The "Century Dawn"

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 22 August 1997
• Neutral Citation: [1997] SGHC 217
• Docket Number: Admiralty in Rem No 533 of 1992
• Date: 22 August 1997
• Year: 1997
• Published date: 19 September 2003
• Plaintiff Counsel: Danny Chua (Khattar Wong & Partners)
• Citation: [1997] SGHC 217
• Defendant Counsel: Vivian Ang and Yap Yin Soon (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Practice and procedure of action in rem,Whether plaintiffs entitled to costs,Arrest of ship for shipowners' default on contract,Effecting of insurance when ship in Sheriff's possession,Admiralty jurisdiction and arrest,Whether plaintiffs terminated contract by effecting arrest of ship,Action in rem,Entitlement to costs,Circumstances when Sheriff obtained possession of ship under arrest,Basis,Sheriff having only custody of ship and not possession on arrest,Claim for insurance premiums and legal fees incurred before arrest of ship,Effect of arrest/termination on underlying contracts,Plaintiffs' claim under different regime to Rules of Court,Rules of Court 1996,Whether action an abuse of process of court,Admiralty and Shipping

Judgment:

GP SELVAM J

The `Century Dawn` of the Port of Nassau, Bahamas was arrested by the Sheriff of this court and sold for S$19,321,525. Most of the proceeds have been paid out to various claimants pursuant to orders of this court. The bulk went to the plaintiffs in this case under judgments they had obtained in this court. There now remains in court some balance.

2.The plaintiffs in this case instituted this action to obtain judgment for additional claims which if established would give them priority as mortgagees and exclude those who have challenged their entitlement.

3. The first action

In order to state the issue before the court in this case it is necessary to travel back in time a little and recapture the events from the arrest of the Century Dawn by this court on 25 July 1991 in Adm No 573/91. The suit was instituted by the present plaintiffs, the Royal Bank of Scotland (the Bank), to recover over US$8,200,000 under a loan agreement between the Bank and the owners of the ship and secured by a first priority mortgage. The owners of the ship were Bridgewater Shipping Ltd. The loan agreement was dated 24 May 1990. The first priority statutory Bahamian mortgage and deed of covenant were dated 25 May 1990 (the first mortgage). The order for the sale of the ship was made on 11 October 1991. The sale was accomplished by a Sheriff`s bill of sale dated 11 December 1991. I will refer to Adm No 573/91 as `the first action`. The Bank obtained judgment in the first action on 20 September 1991 for US$8,269,629.25 and interest at 8.6875% from the date of the writ and costs on full indemnity basis.

4. The second action

Later the Bank commenced another Adm No 188/92 on 5 September and I shall call this as `the second action`. It was to recover moneys due to the Bank under two guarantees in favour of the Bank guaranteeing the obligations of two companies, namely, Unimarine Bulk Transport Inc and Gulfeast Shipping Pte Ltd. The guarantor`s potential liability in respect of the obligations of Unimarine Bulk Transport Inc was secured by a second priority statutory Bahamian mortgage and deed of covenant (the second mortgage). The guarantor`s liability in respect of the obligations of Gulfeast was secured by a third priority statutory Bahamian mortgage and deed of covenant (the third mortgage). The second and third mortgages were executed on 28 March 1991 and duly registered. The amounts claimed in respect of the second and third mortgages were US$538,855.84 and US$365,698.45 respectively. Judgment in default of appearance was given in the second action on 29 November 1991 for the amounts claimed, contractual interest and costs on full indemnity basis.

5.On 12 February 1992 the Bank filed an application by way of a notice of motion seeking payment out of moneys under the default judgments in respect of the first, second and third mortgages and moneys paid as crew wages pursuant to an order of court dated 20 August 1991. The application was made in admiralty in the first action on 12 February 1992 and the order for payment out was made on 20 March 1992.

