The "Halcyon Isle"

• Jurisdiction: Singapore
• Judge: T Kulasekaram J
• Judgment Date: 19 January 1977
• Neutral Citation: [1977] SGHC 2
• Docket Number: Admiralty in Rem Nos 150 and 151 of 1974
• Date: 19 January 1977
• Published date: 19 September 2003
• Year: 1977
• Plaintiff Counsel: Richard Stone QC and Raj Kumar (Donaldson & Burkinshaw)
• Citation: [1977] SGHC 2
• Defendant Counsel: Michael Thomas QC and Loh Boon Huat (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Payment out of proceeds of sale,Practice and procedure of action in rem,Maritime lien,Admiralty and Shipping,Priorities,Several claims against proceeds of sale of mortgaged ship,Whether ship repairer had priority over mortgageee on account of American law according it maritime lien

The ship The Halcyon Isle was arrested in Admiralty Suit 151/74 by Bankers Trusts International Ltd who are the mortgagees of this vessel hereinafter referred to as the BTI mortgagees on 5 September 1974 in Singapore.

The ship was subsequently sold on 5 March 1975 and the proceeds have been paid into court. Various necessary payments over which there were no disputes have been made under orders of court. Time for claims to come in expired on 6 August 1975 and the claims that are before this court on the balance of the proceeds of sale are as set out in the list exh `C`. There are in all 13 claims.

There is now before me a BTI Mortgagee`s Motion in Admiralty Suit No 151/74 for the determination of the priority of payments to the several claimants against the fund now in court in these proceedings. There is no dispute over claims Nos 1-4 in the list `C` as all parties agree that these claims can be paid before other claims. It is conceded by all parties that claims Nos 6-11 on the list have no priority over claim 12. As the fund in court is insufficient to meet claim 12 in full claims Nos 6-11 require no consideration. We are also not concerned with claim 13 which is a further claim of BTI mortgagee.

The only contest as to priority of payment before BTI mortgagee`s claim No 12 comes from Messrs Todd Shipyards Corp, hereinafter referred to here as Todds, who are the claimants in claim No 5 on the list `C`.

Todds` claim is for $237,011 with interest thereon for repairs executed, materials supplied and services rendered to the vessel Halcyon Isle at their repair yard at Brooklyn, New York during March 1974 pursuant to a contract with the owners of the vessel and evidenced by their letter dated 1 March 1974 to the owners of the vessel. Todds say that their claim for repairs done to this vessel under the laws of the United States of America carried a maritime lien on the vessel and hence over the fund now in court and therefore they are entitled to priority of payment on their claim over BTI mortgagee`s claim which is merely that of a mortgagee of the vessel. BTI mortgagee`s claim is for $14,413,000 secured by a statutory mortgage on vessel Halcyon Isle registered on 8 May 1974.

It is not in dispute that Todds` claim for repairs of the vessel under the laws of the United States of America conferred a maritime lien on the vessel. The only dispute is whether Todds` claim for repairs to the vessel carries a maritime lien under our laws.

Todds in their motion dated 23 May 1975 in Admiralty Suit in Rem No 150/74 seek a declaration that they are entitled to and/or have in respect of their claim a maritime lien on the vessel Halcyon Isle within the meaning of s 4(3) of the High Court (Admiralty Jurisdiction) Act of Singapore.

Both these motions were heard together and the evidence in one motion was by consent to be treated as the evidence in the other motion.

Mr George L Varian gave expert evidence in his affidavit sworn on 21 April 1975 on the law of the United States of America on the existence of a maritime lien on the vessel for Todds` claim and connected matters.

He referred to 46 United States Code, s 971 which reads as follows:

Persons entitled to lien.

Any person furnishing repairs, supplies towage, use of dry dock or marine railway or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel.

He said under United States Maritime law Todds` claim here for repairs performed on the vessel Halcyon Isle gave rise to a valid maritime lien which conferred upon Todds rights of the same nature and quality as are conferred upon the holder of a maritime lien under English law.

