The "Dwima 1"

• Judge: S Rajendran J
• Judgment Date: 22 April 1996
• Neutral Citation: [1996] SGHC 83
• Citation: [1996] SGHC 83
• Defendant Counsel: Shireen Abdullah (Wee Ramayah & Pnrs),Jude Benny (Joseph Tan Jude Benny & Co)
• Published date: 19 September 2003
• Plaintiff Counsel: Haridass Ajaib and Corina Song (Haridass Ho & Pnrs)for the plaintiffs
• Date: 22 April 1996
• Docket Number: Admiralty in Rem No 587 of 1994 (Notice of Motion No 155 of 1995)
• Court: High Court (Singapore)
• Subject Matter: Whether arrest, appraisement and sale of vessel by repairer were in derogation of his rights to the lien,Admiralty and Shipping,Admiralty jurisdiction and arrest,Possessory liens,Preservation of lien

In 1992 and early 1993, the plaintiffs carried out certain repairs on the vessel `Dwima 1` (the vessel). As the plaintiffs` charges for the repairs were not settled in full, the plaintiffs retained the vessel at their yard pending full settlement.

From late 1993, there were negotiations relating to the release of the vessel between the owners of the vessel and the plaintiffs. As part of the terms of the release the plaintiffs wanted to enter into a tripartite agreement with the owners and the first mortgagees of the vessel whereby the plaintiffs would secure their outstandings by taking a mortgage on the vessel which would rank pari passu with the first mortgage. In this connection the plaintiffs wrote, in early 1994, to Tokyo Leasing, the agents of First Leasing (Panama) SA (the interveners), the first mortgagee, but Tokyo Leasing asked the plaintiffs to discuss the matter direct with the owners. The negotiations came to nought as the owners could not get the agreement of Tokyo Leasing to the proposals. Thereafter, there was some attempts by the owners to sell the vessel, but this too did not materialize.

On 28 October 1994, the plaintiffs commenced an admiralty action in rem for the recovery of the outstanding amounts. On 1 November 1994, they caused the vessel to be arrested. By notice of motion (No 265/94) the plaintiffs moved the court for judgment in default of appearance for the sum of $1,377,545 and contractual interest thereon at 1% per month. The motion also sought an order for appraisement and sale, such appraisement and sale to be without prejudice to the possessory lien of the plaintiffs . In the affidavit filed in support of the motion, the plaintiffs stated that the vessel had been at their yard since 2 February 1993 and that so long as the vessel remained there she would deteriorate and continue to deteriorate physically and substantial costs and expenses will have to be incurred in preserving the vessel.

On 13 January 1995, Lai Siu Chiu J heard the motion and granted the orders sought. On 2 June 1995, on the application of the sheriff, an order of court approving the sale of the vessel was granted and the vessel was duly sold.

On 6 February 1995, the defendants filed memorandum of appearance. On 10 February 1995, the interveners filed a caveat against payment out of the proceeds of sale and on 17 February 1995 the interveners were granted leave to intervene in this action. At about this time the parties again commenced negotiations with a view to an amicable settlement. To facilitate the negotiations the plaintiffs, on 16 February 1995, filed an application for the order of sale made on 13 January 1995 to be set aside. Negotiations, however, broke down and on 17 March 1995 the plaintiffs withdrew their application for the order of sale to be set aside.

The plaintiffs commenced these proceedings for the determination of priorities with respect to the sale proceeds. The issue for determination was whether, after payment of the sheriff`s expenses in connection with the sale, the plaintiffs` claim to the balance had priority over the claim of the interveners. The shipowners, although represented in court, did not participate in the proceedings. The interveners did not dispute that if the plaintiffs had a possessory lien, that lien would have priority over their mortgage. It was their case, however, that by causing the vessel to be sold the plaintiffs had lost their possessory lien.

