The "Jarguh Sawit"

JudgeMPH Rubin J
Judgment Date16 August 1995
Neutral Citation[1995] SGHC 194
Date23 January 1997
Docket NumberAdmiralty Action in Rem No 539,Admiralty in Rem No 539 of 1994
Published date19 September 2003
Plaintiff CounselIan Ng (Cooma Lau & Loh)
Citation[1995] SGHC 194
Defendant CounselC Arul (Arul & Partners)
CourtHigh Court (Singapore)
Subject Matters 4 High Court (Admiralty Jurisdiction) Act (Cap 123),Whether in personam liability,Statutory Interpretation,Admiralty and Shipping,Claim to enforce mortgage on vessel,Setting aside,Action in rem,Whether jurisdiction of court properly invoked under s 4(2) of High Court (Admiralty Jurisdiction) Act (Cap 123),Expression unius,Intention of Parliament,Admiralty jurisdiction and arrest,Construction of statute,Arrest of vessel

Cur Adv Vult

This is an appeal from the decision of the assistant registrar, against his refusal to grant an application by the defendants to set aside the writ of summons and the subsequent arrest of the vessel Jarguh Sawit (ex `Lea`, ex `V Jay Oxford`, ex `Vidima`). The principal ground of the application before the assistant registrar was that the court`s admiralty jurisdiction had been wrongly invoked as the current owners of the arrested vessel were bona fide purchasers for value without notice of any mortgage of the vessel.

The plaintiffs` claim, as stated in the endorsement, is for the repayment of a loan of US$1,908,000 which was advanced on the security of an unregistered first priority mortgage dated 17 August 1992 over the vessel together with interest thereon.

Facts disclosed to the court by the parties established that the plaintiffs, a Bulgarian company, who were the owners of a Bulgarian vessel then known as `Vidima` entered into an agreement with one Oxford Jay International Pte Ltd (Oxford Jay International), a Singapore registered company, to sell the latter the said vessel for US$2,120,000.
According to the plaintiffs, the terms of the sale were contained in a memorandum of agreement dated 7 May 1992 as varied by an addendum dated 23 June 1992. Under the agreement the purchase price of the vessel was to be paid partly in cash to the amount of US$212,000 (10%) and the balance of US$1,908,000 was by grant of a loan from the plaintiffs to Oxford Jay International in accordance with the terms of the loan agreement.

The 10% deposit of US$212,000 was paid by Oxford Jay International.
The loan was not drawn down but treated as having been advanced to Oxford Jay International and returned to the plaintiffs in satisfaction of the balance of the purchase price of the vessel. The loan was secured by an unregistered mortgage dated 17 August 1992 described by the plaintiffs as the first priority mortgage on the vessel. There was also no registration of any charge filed in the Registry of Companies in Singapore against Oxford Jay International in respect of the said mortgage. The balance of the purchase price is still outstanding despite demands made on Oxford Jay International by the plaintiffs.

Consequent upon the breaches by Oxford Jay International to meet the outstanding balance, the plaintiffs invoked the default provisions in the loan agreement.
A formal demand for repayment of all sums due under the loan agreement made on or about 3 November 1993 met with negative results. The plaintiffs therefore sought to enforce the mortgage against the vessel and it was arrested pursuant to the warrant of arrest.

In the main, the point pursued by the defendants Jaguh Harimau Sdn Bhd (`Jaguh Harimau`) before the assistant registrar was that they were bona fide purchasers for value without notice of the mortgage on the vessel; they became aware of the mortgage only after its arrest and since the plaintiffs` affidavit appeared to confirm that the plaintiffs were aware that the vessel Jarguh Sawit was at the time of the issuance of the warrant of arrest, in the ownership of Jaguh Harimau, a bona fide purchaser for value, and not Oxford Jay International, the party with whom the plaintiffs have entered into a loan agreement and mortgage, the court`s admiralty jurisdiction had been wrongly invoked (see paras 6 and 13 of the affidavit of Wong Peng Chuen filed on 19 October 1994).

Additionally the defendants contended that there was no notice of any prior encumbrance on the vessel either in the Bulgarian registry; nor was any charge notified against Oxford Jay International in the Singapore Registry of Companies and such a failure to register the charge had the effect of making the mortgage void against the liquidator or creditor pursuant to s 131 of the Singapore Companies Act (Cap 50).