6. The third action

On the face of it the Bank`s claims under the three mortgages would have been exhausted by the order for payment out mentioned in the preceding paragraph. That was not to be. On 12 March 1992, the Bank commenced an admiralty action in rem Adm No 188/92 against the proceeds of the sale of the ship seeking to recover under the third mortgage a sum of US$61,274.51 being the equivalent of S$100,000 which the Bank paid to the Port of Singapore Authority on behalf of Gulfeast Shipping Pte Ltd. The Bank obtained a default judgment as the owners did not enter an appearance. James Marine Services Ltd, which became a competing claimant, subsequently intervened and applied to set aside the default judgment. The grounds on which the application to set aside the judgment were founded were that `the statement of claim was defective in that the facts as pleaded were inaccurate and that the judgment had been entered in respect of a facility letter which was not the contract between the plaintiffs and the defendants and was not secured by the third mortgage or the Century Dawn as alleged.` The suggestion was that the Bank had ignored material facts or suppressed them from the court and thereby presented a false case to obtain a judgment which would give it a preferred right over the other claimants. The suggestion indeed applied as well to the affidavit of the Bank`s Singapore manager, George Alexander Leslie. In the event, the Bank conceded without contest to have the judgment set aside and further agreed to pay costs in the sum of $13,500 to James Marine Services Ltd, the interveners.

7. The fourth, fifth and sixth actions

In the meantime the Bank obtained a default judgment in an in personam action (the fourth action) against the owners of the Century Dawn in the English commercial court under the loan agreement and a supplemental loan agreement for 39,089.81 and 12,033.14. These amounts were said to be legal fees of the Bank`s London solicitors. The Bank commenced another action in personam against the owners of the Century Dawn in the English commercial court for US$167,316.94 and obtained a default judgment (the fifth action). The amount was said to be insurance premiums paid by the Bank in respect of the Century Dawn. The Bank then applied by OS No 360/92 (the sixth action) to have the two English judgments registered in Singapore under the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264). Orders were made for the English judgments to be so registered. The Bank then moved this court by a notice of motion in the first action for payment out of the amounts due under the two English judgments in the fourth and fifth action and registered in Singapore in the sixth action. The application was dismissed by me with costs. I did so because this court while exercising its admiralty jurisdiction had no power to recognize those two personam judgments converted into a personam judgment of this court. Enforcement of pure personam judgments is governed by a separate legal regime and they cannot be enforced in an admiralty court.

8. The seventh action

The Bank then commenced this action, an admiralty action in rem. It is the seventh action by the plaintiffs against the same defendants. The purpose of this action was to recover the self same amounts in respect of which personam judgments had been obtained in the English commercial court. To circumvent the problem posed by the personam nature of the judgments, the claims were linked to the first mortgage and cll 15.01 and 7.04 of the loan agreement. The Bank also invoked cl 5.01 of a supplemental agreement dated 28 March 1991.

9.The statutory form of mortgage read as follows :

whereas pursuant to the loan agreement the mortgagor has agreed to execute this mortgage for the purpose of securing payment by the mortgagor to the mortgagee of all sums for the time being owing to the mortgagee in the manner and at the times set forth in the loan agreement and deed of covenant

Now we the (b) said Bridgewater Shipping Ltd in consideration of the premises for ourselves and our successors covenant with the said (c) The Royal Bank of Scotland plc and (d) its assigns, to pay to him or them or it the sums for the time being due on this security, whether by way of principal or interest or otherwise, at the times and manner aforesaid. And for the purpose of better securing to the said (c) The Royal Bank of Scotland plc the payment of such sums as last aforesaid, we do hereby mortgage to the said (c) The Royal Bank of Scotland plc sixty-fourth shares of which we are the owners in the ship above particularly described `Century Dawn`, and in her boats, guns, ammunition, small arms and appurtenances.

10.The material part of cl 15.01 of the loan agreement read as follows:

The borrower shall pay to the lender:

(a) on the date hereof, a non-returnable arrangement fee of thirty thousand dollars ($30,000);

(b) on the drawdown date or the termination date (whichever is the earlier) commitment commission calculated at the rate of one half of one percent (0.5%) per annum on an amount of three...