Mr Jude Benny, on behalf of the interveners, submitted that a possessory lien was a self-help remedy that only entitled the repairer to hold on to the vessel until paid and that if the repairer sought the alternative remedy of obtaining judgment and enforcing it by arresting and selling the vessel, he must take all the disadvantages that go with that, namely, the loss of possession of the vessel and consequently the loss of his possessory lien. He submitted that an essential ingredient of the common law possessory lien was that it existed only so long as the lien holder retained possession of the goods in respect of which the lien was claimed. In support of these submissions, Mr Jude Benny referred to Tappenden v Artus & Anor [1964] QB 185 where at p 195 Diplock LJ in discussing the nature of a common law lien said:

The common law remedy of a possessory lien, like other primitive remedies such as abatement of nuisance, self-defence or ejection of trespassers to land, is one of self-help. It is a remedy in rem exercisable upon the goods, and its exercise requires no intervention by the courts, for it is exercisable only by an artificer who has actual possession of the goods subject to the lien. Since, however, the remedy is the exercise of a right to continue an existing actual possession of the goods, it necessarily involves a right of possession adverse to the right of the person who, but for the lien, would be entitled to immediate possession of the goods. A common law lien, although not enforceable by action, thus affords a defence to an action for recovery of the goods by a person who, but for the lien, would be entitled to immediate possession.

It is now an established proposition of law that the arrest of a vessel over which a repairer had a lien would not, by itself, result in the loss of the repairer`s lien. In The Acacia (1880) 4 Asp Mar Cas 254, it had been argued that the arrest of a vessel by a Marshal was akin to the seizure of goods by a sheriff under a writ of fi fa and that, as in the case of seizure by fi fa, arrest by the Marshal would result in possession being lost and hence the lien being lost. Townsend J rejected this submission and held that arrest was consistent with the lien holder`s possession. The position was further clarified by Atkin LJ in The Arantzazu Mendi [1939] AC 256 at p 257 where he said:

A ship arrested does not by the mere fact of arrest pass from the possession of its then possessors to a new possession of the Marshal. His right is not possession but custody. Any interference with his custody will be properly punished as a contempt of the court which ordered the arrest, but, subject to his complete control of the custody, all the possessory rights which previously existed continue to exist, including all the remedies based on possession.

Mr Jude Benny did not seek to challenge that proposition. He accepted that the arrest of the vessel at the instance of the lien holder would not affect the lien but submitted that if the lien holder went further and obtained a sale of the vessel, his possessory lien would necessarily be lost because the sheriff, in order to be able to sell the vessel, must first be in possession. This was also the view expressed by Nigel Meeson in his book on Admiralty Jurisdiction and Practice where at p 158 the learned author says:

There appears no reason why the holder of a possessory lien should be held to have waived his right to the security afforded by his possessory lien simply by invoking the Admiralty jurisdiction in rem and arresting the vessel. However, it is arguable that if he were to go further than this and move the court for an order for appraisement and sale, he may then be taking a step inconsistent with his possessory lien, as the Marshal must have possession when the vessel is sold. A possessory lien is not a right to be enforced by action, but simply a self-help remedy. The court will not grant an injunction in support of a possessory lien, and it is, therefore, difficult to see upon what ground the court can sell the ship while maintaining the possessory lien. It is suggested that there comes a stage when the creditor must choose whether to persist in his possessory lien, or whether to give up possession to enable the ship to be sold by the court. If he chooses the latter course, he must at the same time lose the protection afforded by reason of the possessory lien, and his only priority is that arising by reason of his action in rem. [Emphasis added.]

Mr Jude Benny adopted the Nigel Meeson approach.

Mr Jude Benny submitted that where the repairer, having a lien on a vessel, proceeds to apply for the sale of the vessel, the repairer`s position would be akin to the position of a lien holder of goods who loses his lien when he proceeds to obtain execution of the goods under a writ of fi fa. There was, he submitted, no reason why a ship repairer having a possessory lien should be in a better position from any other person (such as a warehouser or innkeeper) who levies execution on his judgment by way of fi fa. He submitted that were this court to give recognition to the possessory lien of the plaintiffs in spite of the fact that the sheriff had, for the purposes of the sale, taken possession of the vessel, the court would be recognizing the concept of a `notional` lien - a concept which Mr Jude Benny submitted had been disavowed in The Gaupen (1925) 22 Lloyd LR 57 and The Ally [1952] 2 Lloyd`s Rep 427.

In The Gaupen , the repairer of a vessel had a possessory lien...