There is no serious dispute on Mr George L Varian`s evidence.

What is in issue here is whether Todds on their claim are entitled to maritime lien under our laws.

It is also not in dispute that the substantive rights of Todds` contract like any other contract is to be decided by the proper law of the contract which is United States law. It is also not in dispute here that rights concerning the remedies under a contract and procedure are governed by the lex fori and so here it will be our laws.

So the main question that has to be answered is whether a maritime lien is on the one hand a substantive right of Todds` contract or on the other hand a remedial or procedural right.

To answer this question it would be helpful to have a quick look at the early English Admiralty procedure as our Admiralty law is almost the same as its English counterpart.

In the 17th and 18th centuries the ordinary mode of commencing a suit in the Admiralty Court was by the arrest of the person of the defendant or his goods. It would appear that under this early practice the distinction between actions in personam and actions in rem depended on whether the defendant or the property of the defendant was arrested in the first instance. If the defendant appeared the procedure and effect of the action in rem became those of an action in personam. Courts of Common Law began cutting down on the jurisdiction of the Admiralty Court by frequently issuing prohibitions against it. Several changes in law or practice took place. Actions beginning with arrest of the person became obsolete in practice by the end of the 18th century and arrest of the property of the defendant merely to enforce his appearance became rare or obsolete. Gradually arrest of property over which a lien could be enforced became more common as the idea of a pre-existing maritime lien developed, and the arrest of property in order to assert, for the creditor, that legal nexus over the proprietary interest of his debtor, as from the date of attachment, grew up. The result was that arrest became the distinctive feature of the action in rem such arrest having primarily for its object the satisfaction of the creditor`s claim out of the property seized limited to the amount of the res. Of course if the debtor appeared then the action from then onwards proceeded like an action in personam and the debtor became liable for the full amount of the judgment even though it may be more than the res.

This is broadly how Sir Francis Jeune traced the development of Admiralty proceedings in the 17th and 18th centuries, in The Dictator [1892] P 304.

The concept of maritime lien so far as English law is concerned seems to have had its origin in the early procedure of the Admiralty Court of the arrest of the debtor`s property to secure the appearance of the debtor.

A maritime lien though it is over a thing must always begin with the personal liability of its owner. Lord Watson in The Castlegate [1893] AC 38 stated this same idea thus `in as much as every proceeding in rem is in substance a proceeding against the owner of the ship, a proper maritime lien must have its root in his personal liability`. As soon as the cause of action giving rise to the claim occurs and liability arises the maritime lien automatically attaches to the property.

In The Bold Buccleugh (1851) 7 Moo PC 267, the definition of a maritime lien as recognized by the law maritime given by Lord Tenterden was adopted:

It is a privileged claim upon a thing in respect of services done to or injury caused by it, to be carried into effect by legal process.

It was further stated in that case that

This claim or privilege travels with the thing into whosesoever possession it may come. It is inchoate from the moment the claim or privilege attaches and when carried into effect by legal process, by a proceeding in rem, relates back to the period when it first attached.

A maritime lien which was conferred on a creditor for his claim for services rendered to or damage caused by the res against its owner, gave him the right to take proceedings in rem to have the res seized and sold by the court and its proceeds applied subject to certain priorities towards satisfying his claim.

In order to give the `privileged` creditor adequate protection and to see his rights are not defeated by the debtor parting with the ownership of the res the law also conferred that once the lien attached to the res it remained binding on the res and followed the res even into the hands of an innocent purchaser until it was discharged either by being satisfied or from the laches of the owner or in any other way by which by law it might be discharged. This latter attribute of a maritime lien is not based on any principle of law but rather on commercial expediency to protect such a creditor. A right which originated as a remedy would appear now with this engrafted attribute to have been elevated to a substantive right under a contract. In my opinion in reality this is not so and a maritime lien remains essentially as a remedy though it appears to have some attributes of a substantive right. Our law like English law recognizes maritime lien for claims for salvage, seamen`s wages,...