The outline of the material events as sketched by the plaintiffs` solicitors before the assistant registrar was this.
That sometime after the loan agreement was entered into, unbeknown to the plaintiffs, the vessel changed hands and underwent a number of changes to its name. Searches made by the plaintiffs for the purposes of these proceedings disclosed that on or about 12 November 1992, the vessel was registered in Honduras under the name `V Jay Oxford`, a name akin to the mortgagors of the vessel. Later she was deregistered from Honduras on 31 August 1993 after her name was changed to `Lea`. On or about 7 December 1993 the vessel was provisionally registered in Port Klang, Malaysia, under the name Jarguh Sawit and on 6 June 1994, the vessel received its permanent registration at Port Klang. In September 1994, the Malaysian Registry of Ships approved an application by the defendants to change the vessel`s name to `Jove`. Drawing the attention of the assistant registrar to a suspect feature that Mr Vejayakumar s/o Muthu Kanaga Sundaram (`Vejaya`), a director and shareholder of Oxford Jay International, and the person invested with the authority of Oxford Jay International and the very person who executed the mortgage deed with the plaintiffs, was also the director and substantial shareholder of Jaguh Harimau as of November 1993, it was contended by the plaintiffs at the hearing before the assistant registrar that Jaguh Harimau were by no means bona fide purchasers for value without notice.

In the result, the learned assistant registrar dismissed the defendants` application, observing that he was not satisfied that the defendants were clearly the bona fide purchasers of the vessel for value without notice and that the issues raised warranted determination at trial where cross-examination of witnesses was possible.
From this decision the defendants appealed.

Arguments on appeal

(a) For the defendants

At the appeal stage, the defendants changed solicitors. Mr Arul who appeared on appeal for the defendants, informed the court that the sole `bona fide purchaser` aspect pressed on behalf of the defendants before the assistant registrar was somewhat tangential, so much so his arguments on appeal would not centre on it. Accordingly what mattered most at the appeal stage were two principal questions, first: whether the jurisdiction of the court had been correctly invoked since the current owners of the vessel Jarguh Sawit were not at the time when the writ herein was issued, the party liable in personam on the plaintiffs` claim; and second, whether the endorsement on the writ was regular.

On both these points, Mr Arul`s written submissions (paras 8 to 14) read as follows:

... The writ in rem No 539 of 1994 was directed against the owners of the vessel on the date the writ was filed. On the date of this writ, 6 October 1994, the owners of the vessel were Jaguh Harimau Sdn Bhd and not Oxford Jay International Pte Ltd. Jaguh Harimau Sdn Bhd were not liable in personam to the plaintiffs claim.

Therefore, s 4(2) of the High Court (Admiralty Jurisdiction) Act could not be invoked in view of the change of ownership.

... The endorsement of the writ by the plaintiffs is wrong because Jaguh Harimau Sdn Bhd did not owe any money to the plaintiffs, either by way of a mortgage or otherwise.

The plaintiffs` affidavit leading to the arrest was defective because it did not comply with O 70 r 4(7).

... The plaintiff has the burden of proof showing their claim falls within the admiralty jurisdiction of the Singapore High Court.

... The court does not have jurisdiction to grant an arrest of the defendants vessel.
Section 3(1)(c) of the High Court (Admiralty Jurisdiction) Act does not help the plaintiffs because that only confers jurisdiction when the owner of the vessel is a party who is the mortgagor, that is, the person who would be liable in personam , eg if a plaintiff has an unregistered mortgage given by the owner of the vessel at the time of the arrest the plaintiff will be able to arrest the vessel on the basis of an equitable mortgage.

... The `Shizelle` does not help the plaintiff because in that case the vessel was a yacht (below 15 tonnes) and was not required to be registered under the Merchant Shipping Act.
Every vessel above 15 tonnes must be registered [in England and Singapore] before she can sail, that is a statutory requirement in all maritime nations, warships being an exception.

Section 359 Merchant Shipping Act.
The Merchant Shipping Act only applies to mortgages of registered ships.

Section 382(2) Merchant Shipping Act.

Continuing his submission on the issue relating to jurisdiction, Mr Arul said that `ship or property in question` under s 4(2) of the High Court (Admiralty Jurisdiction) Act (Cap 123) (`the Act`) is not the `ship for ever and ever` but referrable only to the ship with the person who is liable in personam.
He added that under the provisions of the Merchant Shipping Act of 1894 [UK] on which the Singapore Merchant Shipping Act (Cap 179) is modelled, unregistered charges in respect of a registered ship do not take effect as legal charges and do not bind a third party purchaser of the ship nor do they `follow` the ship once it has been sold by the borrower/previous owner. In this context, he invited the court`s attention to the following passage in Ship Sale And Purchase by Iain Goldrein (2nd Ed) at p 206:

... The consequences of failing to register a mortgage are usually that the security is lost and the mortgage will be unenforceable against purchasers of the ship, and priority will be lost to a later mortgage of the ship. Failure to register may also mean that any priority is lost in a court sale of the ship and the distribution of the proceeds of sale to maritime claimants.

Reliance was also placed on a passage in Ship And Aircraft Mortgages by Nigel Meeson (1989), where at p 51 the learned author says:

Where the formal requirements of registration have not been complied with, nevertheless as between the mortgagor and the mortgagee the instrument will be effective. As against

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