, The [1987] 1 NZLR 550 (not folld)

Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co (The Sandrina) [1985] AC 255 (folld)

I Congreso del Partido, The [1978] QB 500; [1977] 1 Lloyd's Rep 536 (refd)

Inai Selasih, The [2005] 4 SLR (R) 1; [2005] 4 SLR 1 (refd)

Indriani, The [1996] 1 SLR (R) 5; [1996] 1 SLR 305 (refd)

Interippu, The [1990] SGHC 131 (folld)

Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland [1995] FCA 1565 (refd)

MARA, The [2000] 3 SLR (R) 31; [2000] 4 SLR 156 (refd)

Maritime Trader, The [1981] 2 Lloyd's Rep 153 (refd)

National Bank Leasing v Merlac Marine Inc (1992) 52 Federal Trial Reports 15 (not folld)

Neptune, The [1986] HKLR 345 (refd)

Ohm Mariana, The; ex Peony [1993] 2 SLR (R) 113; [1993] 2 SLR 698 (refd)

Permina 108, The [1974-1976] SLR (R) 794; [1975-1977] SLR 525 (refd)

Permina 108, The [1974-1976] SLR (R) 850; [1975-1977] SLR 221 (refd)

Pangkalan Susu/Permina 3001, The [1977-1978] SLR (R) 1; [1975-1977] SLR 543 (refd)

Port of Geelong Authority v The Bass Reefer (1992) Federal Court Reports 374 (folld)

Queen of the South, The [1968] 1 All ER 1163 (refd)

Saudi Prince, The [1982] 2 Lloyd's Rep 255 (refd)

Schwarz & Co (Grain) Ltd v St Elefterioex Arion (Owners) (The St Elefterio) [1957] P 179 (refd)

Sextum, The [1982] HKLR 356 (refd)

Shipping Corp of India Ltd v Jaldhi Overseas Pte Ltd585 F.3d 58, 71 (2d Cir.2009) (refd)

Skaw Prince, The [1994] 3 SLR (R) 146; [1994] 3 SLR 379 (refd)

Sonia S, The [1983] 2 Lloyd's Rep 63 (refd)

Span Terza, The [1982] 1 Lloyd's Rep 225 (refd)

Stella Nova, The [1981] Com L R 200 (refd)

Tesaba, The [1982] 1 Lloyd's Rep 397 (refd)

Win Line (UK) Ltd v Masterpart (Singapore) Pte Ltd [1999] 2 SLR (R) 24; [2000] 2 SLR 98 (refd)

Zeus, The (1888) 13 PD 188 (refd)

High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) ss 3 (1) (h) , 4 (4) (b) (consd) ;ss 3 (1) (f) , 4 (4)

Rules of Court (Cap 322,R 5, 2006 Rev Ed) O 18r 19

Admiralty Act 1973 (NZ) s 4 (1)

Federal Court Act, RSC 1985 (Can) s 22 (2) (i)

Supreme Court Act 1981 (c 54) (UK) s 20 (2) (h)

Corina Song and Lim Ai Min (Allen & Gledhill LLP) for the plaintiff

Richard Kuek, Govintharasah s/o Ramanathan and Mark Chan (Gurbani & Co) for the defendant

Koh See Bin (Rajah & Tann LLP) for the caveator.

Steven Chong JC

Introduction

1 This case raises novel and interesting issues of statutory construction relating to the admiralty jurisdiction of the High Court. It concerns the arrest of a vessel owned by a company which had agreed to guarantee the liabilities of a related company as charterer under a separate and independent charterparty. The dispute requires an examination of the scope of the sister ship arrest rule and in particular whether a ship owned by a guarantor can constitute a sister ship for the purpose of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) ( HCAJA ). Specifically it would entail an examination of two issues:

1. (a) whether a claim under a guarantee would be a claim arising out of an agreement relating to the use or hire of a vessel; and

2. (b) whether the party who would be liable in personam under the guarantee was in possession or in control of the vessel at the time when the cause of action arose.

2 Over the last 50 years or so since the International Convention Relating to the Arrest of Seagoing Ships ( the 1952 Arrest Convention ) came into force in 1952, the provisions of the HCAJA and its equivalent in other jurisdictions such as the UK, Hong Kong and Australia have been the subject of intense judicial scrutiny. It has generated numerous judicial decisions on the scope and width of the right of arrest. During this period, the law on this area has never been static and is constantly evolving. To illustrate the dynamic nature of admiralty law, at one time it was decided by none other than the House of Lords that the sister ship arrest rule was only restricted to ships in common ownership by the same defendant: see The Eschersheim [1976] 2 Lloyd's Rep 1 ( The Eschersheim ). The Court of Appeal in The Permina 108 [1974-1976] SLR (R) 850 ( The Permina 108 ) declined to follow The Eschersheimwhen it allowed the arrest of a vessel owned by a charterer even though it had no common ownership with the vessel under which the cause of action arose. Eventually, other jurisdictions including the UK adopted The Permina 108 in preference to The Eschersheim: see the UK decision in The Span Terza [1982] 1 Lloyd's Rep 225, the Hong Kong decision inThe Sextum [1982] HKLR 356, and the New Zealand decision inThe Fua Kavenga [1987] 1 NZLR 550 ( The Fua Kavenga ).

3 The evolving nature of this branch of the law is hardly surprising given that the right of arrest in the hands of...